Tompkins Financial (TMP) 8-K Tompkins Financial Corporation reports increase in fourth quarter earnings

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 26, 2011

Tompkins Financial Corporation reports increase in fourth quarter earnings

ITHACA, NY – Tompkins Financial Corporation (TMP–NYSE Amex)

Tompkins Financial Corporation reported net income of $8.9 million for the fourth quarter of 2010, an increase of 8.3% from the $8.2 million reported for the same period in 2009. Net income of $33.8 million for the year ended December 31, 2010, was 6.3% ahead of the $31.8 million reported for the year ended December 31, 2009.

Diluted earnings per share were $0.81 for the fourth quarter of 2010, a 6.6% increase from the $0.76 reported for the fourth quarter of 2009. For the full year, diluted earnings per share totaled $3.11 in 2010, an increase of 5.1% over the $2.96 reported in 2009.

President and CEO Stephen S. Romaine commented, “We are very pleased to report record earnings for the year ended December 31, 2010, especially given the challenging economic climate. During the quarter we were also pleased to see continuing improvement to our already strong capital position, as well as a decline in nonperforming assets.”

Selected highlights for the fourth quarter and full year period ended December 31, 2010, are included below:

§  Capital levels at December 31, 2010, remain comfortably above the regulatory minimums to be considered well capitalized, with a ratio of Tier I capital to average assets of 8.02%; and a ratio of total capital to risk-weighted assets of 13.42%. These ratios are improved from 7.44% and 12.14%, respectively at December 31, 2009.

§  Total loans were $1.9 billion at December 31, 2010, relatively unchanged from a year earlier.

§  Total deposits were $2.5 billion at quarter end, up 2.3% from the same period in 2009.

§  Average earning assets were up approximately $160.2 million during the year (primarily in the securities portfolio) helping offset a modest decline in the net interest margin.

§  The net interest margin for the fourth quarter of 2010 was 3.75% compared to 3.89% for the fourth quarter of 2009. For the year to date, net interest margin was 3.86% in 2010, compared to 3.92% for 2009. Despite the decline in net interest margin, net interest income of $27.9 million for the fourth quarter of 2010 was relatively flat when compared to the same quarter last year, and for the full year ended December 31, 2010, net interest income of $111.8 million was up 4.4% from 2009.

§  Noninterest income was $12.3 million for the quarter (up 1.14%) and $46.2 million for the year (down 0.1%). Fee income from investment services, insurance, and card services were all up for both the quarter and year-to-date periods, while service charges on deposit accounts declined. The lower level of deposit service charges was attributable to new regulations that went into effect July 1, 2010 for new customers and August 15, 2010 for pre-existing customers.

§  Growth in noninterest expense was relatively modest for the quarter and full year periods. Noninterest expenses for the fourth quarter of 2010 were $25.2 million, up 1.0% over the same period prior year. Noninterest expenses for the full year were $99.0 million, an increase of 2.5% over the full year expenses in 2009.

§  The level of nonperforming assets declined during the quarter from $55.8 million at September 30, 2010, to $46.5 million at December 31, 2010, yet remain above nonperforming assets of $35.2 million reported at year end 2009. As of December 31, 2010, we were continuing to receive regular payments on approximately 63% of the loans that we categorize as nonperforming.

§  The provision for loan and lease losses was $1.4 million in the fourth quarter of 2010, compared to $2.8 million in the fourth quarter of 2009. For the full year, provision expense was $8.5 million, down from $9.3 million in 2009. Net charge-offs were up for both the quarter and full year periods, yet remain well below the most recent peer averages published by the Federal Reserve.

§  The Company’s allowance for loan and lease losses totaled $27.8 million at December 31, 2010, which represented 1.46% of total loans, compared to $28.7 million and 1.50% at September 30, 2010. The allowance as a percentage of total loans has increased from 1.27% at year-end 2009. Allowance coverage of nonperforming loans has improved in the most recent quarter to 61.46% from 53.15% in September 2010.

Mr. Romaine added, “While many in the industry have experienced losses in recent years, we have continued to deliver returns of shareholders equity that are among the best in the industry. Our commitment to a strategy of long term sustainable growth is what has allowed us to continue our long history of earnings and dividend growth, even during the challenging economic environment of recent years.”

