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 June 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 AUGUST 3, 1998
---------------------------- ---------------------------------
Common Stock, $.10 par value 4,847,496 shares
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TOMPKINS COUNTY TRUSTCO, INC.
FORM 10-Q
INDEX
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PART I -FINANCIAL INFORMATION
PAGE
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ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION AS OF
JUNE 30, 1998 AND DECEMBER 31, 1997 3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR
THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998
AND 1997 4
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
SIX MONTHS ENDED JUNE 30, 1998 AND 1997 5
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 7-11
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 12-16
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 16
AVERAGE CONSOLIDATED BALANCE SHEET AND NET INTEREST ANALYSIS 17
PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS 18
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 18
ALL ITEMS NOT LISTED HERE ARE NOT APPLICABLE.
SIGNATURES 19
EXHIBIT INDEX 20
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2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
(In thousands, except share data)
ASSETS AS OF AS OF
06/30/98 12/31/97
--------- ---------
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Cash & noninterest bearing balances
due from banks $ 23,626 $ 22,089
Federal funds sold -0- 3,000
Available-for-sale securities, at fair value 195,083 176,660
Held-to-maturity securities, fair value of $36,840
in 1998 and $37,445 in 1997 36,007 36,911
Loans/leases net of unearned income 382,698 377,184
Less: Reserve for loan/lease losses 5,004 4,979
- --------------------------------------------------------------------------------------
NET LOANS/LEASES 377,694 372,205
Bank premises and equipment 6,633 6,832
Other assets 9,746 9,210
- --------------------------------------------------------------------------------------
TOTAL ASSETS $ 648,789 $ 626,907
======================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Interest bearing:
Checking $ 8,727 $ 63,364
Savings and money market 208,266 140,185
Time 163,985 185,436
Noninterest bearing 94,076 87,715
- --------------------------------------------------------------------------------------
TOTAL DEPOSITS 475,054 476,700
Securities sold under agreements to repurchase and
Federal funds purchased 67,712 57,998
Other borrowings 38,005 27,005
Other liabilities 7,489 8,304
- --------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 588,260 $ 570,007
- --------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
Shareholders' equity:
Common Stock - par value $.10 per share
Authorized 7,500,000 shares; issued and outstanding
4,843,490 in 1998 and 3,256,822 shares in 1997 $ 489 $ 326
Surplus 30,098 29,935
Undivided profits 29,904 26,769
Accumulated other comprehensive Income 985 1,074
Treasury stock, at cost - 29,427 shares in 1998,
20,592 shares in 1997 (559) (571)
Deferred I.S.O.P. benefit expense - 19,429 Shares 1998,
21,110 shares 1997 (388) (633)
- --------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY $ 60,529 $ 56,900
- --------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 648,789 $ 626,907
======================================================================================
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
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3
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
QUARTER ENDING YEAR TO DATE
06/30/98 06/30/97 06/30/98 06/30/97
-------- -------- -------- --------
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INTEREST INCOME
Loans $ 8,545 $ 8,080 $ 16,894 $ 15,927
Federal funds sold 51 54 102 172
Available-for-sale securities 3,248 3,034 6,357 5,889
Held-to-maturity securities 477 489 959 992
- -------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 12,321 11,657 24,312 22,980
- -------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Deposits:
Time certificates of deposits of $100,000 or more 1,417 1,195 2,800 2,252
Other Deposits 2,623 2,478 5,182 4,908
Federal funds Purchased and Securities sold under
agreements to repurchase 674 1,131 1,389 2,190
Borrowed funds 491 211 928 426
- -------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 5,205 5,015 10,299 9,776
- -------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 7,116 6,642 14,013 13,204
- -------------------------------------------------------------------------------------------------------
Less: Provision for loan/lease losses 330 153 481 567
- -------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN/LEASE 6,786 6,489 13,532 12,637
- -------------------------------------------------------------------------------------------------------
OTHER INCOME
Trust and investment services income 933 747 1,893 1,566
Service charges on deposit accounts 419 440 834 896
Credit card merchant income 557 482 1,194 1,038
Other service charges 475 350 905 675
Other operating income 97 56 287 136
