TRUSTCO BANK CORP N Y - FORM 8-K - EX-99.A - EXHIBIT 99(A)

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8-K - TRUSTCO BANK CORP NY 8-K 7-21-2014 - TRUSTCO BANK CORP N Y	form8k.htm

Exhibit 99(a)

News Release

5 Sarnowski Drive, Glenville, New York, 12302

(518) 377-3311 Fax: (518) 381-3668

Subsidiary: Trustco Bank

NASDAQ -- TRST

Contact:

Kevin T. Timmons

Vice President/Treasurer

(518) 381-3607

TrustCo Announces Strong Second Quarter Earnings; Up 20.9% Over Prior Year

Executive Snapshot:

Continued strong financial results:

Second quarter 2014 compared to 2013:

Net income up 20.9%

Diluted EPS up 20.2%

Return on average assets (ROA) rose 15 basis points to 1.03%

Return on average equity (ROE) rose 167 basis points to 12.50%

Improvement in the efficiency ratio from 53.51% in Q2 2013 to 53.00% in Q2 2014

Continued expansion of customer base:

Focus on capitalizing on opportunities presented by expanded branch network

Deposits per branch grew to $28.3 million at June 30, 2014 from $28.2 million a year earlier despite three new branches being opened during that period

Average core deposits grew $91.7 million from Q2 2013 to Q2 2014

Loan portfolio reaches all-time high:

Average loans were up $238.8 million or 8.7% from Q2 2013 to Q2 2014

Residential mortgage loans comprised $223.8 million of the increase

At $3.01 billion at June 30, 2014, loans reached an all-time high, exceeding $3 billion for the first time in Company history

Asset quality improvement:

Nonperforming assets (NPAs) fell $4.7 million to $49.2 million at June 30, 2014 compared to $53.9 million at March 31, 2014

NPAs to total assets improved from 1.21% to 1.07% over the last year

Net chargeoffs (NCOs) to average loans improved from 0.29% in Q2 2013 to 0.22% in Q2 2014

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FOR IMMEDIATE RELEASE:

TrustCo Announces Strong Second Quarter Earnings; Up 20.9% Over Prior Year

Glenville, New York –July 21, 2014

TrustCo Bank Corp NY (TrustCo, Nasdaq: TRST) today announced that net income rose to $11.8 million in the quarter ended June 30, 2014, up 20.9% from $9.8 million for the quarter ended June 30, 2013.

Robert J. McCormick, President and Chief Executive Officer noted, “Our results for the second quarter of 2014 continued our solid bottom line growth and positioning our business for the future. In addition to the significant increase in net income, we continued to add profitable customer relationships on both the loan and deposit sides of the Bank. Our highly liquid balance sheet continues to allow us to fund our loan growth without having to overpay for deposits. The Company had a strong first half of 2014 and we look forward to the remainder of the year with optimism. We will continue taking advantage of opportunities as they are presented.”

TrustCo saw continued strong loan growth in the second quarter of 2014. The gains were primarily funded by continued expansion of retail deposits as well as proceeds from cash flow from the lower yielding investment securities portfolio. The shift toward loans helped offset part of the impact from continued low yields on cash and securities and contributed to an improvement in net interest margin to 3.16% in the second quarter from 3.13% in the first quarter of 2014 and 3.10% in the second quarter of 2013. Our strong liquidity position continues to be available to allow us to take advantage of opportunities when interest rate conditions change. The increase in margin, along with control of operating expenses and gains on the sale of ORE enabled the Company to achieve bottom line objectives without having to deploy liquidity into the current low rate investment environment.

Mr. McCormick also noted “We are encouraged by the continued economic improvements where we operate, particularly Florida, and believe we are well positioned to capitalize on these changes. Our long-term focus on traditional lending criteria and conservative balance sheet management has enabled us to maintain strong liquidity and capital and report continued profit improvements. As a result, we have been able to focus on conducting business, which has significantly enhanced our reputation and put us in a position to take advantage of changes in market and competitive conditions.”

Return on average assets and return on average equity were 1.03% and 12.50%, respectively for the second quarter of 2014, compared to 0.88% and 10.83% for the second quarter of 2013. Diluted earnings per share were $0.125 for the second quarter of 2014, up 20.2% from $0.104 for the second quarter of 2013.

