UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2021~~2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to _________

Commission File Number 0-10592

TRUSTCO BANK CORP NY

(Exact name of registrant as specified in its charter)

NEW YORK		14-1630287
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5 SARNOWSKI DRIVE, GLENVILLE, NEW YORK		12302
(Address of principal executive offices)		(Zip Code)

~~Registrant's~~Registrant’s telephone number, including area code:

(518) 377-3311

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol (s)	Name of each exchange on which registered
Common Stock, $1.00 par value	TRST	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation ~~S-T~~S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”,~~filer,” “smaller reporting ~~company”,~~company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐
Smaller reporting company ☐	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock	Number of Shares Outstanding as of October 31, ~~2021~~2022
$11.00 Par Value	~~19,218,501~~19,051,775

Index

TRUSTCO BANK CORP NY

Consolidated Statements of Income (Unaudited)

(dollars in thousands, except per share data)

												Three months ended					Nine months ended
	Three months ended September 30,						Nine months ended September 30,					September 30,					September 30,
	2021			2020			2021			2020		2022		2021			2022			2021

Interest and dividend income:
Interest and fees on loans	$	39,488			41,330			119,513			125,058	$	40,896		39,488			119,503			119,513
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		91			14			238			541		479		91			712			238
State and political subdivisions		1			1			2			4		1		1			2			2
Mortgage-backed securities and collateralized mortgage obligations		1,038			1,319			3,442			4,959
Mortgage-backed securities and collateralized mortgage obligations - residential													1,617		1,038			4,071			3,442
Corporate bonds		220			646			859			1,372		526		220			1,281			859
Small Business Administration-guaranteed participation securities		181			216			580			690		133		181			427			580
Other securities		5			5			16			16		3		5			7			16
Total interest and dividends on securities available for sale		1,536			2,201			5,137			7,582		2,759		1,536			6,500			5,137

Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential		104			138			338			475		85		104			262			338
Total interest on held to maturity securities		104			138			338			475		85		104			262			338

Federal Reserve Bank and Federal Home Loan Bank stock		64			77			198			351
Federal Home Loan Bank stock													80		64			207			198
Interest on federal funds sold and other short-term investments		470			242			1,026			1,702		5,221		470			8,046			1,026
Total interest income		41,662			43,988			126,212			135,168		49,041		41,662			134,518			126,212

Interest expense:
Interest on deposits:
Interest-bearing checking		38			55			136			97		43		38			129			136
Savings accounts		154			161			475			560		200		154			519			475
Money market deposit accounts		202			637			721			2,595		237		202			661			721
Time deposits		1,149			4,749			4,076			16,739		646		1,149			1,728			4,076
Interest on short-term borrowings		232			221			688			778		122		232			532			688
Total interest expense		1,775			5,823			6,096			20,769		1,248		1,775			3,569			6,096

Net interest income		39,887			38,165			120,116			114,399		47,793		39,887			130,949			120,116
(Credit) Provision for loan losses		(2,800	)		1,000			(2,450	)		5,000
Net interest income after provision for loan losses		42,687			37,165			122,566			109,399
Provision (Credt) for credit losses													300		(2,800	)		(391	)		(2,450	)
Net interest income after (credit) provision for credit losses													47,493		42,687			131,340			122,566

Noninterest income:
Trustco financial services income		1,558			1,784			5,592			4,752		1,435		1,558			5,264			5,592
Fees for services to customers		2,531			2,292			7,221			6,414		2,705		2,531			8,164			7,221
Net gain on securities transactions		0			0			0			1,155
Other		206			265			598			780		246		206			1,057			598
Total noninterest income		4,295			4,341			13,411			13,101		4,386		4,295			14,485			13,411

Noninterest expenses:
Salaries and employee benefits		11,909			10,899			36,737			33,920		12,134		11,909			32,837			36,737
Net occupancy expense		4,259			4,277			13,173			12,968		4,483		4,259			13,266			13,173
Equipment expense		1,628			1,607			4,859			5,015		1,532		1,628			4,787			4,859
Professional services		1,483			1,311			4,529			3,974		1,375		1,483			4,326			4,529
Outsourced services		2,015			1,875			6,434			5,825		2,328		2,015			7,108			6,434
Advertising expense		310			305			1,213			1,394		508		310			1,514			1,213
FDIC and other insurance		746			660			2,230			1,563		773		746			2,389			2,230
Other real estate expense (income), net		32			(115	)		211			47
Other real estate expense, net													124		32			209			211
Other		2,315			1,855			6,086			6,168		2,887		2,315			7,478			6,086
Total noninterest expenses		24,697			22,674			75,472			70,874		26,144		24,697			73,914			75,472

Income before taxes		22,285			18,832			60,505			51,626		25,735		22,285			71,911			60,505
Income taxes		5,523			4,761			15,227			12,988		6,371		5,523			17,587			15,227

Net income	$	16,762			14,071			45,278			38,638	$	19,364		16,762			54,324			45,278

Net income per share (1):
Net income per share:
- Basic	$	0.871			0.730			2.349			2.002	$	1.013		0.871			2.835			2.349

- Diluted	$	0.871			0.730			2.349			2.001	$	1.013		0.871			2.835			2.349

~~(1)~~

~~All periods presented have been adjusted for the~~ ~~1 for 5~~ ~~reverse stock split which occurred on May 28, 2021.~~

See accompanying notes to unaudited consolidated interim financial statements.

Index

TRUSTCO BANK CORP NY

Consolidated Statements of Comprehensive Income (Unaudited)

(dollars in thousands)

	Three months ended						Nine months ended
	September 30,						September 30,
	2022			2021			2022			2021

Net income	$	19,364			16,762			54,324			45,278

Net unrealized holding loss on securities available for sale		(20,943	)		(765	)		(49,379	)		(5,939	)
Tax effect		5,421			199			12,777			1,534

Net unrealized loss on securities available for sale, net of tax		(15,522	)		(566	)		(36,602	)		(4,405	)

Amortization of net actuarial gain		(280	)		(137	)		(784	)		(534	)
Amortization of prior service (credit) cost		(78	)		177			(235	)		227
Tax effect		93			(10	)		265			80
Amortization of net actuarial gain and prior service (credit) cost on pension and postretirement plans, net of tax		(265	)		30			(754	)		(227	)

Other comprehensive loss, net of tax		(15,787	)		(536	)		(37,356	)		(4,632	)
Comprehensive income	$	3,577			16,226			16,968			40,646

See accompanying notes to unaudited consolidated interim financial statements.

Index

TRUSTCO BANK CORP NY

ConsolidatedStatements of ~~Comprehensive Income~~Financial Condition (Unaudited)

(dollars in ~~thousands)~~thousands, except share and per share data)

Three months ended
September 30,

Nine months ended
September 30,

2021 2020 2021 2020

Net income $ 16,762 14,071 45,278 38,638

Net unrealized holding (loss) gain on securities available for sale (765 ) (267 ) (5,939 ) 11,392
Reclassification adjustments for net gain recognized in income 0 0 0 (1,155 )
Tax effect 199 69 1,534 (2,660 )

Net unrealized (loss) gain on securities available for sale, net of tax (566 ) (198 ) (4,405 ) 7,577

Amortization of net actuarial gain (137 ) (222 ) (534 ) (531 )
Amortization of prior service cost (credit) 177 (49 ) 227 (147 )
Tax effect (10 ) 70 80 177
Amortization of net actuarial gain and prior service cost (credit) on pension and postretirement plans, net of tax 30 (201 ) (227 ) (501 )

Other comprehensive (loss) income, net of tax (536 ) (399 ) (4,632 ) 7,076
Comprehensive income $ 16,226 13,672 40,646 45,714

	September 30, 2022			December 31, 2021
ASSETS:

Cash and due from banks	$	46,236			48,357
Federal funds sold and other short term investments		795,028			1,171,113
Total cash and cash equivalents		841,264			1,219,470

Securities available for sale		468,219			407,713
Held to maturity securities ($7,938 and $10,695 fair value at September 30, 2022 and December 31, 2021, respectively)		8,091			9,923

Federal Home Loan Bank stock		5,797			5,604
Loans, net of deferred net costs		4,629,491			4,438,779
Less:
Allowance for credit losses on loans		45,517			44,267
Net loans		4,583,974			4,394,512

Bank premises and equipment, net		31,931			33,027
Operating lease right-of-use assets		45,733			48,090
Other assets		94,485			78,207

Total assets	$	6,079,494			6,196,546

LIABILITIES:
Deposits:
Demand	$	859,829			794,878
Interest-bearing checking		1,188,790			1,191,304
Savings accounts		1,562,564			1,504,554
Money market deposit accounts		716,319			782,079
Time deposits		954,352			995,314
Total deposits		5,281,854			5,268,129

Short-term borrowings		124,932			244,686
Operating lease liabilities		50,077			52,720
Accrued expenses and other liabilities		33,625			29,883

Total liabilities		5,490,488			5,595,418

SHAREHOLDERS’ EQUITY:
Capital stock par value $1.00; 30,000,000 shares authorized; 20,045,684 shares issued at September 30, 2022 and December 31, 2021, and 19,051,775 and 19,219,989 shares outstanding at September 30, 2022 and December 31, 2021, respectively		20,046			20,046
Surplus		256,661			256,661
Undivided profits		379,769			349,056
Accumulated other comprehensive (loss) income, net of tax		(25,209	)		12,147
Treasury stock at cost - 993,909 and 825,695 shares at September 30, 2022 and December 31, 2021, respectively		(42,261	)		(36,782	)

Total shareholders’ equity		589,006			601,128

Total liabilities and shareholders’ equity	$	6,079,494			6,196,546

See accompanying notes to unaudited consolidated interim financial statements.

Index

TRUSTCO BANK CORP NY

Consolidated Statements of ~~Financial Condition (Unaudited)~~

~~(dollars in thousands, except per share data)~~

September 30, 2021 December 31, 2020
ASSETS:

Cash and due from banks $ 45,486 47,196
Federal funds sold and other short term investments 1,147,853 1,059,903
Total cash and cash equivalents 1,193,339 1,107,099

Securities available for sale 434,552 439,071

Held to maturity securities ($11,646 and $14,988 fair value at September 30, 2021 and December 31, 2020, respectively)
10,701 13,824

Federal Reserve Bank and Federal Home Loan Bank stock 5,604 5,506

Loans, net of deferred net costs 4,396,729 4,244,470
Less:
Allowance for loan losses 47,350 49,595
Net loans 4,349,379 4,194,875

Bank premises and equipment, net 33,233 34,412
Operating lease right-of-use assets 45,836 47,885
Other assets 62,191 59,124

Total assets $ 6,134,835 5,901,796

LIABILITIES:
Deposits:
Demand $ 790,663 652,756
Interest-bearing checking 1,148,593 1,086,558
Savings accounts 1,433,130 1,285,501
Money market deposit accounts 744,051 716,005
Time deposits 1,124,581 1,296,373
Total deposits 5,241,018 5,037,193

Short-term borrowings 230,770 214,755
Operating lease liabilities 50,515 52,784
Accrued expenses and other liabilities 25,849 28,903

Total liabilities 5,548,152 5,333,635

SHAREHOLDERS' EQUITY:
Capital stock par value $1; 30,000,000 shares authorized; 20,041,796 and 20,040,966 shares issued and 19,216,101 and 19,286,531 shares outstanding at September 30, 2021 and December 31, 2020, respectively (1) (2)
20,042 20,041
Surplus (1) 256,565 256,606
Undivided profits 339,554 313,974
Accumulated other comprehensive income, net of tax 7,304 11,936
Treasury stock at cost - 825,695 and 754,435 shares at September 30, 2021 and December 31, 2020, respectively (2)
(36,782 ) (34,396 )

Total shareholders' equity 586,683 568,161

Total liabilities and shareholders' equity $ 6,134,835 5,901,796

~~(1)~~

~~All periods presented have been adjusted for the~~ ~~1 for 5~~ ~~reverse stock split which occurred on May 28, 2021.~~

~~(2)~~

~~Share amounts have been adjusted for all periods presented for the~~ ~~1 for 5~~ ~~reverse stock split which occurred on May 28, 2021.~~

~~See accompanying notes to unaudited consolidated interim financial statements.~~

~~Index~~

~~TRUSTCO BANK CORP NY~~

~~Consolidated Statements of~~ Changes in Shareholders’ Equity (Unaudited)

(dollars in thousands, except per share data)

	Capital Stock (1)			Surplus (1)			Undivided Profits			Accumulated Other Comprehensive Income			Treasury Stock			Total												Accumulated
																												Other
Beginning balance, January 1, 2020 (1)	$	20,041			256,591			288,067			4,461			(30,903	)		538,257
Net income		0			0			13,313			0			0			13,313
Other comprehensive income, net of tax		0			0			0			6,931			0			6,931
Cash dividend declared, $0.340625 per share (2)		0			0			(6,827	)		0			0			(6,827	)
Purchase of treasury stock (97,800 shares) (2)		0			0			0			0			(3,493	)		(3,493	)
Stock based compensation expense		0			4			0			0			0			4
																			Capital						Undivided			Comprehensive			Treasury
Ending balance, March 31, 2020 (1)	$	20,041			256,595			294,553			11,392			(34,396	)		548,185
Net income		0			0			11,254			0			0			11,254
Other comprehensive income, net of tax		0			0			0			544			0			544
Cash dividend declared, $0.340625 per share (2)		0			0			(6,568	)		0			0			(6,568	)
Stock based compensation expense		0			6			0			0			0			6
																			Stock (1)			Surplus (1)			Profits			Income			Stock			Total
Ending balance, June 30, 2020 (1)	$	20,041			256,601			299,239			11,936			(34,396	)		553,421
Net income		0			0			14,071			0			0			14,071
Other comprehensive income, net of tax		0			0			0			(399	)		0			(399	)
Cash dividend declared, $0.340625 per share (2)		0			0			(6,569	)		0			0			(6,569	)
Stock based compensation expense		0			4			0			0			0			4

Ending balance, September 30, 2020 (1)	$	20,041			256,605			306,741			11,537			(34,396	)		560,528

Beginning balance, January 1, 2021 (1)	$	20,041			256,606			313,974			11,936			(34,396	)		568,161		$	20,041			256,606			313,974			11,936			(34,396	)		568,161
Net income		0			0			14,083			0			0			14,083			-			-			14,083			-			-			14,083
Other comprehensive loss, net of tax		0			0			0			(4,668	)		0			(4,668	)		-			-			-			(4,668	)		-			(4,668	)
Stock options exercised (2,650 shares) (1)		3			68			0			0			0			71
Stock options exercised (2,650 shares) (1)																				3			68												71
Cash dividend declared, $0.340625 per share (2)		0			0			(6,571	)		0			0			(6,571	)		-			-			(6,571	)		-			-			(6,571	)
Purchase of treasury stock (1,261 shares) (2)		0			0			0			0			(45	)		(45	)		-			-			-			-			(45	)		(45	)

Ending balance, March 31, 2021 (1)	$	20,044			256,674			321,486			7,268			(34,441	)		571,031		$	20,044			256,674			321,486			7,268			(34,441	)		571,031
Net income		0			0			14,433			0			0			14,433			-			-			14,433			-			-			14,433
Other comprehensive loss, net of tax		0			0			0			572			0			572			-			-			-			572			-			572
Cash used to settle fractional shares in the Reverse Stock Split		(5	)		(195	)		0			0			0			(200	)		(5	)		(195	)		-			-			-			(200	)
Stock options exercised (2,225 shares) (1)		2			57			0			0			0			59
Cash dividend declared, $0.340625 per share (2)		0			0			(6,569	)		0			0			(6,569	)
Purchase of treasury stock (20,000 shares) (2)		0			0			0			0			(733	)		(733	)
Stock options exercised (2,225 shares)																				2			57			-			-			-			59
Cash dividend declared, $0.340625 per share																				-			-			(6,569	)		-			-			(6,569	)
Purchase of treasury stock (20,000 shares)																				-			-			-			-			(733	)		(733	)

Ending balance, June 30, 2021 (1)	$	20,041			256,536			329,350			7,840			(35,174	)		578,593
Ending balance, June 30, 2021																			$	20,041			256,536			329,350			7,840			(35,174	)		578,593
Net income		0			0			16,762			0			0			16,762			-			-			16,762			-			-			16,762
Other comprehensive loss, net of tax		0			0			0			(536	)		0			(536	)		-			-			-			(536	)		-			(536	)

Stock options exercised (1,160 shares)		1			29			0			0			0			30			1			29			-			-			-			30
Cash dividend declared, $0.340625 per share		0			0			(6,558	)		0			0			(6,558	)
Cash dividend declared, $0.340625 per share																				-			-			(6,558	)		-			-			(6,558	)
Purchase of treasury stock (50,000 shares)		0			0			0			0			(1,608	)		(1,608	)		-			-			-			-			(1,608	)		(1,608	)

Ending balance, September 30, 2021 (1)	$	20,042			256,565			339,554			7,304			(36,782	)		586,683		$	20,042			256,565			339,554			7,304			(36,782	)		586,683

Beginning balance, January 1, 2022																			$	20,046			256,661			349,056			12,147			(36,782	)		601,128
Cumulative impact of adoption of ASU 2016-13																				-			-			(3,470	)		-			-			(3,470	)
Balance, January 1, 2022 as adjusted For impact of adoption of ASU 2016-13																				20,046			256,661			345,586			12,147			(36,782	)		597,658

Net income																				-			-			17,089			-			-			17,089
Other comprehensive loss, net of tax																				-			-			-			(14,516	)		-			(14,516	)
Cash dividend declared, $0.35 per share																				-			-			(6,727	)		-			-			(6,727	)
Purchase of treasury stock 18,114 shares																				-			-			-			-			(609	)		(609	)

Ending balance, March 31, 2022																			$	20,046			256,661			355,948			(2,369	)		(37,391	)		592,895

Net income																				-			-			17,871			-			-			17,871
Other comprehensive loss, net of tax																				-			-			-			(7,053	)		-			(7,053	)
Cash dividend declared, $0.35 per share																				-			-			(6,719	)		-			-			(6,719	)
Purchase of treasury stock 75,000 shares																				-			-			-			-			(2,362	)		(2,362	)

Ending balance, June 30, 2022																			$	20,046			256,661			367,100			(9,422	)		(39,753	)		594,632

Net income																				-			-			19,364			-			-			19,364
Other comprehensive loss, net of tax																				-			-			-			(15,787	)		-			(15,787	)
Cash dividend declared, $0.35 per share																				-			-			(6,695	)		-			-			(6,695	)
Purchase of treasury stock 75,100 shares																				-			-			-			-			(2,508	)		(2,508	)

Ending balance, September 30, 2022																			$	20,046			256,661			379,769			(25,209	)		(42,261	)		589,006

(1)	All periods presented have been adjusted for the 1 for 5 reverse stock split which occurred on May 28, 2021.

(2)	Share amounts and per share amounts have been adjusted for all periods presented for the 1 for 5 reverse stock split which occurred on May 28, 2021.

See accompanying notes to unaudited consolidated interim financial statements.

Index

TRUSTCO BANK CORP NY

Consolidated Statements ofCash Flows (Unaudited)

(dollars in thousands)

	Nine months ended September 30,						Nine months ended September 30,
	2021			2020			2022			2021

Cash flows from operating activities:
Net income	$	45,278			38,638		$	54,324			45,278

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		3,184			3,003			3,091			3,184
Amortization of right-of-use asset		4,745			4,588			4,841			4,745
Net gain on sale of other real estate owned		(86	)		(332	)		(99	)		(86	)
Writedown of other real estate owned		121			120			-			121
(Credit) provision for loan losses		(2,450	)		5,000
Deferred tax benefit		(1,247	)		(1,199	)
(Credit) provision for credit losses								(391	)		(2,450	)
Deferred tax expense (benefit)								1,523			(1,247	)
Net amortization of securities		3,113			2,703			1,802			3,113
Stock based compensation expense		0			14
Net gain on sales of securities		0			(1,155	)
(Increase) decrease in taxes receivable		(463	)		570
Decrease (increase) in interest receivable		673			(180	)
Net gain on sale of bank premises and equipment								(314	)		-
Decrease (increase) in taxes receivable								4,062			(463	)
(Increase) decrease in interest receivable								(1,837	)		673
Decrease in interest payable		(249	)		(682	)		(1	)		(249	)
Increase in other assets		(1,442	)		(1,201	)		(4,406	)		(1,442	)
Decrease in operating lease liabilities		(4,965	)		(4,715	)		(5,127	)		(4,965	)
(Decrease) increase in accrued expenses and other liabilities		(2,106	)		2,734
Decrease in accrued expenses and other liabilities								(1,652	)		(2,106	)
Total adjustments		(1,172	)		9,268			1,492			(1,172	)
Net cash provided by operating activities		44,106			47,906			55,816			44,106

Cash flows from investing activities:
Proceeds from sales, paydowns and calls of securities available for sale		123,550			226,886			57,714			123,550
Proceeds from calls and maturities of held to maturity securities		3,028			3,398
Proceeds from paydowns of held to maturity securities								1,772			3,028
Purchases of securities available for sale		(136,543	)		(103,991	)		(184,391	)		(136,543	)
Proceeds from maturities of securities available for sale		8,555			5,000			15,050			8,555
Purchases of Federal Reserve Bank and Federal Home Loan Bank stock		(98	)		(380	)
Proceeds from redemption of Federal Reserve Bank stock		0			4,057
Purchases of Federal Home Loan Bank stock								(193	)		(98	)
Net increase in loans		(152,314	)		(152,987	)		(191,052	)		(152,314	)
Proceeds from dispositions of other real estate owned		255			1,802			416			255
Proceeds from dispositions of bank premises and equipment		6			0			469			6
Purchases of bank premises and equipment		(2,011	)		(2,798	)		(2,150	)		(2,011	)
Net cash used in investing activities		(155,572	)		(19,013	)		(302,365	)		(155,572	)

Cash flows from financing activities:
Net increase in deposits		203,825			449,034			13,725			203,825
Net increase in short-term borrowings		16,015			44,789
Net change in short-term borrowings								(119,754	)		16,015
Proceeds from exercise of stock options		160			0			-			160
Cash used to settle fractional shares in the Reverse Stock Split		(200	)		0			-			(200	)
Purchases of treasury stock		(2,386	)		(3,493	)		(5,479	)		(2,386	)
Dividends paid		(19,708	)		(19,750	)		(20,149	)		(19,708	)
Net cash provided by financing activities		197,706			470,580
Net cash (used in) provided by financing activities								(131,657	)		197,706
Net increase in cash and cash equivalents		86,240			499,473			(378,206	)		86,240
Cash and cash equivalents at beginning of period		1,107,099			456,846			1,219,470			1,107,099
Cash and cash equivalents at end of period	$	1,193,339		$	956,319		$	841,264			1,193,339

Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest paid	$	6,345			21,451		$	3,570			6,345
Income taxes paid		15,430			12,274			13,687			15,430
Other non cash items:
Transfer of loans to other real estate owned		260			434			637			260
(Decrease) Increase in dividends payable		(10	)		214
Decrease in dividends payable								(8	)		(10	)
Change in unrealized (loss) gain on securities available for sale-gross of deferred taxes		(5,939	)		10,237			(49,379	)		(5,939	)
Change in deferred tax effect on unrealized loss (gain) on securities available for sale		1,534			(2,660	)		12,777			1,534
Amortization of net actuarial gain and prior service cost (credit) on pension and postretirement plans		(307	)		(678	)		(1,019	)		(307	)
Change in deferred tax effect of amortization of net actuarial gain postretirement benefit plans		80			177			265			80
Impact to retained earnings from adoption of ASC 326, net of tax								(3,470	)		-

See accompanying notes to unaudited consolidated interim financial statements.

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TRUSTCO BANK CORP NY

Notes to Consolidated Interim Financial Statements

(Unaudited)

(1) Financial Statement Presentation

The unaudited Consolidated Interim Financial Statements of TrustCo Bank Corp NY (the “Company” or “TrustCo”) include the accounts of the Company’s subsidiary, Trustco Bank (also referred to as the “Bank”) and other subsidiaries after elimination of all significant intercompany accounts and transactions. Prior period amounts are reclassified when necessary to conform to the current period presentation. The net income reported for the three and nine months ended September 30, ~~2021~~2022 is not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021~~,2022, or any interim periods. These financial statements consider events that occurred through the date of filing.

In the opinion of the management of the Company, the accompanying unaudited Consolidated Interim Financial Statements contain all recurring adjustments necessary to present fairly the financial position as of September 30, ~~2021~~,2022, the results of operations for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~,2021, and the cash flows for the nine months ended September 30, ~~2021~~2022 and ~~2020~~.2021. The accompanying unaudited Consolidated Interim Financial Statements should be read in conjunction with the Company’s ~~year-end~~year‑end audited Consolidated Financial Statements, including notes thereto, which are included in the Company’s Annual Report on Form 10-K10‑K for the year ended December 31, ~~2020~~.2021. The accompanying unaudited Consolidated Interim Financial Statements have been prepared in accordance with the ~~instructions to Form~~ 10-Qapplicable rules of the Securities and Exchange Commission (“SEC”) and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations and cash flow activity required in accordance with accounting principles generally accepted in the United States. Results of operations for the nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

~~Effective as~~The accounting policies of~~May 28, 2021~~, the Company, ~~completed a~~ ~~1-for-5~~ ~~reverse stock split (the “Reverse Stock Split”)~~as applied in the Consolidated Interim Financial Statements presented herein, are substantially the same as those followed on an annual basis in the Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 25, 2022 except as noted below. The accounting policies of the ~~Company’s issued and outstanding shares of common stock, par value $1.00~~ ~~per share, as previously approved by our Board of Directors (the “Board of Directors”) and our shareholders. Proportional adjustments were made~~Company effective for the comparative periods presented prior to the ~~Company’s issued~~adoption of ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) are presented in the Form 10-K referenced above.

Recently Adopted Accounting Standards

On January 1, 2022, the Company adopted ASU 2016-13, “Financial Instruments - Credit Losses” (referred to as “CECL” and ~~outstanding common stock~~as Accounting Standards Codification Topic 326 (“ASC 326”)) which amended existing guidance to replace current generally accepted accounting principles used to measure a reporting entity’s credit losses. The main objective of this update is to provide financial statement users with enhanced financial disclosures for more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this update replace the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The allowance for credit losses on loans is a valuation account that is deducted from, or added to, the ~~exercise price and number~~loans’ amortized cost basis to present the net, lifetime amount expected to be collected on the loans. The measurement of ~~shares issuable upon exercise of the options outstanding~~expected credit losses under the ~~Company’s equity incentive plans,~~CECL methodology applies to financial assets measured at amortized cost including loan receivables and ~~the number~~held-to-maturity debt securities. The update also applies to off-balance sheet exposures not accounted for as insurance (loan commitments, standby letters of ~~shares subject to restricted stock units under the Company’s equity incentive plans.~~ ~~NaN~~ ~~fractional shares of common stock were issued in connection with the Reverse Stock Split,~~credit, financial guarantees and shareholders received cash in lieu of any fractional shares. All references herein to common stock and per share data for all periods presented in these unaudited consolidated interim financial statements and notes thereto, have been retrospectively adjusted to reflect the Reverse Stock Splitother similar instruments).

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In addition, CECL made changes to the accounting for available for sale securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available for sale debt securities that management does not intend to sell or believes that it is more likely than not they will be required to sell.

As previously disclosed, the Company assembled a cross-functional working group that met regularly to oversee the implementation plan for CECL, which included the assessment and documentation of the processes and internal controls, model development and documentation, assessing existing loan and loss data, assessing models for default and loss estimates and conducting parallel runs and reviews through January 1, 2022.

