Tompkins Financial (TMP) 8-K Tompkins Financial Corporation Reports Increase in Second Quarter Earnings

Tompkins Financial Corporation 8-K

For more information contact:

Stephen S. Romaine, President & CEO

Francis M. Fetsko, CFO & COO

Tompkins Financial Corporation 607.273.3210

For Immediate Release

Friday, July 19, 2013

Tompkins Financial Corporation Reports Increase in Second Quarter Earnings

ITHACA, NY – Tompkins Financial Corporation (TMP–NYSE MKT LLC)

Tompkins Financial Corporation reported diluted earnings per share of $0.75 for the second quarter of 2013, an increase of 4.2% from the $0.72 reported for the same period in 2012.  Net income of $11.0 million for the second quarter of 2013, represents a 24.7% increase from the same period in 2012.   Year to date diluted earnings per share were $1.55 for the current period, up 9.2% over the first six months of 2012.  Year to date net income of $22.5 million in 2013 is up 35.3% over the same period in 2012.

Comparisons of the Statement of Income and Statement of Condition to the same period last year are impacted by the acquisition of VIST Financial Corporation on August 1, 2012.  As more fully disclosed in the non-GAAP disclosure section of this press release, net income and diluted earnings in the current and prior period were also impacted by merger related expenses.  The second quarter of 2012 also included $243,000 in after tax income related to the reversal of an accrued liability resulting from the settlement of litigation between VISA Inc. and certain merchants.  After adjusting for the after-tax impact of the above items, diluted earnings per share for the second quarter of 2013 would have been approximately flat compared to the prior year, and year to date diluted earnings per share would have been up by approximately 6.8% over the same period last year.

President and CEO, Stephen S. Romaine said "We saw positive trends during the quarter, with net interest income up $1.6 million from the first quarter of 2013, representing an annualized growth rate of 17.0%.  The growth was fueled by increased loans and noninterest-bearing deposits, which reflected annualized growth of 8.2% and 14.7% respectively over the first quarter of 2013.  The improvement in net interest income was tempered by higher provision expense during the quarter, and lower noninterest income as compared to the prior quarter. Overall performance remains strong, with annualized return on average equity of 10.20% for the quarter, which is ahead of the same period last year and compares favorably to the most recent Federal Reserve Board peer ratio of 8.43% 1.”

NET INTEREST INCOME

Net interest income of $39.8 million for the second quarter of 2013 represents an increase of 41.7% over the same period last year.  The addition of VIST Bank and steady loan growth contributed to the year-over-year increase. Net interest income for the quarter was up $1.6 million, or 4.24%, from the first quarter of 2013, primarily due to growth in average loans and noninterest-bearing deposits.  The net interest margin for the second quarter of 2013 was 3.58% compared to 3.57% for the first quarter in 2013 and 3.52% for the second quarter of 2012.   For the year to date period, net interest income of $78.0 million reflects an increase of 40.5% over the first six months of 2012.

NONINTEREST INCOME

Noninterest income was $16.5 million for the second quarter of 2013, up 29.6% over the same period in 2012, and down 4.9% from the first quarter of 2013. The increase from the same quarter last year is mainly a result of the VIST acquisition. The most significant contributors to the decline from the first quarter of 2013 were lower realized gains on available for sale securities and lower income related to our investment in a Small Business Investment Company.  Insurance commissions, investment services income and card services income were also down modestly from the first quarter, while service charges on deposit accounts were up modestly.    For the year to date period, noninterest income of $33.9 million was up 38.9% from the same six month period in 2012.

NONINTEREST EXPENSE

Noninterest expense was $37.8 million in the second quarter of 2013, up 40.7% from the same period in 2012, and up 0.7% from the first quarter of 2013.  For the year to date period, noninterest income of $75.3 million was up 41.5% from the same six month period in 2012. The increase in noninterest expense over the same quarter and year to date periods of 2012 is mainly a result of the VIST acquisition.

ASSET QUALITY

The ratio of nonperforming assets to total assets of 0.89% reflects improvement from 1.17% for the same period last year, and is up from 0.83% at March 31, 2013.  The nonperforming asset ratio continues to compare favorably to the most recent peer averages of 1.87% published as of March 31, 2013, by the Federal Reserve1.

