FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ___________ to ______________
Commission file number 0-10592
______________________________
TRUSTCO BANK CORP NY
(Exact name of registrant as specified in its charter)
NEW YORK 14-1630287
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
320 STATE STREET, SCHENECTADY, NEW YORK 12305
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(518) 377-3311
_______________
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange on
Title of each class which registered
________________ ________________
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.00 Par Value
(Title of class)
______________
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes.(x) No.( )
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K.[ ]
Indicate the number of shares outstanding of each of the
registrant's classes of common stock:
Number of Shares Outstanding
Class of Common Stock as of March 1, 1996
__________________ __________________
$1 Par Value 17,651,986
The aggregate market value of registrant's common stock (based upon
the closing price on March 1, 1996) held by non-affiliates was
approximately $379,518,000.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of registrant's Annual Report to Shareholders for the
fiscal year ended December 31, 1995 (Part I, Part II, and Part IV).
(2) Portions of registrant's Proxy Statement filed for its Annual
Meeting of Shareholders to be held May 20, 1996 (Part III).
PART I
Item 1. Business
General
- --------
TrustCo Bank Corp NY ("TrustCo") is a one-bank holding
company having its principal place of business at 320 State
Street, Schenectady, New York 12305. TrustCo was incorporated
under the laws of New York in 1981 to acquire all of the
outstanding stock of Trustco Bank, National Association,
formerly known as Trustco Bank New York, and prior to that The
Schenectady Trust Company. Following receipt of necessary
regulatory approvals, TrustCo commenced business on July 1,
1982. In 1991, TrustCo acquired, for a combination of cash
and TrustCo common stock, Home & City Savings Bank ("Home &
City") located in Albany, New York. At the time of the
acquisition, Home & City operated 16 branches, and had total
assets of approximately $ 848 million, deposits of $ 750
million and shareholders' equity of $ 93 million. Through
policy and practice, TrustCo continues to emphasize that it is
an equal opportunity employer. There were 434 full-time
equivalent employees at year-end 1995. TrustCo had 5,092
shareholders of record as of December 31, 1995, and the
closing price of the stock at that date was $22.125.
Bank Subsidiary
- ----------------
On November 16, 1994 TrustCo initiated the process to
convert its banking subsidiary, Trustco Bank New York, a New
York state chartered trust company, to a national banking
association operating under the name Trustco Bank, National
Association (the Bank ). The conversion was undertaken to
minimize duplicative federal/state compliance issues. The
conversion became effective on February 1, 1995. The Bank is
a national banking association engaged in a general commercial
banking business serving individuals, partnerships,
corporations, municipalities and governments of New York.
Trustco operates 23 automatic teller machines and 47 banking
offices in Albany, Columbia, Greene, Rensselaer, Saratoga,
Schenectady, Warren, and Washington counties of New York
State. The largest part of such business consists of
accepting deposits and making loans and investments. The Bank
provides a wide range of both personal and business banking
services. The Bank is a member of the Federal Reserve System
and its deposits are insured by the Federal Deposit Insurance
Corporation to the extent permitted by law. The Bank accounted
for substantially all of TrustCo's 1995 consolidated net
income and average assets.
The trust department of the Bank serves as executor of
estates and trustee of personal trusts, provides estate
planning and related advice, provides custodial services and
acts as trustee for various types of employee benefit plans
and corporate pension and profit sharing trusts. The aggregate
market value of the assets under trust, custody or management
was approximately $777 million as of December 31, 1995.
The daily operations of the Bank remain the responsibility
of its Board of Directors and officers, subject to the overall
supervision by TrustCo. TrustCo derives most of its income
from dividends paid to it by its subsidiary Bank. The accounts
of the Bank are included in TrustCo's consolidated financial
statements.
ORE Subsidiary
- ---------------
During 1993, TrustCo created ORE Subsidiary Corp., a New
York corporation, to hold and manage certain foreclosed
properties acquired by the Bank. The accounts of this
subsidiary are included in TrustCo's consolidated financial
statements.
Competition
- -------------
TrustCo faces strong competition in its market areas, both
in attracting deposits and making loans. The Bank's most
direct competition for deposits, historically, has come from
other commercial banks, savings associations and credit
unions, which are located, or have branches in those areas.
The Bank also faces competition for deposits from national
brokerage houses, short-term money market funds, and other
corporate and government securities funds. Factors affecting
the acquisition of deposits include pricing, office locations
and hours of operation, the variety of deposit accounts
offered, and the quality of customer service provided.
Competition for loans has been especially keen during the last
five years. Commercial banks, local thrift institutions,
traditional mortgage brokers affiliated with local, but
nationally franchised real estate brokers, are all active and
aggressive competitors. The Bank competes in the environment
by providing a full range of financial services based on a
tradition of financial strength and integrity dating from its
inception. It competes for loans, principally through the
interest rates and loan fees it charges, and the efficiency
and quality of services it provides to borrowers.
TrustCo operates in a number of communities where the
competition ranges from other locally based commercial and
savings banks, to branches of the largest financial
institutions in the United States. In the Capital District
area of New York State, TrustCo's principal competitors are
local operations of super regional banks, branch offices of
money center banks, and locally based commercial and savings
banks. TrustCo is the largest commercial bank headquartered
in the Capital District area.
Supervision and Regulation
- ----------------------------
Banking is a highly regulated industry, with numerous
federal and state laws and regulations governing the
organization and operation of banks and their affiliates. As
a registered bank holding company under the Bank Holding
Company Act of 1956, as amended (the "Act"), TrustCo is
regulated and examined by the Board of Governors of the
Federal Reserve System (the "Board"). The Act requires as a
national banking association, TrustCo to obtain prior Board
approval for bank and non-bank acquisitions and restricts the
business operations permitted to TrustCo. The Bank is subject
to regulation and examination by the Office of the Comptroller
of the Currency.
Virtually all aspects of TrustCo's and the Bank's business
are subject to regulation and examination by the Board, the
Federal Deposit Insurance Corporation and the Office of the
Comptroller of the Currency.
Most of TrustCo's revenues consist of cash dividends paid
to TrustCo by its subsidiary Bank, payment of which is subject
to various regulatory limitations. (Note 1 of the
consolidated financial statements contained in TrustCo s
Annual Report to Shareholders for the year ended December 31,
1995, which appears on pages 32 and 33 thereof and contains
information concerning restrictions of TrustCo s ability to
pay dividends, is hereby incorporated by reference.) In
addition, the Federal Deposit Insurance Corporation and the
Board have established guidelines with respect to the
maintenance of appropriate levels of capital by a bank holding
company under their jurisdictions. Compliance with the
standards set forth in such guidelines could also limit the
amount of dividends which a bank or a bank holding company may
pay to its shareholders. The banking industry is also
affected by the monetary and fiscal policies of the federal
government, including the Board, which exerts considerable
influence over the cost and availability of funds obtained for
lending and investing.
Proposals to change various laws and regulations governing
the operation and taxation of banks, bank holding companies
and financial institutions are frequently raised in Congress
and before various federal and state regulatory authorities.
Recently, on September 29, 1994 the Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994 was enacted which
permits, beginning one year from date of enactment, bank
holding companies to acquire banks in any state (subject to
state and nationwide deposit limitations) and for full
interstate branching commencing June 1, 1997 (subject to an
individual state's earlier decision to opt out of or opt into
the interstate branching provision).
Foreign Operations
- --------------------
Neither TrustCo nor the Bank engage in material operations in
foreign countries or have any outstanding loans to foreign
debtors.
Statistical Information Analysis
- --------------------------------
The "Management's Discussion and Analysis" on pages 5
through 23 of TrustCo's Annual Report to Shareholders for the
year ended December 31, 1995, which contains a presentation
and discussion of statistical data relating to TrustCo, is
hereby incorporated by reference. This information should not
be construed to imply any conclusion on the part of the
management of TrustCo that the results, causes or trends
indicated therein will continue in the future. The nature and
effects of governmental monetary policy, supervision and
regulation, future legislation, inflation and other economic
conditions and many other factors which affect interest rates,
investments, loans, deposits and other aspects of TrustCo's
operations are extremely complex and could make historical
operations, earnings, assets and liabilities not indicative of
what may occur in the future.
Item 2. Properties
TrustCo's executive offices are located at 320 State
Street, Schenectady, New York, 12305. The Bank operates 47
offices, of which 20 are owned and 27 are leased from others.
The asset value of these properties, when considered in the
aggregate, are not material to the operation of TrustCo.
In the opinion of management, the physical properties of
TrustCo and the Bank are suitable and adequate and are being
fully utilized.
Item 3. Legal Proceedings
The nature of TrustCo's business generates a certain
amount of litigation against TrustCo and its subsidiaries
involving matters arising in the ordinary course of business.
In the opinion of management of TrustCo, there are no
proceedings pending to which TrustCo or either of its
subsidiaries is a party, or of which its property is the
subject which, if determined adversely to TrustCo or such
subsidiaries, would be material in relation to TrustCo's
consolidated stockholders' equity and financial condition.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Executive Officers of TrustCo
The following is a list of the names and ages of the
executive officers of TrustCo and their business history for the
past five years:
Year First
Became
Name, Age and Principal Occupations Executive
Position Or Employment Since of
With TrustCo January 1, 1990 TrustCo
- ----------------------- -------------------------- -------
Robert A. McCormick, 59, President and Chief 1984
President and Chief Executive Officer, TrustCo
Executive Officer Bank Corp NY.
President and Chief
Executive Officer, Trustco
Bank, National Association.
Robert T. Cushing, 40, Vice President and Chief 1994
Vice President and Financial Officer, TrustCo
Chief Financial Officer Bank Corp NY since 1994.
Senior Vice President and
Chief Financial Officer,
Trustco Bank, National
Association since 1994.
Partner, KPMG Peat Marwick
LLP (1978-1994).
Nancy A. McNamara 46, Vice President, TrustCo Bank 1992
Vice President Corp NY since 1992. Senior
Vice President, Trustco Bank,
National Association since
1988. Director of TrustCo
Bank Corp NY and Trustco Bank,
National Association since
December 1991.
William F. Terry, 54, Secretary, TrustCo Bank Corp 1990
Secretary NY since 1990. Senior Vice
President, Trustco Bank,
National Association since 1987.
Secretary, Trustco Bank,
National Association since 1990.
Ralph A. Pidgeon, 53 Vice President, TrustCo Bank 1995
Vice President Corp NY since 1995. Senior
Vice President, Trustco Bank,
National Association since 1982.
There are no family relationships among any of the named
persons. Each executive officer is elected by the Board of
Directors to serve until election of his or her successor.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
The inside front cover of TrustCo's Annual Report to Shareholders
for the year ended December 31, 1995, is incorporated herein by
reference. The closing price for the Corporation's common stock
on December 31, 1995, was $22.125.
Item 6. Selected Financial Data
Page 21 of TrustCo's Annual Report to Shareholders for the year
ended December 31, 1995, is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Pages 5 through 23 of TrustCo's Annual Report to Shareholders for
the year ended December 31, 1995, are incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data
The financial statements, together with the report thereon of
KPMG Peat Marwick LLP on pages 26 through 41 of TrustCo's Annual
Report to Shareholders for the year ended December 31, 1995, are
incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of Registrant
The information under the captions "Information on TrustCo
Directors and Nominees" and "Information on TrustCo Executive
Officers Not Listed Above" on pages 3 through 5, and "Compliance
With Section 16(a) Of The Securities Exchange Act Of 1934 " on
page 19, of TrustCo's Proxy Statement filed for its Annual
Meeting of Shareholders to be held May 20, 1996, is incorporated
herein by reference. The required information regarding TrustCo's
executive officers is contained in PART I in the item captioned
"Executive Officers of TrustCo."
Item 11. Executive Compensation
The information under the captions "TrustCo and Trustco Bank
Executive Officer Compensation" and "TrustCo Retirement Plans" on
pages 6 through 10 of TrustCo's Proxy Statement filed for its
Annual Meeting of Shareholders to be held May 20, 1996, is
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information under the captions "Information on TrustCo
Directors and Nominees,""Information on TrustCo Executive
Officers Not Listed Above," on pages 3 through 5 and "Ownership
Of TrustCo Common Stock By Certain Beneficial Owners" on page 18
of TrustCo's Proxy Statement filed for its Annual Meeting of
Shareholders to be held May 20, 1996, is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions
The information under the caption "Transactions with TrustCo and
Trustco Bank Directors, Officers and Associates" on page 18 of
TrustCo's Proxy Statement filed for its Annual Meeting of
Shareholders to be held May 20, 1996, is incorporated herein by
reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
The following financial statements of TrustCo and its
consolidated subsidiaries, and the accountants' report thereon
are incorporated herein by reference.
Consolidated Statements of Condition--December 31, 1995 and
1994.
Consolidated Statements of Income--Years Ended December 31,
1995, 1994 and 1993.
Consolidated Statements of Changes in Shareholders'
Equity--Years Ended December 31, 1995, 1994 and 1993.
Consolidated Statements of Cash Flows--Years Ended December
31, 1995, 1994 and 1993.
Notes to Consolidated Financial Statements.
Financial Statement Schedules
Not Applicable. All required schedules for TrustCo
and its subsidiaries have been included in the
consolidated financial statements or related notes
thereto.
The following exhibits are incorporated herein by
reference:*
Reg S-K
Exhibit No. Description
__________ _________________________________________________
3(a) Amended and Restated Certificate of
Incorporation of TrustCo.
3(b) Amended and Restated Bylaws of TrustCo.
10(a) Employment Agreement dated January 1,
1992 and Amendment No. 1 dated November
16, 1993, among TrustCo, the Bank and
Robert A. McCormick. Amendment No. 2 dated
September 1, 1994, and Amendment No. 3
dated February 13, 1995, among TrustCo, the
Bank and Robert A. McCormick.
10(d) Employment Agreement dated June 21, 1994, and
Amendment No. 1 dated February 14, 1995, among
TrustCo, the Bank and Robert T. Cushing.
10(f) Restated Employment Agreements dated June 21, 1994,
and Amendment No. 1 dated February 14, 1995, among
TrustCo, the Bank and Nancy A. McNamara.
10(g) Restated Employment Agreements dated June 21,
1994, and Amendment No. 1 dated February 14,
1995, among TrustCo, the Bank and Ralph A.
Pidgeon.
10(h) Restated Employment Agreements dated June 21,
1994, and Amendment No. 1 dated February 14,
1995, among TrustCo, the Bank and William
F. Terry.
10(j) Restated 1985 TrustCo Bank Corp NY Stock Option
Plan.
10(k) TrustCo Bank Corp NY Directors Stock Option
Plan.
10(o) 1995 TrustCo Bank Corp NY Stock Option Plan.
________________
*The exhibits included under Exhibit 10 constitute all
management contracts, compensatory plans and arrangements
required to be filed as an exhibit to this form pursuant to
Item 14(c) of this report.
The following exhibits are filed herewith:*
Reg S-K
Exhibit No. Description
___________ _______________________________________________
10(b) Amendment No. 4 dated December 1, 1995, to the
Employment Agreement dated January 1, 1992 among
TrustCo, the Bank and Robert A. McCormick.
10(c) Schedule A updating the Employment Agreement
dated January 1, 1992 among TrustCo, the
Bank and Robert A. McCormick.
10(e) Schedule A updating the Employment Agreement
dated June 21, 1994, among TrustCo, the
Bank and Robert T. Cushing.
10(i) Schedules A updating the Restated Employment
Agreements dated June 21, 1994, among TrustCo
the Bank and each of Nancy A. McNamara,
Ralph A. Pidgeon and William F. Terry.
10(l) Restated Trustco Bank Supplemental Retirement
Plan, dated June 24, 1994, Amendment No. 1,
dated February 13, 1995 and Amendment No. 2,
dated December 1, 1995.
10(m) Restated Agreement for Supplemental Retirement
Benefits for Robert A. McCormick, dated June
24, 1994 and Amendment No. 1 dated December 1,
1995.
10(n) Trustco Bank Executive Officer Incentive Plan
dated December 22, 1993, Amendment No. 1, dated
October 18, 1994, Amendment No. 2, dated February
13, 1995 and Amendment No. 3, dated December 1,
1995.
11 Computation of Net Income Per Common Share.
13 Annual Report to Security Holders of TrustCo
for the year ended December 31, 1995.
21 List of Subsidiaries of TrustCo.
23 Independent Auditors' Consent of KPMG Peat
Marwick LLP.
24 Power of Attorney.
27 Financial Data Schedules.
99 Independent Auditors' Report of KPMG
Peat Marwick LLP.
________________
*The exhibits included under Exhibit 10 constitute all
management contracts, compensatory plans and arrangements
required to be filed as an exhibit to this form pursuant to
Item 14(c) of this report.
Reports on Form 8-K:
On October 17, 1995, TrustCo filed a Current Report on Form
8-K reporting the third quarter 1995 results.
On January 19, 1996, TrustCo filed a Current Report on Form
8-K reporting the fourth quarter and year-end December 31,
1995, results.
On February 23, 1996, TrustCo filed a Current Report on Form
8-K reporting the declaration of a cash dividend.
On March 22, 1996, TrustCo filed a Current Report on Form 8-
K reporting an offer to purchase ALBANK Financial
Corporation by TrustCo Bank Corp NY.
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TrustCo Bank Corp NY
By/s/Robert A. McCormick
Robert A. McCormick
President and Chief
Executive Officer
(Principal Executive Officer)
By/s/Robert T. Cushing
Robert T. Cushing
Vice President and Chief
Financial Officer
(Principal Financial and
Accounting Officer)
Date: March 25 1996
.
Signatures
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the date indicated.
Signature Title Date
* Director March 25 1996
Barton A. Andreoli
* Director March 25, 1996
Lionel O. Barthold
* Director March 25, 1996
M. Norman Brickman
* Director March 25, 1996
Charles W. Carl, Jr.
* Director March 25, 1996
Robert A. McCormick
* Director March 25, 1996
Nancy A. McNamara
* Director March 25, 1996
Dr. John S. Morris
* Director March 25, 1996
Dr. James H. Murphy
* Director March 25, 1996
Richard J. Murray, Jr.
* Director March 25, 1996
Kenneth C. Petersen
* Director March 25, 1996
William D. Powers
* Director March 25, 1996
William J. Purdy
/s/William F. Terry Director March 25, 1996
William F. Terry
* Director March 25, 1996
Philip J. Thompson
By/s/William F. Terry
*William F. Terry, as Agent
Pursuant to Power of Attorney
EXHIBIT INDEX
Reg S-K
Item 601
Exhibit No. Exhibit
__________ _________________________________________________
3(a) Amended and Restated Certificate of Incorporation
of TrustCo filed as Exhibit 3(i) to TrustCo Bank
Corp NY s Annual Report on Form 10-K (File No.
000-10592) for the fiscal year ended December 31,
1993, is incorporated herein by reference.
3(b) Amended and Restated Bylaws of TrustCo, with
amendments through February 21, 1995, filed as
Exhibit 3(ii) to TrustCo Bank Corp NY's Annual
Report on Form 10-K(file No. 000-10592) for the
fiscal year ended December 31, 1994, is
incorporated herein by reference.
10(a) Employment Agreement dated January 1, 1992 and,
Amendment No. 1 dated November 16, 1993, among
TrustCo, the Bank and Robert A. McCormick, filed
as Exhibit 10(a); and Amendment No. 2 dated
September 1, 1994, and Amendment No. 3 dated
February 13, 1995, to the Employment Agreement
dated November 16, 1993 among TrustCo, the Bank
and Robert A. McCormick, filed as Exhibit 10(b)
to TrustCo Bank Corp NY's Annual Report on Form
10-K (file No. 000-10592) for the fiscal year
ended December 31, 1994, is incorporated herein
by reference.
10(b) Amendment No. 4 dated December 1, 1995, to the
Employment Agreement dated January 1, 1992 among
TrustCo, the Bank and Robert A. McCormick.
10(c) Schedule A updating the Employment Agreement
dated January 1, 1992 among TrustCo, the
Bank and Robert A. McCormick.
10(d) Employment Agreement dated June 21, 1994, and
Amendment No. 1 dated February 14, 1995, among
TrustCo, the Bank and Robert T. Cushing filed
as Exhibit 10(c) to TrustCo Bank Corp NY's Annual
Report on Form 10-K (file No. 000-10592) for the
fiscal year ended December 31, 1994, is incorpor-
ated herein by reference.
10(e) Schedule A updating the Employment Agreement
dated June 21, 1994, among TrustCo, the
Bank and Robert T. Cushing.
EXHIBIT INDEX (continued)
Reg S-K
Item 601
Exhibit No. Exhibit
__________ ____________________________________________
10(f) Restated Employment Agreement dated June 21, 1994,
and Amendment No. 1 dated February 14, 1995, among
TrustCo, the Bank and Nancy A. McNamara, filed as.
Exhibit 10(d) to TrustCo Bank Corp NY's Annual
Report on Form 10-K (file No. 000-10592)
for the fiscal year ended December 31, 1994, is
incorporated herein by reference.
10(g) Restated Employment Agreement dated June 21, 1994,
and Amendment No. 1 dated February 14, 1995, among
TrustCo, the Bank and Ralph A. Pidgeon, filed as.
Exhibit 10(f) to TrustCo Bank Corp NY's Annual
Report on Form 10-K (file No. 000-10592)
for the fiscal year ended December 31, 1994, is
incorporated herein by reference.
10(h) Restated Employment Agreement dated June 21, 1994,
and Amendment No. 1 dated February 14, 1995, among
TrustCo, the Bank and William F. Terry, filed as.
Exhibit 10(e) to TrustCo Bank Corp NY's Annual
Report on Form 10-K (file No. 000-10592)
for the fiscal year ended December 31, 1994, is
incorporated herein by reference.
10(i) Schedules A updating the Restated Employment
Agreements dated June 21, 1994, among TrustCo,
the Bank and each of Nancy A. McNamara, Ralph A.
Pidgeon, and William F. Terry.
10(j) Restated 1985 TrustCo Bank Corp NY Stock Option
Plan as amended and restated effective July 1,
1994, filed as Exhibit 10(h) to TrustCo Bank
Corp NY s Annual Report on Form 10-K (File No.
000-10592)for the fiscal year ended December 31,
1994, is incorporated herein by reference.
10(k) TrustCo Bank Corp NY Directors Stock Option
Plan filed as Exhibit 10(g) to TrustCo Bank
Corp NY s Annual Report on Form 10-K (File No.
000-10592) for the fiscal year ended December
31, 1993, is incorporated herein by reference.
10(l) Restated Trustco Bank Supplemental Retirement
Plan, dated June 24, 1994, Amendment No. 1,
dated February 13, 1995 and Amendment No. 2,
dated December 1, 1995.
10(m) Restated Agreement for Supplemental Retirement
Benefits for Robert A. McCormick, dated June
24, 1994 and Amendment No. 1 dated December 1, 1995.
EXHIBIT INDEX (continued)
Reg S-K
Item 601
Exhibit No. Exhibit
__________ ____________________________________________
10(n) Trustco Bank Executive Officer Incentive Plan
dated December 22, 1993, Amendment No. 1, dated
October 18, 1994, Amendment No. 2, dated February
13, 1995 and Amendment No. 3, dated December 1,
1995.
10(o) 1995 TrustCo Bank Corp NY Stock Option Plan,
dated June 20, 1995, filed on Form S-8
(file No. 33-60409) dated June 20, 1995, is
incorporated herein by reference.
11 Computation of Net Income Per Common Share.
13 Annual Report to Security Holders of TrustCo
for the year ended December 31, 1995.
GRAPHICS APPENDIX
Cross References
to Page of
Omitted Charts Annual Report
______________________________________________
1 Net Interest Margin............5
2 Allowance for Loan Losses.....15
3 Efficiency Ratio..............19
4 Dividends Per Share...........20
The charts listed above were omitted from the EDGAR version of
Exhibit 13; however, the information depicted in the charts was
adequately discussed and/or displayed in the tabulation formation
within Management's Discussion and Analysis section of the Annual
Report.
21 List of Subsidiaries of TrustCo.
23 Independent Auditors' Consent of KPMG Peat
Marwick LLP.
24 Power of Attorney.
27 Financial Data Schedules.
99 Independent Auditors' Report of KPMG Peat
Marwick LLP.
Exhibit 10(b)
AMENDMENT NO. 4 TO
EMPLOYMENT AGREEMENT BETWEEN
TRUSTCO BANK, NATIONAL ASSOCIATION AND
TRUSTCO BANK CORP NY AND
ROBERT A. McCORMICK
WHEREAS, Trustco Bank, National Association (herein
referred to as the "Company") and TrustCo Bank Corp NY
(herein referred to as "TrustCo") entered into an Employment
Agreement (herein referred to as the "Agreement") with Robert
A. McCormick (herein referred to as the "Executive"); and
WHEREAS, the Company, TrustCo and the Executive desire
to amend the Agreement effective as of January 1, 1995;
NOW, THEREFORE, effective January 1, 1995, the Agreement
is hereby amended in the following respect:
I. Paragraph 6 of the Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"6. Termination of Employment. "In the event
there is a Termination (including termination of
employment or any other event included in Section 7
herein) of the Executive for any reason other than
for good cause (as hereinafter defined) or
retirement, the Executive shall receive, upon his
Termination with either of the Companies, the
Termination Benefits set forth hereinbelow. The
Executive's Termination for good cause shall be
limited to the Executive's having committed a
felony, or an act intentionally against either of
the Companies which cause either Company material
injury, or a final determination by a court that
the Executive has committed a material breach of
his duties and responsibilities in connection with
rendering services to either of the Companies
pursuant to this Agreement."
IN WITNESS WHEREOF, the Company, TrustCo and the
Executive have caused this Amendment No. 4 to be executed
this 1st day of December, 1995.
TRUSTCO BANK, NATIONAL TRUSTCO BANK CORP NY
ASSOCIATION
By:/s/ William F. Terry By:/s/ William F. Terry
_______________________ ________________________
Title: Secretary Title: Secretary
____________________ ____________________
/s/ Robert A. McCormick
__________________________
Exhibit 10(c)
Schedule A to Agreement among Companies and Robert A.
McCormick
Calendar Year Annual Salary Approval of Companies
1992 $550,000
1993 $650,000 /s/William F. Terry
1994 $700,000 /s/William F. Terry
1995 $720,000 /s/William F. Terry
1996 $750,000 /s/William F. Terry
TRUSTCO BANK CORP NY
BY/s/M. Norman Brickman
_____________________
TRUSTCO BANK NEW YORK
BY/s/M. Norman Brickman
_____________________
AGREEMENT OF EXECUTIVE
BY/S/Robert A. McCormick
______________________
Robert A. McCormick
Exhibit 10(e)
Schedule A to Agreement among Companies and Robert T. Cushing
Calendar Year Annual Salary Approval of Companies
_______________ _______________ _______________________
1994 230,000.00 /s/Robert A. McCormick
1995 240,000.00 /s/Robert A. McCormick
1996 260,000.00 /s/Robert A. McCormick
TRUSTCO BANK CORP NY
By:/s/Robert A. McCormick
___________________________
President and Chief Executive
Officer
TRUSTCO BANK NEW YORK
By:/s/Robert A. McCormick
___________________________
President and Chief Executive
Officer
AGREEMENT OF EXECUTIVE
/s/Robert T. Cushing
________________________
Robert T. Cushing
Exhibit 10(i)
Schedule A to Agreement among Companies and Nancy A. McNamara
Calendar Year Annual Salary Approval of Companies
_______________ _______________ _______________________
1992 $160,000.00 /s/Robert A. McCormick
1993 200,000.00 /s/Robert A. McCormick
1994 230,000.00 /s/Robert A. McCormick
1995 240,000.00 /s/Robert A. McCormick
1996 260,000.00 /s/Robert A. McCormick
TRUSTCO BANK CORP NY
By:/s/Robert A. McCormick
___________________________
President and Chief Executive
Officer
TRUSTCO BANK NEW YORK
By:/s/Robert A. McCormick
___________________________
President and Chief Executive
Officer
AGREEMENT OF EXECUTIVE
/s/Nancy A. McNamara
_____________________
Nancy A. McNamara
Note: Schedule A as shown here for Nancy A. McNamara, is
representative of Schedules A for William F. Terry and
Ralph A. Pidgeon.
