form10q.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
10-Q
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
|
For
the period ended September
30, 2007
|
|
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 incorporation or organization)
|
|
(I.R.S.
Employer Identification No.)
|
5
SARNOWSKI DRIVE, GLENVILLE, NEW YORK
|
|
12302
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
Registrant's
telephone number, including area
code: (518)
377-3311
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. xYes oNo
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act. (Check one):
Large
accelerated filer T
|
Accelerated
filer o
|
Non-accelerated
filer o
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
oYes TNo
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.
Class
of Common Stock
|
|
Number
of Shares Outstanding
as
of October 31, 2007
|
$1
Par Value
|
|
75,325,868
|
INDEX
Part
I.
|
|
FINANCIAL
INFORMATION
|
|
PAGE
NO.
|
Item
1.
|
|
Interim
Financial Statements (Unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
6
-
7
|
|
|
|
|
|
|
|
|
|
|
|
8
–
15
|
|
|
|
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
Item
2.
|
|
|
|
|
17
- 33
|
|
|
|
|
|
|
Item
3.
|
|
|
|
|
34
|
|
|
|
|
|
|
Item
4.
|
|
|
|
|
34
- 35
|
|
|
|
|
|
|
Part
II.
|
|
OTHER
INFORMATION
|
|
|
|
|
|
|
|
|
|
Item
1.
|
|
|
|
|
36
|
|
|
|
|
|
|
Item
1A.
|
|
|
|
|
36
|
|
|
|
|
|
|
Item
2.
|
|
|
|
|
36
|
|
|
|
|
|
|
Item
3.
|
|
|
|
|
36
|
|
|
|
|
|
|
Item
4.
|
|
|
|
|
36
|
|
|
|
|
|
|
Item
5.
|
|
|
|
|
36
|
|
|
|
|
|
|
Item
6.
|
|
|
|
|
36
- 45
|
Consolidated
Statements of Income (Unaudited)
(dollars
in thousands, except per share data)
|
|
Three
Months Ended
|
|
|
Nine
Months Ended
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
and dividend income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
and fees on loans
|
|
$ |
31,039
|
|
|
|
26,696
|
|
|
|
89,236
|
|
|
|
76,517
|
|
Interest
and dividends on securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.
S. government sponsored enterprises
|
|
|
3,301
|
|
|
|
10,395
|
|
|
|
8,910
|
|
|
|
30,797
|
|
States
and political subdivisions
|
|
|
1,416
|
|
|
|
1,481
|
|
|
|
4,299
|
|
|
|
4,294
|
|
Mortgage-backed
securities and collateralized mortgage obligations
|
|
|
1,857
|
|
|
|
2,108
|
|
|
|
5,737
|
|
|
|
6,633
|
|
Other
securities
|
|
|
132
|
|
|
|
153
|
|
|
|
447
|
|
|
|
480
|
|
Total
interest and dividends on securities available for sale
|
|
|
6,706
|
|
|
|
14,137
|
|
|
|
19,393
|
|
|
|
42,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
on trading securities - U. S. government sponsored
enterprises
|
|
|
5,921
|
|
|
|
-
|
|
|
|
17,571
|
|
|
|
-
|
|
Interest
on held to maturity securities - U. S. government sponsored
enterprises
|
|
|
224
|
|
|
|
-
|
|
|
|
224
|
|
|
|
-
|
|
Interest
on federal funds sold and other short term investments
|
|
|
4,949
|
|
|
|
2,009
|
|
|
|
15,244
|
|
|
|
6,772
|
|
Total
interest income
|
|
|
48,839
|
|
|
|
42,842
|
|
|
|
141,668
|
|
|
|
125,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
on deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
checking
|
|
|
220
|
|
|
|
364
|
|
|
|
635
|
|
|
|
1,008
|
|
Savings
accounts
|
|
|
2,253
|
|
|
|
2,877
|
|
|
|
7,074
|
|
|
|
7,975
|
|
Money
market deposit accounts
|
|
|
3,655
|
|
|
|
3,065
|
|
|
|
10,370
|
|
|
|
7,321
|
|
Time
deposits
|
|
|
17,214
|
|
|
|
11,183
|
|
|
|
48,406
|
|
|
|
31,660
|
|
Interest
on short-term borrowings
|
|
|
941
|
|
|
|
989
|
|
|
|
2,923
|
|
|
|
2,728
|
|
Interest
on long-term debt
|
|
|
1
|
|
|
|
1
|
|
|
|
2
|
|
|
|
3
|
|
Total
interest expense
|
|
|
24,284
|
|
|
|
18,479
|
|
|
|
69,410
|
|
|
|
50,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income
|
|
|
24,555
|
|
|
|
24,363
|
|
|
|
72,258
|
|
|
|
74,798
|
|
Provision
(credit) for loan losses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,575 |
) |
Net
interest income after provision (credit) for loan losses
|
|
|
24,555
|
|
|
|
24,363
|
|
|
|
72,258
|
|
|
|
78,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust
department income
|
|
|
1,375
|
|
|
|
1,313
|
|
|
|
4,269
|
|
|
|
4,020
|
|
Fees
for other services to customers
|
|
|
2,385
|
|
|
|
2,229
|
|
|
|
6,980
|
|
|
|
6,236
|
|
Net
trading gains
|
|
|
305
|
|
|
|
-
|
|
|
|
906
|
|
|
|
-
|
|
Net
gain (loss) on securities transactions
|
|
|
226
|
|
|
|
24
|
|
|
|
229
|
|
|
|
(264 |
) |
Other
|
|
|
460
|
|
|
|
329
|
|
|
|
1,061
|
|
|
|
1,125
|
|
Total
noninterest income
|
|
|
4,751
|
|
|
|
3,895
|
|
|
|
13,445
|
|
|
|
11,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
and employee benefits
|
|
|
5,255
|
|
|
|
4,640
|
|
|
|
15,057
|
|
|
|
14,026
|
|
Net
occupancy expense
|
|
|
2,635
|
|
|
|
1,928
|
|
|
|
7,460
|
|
|
|
5,781
|
|
Equipment
expense
|
|
|
975
|
|
|
|
694
|
|
|
|
2,530
|
|
|
|
2,128
|
|
Professional
services
|
|
|
1,051
|
|
|
|
908
|
|
|
|
3,060
|
|
|
|
2,584
|
|
Outsourced
Services
|
|
|
1,075
|
|
|
|
1,069
|
|
|
|
3,222
|
|
|
|
3,178
|
|
Other
real estate (income) expense, net
|
|
|
(146 |
) |
|
|
14
|
|
|
|
(111 |
) |
|
|
16
|
|
Other
|
|
|
2,752
|
|
|
|
2,446
|
|
|
|
8,543
|
|
|
|
7,897
|
|
Total
noninterest expenses
|
|
|
13,597
|
|
|
|
11,699
|
|
|
|
39,761
|
|
|
|
35,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before taxes
|
|
|
15,709
|
|
|
|
16,559
|
|
|
|
45,942
|
|
|
|
53,880
|
|
Income
taxes
|
|
|
5,069
|
|
|
|
5,380
|
|
|
|
14,881
|
|
|
|
17,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
10,640
|
|
|
|
11,179
|
|
|
|
31,061
|
|
|
|
35,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income per Common Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Basic
|
|
$ |
0.142
|
|
|
|
0.149
|
|
|
|
0.414
|
|
|
|
0.480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Diluted
|
|
$ |
0.141
|
|
|
|
0.149
|
|
|
|
0.413
|
|
|
|
0.479
|
|
See
accompanying notes to unaudited consolidated interim financial
statements.
TRUSTCO
BANK CORP NY
(dollars
in thousands, except per share data)
|
|
September
30, 2007
|
|
|
December
31, 2006
|
|
ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and due from banks
|
|
$ |
48,275
|
|
|
|
47,889
|
|
|
|
|
|
|
|
|
|
|
Federal
funds sold and other short term investments
|
|
|
274,396
|
|
|
|
243,449
|
|
Total
cash and cash equivalents
|
|
|
322,671
|
|
|
|
291,338
|
|
|
|
|
|
|
|
|
|
|
Trading
securities:
|
|
|
|
|
|
|
|
|
U.
S. government sponsored enterprises
|
|
|
450,513
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Securities
available for sale:
|
|
|
|
|
|
|
|
|
U.
S. government sponsored enterprises
|
|
|
288,827
|
|
|
|
734,547
|
|
States
and political subdivisions
|
|
|
128,112
|
|
|
|
132,879
|
|
Mortgage-backed
securities and collateralized mortgage obligations
|
|
|
149,995
|
|
|
|
167,899
|
|
Other
securities
|
|
|
13,165
|
|
|
|
12,945
|
|
Total
securities available for sale
|
|
|
580,099
|
|
|
|
1,048,270
|
|
|
|
|
|
|
|
|
|
|
Held
to maturity securities:
|
|
|
|
|
|
|
|
|
U.
S. government sponsored enterprises
|
|
|
25,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
283,303
|
|
|
|
263,041
|
|
Residential
mortgage loans
|
|
|
1,389,173
|
|
|
|
1,250,427
|
|
Home
equity line of credit
|
|
|
232,374
|
|
|
|
242,555
|
|
Installment
loans
|
|
|
6,634
|
|
|
|
6,491
|
|
Total
loans
|
|
|
1,911,484
|
|
|
|
1,762,514
|
|
Less:
|
|
|
|
|
|
|
|
|
Allowance
for loan losses
|
|
|
34,731
|
|
|
|
35,616
|
|
Net
loans
|
|
|
1,876,753
|
|
|
|
1,726,898
|
|
|
|
|
|
|
|
|
|
|
Bank
premises and equipment, net
|
|
|
28,656
|
|
|
|
24,050
|
|
Other
assets
|
|
|
57,495
|
|
|
|
70,631
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
3,341,187
|
|
|
|
3,161,187
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
Demand
|
|
$ |
258,978
|
|
|
|
259,401
|
|
Interest-bearing
checking
|
|
|
275,839
|
|
|
|
290,784
|
|
Savings
accounts
|
|
|
619,251
|
|
|
|
662,310
|
|
Money
market deposit accounts
|
|
|
358,131
|
|
|
|
310,719
|
|
Certificates
of deposit (in denominations of
|
|
|
|
|
|
|
|
|
$100,000
or more)
|
|
|
370,990
|
|
|
|
299,813
|
|
Time
deposits
|
|
|
1,101,221
|
|
|
|
976,356
|
|
Total
deposits
|
|
|
2,984,410
|
|
|
|
2,799,383
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
|
93,865
|
|
|
|
95,507
|
|
Long-term
debt
|
|
|
36
|
|
|
|
59
|
|
Accrued
expenses and other liabilities
|
|
|
28,060
|
|
|
|
26,715
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
3,106,371
|
|
|
|
2,921,664
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
|
|
|
|
|
Capital
stock par value $1; 150,000,000 shares authorized and 82,373,165
and 82,149,776 shares issued at September 30, 2007 and December
31, 2006, respectively
|
|
|
82,373
|
|
|
|
82,150
|
|
Surplus
|
|
|
121,679
|
|
|
|
119,313
|
|
Undivided
profits
|
|
|
96,755
|
|
|
|
110,304
|
|
Accumulated
other comprehensive income (loss), net of tax
|
|
|
3,381
|
|
|
|
(2,928 |
) |
Treasury
stock at cost - 7,232,599 and 7,276,450 shares at June 30, 2007
and December 31, 2006, respectively
|
|
|
(69,372 |
) |
|
|
(69,316 |
) |
|
|
|
|
|
|
|
|
|
Total
shareholders' equity
|
|
|
234,816
|
|
|
|
239,523
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and shareholders' equity
|
|
$ |
3,341,187
|
|
|
|
3,161,187
|
|
See
accompanying notes to unaudited consolidated interim financial
statements.
