UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________________
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended Commission File Number 0-10592
March 31, 1996
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:
(Title of class)
Common
____________________________________________________________
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes.(x)
No.( )
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Number of Shares Outstanding
Class of Common Stock as of April 30, 1996
- --------------------- ----------------------
$1 Par Value 17,701,939
============================================================
TrustCo Bank Corp NY
INDEX
Part I. FINANCIAL INFORMATION
PAGE NO.
Item 1.
Interim Financial Statements (Unaudited): 1
Consolidated Statements of Income for the
Three Months Ended March 31, 1996 and 1995
Consolidated Statements of Financial Condition 2
as of March 31, 1996 and December 31, 1995
Consolidated Statements of Cash Flows for the 3 - 4
Three Months Ended March 31, 1996 and 1995
Notes to Consolidated Interim Financial 5
Statements
Independent Auditors' Report 6
Item 2
. Management's Discussion and Analysis 7 - 14
Part II. OTHER INFORMATION
Item 1. Legal Proceedings -- NONE
Item 2. Changes in Securities -- NONE
Item 3. Defaults Upon Senior Securities -- NONE
Item 4. Submission of Matters to Vote of Security
Holders -- NONE
Item 5. Other Information -- NONE
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Reg S-K Exhibit No. Description
- --------------------- --------------------------------
10(a) Trust for Certain Benefits Under
Employment Contract of R.A.
McCormick, dated April 1, 1996.
10(b) Trust for Deferred Benefits
Provided Under Employment
Agreements of Trustco Bank,
National Association, dated April
1, 1996.
10(c) Trust Under Non-Qualified Deferred
Compensation Plans of Trustco Bank,
National Association, dated April
1, 1996.
(b) Reports on Form 8-K
Filing of Form 8-K on January 19,1996 of two press releases
dated January 16, 1996, with fourth quarter and year-end
December 31, 1995 results, and filing of Powers of Attorney,
incorporated herein by reference.
Filing of Form 8-K on February 23,1996, of a press release
declaring a quarterly dividend payable April 1, 1996,
incorporated herein by reference.
Filing of Form 8-K on March 22, 1996, of press release
regarding purchase offer made to ALBANK Financial Corporation
by TrustCo Bank Corp NY, incorporated herein by reference.
Filing of Form 8-K on April 16, 1996, of two press releases
detailing first quarter 1996 results, incorporated herein by
reference.
Filing of Form 8-K on April 23, 1996, of press release
regarding ALBANK Financial Corporation acquisition status,
incorporated herein by reference.
<TABLE>
TRUSTCO BANK CORP NY
Consolidated Statements of Income (Unaudited)
<CAPTION>
(Dollars in Thousands)
3 Months Ended
March 31
1996 1995
--------- ---------
<S> <C> <C>
Interest income:
Interest and fees on loans...........................$ 26,947 26,005
Interest on U. S. Treasuries and agencies............ 8,437 4,972
Interest on states and political
subdivisions........................................ 900 555
Interest on mortgage-backed securities............... 1,322 2,326
Other................................................ 601 571
Interest on federal funds sold....................... 3,301 3,675
------- -------
Total interest income............................. 41,508 38,104
------- -------
Interest expense:
Interest on deposits:
NOW accounts........................................ 891 1,062
Savings............................................. 5,696 5,302
Money market deposit accounts....................... 512 624
Certificates of deposit of $100,000 or more......... 1,281 933
Other time.......................................... 11,264 9,073
Interest on short-term borrowings.................... 733 147
Interest on long-term debt........................... --- 69
------- -------
Total interest expense............................. 20,377 17,210
------- -------
Net interest income................................ 21,131 20,894
Provision for loan losses............................. 3,110 3,573
------- -------
Net interest income after provision
for loan losses................................... 18,021 17,321
------- -------
Noninterest income:
Trust department income.............................. 1,372 1,146
Fees for other services to customers................. 1,693 1,588
Net gain/(loss) on securities available for sale..... (421) 211
Other................................................ 483 504
------- -------
Total noninterest income............................ 3,127 3,449
------- -------
Noninterest expenses:
Salaries and employee benefits....................... 5,342 4,904
Net occupancy expense................................ 1,239 855
Equipment expense.................................... 840 712
FDIC insurance expense............................... 1 1,018
Professional services................................ 787 933
Other real estate expenses........................... 216 793
Other................................................ 2,021 2,536
------- -------
Total noninterest expenses.......................... 10,446 11,751
------- -------
Income before taxes................................ 10,702 9,019
Applicable income taxes............................... 4,017 3,114
------- -------
Net income.......................................$ 6,685 5,905
======== ========
Earnings per Common Share:
Net income.......................................$ 0.37 0.33*
======= =======
Average equivalent shares outstanding (000s omitted). 18,210 17,919
======= =======
*Per share data adjusted for 6 for 5 stock split in August, 1995
See accompanying notes to consolidated interim financial statements.
</TABLE>
<TABLE>
TRUSTCO BANK CORP NY
Consolidated Statements of Financial Condition
<CAPTION>
(Dollars in Thousands)
03/31/96 12/31/95
(Unaudited)
--------- ---------
Assets:
<S> <C> <C>
Cash and due from banks................................$ 49,773 50,889
Federal funds sold..................................... 247,000 239,000
--------- ---------
Total cash and cash equivalents...................... 296,773 289,889
Securities available for sale:
U. S. Treasuries and agencies......................... 461,424 447,343
States and political subdivisions..................... 70,291 70,371
Mortgage-backed securities............................ 68,711 80,284
Other................................................. 35,911 42,208
--------- ---------
Total securities available for sale.................. 636,337 640,206
--------- ---------
Loans:
Commercial............................................ 229,815 233,590
Residential mortgage loans............................ 776,398 763,099
Home equity line of credit............................ 189,822 194,744
Installment loans..................................... 33,167 36,493
--------- ---------
Total loans.......................................... 1,229,202 1,227,926
Less: --------- ---------
Allowance for loan losses............................. 50,580 48,320
Unearned income....................................... 1,615 1,784
--------- ---------
Net loans............................................. 1,177,007 1,177,822
Bank premises and equipment............................ 24,373 25,008
Real estate owned...................................... 2,907 3,732
Other assets........................................... 45,783 39,528
--------- ---------
Total assets....................................... $2,183,180 2,176,185
========= =========
Liabilities:
Deposits:
Demand................................................$ 107,992 111,743
Now accounts.......................................... 230,732 231,107
Savings accounts...................................... 672,181 649,033
Money market deposit accounts......................... 68,739 69,434
Certificates of deposit (in denominations of
$100,000 or more).................................... 88,124 84,210
Other time............................................ 770,761 785,122
--------- ---------
Total deposits....................................... 1,938,529 1,930,649
Short-term borrowings.................................. 61,570 56,654
Accrued expenses and other liabilities................. 28,355 28,783
--------- ---------
Total liabilities.................................... 2,028,454 2,016,086
--------- ---------
Shareholders' equity
Capital stock par value $1; 25,000,000 shares authorized
18,198,585 and 18,134,708 shares issued
March 31, 1996 and December 31, 1995, respectively... 18,199 18,135
Surplus................................................ 116,599 116,128
Undivided profits...................................... 16,548 14,720
Net unrealized gain on securities available for sale... 4,627 12,363
Treasury stock at cost - 496,646 and 496,646 shares at
March 31, 1996 and December 31, 1995, respectively... (1,247) (1,247)
--------- ---------
Total shareholders' equity........................... 154,726 160,099
--------- ---------
Total liabilities and shareholders' equity.......... $2,183,180 2,176,185
========= =========
See accompanying notes to consolidated interim financial statements.
</TABLE>
<TABLE>
TRUSTCO BANK CORP NY
Consolidated Statements of Cash Flows (Unaudited)
<CAPTION>
(Dollars in Thousands)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
THREE MONTHS ENDED March 31, 1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income............................................... 6,685 5,905
-------- --------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 890 485
Provision for loan losses.............................. 3,110 3,573
Loss on sale of securities available for sale.......... 1,089 241
Gain on sale of securities available for sale.......... (668) (452)
(Increase)/decrease in taxes receivable................. (960) 2,334
Increase in interest receivable........................ (190) (1,204)
Increase/(decrease) in interest payable................ (161) 430
(Increase)/decrease in other assets..................... 335 (3,652)
Increase/(decrease) in accrued expenses................ (276) 606
Other real estate charge offs.......................... 188 ---
-------- --------
Total adjustments 3,357 2,361
-------- --------
Net cash provided by operating activities................ 10,042 8,266
-------- --------
Cash flows from investing activities:
Proceeds from sales of securities available for sale... 87,749 92,023
Purchase of securities available for sale.............. (160,388) (198,687)
Proceeds from maturities and calls
of securities avail for sale.......................... 62,912 50
Proceeds from maturities of investment securities ..... --- 13,438
Purchase of investment securities...................... --- (3,720)
Net increase in loans.................................. (2,633) (3,461)
Proceeds from sales of real estate owned............... 975 1,192
Capital expenditures................................... (255) (477)
-------- --------
Net cash used in investing activities................ (11,640) (99,642)
-------- --------
Cash flows from financing activities:
Net increase in deposits............................... 7,880 26,243
Increase in short-term borrowing....................... 4,916 1,316
Repayment of long-term debt............................ --- (3,550)
Proceeds from issuance of common stock................. 535 480
Purchase of treasury stock............................. --- (253)
Dividends paid......................................... (4,849) (8,050)
-------- --------
Net cash provided by financing activities............ 8,482 16,186
-------- --------
Net increase/(decrease) in cash and cash equivalents..... 6,884 (75,190)
Cash and cash equivalents at beginning of period......... 289,889 315,479
-------- --------
Cash and cash equivalents at end of period.............. $ 296,773 240,289
======== ========
See accompanying notes to consolidated interim financial statements. (Continued)
</TABLE>
<TABLE>
TRUSTCO BANK CORP NY
Consolidated Statements of Cash Flows Continued (Unaudited)
<CAPTION>
(Dollars in Thousands)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
THREE MONTHS ENDED March 31, 1996 1995
-------- --------
<S> <C> <C>
Interest paid..........................................$ 20,538 16,780
Income taxes paid...................................... 4,977 780
Transfer of loans to real estate owned................. 338 179
Increase/(decrease) in dividends payable............... 9 (4,020)
Change in unrealized gain on securities
available for sale-gross.............................. 13,175 2,501
Change in deferred tax effect on unrealized gain
on securities available for sale...................... (5,440) (1,043)
See accompanying notes to consolidated interim financial statements.