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For the first half of 2014, return on average assets and return on average equity were 1.01% and 12.30%, respectively, compared to 0.87% and 10.60% for the first half of 2013. Diluted earnings per share were $0.241 for the first half of 2014, up 19.9% from $0.201 over the same period a year earlier.

On a year-over-year basis, average loans were up $238.8 million or 8.7% in the second quarter of 2014, over the same period in 2013. Average deposits were up $116.1 million for the second quarter of 2014 over the same period a year earlier. Most of the gain in deposits came from core deposit accounts, customers also continued to move some funds into certificates with slightly longer maturities, which may help TrustCo if rates rise, without having a material impact on the current cost of funds. Average core deposits rose $91.7 million from Q2 2013 to Q2 2014. Core deposits typically represent longer term customer relationships and are generally lower cost than time deposits. Mr. McCormick noted that, “The year-over-year growth of our loans and core deposit base reflect the long term strategic focus of the Company.

While some banks have backed away from branches, a customer friendly branch franchise continues to be the key to our long term plans. We opened our 140^th and 141^st offices, in Stuart, Florida and Warrensburg, New York, during the second quarter. During 2013 we celebrated the ten year anniversary of our expansion into Florida, while at the same time making significant progress expanding loans and deposits throughout our branch network. We expect that trend to continue as the new branches continue to mature. At June 30, 2014, our average branch had $28.3 million of deposits, up $125 thousand compared to the prior year, despite having opened up three branches during that time frame. We have always designed our branches to be smaller, more cost effective than those built by many of our competitors. We use open floor plans that help maximize the value of our branches. We remain mindful that fully achieving our goals for newer branches will take time and continued work. We believe success in growing customer relationships provides the basic building blocks that help drive profit growth for the coming years.”

Asset quality, the allowance for loan losses coverage of nonperforming loans (NPLs) and net charge-offs all improved from June 30, 2013 to June 30, 2014. NPLs declined to $40.9 million at June 30, 2014, compared to $43.4 million at June 30, 2013 and nonperforming assets (NPAs) declined to $49.2 million from $53.8 million over the same period. NPLs were equal to 1.36% of total loans at June 30, 2014, compared to 1.57% a year earlier. The coverage ratio, or allowance for loan losses to NPLs, was 114.7% at June 30, 2014, compared to 109.5% at June 30, 2013. Overall, virtually every asset quality indicator improved during the second quarter of 2014 relative to the second quarter of 2013. The ratio of loan loss allowance to total loans was 1.56% as of June 30, 2014, compared to 1.72% at June 30, 2013. This decline was due primarily to new loan growth and improved economic conditions over the last year. The allowance for loan losses ended the second quarter at $46.9 million compared to $47.0 million at the end of the first quarter.

The net interest margin for the second quarter of 2014 was 3.16%, compared to 3.10% in the second quarter of 2013, as noted. Included in second quarter of 2014 results was a gain of $2.4 million on the previously disclosed sale of owned real estate. This gain is included in the “Other real estate (income) expense, net” line on the Consolidated Statement of Income. Second quarter results also reflect the sale of approximately $1.8 million of NPAs to a third party at a gain of $164 thousand, included in “Other” noninterest income. Property tax expense of $151 thousand associated with the sold assets was recorded during the quarter and is included in “Other” noninterest expense.

Page | 6

At June 30, 2014 the tangible equity ratio was 8.38% compared to 8.11% at March 31, 2014 and 7.83% at June 30, 2013. Tangible book value per share ended the second quarter at $4.06 compared to $3.69 in the year-ago period.

“American Banker Magazine’s” July 2014 issue recently ranked TRST shares as having the 25^th highest dividend yield for all U.S. banks and thrifts.

TrustCo Bank Corp NY is a $4.6 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 141 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at June 30, 2014.

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

A conference call to discuss second quarter 2014 results will be held at 9:00 a.m. Eastern Time on July 22, 2014. Those wishing to participate in the call may dial toll-free 1-888-339-0764. International callers must dial 1-412-902-4195. Please ask to be joined into the TrustCo Bank Corp NY / TRST call. A replay of the call will be available for thirty days by dialing 1-877-344-7529 (1-412-317-0088 for international callers), Conference Number 10049252. The call will also be audio webcast at: https://services.choruscall.com/links/trst140722.html, and will be available for one year.

