TrustCo Bank Corp NY (TRST) 8-K Results of Operations and Financial Condition

Exhibit 99(a)

News Release

5 Sarnowski Drive, Glenville, New York, 12302

(518) 377-3311  Fax:  (518) 381-3668

Subsidiary:  Trustco Bank NASDAQ -- TRST

Contact:  Kevin T. Timmons

Vice President/Treasurer

(518) 381-3607

FOR IMMEDIATE RELEASE:

TrustCo Announces 2012 Earnings Up 13%

Glenville, New York –January 22, 2013

TrustCo Bank Corp NY (TrustCo, Nasdaq: TRST) today announced that net income was up 13.4% from $33.1 million in the year ended December 31, 2011 to $37.5 million for the year ended December 31,  2012.  Net income for the fourth quarter of 2012 was $9.8 million, up 12.5% over the prior-year period and equal to diluted earnings per share of $0.104, compared to net income of $8.7 million and diluted earnings per share of $0.093 for the fourth quarter of 2011.

TrustCo saw continued balance sheet growth in 2012 in both loans and deposits.  Robert J. McCormick, President and Chief Executive Officer noted, “We are pleased that 2012 resulted in continued solid earnings growth.  We continue to add profitable customer relationships on both the deposit and loan side, which helped our bottom line grow in 2012 and we believe will continue to do so into 2013.  Our highly liquid balance sheet allows us to fund loan growth without having to overpay for deposits, which enabled us to significantly restructure our deposit mix during 2012, and should be of additional benefit when interest rates eventually begin to rise.  We look forward to 2013 with optimism, though we note that our industry continues to face challenges as the economy remains fragile and interest rates remain at unprecedented levels.  We will continue to take advantage of opportunities that are presented.”  Return on average equity and return on average assets were 10.70% and 0.87%, respectively, for 2012, compared to 11.04% and 0.81% for 2011.  The efficiency ratio was 52.28% for 2012, compared to 49.95% for 2011.  The ratios for both years rank TrustCo among industry leaders, a continuation of longer term trends.  TrustCo’s efficiency ratio and return on average equity, for example, have ranked in the top ten in its peer group in 10 of the last 15 years for the former and in 12 of the last 15 years for the latter.  Results for 2012 include the full year effect of the common stock offering completed on July 6, 2011.

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Mr. McCormick also noted “We continue to see some signs of economic improvement in the markets in which we operate, although high levels of unemployment and other persistent issues continue to constrain any significant economic growth. We believe our long-term focus on traditional lending criteria and conservative balance sheet management has enabled us to maintain a strong balance sheet and continued profitability.  As a result, we have been able to focus on conducting business, which has put us in a position to take advantage of changes in market and competitive conditions.”

TrustCo continued to report solid growth in loans and deposits on a year-over-year basis.  For the full year ended December 31, 2012, average loans were up $149.6 million or 6.2% compared to the same period in 2011, while average deposits increased $172.1 million or 4.7% over the same period.  Mr. McCormick noted that, “The year-over-year growth of our loans and deposits reflects the long term strategic focus of the Bank.  The growth in deposits came despite a tactical decision earlier in the year to intensify our focus on enhancing our mix of deposits and growing our core customer base, which resulted in the planned loss of higher costing certificate of deposit balances and an improvement of our net interest margin.

Our branch franchise continues to be the key to our long term plans.  We have made significant progress in expanding our loans and deposits through our branches, and expect that to continue as the new branches grow.  We remain mindful that fully achieving our goals for our newer branches will take time and continued hard work.  We believe our success in growing customer relationships provides the basic building blocks that will help drive profit growth over the coming years.”

For the three months ended December 31, 2012 net income was $9.8 million compared to net income of $8.7 million for the fourth quarter of 2011.  Return on average equity and return on average assets were 10.88% and 0.91%, respectively, for the fourth quarter of 2012 and 10.15% and 0.83% for the comparable period in 2011.

Reported credit results for the year were affected by the implementation in the third quarter of new OCC guidance which affected consumer loans where the borrower's obligation to TrustCo has been discharged in bankruptcy and the borrower has not reaffirmed the debt.  Implementation of this new OCC guidance affected third quarter results as follows:

· Net $4.0 million of performing consumer loans were reclassified to nonaccrual status, and

· $804 thousand increase in net charge offs, which was covered by the reserve.

