SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended DECEMBER 31, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission File Number 1-12709 TOMPKINS COUNTY TRUSTCO, INC. (Exact name of registrant as specified in its charter) NEW YORK 16-1482357 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) THE COMMONS, P.O. BOX 460, ITHACA, NEW YORK 14851 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (607) 273-3210 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: Title of Class: COMMON STOCK ($.10 PAR VALUE) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the registrant's voting stock held by non-affiliates was approximately $138,173,866 on March 16, 1998, based on the closing sales price of the registrant's common stock, $.10 par value (the "Common Stock"), as reported on the American Stock Exchange, Inc. as of such date. The number of shares of the registrant's Common Stock outstanding as of March 16, 1998 was 4,843,190 shares. DOCUMENTS INCORPORATED BY REFERENCE Annual Report to Stockholders for the fiscal year ended December 31, 1997 (the "Annual Report") filed with the Securities and Exchange Commission on March 27, 1998 is incorporated herein by reference (Parts I and II). Proxy Statement (the "Proxy Statement") filed with the Securities and Exchange Commission on March 27, 1998 in connection with the 1998 Annual Meeting of Stockholders is incorporated herein by reference (in Part III).
PART I ITEM 1. BUSINESS GENERAL DEVELOPMENT OF BUSINESS Tompkins County Trustco, Inc. (the "Company") was incorporated under the laws of the State of New York on March 6, 1995, and is a bank holding company registered with the Federal Reserve Board ("FRB") under the Bank Holding Company Act of 1976, as amended. The principal offices of the Company and its wholly-owned operating subsidiary, Tompkins County Trust Company ("the Bank"), are located at The Commons, P.O. Box 460, Ithaca, New York 14851, and its telephone number is 607-273-3210. The Bank is a commercial bank chartered in New York State, which has operated in the community of Ithaca, New York and environs since 1836. On January 1, 1996, the Company consummated a corporate reorganization (the "Reorganization") pursuant to which, the Company became the sole shareholder of, and holding company for, the Bank. All outstanding shares of common stock of the Bank were converted, on a one-for-one basis, into all of the outstanding shares of common stock of the Company. As a result of the Reorganization, the Company's primary asset is the common stock of its wholly-owned subsidiary, the Bank. The Company engages in no substantial business activities other than activities related to its ownership of the Bank. Unless the context otherwise requires, all references herein to the "Company" include its wholly-owned operating subsidiary, the Bank. STOCK REPURCHASE TRANSACTIONS In October 1996, the Company repurchased 244,371 shares of its own common stock in a privately negotiated sale from an unrelated third party. The stock was purchased at a price of $27.50 per share, for a total purchase price of $6.7 million. The shares have been returned to the status of authorized and unissued shares. In May 1997, the Company repurchased 80,000 shares in a privately negotiated transaction. The shares, which have been returned to the status of authorized but unissued, were purchased at $33.38 per share for a total purchase price of $2.67 million. In November 1996, the board of directors approved a stock repurchase program, which authorizes the repurchase of up to $3 million in common stock in open market transactions. No open market transactions have been completed under this program. BRANCH ACQUISITION In November 1996, the Bank acquired all deposits and selected assets of the Odessa branch office of the First National Bank of Rochester. The acquisition of the Odessa office, with approximately $10 million in deposits, represents the Bank's first banking office outside of Tompkins County. Odessa, New York is in Schuyler County, which is adjacent to Tompkins County. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS The Company's primary revenue source is interest income derived from loans and securities. The Company offers a broad range of short to medium-term business and personal loans and consumer leases. Commercial loans include both collateralized and uncollateralized loans for working capital (including inventory and receivables), business expansion (including real estate acquisitions and improvements), and purchases of equipment and machinery. Consumer loans include collateralized and uncollateralized loans for financing automobiles, boats, home improvements, and personal investments. A detailed analysis of the Company's financial condition and results of operations is included in the Management Discussion & Analysis section of the Company's 1997 Annual Report to Shareholders (Annual Report), incorporated by reference under Item 8, herein. 2
