For
the quarterly period ended
|
Commission
File Number 0-10592
|
June
30, 2008
|
NEW
YORK
|
14-1630287
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
5
SARNOWSKI DRIVE, GLENVILLE, NEW YORK
|
12302
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant's
telephone number, including area code:
|
(518)
377-3311
|
Large
accelerated filer x
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
Smaller
reporting company ¨
|
Class
of Common Stock
|
Number
of Shares Outstanding as of July 31, 2008
|
$1
Par Value
|
75,851,006
|
Part I.
|
FINANCIAL INFORMATION
|
PAGE NO.
|
Item
1.
|
Consolidated
Interim Financial Statements (Unaudited):
|
|
3
|
||
4
|
||
5
|
||
6
|
||
7 –
13
|
||
14
|
||
Item
2.
|
15
- 32
|
|
|
||
Item
3.
|
33
|
|
Item
4.
|
33
– 34
|
|
Part
II.
|
OTHER
INFORMATION
|
|
|
||
Item
1.
|
35
|
|
Item
1A.
|
35
|
|
|
||
Item
2.
|
35
|
|
Item
3.
|
35
|
|
Item
4.
|
35
|
|
Item
5.
|
36
|
|
Item
6.
|
36
– 44
|
TRUSTCO BANK CORP NY
|
||||||||||||||||
Consolidated
Statements of Income (Unaudited)
|
||||||||||||||||
(dollars
in thousands, except per share data)
|
||||||||||||||||
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Interest
and dividend income:
|
||||||||||||||||
Interest
and fees on loans
|
$ | 30,030 | 29,566 | 60,814 | 58,197 | |||||||||||
Interest
and dividends on securities available for sale:
|
||||||||||||||||
U.
S. treasuries and government sponsored enterprises
|
2,871 | 2,753 | 6,126 | 5,609 | ||||||||||||
States
and political subdivisions
|
1,336 | 1,434 | 2,731 | 2,883 | ||||||||||||
Mortgage-backed
securities and collateralized mortgage obligations
|
1,737 | 1,916 | 3,510 | 3,880 | ||||||||||||
Other
securities
|
159 | 176 | 337 | 315 | ||||||||||||
Total
interest and dividends on securities available for sale
|
6,103 | 6,279 | 12,704 | 12,687 | ||||||||||||
Interest
on trading securities:
|
||||||||||||||||
U.
S. government sponsored enterprises
|
2,054 | 4,847 | 6,773 | 11,650 | ||||||||||||
States
and political subdivisions
|
48 | - | 57 | - | ||||||||||||
Total
interest on trading securities
|
2,102 | 4,847 | 6,830 | 11,650 | ||||||||||||
Interest
on held to maturity securities:
|
||||||||||||||||
U.
S. government sponsored enterprises
|
508 | - | 733 | - | ||||||||||||
States
and political subdivisions
|
277 | - | 277 | - | ||||||||||||
Total
interest on held to maturity securities
|
785 | - | 1,010 | - | ||||||||||||
Interest
on federal funds sold and other short term investments
|
3,037 | 6,856 | 6,018 | 10,295 | ||||||||||||
Total
interest income
|
42,057 | 47,548 | 87,376 | 92,829 | ||||||||||||
Interest
expense:
|
||||||||||||||||
Interest
on deposits:
|
||||||||||||||||
Interest-bearing
checking
|
172 | 213 | 376 | 415 | ||||||||||||
Savings
|
923 | 2,397 | 2,266 | 4,821 | ||||||||||||
Money
market deposit accounts
|
1,292 | 3,411 | 3,373 | 6,715 | ||||||||||||
Time
deposits
|
15,748 | 16,556 | 32,465 | 31,192 | ||||||||||||
Interest
on short-term borrowings
|
448 | 989 | 1,024 | 1,982 | ||||||||||||
Interest
on long-term debt
|
1 | - | 1 | 1 | ||||||||||||
Total
interest expense
|
18,584 | 23,566 | 39,505 | 45,126 | ||||||||||||
Net
interest income
|
23,473 | 23,982 | 47,871 | 47,703 | ||||||||||||
Provision
for loan losses
|
700 | - | 1,000 | - | ||||||||||||
Net
interest income after provision for loan losses
|
22,773 | 23,982 | 46,871 | 47,703 | ||||||||||||
Noninterest
income:
|
||||||||||||||||
Trust
department income
|
1,350 | 1,441 | 2,844 | 2,894 | ||||||||||||
Fees
for other services to customers
|
2,286 | 2,289 | 4,426 | 4,595 | ||||||||||||
Net
trading (losses) gains
|
(960 | ) | (2,844 | ) | (243 | ) | 601 | |||||||||
Net
gain on securities transactions
|
784 | 3 | 418 | 3 | ||||||||||||
Other
|
477 | 257 | 1,033 | 601 | ||||||||||||
Total
noninterest income
|
3,937 | 1,146 | 8,478 | 8,694 | ||||||||||||
Noninterest
expenses:
|
||||||||||||||||
Salaries
and employee benefits
|
5,517 | 4,893 | 11,157 | 9,802 | ||||||||||||
Net
occupancy expense
|
3,033 | 2,408 | 6,043 | 4,825 | ||||||||||||
Equipment
expense
|
978 | 811 | 2,080 | 1,555 | ||||||||||||
Professional
services
|
1,167 | 1,071 | 2,268 | 2,009 | ||||||||||||
Outsourced
Services
|
1,171 | 1,074 | 2,280 | 2,147 | ||||||||||||
Other
real estate (income) expense
|
(9 | ) | 15 | (17 | ) | 35 | ||||||||||
Other
|
2,490 | 3,186 | 5,100 | 5,791 | ||||||||||||
Total
noninterest expenses
|
14,347 | 13,458 | 28,911 | 26,164 | ||||||||||||
Income
before taxes
|
12,363 | 11,670 | 26,438 | 30,233 | ||||||||||||
Income
taxes
|
3,894 | 3,563 | 8,542 | 9,812 | ||||||||||||
Net
income
|
$ | 8,469 | 8,107 | 17,896 | 20,421 | |||||||||||
Net
income per Common Share:
|
||||||||||||||||
-
Basic
|
$ | 0.112 | 0.108 | 0.237 | 0.272 | |||||||||||
-
Diluted
|
$ | 0.112 | 0.108 | 0.237 | 0.272 | |||||||||||
See
accompanying notes to unaudited consolidated interim financial
statements.
|
June 30,
2008
|
December 31,
2007
|
|||||||
ASSETS:
|
||||||||
Cash
and due from banks
|
$ | 48,177 | 58,156 | |||||
Federal
funds sold and other short term investments
|
466,262 | 286,764 | ||||||
Total
cash and cash equivalents
|
514,439 | 344,920 | ||||||
Trading
securities:
|
||||||||
U.