Nonperforming loans were $52.7 million as of December 31, 2012, compared to $48.8 million at December 31, 2011.  This includes the NPLs added as a result of the OCC guidance noted above. Care should be taken in examining NPL numbers across banking institutions as not all regulators provided this guidance to the institutions they regulate.  Nonperforming assets were $61.4 million at December 31, 2012, compared to $54.0 million at December 31, 2011.  At December 31, 2012, nonperforming loans were equal to 1.96% of total loans, compared to 1.93% at December 31, 2011.  Nonperforming assets to total assets were 1.41% at December 31, 2012, compared to 1.27% at December 31, 2011.  The allowance for loan losses as a percentage of gross loans and as a multiple of net charge-offs remains strong.  The allowance to total loans was 1.79% at December 31, 2012 and 1.93% at December 31, 2011.  For the fourth quarter of 2012 the allowance covered annualized fourth quarter net charge-offs by 4.9 times, compared to an annualized 3.7 times for the fourth quarter of 2011.  The coverage ratio, or allowance for loan losses to nonperforming loans was 91.0% at December 31, 2012, compared to 99.9% at December 31, 2011

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Net interest margin for the fourth quarter of 2012 was 3.21%, equal to the third quarter level and down from 3.35% in the fourth quarter of 2011.

At December 31, 2012 the tangible equity ratio was 8.24% compared to 7.97% at December 31, 2011.  Tangible book value per share ended the fourth quarter at $3.81 compared to $3.62 in the year-ago period.

TrustCo Bank Corp NY is a $4.3 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 138 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at December 31, 2012.

In addition, the Bank’s Financial Services Department offers a full range of investment services, retirement planning and trust and estate administration services. The common shares of TrustCo are traded on the NASDAQ Global Select Market under the symbol TRST.

A conference call to discuss fourth quarter 2012 results will be held at 9:00 a.m. Eastern Time on January 23, 2013.  Those wishing to participate in the call may dial toll-free 1-888-317-6016.  International callers must dial + 1-412-317-6016.   A replay of the call will be available until April 24, 2013 by dialing 1-877-344-7529 (1-412-317-0088 for international callers), Conference Number 10023478. The call will also be audio webcast at: http://services.choruscall.com/links/trst130123.html, and will be available until January 23, 2014.

Safe Harbor Statement

All statements in this news release that are not historical are forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended. The “forward-looking statements” may include statements regarding future events or performance and statements regarding TrustCo’s ability to offer and sell securities under its shelf registration statement. Such forward-looking statements are subject to factors that could cause actual results to differ materially for TrustCo from those discussed. TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo’s actual results and could cause TrustCo’s actual financial performance to differ materially from that expressed in any forward-looking statement: credit risk, the effects of and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rates, market and monetary fluctuations, competition, the effect of changes in financial services laws and regulations (including laws concerning taxation, banking and securities), real estate and collateral values, changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board (“FASB”) or the Public Company Accounting Oversight Board; changes in local market areas and general business and economic trends and the matters described under the heading “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2011, as amended, and in our subsequent securities filings.

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TRUSTCO BANK CORP NY

GLENVILLE, NY

FINANCIAL HIGHLIGHTS

(dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended
	12/31/12			09/30/12		12/31/11
Summary of operations
Net interest income (TE)	$	33,718			34,321		34,220
Provision for loan losses		3,000			2,900		4,200
Net securities transactions		763			666		132
Noninterest income		5,398			4,551		4,219
Noninterest expense		21,150			20,643		19,524
Net income		9,806			9,753		8,714
Per common share
Net income per share:
- Basic	$	0.104			0.104		0.093
- Diluted	$	0.104			0.104		0.093
Cash dividends		0.066			0.066		0.066
Tangible Book value at period end		3.81			3.81		3.62
Market price at period end		5.28			5.71		5.61
At period end
Full time equivalent employees		759			760		726
Full service banking offices		138			138		136
Performance ratios
Return on average assets		0.91	%		0.89		0.83
Return on average equity		10.88			10.97		10.15
Efficiency (1)		53.11			49.99		47.53
Net interest spread (TE)		3.15			3.15		3.26
Net interest margin (TE)		3.21			3.21		3.35
Dividend payout ratio		63.00			63.13		70.50
Capital ratio at period end
Consolidated tangible equity to tangible assets (2)		8.24			8.27		7.97
Asset quality analysis at period end
Nonperforming loans to total loans (4)		1.96			1.92		1.93
Nonperforming assets to total assets		1.41			1.36		1.27
Allowance for loan losses to total loans		1.79			1.82		1.93
Coverage ratio (3)		0.9	x		0.9		1.0

