-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, KpH8ocxalsZDAi4N82pogBCB/iUwF8JyVOIESGE6i+vMYmcFoDsceWvTGvpD7EXB jp29Tvm8o+GwXTlcSH5Jeg== 0000357301-95-000007.txt : 199507120000357301-95-000007.hdr.sgml : 19950711 ACCESSION NUMBER: 0000357301-95-000007 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950328 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRUSTCO BANK CORP N Y CENTRAL INDEX KEY: 0000357301 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 141630287 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-10592 FILM NUMBER: 95523996 BUSINESS ADDRESS: STREET 1: 320 STATE ST CITY: SCHENECTADY STATE: NY ZIP: 12305 BUSINESS PHONE: 5183773311 10-K 1 COMBINED FILES FOR 12/31/94 FORM 10-K AND EXHIBITS FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended December 31, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from ________________ to_________________ Commission file number 0-10592 _______________ TRUSTCO BANK CORP NY (Exact name of registrant as specified in its charter) NEW YORK 14-1630287 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 320 STATE STREET, SCHENECTADY, NEW YORK 12305 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (518) 377-3311 _______________ Securities registered pursuant to Section 12(b) of the Act: Name of exchange on Title of each class which registered ________________ ________________ None None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $1.00 Par Value (Title of class) ______________ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes.(x) No.( ) Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K.[ ] Indicate the number of shares outstanding of each of the registrant's classes of common stock: Number of Shares Outstanding Class of Common Stock as of March 1, 1995 __________________ __________________ $1 Par Value 14,654,868 The aggregate market value of registrant's common stock (based upon the closing price on March 1, 1995) held by non-affiliates was approximately $296,761,000. DOCUMENTS INCORPORATED BY REFERENCE (1) Portions of registrant's Annual Report to Shareholders for the fiscal year ended December 31, 1994 (Part I, Part II, and Part IV). (2) Portions of registrant's Proxy Statement filed for its Annual Meeting of Shareholders to be held May 15, 1995 (Part III). PART I Item 1. Business General TrustCo Bank Corp NY ("TrustCo") is a one-bank holding company having its principal place of business at 320 State Street, Schenectady, New York 12305. TrustCo was organized in 1981 to acquire all of the outstanding stock of Trustco Bank, National Association, formerly known as Trustco Bank New York, and prior to that The Schenectady Trust Company. Following the necessary regulatory approvals, TrustCo commenced business on July 1, 1982. Through policy and practice, TrustCo continues to emphasize that it is an equal opportunity employer. There were 435 full-time equivalent employees at year-end. TrustCo had 4,501 shareholders of record as of December 31, 1994, and the closing price of the stock at that date was $20.25. Bank Subsidiary On November 16, 1994 TrustCo initiated the process to convert its banking subsidiary, Trustco Bank New York, a New York state chartered trust company, to a national banking association operating under the name Trustco Bank, National Association (the Bank ). The conversion was undertaken to facilitate the Bank's regulatory processes and minimize duplicative federal/state compliance issues. The conversion became effective on February 1, 1995. The Bank is a national bank engaged in a general commercial banking business serving individuals, partnerships, corporations, municipalities and governments of New York. The largest part of such business consists of accepting deposits and making loans and investments. The Bank provides a wide range of both personal and business banking services. The Bank is a member of the Federal Reserve system and its deposits are insured by the Federal Deposit Insurance Corporation to the extent permitted by law. The Bank accounted for substantially all of TrustCo's 1994 consolidated net income and average assets. The trust department of the Bank acts as executor of estates and trustee of personal trusts, gives estate planning and related advice, provides custodial services and acts as trustee of various types of employee benefit plans and corporate pension and profit sharing trusts. The aggregate market value of the assets under trust, custody or management was approximately $634 million as of December 31, 1994. The daily operations of the Bank remain the responsibility of its Board of Directors and officers, subject to the overall supervision of TrustCo. TrustCo, as the parent corporation, derives most of its income from dividends paid to it by its subsidiary Bank. TrustCo's Bank subsidiary is included in TrustCo's consolidated financial statements. ORE Subsidiary During 1993, TrustCo created ORE Subsidiary Corp., a New York corporation, to hold and manage certain foreclosed properties. The accounts of this subsidiary are included in TrustCo's consolidated financial statements. Competition The Bank encounters keen competition from other commercial banks, including New York City-based holding companies which are some of the largest and most competitive institutions in the United States. In addition, savings banks, savings and loan associations, credit unions and other financial and related institutions compete for the banking, trust, investment and other financial services which the Bank offers. On a regular basis, TrustCo has discussions with other financial institutions relative to potential merger or acquisition opportunities. Supervision and Regulation Banking is a highly regulated industry, with numerous federal and state laws and regulations governing the organization and operation of banks and their affiliates. As a bank holding company under the Bank Holding Company Act of 1956, as amended (the "Act"), TrustCo is regulated and examined by the Board of Governors of the Federal Reserve System (the "Board"). The Act requires that TrustCo obtain prior Board approval for bank and non-bank acquisitions and restricts the business operations permitted to TrustCo. The Bank is subject to regulation and examination by the Office of the Comptroller of the Currency. Virtually all aspects of TrustCo's and the Bank's business are subject to regulation and examination by the Board, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. Most of TrustCo's revenues consist of cash dividends paid to TrustCo by its subsidiary Bank, payment of which is subject to various regulatory limitations. (Note 1 of the consolidated financial statements contained in TrustCo's Annual Report to Shareholders for the year ended December 31, 1994, which appears on pages 30 and 31 thereof and contains information concerning restrictions of TrustCo's ability to pay dividends, is hereby incorporated by reference.) In addition, the Federal Deposit Insurance Corporation and the Board have established guidelines with respect to the maintenance of appropriate levels of capital by a bank holding company under their jurisdictions. Compliance with the standards set forth in such guidelines could also limit the amount of dividends which a bank or a bank holding company may pay. The banking industry is also affected by the monetary and fiscal policies of the federal government, including the Board, which exerts considerable influence over the cost and availability of funds obtained for lending and investing. Proposals to change various laws and regulations governing the operation and taxation of banks, bank holding companies and financial institutions are frequently raised in Congress and before various federal and state regulatory authorities. Most recently, on September 29, 1994 the Interstate Banking and Branching Efficiency Act of 1994 was enacted which permits beginning one year from date of enactment, bank holding companies to acquire banks in any state (subject to state and nationwide deposit limitations) and for full interstate branching commencing June 1, 1997. Foreign Operations Neither TrustCo nor the Bank engage in material operations in foreign countries or have any outstanding loans to foreign debtors. Statistical Information Analysis The "Management Discussion and Analysis" on pages 5 through 23 of TrustCo's Annual Report to Shareholders for the year ended December 31, 1994, which contains a presentation and discussion of statistical data relating to TrustCo, are hereby incorporated by reference. The information with respect to such tables should not be construed to imply any conclusion on the part of the management of TrustCo that the results, causes or trends indicated therein will continue in the future. The nature and effects of governmental monetary policy, supervision and regulation, future legislation, inflation and other economic conditions and many other factors which affect interest rates, investments, loans, deposits and other aspects of TrustCo's operations are extremely complex and could make historical operations, earnings, assets and liabilities not indicative of what may occur in the future. Item 2. Properties TrustCo's executive offices are located at 320 State Street, Schenectady, New York, 12305. The Bank operates 45 offices, of which 20 are owned and 25 are leased from others. These properties, when considered in the aggregate, are not material to the operation of TrustCo. Item 3. Legal Proceedings The nature of TrustCo's business generates a certain amount of litigation against TrustCo and its subsidiaries involving matters arising in the ordinary course of business. In the opinion of management of TrustCo, there are no proceedings pending to which TrustCo or either of its subsidiaries is a party, or of which its property is the subject which, if determined adversely to TrustCo or such subsidiary, would be material in relation to TrustCo's consolidated stockholders' equity and financial condition. Item 4. Submission of Matters to a Vote of Security Holders None. Executive Officers of TrustCo The following is a list of the names and ages of the executive officers of TrustCo and their business history for the past five years: Year First Became Name, Age and Principal Occupations Executive Position Or Employment Since Officer of With TrustCo January 1, 1989 TrustCo Robert A. McCormick, 58, President and Chief Executive 1984 President and Chief Officer,TrustCo Bank Corp NY. Executive Officer President and Chief Executive Officer, Trustco Bank, National Association. Robert T. Cushing, 39, Vice President and Chief 1994 Vice President and Financial Officer, Chief Financial Offier TrustCo Bank Corp NY since 1994. Senior Vice President and Chief Financial Officer, Trustco Bank, National Association since 1994. Partner, KPMG Peat Marwick LLP (1978 - 1994). Nancy A. McNamara, 45, Vice President, TrustCo Bank 1992 Vice President Corp NY since 1992. Senior Vice President, Trustco Bank, National Association since 1988. Director of TrustCo Bank Corp NY and Trustco Bank, National Association since December 1991. Joined Trustco Bank, National Association in 1971. William F. Terry, 53, Secretary, TrustCo Bank Corp NY 1990 Secretary since 1990. Senior Vice President, Trustco Bank, National Association since 1987. Secretary, Trustco Bank, National Association since 1990. PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters The inside front cover of TrustCo's Annual Report to Shareholders for the year ended December 31, 1994, is incorporated herein by reference. The closing price for the Corporation's common stock on December 31, 1994, was $20.25. Item 6. Selected Financial Data Page 19 of TrustCo's Annual Report to Shareholders for the year ended December 31, 1994, is incorporated herein by reference. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Pages 5 through 23 of TrustCo's Annual Report to Shareholders for the year ended December 31, 1994, are incorporated herein by reference. Item 8. Financial Statements and Supplementary Data The financial statements, together with the report thereon of KPMG Peat Marwick LLP on pages 25 through 39 of TrustCo's Annual Report to Shareholders for the year ended December 31, 1994, are incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. PART III Item 10. Director and Executive Officers of Registrant The information under the captions "Information on TrustCo Directors and Nominees" and "Information on TrustCo Executive Officers Not Listed Above" on pages 3 through 5, and "Compliance With Section 16(a) Of The Securities Exchange Act Of 1934 " on page 22, of TrustCo's Proxy Statement for its Annual Meeting of Shareholders to be held May 15, 1995, is incorporated herein by reference. The required information regarding TrustCo's executive officers is contained in PART I in the item captioned "Executive Officers of TrustCo." Item 11. Executive Compensation The information under the captions "TrustCo and Trustco Bank Executive Officer Compensation" and "TrustCo Retirement Plans" on pages 6 through 11 of TrustCo's Proxy Statement for its Annual Meeting of Shareholders to be held May 15, 1995, is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management The information under the captions "Information on TrustCo Directors and Nominees," "Information on TrustCo Executive Officers Not Listed Above," on pages 3 through 5 and "Ownership Of TrustCo Common Stock By Certain Beneficial Owners" on page 22 of TrustCo's Proxy Statement for its Annual Meeting of Shareholders to be held May 15, 1995, is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions The information under the caption "Transactions with TrustCo and Trustco Bank Directors, Officers and Associates" on page 22 of TrustCo's Proxy Statement for its Annual Meeting of Shareholders to be held May 15, 1995, is incorporated herein by reference. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K The following financial statements of TrustCo and its consolidated subsidiaries, and the accountants' report thereon are incorporated herein by reference. Consolidated Financial Statements. Consolidated Statements of Condition--December 31, 1994 and 1993. Consolidated Statements of Income--Years Ended December 31, 1994, 1993 and 1992. Consolidated Statements of Changes in Shareholders' Equity--Years Ended December 31, 1994, 1993 and 1992. Consolidated Statements of Cash Flows--Years Ended December 31, 1994, 1993 and 1992. Notes to Consolidated Financial Statements. Financial Statement Schedules--Not Applicable. All required schedules for TrustCo and its subsidiaries have been included in the consolidated financial statements or related notes thereto The following exhibits are filed herewith:* Reg S-K Exhibit No. Description =================== =========== 3(i) Amended and Restated Certificate of Incorporation of TrustCo. 3(ii) Amended and Restated Bylaws of TrustCo. 10(a) Employment Agreement dated January 1, 1992 and Amendment No. 1 dated November 16, 1993, among TrustCo, the Bank and Robert A. McCormick. 10(b) Amendment No. 2 dated September 1, 1994, and Amendment No. 3 dated February 13, 1995, among TrustCo, the Bank and Robert A. McCormick. 10(c) Employment Agreement dated June 21, 1994, and Amendment No. 1 dated February 14, 1995, among TrustCo, the Bank and Robert T. Cushing. 10(d) Restated Employment Agreement dated June 21, 1994, and Amendment No. 1 dated February 14, 1995, among TrustCo, the Bank and Nancy A. McNamara. 10(e) Restated Employment Agreement dated June 21, 1994, and Amendment No. 1 dated February 14, 1995, among TrustCo, the Bank and William F. Terry. 10(f) Restated Employment Agreement dated June 21, 1994, and Amendment No. 1 dated February 14, 1995, among TrustCo, the Bank and Ralph A. Pidgeon. 10(g) Restated Employment Agreement dated July 15, 1992, Amendment No. 1 dated November16, 1993, and Amendment No. 2 dated February 14, 1995, among TrustCo, the Bank and Peter A. Zakriski. 10(h) TrustCo Bank Corp NY Amended and Restated 1985 Stock Option Plan. 10(i) TrustCo Bank Corp NY Directors Stock Option Plan. ________________ *The exhibits included under Exhibit 10 constitute all management contracts, compensatory plans and arrangements required to be filed as an exhibit to this form pursuant to Item 14(c) of this report. The following exhibits are filed herewith: (continued) Reg S-K Exhibit No. Description =============== =============== 11 Computation of Net Income Per Common Share. 13 Annual Report to Security Holders of TrustCo for the year ended December 31, 1994. 21 List of Subsidiaries of TrustCo. 23 Independent Auditors' Consent of KPMG Peat Marwick LLP. 24 Power of Attorney. 27 Financial Data Schedules. 99 Independent Auditors' Report of KPMG Peat Marwick LLP. Reports on Form 8-K: On January 26, 1995, TrustCo filed a Current Report on Form 8-K reporting the fourth quarter and year-end December 31, 1994, results. On February 21, 1995, TrustCo filed a Current Report on Form 8-K reporting the declaration of a cash dividend. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the TrustCo Bank Corp NY(the "Corporation") pursuant to the foregoing provisions, or otherwise, the Corporation has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Corporation of expenses incurred or paid by a director, officer or controlling person of the Corporation in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Corporation will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TrustCo Bank Corp NY By/s/Robert A. McCormick ------------------------- Robert A. McCormick President and Chief Executive Officer (Principal Executive Officer) By/s/Robert T. Cushing ------------------------- Robert T. Cushing Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) Date: March 21, 1995 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. Signature Title Date * Director March 21, 1995 Barton A. Andreoli * Director March 21, 1995 Lionel O. Barthold * Director March 21, 1995 M. Norman Brickman * Director March 21, 1995 Charles W. Carl, Jr. * Director March 21, 1995 Robert A. McCormick * Director March 21, 1995 Nancy A. McNamara * Director March 21, 1995 Dr. John S. Morris * Director March 21, 1995 Dr. James H. Murphy * Director March 21, 1995 Richard J. Murray, Jr. * Director March 21, 1995 Kenneth C. Petersen * Director March 21, 1995 William J. Purdy /s/William F. Terry Director March 21, 1995 - ------------------ William F. Terry * Director March 21, 1995 Philip J. Thompson By/s/William F. Terry *William F. Terry, as Agent Pursuant to Power of Attorney EXHIBIT INDEX Reg S-K Item 601 Exhibit No. Exhibit _________________________________________________________________ 3(i) Amended and Restated Certificate of Incorporation of TrustCo filed as Exhibit 3(i) to TrustCo Bank Corp NY's Annual Report on Form 10-K (File No. 000-10592) filed on March 30, 1994, incorporated herein by reference. 3(ii) Amended and Restated Bylaws of TrustCo, with amendments through February 21, 1995. 10(a) Employment Agreement dated January 1, 1992 and Amendment No. 1 dated November 16, 1993, among TrustCo, the Bank and Robert A. McCormick, filed as Exhibit 10(a) to TrustCo Bank Corp NY s Annual Report on Form 10-K (file No. 000-10592) filed on March 30, 1994, incorporated herein by reference. 10(b) Amendment No. 2 dated September 1, 1994, and Amendment No. 3 dated February 13, 1995, to the Employment Agreement dated November 16, 1993 among TrustCo, the Bank and Robert A. McCormick. 10(c) Employment Agreement dated June 21, 1994, and Amendment No. 1 dated February 14, 1995, among TrustCo, the Bank and Robert T. Cushing. 10(d) Restated Employment Agreement dated June 21, 1994, and Amendment No. 1 dated February 14, 1995, among TrustCo, the Bank and Nancy A. McNamara. 10(e) Restated Employment Agreement dated June 21, 1994, and Amendment No. 1 dated February 14, 1995, among TrustCo, the Bank and William F. Terry. 10(f) Restated Employment Agreement dated June 21, 1994, and Amendment No. 1 dated February 14, 1995, among TrustCo, the Bank and Ralph A. Pidgeon. 10(g) Restated Employment Agreement dated July 15, 1992, Amendment No. 1 dated November 16, 1993, and Amendment No. 2 dated February 14, 1995, among TrustCo, the Bank and Peter A. Zakriski. 10(h) Restated 1985 TrustCo Bank Corp NY Stock Option Plan as amended and restated effective July 1, 1994. 10(i) TrustCo Bank Corp NY Directors Stock Option Plan filed as Exhibit 10(g) to TrustCo Bank Corp NY's Annual Report on Form 10-K (File No. 000-10592) filed on March 30, 1994, incorporated herein by reference. 11 Computation of Net Income Per Common Share. 13 Annual Report to Security Holders of TrustCo for the year ended December 31, 1994. GRAPHICS APPENDIX Cross References to Page of Omitted Charts Annual Report _________________________________________________________________ 1 Net Interest Margin............... 5 2 Non-Performing Assets............. 14 3 Efficiency Ratio.................. 18 4 Dividends Per Share............... 21 21 List of Subsidiaries of TrustCo. 23 Independent Auditors' Consent of KPMG Peat Marwick LLP. 24 Power of Attorney. 27 Financial Data Schedules. 99 Independent Auditors' Report of KPMG Peat Marwick LLP. Exhibit 3(ii) BY-LAWS OF TRUSTCO BANK CORP NY (a New York State Corporation) (As Amended Through February 21, 1995) _____________________________________________________ ARTICLE 1 DEFINITIONS As used in these By-Laws, unless the context otherwise requires, the term: 1.1 "Board" means the Board of Directors of the Corporation 1.2 "Business Corporation Law" means the Business Corporation Law of the State of New York, as amended from time to time. 1.3 "By-Laws" means the initial By-Laws of the Corporation, as amended from time to time. 1.4 "Certificate of Incorporation" means the initial certificate of incorporation of the Corporation, as amended, supplemented or restated from time to time. 1.5. "Corporation" means TrustCo Bank Corp NY. 1.6 "Directors" means directors of the Corporation. 1.7 "Entire Board" means the total number of directors which the Corporation would have if there were no vacancies. 1.8 "Chief Executive Officer" means the Chief Executive Officer of the corporation. 1.9 "Chairman" means chairman of the Board of the Corporation. 1.10 "President" means the President of the Corporation. 1.11 "Secretary" means the Secretary of the Corporation. 1.12 "Vice President" means the Vice President of the Corporation. ARTICLE 2 SHAREHOLDERS 2.1 PLACE OF MEETINGS. Every meeting of shareholders shall be held at such place within or without the State of New York as shall be designated by the Board of Directors in the notice of such meeting or in the waiver of notice thereof. 2.2 ANNUAL MEETING. A meeting of shareholders shall be held annually for the election of Directors and the transaction of other business at such hour and on such business day as may be determined by the Board. Written notice of such meeting, stating the place, date and hour thereof, shall be given, personally or by mail, not less than ten nor more than fifty days before the date of such meeting, to each shareholder certified to vote at such meeting. 2.3 SPECIAL MEETINGS. A special meeting of shareholders, other than those regulated by statute, may be called at any time by the Board or by the Chief Executive Officer. It shall also be the duty of the Chief Executive Officer to call such a meeting whenever requested in writing so to do by shareholders owning two thirds of the issued and outstanding share entitled to vote at such a meeting. Written notice of such meeting, stating the place, date, hour and purpose thereof, and indicating that it is being given by the person or persons calling such meeting, shall be given, personally or by mail, not less than ten nor more than fifty days before the date of such meeting, to each shareholder certified to vote at such meeting. 2.4 QUORUM AND VOTING REQUIREMENTS; ADJOURNMENT. Except with respect to a special meeting for the election of Directors as required by law, or as otherwise provided in these By- Laws, (a) the holders of at least a majority of the outstanding shares of the Corporation shall be present in person or by proxy at any meeting of the shareholders in order to constitute a quorum for the transaction of any business, and (b) the votes of the holders of at least a majority of the outstanding shares of the Corporation shall be necessary at any meeting of shareholders for the transaction of any business or specified item of business, other than the changing, amending or repealing of any provision of the Certificate of Incorporation or By- Laws which shall require the affirmative vote of two-thirds of the Corporation's voting stock; provided, however, that when a specified item of business is required to be voted on by a class or series (if the Corporation shall then have outstanding shares or more than one class or series), voting as a class, the holders of a majority of the shares of such class or series shall constitute a quorum (as to such class or series) for the transaction of such item of business. The holders of a majority of shares present in person or represented by proxy at any meeting of shareholders, including an adjourned meeting, whether or not a quorum is present, may adjourn such meeting to another time and place. 2.5 INSPECTORS AT MEETINGS. Two or more inspectors shall be appointed by the Board or the Executive Committee prior to each Annual Meeting of Shareholders, to serve at the meeting or any adjournment thereof. In case any person appointed fails to appear or act, the vacancy may be filled by appointment made by the Board in advance of the meeting or at the meeting by the person presiding thereat. 2.6 ORGANIZATION. At every meeting of shareholders, the Chief Executive Officer, or in his absence, an officer of the Corporation designated by the Board or the Chief Executive Officer, shall act as Chairman of the meeting. The Secretary, or in his absence, one of the Vice Presidents not acting as Chairman of the meeting, shall act as Secretary of the meeting. In case none of the officers above designated to act as Chairman or Secretary of the meeting, respectively, shall be present, a Chairman or a Secretary of the meeting, as the case may be, shall be chosen by a majority of the votes cast at such meeting by the holders of shares present in person, or represented by proxy and entitled to vote at the meeting. 2.7 ORDER OF BUSINESS. The order of business at all meetings of shareholders shall be as determined by the Chairman of the meeting, but the order of business to be followed at any meeting at which a quorum is present may be changed by a majority of the votes cast at such meeting by the holders of shares present in person or represented by proxy and entitled to vote at the meeting. ARTICLE 3 DIRECTORS 3.1 BOARD OF DIRECTORS. Except as otherwise provided in the Certificate of Incorporation, the affairs of the Corporation shall be managed and its corporate powers exercised by its Board. In addition to the powers expressly conferred by the By-Laws, the Board may exercise all powers and perform all acts which are not required, by the By-Laws or the Certificate of Incorporation or by law, to be exercised and performed by the shareholders. 3.2 NUMBER; QUALIFICATION; TERM OF OFFICE. Subject to Section 702(b) of the Business Corporation Law, the number of Directors constituting the Entire Board may be changed from time to time by action of the shareholders or the Board, provided that such number shall not be less than twelve nor more than fifteen. The Directors shall be divided into three classes as nearly equal in number as may be, one class to be elected each year for a term of three years and until their successors are elected and qualified. A Director attaining 72 years of age shall cease to be a Director and that office shall be vacant. A director who was an employee of the Corporation at the time of his election, shall vacate his office when he ceases to be a full-time employee of the Company and shall not be eligible for reelection. 3.3 ELECTION. Directors shall be elected by the affirmative vote of the holders of a majority of the Company's outstanding voting stock. 3.4 NEWLY CREATED DIRECTORSHIP AND VACANCIES. Newly created directorships resulting from an increase in the number of Directors and vacancies occurring in the Board for any reason, may be filled by vote of a majority of the Directors then in office, although less than a quorum, at any meeting of the Board. Directors elected by the Board shall hold office until the next meeting of shareholders at which the election of directors is in the regular order of business, and until their successors have been elected and qualified. 3.5 RULES AND REGULATIONS. The Board of Directors may adopt such Rules and Regulations for the conduct of its meetings and the management of the affairs of the Company as it may deem proper, not inconsistent with the laws of the State of New York, or these By-Laws. 3.6 REGULAR MEETINGS. Regular meetings of the Board shall be held on the third Tuesday of February, May, August and November, unless otherwise specified by the Board, and may be held at such times and places as may be fixed from time to time by the Board, and may be held without notice. 3.7 SPECIAL MEETINGS. Special meetings of the Board shall be held whenever called by the Chief Executive Officer, and a special meeting shall be called by the Chief Executive Officer or the Secretary at the written request of any seven Directors. Notice of the time and place of each special meeting of the Board shall, if mailed, be addressed to each Director at the address designated by him for that purpose or, if none is designated, at his last known address at least three days before the date on which the meeting is to be held; or such notice shall be sent to each Director at such address by telegraph, or similar means of communication, or be delivered to him personally, not later than the day before the date on which such meeting is to be held. 3.8 WAIVERS OF NOTICE. Anything in these By-Laws or in any resolution adopted by the Board to the contrary notwithstanding, notice of any meeting of the Board need not be given to any Director who submits a signed waiver of such notice, whether before or after such meeting, or who attends such meeting without protesting, prior thereto or at its commencement, the lack of notice to him. 3.9 ORGANIZATION. At each meeting of the Board, the Chief Executive Officer of the Corporation, or in the absence of the Chief Executive Officer, a Chairman chosen by the majority of the Directors present, shall preside. The Secretary, or in the absence of the Secretary, a Vice President, shall act as Secretary at each meeting of the Board. 3.10 QUORUM AND VOTING. A majority of the Entire Board shall constitute a quorum for the transaction of business or of any specified item of business at any meeting of the Board. The affirmative vote of a majority of the Entire Board shall be necessary for the transaction of any business or specified item of business at any meeting of the Board, except that the affirmative vote of two-thirds of the Entire Board shall be necessary to change, amend or repeal any provision of the Certificate of Incorporation or By-Laws. 3.11 WRITTEN CONSENT OF DIRECTORS WITHOUT A MEETING. Any action required or permitted to be taken by the Board may be taken without a meeting if all members of the Board consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents thereto by the members of the Board shall be filed with the minutes of the proceedings of the Board. 3.12 PARTICIPATION IN MEETING OF BOARD BY MEANS OF CONFERENCE TELEPHONE OR SIMILAR COMMUNICATIONS EQUIPMENT. Any one or more members of the Board may participate in a meeting of the Board by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting. ARTICLE 4 COMMITTEES 4.1 EXECUTIVE COMMITTEE. There shall be an Executive Committee consisting of not more than nine Directors, of which four shall constitute a quorum. All but six of the members of such Executive Committee shall be appointed by the Board of Directors, shall be known as permanent members and shall hold office until the organization of the Board after the annual election next succeeding their respective appointments. Six places on the Executive Committee shall be filled by the Directors, other than the permanent members of the Executive Committee, in rotation according to alphabetical order, each panel of six rotating members serving for one calendar month. In the event that any member of the Executive Committee is unable to attend a meeting, the Chief Executive Officer may invite any other Director to take his place for such meeting. The Executive Committee shall possess and exercise all of the delegable powers of the Board, except when the latter is in session. It shall keep a record of its proceedings, and the same shall be subject to examination by the Board at any time. All acts done and powers and authority conferred by the Executive Committee from time to time, within the scope of its authority, shall be and be deemed to be and may be certified as being the act and under the authority of the Board. Meetings of the Executive Committee shall be held at such times and places and upon such, if any, notice as the Executive Committee shall determine from time to time, provided that a special meeting of the Executive Committee may be called by the Chief Executive Officer, in his discretion, and shall be called by the Chief Executive Officer or Secretary on the written request of any three members, three days' notice of the time and place of which shall be given in the same manner as notices of special meetings of the Board of Directors, except that if such notice is given otherwise than by mail, it shall be sufficient if given at any time on or before the day preceding the meeting. 4.2 OTHER COMMITTEES. The Board, by resolution adopted by a majority of the Entire Board, may designate from among its members such other standing or special committees as may seem necessary or desirable from time to time. ARTICLE 5 OFFICERS 5.1 OFFICERS. The Board may elect or appoint a Chairman and shall elect or appoint a President, either of which it shall designate the Chief Executive Officer and shall elect or appoint one or more Vice Presidents and a Secretary, and such other officers as it may from time to time determine. All officers shall hold their offices, respectively, at the pleasure of the Board. The Board may require any and all officers, clerks and employees to give a bond or other security for the faithful performance of their duties, in such amount and with such sureties as the Board may determine. 5.2 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the Corporation shall have general supervision over the business of the Corporation, subject, however, to the control of the Board and of any duly authorized committee of Directors. The Chief Executive Officer shall, if present, preside at all meetings of the shareholders, at all meetings of the Board and shall supervise the carrying out of policies adopted or approved by the Board. He may, with the Secretary or any other officer of the Corporation, sign certificates for shares of the Corporation. He may sign and execute, in the name of the Corporation, deeds, mortgages, bonds, contracts and other instruments, subject to any restrictions imposed by the By-Laws, Board or applicable laws, and, in general, he shall perform all duties incident to the office of the Chief Executive Officer and such other duties as from time to time may be assigned to him by the Board. 5.3 CHAIRMAN AND PRESIDENT. Either the Chairman or the President shall be designated the Chief Executive Officer of the Corporation. The one not so designated shall perform such duties as from time to time may be assigned to him by the Board or by the Chief Executive Officer. 5.4 OTHER OFFICERS. All the other officers of the Corporation shall perform all duties incident to their respective offices, subject to the supervision and direction of the Board, the Chief Executive Officer, and the Executive Committee, and shall perform such other duties as may from time to time be assigned them by the Board or by the Chief Executive Officer. The President and any Vice President may also, with the Secretary, sign and execute, in the name of the Corporation, deeds, mortgages, bonds, contracts and other instruments, subject to any restrictions imposed by the By-Laws, Board or applicable laws. ARTICLE 6 CONTRACTS, LOANS, ETC 6.1 EXECUTION OF CONTRACTS. The Board may authorize any officer, employee or agent, in the name and on behalf of the Corporation, to enter into any contract or execute and satisfy any instrument, and any such authority may be general or confined to specific instances, or otherwise limited. 6.2 LOANS. The Chief Executive Officer or any other officer, employee or agent authorized by the Board may effect loans and advances at any time for the Corporation from any bank, trust company or other institution or from any firm, corporation or individual, and for such loans and advances may make, execute and deliver promissory notes, bonds or other certificates or evidences of indebtedness of the Corporation, and when authorized so to do may pledge and hypothecate or transfer any securities or other property of the Corporation as security for any such loans or advances. 6.3 SIGNATURE AUTHORITY. The Chief Executive Officer shall from time to time authorize the appropriate officers and employees of the Corporation who are to sign, execute, acknowledge, verify and deliver or accept all agreements, conveyances, transfers, obligations, authentications, certificates and other documents and instruments and to affix the seal of the Corporation to any such document or instrument and to cause the same to be attested by the Secretary or Assistant Secretary. ARTICLE 7 SHARES 7.1 STOCK CERTIFICATES. Certificates representing shares of the Corporation, in such form as shall be determined from time to time by the Board, shall be signed by the Chief Executive Officer, the Chairman, the President, or any Vice President and the Secretary, and may be sealed with the seal of the Corporation or a facsimile thereof. 