Consolidated
Statements of Changes in Shareholders' Equity (Unaudited)
(dollars
in thousands, except per share data)
|
|
Capital
Stock
|
|
|
Surplus
|
|
|
Undivided
Profits
|
|
|
Accumulated
Other Comprehensive Income (Loss)
|
|
|
Comprehensive
Income
|
|
|
Treasury
Stock
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance, January 1, 2006
|
|
$ |
82,120
|
|
|
|
117,770
|
|
|
|
103,315
|
|
|
|
(6,054 |
) |
|
|
|
|
|
(68,490 |
) |
|
|
228,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment
to January 1, 2006 beginning balance for adoption of SAB No. 108,
net of
tax
|
|
|
-
|
|
|
|
-
|
|
|
|
9,571
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
9,571
|
|
January
1, 2006 beginning balance, as adjusted
|
|
|
82,120
|
|
|
|
117,770
|
|
|
|
112,886
|
|
|
|
(6,054 |
) |
|
|
|
|
|
(68,490 |
) |
|
|
238,232
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income - Nine Months Ended September 30, 2006
|
|
|
|
|
|
|
|
|
|
|
35,969
|
|
|
|
|
|
|
|
35,969
|
|
|
|
|
|
|
|
35,969
|
|
Other
comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
net holding loss on securities available-for-sale arising during
the
period, net of tax (pretax loss of $2,747)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,655 |
) |
|
|
|
|
|
|
|
|
Reclassification
adjustment for net loss realized in net income during the year
(pretax
loss $264)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
159
|
|
|
|
|
|
|
|
|
|
Other
comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,496 |
) |
|
|
(1,496 |
) |
|
|
|
|
|
|
(1,496 |
) |
Comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,473
|
|
|
|
|
|
|
|
|
|
Cash
dividend declared, $.480 per share
|
|
|
|
|
|
|
|
|
|
|
(35,910 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(35,910 |
) |
Stock
options exercised and related tax benefits
|
|
|
30
|
|
|
|
554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
584
|
|
Treasury
stock purchased (583,413 shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,145 |
) |
|
|
(7,145 |
) |
Sale
of treasury stock (605,656 shares)
|
|
|
|
|
|
|
717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,123
|
|
|
|
6,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending
balance, September 30, 2006
|
|
$ |
82,150
|
|
|
|
119,041
|
|
|
|
112,945
|
|
|
|
(7,550 |
) |
|
|
|
|
|
|
(69,512 |
) |
|
|
237,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance, January 1, 2007
|
|
$ |
82,150
|
|
|
|
119,313
|
|
|
|
110,304
|
|
|
|
(2,928 |
) |
|
|
|
|
|
|
(69,316 |
) |
|
|
239,523
|
|
Adjustment
to initially apply FAS No. 159, net of tax
|
|
|
|
|
|
|
|
|
|
|
(8,606 |
) |
|
|
8,606
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income - Nine Months Ended September 30, 2007
|
|
|
|
|
|
|
|
|
|
|
31,061
|
|
|
|
|
|
|
|
31,061
|
|
|
|
|
|
|
|
31,061
|
|
Other
comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of prior service cost on pension and post retirement plans, net
of tax
(pretax of $363)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(218 |
) |
|
|
|
|
|
|
|
|
Unrealized
net holding loss on securities available-for-sale arising during
the
period, net of tax (pretax loss of $3,227)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,941 |
) |
|
|
|
|
|
|
|
|
Reclassification
adjustment for net gain realized in net income during the year
(pretax
gain $229)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(138 |
) |
|
|
|
|
|
|
|
|
Other
comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,297 |
) |
|
|
(2,297 |
) |
|
|
|
|
|
|
(2,297 |
) |
Comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,764
|
|
|
|
|
|
|
|
|
|
Cash
dividend declared, $.480 per share
|
|
|
|
|
|
|
|
|
|
|
(36,004 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(36,004 |
) |
Stock
options exercised and related tax benefits
|
|
|
223
|
|
|
|
1,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,116
|
|
Treasury
stock purchased (569,348 shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,908 |
) |
|
|
(5,908 |
) |
Sale
of treasury stock (613,199 shares)
|
|
|
|
|
|
|
417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,852
|
|
|
|
6,269
|
|
Stock
based compensation expense
|
|
|
|
|
|
|
56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending
balance, September 30, 2007
|
|
$ |
82,373
|
|
|
|
121,679
|
|
|
|
96,755
|
|
|
|
3,381
|
|
|
|
|
|
|
|
(69,372 |
) |
|
|
234,816
|
|
See
accompanying notes to unaudited consolidated interim financial
statements.
Other
comprehensive income for the three month period ending September 30, 2007
and
2006 was $5,241 and $14,175, respectively.
Consolidated
Statements of Cash Flows (Unaudited)
(dollars
in thousands)
INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
|
|
|
|
NINE
MONTHS ENDED SEPTEMBER 30,
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
Net
income
|
|
$ |
31,061
|
|
|
|
35,969
|
|
|
|
|
|
|
|
|
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
2,253
|
|
|
|
1,861
|
|
Gain
on sale of other real estate owned
|
|
|
(165 |
) |
|
|
(34 |
) |
Provision
(credit) for loan losses
|
|
|
-
|
|
|
|
(3,575 |
) |
Stock
based compensation expense
|
|
|
56
|
|
|
|
-
|
|
Net
gain on sale of bank premises and equipment
|
|
|
-
|
|
|
|
(29 |
) |
Net
(gain) loss on sale of securities available for sale
|
|
|
(229 |
) |
|
|
264
|
|
Proceeds
from sales of trading securities
|
|
|
502,934
|
|
|
|
-
|
|
Purchases
of trading securities
|
|
|
(450,296 |
) |
|
|
-
|
|
Net
trading gains
|
|
|
(906 |
) |
|
|
-
|
|
Increase
in interest receivable
|
|
|
(4,447 |
) |
|
|
(6,711 |
) |
Increase
in interest payable
|
|
|
349
|
|
|
|
292
|
|
Decrease
in other assets
|
|
|
18,812
|
|
|
|
2,749
|
|
Increase
(decrease) in accrued expenses and other liabilities.…
|
|
|
996
|
|
|
|
(1,554 |
) |
|
|
|
|
|
|
|
|
|
Total
adjustments
|
|
|
69,357
|
|
|
|
(6,737 |
) |
|
|
|
|
|
|
|
|
|
Net
cash provided by operating activities
|
|
|
100,418
|
|
|
|
29,232
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from sales and calls of securities available for sale
|
|
|
40,004
|
|
|
|
61,327
|
|
Purchases
of securities available for sale
|
|
|
(128,999 |
) |
|
|
(95,293 |
) |
Proceeds
from maturities of securities available for sale
|
|
|
51,694
|
|
|
|
10,681
|
|
Purchases
of held to maturity securities
|
|
|
(25,000 |
) |
|
|
-
|
|
Net
increase in loans
|
|
|
(150,062 |
) |
|
|
(217,417 |
) |
Proceeds
from dispositions of other real estate owned
|
|
|
302
|
|
|
|
57
|
|
Proceeds
from dispositions of bank premises and equipment
|
|
|
-
|
|
|
|
73
|
|
Purchases
of bank premises and equipment
|
|
|
(6,859 |
) |
|
|
(4,019 |
) |
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
|
|
(218,920 |
) |
|
|
(244,591 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase in deposits
|
|
|
185,027
|
|
|
|
86,776
|
|
Net
(decrease) increase in short-term borrowings
|
|
|
(1,642 |
) |
|
|
3,770
|
|
Repayment
of long-term debt
|
|
|
(23 |
) |
|
|
(21 |
) |
Proceeds
from exercise of stock options
|
|
|
|
|
|
|
|
|
and
related tax benefits
|
|
|
2,116
|
|
|
|
584
|
|
Proceeds
from sale of treasury stock
|
|
|
6,269
|
|
|
|
6,840
|
|
Purchase
of treasury stock
|
|
|
(5,908 |
) |
|
|
(7,145 |
) |
Dividends
paid
|
|
|
(36,004 |
) |
|
|
(35,905 |
) |
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
|
149,835
|
|
|
|
54,899
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
31,333
|
|
|
|
(160,460 |
) |
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at beginning of period
|
|
|
291,338
|
|
|
|
312,863
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of period
|
|
$ |
322,671
|
|
|
|
152,403
|
|
See
accompanying notes to unaudited consolidated interim financial statements.
(continued)
TRUSTCO
BANK CORP NY
Consolidated
Statements of Cash Flows (continued) (Unaudited)
(dollars
in thousands)
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
NINE
MONTHS ENDED SEPTEMBER 30,
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
Cash
paid during the year for:
|
|
|
|
|
|
|
Interest
paid
|
|
$ |
69,061
|
|
|
|
50,403
|
|
Income
taxes paid
|
|
|
457
|
|
|
|
14,949
|
|
Non
cash investing and financing activites:
|
|
|
|
|
|
|
|
|
Transfer
of loans to other real estate owned
|
|
|
207
|
|
|
|
132
|
|
Increase
in dividends payable
|
|
|
-
|
|
|
|
5
|
|
Change
in unrealized loss on securities available for sale-gross of deferred
taxes (excluding $14,313 unrealized loss transferred to undivided
profits
in 2007 from adoption of FASB statement No. 159), net of reclassification
adjustment
|
|
|
(3,456 |
) |
|
|
(2,483 |
) |
Change
in deferred tax effect on unrealized loss on securities available
for
sale, net of reclassification adjustment
|
|
|
1,377
|
|
|
|
987
|
|
Amortization
of prior service cost on pension and post retirement plans
|
|
|
363
|
|
|
|
-
|
|
Change
in deferred tax effect of amortization of prior service
cost
|
|
|
(145 |
) |
|
|
-
|
|
Securities
available for sale transferred to trading securities
|
|
|
516,558
|
|
|
|
-
|
|
Cumulative
effect of the adoption of FASB Statement No. No. 159-net of deferred
taxes
($14,313 gross of deferred taxes)
|
|
|
8,606
|
|
|
|
-
|
|
Cumulative
effect of the adoption of Staff Accounting Bulletin No. 108-gross
of
deferred taxes
|
|
|
-
|
|
|
|
15,877
|
|
Deferred
tax effect of the adoption of Staff Accounting Bulletin No.
108
|
|
|
-
|
|
|
|
(6,306 |
) |
See
accompanying notes to unaudited consolidated interim financial
statements.
Notes
to Consolidated Interim Financial Statements
(Unaudited)
1. Financial
Statement Presentation
The
unaudited Consolidated Interim Financial Statements of TrustCo Bank Corp NY
(the
Company) include the accounts of the subsidiaries after elimination of all
significant intercompany accounts and transactions. Prior period
amounts are reclassified when necessary to conform to the current period
presentation. The net income reported for the nine months ended
September 30, 2007 is not necessarily indicative of the results that may be
expected for the year ending December 31, 2007, or any interim
periods.
In
the
opinion of the management of the Company, the accompanying unaudited
Consolidated Interim Financial Statements contain all adjustments necessary
to
present fairly the financial position as of September 30, 2007 and the results
of operations for the three months and nine months ended September 30, 2007
and
2006 and cash flows for the nine months ended September 30, 2007 and
2006. The accompanying Consolidated Interim Financial Statements
should be read in conjunction with the TrustCo Bank Corp NY year-end
Consolidated Financial Statements, including notes thereto, which are included
in TrustCo Bank Corp NY's 2006 Annual Report to Shareholders on Form
10-K.
2.
Earnings
Per Share
A
reconciliation of the component parts of earnings per share (EPS) for the three
and nine month periods ended September 30, 2007 and 2006 follows:
(In
thousands, except per share data)
|
|
Net
Income
|
|
|
Weighted
Average Shares Outstanding
|
|
|
Per
Share Amounts
|
|
For
the quarter ended September 30, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
EPS:
|
|
|
|
|
|
|
|
|
|
Net
income available to Common shareholders
|
|
$ |
10,640
|
|
|
|
75,166
|
|
|
$ |
0.142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of Dilutive Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options
|
|
|
------
|
|
|
|
101
|
|
|
|
(.001
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
|
$ |
10,640
|
|
|
|
75,267
|
|
|
$ |
0.141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
nine months ended September 30, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income available to Common shareholders
|
|
$ |
31,061
|
|
|
|
75,054
|
|
|
$ |
0.414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of Dilutive Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options
|
|
|
-------
|
|
|
|
76
|
|
|
|
(.001 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
|
$ |
31,061
|
|
|
|
75,130
|
|
|
$ |
0.413
|
|
(In
thousands, except per share data)
|
|
Net
Income
|
|
|
Weighted
Average Shares Outstanding
|
|
|
Per
Share Amounts
|
|
For
the quarter ended September 30, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
EPS:
|
|
|
|
|
|
|
|
|
|
Net
income available to Common shareholders
|
|
$ |
11,179
|
|
|
|
74,920
|
|
|
$ |
0.149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of Dilutive Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options
|
|
|
------
|
|
|
|
169
|
|
|
|
------ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
|
$ |
11,179
|
|
|
|
75,089
|
|
|
$ |
0.149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
nine months ended September 30, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income available to Common shareholders
|
|
$ |
35,969
|
|
|
|
74,896
|
|
|
$ |
0.480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of Dilutive Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options
|
|
|
------
|
|
|
|
259
|
|
|
|
(.001 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
|
$ |
35,969
|
|
|
|
75,155
|
|
|
$ |
0.479
|
|
There
were approximately 2.7 million and 3.2 million stock options on average for
the
third quarter of 2007 and for the year-to-date 2007 periods, respectively,
and
1.9 million for both the quarter and year-to-date periods in 2006, which if
included, would have been antidilutive in the calculation of average shares
outstanding for the quarters and nine month periods ended September 30, 2007
and
2006, respectively, and were therefore excluded from the earnings per share
calculations.