Exhibit 10(l)
RESTATEMENT OF
TRUSTCO BANK SUPPLEMENTAL RETIREMENT PLAN
___________________________________________
WHEREAS, Trustco Bank New York, a New York corporation
(the "Corporation") established effective as of November 21,
1989, the Trustco Bank Supplemental Retirement Plan (the
"Plan"); and
WHEREAS, the Corporation desires to amend and restate
the Plan effective as of January 1, 1994;
NOW, THEREFORE, effective as of January 1, 1994, the
Plan is hereby amended and restated in its entirety so that
it shall read as follows:
ARTICLE I
___________
DEFINITIONS
___________
Except as otherwise specified herein, all capitalized
terms shall have the same meanings as such terms have under
the Retirement Plan of Trustco Bank New York.
SECTION 1.1. "Actuarial Equivalent" means equality in
value of the aggregate amounts expected to be received under
different forms of payment, based on the UP-1984 Mortality
Table, with 7 1/2% interest. When determining the amount of a
Participant's lump sum distribution or the present value of
a Participant's Accrued Benefit under the Retirement Plan,
the interest rates used to make an Actuarial Equivalent
determination are the immediate and deferred annuity rates
the Pension Benefit Guaranty Corporation ("PBGC") would use
for a trusteed single employer plan to value a benefit upon
termination of an insufficient trusteed single-employer
plan. In the event of a distribution made during a calendar
year, the applicable PBGC interest rates for the month of
January preceding the distribution shall be used to make an
Actuarial Equivalent determination.
SECTION 1.2. "Board of Directors" means the Board of
Directors of Trustco Bank New York.
SECTION 1.3. "Cause" means conduct of a Participant
which is finally adjudged to be knowingly fraudulent,
deliberately dishonest or willful misconduct. The Committee
shall have sole and uncontrolled discretion with respect to
the application of the provisions of this Section 1.3 and
any determination shall be conclusive and binding upon the
Participant and all other persons.
SECTION 1.4. "Change in Control" means any of the
following events: (a) any individual, corporation (other
than the Corporation), 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 Corporation
possessing twenty percent (20%) or more of the voting power
for the election of Directors of the Corporation; (b) there
shall be consummated any consolidation, merger or other
business combination involving the Corporation or the
securities of the Corporation in which holders of voting
securities of the Corporation immediately prior to such
consummation own, as a group, immediately after such
consummation, voting securities of the Corporation (or, if
the Corporation 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 Corporation (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 Corporation
cease for any reason to constitute at least a majority
thereof unless the election, or the nomination for election
by the Corporation's shareholders, of each new Director of
the Corporation was approved by a vote of at least two-
thirds of the Directors of the Corporation then still in
office who were Directors of the Corporation at the
beginning of any such period; (d) removal by the
stockholders of all or any of the incumbent Directors of the
Corporation other than a removal for Cause; or (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 Corporation (on a consolidated basis) to a party which
is not controlled by or under common control with the
Corporation.
SECTION 1.5. "Code" means the Internal Revenue Code
of 1986, as amended.
SECTION 1.6. "Committee" means the committee
appointed by the Board of Directors to administer the Plan.
SECTION 1.7. "Corporation" means Trustco Bank New
York.
SECTION 1.8. "Credited Years of Service" means (i) as
of a Determination Date, a Participant's Years of Benefit
Service, as calculated under the Retirement Plan without
taking into account the maximum limit on Years of Benefit
Service set forth in the Retirement Plan, and (ii) as of a
Participant's Normal Retirement Date, a Participant's Years
of Benefit Service, as calculated under the Retirement Plan
without taking into account the maximum limit on Years of
Benefit Service set forth in the Retirement Plan, plus the
number of Plan Years (and fractions thereof) from the
Determination Date to his Normal Retirement Date.
SECTION 1.9. "Determination Date" means the date of
termination of employment or the date the Corporation elects
to distribute the present value of the Supplemental
Retirement Benefit of the Participant or Beneficiary in a
single lump sum.
SECTION 1.10. "Earnings" means the calendar year
earned income, wages, salaries, and fees for professional
services, and other amounts received for personal services
actually rendered in the course of employment with the
Corporation (including, but not limited to, commissions paid
to salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums,
tips and bonuses, and amounts paid under the Trustco Bank
Executive Officer Incentive Plan and the Executive Incentive
Plan of Trustco Bank New York) paid or accrued to a
Participant by the Company and excluding the following:
(a) contributions by the Corporation to a plan of
deferred compensation which are not included in
a Participant's gross income for the taxable
years in which contributed or contributions by
the Corporation under a simplified employee
pension plan to the extent the contributions are
deductible by the Participant, or any
distributions from a plan of deferred
compensation;
(b) amounts realized from the exercise of a
nonqualified stock option, or when restricted
stock (or property) held by a Participant either
becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(c) amounts realized from the sale, exchange or
other disposition of stock acquired under a
qualified stock option;
(d) other amounts which received special tax
benefits, or contributions made by the
Corporation (whether or not under a salary
reduction agreement) toward the purchase of an
annuity described in Code Section 403(b)
(whether or not the amounts are actually
excludable from the gross income of a
Participant); and
(e) amounts paid from any supplemental retirement
plan maintained by the Corporation.
Earnings includes any amounts contributed by the
Corporation or any related employer on behalf of a
Participant pursuant to a salary reduction agreement which
are not includable in the gross income of a Participant
pursuant to Code Section 125, 401(a)(8), 401(k), 402(h) or
403(b).
SECTION 1.11. "Employee" means any person, except
Robert A. McCormick, who is employed as an executive officer
by the Corporation or any of its subsidiaries.
SECTION 1.12. "Final Average Earnings" as of any
Determination Date shall be equal to the average of a
Participant's highest five (5) consecutive Plan Years of
Earnings out of the ten (10) consecutive Plan Years
immediately preceding the Determination Date.
Provided, however, if a Participant's Earnings for the
Plan Year in which his employment with the Corporation
terminates for any reason is greater than his Earnings
during the first Plan Year of the averaging period to be
used, the first Plan Year Earnings shall be disregarded and
the Earnings of the Participant during the Plan Year in
which his employment terminates shall be taken into account.
SECTION 1.13. "Normal Retirement Date" means the first
day of the month coinciding with or next following the month
in which a Participant attains age 65.
SECTION 1.14. "Participant" means any Employee who is
selected by the Board of Directors for participation in the
Plan as provided in Article II.
SECTION 1.15. "Plan" means the Trustco Bank
Supplemental Retirement Plan as set forth herein and as the
same may be amended from time to time.
SECTION 1.16. "Plan Year" means the twelve (12) month
period beginning on any January 1 and ending on the
following December 31.
SECTION 1.17. "Primary Social Security Benefit" means
the annual amount that would be available to a Participant
at social security retirement age under the provisions of
Title II of the Social Security Act without regard to any
changes in the wage base or benefit levels that take effect
after that date, based on the assumption that he will
continue to receive until social security retirement age
compensation which would be treated as wages for purposes of
the Social Security Act at the same rate as he received such
compensation at the time of retirement, death, disability or
termination of employment if such event precedes his
attainment of social security retirement age.
SECTION 1.18 "Projected Accrued Benefit" under the
Retirement Plan means the Participant's Accrued Benefit
under the Retirement Plan as of his Normal Retirement Date,
based on Projected Earnings, Projected Final Average
Earnings, Projected Primary Social Security Benefit, and
Projected Years of Service.
SECTION 1.19. "Projected Earnings" means the estimated
annual earnings of a Participant for a future Plan Year and
is equal to Earnings, excluding bonus, for the year ending
on the Valuation Date increased by
(a) the assumed future bonus payments, and
(b) the assumed future cost of living increases for
such year.
The rate of assumed future bonus payments and the rate of
assumed future cost of living increases shall be determined
as of each Valuation Date by the Committee.
SECTION 1.20. "Projected Final Average Earnings" means
the average of the highest five (5) consecutive Plan Year's
Projected Earnings out of the ten (10) consecutive Plan
Years immediately preceding the Normal Retirement Date. If
the Participant is within ten (10) years of his Normal
Retirement Date, his actual Earnings, including bonuses,
will be used for any Plan Year prior to the Valuation Date.
Provided, however, if the Participant's Earnings for
the Plan Year in which his employment with the Corporation
terminates for any reason is greater than his Earnings
during the first Plan Year of the averaging period to be
used, the first Plan Year Earnings shall be disregarded and
the Earnings of the Participant during the Plan Year in
which his employment terminates shall be taken into account.
SECTION 1.21. "Projected Primary Social Security
Benefit" means the Participant's estimated Primary Social
Security Benefit as of the January 1st of the year during
which he attains the Social Security retirement age assuming
that the Social Security wage base and the Social Security
cost of living increases are equal to the assumed future
cost of living increases used for projecting earnings.
SECTION 1.22. "Projected Total Retirement Benefit"
means the Total Retirement Benefit of a Participant as of
his Normal Retirement Date, based on Projected Earnings,
Projected Final Average Earnings, Projected Primary Social
Security Benefits, and Projected Years of Service.
SECTION 1.23. "Projected Years of Service" means the
completed Credited Years of Service at the Participant's
Normal Retirement Date assuming the Participant continues to
work forty (40) hours per week from the Valuation Date to
his Normal Retirement Date.
SECTION 1.24. "Retirement Plan" means the Retirement
Plan of Trustco Bank New York.
SECTION 1.25. "Supplemental Account Balance" means a
bookkeeping account maintained by the Corporation which
reflects a Participant's benefit under the Plan as
calculated under Article III herein.
SECTION 1.26. "Supplemental Retirement Benefit" means
the benefit calculated in accordance with Article III of the
Plan.
SECTION 1.27. "Total Retirement Benefit" for an
individual who is a Participant in the Plan on December 31,
1993 means, as of any Determination Date, the greatest of
the following formulas:
(a) A career average pension equal to, for each
year of employment:
(i) 1.1% of the first $5,000 of Earnings,
plus,
(ii) 2.0% of Earnings in excess of $5,000, or
(b) A pension equal to:
(i) 1% times Final Average Earnings times
Credited Years of Service at Normal
Retirement Date up to a maximum of
40 years, times
(ii) Credited Years of Service as of the
Determination Date divided by Credited
Years of Service at Normal Retirement
Date, or
(c) A pension equal to:
(i) 2% times Final Average Earnings times
Credited Years of Service at Normal
Retirement Date up to a maximum of
40 years, less
(ii) 2% times the Primary Social Security
Benefit times Credited Years of Service
at Normal Retirement Date up to a
maximum of 25 years, times
(iii) Credited Years of Service at the
Determination Date divided by Credited
Years of Service at Normal Retirement
Date, or
(d) A pension equal to:
(i) the Accrued Benefit under the Retirement
Plan as of December 31, 1988 which is
not limited by the maximum benefit limit
under Code Section 415 and the maximum
compensation limit under Code
Section 401(a)(17), plus
(ii) 1.25% times Final Average Earnings times
credited Years of Service after January
1, 1989 up to a maximum of X years at
the Determination Date, plus
(iii) .65% times Final Average Earnings in
excess of the Covered Compensation level
times Credited Years of Service after
January 1, 1989 up to a maximum of X
years at the Determination Date.
For purposes of subparagraphs (ii) and (iii),
X is equal to 40 years minus the Credited Years
of Service at January 1, 1989.
For an individual who becomes a Participant in the Plan
on or after January 1, 1994, "Total Retirement Benefit"
means the formula described in subparagraph (d) of this
Section 1.27.
SECTION 1.28. "Valuation Date" means December 31 of
each year.
ARTICLE II
__________
PARTICIPATION
_____________
SECTION 2.1. Participation in the Plan shall be
limited to a select group of Employees of the Corporation
and its subsidiaries who are management or highly
compensated Employees within the meaning of Section 201(2)
of the Employee Retirement Income Security Act of 1974, as
amended, and who have been selected by the Board of
Directors to participate in the Plan; provided, however,
that Robert A. McCormick shall not be a Participant in the
Plan.
SECTION 2.2. Each Employee selected by the Board of
Directors to participate in the Plan shall indicate his
agreement to the terms of the Plan by executing a
Participation Agreement, a form of which is attached hereto
as Exhibit A. Subject to Article VI, an Employee and the
Corporation may agree to vary the terms of the Plan as to
such Employee.
ARTICLE III
___________
BENEFITS
__________
SECTION 3.1. Benefit Amount. Except in the case of
termination for Cause, in which event no benefit shall be
payable under the Plan, if a Participant's employment with
the Corporation and all of its subsidiaries is terminated
(a) by death or Disability, (b) after the Participant has
completed five (5) years of Vesting Service, or (c) after
the Participant has satisfied the requirements for early
retirement under the Retirement Plan, the Participant will
be entitled to a benefit in an amount equal to his
Supplemental Account Balance payable at such time and in
such manner as provided herein.
SECTION 3.2. Supplemental Account Balance at
December 31, 1993. The Participant's Supplemental Account
Balance at December 31, 1993, is equal to the lump sum
Actuarial Equivalent of the Participant's Supplemental
Retirement Benefit payable under the provisions of the Plan
in effect on December 31, 1993. The Actuarial Equivalent
shall be determined based on the annual Supplemental
Retirement Benefit beginning on the Participant's Normal
Retirement Date but based on his Final Average Earnings and
Credited Years of Service as of December 31, 1993.
SECTION 3.3. Redetermination of Supplemental Account
Balance on or Before Normal Retirement Date. The
Participant's Supplemental Account Balance shall be
redetermined on each Valuation Date and on his Normal
Retirement Date.
(a) The Supplemental Account Balance on any
Valuation Date after December 31, 1993 is equal to:
(i) the Supplemental Account Balance as of
the immediately preceding Valuation
Date, plus
(ii) the Account Balance Increment for the
Plan Year ending on the Valuation Date;
less
(iii) the amount of his Supplemental
Retirement Benefit distributed under the
Plan pursuant to Section 4.4, or its
successor, since the immediately
preceding Valuation Date.
(b) (1) The Account Balance Increment for the Plan
Year ending December 31, 1994 shall be determined as of
January 1, 1994 and is equal to:
(i) the projected Supplemental Account
Balance at Normal Retirement Date,
measured as of December 31, 1993, minus
(ii) the accrued pension expense as
determined by the Retirement Plan
actuary under the Statement of Financial
Accounting Standards No. 87 as of
December 31, 1993, divided by
(iii) the number of years and months from
December 31, 1993 to the Participant's
Normal Retirement Date, minus
(iv) the Supplemental Account Balance as of
December 31, 1993, plus
(v) the accrued pension expense as
determined by the Retirement Plan
actuary under the Statement of Financial
Accounting Standards No. 87 as of
December 31, 1993.
Notwithstanding the above, no Account Balance Increment
for the Plan Year ending December 31, 1994 shall be
less than zero.
(2) The Account Balance Increment for any Plan
Year beginning on and after January 1, 1995 and through
the Plan Year in which a Participant's Normal
Retirement Date occurs shall be determined on the
immediately preceding Valuation Date and is equal to:
(i) the projected Supplemental Account
Balance at Normal Retirement Date,
measured as of the immediately preceding
Valuation Date, minus
(ii) the Supplemental Account Balance as of
the immediately preceding Valuation
Date, divided by
(iii) the number of years and months from the
immediately preceding Valuation Date to
the Participant's Normal Retirement
Date.
Notwithstanding the above, no Account Balance Increment
for any Plan Year beginning on and after January 1,
1995 shall be less than zero.
A portion of the Account Balance Increment
constitutes interest which is determined by using the
Pension Benefit Guaranty Corporation interest rate in
effect as of the first day of the applicable Plan Year.
(c) The Participant's projected Supplemental Account
Balance at Normal Retirement Date is equal to the lump
sum Actuarial Equivalent of:
(i) his Projected Total Retirement Benefit,
less
(ii) the amount of his Projected Accrued
Benefit under the Retirement Plan; less
(iii) the amount of his Supplemental
Retirement Benefit previously
distributed under the Plan pursuant to
Section 4.4, or its successor.
SECTION 3.4. Determination of Supplemental Account
Balance After Normal Retirement Date. If a Participant
remains in the employment of the Corporation beyond his
Normal Retirement Date, his Supplemental Account Balance
shall be increased as of each Valuation Date subsequent to
his Normal Retirement Date by an amount equal to:
(a) the interest on the Supplemental Account Balance
as of the immediately preceding Valuation Date
(adjusted for any distributions made to the Participant
in accordance with Section 4.4 since the immediately
preceding Valuation Date) at the Pension Benefit
Guaranty Corporation interest rate in effect on the
Valuation Date, plus
(b) the same percentage of Earnings as is allocated
as of such Valuation Date to participants under the
Profit Sharing Plan of Trustco Bank New York.
For the Valuation Date immediately following the
Participant's Normal Retirement Date, his Account Balance
Increment shall be the greater of the amount determined
under Section 3.3 or the amount determined under this
Section 3.4.
SECTION 3.5. Monthly Allocation Date. The
Supplemental Account Balance on the last day of any month
during the Plan Year (the "Monthly Allocation Date") shall
be equal to:
(i) the Supplemental Account Balance as of
the immediately preceding Valuation
Date, plus
(ii) the Account Balance Increment, times the
quotient of the number of months from
the immediately preceding Valuation Date
to the Monthly Allocation Date, divided
by 12.
SECTION 3.6. Reduction of Supplemental Account
Balance. A Participant's Supplemental Account Balance will
be reduced by the amount of any distribution made to the
Participant pursuant to Sections 4.3 or 4.4.
ARTICLE IV
____________
PAYMENT OF BENEFITS
___________________
SECTION 4.1. Except in the case of termination for
Cause, in which event no benefit shall be payable under the
Plan, and except as otherwise provided in Sections 4.2 and
9.1, if a Participant's employment with the Corporation and
all of its subsidiaries is terminated (a) after the
Participant has completed five (5) years of Vesting Service,
or (b) after the Participant has satisfied the requirements
for early retirement under the Retirement Plan, the
Participant will be entitled to his Supplemental Account
Balance determined at the next Monthly Allocation Date.
SECTION 4.2. If a Participant's employment with the
Corporation or one of its subsidiaries is terminated (a) by
retirement, (b) by disability or (c) by death, the
Participant or his Beneficiary will be entitled to his
Supplemental Account Balance determined at the next
Valuation Date.
SECTION 4.3. The Supplemental Account Balance shall
be payable to the Participant or his Beneficiary in the same
manner, and at the same time, as benefit payments to such
Participant or his Beneficiary under the Retirement Plan or
in one lump sum or a series of installments as elected by
the Participant or his Beneficiary.
SECTION 4.4. Notwithstanding Section 4.3, the
Corporation, in its discretion, may at any time elect to
distribute to a Participant or his Beneficiary a single lump
sum equal to the Supplemental Account Balance as of a date
specified by the Corporation. The Actuarial Equivalent of
any single lump sum distribution will be included in the
amount offset under Section 3.3(c)(iii).
ARTICLE V
_________
CLAIMS
________
SECTION 5.1. If a claim for benefits under the Plan
is denied, the Committee will provide a written notice of
the denial setting forth the specific reasons for the
denial, a description of any additional material or
information necessary for a claimant to perfect a claim, and
an explanation of why such material or information is
necessary and appropriate information as to the steps to be
taken for the claim to be submitted for review. A claimant
may request a review of a denial. Such requests should be
submitted to the Committee, in writing within 60 days after
receipt of the denial notice, stating the reasons for
requesting the review. A claimant may review pertinent
documents and submit issues and comments in writing. A
decision will be made on the review of the denial of a claim
not later than 60 days after the Committee's receipt of a
request for review unless special circumstances require an
extension of time for processing, in which case a decision
shall be rendered as soon as possible but not later than
120 days after receipt of a request for review. The
decision on review will be in writing to the claimant and
shall include specific reasons for the decision.
ARTICLE VI
______________
AMENDMENT AND TERMINATION
_____________________________
SECTION 6.1. The Board of Directors may amend or
terminate the Plan at any time; provided, however, that no
such amendment or termination shall have the effect of
reducing a Participant's benefit accrued under the Plan as
of the date of such amendment or termination and the
Participant shall be entitled to receive such benefit as
provided in Article III.
ARTICLE VII
____________
ADMINISTRATION
______________
SECTION 7.1. The Plan shall be administered by the
Committee in accordance with its terms, for the exclusive
benefit of Participants. The powers and duties of the
Committee shall be similar to those powers and duties
granted to the Plan Administrator of the Retirement Plan.
Any interpretation or construction of Plan terms or any
determination by the Committee with respect to Plan
benefits, etc., shall be conclusive and binding with respect
to Participants and all other persons.
ARTICLE VIII
____________
MISCELLANEOUS
_____________
SECTION 8.1. The benefits provided hereunder will be
paid directly from the Corporation out of its general assets
and the benefits will not be funded.
SECTION 8.2. Nothing contained in this Plan and no
action taken pursuant to the provisions of this Plan shall
give the Participant the right to be retained in the employ
of the Corporation or its subsidiaries or interfere with the
right of the Corporation or its subsidiaries to discharge
the Participant at any time, nor shall it give the
Corporation or its subsidiaries the right to require the
Participant to remain in their employ or interfere with the
Participant's right to terminate his employment at any time.
SECTION 8.3. No benefit payable at any time under
this Plan shall be subject in any manner to alienation,
sale, transfer, assignment, pledge, attachment or
encumbrance of any kind.
SECTION 8.4. All rights hereunder shall be governed
by and construed according to the laws of the State of New
York, except to the extent such laws are preempted by the
laws of the United States of America. In the event any
provision of this Plan is held invalid, void or
unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of this
Plan.
SECTION 8.5. Nothing contained in this Plan and no
action taken pursuant to the provisions of this Plan shall
create or be construed to create a trust of any kind or a
fiduciary relationship between the Corporation or its
subsidiaries and the Participant or any other person. To
the extent that any person acquires the right to receive
payment from the Corporation under this Plan, such right
shall be no greater than the right of any unsecured general
creditor of the Corporation.
SECTION 8.6. The terms of this Plan shall be binding
upon and inure to the benefit of the Corporation, its
successors and assigns, and the Participant and his heirs
and legal representatives.
SECTION 8.7. If a Participant becomes entitled to a
distribution of benefits under the Plan, and if at such time
the Participant has outstanding any debt, obligation, or
other liability representing an amount owing to the
Corporation or its subsidiaries, then the Corporation may
offset such amount so owing against the amount of benefits
otherwise distributable. Such determination shall be made
by the Committee.
SECTION 8.8. The Corporation shall, to the extent
permitted by law, have the right to deduct from any payments
of any kind with respect to the benefit otherwise due to the
Participant any Federal, state or local taxes of any kind
required by law to be withheld from such payments.
ARTICLE IX
___________
CHANGE OF CONTROL
_________________
SECTION 9.1. If a Participant's employment with the
Corporation and all of its subsidiaries is terminated within
two (2) years after a Change in Control, the Participant
will be entitled to a single lump sum payment equal to the
Supplemental Account Balance at the next Valuation Date.
IN WITNESS WHEREOF, the Corporation has caused this
Restatement of the Plan to be executed this 21st day of
June, 1994.
TRUSTCO BANK NEW YORK
By:/s/Robert A. McCormick
___________________________
President & Chief Executive
Officer
EXHIBIT A
TRUSTCO BANK SUPPLEMENTAL RETIREMENT PLAN
PARTICIPATION AGREEMENT
THIS AGREEMENT is made as of _________________, 19____
between Trustco Bank New York ("Corporation") and
________________________ ("Participant").
The Corporation and the Participant mutually agree as
follows:
1. The Participant has received a copy of the Trustco Bank
Supplemental Retirement Plan ("Plan") and has read and
understands the Plan.
2. By completion of this Agreement, the Participant agrees
to comply with the terms of the Plan in all respects.
3. All provisions of the Plan are hereby made a part of
this Agreement.
4. The following special provisions are applicable to
the Participant's participation in the Plan:
___________________________________________________________
___________________________________________________________
___________________________________________________________
______________________________________________________
TRUSTCO BANK NEW YORK
___________________ By:_________________________________
Date Title:______________________________
___________________ ____________________________________
Date Participant
AMENDMENT NO. 1
TO RESTATEMENT OF
TRUSTCO BANK SUPPLEMENTAL RETIREMENT PLAN
WHEREAS, Trustco Bank New York (herein referred to as the
"Company") maintains the Trustco Bank Supplemental Retirement
Plan (herein referred to as the "Plan"); and
WHEREAS, by statutory conversion the Company converted from a
state chartered trust company to a national bank, and in
connection with the conversion the name of the Company
changed to Trustco Bank, National Association effective
February 1, 1995; and
WHEREAS, the Company desires to amend the Plan to reflect
the change of its name;
NOW, THEREFORE, effective February, 1995, the Plan is hereby
amended by changing "Trustco Bank New York" to "Trustco Bank,
National Association" in each place where it appears therein.
IN WITNESS WHEREOF, the Company has caused this amendment No.
1 to be executed this 13th day of February, 1995.
TRUSTCO BANK, NATIONAL ASSOCIATION
By: William F. Terry
________________________
Title: Secretary
_________________________
AMENDMENT NO. 2 TO
TRUSTCO BANK SUPPLEMENTAL RETIREMENT PLAN
WHEREAS, Trustco Bank, National Association (herein
referred to as the "Corporation") established effective as of
November 21, 1989, the Trustco Bank Supplemental Retirement
Plan (herein referred to as the "Plan"); and
WHEREAS, the Corporation desires to amend the Plan;
NOW, THEREFORE, the Plan is hereby amended effective
October 17, 1995, except as otherwise stated below, as
follows:
I. Sections 4.3 of the Plan is hereby deleted in its
entirety and the following is substituted in lieu
thereof:
SECTION 4.3. The Supplemental Account Balance
shall commence to be paid to a Participant or his
Beneficiary at such time as benefits become payable
to the Participant under the Retirement Plan. The
Supplemental Account Balance may be paid in any one
of the benefit forms provided under the Retirement
Plan or in one lump sum or a series of installments,
as elected by the Participant or his Beneficiary."
II. Effective October 17, 1995, Section 8.1 of the Plan is
hereby deleted in its entirety and the following is
substituted in lieu thereof:
"Section 8.1. The Company intends that the Plan
constitute an unfunded plan maintained for the
purposes of providing deferred compensation for a
select group of management or highly compensated
employees."
IN WITNESS WHEREOF, the Corporation has caused this
Amendment No. 2 to be executed this 1st day of December, 1995.
TRUSTCO BANK, NATIONAL ASSOCIATION
By: /s/ William F. Terry
_____________________________
Title: Secretary
_____________________________
Exhibit 10(m)
RESTATED AGREEMENT FOR SUPPLEMENTAL
RETIREMENT BENEFITS FOR ROBERT A. MCCORMICK
WHEREAS, TrustCo Bancorp NY, a New York corporation,
Trustco Bank New York, a New York corporation ("Corporation"),
and Robert A. McCormick, a New York resident (the "Executive")
entered into an Agreement For Supplemental Retirement Benefits
dated as of January 1, 1992 (the "Agreement"), and
WHEREAS, the parties desire to restate the Agreement and
to incorporate such other changes as have been deemed necessary
and advisable by the parties;
NOW, THEREFORE, in consideration of the above, the
Agreement is hereby amended and restated in its entirety
effective January 1, 1994, so that it shall read as follows:
ARTICLE I
___________
DEFINITIONS
_____________
Except as otherwise specified herein, all capitalized
terms shall have the same meanings as such terms have under the
Retirement Plan of Trustco Bank New York ("Trustco Retirement
Plan").