(1) Calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income (excluding net securities transactions).

(2) The tangible equity ratio excludes $553,000 of intangibles from both equity and assets.

(3) Calculated as allowance for loan losses divided by total nonperforming loans.

(4) Included in the September 30, 2012 balance of nonperforming loans is net $4.0 of perfoming loans that have been reclassified to nonaccrual status as a result of recent OCC guidance.

TE = Taxable equivalent.

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FINANCIAL HIGHLIGHTS, Continued

(dollars in thousands, except per share data)

(Unaudited)

	Year Ended
	12/31/12			12/31/11
Summary of operations
Net interest income (TE)	$	135,669			135,717
Provision for loan losses		12,000			18,750
Net securities transactions		2,161			1,428
Noninterest income		18,803			17,345
Noninterest expense		83,977			82,142
Net income		37,534			33,087
Per common share
Net income per share:
- Basic	$	0.400			0.389
- Diluted		0.400			0.389
Cash dividends		0.263			0.263
Tangible Book value at period end		3.81			3.62
Market price at period end		5.28			5.61
Performance ratios
Return on average assets		0.87	%		0.81
Return on average equity		10.70			11.04
Efficiency (1)		52.28			49.95
Net interest spread (TE)		3.13			3.31
Net interest margin (TE)		3.20			3.40
Dividend payout ratio		65.60			67.71

(1) Calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income (excluding net securities transactions).

TE = Taxable equivalent.

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CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended
	12/31/2012		9/30/2012		6/30/2012		3/31/2012		12/31/2011
Interest and dividend income:
Interest and fees on loans	$	31,776		32,103		32,277		32,425		32,711
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		1,191		1,996		2,606		2,304		2,661
State and political subdivisions		295		340		368		410		490
Mortgage-backed securities and collateralized mortgage obligations-residential		2,237		2,003		1,364		1,093		1,083
Corporate bonds		232		529		648		822		886
Small Business Administration-guaranteed participation securities		276		43		-		-		-
Other securities		5		4		5		5		5
Total interest and dividends on securities available for sale		4,236		4,915		4,991		4,634		5,125
Interest on held to maturity securities:
U. S. government sponsored enterprises		-		-		-		25		97
Mortgage-backed securities and collateralized mortgage obligations-residential		823		976		1,198		1,290		1,151
Corporate bonds		385		385		387		509		590
Total interest on held to maturity securities		1,208		1,361		1,585		1,824		1,838
Federal Reserve Bank and Federal Home Loan Bank stock		127		120		149		90		80
Interest on federal funds sold and other short-term investments		265		258		299		320		284
Total interest income		37,612		38,757		39,301		39,293		40,038
Interest expense:
Interest on deposits:
Interest-bearing checking		80		79		78		78		76
Savings		921		870		979		1,102		1,018
Money market deposit accounts		703		673		770		923		1,030
Time deposits		1,967		2,629		3,230		3,418		3,552
Interest on short-term borrowings		361		348		378		388		401
Total interest expense		4,032		4,599		5,435		5,909		6,077
Net interest income		33,580		34,158		33,866		33,384		33,961
Provision for loan losses		3,000		2,900		3,000		3,100		4,200
Net interest income after provision for loan losses		30,580		31,258		30,866		30,284		29,761
Noninterest income:
Trust department income		1,815		1,145		1,407		1,394		1,086
Fees for services to customers		3,386		3,234		2,939		2,732		2,920
Net gain on securities transactions		763		666		55		677		132
Other		197		172		176		207		213
Total noninterest income		6,161		5,217		4,577		5,010		4,351
Noninterest expenses:
Salaries and employee benefits		8,427		7,587		7,519		7,743		7,638
Net occupancy expense		3,889		3,756		3,817		3,795		3,664
Equipment expense		1,637		1,316		1,600		1,520		1,200
Professional services		1,458		1,657		1,489		1,436		1,411
Outsourced services		1,175		1,350		1,347		1,250		1,050
Advertising expense		1,037		935		1,060		809		607
FDIC and other insurance		1,007		983		953		880		577
Other real estate expense, net		375		1,210		665		966		1,254
Other		2,145		1,849		2,599		2,737		2,123
Total noninterest expenses		21,150		20,643		21,049		21,136		19,524
Income before taxes		15,591		15,832		14,394		14,158		14,588
Income taxes		5,785		6,079		5,328		5,249		5,874
Net income	$	9,806		9,753		9,066		8,909		8,714
Net income per Common Share:
- Basic	$	0.104		0.104		0.097		0.095		0.093
- Diluted		0.104		0.104		0.097		0.095		0.093
Average basic shares (thousands)		93,824		93,692		93,561		93,546		93,308
Average diluted shares (thousands)		93,828		93,700		93,562		93,546		93,308
Note:  Taxable equivalent net interest income	$	33,718		34,321		33,993		33,637		34,220