</TABLE>
TrustCo Bank Corp NY
Notes to Consolidated Interim Financial Statements
(Unaudited)
1. Financial Statement Presentation
In the opinion of the management of TrustCo Bank Corp NY (the
Company), the accompanying unaudited Consolidated Interim
Financial Statements contain all adjustments necessary,
consisting of normal recurring accruals, to present fairly
the financial position as of March 31, 1996, the results
of operations and cash flows for the three month periods
ended March 31, 1996 and 1995. The accompanying Consoli-
dated Interim Financial Statements should be read in
conjunction with the TrustCo Bank Corp NY year-end
Consolidated Financial Statements, including notes thereto,
which are included in TrustCo Bank Corp NY's 1995 Annual
Report to Shareholders on Form 10-K.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
TrustCo Bank Corp NY:
We have reviewed the consolidated statement of financial
condition of TrustCo Bank Corp NY and subsidiaries (the
Company) as of March 31, 1996, and the related consolidated
statements of income and cash flows for the three-month
periods ended March 31, 1996 and 1995. These consolidated
financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information
consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially
less in scope than an audit conducted in accordance with
generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express
such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the consolidated
financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated statement of
financial condition of TrustCo Bank Corp NY and subsidiaries
as of December 31, 1995 and the related consolidated
statements of income, changes in shareholders' equity, and
cash flows for the year then ended (not presented herein);
and in our report dated January 26, 1996, we expressed an
unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the
accompanying consolidated statement of financial condition
as of December 31, 1995, is fairly presented, in all material
respects, in relation to the consolidated statement of
financial condition from which it has been derived.
/s/KPMG Peat Marwick LLP
______________________________
KPMG Peat Marwick LLP
Albany, New York
April 12, 1996
TrustCo Bank Corp NY
Management's Discussion and Analysis
March 31, 1996
The review that follows focuses on the factors affecting the
financial condition and results of operations of TrustCo Bank
Corp NY ("TrustCo" or "Company") during the three month
period ended March 31, 1996, with comparisons to 1995 as
applicable. Net interest income and net interest margin are
presented on a fully taxable equivalent basis in this
discussion. The consolidated interim financial statements
and related notes, as well as the 1995 Annual Report to
Shareholders, should be read in conjunction with this review.
Certain amounts in years prior to 1996 have been reclassified
to conform to the 1996 presentation.
Overview
TrustCo recorded net income of $6.7 million, or $0.37 per
share for the three months ended March 31, 1996, as compared
to $5.9 million or $0.33 per share in the same period in
1995. The per share amounts for 1995 have been restated for
the effect of the 6 for 5 stock split effective August 1995.
The primary factors accounting for the year to date increase
are:
-- the increase in taxable equivalent net interest
income to $21.8 million in 1996 from $21.3 million
in 1995, and
-- continued emphasis on expense control, resulting in
an efficiency ratio of 40.4% in 1996.
Asset/Liability Management
The Company strives to generate superior earnings
capabilities through a mix of core deposits funding a prudent
mix of earning assets. This is, in its most fundamental form,
the essence of asset/liability management. Additionally,
TrustCo attempts to maintain adequate liquidity and reduce
the sensitivity of net interest income to changes in interest
rates to an acceptable level, while enhancing profitability
both on a short term and long term basis.
Earning Assets
Average earning assets increased to $2.1 billion during the
first quarter of 1996, an increase of $205.9 million over the
same period a year ago. The table "Distribution of Assets,
Liabilities and Shareholders' Equity: Interest Rates and
Interest Differential" gives a detailed breakdown of
TrustCo's average interest earning assets and interest
bearing liabilities for the three months ended March 31, 1996
and 1995. The remainder of this discussion will utilize
average balances for 1996 and 1995 as shown in the enclosed
table.
Loans: Average loans increased $63 million to $1.23 billion
during the first quarter, a 5.5% increase over the first
quarter of the prior year. Interest income on loans
increased $917 thousand, primarily due to loan growth. The
average rate declined 19 basis points to 8.83% and was driven
by decreased prime rates in the second half of 1995 and first
quarter of 1996.
Most of the growth in the loan portfolio was the result of
increases in residential first mortgages. TrustCo's
aggressive marketing of these loans combined with quick
decision on applications and low closing costs, allowed the
Company to grow residential first mortgages an average $85.4
million or 12.5% over the first quarter of last year.
During the quarter, the Company's Home Equity Portfolio
declined $14.5 million as the result of loan refinancing
activity. The 88 basis points decline in related interest
rates was mainly due to decreases in the prime lending rate.
Securities Available for Sale: Securities available for sale
had an average balance of $628.9 million for the first
quarter of 1996, versus $135.2 million one year earlier.
Most of the increase is the result of action taken in
December 1995 when the Company transferred the entire held
to maturity securities portfolio to the securities available
for sale portfolio as permitted by contemporaneous changes
in the accounting for investment securities. This action
allows the Company to take full advantage of continuing
changes in interest rates to maximize the overall yield on
the portfolio while providing additional liquidity.
When comparing the portfolio's average rate this quarter with
the first quarter of 1995, the rate appears to have dropped
from 7.71% in 1995 to 7.50% in 1996. However, if considering
both the available for sale portfolio and the investment
portfolio, last year's combined yield was 7.32%. Therefore,
the yield on total marketable securities increased 18 basis
points on increased balances of $150.8 million.
Interest income on this portfolio increased $9.2 million over
the first quarter a year ago to $11.8 million. Most of the
increase is due to higher balances.
Investment Securities: TrustCo had no investment securities
during the first quarter of 1996. The entire investment
portfolio was transferred to the available for sale portfolio
in December 1995, when the accounting authorities allowed a
one time transfer of securities from the held to maturity
category to the available for sale category. As previously
discussed, this action allows the Company to actively manage
the transferred assets to take advantage of changes in
interest rates or other banking opportunities that become
available.
Federal Funds Sold: The 1996 first quarter average balance
of federal funds sold was $244.5 million, $8.4 million lower
than the first quarter of 1995. Portfolio yield declined to
5.43%, down 46 basis points from the 5.89% recorded one year
earlier. Changes in the yield resulted from changes in the
target rate set by the Federal Reserve Board for federal
funds sold. Interest income on this portfolio dropped $374
thousand. Approximately two-thirds of the change was due to
the drop in rates, and one-third of the change was the result
of lower portfolio balances.
Income From Earning Assets: Income from earning assets rose
$3.6 million over the first quarter of 1995. Increases in
the balance of earning assets offset the effect of lower
interest rates.
Funding Opportunities
TrustCo utilizes various funding sources to support its
earning assets portfolio. The vast majority of the Company's
funding comes from traditional deposit vehicles such as
savings, NOW and time deposit accounts.
Total interest bearing liabilities averaged $1.89 billion for
the first quarter of 1996, an increase of $180.1 million over
the first quarter of 1995. Interest bearing checking
balances (NOW and money market accounts) declined $21.9
million, while savings, CD's over $100 thousand, other time
deposits, and short-term borrowings increased $35.4 million,
$19.5 million, $101.6 million and $48.8 million respectively.
Continuing a positive trend begun last year, demand deposits
rose $12.1 million over 1995's first quarter to $104.1
million.
Growth in deposit balances resulted from successful marketing
and advertising campaigns undertaken in the first quarter of
1995 in both CD and savings products, which continued to
attract deposits throughout the year. In TrustCo's past
experience, deposits gathered as the result of these types
of campaigns tend to become a very stable source of core
customers who maintain their deposit relationship with the
Company through various interest rate cycles and provide
opportunities for cross selling additional banking services.
The increase in short-term borrowings balances was due to
growth of the Trustco Short Term Investment Account which was
introduced during the second quarter of 1995.
The yield on these liabilities increased 25 basis points to
4.33% from 4.08%, one year earlier. Most of the increased
yield is the result of higher interest rates paid during the
CD campaign discussed previously.
As these deposits renew at lower rates, portfolio yield is
expected to drop later this year. Total interest expense
rose $3.2 million to $20.4 million as compared with $17.2
million a year ago. Approximately three-quarters of the
increase was the result of higher balances.
Net Interest Income
Taxable equivalent net interest income rose $418 thousand to
$21.8 million for the first quarter of 1996. At the same
time, net interest margin declined 36 basis points to 4.13%,
down from 4.49% a year ago. Asset growth completely offset
the effects of the lower interest margin.
Nonperforming Assets
Nonperforming assets include nonperforming loans which are
those loans in a nonaccrual status, loans that have been
restructured and loans past due 90 days or more and still
accruing interest. Also included in the total of
nonperforming assets are foreclosed real estate properties,
which are categorized as real estate owned.
Impaired loans are defined as those commercial and commercial
real estate loans on a nonaccrual status and loans
restructured since January 1, 1995, when newly effective
accounting standards required changing the identification,
measurement and reporting of impaired loans and loans whose
terms have been modified in a troubled debt restructuring.
The following will describe the nonperforming assets of
TrustCo as of March 31, 1996.
Nonperforming Loans: Total nonperforming loans were $15.6
million at March 31, 1996, down from $15.7 million at year
end 1995. Nonaccrual loans were $12.8 million at December
31, 1995 and decreased to $12.6 million at the end of the
first quarter of 1996. Restructured loans increased $864
thousand to $1.5 million during the same period of time.
Total commercial and commercial real estate impaired loans
were $8.2 million at March 31, 1996 and together with the
newly restructured retail loans of $1.5 million represent the
Company's impaired loans at March 31, 1996. Of the $15.6
million nonperforming loans at quarter end, $9.6 million were
identified as being impaired, leaving $5.9 million of loans
that are nonperforming retail loan products and commercial
loans that are past due more than 90 days and still accruing
interest. TrustCo does not consider these to be impaired
loans.
At March 31, 1996, TrustCo had $4.4 million of residential
mortgage loans in nonaccrual status, compared to $3.5 million
at the end of 1995. There have been net charge offs of $298
thousand commercial and commercial real estate loans, $332
thousand residential real estate loans and $220 thousand
credit card and installment loans during the first quarter
of 1996.
