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, October 18, 2019
Tompkins Financial Corporation Reports Third Quarter Earnings
ITHACA, NY - Tompkins Financial Corporation (NYSE American: TMP)
Tompkins Financial Corporation reported diluted earnings per share of $1.34 for the third quarter of 2019, down 1.5% from the $1.36 per share reported for the same quarter last year. Net income was $20.2 million for the third quarter of 2019, down from the $20.9 million reported for the same period in 2018.
For the year-to-date period ended September 30, 2019, diluted earnings per share were $3.97, down 3.6% from the $4.12 per share reported for the same period in 2018. Year-to-date net income was $60.6 million for the period ended September 30, 2019, a decrease of $2.8 million from the same period in 2018.
President and CEO, Stephen S. Romaine said “Despite earnings being down slightly from the prior year, the quarter saw improvement over the second quarter of 2019 in terms of net interest margin, returns on equity and diluted earnings per share. Solid growth in deposits and reduced borrowing costs contributed to the overall improvement from the second quarter, as did higher revenue from insurance and wealth management businesses.”
SELECTED HIGHLIGHTS FOR THE THIRD QUARTER:
| • | Total loans of $4.9 billion were up 1.1% over total loans at September 30, 2018 |
| • | Total deposits of $5.4 billion reflect an increase of 6.9% over the same period last year |
| • | Net interest margin was 3.43% for the third quarter of 2019, up from 3.34% for the second quarter of 2019, and up from 3.35% for the same quarter last year |
| • | Return on average equity was 12.15% for the third quarter of 2019, up from 11.96% for the second quarter of 2019, and down from 13.89% for the same quarter last year |
NET INTEREST INCOME
Net interest income was relatively flat compared to the same quarter and year-to-date periods in 2018. Third quarter 2019 net interest income was $53.2 million, unchanged from the same quarter last year. Net interest income for the third quarter reflected an increase over the second quarter of 2019, driven largely by lower funding costs, which benefited from lower market interest rates, the paydown of borrowings, and growth in noninterest-bearing deposits. The net interest margin for the third quarter of 2019 was 3.43%, compared to 3.34% for the second quarter of 2019, and 3.35% reported for the third quarter of 2018.
Year-to-date net interest income of $157.4 million was down compared to the $158.6 million reported for the same period last year. Year-to-date yield on interest-earning assets of 4.21% in 2019 was up from 3.96% for the same period last year. Average loans were up $75.9 million, or 1.6% in the first nine months of 2019, compared to the same period in 2018. Average total deposits were up $169.0 million, or 3.5% in the first nine months of 2019, versus the same period in 2018. Average noninterest-bearing deposits for the first nine months of 2019 were up $14.2 million or 1.0% compared to the same period in 2018. The average rate paid on interest-bearing deposits increased 42 basis points in the first nine months of 2019, compared to the same period in 2018.
NONINTEREST INCOME
Noninterest income for the third quarter of 2019 was up 5.0% compared to the same period last year. Noninterest income represented 26.7% of total revenues in the first nine months of 2019, compared to 26.6% in the same period in 2018. Fee income associated with insurance, wealth management, deposit services, and card services were all up over the same quarter last year, with a combined increase of $903,000, or 5.5%.
NONINTEREST EXPENSE
Noninterest expense was $45.7 million for the third quarter of 2019, up $522,000, or 1.2%, over the third quarter of 2018. For the year-to-date period, noninterest expense was $135.9 million, up $2.1 million, or 1.6%, from the same period in 2018. The increase in noninterest expense for both the third quarter and year-to-date periods reflects normal annual increases in salaries and wages. Current quarter other operating expense was reduced bydeposit insurance credits received from the FDIC, which included $1.2 million that were applied during the third quarter of 2019.
INCOME TAX EXPENSE
The Company's effective tax rate was 21.3% in the third quarter of 2019, compared to 20.6% for the same period in 2018.
ASSET QUALITY
Asset quality trends remained strong in the third quarter of 2019, despite an increase in nonperforming assets during the third quarter of 2019. Nonperforming assets represented 0.47% of total assets at September 30, 2019, compared to 0.42% at December 31, 2018, and 0.39% at September 30, 2018. Nonperforming asset levels remain below the most recent Federal Reserve Board Peer Group Average1of 0.60%.
Provision for loan and lease losses was $1.3 million for the third quarter of 2019, compared to $272,000 for the third quarter of 2018. Net charge-offs for the third quarter of 2019 were $739,000 compared to $139,000 reported in the third quarter of 2018.