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CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)

	Year Ended
	12/31/2012		12/31/2011
Interest an d dividend income:
Interest and fees on loans	$	128,581		129,212
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		8,097		12,998
State and political subdivisions		1,413		2,471
Mortgage-backed securities and collateralized mortgage obligations-residential		6,697		3,091
Corporate bonds		2,231		4,059
Small Business Administration-guaranteed participation securities		319		-
Other securities		19		20
Total interest and dividends on securities available for sale		18,776		22,639
Interest on held to maturity securities:
U. S. government sponsored enterprises		25		261
Mortgage-backed securities-residential		4,287		4,765
Corporate bonds		1,666		2,465
Total interest on held to maturity securities		5,978		7,491
Federal Reserve Bank and Federal Home Loan Bank stock		486		304
Interest on federal funds sold and other short-term investments		1,142		1,102
Total interest income		154,963		160,748
Interest expense:
Interest on deposits:
Interest-bearing checking		315		285
Savings		3,872		3,788
Money market deposit accounts		3,069		4,599
Time deposits		11,244		15,998
Interest on short-term borrowings		1,475		1,574
Total interest expense		19,975		26,244
Net interest income		134,988		134,504
Provision for loan losses		12,000		18,750
Net interest income after provision for loan losses		122,988		115,754
Noninterest income:
Trust department income		5,761		5,088
Fees for services to customers		12,290		11,305
Net gain on securities transactions		2,161		1,428
Other		752		952
Total noninterest income		20,964		18,773
Noninterest expenses:
Salaries and employee benefits		31,276		28,751
Net occupancy expense		15,257		14,687
Equipment expense		6,073		5,652
Professional services		6,040		5,729
Outsourced services		5,122		5,100
Advertising expense		3,841		2,784
FDIC and other insurance		3,823		4,655
Other real estate expense, net		3,216		5,693
Other		9,329		9,091
Total noninterest expenses		83,977		82,142
Income before taxes		59,975		52,385
Income taxes		22,441		19,298
Net income	$	37,534		33,087
Net income per Common Share:
- Basic	$	0.400		0.389
- Diluted		0.400		0.389
Average basic shares (thousands)		93,633		85,073
Average diluted shares (thousands)		93,637		85,073
Note:  Taxable equivalent net interest income	$	135,669		135,717

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CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(dollars in thousands)

(Unaudited)

