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 7-21-2016 - 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 Second Quarter 2016 Earnings

Executive Snapshot:

Continued solid financial results:

Key metrics for second quarter of 2016 results:

Net income of $10.5 million in the second quarter of 2016 compared to $10.4 million in the first quarter of 2016 and $10.7 million in the second quarter of 2015

Operating expenses increased $1.8 million in the second quarter of 2016 compared to the second quarter of 2015

Return on average assets (ROA) of 0.88%

Return on average equity (ROE) of 9.88%

Efficiency ratio of 57.70%

Asset quality remains solid:

Asset quality measures improved compared to the second quarter of 2015

Nonperforming assets (NPAs) fell by $5.7 million compared to June 30, 2015

NPAs to total assets improved from 0.81% to 0.68% compared to June 30, 2015

Quarterly net chargeoffs decreased to 0.14% of average loans on an annualized basis, compared to 0.15% for the second quarter of 2015

Continued expansion of customer base:

Focus on capitalizing on opportunities presented by expanded branch network

Average deposits per branch grew $493 thousand from June 30, 2015 to June 30, 2016 on a same store basis

Average deposits per branch were $28.8 million at June 30, 2016

Average core deposits were $47 million higher in the second quarter of 2016 compared to the second quarter of 2015

Loan portfolio reaches all-time high:

Average loans were up $100 million for the second quarter of 2016 compared to second quarter of 2015

At $3.34 billion as of June 30, 2016, loans reached an all-time high

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FOR IMMEDIATE RELEASE:

TrustCo Announces Second Quarter 2016 Earnings

Glenville, New York – July 21, 2016

TrustCo Bank Corp NY (TrustCo, Nasdaq: TRST) today announced second quarter of 2016 net income of $10.5 million compared to $10.4 million for the first quarter of 2016 and $10.7 million for the second quarter of 2015.

Robert J. McCormick, President and Chief Executive Officer noted, “We are pleased to be able to report stable earnings despite added operating costs related to regulatory issues and a difficult operating environment. Our continued focus on traditional lending criteria and conservative balance sheet management has enabled us to produce stable earnings, maintain strong liquidity and capital and allowed us to continue to grow our business and take advantage of changes in market and competitive conditions.”

Mr. McCormick also noted, “We consider our second quarter 2016 results to be solid and are encouraged by the increase in pre-tax earnings from the first quarter of 2016. In terms of our core business, we continue to make progress by adding the customer relationships which ultimately drive future growth. Our highly liquid balance sheet continues to allow us to fund our loan growth without having to overpay for deposits. We will continue taking advantage of opportunities as they are presented during the balance of 2016. Recent merger activity between our competitors may provide us with additional opportunities to add customers.”

TrustCo saw continued solid loan growth in the second quarter of 2016 compared to the prior year. Loan portfolio expansion was funded by deposit growth and capital expansion. The continued shift toward loans helped offset the margin impact from continued comparatively low yields on cash and investments. The growth in average deposits in the second quarter of 2016 versus the prior year was led by lower cost core deposits. TrustCo’s strong liquidity position continues to allow the Company to take advantage of opportunities when interest rate conditions change.

For the second quarter of 2016, return on average assets and return on average equity were 0.88% and 9.88%, respectively, compared to 0.91% and 10.66% for the second quarter of 2015. Diluted earnings per share were $0.109 for the second quarter of 2016, compared to $0.113 for the second quarter of 2015. As discussed in recent quarters, increased operating costs in response to regulatory concerns have hampered earnings. Higher expenses were anticipated in order to fulfill operating and regulatory requirements. We took aggressive action to meet these requirements during 2015 and costs related to those actions have continued into 2016. While some of these costs will be recurring, others will diminish over time.

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For the first six months of 2016, diluted net income per share was $0.219, compared to $0.225 for the first six months of 2015. Return on average assets and equity were 0.88% and 9.93% for the first six months of 2016, compared to 0.92% and 10.78% for the first six months of 2015.