The Company’s allowance for originated loan and lease losses totaled $41.2 million at September 30, 2019, and represented 0.89% of total originated loans and leases at September 30, 2019, up from 0.88% for the most recent prior quarter, and down from 0.91% at September 30, 2018. The total allowance represented 137.46% of total nonperforming loans and leases at September 30, 2019, compared to 163.25% at December 31, 2018, and 169.00% at September 30, 2018.
CAPITAL POSITION
Capital ratios remain well above the regulatory well capitalized minimums. The ratio of Tier 1 capital to average assets was 9.43% at September 30, 2019, improved from 9.25% reported for the quarter ended June 30, 2019, and 8.89% reported for September 30, 2018.
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.
The statements made herein shall not confer upon any person any rights or remedies of any nature, and shall not be construed to establish, amend, or modify any benefit plan, program, agreement, or arrangement, nor to alter any existing at-will employment relationship between the Company and its employees.
| TOMPKINS FINANCIAL CORPORATION |
| CONDENSED CONSOLIDATED STATEMENTS OF CONDITION |
| (In thousands, except share and per share data) | As of | As of |
| ASSETS | 09/30/2019 | 12/31/2018 |
| | | |
| Cash and noninterest bearing balances due from banks | $ | 124,939 | | $ | 78,524 | |
| Interest bearing balances due from banks | 2,488 | | 1,865 | |
| Cash and Cash Equivalents | 127,427 | | 80,389 | |
| | | |
| Available-for-sale securities, at fair value (amortized cost of $1,140,086 at September 30, 2019 and $1,363,902 at December 31, 2018) | 1,142,452 | | 1,332,658 | |
| Held-to-maturity securities, at amortized cost (fair value of $142,583 at September 30, 2019 and $139,377 at December 31, 2018) | 138,657 | | 140,579 | |
| Equity securities, at fair value (amortized cost $1,000 at September 30, 2019 and $1,000 at December 31, 2018) | 917 | | 887 | |
| Originated loans and leases, net of unearned income and deferred costs and fees | 4,628,616 | | 4,568,741 | |
| Acquired loans | 228,457 | | 265,198 | |
| Less: Allowance for loan and lease losses | 41,371 | | 43,410 | |
| Net Loans and Leases | 4,815,702 | | 4,790,529 | |
| | | |
| Federal Home Loan Bank and other stock | 24,881 | | 52,262 | |
| Bank premises and equipment, net | 94,861 | | 97,202 | |
| Corporate owned life insurance | 82,516 | | 81,928 | |
| Goodwill | 92,447 | | 92,283 | |
| Other intangible assets, net | 6,647 | | 7,628 | |
| Accrued interest and other assets | 101,475 | | 82,091 | |
| Total Assets | $ | 6,627,982 | | $ | 6,758,436 | |
| LIABILITIES | | |
| Deposits: | | |
| Interest bearing: | | |
| Checking, savings and money market | 3,165,622 | | 2,853,190 | |
| Time | 701,444 | | 637,295 | |
| Noninterest bearing | 1,502,924 | | 1,398,474 | |
| Total Deposits | 5,369,990 | | 4,888,959 | |
| | | |
| Federal funds purchased and securities sold under agreements to repurchase | 50,541 | | 81,842 | |
| Other borrowings | 429,000 | | 1,076,075 | |
| Trust preferred debentures | 16,992 | | 16,863 | |
| Other liabilities | 101,594 | | 73,826 | |
| Total Liabilities | $ | 5,968,117 | | $ | 6,137,565 | |
| EQUITY | | |
| Tompkins Financial Corporation shareholders' equity: | | |
| Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued: 15,011,660 at September 30, 2019; and 15,348,287 at December 31, 2018 | 1,501 | | 1,535 | |
| Additional paid-in capital | 341,654 | | 366,595 | |
| Retained earnings | 357,165 | | 319,396 | |
| Accumulated other comprehensive loss | (36,851 | ) | (63,165 | ) |
