Tompkins Financial (TMP) 8-K Agreement and Plan of Merger

Tompkins Financial Corporation 8-K

EXHIBIT 99.2

	For more information contact:
	Stephen S. Romaine, President & CEO
	Francis M. Fetsko, CFO
	Tompkins Financial Corporation 607.273.3210

For Immediate Release

Wednesday, January 25, 2012

Tompkins Financial Corporation Reports Increase in Fourth Quarter Earnings and Record 2011 Earnings

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

Tompkins Financial Corporation reported net income of $9.4 million for the fourth quarter of 2011, an increase of 5.6% over the $8.9 million reported for the same period in 2010.  Diluted earnings per share were $0.84 for the fourth quarter of 2011, a 3.7% increase over the $0.81 reported for the fourth quarter of 2010.

For the twelve months ended December 31, 2011, net income was $35.4 million, an increase of 4.7% over net income of $33.8 million for the same period in 2010.  Full year 2011 diluted earnings per share totaled $3.20, an increase of 2.9% over the $3.11 reported for 2010.

Stephen S. Romaine, President and CEO stated, “2011 was a strong year for our Company with net income and total assets at record levels.  In an economic environment that continued to be challenging, we were able to grow both loans and deposits in 2011.  We are also pleased with the favorable trends that we are seeing in asset quality measures, with classified loans down from prior quarter and year end 2010.”

Selected highlights for the fourth quarter and year-to-date period included:

§   Return on average equity was 12.02% in 2011, which ranks in the top 15% of our most recent peer group average as published by the Federal Reserve1.

§   Total loans were $2.0 billion at December 31, 2011, up $71.5 million or 3.7% from December 31, 2010.

§   Total deposits were $2.7 billion at December 31, 2011, up 6.6% from the same period in 2010.  Noninterest-bearing deposits totaled $616.4 million at December 31, 2011, an increase of 17.8% over the same period in 2010.

§   Total revenue was $39.2 million for the fourth quarter of 2011 and $159.4 million for the twelve months ended December 31, 2011, down 2.4% and up 0.9%, respectively, compared to the same periods in 2010.

§   The net interest margin for the fourth quarter of 2011 was 3.62%, compared to 3.71% for the third quarter of 2011, and 3.75% for the fourth quarter of 2010.  For the year to date, net interest margin was 3.72% in 2011, compared to 3.86% for 2010.  Despite the decline in net interest margin over the past 12 months, net interest income of $28.0 million for the fourth quarter of 2011 and $111.4 million for the full year of 2011 were comparable to the same periods in 2010. Growth in interest earning assets, primarily in the securities portfolio, helped mitigate the earnings impact of the decline in margin.

§   Noninterest income was down 8.8% for the quarter and up 4.0% for the full year 2011 compared to the same periods in 2010.  Card services income and insurance commissions and fees were up from the prior year for both the quarter and year to date periods.  Investment services income was down 10.3% for the quarter and was flat for the twelve months ended December 31, 2011, when compared to the same periods in 2010.  Other income was down $958,000 or 39.2% for the quarter and up $374,000 or 5.9% for the twelve months ended December 31, 2011 compared to the same periods in 2010.  Contributing to the decrease from prior quarter were lower loan fees and lower gains on the sale of residential mortgage loans.

§   Noninterest expense for the fourth quarter of 2011 was $24.2 million, down 3.9% compared to the same period prior year. Noninterest expense for the year-to-date period was $98.6 million, comparable to the twelve months ended December 31, 2010.  A reduction in FDIC insurance costs contributed to the decrease in noninterest expense for both the fourth quarter and full year.

§   Provision for loan and lease losses was $1.2 million for the fourth quarter of 2011, down from $4.9 million in the third quarter of 2011, and $1.4 million in the fourth quarter of 2010.  For the full year, provision for loan and lease losses was $8.9 million, up from $8.5 million in 2010.  The third quarter provision was largely the result of an increase in loan charge-offs during the period, which included a single credit that represented 91.7% of the $5.5 million in gross charge offs during the third quarter.

