TRUSTCO BANK CORP N Y (TRST)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

The review that follows focuses on the factors affecting the financial condition and results of operations of TrustCo during the three month period ended March 31, 2026, with comparisons to the corresponding period in 2025, as applicable.  The
consolidated interim financial statements and related notes, as well as the Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on March 16, 2026 (the “2025 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. These reclassifications have no effect on prior
period net income or shareholders’ equity.  See “Cautionary Note Regarding Forward-Looking Statements” on page 5 of this report for a description of important factors that could cause actual results to differ from expected results.

Following this Management’s Discussion and Analysis is the table “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 periods ended March 31, 2026 and 2025.

Economic Overview

During the first quarter of 2026, financial markets started out strong to begin 2026, but declined by the end of the quarter driven by tensions in the Middle East, higher oil prices and
labor market deterioration. As of the end of the first quarter of 2026, the S&P 500 Index was down 4.63%, Nasdaq was down 7.11%, and the Dow Jones Industrial Average was down 3.58% compared to December 31, 2025.  The 10‑year Treasury bond
averaged 4.20% during Q1 2026 compared to 4.10% in Q4 2025, an increase of 10 basis points.  The 2‑year Treasury bond averaged 3.58% during Q1 2026 compared to 3.52% in Q4 2025, and the spread between the 10‑year and the 2-year Treasury bonds
increased from 0.58% on average in Q4 2025 to 0.62% in Q1 2026.  Generally, steeper yield curves are favorable for portfolio mortgage lenders like TrustCo, and the table below illustrates the range of rate movements for both short term and
longer term rates.  During the first quarter of 2026 Federal Funds rate remained flat at a range of 3.50% to 3.75%.

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Index

The country has been experiencing economic uncertainty as markets continue to adjust to changes in tariff policies, Middle East tensions, increased oil prices and a volatile labor market. The Federal Open Market Committee (“FOMC”) lowered the
Federal Funds target rate range to 3.50-3.75% in December 2025 and there was no change in the first quarter of 2026.

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Index

Management believes that TrustCo’s 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. While we continue to adhere to prudent underwriting standards, should general housing prices and other economic measures,
such as unemployment in the Company’s market areas, deteriorate as a result of changes in interest rates, general economic instability, a potential or actual default on the federal debt 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.

Financial Overview

TrustCo recorded net income of $16.3 million, or $0.91 of diluted earnings per share, for the three months ended March 31, 2026, compared to net income of $14.3 million, or $0.75 of diluted earnings per share, in the
same period in 2025.  Return on average assets was 1.02% and 0.93%, respectively, for the three months ended March 31, 2026 and 2025.  Return on average equity was 9.66% and 8.49%, respectively, for the three months ended March 31, 2026 and 2025.

The primary factors accounting for the change in net income for the three months ended March 31, 2026 compared to the same period of the prior year were:

Asset/Liability Management

The Company strives to generate its earnings capabilities through a mix of core deposits funding a prudent mix of 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 and long‑term basis.

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Index

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, in 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 2025 Form 10-K is a description of the effect that changes in interest rates had on the results for the year 2025 compared to 2024.  Many of the same market factors discussed in the 2025 Form 10-K continued to have an
impact on results through the first quarter of 2026.

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.  During the first quarter of 2026 Federal Funds target rate remained flat at a range of 3.50% to
3.75%.

The interest rate on the 10-year Treasury bond and other long-term interest rates have significant influence on the rates for new residential real estate loans and longer term investments.  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 as well as the interest expense on deposits and borrowings.  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 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 is 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.  The Company establishes rates that management determines are appropriate in light of the long-term nature of residential real estate loans while remaining competitive.  Higher
market interest rates also generally increase the value of retail deposits.

TrustCo’s principal loan products are residential real estate loans.  Most of TrustCo’s residential real estate loans carry a fixed rate of interest. 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 was up 10 basis points, on average, during the first quarter of 2026 compared to the fourth quarter of 2025,
and it was down 25 basis points as compared to the first quarter of 2025.

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Index

While TrustCo has been affected by changes in financial markets over time, management believes that 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.  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.  Management believes that the
Company has significant capacity to grow its balance sheet given its extensive branch network.  The Company expects that growth to be profitable.  While the Company has not changed its fundamental long-term strategy in regard to utilizing its
excess capacity, managemen

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our results of
operations and financial condition for 2025, 2024 and 2023.  This discussion should be read in conjunction with our audited financial statements included in “Consolidated Financial Statements and Notes” herein and Part I, Item 1, “Business”
set forth in our Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K”).  The following analysis contains forward-looking statements about our future revenues, operating results and expectations.  See “Cautionary
Note Regarding Forward-Looking Statements” herein for a discussion of the risks, assumptions and uncertainties affecting these statements, as well as Part I, Item 1A. “Risk Factors” set forth in our 2025 Form 10-K.

To review our financial condition and results of operations for 2023 and a comparison between the 2023 and 2024 results, see Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations of our 2024 Form 10-K filed with the SEC on March 14, 2025.  Balances discussed are daily averages unless otherwise described.

Financial Review

In 2025, a year that was extraordinary for the economy and the markets, TrustCo continued to make great progress.  In management’s view, the key results for 2025 are:

Management believes that the Company was able to achieve these accomplishments, by executing its long-term plan focused on traditional lending criteria and sound
balance sheet management.  Achievement of specific business goals such as the continued expansion of loans, along with tight control of operating expenses and manageable levels of nonperforming assets, is fundamental to the long-term
success of the Company as a whole.

