UNITED STATES Conformed Copy
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- ------------------------------------------------------------------------
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended Commission File Number 0-10592
June 30, 1996
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:
(Title of class)
Common
- -------------------------------------------------------------------------------
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Number of Shares Outstanding
Class of Common Stock as of August 1, 1996
--------------------------- ----------------------
$1 Par Value 17,713,506
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TrustCo Bank Corp NY
INDEX
Part I. FINANCIAL INFORMATION PAGE NO.
Item 1. Interim Financial Statements (Unaudited): 1
Consolidated Statements of Income for the
Three Months and Six Months Ended June
30, 1996 and 1995
Consolidated Statements of Financial 2
Condition as of June 30, 1996 and
December 31, 1995
Consolidated Statements of Cash Flows 3-4
for the Six Months Ended June 30, 1996
and 1995
Notes to Consolidated Interim Financial 5
Statements
Independent Auditors' Report 6
Item 2. Management's Discussion and Analysis 7-16
Part II. OTHER INFORMATION
Item 1. Legal Proceedings -- NONE
Item 2. Changes in Securities -- NONE
Item 3. Defaults Upon Senior securities -- NONE
Item 4. Submission of Matters to Vote of Security
Holders -- Annual Meeting
Item 5. Other Information -- NONE
i
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Reg S-K Exhibit No. Description
- ------------------- -------------
3(i) Certificate of Amendment of the Certificate of Incorporation
of TrustCo Bank Corp NY
22 Submission of Matters to Vote of Security Holders -- Annual
Meeting
(b) Reports on Form 8-K
Filing of Form 8-K on April 16, 1996, of two press releases detailing first
quarter 1996 results, incorporated herein by reference.
Filing of Form 8-K on April 23, 1996, of press release regarding ALBANK
Financial Corporation acquisition status, incorporated herein by reference.
Filing of Form 8-K on May 21, 1996, of press release announcing quarterly
dividend, payable July 1, 1996, incorporated herein by reference.
Filing of Form 8-K on June 4, 1996, regarding May 21, 1996, letter to
shareholders which contained discussion of May 20, 1996, annual meeting of
shareholders, incorporated herein by reference.
Filing of Form 8-K on July 18, 1996, of two press releases detailing second
quarter 1996 results, incorporated herein by reference.
ii
TRUSTCO BANK CORP NY
Consolidated Statements of Income (Unaudited)
(Dollars in Thousands)
3 Months Ended 6 Months Ended
June 30 June 30
1996 1995 1996 1995
Interest and fees on loans..........................$ 26,726 26,558 53,673 52,563
Interest on U. S. Treasuries and agencies............ 8,713 6,963 17,150 11,935
Interest on states and political
subdivisions........................................ 983 699 1,883 1,254
Interest on mortgage-backed securities............... 1,112 2,198 2,434 4,524
Other................................................ 576 599 1,177 1,170
Interest on federal funds sold....................... 3,712 2,942 7,013 6,617
------- ------- ------- -------
Total interest income............................. 41,822 39,959 83,330 78,063
------- ------- ------- -------
Interest expense:
Interest on deposits:
NOW accounts........................................ 902 1,091 1,793 2,153
Savings............................................. 5,737 6,005 11,433 11,307
Money market deposit accounts....................... 500 573 1,012 1,197
Certificates of deposit of $100,000 or more......... 1,214 1,234 2,495 2,167
Other time.......................................... 10,840 10,740 22,104 19,813
Interest on short-term borrowings.................... 1,097 230 1,830 377
Interest on long-term debt........................... --- --- --- 69
------- ------- ------- -------
Total interest expense............................. 20,290 19,873 40,667 37,083
------- ------- ------- -------
Net interest income................................ 21,532 20,086 42,663 40,980
Provision for loan losses............................. 854 3,045 3,964 6,618
------- ------- ------- -------
Net interest income after provision
for loan losses................................... 20,678 17,041 38,699 34,362
------- ------- ------- -------
Noninterest income:
Trust department income.............................. 1,416 1,297 2,788 2,443
Fees for other services to customers................. 1,762 1,768 3,455 3,356
Net gain/(loss) on securities available for sale..... (2,630) 417 (3,051) 628
Other................................................ 477 504 960 1,008
------- ------- ------- -------
Total noninterest income............................ 1,025 3,986 4,152 7,435
------- ------- ------- -------
Noninterest expenses:
Salaries and employee benefits....................... 5,276 4,889 10,618 9,793
Net occupancy expense................................ 991 822 2,230 1,677
Equipment expense.................................... 819 870 1,659 1,582
FDIC insurance expense............................... 1 1,016 2 2,034
Professional services................................ 876 782 1,663 1,715
Other real estate expenses........................... 149 1,513 365 2,306
Other................................................ 2,563 1,970 4,584 4,506
------- ------- ------- -------
Total noninterest expenses.......................... 10,675 11,862 21,121 23,613
------- ------- ------- -------
Income before taxes................................ 11,028 9,165 21,730 18,184
Applicable income taxes............................... 4,115 3,059 8,132 6,173
------- ------- ------- -------
Net income.......................................$ 6,913 6,106 13,598 12,011
======== ======== ======== =======
Earnings per Common Share:
Net income.......................................$ 0.38 0.34* 0.75 0.67*
======= ======= ======= =======
Average equivalent shares outstanding (000s omitted).. 18,201 17,957 18,206 17,933
======= ======= ======= =======
*Per share data adjusted for 6 for 5 stock split in August, 1995
See accompanying notes to consolidated interim financial
statements.
-1-
TRUSTCO BANK CORP NY
Consolidated Statements of Financial Condition
(Dollars in Thousands)
06/30/96 12/31/95
(Unaudited)
Assets: --------- ---------
Cash and due from banks................................$ 43,267 50,889
Federal funds sold...................................... 435,000 239,000
--------- ---------
Total cash and cash equivalents....................... 478,267 289,889
Securities available for sale:
U. S. Treasuries and agencies.......................... 345,495 447,343
States and political subdivisions...................... 80,857 70,371
Mortgage-backed securities............................. 18,889 80,284
Other.................................................. 43,111 42,208
--------- ---------
Total securities available for sale................... 488,352 640,206
--------- ---------
Loans:
Commercial............................................. 224,264 233,590
Residential mortgage loans............................. 785,750 763,099
Home equity line of credit............................. 186,459 194,744
Installment loans...................................... 32,822 36,493
--------- ---------
Total loans...........................................1,229,295 1,227,926
Less: --------- ---------
Allowance for loan losses.............................. 50,582 48,320
Unearned income........................................ 1,573 1,784
--------- ---------
Net loans..............................................1,177,140 1,177,822
Bank premises and equipment............................. 24,269 25,008
Real estate owned....................................... 4,672 3,732
Other assets............................................ 51,273 39,528
--------- ---------
Total assets........................................$2,223,973 2,176,185
========= =========
Liabilities:
Deposits:
Demand................................................$ 112,233 111,743
Now accounts........................................... 235,078 231,107
Savings accounts....................................... 674,744 649,033
Money market deposit accounts.......................... 66,650 69,434
Certificates of deposit (in denominations of
$100,000 or more)..................................... 85,921 84,210
Other time............................................. 759,225 785,122
--------- ---------
Total deposits........................................1,933,851 1,930,649
Short-term borrowings................................... 106,654 56,654
Accrued expenses and other liabilities.................. 30,036 28,783
--------- ---------
Total liabilities.....................................2,070,541 2,016,086
--------- ---------
Shareholders' equity
Capital stock par value $1; 50,000,000 and 25,000,000
shares authorized June 30, 1996 and December 31,1995
respectively; 18,199,085 and 18,134,708 shares issued 18,135
June 30, 1996 and December 31, 1995, respectively..... 18,199
Surplus................................................. 116,604 116,128
Undivided profits....................................... 18,592 14,720
Net unrealized gain on securities available for sale.... 1,284 12,363
Treasury stock at cost - 496,646 shares at
June 30, 1996 and December 31, 1995................... (1,247) (1,247)
--------- ---------
Total shareholders' equity............................ 153,432 160,099
--------- ---------
Total liabilities and shareholders' equity...........$2,223,973 2,176,185
========= =========
See accompanying notes to consolidated interim financial statements.