Tompkins Financial Corporation operates 45 banking offices in the New York State markets served by the Company’s three community banks - Tompkins Trust Company, The Bank of Castile, and Mahopac National Bank, insurance through Tompkins Insurance Agencies, Inc. and wealth management through Tompkins Financial Advisors.

“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.

1 Federal Reserve peer ratio as of September 30, 2010, includes banks and bank holding companies with consolidated assets between $3 billion and $10 billion.

TOMPKINS FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION

	As of			As of
(In thousands, except share and per share data) (Unaudited)	12/31/2010			12/31/2009
ASSETS
Cash and noninterest bearing balances due from banks	$	47,339		$	43,686
Interest bearing balances due from banks		2,226			1,676
Money market funds		100			100
Cash and Cash Equivalents		49,665			45,462
Trading securities, at fair value		22,837			31,718
Available-for-sale securities, at fair value		1,039,608			928,770
Held-to-maturity securities, fair value of $56,064 at December 31, 2010, and $46,340 at December 31, 2009		54,973			44,825
Loans and leases, net of unearned income and deferred costs and fees		1,910,358			1,914,818
Less: Allowance for loan and lease losses		27,832			24,350
Net Loans and Leases		1,882,526			1,890,468
FHLB and FRB stock		21,985			20,041
Bank premises and equipment, net		46,103			46,650
Corporate owned life insurance		40,024			35,953
Goodwill		41,649			41,589
Other intangible assets, net		4,207			4,864
Accrued interest and other assets		56,766			62,920
Total Assets	$	3,260,343		$	3,153,260
LIABILITIES
Deposits:
Interest bearing:
Checking, savings and money market		1,230,815			1,183,145
Time		741,829			794,738
Noninterest bearing		523,229			461,981
Total Deposits		2,495,873			2,439,864
Federal funds purchased and securities sold under agreements to repurchase, including certain amounts at fair value of $0 at December 31, 2010, and $5,500 at December 31, 2009		183,609			192,784
Other borrowings, including certain amounts at fair value of $11,629 at December 31, 2010 and $11,335 at December 31, 2009		244,193			208,965
Trust preferred debentures		25,060			25,056
Other liabilities		38,200			41,583
Total Liabilities	$	2,986,935		$	2,908,252
EQUITY
Tompkins Financial Corporation shareholders’ equity:
Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued: 10,934,385 at December 31, 2010; and 9,785,265 at December 31, 2009		1,093			978
Additional paid-in capital		198,114			155,589
Retained earnings		76,446			92,402
Accumulated other comprehensive loss		(1,260	)		(3,087	)
Treasury stock, at cost – 92,025 shares at December 31, 2010, and 81,723 shares at December 31, 2009		(2,437	)		(2,326	)
Total Tompkins Financial Corporation Shareholders’ Equity		271,956			243,556
Noncontrolling interests		1,452			1,452
Total Equity	$	273,408		$	245,008
Total Liabilities and Equity	$	3,260,343		$	3,153,260

