5.	Loans and Allowance for Loan Losses

The following table presents the recorded investment in loans by loan class:

	March 31, 2012
(dollars in thousands)	New York and
	other states*		Florida		Total
Commercial:
Commercial real estate	$	186,053		25,180		211,233
Other		24,186		94		24,280
Real estate mortgage - 1 to 4 family:
First mortgages		1,737,187		188,224		1,925,411
Home equity loans		43,799		1,068		44,867
Home equity lines of credit		286,850		27,818		314,668
Installment		3,790		65		3,855
Total loans, net	$	2,281,865		242,449		2,524,314
Less: Allowance for loan losses						48,535
Net loans					$	2,475,779

	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

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

At March 31, 2012 and December 31, 2011, the Company had approximately $35.3 million and $32.5 million of real estate construction loans, respectively. As of March 31, 2012, approximately $14.5 million are secured by first mortgages to residential borrowers while approximately $20.8 million were to commercial borrowers for residential constructions projects. Of the $32.5 million in real estate construction loans at December 31, 2011, approximately $11.6 million were secured by first mortgages to residential borrowers with the remaining $20.9 million were to commercial borrowers for residential construction projects. The vast majority of construction loans are secured by residential real estate in the Company's New York market area.

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:

	March 31, 2012
(dollars in thousands)	New York and
	other states*		Florida		Total
Loans in nonaccrual status:
Commercial:
Commercial real estate	$	5,535		5,874		11,409
Other		132		-		132
Real estate mortgage - 1 to 4 family:
First mortgages		25,667		8,848		34,515
Home equity loans		822		-		822
Home equity lines of credit		3,405		556		3,961
Installment		9		-		9
Total non-accrual loans		35,570		15,278		50,848
Other nonperforming real estate mortgages - 1 to 4 family		306		-		306
Total nonperforming loans	$	35,876		15,278		51,154

	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
Other nonperforming real estate mortgages - 1 to 4 family		312		-		312
Total nonperforming loans	$	33,116		15,662		48,778

As of March 31, 2012 and December 31, 2011, the Company's loan portfolio did not include any subprime loans 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:

	March 31, 2012
New York and other states*:	30-59		60-89		90 +		Total
	Days		Days		Days		30+ days				Total
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Loans

Commercial:
Commercial real estate	$	-		-		3,233		3,233		182,820		186,053
Other		5		7		-		12		24,174		24,186
Real estate mortgage - 1 to 4 family:
First mortgages		5,035		2,522		20,931		28,488		1,708,699		1,737,187
Home equity loans		420		6		722		1,148		42,651		43,799
Home equity lines of credit		1,071		123		3,131		4,325		282,525		286,850
Installment		9		10		8		27		3,763		3,790

Total	$	6,540		2,668		28,025		37,233		2,244,632		2,281,865

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

Commercial:
Commercial real estate	$	-		2,852		5,874		8,726		16,454		25,180
Other		-		-		-		-		94		94
Real estate mortgage - 1 to 4 family:
First mortgages		734		920		7,433		9,087		179,137		188,224
Home equity loans		-		42		-		42		1,026		1,068
Home equity lines of credit		12		-		435		447		27,371		27,818
Installment		-		-		-		-		65		65

Total	$	746		3,814		13,742		18,302		224,147		242,449

	December 31, 2011
New York and other states*:	30-59		60-89		90 +		Total
	Days		Days		Days		30+ days				Total
(dollars in thousands)	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:	30-59		60-89		90 +		Total
	Days		Days		Days		30+ days				Total
(dollars in thousands)	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

As of March 31, 2012 and December 31, 2011, 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 certain loans less than 90 days past due that were placed in non-accruing status for reasons other than delinquent status.

Interest on nonaccrual and restructured loans that was collected and recognized as income during the three months ended March 31, 2012, and 2011, was not material.

Activity in the allowance for loan losses by portfolio segment, is summarized as follows:

(dollars in thousands)	For the quarter ended March 31, 2012
			Real Estate
			Mortgage-
	Commercial		1 to 4 Family		Installment			Total
Balance at beginning of period	$	3,737		44,882		98			48,717
Loans charged off:
New York and other states*		324		1,257		8			1,589
Florida		168		1,675		-			1,843
Total loan chargeoffs		492		2,932		8			3,432

Recoveries of loans previously charged off:
New York and other states*		3		121		16			140
Florida		8		2		-			10
Total recoveries		11		123		16			150
Net loans charged off		481		2,809		(8	)		3,282
Provision for loan losses		346		2,778		(24	)		3,100
Balance at end of period	$	3,602		44,851		82			48,535

(dollars in thousands)	For the quarter ended March 31, 2011
				Real Estate
				Mortgage-
	Commercial			1 to 4 Family		Installment			Total
Balance at beginning of period	$	4,227			37,448		236			41,911
Loans charged off:
New York and other states*		50			1,005		22			1,077
Florida		-			1,877		1			1,878
Total loan chargeoffs		50			2,882		23			2,955

Recoveries of loans previously charged off:
New York and other states*		-			106		13			119
Florida		3			1		1			5
Total recoveries		3			107		14			124
Net loans charged off		47			2,775		9			2,831
Provision for loan losses		(30	)		4,663		(33	)		4,600
Balance at end of period	$	4,150			39,336		194			43,680

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:

	March 31, 2012
			Real Estate Mortgage-
	Commercial Loans		1 to 4 Family		Installment Loans		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	-		-		-		-
Collectively evaluated for impairment		3,602		44,851		82		48,535

Total ending allowance balance	$	3,602		44,851		82		48,535


Loans:
Individually evaluated for impairment	$	11,541		3,933		-		15,474
Collectively evaluated for impairment		223,972		2,281,013		3,855		2,508,840

Total ending loans balance	$	235,513		2,284,946		3,855		2,524,314

	December 31, 2011
			Real Estate Mortgage-
	Commercial Loans		1 to 4 Family		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

The Company did not acquire any loans with deteriorated credit quality in 2012 and 2011.