7.2 TRANSFER OF SHARES. Transfers of shares shall be made only on the book of the Corporation by the holder thereof or by his duly authorized attorney or a transfer agent of the Corporation, and on surrender of the certificate or certificates representing such shares properly endorsed for transfer and upon payment of all necessary transfer taxes. Every certificate exchanged, returned or surrendered to the Corporation shall be marked "Canceled", with the date of cancellation, by the Secretary or the transfer agent of the Corporation. A person in whose name shares shall stand on the books of the Corporation in whose name shares shall stand on the books of the Corporation shall be deemed the owner thereof to receive dividends, to vote as such owner and for all other purposes as respects the Corporation. No transfer of shares shall be valid as against the Corporation, its shareholders and creditors for any purpose, except to render the transferee liable for the debts of the Corporation to the extent provided by law, until such transfer shall have been entered on the books of the Corporation by an entry showing from and to whom transferred. 7.3 CLOSING OF TRANSFER BOOKS. The Board may prescribe a period prior to any shareholders' meeting or prior to the payment of any dividend, not exceeding fifty days, during which no transfer of stock on the books of the Corporation may be made and may fix a day as provided by the Business Corporation Law as of which shareholders entitled to notice and to vote at such meeting shall be determined. 7.4 TRANSFER AND REGISTRY AGENTS. The Corporation may from time to time maintain one or more transfer offices or agents and registry officer or agents at such place or places as may be determined from time to time by the Board. 7.5 LOST, DESTROYED, STOLEN AND MUTILATED CERTIFICATES. If the holder of any shares shall notify the Corporation of any loss, destruction, theft or mutilation of the certificate or certificates representing such shares, the Corporation may issue a new certificate or certificates to replace the old, upon such conditions as may be specified by the Board consistent with applicable laws. ARTICLE 8 EMERGENCIES 8.1 OPERATION DURING EMERGENCY. In the event of a state of emergency declared by the President of the United States or the person performing his functions or by the Governor of the State of New York or by the person performing his functions, the officers and employees of the Corporation shall continue to conduct the affairs of the Corporation under such guidance from the Directors as may be available except as to matters which by statute require specific approval of the Board of Directors and subject to conformance with any governmental directives during the emergency. 8.2 OFFICERS PRO TEMPORE DURING EMERGENCY. The Board of Directors shall have power, in the absence or disability of any officer, or upon the refusal of any officer to act, to delegate and prescribe such officer's powers and duties to any other officer for the time being. 8.3 DISASTER. In the event of a state of emergency resulting from disaster of sufficient severity to prevent the conduct and management of the affairs and business of the Corporation by the Directors and officers as contemplated by these By-Laws, any two or more available members of the Executive Committee shall constitute a quorum of that committee for the full conduct and management of the affairs and business of the Corporation, notwithstanding any other provision of these By-Laws, and such committee shall further be empowered to exercise all powers reserved to any and all other committees of the Board established pursuant to Article 4 of these By-Laws. In the event of the unavailability, at such time, of at least two members of the Executive Committee, any three available Directors may constitute themselves the Executive Committee pro tem for the full conduct and management of the affairs and business of the Corporation in accordance with the provisions of this Article, until such time as the incumbent Board or a reconstituted Board is capable of assuming full conduct and management of such affairs and business. ARTICLE 9 SEAL 9.1 SEAL. The Board may adopt a corporate seal which shall be in the form of a circle and shall bear the full name of the Corporation and the year and State of its incorporation. ARTICLE 10 FISCAL YEAR 10.1 FISCAL YEAR. The fiscal year of the Corporation shall be determined, and may be changed, by resolution of the Board. ARTICLE 11 VOTING OF SHARES HELD 11.1 VOTING OF SHARE HELD BY THE CORPORATION. Unless otherwise provided by resolution of the Board and excepting the shares of any subsidiary company of the Corporation which are to be voted in accordance with the resolution of the Board, the Chief Executive Officer may from time to time appoint one or more attorneys or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as a shareholder or otherwise in any other corporation, any of whose shares or securities may be held by the Corporation, at meetings of the holders of the shares or other securities of such other corporation and to consent in writing to any action by any such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed on behalf of the Corporation and under its corporate seal, or otherwise, such written proxies, consents, waivers or other instruments as he may deem necessary or proper in the premises; or the Chief Executive Officer may himself attend any meeting of the holders of the shares or other securities of any such other corporation and thereat vote or exercise any or all other powers of the Corporation as the holder of such shares or other securities of such other corporation. ARTICLE 12 AMENDMENTS TO BY-LAWS 12.1 AMENDMENTS. The By-Laws or any of them may be altered, amended, supplemented or repealed, or new By-Laws may be adopted by a vote of the holders of at least two-thirds of the shares entitled to vote at any regular or special meeting of shareholders, or by a vote of at least two- thirds of the Entire Board of Directors at any regular or special meeting thereof, provided notice of such proposed changes has been set forth in the notice of meeting of shareholders or Directors. ARTICLE 13 INDEMNIFICATION OF DIRECTORS AND OFFICERS 13.1 In addition to authorization provided by law, the Directors are authorized, by resolution, to provide indemnification or to advance expenses to any Officer or Director seeking such indemnifica- tion or the advancement of such expenses. They may also, by resolution, authorize agreements providing for indemnification. 13.2 The indemnification and advancement authorized by this Article shall be subject to each of the conditions or limitations set forth in the succeeding subdivisions(s) of this Section. 13.2.1 No indemnification may be made to or on behalf of any Director or Officer if a judgment or other final adjudication adverse to the Officer or Director establishes that his acts were committed in bad faith or were the result of an act of deliberate dishonesty and were material to the cause of action so adjudicated, or that he personally gained in fact a financial profit or other advantage to which he was not entitled. 13.3 Officers and Directors of any wholly owned subsidiary serve at the request of the Corporation for the purpose of this Article. 13.4 The Directors may by resolution, authorize the Corporation's Officers and Directors to serve as a Director or Officer of any other corporation of any type or kind, domestic or foreign, of any partnership, joint venture, trust, employee benefit plan or other enterprise for the purpose of the indemnification provisions of this Article. The failure to enact such a resolution shall not, in itself, create a presumption that such service was not authorized. I, William F. Terry, Secretary of TrustCo Bank Corp NY, Schenectady, New York, hereby certify that the foregoing is a complete, true and correct copy of the By-Laws of TrustCo Bank Corp NY, and that the same are in full force and effect at this date. /s/William F. Terry _____________________________________ Secretary March 23, 1995 _____________________________________ Date Exhibit 10(a) Employment Agreement between TRUSTCO BANK NEW YORK and TRUSTCO BANK CORP NY and ROBERT A. McCORMICK Employment Agreement AGREEMENT, dated as of January 1, 1992, (the Agreement ), by and between TRUSTCO BANK NEW YORK, a New York banking corporation (the Bank ) and TRUSTCO BANK CORP NY, a New York business corporation (the company ) (hereinafter referred to collectively as the Companies ), with principal offices at 320 State Street, Schenectady, New York 12301, and ROBERT A. McCORMICK (the Executive ), residing at 16 Greenlea Drive, Clifton Park, New York 12065. 1 . Engagement. The Companies agree to engage the Executive and the Executive agrees to serve the Companies as President and Chief Executive Officer. 2 . Term. The term of this Agreement shall commence on January 1, 1992 and shall continue until December 31, 1994. Beginning on January 1, 1995, and on January 1 of each and every year thereafter, this Agreement shall renew, automatically, for the succeeding three year term, unless the Executive is notified by the method described in Paragraph 10 herein to the contrary ( Nonrenewal Notice ). Nothing contained herein, however, shall be construed to extend the Executive s right to employment beyond the age of 65 years or the then mandatory retirement age in effect at the Companies, whichever shall be greater. 3 . Services. The Executive shall exert his best efforts and devote substantially all of his time and attention to the affairs of the Companies. The Executive shall be the President and Chief executive Officer of the Companies, and shall have full authority and responsibility for the operation of the Companies, subject to the general direction, approval, and control of the Boards of Directors of the Companies, for formulating policies and administering the Companies in all respects. His powers shall include the authority to hire and fire personnel of the Companies, including employees who are also members of the Boards of Directors, and to retain consultants when he deems necessary in order to implement the Companies policies. 4 . Compensation. For purposes of this Agreement, Annual Compensation shall be deemed to include Executive s Annual Base Salary plus executive incentive. During the first twelve months of employment pursuant to this Agreement, the Executive shall be paid by the Companies the Annual Base Salary provided on Schedule A attached hereto, which Annual Base Salary shall be paid biweekly, plus executive incentive. Thereafter, Annual Compensation shall be negotiated between the parties hereto and shall be deemed a part of this Agreement, provided, however, that Annual Compensation shall not be less than Executive s Annual Compensation for the immediately preceding calendar year. 5 . Retirement, Pension and Profit Sharing. As further compensation for the services of the Executive, the Executive shall be allowed to participate fully in any disability, death benefit, retirement, pension or profit sharing plans maintained by the Companies, pursuant to the terms of such plans. 6 . Termination of Employment. In the event there is a Termination (as hereinafter defined) of the Executive for any reason other than for good cause (as hereinafter defined), death, retirement or disability, the Executive shall receive, upon his Termination of employment with either of the Companies, the Termination Benefits set forth hereinbelow. The Executive s Termination for good cause shall be limited to the Executive s having committed an act of fraud, embezzlement, or theft constituting a felony, or an act intentionally against either of the Companies which causes either Company material injury, or a final determination by a court that the Executive has committed a material breach of his duties and responsibilities in connection with rendering services to either of the Companies pursuant to this Agreement. 7 . Termination. Termination shall include, but is not limited to, (i) any reduction in the Executive s Annual Compensation, disability, death, retirement, pension or profit sharing benefits (unless such reduction shall have been applied to all Bank employees as part of a validly adopted plan of cost containment), responsibilities or duties, or (ii) either Company s relocation or a change in the Executive s base location, or (iii) a Nonrenewal Notice given pursuant to Paragraph 2 of this Agreement, or (iv) the unilateral election of the Executive to terminate the Agreement. Such election shall be communicated to the Companies by the method described in Paragraph 10 hereof. 8 . Termination Benefits. The following benefits shall be Termination Benefits: (a ) The Companies shall pay to the Executive the Executive s full Annual Compensation through the effective date of his Termination at the rate in effect at the time notice of termination is given or at the time of Termination, if earlier, and in addition (b ) The Companies shall pay to the Executive, at Executive s option, either: (i) within ten (10) days of his Termination an additional lump sum amount equal to three (3) times the Annual Compensation then in effect pursuant to paragraph 4 above, which sum shall be reduced to present value as determined by a certified public accountant to be agreed upon between the parties, or (ii) three equal payments each in an amount equal to the Executive s Annual Compensation then in effect, the first such payment to be made within ten (10) days of the Termination and each subsequent payment to be made annually on the anniversary date of the initial payment and in addition (c ) The Companies shall pay to the Executive all benefits payable to the Executive under the Companies retirement, pension and profit sharing plans, and in addition (d ) The Companies shall pay the Executive all legal fees and expenses incurred by the Executive as a result of such Termination, and in addition (e ) The Companies shall provide the Executive, for the greater of one year or the remaining term of this Agreement following his Termination, health insurance and group life insurance benefits substantially similar to those the Executive was receiving immediately prior to his Termination. 9 . Indemnity. The Companies shall indemnify the Executive and hold him harmless for any acts or decisions made by him in good faith while performing services for either of the Companies and shall use their best efforts to obtain coverage for him under any insurance policy now in force or hereinafter obtained during the term of this Agreement covering the other officers and directors of the Companies against lawsuits. The Companies will pay all expenses, including attorneys fees, actually and necessarily incurred by the Executive in connection with the defense of such act, suit or proceeding and in connection with any appeal thereon including the cost of court settlements. 10 . Notices. All notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be deemed to have been given at the time when mailed at any general or branch United States Post Office enclosed in a certified post paid envelope and addressed to the address of the respective party stated below or to such changed address as such party may have fixed by notice: To the Companies: TrustCo Bank Corp NY Trustco Bank New York 320 State Street Schenectady, NY 12301 To the Executive: Robert A. McCormick 16 Greenlea Drive Clifton Park, NY 12065 provided, however, that any notice of change of address shall be effective only upon receipt. 11 . Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Companies, their successors and assigns, including, without limitation, any person or entity which may acquire all or substantially all of either Company s assets or business or into which either Company may be consolidated or merged, and the Executive, his heirs, executors, administrators and legal representatives. The Executive may assign his right to payment under this Agreement, but not his obligations under this Agreement. 12 . Governing Law. This Agreement shall be governed by the laws of the State of New York. 13 . Modification. This Agreement supersedes all prior understandings and agreements between the parties, and may not be amended or modified orally, but only by a writing signed by the parties hereto. TRUSTCO BANK CORP NY BY/s/M. Norman Brickman TRUSTCO BANK NEW YORK BY/s/M. Norman Brickman /s/Robert A. McCormick Robert A. McCormick C011091BC1 Schedule A to Agreement among Companies and Robert A. McCormick Calendar Year Annual Salary Approval of Companies 1992 $550,000 1993 $650,000 /s/William F. Terry 1994 $700,000 /s/William F. Terry 1995 $720,000 /s/William F. Terry TRUSTCO BANK CORP NY BY/s/M. Norman Brickman TRUSTCO BANK NEW YORK BY/s/M. Norman Brickman AGREEMENT OF EXECUTIVE BY/S/Robert A. McCormick Robert A. McCormick AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT BETWEEN TRUSTCO BANK NEW YORK AND TRUSTCO BANK CORP NY AND ROBERT A. MCCORMICK WHEREAS, Trustco Bank New York and TrustCo Bank Corp NY (herein referred to as the Companies ) entered into an Employment Agreement dated as of January 1, 1992, (herein referred to as the Agreement ); with Robert A. McCormick (herein referred to as the Executive ); and WHEREAS, the Companies and the Executive desire to amend the Agreement, effective as of November 16, 1993; NOW, THEREFORE, the Agreement is hereby amended effective June 21, 1993, in the following respect: Section 5 of the Agreement is hereby deleted in its entirety and the following is substituted in lieu thereof: 5. Retirement, Pension and Profit Sharing. as further compensation for the services of the Executive: a. The Executive shall be allowed to participate fully in any disability, death benefit, retirement, pension or profit sharing plans maintained by the Companies, pursuant to the terms of such plans; and b. Upon termination of the Executive s employment due to retirement or disability (both as defined in the Retirement Plan of Trustco Bank New York), the Companies shall provide to the Executive and his spouse, for the life of the Executive, the health insurance benefits provided to retirees by the Companies under their medical insurance plan. The Companies shall provide to the Executive for his life the life insurance benefits provided to retirees by the Companies under their life insurance plan. The obligations of the Companies pursuant to this subparagraph b. shall survive the termination of this Agreement. IN WITNESS WHEREOF, the Companies and the Executive have executed this Amendment No. 1 this 16 day of November, 1993. TRUSTCO BANK NEW YORK TRUSTCO BANK CORP NY BY/s/William F. Terry BY/s/William F. Terry Secretary Secretary /s/Robert A. McCormick Robert A. McCormick Exhibit 10(b) AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT AMONG TRUSTCO BANK NEW YORK AND TRUSTCO BANK CORP NY AND ROBERT A. MCCORMICK WHEREAS, Trustco Bank New York and TrustCo Bank Corp NY (herein referred to as the Companies ) entered into an Employment Agreement dated as of January 1, 1992, (herein referred to as the Agreement ); with Robert A. McCormick (herein referred to as the Executive ); and WHEREAS, the Companies and the Executive desire to amend the Agreement, effective as of June 21, 1994; NOW, THEREFORE, the Agreement is hereby amended effective as of June 21, 1994, in the following respects: I. The following subparagraph (f) is hereby added to Section 8 of the Agreement: (f) In the event of Termination (as described in Sections 6 and 7 herein), if the Termination Benefits paid to the Executive under this Agreement or any other agreement are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986 (the Excise Tax ), then the Companies will pay to the Executive, within ten (10) days after the date the Excise Tax is determined to be due, an additional amount ( Gross Up ) such that the net amount retained by the Executive after (i) deduction of any Excise Tax on the Termination Benefits and any other benefits subject to the Excise Tax, and (ii) any Federal, state and local income taxes and Excise Tax upon the payment provided for in this subparagraph (f), shall be equal to the Termination Benefits. For purposes of determining the amount of the Gross Up, the Executive shall be deemed to pay Federal, State and local income taxes at the highest marginal rate of taxation in the calendar year in which the Termination Benefits are to be made. State and local income taxes shall be determined based upon the state and locality of the Executive s domicile on Termination. The determination of whether such Excise Tax is payable and the amount thereof shall be based upon the opinion of tax counsel selected by the Companies and acceptable to the Executive. If such opinion is not finally accepted by the Internal Revenue Service upon audit, then appropriate adjustments shall be computed (without interest but with Gross Up, if applicable) by such tax counsel based upon the final amount of the Excise Tax so determined. The adjusted amount shall be paid by the appropriate party in one lump cash sum within thirty (30) days of such computation. IN WITNESS WHEREOF, the Companies and the Executive have executed this Amendment NO. 2 this 1st day of September, 1994. TRUSTCO BANK NEW YORK TRUSTCO BANK CORP NY BY:/s/William F. Terry BY:/s/William F. Terry Secretary Secretary /s/Robert A. McCormick Robert A. McCormick AMENDMENT NO. 3 TO EMPLOYMENT AGREEMENT BETWEEN TRUSTCO BANK NEW YORK AND TRUSTCO BANK CORP NY AND ROBERT A. McCORMICK WHEREAS, Trustco Bank New York (herein referred to as the "Company") and TrustCo Bank Corp NY (herein referred to as "TrustCo") entered into an Employment Agreement (herein referred to as the "Agreement") with Robert A. McCormick (herein referred to as the "Executive"); and WHEREAS, by statutory conversion the Company converted from a state chartered trust company to a national bank, and in connection with the conversion the name of the Company changed to Trustco Bank, National Association effective February 1, 1995; and WHEREAS, the Company, TrustCo and the Executive desire to amend the Agreement to reflect the name change; NOW, THEREFORE, effective February 1, 1995, the Agreement is hereby amended by changing "Trustco Bank New York" to "Trustco Bank, National Association" in each place where it appears therein. IN WITNESS WHEREOF, the Company has caused this Amendment No. 3 to be executed this 13th day of February, 1995. TRUSTCO BANK, NATIONAL TRUSTCO BANK CORP NY ASSOCIATION By:/s/William F. Terry By:/s/William F. Terry Title: Secretary Title: Secretary /s/Robert A. McCormick Robert A. McCormick Exhibit 10(c) EMPLOYMENT AGREEMENT among TRUSTCO BANK NEW YORK and TRUSTCO BANK CORP NY and ROBERT T. CUSHING EMPLOYMENT AGREEMENT AGREEMENT, dated as of June 21, 1994 (the "Agreement"), by and among Trustco Bank New York (the "Bank"), a New York banking corporation, and TrustCo Bank Corp NY (the "Company"), a New York business corporation (hereinafter referred to collectively as the "Companies"), with principal offices at 192 Erie Boulevard, Schenectady, New York 12305-1808, and Robert T. Cushing (the "Executive"), residing at 6 Carriage Hill Drive, Latham, New York 12211. Engagement. The Companies agree to engage the Executive and the executive agrees to serve the Companies as an Executive. 1. Term. The term of this Agreement shall commence on June 21, 1994 and shall continue until December 31, 1994. Beginning on January 1, 1995, and on January 1 of each and every year thereafter, this Agreement shall automatically renew for an additional year on the same terms and conditions, except to the extent modified in writing, unless the Executive is notified by the method set forth in Paragraph 11 herein that Executive has been terminated ("Nonrenewal Notice"). Nothing contained herein, however, shall be construed to extend the Executive's right to employment beyond the age of 65 years or the then mandatory retirement age in effect, whichever shall be greater. 2. Purpose and Effect. The purpose of this Agreement is to provide Termination Benefits, as defined in Paragraph 9 hereof, in the event of a Termination, as defined in Paragraph 8 hereof. 3. Service. The Executive shall exert Executive's best efforts and devote substantially all of Executive's time and attention to the affairs of the Bank. The Executive shall perform all the services and duties necessary or appropriate for the management of the Bank's businesses, subject to the general direction, approval, and control of the Chief Executive Officer and his designees. 4. Compensation. For purposes of this Agreement, Annual Compensation shall be deemed to be the Executive's Annual Base Salary. Commencing May 20, 1994, Executive shall be paid by the Companies, the Annual Base Salary established on Schedule A attached hereto (which base salary shall be paid in bi-weekly installments). Thereafter, Annual Base Salary shall continue at such level or such other level as may have been agreed to among the parties and evidenced as provided in this Paragraph, until renegotiated among the parties hereto and either confirmed in a writing signed by either the Chief Executive Officer of or a member of the Board of Directors of the Companies, or endorsed on Schedule A and signed by either the Chief Executive Officer of or by a member of the Board of Directors of the Companies. 5. Retirement, Pension and Profit Sharing. As further compensation for the services of the Executive: 6. The Executive shall be eligible to participate fully in any retirement, executive incentive compensation, pension or profit sharing plans maintained by the Companies, pursuant to the terms of such plans. Nothing in this agreement shall be construed as a waiver of any of the terms of or conditions precedent to participation in such plans; and 7. Upon termination of the Executive's employment due to retirement or disability (both as defined in the Retirement Plan of Trustco Bank New York), the Companies shall provide to the Executive and his spouse, for the life of the Executive, the health insurance benefits provided to retirees by the Companies under their medical insurance plan. The Companies shall provide to the Executive for his life the life insurance benefits provided to retirees by the Companies under their life insurance plan. The obligations of the Companies pursuant to this subparagraph (b) shall survive the termination of this Agreement. 8. Termination of Employment. 9. If there shall be a Termination (as defined in Paragraph 8 hereof) of the Executive from the Companies within two (2) years after a change in control of either Company, for any reason other than for good cause, death, retirement at the mandatory retirement age, or disability, the Executive shall receive upon his Termination with either of the Companies, the Termination Benefits set forth herein. The Executive's Termination for good cause shall be limited to the Executive's having committed an act of fraud, embezzlement, or theft, constituting a felony or any act intentionally against either of the Companies which causes either Company material injury, or a final determination by a court that the Executive has committed a material breach of his duties and responsibilities in connection with rendering services to either of the Companies pursuant to this Agreement. 10. A "change in control" of either Company means any of the following events: (i) any individual, corporation (other than either Company), partnership, trust, association, pool, syndicate, or any other entity or any group of persons acting in concert becomes the beneficial owner, as that concept is defined in Rule 13d-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, of securities of either Company possessing twenty percent (20%) or more of the voting power for the election of directors of either Company; (ii) there shall be consummated any consolidation, merger or other business combination involving either Company or the securities of either Company in which holders of voting securities of either Company immediately prior to such consummation own, as a group, immediately after such consummation, voting securities of either Company (or, if either Company does not survive such transaciton, voting securities of the corporation or corporations surviving such transaction) having less than fifty percent (50%) of the total voting power in an election of directors of either Company (or such other surviving corporation or corporations); (iii) during any period of two consecutive years, individuals who at the beginning of such period constitute the directors of either Company cease for any reason to constitute at least a majority thereof unless the election, or the nomination for election by either Company's shareholders, of each new director of either Company was approved by a vote of at least two-thirds of the directors of the applicable Company then still in office who were directors of such Company at the beginning of any such period; (iv) removal by the stockholders of all or any of the incumbent directors of either Company other than a removal for cause; and (v) there shall be consummated any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all, of the assets of either Company (on a consolidated basis) to a party which is not controlled by or under common control with the Companies. 11. Notice of Termination shall be communicated by the terminating party to the other parties to this Agreement pursuant to Paragraph 11 hereof. 12. Termination. Termination shall include, but is not limited to, (i) any reduction in the Executive's Annual Base Salary, executive incentive compensation, disability, death, retirement, pension or profit sharing benefits (unless such reductions shall have been applied to all Bank employees as a part of a validly adopted plan of cost containment), responsibilities or duties, or (ii) either Companies' relocation or a change in the Executive's base location, or (iii) a Nonrenewal Notice given pursuant to Paragraph 2 of this Agreement, or (iv) the unilateral election of the Executive to terminate the Agreement. Such election shall be communicated to the Companies pursuant to Paragraph 11 hereof. 13. Termination Benefits. The following benefits shall be Termination Benefits: 14. The Companies shall pay to the Executive the Executive's full compensation through the effective date of his Termination at the rate in effect at the time notice of Termination is given or at the time of Termination, if earlier, and in addition 15. The Companies shall pay to the Executive within ten (10) days of Termination a lump sum amount equal to two (2) times the Executive's Annual Base Salary then in effect, and in addition 16. The Companies shall pay to the Executive all benefits payable to the Executive under the Companies' retirement, executive incentive compensation, pension and profit sharing plans, and in addition 17. The Companies shall pay to the Executive all legal fees and expenses incurred by the Executive as a result of such Termination, and in addition 18. The Companies shall provide the Executive, for one year following his Termination, Health Insurance and Group Life Insurance benefits substantially similar to those the Executive was receiving immediately prior to his Termination, and in addition 19. In the event the Termination Benefits paid to the Executive under this Agreement or any other agreement are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986 (the "Excise Tax"), then the Companies will pay to the Executive, within ten (10) days after the date the Excise Tax is determined to be due, an additional amount ("Gross Up") such that the net amount retained by the Executive after deduction of (i) any Excise Tax on the Termination Benefits and any other benefits subject to the Excise Tax, and (ii) any Federal, State and local income taxes and Excise Tax upon the payment provided for in this subparagraph (f), shall be equal to the Termination Benefits. For purposes of determining the amount of the Gross Up, the Executive shall be deemed to pay Federal, State and local income taxes at the highest marginal rate of taxation in the calendar year in which the Termination Benefits are to be made. State and local income taxes shall be determined based upon the state and locality of the Executive's domicile on Termination. The determination of whether such Excise Tax is payable and the amount thereof shall be based upon the opinion of tax counsel selected by the Companies and acceptable to the Executive. If such opinion is not finally accepted by the Internal Revenue Service upon audit, then appropriate adjustments shall be computed (without interest but with Gross Up, if applicable) by such tax counsel based upon the final amount of the Excise Tax so determined. The adjusted amount shall be paid by the appropriate party in one lump cash sum within thirty (30) days of such computation. 20. Indemnity. The Companies shall indemnify the Executive and hold Executive harmless for any acts or decisions made by Executive in good faith while performing services for either of the Companies and shall use their best efforts to obtain coverage for Executive under any insurance policy now in force or hereinafter obtained during the term of this Agreement covering the other officers and directors of the Companies against lawsuits. The Companies will pay all expenses, including attorney's fees, actually and necessarily incurred by the Executive in connection with any appeal thereon including the cost of court settlements. 21. Notices. All notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be deemed to have been given at the time when personally delivered or mailed at any general or branch United States Post Office enclosed in a post paid envelope and addressed to the address of the respective party stated below or to such changed address as such party may have fixed by notice. To the Companies : TrustCo Bank Corp NY Trustco Bank New York 192 Erie Boulevard Schenectady, NY 12305-1808 To the Executive : Robert T. Cushing 6 Carriage Hill Drive Latham, NY 12211 Provided, however, that any notice of change of address shall be effective only upon receipt. 22. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Companies, their successors and assigns, including without limitation, any person or entity which may acquire all or substantially all of either Company's assets or business or into which either Company may be consolidated or merged, and the Executive, as well as Executive's heirs, executors, administrators and legal representatives. The Executive may assign the right to payment under this Agreement, but not obligations under this Agreement. 23. Governing Law. This Agreement shall be governed by the laws of the State of New York. 24. Complete Agreement. This Agreement supersedes all prior understandings and agreements between the parties, and may not be amended or modified orally, but only by a writing signed by the parties hereto. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on June 21, 1994. TRUSTCO BANK CORP NY ATTEST: By:/s/Robert M. Mccormick /s/William F. Terry President and Chief Executive Secretary Officer "Company" TRUSTCO BANK NEW YORK ATTEST: By:/s/Robert M. McCormick /s/William F. Terry President and Chief Executive Secretary Officer "Bank" /s/Robert T. Cushing Robert T. Cushing Schedule A to Agreement among Companies and Robert T. Cushing Calendar Year Annual Salary Approval of Companies 1994 $230,000.00 /s/Robert A. McCormick 1995 $240,000.00 /s/Robert A. McCormick TRUSTCO BANK CORP NY By:/s/Robert A. McCormick President and Chief Executive Officer TRUSTCO BANK NEW YORK By:/s/Robert A. McCormick President and Chief Executive Officer AGREEMENT OF EXECUTIVE /s/Robert T. Cushing Robert T. Cushing AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT BETWEEN TRUSTCO BANK NEW YORK AND TRUSTCO BANK CORP NY AND ROBERT T. CUSHING WHEREAS, Trustco Bank New York (herein referred to as the "Company") and TrustCo Bank Corp NY (herein referred to as "TrustCo") entered into an Employment Agreement (herein referred to as the "Agreement") with Robert T. Cushing (herein referred to as the "Executive"); and WHEREAS, by statutory conversion the Company converted from a state chartered trust company to a national bank, and in connection with the conversion the name of the Company changed to Trustco Bank, National Association effective February 1, 1995; and WHEREAS, the Company, TrustCo and the Executive desire to amend the Agreement to reflect the name change; NOW, THEREFORE, effective February 1, 1995, the Agreement is hereby amended by changing "Trustco Bank New York" to "Trustco Bank, National Association" in each place where it appears therein. IN WITNESS WHEREOF, the Company has caused this Amendment No. 1 to be executed this 14th day of February, 1995. TRUSTCO BANK, NATIONAL TRUSTCO BANK CORP NY ASSOCIATION By:/s/Robert A. McCormick By:/s/Robert A. McCormick Title:President and CEO Title:President and CEO /s/Robert T. Cushing Robert T. Cushing Exhibit 10(d) RESTATED EMPLOYMENT AGREEMENT among TRUSTCO BANK NEW YORK and TRUSTCO BANK CORP NY and NANCY A. McNAMARA RESTATED EMPLOYMENT AGREEMENT WHEREAS, Trustco Bank New York (the "Bank"), a New York banking corporation, and TrustCo Bank Corp NY (the "Company"), a New York business corporation (herein referred to collectively as the "Companies") entered into an Employment Agreement dated July 15, 1992 (herein referred to as the "Agreement") with Nancy A. McNamara (herein referred to as the "Executive"); and WHEREAS, the Companies and the Executive desire to amend and restate the Agreement in its entirety effective as of June 21, 1994; NOW, THEREFORE, the Agreement is hereby amended and restated in its entirety effective June 21, 1994, so that it shall read as follows: Engagement. The Companies agree to engage the Executive and the executive agrees to serve the Companies as an Executive. 1. Term. The term of this Agreement shall commence on July 15, 1992 and shall continue until December 31, 1992. Beginning on January 1, 1993, and on January 1 of each and every year thereafter, this Agreement shall automatically renew for an additional year on the same terms and conditions, except to the extent modified in writing, unless the Executive is notified by the method set forth in Paragraph 11 herein that Executive has been terminated ("Nonrenewal Notice"). Nothing contained herein, however, shall be construed to extend the Executive's right to employment beyond the age of 65 years or the then mandatory retirement age in effect, whichever shall be greater. 2. Purpose and Effect. The purpose of this Agreement is to provide Termination Benefits, as defined in Paragraph 9 hereof, in the event of a Termination, as defined in Paragraph 8 hereof. 3. Service. The Executive shall exert Executive's best efforts and devote substantially all of Executive's time and attention to the affairs of the Bank. The Executive shall perform all the services and duties necessary or appropriate for the management of the Bank's businesses, subject to the general direction, approval, and control of the Chief Executive Officer and his designees. 