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

Tompkins Financial Corporation 8-K 

EXHIBIT 99.1

 

For more information contact:

Stephen S. Romaine, President & CEO

Francis M. Fetsko, Executive VP, CFO & COO

Tompkins Financial Corporation (888)503-5753

For Immediate Release

Friday, April 22, 2016

Tompkins Financial Corporation Reports Record First Quarter Earnings

ITHACA, NY – Tompkins Financial Corporation (NYSEMKT:TMP)

Tompkins Financial Corporation reported net income of $14.2 million for the first quarter of 2016, an increase of 11.8% from the $12.7 million reported for the same period in 2015. Diluted earnings per share were $0.94 for the first quarter of 2016, an 11.9% increase from $0.84 reported for the first quarter of 2015.

President and CEO, Stephen S. Romaine said“We are excited to start off the new year with the best first quarter earnings results in our history. Solid loan growth, coupled with a stabilizing net interest margin, have been key drivers of growth over the prior year. At the same time, we have seen continued improvement in credit quality trends, with nonperforming assets improved from already low levels.”

Selected highlights for First quarter:

§ Net interest income of $44.0 million was up 6.8% from the same period last year.

§ Net interest margin has remained relatively stable over the past four quarters.

§ Total loans of $3.8 billion were up 11.5% over the same period in 2015.

§ Tangible book value per share was up 8.6% compared to the same period last year (refer to Non-GAAP measures).

§ Credit quality continues to improve with nonperforming assets down 13.5% compared to the first quarter of 2015.

 NET INTEREST INCOME

Net interest income of $44.0 million for the first quarter of 2016 increased 6.8% compared to the same period in 2015, and was up 1.4% compared to the fourth quarter of 2015. Growth in net interest income was largely driven by growth in average loans of $392.9 million (11.6%) since the first quarter of 2015; and $103.7 million (2.8%) since the fourth quarter of 2015. The net interest margin was 3.36% for the first quarter of 2016, down from 3.45% for the same period last year, but has remained relatively stable over the past four quarters.

NONINTEREST INCOME

Noninterest income represented 28.4% of total revenues in the first quarter of 2016, compared to 30.0% in 2015. Noninterest income of $17.5 million was consistent with the same period prior year, and was down 2.3% compared to the most recent prior quarter.

NONINTEREST EXPENSE

Noninterest expense was $39.5 million for the first quarter of 2016, which was consistent with the same period last year and the fourth quarter of 2015. Salaries and wages were up 8.1% compared to same quarter last year, which was partially offset by lower pension and employee benefits costs.

ASSET QUALITY

Asset quality trends continued to improve in the first quarter of 2016. Nonperforming assets were down 13.5% compared to the first quarter in 2015, and down 7.8% compared to the prior quarter end. Nonperforming assets represented 0.39% of total assets at March 31, 2016, down from 0.43% at December 31, 2015. Nonperforming asset levels continue to be well below the most recent Federal Reserve Board Peer Group Average1 of 0.90%.

Provision for loan and lease losses was $855,000 for the first quarter of 2016, up from $209,000 one year ago. Net charge-offs for the first quarter of 2016 were $329,000 compared to net recoveries of $279,000 reported in the first quarter 2015.

The Company’s allowance for originated loan and lease losses totaled $32.0 million at March 31, 2016, and represented 0.95% of total originated loans at March 31, 2016. The ratio is unchanged from the most recent prior quarter and is down from 0.99% one year ago. The total allowance represented 156.88% of total nonperforming loans and leases at March 31, 2016, up from 146.7% at December 31, 2015, and 145.11% at March 31, 2015.

CAPITAL POSITION

Capital ratios remain well above the regulatory well capitalized minimums. Tier 1 capital to average assets of 8.79%, compared to 8.82% reported for December 31, 2015, and 8.85% at March 31, 2015. Total Capital to risk-weighted assets improved from 13.03% at December 31, 2015 to 13.18% at March 31, 2016.

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, Tompkins Bank of Castile, Tompkins Mahopac Bank, Tompkins VIST Bank, Tompkins Insurance Agencies, Inc., and offers wealth management services through Tompkins Financial Advisors. For more information on Tompkins Financial, visitwww.tompkinsfinancial.com.