Gain (loss) on available-for-sale securities -0- (44) (95) (44)
- -------------------------------------------------------------------------------------------------------
TOTAL OTHER INCOME 2,481 2,031 5,018 4,267
- -------------------------------------------------------------------------------------------------------
OTHER EXPENSES
Salary and wages 2,117 1,981 4,216 3,945
Pension and other employee benefits 445 451 958 973
Net Occupancy Expense of bank premises 331 320 671 648
Furniture and fixture expense 280 294 526 574
Credit Card Operating Expense 495 453 1,064 947
Other operating expense 1,383 1,243 2,738 2,310
- -------------------------------------------------------------------------------------------------------
TOTAL OTHER EXPENSES 5,051 4,742 10,173 9,397
- -------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 4,216 3,778 8,377 7,507
- -------------------------------------------------------------------------------------------------------
Income Taxes 1,497 1,315 2,973 2,612
- -------------------------------------------------------------------------------------------------------
NET INCOME $ 2,719 $ 2,463 $ 5,404 $ 4,895
- -------------------------------------------------------------------------------------------------------
BASIC EARNINGS PER SHARE $ 0.56 $ 0.50 $ 1.12 $ 1.00
DILUTED EARNINGS PER SHARE $ 0.55 $ 0.50 $ 1.10 $ 0.99
=======================================================================================================
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
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4
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share data)
SIX MONTHS ENDED
06/30/98 06/30/97
-------- --------
OPERATING ACTIVITIES
Net income $ 5,404 $ 4,895
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan/lease losses 481 567
Provision for depreciation and amortization 518 565
Net amortization on securities 142 93
Provision for deferred income taxes 189 67
Net loss on sale of investments 95 44
Net gain on sale of loans (96) (2)
Net gain (loss) on sales of bank premises and equipment (2) 1
ISOP shares released for allocation 351 5
Increase in other assets (586) (613)
(Decrease) Increase in other liabilities (939) 536
- -------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,557 6,158
- -------------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from maturities of available-for-sale securities 41,253 15,607
Proceeds from sales of available-for-sale securities 19,905 4,942
Proceeds from maturities of held-to maturity securities 5,606 6,638
Purchases of available-for-sale securities (79,929) (31,485)
Purchases of held-to-maturity securities (4,744) (5,524)
Proceeds from sale of loans 6,810 911
Net increase in loans (12,684) (14,860)
Proceeds from sale of bank premises and equipment 8 4
Purchases of bank premises and equipment (276) (392)
- -------------------------------------------------------------------------------
NET CASH USED IN INVESTMENT ACTIVITIES (24,051) (24,159)
- -------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase in demand deposits,
money market accounts, and savings accounts 19,805 5,021
Net increase in time deposits (21,451) 5,422
Net increase in securities sold under agreements to
repurchase and Federal funds purchased 9,714 6,092
Net increase in other borrowings 11,000 7,000
Cash dividends (2,106) (1,953)
Sale of treasury stock 20 20
Common shares repurchased and returned to authorized
and unissued status 0 (2,670)
Proceeds from issuance of common stock 49 12
- -------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 17,031 18,944
- -------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,463) 943
Cash and Cash Equivalents at beginning of Period 25,089 25,319
TOTAL CASH & CASH EQUIVALENTS AT END OF PERIOD $ 23,626 $ 26,262
===============================================================================
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
5
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CONDENSED CONSOLIDATED STATEMENT 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
============================================================================================================================
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BALANCES AT
JANUARY 1, 1997 $ 334 ($ 604) $ 32,529 $ 20,925 $ 66 ($ 637) $ 52,613
- ----------------------------------------------------------------------------------------------------------------------------
Net income 4,895 4,895
Common stock issued 12 12
Cash dividends ($0.40/Share) (1,953) (1,953)
Treasury stock sold 17 3 20
Common stock repurchased and
returned to authorized and unissued
status (120,000 shares) (8) (2,662) (2,670)
Change in net unrealized gain (loss) on
available-for-sale securities, net of tax (183) (183)
ISOP Shares released for allocation 1 4 5
- ----------------------------------------------------------------------------------------------------------------------------
BALANCES AT
JUNE 30,1997 $ 326 ($ 587) $ 29,883 $ 23,867 ($ 117) ($ 633) $ 52,739
============================================================================================================================
