FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ________________ to_________________
Commission file number 0-10592
_______________
TRUSTCO BANK CORP NY
(Exact name of registrant as specified in its charter)
NEW YORK 14-1630287
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
320 STATE STREET, SCHENECTADY, NEW YORK 12305
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (518) 377-3311
_______________
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange on
Title of each class which registered
________________ ________________
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.00 Par Value
(Title of class)
______________
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K.[ ]
Indicate the number of shares outstanding of each of the
registrant's classes of common stock:
Number of Shares Outstanding
Class of Common Stock as of March 1, 1995
__________________ __________________
$1 Par Value 14,654,868
The aggregate market value of registrant's common stock (based
upon the closing price on March 1, 1995) held by non-affiliates
was approximately $296,761,000.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of registrant's Annual Report to Shareholders for
the fiscal year ended December 31, 1994 (Part I, Part II, and
Part IV).
(2) Portions of registrant's Proxy Statement filed for its Annual
Meeting of Shareholders to be held
May 15, 1995 (Part III).
PART I
Item 1. Business
General
TrustCo Bank Corp NY ("TrustCo") is a one-bank holding
company having its principal place of business at 320 State
Street, Schenectady, New York 12305. TrustCo was organized in
1981 to acquire all of the outstanding stock of Trustco Bank,
National Association, formerly known as Trustco Bank New York,
and prior to that The Schenectady Trust Company. Following the
necessary regulatory approvals, TrustCo commenced business on
July 1, 1982. Through policy and practice, TrustCo continues to
emphasize that it is an equal opportunity employer. There were
435 full-time equivalent employees at year-end. TrustCo had
4,501 shareholders of record as of December 31, 1994, and the
closing price of the stock at that date was $20.25.
Bank Subsidiary
On November 16, 1994 TrustCo initiated the process to convert
its banking subsidiary, Trustco Bank New York, a New York state
chartered trust company, to a national banking association
operating under the name Trustco Bank, National Association (the
Bank ). The conversion was undertaken to facilitate the Bank's
regulatory processes and minimize duplicative federal/state
compliance issues. The conversion became effective on February
1, 1995. The Bank is a national bank engaged in a general
commercial banking business serving individuals, partnerships,
corporations, municipalities and governments of New York. The
largest part of such business consists of accepting deposits and
making loans and investments. The Bank provides a wide range of
both personal and business banking services. The Bank is a member
of the Federal Reserve system and its deposits are insured by the
Federal Deposit Insurance Corporation to the extent permitted by
law. The Bank accounted for substantially all of TrustCo's 1994
consolidated net income and average assets.
The trust department of the Bank acts as executor of estates
and trustee of personal trusts, gives estate planning and related
advice, provides custodial services and acts as trustee of
various types of employee benefit plans and corporate pension and
profit sharing trusts. The aggregate market value of the assets
under trust, custody or management was approximately $634 million
as of December 31, 1994.
The daily operations of the Bank remain the responsibility of
its Board of Directors and officers, subject to the overall
supervision of TrustCo. TrustCo, as the parent corporation,
derives most of its income from dividends paid to it by its
subsidiary Bank. TrustCo's Bank subsidiary is included in
TrustCo's consolidated financial statements.
ORE Subsidiary
During 1993, TrustCo created ORE Subsidiary Corp., a New York
corporation, to hold and manage certain foreclosed properties.
The accounts of this subsidiary are included in TrustCo's
consolidated financial statements.
Competition
The Bank encounters keen competition from other commercial
banks, including New York City-based holding companies which are
some of the largest and most competitive institutions in the
United States. In addition, savings banks, savings and loan
associations, credit unions and other financial and related
institutions compete for the banking, trust, investment and other
financial services which the Bank offers. On a regular basis,
TrustCo has discussions with other financial institutions
relative to potential merger or acquisition opportunities.
Supervision and Regulation
Banking is a highly regulated industry, with numerous federal
and state laws and regulations governing the organization and
operation of banks and their affiliates. As a bank holding
company under the Bank Holding Company Act of 1956, as amended
(the "Act"), TrustCo is regulated and examined by the Board of
Governors of the Federal Reserve System (the "Board"). The Act
requires that TrustCo obtain prior Board approval for bank and
non-bank acquisitions and restricts the business operations
permitted to TrustCo. The Bank is subject to regulation and
examination by the Office of the Comptroller of the Currency.
Virtually all aspects of TrustCo's and the Bank's business
are subject to regulation and examination by the Board, the
Federal Deposit Insurance Corporation and the Office of the
Comptroller of the Currency.
Most of TrustCo's revenues consist of cash dividends paid to
TrustCo by its subsidiary Bank, payment of which is subject to
various regulatory limitations. (Note 1 of the consolidated
financial statements contained in TrustCo's Annual Report to
Shareholders for the year ended December 31, 1994, which appears
on pages 30 and 31 thereof and contains information concerning
restrictions of TrustCo's ability to pay dividends, is hereby
incorporated by reference.) In addition, the Federal Deposit
Insurance Corporation and the Board have established guidelines
with respect to the maintenance of appropriate levels of capital
by a bank holding company under their jurisdictions. Compliance
with the standards set forth in such guidelines could also limit
the amount of dividends which a bank or a bank holding company
may pay. The banking industry is also affected by the monetary
and fiscal policies of the federal government, including the
Board, which exerts considerable influence over the cost and
availability of funds obtained for lending and investing.
Proposals to change various laws and regulations governing
the operation and taxation of banks, bank holding companies and
financial institutions are frequently raised in Congress and
before various federal and state regulatory authorities. Most
recently, on September 29, 1994 the Interstate Banking and
Branching Efficiency Act of 1994 was enacted which permits
beginning one year from date of enactment, bank holding companies
to acquire banks in any state (subject to state and nationwide
deposit limitations) and for full interstate branching commencing
June 1, 1997.
Foreign Operations
Neither TrustCo nor the Bank engage in material operations in
foreign countries or have any outstanding loans to foreign
debtors.
Statistical Information Analysis
The "Management Discussion and Analysis" on pages 5 through
23 of TrustCo's Annual Report to Shareholders for the year ended
December 31, 1994, which contains a presentation and discussion
of statistical data relating to TrustCo, are hereby incorporated
by reference. The information with respect to such tables should
not be construed to imply any conclusion on the part of the
management of TrustCo that the results, causes or trends
indicated therein will continue in the future. The nature and
effects of governmental monetary policy, supervision and
regulation, future legislation, inflation and other economic
conditions and many other factors which affect interest rates,
investments, loans, deposits and other aspects of TrustCo's
operations are extremely complex and could make historical
operations, earnings, assets and liabilities not indicative of
what may occur in the future.
Item 2. Properties
TrustCo's executive offices are located at 320 State Street,
Schenectady, New York, 12305. The Bank operates 45 offices, of
which 20 are owned and 25 are leased from others. These
properties, when considered in the aggregate, are not material to
the operation of TrustCo.
Item 3. Legal Proceedings
The nature of TrustCo's business generates a certain amount
of litigation against TrustCo and its subsidiaries involving
matters arising in the ordinary course of business. In the
opinion of management of TrustCo, there are no proceedings
pending to which TrustCo or either of its subsidiaries is a
party, or of which its property is the subject which, if
determined adversely to TrustCo or such subsidiary, would be
material in relation to TrustCo's consolidated stockholders'
equity and financial condition.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Executive Officers of TrustCo
The following is a list of the names and ages of the
executive officers of TrustCo and their business history for the
past five years:
Year First
Became
Name, Age and Principal Occupations Executive
Position Or Employment Since Officer of
With TrustCo January 1, 1989 TrustCo
Robert A. McCormick, 58, President and Chief Executive 1984
President and Chief Officer,TrustCo Bank Corp NY.
Executive Officer President and Chief Executive
Officer, Trustco Bank, National
Association.
Robert T. Cushing, 39, Vice President and Chief 1994
Vice President and Financial Officer,
Chief Financial Offier TrustCo Bank Corp NY since
1994. Senior Vice President
and Chief Financial Officer,
Trustco Bank, National
Association since 1994. Partner,
KPMG Peat Marwick LLP (1978 - 1994).
Nancy A. McNamara, 45, Vice President, TrustCo Bank 1992
Vice President Corp NY since 1992. Senior Vice
President, Trustco Bank, National
Association since 1988. Director
of TrustCo Bank Corp NY and
Trustco Bank, National Association
since December 1991. Joined Trustco
Bank, National Association in 1971.
William F. Terry, 53, Secretary, TrustCo Bank Corp NY 1990
Secretary since 1990. Senior Vice President,
Trustco Bank, National Association
since 1987. Secretary,
Trustco Bank, National Association
since 1990.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
The inside front cover of TrustCo's Annual Report to
Shareholders for the year ended December 31, 1994, is
incorporated herein by reference. The closing price for the
Corporation's common stock on December 31, 1994, was $20.25.
Item 6. Selected Financial Data
Page 19 of TrustCo's Annual Report to Shareholders for the year
ended December 31, 1994, is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Pages 5 through 23 of TrustCo's Annual Report to Shareholders for
the year ended December 31, 1994, are incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data
The financial statements, together with the report thereon of
KPMG Peat Marwick LLP on pages 25 through 39 of TrustCo's Annual
Report to Shareholders for the year ended December 31, 1994, are
incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 10. Director and Executive Officers of Registrant
The information under the captions "Information on TrustCo
Directors and Nominees" and "Information on TrustCo Executive
Officers Not Listed Above" on pages 3 through 5, and "Compliance
With Section 16(a) Of The Securities Exchange Act Of 1934 " on
page 22, of TrustCo's Proxy Statement for its Annual Meeting of
Shareholders to be held May 15, 1995, is incorporated herein by
reference. The required information regarding TrustCo's executive
officers is contained in PART I in the item captioned "Executive
Officers of TrustCo."
Item 11. Executive Compensation
The information under the captions "TrustCo and Trustco Bank
Executive Officer Compensation" and "TrustCo Retirement Plans" on
pages 6 through 11 of TrustCo's Proxy Statement for its Annual
Meeting of Shareholders to be held May 15, 1995, is incorporated
herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information under the captions "Information on TrustCo
Directors and Nominees," "Information on TrustCo Executive
Officers Not Listed Above," on pages 3 through 5 and "Ownership
Of TrustCo Common Stock By Certain Beneficial Owners" on page 22
of TrustCo's Proxy Statement for its Annual Meeting of
Shareholders to be held May 15, 1995, is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions
The information under the caption "Transactions with TrustCo and
Trustco Bank Directors, Officers and Associates" on page 22 of
TrustCo's Proxy Statement for its Annual Meeting of Shareholders
to be held May 15, 1995, is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
The following financial statements of TrustCo and its
consolidated subsidiaries, and the accountants' report thereon
are incorporated herein by reference.
Consolidated Financial Statements.
Consolidated Statements of Condition--December 31, 1994 and 1993.
Consolidated Statements of Income--Years Ended December 31, 1994,
1993 and 1992.
Consolidated Statements of Changes in Shareholders' Equity--Years
Ended December 31, 1994, 1993 and 1992.
Consolidated Statements of Cash Flows--Years Ended December 31,
1994, 1993 and 1992.
Notes to Consolidated Financial Statements.
Financial Statement Schedules--Not Applicable.
All required schedules for TrustCo and its subsidiaries have been
included in the consolidated financial statements or related
notes thereto
The following exhibits are filed herewith:*
Reg S-K Exhibit No. Description
=================== ===========
3(i) Amended and Restated Certificate of
Incorporation of TrustCo.
3(ii) Amended and Restated Bylaws of TrustCo.
10(a) Employment Agreement dated January 1,
1992 and Amendment No. 1 dated November
16, 1993, among TrustCo, the Bank and
Robert A. McCormick.
10(b) Amendment No. 2 dated September 1,
1994, and Amendment No. 3
dated February 13, 1995, among
TrustCo, the Bank and
Robert A. McCormick.
10(c) Employment Agreement dated
June 21, 1994, and Amendment
No. 1 dated February 14, 1995,
among TrustCo, the Bank and
Robert T. Cushing.
10(d) Restated Employment Agreement
dated June 21, 1994, and Amendment
No. 1 dated February 14, 1995, among
TrustCo, the Bank and Nancy A. McNamara.
10(e) Restated Employment Agreement dated June
21, 1994, and Amendment
No. 1 dated February 14, 1995, among
TrustCo, the Bank and
William F. Terry.
10(f) Restated Employment Agreement dated June
21, 1994, and Amendment
No. 1 dated February 14, 1995, among
TrustCo, the Bank and
Ralph A. Pidgeon.
10(g) Restated Employment Agreement dated July
15, 1992, Amendment
No. 1 dated November16, 1993,
and Amendment No. 2 dated
February 14, 1995, among TrustCo,
the Bank and Peter A. Zakriski.
10(h) TrustCo Bank Corp NY Amended and Restated
1985 Stock Option Plan.
10(i) TrustCo Bank Corp NY Directors Stock
Option Plan.
________________
*The exhibits included under Exhibit 10 constitute all management
contracts, compensatory plans and arrangements required to be
filed as an exhibit to this form pursuant to Item 14(c) of this
report.
The following exhibits are filed herewith: (continued)
Reg S-K Exhibit No. Description
=============== ===============
11 Computation of Net Income Per Common Share.
13 Annual Report to Security Holders of
TrustCo for the year ended December 31,
1994.
21 List of Subsidiaries of TrustCo.
23 Independent Auditors' Consent of KPMG Peat
Marwick LLP.
24 Power of Attorney.
27 Financial Data Schedules.
99 Independent Auditors' Report of KPMG Peat
Marwick LLP.
Reports on Form 8-K:
On January 26, 1995, TrustCo filed a Current Report on Form 8-K
reporting the fourth quarter and year-end December 31, 1994,
results.
On February 21, 1995, TrustCo filed a Current Report on Form 8-K
reporting the declaration of a cash dividend.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the TrustCo Bank Corp NY(the
"Corporation") pursuant to the foregoing provisions, or
otherwise, the Corporation has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Corporation of expenses incurred or paid by a director,
officer or controlling person of the Corporation in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection
with the securities being registered, the Corporation will,
unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
TrustCo Bank Corp NY
By/s/Robert A. McCormick
-------------------------
Robert A. McCormick
President and Chief Executive
Officer
(Principal Executive Officer)
By/s/Robert T. Cushing
-------------------------
Robert T. Cushing
Vice President and Chief
Financial Officer
(Principal Financial and
Accounting Officer)
Date: March 21, 1995
Signatures
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the date indicated.
Signature Title Date
* Director March 21, 1995
Barton A. Andreoli
* Director March 21, 1995
Lionel O. Barthold
* Director March 21, 1995
M. Norman Brickman
* Director March 21, 1995
Charles W. Carl, Jr.
* Director March 21, 1995
Robert A. McCormick
* Director March 21, 1995
Nancy A. McNamara
* Director March 21, 1995
Dr. John S. Morris
* Director March 21, 1995
Dr. James H. Murphy
* Director March 21, 1995
Richard J. Murray, Jr.
* Director March 21, 1995
Kenneth C. Petersen
* Director March 21, 1995
William J. Purdy
/s/William F. Terry Director March 21, 1995
- ------------------
William F. Terry
* Director March 21, 1995
Philip J. Thompson
By/s/William F. Terry
*William F. Terry, as Agent
Pursuant to Power of Attorney
EXHIBIT INDEX
Reg S-K
Item 601
Exhibit No. Exhibit
_________________________________________________________________
3(i) Amended and Restated Certificate of Incorporation
of TrustCo filed as Exhibit 3(i) to TrustCo Bank
Corp NY's Annual Report on Form 10-K (File No.
000-10592) filed on March 30, 1994, incorporated
herein by reference.
3(ii) Amended and Restated Bylaws of TrustCo, with
amendments through February 21, 1995.
10(a) Employment Agreement dated January 1, 1992 and
Amendment No. 1 dated November 16, 1993, among
TrustCo, the Bank and Robert A. McCormick, filed
as Exhibit 10(a) to TrustCo Bank Corp NY s
Annual Report on Form 10-K (file No. 000-10592)
filed on March 30, 1994, incorporated herein by
reference.
10(b) Amendment No. 2 dated September 1, 1994, and
Amendment No. 3 dated February 13, 1995, to the
Employment Agreement dated November 16, 1993
among TrustCo, the Bank and Robert A. McCormick.
10(c) Employment Agreement dated June 21, 1994, and
Amendment No. 1 dated February 14, 1995, among
TrustCo, the Bank and Robert T. Cushing.
10(d) Restated Employment Agreement dated June 21,
1994, and Amendment No. 1 dated February 14,
1995, among TrustCo, the Bank and
Nancy A. McNamara.
10(e) Restated Employment Agreement dated June
21, 1994, and Amendment No. 1 dated February
14, 1995, among TrustCo, the Bank and
William F. Terry.
10(f) Restated Employment Agreement dated June 21, 1994,
and Amendment No. 1 dated February 14, 1995, among
TrustCo, the Bank and Ralph A. Pidgeon.
10(g) Restated Employment Agreement dated July 15, 1992,
Amendment No. 1 dated November 16, 1993, and
Amendment No. 2 dated February 14, 1995, among
TrustCo, the Bank and Peter A. Zakriski.
10(h) Restated 1985 TrustCo Bank Corp NY Stock Option Plan
as amended and restated effective July 1, 1994.
10(i) TrustCo Bank Corp NY Directors Stock Option Plan
filed as Exhibit 10(g) to TrustCo Bank Corp NY's
Annual Report on Form 10-K (File No. 000-10592)
filed on March 30, 1994, incorporated herein by
reference.
11 Computation of Net Income Per Common Share.
13 Annual Report to Security Holders of TrustCo for the
year ended December 31, 1994.
GRAPHICS APPENDIX
Cross References
to Page of
Omitted Charts Annual Report
_________________________________________________________________
1 Net Interest Margin............... 5
2 Non-Performing Assets............. 14
3 Efficiency Ratio.................. 18
4 Dividends Per Share............... 21
21 List of Subsidiaries of
TrustCo.
23 Independent Auditors' Consent
of KPMG Peat Marwick LLP.
24 Power of Attorney.
27 Financial Data Schedules.
99 Independent Auditors' Report of
KPMG Peat Marwick LLP.
Exhibit 3(ii)
BY-LAWS OF
TRUSTCO BANK CORP NY
(a New York State Corporation)
(As Amended Through February 21, 1995)
_____________________________________________________
ARTICLE 1
DEFINITIONS
As used in these By-Laws, unless the context otherwise requires,
the term:
1.1 "Board" means the Board of Directors of the Corporation
1.2 "Business Corporation Law" means the Business Corporation
Law of the State of New York, as amended from time to time.
1.3 "By-Laws" means the initial By-Laws of the Corporation, as
amended from time to time.
1.4 "Certificate of Incorporation" means the initial certificate
of incorporation of the Corporation, as amended, supplemented or
restated from time to time.
1.5. "Corporation" means TrustCo Bank Corp NY.
1.6 "Directors" means directors of the Corporation.
1.7 "Entire Board" means the total number of directors which the
Corporation would have if there were no vacancies.
1.8 "Chief Executive Officer" means the Chief Executive Officer
of the corporation.
1.9 "Chairman" means chairman of the Board of the Corporation.
1.10 "President" means the President of the Corporation.
1.11 "Secretary" means the Secretary of the Corporation.
1.12 "Vice President" means the Vice President of the
Corporation.
ARTICLE 2
SHAREHOLDERS
2.1 PLACE OF MEETINGS. Every meeting of shareholders shall be
held at such place within or without the State of New York as
shall be designated by the Board of Directors in the notice of
such meeting or in the waiver of notice thereof.
2.2 ANNUAL MEETING. A meeting of shareholders shall be held
annually for the election of Directors and the transaction of
other business at such hour and on such business day as may be
determined by the Board. Written notice of such meeting, stating
the place, date and hour thereof, shall be given, personally or
by mail, not less than ten nor more than fifty days before the
date of such meeting, to each shareholder certified to vote at
such meeting.
2.3 SPECIAL MEETINGS. A special meeting of shareholders, other
than those regulated by statute, may be called at any time by the
Board or by the Chief Executive Officer. It shall also be the
duty of the Chief Executive Officer to call such a meeting
whenever requested in writing so to do by shareholders owning two
thirds of the issued and outstanding share entitled to vote at
such a meeting. Written notice of such meeting, stating the
place, date, hour and purpose thereof, and indicating that it is
being given by the person or persons calling such meeting, shall
be given, personally or by mail, not less than ten nor more than
fifty days before the date of such meeting, to each shareholder
certified to vote at such meeting.
2.4 QUORUM AND VOTING REQUIREMENTS; ADJOURNMENT. Except with
respect to a special meeting for the election of Directors as
required by law, or as otherwise provided in these By- Laws, (a)
the holders of at least a majority of the outstanding shares of
the Corporation shall be present in person or by proxy at any
meeting of the shareholders in order to constitute a quorum for
the transaction of any business, and (b) the votes of the holders
of at least a majority of the outstanding shares of the
Corporation shall be necessary at any meeting of shareholders for
the transaction of any business or specified item of business,
other than the changing, amending or repealing of any provision
of the Certificate of Incorporation or By- Laws which shall
require the affirmative vote of two-thirds of the Corporation's
voting stock; provided, however, that when a specified item of
business is required to be voted on by a class or series (if the
Corporation shall then have outstanding shares or more than one
class or series), voting as a class, the holders of a majority of
the shares of such class or series shall constitute a quorum (as
to such class or series) for the transaction of such item of
business. The holders of a majority of shares present in person
or represented by proxy at any meeting of shareholders, including
an adjourned meeting, whether or not a quorum is present, may
adjourn such meeting to another time and place.
2.5 INSPECTORS AT MEETINGS. Two or more inspectors shall be
appointed by the Board or the Executive Committee prior to each
Annual Meeting of Shareholders, to serve at the meeting or any
adjournment thereof. In case any person appointed fails to
appear or act, the vacancy may be filled by appointment made by
the Board in advance of the meeting or at the meeting by the
person presiding thereat.
2.6 ORGANIZATION. At every meeting of shareholders, the Chief
Executive Officer, or in his absence, an officer of the
Corporation designated by the Board or the Chief Executive
Officer, shall act as Chairman of the meeting. The Secretary, or
in his absence, one of the Vice Presidents not acting as Chairman
of the meeting, shall act as Secretary of the meeting. In case
none of the officers above designated to act as Chairman or
Secretary of the meeting, respectively, shall be present, a
Chairman or a Secretary of the meeting, as the case may be, shall
be chosen by a majority of the votes cast at such meeting by the
holders of shares present in person, or represented by proxy and
entitled to vote at the meeting.
2.7 ORDER OF BUSINESS. The order of business at all meetings of
shareholders shall be as determined by the Chairman of the
meeting, but the order of business to be followed at any meeting
at which a quorum is present may be changed by a majority of the
votes cast at such meeting by the holders of shares present in
person or represented by proxy and entitled to vote at the
meeting.
ARTICLE 3
DIRECTORS
3.1 BOARD OF DIRECTORS. Except as otherwise provided in the
Certificate of Incorporation, the affairs of the Corporation
shall be managed and its corporate powers exercised by its Board.
In addition to the powers expressly conferred by the By-Laws, the
Board may exercise all powers and perform all acts which are not
required, by the By-Laws or the Certificate of Incorporation or
by law, to be exercised and performed by the shareholders.
3.2 NUMBER; QUALIFICATION; TERM OF OFFICE. Subject to Section
702(b) of the Business Corporation Law, the number of Directors
constituting the Entire Board may be changed from time to time by
action of the shareholders or the Board, provided that such
number shall not be less than twelve nor more than fifteen. The
Directors shall be divided into three classes as nearly equal in
number as may be, one class to be elected each year for a term of
three years and until their successors are elected and qualified.
A Director attaining 72 years of age shall cease to be a Director
and that office shall be vacant. A director who was an employee
of the Corporation at the time of his election, shall vacate his
office when he ceases to be a full-time employee of the Company
and shall not be eligible for reelection. 3.3 ELECTION.
Directors shall be elected by the affirmative vote of the holders
of a majority of the Company's outstanding voting stock.
3.4 NEWLY CREATED DIRECTORSHIP AND VACANCIES. Newly created
directorships resulting from an increase in the number of
Directors and vacancies occurring in the Board for any reason,
may be filled by vote of a majority of the Directors then in
office, although less than a quorum, at any meeting of the Board.
Directors elected by the Board shall hold office until the next
meeting of shareholders at which the election of directors is in
the regular order of business, and until their successors have
been elected and qualified.
3.5 RULES AND REGULATIONS. The Board of Directors may adopt
such Rules and Regulations for the conduct of its meetings and
the management of the affairs of the Company as it may deem
proper, not inconsistent with the laws of the State of New York,
or these By-Laws.
3.6 REGULAR MEETINGS. Regular meetings of the Board shall be
held on the third Tuesday of February, May, August and November,
unless otherwise specified by the Board, and may be held at such
times and places as may be fixed from time to time by the Board,
and may be held without notice.
3.7 SPECIAL MEETINGS. Special meetings of the Board shall be
held whenever called by the Chief Executive Officer, and a
special meeting shall be called by the Chief Executive Officer or
the Secretary at the written request of any seven Directors.
Notice of the time and place of each special meeting of the Board
shall, if mailed, be addressed to each Director at the address
designated by him for that purpose or, if none is designated, at
his last known address at least three days before the date on
which the meeting is to be held; or such notice shall be sent to
each Director at such address by telegraph, or similar means of
communication, or be delivered to him personally, not later than
the day before the date on which such meeting is to be held.
3.8 WAIVERS OF NOTICE. Anything in these By-Laws or in any
resolution adopted by the Board to the contrary notwithstanding,
notice of any meeting of the Board need not be given to any
Director who submits a signed waiver of such notice, whether
before or after such meeting, or who attends such meeting without
protesting, prior thereto or at its commencement, the lack of
notice to him.
3.9 ORGANIZATION. At each meeting of the Board, the Chief
Executive Officer of the Corporation, or in the absence of the
Chief Executive Officer, a Chairman chosen by the majority of the
Directors present, shall preside. The Secretary, or in the
absence of the Secretary, a Vice President, shall act as
Secretary at each meeting of the Board.
3.10 QUORUM AND VOTING. A majority of the Entire Board shall
constitute a quorum for the transaction of business or of any
specified item of business at any meeting of the Board. The
affirmative vote of a majority of the Entire Board shall be
necessary for the transaction of any business or specified item
of business at any meeting of the Board, except that the
affirmative vote of two-thirds of the Entire Board shall be
necessary to change, amend or repeal any provision of the
Certificate of Incorporation or By-Laws.
3.11 WRITTEN CONSENT OF DIRECTORS WITHOUT A MEETING. Any action
required or permitted to be taken by the Board may be taken
without a meeting if all members of the Board consent in writing
to the adoption of a resolution authorizing the action. The
resolution and the written consents thereto by the members of the
Board shall be filed with the minutes of the proceedings of the
Board.
3.12 PARTICIPATION IN MEETING OF BOARD BY MEANS OF CONFERENCE
TELEPHONE OR SIMILAR COMMUNICATIONS EQUIPMENT. Any one or more
members of the Board may participate in a meeting of the Board by
means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means
shall constitute presence in person at a meeting.
ARTICLE 4
COMMITTEES
4.1 EXECUTIVE COMMITTEE. There shall be an Executive Committee
consisting of not more than nine Directors, of which four shall
constitute a quorum. All but six of the members of such
Executive Committee shall be appointed by the Board of Directors,
shall be known as permanent members and shall hold office until
the organization of the Board after the annual election next
succeeding their respective appointments. Six places on the
Executive Committee shall be filled by the Directors, other than
the permanent members of the Executive Committee, in rotation
according to alphabetical order, each panel of six rotating
members serving for one calendar month. In the event that any
member of the Executive Committee is unable to attend a meeting,
the Chief Executive Officer may invite any other Director to take
his place for such meeting. The Executive Committee shall
possess and exercise all of the delegable powers of the Board,
except when the latter is in session. It shall keep a record of
its proceedings, and the same shall be subject to examination by
the Board at any time. All acts done and powers and authority
conferred by the Executive Committee from time to time, within
the scope of its authority, shall be and be deemed to be and may
be certified as being the act and under the authority of the
Board. Meetings of the Executive Committee shall be held at such
times and places and upon such, if any, notice as the Executive
Committee shall determine from time to time, provided that a
special meeting of the Executive Committee may be called by the
Chief Executive Officer, in his discretion, and shall be called
by the Chief Executive Officer or Secretary on the written
request of any three members, three days' notice of the time and
place of which shall be given in the same manner as notices of
special meetings of the Board of Directors, except that if such
notice is given otherwise than by mail, it shall be sufficient if
given at any time on or before the day preceding the meeting.
4.2 OTHER COMMITTEES. The Board, by resolution adopted by a
majority of the Entire Board, may designate from among its
members such other standing or special committees as may seem
necessary or desirable from time to time.
ARTICLE 5
OFFICERS
5.1 OFFICERS. The Board may elect or appoint a Chairman and
shall elect or appoint a President, either of which it shall
designate the Chief Executive Officer and shall elect or appoint
one or more Vice Presidents and a Secretary, and such other
officers as it may from time to time determine. All officers
shall hold their offices, respectively, at the pleasure of the
Board. The Board may require any and all officers, clerks and
employees to give a bond or other security for the faithful
performance of their duties, in such amount and with such
sureties as the Board may determine.
5.2 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the
Corporation shall have general supervision over the business of
the Corporation, subject, however, to the control of the Board
and of any duly authorized committee of Directors. The Chief
Executive Officer shall, if present, preside at all meetings of
the shareholders, at all meetings of the Board and shall
supervise the carrying out of policies adopted or approved by the
Board. He may, with the Secretary or any other officer of the
Corporation, sign certificates for shares of the Corporation. He
may sign and execute, in the name of the Corporation, deeds,
mortgages, bonds, contracts and other instruments, subject to any
restrictions imposed by the By-Laws, Board or applicable laws,
and, in general, he shall perform all duties incident to the
office of the Chief Executive Officer and such other duties as
from time to time may be assigned to him by the Board.
5.3 CHAIRMAN AND PRESIDENT. Either the Chairman or the
President shall be designated the Chief Executive Officer of the
Corporation. The one not so designated shall perform such duties
as from time to time may be assigned to him by the Board or by
the Chief Executive Officer.
5.4 OTHER OFFICERS. All the other officers of the Corporation
shall perform all duties incident to their respective offices,
subject to the supervision and direction of the Board, the Chief
Executive Officer, and the Executive Committee, and shall
perform such other duties as may from time to time be assigned
them by the Board or by the Chief Executive Officer. The
President and any Vice President may also, with the Secretary,
sign and execute, in the name of the Corporation, deeds,
mortgages, bonds, contracts and other instruments, subject to any
restrictions imposed by the By-Laws, Board or applicable laws.
ARTICLE 6
CONTRACTS, LOANS, ETC
6.1 EXECUTION OF CONTRACTS. The Board may authorize any
officer, employee or agent, in the name and on behalf of the
Corporation, to enter into any contract or execute and satisfy
any instrument, and any such authority may be general or confined
to specific instances, or otherwise limited.
6.2 LOANS. The Chief Executive Officer or any other officer,
employee or agent authorized by the Board may effect loans and
advances at any time for the Corporation from any bank, trust
company or other institution or from any firm, corporation or
individual, and for such loans and advances may make, execute and
deliver promissory notes, bonds or other certificates or
evidences of indebtedness of the Corporation, and when authorized
so to do may pledge and hypothecate or transfer any securities or
other property of the Corporation as security for any such loans
or advances.
6.3 SIGNATURE AUTHORITY. The Chief Executive Officer shall from
time to time authorize the appropriate officers and employees of
the Corporation who are to sign, execute, acknowledge, verify and
deliver or accept all agreements, conveyances, transfers,
obligations, authentications, certificates and other documents
and instruments and to affix the seal of the Corporation to any
such document or instrument and to cause the same to be attested
by the Secretary or Assistant Secretary.
ARTICLE 7
SHARES
7.1 STOCK CERTIFICATES. Certificates representing shares of the
Corporation, in such form as shall be determined from time to
time by the Board, shall be signed by the Chief Executive
Officer, the Chairman, the President, or any Vice President and
the Secretary, and may be sealed with the seal of the Corporation
or a facsimile thereof.