Safe Harbor Statement

All statements in this news release that are not historical are forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by words such as "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding our expectations for our performance during the remainder of 2014 and for the growth of loans and deposits throughout our branch network and our ability to capitalize on economic changes in the areas in which we operate. Such forward-looking statements are subject to factors that could cause actual results to differ materially for TrustCo from those discussed. TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo’s actual results and could cause TrustCo’s actual financial performance to differ materially from that expressed in any forward-looking statement: our ability to continue to originate a significant volume of one-to-four family mortgage loans in our market areas; our ability to continue to maintain noninterest expense and other overhead costs at reasonable levels relative to income; the future earnings and capital levels of Trustco Bank and the continued ability of Trustco Bank under regulatory rules to distribute capital to TrustCo, which could affect our ability to pay dividends; our ability to make accurate assumptions and judgments regarding the credit risks associated with lending and investing activities; the effect of changes in financial services laws and regulations and the impact of other governmental initiatives affecting the financial services industry; results of examinations of Trustco Bank and TrustCo by our respective regulators; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board, inflation, interest rates, market and monetary fluctuations; the perceived overall value of our products and services by users, including in comparison to competitors’ products and services and the willingness of current and prospective customers to substitute competitors’ products and services for our products and services; real estate and collateral values; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the FASB or PCAOB; changes in local market areas and general business and economic trends, as well as changes in consumer spending and saving habits; our success at managing the risks involved in the foregoing and managing our business; and other risks and uncertainties under the heading “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2013, as amended, and, if any, in our subsequent quarterly reports on Form 10-Q or other securities filings.

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TRUSTCO BANK CORP NY

GLENVILLE, NY

FINANCIAL HIGHLIGHTS

(dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended
	06/30/14			03/31/14		06/30/13
Summary of operations
Net interest income (TE)	$	35,513			34,701		33,630
Provision for loan losses		1,500			1,500		2,000
Net securities transactions		-			6		1,432
Noninterest income, excluding net securities transactions		4,505			5,753		4,484
Noninterest expense		19,437			20,801		21,869
Net income		11,808			11,011		9,763

Per common share
Net income per share:
- Basic	$	0.125			0.116		0.104
- Diluted		0.125			0.116		0.104
Cash dividends		0.066			0.066		0.066
Tangible Book value at period end		4.06			3.93		3.69
Market price at period end		6.68			7.04		5.44

At period end
Full time equivalent employees		747			709		710
Full service banking offices		141			139		138

Performance ratios
Return on average assets		1.03	%		0.99		0.88
Return on average equity		12.50			12.09		10.83
Efficiency (1)		53.00			51.28		53.51
Net interest spread (TE)		3.11			3.08		3.04
Net interest margin (TE)		3.16			3.13		3.10
Dividend payout ratio		52.62			56.36		63.33

Capital ratio at period end
Consolidated tangible equity to tangible assets (2)		8.38			8.11		7.83

Asset quality analysis at period end
Nonperforming loans to total loans		1.36			1.53		1.57
Nonperforming assets to total assets		1.07			1.18		1.21
Allowance for loan losses to total loans		1.56			1.60		1.72
Coverage ratio (3)		1.1x			1.0		1.1

(1)	Calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income (excluding net securities transactions and the net gain on sale of building).

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

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

TE = Taxable equivalent.

Page | 8

FINANCIAL HIGHLIGHTS, Continued

(dollars in thousands, except per share data)

(Unaudited)

	Six Months Ended
	06/30/14			06/30/13
Summary of operations
Net interest income (TE)	$	70,214			67,337
Provision for loan losses		3,000			4,000
Net securities transactions		6			1,434
Noninterest income		10,258			9,074
Noninterest expense		40,238			43,426
Net income		22,819			18,931

Per common share
Net income per share:
- Basic	$	0.241			0.201
- Diluted		0.241			0.201
Cash dividends		0.131			0.131
Tangible Book value at period end		4.06			3.69
Market price at period end		6.68			5.44

Performance ratios
Return on average assets		1.01	%		0.87
Return on average equity		12.30			10.60
Efficiency (1)		52.15			53.92
Net interest spread (TE)		3.09			3.09
Net interest margin (TE)		3.15			3.15
Dividend payout ratio		54.42			65.27

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

TE = Taxable equivalent.