The Company adopted CECL using the modified retrospective method for all financial assets measured at amortized cost and off-balance-sheet credit exposures. Results for reporting periods beginning after January 1, 2022 are presented under CECL while prior period amounts continue to be reported in accordance with previous applicable GAAP. On the adoption date, the Company increased the allowance for credit losses on loans by $2.4 million and increased the allowance for credit losses for unfunded commitments by $2.3 million (included in Accrued expenses and other liabilities). The Company recorded a net decrease to undivided profits of $3.5 million, net of $1.2 million in deferred tax balances as of January 1, 2022 for the cumulative effect of adopting CECL.

The Company did not record an allowance for credit losses as of January 1, 2022 on its securities available for sale or held to maturity.

The impact of the January 1, 2022 adoption entry is summarized in the table below:

(in thousands)	December 31, 2021 Pre-CECL Adoption		Impact of Adoption			January 1, 2022 Post-CECL Adoption
Assets:
Allowance for credit losses on loans	$	44,267	$	2,353		$	46,620
Allowance for credit losses on securities		-		-			-
Liabilities and shareholders’ equity:
Other liabilities (ACL unfunded loan commitments)		18		2,335			2,353
Tax Effect, net		-		(1,218	)		-
Total		44,285		3,470			48,973

Undivided Profits	$	349,056	$	(3,470	)	$	345,586

Loans

Loans that management has the intent and ability to hold for the near future or until maturity or payoff are reported at amortized cost net of allowance for credit losses on loans. Amortized cost is the principal balance outstanding, net of deferred loan fees and costs. Interest income is accrued on unpaid principal balances. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments.

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Interest income of mortgage and commercial loans is discontinued and placed on non-accrual status at the time the loan is 90 days delinquent. Non-accrual loans are individually reviewed and charged off at 180 days past due. Commercial loans are charged off to the extent principal or interest is deemed uncollectible. In all cases, loans are placed on non-accrual or charged off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not received for loans placed on non-accrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Under the cost-recovery method, interest income is not recognized until the loan balance is reduced to zero. Under the cash-basis method, interest income is recorded when the payment is received in cash. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought to current and future payments are reasonably assured.

Accrued Interest Receivable

The Company has made the following elections with regards to accrued interest receivable: the Company will continue to write off accrued interest receivable by reversing interest income; the Company has made the accounting policy election not to measure an allowance for credit losses for accrued interest receivables; and the Company elected to exclude accrued interest receivable balances from tabular disclosures and will present accrued interest receivable balances in other assets.

Allowance for Credit Losses on Loans

The allowance for credit losses on loans (“ACLL”) is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Loan are charged off against the allowance when management believes the uncollectibility of the loan balance is confirmed. Expected recoveries are not to exceed the aggregate of amounts previously charged-off and expected to be charged-off.

The Company has elected the Discounted Cash Flow methodology to determine its ACLL. Management estimates the allowance for credit loss on loans balance using relevant available information from internal and external sources related to past events, current conditions, and a reasonable and supportable forecast provided by a third party. The Company lends in the geographic territory of its branch locations in New York, Florida, Massachusetts, New Jersey and Vermont. Although the loan portfolio is diversified, historical credit loss experience in Florida and New York provides the quantitative basis for the estimation of expected credit losses. Complementary to that, a portion of its debtors’ ability to repay depends significantly on the economic employment conditions prevailing in the respective geographic territory. The ACLL reserve is overlaid with qualitative considerations for changes in underwriting standards, portfolio mix, delinquency levels, or economic conditions such as changes in the unemployment rates, property values, and gross metro product to make adjustments to historical loss information. Management judgment is required at each point in the measurement process.

The allowance for unfunded commitments is maintained at a level by the Company determined to be sufficient to absorb expected lifetime losses related to unfunded credit facilities (including unfunded loan commitments and letters of credit).

Management utilized the historical loss rate experience on the Company’s loan portfolio as the initial basis of the estimate using probability of default and loss given defaults derived from September 30, 2011 to January 1, 2022. A defaulted loan is a loan payment default once it is 90 days contractually past due.

Management utilizes externally developed economic forecasts (Moody’s forecast scenarios) of unemployment rates within the key metropolitan areas in New York and Florida of which we serve to forecast probability of defaults and loss given defaults within the model. Management has determined that a reasonable and supportable forecast is 8 quarters after which the historical average probability defaults and loss given defaults will be used. The two economic scenarios evaluated by management in detail were the Baseline and Stagflation forecast scenarios. Within both scenarios, Management considered the following:

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•

Unemployment levels in relation to inflationary pressures;

Monetary and fiscal policy assumptions and movement of the federal funds rate in 2022;

Supply chain conditions and their impacts on Consumer Price indices (“CPI”), and

Inflationary pressures on housing, and Gross Metro Product (“GMP”).

In determining the appropriate forecast to utilize, management considered the range of forecasted unemployment as well as a number of other economic indicators. Unemployment levels in the Baseline continued to be optimistic while not providing what management determined to be a full reflection of supply chain, workforce challenges, and inflationary pressures. The rising inflation, volatility in consumer confidence, supply chain, and workforce environment challenges, as well as monetary and geopolitical environmental considerations, drove management to elect the Stagflation forecast scenario.

As of January 1, 2022, the Company has elected to fully utilize the Stagflation forecast scenario. The Company determined the forecast more appropriately considers inflationary pressures, and monetary policies observed currently and prospectively in the markets served. The ACLL reserve is then complemented with qualitative factors based upon GMP, CPI, and housing forecasts using the same scenario, and their related forecasts for the respective metropolitan regions of New York and Florida, and were factored into the calculation.

The effective interest rate used to discount expected cash flows considered the timing of the expected cash flows resulting from prepayments that existed as of January 1, 2022. The prepayment-adjusted effective interest rate uses the original contractual rate and prepayment assumptions as of January 1, 2022.

There were no changes in the Company’s methodology for the allowance for credit losses on loans for the period ended September 30, 2022 compared to the adoption date.

The Company determined a contractual term excluding expected extensions, renewals and modifications. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate.

The Company determined its allowance for credit losses on loans using a pool of assets with similar risk characteristics. The Company evaluates its risk characteristics based on regulatory call report codes where it was determined that the loans within the call codes were homogenous in nature and could be aggregated into the main categories for the Company portfolio. There were no changes to the loan pools under CECL for January 1, 2022 compared to previously disclosed loan segments. Loans that no longer match the risk profile of the pool are individually assessed for credit losses. Non-accrual loans that have been delinquent 180 days or greater, commercial non-accrual loans and loans identified as troubled debt restructuring (“TDR”) are individually assessed. The individual assessment for credit impairment is generally based on a discounted cash flow approach unless the asset is collateral dependent. The loan is considered collateral dependent when repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. Collateral dependent loans are individually assessed and the expected credit loss is based on the fair value of the collateral.

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A loan for which terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties is considered a TDR. In situations where the Bank considers a loan modification, management determines whether the borrower is experiencing financial difficulty by performing an evaluation of the probability that the borrower will be in payment default on any of its debt in the near future without the modification. This evaluation is performed under the Company’s underwriting policy. Generally, the modification of the terms of loans was the result of the borrower filing for bankruptcy protection. Chapter 13 bankruptcies generally include the deferral of all past due amounts for a period of generally 60 months in accordance with the bankruptcy court order. In the case of Chapter 7 bankruptcies, even though there was no modification of terms, the borrowers’ debt to the Company was discharged and they may not reaffirm the debt.

The TDR that have subsequently defaulted have the underlying collateral evaluated at the time these loans were identified as TDRs, and a charge‑off was taken at that time, if necessary. Collateral values on these loans are reviewed for collateral sufficiency on a quarterly basis.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

The Company estimates credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on off-balance sheet credit exposures is adjusted as a provision for credit loss expense. The estimate includes consideration that funding will occur and an estimate of expected credit losses on commitments is expected to be funded over its estimated life. The Company lends in the geographic territory of its branch locations in New York, Florida, Massachusetts, New Jersey and Vermont. Although the loan portfolio is diversified, a portion of its debtors’ ability to repay depends significantly on the economic conditions prevailing in the respective geographic territory. The following categories of off-balance sheet credit exposures have been identified: unfunded commitments to extend credit, unfunded lines of credit, residential mortgage pending closings and standby letters of credit. Each of these unfunded commitments is analyzed for a probability of funding to calculate a probable funding amount. The life of loan loss factor by related portfolio segment from the allowance for credit losses on loans calculation is then applied to the probable funding amount to calculate the estimated credit losses on off-balance sheet credit exposures recognized in other liabilities. The post adoption balance is included with Accrued expenses and other liabilities on consolidated statements of financial condition. Prospective changes in the reserve will be recorded through the provision for credit losses on the consolidated statements of income.

Debt Securities

Debt securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Debt securities are classified as available for sale when they might be sold before maturity. Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax. There were no debt securities for which other-than-temporary impairment had been recognized prior to January 1, 2022. Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are generally amortized on the level-yield method without anticipating prepayments. Premiums on callable debt securities are amortized to their earlier call date. Discounts are amortized to maturity date. Gains and losses are recorded on the trade date and determined using the specific identification method.

A debt security is placed on non-accrual status at the time any principal or interest payments become 90 days delinquent. Interest accrued but not received for a security placed on non-accrual is reversed against interest income. Timely principal and interest payments continue to be made on the securities. The unrealized losses in the portfolio are primarily attributable to changes in interest rates.

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Allowance for Credit Losses – Held to Maturity Securities

The Company’s held to maturity securities are issued by U.S. government entities and agencies such as Ginnie Mae, Fannie Mae, and Freddie Mac. These securities are either explicitly or implicitly guaranteed by the U.S. government and are highly rated by major rating agencies and have a long history of no credit losses. Management measures expected credit losses on held to maturity debt securities on a collective basis by major security type, issuer and payment stream. The estimate of expected credit losses considers historical credit loss information adjusted for current conditions and reasonable and supportable forecasts provided by a third party servicer. Based on the nature of the securities held by the Company and the underlying guarantees, there was no allowance for credit losses recorded for held to maturity securities as of January 1, 2022.

Accrued interest receivable on held to maturity securities totaled $33 thousand and is excluded from the estimate of credit losses. Historically the Company has not experienced uncollectible accrued interest receivable on its held-to-maturity securities portfolio.

Allowance for Credit Losses – Available For Sale Securities

For available for sale debit securities in an unrealized loss position, the entity first assesses whether it intends to sell, or if it is more likely that not that it will be required to sell the security before recovery of its amortized cost basis. If either criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For debt securities available for sale that do not meet the aforementioned criteria, in making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency and any adverse conditions specifically related to the security and its issuer, among other factors. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recorded through other comprehensive income.

Change in the allowance for credit losses is recorded as a provision for credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of an available for sale security is confirmed or when either criteria regarding the intent or requirement to sell is met.

The unrealized losses reported pertained to securities issued by the U.S. government and its sponsored entities, include agencies, and mortgage backed securities issued by Ginnie Mae, Fannie Mae, and Freddie Mac, which are currently well rated and guaranteed by the U.S. government. The Company does not intend to sell the securities, and it is not considered likely the Company will be required to sell these securities prior to recovery of the amortized cost. Timely principal and interest payments continue to be made on the securities. The unrealized losses in the portfolio are primarily attributable to changes in interest rates. Management does not believe any individual unrealized loss as of January 1, 2022 represents any credit loss and no realized losses have been recognized into provision for credit loss.

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(2) Earnings Per Share

The Company computes earnings per share in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 260, Earnings Per Share (“ASC 260”). A reconciliation of the component parts of earnings per share for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 is as ~~follows~~follows::

(in thousands, except per share data)
For the three months ended
September 30,

For the nine months ended
September 30,

2021 2020 2021 2020

Net income $ 16,762 14,071 $ 45,278 38,638
Weighted average common shares (1) 19,249 19,287 19,272 19,306
Stock Options (1) 3 1 6 2
Weighted average common shares including potential dilutive shares (1) 19,252 19,288 19,278 19,308

Basic EPS (1) $ 0.871 0.730 $ 2.349 2.002

Diluted EPS (1) $ 0.871 0.730 $ 2.349 2.001

(in thousands, except per share data)	For the three months ended				For the nine months ended
	September 30,				September 30,
	2022		2021		2022		2021

Net income	$	19,364		16,762	$	54,324		45,278
Weighted average common shares		19,111		19,249		19,159		19,272
Stock Options		1		3		1		6
Weighted average common shares including potential dilutive shares		19,112		19,252		19,160		19,278

Basic EPS	$	1.013		0.871	$	2.835		2.349

Diluted EPS	$	1.013		0.871	$	2.835		2.349

~~(1)~~

~~Share and per share amounts have been adjusted for all periods presented for the~~ ~~1 for 5~~ ~~reverse stock split which occurred on May 28, 2021.~~

For both the three and nine months ended September 30, 2022 there were one thousand shares of weighted average antidilutive stock options excluded from dilutive earnings. For the three and nine months ended September 30, 2021 ~~there were~~ 60 ~~thousand weighted average antidilutive stock options excluded from dilutive earnings. For the three and nine months ended September 30, 2020~~ the weighted average antidilutive stock options excluded from dilutive earnings ~~were~~was approximately90 60 thousand shares. The stock options are antidilutive because the strike price is greater than the average fair value of the Company’s common stock for the periods ~~presented~~presented. ~~and have been adjusted to reflect the Reverse Stock Split.~~

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(3) Benefit Plans

The table below outlines the components of the Company’s net periodic benefit recognized during the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 for its pension and other postretirement benefit plans:

	Three months ended September 30,												Three months ended September 30,
	Pension Benefits						Other Postretirement Benefits						Pension Benefits						Other Postretirement Benefits
(dollars in thousands)	2021			2020			2021			2020			2022			2021			2022			2021

Service (credit) cost	$	0			9			9			15
Service cost													$	-			-			4			9
Interest cost		214			269			60			40			222			214			52			60
Expected return on plan assets		(712	)		(755	)		(274	)		(296	)		(807	)		(712	)		(333	)		(274	)
Amortization of net loss (gain)		0			(5	)		(137	)		(217	)
Amortization of prior service cost (credit)		0			0			177			(49	)
Amortization of net gain														-			-			(280	)		(137	)
Amortization of prior service (credit) cost														-			-			(78	)		177
Net periodic benefit	$	(498	)		(482	)		(165	)		(507	)	$	(585	)		(498	)		(635	)		(165	)

	Nine months ended September 30,												Nine months ended September 30,
	Pension Benefits						Other Postretirement Benefits						Pension Benefits						Other Postretirement Benefits
(dollars in thousands)	2021			2020			2021			2020			2022			2021			2022			2021

Service cost	$	0			28			57			55		$	-			-			13			57
Interest cost		642			807			143			152			666			642			155			143
Expected return on plan assets		(2,135	)		(2,265	)		(891	)		(887	)		(2,420	)		(2,135	)		(999	)		(891	)
Amortization of net loss (gain)		0			0			(534	)		(531	)
Amortization of net gain														-			-			(784	)		(534	)
Amortization of prior service cost (credit)		0			0			227			(147	)		-			-			(235	)		227
Net periodic benefit	$	(1,493	)		(1,430	)		(998	)		(1,358	)	$	(1,754	)		(1,493	)		(1,850	)		(998	)

The Company does not expect to make contributions to its pension and postretirement benefit plans in ~~2021.~~2022. As of September 30, ~~2021~~2022, 0no contributions have been made, however, this decision is reviewed each quarter and is subject to change based upon market conditions.

Since 2003, the Company has not subsidized retiree medical insurance premiums. However, it continues to provide postretirement medical benefits to a limited number of current and retired executives in accordance with the terms of their employment contracts.

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(4) Investment Securities

(a) Securities available for sale

The amortized cost and fair value of the securities available for sale are as follows:

									September 30, 2022
											Gross		Gross
	September 30, 2021								Amortized		Unrealized		Unrealized		Fair
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cost		Gains		Losses		Value

U.S. government sponsored enterprises	$	59,974		0		225		59,749	$	109,097		15		6,333		102,779
State and political subdivisions		48		0		0		48		41		-		-		41
Mortgage backed securities and collateralized mortgage obligations - residential		290,508		5,095		2,018		293,585		297,131		-		35,889		261,242
Corporate bonds		45,914		327		326		45,915		85,764		-		4,762		81,002
Small Business Administration - guaranteed participation securities		33,650		919		0		34,569		24,883		-		2,385		22,498
Other		686		0		0		686		686		-		29		657
Total Securities Available for Sale	$	430,780		6,341		2,569		434,552	$	517,602		15		49,398		468,219

									December 31, 2021
											Gross		Gross
	December 31, 2020								Amortized		Unrealized		Unrealized		Fair
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cost		Gains		Losses		Value

U.S. government sponsored enterprises	$	20,000		0		32		19,968	$	59,976		-		797		59,179
State and political subdivisions		103		0		0		103		41		-		-		41
Mortgage backed securities and collateralized mortgage obligations - residential		308,432		7,749		23		316,158		269,907		3,367		2,476		270,798
Corporate bonds		59,185		916		162		59,939		45,805		157		625		45,337
Small Business Administration - guaranteed participation securities		40,955		1,262		0		42,217		31,303		371		-		31,674
Other		685		1		0		686		685		-		1		684

Total securities available for sale	$	429,360		9,928		217		439,071
Total Securities Available for Sale									$	407,717		3,895		3,899		407,713

~~Index~~

The following table ~~distributes~~categorize the debt securities included in the available for sale portfolio as of September 30, ~~2021~~2022, based on the securities’ final maturity. Actual maturities may differ because of securities prepayments and the right of certain issuers to call or prepay their obligations without penalty. Securities not due at a single maturity date are presented separately:

					Amortized		Fair
(dollars in thousands)	Amortized Cost		Fair Value		Cost		Value

Due in one year or less	$	15,667		15,954	$	5,043		5,018
Due in one year through five years		90,946		90,435
Due after one year through five years						186,045		174,946
Due after five years through ten years		9		9		4,500		4,515
Mortgage backed securities and collateralized mortgage obligations - residential		290,508		293,585		297,131		261,242
Small Business Administration - guaranteed participation securities		33,650		34,569		24,883		22,498
	$	430,780		434,552	$	517,602		468,219

Index

Gross unrealized losses on securities available for sale and the related fair values aggregated by the length of time that individual securities have been in an unrealized loss position, were as follows:

													September 30, 2022
													Less than				12 months
													12 months				or more				Total
	September 30, 2021														Gross				Gross				Gross
	Less than 12 months				12 months or more				Total				Fair		Unrealized		Fair		Unrealized		Fair		Unreal.
(dollars in thousands)	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Value		Loss		Value		Loss		Value		Loss

U.S. government sponsored enterprises	$	49,760		214		9,989		11		59,749		225	$	43,300		1,315		54,964		5,018		98,264		6,333
Mortgage backed securities and collateralized mortgage obligations - residential		94,466		1,910		6,361		108		100,827		2,018		175,486		17,560		85,755		18,329		261,241		35,889
Corporate bonds		5,345		8		14,682		318		20,027		326		62,343		3,226		18,659		1,536		81,002		4,762
Small Business Administration - guaranteed participation securities														22,497		2,385		-		-		22,497		2,385
Other														621		29		-		-		621		29

Total	$	149,571		2,132		31,032		437		180,603		2,569	$	304,247		24,515		159,378		24,883		463,625		49,398

													December 31, 2021
													Less than				12 months
													12 months				or more				Total
	December 31, 2020														Gross				Gross				Gross
	Less than 12 months				12 months or more				Total				Fair		Unrealized		Fair		Unrealized		Fair		Unreal.
(dollars in thousands)	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Value		Loss		Value		Loss		Value		Loss

U.S. government sponsored enterprises	$	19,968		32		0		0		19,968		32	$	49,279		697		9,900		100		59,179		797
Mortgage backed securities and collateralized mortgage obligations - residential		19,471		22		0		0		19,471		22		93,447		1,888		22,098		588		115,545		2,476
Corporate bonds		14,901		99		4,937		63		19,838		162		15,670		171		14,546		454		30,216		625
Other														648		1		-		-		648		1

Total	$	54,340		153		4,937		63		59,277		216	$	159,044		2,757		46,544		1,142		205,588		3,899

There were no allowance for credit losses recorded for securities available for sale during the three or nine months ended September 30, 2022.

1217

Index

The proceeds from sales and calls of securities available for sale, gross realized gains and gross realized losses from sales and calls during the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 are as follows:

Three months ended September 30,
(dollars in thousands) 2021 2020

Proceeds from sales $ 0 $ 0
Proceeds from calls/paydowns 47,100 43,052
Proceeds from maturities 3,500 0
Gross realized gains 0 0
Gross realized losses 0 0

Nine months ended September 30,
(dollars in thousands) 2021 2020

Proceeds from sales $ 0 $ 29,219
Proceeds from calls/paydowns 123,550 197,667
Proceeds from maturities 8,555 5,000
Gross realized gains 0 1,155
Gross realized losses 0 0

	Three months ended September 30,
(dollars in thousands)	2022		2021

Proceeds from sales	$	-		-
Proceeds from calls/paydowns		14,376		47,100
Proceeds from maturities		5,000		3,500
Gross realized gains		-		-
Gross realized losses		-		-

	Nine months ended September 30,
(dollars in thousands)	2022		2021

Proceeds from sales	$	-		-
Proceeds from calls/paydowns		57,714		123,550
Proceeds from maturities		15,050		8,555
Gross realized gains		-		-
Gross realized losses		-		-

There were 0no transfers of securities available for sale during the three and nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021.

(b) Held to maturity securities

The amortized cost and fair value of the held to maturity securities are as follows:

									September 30, 2022
											Gross		Gross
	September 30, 2021								Amortized		Unrecognized		Unrecognized		Fair
(dollars in thousands)	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value		Cost		Gains		Losses		Value

Mortgage backed securities and collateralized mortgage obligations - residential	$	10,701		945		0		11,646	$	8,091		122		275		7,938

Total held to maturity	$	10,701		945		0		11,646	$	8,091		122		275		7,938

									December 31, 2021
											Gross		Gross
	December 31, 2020								Amortized		Unrecognized		Unrecognized		Fair
(dollars in thousands)	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value		Cost		Gains		Losses		Value

Mortgage backed securities and collateralized mortgage obligations - residential	$	13,824		1,164		0		14,988	$	9,923		773		1		10,695

Total held to maturity	$	13,824		1,164		0		14,988	$	9,923		773		1		10,695

1318

Index

The following table ~~distributes~~categorizes the debt securities included in the held to maturity portfolio as of September 30, ~~2021,~~2022, based on the securities’ final maturity. Actual maturities may differ because of securities prepayments and the right of certain issuers to call or prepay their obligations without penalty. Securities not due at a single maturity date are presented separately:

(dollars in thousands)	Amortized Cost		Fair Value		Amortized		Fair
					Cost		Value
Mortgage backed securities and collateralized mortgage obligations - residential	$	10,701		11,646	$	8,091		7,938
	$	10,701		11,646	$	8,091		7,938

All held to maturity securities are held at cost on the financial statements. ~~There were~~ 0 ~~gross unrecognized losses on~~As of September 30, 2022 and December 31, 2021 held to maturity securities aswith a fair value of ~~September 30, 2021~~$3.7 million and ~~December 31, 2020~~.$442 thousand had an unrecognized loss of less than 12 months of $275 thousand and one thousand, respectively.

There were 0no sales or transfers of held to maturity securities during the three months ended September 30, ~~2021~~2022 and ~~2020.~~2021.

There were no allowance for credit losses recorded for held to maturity securities during the three and nine months ended September 30, 2022. As of September 30, 2022, there were no securities on non-accrual status and all securities were performing in accordance with contractual terms.

Debt Securities

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for OTTI by segregating the portfolio by type and applying the appropriate OTTI model.

In determining OTTI for debt securities, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to sell the debt security or it is more likely than not it will be required to sell the debt security before its anticipated recovery. The assessment of whether any other‑than‑temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

When OTTI occurs, the amount of the OTTI recognized in earnings depends on whether management intends to sell the security or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis. If management intends to sell the security or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If management does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis, the OTTI on debt securities ~~shall be~~is separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment.

1419

Index

As of September 30, ~~2021,~~2022, the Company’s security portfolio included certain securities which were in an unrealized loss position, and are discussed below.

U.S. government sponsored enterprises: ~~Unrealized~~ In the case of unrealized losses on U.S. government sponsored enterprises, ~~are~~because the decline in fair value is attributable to changes in interest rates, and not credit ~~quality. Because~~quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at September 30, ~~2021.~~2022.

Mortgage backed securities and collateralized mortgage obligations – residential: At September 30, ~~2021,~~2022, all mortgage backed securities and collateralized mortgage obligations held by the Company were issued by U.S. government sponsored entities and agencies, primarily Ginnie Mae, Fannie Mae and Freddie Mac, institutions which the government has affirmed its commitment to support. ~~The~~Because the decline in fair value is attributable to changes in interest rates, and not credit ~~quality. Because~~quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other‑than‑temporarily impaired at September 30, ~~2021.~~2022.

~~Corporate Bonds:~~Small Business Administration (SBA) - guaranteed participation securities: At September 30, ~~2021, corporate bonds~~2022, all of the SBA securities held by the Company ~~are investment grade quality. The~~were issued and guaranteed by U.S. Small Business Administration. Because the decline in fair value is attributable to changes in interest rates, and not credit ~~quality. The~~quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at September 30, ~~2021.~~2022.

Corporate Bonds & Other: At September 30, 2022, corporate bonds held by the Company are investment grade quality. Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at September 30, 2022.

1520

Index

(5) ~~Loans~~Loan Portfolio and Allowance for ~~Loan~~Credit Losses

Upon adoption of CECL, management pooled loans with similar risk characteristics. The portfolio segment is defined as the level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses on loans.

The following table presents ~~the recorded investment in~~ loans by ~~loan class:~~portfolio segment:

September 30, 2021
(dollars in thousands)
New York and
other states*
Florida Total
Commercial:
Commercial real estate $ 147,557 20,512 168,069
Other 36,078 532 36,610
Real estate mortgage - 1 to 4 family:
First mortgages 2,698,870 1,189,086 3,887,956
Home equity loans 49,492 13,837 63,329
Home equity lines of credit 177,240 54,074 231,314
Installment 7,378 2,073 9,451
Total loans, net $ 3,116,615 1,280,114 4,396,729
Less: Allowance for loan losses 47,350
Net loans $ 4,349,379

	December 31, 2020						September 30, 2022
(dollars in thousands)	New York and other states*		Florida		Total		New York and
							other states*		Florida		Total
Commercial:
Commercial real estate	$	148,775		18,666		167,441	$	165,888		31,270		197,158
Other		44,932		119		45,051		19,089		873		19,962
Real estate mortgage - 1 to 4 family:
First mortgages		2,606,781		1,098,915		3,705,696		2,762,616		1,312,097		4,074,713
Home equity loans		59,400		15,071		74,471		45,115		12,537		57,652
Home equity lines of credit		193,654		48,540		242,194		186,146		83,195		269,341
Installment		7,810		1,807		9,617		8,183		2,482		10,665
Total loans, net	$	3,061,352		1,183,118		4,244,470	$	3,187,037		1,442,454		4,629,491
Less: Allowance for loan losses						49,595
Less: Allowance for credit losses												45,517
Net loans					$	4,194,875					$	4,583,974

*Includes New York, New Jersey, Vermont and ~~Massachusetts.~~Massachussetts.

Prior to the adoption of CECL on January 1, 2022, the Company calculated allowance for loan losses using the incurred losses methodology.