3.
Benefit Plans
The
table
below outlines the components of the Company’s net periodic expense (benefit)
recognized during the three month and nine month periods ended September 30,
2007 and 2006 for its pension and other postretirement benefit
plans:
Components
of Net Periodic Expense/(Benefit) for the three months ended September 30,
2007
and 2006 (dollars in thousands)
|
|
Pension
Benefits
|
|
|
Other
Postretirement Benefits
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$ |
11
|
|
|
|
160
|
|
|
|
7
|
|
|
|
4
|
|
Interest
cost
|
|
|
350
|
|
|
|
338
|
|
|
|
13
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected
return on plan assets
|
|
|
(487 |
) |
|
|
(411 |
) |
|
|
(96 |
) |
|
|
(71 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of prior service cost
|
|
|
-
|
|
|
|
6
|
|
|
|
(127 |
) |
|
|
(140 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Curtailment
gain, net
|
|
|
-
|
|
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
periodic (benefit)/expense
|
|
$ |
(126 |
) |
|
|
93
|
|
|
|
(203 |
) |
|
|
(203 |
) |
Components
of Net Periodic Benefit for the nine months ended September 30, 2007 and 2006
(dollars in thousands)
|
|
|
|
Pension
Benefits
|
|
|
Other
Postretirement Benefits
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$ |
33
|
|
|
|
549
|
|
|
|
22
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
cost
|
|
|
1,051
|
|
|
|
1,108
|
|
|
|
40
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected
return on plan assets
|
|
|
(1,462 |
) |
|
|
(1,307 |
) |
|
|
(307 |
) |
|
|
(275 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of prior service cost
|
|
|
-
|
|
|
|
59
|
|
|
|
(363 |
) |
|
|
(368 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Curtailment
gain, net
|
|
|
-
|
|
|
|
(362 |
) |
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
periodic benefit
|
|
$ |
(378 |
) |
|
|
(47 |
) |
|
|
(608 |
) |
|
|
(581 |
) |
The
Company previously disclosed in its consolidated financial statements for the
year ended December 31, 2006, that it did not expect to make any contributions
to its pension and postretirement benefit plans in 2007. As of
September 30, 2007, no contributions have been made. The Company
presently anticipates that it will not make any contributions in
2007.
4.
Adoption of New Accounting Pronouncements
a) Statements
of Financial Accounting Standards No. 159 “The Fair Value Option for Financial
Assets and Financial Liabilities, including an amendment of FASB Statement
No.
115”, and No. 157 “Fair Value Measurements”.
Effective
January 1, 2007 TrustCo elected early adoption of Statements of Financial
Accounting Standards (“SFAS”) No. 159 “The Fair Value Option for Financial
Assets and Financial Liabilities, including an amendment of FASB Statement
No.
115” (SFAS No. 159), and No. 157 “Fair Value Measurements” (SFAS No.
157). SFAS No. 159, which was issued in February 2007, generally
permits the measurement of selected eligible financial instruments at fair
value
at specified election dates. SFAS No. 157 generally establishes the
definition of fair value and expands disclosures about fair value
measurement. This statement establishes a hierarchy of the levels of
fair value measurement techniques. Upon adoption of SFAS No. 159,
TrustCo elected to apply the fair value option for certain U.S. government
sponsored enterprises securities with lower yields, which generally had longer
duration, that were classified in the available for sale portfolio totaling
approximately $517 million ($502 million at fair value). Prior to the
adoption of SFAS No. 159, the Company intended to hold these securities until
a
market price recovery or possibly to maturity. The Company changed
its intent with respect to these securities and therefore recorded these losses
directly to undivided profits rather than current income based on the transition
provisions of SFAS No. 159 by electing the fair value option for these
securities. As a result, unrealized losses, net of taxes, of $8.6
million were directly recorded to undivided profits. This charge to undivided
profits had no overall impact on total shareholders’ equity because the fair
value adjustment had previously been included as an element of shareholders’
equity in the accumulated other comprehensive income (loss) account, net of
tax.
As
a
result of TrustCo’s fair value measurement election for the above financial
instruments, TrustCo recorded $3.4 million of pre-tax unrealized trading gains
in its first quarter earnings for the change in fair value of such instruments
from the effective election date of January 1, 2007 to March 31,
2007. Additionally, TrustCo sold in the second quarter all of these
securities and recognized pre-tax trading losses of $2.8 million in the second
quarter. While the proceeds from this sale were initially invested in
federal funds sold, the Company re-invested these proceeds by purchasing
securities, primarily U.S. government sponsored enterprises, for its trading
portfolio. As of September 30, 2007 $451 million of U.S. government
sponsored enterprises securities were held in the trading
portfolio. TrustCo believes that its adoption of the standard will
have a positive impact on its ability to manage its investment portfolio because
it will enable the Company to sell the securities that it has elected the fair
value option for without recording other-than-temporary impairment on the
remainder of the available-for-sale portfolio. Additionally,
recording the unrealized losses on these securities directly to undivided
profits as part of the transition adjustment will benefit future periods net
income because the loss was not realized in the income statement when the
security was sold.
As
already stated, the Company recorded a $8.6 million charge, net of tax, to
undivided profits as a result of adopting SFAS No. 159 as of January 1,
2007. Had the Company not adopted this new accounting standard and
reclassified the available for sale securities to trading
account assets as of that date, the charge to capital would have been recorded
as a
charge
to net income.
In
determining the fair value for the trading account securities the Company
utilized an independent bond pricing service.
The
following table presents information relative to the assets identified for
the
fair value option of accounting as of the initial implementation date of January
1, 2007:
|
|
Statement
of Condition 12/31/06 Prior to adoption
|
|
|
Net
Loss recognized in undivided profits upon adoption
|
|
|
Statement
of adoption of Condition after Fair Value Option
|
|
($
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
available for sale transferred to trading account assets:
|
|
|
|
|
|
|
|
|
|
Amortized
cost
|
|
$ |
516,558
|
|
|
|
(14,313 |
) |
|
|
502,245
|
|
Unrealized
depreciation
|
|
|
(14,313 |
) |
|
|
14,313
|
|
|
|
-
|
|
Net
transferred to trading account assets
|
|
$ |
502,245
|
|
|
|
-
|
|
|
|
502,245
|
|
The
securities transferred to trading account assets as of January 1, 2007 were
included previously in the available for sale portfolio as Government sponsored
enterprises.
TrustCo
determined that it would be appropriate to account for certain of the Government
sponsored enterprises securities at fair value based upon the relatively low
interest rate on these bonds. Government sponsored enterprises bonds
held by Trustco Bank in the available for sale portfolio as of January 1, 2007
under a predetermined interest rate (generally 5.45% or below) were identified
as bonds to be recorded at fair value (the bonds also had an average life to
maturity of approximately 9 years). Interest on trading account
securities are recorded in the Consolidated Statements of Income based upon
the
coupon of the underlying bond and the par value of the
securities. Unrealized gains and losses on the trading account
securities are recognized based upon the fair value at period end compared
to
the beginning of that period.
After
the
adoption of SFAS 159 as of January 1, 2007 there were $232.3 million of
remaining Government sponsored enterprises obligations classified as available
for sale securities which had gross unrealized losses of $3.3
million. These securities are primarily higher yielding assets and
generally had shorter terms to final maturity. It is management’s
intention that Government sponsored enterprises securities that remain in the
Available for Sale portfolio after the adoption of SFAS 159 will be held to
generate relatively higher yields or provide liquidity in the form of maturing
or called securities. Upon adoption of SFAS 159, the yield on the
securities in the available for sale portfolio ranged from 4.30% to 5.82%,
and
had an average term to maturity of 7 years ranging from 2007 – 2019 final
maturity.
The
following tables presents the financial instruments recorded at fair value
by
the Company as of September 30, 2007 and for the three and nine month periods
ended September 30, 2007.
(in
thousands)
|
|
Fair
Value Measurements at September 30, 2007 using:
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Total
Carrying Amount in Statement Of Financial Position As of
9/30/2007
|
|
|
Statement
107 Fair Value Estimate As of 9/30/2007
|
|
|
Fair
Value Measurement As of 9/30/2007
|
|
|
Quoted
Prices in Active Markets for Identical Assets
(Level 1)
|
|
|
Significant
other Observable input (Level 2 )
|
|
Assets
available for sale
|
|
|
580,099
|
|
|
|
580,099
|
|
|
|
580,099
|
|
|
|
-
|
|
|
|
580,099
|
|
Trading
account assets
|
|
|
450,513
|
|
|
|
450,513
|
|
|
|
450,513
|
|
|
|
-
|
|
|
|
450,513
|
|
Other
real estate owned
|
|
|
162
|
|
|
|
162
|
|
|
|
162
|
|
|
|
-
|
|
|
|
162
|
|
(in
thousands)
|
|
Change
in fair value for the 3 month period from July 1, 2007 to September
30,
2007 for items measured at fair value pursuant to election of the
Fair
Value Option
|
|
|
Change
in fair value for the 9 month period from January 1, 2007 to September
30,
2007 for items measured at fair value pursuant to election of the
Fair
Value Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
Trading Gains
|
|
|
Total
Changes Included in Values Included in Period Earnings
|
|
|
Unrealized
Trading Gains
|
|
|
Total
Changes Included in Values Included in Period Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
Available-for-sale
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading
account assets
|
|
|
305
|
|
|
|
305
|
|
|
|
906
|
|
|
|
906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
real estate owned
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Assets
available for sale and trading account securities are fair valued utilizing
an
independent bond pricing service for identical assets or significantly similar
securities. The pricing service uses a variety of techniques to
arrive at fair value including market maker bids, quotes and pricing
models. Inputs to the pricing models include recent trades, benchmark
interest rates, spreads and actual and projected cash flows. Other
real estate owned fair value is determined by observable comparable sales and
property valuation techniques.
(a.)
|
FASB
Interpretation No. 48 “Accounting for Uncertainty in Income
Taxes”
|
TrustCo
adopted Financial Accounting Standards Board Interpretation No. 48, “Accounting
for Uncertainty in Income Taxes” (“FIN 48”) as of January 1,
2007. FIN 48 prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken on a tax return. As a result
of the Company’s adoption of FIN 48, there were no required adjustments to the
Company’s consolidated financial statements.
TrustCo
has implemented certain tax return positions that have not been fully recognized
for financial statement purposes based upon management’s evaluation of the
probability of the benefit being realized. For 2007 the Company has
recognized interest expense on the potential settlement amount as an element
of
other expenses and nothing for potential tax penalties.
For
the
nine months ended September 30, 2007 the unrecognized tax benefit and change
in
that benefit from the beginning of the year is as follows:
(Dollars
in thousands)
Balance
January 1, 2007
|
|
$ |
3,392
|
|
Additional
unrecognized benefit for the period from 1/1/07 to 9/30/07
|
|
|
659
|
|
|
|
|
|
|
Balance
September 30, 2007
|
|
$ |
4,051
|
|
If
the
unrecognized tax benefit were to be recognized for financial reporting purposes
the impact would be to decrease total tax expense by the balance not previously
recognized (as of September 30, 2007 that amount would be $2.6 million, after
tax). Interest expense of $250 thousand has been recorded during 2007
and included in accrued expenses and other liabilities (no penalties have been
accrued). The total accrual for interest expense included in the
statement of financial condition is $639 thousand and is included in accrued
expenses and other liabilities.
The
New
York State tax returns are currently under audit for the periods that the
unrecognized tax return position was initiated. Open Federal tax
years are 2003, 2004 and 2005, and for NYS they are 2002 through
2005. The 2006 state and federal tax returns were filed in the third
quarter of 2007.
The
Company does not believe the unrecognized tax benefit will significantly
increase or decrease
within the next twelve months except if the New York State tax return audits
are
completed. It is reasonably possible that a reduction in the estimate
may occur, however, a quantification of a reasonable range cannot be
determined.
(b.)
|
Prior
Year Immaterial Uncorrected
Misstatements
|
As
described in the Company Annual Report on Form 10-K in 2006, the Company adopted
the Staff Accounting Bulletin (SAB) No. 108 “Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements.” As a result of the Adoption of SAB No. 108, TrustCo
recognized a reduction in other liabilities
of $8.3 million and a decrease in the allowance for loan losses of $7.6
million. These entries were recorded as adjustments of the beginning
of the year 2006 opening balances for these accounts and the impact, net of
tax,
was reflected in shareholders’ equity as an adjustment to January 1, 2006
undivided profits.
