SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number 1-12709
TOMPKINS COUNTY TRUSTCO, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 16-1482357
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
THE COMMONS, P.O. BOX 460, ITHACA, NY 14851
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (607) 273-3210
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 [X] No [ ].
Indicate the number of shares of the Registrant's Common Stock outstanding as of
the latest practicable date:
Class Outstanding as of November 4, 1998
---------------------------- -----------------------------------
Common Stock, $.10 par value 4,854,336 shares
<PAGE>
TOMPKINS COUNTY TRUSTCO, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PART I -FINANCIAL INFORMATION
PAGE
<S> <C>
ITEM 1 -FINANCIAL STATEMENTS (UNAUDITED)
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION AS OF
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997 3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR
THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1998
AND 1997 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 5
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 7-10
ITEM 2 -MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 11-16
ITEM 3 -QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 17
AVERAGE CONSOLIDATED BALANCE SHEET AND NET INTEREST ANALYSIS 18
PART II -OTHER INFORMATION
ITEM 1 -LEGAL PROCEEDINGS NOT APPLICABLE
ITEM 2 -CHANGES IN SECURITIES AND USE OF PROCEEDS NOT APPLICABLE
ITEM 3 -DEFAULTS ON SENIOR SECURITIES NOT APPLICABLE
ITEM 4 -SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS NOT APPLICABLE
ITEM 5 -OTHER INFORMATION NOT APPLICABLE
ITEM 6 -EXHIBITS AND REPORTS ON FORM 8-K 19
SIGNATURES 20
EXHIBIT INDEX 21
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
(In thousands, except share data)
<TABLE>
<CAPTION>
ASSETS (UNAUDITED)
AS OF AS OF
09/30/98 12/31/97
--------------- ------------
<S> <C> <C>
Cash & noninterest bearing balances
due from banks $19,587 $22,089
Federal funds sold 3,000
Available-for-sale securities, at fair value 189,004 176,660
Held-to-maturity securities, fair value of $35,503
in 1998 and $37,882 in 1997 34,514 36,911
Loans/leases net of unearned income 393,135 377,184
Less: Reserve for loan/lease losses 5,016 4,979
- -----------------------------------------------------------------------------------------------------------------
NET LOANS/LEASES 388,119 372,205
Bank premises and equipment 6,655 6,832
Other assets 15,434 9,210
- -----------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $653,313 $626,907
=================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Interest bearing:
Checking $8,899 $63,364
Savings and money market 203,500 140,185
Time 171,737 185,436
Noninterest bearing 88,859 87,715
- -----------------------------------------------------------------------------------------------------------------
TOTAL DEPOSITS 472,995 476,700
Securities sold under agreements to repurchase and
Federal funds purchased 60,828 57,998
Other borrowings 47,005 27,005
Other liabilities 9,074 8,304
- -----------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $589,902 $570,007
=================================================================================================================
COMMITMENTS AND CONTINGENCIES
Shareholders' equity:
Common Stock - par value $.10 per share
Authorized 7,500,000 shares; issued and outstanding
4,897,597 in 1998 and 3,258,807 shares in 1997 $490 $326
Surplus 29,964 29,935
Undivided profits 31,781 26,769
Accumulated other comprehensive income 2,118 1,074
Treasury stock, at cost - 29,175 shares in 1998,
20,592 shares in 1997. (554) (571)
Deferred ISOP benefit expense - 19,429 shares in 1998,
21,110 shares in 1997. (388) (633)
- -----------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY $63,411 $56,900
- -----------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $653,313 $626,907
=================================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
3
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<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data) (Unaudited)
QUARTER ENDING YEAR TO DATE
----------------------------- ----------------------------
09/30/98 09/30/97 09/30/98 09/30/97
-------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans $8,614 $8,345 $25,509 $24,272
Federal funds sold 55 26 156 198
Available-for-sale securities 3,181 3,087 9,537 8,976
Held-to-maturity securities 448 475 1,408 1,466
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 12,298 11,933 36,610 34,912
==========================================================================================================================
INTEREST EXPENSE
Deposits:
Time certificates of deposits of $100,000 or more 1,251 1,071 4,050 3,323
Other Deposits 2,599 2,629 7,781 7,543
Federal funds Purchased and Securities sold under
agreements to repurchase 831 1,159 2,221 3,349
Borrowed funds 523 317 1,451 744
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 5,204 5,176 15,503 14,959
- --------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 7,094 6,757 21,107 19,953
- --------------------------------------------------------------------------------------------------------------------------
Less: Provision for loan/lease losses 298 263 779 830
- --------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN/LEASE LOSSES 6,796 6,494 20,328 19,123
- --------------------------------------------------------------------------------------------------------------------------
OTHER INCOME
Trust and investment services income 1,067 743 2,960 2,309
Service charges on deposit accounts 380 413 1,214 1,309
Credit card merchant income 585 663 1,778 1,701
Other service charges 463 353 1,368 1,028
Other operating income 71 113 359 256
Gain (loss) on available-for-sale securities 23 (41) (72) (85)
- --------------------------------------------------------------------------------------------------------------------------
TOTAL OTHER INCOME 2,589 2,244 7,607 6,518
- --------------------------------------------------------------------------------------------------------------------------
OTHER EXPENSES
Salary and wages 2,133 2,037 6,349 5,983
Pension and other employee benefits 466 455 1,424 1,428
Net occupancy expense of bank premises 322 328 994 976
Furniture and fixture expense 265 238 791 812
Credit card operating expense 549 592 1,613 1,539
Other operating expense 1,232 1,102 3,969 3,410
- --------------------------------------------------------------------------------------------------------------------------
TOTAL OTHER EXPENSES 4,967 4,752 15,140 14,148
- --------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 4,418 3,986 12,795 11,493
- --------------------------------------------------------------------------------------------------------------------------
Income taxes 1,427 1,385 4,400 3,997
- --------------------------------------------------------------------------------------------------------------------------
NET INCOME $2,991 $2,601 $8,395 $7,496