Average loans were up $100.2 million or 3.1% in the second quarter of 2016, over the same period in 2015. Loan growth was constrained by an $11.5 million decline in commercial loans, which have become less attractive on a risk adjusted basis. Average residential loans, our primary lending focus, were up $110.7 million or 4.2% in the second quarter of 2016, over the same period in 2015. Average deposits were up $33.9 million or 0.8% for the second quarter of 2016 over the same period a year earlier. The increase in deposits came from core deposit accounts, which consist of checking, savings and money market deposits. Average core deposits increased $47.0 million from the second quarter of 2015 to the second quarter of 2016, while average time deposit balances declined $13.2 million. 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 continue to make good progress expanding loans and deposits throughout our entire branch network. We expect that trend to continue as the newer branches continue to mature.”

“At June 30, 2016, our average branch size was $28.8 million. We have always designed our branches to be smaller and 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 basic building blocks that will help drive profit growth for the coming years.”

Asset quality and loan loss reserve measures mostly improved versus both June 30, 2015 and as compared to December 31, 2015. Nonperforming loans (NPLs) were $28.2 million at June 30, 2016, compared to $32.5 million at June 30, 2015 and $28.3 million at December 31, 2015. During the quarter, $1.2 million of nonperforming loans were sold. NPLs were equal to 0.84% of total loans at June 30, 2016, compared to 1.00% a year earlier and 0.86% at December 31, 2015. The coverage ratio, or allowance for loan losses to NPLs, was 156.0% at June 30, 2016, compared to 140.3% at June 30, 2015 and 158.4% at December 31, 2015. Nonperforming assets (NPAs) were at $32.8 million at June 30, 2016 compared to $38.6 million at June 30, 2015 and $34.7 million at December 31, 2015. The ratio of loan loss allowance to total loans was 1.32% as of June 30, 2016, compared to 1.41% at June 30, 2015 and to 1.36% at December 31, 2015 and reflects both the improvement in asset quality and economic conditions in our lending areas. The allowance for loan losses was $44.1 million at June 30, 2016 compared to $45.6 million at June 30, 2015 and $44.8 million at December 31, 2015. Net chargeoffs for the second quarter of 2016 decreased nominally versus both the second quarter of 2015 and the first quarter of 2016, to $1.1 million. The net chargeoff ratio was 0.14% for the second quarter of 2016. The provision for loan losses was flat versus both the second quarter of 2015 and the first quarter of 2016.

The net interest margin for the second quarter of 2016 was 3.09% compared to 3.13% in the first quarter of 2016 and 3.07% in the second quarter of 2015.

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At June 30, 2016 the equity to asset ratio was 8.91%, compared to 8.49% at June 30, 2015 and 8.73% at December 31, 2015. The tangible equity ratio was 8.90% compared to 8.48% at June 30, 2015 and 8.72% at December 31, 2015. GAAP book value per share at June 30, 2016 was $4.51 compared to $4.23 a year earlier and tangible book value per share was $4.50 and $4.23, respectively. Non-GAAP measures are discussed on page 13.

TrustCo Bank Corp NY is a $4.8 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 145 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at June 30, 2016.

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 2016 results will be held at 9:00 a.m. Eastern Time on July 22, 2016. 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 10089498. The call will also be audio webcast at: http://services.choruscall.com/links/trst160722.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 2016 and for the growth of loans and deposits throughout our branch network, our ability to capitalize on economic changes in the areas in which we operate and the extent to which higher expenses to fulfill operating and regulatory requirements recur or diminish over time. 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; our ability to comply with the supervisory agreement entered into with Trustco Bank’s regulator and potential regulatory actions if we fail to comply; restrictions or conditions imposed by our regulators on our operations that may make it more difficult for us to achieve our goals; the future earnings and capital levels of Trustco Bank and the continued ability of Trustco Bank under regulatory rules and the supervisory agreement to distribute capital to TrustCo, which could affect our ability to pay dividends; results of examinations of Trustco Bank and TrustCo by our respective regulators; 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; 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 most recent annual report on Form 10-K and in our subsequent quarterly reports on Form 10-Q or other securities filings.