7.2 TRANSFER OF SHARES. Transfers of shares shall be made only
on the book of the Corporation by the holder thereof or by his
duly authorized attorney or a transfer agent of the Corporation,
and on surrender of the certificate or certificates representing
such shares properly endorsed for transfer and upon payment of
all necessary transfer taxes. Every certificate exchanged,
returned or surrendered to the Corporation shall be marked
"Canceled", with the date of cancellation, by the Secretary or
the transfer agent of the Corporation. A person in whose name
shares shall stand on the books of the Corporation in whose name
shares shall stand on the books of the Corporation shall be
deemed the owner thereof to receive dividends, to vote as such
owner and for all other purposes as respects the Corporation. No
transfer of shares shall be valid as against the Corporation, its
shareholders and creditors for any purpose, except to render the
transferee liable for the debts of the Corporation to the extent
provided by law, until such transfer shall have been entered on
the books of the Corporation by an entry showing from and to whom
transferred.
7.3 CLOSING OF TRANSFER BOOKS. The Board may prescribe a period
prior to any shareholders' meeting or prior to the payment of any
dividend, not exceeding fifty days, during which no transfer of
stock on the books of the Corporation may be made and may fix a
day as provided by the Business Corporation Law as of which
shareholders entitled to notice and to vote at such meeting shall
be determined.
7.4 TRANSFER AND REGISTRY AGENTS. The Corporation may from time
to time maintain one or more transfer offices or agents and
registry officer or agents at such place or places as may be
determined from time to time by the Board.
7.5 LOST, DESTROYED, STOLEN AND MUTILATED CERTIFICATES. If the
holder of any shares shall notify the Corporation of any loss,
destruction, theft or mutilation of the certificate or
certificates representing such shares, the Corporation may issue
a new certificate or certificates to replace the old, upon such
conditions as may be specified by the Board consistent with
applicable laws.
ARTICLE 8
EMERGENCIES
8.1 OPERATION DURING EMERGENCY. In the event of a state of
emergency declared by the President of the United States or the
person performing his functions or by the Governor of the State
of New York or by the person performing his functions, the
officers and employees of the Corporation shall continue to
conduct the affairs of the Corporation under such guidance from
the Directors as may be available except as to matters which by
statute require specific approval of the Board of Directors and
subject to conformance with any governmental directives during
the emergency.
8.2 OFFICERS PRO TEMPORE DURING EMERGENCY. The Board of
Directors shall have power, in the absence or disability of any
officer, or upon the refusal of any officer to act, to delegate
and prescribe such officer's powers and duties to any other
officer for the time being.
8.3 DISASTER. In the event of a state of emergency resulting
from disaster of sufficient severity to prevent the conduct and
management of the affairs and business of the Corporation by the
Directors and officers as contemplated by these By-Laws, any two
or more available members of the Executive Committee shall
constitute a quorum of that committee for the full conduct and
management of the affairs and business of the Corporation,
notwithstanding any other provision of these By-Laws, and such
committee shall further be empowered to exercise all powers
reserved to any and all other committees of the Board established
pursuant to Article 4 of these By-Laws. In the event of the
unavailability, at such time, of at least two members of the
Executive Committee, any three available Directors may constitute
themselves the Executive Committee pro tem for the full conduct
and management of the affairs and business of the Corporation in
accordance with the provisions of this Article, until such time
as the incumbent Board or a reconstituted Board is capable of
assuming full conduct and management of such affairs and
business.
ARTICLE 9
SEAL
9.1 SEAL. The Board may adopt a corporate seal which shall be
in the form of a circle and shall bear the full name of the
Corporation and the year and State of its incorporation.
ARTICLE 10
FISCAL YEAR
10.1 FISCAL YEAR. The fiscal year of the Corporation shall be
determined, and may be changed, by resolution of the Board.
ARTICLE 11
VOTING OF SHARES HELD
11.1 VOTING OF SHARE HELD BY THE CORPORATION. Unless otherwise
provided by resolution of the Board and excepting the shares of
any subsidiary company of the Corporation which are to be voted
in accordance with the resolution of the Board, the Chief
Executive Officer may from time to time appoint one or more
attorneys or agents of the Corporation, in the name and on behalf
of the Corporation, to cast the votes which the Corporation may
be entitled to cast as a shareholder or otherwise in any other
corporation, any of whose shares or securities may be held by the
Corporation, at meetings of the holders of the shares or other
securities of such other corporation and to consent in writing to
any action by any such other corporation, and may instruct the
person or persons so appointed as to the manner of casting such
votes or giving such consent, and may execute or cause to be
executed on behalf of the Corporation and under its corporate
seal, or otherwise, such written proxies, consents, waivers or
other instruments as he may deem necessary or proper in the
premises; or the Chief Executive Officer may himself attend any
meeting of the holders of the shares or other securities of any
such other corporation and thereat vote or exercise any or all
other powers of the Corporation as the holder of such shares or
other securities of such other corporation.
ARTICLE 12
AMENDMENTS TO BY-LAWS
12.1 AMENDMENTS. The By-Laws or any of them may be altered,
amended, supplemented or repealed, or new By-Laws may be adopted
by a vote of the holders of at least two-thirds of the shares
entitled to vote at any regular or special meeting of
shareholders, or by a vote of at least two- thirds of the Entire
Board of Directors at any regular or special meeting thereof,
provided notice of such proposed changes has been set forth in
the notice of meeting of shareholders or Directors.
ARTICLE 13
INDEMNIFICATION OF DIRECTORS AND OFFICERS
13.1 In addition to authorization provided by law, the Directors
are authorized, by resolution, to provide indemnification or to
advance expenses to any Officer or Director seeking such
indemnifica- tion or the advancement of such expenses. They may
also, by resolution, authorize agreements providing for
indemnification.
13.2 The indemnification and advancement authorized by this
Article shall be subject to each of the conditions or limitations
set forth in the succeeding subdivisions(s) of this Section.
13.2.1 No indemnification may be made to or on behalf of any
Director or Officer if a judgment or other final adjudication
adverse to the Officer or Director establishes that his acts were
committed in bad faith or were the result of an act of deliberate
dishonesty and were material to the cause of action so
adjudicated, or that he personally gained in fact a financial
profit or other advantage to which he was not entitled.
13.3 Officers and Directors of any wholly owned subsidiary serve
at the request of the Corporation for the purpose of this
Article.
13.4 The Directors may by resolution, authorize the
Corporation's Officers and Directors to serve as a Director or
Officer of any other corporation of any type or kind, domestic or
foreign, of any partnership, joint venture, trust, employee
benefit plan or other enterprise for the purpose of the
indemnification provisions of this Article. The failure to enact
such a resolution shall not, in itself, create a presumption that
such service was not authorized.
I, William F. Terry, Secretary of TrustCo Bank Corp NY,
Schenectady, New York, hereby certify that the foregoing is a
complete, true and correct copy of the By-Laws of TrustCo Bank
Corp NY, and that the same are in full force and effect at this
date.
/s/William F. Terry
_____________________________________
Secretary
March 23, 1995
_____________________________________
Date
Exhibit 10(a)
Employment Agreement
between
TRUSTCO BANK NEW YORK
and
TRUSTCO BANK CORP NY
and
ROBERT A. McCORMICK
Employment Agreement
AGREEMENT, dated as of January 1, 1992, (the Agreement ), by and
between TRUSTCO BANK NEW YORK, a New York banking corporation
(the Bank ) and TRUSTCO BANK CORP NY, a New York business
corporation (the company ) (hereinafter referred to collectively
as the Companies ), with principal offices at 320 State Street,
Schenectady, New York 12301, and ROBERT A. McCORMICK (the
Executive ), residing at 16 Greenlea Drive, Clifton Park, New
York 12065.
1 . Engagement. The Companies agree to engage the Executive
and the Executive agrees to serve the Companies as President and
Chief Executive Officer.
2 . Term. The term of this Agreement shall commence on
January 1, 1992 and shall continue until December 31, 1994.
Beginning on January 1, 1995, and on January 1 of each and every
year thereafter, this Agreement shall renew, automatically, for
the succeeding three year term, unless the Executive is notified
by the method described in Paragraph 10 herein to the contrary (
Nonrenewal Notice ). Nothing contained herein, however, shall be
construed to extend the Executive s right to employment beyond
the age of 65 years or the then mandatory retirement age in
effect at the Companies, whichever shall be greater.
3 . Services. The Executive shall exert his best efforts and
devote substantially all of his time and attention to the affairs
of the Companies. The Executive shall be the President and Chief
executive Officer of the Companies, and shall have full authority
and responsibility for the operation of the Companies, subject to
the general direction, approval, and control of the Boards of
Directors of the Companies, for formulating policies and
administering the Companies in all respects. His powers shall
include the authority to hire and fire personnel of the
Companies, including employees who are also members of the Boards
of Directors, and to retain consultants when he deems necessary
in order to implement the Companies policies.
4 . Compensation. For purposes of this Agreement, Annual
Compensation shall be deemed to include Executive s Annual Base
Salary plus executive incentive. During the first twelve months
of employment pursuant to this Agreement, the Executive shall be
paid by the Companies the Annual Base Salary provided on Schedule
A attached hereto, which Annual Base Salary shall be paid
biweekly, plus executive incentive. Thereafter, Annual
Compensation shall be negotiated between the parties hereto and
shall be deemed a part of this Agreement, provided, however, that
Annual Compensation shall not be less than Executive s Annual
Compensation for the immediately preceding calendar year.
5 . Retirement, Pension and Profit Sharing. As further
compensation for the services of the Executive, the Executive
shall be allowed to participate fully in any disability, death
benefit, retirement, pension or profit sharing plans maintained
by the Companies, pursuant to the terms of such plans.
6 . Termination of Employment. In the event there is a
Termination (as hereinafter defined) of the Executive for any
reason other than for good cause (as hereinafter defined), death,
retirement or disability, the Executive shall receive, upon his
Termination of employment with either of the Companies, the
Termination Benefits set forth hereinbelow. The Executive s
Termination for good cause shall be limited to the Executive s
having committed an act of fraud, embezzlement, or theft
constituting a felony, or an act intentionally against either of
the Companies which causes either Company material injury, or a
final determination by a court that the Executive has committed a
material breach of his duties and responsibilities in connection
with rendering services to either of the Companies pursuant to
this Agreement.
7 . Termination. Termination shall include, but is not
limited to, (i) any reduction in the Executive s Annual
Compensation, disability, death, retirement, pension or profit
sharing benefits (unless such reduction shall have been applied
to all Bank employees as part of a validly adopted plan of cost
containment), responsibilities or duties, or (ii) either Company
s relocation or a change in the Executive s base location, or
(iii) a Nonrenewal Notice given pursuant to Paragraph 2 of this
Agreement, or (iv) the unilateral election of the Executive to
terminate the Agreement. Such election shall be communicated to
the Companies by the method described in Paragraph 10 hereof.
8 . Termination Benefits. The following benefits shall be
Termination Benefits:
(a ) The Companies shall pay to the Executive the Executive s
full Annual Compensation through the effective date of his
Termination at the rate in effect at the time notice of
termination is given or at the time of Termination, if earlier,
and in addition
(b ) The Companies shall pay to the Executive, at Executive s
option, either: (i) within ten (10) days of his Termination an
additional lump sum amount equal to three (3) times the Annual
Compensation then in effect pursuant to paragraph 4 above, which
sum shall be reduced to present value as determined by a
certified public accountant to be agreed upon between the
parties, or (ii) three equal payments each in an amount equal to
the Executive s Annual Compensation then in effect, the first
such payment to be made within ten (10) days of the Termination
and each subsequent payment to be made annually on the
anniversary date of the initial payment and in addition
(c ) The Companies shall pay to the Executive all benefits
payable to the Executive under the Companies retirement, pension
and profit sharing plans, and in addition
(d ) The Companies shall pay the Executive all legal fees and
expenses incurred by the Executive as a result of such
Termination, and in addition
(e ) The Companies shall provide the Executive, for the
greater of one year or the remaining term of this Agreement
following his Termination, health insurance and group life
insurance benefits substantially similar to those the Executive
was receiving immediately prior to his Termination.
9 . Indemnity. The Companies shall indemnify the Executive
and hold him harmless for any acts or decisions made by him in
good faith while performing services for either of the Companies
and shall use their best efforts to obtain coverage for him under
any insurance policy now in force or hereinafter obtained during
the term of this Agreement covering the other officers and
directors of the Companies against lawsuits. The Companies will
pay all expenses, including attorneys fees, actually and
necessarily incurred by the Executive in connection with the
defense of such act, suit or proceeding and in connection with
any appeal thereon including the cost of court settlements.
10 . Notices. All notices, requests, demands and other
communications provided for by this Agreement shall be in writing
and shall be deemed to have been given at the time when mailed at
any general or branch United States Post Office enclosed in a
certified post paid envelope and addressed to the address of the
respective party stated below or to such changed address as such
party may have fixed by notice:
To the Companies: TrustCo Bank Corp NY
Trustco Bank New York
320 State Street
Schenectady, NY 12301
To the Executive: Robert A. McCormick
16 Greenlea Drive
Clifton Park, NY 12065
provided, however, that any notice of change of address shall be
effective only upon receipt.
11 . Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the Companies, their
successors and assigns, including, without limitation, any person
or entity which may acquire all or substantially all of either
Company s assets or business or into which either Company may be
consolidated or merged, and the Executive, his heirs, executors,
administrators and legal representatives. The Executive may
assign his right to payment under this Agreement, but not his
obligations under this Agreement.
12 . Governing Law. This Agreement shall be governed by the
laws of the State of New York.
13 . Modification. This Agreement supersedes all prior
understandings and agreements between the parties, and may not be
amended or modified orally, but only by a writing signed by the
parties hereto.
TRUSTCO BANK CORP NY
BY/s/M. Norman Brickman
TRUSTCO BANK NEW YORK
BY/s/M. Norman Brickman
/s/Robert A. McCormick
Robert A. McCormick
C011091BC1
Schedule A to Agreement among Companies and Robert A. McCormick
Calendar Year Annual Salary Approval of Companies
1992 $550,000
1993 $650,000 /s/William F. Terry
1994 $700,000 /s/William F. Terry
1995 $720,000 /s/William F. Terry
TRUSTCO BANK CORP NY
BY/s/M. Norman Brickman
TRUSTCO BANK NEW YORK
BY/s/M. Norman Brickman
AGREEMENT OF EXECUTIVE
BY/S/Robert A. McCormick
Robert A. McCormick
AMENDMENT NO. 1 TO
EMPLOYMENT AGREEMENT BETWEEN
TRUSTCO BANK NEW YORK AND
TRUSTCO BANK CORP NY AND
ROBERT A. MCCORMICK
WHEREAS, Trustco Bank New York and
TrustCo Bank Corp NY (herein referred to as the Companies )
entered into an Employment Agreement dated as of January 1, 1992,
(herein referred to as the Agreement ); with Robert A. McCormick
(herein referred to as the Executive ); and
WHEREAS, the Companies and the Executive desire to amend the
Agreement, effective as of November 16, 1993;
NOW, THEREFORE, the Agreement is hereby amended effective
June 21, 1993, in the following respect:
Section 5 of the Agreement is hereby deleted in its entirety
and the following is substituted in lieu thereof:
5. Retirement, Pension and Profit Sharing. as further
compensation for the services of the Executive:
a. The Executive shall be allowed to participate fully in
any disability, death benefit, retirement, pension or profit
sharing plans maintained by the Companies, pursuant to the terms
of such plans; and
b. Upon termination of the Executive s employment due to
retirement or disability (both as defined in the Retirement Plan
of Trustco Bank New York), the Companies shall provide to the
Executive and his spouse, for the life of the Executive, the
health insurance benefits provided to retirees by the Companies
under their medical insurance plan. The Companies shall provide
to the Executive for his life the life insurance benefits
provided to retirees by the Companies under their life insurance
plan. The obligations of the Companies pursuant to this
subparagraph b. shall survive the termination of this Agreement.
IN WITNESS WHEREOF, the Companies and the Executive have
executed this Amendment No. 1 this 16 day of November, 1993.
TRUSTCO BANK NEW YORK TRUSTCO BANK CORP NY
BY/s/William F. Terry BY/s/William F. Terry
Secretary Secretary
/s/Robert A. McCormick
Robert A. McCormick
Exhibit 10(b)
AMENDMENT NO. 2 TO
EMPLOYMENT AGREEMENT AMONG
TRUSTCO BANK NEW YORK AND
TRUSTCO BANK CORP NY AND
ROBERT A. MCCORMICK
WHEREAS, Trustco Bank New York and TrustCo Bank Corp NY
(herein referred to as the Companies ) entered into an
Employment Agreement dated as of January 1, 1992, (herein
referred to as the Agreement ); with Robert A. McCormick (herein
referred to as the Executive ); and
WHEREAS, the Companies and the Executive desire to amend the
Agreement, effective as of June 21, 1994;
NOW, THEREFORE, the Agreement is hereby amended effective as
of June 21, 1994, in the following respects:
I.
The following subparagraph (f) is hereby added to Section 8 of
the Agreement:
(f) In the event of Termination (as described in Sections 6
and 7 herein), if the Termination Benefits paid to the Executive
under this Agreement or any other agreement are subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986 (the Excise Tax ), then the Companies will pay to the
Executive, within ten (10) days after the date the Excise Tax is
determined to be due, an additional amount ( Gross Up ) such that
the net amount retained by the Executive after (i) deduction of
any Excise Tax on the Termination Benefits and any other benefits
subject to the Excise Tax, and (ii) any Federal, state and local
income taxes and Excise Tax upon the payment provided for in this
subparagraph (f), shall be equal to the Termination Benefits.
For purposes of determining the amount of the Gross Up, the
Executive shall be deemed to pay Federal, State and local income
taxes at the highest marginal rate of taxation in the calendar
year in which the Termination Benefits are to be made. State
and local income taxes shall be determined based upon the state
and locality of the Executive s domicile on Termination. The
determination of whether such Excise Tax is payable and the
amount thereof shall be based upon the opinion of tax counsel
selected by the Companies and acceptable to the Executive. If
such opinion is not finally accepted by the Internal Revenue
Service upon audit, then appropriate adjustments shall be
computed (without interest but with Gross Up, if applicable) by
such tax counsel based upon the final amount of the Excise Tax so
determined. The adjusted amount shall be paid by the
appropriate party in one lump cash sum within thirty (30) days of
such computation.
IN WITNESS WHEREOF, the Companies and the Executive have
executed this Amendment NO. 2 this 1st day of September, 1994.
TRUSTCO BANK NEW YORK TRUSTCO BANK CORP NY
BY:/s/William F. Terry BY:/s/William F. Terry
Secretary Secretary
/s/Robert A. McCormick
Robert A. McCormick
AMENDMENT NO. 3
TO
EMPLOYMENT AGREEMENT BETWEEN
TRUSTCO BANK NEW YORK AND
TRUSTCO BANK CORP NY AND
ROBERT A. McCORMICK
WHEREAS, Trustco Bank New York (herein referred to as the
"Company") and TrustCo Bank Corp NY (herein referred to as
"TrustCo") entered into an Employment Agreement (herein referred
to as the "Agreement") with Robert A. McCormick (herein referred
to as the "Executive"); and
WHEREAS, by statutory conversion the Company converted from a
state chartered trust company to a national bank, and in
connection with the conversion the name of the Company changed to
Trustco Bank, National Association effective February 1, 1995;
and
WHEREAS, the Company, TrustCo and the Executive desire to
amend the Agreement to reflect the name change;
NOW, THEREFORE, effective February 1, 1995, the Agreement is
hereby amended by changing "Trustco Bank New York" to "Trustco
Bank, National Association" in each place where it appears
therein.
IN WITNESS WHEREOF, the Company has caused this Amendment No.
3 to be executed this 13th day of February, 1995.
TRUSTCO BANK, NATIONAL TRUSTCO BANK CORP NY
ASSOCIATION
By:/s/William F. Terry By:/s/William F. Terry
Title: Secretary Title: Secretary
/s/Robert A. McCormick
Robert A. McCormick
Exhibit 10(c)
EMPLOYMENT AGREEMENT
among
TRUSTCO BANK NEW YORK
and
TRUSTCO BANK CORP NY
and
ROBERT T. CUSHING
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of June 21, 1994 (the "Agreement"), by and
among Trustco Bank New York (the "Bank"), a New York banking
corporation, and TrustCo Bank Corp NY (the "Company"), a New York
business corporation (hereinafter referred to collectively as the
"Companies"), with principal offices at 192 Erie Boulevard,
Schenectady, New York 12305-1808, and Robert T. Cushing (the
"Executive"), residing at 6 Carriage Hill Drive, Latham, New York
12211.
Engagement. The Companies agree to engage the Executive
and the executive agrees to serve the Companies as an Executive.
1. Term. The term of this Agreement shall commence on June
21, 1994 and shall continue until December 31, 1994. Beginning
on January 1, 1995, and on January 1 of each and every year
thereafter, this Agreement shall automatically renew for an
additional year on the same terms and conditions, except to the
extent modified in writing, unless the Executive is notified by
the method set forth in Paragraph 11 herein that Executive has
been terminated ("Nonrenewal Notice"). Nothing contained herein,
however, shall be construed to extend the Executive's right to
employment beyond the age of 65 years or the then mandatory
retirement age in effect, whichever shall be greater.
2. Purpose and Effect. The purpose of this Agreement is to
provide Termination Benefits, as defined in Paragraph 9 hereof,
in the event of a Termination, as defined in Paragraph 8 hereof.
3. Service. The Executive shall exert Executive's best
efforts and devote substantially all of Executive's time and
attention to the affairs of the Bank. The Executive shall
perform all the services and duties necessary or appropriate for
the management of the Bank's businesses, subject to the general
direction, approval, and control of the Chief Executive Officer
and his designees.
4. Compensation. For purposes of this Agreement, Annual
Compensation shall be deemed to be the Executive's Annual Base
Salary. Commencing May 20, 1994, Executive shall be paid by the
Companies, the Annual Base Salary established on Schedule A
attached hereto (which base salary shall be paid in bi-weekly
installments). Thereafter, Annual Base Salary shall continue at
such level or such other level as may have been agreed to among
the parties and evidenced as provided in this Paragraph, until
renegotiated among the parties hereto and either confirmed in a
writing signed by either the Chief Executive Officer of or a
member of the Board of Directors of the Companies, or endorsed on
Schedule A and signed by either the Chief Executive Officer of or
by a member of the Board of Directors of the Companies.
5. Retirement, Pension and Profit Sharing. As further
compensation for the services of the Executive:
6. The Executive shall be eligible to participate fully
in any retirement, executive incentive compensation, pension or
profit sharing plans maintained by the Companies, pursuant to the
terms of such plans. Nothing in this agreement shall be
construed as a waiver of any of the terms of or conditions
precedent to participation in such plans; and
7. Upon termination of the Executive's employment due
to retirement or disability (both as defined in the Retirement
Plan of Trustco Bank New York), the Companies shall provide to
the Executive and his spouse, for the life of the Executive, the
health insurance benefits provided to retirees by the Companies
under their medical insurance plan. The Companies shall provide
to the Executive for his life the life insurance benefits
provided to retirees by the Companies under their life insurance
plan. The obligations of the Companies pursuant to this
subparagraph (b) shall survive the termination of this Agreement.
8. Termination of Employment.
9. If there shall be a Termination (as defined in
Paragraph 8 hereof) of the Executive from the Companies within
two (2) years after a change in control of either Company, for
any reason other than for good cause, death, retirement at the
mandatory retirement age, or disability, the Executive shall
receive upon his Termination with either of the Companies, the
Termination Benefits set forth herein. The Executive's
Termination for good cause shall be limited to the Executive's
having committed an act of fraud, embezzlement, or theft,
constituting a felony or any act intentionally against either of
the Companies which causes either Company material injury, or a
final determination by a court that the Executive has committed a
material breach of his duties and responsibilities in connection
with rendering services to either of the Companies pursuant to
this Agreement.
10. A "change in control" of either Company means any of
the following events: (i) any individual, corporation (other
than either Company), partnership, trust, association, pool,
syndicate, or any other entity or any group of persons acting in
concert becomes the beneficial owner, as that concept is defined
in Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, of
securities of either Company possessing twenty percent (20%) or
more of the voting power for the election of directors of either
Company; (ii) there shall be consummated any consolidation,
merger or other business combination involving either Company or
the securities of either Company in which holders of voting
securities of either Company immediately prior to such
consummation own, as a group, immediately after such
consummation, voting securities of either Company (or, if either
Company does not survive such transaciton, voting securities of
the corporation or corporations surviving such transaction)
having less than fifty percent (50%) of the total voting power in
an election of directors of either Company (or such other
surviving corporation or corporations); (iii) during any period
of two consecutive years, individuals who at the beginning of
such period constitute the directors of either Company cease for
any reason to constitute at least a majority thereof unless the
election, or the nomination for election by either Company's
shareholders, of each new director of either Company was approved
by a vote of at least two-thirds of the directors of the
applicable Company then still in office who were directors of
such Company at the beginning of any such period; (iv) removal by
the stockholders of all or any of the incumbent directors of
either Company other than a removal for cause; and (v) there
shall be consummated any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all
or substantially all, of the assets of either Company (on a
consolidated basis) to a party which is not controlled by or
under common control with the Companies.
11. Notice of Termination shall be communicated by the
terminating party to the other parties to this Agreement pursuant
to Paragraph 11 hereof.
12. Termination. Termination shall include, but is not
limited to, (i) any reduction in the Executive's Annual Base
Salary, executive incentive compensation, disability, death,
retirement, pension or profit sharing benefits (unless such
reductions shall have been applied to all Bank employees as a
part of a validly adopted plan of cost containment),
responsibilities or duties, or (ii) either Companies' relocation
or a change in the Executive's base location, or (iii) a
Nonrenewal Notice given pursuant to Paragraph 2 of this
Agreement, or (iv) the unilateral election of the Executive to
terminate the Agreement. Such election shall be communicated to
the Companies pursuant to Paragraph 11 hereof.
13. Termination Benefits. The following benefits shall be
Termination Benefits:
14. The Companies shall pay to the Executive the
Executive's full compensation through the effective date of his
Termination at the rate in effect at the time notice of
Termination is given or at the time of Termination, if earlier,
and in addition
15. The Companies shall pay to the Executive within ten
(10) days of Termination a lump sum amount equal to two (2) times
the Executive's Annual Base Salary then in effect, and in
addition
16. The Companies shall pay to the Executive all
benefits payable to the Executive under the Companies'
retirement, executive incentive compensation, pension and profit
sharing plans, and in addition
17. The Companies shall pay to the Executive all legal
fees and expenses incurred by the Executive as a result of such
Termination, and in addition
18. The Companies shall provide the Executive, for one
year following his Termination, Health Insurance and Group Life
Insurance benefits substantially similar to those the Executive
was receiving immediately prior to his Termination, and in
addition
19. In the event the Termination Benefits paid to the
Executive under this Agreement or any other agreement are subject
to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986 (the "Excise Tax"), then the Companies will pay to
the Executive, within ten (10) days after the date the Excise Tax
is determined to be due, an additional amount ("Gross Up") such
that the net amount retained by the Executive after deduction of
(i) any Excise Tax on the Termination Benefits and any other
benefits subject to the Excise Tax, and (ii) any Federal, State
and local income taxes and Excise Tax upon the payment provided
for in this subparagraph (f), shall be equal to the Termination
Benefits. For purposes of determining the amount of the Gross
Up, the Executive shall be deemed to pay Federal, State and local
income taxes at the highest marginal rate of taxation in the
calendar year in which the Termination Benefits are to be made.
State and local income taxes shall be determined based upon the
state and locality of the Executive's domicile on Termination.
The determination of whether such Excise Tax is payable and the
amount thereof shall be based upon the opinion of tax counsel
selected by the Companies and acceptable to the Executive. If
such opinion is not finally accepted by the Internal Revenue
Service upon audit, then appropriate adjustments shall be
computed (without interest but with Gross Up, if applicable) by
such tax counsel based upon the final amount of the Excise Tax so
determined. The adjusted amount shall be paid by the appropriate
party in one lump cash sum within thirty (30) days of such
computation.
20. Indemnity. The Companies shall indemnify the Executive
and hold Executive harmless for any acts or decisions made by
Executive in good faith while performing services for either of
the Companies and shall use their best efforts to obtain coverage
for Executive under any insurance policy now in force or
hereinafter obtained during the term of this Agreement covering
the other officers and directors of the Companies against
lawsuits. The Companies will pay all expenses, including
attorney's fees, actually and necessarily incurred by the
Executive in connection with any appeal thereon including the
cost of court settlements.
21. Notices. All notices, requests, demands and other
communications provided for by this Agreement shall be in writing
and shall be deemed to have been given at the time when
personally delivered or mailed at any general or branch United
States Post Office enclosed in a post paid envelope and addressed
to the address of the respective party stated below or to such
changed address as such party may have fixed by notice.
To the Companies : TrustCo Bank Corp NY
Trustco Bank New York
192 Erie Boulevard
Schenectady, NY 12305-1808
To the Executive : Robert T. Cushing
6 Carriage Hill Drive
Latham, NY 12211
Provided, however, that any notice of change of address shall
be effective only upon receipt.
22. Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the Companies, their
successors and assigns, including without limitation, any person
or entity which may acquire all or substantially all of either
Company's assets or business or into which either Company may be
consolidated or merged, and the Executive, as well as Executive's
heirs, executors, administrators and legal representatives. The
Executive may assign the right to payment under this Agreement,
but not obligations under this Agreement.
23. Governing Law. This Agreement shall be governed by the
laws of the State of New York.
24. Complete Agreement. This Agreement supersedes all prior
understandings and agreements between the parties, and may not be
amended or modified orally, but only by a writing signed by the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on June 21, 1994.
TRUSTCO BANK CORP NY
ATTEST: By:/s/Robert M. Mccormick
/s/William F. Terry President and Chief Executive
Secretary Officer
"Company"
TRUSTCO BANK NEW YORK
ATTEST: By:/s/Robert M. McCormick
/s/William F. Terry President and Chief Executive
Secretary Officer
"Bank"
/s/Robert T. Cushing
Robert T. Cushing
Schedule A to Agreement among Companies and Robert T. Cushing
Calendar Year Annual Salary Approval of Companies
1994 $230,000.00 /s/Robert A. McCormick
1995 $240,000.00 /s/Robert A. McCormick
TRUSTCO BANK CORP NY
By:/s/Robert A. McCormick
President and Chief Executive
Officer
TRUSTCO BANK NEW YORK
By:/s/Robert A. McCormick
President and Chief Executive
Officer
AGREEMENT OF EXECUTIVE
/s/Robert T. Cushing
Robert T. Cushing
AMENDMENT NO. 1
TO
EMPLOYMENT AGREEMENT BETWEEN
TRUSTCO BANK NEW YORK AND
TRUSTCO BANK CORP NY AND
ROBERT T. CUSHING
WHEREAS, Trustco Bank New York (herein referred to as the
"Company") and TrustCo Bank Corp NY (herein referred to as
"TrustCo") entered into an Employment Agreement (herein referred
to as the "Agreement") with Robert T. Cushing (herein referred to
as the "Executive"); and
WHEREAS, by statutory conversion the Company converted from
a state chartered trust company to a national bank, and in
connection with the conversion the name of the Company changed to
Trustco Bank, National Association effective February 1, 1995;
and
WHEREAS, the Company, TrustCo and the Executive desire to
amend the Agreement to reflect the name change;
NOW, THEREFORE, effective February 1, 1995, the Agreement
is hereby amended by changing "Trustco Bank New York" to "Trustco
Bank, National Association" in each place where it appears
therein.
IN WITNESS WHEREOF, the Company has caused this Amendment No. 1
to be executed this 14th day of February, 1995.
TRUSTCO BANK, NATIONAL TRUSTCO BANK CORP NY
ASSOCIATION
By:/s/Robert A. McCormick By:/s/Robert A. McCormick
Title:President and CEO Title:President and CEO
/s/Robert T. Cushing
Robert T. Cushing
Exhibit 10(d)
RESTATED EMPLOYMENT AGREEMENT
among
TRUSTCO BANK NEW YORK
and
TRUSTCO BANK CORP NY
and
NANCY A. McNAMARA
RESTATED EMPLOYMENT AGREEMENT
WHEREAS, Trustco Bank New York (the "Bank"), a New York
banking corporation, and TrustCo Bank Corp NY (the "Company"), a
New York business corporation (herein referred to collectively as
the "Companies") entered into an Employment Agreement dated July
15, 1992 (herein referred to as the "Agreement") with Nancy A.