5. Guarantees
The
Company does not issue any guarantees that would require liability-recognition
or disclosure, other than its standby letters of credit. Standby
letters of credit are conditional commitments issued by the Company to guarantee
the performance of a customer to a third party. Standby letters of
credit generally arise in connection with lending relationships. The credit
risk
involved in issuing these instruments is essentially the same as that involved
in extending loans to customers. Contingent obligations under standby
letters of credit totaled approximately $3.5 million at September 30, 2007
and
represent the maximum potential future payments the Company could be required
to
make. Typically, these instruments have terms of twelve months or
less and expire unused; therefore, the total amounts do not necessarily
represent future cash requirements. Each customer is evaluated
individually for creditworthiness under the same underwriting standards used
for
commitments to extend credit and on-balance sheet
instruments. Company policies governing loan collateral apply to
standby letters of credit at the time of credit
extension. Loan-to-value ratios are generally consistent with
loan-to-value requirements for other commercial loans secured by similar types
of collateral. The fair value of the Company’s standby letters of credit at
September 30, 2007 was insignificant.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The
Board
of Directors and Shareholders
TrustCo
Bank Corp NY:
We
have
reviewed the consolidated statement of financial condition of TrustCo Bank
Corp
NY and subsidiaries (the Company) as of September 30, 2007, and the related
consolidated statements of income for the three and nine-month periods ended
September 30, 2007 and 2006 and the related changes in shareholders’ equity and
cash flows for the nine-month periods ended September 30, 2007 and
2006. These consolidated financial statements are the responsibility
of the Company's management.
We
conducted our review in accordance with standards of the Public Company
Accounting Oversight Board (United States). A review of interim
financial information consists principally of applying analytical procedures
and
making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with the standards of the Public Company Accounting Oversight Board
(United States), the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion. Based on our review, we are not aware
of any material modifications that should be made to the consolidated financial
statements referred to above for them to be in conformity with accounting
principles generally accepted in the United States of America.
As
discussed in Note 4 to the consolidated financial statements, the Company
adopted Statement of Financial Accounting Standards No. 159 “The Fair Value
Option for Financial Assets and Financial Liabilities, including an amendment
of
FASB Statement No. 115” as of January 1, 2007, and Staff Accounting
Bulletin No. 108 “Considering the Effects of Prior Year Misstatements when
Quantifying Misstatement In Current Year Financial Statements” as of
January 1, 2006.
We
have
previously audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated statement of
financial condition of TrustCo Bank Corp NY and subsidiaries as of December
31,
2006, and the related consolidated statements of income, changes in
shareholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated February 27, 2007, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying consolidated statement
of financial condition as of December 31, 2006 is fairly stated, in
all material respects, in relation to the consolidated statement of financial
condition from which it has been derived.
/s/KPMG
LLP
|
|
KPMG
LLP
|
|
|
|
Albany,
New York
|
|
November
7, 2007
|
|
Item
2. Management's Discussion and Analysis of
Financial Condition and Results
of Operations
The
review that follows focuses on the factors affecting the financial condition
and
results of operations of TrustCo Bank Corp NY ("TrustCo" or "Company") during
the three-month and nine-month periods ended September 30, 2007, with
comparisons to 2006 as applicable. Net interest margin is presented
on a fully taxable equivalent basis in this discussion. The
consolidated interim financial statements and related notes, as well as the
2006
Annual Report to Shareholders should be read in conjunction with this
review. Amounts in prior period consolidated interim financial
statements are reclassified whenever necessary to conform to the current
period's presentation.
Forward-looking
Statements
Statements
included in this review and in future filings by TrustCo with the Securities
and
Exchange Commission, in TrustCo's press releases, and in oral statements made
with the approval of an authorized executive officer, which are not historical
or current facts, are "forward-looking statements" made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995,
and
are subject to certain risks and uncertainties that could cause actual results
to differ materially from historical earnings and those presently anticipated
or
projected. TrustCo wishes to caution readers not to place undue
reliance on any such forward-looking statements, which speak only as of the
date
made. The following important factors, among others, in some cases
have affected and in the future could affect TrustCo's actual results, and
could
cause TrustCo's actual financial performance to differ materially from that
expressed in any forward-looking statement: (1) credit risk, (2) interest rate
risk, (3) competition, (4) changes in the regulatory environment, and (5)
changes in market area and general business and economic trends. The
foregoing list should not be construed as exhaustive, and the Company disclaims
any obligation to subsequently revise any forward-looking statements to reflect
events or circumstances after the date of such statements, or to reflect the
occurrence of anticipated or unanticipated events.
Following
this discussion is the table "Distribution of Assets, Liabilities and
Shareholders' Equity: Interest Rates and Interest Differential" which gives
a
detailed breakdown of TrustCo's average interest earning assets and interest
bearing liabilities for the three months and nine months ended September 30,
2007 and 2006.
Adoption
of New Accounting Pronouncements
a)
Statements of Financial Accounting Standards No. 159 “The Fair Value Option for
Financial Assets and Financial Liabilities, including an amendment of FASB
Statement No. 115”, and No. 157 “Fair Value Measurements”.
Effective
January 1, 2007 TrustCo elected early adoption of Statements of Financial
Accounting Standards (“SFAS”) No. 159 “The Fair Value Option for Financial
Assets and Financial
Liabilities, including an amendment of FASB Statement No. 115” (SFAS No.
159),
and
No. 157 “Fair Value Measurements” (SFAS No. 157). SFAS No. 159, which
was
issued in February 2007, generally permits the measurement of selected eligible
financial instruments at fair value at specified election dates. SFAS
No. 157 generally establishes the definition of fair value and expands
disclosures about fair value measurement. This statement establishes
a hierarchy of the levels of fair value measurement
techniques. Upon adoption of SFAS No. 159, TrustCo elected to apply
the fair value option for certain government sponsored enterprises securities
with lower yields, which generally had longer duration, that were classified
as
the available for sale portfolio totaling approximately $517 million ($502
million at fair value). Prior to the adoption of SFAS No. 159, the
Company intended to hold these securities until a market price recovery or
possibly to maturity. The Company changed its intent with respect to
these securities and therefore recorded these losses directly to undivided
profits rather than current income based on the transition provisions of SFAS
159 by electing the fair value option for these securities. As a
result, unrealized losses of $8.6 million were directly recorded to undivided
profits. This charge to undivided profits had no overall impact on total
shareholders’ equity because the fair value adjustment had previously been
included as an element of shareholders’ equity in the accumulated other
comprehensive income (loss) account, net of tax.
As
a
result of TrustCo’s fair value measurement election for the above financial
instruments, TrustCo recorded $3.4 million of pre-tax unrealized trading gains
in its first quarter earnings for the change in fair value of such instruments
from the effective election date of January 1, 2007 to March 31,
2007. Additionally, TrustCo sold in the second quarter all of these
securities and recognized pre-tax trading losses of $2.7 million in the second
quarter. While the proceeds from this sale were initially invested in
federal funds sold, the Company re-invested these proceeds by purchasing
securities, primarily United States Government sponsored enterprises, for its
trading portfolio. As of September 30, 2007 $451 million of US
Government sponsored enterprises securities were purchased for the trading
portfolio. TrustCo believes that its adoption of the standard will
have a positive impact on its ability to manage its investment portfolio because
it will enable the Company to sell the securities that it has elected the fair
value option for without recording other-than-temporary impairment on the
remainder of the available-for-sale portfolio. Additionally,
recording the unrealized losses on these securities directly to undivided
profits as part of the transition adjustment will benefit net income because
the
loss was not realized in the income statement when the security was
sold.
As
already stated, the Company recorded a $8.6 million charge to undivided profits
as a result of adopting SFAS No. 159 as of January 1, 2007. Had the
Company not adopted this new accounting standard and reclassified the available
for sale securities to trading account assets as of that date, the charge to
capital would have been recorded as a charge to net income.
In
determining the fair value for the trading account securities the Company
utilized an independent bond pricing service.
The
following table presents information relative to the assets identified for
the
fair value option of accounting as of the initial implementation date of January
1, 2007:
($
in thousands)
|
|
Statement
of Condition 12/31/06 Prior to Adoption
|
|
|
Net
Loss Recognized in Undivided Profits Upon Adoption
|
|
|
Statement
of Condition After Adoption of Fair Value Option
|
|
Securities
available for sale transferred to trading account assets:
|
|
|
|
|
|
|
|
|
|
Amortized
cost
|
|
$ |
516,558
|
|
|
|
(14,313 |
) |
|
|
502,245
|
|
Unrealized
depreciation
|
|
|
(14,313 |
) |
|
|
14,313
|
|
|
|
-
|
|
Net
transferred to trading account assets
|
|
$ |
502,245
|
|
|
|
-
|
|
|
|
502,245
|
|
The
securities transferred to trading account assets as of January 1, 2007 were
included previously in the available for sale portfolio as Government sponsored
enterprises.
TrustCo
determined that it would be appropriate to account for certain of the U.S.
government sponsored enterprises securities at fair value based upon the
relatively low interest rate on these bonds. U.S. government
sponsored enterprises bonds held by Trustco Bank in the available for sale
portfolio as of January 1, 2007 under a predetermined interest rate (generally
5.45% or below) were identified as bonds to be recorded at fair value (the
bonds
also had an average life to maturity of approximately 9
years). Interest on trading account securities are recorded in the
Consolidated Statements of Income based upon the coupon of the underlying bond
and the par value of the securities. Unrealized gains and losses on
the trading account securities are recognized based upon the fair value at
period end compared to the beginning of that period.
After
the
adoption of SFAS 159 as of January 1, 2007 there were $232.3 million of
remaining U.S. government sponsored enterprises obligations classified as
available for sale securities which had gross unrealized losses of $3.3
million. These securities are primarily higher yielding assets and
generally had shorter terms to final maturity. It is management’s
intention that U.S. government sponsored enterprises securities that remain
in
the Available for Sale portfolio after the adoption of SFAS 159 will be held
to
generate relatively higher yields or provide liquidity in the form of maturing
or called securities.
The
following tables present the financial instruments recorded at fair value by
the
Company as of September 30, 2007 and for the three and nine month periods ended
September 30, 2007.
(in
thousands)
|
|
Fair
Value Measurements at September 30, 2007 using:
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Total
Carrying Amount in Statement Of Financial Position As of
9/30/2007
|
|
|
Statement
107 Fair Value Estimate As of 9/30/2007
|
|
|
Fair
Value Measurement As of 9/30/2007
|
|
|
Quoted
Prices in Active Markets for Identical Assets (Level 1)
|
|
|
Significant
other Observable input (Level 2 )
|
|
Assets
available for sale
|
|
|
580,099
|
|
|
|
580,099
|
|
|
|
580,099
|
|
|
|
-
|
|
|
|
580,099
|
|
Trading
account assets
|
|
|
450,513
|
|
|
|
450,513
|
|
|
|
450,513
|
|
|
|
-
|
|
|
|
450,513
|
|
Other
real estate owned
|
|
|
162
|
|
|
|
162
|
|
|
|
162
|
|
|
|
-
|
|
|
|
162
|
|
(in
thousands)
|
|
Change
in fair value for the 3 month period from July 1, 2007 to September
30,
2007 for items measured at fair value pursuant to election of the
Fair
Value Option
|
|
|
Change
in fair value for the 9 month period from January 1, 2007 to September
30,
2007 for items measured at fair value pursuant to election of the
Fair
Value Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
Trading Gains
|
|
|
Total
Changes Included in Values Included in Period Earnings
|
|
|
Unrealized
Trading Gains
|
|
|
Total
Changes Included in Values Included in Period Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
Available-for-sale
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading
account assets
|
|
|
305
|
|
|
|
305
|
|
|
|
906
|
|
|
|
906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
real estate owned
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Assets
available for sale and trading account securities are fair valued utilizing
an
independent bond pricing service for identical assets or significantly similar
securities. The pricing service uses a variety of techniques to
arrive at fair value including market maker bids, quotes and pricing
models. Inputs to the pricing models include recent trades, benchmark
interest rates, spreads and actual and projected cash flows. Other
real estate owned fair value is determined by observable comparable sales and
property valuation techniques.
|
a)
|
FASB
Interpretation No. 48 “Accounting for Uncertainty in Income
Taxes”
|
TrustCo
adopted Financial Accounting Standards Board Interpretation No. 48, “Accounting
for Uncertainty in Income Taxes” (“FIN 48”) as of January 1,
2007. FIN 48 prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken on a tax return. As a result
of the Company’s adoption of FIN 48, there were no required adjustments to the
Company’s consolidated financial statements.