1.1 "Actuarial Equivalent" means equality in value of the
aggregate amounts expected to be received under different forms
of payment, based on the UP-1984 Mortality Table with 7 1/2%
interest. When determining the amount of the Executive's lump
sum distribution or the present value of the Executive's
Accrued Benefit under the Trustco Retirement Plan, the interest
rates used to make an Actuarial Equivalent determination are
the immediate and deferred annuity rates the Pension Benefit
Guaranty Corporation ("PBGC") would use for a trusteed single
employer plan to value a benefit upon termination of an
insufficient trusteed single-employer plan. In the event of a
distribution made during a calendar year, the applicable PBGC
interest rates for the month of January preceding the
distribution shall be used to make an Actuarial Equivalent
determination.
1.2 "Beneficiary" means any person or persons (including,
but not limited to, an estate, a trust, an executor, personal
representative, administrator or fiduciary, corporate or
otherwise, or the estate or trustee of the testamentary trust
or living trust of the Executive) designated by the Executive
to receive amounts payable hereunder, after the death of the
Executive. In the event that the Executive fails to designate
a Beneficiary or if no such designated Beneficiary is living
upon the death of the Executive or if for any reason such
designation shall be legally ineffective, then the amount which
would have been paid to a designated living Beneficiary shall
be paid to the trustee of the Executive's living trust if no
personal representative is named or to the personal
representative of the estate of the Executive.
1.3 "Cause" means the Executive's having committed an act
of fraud, embezzlement, or theft constituting a felony, or an
act intentionally against the Corporation which causes the
Corporation material injury, or a final determination by a
court that the Executive has committed a material breach of his
duties and responsibilities in connection with rendering
services to the Corporation.
1.4 "Change in Control" means any of the following
events: (a) any individual, corporation (other than the
Corporation), 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 Corporation possessing twenty percent (20%)
or more of the voting power for the election of Directors of
the Corporation; (b) there shall be consummated any
consolidation, merger or other business combination involving
the Corporation or the securities of the Corporation in which
holders of voting securities of the Corporation immediately
prior to such consummation own, as a group, immediately after
such consummation, voting securities of the Corporation (or, if
the Corporation 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 Corporation (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 Corporation cease for
any reason to constitute at least a majority thereof unless the
election, or the nomination for election by the Corporation's
shareholders, of each new Director of the Corporation was
approved by a vote of at least two-thirds of the Directors of
the Corporation then still in office who were Directors of the
Corporation at the beginning of any such period; (d) removal by
the stockholders of all or any or the incumbent Directors of
the Corporation other than a removal for Cause; or (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 Corporation (on a consolidated basis) to a party which is
not controlled by or under common control with the Corporation.
1.5 "Code" means the Internal Revenue Code of 1986, as
amended.
1.6 "Committee" means the committee appointed by the
Board of Directors of the Corporation to administer the Plan.
1.7 "Determination Date" means the date of termination of
employment or the date the Corporation elects to distribute the
present value of the Supplemental Retirement Benefit to the
Executive or his Beneficiary in a single lump sum.
1.8 "Determination Year" means the twelve (12) month
period beginning on any January 1 and ending on the following
December 31.
1.9 "Earnings" means the Executive's earned income,
wages, salaries, and fees for professional services, and other
amounts paid or accrued for personal services actually rendered
in the course of employment with the Corporation (including,
but not limited to, commissions paid to salesmen, compensation
for services on the basis of a percentage of profits,
commissions on insurance premiums, tips and bonuses and amounts
paid under the Trustco Bank Executive Officer Incentive Plan
and the Executive Incentive Plan of Trustco Bank New York), and
excluding the following:
(a) contributions by the Corporation to a plan of
deferred compensation which are not included in the
Executive's gross income for the taxable years in which
contributed or contributions by the Corporation under a
simplified employee pension plan to the extent the
contributions are deductible by the Executive, or any
distributions from a plan of deferred compensation;
(b) amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or
property) held by the Executive either becomes freely
transferable or is no longer subject to a substantial risk
of forfeiture;
(c) amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified
stock option;
(d) other amounts which received special tax
benefits, or contributions made by the Corporation
(whether or not under a salary reduction agreement) toward
the purchase of an annuity described in Code Section
403(b) (whether or not the amounts are actually excludable
from the gross income of the Executive); and
(e) amounts paid from any supplemental retirement
plan maintained by the Corporation.
Earnings includes any amounts contributed by the
Corporation or any related employer on behalf of the Executive
pursuant to a salary reduction agreement which are not
includable in the gross income of the Executive pursuant to
Code Section 125, 401(a)(8), 401(k), 402(h) or 403(b).
1.10 "Final Average Earnings" as of any Determination
Date shall be equal to:
Determination Date Final Average Earnings
12/31/91 to 12/30/92 1991 Earnings
12/31/92 to 12/30/93 1991 + 1992 Earnings, divided by
2
12/31/93 to 12/30/94 1991 + 1992 + 1993 Earnings,
divided by 3
12/31/94 to 12/30/95 1991 + 1992 + 1993 + 1994
Earnings, divided by 4
12/31/95 and later The average of the Executive's
highest five (5) consecutive
Determination Years' Earnings
out of the ten (10) consecutive
Determination Years immediately
preceding the Determination
Date.
Provided, however, if the Executive's Earnings for the
Determination Year in which his employment with the Corporation
terminates for any reason is greater than his Earnings during
the first Determination Year of the averaging period to be
used, the first Determination Year Earnings shall be
disregarded and the Earnings of the Executive during the
Determination Year in which his employment terminates shall be
taken into account.
1.11 "Normal Retirement Date" means the first day of the
month coinciding with or next following the month in which the
Executive attains age 65.
1.12 "Primary Social Security Benefit" means the annual
amount that would be available to the Executive at social
security retirement age under the provisions of Title II of the
Social Security Act without regard to any changes in the wage
base or benefit levels that take effect after that date, based
on the assumption that he will continue to receive until social
security retirement age compensation which would be treated as
wages for purposes of the Social Security Act at the same rate
as he received such compensation at the time of retirement,
death, disability or termination of employment if such event
precedes his attainment of social security retirement age.
1.13 "Projected Accrued Benefit" under the Trustco
Retirement Plan means the Executive's Accrued Benefit under the
Trustco Retirement Plan as of his Normal Retirement Date, based
on Projected Earnings, Projected Final Average Earnings,
Projected Primary Social Security Benefit, and Projected Years
of Service.
1.14 "Projected Earnings" means the Executive's estimated
annual earnings for a future Determination Year and is equal to
Earnings, excluding bonus, for the year ending on the Valuation
Date increased by
(a) the assumed future bonus payments, and
(b) the assumed future cost of living increases for
such year.
The rate of assumed future bonus payments and the rate of
assumed future cost of living increases shall be determined as
of each Valuation Date by the Committee.
1.15 "Projected Final Average Earnings" means the average
of the highest five (5) consecutive Determination Year's
Projected Earnings out of the ten (10) consecutive
Determination Years immediately preceding the Normal Retirement
Date. If the Executive is within ten (10) years of his Normal
Retirement Date, his actual Earnings, including bonuses, will
be used for any Determination Year prior to the Valuation Date.
Provided, however, if the Executive's Earnings for the
Determination Year in which his employment with the Corporation
terminates for any reason is greater than his Earnings during
the first Determination Year of the averaging period to be
used, the first Determination Year Earnings shall be
disregarded and the Earnings of the Executive during the
Determination Year in which his employment terminates shall be
taken into account.
1.16 "Projected Primary Social Security Benefit" means
the Executive's estimated Primary Social Security Benefit as of
the January 1st of the year during which he attains the social
security retirement age assuming that the social security wage
base and the social security cost of living increases are equal
to the assumed future cost of living increases used for
projecting earnings.
1.17 "Projected Total Retirement Benefit" means the Total
Retirement Benefit of the Executive as of his Normal Retirement
Date, based on Projected Earnings, Projected Final Average
Earnings, Projected Primary Social Security Benefits, and
Projected Years of Service.
1.18 "Projected Years of Service" means the completed
Years of Service at the Executive's Normal Retirement Date
assuming the Executive continues to work forty (40) hours per
week from the Valuation Date to his Normal Retirement Date.
1.19 "Supplemental Account Balance" means a bookkeeping
account maintained by the Corporation which reflects the
Executive's benefit under the Plan as calculated under
Article II herein.
1.20 "Supplemental Retirement Benefit" means the benefit
calculated in accordance with Article II of this Agreement.
1.21 "Total Retirement Benefit" means, as of any
Determination Date, the following:
(a) 2% of the Executive's Final Average Earnings
times Years of Service as of the Determination Date, up to
a maximum of 40 years, less
(b) 50% of the Executive's Primary Social Security
Benefit, less
(c) The amount of the Executive's Accrued Benefit
under the Trustco Retirement Plan, less
(d) The amount of the Executive's accrued benefit
under the Citibank, N.A. retirement plans, less
(e) The amount of Supplemental Retirement Benefit
previously distributed to the Executive.
1.22 "Valuation Date" means December 31 of each year.
1.23 "Years of Service" means (i) the Executive's years
of service with Citibank, N.A., commencing December 1, 1954,
plus (ii) his Years of Benefit Service, as calculated under the
Trustco Retirement Plan without taking into account the maximum
limit on Years of Benefit Service set forth in the Trustco
Retirement Plan.
ARTICLE II
______________
BENEFITS
______________
2.1 Benefit Amount. When the Executive's employment with
the Corporation and all of its subsidiaries is terminated, the
Executive will be entitled to a benefit in an amount equal to
his Supplemental Account Balance payable at such time and in
such manner as provided herein.
2.2 Supplemental Account Balance at December 31, 1993.
The Executive's Supplemental Account Balance at December 31,
1993, is equal to the lump sum Actuarial Equivalent of the
Executive's Supplemental Retirement Benefit payable under the
provisions of the Plan in effect on December 31, 1993. The
Actuarial Equivalent shall be determined based on the annual
Supplemental Retirement Benefit beginning on the Executive's
Normal Retirement Date but based on his Final Average Earnings
and Years of Service as of December 31, 1993.
2.3 Redetermination of Supplemental Account Balance on or
Before Normal Retirement Date. The Executive's Supplemental
Account Balance shall be redetermined on each Valuation Date
and on his Normal Retirement Date.
(a) The Supplemental Account Balance on any Valuation
Date after December 31, 1993 is equal to:
(i) the Supplemental Account Balance as of the
immediately preceding Valuation Date, plus
(ii) the Account Balance Increment for the
Determination Year ending on the Valuation Date; less
(iii) the amount of his Supplemental Retirement
Benefit distributed under the Plan pursuant to Section
3.4, or its successor, since the immediately preceding
Valuation Date.
(b) (1) The Account Balance Increment for the
Determination Year ending December 31, 1994 shall be determined
as of January 1, 1994 and is equal to:
(i) the projected Supplemental Account Balance at
Normal Retirement Date, measured as of December 31, 1993,
minus
(ii) the accrued pension expense as determined by the
Trustco Retirement Plan actuary under the Statement of
Financial Accounting Standards No. 87 as of December 31,
1993, divided by
(iii) the number of years and months from December 31,
1993 to the Executive's Normal Retirement Date, minus
(iv) the Supplemental Account Balance as of December
31, 1993, plus
(v) the accrued pension expense as determined by the
Trustco Retirement Plan actuary under the Statement of
Financial Accounting Standards No. 87 as of December 31,
1993.
Notwithstanding the above, the Account Balance Increment for
the Determination Year ending December 31, 1994 shall not be
less than zero.
(2) The Account Balance Increment for any
Determination Year beginning on and after January 1, 1995 and
through the Determination Year in which the Executive's Normal
Retirement Date occurs shall be determined on the immediately
preceding Valuation Date and is equal to:
(i) the projected Supplemental Account Balance at
Normal Retirement Date, measured as of the immediately
preceding Valuation Date, minus
(ii) the Supplemental Account Balance as of the
immediately preceding Valuation Date, divided by
(iii) the number of years and months from the
immediately preceding Valuation Date to the Executive's
Normal Retirement Date.
Notwithstanding the above, the Account Balance Increment for
any Determination Year beginning on and after January 1, 1995
shall not be less than zero.
A portion of the Account Balance Increment constitutes
interest which is determined by using the Pension Benefit
Guaranty Corporation interest rate in effect as of the first
day of the applicable Determination Year.
(c) The Executive's projected Supplemental Account
Balance at Normal Retirement Date is equal to the lump sum
Actuarial Equivalent of:
(i) his Projected Total Retirement Benefit, less
(ii) the amount of his Projected Accrued Benefit
under the Trustco Retirement Plan; less
(iii) the amount of his Supplemental Retirement
Benefit previously distributed under the Plan pursuant to
Section 3.4, or its successor.
2.4 Determination of Supplemental Account Balance After
Normal Retirement Date. If the Executive remains in the
employment of the Corporation beyond his Normal Retirement
Date, his Supplemental Account Balance shall be increased as of
each Valuation Date subsequent to his Normal Retirement Date by
an amount equal to:
(a) the interest on the Supplemental Account Balance
as of the immediately preceding Valuation Date (adjusted
for any distributions made to the Executive in accordance
with Section 3.4 since the immediately preceding Valuation
Date) at the Pension Benefit Guaranty Corporation interest
rate in effect on the Valuation Date, plus
(b) the same percentage of Earnings as is allocated
as of such Valuation Date to participants under the Profit
Sharing Plan of Trustco Bank New York.
For the Valuation Date immediately following the Executive's
Normal Retirement Date, his Account Balance Increment shall be
the greater of the amount determined under Section 2.3 or the
amount determined under this Section 2.4.
2.5 Monthly Allocation Date. The Supplemental Account
Balance on the last day of any month during the Determination
Year (the "Monthly Allocation Date") shall be equal to:
(i) the Supplemental Account Balance as of the
immediately preceding Valuation Date, plus
(ii) the Account Balance Increment, times the
quotient of the number of months from the immediately
preceding Valuation Date to the Monthly Allocation Date,
divided by 12.
2.6 Reduction of Supplemental Account Balance. The
Executive's Supplemental Account Balance will be reduced by the
amount of any distribution made to the Executive pursuant to
Sections 3.3 or 3.4.
ARTICLE III
______________
PAYMENT OF BENEFITS
______________________
3.1 Except as otherwise provided in Sections 3.2 and 6.1,
if the Executive's employment with the Corporation and all of
its subsidiaries is terminated for reasons other than
retirement, disability or death, the Executive will be entitled
to his Supplemental Account Balance determined at the next
Monthly Allocation Date.
3.2 If the Executive's employment with the Corporation or
one of its subsidiaries is terminated (a) by retirement, (b) by
disability, or (c) by death, the Executive or his Beneficiary
will be entitled to his Supplemental Account Balance determined
at the next Valuation Date.
3.3 The Supplemental Account Balance shall be payable to
the Executive or his Beneficiary in the same manner, and at the
same time, as benefit payments to such Participant or his
Beneficiary under the Trustco Retirement Plan or in one lump
sum or a series of installments as elected by the Executive.
3.4 Notwithstanding Section 3.3, the Corporation, in its
discretion, may at any time elect to distribute to the
Executive or his Beneficiary a single lump sum equal to the
Supplemental Account Balance as of a date specified by the
Corporation. The Actuarial Equivalent of any single lump sum
distribution will be included in the amount offset under
Section 2.3(c)(iii).
ARTICLE IV
______________
CLAIMS
______________
4.1 If a claim for benefits under the Plan is denied, the
Committee will provide a written notice of the denial setting
forth the specific reasons for the denial, a description of any
additional material or information necessary for a claimant to
perfect a claim, an explanation of why such material or
information is necessary, and appropriate information as to the
steps to be taken for the claim to be submitted for review. A
claimant may request a review of a denial. Such requests
should be submitted to the Committee, in writing within 60 days
after receipt of the denial notice, stating the reasons for
requesting the review. A claimant may review pertinent
documents and submit issues and comments in writing. A
decision will be made on the review of the denial of a claim
not later than 60 days after the Committee's receipt of a
request for review unless special circumstances require an
extension of time for processing, in which case a decision
shall be rendered as soon as possible but not later than 120
days after receipt of a request for review. The decision on
review will be in writing to the claimant and shall include
specific reasons for the decision.
ARTICLE V
___________
MISCELLANEOUS
_______________
5.1 The benefit provided hereunder will be paid directly
from the Corporation out of its general assets and the benefit
will not be funded.
5.2 This Agreement shall not be construed as giving the
Executive any right to be retained in the employ of the
Corporation.
5.3 Nothing contained in this Agreement and no action
taken pursuant to the provisions of this Agreement shall create
or be construed to create a trust of any kind, or a fiduciary
relationship between the Corporation and the Executive, his
Beneficiary or any other person. To the extent that any person
acquires the right to receive payment from the Corporation
under this Agreement, such right shall be no greater than the
right of any unsecured general creditor of the Corporation.
5.4 No benefit payable at any time under this Agreement
shall be subject in any manner to alienation, sale, transfer,
assignment, pledge, attachment or encumbrance of any kind.
5.5 This Agreement shall be binding upon and inure to the
benefit of the Corporation, its successors and assigns and the
Executive and his heirs, executor, administrator and legal
representatives.
5.6 All rights hereunder shall be governed by and
construed according to the laws of the State of New York,
except to the extent such laws are preempted by the laws of the
United States of America. In the event any provision of this
Agreement is held invalid, void or unenforceable, the same
shall not affect, in any respect whatsoever, the validity of
any other provision of this Agreement.
5.7 No modification of this Agreement shall be binding
upon the parties hereto, or either of them, unless such
modification is in writing and signed by the Corporation and
the Executive.
ARTICLE VI
____________
CHANGE IN CONTROL
____________________
6.1 If the Executive's employment with the Corporation
and all of its subsidiaries is terminated within two (2) years
after a Change in Control, the Executive will be entitled to a
single lump sum payment equal to the Supplemental Account
Balance at the next Valuation Date.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement this 21st day of June, 1994.
TRUSTCO BANK CORP NY
By:/s/William F. Terry
________________________________
TRUSTCO BANK NEW YORK, "Corporation"
By:/s/William F. Terry
________________________________
/s/Robert A. McCormick
____________________________________
Robert A. McCormick, "Executive"
AMENDMENT NO. 1 TO
RESTATED AGREEMENT FOR SUPPLEMENTAL RETIREMENT BENEFITS
FOR ROBERT A. McCORMICK
WHEREAS, TrustCo Bank Corp NY, a New York corporation, Trustco
Bank, National Association (herein referred to as the "Corporation"),
and Robert A. McCormick (herein referred to as the "Executive") entered
into an Agreement For Supplemental Retirement Benefits dated as of
January 1, 1992 (herein referred to as the "Agreement"); and
WHEREAS, the Corporation and McCormick desire to amend the
Agreement;
NOW, THEREFORE, the Agreement is hereby amended effective
October 17, 1995, except as otherwise stated below, as follows:
I. Section 3.3 of the Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"3.3. The Supplemental Account Balance shall
commence to be paid to the Executive at such time as
benefits become payable to the Executive under the
Retirement Plan. The Supplemental Account Balance may
be paid in one of the benefit forms provided under the
Retirement Plan or in one lump sum or a series of
installments, as elected by the Executive."
II. Effective October 17, 1995, Section 5.1 of the Agreement is hereby
deleted in its entirety and the following is substituted in lieu
thereof:
"Section 5.1. The Corporation intends that the
Plan constitute an unfunded plan maintained for the
purposes of providing deferred compensation for a
select group of management or highly compensated
employees."
IN WITNESS WHEREOF, the Corporation has caused this Amendment No.
1 to be executed this 1st day of December, 1995.
TRUSTCO BANK CORP NY
By:/s/William F. Terry
_______________________________
Title: Secretary
____________________________
TRUSTCO BANK, NATIONAL ASSOCIATION
By:/s/William F. Terry
_______________________________
Title: Secretary
____________________________
/s/Robert A. McCormick
__________________________________
Robert A. McCormick
Exhibit 10(n)
TRUSTCO BANK
_________________
EXECUTIVE OFFICER INCENTIVE PLAN
______________________________________
WHEREAS, Trustco Bank New York, a New York corporation
(the "Corporation"), desires to increase the extent to
which the incentive compensation of its executive officers
is linked to business goals and objectives by tying
incentive awards to return on equity of the Corporation;
NOW, THEREFORE, effective as of January 1, 1994, the
Corporation hereby adopts the Trustco Bank Executive
Officer Incentive Plan which shall read as follows:
ARTICLE I
___________
DEFINITIONS
______________
Section 1.1 "Base Salary" means the annual salary
payable to a Participant, including deferrals under Code
section 125 and exclusive of any bonuses, incentive awards,
plan contributions or any other fringe benefit payable
during the Plan Year.
Section 1.2. "Beneficiary" means the person or
persons designated by a Participant in writing to receive
any benefits under this Plan upon the Participant's death.
If a Participant fails to designate a Beneficiary, if no
such Beneficiary is living upon the death of such
Participant or if such designation is legally ineffective,
then "Beneficiary" shall mean the Participant's personal
representative or, if no personal representative is named,
the Participant's testamentary trust or living trust.
Section 1.3 "Board of Directors" means the Board of
Directors of Trustco Bank New York.
Section 1.4 "Code" means the Internal Revenue Code of
1986, as amended.
Section 1.5 "Committee" means the committee appointed
by the Board of Directors to administer the Plan.
Section 1.6 "Corporation" means Trustco Bank New
York.
Section 1.7 "Deferred Compensation Account" means the
bookkeeping account established for each Participant
pursuant to Section 4.2 herein.
Section 1.8 "Incentive Award" means the awards made
pursuant to Section 3.1 herein.
Section 1.9. "Net Income" means net income of the
Corporation exclusive of any related restructure charges
directly in conjunction with a merger or acquisition.
Section 1.10. "Participant" means any executive
officer of the Corporation who is approved by the Board for
participation in the Plan as provided in Article II.
Section 1.11. "Plan" means the Trustco Bank Executive
officer Incentive Plan as set forth herein and as the same
may be amended from time to time.
Section 1.12. "Plan Year" means the twelve (12) month
period beginning on any January 1 and ending on the
following December 31.
Section 1.13. "Retirement" means termination on or
after the earliest retirement date specified in the
retirement Plan of Trustco Bank New York.
Section 1.14. "Return on Equity" means Net Income
divided by the sum of Total Shareholder Equity plus or
minus mark-to-market adjustments for securities minus any
equity transaction directly in conjunction with a merger or
acquisition.
Section 1.15. "Total and Permanent Disability" has
the same meaning as defined in the Retirement Plan of
Trustco Bank New York.
Section 1.16. "Total Shareholder Equity" means total
equity of the Corporation exclusive of any equity
transactions directly in conjunction with a merger or
acquisition.
ARTICLE II
____________
PARTICIPATION
_______________
Section 2.1. Prior to each Plan Year, the Chief
Executive Officer will present to the Board a list of the
executive officer positions recommended for participation
in the Plan for the Plan Year. The Board shall act upon
these recommendations and inform executive officers of
their selection prior to the beginning of the Plan Year.
Section 2.2. Subject to the provisions of Sections
2.3, 2.4, and 2.5 herein, individuals assigned to a
position designated for participation in the Plan during
the course of a Plan Year will be eligible for receipt of
Incentive Awards even if they are in such positions only
part of the Plan Year. The Incentive Award to such
Participants will be prorated based upon the number of full
calendar months of service in the participating position.
Section 2.3. A Participant who terminates employment
due to Total and Permanent Disability or Retirement will be
entitled to an Incentive Award for the Plan Year based upon
the portion of the Base Salary actually paid to such
Participant during the Plan Year in which he terminates.
Section 2.4. A participant who dies prior to the end
of the Plan Year will be entitled to an Incentive Award for
the Plan Year as calculated under Section 3.1 herein.
Section 2.5 A Participant who terminates employment
prior to the end of a Plan Year for reasons other than
death, Total and Permanent Disability or Retirement, will
cease to be a Participant in the Plan as of the date of
termination of employment and will forfeit all rights to
Incentive Awards accrued during the Plan Year in which the
termination of employment occurs.
ARTICLE III
_______________
INCENTIVE AWARDS
____________________
Section 3.1 A Participant will be entitled to an
Incentive Award for each Plan Year in which the Return on
Equity of the Corporation equals or exceeds 14%. The
Incentive Award will be an amount equal to his Base Salary
multiplied by a bonus percentage based on the Corporation's
Return on Equity as set forth in the following table:
Return on Equity Bonus Percentage
__________________ __________________
14% 40%
15% 50%
16% 60%
17% 75%
18% 90%
19% 100%
20% 125%
Section 3.2. The Incentive Award for a Plan Year
will be determined by the Board following a report to the
Board made no earlier than the December meeting of the
Board for the Plan Year.
Section 3.3. Unless the Participant elects to defer
receipt of his Incentive Award as provided in article IV,
Incentive Awards will be paid in cash to Participants as
soon as practicable following the determination of the
Incentive Awards by the Board.
ARTICLE IV
____________
DEFERRAL OF INCENTIVE AWARDS
________________________________
Section 4.1. On or before December 31, a Participant
may elect in writing to defer receipt of all or a specific
part of the Incentive Award that the Participant may earn
the following Plan Year. Such deferral election continues
in effect from Plan Year to Plan Year unless the
Participant amends or terminates his deferral election by
written request. Any amendment or termination of a
deferral election will first become effective for the
Incentive Award earned during the Plan Year commencing
after the receipt of such written request.
Section 4.2 The Corporation will establish a Deferred
Compensation Account for each participant who elects to
defer all or part of an Incentive Award for any Plan Year.
Incentive Awards deferred by a Participant pursuant to this
article IV will be credited to his Deferred Compensation
account as of the date the Incentive Award would have been
payable to the Participant but for this deferral election.
Such Deferred Compensation Account will be for bookkeeping
purposes only. The Corporation will not be required to
segregate assets or otherwise establish a trust with
respect to Incentive awards deferred pursuant to this
article IV.
Section 4.3 A Participant's Deferred Compensation
Account will be credited at the end of each calendar
quarter with an amount equal to the balance of the Deferred
Compensation account at the beginning of the quarter
multiplied by the product of the number of days in the
quarter and the highest daily periodic percentage rate as
of the end of the quarter offered by the Corporation on any
of its retail certificates of deposit due in excess of
twelve months.
ARTICLE V
___________
PAYMENT OF DEFERRED OF INCENTIVE AWARDS
_________________________________________
Section 5.1. Upon termination of employment of a
Participant due to Retirement, Total and Permanent
Disability or any reason other than death, his Deferred
Compensation Account will be payable to him or his
Beneficiary in a single lump sum as soon as practicable
following his termination of employment.
Section 5.2. Upon the death of a Participant, his
Deferred Compensation Account will be payable to his
Beneficiary in a single lump sum on the first day of the
Plan Year following his death.
ARTICLE VI
____________
CLAIMS
________
Section 6.1 If a claim for benefits under the Plan is
denied, the Committee will provide a written notice of the
denial setting forth the specific reasons for the denial,
a description of any additional material or information
necessary for a claimant to perfect a claim, an explanation
of why such material or information is necessary and
appropriate and information as to the steps to be taken for
the claim to be submitted for review. A claimant may
request a review of a denial. Such request should be
submitted to the Committee, in writing, within 60 days
after receipt of the denial notice stating the reasons for
requesting the review. A claimant may review pertinent
documents and submit issues and comments in writing. A
decision will be made on the review of the denial of a
claim not later than 60 days after the Committee's receipt
of a request for review unless special circumstances
require an extension of time for processing, in which case
a decision shall be rendered as soon as possible but not
later than 120 days after receipt of a request for review,
provided that the claimant is given written notice of the
extension of time within the original 60 day period. The
decision on review will be in writing to the claimant and
shall include specific reasons for the decision.