	December 31, 2021
(dollars in thousands)	New York and
	other states*		Florida		Total
Commercial:
Commercial real estate	$	147,063		21,653		168,716
Other		30,889		595		31,484
Real estate mortgage - 1 to 4 family:
First mortgages		2,723,734		1,212,568		3,936,302
Home equity loans		48,190		13,695		61,885
Home equity lines of credit		175,134		55,842		230,976
Installment		7,368		2,048		9,416
Total loans, net	$	3,132,378		1,306,401		4,438,779
Less: Allowance for loan losses						44,267
Net loans					$	4,394,512

*Includes New York, New Jersey, Vermont and Massachussetts.

Included in commercial loans above are Paycheck Protection Program (“PPP”) loans totaling $~~20.5~~1.4 million and $~~28.9~~10.0 million as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021, respectively.

Index

At September 30, ~~2021~~2022 and December 31, ~~2020~~2021, the Company had approximately ~~$37.7~~$36.6 million and ~~$24.7~~$37.3 million, respectively, of real estate construction ~~loans, respectively.~~loans. Of the ~~$37.7~~$36.6 million in real estate construction loans at September 30, ~~2021~~2022, approximately $~~21.9~~14.1 million are secured by first mortgages to residential borrowers while approximately ~~$15.8~~$22.5 million were to commercial borrowers for residential construction projects. Of the ~~$24.7~~$37.3 million in real estate construction loans at December 31, ~~2020,~~2021, approximately ~~$10.5~~$17.9 million ~~are~~were secured by first mortgages to residential borrowers while approximately ~~$14.2~~$19.4 million were to commercial borrowers for residential construction projects. The vast majority of construction loans are in the Company’s New York market.

Allowance for credit losses on loans

The level of the ACLL is based on factors that influence management’s current estimate of expected credit losses including past events and current conditions. There were no changes in the Company’s methodology for the allowance for credit losses on loans for the period ended September 30, 2022 compared to the adoption date. Consistent with the adoption date, the Company has determined the Stagflation forecast scenario to be appropriate for the September 30, 2022 ACLL calculation. The Company selected the Stagflation economic forecast for credit losses as management expects that markets will experience a slight decline in economic conditions and a slight increase in the unemployment rate over the next two years.

~~Index~~

TrustCo lends in the geographic territory of its branch locations in New York, Florida, Massachusetts, New Jersey and Vermont. Although the loan portfolio is diversified, a portion of its debtors’ ability to repay depends significantly on the economic conditions prevailing in the respective geographic territory.

* Includes New York, New Jersey, Vermont and Massachusetts.

The Company transfers loans to other real estate owned, at fair value less cost to sell, in the period the Company obtains physical possession of the property (through legal title or through a deed in lieu). As of ~~September 30, 2021~~ ~~and~~ ~~December 31, 2020, other real estate owned included $511~~ ~~thousand and $541~~ ~~thousand of residential foreclosed properties, respectively. In addition, non-accrual residential mortgage loans that are in the process of foreclosure had a recorded investment of $11.9~~ ~~million and $11.6~~ ~~million, respectively, as of~~ ~~September 30, 2021~~ ~~and~~ ~~December 31, 2020.~~

	December 31, 2021					January 1, 2022
(dollars in thousands)	Pre-Adoption Balance		Impact of Adoption			Post CECL Adoption
	Total					Total
Commercial:
Commercial real estate	$	3,121		(1,100	)		2,021
Other		14		114			128
Real estate mortgage - 1 to 4 family:
First mortgages		37,249		1,703			38,952
Home equity loans		583		262			845
Home equity lines of credit		2,857		1,752			4,609
Installment		443		(378	)		65
Total Allowance	$	44,267		2,353			46,620

~~The following tables present~~

Activity in the ~~aging of the recorded investment in past due~~allowance for credit losses on loans by ~~loan class and by region as of~~portfolio segment for the three months ended September 30, ~~2021 and December 31, 2020:~~2022 is summarized as follows:

~~The following table presents the aging of the recorded investment in past due loans by loan class and by region:~~

September 30, 2021

New York and other states*:
(dollars in thousands)
30-59
Days
Past Due

60-89
Days
Past Due

90 +
Days
Past Due

Total
30+ days
Past Due
Current
Total
Loans

Commercial:
Commercial real estate $ 241 0 63 304 147,253 147,557
Other 0 0 40 40 36,038 36,078
Real estate mortgage - 1 to 4 family:
First mortgages 1,802 1,160 10,447 13,409 2,685,461 2,698,870
Home equity loans 0 0 187 187 49,305 49,492
Home equity lines of credit 446 25 1,145 1,616 175,624 177,240
Installment 5 30 0 35 7,343 7,378

Total $ 2,494 1,215 11,882 15,591 3,101,024 3,116,615

Florida:
(dollars in thousands)
30-59
Days
Past Due

60-89
Days
Past Due

90 +
Days
Past Due

Total
30+ days
Past Due
Current
Total
Loans

Commercial:
Commercial real estate $ 0 0 0 0 20,512 20,512
Other 0 0 0 0 532 532
Real estate mortgage - 1 to 4 family:
First mortgages 482 182 1,367 2,031 1,187,055 1,189,086
Home equity loans 45 0 0 45 13,792 13,837
Home equity lines of credit 186 0 0 186 53,888 54,074
Installment 19 0 0 19 2,054 2,073

Total $ 732 182 1,367 2,281 1,277,833 1,280,114

Total:
(dollars in thousands)
30-59
Days
Past Due

60-89
Days
Past Due

90 +
Days
Past Due

Total
30+ days
Past Due
Current
Total
Loans

Commercial:
Commercial real estate $ 241 0 63 304 167,765 168,069
Other 0 0 40 40 36,570 36,610
Real estate mortgage - 1 to 4 family:
First mortgages 2,284 1,342 11,814 15,440 3,872,516 3,887,956
Home equity loans 45 0 187 232 63,097 63,329
Home equity lines of credit 632 25 1,145 1,802 229,512 231,314
Installment 24 30 0 54 9,397 9,451

Total $ 3,226 1,397 13,249 17,872 4,378,857 4,396,729

	For the three months ended September 30, 2022
(dollars in thousands)			Real Estate
			Mortgage-
	Commercial		1 to 4 Family			Installment		Total
Balance at beginning of period	$	2,274		42,880			131		45,285
Loans charged off:
New York and other states*		-		13			34		47
Florida		-		-			-		-
Total loan chargeoffs		-		13			34		47

Recoveries of loans previously charged off:
New York and other states*		-		177			-		177
Florida		-		-			2		2
Total recoveries		-		177			2		179
Net loans (recoveries) charged off		-		(164	)		32		(132	)
(Credit) provision for credit losses		155		(100	)		45		100
Balance at end of period	$	2,429		42,944			144		45,517

* Includes New York, New Jersey, Vermont and Massachusetts.

~~Index~~

December 31, 2020

New York and other states*:
(dollars in thousands)
30-59
Days
Past Due

60-89
Days
Past Due

90 +
Days
Past Due

Total
30+ days
Past Due
Current
Total
Loans

Commercial:
Commercial real estate $ 125 77 279 481 148,294 148,775
Other 0 0 80 80 44,852 44,932
Real estate mortgage - 1 to 4 family:
First mortgages 1,220 982 10,927 13,129 2,593,652 2,606,781
Home equity loans 120 1 48 169 59,231 59,400
Home equity lines of credit 401 344 1,273 2,018 191,636 193,654
Installment 3 0 43 46 7,764 7,810

Total $ 1,869 1,404 12,650 15,923 3,045,429 3,061,352

Florida:
(dollars in thousands)
30-59
Days
Past Due

60-89
Days
Past Due

90 +
Days
Past Due

Total
30+ days
Past Due
Current
Total
Loans

Commercial:
Commercial real estate $ 0 0 0 0 18,666 18,666
Other 0 0 0 0 119 119
Real estate mortgage - 1 to 4 family:
First mortgages 365 517 655 1,537 1,097,378 1,098,915
Home equity loans 0 0 47 47 15,024 15,071
Home equity lines of credit 0 0 0 0 48,540 48,540
Installment 7 10 0 17 1,790 1,807

Total $ 372 527 702 1,601 1,181,517 1,183,118

Total:
(dollars in thousands)
30-59
Days
Past Due

60-89
Days
Past Due

90 +
Days
Past Due

Total
30+ days
Past Due
Current
Total
Loans

Commercial:
Commercial real estate $ 125 77 279 481 166,960 167,441
Other 0 0 80 80 44,971 45,051
Real estate mortgage - 1 to 4 family:
First mortgages 1,585 1,499 11,582 14,666 3,691,030 3,705,696
Home equity loans 120 1 95 216 74,255 74,471
Home equity lines of credit 401 344 1,273 2,018 240,176 242,194
Installment 10 10 43 63 9,554 9,617

Total $ 2,241 1,931 13,352 17,524 4,226,946 4,244,470

* Includes New York, New Jersey, Vermont and Massachusetts.

At ~~September 30, 2021~~ ~~and~~ ~~December 31, 2020, there were~~ no ~~loans that were~~ 90 days past due and still accruing interest. As a result, non-accrual loans include all loans 90 days or more past due as well as certain loans less than 90 days past due that were placed on non-accrual status for reasons other than delinquent status. There are 0 commitments to extend further credit on non-accrual or restructured loans.

~~Index~~

Activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2021 is summarized as follows:

For the three months ended September 30, 2021

(dollars in thousands)

For the three months ended September 30, 2020

For the three months ended September 30, 2021

(dollars in thousands)

Net loans (recoveries) charged off

* Includes New York, New Jersey, Vermont and Massachusetts.

Activity in the allowance for credit losses on loans by portfolio segment for the nine months ended September 30, 2022 is summarized as follows:

For the nine months ended September 30, 2021

Balance as of January 1, 2022 as adjusted for ASU 2016-13

For the nine months ended September 30, 2020

Activity in the allowance for loan losses by portfolio segment for the nine months ended September 30, 2021 is summarized as follows:

For the nine months ended September 30, 2021

* Includes New York, New Jersey, Vermont and Massachusetts.

The Company has identified non-accrual commercial and commercial real estate loans, as well as all loans restructured under a troubled debt restructuring (“TDR”), as impaired loans. A loan is considered impaired when it is probable that the borrower will be unable to repay the loan according to the original contractual terms of the loan agreement or the loan is restructured as a TDR.

The following tables present the balance in the allowance for ~~loan~~credit losses ~~and the recorded investment in~~on loans by portfolio segment and based on impairment ~~method~~evaluation as of September 30, ~~2021 and December 31, 2020:~~2022:

~~A loan for which the terms have been modified, and for which the borrower is experiencing financial difficulties, is considered a TDR and is classified as impaired. TDR’s at~~ ~~September 30, 2021~~ ~~and~~ ~~December 31, 2020~~ are measured at the present value of estimated future cash flows using the loan’s effective rate at inception or the fair value of the underlying collateral if the loan is considered collateral dependent.

~~The following tables present impaired loans by loan class as of September 30, 2021 and December 31, 2020:~~

New York and other states*:

(dollars in thousands)

* Includes New York, New Jersey, Vermont and Massachusetts.

New York and other states*:

(dollars in thousands)

* Includes New York, New Jersey, Vermont and Massachusetts.

~~The~~ ~~Company has not committed to lend additional amounts to customers with outstanding loans that are classified as impaired. Interest income recognized on impaired loans was not material during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020.~~

~~Management evaluates impairment on impaired loans on a quarterly basis. If, during this evaluation, impairment of the loan is identified, a charge off is taken at that time. As a result, as of~~ ~~September 30, 2021~~ ~~and~~ ~~December 31, 2020, based upon management’s evaluation and due~~Prior to the ~~sufficiency~~adoption of ~~charge offs taken,~~ ~~none~~ ofCECL on January 1, 2022, the Company calculated allowance for loan losses using the incurred losses methodology. The balance in the allowance for loan losses ~~has been allocated~~by portfolio segment is summarized as follows:

The Company’s allowance for credit losses on unfunded commitments is recognized as a liability (accrued expenses and other liabilities) with adjustments to ~~a specific impaired loan(s)~~.the reserve recognized in (credit) provision for credit losses in the consolidated income statement.

The ~~following table presents, by class, loans that were modified as TDR’s:~~

Three months ended 9/30/2021

Three months ended 9/30/2020

New York and other states*:
Number of
Contracts

Pre-Modification
Outstanding
Recorded
Investment

Post-Modification
Outstanding
Recorded
Investment

Number of
Contracts

Pre-Modification
Outstanding
Recorded
Investment

Post-Modification
Outstanding
Recorded
Investment

(dollars in thousands)

Commercial:
Commercial real estate 0 $ 0 0 1 $ 126 126
Real estate mortgage - 1 to 4 family:
First mortgages 2 557 557 6 1,533 1,533
Home equity loans 0 0 0 0 0 0
Home equity lines of credit 1 31 31 1 50 50

Total 3 $ 588 588 8 $ 1,709 1,709

Florida:

(dollars in thousands)

Number of
Contracts

Pre-Modification
Outstanding
Recorded
Investment

Post-Modification
Outstanding
Recorded
Investment

Number of
Contracts

Pre-Modification
Outstanding
Recorded
Investment

Post-Modification
Outstanding
Recorded
Investment

Commercial:
Commercial real estate 0 $ 0 0 0 $ 0 0
Real estate mortgage - 1 to 4 family:
First mortgages 0 0 0 0 0 0
Home equity loans 0 0 0 0 0 0
Home equity lines of credit 0 0 0 0 0 0

Total 0 $ 0 0 0 $ 0 0

* Includes New York, New Jersey, Vermont and Massachusetts.

~~Index~~

Nine months ended 9/30/2021

Nine months ended 9/30/2020

New York and other states*:
Number of
Contracts

Pre-Modification
Outstanding
Recorded
Investment

Post-Modification
Outstanding
Recorded
Investment

Number of
Contracts

Pre-Modification
Outstanding
Recorded
Investment

Post-Modification
Outstanding
Recorded
Investment

(dollars in thousands)

Commercial:
Commercial real estate 0 $ 0
0 1 $
126
126
Real estate mortgage - 1 to 4 family:
First mortgages 4 923 923 9 1,982 1,982
Home equity loans 1 2 2 0 0 0
Home equity lines of credit 3 88 88 3 169 169

Total 8 $ 1,013
1,013 13 $
2,277
2,277

Florida:

(dollars in thousands)

Number of
Contracts

Pre-Modification
Outstanding
Recorded
Investment

Post-Modification
Outstanding
Recorded
Investment

Number of
Contracts

Pre-Modification
Outstanding
Recorded
Investment

Post-Modification
Outstanding
Recorded
Investment

Commercial:
Commercial real estate 0 $ 0
0 0 $
0
0
Real estate mortgage - 1 to 4 family:
First mortgages 1 78 78 4 589 589
Home equity loans 0 0 0 0 0 0
Home equity lines of credit 0 0 0 0 0 0

Total 1 $ 78
78 4 $
589
589

* Includes New York, New Jersey, Vermont and Massachusetts.

~~The addition of these TDR’s did not have a significant impact on~~Company’s activity in the allowance for loan losses. In situations where the Company considers a loan modification, management determines whether the borrower is experiencing financial difficulty by performing an evaluation of the probability that the borrower will be in payment defaultcredit losses on ~~any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s underwriting policy.~~unfunded commitments were as follows:

(In thousands)	For the three months ended September 30, 2022
Balance at June 30, 2022	$	3,162
Provision for credit losses		200
Balance at September 30, 2022	$	3,362


(In thousands)	For the nine months ended September 30, 2022
Balance at January 1, 2022	$	18
Impact of Adopting CECL		2,335
Adjusted Balance at January 1, 2022		2,353
Provision for credit losses		1,009
Balance at September 30, 2022	$	3,362

Generally, the modification of the terms of loans was the result of the borrower filing for bankruptcy protection. Chapter 13 bankruptcies generally include the deferral of all past due amounts for a period of generally 60 months in accordance with the bankruptcy court order. In the case of Chapter 7 bankruptcies, as previously noted, even though there is no modification of terms, the borrowers’ debt to the Company was discharged and they did not reaffirm the debt.

Loan Credit Quality

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. In situations involving a borrower filing for Chapter 13 bankruptcy protection, however, a loan is considered to be in payment default once it is 30 days contractually past due, consistent with the treatment by the bankruptcy court.

~~Index~~

~~The following table presents, by class, TDR’s that defaulted during the~~ ~~three and nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020~~ ~~which had been modified within the last~~ ~~twelve~~ ~~months:~~

Three months ended 9/30/2021

Three months ended 9/30/2020

New York and other states*:
Number of
Contracts

Recorded
Investment

Number of
Contracts

Recorded
Investment

(dollars in thousands)

Commercial:
Commercial real estate 0 $ 0 0 $
0
Real estate mortgage - 1 to 4 family:
First mortgages 0 0 3 264
Home equity lines of credit 0 0 1 19

Total 0 $ 0 4 $
283

Florida:
(dollars in thousands)

Number of
Contracts

Recorded
Investment

Number of
Contracts

Recorded
Investment

Commercial:
Commercial real estate 0 $ 0 0 $
0
Real estate mortgage - 1 to 4 family:
First mortgages 0 0 0 0
Home equity loans
0
0
0
0

Home equity lines of credit 0 0 0 0

Total 0 $ 0 0 $
0

* Includes New York, New Jersey, Vermont and Massachusetts.

Nine months ended 9/30/2021

Nine months ended 9/30/2020

New York and other states*:
Number of
Contracts

Recorded
Investment

Number of
Contracts

Recorded
Investment

(dollars in thousands)

Commercial:
Commercial real estate 0 $ 0 0 $ 0
Real estate mortgage - 1 to 4 family:
First mortgages 0 0 4 459
Home equity loans 0 0 0 0
Home equity lines of credit 0 0 1 19

Total 0 $ 0 5 $ 478

Florida:
(dollars in thousands)

Number of
Contracts

Recorded
Investment

Number of
Contracts

Recorded
Investment

Commercial:
Commercial real estate 0 $ 0 0 $ 0
Real estate mortgage - 1 to 4 family: ��
First mortgages 0 0 0 0
Home equity lines of credit 0 0 0 0
- - - -
Total 0 $ 0 0 $ 0

* ~~Includes New York, New Jersey, Vermont and Massachusetts.~~

~~The TDR’s that subsequently defaulted described above did not have a material impact on the allowance for loan losses.~~

~~Index~~

~~Loan modifications and payment deferrals as a result of COVID-19 that meet the criteria established under Section 4013~~ of the CARES Act or under applicable interagency guidance of the federal banking regulators are excluded from evaluation of TDR classification and will continue to be reported as current during the payment deferral period. The Company’s policy is to continue to accrue interest during the deferral period. Loans not meeting the CARES ACT or regulatory guidance are evaluated for TDR and non-accrual treatment under the Company’s existing policies and procedures. Loan modifications and payment deferrals made pursuant to COVID 19 ~~as of~~ ~~September 30, 2021~~ ~~were not material.~~

The Company categorizes ~~non-homogenous~~commercial loans into risk categories based on relevant information about the ability of borrowers to service their debt, such ~~as:~~as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. On at least an annual basis, the Company’s loan grading process analyzes non-homogeneous loans, such as commercial loans and commercial real estate loans, individually by grading the loans based on credit risk. The ~~loan grades assigned to all loan types are tested by the~~ Company’s internal loan review department in accordance with the Company’s internal loan review ~~policy.~~policy tests the loan grades assigned to all loan types.

Index

The Company uses the following definitions for classified loans:

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as such have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those loans classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. ~~All doubtful loans are considered impaired.~~

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be “pass” rated loans.

For homogeneous loan pools, such as residential mortgages, home equity lines of credit, and installment loans, the Company uses payment status to identify the credit risk in these loan portfolios. Payment status is reviewed on a daily basis by the Bank’s collection area and on a monthly basis with respect to determining the adequacy of the allowance for credit losses on loans. The payment status of these homogeneous pools as of September 30, 2022 and December 31, 2021 is also included in the aging of the past due loans table. Nonperforming loans shown in the table below were loans on non-accrual status and loans over 90 days past due and accruing.

2826

Index

As of September 30, ~~2021 and December 31, 2020,~~2022, and based on the most recent analysis performed, the risk category of loans by class of loans, isand gross chargeoffs year to date for each loan type by origination year was as follows:

September 30, 2021

New York and other states*:
(dollars in thousands) Pass Classified Total

Commercial:
Commercial real estate $ 145,400 2,157 147,557
Other 35,913 165 36,078
$ 181,313 2,322 183,635

Loan Credit Quality

Florida:
(dollars in thousands) Pass Classified Total

Commercial:
Commercial real estate $ 19,957 555 20,512
Other 532 0 532
$ 20,489 555 21,044

(in thousands)	September 30, 2022
	Term Loans Amortized Cost Basis by Origination Year
	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Revolving Loan Converted to Term		Total
Commercial :
Risk rating
Pass	$	58,331		30,325		18,803		23,713		17,058		38,102		9,089		-	$	195,421
Special Mention		-		-		65		-		247		-		-		-		312
Substandard		-		-		115		-		132		1,178		-		-		1,425
Total Commercial Loans	$	58,331		30,325		18,983		23,713		17,437		39,280		9,089		-	$	197,158
Commercial Loans:
Current-period Gross writeoffs	$	-		-		-		-		-		40		-		-	$	40
	$	-		-		-		-		-		40		-		-	$	40
Commercial Other:
Risk rating
Pass	$	2,302		3,313		2,757		706		752		2,472		7,182		-	$	19,484
Special mention		-		124		-		-		-		-		40		-		164
Substandard		-		216		-		-		-		-		98		-		314
Total Commercial Real Estate Loans	$	2,302		3,653		2,757		706		752		2,472		7,320		-	$	19,962

Other Commercial Loans:
Current-period Gross writeoffs	$	-		-		-		-		-		-		-		-		-
	$	-		-		-		-		-		-		-		-	$	-

Residential First Mortgage:
Risk rating
Performing	$	417,902		950,363		799,953		374,430		262,084		1,252,690		1,479		-	$	4,058,901
Nonperforming		-		700		83		846		773		13,410		-		-		15,812
Total First Mortgage:	$	417,902		951,063		800,036		375,276		262,857		1,266,100		1,479		-	$	4,074,713

Residential First Mortgage Loans:
Current-period Gross writeoffs	$	-		-		-		-		-		5		-		-	$	5
	$	-		-		-		-		-		5		-		-	$	5

Home Equity Lines:
Risk rating
Performing	$	5,222		9,748		6,535		7,782		5,468		22,729		-		-	$	57,484
Nonperforming		-		-		-		-		-		168		-		-		168
Total Home Equity Lines:	$	5,222		9,748		6,535		7,782		5,468		22,897		-		-	$	57,652

Home Equity Loans:
Current-period Gross writeoffs	$	-		-		-		-		-		-		-		-	$	-
	$	-		-		-		-		-		-		-		-	$	-
Home Equity Lines of Credit:
Risk rating
Performing	$	698		859		335		56		101		18,826		246,047		-	$	266,922
Nonperforming		-		7		-		-		-		2,207		205		-		2,419
Total Home Equity Credit Lines:	$	698		866		335		56		101		21,033		246,252		-	$	269,341

Home Equity Lines of Credit:
Current-period Gross writeoffs	$	-		-		-		-		-		20		-		-		20
	$	-		-		-		-		-		20		-		-	$	20
Installments:
Risk rating
Performing	$	4,068		2,758		943		918		469		293		1,122		-	$	10,571
Nonperforming		-		25		-		67		-		-		2		-		94
Total Installments	$	4,068		2,783		943		985		469		293		1,124		-	$	10,665

Installments Loans:
Current-period Gross writeoffs	$	-		36		6		6		2		3		-		-		53
	$	-		36		6		6		2		3		-		-	$	53

Index

The following tables present the aging of the amortized cost in past due loans by loan class and by region as of September 30,2022:

Total:
							September 30, 2022
New York and other states*:
							30-59		60-89		90 +		Total
							Days		Days		Days		30+ days				Total
(dollars in thousands)	Pass		Classified		Total		Past Due		Past Due		Past Due		Past Due		Current		Loans

Commercial:
Commercial real estate	$	165,357		2,712		168,069	$	39		-		123		162		165,726		165,888
Other		36,445		165		36,610		-		-		6		6		19,083		19,089
Real estate mortgage - 1 to 4 family:
First mortgages								1,994		2,469		8,128		12,591		2,750,025		2,762,616
Home equity loans								46		66		55		167		44,948		45,115
Home equity lines of credit								359		150		730		1,239		184,907		186,146
Installment								3		25		16		44		8,139		8,183
	$	201,802		2,877		204,679
Total							$	2,441		2,710		9,058		14,209		3,172,828		3,187,037

Florida:
	30-59		60-89		90 +		Total
	Days		Days		Days		30+ days				Total
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Loans

Commercial:
Commercial real estate	$	-		-		-		-		31,270		31,270
Other		124		-		-		124		749		873
Real estate mortgage - 1 to 4 family:
First mortgages		81		245		1,608		1,934		1,310,163		1,312,097
Home equity loans		7		-		-		7		12,530		12,537
Home equity lines of credit		31		-		-		31		83,164		83,195
Installment		-		-		62		62		2,420		2,482

Total	$	243		245		1,670		2,158		1,440,296		1,442,454

Total:
	30-59		60-89		90 +		Total
	Days		Days		Days		30+ days				Total
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Loans

Commercial:
Commercial real estate	$	39		-		123		162		196,996		197,158
Other		124		-		6		130		19,832		19,962
Real estate mortgage - 1 to 4 family:
First mortgages		2,075		2,714		9,736		14,525		4,060,188		4,074,713
Home equity loans		53		66		55		174		57,478		57,652
Home equity lines of credit		390		150		730		1,270		268,071		269,341
Installment		3		25		78		106		10,559		10,665

Total	$	2,684		2,955		10,728		16,367		4,613,124		4,629,491

* Includes New York, New Jersey, Vermont and Massachusetts.

2928

Index

The following tables present the aging of the recorded investment in past due loans by loan class and by region as of December 31, 2021:

December 31, 2020

New York and other states:
(dollars in thousands) Pass Classified Total

Commercial:
Commercial real estate $ 145,741 3,034 148,775
Other 44,522 410 44,932
$ 190,263 3,444 193,707

Florida:
							December 31, 2021
New York and other states*:
							30-59		60-89		90 +		Total
							Days		Days		Days		30+ days				Total
(dollars in thousands)	Pass		Classified		Total		Past Due		Past Due		Past Due		Past Due		Current		Loans

Commercial:
Commercial real estate	$	18,092		574		18,666	$	-		233		45		278		146,785		147,063
Other		119		0		119		-		-		-		-		30,889		30,889
Real estate mortgage - 1 to 4 family:
First mortgages								1,303		239		9,867		11,409		2,712,325		2,723,734
Home equity loans								136		-		224		360		47,830		48,190
Home equity lines of credit								355		458		911		1,724		173,410		175,134
Installment								27		5		4		36		7,332		7,368
	$	18,211		574		18,785
Total							$	1,821		935		11,051		13,807		3,118,571		3,132,378

Total:
Florida:
							30-59		60-89		90 +		Total
							Days		Days		Days		30+ days				Total
(dollars in thousands)	Pass		Classified		Total		Past Due		Past Due		Past Due		Past Due		Current		Loans

Commercial:
Commercial real estate	$	163,833		3,608		167,441	$	-		-		-		-		21,653		21,653
Other		44,641		410		45,051		-		-		-		-		595		595
Real estate mortgage - 1 to 4 family:
First mortgages								869		180		1,146		2,195		1,210,373		1,212,568
Home equity loans								-		45		-		45		13,650		13,695
Home equity lines of credit								-		89		-		89		55,753		55,842
Installment								18		-		5		23		2,025		2,048
	$	208,474		4,018		212,492
Total							$	887		314		1,151		2,352		1,304,049		1,306,401

Total:
	30-59		60-89		90 +		Total
	Days		Days		Days		30+ days				Total
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Loans

Commercial:
Commercial real estate	$	-		233		45		278		168,438		168,716
Other		-		-		-		-		31,484		31,484
Real estate mortgage - 1 to 4 family:
First mortgages		2,172		419		11,013		13,604		3,922,698		3,936,302
Home equity loans		136		45		224		405		61,480		61,885
Home equity lines of credit		355		547		911		1,813		229,163		230,976
Installment		45		5		9		59		9,357		9,416

Total	$	2,708		1,249		12,202		16,159		4,422,620		4,438,779

* Includes New York, New Jersey, Vermont and Massachusetts.