S. government sponsored enterprises
|
220,063 | 465,151 | ||||||
States
and political subdivisions
|
6,300 | 0 | ||||||
Total
trading securities
|
226,363 | 465,151 | ||||||
Securities
available for sale:
|
||||||||
U.
S. treasuries and government sponsored enterprises
|
270,943 | 289,690 | ||||||
States
and political subdivisions
|
108,617 | 129,271 | ||||||
Mortgage-backed
securities and collateralized mortgage obligations
|
140,794 | 148,858 | ||||||
Other
securities
|
10,969 | 11,073 | ||||||
Total
securities available for sale
|
531,323 | 578,892 | ||||||
Held
to maturity securities:
|
||||||||
U.
S. government sponsored enterprises (fair value 2008 $120,125 2007
$15,175)
|
120,085 | 15,000 | ||||||
Corporate
bonds (fair value 2008 $40,694 2007 $0)
|
41,644 | 0 | ||||||
Total
held to maturity securities
|
161,729 | 15,000 | ||||||
Loans:
|
||||||||
Commercial
|
295,440 | 280,248 | ||||||
Residential
mortgage loans
|
1,475,743 | 1,419,231 | ||||||
Home
equity line of credit
|
229,781 | 229,570 | ||||||
Installment
loans
|
5,751 | 5,865 | ||||||
Total
loans
|
2,006,715 | 1,934,914 | ||||||
Less:
|
||||||||
Allowance
for loan losses
|
34,767 | 34,651 | ||||||
Net
loans
|
1,971,948 | 1,900,263 | ||||||
Bank
premises and equipment, net
|
31,316 | 29,193 | ||||||
Other
assets
|
52,459 | 44,132 | ||||||
Total
assets
|
$ | 3,489,577 | 3,377,551 | |||||
LIABILITIES:
|
||||||||
Deposits:
|
||||||||
Demand
|
$ | 268,343 | 262,863 | |||||
Interest-bearing
checking
|
300,476 | 293,027 | ||||||
Savings
accounts
|
623,411 | 609,064 | ||||||
Money
market deposit accounts
|
314,445 | 341,790 | ||||||
Certificates
of deposit (in denominations of $100,000 or more)
|
425,549 | 390,328 | ||||||
Other
time accounts
|
1,167,152 | 1,123,226 | ||||||
Total
deposits
|
3,099,376 | 3,020,298 | ||||||
Short-term
borrowings
|
97,156 | 92,220 | ||||||
Long-term
debt
|
13 | 29 | ||||||
Due
to broker
|
30,000 | 0 | ||||||
Accrued
expenses and other liabilities
|
23,528 | 27,936 | ||||||
Total
liabilities
|
3,250,073 | 3,140,483 | ||||||
SHAREHOLDERS'
EQUITY:
|
||||||||
Capital
stock par value $1; 150,000,000 shares authorized and
82,373,165 and 82,373,165 shares issued at June 30, 2008 and
December 31, 2007, respectively
|
82,373 | 82,373 | ||||||
Surplus
|
122,021 | 121,961 | ||||||
Undivided
profits
|
94,363 | 93,099 | ||||||
Accumulated
other comprehensive income, net of tax
|
4,991 | 7,230 | ||||||
Treasury
stock at cost - 6,697,956 and 7,047,297 shares at June 30, 2008
and December 31, 2007, respectively
|
(64,244 | ) | (67,595 | ) | ||||
Total
shareholders' equity
|
239,504 | 237,068 | ||||||
Total
liabilities and shareholders' equity
|
$ | 3,489,577 | 3,377,551 | |||||
See
accompanying notes to unaudited consolidated interim financial
statements.
