SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-12709
TOMPKINS TRUSTCO, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW YORK 16-1482357
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
THE COMMONS, P.O. BOX 460, ITHACA, NY 14851
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (607) 273-3210
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 of the Registrant's Common Stock outstanding as of
the latest practicable date:
Class Outstanding as of August 1, 2000
---------------------------- ---------------------------------
Common Stock, $.10 par value 7,022,319 shares
TOMPKINS TRUSTCO, INC.
FORM 10-Q
INDEX
PART I -FINANCIAL INFORMATION PAGE
ITEM 1 -FINANCIAL STATEMENTS (UNAUDITED)
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION AS OF
JUNE 30, 2000 AND DECEMBER 31, 1999 3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR
THE THREE MONTHS AND THE SIX MONTHS ENDED JUNE 30, 2000
AND 1999 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
SIX MONTHS ENDED JUNE 30, 2000 AND 1999 5
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 6
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 7-11
ITEM 2 -MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 12-17
ITEM 3 -QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 18
AVERAGE CONSOLIDATED BALANCE SHEET AND NET INTEREST ANALYSIS 19
PART II - OTHER INFORMATION
ITEM 1 -LEGAL PROCEEDINGS NOT APPLICABLE
ITEM 2 -CHANGES IN SECURITIES AND USE OF PROCEEDS NOT APPLICABLE
ITEM 3 -DEFAULTS ON SENIOR SECURITIES NOT APPLICABLE
ITEM 4 -SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS 20
ITEM 5 -OTHER INFORMATION 20
ITEM 6 -EXHIBITS AND REPORTS ON FORM 8-K NOT APPLICABLE
SIGNATURES 21
EXHIBIT INDEX 22
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
(In thousands, except share data)
(In thousands, except share data) (UNAUDITED)
AS OF AS OF
ASSETS 06/30/2000 12/31/1999
- ------------------------------------------------------------------ ----------
Cash & noninterest bearing balances
due from banks $50,133 $35,938
Federal funds sold 2,900 18,850
Available-for-sale securities, at fair value 303,050 294,199
Held-to-maturity securities, fair value of $28,857
in 2000 and $31,265 in 1999 28,674 30,975
Loans/leases net of unearned income 806,002 755,382
Less: Reserve for loan/lease losses 9,523 9,228
- --------------------------------------------------------------------------------
NET LOANS/LEASES 796,479 746,154
Bank premises and equipment, net 23,128 21,147
Corporate owned life insurance 18,069 13,267
Intangible assets 5,846 6,271
Accrued interest and assets 25,078 21,878
- --------------------------------------------------------------------------------
TOTAL ASSETS $1,253,357 $1,188,679
================================================================================
LIABILITIES, MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARIES AND SHAREHOLDERS' EQUITY
Deposits:
Interest bearing:
Checking, savings and money market 409,910 $416,836
Time 360,447 376,371
Noninterest bearing 197,365 181,032
- --------------------------------------------------------------------------------
TOTAL DEPOSITS 967,722 974,239
Securities sold under agreements to repurchase and
Federal funds purchase 106,012 57,846
Other borrowings 62,658 42,012
Other liabilities 11,256 11,766
- --------------------------------------------------------------------------------
TOTAL LIABILITIES $1,147,648 $1,085,863
- --------------------------------------------------------------------------------
Minority interest in consolidated subsidiaries 6,524 6,192
Shareholders' equity:
Common Stock - par value $.10 per share,
authorized 15,000,000 shares
Issued: 7,048,581 at June 30, 2000; and
7,099,606 at December 31, 1999 705 $710
Surplus 39,179 40,548
Undivided profits 65,795 61,078
Accumulated other comprehensive income (loss) (5,541) (4,745)
Treasury stock, at cost - 26,890 shares at
June 30, 2000, and 27,663 shares at December 31, 1999. (511) (525)
Unallocated ISOP/ESOP: 37,637 shares at June 30, 2000,
37,637 shares at December 31, 1999. (442) (442)
- --------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY $99,185 $96,624
- --------------------------------------------------------------------------------
TOTAL LIABILITIES, MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARIES AND SHAREHOLDERS'EQUITY $1,253,357 $1,188,679
- --------------------------------------------------------------------------------
See accompanying notes to unaudited condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data) (Unaudited)
QUARTER TO DATE YEAR TO DATE
06/30/2000 06/30/1999 06/30/2000 06/30/1999
---------- --------- ---------- ---------
INTEREST AND DIVIDEND INCOME
Loans $17,348 $13,570 $33,741 $26,283
Federal funds sold 128 286 382 492
Available-for-sale securities 4,734 4,016 9,482 7,890
Held-to-maturity securities 388 428 785 869
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST AND DIVIDEND INCOME 22,598 18,300 44,390 35,534
- ------------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Deposits:
Time certificates of deposits of $100,000 or more 2,641 1,735 4,601 3,461
Other deposits 5,267 4,202 10,753 8,045
Federal funds purchased and securities
sold under agreements to repurchase 1,035 697 1,927 1,450
Other borrowings 624 623 1,250 1,245
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 9,567 7,257 18,531 14,201
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 13,031 11,043 25,859 21,333
- ------------------------------------------------------------------------------------------------------------------------------------
Less: Provision for loan/lease losses 274 267 514 506
- ------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR 12,757 10,776 25,345 20,827
LOAN/LEASE LOSSES
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME
Trust and investment services income 1,107 1,161 2,350 2,210
Service charges on deposit accounts 910 746 1,754 1,413
Other service charges 912 591 1,928 1,308
Increase in cash surrender value of
corporate owned life insurance 188 178 373 350
Other operating income 229 188 386 301
Net realized gain on available-for-sale securities 83 2 189 2
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OTHER INCOME 3,429 2,866 6,980 5,584
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER EXPENSES
Salary and wages 4,319 3,539 8,569 6,710
Pension and other employee benefits 1,041 799 2,062 1,659
Net occupancy expense of bank premises 603 417 1,230 861
Furniture and fixture expense 661 536 1,281 1,041
Amortization of intangible assets 245 126 497 214
Other operating expense 2,831 2,253 5,580 4,159
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OTHER EXPENSES 9,700 7,670 19,219 14,644
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAX EXPENSE AND MINORITY
INTEREST IN CONSOLIDATED SUBSIDIARIES 6,486 5,972 13,106 11,767
- ------------------------------------------------------------------------------------------------------------------------------------