At September 30, 2022 and December 31, 2021, there were no loans that were 90 days past due and still accruing interest. As a result, non-accrual loans include all loans 90 days or more past due as well as certain loans less than 90 days past due that were placed on non-accrual status for reasons other than delinquent status. There are no commitments to extend further credit on non-accrual or restructured loans.

~~Included in classified~~29

Index

The Company transfers loans to other real estate owned, at fair value less cost to sell, in the ~~above tables~~period the Company obtains physical possession of the property (through legal title or through a deed in lieu). Other real estate owned is included in Other assets on the Balance Sheet. As of September 30,2022 other real estate owned included $682 thousand of residential foreclosed properties. In addition, non-accrual residential mortgage loans that are ~~impaired loans~~in the process of ~~$297 thousand and $796 thousand at~~foreclosure had an amortized cost of $9.6 million as of September 30, ~~2021~~ ~~and~~ 2022 . As of December 31, ~~2020, respectively.~~2021, other real estate owned included $362 thousand of residential foreclosed properties. In addition, non-accrual residential mortgage loans that were in the process of foreclosure had a recorded investment of $9.7 million as of December 31, 2021.

Loans individually evaluated for impairment are non-accrual loans delinquent greater than 180 days, non-accrual commercial loans, as well as loans classified as troubled debt restructurings. As of September 30, 2022 , there was no allowance for credit losses based on loans individually evaluated for impairment. Residential and installment non-accrual loans which are not TDRs or greater than 180 days delinquent are collectively evaluated to determine the allowance for credit loss.

The following table presents the amortized cost basis in non-accrual loans by portfolio segment:

	September 30, 2022
(dollars in thousands)	New York and
	other states*		Florida		Total
Loans in non-accrual status:
Commercial:
Commercial real estate	$	168		-		168
Other		11		-		11
Real estate mortgage - 1 to 4 family:
First mortgages		13,869		1,943		15,812
Home equity loans		126		42		168
Home equity lines of credit		2,301		118		2,419
Installment		29		65		94
Total non-accrual loans		16,504		2,168		18,672
Restructured real estate mortgages - 1 to 4 family		12		-		12
Total nonperforming loans	$	16,516	$	2,168	$	18,684

For homogeneous loan pools, such as residential mortgages, home equity lines of credit, and installment loans, the Company uses payment status to identify the credit risk in these loan portfolios. Payment status is reviewed on a daily basis by the ~~Company’s~~Bank’s collection area and on a monthly basis with respect to determining the adequacy of the allowance for loan losses. The ~~payment status of these homogeneous pools as of~~ ~~September 30, 2021~~ ~~and~~ ~~December 31, 2020~~ ~~is included in the aging of the recorded investment of the past due loans table. In addition, the~~ total nonperforming portion of these homogeneous loan pools as of ~~September 30, 2021~~ ~~and~~ December 31, ~~2020~~2021 is presented in the non-accrual loans table below.

Index

	December 31, 2021
(dollars in thousands)	New York and
	other states*		Florida		Total
Loans in non-accrual status:
Commercial:
Commercial real estate	$	67		-		67
Other		45		-		45
Real estate mortgage - 1 to 4 family:
First mortgages		13,990		1,797		15,787
Home equity loans		247		45		292
Home equity lines of credit		2,337		174		2,511
Installment		23		14		37
Total non-accrual loans		16,709		2,030		18,739
Restructured real estate mortgages - 1 to 4 family		17		-		17
Total nonperforming loans	$	16,726		2,030		18,756

* Includes New York, New Jersey, Vermont and Massachusetts.

The following table presents the amortized cost basis of loans on non-accrual status and loans past due over 89 days still accruing:

	September 30, 2022
(dollars in thousands)	Non-accrual With		Non-accrual With		Loans Past Due
	No Allowance for		Allowance for		Over 89 Days
	Credit Loss		Credit Loss		Still Accruing
Commercial:
Commercial real estate	$	168		-		-
Other		11		-		-
Real estate mortgage - 1 to 4 family:
First mortgages		14,640		1,171		-
Home equity loans		168		-		-
Home equity lines of credit		2,133		287		-
Installment		16		78		-
Total loans, net	$	17,136		1,536		-

The non-accrual balance of $1.5 million disclosed above was collectively evaluated and the associated allowance for credit losses on loans was not material as of September 30, 2022 .

A financial asset is considered collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. Expected Credit losses for the collateral dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. The following table presents the amortized cost basis of individually analyzed collateral dependent loans by portfolio segment as of September 30, 2022:

Index

	Type of Collateral
(dollars in thousands)
	Real Estate		Investment Securities/Cash		Other
Commercial:
Commercial real estate	$	283		-		-
Other		11		-		-
Real estate mortgage - 1 to 4 family:
First mortgages		22,720		-		-
Home equity loans		286		-		-
Home equity lines of credit		3,151		-		-
Installment		16		-		-
Total Allowance	$	26,467		-		-

Troubled Debt Restructuring Loans

The Company has not committed to lend additional amounts to customers with outstanding loans that are classified as TDRs. Interest income recognized on loans that are individually evaluated was not material during the three or nine months ended September 30, 2022 and 2021.

A loan for which the terms have been modified, and for which a borrower is experiencing financial difficulties, is considered a TDR and is classified as individually evaluated. TDRs at September 30, 2022 are measured at the amortized cost using the loan’s effective rate at inception or fair value of the underlying collateral if the loan is considered collateral dependent.

As of September 30, 2022 loans individually evaluated included approximately $9.3 million of loans in accruing status that were identified as TDRs.

The following table presents, by class, loans that were modified as TDRs:

	Three months ended September 30, 2022						Three months ended September 30, 2021

New York and other states*:			Pre-Modification		Post-Modification				Pre-Modification		Post-Modification
			Outstanding		Outstanding				Outstanding		Outstanding
	Number of		Recorded		Recorded		Number of		Recorded		Recorded
(dollars in thousands)	Contracts		Investment		Investment		Contracts		Investment		Investment

Commercial:
Commercial real estate		-	$	-		-		-	$	-		-
Real estate mortgage - 1 to 4 family:
First mortgages		3		282		282		2		557		557
Home equity loans		-		-		-		-		-		-
Home equity lines of credit		-		-		-		1		31		31

Total		3	$	282		282		3	$	588		588

Florida:

Pre-Modification

Post-Modification

Pre-Modification

Post-Modification

��

Outstanding

Number of

Recorded

Number of

Recorded

(dollars in thousands)

Contracts

Investment

Contracts

Investment

Commercial:

Commercial real estate

Real estate mortgage - 1 to 4 family:

First mortgages

Home equity loans

Home equity lines of credit

Total

* Includes New York, New Jersey, Vermont and Massachusetts.

Index

	Nine months ended September 30, 2022						Nine months ended September 30, 2021
New York and other states*:			Pre-Modification		Post-Modification				Pre-Modification		Post-Modification
			Outstanding		Outstanding				Outstanding		Outstanding
	Number of		Recorded		Recorded		Number of		Recorded		Recorded
(dollars in thousands)	Contracts		Investment		Investment		Contracts		Investment		Investment

Commercial:
Commercial real estate		-	$	-		-		-	$	-		-
Real estate mortgage - 1 to 4 family:
First mortgages		7		719		719		4		923		923
Home equity loans		-		-		-		1		2		2
Home equity lines of credit		-		-		-		3		88		88

Total		7	$	719		719		8	$	1,013		1,013

Florida:			Pre-Modification		Post-Modification				Pre-Modification		Post-Modification
			Outstanding		Outstanding				Outstanding		Outstanding
	Number of		Recorded		Recorded		Number of		Recorded		Recorded
(dollars in thousands)	Contracts		Investment		Investment		Contracts		Investment		Investment

Commercial:
Commercial real estate		-	$	-		-		-	$	-		-
Real estate mortgage - 1 to 4 family:
First mortgages		-		-		-		1		78		78
Home equity loans		-		-		-		-		-		-
Home equity lines of credit		-		-		-		-		-		-

Total		-	$	-		-		1	$	78		78

The addition of these TDRs did not have a significant impact on the allowance for credit losses on loans. The nature of the modifications that resulted in them being classified as a TDR was the borrower filing for bankruptcy protection.

In situations where the Bank considers a loan modification, management determines whether the borrower is experiencing financial difficulty by performing an evaluation of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s underwriting policy. In situations involving a borrower filing for Chapter 13 bankruptcy protection, a loan is considered to be in payment default once it is 30 days contractually past due, consistent with the treatment by the bankruptcy court.

Prior to the adoption of CECL on January 1, 2022, the Company calculated allowance for loan losses using the incurred losses methodology. The following tables are the disclosures related to loans in prior periods.

Index

The following table presents impaired loans by loan class as of December 31, 2021:

	December 31, 2021

New York and other states*:			Unpaid				YTD Avg
	Recorded		Principal		Related		Recorded
(dollars in thousands)	Investment		Balance		Allowance		Investment

Commercial:
Commercial real estate	$	187		279		-		1,154
Other		45		45		-		107
Real estate mortgage - 1 to 4 family:
First mortgages		13,687		13,875		-		14,072
Home equity loans		161		161		-		235
Home equity lines of credit		1,852		1,939		-		2,256

Total	$	15,932		16,299		-		17,824

Florida:			Unpaid				YTD Avg
	Recorded		Principal		Related		Recorded
(dollars in thousands)	Investment		Balance		Allowance		Investment

Commercial:
Commercial real estate	$	-		-		-		105
Other		-		-		-		-
Real estate mortgage - 1 to 4 family:
First mortgages		2,368		2,368		-		2,562
Home equity loans		-		-		-		16
Home equity lines of credit		204		204		-		246

Total	$	2,572		2,572		-		2,929

Total:			Unpaid				YTD Avg
	Recorded		Principal		Related		Recorded
(dollars in thousands)	Investment		Balance		Allowance		Investment

Commercial:
Commercial real estate	$	187		279		-		1,259
Other		45		45		-		107
Real estate mortgage - 1 to 4 family:
First mortgages		16,055		16,243		-		16,634
Home equity loans		161		161		-		251
Home equity lines of credit		2,056		2,143		-		2,502

Total	$	18,504		18,871		-		20,753

* Includes New York, New Jersey, Vermont and Massachusetts.

Index

As of December 31, 2021 the risk category of loans by class of loans is as follows:

	December 31, 2021
New York and other states:
(dollars in thousands)	Pass		Classified		Total

Commercial:
Commercial real estate	$	145,500		1,563		147,063
Other		30,726		163		30,889
	$	176,226		1,726		177,952

Florida:
(dollars in thousands)	Pass		Classified		Total
Commercial:
Commercial real estate	$	21,113		540		21,653
Other		595		-		595
	$	21,708		540		22,248

Total:
(dollars in thousands)	Pass		Classified		Total
Commercial:
Commercial real estate	$	166,613		2,103		168,716
Other		31,321		163		31,484
	$	197,934		2,266		200,200

* Includes New York, New Jersey and Massachusetts.

Included in classified loans in the above tables are impaired loans of $226 thousand at December 31, 2021.

(6) Fair Value of Financial Instruments

FASB Topic 820,, Fair Value Measurements (“(“ASC ~~820~~820””) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the value that market participants would use in pricing an asset or liability.

Index

The Company used the following methods and significant assumptions to estimate the fair value of assets and liabilities:

Securities Available for Sale: The fair value of securities available for sale is determined utilizing an independent pricing service for identical assets or significantly similar securities. The pricing service uses a variety of techniques to arrive at fair value including market maker bids, quotes and pricing models. Inputs to the pricing models include recent trades, benchmark interest rates, spreads and actual and projected cash flows. This results in a Level 1 or Level 2 classification of the inputs for determining fair value. Interest and dividend income is recorded on the accrual method and is included in the Consolidated Statements of Income in the respective investment class under total interest and dividend income. The Company does not have any securities that would be designated as Level 3.

Other Real Estate Owned: Assets acquired through loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process to adjust for differences between the comparable sales and income data available. This results in a Level 3 classification of the inputs for determining fair value.

~~Impaired Loans~~Individually evaluated loans: AtPeriodically the ~~time a loan is considered impaired, it is valued at~~Company records non-recurring adjustments to the ~~lower~~carrying value of ~~cost or fair value. Impaired~~ loans ~~carried at~~based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Non-recurring adjustments can also include certain adjustments for collateral-dependent loans to adjust balances to fair value and generally have had a ~~charge off~~chargeoff through the allowance for ~~loan~~Credit losses. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process to adjust for differences between the comparable sales and income data available. Such adjustments may be significant and typically result in a Level 3 classification of the inputs for determining fair value. When obtained, non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. ~~Impaired~~These loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

~~Index~~

Indications of value for both collateral-dependent ~~impaired~~ loans and other real estate owned are obtained from third party providers or the Company’s internal Appraisal Department. All indications of value are reviewed for reasonableness by a member of the Appraisal Department for the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value via comparison with independent data sources such as recent market data or industry-wide statistics.

There were no transfers between Level 1 and Level 2 during the three and nine months ended September 30, 2022 and 2021.

Index

Assets and liabilities measured at fair value under ASC 820 on a recurring basis are summarized below:

~~There were~~ 0 ~~transfers between Level~~ 1 ~~and Level~~ 2 ~~during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020~~.

	Fair Value Measurements at
	September 30, 2022 Using:
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)

U.S. government sponsored enterprises	$	102,779	$	-	$	102,779	$	-
State and political subdivisions		41		-		41		-
Mortgage backed securities and collateralized mortgage obligations - residential		261,242		-		261,242		-
Corporate bonds		81,002		-		81,002		-
Small Business Administration- guaranteed participation securities		22,498		-		22,498		-
Other securities		657		-		657		-

Total securities available for sale	$	468,219	$	-	$	468,219	$	-

Fair Value Measurements at

September 30, 2021 Using:

(dollars in thousands)
Carrying
Value

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

U.S. government sponsored enterprises $ 59,749 $ 0 $ 59,749 $ 0
State and political subdivisions 48 0 48 0
Mortgage backed securities and collateralized mortgage obligations - residential 293,585 0 293,585 0
Corporate bonds 45,915 0 �� 45,915 0
Small Business Administration- guaranteed participation securities 34,569 0 34,569 0
Other securities 686 0 686 0

Total securities available for sale $ 434,552 $ 0 $ 434,552 $ 0

									Fair Value Measurements at
									December 31, 2021 Using:
													Significant
											Quoted Prices in		Other		Significant
	Fair Value Measurements at										Active Markets for		Observable		Unobservable
	December 31, 2020 Using:								Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Value		(Level 1)		(Level 2)		(Level 3)

Securities available for sale:
U.S. government sponsored enterprises	$	19,968	$	0	$	19,968	$	0	$	59,179	$	-	$	59,179	$	-
State and political subdivisions		103		0		103		0		41		-		41		-
Mortgage backed securities and collateralized mortgage obligations - residential		316,158		0		316,158		0		270,798		-		270,798		-
Corporate bonds		59,939		0		59,939		0		45,337		-		45,337		-
Small Business Administration- guaranteed participation securities		42,217		0		42,217		0		31,674		-		31,674		-
Other securities		686		0		686		0		684		-		684		-

Total securities available for sale	$	439,071	$	0	$	439,071	$	0	$	407,713	$	-	$	407,713	$	-

3237

Index

Assets measured at fair value on a non-recurring basis are summarized below:

Fair Value Measurements at

September 30, 2022 Using:

Significant

Quoted Prices in

Other

Significant

Fair Value Measurements at

Active Markets for

Observable

Unobservable

September 30, 2021 Using:

Carrying

Identical Assets

Inputs

(dollars in thousands)

Carrying

Value

Quoted Prices in

Active Markets for

Identical Assets

(Level 1)

Significant

Other

Observable

Inputs

(Level 2)

Significant

Unobservable

Inputs

(Level 3)

Valuation technique

Unobservable inputs

Range (Weighted Average)

Value

(Level 1)

(Level 2)

(Level 3)

Valuation technique

Unobservable inputs

Range (Weighted Average)

Other real estate owned

511

Sales comparison approach

Adjustments for differences between comparable sales

3% - 21% (10

682

Sales comparison approach

Adjustments for differences between comparable sales

3% - 58% (31

Impaired loans:

Real estate mortgage -1 to 4 family

Sales comparison

Adjustments for differences between comparable sales

N/A

Loans individually evaluated

Sales comparison

Adjustments for differences between comparable sales

N/A

														Fair Value Measurements at
														December 31, 2021 Using:
																		Significant
																Quoted Prices in		Other		Significant
	Fair Value Measurements at															Active Markets for		Observable		Unobservable
	December 31, 2020 Using:													Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation technique	Unobservable inputs	Range (Weighted Average)			Value		(Level 1)		(Level 2)		(Level 3)		Valuation technique	Unobservable inputs	Range (Weighted Average)

Other real estate owned	$	541	$	0	$	0	$	541	Sales comparison approach	Adjustments for differences between comparable sales		1% - 7% (2	%)	$	362	$	-	$	-	$	362	Sales comparison approach	Adjustments for differences between comparable sales		1% - 14% (6	%)

Impaired loans:
Real estate mortgage -1 to 4 family		211		0		0		211	Sales comparison	Adjustments for differences between comparable sales		11% - 12% (12	%)		-		-		-		-	Sales comparison	Adjustments for differences between comparable sales		N/A

Other real estate owned, that is carried at fair value less costs to sell was approximately $~~511~~682 thousand at September 30, ~~2021~~2022 and consisted of residential real estate properties. There were 0no commercial real estate properties. There were no valuation charges ~~of $-0- and $121 thousand~~ included in earnings for the ~~three and~~ nine months ended September 30, ~~2021, respectively.~~2022.

Of the total ~~impaired~~individually evaluated loans of $~~19.8~~26.5 million at September 30, ~~2021,~~2022, there are 0no ~~impairments~~loans that are collateral dependent and are carried at fair value measured on a non-recurring basis. Due to the sufficiency of charge offs taken on these loans and the adequacy of the underlying collateral, there were 0no specific valuation allowances for these loans at September 30, ~~2021.~~2022. There were 0no gross charge offs related to residential ~~impaired~~individually evaluated loans included in the table above for the three and nine months ended September 30, ~~2021.~~2022.

Other real estate owned, that is carried at fair value less costs to sell, was approximately ~~$541~~$362 thousand at December 31, ~~2020~~2021 and consisted only of residential real estate properties. A valuation charge of ~~$120~~$121 thousand is included in earnings for the year ended December 31, ~~2020.~~2021.

Of the total impaired loans of ~~$21.6~~$18.5 million at December 31, ~~2020, $211 thousand~~2021, there were no impairments that are collateral dependent and are carried at fair value measured on a non-recurring basis. Due to the sufficiency of ~~charge offs~~charge-offs taken on these loans and the adequacy of the underlying collateral, there were 0no specific valuation allowances for these loans at December 31, ~~2020. Gross charge offs~~2021. There were no gross charge-offs related to residential impaired loans included in the table ~~above amounted to $10 thousand at December 31, 2020.~~above.

3338

Index

In accordance with FASB Topic 825, Financial Instruments (“ (“ASC 825”), the carrying amounts and estimated fair values of financial instruments, at September 30, ~~2021~~2022 and December 31, ~~2020~~2021 are as follows:

(dollars in thousands)			Fair Value Measurements at										Fair Value Measurements at
	Carrying		September 30, 2021 Using:								Carrying		September 30, 2022 Using:
	Value		Level 1		Level 2		Level 3		Total		Value		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	1,193,339		1,193,339		0		0		1,193,339	$	841,264		841,264		-		-		841,264
Securities available for sale		434,552		0		434,552		0		434,552		468,219		-		468,219		-		468,219
Held to maturity securities		10,701		0		11,646		0		11,646		8,091		-		7,938		-		7,938
Federal Home Loan Bank stock		5,604		N/A		N/A		N/A		N/A		5,797		N/A		N/A		N/A		N/A
Net loans		4,349,379		0		0		4,419,921		4,419,921		4,583,974		-		-		4,304,560		4,304,560
Accrued interest receivable		9,358		37		1,042		8,279		9,358		10,936		616		1,648		8,672		10,936
Financial liabilities:
Demand deposits		790,663		790,663		0		0		790,663		859,829		859,829		-		-		859,829
Interest bearing deposits		4,450,355		3,325,774		1,123,934		0		4,449,708		4,422,025		3,467,673		925,461		-		4,393,134
Short-term borrowings		230,770		0		230,770		0		230,770		124,932		-		124,932		-		124,932
Accrued interest payable		225		30		195		0		225		162		38		124		-		162

(dollars in thousands)			Fair Value Measurements at										Fair Value Measurements at
	Carrying		December 31, 2020 Using:								Carrying		December 31, 2021 Using:
	Value		Level 1		Level 2		Level 3		Total		Value		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	1,107,099		1,107,099		0		0		1,107,099	$	1,219,470		1,219,470		-		-		1,219,470
Securities available for sale		439,071		0		439,071		0		439,071		407,713		-		407,713		-		407,713
Held to maturity securities		13,824		0		14,988		0		14,988		9,923		-		10,695		-		10,695
Federal Reserve Bank and Federal
Home Loan Bank stock		5,506		N/A		N/A		N/A		N/A		5,604		N/A		N/A		N/A		N/A
Net loans		4,194,875		0		0		4,287,585		4,287,585		4,394,512		-		-		4,451,031		4,451,031
Accrued interest receivable		10,031		39		1,458		8,534		10,031		9,099		10		1,235		7,854		9,099
Financial liabilities:
Demand deposits		652,756		652,756		0		0		652,756		794,878		794,878		-		-		794,878
Interest bearing deposits		4,384,437		3,088,064		1,298,375		0		4,386,439		4,473,251		3,477,937		993,676		-		4,471,613
Short-term borrowings		214,755		0		214,755		0		214,755		244,686		-		244,686		-		244,686
Accrued interest payable		474		68		406		0		474		163		34		129		-		163

3439

Index

(7) Accumulated Other Comprehensive Income (Loss)

The following is a summary of the accumulated other comprehensive (loss) income balances, net of tax:

															Three months ended September 30, 2022
																					Amount
																		Other			reclassified			Other
																		Comprehensive			from Accumulated			Comprehensive loss-
	Three months ended 9/30/2021														Balance at			loss-Before			Other Comprehensive			Three months ended			Balance at
(dollars in thousands)	Balance at 7/1/2021			Other Comprehensive Income (loss)- Before Reclassifications			Amount reclassified from Accumulated Other Comprehensive Income		Other Comprehensive Income (loss)- Three months ended 9/30/2021			Balance at 9/30/2021			7/1/2022			Reclassifications			Income			9/30/2022			9/30/2022

Net unrealized holding loss on securities available for sale, net of tax	$	3,347			(566	)		0		(566	)		2,781		$	(21,106	)		(15,522	)		-			(15,522	)		(36,628	)
Net change in overfunded position in pension and postretirement plans arising during the year, net of tax		6,084			0			0		0			6,084			13,706			-			-			-			13,706
Net change in net actuarial loss and prior service credit on pension and postretirement benefit plans, net of tax		(1,591	)		0			30		30			(1,561	)
Net change in net actuarial gain and prior service credit on pension and postretirement benefit plans, net of tax																(2,022	)		-			(265	)		(265	)		(2,287	)

Accumulated other comprehensive income (loss), net of tax	$	7,840			(566	)		30		(536	)		7,304
Accumulated other comprehensive loss, net of tax															$	(9,422	)		(15,522	)		(265	)		(15,787	)		(25,209	)

Three months ended 9/30/2020

(dollars in thousands)
Balance at
7/1/2020

Other
Comprehensive
Income (loss)-
Before
Reclassifications

Amount
reclassified
from Accumulated
Other Comprehensive
Income

Other
Comprehensive
Income (loss)-
Three months ended
9/30/2020

Balance at
9/30/2020

Net unrealized holding (gain) loss on securities available for sale, net of tax $ 8,061 (198 ) 0 (198 ) 7,863
Net change in overfunded position in pension and postretirement plans arising during the year, net of tax 4,840 0 0 0 4,840
Net change in net actuarial (gain) loss and prior service cost on pension and postretirement benefit plans, net of tax (965 ) 0 (201 ) (201 ) (1,166 )

Accumulated other comprehensive income (loss), net of tax $ 11,936 (198 ) (201 ) (399 ) 11,537

	Three months ended September 30, 2021
							Amount
				Other			reclassified		Other
				Comprehensive			from Accumulated		Comprehensive loss-
	Balance at			loss-Before			Other Comprehensive		Three months ended			Balance at
(dollars in thousands)	7/1/2021			Reclassifications			Income		9/30/2021			9/30/2021

Net unrealized holding gain on securities available for sale, net of tax	$	3,347			(566	)		-		(566	)		2,781
Net change in overfunded position in pension and postretirement plans arising during the year, net of tax		6,084			-			-		-			6,084
Net change in net actuarial gain and prior service cost on pension and postretirement benefit plans, net of tax		(1,591	)		-			30		30			(1,561	)

Accumulated other comprehensive income, net of tax	$	7,840			(566	)		30		(536	)		7,304

																Nine months ended September 30, 2022
																						Amount
																			Other			reclassified			Other
																			Comprehensive			from Accumulated			Comprehensive loss-
	Nine months ended 9/30/2021															Balance at			loss-Before			Other Comprehensive			Nine months ended			Balance at
(dollars in thousands)	Balance at 1/1/2021			Other Comprehensive Income (loss)- Before Reclassifications			Amount reclassified from Accumulated Other Comprehensive Income			Other Comprehensive Income (loss)- Three months ended 9/30/2021			Balance at 9/30/2021			1/1/2022			Reclassifications			Income			9/30/2022			9/30/2022

Net unrealized holding loss on securities available for sale, net of tax	$	7,186			(4,405	)		0			(4,405	)		2,781		$	(26	)		(36,602	)		-			(36,602	)		(36,628	)
Net change in overfunded position in pension and postretirement plans arising during the year, net of tax		6,084			0			0			0			6,084			13,706			-			-			-			13,706
Net change in net actuarial loss and prior service credit on pension and postretirement benefit plans, net of tax		(1,334	)		0			(227	)		(227	)		(1,561	)
Net change in net actuarial gain and prior service credit on pension and postretirement benefit plans, net of tax																	(1,533	)		-			(754	)		(754	)		(2,287	)

Accumulated other comprehensive income (loss), net of tax	$	11,936			(4,405	)		(227	)		(4,632	)		7,304		$	12,147			(36,602	)		(754	)		(37,356	)		(25,209	)

															Nine months ended September 30, 2021
																					Amount
																		Other			reclassified			Other
																		Comprehensive			from Accumulated			Comprehensive loss-
	Nine months ended 9/30/2020														Balance at			loss-Before			Other Comprehensive			Nine months ended			Balance at
(dollars in thousands)	Balance at 1/1/2020			Other Comprehensive Income (loss)- Before Reclassifications		Amount reclassified from Accumulated Other Comprehensive Income			Other Comprehensive Income (loss)- Three months ended 9/30/2020			Balance at 9/30/2020			1/1/2021			Reclassifications			Income			9/30/2021			9/30/2021

Net unrealized holding loss on securities available for sale, net of tax	$	286			8,432		(855	)		7,577			7,863
Net unrealized holding gain on securities available for sale, net of tax															$	7,186			(4,405	)		-			(4,405	)		2,781
Net change in overfunded position in pension and postretirement plans arising during the year, net of tax		4,840			0		0			0			4,840			6,084			-			-			-			6,084
Net change in net actuarial loss and prior service credit on pension and postretirement benefit plans, net of tax		(665	)		0		(501	)		(501	)		(1,166	)
Net change in net actuarial gain and prior service credit on pension and postretirement benefit plans, net of tax																(1,334	)		-			(227	)		(227	)		(1,561	)

Accumulated other comprehensive income (loss), net of tax	$	4,461			8,432		(1,356	)		7,076			11,537		$	11,936			(4,405	)		(227	)		(4,632	)		7,304

3540

Index

The following represents the reclassifications out of accumulated other comprehensive income (loss) for the three and nine months ended September 30, ~~2021~~2022 and ~~2020:~~2021:

(dollars in thousands)	Three months ended						Nine months ended						Three months ended						Nine months ended
	September 30,						September 30,						September 30,						September 30,
	2021			2020			2021			2020			2022			2021			2022			2021			Affected Line Item in Financial Statements
Net unrealized holding gain on securities available for sale
Realized gain on securities transactions	$	0			0		$	0			1,155
Income tax effect		0			0			0			(300	)
Net of tax		0			0			0			855

Amortization of pension and postretirement benefit items:
Amortization of net actuarial gain	$	137			222		$	534			531		$	280			137		$	784			534		Salaries and employee benefits
Amortization of prior service (cost) credit		(177	)		49			(227	)		147
Income tax benefit		10			(70	)		(80	)		(177	)
Amortization of prior service credit (cost)														78			(177	)		235			(227	)	Salaries and employee benefits
Income tax (benefit) expense														(93	)		10			(265	)		(80	)	Income taxes
Net of tax		(30	)		201			227			501			265			(30	)		754			227

Total reclassifications, net of tax	$	(30	)		201		$	227			1,356		$	265			(30	)	$	754			227

(8) Revenue from Contracts with Customers

All of the Company’s revenue from contracts with customers in the scope of ASC 606 is recognized within ~~Non-Interest~~non-Interest Income. The following table presents the Company’s sources of ~~Non-Interest~~non-Interest Income for the three months and nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021. Items outside the scope of ASC 606 are noted as such.