“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				03/31/2016		12/31/2015
Cash and noninterest bearing balances due from banks			$	53,637	$	56,261
Interest bearing balances due from banks				1,877		1,996
	Cash and Cash Equivalents			55,514		58,257
Trading securities, at fair value				7,023		7,368
Available-for-sale securities, at fair value (amortized cost of $1,415,577 at March 31,
	2016 and $1,390,255 at December 31, 2015)			1,431,709		1,385,684
Held-to-maturity securities, at amortized cost (fair value of $150,139 at March 31, 2016
	and $146,686 at December 31, 2015)			145,010		146,071
Originated loans and leases, net of unearned income and deferred costs and fees (2)				3,370,791		3,310,768
Acquired loans and leases, covered (3)				12,737		14,031
Acquired loans and leases, non-covered (3)				437,385		447,243
Less:  Allowance for loan and lease losses				32,530		32,004
	Net Loans and Leases			3,788,383		3,740,038
FDIC indemnification asset				147		158
Federal Home Loan Bank stock				25,727		29,969
Bank premises and equipment, net				60,237		60,331
Corporate owned life insurance				76,410		75,792
Goodwill				92,617		91,792
Other intangible assets, net				13,233		12,448
Accrued interest and other assets				68,961		82,087
	Total Assets		$	5,764,971	$	5,689,995
LIABILITIES
Deposits:
	Interest bearing:
	Checking, savings and money market			2,574,523		2,401,519
	Time			887,142		855,133
	Noninterest bearing			1,093,563		1,138,654
	Total Deposits			4,555,228		4,395,306
Federal funds purchased and securities sold under agreements to repurchase				116,551		136,513
Other borrowings, including certain amounts at fair value of $10,518 at March 31, 2016
	and $10,576 at December 31, 2015			455,341		536,285
Trust preferred debentures				37,552		37,509
Other liabilities				60,406		67,916
	Total Liabilities		$	5,225,078	$	5,173,529
EQUITY
Tompkins Financial Corporation shareholders’ equity:
	Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued:
		15,059,686 at March 31, 2016; and 15,015,594 at December 31, 2015		1,506		1,502
	Additional paid-in capital			353,846		350,823
	Retained earnings			205,031		197,445
	Accumulated other comprehensive loss			(18,341)		(31,001)
	Treasury stock, at cost – 111,924 shares at March 31, 2016, and 116,126 shares
		at December 31, 2015		(3,634)		(3,755)
	Total Tompkins Financial Corporation Shareholders’ Equity			538,408		515,014
Noncontrolling interests				1,485		1,452
	Total Equity		$	539,893	$	516,466
	Total Liabilities and Equity		$	5,764,971	$	5,689,995

TOMPKINS FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
		Three Months Ended
(In thousands, except per share data) (Unaudited)		03/31/2016		03/31/2015
INTEREST AND DIVIDEND INCOME
Loans	$	40,487	$	37,376
Due from banks		2		1
Trading securities		81		94
Available-for-sale securities		7,531		7,814
Held-to-maturity securities		911		596
Federal Home Loan Bank stock and Federal Reserve Bank stock		297		347
Total Interest and Dividend Income		49,309		46,228
INTEREST EXPENSE
Time certificates of deposits of $250,000 or more		390		335
Other deposits		2,209		2,286
Federal funds purchased and securities sold under agreements to
repurchase		666		670
Trust preferred debentures		589		570
Other borrowings		1,417		1,139
Total Interest Expense		5,271		5,000
Net Interest Income		44,038		41,228
Less:  Provision for loan and lease losses		855		209
Net Interest Income After Provision for Loan and Lease Losses		43,183		41,019
NONINTEREST INCOME
Insurance commissions and fees		7,562		7,370
Investment services income		3,786		4,007
Service charges on deposit accounts		2,264		2,157
Card services income		1,941		1,818
Mark-to-market loss on trading securities		(46)		(63)
Mark-to-market gain on liabilities held at fair value		57		41
Other income		1,707		2,026
Gain on sale of available-for-sale securities		232		290
Total Noninterest Income		17,503		17,646
NONINTEREST EXPENSES
Salaries and wages		18,989		17,568
Pension and other employee benefits		5,283		5,994
Net occupancy expense of premises		3,148		3,339
Furniture and fixture expense		1,689		1,450
FDIC insurance		822		741
Amortization of intangible assets		527		507
Other operating expense		9,048		10,093
Total Noninterest Expenses		39,506		39,692
Income Before Income Tax Expense		21,180		18,973
Income Tax Expense		6,967		6,260
Net Income attributable to Noncontrolling Interests and Tompkins Financial Corporation		14,213		12,713
Less:  Net income attributable to noncontrolling interests		33		33
Net Income Attributable to Tompkins Financial Corporation	$	14,180	$	12,680
Basic Earnings Per Share	$	0.95	$	0.85
Diluted Earnings Per Share	$	0.94	$	0.84

Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)
				Year to Date Period Ended					Year to Date Period Ended
				March 31, 2016					March 31, 2015
				Average					Average
				Balance			Average		Balance			Average
(Dollar amounts in thousands)				(YTD)		Interest	Yield/Rate		(YTD)		Interest	Yield/Rate
ASSETS
Interest-earning assets
	Interest-bearing balances due from banks		$	2,094	$	��2	0.38%	$	1,388	$	1	0.29%
	Securities (4)
		U.S. Government securities		1,458,755		7,903	2.18%		1,435,574		7,853	2.22%
		Trading securities		7,248		81	4.49%		8,858		94	4.30%
		State and municipal (5)		97,631		838	3.45%		88,304		870	4.00%
		Other securities (5)		3,686		31	3.38%		3,764		30	3.23%
		Total securities		1,567,320		8,853	2.27%		1,536,500		8,847	2.34%
	FHLBNY and FRB stock			27,799		298	4.31%		20,765		347	6.78%
	Total loans and leases, net of unearned income (5)(6)			3,791,207		41,185	4.37%		3,398,319		37,954	4.53%
	Total interest-earning assets			5,388,420		50,338	3.76%		4,956,972		47,149	3.86%
Other assets				341,851					358,030
	Total assets			5,730,271					5,315,002
LIABILITIES & EQUITY
Deposits
	Interest-bearing deposits
		Interest bearing checking, savings,  & money market		2,533,185		956	0.15%		2,348,973		990	0.17%
		Time deposits		868,095		1,643	0.76%		905,981		1,631	0.73%
		Total interest-bearing deposits		3,401,280		2,599	0.31%		3,254,954		2,621	0.33%
Federal funds purchased & securities sold under
		agreements to repurchase		126,262		666	2.12%		142,359		670	1.91%
Other borrowings				502,319		1,417	1.13%		347,690		1,139	1.33%
Trust preferred debentures				37,524		589	6.31%		37,352		570	6.19%
	Total interest-bearing liabilities			4,067,385		5,271	0.52%		3,782,355		5,000	0.54%
Noninterest bearing deposits				1,067,638					973,212
Accrued expenses and other liabilities				66,934					62,388
	Total liabilities			5,201,957					4,817,955
Tompkins Financial Corporation Shareholders’ equity				526,846					495,579
Noncontrolling interest				1,468					1,468
	Total equity			528,314					497,047
	Total liabilities and equity		$	5,730,271				$	5,315,002
Interest rate spread							3.24%					3.32%
	Net interest income/margin on earning assets					45,067	3.36%				42,149	3.45%
Tax Equivalent Adjustment						(1,029)					(921)
	Net interest income per consolidated financial statements				$	44,038				$	41,228

