(4) Loans and Allowance for Loan Losses

The following tables present the recorded investment in loans by loan class:


	December 31, 2011
(dollars in thousands)	New York and
	other states*		Florida		Total
Commercial:
Commercial real estate	$	189,101		25,226		214,327
Other		33,734		102		33,836
Real estate mortgage - 1 to 4 family:
First mortgages		1,731,127		177,518		1,908,645
Home equity loans		46,082		1,224		47,306
Home equity lines of credit		285,762		27,276		313,038
Installment		4,078		73		4,151
Total loans, net	$	2,289,884		231,419		2,521,303
Less: Allowance for loan losses						48,717
Net loans					$	2,472,586

	December 31, 2010
(dollars in thousands)	New York and other states*		Florida		Total
Commercial:
Commercial real estate	$	196,803		28,644		225,447
Other		32,542		264		32,806
Real estate mortgage - 1 to 4 family:
First mortgages		1,611,645		139,932		1,751,577
Home equity loans		48,505		960		49,465
Home equity lines of credit		268,509		22,778		291,287
Installment		4,284		399		4,683
Total loans, net	$	2,162,288		192,977		2,355,265
Less: Allowance for loan losses						41,911
Net loans					$	2,313,354

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

At December 31, 2011 and 2010, the Company had approximately $32.5 million and $14.6 million of real estate construction loans. Of the $32.5 million in real estate construction loans at December 31, 2011, approximately $11.6 million are secured by first mortgages to residential borrowers while approximately $20.9 million were to commercial borrowers for residential construction projects. The vast majority of the construction loans are secured by residential real estate in the New York market area.

At December 31, 2011 and 2010, loans to executive officers, directors, and to associates of such persons aggregated $9.4 million and $6.8 million, respectively. During 2011, approximately $3.6 million of new loans were made and repayments of loans totalled approximately $1.1 million. All loans are current according to their terms.

TrustCo lends in the geographic territory of its branch locations in New York, Florida, Massachusetts, New Jersey and Vermont. Although the loan portfolio is diversified, a portion of its debtors' ability to repay depends significantly on the economic conditions prevailing in the respective geographic territory.

The following tables present the recorded investment in non-accrual loans by loan class:

	December 31, 2011
(dollars in thousands)	New York and other states*		Florida		Total
Loans in nonaccrual status:
Commercial:
Commercial real estate	$	4,968		5,000		9,968
Other		13		-		13
Real estate mortgage - 1 to 4 family:
First mortgages		24,392		9,862		34,254
Home equity loans		968		57		1,025
Home equity lines of credit		2,460		743		3,203
Installment		3		-		3
Total non-accrual loans		32,804		15,662		48,466
Restructured real estate mortgages - 1 to 4 family		312		-		312
Total nonperforming loans	$	33,116		15,662		48,778

	December 31, 2010
(dollars in thousands)	New York and other states*		Florida		Total
Loans in nonaccrual status:
Commercial:
Commercial real estate	$	5,617		8,281		13,898
Other		126		-		126
Real estate mortgage - 1 to 4 family:
First mortgages		18,067		12,888		30,955
Home equity loans		860		73		933
Home equity lines of credit		2,109		436		2,545
Installment		20		1		21
Total non-accrual loans		26,799		21,679		48,478
Restructured real estate mortgages - 1 to 4 family		336		-		336
Total nonperforming loans	$	27,135		21,679		48,814

As of December 31, 2011 and 2010, the Company's loan portfolio did not include any subprime mortgages or loans acquired with deteriorated credit quality.

The following tables present the aging of the recorded investment in past due loans by loan class and by region as of December 31, 2011 and 2010:

New york and othet states
	December 31, 2011
(dollars in thousands)	30-59 Days		60-89 Days		90+ Days		Total 30+ days				Total
	Past Due		Past Due		Past Due		Past Due		Current		Loans

Commercial:
Commercial real estate	$	400		-		3,157		3,557		185,544		189,101
Other		-		-		-		-		33,734		33,734
Real estate mortgage - 1 to 4 family:
First mortgages		7,850		2,313		20,294		30,457		1,700,670		1,731,127
Home equity loans		186		32		852		1,070		45,012		46,082
Home equity lines of credit		871		473		2,371		3,715		282,047		285,762
Installment		29		4		2		35		4,043		4,078

Total	$	9,336		2,822		26,676		38,834		2,251,050		2,289,884

Florida:

(dollars in thousands)	30-59 Days		60-89 Days		90 + Days		Total 30+ days				Total
	Past Due		Past Due		Past Due		Past Due		Current		Loans