Asset quality trends on originated loans continue to improve with loans classified as special mention or worse down 30.5% from a year ago, and down 7.5% from last quarter.   Originated loans and leases exclude loans acquired in the VIST acquisition.  In the acquired loan portfolio, loans classified special mention or worse increased by 13.6% from the first quarter of 2013, resulting in 2.0% increase in total loans classified as special mention or worse.  The increase in loans classified as Substandard or Special Mention in the acquired loan portfolio did not have a meaningful impact to the credit marks that were recorded at the time of the acquisition.

Provision for loan and lease losses was $2.5 million for the second quarter of 2013, up from $1.0 million in the same quarter last year, and $1.0 million in the first quarter of 2013.  Net loan and lease (recoveries) charge-offs totaled $1.7 million in the second quarter of 2013, compared to $1.1 million in the second quarter last year, and $1.0 million in the first quarter of 2013.  The current period included net recoveries of $1.2 million in the originated portfolio, while the acquired portfolio included net (recoveries) charge-offs of $2.9 million.

The Company’s allowance for originated loan and lease losses totaled $24.9 million at June 30, 2013, which represented 1.08% of total originated loans, compared to 1.16% at December 31, 2012, reflecting improved quality of the originated portfolio.  The allowance for loan and lease losses covered 64.99% of nonperforming loans and leases as of June 30, 2013, which compares to 62.34% as of December 31, 2012.

CAPITAL POSITION

Capital ratios remain well above the regulatory well capitalized minimums.  Tier 1 capital to average assets improved for the second consecutive quarter, to 8.16% at June 30, 2013.  Total risk based capital also improved during the quarter to 13.34%.  The improvement in capital ratios was primarily driven by growth in retained earnings.  Despite the increase in retained earnings during the quarter, tangible book value per share decline by 5.2% to $22.08, as the rise in market interest rates during the quarter negatively impacted accumulated other comprehensive income associated with unrealized gains available-for-sale securities. Refer to Non-GAAP disclosure for additional details on tangible book value per share.

ABOUT TOMPKINS FINANCIAL CORPORATION

Tompkins Financial Corporation is a financial services company serving the Central, Western, and Hudson Valley regions of New York and the Southeastern region of Pennsylvania.  Headquartered in Ithaca, NY, Tompkins Financial is parent to Tompkins Trust Company, The Bank of Castile, Mahopac National Bank, VIST Bank, Tompkins Insurance Agencies, Inc., and Tompkins Financial Advisors.  For more information on Tompkins Financial, visit www.tompkinsfinancial.com.

NON-GAAP MEASURES

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (GAAP).  Where non-GAAP disclosures are used in this press release, the comparable GAAP measure, as well as reconciliation to the comparable GAAP measure, is provided in the accompanying tables.  Management believes that these non-GAAP measures provide useful information.  Non-GAAP measures should not be considered a substitute for financial measures determined in accordance with GAAP and investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company.  See “Tompkins Financial Corporation - Summary Financial Data (Unaudited)” tables for Non-GAAP related calculations.