==========================================================================================================================
BASIC EARNINGS PER SHARE $0.62 $0.54 $1.73 $1.54
DILUTED EARNINGS PER SHARE $0.60 $0.53 $1.70 $1.52
==========================================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share data) (Unaudited)
NINE MONTHS ENDED
-----------------------------------
09/30/98 09/30/97
-------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $8,395 $7,496
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan/lease losses 779 830
Provision for depreciation and amortization 774 814
Net amortization on securities 203 146
Provision for deferred income taxes 151 94
Net loss on sale of securities 72 85
Net gain on sale of loans (96) (6)
Net gain on sales of bank premises and equipment (9) (30)
ISOP shares released for allocation 351 5
Increase in other assets (6,299) (1,139)
(Decrease) Increase in other liabilities (138) 781
- ----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,183 9,076
- ----------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from maturities of available-for-sale securities 52,103 30,791
Proceeds from sales of available-for-sale securities 20,958 10,684
Proceeds from maturities of held-to maturity securities 9,408 9,871
Purchases of available-for-sale securities (83,820) (53,413)
Purchases of held-to-maturity securities (7,071) (9,281)
Proceeds from sale of loans 6,810 2,561
Net increase in loans (23,406) (20,768)
Proceeds from sale of bank premises and equipment 15 42
Purchases of bank premises and equipment (528) (868)
- ----------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (25,531) (30,381)
- ----------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase in demand deposits,
money market accounts, and savings accounts 9,994 27,831
Net increase (decrease) in time deposits (13,699) 9,858
Net increase (decrease) in securities sold under agreements
to repurchase and Federal funds purchased 2,830 (13,858)
Net increase in other borrowings 20,000 5,000
Cash dividends (3,220) (2,989)
Sale of treasury stock 30 30
Common shares repurchased and returned to authorized
and unissued status 0 (2,670)
Proceeds from exercise of stock options 222 12
Shares swapped and traded to pay taxes on options exercised (311) 0
- ----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 15,846 23,214
- ----------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (5,502) 1,909
Cash and Cash Equivalents at beginning of Period 25,089 25,319
TOTAL CASH & CASH EQUIVALENTS AT END OF PERIOD $19,587 $27,228
======================================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands, except share data)
ACCUMULATED DEFERRED
OTHER ISOP
COMMON TREASURY UNDIVIDED COMPREHENSIVE BENEFIT
STOCK STOCK SURPLUS PROFITS INCOME EXPENSE TOTAL
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES AT
JANUARY 1, 1997 $ 334 ($604) $ 32,529 $ 20,925 $ 66 ($637) $ 52,613
- ----------------------------------------------------------------------------------------------------------------------------
Cash dividends ($0.61/Share) (2,989) (2,989)
Exercise of stock options (642 shares) 12 12
Treasury stock sold (1,735 shares) 25 5 30
Common stock repurchased and
returned to authorized and
unissued status (120,000 shares) (8) (2,662) (2,670)
ISOP Shares released
allocation (177 shares) 1 4 5
Comprehensive Income:
Change in net unrealized gain (loss)
on available-for-sale securities,
net of tax 690 690
Net Income 7,496 7,496
- ---------------------------------------------------------------------------------------------------------------------------
Total Comprehensive Income 7,496 690 8,186
===========================================================================================================================
BALANCES AT
SEPTEMBER 30,1997 $ 326 ($579) $ 29,885 $25,432 $756 ($633) $55,187
- ---------------------------------------------------------------------------------------------------------------------------
===========================================================================================================================
BALANCES AT
JANUARY 1, 1998 $ 326 ($571) $ 29,935 $26,769 $1,074 ($633) $56,900
- ---------------------------------------------------------------------------------------------------------------------------
Cash dividends ($0.67/Share) (3,220) (3,220)
Exercise of stock options (17,728 shares) 1 221 222
Swapped and traded shares, returned
to authorized and unissued
status (8,121 shares) (311) (311)
Treasury stock sold (894 shares) 17 13 30
ISOP Shares released for
allocation (12,236 shares) 106 245 351
Effect of 3 for 2 stock split in
the form of a stock dividend 163 (163)
Comprehensive Income:
Change in net unrealized gain (loss)
on available-for-sale securities,
net of tax 1,044 1,044
Net Income 8,395 8,395
- ---------------------------------------------------------------------------------------------------------------------------
Total Comprehensive Income 8,395 1,044 9,439
- ---------------------------------------------------------------------------------------------------------------------------
BALANCES AT
SEPTEMBER 30, 1998 $ 490 ($554) $ 29,964 $31,781 $2,118 ($388) $63,411
===========================================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
6
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS
Tompkins County Trustco, Inc. (the "Company") is a registered bank holding
company, organized under the laws of New York State. On April 26, 1995, the
shareholders of Tompkins County Trust Company (the "Trust Company" or the
"Bank") approved a proposal to revise its corporate structure by establishing
the Company as a one bank holding company. On January 1, 1996, the Trust Company
became a wholly owned subsidiary of the Company and all issued and outstanding
shares of Trust Company common stock were converted to shares of the Company's
common stock. The holding company formation was accounted for similar to a
pooling of interests. Accordingly, the financial information included herein
combines the results of operations, and the assets, liabilities, and
shareholders equity of the Company and the Trust Company for all periods
presented. The Trust Company traces its charter back to 1836 and provides loan,
deposit, and trust and investment services to its customers primarily in
Tompkins County, New York, and surrounding areas.
2. BASIS OF PRESENTATION
The financial statements have been prepared in accordance with generally
accepted accounting principles. In preparing the financial statements,
management is required to make estimates and assumptions that effect the
reported amounts of assets and liabilities as of the date of the statements of
condition and statements of income and expenses for the period. Actual amounts
could differ from estimates. The accompanying interim condensed consolidated
financial statements and related notes should be read in conjunction with the
Company's Form 10-K and related notes for the year ended December 31, 1997.