	12/31/2012			9/30/2012			6/30/2012			3/31/2012			12/31/2011
ASSETS:
Cash and due from banks	$	55,789			40,354			36,589			39,426			44,395
Federal funds sold and other short term investments		488,227			402,290			486,049			486,055			488,548
Total cash and cash equivalents		544,016			442,644			522,638			525,481			532,943
Securities available for sale:
U. S. government sponsored enterprises		263,108			427,798			643,189			744,725			563,460
States and political subdivisions		26,457			33,857			36,978			38,367			43,968
Mortgage-backed securities and collateralized mortgage obligations-residential		518,776			515,879			354,285			219,301			204,022
Corporate bonds		26,529			49,296			73,311			81,654			96,608
Small Business Administration-guaranteed participation securities		76,562			25,338			-			-			-
Other securities		660			660			660			660			660
Total securities available for sale		912,092			1,052,828			1,108,423			1,084,707			908,718
Held to maturity securities:
U. S. government sponsored enterprises		-			-			-			-			15,000
Mortgage-backed securities and collateralized mortgage obligations-residential		108,471			120,877			133,562			143,629			141,857
Corporate bonds		34,955			35,074			35,193			35,312			59,431
Total held to maturity securities		143,426			155,951			168,755			178,941			216,288
Federal Reserve Bank and Federal Home Loan Bank stock		9,632			9,632			9,632			9,004			9,004
Loans:
Commercial		219,577			217,431			235,347			235,513			248,163
Residential mortgage loans		2,126,668			2,056,972			2,003,046			1,970,278			1,955,951
Home equity line of credit		333,909			327,083			317,157			314,668			313,038
Installment loans		4,579			4,455			4,071			3,855			4,151
Loans, net of deferred fees and costs		2,684,733			2,605,941			2,559,621			2,524,314			2,521,303
Less:
Allowance for loan losses		47,927			47,364			48,018			48,535			48,717
Net loans		2,636,806			2,558,577			2,511,603			2,475,779			2,472,586
Bank premises and equipment, net		36,239			37,251			37,868			37,099			37,006
Other assets		64,402			61,290			62,480			63,432			67,099
Total assets	$	4,346,613			4,318,173			4,421,399			4,374,443			4,243,644
LIABILITIES:
Deposits:
Demand	$	300,544			292,350			283,873			281,628			267,776
Interest-bearing checking		560,064			536,892			528,101			507,510			489,227
Savings accounts		1,198,517			1,167,927			1,122,208			1,068,058			978,819
Money market deposit accounts		667,589			668,064			644,627			631,761			635,434
Certificates of deposit (in denominations of $100,000 or more)		352,734			359,246			452,043			467,447			460,971
Other time accounts		724,745			751,974			867,798			894,946			903,746
Total deposits		3,804,193			3,776,453			3,898,650			3,851,350			3,735,973
Short-term borrowings		159,846			161,751			150,718			159,002			147,563
Accrued expenses and other liabilities		23,776			22,352			22,124			19,445			21,592
Total liabilities		3,987,815			3,960,556			4,071,492			4,029,797			3,905,128
SHAREHOLDERS' EQUITY:
Capital stock		98,912			98,912			98,912			98,912			98,912
Surplus		174,899			175,284			175,773			176,199			176,638
Undivided profits		132,378			128,750			125,153			122,235			119,465
Accumulated other comprehensive income (loss), net of tax		1,558			4,879			1,585			53			(2,493	)
Treasury stock at cost		(48,949	)		(50,208	)		(51,516	)		(52,753	)		(54,006	)
Total shareholders' equity		358,798			357,617			349,907			344,646			338,516
Total liabilities and shareholders' equity	$	4,346,613			4,318,173			4,421,399			4,374,443			4,243,644
Outstanding shares (thousands)		93,935			93,807			93,674			93,549			93,315

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NONPERFORMING ASSETS

(dollars in thousands)

(Unaudited)