Real Estate Owned: Total real estate owned decreased from
$3.7 million at year end 1995 to $2.9 million at March 31,
1996. The decrease is the result of $975 thousand in
property sales and $188 thousand in write downs, partially
offset by a transfer of $338 thousand in loans to real estate
owned. At March 31, 1995, real estate owned was $4.1
million.
Allowance for Loan Losses: The balance of the allowance for
loan losses is maintained at a level that is, in management's
judgment, representative of the amount of the risk inherent
in the loan portfolio, given past, present and expected
future conditions.
At March 31, 1996, the allowance for loan losses was $50.6
million, up $2.3 million from the year end 1995 balance of
$48.3 million. This allowance represents a reserve coverage
of 3.3 times the nonperforming loans at March 31, 1996,
compared to 3.1 times coverage at year end 1995, and 2.2
times coverage at March 31, 1995. The provision charged to
expense during the quarter was $3.1 million for 1996,
compared to $3.6 million for 1995.
Liquidity and Interest Rate Sensitivity
TrustCo seeks to obtain favorable sources of funding and to
maintain prudent levels of liquid assets in order to satisfy
varied liquidity demands. TrustCo's earnings performance and
strong capital position enable the Company to raise funds
easily in the marketplace and to secure new sources of
funding. The Company actively manages its liquidity through
target ratios established under its liquidity policies.
Continual monitoring of both historical and prospective
ratios allows TrustCo to employ strategies necessary to
maintain adequate liquidity. Management has also defined
various degrees of adverse liquidity situations which could
potentially occur, and has prepared appropriate contingency
plans should such a situation arise.
Noninterest Income
Total noninterest income for the first quarter was $3.1
million in 1996, compared to $3.4 million in 1995. Included
in both 1996 and 1995 are securities transactions. For 1996,
the Company recorded a net securities loss of $421 thousand,
compared to a net gain from securities transactions of $211
thousand in 1995. Therefore, once these securities trans-
actions are eliminated, the 1996 noninterest income was
$3.5 million and the 1995 amount was $3.2 million.
Increased fees for fiduciary activities resulting from
growth in trust assets under management was responsible
for most of the increase.
Noninterest Expense
Total noninterest expense was $10.4 million in the first
quarter of 1996 and $11.8 million in the comparable period
of 1995. Most of the decrease was the result of the decrease
in FDIC insurance premium paid. Because TrustCo is
financially sound and well capitalized, under the rate
changes put into effect in January 1996, the Company is
subject only to the statutory minimum assessment of $1
thousand per semi-annual period. The Company's efficiency
ratio was 40.42% for the first quarter of 1996, compared to
44.58% for the first quarter of 1995.
Income Taxes
In the first quarter of 1996 TrustCo recognized income tax
expense of $4.0 million, compared to $3.1 million in 1995.
The effective tax rate for 1996 was 37.5%, compared to 34.5%
in 1995.
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 traditionally most
of its capital requirements are met through the capital
retention program. Previously TrustCo has stated its
intention to open three to five new branch offices each year
for the next couple of years. These new branches and the
related deposit growth anticipated from these locations will
not require additional capital beyond that which is already
existing within the Company or that will be developed and
retained in the coming years.
Total shareholders' equity at March 31, 1996, was $154.7
million, down 3.4% from year end 1995, and 8.3% greater than
March 31, 1995. The change in shareholders' equity between
year end 1995 and March 31, 1996, reflects a $7.7 million
reduction in net unrealized gains on securities available for
sale. Excluding the FAS 115 equity adjustment, shareholders'
equity was $150.1 million, $147.7 million and $141.4 million
at March 31, 1996, December 31, 1995 and March 31, 1995,
respectively.
TrustCo declared dividends of $0.275 so far in 1996, compared
to $0.229 in 1995. These results represent a dividend payout
ratio of 72.67% in 1996 and 68.25% in 1995. The Company
achieved the following ratios as of March 31, 1996 and 1995:
March 31, Minimum Regulatory
1996 1995 Guidelines
---- ---- -------------
Tier 1 risk adjusted
Capital 12.74 12.33 4.00
Total risk adjusted
Capital 14.03 13.61 8.00
In addition, at March 31, 1996 and 1995, the consolidated
equity to total assets ratio (excluding the mark to market
effect on securities available for sale) was 6.89% and 7.08%,
respectively.
<TABLE>
TrustCo Bank Corp NY
Management's Discussion and Analysis
STATISTICAL DISCLOSURE
I. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
The following table summarizes the component distribution of average balance
sheet, related interest income and expense and the average annualized yields on
interest-earning assets and annualized rates on interest-bearing libilities of the
Registrant and the Bank (adjusted for tax equivalency) for each of the reported
periods. Nonaccrual loans are included in loans for this analysis. The average
balances of securities available for sale is calculated using amortized costs for
these securities. Included in the balance of shareholders' equity is unrealized
appreciation, net of tax, in the available for sale portfolio of $11.3 million in
1996 and $547 thousand in 1995.
<CAPTION>
First Quarter First Quarter
1996 1995
__________________________ ______________________________________________________
Average Average Average Average Change in Variance Variance
(dollars in thousands) Balance Interest Rate Balance Interest Rate Interest Balance Rate
Income/ Change Change
Assets Expense
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial loans......................$ 232,418 $ 5,420 9.34% $ 239,451 $ 5,579 9.36% (159) (150) (9)
Real estate loans..................... 769,930 16,087 8.36% 684,557 14,321 8.37% 1,766 1,891 (125)
Home equity credit line............... 192,151 4,449 9.29% 206,631 5,184 10.17% (735) (328) (407)
Installment loans..................... 32,665 1,098 13.48% 33,028 1,053 12.93% 45 (65) 110
--------- ------ --------- ------ ----- ----- -----
Loans, net of unearned income.........1,227,164 27,054 8.83% 1,163,667 26,137 9.02% 917 1,348 (431)
Securities available for sale:
U.S. Treasury and agencies........... 448,424 8,504 7.59% 118,653 2,318 7.81% 6,186 6,660 (474)
Mortgage-backed securities........... 72,175 1,322 7.33% --- --- --- 1,322 1,322 ---
States and political subdivisions.... 68,765 1,315 7.65% 350 7 7.43% 1,308 1,307 1
Other ............................... 39,529 642 6.51% 16,199 279 6.97% 363 489 (126)
--------- ------ --------- ------ ----- ----- -----
Total Securities Available for Sale 628,893 11,783 7.50% 135,202 2,604 7.71% 9,179 9,778 (599)
Investment securities:
U.S. Treasury and agencies........... --- --- --- 145,486 2,709 7.45% (2,709) (2,709) ---
Mortgage-backed securities........... --- --- --- 138,087 2,326 6.74% (2,326) (2,326) ---
States and political subdivisions.... --- --- --- 44,346 807 7.28% (807) (807) ---
Other ............................... --- --- --- 15,012 295 7.86% (295) (295) ---
--------- ------ --------- ------ ----- ----- -----
Total investment securities........ --- --- --- 342,931 6,137 7.16% (6,137) (6,137) ---
Federal funds sold.................... 244,505 3,301 5.43% 252,867 3,675 5.89% (374) (111) (263)
--------- ------ --------- ------ ----- ----- -----
Total Interest-earning assets.......2,100,562 42,138 8.03% 1,894,667 38,553 8.17% 3,585 4,878 (1,293)
Allowance for loan losses............. (50,494) ------ (40,844) ------ ----- ----- -----
Cash and noninterest-earning assets... 131,666 120,756
--------- ---------
Total assets.......................$2,181,734 $ 1,974,579
========= =========
Liabilities and shareholders' equity
Interest-bearing deposits:
NOW accounts .......................$ 231,431 891 1.55% $ 235,776 $ 1,062 1.83% (171) (18) (153)
Money market accounts................ 70,736 512 2.91% 88,333 624 2.87% (112) (175) 63
Savings.............................. 656,479 5,696 3.49% 621,074 5,302 3.46% 394 346 48
CD's over $100M...................... 88,879 1,281 5.80% 69,397 933 5.45% 348 284 64
Other time deposits.................. 780,346 11,264 5.81% 678,729 9,073 5.42% 2,191 1,486 705
--------- ------ --------- ------ ----- ----- -----
Total interest-bearing deposits.....1,827,871 19,644 4.32% 1,693,309 16,994 4.07% 2,650 1,923 727
Short-term borrowings................. 64,630 733 4.56% 15,871 147 3.76% 586 548 38
Long-term debt........................ --- --- --- 3,195 69 8.75% (69) (69) ---
--------- ------ --------- ------ ----- ----- -----
Total interest-bearing liabilities..1,892,501 20,377 4.33% 1,712,375 17,210 4.08% 3,167 2,402 765
Demand deposits....................... 104,115 ------ 92,064 ------ ----- ----- -----
Other liabilities..................... 27,081 29,597
Shareholders' equity.................. 158,037 140,543
--------- ---------
Total liab. & shareholders' equity.$2,181,734 $ 1,974,579
========= =========
Net interest income................... 21,761 21,343 418 2,476 (2,058)
------ ------ ----- ----- -----
Net interest spread................... 3.70% 4.09%
Net interest margin (net interest
income to total interest-earning
assets)............................ 4.13% 4.49%
Tax equivalent adjustment 630 449
------ ------
Net interest income per book....... $ 21,131 $ 20,894
====== ======
</TABLE>
SIGNATURES
Pursuant to the requirements 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
Date: May 10, 1996 By/s/Robert A. McCormick
--------------------------
Robert A. McCormick
President and
Chief Executive Officer
Date: May 10, 1996 By/s/Robert T. Cushing
--------------------------
Robert T. Cushing
Vice President and Chief
Financial Officer
Exhibits Index
Reg S-K Exhibit No. Description
- ------------------- -----------------------------
10(a) Trust for Certain Benefits Under
Employment Contract of R.A.
McCormick, dated April 1, 1996.
10(b) Trust for Deferred Benefits
Provided Under Employment
Agreements of Trustco Bank,
National Association, dated April
1, 1996.
10(c) Trust Under Non-Qualified Deferred
Compensation Plans of Trustco Bank,
National Association, dated April
1, 1996.
