UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Fiscal Year Ended December 31, 2004
Or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ____________________ to _____________________
Commission file number 0-10592
------------------------------
TRUSTCO BANK CORP NY
(Exact name of registrant as specified in its charter)
NEW YORK 14-1630287
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
5 SARNOWSKI DRIVE, GLENVILLE, NEW YORK 12302
(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:
Title of each class Name of exchange on which registered
------------------- ------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.00 Par Value
(Title of class)
--------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes.(x) No.( )
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K. Yes.( ) No.( )
Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act). Yes (x) No.( )
The aggregate market value of the common stock held by non-affiliates
as of June 30, 2004 was approximately $971,901,000 (based upon the closing
price of $13.10 on June 30, 2004, as reported on the Nasdaq National Market).
The number of shares outstanding of the registrant's common stock as
of March 1, 2005 was 74,926,993.
Documents Incorporated by Reference: (1) Portions of registrant's Annual
Report to Shareholders for the
fiscal year ended December 31, 2004
(Part I and Part II).
(2) Portions of registrant's Proxy
Statement filed for its Annual
Meeting of Shareholders to be
held May 9, 2005 (Part III).
INDEX
Description Page
- -----------------------------------------------------------------------------
PART I
Item 1 Business 1
Item 2 Properties 8
Item 3 Legal Proceedings 8
Item 4 Submission of Matters to a Vote of Security Holders 8
PART II
Item 5 Market for the Registrant's Common Equity, 9
Related Stockholder Matters and Issuer
Purchases of Equity Securities
Item 6 Selected Financial Data 11
Item 7 Management's Discussion and Analysis of 11
Financial Condition and Results of Operations
Item 7A Quantitative and Qualitative Disclosures about 11
Market Risk
Item 8 Financial Statements and Supplementary Data 11
Item 9 Changes in and Disagreements with Accountants 11
On Accounting and Financial Disclosure
Item 9A Controls and Procedures 11
Item 9B Other Information 12
PART III
Item 10 Directors and Executive Officers of Registrant 12
Item 11 Executive Compensation 13
Item 12 Security Ownership of Certain Beneficial Owners 13
and Management
Item 13 Certain Relationships and Related Transactions 13
Item 14 Principal Accounting Fees and Services 13
PART IV
Item 15 Exhibits, Financial Statement Schedules 14
Signatures 18
EXHIBITS INDEX 20
PART I
Item 1. Business
General
TrustCo Bank Corp NY ("TrustCo" or the "Company") is a savings and loan
holding company having its principal place of business at 5 Sarnowski Drive,
Glenville, New York 12302. TrustCo was incorporated under the laws of New
York in 1981 to acquire all of the outstanding stock of TrustCo Bank,
National Association, formerly known as TrustCo Bank New York, and prior to
that, The Schenectady Trust Company. On July 28, 2000 TrustCo acquired
Landmark Financial Corp. and its subsidiary Landmark Community Bank,
Canajoharie, New York, a federal savings bank with assets of approximately
$26 million. Landmark Community Bank was subsequently renamed TrustCo Savings
Bank, and, on November 15, 2002, TrustCo Savings Bank and TrustCo Bank,
National Association merged under the charter of TrustCo Savings Bank. In
that merger, the resulting bank changed its name to TrustCo Bank (sometimes
referred to in this report as the "Bank").
Through policy and practice, TrustCo continues to emphasize that it is an
equal opportunity employer. There were 511 full-time equivalent employees of
TrustCo at year-end 2004. TrustCo had 14,395 shareholders of record as of
December 31, 2004 and the closing price of the TrustCo common stock at that
date was $13.79.
Subsidiaries
TrustCo Bank
TrustCo Bank is a federal savings bank engaged in providing general banking
services to individuals, partnerships, and corporations. The Bank operates 72
automatic teller machines and 75 banking offices in Albany, Columbia,
Dutchess, Greene, Montgomery, Rensselaer, Rockland, Saratoga, Schenectady,
Schoharie, Warren, Washington and Westchester counties of New York State,
Sarasota, Seminole and Orange counties in Florida and Bennington County in
Vermont. The largest part of such business consists of accepting deposits and
making loans and investments. The Bank provides a wide range of both personal
and business banking services. The Bank is supervised and regulated by the
federal Office of Thrift Supervision ("OTS") and is a member of the Federal
Reserve System. Its deposits are insured by the Federal Deposit Insurance
Corporation ("FDIC") to the extent permitted by law. The Bank established an
operating subsidiary, TrustCo Vermont Investment Company, in September 2003
for the purposes of holding all of the shares of the capital stock of the
Bank's existing subsidiary, TrustCo Realty Corp., that were held by the Bank
and of acquiring and managing other investments. TrustCo Realty Corp. holds
certain mortgage assets which are serviced by the Bank. The Bank accounted
for substantially all of TrustCo's 2004 consolidated net income and average
assets.
The trust department of the Bank serves as executor of estates and trustee of
personal trusts, provides estate planning and related advice, provides
custodial services, and acts as trustee for various types of employee benefit
plans and corporate pension and profit sharing trusts. The aggregate market
value of the assets under trust, custody, or management of the trust
department of the Bank was approximately $992 million as of December 31,
2004.
1
The daily operations of the Bank remain the responsibility of its officers,
subject to the oversight of its Board of Directors and overall supervision by
TrustCo. The accounts of the Bank are included in TrustCo's consolidated
financial statements.
ORE Subsidiary
During 1993, TrustCo created ORE Subsidiary Corp., a New York corporation, to
hold and manage certain foreclosed properties acquired by the Bank. The
accounts of this subsidiary are included in TrustCo's consolidated financial
statements.