ARTICLE VII
______________
AMENDMENT AND TERMINATION
_____________________________
Section 7.1. The Board may amend or terminate the
Plan at any time; provided, however, that no such amendment
or termination may alter or impair any Participant's rights
previously granted under the Plan as of the date of such
amendment or termination without his consent.
Section 7.2. In the event of Plan termination, a
Participant's Deferred Compensation account will not be
paid to him until he dies or otherwise terminates his
employment with the Corporation.
ARTICLE VIII
_______________
ADMINISTRATION
_______________
Section 8.1. The Plan shall be administered by the
Committee, in accordance with its terms, for the exclusive
benefit of Participants.
ARTICLE IX
____________
MISCELLANEOUS
_______________
Section 9.1. Nothing contained in this Plan and no
action taken pursuant to the provisions of this Plan shall
give the Participant the right to be retained in the employ
of the Corporation or interfere with the right of the
Corporation to discharge the Participant any time.
Section 9.2. No benefit payable at any time under
this Plan shall be subject in any manner to alienation,
sale, transfer, assignment, pledge, attachment or
encumbrance of any kind except by will, by the laws of
descent and distribution or by Beneficiary designation
herein.
Section 9.3. All rights hereunder shall be governed
by and construed according to the laws of the State of New
York, except to the extent such laws are preempted by the
laws of the United States of America. In the event any
provision of this Plan is held invalid, void or
unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of the
Plan.
Section 9.4. Nothing contained in this Plan and no
action taken pursuant to the provisions of this Plan shall
create or be construed to create a trust of any kind or a
fiduciary relationship between the Corporation and the
participant or any other person. To the extent that any
person acquires the right to receive payment from the
Corporation under this Plan, such right shall be no greater
than the right of any unsecured general creditor of the
Corporation.
Section 9.5. The terms of this Plan shall be binding
upon and inure to the benefit of the Corporation, its
successors and assigns, and the Participant and his heirs
and legal representatives.
IN WITNESS WHEREOF, the Corporation has caused this
Plan to be executed on this 22nd day of December, 1993.
/s/ Robert A. McCormick
_____________________________
President\CEO
_____________________________
Title
AMENDMENT NO. 1
TO TRUSTCO BANK
EXECUTIVE OFFICER INCENTIVE PLAN
WHEREAS, Trustco Bank New York, a New York
corporation (the "Corporation"), established the Trustco
Bank Executive Officer Incentive Plan (the "Plan")
effective January 1, 1994; and
WHEREAS, the Corporation desires to amend the Plan
effective January 1, 1994;
NOW, THEREFORE, the Corporation hereby amends the
Plan effective January 1, 1994, in the following respects:
I. New sections, designated sections 1.3a and 1.3b, are
hereby inserted between Sections 1.3 and 1.4 of the Plan
and shall read as follows:
"Section 1.3a. "Cause" means conduct of a
Participant which is finally adjudged to be knowingly
fraudulent, deliberately dishonest or willful misconduct.
The Committee shall have sole and uncontrolled discretion
with respect to the applicable of the provisions of this
Section 3.3a and any determination shall be conclusive and
binding upon the Participant and all other persons.
"Section 1.3b. "Change in Control" means any of the
following events: (a) any individual, corporation (other
than the Corporation), 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 Corporation
possessing twenty percent (20%) or more of the voting
power for the election of Directors of the Corporation;
(b) there shall be consummated any consolidation, merger
or other business combination involving the Corporation or
the securities of the Corporation in which holders of
voting securities of the corporation immediately prior to
such consummating own, as a group, immediately after such
consummation, voting securities of the Corporation (or, if
the Corporation 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 Corporation (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 corporation
cease for any reason to constitute at least a majority
thereof unless the election, or the nomination for
election by the corporation's shareholders, of each new
Director of the Corporation was approved by a vote of at
least two-thirds of the directors of the Corporation then
still in office who were Directors of the Corporation at
the beginning of any such period; (d) removal by the
stockholders of all or any of the incumbent Directors of
the Corporation other than a removal for Cause; or (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 Corporation (on a consolidated basis) to a party
which is not controlled by or under common control with
the Corporation."
II. Section 2.2 of the Plan is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"Section 2.2. Subject to the provisions of Sections
2.3, 2.4, 2.5 and 2.6 herein, individuals assigned to a
position designated for participation in the Plan during
the course of a Plan Year will be eligible for receipt of
Incentive Awards even if they are in such positions only
part of the Plan Year. The Incentive Award to such
Participants will be prorated based upon the number of
full calendar months of service in the participating
position."
III. A new section, designated Section 2.6, is hereby
added to article II of the Plan and shall read as follows:
Section 2.6. A Participant who terminates employment
within two (2) years after a Change in Control will be
entitled to an Incentive Award for the Plan Year based
upon the portion of the base Salary actually paid to such
Participant during the Plan Year in which he terminates."
IN WITNESS WHEREOF, the Corporation has caused this
Amendment No. 1 to be executed this 18th day of October,
1994.
TRUSTCO BANK NEW YORK
By: /s/ William F. Terry
_________________________
Title: Secretary
_________________________
AMENDMENT NO. 2
TRUSTCO BANK EXECUTIVE OFFICER INCENTIVE PLAN
WHEREAS, Trustco Bank New York, (herein referred
to as the "Company") maintains the Trustco Bank
Executive Officer Incentive Plan (herein referred to as
the "Plan"); and
WHEREAS, by statutory conversion the Company
converted from a state chartered trust company to a
national bank, and in connection with the conversion
the name of the Company changed to Trustco Bank,
National Association effective February 1, 1995; and
Whereas, the Company desires to amend the Plan to
reflect the change of its name;
NOW, THEREFORE, effective February 1, 1995, the
Plan is hereby amended by changing "Trustco Bank New
York" to "Trustco Bank, National Association" in each
place where it appears therein.
IN WITNESS WHEREOF, the Company has caused this
amendment No. 2 to be executed this 13th day of
February, 1995.
TRUSTCO BANK, NATIONAL ASSOCIATION
By: /S/ William F. Terry
_________________________________
Title: Secretary
_________________________________
AMENDMENT NO. 3 TO
TRUSTCO BANK EXECUTIVE OFFICER INCENTIVE PLAN
WHEREAS, Trustco Bank, National Association (herein
referred to as the "Company") maintains the Trustco Bank
Executive Officer Incentive Plan (herein referred to
as the "Plan");
and
WHEREAS, the Company desires to amend the Plan;
NOW, THEREFORE, the Plan is hereby amended effective
January 1, 1995, except as otherwise stated below, as
follows:
I. The following is hereby added at the end of Section 2.2
of the Plan:
"A Participant shall be one hundred percent (100%)
vested at all times in each Incentive Award made
to such Participant."
II. Effective October 1, 1995, Section 4.3 of the Plan is
hereby deleted in its entirety and the following is
substituted in lieu thereof:
"Section 4.3. A Participant's Deferred Compensation
Account will be credited at the end of each calendar
quarter with an amount calculated by multiplying the
Participant's Deferred Compensation Account as of the
first day of the calendar quarter by a rate equal to
one- fourth of the greater of (i) six % or (ii)
the ten-year U.S. Treasury Bond rate on the last
business day of the quarter."
IN WITNESS WHEREOF, the Corporation has caused this
Amendment No. 3 to be executed this 1st day of
December, 1995.
TRUSTCO BANK, NATIONAL ASSOCIATION
By: William F. Terry
__________________
Title:Secretary
__________________
Exhibit 11
TRUSTCO BANK CORP NY
1995 FORM 10-K
Computation of Net Income Per Common Share
Year Ended December 31
1995 1994 1993
Net Income..........$25,527,000 $22,888,000 $20,325,000
Weighted Daily
average number
of common shares
outstanding........ 18,035,000 17,863,000 17,764,000
Net Income
Per Common Share.... $1.42 $1.28 $1.14
====== ====== ======
Note: Daily average shares outstanding for all years have been
adjusted to reflect a 6 for 5 stock split in August 1995, a 10%
stock dividend in 1994, and a 2 for 1 stock split in 1993.
Exhibit 13
Annual Report to Security Holders of TrustCo for the year ended
December 31, 1995
TrustCo Bank Corp NY is a one bank holding company headquartered in
Schenectady, New York. The Company is the largest commercial banking
enterprise headquartered in the Capital Region of New York State. The
principal subsidiary of the Company is Trustco Bank, National Association,
which operates 47 community banking offices and 23 ATM's throughout the
Bank's business territory. The Bank serves 8 counties with a broad range of
community banking services.
<TABLE>
Financial Highlights
<CAPTION>
(dollars in thousands, except per share data) Years ended December 31,
Percent
1995 1994 Change
<S> <C> <C> <C>
Income:
Net interest income (TE) $ 83,451 81,117 2.9%
Net income 25,527 22,888 11.5
Per Share <F1>:
Net income 1.42 1.28 10.9
Book value 9.08 7.94 14.4
Average Balances:
Assets 2,073,391 1,994,497 4.0
Loans, net 1,187,929 1,122,698 5.8
Deposits 1,859,070 1,808,336 2.8
Shareholders' equity 145,469 136,977 6.2
Financial Ratios:
Return on average assets 1.23% 1.15 7.0
Return on average equity <F2> 18.03 17.01 6.0
Tier 1 capital to period end:
Total assets (leverage) 7.36 7.05 4.4
Risk adjusted assets 12.45 12.08 3.1
Total capital to risk adjusted assets 13.73 13.35 2.8
As a percentage of average loans:
Loans charged off, net of recoveries 0.27 0.29 (6.9)
Provision for loan losses 1.07 0.72 48.6
Allowance for loan losses as a coverage of nonperforming loans 3.09X 3.32 (6.9)
Efficiency ratio 42.52% 41.82 1.7
Dividend payout ratio 69.55 62.52 11.2
</TABLE>
<TABLE>
Per share information of common stock <F1>
<CAPTION>
Range of Stock
Net Cash Book Price
Income Dividend Value High Low
<S> <C> <C> <C> <C> <C>
1994
First quarter $.30 .19 7.59 17.71 14.20
Second quarter .31 .19 7.62 17.42 13.83
Third quarter .33 .21 7.79 17.90 15.72
Fourth quarter .35 .23 7.94 17.82 15.42
1995
First quarter .33 .23 8.12 17.29 15.21
Second quarter .34 .23 8.38 18.13 16.46
Third quarter .36 .28 8.50 23.00 17.71
Fourth quarter .38 .28 9.08 22.50 21.25
<FN>
<F1> Adjusted for 6 for 5 stock split in 1995 and a 10% stock dividend in 1994.
<F2> Excludes the market adjustment on securities available for sale.
</TABLE>
Table of Contents
Contents
Financial Highlights
Executive and Senior Officers of Trustco Bank
President's Message
Management's Discussion and Analysis of Operations
Average Balances, Yields and Net Interest Margins
Glossary of Terms
Management's Statement of Responsibilities
Independent Auditors' Report
Consolidated Financial Statements and Notes
Officers and Board of Directors
Officers
Branch Locations
General Information
TrustCo Mission Statement:
TrustCo will be the low cost provider of high quality services to the
customers and communities it serves and return to its owners an above average
return on their investment.
Executive and Senior Officers of Trustco Bank
President's Message
Dear Shareholder:
TrustCo had another record year in 1995. 1995 was generally a good year in
the banking industry, and I'm pleased that we continue to provide record
performance with unerring consistency. We are grateful to our employees and
Board of Directors for their strong support and enthusiasm.
During 1995 shareholder values continued in the right direction with net
income at $25.5 million, up a significant 12% over 1994. TrustCo's most
important ratio, return on shareholders' equity, was 18.03%, up from 17.01%
in 1994. We are committed to insuring that return on equity compares
favorably in any peer group, and we are comfortable that it does. TrustCo's
five year ROE was 16.69% and we plan an increase to 19% for the current
fiscal year.
During 1995, we issued a 20% stock split maintaining the cash dividend level
on the newly issued shares, effectively increasing dividend income for
TrustCo owners by 20%. The quarterly cash dividend has increased at a 23%
compound annual rate over the last five years, a major accomplishment. It is
our intention to continue monitoring our internal generation of capital;
should excess capital exist, we would recommend steps to the Board to
correct that situation. These steps could include any measures that would
return excess capital to TrustCo's owners.
I think it appropriate to thank all our Board members for their continued
guidance throughout the year. We note with sorrow the passing of Henry D.
Wright and Donald E. Craig, Honorary Directors, who served the Board with
distinction for many years. During 1995 William D. Powers joined the Boards
of the bank and holding company. We believe Bill brings significant
additional strength to the Board.
A senior staff addition during 1995 was Robert J. McCormick, appointed Vice
President, Senior Commercial Loan Officer. Rob comes to us from Albank after
12 years service. Peter Zakriski, Administrative Vice President, retired
December 1. We thank Pete for his many contributions over the years.
TrustCo's branch expansion program continues and we opened four additional
branches during 1995. Our plans call for two to three branch openings a year
until we have filled the gaps in our market territory. The targeted upgrading
continues with each branch receiving a major review and renovation at
approximately seven year intervals.
During 1995, we evaluated and discussed a number of acquisition
opportunities. Unfortunately, our discussions were not successful. Our
approach to acquisitions is quite simple -- we are extremely careful to avoid
damage to shareholder value in the existing TrustCo franchise.
Since its inception, Trustco Bank has been a New York State chartered
institution regulated by the Federal Reserve Bank of New York and the New
York State Banking Department. We applied for and completed a change from a
New York State charter to a national charter during the first quarter of 1995.
We think changes in the industry suggest the most appropriate direction
for the future is a national charter regulated by the Office of the
Comptroller of the Currency. We are pleased with the change results to date.
TrustCo's Affordable Housing Program, which was designed to assist with
homeownership, continues to be a success in new markets. We consider this
program a model for community reinvestment and one of the most effective in
the state.
1995 was another year in which TrustCo avoided most of the industry
difficulties while moving forward to new records. We intend to continue this
"boring" path to the benefit of the owners, employees, and community for the
foreseeable future.
1996 will provide income and growth success with emphasis continuing on the
Home Equity Loan and Home Equity Credit Line products and our improved NOW
and savings accounts on the deposit side.
Our Trust department, which currently manages assets in excess of $777
million has ambitious expectations, and is moving forward under the new
management team.
1996 and beyond should benefit from the solid performance of the superb
employee team here at TrustCo. For 1995 the often quoted efficiency ratio for
our Company was 42.52% at a time when most banking companies would like to
see 60.00%. This level of performance efficiency will benefit us through
reduced operating expense for years to come.
1995 was a year of significant asset growth from $1.976 billion to $2.176
billion, an increase of 10%, in a time of continuing deposit outflows from
banks. This solid performance will provide us with investment opportunities
going forward. Our loan portfolio continued to grow during 1995, increasing
by 6%, with continued emphasis on the retail side of the product mix.
The quality of the loan portfolio is excellent, and our allowance for loan
loss has a coverage ratio 3.1 times nonperforming loans, an important area
of reserve.
Community needs have expanded, and TrustCo has responded appropriately.
TrustCo has provided increased employee and management participation in
charitable and community organizations, increased its corporate charitable
contributions throughout the Capital District, and our Affordable Housing
Program continues to grow.
TrustCo continues to receive solid external comment. During 1995 we received
favorable mention in Kiplingers' July edition; Advest re dividend yield;
Forbes' July and November editions.
We are enthusiastic about TrustCo's future. It is the intention at every
level in the Company to continue our past success into the future. Our
products are tailored to the needs of our community, we have an unmatched
employee team to deliver them, and a management style that can adapt to any
change the marketplace may bring almost immediately.
We are sure the combination mentioned above and enthusiastic commitment of
the Board of Directors will ensure our continuing success in the years ahead,
whatever the banking environment.
Sincerely,
Robert A. McCormick,
President and Chief Executive Officer
Management's Discussion and Analysis of Operations
The financial review which follows will focus on the factors affecting the
financial condition and results of operations of TrustCo Bank Corp NY (the
"Company" or "TrustCo") and Trustco Bank, National Association (the "Bank" or
"Trustco") during 1995 and, in summary form, the preceding two years. Net
interest income and net interest margin are presented in this discussion on a
taxable equivalent basis. Balances discussed are daily averages unless
otherwise described. The consolidated financial statements and related notes
and the quarterly reports to shareholders for 1995 should be read in
conjunction with this review. Certain amounts in years prior to 1995 have
been reclassified to conform with the 1995 presentation.
During 1995, TrustCo adopted new accounting pronouncements dealing with the
identification, reporting and accounting for impaired loans, which are more
fully described in the enclosed notes to the consolidated financial
statements. The new standards had no impact on the operations of the Company
for 1995.
All per share information has been adjusted for the 6 for 5 stock split in
August 1995.
Overview
TrustCo recorded net income of $25,527,000 or $1.42 per share for the year
ended December 31, 1995, compared to $22,888,000 or $1.28 per share for the
year ended December 31, 1994. This represents an increase of 12% in the full
year earnings and an 11% increase in the per share results.
During 1995 TrustCo achieved:
* taxable equivalent net interest income of $83.5 million, an increase of 3%
over 1994,
* a reserve coverage ratio of nonperforming loans of 3.1 times. The
allowance set aside for problem loans reached 3.94% of loans at year end 1995,
compared to 3.34% for 1994,
* an efficiency ratio of 42.52% for the year. Industry goals look for the
attainment of a 60% efficiency ratio. TrustCo outperformed the industry on
this ratio for 1993, 1994 and 1995, and
* growth in average deposits to $1.9 billion, representing a 3% increase over
1994. The net interest margin for 1995 was 7 basis points lower than in 1994
as a result of the increased cost of attracting new deposits.
Asset/Liability Management
TrustCo's objectives in managing its balance sheet are to manage the
sensitivity of net interest income in relation to actual or potential changes
in interest rates and to enhance profitability through strategies that
promise sufficient reward for understood and controlled risk. The Company has
established guidelines for liquidity so as to maintain adequate levels in
light of loan and deposit demands. TrustCo does not engage in any high risk
investing activities nor does it invest in financial derivatives. The Company
relies on traditional banking investment instruments and its large base of
"core" deposits to help in asset/liability management.
<TABLE>
MIX OF AVERAGE EARNING ASSETS
(dollars in thousands)
<CAPTION>
Components of
95 - 94 94 - 93 Total Earning Assets
1995 1994 1993 Change Change 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Loans, net of unearned income $1,187,929 1,122,698 1,044,855 65,231 77,843 59.6% 58.9 56.2
Trading securities -- -- 1,731 -- (1,731) -- -- 0.1
Securities available for sale:
U.S. Treasuries and agencies 255,244 269,378 182,273 (14,134) 87,105 12.8 14.1 9.9
States and political subdivisions 15,926 -- -- 15,926 -- 0.8 -- --
Mortgage-backed securities 8,731 35,172 -- (26,441) 35,172 0.4 1.8 --
Other 21,179 28,430 10,160 (7,251) 18,270 1.1 1.5 0.5
Total securities available
for sale 301,080 332,980 192,433 (31,900) 140,547 15.1 17.4 10.4
Investment securities:
U.S. Treasuries and agencies 119,989 98,380 274,398 21,609 (176,018) 6.0 5.1 14.8
States and political subdivisions 40,068 27,120 32,615 12,948 (5,495) 2.0 1.4 1.8
Mortgage-backed securities 119,113 111,691 119,442 7,422 (7,751) 6.0 5.8 6.4
Other 13,738 13,621 28,681 117 (15,060) 0.7 0.7 1.5
Total investment securities 292,908 250,812 455,136 42,096 (204,324) 14.7 13.0 24.5
Federal funds sold 212,323 203,878 163,567 8,445 40,311 10.6 10.7 8.8
Total earning assets $1,994,240 1,910,368 1,857,722 83,872 52,646 100.0% 100.0 100.0
</TABLE>
Earning Assets
Average earning assets during 1995 were $2.0 billion, which is $84 million,
or 4%, over the prior year. The increase in average earning assets was
dependent on three factors:
* growth in funding sources (deposits and borrowings),
* movement of assets from nonearning to earning categories, and
* the internal generation of capital retained by the Company.
The $84 million increase in average earning assets was the result of a $69
million increase in funding sources, the conversion of $5 million from
nonearning asset categories, and the retention of $8 million in capital
during 1995. In addition, a small increase in various other liabilities
provided $2 million toward the growth in average earning assets.
The table, "Mix of Average Earning Assets" shows how the mix of the earning
assets has changed over the last three years. While growth in earning assets
is critical to improved profitability, changes to the mix of earning assets
can also have a significant impact on profitability.
Loans: Average total loans increased $65.1 million, or 5.8%, during 1995. Net
loans grew from 58.9% of average earning assets in 1994 to 59.6% of average
earning assets in 1995. The steady growth of the loan portfolio as a
component of the Company's asset mix, as well as the continued high quality
of the portfolio, have contributed significantly to the Company's superior
operating results for 1995.
Loan products related to residential real estate continued to exhibit
significant growth during 1995. Average residential mortgage loans rose $62.0
million, or 9.5%, during 1995. TrustCo continued to outpace the competition
by offering mortgage loan products that offer a quick decision on
application, low closing costs and no escrow requirement.
The overwhelming majority of TrustCo's real estate loans are secured by
properties within the Bank's market area. Management's specific knowledge of
local market conditions and trends enhances the quality of the loan
portfolio. During 1995, management continued its established practice of
retaining all new real estate loan originations in the Bank's portfolio
rather than packaging them for sale in the secondary mortgage market.
The average balance of commercial and commercial real estate loans was
largely unchanged during 1995. New loan originations were slightly outpaced
by amortizations and problem loan resolutions, a portfolio trend reflective
of general economic uncertainty.
TrustCo's commercial lending activities are focused on balancing the
Company's commitment to meeting the credit needs of businesses within its
market area with the necessity of maintaining a high quality loan portfolio.
In accordance with these ideals, the Bank has consistently emphasized the
origination of loans within its market area. The portfolio contains no
foreign loans, nor does it contain any concentrations of credit extended to
any single borrower or industry. The Bank's commercial portfolio reflects
the diversity found in the Capital Region's economy.
<TABLE>
LOAN PORTFOLIO
<CAPTION>
(dollars in thousands) Average Balances
1995 1994 1993 1992 1991
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential $ 714,804 60.1% $ 652,837 58.0% $ 555,317 52.9% $ 506,362 49.2% $274,696 43.6%
Commercial 237,165 19.92 37,994 21.2 255,265 24.42 87,524 27.91 71,695 27.2
Home equity
line of
credit 202,647 17.0 203,756 18.1 201,013 19.2 183,539 17.8 133,721 21.2
Installment 35,269 3.0 30,242 2.7 36,185 3.5 52,790 5.1 50,268 8.0
Total loans 1,189,885 100.0% 1,124,829 100.0% 1,047,780 100.0% 1,030,215 100.0% 630,380 100.0%
Less:
Unearned
income 1,956 2,131 2,925 4,735 5,349
Allowance
for loan
losses 45,086 37,334 30,214 23,735 16,139
Net loans $1,142,843 1,085,364 1,014,641 1,001,745 608,892
</TABLE>
TrustCo continues to offer a full range of consumer credit products. During
1994, the Bank commenced a program to promote its
credit card products. This program, which combined aggressive marketing and
attractive pricing, resulted in significant growth in credit card receivables
during 1994 and 1995.
The average balance of the installment loan portfolio increased to $35.3
million for 1995, a 16.6% increase over 1994. Virtually all of the increase
is concentrated in the credit card portfolio. Credit card outstandings
averaged $17.9 million in 1995 compared to $12.0 million in 1994.
<TABLE>
MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES
<CAPTION>
(in thousands) December 31, 1995
After 1 Year
In 1 Year But Within After
or Less 5 Years 5 Years Total
<S> <C> <C> <C> <C>
Commercial $155,403 61,050 8,721 225,174
Real estate construction 11,239 -- -- 11,239
Total $166,642 61,050 8,721 236,413
Predetermined rates $ 34,843 49,036 8,721 92,600
Floating rates 131,799 12,014 -- 143,813
Total $166,642 61,050 8,721 236,413
</TABLE>
Securities available for sale and investment securities: The Company adopted
new accounting standards during 1994 for its securities portfolio. The
Company identifies securities available for sale and those securities that
are for investment purposes and will be held to maturity. The following
contains information related to these securities.
Securities available for sale: During 1995, the portfolio of securities
available for sale was actively managed by the Company to take full advantage
of the changes in interest rates occurring during that time period. At
December 31, 1995, securities available for sale amounted to $640.2 million
compared to $117.5 million at year end 1994.
As more fully described in the footnotes to the consolidated financial
statements, due to changes in the accounting for investment securities, in
December 1995 TrustCo transferred the held to maturity securities portfolio
to the securities available for sale portfolio. In the fourth quarter of
1995, the accounting regulatory authorities allowed a one time transfer of
securities from the held to maturity category to the available for sale
category. Approximately $288.5 million of securities were transferred to the
available for sale portfolio as a result of this opportunity. Therefore, at
year end 1995, there are no securities identified as held to maturity.
Securities classified as available for sale are utilized as an integral
element in the asset/liability management process of the Company. These
securities are actively managed to take advantage of changes in interest
rates or other banking opportunities that become available. The decision to
transfer the held to maturity securities into the category of securities
available for sale allows TrustCo to manage these newly transferred assets
similarly. Sales of securities from the held to maturity portfolio are
allowed only under very limited circumstances and, therefore, active
portfolio management is not allowed.
For 1995, the average balance of securities available for sale was $301.1
million, down $31.9 million from the average balance of $333.0 million in
1994. The average yield earned on this portfolio for 1995 was 7.49% compared
to 6.38% in 1994. Approximately 85% of the average balance of the available
for sale securities was in the category of U.S. Treasuries and agencies
securities, up from 81% in 1994. These securities provide a consistent source
of liquidity, and are readily acceptable from a credit risk perspective. The
increase in rates earned during 1995 of 111 basis points more than offset
the reduction in the average balances, thereby producing a 6.1% increase in
the taxable equivalent interest income to $22.5 million in 1995.
Also, TrustCo recognized $200 thousand of securities gains during 1995, as
compared to $8.9 million in securities losses recognized in 1994. During much
of 1994, interest rates in the securities markets were rising as a result of
actions by the Federal Reserve Bank that affected the federal funds rate and
the discount rate. TrustCo's response to these changes was to actively purge
the securities portfolio of low yielding investments, which generally
resulted in losses, and to replace them with higher yielding assets. The
results of this strategy are clearly demonstrated in the significant yield
increase in the securities available for sale portfolio.
TrustCo does not invest in exotic investment products such as interest rate
swaps, forward placement contracts, options or any other instrument commonly
referred to as a derivative. By actively managing a portfolio of high quality
securities, the objectives of asset/liability management and liquidity can be
met, while at the same time producing a constant earnings stream that meets
or exceeds alternative rates offered in the marketplace.
Securities available for sale are recorded at their fair value with any
unrealized gains or losses, net of taxes, recognized as a component of
shareholders' equity. At year end 1995, the market value of TrustCo's
portfolio of securities available for sale had an unrealized gain of $21.1
million.
Investment securities: As discussed above, there are no securities in this
classification at year end 1995, compared to $347.9 million at the same time
period in 1994. On average, the investment securities portfolio was $292.9
million in 1995 and earned an average yield of 7.17%, compared to the 1994
average balance of $250.8 million and an average yield of 6.81%. This
resulted in an increase in interest income on these securities of $3.9
million to $21.0 million in 1995. The change in the average balance accounted
for three quarters of the increase in interest income, with the remaining
increase the result of the change in rates during the two time periods.