| Treasury stock, at cost – 121,880 shares at September 30, 2019, and 122,227 shares at December 31, 2018 | (5,111 | ) | (4,902 | ) |
| Total Tompkins Financial Corporation Shareholders’ Equity | 658,358 | | 619,459 | |
| | | |
| Noncontrolling interests | 1,507 | | 1,412 | |
| Total Equity | $ | 659,865 | | $ | 620,871 | |
| Total Liabilities and Equity | $ | 6,627,982 | | $ | 6,758,436 | |
| | | |
| TOMPKINS FINANCIAL CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
| (In thousands, except per share data) (Unaudited) | Three Months Ended | Nine Months Ended |
| | 09/30/2019 | 09/30/2018 | 09/30/2019 | 09/30/2018 |
| INTEREST AND DIVIDEND INCOME | | | | |
| Loans | $ | 57,621 | | $ | 54,769 | | $ | 169,685 | | $ | 158,419 | |
| Due from banks | 11 | | 8 | | 31 | | 22 | |
| Available-for-sale securities | 6,511 | | 7,448 | | 22,055 | | 22,821 | |
| Held-to-maturity securities | 862 | | 860 | | 2,583 | | 2,572 | |
| Federal Home Loan Bank and other stock | 770 | | 899 | | 2,442 | | 2,433 | |
| Total Interest and Dividend Income | 65,775 | | 63,984 | | 196,796 | | 186,267 | |
| INTEREST EXPENSE | | | | |
| Time certificates of deposits of $250,000 or more | 823 | | 563 | | 2,184 | | 1,088 | |
| Other deposits | 7,582 | | 3,830 | | 20,409 | | 9,699 | |
| Federal funds purchased and securities sold under agreements to repurchase | 34 | | 35 | | 110 | | 115 | |
| Trust preferred debentures | 317 | | 318 | | 974 | | 904 | |
| Other borrowings | 3,862 | | 6,075 | | 15,731 | | 15,897 | |
| Total Interest Expense | 12,619 | | 10,821 | | 39,408 | | 27,703 | |
| Net Interest Income | 53,156 | | 53,163 | | 157,388 | | 158,564 | |
| Less: Provision for loan and lease losses | 1,320 | | 272 | | 2,366 | | 1,884 | |
| Net Interest Income After Provision for Loan and Lease Losses | 51,836 | | 52,891 | | 155,022 | | 156,680 | |
| NONINTEREST INCOME | | | | |
| Insurance commissions and fees | 8,517 | | 7,903 | | 24,314 | | 22,684 | |
| Investment services income | 4,175 | | 4,097 | | 12,166 | | 12,365 | |
| Service charges on deposit accounts | 2,191 | | 2,088 | | 6,210 | | 6,300 | |
| Card services income | 2,550 | | 2,442 | | 8,090 | | 7,209 | |
| Other income | 1,963 | | 2,057 | | 6,247 | | 8,743 | |
| Net gain on securities transactions | 138 | | 16 | | 434 | | 290 | |
| Total Noninterest Income | 19,534 | | 18,603 | | 57,461 | | 57,591 | |
| NONINTEREST EXPENSE | | | | |
| Salaries and wages | 22,960 | | 22,029 | | 66,149 | | 64,404 | |
| Other employee benefits | 5,821 | | 5,300 | | 17,094 | | 15,859 | |
| Net occupancy expense of premises | 3,236 | | 3,057 | | 10,095 | | 9,873 | |
| Furniture and fixture expense | 1,919 | | 1,814 | | 5,894 | | 5,461 | |
| Amortization of intangible assets | 421 | | 440 | | 1,251 | | 1,334 | |
| Other operating expense | 11,298 | | 12,493 | | 35,451 | | 36,908 | |
| Total Noninterest Expenses | 45,655 | | 45,133 | | 135,934 | | 133,839 | |
| Income Before Income Tax Expense | 25,715 | | 26,361 | | 76,549 | | 80,432 | |
| Income Tax Expense | 5,478 | | 5,427 | | 15,816 | | 16,939 | |
| Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation | 20,237 | | 20,934 | | 60,733 | | 63,493 | |
| Less: Net Income Attributable to Noncontrolling Interests | 31 | | 32 | | 95 | | 96 | |
| Net Income Attributable to Tompkins Financial Corporation | $ | 20,206 | | $ | 20,902 | | $ | 60,638 | | $ | 63,397 | |
| Basic Earnings Per Share | $ | 1.34 | | $ | 1.37 | | $ | 3.99 | | $ | 4.15 | |
| Diluted Earnings Per Share | $ | 1.34 | | $ | 1.36 | | $ | 3.97 | | $ | 4.12 | |
| | | | | |
| | | |
| Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited) |
| | | | | | | | | | | | | | | |