The condensed consolidated financial statements included herein reflect all
adjustments of a normal recurring nature which are, in the opinion of
management, necessary for a fair presentation of the Company's financial
position at September 30, 1998, and December 31, 1997, and the results of
operations for the three and nine months ended September 30, 1998 and 1997.
Certain reclassifications have been made to prior period amounts for consistency
in reporting.
3. STOCK SPLIT
On February 10, 1998, the Company announced that its board of directors approved
a 3-for-2 stock split in the form of a dividend (the "Stock Split"), payable on
March 15, 1998, to shareholders of record on March 1, 1998. The Split increased
the number of shares outstanding by 1,630,635 shares. The transaction had no
effect on the par value of shares outstanding or on the number of shares
authorized. All share and per share data in the consolidated financial
statements and notes thereto have been retroactively adjusted to reflect the
Stock Split.
4. STOCK REPURCHASE PROGRAM
In November 1996, the board of directors approved a stock repurchase program,
which authorizes the repurchase of up to $3 million in common stock of the
Company in open market transactions. As of September 30, 1998, no open market
transactions have been completed under this program. On May 14, 1997, the
Company repurchased 120,000 shares of its common stock in a privately negotiated
transaction. The shares, which have been returned to the status of authorized
and unissued, were purchased at $22.25 per share, for a total purchase price of
$2.67 million.
5. SECURITIES
As of September 30, 1998, net unrealized gains on securities classified as
available-for-sale totaled $3.7 million, resulting in an after tax increase to
shareholders' equity of $2.1 million. As of December 31, 1997,
available-for-sale securities had net unrealized gains of $1.9 million,
resulting in an after tax shareholders' equity capital increase of $1.1 million.
7
<PAGE>
6. LOANS/LEASES
The Company's recorded investment in loans/leases considered impaired was $1.1
million on September 30, 1998, and the average recorded investment in impaired
loans/leases was $1.1 million through the first nine months of 1998. Included in
this amount was $245,000 of impaired loans/leases for which related reserves
totaled $134,000. The recorded investment in impaired loans/leases as of
December 31, 1997, was $1.4 million. The December 31, 1997 amount includes
$806,000 of impaired loans/leases which had related reserves of $329,000. The
effect on interest income from impaired loans/leases was not material during the
first nine months of 1998.
7. EARNINGS PER SHARE
On December 31, 1997, the Company adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 128, EARNINGS PER SHARE, which
requires dual presentation of "Basic EPS" and "Diluted EPS" on the face of the
income statement for all entities with complex capital structures. All prior
period EPS data has been restated to conform to the provisions of this
statement. A computation of Basic EPS and Diluted EPS for the nine month periods
ending September 30, 1998 and 1997, is presented in the table below.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 1998 INCOME AVERAGE SHARES PER SHARE AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands except share and per share data) (NUMERATOR) (DENOMINATOR)
<S> <C> <C> <C>
BASIC EPS
INCOME AVAILABLE TO COMMON SHAREHOLDERS $2,991 4,846,631 $0.62
EFFECT OF DILUTIVE SECURITIES (OPTIONS) 98,290
DILUTED EPS
INCOME AVAILABLE TO COMMON SHAREHOLDERS PLUS ASSUMED CONVERSIONS $2,991 4,944,921 $0.60
====================================================================================================================================
NINE MONTHS ENDED SEPTEMBER 30, 1998 INCOME AVERAGE SHARES PER SHARE AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands except share and per share data) (NUMERATOR) (DENOMINATOR)
BASIC EPS
INCOME AVAILABLE TO COMMON SHAREHOLDERS $8,395 4,842,049 $1.73
EFFECT OF DILUTIVE SECURITIES (OPTIONS) 92,147
DILUTED EPS
INCOME AVAILABLE TO COMMON SHAREHOLDERS PLUS ASSUMED CONVERSIONS $8,395 4,934,196 $1.70
====================================================================================================================================
</TABLE>
8
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<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 1997 INCOME AVERAGE SHARES PER SHARE AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------
(In thousands except share and per share data) (NUMERATOR) (DENOMINATOR)
<S> <C> <C> <C>
BASIC EPS
INCOME AVAILABLE TO COMMON SHAREHOLDERS $2,601 4,823,109 $0.54
EFFECT OF DILUTIVE SECURITIES (OPTIONS) 56,805
DILUTED EPS
INCOME AVAILABLE TO COMMON SHAREHOLDERS PLUS ASSUMED CONVERSIONS $2,601 4,879,914 $0.53
==============================================================================================================================
NINE MONTHS ENDED SEPTEMBER 30, 1997 INCOME AVERAGE SHARES PER SHARE AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------
(In thousands except share and per share data) (NUMERATOR) (DENOMINATOR)
BASIC EPS
INCOME AVAILABLE TO COMMON SHAREHOLDERS $7,496 4,880,852 $1.54
EFFECT OF DILUTIVE SECURITIES (OPTIONS) 49,216
DILUTED EPS
INCOME AVAILABLE TO COMMON SHAREHOLDERS PLUS ASSUMED CONVERSIONS $7,496 4,930,068 $1.52
==============================================================================================================================
</TABLE>
8. ACCOUNTING CHANGES
Effective January 1, 1998, the Company adopted the remaining provisions of SFAS
No. 125, ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND
EXTINGUISHMENTS OF LIABILITIES, which relate to accounting for securities
lending, repurchase agreements, and other secured financing activities. These
provisions did not have a material impact on the Company.
On January 1, 1998 the Company adopted the provisions of SFAS No. 130, REPORTING
COMPREHENSIVE INCOME. This Statement establishes standards for the reporting and
display of comprehensive income and its components in a full set of general
purpose financial statements. Comprehensive income includes the reported net
income of a company, adjusted for items that are currently accounted for as
direct entries to equity. These items may include mark-to-market adjustments on
securities available-for-sale, foreign currency items, and minimum pension
liability adjustments.