Minority interest in consolidated subsidiaries 204 135 360 135
INCOME TAX EXPENSE 2,094 1,907 4,232 3,771
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 4,188 $ 3,930 $ 8,514 $ 7,861
====================================================================================================================================
BASIC EARNINGS PER SHARE $ 0.60 $ 0.55 $ 1.22 $ 1.11
DILUTED EARNINGS PER SHARE $ 0.60 $ 0.54 $ 1.21 $ 1.09
====================================================================================================================================
See accompanying notes to unaudited condensed consolidated financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
SIX MONTHS ENDED
JUNE 30, 2000 JUNE 30, 1999
------------- -------------
OPERATING ACTIVITIES
Net income $8,514 $7,861
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan/lease losses 514 506
Depreciation and amortization premises, equipment,
and software 1,201 1,157
Amortization of intangible assets 497 214
Earnings from corporate owned life insurance (373) (350)
Net amortization on securities 74 186
Net realized gain on available-for-sale of securities (189) (2)
Net gain on sale of loans (17) (5)
Net loss (gain) on sales of bank premises and equipment 7 (20)
ISOP/ESOP shares released for allocation 0 46
(Increase) decrease in accrued interest receivable (539) 111
Decrease in accrued interest payable (112) (1,042)
Other, net (2,748) (1,272)
- --------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 6,829 7,390
- --------------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from maturities of available-for-sale
securities 18,619 44,781
Proceeds from sales of available-for-sale securities 5,039 5,999
Proceeds from maturities of held-to maturity securities 10,152 7,101
Purchases of available-for-sale securities (33,768) (56,585)
Purchases of held-to-maturity securities (7,872) (4,275)
Proceeds from sale of loans 3,274 1,286
Net increase in loans (54,096) (28,955)
Proceeds from sale of bank premises and equipment 25 20
Purchases of bank premises and equipment (3,095) (869)
Purchase of corporate owned life insurance (4,000) (815)
Net cash provided by acquisition of The Mahopac
National Bank 0 4,258
- --------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (65,722) (28,054)
- --------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase in demand, money market,
and savings deposits 9,408 22,593
Net decrease in time deposits (15,925) (17,615)
Net increase in securities sold under agreements
to repurchase and Federal funds purchased 48,166 20,721
Net increase in other borrowings 20,646 3,785
Cash dividends (3,797) (3,029)
Sale of treasury stock 20 20
Repurchase of common shares (1,429) (2,050)
Cash paid in lieu of fractional shares Letchworth
common shares (9) 0
Net proceeds from exercise of stock options, warrants
and related tax benefit 58 456
- --------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 57,138 24,881
- --------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,755) 4,217
Cash and Cash Equivalents at beginning of Period 54,788 46,668
- --------------------------------------------------------------------------------
TOTAL CASH & CASH EQUIVALENTS AT END OF PERIOD $53,033 $50,885
- --------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION:
Cash paid during the year for:
Interest $18,643 $15,234
Taxes $ 5,858 $ 4,890
Noncash investing activities:
Fair value of noncash assets acquired in
purchase acquisition 0 $143,298
Fair value of liabilities acquired in
purchase acquisition 0 $147,556
See accompanying notes to unaudited condensed consolidated financial statements.
5
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands, except share data) (Unaudited)
ACCUMULATED
OTHER
COMMON UNDIVIDED COMPREHENSIVE TREASURY UNALLOCATED
STOCK SURPLUS PROFITS INCOME(LOSS) STOCK ISOP/ESOP TOTAL
====================================================================================================================================
BALANCES AT
JANUARY 1, 1999 $717 $43,774 $52,037 $2,339 ($548) ($667) $97,652
- ------------------------------------------------------------------------------------------------------------------------------------
Comprehensive Income:
Net Income 7,861 7,861
Other Comprehensive loss (4,526) (4,526)
-------
TOTAL COMPREHENSIVE INCOME 3,335
=======
Cash dividends ($0.50/Share)* (3,029) (3,029)
Exercise of stock options, and related
tax benefit (55,425 shares, net) 3 453 456
Common stock repurchased and
returned to unissued status (55,055) (5) (1,829) (1,834)
Treasury stock purchased and returned
to unissued status by pooled company
(9,465 shares) (1) (215) (216)
Treasury stock sold (584 shares) 9 11 20
ISOP/ESOP shares released for
allocation (5,248 shares) (3) 46 43
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCES AT
JUNE 30, 1999 $ 714 $42,189 $56,869 ($2,187) ($537) ($621) $96,427
====================================================================================================================================
====================================================================================================================================
BALANCES AT
JANUARY 1, 2000 $ 710 $40,548 $61,078 ($4,745) ($525) ($442) $96,624
- ------------------------------------------------------------------------------------------------------------------------------------
Comprehensive Income:
Net Income 8,514 8,514
Other Comprehensive loss (796) (796)
-------
TOTAL COMPREHENSIVE INCOME 7,718
=======
Cash paid in lieu of fractional Letchworth
common shares (9) (9)
Cash dividends ($0.54/Share) (3,797) (3,797)
Exercise of stock options and
related tax benefit (4,752 shares, net) 1 57 58
Common stock repurchased and
returned to authorized and
unissued status (55,472 shares) (6) (1,423) (1,429)
Treasury stock sold (773 shares) 6 14 20
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCES AT
JUNE 30, 2000 $705 $39,179 $65,795 ($5,541) ($511) ($442) $99,185
====================================================================================================================================
* Reflects historical per share cash dividends paid by Tompkins Trustco, Inc.
See accompanying notes to unaudited condensed consolidated financial statements.
6
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
1. BUSINESS
Tompkins Trustco, Inc. ("Tompkins" or "the Company") is a financial holding
company, organized under the laws of New York State, and is the parent company
of Tompkins County Trust Company (the "Trust Company"), The Bank of Castile, and
The Mahopac National Bank. The Trust Company and The Bank of Castile are 100
percent owned by Tompkins, and The Mahopac National Bank is approximately 70%
owned by Tompkins. The consolidated financial information included herein
combines the results of operations, the assets, liabilities, and shareholders'
equity of the Company and its subsidiaries. All significant intercompany
balances and transactions are eliminated in consolidation.