-2-
TRUSTCO BANK CORP NY
Consolidated Statements of Cash Flows (Unaudited)
(Dollars in Thousands)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
SIX MONTHS ENDED June 30, 1996 1995
-------- --------
Cash flows from operating activities:
Net income..............................................$ 13,598 12,011
-------- --------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 1,593 1,041
Provision for loan losses.............................. 3,964 6,618
Loss on sale of securities available for sale.......... 6,246 241
Gain on sale of securities available for sale.......... (3,195) (869)
Increase in taxes receivable........................... (6,431) (4,032)
(Increase)/decrease in interest receivable.............. 2,116 (3,006)
Increase/(decrease) in interest payable................ (168) 600
(Increase)/decrease in other assets..................... 748 (1,375)
Increase in accrued expenses........................... 1,402 1,673
-------- --------
Total adjustments 6,275 891
-------- --------
Net cash provided by operating activities................ 19,873 12,902
-------- --------
Cash flows from investing activities:
Proceeds from sales of securities available for sale... 338,028 138,823
Purchase of securities available for sale.............. (296,891) (336,332)
Proceeds from maturities and calls
of securities available for sale...................... 88,796 275
Proceeds from maturities of investment securities ..... --- 18,345
Purchase of investment securities...................... --- (3,532)
Net increase in loans.................................. (6,820) (26,819)
Proceeds from sales of real estate owned............... 2,211 1,957
Capital expenditures................................... (854) (559)
-------- --------
Net cash provided by/(used in) investing activities.. 124,470 (207,842)
-------- --------
Cash flows from financing activities:
Net increase in deposits............................... 3,202 79,220
Net Increase in short-term borrowing................... 50,000 24,790
Repayment of long-term debt............................ --- (3,550)
Proceeds from issuance of common stock................. 540 563
Purchase of treasury stock............................. --- (253)
Dividends paid......................................... (9,707) (8,050)
-------- --------
Net cash provided by financing activities............ 44,035 92,720
-------- --------
Net increase/(decrease) in cash and cash equivalents..... 188,378 (102,220)
Cash and cash equivalents at beginning of period......... 289,889 315,479
-------- --------
Cash and cash equivalents at end of period..............$ 478,267 213,259
======== ========
See accompanying notes to consolidated interim financial statements. (Continued)
-3-
TRUSTCO BANK CORP NY
Consolidated Statements of Cash Flows Continued (Unaudited)
(Dollars in Thousands)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
SIX MONTHS ENDED June 30, 1996 1995
-------- --------
Interest paid.........................................$ 40,835 36,483
Income taxes paid...................................... 14,563 10,205
Transfer of loans to real estate owned................. 3,538 5,640
Increase in dividends payable.......................... 19 14
Change in unrealized (appreciation)/depreciation
on securities available for sale-gross................ 18,870 (6,863)
Change in deferred tax effect on unrealized gain(loss)
on securities available for sale...................... (7,791) 2,864
Transfer of securities available for sale to
Transfer of building from other real estate to premises --- 2,500
See accompanying notes to consolidated interim financial statements.
-4-
TrustCo Bank Corp NY
Notes to Consolidated Interim Financial Statements
(Unaudited)
1. Financial Statement Presentation
In the opinion of the management of TrustCo Bank Corp NY (the Company), the
accompanying unaudited Consolidated Interim Financial Statements contain all
adjustments necessary to present fairly the financial position as of June 30,
1996, the results of operations for the three months and six months ended June
30, 1996 and 1995, and the cash flows for the six months ended June 30, 1996
and 1995. The accompanying Consolidated Interim Financial Statements should be
read in conjunction with the TrustCo Bank Corp NY year-end Consolidated
Financial Statements, including notes thereto, which are included in TrustCo
Bank Corp NY's 1995 Annual Report to Shareholders on Form 10-K.
- 5 -
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
TrustCo Bank Corp NY:
We have reviewed the consolidated statement of financial condition of TrustCo
Bank Corp NY and subsidiaries (the Company) as of June 30, 1996, and the
related consolidated statements of income for the three month and six month
periods ended June 30, 1996 and 1995, and the consolidated statements of cash
flows for the six month periods ended June 30, 1996 and 1995. These
consolidated financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated statement of financial condition of TrustCo Bank
Corp NY and subsidiaries as of December 31, 1995 and the related consolidated
statements of income, changes in shareholders' equity, and cash flows for the
year then ended (not presented herein); and in our report dated January 26,
1996, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
consolidated statement of financial condition as of December 31, 1995, is
fairly presented, in all material respects, in relation to the consolidated
statement of financial condition from which it has been derived.
/s/KPMG Peat Marwick LLP
------------------------------
KPMG Peat Marwick LLP
Albany, New York
July 12, 1996
- 6 -
TrustCo Bank Corp NY
Management's Discussion and Analysis
June 30, 1996
The review that follows focuses on the factors affecting the financial
condition and results of operations of TrustCo Bank Corp NY ("TrustCo " or "
Company") during the three month and six month periods ended June 30, 1996,
with comparisons to 1995 as applicable. Net interest income and net interest
margin are presented on a fully taxable equivalent basis in this discussion.
The consolidated interim financial statements and related notes, as well as
the 1995 Annual Report to Shareholders, should be read in conjunction with
this review. Certain amounts in years prior to 1996 have been reclassified to
conform to the 1996 presentation. Per share results have all been adjusted for
the 6 for 5 stock split effective August 1995.
Overview
TrustCo recorded net income of $6.9 million, or $0.38 per share for the three
month period ended June 30, 1996, as compared to net income of $6.1 million
and per share earnings of $0.34 for the same time period in 1995.
For the six months ended June 30, 1996, TrustCo recorded net income of $13.6
million or $0.75 per share compared to $12.0 million and $0.67 per share in
the comparable period in 1995.
The primary factors accounting for the year to date increase in net income
are:
-
|_| a 10.2% increase in average earning assets,
|_| reduction in the provision for loan losses by $2.7 million,
|_| increase in noninterest income (excluding the effects of securities
_ transactions) by approximately $400,000, and
|_| the reduction in noninterest expense of $2.5 million.
These positive factors affecting net income were offset by the following:
_
|_| reduction in the net interest margin from 4.35% to 4.14%,
|_| loss on securities sales of $3.1 million, and
|_| an increase in income tax expense of $2.0 million.
Asset/Liability Management
The Company strives to generate superior earnings capabilities through a mix
of core deposits funding a prudent mix of earning assets. This is, in its most
fundamental form, the essence of asset/liability management. Additionally,
TrustCo attempts to maintain adequate liquidity and reduce, to an acceptable
level, the sensitivity of net interest income to changes in interest rates
while enhancing profitability both on a short-term and long-term basis.
- 7 -
TrustCo Bank Corp NY
Management's Discussion and Analysis -- continued
June 30, 1996
Earning Assets
The average balance of earning assets increased by $185.5 million to $2.1
billion during the second quarter of 1996 compared to 1995. The average yield
on these earning assets was 7.95% compared to 8.30% in 1995. For the six
months ended June 30, 1996, the average balance of earning assets increased by
$195.5 million to $2.1 billion. Included in the tables "Distribution of
Assets, Liabilities and Shareholders' Equity:Interest Rates and Interest
Differential" is a detailed breakdown of TrustCo's average earning assets and
interest bearing liabilities for the three month and six month periods ended
June 30, 1996 and 1995. The remainder of this discussion will utilize average
balances for 1996 and 1995 as detailed on these tables.
Loans
During the second quarter, the average balance of loans increased from $1.172
billion in 1995 to $1.227 billion in 1996, representing a 4.8% increase. The
average yield on the loan portfolio decreased from 9.12% in 1995 to 8.76% in
1996. The combination of the increase in average balance and the reduction in
the yield produced a modest increase in income from the loan portfolio to
$26.8 million.
Virtually all of the growth in the loan portfolio was centered in the real
estate loan balances, which increased from $695.9 million for the second
quarter of 1995 to $780.5 million for the comparable 1996 period. TrustCo's
aggressive marketing of these loans, combined with quick decision making on
applications and low closing costs, allowed the Company to grow this portion
of the loan portfolio.
Also during the quarter, the home equity credit line balances decreased 8.2%
from $204.9 million in 1995 to $188.1 million for 1996. The yield on this
portfolio also decreased from 10.34% in 1995 to 9.18% in 1996. The decrease in
yield reflects changes made by TrustCo to respond to competition which was
offering lower overall rates on this product. Competition for this type of
loan product is very strong since all of the local and national financial
institutions try to attract customers to their home equity loan products.
The same trends noted during the quarter are evident in the year to date
results. Overall, the loan portfolio balances increased by 5.1% to $1.227
billion in 1996. This increase in outstanding balances was offset by a
reduction in the overall yield on the loan portfolio from 9.07% in 1995 to
8.79% in 1996. Income from the loan portfolio for the six months of 1996
amounted to $53.9 million, an increase of $1.1 million over the comparable
period in 1995.
The Company is a retail oriented institution, and as such, stresses the
importance of consumer oriented products such as the residential mortgage loan
, home equity loan, and credit cards. Each of these areas is an important
contributor to profitability at TrustCo and is
- 8 -
TrustCo Bank Corp NY
Management's Discussion and Analysis -- continued
June 30, 1996
a focus of continued marketing and product development, so as to result in
increases in the balances outstanding. The second quarter and the year to date
results reflect this focus. TrustCo aggressively pursues the fixed rate
residential mortgage loan market. The Company has a long history in
underwriting loans in this market territory and is confident that the average
life of these loans is significantly shorter than the contractual maturity.