McNamara (herein referred to as the "Executive"); and
WHEREAS, the Companies and the Executive desire to amend
and restate the Agreement in its entirety effective as of June
21, 1994;
NOW, THEREFORE, the Agreement is hereby amended and
restated in its entirety effective June 21, 1994, so that it
shall read as follows:
Engagement. The Companies agree to engage the Executive and
the executive agrees to serve the Companies as an Executive.
1. Term. The term of this Agreement shall commence on July 15,
1992 and shall continue until December 31, 1992. Beginning on
January 1, 1993, and on January 1 of each and every year
thereafter, this Agreement shall automatically renew for an
additional year on the same terms and conditions, except to the
extent modified in writing, unless the Executive is notified by
the method set forth in Paragraph 11 herein that Executive has
been terminated ("Nonrenewal Notice"). Nothing contained herein,
however, shall be construed to extend the Executive's right to
employment beyond the age of 65 years or the then mandatory
retirement age in effect, whichever shall be greater.
2. Purpose and Effect. The purpose of this Agreement is to
provide Termination Benefits, as defined in Paragraph 9 hereof,
in the event of a Termination, as defined in Paragraph 8 hereof.
3. Service. The Executive shall exert Executive's best efforts
and devote substantially all of Executive's time and attention to
the affairs of the Bank. The Executive shall perform all the
services and duties necessary or appropriate for the management
of the Bank's businesses, subject to the general direction,
approval, and control of the Chief Executive Officer and his
designees.
4. Compensation. For purposes of this Agreement, Annual
Compensation shall be deemed to be the Executive's Annual Base
Salary. Commencing January 1, 1992, Executive shall be paid by
the Companies, the Annual Base Salary established on Schedule A
attached hereto (which base salary shall be paid in bi-weekly
installments). Thereafter, Annual Base Salary shall continue at
such level or such other level as may have been agreed to among
the parties and evidenced as provided in this Paragraph, until
renegotiated among the parties hereto and either confirmed in a
writing signed by either the Chief Executive Officer of or a
member of the Board of Directors of the Companies, or endorsed on
Schedule A and signed by either the Chief Executive Officer of or
by a member of the Board of Directors of the Companies.
5. Retirement, Pension and Profit Sharing. As further
compensation for the services of the Executive:
(a) The Executive shall be eligible to participate fully in any
retirement, executive incentive compensation, pension or profit
sharing plans maintained by the Companies, pursuant to the terms
of such plans. Nothing in this agreement shall be construed as a
waiver of any of the terms of or conditions precedent to
participation in such plans; and
(b) Upon termination of the
Executive's employment due to retirement or disability (both as
defined in the Retirement Plan of Trustco Bank New York), the
Companies shall provide to the Executive and her spouse, for the
life of the Executive, the health insurance benefits provided to
retirees by the Companies under their medical insurance plan.
The Companies shall provide to the Executive for her life the
life insurance benefits provided to retirees by the Companies
under their life insurance plan. The obligations of the
Companies pursuant to this subparagraph (b) shall survive the
termination of this Agreement.
6. Termination of Employment.
(a) If there shall be a Termination (as defined in Paragraph 8
hereof) of the Executive from the Companies within two (2) years
after a change in control of either Company, for any reason other
than for good cause, death, retirement at the mandatory
retirement age, or disability, the Executive shall receive upon
her Termination with either of the Companies, the Termination
Benefits set forth herein. The Executive's Termination for good
cause shall be limited to the Executive's having committed an act
of fraud, embezzlement, or theft, constituting a felony or any
act intentionally against either of the Companies which causes
either Company material injury, or a final determination by a
court that the Executive has committed a material breach of her
duties and responsibilities in connection with rendering services
to either of the Companies pursuant to this Agreement.
(b) A "change in control" of either Company means any of the
following events: (i) any individual, corporation (other than
either Company), partnership, trust, association, pool,
syndicate, or any other entity or any group of persons acting in
concert becomes the beneficial owner, as that concept is defined
in Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, of
securities of either Company possessing twenty percent (20%) or
more of the voting power for the election of directors of either
Company; (ii) there shall be consummated any consolidation,
merger or other business combination involving either Company or
the securities of either Company in which holders of voting
securities of either Company immediately prior to such
consummation own, as a group, immediately after such
consummation, voting securities of either Company (or, if either
Company does not survive such transaction, voting securities of
the corporation or corporations surviving such transaction)
having less than fifty percent (50%) of the total voting power in
an election of directors of either Company (or such other
surviving corporation or corporations); (iii) during any period
of two consecutive years, individuals who at the beginning of
such period constitute the directors of either Company cease for
any reason to constitute at least a majority thereof unless the
election, or the nomination for election by either Company's
shareholders, of each new director of either Company was approved
by a vote of at least two-thirds of the directors of the
applicable Company then still in office who were directors of
such Company at the beginning of any such period; (iv) removal by
the stockholders of all or any of the incumbent directors of
either Company other than a removal for cause; and (v) there
shall be consummated any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all
or substantially all, of the assets of either Company (on a
consolidated basis) to a party which is not controlled by or
under common control with the Companies.
(c) Notice of Termination shall be communicated by the
terminating party to the other parties to this Agreement pursuant
to Paragraph 11 hereof.
7. Termination. Termination shall include, but is not limited
to, (i) any reduction in the Executive's Annual Base Salary,
executive incentive compensation, disability, death, retirement,
pension or profit sharing benefits (unless such reductions shall
have been applied to all Bank employees as a part of a validly
adopted plan of cost containment), responsibilities or duties, or
(ii) either Companies' relocation or a change in the Executive's
base location, or (iii) a Nonrenewal Notice given pursuant to
Paragraph 2 of this Agreement, or (iv) the unilateral election of
the Executive to terminate the Agreement. Such election shall be
communicated to the Companies pursuant to Paragraph 11 hereof.
8. Termination Benefits. The following benefits shall be
Termination Benefits:
(a) The Companies shall pay to the Executive the Executive's
full compensation through the effective date of her Termination
at the rate in effect at the time notice of Termination is given
or at the time of Termination, if earlier, and in addition
(b)The Companies shall pay to the Executive within ten (10) days
of Termination a lump sum amount equal to two (2) times the
Executive's Annual Base Salary then in effect, and in addition
(c) The Companies shall pay to the Executive all benefits
payable to the Executive under the Companies' retirement,
executive incentive compensation, pension and profit sharing
plans, and in addition
(d) The Companies shall pay to the Executive all legal fees and
expenses incurred by the Executive as a result of such
Termination, and in addition
(e) The Companies shall provide the Executive, for one year
following her Termination, Health Insurance and Group Life
Insurance benefits substantially similar to those the Executive
was receiving immediately prior to her Termination, and in
addition
(f) In the event the Termination Benefits paid to the Executive
under this Agreement or any other agreement are subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986 (the "Excise Tax"), then the Companies will pay to the
Executive, within ten (10) days after the date the Excise Tax is
determined to be due, an additional amount ("Gross Up") such that
the net amount retained by the Executive after deduction of (i)
any Excise Tax on the Termination Benefits and any other benefits
subject to the Excise Tax, and (ii) any Federal, State and local
income taxes and Excise Tax upon the payment provided for in this
subparagraph (f), shall be equal to the Termination Benefits.
For purposes of determining the amount of the Gross Up, the
Executive shall be deemed to pay Federal, State and local income
taxes at the highest marginal rate of taxation in the calendar
year in which the Termination Benefits are to be made. State and
local income taxes shall be determined based upon the state and
locality of the Executive's domicile on Termination. The
determination of whether such Excise Tax is payable and the
amount thereof shall be based upon the opinion of tax counsel
selected by the Companies and acceptable to the Executive. If
such opinion is not finally accepted by the Internal Revenue
Service upon audit, then appropriate adjustments shall be
computed (without interest but with Gross Up, if applicable) by
such tax counsel based upon the final amount of the Excise Tax so
determined. The adjusted amount shall be paid by the appropriate
party in one lump cash sum within thirty (30) days of such
computation.
9. Indemnity. The Companies shall indemnify the Executive and
hold Executive harmless for any acts or decisions made by
Executive in good faith while performing services for either of
the Companies and shall use their best efforts to obtain coverage
for Executive under any insurance policy now in force or
hereinafter obtained during the term of this Agreement covering
the other officers and directors of the Companies against
lawsuits. The Companies will pay all expenses, including
attorney's fees, actually and necessarily incurred by the
Executive in connection with any appeal thereon including the
cost of court settlements.
10. Notices. All notices, requests, demands and other
communications provided for by this Agreement shall be in writing
and shall be deemed to have been given at the time when
personally delivered or mailed at any general or branch United
States Post Office enclosed in a post paid envelope and addressed
to the address of the respective party stated below or to such
changed address as such party may have fixed by notice.
To the Companies:
TrustCo Bank Corp NY
Trustco Bank New York
192 Erie Boulevard
Schenectady, NY 12305-1808
To the Executive: Nancy A. McNamara
26 Berkshire Drive West
Clifton Park, NY 12065
Provided, however, that any notice of change of address shall
be effective only upon receipt.
11. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Companies, their successors
and assigns, including without limitation, any person or entity
which may acquire all or substantially all of either Company's
assets or business or into which either Company may be
consolidated or merged, and the Executive, as well as Executive's
heirs, executors, administrators and legal representatives. The
Executive may assign the right to payment under this Agreement,
but not obligations under this Agreement.
12. Governing Law. This Agreement shall be governed by the laws
of the State of New York.
13. Complete Agreement. This Agreement supersedes all prior
understandings and agreements between the parties, and may not be
amended or modified orally, but only by a writing signed by the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Restated Agreement on June 21, 1994.
TRUSTCO BANK CORP NY
ATTEST: By:/s/Robert A. McCormick
President and Chief Executive
/s/William F. Terry Officer "Company"
Secretary
TRUSTCO BANK NEW YORK
ATTEST: By:/s/Robert A. McCormick
President and Chief Executive
/s/William F. Terry Officer "Bank"
Secretary
/s/Nancy A. McNamara
Nancy A. McNamara
Schedule A to Agreement among Companies and Nancy A. Mcnamara
Calendar Year Annual Salary Approval of Companies
1992 $160,000.00 /s/Robert A. McCormick
1993 200,000.00 /s/Robert A. McCormick
1994 230,000.00 /s/Robert A. McCormick
1995 240,000.00 /s/Robert A. McCormick
TRUSTCO BANK CORP NY
By:/s/Robert A. McCormick
President and Chief Executive
Officer
TRUSTCO BANK NEW YORK
By:/s/Robert A. McCormick
President and Chief Executive
Officer
AGREEMENT OF EXECUTIVE
/s/Nancy A. McNamara
Nancy A. McNamara
AMENDMENT NO. 1
TO
EMPLOYMENT AGREEMENT BETWEEN
TRUSTCO BANK NEW YORK AND
TRUSTCO BANK CORP NY AND
NANCY A. McNAMARA
WHEREAS, Trustco Bank New York (herein referred to as the
"Company") and TrustCo Bank Corp NY (herein referred to as
"TrustCo") entered into an Employment Agreement (herein referred
to as the "Agreement") with Nancy A. McNamara (herein referred to
as the "Executive"); and
WHEREAS, by statutory conversion the Company converted from a
state chartered trust company to a national bank, and in
connection with the conversion the name of the Company changed to
Trustco Bank, National Association effective February 1, 1995;
and
WHEREAS, the Company, TrustCo and the Executive desire to
amend the Agreement to reflect the name change;
NOW, THEREFORE, effective February 1, 1995, the Agreement is
hereby amended by changing "Trustco Bank New York" to "Trustco
Bank, National Association" in each place where it appears
therein.
IN WITNESS WHEREOF, the Company has caused this Amendment
No. 1 to be executed this 14th day of February, 1995.
TRUSTCO BANK, NATIONAL TRUSTCO BANK CORP NY
ASSOCIATION
By: /s/Robert A. McCormick By:/s/Robert A. McCormick
Title: President and CEO Title: President and CEO
/s/Nancy A. McNamara
Nancy A. McNamara
Exhibit 10(e)
RESTATED EMPLOYMENT AGREEMENT
among
TRUSTCO BANK NEW YORK
and
TRUSTCO BANK CORP NY
and
WILLIAM F. TERRY
RESTATED EMPLOYMENT AGREEMENT
WHEREAS, Trustco Bank New York (the "Bank"), a New York
banking corporation, and TrustCo Bank Corp NY (the "Company"), a
New York business corporation (herein referred to collectively as
the "Companies") entered into an Employment Agreement dated July
15, 1992 (herein referred to as the "Agreement") with William F.
Terry (herein referred to as the "Executive"); and
WHEREAS, the Companies and the Executive desire to amend and
restate the Agreement in its entirety effective as of June 21,
1994;
NOW, THEREFORE, the Agreement is hereby amended and restated
in its entirety effective June 21, 1994, so that it shall read as
follows:
Engagement. The Companies agree to engage the
Executive and the executive agrees to serve the Companies as an
Executive.
1. Term. The term of this Agreement shall commence on
July 15, 1992 and shall continue until December 31, 1992.
Beginning on January 1, 1993, and on January 1 of each and every
year thereafter, this Agreement shall automatically renew for an
additional year on the same terms and conditions, except to the
extent modified in writing, unless the Executive is notified by
the method set forth in Paragraph 11 herein that Executive has
been terminated ("Nonrenewal Notice"). Nothing contained herein,
however, shall be construed to extend the Executive's right to
employment beyond the age of 65 years or the then mandatory
retirement age in effect, whichever shall be greater.
2. Purpose and Effect. The purpose of this Agreement is
to provide Termination Benefits, as defined in Paragraph 9
hereof, in the event of a Termination, as defined in Paragraph 8
hereof.
3. Service. The Executive shall exert Executive's best
efforts and devote substantially all of Executive's time and
attention to the affairs of the Bank. The Executive shall
perform all the services and duties necessary or appropriate for
the management of the Bank's businesses, subject to the general
direction, approval, and control of the Chief Executive Officer
and his designees.
4. Compensation. For purposes of this Agreement, Annual
Compensation shall be deemed to be the Executive's Annual Base
Salary. Commencing January 1, 1992, Executive shall be paid by
the Companies, the Annual Base Salary established on Schedule A
attached hereto (which base salary shall be paid in bi-weekly
installments). Thereafter, Annual Base Salary shall continue at
such level or such other level as may have been agreed to among
the parties and evidenced as provided in this Paragraph, until
renegotiated among the parties hereto and either confirmed in a
writing signed by either the Chief Executive Officer of or a
member of the Board of Directors of the Companies, or endorsed on
Schedule A and signed by either the Chief Executive Officer of or
by a member of the Board of Directors of the Companies.
5. Retirement, Pension and Profit Sharing. As further
compensation for the services of the Executive:
(a) The Executive shall be eligible to participate
fully in any retirement, executive incentive compensation,
pension or profit sharing plans maintained by the Companies,
pursuant to the terms of such plans. Nothing in this agreement
shall be construed as a waiver of any of the terms of or
conditions precedent to participation in such plans; and
(b) Upon termination of the Executive's employment due
to retirement or disability (both as defined in the Retirement
Plan of Trustco Bank New York), the Companies shall provide to
the Executive and his spouse, for the life of the Executive, the
health insurance benefits provided to retirees by the Companies
under their medical insurance plan. The Companies shall provide
to the Executive for his life the life insurance benefits
provided to retirees by the Companies under their life insurance
plan. The obligations of the Companies pursuant to this
subparagraph (b) shall survive the termination of this Agreement.
6. Termination of Employment.
(a) If there shall be a Termination (as defined in
Paragraph 8 hereof) of the Executive from the Companies within
two (2) years after a change in control of either Company, for
any reason other than for good cause, death, retirement at the
mandatory retirement age, or disability, the Executive shall
receive upon his Termination with either of the Companies, the
Termination Benefits set forth herein. The Executive's
Termination for good cause shall be limited to the Executive's
having committed an act of fraud, embezzlement, or theft,
constituting a felony or any act intentionally against either of
the Companies which causes either Company material injury, or a
final determination by a court that the Executive has committed a
material breach of his duties and responsibilities in connection
with rendering services to either of the Companies pursuant to
this Agreement.
(b) A "change in control" of either Company means any
of the following events: (i) any individual, corporation (other
than either Company), partnership, trust, association, pool,
syndicate, or any other entity or any group of persons acting in
concert becomes the beneficial owner, as that concept is defined
in Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, of
securities of either Company possessing twenty percent (20%) or
more of the voting power for the election of directors of either
Company; (ii) there shall be consummated any consolidation,
merger or other business combination involving either Company or
the securities of either Company in which holders of voting
securities of either Company immediately prior to such
consummation own, as a group, immediately after such
consummation, voting securities of either Company (or, if either
Company does not survive such transaction, voting securities of
the corporation or corporations surviving such transaction)
having less than fifty percent (50%) of the total voting power in
an election of directors of either Company (or such other
surviving corporation or corporations); (iii) during any period
of two consecutive years, individuals who at the beginning of
such period constitute the directors of either Company cease for
any reason to constitute at least a majority thereof unless the
election, or the nomination for election by either Company's
shareholders, of each new director of either Company was approved
by a vote of at least two- thirds of the directors of the
applicable Company then still in office who were directors of
such Company at the beginning of any such period; (iv) removal by
the stockholders of all or any of the incumbent directors of
either Company other than a removal for cause; and (v) there
shall be consummated any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all
or substantially all, of the assets of either Company (on a
consolidated basis) to a party which is not controlled by or
under common control with the Companies.
(c) Notice of Termination shall be communicated by the
terminating party to the other parties to this Agreement pursuant
to Paragraph 11 hereof.
7. Termination. Termination shall include, but is not
limited to, (i) any reduction in the Executive's Annual Base
Salary, executive incentive compensation, disability, death,
retirement, pension or profit sharing benefits (unless such
reductions shall have been applied to all Bank employees as a
part of a validly adopted plan of cost containment),
responsibilities or duties, or (ii) either Companies' relocation
or a change in the Executive's base location, or (iii) a
Nonrenewal Notice given pursuant to Paragraph 2 of this
Agreement, or (iv) the unilateral election of the Executive to
terminate the Agreement. Such election shall be communicated to
the Companies pursuant to Paragraph 11 hereof.
8. Termination Benefits. The following benefits shall be
Termination Benefits:
(a) The Companies shall pay to the Executive the
Executive's full compensation through the effective date of his
Termination at the rate in effect at the time notice of
Termination is given or at the time of Termination, if earlier,
and in addition
(b) The Companies shall pay to the Executive within
ten (10) days of Termination a lump sum amount equal to two (2)
times the Executive's Annual Base Salary then in effect, and in
addition
(c) The Companies shall pay to the Executive all
benefits payable to the Executive under the Companies'
retirement, executive incentive compensation, pension and profit
sharing plans, and in addition
(d) The Companies shall pay to the Executive all legal
fees and expenses incurred by the Executive as a result of such
Termination, and in addition
(e) The Companies shall provide the Executive, for one
year following his Termination, Health Insurance and Group Life
Insurance benefits substantially similar to those the Executive
was receiving immediately prior to his Termination, and in
addition
(f) In the event the Termination Benefits paid to the
Executive under this Agreement or any other agreement are subject
to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986 (the "Excise Tax"), then the Companies will pay to
the Executive, within ten (10) days after the date the Excise Tax
is determined to be due, an additional amount ("Gross Up") such
that the net amount retained by the Executive after deduction of
(i) any Excise Tax on the Termination Benefits and any other
benefits subject to the Excise Tax, and (ii) any Federal, State
and local income taxes and Excise Tax upon the payment provided
for in this subparagraph (f), shall be equal to the Termination
Benefits. For purposes of determining the amount of the Gross
Up, the Executive shall be deemed to pay Federal, State and local
income taxes at the highest marginal rate of taxation in the
calendar year in which the Termination Benefits are to be made.
State and local income taxes shall be determined based upon the
state and locality of the Executive's domicile on Termination.
The determination of whether such Excise Tax is payable and the
amount thereof shall be based upon the opinion of tax counsel
selected by the Companies and acceptable to the Executive. If
such opinion is not finally accepted by the Internal Revenue
Service upon audit, then appropriate adjustments shall be
computed (without interest but with Gross Up, if applicable) by
such tax counsel based upon the final amount of the Excise Tax so
determined. The adjusted amount shall be paid by the appropriate
party in one lump cash sum within thirty (30) days of such
computation.
9. Indemnity. The Companies shall indemnify the Executive
and hold Executive harmless for any acts or decisions made by
Executive in good faith while performing services for either of
the Companies and shall use their best efforts to obtain coverage
for Executive under any insurance policy now in force or
hereinafter obtained during the term of this Agreement covering
the other officers and directors of the Companies against
lawsuits. The Companies will pay all expenses, including
attorney's fees, actually and necessarily incurred by the
Executive in connection with any appeal thereon including the
cost of court settlements.
10. Notices. All notices, requests, demands and other
communications provided for by this Agreement shall be in writing
and shall be deemed to have been given at the time when
personally delivered or mailed at any general or branch United
States Post Office enclosed in a post paid envelope and addressed
to the address of the respective party stated below or to such
changed address as such party may have fixed by notice.
To the Companies: TrustCo Bank Corp NY
Trustco Bank New York
192 Erie Boulevard
Schenectady, NY 12305-1808
To the Executive: William F. Terry
29 St. Agnes Lane
Loudonville, NY 12211
Provided, however, that any notice of change of address
shall be effective only upon receipt.
11. Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the Companies, their
successors and assigns, including without limitation, any person
or entity which may acquire all or substantially all of either
Company's assets or business or into which either Company may be
consolidated or merged, and the Executive, as well as Executive's
heirs, executors, administrators and legal representatives. The
Executive may assign the right to payment under this Agreement,
but not obligations under this Agreement.
12. Governing Law. This Agreement shall be governed by the
laws of the State of New York.
13. Complete Agreement. This Agreement supersedes all
prior understandings and agreements between the parties, and may
not be amended or modified orally, but only by a writing signed
by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Restated Agreement on June 21, 1994.
TRUSTCO BANK CORP NY
ATTEST: By:/s/Robert A. McCormick
President and Chief Executive
/s/William F. Terry Officer "Company"
Secretary
TRUSTCO BANK NEW YORK
ATTEST: By:/s/Robert A. McCormick
President and Chief Executive
/s/William F. Terry Officer "Bank"
Secretary
/s/William F. Terry
William F. Terry
Schedule A to Agreement among Companies and William F. Terry
Calendar Year Annual Salary Approval of Companies
1992 $160,000.00 /s/Robert A. McCormick
1993 200,000.00 /s/Robert A. McCormick
1994 230,000.00 /s/Robert A. McCormick
1995 240,000.00 /s/Robert A. McCormick
TRUSTCO BANK CORP NY
By:/s/Robert A. McCormick
President and Chief Executive
Officer
TRUSTCO BANK NEW YORK
By:/s/Robert A. McCormick
President and Chief Executive
Officer
AGREEMENT OF EXECUTIVE
/s/William F. Terry
William F. Terry
AMENDMENT NO. 1
TO
EMPLOYMENT AGREEMENT BETWEEN
TRUSTCO BANK NEW YORK AND
TRUSTCO BANK CORP NY AND
WILLIAM F. TERRY
WHEREAS, Trustco Bank New York (herein referred to as the
"Company") and TrustCo Bank Corp NY (herein referred to as
"TrustCo") entered into an Employment Agreement (herein referred
to as the "Agreement") with William F. Terry (herein referred to
as the "Executive"); and
WHEREAS, by statutory conversion the Company converted from
a state chartered trust company to a national bank, and in
connection with the conversion the name of the Company changed to
Trustco Bank, National Association effective February 1, 1995;
and
WHEREAS, the Company, TrustCo and the Executive desire to
amend the Agreement to reflect the name change;
NOW, THEREFORE, effective February 1, 1995, the Agreement is
hereby amended by changing "Trustco Bank New York" to "Trustco
Bank, National Association" in each place where it appears
therein.
IN WITNESS WHEREOF, the Company has caused this Amendment
No. 1 to be executed this 14th day of February, 1995.
TRUSTCO BANK, NATIONAL TRUSTCO BANK CORP NY
ASSOCIATION
By:/s/Robert A. McCormick By:/s/Robert A. McCormick
Title: President and CEO Title: President and CEO
/s/William F. Terry
William F. Terry
Exhibit 10(f)
RESTATED EMPLOYMENT AGREEMENT
among
TRUSTCO BANK NEW YORK
and
TRUSTCO BANK CORP NY
and
RALPH A. PIDGEON
RESTATED EMPLOYMENT AGREEMENT
WHEREAS, Trustco Bank New York (the "Bank"), a New York
banking corporation, and TrustCo Bank Corp NY (the "Company"), a
New York business corporation (herein referred to collectively as
the "Companies") entered into an Employment Agreement dated July
15, 1992 (herein referred to as the "Agreement") with Ralph A.
Pidgeon (herein referred to as the "Executive"); and
WHEREAS, the Companies and the Executive desire to amend and
restate the Agreement in its entirety effective as of June 21,
1994;
NOW, THEREFORE, the Agreement is hereby amended and restated
in its entirety effective June 21, 1994, so that it shall read as
follows:
Engagement. The Companies agree to engage the Executive and the
executive agrees to serve the Companies as an Executive.
1. Term. The term of this Agreement shall commence on July
15, 1992 and shall continue until December 31, 1992. Beginning
on January 1, 1993, and on January 1 of each and every year
thereafter, this Agreement shall automatically renew for an
additional year on the same terms and conditions, except to the
extent modified in writing, unless the Executive is notified by
the method set forth in Paragraph 11 herein that Executive has
been terminated ("Nonrenewal Notice"). Nothing contained herein,
however, shall be construed to extend the Executive's right to
employment beyond the age of 65 years or the then mandatory
retirement age in effect, whichever shall be greater.
2. Purpose and Effect. The purpose of this Agreement is to
provide Termination Benefits, as defined in Paragraph 9 hereof,
in the event of a Termination, as defined in Paragraph 8 hereof.
3. Service. The Executive shall exert Executive's best
efforts and devote substantially all of Executive's time and
attention to the affairs of the Bank. The Executive shall
perform all the services and duties necessary or appropriate for
the management of the Bank's businesses, subject to the general
direction, approval, and control of the Chief Executive Officer
and his designees.
4. Compensation. For purposes of this Agreement, Annual
Compensation shall be deemed to be the Executive's Annual Base
Salary. Commencing January 1, 1992, Executive shall be paid by
the Companies, the Annual Base Salary established on Schedule A
attached hereto (which base salary shall be paid in bi-weekly
installments). Thereafter, Annual Base Salary shall continue at
such level or such other level as may have been agreed to among
the parties and evidenced as provided in this Paragraph, until
renegotiated among the parties hereto and either confirmed in a
writing signed by either the Chief Executive Officer of or a
member of the Board of Directors of the Companies, or endorsed on
Schedule A and signed by either the Chief Executive Officer of or
by a member of the Board of Directors of the Companies.
5. Retirement, Pension and Profit Sharing. As further
compensation for the services of the Executive:
(a) The Executive shall be eligible to participate fully
in any retirement, executive incentive compensation, pension or
profit sharing plans maintained by the Companies, pursuant to the
terms of such plans. Nothing in this agreement shall be
construed as a waiver of any of the terms of or conditions
precedent to participation in such plans; and
(b) Upon termination of the Executive's employment due to
retirement or disability (both as defined in the Retirement Plan
of Trustco Bank New York), the Companies shall provide to the
Executive and his spouse, for the life of the Executive, the
health insurance benefits provided to retirees by the Companies
under their medical insurance plan. The Companies shall provide
to the Executive for his life the life insurance benefits
provided to retirees by the Companies under their life insurance
plan. The obligations of the Companies pursuant to this
subparagraph (b) shall survive the termination of this Agreement.
6. Termination of Employment.
(a) If there shall be a Termination (as defined in
Paragraph 8 hereof) of the Executive from the Companies within
two (2) years after a change in control of either Company, for
any reason other than for good cause, death, retirement at the
mandatory retirement age, or disability, the Executive shall
receive upon his Termination with either of the Companies, the
Termination Benefits set forth herein. The Executive's
Termination for good cause shall be limited to the Executive's
having committed an act of fraud, embezzlement, or theft,
constituting a felony or any act intentionally against either of
the Companies which causes either Company material injury, or a
final determination by a court that the Executive has committed a
material breach of his duties and responsibilities in connection
with rendering services to either of the Companies pursuant to
this Agreement.
(b) A "change in control" of either Company means any of
the following events: (i) any individual, corporation (other
than either Company), partnership, trust, association, pool,
syndicate, or any other entity or any group of persons acting in
concert becomes the beneficial owner, as that concept is defined
in Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, of
securities of either Company possessing twenty percent (20%) or
more of the voting power for the election of directors of either
Company; (ii) there shall be consummated any consolidation,
merger or other business combination involving either Company or
the securities of either Company in which holders of voting
securities of either Company immediately prior to such
consummation own, as a group, immediately after such
consummation, voting securities of either Company (or, if either
Company does not survive such transaction, voting securities of
the corporation or corporations surviving such transaction)
having less than fifty percent (50%) of the total voting power in
an election of directors of either Company (or such other
surviving corporation or corporations); (iii) during any period
of two consecutive years, individuals who at the beginning of
such period constitute the directors of either Company cease for
any reason to constitute at least a majority thereof unless the
election, or the nomination for election by either Company's
shareholders, of each new director of either Company was approved
by a vote of at least two-thirds of the directors of the
applicable Company then still in office who were directors of
such Company at the beginning of any such period; (iv) removal by
the stockholders of all or any of the incumbent directors of
either Company other than a removal for cause; and (v) there
shall be consummated any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all
or substantially all, of the assets of either Company (on a
consolidated basis) to a party which is not controlled by or
under common control with the Companies.
(c) Notice of Termination shall be communicated by the
terminating party to the other parties to this Agreement pursuant
to Paragraph 11 hereof.
7. Termination. Termination shall
include, but is not limited to, (i) any reduction in the
Executive's Annual Base Salary, executive incentive compensation,
disability, death, retirement, pension or profit sharing benefits
(unless such reductions shall have been applied to all Bank
employees as a part of a validly adopted plan of cost
containment), responsibilities or duties, or (ii) either
Companies' relocation or a change in the Executive's base
location, or (iii) a Nonrenewal Notice given pursuant to
Paragraph 2 of this Agreement, or (iv) the unilateral election of
the Executive to terminate the Agreement. Such election shall be
communicated to the Companies pursuant to Paragraph 11 hereof.
8. Termination Benefits. The following benefits shall be
Termination Benefits:
(a) The Companies shall pay to the Executive the
Executive's full compensation through the effective date of his
Termination at the rate in effect at the time notice of
Termination is given or at the time of Termination, if earlier,
and in addition
(b) The Companies shall pay to the Executive within ten
(10) days of Termination a lump sum amount equal to two (2) times
the Executive's Annual Base Salary then in effect, and in
addition
(c) The Companies shall pay to the Executive all benefits
payable to the Executive under the Companies' retirement,
executive incentive compensation, pension and profit sharing
plans, and in addition
(d) The Companies shall pay to the Executive all legal
fees and expenses incurred by the Executive as a result of such
Termination, and in addition
(e) The Companies shall provide the Executive, for one
year following his Termination, Health Insurance and Group Life
Insurance benefits substantially similar to those the Executive
was receiving immediately prior to his Termination, and in
addition
(f) In the event the Termination Benefits paid to the
Executive under this Agreement or any other agreement are subject
to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986 (the "Excise Tax"), then the Companies will pay to
the Executive, within ten (10) days after the date the Excise Tax
is determined to be due, an additional amount ("Gross Up") such
that the net amount retained by the Executive after deduction of
(i) any Excise Tax on the Termination Benefits and any other
benefits subject to the Excise Tax, and (ii) any Federal, State
and local income taxes and Excise Tax upon the payment provided
for in this subparagraph (f), shall be equal to the Termination
Benefits. For purposes of determining the amount of the Gross
Up, the Executive shall be deemed to pay Federal, State and local
income taxes at the highest marginal rate of taxation in the
calendar year in which the Termination Benefits are to be made.