On December 31, 1999, Tompkins completed a merger with Letchworth Independent
Bancshares ("Letchworth"), which was the parent company for The Bank of Castile
(a wholly-owned subsidiary), and The Mahopac National Bank (approximately 70%
owned by Letchworth). The merger was accounted for as a pooling-of-interests,
and upon completing the merger, Letchworth was merged with and into Tompkins.
All prior period financial information has been restated to present the combined
financial condition and results of operations of both companies as if the merger
had been in effect for all periods presented. Further details pertaining to the
merger are presented in Note 2 to the Company's Annual Report on Form 10-K dated
December 31, 1999.
On April 3, 2000, the Company announced that it entered into an agreement to
acquire two Western New York insurance agencies, pending regulatory approvals.
The Austin, Hardie, Wise Agency, Inc., with offices in Attica, Warsaw and Alden;
and Ernest Townsend & Son, Inc., with offices in LeRoy, Batavia and Caledonia,
are expected to continue operating in those locations. The two agencies employ a
total of 47 persons.
On July 31, 2000, Tompkins Trustco, Inc. announced that it has reached
agreement to purchase the approximate 30% minority interest in The Mahopac
National Bank from the minority shareholders (the "Spain family"). Tompkins
acquired its present 70% interest in Mahopac when it merged with Letchworth
Independent Bancshares Corporation on December 31, 1999. Letchworth had
purchased the Mahopac interest in June of 1999. The 30% interest owned by the
Spain family has been subject to a buy/sell contract between Tompkins and the
Spain family. It has been the stated intention of the parties to reach
agreement for purchase of the Spain interest by Tompkins. An agreement has now
been reached several months earlier than anticipated.
2. BASIS OF PRESENTATION
The unaudited condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles. In preparing the
financial statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities, and disclose
contingent assets and liabilities, at the date of the financial statements and
the reported amounts of revenue and expense during the reporting period. Actual
results could differ from those estimates. Amounts in the prior period's
consolidated financial statements are reclassified when necessary to conform
with the current period's presentation.
All intercompany accounts and transactions have been eliminated in
consolidation. In management's opinion, the unaudited condensed consolidated
financial statements reflect all adjustments of a normal recurring nature and
should be read in conjunction with the Company's 1999 Annual Report on Form
10-K. The results of operations for the interim periods are not necessarily
indicative of the results of operations to be expected for the full year ended
December 31, 2000.
7
3. EARNINGS PER SHARE
A computation of Basic earnings per share ("EPS") and Diluted EPS for the three
month periods ending June 30, 2000 and 1999, is presented in the table below.
WEIGHTED
NET AVERAGE PER
THREE MONTHS ENDED JUNE 30, 2000 INCOME SHARES SHARE
(In thousands except share and per share data) (NUMERATOR) (DENOMINATOR) AMOUNT
- --------------------------------------------------------------------------------
BASIC EPS
Income available to common shareholders $4,188 6,989,779 $0.60
EFFECT OF DILUTIVE SECURITIES (Stock options) 43,217
DILUTED EPS
Income Available to common shareholders plus
assumed conversions $4,188 7,032,996 $0.60
================================================================================
WEIGHTED
NET AVERAGE PER
THREE MONTHS ENDED JUNE 30, 2000 INCOME SHARES SHARE
(In thousands except share and per share data) (NUMERATOR) (DENOMINATOR) AMOUNT
- --------------------------------------------------------------------------------
BASIC EPS
Income Available to common shareholders $3,930 7,104,042 $0.55
EFFECT OF DILUTIVE SECURITIES (Stock options) 108,075
DILUTED EPS
Income Available to common shareholders plus
assumed conversions $3,930 7,212,117 $0.54
================================================================================
A computation of Basic EPS and Diluted EPS for the six month periods ending June
30, 2000 and 1999, is presented in the table below.
WEIGHTED
NET AVERAGE PER
SIX MONTHS ENDED JUNE 30, 2000 INCOME SHARES SHARE
(In thousands except share and per share data) (NUMERATOR) (DENOMINATOR) AMOUNT
- --------------------------------------------------------------------------------
BASIC EPS
Income available to common shareholders $8,514 7,004,386 $1.22
EFFECT OF DILUTIVE SECURITIES (Stock options) 51,553
DILUTED EPS
Income Available to common shareholders plus
assumed conversions $8,514 7,055,939 $1.21
================================================================================
WEIGHTED
NET AVERAGE PER
SIX MONTHS ENDED JUNE 30, 2000 INCOME SHARES SHARE
(In thousands except share and per share data) (NUMERATOR) (DENOMINATOR) AMOUNT
- --------------------------------------------------------------------------------
BASIC EPS
Income Available to common shareholders $7,861 7,089,597 $1.11
EFFECT OF DILUTIVE SECURITIES (Stock options) 124,386
DILUTED EPS
Income Available to common shareholders plus
assumed conversions $7,861 7,213,983 $1.09
================================================================================
8
4. COMPREHENSIVE INCOME
QUARTER ENDING YEAR TO DATE
06/30/2000 06/30/1999 06/30/2000 06/30/1999
- ------------------------------------------------------------------------------------------
NET INCOME $4,188 $3,930 $8,514 $7,861
- ------------------------------------------------------------------------------------------
Net unrealized holding losses during the (102) (3,770) (683) (4,525)
period
Memo: Pre-tax unrealized net holding (41) (1,508) (273) (1,810)
loss
Reclassification adjustment for net
realized gain on
available-for-sale securities (50) (1) (113) (1)
Memo: Pretax Adjustment (83) (2) (189) (2)
- ------------------------------------------------------------------------------------------
OTHER COMPREHENSIVE LOSS (152) (3,771) (796) (4,526)
- ------------------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME $4,036 $159 $7,718 $3,335
- ------------------------------------------------------------------------------------------
5. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments, including certain derivatives embedded in
other contracts, and for hedging activities. During the second quarter of 1999,
the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities-Deferral of Effective Date of SFAS No. 133." SFAS No. 137 defers the
effective date of SFAS No. 133 by one year from fiscal quarters of fiscal years
beginning after June 15, 1999 to fiscal quarters of fiscal years beginning after
June 15, 2000. In June 2000, the FASB issued SFAS No. 138 "Accounting for
Derivative Instruments and Hedging Activities, an amendment to FASB Statement
No. 133." This statement amends the accounting and reporting standards of SFAS
No. 133 for certain derivative instruments and certain hedging activities. At
the present time, management is evaluating the impact of adoption of SFAS Nos.