| | | | Quarter Ended | YTD Period Ended | YTD Period Ended |
| | | | | September 30, 2019 | | September 30, 2019 | | September 30, 2018 |
| | | | | 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 | $ | 2,908 | | $ | 11 | 1.50 | % | $ | 2,460 | $ | 31 | 1.68 | % | $ | 2,121 | $ | 22 | 1.39 | % |
| | Securities (4) | | | | | | | | | | | | |
| | | U.S. Government securities | | 1,219,318 | | 6,822 | 2.22 | % | | 1,338,807 | 22,990 | 2.30 | % | | 1,438,322 | 23,763 | 2.21 | % |
| | | State and municipal (5) | | 91,675 | | 639 | 2.76 | % | | 93,131 | 1,903 | 2.73 | % | | 97,556 | 1,898 | 2.60 | % |
| | | Other securities (5) | | 3,419 | | 39 | 4.52 | % | | 3,417 | 120 | 4.70 | % | | 3,516 | 113 | 4.30 | % |
| | | Total securities | | 1,314,412 | | 7,500 | 2.26 | % | | 1,435,355 | 25,013 | 2.33 | % | | 1,539,394 | 25,774 | 2.24 | % |
| | FHLBNY and FRB stock | | 33,359 | | 770 | 9.16 | % | | 42,634 | 2,442 | 7.66 | % | | 52,802 | 2,433 | 6.16 | % |
| | | | | | | | | | | | | | | |
| | Total loans and leases, net of unearned income (5)(6) | | 4,852,399 | | 57,904 | 4.73 | % | | 4,816,140 | 170,540 | 4.73 | % | | 4,740,257 | 159,398 | 4.50 | % |
| | Total interest-earning assets | | 6,203,078 | | 66,185 | 4.23 | % | | 6,296,589 | 198,026 | 4.21 | % | | 6,334,574 | 187,627 | 3.96 | % |
| | | | | | | | | | | | | | | |
| Other assets | | 418,334 | | | | | 405,358 | | | | 351,949 | | |
| | | | | | | | | | | | | | | |
| | Total assets | $ | 6,621,412 | | | | $ | 6,701,947 | | | $ | 6,686,523 | | |
| LIABILITIES & EQUITY | | | | | | | | | | | | |
| Deposits | | | | | | | | | | | | |
| | Interest-bearing deposits | | | | | | | | | | | | |
| | | Interest bearing checking, savings & money market | $ | 2,998,574 | | 5,423 | 0.72 | % | $ | 2,962,236 | 14,865 | 0.67 | % | $ | 2,806,119 | 6,118 | 0.29 | % |
| | | Time deposits | | 694,822 | | 2,982 | 1.70 | % | | 670,570 | 7,728 | 1.54 | % | | 671,888 | 4,669 | 0.93 | % |
| | | Total interest-bearing deposits | | 3,693,396 | | 8,405 | 0.90 | % | | 3,632,806 | 22,593 | 0.83 | % | | 3,478,007 | 10,787 | 0.41 | % |
| | | | | | | | | | | | | | | |
| Federal funds purchased & securities sold under | | | | | | | | | | | | |
| | | agreements to repurchase | | 57,607 | | 34 | 0.23 | % | | 61,482 | 110 | 0.24 | % | | 62,956 | 115 | 0.24 | % |
| Other borrowings | | 647,112 | | 3,862 | 2.37 | % | | 861,930 | 15,731 | 2.44 | % | | 1,113,120 | 15,897 | 1.91 | % |
| Trust preferred debentures | | 16,964 | | 318 | 7.44 | % | | 16,921 | 974 | 7.70 | % | | 16,749 | 904 | 7.22 | % |
| | Total interest-bearing liabilities | | 4,415,079 | | 12,619 | 1.13 | % | | 4,573,139 | 39,408 | 1.15 | % | | 4,670,832 | 27,703 | 0.79 | % |
| | | | | | | | | | | | | | | |
| Non-interest bearing deposits | | 1,445,051 | | | | | 1,380,399 | | | | 1,366,219 | | |
| Accrued expenses and other liabilities | | 101,632 | | | | | 101,483 | | | | 63,682 | | |
| | Total liabilities | | 5,961,762 | | | | | 6,055,021 | | | | 6,100,733 | | |
| | | | | | | | | | | | | | | |
| Tompkins Financial Corporation Shareholders’ equity | | 658,159 | | | | | 645,466 | | | | 584,331 | | |
| Noncontrolling interest | | 1,491 | | | | | 1,460 | | | | 1,459 | | |
| | Total equity | | 659,650 | | | | | 646,926 | | | | 585,790 | | |
| | | | | | | | | | | | | | | |
| | Total liabilities and equity | $ | 6,621,412 | | | | $ | 6,701,947 | | | $ | 6,686,523 | | |
| Interest rate spread | | | | 3.10 | % | | | | 3.05 | % | | | | 3.17 | % |
| | Net interest income/margin on earning assets | | | 53,566 | 3.43 | % | | | 158,618 | 3.37 | % | | | 159,924 | 3.38 | % |
| | | | | | | | | | | | | | | |