Page | 4

TRUSTCO BANK CORP NY

GLENVILLE, NY

FINANCIAL HIGHLIGHTS

(dollars in thousands, except per share data) (Unaudited)
	Three Months Ended
	06/30/16			03/31/16		06/30/15
Summary of operations
Net interest income (TE)	$	36,311			36,196		35,690
Provision for loan losses		800			800		800
Net gain on securities transactions		668			-		-
Noninterest income, excluding net gain on securities transactions		4,531			4,572		4,454
Noninterest expense		23,974			23,439		22,131
Net income		10,464			10,409		10,727

Per common share
Net income per share:
- Basic	$	0.110			0.109		0.113
- Diluted		0.109			0.109		0.113
Cash dividends		0.066			0.066		0.066
Tangible Book value at period end		4.50			4.43		4.23
Market price at period end		6.41			6.06		7.03

At period end
Full time equivalent employees		801			784		760
Full service banking offices		145			145		146

Performance ratios
Return on average assets		0.88	%		0.89		0.91
Return on average equity		9.88			9.98		10.66
Efficiency (1)		57.70			56.22		54.71
Net interest spread (TE)		3.03			3.07		3.01
Net interest margin (TE)		3.09			3.13		3.07
Dividend payout ratio		59.89			60.13		58.15

Capital ratio at period end
Consolidated tangible equity to tangible assets (2)		8.90			8.87		8.48

Asset quality analysis at period end
Nonperforming loans to total loans		0.84			0.92		1.00
Nonperforming assets to total assets		0.68			0.76		0.81
Allowance for loan losses to total loans		1.32			1.34		1.41
Coverage ratio (3)		1.6	x		1.5		1.4

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

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

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

TE = Taxable equivalent.

Page | 5

FINANCIAL HIGHLIGHTS, Continued

(dollars in thousands, except per share data)

(Unaudited)

	Six Months Ended
	06/30/16			06/30/15
Summary of operations
Net interest income (TE)	$	72,508			70,875
Provision for loan losses		1,600			1,600
Net gain on securities transactions		668			249
Noninterest income, excluding net gain on securities transactions		9,103			8,828
Noninterest expense		47,412			43,988
Net income		20,875			21,442

Per common share
Net income per share:
- Basic	$	0.219			0.226
- Diluted		0.219			0.225
Cash dividends		0.131			0.131
Tangible Book value at period end		4.50			4.23
Market price at period end		6.41			7.03

Performance ratios
Return on average assets		0.88	%		0.92
Return on average equity		9.93			10.78
Efficiency (1)		56.96			54.45
Net interest spread (TE)		3.05			3.02
Net interest margin (TE)		3.11			3.08
Dividend payout ratio		60.00			58.14

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

TE = Taxable equivalent.

Page | 6

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended
	6/30/2016		3/31/2016		12/31/2015		9/30/2015		6/30/2015
Interest and dividend income:
Interest and fees on loans	$	35,652		35,605		35,930		35,631		35,343
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		404		255		256		584		366
State and political subdivisions		13		14		16		23		23
Mortgage-backed securities and collateralized mortgage obligations-residential		2,169		2,116		2,233		2,230		2,276
Corporate bonds		-		-		-		-		-
Small Business Administration-guaranteed participation securities		450		476		482		497		503
Mortgage-backed securities and collateralized mortgage obligations-commercial		38		36		37		37		38
Other securities		4		4		4		4		4
Total interest and dividends on securities available for sale		3,078		2,901		3,028		3,375		3,210

Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential		374		402		425		461		480
Corporate bonds		154		154		154		153		154
Total interest on held to maturity securities		528		556		579		614		634

Federal Reserve Bank and Federal Home Loan Bank stock		118		120		120		113		118

Interest on federal funds sold and other short-term investments		832		844		494		408		423
Total interest income		40,208		40,026		40,151		40,141		39,728

Interest expense:
Interest on deposits:
Interest-bearing checking		116		114		115		117		111
Savings		604		604		608		603		599
Money market deposit accounts		467		496		513		537		547
Time deposits		2,460		2,373		2,375		2,544		2,500
Interest on short-term borrowings		262		257		278		290		300
Total interest expense		3,909		3,844		3,889		4,091		4,057