Exhibit 10(a)
TRUST FOR CERTAIN BENEFITS UNDER EMPLOYMENT CONTRACT
____________________________________________________
OF R.A. MCCORMICK
___________________
This Agreement made this first day of April, 1996, by
and between Trustco Bank, National Association ("Company")
and Trustco Bank, National Association, Trust Department
("Trustee");
WHEREAS, Company has entered into an employment
agreement with Robert A. McCormick ("Executive"), dated
April 1, 1996, which provides for termination benefits
and, in the event of a Change of Control, gross-up
benefits ("Agreement");
WHEREAS, Company wishes to establish a trust
(hereinafter called "Trust") and to contribute to the
Trust assets that shall be held therein, subject to the
claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to Executive in
such manner and at such times as specified in the
Agreement;
WHEREAS, it is the intention of the parties that this
Trust shall constitute an unfunded arrangement and shall
not affect the status of the Agreement as an unfunded plan
maintained for the purpose of providing deferred
compensation for a select group of management or highly
compensated employees for purposes of Title I of the
Employee Retirement Income Security Act of 1974; and
WHEREAS, it is the intention of Company to make
contributions to the Trust to provide itself with a source
of funds to assist it in the meeting of its liabilities
under the Agreement;
NOW, THEREFORE, the parties do hereby establish the
Trust and agree that the Trust shall be comprised, held
and disposed of as follows:
Section 1. Establishment of Trust.
(a) Company hereby deposits with Trustee in trust
Four Million Six Hundred Twelve Thousand Five Hundred
Dollars ($4,612,500.00), which shall become the principal
of the Trust to be held, administered and disposed of by
Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be
irrevocable.
(c) The Trust is intended to be a grantor trust,
of which Company is the grantor, within the meaning of
Subpart E, Part I, Subchapter J, Chapter 1, Subtitle A of
the Internal Revenue Code of 1986, as amended, and shall
be construed accordingly.
(d) The principal of the Trust shall be held
separate and apart from other funds of Company and shall
be used exclusively for the uses and purposes of
Executive, his beneficiaries and Company's general
creditors as herein set forth. Executive and his
beneficiaries shall have no preferred claim on, or any
beneficial ownership interest in, any assets of the Trust.
Any rights created under the Agreement and this Trust
Agreement shall be mere unsecured contractual rights of
Executive and his beneficiaries against Company. Any
assets held by the Trust will be subject to the claims of
Company's general creditors under federal and state law in
the event of Insolvency, as defined in Section 3(a)
herein.
(e) Within thirty (30) days following the end of
each calendar year, Company shall be required to
irrevocably deposit additional cash or other property to
the Trust in an amount sufficient to pay Executive the
benefits payable pursuant to the terms of the Agreement as
of the close of such year.
(f) Company, in its sole discretion, may at any
time, or from time to time, make additional deposits of
cash or other property in trust with Trustee to augment
the principal to be held, administered and disposed of by
Trustee as provided in this Trust Agreement. Neither
Trustee nor Executive shall have any right to compel such
additional deposits.
(g) Upon a Change of Control, as defined herein,
or upon the occurrence of an event pursuant to which
Executive becomes entitled to payment of benefits under
the Agreement, Company shall, as soon as possible, but in
no event later than thirty (30) days following such Change
of Control or such event, make an irrevocable contribution
to the Trust in an amount that is sufficient to pay
Executive or his beneficiaries all of the benefits which
have accrued on behalf of Executive or his beneficiaries
pursuant to the terms of the Agreement as of the date on
which the Change of Control or such event occurred.
Section 2. Payments to Executive and His
Beneficiaries
(a) Company shall deliver to Trustee a schedule
(the "Payment Schedule") that indicates the amounts
payable in respect of each Executive (and his
beneficiaries), that provides a formula or other
instructions acceptable to Trustee for determining the
amounts so payable, the form in which such amount is to be
paid (as provided for or available under the Agreement),
and the time of commencement for payment of such amounts.
Except as otherwise provided herein, Trustee shall make
payments to Executive and his beneficiaries in accordance
with such Payment Schedule. The Trustee shall make
provision for the reporting and withholding of any
federal, state or local taxes that may be required to be
withheld with respect to the payment of benefits pursuant
to the terms of the Agreement and shall pay amounts
withheld to the appropriate taxing authorities or
determine that such amounts have been reported withheld
and paid by Company.
(b) The entitlement of Executive or his
beneficiaries to benefits under the Agreement shall be
determined by Company or such party as it shall designate
under the Agreement, and any claim for such benefits shall
be considered and reviewed under the procedures set out in
the Agreement.
(c) Company may make payment of benefits directly
to Executive or his beneficiaries as they become due under
the terms of the Agreement. Company shall notify Trustee
of its decision to make payment of benefits directly prior
to the time amounts are payable to Executive or his
beneficiaries. In addition, if the principal of the Trust
is not sufficient to make payments of benefits in
accordance with the terms of the Agreement, Company shall
make the balance of each such payment as it falls due.
Trustee shall notify Company where principal is not
sufficient.
Section 3. Trustee Responsibility Regarding Payments
to Trust Beneficiary when Company is Insolvent.
(a) Trustee shall cease payment of benefits to
Executive and his beneficiaries if the Company is
Insolvent. Company shall be considered "Insolvent" for
purposes of this Trust Agreement if (i) Company is unable
to pay its debts as they become due, or (ii) Company is
subject to a pending proceeding as a debtor under the
United States Bankruptcy Code, or (iii) Company is
determined to be Insolvent by the Federal Deposit
Insurance Corporation.
(b) At all times during the continuance of this
Trust, as provided in Section 1(d) hereof, the principal
of the Trust shall be subject to claims of general
creditors of Company under federal and state law as set
forth below.
(1) The Board of Directors and the
Chief Executive Office of Company shall have the
duty to inform Trustee in writing of Company's
Insolvency. If a person claiming to be a
creditor of Company alleges in writing to
Trustee that Company has become Insolvent,
Trustee shall determine whether Company is
Insolvent and, pending such determination,
Trustee shall discontinue payment of benefits to
Executive or his beneficiaries.
(2) Unless Trustee has actual knowledge
of Company's Insolvency, or has received notice
from Company or a person claiming to be a
creditor alleging that Company is Insolvent,
Trustee shall have no duty to inquire whether
Company is Insolvent. Trustee may in all events
rely on such evidence concerning Company's
solvency as may be furnished to Trustee and that
provides Trustee with a reasonable basis for
making a determination concerning Company's
solvency.
(3) If at any time Trustee has
determined that Company is Insolvent, Trustee
shall discontinue payments to Executive or his
beneficiaries and shall hold the assets of the
Trust for the benefit of Company's general
creditors. Nothing in this Trust Agreement
shall in any way diminish any rights of
Executive or his beneficiaries to pursue their
rights as general creditors of Company with
respect to benefits due under the Agreement or
otherwise.
(4) Trustee shall resume the payment of
benefits to Executive or his beneficiaries in
accordance with Section 2 of this Trust
Agreement only after Trustee has determined that
Company is not Insolvent (or is no longer
Insolvent).
(c) Provided that there are sufficient assets, if
Trustee discontinues the payment of benefits from the
Trust pursuant to Section 3(b) hereof and subsequently
resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all
payments due to Executive or his beneficiaries under the
terms of the Agreement for the period of such
discontinuance, less the aggregate amount of any payments
made to Executive or his beneficiaries by Company in lieu
of the payments provided for hereunder during any such
period of discontinuance.
Section 4. Investment Authority.
(a) Trustee may invest in securities (including
stock or rights to acquire stock) or obligations issued by
Company. All rights associated with assets of the Trust
shall be exercised by Trustee or the person designated by
Trustee, and shall in no event be exercisable by or rest
with Executive. Company shall have the right at any time,
and from time to time in its sole discretion, to
substitute assets of equal fair market value for any asset
held by the Trust. This right is exercisable by Company
in a nonfiduciary capacity without the approval or consent
of any person in a fiduciary capacity.
Section 5. Disposition of Income.
(a) During the term of this Trust, all of the income
received by the Trust, net of expenses and taxes, shall be
returned to Company.
Section 6. Accounting by Trustee.
Trustee shall keep accurate and detailed records of
all investments, receipts, disbursements, and all other
transactions required to be made, including such specific
records as shall be agreed upon in writing between Company
and Trustee. Within thirty (30) days following the close
of each calendar year and within thirty (30) days after
the removal or resignation of Trustee, Trustee shall
deliver to Company a written account of its administration
of the Trust during such year or during the period from
the close of the last preceding year to the date of such
removal or resignation, setting forth all investments,
receipts, disbursements and other transactions effected by
it, including a description of all securities and
investments purchased and sold with the cost or net
proceeds of such purchases or sales (accrued interest paid
or receivable being shown separately), and showing all
cash, securities and other property held in the Trust at
the end of such year or as of the date of such removal or
resignation, as the case may be.
Section 7. Responsibility of Trustee.
(a) If Trustee undertakes or defends any
litigation arising in connection with this Trust, Company
agrees to indemnify Trustee against Trustee's costs,
expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be
primarily liable for such payments. If Company does not
pay such costs, expenses and liabilities in a reasonably
timely manner, Trustee may obtain payment from the Trust.
(b) Trustee may consult with legal counsel (who
may also be counsel for Company generally) with respect to
any of its duties or obligations hereunder.
(c) Trustee may hire agents, accountants,
actuaries, investment advisors, financial consultants or
other professionals to assist it in performing any of its
duties or obligations hereunder.
(d) Trustee shall have, without exclusion, all
powers conferred on Trustees by applicable law, unless
expressly provided otherwise herein, provided, however,
that if an insurance policy is held as an asset of the
Trust, Trustee shall have no power to name a beneficiary
of the policy other than the Trust, to assign the policy
(as distinct from conversion of the policy to a different
form) other than to a successor Trustee, or to loan to any
person the proceeds of any borrowing against such policy.
(e) Notwithstanding any powers granted to Trustee
pursuant to this Trust Agreement or to applicable law,
Trustee shall not have any power that could give this
Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of Section
301.7701-2 of the Procedure and Administrative Regulations
promulgated pursuant to the Internal Revenue Code.
Section 8. Compensation and Expenses of Trustee.
Company shall pay all administrative and Trustee's
fees and expenses. If not so paid, the fees and expenses
shall be paid from the Trust.
Section 9. Resignation and Removal of Trustee.
(a) Trustee may resign at any time by written
notice to Company, which shall be effective thirty (30)
days after receipt of such notice unless Company and
Trustee agree otherwise.
