Tompkins Financial (TMP) 8-K Results of Operations and Financial Condition

Exhibit 99.1

For more information contact:

Stephen S. Romaine, President & CEO

Francis M. Fetsko, CFO

Tompkins Financial Corporation 607.273.3210

For Immediate Release

Wednesday, January 28, 2009

Tompkins Financial Corporation reports record earnings for 2008

ITHACA, NY – Tompkins Financial Corporation (TMP–NYSE Alternext US)

Tompkins Financial Corporation reported net income of $29.8 million for the full year ended December 31, 2008, an increase of 13.1% over the $26.4 million reported for the same period in 2007. Diluted earnings per share of $3.06 for the full year ended December 31, 2008, were up 13.3% when compared to the $2.70 of diluted earnings per share earning reported in 2007.

For the fourth quarter of 2008, net income was $7.3 million, down 2.0% compared to net income of $7.4 million for the same period in 2007. Diluted earnings per share of $0.74 for the fourth quarter of 2008, were down 3.9% from the $0.77 per share reported in the fourth quarter of 2007.

Stephen S. Romaine, President and CEO stated, “We are very pleased to report record earnings performance in 2008, a period during which our industry faced unprecedented challenges. Although we have not been immune to challenges in this economy, our performance in 2008 provides confirmation that our consistent focus on a strategy that involves building diversified sources of revenue, managing for sustainable growth, and maintaining high standards for risk management have served us well.”

Total assets were $2.9 billion at December 31, 2008, up $508.3 million or 21.5% from December 31, 2007. Total loans were $1.8 billion at December 31, 2008, representing a 26.2% increase from the prior year. Total deposits at December 31, 2008, were $2.1 billion, up 24.0% from December 31, 2007.

The growth comparisons to prior periods were impacted by the May 9, 2008, acquisition of Sleepy Hollow Bancorp. Immediately following the acquisition, Sleepy Hollow Bank was successfully merged into our Mahopac National Bank subsidiary. Total assets acquired from Sleepy Hollow were $269.2 million, and included $151.2 million in loans, $46.9 million in securities, and resulted in $18.2 million of goodwill. Total deposits in Sleepy Hollow Bank’s five Westchester County, NY branches were $229.0 million at the time of the acquisition.

Balance sheet growth contributed to improved net interest income in 2008, for both the fourth quarter and year to date. Net interest income of $24.8 million in the fourth quarter was up 27.4% over the same period in 2007. For the year to date period, net interest income was $90.4 million, up 22.1% from the same period last year. Net interest income also benefited from an improved net interest margin, which was 3.89% in the fourth quarter of 2008, compared to 3.70% in the fourth quarter of 2007. For the full year, net interest margin was 3.81% in 2008, compared to 3.63% in 2007.

Offsetting some of the benefits of improved net interest income was an increase in the provision for loan and lease losses. The provision for loan and lease losses increased to $2.1 million in the fourth quarter of 2008, compared to $479,000 in the fourth quarter of 2007. For the full year, the provision expense was $5.4 million, up from $1.5 million in 2007. Growth in the loan portfolio, trends in asset quality, and general economic conditions all played a role in the increased provision expense for both the quarter and year to date periods. During the fourth quarter, total loans increased by $99.2 million to $1.8 billion, up 5.8% from the third quarter of 2008. For the full year, loans were up $377.4 million, up 26.2% from December 2007.

Mr. Romaine commented, “As one might expect in these challenging economic times, we have seen an increase in net charge-offs and nonperforming assets; however, our credit quality ratios remain manageable and compare favorably to our peers.” Net charge-offs for the 12 months ended December 31, 2008, represented 0.18% of average loans (up from 0.09% in 2007), which compares to a peerⁱ ratio of 0.47%. Nonperforming assets represented 0.56% of total assets as of December 31, 2008 (up from 0.40% at December 31, 2007), which compares to a peer¹ ratio of 1.77%.