"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
(In thousands, except share and per share data) (Unaudited)	As of			As of
ASSETS	06/30/2013			12/31/2012
Cash and noninterest bearing balances due from banks	$	65,064		$	117,448
Interest bearing balances due from banks		1,479			1,482
Cash and Cash Equivalents		66,543			118,930
Trading securities, at fair value		14,688			16,450
Available-for-sale securities, at fair value (amortized cost of $1,434,359 at June 30,
2013 and $1,349,416 at December 31, 2012)		1,434,454			1,393,340
Held-to-maturity securities, fair value of $21,129 at June 30, 2013, and $25,163
at December 31, 2012		20,173			24,062
Originated loans and leases, net of unearned income and deferred costs and fees		2,309,232			2,133,106
Acquired loans and leases, covered		31,548			37,600
Acquired loans and leases, non-covered		714,403			783,904
Less:  Allowance for loan and lease losses		25,458			24,643
Net Loans and Leases		3,029,725			2,929,967
FDIC Indemnification Asset		4,270			4,385
Federal Home Loan Bank stock and Federal Reserve Bank stock		26,039			19,388
Bank premises and equipment, net		54,824			54,581
Corporate owned life insurance		66,143			65,102
Goodwill		92,140			92,305
Other intangible assets, net		17,400			18,643
Accrued interest and other assets		105,484			100,044
Total Assets	$	4,931,883		$	4,837,197
LIABILITIES
Deposits:
Interest bearing:
Checking, savings and money market		2,174,926			2,144,367
Time		937,775			973,883
Noninterest bearing		800,209			831,919
Total Deposits		3,912,910			3,950,169
Federal funds purchased and securities sold under agreements to repurchase		171,498			213,973
Other borrowings, including certain amounts at fair value of $11,424 at June 30, 2013
and $11,847 at December 31, 2012		299,098			111,848
Trust preferred debentures		43,703			43,668
Other liabilities		72,780			76,179
Total Liabilities	$	4,499,989		$	4,395,837
EQUITY
Tompkins Financial Corporation shareholders' equity:
Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued:
14,635,468 at June 30, 2013; and 14,426,711 at December 31, 2012		1,464			1,443
Additional paid-in capital		339,233			334,649
Retained earnings		120,218			108,709
Accumulated other comprehensive loss		(27,667	)		(2,106	)
Treasury stock, at cost – 101,055 shares at June 30, 2013, and 100,054 shares
at December 31, 2012		(2,871	)		(2,787	)
Total Tompkins Financial Corporation Shareholders’ Equity		430,377			439,908
Noncontrolling interests		1,517			1,452
Total Equity	$	431,894		$	441,360
Total Liabilities and Equity	$	4,931,883		$	4,837,197
See notes to unaudited condensed consolidated financial statements

TOMPKINS FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
	Three Months Ended						Six Months Ended
(In thousands, except per share data) (Unaudited)	06/30/2013			06/30/2012			06/30/2013			06/30/2012
INTEREST AND DIVIDEND INCOME
Loans	$	37,550		$	25,403		$	73,979		$	50,706
Due from banks		1			5			8			8
Federal funds sold		0			0			0			2
Trading securities		160			189			325			387
Available-for-sale securities		7,912			7,523			15,392			14,699
Held-to-maturity securities		177			225			368			450
Federal Home Loan Bank stock and Federal Reserve Bank stock		160			196			345			417
Total Interest and Dividend Income		45,960			33,541			90,417			66,669
INTEREST EXPENSE
Time certificates of deposits of $100,000 or more		1,239			720			2,443			1,454
Other deposits		2,016			1,798			4,198			3,825
Federal funds purchased and securities sold under agreements to repurchase		966			1,074			1,976			2,166
Trust preferred debentures		690			402			1,377			807
Other borrowings		1,223			1,437			2,391			2,866
Total Interest Expense		6,134			5,431			12,385			11,118
Net Interest Income		39,826			28,110			78,032			55,551
Less:  Provision for loan and lease losses		2,489			1,011			3,527			2,136
Net Interest Income After Provision for Loan and Lease Losses		37,337			27,099			74,505			53,415
NONINTEREST INCOME
Insurance commissions and fees		7,167			3,493			14,428			6,890
Investment services income		3,698			3,760			7,486			7,398
Service charges on deposit accounts		2,024			1,593			3,932			3,378
Card services income		1,690			1,280			3,428			2,849
Mark-to-market loss on trading securities		(270	)		(75	)		(385	)		(157	)
Mark-to-market gain on liabilities held at fair value		347			77			424			166
Net other-than-temporary impairment losses		0			(65	)		0			(65	)
Other income		1,810			1,770			4,176			3,034
Gain on securities transactions		75			933			442			935
Total Noninterest Income		16,541			12,766			33,931			24,428
NONINTEREST EXPENSES
Salaries and wages		16,291			11,081			31,863			22,381
Pension and other employee benefits		5,338			4,123			11,408			8,422
Net occupancy expense of premises		2,954			1,793			6,015			3,598
Furniture and fixture expense		1,462			1,116			2,919			2,216
FDIC insurance		821			554			1,593			1,082
Amortization of intangible assets		547			124			1,104			257
Merger related expenses		37			879			233			972
Other operating expense		10,327			7,185			20,163			14,298
Total Noninterest Expenses		37,777			26,855			75,298			53,226
Income Before Income Tax Expense		16,101			13,010			33,138			24,617
Income Tax Expense		5,061			4,151			10,557			7,912
Net Income attributable to Noncontrolling Interests and Tompkins Financial Corporation		11,040			8,859			22,581			16,705
Less:  Net income attributable to noncontrolling interests		33			33			65			65
Net Income Attributable to Tompkins Financial Corporation	$	11,007		$	8,826		$	22,516		$	16,640
Basic Earnings Per Share	$	0.76		$	0.72		$	1.55		$	1.43
Diluted Earnings Per Share	$	0.75		$	0.72		$	1.55		$	1.42
See notes to unaudited condensed consolidated financial statements

Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)
	Quarter Ended								Year to Date Period Ended								Year to Date Period Ended
	June 30, 2013								June 30, 2013								June 30, 2012
	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	$	1,623	$	1			0.25	%	$	2,760	$	8			0.58	%	$	20,269	$	8			0.08	%
Money market funds		-		-			0.00	%		-		-			0.00	%		36		-			0.00	%
Securities (1)
U.S. Government securities		1,386,975		7,266			2.10	%		1,342,524		14,060			2.11	%		1,107,730		13,504			2.45	%
Trading securities		15,342		159			4.16	%		15,732		325			4.17	%		18,917		387			4.11	%
State and municipal (2)		98,279		1,259			5.14	%		99,179		2,558			5.20	%		84,785		2,270			5.38	%
Other securities (2)		7,441		60			3.23	%		8,295		150			3.65	%		11,787		268			4.57	%
Total securities		1,508,037		8,744			2.33	%		1,465,730		17,093			2.35	%		1,223,219		16,429			2.70	%
Federal Funds Sold		-		-			0.00	%		-		-			0.00	%		3,693		2			0.11	%
FHLBNY and FRB stock		23,002		160			2.79	%		20,942		345			3.32	%		17,134		415			4.87	%
Total loans and leases, net of unearned income (3)		3,038,766		38,048			5.02	%		3,001,458		74,906			5.03	%		1,980,673		50,980			5.18	%
Total interest-earning assets		4,571,428		46,953			4.12	%		4,490,890		92,352			4.15	%		3,245,024		67,834			4.20	%
Other assets		394,467								442,103								257,020
Total assets		4,965,895								4,932,993								3,502,044
LIABILITIES & EQUITY
Deposits
Interest-bearing deposits
Interest bearing checking, savings,  & money market		2,240,518		1,264			0.23	%		2,255,128		2,682			0.24	%		1,466,424		1,872			0.26	%
Time deposits		960,722		1,991			0.84	%		970,239		3,959			1.24	%		709,586		3,407			1.45	%
Total interest-bearing deposits		3,201,240		3,255			0.41	%		3,225,367		6,641			0.42	%		2,176,010		5,279			0.49	%
Federal funds purchased & securities sold under agreements
to repurchase		175,997		966			2.20	%		187,289		1,976			2.13	%		169,103		2,166			2.58	%
Other borrowings		242,301		1,223			2.03	%		181,292		2,391			2.66	%		144,037		2,866			4.00	%
Trust preferred debentures		43,692		690			6.33	%		43,683		1,377			6.36	%		25,066		807			6.47	%
Total interest-bearing liabilities		3,663,230		6,134			0.67	%		3,637,631		12,385			0.69	%		2,514,216		11,118			0.89	%
Noninterest bearing deposits		784,570								778,201								604,866
Accrued expenses and other liabilities		71,007								71,969								56,679
Total liabilities		4,518,807								4,487,801								3,175,761
Tompkins Financial Corporation Shareholders’ equity		445,586								443,708								324,798
Noncontrolling interest		1,502								1,484								1,485
Total equity		447,088								445,192								326,283
Total liabilities and equity	$	4,965,895							$	4,932,993							$	3,502,044
Interest rate spread							3.45	%							3.46	%							3.31	%
Net interest income/margin on earning assets				40,819			3.58	%				79,967			3.59	%				56,716			3.51	%
Tax Equivalent Adjustment				(993	)							(1,935	)							(1,165	)
Net interest income per consolidated financial statements			$	39,826							$	78,032							$	55,551

(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 rat 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 statement included in Part I of the Company's annual report on Form 10-K for the fiscal year ended December 31, 2012.