TrustCo
has implemented certain tax return positions that have not been fully recognized
for financial statement purposes based upon management’s evaluation of the
probability of the benefit being realized. For 2007 the Company has
recognized interest expense on the potential settlement amount as an element
of
other expenses and nothing for potential tax penalties.
For
the
nine months ended September 30, 2007 the unrecognized tax benefit and change
in
that benefit from the beginning of the year is as follows:
(Dollars
in thousands)
|
|
|
|
|
|
|
|
Balance
January 1, 2007
|
|
$ |
3,392
|
|
|
|
|
|
|
Additional
unrecognized benefit for the period from 1/1/07 to 9/30/07
|
|
|
659
|
|
|
|
|
|
|
Balance
September 30, 2007
|
|
$ |
4,051
|
|
If
the
unrecognized tax benefit were to be recognized for financial reporting purposes
the impact would be to decrease total tax expense by the balance not previously
recognized (as of September 30, 2007 that amount would be $2.6 million, after
tax). Interest expense of $250 thousand has been recorded during 2007
and included in accrued expenses and other liabilities (no penalties have been
accrued). The total accrual for interest expense included in the
statement of financial condition is $639 thousand and is included in accrued
expenses and other liabilities.
The
New
York State tax returns are currently under audit for the periods that the
unrecognized tax return position was initiated. Open Federal tax
years are 2003, 2004 and 2005, and for NYS they are 2002 through
2005. The 2006 state and federal tax returns were filed in the third
quarter of 2007.
The
Company does not believe the unrecognized tax benefit will significantly
increase or decrease within the next twelve months except if the New York State
tax return audits are completed. It is reasonably possible that a
reduction in the estimate may occur, however, a quantification of a reasonable
range cannot be determined.
b)
|
Prior
Year Immaterial Uncorrected
Misstatements
|
As
described in the Company Annual Report on Form 10-K in 2006, the Company adopted
the Staff Accounting Bulletin (SAB) No. 108 “Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements.” As a result of the Adoption of SAB No. 108 TrustCo
recognized a reduction in other liabilities of $8.3 million and a decrease
in
the allowance for loan losses of $7.6 million. These entries were
recorded as adjustments of the beginning of the year 2006 opening balances
for
these accounts and the impact, net of tax, was reflected in shareholders’ equity
as an adjustment to January 1, 2006 undivided profits.
Overview
TrustCo
recorded net income of $10.6 million, or $0.141 of diluted earnings per share
for the three months ended September 30, 2007, as compared to net income of
$11.2 million or $0.149 of diluted earnings per share in the same period in
2006. For the nine-month period ended September 30, 2007, TrustCo
recorded net income of $31.1 million, or $0.413 per diluted earnings per share
as compared to $36.0 million, or $0.479 of diluted earnings per share for the
comparable period in 2006.
The
primary factors accounting for the year to date changes were:
|
o
|
Increase
in the average balance of interest earning assets by $316.3 million
to
$3.19 billion for the first nine months of 2007 compared to the comparable
period in 2006,
|
|
o
|
Increase
in the average balance of interest bearing liabilities by $320.2
million
to $2.77 billion for the first nine months of 2007 as compared to
2006,
|
|
o
|
Decrease
in net interest margin from 3.57% for the first nine months of 2006
to
3.11% for the nine months of 2007,
|
|
o
|
Decrease
in the credit for loan losses from $3.6 million for the first nine
months
of 2006 to $-0- in the comparable period in
2007,
|
|
o
|
Increase
in noninterest income from $11.1 million for the first nine months
of 2006
to $13.4 million for the comparable period in 2007. Included in
noninterest income were $264 thousand of net losses on securities
transactions for 2006 compared to gains of $229 thousand for 2007
and $906
million of net unrealized gains on trading securities in 2007 and
none in
2006, and
|
|
o
|
An
increase of $4.2 million in noninterest expense for the first nine
months
of 2007 as compared to the first nine months of
2006.
|
Asset/Liability
Management
The
Company strives to generate its earnings capabilities through a mix of core
deposits, funding a prudent mix of earning assets. Additionally,
TrustCo attempts to maintain adequate liquidity and reduce the sensitivity
of
net interest income to changes in interest rates to an acceptable level while
enhancing profitability both on a short-term and long-term basis.
The
following Management’s Discussion and Analysis for the third quarter and first
nine months of 2007 compared to the comparable periods in 2006 is greatly
affected by the change in interest rates in the marketplace in which TrustCo
competes. Included in the 2006 Annual Report to Shareholders is a
description of the effect interest rates had on the results for the year 2006
compared to 2005. Most of the same market factors discussed in the
2006 Annual Report also had a significant impact on the second quarter and
year-to-date 2007 results.
TrustCo
competes with other financial service providers based upon many factors
including quality of service, convenience of operations, and rates paid on
deposits and charged on loans. The absolute level of interest rates,
changes in rates and customers’ expectations with respect to the direction of
interest rates have a significant impact on the volume of loan and deposit
originations in any particular period.
One
of
the most important interest rates used to control national economic policy
is
the “federal funds” rate. This is the interest rate utilized for
institutions with the highest credit quality rating. The federal funds rate
remained unchanged from the second quarter of 2006 until it was reduced by
50
basis points to 4.75% on September 18, 2007. Since early 2006, the
yield curve has frequently been flat or mildly inverted, as opposed to the
more
typical positively sloped curve. A flat yield curve refers to an
environment where market interest rates are approximately the same for short
and
long terms securities of the same type. In an inverted curve, short
term rates are higher than long term rates and in a positively sloped curve,
long term rates are higher than short term rates. The Federal Reserve
has indicated its intention to continue to monitor economic expansion in the
United States economy which may require additional changes in the federal funds
rate subsequent to September 30, 2007.
These
changes in interest rates have an effect on the Company relative to the interest
income on loans, securities and federal funds sold as well as on interest
expense on deposits and borrowings. New originations of residential
real estate loans and new purchases of longer-term investments are most affected
by the changes in longer term market interest rates such as the 10 year
treasury. The federal funds sold portfolio and other short term
investments along with short term securities classified as trading are affected
primarily by changes in the federal funds target rate. Deposit
interest rates are most affected by the short term market interest
rates. Also, changes in interest rates have an effect on the recorded
balance of the securities available for sale portfolio (with the offset to
accumulated other comprehensive income) and trading portfolio (with the offset
to earnings), which are recorded at fair value.
Generally
as interest rates increase the fair value of these securities will
decrease.
The
principal loan product for TrustCo is residential real estate
loans. Interest rates on new residential real estate loan
originations are influenced by the rates established by secondary market
participants such as Freddie Mac and Fannie Mae. Because TrustCo is a
portfolio lender and does not typically sell loans into the secondary market,
the Company establishes rates that management determines are appropriate in
relation to the long-term nature of a residential real estate loan, while
remaining competitive with the secondary market rates.
For
the
third quarter of 2007, the net interest margin decreased to 3.10% from 3.46%
for
the third quarter of 2006. The quarterly results reflect the
following significant factors:
-
|
The
average balance of securities available for sale, held-to-maturity
securities and trading securities decreased by $112.3 million and
the
average yield increased to 5.39% from 5.32% in the third quarter
of
2006.
|
-
|
The
average balance of federal funds sold and other short-term investments
increased by $227.6 million and the average yield decreased 11 basis
points to 5.21%. The decrease in yield on federal funds sold
and other short-term investments is attributable to the decrease
in the
target federal funds rate during the third quarter of
2007.
|
-
|
The
average loan portfolio grew by $235.2 million to $1.88 billion and
the
average yield increased 11 basis points to
6.58%.
|
-
|
The
average balance of interest bearing liabilities (primarily deposit
accounts) increased $344.0 million and the average rate paid increased
45
basis points to 3.39%.
|
During
the third quarter of 2007 the Company’s strategy was to expand the loan
portfolio by offering competitive interest rates as the rate environment
changed. The TrustCo residential real estate loan product is very
competitive compared to local and national competitors. The
widespread disruptions in the mortgage market have not had a significant impact
on TrustCo, partly because the Company has not originated the types of loans
that have been responsible for many of the problems causing the
disruptions. The average balance of federal funds sold and other
short-term investments increased, primarily reflecting the Company’s strong
deposit growth.
The
strategy on the funding side of the balance sheet continues to be to attract
customers to the Company based upon a combination of service, convenience and
interest rate. The Company offered attractive long-term deposit rates
as part of a strategy to lengthen deposit lives. This strategy has
been successful but has also resulted in part of the increase in the deposit
costs.
Earning
Assets
Total
average interest earning assets increased from $2.92 billion in the third
quarter of 2006 to $3.27 billion in the same period of 2007 with an average
yield of 5.97% in 2006 and 6.05% in 2007. Interest income on average
earning assets increased during this same
time-period from $43.6 million in 2006 to $49.6 million in 2007 on a tax
equivalent basis.
Loans
The
average balance of loans was $1.88 billion in the third quarter of 2007 and
$1.65 billion in the comparable period in 2006. The yield on loans
increased 11 basis points to 6.58%. The higher average balances and
higher yield both contributed to an increase in the interest income on loans
of
$4.3 million.
For
the
first nine months of 2007, average loans increased $257.9 million to $1.83
billion and the average yield increased by 1 basis point to 6.51%.
Compared
to the third quarter of 2006, the average balance of the loan portfolio during
the third quarter of 2007 increased in all loan categories. The
average balance of residential mortgage loans was $1.18 billion in 2006 compared
to $1.37 billion in 2007, an increase of 16.0%. The average yield on
residential mortgage loans increased by 3 basis points to 6.24% in 2007 compared
to 2006.
TrustCo
actively markets the residential loan products within its market
territory. Mortgage loan rates are affected by a number of factors
including rates on treasury securities, the federal funds rate and rates set
by
competitors and secondary market participants. As noted earlier,
market interest rates have changed significantly as a result of national
economic policy in the United States. During this period of changing
interest rates TrustCo aggressively marketed the unique aspects of its loan
products thereby attempting to create a differentiation from other
lenders. These unique aspects include extremely low closing costs,
fast turn around time on loan approvals, no escrow or mortgage insurance
requirements and the fact that the Company typically holds these
loans in portfolio and does not sell them into the secondary
markets. Assuming a rise in long-term interest rates, the Company
would anticipate that the unique features of its loan product will continue
to
attract customers in the residential mortgage loan area.
Commercial
loans, which consist primarily of loans secured by commercial real estate,
increased 19.2% to an average balance of $280.4 million in the third quarter
of
2007 over the prior year. The significant increase in balances is
partly due to fewer competitors focusing on this sector. The average
yield on this portfolio decreased 6 basis points to 7.58% over the same
period.
The
average yield on home equity credit lines of credit increased 78 basis points
to
7.18% during the third quarter of 2007 compared to 2006. The
improvement in yield was the result of existing loans repricing from low initial
rates to the regular indexed rate as well as a decision to significantly reduce
the introductory rate discount on new loans. The average balances of
home equity lines increased 0.5% to $230.7 million in the third quarter of
2007
as compared to the prior year.
Securities
Available-for-Sale
As
discussed previously, TrustCo adopted the accounting requirements of SFAS No.
159 and, as a result, reclassified assets from the available-for-sale portfolio
to the trading securities portfolio as of January 1, 2007. As a
result of this reclassification, there
was
a significant change in the balances of these portfolios between the third
quarter of 2007 and the third quarter of 2006. The Company also added
a small held-to-maturity portfolio in the third quarter of 2007.
The
average balance of the securities available-for-sale portfolio for the third
quarter of 2007 was $544.1 million compared to $1.12 billion for the comparable
period in 2006. The average yield was 5.48% for the third quarter of
2007 and 5.32% for the third quarter of 2006. The increase in yield
is a result of the higher yielding assets in the securities available-for-sale
portfolio after the transfer of assets to trading securities. The
changes in balances between the two time periods was primarily due to the
transfer of bonds to the trading portfolio and to a lesser degree was due to
paydowns on mortgage backed securities, and purchases, calls and maturities
of
bonds.
Similar
to the third quarter, for the first nine months of 2007, average securities
available-for-sale were $528.2 million, compared to $1.12 billion in the
comparable 2006 period. The average yield increased from 5.31% to
5.47%.
Trading
Securities
The
average balance of trading securities for the third quarter of 2007 was
$450.3 There were no trading securities in 2006. The
average yield was 5.22% for 2007.
For
the
first nine months of 2007, average trading securities were $440.5
million. The average year-to-date yield was 5.32%.
All
of
the securities in this portfolio are bonds issued by Government Sponsored
Enterprises (FNMA, FHLB, and Freddie Mac issued bonds). The balances
for these bonds are recorded at fair value.
As
of
September 30, 2007 $450.2 million of U.S. government sponsored enterprises
securities were purchased for the trading portfolio.