Competition
TrustCo faces strong competition in its market areas, both in attracting
deposits and making loans. The Company's most direct competition for
deposits, historically, has come from commercial banks, savings associations,
and credit unions that are located or have branches in those market areas.
The competition ranges from other locally based commercial banks, savings
banks and credit unions to branches of the largest financial institutions in
the United States. In the Capital District area of New York State, TrustCo's
principal competitors are local operations of super regional banks, branch
offices of money center banks, and locally based commercial and savings
banks. The Bank is the largest depository institution headquartered in the
Capital District area. The Company also faces competition for deposits from
national brokerage houses, short-term money market funds, and other corporate
and government securities funds.
Factors affecting the acquisition of deposits include pricing, office
locations and hours of operation, the variety of deposit accounts offered,
and the quality of customer service provided. Competition for loans has been
especially keen during the last several years. Commercial banks, local thrift
institutions, traditional mortgage brokers affiliated with local offices, and
nationally franchised real estate brokers are all active and aggressive
competitors. The Company competes in this environment by providing a full
range of financial services based on a tradition of financial strength and
integrity dating from its inception. The Company competes for loans,
principally through the interest rates and loan fees it charges, and the
efficiency and quality of services it provides to borrowers.
Supervision and Regulation
Banking is a highly regulated industry, with numerous federal and state laws
and regulations governing the organization and operation of banks and their
affiliates. As a savings and loan holding company registered under the Home
Owners' Loan Act (the "Act"), TrustCo is regulated and examined by the OTS.
The Act requires TrustCo to obtain prior OTS approval for acquisitions and
restricts the business operations permitted to TrustCo. Because the FDIC
provides deposit insurance to the Bank, the Bank is also subject to its
supervision and regulation even though the FDIC is not the Bank's primary
federal regulator.
2
Most of TrustCo's revenues consist of cash dividends paid to TrustCo by the
Bank, payment of which is subject to various regulatory limitations. (Note 1
to the consolidated financial statements contained in TrustCo's Annual Report
to Shareholders for the year ended December 31, 2004, which appears on page
34 thereof, contains information concerning restrictions on TrustCo's ability
to pay dividends and is hereby incorporated by reference.) Compliance with
the standards set forth in the OTS rules regarding capital distribution by
savings associations and savings banks could also limit the amount of
dividends that TrustCo may pay to its shareholders. The banking industry is
also affected by the monetary and fiscal policies of the federal government,
including the Reserve Board, which exerts considerable influence over the
cost and availability of funds obtained for lending and investing.
See Note 15 to the consolidated financial statements contained in TrustCo's
Annual Report to Shareholders for the year ended December 31, 2004, which
appears on page 45 thereof and contains information concerning regulatory
capital requirements.
The following summary of laws and regulations applicable to the Company and
the Bank is not intended to be a complete description of those laws and
regulations or their effects on the Company and the Bank, and it is qualified
in its entirety by reference to the particular statutory and regulatory
provisions described.
Holding Company Activities
The activities of savings and loan holding companies are governed by the Act.
Since TrustCo became a savings and loan holding company in 2002, its
activities are limited to those permissible for "multiple" savings and loan
holding companies (that is, savings and loan holding companies owning more
than one savings association subsidiary) as of March 5, 1987, activities
permitted for bank holding companies as of November 12, 1999 and activities
permissible for "financial holding companies" (which are described below).
"Savings associations" include federal savings banks such as the Bank.
TrustCo must obtain approval from the appropriate bank regulatory agencies
before acquiring control of any insured depository institution.
Regulatory Capital Requirements
OTS capital regulations require thrifts to satisfy three capital ratio
requirements: tangible capital, Tier 1 core (leverage) capital, and
risk-based capital. In general, an association's tangible capital, which must
be at least 1.5% of adjusted total assets, is the sum of common shareholders'
equity adjusted for the effects of other comprehensive income ("OCI"), less
goodwill and other disallowed assets. An association's ratio of Tier 1 core
capital to adjusted total assets (the "core capital" or "leverage" ratio)
must be at least 3% for the most highly rated associations and 4% for others.
Higher capital ratios may be required if warranted by the particular
circumstances or risk profile of a given association. Under the risk-based
capital requirement, a savings association must have total capital (core
capital plus supplementary capital) equal to at least 8% of risk-weighted
assets. Tier 1 capital must represent at least 50% of total capital and
consists of core capital elements, which include common shareholders' equity,
qualifying noncumulative nonredeemable perpetual preferred stock, and
minority interests in the equity accounts of consolidated subsidiaries, but
exclude goodwill and certain other intangible assets. Supplementary capital
mainly consists of qualifying subordinated debt and portions of allowance for
loan losses.
3
The above capital requirements are viewed as minimum standards by the OTS.
The OTS regulations also specify minimum requirements for a savings
association to be considered a "well-capitalized institution" as defined in
the "prompt corrective action" regulation described below. A
"well-capitalized" savings association must have a total risk-based capital
ratio of 10% or greater, and a leverage ratio of 5% or greater. Additionally,
to qualify as a "well-capitalized institution," a savings association's Tier
1 risk-based capital, defined as core capital plus supplementary capital less
portions of the association's allowance for loan losses, must be equal to at
least 6% of risk-weighted assets. TrustCo Bank currently meets all of the
requirements of a "well-capitalized institution."
The OTS regulations contain prompt corrective action provisions that require
certain mandatory remedial actions and authorize certain other discretionary
actions to be taken by the OTS against a savings association that falls
within specified categories of capital deficiency. The relevant regulations
establish five categories of capital classification for this purpose, ranging
from "well-capitalized" or "adequately capitalized" through
"undercapitalized," "significantly undercapitalized" and "critically
undercapitalized." In general, the prompt corrective action regulations
prohibit an OTS-regulated institution from declaring any dividends, making
any other capital distributions, or paying a management fee to a controlling
person, such as its parent holding company, if, following the distribution or
payment, the institution would be within any of the three undercapitalized
categories.