TOMPKINS FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended						Twelve Months Ended
(In thousands, except per share data) (Unaudited)	12/31/2010			12/31/2009			12/31/2010			12/31/2009
INTEREST AND DIVIDEND INCOME
Loans	$	26,314		$	27,359		$	106,357		$	107,452
Due from banks		4			12			31			27
Federal funds sold		2			4			17			15
Money market funds		0			1			0			36
Trading securities		242			313			1,084			1,362
Available-for-sale securities		7,980			8,514			33,989			35,196
Held-to-maturity securities		375			417			1,535			1,814
FHLB and FRB stock		317			807			1,049			893
Total Interest and Dividend Income		35,234			37,427			144,062			146,795
INTEREST EXPENSE
Time certificates of deposits of $100,000 or more		938			1,286			4,297			5,442
Other deposits		2,873			4,340			13,380			18,769
Federal funds purchased and repurchase agreements		1,349			1,565			5,418			6,254
Trust preferred debentures		371			363			1,581			1,087
Other borrowings		1,842			1,976			7,611			8,206
Total Interest Expense		7,373			9,530			32,287			39,758
Net Interest Income		27,861			27,897			111,775			107,037
Less: Provision for loan/lease losses		1,433			2,758			8,507			9,288
Net Interest Income After Provision for Loan/Lease Losses		26,428			25,139			103,268			97,749
NONINTEREST INCOME
Investment services income		3,564			3,502			14,329			13,328
Insurance commissions and fees		3,016			2,870			12,738			12,307
Service charges on deposit accounts		1,952			2,451			8,554			9,312
Card services income		1,138			980			4,285			3,664
Mark-to-market (loss) gain on trading securities		(339	)		(150	)		219			204
Mark-to-market gain (loss) on liabilities held at fair value		500			502			(441	)		1,263
Other income		2,446			1,769			6,331			5,933
Net other-than-temporary impairment losses		0			0			(34	)		(146	)
Net gain on security transactions		4			218			178			348
Total Noninterest Income		12,281			12,142			46,159			46,213
NONINTEREST EXPENSES
Salaries and wages		10,911			10,597			42,530			40,459
Pension and other employee benefits		3,554			3,281			14,523			13,367
Net occupancy expense of premises		1,735			1,668			7,161			7,135
Furniture and fixture expense		1,109			1,101			4,421			4,462
FDIC insurance		1,022			1,648			3,768			4,976
Amortization of intangible assets		175			213			762			915
Other operating expense		6,677			6,423			25,880			25,303
Total Noninterest Expenses		25,183			24,931			99,045			96,617
Income Before Income Tax Expense		13,526			12,350			50,382			47,345
Income Tax Expense		4,602			4,104			16,420			15,383
Net Income attributable to Noncontrolling Interests and Tompkins Financial Corporation		8,924			8,246			33,962			31,962
Less: Net income attributable to noncontrolling interests		32			32			131			131
Net Income Attributable to Tompkins Financial Corporation	$	8,892		$	8,214		$	33,831		$	31,831
Basic Earnings Per Share	$	0.82		$	0.77		$	3.13		$	2.98
Diluted Earnings Per Share	$	0.81		$	0.76		$	3.11		$	2.96

Average Consolidated Balance Sheet and Net Interest Analysis

	Quarter Ended							Year to Date Period Ended							Year to Date Period Ended
	December 31, 2010							December 31, 2010							December 31, 2009
	Average							Average							Average
	Balance					Average		Balance					Average		Balance					Average
(Dollar amounts in thousands)	(QTD)		Interest			Yield/Rate		(YTD)		Interest			Yield/Rate		(YTD)		Interest			Yield/Rate
ASSETS