|
Capital
Stock
|
Surplus
|
Undivided
Profits
|
Accumulated
Other Comprehensive Income (Loss)
|
Comprehensive
Income
|
Treasury
Stock
|
Total
|
||||||||||||||||||||||
Beginning
balance, January 1, 2007
|
$ | 82,150 | 119,313 | 110,304 | (2,928 | ) | (69,316 | ) | 239,523 | |||||||||||||||||||
Adjustment
to initially apply FAS No. 159, net of tax
|
- | - | (8,606 | ) | 8,606 | - | - | - | ||||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net
Income - Six Months Ended June, 2007
|
- | - | 20,421 | - | 20,421 | - | 20,421 | |||||||||||||||||||||
Other
comprehensive loss, net of tax:
|
||||||||||||||||||||||||||||
Amortization
of prior service cost on pension and post retirement plans, net of tax
(pretax of $242)
|
- | - | - | - | (146 | ) | - | - | ||||||||||||||||||||
Unrealized
net holding loss on securities available-for-sale arising during the
period, net of tax (pretax loss of $12,295)
|
- | - | - | - | (7,392 | ) | - | - | ||||||||||||||||||||
Other
comprehensive loss
|
- | - | - | (7,538 | ) | (7,538 | ) | - | (7,538 | ) | ||||||||||||||||||
Comprehensive
income
|
12,883 | |||||||||||||||||||||||||||
Cash
dividend declared, $.32 per share
|
- | - | (23,979 | ) | - | - | (23,979 | ) | ||||||||||||||||||||
Stock
options exercised and related excess tax benefits
|
19 | 116 | - | - | - | 135 | ||||||||||||||||||||||
Treasury
stock purchased (280,497 shares)
|
- | - | - | - | (2,862 | ) | (2,862 | ) | ||||||||||||||||||||
Sale
of treasury stock (403,953 shares)
|
- | 330 | - | - | 3,854 | 4,184 | ||||||||||||||||||||||
Stock
based compensation expense
|
- | 26 | - | - | - | 26 | ||||||||||||||||||||||
Ending
balance, June 30, 2007
|
$ | 82,169 | 119,785 | 98,140 | (1,860 | ) | (68,324 | ) | 229,910 | |||||||||||||||||||
Beginning
balance, January 1, 2008
|
$ | 82,373 | 121,961 | 93,099 | 7,230 | (67,595 | ) | 237,068 | ||||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net
Income - Six Months Ended June 30, 2008
|
- | - | 17,896 | - | 17,896 | - | 17,896 | |||||||||||||||||||||
Other
comprehensive income, net of tax:
|
||||||||||||||||||||||||||||
Amortization
of prior service cost on pension and post retirement plans, net of tax
(pretax of $275)
|
- | - | - | - | (165 | ) | - | - | ||||||||||||||||||||
Unrealized
net holding loss on securities available-for-sale arising during the
period, net of tax (pretax loss of $3,031)
|
- | - | - | - | (1,822 | ) | - | - | ||||||||||||||||||||
Reclassification
adjustment for net gain realized in net income during the period (pretax
gain $418)
|
- | - | - | - | (252 | ) | - | - | ||||||||||||||||||||
Other
comprehensive income, net of tax:
|
- | - | - | (2,239 | ) | (2,239 | ) | (2,239 | ) | |||||||||||||||||||
Comprehensive
income
|
15,657 | - | - | |||||||||||||||||||||||||
Cash
dividend declared, $.22 per share
|
- | - | (16,632 | ) | - | - | (16,632 | ) | ||||||||||||||||||||
Sale
of treasury stock (349,341 shares)
|
- | (26 | ) | - | - | 3,351 | 3,325 | |||||||||||||||||||||
Stock
based compensation expense
|
- | 86 | - | - | - | 86 | ||||||||||||||||||||||
Ending
balance, June 30, 2008
|
$ | 82,373 | 122,021 | 94,363 | 4,991 | (64,244 | ) | 239,504 |
Six
months ended June 30,
|
||||||||
2008
|
2007
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 17,896 | 20,421 | |||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
1,817 | 1,366 | ||||||
Gain
on sale of other real estate owned
|
(128 | ) | (89 | ) | ||||
Provision
for loan losses
|
1,000 | - | ||||||
Deferred
tax expense
|
363 | 1,492 | ||||||
Stock
based compensation expense
|
86 | 26 | ||||||
Net
loss on sale of bank premises and equipment
|
6 | - | ||||||
Net
gain on sale of securities available for sale
|
(418 | ) | (3 | ) | ||||
Proceeds
from sales and calls of trading securities
|
344,788 | 502,944 | ||||||
Purchases
of trading securities
|
(262,393 | ) | (450,296 | ) | ||||
Proceeds
from maturities of trading securities
|
156,150 | - | ||||||
Net
trading losses (gains)
|
243 | (601 | ) | |||||
(Increase)
decrease in taxes receivable
|
(7,237 | ) | 9,322 | |||||
(Increase)
decrease in interest receivable
|
(1,950 | ) | 3,511 | |||||
(Decrease)
increase in interest payable
|
(462 | ) | 403 | |||||
Decrease
(increase) in other assets
|
3,062 | (2,903 | ) | |||||
(Decrease)
increase in accrued expenses and other liabilities
|
(218 | ) | 731 | |||||
Total
adjustments
|
234,709 | 65,903 | ||||||
Net
cash provided by operating activities
|
252,605 | 86,324 | ||||||
Cash
flows from investing activities:
|
||||||||
Proceeds
from sales and calls of securities available for sale
|
158,970 | 15,354 | ||||||
Purchases
of securities available for sale
|
(102,452 | ) | (31,034 | ) | ||||
Proceeds
from maturities of securities available for sale
|
8,020 | 46,580 | ||||||
Purchases
of held to maturity securities
|
(136,729 | ) | - | |||||
Net
increase in loans
|
(74,277 | ) | (86,571 | ) | ||||
Proceeds
from dispositions of other real estate owned
|
365 | 213 | ||||||
Proceeds
from dispositions of bank premises and equipment
|
10 | - | ||||||
Purchases
of bank premises and equipment
|
(3,956 | ) | (5,174 | ) | ||||
Net
cash provided by investing activities
|
(150,049 | ) | (60,632 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Net
increase in deposits
|
79,078 | 223,153 | ||||||
Net
increase (decrease) in short-term borrowings
|
4,936 | (1,652 | ) | |||||
Repayment
of long-term debt
|
(16 | ) | (15 | ) | ||||
Proceeds
from exercise of stock options and related tax benefits
|
- | 135 | ||||||
Proceeds
from sale of treasury stock
|
3,325 | 4,184 | ||||||
Purchase
of treasury stock
|
- | (2,862 | ) | |||||
Dividends
paid
|
(20,360 | ) | (23,979 | ) | ||||
Net
cash provided by financing activities
|
66,963 | 198,964 | ||||||
Net
increase in cash and cash equivalents
|
169,519 | 224,656 | ||||||
Cash
and cash equivalents at beginning of period
|
344,920 | 291,338 | ||||||
Cash
and cash equivalents at end of period
|
$ | 514,439 | 515,994 | |||||
Supplemental
Disclosure of Cash Flow Information:
|
||||||||
Cash
paid during the year for:
|
||||||||
Interest
paid
|
$ | 39,967 | 44,723 | |||||
Income
taxes paid
|
15,778 | 411 | ||||||
Non
cash investing and financing activites:
|
||||||||
Increase
in due to broker
|
30,000 | - | ||||||
Transfer
of loans to other real estate owned
|
1,592 | 189 | ||||||
Decrease
in dividends payable
|
(3,728 | ) | - | |||||
Change
in unrealized loss on securities available for sale-gross of deferred
taxes (excluding $14,313 unrealized loss transferred to undivided profits
in 2007 from adoption of SFAS No. 159), net of reclassification
adjustment
|
(3,449 | ) | (12,295 | ) | ||||
Change
in deferred tax effect on unrealized loss on securities available for
sale, net of reclassification adjustment
|
1,375 | 4,903 | ||||||
Amortization
of prior service cost on pension and post retirement plans
|
(275 | ) | (242 | ) | ||||
Change
in deferred tax effect of amortization of prior service
cost
|
110 | 96 | ||||||
Securities
available for sale transferred to trading securities
|
- | 516,558 | ||||||
Cumulative
effect of the adoption of SFAS No.No. 159-net of deferred taxes ($14,313
gross of deferred taxes)
|
- | 8,606 |
2.