For the Company, comprehensive income represents net income plus other
comprehensive income. Accumulated other comprehensive income represents the net
unrealized gains or losses on securities available-for-sale as of the balance
sheet dates. Comprehensive income for the three and nine month periods ended
September 30, 1998 and 1997 is summarized in the table below:
<TABLE>
<CAPTION>
(In thousands) QUARTER ENDED YEAR TO DATE
- ---------------------------------------------------------------------------------------------------------------------------
09/30/98 09/30/97 09/30/98 09/30/97
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET INCOME $2,991 $2,601 $8,395 $7,496
- ---------------------------------------------------------------------------------------------------------------------------
Net unrealized holding gains or losses 1,978 1,463 1,730 1,105
Reclassification adjustment for realized gain (loss) on sale
of available-for-sale securities 23 (41) (72) (85)
- ---------------------------------------------------------------------------------------------------------------------------
Unrealized holding gains (losses) arising during the period 1,955 1,504 1,802 1,190
Deferred taxes on unrealized holding gains (losses) (822) (631) (758) (500)
- ---------------------------------------------------------------------------------------------------------------------------
Other comprehensive income, net of tax 1,133 873 1,044 690
- ---------------------------------------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME $4,124 $3,474 $9,439 $8,186
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION. SFAS No.
131 requires publicly held companies to report financial and other information
about key revenue-producing segments of the entity for which such information is
available and is utilized by the chief operation decision maker. Specific
information to be reported for individual segments includes profit or loss,
certain revenue and expense items, and total assets. A reconciliation of segment
financial information to amounts reported in the financial statements would be
provided. The new accounting standard is not expected to result in significant
changes to the company's reporting.
In February 1998, the Financial Accounting Standards Board issued SFAS No. 132,
EMPLOYER'S DISCLOSURES ABOUT PENSIONS AND OTHER POST RETIREMENT BENEFITS. This
Statement revises employers' disclosures about pension and other post retirement
benefit plans. It does not change the measurement or recognition of these plans.
This Statement is effective for the Company in 1998 and will have no impact on
the Company's financial position or results of operations.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. This statement
establishes comprehensive accounting and reporting requirements for derivative
instruments and hedging activities. The statement requires companies to
recognize all derivatives as either assets or liabilities, with instruments
measured at fair value. The recognition of accounting gains and losses resulting
from changes in fair value of a derivative instrument depends on the intended
use of the derivative and the type of risk being hedged. This statement is
effective for the Company for all fiscal quarters beginning after January 1,
2000; however, early adoption is permitted. The Company is currently evaluating
the effect this standard will have on its financial statements.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Tompkins County Trustco, Inc. is the parent company of Tompkins County Trust
Company. The Trust Company is an independent community bank whose primary
service area is Tompkins County, New York. Through the Bank, the Company
provides a full range of financial services including: deposits, trust and
investment services, commercial lending, consumer lending, residential mortgage
lending, cash management, and electronic banking. In February 1998, the Trust
Company formed a subsidiary corporation, Tompkins Real Estate Holdings, Inc.,
which was formed to qualify as a real estate investment trust. Tompkins Real
Estate Holdings, Inc. became an active subsidiary of the Trust Company on June
1, 1998.
The following discussion is intended to provide the reader with a further
understanding of the consolidated financial condition and results of operations
of Tompkins County Trustco, Inc. and its operating subsidiaries. It should be
read in conjunction with the Company's Form 10-K and related notes for the year
ended December 31, 1997, and the condensed consolidated financial statements and
notes included elsewhere in this report.
RESULTS OF OPERATIONS
Net income for the third quarter of 1998 was $3.0 million, compared to $2.6
million for the third quarter of 1997. Basic earnings per share in the third
quarter of 1998 increased by 14.5% to $0.62, compared to $0.54 in the third
quarter of 1997. On a diluted basis, earnings per share increased to $0.60 per
share in the third quarter of 1998, compared to $0.53 for the same period in
1997. Year to date net income through the first nine months of 1998 was $8.4
million, compared to $7.5 million for the same period in 1997. Year to date
basic earnings per share of $1.73 represents a 13% increase over the same period
in 1997. Year to date diluted earnings per share of $1.70 reflects an 12%
increase over the prior year.
The significant improvement in per share earnings through the first nine months
of 1998 was achieved primarily through 12% growth in net income, and benefited
from a 1% decline in the basic average shares outstanding. The reduction in
average shares outstanding is the result of a privately negotiated transaction
in which the Company repurchased 120,000 common shares in May of 1997.
The Company's return on average assets (ROAA) was 1.74% through the first nine
months of 1998, compared to 1.64% for the same period in 1997. Return on average
shareholders' equity (ROAE) for the first nine months of 1998 was 18.94%,
compared to 18.97% for the same period in 1997. Improvement in ROAA reflects the
strong earnings growth through the first half of 1998, which exceeded average
total asset growth of 6%. The modest decline in ROAE is the result of 12% growth
in average equity between September 1998 and September 1997.
NET INTEREST INCOME
As reflected in the attached Average Consolidated Balance Sheet and Net Interest
Analysis, the Company earned tax-equivalent net interest income of $22.0 million
for the nine months ended September 30, 1998, compared to $20.9 million for the
same period in 1997. The improvement in net interest income is attributable to
growth in the Company's earnings assets, which helped offset a modest decline in
net interest margin. The Company has also enhanced its cash management practices
in 1998, which has resulted in a greater percentage of total assets being
comprised of earning assets. Average earning assets grew by $36.7 million
between September 30, 1997 and September 30, 1998. Growth in average earnings
assets was centered in the securities portfolio, residential real estate loans,
and commercial real estate loans. Growth was supported by a $21.9 million
increase in average core deposits (noninterest bearing deposits, savings and
money market deposits, and time deposits of less than $100,000), and a $6.9
million increase in average non-core funding (Time deposits of $100,000 and
more, Federal funds purchased and securities sold under agreements to
repurchase, and other borrowings), and $6.4 million growth in average
shareholders' equity.