4. Compensation. For purposes of this Agreement, Annual Compensation shall be deemed to be the Executive's Annual Base Salary. Commencing January 1, 1992, Executive shall be paid by the Companies, the Annual Base Salary established on Schedule A attached hereto (which base salary shall be paid in bi-weekly installments). Thereafter, Annual Base Salary shall continue at such level or such other level as may have been agreed to among the parties and evidenced as provided in this Paragraph, until renegotiated among the parties hereto and either confirmed in a writing signed by either the Chief Executive Officer of or a member of the Board of Directors of the Companies, or endorsed on Schedule A and signed by either the Chief Executive Officer of or by a member of the Board of Directors of the Companies. 5. Retirement, Pension and Profit Sharing. As further compensation for the services of the Executive: (a) The Executive shall be eligible to participate fully in any retirement, executive incentive compensation, pension or profit sharing plans maintained by the Companies, pursuant to the terms of such plans. Nothing in this agreement shall be construed as a waiver of any of the terms of or conditions precedent to participation in such plans; and (b) Upon termination of the Executive's employment due to retirement or disability (both as defined in the Retirement Plan of Trustco Bank New York), the Companies shall provide to the Executive and her spouse, for the life of the Executive, the health insurance benefits provided to retirees by the Companies under their medical insurance plan. The Companies shall provide to the Executive for her life the life insurance benefits provided to retirees by the Companies under their life insurance plan. The obligations of the Companies pursuant to this subparagraph (b) shall survive the termination of this Agreement. 6. Termination of Employment. (a) If there shall be a Termination (as defined in Paragraph 8 hereof) of the Executive from the Companies within two (2) years after a change in control of either Company, for any reason other than for good cause, death, retirement at the mandatory retirement age, or disability, the Executive shall receive upon her Termination with either of the Companies, the Termination Benefits set forth herein. The Executive's Termination for good cause shall be limited to the Executive's having committed an act of fraud, embezzlement, or theft, constituting a felony or any act intentionally against either of the Companies which causes either Company material injury, or a final determination by a court that the Executive has committed a material breach of her duties and responsibilities in connection with rendering services to either of the Companies pursuant to this Agreement. (b) A "change in control" of either Company means any of the following events: (i) any individual, corporation (other than either Company), partnership, trust, association, pool, syndicate, or any other entity or any group of persons acting in concert becomes the beneficial owner, as that concept is defined in Rule 13d-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, of securities of either Company possessing twenty percent (20%) or more of the voting power for the election of directors of either Company; (ii) there shall be consummated any consolidation, merger or other business combination involving either Company or the securities of either Company in which holders of voting securities of either Company immediately prior to such consummation own, as a group, immediately after such consummation, voting securities of either Company (or, if either Company does not survive such transaction, voting securities of the corporation or corporations surviving such transaction) having less than fifty percent (50%) of the total voting power in an election of directors of either Company (or such other surviving corporation or corporations); (iii) during any period of two consecutive years, individuals who at the beginning of such period constitute the directors of either Company cease for any reason to constitute at least a majority thereof unless the election, or the nomination for election by either Company's shareholders, of each new director of either Company was approved by a vote of at least two-thirds of the directors of the applicable Company then still in office who were directors of such Company at the beginning of any such period; (iv) removal by the stockholders of all or any of the incumbent directors of either Company other than a removal for cause; and (v) there shall be consummated any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all, of the assets of either Company (on a consolidated basis) to a party which is not controlled by or under common control with the Companies. (c) Notice of Termination shall be communicated by the terminating party to the other parties to this Agreement pursuant to Paragraph 11 hereof. 7. Termination. Termination shall include, but is not limited to, (i) any reduction in the Executive's Annual Base Salary, executive incentive compensation, disability, death, retirement, pension or profit sharing benefits (unless such reductions shall have been applied to all Bank employees as a part of a validly adopted plan of cost containment), responsibilities or duties, or (ii) either Companies' relocation or a change in the Executive's base location, or (iii) a Nonrenewal Notice given pursuant to Paragraph 2 of this Agreement, or (iv) the unilateral election of the Executive to terminate the Agreement. Such election shall be communicated to the Companies pursuant to Paragraph 11 hereof. 8. Termination Benefits. The following benefits shall be Termination Benefits: (a) The Companies shall pay to the Executive the Executive's full compensation through the effective date of her Termination at the rate in effect at the time notice of Termination is given or at the time of Termination, if earlier, and in addition (b)The Companies shall pay to the Executive within ten (10) days of Termination a lump sum amount equal to two (2) times the Executive's Annual Base Salary then in effect, and in addition (c) The Companies shall pay to the Executive all benefits payable to the Executive under the Companies' retirement, executive incentive compensation, pension and profit sharing plans, and in addition (d) The Companies shall pay to the Executive all legal fees and expenses incurred by the Executive as a result of such Termination, and in addition (e) The Companies shall provide the Executive, for one year following her Termination, Health Insurance and Group Life Insurance benefits substantially similar to those the Executive was receiving immediately prior to her Termination, and in addition (f) In the event the Termination Benefits paid to the Executive under this Agreement or any other agreement are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986 (the "Excise Tax"), then the Companies will pay to the Executive, within ten (10) days after the date the Excise Tax is determined to be due, an additional amount ("Gross Up") such that the net amount retained by the Executive after deduction of (i) any Excise Tax on the Termination Benefits and any other benefits subject to the Excise Tax, and (ii) any Federal, State and local income taxes and Excise Tax upon the payment provided for in this subparagraph (f), shall be equal to the Termination Benefits. For purposes of determining the amount of the Gross Up, the Executive shall be deemed to pay Federal, State and local income taxes at the highest marginal rate of taxation in the calendar year in which the Termination Benefits are to be made. State and local income taxes shall be determined based upon the state and locality of the Executive's domicile on Termination. The determination of whether such Excise Tax is payable and the amount thereof shall be based upon the opinion of tax counsel selected by the Companies and acceptable to the Executive. If such opinion is not finally accepted by the Internal Revenue Service upon audit, then appropriate adjustments shall be computed (without interest but with Gross Up, if applicable) by such tax counsel based upon the final amount of the Excise Tax so determined. The adjusted amount shall be paid by the appropriate party in one lump cash sum within thirty (30) days of such computation. 9. Indemnity. The Companies shall indemnify the Executive and hold Executive harmless for any acts or decisions made by Executive in good faith while performing services for either of the Companies and shall use their best efforts to obtain coverage for Executive under any insurance policy now in force or hereinafter obtained during the term of this Agreement covering the other officers and directors of the Companies against lawsuits. The Companies will pay all expenses, including attorney's fees, actually and necessarily incurred by the Executive in connection with any appeal thereon including the cost of court settlements. 10. Notices. All notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be deemed to have been given at the time when personally delivered or mailed at any general or branch United States Post Office enclosed in a post paid envelope and addressed to the address of the respective party stated below or to such changed address as such party may have fixed by notice. To the Companies: TrustCo Bank Corp NY Trustco Bank New York 192 Erie Boulevard Schenectady, NY 12305-1808 To the Executive: Nancy A. McNamara 26 Berkshire Drive West Clifton Park, NY 12065 Provided, however, that any notice of change of address shall be effective only upon receipt. 11. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Companies, their successors and assigns, including without limitation, any person or entity which may acquire all or substantially all of either Company's assets or business or into which either Company may be consolidated or merged, and the Executive, as well as Executive's heirs, executors, administrators and legal representatives. The Executive may assign the right to payment under this Agreement, but not obligations under this Agreement. 12. Governing Law. This Agreement shall be governed by the laws of the State of New York. 13. Complete Agreement. This Agreement supersedes all prior understandings and agreements between the parties, and may not be amended or modified orally, but only by a writing signed by the parties hereto. IN WITNESS WHEREOF, the parties hereto have executed this Restated Agreement on June 21, 1994. TRUSTCO BANK CORP NY ATTEST: By:/s/Robert A. McCormick President and Chief Executive /s/William F. Terry Officer "Company" Secretary TRUSTCO BANK NEW YORK ATTEST: By:/s/Robert A. McCormick President and Chief Executive /s/William F. Terry Officer "Bank" Secretary /s/Nancy A. McNamara Nancy A. McNamara Schedule A to Agreement among Companies and Nancy A. Mcnamara Calendar Year Annual Salary Approval of Companies 1992 $160,000.00 /s/Robert A. McCormick 1993 200,000.00 /s/Robert A. McCormick 1994 230,000.00 /s/Robert A. McCormick 1995 240,000.00 /s/Robert A. McCormick TRUSTCO BANK CORP NY By:/s/Robert A. McCormick President and Chief Executive Officer TRUSTCO BANK NEW YORK By:/s/Robert A. McCormick President and Chief Executive Officer AGREEMENT OF EXECUTIVE /s/Nancy A. McNamara Nancy A. McNamara AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT BETWEEN TRUSTCO BANK NEW YORK AND TRUSTCO BANK CORP NY AND NANCY A. McNAMARA WHEREAS, Trustco Bank New York (herein referred to as the "Company") and TrustCo Bank Corp NY (herein referred to as "TrustCo") entered into an Employment Agreement (herein referred to as the "Agreement") with Nancy A. McNamara (herein referred to as the "Executive"); and WHEREAS, by statutory conversion the Company converted from a state chartered trust company to a national bank, and in connection with the conversion the name of the Company changed to Trustco Bank, National Association effective February 1, 1995; and WHEREAS, the Company, TrustCo and the Executive desire to amend the Agreement to reflect the name change; NOW, THEREFORE, effective February 1, 1995, the Agreement is hereby amended by changing "Trustco Bank New York" to "Trustco Bank, National Association" in each place where it appears therein. IN WITNESS WHEREOF, the Company has caused this Amendment No. 1 to be executed this 14th day of February, 1995. TRUSTCO BANK, NATIONAL TRUSTCO BANK CORP NY ASSOCIATION By: /s/Robert A. McCormick By:/s/Robert A. McCormick Title: President and CEO Title: President and CEO /s/Nancy A. McNamara Nancy A. McNamara Exhibit 10(e) RESTATED EMPLOYMENT AGREEMENT among TRUSTCO BANK NEW YORK and TRUSTCO BANK CORP NY and WILLIAM F. TERRY RESTATED EMPLOYMENT AGREEMENT WHEREAS, Trustco Bank New York (the "Bank"), a New York banking corporation, and TrustCo Bank Corp NY (the "Company"), a New York business corporation (herein referred to collectively as the "Companies") entered into an Employment Agreement dated July 15, 1992 (herein referred to as the "Agreement") with William F. Terry (herein referred to as the "Executive"); and WHEREAS, the Companies and the Executive desire to amend and restate the Agreement in its entirety effective as of June 21, 1994; NOW, THEREFORE, the Agreement is hereby amended and restated in its entirety effective June 21, 1994, so that it shall read as follows: Engagement. The Companies agree to engage the Executive and the executive agrees to serve the Companies as an Executive. 1. Term. The term of this Agreement shall commence on July 15, 1992 and shall continue until December 31, 1992. Beginning on January 1, 1993, and on January 1 of each and every year thereafter, this Agreement shall automatically renew for an additional year on the same terms and conditions, except to the extent modified in writing, unless the Executive is notified by the method set forth in Paragraph 11 herein that Executive has been terminated ("Nonrenewal Notice"). Nothing contained herein, however, shall be construed to extend the Executive's right to employment beyond the age of 65 years or the then mandatory retirement age in effect, whichever shall be greater. 2. Purpose and Effect. The purpose of this Agreement is to provide Termination Benefits, as defined in Paragraph 9 hereof, in the event of a Termination, as defined in Paragraph 8 hereof. 3. Service. The Executive shall exert Executive's best efforts and devote substantially all of Executive's time and attention to the affairs of the Bank. The Executive shall perform all the services and duties necessary or appropriate for the management of the Bank's businesses, subject to the general direction, approval, and control of the Chief Executive Officer and his designees. 4. Compensation. For purposes of this Agreement, Annual Compensation shall be deemed to be the Executive's Annual Base Salary. Commencing January 1, 1992, Executive shall be paid by the Companies, the Annual Base Salary established on Schedule A attached hereto (which base salary shall be paid in bi-weekly installments). Thereafter, Annual Base Salary shall continue at such level or such other level as may have been agreed to among the parties and evidenced as provided in this Paragraph, until renegotiated among the parties hereto and either confirmed in a writing signed by either the Chief Executive Officer of or a member of the Board of Directors of the Companies, or endorsed on Schedule A and signed by either the Chief Executive Officer of or by a member of the Board of Directors of the Companies. 5. Retirement, Pension and Profit Sharing. As further compensation for the services of the Executive: (a) The Executive shall be eligible to participate fully in any retirement, executive incentive compensation, pension or profit sharing plans maintained by the Companies, pursuant to the terms of such plans. Nothing in this agreement shall be construed as a waiver of any of the terms of or conditions precedent to participation in such plans; and (b) Upon termination of the Executive's employment due to retirement or disability (both as defined in the Retirement Plan of Trustco Bank New York), the Companies shall provide to the Executive and his spouse, for the life of the Executive, the health insurance benefits provided to retirees by the Companies under their medical insurance plan. The Companies shall provide to the Executive for his life the life insurance benefits provided to retirees by the Companies under their life insurance plan. The obligations of the Companies pursuant to this subparagraph (b) shall survive the termination of this Agreement. 6. Termination of Employment. (a) If there shall be a Termination (as defined in Paragraph 8 hereof) of the Executive from the Companies within two (2) years after a change in control of either Company, for any reason other than for good cause, death, retirement at the mandatory retirement age, or disability, the Executive shall receive upon his Termination with either of the Companies, the Termination Benefits set forth herein. The Executive's Termination for good cause shall be limited to the Executive's having committed an act of fraud, embezzlement, or theft, constituting a felony or any act intentionally against either of the Companies which causes either Company material injury, or a final determination by a court that the Executive has committed a material breach of his duties and responsibilities in connection with rendering services to either of the Companies pursuant to this Agreement. (b) A "change in control" of either Company means any of the following events: (i) any individual, corporation (other than either Company), partnership, trust, association, pool, syndicate, or any other entity or any group of persons acting in concert becomes the beneficial owner, as that concept is defined in Rule 13d-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, of securities of either Company possessing twenty percent (20%) or more of the voting power for the election of directors of either Company; (ii) there shall be consummated any consolidation, merger or other business combination involving either Company or the securities of either Company in which holders of voting securities of either Company immediately prior to such consummation own, as a group, immediately after such consummation, voting securities of either Company (or, if either Company does not survive such transaction, voting securities of the corporation or corporations surviving such transaction) having less than fifty percent (50%) of the total voting power in an election of directors of either Company (or such other surviving corporation or corporations); (iii) during any period of two consecutive years, individuals who at the beginning of such period constitute the directors of either Company cease for any reason to constitute at least a majority thereof unless the election, or the nomination for election by either Company's shareholders, of each new director of either Company was approved by a vote of at least two- thirds of the directors of the applicable Company then still in office who were directors of such Company at the beginning of any such period; (iv) removal by the stockholders of all or any of the incumbent directors of either Company other than a removal for cause; and (v) there shall be consummated any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all, of the assets of either Company (on a consolidated basis) to a party which is not controlled by or under common control with the Companies. (c) Notice of Termination shall be communicated by the terminating party to the other parties to this Agreement pursuant to Paragraph 11 hereof. 7. Termination. Termination shall include, but is not limited to, (i) any reduction in the Executive's Annual Base Salary, executive incentive compensation, disability, death, retirement, pension or profit sharing benefits (unless such reductions shall have been applied to all Bank employees as a part of a validly adopted plan of cost containment), responsibilities or duties, or (ii) either Companies' relocation or a change in the Executive's base location, or (iii) a Nonrenewal Notice given pursuant to Paragraph 2 of this Agreement, or (iv) the unilateral election of the Executive to terminate the Agreement. Such election shall be communicated to the Companies pursuant to Paragraph 11 hereof. 8. Termination Benefits. The following benefits shall be Termination Benefits: (a) The Companies shall pay to the Executive the Executive's full compensation through the effective date of his Termination at the rate in effect at the time notice of Termination is given or at the time of Termination, if earlier, and in addition (b) The Companies shall pay to the Executive within ten (10) days of Termination a lump sum amount equal to two (2) times the Executive's Annual Base Salary then in effect, and in addition (c) The Companies shall pay to the Executive all benefits payable to the Executive under the Companies' retirement, executive incentive compensation, pension and profit sharing plans, and in addition (d) The Companies shall pay to the Executive all legal fees and expenses incurred by the Executive as a result of such Termination, and in addition (e) The Companies shall provide the Executive, for one year following his Termination, Health Insurance and Group Life Insurance benefits substantially similar to those the Executive was receiving immediately prior to his Termination, and in addition (f) In the event the Termination Benefits paid to the Executive under this Agreement or any other agreement are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986 (the "Excise Tax"), then the Companies will pay to the Executive, within ten (10) days after the date the Excise Tax is determined to be due, an additional amount ("Gross Up") such that the net amount retained by the Executive after deduction of (i) any Excise Tax on the Termination Benefits and any other benefits subject to the Excise Tax, and (ii) any Federal, State and local income taxes and Excise Tax upon the payment provided for in this subparagraph (f), shall be equal to the Termination Benefits. For purposes of determining the amount of the Gross Up, the Executive shall be deemed to pay Federal, State and local income taxes at the highest marginal rate of taxation in the calendar year in which the Termination Benefits are to be made. State and local income taxes shall be determined based upon the state and locality of the Executive's domicile on Termination. The determination of whether such Excise Tax is payable and the amount thereof shall be based upon the opinion of tax counsel selected by the Companies and acceptable to the Executive. If such opinion is not finally accepted by the Internal Revenue Service upon audit, then appropriate adjustments shall be computed (without interest but with Gross Up, if applicable) by such tax counsel based upon the final amount of the Excise Tax so determined. The adjusted amount shall be paid by the appropriate party in one lump cash sum within thirty (30) days of such computation. 9. Indemnity. The Companies shall indemnify the Executive and hold Executive harmless for any acts or decisions made by Executive in good faith while performing services for either of the Companies and shall use their best efforts to obtain coverage for Executive under any insurance policy now in force or hereinafter obtained during the term of this Agreement covering the other officers and directors of the Companies against lawsuits. The Companies will pay all expenses, including attorney's fees, actually and necessarily incurred by the Executive in connection with any appeal thereon including the cost of court settlements. 10. Notices. All notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be deemed to have been given at the time when personally delivered or mailed at any general or branch United States Post Office enclosed in a post paid envelope and addressed to the address of the respective party stated below or to such changed address as such party may have fixed by notice. To the Companies: TrustCo Bank Corp NY Trustco Bank New York 192 Erie Boulevard Schenectady, NY 12305-1808 To the Executive: William F. Terry 29 St. Agnes Lane Loudonville, NY 12211 Provided, however, that any notice of change of address shall be effective only upon receipt. 11. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Companies, their successors and assigns, including without limitation, any person or entity which may acquire all or substantially all of either Company's assets or business or into which either Company may be consolidated or merged, and the Executive, as well as Executive's heirs, executors, administrators and legal representatives. The Executive may assign the right to payment under this Agreement, but not obligations under this Agreement. 12. Governing Law. This Agreement shall be governed by the laws of the State of New York. 13. Complete Agreement. This Agreement supersedes all prior understandings and agreements between the parties, and may not be amended or modified orally, but only by a writing signed by the parties hereto. IN WITNESS WHEREOF, the parties hereto have executed this Restated Agreement on June 21, 1994. TRUSTCO BANK CORP NY ATTEST: By:/s/Robert A. McCormick President and Chief Executive /s/William F. Terry Officer "Company" Secretary TRUSTCO BANK NEW YORK ATTEST: By:/s/Robert A. McCormick President and Chief Executive /s/William F. Terry Officer "Bank" Secretary /s/William F. Terry William F. Terry Schedule A to Agreement among Companies and William F. Terry Calendar Year Annual Salary Approval of Companies 1992 $160,000.00 /s/Robert A. McCormick 1993 200,000.00 /s/Robert A. McCormick 1994 230,000.00 /s/Robert A. McCormick 1995 240,000.00 /s/Robert A. McCormick TRUSTCO BANK CORP NY By:/s/Robert A. McCormick President and Chief Executive Officer TRUSTCO BANK NEW YORK By:/s/Robert A. McCormick President and Chief Executive Officer AGREEMENT OF EXECUTIVE /s/William F. Terry William F. Terry AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT BETWEEN TRUSTCO BANK NEW YORK AND TRUSTCO BANK CORP NY AND WILLIAM F. TERRY WHEREAS, Trustco Bank New York (herein referred to as the "Company") and TrustCo Bank Corp NY (herein referred to as "TrustCo") entered into an Employment Agreement (herein referred to as the "Agreement") with William F. Terry (herein referred to as the "Executive"); and WHEREAS, by statutory conversion the Company converted from a state chartered trust company to a national bank, and in connection with the conversion the name of the Company changed to Trustco Bank, National Association effective February 1, 1995; and WHEREAS, the Company, TrustCo and the Executive desire to amend the Agreement to reflect the name change; NOW, THEREFORE, effective February 1, 1995, the Agreement is hereby amended by changing "Trustco Bank New York" to "Trustco Bank, National Association" in each place where it appears therein. IN WITNESS WHEREOF, the Company has caused this Amendment No. 1 to be executed this 14th day of February, 1995. TRUSTCO BANK, NATIONAL TRUSTCO BANK CORP NY ASSOCIATION By:/s/Robert A. McCormick By:/s/Robert A. McCormick Title: President and CEO Title: President and CEO /s/William F. Terry William F. Terry Exhibit 10(f) RESTATED EMPLOYMENT AGREEMENT among TRUSTCO BANK NEW YORK and TRUSTCO BANK CORP NY and RALPH A. PIDGEON RESTATED EMPLOYMENT AGREEMENT WHEREAS, Trustco Bank New York (the "Bank"), a New York banking corporation, and TrustCo Bank Corp NY (the "Company"), a New York business corporation (herein referred to collectively as the "Companies") entered into an Employment Agreement dated July 15, 1992 (herein referred to as the "Agreement") with Ralph A. Pidgeon (herein referred to as the "Executive"); and WHEREAS, the Companies and the Executive desire to amend and restate the Agreement in its entirety effective as of June 21, 1994; NOW, THEREFORE, the Agreement is hereby amended and restated in its entirety effective June 21, 1994, so that it shall read as follows: Engagement. The Companies agree to engage the Executive and the executive agrees to serve the Companies as an Executive. 1. Term. The term of this Agreement shall commence on July 15, 1992 and shall continue until December 31, 1992. Beginning on January 1, 1993, and on January 1 of each and every year thereafter, this Agreement shall automatically renew for an additional year on the same terms and conditions, except to the extent modified in writing, unless the Executive is notified by the method set forth in Paragraph 11 herein that Executive has been terminated ("Nonrenewal Notice"). Nothing contained herein, however, shall be construed to extend the Executive's right to employment beyond the age of 65 years or the then mandatory retirement age in effect, whichever shall be greater. 2. Purpose and Effect. The purpose of this Agreement is to provide Termination Benefits, as defined in Paragraph 9 hereof, in the event of a Termination, as defined in Paragraph 8 hereof. 3. Service. The Executive shall exert Executive's best efforts and devote substantially all of Executive's time and attention to the affairs of the Bank. The Executive shall perform all the services and duties necessary or appropriate for the management of the Bank's businesses, subject to the general direction, approval, and control of the Chief Executive Officer and his designees. 4. Compensation. For purposes of this Agreement, Annual Compensation shall be deemed to be the Executive's Annual Base Salary. Commencing January 1, 1992, Executive shall be paid by the Companies, the Annual Base Salary established on Schedule A attached hereto (which base salary shall be paid in bi-weekly installments). Thereafter, Annual Base Salary shall continue at such level or such other level as may have been agreed to among the parties and evidenced as provided in this Paragraph, until renegotiated among the parties hereto and either confirmed in a writing signed by either the Chief Executive Officer of or a member of the Board of Directors of the Companies, or endorsed on Schedule A and signed by either the Chief Executive Officer of or by a member of the Board of Directors of the Companies. 5. Retirement, Pension and Profit Sharing. As further compensation for the services of the Executive: (a) The Executive shall be eligible to participate fully in any retirement, executive incentive compensation, pension or profit sharing plans maintained by the Companies, pursuant to the terms of such plans. Nothing in this agreement shall be construed as a waiver of any of the terms of or conditions precedent to participation in such plans; and (b) Upon termination of the Executive's employment due to retirement or disability (both as defined in the Retirement Plan of Trustco Bank New York), the Companies shall provide to the Executive and his spouse, for the life of the Executive, the health insurance benefits provided to retirees by the Companies under their medical insurance plan. The Companies shall provide to the Executive for his life the life insurance benefits provided to retirees by the Companies under their life insurance plan. The obligations of the Companies pursuant to this subparagraph (b) shall survive the termination of this Agreement. 6. Termination of Employment. (a) If there shall be a Termination (as defined in Paragraph 8 hereof) of the Executive from the Companies within two (2) years after a change in control of either Company, for any reason other than for good cause, death, retirement at the mandatory retirement age, or disability, the Executive shall receive upon his Termination with either of the Companies, the Termination Benefits set forth herein. The Executive's Termination for good cause shall be limited to the Executive's having committed an act of fraud, embezzlement, or theft, constituting a felony or any act intentionally against either of the Companies which causes either Company material injury, or a final determination by a court that the Executive has committed a material breach of his duties and responsibilities in connection with rendering services to either of the Companies pursuant to this Agreement. (b) A "change in control" of either Company means any of the following events: (i) any individual, corporation (other than either Company), partnership, trust, association, pool, syndicate, or any other entity or any group of persons acting in concert becomes the beneficial owner, as that concept is defined in Rule 13d-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, of securities of either Company possessing twenty percent (20%) or more of the voting power for the election of directors of either Company; (ii) there shall be consummated any consolidation, merger or other business combination involving either Company or the securities of either Company in which holders of voting securities of either Company immediately prior to such consummation own, as a group, immediately after such consummation, voting securities of either Company (or, if either Company does not survive such transaction, voting securities of the corporation or corporations surviving such transaction) having less than fifty percent (50%) of the total voting power in an election of directors of either Company (or such other surviving corporation or corporations); (iii) during any period of two consecutive years, individuals who at the beginning of such period constitute the directors of either Company cease for any reason to constitute at least a majority thereof unless the election, or the nomination for election by either Company's shareholders, of each new director of either Company was approved by a vote of at least two-thirds of the directors of the applicable Company then still in office who were directors of such Company at the beginning of any such period; (iv) removal by the stockholders of all or any of the incumbent directors of either Company other than a removal for cause; and (v) there shall be consummated any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all, of the assets of either Company (on a consolidated basis) to a party which is not controlled by or under common control with the Companies. (c) Notice of Termination shall be communicated by the terminating party to the other parties to this Agreement pursuant to Paragraph 11 hereof. 7. Termination. Termination shall include, but is not limited to, (i) any reduction in the Executive's Annual Base Salary, executive incentive compensation, disability, death, retirement, pension or profit sharing benefits (unless such reductions shall have been applied to all Bank employees as a part of a validly adopted plan of cost containment), responsibilities or duties, or (ii) either Companies' relocation or a change in the Executive's base location, or (iii) a Nonrenewal Notice given pursuant to Paragraph 2 of this Agreement, or (iv) the unilateral election of the Executive to terminate the Agreement. Such election shall be communicated to the Companies pursuant to Paragraph 11 hereof. 8. Termination Benefits. The following benefits shall be Termination Benefits: (a) The Companies shall pay to the Executive the Executive's full compensation through the effective date of his Termination at the rate in effect at the time notice of Termination is given or at the time of Termination, if earlier, and in addition (b) The Companies shall pay to the Executive within ten (10) days of Termination a lump sum amount equal to two (2) times the Executive's Annual Base Salary then in effect, and in addition (c) The Companies shall pay to the Executive all benefits payable to the Executive under the Companies' retirement, executive incentive compensation, pension and profit sharing plans, and in addition (d) The Companies shall pay to the Executive all legal fees and expenses incurred by the Executive as a result of such Termination, and in addition (e) The Companies shall provide the Executive, for one year following his Termination, Health Insurance and Group Life Insurance benefits substantially similar to those the Executive was receiving immediately prior to his Termination, and in addition (f) In the event the Termination Benefits paid to the Executive under this Agreement or any other agreement are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986 (the "Excise Tax"), then the Companies will pay to the Executive, within ten (10) days after the date the Excise Tax is determined to be due, an additional amount ("Gross Up") such that the net amount retained by the Executive after deduction of (i) any Excise Tax on the Termination Benefits and any other benefits subject to the Excise Tax, and (ii) any Federal, State and local income taxes and Excise Tax upon the payment provided for in this subparagraph (f), shall be equal to the Termination Benefits. For purposes of determining the amount of the Gross Up, the Executive shall be deemed to pay Federal, State and local income taxes at the highest marginal rate of taxation in the calendar year in which the Termination Benefits are to be made. State and local income taxes shall be determined based upon the state and locality of the Executive's domicile on Termination. The determination of whether such Excise Tax is payable and the amount thereof shall be based upon the opinion of tax counsel selected by the Companies and acceptable to the Executive. If such opinion is not finally accepted by the Internal Revenue Service upon audit, then appropriate adjustments shall be computed (without interest but with Gross Up, if applicable) by such tax counsel based upon the final amount of the Excise Tax so determined. The adjusted amount shall be paid by the appropriate party in one lump cash sum within thirty (30) days of such computation. 9. Indemnity. The Companies shall indemnify the Executive and hold Executive harmless for any acts or decisions made by Executive in good faith while performing services for either of the Companies and shall use their best efforts to obtain coverage for Executive under any insurance policy now in force or hereinafter obtained during the term of this Agreement covering the other officers and directors of the Companies against lawsuits. The Companies will pay all expenses, including attorney's fees, actually and necessarily incurred by the Executive in connection with any appeal thereon including the cost of court settlements. 