<TABLE>
SECURITIES AVAILABLE FOR SALE AND INVESTMENT SECURITIES
<CAPTION>
(in thousands) As of December 31,
1995 1994 1993
Amortized Market Amortized Market Amortized Market
Cost Value Cost Value Cost Value
<S> <C> <C> <C> <C> <C> <C>
Securities available for sale:
U.S. Treasuries and agencies $432,710 447,343 102,947 102,919 230,563 236,471
States and political subdivisions 68,151 70,371 -- -- -- --
Mortgage-backed securities 78,481 80,284 -- -- -- --
Other 39,808 42,208 14,581 14,539 10,153 11,588
Total securities available for sale $619,150 640,206 117,528 117,458 240,716 248,059
Investment securities:
U.S. Treasuries and agencies $ -- -- 145,542 141,117 228,157 237,008
States and political subdivisions -- -- 44,222 43,827 23,017 23,471
Mortgage-backed securities -- -- 143,082 134,902 138,376 142,119
Other -- -- 15,012 14,609 27,256 28,700
Total investment securities $ -- -- 347,858 334,455 416,806 431,298
</TABLE>
The table "Securities Portfolio Maturity Distribution and Yield," distributes
the securities available for sale portfolio as of
December 31, 1995, based on the final maturity of the securities
(mortgage-backed securities are stated using average life, and equity
securities are included in the category of other securities maturing after 10
years).
<TABLE>
SECURITIES PORTFOLIO MATURITY DISTRIBUTION AND YIELD
Securities available for sale:
<CAPTION>
(dollars in thousands) As of December 31, 1995
Maturing:
After 1 After 5
Within But Within But Within After
1 Year 5 Years 10 Years 10 Years Total
<S> <C> <C> <C> <C> <C>
U.S. Treasuries and agencies
Amortized cost $15,036 110,942 236,875 69,857 432,710
Market value 15,305 117,084 242,270 72,684 447,343
Yield 7.68% 7.60 7.48 7.72 7.56
States and political subdivisions
Amortized cost $10,894 25,873 5,231 26,153 68,151
Market value 10,915 26,772 5,480 27,204 70,371
Yield 5.01% 5.31 5.40 5.67 5.41
Mortgage-backed securities
Amortized cost $ -- 11,960 2,536 63,985 78,481
Market value -- 11,954 2,618 65,712 80,284
Yield --% 6.43 7.84 7.77 7.57
Other
Amortized cost $ 25 -- 15,665 24,118 39,808
Market value 25 -- 17,265 24,918 42,208
Yield 5.50% -- 8.16 3.28 5.20
Total securities available for sale
Amortized cost $25,955 148,775 260,307 184,113 619,150
Market value 26,245 155,810 267,633 190,518 640,206
Yield 6.56% 7.11 7.48 6.86 7.17
</TABLE>
Maturity and call dates of securities: Many of the securities in the
investment portfolio have a call date in addition to the
stated maturity date. Call dates allow the issuer of the bond to redeem the
bond prior to maturity at selected dates and at predetermined prices.
Normally, securities are redeemed at the call date because the issuer can
reissue the bond at a lower yield. Therefore, for cash flow, liquidity, and
interest rate management purposes, it is important to monitor both maturity
dates and call dates. The following table details the portfolio of
securities available for sale, for both the maturity date and call date as
of December 31, 1995.
<TABLE>
SECURITIES PORTFOLIO MATURITY AND CALL DATE DISTRIBUTION
Securities available for sale:
<CAPTION>
(in thousands) As of December 31, 1995
Based on Based on
Final Maturity Call Date
Amortized Market Amortized Market
Cost Value Cost Value
<S> <C> <C> <C> <C>
Within 1 year $ 25,955 26,245 167,547 168,126
1 to 5 years 148,775 155,810 319,846 331,592
5 to 10 years 260,307 267,633 92,614 98,330
After 10 years 184,113 190,518 39,143 42,158
Total $619,150 640,206 619,150 640,206
</TABLE>
Federal funds sold: During 1995, the average balance of these funds was
$212.3 million, up from $203.9 million in 1994. The
average rate earned on these funds was 5.91% for 1995 and 4.44% for 1994.
TrustCo utilized this category of earning assets during 1995 as a means of
keeping strong liquidity as interest rates in the securities markets changed.
Rather than invest this excess liquidity during 1995, the Company chose to
place these funds in overnight federal funds sold. This decision had the
short term effect of suppressing potential earnings for 1995, but positioned
TrustCo to take advantage of other banking opportunities as they emerge in
1996.
<TABLE>
AVERAGE BALANCES, YIELDS AND NET INTEREST MARGINS
<CAPTION>
(dollars in thousands) 1995 1994 1993
Interest Interest Interest
Average Income/ Average Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate Balance Expense Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Loans, net of unearned income $1,187,929 107,544 9.05% $1,122,698 94,432 8.41% $1,044,855 87,559 8.38%
Trading securities -- -- -- -- -- -- 1,731 94 5.43
Securities available for sale:
U.S. Treasuries and agencies 255,244 19,490 7.64 269,378 17,142 6.36 182,273 12,797 7.02
States and political
subdivisions 15,926 1,277 8.02 -- -- -- -- -- --
Mortgage-backed securities 8,731 597 6.84 35,172 2,122 6.03 -- -- --
Other 21,179 1,185 5.60 28,430 1,994 7.02 10,160 804 7.91
Total securities available
for sale 301,080 22,549 7.49 332,980 21,258 6.38 192,433 13,601 7.07
Investment securities:
U.S. Treasuries and agencies 119,989 8,968 7.47 98,380 7,128 7.24 274,398 16,913 6.16
States and political
subdivisions 40,068 2,963 7.39 27,120 1,661 6.13 32,615 2,074 6.35
Mortgage-backed securities 119,113 8,005 6.72 111,691 7,254 6.50 119,442 8,444 7.07
Other 13,738 1,079 7.86 13,621 1,024 7.52 28,681 2,071 7.23
Total investment securities 292,908 21,015 7.17 250,812 17,067 6.81 455,136 29,502 6.48
Federal funds sold 212,323 12,543 5.91 203,878 9,058 4.44 163,567 4,912 3.00
Total interest earning assets 1,994,240 163,651 8.21 1,910,368 141,815 7.42 1,857,722 135,668 7.30
Allowance for loan losses (45,086) (37,334) (30,214)
Cash and non-interest
earning assets 124,237 121,463 119,207
Total assets $2,073,391 1,994,497 1,946,715
Liabilities and
shareholders' equity
Interest-bearing deposits:
NOW accounts $ 230,291 4,356 1.89% $ 246,357 3,636 1.48% $ 242,876 4,224 1.74%
Savings 618,933 24,248 3.92 726,295 21,725 2.99 730,264 23,306 3.19
Time deposits and
money markets 911,906 49,751 5.46 741,862 34,673 4.67 701,628 33,352 4.75
Total interest-bearing
deposits 1,761,130 78,355 4.45 1,714,514 60,034 3.50 1,674,768 60,882 3.64
Short-term borrowings 38,090 1,776 4.66 18,129 461 2.54 17,447 380 2.18
Long-term debt 788 69 8.75 2,840 203 7.15 3,870 357 9.22
Total interest-bearing
liabilities 1,800,008 80,200 4.46 1,735,483 60,698 3.50 1,696,085 61,619 3.63
Demand deposits 97,940 93,822 92,763
Other liabilities 29,974 28,215 32,219
Shareholders' equity 145,469 136,977 125,648
Total liabilities and
shareholders' equity $2,073,391 1,994,497 1,946,715
Net interest income 83,451 81,117 74,049
Net interest spread 3.75% 3.92% 3.67%
Net interest margin (net interest
income to total interest
earning assets) 4.18 4.25 3.99
Portions of income earned on certain commercial loans, U.S. Government
obligations, obligations of states and political subdivisions, and equity
securities are exempt from federal and/or state taxation. Appropriate
adjustments have been made to reflect the equivalent amount of taxable income
that would have been necessary to generate an equal amount of after tax
income. Federal and New York State tax rates used to calculate income on a
tax equivalent basis were 35.0 percent and 9.68 percent for 1995, 35.0
percent and 10.13 percent for 1994, and 35.0 percent and 10.35 percent for
1993. The average balances of securities available for sale is calculated
using amortized costs for these securities. Included in the balance of
shareholders' equity is $3.9 million and $2.4 million in 1995 and 1994,
respectively, of unrealized appreciation, net of tax, in the available for
sale securities portfolio.
</TABLE>
Interest bearing sources of funds: TrustCo utilizes various traditional
sources of funds to support its asset portfolio. The following table "Average
Sources of Funding" presents the various categories of funds used and the
corresponding average balances for each of the last three years.
<TABLE>
AVERAGE SOURCES OF FUNDING
(dollars in thousands)
<CAPTION>
Components of
95 - 94 94 - 93 Total Funding
1995 1994 1993 Change Change 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Demand deposits $ 97,940 93,822 92,763 4,118 1,059 5.2% 5.1 5.2
Retail deposits:
Savings 618,933 726,295 730,264 (107,362) (3,969) 32.6 39.7 40.8
Time deposits under $100 thousand 750,141 589,573 550,294 160,568 39,279 39.5 32.2 30.8
NOW accounts 230,291 246,357 242,876 (16,066) 3,481 12.1 13.5 13.6
Money market deposits 79,618 103,622 113,632 (24,004) (10,010) 4.2 5.7 6.4
Total retail deposits 1,678,983 1,665,847 1,637,066 13,136 28,781 88.4 91.1 91.6
Total core deposits 1,776,923 1,759,669 1,729,829 17,254 29,840 93.6 96.2 96.8
Time deposits over $100 thousand 82,147 48,667 37,702 33,480 10,965 4.3 2.7 2.1
Short-term borrowings 38,090 18,129 17,447 19,961 682 2.0 1.0 0.9
Long-term debt 788 2,840 3,870 (2,052) (1,030) 0.1 0.1 0.2
Total purchased liabilities 121,025 69,636 59,019 51,389 10,617 6.4 3.8 3.2
Total sources of funding $1,897,948 1,829,305 1,788,848 68,643 40,457 100.0% 100.0 100.0
</TABLE>
<TABLE>
AVERAGE DEPOSITS BY TYPE OF DEPOSITOR
<CAPTION>
(in thousands) Years Ended December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Individuals, partnerships and corporations $1,817,762 1,752,163 1,706,530 1,605,191 948,390
U.S. Government 261 542 540 525 505
States and political subdivisions 30,784 44,289 48,145 58,439 45,101
Other (certified and official checks, etc.) 10,263 11,342 12,316 11,324 7,308
Total average deposits by type of depositor $1,859,070 1,808,336 1,767,531 1,675,479 1,001,304
</TABLE>
Deposits: Average total deposits (including time deposits greater than $100
thousand) were $1.859 billion in 1995 compared to $1.808 billion in 1994.
Deposit increases centered primarily in the time deposit category, which
increased $194.0 million, or 30%, over the average balance in 1994. The
demand deposit category increased 4% to $97.9 million in 1995 compared to
$93.8 million in 1994. Deposit outflows were experienced in all other
categories with the largest decrease occurring in the savings category.
In order to stop the outflow of savings deposits, TrustCo implemented a
successful marketing and advertising campaign beginning March 1995 to promote
the increase of the savings account interest rate to 4%, a level which was
significantly higher than that offered by any other bank in the Capital
Region. As a result, savings account balances increased from $588.0 million
at March 31, 1995 to $649.0 million at December 31, 1995.
Past experience at TrustCo has demonstrated that once customers are attracted
to the Bank as a result of a deposit generation campaign, they tend to
maintain their deposit relationship with TrustCo through various interest
rate cycles. It is the Company's belief that these deposits are a very stable
source of core customers. These customers provide a tremendous opportunity
for cross selling other banking services in addition to their deposit
accounts.
Interest expense on deposits increased from $60.0 million in 1994 to $78.4
million in 1995. The increase of $18.3 million was primarily due to the
increase in rates paid on deposit accounts which increased to 4.45% in 1995
from the 3.50% in 1994.
In addition to the deposit generating activities described previously,
TrustCo also opened four new retail branches in 1995. These new branches
increased the marketing territory of the Bank and contributed significantly
to the deposit increases noted in 1995. For 1996, TrustCo anticipates opening
three new branches. These new retail outlets will provide new sources of
funding and additional opportunities for cross selling to a new depositor
base.
Interest expense on certificates of deposit greater than $100,000 was $4.9
million, $2.6 million and $2.1 million for the years 1995, 1994 and 1993,
respectively.
<TABLE>
MATURITY OF TIME DEPOSITS
OVER $100 THOUSAND
<CAPTION>
(in thousands) As of December 31, 1995
<S> <C>
Under 3 months $26,512
3 to 6 months 11,036
6 to 12 months 18,068
over 12 months 28,594
Total $84,210
</TABLE>
Other funding sources: The Company had $38.1 million of average short-term
borrowings and $800 thousand of average long-term debt
outstanding during 1995. Total purchased liabilities (which includes time
deposits over $100 thousand) were $121.0 million in 1995, compared to $69.6
million in 1994. The average rate on short-term borrowings was 4.66% in 1995
and 2.54% in 1994; the average rate on long-term debt was 8.75% in 1995 and
7.15% in 1994.
<TABLE>
VOLUME AND YIELD ANALYSIS
<CAPTION>
(in thousands) 1995 vs. 1994 1994 vs. 1993
Increase Due to Due to Increase Due to Due to
(Decrease) Volume Rate (Decrease) Volume Rate
<S> <C> <C> <C> <C> <C> <C>
Interest income (TE):
Federal funds sold $ 3,485 389 3,096 4,146 1,408 2,738
Trading securities -- -- -- (94) (94) --
Securities available for sale:
Taxable 13 (3,164) 3,177 7,655 9,048 (1,393)
Tax-exempt 1,278 1,278 -- 2 2 --
Total securities available
for sale 1,291 (1,886) 3,177 7,657 9,050 (1,393)
Investment securities:
Taxable 2,647 2,112 535 (12,022) (14,001) 1,979
Tax-exempt 1,301 907 394 (413) (339) (74)
Total investment securities 3,948 3,019 929 (12,435) (14,340) 1,905
Loans 13,112 5,662 7,450 6,873 6,143 730
Total interest income 21,836 7,184 14,652 6,147 2,167 3,980
Interest expense:
NOW accounts 720 (250) 970 (588) 60 (648)
Money market deposits (181) (637) 456 (460) (248) (212)
Savings 2,523 (3,532) 6,055 (1,581) (126) (1,455)
Time deposits under
$100 thousand 12,936 8,773 4,163 1,288 1,985 (697)
Time deposits over
$100 thousand 2,323 1,966 357 493 585 (92)
Short-term borrowings 1,315 747 568 81 16 65
Long-term debt (134) (171) 37 (154) (84) (70)
Total interest expense 19,502 6,896 12,606 (921) 2,188 (3,109)
Net interest income (TE) $ 2,334 288 2,046 7,068 (21) 7,089
Increases and decreases in interest income and interest expense due to both
rate and volume have been allocated to the two categories of variances
(volume and rate) based on the percentage relationship of such variances to
each other.
</TABLE>
The increase in short-term borrowing balances from $18.1 million in 1994 to
$38.1 million in 1995 is due almost exclusively to the introduction of the
Trustco Short Term Investment Account. This account was developed for the
Bank's Trust Department as an investment vehicle for trust accounts.
Balances are transferred daily by the Trust Department into this account
and are collateralized by securities owned by the Bank.
Net Interest Income
Net interest income is the principal contributor to net income. Therefore,
growth in net income is directly dependent upon the ability of the Company to
increase net interest income. TrustCo's 1995 change in net interest income is
primarily the result of increased earning asset balances invested at higher
rates in 1995 compared to 1994.
Taxable equivalent net interest income for 1995 was $83.5 million, up $2.3
million or 3% over 1994. The yield on average earning assets rose 79 basis
points to 8.21% during 1995 while the rate paid on average interest-bearing
liabilities increased 96 basis points to 4.46%. Together, this resulted in a
7 basis point decrease in the net margin to 4.18%.
The changes between 1995 and 1994, as illustrated in the table "Volume and
Yield Analysis," resulted in an increase in interest on earning assets of
$21.8 million and an increase in interest expense of $19.5 million. The
increase in the interest on earning assets was primarily the result of
increases in the rates earned from 7.42% in 1994 to 8.21% in 1995. Rate
changes accounted for approximately two-thirds of the total increase in
interest income. The increase in interest expense is also principally the
result of increases in the rates paid on interest-bearing liabilities, which
rose from 3.50% in 1994 to 4.46% in 1995. As with the increase in interest
income on earning assets, the increase in interest paid on interest-bearing
liabilities was approximately two-thirds the result of increases in rates
paid.
Risk Management
The responsibility for balance sheet risk management oversight is the
function of the Asset Allocation Committee. This committee meets monthly and
includes the executive officers of the Company as well as other department
managers as appropriate. The meetings include a review of the balance sheet
structure, formulation of strategy in light of expected economic conditions,
and a review of performance against guidelines established to control
exposure to various types of risk.
Credit Risk
Credit risk is managed through a network of loan officer authorities, review
committees, loan policies, and oversight from the senior executives of the
Company. Management follows a policy of continually identifying, analyzing,
and evaluating the credit risk inherent in the loan portfolio. As a result of
management's ongoing review of the loan portfolio, loans are placed in
nonaccrual status, either due to the delinquent status of principal and/or
interest payments, or a judgment by management that, although payment of
principal and/or interest is current, such action is prudent. Loans are
generally placed in nonaccrual status when principal and/or interest is 90
days past due. Thereafter, no interest is taken into income unless received
in cash or until such time as the borrower demonstrates the ability to make
scheduled payments of interest and principal.
<TABLE>
NONPERFORMING ASSETS
<CAPTION>
(dollars in thousands) As of December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Loans in nonaccrual status $12,832 6,370 10,227 17,448 11,948
Loans past due 90 days or more 1,696 4,436 6,567 10,634 8,996
Restructured loans 1,130 910 -- -- --
Total nonperforming loans 15,658 11,716 16,794 28,082 20,944
Foreclosed real estate 3,732 5,080 4,309 5,946 1,413
Total nonperforming assets $19,390 16,796 21,103 34,028 22,357
Allowance for loan losses $48,320 38,851 34,087 26,919 19,049
Allowance coverage of nonperforming loans 3.09X 3.32 2.03 0.96 0.91
Nonperforming loans as a % of total loans 1.28% 1.01 1.56 2.68 2.01
Nonperforming assets as a % of total assets 0.89 0.85 1.07 1.75 1.27
</TABLE>
Nonperforming Assets
Nonperforming assets include loans in non-accrual status, loans which have
been treated as troubled debt restructurings, loans past due 90 days or more
and still accruing interest, and foreclosed real estate properties.
Nonperforming assets at year end 1995 totalled $19.4 million, an increase of
$2.6 million from the balance at year end 1994. Nonperforming loans increased
from $11.7 million in 1994 to $15.7 million in 1995. Nonperforming loans as a
percentage of loans were 1.28% in 1995 and 1.01% in 1994. These percentages
are well below industry and peer group averages, and reflect TrustCo's
conservative lending policy and its aggressive collection and charge off
policies.
The increase in the nonperforming loans of $3.9 million is the result of two
commercial loans reaching nonaccrual status in 1995. Both loans are well
secured and management does not anticipate any loss as a result of collecting
these loans.
TrustCo has a very diversified loan portfolio with no concentrations to any
one borrower or industry. As an indication of this diversification, there
are only three loans greater than $1 million identified as nonperforming at
December 31, 1995. This is significant because it demonstrates sound business
judgments made by TrustCo in loan portfolio risk management.
Nonperforming assets at year end 1995 included $3.7 million of foreclosed
properties compared to $5.1 million in 1994.
There are no other loans in the Bank's portfolio that management is aware of
that pose any significant risk of the eventual non-collection of principal.
As of December 31, 1995, there were no other loans classified for regulatory
purposes that management reasonably expects will materially impact future
operating results, liquidity, or capital resources.
Allowance for Loan Losses
The balance in the allowance for loan losses has been accumulated over the
years through periodic provisions, and is available to absorb losses on
loans which have been determined to be uncollectible. The adequacy of the
allowance is evaluated continuously, with emphasis on nonperforming and other
loans that management believes warrant special attention. The balance of
the allowance is maintained at a level that is, in management's judgment,
representative of the loan portfolio's inherent risk given present and
anticipated future conditions.
The table "Summary of Loan Loss Experience" includes an analysis of the
changes to the allowance for the past five years. Loans charged off in 1995
were $7.3 million, compared to $4.8 million in 1994. Recoveries were $4.1
million in 1995 and $1.5 million in 1994. Provisions recorded in 1995 and
1994 were $12.7 million and $8.1 million, respectively.
Net charge offs as a percentage of average loans were 0.27% in 1995 and 0.29%
in 1994. The allowance as a percentage of loans outstanding grew to 3.94% in
1995 from 3.34% in 1994. The Company has a policy of recognizing problem loan
charge offs early and aggressively pursuing collection efforts. This policy
of early intervention has proven to be a cornerstone of the strong lending
performance that TrustCo has achieved.
TrustCo adopted the provisions of Statement of Financial Accounting Standards
No. 114 (Statement 114), "Accounting by Creditors for Impairment of a Loan,"
and Statement of Financial Accounting Standards No. 118 (Statement 118),
"Accounting by Creditors for Impairment of a Loan -- Income Recognition and
Disclosure," effective as of January 1, 1995. The enclosed consolidated
financial statements have been presented in accordance with these new
accounting pronouncements. The footnotes to the consolidated financial
statements provide additional details with respect to the adoption and
accounting requirements of these pronouncements.
TrustCo has classified nonaccrual commercial and commercial real estate loans
as impaired loans, as well as all loans restructured under a troubled debt
restructuring since the adoption of these new accounting requirements as of
January 1, 1995. At year end 1995, there were $10.0 million of impaired
loans. The average balance of impaired loans during 1995 was $10.5 million
and the Company recognized approximately $400 thousand of interest income on
these loans during the year.
Statement 114 substantially modified the definition of "in-substance
foreclosure" loans. Consequently, certain loans identified at year end 1994
as being in-substance foreclosure loans and classified as real estate owned
have been reclassified as of January 1, 1995 to the loan portfolio. At
January 1, 1995, $9.2 million of loans previously included in real estate
owned were reclassified to the loan balance. Prior to adoption of Statements
114 and 118, in-substance foreclosed properties included those properties
where the borrower had little or no remaining equity in the property,
considering its fair value; where repayment was expected to come only from
the operation or sale of the property; and where the borrower had effectively
abandoned control of the property or it was doubtful the borrower would be
able to rebuild equity in the property.
<TABLE>
SUMMARY OF LOAN LOSS EXPERIENCE
<CAPTION>
(dollars in thousands) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Amount of loans outstanding at end of year
(less unearned income) $1,226,142 1,161,789 1,075,564 1,049,215 1,042,185
Average loans outstanding during year
(less average unearned income) 1,187,929 1,122,698 1,044,855 1,025,480 625,031
Balance of allowance at beginning of year 38,851 34,087 26,919 19,049 13,446
Loans charged off:
Commercial 4,823 3,864 5,866 4,857 1,129
Real estate 1,694 53 199 125 70
Installment 821 907 676 1,015 616
Total 7,338 4,824 6,741 5,997 1,815
Recoveries of loans previously charged off:
Commercial 3,504 1,125 1,810 327 23
Real estate 258 -- -- -- --
Installment 347 407 523 847 174
Total 4,109 1,532 2,333 1,174 197
Net loans charged off 3,229 3,292 4,408 4,823 1,618
Additions to allowance charged to
operating expense 12,698 8,056 11,576 12,693 6,490
Allowance of acquired bank -- -- -- -- 731
Balance of allowance at end of year $ 48,320 38,851 34,087 26,919 19,049
Net charge offs as a percent of average
loans outstanding during year
(less average unearned income) 0.27% 0.29 0.42 0.47 0.26
Allowance as a percent of loans outstanding
at end of year 3.94 3.34 3.17 2.57 1.83
</TABLE>
Interest Rate Risk
Management of interest rate risk involves continual monitoring of the
relative sensitivity of asset and liability portfolios to changes in rates
due to maturities or repricing. Forecasting models are utilized to quantify
the impact of changes in rates on the Company's net income. Specific targets
for interest rate sensitivity have been established by the Company.
Interest rate sensitivity is a function of the repricing of assets and
liabilities through maturity and interest rate changes. The objective is to
maintain an appropriate balance between income growth and the risk associated
with maximizing income through the mismatch of the timing of interest rate
changes between assets and liabilities. Perfectly matching this funding can
eliminate interest rate risk but net interest income is not always enhanced.
One measure of interest rate risk, the so called "gap," is illustrated in the
table "Interest Rate Sensitivity."
The table measures the incremental and cumulative gap, or the difference
between assets and liabilities subject to repricing/maturity during the
periods indicated. For purposes of this analysis the maturity and repricing
of loans is based on the stated maturity or earliest repricing date. For
securities available for sale, the earlier of average life or stated maturity
is used. NOW, money market, demand, and savings accounts are presented with a
maturity or repricing cycle over the full interest rate cycle and TrustCo's
actual experience, even though they are subject to immediate withdrawal. Time
deposit accounts are presented based upon their maturity dates.
<TABLE>
INTEREST RATE SENSITIVITY
<CAPTION>
(dollars in thousands) At December 31, 1995
Repricing, or able to be repriced, in:
0-90 91-365 1-5 Over 5 Rate
Days Days Years Years Insensitive Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Federal funds sold $239,000 -- -- -- -- 239,000
Securities available for sale 28,863 30,575 188,332 380,119 12,317 640,206
Loans, net of unearned income 334,862 182,247 151,956 557,077 -- 1,226,142
Noninterest rate sensitive assets -- -- -- -- 70,837 70,837
Total assets 602,725 212,822 340,288 937,196 83,154 2,176,185
Cumulative total assets 602,725 815,547 1,155,835 2,093,031 2,176,185 2,176,185
Liabilities and shareholders' equity:
Deposits:
Interest bearing deposits 218,363 440,548 906,514 253,481 -- 1,818,906
Noninterest bearing deposits 4,007 11,971 63,844 31,921 -- 111,743
Total deposits 222,370 452,519 970,358 285,402 -- 1,930,649
Borrowings 56,654 -- -- -- -- 56,654
Noninterest rate sensitive liabilities -- -- -- -- 28,783 28,783
Shareholders' equity -- -- -- -- 160,099 160,099
Total liabilities and
shareholders' equity 279,024 452,519 970,358 285,402 188,882 2,176,185
Cumulative total liabilities and
shareholders' equity $279,024 731,543 1,701,901 1,987,303 2,176,185 2,176,185
Incremental gap:
Interest sensitivity gap $323,701 (239,697) (630,070) 651,794
Gap as a % of earning assets 15.38% (11.39) (29.93) 30.96
Interest sensitive assets to liabilities 219.16 48.31 37.54 369.73
Cumulative gap:
Interest sensitivity gap $323,701 84,004 (546,066) 105,728
Gap as a % of earning assets 15.38% 3.99 (25.94) 5.02
Interest sensitive assets to liabilities 219.16 113.97 71.26 111.60
</TABLE>
At December 31, 1995, the Company's gap position indicates an excess of assets
repricing in the 0-90 day period of $323.7
million. This positive gap position is significantly enhanced by the $239.0
million federal funds balance at year end. The gap position turns negative in
the 91 to 365 day period and in the 1 to 5 year period. This situation
reflects the significant amount of time deposits that mature in these time
bands. Over 5 years, the gap position again reflects an excess of repricing
assets over liabilities of $651.8 million.