(b) Trustee may be removed by Company on ten (10)
days notice or upon shorter notice accepted by Trustee.
(c) Within ten (10) days after a Hostile Change
of Control, as defined herein, the Trust shall be funded
with an amount sufficient to pay the Executive or
beneficiary on whose behalf it is established, all of the
benefits which have accrued on behalf of said Executive or
his beneficiaries pursuant to the terms of this Agreement
as of the date of the Change of Control. Upon a Hostile
Change of Control, as defined herein, Executive or his
beneficiaries shall appoint an independent bank trust
department or another independent party that may be
granted corporate trustee powers under state law, as
trustee of the Trust. Upon receipt from a successor
Trustee of its written acceptance of appointment in which
the successor Trustee agrees to be bound by the terms of
this Trust Agreement, the Company will immediately
transfer to such successor Trustee the assets of the
Trust. No action taken pursuant to this Section 9(c) will
create on behalf of Executive or his beneficiaries any
preferred claim on, or any beneficial ownership interest
in, any assets of the Trust and such assets will continue
to be subject to the claims of Company's general creditors
under federal and state law in the event of Insolvency, as
defined in Section 3(a) herein. A Trustee named by
Executive or his beneficiaries pursuant to this Section
9(c) may not be removed by Company.
(d) If Trustee resigns or is removed within
fifteen (15) years after a Change of Control, as defined
herein, Company shall apply to a court of competent
jurisdiction for the appointment of a successor trustee or
for instructions within five (5) days after such Trustee
Resignation.
(e) Upon resignation or removal of Trustee and
appointment of a successor Trustee, all assets shall
subsequently be transferred to the successor Trustee. The
transfer shall be completed within thirty (30) days after
receipt of notice of resignation, removal or transfer,
unless Company extends the time limit.
(f) If Trustee resigns or is removed, a successor
shall be appointed, in accordance with Section 10 hereof,
by the effective date of resignation or removal under
paragraph(s) (a) or (b) of this section. If no such
appointment has been made, Trustee may apply to a court of
competent jurisdiction for appointment of a successor or
for instructions. All expenses of Trustee in connection
with the proceeding shall be allowed as administrative
expenses of the Trust.
Section 10. Appointment of Successor.
(a) If Trustee resigns or is removed in
accordance with Section 9(a) or (b) hereof, Company may
appoint any third party, such as a bank trust department
or other party that may be granted corporate trustee
powers under state law, as a successor to replace Trustee
upon resignation or removal. The appointment shall be
effective when accepted in writing by the new Trustee, who
shall have all of the rights and powers of the former
Trustee, including ownership rights in the Trust assets.
The former Trustee shall execute any instrument necessary
or reasonably requested by Company or the successor
Trustee to evidence the transfer.
(b) If Trustee resigns or is removed pursuant to
the provisions of Section 9(d) hereof and a court of
competent jurisdiction for the appointment of a successor
trustee selects a successor Trustee, Trustee may appoint
any third party such as a bank trust department or other
party that may be granted corporate trustee powers under
state law, as a successor to replace Trustee upon
resignation or removal. The appointment of a successor
Trustee shall be effective when accepted in writing by the
new Trustee. The new Trustee shall have all the rights
and powers of the former Trustee, including ownership
rights in Trust assets. The former Trustee shall execute
any instrument necessary or reasonably requested by the
successor Trustee to evidence the transfer.
Section 11. Amendment or Termination.
(a) This Trust Agreement may be amended by a
written instrument executed by Trustee and Company.
Notwithstanding the foregoing, no such amendment shall
conflict with the terms of the Agreement or shall make the
Trust revocable after it has become irrevocable in
accordance with Section 1(b) hereof.
(b) The Trust shall not terminate until the date
on which Plan participants and their beneficiaries are no
longer entitled to benefits pursuant to the terms of the
Agreement. Upon termination of the Trust any assets
remaining in the Trust shall be returned to Company.
(c) Sections 1.(b), 1.(d), 1.(e), 1.(g), 2.(a),
2.(b), 4.(a), 9.(c), 9.(d), 10.(b), 11.(a), 11.(b),
11.(c), 12.(a), 12.(b), 12.(c), 12.(d) and 12.(e) of this
Trust Agreement may not be amended by Company for fifteen
(15) years following a Change of Control, as defined
herein.
Section 12. Miscellaneous.
(a) Any provision of this Trust Agreement
prohibited by law shall be ineffective to the extent of
any such prohibition, without invalidating the remaining
provisions hereof.
(b) Benefits payable to Executive and his
beneficiaries under this Trust Agreement may not be
anticipated, assigned (either at law or in equity),
alienated, pledged, encumbered or subjected to attachment,
garnishment, levy, execution or other legal or equitable
process.
(c) This Trust Agreement shall be governed by and
construed in accordance with the laws of New York.
(d) For purposes of this Trust, Change of Control
shall mean any of the following events: (a) any
individual, corporation (other than the 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 the Company possessing twenty percent (20%)
or more of the voting power for the election of directors
of the Company; (b) there shall be consummated any
consolidation, merger or other business combination
involving the Company or the securities of the Company in
which holders of voting securities of the Company
immediately prior to such consummation own, as a group,
immediately after such consummation, voting securities of
the Company (or, if the Company does not survive such
transaction, voting securities of the corporation
surviving such transaction) having less than fifty percent
(50%) of the total voting power in an election of
directors of the Company (or such other surviving
corporation); (c) during any period of two consecutive
years, individuals who at the beginning of such period
constitute the directors of the Company cease for any
reason to constitute at least a majority thereof unless
the election, or the nomination for election by the
Company's shareholders, of each new director of the
Company was approved by a vote of at least two-thirds of
the directors of the Company then still in office who were
directors of the Company at the beginning of any such
period; (d) removal by the stockholders of all or any of
the incumbent directors of the Company other than a
removal for Cause; and (e) 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 the Company (on a
consolidated basis) to a party which is not controlled by
or under common control with the Company.
For purposes of this Trust, a "Hostile Change of
Control" means a transaction which the executive officers
of the Corporation unanimously determine is a Hostile
Change of Control.
(e) For purposes of this Trust, Cause means conduct
of a director which is finally adjudged to be knowingly
fraudulent, deliberately dishonest or willful misconduct.
Section 13. Effective Date.
The effective date of this Trust Agreement shall be
April 1, 1996.
TRUSTCO BANK, NATIONAL ASSOCIATION
BY: /s/William F. Terry,
Secretary
_________________________________
"Company"
BY:/s/Carroll E. Winch
__________________________________
"Trustee"
Exhibit 10(b)
TRUST FOR DEFERRED BENEFITS PROVIDED UNDER EMPLOYMENT
_____________________________________________________________
AGREEMENTS OF TRUSTCO BANK, NATIONAL ASSOCIATION
_____________________________________________________
This Agreement made this 1st day of April,1996, by
and between Trustco Bank, National Association ("Company")
and Trustco Bank, National Association, Trust Department
("Trustee");
WHEREAS, Company has provided for certain termination
and gross-up benefits in the employment agreements listed
in Appendix A (hereinafter called "Employment
Agreements");
WHEREAS, Company wishes to establish a trust
(hereinafter called "Trust") and to contribute to the
Trust assets that shall be held therein, subject to the
claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to employees and
their beneficiaries in such manner and at such times as
specified in the Employment Agreements;
WHEREAS, it is the intention of the parties that this
Trust shall constitute an unfunded arrangement and shall
not affect the status of the Employment Agreements as
unfunded arrangements maintained for the purpose of
providing deferred compensation for a select group of
management or highly compensated employees for purposes of
Title I of the Employee Retirement Income Security Act of
1974; and
WHEREAS, it is the intention of Company to make
contributions to the Trust to provide itself with a source
of funds to assist it in the meeting of its liabilities
under the Employment Agreements;
NOW, THEREFORE, the parties do hereby establish the
Trust and agree that the Trust shall be comprised, held
and disposed of as follows:
Section 1. Establishment of Trust.
(a) Company hereby deposits with Trustee in trust
One Dollar ($1.00), which shall become the principal of
the Trust to be held, administered and disposed of by
Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be
irrevocable.
(c) The Trust is intended to be a grantor trust,
of which Company is the grantor, within the meaning of
Subpart E, Part I, Subchapter J, Chapter 1, Subtitle A of
the Internal Revenue Code of 1986, as amended, and shall
be construed accordingly.
(d) The principal of the Trust shall be held
separate and apart from other funds of Company and shall
be used exclusively for the uses and purposes of
employees, their beneficiaries and Company's general
creditors as herein set forth. Employees and their
beneficiaries shall have no preferred claim on, or any
beneficial ownership interest in, any assets of the Trust.
Any rights created under the Employment Agreements and
this Trust Agreement shall be mere unsecured contractual
rights of employees and their beneficiaries against
Company. Any assets held by the Trust will be subject to
the claims of Company's general creditors under federal
and state law in the event of Insolvency, as defined in
Section 3(a) herein.
(e) Company, in its sole discretion, may at any
time, or from time to time, make additional deposits of
cash or other property in trust with Trustee to augment
the principal to be held, administered and disposed of by
Trustee as provided in this Trust Agreement. Neither
Trustee nor any employee or beneficiary shall have any
right to compel such additional deposits.
(f) Upon a Change of Control, as defined herein,
or upon the occurrence of an event pursuant to which an
employee or beneficiary becomes entitled to payment of
benefits under the Employment Agreements, Company shall,
as soon as possible, but in no event later than thirty
(30) days following such Change of Control or such event
make an irrevocable contribution to the Trust in an amount
that is sufficient to pay each employee or beneficiary all
of the benefits which have accrued on behalf of employees
or their beneficiaries pursuant to the terms of the
Employment Agreements as of the date on which the Change
of Control or such event occurred.
Section 2. Payments to Employees and Their
Beneficiaries.
(a) Company shall deliver to Trustee a schedule
(the "Payment Schedule") that indicates the amounts
payable in respect of each employee (and his or her
beneficiaries), that provides a formula or other
instructions acceptable to Trustee for determining the
amounts so payable, the form in which such amount is to be
paid (as provided for or available under the Employment
Agreements), and the time of commencement for payment of
such amounts. Except as otherwise provided herein,
Trustee shall make payments to the employees and their
beneficiaries in accordance with such Payment Schedule.