Commercial:
Commercial real estate	$	1,042		-		5,000		6,042		19,184		25,226
Other		-		-		-		-		102		102
Real estate mortgage - 1 to 4 family:
First mortgages		813		1,502		8,973		11,288		166,230		177,518
Home equity loans		68		-		65		133		1,091		1,224
Home equity lines of credit		100		91		684		875		26,401		27,276
Installment		1		-		-		1		72		73

Total	$	2,024		1,593		14,722		18,339		213,080		231,419

Total:

(dollars in thousands)	30-59 Days		60-89 Days		90 + Days		Total 30+ days				Total
	Past Due		Past Due		Past Due		Past Due		Current		Loans

Commercial:
Commercial real estate	$	1,442		-		8,157		9,599		204,728		214,327
Other		-		-		-		-		33,836		33,836
Real estate mortgage - 1 to 4 family:
First mortgages		8,663		3,815		29,267		41,745		1,866,900		1,908,645
Home equity loans		254		32		917		1,203		46,103		47,306
Home equity lines of credit		971		564		3,055		4,590		308,448		313,038
Installment		30		4		2		36		4,115		4,151

Total	$	11,360		4,415		41,398		57,173		2,464,130		2,521,303

New York and other states:
	December 31, 2010
(dollars in thousands)	30-59 Days		60-89 Days		90 + Days		Total 30+ days				Total
	Past Due		Past Due		Past Due		Past Due		Current		Loans

Commercial:
Commercial real estate	$	-		-		3,870		3,870		192,933		196,803
Other		-		13		126		139		32,403		32,542
Real estate mortgage - 1 to 4 family:
First mortgages		11,129		4,275		15,615		31,019		1,580,626		1,611,645
Home equity loans		228		63		690		981		47,524		48,505
Home equity lines of credit		1,324		19		1,338		2,681		265,828		268,509
Installment		46		4		20		70		4,214		4,284

Total	$	12,727		4,374		21,659		38,760		2,123,528		2,162,288

Florida:

(dollars in thousands)	30-59 Days		60-89 Days		90 + Days		Total 30+ days				Total
	Past Due		Past Due		Past Due		Past Due		Current		Loans

Commercial:
Commercial real estate	$	-		-		2,281		2,281		26,363		28,644
Other		-		-		-		-		264		264
Real estate mortgage - 1 to 4 family:
First mortgages		5,219		553		12,427		18,199		121,733		139,932
Home equity loans		26		-		73		99		861		960
Home equity lines of credit		422		10		410		842		21,936		22,778
Installment		-		-		1		1		398		399

Total	$	5,667		563		15,192		21,422		171,555		192,977

Total:

(dollars in thousands)	30-59 Days		60-89 Days		90 + Days		Total 30+ days				Total
	Past Due		Past Due		Past Due		Past Due		Current		Loans

Commercial:
Commercial real estate	$	-		-		6,151		6,151		219,296		225,447
Other		-		13		126		139		32,667		32,806
Real estate mortgage - 1 to 4 family:
First mortgages		16,348		4,828		28,042		49,218		1,702,359		1,751,577
Home equity loans		254		63		763		1,080		48,385		49,465
Home equity lines of credit		1,746		29		1,748		3,523		287,764		291,287
Installment		46		4		21		71		4,612		4,683

Total	$	18,394		4,937		36,851		60,182		2,295,083		2,355,265

At December 31, 2011 and 2010, there were no loans that are 90 days past due and still accruing interest. As a result, non-accrual loans includes all loans 90 days past due and greater as well as $7.7 million and $11.6 million of certain loans less than 90 days past due that were placed in non-accruing status for reasons other than delinquent status as of December 31, 2011 and 2010, respectively.

Interest on nonaccrual and restructured loans was not material in 2011, 2010, and 2009. There are no commitments to extend further credit on nonaccrual or restructured loans.

Transactions in the allowance for loan losses are summarized as follows:

(dollars in thousands)	For the year ended December 31, 2011		For the year ended December 31, 2010		For the year ended December 31, 2009
Balance at beginning of period	$	41,911		37,591		36,149
Loans charged off:
Commercial-New York and other states*		171		141		-
Commercial-Florida		1,000		4,940		1,850
Real estate mortgage - 1 to 4 family - New York and other states*		4,315		3,754		1,396
Real estate mortgage - 1 to 4 family - Florida		6,990		10,878		7,601
Installment-New York and other states*		80		150		155
Installment-Florida		2		5		11
Total loan chargeoffs		12,558		19,868		11,013