The tax-equivalent net interest margin on earning assets was 4.78% through the
first nine months of 1998, compared to a 4.83% ratio through the first nine
months of 1997. Yield on earning assets declined from 8.29% as of September 30,
1997, to 8.16% as of September 30, 1998. The decline in asset yields is
reflective of the general downward trending of interest rates over the periods
presented.
11
<PAGE>
The cost of interest bearing liabilities was 4.23% in the first nine months of
1998, compared to 4.26% in the first nine months of 1997. Despite the decline in
the cost of interest bearing liabilities, the cost of interest bearing deposits
increased, reflecting the competitive environment for deposits in the Company's
market area. The increased cost of interest bearing deposits was partially
offset by an $8.6 million increase in average noninterest bearing deposits.
Noninterest bearing liabilities contributed 86 basis points to the Company's net
interest margin in the first nine months of 1998, compared to 80 basis points
for the same period in 1997.
PROVISION FOR LOAN/LEASE LOSSES
The provision represents management's estimate of the expense necessary to
maintain the reserve for loan/lease losses at an adequate level. The provision
of $779,000 for the first nine months of 1998 represents a 6% decline from the
$830,000 provision in the first nine months of 1997. The decline in the year to
date provision is reflective of a lower level of loan/lease losses in the
current period, and management's estimates of the reserves necessary given the
overall quality of the portfolio, growth expectations, and general economic
conditions. For the third quarter of 1998, the provision was $298,000 compared
to $263,000 for the same period in 1997.
OTHER INCOME
Other income continues to be a key source of revenue growth for the Company.
Total other income for the first nine months of 1998 totaled $7.6 million, an
increase of 17% from the prior year. Other income for the third quarter of 1998
was $2.6 million, an increase of 15% from the third quarter of 1997. Other
income as a percentage of average assets increased from 1.42% for the nine
months ended September 30, 1997, compared to 1.57% for the same period in 1998.
Income from trust and investment services, the largest segment of other income,
increased 28% to $3.0 million, compared to $2.3 million the first nine months of
1997. The increase is primarily attributable to continued asset growth in the
Trust and Investment Services Division. Total assets managed by, or in custody
of, the Trust and Investment Services Division were $896 million on September
30, 1998, representing a $120 million increase from September 30, 1997. Assets
in the custody of the Trust and Investment Services Division included a portion
of the Trust Company's securities portfolio, with a market value of $146 million
on September 30, 1998, and $129 million on September 30, 1997.
In 1997, the Trust and Investment Services Division formed an alliance with
another community bank. Through this alliance, the Company provides servicing
and administrative support to the trust department of the other bank. Due to the
success of this alliance, which has resulted in nearly $10 million in new assets
under management, the Company anticipates expanding this service to additional
banks. A second alliance was formed in the third quarter of 1998, with Hudson
Valley Bank in Westchester County, New York.
Credit card merchant fee income of $1.8 million through the first nine months of
1998 represents a 5% increase from the same period in 1997. Growth in merchant
fee income is primarily attributable to an increase in the number of Trust
Company merchant customers. Other service charges increased 33%, from $1.0
million for the first nine months of 1997, to $1.4 million for the same period
in 1998. Growth in other service charges reflects the Company's continued
efforts to generate income from noninterest related sources, and includes fees
related to debit card usage, ATM fees, sales of non-deposit investment products,
wire transfer services, and lockbox services, all of which reflected increases
over the same period in the previous year. Service charges on deposit accounts
of $1.2 million represents a 7% decline from the previous year, and is
reflective of an increased number of customers taking advantage of lower fee
deposit products.
Total other income was reduced by losses on the sale of available-for-sale
securities of $72,000 in 1998, and $85,000 in 1997. Other income in 1998 also
included a $95,000 gain on the sale of approximately $6 million in student loans
in the second quarter of 1998.
OTHER EXPENSE
Total other expenses increased 7% in the first nine months of 1998 to $15.1
million, compared to $14.1 million in 1997. Salary and wages remains the largest
segment of other expense, comprising 42% of other expenses for the period ended
September 30, 1998, which is comparable to the same period in 1997. Total salary
and wage expense of $6.3 million in the first nine months of 1998, represents a
6% increase from the prior year.
12
<PAGE>
Credit card operating expense is a variable expense that increases as the volume
of merchant and card holder transactions increases. The 5% increase in credit
card operating expenses during the first nine months of 1998 is primarily due to
an increased volume of merchant customer transactions.
Year to date other operating expenses increased from $3.4 million in 1997, to
$4.0 million in 1998. Included in other operating expenses is approximately
$160,000 relating to consulting contracts initiated in the first quarter of
1998. These consulting contracts were entered into to enhance the ability of
employees to meet the needs of customers through improved sales and service
techniques and more efficient use of the Company's existing technology.
INCOME TAXES
The Company's effective tax rate for the third quarter declined from 34.8% in
1997, to 32.3% in 1998. The decline in the effective tax rate reflects certain
state tax benefits that have accrued to the Company as a result of the formation
of Tompkins Real Estate Holdings, Inc. Tompkins Real Estate Holdings, Inc. is a
wholly-owned subsidiary of Tompkins County Trust Company, which became active on
June 1, 1998. The corporation has been formed to qualify as a Real Estate
Investment Trust, as defined by the Internal Revenue Code of 1986.
FINANCIAL CONDITION
The Company's total assets were $653.3 million as of September 30, 1998,
representing a 4% increase over total assets reported as of December 31, 1997.
Growth was primarily in the loan and lease portfolio, which increased by $16.0
million in the first nine months of 1998, while the securities portfolio grew by
approximately $9.9 million (including market value adjustments on
available-for-sale securities). Other assets grew by $6.2 million in the first
nine month of 1998, primarily as a result of the purchase of $5 million in
corporate owned life insurance, covering various officers of the corporation.
The purchase of this insurance provides benefits to both the Company and the
covered employees. Future increases in the cash surrender value of the insurance
will be reflected in other operating income. Asset growth was funded through a
combination of growth in other borrowings and equity capital.