Tompkins Financial Corporation - Summary Financial Data (Unaudited)
(In thousands, except per share data)	Quarter-Ended										Year-Ended
	Jun-13		Mar-13		Dec-12		Sep-12		Jun-12		Dec-12
Period End Balance Sheet
Securities	$	1,469,315	$	1,566,510	$	1,433,852	$	1,516,913	$	1,228,143	$	1,433,852
Originated loans and leases, net of unearned income and deferred costs and fees (2)		2,309,232		2,208,346		2,133,106		2,060,539		2,019,681		2,133,106
Acquired loans and leases (3)		745,951		785,449		821,504		869,211		0		821,504
Allowance for  loan and lease losses		25,458		24,661		24,643		26,632		26,865		24,643
Total assets		4,931,883		4,987,280		4,837,197		4,924,786		3,482,669		4,837,197
Total deposits		3,912,910		4,072,352		3,950,169		4,037,644		2,765,093		3,950,169
Federal funds purchased and securities sold under agreements to repurchase		171,498		194,091		213,973		206,996		161,662		213,973
Other borrowings		299,098		156,649		111,848		125,461		121,934		111,848
Trust preferred debentures		43,703		43,687		43,668		43,651		25,067		43,668
Shareholders' equity		431,894		446,812		441,360		440,950		353,700		441,360
Average Balance Sheet
Average earning assets	$	4,571,428	$	4,409,455	$	4,431,698	$	4,087,264	$	3,278,519	$	3,754,667
Average assets		4,965,895		4,899,727		4,901,374		4,450,013		3,539,170		4,092,473
Average interest-bearing liabilities		3,663,230		3,611,748		3,563,731		3,248,839		2,521,285		2,963,097
Average equity		447,088		443,277		443,592		410,300		349,021		376,890
Share data
Weighted average shares outstanding (basic)		14,427,838		14,374,265		14,332,672		13,580,771		12,146,622		12,797,173
Weighted average shares outstanding (diluted)		14,500,429		14,436,757		14,374,368		13,630,464		12,166,417		12,836,043
Period-end shares outstanding		14,599,558		14,447,017		14,390,801		14,358,230		12,223,790		14,390,801
Book value per share		29.58		30.93		30.67		30.71		28.94		30.67
Tangible book value per share (Non-GAAP)		23.09		23.29		22.96		22.71		24.96		22.96
Income Statement
Net interest income	$	39,826	$	38,206	$	41,849	$	36,743	$	28,110	$	134,143
Provision for loan/lease losses		2,489		1,038		5,659		1,042		1,011		8,837
Noninterest income		16,541		17,390		15,608		14,773		12,766		54,808
Noninterest expense		37,777		37,520		38,188		46,194		26,855		137,608
Income tax expense		5,061		5,495		2,416		761		4,151		11,090
Net income attributable to Tompkins Financial Corporation		11,007		11,510		11,161		3,487		8,826		31,286
Noncontrolling interests		33		33		33		32		33		131
Basic earnings per share (9)	$	0.76	$	0.80	$	0.78	$	0.26	$	0.72	$	2.44
Diluted earnings per share (9)	$	0.75	$	0.79	$	0.77	$	0.25	$	0.72	$	2.43
Nonperforming Assets
Originated nonaccrual loans and leases	$	32,100	$	32,554	$	33,388	$	36,996	$	36,749	$	33,388
Acquired nonaccrual loans and leases		6,916		4,561		4,352		-		-		4,352
Originated loans and leases 90 days past due and accruing		155		157		257		126		321		257
Troubled debt restructurings not included above		-		-		1,532		1,468		1,507		1,532
Total nonperforming loans and leases		39,171		37,272		39,529		38,590		38,577		39,529
OREO (8)		4,918		3,950		4,862		4,675		2,161		4,862
Total nonperforming assets		44,089		41,222		44,391		43,265		40,738		44,391