133 and 138 on the Company's consolidated financial statements.
In March 2000, the FASB issued FASB interpretation No. 44, "Accounting for
Certain Transactions involving Stock Compensation." FASB Interpretation No. 44
clarifies certain issues relating to the application of Accounting Principles
Board No. 25, "Accounting for Stock Issued to Employees." FASB interpretation
No. 44 becomes effective on July 31, 2000, and the adoption of this
interpretation is not expected to have a material effect on the Company's
financial position or results of operations.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Tompkins Trustco, Inc. ("Tompkins" or "the Company") was organized in 1995, as
the parent company of Tompkins County Trust Company (the "Trust Company"), which
traces its charter back to 1836. On December 31, 1999, the Company completed a
merger with Letchworth Independent Bancshares Corporation ("Letchworth"), at
which time Letchworth was merged with and into Tompkins. Upon completion of the
merger, Letchworth's two subsidiary banks, The Bank of Castile and The Mahopac
National Bank, became subsidiaries of Tompkins. The Trust Company and The Bank
of Castile are wholly-owned subsidiaries, and The Mahopac National Bank is
approximately 70% owned by the Company.
Through its community bank subsidiaries, the Company provides traditional
banking related services, which constitute the Company's only business segment.
Banking services consist primarily of attracting deposits from the areas served
by its banking offices and using those deposits to originate a variety of
commercial loans, consumer loans, real estate loans (including commercial loans
collateralized by real estate), and leases, and providing trust and investment
related services. The Company's principal expenses are interest on deposits,
interest on borrowings, and operating and general administrative expenses, as
well as provisions for loan/lease losses. Funding sources, other than deposits,
include borrowings, securities sold under agreements to repurchase, and cash
flow from lending and investing activities.
The Company conducts trust and investment management services through the Trust
and Investment Services Divisions of its banking subsidiaries. These Trust and
Investment Services Divisions provide a full range of money management services
to individuals and institutions,including: investment management accounts,
custody accounts, trusts, retirement plans and rollovers, estate settlement, and
financial planning.
The merger with Letchworth was accounted for as a pooling-of-interests, and
accordingly all prior period financial information has been restated to present
the combined financial condition and results of operations of both companies as
if the merger had been in effect for all periods presented. On June 4, 1999,
Letchworth acquired 70.17% of the outstanding common stock of The Mahopac
National Bank in a cash transaction, accounted for as a purchase. Accordingly,
operating results for The Mahopac National Bank are not included for periods
prior to June 4, 1999. The 29.83% interest in The Mahopac National Bank, which
is not owned by Tompkins, is shown as a minority interest in consolidated
subsidiaries on the consolidated statements of condition. Further details
pertaining to the merger with Letchworth are presented in Note 2 to the
Company's Annual Report on Form 10-K dated December 31, 1999.
In conjunction with the merger with Letchworth, Tompkins assumed an option to
acquire the remaining outstanding shares of The Mahopac National Bank from the
minority shareholders, at 90% of their fair value. On July 31, 2000, Tompkins
reached an agreement to purchase the remaining 29.83% interest of The Mahopac
National Bank from the minority shareholders. Upon consummation of the
agreement, which is expected to occur in the third quarter of 2000, The Mahopac
National Bank will become a wholly-owned subsidiary of the Tompkins.
Since the merger with Letchworth was completed on December 31, 1999, operating
results for the first six months of 2000 reflect minimal cost savings and
revenue enhancements resulting from the merger. Certain cost savings and revenue
enhancement opportunities were implemented in the second quarter of 2000.
Management anticipates additional cost savings and revenue enhancement
opportunities will continue to be realized in the remainder of 2000 and in 2001.
Additionally, two branch office openings -- the Chili Office of The Bank of
Castile (opened in the third quarter of 1999), and the Brewster Office of The
Mahopac National Bank (opened in the first quarter of 2000) -- are expected to
contribute positively to the Company's earnings beginning in the second half of
2000.
The following discussion is intended to provide the reader with a further
understanding of the consolidated financial condition and results of operations
of Tompkins Trustco, Inc. and its operating subsidiaries. It should be read in
conjunction with the Company's Form 10-K and related notes for the year ended
December 31, 1999, and the unaudited condensed consolidated financial statements
and notes included elsewhere in this report.
10
FORWARD-LOOKING STATEMENTS
This report may include forward-looking statements with respect to revenue
sources, growth, market risk, and corporate objectives. The Company assumes no
duty, and specifically disclaims any obligation, to update forward-looking
statements, and cautions that these statements are subject to numerous
assumptions, risk, and uncertainties, all of which could change over time.
Actual results could differ materially from forward-looking statements.
11
RESULTS OF OPERATIONS
Net income for the second quarter of 2000 was $4.2 million, compared to $3.9
million for the second quarter of 1999. Operating earnings, which excludes
noncash amortization of intangible assets, was $4.4 million for the quarter, an
increase of 8% over the second quarter of 1999. The growth in operating earnings
reflects strength in the core business strategies of the Company's community
banking subsidiaries. Diluted operating earnings per share was $0.62 for the
second quarter of 2000, an increase of 12.6% over the second quarter of 1999.
Basic earnings per share for the second quarter of 2000 increased by 9.1% to
$0.60, compared to $0.55 for the same period in 1999. Diluted earnings per share
increased from $0.54 in 1999 to $0.60 in 2000.
Net income for the six months ended June 30, 2000 was $8.5 million, an increase
of 8.3% over the same six month period in 1999. Operating earnings of $8.8
million for the first six months of 2000 reflects a 10.6% increase over
operating earnings of $8.0 million for the first six months of 1999. Diluted
operating earnings per share was $1.25 for the first six months of 2000, an
increase of 11.6% over the same period in 1999. Basic earnings per share was
$1.22 for the year to date period ended June 30, 2000, compared to $1.11 for the
same period in 1999. Diluted earnings per share of $1.21 for first six months of
2000 reflect an increase of 11.0% over the $1.09 reported for the same period in
1999.