Return on average equity was 8.88% in 2025 compared to 7.43% in 2024, while return on average assets was 0.97% in 2025 as compared to 0.80% in 2024.

The U.S. economy continued to demonstrate resilience during 2025, supported by continued consumer spending and generally stable economic growth. In 2024, the Federal Reserve began easing
monetary policy, including a 50 basis point cut in September 2024 and additional 25 basis point cuts in November 2024 and December 2024, which resulted in a federal funds target rate range of 4.25 percent to 4.50 percent at year-end 2024.
The Federal Reserve continued to reduce short-term interest rates over the course of 2025, and, at its Federal Open Market Committee (“FOMC”) meeting in December 2025, it lowered the target range for the federal funds rate to a range of
3.50 percent to 3.75 percent.

For the year ended 2025, equity markets produced positive returns. The Dow Jones Industrial Average increased approximately 13% during 2025, and the S&P 500 Index generated a total
return of approximately 18%. United States three-month Treasury bills experienced a decrease in rates ending the year at 3.67%, 20 basis points above the two-year Treasury yield at year-end of 3.47%, and 51 basis points behind the ten-year
Treasury yield at year-end of 4.18%. These yields compare to 2024 year-end yields of 4.37% for the three-month Treasury bills, 4.25% for the two-year Treasury bond and 4.58% for the ten-year Treasury bond.   These rates are important to the banking industry because deposit rates tend to track the changes in the shorter-term Treasury markets and the mortgage loan products tend to track with the ten-year Treasury yields.  Beginning

in 2025, the yield on the two-year Treasury bond was 4.25% and decreased 78 basis points during the year to close 2025 at 3.47%, and the ten-year Treasury bond began 2025 at 4.58% and closed the year down 40 basis points to 4.18% at
year-end.   These rate changes have a significant implication to the broader economic cycle.

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While the FOMC continued its rate easing cycle during 2025, the range of potential rate paths over the coming year remains wide and will ultimately be driven by the path of inflation,
labor market performance and economic growth. In its January 2026 “Beige Book,” the Federal Reserve reported that overall economic activity increased at a slight to modest pace in eight of the twelve Federal Reserve Districts, with three
Districts reporting no change and one reporting a modest decline. In the Second District (including New York), economic activity continued to decline modestly, with small-to-medium sized banks in the region reporting that loan demand
declined since the previous period, especially for consumer loans and residential mortgages. In the Sixth District (including Florida), the Beige Book reported slight growth in economic activity, with financial institutions reporting modest
loan growth, with the largest increases in credit cards.

The U.S. government announced changes to its trade policies in 2025 and significantly increased tariffs on certain imports under emergency authorities, including the
International Emergency Economic Powers Act (“IEEPA”). In February 2026, the Supreme Court ruled that IEEPA does not authorize the President to impose tariffs. The current tariff environment remains dynamic and uncertain, including
regarding potential refunds of tariffs paid under IEEPA, and the U.S. government could respond with replacement measures under other legal authorities. We continue to closely monitor both the impact and potential impact of such measures on
our business, our customers and on overall economic conditions in the United States.

Trustco, like most other banking organizations, prices its liabilities (deposits and short-term borrowings) in relation to the shorter end of the Treasury maturity
curve.  The average for the three-month treasury was 97 basis points lower in 2025 than in 2024, with the median yield of 4.33% in 2025 down 110 basis points over the median yield in 2024.  These trends generally reflect a decrease in the
cost for deposit products that price in relation to the short-term treasury market yields.  At the same time the average yield of the ten-year Treasury has increased to 4.29% in 2025, up 8 basis points from 2024 when the average was 4.21%.
Generally longer-term loans are priced consistent with the changes in the ten-year Treasury markets.  These two trends – lower shorter-term rates and an increase in longer-term rates – could result in an increase of new loan yields and a
decrease in deposit yields.

In November 2023, the FDIC issued a final rule to implement a special assessment to recoup losses to the Deposit Insurance Fund associated with bank
failures in the first half of 2023. Under the rule, the assessment base for the special assessment is equal to an insured depository institution’s estimated uninsured deposits reported as of December 31, 2022, adjusted to exclude the
first $5 billion of uninsured deposits. The total amount of the special assessment is to be paid in quarterly installments that began with the invoice for the first quarter of 2024 (received in
June 2024) and ends with the invoice for the second quarter of 2026. In December 2025, the FDIC adopted an interim final rule modifying the special assessment collection to reflect updated estimated losses and providing for mechanisms to
address potential over- or under-collection relative to actual losses.  There continues to be no additional cost to TrustCo as a result of its uninsured deposits being under $5 billion.

Management believes that TrustCo’s long-term focus on traditional banking services has enabled the Company to avoid significant impact from asset
quality problems, and the Company’s strong liquidity and solid capital positions have allowed the Company to continue to conduct business in a manner consistent with past practices.  While we continue to aim to adhere to prudent
underwriting standards, should general housing prices and other economic measures, such as unemployment in the Company’s market areas, deteriorate as a result of unexpected changes, financial
sector instability, a potential or actual default on the federal debt 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.