============================================================================================================================
BALANCES AT
JANUARY 1, 1998 $ 326 ($ 571) $ 29,935 $ 26,769 $ 1,074 ($ 633) $ 56,900
- ----------------------------------------------------------------------------------------------------------------------------
Net income 5,404 5,404
Cash dividends ($0.43/Share) (2,106) (2,106)
Common stock issued 49 49
Treasury stock sold 12 8 20
Change in net unrealized gain (loss) on
available-for-sale securities, net of tax (89) (89)
ISOP Shares released for allocation 106 245 351
Effect of 3 for 2 stock split in
the form of a stock dividend 163 (163) -0-
- ----------------------------------------------------------------------------------------------------------------------------
BALANCES AT
JUNE 30, 1998 $ 489 ($ 559) $ 30,098 $ 29,904 $ 985 ($ 388) $ 60,529
============================================================================================================================
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
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6
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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 June 30, 1998, and December 31, 1997, and the results of operations
for the three and six months ended June 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. 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
Management determines the appropriate classification of debt and equity
securities at the time of purchase. Debt securities are classified as
held-to-maturity when the Company has the positive intent and ability to hold
the securities to maturity. Held-to-maturity securities are stated at amortized
cost. Debt securities not classified as held-to-maturity and marketable equity
securities are classified as available-for-sale. Available-for-sale securities
are stated at fair value, with the unrealized gains and losses, net of tax,
excluded from earnings and reported as a separate component of shareholders'
equity.
Amortized cost of held-to-maturity debt securities is adjusted for amortization
of premiums and accretion of discounts to maturity, or in the case of
mortgage-backed securities, over the estimated life of the security. Realized
gains and losses, and
7
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declines in value judged to be other-than-temporary are included in net
securities gains (losses). The cost of securities sold is based on the specific
identification method.
Transfers of securities between categories are recorded at fair value at the
date of transfer. Unrealized holding gains or losses included in the separate
component of shareholders' equity for securities transferred from
available-for-sale to held-to-maturity are maintained and amortized into
earnings over the remaining life of the security as an adjustment to yield in a
manner consistent with the amortization or accretion of premium or discount on
the associated security.
As of June 30, 1998, net unrealized gains on securities classified as
available-for-sale totaled $1.7 million, resulting in an after tax increase to
shareholders' equity of $985,000. 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.
6. LOANS/LEASES
Loans/leases are reported at their principal outstanding balance net of
charge-offs, deferred loan fees and costs, and unearned income. The Company
provides motor vehicle and equipment financing to its customers through direct
financing leases. These leases are carried at the aggregate lease payments
receivable, plus estimated residual values, less unearned income. Unearned
income on direct financing leases is amortized over the lease terms resulting in
a level rate of return.
Loans/leases, including impaired loans/leases, are generally classified as
nonaccrual if they are past due as to maturity or payment of principal or
interest for a period of more than 90 days, unless such loans/leases are well
secured and in the process of collection. Loans/leases that are past due less
than 90 days may also be classified as nonaccrual if repayment in full of
principal and/or interest is in doubt. Loans/leases may be returned to accrual
status when all principal and interest amounts contractually due (including
arrearages) are reasonably assured of repayment within an acceptable time
period, and there is a sustained period of repayment performance by the borrower
in accordance with the contractual terms of the loan agreement. Payments
received on loans/leases carried as nonaccrual are generally applied as a
reduction to principal. When the future collectibility of the recorded loan
balance is expected, interest income may be recognized on a cash basis.
The Company's recorded investment in loans/leases considered impaired was $1.4
million on June 30, 1998, and the average recorded investment in impaired
loans/leases was $1.6 million through the first six months of 1998. Included in
this amount was $605,000 of impaired loans/leases for which related reserves
totaled $291,000. 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 six months of 1998.