The Company's return on average assets (ROAA) of 1.42% for the first six months
of 2000 remains strong by industry standards, although the ratio is down from
1.56% for the same period in 1999. The decline in ROAA is primarily the result
of increased expenses associated with the recent openings of the Chili Office of
The Bank of Castile and the Brewster Office of The Mahopac National Bank. Both
offices became fully operational in the first quarter of 2000, and are ahead of
early expectations for deposit growth. Operating return on assets was 1.47% for
the first half of 2000, compared to 1.59% for the first half of 1999.
Return on average shareholders' equity (ROAE) for the first six months of 2000
was 17.51%, compared to 15.92% for the same period in 1999. Operating ROAE was
18.11% for the six months ended June 30, 2000, compared to 16.17% for the same
period in 1999. Improvement in ROAE reflects strong earnings growth in the first
half of 2000, along with a slightly lower average equity position.
NET INTEREST INCOME
As reflected in the attached Average Consolidated Balance Sheet and Net Interest
Analysis, the Company earned tax-equivalent net interest income of $26.9 million
for the six months ended June 30,, 2000, compared to $22.2 million for the same
period in 1999. Tax-equivalent net interest income for the second quarter of
2000 was $13.6 million. This 21.2% increase in net interest income was achieved
through growth in earnings assets, which was primarily funded by strong growth
in core deposits (total deposits less time deposits of $100,000 or more). Recent
rising interest rate trends have resulted in increases in both the yield on
earning assets and the cost of funds. Between June 30, 1999 and June 30, 2000
the Company's yield on earning assets increased by 47 basis points from 7.67% to
8.14%, respectively. Over that same period, the Company's cost of funds
increased 31 basis points from 3.79% in 1999 to 4.10% in 2000.
Strong growth in net interest income reflects benefits from the Letchworth
acquisition, which has provided the Company with new and faster growing markets
for loan and deposit products. A favorable mix of high quality earning assets
and low cost funding helped increase the Company's net interest margin to 4.82%
for the first half of 2000, a relatively high level compared to its peers. The
ratio also compares favorably to the Company's 4.68% net interest margin for the
first six months of 1999. The net interest margin for the second quarter of 2000
was 4.85%.
12
Average core deposits amounted to $816 million at June 30, 2000, and represented
73.6% of average liabilities. This compares to average core deposits of $660
million at June 30, 1999, representing 72.2% of average liabilities. Growth in
the Company's core funding base was the primary support for a $191 million
increase in average assets, up 18.9% over the first half of 1999. Loan growth
was particularly strong, with average loans of $773 million, representing an
increase of 22.2% over 1999. Most of the growth in average loans centered in
real estate loans, which increased from $336 million at June 30, 1999 to $469
million at June 30, 2000.
PROVISION FOR LOAN/LEASE LOSSES
The provision for loan/lease losses represents management's estimate of the
expense necessary to maintain the reserve for loan/lease losses at an adequate
level. The provision for loan/lease losses of $514,000 for the first half of
2000, compared to $506,000 for the same period in 1999. The provision for
loan/lease losses was $274,000 for the second quarter of 2000, compared to
$267,000 for the second quarter of 1999. The provision expense in the
periods presented is reflective of the continued high quality of the Company's
loan portfolio, as evidenced by the low level of nonperforming loans and net
charge-offs. Nonperforming loans and leases were $2.3 million at June 30, 2000,
representing 0.28% of total loans and leases. Nonperforming loans and leases at
June 30, 1999 were $2.3 million, or 0.33% of total loans and leases. Net
charge-offs of $219,000 in the first half of 2000 compares favorably to the
$282,000 in net charge-offs in the first half of 1999. The reserve for
loan/lease losses as a percentage of period end loans was 1.18% at June 30,
2000, and 1.22% at December 31, 1999.
OTHER INCOME
Other income continues to be a key source of revenue growth for the Company.
Total other income for the first six months of 2000 totaled $7.0 million, an
increase of 25% from the prior year. Other income as a percentage of average
assets increased from 1.11% for the six months ended June 30, 1999, to 1.16% for
the same period in 2000. Other income for the second quarter of 2000 was $3.4
million, an increase of 8.7% from the second quarter of 1999. Other income
from The Mahopac National Bank amounted to $685,000 for the six months ended
June 30, 2000. In 1999, other income from The Mahopac National Bank was
$102,000 for the one month in which Mahopac is included in the consolidated
statements of income.
Income from trust and investment services, the largest segment of other income,
increased 6.3% to $2.4 million, compared to $2.2 million the first six months of
1999. The increase is primarily attributable to continued asset growth in the
Trust and Investment Services Division. Total assets managed by, or in custody
of, the Trust and Investment Services Division were $1.1 billion on June 30,
2000, compared to $1.0 billion at June 30, 1999.
The Trust and Investment Services Division remains important to future revenue
growth of the Company. Trust and investment services are primarily provided to
customers in the Trust Company's market area of Tompkins County and surrounding
areas, although the division currently manages assets for clients in more than
40 states. Since 1997, the Trust and Investment Services Division of the Trust
Company has been offering a "Trust Alliance" program, through which the Company
provides servicing and administrative support to trust departments of other
banks. Currently the Trust Alliance program participants include The Bank of
Castile and two non-affiliated community banks.
Card services, included in other service charges on the consolidated statements
of income, has been another growth area for the Company, as technology has
created opportunities to provide customers with new products to better serve
their needs. Card services products include traditional credit cards, purchasing
cards, debit cards, and merchant card processing. Fee income associated with
card services increased 54% to $1.1 million in 2000, compared to $683,000 in
1999.
13
The Company continues to invest in technology to meet consumer demands for more
convenient banking services. The Trust Company and The Mahopac National Bank
currently offer Internet banking products. In the first quarter of 2000, the
Trust Company introduced an improved Internet banking product for individuals
and businesses. The Bank of Castile is expected to begin offering Internet
banking during the third quarter of 2000. Through the Trust Company, the Company
has invested significant resources in developing fee income producing products
and services. Many of these products and services can be offered to customers of
The Bank of Castile and The Mahopac National Bank, thereby expanding the
customer base for these products. Through this expanded customer base, the
Company anticipates continued growth from noninterest related sources.