§   Nonperforming assets were generally flat when compared to the most recent two quarters, and are down 8.2% when compared to the same quarter last year.  The ratio of nonperforming assets to total assets of 1.26% at December 31, 2011, has improved for five consecutive quarters and remains well below the most recent peer averages of 3.10% published as of September 30, 2011, by the Federal Reserve1.  The Company continues to receive regular payments on over 64% of loan balances that we categorize as nonperforming.

§   The Company’s allowance for loan and lease losses totaled $27.6 million at December 31, 2011, which represented 1.39% of total loans, compared to $27.8 million and 1.46% at December 31, 2010.  The allowance for loan and lease losses covered 66.65% of nonperforming loans as of December 31, 2011, reflecting improvement from 61.46% at December 31, 2010.

§   Capital levels continued to improve during the quarter and ratios remain well above the regulatory well capitalized minimums.  Tier 1 capital as a percentage of average assets was 8.51%; and the ratio of total capital to risk-weighted assets was 14.17%.

Mr. Romaine, added, “Although the interest rate and economic environment will remain a challenge for our business, our strong balance sheet and earnings performance, along with a dedicated and professional team of employees, continues to position us well to take advantage of new growth opportunities.”

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, 2011, includes banks and bank holding companies with consolidated assets between $3 billion and $10 billion.

TOMPKINS FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
(In thousands, except share and per share data) (Unaudited)	As of			As of
ASSETS	12/31/2011			12/31/2010
Cash and noninterest bearing balances due from banks	$	47,297		$	47,339
Interest bearing balances due from banks		2,170			2,226
Money market funds		100			100
Cash and Cash Equivalents		49,567			49,665
Trading securities, at fair value		19,598			22,837
Available-for-sale securities, at fair value		1,143,546			1,039,608
Held-to-maturity securities, fair value of $27,255 at December 31, 2011, and $56,064
at December 31, 2010		26,673			54,973
Loans and leases, net of unearned income and deferred costs and fees		1,981,849			1,910,358
Less:  Allowance for loan and lease losses		27,593			27,832
Net Loans and Leases		1,954,256			1,882,526
Federal Home Loan Bank stock and Federal Reserve Bank stock		19,070			21,985
Bank premises and equipment, net		44,712			46,103
Corporate owned life insurance		43,044			40,024
Goodwill		43,898			41,649
Other intangible assets, net		4,096			4,207
Accrued interest and other assets		51,788			56,766
Total Assets	$	3,400,248		$	3,260,343
LIABILITIES
Deposits:
Interest bearing:
Checking, savings and money market		1,356,870			1,230,815
Time		687,321			741,829
Noninterest bearing		616,373			523,229
Total Deposits		2,660,564			2,495,873
Federal funds purchased and securities sold under agreements to repurchase		169,090			183,609
Other borrowings, including certain amounts at fair value of $12,093 at December 31, 2011
and $11,629 at December 31, 2010		186,075			244,193
Trust preferred debentures		25,065			25,060
Other liabilities		60,311			38,200
Total Liabilities	$	3,101,105		$	2,986,935
EQUITY
Tompkins Financial Corporation shareholders' equity:
Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued:
11,159,466 at December 31, 2011; and 10,934,385 at December 31, 2010		1,116			1,093
Additional paid-in capital		206,395			198,114
Retained earnings		96,445			76,446
Accumulated other comprehensive loss		(3,677	)		(1,260	)
Treasury stock, at cost – 95,105 shares at December 31, 2011, and 92,025 shares
at December 31, 2010		(2,588	)		(2,437	)
Total Tompkins Financial Corporation Shareholders’ Equity		297,691			271,956
Noncontrolling interests		1,452			1,452
Total Equity	$	299,143		$	273,408
Total Liabilities and Equity	$	3,400,248		$	3,260,343