NARRATIVE DESCRIPTION OF BUSINESS The Company conducts commercial and consumer banking business, which primarily consists of attracting deposits from the areas served by its banking offices and using those deposits to originate a variety of commercial, consumer, and real estate loans (including commercial loans collateralized by real estate). The Company's principal expenses are interest paid on deposits, interest on borrowings, and operating and general administrative expenses. Funding sources, other than deposits include: borrowing, securities sold under agreements to repurchase, and cash flow from operations, lending, and investing activities. The Company conducts trust and investment management services through its Trust and Investment Services Division. The Trust and Investment Services Division provides a full range of money management services, including investment management accounts, custody accounts, living trusts, life insurance trusts, standby trusts, retirement plans and rollovers, will trusts, estate settlement, and financial planning. As is the case with banking institutions generally, the Company's operations are materially and significantly influenced by general local and national economic conditions and related monetary and fiscal policies of the Federal government. Operations may also be significantly influenced by regulatory policies of various Federal and State agencies, which regulate various aspects of the Company's business. Deposit flows and cost of funds are influenced by returns on competing investments and general market rates of interest. Lending activities are affected by the demand for financing of real estate and other types of loans, competing interest rates, and other factors affecting local demand and availability of funds. The Company faces strong competition in the attraction of deposits (its primary source of lendable funds) and in the origination of loans. See "-COMPETITION." The Company's primary source of income is interest earned from its loan and securities portfolios, which is discussed more fully in the Management Discussion and Analysis section of the Annual Report. LENDING ACTIVITIES A discussion of the Company's lending activities is included in the Management Discussion and Analysis section of the Annual Report. As of December 31, 1997, management is not aware of any potential problem loans, or loans classified for regulatory purposes as Substandard, Doubtful, or Loss, which have not been disclosed as nonperforming assets in the Annual Report. REAL ESTATE MORTGAGE LOANS The Company originates mortgage loans to businesses to finance the acquisition and holding of commercial real estate, and to individuals for residential real estate purchases and financing. The Company requires mortgage title insurance, flood insurance, and hazard insurance in amounts deemed appropriate by management or required by law. Escrow accounts for the payment of real estate taxes and insurance may also be required. The Company's real estate mortgage loans primarily are underwritten in the Company's primary market area on the basis of the value of the underlying real property. The Company carefully manages environmental risks in its real estate loan portfolio. Primary risks associated with real estate lending include the borrower's inability to repay the debt and a reduction in collateral value. COMMERCIAL LENDING The Company offers a variety of commercial loan services including term loans, demand loans, lines of credit, purchased accounts receivables, leasing, and equipment financing. A broad range of short-to-medium term commercial loans, both collateralized and uncollateralized, are made available to businesses for working capital (including inventory and receivables), business expansion (including acquisitions of real estate and improvements), and the purchase of equipment and machinery. The purpose of a particular loan generally determines its structure. Commercial loans include loans that support local not-for-profit corporations. 3