This asset portfolio is an excellent investment in relation to the core
deposit base that TrustCo attracts.
Securities Available for Sale
During the second quarter of 1996 the average balance of securities available
for sale was $631.1 million, versus an average balance for 1995 of $251.7
million. The yield earned on these assets in 1996 was 7.56%, compared to 7.75%
in 1995. The change in average balance and the change in rates earned resulted
in an increase in interest income on securities available for sale of $7.1
million. Most of the increase in the balance outstanding was the result of
action taken in December 1995 when the Company transferred the entire held to
maturity securities portfolio to the securities available for sale portfolio
as permitted by changes in the accounting for securities. This action allows
the Company to take full advantage of continuing changes in interest rates to
maximize the overall yield on the portfolio while providing additional
liquidity.
As a comparison between 1996 and 1995, the overall yield appears to have
dropped. However, when the available for sale portfolio yield is combined with
the 1995 yield for investment securities, the combined yield for 1995's second
quarter was 7.40% compared to the 7.56% earned on the comparable portfolio in
1996.
The six month average balance of securities available for sale was $630.0
million in 1996 with a yield of 7.53%, compared to an average balance for the
six months of 1995 of $193.8 million and a yield of 7.72%. As with the second
quarter, the year to date results for 1995 compared to 1996 are significantly
affected by the changes made in late 1995 to the portfolio of securities held
to maturity. Therefore, for 1995, if the portfolio of securities available for
sale is combined with the portfolio of securities held to maturity, the
overall yield was 7.35%, compared to the comparable portfolio for 1996 with a
yield of 7.53%.
Investment Securities
There are no securities classified as investment securities for 1996. For 1995
the second quarter and the year to date results are detailed on the average
balance tables.
Federal Funds Sold
During the second quarter the average balance of federal funds sold was $280.2
million, compared to $193.8 million in 1995. The yield earned on these asset
balances during the quarter was 5.33% in 1996, and 6.09% in 1995. The yield
earned by these investments is
- 9 -
TrustCo Bank Corp NY
Management's Discussion and Analysis -- continued
June 30, 1996
directly tied to the target federal funds rate as established by the Federal
Reserve Board. The increase in the average balances more than offset the
reduction in the average yield, thereby producing an approximately $800,000
increase in the interest income on this investment.
For the six month results the average balance and yield was $262.3 million and
5.38% in 1996, and $223.2 million and 5.98% in 1995, respectively.
The increases in the average balances for 1996 compared to 1995 for both the
quarter and year to date results reflect management's decision to remain
relatively liquid during 1996 as market interest rates in the loan and
securities portfolios were increasing. This positions TrustCo to take
advantage of these higher rates when the decision is made to reinvest this
excess liquidity.
Income from Earning Assets
Income from earning assets increased by 4.9% during the second quarter of 1996
compared to 1995. The increase in the average balance of earning assets during
the quarter offset the decrease in the yields earned. Similarly, the year to
date results reflect an increase of 7.0% in the income from earning assets
between 1996 and 1995.
Funding Opportunities
TrustCo utilizes various funding sources to support its earning assets
portfolio. The vast majority of the Company's funding comes from traditional
deposit vehicles such as savings, NOW and time deposit accounts. Also, TrustCo
developed a Short Term Investment Account which was introduced during the
second quarter of 1995. This account is available for deposits from the
TrustCo Trust Department.
During the quarter, total interest bearing liabilities increased from $1.761
billion in 1995 to $1.925 billion in 1996. This increase in balance was offset
by a reduction in cost on these liabilities from 4.53% in 1995 to 4.24% in
1996. The growth in the average balances was principally in the savings
account and time account categories of deposits and in the short term
borrowings (principally the Trustco Short Term Investment Account).
The six month results reflect the same trends as noted for the quarter.
Growth in deposit balances resulted from successful marketing and advertising
campaigns undertaken during the first quarter of 1995 in both CD and savings
products, which continued to attract deposits throughout the year. In
TrustCo's past experience, deposits gathered as the result of these types of
campaigns tend to become a very stable source of core customers who maintain
their deposit relationship with the Company through various interest rate
cycles and provide opportunities for cross selling additional banking
services.
- 10 -
TrustCo Bank Corp NY
Management's Discussion and Analysis -- continued
June 30, 1996
Net Interest Income
Taxable equivalent net interest income totalled $22.2 million for the second
quarter of 1996, compared to $20.6 million in 1995. For the six months of
1996, taxable equivalent net interest income totalled $43.9 million compared
to $42.0 million in 1995.
The net interest margin for the second quarter was 4.14% in 1996 and 4.22% in
1995. For the six month periods, the net interest margin was 4.14% in 1996 and
4.35 % in 1995.
Nonperforming Assets
Nonperforming assets include nonperforming loans which are those loans in a
nonaccrual status, loans that have been restructured and loans past due 90
days or more and still accruing interest. Also included in the total of
nonperforming assets are foreclosed real estate properties, which are
categorized as real estate owned.
Impaired loans are defined as those commercial and commercial real estate
loans in a nonaccrual status and loans restructured since January 1, 1995,
when newly effective accounting standards required changing the
identification, measurement and reporting of impaired loans and loans whose
terms have been modified in a troubled debt restructuring. The following will
describe the nonperforming assets of TrustCo as of June 30, 1996.
Nonperforming loans: Total nonperforming loans were $ 13.9 million at June 30,
1996, down from $15.7 million at year end 1995, but up slightly from the $13.3
million at June 30, 1995. Nonaccrual loans were $10.8 million at June 30,
1996, compared to $12.8 million at year end 1995 and $10.4 million at June 30,
1995. Restructured loans amounted to $ 2.1 million at June 30, 1996, $1.1
million at year end 1995, and $1.4 million at June 30, 1995. Changes in the
nonperforming loans since year end 1995 have principally been the transfer of
one commercial real estate property in excess of $2 million to the category of
foreclosed real estate. This loan is well secured and management does not
anticipate any loss on the disposal of this property.
Total commercial and commercial real estate impaired loans were $6.1 million
at June 30, 1996, and together with the newly restructured retail loans of
$2.1 million, represent the Company's impaired loans at June 30, 1996. Of the
$13.9 million nonperforming loans at June 30, 1996, $8.2 million were
identified as being impaired, leaving $5.7 million of loans that are
nonperforming retail loan products and commercial loans that are past due more
than 90 days and still accruing interest. TrustCo does not consider these to
be impaired loans. At June 30, 1996, there are $4.6 million of residential
mortgage loans classified as nonaccrual as compared to $3.5 million at year
end 1995, and $2.9 million at June 30, 1995.
- 11 -
TrustCo Bank Corp NY
Management's Discussion and Analysis -- continued
June 30, 1996
The average balance of loans identified as impaired during 1996 is $9.5
million and the interest income earned on the loans classified as impaired at
June 30, 1996, was approximately $150,000.
For the six months of 1996, charge offs were as follows:
Commercial loans $1.9 million
Installment credit .5 million
Mortgage loans .7 million
Recoveries for the same period were $1.3 million.
Real estate owned: Total real estate owned increased from the year end balance
of $3.7 million to $4.7 million at June 30, 1996. Real estate owned at June
30, 1995 was $4.3 million. As noted previously, the increase in the balance
outstanding between year end 1995 and June 30, 1996, is the result of one
commercial property being placed in foreclosure during this period.
Allowance for loan losses: The balance of the allowance for loan losses is
maintained at a level that is, in management's judgment, representative of the
amount of the risk inherent in the loan portfolio, given past, present and
expected future conditions.
At June 30, 1996, the allowance for loan losses was $50.6 million, an increase
of $2.3 million from the year end 1995 balance of $48.3 million. This
allowance represents a reserve coverage of 3.6 times the nonperforming loans
at June 30, 1996, compared to 3.1 times coverage at year end 1995 and 3.3
times coverage at June 30, 1995. The provision charged to expense during the
year was $4.0 million in 1996, compared to $6.6 million in 1995.
Liquidity and Interest Rate Sensitivity
TrustCo seeks to obtain favorable sources of funding and to maintain prudent
levels of liquid assets in order to satisfy varied liquidity demands.
TrustCo's earnings performance and strong capital position enable the Company
to raise funds easily in the marketplace and to secure new sources of funding.
The Company actively manages its liquidity through target ratios established
under its liquidity policies. Continual monitoring of both historical and
prospective ratios allows TrustCo to employ strategies necessary to maintain
adequate liquidity. Management has also defined various degrees of adverse
liquidity situations which could potentially occur, and has prepared
appropriate contingent plans should such a situation arise.
