Loans and Allowance for Loan Losses

12 Months Ended

Dec. 31, 2012

Loans and Allowance for Loan Losses [Abstract]

Loans and Allowance for Loan Losses

(4) Loans and Allowance for Loan Losses

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

	December 31, 2012
(dollars in thousands)	New York and
	other states*		Florida		Total
Commercial:
Commercial real estate	$	167,249		18,882		186,131
Other		33,381		65		33,446
Real estate mortgage - 1 to 4 family:
First mortgages		1,814,214		275,764		2,089,978
Home equity loans		35,601		1,089		36,690
Home equity lines of credit		301,338		32,571		333,909
Installment		4,183		396		4,579
Total loans, net	$	2,355,966		328,767		2,684,733
Less: Allowance for loan losses						47,927
Net loans					$	2,636,806

	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 December 31, 2012 and 2011, the Company had approximately $37.2 million and $32.5 million of real estate construction loans. As of December 31, 2012, approximately $16.4 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 in the Company's New York market.

At December 31, 2012 and 2011, loans to executive officers, directors, and to associates of such persons aggregated $8.2 million and $9.4 million, respectively. During 2012, approximately $1.8 million of new loans were made and repayments of loans totaled approximately $3.0 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, 2012
(dollars in thousands)	New York and
	other states*		Florida		Total
Loans in nonaccrual status:
Commercial:
Commercial real estate	$	6,511		2,698		9,209
Other		124		-		124
Real estate mortgage - 1 to 4 family:
First mortgages		30,329		7,319		37,648
Home equity loans		694		-		694
Home equity lines of credit		4,263		501		4,764
Installment		6		1		7
Total non-accrual loans		41,927		10,519		52,446
Restructured real estate mortgages - 1 to 4 family		231		-		231
Total nonperforming loans	$	42,158		10,519		52,677

	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

As of December 31, 2012 and 2011, 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, 2012 and 2011:

New York and other states:
	December 31, 2012
(dollars in thousands)	30-59		60-89		90 +		Total
	Days		Days		Days		30+ days				Total
	Past Due		Past Due		Past Due		Past Due		Current		Loans
Commercial:
Commercial real estate	$	-		-		3,225		3,225		164,024		167,249
Other		-		-		4		4		33,377		33,381
Real estate mortgage - 1 to 4 family:
First mortgages		6,364		2,248		21,341		29,953		1,784,261		1,814,214
Home equity loans		177		216		464		857		34,744		35,601
Home equity lines of credit		604		350		3,044		3,998		297,340		301,338
Installment		40		27		-		67		4,116		4,183
Total	$	7,185		2,841		28,078		38,104		2,317,862		2,355,966

Florida:
(dollars in thousands)	30-59		60-89		90 +		Total
	Days		Days		Days		30+ days				Total
	Past Due		Past Due		Past Due		Past Due		Current		Loans
Commercial:
Commercial real estate	$	-		-		2,698		2,698		16,184		18,882
Other		-		-		-		-		65		65
Real estate mortgage - 1 to 4 family:
First mortgages		862		452		5,390		6,704		269,060		275,764
Home equity loans		-		-		-		-		1,089		1,089
Home equity lines of credit		59		29		442		530		32,041		32,571
Installment		9		-		1		10		386		396
Total	$	930		481		8,531		9,942		318,825		328,767

Total:
(dollars in thousands)	30-59		60-89		90 +		Total
	Days		Days		Days		30+ days				Total
	Past Due		Past Due		Past Due		Past Due		Current		Loans
Commercial:
Commercial real estate	$	-		-		5,923		5,923		180,208		186,131
Other		-		-		4		4		33,442		33,446
Real estate mortgage - 1 to 4 family:
First mortgages		7,226		2,700		26,731		36,657		2,053,321		2,089,978
Home equity loans		177		216		464		857		35,833		36,690
Home equity lines of credit		663		379		3,486		4,528		329,381		333,909
Installment		49		27		1		77		4,502		4,579
Total	$	8,115		3,322		36,609		48,046		2,636,687		2,684,733