TOMPKINS FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
	Three Months Ended						Twelve Months Ended
(In thousands, except per share data) (Unaudited)	12/31/2011			12/31/2010			12/31/2011			12/31/2010
INTEREST AND DIVIDEND INCOME
Loans	$	26,280		$	26,314		$	103,998		$	106,357
Due from banks		1			4			12			31
Federal funds sold		2			2			7			17
Trading securities		205			242			873			1,084
Available-for-sale securities		6,996			7,980			30,103			33,989
Held-to-maturity securities		240			375			1,185			1,535
Federal Home Loan Bank stock and Federal Reserve Bank stock		189			317			910			1,049
Total Interest and Dividend Income		33,913			35,234			137,088			144,062
INTEREST EXPENSE
Time certificates of deposits of $100,000 or more		758			938			3,292			4,297
Other deposits		2,156			2,873			9,795			13,380
Federal funds purchased and securities sold under agreements to repurchase		1,129			1,349			4,872			5,418
Trust preferred debentures		382			371			1,580			1,581
Other borrowings		1,489			1,842			6,143			7,611
Total Interest Expense		5,914			7,373			25,682			32,287
Net Interest Income		27,999			27,861			111,406			111,775
Less:  Provision for loan and lease losses		1,160			1,433			8,945			8,507
Net Interest Income After Provision for Loan and Lease Losses		26,839			26,428			102,461			103,268
NONINTEREST INCOME
Investment services income		3,196			3,564			14,287			14,329
Insurance commissions and fees		3,136			3,016			13,542			12,738
Service charges on deposit accounts		2,235			1,952			8,491			8,554
Card services income		1,275			1,138			5,060			4,285
Mark-to-market (loss) gain on trading securities		(108	)		(339	)		62			219
Mark-to-market gain (loss) on liabilities held at fair value		25			500			(464	)		(441	)
Other income		1,488			2,446			6,705			6,331
Net other-than-temporary impairment losses		(65	)		0			(65	)		(34	)
Net gain on securities transactions		15			4			396			178
Total Noninterest Income		11,197			12,281			48,014			46,159
NONINTEREST EXPENSES
Salaries and wages		10,914			10,911			44,140			42,530
Pension and other employee benefits		3,213			3,554			14,275			14,523
Net occupancy expense of premises		1,796			1,735			7,117			7,161
Furniture and fixture expense		1,138			1,109			4,463			4,421
FDIC insurance		471			1,022			2,527			3,768
Amortization of intangible assets		136			175			589			762
Other operating expense		6,532			6,677			25,441			25,880
Total Noninterest Expenses		24,200			25,183			98,552			99,045
Income Before Income Tax Expense		13,836			13,526			51,923			50,382
Income Tax Expense		4,417			4,602			16,373			16,420
Net Income attributable to Noncontrolling Interests and Tompkins Financial Corporation		9,419			8,924			35,550			33,962
Less:  Net income attributable to noncontrolling interests		32			32			131			131
Net Income Attributable to Tompkins Financial Corporation	$	9,387		$	8,892		$	35,419		$	33,831
Basic Earnings Per Share	$	0.84		$	0.82		$	3.21		$	3.13
Diluted Earnings Per Share	$	0.84		$	0.81		$	3.20		$	3.11
See accompanying notes to unaudited condensed consolidated financial statements.