In the second quarter of 2000 the Company announced plans to acquire Austin,
Hardy, Wise, Inc. and Ernest Townsend & Sons, Inc., which will provide an
additional source of noninterest income and enhance the Company's ability to
serve its customers with a full range of financial products and services. The
acquisition is expected to close in the third quarter of 2000.
Other income for the first six months of 2000 includes a $373,000 increase in
cash surrender value of corporate owned life insurance, up from $350,000 in
1999. The corporate owned life insurance relates to life insurance provided to
certain senior officers. Increases in the cash surrender value of insurance are
reflected as other income, and the related mortality expense is recognized as an
other expense. The income and expense associated with this insurance are
excluded from taxes.
OTHER EXPENSES
Total other expenses of $19.2 million for the first six months of 2000, reflects
an increase of 31% over 1999. The increase in the first quarter of 2000 includes
the additional costs associated with operating the new Chili and Brewster
Offices. Other expenses in the first half of 2000 include $3.5 million in
operating expenses relating to The Mahopac National Bank. Operating expenses for
1999 included only $532,000 of expense relating to The Mahopac National Bank,
representing one month of consolidated operations. Other expenses in 2000 also
include approximately $344,000 of intangible amortization expense associated
with the Mahopac acquisition. In general, the expenses associated with the
branch openings and post merger systems conversion have been in line with
management expectations.
Personnel-related expenses comprise the largest segment of other expense,
representing approximately 55% of operating expense in the first half of 2000,
compared to approximately 57% for the same period in 1999. Total
personnel-related expenses for the first half of 2000 increased by 27% over the
first half of 1999. Although the Company does not anticipate significant
personnel reductions as a result of the merger, certain operational changes are
expected to result in more efficient personnel utilization in the remainder of
2000.
Expense for premises, furniture, and fixtures increased from $1.9 million for
the period ended June 30, 1999, to $2.5 million for the period ended June 30,
2000. The increase of $609,000 is almost entirely related to the additional
expenses for premises, furniture, and fixtures of The Mahopac National Bank,
which are included in the 2000 operating results.
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES
Minority interest expense represents the portion of net income in consolidated
majority-owned subsidiaries that is attributable to the minority owners of the
subsidiaries. Minority interest expense for the six months ended June 30, 2000,
includes $293,000 related to the minority owners of The Mahopac National Bank,
and $67,000 related to the minority interests in the Real Estate Investment
Trust subsidiaries of the Company's three banking subsidiaries.
14
INCOME TAX EXPENSE
The provision for income taxes provides for Federal and New York State income
taxes. The provision for the six months ended June 30, 2000, was $4.2 million,
compared to $3.8 million in 1999. The increased provision is primarily due to
increased levels of taxable income. The effective tax rate for the first six
months of 2000 was 33%, compared to 32% for the same period in 1999.
FINANCIAL CONDITION
The Company's total assets were $1.3 billion as of June 30, 2000, representing a
$64.7 million increase over total assets reported as of December 31, 1999.
Growth was primarily in the loan and lease portfolio, which increased by $50.6
million in the first six months of 2000, while the securities portfolio grew by
approximately $6.6 million (including market value adjustments on
available-for-sale securities).
CAPITAL
Total shareholders' equity grew by approximately 3% during the first six months
of 2000 to $99.2 million. Cash dividends paid in the first half of 2000 totaled
approximately $3.8 million, representing 45% of year to date earnings. Per share
cash dividends of $0.54 for the first six months of 2000, represents an 8%
increase over cash dividends paid by Tompkins in the same period of 1999.
The Company and its banking subsidiaries are subject to various regulatory
capital requirements administered by Federal banking agencies. Management
believes the Company and its subsidiaries meet all capital adequacy requirements
to which they are subject. The table below reflects the Company's capital
position at June 30, 2000, compared to the regulatory capital requirements for
"well capitalized" institutions.
REGULATORY CAPITAL ANALYSIS - JUNE 30, 2000
================================================================================
ACTUAL WELL CAPITALIZED
REQUIREMENT
(Dollar amounts in thousands) AMOUNT RATIO AMOUNT RATIO
- --------------------------------------------------------------------------------
Total Capital (to risk weighted assets) $115,274 13.4% $86,198 10.0%
Tier I Capital (to risk weighted assets) $105,751 12.3% $51,719 6.0%
Tier I Capital (to average assets) $105,751 8.7% $60,678 5.0%
================================================================================
As illustrated above, the Company's capital ratios on June 30, 2000 remain well
above the minimum requirement for well capitalized institutions. As of June 30,
2000, the capital ratios for each of the Company's subsidiary banks also
exceeded the minimum levels required to be considered well capitalized.
RESERVE FOR LOAN AND LEASE LOSSES AND NONPERFORMING ASSETS
Management reviews the adequacy of the reserve for loan and lease losses in a
detailed and ongoing basis, giving consideration to various risk elements that
may affect the inherent risk of loss in the current loan/lease portfolio. Based
upon management's review, the current reserve of $9.5 million is believed
adequate based on the inherent risk of loss in the loan and lease portfolios.
Activity in the Company's reserve for loan and lease losses during the first six
months of 2000 and 1999 is illustrated in the table below.
15
ANALYSIS OF THE RESERVE FOR LOAN/LEASE LOSSES (IN THOUSANDS)
================================================================================
JUNE 30, 2000 JUNE 30, 1999
- --------------------------------------------------------------------------------
Average Loans and Leases Outstanding Year to Date $773,293 $632,959
- --------------------------------------------------------------------------------
Beginning Balance 9,228 7,405
- --------------------------------------------------------------------------------
Allowance related to purchase acquisition 0 1,511
- --------------------------------------------------------------------------------
Provision for loan losses 514 506
Loans charged off (449) (541)
Loan recoveries 230 259
- --------------------------------------------------------------------------------
Net Charge-offs (219) (282)
- --------------------------------------------------------------------------------
Ending Balance $9,523 $7,629
================================================================================
Annualized net charge-offs through the first six months of 2000 amounted to
0.06% of average loans outstanding during the period. This ratio compares to
0.09% for the six months ended June 30, 1999.