|
Earnings
Per Share
|
(In
thousands, except per share data)
|
NetIncome
|
Weighted
Average Shares Outstanding
|
Per
ShareAmounts
|
|||||||||
For
the quarter ended June 30, 2008:
|
||||||||||||
Basic
EPS:
|
||||||||||||
Net
income available to Common shareholders
|
$ | 8,469 | 75,675 | $ | 0.112 | |||||||
Effect
of Dilutive Securities:
|
||||||||||||
Stock
options
|
------ | 2 | ----- | |||||||||
Diluted
EPS
|
$ | 8,469 | 75,677 | $ | 0.112 | |||||||
For
six months ended June 30, 2008:
|
||||||||||||
Basic
EPS:
|
||||||||||||
Net
income available to Common shareholders
|
$ | 17,896 | 75,591 | $ | 0.237 | |||||||
Effect
of Dilutive Securities:
|
||||||||||||
Stock
options
|
------- | 6 | ----- | |||||||||
Diluted
EPS
|
$ | 17,896 | 75,597 | $ | 0.237 |
(In
thousands, except per share data)
|
NetIncome
|
Weighted
AverageShares Outstanding
|
Per
ShareAmounts
|
|||||||||
For
the quarter endedJune 30, 2007:
|
||||||||||||
Basic
EPS:
|
||||||||||||
Net
income available to Common shareholders
|
$ | 8,107 | 75,040 | $ | 0.108 | |||||||
Effect
of Dilutive Securities:
|
||||||||||||
Stock
options
|
------ | 28 | ----- | |||||||||
Diluted
EPS
|
$ | 8,107 | 75,068 | $ | 0.108 | |||||||
For
six months ended June 30, 2007:
|
||||||||||||
|
||||||||||||
Basic
EPS:
|
||||||||||||
Net
income available to Common shareholders
|
$ | 20,421 | 74,996 | $ | 0.272 | |||||||
Effect
of Dilutive Securities:
|
||||||||||||
Stock
options
|
------- | 65 | ----- | |||||||||
Diluted
EPS
|
$ | 20,421 | 75,061 | $ | 0.272 |
Pension
Benefits
|
Other
Postretirement Benefits
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Service
cost
|
$ | 13 | 22 | 6 | 8 | |||||||||||
Interest
cost
|
353 | 347 | 15 | 13 | ||||||||||||
Expected
return on plan assets
|
(501 | ) | (515 | ) | (109 | ) | (98 | ) | ||||||||
Amortization
of prior service cost
|
- | - | (141 | ) | (125 | ) | ||||||||||
Net
periodic benefit
|
$ | (135 | ) | (146 | ) | (229 | ) | (202 | ) |
Pension
Benefits
|
Other
Postretirement Benefits
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Service
cost
|
25 | 22 | 13 | 15 | ||||||||||||
Interest
cost
|
705 | 701 | 29 | 27 | ||||||||||||
Expected
return on plan assets
|
(1,002 | ) | (975 | ) | (233 | ) | (205 | ) | ||||||||
Amortization
of prior service cost
|
- | - | (275 | ) | (242 | ) | ||||||||||
Net
periodic benefit
|
$ | (272 | ) | (252 | ) | (467 | ) | (405 | ) |
4.
|
Adoption
of New Accounting Pronouncements
|
Statement
of 12/31/06 Prior to adoption
|
Net
Loss recognized in undivided profits upon adoption
|
Statement
of Condition after adoption of Fair Value Option
|
||||||||||
($
in thousands)
|
||||||||||||
Securities
available for sale transferred to trading account assets:
|
||||||||||||
Amortized
cost
|
$ | 516,558 | (14,313 | ) | 502,245 | |||||||
Unrealized
depreciation
|
(14,313 | ) | 14,313 |
-
|
||||||||
Net
transferred to trading account assets
|
$ | 502,245 |
-
|
502,245 |
|
·
|
Level
1 – Inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active
markets.
|
|
·
|
Level
2 – Inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets and inputs that are observable
for the asset or liability, either directly or indirectly, for
substantially the full term of the financial
instrument.
|
|
·
|
Level
3 – Inputs to the valuation methodology are unobservable and significant
to the fair value measurement.
|
(dollars
in thousands)
|
Fair
value measurements at June 30, 2008 using:
|
|||||||||||
Description
|
Total
carrying
amount
in
statement
of
financial
condition
as
of 6/30/08
|
Fair
value
measurement
as
of
6/30/08
|
Significant
other
observable
inputs
(Level
2)
|
|||||||||
Securities
available for sale
|
$ | 531,323 | 531,323 | 531,323 | ||||||||
Trading
securities
|
226,363 | 226,363 | 226,363 | |||||||||
Other
real estate owned
|
1,647 | 1,647 | 1,647 |
(dollars
in thousands)
|
Fair
value measurements at December 31, 2007 using:
|
|||||||||||
Description
|
Total
carrying
amount
in
statement
of
financial
condition
as
of 12/31/07
|
Fair
value
measurement
as
of
12/31/07
|
Significant
other
observable
inputs
(Level
2)
|
|||||||||
Securities
available for sale
|
$ | 578,892 | 578,892 | 578,892 | ||||||||
Trading
securities
|
465,151 | 465,151 | 465,151 | |||||||||
Other
real estate owned
|
293 | 293 | 293 |
|
b)
|
Statements
of Financial Accounting Standards No. 48 “Accounting for Uncertainty in
Income Taxes” as amended by FSB No. 48-1 “Definition of Settlement in FASB
Interpretation No. 48”.