Community Reinvestment Act
The Community Reinvestment Act ("CRA") requires each savings institution, as
well as commercial banks and certain other lenders, to identify the
communities served by the institution's offices and to identify the types of
credit the institution is prepared to extend within those communities. The
CRA also requires the OTS to assess an institution's performance in meeting
the credit needs of its identified communities as part of its examination of
the institution, and to take such assessments into consideration in reviewing
applications with respect to branches, mergers and other business
combinations, including acquisitions by savings and loan holding companies.
An unsatisfactory CRA rating may be the basis for denying such an application
and community groups have successfully protested applications on CRA grounds.
In connection with its assessment of CRA performance, the OTS assigns CRA
ratings of "outstanding," "satisfactory," "needs to improve" or "substantial
noncompliance." The Bank was rated "satisfactory" in its last CRA
examination. Institutions are evaluated based on (i) its record of helping to
meet the credit needs of its assessment area through lending activities (ii)
its qualified investments; and (iii) through the availability and
effectiveness of the banks system for delivering retail banking services. An
institution that is found to be deficient in its performance in meeting its
community's credit needs may be subject to enforcement actions, including
cease and desist orders and civil money penalties.
4
Qualified Thrift Lender Test
Like all OTS-regulated institutions, the Bank is required to meet a Qualified
Thrift Lender ("QTL") test or the Internal Revenue Service (IRS) tax code
Domestic Building and Loan Association (DBLA) test to avoid certain
restrictions on its operations, including restrictions on its ability to
branch interstate and the Company's mandatory registration as a savings and
loan holding company under the Home Owners' Loan Act. A savings association
satisfies the QTL test if: (i) on a monthly average basis in at least nine
months out of each twelve month period, at least 65% of a specified asset
base of the savings association consists of loans to small businesses, credit
card loans, educational loans, or certain assets related to domestic
residential real estate, including residential mortgage loans and mortgage
securities; or (ii) at least 60% of the savings association's total assets
consist of cash, U.S. government or government agency debt or equity
securities, fixed assets, or loans secured by deposits, real property used
for residential, educational, church, welfare, or health purposes, or real
property in certain urban renewal areas. To be a QTL under the DBLA test, a
savings association must meet a "business operations test" and a "60 percent
of assets test." The business operations test requires the business of a DBLA
to consist primarily of acquiring the savings of the public and investing in
loans. An institution meets the public savings requirement when it meets one
of two conditions: (i) The institution acquires its savings in conformity
with OTS rules and regulations and (ii) The general public holds more than 75
percent of its deposits, withdrawable shares, and other obligations. An
institution meets the investing in loans requirement when more than 75
percent of its gross income consists of interest on loans and government
obligations, and various other specified types of operating income that
financial institutions ordinarily earn. The 60 percent of assets test
requires that at least 60 percent of a DBLA's assets must consist of assets
that thrifts normally hold, except for consumer loans that are not
educational loans. The Bank is currently, and expects to remain, in
compliance with these standards.
Federal Reserve System
Federal Reserve Board regulations require savings institutions to maintain
non-interest bearing reserves against their transaction accounts. The reserve
for transaction accounts as of December 31, 2004 was 0% of the first $6.6
million of such accounts, 3% of the next $45.4 million of such accounts and
10% (subject to adjustment by the Federal Reserve Board between 8% and 14%)
of the balance of such accounts. The Bank is in compliance with these
requirements as of December 31, 2004.
Gramm-Leach-Bliley Act
On November 12, 1999, the Gramm-Leach-Bliley Act of 1999 (the"GLB Act")
was signed into law. The GLB Act made significant changes to the operations
of financial services companies. It repealed prohibitions on affiliations
among banks, securities firms and insurance companies. It authorized a broad
range of financial services to be conducted by these types of companies
within a new structure known as a "financial holding company." A financial
holding company may engage in a number of activities deemed to be new
activities, such as securities underwriting and dealing activities, insurance
underwriting and sales activities, merchant banking and equity investment
activities, and "incidental" and "complementary" non-financial activities.
While the GLB Act specifies so-called "functional regulation," various
federal and state regulators have continued authority over certain activities
of financial holding companies and other regulated financial institutions.
5
The GLB Act establishes a federal right to the confidential treatment of
nonpublic personal information about consumers. These provisions of the GLB
Act require disclosure of privacy policies to consumers and, in some
circumstances, will allow consumers to prevent disclosure of certain personal
information to a nonaffiliated third party. Compliance with the rules was
mandatory starting on July 1, 2001. These rules affect how consumer
information is transmitted through diversified financial companies and
conveyed to outside vendors. Because the Company does not sell customer
information or give customer information to outside third parties or its
affiliates except under very limited circumstances (e.g., providing customer
information to the Company's data processing provider), the rules have not
had a significant impact on the Company's results of operations or financial
condition.
Other Legislation
On October 26, 2001, President Bush signed into law the USA PATRIOT Act
("Patriot Act"). The Patriot Act includes numerous provisions designed to
fight international money laundering and to block terrorist access to the
U.S. financial system. Under Title III of the Patriot Act, also known as the
International Money Laundering Abatement and Anti-Terrorism Financing Act of
2001, all financial institutions, including the Company and the Bank, are
required to take certain measures to identify their customers, prevent money
laundering, monitor certain customer transactions and report suspicious
activity to U.S. law enforcement agencies, and scrutinize or prohibit
altogether certain transactions of special concern. Financial institutions
also are required to respond to requests for information from federal banking
regulatory agencies and law enforcement agencies concerning their customers
and their transactions. Information-sharing among financial institutions
concerning terrorist or money laundering activities is encouraged by an
exemption provided from the privacy provisions of the GLB Act and other laws.