- 12 -
TrustCo Bank Corp NY
Management's Discussion and Analysis -- continued
June 30, 1996
Noninterest Income
Total noninterest income for the three months ended June 30, 1996 was $1.0
million compared to $4.0 million in 1995. For 1996 the Company recorded $2.6
million of net securities losses during the second quarter, compared to
approximately $400,000 of net securities gains in 1995. Therefore once these
securities transactions are eliminated, the 1996 noninterest income was $3.7
million compared to $3.6 million in 1995. Likewise for the six months ended
June 30, 1996, total noninterest income (excluding the effects of net
securities transactions) was $7.2 million, compared to $6.8 million in 1995.
Noninterest Expenses
Total noninterest expense for the second quarter of 1996 was $10.7 million
compared to $11.9 million in 1995. The decrease in FDIC insurance expense and
the reduced cost of operating and disposing of other real estate were the
principal reasons for the overall decrease in noninterest expense during the
two time periods.
For the first six months of 1996, noninterest expense amounted to $21.1
million compared to $23.6 million in 1995. Similar to the second quarter
results, the decrease in total noninterest expense was due principally to a
reduction in FDIC insurance expense and expenses associated with other real
estate.
Income Taxes
In the second quarter of 1996 and 1995, TrustCo recognized $ 4.1 million and
$3.1 million, respectively, of income tax expense. This resulted in an
effective tax rate of 37.3% in 1996 and 33.4% in 1995. For the six months of
1996, total tax expense was $8.1 million compared to $6.2 million for 1995.
Capital Resources
Consistent with its long-term goal of operating a sound and profitable
financial organization, TrustCo strives to maintain strong capital ratios. New
issues of equity securities have not been required since traditionally, most
of its capital requirements are met through the capital retention program.
Total shareholders' equity at June 30, 1996 was $153.4 million down 4.2% from
year end 1995. The change in shareholders' equity between year end 1995 and
June 30, 1996 reflects the net income retained in TrustCo (after shareholders
dividend payments) offset by the reduction in the net unrealized appreciation
on securities available for sale of $11.1 million. Excluding the effect of the
FASB 115 adjustment (mark to market on the available for sale securities),
shareholders' equity was $147.7 million at year end 1995 and $152.1 million at
June 30, 1996.
- 13 -
TrustCo Bank Corp NY
Management's Discussion and Analysis -- continued
June 30, 1996
TrustCo declared dividends of $0.55 per share so far in 1996, compared to
$0.46 in 1995. These result in a dividend payout ratio of 71.5% in 1996 and
67.1% in 1995. The Company achieved the following ratios as of June 30, 1996
and 1995:
June 30, Minimum Regulatory
1996 1995 Guidelines
---- ---- ----------
Tier 1 risk adjusted
capital 12.64 12.29 4.00
Total risk adjusted
capital 13.92 13.57 8.00
In addition, at June 30, 1996 and 1995, the consolidated equity to asset ratio
(excluding the mark to market on the securities available for sale) was 6.85%
and 6.89%, respectively.
- 14 -
TrustCo Bank Corp NY
Management's Discussion and Analysis
STATISTICAL DISCLOSURE
I. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
The following table summarizes the component distribution of average
balance sheet, related interest income and expense and the average annualized
yields on interest-earning assets and annualized rates on interest-bearing
libilities of TrustCo (adjusted for tax equivalency) for each of the reported
periods. Nonaccrual loans are included in loans for this analysis. The average
balances of securities available for sale is calculated using amortized
costs for these securities. Included in the balance of shareholders' equity is
unrealized appreciation, net of tax in the available for sale portfolio of
$2.6 million in 1996 and 1995.
Second Quarter Second Quarter
1996 1995
--------------------------- --------------------------- ---------------------------
Average Average Average Average Change inVariance Variance
(dollars in thousands) Balance Interest Rate Balance Interest Rate Interest Balance Rate
Income/ Change Change
Assets Expense
Commercial loans.....................$ 227,301 $ 5,303 9.34%$ 237,708 $ 5,668 9.54% (365) (247) (118)
Residential mortgage loans............ 780,528 16,201 8.30% 695,887 14,684 8.44% 1,517 3,031 (1,514)
Home equity lines of credit .......... 188,066 4,293 9.18% 204,872 5,283 10.34% (990) (418) (572)
Installment loans..................... 31,526 1,033 13.18% 33,235 1,048 12.65% (15) (203) 188
--------- ------ --------- ------ ----- ----- -----
Loans, net of unearned income.........1,227,421 26,830 8.76% 1,171,702 26,683 9.12% 147 2,163 (2,016)
Securities available for sale:
U.S. Treasuries and agencies......... 456,154 8,775 7.70% 224,048 4,363 7.79% 4,412 4,778 (366)
Mortgage-backed securities........... 58,767 1,112 7.57% --- --- --- 1,112 1,112 ---
States and political subdivisions.... 73,269 1,436 7.84% 9,680 201 8.32% 1,235 1,280 (45)
Other ............................... 42,871 601 5.62% 17,968 310 6.91% 291 665 (374)
--------- ------ --------- ------ ----- ----- -----
Total securities available for sale 631,061 11,924 7.56% 251,696 4,874 7.75% 7,050 7,835 (785)
Investment securities:
U.S. Treasuries and agencies......... --- --- --- 145,353 2,672 7.35% (2,672) (2,672) ---
Mortgage-backed securities........... --- --- --- 131,376 2,198 6.69% (2,198) (2,198) ---
States and political subdivisions.... --- --- --- 44,141 825 7.48% (825) (825) ---
Other ............................... --- --- --- 15,013 294 7.83% (294) (294) ---
--------- ------ --------- ------ ----- ---- -----
Total investment securities........ --- --- --- 335,883 5,989 7.13% (5,989) (5,989) ---
Federal funds sold.................... 280,165 3,712 5.33% 193,846 2,942 6.09% 770 2,900 (2,130)
--------- ------ --------- ------ ----- ---- -----
Total Interest earning assets.......2,138,647 42,466 7.95% 1,953,127 40,488 8.30% 1,978 6,909 (4,931)
Allowance for loan losses............. (51,230) ------ (44,200) ------ ----- ---- -----
Cash and non-interest earning assets.. 128,127 122,684
--------- ---------
Total assets.......................$2,215,544 $ 2,031,611
========= =========
Liabilities and shareholders' equity Time deposits:
Interest-bearing checking:
NOW accounts .....................$ 236,196 902 1.54%$ 228,119 1,091 1.92% (189) 235 (424)
Money market accounts.............. 69,202 500 2.91% 79,900 573 2.87% (73) (118) 45
Savings.............................. 672,179 5,737 3.43% 594,475 6,005 4.05% (268) 3,269 (3,537)
CD's over $100 thousand.............. 86,635 1,214 5.63% 85,083 1,234 5.82% (20) 107 (127)
Other time deposits.................. 764,326 10,840 5.70% 752,268 10,740 5.73% 100 354 (254)
--------- ------ --------- ------ ----- ----- -----
Total time deposits.................1,828,538 19,193 4.22% 1,739,845 19,643 4.53% (450) 3,847 (4,297)
Short-term borrowings................. 96,000 1,097 4.59% 21,171 230 4.34% 867 853 14
Long-term debt........................ --- --- --- --- --- ---
--------- ------ --------- ------ ----- ----- -----
Total interest-bearing liabilities..1,924,538 20,290 4.24% 1,761,016 19,873 4.53% 417 4,700 (4,283)
Demand deposits....................... 110,271 ------ 95,346 ------ ----- ----- -----
Other liabilities..................... 28,968 31,536
Shareholders' equity.................. 151,767 143,713
--------- ---------
Total liab. & shareholders' equity.$2,215,544 $ 2,031,611
========= =========
Net interest income................... 22,176 20,615 1,561 2,209 (648)
------ ------ ----- ----- -----
Net interest spread................... 3.71% 3.77%
Net interest margin (net interest
income to total interest earning
assets)............................ 4.14% 4.22%
Tax equivalent adjustment 644 529
------ ------
Net interest income per book....... $ 21,532 $ 20,086
====== ======
-15-
TrustCo Bank Corp NY
Management's Discussion and Analysis
STATISTICAL DISCLOSURE
I. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
The following table summarizes the component distribution of average
balance sheet, related interest income and expense and the average annualized
yields on interest-earning assets and annualized rates on interest-bearing
libilities of TrustCo (adjusted for tax equivalency) for each of the reported
periods. Nonaccrual loans are included in loans for this analysis. The average
balances of securities available for sale is calculated using amortized
costs for these securities. Included in the balance of shareholders' equity is
unrealized appreciation, net of tax in the available for sale portfolio of
$6.9 million in 1996 and $1.6 million in 1995.