Recoveries of loans previously charged off:
Commercial-New York and other states*		55		34		259
Commercial-Florida		4		69		-
Real estate mortgage - 1 to 4 family - New York and other states*		477		700		831
Real estate mortgage - 1 to 4 family - Florida		34		89		-
Installment-New York and other states*		43		95		55
Installment-Florida		1		1		-
Total recoveries		614		988		1,145
Net loans charged off		11,944		18,880		9,868
Provision for loan losses		18,750		23,200		11,310
Balance at end of period	$	48,717		41,911		37,591

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2011 and 2010:

	December 31, 2011
	Commercial Loans		1-to-4 Family Residential Real Estate		Installment Loans		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	-		-		-		-
Collectively evaluated for impairment		4,140		44,479		98		48,717

Total ending allowance balance	$	4,140		44,479		98		48,717


Loans:
Individually evaluated for impairment	$	9,981		3,686		-		13,667
Collectively evaluated for impairment		238,182		2,265,303		4,151		2,507,636

Total ending loans balance	$	248,163		2,268,989		4,151		2,521,303

	December 31, 2010
	Commercial Loans		1-to-4 Family Residential Real Estate		Installment Loans		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	-		-		-		-
Collectively evaluated for impairment		4,227		37,448		236		41,911

Total ending allowance balance	$	4,227		37,448		236		41,911


Loans:
Individually evaluated for impairment	$	14,024		336		-		14,360
Collectively evaluated for impairment		244,229		2,091,993		4,683		2,340,905

Total ending loans balance	$	258,253		2,092,329		4,683		2,355,265

The Company did not acquire any loans with deteriorated credit quality in 2011 and 2010.

The following tables present impaired loans by loan class as of December 31, 2011 and 2010:

New York and other states:
	December 31, 2011
(dollars in thousands)			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized

Commercial:
Commercial real estate	$	4,968		5,684		-		5,198		-
Other		13		32		-		56		-
Real estate mortgage - 1 to 4 family:
First mortgages		2,874		3,299		-		1,664		30
Home equity loans		151		199				69		3
Home equity lines of credit		-		75				-		2

Total	$	8,006		9,289		-		6,987		35

Florida:

(dollars in thousands)			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized

Commercial:
Commercial real estate	$	5,000		9,042		-		6,774		-
Other		-		-		-		-		-
Real estate mortgage - 1 to 4 family:
First mortgages		705		1,301		-		224		-

Total	$	5,705		10,343		-		6,998		-

Total:

(dollars in thousands)			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized

Commercial:
Commercial real estate	$	9,968		14,726		-		11,972		-
Other		13		32		-		56		-
Real estate mortgage - 1 to 4 family:
First mortgages		3,579		4,600		-		1,888		30
Home equity loans		151		199				69		3
Home equity lines of credit		-		75				-		2

Total	$	13,711		19,632		-		13,985		35

New York and other states:
	December 31, 2010
(dollars in thousands)			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized

Commercial:
Commercial real estate	$	5,617		6,217		-		3,792		-
Other		126		189		-		179		-
Real estate mortgage - 1 to 4 family:
First mortgages		336		516		-		373		39
Home equity loans		-		58				-		6
Home equity lines of credit		-		77				-		3

Total	$	6,079		7,057		-		4,344		48

Florida:

(dollars in thousands)			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized

Commercial:
Commercial real estate	$	8,281		12,798		-		9,289		-
Other		-		-		-		1		-
Real estate mortgage - 1 to 4 family:
First mortgages		-		-		-		-		-

Total	$	8,281		12,798		-		9,290		-

Total:

(dollars in thousands)			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized

Commercial:
Commercial real estate	$	13,898		19,015		-		13,081		-
Other		126		189		-		180		-
Real estate mortgage - 1 to 4 family:
First mortgages		336		516		-		373		39
Home equity loans		-		58				-		6
Home equity lines of credit		-		77				-		3

Total	$	14,360		19,855		-		13,634		48

In the preceding tables, the average recorded investment in impaired loans includes the year-to-date average of all impaired loans. During 2009, the average balance of impaired loans was $12.8 million and there was approximately $55 thousand of interest income recorded on these loans in the accompanying Consolidated Statements of Income. The Company has not committed to lend additional amounts to customers with outstanding loans that are classified as impaired.

Management evaluates impairment on commercial and commercial real estate loans that are past due as well as in situations where circumstances dictate that an evaluation is prudent. If, during this evaluation, impairment of the loan is identified, a charge-off is taken at that time. As a result, as of December 31, 2011 and 2010, based upon management's evaluation and due to the sufficiency of chargeoffs taken, none of the allowance for loan losses has been allocated to a specific impaired loan(s).