Held-to-Maturity
Securities
The
average balance of held-to-maturity securities for the third quarter of 2007
was
$15.1 million. There were no held-to-maturity securities in
2006. The average yield was 5.91% for 2007.
For
the
first nine months of 2007, average held-to-maturity securities were $5.1
million. The average year-to-date yield was 5.89%.
All
of
the securities in this portfolio are bonds issued by Government Sponsored
Enterprises (FNMA, FHLB, and Freddie Mac issued bonds). The balances
for these bonds are recorded at amortized cost.
Federal
Funds Sold and Other Short-term Investments
The
2007
third quarter average balance of federal funds sold and other short-term
investments was $377.7 million, $227.7 million more than the $150.0 million
average in 2006. The portfolio yield decreased from 5.32% in 2006 to
5.21% in 2007. Changes in the yield resulted from changes in the
target rate set by the Federal Reserve Board for federal funds
sold. Interest income on this portfolio increased by approximately
$2.9 million from $2.0 million in 2006 to $4.9 million in 2007.
For
the
first nine months of 2007, federal funds sold and other short-term investments
averaged $388.5 million, compared to $187.1 million in the prior
year. The yield improved to 5.24% from 4.84%, reflecting the change
in the fed funds target rate.
The
federal funds sold and other short-term investments portfolio is utilized to
generate additional interest income and liquidity as funds are waiting to be
deployed into the loan and securities portfolios.
Funding
Opportunities
TrustCo
utilizes various funding sources to support its earning asset
portfolio. The vast majority of the Company’s funding comes from
traditional deposit vehicles such as savings, demand deposits, interest-bearing
checking and time deposit accounts.
Total
average interest-bearing deposits (which includes interest bearing checking,
money market accounts, savings, and certificates of deposit) increased from
$2.40 billion during the third quarter of 2006 to $2.75 billion in the third
quarter of 2007, and the average rate paid increased from 2.89% for 2006 to
3.37% for 2007. Total interest expense on these deposits increased
$5.9 million to $23.3 million.
For
the
first nine months of 2007 average interest-bearing deposits were $2.68 billion,
an increase of $319.7 million over the prior year and the cost of these funds
increased to 3.32% from 2.72% over this time frame.
Average
short-term borrowings for the quarter were $93.3 million in 2007 compared to
$95.2 million in 2006. The average rate decreased during this time
period from 4.12% in 2006 to 4.00% in 2007. Rates on short-term
borrowings tend to change with the rates on the target Federal
Funds.
For
the
first nine months of 2007, average short-term borrowings were $95.8 million
in
2007 compared to $95.4 million in 2006. The average rate increased
during this time period from 3.82% in 2006 to 4.08% in 2007.
Net
Interest Income
Taxable
equivalent net interest income increased by $151 thousand to $25.3 million
in
the third quarter of 2007 as compared to the same period in 2006. The
net interest spread decreased from 3.03% in the third quarter of 2006 to 2.66%
in 2007. The net interest
margin decreased by 36 basis points to 3.10% for the third quarter of
2007.
Net
interest income was $74.6 million in the first nine months of 2007, a decline
of
$2.5 million versus the comparable period in 2006. The net interest
spread declined 50 basis points to 2.67%, while the net interest margin declined
46 basis points to 3.11%.
Nonperforming
Assets
Nonperforming
assets include nonperforming loans which are those loans in a nonaccrual status,
loans that have been restructured in a troubled debt restructuring, and
loans
past due three payments or more and still accruing interest. Also
included in the total of nonperforming assets are foreclosed real estate
properties, which are categorized as real estate owned.
Impaired
loans are considered to be those commercial and commercial real estate loans
in
a nonaccrual status and restructured loans. The following describes
the nonperforming assets of TrustCo as of September 30, 2007:
Nonperforming
loans: Total
nonperforming loans were $8.9 million at September 30, 2007, an increase from
the $7.1 million of nonperforming loans at December 31, 2006 and the $6.3
million of nonperforming loans at September 30, 2006. There were $7.8
million of nonaccrual loans at September 30, 2007 compared to the $5.7 million
at December 31, 2006 and $5.1 million at September 30,
2006. Restructured loans were $842 thousand at September 30, 2007
compared to the $1.2 million at both December 31, 2006 and September 30,
2006. There were $272 thousand of loans at September 30, 2007 that
were past due 90 days or more and still accruing interest, compared to $211
thousand at December 31, 2006 and $40 thousand at September 30,
2006.
Substantially
all of the nonperforming loans at September 30, 2007 and 2006 are residential
real estate or retail consumer loans. Since 2000, there has been a
continued shifting in the components of TrustCo’s problem loans and charge-offs
from commercial and commercial real estate to the residential real estate and
retail consumer loan portfolios.
TrustCo
strives to identify borrowers that are experiencing financial difficulties
and
to work aggressively with them so as to minimize losses or
exposures.
Total
impaired loans at September 30, 2007 were $917 thousand, and consisted of
restructured retail loans as well as one commercial mortgage. During
the third quarter of 2007, there were $167 thousand of commercial loan charge
offs, $179 thousand of consumer loan charge offs and $486 thousand of
residential mortgage loan charge-offs as compared with $19 thousand commercial
loan charge-offs, $95 thousand of consumer loan charge-offs and $242 thousand
of
residential mortgage loan charge-offs in the third quarter of
2006. Recoveries during the quarter were $478 thousand in 2007 and
$691 thousand in 2006.
Allowance
for loan losses: The balance of the allowance for loan losses is
maintained at a level that is, in management’s judgment, representative of the
amount of risk inherent in the loan portfolio.
At
September 30, 2007, the allowance for loan losses was $34.7 million, which
represents a decrease from the $35.6 million in the allowance at December 31,
2006. The allowance represents 1.82% of the loan portfolio as of
September 30, 2007 compared to 2.02% at December 31, 2006. The
provision for loan losses was zero for the quarter ended September 30, 2007
and
for the year earlier quarter due to the continuation of the positive credit
quality indicators, offset to a degree by loan growth. The loan loss
provision was also zero for the first nine months of 2007, compared to a credit
$3.6 million for the first nine months of 2006. The
change in the provision/credit for loan losses is partially reflective of the
change in the net charge off/ recovery from 2006 to 2007. Net charge
offs for the nine month period ended September 2007 were approximately $833
thousand compared to net recoveries of $1.4 million for the comparable period
in
2006. In deciding on the adequacy of the allowance for loan
losses, management reviews the current nonperforming loan portfolio as well
as
loans that are past due and not yet categorized
as nonperforming for reporting purposes. Also, there are a number of
other factors
that are taken into consideration, including:
|
‘o
|
The
magnitude and nature of the recent loan charge offs and
recoveries,
|
|
‘o
|
The
growth in the loan portfolio and the implication that has in relation
to
the economic climate in the bank’s business territory,
and
|
|
‘o
|
The
improving economic environment in the Company’s upstate New York territory
over the last two years.
|
Management
continues to monitor these factors in determining future provisions or credits
for loan losses in relation to the economic environment, loan charge-offs,
recoveries and the level and trends of nonperforming loans.
Liquidity
and Interest Rate Sensitivity
TrustCo
seeks to obtain favorable sources of funding and to maintain prudent levels
of
liquid assets in order to satisfy varied liquidity demands. TrustCo’s
earnings performance and strong capital position enable the Company to raise
funds easily in the marketplace and to secure new sources of
funding. The Company actively manages its liquidity
through target ratios established under its liquidity
policies. Continual monitoring of both historical and prospective
ratios allows TrustCo to employ strategies necessary to maintain adequate
liquidity. Management has also defined various degrees of adverse
liquidity situations, which could potentially occur, and has prepared
appropriate
contingency plans should such a situation arise.
Noninterest
Income
Total
noninterest income for the third quarter was $4.8 million, compared to $3.9
million in 2006, an increase of 22.0%. For the first nine months of
2007, noninterest income totaled $13.4 million, compared to $11.1 million in
the
comparable 2006 period, an increase of 20.9%.
Trust
department income increased 4.7% to $1.4 million for the third quarter of 2007
compared to $1.3 million in the third quarter of 2006. Trust department assets
under management were $950 million at September 30, 2007 compared to $872
million at September 30, 2006. On a year-to-date basis, trust income
was up 6.2% to $4.3 million, due primarily to higher average valuation of assets
under management in the first nine months of the current year compared to the
same period in 2006.
Fees
for
other services to customers increased by 7.0% to $2.4 million between the third
quarter of 2006 and the comparable period in 2007. The increase is
the result of changes in fee policies as well as fees being charged on a larger
customer base. For the first nine months, fees were up 11.9% to $7.0
million.
The
Company recognized $305 thousand of net trading gains in the third quarter
of 2007. For the first nine months of 2007, trading gains
of $906 thousand were recognized, compared to zero in the same period in
2006. On a year-to-date basis, the impact of net gains in the
available for sale and trading portfolios, relative to the same period in 2006,
resulted in an improvement of $1.4 million in non-interest income.
Noninterest
Expenses
Total
noninterest expense increased from $11.7 million for the three months ended
September 30, 2006 to $13.6 million for the three months ended September 30,
2007, with increases in each expense category. Salaries and employee
benefits increased $615 thousand to $5.3 million for 2007. Higher
salaries and benefits are primarily due to increased staffing related to the
branch expansion initiative and the impact of extended service
hours. Net occupancy expense increased $707 thousand to $2.6 million
during the third quarter of 2007. The increase is the result of new
branch lease costs and the increased cost of utilities and taxes on branch
locations.
For
the
first nine months of 2007, noninterest expense rose to $39.8 million from $35.6
million
in the comparable 2006 period, with increases in each expense
category. The bulk of the increase was in compensation and occupancy,
both substantially reflecting the increase in the number of branches and the
former also impacted by new extended service hours.
Income
Taxes
In
the
third quarter of 2007, TrustCo recognized income tax expense of $5.1 million
as
compared to $5.4 million for 2006. The effective tax rates were 32.3%
and 32.5% for the third quarter of 2007 and 2006, respectively. The
tax expense on the Company’s income was different than tax expense at the
statutory rate of 35%, due primarily to tax exempt income and the effect of
state income taxes.
For
the
first nine months of 2007, income taxes were $14.9 million, compared to $17.9
million in 2006 and the tax rate declined from 33.2% to 32.4%.
Capital
Resources
Consistent
with its long-term goal of operating a sound and profitable financial
organization, TrustCo strives to maintain strong capital ratios. New
issues of equity securities have not been required since traditionally, most
of
its capital requirements are met through capital retention.
Total
shareholders’ equity at September 30, 2007 was $234.8 million, a decrease from
the $239.5 million at year-end 2006. TrustCo declared dividends of $0.160 per
share in the third quarter of 2007. This results in a dividend payout
ratio of 113.0% in 2007. TrustCo expects to manage this ratio down. A
dividend payout ratio in excess of 100% is not sustainable indefinitely,
particularly given growth in the Company’s asset base.
The
Company achieved the following ratios as of September 30, 2007 and
2006:
|
|
September
30,
|
|
|
Minimum
Regulatory
|
|
|
|
2007
|
|
|
2006
|
|
|
Guidelines
|
|
|
|
|
|
|
|
|
|
|
|
Tier
1 risk adjusted capital
|
|
|
13.44%
|
|
|
|
15.73%
|
|
|
|
4.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
risk adjusted capital
|
|
|
14.70%
|
|
|
|
16.99%
|
|
|
|
8.00%
|
|
In
addition, at September 30, 2007 and 2006, the consolidated equity to total
assets ratio (excluding the mark to market effect of securities available for
sale) was 6.93% and 8.13%, respectively, compared to a minimum regulatory
requirement of 4.00%.
The
decrease in capital ratios primarily reflects growth in the overall consolidated
balance sheet as well as the decline in stockholders’ equity.
Critical
Accounting Policies:
Pursuant
to SEC guidance, management of the Company is encouraged to evaluate and
disclose those accounting policies that are judged to be critical policies
-
those most important to the portrayal of the Company’s financial condition and
results, and that require management’s most difficult subjective or complex
judgments.
Management
considers the accounting policy relating to the allowance for loan losses to
be
a critical accounting policy given the inherent uncertainty in evaluating the
levels of the allowance required to cover the inherent risk of losses in the
portfolio and the material effect that such judgments can have on the results
of
operations. Included in Note 1 to the Consolidated Financial Statements
contained in the Company’s 2006 Annual Report on Form 10-K is a description of
the significant accounting policies that are utilized by the Company in the
preparation of the Consolidated Financial Statements.
The
Company considers the adoption of SFAS No. 157 and 159 and the resulting fair
value accounting requirements to be considered critical accounting policies
which effect the Company’s financial position and results of
operations. See Footnote 4 “Adoption of New Accounting
Pronouncements” for a description of the Company’s implementation.