|
(dollars
in thousands)
|
||||
Balance
January 1, 2008
|
$ | 4,023 | ||
Amount
paid to taxing Authorities for the six month period ended June 30,
2008
|
(2,839 | ) | ||
Balance
June 30, 2008
|
$ | 1,184 |
Statement
of Condition 12/31/06 Prior to adoption
|
Net
Loss recognized in undivided profits upon adoption
|
Statement
of Condition after adoption of Fair Value Option
|
||||||||||
($
in thousands)
|
||||||||||||
Securities
available for sale transferred to trading account assets:
|
||||||||||||
Amortized
cost
|
$ | 516,558 | (14,313 | ) | 502,245 | |||||||
Unrealized
depreciation
|
(14,313 | ) | 14,313 |
-
|
||||||||
Net
transferred to trading account assets
|
$ | 502,245 |
-
|
502,245 |
|
·
|
Level
1 – Inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active
markets.
|
|
·
|
Level
2 – Inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets and inputs that are observable
for the asset or liability, either directly or indirectly, for
substantially the full term of the financial
instrument.
|
|
·
|
Level
3 – Inputs to the valuation methodology are unobservable and significant
to the fair value measurement.
|
(dollars
in thousands)
|
Fair
value measurements at June 30, 2008 using:
|
|||||||||||
Description
|
Total
carrying
amount
in
statement
of
financial
condition
as
of 6/30/08
|
Fair
value
measurement
as
of
6/30/08
|
Significant
other
observable
inputs
(Level
2)
|
|||||||||
Securities
available for sale
|
$ | 531,323 | 531,323 | 531,323 | ||||||||
Trading
securities
|
226,363 | 226,363 | 226,363 | |||||||||
Other
real estate owned
|
1,647 | 1,647 | 1,647 |
(dollars
in thousands)
|
Fair
value measurements at December 31, 2007 using:
|
|||||||||||
Description
|
Total
carrying
amount
in
statement
of
financial
condition
as
of 12/31/07
|
Fair
value
measurement
as
of
12/31/07
|
Significant
other
observable
inputs
(Level
2)
|
|||||||||
Securities
available for sale
|
$ | 578,892 | 578,892 | 578,892 | ||||||||
Trading
securities
|
465,151 | 465,151 | 465,151 | |||||||||
Other
real estate owned
|
293 | 293 | 293 |
|
b)
|
Statements
of Financial Accounting Standards No. 48 “Accounting for Uncertainty in
Income Taxes” as amended by FSB No. 48-1 “Definition of Settlement in FASB
Interpretation No. 48”.
|
(dollars
in thousands)
|
||||
Balance
January 1, 2008
|
$ | 4,023 | ||
Amount
paid to taxing Authorities for the six month period ended June 30,
2008
|
(2,839 | ) | ||
Balance
June 30, 2008
|
$ | 1,184 |
|
o
|
Increase
in the average balance of interest earning assets of $161.6 million to
$3.31 billion for the first six months of 2008 compared to the same period
in 2007,
|
|
o
|
Increase
in the average balance of interest bearing liabilities of $144.3 million
to $2.88 billion for the first six months of 2008 as compared to
2007,
|
|
o
|
Decrease
in net interest margin from 3.11% for the first six months of 2007 to
2.97% for the six months of 2008,
|
|
o
|
Increase
in the provision for loan losses from zero for the first six months of
2007 to $1.0 million in the comparable period in
2008,
|
|
o
|
Increase
in noninterest income (excluding net gains on securities transactions and
net trading (losses) / gains) from $8.1 million for the first six months
of 2007 to $8.3 million for the comparable period in
2008. Excluded from noninterest income were $418 thousand of
net gains on securities transactions for the first six months of 2008
compared to $3 thousand for the same period in 2007, and $243 thousand of
net trading losses in the 2008 period compared to $601 thousand of net
gains in the first half of 2007,
and
|
|
o
|
An
increase of $2.7 million in noninterest expense for the first six months
of 2008 as compared to the first six months of
2007.
|
-
|
The
average balance of securities available for sale, held-to-maturity
securities and trading securities decreased by $46.2 million and the
average yield decreased to 4.66% from 5.40% for the second quarter of 2008
compared to the same period in
2007.
|
-
|
The
average balance of federal funds sold and other short-term investments
increased by $20.0 million and the average yield decreased 303 basis
points to 2.26% in the second quarter of 2008 compared to the same period
in 2007 . The decrease in yield on federal funds sold and other
short-term investments is attributable to the decrease in the target
federal funds rate.
|
-
|
The
average loan portfolio grew by $159.8 million to $1.98 billion and the
average yield decreased 43 basis points to 6.07% in the second quarter of
2008 compared to the same period in 2007. The decline in the
average yield reflects the decline in market interest
rates.
|
-
|
The
average balance of interest bearing liabilities (primarily deposit
accounts) increased $124.4 million and the average rate paid decreased 82
basis points to 2.56% in the first quarter of 2008 compared to the same
period in 2007. The decline In the rate paid on interest
bearing liabilities reflects the decline in market interest
rates.
|
|
o
|
The
magnitude and nature of the recent loan charge offs and
recoveries,
|
|
o
|
The
growth in the loan portfolio and the implication that has in relation to
the economic climate in the bank’s business territory,
and
|
|
o
|
The
economic environment in the Company’s market territories over the last two
years.
|
June
30,
|
Minimum
Regulatory
|
|||||||||||
2008
|
2007
|
Guidelines
|
||||||||||
Tier
1 risk adjusted capital
|
12.59 | % | 13.29 | % | 4.00 | % | ||||||
Total
risk adjusted capital
|
13.84 | % | 14.55 | % | 8.00 | % |
Three
|
2008
|
Three
|
2007
|
|||||||||||||||||||||||||||||||||
Month
|
Month
|
|||||||||||||||||||||||||||||||||||
Average
|
Interest
|
Average
|
Average
|
Interest
|
Average
|
Change
in
|
Variance
|
Variance
|
||||||||||||||||||||||||||||
(dollars
in thousands)
|
Balance
|
Rate
|
Balance
|
Rate
|
Interest
|
Balance
|
Rate
|
|||||||||||||||||||||||||||||
Income/
|
Change
|
Change
|
||||||||||||||||||||||||||||||||||
Assets
|
Expense
|
|||||||||||||||||||||||||||||||||||
Securities
available for sale:
|
||||||||||||||||||||||||||||||||||||
U.S.