8
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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 six month periods
ending June 30, 1998 and 1997, is presented in the table below.
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PER
THREE MONTHS ENDED JUNE 30, 1998 INCOME AVERAGE SHARE
(In thousands except share and per share data) (NUMERATOR)(DENOMINATOR) AMOUNT
- ---------------------------------------------------------------------------------------------------
BASIC EPS
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INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 2,719 4,843,490 $ 0.56
EFFECT OF DILUTIVE SECURITIES (OPTIONS) 97,846
DILUTED EPS
INCOME AVAILABLE TO COMMON SHAREHOLDERS PLUS ASSUMED CONVERSIONS $ 2,719 4,941,336 $ 0.55
===================================================================================================
PER
SIX MONTHS ENDED JUNE 30, 1998 INCOME AVERAGE SHARE
(In thousands except share and per share data) (NUMERATOR)(DENOMINATOR) AMOUNT
- ---------------------------------------------------------------------------------------------------
BASIC EPS
INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 5,404 4,839,721 $ 1.12
EFFECT OF DILUTIVE SECURITIES (OPTIONS) 88,662
DILUTED EPS
INCOME AVAILABLE TO COMMON SHAREHOLDERS PLUS ASSUMED CONVERSIONS $ 5,404 4,928,383 $ 1.10
===================================================================================================
PER
THREE MONTHS ENDED JUNE 30, 1997 INCOME AVERAGE SHARE
(In thousands except share and per share data) (NUMERATOR)(DENOMINATOR) AMOUNT
- ---------------------------------------------------------------------------------------------------
BASIC EPS
INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 2,463 4,879,284 $ 0.50
EFFECT OF DILUTIVE SECURITIES (OPTIONS) 45,888
DILUTED EPS
INCOME AVAILABLE TO COMMON SHAREHOLDERS PLUS ASSUMED CONVERSIONS $ 2,463 4,925,172 $ 0.50
===================================================================================================
PER
SIX MONTHS ENDED JUNE 30, 1997 INCOME AVERAGE SHARE
(In thousands except share and per share data) (NUMERATOR)(DENOMINATOR) AMOUNT
- ---------------------------------------------------------------------------------------------------
BASIC EPS
INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 4,895 4,910,202 $ 1.00
EFFECT OF DILUTIVE SECURITIES (OPTIONS) 45,358
DILUTED EPS
INCOME AVAILABLE TO COMMON SHAREHOLDERS PLUS ASSUMED CONVERSIONS $ 4,895 4,955,560 $ 0.99
===================================================================================================
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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, which were delayed for implementation by SFAS No. 127, are not
expected to 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, which consists of net change in unrealized gains or losses
on securities available-for-sale for the period. 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 six month periods ended June 30, 1998 and
1997 is summarized in the table below:
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QUARTER ENDED YEAR TO DATE
(In thousands)
- ------------------------------------------------------------------------------------------------------
06/30/98 06/30/97 06/30/98 06/30/97
- ------------------------------------------------------------------------------------------------------
NET INCOME $ 2,719 $ 2,463 $ 5,404 $ 4,895
- ------------------------------------------------------------------------------------------------------
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Net unrealized holding gains or losses 466 1,353 (58) (270)
Reclassification adjustment for realized loss on sale
of available-for-sale securities -0- 44 (95) (44)
- ------------------------------------------------------------------------------------------------------
Unrealized holding gains (losses) arising during the period 466 1,309 (153) (314)
Deferred taxes on unrealized holding gains (losses) (196) (550) 64 132
- ------------------------------------------------------------------------------------------------------
Other comprehensive income, net of tax 270 759 (89) (183)
- ------------------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME $ 2,989 $ 3,222 $ 5,315 $ 4,712
- ------------------------------------------------------------------------------------------------------
</TABLE>
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
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Tompkins County Trustco 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.