Commercial loans typically are underwritten on the basis of the borrower's repayment capacity from cash flow and are generally collateralized by business assets such as accounts receivable, equipment, real estate, and inventory. As a result, the availability of funds for the repayment of commercial loans may be substantially dependent on the success of the business itself. Further, the collateral underlying the loans may depreciate over time, cannot be appraised with as much precision as real estate, and may fluctuate in value based on the success of the business. Working capital loans are primarily collateralized by short-term assets, while term loans are primarily collateralized by long-term or fixed assets. The Company normally requires personal guarantees for commercial loans and has approximately $8 million of commercial loans which are fully or partially guaranteed by the Small Business Administration. CONSUMER LOANS Consumer loans made by the Company include loans for automobiles, recreation vehicles, education, boats, mobile homes, appliances, home improvements and overdraft protection. These loans have been extended through second mortgages, personal (collateralized and uncollateralized) loans, credit cards, and deposit account collateralized loans. Consumer loans are beneficial for the Company because the portfolio risk is more predictable over time and such loans carry higher interest rates than those charged on other types of loans. Consumer loans, however, pose additional risks of collectability when compared to other types of loans, such as residential mortgage loans. In many instances, the Company must rely on the borrower's ability to repay, since the collateral normally is of reduced value at the time of any liquidation. Accordingly, the initial determination of the borrower's ability to repay is of primary importance in the underwriting of consumer loans. Home equity lines of credit are extended to individuals and secured by a mortgage covering residential real estate. The Company requires flood insurance and hazard insurance in amounts deemed appropriate by management. LEASE FINANCING The Company's lease portfolio is comprised primarily of leases on vehicles and equipment for small businesses and individuals. The terms of these loans and leases typically range from 12 to 180 months and vary based upon the type of collateral and amount of the lease. The current lease portfolio is comprised substantially of direct lease financing of new and used automobiles. Marketing efforts in 1997 have resulted in growth in the commercial leasing portfolio, which is expected to continue in 1998. INVESTMENT ACTIVITIES The Company maintains a portfolio of securities such as U.S. government and agency securities, obligations of states and political subdivisions thereof, equity securities, and interest-bearing deposits. It is the intention of management to maintain short to intermediate maturities in the Company's securities portfolio in order to better match the interest rate sensitivities of its assets and liabilities. Investment decisions are made within policy guidelines established by the Company's Board of Directors. The investment policy established by the Board of Directors is based on the asset/liability management goals of the Company. The intent of the policy is to establish a portfolio of high quality diversified securities, which optimize net interest income within acceptable limits of safety and liquidity. 4
Purchases of securities, other than obligations of states and political subdivisions thereof, are classified as available-for-sale, though it is generally management's intent to hold all securities to maturity. Securities available-for-sale may be used to enhance total return, provide additional liquidity, or reduce interest rate risk. Securities classified as held-to-maturity are comprised of obligations of states and political subdivisions thereof. The Company's current policy is to invest in instruments with maturities between one and fifteen years. A desired maturity curve is determined by the asset\liability management committee consistent with the desired interest rate sensitivity. The accounting treatment of the Company's securities is addressed in Note 1 of the Notes to the Consolidated Financial Statements of the Annual Report. Information regarding the amortized cost and fair value of the securities portfolio for the years ended 1997 and 1996 is presented in Note 2 of the Notes to Financial Statements of the Annual Report. The amortized cost and fair value of the securities portfolio for the year ended 1995 is presented in Table 1 below. <TABLE> <CAPTION> TABLE 1 SECURITIES =================================================================================================================== Available-for-Sale Held-to-Maturity December 31, 1995 Amortized Cost Fair Value Amortized Cost Fair Value - ------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> (In Thousands) U.S. Treasury Securities & Obligations of U.S. Government Agencies $127,013 $128,381 $ 0 $ 0 Mortgage-Backed Securities 13,451 13,633 Obligations of State and Political