Further, the effectiveness of a financial institution in combating money
laundering activities is a factor to be considered in applications submitted
by a financial institution under the Bank Merger Act. The Company has in
place a Bank Secrecy Act compliance program, and it engages in very few
transactions of any kind with foreign financial institutions or foreign
persons.
On July 30, 2002, the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley") was
signed into law. Sarbanes-Oxley implemented legislative reforms intended to
address corporate and accounting fraud and contains reforms of various
business practices and numerous aspects of corporate governance. For example,
this new legislation addresses accounting oversight and corporate governance
matters, including the creation of a five-member oversight board appointed by
the Securities and Exchange Commission to set and enforce auditing, quality
control and independence standards for accountants and have investigative and
disciplinary powers; increased responsibilities and codified requirements
relating to audit committees of public companies and how they interact with a
company's public accounting firm; the prohibition of accounting firms from
providing various types of consulting services to public clients and
requiring accounting firms to rotate partners among public client assignments
every five years; expanded disclosure of corporate operations and internal
controls and certification by chief executive officers and chief financial
officers to the accuracy of periodic reports filed with the SEC; and
prohibitions on public company insiders from trading during retirement plan
"blackout" periods, restrictions on loans to company executives and enhanced
controls on and reporting of insider trading.
6
Although the Company will incur additional expense in complying with the
provisions of Sarbanes-Oxley and the resulting regulations, management does
not expect that such compliance will have a material impact on the Company's
financial condition or results of operations.
Foreign Operations
Neither TrustCo nor the Bank engage in any operations in foreign countries or
have outstanding loans to foreign debtors.
Statistical Information Analysis
The "Management's Discussion and Analysis of Financial Condition and Results
of Operations" on pages 6 through 25 of TrustCo's Annual Report to
Shareholders for the year ended December 31, 2004, which contains a
presentation and discussion of statistical data relating to TrustCo, is
hereby incorporated by reference. This information should not be construed to
imply any conclusion on the part of the management of TrustCo that the
results, causes, or trends indicated therein will continue in the future. The
nature and effects of governmental monetary policy, supervision and
regulation, future legislation, inflation and other economic conditions and
many other factors which affect interest rates, investments, loans, deposits,
and other aspects of TrustCo's operations are extremely complex and could
make historical operations, earnings, assets, and liabilities not indicative
of what may occur in the future.
Critical Accounting Policies
Pursuant to recent SEC guidance, management of the Company is encouraged to
evaluate and disclose those accounting policies that are judged to be
critical policies, or those most important to the portrayal of the Company's
financial condition and results of operations, and that require management's
most difficult subjective or complex judgments. Management considers the
accounting policy relating to the allowance for loan losses to be a critical
accounting policy given the inherent subjectivity and uncertainty in
estimating the levels of the allowance required to cover credit losses in the
portfolio and the material effect that such judgments can have on the results
of operations. Included in Note 1 to the consolidated financial statements
contained in TrustCo's Annual Report to Shareholders is a description of this
critical policy and the other significant accounting policies that are
utilized by the Company in the preparation of the Consolidated Financial
Statements.
7
Availability of Reports
This annual report on Form 10-K and subsequently filed quarterly reports on
Form 10-Q, current reports on Form 8-K and all amendments to those reports
are available free of charge from our Internet site, www.trustcobank.com.
Forward-Looking Statements
Statements included in the "Management's Discussion and Analysis of Financial
Condition and Results of Operations" of TrustCo's Annual Report to
Shareholders for the year ended December 31, 2004 and in future filings by
TrustCo with the Securities and Exchange Commission, in TrustCo's press
releases, and in oral statements made with the approval of an authorized
executive officer which are not historical or current facts are
"forward-looking statements" made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995 and are subject to
certain risks and uncertainties that could cause actual results to differ
materially from historical earnings and those presently anticipated or
projected. TrustCo wishes to caution readers not to place undue reliance on
any such forward-looking statements, which speak only as of the date made.
The following important factors, among others, in some cases have affected
and in the future could affect TrustCo's actual results and could cause
TrustCo's actual financial performance to differ materially from that
expressed in any forward-looking statement: (i) credit risk; (ii) interest
rate risk; (iii) competition; (iv) changes in the regulatory environment; and
(v) changes in local market area and general business and economic trends.
The foregoing list should not be construed as exhaustive and the Company
disclaims any obligation to subsequently revise any forward-looking
statements to reflect events or circumstances after the date of such
statements or to reflect the occurrence of anticipated or unanticipated
events.
Item 2. Properties
TrustCo's executive offices are located at 5 Sarnowski Drive, Glenville, New
York, 12302. The Company operates 75 offices, of which 24 are owned and 51
are leased from others. The asset value of these properties, when considered
in the aggregate, is not material to the operation of TrustCo.
In the opinion of management, the physical properties of TrustCo and the Bank
are suitable and adequate and are being fully utilized.
Item 3. Legal Proceedings
The nature of TrustCo's business generates a certain amount of litigation
against TrustCo and its subsidiaries involving matters arising in the
ordinary course of business. In the opinion of management of TrustCo, there
are no proceedings pending to which TrustCo or any of its subsidiaries is a
party, or of which its property is the subject which, if determined adversely
to TrustCo or such subsidiaries, would be material in relation to TrustCo's
consolidated shareholders' equity and financial condition.
Item 4. Submission of Matters to a Vote of Security Holders
None.
8
Executive Officers of TrustCo
The following is a list of the names and ages of the executive officers
of TrustCo and their business history for the past five years:
Year First
Name, Age and Principal Occupations Became
Position Or Employment Since Executive
With TrustCo January 1, 1999 of TrustCo
- -----------------------------------------------------------------------------------------------------------
Robert J. McCormick, 41, President and Chief Executive Officer of 2000
President and Chief TrustCo since January 2004, Executive Officer
Executive Officer of TrustCo since 2001 and President and Chief
Executive Officer of TrustCo Bank since November 2002.