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

At December 31, 2012 and 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. 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		For the year ended		For the year ended
	December 31, 2012		December 31, 2011		December 31, 2010
Balance at beginning of period	$	48,717	$	41,911		37,591
Loans charged off:
Commercial-New York and other states*		1,307		171		141
Commercial-Florida		1,192		1,000		4,940
Real estate mortgage - 1 to 4 family - New York and other states*		6,919		4,315		3,754
Real estate mortgage - 1 to 4 family - Florida		3,920		6,990		10,878
Installment-New York and other states*		128		80		150
Installment-Florida		13		2		5
Total loan chargeoffs		13,479		12,558		19,868
Recoveries of loans previously charged off:
Commercial-New York and other states*		112		55		34
Commercial-Florida		26		4		69
Real estate mortgage - 1 to 4 family - New York and other states*		375		477		700
Real estate mortgage - 1 to 4 family - Florida		127		34		89
Installment-New York and other states*		49		43		95
Installment-Florida		-		1		1
Total recoveries		689		614		988
Net loans charged off		12,790		11,944		18,880
Provision for loan losses		12,000		18,750		23,200
Balance at end of period	$	47,927	$	48,717		41,911

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, 2012 and 2011:

	December 31, 2012
			1-to-4 Family
	Commercial Loans		Residential Real Estate		Installment Loans		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	-		-		-		-
Collectively evaluated for impairment		3,771		44,069		87		47,927
Total ending allowance balance	$	3,771		44,069		87		47,927
Loans:
Individually evaluated for impairment	$	9,333		16,740		-		26,073
Collectively evaluated for impairment		210,244		2,443,837		4,579		2,658,660
Total ending loans balance	$	219,577		2,460,577		4,579		2,684,733

	December 31, 2011
			1-to-4 Family
	Commercial Loans		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		3,730		-		13,711
Collectively evaluated for impairment		238,182		2,265,259		4,151		2,507,592
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 at December 31, 2012 and 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 December 31, 2012, 2011 and 2010:

New York and other states:
	December 31, 2012
(dollars in thousands)			Unpaid				Average
	Recorded		Principal		Related		Recorded
	Investment		Balance		Allowance		Investment
Commercial:
Commercial real estate	$	6,511		7,169		-		5,615
Other		124		124		-		107
Real estate mortgage - 1 to 4 family:
First mortgages		12,964		14,143		-		6,075
Home equity loans		623		664		-		260
Home equity lines of credit		1,633		1,735		-		458
Total	$	21,855		23,835		-		12,515

Florida:
(dollars in thousands)			Unpaid				Average
	Recorded		Principal		Related		Recorded
	Investment		Balance		Allowance		Investment
Commercial:
Commercial real estate	$	2,698		3,890		-		5,871
Other		-		-		-		-
Real estate mortgage - 1 to 4 family:
First mortgages		1,472		2,665		-		948
Home equity lines of credit		48		176		-		24
Total	$	4,218		6,731		-		6,843

Total:
(dollars in thousands)			Unpaid				Average
	Recorded		Principal		Related		Recorded
	Investment		Balance		Allowance		Investment
Commercial:
Commercial real estate	$	9,209		11,059		-		11,486
Other		124		124		-		107
Real estate mortgage - 1 to 4 family:
First mortgages		14,436		16,808		-		7,023
Home equity loans		623		664		-		260
Home equity lines of credit		1,681		1,911		-		482
Total	$	26,073		30,566		-		19,358

New York and other states:
	December 31, 2011
(dollars in thousands)			Unpaid				Average
	Recorded		Principal		Related		Recorded
	Investment		Balance		Allowance		Investment
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
Home equity loans		151		199		-		69
Home equity lines of credit		-		75		-		-
Total	$	8,006		9,289		-		6,987

Florida:
(dollars in thousands)			Unpaid				Average
	Recorded		Principal		Related		Recorded
	Investment		Balance		Allowance		Investment
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
	Recorded		Principal		Related		Recorded
	Investment		Balance		Allowance		Investment
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
Home equity loans		151		199		-		69
Home equity lines of credit		-		75		-		-
Total	$	13,711		19,632		-		13,985

New York and other states:
	December 31, 2010
(dollars in thousands)			Unpaid				Average
	Recorded		Principal		Related		Recorded
	Investment		Balance		Allowance		Investment
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
Home equity loans		-		58		-		-
Home equity lines of credit		-		77		-		-
Total	$	6,079		7,057		-		4,344

Florida:
(dollars in thousands)			Unpaid				Average
	Recorded		Principal		Related		Recorded
	Investment		Balance		Allowance		Investment
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
	Recorded		Principal		Related		Recorded
	Investment		Balance		Allowance		Investment
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
Home equity loans		-		58		-		-
Home equity lines of credit		-		77		-		-
Total	$	14,360		19,855		-		13,634

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. Interest income recognized on impaired loans was not material in 2012, 2011, and 2010.