Page | 9

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended
	6/30/2014			3/31/2014		12/31/2013		9/30/2013		6/30/2013
Interest and dividend income:
Interest and fees on loans	$	33,614			32,874		32,658		32,166		31,639
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		381			506		586		571		627
State and political subdivisions		44			68		96		127		148
Mortgage-backed securities and collateralized mortgage obligations-residential		3,299			3,078		3,027		2,888		2,701
Corporate bonds		2			59		138		223		233
Small Business Administration-guaranteed participation securities		539			556		562		558		564
Mortgage-backed securities and collateralized mortgage obligations-commercial		38			38		38		39		38
Other securities		4			4		4		5		3
Total interest and dividends on securities available for sale		4,307			4,309		4,451		4,411		4,314

Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential		577			625		649		686		716
Corporate bonds		154			154		153		154		214
Total interest on held to maturity securities		731			779		802		840		930

Federal Reserve Bank and Federal Home Loan Bank stock		128			133		129		121		121

Interest on federal funds sold and other short-term investments		376			351		324		344		327
Total interest income		39,156			38,446		38,364		37,882		37,331

Interest expense:
Interest on deposits:
Interest-bearing checking		89			84		83		84		82
Savings		592			763		790		798		829
Money market deposit accounts		618			599		611		590		630
Time deposits		2,035			1,951		1,982		1,937		1,883
Interest on short-term borrowings		342			393		382		370		367
Total interest expense		3,676			3,790		3,848		3,779		3,791

Net interest income		35,480			34,656		34,516		34,103		33,540

Provision for loan losses		1,500			1,500		1,500		1,500		2,000
Net interest income after provision for loan losses		33,980			33,156		33,016		32,603		31,540

Noninterest income:
Trustco Financial Services income		1,405			1,510		1,276		1,317		1,287
Fees for services to customers		2,732			2,521		2,917		2,903		2,968
Net gain on securities transactions		-			6		188		-		1,432
Other		368			1,722		467		194		229
Total noninterest income		4,505			5,759		4,848		4,414		5,916

Noninterest expenses:
Salaries and employee benefits		8,012			7,592		8,664		7,935		7,647
Net occupancy expense		4,110			4,259		4,226		3,911		3,910
Equipment expense		1,823			1,752		1,514		1,567		1,582
Professional services		1,438			1,286		1,409		1,255		1,565
Outsourced services		1,425			1,325		1,075		1,350		1,350
Advertising expense		657			599		835		548		714
FDIC and other insurance		1,000			904		952		1,009		1,004
Other real estate (income) expense, net		(1,688	)		855		430		946		1,473
Other		2,660			2,229		1,786		2,167		2,624
Total noninterest expenses		19,437			20,801		20,891		20,688		21,869

Income before taxes		19,048			18,114		16,973		16,329		15,587
Income taxes		7,240			7,103		6,344		6,077		5,824

Net income	$	11,808			11,011		10,629		10,252		9,763
Net income per Common Share:
- Basic	$	0.125			0.116		0.113		0.109		0.104

- Diluted		0.125			0.116		0.112		0.109		0.104

Average basic shares (thousands)		94,559			94,452		94,347		94,228		94,204
Average diluted shares (thousands)		94,675			94,581		94,472		94,275		94,211

Note: Taxable equivalent net interest income	$	35,513			34,701		34,577		34,180		33,630

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CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)

	Six Months Ended
	6/30/2014			6/30/2013
Interest and dividend income:
Interest and fees on loans	$	66,488			63,120
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		887			1,443
State and political subdivisions		112			339
Mortgage-backed securities and collateralized mortgage obligations-residential		6,377			5,470
Corporate bonds		61			451
Small Business Administration-guaranteed participation securities		1,095			1,060
Mortgage-backed securities and collateralized mortgage obligations-commercial		76			67
Other securities		8			8
Total interest and dividends on securities available for sale		8,616			8,838

Interest on held to maturity securities:
Mortgage-backed securities-residential		1,202			1,505
Corporate bonds		308			526
Total interest on held to maturity securities		1,510			2,031

Federal Reserve Bank and Federal Home Loan Bank stock		261			240

Interest on federal funds sold and other short-term investments		727			572
Total interest income		77,602			74,801

Interest expense:
Interest on deposits:
Interest-bearing checking		173			162
Savings		1,355			1,745
Money market deposit accounts		1,217			1,315
Time deposits		3,986			3,703
Interest on short-term borrowings		735			731
Total interest expense		7,466			7,656

Net interest income		70,136			67,145

Provision for loan losses		3,000			4,000
Net interest income after provision for loan losses		67,136			63,145

Noninterest income:
Trust department income		2,915			2,708
Fees for services to customers		5,253			5,855
Net gain on securities transactions		6			1,434
Other		2,090			511
Total noninterest income		10,264			10,508