Noninterest income for the fourth quarter of 2008 was $10.3 million, down from $11.2 million for the same period in 2007. The economic climate has played a role in this trend as investment services fees, service charges on deposit accounts, and card services income, were all down slightly from the fourth quarter of 2007. Noninterest income was also negatively impacted by net mark-to-market losses on securities and liabilities held at fair value of $856,000 in the fourth quarter of 2008, compared to a net loss of $290,000 in the fourth quarter of 2007. Ultimately, as these adjustments are driven by changes in interest rates and spreads, and as it is management’s current intention to hold the underlying financial instruments until they mature, it is expected that these mark-to-market losses will be fully recovered over the life of the underlying financial instruments.

For the full year, noninterest income was $46.0 million in 2008, up 4.5% over the $44.0 million reported for the year in 2007. In aggregate, key fee income categories were relatively unchanged from the prior year, with growth in insurance revenue roughly offsetting declines in investments service revenue and service charges on deposit accounts. Net mark-to-market losses on securities and liabilities held at fair value of $1.2 million in 2008, compared to a net loss of $736,000 in 2007. The year-to-date results benefited from the proceeds received from the Company’s allocation of the Visa, Inc. initial public offering (the Visa IPO) in the first quarter of 2008. First quarter 2008 results include $983,000 of after tax income ($1.6 million pre-tax) related to the Visa IPO. Diluted earnings per share for the year ended December 31, 2008, would have still shown a 5.0% increase over 2007, if results were adjusted for the impact of revenue related to the Visa IPO. See Summary Financial Data for a reconciliation of the amounts.

Noninterest expenses for the fourth quarter of 2008 were $22.7 million, up 16.0% from the same period last year. For the full year ended December 31, 2008, noninterest expenses were $87.1 million, an increase of 11.5% from the same period in 2007. The increase in both the current quarter and year to date periods is largely in the salary and wages and occupancy expense categories. These expenses were directly impacted by the Sleepy Hollow acquisition with the addition of five staffed branches. Comparisons of noninterest expense to prior period results are impacted by a pre-tax expense accrual of $862,000 ($517,000 after-tax) related to Visa litigation indemnification in the fourth quarter of 2007, and a pre-tax charge of $1.2 million ($712,000 after-tax) related to consulting and reorganization expenses associated with profit improvement initiatives that were completed in the third quarter of 2007. See Summary Financial Data for a reconciliation of the amounts.

Mr. Romaine added, “As we continue to see many in the financial services industry report record losses, announce staffing cut backs, and seek capital funding from the Federal government, Tompkins has delivered a year of record earnings, strong business growth, and remains well-capitalized. I am extremely proud of our employees who are responsible for these outstanding results. Current economic forecasts, State budget deficits, volatile interest rates, and uncertain stock market conditions suggest that 2009 will be another challenging year; yet, I feel that our current financial strength, earnings momentum, and diversified revenue sources put Tompkins in a strong position as we enter 2009.”

Tompkins Financial Corporation operates 45 banking offices in the New York State markets served by the Company’s subsidiary banks - Tompkins Trust Company, The Bank of Castile, and Mahopac National Bank. Through its community banking subsidiaries, the Company provides traditional banking services, and offers a full range of money management services through Tompkins Investment Services (a division of Tompkins Trust Company). The Company offers insurance services through its Tompkins Insurance Agencies, Inc. subsidiary, an independent agency serving individuals and business clients throughout New York State. The Company offers fee-based financial planning and wealth management services through its AM&M Financial Services, Inc. subsidiary. AM&M Financial Services, Inc. is also the parent Company to Ensemble Financial Services, Inc., an independent broker dealer and leading outsourcing company for financial planners and investment advisors. Each Tompkins subsidiary operates with a community focus, meeting the unique needs of the communities served.

“Safe Harbor” Statement under the Private Securities Litigation Reform of 1995:

This press release may include forward-looking statements with respect to revenue sources, growth, market risk, and corporate objectives. The Company assumes no duty, and specifically disclaims any obligation, to update forward-looking statements, and cautions that these statements are subject to numerous assumptions, risks, and uncertainties, all of which could change over time. Actual results could differ materially from forward-looking statements.