State and local income taxes shall be determined based upon the
state and locality of the Executive's domicile on Termination.
The determination of whether such Excise Tax is payable and the
amount thereof shall be based upon the opinion of tax counsel
selected by the Companies and acceptable to the Executive. If
such opinion is not finally accepted by the Internal Revenue
Service upon audit, then appropriate adjustments shall be
computed (without interest but with Gross Up, if applicable) by
such tax counsel based upon the final amount of the Excise Tax so
determined. The adjusted amount shall be paid by the appropriate
party in one lump cash sum within thirty (30) days of such
computation.
9. Indemnity. The Companies shall indemnify the Executive
and hold Executive harmless for any acts or decisions made by
Executive in good faith while performing services for either of
the Companies and shall use their best efforts to obtain coverage
for Executive under any insurance policy now in force or
hereinafter obtained during the term of this Agreement covering
the other officers and directors of the Companies against
lawsuits. The Companies will pay all expenses, including
attorney's fees, actually and necessarily incurred by the
Executive in connection with any appeal thereon including the
cost of court settlements.
10. Notices. All notices, requests, demands and other
communications provided for by this Agreement shall be in writing
and shall be deemed to have been given at the time when
personally delivered or mailed at any general or branch United
States Post Office enclosed in a post paid envelope and addressed
to the address of the respective party stated below or to such
changed address as such party may have fixed by notice.
To the Companies: TrustCo Bank Corp NY
Trustco Bank New York
192 Erie Boulevard
Schenectady, NY 12305-1808
To the Executive: Ralph A. Pidgeon
925 Marion Avenue
Schenectady, NY 12303
Provided, however, that any notice of change of address
shall be effective only upon receipt.
11. Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the Companies, their
successors and assigns, including without limitation, any person
or entity which may acquire all or substantially all of either
Company's assets or business or into which either Company may be
consolidated or merged, and the Executive, as well as Executive's
heirs, executors, administrators and legal representatives. The
Executive may assign the right to payment under this Agreement,
but not obligations under this Agreement.
12. Governing Law. This Agreement shall be governed by
the laws of the State of New York.
13. Complete Agreement. This Agreement supersedes all
prior understandings and agreements between the parties, and may
not be amended or modified orally, but only by a writing signed
by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Restated Agreement on June 21, 1994.
TRUSTCO BANK CORP NY
ATTEST:
By:/s/Robert A. McCormick
President and Chief Executive
/s/William F. Terry Officer "Company"
Secretary
TRUSTCO BANK NEW YORK
ATTEST: By:/s/Robert A. McCormick
President and Chief Executive
/s/William F. Terry Officer "Bank"
Secretary
/s/Ralph A. Pidgeon
Ralph A. Pidgeon
Schedule A to Agreement among Companies and Ralph A. Pidgeon
Calendar Year Annual Salary Approval of Companies
1992 $160,000.00 /s/Robert A. McCormick
1993 200,000.00 /s/Robert A. McCormick
1994 230,000.00 /s/Robert A. McCormick
1995 240,000.00 /s/Robert A. McCormick
TRUSTCO BANK CORP NY
By:/s/Robert A. McCormick
President and Chief Executive
Officer
TRUSTCO BANK NEW YORK
By:/s/Robert A. McCormick
President and Chief Executive
Officer
AGREEMENT OF EXECUTIVE
/s/Ralph A. Pidgeon
Ralph A. Pidgeon
AMENDMENT NO. 1
TO
EMPLOYMENT AGREEMENT BETWEEN
TRUSTCO BANK NEW YORK AND
TRUSTCO BANK CORP NY AND
RALPH A. PIDGEON
WHEREAS, Trustco Bank New York (herein referred to as the
"Company") and TrustCo Bank Corp NY (herein referred to as
"TrustCo") entered into an Employment Agreement (herein referred
to as the "Agreement") with Ralph A. Pidgeon (herein referred to
as the "Executive"); and
WHEREAS, by statutory conversion the Company converted from
a state chartered trust company to a national bank, and in
connection with the conversion the name of the Company changed to
Trustco Bank, National Association effective February 1, 1995;
and
WHEREAS, the Company, TrustCo and the Executive desire to
amend the Agreement to reflect the name change;
NOW, THEREFORE, effective February 1, 1995, the Agreement
is hereby amended by changing "Trustco Bank New York" to "Trustco
Bank, National Association" in each place where it appears
therein.
IN WITNESS WHEREOF, the Company has caused this Amendment
No. 1 to be executed this 14th day of February, 1995.
TRUSTCO BANK, NATIONAL TRUSTCO BANK CORP NY
ASSOCIATION
By:/s/Robert A. McCormick By:/s/Robert A. McCormick
Title:President and CEO Title: President and CEO
/s/Ralph A. Pidgeon
Ralph A. Pidgeon
Exhibit 10(g)
EMPLOYMENT AGREEMENT
between
TRUSTCO BANK NEW YORK
and
TRUSTCO BANK CORP NY
and
Peter A. Zakriski
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of July 15, 1992, (the Agreement ), by
and between Trustco Bank New York (the "Bank"), a New York
banking corporation, and TrustCo Bank Corp NY (the "Company"), a
New York business corporation (hereinafter referred to
collectively as the "Companies"), with principal offices at 320
State Street, Schenectady, New York and Peter A. Zakriski ( the
Executive ), residing at 86 St. Stephen's Lane West, Scotia, New
York 12302.
1. Engagement. The Companies agree to engage the
Executive and the Executive agrees to serve the Companies as an
Executive.
2. Term. The term of this Agreement shall commence on the
date first above written and shall continue until December 31,
1992. Beginning on January 1, 1993, and on January 1 of each and
every year thereafter, this Agreement shall automatically renew
for an additional year on the same terms and conditions, except
to the extent modified in writing, unless the Executive is
notified by the method set forth in Paragraph 11 herein that
Executive has been terminated ("Nonrenewal Notice"). Nothing
contained herein, however, shall be construed to extend the
Executive's right to employment beyond the age of 65 years or the
then mandatory retirement age in effect, whichever shall be
greater.
3. Purpose and Effect. The purpose of this Agreement is
to provide Termination Benefits, as defined in Paragraph 9
hereof, in the event of a Termination, as defined in Paragraph 8
hereof.
4. Service. The Executive shall exert Executive's best
efforts and devote substantially all of Executive's time and
attention to the affairs of the Bank. The Executive shall
perform all the services and duties necessary or appropriate for
the management of the Bank's businesses, subject to the general
direction, approval, and control of the Chief Executive Officer
and his designees.
5. Compensation. For purposes of this Agreement, Annual
Compensation shall be deemed to be the Executive's Annual Base
Salary. Commencing January 1, 1992, Executive shall be paid by
the Companies, the Annual Base Salary established on Schedule A
attached hereto, (which base salary shall be paid in bi-weekly
installments). Thereafter, Annual Base Salary shall continue at
such level or such other level as may have been agreed to among
the parties and evidenced as provided in this Paragraph, until
renegotiated among the parties hereto and either confirmed in a
writing signed by either the Chief Executive Officer of or a
member of the Board of Directors of the Companies, or endorsed on
Schedule A and signed by either the Chief Executive Officer of or
by a member of the Board of Directors of the Companies.
6. Retirement, Pension and Profit Sharing. As further
compensation for the services of the Executive, the Executive
shall be eligible to participate fully in any retirement,
executive incentive compensation, pension or profit sharing plans
maintained by the Companies, pursuant to the terms of such plans.
Nothing in this Agreement shall be construed as a waiver of any
of the terms of or conditions precedent to participation in such
plans.
7. Termination of Employment. If there shall be a
Termination (as hereinafter defined) of the Executive for any
reason other than for good cause, death, retirement at the
mandatory retirement age, or disability, the Executive shall
receive upon his Termination with either of the Companies, the
Termination Benefits set forth herein. The Executive's
Termination for good cause shall be limited to the Executive's
having committed an act of fraud, embezzlement, or theft,
constituting a felony or any act intentionally against either of
the Companies which causes either Company material injury, or a
final determination by a court that the Executive has committed a
material breach of his duties and responsibilities in connection
with rendering services to either of the Companies pursuant to
this Agreement.
8. Termination. Termination shall include, but is not
limited to, (i) any reduction in the Executive's Annual Base
Salary, retirement other than at the mandatory retirement age,
executive incentive compensation, pension or profit sharing
benefits, (unless such reductions shall have been applied to all
Bank employees as a part of a validly adopted plan of cost
containment), responsibilities or duties, or (ii) either
Companies' relocation or a change in the Executive's base
location, or (iii) a nonrenewal notice given pursuant to
Paragraph 2 of this Agreement, or (iv) the unilateral election of
the Executive to terminate the Agreement. Such election shall be
communicated to the Companies pursuant to Paragraph 11 hereof.
9. Termination Benefits. The following benefits shall be
Termination Benefits:
(a) The Companies shall pay to the Executive the
Executive's full compensation through the effective date of his
termination at the rate in effect at the time notice of
termination is given or at the time of Termination, if earlier,
and in addition
(b) The Companies shall pay to the Executive within ten
(10) days of Termination an additional lump sum amount equal to
that Executive's Annual Base Salary then in effect, and in
addition
(c) The Companies shall pay to the Executive all benefits
payable to the Executive under the Companies' retirement,
executive incentive compensation, pension and profit sharing
plans, and in addition
(d) The Companies shall pay to the Executive all legal fees
and expenses incurred by the Executive as a result of such
Termination, and in addition
(e) The Companies shall provide the Executive, for one year
following his Termination, Health Insurance and Group Life
Insurance benefits substantially similar to those the Executive
was receiving immediately prior to his Termination.
10. Indemnity. The Companies shall indemnify the Executive
and hold Executive harmless for any acts or decisions made by
Executive in good faith while performing services for either of
the Companies and shall use their best efforts to obtain coverage
for Executive under any insurance policy now in force or
hereinafter obtained during the term of this Agreement covering
the other officers and directors of the Companies against
lawsuits. The Companies will pay all expenses, including
attorney's fees, actually and necessarily incurred by the
Executive in connection with any appeal thereon including the
cost of court settlements.
11. Notices. All notices, requests, demands and other
communications provided for by this Agreement shall be in writing
and shall be deemed to have been given at the time when
personally delivered or mailed at any general or branch United
States Post Office enclosed in a post paid envelope and addressed
to the address of the respective party stated below or to such
changed address as such party may have fixed by notice.
To the Companies: TrustCo Bank Corp NY
Trustco Bank New York
320 State Street
Schenectady, NY 12305
To the Executive: Peter A. Zakriski
86 St. Stephen's Lane West
Scotia, NY 12302
Provided, however, that any notice of change of address
shall be effective only upon receipt.
12. Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the Companies, their
successors and assigns, including, without limitation, any person
or entity which may acquire all or substantially all of either
Company's assets or business or into which either Company may be
consolidated or merged, and the Executive, as well as Executive's
heirs, executors, administrators and legal representatives. The
Executive may assign the right to payment under this Agreement,
but not obligations under this Agreement.
13. Governing Law. This Agreement shall be governed by
the laws of the State of New York.
14. Complete Agreement. This Agreement supersedes all
prior understandings and agreements between the parties, and may
not be amended or modified orally, but only by a writing signed
by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the 15th Day of July, 1992
TRUSTCO BANK CORP NY
By:/s/Robert A. McCormick
President and Chief Executive
Officer "Company"
TRUSTCO BANK NEW YORK
ATTEST: By:/s/Robert A. McCormick
President and Chief Executive
/s/William F. Terry Officer "Bank"
Secretary
/s/Peter A. Zakriski
Peter A. Zakriski
Schedule A to Agreement among Companies and Peter A. Zakriski
Calendar Year Annual Salary Approval of Companies
1992 $110,000.00 /s/Robert A. McCormick
1993 115,000.00 /s/Robert A. McCormick
1994 120,000.00 /s/Robert A. McCormick
1995 125,000.00 /s/Robert A. McCormick
TRUSTCO BANK CORP NY
By:/s/Robert A. McCormick
President and Chief Executive
Officer
TRUSTCO BANK NEW YORK
By:/s/Robert A. McCormick
President and Chief Executive
Officer
AGREEMENT OF EXECUTIVE
/s/Peter A. Zakriski
Peter A. Zakriski
AMENDMENT NO. 1
TO
EMPLOYMENT AGREEMENT BETWEEN
TRUSTCO BANK NEW YORK AND
TRUSTCO BANK CORP NY AND
PETER A. ZAKRISKI
WHEREAS, Trustco Bank New York and Trustco Bank Corp NY
(herein referred to as the companies ) entered into an
Employment Agreement dated as of July 15, 1992, (herein referred
to as the Agreement ); with Peter A. Zakriski (herein referred
to as the Executive ); and
WHEREAS, the Companies and the Executive desire to amend
the Agreement, effective as of November 16, 1993;
NOW, THEREFORE, the Agreement is hereby amended effective
June 21, 1993 in the following respect:
Section 6 of the Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:
6. Retirement, Pension and Profit Sharing. As further
compensation for the services of the Executive:
a. The Executive shall be eligible to participate fully in
any retirement, executive incentive compensation, pension or
profit sharing plans maintained by the Companies, pursuant to the
terms of such plans. Nothing in this agreement shall be
construed as a waiver of any of the terms of or conditions
precedent to participation in such plans; and,
b. Upon termination of the Executive's employment due to
retirement or disability (both as defined in the Retirement Plan
of Trustco Bank New York), the Companies shall provide to the
Executive and his spouse, for the life of the Executive, the
health insurance benefits provided to retirees by the Companies
under their medical insurance plan. the Companies shall provide
to the Executive for his life the life insurance benefits
provided to retirees by the Companies under their life insurance
plan. The obligations of the Companies pursuant to this
subparagraph b. shall survive the termination of this Agreement.
IN WITNESS WHEREOF, the Companies and the Executive have
executed this Amendment No. 1 this 16 day of November, 1993.
TRUSTCO BANK NEW York TRUSTCO BANK NY
By:/s/Robert A. McCormick By:/s/Robert A. McCormick
/s/Peter A. Zakriski
Peter A. Zakriski
AMENDMENT NO. 2
TO
EMPLOYMENT AGREEMENT BETWEEN
TRUSTCO BANK NEW YORK AND
TRUSTCO BANK CORP NY AND
PETER A. ZAKRISKI
WHEREAS, Trustco Bank New York (herein referred to as the
"Company") and TrustCo Bank Corp NY (herein referred to as
"TrustCo") entered into an Employment Agreement (herein referred
to as the "Agreement") with Peter A. Zakriski (herein referred to
as the "Executive"); and
WHEREAS, by statutory conversion the Company converted from
a state chartered trust company to a national bank, and in
connection with the conversion the name of the Company changed to
Trustco Bank, National Association effective February 1, 1995;
and
WHEREAS, the Company, TrustCo and the Executive desire to
amend the Agreement to reflect the name change;
NOW, THEREFORE, effective February 1, 1995, the Agreement
is hereby amended by changing "Trustco Bank New York" to "Trustco
Bank, National Association" in each place where it appears
therein.
IN WITNESS WHEREOF, the Company has caused this Amendment
No. 2 to be executed this 14th day of February, 1995.
TRUSTCO BANK, NATIONAL TRUSTCO BANK CORP NY
ASSOCIATION
By:/s/Robert A. McCormick By:/s/Robert A. McCormick
Title:President and CEO Title: President and CEO
/s/Peter A. Zakriski
Peter A. Zakriski
Exhibit 10(h)
RESTATED
1985 TRUSTCO BANK CORP NY
STOCK OPTION PLAN
WHEREAS, TrustCo Bank Corp NY (the "Company") established
the 1985 TrustCo Bank Corp NY Stock Option Plan (the "Plan"); and
WHEREAS, the Company desires to amend said Plan effective
as of July 1, 1994, and to restate the Plan in its entirety;
NOW, THEREFORE, the Company does hereby amend the Plan
effective July 1, 1994, and restates the Plan in its entirety so
that it will read as follows:
SECTION 1: PURPOSE
This 1985 Stock Option Plan (the "Plan") has been
established by TrustCo Bank Corp NY (the "Company") to advance
the interests of the Company and its stockholders by providing to
certain key employees an opportunity to acquire equity ownership
in the Company and the incentive advantages inherent in that
equity ownership.
SECTION 2: DEFINITIONS
When capitalized and used in this Plan, each of the
following terms or phrases has the indicated meaning, unless a
different meaning is clearly implied by the content:
"Adoption Date"
means the date this plan is duly adopted by the Board.
"Board" means the Company's Board of Directors.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee"
means the Committee to be appointed by the Board from time
to time and to consist of three or more members of the Board
who have not been eligible to receive options under the Plan at
any time within a period of one year immediately preceding the
date of their appointment to such Committee.
"Company" means TrustCo Bank Corp NY and its subsidiaries.
"Disability"
means a Participant's termination of employment by
the Company or a Participating Subsidiary by reason of his
permanent and total disability, as defined in Code Section
22(e)(3).
"Eligible Employee"
means any executive or other key managerial employee of
the Company or any Participating Subsidiary who has been
designated by the Board as eligible to participate in the Plan
and who is a full-time, salaried employee of the Company or any
Participating Subsidiary, provided he is so employed at the date
any Stock Option is granted to him.
"Fair Market Value"
means the current fair market value of any Stock subject
to a Stock Option. During such time as the Stock is not listed
on an established stock exchange, fair market value per share
shall be the mean between the closing dealer "bid" and "ask"
prices for the Stock as quoted by NASDAQ for the day of the grant
and if "bid" and "ask" prices are quoted for the day of the
grant, the fair market value shall be determined by reference to
such prices on the next preceding day on which such prices were
quoted. If the Stock is listed on an established stock exchange
or exchanges, the fair market value shall be deemed to be the
highest closing price of the Stock on such stock exchange or
exchanges on the day the option is granted or, if no sale of
Stock has been made on any stock exchange on that day, the fair
market value shall be determined by reference to such price for
the next preceding day on which a sale occurred. In the event
that Stock is not traded on an established stock exchange, and no
closing dealer "bid" and "ask" prices are available, then the
purchase price shall be 100 percent of the fair market value of
one share of Stock on the day the option is granted, as
determined by the Committee in good faith. The purchase price
shall be subject to adjustment only as provided in Section 9 of
the Plan.
"Incentive Stock Option"
means an option granted to a Participant under this Plan
to purchase the Company's Stock, which is designated as an
Incentive Stock Option and which satisfies the requirements of
Code ?422, as amended.
"Nonqualified Stock Option"
means an option granted to a Participant under this
Plan to purchase the Company's Stock and which is not an
Incentive Stock Option.
"Option Agreement"
means the written agreement executed between the Participant
and the Company evidencing the award of Stock Options
under this Plan, as more particularly described in Section 7.
"Participant"
means any Eligible Employee who has been awarded any
Stock Option(s) under this Plan and his heirs, legatees, or
personal representatives who may succeed to his interests under
any Option Agreement at his death.
"Participating Subsidiary"
means a Subsidiary some or all of whose employees
have been designated as Eligible Employees by the Board.
"Plan"means the Restated 1985 TrustCo Bank Corp NY Stock Option
Plan as embodied in this document including all amendments to
this document made from time to time.
"Shareholder-Employee"
means any Eligible Employee who at the time an
Incentive Stock Option is to be granted to him under this Plan
owns (within the meaning of Code Section 422(b)(6) and (c)(5))
more than 10 percent of the combined voting power of all classes
of the Company's Stock or of its parent or subsidiary companies
(if any).
"Stock" means shares of the Company's common stock.
"Stock Appreciation Right"
means a right, granted to a Participant concurrently with
the grant of a Nonqualified Stock Option, to receive a cash
payment from the Company upon the partial or complete
cancellation of that option by a Participant. Each Option
Agreement may provide that the Participant may from time to time
elect to cancel all or any portion of the Option then subject to
exercise, in which event the Company's obligation in respect of
such Option may be discharged by payment to the Participant of an
amount in cash equal to the excess, if any, of the fair market
value at the time of cancellation of the shares subject to the
Option or the portion thereof so cancelled, over the aggregate
purchase price for such shares as set forth in the Option
Agreement. In the event of such a cancellation, the number of
shares as to which such Option was cancelled shall not become
available for use under the Plan.
"Stock Option" or "Option"
means a right granted under this Plan to purchase
Company Stock, including a Nonqualified Stock Option or
an Incentive Stock Option.
"Subsidiary"
means a corporation of which stock possessing 50% or
more of the total combined voting power of all classes of its
stock entitled to vote generally in the election of directors is
owned in the aggregate by the Company directly or indirectly
through one or more Subsidiaries.
SECTION 3: PLAN ADMINISTRATION
The Plan is to be administered by the Committee except as
otherwise provided in the Plan. Subject to all other Plan
provisions, the Committee is expressly empowered to:
1. select the Eligible Employees who are to receive Stock
Options and Stock Appreciation Rights under this Plan from time
to time and grant those Options and Stock Appreciation Rights;
2. determine the time(s) at which Stock Options and Stock
Appreciation Rights are to be granted;
3. determine the number of shares of Stock to be subject to a
Stock Option granted to any Participant;
4. determine the option price and term of each Stock Option
granted under this Plan (including whether it is to be an
Incentive Stock Option or Nonqualified Stock Option) and all
other terms and conditions to be included in the Option Agreement
relating to any Stock Options under this Plan;
5. determine the duration and purposes of leaves of absence
which may be granted to a Participant without constituting a
termination of employment or service for purposes of the Plan;
6. determine all matters of interpretation of the Plan and any
Option Agreement, and the Committee's decision is to be binding
and conclusive on all persons;
7. determine, in its sole discretion, whether the Company is
to accept Stock previously acquired by a Participant as payment
of the option price for Stock Options granted under this Plan;
8. prescribe, amend and rescind all rules and regulations
relating to the Plan and its operations;
9. in the event of the Company's or a Participating
Subsidiary's merger, consolidation, dissolution or liquidation,
accelerate the exercise date and expiration date for any
unexercised Stock Options then outstanding; and
10. make all other determinations and decisions and take all
further actions deemed necessary or advisable for the Plan's
administration.
Notwithstanding any conflicting Plan provision, the Board
reserves the right, by written resolution duly adopted by the
Board, to terminate from time to time any and all powers
delegated to the Committee by the express Plan provisions and, in
that event, those Committee powers so terminated by the Board
shall revert to and be fully exercisable by the Board to the same
extent as they were exercisable by the Committee, provided that
no termination of the Committee's powers shall be retroactively
effective. Any termination of the Committee's powers under this
Plan shall not be deemed a Plan amendment. No Committee or Board
member may participate in the decision to award any Stock Option
or Stock Appreciation Right under this Plan to himself. Neither
the Board nor the Committee may, without the Participant's
consent, change the terms and conditions of any Option Agreement
after its execution, except to the extent that the Agreement may,
by its terms, be so amended.
SECTION 4: PLAN EFFECTIVE DATE AND DURATION
This Plan is effective as of the Adoption Date, subject, however,
to the Plan's approval by the Company's shareholders either on or
before the Adoption Date or within the 12-month period following
the Adoption Date. If shareholder approval is not so obtained,
all Stock Options, Stock Appreciation Rights and Option
Agreements granted under this Plan shall automatically be null
and void, ab initio. No Stock Option may be granted under this
Plan at any date which is 10 years or more after the Adoption
Date.
SECTION 5: AMENDMENTS AND TERMINATIONS
This Plan may be amended, suspended, terminated or reinstated, in
whole or in part, at any time by the Board; provided, however,
that without the approval of the Company's stockholders, the
Board may not:
1. except as provided in Section 9, increase the number of
shares of Stock subject to Stock Options issued under this Plan;
2. extend the maximum period during which a Stock Option may
be exercised;
3. extend the maximum period during which Incentive Stock
Options may be granted under this Plan; or
4. change the class of Eligible Employees.
SECTION 6: SHARES SUBJECT TO THE PLAN
The total number of shares available for grants of Stock Options
under this Plan is 428,703, subject to the adjustments under
Section 9. If a Stock Option or a portion thereof expires or
terminates for any reason without being exercised in full, the
unpurchased shares covered by the Option are to be available for
future Stock Option grants under this Agreement.
SECTION 7: GRANTS OF OPTIONS
Nonqualified Stock Options may be granted to any Eligible
Employee, at the time(s) and upon such terms and conditions as
may be selected by the Committee. At the time of grant of a
Nonqualified Stock Option, the Committee may, in its discretion,
also grant to the Eligible Employee Stock Appreciation Rights for
the total number of shares subject to that Option. The grant of
a Nonqualified Stock Option and, if appropriate, Stock
Appreciation Rights shall be evidenced by an Option Agreement
between the Eligible Employee and the Company containing any
terms and conditions specified by the Committee, but including
the terms described in Section 8.
Incentive Stock Options may be granted to any Eligible Employee,
at the time(s) and upon such terms and condition as may be
selected by the Committee, subject, nevertheless to the
following:
1. With respect to Incentive Stock Options granted prior
to January 1, 1987, the aggregate Fair Market Value (as of the
date the Incentive Stock Option is granted) of the Stock subject
to Incentive Stock Options granted to any Eligible Employee
during one calendar year (under this Plan and all other plans of
the Company and its Subsidiaries providing "incentive stock
options" within the meaning of Code Section 422A(b)) shall not
exceed the sum of: (i) $100,000; and (ii) the amount of any
"unused limit carryover" which may be taken into account for that
calendar year with respect to that Eligible Employee under Code
Section 422(A)(c)(4).
2. With respect to Incentive Stock
Options granted after December 31, 1986, the aggregate fair
market value, determined at the time the Incentive Stock Option
is granted, of the shares with respect to which Incentive Stock
Options are exercisable for the first time by an Eligible
Employee during any calendar year (under all stock option plans
of the Company and its Subsidiaries to which the provisions of
Section 422 of the Code apply) shall not exceed $100,000.
3. The grant shall be evidenced by
an Option Agreement between the Company and the Eligible Employee
containing any terms and conditions specified by the Committee,
except that those terms and conditions must conform with Section
8 and must be consistent with the requirements for an "incentive
stock option" as described in Code Section 422(b).
SECTION 8: TERMS OF OPTIONS AGREEMENT
All Option Agreements issued under this Plan must include terms
that are consistent with the following:
1. The Participant shall be entitled to purchase the number of
shares subject to the Stock Option, upon his exercise of that
Option, at a price no less than 100% of the Stock's Fair Market
Value at the date of the grant; provided, however, that in the
case of an Incentive Stock Option granted to a
Shareholder-Employee, the option price is to be no less than 110%
of that Fair Market Value.
2. At the option's exercise, the option price may be paid in
cash or cash equivalent--that is, by certified check, bank draft
or postal or express money orders made payable to the Company's
order in U.S. dollars. Alternatively, in the Committee's sole
discretion, the option price may be paid, in whole or in part, by
the Participant's exchange of Company Stock previously acquired
by him, based on that Stock's Fair Market Value at the date of
exchange. However, no Company Stock may be accepted in payment
of the option price upon exercise of an Incentive Stock Option,
if that Stock was acquired by the Participant's previous exercise
of an Incentive Stock Option unless that Stock has been held by
the Participant for more than 2 years after the date that
previous Option was granted and more than 1 year after the date
that previous Option was exercised.
3. (i) The Option may not be exercisable after the earlier of
the following dates:
(a) If the Participant is not a
Shareholder-- Employee at the date of grant or the Option is not
an Incentive Stock Option, the date 10 years after the date of
grant;
(b) If the Participant is a
Shareholder- Employee at the date of grant and the Option is an
Incentive Stock Option, the date 5 years after the date of grant;
(c) If the Participant's employment
terminates for reasons other than his death or Disability or
retirement, the date three months after the date his employment
terminates.
(d) If the Participant terminates
employment as a result of Disability or retirement, the date
described in Item 3(i)(a) or 3(i)(b), whichever is applicable.
(e) If the Participant dies, the date
prescribed by the Committee, except that no Option shall be
exercisable after the date described in Item 3(i)(a) or 3(ii)(b)
of Section 8, whichever is applicable.
(f) If the Option is an Incentive Stock Option and the
Participant's employment terminates due to Disability or
retirement, the tax treatment available pursuant to Code Section
422 upon the exercise of an Incentive Stock Option will not be
available to a Participant who exercises any Incentive Stock
Option more than (a) three months after the date of the
termination of employment due to retirement or (b) twelve months
after the date of termination of employment due to Disability.
If the Option is an Incentive Stock Option and the Participant
dies, the tax treatment available pursuant to Code Section 422
upon the exercise of an Incentive Stock Option will not be
available to the Participant's estate or any person who acquires
the Option by bequest or inheritance or by reason of the death of
the Participant unless the Participant was eligible for such tax
treatment at the time of his death.
Notwithstanding the foregoing, the committee, in its discretion,
may further limit the period during which all or any portion of a
Stock Option may be exercised and may accelerate the time at
which an Option maybe exercised.
4. Acceleration and the immediate right to exercise options in
full will occur if any one or more the following takes place:
(i) a contract providing for a merger or consolidation
of the Company with or into another entity (except in the case
where the Company is the surviving entity and the merger does not
affect the stock interest of the stockholders of the Company) or
a sale of substantially all the assets of the Company is
executed;
(ii) a single entity or individual (including any
related parties to such entity or individual) acquires 20% or
more of the outstanding stock of the Company; or
(iii) a situation occurs in which, during any period
of 12 consecutive months, individuals who at the beginning of
such period were members of the Board cease for any reason to
constitute at least a majority of the Board, unless the
nomination or election of each new director was approved by at
least two-thirds of the directors then still in office who were
directors at the beginning of such period.
5. The Stock Option(s) and any related Stock Appreciation
Rights may be exercised during such Participant's lifetime, only
by the Participant and, after his death, only by his heirs
legatees or personal representatives who succeed to his interest
under the Option Agreement. The Option Agreement, the Stock
Options and the Stock Appreciation Rights issued under this Plan
shall not be transferable by the Participant other than by will
or by the laws of descent and distribution; provided, however, in
addition to non-transferable Stock Options, the Committee may
grant Nonqualified Stock Options that are transferable, without
payment of consideration, to (i) revocable trusts for the benefit
of immediate family members which qualify as grantor trusts for
Federal income tax purposes, (ii) by gift to immediate family
members, and (iii) to partnerships whose only partners are
immediate family members. The Committee may also amend
outstanding Nonqualified Stock Options to provide for such
transferability. Notwithstanding the foregoing, in the event
that a transferable Nonqualified Stock Option is transferred as
permitted herein, such Nonqualified Stock Option(s) may be
exercised by such transferee. The transferee of a transferable
Nonqualified Stock Option is subject to all conditions applicable
to the transferable Nonqualified Stock Option prior to its
transfer.
6. Notwithstanding anything else to the contrary, no Incentive
Stock Option may be exercised while there is outstanding (within
the meaning of former Code Section 422(c)(7)) any "incentive
stock option" (within the meaning of former Code Section 422(b))
to purchase stock of the Company or any Subsidiary which was
granted to the Participant prior to the grant of the Option
sought to be exercised. The provisions of this Item 6 shall
apply only to Incentive Stock Options granted prior to January 1,
1987.
7. In the case of Nonqualified Stock Options, the Option may
be exercised while there is outstanding another Stock Option to
purchase Stock of the company or a Subsidiary which was granted
to the Participant prior to the grant of the Option sought to be
exercised.
8. The aggregate fair market value (determined at the time the
Option is granted) of the stock with respect to which Incentive
Stock Options are exercisable for the first time by such
individual during any calendar year (under all such plans of the
individual's employer corporation and its parent and subsidiary
corporation) shall not exceed $100,000. The provisions of this
Item 8 shall apply to Incentive Stock Options granted after
December 31, 1986.
9. The acceleration provisions of Section 8, Items 4 and 10 of
the Plan shall override restrictions contained in Section 8, Item
8.
10. As to each Option granted a Participant since November 19,
1985, if the Participant's employment terminates by his death,
Disability or retirement, the exercise of each such Option shall
accelerate and become exercisable in full upon such termination,
and shall remain exercisable throughout the period permitted for
exercise as described in Item 3 of this Section 8.
11. If a Participant dies during the period which he or she
could have exercised an Option under Item 3 of Section 8 of the
Plan, then the Option may be exercised by the executors or
administrators of the Participant's estate, or by any person or
persons who may have acquired the Option, directly from the
Participant by bequest or inheritance within a period prescribed
by the Committee after the Participant's death, except that no
Option shall be exercisable after its expiration date as defined
in Item 3(i) or 3(ii) of Section 8, whichever is applicable.