Noninterest expenses:
Salaries and employee benefits		15,604			15,825
Net occupancy expense		8,369			7,963
Equipment expense		3,575			3,300
Professional services		2,724			2,985
Outsourced services		2,750			2,700
Advertising expense		1,256			1,444
FDIC and other insurance		1,904			2,014
Other real estate (income) expense, net		(833	)		2,222
Other		4,889			4,973
Total noninterest expenses		40,238			43,426

Income before taxes		37,162			30,227
Income taxes		14,343			11,296

Net income	$	22,819			18,931

Net income per Common Share:
- Basic	$	0.241			0.201

- Diluted		0.241			0.201

Average basic shares (thousands)		94,536			94,134
Average diluted shares (thousands)		94,658			94,141

Note: Taxable equivalent net interest income	$	70,214			67,337

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CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(dollars in thousands)

(Unaudited)

	6/30/2014			3/31/2014			12/31/2013			9/30/2013			6/30/2013
ASSETS:

Cash and due from banks	$	48,034			46,127			46,453			45,088			40,580
Federal funds sold and other short term investments		573,514			687,003			536,591			510,561			588,252
Total cash and cash equivalents		621,548			733,130			583,044			555,649			628,832

Securities available for sale:
U. S. government sponsored enterprises		103,340			92,708			198,829			193,614			188,133
States and political subdivisions		3,921			4,968			7,758			11,199			12,159
Mortgage-backed securities and collateralized mortgage obligations-residential		589,517			524,197			532,449			534,301			504,793
Corporate bonds		1,402			6,402			10,471			53,094			53,053
Small Business Administration-guaranteed participation securities		102,367			101,821			103,029			104,863			108,665
Mortgage-backed securities and collateralized mortgage obligations-commercial		10,544			10,543			10,558			10,715			10,725
Other securities		679			653			660			660			660
Total securities available for sale		811,770			741,292			863,754			908,446			878,188

Held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential		67,974			72,188			76,270			81,337			88,852
Corporate bonds		9,952			9,948			9,945			9,941			9,937
Total held to maturity securities		77,926			82,136			86,215			91,278			98,789

Federal Reserve Bank and Federal Home Loan Bank stock		10,951			10,500			10,500			10,500			10,500

Loans:
Commercial		222,655			220,443			223,481			212,833			216,977
Residential mortgage loans		2,437,500			2,374,874			2,338,944			2,279,064			2,205,334
Home equity line of credit		339,897			339,971			340,489			337,178			334,571
Installment loans		6,098			5,714			5,895			5,894			5,544
Loans, net of deferred fees and costs		3,006,150			2,941,002			2,908,809			2,834,969			2,762,426
Less:
Allowance for loan losses		46,935			47,035			47,714			47,722			47,589
Net loans		2,959,215			2,893,967			2,861,095			2,787,247			2,714,837

Bank premises and equipment, net		36,658			35,267			34,414			34,559			38,301
Other assets		71,061			82,445			82,430			71,728			73,757

Total assets	$	4,589,129			4,578,737			4,521,452			4,459,407			4,443,204

LIABILITIES:
Deposits:
Demand	$	324,277			327,779			318,456			314,660			314,985
Interest-bearing checking		643,473			628,752			611,127			591,590			591,844
Savings accounts		1,233,347			1,236,331			1,218,038			1,221,791			1,228,281
Money market deposit accounts		651,367			648,244			648,402			650,688			634,804
Certificates of deposit (in denominations of $100,000 or more)		436,785			432,168			419,301			405,575			397,707
Other time accounts		705,938			713,944			711,747			710,064			725,255
Total deposits		3,995,187			3,987,218			3,927,071			3,894,368			3,892,876

Short-term borrowings		181,516			195,411			204,162			185,226			176,325
Accrued expenses and other liabilities		27,409			24,329			28,406			25,425			25,380

Total liabilities		4,204,112			4,206,958			4,159,639			4,105,019			4,094,581

SHAREHOLDERS' EQUITY:
Capital stock		98,927			98,927			98,927			98,912			98,912
Surplus		172,769			172,964			173,144			173,408			173,897
Undivided profits		157,832			152,237			147,432			143,015			138,953
Accumulated other comprehensive income (loss), net of tax		(2,611	)		(9,452	)		(13,803	)		(15,923	)		(16,831	)
Treasury stock at cost		(41,900	)		(42,897	)		(43,887	)		(45,024	)		(46,308	)