Six Months Six Months
1996 1995
--------------------------- ------------------------------------------------------
Average Average Average AverageChange inVariance Variance
(dollars in thousands) Balance Interest Rate Balance Interest Rate Interest Balance Rate
Income/ Change Change
Assets Expense
Commercial loans.....................$ 229,859 $ 10,723 9.34% $ 238,575 $ 11,245 9.45% (522) (400) (122)
Residential mortgage loans............ 775,229 32,288 8.33% 690,253 29,006 8.40% 3,282 4,021 (739)
Home equity lines of credit .......... 190,109 8,742 9.25% 205,747 10,467 10.26% (1,725) (751) (974)
Installment loans..................... 32,096 2,131 13.35% 33,132 2,101 12.79% 30 (142) 172
--------- ------- --------- ------- ----- ----- -----
Loans, net of unearned income.........1,227,293 53,884 8.79% 1,167,707 52,819 9.07% 1,065 2,728 (1,663)
Securities available for sale:
U.S. Treasuries and agencies......... 452,289 17,279 7.64% 171,642 6,682 7.79% 10,597 10,970 (373)
Mortgage-backed securities........... 65,471 2,434 7.44% --- --- --- 2,434 2,434 ---
States and political subdivisions.... 71,017 2,751 7.75% 5,041 208 8.24% 2,543 2,568 (25)
Other ............................... 41,200 1,242 6.04% 17,088 589 6.93% 653 879 (226)
--------- ------- --------- ------- ----- ----- -----
Total securities available for sale 629,977 23,706 7.53% 193,771 7,479 7.72% 16,227 16,851 (624)
Investment securities:
U.S. Treasuries and agencies......... --- --- --- 145,419 5,381 7.40% (5,381) (5,381) ---
Mortgage-backed securities........... --- --- --- 134,713 4,524 6.72% (4,524) (4,524) ---
States and political subdivisions.... --- --- --- 44,243 1,632 7.38% (1,632) (1,632) ---
Other ............................... --- --- --- 15,013 589 7.85% (589) (589) ---
--------- ------ --------- ------- ----- ----- ------
Total investment securities........ --- --- --- 339,388 12,126 7.15% (12,126) (12,126) ---
Federal funds sold.................... 262,335 7,013 5.38% 223,193 6,617 5.98% 396 1,960 (1,564)
--------- ------- --------- ------- ----- ----- -----
Total Interest earning assets.......2,119,605 84,603 7.99% 1,924,059 79,041 8.23% 5,562 9,413 (3,851)
Allowance for loan losses............. (50,862) ------- (42,532) ------- ----- ----- -----
Cash and non-interest earning assets.. 129,897 121,726
--------- ---------
Total assets.......................$2,198,640 $ 2,003,253
========= =========
Liabilities and shareholders' equity Time deposits:
Interest-bearing checking:
NOW accounts .....................$ 233,814 1,793 1.54% $ 231,927 2,153 1.87% (360) 51 (411)
Money market accounts.............. 69,969 1,012 2.91% 84,093 1,197 2.87% (185) (233) 48
Savings.............................. 664,329 11,433 3.46% 607,748 11,307 3.75% 126 1,998 (1,872)
CD's over $100 thousand.............. 87,757 2,495 5.72% 77,283 2,167 5.66% 328 304 24
Other time deposits.................. 772,336 22,104 5.76% 715,655 19,813 5.58% 2,291 1,648 643
--------- ------- --------- ------- ----- ----- -----
Total time deposits.................1,828,205 38,837 4.27% 1,716,706 36,637 4.30% 2,200 3,768 (1,568)
Short-term borrowings................. 80,315 1,830 4.58% 18,535 377 4.10% 1,453 1,403 50
Long-term debt........................ --- --- --- 1,589 69 8.68% (69) (69) ---
--------- ------- --------- ------- ----- ----- -----
Total interest-bearing liabilities..1,908,520 40,667 4.29% 1,736,830 37,083 4.31% 3,584 5,102 (1,518)
Demand deposits....................... 107,193 ------- 93,714 ------- ----- ----- -----
Other liabilities..................... 28,025 30,572
Shareholders' equity.................. 154,902 142,137
--------- ---------
Total liab. & shareholders' equity.$2,198,640 $ 2,003,253
========= =========
Net interest income................... 43,936 41,958 1,978 4,311 (2,333)
------- ------- ----- ----- -----
Net interest spread................... 3.70% 3.92%
Net interest margin (net interest
income to total interest earning
assets)............................ 4.14% 4.35%
Tax equivalent adjustment 1,273 978
------- -------
Net interest income per book....... $ 42,663 $ 40,980
======= =======
-16-
SIGNATURES
Pursuant to the requirements 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
Date: August 8, 1996 By: /s/Robert A. McCormick
-----------------------------
Robert A. McCormick
President and
Chief Executive Officer
Date: August 8, 1996 By: /s/Robert T. Cushing
-----------------------------
Robert T. Cushing
Vice President and Chief
Financial Officer
- 17 -
Exhibits Index
Reg S-K Exhibit No. Description Page No.
- ------------------- -------------- ---------
3(i) Certificate of Amendment of the Certificate 19
of Incorporation of TrustCo Bank Corp NY
22 Submission of Matters to Vote of Security 34
Holders -- Annual Meeting
- 18 -
Exhibit 3 (i)
CERTIFICATE OF AMENDMENT
OF THE CERTIFICATE OF INCORPORATION
OF
TRUSTCO BANK CORP NY
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
Filed by: Lewis Rice & Fingersh, L.C.
500 North Broadway
Suite 2000
St. Louis, Missouri 63102
- 19 -
CERTIFICATE OF AMENDMENT
OF THE CERTIFICATE OF INCORPORATION
OF
TRUSTCO BANK CORP NY
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
WE, THE UNDERSIGNED, Robert A. McCormick and William F. Terry, being
respectively, the President and Chief Executive Officer and the Secretary of
TrustCo Bank Corp NY, certify:
1. The name of the Corporation is TrustCo Bank Corp NY.
2. The Certificate of Incorporation was filed by the Department of State
on the twenty- eighth day of October, 1981. A Restated Certificate of
Incorporation was filed by the Department of State on the fifteenth day of
July, 1988 and an Amendment to the Certificate of Incorporation was filed by
the Department of State on the twenty-ninth day of August, 1991. A further
Restated Certificate of Incorporation was filed by the Department of State on
the sixth day of August, 1993.
3.a.The Certificate of Incorporation is amended to increase the number of
authorized shares of common stock from 25,000,000 shares par value $1.00
to 50,000,000 shares par value $1.00. The number of shares of common
stock issued before and after such Amendment shall be 18,198,585, such
change being at the rate of 1 share of issued common stock for 1 share of
issued common stock. The number of shares of common stock unissued
before such Amendment shall be 6,801,415 and the number of shares of
common stock unissued after such Amendment shall be 31,801,415, such
change being at the rate of 1 share of unissued common stock for 4.68
shares of unissued common stock.
b.To effect the foregoing, Section 4.1 of Article IV of
the Amended and Restated Certificate of Incorporation
is hereby stricken out in its entirety, and the
following new Article IV is substituted in lieu
thereof:
4.1 The total number of shares of Common
Stock which the Corporation shall have authority to
issue is 50,000,000 shares of the par value of $1 per
share.
- 20 -
The total number of shares of Preferred Stock
which the Corporation shall have authority to issue is
500,000 shares of the par value of $10 per share.
The Board of Directors of the Corporation
shall have the authority to provide for the issuance
of the Preferred Stock in one or more series, with
such voting powers, full or limited, but not to exceed
one vote per share, or without voting powers, and with
such designations, conversion rights, redemption
prices, dividend rates and similar matters, including
preferences over shares of Common Stock or other
series of Preferred Stock as to dividends or
distributions of assets and relative participation,
optional or other special rights, and qualifications,
limitations or restrictions thereof, as shall be set
forth in resolutions providing for the issuance
thereof that may be adopted by the Board of Directors.
4. The amendment to the Certificate of Incorporation was authorized by a
majority vote of the Board of Directors, followed by vote of the holders of a
majority of the Corporation's outstanding shares entitled to vote thereon,
pursuant to Section 803 of the Business Corporation Law.
IN WITNESS WHEREOF, we have signed this Certificate of Amendment on the
28th day of May, 1996 and we affirm the statements contained therein as true
under penalties of perjury.
/s/ Robert A. McCormick
Robert A. McCormick
President and Chief Executive Officer
/s/ William F. Terry
William F. Terry
Secretary
- 21 -
STATE OF NEW YORK )
) SS
COUNTY OF SCHENECTADY )
Robert A. McCormick, being duly sworn, deposes and says that he is the
President and Chief Executive Officer of TrustCo Bank Corp NY, the Corporation
named in the foregoing Certificate of Amendment, that he has read and signed
said Certificate and knows the contents thereof, and that the statements
contained therein are true.