| Tax equivalent adjustments | | | (410) | | | | (1,230) | | | | (1,360) | |
| | | | | | | | | | | | | | | |
| | Net interest income per consolidated financial statements | | | $ | 53,156 | | | | $ | 157,388 | | | | $ | 158,564 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Tompkins Financial Corporation - Summary Financial Data (Unaudited)
| (In thousands, except per share data) | | | | | | | | | | | | |
| | Quarter-Ended | Year-Ended |
| Period End Balance Sheet | | Sep-19 | | | Jun-19 | | | Mar-19 | | | Dec-18 | | | Sep-18 | | | Dec-18 | |
| Securities | $ | 1,282,026 | | $ | 1,330,719 | | $ | 1,484,151 | | $ | 1,474,124 | | $ | 1,452,788 | | $ | 1,474,124 | |
| Originated loans and leases, net of unearned income and deferred costs and fees (2) | | 4,628,616 | | | 4,608,483 | | | 4,532,803 | | | 4,568,741 | | | 4,531,241 | | | 4,568,741 | |
| Acquired loans and leases (3) | | 228,457 | | | 247,319 | | | 256,897 | | | 265,198 | | | 271,468 | | | 265,198 | |
| Allowance for loan and lease losses | | 41,371 | | | 40,790 | | | 40,328 | | | 43,410 | | | 41,358 | | | 43,410 | |
| Total assets | | 6,627,982 | | | 6,654,390 | | | 6,738,719 | | | 6,758,436 | | | 6,746,960 | | | 6,758,436 | |
| Total deposits | | 5,369,990 | | | 4,988,897 | | | 4,989,925 | | | 4,888,959 | | | 5,025,082 | | | 4,888,959 | |
| Federal funds purchased and securities sold under agreements to repurchase | | 50,541 | | | 63,978 | | | 66,918 | | | 81,842 | | | 52,875 | | | 81,842 | |
| Other borrowings | | 429,000 | | | 824,562 | | | 923,427 | | | 1,076,075 | | | 988,515 | | | 1,076,075 | |
| Trust preferred debentures | | 16,992 | | | 16,949 | | | 16,906 | | | 16,863 | | | 16,820 | | | 16,863 | |
| Total common equity | | 658,358 | | | 656,201 | | | 645,823 | | | 619,459 | | | 597,636 | | | 619,459 | |
| Total equity | | 659,865 | | | 657,677 | | | 647,267 | | | 620,871 | | | 599,144 | | | 620,871 | |
| Average Balance Sheet | | | | | | | | | | | | |
| Average earning assets | $ | 6,203,078 | | $ | 6,337,983 | | $ | 6,350,325 | | $ | 6,364,113 | | $ | 6,356,781 | | $ | 6,342,019 | |
| Average assets | | 6,621,412 | | | 6,742,409 | | | 6,743,360 | | | 6,710,944 | | | 6,716,452 | | | 6,692,678 | |
| Average interest-bearing liabilities | | 4,415,079 | | | 4,638,249 | | | 4,668,875 | | | 4,606,536 | | | 4,644,533 | | | 4,654,625 | |
| Average equity | | 659,650 | | | 650,079 | | | 630,731 | | | 606,238 | | | 597,211 | | | 590,944 | |
| Share data | | | | | | | | | | | | |
| Weighted average shares outstanding (basic) | 14,827,114 | | 15,019,710 | | 15,060,175 | | 15,057,673 | | 15,047,405 | | 15,039,229 | |
| Weighted average shares outstanding (diluted) | 14,887,626 | | 15,085,945 | | 15,136,523 | | 15,135,750 | | 15,144,491 | | 15,132,257 | |
| Period-end shares outstanding | 14,975,750 | | 15,160,719 | | 15,314,078 | | 15,312,377 | | 15,277,915 | | 15,312,377 | |
| Common equity book value per share | $ | 43.96 | | $ | 43.28 | | $ | 42.17 | | $ | 40.45 | | $ | 39.12 | | $ | 40.45 | |
| Tangible book value per share (Non-GAAP) (10) | $ | 37.40 | | $ | 36.77 | | $ | 35.73 | | $ | 33.98 | | $ | 32.60 | | $ | 33.98 | |
| Income Statement | | | | | | | | | | | | |
| Net interest income | $ | 53,156 | | $ | 52,318 | | $ | 51,914 | | $ | 53,236 | | $ | 53,163 | | $ | 211,800 | |
| Provision for loan/lease losses | | 1,320 | | | 601 | | | 445 | | | 2,058 | | | 272 | | | 3,942 | |
| Noninterest income | | 19,534 | | | 18,520 | | | 19,407 | | | 19,858 | | | 18,603 | | | 77,449 | |
| Noninterest expense | | 45,655 | | | 46,070 | | | 44,209 | | | 47,228 | | | 45,133 | | | 181,067 | |