Nonperforming Assets

	12/31/12			09/30/12			06/30/12			03/31/12			12/31/11
New York and other states*
Loans in nonaccrual status:
Commercial	$	6,635			5,880			5,656			5,667			4,981
Real estate mortgage - 1 to 4 family		35,286			32,593			29,167			29,894			27,820
Installment		6			71			1			9			3
Total non-accrual loans		41,927			38,544			34,824			35,570			32,804
Other nonperforming real estate mortgages - 1 to 4 family		231			238			243			306			312
Total nonperforming loans		42,158			38,782			35,067			35,876			33,116
Other real estate owned		2,979			2,716			2,787			2,411			2,382
Total nonperforming assets	$	45,137			41,498			37,854			38,287			35,498
Florida
Loans in nonaccrual status:
Commercial	$	2,698			2,698			8,435			5,874			5,000
Real estate mortgage - 1 to 4 family		7,820			8,438			7,954			9,404			10,662
Installment		1			7			1			-			-
Total non-accrual loans		10,519			11,143			16,390			15,278			15,662
Other nonperforming real estate mortgages - 1 to 4 family		-			-			-			-			-
Total nonperforming loans		10,519			11,143			16,390			15,278			15,662
Other real estate owned		5,726			5,975			1,083			1,293			2,883
Total nonperforming assets	$	16,245			17,118			17,473			16,571			18,545
Total
Loans in nonaccrual status:
Commercial	$	9,333			8,578			14,091			11,541			9,981
Real estate mortgage - 1 to 4 family		43,106			41,031			37,121			39,298			38,482
Installment		7			78			2			9			3
Total non-accrual loans		52,446			49,687			51,214			50,848			48,466
Other nonperforming real estate mortgages - 1 to 4 family		231			238			243			306			312
Total nonperforming loans		52,677			49,925			51,457			51,154			48,778
Other real estate owned		8,705			8,691			3,870			3,704			5,265
Total nonperforming assets	$	61,382			58,616			55,327			54,858			54,043
Quarterly Net Chargeoffs
	12/31/12			09/30/12			06/30/12			03/31/12			12/31/11
New York and other states*
Commercial	$	152			9			713			321			99
Real estate mortgage - 1 to 4 family		1,410			2,157			1,844			1,136			1,404
Installment		72			7			7			(8	)		5
Total net chargeoffs	$	1,634			2,173			2,564			1,449			1,508
Florida
Commercial	$	(18	)		736			288			160			400
Real estate mortgage - 1 to 4 family		810			644			665			1,673			1,359
Installment		12			1			-			-			(2	)
Total net chargeoffs	$	804			1,381			953			1,833			1,757
Total
Commercial	$	134			745			1,001			481			499
Real estate mortgage - 1 to 4 family		2,220			2,801			2,509			2,809			2,763
Installment		84			8			7			(8	)		3
Total net chargeoffs	$	2,438			3,554			3,517			3,282			3,265
Asset Quality Ratios
	12/31/12			09/30/12			06/30/12			03/31/12			12/31/11
Total nonperforming loans(1)	$	52,677			49,925			51,457			51,154			48,778
Total nonperforming assets(1)		61,382			58,616			55,327			54,858			54,043
Total net chargeoffs(2)		2,438			3,554			3,517			3,282			3,265
Allowance for loan losses(1)		47,927			47,364			48,018			48,535			48,717
Nonperforming loans to total loans(1)		1.96	%		1.92	%		2.01	%		2.03	%		1.93	%
Nonperforming assets to total assets(1)		1.41	%		1.36	%		1.25	%		1.25	%		1.27	%
Allowance for loan losses to total loans(1)		1.79	%		1.82	%		1.88	%		1.92	%		1.93	%
Coverage ratio(1)		91.0	%		94.9	%		93.3	%		94.9	%		99.9	%
Annualized net chargeoffs to average loans(2)		0.37	%		0.55	%		0.55	%		0.52	%		0.52	%
Allowance for loan losses to annualized net chargeoffs(2)		4.9	x		3.3	x		3.4	x		3.7	x		3.7	x

* Includes New York, New Jersey, Vermont and Massachusetts.

(1)  At period-end

(2)  For the period ended

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DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY- INTEREST RATES AND INTEREST DIFFERENTIAL

