Trustco Bank Q3FY26 Results: EPS up 18.6% YoY, revenue rises 8.4%
- Diluted EPS rose 18.6% YoY to $1.02 in Q3FY26
- Total revenue increased 8.35% YoY to $51.8 million
- Net income grew 6.5% YoY to $17.3 million
- Net interest margin expanded 16 bps to 2.95%
- Share repurchases reduced outstanding shares by 8.3% YTD
*this image is generated using AI for illustrative purposes only.
TrustCo Bank Corp NY reported third quarter 2026 diluted earnings per share of $1.02, an 18.6% increase from $0.86 in the prior-year period. Total revenue for the quarter stood at $51.8 million, up 8.35% year over year.
Key financial highlights for Q3FY26
The following table summarises the primary income statement metrics for the three months ended September 30, 2026, compared to the prior quarter and the year-ago period.
| Metric | Q3FY26 | Q2FY26 | Q3FY25 |
|---|---|---|---|
| Net interest income | $47,039 thousand | $45,590 thousand | $43,119 thousand |
| Provision for credit losses | $850 thousand | $650 thousand | $250 thousand |
| Noninterest expense | $28,019 thousand | $28,333 thousand | $26,242 thousand |
| Net income | $17,318 thousand | $16,965 thousand | $16,258 thousand |
| Basic EPS | $1.03 | $0.98 | $0.87 |
| Diluted EPS | $1.02 | $0.98 | $0.86 |
| Cash dividends per share | $0.40 | $0.38 | $0.38 |
| Book value per share | $38.20 | $38.53 | $37.30 |
Net interest income of $47.0 million for the three months ended September 30, 2026 rose $3.9 million, or 9.1%, compared to the third quarter of 2025. The net interest margin expanded to 2.95% from 2.79% in the prior year period, an improvement of 16 bps. The yield on interest-earning assets increased to 4.35% from 4.25%, while the cost of interest-bearing liabilities decreased to 1.79% from 1.90%, over the same comparison periods.
For the nine months ended September 30, 2026, net income was $50.6 million, or $2.91 diluted earnings per share, compared to net income of $45.6 million, or $2.41 diluted earnings per share, for the nine months ended September 30, 2025.
Performance ratios
The table below presents key performance ratios across the three most recent quarters.
| Ratio | Q3FY26 | Q2FY26 | Q3FY25 |
|---|---|---|---|
| Return on average assets | 1.05% | 1.04% | 1.02% |
| Return on average equity | 10.57 | 10.22 | 9.29 |
| Efficiency ratio (GAAP) | 54.03 | 55.01 | 54.89 |
| Adjusted efficiency ratio (Non-GAAP) | 54.11 | 55.71 | 54.87 |
| Net interest spread | 2.56 | 2.48 | 2.35 |
| Net interest margin | 2.95 | 2.87 | 2.79 |
| Dividend payout ratio | 38.58 | 38.36 | 43.68 |
| Consolidated equity to assets (GAAP) | 9.72% | 10.05% | 10.90% |
Loan and deposit growth
Average loans increased $238.1 million, or 4.6%, in the third quarter of 2026 over the same period in 2025. Within that growth, average residential loans rose $177.3 million, or 4.0%, and average Home Equity Credit Lines (HECLs) increased $50.0 million, or 11.4%. Average commercial loans also grew $13.5 million, or 4.3%, over the same comparison period.
Average deposits were up $229.6 million, or 4.2%, for the third quarter of 2026 compared to the third quarter of 2025, driven by increases in time deposits, interest-bearing checking accounts, and demand deposits. As of September 30, 2026, total deposits stood at $5,684,218 thousand.
Asset quality
Asset quality metrics remained stable. The following table presents key credit quality indicators at period end.
| Asset quality metric | 9/30/2026 | 9/30/2025 |
|---|---|---|
| Nonperforming loans (NPLs) | $21,067 thousand | $18,477 thousand |
| Nonperforming assets (NPAs) | $22,250 thousand | $19,711 thousand |
| Allowance for credit losses on loans | $55,162 thousand | $51,891 thousand |
| NPLs to total loans | 0.39% | 0.36% |
| NPAs to total assets | 0.34% | 0.31% |
| Allowance for credit losses to total loans | 1.01% | 1.00% |
| Coverage ratio | 261.8% | 280.8% |
TrustCo Bank Corp NY recorded a provision for credit losses of $850 thousand in the third quarter of 2026, an increase of $600 thousand compared to the same period in 2025. The provision comprised a $1.05 million charge for credit losses on loans, driven by loan growth and changes in forward-looking economic assumptions, partially offset by a $200 thousand benefit for credit losses on unfunded commitments due to a seasonal decrease in the loan pipeline.
Capital allocation and shareholder returns
During the third quarter of 2026, the bank declared an increased quarterly cash dividend of $0.40 per share, or $1.60 per share on an annualized basis, representing a 5.3% increase over the prior dividend amount. For the three and nine months ended September 30, 2026, TrustCo Bank Corp NY repurchased 500 thousand and 1.5 million shares, or 2.9% and 8.3%, respectively, of outstanding common stock under its stock repurchase program, which authorizes repurchase of up to two million shares, or 11.1%, of outstanding common stock in 2026.
Book value per share as of September 30, 2026 was $38.20, up 2.4% compared to $37.30 as of September 30, 2025. The consolidated equity to assets ratio was 9.72% as of September 30, 2026, compared to 10.90% as of September 30, 2025.
What the Numbers Show
While net income grew 6.5% YoY, diluted EPS rose 18.6% YoY. This divergence is explained by the company's aggressive share buyback program, which reduced outstanding shares by 8.3% over the first nine months of 2026. Additionally, total revenue growth of 8.35% outpaced net interest income growth of 9.1%, suggesting non-interest income components also contributed positively to the top line.
How might the continued decline in the equity-to-assets ratio from 10.90% to 9.72% influence TrustCo's capacity for future loan growth or regulatory capital requirements?
Given the rising provision for credit losses and increasing nonperforming loans, what specific sectors within the residential or commercial portfolios are driving this deterioration in asset quality?
With the net interest margin expanding due to lower liability costs, how sensitive is TrustCo's profitability outlook to potential Federal Reserve rate cuts in the coming quarters?
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