| Income tax expense | | 5,478 | | | 4,743 | | | 5,595 | | | 4,866 | | | 5,427 | | | 21,805 | |
| Net income attributable to Tompkins Financial Corporation | | 20,206 | | | 19,392 | | | 21,040 | | | 18,911 | | | 20,902 | | | 82,308 | |
| Noncontrolling interests | | 31 | | | 32 | | | 32 | | | 31 | | | 32 | | | 127 | |
| Basic earnings per share (8) | $ | 1.34 | | $ | 1.27 | | $ | 1.37 | | $ | 1.24 | | $ | 1.37 | | $ | 5.39 | |
| Diluted earnings per share (8) | $ | 1.34 | | $ | 1.27 | | $ | 1.37 | | $ | 1.23 | | $ | 1.36 | | $ | 5.35 | |
| Nonperforming Assets | | | | | | | | | | | | |
| Originated nonaccrual loans and leases | $ | 21,404 | | $ | 16,543 | | $ | 15,165 | | $ | 19,340 | | $ | 17,518 | | $ | 19,340 | |
| Acquired nonaccrual loans and leases | | 2,164 | | | 2,363 | | | 2,579 | | | 2,856 | | | 2,659 | | | 2,856 | |
| Originated loans and leases 90 days past due and accruing | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
| Troubled debt restructuring not included above | | 6,528 | | | 4,889 | | | 5,234 | | | 4,395 | | | 4,295 | | | 4,395 | |
| Total nonperforming loans and leases | | 30,096 | | | 23,795 | | | 22,978 | | | 26,591 | | | 24,472 | | | 26,591 | |
| OREO | | 888 | | | 2,229 | | | 1,595 | | | 1,595 | | | 1,870 | | | 1,595 | |
| Total nonperforming assets | $ | 30,984 | | $ | 26,024 | | $ | 24,573 | | $ | 28,186 | | $ | 26,342 | | $ | 28,186 | |
Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued
| | | Quarter-Ended | Year-Ended |
| Delinquency - Originated loan and lease portfolio | | Sep-19 | | | Jun-19 | | | Mar-19 | | | Dec-18 | | | Sep-18 | | | Dec-18 | |
| Loans and leases 30-89 days past due and | | | | | | | | | | | | |
| accruing (2) | $ | 3,287 | | $ | 3,883 | | $ | 4,193 | | $ | 7,838 | | $ | 6,454 | | $ | 7,838 | |
| Loans and leases 90 days past due and accruing (2) | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
| Total originated loans and leases past due and accruing (2) | | 3,287 | | | 3,883 | | | 4,193 | | | 7,838 | | | 6,454 | | | 7,838 | |
| Delinquency - Acquired loan and lease portfolio |
| Loans 30-89 days past due and accruing (3)(7) | $ | 232 | | $ | 493 | | $ | 474 | | $ | 67 | | $ | 1,109 | | $ | 67 | |
| Loans 90 days or more past due | | 1,219 | | | 1,229 | | | 1,218 | | | 1,316 | | | 1,420 | | | 1,316 | |
| Total acquired loans and leases past due and accruing | | 1,451 | | | 1,722 | | | 1,692 | | | 1,383 | | | 2,529 | | | 1,383 | |
| Total loans and leases past due and accruing | $ | 4,738 | | $ | 5,605 | | $ | 5,885 | | $ | 9,221 | | $ | 8,983 | | $ | 9,221 | |
| Allowance for Loan Losses - Originated loan and lease portfolio |
| Balance at beginning of period | $ | 40,689 | | $ | 40,245 | | $ | 43,321 | | $ | 41,289 | | $ | 41,111 | | $ | 39,686 | |
| Provision for loan and lease losses | | 1,245 | | | 590 | | | 480 | | | 2,046 | | | 208 | | | 3,897 | |
| Net loan and lease (recoveries) charge-offs | | 703 | | | 146 | | | 3,556 | | | 14 | | | 30 | | | 262 | |
| Allowance for loan and lease losses (originated | | | | | | | | | | | | |
| loan portfolio) - balance at end of period | $ | 41,231 | | $ | 40,689 | | $ | 40,245 | | $ | 43,321 | | $ | 41,289 | | $ | 43,321 | |
| Allowance for Loan Losses - Acquired loan and lease portfolio |
| Balance at beginning of period | $ | 101 | | $ | 83 | | $ | 89 | | $ | 69 | | $ | 114 | | $ | 85 | |
| Provision (credit) for loan and lease losses | | 75 | | | 11 | | | (35 | ) | | 12 | | | 64 | | | 45 | |
| Net loan and lease (recoveries) charge-offs | | 36 | | | (7 | ) | | (29 | ) | | (8 | ) | | 109 | | | 41 | |
| Allowance for loan and lease losses (acquired | | | | | | | | | | | | |