Total shareholders' equity		385,017			371,779			361,813			354,388			348,623

Total liabilities and shareholders' equity	$	4,589,129			4,578,737			4,521,452			4,459,407			4,443,204

Outstanding shares (thousands)		94,665			94,564			94,463			94,334			94,204

Page | 12

NONPERFORMING ASSETS

(dollars in thousands)

(Unaudited)

Nonperforming Assets

	06/30/14		03/31/14		12/31/13		09/30/13		06/30/13
New York and other states*
Loans in nonaccrual status:
Commercial	$	5,132		4,853		6,952		5,436		5,891
Real estate mortgage - 1 to 4 family		31,433		34,597		31,045		30,643		30,736
Installment		87		103		93		71		36
Total non-accrual loans		36,652		39,553		38,090		36,150		36,663
Other nonperforming real estate mortgages - 1 to 4 family		159		162		166		170		174
Total nonperforming loans		36,811		39,715		38,256		36,320		36,837
Other real estate owned		3,930		4,707		3,348		3,011		3,918
Total nonperforming assets	$	40,741		44,422		41,604		39,331		40,755

Florida
Loans in nonaccrual status:
Commercial	$	517		517		-		-		583
Real estate mortgage - 1 to 4 family		3,578		4,668		5,137		5,406		6,022
Installment		1		7		-		-		-
Total non-accrual loans		4,096		5,192		5,137		5,406		6,605
Other nonperforming real estate mortgages - 1 to 4 family		-		-		-		-		-
Total nonperforming loans		4,096		5,192		5,137		5,406		6,605
Other real estate owned		4,365		4,300		5,381		6,816		6,427
Total nonperforming assets	$	8,461		9,492		10,518		12,222		13,032

Total
Loans in nonaccrual status:
Commercial	$	5,649		5,370		6,952		5,436		6,474
Real estate mortgage - 1 to 4 family		35,011		39,265		36,182		36,049		36,758
Installment		88		110		93		71		36
Total non-accrual loans		40,748		44,745		43,227		41,556		43,268
Other nonperforming real estate mortgages - 1 to 4 family		159		162		166		170		174
Total nonperforming loans		40,907		44,907		43,393		41,726		43,442
Other real estate owned		8,295		9,007		8,729		9,827		10,345
Total nonperforming assets	$	49,202		53,914		52,122		51,553		53,787

Quarterly Net Chargeoffs

	06/30/14			03/31/14		12/31/13			09/30/13			06/30/13
New York and other states*
Commercial	$	13			242		176			585			49
Real estate mortgage - 1 to 4 family		1,496			851		1,194			1,215			1,885
Installment		24			44		(2	)		25			13
Total net chargeoffs	$	1,533			1,137		1,368			1,825			1,947

Florida
Commercial	$	(2	)		612		(1	)		(502	)		(1	)
Real estate mortgage - 1 to 4 family		59			428		138			41			123
Installment		10			2		3			3			-
Total net chargeoffs	$	67			1,042		140			(458	)		122

Total
Commercial	$	11			854		175			83			48
Real estate mortgage - 1 to 4 family		1,555			1,279		1,332			1,256			2,008
Installment		34			46		1			28			13
Total net chargeoffs	$	1,600			2,179		1,508			1,367			2,069

Asset Quality Ratios

	06/30/14			03/31/14			12/31/13			09/30/13			06/30/13

Total nonperforming loans(1)	$	40,907			44,907			43,393			41,726			43,442
Total nonperforming assets(1)		49,202			53,914			52,122			51,553			53,787
Total net chargeoffs(2)		1,600			2,179			1,508			1,367			2,069

Allowance for loan losses(1)		46,935			47,035			47,714			47,722			47,589

Nonperforming loans to total loans		1.36	%		1.53	%		1.49	%		1.47	%		1.57	%
Nonperforming assets to total assets		1.07	%		1.18	%		1.15	%		1.16	%		1.21	%
Allowance for loan losses to total loans		1.56	%		1.60	%		1.64	%		1.68	%		1.72	%
Coverage ratio(1)		114.7	%		104.7	%		110.0	%		114.4	%		109.5	%
Annualized net chargeoffs to average loans(2)		0.22	%		0.30	%		0.21	%		0.20	%		0.29	%
Allowance for loan losses to annualized net chargeoffs(2)		7.3	x		5.4	x		7.9	x		8.7	x		6.0	x