This 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 the Tompkins County Trust
Company. 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 second quarter of 1998 was $2.7 million, compared to $2.5
million for the first quarter of 1997. Basic earnings per share in the second
quarter of 1998 increased by 11.2% to $0.56, compared to $0.50 in the second
quarter of 1997. On a diluted basis, earnings per share increased to $0.55 per
share in the second quarter of 1998, compared to $0.50 for the same period in
1997. Year to date net income through the first six months of 1998 was $5.4
million, compared to $4.9 million for the same period in 1997. Year to date
basic earnings per share of $1.12 represents a 12% increase over the same period
in 1997. Year to date diluted earnings per share of $1.10 reflects an 11%
increase over the prior year.
The significant improvement in per share earnings through the first six months
of 1998 was achieved primarily through 10% growth in net income, and benefited
from a 1% decline in the basic average number of 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 1.69% through the first six
months of 1998, compared to 1.63% for the same period in 1997. Return on average
shareholders' equity (ROAE) for the first six months of 1998 was 18.66%,
compared to 18.77% 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 6.5%. The modest decline in ROAE is the result of 11%
growth in average equity in the first half of 1998, which slightly outpaced the
growth in net income over the same period.
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 $14.6 million
for the six months ended June 30, 1998, compared to $13.8 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,
which has resulted in a greater percentage of total assets being comprised of
earning assets.
Average earning assets grew by $39.6 million between June 30, 1997 and June 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 $25.5 million increase in average core deposits
(noninterest bearing deposits, savings and money market deposits, and time
deposits of less than $100,000), and a $7.5 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 $5.8
million growth in average shareholders' equity.
Tax-equivalent net interest margin on earning assets was 4.80% through the first
six months of 1998, compared to a 4.86% ratio through the first six months of
1997. Yield on earning assets declined from 8.30% as of June 30, 1997, to 8.19%
as of June 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 increased to 4.24% in the first six
months of 1998, compared to 4.23% in the first six months of 1997. Increases in
the cost of interest bearing deposits reflects the competitive environment for
deposits in the Company's market area. The increased cost of interest bearing
deposits was offset by a $5.8 million increase in average noninterest bearing
deposits. Noninterest bearing liabilities contributed 85 basis points to the
Company's net interest margin in the first half of 1998, compared to 79 basis
points in the first half of 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 $481,000 for the first six months of 1998 represents a 15% decline from the
$567,000 provision in the first half 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 second quarter of 1998, the provision was $330,000 compared to $153,000
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 six months of 1998 totaled $5.0 million, an
increase of 18% from the prior year. Other income for the second quarter of 1998
was $2.5 million, and increase of 22% from the second quarter of 1997. Other
income as a percentage of average assets increased from 1.41% for the six months
ended June 30, 1997, compared to 1.56% for the same period in 1998.
Income from trust and investment services, the largest segment of other income,
increased 21% to $1.9 million, compared to $1.6 million the first six 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 $942 million on June 30,
1998, representing a $217 million increase from June 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 $159 million on June
30, 1998, and $170 million on June 30, 1997.
Credit card merchant fee income of $1.2 million through the first six months of
1998 represents a 12% 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 from $675,000 for
the first six months of 1997, to $905,000 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, sales of non-deposit investment products, wire transfer services,
checkbook sales, and lockbox services, all of which reflected increases over the
same period in the previous year.
Total other income was reduced by losses on the sale of available-for-sale
securities of $96,000 in 1998, and $44,000 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 8% in the first half of 1998 to $10.2 million,
compared to $9.4 million in 1997. Salary and wages remain the largest segment of
other expense, comprising 41% of other expenses for the period ended June 30,
1998, compared to 42% for the same period in 1997. Total salary and wage expense
of $4.2 million in the first half of 1998, represents a 7% increase from the
prior year.
Credit card operating expense is a variable expense that increases as the volume
of merchant and card holder transactions increases. The 12% increase in credit
card operating expenses during the first six months of 1998 is primarily due to
an increase in the volume of merchant customer transactions.
Year to date other operating expenses increased from $2.3 million in 1997, to
$2.7 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.