/s/ Robert A. McCormick
Robert A. McCormick
President and Chief Executive Officer
Sworn to before me this
28th day of May, 1996
/s/Joan Clark
Notary Public
My Commission Expires:
Joan Clark
Notary Public, State of New York
Qualified in Albany County
No. 01CL4822282
Commission Expires Nov. 30, 1996.
- 22 -
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
TRUSTCO BANK CORP NY
UNDER SECTION 807 OF THE BUSINESS CORPORATION LAW
We, Robert A. McCormick and William F. Terry, being respectively, the
President and Chief Executive Officer and Senior Vice President and Secretary
of TrustCo Bank Corp NY, certify:
FIRST. The name of the Corporation is TRUSTCO BANK CORP NY.
SECOND. The Certificate of Incorporation was filed by the Department of
State on the twenty-eighth day of October 1981. An Amended and Restated
Certificate of Incorporation was filed by the Department of State on the
fifteenth day of July 1988 and an Amendment to the Amended and Restated
Organization Certificate was filed by the Department of State on the
twenty-ninth day of August 1991.
THIRD. The Certificate of Incorporation of the Corporation is restated
as set forth in its entirety below. The only change to the certificate of
incorporation is increase in the number of authorized shares of common stock
set forth in Section 4.1 of Article IV from 10,000,000 shares to 25,000,000
shares.
FOURTH. The Certificate of Incorporation, as amended and restated, is
set forth below:
Article I
Name
1. The name of the corporation is:
TrustCo Bank Corp NY
(hereinafter called the "Corporation").
Article II
Purposes
2. Subject to any limitation provided in the Business Corporation Law or
any other statute of the State of New York, and except as otherwise
specifically provided in this Certificate, the purposes for which the
Corporation is formed are:
2.1 To the extent that a corporation formed under the Business
Corporation Law of the State of New York may lawfully do so, to acquire, own,
control, hold with power to vote, deal in and with, and dispose of, in any
manner, interests in financial institutions, including, without limitation,
banks, trust companies, savings banks, national banking associations, savings
and loan associations, industrial banks, investment banks, service banks, safe
deposit companies, credit unions, and mutual trust investment companies,
located within or without the State of New York, and to acquire, own, control,
hold with power to vote, deal in and with, and dispose of, in any manner,
interests in any other companies, corporations, partnerships, trusts,
- 23 -
unincorporated associations, joint stock associations, and other entities,
which are engaged in activities related to the business of banking.
2.2 To the extent that a corporation formed under the Business
Corporation Law of the State of New York may lawfully do so, to engage in,
carry on, conduct, and participate in activities, enterprises and businesses
permitted to be engaged in, carried on, conducted and participated in by bank
holding companies under applicable provisions of law and also research,
experimenting, manufacturing, assembling, building, erecting, trading, buying,
selling, collecting, distributing, wholesaling, retailing, importing,
exporting, processing, compounding, producing, refining, synthesizing, mining,
extracting, growing, liquidating, dismantling, demolishing, servicing,
promoting, exhibiting and publishing activities, enterprises and businesses;
and also any activities, enterprises, ventures and businesses similar or
incidental to any of the foregoing.
2.3 To create, acquire, hold, deal in and with, and dispose of, in any
manner, any legal or equitable interest in real property and chattels real,
and, without limiting the generality of the foregoing, to purchase, receive,
take (by grant, gift, devise, bequest or otherwise), own, hold, improve,
employ, use, operate, manage, repair, control, maintain, sell, assign,
transfer, convey, exchange, lease, alter, construct, mortgage or encumber real
property, whether improved or unimproved, and structures and improvements on
real property, or leaseholds, or any other legal or equitable interests or
rights therein.
2.4 To create, acquire, hold, deal in and with, and dispose of, in any
manner, any legal or equitable interest in tangible or intangible personal
property, and, without limiting the generality of the foregoing, to make,
purchase, receive, take (by grant, gift, bequest, lease, exchange or
otherwise), own, hold, improve, employ, use, operate, manage, repair, control,
maintain, process, import, export, sell, assign, transfer, convey, exchange,
lease, or otherwise dispose of, mortgage, ledge or otherwise encumber or in
any manner to exploit, turn to account, trade or deal in or with, personal
property, whether tangible or intangible, or any other legal or equitable
interests or rights therein.
2.5 To make, create, apply for, renew, take (by grant, gift, bequest or
otherwise), purchase, lease or otherwise acquire, to hold, own, register, use,
operate, to sell, assign, license, lease, transfer, exchange or otherwise
dispose of, to mortgage, pledge or otherwise encumber, to acquire or grant
licenses with respect to, or in any manner to exploit, turn to account, trade
or deal in or with, copyrights, trademarks, service marks, designs,
inventions, discoveries, improvements, developments, processes, formulas,
patents, trade names, labels, prints, or any interest or right, whether legal
or equitable, therein.
2.6 To purchase, take (by grant gift, bequest or otherwise), receive,
subscribe for, invest in or otherwise acquire, own, hold, employ, sell, lend,
lease, exchange, transfer, assign, or otherwise dispose of, mortgage, pledge,
use, and otherwise deal in and with, or in respect of shares, stock, bonds,
debentures, warrants, rights, scrip, notes, evidences of indebtedness,
certificates of interest or participation in profit-sharing agreements,
collateral trust certificates, preorganization certificates and subscriptions,
investment contracts, voting trust certificates, certificates of deposit or
other securities or obligations of any kind by whomsoever issued (whether or
not engaged in similar or different businesses, governmental or other
activities); to
- 24 -
exercise in respect thereof all powers and privileges of individual or
corporate ownership or interest therein, including the right to vote thereon
(by proxy or otherwise) for any and all purposes; to consent or otherwise act
with respect thereto, without limitation and to issue in exchange therefor the
Corporation's shares, stock, bonds, debentures, warrants, rights, scrip,
notes, evidences of indebtedness, or other securities or obligations of any
kind.
2.7 To make contracts, incur debts and other liabilities, and borrow
money on such terms and at such rate of interest as the Corporation may
determine; and to mortgage, pledge, convey, assign, in trust or otherwise
encumber or dispose of, the property, good will, franchises or other assets of
the Corporation, including contract rights and including after-acquired
property.
2.8 To lend money, with or without security; provided that the
Corporation shall not have the power to engage in the business of banking.
2.9 To issue, reissue, sell, assign, exchange, pledge, negotiate or
otherwise dispose of, to purchase, receive, take, own, hold or otherwise
acquire, to deal in or with, or to cancel, shares, stock, bonds, debentures,
warrants, rights, scrip, notes, evidences of indebtedness or other securities
or obligations of the corporation of any kind, whether secured or unsecured,
and whether or not convertible into or subordinated to any other class of
securities.
2.10 In furtherance of its corporate business, to guarantee or assume
liability for the payment of the principal of, or dividends or interest on, or
sinking fund payments in respect of, shares, stock, bonds, debentures,
warrants, rights, scrip, notes, evidences of indebtedness, certificates of
interest or participation in profit-sharing agreements, collateral trust
certificates, preorganization certificates and subscriptions, investment
contracts, voting trust certificates, certificates of deposit, or other
securities or obligations of any kind by whomsoever issued; and to guarantee
or assume liability for the performance of any other contract or obligation,
made or issued by any domestic or foreign corporation, partnership,
association, trustee, group, individual or entity; and, when authorized in any
manner provided by law, to give any guaranty although not in furtherance of
the Corporation's purposes.
2.11 In furtherance of its corporate business, to be a promoter,
partner, co-venturer, member, associate or manager of other business
enterprises or ventures, or to be an agent thereof, or to the extent permitted
in any jurisdiction to be an incorporator of other corporations of any kind or
type.
2.12 To cause to be formed under the laws of any state or country, to
control or in any manner participate in the management of, to reorganize,
merge, consolidate, and to liquidate or dissolve any corporation, association
or organization of any kind.
2.13 To engage in, carry on, conduct and/or participate in any activity,
enterprise or business which is similar or related to any activity, enterprise
or business herein set forth, or which is capable of being conveniently
carried on incidental to any such activity, enterprise or business or which
may directly or indirectly protect or enhance the value of any of the rights
or property of the Corporation.
2.14 To engage in, carry on, conduct and/or participate in any general
or specific branch or phase of the activities, enterprises or businesses
authorized in this Certificate in the State of New York or in any other state
of the United States and in all foreign countries, and
- 25 -
in all territories, possessions and other places, and in connection with the
same, or any thereof, to he and act either as principal, agent, contractor or
otherwise.
2.15 To do everything necessary, suitable, convenient or proper for the
accomplishment, attainment or furtherance of, to do every other act or thing
incidental to, appurtenant to, growing out of or connected with, the purposes
set forth in this Certificate, whether alone or in association with others; to
possess all the rights, powers and privileges now or hereafter conferred by
the law of the State of New York upon a corporation organized under the
Business Corporation Law of the State of New York (as the same may be amended
from time to time) or any statute which may be enacted to supplement or
replace it, and, in general, to carry on any of the activities and to do any
of the things herein set forth to the same extent and as fully as a natural
person or a partnership, association, corporation, or other entity, or any of
them, might or could do; provided that nothing herein set forth shall be
construed as authorizing the Corporation to possess any purpose, object, or
power, or to do any act or thing forbidden by law to a corporation organized
under the Business Corporation Law of the State of New York.