In evaluating interest rate sensitivity at year end 1995, the Company would
have a slight benefit from an increase in interest rates, as the Bank would
be able to redeploy short-term assets that are repricing into higher yielding
investments. Conversely, the Company would be slightly disadvantaged given a
decrease in interest rates, since the assets that are repricing would do so
at lower interest rates.
The Company's gap position is constantly under evaluation by the Asset
Allocation Committee in relation to products, services, and the marketplace.
There are significant shortcomings inherent in the method of analysis
presented in the Interest Rate Sensitivity table. For example, although
certain assets and liabilities have similar periods to maturity or to
repricing, they may react in different degrees to changes in market rates.
Also, the interest rates on certain types of assets and liabilities may
fluctuate in advance of changes in market interest rates, while other
interest rates may lag behind changes in market rates. Additionally, certain
assets have features which restrict changes in interest rates on a short-term
basis and over the life of the asset (certain annual caps and lifetime
caps). Further, in the event of significant changes in interest rates,
prepayment and early withdrawal levels would be likely to deviate
significantly from those assumed in the table. Finally, the ability of many
borrowers to service their debt may decrease in the event of a significant
interest rate increase. Management takes these factors into account when
reviewing the Bank's gap position and establishing future asset/liability
strategy.
Liquidity Risk
TrustCo seeks to obtain favorable sources of liabilities and to maintain
prudent levels of liquid assets in order to satisfy varied liquidity demands.
In addition to serving as a funding source for maturing obligations,
liquidity provides flexibility in responding to customer initiated needs.
Many factors affect the ability to meet liquidity needs, including variations
in the markets served by the Bank's network of branches, the mix of assets
and liabilities, and general economic conditions.
The Company actively manages its liquidity position through target ratios
established under the Asset/Liability Management policies. Continual
monitoring of these ratios, both historically and through forecasts under
multiple interest rate scenarios, allows TrustCo to employ strategies
necessary to maintain adequate liquidity levels. Management has also
developed various liquidity alternatives should abnormal situations arise.
The Company achieves its liability based liquidity objectives in a variety of
ways. Net liabilities can be classified into three categories for the
purposes of managing liability based liquidity: net core deposits, purchased
money, and capital market funds. TrustCo seeks deposits that are dependable
and predictable, ones that are based as much on interest rate as they are on
the level and quality of service. At December 31, 1995, core deposits
representing total deposits less those time deposits greater than $100,000,
amounted to $1.846 billion. Average balances of core deposits are detailed
in the table "Average Sources of Funding."
In addition to core deposits, another funding source available to TrustCo is
purchased money. These are principally long-term and short-term borrowings,
federal funds purchased, securities sold under repurchase agreements, and
time deposits greater than $100,000. The average balances of these purchased
liabilities are detailed in the table "Average Sources of Funding." During
1995, the average balance in purchased liabilities was $121.0 million,
compared with $69.6 million in 1994, and $59.0 million in 1993.
Off-Balance Sheet Risk
Commitments to extend credit: TrustCo makes contractual commitments to
extend credit, and extends lines of credit which are subject to the Bank's
credit approval and monitoring procedures. At December 31, 1995 and 1994,
commitments to extend credit in the form of loans, including unused lines of
credit, amounted to $220.8 million and $217.3 million respectively. In
management's opinion, there are no material commitments to extend credit that
represent unusual risk.
Letters of credit and standby letters of credit: TrustCo guarantees the
obligations or performance of customers by issuing letters of credit and
standby letters of credit to third parties. These letters of credit are
frequently issued in support of third party debt, such as corporate debt
issuances, industrial revenue bonds, and municipal securities. The risk
involved in issuing letters of credit and standby letters of credit is
essentially the same as the credit risk involved in extending loan facilities
to customers, and they are subject to the same credit origination,
portfolio maintenance, and management procedures in effect to monitor other
credit and off-balance sheet products. At December 31, 1995 and 1994,
outstanding letters of credit and standby letters of credit were
approximately $19.0 million and $20.8 million, respectively.
Other Off-Balance Sheet Risk: TrustCo does not engage in activities involving
interest rate swaps, forward placement contracts, options, or any other
instrument commonly referred to as a "derivative." Management believes these
instruments pose a high degree of risk, and that investing in them is
unnecessary.
<TABLE>
NONINTEREST INCOME
<CAPTION>
(dollars in thousands) 1995 vs. 1994
1995 1994 1993 Amount Percent
<S> <C> <C> <C> <C> <C>
Trust department income $ 4,890 4,850 4,347 40 0.8%
Fees for other services to customers 7,003 7,007 6,489 (4) 0.1
Net gain (loss) on securities transactions 243 (8,877) 6,239 9,120 102.7
Other 1,931 1,580 2,101 351 22.2
Total noninterest income $14,067 4,560 19,176 9,507 208.5%
</TABLE>
Noninterest Income and Expense
Noninterest income: Noninterest income is a significant source of revenue
for the Company and an important factor in the overall results for the year.
Total noninterest income was $14.1 million for 1995 compared to $4.6 million
in 1994. Included in the 1995 results are $200 thousand of securities gains
compared to securities losses of $8.9 million during the comparable period in
1994. Excluding these securities transactions, noninterest income would
have been $13.8 million and $13.4 million in 1995 and 1994, respectively. As
noted earlier, these securities losses for 1994 were realized in an effort to
reinvest the available for sale portfolio at the year end higher interest
rates. Therefore, future periods will benefit from these enhanced rates.
The Trust Department contributes the largest recurring portion of noninterest
income through fees generated by the performance of fiduciary services.
Income from these fiduciary activities totalled $4.9 million in both 1995 and
in 1994.
Changes in the other categories of noninterest income reflect the fee scale
used by the Bank for pricing its services.
<TABLE>
NONINTEREST EXPENSE
<CAPTION>
(dollars in thousands) 1995 vs. 1994
1995 1994 1993 Amount Percent
<S> <C> <C> <C> <C> <C>
Salaries and employee benefits $19,895 18,323 16,649 1,572 8.6%
Net occupancy expense of bank premises 4,562 3,479 3,439 1,083 31.1
Equipment expense 3,403 3,363 3,650 40 1.2
FDIC insurance expense 2,101 4,071 3,985 (1,970) (48.4)
Professional services 3,585 2,548 2,508 1,037 40.7
Other real estate expenses 3,120 1,016 4,679 2,104 207.1
Other 7,774 7,760 8,592 14 0.2
Total noninterest expense $44,440 40,560 43,502 3,880 9.6%
</TABLE>
Noninterest expense: Noninterest expense was $44.4 million in 1995,
$40.6 million in 1994, and $43.5 million in 1993. TrustCo's
operating philosophy stresses the importance of monitoring and controlling
the level of noninterest expense. The efficiency ratio is a strong indicator
of how well controlled and monitored these expenses are for a banking
enterprise. TrustCo's efficiency ratio was 42.52% for 1995, 41.82% for 1994,
and 44.63% for 1993. Industry goals look for the attainment of a 60%
efficiency ratio. TrustCo outperformed the industry on this ratio for 1993,
1994, and 1995.
Salaries and employee benefits are the most significant component of
noninterest expense. At year end 1995, these expenses amounted to $19.9
million, compared to $18.3 million and $16.6 million for 1994 and 1993,
respectively. The increase in salaries and employee benefits reflects the
addition of four new branches during 1995, merit increases, and raises given
to the Bank staff. Increased costs for benefits, such as health insurance
and retirement benefits, account for the remainder of the increase.
During 1995, FDIC insurance premiums decreased by $2.0 million compared to
1994 as a result of the reduction and eventual elimination of the insurance
premium on the TrustCo deposits. Net occupancy expenses have increased by
$1.1 million due to the four new branch facilities opened during 1995 and a
write down on selected bank premises recognized in 1995. Professional
services increased by $1.0 million in 1995 over 1994, which was almost equal
to 1993 expenses. The increase in 1995 expense was the result of costs
associated with resolving certain litigation relative to nonperforming loans.
Other real estate expense is also up by $2.1 million over 1994 due to the
cost of disposing of or preparing for sale certain properties that had been
acquired through foreclosure.
Income Tax
In 1995, TrustCo recognized income tax expense of $12.8 million as compared
to $12.6 million in 1994 and $12.5 million in 1993. The tax expense on the
Company's income was lower than tax expense at the statutory rate of 35% due
primarily to tax exempt income and the reduction of the deferred tax asset
valuation reserve, offset in part by state income taxes, net of the federal
tax benefit.
Deferred tax assets are recognized subject to management's judgment that
realization is more likely than not. During 1995, the valuation reserve was
reduced as a result of the resolution of several tax return audits and
management's reassessment of the realization of certain deferred tax assets.
The valuation allowance of $2.1 million at December 31, 1995, is primarily
reserved for federal and state tax law restrictions on the deductibility of
certain temporary differences. The valuation allowance of $4.7 million at
December 31, 1994 was reserved primarily for federal and state tax law
restrictions on the deductibility of certain temporary differences, as well
as uncertainty regarding the ultimate realization of certain other deferred
tax assets. Based primarily on the sufficiency of historical and future
taxable income, management believes it is more likely than not that the
remaining net deferred tax asset of $30.4 million and $20.6 million at
December 31, 1995 and 1994, respectively, will be realized.
Capital Resources
Consistent with its long-term goal of operating a sound and profitable
financial organization, TrustCo strives to maintain strong capital ratios.
New issues of equity securities have not been required, since most of the
Company's capital requirements have been provided through retained earnings.
Part of TrustCo's operating philosophy is that the Company will not retain
any excess capital. All capital that is generated by the Company that is in
excess of the levels considered by management to be necessary for the safe
and sound operations of the Company has been distributed to the shareholders
in the form of cash dividends. Consequently, the capital ratios that are
maintained are adequate but not excessive. This philosophy has led to a
dividend payout ratio for 1995 of 69.55%, 1994 of 62.52%, and 1993 of 56.88%.
These are significant payouts to the Company's shareholders and are
considered by management to be a prudent use of the retained capital in
TrustCo. As to the likelihood of future dividends, the philosophy stated
above will continue into 1996 and, where appropriate, the Board of Directors
will declare dividends consistent with that operating philosophy.
At December 31, 1995, TrustCo's Tier 1 capital was $147.7 million or 12.45%
of risk adjusted assets. The Tier 1 capital to total assets or the leverage
ratio at December 31, 1995 was 7.36% as compared to 7.05% in 1994 and 6.59%
in 1993. At December 31, 1995 the subsidiary bank, Trustco Bank, met the
regulatory definition of a "well capitalized" institution.
The Bank converted to a nationally chartered bank in early 1995 and changed
its legal name to Trustco Bank, National Association. All of the operations
of the Bank were consistent with those allowed of a nationally chartered
bank. The national charter allowed the Bank to streamline its regulatory
process by having the Office of the Comptroller of the Currency as the
primary bank regulator.
As mentioned earlier, TrustCo will be expanding its branch network by three
locations in 1996. It is not anticipated that additional capital will be
required to support this expansion program. Likewise, operating costs during
1996 can be expected to rise modestly as a result of these new branches, but
will be offset by the additional revenue generated by the new branches.
Impact of Inflation and Changing Prices
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles which require the measurement of
financial position and operating results in terms of historical dollars
without considering the changes in the relative purchasing power of money
over time due to inflation. The impact of inflation is reflected in the
increasing costs of operations. Unlike most industrial companies, nearly all
the assets and liabilities of the Company are monetary.
<TABLE>
FIVE YEAR SUMMARY OF FINANCIAL DATA
<CAPTION>
(dollars in thousands, except per share data) Years Ended December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Statement of income data:
Interest income $ 161,552 140,282 133,657 143,260 100,805
Interest expense 80,200 60,698 61,619 76,401 58,252
Net interest income 81,352 79,584 72,038 66,859 42,553
Provision for loan losses 12,698 8,056 11,576 12,693 6,490
Net interest income after provision
for loan losses 68,654 71,528 60,462 54,166 36,063
Noninterest income 14,067 4,560 19,176 15,433 9,847
Noninterest expense 44,440 40,560 43,502 42,771 28,193
Income before income taxes 38,281 35,528 36,136 26,828 17,717
Income tax expense 12,754 12,640 12,516 9,325 4,856
Income before cumulative effect of
change in accounting principle 25,527 22,888 23,620 17,503 12,861
Cumulative effect of a change in
accounting principle -- -- (3,295) -- --
Net income $ 25,527 22,888 20,325 17,503 12,861
Share data:
Average equivalent shares outstanding
(in thousands) 18,035 17,863 17,764 17,527 13,428
Book value $ 9.08 7.94 7.44 6.93 6.44
Cash dividends 1.01 0.82 0.66 0.52 0.43
Net income 1.42 1.28 1.14 1.00 0.96
Financial ratios:
Return on average assets 1.23% 1.15 1.04 0.95 1.12
Return on average shareholders' equity <F1> 18.03 17.01 16.18 15.06 17.16
Cash dividend payout ratio 69.55 62.52 56.88 51.05 45.00
Tier 1 capital as a % of total risk adjusted
assets 12.45 12.08 12.18 11.39 10.45
Total capital as a % of total risk adjusted
assets 13.73 13.35 13.45 12.64 11.70
Efficiency ratio 42.52 41.82 44.63 51.96 48.51
Net interest margin 4.18 4.25 3.99 3.94 4.20
Average balances:
Total assets $2,073,391 1,994,497 1,946,715 1,852,180 1,149,775
Earning assets 1,994,240 1,910,368 1,857,722 1,763,450 1,085,868
Loans, net 1,187,929 1,122,698 1,044,855 1,025,480 625,031
Allowance for loan losses (45,086) (37,334) (30,214) (23,735) (16,139)
Securities available for sale 301,080 332,980 192,433 55,716 --
Investment securities 292,908 250,812 455,136 568,825 418,295
Deposits 1,859,070 1,808,336 1,767,531 1,675,479 1,001,304
Short-term borrowings 38,090 18,129 17,447 25,520 42,990
Long-term debt 788 2,840 3,870 5,000 5,000
Shareholders' equity 145,469 136,977 125,648 116,238 74,951
<FN>
<F1> Average shareholders' equity excludes the market adjustment for
securities available for sale.
</TABLE>
As a result, changes in interest rates have a greater impact on the Company's
performance than do the effects of general levels of inflation, since
interest rates do not necessarily move in the same direction or to the same
extent as the price of goods and services.
Impact of Changes in Accounting Standards
Accounting for Postretirement Benefits Other than Pensions: On January 1,
1993, the Company adopted Statement of Financial Accounting Standards No. 106
(Statement 106), "Employers' Accounting for Postretirement Benefits Other
than Pensions." In implementing the new accounting standard, the Company
recorded a one time transition charge of $3.3 million, net of tax benefits,
which is reflected as a cumulative effect of a change in accounting principle
in the 1993 consolidated statement of income.
Accounting for Income Taxes: On January 1, 1993, the Company adopted
Statement of Financial Accounting Standards No. 109 (Statement 109),
"Accounting for Income Taxes." Statement 109 significantly changed the method
of accounting for income taxes for financial statement purposes without
affecting the actual cash tax liability. In adopting Statement 109, the
Company elected not to restate prior period financial results. The
implementation of Statement 109 had no material impact on the 1993 results of
operations. The Company's complete disclosure related to Statement 109 is
included in the notes to the consolidated financial statements.
Accounting by Creditors for Impairment of a Loan: The Company adopted
Statements 114 and 118 effective as of January 1, 1995. These statements
require that an impaired loan be measured at the present value of expected
cash flows. The Statements also narrow the application of the concept of
in-substance foreclosure to situations where the creditor has received
physical possession of the debtor's collateral. The adoption of Statements
114 and 118 did not have a material impact on the financial condition or
results of operations of the Company.
Accounting for Certain Investments in Debt and Equity Securities: The Company
adopted Statement of Financial Accounting Standards No. 115 (Statement 115),
"Accounting for Certain Investments in Debt and Equity Securities," effective
January 1, 1994. Upon adoption of Statement 115, the Company identified
securities that are "available for sale" and those that are "held to
maturity" (the Company has no trading account assets as prescribed by
Statement 115). Securities classified as available for sale are those that
can be sold in response to changes in market interest rates, liquidity
requirements, or other investment alternatives. Securities classified as held
to maturity are not available for sale and are held until contractual
maturity or call. Securities available for sale are recorded at market value
with the unrealized appreciation and depreciation, net of tax, recorded as an
element of shareholders' equity. Securities identified as held to maturity
are recorded at amortized cost.
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of: In May 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 121 (Statement 121),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of." Various assets are excluded from the scope of
Statement 121, including financial instruments which constitute the majority
of the Company's assets. For long-lived assets included in the scope of
Statement 121, such as premises and equipment, an impairment loss must be
recognized when the estimate of total undiscounted future cash flows
attributable to the asset is less than the asset's carrying amount. The
Company will adopt Statement 121 in the first quarter of 1996. Management
anticipates that the adoption of Statement 121 will not have a material
effect on the Company's consolidated financial statements.
Accounting for Stock-Based Compensation: In October 1995, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 123 (Statement 123), "Accounting for Stock-Based Compensation," which
establishes a fair value based method of accounting for stock options, such
as the Company's stock option plans. Under Statement 123, entities can
recognize stock-based compensation expense in the basic financial statements
using either (1) the intrinsic value based approach set forth in the
Accounting Principles Board Opinion No. 25 (APB Opinion 25), or (2) the fair
value based method introduced in Statement 123. Companies electing to remain
with the accounting in APB Opinion 25 must make pro forma disclosures of net
income and earnings per share, as if the fair value based method of
accounting defined in Statement 123 had been applied. Under the method
currently utilized by TrustCo (APB Opinion 25), compensation expense is
determined based upon the option's intrinsic value. Under the fair value
based method introduced by Statement 123, compensation expense is based on
the estimate of the option's fair value at the grant date and is generally
recognized over the vesting period. Management anticipates that it will elect
to continue to measure stock-based compensation costs in accordance with APB
Opinion 25 and will adopt the pro forma disclosure requirements of Statement
123 in 1996.
~~
<TABLE>
SUMMARY OF UNAUDITED QUARTERLY FINANCIAL INFORMATION
(dollars in thousands, except per share data)
<CAPTION>
1995 1994
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income statement:
Interest income $38,104 39,959 41,506 41,983 161,552 32,684 34,726 36,215 36,657 140,282
Interest expense 17,210 19,873 21,407 21,710 80,200 14,666 15,069 15,342 15,621 60,698
Net interest income 20,894 20,086 20,099 20,273 81,352 18,018 19,657 20,873 21,036 79,584
Provision for loan losses 3,573 3,045 3,120 2,960 12,698 1,827 1,886 2,778 1,565 8,056
Net interest income
after provision for
loan losses 17,321 17,041 16,979 17,313 68,654 16,191 17,771 18,095 19,471 71,528
Noninterest income 3,449 3,986 3,647 2,985 14,067 3,314 (402) 838 810 4,560
Noninterest expense 11,751 11,862 10,695 10,132 44,440 11,409 8,808 9,599 10,744 40,560
Income before
income taxes 9,019 9,165 9,931 10,166 38,281 8,096 8,561 9,334 9,537 35,528
Income tax expense 3,114 3,059 3,335 3,246 12,754 2,800 3,085 3,420 3,335 12,640
Net income 5,905 6,106 6,596 6,920 25,527 5,296 5,476 5,914 6,202 22,888
Per share data:
Net income .33 .34 .36 .38 1.42 .30 .31 .33 .35 1.28
Cash dividends declared .23 .23 .28 .28 1.01 .19 .19 .21 .23 .82
</TABLE>
Glossary of Terms
Book Value Per Share
Total shareholders' equity divided by shares outstanding on the same dates.
This provides an indication of the book value of a share of stock.
Cash Dividends Per Share
Total cash dividends declared divided by average shares outstanding for the
period.
Derivative Investments
Investments in futures contracts, forwards, swaps, or option contracts, or
other investments with similar characteristics.
Earning Assets
The sum of interest-bearing deposits with banks, securities available for
sale, investment securities, loans, net of unearned income, in accrual status
and federal funds sold.
Earnings Per Share
Net income divided by the average shares of common stock outstanding during
the period including the effect of stock options.
Efficiency Ratio
Noninterest expense (excluding nonrecurring charges and other real estate
expense) divided by taxable equivalent net interest income plus noninterest
income (excluding securities transactions). This is an indicator of the total
cost of operating the Company in relation to total income generated.
Impaired Loans
Loans, principally commercial, where it is probable that the borrower will be
unable to make the principal and interest payments according to the
contractual terms of the loan, and all loans restructured subsequent to
January 1, 1995.
Interest-Bearing Liabilities
The sum of interest-bearing deposits, federal funds purchased, securities
sold under agreements to repurchase, other short-term borrowings, and
long-term debt.
Interest Rate Spread
The difference between the taxable equivalent yield on earning assets and the
rate paid on interest bearing liabilities.
Liquidity
The ability to meet both loan commitments and deposit withdrawals as they
come due.
Net Interest Margin
Fully taxable equivalent net interest income as a percentage of average
earning assets.
Net Loans Charged Off
Reductions to the allowance for loan losses written off as losses, net of the
recovery of loans previously charged off.
Nonaccrual Loans
Loans for which no periodic accrual of interest income is recognized.
Nonperforming Assets
The sum of nonperforming loans plus real estate owned.
Nonperforming Loans
The sum of loans in a nonaccrual status (for purposes of interest
recognition) plus loans whose repayment criteria have been renegotiated to
less than market terms due to the inability of the borrowers to repay the
loan in accordance with its original terms plus accruing loans 90 days or
more past due as to principal or interest payments.
Parent Company
A company that owns or controls a subsidiary through the ownership of voting
stock.
Real Estate Owned
Real estate acquired through foreclosure proceedings.
Return on Average Assets
Net income as a percentage of average total assets.
Return on Average Equity
Net income as a percentage of average equity, excluding the impact of the
mark to market adjustment for securities available for sale.
Taxable Equivalent (TE)
Tax exempt income that has been adjusted to an amount that would yield the
same after tax income had the income been subject to taxation at the
statutory Federal and/or state income tax rates.
Management's Statement of Responsibilities
The management of TrustCo Bank Corp NY (the "Company") is responsible for the
preparation, content, and integrity of the financial statements and other
statistical data and analyses compiled for this report. The consolidated
financial statements and related notes have been prepared in conformity with
generally accepted accounting principles and, in the judgment of management,
present fairly and consistently the Company's financial position, results of
operations, and cash flows. Management also believes that financial
information elsewhere in this report is consistent with that in the financial
statements. The amounts contained in the financial statements are based on
management's best estimates and judgments.
The Company maintains a system of internal controls and accounting procedures
designed to provide reasonable assurance as to the protection of assets and
the integrity of the financial statements. These procedures include
management's evaluation of asset quality, organizational arrangements that
provide an appropriate division of responsibilities, and a program of
internal audits to evaluate independently the adequacy and application of
financial and operating controls.
The Board of Directors discharges its responsibility for TrustCo's financial
statements through its Audit Committee, which is composed entirely of outside
directors and has responsibility for the recommendation of the independent
auditors.
Management has made an assessment of the Company's internal control structure
and procedures covering financial reporting using established and recognized
criteria. On the basis of this assessment, management believes that the
Company maintained an effective system of internal controls for financial
reporting as of December 31, 1995.
Robert A. McCormick
President and Chief Executive Officer
Robert T. Cushing
Vice President and Chief Financial Officer
January 26, 1996
Independent Auditors' Report
The Board of Directors and Shareholders of TrustCo Bank Corp NY:
We have audited the accompanying consolidated statements of condition of
TrustCo Bank Corp NY and subsidiaries as of December 31, 1995 and 1994, and
the related consolidated statements of income, changes in shareholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of TrustCo
Bank Corp NY and subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles.
As discussed in note 5 to the consolidated financial statements, effective
January 1, 1995, the Company adopted the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting Standards No.
114, "Accounting by Creditors for Impairment of a Loan," and Statement of
Financial Accounting Standards No. 118, "Accounting by Creditors for
Impairment of a Loan -- Income Recognition and Disclosures" which prescribe
recognition criteria for loan impairment and measurement methods for impaired
loans. As discussed in note 4 to the consolidated financial statements, in
1994 the Company adopted the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" which
changed its method of accounting for certain investments in debt and equity
securities. As discussed in note 9 to the consolidated financial statements,
the Company also adopted the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions" in 1993 which
changed its method of accounting for postretirement benefits other than
pensions.
Albany, New York
January 26, 1996
<TABLE>
Consolidated Statements of Income
<CAPTION>
(dollars in thousands, except per share data) Years Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $107,060 93,873 86,965
Interest and dividends on:
U.S. Treasuries and agencies 28,193 23,841 28,976
States and political subdivisions 2,902 1,129 1,416
Mortgage-backed securities 8,602 9,376 8,444
Other 2,252 3,005 2,944
Interest on federal funds sold 12,543 9,058 4,912
Total interest income 161,552 140,282 133,657
Interest expense:
Interest on deposits: 78,355 60,034 60,882
Interest on short-term borrowings 1,776 461 380
Interest on long-term debt 69 203 357
Total interest expense 80,200 60,698 61,619
Net interest income 81,352 79,584 72,038
Provision for loan losses 12,698 8,056 11,576
Net interest income after provision for loan losses 68,654 71,528 60,462
Noninterest income:
Trust department income 4,890 4,850 4,347
Fees for other services to customers 7,003 7,007 6,489
Net gain/(loss) on securities transactions 243 (8,877) 6,239
Other 1,931 1,580 2,101
Total noninterest income 14,067 4,560 19,176
Noninterest expense:
Salaries and employee benefits 19,895 18,323 16,649
Net occupancy expense of bank premises 4,562 3,479 3,439
Equipment expense 3,403 3,363 3,650
FDIC insurance expense 2,101 4,071 3,985
Professional services 3,585 2,548 2,508
Other real estate expenses 3,120 1,016 4,679
Other 7,774 7,760 8,592
Total noninterest expense 44,440 40,560 43,502
Income before income taxes and cumulative effect of a change in accounting principle 38,281 35,528 36,136
Income taxes 12,754 12,640 12,516
Income before cumulative effect of a change in accounting principle 25,527 22,888 23,620
Cumulative effect at January 1, 1993 of a change in accounting principle -- -- (3,295)
Net income $ 25,527 22,888 20,325
Earnings per common share:
Income before cumulative effect of a change in accounting principle $ 1.42 1.28 1.33
Cumulative effect at January 1, 1993 of a change in accounting principle -- -- (.19)
Net income per common share $ 1.42 1.28 1.14
Average equivalent shares outstanding were 18,035,000 for 1995, 17,863,000
for 1994, and 17,764,000 for 1993. Per share data has been adjusted for a 6
for 5 stock split in August 1995, a 10% stock dividend in 1994, and a 2 for 1
stock split in 1993.