The Company has identified nonaccrual commercial and commercial real estate loans, as well as all loans restructured under a troubled debt restructuring (TDR), as impaired loans. A loan is considered impaired when it is probable that the borrower will be unable to repay the loan according to the original contractual terms of the loan agreement or the loan is restructured in a TDR.

A loan for which the terms have been modified, and for which the borrower is experiencing financial difficulties, is considered a TDR and is classified as impaired. TDR's, which are included in nonaccrual loans at March 31, 2012 and December 31, 2011, are measured at the present value of estimated future cash flows using the loan's effective rate at inception or the fair value of the underlying collateral if the loan is considered collateral dependent.

The following tables present impaired loans by loan class as of March 31, 2012 and December 31, 2011:

	March 31, 2012
New York and other states*:			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
(dollars in thousands)	Investment		Balance		Allowance		Investment		Recognized

Commercial:
Commercial real estate	$	5,535		6,543		-		5,290		-
Other		132		151		-		53		-
Real estate mortgage - 1 to 4 family:
First mortgages		3,240		4,751		-		3,167		8
Home equity loans		144		196		-		146		-
Home equity lines of credit		-		149		-		-		-

Total	$	9,051		11,790		-		8,656		8

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

Commercial:
Commercial real estate	$	5,874		10,084		-		5,639		-
Other		-		-		-		-		-
Real estate mortgage - 1 to 4 family:
First mortgages		549		1,015		-		601		-
Home equity lines of credit		-		62		-		-		-

Total	$	6,423		11,161		-		6,240		-

	December 31, 2011
New York and other states*:			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
(dollars in thousands)	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:			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
(dollars in thousands)	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		-

In the preceding tables, the average recorded investment in impaired loans includes the year-to-date average of all impaired loans.

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 March 31, 2012 and December 31, 2011, 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 both March 31, 2012 and December 31, 2011, total TDR's amounted to $5.2 million.

As of March 31, 2012, all loans classified as TDR's are on nonaccrual. 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 three months ended March 31, 2012, there were $28 thousand of chargeoffs on loans identified as TDR's.

The Company is not committed to lend any additional amounts to borrowers with outstanding loans that are classified as TDR's.

The following tables present modified loans by class that were determined to be TDR's that occurred during the three months and the twelve months ended March 31, 2012:

	During the three months ended March 31, 2012
New York and other states*:			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(dollars in thousands)	Contracts		Investment		Investment

Commercial:
Commercial real estate		-	$	-		-
Other		-		-		-
Real estate mortgage - 1 to 4 family:
First mortgages		4		442		434
Home equity loans		-		-		-
Home equity lines of credit		-		-		-

Total		4	$	442		434

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

Commercial:
Commercial real estate		-	$	-		-
Other		-		-		-
Real estate mortgage - 1 to 4 family:
First mortgages		1		163		154

Total		1	$	163		154

	During the twelve months ended March 31, 2012
New York and other states*:			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(dollars in thousands)	Contracts		Investment		Investment

Commercial:
Commercial real estate		1	$	91		90
Other		-		-		-
Real estate mortgage - 1 to 4 family:
First mortgages		25		2,763		2,516
Home equity loans		3		120		106
Home equity lines of credit		-		-		-

Total		29	$	2,974		2,712

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

Commercial:
Commercial real estate		-	$	-		-
Other		-		-		-
Real estate mortgage - 1 to 4 family:
First mortgages		5		682		549

Total		5	$	682		549

In addition to the loans in the preceding tables, as of March 31, 2012, the Company has approximately $1.5 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 March 31, 2012 and December 31, 2011. As of March 31, 2012, 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 March 31, 2012 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		-	$	-
Other		-		-
Real estate mortgage - 1 to 4 family:
First mortgages		20		2,151
Home equity loans		3		106
Home equity lines of credit		-		-

Total		23	$	2,257

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

Commercial:
Commercial real estate		-	$	-
Other		-		-
Real estate mortgage - 1 to 4 family:
First mortgages		5		549

Total		5	$	549

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 of the bankruptcy court.

The TDR's that subsequently defaulted described above did not have a material impact on the allowance for loan losses as they were previously identified as nonaccrual loans. 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 existing substandard loans are considered impaired.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those loans classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. 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.

Based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

	As of March 31, 2012
New York and other states*:	Pass		Classified		Total

(dollars in thousands)

Commercial:
Commercial real estate	$	174,607		11,446		186,053
Other		23,918		268		24,186

	$	198,525		11,714		210,239

Florida:	Pass		Classified		Total

(dollars in thousands)

Commercial:
Commercial real estate	$	16,706		8,474		25,180
Other		94		-		94

	$	16,800		8,474		25,274

	As of December 31, 2011
New York and other states*:	Pass		Classified		Total

(dollars in thousands)

Commercial:
Commercial real estate	$	181,809		7,384		189,193
Other		33,721		13		33,734

	$	215,530		7,397		222,927

Florida:	Pass		Classified		Total

(dollars in thousands)

Commercial:
Commercial real estate	$	17,534		7,600		25,134
Other		102		-		102

	$	17,636		7,600		25,236

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 March 31, 2012 and December 31, 2011 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 March 31, 2012 and December 31, 2011 is presented in the recorded investment in non-accrual loans table.