The Trustee shall make provision for the reporting and
withholding of any federal, state or local taxes that may
be required to be withheld with respect to the payment of
benefits pursuant to the terms of the Employment
Agreements and shall pay amounts withheld to the
appropriate taxing authorities or determine that such
amounts have been reported withheld and paid by Company.
(b) The entitlement of an employee or his or her
beneficiaries to benefits under the Employment Agreements
shall be determined by Company or such party as it shall
designate under the Employment Agreements, and any claim
for such benefits shall be considered and reviewed under
the procedures set out in the Employment Agreements.
(c) Company may make payment of benefits directly
to employees or their beneficiaries as they become due
under the terms of the Employment Agreements. Company
shall notify Trustee of its decision to make payment of
benefits directly prior to the time amounts are payable to
employees or their beneficiaries. In addition, if the
principal of the Trust is not sufficient to make payments
of benefits in accordance with the terms of the Employment
Agreements, Company shall make the balance of each such
payment as it falls due. Trustee shall notify Company
where principal is not sufficient.
Section 3. Trustee Responsibility Regarding Payments
to Trust Beneficiary when Company is Insolvent.
(a) Trustee shall cease payment of benefits to
employees and their beneficiaries if the Company is
Insolvent. Company shall be considered "Insolvent" for
purposes of this Trust Agreement if (i) Company is unable
to pay its debts as they become due, or (ii) Company is
subject to a pending proceeding as a debtor under the
United States Bankruptcy Code, or (iii) Company is
determined to be Insolvent by the Federal Deposit
Insurance Corporation.
(b) At all times during the continuance of this
Trust, as provided in Section 1(d) hereof, the principal
of the Trust shall be subject to claims of general
creditors of Company under federal and state law as set
forth below.
(1) The Board of Directors and the
Chief Executive Officer of Company shall have
the duty to inform Trustee in writing of
Company's Insolvency. If a person claiming to
be a creditor of Company alleges in writing to
Trustee that Company has become Insolvent,
Trustee shall determine whether Company is
Insolvent and, pending such determination,
Trustee shall discontinue payment of benefits to
employees or their beneficiaries.
(2) Unless Trustee has actual knowledge
of Company's Insolvency, or has received notice
from Company or a person claiming to be a
creditor alleging that Company is Insolvent,
Trustee shall have no duty to inquire whether
Company is Insolvent. Trustee may in all events
rely on such evidence concerning Company's
solvency as may be furnished to Trustee and that
provides Trustee with a reasonable basis for
making a determination concerning Company's
solvency.
(3) If at any time Trustee has
determined that Company is Insolvent, Trustee
shall discontinue payments to employees or their
beneficiaries and shall hold the assets of the
Trust for the benefit of Company's general
creditors. Nothing in this Trust Agreement
shall in any way diminish any rights of
employees or their beneficiaries to pursue their
rights as general creditors of Company with
respect to benefits due under the Employment
Agreements or otherwise.
(4) Trustee shall resume the payment of
benefits to employees or their beneficiaries in
accordance with Section 2 of this Trust
Agreement only after Trustee has determined that
Company is not Insolvent (or is no longer
Insolvent).
(c) Provided that there are sufficient assets, if
Trustee discontinues the payment of benefits from the
Trust pursuant to Section 3(b) hereof and subsequently
resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all
payments due to employees or their beneficiaries under the
terms of the Employment Agreements for the period of such
discontinuance, less the aggregate amount of any payments
made to employees or their beneficiaries by Company in
lieu of the payments provided for hereunder during any
such period of discontinuance.
Section 4. Investment Authority.
(a) Trustee may invest in securities (including
stock or rights to acquire stock) or obligations issued by
Company. All rights associated with assets of the Trust
shall be exercised by Trustee or the person designated by
Trustee, and shall in no event be exercisable by or rest
with employees. Company shall have the right at any time,
and from time to time in its sole discretion, to
substitute assets of equal fair market value for any asset
held by the Trust. This right is exercisable by Company
in a nonfiduciary capacity without the approval or consent
of any person in a fiduciary capacity.
Section 5. Disposition of Income.
(a) During the term of this Trust, all of the income
received by the Trust, net of expenses and taxes, shall be
returned to Company.
Section 6. Accounting by Trustee.
Trustee shall keep accurate and detailed records of
all investments, receipts, disbursements, and all other
transactions required to be made, including such specific
records as shall be agreed upon in writing between Company
and Trustee. Within thirty (30) days following the close
of each calendar year and within thirty (30) days after
the removal or resignation of Trustee, Trustee shall
deliver to Company a written account of its administration
of the Trust during such year or during the period from
the close of the last preceding year to the date of such
removal or resignation, setting forth all investments,
receipts, disbursements and other transactions effected by
it, including a description of all securities and
investments purchased and sold with the cost or net
proceeds of such purchases or sales (accrued interest paid
or receivable being shown separately), and showing all
cash, securities and other property held in the Trust at
the end of such year or as of the date of such removal or
resignation, as the case may be.
Section 7. Responsibility of Trustee.
(a) If Trustee undertakes or defends any
litigation arising in connection with this Trust, Company
agrees to indemnify Trustee against Trustee's costs,
expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be
primarily liable for such payments. If Company does not
pay such costs, expenses and liabilities in a reasonably
timely manner, Trustee may obtain payment from the Trust.
(b) Trustee may consult with legal counsel (who
may also be counsel for Company generally) with respect to
any of its duties or obligations hereunder.
(c) Trustee may hire agents, accountants,
actuaries, investment advisors, financial consultants or
other professionals to assist it in performing any of its
duties or obligations hereunder.
(d) Trustee shall have, without exclusion, all
powers conferred on Trustees by applicable law, unless
expressly provided otherwise herein, provided, however,
that if an insurance policy is held as an asset of the
Trust, Trustee shall have no power to name a beneficiary
of the policy other than the Trust, to assign the policy
(as distinct from conversion of the policy to a different
form) other than to a successor Trustee, or to loan to any
person the proceeds of any borrowing against such policy.
(e) Notwithstanding any powers granted to Trustee
pursuant to this Trust Agreement or to applicable law,
Trustee shall not have any power that could give this
Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of Section
301.7701-2 of the Procedure and Administrative Regulations
promulgated pursuant to the Internal Revenue Code.
Section 8. Compensation and Expenses of Trustee.
Company shall pay all administrative and Trustee's
fees and expenses. If not so paid, the fees and expenses
shall be paid from the Trust.
Section 9. Resignation and Removal of Trustee.
(a) Trustee may resign at any time by written
notice to Company, which shall be effective thirty (30)
days after receipt of such notice unless Company and
Trustee agree otherwise.
(b) Trustee may be removed by Company on ten (10)
days notice or upon shorter notice accepted by Trustee.
(c) Within ten (10) days after a Hostile Change
of Control, as defined herein, the Trust shall be
subdivided into separate trusts for each Employment
Agreement, with each trust containing an amount that is
sufficient to pay the employee or beneficiary on whose
behalf it is established, all of the benefits which have
accrued on behalf of such employee or his beneficiaries
pursuant to the terms of his or her Employment Agreement
as of the date of the Change of Control. Each employee or
his beneficiaries shall appoint an independent bank trust
department or another independent party that may be
granted corporate trustee powers under state law, as
trustee of such trust. Upon receipt from a successor
Trustee of its written acceptance of appointment in which
the successor Trustee agrees to be bound by the terms of
this Trust Agreement, the Company will immediately
transfer to such successor Trustee the amount of assets
sufficient to pay the employee or beneficiary on whose
behalf the subdivided trust is established, all of the
benefits which have accrued on behalf of such employee or
his beneficiaries pursuant to the terms of his or her
Employment Agreement as of the date of the Change of
Control. No action taken pursuant to this Section 9(c)
will create on behalf of employees and their beneficiaries
any preferred claim on, or any beneficial ownership
interest in, any assets of the subdivided trusts and
assets held by each trust created pursuant to this Section
9(c) will continue to be subject to the claims of
Company's general creditors under federal and state law in
the event of Insolvency, as defined in Section 3(a)
herein. Trustees named by employees and beneficiaries
pursuant to this Section 9(c) may not be removed by
Company.
(d) If Trustee resigns or is removed within
fifteen (15) years after a Change of Control, as defined
herein, Company shall apply to a court of competent
jurisdiction for the appointment of a successor trustee or
for instructions within five (5) days after such Trustee
resignation.
(e) Upon resignation or removal of Trustee and
appointment of a successor Trustee, all assets shall
subsequently be transferred to the successor Trustee. The
transfer shall be completed within thirty (30) days after
receipt of notice of resignation, removal or transfer,
unless Company extends the time limit.
(f) If Trustee resigns or is removed, a successor
shall be appointed, in accordance with Section 10 hereof,
by the effective date of resignation or removal under
paragraph(s) (a) or (b) of this section. If no such
appointment has been made, Trustee may apply to a court of
competent jurisdiction for appointment of a successor or
for instructions. All expenses of Trustee in connection
with the proceeding shall be allowed as administrative
expenses of the Trust.
Section 10. Appointment of Successor.
(a) If Trustee resigns or is removed in
accordance with Section 9(a) or (b) hereof, Company may
appoint any third party, such as a bank trust department
or other party that may be granted corporate trustee
powers under state law, as a successor to replace Trustee
upon resignation or removal. The appointment shall be
effective when accepted in writing by the new Trustee, who
shall have all of the rights and powers of the former
Trustee, including ownership rights in the Trust assets.
The former Trustee shall execute any instrument necessary
or reasonably requested by Company or the successor
Trustee to evidence the transfer.
(b) If Trustee resigns or is removed pursuant to
the provisions of Section 9(d) hereof and a court of
competent jurisdiction for the appointment of a successor
trustee selects a successor Trustee, Trustee may appoint
any third party such as a bank trust department or other
party that may be granted corporate trustee powers under
state law as a successor to replace Trustee upon
resignation or removal. The appointment of a successor
Trustee shall be effective when accepted in writing by the
new Trustee. The new Trustee shall have all the rights
and powers of the former Trustee, including ownership
rights in Trust assets. The former Trustee shall execute
any instrument necessary or reasonably requested by the
successor Trustee to evidence the transfer.
Section 11. Amendment or Termination.
(a) This Trust Agreement may be amended by a
written instrument executed by Trustee and Company.