CAPITAL
Total shareholders' equity grew by 11% during the first nine months of 1998 to
$63.4 million. Cash dividends paid in the first half of 1998 totaled
approximately $3.2 million, representing 38.4% of year to date earnings. Per
share cash dividends of $0.67 for the first nine months of 1998, represents an
9.8% increase over cash dividends paid in 1997.
The Company and the Trust Company are subject to various regulatory capital
requirements administered by Federal banking agencies. Management believes the
Company and the Trust Company meet all capital adequacy requirements to which
they are subject. The table below reflects the Company's capital position at
September 30, 1998, compared to the regulatory capital requirements for "well
capitalized" institutions.
<TABLE>
<CAPTION>
REGULATORY CAPITAL ANALYSIS - September 30, 1998
=============================================================================================================================
ACTUAL WELL CAPITALIZED REQUIREMENT
(DOLLAR AMOUNTS IN THOUSANDS) AMOUNT RATIO AMOUNT RATIO
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Capital (to risk weighted assets) $65,734 17.0% $38,663 10.0%
Tier I Capital (to risk weighted assets) $60,899 15.8% $23,198 6.0%
Tier I Capital (to average assets) $60,899 9.4% $32,391 5.0%
=============================================================================================================================
</TABLE>
As illustrated above, the Company's capital ratios on September 30, 1998 remain
well above the minimum requirement for well capitalized institutions. The ratios
show continued improvement from the levels reported at December 31, 1997. As of
December 31, 1997, the Company's Total Capital as a percentage of Risk Weighted
assets was 16.4%; Tier I Capital to risk weighted assets was 15.1%; and Tier I
Capital to average assets was 8.9%.
13
<PAGE>
RESERVE FOR LOAN AND LEASE LOSSES AND NONPERFORMING ASSETS
Management reviews the adequacy of the reserve for loan and lease losses in a
detailed and ongoing basis, giving consideration to various risk elements that
may affect losses in the loan portfolio. Based upon management's review, the
current reserve of $5.0 million is believed to be adequate to absorb inherent
losses in the loan and lease portfolios. Activity in the Company's reserve for
loan and lease losses during the first nine months of 1998 and 1997 is
illustrated in the table below.
<TABLE>
<CAPTION>
ANALYSIS OF THE RESERVE FOR LOAN/LEASE LOSSES (In thousands)
============================================================================================================
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Average Loans and Leases Outstanding Year to Date $382,648 $358,085
- ------------------------------------------------------------------------------------------------------------
Beginning Balance 4,979 4,779
- ------------------------------------------------------------------------------------------------------------
Provision for loan losses 778 830
Loans charged off (1,057) (1,053)
Loan recoveries 316 373
- ------------------------------------------------------------------------------------------------------------
Net Charge-offs (741) (680)
============================================================================================================
Ending Balance $5,016 $4,929
============================================================================================================
</TABLE>
Annualized net charge-offs through the first nine months of 1998 amounted to
0.26% of average loans outstanding during the period. This ratio compares to
0.25% for the nine months ended September 30, 1997.
The level of nonperforming assets, as illustrated in the table below, reflects
an improving trend from the prior year. Over 90% of nonperforming loans as of
September 30, 1998 are secured by real estate, with 55% secured by 1-4 family
residential properties.
<TABLE>
<CAPTION>
NONPERFORMING ASSETS (In thousands)
============================================================================================================
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Nonaccrual loans $1,787 $1,763
Loans past due 90 days and accruing 0 55
Troubled debt restructuring not included above 0 0
- ------------------------------------------------------------------------------------------------------------
Total nonperforming loans 1,787 1,818
- ------------------------------------------------------------------------------------------------------------
Other real estate, net of allowances 124 137
- ------------------------------------------------------------------------------------------------------------
Total nonperforming assets $1,911 $1,955
============================================================================================================
Total nonperforming loans as a percent of total loans 0.45% 0.49%
Total nonperforming assets as a percentage of total assets 0.29% 0.31%
============================================================================================================
</TABLE>
DEPOSITS AND OTHER LIABILITIES
Total deposits were $473.0 million on September 30, 1998, compared to $476.7
million in total deposits on December 31, 1997. Core deposits, which include
demand deposits, savings and money market accounts, and time deposits of less
than $100,000 represent the primary funding source for the Company. As of
September 30, 1998, core deposits of $387.1 million represented 65.6% of total
liabilities. This compares to core deposits of $379.7 million, representing
66.6% of total liabilities on December 31, 1997.
The Company uses large time deposits, securities sold under repurchase
agreements, Federal funds purchased, and other borrowings as additional funding
sources. Time Deposits of $100,000 and over decreased from $97.0 million on
December 31, 1997, to $85.8 million on September 30, 1998. As of September 30,
1998, total securities sold under repurchase agreements amounted to $60.8
million, compared to $58.0 million at December 31, 1997. Other borrowings,
consisting of term borrowings from the Federal Home Loan Bank, increased from
$27.0 million on December 31, 1997, to $47.0 on September 30, 1998.
LIQUIDITY
Liquidity represents the Company's ability to efficiently and economically
accommodate decreases in deposits and other liabilities, and fund increases in
assets. The Company uses a variety of resources to meet its liquidity needs
which include cash and cash equivalents, short term investments, cash flow from
lending and investing activities, deposit growth, securities sold under
repurchase agreements, and borrowings.
14
<PAGE>
Cash and cash equivalents of $19.6 million as of September 30, 1998 reflects a
decline of $5.5 million from December 31, 1997. A portion of this decline is the
result of improved cash management practices, which were implemented in January
1998 to reduce the level of noninterest bearing balances required to be
maintained with the Federal Reserve Bank.
Short term investments consisting of securities due in one year or less declined
from $28.3 million on December 31, 1997, to $24.7 million on September 30, 1998.
Securities pledged to secure certain large deposits and securities sold under
repurchase agreements were 83.2% of total securities as of September 30, 1998,
compared to 76% as of December 31, 1997.