SECTION 9: RECAPITALIZATION
The number of shares of Stock subject to this Plan, the number of
shares of Stock covered by each outstanding Option (and any
corresponding Stock Appreciation Rights), and the price per share
in each Option, are to be proportionately adjusted for any
increase or decrease in the number of issued shares of Company
Stock resulting from a subdivision or consolidation of shares or
the payment of a stock dividend (but only on the Company's common
stock) or any other increase or decrease in the number of those
shares effected without receipt of consideration by the Company.
Subject to any required action by the Stockholders if the Company
shall be the surviving corporation in any merger or
consolidation, each outstanding Stock Option (and any
corresponding Stock Appreciation Rights) shall pertain to and
apply to the securities to which a holder of the number of shares
of stock subject to that Option would have been entitled. A
dissolution or liquidation of the Company, a proposed sale of
substantially all of the assets of the Company, or a merger or
consolidation in which the Company is not the surviving
Corporation, shall cause each outstanding Option (and any
corresponding stock Appreciation Rights) to terminate as of a
date to be fixed by the Board; provided that no less than 30 days
written notice of the date so fixed shall be given to each
Optionee, and each Optionee shall have the right, during the
period of 30 days preceding such termination, to exercise his
option as to all or any part of the shares covered thereby,
including shares as to which such option would not otherwise be
exercisable.
The foregoing adjustments shall be made by the Committee.
Fractional shares resulting from any adjustment in options
pursuant to this Section 9 may be settled as the Committee or the
Board (as the case may be) shall determine.
SECTION 10: GOVERNMENT AND OTHER REGULATIONS
No Option shall be exercisable, no Stock shall be issued, no
certificate for shares of Stock shall be delivered, and no
payment shall be made under this Plan except in compliance with
all applicable federal and state laws and regulations. The
Company shall have the right to rely on the opinion of its
counsel as to such compliance. Any share certificate issued to
evidence Stock for which an Option is exercised may bear such
legends and statements as the Committee may deem advisable to
assure compliance with federal and state laws and regulations.
No Option shall be exercisable, no Stock shall be issued, no
certificate for shares shall be delivered, and no payment shall
be made under this Plan until the Company has obtained such
consent or approval as the Committee may deem advisable from
regulatory bodies having jurisdiction over such matters.
SECTION 11: INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification that they may
have as officers or directors, the Committee members shall be
indemnified by the Company against the reasonable expenses,
including attorneys' fees actually and necessarily incurred in
connection with the Plan's administration and the defense of any
action, suit, or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reasons
of any action taken or failure to act under or in connection with
the Plan or any Option or Stock Appreciation Right granted
thereunder. The Committee members are also to be indemnified
against all amounts paid by them in settlement thereof (provided
that settlement is approved by independent legal counsel selected
by the Company) or paid by them in satisfaction of a judgment in
any such action, suit or proceeding, except in relation to
matters as to which it shall be adjudged in such action, suit or
proceeding that such Committee member is liable for gross
negligence or willful misconduct in the performance of his/her
duties; provided that within 60 days after institution of any
such action, suit or proceeding a Committee member shall in
writing offer the Company the opportunity, at its own expense, to
handle and defend the same.
SECTION 12: MISCELLANEOUS
The adoption of this Plan, its operation, or any
documents describing or referring to this
Plan (or any part thereof) shall not confer upon any
employee any right to continue
in the employ of the Company or in any way affect any right and
power of the Company to terminate the employment of any employee
at any time with or without assigning a reason thereof.
Any liability of the Company to any person with respect to any
grant under this Plan shall be based solely upon any contractual
obligations which may be created pursuant to this Plan. No such
obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.
The Plan shall be administered in the State of New York and the
validity, construction, interpretation, administration and effect
of the Plan shall be determined solely in accordance with the
laws of that State.
IN WITNESS WHEREOF, the Company has caused this Plan to be
executed on this 18th day of October, 1994.
TRUSTCO BANK CORP NY
By: /s/ William F. Terry
Title: Secretary
Exhibit 11
TRUSTCO BANK CORP NY
1994 FORM 10-K
Computation of Net Income Per Common Share
Year Ended December 31
1994 1993 1992
Net Income $22,888,000 $20,325,000 $17,503,000
Weighted Daily
average number
of common
shares
outstanding 14,886,000 14,803,000 14,606,000
Net Income
Per Common
Share $1.54 $1.37 $1.20
====== ====== ======
Note: Daily average shares outstanding for all years have been
adjusted to reflect a 10% stock dividend in October 1994, the 2
for 1 stock split in November 1993, and the 5 for 4 stock split
in November 1992.
Exhibit 13
Presidents Message
Dear Shareholder:
The good news is 1994 was another record year at TrustCo.
The bad news is a significant segment of the banking industry
is encountering difficulty in the area of interest rate hedging
or "derivatives." TrustCo has no derivative exposure and our
policy of "plain vanilla" in the management of our Company
appears to have carried us through unscathed once again. We
are grateful to our staff and Board of Directors for their
continuing enthusiasm and support.
During 1994, shareholder values continued in the right
direction with net income at $22.9 million, up a significant
13% over 1993. TrustCo's most important ratio, return on
shareholders' equity, was 17.01%, up from 16.18% in 1993. We
are committed to insuring that return on equity compares
favorably in any peer group, and we are comfortable that it
does. TrustCo's five year ROE was 16.78% and we plan an
increase to 18% for the current fiscal year.
During 1994, we increased our cash dividend by 10% and
then issued a 10% stock dividend maintaining the increased cash
dividend level on the newly issued shares, effectively
increasing dividend income for TrustCo owners by 21%. The
quarterly cash dividend has increased at a 25% compound annual
rate over the last five years, a major accomplishment. It is
our intention to continue monitoring our internal generation
of capital; should excess capital exist, we would recommend
steps to the Board to correct that situation. These steps
could include special dividends, stock buy back, or any other
measures that would return excess capital to TrustCo's owners.
Daniel J. Rourke, M.D., retired from the Bank and Holding
Company boards during 1994. We thank Dan for his many
contributions over the years and wish him well in his
retirement. I think it appropriate to thank all our Board
members for their continued guidance throughout the year. We
note with sorrow the passing of Herman R. Hill, Honorary
Director, who served the Board with distinction for many
years.
Senior staff additions during 1994 include Robert T.
Cushing, appointed Senior Vice President and Chief Financial
Officer about mid-year. Bob managed the banking practice at
KPMG Peat Marwick for many years and adds an important level of
experience to our senior management ranks. Henry C. Collins
was appointed Vice President & General Counsel and Carroll E.
Winch was named Administrative Vice President and Senior Trust
Officer. These additions should add significant strength to
our senior management.
The TrustCo branch expansion program continues and we
anticipate opening three additional branches during 1995. Our
plans call for two to three branch openings a year until we
have filled the gaps in our market territory. The targeted
upgrading continues with each branch receiving a major review
and renovation at approximately seven year intervals.
During 1994, we evaluated and discussed a number of
acquisition opportunities. Unfortunately, our discussions were
not successful. Our approach to acquisitions is quite simple
we are extremely careful to avoid damage to shareholder value
in the existing TrustCo franchise. We would prefer that the
benefits of an acquisition be shared by all the owners of the
emerging company, and that does make for difficult negotiations
on occasion.
Since its inception, Trustco Bank has been a New York State
chartered institution regulated by the Federal Reserve Bank of
New York and the New York State Banking Department. During
the first quarter of 1995, we completed a change from our New
York State charter to a national charter. We think changes in
the industry suggest the most appropriate direction for the
future is a national charter regulated by the Office of the
Comptroller of the Currency.
TrustCo's Affordable Housing Program, which was designed to
assist with homeownership, continues to be a success in new
markets. We consider this program a model for community
reinvestment and one of the most effective in the State.
Occasionally, TrustCo has been described as "boring" because
we are able to avoid most industry difficulties. Well, 1994 was
another boring year during which we were able to benefit all
important constituencies -- the owners, employees, and community.
We expect to be equally tiresome in 1995.
1995 should provide income and growth success with
emphasis continuing on the Home Equity Loan and Home Equity
Credit Line products and our improved NOW account on the
deposit side.
Our Trust Department, which currently manages assets in
excess of $630 million has ambitious expectations, and the
impetus to move forward under new management.
1995 and beyond should benefit from the solid performance of
the superb employee team here at TrustCo. For 1994 the often
quoted efficiency ratio for our Company was 41.82% at a time
when most banking companies would like to see 60.00%. This
level of performance efficiency will benefit us through reduced
operating expense for years to come.
Net interest margins are another interesting ongoing
benefit. During 1994, we recognized $8,877,000 of security
losses and still had record net income. We have always
described security losses as the deferral of income into future
periods. To dramatize that point, net interest margin for the
month of December 1993 was 3.78%. In December 1994 TrustCo's net
interest margin was 4.63% and accelerating. This year-to-year
increase of 85 basis points provides dramatic pre-tax income
opportunities for the future.
The quality of the loan portfolio is excellent, and our
reserve for loan loss has a coverage ratio 14 times
non-performing loans, an important area of reserve.
Community needs have expanded and TrustCo has responded
appropriately. TrustCo has provided increased employee and
management participation in charitable and community
organizations, increased its corporate charitable contributions
throughout the Capital District, and our Affordable Housing
Program continues to grow.
We have an enthusiastic view of TrustCo's future. It is
the intention at every level in the Company to continue our
past success into the future. Our products are tailored to the
needs of our community, we have an unmatched employee team to
deliver them, and a management style that can adapt almost
immediately to any change the marketplace may bring.
Though we are not certain what the banking environment of
the future will be, we are sure the combination mentioned above
and the enthusiastic commitment of the Board of Directors will
ensure our continuing success in the years ahead.
Sincerely,
/s/ Robert A. McCormick
Robert A. McCormick,
President and Chief Executive Officer
Management's Discussion and Analysis of Operations
The financial review which follows will focus on the factors affecting
the financial condition and results of operations of TrustCo Bank Corp NY
(the "Company" or "TrustCo") and Trustco Bank, National Association (the
"Bank" or "Trustco") during 1994 and, in summary form, the preceding two
years. Net interest income and net interest margin are presented in this
discussion on a taxable equivalent basis. Balances discussed are daily
averages unless otherwise described. The consolidated financial statements
and related notes and the quarterly reports to shareholders for 1994 should
be read in conjunction with this review. Certain amounts in years prior to
1994 have been reclassified to conform with the 1994 presentation.
Overview
TrustCo recorded net income of $22,888,000 or $1.54 per share for the
year ended December 31, 1994, compared to $20,325,000 or $1.37 per share for
the year ended December 31, 1993. This represents an increase of 13% in the
full year earnings and a 12% increase in the per share results.
During 1994 TrustCo achieved:
* taxable equivalent net interest income of $81.1 million, an increase
of almost 10% over 1993,
* a reserve coverage ratio of non-performing loans of 14 times. The
reserves set aside for problem loans were 3.37% of loans at year end 1994,
compared to 3.21% for 1993,
* an efficiency ratio of 41.82% for the year. Industry goals look for
the attainment of a 60% efficiency ratio. TrustCo outperformed this ratio
for both 1993 and 1994,
* an increase in the net interest margin from 4.04% in 1993 to 4.26% in
1994, the net interest margin for the fourth quarter of 1994 was 4.55%;
and
* a dividend payout ratio of 64% of net income.
Net Interest Margin
1992 3.98%
1993 4.04%
1994 4.26%
<TABLE>
MIX OF AVERAGE EARNING ASSETS
(dollars in thousands)
<CAPTION>
Components
of
% of Earning
Total Assets
1994 1993 Change Change 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
Loans, net of unearned income $1,110,859 1,021,984 88,875 131.0% 58.4 55.7 57.7
Trading securities -- 1,731 (1,731) (2.5) -- .1 --
Securities available for sale:
U.S. Treasuries and agencies 272,003 182,273 89,730 132.3 14.3 9.9 2.8
Mortgage-backed securities 36,119 -- 36,119 53.2 1.9 -- --
Other 29,015 10,160 18,855 27.8 1.5 .5 .4
Total securities available for sale 337,137 192,433 144,704 213.3 17.7 10.4 3.2
Investment securities:
U.S. Treasuries and agencies 98,380 274,398 (176,018) (259.5) 5.2 15.0 19.7
States and political subdivisions 27,120 32,615 (5,495) (8.1) 1.4 1.8 3.1
Mortgage-backed securities 111,691 119,442 (7,751) (11.4) 5.9 6.5 8.6
Other 13,621 28,681 (15,060) (22.2) .7 1.6 1.2
Total investment securities 250,812 455,136 (204,324) (301.2) 13.2 24.9 32.6
Federal funds sold 203,878 163,567 40,311 59.4 10.7 8.9 6.5
Total earning assets $1,902,686 1,834,851 67,835 100.0% 100.0 100.0 100.0
</TABLE>
Asset/Liability Management
TrustCo's objectives in managing its balance sheet are to manage the
sensitivity of net interest income to actual or potential changes in
interest rates and to enhance profitability through strategies that promise
sufficient reward for understood and controlled risk. The Company has
established guidelines for liquidity so as to maintain adequate levels in
light of loan and deposit demands. TrustCo does not engage in any high risk
investing activities nor does it invest in financial derivatives. The Company
relies on traditional banking investment instruments and its large base of
"core" deposits to help in asset/liability management.
Earning Assets
Average earning assets during 1994 were $1.9 billion, which is $68
million, or 4%, over the prior year. Increases in the balance of average
earning assets is dependent on three factors:
* growth in funding sources (deposits and borrowings),
* movement of assets from non-earning to earning categories, and
* the internal generation of capital retained by the Company.
To account for the $68 million of growth in average earning assets,
TrustCo increased the funding sources by $40 million, converted $20 million
from non-earning asset categories, and retained $11 million in capital
during 1994. A small amount of the growth in these areas was directed to a
decrease of $4 million in various other liabilities.
The table, "Mix of Average Earning Assets" shows how the mix of the
earning assets has changed over the last three years. While growth in earning
assets is critical to improved profitability, changes to the mix of earning
assets can also have a significant impact on profitability.
<TABLE>
Loan portfolio
<CAPTION>
Average Balances
(dollars in thousands)
1994 1993 1992 1991 1990
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential $650,178 58.4% $550,906 53.8% $503,272 49.8% $274,696 43.6% $168,118 37.3%
Commercial 229,015 20.6 237,179 23.1 270,947 26.8 171,695 27.2 127,842 28.4
Home equity line of credit 203,623 18.3 200,811 19.6 183,424 18.2 133,721 21.2 97,478 21.7
Installment 30,174 2.7 36,013 3.5 52,750 5.2 50,268 8.0 56,786 12.6
Total loans 1,112,990 100.0% 1,024,909 100.0% 1,010,393 100.0% 630,380 100.0% 450,224 100.0%
Less: Unearned income 2,131 2,925 4,735 5,349 7,057
Allowance for loan losses 37,334 30,214 23,735 16,139 12,362
Net loans $1,073,525 991,770 981,923 608,892 430,805
</TABLE>
Loans: Average total loans increased $88.1 million, or 8.6% during 1994. Net
loans grew from 55.7% of average earning assets in 1993 to 58.4% of average
earning assets in 1994. The steady growth of the loan portfolio as a
component of its asset mix, as well as the continued high quality of the
portfolio, have contributed significantly to the Company's superior
operating results for 1994.
Loan products related to residential real estate continued to exhibit
significant growth during 1994. Average residential mortgage loan
outstandings rose $99.3 million, or 18.0%, during 1994. TrustCo also
continued to experience success in the marketing of home equity loans and
home equity credit lines during the year.
The overwhelming majority of TrustCo's real estate loans are secured by
properties within the Bank's market area. Management's specific knowledge of
local market conditions and trends enhances the quality of the loan
portfolio. During 1994, management continued its established practice of
retaining all new real estate loan originations in the Bank's portfolio
rather than packaging them for sale in the secondary mortgage market.
Average commercial loan and commercial real estate loan outstandings
were largely unchanged during 1994. New loan originations were slightly
outpaced by amortizations and problem loan resolutions, a portfolio trend
reflective of general economic uncertainty.
TrustCo's commercial lending activities are focused on balancing the
Company's commitment to meeting the credit needs of businesses within its
market area with the necessity of maintaining a high quality loan
portfolio. In accordance with these ideals, the Bank has consistently
emphasized the origination of loans within its trade area. The portfolio
contains no foreign loans, nor does it contain any concentrations of credit
extended to any particular borrower or specific industry. The Bank's
commercial portfolio is a reflection of the diversity found in the Capital
Region's economy.
TrustCo continues to offer a full range of consumer credit products.
However, as has been the case in the recent past, the unfavorable tax
treatment of installment loan interest curbed demand in 1994. In addition,
the artificially low rates offered by other lenders have affected origination
volume for the year.
During 1994, the Bank commenced a program to promote its credit card
products. This program, which combined aggressive marketing and attractive
pricing, resulted in significant growth in credit card receivables
during 1994.
<TABLE>
MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES
<CAPTION>
(in thousands) December 31, 1994
After 1 year
In 1 year but within After
or less 5 years 5 years Total
<S> <C> <C> <C> <C>
Commercial $129,089 82,030 18,944 230,063
Real estate construction 12,935 -- -- 12,935
Total $142,024 82,030 18,944 242,998
Predetermined rates $ 9,382 67,362 18,944 95,688
Floating rates 132,642 14,668 -- 147,310
Total $142,024 82,030 18,944 242,998
</TABLE>
Securities available for sale and investment securities: The Company adopted
new accounting standards during 1994 for its securities portfolio. The
Company has now identified securities available for sale and those securities
that are for investment purposes and will be held to maturity. The following
tables identify certain information related to these securities.
<TABLE>
Securities available for sale and investment securities
<CAPTION>
(in thousands) As of December 31,
1994 1993 1992
Book Market Book Market Book Market
Value Value Value Value Value Value
<S> <C> <C> <C> <C> <C> <C>
Securities available for sale:
U.S. Treasuries and agencies $102,947 102,919 230,563 236,471 110,507 113,721
Other 14,581 14,539 10,153 11,588 10,168 10,679
Total securities available for sale $117,528 117,458 240,716 248,059 120,675 124,400
Investment securities:
U.S. Treasuries and agencies $145,542 141,117 228,157 237,008 360,622 373,900
States and political subdivisions 44,222 43,827 23,017 23,471 44,318 44,787
Mortgage-backed securities 143,082 134,902 138,376 142,119 111,455 114,172
Other 15,012 14,609 27,256 28,700 31,883 32,825
Total investment securities $347,858 334,455 416,806 431,298 548,278 565,684
</TABLE>
Securities Available for Sale: During 1994, the portfolio of securities
available for sale was actively managed by the Company to
take full advantage of the increases in interest rates available during
that time period. At December 31, 1994, securities available for sale
amounted to $117.5 million compared to $240.7 million at year-end 1993. Near
the end of 1994, TrustCo liquidated a large portion of the securities
available for sale and reinvested the proceeds in federal funds sold, which
ended the year at $263.0 million, or $114.0 million more than the balance at
year-end 1993.
For 1994, the average balance of securities available for sale was
$337.1 million, almost double the average amount for 1993. The average rates
earned during 1994 were 6.30% compared to 7.07% in 1993. During 1994, certain
of the high coupon securities in this portfolio at year-end 1993 were
disposed of. As noted earlier, the portfolio of securities available for sale
was actively managed during 1994. Consequently, $8.9 million of securities
losses were recognized as compared to securities gains of $6.2 million in
1993. The objective of recognizing these losses was to insure that the
resulting portfolio of earning assets took advantage of the higher yields that
were in the marketplace at year-end 1994. Management's actions resulted in an
average yield on the securities available for sale portfolio for the fourth
quarter of 1994 of 6.93%, compared to 5.81% for the comparable fourth quarter
period in 1993. Absent these actions, the average yield in the year-end 1994
portfolio would have been significantly less, thereby resulting in lower
future earnings. Therefore, these actions are consistent with the
longstanding Company philosophy of taking actions designed to insure the
future growth of net income.
This portfolio is heavily weighted to U.S. Treasuries and Agency
obligations because these issuers provide a consistent source of liquidity
for the bonds and are readily accepted from a credit risk perspective.
TrustCo has never invested in derivative products, structured notes or
in any other exotic investment vehicles. By actively managing a portfolio of
high quality securities the objectives of asset/liability management and
liquidity can be met, while at the same time producing a constant earnings
stream that meets or exceeds rates offered in the marketplace.
Securities available for sale are recorded at their fair value with any
unrealized gains or losses, net of taxes, recognized as a component of
shareholders' equity. At year-end 1994, the market value of Trustco's
portfolio of securities available for sale was 99.94% of the amortized cost
basis, thereby demonstrating an ability to take full advantage of the top of
the current interest rate market.
During 1994, approximately $213 million of securities available for
sale were transferred to the held to maturity investment securities
portfolio. At the time of the transfer, the amortized cost of the securities
transferred approximated market value.
Investment Securities: This portfolio had a balance of $347.9 million at
year-end 1994 compared to $416.8 million at year-end 1993. The average
balance of investment securities during 1994 was $250.8 million and produced
an average yield of 6.81%, compared to an average balance in 1993 of $455.1
million and a yield of 6.48%.
At year end 1994, 42% of the investment securities portfolio was
invested in U.S. Treasuries and Agency issues, 41% was invested in
mortgage-backed securities (all of which are agency guaranteed), 13% was in
municipal securities and the remainder in other bonds. Therefore, virtually
all of the investment securities portfolio is supported by some form of U.S.
Government or subdivision guarantee. All securities in the portfolio are
investment grade securities.
<TABLE>
INVESTMENT PORTFOLIO MATURITY DISTRIBUTION AND YIELD
Securities available for sale:
<CAPTION>
(dollars in thousands)
As of December 31, 1994
Amortized Market
Cost Value Yield
<S> <C> <C> <C>
Within 1 year
U.S. Treasuries and agencies $ 275 276 7.62%
Other -- -- --
Total within 1 year 275 276 7.62
1 to 5 years
U.S. Treasuries and agencies 102,672 102,643 7.77
Other 25 25 5.50
Total 1 to 5 years 102,697 102,668 7.77
5 to 10 years
U.S. Treasuries and agencies -- -- --
Other 650 650 6.62
Total 5 to 10 years 650 650 6.62
After 10 years
U.S. Treasuries and agencies -- -- --
Other 13,906 13,864 6.06
Total after 10 years 13,906 13,864 6.06
Total
U.S. Treasuries and agencies 102,947 102,919 7.77
Other 14,581 14,539 6.08
Total securities available for sale $117,528 117,458 7.56%
</TABLE>
<TABLE>
Investment securities portfolio:
<CAPTION>
(dollars in thousands) As of December 31, 1994
Book Market
Value Value Yield
<S> <C> <C> <C>
Within 1 year
U.S. Treasuries and agencies $ -- -- --
States and political subdivisions 12,458 12,462 4.35%
Mortgage-backed securities -- -- --
Other -- -- --
Total within 1 year 12,458 12,462 4.35
1 to 5 years
U.S. Treasuries and agencies 19,949 19,011 6.39
States and political subdivisions 22,246 22,110 5.28
Mortgage-backed securities 6,602 6,257 5.70
Other -- -- --
Total 1 to 5 years 48,797 47,378 5.79
5 to 10 years
U.S. Treasuries and agencies 84,945 81,793 7.49
States and political subdivisions 7,283 7,060 5.43
Mortgage-backed securities 55,419 50,453 6.04
Other 15,012 14,609 7.85
Total 5 to 10 years 162,659 153,915 6.93
After 10 years
U.S. Treasuries and agencies 40,648 40,313 8.04
States and political subdivisions 2,235 2,195 5.67
Mortgage-backed securities 81,061 78,192 7.65
Other -- -- --
Total after 10 years 123,944 120,700 7.74
Total
U.S. Treasuries and agencies 145,542 141,117 7.49
States and political subdivisions 44,222 43,827 5.06
Mortgage-backed securities 143,082 134,902 6.93
Other 15,012 14,609 7.85
Total investment securities $347,858 334,455 6.97%
</TABLE>
<TABLE>
Average balances, yields and net interest margins
<CAPTION>
(dollars in thousands) 1994 1993 1992
Interest Interest Interest
Average Income/ Average Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate Balance Expense Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Loans, net of unearned income $1,110,859 94,432 8.50% $1,021,984 87,559 8.57% $1,005,658 93,532 9.30%
Trading securities -- -- -- 1,731 94 5.43 -- -- --
Securities available for sale:
U.S. Treasuries and agencies 272,003 17,142 6.30 182,273 12,797 7.02 48,660 3,671 7.54
Other 65,134 4,104 6.30 10,160 804 7.91 7,056 558 7.91
Total securities available
for sale 337,137 21,246 6.30 192,433 13,601 7.07 55,716 4,229 7.59
Investment securities:
U.S. Treasuries and agencies 98,380 7,128 7.24 274,398 16,913 6.16 342,796 26,209 7.65
States and political subdivisions 27,120 1,661 6.13 32,615 2,074 6.35 54,652 4,005 7.33
Mortgage-backed securities 111,691 7,254 6.50 119,442 8,444 7.07 149,408 12,389 8.29
Other 13,621 1,036 7.61 28,681 2,071 7.23 21,969 1,639 7.46
Total investment securities 250,812 17,079 6.81 455,136 29,502 6.48 568,825 44,242 7.78
Federal funds sold 203,878 9,058 4.44 163,567 4,912 3.00 113,429 3,811 3.36
Total interest earning assets 1,902,686 141,815 7.45 1,834,851 135,668 7.39 1,743,628 145,814 8.36
Allowance for loan losses (37,334) (30,214) (23,735)
Cash and non-interest
earning assets 129,145 142,078 132,287
Total assets $1,994,497 1,946,715 1,852,180
Liabilities and shareholders' equity
Time deposits:
Regular savings & NOW accounts $ 972,719 25,361 2.61% $ 973,076 27,530 2.83% $ 811,973 31,850 3.92%
Other time deposits 741,795 34,673 4.67 701,692 33,352 4.75 774,839 43,324 5.59
Total time deposits 1,714,514 60,034 3.50 1,674,768 60,882 3.64 1,586,812 75,174 4.74
Short-term borrowings 18,129 461 2.54 17,447 380 2.18 25,520 757 2.97
Long-term debt 2,840 203 7.15 3,870 357 9.22 5,000 470 9.40
Total interest-bearing
liabilities 1,735,483 60,698 3.50 1,696,085 61,619 3.63 1,617,332 76,401 4.72
Demand deposits 93,822 92,763 88,667
Other liabilities 28,215 32,219 29,943
Shareholders' equity 136,977 125,648 116,238
Total liabilities and
shareholders' equity $1,994,497 $1,946,715 $1,852,180
Net interest income 81,117 74,049 69,413
Net interest spread 3.95% 3.76% 3.64%
Net interest margin (net
interest income to total
interest earning assets) 4.26 4.04 3.98
</TABLE>
Certain portions of income earned on certain commercial loans, U.S.
Government obligations, obligations of states and political
subdivisions, and equity securities are exempt from federal and state
taxation. Appropriate adjustments have been made to reflect the equivalent
amount of taxable income that would have been necessary to generate an equal
amount of after tax income. Federal and New York State tax rates used to
calculate income on a tax equivalent basis were 35.0 percent and 10.13
percent for 1994, 35.0 percent and 10.35 percent for 1993, and 34.0 percent
and 10.35 percent for 1992. The average balances of securities available for
sale is calculated using market values for these securities. For 1994, the
average market value was $2.4 million greater than original costs.
Federal Funds Sold: During 1994, the average balance of these funds was
$203.9 million up from the $163.6 million in 1993. The average rate earned on
these funds was 4.44% for 1994, and 3.00% for 1993. TrustCo utilized this
category of earning assets during 1994 as a means of keeping strong liquidity
during the year as interest rates in the securities markets rose. Rather
than invest this excess liquidity during 1994, the Company chose to invest
these funds in overnight federal funds sold. This decision had the short term
effect of suppressing the potential earnings for 1994, but positioned TrustCo
to take advantage of higher interest rates offered near the end of 1994 and
into 1995. The increase in federal funds balances during 1994 is not expected
to continue during 1995 as the Company reinvests this excess liquidity into
higher yielding securities.
Interest Bearing Sources of Funds: TrustCo utilizes various traditional
sources of funds to support its asset portfolio. The following table "Average
Sources of Funding" presents the various categories of funds used and the
corresponding average balances for each of the last two years.
<TABLE>
Average Sources of Funding
<CAPTION>
(dollars in thousands) % of Components of
Total Total Funding
1994 1993 Change Change 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
Demand deposits $ 93,822 92,763 1,059 2.6% 5.1 5.2 5.2
Retail deposits:
Regular savings 726,362 730,200 (3,838) (9.5) 39.7 40.8 33.9
Time deposits under $100 thousand 589,506 550,358 39,148 96.8 32.2 30.8 35.0
NOW accounts 246,357 242,876 3,481 8.6 13.5 13.6 13.7
Money market deposits 103,622 113,632 (10,010) (24.7) 5.7 6.4 7.8
Total retail deposits 1,665,847 1,637,066 28,781 71.2 91.1 91.6 90.4
Total core deposits 1,759,669 1,729,829 29,840 73.8 96.2 96.8 95.6
Time deposits over $100 thousand 48,667 37,702 10,965 27.1 2.7 2.1 2.6
Short-term borrowings 18,129 17,447 682 1.7 1.0 0.9 1.5
Long-term debt 2,840 3,870 (1,030) (2.6) 0.1 0.2 0.3
Total purchased liabilities 69,636 59,019 10,617 26.2 3.8 3.2 4.4
Total sources of funding $1,829,305 1,788,848 40,457 100.0% 100.0 100.0 100.0
</TABLE>
<TABLE>
Average Deposits by Type of Depositor
<CAPTION>
(in thousands) Years Ended December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Individuals, partnerships and corporations $1,752,163 1,706,530 1,605,191 948,390 690,970
U.S. Government 542 540 525 505 620
States and political subdivisions 44,289 48,145 58,439 45,101 37,162
Other (certified and official checks, etc.) 11,342 12,316 11,324 7,308 5,231
Total average deposits by type of depositor $1,808,336 1,767,531 1,675,479 1,001,304 733,983
</TABLE>
Deposits: The average of total deposits (including time deposits greater than
$100 thousand) was $1.808 billion in 1994 compared to $1.768 billion in 1993.
Deposit increases centered in the retail deposit categories of time deposit
under $100 thousand (an increase of $39.1 million), and NOW accounts (an
increase of $3.5 million). Growth was also experienced in time deposits
greater than $100 thousand, which increased by $11.0 million. These increases
were offset by decreases in average deposits in regular savings accounts
($3.8 million) and money market deposit accounts ($10.0 million). TrustCo
experienced the same trend noted by other financial institutions, namely
depositors switching from regular savings type accounts to time deposit
products. This was an attempt by depositors to lock in higher rates than
those offered on regular savings accounts. By year-end 1994, demand deposits,
regular savings, NOW accounts, and money market accounts were down $79.0
million from year-end 1993, while all other deposit accounts increased $74.6
million. The average rate on deposit accounts was 3.50% in 1994, compared to
3.64% in 1993 and 4.74% in 1992. The dramatic reduction in rates from 1992 to
1994 more than offset the modest increases in average balances during this time
period thereby producing interest expense that was $15.1 million less in 1994
than it was in 1992, and $848 thousand less than in 1993. For 1995, TrustCo
anticipates interest expense to rise as competitive pressures and the
depositors desire for higher rates becomes more of a reality. Mutual funds,
and the stock and bond markets all compete with financial institutions for
the same funds. TrustCo has developed plans for 1995 to add 3 new branches.
These new retail outlets will provide new sources of funding and additional
opportunities for cross selling to a new deposit base.
Maturity of 1994 Year end Time deposits
over $100 thousand
(in thousands)
Under 3 months $ 16,547
3 to 6 months 4,099
6 to 12 months 11,132
over 12 months 30,733
--------
$ 62,511
Other Funding Sources: The Company had $18.1 million of average short-term
borrowings and $2.8 million of long-term debt outstanding during 1994. Total
purchased liabilities (which includes time deposits over $100 thousand) was
$69.6 million in 1994 compared to $59.0 million in 1993. The average rate
on short-term borrowings was 2.54% in 1994 and 2.18% in 1993; the average
rate on the long-term debt was 7.15% in 1994 and 9.22% in 1993.