TrustCo
Bank Corp NY
Management's
Discussion and Analysis
STATISTICAL
DISCLOSURE
I.
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS'
EQUITY;
INTEREST
RATES AND INTEREST DIFFERENTIAL
The
following table summarizes the component distribution of average balance sheet,
related interest income and expense and the average annualized
yields
on interest earning assets and annualized rates on interest bearing liabilities
of TrustCo (adjusted for tax equivalency) for each of the reported periods.
Nonaccrual loans are included in loans for this analysis. The average balances
of securities available for sale and held-to-maturity are calculated using
amortized costs for these securities. The average balance of trading
securities is calculated using fair value for these securities. Included in
the
average balance of shareholders' equity is unrealized depreciation, net of
tax,
in the available for sale portfolio of $6.3 million in 2007 and
$16.4 million in 2006. The subtotals contained in the
following table are the arithmetic totals of the items contained in that
category. Increases and decreases in interest income and
expense due to both rate and volume have been allocared to the
categories of variances (volume and rate) based on the percentage relationship
of such variances to each other.
|
|
Three
Month
|
|
|
2007
|
|
|
|
|
|
Three
Month
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars
in thousands)
|
|
Average
Balance
|
|
|
Interest
|
|
|
Average
Rate
|
|
|
Average
Balance
|
|
|
Interest
|
|
|
Average
Rate
|
|
|
Change
in Interest Income/Expense
|
|
|
Variance
Balance Change
|
|
|
Variance
Rate Change
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Treasuries
|
|
$ |
-
|
|
|
$ |
-
|
|
|
|
0.00 |
% |
|
$ |
993
|
|
|
$ |
12
|
|
|
|
4.74 |
% |
|
|
(12 |
) |
|
|
(6 |
) |
|
|
(6 |
) |
U.
S. Gov't Sponsored Enterprises
|
|
|
244,831
|
|
|
|
3,300
|
|
|
|
5.39 |
% |
|
|
796,523
|
|
|
|
10,382
|
|
|
|
5.21
|
|
|
|
(7,082 |
) |
|
|
(9,477 |
) |
|
|
2,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed
securities and collateralized mortgage obligations
|
|
|
159,362
|
|
|
|
1,857
|
|
|
|
4.66 |
% |
|
|
179,831
|
|
|
|
2,110
|
|
|
|
4.69 |
% |
|
|
(253 |
) |
|
|
(240 |
) |
|
|
(13 |
) |
States
and political subdivisions
|
|
|
126,643
|
|
|
|
2,154
|
|
|
|
6.80 |
% |
|
|
131,848
|
|
|
|
2,252
|
|
|
|
6.84 |
% |
|
|
(98 |
) |
|
|
(85 |
) |
|
|
(13 |
) |
Other
|
|
|
13,244
|
|
|
|
147
|
|
|
|
4.41 |
% |
|
|
12,511
|
|
|
|
171
|
|
|
|
5.48 |
% |
|
|
(24 |
) |
|
|
56
|
|
|
|
(80 |
) |
Total
securities available for sale
|
|
|
544,080
|
|
|
|
7,458
|
|
|
|
5.48 |
% |
|
|
1,121,706
|
|
|
|
14,927
|
|
|
|
5.32 |
% |
|
|
(7,469 |
) |
|
|
(9,752 |
) |
|
|
2,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
funds sold and other short-term Investments
|
|
|
377,659
|
|
|
|
4,949
|
|
|
|
5.21 |
% |
|
|
150,029
|
|
|
|
2,009
|
|
|
|
5.32 |
% |
|
|
2,940
|
|
|
|
3,226
|
|
|
|
(286 |
) |
Trading
Securities
|
|
|
450,283
|
|
|
|
5,921
|
|
|
|
5.22 |
% |
|
|
0
|
|
|
|
0
|
|
|
|
0.00 |
% |
|
|
5,921
|
|
|
|
2,961
|
|
|
|
2,961
|
|
Held
to Maturity Securities
|
|
|
15,054
|
|
|
|
224
|
|
|
|
5.91 |
% |
|
|
0
|
|
|
|
0
|
|
|
|
0.00 |
% |
|
|
224
|
|
|
|
112
|
|
|
|
112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
Loans
|
|
|
280,410
|
|
|
|
5,320
|
|
|
|
7.58 |
% |
|
|
235,294
|
|
|
|
4,497
|
|
|
|
7.64 |
% |
|
|
823
|
|
|
|
1,062
|
|
|
|
(239 |
) |
Residential
mortgage loans
|
|
|
1,367,451
|
|
|
|
21,332
|
|
|
|
6.24 |
% |
|
|
1,179,153
|
|
|
|
18,315
|
|
|
|
6.21 |
% |
|
|
3,017
|
|
|
|
2,928
|
|
|
|
89
|
|
Home
equity lines of credit
|
|
|
230,651
|
|
|
|
4,176
|
|
|
|
7.18 |
% |
|
|
229,559
|
|
|
|
3,703
|
|
|
|
6.40 |
% |
|
|
473
|
|
|
|
18
|
|
|
|
455
|
|
Installment
loans
|
|
|
5,947
|
|
|
|
219
|
|
|
|
14.59 |
% |
|
|
5,297
|
|
|
|
191
|
|
|
|
14.28 |
% |
|
|
28
|
|
|
|
24
|
|
|
|
4
|
|
Loans,
net of unearned income
|
|
|
1,884,459
|
|
|
|
31,047
|
|
|
|
6.58 |
% |
|
|
1,649,303
|
|
|
|
26,706
|
|
|
|
6.47 |
% |
|
|
4,341
|
|
|
|
4,032
|
|
|
|
309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
interest earning assets
|
|
|
3,271,535
|
|
|
|
49,599
|
|
|
|
6.05 |
% |
|
|
2,921,038
|
|
|
|
43,642
|
|
|
|
5.97 |
% |
|
|
5,957
|
|
|
|
579
|
|
|
|
5,378
|
|
Allowance
for loan losses
|
|
|
(35,072 |
) |
|
|
|
|
|
|
|
|
|
|
(34,448 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
& non-interest earning assets
|
|
|
119,126
|
|
|
|
|
|
|
|
|
|
|
|
102,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
3,355,589
|
|
|
|
|
|
|
|
|
|
|
$ |
2,989,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Bearing Checking Accounts
|
|
$ |
285,001
|
|
|
|
220
|
|
|
|
0.31 |
% |
|
$ |
285,112
|
|
|
|
364
|
|
|
|
0.51 |
% |
|
|
(144 |
) |
|
|
(0 |
) |
|
|
(144 |
) |
Money
market accounts
|
|
|
353,458
|
|
|
|
3,655
|
|
|
|
4.10 |
% |
|
|
291,767
|
|
|
|
3,065
|
|
|
|
4.17 |
% |
|
|
590
|
|
|
|
925
|
|
|
|
(335 |
) |
Savings
|
|
|
638,838
|
|
|
|
2,254
|
|
|
|
1.40 |
% |
|
|
703,469
|
|
|
|
2,878
|
|
|
|
1.62 |
% |
|
|
(624 |
) |
|
|
(252 |
) |
|
|
(372 |
) |
Time
deposits
|
|
|
1,470,216
|
|
|
|
17,214
|
|
|
|
4.65 |
% |
|
|
1,121,216
|
|
|
|
11,182
|
|
|
|
3.96 |
% |
|
|
6,032
|
|
|
|
3,867
|
|
|
|
2,165
|
|
Total
interest bearing deposits
|
|
|
2,747,513
|
|
|
|
23,343
|
|
|
|
3.37 |
% |
|
|
2,401,564
|
|
|
|
17,489
|
|
|
|
2.89 |
% |
|
|
5,854
|
|
|
|
4,540
|
|
|
|
1,314
|
|
Short-term
borrowings
|
|
|
93,279
|
|
|
|
941
|
|
|
|
4.00 |
% |
|
|
95,178
|
|
|
|
989
|
|
|
|
4.12 |
% |
|
|
(48 |
) |
|
|
(20 |
) |
|
|
(28 |
) |
Long-term
debt
|
|
|
39
|
|
|
|
1
|
|
|
|
5.17 |
% |
|
|
68
|
|
|
|
1
|
|
|
|
5.18 |
% |
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
Interest Bearing Liabilities
|
|
|
2,840,831
|
|
|
|
24,285
|
|
|
|
3.39 |
% |
|
|
2,496,810
|
|
|
|
18,479
|
|
|
|
2.94 |
% |
|
|
5,806
|
|
|
|
4,520
|
|
|
|
1,286
|
|
Demand
deposits
|
|
|
261,686
|
|
|
|
|
|
|
|
|
|
|
|
245,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
liabilities
|
|
|
24,242
|
|
|
|
|
|
|
|
|
|
|
|
18,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
228,830
|
|
|
|
|
|
|
|
|
|
|
|
227,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liab. & shareholders' equity
|
|
$ |
3,355,589
|
|
|
|
|
|
|
|
|
|
|
$ |
2,989,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Interest Income , tax equivalent
|
|
|
|
|
|
|
25,314
|
|
|
|
|
|
|
|
|
|
|
|
25,163
|
|
|
|
|
|
|
|
151
|
|
|
|
(3,941 |
) |
|
|
4,092
|
|
Net
Interest Spread
|
|
|
|
|
|
|
|
|
|
|
2.66 |
% |
|
|
|
|
|
|
|
|
|
|
3.03 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Interest margin (net interest income to total interest earning
assets)
|
|
|
|
|
|
|
|
|
|
|
3.10 |
% |
|
|
|
|
|
|
|
|
|
|
3.46 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
equivalent adjustment
|
|
|
|
|
|
|
(760 |
) |
|
|
|
|
|
|
|
|
|
|
(801 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Interest Income
|
|
|
|
|
|
|
24,554
|
|
|
|
|
|
|
|
|
|
|
|
24,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TrustCo
Bank Corp NY
Management's
Discussion and Analysis
STATISTICAL
DISCLOSURE
I.
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS'
EQUITY;
INTEREST
RATES AND INTEREST DIFFERENTIAL
The
following table summarizes the component distribution of average balance sheet,
related interest income and expense and the average annualized
yields
on interest earning assets and annualized rates on interest bearing liabilities
of TrustCo (adjusted for tax equivalency) for each of the reported periods.
Nonaccrual loans are included in loans for this analysis. The average balances
of securities available for sale and held-to-maturity are calculated using
amortized costs for these securities. The average balance of trading
securities is calculated using fair value for these securities. Included in
the
average balance of shareholders' equity is unrealized depreciation, net of
tax,
in the available for sale portfolio of $6.1 million in 2007 and
$13.5 million in 2006. The subtotals contained in the
following table are the arithmetic totals of the items contained in that
category. Increases and decreases in interest income and
expense due to both rate and volume have been allocared to the
categories of variances (volume and rate) based on the percentage relationship
of such variances to each other.
|
|
Nine
Month
|
|
|
2007
|
|
|
|
|
|
Nine
Month
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars
in thousands)
|
|
Average
Balance
|
|
|
Interest
|
|
|
Average
Rate
|
|
|
Average
Balance
|
|
|
Interest
|
|
|
Average
Rate
|
|
|
Change
in Interest Income/ Expense
|
|
|
Variance
Balance Change
|
|
|
Variance
Rate Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Treasuries
|
|
$ |
302
|
|
|
$ |
11
|
|
|
|
4.74 |
% |
|
$ |
904
|
|
|
$ |
31
|
|
|
|
4.51 |
% |
|
|
(20 |
) |
|
|
(22 |
) |
|
|
2
|
|
U.