Tompkins Financial Corporation - Summary Financial Data (Unaudited)
(In thousands, except per share data)		Quarter-Ended									Year-Ended
		Mar-16		Dec-15		Sep-15		Jun-15		Mar-15		Dec-15
Period End Balance Sheet
Securities	$	1,583,742	$	1,539,123	$	1,542,332	$	1,536,374	$	1,555,597	$	1,539,123
Originated loans and leases, net of unearned income and deferred costs and fees (2)		3,370,791		3,310,768		3,149,386		3,013,968		2,898,533		3,310,768
Acquired loans and leases (3)		450,122		461,274		484,927		507,963		529,024		461,274
Allowance for  loan and lease losses		32,530		32,004		30,965		30,091		29,485		32,004
Total assets		5,764,971		5,689,995		5,594,718		5,436,136		5,357,533		5,689,995
Total deposits		4,555,228		4,395,306		4,437,073		4,204,089		4,282,766		4,395,306
Federal funds purchased and securities sold under agreements to repurchase		116,551		136,513		134,941		131,063		135,769		136,513
Other borrowings		455,341		536,285		398,946		493,326		330,850		536,285
Trust preferred debentures		37,552		37,509		37,466		37,423		37,380		37,509
Total common equity		538,408		515,014		516,409		503,877		502,811		515,014
Total equity		539,893		516,466		517,959		505,394		504,296		516,466
Average Balance Sheet
Average earning assets	$	5,388,420	$	5,260,979	$	5,138,665	$	5,038,586	$	4,956,972	$	5,099,743
Average assets		5,730,271		5,624,351		5,486,645		5,391,114		5,315,002		5,455,214
Average interest-bearing liabilities		4,067,385		3,930,707		3,856,025		3,835,430		3,782,355		3,851,549
Average equity		528,314		518,529		509,518		505,667		497,047		507,754
Share data
Weighted average shares outstanding (basic)		14,760,276		14,719,394		14,739,915		14,751,844		14,701,397		14,728,193
Weighted average shares outstanding (diluted)		14,905,919		14,869,103		14,866,735		14,878,107		14,837,935		14,863,026
Period-end shares outstanding		15,023,776		14,979,684		14,905,576		14,942,107		14,962,079		14,979,684
Common equity book value per share	$	35.84	$	34.38	$	34.65	$	33.72	$	33.61	$	34.38
Tangible book value per share (Non-GAAP)	$	28.85	$	27.48	$	27.64	$	26.71	$	26.56	$	27.48
Income Statement
Net interest income	$	44,038	$	43,437	$	42,386	$	41,330	$	41,228	$	168,381
Provision (Credit) for loan/lease losses		855		1,533		281		922		209		2,945
Noninterest income		17,503		17,910		17,422		18,962		17,646		71,940
Noninterest expense		39,506		39,370		37,882		32,918		39,692		149,862
Income tax expense		6,967		6,557		7,115		9,030		6,260		28,962
Net income attributable to Tompkins Financial Corporation		14,180		13,854		14,497		17,390		12,680		58,421
Noncontrolling interests		33		33		33		32		33		131
Basic earnings per share (9)	$	0.95	$	0.93	$	0.97	$	1.16	$	0.85	$	3.91
Diluted earnings per share (9)	$	0.94	$	0.92	$	0.96	$	1.15	$	0.84	$	3.87
Nonperforming Assets
Originated nonaccrual loans and leases	$	12,671	$	13,506	$	14,821	$	14,566	$	13,811	$	13,506
Acquired nonaccrual loans and leases		4,145		4,331		4,908		5,030		4,683		4,331
Originated loans and leases 90 days past due and accruing		57		58		57		58		236		58
Troubled debt restructurings not included above		3,862		3,915		3,465		1,939		1,589		3,915
Total nonperforming loans and leases		20,735		21,810		23,251		21,593		20,319		21,810
OREO (8)		1,865		2,692		3,188		2,570		5,816		2,692
Total nonperforming assets	$	22,600	$	24,502	$	26,439	$	24,163	$	26,135	$	24,502

Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued
		Quarter-Ended									Year-Ended
Delinquency - Originated loan and lease portfolio		Mar-16		Dec-15		Sep-15		Jun-15		Mar-15		Dec-15
Loans and leases 30-89 days past due and
accruing (2)	$	2,519	$	3,280	$	3,550	$	3,315	$	2,438	$	3,280
Loans and leases 90 days past due and accruing (2)		57		58		57		58		236		58
Total originated loans and leases past due and accruing (2)		2,576		3,338		3,607		3,373		2,674		3,338
Delinquency - Acquired loan and lease portfolio
Covered loans and leases 30-89 days past due and accruing (3)(7)	$	1	$	276	$	309	$	455	$	547	$	276
Covered loans and leases 90 days or more past
due and accruing (3)(7)		469		524		508		674		682		524
Non-covered loans and leases 30-89 days past
due and accruing (3)(7)		1,038		933		1,028		917		2,546		933
Non-covered loans and leases 90 days past
due and accruing (3)(7)		1,446		1,991		2,069		3,031		2,811		1,991
Total acquired loans and leases past due and accruing		2,954		3,724		3,914		5,077		6,586		3,724
Total loans and leases past due and accruing	$	5,530	$	7,062	$	7,521	$	8,450	$	9,260	$	7,062
Allowance for Loan Losses - Originated loan and lease portfolio
Balance at beginning of period	$	31,312	$	30,450	$	29,428	$	28,690	$	28,156	$	28,156
Provision for loan and lease losses		872		1,185		173		769		340		2,467
Net loan and lease charge-offs (recoveries)		203		323		(849)		31		(194)		(689)
Allowance for loan and lease losses (originated		31,981		31,312		30,450		29,428		28,690		31,312
loan portfolio) - balance at end of period	$		$		$		$		$		$
Allowance for Loan Losses - Acquired loan and lease portfolio
Balance at beginning of period	$	692	$	515	$	663	$	795	$	841	$	841
Provision (Credit) for loan and lease losses		(17)		348		108		153		(131)		478
Net loan and lease charge-offs (recoveries)		126		171		256		285		(85)		627
Allowance for loan and lease losses (acquired
loan portfolio) - balance at end of period		549		692		515		663		795		692
Total allowance for loan and lease losses	$	32,530	$	32,004	$	30,965	$	30,091	$	29,485	$	32,004
Loan Classification - Originated Portfolio
Special Mention	$	20,388	$	19,657	$	25,133	$	25,706	$	34,965	$	19,657
Substandard		18,026		18,186		19,937		21,600		19,150		18,186
Loan Classification - Acquired Portfolio
Special Mention		534		540		1,446		1,589		5,053		540
Substandard		17,445		17,007		23,683		21,932		21,752		18,238
Loan Classifications - Total Portfolio
Special Mention		20,922		20,197		26,579		27,295		40,018		20,197
Substandard		35,471		35,193		43,620		43,532		40,902		36,424

Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued
RATIO ANALYSIS	Quarter-Ended					Year-Ended
Credit Quality	Mar-16	Dec-15	Sep-15	Jun-15	Mar-15		Dec-15
Nonperforming loans and leases/total loans and leases (7)	0.54%	0.58%	0.64%	0.61%	0.59%		0.58%
Nonperforming assets/total assets	0.39%	0.43%	0.47%	0.44%	0.49%		0.43%
Allowance for originated loan and lease losses/total originated loans and leases	0.95%	0.95%	0.97%	0.98%	0.99%		0.95%
Allowance/nonperforming loans and leases	156.88%	146.74%	133.18%	139.36%	145.11%		146.74%
Net loan and lease losses (recoveries) annualized/total average loans and leases	0.03%	0.05%	(0.07%)	0.04%	(0.03%)		(0.00%)
Capital Adequacy (period-end)
Tier 1 capital / average assets *	8.79%	8.82%	8.89%	8.92%	8.85%		8.82%
Total capital / risk-weighted assets *	13.18%	13.03%	13.29%	13.46%	13.37%		13.03%
*Beginning with March 31, 2015, ratios are calculated utilizing Basel III regulatory capital framework
Profitability
Return on average assets *	0.99%	0.98%	1.05%	1.29%	0.97%		1.07%
Return on average equity *	10.77%	10.63%	11.29%	13.79%	10.35%		11.51%
Net interest margin (TE) *	3.36%	3.35%	3.35%	3.37%	3.45%		3.38%
* Quarterly ratios have been annualized

Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued
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 measure 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.
Non-GAAP Disclosure - Adjusted Diluted Earnings Per Share
Net income available to common shareholders	$	14,180	$	13,854	$	14,497	$	17,390	$	12,680	$	58,421
Less: Dividends and undistributed earnings allocated to unvested restricted stock awards		224		229		189		234		182		834
Adjusted net income available to common shareholders		13,956		13,625		14,308		17,156		12,498		57,587
Gain on pension plan curtailment (net of tax)		0		0		0		(3,602)		0		(3,602)
Net operating income (Non-GAAP)		13,956		13,625		14,308		13,554		12,498		54,349
Weighted average shares outstanding (diluted)		14,905,919		14,869,103		14,866,735		14,878,107		14,837,935		14,863,026
Adjusted diluted earnings per share (Non-GAAP) (9)	$	0.94	$	0.92	$	0.96	$	0.91	$	0.84	$	3.66
Non-GAAP Disclosure - Tangible Book Value Per Share
Total common equity	$	538,408	$	515,014	$	516,409	$	503,877	$	502,811	$	515,014
Less:  Goodwill and intangibles (10)		104,987		103,347		104,349		104,845		105,344		103,347
Tangible common equity		433,421		411,667		412,060		399,032		397,467		411,667
Ending shares outstanding		15,023,776		14,979,684		14,905,576		14,942,107		14,962,079		14,979,684
Tangible book value per share (Non-GAAP)	$	28.85	$	27.48	$	27.64	$	26.71	$	26.56	$	27.48
(1) Federal Reserve peer ratio as of December 31, 2015, 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, 2015.
(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.
(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.
(10) “Goodwill and intangibles” equal Total Intangible Assets less Mortgage Servicing Rights in the above tables.