Tompkins Financial Corporation – Condensed Consolidated Statements of Condition (Unaudited)

(In thousands, except share data)	As of 12/31/2008			As of 12/31/2007
ASSETS
Cash and noninterest bearing balances due from banks	$	48,133		$	46,705
Interest bearing balances due from banks		4,116			3,154
Trading securities, at fair value		38,101			60,135
Available-for-sale securities, at fair value		764,193			639,148
Held-to-maturity securities, fair value of $55,064 at December 31, 2008, and $50,297 at December 31, 2007		54,453			49,593
Loans and leases, net of unearned income and deferred costs and fees		1,817,531			1,440,122
Less: Allowance for loan/lease losses		18,672			14,607
Net Loans and Leases		1,798,859			1,425,515
Bank premises and equipment, net		46,613			44,811
Corporate owned life insurance		34,804			29,821
Goodwill		41,479			22,894
Other intangible assets		5,299			3,497
Accrued interest and other assets		36,672			34,186
Total Assets	$	2,867,722		$	2,359,459
LIABILITIES, MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES AND SHAREHOLDERS’ EQUITY
Deposits:
Interest bearing:
Checking, savings and money market	$	980,011		$	741,836
Time		703,107			585,142
Noninterest bearing		450,889			393,848
Total Deposits		2,134,007			1,720,826
Federal funds purchased and securities sold under agreements to repurchase (Valued at fair value: $16,170 at December 31, 2008, and $15,553 at December 31, 2007.)		196,304			195,447
Other borrowings (Valued at fair value: $12,179 at December 31, 2008 and $10,795 at December 31, 2007.)		274,791			210,862
Other liabilities		43,259			33,677
Total Liabilities	$	2,648,361		$	2,160,812
Minority interest in consolidated subsidiaries		1,452			1,452
Shareholders’ equity:
Common stock - par value $.10 per share: Authorized 25,000,000 shares; Issued: 9,727,418 at December 31, 2008; and 9,615,430 at December 31, 2007.		973			962
Additional paid-in capital		152,842			147,657
Retained earnings		73,779			57,255
Accumulated other comprehensive loss		(7,602	)		(6,900	)
Treasury stock, at cost, 76,881 shares at December 31, 2008, and 70,896 shares at December 31, 2007.		(2,083	)		(1,779	)
Total Shareholders’ Equity	$	217,909		$	197,195
Total Liabilities, Minority Interest in Consolidated Subsidiaries And Shareholders’ Equity	$	2,867,722		$	2,359,459