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
Consolidated Statements of Condition
<CAPTION>
(dollars in thousands, except per share data) As of December 31,
1995 1994
<S> <C> <C>
ASSETS
Cash and due from banks $ 50,889 52,479
Federal funds sold 239,000 263,000
Total cash and cash equivalents 289,889 315,479
Securities available for sale 640,206 117,458
Investment securities (approximate market value $334,455 at December 31, 1994) -- 347,858
Loans 1,227,926 1,163,758
Less: Unearned income 1,784 1,969
Allowance for loan losses 48,320 38,851
Net loans 1,177,822 1,122,938
Bank premises and equipment 25,008 23,877
Real estate owned 3,732 5,080
Other assets 39,528 42,987
Total assets $2,176,185 1,975,677
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand $ 111,743 93,496
Savings 649,033 663,778
NOW accounts 231,107 247,834
Money market deposit accounts 69,434 92,965
Certificates of deposit (in denominations of $100,000 or more) 84,210 62,511
Other time accounts 785,122 629,247
Total deposits 1,930,649 1,789,831
Short-term borrowings 56,654 12,713
Accrued expenses and other liabilities 28,783 30,300
Long-term debt -- 3,550
Total liabilities 2,016,086 1,836,394
Shareholders' equity:
Capital stock; $1 par value. Shares authorized 25,000,000; 18,134,708 and
15,018,448 shares issued at December 31, 1995 and 1994, respectively 18,135 15,018
Surplus 116,128 118,352
Undivided profits 14,720 6,948
Net unrealized gain/(loss) on securities available for sale 12,363 (41)
Treasury stock; 496,646 and 401,022 shares, at cost, at December 31, 1995
and 1994, respectively (1,247) (994)
Total shareholders' equity 160,099 139,283
Total liabilities and shareholders' equity $2,176,185 1,975,677
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
Consolidated Statements of Changes in Shareholders' Equity
<CAPTION>
(dollars in thousands, except per share data) Three Years Ended December 31, 1995
Net Unrealized
Gain/(Loss)
On Securities
Capital Undivided Available Treasury
Stock Surplus Profits For Sale Stock
<S> <C> <C> <C> <C> <C>
Beginning balance, January 1, 1993 $ 6,771 98,115 16,566 -- (1,023)
Net income -- 1993 -- -- 20,325 -- --
Cash dividend declared, $.66 per share -- -- (11,560) -- --
Stock options exercised, 23,919 shares 24 444 -- -- --
Sale of 5,300 treasury shares to benefit plans -- 189 -- -- 29
2 for 1 stock split (6,793,022 shares) 6,793 (6,793) -- -- --
Ending balance, December 31, 1993 13,588 91,955 25,331 -- (994)
Net income -- 1994 -- -- 22,888 -- --
Cash dividend declared, $.82 per share -- -- (14,310) -- --
Stock options exercised, 65,282 shares 65 801 -- -- --
Net unrealized loss on securities available for sale -- -- -- (41) --
10% stock dividend (1,365,122 shares) 1,365 25,596 (26,961) -- --
Ending balance, December 31, 1994 15,018 118,352 6,948 (41) (994)
Net income -- 1995 -- -- 25,527 -- --
Cash dividend declared, $1.01 per share -- -- (17,755) -- --
Stock options exercised, 99,544 shares 100 793 -- -- --
6 for 5 stock split (3,016,716 shares) 3,017 (3,017) -- -- --
Treasury stock purchased -- -- -- -- (253)
Change in net unrealized gain/(loss) on securities
available for sale -- -- -- 12,404 --
Ending balance, December 31, 1995 $18,135 116,128 14,720 12,363 (1,247)
Per share data adjusted for a 6 for 5 stock split in 1995, a 10% stock
dividend in 1994, and a 2 for 1 stock split in1993.
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
Consolidated Statements of Cash Flows
<CAPTION>
(in thousands) For the Years Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Increase/(decrease) in cash and cash equivalents
Cash flows from operating activities:
Net income before change in accounting principle $ 25,527 22,888 23,620
Change in accounting principle -- -- (3,295)
Net income 25,527 22,888 20,325
Adjustments to reconcile net income to net cash provided by/
(used in) operating activities:
Depreciation and amortization 3,640 2,749 2,373
Provision for loan losses 12,698 8,056 11,576
Provision for deferred tax expense/(benefit) (9,811) (2,981) 46
Net (gain)/loss on sale or call of securities available for sale (284) 8,883 (5,865)
Net (gain)/loss on maturities and calls of investment
securities and trading assets 41 (6) (374)
Purchase of trading securities -- -- (1,940)
(Increase)/decrease in taxes receivable 4,044 (1,003) (1,505)
(Increase)/decrease in interest receivable (3,586) 488 3,345
Increase/(decrease) in interest payable 954 318 (4,881)
(Increase)/decrease in other assets 6,711 1,551 (9,066)
Increase/(decrease) in accrued expenses (3,300) 3,154 3,354
Total adjustments 11,107 21,209 (2,937)
Net cash provided by operating activities 36,634 44,097 17,388
Cash flows from investing activities:
Proceeds from sales of securities available for sale 243,597 1,015,688 99,475
Proceeds from maturities and calls of securities available for sale 48,106 42,558 --
Purchase of securities available for sale (504,525) (770,617) (153,596)
Proceeds from sales of investment securities -- -- 1,877
Proceeds from maturities and calls of investment securities 62,514 80,717 229,288
Purchase of investment securities (3,212) (182,981) (159,540)
Net increase in loans (75,287) (99,396) (37,769)
Proceeds from sales of real estate owned 3,931 9,109 6,091
Capital expenditures (2,271) (1,733) (2,210)
Net cash provided by/(used in) investing activities (227,147) 93,345 (16,384)
Cash flows from financing activities:
Net increase/(decrease) in deposits 140,818 (4,401) 22,926
Net increase/(decrease) in short-term borrowing 43,941 (5,610) (2,526)
Repayment of long-term debt (3,550) -- (5,000)
Proceeds from issuance of long-term debt -- 800 2,750
Proceeds from issuance of common stock 893 866 468
Proceeds from sale of treasury stock -- -- 218
Payments to acquire treasury stock (253) -- --
Dividends paid (16,926) (13,595) (10,888)
Net cash provided by/(used in) financing activities 164,923 (21,940) 7,948
Net increase/(decrease) in cash and cash equivalents (25,590) 115,502 8,952
Cash and cash equivalents at beginning of year 315,479 199,977 191,025
Cash and cash equivalents at end of year $289,889 315,479 199,977
Supplemental disclosure of cash flow information:
Interest paid $ 79,246 60,380 66,500
Income taxes paid 18,521 16,624 8,554
Reclassification of investment securities to securities available
for sale upon adoption of Statement 115 -- 384,416 --
Transfer of investment securities to securities available for sale
upon adoption of the FASB special report on Statement 115 288,515 -- --
Transfer of investment securities to/(from) securities available for sale -- (213,199) 60,055
Transfer of loans to real estate owned 7,705 9,880 7,011
Transfer of building from real estate owned to premises 2,500 -- 2,557
Increase in dividends payable 829 715 672
Reclassification of trading securities to securities available for sale
upon adoption of Statement 115 -- 2,106 --
Unrealized gain on securities available for sale on January 1, 1994 -- 14,037 --
Deferred tax on unrealized gain on securities available for sale
on January 1, 1994 -- 5,816 --
Change in unrealized (gain)/loss on securities available for sale -- gross (21,127) (14,107) --
Change in deferred tax effect on unrealized gain/(loss) on securities
available for sale 8,723 (5,787) --
See accompanying notes to consolidated financial statements.
</TABLE>
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
Basis of Presentation
The accounting and financial reporting policies of TrustCo Bank Corp NY
(Company or TrustCo) and Trustco Bank, National Association (Bank or Trustco)
conform to general practices within the banking industry and are in
accordance with generally accepted accounting principles. A description of
the more significant policies follows.
Consolidation
The consolidated financial statements of the Company include the accounts of
the subsidiaries after elimination of all significant intercompany accounts
and transactions.
Securities Available for Sale
Securities available for sale are carried at market value with any unrealized
appreciation or depreciation of value, net of tax, included as an element of
the capital accounts. Management maintains an available for sale portfolio in
order to provide maximum flexibility in future balance sheet management. The
designation of available for sale is made at the time of purchase based upon
management's intent to hold the securities for an indefinite period of time.
These securities, however, would be available for sale in response to changes
in market interest rates, related changes in liquidity needs, or changes in
the availability of and yield on alternative investments. Unrealized losses
on securities that reflect a decline in value which is other than temporary,
if any, are charged to income. Nonmarketable equity securities (principally
stock of the Federal Reserve Bank and the Federal Home Loan Bank) are
included in securities available for sale at cost since there is no readily
available market value.
Gains and losses on the sale of securities available for sale are based on
the amortized cost of the specific security sold.
Investment Securities
Securities classified as investment securities are held to maturity to meet
longer term investment objectives, including yield and liquidity purposes.
At the time of purchase, securities are identified as held for investment
based upon the Company's intention and ability to hold the securities to
maturity. Investment securities are carried at cost, adjusted for
amortization of premium and accretion of discounts on a method that equates
to the level yield. Unrealized losses on securities that reflect a decline
in value which is other than temporary, if any, are charged to income.
Loans
Loans are carried at the principal amount outstanding net of unearned income
and unamortized loan fees and costs, which are recognized as income over the
applicable loan term.
Nonperforming loans include nonaccrual loans, restructured loans, and loans
which are 90 days or more past due and still accruing interest. Generally,
loans are placed in nonaccrual status, either due to the delinquency status
of principal and/or interest payments, or a judgment by management that,
although payments of principal and/or interest are current, such action is
prudent. Future payments received on nonperforming loans are recorded as
interest income or principal reductions based upon management's ultimate
expectation for collection.
Impaired loans are commercial and commercial real estate loans in nonaccrual
status and loans restructured in a troubled debt restructuring since January
1, 1995.
Allowance for Loan Losses
An allowance for loan losses is maintained at a level considered adequate by
management to provide for potential loan losses based on consideration of the
credit risk of the loan portfolio, including a review of past experience,
current economic conditions, and underlying collateral value. The allowance
is increased by provisions charged against income and reduced by net charge
offs.
In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Company's allowance for loan
losses. Such agencies may require the Company to recognize additions to the
allowances based on their judgments of information available to them at the
time of their examination.
Bank Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation and
amortization computed on either the straightline or accelerated methods over
the remaining useful lives of the assets.
Real Estate Owned
Real estate owned are assets taken through foreclosures on loans.
Foreclosed assets held for sale are recorded on an individual basis at the
lower of (1) fair value minus estimated costs to sell or (2) "cost" (which is
the fair value at initial foreclosure). When a property is acquired, the
excess of the loan balance over fair value is charged to the allowance for
loan losses. Subsequent write downs are included in other noninterest
expense.
Income Taxes
Effective January 1, 1993, TrustCo adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." Deferred taxes are recorded
for the future tax consequences of events that have been recognized in the
financial statements or tax returns, based upon enacted tax laws and rates.
Deferred tax assets are recognized subject to management's judgment that
realization is more likely than not.
Dividend Restrictions
Banking regulations restrict the amount of cash dividends which may be paid
during a year by the Bank to the Parent Company without the written consent
of the appropriate bank regulatory agency. Based on these restrictions, the
Bank could pay $20.6 million plus 1996 net profits. For all practical
purposes, TrustCo could not declare dividends to shareholders materially in
excess of the aggregate amount of dividends that could be paid by the Bank.
Pension Plan
The Company has a defined benefit pension plan covering substantially all of
its employees. The benefits are based on years of service and the
employee's compensation.
Reclassification of Prior Year Statements
It is the Company's policy to reclassify prior year financial statements to
conform to the current year presentation.
(2) Balances at Other Banks
The Bank is required to maintain certain reserves of vault cash and/or
deposits with the Federal Reserve Bank. The amount of this reserve
requirement, included in cash and due from banks, was approximately
$15,571,000 and $14,576,000 at December 31, 1995 and 1994, respectively.
(3) Securities Available for Sale
The amortized cost and approximate market value of the securities available
for sale are as follows:
<TABLE>
<CAPTION>
(in thousands) At December 31, 1995
Gross Gross Approximate
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasuries
and agencies $432,710 14,806 173 447,343
States and political
subdivisions 68,151 2,256 36 70,371
Mortgage-backed
securities 78,481 1,934 131 80,284
Other 39,808 2,400 -- 42,208
Total securities
available for sale $619,150 21,396 340 640,206
</TABLE>
<TABLE>
<CAPTION>
(in thousands) At December 31, 1994
Gross Gross Approximate
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasuries
and agencies $102,947 32 60 102,919
Other 14,581 -- 42 14,539
Total securities
available for sale $117,528 32 102 117,458
</TABLE>
The following table distributes the securities available for sale portfolio
as of December 31, 1995, based on the securities' final maturity
(mortgage-backed securities are stated using average life):
<TABLE>
<CAPTION>
(in thousands) Approximate
Amortized Market
Cost Value
<S> <C> <C>
Due in one year or less $ 25,955 26,245
Due after one year through five years 148,775 155,810
Due after five years through ten years 260,307 267,633
Due after ten years 184,113 190,518
$619,150 640,206
</TABLE>
Included in the table above are $24,118,000 at amortized cost and $24,918,000
at market value of equity securities categorized as due after 10 years.
Proceeds from sales of securities available for sale during 1995, 1994, and
1993 were approximately $243,597,000, $1,015,688,000, and $99,475,000,
respectively.
The gross realized gains on sales of securities available for sale in 1995,
1994, and 1993 were approximately $1,220,000, $5,799,000, and $5,867,000,
respectively.
Gross realized losses on the sales of securities available for sale in 1995,
1994, and 1993 were $936,000, $14,682,000, and $2,000, respectively.
The amortized cost of securities available for sale that have been pledged to
secure public deposits and for other purposes required by law amounted to
$250,090,000 and $44,430,000 at December 31, 1995 and 1994, respectively.
(4) Investment Securities
There were no investment securities as of December 31, 1995.
The amortized cost and approximate market value of the investment securities
at December 31, 1994 were as follows:
<TABLE>
<CAPTION>
(in thousands)
Gross Gross Approximate
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasuries
and agencies $145,542 376 4,801 141,117
States and political
subdivisions 44,222 125 520 43,827
Mortgage-backed
securities 143,082 280 8,460 134,902
Other 15,012 -- 403 14,609
Total investment
securities $347,858 781 14,184 334,455
</TABLE>
There were no sales of investment securities during 1995 and 1994. Proceeds
from sales of investment securities during 1993 were
$1,877,000. Gross realized gains on sales of investment securities in 1993
were approximately $229,000 and gross realized losses on sales of investment
securities in 1993 were approximately $21,000.
The book value of investment securities pledged to secure public deposits
and for other purposes required by law was $135,050,000 at December 31,
1994.
The Company adopted Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," as of
January 1, 1994. The Company classified certain of the investment securities
as being available for sale and reclassified these balances to a separate
line on the consolidated statement of condition.
In December 1995, the Company reclassified the entire portfolio of investment
securities to the category of securities available for sale. This
reclassification was made in response to a one-time transfer allowed by the
Financial Accounting Standards Board and the various federal banking
regulators.
(5) Loans and Allowance for Loan Losses
A summary of loans by category is as follows:
<TABLE>
<CAPTION>
(in thousands) At December 31,
1995 1994
<S> <C> <C>
Commercial $ 225,174 229,944
Real estate
Construction 11,239 12,935
Residential mortgage loans 760,276 677,691
Home equity line of credit 194,744 207,517
Installment loans 36,493 35,671
Total loans 1,227,926 1,163,758
Less: Unearned income 1,784 1,969
Allowance for loan losses 48,320 38,851
Net loans $1,177,822 1,122,938
</TABLE>
At December 31, 1995 and 1994, loans to executive officers, directors, and
to associates of such persons aggregated $7,742,000
and $7,641,000, respectively. During 1995, new loans of $5,973,000 were made
and repayments of loans totalled $5,872,000. In the opinion of management,
such loans were made in the ordinary course of business on substantially the
same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions. These loans do not involve more than
normal risk of collectibility or present other unfavorable features.
TrustCo lends primarily in the Capital District region of New York State and
in the geographic territory surrounding its borders. Although the loan
portfolio is diversified, a substantial portion of its debtors' ability to
repay is dependent upon the economic conditions prevailing in New York State.
The following table sets forth the information with regard to nonperforming
loans:
<TABLE>
<CAPTION>
(in thousands) At December 31,
1995 1994 1993
<S> <C> <C> <C>
Loans in nonaccrual status $12,832 6,370 10,227
Loans contractually past due
90 days or more and still
accruing interest 1,696 4,436 6,567
Restructured loans 1,130 910 --
Total nonperforming loans $15,658 11,716 16,794
</TABLE>
Interest on nonaccrual and restructured loans of $1.3 million, $639 thousand,
and $964 thousand would have been earned in
accordance with the original contractual terms of the loans in 1995,
1994, and 1993, respectively. Approximately $607 thousand,
$292 thousand and $288 thousand of interest on nonaccrual and restructured
loans was collected and recognized as income in 1995, 1994, and 1993,
respectively. There are no commitments to extend further credit on nonaccrual
or restructured loans.
Transactions in the allowance for loan losses account are summarized as
follows:
<TABLE>
<CAPTION>
(in thousands) For the years ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Balance at beginning of year $38,851 34,087 26,919
Provision for loan losses 12,698 8,056 11,576
Loans charged off (7,338) (4,824) (6,741)
Recoveries on loans
previously charged off 4,109 1,532 2,333
Balance at year end $48,320 38,851 34,087
</TABLE>
Effective January 1, 1995, the Company adopted Statement of Financial
Accounting Standards No. 114 (Statement 114), "Accounting
by Creditors for Impairment of a Loan." Statement 114 was amended by
Statement of Financial Accounting Standards No. 118 (Statement 118),
"Accounting by Creditors for Impairment of a Loan -- Income Recognition and
Disclosure." These new accounting standards prescribe recognition criteria
for loan impairment and measurement methods for impaired loans, and loans
whose terms are modified in a troubled debt restructuring subsequent to the
adoption of these new standards. A loan is considered impaired when it is
probable that the borrower will be unable to repay the loan according to the
original contractual terms of the loan agreement. These new standards are
applicable principally to commercial and commercial real estate loans,
however, certain provisions dealing with restructured loans also apply to the
retail loan products. Once a loan is identified as impaired, the new
accounting standards require measurement of the loan at the lower of fair
value of the anticipated proceeds to be received or the recorded investment
in the loan. The accounting standards provide certain guidelines as to how
fair value is to be determined. As of January 1, 1995, the Company adopted
the provisions of Statements 114 and 118 and has provided the required
disclosures.
In addition, Statement 114 substantially modified the definition of
"in-substance foreclosure" loans. Consequently, certain loans identified at
year end 1994 as being in-substance foreclosure loans, and classified as real
estate owned, have been reclassified into the loan portfolio. At January 1,
1995, $9.2 million of loans previously included in real estate owned have
been reclassified to the loan balance.
At December 31, 1995, there were $9.4 million of commercial and commercial
real estate loans that were in nonaccrual status and were classified as
impaired loans. In addition, there were newly restructured retail loans
totalling $600 thousand that as of December 31, 1995, are identified as
impaired loans.
None of the allowance for loan losses has been allocated to these impaired
loans because of the significant charge offs that have been taken in prior
years, and the fact that the collateral values support the loan balances.
Cash payments received are normally applied to reduce the outstanding loan
balance on the impaired loans (exclusive of cash payments received on
restructured loans).
During 1995 the average balance of impaired loans was $10.5 million, and
there was approximately $405 thousand of interest income recorded on these
loans in the accompanying consolidated statement of income.
There were $7.1 million and $8.4 million of loans pledged for various
purposes at December 31, 1995 and 1994, respectively.
(6) Bank Premises and Equipment
A summary of premises and equipment at December 31, 1995 and 1994 follows:
<TABLE>
<CAPTION>
(in thousands) 1995 1994
<S> <C> <C>
Land $ 3,593 3,958
Buildings 25,075 22,155
Furniture, fixtures and equipment 15,611 15,466
Leasehold improvements 3,458 2,936
47,737 44,515
Accumulated depreciation
and amortization (22,729) (20,638)
Total $ 25,008 23,877
</TABLE>
Depreciation and amortization expense approximated $3,640,000, $2,749,000,
and $2,373,000 for the years 1995, 1994, and 1993,
respectively. Occupancy expense of Bank premises included rental expense of
$1,124,000, $1,053,000, and $1,388,000 for the years 1995, 1994, and 1993,
respectively.
(7) Short-term Borrowings
Short-term borrowings, consisting primarily of securities sold under
agreements to repurchase with maturities of generally less than ninety days
and the Trustco Short Term Investment Fund, were as follows:
<TABLE>
<CAPTION>
(dollars in thousands) 1995 1994
<S> <C> <C>
Amount outstanding at December 31 $56,654 12,713
Maximum amount outstanding at
any month end 62,164 21,746
Average amount outstanding 38,090 18,129
Weighted average interest rate:
For the year 4.66% 2.54
As of year end 4.83 3.36
</TABLE>
(8) Income Taxes
A summary of income tax expense/(benefit) included in the consolidated
statements of income follows:
<TABLE>
<CAPTION>
(in thousands) For the years ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Current tax expense:
Federal $16,919 12,412 10,372
State 5,646 3,209 2,098
Total current tax expense 22,565 15,621 12,470
Deferred tax expense/(benefit) (9,811) (2,981) 46
Total income tax expense $12,754 12,640 12,516
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax
liabilities at December 31, 1995 and 1994 is presented below.
<TABLE>
<CAPTION>
(in thousands) December 31, 1995
Deductible Taxable
temporary temporary
differences differences
<S> <C> <C>
Bond accounting $ 18 --
Benefits and deferred remuneration 2,433 --
Deferred loan fees, net 1,085 --
Difference in reporting the provision for
loan losses, net 23,477 --
Other income or expense not utilized for
tax purposes 4,386 --
Other items 1,098 --
Total 32,497 --
Valuation reserve (2,051) --
Net deferred tax asset at December 31, 1995 30,446
Net deferred tax asset at December 31, 1994 20,635
Deferred tax benefit for 1995 $(9,811)
</TABLE>
<TABLE>
<CAPTION>
(in thousands) December 31, 1994
Deductible Taxable
temporary temporary
differences differences
<S> <C> <C>
Bond accounting $ 107 --
Benefits and deferred remuneration 2,326 --
Deferred loan fees, net 1,391 --
Difference in reporting the provision for
loan losses, net 18,301 --
Other income or expense not utilized for
tax purposes 2,174 --
Other items 1,042 --
Total 25,341 --
Valuation reserve (4,706) --
Net deferred tax asset at December 31, 1994 20,635
Net deferred tax asset at December 31, 1993 17,654
Deferred tax benefit for 1994 $(2,981)
</TABLE>
Deferred tax assets are recognized subject to management's judgment that
realization is more likely than not. During 1995, the
valuation reserve was reduced as a result of the resolution of several tax
return audits and management's reassessment of the realization of certain
deferred tax assets. The valuation allowance of $2,051,000 at December 31,
1995 is primarily reserved for federal and state tax law restrictions on the
deductibility of certain temporary differences. The valuation allowance of
$4,706,000 at December 31, 1994 was primarily reserved for federal and state
tax law restrictions on the deductibility of certain temporary differences,
as well as uncertainty regarding the ultimate realization of certain other
deferred tax assets. Based primarily on the sufficiency of historical and
future taxable income, management believes it is more likely than not that
the remaining net deferred tax asset of $30,446,000 and $20,635,000 at
December 31, 1995 and 1994, respectively, will be realized.
In addition to the deferred tax items described in the preceding table, the
Company also has a deferred tax liability of $8,693,000 at December 31, 1995,
and a deferred tax asset of $29 thousand at December 31, 1994, relating to
the net unrealized gains and losses, respectively, on securities available
for sale.
The effective tax rates differ from the statutory federal income tax rate.
The reasons for these differences are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Statutory federal income tax rate 35.0% 35.0 35.0
Increase/(decrease) in taxes resulting from:
Tax exempt income (3.1) (1.9) (2.2)
State income tax, net of federal
tax benefit 9.6 4.9 4.0
Effect of (increase)/decrease in tax rate
on deferred tax benefit -- 1.1 (1.4)
Reduction in valuation reserve (6.9) (3.5) --
Other items (1.3) -- (0.8)
Effective income tax rate 33.3% 35.6 34.6
</TABLE>
(9) Employee Benefits
The Company maintains a trusteed non-contributory pension plan covering
employees that have completed one year of employment and 1,000 hours of
service. The benefits are based on the sum of (a) a benefit equal to a prior
service benefit plus the average of the employees' highest five consecutive
years' compensation in the ten years preceding retirement multiplied by a
percentage of service after a specified date plus (b) a benefit based upon
career average compensation. The amounts contributed to the plan are
determined annually on the basis of (a) the maximum amount that can be
deducted for federal income tax purposes or (b) the amount certified by a
consulting actuary as necessary to avoid an accumulated funding deficiency as
defined by the Employee Retirement Income Security Act of 1974. Contributions
are intended to provide not only for benefits attributed to service to date
but also for those expected to be earned in the future. Assets of the plan
are invested primarily in common stock and fixed income common funds
administered by the Bank. The following table sets forth the plans' funded
status and amounts recognized in the Company's consolidated statements of
condition at December 31, 1995 and 1994:
<TABLE>
Actuarial Present Value of Benefit Obligations:
<CAPTION>
(in thousands) 1995 1994
<S> <C> <C>
Accumulated benefit obligation,
including vested benefits of $12,304 and
$12,768 in 1995 and 1994, respectively $(13,715) (12,946)
Projected benefit obligation for service
rendered to date (15,037) (14,093)
Plan assets at fair value 22,621 18,575
Plan assets in excess of projected
benefit obligation 7,584 4,482
Unrecognized net gain from past experience
different from that assumed and effects
of changes in assumptions (5,110) (1,825)
Unrecognized prior service cost (465) (511)
Unrecognized net asset at transition being
recognized over 5 remaining years (737) (884)
Prepaid pension expense $ 1,272 1,262
</TABLE>
<TABLE>
Net Pension Benefit for 1995, 1994 and 1993
Included the Following Components:
<CAPTION>
(in thousands) 1995 1994 1993
<S> <C> <C> <C>
Service cost -- benefits earned
during the period $ 511 518 501
Interest cost on projected
benefit obligation 920 874 811
Actual return on plan assets (5,080) (39) (1,064)
Net amortization and deferral 3,639 (1,478) (500)
Net periodic pension benefit $ (10) (125) (252)
</TABLE>
The weighted average discount rate and the rate of increase in future
compensation levels used in determining the actuarial
present value of projected benefit obligations, and the weighted average
expected long-term rate of return on pension assets used in determining net
periodic pension costs/(benefits) were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Weighted average discount rate 6.50% 6.75 6.75
Rate of increase in future
compensation 6.00 5.00 5.00
Expected long-term rate of return
on assets 6.75 6.50 6.50
</TABLE>
The Company also has an unfunded defined contribution supplementary pension
plan under which additional retirement benefits are
accrued for eligible executive and senior officers. The expense recorded for
this plan was $1,970,000, $1,780,000, and $489,000 in 1995, 1994, and 1993,
respectively.
The Company provides a profit-sharing plan for substantially all employees.
The expense of this plan, which is based on management discretion as defined
in the plan, amounted to $1,290,000 in 1995, $1,230,000 in 1994, and
$1,470,000 in 1993.
The Company also has an executive incentive plan. The expense of this plan is
based on the Company's performance and estimated distributions to
participants are accrued during the year and generally paid in the following
year. The expense recorded for this plan was $1,655,000, $1,291,000, and
$419,000 in 1995, 1994, and 1993, respectively.
The following table presents a summary of activity with respect to the
Company's Stock Option Plan:
<TABLE>
<CAPTION>
Outstanding options Exercisable options
Average Average
option option
Shares price Shares price
<S> <C> <C> <C> <C>
Balance, January 1, 1993 860,371 $ 9.35 383,260 $ 8.00
New options awarded -- 1993 369,600 15.30 73,920 15.30
Exercised options -- 1993 58,283 7.39 58,283 7.39
Options became exercisable -- -- 137,741 8.00
Balance, December 31, 1993 1,171,688 10.29 536,638 9.68
New options awarded -- 1994 324,060 15.24 64,812 15.24
Cancelled options -- 1994 107,117 14.53 1,320 15.30
Exercised options -- 1994 85,921 10.09 85,921 10.09
Options became exercisable -- -- 193,249 9.68
Balance, December 31, 1994 1,302,710 12.12 707,458 10.68
New options awarded -- 1995 295,800 18.68 59,160 18.68
Exercised options -- 1995 111,914 7.95 111,914 7.95
Options became exercisable -- -- 242,417 12.71
Balance, December 31, 1995 1,486,596 $13.74 897,121 $12.10
</TABLE>
Under the terms of the Directors' Stock Option Plan, 132,000 shares are
reserved for director options. At December 31, 1995, 50,932 options remain
issued and outstanding with an average exercise price of $17.31.