Treasuries
|
$ | 1,650 | 26 | 6.26 | % | $ | 247 | 3 | 4.95 | % | $ | 23 | 22 | 1 | ||||||||||||||||||||||
U.
S. Gov't Sponsored Enterprises
|
239,138 | 2,845 | 4.76 | % | 206,385 | 2,751 | 5.33 | % | 94 | 1,462 | (1,368 | ) | ||||||||||||||||||||||||
Mortgage-backed
securities and collateralized mortgage obligations
|
149,392 | 1,738 | 4.65 | % | 163,979 | 1,916 | 4.67 | % | (178 | ) | (170 | ) | (8 | ) | ||||||||||||||||||||||
States
and political subdivisions
|
120,168 | 2,032 | 6.76 | % | 128,145 | 2,182 | 6.81 | % | (150 | ) | (134 | ) | (16 | ) | ||||||||||||||||||||||
Other
|
11,480 | 173 | 6.04 | % | 13,023 | 190 | 5.84 | % | (17 | ) | (54 | ) | 37 | |||||||||||||||||||||||
Total
securities available for sale
|
521,828 | 6,814 | 5.22 | % | 511,779 | 7,042 | 5.50 | % | (228 | ) | 1,126 | (1,354 | ) | |||||||||||||||||||||||
Federal
funds sold and other short-term Investments
|
539,625 | 3,037 | 2.26 | % | 519,651 | 6,856 | 5.29 | % | (3,819 | ) | 1,740 | (5,559 | ) | |||||||||||||||||||||||
Trading
Securities
|
||||||||||||||||||||||||||||||||||||
Trading
Securities Agency
|
221,058 | 2,053 | 3.72 | % | 369,540 | 4,847 | 5.26 | % | (2,794 | ) | (1,616 | ) | (1,178 | ) | ||||||||||||||||||||||
Trading
Securities SCM
|
9,552 | 73 | 3.08 | % | - | - | 0.00 | % | 73 | 73 | - | |||||||||||||||||||||||||
Total
Trading Securities
|
230,610 | 2,126 | 3.69 | % | 369,540 | 4,847 | 5.26 | (2,721 | ) | (1,543 | ) | (1,178 | ) | |||||||||||||||||||||||
Held
to Maturity Agencies
|
59,007 | 508 | 3.44 | % | - | - | 0.00 | % | 508 | 508 | - | |||||||||||||||||||||||||
Held
to Maturity Corp. Bonds
|
23,716 | 277 | 4.68 | % | - | - | 0.00 | % | 277 | 277 | - | |||||||||||||||||||||||||
Total
Held to Maturities
|
82,723 | 785 | 3.80 | % | - | - | 0.00 | % | 785 | 785 | - | |||||||||||||||||||||||||
Commercial
Loans
|
291,327 | 4,711 | 6.47 | % | 271,618 | 5,113 | 7.53 | % | (402 | ) | 1,822 | (2,224 | ) | |||||||||||||||||||||||
Residential
mortgage loans
|
1,456,714 | 22,300 | 6.12 | % | 1,306,371 | 20,293 | 6.21 | % | 2,007 | 3,871 | (1,864 | ) | ||||||||||||||||||||||||
Home
equity lines of credit
|
227,585 | 2,829 | 5.00 | % | 237,337 | 3,960 | 6.69 | % | (1,131 | ) | (158 | ) | (973 | ) | ||||||||||||||||||||||
Installment
loans
|
5,232 | 194 | 14.90 | % | 5,699 | 207 | 14.61 | % | (13 | ) | (37 | ) | 24 | |||||||||||||||||||||||
Loans,
net of unearned income
|
1,980,858 | 30,034 | 6.07 | % | 1,821,025 | 29,573 | 6.50 | % | 461 | 5,498 | (5,037 | ) | ||||||||||||||||||||||||
Total
interest earning assets
|
3,355,644 | 42,796 | 5.10 | % | 3,221,995 | 48,318 | 6.00 | % | (5,522 | ) | 7,606 | (13,128 | ) | |||||||||||||||||||||||
Allowance
for loan losses
|
(34,609 | ) | (35,229 | ) | ||||||||||||||||||||||||||||||||
Cash
& non-interest earning assets
|
125,101 | 123,727 | ||||||||||||||||||||||||||||||||||
Total
assets
|
$ | 3,446,136 | $ | 3,310,493 | ||||||||||||||||||||||||||||||||
Liabilities
and shareholders' equity
|
||||||||||||||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||||||||||||||
Interest
Bearing Checking Accounts
|
$ | 293,566 | 172 | 0.24 | % | $ | 282,670 | 213 | 0.30 | % | (41 | ) | 48 | (89 | ) | |||||||||||||||||||||
Money
market accounts
|
318,178 | 1,292 | 1.63 | % | 331,303 | 3,411 | 4.13 | % | (2,119 | ) | (130 | ) | (1,989 | ) | ||||||||||||||||||||||
Savings
|
618,301 | 923 | 0.60 | % | 652,324 | 2,398 | 1.47 | % | (1,475 | ) | (119 | ) | (1,356 | ) | ||||||||||||||||||||||
Time
deposits
|
1,599,328 | 15,749 | 3.96 | % | 1,435,504 | 16,555 | 4.63 | % | (806 | ) | 8,126 | (8,932 | ) | |||||||||||||||||||||||
Total
interest bearing deposits
|
2,829,373 | 18,136 | 2.58 | % | 2,701,801 | 22,577 | 3.35 | % | (4,441 | ) | 7,925 | (12,366 | ) | |||||||||||||||||||||||
Short-term
borrowings
|
93,315 | 448 | 1.93 | % | 96,417 | 989 | 4.12 | % | (541 | ) | (31 | ) | (510 | ) | ||||||||||||||||||||||
Long-term
debt
|
16 | - | 5.25 | % | 46 | - | 5.24 | % | - | - | - | |||||||||||||||||||||||||
Total
Interest Bearing Liabilities
|