| loan portfolio) - balance at end of period | | 140 | | | 101 | | | 83 | | | 89 | | | 69 | | | 89 | |
| | | | | | | | | | | | | |
| Total allowance for loan and lease losses | $ | 41,371 | | $ | 40,791 | | $ | 40,328 | | $ | 43,410 | | $ | 41,358 | | $ | 43,410 | |
| Loan Classification - Originated Portfolio | | | | | | | | | | | | |
| Special Mention | $ | 41,314 | | $ | 36,619 | | $ | 33,689 | | $ | 28,074 | | $ | 34,245 | | $ | 28,074 | |
| Substandard | | 58,873 | | | 44,770 | | | 35,895 | | | 43,963 | | | 49,597 | | | 43,963 | |
| Loan Classification - Acquired Portfolio | | | | | | | | | | | | |
| Special Mention | | 261 | | | 265 | | | 270 | | | 452 | | | 465 | | | 452 | |
| Substandard | | 2,809 | | | 2,857 | | | 2,830 | | | 2,914 | | | 3,041 | | | 2,914 | |
| Loan Classifications - Total Portfolio | | | | | | | | | | | | |
| Special Mention | | 41,575 | | | 36,884 | | | 33,959 | | | 28,526 | | | 34,710 | | | 28,526 | |
| Substandard | | 61,682 | | | 47,627 | | | 38,725 | | | 46,877 | | | 52,638 | | | 46,877 | |
Ratio Analysis
| Credit Quality | | | | | | | | | | | | |
| Nonperforming loans and leases/total loans and leases (7) | | 0.62 | % | | 0.49 | % | | 0.48 | % | | 0.55 | % | | 0.51 | % | | 0.55 | % |
| Nonperforming assets/total assets | | 0.47 | % | | 0.39 | % | | 0.36 | % | | 0.42 | % | | 0.39 | % | | 0.42 | % |
| Allowance for originated loan and lease losses/total originated loans and leases | | 0.89 | % | | 0.88 | % | | 0.89 | % | | 0.95 | % | | 0.91 | % | | 0.95 | % |
| Allowance/nonperforming loans and leases | | 137.46 | % | | 171.42 | % | | 175.51 | % | | 163.25 | % | | 169.00 | % | | 163.25 | % |
| Net loan and lease losses annualized/total average loans and leases | | 0.06 | % | | 0.01 | % | | 0.30 | % | | 0.00 | % | | 0.01 | % | | 0.01 | % |
Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued
| | | Year-Ended |
| Capital Adequacy (period-end) | | Sep-19 | | Jun-19 | | Mar-19 | | Dec-18 | | Sep-18 | | Dec-18 |
| Tier 1 Capital (to average assets) | | 9.43 | % | | 9.25 | % | | 9.24 | % | | 9.05 | % | | 8.89 | % | | 9.05 | % |
| Common Equity Tier 1 Capital (to risk-weighted assets) | | 12.14 | % | | 12.13 | % | | 12.19 | % | | 11.84 | % | | 11.65 | % | | 11.84 | % |
| Profitability | | | | | | | | | | | | |
| Return on average assets * | | 1.21 | % | | 1.15 | % | | 1.27 | % | | 1.12 | % | | 1.23 | % | | 1.23 | % |
| Return on average equity * | | 12.15 | % | | 11.96 | % | | 13.53 | % | | 12.38 | % | | 13.89 | % | | 13.93 | % |
| Net interest margin (TE) * | | 3.43 | % | | 3.34 | % | | 3.34 | % | | 3.34 | % | | 3.35 | % | | 3.37 | % |
| * Quarterly ratios have been annualized | | | | | | | | | | | | |
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 below tables. The Company believes the non-GAAP measures provide meaningful comparisons of our underlying operational performance and facilitate management's and investors' assessments of business and performance trends in comparison to others in the financial services industry. These non-GAAP financial measures should not be considered in isolation or as a measure of the Company's profitability or liquidity; they are in addition to, and are not a substitute for, financial measures under GAAP. The non-GAAP financial measures presented herein may be different from non-GAAP financial measures used by other companies, and may not be comparable to similarly titled measures reported by other companies. Further, the Company may utilize other measures to illustrate performance in the future. Non-GAAP financial measures have limitations since they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP.