Overview

2025 results were marked by growth in the Company’s loan portfolio despite a challenging year for loan rates and housing prices.  The loan portfolio grew to a total of
$5.25 billion, an increase of $154.4 million or 3.0% over the 2024 year-end balance.  Deposits ended 2025 at $5.56 billion, up from $5.39 billion the prior year-end.  The year-over-year increase in loans reflects the success the Company has
had in attracting customers to the Bank given its array of loan products.  Management believes that the increase in deposits was driven by the Bank’s effective market and pricing strategy.    Moreover, management believes that TrustCo’s
success is predicated on providing core banking services to a wider number of customers and continuing to provide added services to existing customers where possible.  Growing the customer base should contribute to continued growth of loans
and a renewed growth of deposits, as well as growth in net interest income and non-interest income.

TrustCo earned $61.1 million in net income or $3.25 of diluted earnings per share for the year ended December 31, 2025, compared to $48.8 million in net income or $2.57
of diluted earnings per share for the year ended December 31, 2024.

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During 2025, the following items had a significant effect on net income:

Management believes that TrustCo performed well in comparison to its peers with respect to a number of key performance ratios during 2025 and 2024, including:

During 2025, TrustCo’s results were affected by loan growth and a changing interest rate environment.  The increase in net interest income was
due to a 20 basis-point expansion in the net interest margin to 2.74% from 2.54%, primarily as a result of a $192.6 million, or 3.2%, increase in average interest-earning assets and a decrease of 8 basis points in average cost of
interest-bearing liabilities from 2024 to 2025.  Average loan balances increased 2.3% from 2024 to 2025, and average Federal Funds Sold and other short-term investments increased 30.7%, while available for sale securities and held to
maturity securities decreased 17.8%. Average net loans decreased to 83.6% of average earning assets in 2025 from 84.4% in 2024.  On average for 2025, non-maturity deposits were 61.5% of total deposits, down from 63.8% in 2024. The Company
has traditionally sought to maintain a high liquidity position and taken a conservative stance in its investment portfolio through the use of relatively short-term securities.

Market interest rates moved significantly during the course of 2024 and 2025, with shorter-term three-month treasury rates decreasing
year-over-year as well as the longer-term ten-year rates decreasing.  This resulted in the average daily spread between the ten-year Treasury and the two-year Treasury increasing to 0.48 basis points in 2025, up from an average of negative
16 basis points in 2024.  The spread between the ten-year Treasury and the two-year Treasury changed throughout the year and ended 2025 at a positive 71 basis points. Generally, a more positive slope in the yield curve is beneficial for the
Company’s earnings derived from its core mix of loans and deposits.

The tables below illustrate the range of key Treasury bond interest rates during 2025 and 2024.

Source: www.treasury.gov

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TrustCo focuses on providing high quality service to the communities served by its branch network.  The financial results for the Company are influenced by economic
events that affect those communities, as well as national economic trends, primarily interest rates, affecting the entire banking industry.

The Company remains focused on building its customer relationships, and deposits and loans throughout its branch network, with a particular emphasis on the newest
branches added to our network in recent years.

The Company continually looks for opportunities to open new offices each year by filling in or extending existing markets.  The Company has
experienced continued growth in all markets as measured by the growth in our loan balances.  Branches in all geographies have the same products and features found at other Trustco Bank locations.  Additionally, over the last several years
the Company has made significant investments in its online and mobile banking platforms, including new automated tools.  With a combination of competitive rates, excellent service, technology, and convenient locations, management believes
that as branches mature, they will continue to attract deposit and loan customers.  As expected, some branches have grown more rapidly than others.  Generally, new bank branches continue to grow for years after being opened, although there
is no specific time frame that could be characterized as typical.  The Company also took the opportunity in 2025 to close two underperforming branches and consolidated the loans and deposits at nearby locations.

Asset/Liability Management

In managing its balance sheet, TrustCo utilizes funding and capital sources within credit, investment, interest rate, and liquidity risk guidelines established by
management and approved by the Board of Directors.  Loans and securities (including Federal Funds sold and other short-term investments) are the Company’s primary earning assets.  Average interest earning assets were 97.5% and 97.7% of
average total assets for 2025 and 2024, respectively.

TrustCo, through its management of liabilities, attempts to provide stable and flexible sources of funding within established liquidity and interest rate risk
guidelines.  This is accomplished through core deposit banking products offered within the markets served by the Company.  TrustCo does not actively seek to attract out‑of‑area deposits or so‑called “hot money,” but rather focuses on core
relationships with both depositors and borrowers.

TrustCo’s objectives in managing its balance sheet are to limit the sensitivity of net interest income to actual or potential changes in interest rates and to enhance
profitability through strategies that should provide sufficient reward for predicted and controlled risk.  The Company is deliberate in its efforts to maintain adequate liquidity under prevailing and projected economic conditions and to
maintain an efficient and appropriate mix of core deposit relationships.  The Company relies on traditional banking investment instruments and its large base of core deposits to help in asset and liability management.  Predicting the impact
of changing rates on the Company’s net interest income and net fair value of its balance sheet is complex and subject to uncertainty for a number of reasons.  For example, in making a general assumption that rates will rise, a myriad of
other assumptions regarding whether the slope of the yield curve remains the same or changes, whether the spreads of various loans, deposits and investments remain unchanged, widen or narrow and what changes occur in customer behavior all
need to be made.  The Company routinely models various rate change assumptions to determine expected impact on net interest income.

Interest Rates

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.  The absolute level of interest rates, changes in 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 year.