(dollars in thousands)	Three months ended				Nine months ended				Three months ended				Nine months ended
	September 30,				September 30,				September 30,				September 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Non-interest income
Service Charges on Deposits
Overdraft fees	$	735	$	595	$	1,964	$	1,920	$	714		735	$	2,007		1,964
Other		518		348		1,479		1,159		494		518		1,466		1,479
Interchange Income		1,330		1,195		3,863		3,072		1,546		1,330		4,792		3,863
Net gain on securities transactions (a)		0		0		0		1,155
Wealth management fees		1,558		1,784		5,592		4,752		1,435		1,558		5,264		5,592
Other (a)		154		419		513		1,043		197		154		956		513

Total non-interest income	$	4,295	$	4,341	$	13,411	$	13,101	$	4,386		4,295	$	14,485		13,411

(a)	Not within the scope of ASC 606.

A description of the Company’s revenue streams accounted in accordance with ASC 606 as follows:

Service charges on Deposit Accounts: The Company earns fees from its deposit customers for transaction-based, account maintenance and overdraft services. Transaction-based fees, which include services such as stop payment charges, statement rendering and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance.

~~Index~~

Interchange Income: Interchange revenue primarily consists of interchange fees, volume-related incentives and ATM charges. As the card-issuing bank, interchange fees represent our portion of discount fees paid by merchants for credit/debit card transactions processed through the interchange network. The levels and structure of interchange rates are set by the card processing companies and are based on cardholder purchase volumes. The Company earns interchange income as cardholder transactions occur and interchange fees are settled on a daily basis concurrent with the transaction processing services provided to the cardholder.

Index

Wealth Management fees: Trustco Financial Services provides a comprehensive suite of trust and wealth management products and services, including financial and estate planning, trustee and custodial services, investment management, corporate retirement plan recordkeeping and administration of which a fee is charged to manage assets for investment or transact on accounts. These fees are earned over time as the Company provides the contracted monthly or quarterly services and are generally assessed over the period in which services are performed based on a percentage of the fair value of assets under management or administration. Other services are based on a fixed fee for certain account types, or based on transaction activity and are recognized when services are rendered. Fees are withdrawn from the customer’s account balance.

~~Gains/Losses on Sales of Other Real Estate Owned “OREO”:~~ The Company records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the company finances the sale of OREO to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain/ (loss) on sale if a significant financing component is present.

(9) Operating Leases

The Company adopted Topic 842 “Leases” effective January 1, 2019 and has applied the guidance to all operating leases within the scope of Topic 842 at that date. The company elected to adopt practical expedients, which among other things, does not require reassessment of lease classification.

The Company has committed to rent premises used in business operations under non-cancelable operating leases and determines if an arrangement meets the definition of a lease upon inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities on the Company’s balance sheets.

Operating lease ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company’s leases do not provide an implicit rate, therefore the Company used its incremental collateralized borrowing rates commensurate with the underlying lease terms to determine present value of operating lease liabilities. Additionally, the Company does allocate the consideration between lease and non-lease components. The Company’s lease terms may include options to extend when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Variable lease components, such as fair market value adjustments, are expensed as incurred and not included in ROU assets and operating lease liabilities. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. As of September 30, ~~2021~~2022 the Company did not have any leases with terms of twelve months or less.

~~Index~~

As of September 30, ~~2021~~2022 the Company ~~has 1 lease that the~~did not have any leases for which any related construction has not ~~started yet.~~yet started. At September 30, ~~2021~~2022 lease expiration dates ranged from five months to ~~23.0~~22.0 years and have a weighted average remaining lease term of ~~8.7~~9.0 years. Certain leases provide for increases in future minimum annual rental payments as defined in the lease agreements. As mentioned above the leases generally also include variable lease components which include real estate taxes, insurance, and common area maintenance (“CAM”) charges in the annual rental payments.

Index

Other information related to leases was as follows:

(dollars in thousands)	Three months ended September 30,				Three months ended
					September 30,
	2021		2020		2022		2021
Operating lease cost	$	2,010		1,966	$	2,062		2,010
Variable lease cost		499		369		565		499

Total Lease costs	$	2,509		2,335	$	2,627		2,509

(dollars in thousands)	Nine months ended September 30,				Nine months ended
					September 30,
	2021		2020		2022		2021
Operating lease cost	$	6,029		5,893	$	6,185		6,029
Variable lease cost		1,508		1,524		1,706		1,508

Total Lease costs	$	7,537		7,417	$	7,891		7,537

(dollars in thousands)	Nine months ended September 30,						Nine months ended
							September 30,
	2021			2020			2022			2021
Supplemental cash flows information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,121			6,022		$	6,262			6,121

Right-of-use assets obtained in exchange for lease obligations:		2,696			287			2,484			2,696

Weighted average remaining lease term	8.7 years			8.9 years			9.0 years			8.7 years
Weighted average discount rate		3.07	%		3.25	%		2.96	%		3.07	%

3843

Index

Future minimum lease payments under non-cancellable leases as of September 30, ~~2021~~2022 were as follows:

(dollars in thousands)	(dollars in thousands)			(dollars in thousands)

Year ending December 31,
2021^(a)		$	2,072
2022			8,014
Year ending
December 31,
2022^(a)					$	2,065
2023			7,719			8,234
2024			7,595			8,082
2025			7,223			7,675
2026						6,700
Thereafter			25,291			24,529
Total lease payments		$	57,914		$	57,285
Less: Interest			7,399			7,208

Present value of lease liabilities		$	50,515		$	50,077

^(a)	Excluding the nine months ended September 30, ~~2021.~~2022.

A member of the Board of Directors has an ownership interest in 5five entities that own commercial real estate leased by the Company for use as branch locations. Total lease payments from the Company to those entities, which are included in the table above, owed at September 30, ~~2021,~~2022, were $~~3.7~~3.3 million, which includes interest ~~in the amount~~ of $~~525~~424 thousand.

(10) Regulatory Capital Requirements

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy regulations and, additionally for banks, the prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can result in regulatory action. As of September 30, ~~2021,~~2022, the Company and the Bank ~~meet~~met all capital adequacy requirements to which they are subject.

Prompt corrective action regulations provide 5five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If a bank is not classified as well capitalized, regulatory approval is required to accept brokered deposits. If a bank is undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. The federal banking agencies are required to take certain supervisory actions (and may take additional discretionary actions) with respect to an undercapitalized institution or its holding company. Such actions could have a direct material effect on an institution’s or its holding company’s financial statements. As of September ~~2021~~30, 2022 and December 31, ~~2020,~~2021, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank’s category. ~~There are no conditions or events since that notification that management believes have changed the Bank’s category~~

3944

Index

The Bank and the Company reported the following capital ratios as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021:

(Bank Only)
									Minimum for Capital Adequacy plus Capital Conservation											Minimum for
	As of September 30, 2021					Well						As of September 30, 2022					Well			Capital Adequacy plus
	As of September 30, 2021					Well						As of September 30, 2022					Well			Capital Conservation
(dollars in thousands)	Amount		Ratio			Capitalized⁽¹⁾			Buffer⁽¹⁾⁽²⁾			Amount		Ratio			Capitalized⁽¹⁾			Buffer⁽¹⁾⁽²⁾

Tier 1 leverage ratio	$	561,969		9.148	%		5.000	%		4.000	%	$	597,092		9.648	%		5.000	%		4.000	%
Common equity tier 1 capital		561,969		18.899			6.500			7.000			597,092		18.333			6.500			7.000
Tier 1 risk-based capital		561,969		18.899			8.000			8.500			597,092		18.333			8.000			8.500
Total risk-based capital		599,265		20.153			10.000			10.500			637,906		19.586			10.000			10.500

												As of December 31, 2021					Well			Minimum for
																				Capital Adequacy plus
	As of December 31, 2020					Well			Minimum for Capital Adequacy plus Capital Conservation											Capital Conservation
(dollars in thousands)	Amount		Ratio			Capitalized⁽¹⁾			Buffer ⁽¹⁾⁽²⁾			Amount		Ratio			Capitalized⁽¹⁾			Buffer ⁽¹⁾⁽²⁾

Tier 1 leverage ratio	$	539,897		9.378	%		5.000	%		4.000	%	$	570,594		9.324	%		5.000	%		4.000	%
Common equity tier 1 capital		539,897		18.646			6.500			7.000			570,594		18.954			6.500			7.000
Tier 1 risk-based capital		539,897		18.646			8.000			8.500			570,594		18.954			8.000			8.500
Total risk-based capital		576,257		19.902			10.000			10.500			608,308		20.206			10.000			10.500

(Consolidated)
									As of September 30, 2022					Minimum for
														Capital Adequacy plus
	As of September 30, 2021					Minimum for Capital Adequacy plus Capital Conservation								Capital Conservation
(dollars in thousands)	Amount		Ratio			Buffer⁽¹⁾⁽²⁾			Amount		Ratio			Buffer⁽¹⁾⁽²⁾

Tier 1 leverage ratio	$	578,825		9.420	%		4.000	%	$	613,661		9.913	%		4.000	%
Common equity tier 1 capital		578,825		19.461			7.000			613,661		18.837			7.000
Tier 1 risk-based capital		578,825		19.461			8.500			613,661		18.837			8.500
Total risk-based capital		616,131		20.715			10.500			654,486		20.090			10.500

									As of December 31, 2021					Minimum for
														Capital Adequacy plus
	As of December 31, 2020					Minimum for Capital Adequacy plus Capital Conservation								Capital Conservation
(dollars in thousands)	Amount		Ratio			Buffer⁽¹⁾⁽²⁾			Amount		Ratio			Buffer⁽¹⁾⁽²⁾

Tier 1 leverage ratio	$	555,672		9.650	%		4.000	%	$	588,427		9.614	%		4.000	%
Common equity Tier 1 capital		555,672		19.187			7.000			588,427		19.541			7.000
Tier 1 risk-based capital		555,672		19.187			8.500			588,427		19.541			8.500
Total risk-based capital		592,040		20.443			10.500			626,150		20.794			10.500

(1)	Federal regulatory minimum requirements to be considered to be Well Capitalized and Adequately Capitalized

(2)	The September 30, ~~2021~~2022 and December 31, ~~2020~~2021 common equity tier 1, tier 1 risk-based, and total risk-based capital ratios include a capital conservation buffer of 2.50 percent

Index

(11) New Accounting Pronouncements

Staff Accounting Bulletin (“SAB”) No. 121 - In March 2022, the SEC issued SAB No. 121. This SAB adds interpretive guidance for entities to consider when they have obligations to safeguard crypto-assets held for their platform users. Specifically, this SAB provides interpretive guidance on the accounting and disclosure of obligations to safeguard crypto-assets held for platform users. This guidance was applicable no later than the financial statement covering the first interim or annual period ending after June 15, 2022. The Company reviewed its business activities as of the date of adoption, June 30, 2022, and determined that SAB 121 is not materially impactful to the financial statements. Management has continued to monitor on a quarterly basis and has determined that SAB 121 is not materially impactful to the financial statements as of September ~~2016, the FASB released~~ 30, 2022.

ASU ~~2016-13, “Financial~~2022-02 - Financial Instruments - Credit ~~Losses” (referred to as “CECL”) which amended existing~~Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures: In March 2022, FASB issued ASU 2022-02 - Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructuring and Vintage Disclosures. ASU 2022-02 eliminates the accounting guidance ~~to replace current generally accepted accounting principles used to measure~~for TDRs by creditors in Subtopic 310-40, Receivables - Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a ~~reporting entity’s credit losses. The main objective of this update~~borrower is ~~to provide~~experiencing financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective,difficulty. Additionally, the amendments in this ~~update replace~~ASU require that public business entities disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the ~~incurred loss impairment methodology~~scope of Subtopic 326-20, Financial Instruments - Credit Losses -Measured at Amortized Cost. For entities, like TrustCo, that have adopted the amendments in ~~current GAAP with~~ASU 2016-13, the amendments in this ASU are effective for fiscal years beginning after December 15, 2022, including interim periods within those years. Early adoption is permitted, including adoption in an interim period. An entity may elect to adopt the loan modification guidance and related disclosure enhancements separately from the amendments related to vintage disclosures. The amendments in this ASU should be applied prospectively, except for the amendments related to the recognition and measurement of TDRs which may be applied prospectively or using a ~~methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.~~

~~Index~~

~~As previously disclosed, the Company formed a cross-functional team to work through its implementation of CECL.~~modified retrospective transition method. The Company ~~has selected~~will adopt the Discounted Cash Flow modeling method and is running parallel processes and is working to finalize assessment and documentation of processes, data and model validation testing, qualitative factors and forecast periods. The Company had previously elected to delay its adoption of CECL, as provided by the CARES Act until the date on which the National Emergency concerning COVID-19 was terminated or December 31, 2020, whichever occurred first. The December 31, 2020 adoption date under the CARES Act was extended to January 1, 2022 as a part of the COVID-19 Relief Bill, which became law in December 2020, and therefore the Company intends to adopt CECLASU on January 1, ~~2022.~~2023 and the adoption is not expect to have a material impact to the Company, however, new disclosures will be added.

(12) Risks and Uncertainties

Beginning in March 2020, the Company experienced negative impacts to its business in the form of requests for loan deferrals of principal and interest due to the business disruption caused by COVID-19. In March 2020, the World Health Organization categorized COVID-19 as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. On March 3, 2020, the Federal Reserve reduced the target federal funds rate by 50 basis points, followed by an additional reduction of 100 basis points on March 16, 2020. The Company has evaluated the impact of the effects of COVID-19 and determined that there have been no lasting material or systematic adverse impacts on the Company’s September 30, 2021 financial statements, except for adjustments in the allowance for loan losses since the inception of the pandemic. As of September 30, 2021, the Company and Bank capital ratios were in excess of all regulatory requirements. While management believes that we have sufficient capital to withstand ~~an extended~~any further economic ~~recession~~challenges brought ~~about~~on by the COVID-19 pandemic, our reported and regulatory capital ratios, as well as the ability of the Company and the Bank to pay dividends or make other distributions, could be adversely impacted by unanticipated credit losses. At this time, we do not believe there exists any impairment to our goodwill, long-lived assets, right of use assets, held to maturity investment securities, or available-for-sale investment securities due to the COVID-19 pandemic. It is uncertain whether prolonged effects of the COVID-19 pandemic will result in future impairment charges related to any of the aforementioned assets and continue to negatively impact net interest income, provision for ~~loan~~credit losses, and noninterest income.

Loan modifications and payment deferrals as a result of COVID-19 that ~~meet~~met the criteria established under Section 4013 of the CARES Act or under applicable interagency guidance of the federal banking regulators ~~are~~were excluded from evaluation of TDR classification and ~~will continue to be~~were reported as current during the payment deferral period. The Company’s policy iswas to continue to accrue interest during the deferral period. Loans not meeting the CARES ACT or regulatory guidance ~~are~~were evaluated for TDR and non-accrual treatment under the Company’s existing policies and procedures. AsThe relief provided by the CARES ACT expired on December 31, 2021. The Company doesn’t have any loan deferrals as of September 30, ~~2021, loans in deferral were not material.~~2022.

4146

Index

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and the Board of Directors of TrustCo Bank Corp NY

Glenville, New York

Results of Review of Interim Financial Information

We have reviewed the consolidated statement of financial condition of TrustCo Bank Corp NY (the "Company") as of September 30, ~~2021,~~2022, and the related consolidated statements of income and comprehensive income for the three and nine-month periods ended September 30, ~~2021~~2022 and September 30, ~~2020~~2021 and the related changes in shareholders’ equity and cash flows for the nine-month periods ended September 30, ~~2021~~2022 and September 30, ~~2020,~~2021, and the related notes (collectively referred to as the "interim financial information or statements"). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the consolidated statement of financial condition of the Company as of December 31, ~~2020,~~2021, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated February ~~26, 2021,~~25, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated statement of financial condition as of December 31, ~~2020,~~2021, is fairly stated, in all material respects, in relation to the consolidated statement of condition from which it has been derived.

Basis for Review Results

These financial statements are the responsibility of the Company's management. We conducted our review in accordance with the standards of the PCAOB. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the company in accordance with the ~~U.S~~U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

New York, New York	/s/ Crowe LLP
November ~~5, 2021~~7, 2022

4247

Index

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking Statements

Statements included in this report and in future filings by TrustCo with the Securities and Exchange Commission, in TrustCo’s press releases, and in oral statements made with the approval of an authorized executive officer, including statements regarding the effect of the ~~novel coronavirus disease (“COVID-19”)~~COVID-19 pandemic on our business and ~~our continuing response~~macroeconomic or geopolitical concerns related to ~~the COVID-19 pandemic,~~inflation and rising interest rates, that are not historical or current facts, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. Forward-looking statements can be identified by the use of such words such as may, will, should, could, would, estimate, project, believe, intend, anticipate, plan, seek, expect and similar expressions. TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.

In addition to any factors described under Part II, Item 1A, Risk Factors, and under the Risk Factor discussion in TrustCo’s Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, the factors listed below, among others, in some cases have affected and in the future could affect TrustCo’s actual results and could cause TrustCo’s actual financial performance to differ materially from that expressed in any forward-looking statement. Additionally, many of these risks and uncertainties are currently elevated by and may or will continue to be elevated by the effects of the COVID-19 ~~pandemic.~~pandemic and macroeconomic or geopolitical concerns related to inflation, rising interest rates and the war in Ukraine.

~~The current COVID-19 pandemic,~~

changes in local market areas and general business and economic trends, as well as changes in consumer spending, borrowing and savings habits; and our ability to assess and react effectively to such changes;

the effects of the COVID-19 pandemic, which could cause, and in some instances has, caused us to experience a decline in the demand for products and services; an increase in loan delinquencies; problem assets and foreclosures; a decline in collateral value; a work ~~stoppage, forced quarantine,~~force shortages, or other interruption or the unavailability of key employees; an increase in the allowance for ~~loan losses;~~credit losses on loans; a reduction in wealth management revenues; an increase in Federal Deposit Insurance Corporation premiums; a reduction in the value of the securities portfolio; or a decline in the net worth and liquidity of loan guarantors;

the impact of hurricanes, including Hurricane Ian, and other severe weather events on the communities we serve, which could have an adverse impact on our business and results of operation;

changes in and uncertainty related to benchmark interest rates used to price loans and deposits;

credit risks and risks from concentrations (by geographic area and by loan product) within our loan portfolio;

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TrustCo’s ability to continue to originate a significant volume of one- to- four family mortgage loans in its market areas and to otherwise maintain or increase its market share in the areas in which it operates;

TrustCo’s ability to continue to maintain noninterest expense and other overhead costs at reasonable levels relative to income;

TrustCo’s ability to make accurate assumptions and judgments regarding the credit risks associated with its lending and investing activities, including changes in the level and direction of loan delinquencies and charge-offs, changes in property values, and changes in estimates of the adequacy of the allowance for ~~loan and lease~~credit losses;

the effects of and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rates, market and monetary fluctuations;

~~Index~~

restrictions or conditions imposed by TrustCo’s and Trustco Bank’s regulators on their operations that may make it more difficult to achieve TrustCo’s and Trustco Bank’s goals;

the future earnings and capital levels of TrustCo and Trustco Bank and the continued non objection from TrustCo’s and Trustco Bank’s primary federal banking regulators under regulatory rules to distribute capital from Trustco Bank to TrustCo, which could affect the ability of TrustCo to pay dividends;

the results of supervisory monitoring or examinations of Trustco Bank and the Company by their respective primary federal banking regulators, including the possibility that the regulators may, among other things, require us to increase our loss allowances or to take other actions that reduce capital or income;

adverse conditions in the securities markets that lead to impairment in the value of securities in TrustCo’s investment portfolio;

the perceived overall value of TrustCo’s products and services by users, including the features, pricing and quality, compared to competitors’ products and services and the willingness of current and prospective customers to substitute competitors’ products and services for TrustCo’s products and services;

~~changes in consumer spending, borrowing and savings habits;~~

the effect of changes in financial services laws and regulations (including laws concerning taxation, banking and securities) and the impact of other governmental initiatives affecting the financial services industry, including regulatory capital requirements;

changes in management personnel;

real estate and collateral values;

changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, Financial Accounting Standards Board or the Public Company Accounting Oversight Board;

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disruptions, security breaches or other adverse events affecting the third-party vendors who perform several of our critical processing functions;

technological changes and electronic, cyber and physical security breaches;

~~changes in local market areas and general business and economic trends;~~

TrustCo’s success at managing the risks involved in the foregoing and managing its business;

Risks related to climate change; and

other risks and uncertainties included under “Risk Factors” in our Form 10-K for the year ended December 31, ~~2020.~~2021, as well as risks and uncertainties, if any, discussed elsewhere in this Form 10-Q and in our other filings made from time to time with the SEC, or in materials incorporated therein by reference.

You should not rely upon forward-looking statements as predictions of future events. Although TrustCo believes that the expectations reflected in the forward‑looking statements are reasonable, it cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. The foregoing list should not be construed as exhaustive, and the Company disclaims any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements, or to reflect the occurrence of anticipated or unanticipated events.

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Following this management discussion and analysis are the tables "Distribution of Assets, Liabilities and Shareholders' Equity: Interest Rates and Interest Differential" which gives a detailed breakdown of TrustCo's average interest earning assets and interest bearing liabilities for the three month and nine month periods ended September 30, ~~2021~~2022 and ~~2020.~~2021.

Introduction

The review that follows focuses on the factors affecting the financial condition and results of operations of TrustCo during the three month and nine month periods ended September 30, ~~2021,~~2022, with comparisons to the corresponding period in ~~2020,~~2021, as applicable. Net interest margin is presented on a fully taxable equivalent basis in this discussion. The consolidated interim financial statements and related notes, as well as the ~~2020~~ Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on February ~~26, 2021,~~25, 2022 (the “2021 Form 10-K”), should also be read in conjunction with this review. Amounts in prior period consolidated interim financial statements are reclassified whenever necessary to conform to the current period's presentation.

COVID-19 Impact

~~In March 2020, the World Health Organization categorized COVID-19 as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency.~~ The Company ~~has~~ evaluated the impact of the effects of the COVID-19 pandemic and determined that there were no material or systematic adverse impacts on the Company’s balance sheets and results of operations as of and for the years ended December 31, 2021 and 2020, as well as for the three month and nine month periods ended September 30, ~~2021, except for the adjustments in the allowance for loan losses since the inception of the pandemic.~~ 2022 and 2021. At this time, it is difficult to quantify the impact ~~COVID-19~~the pandemic will have on future ~~periods.~~periods due to various uncertainties, including the duration, severity, spread, variants and resurgences of COVID-19.

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The following is a description of the impact the COVID-19 global pandemic is having on certain elements of our business:

~~Loan modifications~~

We began receiving requests from our borrowers for loan deferrals in March 2020 and agreed with many borrowers to modify their loans. Modifications included the deferral of principal and/or interest payments for terms generally up to 90 days. Requests were evaluated individually and approved modifications were based on the unique circumstances of each borrower. We are committed to working with our clients to allow time to work through the challenges of this pandemic. Loan modifications and payment deferrals as a result of COVID-19 that meet the criteria established under Section 4013 of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which was enacted in March 2020, or under applicable interagency guidance of the federal banking regulators, are excluded from evaluation of TDR classification and will continue to be reported as current during the payment deferral period. The Company’s policy is to continue to accrue interest during the deferral period. Loans not meeting the CARES Act or regulatory guidance are evaluated for TDR and non-accrual treatment under the Company’s existing policies and procedures. As of September 30, 2021, loans in deferral as a result of the COVID-19 pandemic were not material.

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Paycheck Protection Program (“PPP”) and Liquidity

As part of the CARES Act, the Small Business Administration (SBA) ~~has been~~was authorized to guarantee loans under the PPP for small businesses ~~who~~that meet the necessary eligibility requirements in order to keep their workers on the payroll. The Company began accepting PPP loan applications on April 3, 2020. The Bank had originally funded 663 PPP loans totaling $46 million in 2020, and an additional 344 loans totaling $23 million in 2021. As of September 30, 2021, 349 PPP loans totaling $21 million remain outstanding. The Company receiveshas received loan origination fees from the SBA which are being recognized over the life of the loan ~~and apply~~using the effective yield method.

~~On April 9, 2020, the FDIC, Federal Reserve and the Office~~ As of ~~the Comptroller of the Currency (“OCC”) created the Paycheck Protection Program Liquidity Facility (“PPPLF”) to bolster the effectiveness of the~~September 30, 2022, TrustCo’s PPP by providing liquidity to and neutralizing the regulatory capital effects on participating financial institutions. We do not intend to utilize the liquidity relief offered by the PPPLF as we do not expect our participation in the PPP to have a negative impact on our liquidity position, capital resources, financial condition or results of operations.loans outstanding totaled $1.4 million.

Asset impairment

At this time, we do not believe there exists any impairment to our goodwill, long-lived assets, right of use assets, held to maturity investment securities or available-for-sale investment securities due to the COVID-19 pandemic. It is uncertain whether prolonged effects of the COVID-19 pandemic will result in future impairment charges related to any of the aforementioned assets.

Provision for ~~loan~~credit losses

See “Allowance for ~~Loan Losses”~~Credit Losses on Loans” for more information.

~~Preventative measures~~

The Company has instituted preventative measures at branch and back office locations to protect the health of both the customers and our employees, including regular deep cleaning of facilities, adhering to CDC guidelines and practicing “social distancing.” These additional expenses did not have a material impact on the Company for the three month and nine month periods ended September 30, 2021.