Subdivisions 0 0 38,908 40,219 U.S. Corporate Debt Securities 2,999 3,016 0 0 Equity Securities 1,596 1,596 0 0 - ------------------------------------------------------------------------------------------------------------------- $145,059 $146,626 $38,908 $40,219 =================================================================================================================== </TABLE> TRUST AND INVESTMENT MANAGEMENT SERVICES The Company, through its Trust and Investment Services Division, provides trust and investment management services to residents of its primary market area, and to those who have relocated outside of Tompkins County and retained their trust relationships with the Company. Additionally, the Company provides financial planning and alternative investments through its relationships with the INVEST Financial Corporation and Fidelity Investments Incorporated. The Company also provides pension and 401(k) benefits administration to small businesses. The Trust and Investment Services Division continues to add services as part of the Company's strategy to sharpen competitive performance and expand markets. In December 1996, the Trust and Investment Services Division began providing custodial services for the Company's securities portfolio. In 1997, The Company formed an alliance with another community bank, in which the Company began providing Trust and Investment Services through the newly formed trust department of the other bank. DEPOSITS Deposit services include time deposits, individual retirement accounts ("IRAs"), checking and other demand deposit accounts, NOW accounts, savings accounts, and money market accounts. Transaction accounts and time deposits are tailored to the principal market area at rates competitive to those in the area. All deposit accounts are insured under the Bank Insurance Fund ("BIF") of the Federal Deposit Insurance Corporation ("FDIC") up to the maximum limits permitted by law. The Company solicits deposit accounts from small businesses, professional firms, households, and educational and governmental institutions located throughout its primary market area. Total deposits represented 84% of total liabilities on December 31, 1997. Scheduled maturities of time deposits are detailed in Note 6 of the Annual Report. 5
MARKET AREA Tompkins County, New York is the Company's primary market area. The Company has ten full service branch facilities located in Tompkins County, and one full service facility located in Schuyler County, New York, which is adjacent to Tompkins County. The Company's deposit gathering, lending markets and trust and investment management services are concentrated in the communities surrounding its offices in Ithaca, New York. Management believes its offices are located in an area serving small and mid-sized businesses; and serving low, middle and upper income communities. Tompkins County has an estimated resident population of approximately 97,000 people, with approximately 34,000 households, and an average household income of approximately $44,000. Education plays a significant role in the local economy with Cornell University and Ithaca College being two of the county's major employers. Unemployment in the county has historically remained well below the State average, and was 3.1% in December 1997, compared to a State average of 5.7%. Job growth in the county for the twelve months ended December 31, 1997, totaled 2.98%, compared to total job growth for the State of 1.42%. MARKET FOR SERVICES The Company's principal markets are the established and expanding small businesses; and the low, moderate, and high income households within Tompkins and surrounding counties. Management believes its focus on professional personalized service, and the Bank's unique situation as the only commercial bank headquartered in Ithaca, NY, contribute to the Company's competitiveness as a leading provider of financial services in Tompkins County. The Company continues to invest in technologies that allow customers to access Bank products and services from anywhere in the country. This technology has allowed the Bank to retain customers who have moved outside of the Bank's principal market area, and attract customers for certain products from outside the Bank's principal market area. In 1997, the Trust and Investment Services Division served customers in more than 40 states. Other products such as credit cards, debit cards, telephone banking, and PC banking have greatly expanded access to Trust Company products and services from outside the Bank's primary market area. COMPETITION The Company encounters strong competition in making loans, attracting deposits, and providing trust and investment