Net interest income		36,299		36,182		36,262		36,050		35,671

Provision for loan losses		800		800		1,300		800		800
Net interest income after provision for loan losses		35,499		35,382		34,962		35,250		34,871

Noninterest income:
Trustco Financial Services income		1,512		1,605		1,489		1,351		1,478
Fees for services to customers		2,737		2,661		2,704		2,770		2,691
Net gain on securities transactions		668		-		2		-		-
Other		282		306		235		244		285
Total noninterest income		5,199		4,572		4,430		4,365		4,454

Noninterest expenses:
Salaries and employee benefits		8,934		9,003		8,042		7,834		8,164
Net occupancy expense		3,918		4,088		3,884		3,929		3,878
Equipment expense		1,840		1,514		1,530		1,596		1,803
Professional services		2,098		2,146		2,067		2,238		2,066
Outsourced services		1,425		1,551		1,585		1,425		1,425
Advertising expense		570		729		592		668		733
FDIC and other insurance		1,949		1,990		2,055		2,202		1,017
Other real estate expense, net		423		519		570		806		201
Other		2,817		1,899		2,783		2,766		2,844
Total noninterest expenses		23,974		23,439		23,108		23,464		22,131

Income before taxes		16,724		16,515		16,284		16,151		17,194
Income taxes		6,260		6,106		6,104		5,535		6,467

Net income	$	10,464		10,409		10,180		10,616		10,727
Net income per common share:
- Basic	$	0.110		0.109		0.107		0.112		0.113

- Diluted		0.109		0.109		0.107		0.111		0.113

Average basic shares (in thousands)		95,487		95,365		95,256		95,149		95,056
Average diluted shares (in thousands)		95,580		95,412		95,349		95,234		95,190

Note: Taxable equivalent net interest income	$	36,311		36,196		36,278		36,069		35,690

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CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)

	Six Months Ended
	6/30/2016		6/30/2015

Interest and dividend income:
Interest and fees on loans	$	71,257		70,326
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		659		578
State and political subdivisions		27		48
Mortgage-backed securities and collateralized mortgage obligations-residential		4,285		4,669
Corporate bonds		-		1
Small Business Administration-guaranteed participation securities		926		1,025
Mortgage-backed securities and collateralized mortgage obligations-commercial		74		75
Other securities		8		8
Total interest and dividends on securities available for sale		5,979		6,404

Interest on held to maturity securities:
Mortgage-backed securities-residential		775		958
Corporate bonds		308		308
Total interest on held to maturity securities		1,083		1,266

Federal Reserve Bank and Federal Home Loan Bank stock		238		234

Interest on federal funds sold and other short-term investments		1,677		823
Total interest income		80,234		79,053

Interest expense:
Interest on deposits:
Interest-bearing checking		230		216
Savings		1,208		1,257
Money market deposit accounts		962		1,164
Time deposits		4,833		4,934
Interest on short-term borrowings		519		646
Total interest expense		7,752		8,217

Net interest income		72,482		70,836

Provision for loan losses		1,600		1,600
Net interest income after provision for loan losses		70,882		69,236

Noninterest income:
Trust department income		3,117		3,131
Fees for services to customers		5,398		5,215
Net gain on securities transactions		668		249
Other		588		482
Total noninterest income		9,771		9,077

Noninterest expenses:
Salaries and employee benefits		17,937		16,645
Net occupancy expense		8,006		7,986
Equipment expense		3,354		3,745
Professional services		4,244		3,573
Outsourced services		2,976		2,850
Advertising expense		1,299		1,333
FDIC and other insurance		3,939		2,082
Other real estate (income) expense, net		942		625
Other		4,715		5,149
Total noninterest expenses		47,412		43,988

Income before taxes		33,241		34,325
Income taxes		12,366		12,883

Net income	$	20,875		21,442

Net income per Common Share:
- Basic	$	0.219		0.226

- Diluted		0.219		0.225

Average basic shares (thousands)		95,426		95,002
Average diluted shares (thousands)		95,496		95,132

Note: Taxable equivalent net interest income	$	72,508		70,875

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CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(dollars in thousands)

(Unaudited)

	6/30/2016			3/31/2016			12/31/2015			9/30/2015			6/30/2015
ASSETS:

Cash and due from banks	$	39,787			37,373			41,698			42,560			37,574
Federal funds sold and other short term investments		718,609			722,805			676,458			655,512			641,011
Total cash and cash equivalents		758,396			760,178			718,156			698,072			678,585

Securities available for sale:
U. S. government sponsored enterprises		116,595			66,920			86,737			103,492			152,082
States and political subdivisions		974			974			1,290			1,963			1,969
Mortgage-backed securities and collateralized mortgage obligations-residential		404,138			422,189			411,729			413,878			429,205
Small Business Administration-guaranteed participation securities		87,740			89,053			90,416			94,038			95,323
Mortgage-backed securities and collateralized mortgage obligations-commercial		10,374			10,307			10,180			10,491			10,399
Other securities		685			685			685			685			685
Total securities available for sale		620,506			590,128			601,037			624,547			689,663

Held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential		40,702			43,595			46,490			50,027			53,576
Corporate bonds		9,982			9,979			9,975			9,971			9,967
Total held to maturity securities		50,684			53,574			56,465			59,998			63,543

Federal Reserve Bank and Federal Home Loan Bank stock		9,579			9,480			9,480			9,480			9,480

Loans:
Commercial		195,698			198,765			203,415			208,794			209,399
Residential mortgage loans		2,786,951			2,737,784			2,721,173			2,707,944			2,669,929
Home equity line of credit		352,069			356,163			359,325			356,337			354,946
Installment loans		8,476			8,667			9,391			8,930			8,674
Loans, net of deferred fees and costs		3,343,194			3,301,379			3,293,304			3,282,005			3,242,948
Less:
Allowance for loan losses		44,064			44,398			44,762			45,149			45,571
Net loans		3,299,130			3,256,981			3,248,542			3,236,856			3,197,377

Bank premises and equipment, net		36,793			37,360			37,643			37,506			38,100
Other assets		55,825			55,561			63,669			59,358			64,589

Total assets	$	4,830,913			4,763,262			4,734,992			4,725,817			4,741,337

LIABILITIES:
Deposits:
Demand	$	376,669			359,060			365,081			354,162			355,783
Interest-bearing checking		766,322			746,562			754,347			719,071			713,001
Savings accounts		1,282,006			1,272,394			1,262,194			1,237,549			1,250,154
Money market deposit accounts		577,063			595,585			610,826			617,103			633,239
Time deposits		1,178,567			1,168,887			1,107,930			1,168,908			1,185,264
Total deposits		4,180,627			4,142,488			4,100,378			4,096,793			4,137,441

Short-term borrowings		190,542			169,528			191,226			184,405			170,750
Accrued expenses and other liabilities		29,479			28,221			30,078			32,327			30,687

Total liabilities		4,400,648			4,340,237			4,321,682			4,313,525			4,338,878

SHAREHOLDERS' EQUITY:
Capital stock		99,071			98,973			98,973			98,964			98,964
Surplus		171,174			171,113			171,443			171,788			171,988
Undivided profits		192,356			188,159			184,009			180,093			175,721
Accumulated other comprehensive income (loss), net of tax		2,395			73			(4,781	)		(1,174	)		(5,927	)
Treasury stock at cost		(34,731	)		(35,293	)		(36,334	)		(37,379	)		(38,287	)

Total shareholders' equity		430,265			423,025			413,310			412,292			402,459

Total liabilities and shareholders' equity	$	4,830,913			4,763,262			4,734,992			4,725,817			4,741,337

Outstanding shares (in thousands)		95,493			95,369			95,262			95,149			95,056

Page | 9

NONPERFORMING ASSETS

(dollars in thousands)

(Unaudited)

Nonperforming Assets

	06/30/16			03/31/16			12/31/15			09/30/15			06/30/15
New York and other states*
Loans in nonaccrual status:
Commercial	$	2,690			2,762			3,024			3,699			3,263
Real estate mortgage - 1 to 4 family		23,559			25,669			23,273			26,059			27,366
Installment		49			74			90			69			79
Total non-accrual loans		26,298			28,505			26,387			29,827			30,708
Other nonperforming real estate mortgages - 1 to 4 family		45			47			48			50			74
Total nonperforming loans		26,343			28,552			26,435			29,877			30,782
Other real estate owned		4,602			5,208			6,120			5,893			5,833
Total nonperforming assets	$	30,945			33,760			32,555			35,770			36,615