~~Index~~

~~Federal Reserve Actions~~

~~The Federal Reserve Board has taken several actions to support the flow of credit to households and businesses. Some of these pertinent actions include:~~

~~The establishment of the Commercial Paper Funding Facility, the Money Market Mutual Fund Liquidity Facility, and the Primary Dealer Credit Facility;~~

~~The expansion of central bank liquidity swap lines;~~

~~Steps to enhance the availability and ease terms for borrowing at the discount window;~~

~~The elimination of reserve requirements;~~

Guidance, issued with the other federal banking regulators, encouraging banks to be flexible with customers experiencing financial challenges related to the coronavirus pandemic and to utilize their liquidity and capital buffers in doing so;

~~Expand access to its PPPLF for additional SBA-qualified lenders; and~~

~~Statements encouraging the use of daylight credit at the Federal Reserve.~~

Economic Overview

During the third quarter of ~~2021,~~2022, financial markets ~~were a bit volatile resulting~~declined for the third consecutive quarter as the economy continued to feel the impact from several economic areas, as well as reacting to global concerns. Ongoing inflationary pressures, higher interest rates, pandemic concerns, supply-chain bottlenecks, the war in Ukraine and higher Treasury yields, continued to place worries on investors. For the third quarter of 2022, the S&P 500 Index was down 5.28% and the Dow Jones Industrial Average ~~Russell 2000, and Nasdaq posting quarterly losses of 1.9%, 4.6%, and 0.4%, respectively, while~~was down 6.66%. This consecutive quarter decline in 2022 comes after the S&P 500 squeezed out a quarterly gain of 0.2%. Credit markets continue to be driven by worldwide economic news, effects of COVID-19, supply chain issues and demand shifts. The shape of the yield curve ended the quarter relatively consistent as compared to the second quarter.economy saw continued improvement throughout 2021. The 10‑year Treasury bond averaged ~~1.32%~~3.10% during Q3 ~~2021~~2022 compared to ~~1.59%~~2.93% in Q2 ~~2021, a decrease~~2022, an increase of 2717 basis points. The 2‑year Treasury bond average rate increased 666 basis points to ~~0.23%~~3.38%. ~~The~~Consequently, the spread between the 10‑year and the 2-year Treasury bonds ~~shortened~~decreased from ~~1.42%~~0.21% on average in Q2 to ~~1.10%~~-0.28% in ~~Q3. This spread had been depressed~~Q3 resulting in ~~recent years, and compares to 2.42% during its most recent peak in Q4 of 2013. Steeper~~an inverted yield curve. Generally, steeper yield curves are favorable for portfolio mortgage lenders like ~~TrustCo. The~~TrustCo, and the table below illustrates the range of rate movements for both short term and longer term rates. The target Federal Funds rate ~~remained flat~~increased 25 basis points in March 2022, 50 basis points in May 2022, 75 basis points in June 2022, 75 basis points in July 2022, 75 basis points in September 2022, and another 75 basis points in November 2022 to arrive at ~~0.00%~~3.75% to ~~0.25%~~4.00%, the highest rate since 2007, with additional rate increases anticipated. Changes in interest rates could have an effect on interest-earning assets such as loans, investment securities, and cash balances, and also have an effect on interest-bearing liabilities primarily deposits and short-term borrowings. Additionally, unrealized gains and losses on available for sale securities, demand for products, borrowers ability to repay loans, and the ~~quarter.~~number of delinquencies could also be effected. Spreads of most asset classes to the comparative treasury yield, including agency securities, corporates, municipals and mortgage-backed securities, ~~continue to be down as~~have widened compared to the levels seen ~~before the pandemic.~~in recent years. Accordingly, changes in rates and spreads continue to be ~~effected~~affected by the ~~pandemic.~~pandemic and global economic concerns.

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3 Month
Yield (%)
2 Year
Yield (%)
5 Year
Yield (%)
10 Year
Yield (%)
10 - 2 Year
Spread (%)

Q3/20 Beg of Q3 0.16 0.16 0.29 0.66 0.50
Peak 0.16 0.17 0.32 0.74 0.60
Trough 0.09 0.11 0.19 0.52 0.41
End of Q3 0.10 0.13 0.28 0.69 0.56
Average in Q3 0.14 0.14 0.27 0.65 0.51

Q4/20 Beg of Q4 0.10 0.13 0.28 0.69 0.56
Peak 0.12 0.19 0.46 0.98 0.83
Trough 0.07 0.11 0.27 0.68 0.54
End of Q4 0.09 0.13 0.36 0.93 0.80
Average in Q4 0.09 0.15 0.37 0.86 0.71

Q1/21 Beg of Q1 0.09 0.13 0.36 0.93 0.80
Peak 0.09 0.17 0.92 1.74 1.59
Trough 0.01 0.09 0.36 0.93 0.82
End of Q1 0.03 0.16 0.92 1.74 1.58
Average in Q1 0.05 0.13 0.62 1.34 1.20

Q2/21 Beg of Q2 0.03 0.16 0.92 1.74 1.58
Peak 0.06 0.28 0.97 1.73 1.56
Trough 0.01 0.13 0.73 1.45 1.19
End of Q2 0.05 0.25 0.87 1.45 1.20
Average in Q2 0.03 0.17 0.84 1.59 1.42

Q3/21 Beg of Q3 0.05 0.25 0.87 1.45 1.20
Peak 0.07 0.31 1.02 1.55 1.25
Trough 0.03 0.17 0.65 1.19 0.98
End of Q3 0.04 0.28 0.98 1.52 1.24
Average in Q3 0.05 0.23 0.80 1.32 1.10

		3 Month Yield (%)	2 Year Yield (%)	5 Year Yield (%)	10 Year Yield (%)	10 - 2 Year Spread (%)

Q3/21	Beg of Q3	0.05	0.25	0.87	1.45	1.20
	Peak	0.07	0.31	1.02	1.55	1.25
	Trough	0.03	0.17	0.65	1.19	0.98
	End of Q3	0.04	0.28	0.98	1.52	1.24
	Average in Q3	0.05	0.23	0.80	1.32	1.10

Q4/21	Beg of Q4	0.04	0.28	0.98	1.52	1.24
	Peak	0.08	0.76	1.34	1.68	1.29
	Trough	0.04	0.27	0.93	1.35	0.72
	End of Q4	0.06	0.73	1.26	1.52	0.79
	Average in Q4	0.05	0.53	1.18	1.53	1.00

Q1/22	Beg of Q1	0.06	0.73	1.26	1.52	0.79
	Peak	0.59	2.35	2.55	2.48	0.89
	Trough	0.08	0.77	1.37	1.63	0.04
	End of Q1	0.52	2.28	2.42	2.32	0.04
	Average in Q1	0.31	1.46	1.83	1.95	0.49

Q2/22	Beg of Q2	0.52	2.28	2.42	2.32	0.04
	Peak	1.83	3.45	3.61	3.49	0.44
	Trough	0.53	2.37	2.55	2.39	-0.05
	End of Q2	1.72	2.92	3.01	2.98	0.06
	Average in Q2	1.10	2.72	2.95	2.93	0.21

Q3/22	Beg of Q3	1.72	2.92	3.01	2.98	0.06
	Peak	3.40	4.30	4.21	3.97	0.04
	Trough	1.73	2.82	2.66	2.60	-0.51
	End of Q3	3.33	4.22	4.06	3.83	-0.39
	Average in Q3	2.75	3.38	3.23	3.10	-0.28

The United States economy ~~overall has continued to show improvements during~~experienced several areas of concern as 2022 began after experiencing significant progress throughout 2021. Economic conditions can vary significantly over geographic areas, with strength concentrated in and around major population centers on the coasts and in certain areas where economic activity has been driven by specific regional factors.

TrustCo believes that its long-term focus on traditional banking services and practices historically has enabled the Company to avoid significant impact from asset quality problems, and that the Company’s strong liquidity and solid capital positions have allowed the Company to continue to conduct business in a manner consistent with its past practice. Management believes that TrustCo has not engaged in the types of high risk loans and investments that ~~have~~ led to the widely reported problems in the industry ~~particularly those arising~~ during the ~~2008-2010~~2007-2009 financial crisis. Nevertheless, the Company may experience increases in nonperforming loans (“NPLs”) relative to historical levels from time to time.

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Should general housing prices and other economic measures, such as unemployment in the Company’s market areas, deteriorate as a result of the COVID-19 pandemic or other reasons, the Company may experience an increase in the level of credit risk and in the amount of its classified and nonperforming loans.

~~Index~~

In a direct response to the COVID-19 pandemic, on March 27, 2020 Congress passed the CARES Act. As previously noted, included in the CARES Act is support for small businesses, direct payments to lower and middle income families, expanded unemployment insurance and additional funding for health care providers, as well as support for other industries. The Federal Reserve Board, in an attempt to increase liquidity and promote the normal functioning of financial markets, also provided support by increasing purchases of Treasury securities and agency mortgage-backed securities.

Financial Overview

TrustCo recorded net income of $19.4 million, or $1.013 of diluted earnings per share, for the three months ended September 30, 2022, compared to net income of $16.8 million, or $0.871 of diluted earnings per share, ~~for the three months ended September 30, 2021, compared to net income of $14.1 million, or $0.730 of diluted earnings per share,~~ in the same period in 2020. For all periods presented, share and per share information has been adjusted for the 1-for-5 reverse stock split (the “Reverse Stock Split”) of TrustCo’s common stock that was effective May 28, 2021. Return on average assets was ~~1.08%~~1.24% and ~~0.98%~~1.08%, respectively, for the three-months ended September 30, ~~2021~~2022 and ~~2020.~~2021. Return on average equity was ~~11.40%~~12.78% and ~~10.04%~~11.40%, respectively, for the three-months ended September 30, ~~2021~~2022 and ~~2020.~~2021.

The primary factors accounting for the change in net income for the three months ended September 30, ~~2021~~2022 compared to the same period of the prior year were:

~~A decrease~~An increase in ~~the cost~~income of ~~interest bearing liabilities of $4.0~~$7.4 million ~~partially offset by a decrease in income~~ from interest earning assets and a decrease in interest expense of ~~$2.3 million, resulted~~$527 thousand from interest bearing liabilities, resulting in an increase in taxable equivalent net interest income in the third quarter of ~~2021~~2022 compared to the third quarter of ~~2020~~2021 of ~~$1.7~~$7.9 million.

~~A decrease~~An increase of ~~$3.8~~$2.9 million in provision for ~~loan~~credit losses ~~for the third quarter of 2021 compared to the third quarter 2020~~on loans primarily as a result of the ongoing uncertainty surrounding ~~the pandemic in the prior year as well as related adjustments in the current quarter due to improving~~ economic conditions and credit risk metrics. An increase of $200 thousand in unfunded commitments for the third quarter of 2022 compared to the third quarter 2021 primarily as a result of an increase in unfunded loan commitments.

An increase of ~~$2.0~~$1.4 million in noninterest expense for the third quarter of ~~2021~~2022 compared to the third quarter ~~2020~~2021, primarily as a result of an increase in salaries and employee ~~benefits.~~benefits, net occupancy expense, outsourced services, advertising expense and other expenses.

TrustCo recorded net income of $54.3 million, or $2.835 of diluted earnings per share, for the nine‑months ended September 30, 2022, compared to net income of $45.3 million, or $2.349 of diluted earnings per share, ~~for the nine‑months ended September 30, 2021, compared to net income of $38.6 million, or $2.001 of diluted earnings per share,~~ in the same period in ~~2020.~~2021. Return on average assets was ~~1.00%~~1.17% and ~~0.94%~~1.00%, respectively, for the nine-months ended September 30, ~~2021~~2022 and ~~2020.~~2021. Return on average equity was ~~10.50%~~12.16% and ~~9.38%~~10.50%, respectively, for the nine-months ended September 30, ~~2021~~2022 and ~~2020.~~2021.

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Asset/Liability Management

The Company strives to generate its earnings capabilities through a mix of core deposits funding a prudent mix of interest earning assets. Additionally, TrustCo attempts to maintain adequate liquidity and reduce the sensitivity of net interest income to changes in interest rates to an acceptable level while enhancing profitability both on a ~~short-term~~short‑term and ~~long-term~~long‑term basis.

TrustCo’s results are affected by a variety of factors including competitive and economic conditions in the specific markets in which the Company operates and, more generally, byin the national economy, financial market conditions and the regulatory environment. Each of these factors is dynamic, and changes in any area can have an impact on TrustCo’s results. Included in the ~~Annual Report to Shareholders on~~2021 Form 10-K ~~for the year ended December 31, 2020~~ is a description of the effect interest rates had on the results for the year ~~2020~~2021 compared to ~~2019.~~2020. Many of the same market factors discussed in the ~~2020 Annual Report~~2021 Form 10-K continued to have a significant impact on results through the third quarter of ~~2021,~~2022, as well as the economic effect of ~~COVID-19.~~COVID-19 and heightened global concerns.

TrustCo competes with other financial service providers based upon many factors including quality of service, convenience of operations and rates paid on deposits and charged on loans. In the experience of management, the absolute level of interest rates, changes in interest rates and customers’ expectations with respect to the direction of interest rates have a significant impact on the volume of loan and deposit originations in any particular period.

Interest rates have a significant impact on the operations and financial results of all financial services companies. One of the most important interest rates used to control national economic policy is the “Federal Funds” rate. This is the interest rate utilized within the banking system for overnight borrowings for institutions with the highest credit rating. ~~From December 2015 through December 2018, the U.S. Federal Reserve Board increased its federal funds target rate from a range of 0.00% - 0.25% to a range of 2.25% - 2.50%.~~ Beginning in the second half of 2019, the Federal Reserve Board began lowering the rate in response to a slowing economy. During the first quarter of 2020 the rate was significantly decreased again to 0.00% to 0.25% as a result of the ~~global pandemic related~~COVID-19 pandemic. The Federal Reserve Board increased the rate in March 2022, May 2022, June 2022, July 2022 and again in September 2022 to ~~COVID-19, and has returned~~end the ~~range of 0.00%~~third quarter at 3.00% to ~~0.25%.~~3.25% in order to address inflationary concerns, with additional rate increases anticipated.

The interest rate on the ~~ten-year~~10-year Treasury bond and other long-term interest rates have significant ~~influence~~impact on the rates for new residential real estate loans. These changes in interest rates have an effect on the Company relative to the interest income on loans, securities, and Federal Funds sold and other short-term ~~instruments~~investments as well as the interest expense on deposits and borrowings. Residential real estate loans and ~~longer‑term~~longer-term investments are most affected by the changes in longer term market interest rates such as the 10‑year Treasury. The Federal Funds sold portfolio and other short‑term investments are affected primarily by changes in the Federal Funds target rate. Deposit interest rates are most affected by short term market interest rates. Also, changes in interest rates have an effect on the recorded balance of the securities available for sale portfolio, which are recorded at fair value. Generally, as market interest rates increase, the fair value of the securities will decrease and the reverse is also generally applicable. Interest rates on new residential real estate loan originations are also influenced by the rates established by secondary market participants such as Freddie Mac and Fannie Mae. Because TrustCo is a portfolio lender and does not sell loans into the secondary market, the Company establishes rates that management determines are appropriate in light of the long-term nature of residential real estate loans while remaining competitive with the secondary market rates. Higher market interest rates also generally increase the value of retail deposits.

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TrustCo’s principal loan products are residential real estate loans. As noted above, residential real estate loans and longer‑term investments are most affected by the changes in longer term market interest rates such as the 10-year Treasury. The 10‑year Treasury yield increased 460.17 basis points, on average, during the third quarter of ~~2021~~2022 compared to the ~~fourth~~second quarter of ~~2020~~2022 and increased 671.78 basis points as compared to the third quarter of ~~2020.~~2021.

While TrustCo has been affected by changes in financial markets over time, the impacts have been mitigated by the Company’s generally conservative approach to banking. The Company utilizes a traditional underwriting process in evaluating loan applications, and since originated loans are retained in the portfolio, there is a strong incentive to be conservative in making credit decisions. For additional information concerning TrustCo’s loan portfolio and nonperforming loans, please refer to the discussions under “Loans” and “Nonperforming Assets,” respectively. Further, the Company does not rely on borrowed funds to support its assets and maintains a significant level of liquidity on the asset side of the balance sheet. ~~These~~Management believes that these characteristics provide the Company with increased flexibility and stability during periods of market disruption and interest rate volatility.

A fundamental component of TrustCo’s strategy has been to grow customer relationships and the deposits and loans that are part of those relationships. The Company has significant capacity to grow its balance sheet given its extensive branch network. The Company expects that growth to be profitable. ~~The~~Additionally, the current interest rate environment ~~however,~~ has ~~narrowed~~improved the margin on incremental balance sheet expansion. While the Company has not changed its fundamental long term strategy in regard to utilizing its excess capacity, management continually evaluates changing conditions and may seek to limit growth or reduce the size of the balance sheet if its analysis indicates that doing so would be beneficial.

For the third quarter of ~~2021,~~2022, the net interest margin was ~~2.65%~~3.16%, ~~down 8~~up 51 basis points versus the prior year’s quarter. The quarterly results reflect the following significant factors:

The average balance of Federal Funds sold and other short-term investments ~~increased~~decreased by ~~$228.6~~$247.8 million while the average yield increased 6209 basis points in the third quarter of ~~2021~~2022 compared to the same period in ~~2020.~~2021. The increase in the average yield was a result of increases in the Federal Funds target rate during 2022 and was more than enough to offset the decrease in the average balance of Federal Funds sold.

The average balance of securities available for sale increased by ~~$23.8 million while the average yield decreased 69 basis points to 1.36%. The average balance of held to maturity securities decreased by $4.6~~$67.6 million and the average yield also increased 2076 basis points to ~~3.72% for~~2.12%. The increase in the ~~third quarter~~average yield was primarily a result of ~~2021 compared~~higher bond yields on purchases throughout the year due to the ~~same period in 2020.~~changing interest rate environment.

The average loan portfolio grew by ~~$176.4~~$213.5 million to ~~$4.37~~$4.59 billion and the average yield decreased 334 basis points to ~~3.61%~~3.57% in the third quarter of ~~2021~~2022 compared to the same period in ~~2020.~~2021. The average yield decreased primarily as a result of lower loan origination rates while rates remained low before the recent increases by the Federal Reserve Board, as well as the timing of PPP loan origination fees.

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The average balance of interest bearing liabilities ~~increased $236.8~~decreased $76.0 million and the average rate paid decreased 374 basis points to ~~0.15%~~0.11% in the third quarter of ~~2021~~2022 compared to the same period in ~~2020.~~2021. Prior to the recent interest rate increases, time deposits were repricing at lower rates which drove down the rate paid on interest bearing liabilities. As time deposits reprice to current market rates we expect an increase in the average paid on interest bearing liabilities.

During the third quarter of ~~2021,~~2022, the Company continued to focus on its strategy to expand the loan portfolio by offering competitive interest rates. Management believes the TrustCo residential real estate loan product is very competitive compared to local and national competitors. ~~Competition remains strong~~We continue to face significant competition in the Company’s market areas.

The strategy on the funding side of the balance sheet iswas to offer competitive shorter term rates which allowed the Bank to ~~gain market share as well as retain our existing time deposits.~~remain competitive in the markets we serve. This strategy drove deposit growth at a relatively low cost that ~~will~~management believes should sustain TrustCo’s strong liquidity position and continue to allow us to cross sell new relationships and take advantage of opportunities as they arise. A significant portion of the Bank’s time deposits repriced during the last year while interest rates remained low. However, the Bank continues to monitor the recent Federal Funds target rate increases and the effects it is having on deposit rates. Continued increases in rates by the Federal Reserve Board will more than likely cause an increase in rates on interest bearing liabilities.

Earning Assets

Total average interest earning assets increased from ~~$5.58~~$6.01 billion in the third quarter of ~~2020~~2021 to ~~$6.01~~$6.04 billion in the same period of ~~2021~~2022 with an average yield of 3.24% in the third quarter of 2022 and 2.77% in the third quarter of ~~2021 and 3.15% in the third quarter of 2020. There was a shift in the~~2021. The mix of assets ~~towards a higher proportion of federal funds~~invested in Federal Funds sold and other short-term investments ~~as a result of an increase in deposits. There was a sharp decrease in~~decreased while loans and securities available for sale increased over the federal funds rate during March of 2020 significantly reducing the average yield on the federal funds sold and other short-term investments. Since then the rate has remained consistently low, however, during the third quarter 2021 it increased by 6 basis points to 0.16% from 0.10% due to a slight increase in the interest rate on excess reserves.prior year period. Interest income on average earning assets ~~decreased~~increased from ~~$44.0 million in the third quarter of 2020 to~~ $41.7 million in the third quarter of 2021 to $49.0 million in the third quarter of 2022, on a tax equivalent ~~basis, and~~basis. This increase was primarily driven by the ~~lower~~higher interest rates on Federal Funds sold and other short-term investments and securities available for sale, which resulted from the increases in the Federal Funds target rate throughout 2022, and ~~loans.~~also from interest income on loans due to increased volume of originations year over year.

Loans

The average balance of loans was ~~$4.37~~$4.59 billion in the third quarter of ~~2021~~2022 and ~~$4.20~~$4.37 billion in the comparable period in ~~2020. The~~2021, and the yield on loans was down 334 basis points to ~~3.61%~~3.57%. Interest income on loans was ~~$39.5~~$40.9 million in the third quarter of ~~2021 down $1.8~~2022 up $1.4 million from the same period in ~~2020.~~2021. As mentioned above, the average yield decreased primarily as a result of lower loan origination rates while interest rates remained low before the recent increases by the Federal Reserve Board, as well as the timing of PPP loan origination fees.

Index

Compared to the third quarter of ~~2020,~~2021, the average balance of residential mortgage ~~loans increased while commercial~~ loans, home equity lines of credit, and installment loans ~~decreased.~~increased while .commercial loans decreased. The average balance of residential mortgage loans was ~~$3.92~~$4.11 billion in the third quarter of ~~2021~~2022 compared to ~~$3.70~~$3.92 billion in ~~2020,~~2021, an increase of ~~5.9%~~4.7%. The average yield on residential mortgage loans decreased by 378 basis points to ~~3.52%~~3.44% in the third quarter of ~~2021~~2022 compared to ~~2020.~~2021.

~~Index~~

TrustCo actively markets the residential loan products within its market territories. Mortgage loan rates are affected by a number of factors including rates on Treasury securities, the Federal Funds rate and rates set by competitors and secondary market participants. TrustCo aggressively markets the unique aspects of its loan products thereby attempting to create a differentiation from other lenders. These unique aspects include low closing costs, fast turn-around time on loan approvals, no escrow or mortgage insurance requirements for qualified borrowers and the fact that the Company typically holds these loans in portfolio and does not sell them into the secondary markets. Assuming ~~an eventual~~a continued rise in long-term interest rates, the Company ~~anticipates~~would anticipate that the unique features of its loan products will continue to attract customers in the residential mortgage loan area.

Commercial loans, which consist primarily of loans secured by commercial real estate, decreased ~~$20.7~~$3.3 million to an average balance of ~~$210.8~~$207.5 million in the third quarter of ~~2021~~2022 compared to the same period in the prior year, primarily as a result of the ~~forgiven~~forgiveness of PPP loans. The average yield on this portfolio was ~~up 49~~down 24 basis points to ~~5.03%~~4.79% compared to the prior year period primarily as a result of ~~the~~less origination fees recognized on the forgiven PPP loans.The Company remains selective in underwriting commercial loans in recent periods as the apparent risk/reward balance has been less favorable in many cases.

The average yield on home equity credit lines ~~decreased 29~~increased 70 basis points to ~~3.69%~~4.39% during the third quarter of ~~2021~~2022 compared to the year earlier period. The average balances of home equity credit lines ~~decreased 8.0%~~increased 13.1% to ~~$231.3~~$261.6 million in the third quarter of ~~2021~~2022 as compared to the prior year. Customers with home equity lines continue to refinance their balances into fixed rate mortgage loans given the current rate environment and have been less likely to draw on home equity lines due to receipt of COVID-19 stimulus payments and reduced tax benefits.

Securities Available for Sale

The average balance of the securities available for sale portfolio for the third quarter of ~~2021~~2022 was ~~$453.1~~$520.7 million compared to ~~$429.3~~$453.1 million for the comparable period in ~~2020.~~2021. The increasing balance reflects new investment purchases offset by paydowns, calls and maturities. The ~~current interest rate environment has significantly contributed to more bonds being called. The~~ average yield was 2.12% for the third quarter of 2022 compared to 1.36% for the third quarter of ~~2021 compared to 2.05% for~~2021. The increase in average yield is a result of higher yields on bonds purchased in 2022 as a result of the ~~third quarter of 2020.~~current interest rate environment. This portfolio is primarily comprised of agency, mortgage backed securities and collateral mortgage obligation bonds issued by government sponsored enterprises (such as Fannie Mae, the Federal Home Loan Bank and Freddie Mac), Small Business Administration participation certificates, corporate bonds and municipal bonds. These securities are recorded at fair value with any adjustment in fair value included in accumulated other comprehensive ~~loss,~~income (loss), net of tax.

The net unrealized ~~gain~~loss in the available for sale securities portfolio was ~~$3.8~~$49.4 million as of September 30, ~~2021~~2022 compared to a net unrealized ~~gain~~loss of ~~$9.7 million~~$4 thousand as of December 31, ~~2020.~~2021. The ~~decrease~~increase in the net unrealized ~~gains~~losses in the portfolio is the result of changes in market interest rate levels.

Index

Held to Maturity Securities

The average balance of held to maturity securities was ~~$11.2~~$8.3 million for the third quarter of ~~2021~~2022 compared to ~~$15.8~~$11.2 million in the third quarter of ~~2020.~~2021. The decrease in balances reflects routine paydowns and calls. No new securities were added to this portfolio during the period. The average yield was ~~3.72%~~4.08% for the third quarter of ~~2021 compared to 3.52%~~2022 up from 3.72% for the year earlier period. The increase in the yield is primarily a result of an increase in average lives as well as the timing of mortgage-backed payments. TrustCo expects to hold the securities in this portfolio until they mature or are called.

As of September 30, ~~2021,~~2022, this portfolio consisted solely of agency issued mortgage-backed ~~securities.~~securities and collateralized mortgage obligations. The balances for these securities are recorded at amortized cost.

~~Index~~

Federal Funds Sold and Other Short-term Investments

The ~~2021 third quarter~~ average balance of Federal Funds sold and other short‑term investments was ~~$1.2 billion, a $228.6~~$918.9 million ~~increase from the $938.1 million average for the same period in 2020. The yield was 0.16%~~ for the third quarter of ~~2021~~2022 compared to $1.2 billion in the third quarter of 2022. The yield was 2.25% for the third quarter of 2022 and ~~0.10%~~0.16% for the comparable period in ~~2020. As previously noted, the increase in the yield was a result of an increase in the excess reserves interest rate.~~2021. Interest income from this portfolio increased ~~$228 thousand~~$4.8 million from ~~$242 thousand in 2020 to~~ $470 thousand in ~~2021.~~2021 to $5.2 million in 2022. While the average balances decreased year over year, the increase in the federal funds target rate throughout 2022 resulted in an increase in interest income over the same period in the prior year.

The Federal Funds sold and other short-term investments portfolio is utilized to generate additional interest income and liquidity as funds are waiting to be deployed into the loan and securities portfolios.

Funding Opportunities

TrustCo utilizes various funding sources to support its earning asset portfolio. The vast majority of the Company’s funding comes from traditional deposit vehicles such as savings, demand deposits, interest-bearing checking, money market and time deposit accounts.