12
<PAGE>
FINANCIAL CONDITION
The Company's total assets were $648.8 million as of June 30, 1998, representing
a 3% increase over total assets reported as of December 31, 1997. Growth was
primarily in the securities portfolio which grew by approximately $17.5 million
(net of market value adjustments on available-for-sale securities). Total
loans/leases increased $5.5 million during the first six months of 1998. Asset
growth was funded through a combination of core deposit growth, large time
deposit growth, and other borrowings.
CAPITAL
Total shareholders' equity grew by 6% during the first six months of 1998 to
$60.5 million. Cash dividends paid in the first half of 1998 totaled
approximately $2.1 million, representing 39% of year to date earnings. Per share
cash dividends of $0.43 for the first six months of 1998, represents an 7.5%
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
June 30, 1998, compared to the regulatory capital requirements for "well
capitalized" institutions.
REGULATORY CAPITAL ANALYSIS - June 30, 1998
<TABLE>
<CAPTION>
============================================================================================================
ACTUAL WELL CAPITALIZED
REQUIREMENT
(DOLLAR AMOUNTS IN THOUSANDS) AMOUNT RATIO AMOUNT RATIO
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Capital (to risk weighted assets) $63,898 17.0% $37,604 10.0%
Tier I Capital (to risk weighted assets) $59,194 15.7% $22,562 6.0%
Tier I Capital (to average assets) $59,194 9.1% $32,407 5.0%
============================================================================================================
</TABLE>
As illustrated above, the Company's capital ratios on June 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 six months of 1998 and 1997 is
illustrated in the table below.
<TABLE>
<CAPTION>
ANALYSIS OF THE RESERVE FOR LOAN/LEASE LOSSES (In thousands)
===============================================================================================
JUNE 30, 1998 JUNE 30, 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Average Loans and Leases Outstanding Year to Date $ 380,415 $ 353,908
- -----------------------------------------------------------------------------------------------
Beginning Balance 4,979 4,779
- -----------------------------------------------------------------------------------------------
Provision for loan losses 481 567
Loans charged off (658) (747)
Loan recoveries 202 280
- -----------------------------------------------------------------------------------------------
Net Charge-offs (456) (467)
- -----------------------------------------------------------------------------------------------
Ending Balance $ 5,004 $ 4,879
===============================================================================================
</TABLE>
Annualized net charge-offs through the first six months of 1998 amounted to
0.24% of average loans outstanding during the period. This ratio compares to
0.26% for the six months ended June 30, 1997.
The level of nonperforming loans, as illustrated in the table below, reflects a
decline from the prior year, while nonperforming assets as a percentage of total
assets is unchanged . Over 85% of nonperforming loans as of June 30, 1998 are
secured by real estate, with 55% secured by 1-4 family residential properties.
<TABLE>
<CAPTION>
NONPERFORMING ASSETS (In thousands)
===============================================================================================
JUNE 30, 1998 JUNE 30, 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Nonaccrual loans $ 1,325 $ 1,569
Loans past due 90 days and accruing 59 75
Troubled debt restructuring not included above 0 0
- -----------------------------------------------------------------------------------------------
Total nonperforming loans 1,384 1,644
- -----------------------------------------------------------------------------------------------
Other real estate, net of allowances 271 137
- -----------------------------------------------------------------------------------------------
Total nonperforming assets $ 1,655 $ 1,781
===============================================================================================
Total nonperforming loans as a percent of total loans 0.36% 0.45%
Total nonperforming assets as a percentage of total assets 0.26% 0.26%
===============================================================================================
</TABLE>
DEPOSITS AND OTHER LIABILITIES
Total Deposits were $475.1 million on June 30, 1998, compared to $476.7 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 June 30, 1998, core
deposits of $397.6 million represented 67.6% 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 $77.4 million on June 30, 1998. As of June 30, 1998, total
securities sold under repurchase agreements amounted to $48.2 million, compared
to $60.0 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 $38.0 on June 30, 1998.
14
<PAGE>
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.