Interest-earning assets
Interest-bearing balances due from banks	$	10,582	$	4		0.15	%	$	25,189	$	31		0.12	%	$	17,017	$	27		0.16	%
Money market funds		100		—		0.00	%		100		—		0.00	%		17,130		36		0.21	%
Securities (1)
U.S. Government Securities		916,601		7,254		3.14	%		857,724		30,964		3.61	%		721,438		31,812		4.41	%
Trading Securities		23,888		242		4.02	%		27,389		1,085		3.96	%		35,067		1,362		3.88	%
State and municipal (2)		113,115		1,478		5.18	%		107,376		6,059		5.64	%		111,253		6,715		6.04	%
Other Securities (2)		16,308		196		4.77	%		17,465		849		4.86	%		20,710		1,064		5.14	%
Total securities		1,069,912		9,170		3.40	%		1,009,954		38,957		3.86	%		888,468		40,953		4.61	%
Federal Funds Sold		4,121		2		0.19	%		9,233		17		0.18	%		8,542		15		0.18	%
FHLBNY and FRB stock		19,807		317		6.35	%		19,597		1,049		5.35	%		20,274		893		4.40	%
Loans, net of unearned income (3)
Real Estate		1,361,886		18,732		5.46	%		1,345,540		75,610		5.62	%		1,284,063		75,479		5.88	%
Commercial Loans (2)		458,064		6,126		5.30	%		461,339		24,730		5.36	%		466,076		25,461		5.46	%
Consumer Loans		76,239		1,348		7.01	%		80,412		5,619		6.99	%		87,283		6,083		6.97	%
Direct Lease Financing		9,650		145		5.96	%		10,692		643		6.01	%		13,031		784		6.02	%
Total loans, net of unearned income		1,905,839		26,351		5.48	%		1,897,983		106,602		5.62	%		1,850,453		107,807		5.83	%
Total interest-earning assets		3,010,361		35,844		4.72	%		2,962,056		146,656		4.95	%		2,801,884		149,731		5.34	%
Other assets		233,461							229,784							207,123
Total assets		3,243,822							3,191,840							3,009,007
LIABILITIES & EQUITY
Deposits
Interest-bearing deposits
Interest bearing checking, savings, & money market		1,253,844		1,218		0.39	%		1,226,852		5,994		0.49	%		1,128,648		8,694		0.77	%
Time Dep > $100,000		309,262		938		1.20	%		327,626		4,297		1.31	%		303,761		5,442		1.79	%
Time Dep < $100,000		433,962		1,602		1.46	%		432,804		6,984		1.61	%		420,351		9,223		2.19	%
Brokered Time Dep < $100,000		15,740		53		1.34	%		24,886		402		1.62	%		43,218		852		1.97	%
Total interest-bearing deposits		2,012,808		3,811		0.75	%		2,012,168		17,677		0.88	%		1,895,978		24,211		1.28	%
Federal funds purchased & securities sold under agreements to repurchase repurchase		191,622		1,349		2.79	%		185,563		5,418		2.92	%		190,975		6,254		3.27	%
Other borrowings		195,508		1,842		3.74	%		193,296		7,611		3.94	%		204,467		8,206		4.01	%
Trust preferred debentures		25,060		371		5.87	%		25,058		1,581		6.31	%		17,311		1,087		6.28	%
Total interest-bearing liabilities		2,424,998		7,373		1.21	%		2,416,085		32,287		1.34	%		2,308,731		39,758		1.72	%
Noninterest bearing deposits		495,781							468,219							427,025
Accrued expenses and other liabilities		42,992							41,593							40,242
Total liabilities		2,963,771							2,925,897							2,775,998
Tompkins Financial Corporation Shareholders’ equity		278,508							264,431							231,498
Noncontrolling interest		1,543							1,512							1,511
Total equity		280,051							265,943							233,009
Total liabilities and equity	$	3,243,822						$	3,191,840						$	3,009,007
Interest rate spread						3.51	%						3.61	%						3.62	%
Net interest income/margin on earning assets				28,471		3.75	%				114,369		3.86	%				109,973		3.92	%
Tax Equivalent Adjustment				(610	)						(2,594	)						(2,936	)
Net interest income per consolidated financial statements			$	27,861						$	111,775						$	107,037