Total average interest bearing deposit accounts (which includes interest bearing checking, money market accounts, savings and time deposits) increased ~~$190.4~~$26.1 million to ~~$4.5~~$4.50 billion for the third quarter of ~~2021~~2022 versus the third quarter in the prior year, and the average rate paid decreased from ~~0.52% for 2020 to~~ 0.14% for ~~2021.~~2021 to 0.10% for 2022. Total interest expense on these deposits decreased from ~~$5.6~~$1.5 million to ~~$1.5~~$1.1 million in the third quarter of ~~2021~~2022 compared to the year earlier ~~period primarily as a result of reduced market rates and shifts in the mix of deposit balances.~~period. From the third quarter of ~~2020~~2021 to the third quarter of ~~2021,~~2022, interest bearing demand account average balances were up ~~12.6%~~3.6%, certificates of deposit average balances were down ~~15.0%~~14.8%, non-interest demand average balances were up ~~25.4%~~10.1%, average savings balances increased ~~17.0%~~10.4% and money market balances were up ~~8.3%~~0.8%. Our growth in deposits came at relatively low cost and continues to be offset by higher earnings on loan yields and returns in the investment portfolios.

Index

At September 30, ~~2021,~~2022, the maturity of total time deposits is as follows:

~~(dollars in thousands)~~

(dollars in thousands)

Under 1 year	$	786,544
1 to 2 years		71,291
2 to 3 years		5,618
3 to 4 years		936
4 to 5 years		89,833
Over 5 years		130
	$	954,352

Under 1 year $ 1,047,698
1 to 2 years 65,500
2 to 3 years 9,127
3 to 4 years 1,419
4 to 5 years 687
Over 5 years 150
$ 1,124,581

~~Index~~

Average short-term borrowings for the third quarter 2022 were $138.1 million in 2022 compared to $240.2 million in ~~2021 compared to $193.8 million~~2021. The decrease in ~~2020.~~the average balance from the prior year period is primarily a result of a shift of funds into time deposits. The average rate decreased during this time period from ~~0.45% in 2020 to~~ 0.38% in ~~2021.~~2021 to 0.35% in 2022. The short-term borrowings of the Company are cash management accounts, which represent retail accounts with customers for which the Bank has pledged certain assets as collateral.

The Company has a number of contingent funding alternatives available in addition to the large cash and cash equivalents position and the investment securities positions it maintains on its balance sheet. The Bank is a member of the Federal Home Loan Bank of New York (“FHLBNY”) and is an eligible borrower at the Federal Reserve Bank of New York (“FRBNY”) and has the ability to borrow utilizing securities and/or loans as collateral at either. The Bank does not utilize brokered deposits as a part of its funding strategy, but does incorporate them as a potential contingent funding source within its Asset/Liability Management Policy. Like other contingent funding sources, brokered ~~CDs~~deposits may be tested from time to time to ensure operational and market readiness.

Net Interest Income

Taxable equivalent net interest income increased by ~~$1.7~~$7.9 million to ~~$39.9~~$47.8 million in the third quarter of ~~2021~~2022 compared to the same period in ~~2020.~~2021. The net interest spread was ~~down 1~~up 51 basis point to ~~2.62%~~3.13% in the third quarter of ~~2021~~2022 compared to the same period in ~~2020.~~2021. As previously noted, the net interest margin was ~~down 8~~also up 51 basis points to ~~2.65%~~3.16% for the third quarter of ~~2021~~2022 compared to the same period in ~~2020.~~2021.

Taxable equivalent net interest income increased by ~~$5.7~~$10.8 million to ~~$120.1~~$130.9 million in the first nine-months of ~~2021~~2022 compared to the same period in ~~2020.~~2021. The net interest spread was ~~down 7~~up 19 basis points to ~~2.67%~~2.86% in the first nine-months of ~~2021~~2022 compared to the same period in ~~2020.~~2021. Net interest margin was ~~down 15~~up 17 basis points to ~~2.71%~~2.88% for the first nine‑months of ~~2021~~2022 compared to the same period in ~~2020.~~2021.

Nonperforming Assets

Nonperforming assets include nonperforming loans (“NPLs”), which are those loans in a non‑accrual status and loans past due three payments or more and still accruing interest. Also included in the total of nonperforming assets are foreclosed real estate properties, which are included in other assets and categorized as other real estate owned. As of September 30, 2021, there were $1.8 million pandemic related deferrals that have been recorded as NPLs. Additionally, $1.4 million of pandemic related deferrals are classified as troubled debt restructurings (“TDRs”).

Index

The following describes the nonperforming assets of TrustCo as of September 30, ~~2021:~~2022:

Nonperforming loans and foreclosed real estate: Total NPLs and non-accrual loans were $18.7 million at September 30, 2022, compared to $18.8 million at December 31, 2021 and $20.2 million at September 30, ~~2021, compared to $21.1 million at December 31, 2020 and $21.8 million at September 30, 2020.~~2021. There were no loans at September 30, ~~2021~~2022 and ~~2020~~2021 and December 31, ~~2020~~2021 that were past due 90 days or more and still accruing interest.

~~Index~~

At September 30, ~~2021,~~2022, nonperforming loans primarily include a mix of commercial and residential loans. Of total nonperforming loans of ~~$20.2~~$18.7 million at September 30, ~~2021, $19.9~~2022, $18.4 million were residential real estate loans, ~~$176~~$179 thousand were commercial loans and mortgages and ~~$32~~$94 thousand were installment loans, compared to ~~$20.6~~$18.6 million, ~~$452~~$112 thousand and ~~$43~~$37 thousand, respectively, at December 31, ~~2020.~~2021.

A significant percentage of nonperforming loans are residential real estate loans, which are historically lower-risk than most other types of loans. Net recoveries were ~~$39~~$164 thousand on residential real estate loans (including home equity lines of credit) for the third quarter of ~~2021~~2022 compared to net ~~chargeoffs~~recoveries of $4$39 thousand for the third quarter of ~~2020.~~2021. Management believes that these loans have been appropriately written down where required.

Ongoing portfolio management is intended to result in early identification and disengagement from deteriorating credits. TrustCo has a diversified loan portfolio that includes a significant balance of residential mortgage loans to borrowers in the Capital Region of New York and Central Florida, and avoids concentrations to any one borrower or any single industry. TrustCo has no advances to borrowers or projects located outside the United States. TrustCo continues to identify delinquent loans as quickly as possible and to move promptly to resolve problem loans. Efforts to resolve delinquencies begin immediately after the payment grace period expires, with repeated, automatically generated notices, as well as personalized phone calls and letters. Loans are placed in ~~nonaccrual~~non-accrual status once they are 90 days past due, or earlier if management has determined that such classification is appropriate. Once in ~~nonaccrual~~non-accrual status, loans are either brought current and maintained current, at which point they may be returned to accrual status, or they proceed through the foreclosure process. The collateral on ~~nonaccrual~~non-accrual loans is evaluated periodically, and the loan value is written down if the collateral value is insufficient. ~~Additionally, due to the COVID-19 pandemic, the Bank is monitoring recent regulatory mandates by state in regards to a moratorium on foreclosures.~~

The Company originates loans throughout its branch franchise area. At September 30, ~~2021, 70.9%~~2022, 68.8% of its gross loan portfolio balances were in New York State and the immediately surrounding areas (including New Jersey, Vermont and Massachusetts), and ~~29.1%~~31.2% were in Florida. Those figures compare to ~~72.1%~~70.6% and ~~27.9%~~29.4%, respectively, at December 31, ~~2020.~~2021.

Economic conditions vary widely by geographic location. As a percentage of the total nonperforming loans as of September 30, ~~2021, 10.2%~~2022, 11.6% were to Florida borrowers, compared to ~~89.8%~~88.4% to borrowers in New York and surrounding areas. For the three months ended September 30, ~~2021,~~2022, New York and surrounding areas experienced net ~~chargeoffs~~recoveries of approximately $5$130 thousand and Florida experienced no net ~~chargeoffs~~recoveries of $2 thousand for the third quarter of ~~2021.~~2022.

Index

Other than loans currently identified as nonperforming, ~~and loan deferrals as a result of COVID-19,~~ management is aware of no other loans in the Bank’s portfolio that pose material risk of the eventual non-collection of principal and interest. Also as of September 30, ~~2021,~~2022, there were no other loans classified for regulatory purposes that management reasonably expects will materially impact future operating results, liquidity, or capital resources.

~~Index~~

TrustCo has identified ~~nonaccrual~~non-accrual commercial and commercial real estate loans, ~~as well as~~ all loans restructured under a TDR, and residential non-accrual loans over 180 days as ~~impaired~~individually evaluated loans. There were ~~$521~~$294 thousand of commercial mortgages and commercial loans classified as ~~impaired~~individually evaluated as of September 30, ~~2021~~2022 compared to ~~$1.0 million~~$232 thousand classified as impaired at December 31, ~~2020.~~2021. There were ~~$19.3~~$26.2 million of ~~impaired~~individually evaluated residential loans at September 30, ~~2021 and $20.6~~2022 compared to $18.3 million classified as impaired at December 31, ~~2020~~2021. ~~The average balances of all impaired loans were $20.7 million for the nine months of 2021 and $20.8 million for the full year 2020.~~

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company’s loan portfolio did not include any subprime mortgages or loans acquired with deteriorated credit quality.

At September 30, ~~2021~~2022 there was ~~$511~~$682 thousand of foreclosed real estate compared to ~~$541~~$362 thousand at December 31, ~~2020.~~2021.

In response to Hurricane Ian, the Bank continues to assess the impact to the counties in Florida in which we do business. We are currently monitoring all customer contact in the affected counties and to date have not identified circumstances that would have a material adverse impact on the performance of our loan portfolio.

Allowance for ~~loan losses:~~credit losses on loans: The ~~balance~~Company adopted CECL on January 1, 2022. Under this standard, allowances have been established for loans and commitments to lend. The allowance for credit losses on loans (“ACLL”) replaces the previous allowance for loan losses (“ALL”). Upon adoption, the allowance for credit losses on loans increased by $2.4 million to $46.6 million from $44.2 at December 31, 2021 under the ALLL. The allowance for credit losses on unfunded commitments increased from $18 thousand to $2.4 million and is recorded in accrued expenses and other liabilities. The Company recorded a net decrease to undivided profits of $3.5 million, net of $1.2 million in deferred tax balances as of January 1, 2022 for the cumulative effect of adopting CECL.

In the third quarter of 2022, the Company recorded a provision for credit losses of $300 thousand, which includes a provision for credit losses on loans of $100 thousand as a result of continued growth growth in the loan portfolio partially offset by a sustained low level of NPL’s and chargeoffs, and a provision for credit losses on unfunded commitments of $200 thousand as a result of a corresponding increase in unfunded loans.

During the most recent quarter, the Federal Reserve Bank increased the target federal funds rate on two occasions by 75 basis points each, and then another 75 basis points in November 2022, resulting in six interest rate hikes this year totaling 375 basis points. Rising inflation weighs on consumers’ purchasing power by slowing spending and driving monetary tightening. Inflation has reached a forty-year high, and labor and supply chain challenges have been heightened by the global impacts of the Russian invasion of Ukraine. Management has taken into consideration the possible effects of these changes qualitatively within the reserves.

Index

The Company evaluates several external forecasts in choosing the forecast element for the economic components of the allowance for ~~loan~~credit losses ~~is maintained at a level that is,~~on loans. The Company selected the stagflation forecast for both January 1, 2022 and September 30, 2022 for economic modeling.

The following changes in ~~management’s judgment, representative~~forecasts from June to September impacted the reserves:

unemployment rates declining 2% for both New York and Florida,

an increase in consumer price indices (“CPI”) of 0.2% for New York and 3% for Florida,

an increase in Gross Metro Product (“GMP”) of 2% for New York,

an increase in Gross Metro Product (“GMP”) of 4% for Florida.

See Notes 1 and 5 of the ~~amount~~financial statements for additional discussion related to the adoption of ~~probable incurred losses in~~CECL, and the ~~loan portfolio.~~process for determining the provision for credit losses.

(dollars in thousands)

As of
September 30, 2021

As of
December 31, 2020

Amount
Percent of
Loans to
Total Loans
Amount
Percent of
Loans to
Total Loans

Commercial
$ 3,083 4.30 %
$
3,975

4.67
%
Real estate - construction
411 0.86 %
290

0.58
%
Real estate mortgage - 1 to 4 family
40,339 89.37 %
41,228

88.81
%
Home equity lines of credit
3,073 5.26 %
3,597

5.71
%
Installment Loans
444 0.21 %
505

0.23
%
$ 47,350 100.00 %
$
49,595

100.00
%

The allocation of the allowance for credit losses on loans as follows:

	As of					As of
(dollars in thousands)	September 30, 2022					December 31, 2021
			Percent of					Percent of
			Loans to					Loans to
	Amount		Total Loans			Amount		Total Loans
Commercial	$	2,169		4.20	%	$	2,942		4.08	%
Real estate - construction		393		0.79	%		375		0.84	%
Real estate mortgage - 1 to 4 family		38,649		88.96	%		37,650		89.67	%
Home equity lines of credit		4,162		5.82	%		2,857		5.20	%
Installment Loans		144		0.23	%		443		0.21	%
	$	45,517		100.00	%	$	44,267		100.00	%

At September 30, ~~2021,~~2022, the allowance for loan losses was ~~$47.4~~$45.5 million, compared to ~~$49.1~~$47.4 million at September 30, ~~2020~~2021 and ~~$49.6~~$44.3 million at December 31, ~~2020.~~2021. The allowance represents ~~1.08%~~0.98% of the loan portfolio as of September 30, ~~2021, and 1.17%~~2022, 1.00% at December 31, ~~2020~~2021, and 1.08% at September 30, ~~2020.~~

Provision for loan losses for the quarter ended September 30, 2021 was a credit of $2.8 compared to a provision for loan losses of $1 million for the quarter ended September 30, 2020. The decrease is primarily driven by sustained improvements in the current economic environment and credit quality metrics. Net chargeoffs for the three-month period ended September 30, 2021 were $5 thousand compared to net chargeoffs of $21 thousand for the prior year period.2021.

During the third quarter of ~~2021,~~2022, there ~~was~~were no commercial loan chargeoffs, $13 thousand of residential loan chargeoffs, and $34 thousand of consumer loan chargeoffs, compared to $30 thousand of commercial loan ~~net~~ chargeoffs, ~~$39~~$73 thousand of gross residential mortgage chargeoffs, and $17 thousand of consumer loan chargeoffs in the third quarter of 2021. During the third quarter of 2022 there were no commercial loan recoveries, $177 thousand of residential mortgage ~~net~~ recoveries, and ~~$14~~$2 thousand for consumer loan recoveries, compared to no commercial loan recoveries, $112 thousand of residential mortgage recoveries, and $3 thousand of consumer loan ~~net chargeoffs, compared with $1 thousand of net commercial loan~~ recoveries ~~$4 thousand of residential mortgage net chargeoffs, and $18 thousand of consumer loan net chargeoffs for the same period~~ in the ~~prior year.~~

~~In determining the adequacy~~third quarter of the allowance for loan losses, management reviews the current nonperforming loan portfolio as well as loans that are past due and not yet categorized as nonperforming for reporting purposes. Also, there are a number of other factors that are taken into consideration, including:2021.

5762

Index

~~The magnitude and nature of recent loan chargeoffs and recoveries;~~

~~The growth in the loan portfolio and the implication that it has in relation to the economic climate in the Bank’s market territories;~~

~~The economic environment in the Upstate New York and Florida territories over the last several years, as well as in the Company’s other market areas; and~~

~~The economic environment as a result of the global pandemic.~~

Management continues to monitor these factors in determining the provision for loan losses in relation to loan chargeoffs, recoveries, the level and trends of nonperforming loans and overall economic conditions in the Company’s market territories.

Liquidity and Interest Rate Sensitivity

TrustCo seeks to obtain favorable sources of funding and to maintain prudent levels of liquid assets in order to satisfy varied liquidity demands. Management believes that TrustCo’s earnings performance and strong capital position enable the Company to easily secure new sources of liquidity. The Company actively manages its liquidity through target ratios established under its liquidity policies. Continual monitoring of both historical and prospective ratios allows TrustCo to employ strategies necessary to maintain adequate liquidity. Management has also defined various degrees of adverse liquidity situations which could potentially occur and has prepared appropriate contingency plans should such a situation arise. As noted, the Company has a number of contingent funding alternatives available in addition to the large cash and cash equivalents position and the investment securities positions it maintains on its balance sheet. As previously stated, the Bank is a member of the FHLBNY and is an eligible borrower at the FRBNY and has the ability to borrow utilizing securities and/or loans as collateral at either institution. The Bank does not utilize brokered deposits as a part of its funding strategy, but does incorporate them as a contingent funding source within its Asset/Liability Management Policy. Like other contingent funding sources, brokered ~~CDs~~deposits may be tested from time to time to ensure operational and market readiness. Management believes that the Company has adequate sources of liquidity to cover its contractual obligations and commitments over the next twelve months and beyond.

The Company uses an industry standard external model as the primary tool to identify, quantify and project changes in interest rates and prepayment speeds taken both from industry sources and internally generated data based upon historical trends in the Bank’s balance sheet. Assumptions based on the historical behavior of deposit rates and balances in relation to changes in market interest rates are also incorporated into the model. This model calculates an economic or fair value amount with respect to non-time deposit categories since these deposits are part of the core deposit products of the Company. The assumptions used are inherently uncertain and, as a result, the model cannot precisely measure the fair value of capital or precisely predict the impact of fluctuations in interest rates on the fair value of capital.

Using this model, the fair value of capital projections as of September 30, ~~2021~~2022 are referenced below. The base case (current rates) scenario shows the present estimate of the fair value of capital assuming no change in the operating environment or operating strategies and no change in interest rates from those existing in the marketplace as of September 30, ~~2021.~~2022. The table indicates the impact on the fair value of capital assuming interest rates were to instantaneously increase by 100 bp, 200 bp, 300 bp and 400 bp or to decrease by 100 ~~bp.~~bp, 200bp and 300bp.

~~Index~~

As of September 30, ~~2021~~2022		Estimated Percentage of Fair value of Capital to Fair value of Assets
+400 BP	~~22.20~~		30.90 %
+300 BP	~~22.20~~		30.60
+200 BP	~~22.10~~		31.50
+100 BP	~~22.30~~		31.60
Current rates	~~21.40~~		30.60
-100 BP	~~18.30~~		28.50
-200 BP			25.30
-300 BP			21.60

Noninterest Income

Total noninterest income for the third quarter of ~~both 2021 and 2020~~2022 was ~~$4.3 million. Financial Services income was down $226 thousand~~$4.4 million compared to ~~$1.6~~$4.3 million in the third quarter of ~~2021~~2021. Financial Services income was down $123 thousand to $1.4 million in the third quarter of 2022 as compared to the year-ago period, primarily as a result of ~~estate settlements in the prior year.~~lower market values of assets under management. The fair value of assets under management was $864.8 million at September 30, 2022, $1.10 billion as of December 31, 2021, and $1.05 billion at September 30, 2021. Fees for services to customers were up ~~$239~~$174 thousand over the same period in the prior year, primarily as a result of more ~~overdraft fees and~~ interchange income. ~~The fair value of assets under management was $1.1 billion at September 30, 2021, $996.7 million as of December 31, 2020, and $899 million at September 30, 2020.~~

Index

For the nine-months ended September 30, ~~2021~~2022 total noninterest income was ~~$13.4~~$14.5 million, up ~~$310 thousand~~$1.1 million compared to the prior year period. The increase is primarily the result of more ~~Financial Services~~interchange income asand a ~~result~~gain on the sale of ~~higher asset market values under management, and more interchange income,~~fixed assets, partially offset by ~~net gains on securities transactions of $1.2 million in the prior period.~~less financial services income.

Noninterest Expenses

Total noninterest expenses were ~~$24.7~~$26.1 million for the three-months ended September 30, ~~2021,~~2022, compared to ~~$22.7~~$24.7 million for the three-months ended September 30, ~~2020~~2021. Significant changes included a ~~$1.0 million~~$225 thousand increase in salaries and employee benefits, a ~~$172~~$224 thousand increase in ~~professional services,~~net occupancy expense, a ~~$140~~$313 thousand increase in outsourced services, a $198 increase in advertising expense, and a ~~$460~~$572 thousand increase in other ~~expenses.~~expenses, partially offset by a $96 thousand decrease in equipment expense, and a $108 thousand decrease in professional services. Full time equivalent headcount was ~~771 as of September 30, 2020, 778 as of December 31, 2020, and~~ 743 as of September 30, ~~2021. Full time equivalent employees decreased~~2021, 759 as of December 31, 2021, and ~~salaries and employee benefits expense on existing employees has increased from the prior year partially due to a challenging labor market from the impact~~753 as of ~~the pandemic. In addition, other benefits has increased primarily as a result of a higher stock price on the liability-based equity awards, and the increase~~September 30, 2022. Changes in ~~costs associated with existing employee benefit plans.~~headcount represent normal fluctuations.

Total noninterest expenses were ~~$75.5~~$73.9 million for the nine-months ended September 30, ~~2021,~~2022, compared to ~~$70.9~~$75.5 million for the nine-months ended September 30, ~~2020~~2021. Significant changes included ~~an increase~~a decrease of ~~$2.8~~$3.9 million in salaries and employee benefits ~~for~~primarily as a result of a $2 million favorable true-up to the ~~same reasons~~incentive compensation accrual upon payout in the first quarter of 2022, as ~~mentioned above,~~well as decreases in various other employee benefit plan expenses. This was partially offset by a ~~$555 thousand increase in professional services, a $609~~$674 thousand increase in outsourced services, a ~~$667~~$301 thousand increase ~~FDIC and other insurance expense as a result of credits in the prior period due to the FDIC reaching the Deposit Reserve Fund reserve ratio, partially offset by a $181 thousand decrease~~ in advertising expense and a ~~decrease of $156 thousand~~$1.4 million increase in ~~equipment~~other expense.

~~Index~~

Income Taxes

In the third quarter of ~~2021,~~2022, TrustCo recognized income tax expense of ~~$5.5~~$6.4 million compared to ~~$4.8~~$5.5 million for the third quarter of ~~2020.~~2021. The effective tax rates were 24.8% ~~and 25.3%~~ for both the third quarters of ~~2021~~2022 and ~~2020, respectively.~~2021. For the first nine-months, income taxes were $17.6 million and $15.2 million in 2022 and ~~$13.0 million in~~ 2021, ~~and 2020,~~ respectively. The effective tax rate was 24.5% and 25.2% for ~~both~~2022 and 2021, ~~and 2020.~~respectively.

Capital Resources

Consistent with its long-term goal of operating a sound and profitable financial organization, TrustCo strives to maintain strong capital ratios.

Banking regulators have moved towards higher required capital requirements due to the standards included in the ~~Basel III~~“Basel III” banking capital reform measures and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as a general trend towards reducing risk in the banking system by providing a greater capital margin.

Total shareholders’ equity at September 30, ~~2021~~2022 was ~~$586.7~~$589.0 million compared to ~~$560.5~~$586.7 million at September 30, ~~2020.~~2021. TrustCo declared a dividend of ~~$0.340625~~$0.35 per share in the third quarter of ~~2021 and is adjusted for the Reverse Stock Split which occurred on May 28, 2021.~~2022. This results in a dividend payout ratio of ~~39.13%~~34.57% based on third quarter ~~2021~~2022 earnings of ~~$16.8~~$19.4 million.

6064

Index

The Bank and the Company reported the following capital ratios as of September 30, ~~2021~~2022 and December 31, ~~2020:~~2021:

~~(Bank Only)~~

(Bank Only)	As of September 30, 2022					Well			Minimum for Capital Adequacy plus Capital Conservation
(dollars in thousands)	Amount		Ratio			Capitalized⁽¹⁾			Buffer⁽¹⁾⁽²⁾

Tier 1 leverage ratio	$	597,092		9.648	%		5.000	%		4.000	%
Common equity tier 1 capital		597,092		18.333			6.500			7.000
Tier 1 risk-based capital		597,092		18.333			8.000			8.500
Total risk-based capital		637,906		19.586			10.000			10.500

(dollars in thousands)					Well Capitalized⁽¹⁾		Minimum for Capital Adequacy plus Capital Conservation Buffer⁽¹⁾⁽²⁾

	As of September 30, 2021
									As of December 31, 2021						Well			Minimum for Capital Adequacy plus Capital Conservation
(dollars in thousands)	Amount		Ratio		Well Capitalized⁽¹⁾		Minimum for Capital Adequacy plus Capital Conservation Buffer⁽¹⁾⁽²⁾		Amount			Ratio			Capitalized⁽¹⁾			Buffer⁽¹⁾⁽²⁾

	$	561,969		9.148					$	570,594			9.324	%		5.000	%		4.000	%
		561,969		18.899						570,594			18.954			6.500			7.000
Tier 1 risk-based capital		561,969		18.899							8.000			8.500			570,594			18.954	8.000	8.500
Total risk-based capital		599,265		20.153		10.000		10.500		608,308			20.206			10.000			10.500

(dollars in thousands)


Well
Capitalized⁽¹⁾

Minimum for
Capital Adequacy plus
Capital Conservation
Buffer⁽¹⁾⁽²⁾


As of December 31, 2020
Amount Ratio

Tier 1 leverage ratio
$
539,897

9.378
%

5.000
%

4.000
%
Common equity tier 1 capital
539,897

18.646

6.500

7.000

Tier 1 risk-based capital
539,897

18.646

8.000

8.500

Total risk-based capital
576,257

19.902

10.000

10.500

(Consolidated)

(dollars in thousands)


Minimum for
Capital Adequacy plus
Capital Conservation
Buffer⁽¹⁾⁽²⁾


As of September 30, 2021
Amount Ratio

Tier 1 leverage ratio $ 578,825 9.420 % 4.000 %
Common equity tier 1 capital 578,825 19.461 7.000
Tier 1 risk-based capital 578,825 19.461 8.500
Total risk-based capital 616,131 20.715 10.500

(dollars in thousands)

Minimum for
Capital Adequacy plus
Capital Conservation
Buffer⁽¹⁾⁽²⁾

As of December 31, 2020
Amount Ratio

Tier 1 leverage ratio
$
555,672

9.650
%

4.000
%
Common equity Tier 1 capital
555,672

19.187

7.000

Tier 1 risk-based capital
555,672

19.187

8.500

Total risk-based capital
592,040

20.443

10.500

	As of September 30, 2022					Minimum for Capital Adequacy plus Capital Conservation
(dollars in thousands)	Amount		Ratio			Buffer⁽¹⁾⁽²⁾

Tier 1 leverage ratio	$	613,661		9.913	%		4.000	%
Common equity tier 1 capital		613,661		18.837			7.000
Tier 1 risk-based capital		613,661		18.837			8.500
Total risk-based capital		654,486		20.090			10.500

	As of December 31, 2021					Minimum for Capital Adequacy plus Capital Conservation
(dollars in thousands)	Amount		Ratio			Buffer⁽¹⁾⁽²⁾

Tier 1 leverage ratio	$	588,427		9.614	%		4.000	%
Common equity Tier 1 capital		588,427		19.541			7.000
Tier 1 risk-based capital		588,427		19.541			8.500
Total risk-based capital		626,150		20.794			10.500

(1)	Federal regulatory minimum requirements to be considered to be Well Capitalized and Adequately Capitalized

(2)	The September 30, ~~2021~~2022 and December 31, ~~2020~~2021 common equity tier 1, tier 1 risk-based, and total risk-based capital ratios include a capital conservation buffer of 2.50 percent

Critical Accounting Policies and Estimates

The following table summarizes the component distribution of the average balance sheet, related interest income and expense and the average annualized yields on interest earning assets and annualized rates on interest bearing liabilities of TrustCo (adjusted for tax equivalency) for each of the reported periods. Nonaccrual loans are included in loans for this analysis. The average balances of securities available for sale and held to maturity are calculated using amortized costs for these securities. Included in the average balance of shareholders' equity is the unrealized gain (loss), net of tax, in the available for sale portfolio of ~~$4.1~~$($25.4) million in ~~2021~~2022 and ~~$7.2~~$3.9 million in ~~2020.~~2021. The subtotals contained in the following table are the arithmetic totals of the items contained in that category. Increases and decreases in interest income and expense due to both rate and volume have been allocated to the categories of variances (volume and rate) based on the percentage relationship of such variances to each other.