10. Notices. All notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be deemed to have been given at the time when personally delivered or mailed at any general or branch United States Post Office enclosed in a post paid envelope and addressed to the address of the respective party stated below or to such changed address as such party may have fixed by notice. To the Companies: TrustCo Bank Corp NY Trustco Bank New York 192 Erie Boulevard Schenectady, NY 12305-1808 To the Executive: Ralph A. Pidgeon 925 Marion Avenue Schenectady, NY 12303 Provided, however, that any notice of change of address shall be effective only upon receipt. 11. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Companies, their successors and assigns, including without limitation, any person or entity which may acquire all or substantially all of either Company's assets or business or into which either Company may be consolidated or merged, and the Executive, as well as Executive's heirs, executors, administrators and legal representatives. The Executive may assign the right to payment under this Agreement, but not obligations under this Agreement. 12. Governing Law. This Agreement shall be governed by the laws of the State of New York. 13. Complete Agreement. This Agreement supersedes all prior understandings and agreements between the parties, and may not be amended or modified orally, but only by a writing signed by the parties hereto. IN WITNESS WHEREOF, the parties hereto have executed this Restated Agreement on June 21, 1994. TRUSTCO BANK CORP NY ATTEST: By:/s/Robert A. McCormick President and Chief Executive /s/William F. Terry Officer "Company" Secretary TRUSTCO BANK NEW YORK ATTEST: By:/s/Robert A. McCormick President and Chief Executive /s/William F. Terry Officer "Bank" Secretary /s/Ralph A. Pidgeon Ralph A. Pidgeon Schedule A to Agreement among Companies and Ralph A. Pidgeon Calendar Year Annual Salary Approval of Companies 1992 $160,000.00 /s/Robert A. McCormick 1993 200,000.00 /s/Robert A. McCormick 1994 230,000.00 /s/Robert A. McCormick 1995 240,000.00 /s/Robert A. McCormick TRUSTCO BANK CORP NY By:/s/Robert A. McCormick President and Chief Executive Officer TRUSTCO BANK NEW YORK By:/s/Robert A. McCormick President and Chief Executive Officer AGREEMENT OF EXECUTIVE /s/Ralph A. Pidgeon Ralph A. Pidgeon AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT BETWEEN TRUSTCO BANK NEW YORK AND TRUSTCO BANK CORP NY AND RALPH A. PIDGEON WHEREAS, Trustco Bank New York (herein referred to as the "Company") and TrustCo Bank Corp NY (herein referred to as "TrustCo") entered into an Employment Agreement (herein referred to as the "Agreement") with Ralph A. Pidgeon (herein referred to as the "Executive"); and WHEREAS, by statutory conversion the Company converted from a state chartered trust company to a national bank, and in connection with the conversion the name of the Company changed to Trustco Bank, National Association effective February 1, 1995; and WHEREAS, the Company, TrustCo and the Executive desire to amend the Agreement to reflect the name change; NOW, THEREFORE, effective February 1, 1995, the Agreement is hereby amended by changing "Trustco Bank New York" to "Trustco Bank, National Association" in each place where it appears therein. IN WITNESS WHEREOF, the Company has caused this Amendment No. 1 to be executed this 14th day of February, 1995. TRUSTCO BANK, NATIONAL TRUSTCO BANK CORP NY ASSOCIATION By:/s/Robert A. McCormick By:/s/Robert A. McCormick Title:President and CEO Title: President and CEO /s/Ralph A. Pidgeon Ralph A. Pidgeon Exhibit 10(g) EMPLOYMENT AGREEMENT between TRUSTCO BANK NEW YORK and TRUSTCO BANK CORP NY and Peter A. Zakriski EMPLOYMENT AGREEMENT AGREEMENT, dated as of July 15, 1992, (the Agreement ), by and between Trustco Bank New York (the "Bank"), a New York banking corporation, and TrustCo Bank Corp NY (the "Company"), a New York business corporation (hereinafter referred to collectively as the "Companies"), with principal offices at 320 State Street, Schenectady, New York and Peter A. Zakriski ( the Executive ), residing at 86 St. Stephen's Lane West, Scotia, New York 12302. 1. Engagement. The Companies agree to engage the Executive and the Executive agrees to serve the Companies as an Executive. 2. Term. The term of this Agreement shall commence on the date first above written and shall continue until December 31, 1992. Beginning on January 1, 1993, and on January 1 of each and every year thereafter, this Agreement shall automatically renew for an additional year on the same terms and conditions, except to the extent modified in writing, unless the Executive is notified by the method set forth in Paragraph 11 herein that Executive has been terminated ("Nonrenewal Notice"). Nothing contained herein, however, shall be construed to extend the Executive's right to employment beyond the age of 65 years or the then mandatory retirement age in effect, whichever shall be greater. 3. Purpose and Effect. The purpose of this Agreement is to provide Termination Benefits, as defined in Paragraph 9 hereof, in the event of a Termination, as defined in Paragraph 8 hereof. 4. Service. The Executive shall exert Executive's best efforts and devote substantially all of Executive's time and attention to the affairs of the Bank. The Executive shall perform all the services and duties necessary or appropriate for the management of the Bank's businesses, subject to the general direction, approval, and control of the Chief Executive Officer and his designees. 5. Compensation. For purposes of this Agreement, Annual Compensation shall be deemed to be the Executive's Annual Base Salary. Commencing January 1, 1992, Executive shall be paid by the Companies, the Annual Base Salary established on Schedule A attached hereto, (which base salary shall be paid in bi-weekly installments). Thereafter, Annual Base Salary shall continue at such level or such other level as may have been agreed to among the parties and evidenced as provided in this Paragraph, until renegotiated among the parties hereto and either confirmed in a writing signed by either the Chief Executive Officer of or a member of the Board of Directors of the Companies, or endorsed on Schedule A and signed by either the Chief Executive Officer of or by a member of the Board of Directors of the Companies. 6. Retirement, Pension and Profit Sharing. As further compensation for the services of the Executive, the Executive shall be eligible to participate fully in any retirement, executive incentive compensation, pension or profit sharing plans maintained by the Companies, pursuant to the terms of such plans. Nothing in this Agreement shall be construed as a waiver of any of the terms of or conditions precedent to participation in such plans. 7. Termination of Employment. If there shall be a Termination (as hereinafter defined) of the Executive for any reason other than for good cause, death, retirement at the mandatory retirement age, or disability, the Executive shall receive upon his Termination with either of the Companies, the Termination Benefits set forth herein. The Executive's Termination for good cause shall be limited to the Executive's having committed an act of fraud, embezzlement, or theft, constituting a felony or any act intentionally against either of the Companies which causes either Company material injury, or a final determination by a court that the Executive has committed a material breach of his duties and responsibilities in connection with rendering services to either of the Companies pursuant to this Agreement. 8. Termination. Termination shall include, but is not limited to, (i) any reduction in the Executive's Annual Base Salary, retirement other than at the mandatory retirement age, executive incentive compensation, pension or profit sharing benefits, (unless such reductions shall have been applied to all Bank employees as a part of a validly adopted plan of cost containment), responsibilities or duties, or (ii) either Companies' relocation or a change in the Executive's base location, or (iii) a nonrenewal notice given pursuant to Paragraph 2 of this Agreement, or (iv) the unilateral election of the Executive to terminate the Agreement. Such election shall be communicated to the Companies pursuant to Paragraph 11 hereof. 9. Termination Benefits. The following benefits shall be Termination Benefits: (a) The Companies shall pay to the Executive the Executive's full compensation through the effective date of his termination at the rate in effect at the time notice of termination is given or at the time of Termination, if earlier, and in addition (b) The Companies shall pay to the Executive within ten (10) days of Termination an additional lump sum amount equal to that Executive's Annual Base Salary then in effect, and in addition (c) The Companies shall pay to the Executive all benefits payable to the Executive under the Companies' retirement, executive incentive compensation, pension and profit sharing plans, and in addition (d) The Companies shall pay to the Executive all legal fees and expenses incurred by the Executive as a result of such Termination, and in addition (e) The Companies shall provide the Executive, for one year following his Termination, Health Insurance and Group Life Insurance benefits substantially similar to those the Executive was receiving immediately prior to his Termination. 10. Indemnity. The Companies shall indemnify the Executive and hold Executive harmless for any acts or decisions made by Executive in good faith while performing services for either of the Companies and shall use their best efforts to obtain coverage for Executive under any insurance policy now in force or hereinafter obtained during the term of this Agreement covering the other officers and directors of the Companies against lawsuits. The Companies will pay all expenses, including attorney's fees, actually and necessarily incurred by the Executive in connection with any appeal thereon including the cost of court settlements. 11. Notices. All notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be deemed to have been given at the time when personally delivered or mailed at any general or branch United States Post Office enclosed in a post paid envelope and addressed to the address of the respective party stated below or to such changed address as such party may have fixed by notice. To the Companies: TrustCo Bank Corp NY Trustco Bank New York 320 State Street Schenectady, NY 12305 To the Executive: Peter A. Zakriski 86 St. Stephen's Lane West Scotia, NY 12302 Provided, however, that any notice of change of address shall be effective only upon receipt. 12. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Companies, their successors and assigns, including, without limitation, any person or entity which may acquire all or substantially all of either Company's assets or business or into which either Company may be consolidated or merged, and the Executive, as well as Executive's heirs, executors, administrators and legal representatives. The Executive may assign the right to payment under this Agreement, but not obligations under this Agreement. 13. Governing Law. This Agreement shall be governed by the laws of the State of New York. 14. Complete Agreement. This Agreement supersedes all prior understandings and agreements between the parties, and may not be amended or modified orally, but only by a writing signed by the parties hereto. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the 15th Day of July, 1992 TRUSTCO BANK CORP NY By:/s/Robert A. McCormick President and Chief Executive Officer "Company" TRUSTCO BANK NEW YORK ATTEST: By:/s/Robert A. McCormick President and Chief Executive /s/William F. Terry Officer "Bank" Secretary /s/Peter A. Zakriski Peter A. Zakriski Schedule A to Agreement among Companies and Peter A. Zakriski Calendar Year Annual Salary Approval of Companies 1992 $110,000.00 /s/Robert A. McCormick 1993 115,000.00 /s/Robert A. McCormick 1994 120,000.00 /s/Robert A. McCormick 1995 125,000.00 /s/Robert A. McCormick TRUSTCO BANK CORP NY By:/s/Robert A. McCormick President and Chief Executive Officer TRUSTCO BANK NEW YORK By:/s/Robert A. McCormick President and Chief Executive Officer AGREEMENT OF EXECUTIVE /s/Peter A. Zakriski Peter A. Zakriski AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT BETWEEN TRUSTCO BANK NEW YORK AND TRUSTCO BANK CORP NY AND PETER A. ZAKRISKI WHEREAS, Trustco Bank New York and Trustco Bank Corp NY (herein referred to as the companies ) entered into an Employment Agreement dated as of July 15, 1992, (herein referred to as the Agreement ); with Peter A. Zakriski (herein referred to as the Executive ); and WHEREAS, the Companies and the Executive desire to amend the Agreement, effective as of November 16, 1993; NOW, THEREFORE, the Agreement is hereby amended effective June 21, 1993 in the following respect: Section 6 of the Agreement is hereby deleted in its entirety and the following is substituted in lieu thereof: 6. Retirement, Pension and Profit Sharing. As further compensation for the services of the Executive: a. The Executive shall be eligible to participate fully in any retirement, executive incentive compensation, pension or profit sharing plans maintained by the Companies, pursuant to the terms of such plans. Nothing in this agreement shall be construed as a waiver of any of the terms of or conditions precedent to participation in such plans; and, b. Upon termination of the Executive's employment due to retirement or disability (both as defined in the Retirement Plan of Trustco Bank New York), the Companies shall provide to the Executive and his spouse, for the life of the Executive, the health insurance benefits provided to retirees by the Companies under their medical insurance plan. the Companies shall provide to the Executive for his life the life insurance benefits provided to retirees by the Companies under their life insurance plan. The obligations of the Companies pursuant to this subparagraph b. shall survive the termination of this Agreement. IN WITNESS WHEREOF, the Companies and the Executive have executed this Amendment No. 1 this 16 day of November, 1993. TRUSTCO BANK NEW York TRUSTCO BANK NY By:/s/Robert A. McCormick By:/s/Robert A. McCormick /s/Peter A. Zakriski Peter A. Zakriski AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT BETWEEN TRUSTCO BANK NEW YORK AND TRUSTCO BANK CORP NY AND PETER A. ZAKRISKI WHEREAS, Trustco Bank New York (herein referred to as the "Company") and TrustCo Bank Corp NY (herein referred to as "TrustCo") entered into an Employment Agreement (herein referred to as the "Agreement") with Peter A. Zakriski (herein referred to as the "Executive"); and WHEREAS, by statutory conversion the Company converted from a state chartered trust company to a national bank, and in connection with the conversion the name of the Company changed to Trustco Bank, National Association effective February 1, 1995; and WHEREAS, the Company, TrustCo and the Executive desire to amend the Agreement to reflect the name change; NOW, THEREFORE, effective February 1, 1995, the Agreement is hereby amended by changing "Trustco Bank New York" to "Trustco Bank, National Association" in each place where it appears therein. IN WITNESS WHEREOF, the Company has caused this Amendment No. 2 to be executed this 14th day of February, 1995. TRUSTCO BANK, NATIONAL TRUSTCO BANK CORP NY ASSOCIATION By:/s/Robert A. McCormick By:/s/Robert A. McCormick Title:President and CEO Title: President and CEO /s/Peter A. Zakriski Peter A. Zakriski Exhibit 10(h) RESTATED 1985 TRUSTCO BANK CORP NY STOCK OPTION PLAN WHEREAS, TrustCo Bank Corp NY (the "Company") established the 1985 TrustCo Bank Corp NY Stock Option Plan (the "Plan"); and WHEREAS, the Company desires to amend said Plan effective as of July 1, 1994, and to restate the Plan in its entirety; NOW, THEREFORE, the Company does hereby amend the Plan effective July 1, 1994, and restates the Plan in its entirety so that it will read as follows: SECTION 1: PURPOSE This 1985 Stock Option Plan (the "Plan") has been established by TrustCo Bank Corp NY (the "Company") to advance the interests of the Company and its stockholders by providing to certain key employees an opportunity to acquire equity ownership in the Company and the incentive advantages inherent in that equity ownership. SECTION 2: DEFINITIONS When capitalized and used in this Plan, each of the following terms or phrases has the indicated meaning, unless a different meaning is clearly implied by the content: "Adoption Date" means the date this plan is duly adopted by the Board. "Board" means the Company's Board of Directors. "Code" means the Internal Revenue Code of 1986, as amended. "Committee" means the Committee to be appointed by the Board from time to time and to consist of three or more members of the Board who have not been eligible to receive options under the Plan at any time within a period of one year immediately preceding the date of their appointment to such Committee. "Company" means TrustCo Bank Corp NY and its subsidiaries. "Disability" means a Participant's termination of employment by the Company or a Participating Subsidiary by reason of his permanent and total disability, as defined in Code Section 22(e)(3). "Eligible Employee" means any executive or other key managerial employee of the Company or any Participating Subsidiary who has been designated by the Board as eligible to participate in the Plan and who is a full-time, salaried employee of the Company or any Participating Subsidiary, provided he is so employed at the date any Stock Option is granted to him. "Fair Market Value" means the current fair market value of any Stock subject to a Stock Option. During such time as the Stock is not listed on an established stock exchange, fair market value per share shall be the mean between the closing dealer "bid" and "ask" prices for the Stock as quoted by NASDAQ for the day of the grant and if "bid" and "ask" prices are quoted for the day of the grant, the fair market value shall be determined by reference to such prices on the next preceding day on which such prices were quoted. If the Stock is listed on an established stock exchange or exchanges, the fair market value shall be deemed to be the highest closing price of the Stock on such stock exchange or exchanges on the day the option is granted or, if no sale of Stock has been made on any stock exchange on that day, the fair market value shall be determined by reference to such price for the next preceding day on which a sale occurred. In the event that Stock is not traded on an established stock exchange, and no closing dealer "bid" and "ask" prices are available, then the purchase price shall be 100 percent of the fair market value of one share of Stock on the day the option is granted, as determined by the Committee in good faith. The purchase price shall be subject to adjustment only as provided in Section 9 of the Plan. "Incentive Stock Option" means an option granted to a Participant under this Plan to purchase the Company's Stock, which is designated as an Incentive Stock Option and which satisfies the requirements of Code ?422, as amended. "Nonqualified Stock Option" means an option granted to a Participant under this Plan to purchase the Company's Stock and which is not an Incentive Stock Option. "Option Agreement" means the written agreement executed between the Participant and the Company evidencing the award of Stock Options under this Plan, as more particularly described in Section 7. "Participant" means any Eligible Employee who has been awarded any Stock Option(s) under this Plan and his heirs, legatees, or personal representatives who may succeed to his interests under any Option Agreement at his death. "Participating Subsidiary" means a Subsidiary some or all of whose employees have been designated as Eligible Employees by the Board. "Plan"means the Restated 1985 TrustCo Bank Corp NY Stock Option Plan as embodied in this document including all amendments to this document made from time to time. "Shareholder-Employee" means any Eligible Employee who at the time an Incentive Stock Option is to be granted to him under this Plan owns (within the meaning of Code Section 422(b)(6) and (c)(5)) more than 10 percent of the combined voting power of all classes of the Company's Stock or of its parent or subsidiary companies (if any). "Stock" means shares of the Company's common stock. "Stock Appreciation Right" means a right, granted to a Participant concurrently with the grant of a Nonqualified Stock Option, to receive a cash payment from the Company upon the partial or complete cancellation of that option by a Participant. Each Option Agreement may provide that the Participant may from time to time elect to cancel all or any portion of the Option then subject to exercise, in which event the Company's obligation in respect of such Option may be discharged by payment to the Participant of an amount in cash equal to the excess, if any, of the fair market value at the time of cancellation of the shares subject to the Option or the portion thereof so cancelled, over the aggregate purchase price for such shares as set forth in the Option Agreement. In the event of such a cancellation, the number of shares as to which such Option was cancelled shall not become available for use under the Plan. "Stock Option" or "Option" means a right granted under this Plan to purchase Company Stock, including a Nonqualified Stock Option or an Incentive Stock Option. "Subsidiary" means a corporation of which stock possessing 50% or more of the total combined voting power of all classes of its stock entitled to vote generally in the election of directors is owned in the aggregate by the Company directly or indirectly through one or more Subsidiaries. SECTION 3: PLAN ADMINISTRATION The Plan is to be administered by the Committee except as otherwise provided in the Plan. Subject to all other Plan provisions, the Committee is expressly empowered to: 1. select the Eligible Employees who are to receive Stock Options and Stock Appreciation Rights under this Plan from time to time and grant those Options and Stock Appreciation Rights; 2. determine the time(s) at which Stock Options and Stock Appreciation Rights are to be granted; 3. determine the number of shares of Stock to be subject to a Stock Option granted to any Participant; 4. determine the option price and term of each Stock Option granted under this Plan (including whether it is to be an Incentive Stock Option or Nonqualified Stock Option) and all other terms and conditions to be included in the Option Agreement relating to any Stock Options under this Plan; 5. determine the duration and purposes of leaves of absence which may be granted to a Participant without constituting a termination of employment or service for purposes of the Plan; 6. determine all matters of interpretation of the Plan and any Option Agreement, and the Committee's decision is to be binding and conclusive on all persons; 7. determine, in its sole discretion, whether the Company is to accept Stock previously acquired by a Participant as payment of the option price for Stock Options granted under this Plan; 8. prescribe, amend and rescind all rules and regulations relating to the Plan and its operations; 9. in the event of the Company's or a Participating Subsidiary's merger, consolidation, dissolution or liquidation, accelerate the exercise date and expiration date for any unexercised Stock Options then outstanding; and 10. make all other determinations and decisions and take all further actions deemed necessary or advisable for the Plan's administration. Notwithstanding any conflicting Plan provision, the Board reserves the right, by written resolution duly adopted by the Board, to terminate from time to time any and all powers delegated to the Committee by the express Plan provisions and, in that event, those Committee powers so terminated by the Board shall revert to and be fully exercisable by the Board to the same extent as they were exercisable by the Committee, provided that no termination of the Committee's powers shall be retroactively effective. Any termination of the Committee's powers under this Plan shall not be deemed a Plan amendment. No Committee or Board member may participate in the decision to award any Stock Option or Stock Appreciation Right under this Plan to himself. Neither the Board nor the Committee may, without the Participant's consent, change the terms and conditions of any Option Agreement after its execution, except to the extent that the Agreement may, by its terms, be so amended. SECTION 4: PLAN EFFECTIVE DATE AND DURATION This Plan is effective as of the Adoption Date, subject, however, to the Plan's approval by the Company's shareholders either on or before the Adoption Date or within the 12-month period following the Adoption Date. If shareholder approval is not so obtained, all Stock Options, Stock Appreciation Rights and Option Agreements granted under this Plan shall automatically be null and void, ab initio. No Stock Option may be granted under this Plan at any date which is 10 years or more after the Adoption Date. SECTION 5: AMENDMENTS AND TERMINATIONS This Plan may be amended, suspended, terminated or reinstated, in whole or in part, at any time by the Board; provided, however, that without the approval of the Company's stockholders, the Board may not: 1. except as provided in Section 9, increase the number of shares of Stock subject to Stock Options issued under this Plan; 2. extend the maximum period during which a Stock Option may be exercised; 3. extend the maximum period during which Incentive Stock Options may be granted under this Plan; or 4. change the class of Eligible Employees. SECTION 6: SHARES SUBJECT TO THE PLAN The total number of shares available for grants of Stock Options under this Plan is 428,703, subject to the adjustments under Section 9. If a Stock Option or a portion thereof expires or terminates for any reason without being exercised in full, the unpurchased shares covered by the Option are to be available for future Stock Option grants under this Agreement. SECTION 7: GRANTS OF OPTIONS Nonqualified Stock Options may be granted to any Eligible Employee, at the time(s) and upon such terms and conditions as may be selected by the Committee. At the time of grant of a Nonqualified Stock Option, the Committee may, in its discretion, also grant to the Eligible Employee Stock Appreciation Rights for the total number of shares subject to that Option. The grant of a Nonqualified Stock Option and, if appropriate, Stock Appreciation Rights shall be evidenced by an Option Agreement between the Eligible Employee and the Company containing any terms and conditions specified by the Committee, but including the terms described in Section 8. Incentive Stock Options may be granted to any Eligible Employee, at the time(s) and upon such terms and condition as may be selected by the Committee, subject, nevertheless to the following: 1. With respect to Incentive Stock Options granted prior to January 1, 1987, the aggregate Fair Market Value (as of the date the Incentive Stock Option is granted) of the Stock subject to Incentive Stock Options granted to any Eligible Employee during one calendar year (under this Plan and all other plans of the Company and its Subsidiaries providing "incentive stock options" within the meaning of Code Section 422A(b)) shall not exceed the sum of: (i) $100,000; and (ii) the amount of any "unused limit carryover" which may be taken into account for that calendar year with respect to that Eligible Employee under Code Section 422(A)(c)(4). 2. With respect to Incentive Stock Options granted after December 31, 1986, the aggregate fair market value, determined at the time the Incentive Stock Option is granted, of the shares with respect to which Incentive Stock Options are exercisable for the first time by an Eligible Employee during any calendar year (under all stock option plans of the Company and its Subsidiaries to which the provisions of Section 422 of the Code apply) shall not exceed $100,000. 3. The grant shall be evidenced by an Option Agreement between the Company and the Eligible Employee containing any terms and conditions specified by the Committee, except that those terms and conditions must conform with Section 8 and must be consistent with the requirements for an "incentive stock option" as described in Code Section 422(b). SECTION 8: TERMS OF OPTIONS AGREEMENT All Option Agreements issued under this Plan must include terms that are consistent with the following: 1. The Participant shall be entitled to purchase the number of shares subject to the Stock Option, upon his exercise of that Option, at a price no less than 100% of the Stock's Fair Market Value at the date of the grant; provided, however, that in the case of an Incentive Stock Option granted to a Shareholder-Employee, the option price is to be no less than 110% of that Fair Market Value. 2. At the option's exercise, the option price may be paid in cash or cash equivalent--that is, by certified check, bank draft or postal or express money orders made payable to the Company's order in U.S. dollars. Alternatively, in the Committee's sole discretion, the option price may be paid, in whole or in part, by the Participant's exchange of Company Stock previously acquired by him, based on that Stock's Fair Market Value at the date of exchange. However, no Company Stock may be accepted in payment of the option price upon exercise of an Incentive Stock Option, if that Stock was acquired by the Participant's previous exercise of an Incentive Stock Option unless that Stock has been held by the Participant for more than 2 years after the date that previous Option was granted and more than 1 year after the date that previous Option was exercised. 3. (i) The Option may not be exercisable after the earlier of the following dates: (a) If the Participant is not a Shareholder-- Employee at the date of grant or the Option is not an Incentive Stock Option, the date 10 years after the date of grant; (b) If the Participant is a Shareholder- Employee at the date of grant and the Option is an Incentive Stock Option, the date 5 years after the date of grant; (c) If the Participant's employment terminates for reasons other than his death or Disability or retirement, the date three months after the date his employment terminates. (d) If the Participant terminates employment as a result of Disability or retirement, the date described in Item 3(i)(a) or 3(i)(b), whichever is applicable. (e) If the Participant dies, the date prescribed by the Committee, except that no Option shall be exercisable after the date described in Item 3(i)(a) or 3(ii)(b) of Section 8, whichever is applicable. (f) If the Option is an Incentive Stock Option and the Participant's employment terminates due to Disability or retirement, the tax treatment available pursuant to Code Section 422 upon the exercise of an Incentive Stock Option will not be available to a Participant who exercises any Incentive Stock Option more than (a) three months after the date of the termination of employment due to retirement or (b) twelve months after the date of termination of employment due to Disability. If the Option is an Incentive Stock Option and the Participant dies, the tax treatment available pursuant to Code Section 422 upon the exercise of an Incentive Stock Option will not be available to the Participant's estate or any person who acquires the Option by bequest or inheritance or by reason of the death of the Participant unless the Participant was eligible for such tax treatment at the time of his death. Notwithstanding the foregoing, the committee, in its discretion, may further limit the period during which all or any portion of a Stock Option may be exercised and may accelerate the time at which an Option maybe exercised. 4. Acceleration and the immediate right to exercise options in full will occur if any one or more the following takes place: (i) a contract providing for a merger or consolidation of the Company with or into another entity (except in the case where the Company is the surviving entity and the merger does not affect the stock interest of the stockholders of the Company) or a sale of substantially all the assets of the Company is executed; (ii) a single entity or individual (including any related parties to such entity or individual) acquires 20% or more of the outstanding stock of the Company; or (iii) a situation occurs in which, during any period of 12 consecutive months, individuals who at the beginning of such period were members of the Board cease for any reason to constitute at least a majority of the Board, unless the nomination or election of each new director was approved by at least two-thirds of the directors then still in office who were directors at the beginning of such period. 5. The Stock Option(s) and any related Stock Appreciation Rights may be exercised during such Participant's lifetime, only by the Participant and, after his death, only by his heirs legatees or personal representatives who succeed to his interest under the Option Agreement. The Option Agreement, the Stock Options and the Stock Appreciation Rights issued under this Plan shall not be transferable by the Participant other than by will or by the laws of descent and distribution; provided, however, in addition to non-transferable Stock Options, the Committee may grant Nonqualified Stock Options that are transferable, without payment of consideration, to (i) revocable trusts for the benefit of immediate family members which qualify as grantor trusts for Federal income tax purposes, (ii) by gift to immediate family members, and (iii) to partnerships whose only partners are immediate family members. The Committee may also amend outstanding Nonqualified Stock Options to provide for such transferability. Notwithstanding the foregoing, in the event that a transferable Nonqualified Stock Option is transferred as permitted herein, such Nonqualified Stock Option(s) may be exercised by such transferee. The transferee of a transferable Nonqualified Stock Option is subject to all conditions applicable to the transferable Nonqualified Stock Option prior to its transfer. 6. Notwithstanding anything else to the contrary, no Incentive Stock Option may be exercised while there is outstanding (within the meaning of former Code Section 422(c)(7)) any "incentive stock option" (within the meaning of former Code Section 422(b)) to purchase stock of the Company or any Subsidiary which was granted to the Participant prior to the grant of the Option sought to be exercised. The provisions of this Item 6 shall apply only to Incentive Stock Options granted prior to January 1, 1987. 7. In the case of Nonqualified Stock Options, the Option may be exercised while there is outstanding another Stock Option to purchase Stock of the company or a Subsidiary which was granted to the Participant prior to the grant of the Option sought to be exercised. 8. The aggregate fair market value (determined at the time the Option is granted) of the stock with respect to which Incentive Stock Options are exercisable for the first time by such individual during any calendar year (under all such plans of the individual's employer corporation and its parent and subsidiary corporation) shall not exceed $100,000. The provisions of this Item 8 shall apply to Incentive Stock Options granted after December 31, 1986. 9. The acceleration provisions of Section 8, Items 4 and 10 of the Plan shall override restrictions contained in Section 8, Item 8. 10. As to each Option granted a Participant since November 19, 1985, if the Participant's employment terminates by his death, Disability or retirement, the exercise of each such Option shall accelerate and become exercisable in full upon such termination, and shall remain exercisable throughout the period permitted for exercise as described in Item 3 of this Section 8. 