(1)   Average balances and yields on available-for-sale securities are based on historical amortized cost.

(2)   Interest income includes the tax effects of taxable-equivalent adjustments using a combined New York State and Federal effective income tax rate of 40% to increase tax exempt interest income to taxable-equivalent basis.

(3)   Nonaccrual loans are included in the average asset totals presented above. Payments received on nonaccrual loans have been recognized as disclosed in Note 1 of the Company’s condensed consolidated financial statements included in Part I of the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2009.

Tompkins Financial Corporation - Summary Financial Data (Unaudited)

	Quarter-Ended										Year-Ended
(In thousands, except per share data	Dec-10		Sep-10		Jun-10		Mar-10		Dec-09		Dec-10
Period End Balance Sheet
Securities	$	1,117,418	$	1,053,038	$	1,023,220	$	1,026,301	$	1,005,313	$	1,117,418
Loans and leases, net of unearned income and deferred costs and fees		1,910,358		1,914,064		1,900,303		1,887,038		1,914,818		1,910,358
Allowance for loan and lease losses		27,832		28,684		26,530		25,366		24,350		27,832
Total assets		3,260,343		3,247,111		3,161,648		3,206,763		3,153,260		3,260,343
Total deposits		2,495,873		2,528,528		2,460,223		2,512,201		2,439,864		2,495,873
Federal funds purchased and securities sold under agreements to repurchase		183,609		191,596		175,336		181,255		192,784		183,609
Other borrowings		244,193		182,779		189,561		190,545		208,965		244,193
Trust preferred debentures		25,060		25,059		25,058		25,057		25,056		25,060
Shareholders’ equity		273,408		276,495		268,683		254,444		245,008		273,408
Average Balance Sheet
Average earning assets	$	3,010,361	$	2,937,795	$	2,953,673	$	2,945,953	$	2,920,269	$	2,962,056
Average assets		3,243,822		3,168,478		3,181,476		3,173,064		3,132,599		3,191,840
Average interest-bearing liabilities		2,424,998		2,372,630		2,424,245		2,443,145		2,408,997		2,416,085
Average equity		280,051		273,517		260,197		249,586		245,176		265,943
Share data
Weighted average shares outstanding (basic)		10,888,138		10,845,106		10,818,218		10,724,644		10,702,447		10,812,502
Weighted average shares outstanding (diluted)		10,936,042		10,893,642		10,876,421		10,776,934		10,752,737		10,864,450
Period-end shares outstanding		10,898,475		10,878,813		10,830,001		10,793,573		9,752,619		10,898,475
Book value per share		25.09		25.42		24.81		23.57		22.84		25.09
Income Statement
Net interest income	$	27,861	$	27,864	$	28,106	$	27,944	$	27,897	$	111,775
Provision for loan/lease losses		1,433		3,483		1,408		2,183		2,758		8,507
Noninterest income		12,281		11,227		11,331		11,320		12,142		46,159
Noninterest expense		25,183		24,852		24,516		24,494		24,931		99,045
Income tax expense		4,602		3,233		4,447		4,138		4,104		16,420
Net income attributable to Tompkins Financial		8,892		7,490		9,033		8,416		8,214		33,831
Noncontrolling interests		32		33		33		33		32		131
Basic earnings per share	$	0.82	$	0.69	$	0.84	$	0.78	$	0.77	$	3.13
Diluted earnings per share	$	0.81	$	0.69	$	0.83	$	0.78	$	0.76	$	3.11
Asset Quality
Net charge-offs		2,285		1,329		244		1,167		1,208		5,025
Nonaccrual loans and leases		41,501		48,966		33,645		29,521		31,289		41,501
Loans and leases 90 days past due and accruing		1,217		1,737		1,758		51		369		1,217
Troubled debt restructurings not included above		2,564		3,264		3,264		3,703		3,265		2,564
Total nonperforming loans and leases		45,282		53,967		38,667		33,275		34,923		45,282
OREO		1,255		1,845		1,638		558		299		1,255
Nonperforming assets		46,537		55,812		40,305		33,833		35,222		46,537

	Quarter-Ended															Year-Ended
RATIO ANALYSIS	Dec-10			Sep-10			Jun-10			Mar-10			Dec-09			Dec-10
Credit Quality
Net loan and lease losses/ average loans and leases *		0.48	%		0.28	%		0.05	%		0.25	%		0.25	%		0.26	%
Nonperforming loans and leases/loans and leases		2.37	%		2.82	%		2.03	%		1.76	%		1.82	%		2.37	%
Nonperforming assets/assets		1.43	%		1.72	%		1.27	%		1.06	%		1.12	%		1.43	%
Allowance/nonperforming loans and leases		61.46	%		53.15	%		68.61	%		76.23	%		69.72	%		61.46	%
Allowance/loans and leases		1.46	%		1.50	%		1.40	%		1.34	%		1.27	%		1.46	%
Capital Adequacy (period-end)
Tier I capital / average assets		8.02	%		8.01	%		7.77	%		7.56	%		7.44	%		8.02	%
Total capital / risk-weighted assets		13.42	%		13.14	%		13.10	%		12.56	%		12.14	%		13.42	%
Profitability
Return on average assets *		1.09	%		0.94	%		1.14	%		1.08	%		1.04	%		1.06	%
Return on average equity *		12.60	%		10.86	%		13.92	%		13.68	%		13.29	%		12.72	%
Net interest margin (TE) *		3.75	%		3.85	%		3.91	%		3.95	%		3.89	%		3.86	%
* Quarterly ratios have been annualized

	Quarter-Ended										Year-Ended
	Dec-10		Sep-10		Jun-10		Mar-10		Dec-09		Dec-10
Non-GAAP Disclosure
Reported net income	$	8,892	$	7,490	$	9,033	$	8,416	$	8,214	$	33,831
Adjustments:
Adjusted net income		8,892		7,490		9,033		8,416		8,214		33,831
Weighted average shares outstanding (diluted)		10,936,042		10,893,641		10,876,421		10,776,934		10,752,737		10,864,450
Adjusted diluted earnings per share	$	0.81	$	0.69	$	0.83	$	0.78	$	0.76	$	3.11

	Year-to-date period ended
	Dec-10		Dec-09
Non-GAAP Disclosure
Reported net income	$	33,831	$	31,831
Adjustments:
FDIC special insurance assessment (after-tax)		—		822
Subtotal adjustments		—		822
Adjusted net income		33,831		32,653
Weighted average shares outstanding (diluted)		10,864,450		10,759,302
Adjusted diluted earnings per share	$	3.11	$	3.03