In response to the OCC interpretation, that was issued in the third quarter of 2012, regarding borrowers who have filed Chapter 7 bankruptcy and did not re-affirm their debt with the Company, the Company classified $10.1 million of previously performing 1-4 family real estate mortgage loans as troubled debt restructurings ("TDR's") as of September 30, 2012. Included in the $10.1 million, were $4.0 million of loans that were reclassified from performing status to non-accrual status due to a collateral deficiency of $804 thousand. The collateral deficiency was charged off during the third quarter of 2012.

Included in impaired loans as of December 31, 2012 are approximately $10.6 million of 1 to 4 family residential real estate loans that were identified as TDR's in accordance with OCC guidance released in the third quarter of 2012.

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, 2012 and 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 December 31, 2012, due to the adequacy of the underlying collateral and the sufficiency of prior chargeoffs taken, none of the allowance for loan losses has been allocated to TDR's. During the year ended December 31, 2012, there were $1.7 million of chargeoffs on loans identified as TDR's. Included in the 2012 chargeoffs is $804 thousand related to loans reclassified to non-accrual based on the OCC guidance released in the third quarter of 2012.

The following table presents modified loans by class that were determined to be TDR's that occurred during the years ended December 31, 2012 and 2011:

	December 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		2	$	138		138
Real estate mortgage - 1 to 4 family:
First mortgages		95		10,636		10,636
Home equity loans		16		488		488
Home equity lines of credit		30		1,633		1,633
Total		143	$	12,895		12,895

Florida:			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(dollars in thousands)	Contracts		Investment		Investment
Commercial:
Commercial real estate		-	$	-		-
Real estate mortgage - 1 to 4 family:
First mortgages		12		1,265		1,265
Home equity lines of credit		2		48		48
Total		14	$	1,313		1,313

	December 31, 2011
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
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
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(dollars in thousands)	Contracts		Investment		Investment
Commercial:
Commercial real estate		-	$	-		-
Real estate mortgage - 1 to 4 family:
First mortgages		6		852		705
Total		6	$	852		705

As previously noted, included in loans modified and classified as TDR's during the year ended December 31, 2012 are approximately $10.6 million of 1 to 4 family residential real estate loans that were determined to be TDR's in accordance with OCC guidance released in the third quarter of 2012.

The following table presents loans by class modified as TDR's that occurred during the years ended December 31, 2012 and 2011 for which there was a payment default during the same period:

	December 31, 2012
New York and other states*:	Number of		Recorded
(dollars in thousands)	Contracts		Investment
Commercial:
Commercial real estate		-	$	-
Real estate mortgage - 1 to 4 family:
First mortgages		22		2,265
Home equity loans		2		13
Home equity lines of credit		5		209
Total		29	$	2,487

Florida:
	Number of		Recorded
(dollars in thousands)	Contracts		Investment
Commercial:
Commercial real estate		-	$	-
Real estate mortgage - 1 to 4 family:
First mortgages		6		605
Home equity lines of credit		1		47
Total		7	$	652

	December 31, 2011
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. Generally, the modification of the terms of loans was the result of the borrower filing for bankruptcy protection. Chapter 13 bankruptcies generally include the deferral of all past due amounts for a period of generally 60 months in accordance with the bankruptcy court order. In the case of Chapter 7 bankruptcies, as previously noted, even though there is no modification of terms, the borrowers' debt to the Company was discharged and they did not reaffirm the debt.

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 Chapter 13 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 the underlying collateral was evaluated at the time these loans were identified as TDR's, 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 over $150 thousand, 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.

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 doubtful 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, 2012 and 2011, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

	December 31, 2012
New York and other states:
(dollars in thousands)
	Pass		Classified		Total
Commercial:
Commercial real estate	$	155,981		11,268		167,249
Other		33,067		314		33,381
	$	189,048		11,582		200,630

Florida:
(dollars in thousands)
	Pass		Classified		Total
Commercial:
Commercial real estate	$	12,454		6,428		18,882
Other		65		-		65
	$	12,519		6,428		18,947

	December 31, 2011
New York and other states:
(dollars in thousands)
	Pass		Classified		Total
Commercial:
Commercial real estate	$	181,717		7,384		189,101
Other		33,721		13		33,734
	$	215,438		7,397		222,835

Florida:
(dollars in thousands)
	Pass		Classified		Total
Commercial:
Commercial real estate	$	17,626		7,600		25,226
Other		102		-		102
	$	17,728		7,600		25,328

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