Joined TrustCo Bank in 1995. Robert J. McCormick
is the son of Robert A. McCormick, Chairman of
TrustCo and TrustCo Bank.
Robert T. Cushing, 49, Executive Vice President and Chief Financial Officer 1994
Executive Vice President of TrustCo since January 2004, President and Chief
and Chief Financial Officer Executive Officer of TrustCo from November 2002 to
December 2003; Executive Officer of TrustCo and TrustCo
Bank since 1994. Joined TrustCo Bank in 1994.
Scot R. Salvador, Age 38, Executive Vice President and Chief Banking Officer 2004
Executive Vice President of TrustCo and TrustCo Bank since January 2004.
and Chief Banking Officer Officer of TrustCo Bank since 1996. Joined TrustCo
Bank in 1995.
Robert M. Leonard, Age 42, Administrative Vice President and Secretary 2003
Administrative Vice President of TrustCo and TrustCo Bank since 2004. Secretary of
and Secretary TrustCo and TrustCo Bank since 2003. Joined TrustCo Bank
in 1986.
Each executive officer is elected by the Board of Directors to serve until
election of his successor.
PART II
Item 5. Market for the Registrant's Common Equity, Related Stockholder
Matters and Issuer Re-purchases of Equity Securities
TrustCo's common stock is traded on The Nasdaq Stock Market under the symbol
"TRST." Information with respect to the range of high and low bid information
for TrustCo's common stock, and with respect to the frequency and amount of
cash dividends declarded on the common stock, is set forth on page 1 of
TrustCo's Annual Report to Shareholders for the year ended December 31, 2004.
TrustCo had 14,471 shareholders of record as of March 1, 2005, and the
closing price of TrustCo's common stock on that date was $12.05.
9
The following table provides information, as of December 31, 2004,
regarding securities authorized for issuance under TrustCo's equity
compensation plans.
Number of
securities
Number of remaining
securities to be available for future
issued upon Weighted-average issuance under
exercise of exercise price of equity compensation
outstanding outstanding plans (excluding
options, warrants options, warrants securities reflected
and rights and rights in column (a))
Plan category (a) (b) (c)
Equity
compensation plans
approved by 4,445,110 $10.00 1,821,520
security holders
Equity
compensation plans
not approved by None None None
security holders
Total 4,445,110 $10.00 1,821,520
The following table provides information with respect to purchases of shares
of TrustCo's common stock made by or on behalf of TrustCo in the fourth
quarter of the year ended December 31, 2004.
Purchases of Equity Securities
Total
Number of Maximum
Shares Number
Purchased as Of Shares
Part of That May
Total Average Publicly Yet Be
Number of Price Announced Purchased
2004 Shares Paid per Plans or Under the
Period Purchased Share Programs Plans or Programs
October 1-31 38,415 $13.15 0 N/A
November 1-30 0 $ 0 0 N/A
December 1-31 0 $ 0 0 N/A
Total 38,415 $13.15 0 N/A
10
All 38,415 shares were purchased by other than through a publicly announced
plan or program. All purchases were made in open-market transactions to
provide shares for issuance upon exercise of outstanding stock options issued
by the Company and to provide shares for issuance under the Company's
dividend reinvestment plan.
Item 6. Selected Financial Data
Page 25 of TrustCo's Annual Report to Shareholders for the year ended
December 31, 2004, is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Pages 6 through 25 of TrustCo's Annual Report to Shareholders for the
year ended December 31, 2004, are incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Pages 17 through 20 of TrustCo's Annual Report to Shareholders for the
year ended December 31, 2004, are incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements, together with the report thereon of
KPMG LLP on pages 28 through 45 of TrustCo's Annual Report to Shareholders
for the year ended December 31, 2004, are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Item 9A. Controls and Procedures
An evaluation was carried out under the supervision and with the
participation of the Company's management, including the Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the Company's
disclosure controls and procedures as of the end of the period covered by
this report. Disclosure controls and procedures are procedures that are
designed with the objective of ensuring that information required to be
disclosed in the Company's reports filed under the Securities Exchange Act of
1934, such as this Form 10-K, is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission's
rules and forms. Based on that evaluation, the Chief Executive Officer and
Chief Financial Officer have concluded that the Company's disclosure controls
and procedures are effective to satisfy the objectives for which they are
designed.
Management's Report on Internal Control over Financial Reporting, together
with the report thereon of KPMG LLP on pages 27 and 28 of TrustCo's Annual
Report to Shareholders for the year ended December 31, 2004 are incorporated
herein by reference.
11
Subsequent to the date of Management's evaluation, there were no significant
changes in the Company's internal controls or in other factors that could
significantly affect these controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Item 9B. Other Information
None.
PART III
Item 10. Directors and Executive Officers of Registrant
The information in TrustCo's Proxy Statement filed for its Annual Meeting of
Shareholders to be held May 9, 2005 under the following captions is
incorporated herein by reference: "Information on TrustCo Directors and
Nominees" and "Information on TrustCo Executive Officers" on pages 3 through
5, and "Section 16(a) Beneficial Ownership Reporting Compliance" on page 22.
TrustCo has adopted a code of conduct that applies to all employees,
including its principal executive, financial and accounting officers. A copy
of this code of conduct will be provided without charge upon written request.
Requests and inquiries should be directed to: Cheri J. Parvis, Vice
President-Personnel, TrustCo Bank Corp NY, P.O. Box 1082, Schenectady, New
York 12301-1082. The required information regarding TrustCo's executive
officers is contained in PART I in the item captioned "Executive Officers of
TrustCo."