11. If a Participant dies during the period which he or she could have exercised an Option under Item 3 of Section 8 of the Plan, then the Option may be exercised by the executors or administrators of the Participant's estate, or by any person or persons who may have acquired the Option, directly from the Participant by bequest or inheritance within a period prescribed by the Committee after the Participant's death, except that no Option shall be exercisable after its expiration date as defined in Item 3(i) or 3(ii) of Section 8, whichever is applicable. SECTION 9: RECAPITALIZATION The number of shares of Stock subject to this Plan, the number of shares of Stock covered by each outstanding Option (and any corresponding Stock Appreciation Rights), and the price per share in each Option, are to be proportionately adjusted for any increase or decrease in the number of issued shares of Company Stock resulting from a subdivision or consolidation of shares or the payment of a stock dividend (but only on the Company's common stock) or any other increase or decrease in the number of those shares effected without receipt of consideration by the Company. Subject to any required action by the Stockholders if the Company shall be the surviving corporation in any merger or consolidation, each outstanding Stock Option (and any corresponding Stock Appreciation Rights) shall pertain to and apply to the securities to which a holder of the number of shares of stock subject to that Option would have been entitled. A dissolution or liquidation of the Company, a proposed sale of substantially all of the assets of the Company, or a merger or consolidation in which the Company is not the surviving Corporation, shall cause each outstanding Option (and any corresponding stock Appreciation Rights) to terminate as of a date to be fixed by the Board; provided that no less than 30 days written notice of the date so fixed shall be given to each Optionee, and each Optionee shall have the right, during the period of 30 days preceding such termination, to exercise his option as to all or any part of the shares covered thereby, including shares as to which such option would not otherwise be exercisable. The foregoing adjustments shall be made by the Committee. Fractional shares resulting from any adjustment in options pursuant to this Section 9 may be settled as the Committee or the Board (as the case may be) shall determine. SECTION 10: GOVERNMENT AND OTHER REGULATIONS No Option shall be exercisable, no Stock shall be issued, no certificate for shares of Stock shall be delivered, and no payment shall be made under this Plan except in compliance with all applicable federal and state laws and regulations. The Company shall have the right to rely on the opinion of its counsel as to such compliance. Any share certificate issued to evidence Stock for which an Option is exercised may bear such legends and statements as the Committee may deem advisable to assure compliance with federal and state laws and regulations. No Option shall be exercisable, no Stock shall be issued, no certificate for shares shall be delivered, and no payment shall be made under this Plan until the Company has obtained such consent or approval as the Committee may deem advisable from regulatory bodies having jurisdiction over such matters. SECTION 11: INDEMNIFICATION OF COMMITTEE In addition to such other rights of indemnification that they may have as officers or directors, the Committee members shall be indemnified by the Company against the reasonable expenses, including attorneys' fees actually and necessarily incurred in connection with the Plan's administration and the defense of any action, suit, or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reasons of any action taken or failure to act under or in connection with the Plan or any Option or Stock Appreciation Right granted thereunder. The Committee members are also to be indemnified against all amounts paid by them in settlement thereof (provided that settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Committee member is liable for gross negligence or willful misconduct in the performance of his/her duties; provided that within 60 days after institution of any such action, suit or proceeding a Committee member shall in writing offer the Company the opportunity, at its own expense, to handle and defend the same. SECTION 12: MISCELLANEOUS The adoption of this Plan, its operation, or any documents describing or referring to this Plan (or any part thereof) shall not confer upon any employee any right to continue in the employ of the Company or in any way affect any right and power of the Company to terminate the employment of any employee at any time with or without assigning a reason thereof. Any liability of the Company to any person with respect to any grant under this Plan shall be based solely upon any contractual obligations which may be created pursuant to this Plan. No such obligation of the Company shall be deemed to be secured by any pledge of, or other encumbrance on, any property of the Company. The Plan shall be administered in the State of New York and the validity, construction, interpretation, administration and effect of the Plan shall be determined solely in accordance with the laws of that State. IN WITNESS WHEREOF, the Company has caused this Plan to be executed on this 18th day of October, 1994. TRUSTCO BANK CORP NY By: /s/ William F. Terry Title: Secretary Exhibit 11 TRUSTCO BANK CORP NY 1994 FORM 10-K Computation of Net Income Per Common Share Year Ended December 31 1994 1993 1992 Net Income $22,888,000 $20,325,000 $17,503,000 Weighted Daily average number of common shares outstanding 14,886,000 14,803,000 14,606,000 Net Income Per Common Share $1.54 $1.37 $1.20 ====== ====== ====== Note: Daily average shares outstanding for all years have been adjusted to reflect a 10% stock dividend in October 1994, the 2 for 1 stock split in November 1993, and the 5 for 4 stock split in November 1992. Exhibit 13 Presidents Message Dear Shareholder: The good news is 1994 was another record year at TrustCo. The bad news is a significant segment of the banking industry is encountering difficulty in the area of interest rate hedging or "derivatives." TrustCo has no derivative exposure and our policy of "plain vanilla" in the management of our Company appears to have carried us through unscathed once again. We are grateful to our staff and Board of Directors for their continuing enthusiasm and support. During 1994, shareholder values continued in the right direction with net income at $22.9 million, up a significant 13% over 1993. TrustCo's most important ratio, return on shareholders' equity, was 17.01%, up from 16.18% in 1993. We are committed to insuring that return on equity compares favorably in any peer group, and we are comfortable that it does. TrustCo's five year ROE was 16.78% and we plan an increase to 18% for the current fiscal year. During 1994, we increased our cash dividend by 10% and then issued a 10% stock dividend maintaining the increased cash dividend level on the newly issued shares, effectively increasing dividend income for TrustCo owners by 21%. The quarterly cash dividend has increased at a 25% compound annual rate over the last five years, a major accomplishment. It is our intention to continue monitoring our internal generation of capital; should excess capital exist, we would recommend steps to the Board to correct that situation. These steps could include special dividends, stock buy back, or any other measures that would return excess capital to TrustCo's owners. Daniel J. Rourke, M.D., retired from the Bank and Holding Company boards during 1994. We thank Dan for his many contributions over the years and wish him well in his retirement. I think it appropriate to thank all our Board members for their continued guidance throughout the year. We note with sorrow the passing of Herman R. Hill, Honorary Director, who served the Board with distinction for many years. Senior staff additions during 1994 include Robert T. Cushing, appointed Senior Vice President and Chief Financial Officer about mid-year. Bob managed the banking practice at KPMG Peat Marwick for many years and adds an important level of experience to our senior management ranks. Henry C. Collins was appointed Vice President & General Counsel and Carroll E. Winch was named Administrative Vice President and Senior Trust Officer. These additions should add significant strength to our senior management. The TrustCo branch expansion program continues and we anticipate opening three additional branches during 1995. Our plans call for two to three branch openings a year until we have filled the gaps in our market territory. The targeted upgrading continues with each branch receiving a major review and renovation at approximately seven year intervals. During 1994, we evaluated and discussed a number of acquisition opportunities. Unfortunately, our discussions were not successful. Our approach to acquisitions is quite simple we are extremely careful to avoid damage to shareholder value in the existing TrustCo franchise. We would prefer that the benefits of an acquisition be shared by all the owners of the emerging company, and that does make for difficult negotiations on occasion. Since its inception, Trustco Bank has been a New York State chartered institution regulated by the Federal Reserve Bank of New York and the New York State Banking Department. During the first quarter of 1995, we completed a change from our New York State charter to a national charter. We think changes in the industry suggest the most appropriate direction for the future is a national charter regulated by the Office of the Comptroller of the Currency. TrustCo's Affordable Housing Program, which was designed to assist with homeownership, continues to be a success in new markets. We consider this program a model for community reinvestment and one of the most effective in the State. Occasionally, TrustCo has been described as "boring" because we are able to avoid most industry difficulties. Well, 1994 was another boring year during which we were able to benefit all important constituencies -- the owners, employees, and community. We expect to be equally tiresome in 1995. 1995 should provide income and growth success with emphasis continuing on the Home Equity Loan and Home Equity Credit Line products and our improved NOW account on the deposit side. Our Trust Department, which currently manages assets in excess of $630 million has ambitious expectations, and the impetus to move forward under new management. 1995 and beyond should benefit from the solid performance of the superb employee team here at TrustCo. For 1994 the often quoted efficiency ratio for our Company was 41.82% at a time when most banking companies would like to see 60.00%. This level of performance efficiency will benefit us through reduced operating expense for years to come. Net interest margins are another interesting ongoing benefit. During 1994, we recognized $8,877,000 of security losses and still had record net income. We have always described security losses as the deferral of income into future periods. To dramatize that point, net interest margin for the month of December 1993 was 3.78%. In December 1994 TrustCo's net interest margin was 4.63% and accelerating. This year-to-year increase of 85 basis points provides dramatic pre-tax income opportunities for the future. The quality of the loan portfolio is excellent, and our reserve for loan loss has a coverage ratio 14 times non-performing loans, an important area of reserve. Community needs have expanded and TrustCo has responded appropriately. TrustCo has provided increased employee and management participation in charitable and community organizations, increased its corporate charitable contributions throughout the Capital District, and our Affordable Housing Program continues to grow. We have an enthusiastic view of TrustCo's future. It is the intention at every level in the Company to continue our past success into the future. Our products are tailored to the needs of our community, we have an unmatched employee team to deliver them, and a management style that can adapt almost immediately to any change the marketplace may bring. Though we are not certain what the banking environment of the future will be, we are sure the combination mentioned above and the enthusiastic commitment of the Board of Directors will ensure our continuing success in the years ahead. Sincerely, /s/ Robert A. McCormick Robert A. McCormick, President and Chief Executive Officer Management's Discussion and Analysis of Operations The financial review which follows will focus on the factors affecting the financial condition and results of operations of TrustCo Bank Corp NY (the "Company" or "TrustCo") and Trustco Bank, National Association (the "Bank" or "Trustco") during 1994 and, in summary form, the preceding two years. Net interest income and net interest margin are presented in this discussion on a taxable equivalent basis. Balances discussed are daily averages unless otherwise described. The consolidated financial statements and related notes and the quarterly reports to shareholders for 1994 should be read in conjunction with this review. Certain amounts in years prior to 1994 have been reclassified to conform with the 1994 presentation. Overview TrustCo recorded net income of $22,888,000 or $1.54 per share for the year ended December 31, 1994, compared to $20,325,000 or $1.37 per share for the year ended December 31, 1993. This represents an increase of 13% in the full year earnings and a 12% increase in the per share results. During 1994 TrustCo achieved: * taxable equivalent net interest income of $81.1 million, an increase of almost 10% over 1993, * a reserve coverage ratio of non-performing loans of 14 times. The reserves set aside for problem loans were 3.37% of loans at year end 1994, compared to 3.21% for 1993, * an efficiency ratio of 41.82% for the year. Industry goals look for the attainment of a 60% efficiency ratio. TrustCo outperformed this ratio for both 1993 and 1994, * an increase in the net interest margin from 4.04% in 1993 to 4.26% in 1994, the net interest margin for the fourth quarter of 1994 was 4.55%; and * a dividend payout ratio of 64% of net income. Net Interest Margin 1992 3.98% 1993 4.04% 1994 4.26% MIX OF AVERAGE EARNING ASSETS (dollars in thousands)
Components of % of Earning Total Assets 1994 1993 Change Change 1994 1993 1992 Loans, net of unearned income $1,110,859 1,021,984 88,875 131.0% 58.4 55.7 57.7 Trading securities -- 1,731 (1,731) (2.5) -- .1 -- Securities available for sale: U.S. Treasuries and agencies 272,003 182,273 89,730 132.3 14.3 9.9 2.8 Mortgage-backed securities 36,119 -- 36,119 53.2 1.9 -- -- Other 29,015 10,160 18,855 27.8 1.5 .5 .4 Total securities available for sale 337,137 192,433 144,704 213.3 17.7 10.4 3.2 Investment securities: U.S. Treasuries and agencies 98,380 274,398 (176,018) (259.5) 5.2 15.0 19.7 States and political subdivisions 27,120 32,615 (5,495) (8.1) 1.4 1.8 3.1 Mortgage-backed securities 111,691 119,442 (7,751) (11.4) 5.9 6.5 8.6 Other 13,621 28,681 (15,060) (22.2) .7 1.6 1.2 Total investment securities 250,812 455,136 (204,324) (301.2) 13.2 24.9 32.6 Federal funds sold 203,878 163,567 40,311 59.4 10.7 8.9 6.5 Total earning assets $1,902,686 1,834,851 67,835 100.0% 100.0 100.0 100.0
Asset/Liability Management TrustCo's objectives in managing its balance sheet are to manage the sensitivity of net interest income to actual or potential changes in interest rates and to enhance profitability through strategies that promise sufficient reward for understood and controlled risk. The Company has established guidelines for liquidity so as to maintain adequate levels in light of loan and deposit demands. TrustCo does not engage in any high risk investing activities nor does it invest in financial derivatives. The Company relies on traditional banking investment instruments and its large base of "core" deposits to help in asset/liability management. Earning Assets Average earning assets during 1994 were $1.9 billion, which is $68 million, or 4%, over the prior year. Increases in the balance of average earning assets is dependent on three factors: * growth in funding sources (deposits and borrowings), * movement of assets from non-earning to earning categories, and * the internal generation of capital retained by the Company. To account for the $68 million of growth in average earning assets, TrustCo increased the funding sources by $40 million, converted $20 million from non-earning asset categories, and retained $11 million in capital during 1994. A small amount of the growth in these areas was directed to a decrease of $4 million in various other liabilities. The table, "Mix of Average Earning Assets" shows how the mix of the earning assets has changed over the last three years. While growth in earning assets is critical to improved profitability, changes to the mix of earning assets can also have a significant impact on profitability. Loan portfolio
Average Balances (dollars in thousands) 1994 1993 1992 1991 1990 Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Residential $650,178 58.4% $550,906 53.8% $503,272 49.8% $274,696 43.6% $168,118 37.3% Commercial 229,015 20.6 237,179 23.1 270,947 26.8 171,695 27.2 127,842 28.4 Home equity line of credit 203,623 18.3 200,811 19.6 183,424 18.2 133,721 21.2 97,478 21.7 Installment 30,174 2.7 36,013 3.5 52,750 5.2 50,268 8.0 56,786 12.6 Total loans 1,112,990 100.0% 1,024,909 100.0% 1,010,393 100.0% 630,380 100.0% 450,224 100.0% Less: Unearned income 2,131 2,925 4,735 5,349 7,057 Allowance for loan losses 37,334 30,214 23,735 16,139 12,362 Net loans $1,073,525 991,770 981,923 608,892 430,805
Loans: Average total loans increased $88.1 million, or 8.6% during 1994. Net loans grew from 55.7% of average earning assets in 1993 to 58.4% of average earning assets in 1994. The steady growth of the loan portfolio as a component of its asset mix, as well as the continued high quality of the portfolio, have contributed significantly to the Company's superior operating results for 1994. Loan products related to residential real estate continued to exhibit significant growth during 1994. Average residential mortgage loan outstandings rose $99.3 million, or 18.0%, during 1994. TrustCo also continued to experience success in the marketing of home equity loans and home equity credit lines during the year. The overwhelming majority of TrustCo's real estate loans are secured by properties within the Bank's market area. Management's specific knowledge of local market conditions and trends enhances the quality of the loan portfolio. During 1994, management continued its established practice of retaining all new real estate loan originations in the Bank's portfolio rather than packaging them for sale in the secondary mortgage market. Average commercial loan and commercial real estate loan outstandings were largely unchanged during 1994. New loan originations were slightly outpaced by amortizations and problem loan resolutions, a portfolio trend reflective of general economic uncertainty. TrustCo's commercial lending activities are focused on balancing the Company's commitment to meeting the credit needs of businesses within its market area with the necessity of maintaining a high quality loan portfolio. In accordance with these ideals, the Bank has consistently emphasized the origination of loans within its trade area. The portfolio contains no foreign loans, nor does it contain any concentrations of credit extended to any particular borrower or specific industry. The Bank's commercial portfolio is a reflection of the diversity found in the Capital Region's economy. TrustCo continues to offer a full range of consumer credit products. However, as has been the case in the recent past, the unfavorable tax treatment of installment loan interest curbed demand in 1994. In addition, the artificially low rates offered by other lenders have affected origination volume for the year. During 1994, the Bank commenced a program to promote its credit card products. This program, which combined aggressive marketing and attractive pricing, resulted in significant growth in credit card receivables during 1994. MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES
(in thousands) December 31, 1994 After 1 year In 1 year but within After or less 5 years 5 years Total Commercial $129,089 82,030 18,944 230,063 Real estate construction 12,935 -- -- 12,935 Total $142,024 82,030 18,944 242,998 Predetermined rates $ 9,382 67,362 18,944 95,688 Floating rates 132,642 14,668 -- 147,310 Total $142,024 82,030 18,944 242,998
Securities available for sale and investment securities: The Company adopted new accounting standards during 1994 for its securities portfolio. The Company has now identified securities available for sale and those securities that are for investment purposes and will be held to maturity. The following tables identify certain information related to these securities. Securities available for sale and investment securities
(in thousands) As of December 31, 1994 1993 1992 Book Market Book Market Book Market Value Value Value Value Value Value Securities available for sale: U.S. Treasuries and agencies $102,947 102,919 230,563 236,471 110,507 113,721 Other 14,581 14,539 10,153 11,588 10,168 10,679 Total securities available for sale $117,528 117,458 240,716 248,059 120,675 124,400 Investment securities: U.S. Treasuries and agencies $145,542 141,117 228,157 237,008 360,622 373,900 States and political subdivisions 44,222 43,827 23,017 23,471 44,318 44,787 Mortgage-backed securities 143,082 134,902 138,376 142,119 111,455 114,172 Other 15,012 14,609 27,256 28,700 31,883 32,825 Total investment securities $347,858 334,455 416,806 431,298 548,278 565,684
Securities Available for Sale: During 1994, the portfolio of securities available for sale was actively managed by the Company to take full advantage of the increases in interest rates available during that time period. At December 31, 1994, securities available for sale amounted to $117.5 million compared to $240.7 million at year-end 1993. Near the end of 1994, TrustCo liquidated a large portion of the securities available for sale and reinvested the proceeds in federal funds sold, which ended the year at $263.0 million, or $114.0 million more than the balance at year-end 1993. For 1994, the average balance of securities available for sale was $337.1 million, almost double the average amount for 1993. The average rates earned during 1994 were 6.30% compared to 7.07% in 1993. During 1994, certain of the high coupon securities in this portfolio at year-end 1993 were disposed of. As noted earlier, the portfolio of securities available for sale was actively managed during 1994. Consequently, $8.9 million of securities losses were recognized as compared to securities gains of $6.2 million in 1993. The objective of recognizing these losses was to insure that the resulting portfolio of earning assets took advantage of the higher yields that were in the marketplace at year-end 1994. Management's actions resulted in an average yield on the securities available for sale portfolio for the fourth quarter of 1994 of 6.93%, compared to 5.81% for the comparable fourth quarter period in 1993. Absent these actions, the average yield in the year-end 1994 portfolio would have been significantly less, thereby resulting in lower future earnings. Therefore, these actions are consistent with the longstanding Company philosophy of taking actions designed to insure the future growth of net income. This portfolio is heavily weighted to U.S. Treasuries and Agency obligations because these issuers provide a consistent source of liquidity for the bonds and are readily accepted from a credit risk perspective. TrustCo has never invested in derivative products, structured notes or in any other exotic investment vehicles. By actively managing a portfolio of high quality securities the objectives of asset/liability management and liquidity can be met, while at the same time producing a constant earnings stream that meets or exceeds rates offered in the marketplace. Securities available for sale are recorded at their fair value with any unrealized gains or losses, net of taxes, recognized as a component of shareholders' equity. At year-end 1994, the market value of Trustco's portfolio of securities available for sale was 99.94% of the amortized cost basis, thereby demonstrating an ability to take full advantage of the top of the current interest rate market. During 1994, approximately $213 million of securities available for sale were transferred to the held to maturity investment securities portfolio. At the time of the transfer, the amortized cost of the securities transferred approximated market value. Investment Securities: This portfolio had a balance of $347.9 million at year-end 1994 compared to $416.8 million at year-end 1993. The average balance of investment securities during 1994 was $250.8 million and produced an average yield of 6.81%, compared to an average balance in 1993 of $455.1 million and a yield of 6.48%. At year end 1994, 42% of the investment securities portfolio was invested in U.S. Treasuries and Agency issues, 41% was invested in mortgage-backed securities (all of which are agency guaranteed), 13% was in municipal securities and the remainder in other bonds. Therefore, virtually all of the investment securities portfolio is supported by some form of U.S. Government or subdivision guarantee. All securities in the portfolio are investment grade securities. INVESTMENT PORTFOLIO MATURITY DISTRIBUTION AND YIELD Securities available for sale:
(dollars in thousands) As of December 31, 1994 Amortized Market Cost Value Yield Within 1 year U.S. Treasuries and agencies $ 275 276 7.62% Other -- -- -- Total within 1 year 275 276 7.62 1 to 5 years U.S. Treasuries and agencies 102,672 102,643 7.77 Other 25 25 5.50 Total 1 to 5 years 102,697 102,668 7.77 5 to 10 years U.S. Treasuries and agencies -- -- -- Other 650 650 6.62 Total 5 to 10 years 650 650 6.62 After 10 years U.S. Treasuries and agencies -- -- -- Other 13,906 13,864 6.06 Total after 10 years 13,906 13,864 6.06 Total U.S. Treasuries and agencies 102,947 102,919 7.77 Other 14,581 14,539 6.08 Total securities available for sale $117,528 117,458 7.56%
Investment securities portfolio:
(dollars in thousands) As of December 31, 1994 Book Market Value Value Yield Within 1 year U.S. Treasuries and agencies $ -- -- -- States and political subdivisions 12,458 12,462 4.35% Mortgage-backed securities -- -- -- Other -- -- -- Total within 1 year 12,458 12,462 4.35 1 to 5 years U.S. Treasuries and agencies 19,949 19,011 6.39 States and political subdivisions 22,246 22,110 5.28 Mortgage-backed securities 6,602 6,257 5.70 Other -- -- -- Total 1 to 5 years 48,797 47,378 5.79 5 to 10 years U.S. Treasuries and agencies 84,945 81,793 7.49 States and political subdivisions 7,283 7,060 5.43 Mortgage-backed securities 55,419 50,453 6.04 Other 15,012 14,609 7.85 Total 5 to 10 years 162,659 153,915 6.93 After 10 years U.S. Treasuries and agencies 40,648 40,313 8.04 States and political subdivisions 2,235 2,195 5.67 Mortgage-backed securities 81,061 78,192 7.65 Other -- -- -- Total after 10 years 123,944 120,700 7.74 Total U.S. Treasuries and agencies 145,542 141,117 7.49 States and political subdivisions 44,222 43,827 5.06 Mortgage-backed securities 143,082 134,902 6.93 Other 15,012 14,609 7.85 Total investment securities $347,858 334,455 6.97%
Average balances, yields and net interest margins
(dollars in thousands) 1994 1993 1992 Interest Interest Interest Average Income/ Average Average Income/ Average Average Income/ Average Balance Expense Rate Balance Expense Rate Balance Expense Rate Assets Loans, net of unearned income $1,110,859 94,432 8.50% $1,021,984 87,559 8.57% $1,005,658 93,532 9.30% Trading securities -- -- -- 1,731 94 5.43 -- -- -- Securities available for sale: U.S. Treasuries and agencies 272,003 17,142 6.30 182,273 12,797 7.02 48,660 3,671 7.54 Other 65,134 4,104 6.30 10,160 804 7.91 7,056 558 7.91 Total securities available for sale 337,137 21,246 6.30 192,433 13,601 7.07 55,716 4,229 7.59 Investment securities: U.S. Treasuries and agencies 98,380 7,128 7.24 274,398 16,913 6.16 342,796 26,209 7.65 States and political subdivisions 27,120 1,661 6.13 32,615 2,074 6.35 54,652 4,005 7.33 Mortgage-backed securities 111,691 7,254 6.50 119,442 8,444 7.07 149,408 12,389 8.29 Other 13,621 1,036 7.61 28,681 2,071 7.23 21,969 1,639 7.46 Total investment securities 250,812 17,079 6.81 455,136 29,502 6.48 568,825 44,242 7.78 Federal funds sold 203,878 9,058 4.44 163,567 4,912 3.00 113,429 3,811 3.36 Total interest earning assets 1,902,686 141,815 7.45 1,834,851 135,668 7.39 1,743,628 145,814 8.36 Allowance for loan losses (37,334) (30,214) (23,735) Cash and non-interest earning assets 129,145 142,078 132,287 Total assets $1,994,497 1,946,715 1,852,180 Liabilities and shareholders' equity Time deposits: Regular savings & NOW accounts $ 972,719 25,361 2.61% $ 973,076 27,530 2.83% $ 811,973 31,850 3.92% Other time deposits 741,795 34,673 4.67 701,692 33,352 4.75 774,839 43,324 5.59 Total time deposits 1,714,514 60,034 3.50 1,674,768 60,882 3.64 1,586,812 75,174 4.74 Short-term borrowings 18,129 461 2.54 17,447 380 2.18 25,520 757 2.97 Long-term debt 2,840 203 7.15 3,870 357 9.22 5,000 470 9.40 Total interest-bearing liabilities 1,735,483 60,698 3.50 1,696,085 61,619 3.63 1,617,332 76,401 4.72 Demand deposits 93,822 92,763 88,667 Other liabilities 28,215 32,219 29,943 Shareholders' equity 136,977 125,648 116,238 Total liabilities and shareholders' equity $1,994,497 $1,946,715 $1,852,180 Net interest income 81,117 74,049 69,413 Net interest spread 3.95% 3.76% 3.64% Net interest margin (net interest income to total interest earning assets) 4.26 4.04 3.98
Certain portions of income earned on certain commercial loans, U.S. Government obligations, obligations of states and political subdivisions, and equity securities are exempt from federal and state taxation. Appropriate adjustments have been made to reflect the equivalent amount of taxable income that would have been necessary to generate an equal amount of after tax income. Federal and New York State tax rates used to calculate income on a tax equivalent basis were 35.0 percent and 10.13 percent for 1994, 35.0 percent and 10.35 percent for 1993, and 34.0 percent and 10.35 percent for 1992. The average balances of securities available for sale is calculated using market values for these securities. For 1994, the average market value was $2.4 million greater than original costs. Federal Funds Sold: During 1994, the average balance of these funds was $203.9 million up from the $163.6 million in 1993. The average rate earned on these funds was 4.44% for 1994, and 3.00% for 1993. TrustCo utilized this category of earning assets during 1994 as a means of keeping strong liquidity during the year as interest rates in the securities markets rose. Rather than invest this excess liquidity during 1994, the Company chose to invest these funds in overnight federal funds sold. This decision had the short term effect of suppressing the potential earnings for 1994, but positioned TrustCo to take advantage of higher interest rates offered near the end of 1994 and into 1995. The increase in federal funds balances during 1994 is not expected to continue during 1995 as the Company reinvests this excess liquidity into higher yielding securities. Interest Bearing Sources of Funds: TrustCo utilizes various traditional sources of funds to support its asset portfolio. The following table "Average Sources of Funding" presents the various categories of funds used and the corresponding average balances for each of the last two years. Average Sources of Funding
(dollars in thousands) % of Components of Total Total Funding 1994 1993 Change Change 1994 1993 1992 Demand deposits $ 93,822 92,763 1,059 2.6% 5.1 5.2 5.2 Retail deposits: Regular savings 726,362 730,200 (3,838) (9.5) 39.7 40.8 33.9 Time deposits under $100 thousand 589,506 550,358 39,148 96.8 32.2 30.8 35.0 NOW accounts 246,357 242,876 3,481 8.6 13.5 13.6 13.7 Money market deposits 103,622 113,632 (10,010) (24.7) 5.7 6.4 7.8 Total retail deposits 1,665,847 1,637,066 28,781 71.2 91.1 91.6 90.4 Total core deposits 1,759,669 1,729,829 29,840 73.8 96.2 96.8 95.6 Time deposits over $100 thousand 48,667 37,702 10,965 27.1 2.7 2.1 2.6 Short-term borrowings 18,129 17,447 682 1.7 1.0 0.9 1.5 Long-term debt 2,840 3,870 (1,030) (2.6) 0.1 0.2 0.3 Total purchased liabilities 69,636 59,019 10,617 26.2 3.8 3.2 4.4 Total sources of funding $1,829,305 1,788,848 40,457 100.0% 100.0 100.0 100.0
Average Deposits by Type of Depositor
(in thousands) Years Ended December 31, 1994 1993 1992 1991 1990 Individuals, partnerships and corporations $1,752,163 1,706,530 1,605,191 948,390 690,970 U.S. Government 542 540 525 505 620 States and political subdivisions 44,289 48,145 58,439 45,101 37,162 Other (certified and official checks, etc.) 11,342 12,316 11,324 7,308 5,231 Total average deposits by type of depositor $1,808,336 1,767,531 1,675,479 1,001,304 733,983
Deposits: The average of total deposits (including time deposits greater than $100 thousand) was $1.808 billion in 1994 compared to $1.768 billion in 1993. Deposit increases centered in the retail deposit categories of time deposit under $100 thousand (an increase of $39.1 million), and NOW accounts (an increase of $3.5 million). Growth was also experienced in time deposits greater than $100 thousand, which increased by $11.0 million. These increases were offset by decreases in average deposits in regular savings accounts ($3.8 million) and money market deposit accounts ($10.0 million). TrustCo experienced the same trend noted by other financial institutions, namely depositors switching from regular savings type accounts to time deposit products. This was an attempt by depositors to lock in higher rates than those offered on regular savings accounts. By year-end 1994, demand deposits, regular savings, NOW accounts, and money market accounts were down $79.0 million from year-end 1993, while all other deposit accounts increased $74.6 million. The average rate on deposit accounts was 3.50% in 1994, compared to 3.64% in 1993 and 4.74% in 1992. The dramatic reduction in rates from 1992 to 1994 more than offset the modest increases in average balances during this time period thereby producing interest expense that was $15.1 million less in 1994 than it was in 1992, and $848 thousand less than in 1993. For 1995, TrustCo anticipates interest expense to rise as competitive pressures and the depositors desire for higher rates becomes more of a reality. Mutual funds, and the stock and bond markets all compete with financial institutions for the same funds. TrustCo has developed plans for 1995 to add 3 new branches. These new retail outlets will provide new sources of funding and additional opportunities for cross selling to a new deposit base. Maturity of 1994 Year end Time deposits over $100 thousand (in thousands) Under 3 months $ 16,547 3 to 6 months 4,099 6 to 12 months 11,132 over 12 months 30,733 -------- $ 62,511 Other Funding Sources: The Company had $18.1 million of average short-term borrowings and $2.8 million of long-term debt outstanding during 1994. Total purchased liabilities (which includes time deposits over $100 thousand) was $69.6 million in 1994 compared to $59.0 million in 1993. The average rate on short-term borrowings was 2.54% in 1994 and 2.18% in 1993; the average rate on the long-term debt was 7.15% in 1994 and 9.22% in 1993. Net Interest Income Taxable equivalent net interest income for 1994 was $81.1 million, up $7.1 million or 9.5% over 1993. The yield on average earning assets rose 6 basis points to 7.45% during the year while the rate paid on average interest bearing liabilities dropped 13 basis points to 3.50%. Together, this resulted in a 19 basis point increase in the net spread to 3.95%. While spread is an important consideration, net interest margin is generally viewed as the most significant measure of earning asset performance. The net interest margin increased 22 basis points to 4.26% during 1994. Volume and Yield Analysis
(in thousands) 1994 vs. 1993 1993 vs. 1992 Increase Due to Due to Increase Due to Due to 1994 1993 (Decrease) Volume Rate 1993 1992 (Decrease) Volume Rate Interest income (TE): Federal funds sold $ 9,058 4,912 4,146 1,408 2,738 4,912 3,811 1,101 1,541 (440) Trading securities -- 94 (94) (94) -- 94 -- 94 94 -- Securities available for sale 21,246 13,601 7,645 9,190 (1,545) 13,601 4,229 9,372 9,643 (271) Investment securities Taxable 15,417 27,425 (12,008) (14,010) 2,002 27,425 40,234 (12,809) (6,479) (6,330) Tax-exempt 1,662 2,077 (415) (341) (74) 2,077 4,008 (1,931) (1,453) (478) Total investment securities 17,079 29,502 (12,423) (14,351) 1,928 29,502 44,242 (14,740) (7,932) (6,808) Loans 94,432 87,559 6,873 7,064 (191) 87,559 93,532 (5,973) 570 (6,543) Total interest income 141,815 135,668 6,147 3,217 2,930 135,668 145,814 (10,146) 3,916 (14,062) Interest expense: NOW accounts 3,636 4,224 (588) 60 (648) 4,224 6,406 (2,182) 231 (2,413) Money market deposits 2,477 2,937 (460) (248) (212) 2,937 4,720 (1,783) (624) (1,159) Regular savings 21,725 23,306 (1,581) (121) (1,460) 23,306 25,444 (2,138) 5,806 (7,944) Time deposits under $100 thousand 29,613 28,325 1,288 1,979 (691) 28,325 36,026 (7,701) (2,681) (5,020) Time deposits over $100 thousand 2,583 2,090 493 585 (92) 2,090 2,578 (488) (385) (103) Short-term borrowings 461 380 81 15 66 380 757 (377) (205) (172) Long-term debt 203 357 (154) (84) (70) 357 470 (113) (104) (9) Total interest expense 60,698 61,619 (921) 2,186 (3,107) 61,619 76,401 (14,782) 2,038 (16,820) Net interest income (TE) $ 81,117 74,049 7,068 1,031 6,037 74,049 69,413 4,636 1,878 2,758 Increases and decreases in interest income and interest expense due to both rate and volume have been allocated to the two categories of variances (volume and rate) based on the percentage relationship of such variances to each other. The margins and spreads for 1994 and 1993 resulted from an increase in interest on earning assets of $6.1 million and a decrease in interest expense of $921 thousand. The increase in the interest on earning assets was almost evenly split between the increase in average balances and increases in rates. The decrease in interest on liabilities was primarily a factor of decreasing rates offset by additional interest expense resulting from increased average balances. Risk Management The responsibility for balance sheet risk management oversight is the function of the asset allocation committee. This committee meets monthly and includes the senior executives of the Company as well as other department managers as appropriate. The meetings include a review of the balance sheet structure, formulation of strategy in light of expected economic conditions, and a review of performance against guidelines established to control exposure to various types of risk. Credit Risk Credit risk is managed through a network of loan officer authorities, credit committees, loan policies and oversight from the senior executives of the Company. Management follows a policy of continually identifying, analyzing and evaluating the credit risk inherent in the loan portfolio. As a result of management's ongoing review of the loan portfolio, loans are placed in non-accrual status, either due to the delinquent status of principal and/or interest payments or a judgment by management that, although payment of principal and/or interest are current, such action is prudent. Loans are generally placed in non-accrual status when principal and/or interest is 90 days past due. Thereafter, no interest is taken into income unless received in cash or until such time as the borrower demonstrates the ability to make scheduled payments of interest and principal. Non-Performing Assets Non-performing assets include loans in non-accrual status, loans which have been treated as troubled debt restructurings, and loans past due 90 days or more and still accruing interest. Also included in total non-performing assets are foreclosed and in-substance foreclosed real estate properties. Non-performing assets at year-end 1994 totalled $17.0 million, down $4.1 million from the balance at year-end 1993. Non-performing loans increased from $1.9 million in 1993 to $2.8 million in 1994. Non-performing loans as a percentage of loans were 0.24% in 1994, 0.18% in 1993 and 0.72% in 1992. All of these percentages are well below industry and peer group averages, and reflect TrustCo's conservative lending policy and its aggressive collection and charge-off policies. Non-performing assets for 1994 included $5.1 million of foreclosed properties and $9.2 million of in-substance foreclosed properties. For 1993, the balance of foreclosed properties stood at $4.3 million and the in-substance foreclosed properties totalled $14.9 million. There are no other loans in the Bank's portfolio that management is aware of that pose any significant risk of the eventual non-collection of principal. As of December 31, 1994, there were no other loans classified for regulatory purposes that management reasonably expects will materially impact future operating results, liquidity or capital resources.