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.  At its meeting in
September 2024, the FOMC implemented a 50 basis point cut resulting in a federal funds target rate range of 4.75% to 5.00 %. The rate cut represented the first interest rate change in a year and the first rate cut in more than four years.
The FOMC subsequently cut the federal funds target rate another 25 basis points in November 2024 and again in December 2024, and cut the rate three additional times in 2025, to a current range of
3.50% to 3.75%.

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The yield on the ten-year Treasury bond decreased 40 basis points from 4.58% at the beginning of 2025 to the year‑end level of 4.18%.  The rate on the ten-year Treasury
bond and other long-term interest rates have a significant influence on the rates offered 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 on other short-term instruments, as well as the interest expense on deposits and borrowings.  Residential real estate loans and longer‑term investments are most affected by the changes in longer-term
market interest rates such as the ten‑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 decrease, the fair
value of the securities will increase 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.  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.  The
Company did not originate loans for sale into the secondary market during 2025.  Higher market interest rates also generally increase the value of retail deposits.

During the third and fourth quarters of 2024, the Federal Funds target range was lowered three times and in
2025 the Federal Funds target range was lowered three additional times.  These rate reductions had a positive impact on the Company by offering lower rates on time deposits at a faster pace than offering lower rates on loans, thus aiding
in margin expansion.  Management believes further rate reductions could provide opportunity for margin expansion if deposit yields fall at a faster pace than investment and loan yields.

Earning Assets

Average earning assets during 2025 were $6.2 billion, which was an increase of $192.6 million from 2024.  This increase was primarily the result of an increase in
net loans of $118.4 million, an increase in Federal Funds Sold and other short-term investments of $151.6 million, partially offset by a decrease in securities available for sale of $76.6 million. The increase in the average loan portfolio
is primarily the result of an increase in commercial loans, residential mortgage loans, and home equity lines of credit.  TrustCo continues to prioritize the growth of residential real estate loans throughout the Trustco Bank branch network
through effective marketing campaigns, competitive rates, and closing costs.

Total average assets were $6.3 billion for 2025 and $6.1 billion for 2024.

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The table “Mix of Average Earning Assets” shows how the mix of the earning assets has changed over the last three years.  While the growth in earning assets is critical
to improved profitability, changes in the mix also have a significant impact on income levels, as discussed below.

MIX OF AVERAGE EARNING ASSETS

(1) The average balances of securities available for sale are presented using amortized cost for these securities.

Loans

In 2025, the Company experienced another year of loan growth.  The $154.4 million increase or 3.0% in the Company’s gross loan portfolio from December 31, 2024 to
December 31, 2025 was primarily due to higher balances in commercial and residential loan categories including home equity lines of credit.  Average loans increased $118.4 million during 2025 to $5.2 billion.  Interest income on the loan
portfolio increased to $220.8 million in 2025 from $205.6 million in 2024.  The average yield increased 20 basis points to 4.28% in 2025 compared to 4.08% in 2024.

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LOAN PORTFOLIO

(1) Presented net of deferred direct loan origination fees and costs.

Through marketing, pricing, and a customer-friendly service delivery network, the Bank has attempted to distinguish itself from other mortgage lenders by highlighting the uniqueness of its
loan products, as well as by offering competitive interest rates to expand the loan portfolio.  Specifically, key selling points such as low closing costs, no private mortgage insurance for qualified borrowers, quick loan decisions, and
fast closings were identified and marketed to prospective customers.  The average balance of residential real estate mortgage loans was approximately $4.4 billion in 2025 and approximately $4.37 billion in 2024.  Income on residential real
estate loans increased to $175.0 million in 2025 from $165.5 million in 2024.  The yield on the portfolio increased from 3.79% in 2024 to 3.97% in 2025.  The vast majority of Trustco’s real estate loans are secured by properties within the
Bank’s market areas.

Trustco does not make subprime loans or purchase investments collateralized by subprime loans.  A loan may be considered subprime for a number of reasons, but
effectively subprime loans are loans where the certainty of repayment of principal and interest is lower than for a traditional prime loan due to the structure of the loan itself, the credit worthiness of the borrower, the underwriting
standards of the lender, or some combination of these.  For instance, adjustable rate loans underwritten at initial low “teaser” rates instead of the fully indexed rate and loans to borrowers with poor payment history would generally be
classified as subprime.  Trustco underwrites its loan originations in a traditional manner, focusing on key factors that have proven to result in good credit decisions, rather than relying on automated systems or basing decisions primarily
on one factor, such as a borrower’s credit score.

Average commercial loans increased by $26.4 million from $280.6 million in 2024 to $307.0 million in 2025.  Average commercial loans included $30.0 million and $19.0
million of commercial real estate construction loans in 2025 and 2024, respectively.  The average yield on the commercial loan portfolio increased to 5.59% for 2025 from 5.38% in 2024, primarily as a result of higher interest rates on
originations and repricing of variable rate loans due to the current interest rate environment.  Interest income on commercial loans was $17.1 million in 2025 compared to $15.1 million in 2024, up also primarily as a result of the interest
rate environment and higher balances.