Under rules adopted by the SEC, TrustCo is required to disclose whether it
has an "audit committee financial expert" serving on its Audit Committee. The
Board has determined that none of the members of the Audit Committee meet the
definition of "audit committee financial expert" as defined in those rules.
The Board believes that in order to fulfill all the functions of the Board
and the Audit Committee, each member of the Board and the Audit Committee
should meet all the criteria that have been established by the Board for
Board membership and that it is not in the best interests of the Company to
nominate as a director someone who does not have all the experience,
attributes and qualifications that TrustCo seeks. Further, the Board believes
that the present members of the Audit Committee have sufficient knowledge and
experience in financial affairs to effectively perform their duties.
TrustCo's Audit Committee consists of four non-employee directors, each of
whom has been selected for the Audit Committee by the Board based on a
determination that they are fully qualified to monitor the performance of
management, the public disclosures by the Company of its financial condition
and performance, the Company's internal accounting operations and our
independent auditors. Members of the committee include William D. Powers
(Chairman), Joseph Lucarelli, Anthony J. Marinello, M.D., Ph.D., and William
J. Purdy. The Audit Committee has the ability on its own to retain
independent accountants or other consultants whenever it deems appropriate,
and has, in fact, retained Marvin & Co., an independent accounting firm, as a
consultant to the committee. Further, the Audit Committee receives directly
or has access to extensive information from reviews and examinations by the
Company's internal auditor, independent auditor and the various banking
regulatory agencies having jurisdiction over the Company and its
subsidiaries.
12
Item 11. Executive Compensation
The information under the captions "TrustCo and TrustCo Bank Executive
Officer Compensation" and "TrustCo Retirement Plans" on pages 7 through 11 of
TrustCo's Proxy Statement filed for its Annual Meeting of Shareholders to be
held May 9, 2005, is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information under the captions "Information on TrustCo Directors and
Nominees," and "Information on TrustCo Executive Officers," on pages 3
through 5 and "Ownership Of TrustCo Common Stock By Certain Beneficial
Owners" on page 21 of TrustCo's Proxy Statement filed for its Annual Meeting
of Shareholders to be held May 9, 2005, is incorporated herein by reference.
Additional information concerning the Company's equity compensation plan is
set forth in Item 5 hereof.
Item 13. Certain Relationships and Related Transactions
The information under the caption "Transactions with TrustCo and TrustCo Bank
Directors, Executive Officers and Associates" on page 21 of TrustCo's Proxy
Statement filed for its Annual Meeting of Shareholders to be held May 9, 2005
is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
The following table presents fees for professional audit services rendered by
KPMG LLP ("KPMG") for the audit of TrustCo's annual consolidated financial
statements for the fiscal years ended December 31, 2004 and 2003, and fees
billed for other services provided by KPMG during 2004 and 2003.
2004 2003
-------- --------
Audit Fees $315,000 $212,000
Audit Related Fees(1) 23,500 28,000
Tax Fees(2) 148,110 152,655
All Other Fees(3) 85,700 132,600
-------- --------
Total Fees $572,310 $525,265
======== ========
(1) For 2004 and 2003, audit-related fees consisted of fees for audits of
certain employee benefit plan financial statements. Fees for 2003 also
includes fees for an audit of TrustCo Bank's collateral maintenance
levels as required by the Federal Home Loan Bank of New York.
(2) For 2004 and 2003, tax fees includes tax return preparation services and
other compliance services.
(3) For 2004, all other fees includes $79,000 for tax planning services and
$6,700 for other tax services. For 2003, all other fees includes
$125,000 for tax planning services and $7,600 for other tax services.
The Audit Committee preapproves all audit and nonaudit services provided by
the Company's independent accountants. As such, all of the services described
above were approved by the Audit Committee.
13
PART IV
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
The following financial statements of TrustCo and its consolidated
subsidiaries, and the accountants' report thereon are filed as a part of this
report.
Consolidated Statements of Condition -- December 31, 2004 and 2003.
Consolidated Statements of Income -- Years Ended December 31, 2004,
2003, and 2002.
Consolidated Statements of Changes in Shareholders' Equity -- Years
Ended December 31, 2004, 2003, and 2002.
Consolidated Statements of Cash Flows -- Years Ended December 31, 2004,
2003, and 2002.
Notes to Consolidated Financial Statements.
Financial Statement Schedules
Not Applicable. All required schedules for TrustCo and its subsidiaries
have been included in the consolidated financial statements or related
notes thereto.
Supplementary Financial Information
Summary of Unaudited Quarterly Financial Information for the years ended
December 31, 2004 and 2003.
14
The following exhibits are incorporated herein by reference:*
Reg S-K
Exhibit No. Description
- --------------------------
3(i) Amended and Restated Certificate of Incorporation of
TrustCo Bank Corp NY, dated July 27, 1993, as amended.
3(ii) Amended and Restated ByLaws of TrustCo Bank Corp NY,
dated September 17, 2002.
10(a) Amended and Restated Trust For Deferred Benefits
Provided under Employment Agreements of TrustCo Bank,
National Association and TrustCo Bank Corp NY, dated
September 18, 2001.
10(b) Amended and Restated Trust Under Non-Qualified Deferred
Compensation Plans of TrustCo Bank, National Association
and TrustCo Bank Corp NY, dated September 18, 2001.
10(c) Amended and Restated TrustCo Bank, National Association
and TrustCo Bank Corp NY Supplemental Retirement Plan,
dated September 18, 2001.
10(d) Amended and Restated TrustCo Bank Corp NY Performance
Bonus Plan, dated September 18, 2001.
10(e) Amended and Restated TrustCo Bank, National Association
Executive Officer Incentive Plan, dated September 18,
2001.