Average Consolidated Balance Sheet and Net Interest Analysis
				Quarter Ended					Year to Date Period Ended					Year to Date Period Ended
				December 31, 2011					December 31, 2011					December 31, 2010
				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		$	20,815	$	1	0.04%	$	12,717	$	12	0.09%	$	25,189	$	31	0.12%
	Money market funds			100		—	0.00%		100		—	0.00%		100		—	0.00%
	Securities (1)
		U.S. Government securities		1,011,681		6,386	2.50%		969,303		27,504	2.84%		857,724		30,964	3.61%
		Trading securities		20,110		205	4.04%		21,262		873	4.11%		27,389		1,085	3.96%
		State and municipal (2)		82,632		1,156	5.55%		95,039		5,143	5.41%		107,376		6,059	5.64%
		Other securities (2)		12,790		146	4.53%		13,971		648	4.64%		17,465		849	4.86%
		Total securities		1,127,213		7,893	2.78%		1,099,575		34,168	3.11%		1,009,954		38,957	3.86%
	Federal Funds Sold			4,646		2	0.09%		5,837		7	0.12%		9,233		17	0.18%
	FHLBNY and FRB stock			17,068		189	4.44%		17,992		910	5.06%		19,597		1,049	5.35%
	Loans, net of unearned income (3)
		Real estate		1,423,532		18,861	5.26%		1,395,533		74,598	5.35%		1,345,540		75,610	5.62%
		Commercial loans (2)		465,471		6,352	5.41%		457,120		24,792	5.42%		461,339		24,730	5.36%
		Consumer loans		65,749		1,118	6.74%		68,364		4,712	6.89%		80,412		5,619	6.99%
		Direct lease financing		6,457		94	5.77%		7,523		446	5.93%		10,692		643	6.01%
		Total loans, net of unearned income		1,961,209		26,425	5.34%		1,928,540		104,548	5.42%		1,897,983		106,602	5.62%
	Total interest-earning assets			3,131,051		34,511	4.37%		3,064,761		139,645	4.56%		2,962,056		146,656	4.95%
Other assets				237,084					230,221					229,784
	Total assets			3,368,135					3,294,982					3,191,840
LIABILITIES & EQUITY
Deposits
	Interest-bearing deposits
		Interest bearing checking, savings,  & money market		1,400,283		1,047	0.30%		1,350,659		4,741	0.35%		1,226,852		5,994	0.49%
		Time deposits > $100,000		309,773		758	0.97%		313,881		3,292	1.05%		327,626		4,297	1.31%
		Time deposits < $100,000		388,100		1,109	1.13%		401,902		5,033	1.25%		432,804		6,984	1.61%
		Brokered time deposits < $100,000		13		0	0.00%		1,731		21	1.21%		24,886		402	1.62%
		Total interest-bearing deposits		2,098,169		2,914	0.55%		2,068,173		13,087	0.63%		2,012,168		17,677	0.88%
Federal funds purchased & securities sold under
		agreements to repurchase		170,358		1,129	2.63%		173,692		4,872	2.80%		185,563		5,418	2.92%
Other borrowings				141,735		1,489	4.17%		155,650		6,143	3.95%		193,296		7,611	3.94%
Trust preferred debentures				25,064		383	6.06%		25,062		1,580	6.30%		25,058		1,581	6.31%
	Total interest-bearing liabilities			2,435,326		5,915	0.96%		2,422,577		25,682	1.06%		2,416,085		32,287	1.34%
Noninterest bearing deposits				584,514					539,917					468,219
Accrued expenses and other liabilities				40,756					37,868					41,593
	Total liabilities			3,060,596					3,000,362					2,925,897
Tompkins Financial Corporation Shareholders’ equity				305,996					292,845					264,431
Noncontrolling interest				1,543					1,775					1,512
	Total equity			307,539					294,620					265,943
	Total liabilities and equity		$	3,368,135				$	3,294,982				$	3,191,840
Interest rate spread							3.41%					3.50%					3.61%
	Net interest income/margin on earning assets					28,596	3.62%				113,963	3.72%				114,369	3.86%
Tax Equivalent Adjustment						(597)					(2,557)					(2,594)
	Net interest income per consolidated financial statements				$	27,999				$	111,406				$	111,775

(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 consolidated financial statements included in Part I of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

Tompkins Financial Corporation - Summary Financial Data (Unaudited)
(In thousands, except per share data)	Quarter-Ended					Year-Ended
	Dec-11	Sep-11	Jun-11	Mar-11	Dec-10	Dec-11