Tompkins Financial Corporation – Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except per share data)	Three months ended						Twelve months ended
	12/31/2008			12/31/2007			12/31/2008			12/31/2007
INTEREST AND DIVIDEND INCOME
Loans	$	26,931		$	25,077		$	102,840		$	97,418
Balances due from banks		9			33			133			217
Federal funds sold		0			0			115			217
Trading securities		406			773			1,923			2,762
Available-for-sale securities		8,684			7,755			33,881			29,773
Held-to-maturity securities		503			494			1,891			2,054
Total Interest and Dividend Income		36,533			34,132			140,783			132,441
INTEREST EXPENSE
Deposits:
Time certificates of deposits of $100,000 or more		1,883			3,002			9,039			14,750
Other deposits		5,825			7,827			25,489			30,735
Federal funds purchased and securities sold under agreements to repurchase		1,734			2,059			7,496			8,125
Other borrowings		2,288			1,771			8,369			4,802
Total Interest Expense		11,730			14,659			50,393			58,412
Net Interest Income		24,803			19,473			90,390			74,029
Less: Provision for loan/lease losses		2,105			479			5,428			1,529
Net Interest Income After Provision for Loan/Lease Losses		22,698			18,994			84,962			72,500
NONINTEREST INCOME
Investment services income		3,451			3,818			14,179			14,446
Insurance commissions and fees		2,833			2,606			11,607			11,046
Service charges on deposit accounts		2,529			2,886			10,192			10,401
Card services income		844			867			3,338			3,453
Other service charges		661			709			2,657			2,643
Mark-to-market gain on trading securities		983			392			811			612
Mark-to-market loss on liabilities held at fair value		(1,839	)		(682	)		(2,001	)		(1,348	)
Increase in cash surrender value of corporate owned life insurance		361			264			1,448			1,122
Gains on sale of loans		15			8			105			159
Gain on VISA stock redemption		0			0			1,639			0
Other income		440			257			1,583			1,131
Net realized gain on available-for-sale securities		53			96			477			384
Total Noninterest Income		10,331			11,221			46,035			44,049
NONINTEREST EXPENSES
Salary and wages		10,787			8,608			40,140			35,225
Pension and other employee benefits		2,555			2,273			10,307			9,986
Net occupancy expense of bank premises		1,753			1,515			6,839			6,046
Furniture and fixture expense		1,045			972			4,197			3,866
Marketing expense		608			536			2,701			2,284
Professional fees		904			668			3,011			3,258
Software licenses and maintenance		460			516			2,503			2,071
Cardholder expense		305			242			1,225			974
Amortization of intangible assets		306			155			906			653
Other operating expense		4,005			4,103			15,227			13,693
Total Noninterest Expenses		22,728			19,588			87,056			78,056
Income Before Income Tax Expense and Minority Interest in Consolidated Subsidiaries		10,301			10,627			43,941			38,493
Minority interest in consolidated subsidiaries		33			32			297			131
Income Tax Expense		2,994			3,171			13,810			11,991
Net Income	$	7,274		$	7,424		$	29,834		$	26,371
Basic Earnings Per Share	$	0.75		$	0.78		$	3.09		$	2.72
Diluted Earnings Per Share	$	0.74		$	0.77		$	3.06		$	2.70

Tompkins Financial Corporation – Summary Financial Data (Unaudited)

(In thousands, except share and per share data)	Quarter-Ended										Year-Ended
	Dec-08		Sept-08		June-08		Mar-08		Dec-07		Dec-08
Period End Balance Sheet
Securities	$	856,747	$	800,398	$	839,976	$	811,627	$	748,876	$	856,747
Loans and leases, net of unearned income and deferred costs and fees		1,817,531		1,718,378		1,652,831		1,455,570		1,440,122		1,817,531
Allowance for loan/lease losses		18,672		17,306		16,835		14,781		14,607		18,672
Total assets		2,867,722		2,725,014		2,705,196		2,450,413		2,359,459		2,867,722
Total deposits		2,134,007		2,094,647		2,057,244		1,841,045		1,720,826		2,134,007
Federal funds purchased and securities sold under agreements to repurchase		196,304		190,299		203,687		210,079		195,447		196,304
Other borrowings		274,791		185,067		192,638		156,439		210,862		274,791
Shareholders’ Equity		217,909		212,632		203,295		209,688		197,195		217,909
Average Balance Sheet
Average earning assets	$	2,613,324	$	2,512,077	$	2,408,901	$	2,233,023	$	2,154,891	$	2,442,502
Average assets		2,813,158		2,708,126		2,602,914		2,405,040		2,318,558		2,633,020
Average interest-bearing liabilities		2,119,357		2,034,353		1,953,254		1,796,953		1,717,843		1,976,963
Average equity		212,608		205,301		209,403		202,195		191,221		207,382
Share data
Weighted average shares outstanding (basic)		9,683,177		9,668,256		9,650,917		9,602,478		9,560,649		9,651,341
Weighted average shares outstanding (diluted)		9,780,358		9,752,250		9,747,914		9,696,550		9,657,751		9,744,402
Period-end shares outstanding		9,694,772		9,671,379		9,662,547		9,629,693		9,582,783		9,694,772
Book value per share	$	22.48	$	21.99	$	21.04	$	21.78	$	20.58	$	22.48
Income Statement
Net interest income	$	24,803	$	24,038	$	21,910	$	19,833	$	19,473	$	90,390
Provision for loan/lease losses		2,105		1,515		1,183		625		479		5,428
Noninterest income		10,331		11,442		11,553		12,516		11,221		46,035
Noninterest expenses		22,728		22,190		21,758		20,381		19,588		87,056
Minority interest in consolidated subsidiaries		33		117		115		33		32		297
Income tax expense		2,994		3,725		3,288		3,802		3,171		13,810
Net income		7,274		7,933		7,119		7,508		7,424		29,834
Basic earnings per share	$	0.75	$	0.82	$	0.74	$	0.78	$	0.78	$	3.09
Diluted earnings per share	$	0.74	$	0.81	$	0.73	$	0.77	$	0.77	$	3.06
Asset Quality
Net charge-offs	$	739	$	1,043	$	615	$	451	$	282	$	2,848
Nonaccrual loans and leases		15,798		12,463		10,552		9,008		8,890		15,798
Loans and leases 90 days past due and accruing		161		0		1,422		53		312		161
Troubled debt restructurings not included above		69		132		135		139		145		69
Total nonperforming loans and leases		16,028		12,595		12,109		9,200		9,347		16,028
OREO		110		526		481		5		5		110
Nonperforming assets		16,138		13,121		12,590		9,205		9,352		16,138