Trustco’s commercial lending activities are focused on balancing the Company’s commitment to meeting the credit needs of businesses in its market areas with the
necessity of managing its credit risk.  In accordance with these goals, the Company has consistently emphasized the origination of loans within its market areas. Trustco’s commercial loan portfolio contains no foreign loans, nor does it
contain any significant concentrations of credit to any single borrower or industry.  The Capital Region commercial loan portfolio reflects the diversity of businesses found in the market area, including light manufacturing, retail,
service, and real estate-related businesses.  Commercial loans made in the downstate New York market area and in the central Florida market area also reflect the businesses in those areas, with a focus on real estate.  Trustco strives to
maintain strong asset quality in all segments of its loan portfolio, especially commercial loans.  There is significant competition for commercial loans in the Bank’s market regions.

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During 2025, the average balance of home equity credit lines was $434.7 million, an increase from $374.8 million in 2024.  Trustco Bank competes with both regional and
national companies for these lines of credit and faces stiff competition with respect to interest rates, closing costs, and customer service for these loans.  Trustco continuously reviews changes made by competitors with respect to the home
equity credit line product and adjusts its offerings to remain competitive while meeting evolving needs.  Trustco’s average yield on this portfolio was 6.40% for 2025 and 6.39% for 2024 reflecting a relatively flat prime lending rate that
occurred in 2025 and 2024.  Interest income on home equity credit lines increased from $23.9 million in 2024 to $27.8 million in 2025.  Management would expect that a decline in interest rates during 2026 should increase demand for
residential mortgages, including home equity credit lines.

At December 31, 2025 and 2024, the Company had approximately $41.9 million and $29.7 million of real estate construction loans, respectively.  Of the $41.9 million in
real estate construction loans at December 31, 2025, approximately $11.9 million was secured by first mortgages to residential borrowers with the remaining $30.0 million were loans to commercial borrowers for residential construction
projects.  Of the $29.7 million in real estate construction loans at December 31, 2024, approximately $10.7 million was secured by first mortgages to residential borrowers with the remaining $19.0 million were loans to commercial borrowers
for residential construction projects.

LOAN MATURITY SCHEDULE

The following table sets forth the maturities of our loan portfolio at December 31, 2025.  Loans having no stated maturity and overdrafts are shown as due in one year
or less.  Loans are stated in the following table at contractual maturity and actual maturities could differ due to prepayments.

The following table shows the loans as of December 31, 2025 due after December 31, 2026 according to type and loan category:

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INVESTMENT SECURITIES

The following table sets forth the amortized cost and fair value of our securities portfolio at the dates indicated:

Securities Available for Sale:

The portfolio of securities available for sale is designed to provide a stable source of interest income and liquidity.  The portfolio is also managed by the Company to
take advantage of changes in interest rates and is particularly important in providing greater flexibility in the current interest rate environment.  The securities available for sale portfolio is managed under a policy detailing the types
and characteristics acceptable in the portfolio.  Mortgage-backed securities and collateralized mortgage obligations held in the portfolio include only pass‑throughs issued by United States government agencies or sponsored enterprises.

Holdings of various types of securities may vary from year‑to‑year depending on management’s assessment of relative risk and reward, and also due
to the timing of calls, maturities, prepayments and purchases.  Holdings of both municipal and corporate securities are subject to additional monitoring requirements under current regulations, adding to the costs of owning those securities.

Proceeds from sales, calls and maturities of securities available for sale have been typically invested in higher yielding assets, such as
loans, or temporarily held in Federal Funds sold and other short-term investments until deployed to fund future loan growth or future investment opportunities.

The designation of securities as “available for sale” is made at the time of purchase, based upon management’s intent and ability to hold the
securities for an indefinite period of time.  These securities are available for sale in response to changes in market interest rates, related changes in prepayment risk, needs for liquidity, or changes in the availability of and yield on
alternative investments.  At December 31, 2025, some securities in this portfolio had fair values that were less than the amortized cost due to changes in interest rates and market conditions and not related to the credit condition of the
issuers.  At December 31, 2025, the Company did not intend to sell, and it is not likely that the Company will be required to sell, these securities before market recovery.  Accordingly, at December 31, 2025, due to current market interest
rates, the net fair value of the investment securities portfolio was below amortized cost and unrealized losses were not credit related.

At December 31, 2025, the carrying value of securities available for sale amounted to $310.4 million, compared to $358.2 million at year-end
2024.  For 2025, the average balance of securities available for sale was $352.8 million with an average yield of 2.81%, compared to an average balance in 2024 of $429.4 million with an average yield of 2.54%.  The income earned on the
securities available for sale portfolio in 2025 was $9.9 million, compared to $10.9 million earned in 2024.

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Securities available for sale are recorded at their fair value, with any unrealized gains or losses, net of taxes, recognized as a component of
shareholders’ equity.  Average balances of securities available for sale are stated at amortized cost.  At December 31, 2025, the fair value of TrustCo’s portfolio of securities available for sale carried gross unrealized gains of
approximately $676 thousand and gross unrealized losses of approximately $16.9 million.  At December 31, 2024, the fair value of TrustCo’s portfolio of securities available for sale carried gross unrealized gains of approximately $130
thousand and gross unrealized losses of approximately $29.4 million.   As previously noted, in both periods, unrealized losses were related to market interest rate levels and were not credit related.