As of December 31, 2011, all loans classified as TDR's are on nonaccrual. Total TDRs as of December 31, 2011 and 2010 totalled $5.2 million and $1.8 million, respectively. In addition, due to the sufficiency of prior chargeoffs taken, none of the allowance for loan losses has been allocated to TDR's and the impact of the identification of these loans as TDR's did not have a material impact on the allowance. During the year ended December 31, 2011, there were $1.4 million of chargeoffs on loans identified as TDR's.

The following table presents modified loans by class that were determined to be TDR's that occurred during the year ended December 31, 2011:

New York and other states*:			Pre-Modification		Post-Modification
(dollars in thousands)	Number of Contracts		Outstanding Recorded Investment		Outstanding Recorded Investment

Commercial:
Commercial real estate		1	$	91		90
Real estate mortgage - 1 to 4 family:
First mortgages		21		2,758		2,518
Home equity loans		4		160		151

Total		26	$	3,009		2,759

Florida:			Pre-Modification		Post-Modification
(dollars in thousands)	Number of Contracts		Outstanding Recorded Investment		Outstanding Recorded Investment

Commercial:
Commercial real estate		-	$	-		-
Real estate mortgage - 1 to 4 family:
First mortgages		6		852		705

Total		6	$	852		705

In addition to the loans in the preceding tables, as of December 31, 2011, the Company has approximately $1.8 million of commercial and commercial real estate loans which were classified as TDR's as a result of modifications prior to 2011. In these cases, the loan modification included a reduction in the stated interest rate on the loan to the current market rate available. These loans were in nonaccrual status as of December 31, 2011 and 2010. As of December 31, 2011, these loans were performing in accordance with their modified terms.

The following table presents loans by class modified as TDR's that occurred during the twelve months ended December 31, 2011 for which there was a payment default during the same period:

New York and other states*:	Number of		Recorded
(dollars in thousands)	Contracts		Investment

Commercial:
Commercial real estate		1	$	90
Real estate mortgage - 1 to 4 family:
First mortgages		13		1,729
Home equity loans		3		113

Total		17	$	1,932

Florida:
	Number of		Recorded
(dollars in thousands)	Contracts		Investment

Commercial:
Commercial real estate		-	$	-
Real estate mortgage - 1 to 4 family:
First mortgages		6		705

Total		6	$	705

In situations where the Bank considers a loan modification, management determines whether the borrower is experiencing financial difficulty by performing an evaluation of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company's underwriting policy.

The modification of the terms of these loans were the result of the borrower filing for bankruptcy protection, and included the deferral of all past due amounts for a period of generally 60 months in accordance with the bankruptcy court order.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. In situations involving a borrower filing for bankruptcy protection, however, a loan is considered to be in payment default once it is 30 days contractually past due, consistent with the treatment by the bankruptcy court.

The TDR's that subsequently defaulted described above did not have a material impact on the allowance for loan losses. As a result, the underlying collateral was evaluated at the time these loans were placed on nonaccrual, and a charge-off was taken at that time, if necessary. Collateral values on these loans, as well as all other nonaccrual loans, are reviewed for collateral sufficiency on a quarterly basis.

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. On at least an annual basis, the Company's loan review process analyzes non-homogeneous loans, such as commercial and commercial real estate loans, individually by grading the loans based on credit risk. The Company uses the following definitions for classified loans:

Special Mention: Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company's credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. All substandard loans are considered impaired.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.

As of December 31, 2011 and 2010, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

	December 31, 2011
New York and other states:

(dollars in thousands)
	Pass		Classified		Total
Commercial:
Commercial real estate	$	181,809		7,384		189,193
Other		33,721		13		33,734

	$	215,530		7,397		222,927

Florida:

(dollars in thousands)
	Pass		Classified		Total
Commercial:
Commercial real estate	$	17,534		7,600		25,134
Other		102		-		102

	$	17,636		7,600		25,236

	December 31, 2010
New York and other states:

(dollars in thousands)
	Pass		Classified		Total
Commercial:
Commercial real estate	$	189,809		6,994		196,803
Other		32,286		256		32,542

	$	222,095		7,250		229,345

Florida:

(dollars in thousands)
	Pass		Classified		Total
Commercial:
Commercial real estate	$	20,363		8,281		28,644
Other		264		-		264

	$	20,627		8,281		28,908

For homogeneous loan pools, such as residential mortgages, home equity lines of credit, and installment loans, the Company uses payment status to identify the credit risk in these loan portfolios. Payment status is reviewed on a daily basis by the Bank's collection area and on a monthly basis with respect to determining the adequacy of the allowance for loan losses. The payment status of these homogeneous pools at December 31, 2011 and 2010 is included in the aging of the recorded investment of past due loans table. In addition, the total nonperforming portion of these homogeneous loan pools at December 31, 2011 and 2010 is presented in the recorded investment in non-accrual loans table.