Cash and cash equivalents of $23.6 million as of June 30, 1998 reflects a
decline of $1.5 million from December 31, 1997. Short term investments
consisting of securities due in one year or less declined from $28.3 million on
December 31, 1997, to $23.6 million on June 30, 1998. Securities pledged to
secure certain large deposits and securities sold under repurchase agreements
has remained relatively level at 77% of total securities as of June 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 June 30, 1998, the Trust Company had approximately
$57.6 million in unused borrowing capacity through established lines of credit
with the FHLB. The Trust Company has approximately $137.2 million in loans
secured by first liens on residential properties that can be used to secure
additional borrowings from the FHLB.
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 June 30, 1998, one-year cumulative rate sensitivity gap was a
negative 16% 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 4% 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.
YEAR 2000 CONSIDERATIONS
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 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.
The Company's primary application, which handles processing of loans, deposits,
safe deposit, and general ledger, has been certified as year 2000 compliant by
the vendor. It is anticipated that all critical internal applications will be
certified and tested by December 31, 1998. To date, confirmations have been
received from the Company's primary processing vendors that plans are being
developed to address processing of transactions in the year 2000. The Company
has also begun evaluating year 2000 readiness of commercial loan applicants as
part of the underwriting process, and is calling upon significant existing
borrowers to assess their readiness for year 2000.
The Company expects to incur internal staff costs as well as consulting and
other expenses related to preparing the systems for year 2000. A significant
portion of these costs are not likely to be incremental costs, but rather will
involve redeployment of existing personnel related information technology
resources.
15
<PAGE>
<TABLE>
<CAPTION>
TOMPKINS COUNTY TRUSTCO, INC.
AVERAGE CONSOLIDATED BALANCE SHEET AND NET INTEREST ANALYSIS
- ---------------------------------------------------------------------------------------------------------------------------------
QUARTER YTD YTD
ENDED ENDED ENDED
JUN-98 JUN-98 JUN-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 189,807 3,160 6.68% 185,113 6,181 6.73% 170,722 5,781 6.83%
State and municipal (2) 37,474 741 7.93% 37,557 1,489 7.99% 38,391 1,539 8.08%
Other Securities (2) 5,788 100 6.93% 5,827 199 6.89% 3,050 129 8.53%
----------------------------------------------------------------------------------------
Total securities 233,069 4,001 6.89% 228,497 7,869 6.94% 212,163 7,449 7.08%
Federal Funds Sold 4,054 51 5.05% 3,880 102 5.30% 6,552 172 5.29%
Loans, net of unearned income (3)
Residential real estate 164,071 3,281 8.02% 161,831 6,449 8.04% 145,063 5,879 8.17%
Commercial Real Estate 70,164 1,580 9.03% 69,098 3,135 9.15% 53,024 2,447 9.31%
Commercial Loans (2) 77,519 1,872 9.69% 77,620 3,711 9.64% 82,983 3,926 9.54%
Consumer Loans 58,691 1,578 10.78% 59,428 3,126 10.61% 60,998 3,221 10.65%
Direct Lease Financing 12,319 247 8.04% 12,438 500 8.11% 11,840 482 8.21%
----------------------------------------------------------------------------------------
Total loans, net of unearned
income 382,763 8,558 8.97% 380,415 16,921 8.97% 353,908 15,955 9.09%
----------------------------------------------------------------------------------------
TOTAL INTEREST-EARNING ASSETS 619,886 12,610 8.16% 612,791 24,892 8.19% 572,623 23,576 8.30%
----------------------------------------------------------------------------------------
Noninterest-earning assets 30,296 31,439 32,041
--------- --------- ---------
TOTAL ASSETS $ 650,182 $ 644,230 $ 604,664
--------- --------- ---------
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Deposits
Interest-bearing deposits
Interest checking, savings,
& money market 216,109 1,503 2.79% 212,631 2,921 2.77% 197,395 2,673 2.73%
Time Dep > $100,000 101,444 1,417 5.60% 101,536 2,800 5.56% 83,047 2,252 5.47%
Time Dep < $100,000 87,005 1,120 5.16% 87,769 2,261 5.19% 86,635 2,236 5.20%
----------------------------------------------------------------------------------------
Total interest-bearing deposits 404,558 4,040 4.01% 401,936 7,982 4.00% 367,077 7,161 3.93%
Federal funds purchased & securities
sold under agreements to repurchase 52,909 674 5.11% 54,180 1,389 5.17% 84,280 2,190 5.24%
Other borrowings 35,532 491 5.54% 33,331 928 5.61% 14,270 426 6.02%
----------------------------------------------------------------------------------------
TOTAL INTEREST-BEARING LIABILITIES 492,999 5,205 4.23% 489,447 10,299 4.24% 465,627 9,777 4.23%
Non-interest bearing deposits 89,363 87,638 78,515
Accrued expenses and other liabilities 8,690 8,747 7,934
--------- --------- ---------
TOTAL LIABILITIES 591,052 585,832 552,076
SHAREHOLDER'S EQUITY 59,130 58,398 52,588
--------- --------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 650,182 $ 644,230 $ 604,664
--------- --------- ---------
Interest rate spread 3.92% 3.95% 4.07%
Impact of noninterest-bearing
liabilities 0.87% 0.85% 0.79%
---------------- ----------------- -----------------
Net interest income/margin on
earning assets $ 7,405 4.79% $ 14,593 4.80% $13,799 4.86%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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 .