Held to Maturity Securities

At December 31, 2025, the Company held $4.3 million of held to maturity securities, compared to $5.4 million at December 31, 2024.  For 2025,
the average balance of held to maturity securities was $4.8 million, compared to $5.9 million in 2024.  Similar to securities available for sale, cash flow from these securities has been reinvested in higher yielding assets, such as loans,
or temporarily held in Federal Funds Sold and other short-term investments to fund future loan growth or future investment opportunities.  The average yield on held to maturity securities increased slightly from 4.29% in 2024 to 4.39% in
2025 due primarily to changes in average lives from normal pay downs and prepayments on the mortgage-backed securities held in the portfolio.  Interest income on held to maturity securities declined from $254 thousand in 2024 to $213
thousand in 2025, reflecting the decline in average balances.  Held to maturity securities are recorded at amortized cost.  The fair value of these securities as of December 31, 2025 was $4.4 million.

The designation of securities as “held to maturity” is made at the time of purchase, based upon management’s intent and ability to hold the
securities until final maturity.  At December 31, 2025 there were $40 thousand of unrecognized losses and $90 thousand of unrecognized gains on securities in this portfolio.

Equity Securities

During the second quarter of 2024, Visa Inc. accepted the Company’s tender of its 6,528 shares of Visa Class B-1 common stock in exchange for a combination of Visa
Class B-2 common stock and Visa Class C common stock.  As a result of the exchange, the Company marked its Visa Class C common stock to fair value and recorded a gain of $1.4 million based on the conversion privilege of the Visa Class C
common stock and the closing price of Visa Class A common stock on June 28, 2024 of $262.47 per share. In 2024, Company’s Visa Class C shares were marked to fair value on a recurring basis using the Visa Class A shares as evidence of
orderly transactions between market participants for similar securities issued by Visa.  The Company originally obtained the shares in 2008. The carrying value of the Visa Class B-2 shares is nominal as of December 31, 2025 and there was no
activity during the year ended December 31, 2025.

Securities Gains

During 2024 TrustCo recognized net gain on the sale of equity securities of $1.4 million as described above.  During 2025 and 2023, TrustCo did
not recognize any net gains from securities transactions.  There were no sales or transfers of held to maturity securities in 2025, 2024 or 2023.

TrustCo has not invested in any exotic investment products such as interest rate swaps, forward placement contracts, or other instruments
commonly referred to as derivatives.  In addition, the Company has not invested in securities backed by subprime mortgages or in collateralized debt obligations (CDOs).  By actively managing a portfolio of high quality securities, TrustCo
believes it can meet the objectives of asset/liability management and liquidity, while at the same time producing a reasonably predictable earnings stream.

Securities pledged totaled $188.5 million, which results in $126.3 million in unpledged securities.  In addition to unpledged securities,
TrustCo had $730.4 million of cash and cash equivalents and borrowing capacity of $967.9 million as of December 31, 2025.

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SECURITIES PORTFOLIO MATURITY DISTRIBUTION AND YIELD

Weighted average yields have not been adjusted for any tax-equivalent factor.

Maturity and Call Dates of Securities

Many of the securities in the Company’s portfolios have a call date in addition to the stated maturity date.  Call dates allow the issuer to redeem the bonds prior
to maturity at specified dates and at predetermined prices.  Normally, securities are redeemed at the call date when the issuer can reissue the security at a lower interest rate.  Therefore, for cash flow, liquidity and interest rate risk
management purposes, it is important for TrustCo to monitor both maturity dates and call dates.  Given the current interest rate environment, the probability of future calls will depend on future market interest rate levels.  The tables
labeled “Securities Portfolio Maturity and Call Date Distribution,” show the distribution, based on both final maturity and call date of each security, broken out by the available for sale and held to maturity portfolios as of December 31,
2025.  Mortgage-backed securities, collateralized mortgage obligations and Small Business Administration securities are reported using an estimate of average life.  Actual maturities may differ from contractual maturities because of
securities’ prepayments and the right of certain issuers to call or prepay their obligations without penalty.  The table, “Securities Portfolio Maturity Distribution and Yield,” shows the distribution of maturities for each of the
securities portfolios, based on final maturity, as well as the average yields at December 31, 2025 on each type/maturity grouping.

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SECURITIES PORTFOLIO MATURITY AND CALL DATE DISTRIBUTION

Debt securities available for sale:

Held to maturity securities:

Federal Funds Sold and Other Short-term Investments

During 2025, the average balance of Federal Funds sold and other short-term investments was $645.2 million, an increase from $493.5 million in
2024.  The average rate earned on these assets was 4.32% in 2025 and 5.26% in 2024.  The decline in yield is consistent with FOMC target rate cuts noted earlier.  Trustco utilizes this category of earning assets as a means of maintaining
strong liquidity.  The Federal Funds sold and other short-term investments portfolio is significantly affected by changes in the target Federal Funds rate, as are virtually all short-term interest-sensitive instruments.

The year-end balance of Federal Funds sold and other short-term investments was approximately $679.9 million for 2025, compared to $594.4 million at year-end 2024.  While yields on
investment securities with acceptable risk characteristics were insufficient to justify shifting overnight liquidity into other investment types during 2025, some funds were shifted into higher yielding loans.  Management will continue to
evaluate the overall level of Federal Funds sold and other short-term investments in 2026 and make appropriate adjustments based upon market opportunities and interest rates.

Funding Sources

Trustco utilizes various traditional sources of funds to support its earning asset portfolio.  The table, “Mix of Average Sources of Funding,” presents the various
categories of funds used and the corresponding average balances for each of the last three years.