Net Interest Income
Taxable equivalent net interest income for 1994 was $81.1 million, up
$7.1 million or 9.5% over 1993. The yield on average earning assets rose 6
basis points to 7.45% during the year while the rate paid on average interest
bearing liabilities dropped 13 basis points to 3.50%. Together, this resulted
in a 19 basis point increase in the net spread to 3.95%. While spread is an
important consideration, net interest margin is generally viewed as the most
significant measure of earning asset performance. The net interest margin
increased 22 basis points to 4.26% during 1994.
<TABLE>
Volume and Yield Analysis
<CAPTION>
(in thousands) 1994 vs. 1993 1993 vs. 1992
Increase Due to Due to Increase Due to Due to
1994 1993 (Decrease) Volume Rate 1993 1992 (Decrease) Volume Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income (TE):
Federal funds sold $ 9,058 4,912 4,146 1,408 2,738 4,912 3,811 1,101 1,541 (440)
Trading securities -- 94 (94) (94) -- 94 -- 94 94 --
Securities available for sale 21,246 13,601 7,645 9,190 (1,545) 13,601 4,229 9,372 9,643 (271)
Investment securities
Taxable 15,417 27,425 (12,008) (14,010) 2,002 27,425 40,234 (12,809) (6,479) (6,330)
Tax-exempt 1,662 2,077 (415) (341) (74) 2,077 4,008 (1,931) (1,453) (478)
Total investment securities 17,079 29,502 (12,423) (14,351) 1,928 29,502 44,242 (14,740) (7,932) (6,808)
Loans 94,432 87,559 6,873 7,064 (191) 87,559 93,532 (5,973) 570 (6,543)
Total interest income 141,815 135,668 6,147 3,217 2,930 135,668 145,814 (10,146) 3,916 (14,062)
Interest expense:
NOW accounts 3,636 4,224 (588) 60 (648) 4,224 6,406 (2,182) 231 (2,413)
Money market deposits 2,477 2,937 (460) (248) (212) 2,937 4,720 (1,783) (624) (1,159)
Regular savings 21,725 23,306 (1,581) (121) (1,460) 23,306 25,444 (2,138) 5,806 (7,944)
Time deposits under
$100 thousand 29,613 28,325 1,288 1,979 (691) 28,325 36,026 (7,701) (2,681) (5,020)
Time deposits over
$100 thousand 2,583 2,090 493 585 (92) 2,090 2,578 (488) (385) (103)
Short-term borrowings 461 380 81 15 66 380 757 (377) (205) (172)
Long-term debt 203 357 (154) (84) (70) 357 470 (113) (104) (9)
Total interest expense 60,698 61,619 (921) 2,186 (3,107) 61,619 76,401 (14,782) 2,038 (16,820)
Net interest income (TE) $ 81,117 74,049 7,068 1,031 6,037 74,049 69,413 4,636 1,878 2,758
Increases and decreases in interest income and interest expense due to both
rate and volume have been allocated to the two categories of variances
(volume and rate) based on the percentage relationship of such variances to
each other.
The margins and spreads for 1994 and 1993 resulted from an increase in
interest on earning assets of $6.1 million and a decrease in interest expense
of $921 thousand. The increase in the interest on earning assets was almost
evenly split between the increase in average balances and increases in rates.
The decrease in interest on liabilities was primarily a factor of decreasing
rates offset by additional interest expense resulting from increased average
balances.
Risk Management
The responsibility for balance sheet risk management oversight is the
function of the asset allocation committee. This committee meets monthly and
includes the senior executives of the Company as well as other department
managers as appropriate. The meetings include a review of the balance sheet
structure, formulation of strategy in light of expected economic conditions,
and a review of performance against guidelines established to control
exposure to various types of risk.
Credit Risk
Credit risk is managed through a network of loan officer authorities,
credit committees, loan policies and oversight from the senior executives of
the Company. Management follows a policy of continually identifying,
analyzing and evaluating the credit risk inherent in the loan portfolio. As a
result of management's ongoing review of the loan portfolio, loans are placed
in non-accrual status, either due to the delinquent status of principal
and/or interest payments or a judgment by management that, although payment
of principal and/or interest are current, such action is prudent. Loans are
generally placed in non-accrual status when principal and/or interest is 90
days past due. Thereafter, no interest is taken into income unless received
in cash or until such time as the borrower demonstrates the ability to make
scheduled payments of interest and principal.
Non-Performing Assets
Non-performing assets include loans in non-accrual status, loans which
have been treated as troubled debt restructurings, and loans past due 90 days
or more and still accruing interest. Also included in total non-performing
assets are foreclosed and in-substance foreclosed real estate properties.
Non-performing assets at year-end 1994 totalled $17.0 million, down
$4.1 million from the balance at year-end 1993. Non-performing loans
increased from $1.9 million in 1993 to $2.8 million in 1994. Non-performing
loans as a percentage of loans were 0.24% in 1994, 0.18% in 1993 and 0.72% in
1992. All of these percentages are well below industry and peer group
averages, and reflect TrustCo's conservative lending policy and its
aggressive collection and charge-off policies.
Non-performing assets for 1994 included $5.1 million of foreclosed
properties and $9.2 million of in-substance foreclosed properties. For 1993,
the balance of foreclosed properties stood at $4.3 million and the
in-substance foreclosed properties totalled $14.9 million.
There are no other loans in the Bank's portfolio that management is
aware of that pose any significant risk of the eventual non-collection of
principal. As of December 31, 1994, there were no other loans classified for
regulatory purposes that management reasonably expects will materially impact
future operating results, liquidity or capital resources.
</TABLE>
<TABLE>
Non-performing Assets
<CAPTION>
(dollars in thousands) As of December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Loans on non-accrual status $ 1,058 24 970 1,054 107
Loans past due 90 days or more 803 1,853 6,438 3,340 1,772
Restructured loans 910 -- -- -- --
Total non-performing loans 2,771 1,877 7,408 4,394 1,879
Foreclosed real estate 5,080 4,309 5,946 1,413 --
In-substance foreclosed real estate 9,157 14,917 20,674 16,771 --
Total non-performing assets $17,008 21,103 34,028 22,578 1,879
Allowance for loan losses $38,851 34,087 26,919 19,049 13,446
Allowance coverage of non-performing loans 14.02X 18.16 3.63 4.34 7.16
Non-performing loans as a % of total loans 0.24% 0.18 0.72 0.44 0.41
Non-performing assets as a % of total assets 0.86 1.07 1.75 1.28 0.20
</TABLE>
Allowance for Loan Losses
The balance in the allowance for loan losses has been accumulated over
the years through periodic provisions, and is available to absorb losses on
loans which have been determined to be uncollectible. The adequacy of the
allowance is evaluated continuously, with particular emphasis on
non-performing and other loans that management believes warrant special
attention. The balance of the allowance is maintained at a level that is, in
management's judgment, representative of the amount of risk inherent in the
loan portfolio given present and anticipated future conditions.
The table "Summary of Loan Loss Experience" includes an analysis of the
changes to the allowance for the past five years. Loans charged off in 1994
were $4.8 million, compared to $6.7 million in 1993. Recoveries were $1.5
million in 1994, and $2.3 million in 1993. The provisions recorded in 1994
and 1993 were $8.1 million and $11.6 million, respectively.
Non-Performing Assets (in millions)
1992 $34.0
1993 $21.1
1994 $17.0
<TABLE>
Summary of Loan Loss Experience
<CAPTION>
(dollars in thousands) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Amount of loans outstanding at end of year
(less unearned income) $1,152,632 1,060,648 1,028,541 1,025,421 462,469
Average loans outstanding during year
(less average unearned income) 1,110,859 1,021,984 1,005,658 625,031 443,167
Balance of allowance at beginning of year 34,087 26,919 19,049 13,446 11,336
Loans charged off:
Commercial 3,864 5,866 4,857 1,129 313
Real estate 53 199 125 70 140
Installment 907 676 1,015 616 395
Total 4,824 6,741 5,997 1,815 848
Recoveries of loans previously charged off:
Commercial 1,125 1,810 327 23 21
Real estate -- -- -- -- --
Installment 407 523 847 174 237
Total 1,532 2,333 1,174 197 258
Net loans charged off 3,292 4,408 4,823 1,618 590
Additions to allowance charged to
operating expense 8,056 11,576 12,693 6,490 2,700
Allowance of acquired bank -- -- -- 731 --
Balance of allowance at end of year $ 38,851 34,087 26,919 19,049 13,446
Net charge-offs as percent of average
loans outstanding during year
(less average unearned income) 0.30% 0.43 0.48 0.26 0.13
Allowance as percent of loans outstanding
at end of year 3.37 3.21 2.62 1.86 2.91
</TABLE>
Net charge-offs as a percentage of average loans were .30% in 1994 and
.43% in 1993, while the allowance as a percentage of
loans outstanding grew to 3.37% in 1994 from 3.21% in 1993.
The Company has a policy of recognizing charge-offs early in a
loan's deterioration and then aggressively pursuing collection efforts. This
policy of early intervention has proven to be a cornerstone of the strong
lending performance that TrustCo has achieved.
In 1993, the Financial Accounting Standards Board issued Statement No. 1
14 "Accounting by Creditors for Impairment of a Loan" which is effective for
TrustCo for 1995. This statement prescribes recognition criteria for loan
impairment and measurement methods for certain impaired loans and loans whose
terms have been the subject of a renegotiation. TrustCo will adopt the new
pronouncement in 1995, and does not anticipate that it will have any material
impact on the financial condition or operating results of the Company. A
significant percentage of loans that have been identified as in-substance
foreclosed real estate and included in real estate owned as of December 31,
1994, will be reclassified to loans under Statement 114.
Interest Rate Risk
Management of interest rate risk involves continual monitoring of the
relative sensitivity of asset and liability portfolios to changes in rate due
to maturities or repricing. Forecasting models are utilized to quantify the
impact of changes in rates on the Company's net income. Specific targets for
interest rate sensitivity have been established by the Company.
Interest rate sensitivity is a function of the repricing of assets and
liabilities through maturity and interest rate changes. The objective is to
maintain an appropriate balance between income growth and the risk
associated with maximizing income through the mismatch of the timing of
interest rate changes between assets and liabilities. Perfectly matching
this funding can eliminate interest rate risk but net interest income is not
always enhanced.
One measure of interest rate risk, the so called "gap," is illustrated
in the table "Interest Rate Sensitivity."
The table measures the incremental and cumulative gap, or the
difference between assets and liabilities subject to repricing during the
periods indicated. For purposes of this analysis the maturity and repricing
of loans is based on the stated maturity or earliest repricing date. For
securities available for sale and investment securities, the earlier of
average life or stated maturity is used. NOW, money market deposits and
regular savings accounts are presented with a maturity or repricing cycle
over the full interest rate cycle even though they are subject to immediate
withdrawal. Time deposit accounts are presented based upon their maturity
dates.
At December 31, 1994, the Company's gap position indicates an excess
of assets repricing in the 0-90 day period of $462.9 million. This positive
gap position is significantly enhanced by the $263.0 million federal funds
balance at year end. The gap position turns negative in the 91 to 365 day
period and in the 1 to 5 year period. This situation reflects the
significant amount of time deposits that mature in these timebands. Over 5
years, the gap position again reflects an excess of repricing assets over
liabilities of $490.3 million.
In evaluating interest rate sensitivity at year-end 1994, the Company
would benefit from an increase in interest rates, as the Bank would be able
to redeploy short-term assets that are repricing into higher yielding
investments. Conversely, the Company would be negatively affected by a
decrease in interest rates, since the assets that are repricing would do so
at lower interest rates.
The Company's gap position is constantly under evaluation in relation
to products, services and the marketplace. The positive gap position at
year-end was designed by management to position the Bank to take full
advantage of increased interest rates available at that time.
There are some shortcomings inherent in the method of analysis
presented in the Interest Rate Sensitivity table. For example, although
certain assets and liabilities have similar periods to maturity or to
repricing, they may react in different degrees to changes in market rates.
Also, the interest rates on certain types of assets and liabilities may
fluctuate in advance of changes in market interest rates, while interest
rates on other types may lag behind changes in market rates. Additionally,
certain assets have features which restrict changes in interest rates on a
short-term basis and over the life of the asset (certain annual caps and
lifetime caps). Further, in the event of significant change in interest
rates, prepayment and early withdrawal levels would likely deviate
significantly from those assumed in the table. Finally, the ability of many
borrowers to service their debt may decrease in the event of a significant
interest rate increase. Management takes these factors into account when
reviewing the Bank's gap position and establishing future asset/liability
strategy.
<TABLE>
Interest Rate Sensitivity
(dollars in thousands)
At December 31, 1994
Repricing, or able to be repriced, in:
0-90 91-365 1-5 Over 5 Rate
Days Days Years Years Insensitive Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Federal funds sold $263,000 -- -- -- -- 263,000
Securities available for sale 2,350 226 102,668 12,214 -- 117,458
Investment securities 17,558 4,654 133,696 191,950 -- 347,858
Loans, net of unearned income 320,700 170,021 101,632 560,279 -- 1,152,632
Allowance for loan losses -- -- -- -- (38,851) (38,851)
Others assets 1,873 5,623 29,988 14,995 81,101 133,580
Total assets 605,481 180,524 367,984 779,438 42,250 1,975,677
Cumulative total assets 605,481 786,005 1,153,989 1,933,427 1,975,677 1,975,677
Liabilities and shareholders' equity:
Deposits:
Demand deposits 3,339 10,017 53,426 26,714 -- 93,496
NOW accounts 9,804 29,411 140,858 67,763 -- 247,836
Money market deposits 11,620 34,862 46,483 -- -- 92,965
Regular savings 20,222 74,617 379,303 189,651 -- 663,793
Time deposits under 100 thousand 63,294 192,876 369,521 3,539 -- 629,230
Time deposits over 100 thousand 16,547 15,231 30,733 -- -- 62,511
Total interest bearing deposits 121,487 346,997 966,898 260,953 -- 1,696,335
Total deposits 124,826 357,014 1,020,324 287,667 -- 1,789,831
Short-term borrowings 12,713 -- -- -- -- 12,713
Long-term debt -- 296 3,254 -- -- 3,550
Other liabilities 5,034 395 342 1,449 23,080 30,300
Shareholders' equity -- -- -- -- 139,283 139,283
Total liabilities and shareholders' equity 142,573 357,705 1,023,920 289,116 162,363 1,975,677
Cumulative total liabilities and
shareholders' equity $142,573 500,278 1,524,198 1,813,314 1,975,677 1,975,677
Incremental gap:
Interest sensitivity gap $462,908 (177,181) (655,936) 490,322
Gap as a % of earning assets 24.61% (9.42) (34.87) 26.07
Interest sensitive assets to liabilities 449.78 50.36 34.84 292.94
Cumulative gap:
Interest sensitivity gap $462,908 285,727 (370,209) 120,113
Gap as a % of earning assets 24.61% 15.19 (19.68) 6.39
Interest sensitive assets to liabilities 449.78 161.69 76.91 109.83
</TABLE>
Liquidity Risk
TrustCo seeks to obtain favorable sources of liabilities and to
maintain prudent levels of liquid assets in order to satisfy varied liquidity
demands. In addition to serving as a funding source for maturing obligations,
liquidity provides flexibility in responding to customer initiated needs.
Many factors affect the ability to meet liquidity needs, including variations
in the markets served by the TrustCo network of branches, the mix of assets
and liabilities, and general economic conditions.
The Company actively manages its liquidity position through target
ratios established under the Asset/Liability Management policies. Continual
monitoring of these ratios, both historically and through forecasts under
multiple interest rate scenarios, allows TrustCo to employ strategies
necessary to maintain adequate liquidity levels. Management has also
developed various liquidity alternatives should abnormal situations arise.
The Company achieves its liability-based liquidity objectives in a
variety of ways. Net liabilities can be classified into three categories for
the purposes of managing liability based liquidity; net core deposits,
purchased money and capital market funds. TrustCo seeks deposits that are
dependable and predictable, ones that are based as much on interest rate as
they are on the level and quality of service. At December 31, 1994, core
deposits representing total deposits less those deposits greater than
$100,000, amounted to $1.727 billion. Average balances of core deposits are
detailed in the table "Average Sources of Funding."
In addition to core deposits another funding source available to
TrustCo is purchased money. These are principally long and short term
borrowings, federal funds purchased, securities sold under repurchase
agreements and time deposits greater than $100,000. The average balances of
these purchased money instruments are detailed in the table "Average Sources
of Funding." During 1994 the average balance in purchased money instruments
was $69.6 million, in 1993 it was $59.0 million and in 1992 it was $75.1
million.
Off-Balance Sheet Risk
Commitments to extend credit: TrustCo makes contractual commitments to
extend credit and extends lines of credit, which are subject to the Bank's
credit approval and monitoring procedures. At December 31, 1994 and 1993
commitments to extend credit in the form of loans, including unused lines of
credit amounted to $217.3 million and $200.9 million respectively. In the
opinion of management, there are no material commitments to extend credit
that represent unusual risk.
Letters of credit and standby letters of credit: TrustCo guarantees the
obligations or performance of customers by issuing letters of credit and
standby letters of credit to third parties. These letters of credit are
frequently issued in support of third party debt, such as corporate debt
issuances, industrial revenue bonds and municipal securities. The risk
involved in issuing letters of credit and standby letters of credit is
essentially the same as the credit risk involved in extending loan facilities
to customers, and they are subject to the same credit origination, portfolio
maintenance and management procedures in effect to monitor other credit and
off balance sheet products. At December 31, 1994 and 1993 outstanding letters
of credit and standby letters of credit were approximately $20.8 million and
$21.4 million respectively.
Other Off-Balance Sheet Risk: TrustCo does not engage in activities
involving interest rate swaps, forward placement contracts, options or any
other instrument commonly referred to as a "derivative." Management believes
these instruments pose a high degree of risk and that investing in them is
unnecessary.
Noninterest Income and Expense
Noninterest Income: Noninterest income is a significant source of
revenue for the Company and an important factor in the overall results for
the year. Total noninterest income was $4.6 million for 1994 compared to $19.2
million in 1993. Included in the 1994 results are $8.9 million of securities
losses compared to securities gains of $6.2 million during the comparable
period in 1993. Excluding these securities transactions, noninterest income
would have been $13.4 million and $12.9 million in 1994 and 1993,
respectively. As noted earlier, these securities losses for 1994 were
realized in an effort to maintain the available for sale portfolio at the
year-end higher interest rates. Therefore, future periods will benefit from
these enhanced rates.
<TABLE>
Noninterest income
<CAPTION>
(dollars in thousands)
1994 vs. 1993
1994 1993 1992 Amount Percent
<S> <C> <C> <C> <C> <C>
Trust department income $4,850 4,347 3,869 503 11.6%
Service charges on deposit accounts and
other charges and fees 7,007 6,489 6,378 518 8.0
Credit card processing income 903 881 1,035 22 2.5
Net gain (loss) on securities transactions (8,877) 6,239 2,939 (15,116) (242.3)
Other 677 1,220 1,212 (543) (44.5)
Total noninterest income $4,560 19,176 15,433 (14,616) (76.2)%
</TABLE>
The Trust Department contributes the largest recurring portion of
noninterest income through fees generated by the performance of fiduciary
services. Income from these fiduciary activities totalled $4.9 million in
1994 and $4.3 million in 1993. This increase was the result of changes in the
fees charged on trust accounts.
The changes in the other categories of noninterest income reflect the
fee scale used by the Bank for pricing its services.
Noninterest Expense: Noninterest expense was $40.6 million in 1994,
$43.5 million in 1993 and $42.8 million in 1992. TrustCo's operating
philosophy stresses the importance of monitoring and controlling the level of
noninterest expense. The efficiency ratio is a strong indicator of how well
controlled and monitored these expenses are for a banking enterprise. The
TrustCo efficiency ratio was 41.82% for 1994, 44.63% for 1993 and 51.96%
for 1992.
Salaries and employee benefits are the most significant component of
noninterest expense. At year-end 1994, these expenses amounted to $18.3
million compared to $16.6 million and $15.9 million for 1993 and 1992,
respectively. The increase in salaries and employee benefits reflect merit
increases and raises given to the Bank staff. In addition, increased costs
for benefits, such as health insurance and retirement benefits, account for
the remainder of the increase.
Expenses associated with the portfolio of other real estate decreased
from $4.7 million in 1993 to $1.0 million in 1994. During 1993 the Company
recognized significant write-downs and expenses associated with other real
estate properties so as to facilitate their eventual disposition.
Continued operating efficiency is a cornerstone to TrustCo's operating
philosophy. TrustCo is committed to continuing cost control and to the
reduction of noninterest expense where possible.
Efficiency Ratio
1992 51.96%
1993 44.63%
1994 41.82%
Income Tax
In 1994, TrustCo recognized income tax expense of $12.6 million as
compared to $12.5 million in 1993 and $9.3 million in 1992. The tax expense
on the Company's income was lower than tax expense at the statutory rate of
35% primarily due to tax exempt income and other permanent differences.
Prior to January 1, 1993, when it adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," the Company
accounted for income taxes under APB No. 11. Statement 109, which calls for
an asset/liability, or balance sheet approach in determining income tax
expense, has changed the Company's method of accounting for income taxes from
that required under ABP No. 11, which had been the deferred method or income
statement approach. Adoption of the new accounting literature did not have
any material impact on the results of operation for the year of adoption.
<TABLE>
Noninterest Expense
<CAPTION>
(dollars in thousands) 1994 vs. 1993
1994 1993 1992 Amount Percent
<S> <C> <C> <C> <C> <C>
Salaries and employee benefits $18,323 16,649 15,853 1,674 10.1%
Net occupancy expense of bank premises 3,479 3,439 3,534 40 1.2
Equipment expense 3,363 3,650 4,182 (287) (7.9)
FDIC insurance expense 4,071 3,985 3,654 86 2.2
Advertising and promotional expense 871 999 2,168 (128) (12.8)
Professional services 2,548 2,508 4,295 40 1.6
Other real estate expenses 1,016 4,679 215 (3,663) (78.3)
Supplies 1,176 1,207 1,286 (31) (2.6)
Credit card processing expense 758 1,000 1,143 (242) (24.2)
Amortization of goodwill -- -- 880 -- --
Other 4,955 5,386 5,561 (431) (8.0)
Total noninterest expense $40,560 43,502 42,771 (2,942) (6.8)%
</TABLE>
<TABLE>
Five Year Summary of Financial Data
<CAPTION>
(dollars in thousands, except per share data) Years Ended December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Statement of income data:
Interest income $ 140,282 133,657 143,260 100,805 81,520
Interest expense 60,698 61,619 76,401 58,252 48,445
Net interest income 79,584 72,038 66,859 42,553 33,075
Provision for loan losses 8,056 11,576 12,693 6,490 2,700
Net interest income after provision
for loan losses 71,528 60,462 54,166 36,063 30,375
Noninterest income 4,560 19,176 15,433 9,847 5,735
Noninterest expense 40,560 43,502 42,771 28,193 21,877
Income before income taxes 35,528 36,136 26,828 17,717 14,233
Income tax expense 12,640 12,516 9,325 4,856 3,658
Income before cumulative effect of
change in accounting principle 22,888 23,620 17,503 12,861 10,575
Cumulative effect of a change in
accounting principle -- (3,295) -- -- --
Net income $ 22,888 20,325 17,503 12,861 10,575
Share data:
Average equivalent shares outstanding
(in thousands) 14,886 14,803 14,606 11,189 10,030
Book value $ 9.53 8.93 8.32 7.73 6.03
Cash dividends .98 .80 .62 .52 .41
Net income 1.54 1.37 1.20 1.15 1.05
Financial ratios:
Return on average assets 1.15% 1.04 .94 1.12 1.22
Return on average shareholders' equity <F1> 17.01 16.18 15.06 17.16 18.49
Cash dividend payout ratio 63.71 57.93 51.05 45.00 38.36
Tier 1 capital as a % of total risk adjusted
assets 12.08 12.18 11.39 10.45 11.36
Total capital as a % of total risk adjusted
assets 13.35 13.45 12.64 11.70 12.33
Efficiency ratio 41.82 44.63 51.96 48.51 50.28
Net interest margin 4.26 4.04 3.98 4.20 4.41
Average balances:
Total assets $1,994,497 1,946,715 1,852,180 1,149,775 868,069
Earning assets 1,902,686 1,834,851 1,743,628 1,085,868 813,663
Loans, net 1,110,859 1,021,984 1,005,658 625,031 443,167
Allowance for loan losses (37,334) (30,214) (23,735) (16,139) (12,362)
Securities available for sale 337,137 192,433 55,716 -- --
Investment securities 250,812 455,136 568,825 418,295 308,813
Deposits 1,808,336 1,767,531 1,675,479 1,001,304 733,983
Short-term borrowings 18,129 17,447 25,520 42,990 50,489
Long-term debt 2,840 3,870 5,000 5,000 5,000
Shareholders' equity 136,977 125,648 116,238 74,951 57,208
<FN>
<F1> Average shareholders' equity excludes the effect of the mark to market
adjustment for securities available for sale.
</FN>
</TABLE>
<TABLE>
Summary of unaudited quarterly financial information
<CAPTION>
(dollars in thousands, except per share data)
1994 1993
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income statement:
Interest income $ 32,684 34,726 36,215 36,657 140,282 34,209 33,731 33,216 32,501 133,657
Interest expense 14,666 15,069 15,342 15,621 60,698 16,062 15,470 15,207 14,880 61,619
Net interest income 18,018 19,657 20,873 21,036 79,584 18,147 18,261 18,009 17,621 72,038
Provision for
loan losses 1,827 1,886 2,778 1,565 8,056 1,000 2,600 5,690 2,286 11,576
Net interest
income after
provision for
loan losses 16,191 17,771 18,095 19,471 71,528 17,147 15,661 12,319 15,335 60,462
Noninterest income 3,314 (402) 838 810 4,560 4,981 2,943 5,379 5,873 19,176
Noninterest expense 11,409 8,808 9,599 10,744 40,560 9,284 10,867 10,381 12,970 43,502
Income before
income taxes 8,096 8,561 9,334 9,537 35,528 12,844 7,737 7,317 8,238 36,136
Income tax expense 2,800 3,085 3,420 3,335 12,640 4,809 2,833 2,030 2,844 12,516
Income before
cumulative
effect of
change in
accounting
principle 5,296 5,476 5,914 6,202 22,888 8,035 4,904 5,287 5,394 23,620
Net income 5,296 5,476 5,914 6,202 22,888 4,751 4,904 5,287 5,383 20,325
Per share data:
Net income .36 .37 .40 .42 1.54 .33 .34 .36 .36 1.37
Book value 9.10 9.14 9.35 9.53 9.53 8.47 8.63 8.78 8.93 8.93
Cash dividends
declared .23 .23 .25 .28 .98 .18 .18 .21 .23 .80
Average balances:
Assets 1,968,001 2,002,981 2,007,747 1,974,105 1,994,497 1,920,522 1,945,479 1,953,112 1,953,240 1,946,715
Loans, net 1,081,884 1,099,507 1,119,222 1,143,331 1,110,859 1,019,725 1,017,706 1,004,929 1,036,161 1,021,984
Deposits 1,797,804 1,821,748 1,825,202 1,788,504 1,808,336 1,749,573 1,768,967 1,775,303 1,775,908 1,767,531
Shareholders'
equity 142,752 134,353 134,657 137,641 136,977 120,571 124,950 127,440 129,513 125,648
Ratios:
Return on
average assets 1.08% 1.09 1.17 1.25 1.15 1.08 1.01 1.07 1.09 1.04
Return on average
shareholders'
equity 16.33 16.37 17.45 17.84 17.01 16.33 15.74 16.46 16.49 16.18
Net interest
margin (TE) 3.86 4.19 4.44 4.55 4.26 3.86 4.10 4.03 3.90 4.04
Efficiency ratio 49.89 36.73 38.57 42.49 41.82 40.63 49.06 46.09 42.86 44.63
</TABLE>
Capital Resources
Consistent with its long-term goal of operating a sound and profitable
financial organization, TrustCo strives to maintain strong capital ratios.
New issues of equity securities have not been required, since most of the
Company's capital requirements have been provided through retained earnings.
Part of the operating philosophy of TrustCo is that the Company will
not retain any excess capital. All capital that is generated by the Company
that is in excess of the levels considered by management to be necessary for
the safe and sound operations of the Company will be distributed to the
shareholders in the form of recurring or special cash dividends.
Consequently, the capital ratios that are maintained are adequate but not
excessive. This philosophy has led to a dividend payout ratio for 1994 of
63.71%, 1993 of 57.93% and 1992 of 51.05%. These are significant payouts to
the Company shareholders and are considered by management to be a prudent use
of the retained capital in TrustCo. As to the likelihood of future dividends,
the philosophy stated above will continue into 1995 and where appropriate the
Board of Directors will declare dividends consistent with that operating
philosophy.
Dividends Per Share
1992 $0.62
1993 $0.80
1994 $0.98
At December 31, 1994 TrustCo's Tier 1 capital was $139.3 million or 12.08%
of risk adjusted assets. The Tier 1 capital to total assets or the
leverage ratio at December 31, 1994 was 7.05% as compared to 6.59% in 1993
and 6.19% in 1992. At December 31, 1994 the subsidiary bank, Trustco Bank met
the regulatory definition of a "well capitalized" institution.
The Bank has converted to a nationally chartered bank, and in early 1995
changed its legal name to Trustco Bank, National Association. All of the
current operations of the Bank are consistent with those allowed of a
nationally chartered bank. Therefore, management does not believe that the
operations will be inhibited in any fashion. The national charter allows the
Bank to streamline its regulatory process by having the Office of the
Comptroller of the Currency as the primary bank regulator.
As mentioned earlier, Trustco will be expanding its branch network by
three locations in 1995. It is not anticipated that additional capital will
be required to support this expansion program. Likewise, operating costs
during 1995 can be expected to rise modestly as a result of these new
branches, but will be offset by the additional revenue the new branches will
generate.
Impact of Inflation and Changing Prices
The consolidated financial statements have been prepared in accordance
with generally accepted accounting principles which require the measurement
of financial position and operating results in terms of historical dollars
without considering the changes in the relative purchasing power of money
over time due to inflation. The impact of inflation is reflected in the
increasing costs of operations. Unlike most industrial companies, nearly all
the assets and liabilities of the Company are monetary. As a result,
interest rates have a greater impact on the Company's performance than do the
effects of general levels of inflation, since interest rates do not
necessarily move in the same direction or to the same extent as the price of
goods and services.
Impact of Changes in Accounting Standards
ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS: On January
1, 1993, the Company adopted Statement 106 "Employers' Accounting for
Postretirement Benefits Other than Pensions." In implementing the new
accounting standard, the Company recorded a one time transition charge of
$3.3 million, net of tax benefits, which is reflected as a cumulative effect
of a change in accounting principle in the 1993 consolidated statement of
income.
ACCOUNTING FOR INCOME TAXES: On January 1, 1993, the Company adopted
Statement 109 "Accounting for Income Taxes." Statement 109 significantly
changed the method of accounting for income taxes for financial statement
purposes without affecting the actual cash tax liability. In adopting
Statement 109, the Company elected not to restate prior period financial
results. The implementation of Statement 109 had no material impact on the
1993 results of operations. The Company's complete disclosure related to
Statement 109 is included in the notes to the consolidated financial
statements.
ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN: In May 1993,
Statement 114 "Accounting by Creditors for Impairment of a Loan" was issued.
The Statement is effective for fiscal years beginning after December 15, 1994
(for TrustCo this statement will be effective for 1995). This Statement
requires that an impaired loan be measured
based on the present value of expected future cash flows or, for a loan whose
repayment is collateral dependent, based on the collateral's observable
market price. The Statement also narrows the application of the concept of
in-substance foreclosures to situations where the creditor has received
physical possession of the debtor's collateral regardless of whether formal
foreclosure proceedings have taken place. The adoption of Statement 114 is
not anticipated to have a material impact on the financial condition or
results of operation of the Company. Upon adoption, a significant percentage
of the loans identified at year-end 1994 as in-substance foreclosures will be
reclassified into the loan portfolio.
ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES. The
Company adopted Statement 115 "Accounting for Certain Investments in Debt
and Equity Securities" effective January 1, 1994. Upon adoption of Statement
115, the Company identified securities that are "available for sale" and those
that are "held to maturity" (the Company has no trading account assets as
prescribed by Statement 115). Securities classified as available for sale
are those that can be sold in response to changes in market interest rates,
liquidity requirements, or other investment alternatives. Securities
classified as held to maturity are not available for sale and are held until
contractual maturity or call. Securities available for sale are recorded at
market value with the unrealized appreciation and depreciation, net of tax,
recorded as an element of shareholders' equity. Securities identified as held
to maturity are recorded at amortized cost.
Glossary of Terms
Book Value Per Share
Total shareholders' equity divided by shares outstanding on the same dates.
This provides an indication of the value of a share of stock.
Cash Dividends Per Share
Total cash dividends declared divided by average shares outstanding for the
period.
Derivative Investments
These are investments in futures contracts, forwards, swaps, or option
contracts, or other investments with similar characteristics.
Earning Assets
The sum of interest-bearing deposits with banks, securities available for
sale, investment securities, loans in accrual status and federal funds sold.
Earnings Per Share
Net income divided by the average shares of common stock outstanding during
the period including the effect of stock options.
Efficiency Ratio
Noninterest expense (excluding nonrecurring charges and other real estate
expense) divided by taxable equivalent net interest income plus noninterest
income (excluding securities transactions). This is an indicator of the total
cost of operating the Company in relation to total income generated.
Interest-Bearing Liabilities
The sum of interest-bearing deposits, federal funds purchased, securities
sold under agreements to repurchase, other short term borrowings and long
term debt.
Interest Rate Spread
The difference between the taxable equivalent yield on earning assets and the
rate paid on interest bearing liabilities.
Liquidity
The ability to meet both loan commitments and deposit withdrawals as they
come due.
Net Interest Margin
Fully taxable equivalent net interest income as a percentage of average
earning assets.
Net Loans Charged Off
Reductions to the allowance for loan losses written off as losses, net of the
recovery of loans previously charged off.
Non-Accrual Loans
Loans for which no periodic accrual of interest income is recognized.
Non-Performing Assets
The sum of non-performing loans plus real estate owned.
Non-Performing Loans
The sum of loans on a non-accrual basis (for purposes of interest
recognition) plus loans whose repayment criteria have been renegotiated to
less than market terms due to the inability of the borrowers to repay the
loan in accordance with their original terms plus loans 90 days or more past
due as to principal or interest payments.
Parent Company
A company that owns or controls a subsidiary through the ownership of voting
stock.
Real Estate Owned
Real estate acquired in either formal or, where the borrower's circumstances
appear to make actual foreclosure likely, in-substance foreclosures.
Return on Average Assets
Net income as a percentage of average total assets.
Return on Average Equity
Net income as a percentage of average equity, excluding the impact of the
mark to market adjustment for securities available for sale.
Taxable Equivalent (TE)
Tax exempt income which has been adjusted to an amount that would yield the
same after tax income had the income been subject to taxation at the
statutory Federal and/or state income tax rates.
Management's Statement of Responsibilities
The management of TrustCo Bank Corp NY (the "Company") is responsible for the
preparation, content and integrity of the financial statements and other
statistical data and analyses compiled for this report. The consolidated
financial statements and related notes have been prepared in conformity with
generally accepted accounting principles and, in the judgment of management,
present fairly and consistently the Company's financial position, results of
operations and cash flows. Management also believes that financial
information elsewhere in this report is consistent with that in the financial
statements. The amounts contained in the financial statements are based on
management's best estimates and judgments.
The Company maintains a system of internal controls and accounting procedures
designed to provide reasonable assurance as to the protection of assets and
the integrity of the financial statements. These procedures include
management's evaluation of asset quality, organizational arrangements that
provide an appropriate division of responsibilities, and a program of
internal audits to evaluate independently the adequacy and application of
financial and operating controls.
The Board of Directors discharges its responsibility for TrustCo's financial
statements through its Audit Committee which is composed entirely of outside
directors and has responsibility for the recommendation of the independent
auditors.
Management has made an assessment of the Company's internal control structure
and procedures, covering financial reporting using established and recognized
criteria. On the basis of this assessment, management believes that the
Company maintained an effective system of internal control for financial
reporting as of December 31, 1994.
Robert A. McCormick
President and Chief Executive Officer
Robert T. Cushing
Vice President and Chief Financial Officer
January 27, 1995
Independent Auditors' Report
The Board of Directors and Shareholders of TrustCo Bank Corp NY:
We have audited the accompanying consolidated statements of condition of
TrustCo Bank Corp NY and subsidiaries as of December 31, 1994 and 1993, and
the related consolidated statements of income, changes in shareholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1994. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of TrustCo
Bank Corp NY and subsidiaries as of December 31, 1994 and 1993, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1994, in conformity with generally
accepted accounting principles.
As discussed in note 4 to the consolidated financial statements, in 1994 the
Company adopted the provisions of Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" which changed its method of
accounting for certain investments in debt and equity securities. As
discussed in notes 1 and 8 to the consolidated financial statements, in 1993
the Company adopted the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" which changed its method of accounting for income taxes. As
discussed in note 9 to the consolidated financial statements, the Company
also adopted the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other than Pensions" in 1993 which changed its
method of accounting for postretirement benefits other than pensions.
Albany, New York
January 27, 1995
<TABLE>
Consolidated Statements of Income
(dollars in thousands, except per share data)
<CAPTION>
Years Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $93,873 86,965 92,935
Interest and dividends on:
U.S. Treasuries and agencies 23,841 28,976 29,125
States and political subdivisions 1,129 1,416 2,810
Mortgage-backed securities 9,376 8,444 12,389
Other 3,005 2,944 2,190
Interest on federal funds sold 9,058 4,912 3,811
Total interest income 140,282 133,657 143,260
Interest expense:
Interest on deposits:
Regular savings and NOW accounts 25,361 27,530 31,850
Money market deposit accounts 2,477 2,937 4,720
Certificates of deposit (in Denominations of $100,000 or more) 2,583 2,090 2,578
Other time accounts 29,613 28,325 36,026
Interest on short-term borrowings 461 380 757
Interest on long-term debt 203 357 470
Total interest expense 60,698 61,619 76,401
Net interest income 79,584 72,038 66,859
Provision for loan losses 8,056 11,576 12,693
Net interest income after provision for loan losses 71,528 60,462 54,166
Noninterest income:
Trust department income 4,850 4,347 3,869
Fees for other services to customers 7,007 6,489 6,378
Credit card processing income 903 881 1,035
Net gain (loss) on securities transactions (8,877) 6,239 2,939
Other 677 1,220 1,212
Total noninterest income 4,560 19,176 15,433
Noninterest expense:
Salaries and employee benefits 18,323 16,649 15,853
Net occupancy expense of bank premises 3,479 3,439 3,534
Equipment expense 3,363 3,650 4,182
FDICinsurance expense 4,071 3,985 3,654
Advertising and promotional expense 871 999 2,168
Professional services 2,548 2,508 4,295
Other real estate expenses 1,016 4,679 215
Supplies 1,176 1,207 1,286
Credit card processing expense 758 1,000 1,143
Amortization of goodwill -- -- 880
Other 4,955 5,386 5,561
Total noninterest expense 40,560 43,502 42,771
Income before income taxes and cumulative effect of a
change in accounting principle 35,528 36,136 26,828
Income taxes 12,640 12,516 9,325
Income before cumulative effect of a change in accounting principle 22,888 23,620 17,503
Cumulative effect at January 1, 1993 of a change in accounting principle -- (3,295) --
Net income $22,888 20,325 17,503
Earnings per common share:
Income before cumulative effect of a change in accounting principle $1.54 1.59 1.20
Cumulative effect at January 1, 1993 of a change in accounting principle -- (0.22) --
Net income per common share $1.54 1.37 1.20
Average equivalent shares outstanding 14,886,000 for 1994, 14,803,000 for 1993 and 14,606,000 for 1992. Per share data has been
adjusted for a 10% stock dividend in October 1994, a 2 for 1 stock split in
November 1993, and a 5 for 4 stock split in November 1992.
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
Consolidated Statements of Condition
(dollars in thousands, except per share data)
<CAPTION>
As of December 31,
1994 1993
<S> <C> <C>
ASSETS
Cash and due from banks $52,479 50,977
Federal funds sold 263,000 149,000
Total cash and cash equivalents 315,479 199,977
Trading securities -- 2,106
Securities available for sale
(approximate market value $248,059 at December 31, 1993) 117,458 240,716
Investment securities (approximate market value $334,455 and
$431,298 at December 31, 1994 and 1993, respectively) 347,858 416,806
Loans 1,154,601 1,063,006
Less: Unearned income 1,969 2,358
Allowance for loan losses 38,851 34,087
Net loans 1,113,781 1,026,561
Bank premises and equipment 23,877 24,893
Real estate owned 14,237 19,226
Other assets 42,987 41,013
Total assets $1,975,677 1,971,298
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand $93,496 96,034
Regular savings and NOW accounts 911,629 970,407
Money market deposit accounts 92,965 110,630
Certificates of deposit (in denominations of $100,000 or more) 62,511 42,358
Other time accounts 629,230 574,803
Total deposits 1,789,831 1,794,232
Short-term borrowings 12,713 18,323
Accrued expenses and other liabilities 30,300 26,113
Long-term debt 3,550 2,750
Total liabilities 1,836,394 1,841,418
Commitments and contingencies
Shareholders' equity:
Capital stock; $1 par value. Shares authorized 25,000,000;
15,018,448 and 13,588,044 shares issued at December 31, 1994
and 1993, respectively 15,018 13,588
Surplus 118,352 91,955
Undivided profits 6,948 25,331
Net unrealized loss on securities available for sale (41) --
Treasury stock; 401,022 and 364,566 shares, at cost, at
December 31, 1994 and 1993, respectively (994) (994)
Total shareholders' equity 139,283 129,880
Total liabilities and shareholders' equity $1,975,677 1,971,298
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
Consolidated Statements of Changes in Shareholders' Equity
(dollars in thousands, except per share data)
<CAPTION>
Three Years Ended December 31, 1994
Net
Unrealized
Loss on
Securities
Capital Undivided Available Treasury
Stock Surplus Profits For Sale Stock
<S> <C> <C> <C> <C> <C>
Beginning balance, January 1, 1992 $5,378 98,749 7,999 -- (1,023)
Net income-1992 -- -- 17,503 -- --
Cash dividend declared, $.62 per share -- -- (8,936) -- --
Stock options exercised, 38,621 shares 39 720 -- -- --
5 for 4 stock split (1,354,223 shares) 1,354 (1,354) -- -- --
Ending balance, December 31, 1992 6,771 98,115 16,566 -- (1,023)
Net income-1993 -- -- 20,325 -- --
Cash dividend declared, $.80 per share -- -- (11,560) -- --
Stock options exercised, 23,919 share 24 444 -- -- --
Sale of 5,300 treasury shares to benefit plans -- 189 -- -- 29
2 for 1 stock split (6,793,022 shares) 6,793 (6,793) -- -- --
Ending balance, December 31, 1993 13,588 91,955 25,331 -- (994)
Net income-1994 -- -- 22,888 -- --
Cash dividend declared, $.98 per share -- -- (14,310) -- --
Stock options exercised, 65,282 shares 65 801 -- -- --
10% stock dividend 1,365,122 shares 1,365 25,596 (26,961) -- --
Net unrealized loss on securities available for sale -- -- -- (41) --
Ending balance, December 31, 1994 $15,018 118,352 6,948 (41) (994)
Per share data adjusted for a 10% stock dividend in October 1994, a 2 for 1
stock split in November 1993, and a 5 for 4 stock split in November 1992.
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
Consolidated Statements of Cash Flows
(in thousands)
<CAPTION>
For the Years Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities:
Net income before change in accounting principle $ 22,888 23,620 17,503
Change in accounting principle -- (3,295) --
Net income 22,888 20,325 17,503
Adjustments to reconcile net income to net cash (used in)/provided by
operating activities:
Depreciation and amortization 2,749 2,373 2,245
Provision for loan losses 8,056 11,576 12,693
Amortization of goodwill -- -- 880
Provision for deferred tax expense (benefit) (2,981) 46 (4,364)
Net (gain) loss on sale of securities 8,877 (6,239) (2,939)
Purchase of trading securities -- (1,940) --
(Increase) decrease in taxes receivable (1,003) (1,505) 4,066
Decrease in interest receivable 488 3,345 1,939
Increase (decrease) in interest payable 318 (4,881) (985)
(Increase) decrease in other assets 1,551 (9,066) 6,244
Increase (decrease) in accrued expenses 3,154 3,354 (7,010)
Total adjustments 21,209 (2,937) 12,769
Net cash provided by operating activities 44,097 17,388 30,272
Cash flows from investing activities:
Proceeds from sales of securities available for sale 1,015,688 99,475 --
Proceeds from maturities of securities available for sale 42,558 -- --
Purchase of securities available for sale (770,617) (153,596) --
Proceeds from sales of investment securities -- 1,877 107,639
Proceeds from maturities of investment securities 80,717 229,288 299,559
Purchase of investment securities (182,981) (159,540) (500,144)
Net increase in loans (99,396) (37,769) (19,506)
Proceeds from sales of real estate owned 9,109 6,091 3,127
Capital expenditures (1,733) (2,210) (4,415)
Net cash provided by/(used in) investing activities 93,345 (16,384) (113,740)
Cash flows from financing activities:
Net increase (decrease) in deposits (4,401) 22,926 203,226
Net decrease in short-term borrowing (5,610) (2,526) (18,098)
Repayment of long-term debt -- (5,000) --
Proceeds from issuance of long-term debt 800 2,750 --
Proceeds from issuance of common stock 866 468 759
Proceeds from sale of treasury stock -- 218 --
Dividends paid (13,595) (10,888) (8,394)
Net cash provided by/(used in) financing activities (21,940) 7,948 177,493
Net increase in cash and cash equivalents 115,502 8,952 94,025
Cash and cash equivalents at beginning of year 199,977 191,025 97,000
Cash and cash equivalents at end of year $ 315,479 199,977 191,025
Supplemental disclosure of cash flow information:
Interest paid $ 60,380 66,500 77,386
Income taxes paid 16,624 8,554 5,873
Reclassification of investment securities to securities available for
sale upon adoption of Statement 115 398,454 -- --
Transfer of investment securities to/(from) securities available for sale (213,199) 60,055 120,675
Transfer of loans to real estate owned 4,120 1,254 11,563
Increase in dividends payable 715 672 542
Reclassification of trading securities to securities available for sale upon
adoption of Statement 115 2,106 -- --
Unrealized gain on securities available for sale on January 1, 1994 14,037 -- --
See accompanying notes to consolidated financial statements.
</TABLE>
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
Basis of Presentation
The accounting and financial reporting policies of TrustCo Bank Corp NY
(Company or TrustCo) and Trustco Bank, National Association (Bank or Trustco)
conform to general practices within the banking industry and are in
accordance with generally accepted accounting principles. A description of
the more significant policies follows. The Bank has converted to a national
banking association from the previous charter as a state banking association.
Upon conversion, the Bank changed its name to TRUSTCO BANK, NATIONAL
ASSOCIATION. The conversion was finalized during the first quarter of 1995
and will have no effect on the Bank's operations.
Consolidation
The consolidated financial statements of the Company include the
accounts of the subsidiaries after elimination of all significant
intercompany accounts and transactions.
Securities Available for Sale
Securities available for sale are carried at market value (for 1994)
and lower of cost or market (for 1993) with any unrealized appreciation or
depreciation of value, net of tax, (for 1994) included as an element of the
capital accounts. Management maintains an available for sale portfolio in
order to provide maximum flexibility in future balance sheet management. The
designation of available for sale is made at the time of purchase based upon
management's intent to hold the securities for an indefinite period of time.
These securities, however, would be available for sale in response to changes
in market interest rates, related changes in liquidity needs or changes in
the availability of and yield on alternative investments. Unrealized losses
on securities that reflect a decline in value which is other than temporary,
if any, are charged to income. Nonmarketable equity securities (principally
stock of the Federal Reserve Bank and the Federal Home Loan Bank) are included
in securities available for sale at cost since there is no readily available
market value.
Gains and losses on the sale of securities available for sale are based
on the amortized cost of the specific security sold.
Investment Securities
Securities classified as investment securities are held to maturity to
meet longer term investment objectives, including yield and liquidity
purposes. At the time of purchase, securities are identified as held for
investment based upon the Company's intention and ability to hold the
securities to maturity. Investment securities are carried at cost, adjusted
for amortization of premium and accretion of discounts on a method that
equates to the level yield. Unrealized losses on securities that reflect a
decline in value which is other than temporary, if any, are charged to income.
Loans
Loans are carried at the principal amount outstanding net of unearned
income and unamortized loan fees and costs, which are amortized into income
over the applicable loan period.
Non-performing loans include non-accrual loans, restructured loans and
loans which are 90 days or more past due and still accruing interest.
Generally, loans are placed on non-accrual status, either due to the
delinquency status of principal and/or interest payments, or a judgment by
management that, although payments of principal and/or interest are current
such action is prudent. Future payments received on non-performing loans are
recorded as interest income or principal reductions based upon management's
ultimate expectation for collections.
Allowance for Loan Losses
An allowance for loan losses is maintained at a level considered
adequate by management to provide for potential loan losses based on analysis
of the credit risk of the loan portfolio including a review of past loan
experience, current economic conditions and the underlying collateral value.
The allowance is increased by provisions charged against income and reduced
by net charge-offs.
In addition, various regulatory agencies as an integral part of their
examination process, periodically review the Company's allowance for loan
losses. Such agencies may require the Company to recognize additions to the
allowances based on their judgments of information available to them at the
time of their examination.
Bank Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation
and amortization computed on either the straightline or accelerated methods
over the remaining useful lives of the assets.
Real Estate Owned
Real estate owned includes assets received from foreclosures and
in-substance foreclosures. A loan is considered an in-substance foreclosure
when little or no equity of the borrower is present in the underlying
collateral, considering the current fair value of the collateral; proceeds
for repayment of the loan can be expected to come only from the operation or
sale of the collateral; control of the collateral is effectively abandoned,
or because of the current financial condition it is doubtful that equity will
be rebuilt or the loan repaid in the foreseeable future.
Foreclosed assets, including in-substance foreclosures, held for sale
are recorded on an individual basis at the lower of (1) fair value minus
estimated costs to sell or (2) "cost" (defined as the fair value at initial
foreclosure). When a property is acquired or identified as in-substance
foreclosure, the excess of the loan balance over fair value is charged to
the allowance for loan losses. Subsequent write downs are included in other
noninterest expense.
Income Taxes
Effective January 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" and has chosen not to restate prior year financial statements. Under
the asset and liability method of Statement 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and operating loss and
tax credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Under Statement 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
Dividend Restrictions
Banking regulations restrict the amount of cash dividends which may be
paid during a year by the Bank to the Parent Company without the written
consent of the appropriate bank regulatory agency. Based on these
restrictions, the Bank could pay $29.8 million plus 1995 net profits. For all
practical purposes, TrustCo could not declare dividends to shareholders
materially in excess of the aggregate amount of dividends that could be paid
by the Bank.
Pension Plan
The Company has a defined benefit pension plan covering substantially
all of its employees. The benefits are based on years of service and the
employee's compensation. The cost of this program is being funded currently.
Reclassification of Prior Year Statements
It is the Company's policy to reclassify prior year financial statements
to conform to the current year presentation.
(2) Balances at Other Banks
The Bank is required to maintain certain reserves of vault cash and/or
deposits with the Federal Reserve Bank. The amount of this reserve
requirement, included in cash and due from banks, was approximately
$14,576,000 and $15,986,000 at December 31, 1994 and 1993, respectively.
(3) Securities Available for Sale
The amortized cost and approximate market value of the securities
available for sale are as follows:
<TABLE>
(in thousands)
<CAPTION>
At December 31, 1994
Gross Gross Approximate
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasuries and agencies $102,947 32 60 102,919
Other 14,581 -- 42 14,539
Total securities available for sale $117,528 32 102 117,458
</TABLE>
<TABLE>
(in thousands)
<CAPTION>
At December 31, 1993
Gross Gross Approximate
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasuries and agencies $230,563 7,289 1,381 236,471
Other 10,153 1,435 -- 11,588
Total securities available for sale $240,716 8,724 1,381 248,059
</TABLE>
The anticipated maturity schedule of amortized cost and market value of
securities available for sale at December 31, 1994, follows:
<TABLE>
<CAPTION>
(in thousands) Approximate
Amortized Market
Cost Value
<S> <C> <C>
Due in one year or less $000,275 276
Due after one year through five years 102,697 102,668
Due after five years through ten years 650 650
Due after ten years 13,906 13,864
$117,528 117,458
</TABLE>
Proceeds from sales of securities available for sale during 1994 and 1993
were approximately $1,015,688,000, and $99,475,000, respectively. During 1992
there were no sales of securities available for sale.
The gross realized gains on sales of securities available for sale in 1994
and 1993 were approximately $5,799,000 and $5,867,000, respectively.
Gross realized losses on the sales of securities available for sale in 1994
and 1993 were $14,682,000 and $2,000, respectively.
The amortized cost of securities available for sale that have been
pledged to secure public deposits and for other purposes required by law
amounted to $44,430,000, and $41,219,000 at December 31, 1994 and 1993,
respectively.
(4) Investment Securities
The book value and approximate market value of the investment
securities are as follows:
<TABLE>
(in thousands)
<CAPTION>
At December 31, 1994
Gross Gross Approximate
Book Unrealized Unrealized Market
Value Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasuries and agencies $145,542 376 4,801 141,117
States and political subdivisions 44,222 125 520 43,827
Mortgage-backed securities 143,082 280 8,460 134,902
Other 15,012 -- 403 14,609
Total investment securities $347,858 781 14,184 334,455
</TABLE>
<TABLE>
(in thousands)
<CAPTION>
At December 31, 1993
Gross Gross Approximate
Book Unrealized Unrealized Market
Value Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasuries and agencies $228,157 8,851 -- 237,008
States and political subdivisions 23,017 458 4 23,471
Mortgage-backed securities 138,376 4,524 781 142,119
Other 27,256 1,465 21 28,700
Total investment securities $416,806 15,298 806 431,298
</TABLE>
The anticipated maturity schedule of book values and market values of
investment securities at December 31, 1994 follows:
<TABLE>
<CAPTION>
(in thousands) Approximate
Book Market
Value Value
<S> <C> <C>
Due in one year or less $ 12,458 12,462
Due after one year through five years 48,797 47,378
Due after five years through ten years 162,659 153,915
Due after ten years 123,944 120,700
$347,858 334,455
</TABLE>
The maturity of mortgage-backed securities is based on the security's average
life. There were no sales of investment
securities during 1994. Proceeds from sales of investment securities during
1993 and 1992 were $1,877,000 and $107,639,000,
respectively. Gross realized gains on sales of equity instruments in 1993
were approximately $229,000.The gross realized gains on
sales and calls of investment securities in 1992 were $3,346,000. Gross
realized losses on sales of equity instruments in 1993
were approximately $21,000. Gross realized losses on the sales and calls of
debt instruments for 1992 were $407,000.
The book value of investment securities pledged to secure public deposits and
for other purposes required by law amounted
to $135,050,000, and $85,634,000 at December 31, 1994 and 1993, respectively.
The Company adopted Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and
Equity Securities" as of January 1, 1994. The Company classified certain of
the investment securities as being available for sale
and reclassified these balances to a separate line on the consolidated
statement of condition. Securities included in the available for sale
category may be sold in response to changes in market interest rates and
related changes in a security's prepayment risk, needs for liquidity, changes
in the availability of and the yield on alternative investments or changes in
funding sources and terms. These securities are recorded at market value with
any net unrealized gains (losses) shown as a component of shareholders'
equity.
In addition, the Company has identified a portfolio of investment
securities which are being held to maturity. In accordance with Statement 115
these securities cannot be sold except in very limited circumstances as
described in the Statement.
(5) Loans and Allowance for Loan Losses
<TABLE>
A summary of loans by category is as follows:
<CAPTION>
(in thousands) At December 31,
1994 1993
<S> <C> <C>
Commercial $230,063 218,669
Real estate
Construction 12,935 14,172
Residential mortgage loans 668,604 596,935
Home equity line of credit 207,313 202,018
Installment loans 35,686 31,212
Total loans 1,154,601 1,063,006
Less: Unearned income 1,969 2,358
Allowance for loan losses 38,851 34,087
Net loans $1,113,781 1,026,561
</TABLE>
At December 31, 1994 and 1993, loans to executive officers, directors
and to associates of such persons aggregated $7,641,000 and $11,163,000,
respectively. During 1994, new loans of $4,638,000 were made and repayments
of loans totalled $8,160,000. In the opinion of management, such loans were
made in the ordinary course of business on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions. These loans do not involve more than normal risk of
collectibility or present other unfavorable features.
TrustCo primarily lends in the Capital District region of New York
State and in the geographic territory surrounding its borders. Although the
loan portfolio is diversified, a substantial portion of its debtors ability
to repay is dependent upon the economic conditions existing in New York
State.
The following table sets forth the information with regard to
non-performing loans:
<TABLE>
<CAPTION>
(in thousands) At December 31,
1994 1993 1992
<S> <C> <C> <C>
Loans on non-accrual status $1,058 24 970
Loans contractually past due 90 days or more and still
accruing interest 803 1,853 6,438
Restructured loans 910 -- --
Total non-performing loans $2,771 1,877 7,408
</TABLE>
Interest on non-accrual and restructured loans of $222 thousand, $1
thousand and $79 thousand, would have been earned in accordance with the
original contractual terms of the loans in 1994, 1993 and 1992, respectively.
Approximately $35 thousand, $1 thousand and $61 thousand of interest on
non-accrual and restructured loans was collected and recognized as income in
1994, 1993 and 1992, respectively. There are no commitments to extend further
credit on non-accrual or restructured loans.
Transactions in the allowance for loan losses accounts are summarized
as follows:
<TABLE>
<CAPTION>
(in thousands) For the years ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Balance at beginning of year $34,087 26,919 19,049
Provision for loan losses 8,056 11,576 12,693
Loans charged off (4,824) (6,741) (5,997)
Recoveries on loans previously charged off 1,532 2,333 1,174
Balance at year end $38,851 34,087 26,919
</TABLE>
On May 31, 1993, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 114, "Accounting by Creditors
for Impairment of a Loan." Statement 114, which is effective for financial
statements issued for fiscal years beginning after December 15, 1994,
prescribes recognition criteria for loan impairment and measurement methods
for certain impaired loans and loans whose terms are modified in troubled-debt
restructurings. Statement 114 will be adopted effective January 1, 1995. At
that time, a significant amount of the assets currently identified as in-
substance foreclosures will be reclassified to loans, and, for the most part,
included in the category of impaired loans. Other than this reclassification
of the balances of in-substance foreclosure loans, the adoption of Statement
114 is not anticipated to have a material impact on the results of operations
of the Company.
There are $8.4 million and $11.4 million of loans pledged for various
purposes at December 31, 1994 and 1993, respectively.
(6) Bank Premises and Equipment
A summary of premises and equipment at December 31, 1994 and 1993 follows:
<TABLE>
<CAPTION>
(in thousands) 1994 1993
<S> <C> <C>
Land $3,958 4,268
Buildings 22,155 21,361
Furniture, fixtures and equipment 15,466 14,849
Leasehold improvements 2,936 2,783
44,515 43,261
Accumulated depreciation and amortization (20,638) (18,368)
Total $23,877 24,893
</TABLE>
Depreciation and amortization expense approximated $2,749,000,
$2,373,000 and $2,245,000 for the years 1994, 1993 and 1992, respectively.
Occupancy expense of Bank premises included rental expense of $1,053,000,
$1,388,000 and $1,430,000 for the years 1994, 1993 and 1992, respectively.
(7) Short-term Borrowings
Short-term borrowings, consisting primarily of Securities sold under
agreements to repurchase with maturities of generally less than ninety days,
was as follows:
<TABLE>
<CAPTION>
(dollars in thousands) 1994 1993
<S> <C> <C>
Amount outstanding at December 31 $12,713 18,323
Maximum amount outstanding at any month end 21,746 20,405
Average amount outstanding 18,129 17,447
Weighted average interest rate:
For the year 2.54% 2.18
As of year-end 3.36 2.11
</TABLE>
The Company has available $202.3 million of unused lines of credit at
December 31, 1994.
(8) Income Taxes
A summary of income tax expense (benefit) included in the consolidated
statements of income follows:
<TABLE>
<CAPTION>
(in thousands) For the years ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Current tax expense:
Federal $12,412 10,372 11,103
State 3,209 2,098 2,586
Total current tax expense 15,621 12,470 13,689
Deferred expense (benefit) (2,981) 46 (4,364)
Total consolidated provision for income taxes $12,640 12,516 9,325
</TABLE>
Prior to 1993, the Company accounted for income taxes under APB11.
Under APB 11, deferred tax expense (benefit) resulted from timing differences
in the recognition of revenue and expense for tax and financial statement
purposes. Effective January 1, 1993, the Company adopted Statement 109. The
effect of adoption was not material to the financial statements.
The sources of these differences and the tax effect for 1992 follows:
<TABLE>
<CAPTION>
(in thousands) 1992
<S> <C>
Provision for loan losses more than amount
deducted for tax purposes $(3,213)
Depreciation expense less than amount deducted
for tax purposes 2
Other expense not utilized for tax purposes (102)
Financial statement interest income greater
than taxable interest income 191
Financial statement interest expense greater
than taxable interest expense (186)
Bond accretion and security gains/losses
currently reportable for tax purposes (1,056)
Total deferred tax benefit $(4,364)
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 1994 and 1993 is presented below.
<TABLE>
<CAPTION>
(in thousands)
December 31, 1994
Deductible Taxable
temporary temporary
differences differences
<S> <C> <C>
Bond accounting $ 107 --
Benefits and deferred remuneration 2,326 --
Deferred loan fees, net 1,391 --
Difference in reporting the provision for loan losses, net 18,301 --
Other income or expense not utilized for tax purposes 2,174 --
Other items 1,042 --
Total 25,341 --
Valuation reserve (4,706) --
Total after valuation reserve 20,635 --
Net deferred tax asset at December 31,1994 20,635
Net deferred tax asset at December 31,1993 17,654
Deferred tax expense/(benefit) for 1994 $ (2,981)
</TABLE>
<TABLE>
<CAPTION>
(in thousands) December 31, 1993
Deductible Taxable
temporary temporary
differences differences
<S> <C> <C>
Bond accounting $ -- 126
Benefits and deferred remuneration 1,883 --
Deferred loan fees, net 1,992 --
Difference in reporting the provision for loan losses, net 17,039 --
Other income or expense not utilized for tax purposes 1,966 --
Other items 838 --
Total 23,718 126
Valuation reserve (5,938) --
Total after valuation reserve 17,780 126
Net deferred tax asset at December 31, 1993 17,654
Net deferred tax asset at January 1, 1993 17,700
Deferred tax expense/(benefit) for 1993 $ 46
</TABLE>
The valuation allowance as established by management takes into
consideration the historical level of taxable income in the prior years as
well as the time period that the items giving rise to the deferred tax assets
turn around.
The effective tax rates differ from the statutory federal income tax
rate. The reasons for these differences are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Statutory federal income tax rate 35.0% 35.0 34.0
Increase (decrease) in taxes resulting from:
Tax exempt income (1.9) (2.2) (3.9)
State income tax, net of federal tax benefit 4.9 4.0 3.6
Goodwill amortization -- -- 1.1
Effect of (increase) decrease in tax rate on deferred tax benefit 1.1 (1.4) --
Reduction in valuation reserve (3.5) -- --
Other items -- (0.8) --
Effective income tax rate 35.6% 34.6 34.8
</TABLE>
In addition to the deferred tax asset described in the preceding table,
the Company also has a deferred tax asset of $29,000 relating to the
unrealized loss on securities available for sale.