Tompkins Financial Corporation – Summary Financial Data (Unaudited)

	Quarter-Ended															Year-Ended
	Dec-08			Sept-08			June-08			Mar-08			Dec-07			Dec-08
Credit Quality
Net loan and lease losses/ average loans and leases *		0.17	%		0.25	%		0.16	%		0.13	%		0.08	%		0.18	%
Nonperforming loans and leases/loans and leases		0.88	%		0.73	%		0.73	%		0.63	%		0.65	%		0.88	%
Nonperforming assets/assets		0.56	%		0.48	%		0.47	%		0.38	%		0.40	%		0.56	%
Allowance/nonperforming loans and leases		116.50	%		137.40	%		139.03	%		160.67	%		156.27	%		116.50	%
Allowance/loans and leases		1.03	%		1.01	%		1.02	%		1.02	%		1.01	%		1.03	%
Capital Adequacy (period-end)
Tier I capital / average assets		6.7	%		7.0	%		7.1	%		7.9	%		7.9	%		6.7	%
Total capital / risk-weighted assets		10.6	%		10.9	%		11.1	%		12.4	%		12.2	%		10.6	%
Profitability
Return on average assets *		1.03	%		1.17	%		1.10	%		1.26	%		1.27	%		1.13	%
Return on average equity *		13.61	%		15.37	%		13.67	%		14.93	%		15.40	%		14.39	%
Net interest margin (TE) *		3.89	%		3.92	%		3.77	%		3.68	%		3.70	%		3.81	%
* Quarterly ratios have been annualized

	Quarter-ended											Year-Ended
Non-GAAP Disclosure	Dec-08		Sept-08		June-08		Mar-08			Dec-07		Dec-08
Reported net income	$	7,274	$	7,933	$	7,119	$	7,508		$	7,424	$	29,834
Adjustments:
Proceeds and accrual adjustment from VISA IPO (after-tax)								(983	)				(983	)
Accrual for VISA settlements											517
Subtotal adjustments								(983	)		517		(983	)
Adjusted net income	$	7,274	$	7,933	$	7,119	$	6,525		$	7,941	$	28,851
Weighted average shares outstanding (diluted)		9,780,358		9,752,250		9,747,914		9,696,550			9,657,751		9,744,402
Adjusted diluted earnings per share	$	.74	$	.81	$	.73	$	.67		$	.82	$	2.96

	Year-to-date period ended
Non-GAAP Disclosure	Dec-08			Dec-07
Reported net income	$	29,834		$	26,371
Adjustments:
Proceeds and accrual adjustment from VISA IPO (after-tax)		(983	)		0
Accrual for VISA settlements		0			517
Reorganization related charges (after-tax)		0			712
Subtotal adjustments		(983	)		1,229
Adjusted net income	$	28,851		$	27,600
Weighted average shares outstanding (diluted)		9,744,402			9,781,789
Adjusted diluted earnings per share	$	2.96		$	2.82

¹ Federal Reserve peer ratio as of September 30, 2008, includes banks and bank holding companies with consolidated assets between $1 billion and $3 billion.