Notwithstanding the foregoing, no such amendment shall
conflict with the terms of the Employment Agreements or
shall make the Trust revocable after it has become
irrevocable in accordance with Section 1(b) hereof.
(b) The Trust shall not terminate until the date
on which employees and their beneficiaries are no longer
entitled to benefits pursuant to the terms of the
Employment Agreements. Upon termination of the Trust any
assets remaining in the Trust shall be returned to
Company.
(c) Sections 1.(b), 1.(d), 1.(f), 2.(a), 2.(b),
4.(a), 9.(c), 9.(d), 10.(b), 11.(a), 11.(b), 11.(c),
12.(a), 12.(b), 12.(c), 12.(d) and 12 (e) and Appendix A
of this Trust Agreement may not be amended by Company for
fifteen (15) years following a Change of Control, as
defined herein.
Section 12. Miscellaneous.
(a) Any provision of this Trust Agreement
prohibited by law shall be ineffective to the extent of
any such prohibition, without invalidating the remaining
provisions hereof.
(b) Benefits payable to employees and their
beneficiaries under this Trust Agreement may not be
anticipated, assigned (either at law or in equity),
alienated, pledged, encumbered or subjected to attachment,
garnishment, levy, execution or other legal or equitable
process.
(c) This Trust Agreement shall be governed by and
construed in accordance with the laws of New York.
(d) For purposes of this Trust, Change of Control
shall mean any of the following events: (a) any
individual, corporation (other than the 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 the Company possessing twenty percent (20%)
or more of the voting power for the election of directors
of the Company; (b) there shall be consummated any
consolidation, merger or other business combination
involving the Company or the securities of the Company in
which holders of voting securities of the Company
immediately prior to such consummation own, as a group,
immediately after such consummation, voting securities of
the Company (or, if the Company does not survive such
transaction, voting securities of the corporation
surviving such transaction) having less than fifty percent
(50%) of the total voting power in an election of
directors of the Company (or such other surviving
corporation); (c) during any period of two consecutive
years, individuals who at the beginning of such period
constitute the directors of the Company cease for any
reason to constitute at least a majority thereof unless
the election, or the nomination for election by the
Company's shareholders, of each new director of the
Company was approved by a vote of at least two-thirds of
the directors of the Company then still in office who were
directors of the Company at the beginning of any such
period; (d) removal by the stockholders of all or any of
the incumbent directors of the Company other than a
removal for Cause; and (e) 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 the Company (on a
consolidated basis) to a party which is not controlled by
or under common control with the Company.
For purposes of this Trust, a "Hostile Change of
Control"
means a transaction which the executive officers of the
Corporation unanimously determine is a Hostile Change of
Control.
(e) For purposes of this Trust, Cause means conduct
of a director which is finally adjudged to be knowingly
fraudulent, deliberately dishonest or willful misconduct.
Section 13. Effective Date.
The effective date of this Trust Agreement shall be
April 1, 1996.
TRUSTCO BANK, NATIONAL ASSOCIATION
BY:/s/William F. Terry, Secretary
______________________________
"Company"
BY:/s/Carroll E. Winch
______________________________
"Trustee"
APPENDIX A TO TRUST FOR DEFERRED BENEFITS UNDER EMPLOYMENT
AGREEMENTS OF TRUSTCO BANK, NATIONAL ASSOCIATION
Termination and Gross-Up Benefits Under Employment Contracts
of R. T. Cushing, N. A. McNamara, W. F. Terry and R. A.
Pidgeon
Exhibit 10(c)
TRUST UNDER NON-QUALIFIED DEFERRED COMPENSATION
__________________________________________________
PLANS OF TRUSTCO BANK, NATIONAL ASSOCIATION
__________________________________________________
This Agreement made this 1st day of April, 1996, by and
between Trustco Bank, National Association ("Company") and
Trustco Bank, National Association, Trust Department ("Trustee");
WHEREAS, Company has adopted the non-qualified deferred
compensation plans listed in Appendix A (hereinafter called
"Plans");
WHEREAS, Company wishes to establish a trust (hereinafter
called "Trust") and to contribute to the Trust assets that shall
be held therein, subject to the claims of Company's creditors in
the event of Company's Insolvency, as herein defined, until paid
to Plan participants and their beneficiaries in such manner and
at such times as specified in the Plans;
WHEREAS, it is the intention of the parties that this Trust
shall constitute an unfunded arrangement and shall not affect the
status of the Plans as unfunded plans maintained for the purpose
of providing deferred compensation for a select group of
management or highly compensated employees for purposes of Title
I of the Employee Retirement Income Security Act of 1974; and
WHEREAS, it is the intention of Company to make
contributions to the Trust to provide itself with a source of
funds to assist it in the meeting of its liabilities under the
Plans;
NOW, THEREFORE, the parties do hereby establish the Trust
and agree that the Trust shall be comprised, held and disposed of
as follows:
Section 1. Establishment of Trust.
(a) Company hereby deposits with Trustee in trust
Seven Million Two Hundred Sixty-one Thousand Four Hundred Forty-
three Dollars and Sixty-six Cents ($7,261,443.66), which shall
become the principal of the Trust to be held, administered and
disposed of by Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of
which Company is the grantor, within the meaning of Subpart E,
Part I, Subchapter J, Chapter 1, Subtitle A of the Internal
Revenue Code of 1986, as amended, and shall be construed
accordingly.
(d) The principal of the Trust shall be held separate
and apart from other funds of Company and shall be used
exclusively for the uses and purposes of Plan participants, their
beneficiaries and Company's general creditors as herein set
forth. Plan participants and their beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any
assets of the Trust. Any rights created under the Plans and this
Trust Agreement shall be mere unsecured contractual rights of
Plan participants and their beneficiaries against Company. Any
assets held by the Trust will be subject to the claims of
Company's general creditors under federal and state law in the
event of Insolvency, as defined in Section 3(a) herein.
(e) Within thirty (30) days following the end of each
Plan year, Company shall be required to irrevocably deposit
additional cash or other property to the Trust in an amount
sufficient to pay each Plan participant or beneficiary the
benefits accrued pursuant to the terms of the Plans as of the
close of such Plan year.
(f) Company, in its sole discretion, may at any time,
or from time to time, make additional deposits of cash or other
property in trust with Trustee to augment the principal to be
held, administered and disposed of by Trustee as provided in this
Trust Agreement. Neither Trustee nor any Plan participant or
beneficiary shall have any right to compel such additional
deposits.
(g) Upon a Change of Control, as defined herein, or
upon the occurrence of an event pursuant to which a Participant
or beneficiary becomes entitled to payment of benefits under the
Plans, Company shall, as soon as possible, but in no event later
than thirty (30) days following such Change of Control or such
event, make an irrevocable contribution to the Trust in an amount
that is sufficient to pay each Plan participant or beneficiary
all of the benefits which have accrued on behalf of Plan
participants or their beneficiaries pursuant to the terms of the
Plans as of the date on which the Change of Control or such event
occurred.
Section 2. Payments to Plan Participants and Their
Beneficiaries.
(a) Company shall deliver to Trustee a schedule (the
"Payment Schedule") that indicates the amounts payable in respect
of each Plan participant (and his or her beneficiaries), that
provides a formula or other instructions acceptable to Trustee
for determining the amounts so payable, the form in which such
amount is to be paid (as provided for or available under the
Plans), and the time of commencement for payment of such amounts.
Except as otherwise provided herein, Trustee shall make payments
to the Plan participants and their beneficiaries in accordance
with such Payment Schedule. The Trustee shall make provision for
the reporting and withholding of any federal, state or local
taxes that may be required to be withheld with respect to the
payment of benefits pursuant to the terms of the Plans and shall
pay amounts withheld to the appropriate taxing authorities or
determine that such amounts have been reported withheld and paid
by Company.
(b) The entitlement of a Plan participant or his or her
beneficiaries to benefits under the Plans shall be determined by
Company or such party as it shall designate under the Plans, and
any claim for such benefits shall be considered and reviewed
under the procedures set out in the Plans.
(c) Company may make payment of benefits directly
to Plan participants or their beneficiaries as they become due
under the terms of the Plans. Company shall notify Trustee of
its decision to make payment of benefits directly prior to the
time amounts are payable to participants or their beneficiaries.
In addition, if the principal of the Trust is not sufficient to
make payments of benefits in accordance with the terms of the
Plans, Company shall make the balance of each such payment as it
falls due. Trustee shall notify Company where principal is not
sufficient.
Section 3. Trustee Responsibility Regarding Payments
to Trust Beneficiary when Company is
Insolvent.
(a) Trustee shall cease payment of benefits to Plan
participants and their beneficiaries if the Company is Insolvent.
Company shall be considered "Insolvent" for purposes of this
Trust Agreement if (i) Company is unable to pay its debts as they
become due, or (ii) Company is subject to a pending proceeding as
a debtor under the United States Bankruptcy Code, or (iii)
Company is determined to be Insolvent by the Federal Deposit
Insurance Corporation.
(b) At all times during the continuance of this Trust,
as provided in Section 1(d) hereof, the principal of the Trust
shall be subject to claims of general creditors of Company under
federal and state law as set forth below.
(1) The Board of Directors and the Chief
Executive Officer of Company shall have the duty to
inform Trustee in writing of Company's Insolvency. If
a person claiming to be a creditor of Company alleges
in writing to Trustee that Company has become
Insolvent, Trustee shall determine whether Company is
Insolvent and, pending such determination, Trustee
shall discontinue payment of benefits to Plan
participants or their beneficiaries.
(2) Unless Trustee has actual knowledge of
Company's Insolvency, or has received notice from
Company or a person claiming to be a creditor alleging
that Company is Insolvent, Trustee shall have no duty
to inquire whether Company is Insolvent. Trustee may
in all events rely on such evidence concerning
Company's solvency as may be furnished to Trustee and
that provides Trustee with a reasonable basis for
making a determination concerning Company's solvency.
(3) If at any time Trustee has determined that
Company is Insolvent, Trustee shall discontinue
payments to Plan participants or their beneficiaries
and shall hold the assets of the Trust for the benefit
of Company's general creditors. Nothing in this Trust
Agreement shall in any way diminish any rights of Plan
participants or their beneficiaries to pursue their
rights as general creditors of Company with respect to
benefits due under the Plans or otherwise.