Additional liquidity is provided through the Trust Company's Federal Home Loan
Bank (FHLB) membership. As of September 30, 1998, the Trust Company had
approximately $57.2 million in unused borrowing capacity through established
lines of credit with the FHLB. The Trust Company's equity investment in Tompkins
Real Estate Holdings, Inc. of $204 million can be used to secure additional
borrowings from the FHLB.
YEAR 2000 CONSIDERATIONS
The Company uses purchased software products for all of its internal transaction
processing applications; therefore, no significant internal programming is
necessary to prepare these systems to handle transactions in the Year 2000. The
majority of the Company's efforts in preparation for Year 2000 processing relate
to testing purchased and outsourced processing systems, as well as updating
databases.
Management has initiated an enterprise-wide program, consistent with guidelines
issued by the Federal Financial Institutions Examination Council (FFIEC), to
prepare the Company's computer systems and software applications for the Year
2000. The program includes the following phases:
o Identification (Completed)
o Assessment (Completed)
o Remediation (In process)
o Testing (In process)
o Contingency Planning (In process)
The identification phase involved identifying the types of risk exposures
related to Year 2000. Through this process the Company identified specific risk
exposures related to internal information technologies, information service
providers, other service providers, and customers.
As part of the assessment phase, the Company has categorized its information
technology systems as Mission Critical, Mission Important, or Important. The
Company has assessed the Year 2000 readiness of each information technology
system and has established a plan for remediating any known Year 2000 problems.
15
<PAGE>
The Company's primary application, which handles processing of loans, deposits,
safe deposit, and general ledger, has been designated as Year 2000 compliant by
the vendor. The vendor has also provided the Company with test results performed
by an independent contractor that has also designated the system as Year 2000
compliant. Of the remaining systems that have been categorized as Mission
Critical or Mission Important, approximately 40% have been designated as Year
2000 compliant. Based upon the most recent communications with vendors and
service providers, management expects that remediation of all Mission Critical
and Mission Important systems will be completed by December 31, 1998.
As previously indicated, the Company's primary application has been
independently tested. Due to the importance of this application to the Company's
operations, management plans to conduct its own tests this system in the fourth
quarter of 1998. Testing is also in process on several other systems, and it is
expected that testing of all Mission Critical and Mission Important systems will
be completed by the first quarter of 1999.
The Company is formulating a contingency plan for business continuation in the
event of Year 2000 system failures. This contingency plan will be based upon the
Company's existing disaster recovery plan, with modifications for Year 2000
risks. The Company expects the Year 2000 contingency plan to be completed by
March 1999.
As part of the process of evaluating and attempting to mitigate third party
risk, the Company is collecting and analyzing Year 2000 information from third
parties who have significant business relationships with the Company. These
third parties include borrowers, obligors, and vendors. It is difficult predict
the effect of third party non-readiness on the business of the Company.
Significant Year 2000 failures in the Company's systems, or in the systems of
third parties would have a material adverse effect on the Company's financial
condition and results of operations. The Company believes that its reasonably
likely worst case scenario might include a material increase in credit losses
due to Year 2000 problems of borrowers and a disruption in financial markets
causing liquidity stress to the Company. The magnitude of potential credit
losses or a disruption in financial markets cannot be determined at this time;
however, the Year 2000 program described above is designed to reduce exposure to
these risks.
The total cost of the Company's Year 2000 project is expected to be $200,000, of
which approximately $125,000 has been incurred as of September 30, 1998. This
amount includes the costs of additional hardware, software, and technology
consultants, as well as the cost of the Company's information technology
professionals dedicated to achieving Year 2000 compliance. A significant portion
of these costs are not incremental, but rather involve redeployment of existing
personnel related information technology resources. The Company has included the
cost of the Year 2000 project in its operating budget and management does not
expect that this will have a material effect on the Company's financial
condition or results of operations.
FORWARD LOOKING STATEMENTS
This report may include forward-looking statements with respect to revenue
sources, growth, market risk, corporate objectives, and Year 2000. The Company
assumes no duty to update forward-looking statements, and cautions that these
statements are subject to numerous assumptions, risk, and uncertainties, all of
which could change over time. Actual results could differ materially from
forward-looking statements.
16
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest rate sensitivity is the primary market risk category associated with
the Company's operations. Interest rate risk refers to the volatility of
earnings caused by changes in interest rates. Each month the Asset/Liability
Management Committee estimates the likely impact on earnings resulting from
various changing interest rate scenarios. The findings of the committee are
incorporated into the investment and funding decision of the Company.
The Company's September 30, 1998, one-year cumulative rate sensitivity gap was a
negative 10% of total assets. This suggests earnings would benefit from a
declining interest rate environment, and would be vulnerable to a rising
interest rate environment. Management estimates that a 200 basis point rise in
interest rates over a one year period would result in a 3% decline in net
interest income, assuming no management actions to reposition the balance sheet
in reaction to a changing rate environment. Management believes the current
interest rate risk exposure is not material given the Company's current level of
earnings and capital.
17
<PAGE>
<TABLE>
<CAPTION>
TOMPKINS COUNTY TRUSTCO, INC.