16
<PAGE>
PART II - OTHER INFORMATION
ALL ITEMS NOT LISTED HERE ARE NOT APPLICABLE.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
The Annual Meeting of stockholders of the Company was held on April 29, 1998
(the "Annual Meeting"). Proxies for the Annual Meeting were solicited pursuant
to Regulation 14 under the Securities and Exchange Act of 1934, as amended.
The election of four directors was approved at the Annual Meeting. Directors
James J. Byrnes, Reeder D. Gates, Bonnie H. Howell, and Lucinda Noble were each
elected to terms of three years which expire in the year 2001. Directors John E.
Alexander, Edward C. Hooks, Hunter Rawlings, III, Michael D. Shay, William W.
Griswold, Carl E. Haynes, Robert T. Horn, Jr., Frank H. T. Rhodes, and Thomas R.
Salm will continue as directors.
In addition to the election of directors, the Company's 1998 Stock Option Plan
(the "Plan") was approved and 240,000 shares have been reserved for issuance
under the Plan. Voting with respect to the Plan was as follows: 3,132,512 in
favor, 238,429 opposed, 82,933 abstained, and 1,408,745 did not vote.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule.
17
<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: August 7, 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
18
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGES
- -------------- ----------- -----
EXHIBIT 27 FINANCIAL DATA SCHEDULE
19
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MARCH 31,
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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 23,626
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 195,083
<INVESTMENTS-CARRYING> 36,007
<INVESTMENTS-MARKET> 37,445
<LOANS> 382,698
<ALLOWANCE> 5,004
<TOTAL-ASSETS> 648,789
<DEPOSITS> 475,054
<SHORT-TERM> 80,717
<LIABILITIES-OTHER> 7,489
<LONG-TERM> 25,000
0
0
<COMMON> 482
<OTHER-SE> 60,040
<TOTAL-LIABILITIES-AND-EQUITY> 648,789
<INTEREST-LOAN> 16,894
<INTEREST-INVEST> 7,316
<INTEREST-OTHER> 102
<INTEREST-TOTAL> 24,312
<INTEREST-DEPOSIT> 7,982
<INTEREST-EXPENSE> 10,299
<INTEREST-INCOME-NET> 14,013
<LOAN-LOSSES> 481
<SECURITIES-GAINS> (95)
<EXPENSE-OTHER> 10,173
<INCOME-PRETAX> 8,377
<INCOME-PRE-EXTRAORDINARY> 8,377
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,404
<EPS-PRIMARY> 1.12
<EPS-DILUTED> 1.10
<YIELD-ACTUAL> 2
<LOANS-NON> 1,325
<LOANS-PAST> 59
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,979
<CHARGE-OFFS> 658
<RECOVERIES> 202
<ALLOWANCE-CLOSE> 5,004
<ALLOWANCE-DOMESTIC> 5,004
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,851
</TABLE>