Period End Balance Sheet
Securities	$	1,189,817	$	1,130,769	$	1,138,563	$	1,121,443	$	1,117,418	$	1,189,817
Loans and leases, net of unearned income and deferred costs and fees		1,981,849		1,951,598		1,920,716		1,914,344		1,910,358		1,981,849
Allowance for loan and lease losses		27,593		27,878		28,361		28,035		27,832		27,593
Total assets		3,400,248		3,359,017		3,287,598		3,278,894		3,260,343		3,400,248
Total deposits		2,660,564		2,675,674		2,572,008		2,612,517		2,495,873		2,660,564
Federal funds purchased and securities sold under agreements to repurchase		169,090		171,943		178,545		182,009		183,609		169,090
Other borrowings		186,075		138,001		172,643		140,353		244,193		186,075
Trust preferred debentures		25,065		25,063		25,062		25,061		25,060		25,065
Shareholders' equity		299,143		309,335		300,060		282,237		273,408		299,143
Average Balance Sheet
Average earning assets	$	3,131,051	$	3,050,346	$	3,047,494	$	3,029,188	$	3,010,361	$	3,064,761
Average assets		3,368,135		3,286,159		3,271,895		3,252,549		3,243,822		3,294,982
Average interest-bearing liabilities		2,435,326		2,391,576		2,432,556		2,431,145		2,424,998		2,422,577
Average equity		307,539		303,861		288,341		277,283		280,051		294,620
Share data
Weighted average shares outstanding (basic)		11,074,330		11,049,831		10,974,615		10,905,197		10,888,138		11,002,106
Weighted average shares outstanding (diluted)		11,104,623		11,124,331		11,016,515		10,955,430		10,936,042		11,035,384
Period-end shares outstanding		11,123,556		11,122,886		11,051,894		10,952,410		10,898,475		11,123,556
Book value per share		26.89		27.81		27.15		25.77		25.09		26.89
Income Statement
Net interest income	$	27,999	$	27,913	$	27,952	$	27,542	$	27,861	$	111,406
Provision for loan/lease losses		1,160		4,870		1,005		1,910		1,433		8,945
Noninterest income		11,197		12,312		12,013		12,492		12,281		48,014
Noninterest expense		24,200		23,973		25,163		25,216		25,183		98,552
Income tax expense		4,417		3,490		4,364		4,102		4,602		16,373
Net income attributable to Tompkins Financial Corporation		9,387		7,859		9,400		8,773		8,892		35,419
Noncontrolling interests		32		33		33		33		32		131
Basic earnings per share	$	0.84	$	0.71	$	0.86	$	0.80	$	0.82	$	3.21
Diluted earnings per share	$	0.84	$	0.71	$	0.85	$	0.80	$	0.81	$	3.20
Asset Quality
Net charge-offs		1,445		5,353		679		1,707		2,285		9,184
Nonaccrual loans and leases		39,588		40,419		38,457		39,902		41,501		39,588
Loans and leases 90 days past due and accruing		1,380		379		2,512		1,266		1,217		1,380
Troubled debt restructurings not included above		428		441		0		2,411		2,564		428
Total nonperforming loans and leases		41,396		41,239		40,969		43,579		45,282		41,396
OREO		1,334		1,632		1,742		2,270		1,255		1,334
Nonperforming assets		42,730		42,871		42,711		45,849		46,537		42,730
Loan Classifications
Special Mention		52,156		66,697		80,470		70,765		80,920		52,156
Substandard		72,920		73,313		80,003		85,973		91,645		72,920
Doubtful		1,494		509		2,450		2,468		0		1,494

RATIO ANALYSIS	Quarter-Ended															Year-Ended
Credit Quality	Dec-11			Sep-11			Jun-11			Mar-11			Dec-10			Dec-11
Net loan and lease losses/ average loans
and leases *		0.29	%		1.10	%		0.14	%		0.36	%		0.48	%		0.48	%
Nonperforming loans and leases/loans and leases		2.09	%		2.11	%		2.13	%		2.28	%		2.37	%		2.09	%
Nonperforming assets/assets		1.26	%		1.28	%		1.30	%		1.40	%		1.43	%		1.26	%
Allowance/nonperforming loans and leases		66.65	%		67.60	%		69.23	%		64.33	%		61.46	%		66.65	%
Allowance/loans and leases		1.39	%		1.43	%		1.48	%		1.46	%		1.46	%		1.39	%
Capital Adequacy (period-end)
Tier I capital / average assets		8.51	%		8.55	%		8.39	%		8.22	%		8.02	%		8.51	%
Total capital / risk-weighted assets		14.17	%		14.11	%		13.98	%		13.66	%		13.42	%		14.17	%
Profitability
Return on average assets *		1.11	%		0.95	%		1.15	%		1.09	%		1.09	%		1.07	%
Return on average equity *		12.07	%		10.29	%		13.08	%		12.83	%		12.60	%		12.02	%
Net interest margin (TE) *		3.62	%		3.71	%		3.77	%		3.78	%		3.75	%		3.72	%
* Quarterly ratios have been annualized