Deposits: Average total deposits were approximately $5.5 billion in 2025, compared to approximately $5.3 billion in 2024, an increase of $183.9 million.  Changes
in deposit categories (average balances 2025 versus 2024) included: demand deposits were up $44.7 million, interest-bearing checking deposits were up $38.6 million, savings was down $48.8 million, money market was down $44.3 million and
time deposits were up $193.7 million.  While many customers remain in one product type for many years, others may move funds between product types to maximize the yield earned or as a result of increased or decreased liquidity needs.  The
balance in time deposits over $250 thousand is not the result of any incentive pricing as Trustco does not offer premium rates on large certificates of deposit.

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The Company has been proactive in retaining deposits, which is evident since total deposits have increased since December 31, 2024.  Total deposits as of December 31, 2025 increased $166.4 million to $5.56
billion compared to $5.39 billion as of December 31, 2024.  As we move forward, Trustco’s objective is to continue to encourage customers to retain these funds in the expanded product offerings of the Bank through aggressive marketing and
product differentiation.

MIX OF AVERAGE SOURCES OF FUNDING

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AVERAGE BALANCES, YIELDS AND NET INTEREST MARGINS

Portions of income earned on certain commercial loans, obligations of states and political subdivisions, and equity securities are exempt from federal and/or state
taxation.  Appropriate adjustments have been made to reflect the equivalent amount of taxable income that would have been necessary to generate an equal amount of after-tax income.  Federal and state tax rates used to calculate income tax
on a tax equivalent basis were 21% and 6%, respectively, for 2025, 2024 and 2023.  The average balances of securities available for sale and held to maturity were calculated using amortized costs.  Included in the average balance of
shareholders’ equity is $15.6 million, $30.1 million, and $30.7 million in 2025, 2024, and 2023, respectively, of net unrealized loss, net of tax, in the available for sale securities portfolio.  The gross amounts of the net unrealized
income (loss) have been included in cash and noninterest earning assets.  Non-accrual loans are included in average loans.

The overall cost of interest-bearing deposits decreased as a result of lower deposit rates throughout the year as a result of the current interest rate environment.
The Company strives to maintain competitive rates on deposit accounts and to attract customers through a combination of competitive interest rates, quality customer service, and convenient banking locations.  In this fashion, management
believes TrustCo is able to attract deposit customers looking for a long-term banking relationship and to cross-sell banking services utilizing the deposit account relationship as the starting point.

Other Funding Sources

Other Funding Sources: The Company had $89.8 million of average short‑term borrowings outstanding during 2025, compared to $89.7 million in 2024.  The slight
increase over the prior year is attributable to customer behavior and the products they choose.  These borrowings represent customer repurchase accounts, which behave more like deposit accounts than traditional borrowings.  The average cost
of short-term borrowings was at 0.99% in 2025 and 0.88% in 2024.  Higher balances toward the end 2025 resulted in an increase of interest expense to approximately $894 thousand in 2025, compared to $791 thousand in 2024.

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AVERAGE DEPOSITS BY TYPE OF DEPOSITOR

MATURITY OF TIME DEPOSITS IN EXCESS OF THE FDIC INSURANCE LIMIT

As of December 31, 2025 and 2024, approximately $1.22 billion and $1.11 billion, respectively, of our deposit portfolio was uninsured. The uninsured amounts are estimates based on the
methodologies and assumptions used for the Bank’s regulatory reporting requirements.

VOLUME AND YIELD ANALYSIS

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Capital Resources

Consistent with its long-term goal of operating a sound and profitable financial organization, Trustco strives to maintain strong capital ratios
and to qualify Trustco Bank as a well-capitalized institution in accordance with federal regulatory requirements. Historically, most of the Company’s capital requirements have been provided through retained earnings.

Both TrustCo and Trustco Bank are subject to regulatory capital requirements.  The regulatory capital rules require a Tier 1 leverage ratio of 4.0% of consolidated
assets, a common equity Tier 1 minimum capital requirement of 4.5% of risk-weighted assets, a minimum Tier 1 capital to risk-based assets requirement of 6.0% of risk-weighted assets, and a total risk-based capital ratio or 8.0% of
risk-weighted assets.  In addition, the Company and the Bank are required to maintain additional levels of Tier 1 common equity (known as the capital conservation buffer) above the minimum risk-based capital levels in order to avoid
restrictions on dividends, share repurchases, or payment of discretionary bonuses.

As of December 31, 2025, the capital levels of both TrustCo and the Bank exceeded the minimum standards, including with the capital conservation buffer taken into
account.

Under the OCC’s “prompt corrective action” regulations, a bank is deemed to be “well-capitalized” when its “Common

Equity Tier 1” (“CET1”), Tier 1, total risk-based, and leverage capital ratios are at least 6.5%, 8%, 10%, and 5%, respectively.  A bank is deemed to be “adequately capitalized” or better if its capital
ratios meet or exceed the minimum federal regulatory capital requirements, and “undercapitalized” if it fails to meet these minimal capital requirements.  A bank is “significantly undercapitalized” if its CET1, Tier 1, total risk-based
and leverage capital ratios fall below 3%, 4%, 6%, and 3%, respectively and “critically undercapitalized” if the institution has a ratio of tangible equity to total assets that is equal to or less than 2%.  At December 31, 2025 and
2024, Trustco Bank met the definition of “well-capitalized.”