(9) Employee Benefits
The Company maintains a trusteed non-contributory pension plan covering
employees that have completed one year of employment and 1,000 hours. The
benefits are based on the sum of (a) a benefit equal to a prior service
benefit plus the average of the employees' highest five consecutive years
compensation in the ten years preceding retirement multiplied by a percentage
of service after a specified date plus (b) a benefit based upon career
average compensation. The amounts contributed to the plan are determined
annually on the basis of (a) the maximum amount that can be deducted for
federal income tax purposes or (b) the amount certified by a consulting
actuary as necessary to avoid an accumulated funding deficiency as defined by
the Employee Retirement Income Security Act of 1974. Contributions are
intended to provide not only for benefits attributed to service to date but
also for those expected to be earned in the future. Assets of the plan are
primarily invested in common stock and fixed income common funds administered
by the Bank. The following table sets forth the plans' funded status and
amounts recognized in the Company's consolidated statements of condition at
December 31, 1994 and 1993:
<TABLE>
Actuarial Present Value of Benefit Obligations:
<CAPTION>
(in thousands) 1994 1993
<S> <C> <C>
Accumulated benefit obligation, including vested benefits of $12,768 and
$12,409 in 1994 and 1993, respectively $(12,946) (12,555)
Projected benefit obligation for service rendered to date (14,093) (13,570)
Plan assets at fair value 18,575 19,554
Plan assets in excess of projected benefit obligation 4,482 5,984
Unrecognized net gain from past experience different from that assumed and effects
of changes in assumptions (1,825) (3,420)
Unrecognized prior service cost (511) (395)
Unrecognized net asset at transition being recognized over 15 years (884) (1,032)
Prepaid pension expense $ 1,262 1,137
</TABLE>
<TABLE>
Net Pension Benefit for 1994, 1993 and 1992 Included the Following Components:
<CAPTION>
(in thousands) 1994 1993 1992
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 518 501 529
Interest cost on projected benefit obligation 874 811 808
Actual return on plan assets (39) (1,064) (573)
Net amortization and deferral (1,478) (500) (1,221)
Net periodic pension benefit $ (125) (252) (457)
</TABLE>
The actuarial assumptions used in determining the actuarial present
value of projected benefit obligations and the net pension costs were as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Weighted average discount rate 6.75% 6.75 7.50
Rate of increase in future compensation 5.00 5.00 6.00
Expected long-term rate of return on assets 6.50 6.50 7.00
</TABLE>
The Company also has an unfunded defined contribution supplementary
pension plan under which additional retirement benefits are accrued for
eligible senior and executive officers. The expense recorded for this plan
was $1,780,000, $489,000 and $392,000 in 1994, 1993 and 1992, respectively.
The Company provides a profit-sharing plan for substantially all
employees. The expense of this plan, which is based on management discretion
as defined in the plan, amounted to $1,230,000, in 1994, $1,470,000 in 1993,
and $1,344,000 in 1992.
The Company also has an executive incentive plan. The expense of this plan
is based on the Bank's performance and estimated distributions to
participants are accrued during the year and generally paid in the following
year. The expense recorded for this plan was $1,291,000, $419,000 and
$393,000 in 1994, 1993 and 1992 respectively.
Under the terms of the Company's Stock Option Plan the following table
presents a summary of activity with respect to this plan:
<TABLE>
<CAPTION>
Outstanding Exercisable
options options
Average Average
option option
Shares price Shares price
<S> <C> <C> <C> <C>
Balance, January 1, 1992 598,924 $ 9.68 306,994 $ 7.65
New options awarded-1992 276,510 13.14 55,302 13.14
Cancelled options-1992 52,250 12.03 -- --
Exercised options-1992 106,207 7.14 106,207 7.14
Options became exercisable -- -- 63,296 7.65
Balance, December 31, 1992 716,977 11.22 319,385 9.60
New options awarded-1993 308,000 18.35 61,600 18.35
Cancelled options-1993 -- -- -- --
Exercised options-1993 48,569 8.87 48,569 8.87
Options became exercisable -- -- 114,784 9.60
Balance, December 31, 1993 976,408 12.35 447,200 11.61
New options awarded-1994 270,050 18.29 54,010 18.29
Cancelled options-1994 89,264 17.44 1,100 18.35
Exercised options-1994 71,601 12.11 71,601 12.11
Options became exercisable -- -- 161,041 11.61
Balance, December 31, 1994 1,085,593 $14.54 589,550 $12.81
</TABLE>
Under the terms of the Directors' Stock Option Plan, 110,000 shares are
reserved for director options. As of December 31, 1994, 34,100 options
remain issued and outstanding with an average exercise price of $19.83.
In December 1990, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions." Statement 106 requires a
calculation of the present value of expected benefits to be paid to
employees after their retirement and an allocation of those benefits to the
periods that employees render service to earn the benefits. The Company
permits retirees under age 65 to participate in the Company's medical plan by
paying the same premium as the active employees. At age 65, the Bank provides
a Medicare Supplemental Program to retirees.
Since these benefits are currently being provided, the Company adopted
Statement 106 effective January 1, 1993, and has reported the cumulative
effect of that change in the December 31, 1993 Consolidated Statement of
Income.
Accumulated postretirement benefit obligation at December 31, 1994 and 1993:
<TABLE>
<CAPTION>
(in thousands) 1994 1993
<S> <C> <C>
Retirees $2,850 2,987
Fully eligible active plan participants 1,381 1,083
Other active plan participants 2,911 2,140
Accumulated postretirement benefit obligation $7,142 6,210
Plan assets, at fair value $6,358 6,618
</TABLE>
Net periodic postretirement benefit cost for 1994 and 1993 includes the
following components:
<TABLE>
<CAPTION>
(in thousands) 1994 1993
<S> <C> <C>
Service cost $362 357
Interest cost 462 389
Return on plan assets (429) (279)
Transition obligation -- 5,260
Net period postretirement benefit cost $395 5,727
</TABLE>
Expense for 1993 related to the transition obligation was $5.3 million,
with an after-tax cost of $3.3 million. Periodic benefit cost amounted to
$467 thousand for 1993. The Company funded the plan in full through the use
of a benefit trust during the first quarter of 1993. As a result, periodic
benefit costs in future years are expected to decrease. Assets of the plan
are primarily invested in common stock and fixed income common funds
administered by the Bank.
The trust holding the plan assets is subject to federal income taxes at
a 35.0 percent tax rate. The expected long term rate of return on plan
assets, after estimated income taxes was 4.2 percent and 3.3 percent for the
years ended December 31, 1994 and 1993, respectively.
For measurement purposes, a 12 percent annual rate of increase in the
per capita cost of covered benefits (i.e., health care cost trend rate) was
assumed for 1994; the rate was assumed to decrease gradually to 5.75 percent
by the year 2002 and remain at that level thereafter.
The health care cost trend rate assumption has a significant effect on
the amounts reported. To illustrate, increasing the assumed health care cost
trend rates by one percentage point in each year would increase the
accumulated postretirement benefit obligation as of December 31, 1994, by
approximately $1.4 million, and the aggregate of the service and the interest
cost components of net periodic postretirement benefit cost for the year
ended December 31, 1994, by approximately $274 thousand. The weighted-average
discount rate used in determining the accumulated postretirement benefit
obligation was 6.75 percent at December 31, 1994 and 1993.
(10) Lease Commitments and Contingent Liabilities
(A) LEASES
The Bank leases certain banking premises. These leases are accounted
for as operating leases with minimum rental commitments in the amounts
presented below. The majority of these leases contain options to renew.
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
1995 $ 853
1996 888
1997 833
1998 766
1999 704
2000 and after 3,139
$7,183
</TABLE>
(B) LITIGATION
Existing litigation arising in the normal course of business is not
expected to result in any material loss to the Company.
(11) Off-Balance-Sheet Financing
Loan commitments to extend credit are agreements to lend to a customer
as long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require a fee.
Commitments sometimes expire without being drawn upon, therefore the total
commitment amounts do not necessarily represent future cash requirements.
These arrangements have credit risk essentially the same as that involved in
extending loans to customers and are subject to the Bank's normal credit
policies including obtaining collateral. The Bank's exposure to credit loss
for loan commitments including unused lines of credit outstanding at December
31, 1994 and 1993 was $217.3 million and $200.9 million, respectively.
Standby letters of credit are conditional commitments issued by the
Bank to guarantee the performance of a customer to a third party. These
arrangements have credit risk essentially the same as that involved in
extending loans to customers and are subject to the Bank's normal credit
policies including the obtaining of collateral. The Bank's exposure to
credit loss for standby letters of credit outstanding at December 31, 1994
and 1993 was $20.8 million and $21.4 million, respectively. No losses are
anticipated as a result of loan commitments or standby letters of credit.
(12) Fair Value of Financial Instruments
The fair values shown below represent management's estimates of values
at which the various types of financial instruments could be exchanged in
transactions between willing, unrelated parties. They do not necessarily
represent amounts that would be received or paid in actual trades of specific
financial instruments.
<TABLE>
<CAPTION>
(in thousands) As of December 31 , 1994
Carrying Fair
value value
<S> <C> <C>
Financial assets:
Cash and cash equivalents $ 315,479 315,479
Securities available for sale 117,458 117,458
Investment securities 347,858 334,455
Loans 1,113,781 1,098,637
Accrued interest receivable 14,690 14,690
Financial liabilities:
Noninterest-bearing deposits 93,496 93,496
Interest-bearing deposits 1,696,335 1,696,335
Borrowings 16,263 16,263
Accrued interest payable 1,843 1,843
</TABLE>
<TABLE>
<CAPTION>
(in thousands) As of December 31 , 1993
Carrying Fair
value value
<S> <C> <C>
Financial assets:
Cash and cash equivalents $ 199,977 199,977
Securities available for sale 240,716 248,059
Investment securities 416,806 431,298
Loans 1,026,561 1,089,897
Accrued interest receivable 15,178 15,178
Financial liabilities:
Noninterest-bearing deposits 96,034 96,034
Interest-bearing deposits 1,698,198 1,713,732
Borrowings 21,073 21,073
Accrued interest payable 1,525 1,525
</TABLE>
The specific estimation methods and assumptions used can have a
substantial impact on the resulting fair values ascribed to financial
instruments. Following is a brief summary of the significant methods and
assumptions used in the above table:
Cash and Cash Equivalents
The carrying values of these financial instruments approximates fair
values.
Securities
Fair values for all securities portfolios are based upon quoted market
prices, where available. The carrying value of certain local, unrated
municipal obligations was used as an approximation of fair value.
Loans
The fair values of all loans are estimated using discounted cash flow
analyses with discount rates equal to the interest rates currently being
offered for loans with similar terms to borrowers of similar credit quality.
Deposit Liabilities
The fair values disclosed for noninterest-bearing deposits, NOW
accounts, savings accounts and money market accounts are, by definition,
equal to the amount payable on demand at the balance sheet date. The carrying
value of all variable rate certificates of deposit is assumed to approximate
fair value. The fair value of all other fixed rate certificates of deposit
are estimated using discounted cash flow analyses with discount rates equal
to the interest rates currently being offered on certificates of similar size
and remaining maturity. At December 31, 1994, the fair value of fixed rate
certificates of deposit are assumed to equal carrying value due to the
interest rate environment at year-end 1994.
Borrowings and Other Financial Instruments
The fair value of all borrowings and other financial instruments is
assumed to be the carrying value.
Financial Instruments with Off-Balance Sheet Risk
The Company is a party to financial instruments with off-balance sheet
risk. Such financial instruments consist of commitments to extend financing
and letters of credit. If the commitments are exercised by the prospective
borrowers, these financial instruments will become interest-earning assets of
the Company. If the commitments expire, the Company retains any fees paid by
the prospective borrower. The fair value of commitments is estimated based
upon fees currently charged to enter into similar agreements, taking into
consideration the remaining terms of the agreements and the present
credit-worthiness of the borrower. For fixed rate commitments, the fair value
estimation takes into consideration an interest rate risk factor. The fair
value of these off-balance sheet items at December 31, 1994 and 1993
approximates the recorded amounts of the related fees, which are considered
to be immaterial.
The Company has no derivative investment products at year-end 1994 and
1993, nor has the Company ever invested in such investment vehicles.
Therefore, the disclosures as required by Statement of Financial Accounting
Standards No. 119 "Disclosures about Derivative Financial Instruments and
Fair Value of Financial Instruments" is not presented except as it relates
to fair value disclosures in this footnote.
(13) Parent Company Only
The following statements pertain to TrustCo Bank Corp NY (Parent Company):
<TABLE>
Statements of Income
<CAPTION>
(in thousands)
Years Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Income:
Dividends and interest
from subsidiaries $14,820 11,061 11,067
Gain on sale of securities 133 374 --
Income from other investments 66 72 43
Total income 15,019 11,507 11,110
Expense:
Interest on long-term debt -- 343 470
Operating supplies 129 129 151
Professional services 145 128 187
Miscellaneous expense 48 33 14
Total expense 322 633 822
Income before income
taxes and undistributed
net income of subsidiaries 14,697 10,874 10,288
Income tax expense (benefit) 1 52 (153)
Income before equity in
undistributed net
income of subsidiaries 14,696 10,822 10,441
Equity in undistributed net
income of subsidiaries 8,192 9,503 7,062
Net income $22,888 20,325 17,503
</TABLE>
<TABLE>
Statements of Condition
<CAPTION>
(in thousands) December 31,
1994 1993
<S> <C> <C>
Assets:
Cash in subsidiary bank $ 8,229 6,425
Trading securities -- 2,106
Notes and receivables from subsidiaries -- 10
Investments in subsidiaries at equity 132,300 124,124
Securities available for sale 2,300 37
Other receivables . 126 101
Bank premises and equipment 389 389
Total assets $143,344 133,192
Liabilities and shareholders' equity:
Accrued expenses and other liabilities $ 4,061 3,312
Total liabilities 4,061 3,312
Shareholders' equity 139,283 129,880
Total liabilities and shareholders' equity $143,344 133,192
</TABLE>
<TABLE>
Statements of Cash Flows
<CAPTION>
(in thousands)
For the Years Ended December 31, 1994 1993 1992
<S> <C> <C> <C>
Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities:
Net income $ 22,888 20,325 17,503
Adjustments to reconcile net income to net cash
provided by operating activities:
Undistributed income of subsidiaries (8,192) (9,503) (7,062)
Decrease in receivable from subsidiary -- 54 --
Gain on sales of securities (133) (374) --
Decrease in taxes and other receivables 1 53 437
Increase (decrease) in accrued expenses 34 (120) (136)
Total adjustments (8,290) (9,890) (6,761)
Net cash provided by operating activities 14,598 10,435 10,742
Cash flows from investing activities:
Proceeds from sales or maturities of investment securities -- 1,877 --
Proceeds from sale of securities available for sale 1,603 -- --
Purchase of trading securities -- (1,940) --
Purchase of investment securities (1,668) (8) (48)
Net decrease in short term loaned funds to subsidiary -- 2,500 --
Increase in investment in subsidiary -- (1) --
Net cash provided by (used in) investing activities (65) 2,428 (48)
Cash flows from financing activities:
Repayment of long-term debt -- (5,000) --
Proceeds from issuance of common stock 866 468 759
Dividends paid (13,595) (10,888) (8,394)
Sales of treasury stock -- 218 --
Net cash used in financing activities (12,729) (15,202) (7,635)
Net increase (decrease) in cash and cash equivalents 1,804 (2,339) 3,059
Cash and cash equivalents at beginning of year 6,425 8,764 5,705
Cash and cash equivalents at end of year $ 8,229 6,425 8,764
Supplemental disclosure of cash flow information:
Increase in dividends payable $ 715 672 542
Reclassification of trading securities to securities
available for sale upon adoption of Statement 115 2,106 -- --
Net unrealized loss on securities
available for sale at year end 41 -- --
</TABLE>
TrustCo Bank Corp NY
Officers and Board of Directors
Officers
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Robert A. McCormick
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
Robert T. Cushing
VICE PRESIDENT
Nancy A. McNamara
SECRETARY
William F. Terry
Board of Directors
Barton A. Andreoli
President
Towne Construction and Paving Co.
Lionel O. Barthold
Vice-Chairman, Power Technologies, Inc.
(Consulting Engineers)
M. Norman Brickman
President, D. Brickman, Inc.
(Wholesale Fruit and Produce)
Charles W. Carl, Jr.
Retired, Former President, The Carl Company
(Department Store)
Robert A. McCormick
President and Chief Executive Officer
Trustco Bank
Nancy A. McNamara
Senior Vice President
Trustco Bank
Dr. John S. Morris
President Emeritus, Union College and Former
Chancellor, Union University
James H. Murphy, D.D.S.
Orthodontist
Richard J. Murray, Jr.
President, R.J. Murray Co., Inc.
(Air Conditioning Distributors)
Kenneth C. Petersen
President
Schenectady International, Inc.
William J. Purdy
President
Welbourne & Purdy Realty, Inc.
William F. Terry
Senior Vice President and Secretary
Trustco Bank
Philip J. Thompson
Retired, Former Vice President, and Director
New York Telephone
Directors of TrustCo Bank Corp NY are also Directors of Trustco Bank
HONORARY DIRECTORS
Donald E. Craig
Dr. Caryl P. Haskins
Bernard J. King
H. Gladstone McKeon
William H. Milton, III
Daniel J. Rourke, M.D.
Anthony M. Salerno
Edwin O. Salisbury
Harry E. Whittingham, Jr.
Henry D. Wright
Trustco Bank Officers
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
Robert A. McCormick
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
Robert T. Cushing
SENIOR VICE PRESIDENT
Nancy A. McNamara
SENIOR VICE PRESIDENT
Ralph A. Pidgeon
SENIOR VICE PRESIDENT
AND SECRETARY
William F. Terry
AUDITOR
John C. Fay
ACCOUNTING/FINANCE,
DATA PROCESSING,
GENERAL SERVICES
Senior Vice President and
Chief Financial Officer
Robert T. Cushing
ACCOUNTING/FINANCE
Administrative Vice President
Linda C. Christensen
DATA PROCESSING
Administrative Vice President
William H. Milton
Senior Information Services Officer
Daneille M. Eddy
GENERAL SERVICES
Administrative Vice President
Peter A. Zakriski
HUMAN RESOURCES,
LEGAL COUNSEL, LOAN
DIVISION, MANAGEMENT
INFORMATION SERVICES,
QUALITY CONTROL
Senior Vice President
Nancy A. McNamara
HUMAN RESOURCES,
MANAGEMENT
INFORMATION SERVICES,
QUALITY CONTROL
Vice President
Ann M. Noble
Management Information Officer
Lynn D. Hackler
LEGAL COUNSEL
Vice President
Henry C. Collins
Vice President
George W. Wickswat
LOAN DIVISION
COMMERCIAL LOANS
Administrative Vice President
Donald J. Csaposs
Senior Commercial Loan Officer
John H. Cunningham
Commercial Loan Officers
Timothy C. Larson
Richard G. Roberts
MORTGAGE LOANS
Senior Mortgage Officer
Elinore J. Vine
BRANCHES, INSTALLMENT
LOANS/CREDIT CARDS,
RETIREMENT/GOVERNMENT ACCOUNTS
Senior Vice President
Ralph A. Pidgeon
BRANCH OFFICERS
Richard E. Bailey
Thomas H. Lauster
INSTALLMENT LOANS/CREDIT CARDS
Senior Installment Loan
Officer
Thomas M. Poitras
BANK OPERATIONS,
MARKETING/COMMUNITY
RELATIONS, TRUST DEPARTMENT
Senior Vice President
William F. Terry
BANK OPERATIONS
Administrative Vice President
James D. McLoughlin
MARKETING/COMMUNITY
RELATIONS
Vice President
Madeline S. Busch
TRUST DEPARTMENT
Administrative Vice President
Carroll E. Winch
Vice President and
Senior Trust Officer
James Niland
Vice President and
Senior Trust Officer
Matthew G. Waschull
Trust Officer
John P. Fulgan
Investment Officer
Robert Scribner
Branch Locations
Altamont Ave. Office
1400 Altamont Ave.
Schenectady
Telephone: 356-1317
Altamont Ave. West Office
1900 Altamont Ave.
Rotterdam
Telephone: 355-1900
Bay Road Office
292 Bay Road
Queensbury
Telephone: 792-2691
Brandywine Office
State St. at Brandywine Ave.
Schenectady
Telephone: 346-4295
Central Avenue Office
163 Central Ave.
Albany
Telephone: 426-7291
Clifton Park Office
1018 Route 146
Clifton Park
Telephone: 371-8451
Clifton Country Road Office
7 Clifton Country Road
Clifton Park
Telephone: 371-5002
Colonie Office
1892 Central Ave.
Colonie Plaza, Colonie
Telephone: 456-0041
Delmar Office
167 Delaware Ave.
Delmar
Telephone: 439-9941
East Greenbush Office
501 Columbia Turnpike
Rensselaer
Telephone: 479-7233
Glens Falls Office
3 Warren Street
Glens Falls
Telephone: 798-8131
Greenwich Office
131 Main St.
Greenwich
Telephone: 692-2233
Guilderland Office
3900 Carman Road
Schenectady
Telephone: 355-4890
Halfmoon Office
Country Dollar Plaza
Halfmoon
Telephone: 371-0593
Hoosick Falls Office
47 Main St.
Hoosick Falls
Telephone: 686-5352
Hudson Office
507 Warren St.
Hudson
Telephone: 828-9434
Hudson Falls Office
3376 Burgoyne Avenue
Hudson Falls
Telephone: 747-0886
Latham Office
1 Johnson Road
Latham
Telephone: 785-0761
Loudon Plaza Office
372 Northern Blvd.
Albany
Telephone: 462-6668
Madison Avenue Office
1084 Madison Ave.
Albany
Telephone: 489-4711
Main Office
320 State St.
Schenectady
Telephone: 377-3311
Malta Mall
43 Round Lake Road
Ballston Lake
Telephone: 899-1558
Mayfair Office
Saratoga Road at Mayfair
Glenville
Telephone: 399-9121
Mont Pleasant Office
Crane St. at Main Ave.
Schenectady
Telephone: 346-1267
New Scotland Office
301 New Scotland Ave.
Albany
Telephone: 438-7838
Newton Plaza Office
588 New Loudon Road
Latham
Telephone: 786-3687
Niskayuna-Woodlawn Office
3461 State St.
Schenectady
Telephone: 377-2264
Plaza Seven Office
1208 Troy-Schenectady Road
Latham
Telephone: 785-4744
Queensbury Office
33 Quaker Road
Queensbury
Telephone: 798-7226
Rotterdam Office
Curry Road Shopping Ctr.
Rotterdam
Telephone: 355-8330
Rotterdam Square Office
2 Campbell Road
Rotterdam
Telephone: 377-2393
Route 9 Office-Latham
754 New Loudon Rd.
Latham
Telephone: 786-8816
Sheridan Plaza Office
1350 Gerling St.
Schenectady
Telephone: 377-8517
Shoppers' World Office
Old Rte. 146 and Plank Rd.
Clifton Park
Telephone: 383-6851
State Farm Road Office
2050 Western Ave.
Guilderland
Telephone: 452-6913
State Street Office
112 State St.
Albany
Telephone: 436-9043
Stuyvesant Plaza Office
Western Ave. at Fuller Road
Albany
Telephone: 489-2616
Tanners Main Office
345 Main Street
Catskill
Telephone: 943-2500
Tanners West Side Office
238 West Bridge St.
Catskill
Telephone: 943-5090
Troy Office
5th Ave. and State St.
Troy
Telephone: 274-5420
Union Street East Office
1700 Union St.
Schenectady
Telephone: 382-7511
Upper New Scotland Office
583 New Scotland Ave.
Albany
Telephone: 438-6611
Upper Union Street Office
1620 Union St.
Schenectady
Telephone: 374-4056
Wilton Mall Office
Route 50
Saratoga Springs
Telephone: 583-1716
Wolf Road Office
34 Wolf Road
Albany
Telephone: 458-7761
General Information
ANNUAL MEETING
Monday, May 15, 1995
12:00 Noon
Glen Sanders Mansion
One Glen Avenue
Scotia, New York 12302
CORPORATE HEADQUARTERS
320 State Street
Schenectady, New York 12305
(518-377-3311)
DIVIDEND REINVESTMENT PLAN
A Dividend Reinvestment Plan is available to shareholders of TrustCo Bank
Corp NY. It provides for the reinvestment
of cash dividends and optional cash payments to purchase additional shares of
TrustCo stock. The Plan is free of administrative charges, and provides a
convenient method of acquiring additional shares. Trustco Bank, our wholly
owned bank subsidiary, acts as administrator for this service, and has
designated Glens Falls National Bank and
Trust Company to act as agent for shareholders in these transactions.
Shareholders who want additional information may contact the TrustCo
Shareholder Services Department (518-381-3699, ext. 1292).
EQUAL OPPORTUNITY AT TRUSTCO
Trustco Bank is an Affirmative Action Equal Opportunity Employer.
FORM 10-K
TrustCo Bank Corp NY will provide without charge a copy of its Form 10-K upon
written request. Requests and
related inquiries should be directed to William F. Terry, Secretary, TrustCo
Bank Corp NY, P.O. Box 1082, Schenectady, New York 12301-1082.
NASDAQ SYMBOL: TRST
The Corporation's common stock is traded on the NASDAQ National Market
System.
SUBSIDIARIES:
Trustco Bank, National Association
Schenectady, New York
Member FDIC
ORE Subsidiary Corp.
Schenectady, New York
TRANSFER AGENT
Trustco Bank
Securities Department
P.O. Box 380
Schenectady, New York 12301-0380
Exhibit 21
LIST OF SUBSIDIARIES OF TRUSTCO
Trustco Bank, National Association.........Nationally chartered
banking association
ORE Subsidiary Corp........................New York corporation
Exhibit 23
KPMG Peat Marwick LLP
74 North Pearl Street
Albany, NY 12207
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
TrustCo Bank Corp NY:
We consent to incorporation by reference in the Registration
Statements, Form S-8 (No. 33-43153) filed on October 3, 1991,
Form S-8 (No. 33-67176) filed on August 6, 1993, and Form S-8
(No. 33-43153) filed on March 21, 1995 of TrustCo Bank Corp NY
and subsidiaries of our report dated January 27, 1995, relating
to the consolidated statements of condition of TrustCo Bank Corp
NY and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of income, changes in
shareholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1994, which report appears
in the December 31, 1994 Annual Report on Form 10-K of TrustCo
Bank Corp NY. Our report refers to the adoption of the
provisions of Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions," Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes," and Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities."
/s/ KPMG Peat Marwick LLP
Albany, New York
March 27, 1995
Exhibit 24
POWER OF ATTORNEY
The undersigned persons do hereby appoint William F. Terry or
Robert T. Cushing as a true and lawful Attorney In Fact for the
sole purpose of affixing their signatures to the 1994 Annual
Report (Form 10-K) of TrustCo Bank Corp NY to the Securities and
Exchange Commission.
/s/Barton A. Andreoli /s/Lionel O. Barthold
Barton A. Andreoli Lionel O. Barthold
/s/M. Norman Brickman /s/Charles W. Carl, Jr .
M. Norman Brickman Charles W. Carl, Jr.
/s/Robert A. McCormick /s/Nancy A. McNamara
Robert A. McCormick Nancy A. McNamara
/s/Dr. John S. Morris /s/Dr. James H. Murphy
Dr. John S. Morris Dr. James H. Murphy
/s/Richard J. Murray, Jr. /s/Kenneth C. Petersen
Richard J. Murray, Jr. Kenneth C. Petersen
/s/William J. Purdy /s/William F. Terry
William J. Purdy William F. Terry
/s/Philip J. Thompson
Philip J. Thompson
Sworn to before me this 21st day of March 1995
By/s/Joan Clark
Joan Clark
Notary Public, State of New York
Qualified in Albany County
No. 01CL4822282
Commission Expires Nov. 30, 1996
Financial Data Schedules to 10-K Exhibit 27
PERIOD-TYPE 12-MOS
FISCAL-YEAR-END DEC-31-1994
PERIOD-END DEC-31-1994
CASH 52,479
INT-BEARING-DEPOSITS 1,696,335
FED-FUNDS-SOLD 263,000
TRADING-ASSETS 0
INVESTMENTS-HELD-FOR-SALE 117,458
INVESTMENTS-CARRYING 347,858
INVESTMENTS-MARKET 334,455
LOANS 1,152,632
ALLOWANCE 38,851
TOTAL-ASSETS 1,975,677
DEPOSITS 1,789,831
SHORT-TERM 12,713
LIABILITIES-OTHER 30,300
LONG-TERM 3,550
COMMON 15,018
PREFERRED-MANDATORY 0
PREFERRED 0
OTHER-SE 124,265
TOTAL-LIABILITIES-AND-EQUITY 1,975,677
INTEREST-LOAN 93,873
INTEREST-INVEST 46,409
INTEREST-OTHER 0
INTEREST-TOTAL 140,282
INTEREST-DEPOSIT 60,034
INTEREST-EXPENSE 60,698
INTEREST-INCOME-NET 71,528
LOAN-LOSSES 8,056
SECURITIES-GAINS (8,877)
EXPENSE-OTHER 40,560
INCOME-PRETAX 35,528
INCOME-PRE-EXTRAORDINARY 35,528
EXTRAORDINARY 0
CHANGES 0
NET-INCOME 22,888
EPS-PRIMARY 1.54
EPS-DILUTED 1.54
YIELD-ACTUAL 426
LOANS-NON> 1,057
LOANS-PAST 803
LOANS-TROUBLED 910
LOANS-PROBLEM 0
ALLOWANCE-OPEN 34,087
CHARGE-OFFS 4,824
RECOVERIES 1,532
ALLOWANCE-CLOSE 38,851
ALLOWANCE-DOMESTIC 0
ALLOWANCE-FOREIGN 0
ALLOWANCE-UNALLOCATED 38,851
Exhibit 99
KPMG Peat Marwick LLP
74 North Pearl Street
Albany, NY 12207
Independent Auditors' Report
------------------------------------
The Board of Directors and Shareholders of Trustco Bank Corp NY:
We have audited the accompanying consolidated statements of
condition of TrustCo Bank Corp NY and subsidiaries as of December
31, 1994 and 1993, and the related consolidated statements of
income, changes in shareholders' equity, and cash flows for each
of the years in the three-year period ended December 31, 1994.
These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of TrustCo Bank Corp NY and subsidiaries as of December
31, 1994 and 1993, and the results of their operations and their
cash flows for each of the years in the three- year period ended
December 31, 1994, in conformity with generally accepted
accounting principles.
As discussed in note 4 to the consolidated financial statements,
in 1994 the Company adopted the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities" which changed its method of accounting for
certain investments in debt and equity securities. As discussed
in notes 1 and 8 to the consolidated financial statements, in
1993 the Company adopted the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" which changed
its method of accounting for income taxes. As discussed in note
9 to the consolidated financial statements, the Company also
adopted the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other than
Pensions" in 1993 which changed its method of accounting for
postretirement benefits other than pensions.
/s/KPMG Peat Marwick LLP
January 27, 1995
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 52,479
<INT-BEARING-DEPOSITS> 1,696,335
<FED-FUNDS-SOLD> 263,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 117,458
<INVESTMENTS-CARRYING> 347,858
<INVESTMENTS-MARKET> 334,455
<LOANS> 1,152,632
<ALLOWANCE> 38,851
<TOTAL-ASSETS> 1,975,677
<DEPOSITS> 1,789,831
<SHORT-TERM> 12,713
<LIABILITIES-OTHER> 30,300
<LONG-TERM> 3,550
<COMMON> 15,018
0
0
<OTHER-SE> 124,265
<TOTAL-LIABILITIES-AND-EQUITY> 1,975,677
<INTEREST-LOAN> 93,873
<INTEREST-INVEST> 46,409
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 140,282
<INTEREST-DEPOSIT> 60,034
<INTEREST-EXPENSE> 60,698
<INTEREST-INCOME-NET> 71,528
<LOAN-LOSSES> 8,056
<SECURITIES-GAINS> (8,877)
<EXPENSE-OTHER> 40,560
<INCOME-PRETAX> 35,528
<INCOME-PRE-EXTRAORDINARY> 35,528
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,888
<EPS-PRIMARY> 1.54
<EPS-DILUTED> 1.54
<YIELD-ACTUAL> 426
<LOANS-NON> 1,058
<LOANS-PAST> 803
<LOANS-TROUBLED> 910
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 34,087
<CHARGE-OFFS> 4,824
<RECOVERIES> 1,532
<ALLOWANCE-CLOSE> 38,851
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 38,851
</TABLE>