Florida
Loans in nonaccrual status:
Commercial	$	-			-			-			-			-
Real estate mortgage - 1 to 4 family		1,900			1,802			1,817			2,054			1,678
Installment		-			-			8			9			10
Total non-accrual loans		1,900			1,802			1,825			2,063			1,688
Other nonperforming real estate mortgages - 1 to 4 family		-			-			-			-			-
Total nonperforming loans		1,900			1,802			1,825			2,063			1,688
Other real estate owned		-			476			335			-			275
Total nonperforming assets	$	1,900			2,278			2,160			2,063			1,963

Total
Loans in nonaccrual status:
Commercial	$	2,690			2,762			3,024			3,699			3,263
Real estate mortgage - 1 to 4 family		25,459			27,471			25,090			28,113			29,044
Installment		49			74			98			78			89
Total non-accrual loans		28,198			30,307			28,212			31,890			32,396
Other nonperforming real estate mortgages - 1 to 4 family		45			47			48			50			74
Total nonperforming loans		28,243			30,354			28,260			31,940			32,470
Other real estate owned		4,602			5,684			6,455			5,893			6,108
Total nonperforming assets	$	32,845			36,038			34,715			37,833			38,578

Quarterly Net Chargeoffs (Recoveries)
	06/30/16			03/31/16			12/31/15			09/30/15			06/30/15
New York and other states*
Commercial	$	67			224			672			3			50
Real estate mortgage - 1 to 4 family		973			771			963			1,159			933
Installment		77			70			35			26			24
Total net chargeoffs	$	1,117			1,065			1,670			1,188			1,007

Florida
Commercial	$	-			-			(2	)		(3	)		(1	)
Real estate mortgage - 1 to 4 family		16			83			6			33			167
Installment		1			16			13			4			-
Total net chargeoffs	$	17			99			17			34			166

Total
Commercial	$	67			224			670			-			49
Real estate mortgage - 1 to 4 family		989			854			969			1,192			1,100
Installment		78			86			48			30			24
Total net chargeoffs	$	1,134			1,164			1,687			1,222			1,173

Asset Quality Ratios
	06/30/16			03/31/16			12/31/15			09/30/15			06/30/15

Total nonperforming loans(1)	$	28,243			30,354			28,260			31,940			32,470
Total nonperforming assets(1)		32,845			36,038			34,715			37,833			38,578
Total net chargeoffs(2)		1,134			1,164			1,687			1,222			1,173

Allowance for loan losses(1)		44,064			44,398			44,762			45,149			45,571

Nonperforming loans to total loans		0.84	%		0.92	%		0.86	%		0.97	%		1.00	%
Nonperforming assets to total assets		0.68	%		0.76	%		0.73	%		0.80	%		0.81	%
Allowance for loan losses to total loans		1.32	%		1.34	%		1.36	%		1.38	%		1.41	%
Coverage ratio(1)		156.0	%		146.3	%		158.4	%		141.4	%		140.3	%
Annualized net chargeoffs to average loans(2)		0.14	%		0.14	%		0.21	%		0.15	%		0.15	%
Allowance for loan losses to annualized net chargeoffs(2)		9.7	x		9.5	x		6.6	x		9.3	x		9.7	x

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

(1)	At period-end

(2)	For the period ended

Page | 10

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY-

INTEREST RATES AND INTEREST DIFFERENTIAL

(dollars in thousands) (Unaudited)	Three months ended June 30, 2016									Three months ended June 30, 2015
	Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate

Assets

Securities available for sale:
U. S. government sponsored enterprises	$	107,190			404			1.51	%	$	114,279			366			1.28	%
Mortgage backed securities and collateralized mortgage obligations-residential		445,162			2,169			1.95			441,754			2,276			2.06
State and political subdivisions		955			19			7.96			1,939			36			7.36
Corporate bonds		-			-			-			956			0			0.00
Small Business Administration-guaranteed participation securities		87,801			450			2.05			98,894			503			2.03
Mortgage backed securities and collateralized mortgage obligations-commercial		10,321			38			1.47			10,600			38			1.41
Other		677			4			2.36			685			4			2.34