	Quarter-Ended										Year-Ended
Delinquency - Originated loan and lease portfolio	Jun-13		Mar-13		Dec-12		Sep-12		Jun-12		Dec-12
Loans and leases 30-89 days past due and
accruing (2)	$	9,597	$	10,888	$	7,990	$	9,412	$	10,149	$	7,990
Loans and leases 90 days past due and accruing (2)		156		157		257		126		321		257
Total originated loans and leases past due and accruing (2)		9,753		11,045		8,247		9,538		10,470		8,247

Delinquency - Acquired loan and lease portfolio
Covered loans and leases 30-89 days past due and accruing (3)(7)	1,613	3,503	1,014	669	0	1,014
Covered loans and leases 90 days or more past
due and accruing (3)(7)	3,091	3,809	4,272	2,837	0	4,272
Non-covered loans and leases 30-89 days past
due and accruing (3)(7)	5,591	5,738	4,249	5,848	0	4,249
Non-Covered loans and leases 90 days past
due and accruing (3)(7)	13,324	14,026	14,438	19,339	0	14,438
Total acquired loans and leases past due and accruing	23,619	27,076	23,973	28,693	0	23,973

Total loans and leases past due and accruing $ 33,372 $ 38,121 $ 32,220 $ 38,231 $ 10,470 $ 32,220

Allowance for Loan Losses - Originated loan and lease portfolio
Balance at beginning of period	$	24,598		$	24,643	$	26,632	$	26,865	$	26,948	$	27,593
Provision for loan and lease losses		(993	)		820		5,659		1,042		1,011		8,837
Net loan and lease (recoveries) charge-offs		(1,248	)		864		7,648		1,275		1,094		11,787
Allowance for loan and lease losses (originated		24,853			24,598		24,643		26,632		26,865		24,643
loan portfolio) - balance at end of period

Allowance for Loan Losses - Acquired loan and lease portfolio
Balance at beginning of period	$	63	$	0	$	0	$	0	$	0	$	0
Provision for loan and lease losses		3,483		218		0		0		0		0
Net loan and lease (recoveries) charge-offs		2,941		155		0		0		0		0
Allowance for loan and lease losses (acquired
loan portfolio) - balance at end of period		605		63		0		0		0		0

Total allowance for loan and lease losses 25,458 24,661 24,643 26,632 26,865 24,643

Loan Classification - Originated Portfolio
Special Mention	$	43,099	$	48,468	$	56,342	$	58,598	$	63,652	$	56,342
Substandard		41,969		43,449		45,083		54,383		58,185		45,083
Doubtful		0		0		0		494		588		0

Loan Classification - Acquired Portfolio
Special Mention	29,300	26,568	25,381	14,723	0	25,381
Substandard	55,079	47,698	45,207	31,087	0	45,207

Loan Classifications - Total Portfolio
Special Mention	72,399	75,036	81,723	73,321	63,652	81,723
Substandard	97,048	91,147	90,290	85,470	58,185	90,290
Doubtful	0	0	0	494	588	0

Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued
RATIO ANALYSIS		Quarter-Ended									Year-Ended
Credit Quality		Jun-13		Mar-13		Dec-12		Sep-12		Jun-12		Dec-12
Nonperforming loans and leases/total loans and leases (7)		1.28%		1.24%		1.34%		1.32%		1.91%		1.34%
Nonperforming assets/total assets		0.89%		0.83%		0.92%		0.88%		1.17%		0.92%
Allowance for originated loan and lease losses/total originated loans and leases		1.08%		1.11%		1.16%		1.29%		1.33%		1.16%
Allowance/nonperforming loans and leases		64.99%		66.16%		62.34%		69.01%		69.64%		62.34%
Net loan and lease losses (annualized)/total average loans and leases		0.22%		0.14%		1.04%		0.20%		0.22%		0.49%
Capital Adequacy (period-end)
Tier 1 capital / average assets		8.16%		8.11%		7.95%		8.50%		9.53%		7.95%
Total capital / risk-weighted assets		13.34%		12.93%		12.94%		12.87%		16.22%		12.94%
Tangible common equity / tangible assets		6.99%		6.90%		6.99%		6.78%		8.88%		6.99%
Profitability
Return on average assets *		0.92%		0.95%		0.91%		0.31%		1.00%		0.76%
Return on average equity *		10.20%		10.53%		10.01%		3.38%		10.17%		8.30%
Net interest margin (TE) *		3.58%		3.57%		3.83%		3.66%		3.52%		3.65%
* Quarterly ratios have been annualized
Non-GAAP Disclosure
Reported net income (GAAP)	$	11,007	$	11,510	$	11,161	$	3,487	$	8,826	$	31,285
Adjustments (net of tax):
Accrual adjustment VISA		0		0		0		0		-243		-243
Merger related expenses		22		118		462		8,424		703		9,664
Subtotal adjustments		22		118		462		8,424		460		9,421
Net operating income (Non-GAAP)		11,029		11,628		11,623		11,911		9,286		40,706
Weighted average shares outstanding (diluted)		14,500,429		14,436,757		14,374,368		13,630,464		12,166,417		12,836,043
Adjusted diluted earnings per share (Non-GAAP) (9)	$	0.76	$	0.81	$	0.81	$	0.87	$	0.76	$	3.17
Non-GAAP Disclosure
Reported net income (GAAP)	$	11,007	$	11,510	$	11,161	$	3,487	$	8,826	$	31,285
Merger related expenses (net of tax)		22		118		462		8,424		703		9,664
Net operating income (Non-GAAP)	$	11,029	$	11,628	$	11,623	$	11,911	$	9,529	$	40,949
Amortization of intangibles, (net of tax)		328		334		348		256		74		758
Adjusted net operating income (Non-GAAP)		11,357		11,962		11,971		12,167		9,603		41,707
Average total shareholders' equity		447,088		443,277		443,592		410,300		349,021		376,890
Less:  Average goodwill and intangibles		110,037		110,687		114,644		92,748		48,665		76,149
Average tangible shareholders' equity (Non-GAAP)		337,051		332,590		328,948		317,552		300,356		300,741
Adjusted operating return on shareholders' tangible equity (annualized) (Non-GAAP)		13.48%		14.59%		14.56%		15.24%		12.86%		13.87%
Non-GAAP Disclosure
Total shareholders' equity (GAAP)	$	431,894	$	446,812	$	441,360	$	440,950	$	353,700	$	441,360
Less:  goodwill and intangibles		109,540		110,314		110,947		114,859		48,652		110,947
Tangible shareholders' equity		322,354		336,498		330,413		326,030		305,048		330,413
Ending shares outstanding		14,599,558		14,447,017		14,390,801		14,358,230		12,223,790		14,390,801
Tangible book value per share (Non-GAAP)		22.08		23.29		22.96		22.71		24.96		22.96

Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued

Non-GAAP Disclosure	Year-to-date period ended
	Jun-13		Jun-12
Reported net income (GAAP)	22,516		16,640
Adjustments (net of tax):
Accrual adjustment VISA		0			(243	)
Merger related expenses		155			778
Subtotal adjustments		155			535
Net operating income (Non-GAAP)		22,671			17,175
Weighted average shares outstanding (diluted)		14,500,429			11,656,771
Adjusted diluted earnings per share	$	1.56		$	1.47

(1) Federal Reserve peer ratio as of March 31, 2013, includes banks and bank holding companies with consolidated assets between $3 billion and $10 billion.

(2) "Originated" equals loans and leases not included by definition in "acquired loans"

(3)"Acquired Loans and Leases" equals loans and leases acquired at fair value, accounted for in accordance with FASB ASC Topic 805.  "Covered Loans" are loans for which the Company will share losses with the FDIC and consist of loans VIST Bank acquired as part of an FDIC-assisted transaction during the fourth quarter of 2010.

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

(5) Interest income includes the tax effects of taxable-equivalent basis.

(6) 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, 2012.

(7) Certain acquired loans and leases that are past due are not on nonaccrual and are not included in nonperforming loans.  The risk of credit loss on these loans has been considered by virtue of the Corporation's estimate of acquisition-date fair value and these loans are considered accruing as the Corporation primarily recognizes interest income through accretion of the difference between the carrying value of these loans and their expected cash flows.  There have been no significant changes in expected cash flows since acquisition.

(8) Includes all other real estate owned, including those balances acquired through business combinations.

(9)Earnings per share year-to-date may not equal the sum of the quarterly earnings per share as a result of rounding of average shares.