The level of nonperforming assets at June 30, 2000 and 1999 is illustrated in
the table below. Trends in nonperforming assets remain positive with
nonperforming assets at June 30, 2000, reflecting a $53,000 decline from the
prior year. The ratio of nonperforming assets as a percentage of total assets
was a modest 0.20% at June 30, 2000.
NONPERFORMING ASSETS (IN THOUSANDS)
================================================================================
JUNE 30, 2000 JUNE 30, 1999
- --------------------------------------------------------------------------------
Nonaccrual loans $2,129 $1,688
Loans past due 90 days and accruing 153 659
Troubled debt restructuring not included above 0 0
- --------------------------------------------------------------------------------
Total nonperforming loans 2,282 2,347
- --------------------------------------------------------------------------------
Other real estate, net of allowances 282 270
- --------------------------------------------------------------------------------
Total nonperforming assets $2,564 $2,617
================================================================================
Total nonperforming loans as a percent of
total loans 0.28% 0.33%
Total nonperforming assets as a percentage of
total assets 0.20% 0.23%
================================================================================
DEPOSITS AND OTHER LIABILITIES
Total deposits were $968 million on June 30, 2000, compared to $974 million on
December 31, 1999. Core deposits, which include demand deposits, savings and
money market accounts, and time deposits of less than $100,000 represent the
primary funding source for the Company. As of June 30, 2000, core deposits of
$813 million represented 71% of total liabilities. This compares to core
deposits of $794 million, representing 73% of total liabilities at December 31,
1999.
The Company uses large time deposits, securities sold under repurchase
agreements, Federal funds purchased, and other borrowings as additional funding
sources. Time Deposits of $100,000 and over decreased from $180 million on
December 31, 1999, to $155 million on June 30, 2000. As of June 30, 2000, total
securities sold under repurchase agreements amounted to $60 million, compared to
$58 million at December 31, 1999. Other borrowings, consisting of term
borrowings from the Federal Home Loan Bank, increased from $42 million at
December 31, 1999, to $62 million at June 30, 2000.
16
LIQUIDITY
Liquidity represents the Company's ability to efficiently and economically
accommodate decreases in deposits and other liabilities, and fund increases in
assets. The Company uses a variety of resources to meet its liquidity needs
which include cash and cash equivalents, short term investments, cash flow from
lending and investing activities, deposit growth, securities sold under
repurchase agreements, and borrowings.
Cash and cash equivalents of $53 million as of June 30, 2000 reflects a decrease
of $1.8 million from December 31, 1999. Short term investments consisting of
securities due in one year or less increased from $43 million on December 31,
1999, to $52 million on June 30, 2000. Securities pledged to secure certain
large deposits and securities sold under repurchase agreements were 72% of total
securities as of June 30, 2000, compared to 77% as of December 31, 1999.
Liquidity is enhanced by ready access to national and regional wholesale funding
sources including federal funds purchased, repurchase agreements, negotiable
certificates of deposit, and FHLB advances. Through its subsidiary banks, the
Company has borrowing relationships with the FHLB and correspondent banks, which
provide secured and unsecured borrowing capacity. At June 30, 2000, the unused
borrowing capacity on established lines with the FHLB was $70 million. As
members of the FHLB, the Company's subsidiary banks can use certain unencumbered
mortgage-related assets to secure additional borrowings from the FHLB. At June
30, 2000, total real estate loans of the Company were $487 million.
YEAR 2000
Concerns over the arrival of Year 2000 and its impact on computer technologies
used by financial institutions led bank regulatory authorities to require
substantial advance testing and preparations by all banking organizations,
including the Company. As of the date of this filing, the Company has
experienced no material problems in connection with the arrival of Year 2000.
Management will continue to monitor its technologies for any Year 2000 related
issue that may arise and may not become immediately apparent. Although
management expects that the likelihood of its business being materially impacted
by Year 2000 issues is remote, future events cannot be known with certainty.
17
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest rate risk is the primary market risk category associated with the
Company's operations. Interest rate risk refers to the volatility of earnings
caused by changes in interest rates. Each month the Asset/Liability Management
Committee estimates the likely impact on earnings resulting from various
changing interest rate scenarios. The findings of the committee are incorporated
into the investment and funding decisions of the Company.
The table below is a Condensed Static Gap Report, which illustrates the
anticipated repricing intervals of assets and liabilities as of June 30, 2000.
CONDENSED STATIC GAP - JUNE 30, 2000 REPRICING INTERVAL
CUMULATIVE
(dollar amounts in thousands) TOTAL 0-3 MONTHS 3-6 MONTHS 6-12 MONTHS 12 MONTHS
- ----------------------------------------------------------------------------------------------
Interest-earning assets $1,150,587 $287,789 $53,956 $96,548 $438,293
Interest-bearing liabilities 939,026 548,922 54,650 93,551 697,123
- ----------------------------------------------------------------------------------------------
Net gap position (261,133) (694) 2,997 (258,830)
- ----------------------------------------------------------------------------------------------
Net gap position as a percentage of total assets (20.83%) (0.06%) 0.24% (20.65%)
- ----------------------------------------------------------------------------------------------
The Company's June 30, 2000, one-year cumulative rate sensitivity gap was a
negative 20.7% of total assets, indicating a liability sensitive position. The
analysis suggests earnings would benefit from a declining interest rate
environment, and would be vulnerable to a rising interest rate environment.
Management estimates that a 200 basis point rise in interest rates over a one
year period would result in a 3.5% decline in net interest income, assuming no
management actions to reposition the balance sheet in reaction to a changing
rate environment. Management believes the current interest rate risk exposure is
not material given the Company's current level of earnings and capital.
18
TOMPKINS TRUSTCO, INC.