10(f) Amended and Restated Employment Agreements Between
TrustCo Bank, National Association, TrustCo Bank Corp NY
and each of Robert T. Cushing, Robert J. McCormick, and
Nancy A. McNamara, dated September 18, 2001.
10(g) Amended and Restated TrustCo Bank Corp NY 1995 Stock
Option Plan, dated September 18, 2001.
10(h) Amended and Restated TrustCo Bank Corp NY Directors
Stock Option Plan, dated September 18, 2001.
10(i) Amended and Restated TrustCo Bank Corp NY Directors
Performance Bonus Plan, dated September 18, 2001.
15
Reg S-K
Exhibit No. Description
- --------------------------
10(j) Amended and Restated TrustCo Bank, National Association
Deferred Compensation Plan for Directors, dated September
18, 2001.
10(k) Consulting Agreement Between TrustCo Bank Corp NY and
Robert A. McCormick.
10(l) Amendment No.1 to Amended and Restated TrustCo Bank Corp
NY Performance Bonus Plan, dated November 25, 2003.
10(m) Amended and Restated Employment Agreement between
TrustCo Bank, TrustCo Bank Corp NY and Scot R. Salvador,
dated January 1, 2004.
10(n) Service Bureau Processing Agreement by and between
Fidelity Information Services, Inc. and TrustCo Bank Corp
NY, dated March 3, 2004.
10(o) Amendment No. 2 to Amended and Restated Retirement Plan
of TrustCo Bank, dated March 16, 2004.
10(p) Master Service Agreement by and between Sungard Wealth
Management Services, LLC and TrustCo Bank Corp NY dated
April 1, 2004 (portions omitted pursuant to a request for
confidential treatment).
10(q) 2004 TrustCo Directors Stock Option Plan (incorporated
by reference to Exhibit 4.1 to the Registration Statement
on Form S-8 (File No. 333-115689), filed May 20, 2004).
10(r) 2004 TrustCo Stock Option Plan (incorporated by
reference to Exhibit 4.1 to the Registration Statement on
Form S-8 (File No. 333-115674), filed May 20, 2004).
11 Computation of Net Income Per Common Share.
- ----------------
*The exhibits included under Exhibit 10 constitute all management contracts,
compensatory plans and arrangements required to be filed as an exhibit to
this form pursuant to Item 15 of this report.
16
The following exhibits are filed herewith:
Reg S-K
Exhibit No. Description
- --------------------------
13 Portions of Annual Report to Security Holders of TrustCo
for the year ended December 31, 2004.
21 List of Subsidiaries of TrustCo.
23 Consent of Independent Certified Public Accountants.
24 Power of Attorney.
31(a) Rule 13a-15(e)/15d-15(e) Certification of Robert J.
McCormick, principal executive officer.
31(b) Rule 13a-15(e)/15d-15(e) Certification of Robert T.
Cushing, principal financial officer.
32 Section 1350 Certifications of Robert J. McCormick,
principal executive officer and Robert T. Cushing,
principal financial officer.
17
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
By: /s/ Robert T. Cushing
-------------------------
Robert T. Cushing
Executive Vice President and
Chief Financial Officer
Date: March 15, 2005
18
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Robert J. McCormick President and March 15, 2005
- ------------------------ Chief Executive Officer
Robert J. McCormick (principal executive officer)
/s/ Robert T. Cushing Executive Vice President and March 15, 2005
- ------------------------- Chief Financial Officer
Robert T. Cushing (principal financial and
accounting officer)
* Director March 15, 2005
- ------------------------
Joseph Lucarelli
* Director March 15, 2005
- ------------------------
Dr. Anthony J. Marinello
* Director March 15, 2005
- ------------------------
Robert A. McCormick
* Director March 15, 2005
- ------------------------
William D. Powers
* Director March 15, 2005
- ------------------------
William J. Purdy
By: /s/ Robert M. Leonard
------------------------------
*Robert M. Leonard, as Agent
Pursuant to Power of Attorney
19
Exhibits Index
Reg S-K
Item 601
Exhibit No.
- -----------
3(i) Amended and Restated Certificate of Incorporation of TrustCo
Bank Corp NY, as amended, incorporated by reference to,
Exhibit 3(i)a to TrustCo Bank Corp NY's Quarterly Report on
Form 10Q, for the quarter ended June 30, 2004.
3(ii) Amended and Restated ByLaws of TrustCo Bank Corp NY, dated
September 17, 2002, incorporated by reference to, Exhibit
3(ii)a to TrustCo Bank Corp NY's Quarterly Report on Form 10Q,
for the quarter ended September 30, 2002.
10(a) Amended and Restated Trust For Deferred Benefits Provided
under Employment Agreements of TrustCo Bank, National
Association and TrustCo Bank Corp NY, dated September 18, 2001
incorporated by reference to Exhibit 10(b) to TrustCo Bank
Corp NY's Annual Report on Form 10K, for the year ended
December 31, 2001.
10(b) Amended and Restated Trust Under Non-Qualified Deferred
Compensation Plans of TrustCo Bank, National Association and
TrustCo Bank Corp NY, dated September 18, 2001, incorporated
by reference to, Exhibit 10(c) to TrustCo Bank Corp NY's
Annual Report on Form 10K, for the year ended December 31,
2001.
10(c) Amended and Restated TrustCo Bank, National Association and
TrustCo Bank Corp NY Supplemental Retirement Plan, dated
September 18, 2001 incorporated by reference to, Exhibit 10(f)
to TrustCo Bank Corp NY's Annual Report on Form 10K, for the
year ended December 31, 2001.
10(d) Amended and Restated TrustCo Bank Corp NY Performance Bonus
Plan, dated September 18, 2001 incorporated by reference to,
Exhibit 10(g) to TrustCo Bank Corp NY's Annual Report on Form
10K, for the year ended December 31, 2001.