(4) Trustee shall resume the payment of
benefits to Plan participants or their beneficiaries in
accordance with Section 2 of this Trust Agreement only
after Trustee has determined that Company is not
Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if
Trustee discontinues the payment of benefits from the Trust
pursuant to Section 3(b) hereof and subsequently resumes such
payments, the first payment following such discontinuance shall
include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plans
for the period of such discontinuance, less the aggregate amount
of any payments made to Plan participants or their beneficiaries
by Company in lieu of the payments provided for hereunder during
any such period of discontinuance.
Section 4. Investment Authority.
(a) Trustee may invest in securities (including stock or
rights to acquire stock) or obligations issued by Company. All
rights associated with assets of the Trust shall be exercised by
Trustee or the person designated by Trustee, and shall in no
event be exercisable by or rest with Plan participants. Company
shall have the right at any time, and from time to time in its
sole discretion, to substitute assets of equal fair market value
for any asset held by the Trust. This right is exercisable by
Company in a nonfiduciary capacity without the approval or
consent of any person in a fiduciary capacity.
Section 5. Disposition of Income.
(a) During the term of this Trust, all of the income
received by the Trust, net of expenses and taxes, shall be
returned to Company.
Section 6. Accounting by Trustee.
Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions
required to be made, including such specific records as shall be
agreed upon in writing between Company and Trustee. Within
thirty (30) days following the close of each calendar year and
within thirty (30) days after the removal or resignation of
Trustee, Trustee shall deliver to Company a written account of
its administration of the Trust during such year or during the
period from the close of the last preceding year to the date of
such removal or resignation, setting forth all investments,
receipts, disbursements and other transactions effected by it,
including a description of all securities and investments
purchased and sold with the cost or net proceeds of such
purchases or sales (accrued interest paid or receivable being
shown separately), and showing all cash, securities and other
property held in the Trust at the end of such year or as of the
date of such removal or resignation, as the case may be.
Section 7. Responsibility of Trustee.
(a) If Trustee undertakes or defends any litigation
arising in connection with this Trust, Company agrees to
indemnify Trustee against Trustee's costs, expenses and
liabilities (including, without limitation, attorneys' fees and
expenses) relating thereto and to be primarily liable for such
payments. If Company does not pay such costs, expenses and
liabilities in a reasonably timely manner, Trustee may obtain
payment from the Trust.
(b) Trustee may consult with legal counsel (who may
also be counsel for Company generally) with respect to any of its
duties or obligations hereunder.
(c) Trustee may hire agents, accountants,
actuaries, investment advisors, financial consultants or other
professionals to assist it in performing any of its duties or
obligations hereunder.
(d) Trustee shall have, without exclusion, all powers
conferred on Trustees by applicable law, unless expressly
provided otherwise herein, provided, however, that if an
insurance policy is held as an asset of the Trust, Trustee shall
have no power to name a beneficiary of the policy other than the
Trust, to assign the policy (as distinct from conversion of the
policy to a different form) other than to a successor Trustee, or
to loan to any person the proceeds of any borrowing against such
policy.
(e) Notwithstanding any powers granted to Trustee
pursuant to this Trust Agreement or to applicable law, Trustee
shall not have any power that could give this Trust the objective
of carrying on a business and dividing the gains therefrom,
within the meaning of Section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal
Revenue Code.
Section 8. Compensation and Expenses of Trustee.
Company shall pay all administrative and Trustee's fees and
expenses. If not so paid, the fees and expenses shall be paid
from the Trust.
Section 9. Resignation and Removal of Trustee.
(a) Trustee may resign at any time by written notice to
Company, which shall be effective thirty (30) days after receipt
of such notice unless Company and Trustee agree otherwise.
(b) Trustee may be removed by Company on ten (10) days
notice or upon shorter notice accepted by Trustee.
(c) Within ten (10) days after a Hostile Change of
Control, as defined herein, the Trust shall be subdivided into
separate trusts for each participant in the Plans, with each
trust containing an amount that is sufficient to pay the Plan
participant or beneficiary on whose behalf it is established, all
of the benefits which have accrued on behalf of such Plan
participant or his beneficiaries pursuant to the terms of the
Plans as of the date of the Change of Control. Each Plan
participant or his beneficiaries shall appoint an independent
bank trust department or another independent party that may be
granted corporate trustee powers under state law, as trustee of
such trust. Upon receipt from a successor Trustee of its written
acceptance of appointment in which the successor Trustee agrees
to be bound by the terms of this Trust Agreement, the Company
will immediately transfer to such successor Trustee the amount of
assets sufficient to pay the Plan participant or beneficiary on
whose behalf the subdivided trust is established, all of the
benefits which have accrued on behalf of such Plan participant or
his beneficiaries pursuant to the terms of the Plans as of the
date of the Change of Control. No action taken pursuant to this
Section 9(c) will create on behalf of Plan participants and their
beneficiaries any preferred claim on, or any beneficial ownership
interest in, any assets of the subdivided trusts and assets held
by each trust created pursuant to this Section 9(c) will continue
to be subject to the claims of Company's general creditors under
federal and state law in the event of Insolvency, as defined in
Section 3(a) herein. Trustees named by Plan participants and
beneficiaries pursuant to this Section 9(c) may not be removed by
Company.
(d) If Trustee resigns or is removed within fifteen (15)
years after a Change of Control, as defined herein, Company shall
apply to a court of competent jurisdiction for the appointment of
a successor trustee or for instructions within five (5) days
after such Trustee resignation.
(e) Upon resignation or removal of Trustee and
appointment of a successor Trustee, all assets shall subsequently
be transferred to the successor Trustee. The transfer shall be
completed within thirty (30) days after receipt of notice of
resignation, removal or transfer, unless Company extends the time
limit.
(f) If Trustee resigns or is removed, a successor shall
be appointed, in accordance with Section 10 hereof, by the
effective date of resignation or removal under paragraph(s) (a)
or (b) of this section. If no such appointment has been made,
Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of
Trustee in connection with the proceeding shall be allowed as
administrative expenses of the Trust.
Section 10. Appointment of Successor.
(a) If Trustee resigns or is removed in accordance with
Section 9(a) or (b) hereof, Company may appoint any third party,
such as a bank trust department or other party that may be
granted corporate trustee powers under state law, as a successor
to replace Trustee upon resignation or removal. The appointment
shall be effective when accepted in writing by the new Trustee,
who shall have all of the rights and powers of the former
Trustee, including ownership rights in the Trust assets. The
former Trustee shall execute any instrument necessary or
reasonably requested by Company or the successor Trustee to
evidence the transfer.
(b) If Trustee resigns or is removed pursuant to
the provisions of Section 9(d) hereof and a court of competent
jurisdiction for the appointment of a successor Trustee selects a
successor Trustee, Trustee may appoint any third party such as a
bank trust department or other party that may be granted
corporate trustee powers under state law as a successor to
replace Trustee upon resignation or removal. The appointment of
a successor Trustee shall be effective when accepted in writing
by the new Trustee. The new Trustee shall have all the rights
and powers of the former Trustee, including ownership rights in
Trust assets. The former Trustee shall execute any instrument
necessary or reasonably requested by the successor Trustee to
evidence the transfer.
Section 11. Amendment or Termination.
(a) This Trust Agreement may be amended by a written
instrument executed by Trustee and Company. Notwithstanding the
foregoing, no such amendment shall conflict with the terms of the
Plans or shall make the Trust revocable after it has become
irrevocable in accordance with Section 1(b) hereof.
(b) The Trust shall not terminate until the date on
which Plan participants and their beneficiaries are no longer
entitled to benefits pursuant to the terms of the Plans. Upon
termination of the Trust any assets remaining in the Trust shall
be returned to Company.
(c) Sections 1.(b), 1.(d), 1.(e), 1.(g), 2.(a), 2.(b),
4.(a), 9.(c), 9.(d), 10.(b), 11.(a), 11.(b), 11.(c), 12.(a),
12.(b), 12.(c), 12.(d) and 12.(e) and Appendix A of this Trust
Agreement may not be amended by Company for fifteen (15) years
following a Change of Control, as defined herein.
Section 12. Miscellaneous.
(a) Any provision of this Trust Agreement prohibited by
law shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.
(b) Benefits payable to Plan participants and their
beneficiaries under this Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and
construed in accordance with the laws of New York.
(d) For purposes of this Trust, Change of Control
shall mean any of the following events: (a) any individual,
corporation (other than the 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 the Company possessing twenty percent
(20%) or more of the voting power for the election of directors
of the Company; (b) there shall be consummated any consolidation,
merger or other business combination involving the Company or the
securities of the Company in which holders of voting securities
of the Company immediately prior to such consummation own, as a
group, immediately after such consummation, voting securities of
the Company (or, if the Company does not survive such
transaction, voting securities of the corporation surviving such
transaction) having less than fifty percent (50%) of the total
voting power in an election of directors of the Company (or such
other surviving corporation); (c) during any period of two
consecutive years, individuals who at the beginning of such
period constitute the directors of the Company cease for any
reason to constitute at least a majority thereof unless the
election, or the nomination for election by the Company's
shareholders, of each new director of the Company was approved by
a vote of at least two-thirds of the directors of the Company
then still in office who were directors of the Company at the
beginning of any such period; (d) removal by the stockholders of
all or any of the incumbent directors of the Company other than a
removal for Cause; and (e) 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 the Company (on a consolidated basis) to a party which
is not controlled by or under common control with the Company.
For purposes of this Trust, a "Hostile Change of
Control" means a transaction which the executive officers of the
Corporation unanimously determine is a Hostile Change of Control.
(e) For purposes of this Trust, Cause means conduct of a
director which is finally adjudged to be knowingly fraudulent,
deliberately dishonest or willful misconduct.
Section 13. Effective Date.
The effective date of this Trust Agreement shall be April 1,
1996.
TRUSTCO BANK, NATIONAL ASSOCIATION
By:/s/William F. Terry, Secretary
________________________________
"Company"
BY:/s/Carroll E. Winch
________________________________
"Trustee"
APPENDIX A TO TRUST UNDER
NON-QUALIFIED DEFERRED COMPENSATION PLANS
OF TRUSTCO BANK, NATIONAL ASSOCIATION
Trustco Bank Supplemental Retirement Plan
Supplemental Retirement Agreement for Robert A. McCormick
Trustco Bank, National Association Deferred Compensation Plan for
Directors
Executive Incentive plan of Trustco Bank, National Association
Trustco Bank Executive Officer Incentive Plan
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