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

(1)	At period-end

(2)	For the period ended

Page | 13

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY-

INTEREST RATES AND INTEREST DIFFERENTIAL

(dollars in thousands)	Three months ended									Three months ended
(Unaudited)	June 30, 2014									June 30, 2013
	Average			Interest			Average			Average			Interest			Average
	Balance						Rate			Balance						Rate

Assets

Securities available for sale:
U. S. government sponsored enterprises	$	110,783			381			1.38	%	$	218,199			627			1.15	%
Mortgage backed securities and collateralized mortgage obligations-residential		589,334			3,299			2.24			545,989			2,701			1.98
State and political subdivisions		3,823			70			7.32			13,098			231			7.05
Corporate bonds		1,403			2			0.48			54,724			233			1.70
Small Business Administration-guaranteed participation securities		108,072			539			1.99			114,760			564			1.97
Mortgage backed securities and collateralized mortgage obligations-commercial		10,871			38			1.40			11,136			38			1.36
Other		665			4			2.41			660			3			1.82

Total securities available for sale		824,951			4,333			2.10			958,566			4,397			1.83

Federal funds sold and other short-term Investments		606,809			376			0.25			529,672			327			0.25

Held to maturity securities:
Corporate bonds		9,950			154			6.18			13,947			214			6.14
Mortgage backed securities and collateralized mortgage obligations-residential		70,377			577			3.28			93,644			716			3.06

Total held to maturity securities		80,327			731			3.64			107,591			930			3.46

Federal Reserve Bank and Federal Home Loan Bank stock		10,937			128			4.68			10,434			121			4.64

Commercial loans		221,819			2,842			5.12			214,158			2,812			5.25
Residential mortgage loans		2,401,020			27,548			4.59			2,177,171			25,866			4.75
Home equity lines of credit		339,884			3,064			3.62			333,510			2,806			3.37
Installment loans		5,827			167			11.47			4,930			162			13.16

Loans, net of unearned income		2,968,550			33,621			4.53			2,729,769			31,646			4.64

Total interest earning assets		4,491,574			39,189			3.49			4,336,032			37,421			3.45

Allowance for loan losses		(47,389	)								(48,298	)
Cash & non-interest earning assets		135,326									146,387

Total assets	$	4,579,511								$	4,434,121

Liabilities and shareholders' equity

Deposits:
Interest bearing checking accounts	$	632,266			89			0.06	%	$	581,785			82			0.06	%
Money market accounts		655,009			618			0.38			650,927			630			0.39
Savings		1,240,158			592			0.19			1,218,683			829			0.27
Time deposits		1,144,165			2,035			0.71			1,119,710			1,883			0.67

Total interest bearing deposits		3,671,598			3,334			0.36			3,571,105			3,424			0.38
Short-term borrowings		189,802			342			0.72			179,878			367			0.82

Total interest bearing liabilities		3,861,400			3,676			0.38			3,750,983			3,791			0.41

Demand deposits		316,759									301,123
Other liabilities		22,325									20,590
Shareholders' equity		379,027									361,425

Total liabilities and shareholders' equity	$	4,579,511								$	4,434,121

Net interest income , tax equivalent					35,513									33,630

Net interest spread								3.11	%								3.04	%

Net interest margin (net interest income to total interest earning assets)								3.16	%								3.10	%

Tax equivalent adjustment					(33	)								(90	)

Net interest income					35,480									33,540

Page | 14

(dollars in thousands)	Six months ended									Six months ended
(Unaudited)	June 30, 2014									June 30, 2013
	Average			Interest			Average			Average			Interest			Average
	Balance						Rate			Balance						Rate

Assets

Securities available for sale:
U. S. government sponsored enterprises	$	139,907			887			1.27	%	$	244,430			1,443			1.18	%
Mortgage backed securities and collateralized mortgage obligations-residential		567,700			6,377			2.25			551,667			5,470			1.98
State and political subdivisions		4,971			175			7.04			15,812			516			6.53
Corporate bonds		4,956			61			2.47			51,061			451			1.76
Small Business Administration-guaranteed participation securities		109,079			1,095			2.01			107,263			1,060			1.98
Mortgage backed securities and collateralized mortgage obligations-commercial		10,904			76			1.39			9,764			67			1.37
Other		662			8			2.42			660			8			2.42