Non-performing Assets
(dollars in thousands) As of December 31, 1994 1993 1992 1991 1990 Loans on non-accrual status $ 1,058 24 970 1,054 107 Loans past due 90 days or more 803 1,853 6,438 3,340 1,772 Restructured loans 910 -- -- -- -- Total non-performing loans 2,771 1,877 7,408 4,394 1,879 Foreclosed real estate 5,080 4,309 5,946 1,413 -- In-substance foreclosed real estate 9,157 14,917 20,674 16,771 -- Total non-performing assets $17,008 21,103 34,028 22,578 1,879 Allowance for loan losses $38,851 34,087 26,919 19,049 13,446 Allowance coverage of non-performing loans 14.02X 18.16 3.63 4.34 7.16 Non-performing loans as a % of total loans 0.24% 0.18 0.72 0.44 0.41 Non-performing assets as a % of total assets 0.86 1.07 1.75 1.28 0.20
Allowance for Loan Losses The balance in the allowance for loan losses has been accumulated over the years through periodic provisions, and is available to absorb losses on loans which have been determined to be uncollectible. The adequacy of the allowance is evaluated continuously, with particular emphasis on non-performing and other loans that management believes warrant special attention. The balance of the allowance is maintained at a level that is, in management's judgment, representative of the amount of risk inherent in the loan portfolio given present and anticipated future conditions. The table "Summary of Loan Loss Experience" includes an analysis of the changes to the allowance for the past five years. Loans charged off in 1994 were $4.8 million, compared to $6.7 million in 1993. Recoveries were $1.5 million in 1994, and $2.3 million in 1993. The provisions recorded in 1994 and 1993 were $8.1 million and $11.6 million, respectively. Non-Performing Assets (in millions) 1992 $34.0 1993 $21.1 1994 $17.0 Summary of Loan Loss Experience
(dollars in thousands) 1994 1993 1992 1991 1990 Amount of loans outstanding at end of year (less unearned income) $1,152,632 1,060,648 1,028,541 1,025,421 462,469 Average loans outstanding during year (less average unearned income) 1,110,859 1,021,984 1,005,658 625,031 443,167 Balance of allowance at beginning of year 34,087 26,919 19,049 13,446 11,336 Loans charged off: Commercial 3,864 5,866 4,857 1,129 313 Real estate 53 199 125 70 140 Installment 907 676 1,015 616 395 Total 4,824 6,741 5,997 1,815 848 Recoveries of loans previously charged off: Commercial 1,125 1,810 327 23 21 Real estate -- -- -- -- -- Installment 407 523 847 174 237 Total 1,532 2,333 1,174 197 258 Net loans charged off 3,292 4,408 4,823 1,618 590 Additions to allowance charged to operating expense 8,056 11,576 12,693 6,490 2,700 Allowance of acquired bank -- -- -- 731 -- Balance of allowance at end of year $ 38,851 34,087 26,919 19,049 13,446 Net charge-offs as percent of average loans outstanding during year (less average unearned income) 0.30% 0.43 0.48 0.26 0.13 Allowance as percent of loans outstanding at end of year 3.37 3.21 2.62 1.86 2.91
Net charge-offs as a percentage of average loans were .30% in 1994 and .43% in 1993, while the allowance as a percentage of loans outstanding grew to 3.37% in 1994 from 3.21% in 1993. The Company has a policy of recognizing charge-offs early in a loan's deterioration and then aggressively pursuing collection efforts. This policy of early intervention has proven to be a cornerstone of the strong lending performance that TrustCo has achieved. In 1993, the Financial Accounting Standards Board issued Statement No. 1 14 "Accounting by Creditors for Impairment of a Loan" which is effective for TrustCo for 1995. This statement prescribes recognition criteria for loan impairment and measurement methods for certain impaired loans and loans whose terms have been the subject of a renegotiation. TrustCo will adopt the new pronouncement in 1995, and does not anticipate that it will have any material impact on the financial condition or operating results of the Company. A significant percentage of loans that have been identified as in-substance foreclosed real estate and included in real estate owned as of December 31, 1994, will be reclassified to loans under Statement 114. Interest Rate Risk Management of interest rate risk involves continual monitoring of the relative sensitivity of asset and liability portfolios to changes in rate due to maturities or repricing. Forecasting models are utilized to quantify the impact of changes in rates on the Company's net income. Specific targets for interest rate sensitivity have been established by the Company. Interest rate sensitivity is a function of the repricing of assets and liabilities through maturity and interest rate changes. The objective is to maintain an appropriate balance between income growth and the risk associated with maximizing income through the mismatch of the timing of interest rate changes between assets and liabilities. Perfectly matching this funding can eliminate interest rate risk but net interest income is not always enhanced. One measure of interest rate risk, the so called "gap," is illustrated in the table "Interest Rate Sensitivity." The table measures the incremental and cumulative gap, or the difference between assets and liabilities subject to repricing during the periods indicated. For purposes of this analysis the maturity and repricing of loans is based on the stated maturity or earliest repricing date. For securities available for sale and investment securities, the earlier of average life or stated maturity is used. NOW, money market deposits and regular savings accounts are presented with a maturity or repricing cycle over the full interest rate cycle even though they are subject to immediate withdrawal. Time deposit accounts are presented based upon their maturity dates. At December 31, 1994, the Company's gap position indicates an excess of assets repricing in the 0-90 day period of $462.9 million. This positive gap position is significantly enhanced by the $263.0 million federal funds balance at year end. The gap position turns negative in the 91 to 365 day period and in the 1 to 5 year period. This situation reflects the significant amount of time deposits that mature in these timebands. Over 5 years, the gap position again reflects an excess of repricing assets over liabilities of $490.3 million. In evaluating interest rate sensitivity at year-end 1994, the Company would benefit from an increase in interest rates, as the Bank would be able to redeploy short-term assets that are repricing into higher yielding investments. Conversely, the Company would be negatively affected by a decrease in interest rates, since the assets that are repricing would do so at lower interest rates. The Company's gap position is constantly under evaluation in relation to products, services and the marketplace. The positive gap position at year-end was designed by management to position the Bank to take full advantage of increased interest rates available at that time. There are some shortcomings inherent in the method of analysis presented in the Interest Rate Sensitivity table. For example, although certain assets and liabilities have similar periods to maturity or to repricing, they may react in different degrees to changes in market rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Additionally, certain assets have features which restrict changes in interest rates on a short-term basis and over the life of the asset (certain annual caps and lifetime caps). Further, in the event of significant change in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in the table. Finally, the ability of many borrowers to service their debt may decrease in the event of a significant interest rate increase. Management takes these factors into account when reviewing the Bank's gap position and establishing future asset/liability strategy. Interest Rate Sensitivity (dollars in thousands) At December 31, 1994 Repricing, or able to be repriced, in: 0-90 91-365 1-5 Over 5 Rate Days Days Years Years Insensitive Total Assets: Federal funds sold $263,000 -- -- -- -- 263,000 Securities available for sale 2,350 226 102,668 12,214 -- 117,458 Investment securities 17,558 4,654 133,696 191,950 -- 347,858 Loans, net of unearned income 320,700 170,021 101,632 560,279 -- 1,152,632 Allowance for loan losses -- -- -- -- (38,851) (38,851) Others assets 1,873 5,623 29,988 14,995 81,101 133,580 Total assets 605,481 180,524 367,984 779,438 42,250 1,975,677 Cumulative total assets 605,481 786,005 1,153,989 1,933,427 1,975,677 1,975,677 Liabilities and shareholders' equity: Deposits: Demand deposits 3,339 10,017 53,426 26,714 -- 93,496 NOW accounts 9,804 29,411 140,858 67,763 -- 247,836 Money market deposits 11,620 34,862 46,483 -- -- 92,965 Regular savings 20,222 74,617 379,303 189,651 -- 663,793 Time deposits under 100 thousand 63,294 192,876 369,521 3,539 -- 629,230 Time deposits over 100 thousand 16,547 15,231 30,733 -- -- 62,511 Total interest bearing deposits 121,487 346,997 966,898 260,953 -- 1,696,335 Total deposits 124,826 357,014 1,020,324 287,667 -- 1,789,831 Short-term borrowings 12,713 -- -- -- -- 12,713 Long-term debt -- 296 3,254 -- -- 3,550 Other liabilities 5,034 395 342 1,449 23,080 30,300 Shareholders' equity -- -- -- -- 139,283 139,283 Total liabilities and shareholders' equity 142,573 357,705 1,023,920 289,116 162,363 1,975,677 Cumulative total liabilities and shareholders' equity $142,573 500,278 1,524,198 1,813,314 1,975,677 1,975,677 Incremental gap: Interest sensitivity gap $462,908 (177,181) (655,936) 490,322 Gap as a % of earning assets 24.61% (9.42) (34.87) 26.07 Interest sensitive assets to liabilities 449.78 50.36 34.84 292.94 Cumulative gap: Interest sensitivity gap $462,908 285,727 (370,209) 120,113 Gap as a % of earning assets 24.61% 15.19 (19.68) 6.39 Interest sensitive assets to liabilities 449.78 161.69 76.91 109.83
Liquidity Risk TrustCo seeks to obtain favorable sources of liabilities and to maintain prudent levels of liquid assets in order to satisfy varied liquidity demands. In addition to serving as a funding source for maturing obligations, liquidity provides flexibility in responding to customer initiated needs. Many factors affect the ability to meet liquidity needs, including variations in the markets served by the TrustCo network of branches, the mix of assets and liabilities, and general economic conditions. The Company actively manages its liquidity position through target ratios established under the Asset/Liability Management policies. Continual monitoring of these ratios, both historically and through forecasts under multiple interest rate scenarios, allows TrustCo to employ strategies necessary to maintain adequate liquidity levels. Management has also developed various liquidity alternatives should abnormal situations arise. The Company achieves its liability-based liquidity objectives in a variety of ways. Net liabilities can be classified into three categories for the purposes of managing liability based liquidity; net core deposits, purchased money and capital market funds. TrustCo seeks deposits that are dependable and predictable, ones that are based as much on interest rate as they are on the level and quality of service. At December 31, 1994, core deposits representing total deposits less those deposits greater than $100,000, amounted to $1.727 billion. Average balances of core deposits are detailed in the table "Average Sources of Funding." In addition to core deposits another funding source available to TrustCo is purchased money. These are principally long and short term borrowings, federal funds purchased, securities sold under repurchase agreements and time deposits greater than $100,000. The average balances of these purchased money instruments are detailed in the table "Average Sources of Funding." During 1994 the average balance in purchased money instruments was $69.6 million, in 1993 it was $59.0 million and in 1992 it was $75.1 million. Off-Balance Sheet Risk Commitments to extend credit: TrustCo makes contractual commitments to extend credit and extends lines of credit, which are subject to the Bank's credit approval and monitoring procedures. At December 31, 1994 and 1993 commitments to extend credit in the form of loans, including unused lines of credit amounted to $217.3 million and $200.9 million respectively. In the opinion of management, there are no material commitments to extend credit that represent unusual risk. Letters of credit and standby letters of credit: TrustCo guarantees the obligations or performance of customers by issuing letters of credit and standby letters of credit to third parties. These letters of credit are frequently issued in support of third party debt, such as corporate debt issuances, industrial revenue bonds and municipal securities. The risk involved in issuing letters of credit and standby letters of credit is essentially the same as the credit risk involved in extending loan facilities to customers, and they are subject to the same credit origination, portfolio maintenance and management procedures in effect to monitor other credit and off balance sheet products. At December 31, 1994 and 1993 outstanding letters of credit and standby letters of credit were approximately $20.8 million and $21.4 million respectively. Other Off-Balance Sheet Risk: TrustCo does not engage in activities involving interest rate swaps, forward placement contracts, options or any other instrument commonly referred to as a "derivative." Management believes these instruments pose a high degree of risk and that investing in them is unnecessary. Noninterest Income and Expense Noninterest Income: Noninterest income is a significant source of revenue for the Company and an important factor in the overall results for the year. Total noninterest income was $4.6 million for 1994 compared to $19.2 million in 1993. Included in the 1994 results are $8.9 million of securities losses compared to securities gains of $6.2 million during the comparable period in 1993. Excluding these securities transactions, noninterest income would have been $13.4 million and $12.9 million in 1994 and 1993, respectively. As noted earlier, these securities losses for 1994 were realized in an effort to maintain the available for sale portfolio at the year-end higher interest rates. Therefore, future periods will benefit from these enhanced rates. Noninterest income
(dollars in thousands) 1994 vs. 1993 1994 1993 1992 Amount Percent Trust department income $4,850 4,347 3,869 503 11.6% Service charges on deposit accounts and other charges and fees 7,007 6,489 6,378 518 8.0 Credit card processing income 903 881 1,035 22 2.5 Net gain (loss) on securities transactions (8,877) 6,239 2,939 (15,116) (242.3) Other 677 1,220 1,212 (543) (44.5) Total noninterest income $4,560 19,176 15,433 (14,616) (76.2)%
The Trust Department contributes the largest recurring portion of noninterest income through fees generated by the performance of fiduciary services. Income from these fiduciary activities totalled $4.9 million in 1994 and $4.3 million in 1993. This increase was the result of changes in the fees charged on trust accounts. The changes in the other categories of noninterest income reflect the fee scale used by the Bank for pricing its services. Noninterest Expense: Noninterest expense was $40.6 million in 1994, $43.5 million in 1993 and $42.8 million in 1992. TrustCo's operating philosophy stresses the importance of monitoring and controlling the level of noninterest expense. The efficiency ratio is a strong indicator of how well controlled and monitored these expenses are for a banking enterprise. The TrustCo efficiency ratio was 41.82% for 1994, 44.63% for 1993 and 51.96% for 1992. Salaries and employee benefits are the most significant component of noninterest expense. At year-end 1994, these expenses amounted to $18.3 million compared to $16.6 million and $15.9 million for 1993 and 1992, respectively. The increase in salaries and employee benefits reflect merit increases and raises given to the Bank staff. In addition, increased costs for benefits, such as health insurance and retirement benefits, account for the remainder of the increase. Expenses associated with the portfolio of other real estate decreased from $4.7 million in 1993 to $1.0 million in 1994. During 1993 the Company recognized significant write-downs and expenses associated with other real estate properties so as to facilitate their eventual disposition. Continued operating efficiency is a cornerstone to TrustCo's operating philosophy. TrustCo is committed to continuing cost control and to the reduction of noninterest expense where possible. Efficiency Ratio 1992 51.96% 1993 44.63% 1994 41.82% Income Tax In 1994, TrustCo recognized income tax expense of $12.6 million as compared to $12.5 million in 1993 and $9.3 million in 1992. The tax expense on the Company's income was lower than tax expense at the statutory rate of 35% primarily due to tax exempt income and other permanent differences. Prior to January 1, 1993, when it adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," the Company accounted for income taxes under APB No. 11. Statement 109, which calls for an asset/liability, or balance sheet approach in determining income tax expense, has changed the Company's method of accounting for income taxes from that required under ABP No. 11, which had been the deferred method or income statement approach. Adoption of the new accounting literature did not have any material impact on the results of operation for the year of adoption. Noninterest Expense
(dollars in thousands) 1994 vs. 1993 1994 1993 1992 Amount Percent Salaries and employee benefits $18,323 16,649 15,853 1,674 10.1% Net occupancy expense of bank premises 3,479 3,439 3,534 40 1.2 Equipment expense 3,363 3,650 4,182 (287) (7.9) FDIC insurance expense 4,071 3,985 3,654 86 2.2 Advertising and promotional expense 871 999 2,168 (128) (12.8) Professional services 2,548 2,508 4,295 40 1.6 Other real estate expenses 1,016 4,679 215 (3,663) (78.3) Supplies 1,176 1,207 1,286 (31) (2.6) Credit card processing expense 758 1,000 1,143 (242) (24.2) Amortization of goodwill -- -- 880 -- -- Other 4,955 5,386 5,561 (431) (8.0) Total noninterest expense $40,560 43,502 42,771 (2,942) (6.8)%
Five Year Summary of Financial Data
(dollars in thousands, except per share data) Years Ended December 31, 1994 1993 1992 1991 1990 Statement of income data: Interest income $ 140,282 133,657 143,260 100,805 81,520 Interest expense 60,698 61,619 76,401 58,252 48,445 Net interest income 79,584 72,038 66,859 42,553 33,075 Provision for loan losses 8,056 11,576 12,693 6,490 2,700 Net interest income after provision for loan losses 71,528 60,462 54,166 36,063 30,375 Noninterest income 4,560 19,176 15,433 9,847 5,735 Noninterest expense 40,560 43,502 42,771 28,193 21,877 Income before income taxes 35,528 36,136 26,828 17,717 14,233 Income tax expense 12,640 12,516 9,325 4,856 3,658 Income before cumulative effect of change in accounting principle 22,888 23,620 17,503 12,861 10,575 Cumulative effect of a change in accounting principle -- (3,295) -- -- -- Net income $ 22,888 20,325 17,503 12,861 10,575 Share data: Average equivalent shares outstanding (in thousands) 14,886 14,803 14,606 11,189 10,030 Book value $ 9.53 8.93 8.32 7.73 6.03 Cash dividends .98 .80 .62 .52 .41 Net income 1.54 1.37 1.20 1.15 1.05 Financial ratios: Return on average assets 1.15% 1.04 .94 1.12 1.22 Return on average shareholders' equity 17.01 16.18 15.06 17.16 18.49 Cash dividend payout ratio 63.71 57.93 51.05 45.00 38.36 Tier 1 capital as a % of total risk adjusted assets 12.08 12.18 11.39 10.45 11.36 Total capital as a % of total risk adjusted assets 13.35 13.45 12.64 11.70 12.33 Efficiency ratio 41.82 44.63 51.96 48.51 50.28 Net interest margin 4.26 4.04 3.98 4.20 4.41 Average balances: Total assets $1,994,497 1,946,715 1,852,180 1,149,775 868,069 Earning assets 1,902,686 1,834,851 1,743,628 1,085,868 813,663 Loans, net 1,110,859 1,021,984 1,005,658 625,031 443,167 Allowance for loan losses (37,334) (30,214) (23,735) (16,139) (12,362) Securities available for sale 337,137 192,433 55,716 -- -- Investment securities 250,812 455,136 568,825 418,295 308,813 Deposits 1,808,336 1,767,531 1,675,479 1,001,304 733,983 Short-term borrowings 18,129 17,447 25,520 42,990 50,489 Long-term debt 2,840 3,870 5,000 5,000 5,000 Shareholders' equity 136,977 125,648 116,238 74,951 57,208 Average shareholders' equity excludes the effect of the mark to market adjustment for securities available for sale.