AVERAGE CONSOLIDATED BALANCE SHEET AND NET INTEREST ANALYSIS
- ----------------------------------------------------------------------------------------------------------------------------------
QUARTER YTD YTD
ENDED ENDED ENDED
SEP-98 SEP-98 SEP-97
- ----------------------------------------------------------------------------------------------------------------------------------
Average Average Average Average Average Average
(DOLLAR AMOUNTS IN THOUSANDS) Balance Interest Yield/Rate Balance Interest Yield/Rate Balance Interest Yield/Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets
Certificates of deposit
with other banks $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Securities (1)
U.S. Government Securities 185,802 3,100 6.62% 185,345 9,281 6.69% 172,515 8,782 6.81%
State and municipal (2) 35,101 696 7.87% 36,729 2,185 7.95% 37,870 2,276 8.04%
Other Securities (2) 5,255 93 7.02% 5,634 292 6.93% 3,980 226 7.59%
----------------------------------------------------------------------------------------
Total securities 226,158 3,889 6.82% 227,708 11,758 6.90% 214,365 11,284 7.04%
Federal Funds Sold 3,580 54 5.98% 3,780 156 5.52% 4,997 198 5.30%
Loans, net of unearned income (3)
Residential real estate 169,121 3,342 7.84% 164,288 9,792 7.97% 147,503 9,077 8.23%
Commercial Real Estate 70,293 1,600 9.03% 69,500 4,735 9.11% 55,234 3,746 9.07%
Commercial Loans (2) 78,465 1,931 9.76% 77,905 5,642 9.68% 82,660 5,919 9.57%
Consumer Loans 57,105 1,513 10.51% 58,645 4,639 10.58% 60,631 4,837 10.67%
Direct Lease Financing 12,058 242 7.96% 12,310 742 8.06% 12,056 735 8.15%
----------------------------------------------------------------------------------------
Total loans, net of unearned
income 387,042 8,628 8.84% 382,648 25,550 8.93% 358,085 24,314 9.08%
----------------------------------------------------------------------------------------
TOTAL INTEREST-EARNING ASSETS 616,780 12,571 8.09% 614,136 37,464 8.16% 577,447 35,796 8.29%
----------------------------------------------------------------------------------------
Noninterest-earning assets 33,087 31,994 32,766
--------- -------- ----------
TOTAL ASSETS $649,867 $646,130 $610,213
--------- -------- ----------
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Deposits
Interest-bearing deposits
Interest checking, savings,
& money market 215,000 1,491 2.75% 213,429 4,412 2.76% 200,509 4,152 2.77%
Time Dep > $100,000 88,403 1,250 5.61% 97,110 4,050 5.58% 80,729 3,323 5.50%
Time Dep < $100,000 85,716 1,108 5.13% 87,077 3,369 5.17% 86,719 3,378 5.21%
----------------------------------------------------------------------------------------
Total interest-bearing deposits 389,119 3,849 3.92% 397,616 11,831 3.98% 367,957 10,853 3.94%
Federal funds purchased & securities sold
under agreements to repurchase 62,883 831 5.24% 57,113 2,220 5.20% 84,922 3,349 5.27%
Other borrowings 38,309 523 5.42% 35,009 1,451 5.54% 16,664 744 5.97%
----------------------------------------------------------------------------------------
TOTAL INTEREST-BEARING LIABILITIES 490,311 5,203 4.21% 489,738 15,502 4.23% 469,543 14,946 4.26%
Noninterest bearing deposits 89,435 88,244 79,607
Accrued expenses and other liabilities 9,155 8,884 8,244
--------- --------- --------
TOTAL LIABILITIES 588,901 586,866 557,394
SHAREHOLDER'S EQUITY 60,966 59,264 52,819
--------- -------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $649,867 $646,130 $610,213
--------- -------- --------
Interest rate spread 3.88% 3.92% 4.03%
Impact of noninterest bearing
liabilities 0.86% 0.86% 0.80%
----------------- ------------------ ---------------------
Net interest income/margin
on earning assets $ 7,368 4.74% $21,962 4.78% $20,850 4.83%
(1) Average balances and yields exclude unrealized gains and losses on available-for-sale securities.
(2) Interest income includes the effects of taxable-equivalent adjustments using a blended Federal and State income tax
rate of 41% to increase tax exempt interest income to a taxable-equivalent basis.
(3) Nonaccrual loans are included in the average asset totals presented above. Payments received on nonaccrual loans
have been recognized as disclosed in Note 6 to the condensed consolidated financial statements included.
</TABLE>
18
<PAGE>
PART II - OTHER INFORMATION
ALL ITEMS NOT LISTED HERE ARE NOT APPLICABLE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: November 13, 1998
TOMPKINS COUNTY TRUSTCO, INC.
By: /s/ JAMES J. BYRNES
------------------------------------------
JAMES J. BYRNES
Chairman of the Board,
President and Chief Executive Officer
By: /s/ RICHARD D. FARR
------------------------------------------
RICHARD D. FARR
Senior Vice President and
Chief Financial Officer
20
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGES
- --------------------------------------------------------------------------------
EXHIBIT 27 FINANCIAL DATA SCHEDULE
21
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEPTEMBER
30, 1998 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001005817
<NAME> TOMPKINS COUNTY TRUSTCO, INC.
<MULTIPLIER> 1,000
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 19,587
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 189,004
<INVESTMENTS-CARRYING> 34,514
<INVESTMENTS-MARKET> 35,503
<LOANS> 393,135
<ALLOWANCE> 5,016
<TOTAL-ASSETS> 653,313
<DEPOSITS> 472,995
<SHORT-TERM> 72,833
<LIABILITIES-OTHER> 9,074
<LONG-TERM> 35,000
0
0
<COMMON> 490
<OTHER-SE> 62,921
<TOTAL-LIABILITIES-AND-EQUITY> 653,313
<INTEREST-LOAN> 25,509
<INTEREST-INVEST> 10,945
<INTEREST-OTHER> 156
<INTEREST-TOTAL> 36,610
<INTEREST-DEPOSIT> 11,831
<INTEREST-EXPENSE> 15,503
<INTEREST-INCOME-NET> 21,107
<LOAN-LOSSES> 779
<SECURITIES-GAINS> (72)
<EXPENSE-OTHER> 15,140
<INCOME-PRETAX> 12,795
<INCOME-PRE-EXTRAORDINARY> 8,395
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,395
<EPS-PRIMARY> 1.73
<EPS-DILUTED> 1.70
<YIELD-ACTUAL> 3
<LOANS-NON> 1,787
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,979
<CHARGE-OFFS> 1,057
<RECOVERIES> 316
<ALLOWANCE-CLOSE> 5,016
<ALLOWANCE-DOMESTIC> 5,016
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,312
</TABLE>