(dollars in thousands)	Three months ended									Three months ended
(Unaudited)	December 31, 2012									December 31, 2011
	Average			Interest			Average			Average			Interest			Average
	Balance						Rate			Balance						Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises	$	370,086			1,191			1.29	%	$	592,488			2,661			1.80	%
Mortgage backed securities and collateralized mortgage obligations-residential		480,382			2,237			1.86			199,155			1,083			2.18
State and political subdivisions		30,619			425			5.55			47,373			712			6.01
Corporate bonds		35,640			232			2.59			102,532			886			3.46
Small Business Administration-guaranteed participation securities		54,678			276			2.02			-			-			0.00
Other		660			5			3.03			660			5			3.03
Total securities available for sale		972,065			4,366			1.80			942,208			5,347			2.27
Federal funds sold and other short-term Investments		427,298			265			0.25			444,599			284			0.25
Held to maturity securities:
U. S. government sponsored enterprises		-			-			0.00			16,413			97			2.37
Corporate bonds		35,013			385			4.40			59,491			590			3.96
Mortgage backed securities and collateralized mortgage obligations-residential		114,647			823			2.87			119,739			1,151			3.85
Total held to maturity securities		149,660			1,208			3.23			195,643			1,838			3.76
Federal Reserve Bank and Federal Home Loan Bank stock		9,632			127			5.27			6,954			80			4.60
			��
Commercial loans		216,787			2,917			5.38			239,680			3,401			5.67
Residential mortgage loans		2,087,003			25,804			4.95			1,945,375			26,331			5.41
Home equity lines of credit		331,441			2,905			3.49			310,052			2,870			3.67
Installment loans		4,274			158			14.68			3,532			146			16.37
Loans, net of unearned income		2,639,505			31,784			4.81			2,498,639			32,748			5.24
Total interest earning assets		4,198,160			37,750			3.59			4,088,043			40,297			3.94
Allowance for loan losses		(48,312	)								(49,250	)
Cash & non-interest earning assets		146,482									143,121
Total assets	$	4,296,330								$	4,181,914
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts	$	532,579			80			0.06	%	$	467,418			76			0.07	%
Money market accounts		669,201			703			0.42			639,365			1,030			0.64
Savings		1,184,601			921			0.31			951,562			1,018			0.42
Time deposits		1,085,054			1,967			0.72			1,360,979			3,552			1.04
Total interest bearing deposits		3,471,435			3,671			0.42			3,419,324			5,676			0.66
Short-term borrowings		161,816			361			0.89			142,443			401			1.12
Total interest bearing liabilities		3,633,251			4,032			0.44			3,561,767			6,077			0.68
Demand deposits		283,528									258,980
Other liabilities		21,006									20,423
Shareholders' equity		358,545									340,744
Total liabilities and shareholders' equity	$	4,296,330								$	4,181,914
Net interest income , tax equivalent					33,718									34,220
Net interest spread								3.15	%								3.26	%
Net interest margin (net interest income to total interest earning assets)								3.21	%								3.35	%
Tax equivalent adjustment					(138	)								(259	)
Net interest income					33,580									33,961

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(dollars in thousands)	Year ended									Year ended
(Unaudited)	December 31, 2012									December 31, 2011
	Average			Interest			Average			Average			Interest			Average
	Balance						Rate			Balance						Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises	$	568,425			8,097			1.42	%	$	667,037			12,998			1.95	%
Mortgage backed securities and collateralized mortgage obligations-residential		334,616			6,697			2.00			112,504			3,091			2.75
State and political subdivisions		35,435			2,012			5.68			58,725			3,625			6.17
Corporate bonds		68,182			2,231			3.27			108,513			4,059			3.74
Small Business Administration-guaranteed participation securities		15,707			319			2.03			-			-			0.00
Other		660			19			2.88			703			20			2.84
Total securities available for sale		1,023,025			19,375			1.89			947,482			23,793			2.51
Federal funds sold and other short-term Investments		461,495			1,142			0.25			432,631			1,102			0.25
Held to maturity securities:
U. S. government sponsored enterprises		1,048			25			2.43			11,035			261			2.36
Corporate bonds		39,570			1,666			4.21			56,253			2,465			4.38
Mortgage backed securities and collateralized mortgage obligations-residential		131,092			4,287			3.27			114,296			4,765			4.17
Total held to maturity securities		171,710			5,978			3.48			181,584			7,491			4.13
Federal Reserve Bank and Federal Home Loan Bank stock		9,425			486			5.16			6,898			304			4.41
Commercial loans		230,539			12,486			5.42			247,691			14,285			5.77
Residential mortgage loans		2,017,230			104,028			5.16			1,873,028			103,281			5.51
Home equity lines of credit		321,299			11,551			3.60			298,996			11,117			3.72
Installment loans		3,915			598		��	15.28			3,622			588			16.23
Loans, net of unearned income		2,572,983			128,663			5.00			2,423,337			129,271			5.33
Total interest earning assets		4,238,638			155,644			3.67			3,991,932			161,961			4.06
Allowance for loan losses		(49,148	)								(46,210	)
Cash & non-interest earning assets		143,303									144,068
Total assets	$	4,332,793								$	4,089,790
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts	$	515,062			315			0.06	%	$	456,397			285			0.06	%
Money market accounts		649,452			3,069			0.47			632,786			4,599			0.73
Savings		1,115,151			3,872			0.35			889,773			3,788			0.43
Time deposits		1,251,846			11,244			0.90			1,403,312			15,998			1.14
Total interest bearing deposits		3,531,511			18,500			0.52			3,382,268			24,670			0.73
Short-term borrowings		152,982			1,475			0.96			133,803			1,574			1.18
Total interest bearing liabilities		3,684,493			19,975			0.54			3,516,071			26,244			0.75
Demand deposits		278,179									255,327
Other liabilities		19,441									18,653
Shareholders' equity		350,680									299,739
Total liabilities and shareholders' equity	$	4,332,793								$	4,089,790
Net interest income , tax equivalent					135,669									135,717
Net interest spread								3.13	%								3.31	%
Net interest margin (net interest income to total interest earning assets)								3.20	%								3.40	%
Tax equivalent adjustment					(681	)								(1,213	)
Net interest income					134,988									134,504