services. Competition among financial institutions is based upon interest rates offered on deposit accounts, interest rates charged on loans, other credit and service charges, the quality and scope of the services rendered, and the convenience of banking facilities. The deregulation of the banking industry, the widespread enactment of state laws that accommodate interstate multi-bank holding companies, and an increasing level of interstate banking have created a highly competitive environment for commercial banking in the Company's primary market area. In one or more aspects of its business, the Company competes with other commercial banks, savings institutions, credit unions, mortgage bankers and brokers, finance companies, mutual funds, insurance companies, brokerage and investment banking companies, and other financial intermediaries operating in Tompkins County and elsewhere. Many of these competitors, some of which are affiliated with large bank holding companies, have substantially greater resources and lending limits; and may offer certain services the Company does not currently provide. In addition, many non-bank competitors, such as credit unions, are not subject to the same extensive Federal regulations that govern bank holding companies and Federally insured banks. The Company primarily focuses on providing personalized banking and trust and investment services to businesses and individuals within the market area where its banking offices are located. As the only independent community bank headquartered in Ithaca, NY, management believes the Company's community commitment and personalized service are factors that contribute to the Company's competitiveness. 6
Customers are solicited through the personal efforts of the Company's officers and employees. Management believes a locally-based bank can possess a clearer understanding of local commerce and the needs of local businesses. Consequently, management expects to be able to make prudent lending decisions quickly and more equitably than many of its competitors without compromising asset quality or the Company's profitability. The Company recognizes that its employees are the key to providing a high level of personal service. During 1997, the Company invested approximately $100,000 in formal education of its employees, and provides ongoing internal training to ensure employees are knowledgeable of the Company's products and services. The Company offers state-of-the-art facilities, convenient office locations and service hours, an extensive ATM network, telephone banking services, PC banking services, electronic bill payment services, and a wide variety of financial products. Management periodically reviews the scope of the Company's products and services to assess whether additional products or services should be offered, giving consideration to customer demand, market opportunities, and available resources. REGULATION As a registered bank holding company, the Company is subject to examination and comprehensive regulation by the FRB, and the Bank is subject to examination and comprehensive regulation by the FDIC and the New York State Banking Department ("NYSBD"). Each of these agencies issues regulations and requires the filing of reports describing the activities and financial condition of the entities under its jurisdiction. Likewise, such agencies conduct examinations on a recurring basis to evaluate the safety and soundness of the institution and test compliance with various regulatory requirements relating to: Consumer Protection, Fair Lending, the Community Reinvestment Act, sales of non-deposit investments, electronic data processing, and trust department activities. Under FRB regulations, the Company may not, without providing prior notice to the FRB, purchase or redeem its own Common Stock if the gross consideration for the purchase or redemption, combined with the net consideration paid for all such purchases or redemptions during the preceding twelve months, is equal to ten percent or more of the Company's consolidated net worth. Additionally, FRB policy provides that dividends shall not be paid except out of current earnings and unless prospective rate of earnings retention by the Company appears consistent with its capital needs, asset quality, and overall financial condition. The FRB and FDIC have promulgated capital adequacy guidelines that are considered by the agencies in examining and supervising a bank or bank holding company; and in analyzing any applications a bank or holding company may make to the appropriate agency. In addition, for supervisory purposes the agencies have promulgated regulations establishing five categories of capitalization, ranging from well