AVERAGE CONSOLIDATED BALANCE SHEET AND NET INTEREST ANALYSIS
- ------------------------------------------------------------------------------------------------------------------------------------
QTD YTD YTD
PERIOD PERIOD PERIOD
ENDED ENDED ENDED
JUN-00 JUN-00 JUN-99
- ------------------------------------------------------------------------------------------------------------------------------------
Average Average Average
Balance Average Balance Average Balance Average
(Dollar amounts in thousands) (QTD) Interet Yield/Rate (YTD) Interest Yield/Rate (YTD) Interet Yield/Rate
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Interest-earning assets
Certificates of deposit with
other banks $0 $0 $0 $0 $0 $0
Securities (1)
U.S. Government Securities 242,322 3,953 6.56% 242,469 7,909 6.56% 215,418 6,614 6.19%
State and municipal (2) 80,302 1,451 7.27% 80,852 2,904 7.22% 72,982 2,634 7.28%
Other Securities (2) 12,207 249 8.20% 12,210 484 7.97% 9,819 301 6.18%
----------------------------------------------------------------------------------------
Total securities 334,831 5,653 6.79% 335,531 11,297 6.77% 298,219 9,549 6.46%
Federal Funds Sold 8,769 128 5.87% 13,395 382 5.73% 22,657 489 4.35%
Loans, net of unearned income (3)
Real Estate 473,698 9,732 8.26% 469,012 20,807 8.92% 336,421 12,636 7.57%
Commercial Loans (2) 184,111 4,629 10.11% 178,488 7,024 7.91% 193,526 7,796 8.12%
Consumer Loans 107,608 2,651 9.91% 108,553 5,262 9.75% 87,955 5,333 12.23%
Direct Lease Financing 17,695 349 7.93% 17,237 677 7.90% 15,058 594 7.95%
----------------------------------------------------------------------------------------
Total loans, net of unearned income 783,112 17,361 8.92% 773,293 33,770 8.78% 632,959 26,359 8.40%
----------------------------------------------------------------------------------------
TOTAL INTEREST-EARNING ASSETS 1,126,712 23,142 8.26% 1,122,219 45,449 8.14% 953,835 36,397 7.67%
----------------------------------------------------------------------------------------
Other assets 86,701 83,381 60,353
----------- ---------- ----------
TOTAL ASSETS $ 1,213,413 $1,205,600 $1,014,188
=========== ========== ==========
- ------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Deposits
Interest-bearing deposits
Interest bearing checking,
savings, & money market 415,538 2,592 2.51% 415,500 5,091 2.46% 332,860 3,593 2.18%
Time Dep > $100,000 177,461 2,641 5.99% 159,777 4,601 5.79% 130,160 3,438 5.33%
Time Dep < $100,000 204,581 2,675 5.26% 220,168 5,663 5.17% 182,308 4,475 4.95%
----------------------------------------------------------------------------------------
Total interest-bearing deposits 797,580 7,908 3.99% 795,445 15,355 3.88% 645,328 11,506 3.60%
Federal funds purchased & securities
sold under agreements to repurchase 70,670 1,035 5.89% 69,000 1,927 5.62% 61,595 1,450 4.75%
Other borrowings 43,411 624 5.78% 44,264 1,250 5.68% 49,485 1,245 5.07%
----------------------------------------------------------------------------------------
TOTAL INTEREST-BEARING LIABILITIES 911,661 9,567 4.22% 908,709 18,532 4.10% 756,408 14,201 3.79%
Noninterest bearing deposits 185,016 179,835 144,988
Minority Interest 6,464 6,369 1,380
Accrued expenses and other liabilities 12,260 12,886 11,837
---------- ---------- ----------
TOTAL LIABILITIES 1,115,401 1,107,799 914,613
SHAREHOLDERS' EQUITY 98,012 97,801 99,575
---------- ---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,213,413 $1,205,600 $1,014,188
========== ========== ==========
Interest rate spread 4.04% 4.04% 3.88%
---------------- ---------------- ---------------
Net interest income/margin
on earning assets $13,575 4.85% $26,917 4.82% $22,196 4.68%
==============================================================================================================================
(1) Average balances and yields exclude unrealized gains and losses on
available-for-sale securities.
(2) Interest income includes the effects of taxable-equivalent adjustments
using a blended Federal and State income tax rate of 40% to increase
tax exempt interest income to a taxable-equivalent basis.
(3) Nonaccrual loans are included in the average loans totals presented
above. Payments received on nonaccrual loans have been recognized as
disclosed in Note 1 to the Company's Annual Report on Form 10-K dated
December 31, 1999.
19
PART II - OTHER INFORMATION
ALL ITEMS NOT LISTED HERE ARE NOT APPLICABLE.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of stockholders of the Company was held on May 10, 2000 (the
"Annual Meeting"). Proxies for the Annual Meeting were solicited pursuant to
Regulation 14 under the Securities and Exchange Act of 1934, as amended.
The election of three directors for three year terms, one director for a two
year term and one director for a one year term were approved at the Annual
Meeting. Directors James W. Fulmer, William W. Griswold, and Thomas R. Salm were
each elected to terms of three years which expire in the year 2003, Director
Craig Yunker was elected to a two year term expiring in 2002 and Director
William D. Spain, Jr. was elected to a one year term expiring in the year 2001.
James J. Byrnes, Reeder D. Gates, Bonnie H. Howell, John E. Alexander, Edward C.
Hooks and Hunter R. Rawlings, III will continue as Directors.
ITEM 5. OTHER INFORMATION
On July 31, 2000, Tompkins Trustco, Inc. announced that it has reached agreement
to purchase the approximate 30% minority interest in The Mahopac National Bank
from the minority shareholders (the "Spain family"). Tompkins acquired its
present 70% interest in Mahopac when it merged with Letchworth Independent
Bancshares Corporation on December 31, 1999. Letchworth had purchased the
Mahopac interest in June of 1999. The 30% interest owned by the Spain family has
been subject to a buy/sell contract between Tompkins and the Spain family. It
has been the stated intention of the parties to reach agreement for purchase of
the Spain interest by Tompkins. An agreement has now been reached several months
earlier than anticipated.
The purchase of the Spain interest in Mahopac will entail issuance of
approximately 417,000 Tompkins shares, and is expected to close within 90 days.
Michael H. Spain will join the Tompkins board. His brother, William, is
currently a Tompkins director, and also serves as Chairman of The Mahopac
National Bank.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule.
20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: August 14, 2000
TOMPKINS TRUSTCO, INC.
By: /s/ JAMES J. BYRNES
--------------------------
JAMES J. BYRNES
Chairman of the Board,
Chief Executive Officer
By: /s/ RICHARD D. FARR
---------------------------
RICHARD D. FARR
Senior Vice President and
Chief Financial Officer
21
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGES
EXHIBIT 27 FINANCIAL DATA SCHEDULE
22