Summary of unaudited quarterly financial information
(dollars in thousands, except per share data) 1994 1993 Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Income statement: Interest income $ 32,684 34,726 36,215 36,657 140,282 34,209 33,731 33,216 32,501 133,657 Interest expense 14,666 15,069 15,342 15,621 60,698 16,062 15,470 15,207 14,880 61,619 Net interest income 18,018 19,657 20,873 21,036 79,584 18,147 18,261 18,009 17,621 72,038 Provision for loan losses 1,827 1,886 2,778 1,565 8,056 1,000 2,600 5,690 2,286 11,576 Net interest income after provision for loan losses 16,191 17,771 18,095 19,471 71,528 17,147 15,661 12,319 15,335 60,462 Noninterest income 3,314 (402) 838 810 4,560 4,981 2,943 5,379 5,873 19,176 Noninterest expense 11,409 8,808 9,599 10,744 40,560 9,284 10,867 10,381 12,970 43,502 Income before income taxes 8,096 8,561 9,334 9,537 35,528 12,844 7,737 7,317 8,238 36,136 Income tax expense 2,800 3,085 3,420 3,335 12,640 4,809 2,833 2,030 2,844 12,516 Income before cumulative effect of change in accounting principle 5,296 5,476 5,914 6,202 22,888 8,035 4,904 5,287 5,394 23,620 Net income 5,296 5,476 5,914 6,202 22,888 4,751 4,904 5,287 5,383 20,325 Per share data: Net income .36 .37 .40 .42 1.54 .33 .34 .36 .36 1.37 Book value 9.10 9.14 9.35 9.53 9.53 8.47 8.63 8.78 8.93 8.93 Cash dividends declared .23 .23 .25 .28 .98 .18 .18 .21 .23 .80 Average balances: Assets 1,968,001 2,002,981 2,007,747 1,974,105 1,994,497 1,920,522 1,945,479 1,953,112 1,953,240 1,946,715 Loans, net 1,081,884 1,099,507 1,119,222 1,143,331 1,110,859 1,019,725 1,017,706 1,004,929 1,036,161 1,021,984 Deposits 1,797,804 1,821,748 1,825,202 1,788,504 1,808,336 1,749,573 1,768,967 1,775,303 1,775,908 1,767,531 Shareholders' equity 142,752 134,353 134,657 137,641 136,977 120,571 124,950 127,440 129,513 125,648 Ratios: Return on average assets 1.08% 1.09 1.17 1.25 1.15 1.08 1.01 1.07 1.09 1.04 Return on average shareholders' equity 16.33 16.37 17.45 17.84 17.01 16.33 15.74 16.46 16.49 16.18 Net interest margin (TE) 3.86 4.19 4.44 4.55 4.26 3.86 4.10 4.03 3.90 4.04 Efficiency ratio 49.89 36.73 38.57 42.49 41.82 40.63 49.06 46.09 42.86 44.63
Capital Resources Consistent with its long-term goal of operating a sound and profitable financial organization, TrustCo strives to maintain strong capital ratios. New issues of equity securities have not been required, since most of the Company's capital requirements have been provided through retained earnings. Part of the operating philosophy of TrustCo is that the Company will not retain any excess capital. All capital that is generated by the Company that is in excess of the levels considered by management to be necessary for the safe and sound operations of the Company will be distributed to the shareholders in the form of recurring or special cash dividends. Consequently, the capital ratios that are maintained are adequate but not excessive. This philosophy has led to a dividend payout ratio for 1994 of 63.71%, 1993 of 57.93% and 1992 of 51.05%. These are significant payouts to the Company shareholders and are considered by management to be a prudent use of the retained capital in TrustCo. As to the likelihood of future dividends, the philosophy stated above will continue into 1995 and where appropriate the Board of Directors will declare dividends consistent with that operating philosophy. Dividends Per Share 1992 $0.62 1993 $0.80 1994 $0.98 At December 31, 1994 TrustCo's Tier 1 capital was $139.3 million or 12.08% of risk adjusted assets. The Tier 1 capital to total assets or the leverage ratio at December 31, 1994 was 7.05% as compared to 6.59% in 1993 and 6.19% in 1992. At December 31, 1994 the subsidiary bank, Trustco Bank met the regulatory definition of a "well capitalized" institution. The Bank has converted to a nationally chartered bank, and in early 1995 changed its legal name to Trustco Bank, National Association. All of the current operations of the Bank are consistent with those allowed of a nationally chartered bank. Therefore, management does not believe that the operations will be inhibited in any fashion. The national charter allows the Bank to streamline its regulatory process by having the Office of the Comptroller of the Currency as the primary bank regulator. As mentioned earlier, Trustco will be expanding its branch network by three locations in 1995. It is not anticipated that additional capital will be required to support this expansion program. Likewise, operating costs during 1995 can be expected to rise modestly as a result of these new branches, but will be offset by the additional revenue the new branches will generate. Impact of Inflation and Changing Prices The consolidated financial statements have been prepared in accordance with generally accepted accounting principles which require the measurement of financial position and operating results in terms of historical dollars without considering the changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increasing costs of operations. Unlike most industrial companies, nearly all the assets and liabilities of the Company are monetary. As a result, interest rates have a greater impact on the Company's performance than do the effects of general levels of inflation, since interest rates do not necessarily move in the same direction or to the same extent as the price of goods and services. Impact of Changes in Accounting Standards ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS: On January 1, 1993, the Company adopted Statement 106 "Employers' Accounting for Postretirement Benefits Other than Pensions." In implementing the new accounting standard, the Company recorded a one time transition charge of $3.3 million, net of tax benefits, which is reflected as a cumulative effect of a change in accounting principle in the 1993 consolidated statement of income. ACCOUNTING FOR INCOME TAXES: On January 1, 1993, the Company adopted Statement 109 "Accounting for Income Taxes." Statement 109 significantly changed the method of accounting for income taxes for financial statement purposes without affecting the actual cash tax liability. In adopting Statement 109, the Company elected not to restate prior period financial results. The implementation of Statement 109 had no material impact on the 1993 results of operations. The Company's complete disclosure related to Statement 109 is included in the notes to the consolidated financial statements. ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN: In May 1993, Statement 114 "Accounting by Creditors for Impairment of a Loan" was issued. The Statement is effective for fiscal years beginning after December 15, 1994 (for TrustCo this statement will be effective for 1995). This Statement requires that an impaired loan be measured based on the present value of expected future cash flows or, for a loan whose repayment is collateral dependent, based on the collateral's observable market price. The Statement also narrows the application of the concept of in-substance foreclosures to situations where the creditor has received physical possession of the debtor's collateral regardless of whether formal foreclosure proceedings have taken place. The adoption of Statement 114 is not anticipated to have a material impact on the financial condition or results of operation of the Company. Upon adoption, a significant percentage of the loans identified at year-end 1994 as in-substance foreclosures will be reclassified into the loan portfolio. ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES. The Company adopted Statement 115 "Accounting for Certain Investments in Debt and Equity Securities" effective January 1, 1994. Upon adoption of Statement 115, the Company identified securities that are "available for sale" and those that are "held to maturity" (the Company has no trading account assets as prescribed by Statement 115). Securities classified as available for sale are those that can be sold in response to changes in market interest rates, liquidity requirements, or other investment alternatives. Securities classified as held to maturity are not available for sale and are held until contractual maturity or call. Securities available for sale are recorded at market value with the unrealized appreciation and depreciation, net of tax, recorded as an element of shareholders' equity. Securities identified as held to maturity are recorded at amortized cost. Glossary of Terms Book Value Per Share Total shareholders' equity divided by shares outstanding on the same dates. This provides an indication of the value of a share of stock. Cash Dividends Per Share Total cash dividends declared divided by average shares outstanding for the period. Derivative Investments These are investments in futures contracts, forwards, swaps, or option contracts, or other investments with similar characteristics. Earning Assets The sum of interest-bearing deposits with banks, securities available for sale, investment securities, loans in accrual status and federal funds sold. Earnings Per Share Net income divided by the average shares of common stock outstanding during the period including the effect of stock options. Efficiency Ratio Noninterest expense (excluding nonrecurring charges and other real estate expense) divided by taxable equivalent net interest income plus noninterest income (excluding securities transactions). This is an indicator of the total cost of operating the Company in relation to total income generated. Interest-Bearing Liabilities The sum of interest-bearing deposits, federal funds purchased, securities sold under agreements to repurchase, other short term borrowings and long term debt. Interest Rate Spread The difference between the taxable equivalent yield on earning assets and the rate paid on interest bearing liabilities. Liquidity The ability to meet both loan commitments and deposit withdrawals as they come due. Net Interest Margin Fully taxable equivalent net interest income as a percentage of average earning assets. Net Loans Charged Off Reductions to the allowance for loan losses written off as losses, net of the recovery of loans previously charged off. Non-Accrual Loans Loans for which no periodic accrual of interest income is recognized. Non-Performing Assets The sum of non-performing loans plus real estate owned. Non-Performing Loans The sum of loans on a non-accrual basis (for purposes of interest recognition) plus loans whose repayment criteria have been renegotiated to less than market terms due to the inability of the borrowers to repay the loan in accordance with their original terms plus loans 90 days or more past due as to principal or interest payments. Parent Company A company that owns or controls a subsidiary through the ownership of voting stock. Real Estate Owned Real estate acquired in either formal or, where the borrower's circumstances appear to make actual foreclosure likely, in-substance foreclosures. Return on Average Assets Net income as a percentage of average total assets. Return on Average Equity Net income as a percentage of average equity, excluding the impact of the mark to market adjustment for securities available for sale. Taxable Equivalent (TE) Tax exempt income which has been adjusted to an amount that would yield the same after tax income had the income been subject to taxation at the statutory Federal and/or state income tax rates. Management's Statement of Responsibilities The management of TrustCo Bank Corp NY (the "Company") is responsible for the preparation, content and integrity of the financial statements and other statistical data and analyses compiled for this report. The consolidated financial statements and related notes have been prepared in conformity with generally accepted accounting principles and, in the judgment of management, present fairly and consistently the Company's financial position, results of operations and cash flows. Management also believes that financial information elsewhere in this report is consistent with that in the financial statements. The amounts contained in the financial statements are based on management's best estimates and judgments. The Company maintains a system of internal controls and accounting procedures designed to provide reasonable assurance as to the protection of assets and the integrity of the financial statements. These procedures include management's evaluation of asset quality, organizational arrangements that provide an appropriate division of responsibilities, and a program of internal audits to evaluate independently the adequacy and application of financial and operating controls. The Board of Directors discharges its responsibility for TrustCo's financial statements through its Audit Committee which is composed entirely of outside directors and has responsibility for the recommendation of the independent auditors. Management has made an assessment of the Company's internal control structure and procedures, covering financial reporting using established and recognized criteria. On the basis of this assessment, management believes that the Company maintained an effective system of internal control for financial reporting as of December 31, 1994. Robert A. McCormick President and Chief Executive Officer Robert T. Cushing Vice President and Chief Financial Officer January 27, 1995 Independent Auditors' Report The Board of Directors and Shareholders of TrustCo Bank Corp NY: We have audited the accompanying consolidated statements of condition of TrustCo Bank Corp NY and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of income, changes in shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1994. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of TrustCo Bank Corp NY and subsidiaries as of December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1994, in conformity with generally accepted accounting principles. As discussed in note 4 to the consolidated financial statements, in 1994 the Company adopted the provisions of Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" which changed its method of accounting for certain investments in debt and equity securities. As discussed in notes 1 and 8 to the consolidated financial statements, in 1993 the Company adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" which changed its method of accounting for income taxes. As discussed in note 9 to the consolidated financial statements, the Company also adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions" in 1993 which changed its method of accounting for postretirement benefits other than pensions. Albany, New York January 27, 1995 Consolidated Statements of Income (dollars in thousands, except per share data)
Years Ended December 31, 1994 1993 1992 Interest income: Interest and fees on loans $93,873 86,965 92,935 Interest and dividends on: U.S. Treasuries and agencies 23,841 28,976 29,125 States and political subdivisions 1,129 1,416 2,810 Mortgage-backed securities 9,376 8,444 12,389 Other 3,005 2,944 2,190 Interest on federal funds sold 9,058 4,912 3,811 Total interest income 140,282 133,657 143,260 Interest expense: Interest on deposits: Regular savings and NOW accounts 25,361 27,530 31,850 Money market deposit accounts 2,477 2,937 4,720 Certificates of deposit (in Denominations of $100,000 or more) 2,583 2,090 2,578 Other time accounts 29,613 28,325 36,026 Interest on short-term borrowings 461 380 757 Interest on long-term debt 203 357 470 Total interest expense 60,698 61,619 76,401 Net interest income 79,584 72,038 66,859 Provision for loan losses 8,056 11,576 12,693 Net interest income after provision for loan losses 71,528 60,462 54,166 Noninterest income: Trust department income 4,850 4,347 3,869 Fees for other services to customers 7,007 6,489 6,378 Credit card processing income 903 881 1,035 Net gain (loss) on securities transactions (8,877) 6,239 2,939 Other 677 1,220 1,212 Total noninterest income 4,560 19,176 15,433 Noninterest expense: Salaries and employee benefits 18,323 16,649 15,853 Net occupancy expense of bank premises 3,479 3,439 3,534 Equipment expense 3,363 3,650 4,182 FDICinsurance expense 4,071 3,985 3,654 Advertising and promotional expense 871 999 2,168 Professional services 2,548 2,508 4,295 Other real estate expenses 1,016 4,679 215 Supplies 1,176 1,207 1,286 Credit card processing expense 758 1,000 1,143 Amortization of goodwill -- -- 880 Other 4,955 5,386 5,561 Total noninterest expense 40,560 43,502 42,771 Income before income taxes and cumulative effect of a change in accounting principle 35,528 36,136 26,828 Income taxes 12,640 12,516 9,325 Income before cumulative effect of a change in accounting principle 22,888 23,620 17,503 Cumulative effect at January 1, 1993 of a change in accounting principle -- (3,295) -- Net income $22,888 20,325 17,503 Earnings per common share: Income before cumulative effect of a change in accounting principle $1.54 1.59 1.20 Cumulative effect at January 1, 1993 of a change in accounting principle -- (0.22) -- Net income per common share $1.54 1.37 1.20 Average equivalent shares outstanding 14,886,000 for 1994, 14,803,000 for 1993 and 14,606,000 for 1992. Per share data has been adjusted for a 10% stock dividend in October 1994, a 2 for 1 stock split in November 1993, and a 5 for 4 stock split in November 1992. See accompanying notes to consolidated financial statements.
Consolidated Statements of Condition (dollars in thousands, except per share data)
As of December 31, 1994 1993 ASSETS Cash and due from banks $52,479 50,977 Federal funds sold 263,000 149,000 Total cash and cash equivalents 315,479 199,977 Trading securities -- 2,106 Securities available for sale (approximate market value $248,059 at December 31, 1993) 117,458 240,716 Investment securities (approximate market value $334,455 and $431,298 at December 31, 1994 and 1993, respectively) 347,858 416,806 Loans 1,154,601 1,063,006 Less: Unearned income 1,969 2,358 Allowance for loan losses 38,851 34,087 Net loans 1,113,781 1,026,561 Bank premises and equipment 23,877 24,893 Real estate owned 14,237 19,226 Other assets 42,987 41,013 Total assets $1,975,677 1,971,298 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand $93,496 96,034 Regular savings and NOW accounts 911,629 970,407 Money market deposit accounts 92,965 110,630 Certificates of deposit (in denominations of $100,000 or more) 62,511 42,358 Other time accounts 629,230 574,803 Total deposits 1,789,831 1,794,232 Short-term borrowings 12,713 18,323 Accrued expenses and other liabilities 30,300 26,113 Long-term debt 3,550 2,750 Total liabilities 1,836,394 1,841,418 Commitments and contingencies Shareholders' equity: Capital stock; $1 par value. Shares authorized 25,000,000; 15,018,448 and 13,588,044 shares issued at December 31, 1994 and 1993, respectively 15,018 13,588 Surplus 118,352 91,955 Undivided profits 6,948 25,331 Net unrealized loss on securities available for sale (41) -- Treasury stock; 401,022 and 364,566 shares, at cost, at December 31, 1994 and 1993, respectively (994) (994) Total shareholders' equity 139,283 129,880 Total liabilities and shareholders' equity $1,975,677 1,971,298 See accompanying notes to consolidated financial statements.
Consolidated Statements of Changes in Shareholders' Equity (dollars in thousands, except per share data)
Three Years Ended December 31, 1994 Net Unrealized Loss on Securities Capital Undivided Available Treasury Stock Surplus Profits For Sale Stock Beginning balance, January 1, 1992 $5,378 98,749 7,999 -- (1,023) Net income-1992 -- -- 17,503 -- -- Cash dividend declared, $.62 per share -- -- (8,936) -- -- Stock options exercised, 38,621 shares 39 720 -- -- -- 5 for 4 stock split (1,354,223 shares) 1,354 (1,354) -- -- -- Ending balance, December 31, 1992 6,771 98,115 16,566 -- (1,023) Net income-1993 -- -- 20,325 -- -- Cash dividend declared, $.80 per share -- -- (11,560) -- -- Stock options exercised, 23,919 share 24 444 -- -- -- Sale of 5,300 treasury shares to benefit plans -- 189 -- -- 29 2 for 1 stock split (6,793,022 shares) 6,793 (6,793) -- -- -- Ending balance, December 31, 1993 13,588 91,955 25,331 -- (994) Net income-1994 -- -- 22,888 -- -- Cash dividend declared, $.98 per share -- -- (14,310) -- -- Stock options exercised, 65,282 shares 65 801 -- -- -- 10% stock dividend 1,365,122 shares 1,365 25,596 (26,961) -- -- Net unrealized loss on securities available for sale -- -- -- (41) -- Ending balance, December 31, 1994 $15,018 118,352 6,948 (41) (994) Per share data adjusted for a 10% stock dividend in October 1994, a 2 for 1 stock split in November 1993, and a 5 for 4 stock split in November 1992. See accompanying notes to consolidated financial statements.
Consolidated Statements of Cash Flows (in thousands)
For the Years Ended December 31, 1994 1993 1992 Increase (decrease) in cash and cash equivalents Cash flows from operating activities: Net income before change in accounting principle $ 22,888 23,620 17,503 Change in accounting principle -- (3,295) -- Net income 22,888 20,325 17,503 Adjustments to reconcile net income to net cash (used in)/provided by operating activities: Depreciation and amortization 2,749 2,373 2,245 Provision for loan losses 8,056 11,576 12,693 Amortization of goodwill -- -- 880 Provision for deferred tax expense (benefit) (2,981) 46 (4,364) Net (gain) loss on sale of securities 8,877 (6,239) (2,939) Purchase of trading securities -- (1,940) -- (Increase) decrease in taxes receivable (1,003) (1,505) 4,066 Decrease in interest receivable 488 3,345 1,939 Increase (decrease) in interest payable 318 (4,881) (985) (Increase) decrease in other assets 1,551 (9,066) 6,244 Increase (decrease) in accrued expenses 3,154 3,354 (7,010) Total adjustments 21,209 (2,937) 12,769 Net cash provided by operating activities 44,097 17,388 30,272 Cash flows from investing activities: Proceeds from sales of securities available for sale 1,015,688 99,475 -- Proceeds from maturities of securities available for sale 42,558 -- -- Purchase of securities available for sale (770,617) (153,596) -- Proceeds from sales of investment securities -- 1,877 107,639 Proceeds from maturities of investment securities 80,717 229,288 299,559 Purchase of investment securities (182,981) (159,540) (500,144) Net increase in loans (99,396) (37,769) (19,506) Proceeds from sales of real estate owned 9,109 6,091 3,127 Capital expenditures (1,733) (2,210) (4,415) Net cash provided by/(used in) investing activities 93,345 (16,384) (113,740) Cash flows from financing activities: Net increase (decrease) in deposits (4,401) 22,926 203,226 Net decrease in short-term borrowing (5,610) (2,526) (18,098) Repayment of long-term debt -- (5,000) -- Proceeds from issuance of long-term debt 800 2,750 -- Proceeds from issuance of common stock 866 468 759 Proceeds from sale of treasury stock -- 218 -- Dividends paid (13,595) (10,888) (8,394) Net cash provided by/(used in) financing activities (21,940) 7,948 177,493 Net increase in cash and cash equivalents 115,502 8,952 94,025 Cash and cash equivalents at beginning of year 199,977 191,025 97,000 Cash and cash equivalents at end of year $ 315,479 199,977 191,025 Supplemental disclosure of cash flow information: Interest paid $ 60,380 66,500 77,386 Income taxes paid 16,624 8,554 5,873 Reclassification of investment securities to securities available for sale upon adoption of Statement 115 398,454 -- -- Transfer of investment securities to/(from) securities available for sale (213,199) 60,055 120,675 Transfer of loans to real estate owned 4,120 1,254 11,563 Increase in dividends payable 715 672 542 Reclassification of trading securities to securities available for sale upon adoption of Statement 115 2,106 -- -- Unrealized gain on securities available for sale on January 1, 1994 14,037 -- -- See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements (1) Summary of Significant Accounting Policies Basis of Presentation The accounting and financial reporting policies of TrustCo Bank Corp NY (Company or TrustCo) and Trustco Bank, National Association (Bank or Trustco) conform to general practices within the banking industry and are in accordance with generally accepted accounting principles. A description of the more significant policies follows. The Bank has converted to a national banking association from the previous charter as a state banking association. Upon conversion, the Bank changed its name to TRUSTCO BANK, NATIONAL ASSOCIATION. The conversion was finalized during the first quarter of 1995 and will have no effect on the Bank's operations. Consolidation The consolidated financial statements of the Company include the accounts of the subsidiaries after elimination of all significant intercompany accounts and transactions. Securities Available for Sale Securities available for sale are carried at market value (for 1994) and lower of cost or market (for 1993) with any unrealized appreciation or depreciation of value, net of tax, (for 1994) included as an element of the capital accounts. Management maintains an available for sale portfolio in order to provide maximum flexibility in future balance sheet management. The designation of available for sale is made at the time of purchase based upon management's intent to hold the securities for an indefinite period of time. These securities, however, would be available for sale in response to changes in market interest rates, related changes in liquidity needs or changes in the availability of and yield on alternative investments. Unrealized losses on securities that reflect a decline in value which is other than temporary, if any, are charged to income. Nonmarketable equity securities (principally stock of the Federal Reserve Bank and the Federal Home Loan Bank) are included in securities available for sale at cost since there is no readily available market value. Gains and losses on the sale of securities available for sale are based on the amortized cost of the specific security sold. Investment Securities Securities classified as investment securities are held to maturity to meet longer term investment objectives, including yield and liquidity purposes. At the time of purchase, securities are identified as held for investment based upon the Company's intention and ability to hold the securities to maturity. Investment securities are carried at cost, adjusted for amortization of premium and accretion of discounts on a method that equates to the level yield. Unrealized losses on securities that reflect a decline in value which is other than temporary, if any, are charged to income. Loans Loans are carried at the principal amount outstanding net of unearned income and unamortized loan fees and costs, which are amortized into income over the applicable loan period. Non-performing loans include non-accrual loans, restructured loans and loans which are 90 days or more past due and still accruing interest. Generally, loans are placed on non-accrual status, either due to the delinquency status of principal and/or interest payments, or a judgment by management that, although payments of principal and/or interest are current such action is prudent. Future payments received on non-performing loans are recorded as interest income or principal reductions based upon management's ultimate expectation for collections. Allowance for Loan Losses An allowance for loan losses is maintained at a level considered adequate by management to provide for potential loan losses based on analysis of the credit risk of the loan portfolio including a review of past loan experience, current economic conditions and the underlying collateral value. The allowance is increased by provisions charged against income and reduced by net charge-offs. In addition, various regulatory agencies as an integral part of their examination process, periodically review the Company's allowance for loan losses. Such agencies may require the Company to recognize additions to the allowances based on their judgments of information available to them at the time of their examination. Bank Premises and Equipment Premises and equipment are stated at cost less accumulated depreciation and amortization computed on either the straightline or accelerated methods over the remaining useful lives of the assets. Real Estate Owned Real estate owned includes assets received from foreclosures and in-substance foreclosures. A loan is considered an in-substance foreclosure when little or no equity of the borrower is present in the underlying collateral, considering the current fair value of the collateral; proceeds for repayment of the loan can be expected to come only from the operation or sale of the collateral; control of the collateral is effectively abandoned, or because of the current financial condition it is doubtful that equity will be rebuilt or the loan repaid in the foreseeable future. Foreclosed assets, including in-substance foreclosures, held for sale are recorded on an individual basis at the lower of (1) fair value minus estimated costs to sell or (2) "cost" (defined as the fair value at initial foreclosure). When a property is acquired or identified as in-substance foreclosure, the excess of the loan balance over fair value is charged to the allowance for loan losses. Subsequent write downs are included in other noninterest expense. Income Taxes Effective January 1, 1993, the Company adopted the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" and has chosen not to restate prior year financial statements. Under the asset and liability method of Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Dividend Restrictions Banking regulations restrict the amount of cash dividends which may be paid during a year by the Bank to the Parent Company without the written consent of the appropriate bank regulatory agency. Based on these restrictions, the Bank could pay $29.8 million plus 1995 net profits. For all practical purposes, TrustCo could not declare dividends to shareholders materially in excess of the aggregate amount of dividends that could be paid by the Bank. Pension Plan The Company has a defined benefit pension plan covering substantially all of its employees. The benefits are based on years of service and the employee's compensation. The cost of this program is being funded currently. Reclassification of Prior Year Statements It is the Company's policy to reclassify prior year financial statements to conform to the current year presentation. (2) Balances at Other Banks The Bank is required to maintain certain reserves of vault cash and/or deposits with the Federal Reserve Bank. The amount of this reserve requirement, included in cash and due from banks, was approximately $14,576,000 and $15,986,000 at December 31, 1994 and 1993, respectively. (3) Securities Available for Sale The amortized cost and approximate market value of the securities available for sale are as follows: (in thousands)
At December 31, 1994 Gross Gross Approximate Amortized Unrealized Unrealized Market Cost Gains Losses Value U.S. Treasuries and agencies $102,947 32 60 102,919 Other 14,581 -- 42 14,539 Total securities available for sale $117,528 32 102 117,458
(in thousands)
At December 31, 1993 Gross Gross Approximate Amortized Unrealized Unrealized Market Cost Gains Losses Value U.S. Treasuries and agencies $230,563 7,289 1,381 236,471 Other 10,153 1,435 -- 11,588 Total securities available for sale $240,716 8,724 1,381 248,059
The anticipated maturity schedule of amortized cost and market value of securities available for sale at December 31, 1994, follows:
(in thousands) Approximate Amortized Market Cost Value Due in one year or less $000,275 276 Due after one year through five years 102,697 102,668 Due after five years through ten years 650 650 Due after ten years 13,906 13,864 $117,528 117,458
Proceeds from sales of securities available for sale during 1994 and 1993 were approximately $1,015,688,000, and $99,475,000, respectively. During 1992 there were no sales of securities available for sale. The gross realized gains on sales of securities available for sale in 1994 and 1993 were approximately $5,799,000 and $5,867,000, respectively. Gross realized losses on the sales of securities available for sale in 1994 and 1993 were $14,682,000 and $2,000, respectively. The amortized cost of securities available for sale that have been pledged to secure public deposits and for other purposes required by law amounted to $44,430,000, and $41,219,000 at December 31, 1994 and 1993, respectively. (4) Investment Securities The book value and approximate market value of the investment securities are as follows: (in thousands)
At December 31, 1994 Gross Gross Approximate Book Unrealized Unrealized Market Value Gains Losses Value U.S. Treasuries and agencies $145,542 376 4,801 141,117 States and political subdivisions 44,222 125 520 43,827 Mortgage-backed securities 143,082 280 8,460 134,902 Other 15,012 -- 403 14,609 Total investment securities $347,858 781 14,184 334,455
(in thousands)
At December 31, 1993 Gross Gross Approximate Book Unrealized Unrealized Market Value Gains Losses Value U.S. Treasuries and agencies $228,157 8,851 -- 237,008 States and political subdivisions 23,017 458 4 23,471 Mortgage-backed securities 138,376 4,524 781 142,119 Other 27,256 1,465 21 28,700 Total investment securities $416,806 15,298 806 431,298
The anticipated maturity schedule of book values and market values of investment securities at December 31, 1994 follows:
(in thousands) Approximate Book Market Value Value Due in one year or less $ 12,458 12,462 Due after one year through five years 48,797 47,378 Due after five years through ten years 162,659 153,915 Due after ten years 123,944 120,700 $347,858 334,455
The maturity of mortgage-backed securities is based on the security's average life. There were no sales of investment securities during 1994. Proceeds from sales of investment securities during 1993 and 1992 were $1,877,000 and $107,639,000, respectively. Gross realized gains on sales of equity instruments in 1993 were approximately $229,000.The gross realized gains on sales and calls of investment securities in 1992 were $3,346,000. Gross realized losses on sales of equity instruments in 1993 were approximately $21,000. Gross realized losses on the sales and calls of debt instruments for 1992 were $407,000. The book value of investment securities pledged to secure public deposits and for other purposes required by law amounted to $135,050,000, and $85,634,000 at December 31, 1994 and 1993, respectively. The Company adopted Statement of Financial Accounting Standards No. 115 "Accounting for Certain Investments in Debt and Equity Securities" as of January 1, 1994. The Company classified certain of the investment securities as being available for sale and reclassified these balances to a separate line on the consolidated statement of condition. Securities included in the available for sale category may be sold in response to changes in market interest rates and related changes in a security's prepayment risk, needs for liquidity, changes in the availability of and the yield on alternative investments or changes in funding sources and terms. These securities are recorded at market value with any net unrealized gains (losses) shown as a component of shareholders' equity. In addition, the Company has identified a portfolio of investment securities which are being held to maturity. In accordance with Statement 115 these securities cannot be sold except in very limited circumstances as described in the Statement. (5) Loans and Allowance for Loan Losses A summary of loans by category is as follows:
(in thousands) At December 31, 1994 1993 Commercial $230,063 218,669 Real estate Construction 12,935 14,172 Residential mortgage loans 668,604 596,935 Home equity line of credit 207,313 202,018 Installment loans 35,686 31,212 Total loans 1,154,601 1,063,006 Less: Unearned income 1,969 2,358 Allowance for loan losses 38,851 34,087 Net loans $1,113,781 1,026,561
At December 31, 1994 and 1993, loans to executive officers, directors and to associates of such persons aggregated $7,641,000 and $11,163,000, respectively. During 1994, new loans of $4,638,000 were made and repayments of loans totalled $8,160,000. In the opinion of management, such loans were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions. These loans do not involve more than normal risk of collectibility or present other unfavorable features. TrustCo primarily lends in the Capital District region of New York State and in the geographic territory surrounding its borders. Although the loan portfolio is diversified, a substantial portion of its debtors ability to repay is dependent upon the economic conditions existing in New York State. The following table sets forth the information with regard to non-performing loans:
(in thousands) At December 31, 1994 1993 1992 Loans on non-accrual status $1,058 24 970 Loans contractually past due 90 days or more and still accruing interest 803 1,853 6,438 Restructured loans 910 -- -- Total non-performing loans $2,771 1,877 7,408
Interest on non-accrual and restructured loans of $222 thousand, $1 thousand and $79 thousand, would have been earned in accordance with the original contractual terms of the loans in 1994, 1993 and 1992, respectively. Approximately $35 thousand, $1 thousand and $61 thousand of interest on non-accrual and restructured loans was collected and recognized as income in 1994, 1993 and 1992, respectively. There are no commitments to extend further credit on non-accrual or restructured loans. Transactions in the allowance for loan losses accounts are summarized as follows:
(in thousands) For the years ended December 31, 1994 1993 1992 Balance at beginning of year $34,087 26,919 19,049 Provision for loan losses 8,056 11,576 12,693 Loans charged off (4,824) (6,741) (5,997) Recoveries on loans previously charged off 1,532 2,333 1,174 Balance at year end $38,851 34,087 26,919
On May 31, 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan." Statement 114, which is effective for financial statements issued for fiscal years beginning after December 15, 1994, prescribes recognition criteria for loan impairment and measurement methods for certain impaired loans and loans whose terms are modified in troubled-debt restructurings. Statement 114 will be adopted effective January 1, 1995. At that time, a significant amount of the assets currently identified as in- substance foreclosures will be reclassified to loans, and, for the most part, included in the category of impaired loans. Other than this reclassification of the balances of in-substance foreclosure loans, the adoption of Statement 114 is not anticipated to have a material impact on the results of operations of the Company. There are $8.4 million and $11.4 million of loans pledged for various purposes at December 31, 1994 and 1993, respectively. (6) Bank Premises and Equipment A summary of premises and equipment at December 31, 1994 and 1993 follows:
(in thousands) 1994 1993 Land $3,958 4,268 Buildings 22,155 21,361 Furniture, fixtures and equipment 15,466 14,849 Leasehold improvements 2,936 2,783 44,515 43,261 Accumulated depreciation and amortization (20,638) (18,368) Total $23,877 24,893
Depreciation and amortization expense approximated $2,749,000, $2,373,000 and $2,245,000 for the years 1994, 1993 and 1992, respectively. Occupancy expense of Bank premises included rental expense of $1,053,000, $1,388,000 and $1,430,000 for the years 1994, 1993 and 1992, respectively. (7) Short-term Borrowings Short-term borrowings, consisting primarily of Securities sold under agreements to repurchase with maturities of generally less than ninety days, was as follows:
(dollars in thousands) 1994 1993 Amount outstanding at December 31 $12,713 18,323 Maximum amount outstanding at any month end 21,746 20,405 Average amount outstanding 18,129 17,447 Weighted average interest rate: For the year 2.54% 2.18 As of year-end 3.36 2.11
The Company has available $202.3 million of unused lines of credit at December 31, 1994. (8) Income Taxes A summary of income tax expense (benefit) included in the consolidated statements of income follows:
(in thousands) For the years ended December 31, 1994 1993 1992 Current tax expense: Federal $12,412 10,372 11,103 State 3,209 2,098 2,586 Total current tax expense 15,621 12,470 13,689 Deferred expense (benefit) (2,981) 46 (4,364) Total consolidated provision for income taxes $12,640 12,516 9,325
Prior to 1993, the Company accounted for income taxes under APB11. Under APB 11, deferred tax expense (benefit) resulted from timing differences in the recognition of revenue and expense for tax and financial statement purposes. Effective January 1, 1993, the Company adopted Statement 109. The effect of adoption was not material to the financial statements. The sources of these differences and the tax effect for 1992 follows:
(in thousands) 1992 Provision for loan losses more than amount deducted for tax purposes $(3,213) Depreciation expense less than amount deducted for tax purposes 2 Other expense not utilized for tax purposes (102) Financial statement interest income greater than taxable interest income 191 Financial statement interest expense greater than taxable interest expense (186) Bond accretion and security gains/losses currently reportable for tax purposes (1,056) Total deferred tax benefit $(4,364)
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 1994 and 1993 is presented below.