20
Exhibits Index
Reg S-K
Item 601
Exhibit No.
- -----------
10(e) Amended and Restated TrustCo Bank, National Association
Executive Officer Incentive Plan, dated September 18, 2001
incorporated by reference to, Exhibit 10(h) to TrustCo Bank
Corp NY's Annual Report on Form 10K, for the year ended
December 31, 2001.
10(f) Amended and Restated Employment Agreements Between TrustCo
Bank, National Association, TrustCo Bank Corp NY and each of
Robert T. Cushing, Robert J. McCormick, and Nancy A. McNamara,
dated September 18, 2001 incorporated by reference to, Exhibit
10(i) to TrustCo Bank Corp NY's Annual Report on Form 10K, for
the year ended December 31, 2001.
10(g) Amended and Restated TrustCo Bank Corp NY 1995 Stock Option
Plan, dated September 18, 2001 incorporated by reference to,
Exhibit 10(k) to TrustCo Bank Corp NY's Annual Report on Form
10K, for the year ended December 31, 2001.
10(h) Amended and Restated TrustCo Bank Corp NY Directors Stock
Option Plan, dated September 18, 2001 incorporated by
reference to, Exhibit 10(l) to TrustCo Bank Corp NY's Annual
Report on Form 10K, for the year ended December 31, 2001.
10(i) Amended and Restated TrustCo Bank Corp NY Directors
Performance Bonus Plan, dated September 18, 2001 incorporated
by reference to, Exhibit 10(m) to TrustCo Bank Corp NY's
Annual Report on Form 10K, for the year ended December 31,
2001.
10(j) Amended and Restated TrustCo Bank Deferred Compensation Plan
for Directors, dated September 18, 2001 incorporated by
reference to, Exhibit 10(n) to TrustCo Bank Corp NY's Annual
Report on Form 10K, for the year ended December 31, 2001.
21
Exhibits Index
Reg S-K
Item 601
Exhibit No.
- -----------
10(k) Consulting Agreement Between TrustCo Bank Corp NY and Robert
A. McCormick, dated October 11, 2002 incorporated by reference
to, Exhibit 10(a) to TrustCo Bank Corp NY's Quarterly Report
on Form 10Q, for the quarter ended September 30, 2002.
10(l) Amendment No. 1 to Amended and Restated TrustCo Bank Corp NY
Performance Bonus Plan, dated November 25, 2003 incorporated
by reference to, Exhibit 10(m) to TrustCo Bank Corp NY's
Annual Report on Form 10K, for the year ended December 31,
2003.
10(m) Amended and Restated Employment Agreement between TrustCo
Bank, TrustCo Bank Corp NY, and Scot R. Salvador, dated
January 1, 2004 incorporated by reference to, Exhibit 10(a) to
TrustCo Bank Corp NY's Quarterly Report on Form 10Q, for the
quarter ended March 31, 2004.
10(n) Service Bureau Processing Agreement by and between Fidelity
Information Services, Inc. and TrustCo Bank Corp NY dated
March 3, 2004 incorporated by reference to, Exhibit 10(b) to
TrustCo Bank Corp NY's Quarterly Report on Form 10Q, for the
quarter ended March 31, 2004.
10(o) Amendment No. 2 to Amended and Restated Retirement Plan of
TrustCo Bank, dated March 16, 2004 incorporated by reference
to, Exhibit 10(c) to TrustCo Bank Corp NY's Quarterly Report
on Form 10Q, for the quarter ended March 31, 2004.
10(p) Master Service Agreement by and between Sungard Wealth
Management Services, LLC and TrustCo Bank Corp NY dated April
1, 2004 (portions omitted pursuant to a request for
confidential treatment) incorporated by reference to Exhibit
10(a) to TrustCo Bank Corp NY's Quarterly Report on Form 10Q,
for the quarter ended June 30, 2004.
10(q) 2004 TrustCo Directors Stock Option Plan (incorporated by
reference to Exhibit 4.1 to the Registration Statement on Form
S-8 (File No. 333-115689), filed May 20, 2004).
10(r) 2004 TrustCo Stock Option Plan (incorporated by reference to
Exhibit 4.1 to the Registration Statement on Form S-8 (File
No. 333-115674), filed May 20, 2004).
22
Exhibits Index
Reg S-K
Item 601
Exhibit No.
- -----------
11 Computation of Net Income Per Common Share. Note 11 on page 42
of TrustCo's Annual Report to Shareholders for the year ended
December 31, 2004 is incorporated herein by reference.
13 Portions of Annual Report to Security Holders of TrustCo for
the year ended December 31, 2004, filed herewith.
21 List of Subsidiaries of TrustCo, filed herewith
23 Independent Auditors' Consent, filed herewith.
24 Power of Attorney, filed herewith.
31(a) Rule 13a-15(e)/15d-15(e) Certification of Robert J.
McCormick, principal executive officer, filed herewith.
31(b) Rule 13a-15(e)/15d-15(e) Certification of Robert T. Cushing,
principal financial officer, filed herewith.
32 Certification Pursuant To 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 Of The Sarbanes-Oxley Act of 2002,
filed herewith.
GRAPHICS APPENDIX
Cross Reference
To Page of
Omitted Charts Annual Report
---------------------------------------------------------------
1 Return on Equity 6
2 Taxable Equivalent Net Interest Income 8
3 Allowance for Loan Losses 17
4 Allowance to Loans Outstanding 18
5 Efficiency Ratio 22
The charts listed above were omitted from the EDGAR
version of Exhibit 13; however, the information depicted
in the charts was adequately discussed and/or displayed in
the tabular information within Management's Discussion and
Analysis section of the Annual Report.
23