The foregoing provisions of this Article shall be construed as purposes,
objects and powers, and each as an independent purpose, object and power, in
furtherance, and not in limitation, of the purposes, objects and powers
granted to the Corporation by the laws of the State of New York; and except as
otherwise specifically provided in any such provision, no purpose, object or
power herein set forth shall be in any way limited or restricted by reference
to, or inference from, any other provision of this Certificate.
Article III
Office
The office of the corporation is to be located in the City of
Schenectady, County of Schenectady, and State of New York.
Article IV
Number of Shares; Preemptive Rights Denied
4.1 The total number of shares of Common Stock which the Corporation
shall have authority to issue is 25,000,000 shares of the par value of $1 per
share.
The total number of shares of Preferred Stock which the Corporation
shall have authority to issue is 500,000 shares of the par value of $10 per
share.
The Board of Directors of the Corporation shall have the authority to
provide for the issuance of the Preferred Stock in one or more series, with
such voting powers, full or limited, but not to exceed one vote per share, or
without voting powers, and with such designations, conversion rights,
redemption prices, dividend rates and similar matters, including preferences
over shares of Common Stock or other series of Preferred Stock as to dividends
or distributions of assets and relative participation, optional or other
special rights, and qualifications, limitations or restrictions thereof, as
shall be set forth in resolutions providing for the issuance thereof that may
be adopted by the Board of Directors.
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4.2 No holder of shares of the Corporation shall be entitled as of right
to subscribe for, purchase or receive any new or additional shares of any
class, whether now or hereafter authorized, or any notes, bonds, debentures or
other securities convertible into, or carrying options or warrants to
purchase, shares of any class; but all such new or additional shares of any
class, or notes, bonds, debentures or other securities convertible into, or
carrying options or warrants to purchase, shares of any class may be issued or
disposed of by the Board of Directors to such persons and on such terms as it,
in its absolute discretion, may deem advisable.
Article V
Designation of Secretary of State; Mailing Address
5. The Secretary of State is designated as the agent of the Corporation
upon whom process in any action or proceeding against the Corporation may be
served, and the address to which the Secretary of State shall mail a copy of
process in any action or preceeding against the Corporation which may be
served upon him is:
320 State Street
Schenectady, New York 12301
Attn: Corporate Secretary
Article VI
Directors; Election and Classification
6. The entire Board of Directors, consisting of not less than twelve
(12) members and not more than fifteen (15) members, shall be divided into
three (3) classes of not less than four (4) members each, which classes are
hereby designated as Class A, Class B and Class C. The number of directors of
Class A shall equal one-third (1/3) of the total number of directors as
determined in the manner provided in the By-Laws (with any fractional
remainder to count as one); the number of directors of Class B shall equal
one-third (1/3) of the total number of directors (or the nearest whole number
thereto); and the number of directors of Class C shall equal said total number
of directors minus the aggregate number of directors of Classes A and B. At
the election of the first Board of Directors, the class of each of the members
then elected shall be designated. The term of office of each member then
designated as a Class A director shall expire at the annual meeting of
shareholders next ensuing, that of each member then designated as a Class B
director at the annual meeting of shareholders one year thereafter, and that
of each member then designated as a Class C director at the annual meeting of
shareholders two years thereafter. At each annual meeting of shareholders held
after the election and classification of the first Board of Directors,
directors to succeed those whose terms expire at such annual meeting shall be
elected to hold office for a term expiring at the third succeeding annual
meeting of shareholders and until their respective successors are elected and
have qualified or until their respective earlier displacement from office by
resignation, removal or otherwise.
Article VII
Duration
7. The duration of the Corporation is to be perpetual.
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Article VIII
Shareholders -- Quorum, Voting and Special Meetings
8. The holders of at least a majority of the outstanding Voting Stock of
the Corporation shall be present in person or by proxy at any meeting of
shareholders in order to constitute a quorum for the transaction of any
business, and the affirmative vote of at least a majority of the Corporation's
outstanding Voting Stock shall be needed to approve any matter on which such
shareholders are entitled to vote except that the affirmative vote or request,
as the case may be, of at least two-thirds of the Corporation's Voting Stock
shall be needed to effect a change, modification or repeal of any provision in
the Certificate of Incorporation or By-Laws and to call a Special Meeting of
the shareholders. This provision does not affect those circumstances under
which shareholders may call a Special Meeting for the election of directors as
a matter of law and the right of management to call shareholder meetings as
set forth in the By-Laws.
Article IX
Quorum and Voting Requirements at Directors' Meeting
9. A majority of the Board of Directors shall be present at any meeting
of Directors in order to constitute a quorum for the transaction of any
business. The affirmative vote of a majority of the entire Board of Directors
shall be necessary for the transaction of any business or specified item of
business, except as otherwise provided in this Certificate, and except that,
the affirmative vote of two-thirds of the entire Board of Directors shall be
necessary to change, amend or repeal any provision of the Certificate of
Incorporation or By-Laws.
Article X
Business Combination
10.1 Shareholder Approval of Business Combinations -- Maximum Vote.
(A) Except as otherwise expressly provided in Section 10.2 of this
Article 10, the approval of any Business Combination (as hereinafter defined)
shall, in addition to any affirmative vote required by law or any other
provision of this Certificate of Incorporation or any preferred stock
designation of the Corporation, require the affirmative vote of the holders of
not less than two-thirds of the shares of the Corporation then entitled to
vote generally in the election of directors of the Corporation (hereinafter in
this Article 10 referred to as "Voting Stock"), voting together as a single
class, with each share of Voting Stock to have one (1) vote.
(B) The term "Business Combination" as used in this Article 10 shall
mean:
(i) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (a) any Substantial Shareholder (as
hereinafter defined) or (b) any other corporation which, after such merger or
consolidation, would be a Substantial Shareholder, regardless of which entity
survives;
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to or with
any Substantial Shareholder of all or any significant part of the assets of
the Corporation or any Subsidiary, or both, with a "significant part of the
assets" to be defined as more than ten percent (10%) of the total assets
- 28 -
of such entity as shown on its audited statement of condition as of the end of
the most recent fiscal year ending prior to the time the particular
transaction is announced;
(iii) the adoption of any plan or proposal for the liquidation
or dissolution of
the Corporation proposed by or on behalf of any Substantial Shareholder; or
(iv) any transaction involving the Corporation or any
Subsidiary, including any issuance, transfer or reclassification of any
securities of, or any recapitalization of, the Corporation or any Subsidiary,
or any merger or consolidation of the Corporation with any Subsidiary (whether
or not involving a Substantial Shareholder), if the transaction would have the
effect, directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is owned directly or indirectly by a
Substantial Shareholder.
10.2 Exception to Maximum Vote Requirement.
The provision of Section 10.1 of this Article 10 shall not be applicable
to any Business Combination, and such Business Combination shall require only
such affirmative shareholder vote as is required by law or otherwise, if, in
the case of a Business Combination which does not involve any cash or other
consideration being received by shareholders of the Corporation (in their
capacities as shareholders), the condition specified in the following
paragraph (i) is met, or, in the case of any Business Combination, either the
condition specified in the following paragraph (i) is met or the condition
specified in the following paragraph (ii) is met:
(i) the Business Combination shall have been approved by
two-thirds of the Disinterested Directors (as hereinafter defined), it being
understood that this condition shall not be capable of satisfaction unless
there is at least one Disinterested Director.
(ii) the consideration to be received per share by holders of
Common Stock of the Corporation and by holders of each other class of Voting
Stock outstanding, if any, shall be Fair Consideration (as hereinafter
defined).