Mortgage backed securities and collateralized mortgage obligations-residential

Small Business Administration-guaranteed participation securities

Federal funds sold and other short-term Investments

Mortgage backed securities and collateralized mortgage obligations-residential

Net interest margin (net interest income to total interest earning assets)

The following table summarizes the component distribution of the average balance sheet, related interest income and expense and the average annualized yields on interest earning assets and annualized rates on interest bearing liabilities of TrustCo (adjusted for tax equivalency) for each of the reported periods. Nonaccrual loans are included in loans for this analysis. The average balances of securities available for sale and held to maturity are calculated using amortized costs for these securities. Included in the average balance of shareholders' equity is the unrealized gain (loss), net of tax, in the available for sale portfolio of $(17.9) million in 2022 and $4.1 million in 2021. The subtotals contained in the following table are the arithmetic totals of the items contained in that category. Increases and decreases in interest income and expense due to both rate and volume have been allocated to the categories of variances (volume and rate) based on the percentage relationship of such variances to each other.

There were no material changes to the risk factors previously disclosed in the Company’s Annual Report on Form ~~10‑K~~10-K for the year ended December 31, ~~2020.~~2021 and the risk factors contained in “Risk Factors” within Item 1A of Part II of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, which are incorporated herein by reference.

Share Repurchase Program

Period Total numbers of shares purchased
Average price paid per
share

Total number of
shares purchased as
part of publicly
announced plans or
programs

Maximum number of
shares that may yet
be purchased under
the plans or programs
(1)

July 1, 2021 through July 30, 2021
10,000

$
33.82

10,000

370,000

August 1, 2021 through August 31, 2021
-

N/A

-

370,000

September 1, 2021 through September 30, 2021
40,000

$
31.61

40,000

330,000

Total
50,000

$
32.24

50,000

330,000

2022:

On ~~February 18, 2021~~March 9, 2022 the Company’s Board of Directors authorized aanother share repurchase program of up to ~~400,000~~200,000 shares, ~~as adjusted for the Reverse Stock Split,~~ or approximately 2%1% of ~~the Company’s~~its currently outstanding common stock. ~~The~~During the three months ended September 30, 2022, the Company ~~commenced repurchases~~repurchased a total of 75,100 shares at an average price per share of $33.37, for a total of $2.5 million under ~~the program during the quarter ended June 30, 2021.~~its Board authorized share repurchase program.

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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TrustCo Bank Corp NY

By: /s/ Robert J. McCormick

Chairman, President and Chief Executive Officer

Executive Vice President and Chief Financial Officer

Part I.	FINANCIAL INFORMATION	PAGE NO.
Item 1.	Consolidated Interim Financial Statements (Unaudited):

	Consolidated Statements of Income for the three-month and nine-month periods ended September 30, ~~2021~~2022 and ~~2020~~2021	3

	Consolidated Statements of Comprehensive Income for the three-month and nine-month periods ended September 30, ~~2021~~2022 and ~~2020~~2021	4

	Consolidated Statements of Financial Condition as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021	5

	Consolidated Statements of Changes in Shareholders’ Equity for the three-month and nine-month periods ended September 30, ~~2021~~2022 and ~~2020~~2021	6

	Consolidated Statements of Cash Flows for the nine-month periods ended September 30, ~~2021~~2022 and ~~2020~~2021	7

	Notes to Consolidated Interim Financial Statements	~~8-41~~8-46

	Report of Independent Registered Public Accounting Firm	42 47

Item 2.	~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~43-65~~48-69

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6670

Item 4.	Controls and Procedures	6670

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	6771

Item 1A.	Risk Factors	6771

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6771

Item 3.	Defaults Upon Senior Securities	67 71

Item 4.	Mine Safety Disclosures	6771

Item 5.	Other Information	6772

Item 6.	Exhibits	6872

	December 31, 2020
(dollars in thousands)	Commercial Loans		1-to-4 Family Residential Real Estate		Installment Loans		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	0		0		0		0
Collectively evaluated for impairment		4,140		44,950		505		49,595

Total ending allowance balance	$	4,140		44,950		505		49,595

Loans:
Individually evaluated for impairment	$	1,028		20,553		0		21,581
Collectively evaluated for impairment		211,464		4,001,808		9,617		4,222,889

Total ending loans balance	$	212,492		4,022,361		9,617		4,244,470

(in thousands, except per share data)	For the three months ended September 30,				For the nine months ended September 30,
	2021		2020		2021		2020

Net income	$	16,762		14,071	$	45,278		38,638
Weighted average common shares (1)		19,249		19,287		19,272		19,306
Stock Options (1)		3		1		6		2
Weighted average common shares including potential dilutive shares (1)		19,252		19,288		19,278		19,308

Basic EPS (1)	$	0.871		0.730	$	2.349		2.002

Diluted EPS (1)	$	0.871		0.730	$	2.349		2.001

Florida:
(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 + Days Past Due		Total 30+ days Past Due		Current		Total Loans

Commercial:
Commercial real estate	$	0		0		0		0		20,512		20,512
Other		0		0		0		0		532		532
Real estate mortgage - 1 to 4 family:
First mortgages		482		182		1,367		2,031		1,187,055		1,189,086
Home equity loans		45		0		0		45		13,792		13,837
Home equity lines of credit		186		0		0		186		53,888		54,074
Installment		19		0		0		19		2,054		2,073

Total	$	732		182		1,367		2,281		1,277,833		1,280,114

	For the nine months ended September 30, 2020
	Commercial			Real Estate Mortgage- 1 to 4 Family		Installment		Total
Balance at beginning of period	$	3,999			39,748		570		44,317
Loans charged off:
New York and other states*		3			277		77		357
Florida		0			0		19		19
Total loan chargeoffs		3			277		96		376

Recoveries of loans previously charged off:
New York and other states*		9			160		11		180
Florida		0			2		0		2
Total recoveries		9			162		11		182
Net loans charged off (recoveries)		(6	)		115		85		194
Provision for loan losses		262			4,690		48		5,000
Balance at end of period	$	4,267			44,323		533		49,123

	September 30, 2021

New York and other states*: (dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment

Commercial:
Commercial real estate	$	388		480		0		1,147
Other		40		40		0		108
Real estate mortgage - 1 to 4 family:
First mortgages		14,261		14,567		0		14,070
Home equity loans		199		199		0		235
Home equity lines of credit		2,052		2,192		0		2,255

Total	$	16,940		17,478		0		17,815

Florida: (dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment

Commercial:
Commercial real estate	$	93		93		0		105
Other		0		0		0		0
Real estate mortgage - 1 to 4 family:
First mortgages		2,597		2,597		0		2,563
Home equity loans		0		0		0		15
Home equity lines of credit		183		183		0		246

Total	$	2,873		2,873		0		2,929

Total: (dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment

Commercial:
Commercial real estate	$	481		573		0		1,252
Other		40		40		0		108
Real estate mortgage - 1 to 4 family:
First mortgages		16,858		17,164		0		16,633
Home equity loans		199		199		0		250
Home equity lines of credit		2,235		2,375		0		2,501

Total	$	19,813		20,351		0		20,744

	December 31, 2021
(dollars in thousands)			1-to-4 Family
	Commercial		Residential		Installment
	Loans		Real Estate		Loans		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	-		-		-		-
Collectively evaluated for impairment		3,135		40,689		443		44,267

Total ending allowance balance		3,135		40,689		443		44,267

Loans:
Individually evaluated for impairment	$	232		18,272		-		18,504
Collectively evaluated for impairment		199,968		4,210,891		9,416		4,420,275

Total ending loans balance	$	200,200		4,229,163		9,416		4,438,779

	Three months ended 9/30/2021						Three months ended 9/30/2020

New York and other states*:	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
(dollars in thousands)	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment

Commercial:
Commercial real estate		0	$	0		0		1	$	126		126
Real estate mortgage - 1 to 4 family:
First mortgages		2		557		557		6		1,533		1,533
Home equity loans		0		0		0		0		0		0
Home equity lines of credit		1		31		31		1		50		50

Total		3	$	588		588		8	$	1,709		1,709

Florida: (dollars in thousands)	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment

Commercial:
Commercial real estate		0	$	0		0	$	0
Real estate mortgage - 1 to 4 family:
First mortgages		0		0		0		0
Home equity loans		0		0		0		0
Home equity lines of credit		0		0		0		0

Total		0	$	0		0	$	0

	Three months ended 9/30/2020
(dollars in thousands)	Balance at 7/1/2020			Other Comprehensive Income (loss)- Before Reclassifications			Amount reclassified from Accumulated Other Comprehensive Income			Other Comprehensive Income (loss)- Three months ended 9/30/2020			Balance at 9/30/2020

Net unrealized holding (gain) loss on securities available for sale, net of tax	$	8,061			(198	)		0			(198	)		7,863
Net change in overfunded position in pension and postretirement plans arising during the year, net of tax		4,840			0			0			0			4,840
Net change in net actuarial (gain) loss and prior service cost on pension and postretirement benefit plans, net of tax		(965	)		0			(201	)		(201	)		(1,166	)

Accumulated other comprehensive income (loss), net of tax	$	11,936			(198	)		(201	)		(399	)		11,537

Under 1 year	$	1,047,698
1 to 2 years		65,500
2 to 3 years		9,127
3 to 4 years		1,419
4 to 5 years		687
Over 5 years		150
	$	1,124,581

(dollars in thousands)	As of September 30, 2021					As of December 31, 2020
	Amount		Percent of Loans to Total Loans			Amount		Percent of Loans to Total Loans
Commercial	$	3,083		4.30	%	$	3,975		4.67	%
Real estate - construction		411		0.86	%		290		0.58	%
Real estate mortgage - 1 to 4 family		40,339		89.37	%		41,228		88.81	%
Home equity lines of credit		3,073		5.26	%		3,597		5.71	%
Installment Loans		444		0.21	%		505		0.23	%
	$	47,350		100.00	%	$	49,595		100.00	%

(dollars in thousands)	Three months ended September 30, 2021									Three months ended September 30, 2020

	Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate			Change in Interest Income/ Expense			Variance Balance Change			Variance Rate Change

Assets

Securities available for sale:
U. S. government sponsored enterprises	$	68,505		$	91			0.53	%	$	12,391		$	14			0.45	%	$	77			74			3
Mortgage backed securities and collateralized mortgage obligations-residential		300,765			1,038			1.38	%		313,296			1,319			1.68	%		(281	)		(51	)		(230	)
State and political subdivisions		48			2			6.66	%		110			2			7.90	%		-			-			-
Corporate bonds		48,543			220			1.81	%		59,555			646			4.33	%		(426	)		(103	)		(323	)
Small Business Administration-guaranteed participation securities		34,578			181			2.09	%		43,282			216			1.99	%		(35	)		(98	)		63
Other		686			5			2.92	%		685			5			2.92	%		-			-			-

Total securities available for sale		453,125			1,537			1.36	%		429,319			2,202			2.05	%		(665	)		(178	)		(487	)

Federal funds sold and other short-term Investments		1,166,679			470			0.16	%		938,087			242			0.10	%		228			69			159

Held to maturity securities:
Mortgage backed securities and collateralized mortgage obligations-residential		11,168			104			3.72	%		15,759			138			3.52	%		(34	)		(81	)		47

Total held to maturity securities		11,168			104			3.72	%		15,759			138			3.52	%		(34	)		(81	)		47

Federal Reserve Bank and Federal Home Loan Bank stock		5,604			64			4.57	%		5,506			77			5.59	%		(13	)		8			(21	)

Commercial loans		210,825			2,649			5.03	%		231,517			2,625			4.54	%		24			(1,016	)		1,040
Residential mortgage loans		3,920,903			34,532			3.52	%		3,702,680			36,020			3.89	%		(1,488	)		9,896			(11,384	)
Home equity lines of credit		231,269			2,152			3.69	%		251,459			2,515			3.98	%		(363	)		(191	)		(172	)
Installment loans		8,669			155			7.10	%		9,632			170			7.02	%		(15	)		(28	)		13

Loans, net of unearned income		4,371,666			39,488			3.61	%		4,195,288			41,330			3.94	%		(1,842	)		8,661			(10,503	)

Total interest earning assets		6,008,242			41,663			2.77	%		5,583,959			43,989			3.15	%		(2,326	)		8,479			(10,805	)

Allowance for loan losses		(50,160	)								(48,483	)
Cash & non-interest earning assets		195,902									201,018

Total assets	$	6,153,984									5,736,494

Liabilities and shareholders' equity

Deposits:
Interest bearing checking accounts	$	1,153,812			38			0.01	%	$	1,024,455		$	55			0.02	%		(17	)		39			(56	)
Money market accounts		738,662			202			0.11	%		682,319			637			0.37	%		(435	)		329			(764	)
Savings		1,430,558			154			0.04	%		1,222,956			161			0.05	%		(7	)		108			(115	)
Time deposits		1,152,298			1,149			0.40	%		1,355,244			4,749			1.39	%		(3,600	)		(623	)		(2,977	)

Total interest bearing deposits		4,475,330			1,543			0.14	%		4,284,974			5,602			0.52	%		(4,059	)		(147	)		(3,912	)
Short-term borrowings		240,183			232			0.38	%		193,765			221			0.45	%		11			173			(162	)

Total interest bearing liabilities		4,715,513			1,775			0.15	%		4,478,739			5,823			0.52	%		(4,048	)		26			(4,074	)

Demand deposits		780,163									622,313
Other liabilities		75,116									78,093
Shareholders' equity		583,192									557,349

Total liabilities and shareholders' equity	$	6,153,984								$	5,736,494

Net interest income, tax equivalent					39,888									38,166					$	1,722			8,453			(6,731	)

Net interest spread								2.62	%								2.63	%

Net interest margin (net interest income to total interest earning assets)								2.65	%								2.73	%

Tax equivalent adjustment					(1	)								(1	)

Net interest income					39,887									38,165

(dollars in thousands)	Nine months ended September 30, 2021									Nine months ended September 30, 2020																				Three months ended September 30, 2022										Three months ended September 30, 2021

	Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate			Change in Interest Income/ Expense				Variance Balance Change			Variance Rate Change
																							Variance Balance Change			Variance Rate Change				Average Balance			Interest			Average Rate				Average Balance			Interest			Average Rate				Change in Interest Income/ Expense			Variance Balance Change			Variance Rate Change
Assets

Securities available for sale:
U. S. government sponsored enterprises	$	65,103			238			0.49	%	$	42,573			541			1.69	%		$	(303	)			308			(611	)		$	104,633		$	479			1.83	%		$	68,505		$	91			0.53	%		$	388			68			320
Mortgage backed securities and collateralized mortgage obligations-residential		318,472			3,442			1.44	%		339,300			4,959			1.95	%		(1,517	)			(289	)		(1,228	)			302,886			1,617			2.13	%			300,765			1,038			1.38	%			579			7			572
State and political subdivisions		49			3			8.16	%		111			6			7.79	%		(3	)			(4	)		1				41			1			8.12	%			48			2			6.66	%			(1	)		(1	)		-
Corporate bonds		56,245			859			2.04	%		46,508			1,372			3.93	%		(513	)			378			(891	)			86,965			526			2.42	%			48,543			220			1.81	%			306			215			91
Small Business Administration-guaranteed participation securities		36,981			580			2.09	%		45,313			690			2.03	%		(110	)			(142	)		32				25,533			133			2.08	%			34,578			181			2.09	%			(48	)		(47	)		(1	)
Other		686			16			3.11	%		685			16			3.11	%		-				-			-				686			3			1.75	%			686			5			2.92	%			(2	)		-			(2	)

Total securities available for sale		477,536			5,138			1.43	%		474,490			7,584			2.13	%		(2,446	)			251			(2,697	)			520,744			2,759			2.12	%			453,125			1,537			1.36	%			1,222			242			980

Federal funds sold and other short-term Investments		1,108,018			1,026			0.12	%		693,286			1,702			0.33	%		(676	)			1,071			(1,747	)			918,909			5,221			2.25	%			1,166,679			470			0.16	%			4,751			(704	)		5,455

Held to maturity securities:
Mortgage backed securities and collateralized mortgage obligations-residential		12,199			338			3.70	%		17,029			475			3.72	%		(137	)			(134	)		(3	)			8,306			85			4.08	%			11,168			104			3.72	%			(19	)		(72	)		53

Total held to maturity securities		12,199			338			3.70	%		17,029			475			3.72	%		(137	)			(134	)		(3	)			8,306			85			4.08	%			11,168			104			3.72	%			(19	)		(72	)		53

Federal Reserve Bank and Federal Home Loan Bank stock		5,570			198			4.74	%		7,998			351			5.85	%		(153	)			(94	)		(59	)			5,797			80			5.52	%			5,604			64			4.57	%			16			2			14

Commercial loans		212,832			8,203			5.14	%		217,573			7,778			4.77	%		425				(261	)		686				207,477			2,484			4.79	%			210,825			2,649			5.03	%			(165	)		(42	)		(123	)
Residential mortgage loans		3,852,960			104,219			3.61	%		3,652,766			108,845			3.97	%		(4,626	)			8,226			(12,852	)			4,105,859			35,342			3.44	%			3,920,903			34,532			3.52	%			810			4,773			(3,963	)
Home equity lines of credit		234,682			6,622			3.77	%		258,956			7,898			4.07	%		(1,276	)			(710	)		(566	)			261,575			2,896			4.39	%			231,269			2,152			3.69	%			744			304			440
Installment loans		8,608			469			7.28	%		10,129			537			7.08	%		(68	)			(91	)		23				10,213			174			6.75	%			8,669			155			7.10	%			19			63			(44	)

Loans, net of unearned income		4,309,082			119,513			3.70	%		4,139,424			125,058			4.03	%		(5,545	)			7,164			(12,709	)			4,585,124			40,896			3.57	%			4,371,666			39,488			3.61	%			1,408			5,098			(3,690	)

Total interest earning assets		5,912,405			126,213			2.85	%		5,332,227			135,170			3.38	%		(8,957	)			8,258			(17,215	)			6,038,880			49,041			3.24	%			6,008,242			41,663			2.77	%			7,378			4,566			2,812

Allowance for loan losses		(50,101	)								(46,618	)
Allowance for credit losses on loans																															(45,519	)									(50,160	)
Cash & non-interest earning assets		196,876									196,835																				188,672										195,902

Total assets	$	6,059,180								$	5,482,444																			$	6,182,033									$	6,153,984

Liabilities and shareholders' equity

Deposits:
Interest bearing checking accounts	$	1,129,480			136			0.02	%	$	949,909			97			0.01	%		39				11			28				1,195,370			43			0.01	%		$	1,153,812		$	38			0.01	%			5			1			4
Money market accounts		731,171			721			0.13	%		646,170			2,595			0.54	%		(1,874	)			500			(2,374	)			744,868			237			0.13	%			738,662			202			0.11	%			35			2			33
Savings		1,376,494			475			0.05	%		1,169,316			560			0.06	%		(85	)			108			(193	)			1,579,513			200			0.05	%			1,430,558			154			0.04	%			46			17			29
Time deposits		1,203,708			4,076			0.45	%		1,372,369			16,739			1.63	%		(12,663	)			(1,838	)		(10,825	)			981,704			646			0.26	%			1,152,298			1,149			0.40	%			(503	)		(152	)		(351	)

Total interest bearing deposits		4,440,853			5,408			0.16	%		4,137,764			19,991			0.65	%		(14,583	)			(1,219	)		(13,364	)			4,501,455			1,126			0.10	%			4,475,330			1,543			0.14	%			(417	)		(132	)		(285	)
Short-term borrowings		232,532			688			0.40	%		173,497			778			0.60	%		(90	)			304			(394	)			138,105			122			0.35	%			240,183			232			0.38	%			(110	)		(90	)		(20	)

Total interest bearing liabilities		4,673,385			6,096			0.17	%		4,311,261			20,769			0.64	%		(14,673	)			(915	)		(13,758	)			4,639,560			1,248			0.11	%			4,715,513			1,775			0.15	%			(527	)		(222	)		(305	)

Demand deposits		735,495									543,279																				859,122										780,163
Other liabilities		73,689									77,568																				82,290										75,116
Shareholders' equity		576,611									550,336																				601,061										583,192

Total liabilities and shareholders' equity	$	6,059,180								$	5,482,444																			$	6,182,033									$	6,153,984

Net interest income , tax equivalent					120,117									114,401					$	5,716				9,173			(3,457	)
Net interest income, tax equivalent																																		47,793										39,888						$	7,905			4,788			3,117

Net interest spread								2.67	%								2.74	%																			3.13	%									2.62	%

Net interest margin (net interest income to total interest earning assets)								2.71	%								2.86	%																			3.16	%									2.65	%

Tax equivalent adjustment					(1	)								(2	)																			-										(1	)

Net interest income					120,116									114,399																			$	47,793									$	39,887

(dollars in thousands)	Nine months ended September 30, 2022								Nine months ended September 30, 2021

Assets	Average Balance			Interest		Average Rate			Average Balance			Interest			Average Rate		Change in Interest Income/ Expense			Variance Balance Change			Variance Rate Change

Securities available for sale:
U. S. government sponsored enterprises	$	79,423		$	712		1.19	%	$	65,103		$	238			0.49	$	474			63			411
Mortgage backed securities and collateralized mortgage obligations-residential		282,423			4,071		1.92	%		318,472			3,442			1.44		629			(615	)		1,244
State and political subdivisions		41			2		6.73	%		49			3			8.16		(1	)		-			(1	)
Corporate bonds		75,957			1,281		2.25	%		56,245			859			2.04		422			325			97
Small Business Administration-guaranteed participation securities		27,623			427		2.06	%		36,981			580			2.09		(153	)		(145	)		(8	)
Other		686			7		2.04	%		686			16			3.11		(9	)		-			(9	)

Total securities available for sale		466,153			6,500		2.79	%		477,536			5,138			1.43		1,362			(372	)		1,734

Federal funds sold and other short-term Investments		1,068,217			8,046		1.01	%		1,108,018			1,026			0.12		7,020			(63	)		7,083

Held to maturity securities:
Mortgage backed securities and collateralized mortgage obligations-residential		8,897			262		3.93	%		12,199			338			3.70		(76	)		(108	)		32

Total held to maturity securities		8,897			262		3.93	%		12,199			338			3.70		(76	)		(108	)		32

Federal Reserve Bank and Federal Home Loan Bank stock		5,734			207		7.22	%		5,570			198			4.74		9			-			9

Commercial loans		200,525			7,412		4.93	%		212,832			8,203			5.14		(791	)		(465	)		(326	)
Residential mortgage loans		4,054,657			104,310		3.43	%		3,852,960			104,219			3.61		91			7,109			(7,018	)
Home equity lines of credit		246,026			7,289		3.96	%		234,682			6,622			3.77		667			329			338
Installment loans		9,507			492		6.91	%		8,608			469			7.28		23			58			(35	)

Loans, net of unearned income		4,510,715			119,503		3.53	%		4,309,082			119,513			3.70		(10	)		7,031			(7,041	)

Total interest earning assets		6,059,716			134,518		2.96	%		5,912,405			126,213			2.85		8,305			6,488			1,817

Allowance for credit losses on loans		(46,225	)							(50,101	)
Cash & non-interest earning assets		196,333								196,876

Total assets	$	6,209,824							$	6,059,180

Liabilities and shareholders' equity

Deposits:
Interest bearing checking accounts	$	1,199,154			129		0.01	%	$	1,129,480			136			0.02		(7	)		18			(25	)
Money market accounts		771,301			661		0.11	%		731,171			721			0.13		(60	)		65			(125	)
Savings		1,557,503			519		0.04	%		1,376,494			475			0.05		44			106			(62	)
Time deposits		971,539			1,728		0.24	%		1,203,708			4,076			0.45		(2,348	)		(683	)		(1,665	)

Total interest bearing deposits		4,499,497			3,037		0.09	%		4,440,853			5,408			0.16		(2,371	)		(494	)		(1,877	)
Short-term borrowings		194,228			532		0.37	%		232,532			688			0.40		(156	)		(112	)		(44	)

Total interest bearing liabilities		4,693,725			3,569		0.10	%		4,673,385			6,096			0.17		(2,527	)		(606	)		(1,921	)

Demand deposits		836,953								735,495
Other liabilities		81,780								73,689
Shareholders' equity		597,366								576,611

Total liabilities and shareholders' equity	$	6,209,824							$	6,059,180

Net interest income , tax equivalent					130,949								120,117				$	10,832			7,094			3,738

Net interest spread							2.86	%								2.67

Net interest margin (net interest income to total interest earning assets)							2.88	%								2.71

Tax equivalent adjustment					-								(1	)

Net interest income				$	130,949							$	120,116

Period	Total numbers of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs		Maximum number of shares that may yet be purchased under the plans or programs (1)
July 1, 2021 through July 30, 2021		10,000	$	33.82		10,000		370,000
August 1, 2021 through August 31, 2021		-		N/A		-		370,000
September 1, 2021 through September 30, 2021		40,000	$	31.61		40,000		330,000
Total		50,000	$	32.24		50,000		330,000

Period	Total Numbers of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs		Maximum number of shares that may yet be purchased under the plans or programs (1)
July 1, 2022 through July 31, 2022		-	$	-		-		106,886
August 1, 2022 through August 31, 2022		-		-		-		106,886
September 1, 2022 through September 30, 2022		75,100		33.37		75,100		32,786
Total		75,100	$	33.37		75,100		32,786

~~Reg S-K (Item 601)~~
Exhibit No.	Description

3(a)	Amended and Restated Certificate of Incorporation of TrustCo Bank Corp NY (incorporated by reference to Exhibit 3.1 to TrustCo Bank Corp NY's Quarterly Report on Form 10-Q, filed August 5, 2021).

3(b)	Amended and Restated Bylaws of TrustCo Bank Corp NY, dated May 23, 2019 (incorporated by reference to Exhibit 3.2 to TrustCo Bank Corp NY's Quarterly Report on Form 10-Q, filed August 8, 2019).

15	Crowe LLP Letter Regarding Unaudited Interim Financial Information

31(a)	Rule ~~13a-15(e)~~13a-14(a)/~~15d-15(e)~~15d-14(a) Certification of Robert J. McCormick, principal executive officer.

31(b)	Rule ~~13a-15(e)~~13a-14(a)/~~15d-15(e)~~15d-14(a) Certification of Michael M. Ozimek, principal financial officer.

32	Section 1350 Certifications of Robert J. McCormick, principal executive officer and Michael M. Ozimek, principal financial officer.

101	Sections of the Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in XBRL (eXtensible Business Reporting Language), submitted in the following files:

	101.INS	Instance Document

	101.SCH	XBRL Taxonomy Extension Schema Document

	101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

	101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

	101.LAB	XBRL Taxonomy Extension Label Linkbase Document

	101.PRE	XBRLTaxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

			TrustCo Bank Corp NY

	By: /s/ Robert J. McCormick
	Robert J. McCormick
	Chairman, President and Chief Executive Officer

		By:	/s/ ~~Robert J. McCormick~~
		~~Robert J. McCormick~~
		~~Chairman, President and Chief Executive Officer~~
		Michael M. Ozimek
				Michael M. Ozimek
			~~By:~~	~~/s/ Michael M. Ozimek~~
		~~Michael M. Ozimek~~
		Executive Vice President and Chief Financial Officer

Date:	November ~~5, 2021~~	7, 2022