(in thousands) December 31, 1994 Deductible Taxable temporary temporary differences differences Bond accounting $ 107 -- Benefits and deferred remuneration 2,326 -- Deferred loan fees, net 1,391 -- Difference in reporting the provision for loan losses, net 18,301 -- Other income or expense not utilized for tax purposes 2,174 -- Other items 1,042 -- Total 25,341 -- Valuation reserve (4,706) -- Total after valuation reserve 20,635 -- Net deferred tax asset at December 31,1994 20,635 Net deferred tax asset at December 31,1993 17,654 Deferred tax expense/(benefit) for 1994 $ (2,981)
(in thousands) December 31, 1993 Deductible Taxable temporary temporary differences differences Bond accounting $ -- 126 Benefits and deferred remuneration 1,883 -- Deferred loan fees, net 1,992 -- Difference in reporting the provision for loan losses, net 17,039 -- Other income or expense not utilized for tax purposes 1,966 -- Other items 838 -- Total 23,718 126 Valuation reserve (5,938) -- Total after valuation reserve 17,780 126 Net deferred tax asset at December 31, 1993 17,654 Net deferred tax asset at January 1, 1993 17,700 Deferred tax expense/(benefit) for 1993 $ 46
The valuation allowance as established by management takes into consideration the historical level of taxable income in the prior years as well as the time period that the items giving rise to the deferred tax assets turn around. The effective tax rates differ from the statutory federal income tax rate. The reasons for these differences are as follows:
1994 1993 1992 Statutory federal income tax rate 35.0% 35.0 34.0 Increase (decrease) in taxes resulting from: Tax exempt income (1.9) (2.2) (3.9) State income tax, net of federal tax benefit 4.9 4.0 3.6 Goodwill amortization -- -- 1.1 Effect of (increase) decrease in tax rate on deferred tax benefit 1.1 (1.4) -- Reduction in valuation reserve (3.5) -- -- Other items -- (0.8) -- Effective income tax rate 35.6% 34.6 34.8
In addition to the deferred tax asset described in the preceding table, the Company also has a deferred tax asset of $29,000 relating to the unrealized loss on securities available for sale. (9) Employee Benefits The Company maintains a trusteed non-contributory pension plan covering employees that have completed one year of employment and 1,000 hours. The benefits are based on the sum of (a) a benefit equal to a prior service benefit plus the average of the employees' highest five consecutive years compensation in the ten years preceding retirement multiplied by a percentage of service after a specified date plus (b) a benefit based upon career average compensation. The amounts contributed to the plan are determined annually on the basis of (a) the maximum amount that can be deducted for federal income tax purposes or (b) the amount certified by a consulting actuary as necessary to avoid an accumulated funding deficiency as defined by the Employee Retirement Income Security Act of 1974. Contributions are intended to provide not only for benefits attributed to service to date but also for those expected to be earned in the future. Assets of the plan are primarily invested in common stock and fixed income common funds administered by the Bank. The following table sets forth the plans' funded status and amounts recognized in the Company's consolidated statements of condition at December 31, 1994 and 1993: Actuarial Present Value of Benefit Obligations:
(in thousands) 1994 1993 Accumulated benefit obligation, including vested benefits of $12,768 and $12,409 in 1994 and 1993, respectively $(12,946) (12,555) Projected benefit obligation for service rendered to date (14,093) (13,570) Plan assets at fair value 18,575 19,554 Plan assets in excess of projected benefit obligation 4,482 5,984 Unrecognized net gain from past experience different from that assumed and effects of changes in assumptions (1,825) (3,420) Unrecognized prior service cost (511) (395) Unrecognized net asset at transition being recognized over 15 years (884) (1,032) Prepaid pension expense $ 1,262 1,137
Net Pension Benefit for 1994, 1993 and 1992 Included the Following Components:
(in thousands) 1994 1993 1992 Service cost-benefits earned during the period $ 518 501 529 Interest cost on projected benefit obligation 874 811 808 Actual return on plan assets (39) (1,064) (573) Net amortization and deferral (1,478) (500) (1,221) Net periodic pension benefit $ (125) (252) (457)
The actuarial assumptions used in determining the actuarial present value of projected benefit obligations and the net pension costs were as follows:
1994 1993 1992 Weighted average discount rate 6.75% 6.75 7.50 Rate of increase in future compensation 5.00 5.00 6.00 Expected long-term rate of return on assets 6.50 6.50 7.00
The Company also has an unfunded defined contribution supplementary pension plan under which additional retirement benefits are accrued for eligible senior and executive officers. The expense recorded for this plan was $1,780,000, $489,000 and $392,000 in 1994, 1993 and 1992, respectively. The Company provides a profit-sharing plan for substantially all employees. The expense of this plan, which is based on management discretion as defined in the plan, amounted to $1,230,000, in 1994, $1,470,000 in 1993, and $1,344,000 in 1992. The Company also has an executive incentive plan. The expense of this plan is based on the Bank's performance and estimated distributions to participants are accrued during the year and generally paid in the following year. The expense recorded for this plan was $1,291,000, $419,000 and $393,000 in 1994, 1993 and 1992 respectively. Under the terms of the Company's Stock Option Plan the following table presents a summary of activity with respect to this plan:
Outstanding Exercisable options options Average Average option option Shares price Shares price Balance, January 1, 1992 598,924 $ 9.68 306,994 $ 7.65 New options awarded-1992 276,510 13.14 55,302 13.14 Cancelled options-1992 52,250 12.03 -- -- Exercised options-1992 106,207 7.14 106,207 7.14 Options became exercisable -- -- 63,296 7.65 Balance, December 31, 1992 716,977 11.22 319,385 9.60 New options awarded-1993 308,000 18.35 61,600 18.35 Cancelled options-1993 -- -- -- -- Exercised options-1993 48,569 8.87 48,569 8.87 Options became exercisable -- -- 114,784 9.60 Balance, December 31, 1993 976,408 12.35 447,200 11.61 New options awarded-1994 270,050 18.29 54,010 18.29 Cancelled options-1994 89,264 17.44 1,100 18.35 Exercised options-1994 71,601 12.11 71,601 12.11 Options became exercisable -- -- 161,041 11.61 Balance, December 31, 1994 1,085,593 $14.54 589,550 $12.81
Under the terms of the Directors' Stock Option Plan, 110,000 shares are reserved for director options. As of December 31, 1994, 34,100 options remain issued and outstanding with an average exercise price of $19.83. In December 1990, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." Statement 106 requires a calculation of the present value of expected benefits to be paid to employees after their retirement and an allocation of those benefits to the periods that employees render service to earn the benefits. The Company permits retirees under age 65 to participate in the Company's medical plan by paying the same premium as the active employees. At age 65, the Bank provides a Medicare Supplemental Program to retirees. Since these benefits are currently being provided, the Company adopted Statement 106 effective January 1, 1993, and has reported the cumulative effect of that change in the December 31, 1993 Consolidated Statement of Income. Accumulated postretirement benefit obligation at December 31, 1994 and 1993:
(in thousands) 1994 1993 Retirees $2,850 2,987 Fully eligible active plan participants 1,381 1,083 Other active plan participants 2,911 2,140 Accumulated postretirement benefit obligation $7,142 6,210 Plan assets, at fair value $6,358 6,618
Net periodic postretirement benefit cost for 1994 and 1993 includes the following components:
(in thousands) 1994 1993 Service cost $362 357 Interest cost 462 389 Return on plan assets (429) (279) Transition obligation -- 5,260 Net period postretirement benefit cost $395 5,727
Expense for 1993 related to the transition obligation was $5.3 million, with an after-tax cost of $3.3 million. Periodic benefit cost amounted to $467 thousand for 1993. The Company funded the plan in full through the use of a benefit trust during the first quarter of 1993. As a result, periodic benefit costs in future years are expected to decrease. Assets of the plan are primarily invested in common stock and fixed income common funds administered by the Bank. The trust holding the plan assets is subject to federal income taxes at a 35.0 percent tax rate. The expected long term rate of return on plan assets, after estimated income taxes was 4.2 percent and 3.3 percent for the years ended December 31, 1994 and 1993, respectively. For measurement purposes, a 12 percent annual rate of increase in the per capita cost of covered benefits (i.e., health care cost trend rate) was assumed for 1994; the rate was assumed to decrease gradually to 5.75 percent by the year 2002 and remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. To illustrate, increasing the assumed health care cost trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation as of December 31, 1994, by approximately $1.4 million, and the aggregate of the service and the interest cost components of net periodic postretirement benefit cost for the year ended December 31, 1994, by approximately $274 thousand. The weighted-average discount rate used in determining the accumulated postretirement benefit obligation was 6.75 percent at December 31, 1994 and 1993. (10) Lease Commitments and Contingent Liabilities (A) LEASES The Bank leases certain banking premises. These leases are accounted for as operating leases with minimum rental commitments in the amounts presented below. The majority of these leases contain options to renew.
(in thousands) 1995 $ 853 1996 888 1997 833 1998 766 1999 704 2000 and after 3,139 $7,183
(B) LITIGATION Existing litigation arising in the normal course of business is not expected to result in any material loss to the Company. (11) Off-Balance-Sheet Financing Loan commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require a fee. Commitments sometimes expire without being drawn upon, therefore the total commitment amounts do not necessarily represent future cash requirements. These arrangements have credit risk essentially the same as that involved in extending loans to customers and are subject to the Bank's normal credit policies including obtaining collateral. The Bank's exposure to credit loss for loan commitments including unused lines of credit outstanding at December 31, 1994 and 1993 was $217.3 million and $200.9 million, respectively. Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. These arrangements have credit risk essentially the same as that involved in extending loans to customers and are subject to the Bank's normal credit policies including the obtaining of collateral. The Bank's exposure to credit loss for standby letters of credit outstanding at December 31, 1994 and 1993 was $20.8 million and $21.4 million, respectively. No losses are anticipated as a result of loan commitments or standby letters of credit. (12) Fair Value of Financial Instruments The fair values shown below represent management's estimates of values at which the various types of financial instruments could be exchanged in transactions between willing, unrelated parties. They do not necessarily represent amounts that would be received or paid in actual trades of specific financial instruments.
(in thousands) As of December 31 , 1994 Carrying Fair value value Financial assets: Cash and cash equivalents $ 315,479 315,479 Securities available for sale 117,458 117,458 Investment securities 347,858 334,455 Loans 1,113,781 1,098,637 Accrued interest receivable 14,690 14,690 Financial liabilities: Noninterest-bearing deposits 93,496 93,496 Interest-bearing deposits 1,696,335 1,696,335 Borrowings 16,263 16,263 Accrued interest payable 1,843 1,843
(in thousands) As of December 31 , 1993 Carrying Fair value value Financial assets: Cash and cash equivalents $ 199,977 199,977 Securities available for sale 240,716 248,059 Investment securities 416,806 431,298 Loans 1,026,561 1,089,897 Accrued interest receivable 15,178 15,178 Financial liabilities: Noninterest-bearing deposits 96,034 96,034 Interest-bearing deposits 1,698,198 1,713,732 Borrowings 21,073 21,073 Accrued interest payable 1,525 1,525
The specific estimation methods and assumptions used can have a substantial impact on the resulting fair values ascribed to financial instruments. Following is a brief summary of the significant methods and assumptions used in the above table: Cash and Cash Equivalents The carrying values of these financial instruments approximates fair values. Securities Fair values for all securities portfolios are based upon quoted market prices, where available. The carrying value of certain local, unrated municipal obligations was used as an approximation of fair value. Loans The fair values of all loans are estimated using discounted cash flow analyses with discount rates equal to the interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Deposit Liabilities The fair values disclosed for noninterest-bearing deposits, NOW accounts, savings accounts and money market accounts are, by definition, equal to the amount payable on demand at the balance sheet date. The carrying value of all variable rate certificates of deposit is assumed to approximate fair value. The fair value of all other fixed rate certificates of deposit are estimated using discounted cash flow analyses with discount rates equal to the interest rates currently being offered on certificates of similar size and remaining maturity. At December 31, 1994, the fair value of fixed rate certificates of deposit are assumed to equal carrying value due to the interest rate environment at year-end 1994. Borrowings and Other Financial Instruments The fair value of all borrowings and other financial instruments is assumed to be the carrying value. Financial Instruments with Off-Balance Sheet Risk The Company is a party to financial instruments with off-balance sheet risk. Such financial instruments consist of commitments to extend financing and letters of credit. If the commitments are exercised by the prospective borrowers, these financial instruments will become interest-earning assets of the Company. If the commitments expire, the Company retains any fees paid by the prospective borrower. The fair value of commitments is estimated based upon fees currently charged to enter into similar agreements, taking into consideration the remaining terms of the agreements and the present credit-worthiness of the borrower. For fixed rate commitments, the fair value estimation takes into consideration an interest rate risk factor. The fair value of these off-balance sheet items at December 31, 1994 and 1993 approximates the recorded amounts of the related fees, which are considered to be immaterial. The Company has no derivative investment products at year-end 1994 and 1993, nor has the Company ever invested in such investment vehicles. Therefore, the disclosures as required by Statement of Financial Accounting Standards No. 119 "Disclosures about Derivative Financial Instruments and Fair Value of Financial Instruments" is not presented except as it relates to fair value disclosures in this footnote. (13) Parent Company Only The following statements pertain to TrustCo Bank Corp NY (Parent Company): Statements of Income
(in thousands) Years Ended December 31, 1994 1993 1992 Income: Dividends and interest from subsidiaries $14,820 11,061 11,067 Gain on sale of securities 133 374 -- Income from other investments 66 72 43 Total income 15,019 11,507 11,110 Expense: Interest on long-term debt -- 343 470 Operating supplies 129 129 151 Professional services 145 128 187 Miscellaneous expense 48 33 14 Total expense 322 633 822 Income before income taxes and undistributed net income of subsidiaries 14,697 10,874 10,288 Income tax expense (benefit) 1 52 (153) Income before equity in undistributed net income of subsidiaries 14,696 10,822 10,441 Equity in undistributed net income of subsidiaries 8,192 9,503 7,062 Net income $22,888 20,325 17,503
Statements of Condition
(in thousands) December 31, 1994 1993 Assets: Cash in subsidiary bank $ 8,229 6,425 Trading securities -- 2,106 Notes and receivables from subsidiaries -- 10 Investments in subsidiaries at equity 132,300 124,124 Securities available for sale 2,300 37 Other receivables . 126 101 Bank premises and equipment 389 389 Total assets $143,344 133,192 Liabilities and shareholders' equity: Accrued expenses and other liabilities $ 4,061 3,312 Total liabilities 4,061 3,312 Shareholders' equity 139,283 129,880 Total liabilities and shareholders' equity $143,344 133,192
Statements of Cash Flows
(in thousands) For the Years Ended December 31, 1994 1993 1992 Increase (decrease) in cash and cash equivalents: Cash flows from operating activities: Net income $ 22,888 20,325 17,503 Adjustments to reconcile net income to net cash provided by operating activities: Undistributed income of subsidiaries (8,192) (9,503) (7,062) Decrease in receivable from subsidiary -- 54 -- Gain on sales of securities (133) (374) -- Decrease in taxes and other receivables 1 53 437 Increase (decrease) in accrued expenses 34 (120) (136) Total adjustments (8,290) (9,890) (6,761) Net cash provided by operating activities 14,598 10,435 10,742 Cash flows from investing activities: Proceeds from sales or maturities of investment securities -- 1,877 -- Proceeds from sale of securities available for sale 1,603 -- -- Purchase of trading securities -- (1,940) -- Purchase of investment securities (1,668) (8) (48) Net decrease in short term loaned funds to subsidiary -- 2,500 -- Increase in investment in subsidiary -- (1) -- Net cash provided by (used in) investing activities (65) 2,428 (48) Cash flows from financing activities: Repayment of long-term debt -- (5,000) -- Proceeds from issuance of common stock 866 468 759 Dividends paid (13,595) (10,888) (8,394) Sales of treasury stock -- 218 -- Net cash used in financing activities (12,729) (15,202) (7,635) Net increase (decrease) in cash and cash equivalents 1,804 (2,339) 3,059 Cash and cash equivalents at beginning of year 6,425 8,764 5,705 Cash and cash equivalents at end of year $ 8,229 6,425 8,764 Supplemental disclosure of cash flow information: Increase in dividends payable $ 715 672 542 Reclassification of trading securities to securities available for sale upon adoption of Statement 115 2,106 -- -- Net unrealized loss on securities available for sale at year end 41 -- --
TrustCo Bank Corp NY Officers and Board of Directors Officers PRESIDENT AND CHIEF EXECUTIVE OFFICER Robert A. McCormick VICE PRESIDENT AND CHIEF FINANCIAL OFFICER Robert T. Cushing VICE PRESIDENT Nancy A. McNamara SECRETARY William F. Terry Board of Directors Barton A. Andreoli President Towne Construction and Paving Co. Lionel O. Barthold Vice-Chairman, Power Technologies, Inc. (Consulting Engineers) M. Norman Brickman President, D. Brickman, Inc. (Wholesale Fruit and Produce) Charles W. Carl, Jr. Retired, Former President, The Carl Company (Department Store) Robert A. McCormick President and Chief Executive Officer Trustco Bank Nancy A. McNamara Senior Vice President Trustco Bank Dr. John S. Morris President Emeritus, Union College and Former Chancellor, Union University James H. Murphy, D.D.S. Orthodontist Richard J. Murray, Jr. President, R.J. Murray Co., Inc. (Air Conditioning Distributors) Kenneth C. Petersen President Schenectady International, Inc. William J. Purdy President Welbourne & Purdy Realty, Inc. William F. Terry Senior Vice President and Secretary Trustco Bank Philip J. Thompson Retired, Former Vice President, and Director New York Telephone Directors of TrustCo Bank Corp NY are also Directors of Trustco Bank HONORARY DIRECTORS Donald E. Craig Dr. Caryl P. Haskins Bernard J. King H. Gladstone McKeon William H. Milton, III Daniel J. Rourke, M.D. Anthony M. Salerno Edwin O. Salisbury Harry E. Whittingham, Jr. Henry D. Wright Trustco Bank Officers PRESIDENT AND CHIEF EXECUTIVE OFFICER Robert A. McCormick SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER Robert T. Cushing SENIOR VICE PRESIDENT Nancy A. McNamara SENIOR VICE PRESIDENT Ralph A. Pidgeon SENIOR VICE PRESIDENT AND SECRETARY William F. Terry AUDITOR John C. Fay ACCOUNTING/FINANCE, DATA PROCESSING, GENERAL SERVICES Senior Vice President and Chief Financial Officer Robert T. Cushing ACCOUNTING/FINANCE Administrative Vice President Linda C. Christensen DATA PROCESSING Administrative Vice President William H. Milton Senior Information Services Officer Daneille M. Eddy GENERAL SERVICES Administrative Vice President Peter A. Zakriski HUMAN RESOURCES, LEGAL COUNSEL, LOAN DIVISION, MANAGEMENT INFORMATION SERVICES, QUALITY CONTROL Senior Vice President Nancy A. McNamara HUMAN RESOURCES, MANAGEMENT INFORMATION SERVICES, QUALITY CONTROL Vice President Ann M. Noble Management Information Officer Lynn D. Hackler LEGAL COUNSEL Vice President Henry C. Collins Vice President George W. Wickswat LOAN DIVISION COMMERCIAL LOANS Administrative Vice President Donald J. Csaposs Senior Commercial Loan Officer John H. Cunningham Commercial Loan Officers Timothy C. Larson Richard G. Roberts MORTGAGE LOANS Senior Mortgage Officer Elinore J. Vine BRANCHES, INSTALLMENT LOANS/CREDIT CARDS, RETIREMENT/GOVERNMENT ACCOUNTS Senior Vice President Ralph A. Pidgeon BRANCH OFFICERS Richard E. Bailey Thomas H. Lauster INSTALLMENT LOANS/CREDIT CARDS Senior Installment Loan Officer Thomas M. Poitras BANK OPERATIONS, MARKETING/COMMUNITY RELATIONS, TRUST DEPARTMENT Senior Vice President William F. Terry BANK OPERATIONS Administrative Vice President James D. McLoughlin MARKETING/COMMUNITY RELATIONS Vice President Madeline S. Busch TRUST DEPARTMENT Administrative Vice President Carroll E. Winch Vice President and Senior Trust Officer James Niland Vice President and Senior Trust Officer Matthew G. Waschull Trust Officer John P. Fulgan Investment Officer Robert Scribner Branch Locations Altamont Ave. Office 1400 Altamont Ave. Schenectady Telephone: 356-1317 Altamont Ave. West Office 1900 Altamont Ave. Rotterdam Telephone: 355-1900 Bay Road Office 292 Bay Road Queensbury Telephone: 792-2691 Brandywine Office State St. at Brandywine Ave. Schenectady Telephone: 346-4295 Central Avenue Office 163 Central Ave. Albany Telephone: 426-7291 Clifton Park Office 1018 Route 146 Clifton Park Telephone: 371-8451 Clifton Country Road Office 7 Clifton Country Road Clifton Park Telephone: 371-5002 Colonie Office 1892 Central Ave. Colonie Plaza, Colonie Telephone: 456-0041 Delmar Office 167 Delaware Ave. Delmar Telephone: 439-9941 East Greenbush Office 501 Columbia Turnpike Rensselaer Telephone: 479-7233 Glens Falls Office 3 Warren Street Glens Falls Telephone: 798-8131 Greenwich Office 131 Main St. Greenwich Telephone: 692-2233 Guilderland Office 3900 Carman Road Schenectady Telephone: 355-4890 Halfmoon Office Country Dollar Plaza Halfmoon Telephone: 371-0593 Hoosick Falls Office 47 Main St. Hoosick Falls Telephone: 686-5352 Hudson Office 507 Warren St. Hudson Telephone: 828-9434 Hudson Falls Office 3376 Burgoyne Avenue Hudson Falls Telephone: 747-0886 Latham Office 1 Johnson Road Latham Telephone: 785-0761 Loudon Plaza Office 372 Northern Blvd. Albany Telephone: 462-6668 Madison Avenue Office 1084 Madison Ave. Albany Telephone: 489-4711 Main Office 320 State St. Schenectady Telephone: 377-3311 Malta Mall 43 Round Lake Road Ballston Lake Telephone: 899-1558 Mayfair Office Saratoga Road at Mayfair Glenville Telephone: 399-9121 Mont Pleasant Office Crane St. at Main Ave. Schenectady Telephone: 346-1267 New Scotland Office 301 New Scotland Ave. Albany Telephone: 438-7838 Newton Plaza Office 588 New Loudon Road Latham Telephone: 786-3687 Niskayuna-Woodlawn Office 3461 State St. Schenectady Telephone: 377-2264 Plaza Seven Office 1208 Troy-Schenectady Road Latham Telephone: 785-4744 Queensbury Office 33 Quaker Road Queensbury Telephone: 798-7226 Rotterdam Office Curry Road Shopping Ctr. Rotterdam Telephone: 355-8330 Rotterdam Square Office 2 Campbell Road Rotterdam Telephone: 377-2393 Route 9 Office-Latham 754 New Loudon Rd. Latham Telephone: 786-8816 Sheridan Plaza Office 1350 Gerling St. Schenectady Telephone: 377-8517 Shoppers' World Office Old Rte. 146 and Plank Rd. Clifton Park Telephone: 383-6851 State Farm Road Office 2050 Western Ave. Guilderland Telephone: 452-6913 State Street Office 112 State St. Albany Telephone: 436-9043 Stuyvesant Plaza Office Western Ave. at Fuller Road Albany Telephone: 489-2616 Tanners Main Office 345 Main Street Catskill Telephone: 943-2500 Tanners West Side Office 238 West Bridge St. Catskill Telephone: 943-5090 Troy Office 5th Ave. and State St. Troy Telephone: 274-5420 Union Street East Office 1700 Union St. Schenectady Telephone: 382-7511 Upper New Scotland Office 583 New Scotland Ave. Albany Telephone: 438-6611 Upper Union Street Office 1620 Union St. Schenectady Telephone: 374-4056 Wilton Mall Office Route 50 Saratoga Springs Telephone: 583-1716 Wolf Road Office 34 Wolf Road Albany Telephone: 458-7761 General Information ANNUAL MEETING Monday, May 15, 1995 12:00 Noon Glen Sanders Mansion One Glen Avenue Scotia, New York 12302 CORPORATE HEADQUARTERS 320 State Street Schenectady, New York 12305 (518-377-3311) DIVIDEND REINVESTMENT PLAN A Dividend Reinvestment Plan is available to shareholders of TrustCo Bank Corp NY. It provides for the reinvestment of cash dividends and optional cash payments to purchase additional shares of TrustCo stock. The Plan is free of administrative charges, and provides a convenient method of acquiring additional shares. Trustco Bank, our wholly owned bank subsidiary, acts as administrator for this service, and has designated Glens Falls National Bank and Trust Company to act as agent for shareholders in these transactions. Shareholders who want additional information may contact the TrustCo Shareholder Services Department (518-381-3699, ext. 1292). EQUAL OPPORTUNITY AT TRUSTCO Trustco Bank is an Affirmative Action Equal Opportunity Employer. FORM 10-K TrustCo Bank Corp NY will provide without charge a copy of its Form 10-K upon written request. Requests and related inquiries should be directed to William F. Terry, Secretary, TrustCo Bank Corp NY, P.O. Box 1082, Schenectady, New York 12301-1082. NASDAQ SYMBOL: TRST The Corporation's common stock is traded on the NASDAQ National Market System. SUBSIDIARIES: Trustco Bank, National Association Schenectady, New York Member FDIC ORE Subsidiary Corp. Schenectady, New York TRANSFER AGENT Trustco Bank Securities Department P.O. Box 380 Schenectady, New York 12301-0380 Exhibit 21 LIST OF SUBSIDIARIES OF TRUSTCO Trustco Bank, National Association.........Nationally chartered banking association ORE Subsidiary Corp........................New York corporation Exhibit 23 KPMG Peat Marwick LLP 74 North Pearl Street Albany, NY 12207 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors TrustCo Bank Corp NY: We consent to incorporation by reference in the Registration Statements, Form S-8 (No. 33-43153) filed on October 3, 1991, Form S-8 (No. 33-67176) filed on August 6, 1993, and Form S-8 (No. 33-43153) filed on March 21, 1995 of TrustCo Bank Corp NY and subsidiaries of our report dated January 27, 1995, relating to the consolidated statements of condition of TrustCo Bank Corp NY and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of income, changes in shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1994, which report appears in the December 31, 1994 Annual Report on Form 10-K of TrustCo Bank Corp NY. Our report refers to the adoption of the provisions of Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," and Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." /s/ KPMG Peat Marwick LLP Albany, New York March 27, 1995 Exhibit 24 POWER OF ATTORNEY The undersigned persons do hereby appoint William F. Terry or Robert T. Cushing as a true and lawful Attorney In Fact for the sole purpose of affixing their signatures to the 1994 Annual Report (Form 10-K) of TrustCo Bank Corp NY to the Securities and Exchange Commission. /s/Barton A. Andreoli /s/Lionel O. Barthold Barton A. Andreoli Lionel O. Barthold /s/M. Norman Brickman /s/Charles W. Carl, Jr . M. Norman Brickman Charles W. Carl, Jr. /s/Robert A. McCormick /s/Nancy A. McNamara Robert A. McCormick Nancy A. McNamara /s/Dr. John S. Morris /s/Dr. James H. Murphy Dr. John S. Morris Dr. James H. Murphy /s/Richard J. Murray, Jr. /s/Kenneth C. Petersen Richard J. Murray, Jr. Kenneth C. Petersen /s/William J. Purdy /s/William F. Terry William J. Purdy William F. Terry /s/Philip J. Thompson Philip J. Thompson Sworn to before me this 21st day of March 1995 By/s/Joan Clark Joan Clark Notary Public, State of New York Qualified in Albany County No. 01CL4822282 Commission Expires Nov. 30, 1996 Financial Data Schedules to 10-K Exhibit 27 PERIOD-TYPE 12-MOS FISCAL-YEAR-END DEC-31-1994 PERIOD-END DEC-31-1994 CASH 52,479 INT-BEARING-DEPOSITS 1,696,335 FED-FUNDS-SOLD 263,000 TRADING-ASSETS 0 INVESTMENTS-HELD-FOR-SALE 117,458 INVESTMENTS-CARRYING 347,858 INVESTMENTS-MARKET 334,455 LOANS 1,152,632 ALLOWANCE 38,851 TOTAL-ASSETS 1,975,677 DEPOSITS 1,789,831 SHORT-TERM 12,713 LIABILITIES-OTHER 30,300 LONG-TERM 3,550 COMMON 15,018 PREFERRED-MANDATORY 0 PREFERRED 0 OTHER-SE 124,265 TOTAL-LIABILITIES-AND-EQUITY 1,975,677 INTEREST-LOAN 93,873 INTEREST-INVEST 46,409 INTEREST-OTHER 0 INTEREST-TOTAL 140,282 INTEREST-DEPOSIT 60,034 INTEREST-EXPENSE 60,698 INTEREST-INCOME-NET 71,528 LOAN-LOSSES 8,056 SECURITIES-GAINS (8,877) EXPENSE-OTHER 40,560 INCOME-PRETAX 35,528 INCOME-PRE-EXTRAORDINARY 35,528 EXTRAORDINARY 0 CHANGES 0 NET-INCOME 22,888 EPS-PRIMARY 1.54 EPS-DILUTED 1.54 YIELD-ACTUAL 426 LOANS-NON> 1,057 LOANS-PAST 803 LOANS-TROUBLED 910 LOANS-PROBLEM 0 ALLOWANCE-OPEN 34,087 CHARGE-OFFS 4,824 RECOVERIES 1,532 ALLOWANCE-CLOSE 38,851 ALLOWANCE-DOMESTIC 0 ALLOWANCE-FOREIGN 0 ALLOWANCE-UNALLOCATED 38,851 Exhibit 99 KPMG Peat Marwick LLP 74 North Pearl Street Albany, NY 12207 Independent Auditors' Report ------------------------------------ The Board of Directors and Shareholders of Trustco Bank Corp NY: We have audited the accompanying consolidated statements of condition of TrustCo Bank Corp NY and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of income, changes in shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1994. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of TrustCo Bank Corp NY and subsidiaries as of December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the years in the three- year period ended December 31, 1994, in conformity with generally accepted accounting principles. As discussed in note 4 to the consolidated financial statements, in 1994 the Company adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" which changed its method of accounting for certain investments in debt and equity securities. As discussed in notes 1 and 8 to the consolidated financial statements, in 1993 the Company adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" which changed its method of accounting for income taxes. As discussed in note 9 to the consolidated financial statements, the Company also adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions" in 1993 which changed its method of accounting for postretirement benefits other than pensions. /s/KPMG Peat Marwick LLP January 27, 1995 EX-27 2 ARTICLE 9 FDS FOR 10-K
9 12-MOS DEC-31-1994 DEC-31-1994 52,479 1,696,335 263,000 0 117,458 347,858 334,455 1,152,632 38,851 1,975,677 1,789,831 12,713 30,300 3,550 15,018 0 0 124,265 1,975,677 93,873 46,409 0 140,282 60,034 60,698 71,528 8,056 (8,877) 40,560 35,528 35,528 0 0 22,888 1.54 1.54 426 1,058 803 910 0 34,087 4,824 1,532 38,851 0 0 38,851
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