10.3 Definitions.
(A) "Fair Consideration" shall mean,
(i) in the case of shares of Common Stock, an amount in cash or
readily available funds at least equal to the highest of the following
(whether or not the Substantial Shareholder has previously acquired such
shares):
(a) the highest per share price paid by the
Substantial Shareholder for any such shares acquired by it within the
three-year period immediately preceding the first public announcement
of the proposal of the Business Combination (hereinafter referred to as
the "Announcement Date"), plus an "Interest Adjustment" of such price,
as defined hereafter in this Section 10.3(A);
(b) the highest reported per share price at which such
shares were publicly traded during the three-year period immediately
preceding the Announcement Date, plus an "Interest Adjustment" of such
price, as defined hereafter in this Section 10.3(A);
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(c) the per share fair market value of such shares on
the Announcement Date, plus an "Interest Adjustment" of such value,as defined
hereafter in this Section 10.3(A);
(d) the book value per share of Common Stock as of
the end of the latest fiscal quarter preceding the Announcement Date,
plus an "Interest Adjustment" of such value, as defined hereafter in this
Section 10.3(A);
(ii) and in the case of shares of any class of Voting Stock of
the Corporation outstanding, an amount in cash or readily available funds at
least equal to the highest of the following (whether or not the Substantial
Shareholder has previously acquired any such shares);
(a) the highest per share price paid by the
Substantial Shareholder for any such shares acquired by it within the
three-year period immediately preceding the Announcement Date, plus an
"Interest Adjustment" of such price, as defined hereafter in this Section
10.3(A);
(b) the highest reported per share price at which
such shares were public traded during the three-year period immediately
preceding the Announcement Date, plus an "Interest Adjustment" of such
price, as defined hereafter in this Section 10.3(A);
(c) the per share fair market value of such shares
on the Announcement Date, plus an "Interest Adjustment" of such value, as
defined hereafter in this Section 10.3(A);
(d) the highest preferential amount per share to
which the holders of such shares are entitled in the event of voluntary or
involuntary liquidation or dissolution of the Corporation.
An "Interest Adjustment" of any price or value per share for a class of
shares under this Section 10.3(A) shall equal an amount of interest on such
price or value compounded annually from the Announcement Date until the
Consummation Date of the Business Combination (the "Consummation Date"), or,
in the case of subdivisions (a) and (b) in each of the subsections (A)(i) and
(A)(ii) in this Section 10.3, from the date the Substantial Shareholder first
became a Substantial Shareholder (the "Determination Date") until the
Consummation Date, at a market prime rate of interest as may be determined
from time to time by a majority of the Disinterested Directors, less the
aggregate amount of any cash dividends per share paid on such class of shares
during such period up to but not in excess of such amount of interest.
(B) "Substantial Shareholder" shall mean and include any individual,
corporation, partnership or other person or entity (other than the Corporation
or any Subsidiary) which, together with its "Affiliates" and "Associates" (as
such terms were defined as of December 11, 1984, in Rule 12b-2 under the
Securities Exchange Act of 1934) is the "Beneficial Owner" (as defined in
accordance with the criteria set forth as of December 11, 1984, under Rule
13d-3 under the Securities Exchange Act of 1934) in the aggregate of more than
five percent (5%) of the voting power of the then-outstanding Voting Stock of
the Corporation of any Affiliate or Associate of any such individual,
corporation, partnership or other person or entity.
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(C) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security is owned, directly or indirectly, by the Corporation.
(D) "Disinterested Director" shall mean any member of the Board of
Directors of the Corporation (the "Board") who is unaffiliated with the
Substantial Shareholder and who was a member of the Board prior to the
Determination Date or became a member of the Board after the Determination
Date and was recommended or elected by a majority of Disinterested Directors
then on the Board.
10.4 Interpretative Power of Disinterested Directors.
A majority of the Disinterested Directors from time to time shall have
the power and duty to determine, on the basis of facts known to them after
reasonable inquiry, all facts necessary to determine compliance with this
Article 10, including, without limitation, (1) whether a person or entity is a
Substantial Shareholder, (2) whether the price in a proposed Business
Combination is Fair Consideration, (3) the number of shares of Voting Stock
beneficially owned by any person or entity at any given time, and (4) the fair
market value as of any given date of the shares of any class of Voting Stock.
10.5 Alteration, Amendment and Repeal
Notwithstanding any provision of this Certificate of Incorporation or
any provision of law or any preferred stock designation of the Corporation
which might otherwise permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series of the
Voting Stock required by law or this Certificate of Incorporation or any
preferred stock designation of this Corporation, the affirmative vote of the
holders of at least two-thirds of the voting power of the then-outstanding
shares of Voting Stock, voting together as a single class, shall be required
to alter, amend or repeal, or to adopt any provision inconsistent with, this
Article 10 or any provision of this Article 10.
Article XI
Limitation of Personal Liability
11. To the fullest extent that the Business Corporation Law of the State
of New York, as the same exists or may hereafter be amended, permits
elimination or a limitation of the liabilities of directors, no director of
the corporation shall be liable to the corporation, or its shareholders for
any breach of duty in such capacity. Any repeal or modification of this
Article by the shareholder of the corporation shall be prospective only and
shall not adversely affect any elimination or limitation of the personal
liability of a director of the corporation for acts or omissions occurring
prior to the effective date of such repeal or modification.
FIFTH. This Amendment was authorized by a vote of the Board of Directors,
followed by a vote of the holders of a majority of all outstanding shares
entitled to vote thereon at a meeting of Shareholders on the seventeenth day
of May, 1993.
SIXTH. This restatement of the Certificate of Incorporation of the
Corporation was authorized by a majority vote of the Board of Directors
pursuant to section 807 of the Business Corporation Law.
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IN WITNESS WHEREOF, THE UNDERSIGNED HAVE SIGNED THIS CERTIFICATE
THIS 27th DAY OF JULY, 1993, AND DO HEREBY AFFIRM THE CONTENTS TO BE
TRUE UNDER THE PENALTIES OF PERJURY.
/s/Robert A. McCormick
ROBERT A. McCORMICK
President
/s/William F. Terry
WILLIAM F. TERRY
Secretary
STATE OF NEW YORK )
) ss.
COUNTY OF SCHENECTADY )
ROBERT A. McCORMICK, being duly sworn, deposes and says that he is the
President and Chief Executive Officer of TRUSTCO BANK CORP NY, the Corporation
named in the foregoing Certificate, that he has read and signed said
Certificate and knows the contents thereof, and that the statements contained
therein are true.
/s/Robert A. McCormick
ROBERT A MCCORMICK
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
Sworn to before me this
27th day of July, 1993
/s/Joan Clark
Notary Public
Notary Public State of New York
Qualified in Albany County
01CL4822282
My commision expires Nov. 30, 1994
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RESOLUTION RELATING TO
AMENDMENT AND RESTATEMENT OF ORGANIZATION CERTIFICATE
RESOLVED, That the Certificate of Incorporation of the Corporation be and
hereby is restated to reflect the amendments to the Certificate of
Incorporation adopted since the previous restatement on the eighth day of
July, 1988, including the amendment adopted at the meeting of the shareholders
of the Corporation on the seventeenth day of May, 1993; such Amended and
Restated Certificate of Incorporation, in the form presented to this meeting,
correctly sets forth the corresponding provisions of the Certificate of
Incorporation, as amended, and is hereby adopted on behalf of the Corporation.
RESOLVED, That the appropriate officers of the Corporation be,and they hereby
are,authorized and directed to execute and deliver and file such certificates
and other documents, including the delivery of an Amended and Restated
Certificate of Incorporation, to the Department of State of the State of New
York, and to take such action and do such other things as may, in their
judgment, be necessary and advisable in order to fully effectuate the
foregoing resolutions.
---------------------------------------------------------------------------
I hereby certify that the above is a true and correct excerpt from the minutes
of a regular meeting of the Board of Directors of TrustCo Bank Corp NY held on
July 20, 1993, at the Main Office of the Company at 320 State Street,
Schenectady, New York, that a quorum of directors was present and acting
throughout the meeting, and that the resolutions adopted at the meeting as set
forth above are in full force and effect by a majority of the Board of
Directors.
/s/William F. Terry
------------------------------
Secretary
7/22/93
------------------
Date
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Exhibit 22
Item 4. Submission of Matters to Vote of Security Holders -- Annual Meeting
1. Election of Directors:
At the annual meeting held May 20, 1996, shareholders of the Company were
asked to consider the Company's nominees for directors and to elect four
(4) directors, each to serve for a term of three (3) years. The Company's
nominees for director were Lionel O. Barthold, Richard J. Murray, Jr.,
William D. Powers, and William F. Terry. The results of shareholder voting
are as follows:
DIRECTOR FOR WITHHELD ABSTAIN
-------- --- -------- -------
Barthold 16,306,811 290,254 N/A
Murray 16,290,981 286,084 N/A
Powers 16,264,416 312,650 N/A
Terry 16,290,154 286,911 N/A
Directors continuing in office are: Barton A. Andreoli, M. Norman
Brickman, Robert A. McCormick, Nancy A. McNamara, John S. Morris, PhD,
James H. Murphy, DDS, Kenneth C. Petersen, William J. Purdy, and
Philip J. Thompson.
2. Proposal to amend Amended and Restated Certificate of Incorporation to
increase the number of authorized shares of TrustCo common stock from
25,000,000 to 50,000,000 shares.
FOR AGAINST ABSTAIN NON-VOTE
15,115,063 714,298 747,424 N/A
3. Proposal to ratify the selection of KPMG Peat Marwick LLP as the
independent certified public accountants.
FOR AGAINST ABSTAIN
16,230,831 49,115 292,120
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