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Non-GAAP Financial Measures Reconciliation

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. We calculate tangible book value per share by dividing tangible equity by common shares outstanding, as compared to book value per common share, which we calculate by dividing shareholders’ equity by common shares outstanding. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios.

The efficiency ratio is a non-GAAP measure of expense control relative to recurring revenue.  We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, but excluding other real estate expense, net, which we refer to below as recurring expense, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, but excluding net gains on securities from this calculation, which we refer to below as recurring revenue.  We believe that this provides one reasonable measure of core expenses relative to core revenue.

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial position, results and ratios. Our management internally assesses our performance based, in part, on these measures.  However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled measures reported by other companies. A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share and efficiency ratio to the underlying GAAP numbers is set forth below.

Non-GAAP Financial Measures Reconciliation

(dollars in thousands, except per share amounts)

(Unaudited)

	12/31/12			09/30/12			06/30/12			03/31/12			12/31/11
Tangible Book Value Per Share
Equity	$	358,798			357,617			349,907			344,646			338,516
Less: Intangible assets		553			553			553			553			553
Tangible equity		358,245			357,064			349,354			344,093			337,963
Shares outstanding		93,935			93,807			93,674			93,549			93,315
Tangible book value per share		3.81			3.81			3.73			3.68			3.62
Book value per share		3.82			3.81			3.74			3.68			3.63
Tangible Equity to Tangible Assets
Total Assets		4,346,613			4,318,173			4,421,399			4,374,443			4,243,644
Less: Intangible assets		553			553			553			553			553
Tangible assets		4,346,060			4,317,620			4,420,846			4,373,890			4,243,091
Tangible Equity to Tangible Assets		8.24	%		8.27	%		7.90	%		7.87	%		7.97	%
Equity to Assets		8.25	%		8.28	%		7.91	%		7.88	%		7.98	%

	3 Months Ended															Year Ended
Efficiency Ratio	12/31/12			09/30/12			06/30/12			03/31/12			12/31/11			12/31/12			12/31/11
Net interest income (fully taxable equivalent)	$	33,718			34,321			33,993			33,637			34,220			135,669			135,717
Non-interest income		6,161			5,217			4,577			5,010			4,351			20,964			18,773
Less:  Net gain on securities		763			666			55			677			132			2,161			1,428
Recurring revenue		39,116			38,872			38,515			37,970			38,439			154,472			153,062
Total Noninterest expense		21,150			20,643			21,049			21,136			19,524			83,977			82,142
Less:  Other real estate expense, net		375			1,210			665			966			1,254			3,216			5,693
Recurring expense		20,775			19,433			20,384			20,170			18,270			80,761			76,449
Efficiency Ratio		53.11	%		49.99	%		52.92	%		53.12	%		47.53	%		52.28	%		49.95	%

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