The federal bank regulatory agencies have adopted rules creating a “community bank leverage ratio” framework designed to simplify capital
requirements for qualifying banks and bank or thrift holding companies.  Although TrustCo would qualify to take advantage of the community bank leverage ratio framework, it decided not to opt into the framework.

The Company’s dividend payout ratio was 45.19% of net income in 2025 and 56.09% of net income in 2024. The per-share dividend paid was $1.48 in 2025 and $1.44 in
2024.  The Company’s ability to pay dividends to its shareholders is dependent upon the ability of the Bank to pay dividends to the Company.  The payment of dividends by the Bank to the Company is subject to continued compliance with
minimum regulatory capital requirements.

TrustCo’s consolidated Tier 1 risk-based capital was 18.39% of risk-adjusted assets at December 31, 2025, and 19.30% of risk‑adjusted assets at December 31, 2024.
Consolidated Tier 1 capital to assets (leverage ratio) at December 31, 2025 was 10.60%, as compared to 11.05% at year-end 2024.  Note 14 to the financial statements includes information on all regulatory capital ratios.

TrustCo maintains a dividend reinvestment and stock purchase plan (DRSPP) with approximately 5,759 participants.  During 2025, $2.0 million of dividends paid on the
shares held in this plan were reinvested in shares of the Company.  The DRSPP also allows for additional purchases of stock by participants and has a discount feature (up to 5%) that can be activated by management as a tool to raise
capital. To date, the discount feature has not been utilized.

On December 19, 2025 the Company’s Board authorized, and the Company announced, a share repurchase program of up to 2,000,000 shares, or approximately 11% of its
currently outstanding common stock. The program expires on December 31, 2026. Prior to that, on March 18, 2025 the Company announced that its Board of Directors authorized a share repurchase program of up to 1,000,000 shares, or
approximately 5% of its currently outstanding common stock. The Company purchased all 1,000,000 shares under this share repurchase program as of December 10, 2025. During the twelve months ended December 31, 2025, the Company repurchased a
total of 1,000,000 shares at an average price per share of $38.08 for a total of $38.1 million under such share repurchase programs. On March 29, 2024 the Company’s Board of Directors authorized, and the Company announced, another share
repurchase program of up to 200,000 shares, or approximately 1% of its currently outstanding common stock. During the twelve months ended December 31, 2024, the Company repurchased a total of 14,000 shares at an average price per share of
$26.68 for a total of $374 thousand under its Board authorized share repurchase program.

Risk Management

The responsibility for balance sheet risk management oversight is the function of the Company’s Asset Allocation Committee.  The Committee meets monthly and
includes the executive officers of the Company as well as other department managers as appropriate.  The meetings include a review of balance sheet structure, formulation of strategy in light of anticipated economic conditions, and
comparison to Board-established guidelines to control exposures to various types of risk.

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Credit Risk

Credit risk is managed through a framework of loan officer authorities, review committees, loan policies, and oversight from the senior executives of the Company.  In
addition, the Company utilizes an independent loan review function to evaluate management’s loan grading of non-homogeneous loans.  Management follows a policy of continually identifying, analyzing, and evaluating the credit risk inherent
in the loan portfolio.  As a result of management’s ongoing reviews of the loan portfolio, loans are placed in non-accrual status, either due to the delinquent status of the principal and/or interest payments, or based on a judgment by
management that, although payment of principal and/or interest is current, such action is prudent.  Thereafter, no interest is taken into income unless received in cash or until such time as the borrower demonstrates a sustained ability to
make scheduled payments of interest and principal.

Management has also developed policies and procedures to monitor the credit risk in relation to the Federal Funds sold portfolio.  TrustCo maintains an approved list of
third-party banks to which Trustco can sell Federal Funds and monitors the credit rating and capital levels of those institutions.  At December 31, 2025, virtually all of the Federal Funds sold and other short-term investments were funds on
deposit at the Federal Reserve Bank of New York (“FRBNY”) and the Federal Home Loan Bank of New York (“FHLBNY”).  The Company also monitors the credit ratings on its investment securities and performs initial and periodic reviews of
financial information for the issuers of corporate and municipal bonds.

Nonperforming Assets

Nonperforming assets include loans in non-accrual status, restructured loans, loans past due by three payments or more and still accruing interest, and foreclosed real
estate properties.

Nonperforming assets at year-end 2025 and 2024 totaled $22.0 million and $21.0 million, respectively.  Nonperforming loans as a percentage of the total
loan portfolio were 0.39% in 2025 and 0.37% in 2024.  As of December 31, 2025 and 2024, there were $9.4 million and $8.9 million, respectively, of loans in non-accruing status that were less than
90 days past due.

At December 31, 2025, nonperforming loans included a mix of commercial and residential loans.  Of the total nonperforming loans of $20.7 million, $18.7 were residential
real estate loans and $2.0 million were commercial loans.  The majority of the Company’s loan portfolio continues to come from its historical market area in Upstate New York.  As of December 31, 2025, 64.3% of loans are in New York,
including both the Upstate and Downstate areas, as well as nominal loan balances in adjoining states.  The remaining 35.7% of the loan portfolio are Florida loans.  At December 31, 2025, 19.7% of nonperforming loans were in Florida and
80.3% were in the Company’s New York area markets.  At December 31, 2025 nonperforming Florida loans amounted to $4.1 million compared to $3.7 million at December 31, 2024. At December 31, 2025 New York nonperforming loans amounted to $16.6 million compared to $15.1 million at December 31, 2024.