2,922,704 | 18,584 | 2.56 | % | 2,798,264 | 23,566 | 3.38 | % | (4,982 | ) | 7,894 | (12,876 | ) | |||||||||||||||||||||||
Demand
deposits
|
262,928 | 254,920 | ||||||||||||||||||||||||||||||||||
Other
liabilities
|
21,262 | 23,977 | ||||||||||||||||||||||||||||||||||
Shareholders'
equity
|
239,242 | 233,332 | ||||||||||||||||||||||||||||||||||
Total
liab. & shareholders' equity
|
$ | 3,446,136 | $ | 3,310,493 | ||||||||||||||||||||||||||||||||
Net
Interest Income , tax equivalent
|
24,212 | 24,752 | $ | (540 | ) | (288 | ) | (252 | ) | |||||||||||||||||||||||||||
Net
Interest Spread
|
2.55 | % | 2.63 | % | ||||||||||||||||||||||||||||||||
Net
Interest margin (net interest income to total interest earning
assets)
|
2.88 | % | 3.07 | % | ||||||||||||||||||||||||||||||||
Tax
equivalent adjustment
|
(739 | ) | (770 | ) | ||||||||||||||||||||||||||||||||
Net
Interest Income
|
$ | 23,473 | $ | 23,982 |
Six
|
2008
|
Six
|
2007
|
|||||||||||||||||||||||||||||||||
Month
|
Month
|
|||||||||||||||||||||||||||||||||||
Average
Balance
|
Interest
|
Average
Rate
|
Average
Balance
|
Interest
|
Average
Rate
|
Change
in
Interest
Income/
Expense
|
Variance
Balance
Change
|
Variance
Rate
Change
|
||||||||||||||||||||||||||||
(dollars
in thousands)
|
||||||||||||||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||||||||||||||
Securities
available for sale:
|
||||||||||||||||||||||||||||||||||||
U.S.
Treasuries
|
$ | 1,498 | 35 | 4.62 | % | $ | 455 | 11 | 4.71 | % | $ | 24 | 25 | (1 | ) | |||||||||||||||||||||
U.
S. Gov't Sponsored Enterprises
|
240,160 | 6,091 | 5.07 | % | 211,958 | 5,599 | 5.28 | % | 492 | 1,064 | (572 | ) | ||||||||||||||||||||||||
Mortgage-backed
securities and collateralized mortgage obligations
|
151,171 | 3,510 | 4.64 | % | 166,087 | 3,880 | 4.67 | % | (370 | ) | (345 | ) | (25 | ) | ||||||||||||||||||||||
States
and political subdivisions
|
122,573 | 4,154 | 6.78 | % | 128,761 | 4,386 | 6.81 | % | (232 | ) | (213 | ) | (19 | ) | ||||||||||||||||||||||
Other
|
11,523 | 365 | 6.36 | % | 12,825 | 350 | 5.48 | % | 15 | (82 | ) | 97 | ||||||||||||||||||||||||
Total
securities available for sale
|
526,925 | 14,155 | 5.37 | % | 520,086 | 14,226 | 5.47 | % | (71 | ) | 449 | (520 | ) | |||||||||||||||||||||||
Federal
funds sold and other short-term Investments
|
442,089 | 6,018 | 2.73 | % | 393,555 | 10,295 | 5.26 | % | (4,277 | ) | 3,191 | (7,468 | ) | |||||||||||||||||||||||
Trading
Securities
|
||||||||||||||||||||||||||||||||||||
Trading
Securities Agency
|
323,498 | 6,773 | 4.19 | % | 435,545 | 11,650 | 5.35 | % | (4,877 | ) | (2,646 | ) | (2,231 | ) | ||||||||||||||||||||||
Trading
Securities SCM
|
5,631 | 87 | 3.09 | % | - | - | 0.00 | % | 87 | 87 | - | |||||||||||||||||||||||||
Total
Trading Securities
|
329,129 | 6,860 | 4.17 | % | 435,545 | 11,650 | 5.35 | % | (4,790 | ) | (2,559 | ) | (2,231 | ) | ||||||||||||||||||||||
Held
to Maturity Agencies
|
37,003 | 733 | 3.96 | % | - | - | 0.00 | % | 733 | 733 | - | |||||||||||||||||||||||||
Held
to Maturity Corp. Bonds
|
11,858 | 277 | 4.68 | % | - | - | 0.00 | % | 277 | 277 | - | |||||||||||||||||||||||||
Total
Held to Maturities
|
48,861 | 1,010 | 4.13 | % | - | - | 0.00 | % | 1,010 | 1,010 | - | |||||||||||||||||||||||||
Commercial
Loans
|
287,634 | 9,658 | 6.72 | % | 269,029 | 10,135 | 7.54 | % | (477 | ) | 1,530 | (2,007 | ) | |||||||||||||||||||||||
Residential
mortgage loans
|
1,443,862 | 44,471 | 6.16 | % | 1,286,135 | 39,978 | 6.22 | % | 4,493 | 5,596 | (1,103 | ) | ||||||||||||||||||||||||
Home
equity lines of credit
|
228,173 | 6,292 | 5.55 | % | 240,488 | 7,697 | 6.45 | % | (1,405 | ) | (377 | ) | (1,028 | ) | ||||||||||||||||||||||
Installment
loans
|
5,391 | 403 | 15.00 | % | 5,636 | 403 | 14.43 | % | - | (34 | ) | 34 | ||||||||||||||||||||||||
Loans,
net of unearned income
|
1,965,060 | 60,824 | 6.19 | % | 1,801,288 | 58,213 | 6.47 | % | 2,611 | 6,715 | (4,104 | ) | ||||||||||||||||||||||||
Total
interest earning assets
|
3,312,064 | 88,867 | 5.37 | % | 3,150,474 | 94,384 | 6.00 | % | (5,517 | ) | 8,806 | (14,323 | ) | |||||||||||||||||||||||
Allowance
for loan losses