In December 1990, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 106 (Statement 106), "Employers'
Accounting for Postretirement Benefits Other Than Pensions." Statement 106
requires a calculation of the present value of expected benefits to be paid
to employees after their retirement and an allocation of those benefits to
the periods that employees render service to earn the benefits. The Company
permits retirees under age 65 to participate in the Company's medical plan by
paying the same premium as the active employees. At age 65, the Bank provides
a Medicare Supplemental Program to retirees.
The Company adopted Statement 106 effective January 1, 1993, and has reported
the cumulative effect of that change in the December 31, 1993 Consolidated
Statement of Income.
Accumulated postretirement benefit obligations at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
(in thousands) 1995 1994
<S> <C> <C>
Retirees $4,000 2,850
Fully eligible active plan participants 651 1,381
Other active plan participants 1,929 2,911
Accumulated postretirement
benefit obligation $6,580 7,142
Plan assets, at fair value $8,058 6,358
</TABLE>
Net periodic postretirement benefit costs for 1995, 1994, and 1993 includes
the following components:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
<S> <C> <C> <C>
Service cost $ 325 362 357
Interest cost 445 462 389
Return on plan assets (248) (429) (279)
Transition obligation -- -- 5,260
Net period postretirement benefit cost $ 522 395 5,727
</TABLE>
The Company funded the plan in full through the use of a benefit trust during
the first quarter of 1993. Assets of the plan are
invested primarily in common stock and fixed income common funds administered
by the Bank.
The trust holding the plan assets is subject to federal income taxes at a
35.0 percent tax rate. The expected long-term rate of return on plan assets,
after estimated income taxes, was 4.0%, 4.2%, and 3.3% for the years ended
December 31, 1995, 1994, and 1993, respectively. For measurement purposes, an
8 percent annual rate of increase in the per capita cost of covered benefits
(i.e., health care cost trend rate) was assumed for 1995 and thereafter.
The health care cost trend rate assumption has a significant effect on the
amounts reported. To illustrate, increasing the assumed health care cost
trend rates by one percentage point in each year would increase the
accumulated postretirement benefit obligation as of December 31, 1995, by
approximately $1.1 million, and the aggregate of the service and the interest
cost components of net periodic postretirement benefit cost for the year
ended December 31, 1995, by approximately $189 thousand.
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 6.50 percent at December 31, 1995 and
6.75 percent at December 31, 1994.
(10) Lease Commitments and Contingent Liabilities
(a) Leases
The Bank leases certain banking premises. These leases are accounted for as
operating leases with minimum rental commitments in the amounts presented
below. The majority of these leases contain options to renew.
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
1996 $1,052
1997 971
1998 886
1999 845
2000 794
2001 and after 3,750
$8,298
</TABLE>
(b) Litigation
Existing litigation arising in the normal course of business is not expected
to result in any material loss to the Company.
(11) Off-Balance Sheet Financing
Loan commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require a fee. Commitments sometimes expire without being
drawn upon. Therefore, the total commitment amounts do not necessarily
represent future cash requirements. These arrangements have credit risk
essentially the same as that involved in extending loans to customers and are
subject to the Bank's normal credit policies, including obtaining collateral.
The Bank's exposure to credit loss for loan commitments, including unused
lines of credit, at December 31, 1995 and 1994 was $220.8 million and $217.3
million, respectively.
Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. These arrangements
have credit risk essentially the same as that involved in extending loans to
customers and are subject to the Bank's normal credit policies, including
obtaining collateral. The Bank's exposure to credit loss for standby letters
of credit at December 31, 1995 and 1994 was $19.0 million and $20.8 million,
respectively. No losses are anticipated as a result of loan commitments or
standby letters of credit.
(12) Fair Value of Financial Instruments
The fair values shown below represent management's estimates of values at
which the various types of financial instruments could be exchanged in
transactions between willing, unrelated parties. They do not necessarily
represent amounts that would be received or paid in actual trades of
specific financial instruments.
<TABLE>
<CAPTION>
(in thousands) As of December 31, 1995
Carrying Fair
value value
<S> <C> <C>
Financial assets:
Cash and cash equivalents $ 289,889 289,889
Securities available for sale 640,206 640,206
Loans 1,177,822 1,242,507
Accrued interest receivable 18,276 18,276
Financial liabilities:
Demand deposits 111,743 111,743
Interest-bearing deposits 1,818,906 1,829,052
Borrowings 56,654 56,654
Accrued interest payable 2,797 2,797
</TABLE>
<TABLE>
<CAPTION>
(in thousands) As of December 31, 1994
Carrying Fair
value value
<S> <C> <C>
Financial assets:
Cash and cash equivalents $ 315,479 315,479
Securities available for sale 117,458 117,458
Investment securities 347,858 334,455
Loans 1,122,938 1,104,401
Accrued interest receivable 14,690 14,690
Financial liabilities:
Demand deposits 93,496 93,496
Interest-bearing deposits 1,696,335 1,696,335
Borrowings 16,263 16,263
Accrued interest payable 1,843 1,843
</TABLE>
The specific estimation methods and assumptions used can have a substantial
impact on the resulting fair values of financial instruments. Following is a
brief summary of the significant methods and assumptions used in the above
table:
Cash and Cash Equivalents
The carrying values of these financial instruments approximates fair values.
Securities
Fair values for all securities portfolios are based upon quoted market
prices, where available. The carrying value of certain local, unrated
municipal obligations was used as an approximation of fair value.
Loans
The fair values of all loans are estimated using discounted cash flow
analyses with discount rates equal to the interest rates currently being
offered for loans with similar terms to borrowers of similar credit quality.
Deposit Liabilities
The fair values disclosed for noninterest-bearing deposits, NOW accounts,
savings accounts and money market accounts are, by definition, equal to the
amount payable on demand at the balance sheet date. The carrying value of all
variable rate certificates of deposit is assumed to approximate fair value.
The fair value of fixed rate certificates of deposit is estimated using
discounted cash flow analyses with discount rates equal to the interest rates
currently being offered on certificates of similar size and remaining
maturity. For 1995, the fair value of fixed rate certificates of deposit is
less than the carrying value because the average rate paid by the Company on
the deposits at December 31, 1995, is greater than the market rates at that
date. At December 31, 1994, the fair value of fixed rate certificates of
deposit is assumed to equal carrying value due to the interest rate
environment at year end 1994.
Borrowings and Other Financial Instruments
The fair value of all borrowings and other financial instruments is assumed
to be the carrying value.
Financial Instruments with Off-Balance Sheet Risk
The Company is a party to financial instruments with off-balance sheet risk.
Such financial instruments consist of commitments to extend financing and
letters of credit. If the commitments are exercised by the prospective
borrowers, these financial instruments will become interest-earning assets of
the Company. If the commitments expire, the Company retains any fees paid by
the prospective borrower. The fair value of commitments is estimated based
upon fees currently charged to enter into similar agreements, taking into
consideration the remaining terms of the agreements and the present credit
worthiness of the borrower. For fixed rate commitments, the fair value
estimation takes into consideration an interest rate risk factor. The fair
value of these off-balance sheet items at December 31, 1995 and 1994
approximates the recorded amounts of the related fees, which are considered
to be immaterial.
The Company has no derivative investment products at year end 1995 and 1994,
nor has the Company ever invested in such investment vehicles. Therefore, the
disclosures as required by Statement of Financial Accounting Standards No.
119, "Disclosures about Derivative Financial Instruments and Fair Value of
Financial Instruments," are not presented except as it relates to fair value
disclosures in this footnote.
(13) Parent Company Only
The following statements pertain to TrustCo Bank Corp NY (Parent Company):
<TABLE>
Statements of Income
<CAPTION>
(in thousands) Years Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Income:
Dividends and interest
from subsidiaries $28,416 14,820 11,061
Gain on sale of securities 92 133 374
Income from other investments 66 66 72
Total income 28,574 15,019 11,507
Expense:
Interest on long-term debt -- -- 343
Operating supplies 126 129 129
Professional services 200 145 128
Miscellaneous expense 70 48 33
Total expense 396 322 633
Income before income
taxes and undistributed
net income of subsidiaries 28,178 14,697 10,874
Income tax expense/(benefit) (32) 1 52
Income before equity in
undistributed net
income of subsidiaries 28,210 14,696 10,822
(Distributions in excess of)/equity
in undistributed net income
of subsidiaries (2,683) 8,192 9,503
Net income $25,527 22,888 20,325
</TABLE>
<TABLE>
Statements of Condition
<CAPTION>
(in thousands) December 31,
1995 1994
<S> <C> <C>
Assets:
Cash in subsidiary bank $ 7,187 8,229
Notes and receivables from subsidiaries 3,617 --
Investments in subsidiaries 141,526 132,300
Securities available for sale 12,601 2,300
Other assets 92 126
Bank premises and equipment -- 389
Total assets $165,023 143,344
Liabilities and shareholders' equity:
Accrued expenses and other
liabilities $ 4,924 4,061
Total liabilities 4,924 4,061
Shareholders' equity 160,099 139,283
Total liabilities and
shareholders' equity $165,023 143,344
</TABLE>
<TABLE>
Statements of Cash Flows
<CAPTION>
(in thousands) For the Years Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Increase/(decrease) in cash and cash equivalents:
Cash flows from operating activities:
Net income $ 25,527 22,888 20,325
Adjustments to reconcile net income to net cash
provided by operating activities:
Distributions in excess of/(undistributed income) of subsidiaries 2,683 (8,192) (9,503)
Decrease in receivable from subsidiary -- -- 54
Gain on sales of securities (92) (133) (374)
Decrease in taxes and other assets 78 1 53
Increase/(decrease) in accrued expenses 31 34 (120)
Total adjustments 2,700 (8,290) (9,890)
Net cash provided by operating activities 28,227 14,598 10,435
Cash flows from investing activities:
Proceeds from sales or maturities of investment securities -- -- 1,877
Proceeds from sale of securities available for sale 1,285 1,603 --
Purchase of trading securities -- -- (1,940)
Purchase of securities (10,651) (1,668) (8)
Net decrease in short-term loaned funds to subsidiary -- -- 2,500
Increase in investment in and notes and receivables from subsidiaries (3,617) -- (1)
Net cash provided by/(used in) investing activities (12,983) (65) 2,428
Cash flows from financing activities:
Repayment of long-term debt -- -- (5,000)
Proceeds from issuance of common stock 893 866 468
Dividends paid (16,926) (13,595) (10,888)
Payments to acquire treasury stock (253) -- --
Proceeds from sale of treasury stock -- -- 218
Net cash used in financing activities (16,286) (12,729) (15,202)
Net increase/(decrease) in cash and cash equivalents (1,042) 1,804 (2,339)
Cash and cash equivalents at beginning of year 8,229 6,425 8,764
Cash and cash equivalents at end of year $ 7,187 8,229 6,425
Supplemental disclosure of cash flow information:
Increase in dividends payable $ 829 715 672
Reclassification of trading securities to securities available for sale
upon adoption of Statement 115 -- 2,106 --
Change in unrealized (gain)/loss on available for sale securities -- gross (843) 42 --
Reclassification of fixed assets to other assets 389 -- --
Change in deferred tax effect on unrealized gain/(loss) on
securities available for sale 348 (18) --
</TABLE>
TrustCo Bank Corp NY
Officers and Board of Directors
OFFICERS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Robert A. McCormick
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
Robert T. Cushing
VICE PRESIDENT
Nancy A. McNamara
VICE PRESIDENT AND ASSISTANT SECRETARY
Ralph A. Pidgeon
SECRETARY
William F. Terry
BOARD OF DIRECTORS
Barton A. Andreoli
President
Towne Construction and Paving Corp.
Lionel O. Barthold
Chairman, Power Technologies, Inc.
M. Norman Brickman
President, D. Brickman, Inc.
Charles W. Carl, Jr.
Retired, Former President, The Carl Company
Robert A. McCormick
President and Chief Executive Officer
Trustco Bank
Nancy A. McNamara
Senior Vice President
Trustco Bank
John S. Morris, Ph. D.
President Emeritus, Union College and Former
Chancellor, Union University
James H. Murphy, D.D.S.
Orthodontist
Richard J. Murray, Jr.
President, R.J. Murray Co., Inc
Kenneth C. Petersen
President
Schenectady International, Inc.
William D. Powers
Chairman
New York Republican State Committee
William J. Purdy
President
Welbourne & Purdy Realty, Inc.
William F. Terry
Senior Vice President and Secretary
Trustco Bank
Philip J. Thompson
Retired, Former Vice President and Director
New York Telephone
Directors of TrustCo Bank Corp NY are also Directors of Trustco Bank
HONORARY DIRECTORS
Dr. Caryl P. Haskins
Bernard J. King
H. Gladstone McKeon
William H. Milton, III
Daniel J. Rourke, M.D.
Anthony M. Salerno
Edwin O. Salisbury
Harry E. Whittingham, Jr.
Trustco Bank Officers
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
Robert A. McCormick
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Robert T. Cushing
SENIOR VICE PRESIDENT
Nancy A. McNamara
SENIOR VICE PRESIDENT
Ralph A. Pidgeon
SENIOR VICE PRESIDENT
AND SECRETARY
William F. Terry
AUDITOR
John C. Fay
ACCOUNTING/FINANCE,
DATA PROCESSING,
GENERAL SERVICES,
MANAGEMENT
INFORMATION SYSTEMS
Senior Vice President and
Chief Financial Officer
Robert T. Cushing
ACCOUNTING/FINANCE
Vice Presidents
Linda C. Christensen
Jeffrey S. Farbaniec
Management Information Officer
Lynn D. Hackler
DATA PROCESSING
Administrative Vice President
William H. Milton
Senior Information Services Officer
Daneille M. Eddy
LEGAL COUNSEL, LOAN
DIVISION, MARKETING/
COMMUNITY RELATIONS
Senior Vice President
Nancy A. McNamara
LEGAL COUNSEL
Administrative Vice President
Henry C. Collins
Vice President
George W. Wickswat
LOAN DIVISION
COMMERCIAL LOANS
Vice President
Robert J. McCormick
Senior Commercial Loan Officer
Elinore J. Vine
Commercial Loan Officer
Eric W. Schreck
MORTGAGE LOANS
Vice President
Donald J. Csaposs
MARKETING/COMMUNITY RELATIONS
Vice President
Madeline S. Busch
BRANCHES, INSTALLMENT
LOANS/CREDIT CARDS,
RETIREMENT/GOVERNMENT ACCOUNTS
Senior Vice President
Ralph A. Pidgeon
BRANCH OFFICERS
Richard E. Bailey
Thomas H. Lauster
INSTALLMENT LOANS/
CREDIT CARDS
Senior Installment Loan Officer
Thomas M. Poitras
BANK OPERATIONS
Senior Vice President
and Secretary
William F. Terry
Administrative Vice President
James D. McLoughlin
Vice President
Ann M. Noble
HUMAN RESOURCES
Senior Personnel Officer
Cheri J. Parvis
TRUST DEPARTMENT
Administrative Vice President
Carroll E. Winch
Vice Presidents
Ann Marie Franke
James Niland
Matthew G. Waschull
Trust Officers
John P. Fulgan
Richard W. Provost
J. Jeffrey Underhill
Investment Officers
William M. McCartan
Robert Scribner
Branch Locations
Altamont Ave. Office
1400 Altamont Ave.
Schenectady
Telephone: 356-1317
Altamont Ave. West Office
1900 Altamont Ave.
Rotterdam
Telephone: 355-1900
Bay Road Office
292 Bay Road
Queensbury
Telephone: 792-2691
Brandywine Office
State St. at Brandywine Ave.
Schenectady
Telephone: 346-4295
Central Avenue Office
163 Central Ave.
Albany
Telephone: 426-7291
Clifton Country Road Office
7 Clifton Country Road
Clifton Park
Telephone: 371-5002
Clifton Park Office
1018 Route 146
Clifton Park
Telephone: 371-8451
Colonie Office
1892 Central Ave.
Colonie Plaza, Colonie
Telephone: 456-0041
Delmar Office
167 Delaware Ave.
Delmar
Telephone: 439-9941
East Greenbush Office
501 Columbia Turnpike
Rensselaer
Telephone: 479-7233
Exit 8/Crescent Rd. Office
CVS Plaza
Clifton Park
Telephone: 383-0113
Glens Falls Office
3 Warren Street
Glens Falls
Telephone: 798-8131
Greenwich Office
131 Main St.
Greenwich
Telephone: 692-2233
Guilderland Office
3900 Carman Road
Schenectady
Telephone: 355-4890
Halfmoon Office
Country Dollar Plaza
Halfmoon
Telephone: 371-0593
Hoosick Falls Office
47 Main St.
Hoosick Falls
Telephone: 686-5352
Hudson Office
507 Warren St.
Hudson
Telephone: 828-9434
Hudson Falls Office
3376 Burgoyne Avenue
Hudson Falls
Telephone: 747-0886
Latham Office
1 Johnson Road
Latham
Telephone: 785-0761
Loudon Plaza Office
372 Northern Blvd.
Albany
Telephone: 462-6668
Madison Avenue Office
1084 Madison Ave.
Albany
Telephone: 489-4711
Main Office
320 State St.
Schenectady
Telephone: 377-3311
Malta Mall Office
43 Round Lake Road
Ballston Lake
Telephone: 899-1558
Mayfair Office
Saratoga Road at Mayfair
Glenville
Telephone: 399-9121
Mechanicville Office
9 Price Chopper Plaza
Mechanicville
Telephone: 664-1059
Mont Pleasant Office
Crane St. at Main Ave.
Schenectady
Telephone: 346-1267
New Scotland Office
301 New Scotland Ave.
Albany
Telephone: 438-7838
Newton Plaza Office
588 New Loudon Road
Latham
Telephone: 786-3687
Niskayuna-Woodlawn Office
3461 State St.
Schenectady
Telephone: 377-2264
Plaza Seven Office
1208 Troy-Schenectady Road
Latham
Telephone: 785-4744
Queensbury Office
118 Quaker Road
Suite 9, Queensbury
Telephone: 798-7226
Rotterdam Office
Curry Road Shopping Ctr.
Rotterdam
Telephone: 355-8330
Rotterdam Square Office
93 W. Campbell Road
Rotterdam
Telephone: 377-2393
Route 9 Office -- Latham
754 New Loudon Rd.
Latham
Telephone: 786-8816
Sheridan Plaza Office
1350 Gerling St.
Schenectady
Telephone: 377-8517
Shoppers' World Office
Old Rte. 146 and Plank Rd.
Clifton Park
Telephone: 383-6851
State Farm Road Office
2050 Western Ave.
Guilderland
Telephone: 452-6913
State Street Office
112 State St.
Albany
Telephone: 436-9043
Stuyvesant Plaza Office
Western Ave. at Fuller Road
Albany
Telephone: 489-2616
Tanners Main Office
345 Main Street
Catskill
Telephone: 943-2500
Tanners West Side Office
238 West Bridge St.
Catskill
Telephone: 943-5090
Troy Office
5th Ave. and State St.
Troy
Telephone: 274-5420
Union Street East Office
1700 Union St.
Schenectady
Telephone: 382-7511
Upper New Scotland Office
583 New Scotland Ave.
Albany
Telephone: 438-6611
Upper Union Street Office
1620 Union St.
Schenectady
Telephone: 374-4056
Wilton Mall Office
Route 50
Saratoga Springs
Telephone: 583-1716
Wolf Road Office
34 Wolf Road
Albany
Telephone: 458-7761
General Information
ANNUAL MEETING
Monday, May 20, 1996
10:00 AM
TrustCo Bank Corp NY
192 Erie Boulevard
Schenectady, NY 12305
CORPORATE HEADQUARTERS
320 State Street
Schenectady, New York 12305
(518-377-3311)
DIVIDEND REINVESTMENT PLAN
A Dividend Reinvestment Plan is available to shareholders of TrustCo Bank
Corp NY. It provides for the reinvestment
of cash dividends and optional cash payments to purchase additional shares of
TrustCo stock. The Plan is free of administrative charges, and provides a
convenient method of acquiring additional shares. Trustco Bank, our wholly
owned bank subsidiary, acts as administrator for this service, and has a
designated agent for shareholders in these transactions. Shareholders who
want additional information may contact the TrustCo Shareholder Services
Department (518-381-3601).
EQUAL OPPORTUNITY AT TRUSTCO
Trustco Bank is an Affirmative Action Equal Opportunity Employer.
FORM 10-K
TrustCo Bank Corp NY will provide without charge a copy of its Form 10-K upon
written request. Requests and
related inquiries should be directed to William F. Terry, Secretary, TrustCo
Bank Corp NY, P.O. Box 1082, Schenectady, New York 12301-1082.
NASDAQ SYMBOL: TRST
The Corporation's common stock trades on the Nasdaq National Market tier of
The Nasdaq Stock Market
under the symbol TRST.
SUBSIDIARIES:
Trustco Bank, National Association
Schenectady, New York
Member FDIC
ORE Subsidiary Corp.
Schenectady, New York
TRANSFER AGENT
Trustco Bank
Securities Department
P.O. Box 380
Schenectady, New York 12301-0380
Exhibit 21
LIST OF SUBSIDIARIES OF TRUSTCO
Trustco Bank, National Association...... .Nationally chartered
banking association
ORE Subsidiary Corp..................... New York corporation
Exhibit 23
KPMG Peat Marwick LLP
74 North Pearl Street
Albany, NY 12207
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
_______________________________________________________
The Board of Directors
TrustCo Bank Corp NY:
We consent to incorporation by reference in the Registration
Statements, Form S-8 (No. 33-43153) filed on October 3, 1991, Form S-8
(No. 33-67176) filed on August 6, 1993, Form S-8 (No. 33-43153) filed
on March 21, 1995, Form S-8 (No. 33-60409) filed on June 20, 1995, Form
S-3 (No. 33-46044) filed on September 20, 1995 of TrustCo Bank Corp NY
and subsidiaries of our report dated January 26, 1996, relating to the
consolidated statements of condition of TrustCo Bank Corp NY and
subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, changes in shareholders equity, and
cash flows for each of the years in the three-year period ended
December 31, 1995, which report appears in the December 31, 1995 Annual
Report on Form 10-K of TrustCo Bank Corp NY. Our report refers to the
adoption of the provisions of Statement of Financial Accounting
Standards No. 106, Employers Accounting for Postretirement Benefits
Other Than Pensions, Statement of Financial Accounting Standards No.
115, Accounting for Certain Investments in Debt and Equity
Securities, Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan," and Statement of
Financial Accounting Standards No. 118, "Accounting by Creditors for
Impairment of a Loan -- Income Recognition and Disclosures."
/s/ KPMG Peat Marwick LLP
Albany, New York
March 26, 1996
Exhibit 24
POWER OF ATTORNEY
The undersigned persons do hereby appoint William F. Terry or Robert T.
Cushing as a true and lawful Attorney In Fact for the sole purpose of
affixing their signatures to the 1995 Annual Report (Form 10-K) of
TrustCo Bank Corp NY to the Securities and Exchange Commission.
/s/Barton A. Andreoli /s/Lionel O. Barthold
__________________________ _____________________
Barton A. Andreoli Lionel O. Barthold
/s/M. Norman Brickman /s/Charles W. Carl, Jr.
__________________________ _____________________
M. Norman Brickman Charles W. Carl, Jr.
/s/Robert A. McCormick /s/Nancy A. McNamara
__________________________ _____________________
Robert A. McCormick Nancy A. McNamara
/s/Dr. John S. Morris /s/Dr. James H. Murphy
__________________________ _____________________
Dr. John S. Morris Dr. James H. Murphy
/s/Richard J. Murray, Jr. /s/Kenneth C. Petersen
__________________________ _____________________
Richard J. Murray, Jr. Kenneth C. Petersen
/s/ William D. Powers /s/William J. Purdy
__________________________ _____________________
William D. Powers William J. Purdy
/s/William F. Terry /s/Philip J. Thompson
__________________________ _____________________
William F. Terry Philip J. Thompson
Sworn to before me this 19th day of March 1996.
By/s/Joan Clark
- -------------------------
Notary Public
Joan Clark
Notary Public, State of New York
Qualified in Albany County
No. 01CL4822282
Commission Expires Nov. 30, 1996
Exhibit 99
KPMG Peat Marwick LLP
74 North Pearl Street
Albany, NY 12207
Independent Auditors Report
------------------------------------
The Board of Directors and Shareholders of TrustCo Bank Corp NY:
We have audited the accompanying consolidated statements of condition
of TrustCo Bank Corp NY and subsidiaries as of December 31, 1995 and
1994, and the related consolidated statements of income, changes in
shareholders equity, and cash flows for each of the years in the
three-year period ended December 31, 1995. These consolidated
financial statements are the responsibility of the Company s
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
TrustCo Bank Corp NY and subsidiaries as of December 31, 1995 and 1994,
and the results of their operations and their cash flows for each of
the years in the three-year period ended December 31, 1995, in
conformity with generally accepted accounting principles.
As discussed in note 5 to the consolidated financial statements,
effective January 1, 1995, the Company adopted the provisions of the
Financial Accounting Standards Board s Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment
of a Loan," and Statement of Financial Accounting Standards No. 118,
"Accounting by Creditors for Impairment of a Loan -- Income Recognition
and Disclosures" which prescribe recognition criteria for loan
impairment and measurement methods for impaired loans. As discussed in
note 4 to the consolidated financial statements, in 1994 the Company
adopted the provisions of the Financial Accounting Standards Board s
Statement of Financial Accounting Standards No. 115 Accounting for
Certain Investments in Debt and Equity Securities which changed its
method of accounting for certain investments in debt and equity
securities. As discussed in note 9 to the consolidated financial
statements, the Company also adopted the provisions of the Financial
Accounting Standards Board s Statement of Financial Accounting
Standards No. 106, Employers Accounting for Postretirement Benefits
Other than Pensions in 1993 which changed its method of accounting for
postretirement benefits other than pensions.
/s/KPMG Peat Marwick LLP
Albany, New York
January 26, 1996
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 50,889
<INT-BEARING-DEPOSITS> 1,818,906
<FED-FUNDS-SOLD> 239,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 640,206
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 1,226,142
<ALLOWANCE> 48,320
<TOTAL-ASSETS> 2,176,185
<DEPOSITS> 1,930,649
<SHORT-TERM> 56,654
<LIABILITIES-OTHER> 28,783
<LONG-TERM> 0
<COMMON> 18,135
0
0
<OTHER-SE> 141,964
<TOTAL-LIABILITIES-AND-EQUITY> 2,176,185
<INTEREST-LOAN> 107,060
<INTEREST-INVEST> 54,492
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<INTEREST-TOTAL> 161,552
<INTEREST-DEPOSIT> 78,355
<INTEREST-EXPENSE> 80,200
<INTEREST-INCOME-NET> 81,352
<LOAN-LOSSES> 12,698
<SECURITIES-GAINS> 243
<EXPENSE-OTHER> 44,440
<INCOME-PRETAX> 38,281
<INCOME-PRE-EXTRAORDINARY> 38,281
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,527
<EPS-PRIMARY> 1.42
<EPS-DILUTED> 1.42
<YIELD-ACTUAL> 418
<LOANS-NON> 12,832
<LOANS-PAST> 1,696
<LOANS-TROUBLED> 1,130
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 38,851
<CHARGE-OFFS> 7,338
<RECOVERIES> 4,109
<ALLOWANCE-CLOSE> 48,320
<ALLOWANCE-DOMESTIC> 0
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<ALLOWANCE-UNALLOCATED> 48,320
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