S. Gov't Sponsored Enterprises
|
|
|
223,036
|
|
|
|
8,899
|
|
|
|
5.32 |
% |
|
|
788,904
|
|
|
|
30,766
|
|
|
|
5.20
|
|
|
|
(21,867 |
) |
|
|
(23,020 |
) |
|
|
1,153
|
|
Mortgage-backed
securities and collateralized mortgage obligations
|
|
|
163,820
|
|
|
|
5,737
|
|
|
|
4.67 |
% |
|
|
188,613
|
|
|
|
6,634
|
|
|
|
4.69 |
% |
|
|
(897 |
) |
|
|
(869 |
) |
|
|
(28 |
) |
States
and political subdivisions
|
|
|
128,047
|
|
|
|
6,540
|
|
|
|
6.81 |
% |
|
|
126,002
|
|
|
|
6,532
|
|
|
|
6.91 |
% |
|
|
8
|
|
|
|
137
|
|
|
|
(129 |
) |
Other
|
|
|
12,966
|
|
|
|
497
|
|
|
|
5.12 |
% |
|
|
12,248
|
|
|
|
527
|
|
|
|
5.75 |
% |
|
|
(30 |
) |
|
|
43
|
|
|
|
(73 |
) |
Total
securities available for sale
|
|
|
528,171
|
|
|
|
21,684
|
|
|
|
5.47 |
% |
|
|
1,116,671
|
|
|
|
44,490
|
|
|
|
5.31 |
% |
|
|
(22,806 |
) |
|
|
(23,731 |
) |
|
|
925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
funds sold and other short-term Investments
|
|
|
388,475
|
|
|
|
15,244
|
|
|
|
5.24 |
% |
|
|
187,118
|
|
|
|
6,772
|
|
|
|
4.84 |
% |
|
|
8,472
|
|
|
|
7,868
|
|
|
|
604
|
|
Trading
Securities
|
|
|
440,512
|
|
|
|
17,571
|
|
|
|
5.32 |
% |
|
|
0
|
|
|
|
0
|
|
|
|
0.00 |
% |
|
|
17,571
|
|
|
|
8,786
|
|
|
|
8,786
|
|
Held
to Maturity Securities
|
|
|
5,073
|
|
|
|
224
|
|
|
|
5.89 |
% |
|
|
0
|
|
|
|
0
|
|
|
|
0.00 |
% |
|
|
224
|
|
|
|
112
|
|
|
|
112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
Loans
|
|
|
272,865
|
|
|
|
15,455
|
|
|
|
7.55 |
% |
|
|
227,366
|
|
|
|
12,860
|
|
|
|
7.54 |
% |
|
|
2,595
|
|
|
|
2,578
|
|
|
|
17
|
|
Residential
mortgage loans
|
|
|
1,313,538
|
|
|
|
61,310
|
|
|
|
6.22 |
% |
|
|
1,127,775
|
|
|
|
52,426
|
|
|
|
6.20 |
% |
|
|
8,884
|
|
|
|
8,713
|
|
|
|
171
|
|
Home
equity lines of credit
|
|
|
237,173
|
|
|
|
11,873
|
|
|
|
6.69 |
% |
|
|
210,987
|
|
|
|
10,691
|
|
|
|
6.77 |
% |
|
|
1,182
|
|
|
|
1,387
|
|
|
|
(205 |
) |
Installment
loans
|
|
|
5,741
|
|
|
|
622
|
|
|
|
14.49 |
% |
|
|
5,336
|
|
|
|
569
|
|
|
|
14.26 |
% |
|
|
53
|
|
|
|
44
|
|
|
|
9
|
|
Loans,
net of unearned income
|
|
|
1,829,317
|
|
|
|
89,260
|
|
|
|
6.51 |
% |
|
|
1,571,464
|
|
|
|
76,546
|
|
|
|
6.50 |
% |
|
|
12,714
|
|
|
|
12,722
|
|
|
|
(8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
interest earning assets
|
|
|
3,191,548
|
|
|
|
143,983
|
|
|
|
6.02 |
% |
|
|
2,875,253
|
|
|
|
127,808
|
|
|
|
5.93 |
% |
|
|
16,175
|
|
|
|
5,757
|
|
|
|
10,418
|
|
Allowance
for loan losses
|
|
|
(35,295 |
) |
|
|
|
|
|
|
|
|
|
|
(35,660 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
& non-interest earning assets
|
|
|
126,112
|
|
|
|
|
|
|
|
|
|
|
|
106,367
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
3,282,365
|
|
|
|
|
|
|
|
|
|
|
$ |
2,945,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Bearing Checking Accounts
|
|
$ |
281,979
|
|
|
|
635
|
|
|
|
0.30 |
% |
|
$ |
290,722
|
|
|
|
1,008
|
|
|
|
0.46 |
% |
|
|
(373 |
) |
|
|
(30 |
) |
|
|
(343 |
) |
Money
market accounts
|
|
|
336,445
|
|
|
|
10,370
|
|
|
|
4.12 |
% |
|
|
245,152
|
|
|
|
7,321
|
|
|
|
3.99 |
% |
|
|
3,049
|
|
|
|
2,804
|
|
|
|
245
|
|
Savings
|
|
|
649,060
|
|
|
|
7,074
|
|
|
|
1.46 |
% |
|
|
713,438
|
|
|
|
7,975
|
|
|
|
1.49 |
% |
|
|
(901 |
) |
|
|
(737 |
) |
|
|
(164 |
) |
Time
deposits
|
|
|
1,408,988
|
|
|
|
48,406
|
|
|
|
4.59 |
% |
|
|
1,107,414
|
|
|
|
31,659
|
|
|
|
3.82 |
% |
|
|
16,747
|
|
|
|
9,624
|
|
|
|
7,123
|
|
Total
interest bearing deposits
|
|
|
2,676,472
|
|
|
|
66,485
|
|
|
|
3.32 |
% |
|
|
2,356,726
|
|
|
|
47,963
|
|
|
|
2.72 |
% |
|
|
18,522
|
|
|
|
11,661
|
|
|
|
6,861
|
|
Short-term
borrowings
|
|
|
95,843
|
|
|
|
2,923
|
|
|
|
4.08 |
% |
|
|
95,394
|
|
|
|
2,728
|
|
|
|
3.82 |
% |
|
|
195
|
|
|
|
13
|
|
|
|
182
|
|
Long-term
debt
|
|
|
46
|
|
|
|
2
|
|
|
|
5.24 |
% |
|
|
75
|
|
|
|
3
|
|
|
|
5.24 |
% |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
-
|
|
Total
Interest Bearing Liabilities
|
|
|
2,772,361
|
|
|
|
69,410
|
|
|
|
3.35 |
% |
|
|
2,452,195
|
|
|
|
50,694
|
|
|
|
2.76 |
% |
|
|
18,716
|
|
|
|
11,673
|
|
|
|
7,043
|
|
Demand
deposits
|
|
|
253,602
|
|
|
|
|
|
|
|
|
|
|
|
244,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
liabilities
|
|
|
23,545
|
|
|
|
|
|
|
|
|
|
|
|
19,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
232,857
|
|
|
|
|
|
|
|
|
|
|
|
229,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liab. & shareholders' equity
|
|
$ |
3,282,365
|
|
|
|
|
|
|
|
|
|
|
$ |
2,945,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Interest Income , tax equivalent
|
|
|
|
|
|
|
74,573
|
|
|
|
|
|
|
|
|
|
|
|
77,114
|
|
|
|
|
|
|
|
(2,541 |
) |
|
|
(5,916 |
) |
|
|
3,375
|
|
Net
Interest Spread
|
|
|
|
|
|
|
|
|
|
|
2.67 |
% |
|
|
|
|
|
|
|
|
|
|
3.17 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Interest margin (net interest income to total interest earning
assets)
|
|
|
|
|
|
|
|
|
|
|
3.11 |
% |
|
|
|
|
|
|
|
|
|
|
3.57 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
equivalent adjustment
|
|
|
|
|
|
|
(2,315 |
) |
|
|
|
|
|
|
|
|
|
|
(2,315 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Interest Income
|
|
|
|
|
|
|
72,258
|
|
|
|
|
|
|
|
|
|
|
|
74,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quantitative
and Qualitative Disclosures about Market Risk
As
detailed in the Annual Report to Shareholders as of December 31, 2006 the
Company is subject to interest rate risk as its principal market
risk. As noted in detail throughout this Management’s Discussion and
Analysis for the three months and nine months ended September 30, 2007, the
Company continues to respond to changes in interest rates in a fashion to
position the Company to meet both short term earning goals but to also allow
the
Company to respond to changes in interest rates in the
future. Consequently the quarter-to-date average balance of federal
funds sold and other short-term investments has increased to $377.7 million
in
2007 from $150.0 million in 2006. This change also reflects the impact of the
changes resulting from the SFAS 159 adoption. As investment
opportunities present themselves, management plans to continue to invest funds
from the federal funds sold and other short-term investment portfolio into
the
trading securities, securities available for sale and loan
portfolios. This trend is expected to continue into the fourth
quarter.
The
Company had $450.5 million of trading account assets at September 30, 2007
and
none as of December 31, 2006. These trading account assets have been
recorded at their fair value as determined by quoted market prices from a third
party pricing service. The trading account securities at September
30, 2007 were all fixed rate callable bonds issued by Government Sponsored
Enterprises with a final average maturity of approximately 3 months and weighted
average yield of 5.25%. Changes in market interest rates could affect
the fair value of this portfolio and net trading gains and losses recorded
in
periodic earnings results.
Controls
and Procedures
An
evaluation was carried out under the supervision and with the participation
of
the Company’s management, including the Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the Company’s disclosure controls and
procedures as of the end of the period covered by this report.
The
Company maintains disclosure controls and procedures (as that term is defined
in
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (“Exchange
Act”)) designed to ensure that information required to be disclosed in the
reports that the Company files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the Securities and Exchange Commission. Based upon
this evaluation of those disclosure controls and procedures, the Chief Executive
and Chief Financial Officer of the Company concluded, as of the end of the
period covered by this report, that the Company’s disclosure controls and
procedures were effective to ensure that information required
to be disclosed in the reports the Company files and submits under the Exchange
Act is recorded, processed, summarized and reported as and when
required.
In
designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and
procedures. Further, no evaluation of a cost-effective systems of
controls can provide absolute assurance that all control issues and instances
of
fraud, if any, will be detected.
There
have been no changes in internal control over financial reporting (as defined
in
Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter to which
this report relates that have materially affected or are reasonably likely
to
materially affect, the internal control over financial reporting.
PART
II OTHER
INFORMATION
Item
1. Legal
Proceedings
None.
There
are
no material changes to the Company’s risk factors as discussed in The Annual
Report on Form 10K for the year ended December 31, 2006.
Item
2. Unregistered Sales of Equity
Securities and Use of Proceeds
ISSUER
PURCHASES OF EQUITY SECURITIES
Period
|
Total
Number of Shares Purchased
|
Average
Price Paid per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
|
Maximum
Number of Shares that May Yet Be Purchases Under the Plans or
Programs
|
July
1 – July 31
|
60,774
|
$
9.55
|
0
|
N/A
|
August
1 – August 31
|
228,077
|
$ 10.81
|
0
|
N/A
|
September
1 – September 30
|
0
|
$
0
|
0
|
N/A
|
Total
|
288,851
|
$ 10.55
|
0
|
N/A
|
All
288,851 shares were purchased by other than through a publicly announced plan
or
program. All purchases were
made in open-market transactions in satisfaction of the Company’s obligations
upon exercise of outstanding
stock options issued by the Company and for quarterly sales to the dividend
reinvestment plan.
Item
3. Defaults Upon Senior
Securities
None.
Item
4. Submissions of Matters to
Vote of Security Holders
None.
Item
5. Other
Information
None.
Item
6. Exhibits and Reports on
Form 8-K
(a)
Exhibits
Reg
S-K (Item 601)
|
Exhibit
No.
|
Description
|
|
|
15
|
KPMG
LLP Letter Regarding Unaudited Interim Financial
Information
|
|
|
31(a)
|
Rule
13a-15(e)/15d-15(e) Certification of Robert J. McCormick, principal
executive officer.
|
|
|
31(b)
|
Rule
13a-15(e)/15d-15(e) Certification of Robert T. Cushing, principal
financial officer
|
|
|
32
|
Section
1350 Certifications of Robert J. McCormick, principal executive officer
and Robert T. Cushing, principal financial
officer.
|
During
the quarter ended September 30, 2007, TrustCo filed the following reports on
Form 8-K:
July
17,
2007, regarding a press release dated July 17, 2007, detailing second quarter
and year to date results for the period ending June 30, 2007.
August
21, 2007, regarding a press release dated August 21, 2007, declaring a cash
dividend of $0.16 per share payable on October 1, 2007, to shareholders of
record at the close of business on September 7, 2007.
SIGNATURES
Pursuant
to the requirements 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 J. McCormick
|
|
|
Robert
J. McCormick
|
|
President
|
|
and
Chief Executive Officer
|
|
|
|
|
|
|
|
By:
/s/Robert T. Cushing
|
|
|
Robert
T. Cushing
|
|
Executive
Vice President
|
|
and
Chief Financial Officer
|
Date: November
7, 2007
Exhibits
Index
Reg
S-K (Item 601)
|
Exhibit
No.
|
Description
|
|
|
|
KPMG
LLP Letter Regarding Unaudited Interim Financial
Information
|
|
|
|
Rule
13a-15(e)/15d-15(e) Certification of Robert J. McCormick, principal
executive officer.
|
|
|
|
Rule
13a-15(e)/15d-15(e) Certification of Robert T. Cushing, principal
financial officer
|
|
|
|
Section
1350 Certifications of Robert J. McCormick, principal executive officer
and Robert T. Cushing, principal financial
officer.
|