Total securities available for sale		652,106			3,084			1.89			669,107			3,223			1.93

Federal funds sold and other short-term Investments		668,395			832			0.50			683,110			423			0.25

Held to maturity securities:
Corporate bonds		9,981			154			6.17			9,965			154			6.17
Mortgage backed securities and collateralized mortgage obligations-residential		42,188			374			3.55			55,509			480			3.46

Total held to maturity securities		52,169			528			4.05			65,474			634			3.87

Federal Reserve Bank and Federal Home Loan Bank stock		9,576			118			4.93			9,466			118			4.99

Commercial loans		198,938			2,563			5.15			210,424			2,710			5.15
Residential mortgage loans		2,759,024			29,725			4.31			2,648,320			29,371			4.44
Home equity lines of credit		354,897			3,179			3.58			354,053			3,092			3.50
Installment loans		8,316			191			9.19			8,226			176			8.60

Loans, net of unearned income		3,321,175			35,658			4.29			3,221,023			35,349			4.39

Total interest earning assets		4,703,421			40,220			3.42			4,648,180			39,747			3.42

Allowance for loan losses		(44,754	)								(46,190	)
Cash & non-interest earning assets		136,724									137,329


Total assets	$	4,795,391								$	4,739,319

Liabilities and shareholders' equity

Deposits:
Interest bearing checking accounts	$	759,546			116			0.06	%	$	706,767			111			0.06	%
Money market accounts		580,100			467			0.32			635,347			547			0.35
Savings		1,273,575			604			0.19			1,249,865			599			0.19
Time deposits		1,177,084			2,460			0.84			1,190,234			2,500			0.84

Total interest bearing deposits		3,790,305			3,647			0.38			3,782,213			3,757			0.40
Short-term borrowings		181,247			262			0.58			182,829			300			0.66

Total interest bearing liabilities		3,971,552			3,909			0.39			3,965,042			4,057			0.41

Demand deposits		370,781									344,982
Other liabilities		27,121									25,591
Shareholders' equity		425,937									403,704

Total liabilities and shareholders' equity	$	4,795,391								$	4,739,319

Net interest income, tax equivalent					36,311									35,690

Net interest spread								3.03	%								3.01	%

Net interest margin (net interest income to total interest earning assets)								3.09	%								3.07	%

Tax equivalent adjustment					(12	)								(19	)

Net interest income					36,299									35,671

Page | 11

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY-

INTEREST RATES AND INTEREST DIFFERENTIAL

(dollars in thousands) (Unaudited)	Six months ended June 30, 2016									Six months ended June 30, 2015
	Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate

Assets

Securities available for sale:
U. S. government sponsored enterprises	$	91,111			659			1.45	%	$	96,172			578			1.20	%
Mortgage backed securities and collateralized mortgage obligations-residential		428,831			4,285			2.00			459,980			4,669			2.03
State and political subdivisions		1,034			41			7.93			2,015			74			7.31
Corporate bonds		-			-			-			1,226			1			0.16
Small Business Administration-guaranteed participation securities		89,206			926			2.08			100,270			1,025			2.05
Mortgage backed securities and collateralized mortgage obligations-commercial		10,357			74			1.43			10,635			75			1.41
Other		682			8			2.35			685			8			2.34

Total securities available for sale		621,221			5,993			1.93			670,983			6,430			1.92

Federal funds sold and other short-term Investments		671,990			1,677			0.50			668,269			823			0.25

Held to maturity securities:
Corporate bonds		9,979			308			6.17			9,964			308			6.17
Mortgage backed securities and collateralized mortgage obligations-residential		43,650			775			3.55			57,419			958			3.34

Total held to maturity securities		53,629			1,083			4.04			67,383			1,266			3.76

Federal Reserve Bank and Federal Home Loan Bank stock		9,527			238			5.00			9,348			234			5.01