capitalized to critically undercapitalized, depending upon the level of capitalization and other factors. Currently, the Company and the Bank maintain leverage and risk-based capital ratios above the required levels and are considered well capitalized under the FRB and FDIC regulations. A comparison of the Company's capital ratios and the various regulatory requirements is included in Note 15 of the Notes to Consolidated Financial Statements of the Annual Report. Bank deposit accounts are insured by the BIF, generally in amounts up to $100,000 per depositor. The FDIC has the power to terminate a bank's insured status or to temporarily suspend it under special conditions. Deposit insurance coverage is maintained by payment of premiums assessed to banks insured by the BIF. Based upon the capital strength of the Bank and a favorable FDIC risk classification, the Bank is not currently subject to BIF insurance assessments. Beginning in January 1997, the Bank, and all BIF insured banks, are subject to special assessments to repay Financing Corporation (FICO) bonds, which were used to repay depositors of failed Savings and Loan Associations after the former Federal Savings and Loan Insurance Fund became insolvent. The 7
special assessments attributable to the FICO bonds added approximately $50,000 to the Company's operating expenses in 1997, compared to 1996. EMPLOYEES At December 31, 1997, the Company employed 235 employees, approximately 45 of which are part-time. No employees are covered by a collective bargaining agreement and the Company believes its employee relations are excellent. 8
ITEM 2. PROPERTIES The following table provides information with respect to the Company's facilities: <TABLE> <CAPTION> LOCATION FACILITY TYPE SQUARE FEET OWNED/LEASED - -------- ------------- ----------- ------------ <S> <C> <C> <C> The Commons Main Office 23,900 Owned Ithaca, NY 119 E. Seneca Street Trust and Investment Services 18,550 Owned Ithaca, NY 121 E. Seneca Street Administration 18,900 Owned Ithaca, NY Rothschilds Building Operations 20,500 Leased The Commons Ithaca, NY Campus Store Cornell Campus Branch Office 400 Leased Central Avenue Cornell University 905 Hanshaw Road Community Corners 790 Leased Ithaca, NY Branch Office 139 North Street Extension Dryden Branch 2,250 Owned Dryden, NY Office 1020 Ellis Hollow Road East Hill Plaza Branch 650 Leased Ithaca, NY 775 S. Meadow St. Plaza Branch Office 2,280 Owned Ithaca, NY Pyramid Mall Pyramid Mall Branch Office 610 Leased Ithaca, NY 116 E. Seneca St. Seneca Street 775 Owned Ithaca, NY Drive-In 2251 N. Triphammer Rd. Triphammer Road Branch Office 3,000 Leased Ithaca, NY 2 W. Main Street Trumansburg Branch Office 2,720 Owned Trumansburg, NY 701 W. Seneca St. West End Branch Office 2,150 Leased Ithaca, NY 2230 N. Triphammer Rd. Kendall Branch 204 Leased Ithaca, NY Part Time Office 100 Main Street Odessa Branch Office 3,115 Owned Odessa, NY </TABLE> 9
Management believes the Company's facilities are suitable for their present intended purposes and adequate for the Company's current level of operations. The lease terminations for the Company's currently leased properties range from January 1998 to July 2042. ITEM 3. LEGAL PROCEEDINGS The Company is involved in legal proceedings in the normal course of business, none of which is expected to have a material adverse impact on the financial condition or operations of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company did not submit any matters during the fourth quarter of the fiscal year covered by this report to a vote of security holders through the solicitation of proxies or otherwise. ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT <TABLE> <CAPTION> EXECUTIVE NAME AGE POSITION OFFICER SINCE - ---- --- -------- ------------- <S> <C> <C> <C> James J. Byrnes 56 Chairman of the January 1989 Board, President and Chief Executive Officer Francis E. Benedict 58 Executive Vice President * December 1984 Richard D. Farr 45 Senior Vice President December 1988 and Chief Financial Officer Thomas J. Smith 57 Senior Vice President December 1984 Donald S. Stewart 53 Executive Vice President December 1984 Lawrence A. Updike 52 Senior Vice President December 1988 </TABLE> * Effective December 31, 1997, Mr. Benedict retired as an executive officer; however, he remains with the bank as a contract employee, performing many of the same duties in an advisory capacity. 10