|
(34,602 | ) | (35,409 | ) | ||||||||||||||||||||||||||||||||
Cash
& non-interest earning assets
|
124,217 | 130,095 | ||||||||||||||||||||||||||||||||||
Total
assets
|
$ | 3,401,679 | $ | 3,245,160 | ||||||||||||||||||||||||||||||||
Liabilities
and shareholders' equity
|
||||||||||||||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||||||||||||||
Interest
Bearing Checking Accounts
|
$ | 287,048 | 376 | 0.26 | % | $ | 280,443 | 415 | 0.30 | % | (39 | ) | 28 | (67 | ) | |||||||||||||||||||||
Money
market accounts
|
326,494 | 3,373 | 2.08 | % | 327,797 | 6,715 | 4.13 | % | (3,342 | ) | (27 | ) | (3,315 | ) | ||||||||||||||||||||||
Savings
|
612,533 | 2,266 | 0.74 | % | 654,255 | 4,821 | 1.49 | % | (2,555 | ) | (287 | ) | (2,268 | ) | ||||||||||||||||||||||
Time
deposits
|
1,562,903 | 32,465 | 4.18 | % | 1,377,866 | 31,192 | 4.57 | % | 1,273 | 7,350 | (6,077 | ) | ||||||||||||||||||||||||
Total
interest bearing deposits
|
2,788,978 | 38,480 | 2.77 | % | 2,640,361 | 43,143 | 3.30 | % | (4,663 | ) | 7,064 | (11,727 | ) | |||||||||||||||||||||||
Short-term
borrowings
|
92,870 | 1,024 | 2.22 | % | 97,146 | 1,982 | 4.11 | % | (958 | ) | (84 | ) | (874 | ) | ||||||||||||||||||||||
Long-term
debt
|
20 | 1 | 5.25 | % | 50 | 1 | 5.27 | % | - | - | - | |||||||||||||||||||||||||
Total
Interest Bearing Liabilities
|
2,881,868 | 39,505 | 2.76 | % | 2,737,557 | 45,126 | 3.32 | % | (5,621 | ) | 6,980 | (12,601 | ) | |||||||||||||||||||||||
Demand
deposits
|
259,837 | 249,493 | ||||||||||||||||||||||||||||||||||
Other
liabilities
|
21,455 | 23,190 | ||||||||||||||||||||||||||||||||||
Shareholders'
equity
|
238,519 | 234,920 | ||||||||||||||||||||||||||||||||||
Total
liab. & shareholders' equity
|
$ | 3,401,679 | $ | 3,245,160 | ||||||||||||||||||||||||||||||||
Net
Interest Income , tax equivalent
|
49,362 | 49,258 | $ | 104 | 1,826 | (1,722 | ) | |||||||||||||||||||||||||||||
Net
Interest Spread
|
2.61 | % | 2.68 | % | ||||||||||||||||||||||||||||||||
Net
Interest margin (net interest income to total interest earning
assets)
|
2.97 | % | 3.11 | % | ||||||||||||||||||||||||||||||||
Tax
equivalent adjustment
|
(1,491 | ) | (1,555 | ) | ||||||||||||||||||||||||||||||||
Net
Interest Income
|
$ | 47,871 | $ | 47,703 |
|
PART
II
|
|
OTHER
INFORMATION
|
Item
1.
|
Legal
Proceedings
|
|
None.
|
Item
1A.
|
Risk
Factors
|
Item
2.
|
Unregistered Sales of Equity Securities and Use of
Proceeds
|
Item
3.
|
Defaults Upon Senior
Securities
|
Item
4.
|
Submissions of Matters to Vote of Security
Holders
|
1.
|
Election
of Directors:
|
Director
|
For
|
Withheld
|
||||||
Anthony
J. Marinello, M.D., Ph.D
|
57,652,861 | 4,127,598 | ||||||
William
D. Powers
|
54,057,779 | 7,722,680 |
2.
|
Proposal
to ratify the appointment of KPMG LLP as the independent
certified
|
For
|
Against
|
Abstain
|
||||||
59,339,729
|
2,060,463 | 380,260 |
Item
5.
|
Other
Information
|
Item
6.
|
Exhibits and Reports on Form
8-K
|
(a)
Exhibits Reg S-K (Item 601) Exhibit
No.
|
Description
|
15
|
KPMG
LLP Letter Regarding Unaudited Interim Financial
Information
|
31(a)
|
Rule
13a-15(e)/15d-15(e) Certification of Robert J. McCormick, principal
executive officer.
|
31(b)
|
Rule
13a-15(e)/15d-15(e) Certification of Robert T. Cushing, principal
financial officer.
|
32
|
Section
1350 Certifications of Robert J. McCormick, principal executive officer
and Robert T. Cushing, principal financial
officer.
|
TrustCo
Bank Corp NY
|
||
By: /s/Robert J.
McCormick
|
|
|
Robert
J. McCormick
|
||
President and
Chief Executive Officer
|
||
By: /s/Robert T.
Cushing
|
|
|
Robert
T. Cushing
|
||
Executive
Vice President and Chief Financial
Officer
|
Reg
S-K Exhibit No.
|
Description
|
KPMG
LLP Letter Regarding Unaudited Interim Financial
Information
|
|
Rule
13a-15(e)/15d-15(e) Certification of Robert J. McCormick, principal
executive officer.
|
|
Rule
13a-15(e)/15d-15(e) Certification of Robert T. Cushing, principal
financial officer.
|
|
Section
1350 Certifications of Robert J. McCormick, principal executive officer and Robert T.
Cushing, principal financial
officer.
|