Commercial loans		200,152			5,180			5.18			214,713			5,506			5.13
Residential mortgage loans		2,742,918			59,348			4.33			2,621,417			58,329			4.46
Home equity lines of credit		356,857			6,358			3.56			353,161			6,153			3.51
Installment loans		8,488			383			9.02			8,011			351			8.84

Loans, net of unearned income		3,308,415			71,269			4.31			3,197,302			70,339			4.41

Total interest earning assets		4,664,782			80,260			3.44			4,613,285			79,092			3.44

Allowance for loan losses		(45,013	)								(46,392	)
Cash & non-interest earning assets		136,138									138,319


Total assets	$	4,755,907								$	4,705,212

Liabilities and shareholders' equity

Deposits:
Interest bearing checking accounts	$	747,322			230			0.06	%	$	692,445			216			0.06	%
Money market accounts		591,937			962			0.33			636,596			1,164			0.37
Savings		1,268,021			1,208			0.19			1,239,737			1,257			0.20
Time deposits		1,155,773			4,833			0.84			1,185,363			4,934			0.84

Total interest bearing deposits		3,763,053			7,233			0.38			3,754,141			7,571			0.41
Short-term borrowings		178,683			519			0.58			187,560			646			0.69

Total interest bearing liabilities		3,941,736			7,752			0.39			3,941,701			8,217			0.42

Demand deposits		364,503									336,741
Other liabilities		27,019									25,817
Shareholders' equity		422,649									400,953

Total liabilities and shareholders' equity	$	4,755,907								$	4,705,212

Net interest income, tax equivalent					72,508									70,875

Net interest spread								3.05	%								3.02	%

Net interest margin (net interest income to total interest earning assets)								3.11	%								3.08	%

Tax equivalent adjustment					(26	)								(39	)

Net interest income					72,482									70,836

Page | 12

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 revenue from net interest income and fee income. We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, but excluding other real estate expense, net, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, but excluding net gains on the sale of nonperforming loans and securities from this calculation. We believe that this provides a reasonable measure of primary banking expenses relative to primary banking 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, efficiency ratio, net income and net income per share to the underlying GAAP numbers is set forth below.

NON-GAAP FINANCIAL MEASURES RECONCILIATION

(dollars in thousands, except per share amounts) (Unaudited)
	06/30/16			03/31/16			06/30/15
Tangible Book Value Per Share

Equity	$	430,265			423,025			402,459
Less: Intangible assets		553			553			553
Tangible equity		429,712			422,472			401,906

Shares outstanding		95,493			95,369			95,056
Tangible book value per share		4.50			4.43			4.23
Book value per share		4.51			4.44			4.23

Tangible Equity to Tangible Assets
Total Assets		4,830,913			4,763,262			4,741,337
Less: Intangible assets		553			553			553
Tangible assets		4,830,360			4,762,709			4,740,784

Tangible Equity to Tangible Assets		8.90	%		8.87	%		8.48	%
Equity to Assets		8.91	%		8.88	%		8.49	%

	3 Months Ended									6 Months Ended
Efficiency Ratio	06/30/16			03/31/16			06/30/15			06/30/16			06/30/15

Net interest income	$	36,299			36,182			35,671			72,482			70,836
Taxable equivalent adjustment		12			14			19			26			39
Net interest income (fully taxable equivalent)		36,311			36,196			35,690			72,508			70,875
Non-interest income		5,199			4,572			4,454			9,771			9,077
Less: Net gain on sale of nonperforming loans		24			-			60			24			60
Less: Net gain on securities		668			-			-			668			249
Revenue used for efficiency ratio		40,818			40,768			40,084			81,587			79,643

Total noninterest expense		23,974			23,439			22,131			47,412			43,988
Less: Other real estate expense, net		423			519			201			942			625
Expense used for efficiency ratio		23,551			22,920			21,930			46,470			43,363

Efficiency Ratio		57.70	%		56.22	%		54.71	%		56.96	%		54.45	%

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TRUSTCO BANK CORP N Y - FORM 8-K - EX-99.(A) - EXHIBIT 99(A) - July 21, 2016

Attached files

TRUSTCO BANK CORP N Y Reports