BUSINESS EXPERIENCE OF THE EXECUTIVE OFFICERS JAMES J. BYRNES has been Chairman of the Board of the Company since April 1992 and President and Chief Executive Officer of the Company since January 1989. From 1978 to 1988, Mr. Byrnes was employed at the Bank of Montreal, most recently as Senior Vice President. FRANCIS E. BENEDICT has been employed by the Company since 1957 and has served as Executive Vice President in charge of banking and investments since December 1984. RICHARD D. FARR has been employed by the Company since 1984 and has served as Senior Vice President and Chief Financial Officer since December 1988. THOMAS J. SMITH has been employed by the Company since 1964 and has served as Senior Vice President in charge of credit services since December 1984. DONALD S. STEWART has been employed by the Company since 1972, served as Senior Vice President in charge of trust and investment services since December 1984, and was promoted to Executive Vice President in 1997. LAWRENCE A. UPDIKE has been employed by the Company since 1965 and has served as Senior Vice President in charge of operations and systems since December 1988. 11
PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (SEE NOTES 1, 2 & 3 BELOW) MARKET PRICE CASH HIGH LOW DIVIDENDS PAID 1996 1st Quarter $32.00 27.50 .26 2nd Quarter 31.50 21.50 .27 3rd Quarter 28.00 23.75 .27 4th Quarter 34.25 25.75 .30 1997 1st Quarter $34.75 31.63 .30 2nd Quarter 35.75 32.13 .30 3rd Quarter 38.06 34.88 .32 4th Quarter 43.25 38.13 .32 Note 1: The range of reported high and low transaction prices reflects inter-dealer prices without retail mark-up, mark-down or commission and do represent actual transactions as quoted on the Nasdaq National Market or American Stock Exchange. The Company's stock was traded on the Nasdaq Market in 1996 and during January of 1997. Effective February 3, 1997, the Company's stock began trading on the American Stock Exchange. As of March 16, 1998, there were approximately 992, shareholders of record. Note 2: On February 10, 1998, the Company announced that its board of directors had approved a 3-for-2 stock split in the form of a stock dividend (the "Stock Split"), payable on March 15, 1998, to shareholders of record on March 1, 1998. The above market prices and cash dividends have not been adjusted for the effect of the Stock Split. Note 3: Cash dividends were paid on the 15th day of March, June, September and December of each year. ITEM 6. SELECTED FINANCIAL DATA "Selected Financial Data" contained on page 7 of the Annual Report is incorporated by reference herein. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS "Management Discussion & Analysis of Financial Condition & Results of Operations" contained on pages 28-40 of the Annual Report is incorporated by reference herein. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Quantitative and Qualitative Disclosures about market risk are contained on pages 38-39, of the "Management Discussion & Analysis of Financial Condition & Results of Operations" section of the Annual Report, incorporated by reference herein. 12
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Incorporated by reference are the following sections of the Annual Report: Consolidated Statements of Condition as of December 31, 1997 and 1996 contained on page 8 of the Annual Report; Consolidated Statements of Income for the Years Ended December 31, 1997, 1996 and 1995 contained on page 9 of the Annual Report; Consolidated Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995 contained on page 10 of the Annual Report; Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 1997, 1996 and 1995 contained on page 11 of the Annual Report; and Notes to Consolidated Financial Statements contained on pages 12-26 of the Annual Report. Report of KPMG Peat Marwick LLP, Independent Auditors, contained on page 27 of the Annual Report; ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 13
PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information relating to the executive officers of the Company is included in Item 4A of Part I. Information relating to the Directors of the Company is incorporated herein by reference from the "Election of Directors" section of the Proxy Statement beginning on page 4 thereof. ITEM 11. EXECUTIVE COMPENSATION "Executive Compensation" beginning on page 8 of the Proxy Statement is incorporated by reference herein. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT "Security Ownership of Certain Beneficial Owners and Management" beginning on page 2 of the Proxy Statement is incorporated by reference herein. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS "Certain Relationships and Related Transactions" contained on page 11 of the Proxy Statement is incorporated by reference herein. 14
PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report: (1) THE FOLLOWING FINANCIAL STATEMENTS OF THE COMPANY AND INDEPENDENT AUDITOR'S REPORT ARE INCORPORATED BY REFERENCE HEREIN AS SPECIFIED IN ITEM 8: Consolidated Statements of Condition as of December 31, 1997 and 1996 Consolidated Statements of Income for the Years Ended December 31, 1997, 1996 and 1995 Consolidated Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995 Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 1997, 1996 and 1995 Notes to Consolidated Financial Statements Report of KPMG Peat Marwick LLP, Independent Auditors (2) THE FOLLOWING FINANCIAL STATEMENT SCHEDULES ARE FILED WITH THIS REPORT: All other schedules for which provision is made in the applicable accounting regulations of the Commission are not required under related instructions or are inapplicable and therefore have been omitted. (b) Reports on Form 8-K None. (c) Exhibits - The response to this portion of Item 14 is submitted as a separate section of this report. See Exhibit Index on page 18. 15
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. TOMPKINS COUNTY TRUSTCO, INC. By: /s/ JAMES J. BYRNES ----------------------------------------- James J. Byrnes Chairman of the Board, President and Chief Executive Officer Date: March 20, 1998 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated: <TABLE> <CAPTION> SIGNATURE CAPACITY DATE - --------- -------- ---- <S> <C> <C> /s/ JAMES J. BYRNES Chairman of the Board, President March 20, 1998 - --------------------------- and Chief Executive Officer James J. Byrnes /s/ RICHARD D. FARR Senior Vice President and March 20, 1998 - --------------------------- Chief Financial Officer Richard D. Farr Director - --------------------------- John E. Alexander /s/ REEDER D. GATES Director March 24, 1998 - --------------------------- Reeder D. Gates /s/ WILLIAM W. GRISWOLD Director March 26, 1998 - --------------------------- William W. Griswold /s/ CARL E. HAYNES Director March 26, 1998 - --------------------------- Carl E. Haynes /s/ EDWARD C. HOOKS Director March 25, 1998 - --------------------------- Edward C. Hooks /s/ RICHARD T. HORN, JR. Director March 25, 1998 - --------------------------- Robert T. Horn, Jr. /s/ BONNIE H. HOWELL Director March 25, 1998 - --------------------------- Bonnie H. Howell /s/ LUCINDA A. NOBLE Director March 24, 1998 - --------------------------- Lucinda A. Noble </TABLE> 16
<TABLE> <CAPTION> SIGNATURE CAPACITY DATE - --------- -------- ---- <S> <C> <C> - --------------------------- Director Frank H. T. Rhodes /s/ HUNTER R. RAWLINGS, III Director March 25, 1998 - --------------------------- Hunter R. Rawlings, III /s/ THOMAS R. SALM Director March 25, 1998 - --------------------------- Thomas R. Salm /s/ MICHAEL D. SHAY Director March 24, 1998 - --------------------------- Michael D. Shay </TABLE> 17
EXHIBIT INDEX The following designated exhibits are, as indicated below, either filed herewith or have heretofore been filed with the Commission under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and are incorporated herein by reference to such filings. As indicated, various exhibits are incorporated herein by reference to the identically numbered exhibit contained in the (I) Registrant's Registration Statement on Form 8-A (No. 0-27514), as filed with the Commission on December 29, 1995 and amended by the Company's Form 8-A/A filed with the Commission on January 22, 1996 (the "Form 8-A"), and (ii) Form 10-K, as filed with the Commission on March 26, 1996, and amended by the Company's form 10-K/A filed with the Commission on September 20, 1996 (the "Form 10-K"). Exhibit Number Title Of Exhibit Page - ------- ---------------- ---- 2. Agreement and Plan of Reorganization, dated as of March 14, 1995, among the Bank, the Company and the Bank Interim Bank (1) 3.1 Certificate of Incorporation of the Company (1) 3.2 Bylaws of the Company (1) 4. Form of Specimen Common Stock Certificate of the Company (1) 10.2 1992 Stock Option Plan (1) 10.3 1996 Stock Retainer Plan for Non-Employee Directors (1) 10.4 Form of Director Deferred Compensation Agreement (1) 10.5 Deferred Compensation Plan for Senior Officers (1) 10.6 Supplemental Executive Retirement Agreement with James J. Byrnes (1) 10.7 Severance Agreement with James J. Byrnes (1) 10.8 Lease Agreement dated August 20, 1993 between Tompkins County Trust Company and Comex Plaza Associates, relating to leased property at the Rothschilds Building, Ithaca, NY (2) 11 Statement of Computation of Earnings Per Share 13 Portions of the Annual Report to Stockholders for the fiscal year ended December 31, 1997. 21 Subsidiaries of Registrant (2) 23 Consent of KPMG Peat Marwick LLP 27 Financial Data Schedule - ---------------- (1) Incorporated by reference herein to the identically numbered exhibit of the Form 8-A. (2) Incorporated by reference to the identically numbered exhibits of the Form 10-K. 18