Total securities available for sale		838,179			8,679			2.07			980,657			9,015			1.84

Federal funds sold and other short-term Investments		591,167			727			0.25			468,154			572			0.25

Held to maturity securities:
Corporate bonds		9,948			308			6.18			18,086			526			5.81
Mortgage backed securities and collateralized mortgage obligations-residential		72,340			1,202			3.32			98,598			1,505			3.05

Total held to maturity securities		82,288			1,510			3.67			116,684			2,031			3.48

Federal Reserve Bank and Federal Home Loan Bank stock		10,720			261			4.87			10,035			240			4.78

Commercial loans		222,074			5,639			5.08			215,178			5,659			5.26
Residential mortgage loans		2,378,199			54,530			4.59			2,156,733			51,550			4.79
Home equity lines of credit		340,281			6,000			3.56			333,472			5,606			3.39
Installment loans		5,712			334			11.78			4,730			320			13.65

Loans, net of unearned income		2,946,266			66,503			4.52			2,710,113			63,135			4.67

Total interest earning assets		4,468,620			77,680			3.48			4,285,643			74,993			3.51

Allowance for loan losses		(47,802	)								(48,377	)
Cash & non-interest earning assets		132,906									149,670

Total assets	$	4,553,724								$	4,386,936

Liabilities and shareholders' equity

Deposits:
Interest bearing checking accounts	$	619,076			173			0.06	%	$	567,261			162			0.06	%
Money market accounts		650,828			1,217			0.38			655,027			1,315			0.40
Savings		1,232,803			1,355			0.22			1,211,173			1,745			0.29
Time deposits		1,142,001			3,986			0.70			1,104,379			3,703			0.68

Total interest bearing deposits		3,644,708			6,731			0.37			3,537,840			6,925			0.39
Short-term borrowings		195,954			735			0.76			174,001			731			0.85

Total interest bearing liabilities		3,840,662			7,466			0.39			3,711,841			7,656			0.42

Demand deposits		316,386									294,449
Other liabilities		22,499									20,339
Shareholders' equity		374,177									360,307

Total liabilities and shareholders' equity	$	4,553,724								$	4,386,936

Net interest income , tax equivalent					70,214									67,337

Net interest spread								3.09	%								3.09	%

Net interest margin (net interest income to total interest earning assets)								3.15	%								3.15	%

Tax equivalent adjustment					(78	)								(192	)

Net interest income					70,136									67,145

Page | 15

Non-GAAP Financial Measures Reconciliation

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

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

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

NON-GAAP FINANCIAL MEASURES RECONCILIATION

(dollars in thousands, except per share amounts)

(Unaudited)

	06/30/14			03/31/14			06/30/13
Tangible Book Value Per Share

Equity	$	385,017			371,779			348,623
Less: Intangible assets		553			553			553
Tangible equity		384,464			371,226			348,070

Shares outstanding		94,665			94,564			94,204
Tangible book value per share		4.06			3.93			3.69
Book value per share		4.07			3.93			3.70

Tangible Equity to Tangible Assets
Total Assets		4,589,129			4,578,737			4,443,204
Less: Intangible assets		553			553			553
Tangible assets		4,588,576			4,578,184			4,442,651

Tangible Equity to Tangible Assets		8.38	%		8.11	%		7.83	%
Equity to Assets		8.39	%		8.12	%		7.85	%

	3 Months Ended									6 Months Ended
Efficiency Ratio	06/30/14			03/31/14			06/30/13			06/30/14			06/30/13

Net interest income (fully taxable equivalent)	$	35,513			34,701			33,630			70,214			67,337
Non-interest income		4,505			5,759			5,916			10,264			10,508
Less: Net gain on sale of building and net gain on sale of nonperforming loans		163			1,556			-			1,719			-
Less: Net gain on securities		-			6			1,432			6			1,434
Recurring revenue		39,855			38,898			38,114			78,753			76,411

Total Noninterest expense		19,437			20,801			21,869			40,238			43,426
Less: Other real estate (income) expense, net		(1,688	)		855			1,473			(833	)		2,222
Recurring expense		21,125			19,946			20,396			41,071			41,204

Efficiency Ratio		53.00	%		51.28	%		53.51	%		52.15	%		53.92	%

Page | 16

TRUSTCO BANK CORP N Y - FORM 8-K - EX-99.A - EXHIBIT 99(A) - July 21, 2014

Attached files

TRUSTCO BANK CORP N Y Reports