| Reconciliation of Diluted Earnings Per Share (GAAP) to Adjusted Diluted Earnings Per Share (non-GAAP) |
| | | Quarter-Ended | Year-Ended |
| | | Sep-19 | | | Jun-19 | | | Mar-19 | | | Dec-18 | | | Sep-18 | | | Dec-18 | |
| Net income available to common shareholders | $ | 20,206 | | $ | 19,392 | | $ | 21,040 | | $ | 18,911 | | $ | 20,902 | | $ | 82,308 | |
| Income attributable to unvested stock-based compensation awards | | 317 | | | 306 | | | 349 | | | 291 | | | 318 | | | 1,315 | |
| Net earnings allocated to common shareholders (GAAP) | | 19,889 | | | 19,086 | | | 20,691 | | | 18,620 | | | 20,584 | | | 80,993 | |
| Weighted average shares outstanding (diluted) | 14,887,626 | | 15,085,945 | | 15,136,523 | | 15,135,750 | | 15,144,491 | | 15,132,257 | |
| Diluted earnings per share (8) | $ | 1.34 | | $ | 1.27 | $ | 1.37 | $ | 1.23 | $ | 1.36 | $ | 5.35 |
| Adjustments for non-operating income and expense: |
| Gain on sale of real estate, net of tax | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 2,227 | |
| Write-down of impaired leases, net of tax | | 0 | | | 0 | | | 0 | | | 0 | | | (388 | ) | | (1,915 | ) |
| Adjusted net income (Non-GAAP) (10) | | 19,889 | | | 19,086 | | | 20,691 | | | 18,620 | | | 20,972 | | | 80,681 | |
| Weighted average shares outstanding (diluted) | 14,887,626 | | 15,085,945 | | 15,136,523 | | 15,135,750 | | 15,144,491 | | 15,132,257 | |
| Adjusted diluted earnings per share (Non-GAAP) (10) | $ | 1.34 | | $ | 1.27 | | $ | 1.37 | | $ | 1.23 | | $ | 1.38 | | $ | 5.33 | |
| Reconciliation of Common Equity Book Value Per Share (GAAP) to Tangible Book Value Per Share (non-GAAP) |
| Total common equity | $ | 658,358 | | $ | 656,201 | | $ | 645,823 | | $ | 619,459 | | $ | 597,636 | | $ | 619,459 | |
| Less: Goodwill and intangibles (9) | | 98,277 | | | 98,698 | | | 98,694 | | | 99,106 | | | 99,543 | | | 99,106 | |
| Tangible common equity (Non-GAAP) (10) | | 560,081 | | | 557,503 | | | 547,129 | | | 520,353 | | | 498,093 | | | 520,353 | |
| Ending shares outstanding | 14,975,750 | | 15,160,719 | | 15,314,078 | | 15,312,377 | | 15,277,915 | | 15,312,377 | |
| Tangible book value per share (Non-GAAP) (10) | $ | 37.40 | | $ | 36.77 | | $ | 35.73 | | $ | 33.98 | | $ | 32.60 | | $ | 33.98 | |
Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued
| Reconciliation of Year to Date Common Equity Diluted Earnings Per Share (GAAP) to Adjusted Diluted Earnings Per Share (non-GAAP) | |
| | Sep-19 | Sep-18 |
| Net income available to common shareholders | $60,638 | | $63,397 | |
| Income attributable to unvested stock-based compensation awards | 972 | | 1,024 | |
| Net earnings allocated to common shareholders (GAAP) | 59,666 | | 62,373 | |
| Weighted average shares outstanding (diluted) | 15,035,780 | | 15,131,018 | |
| Diluted earnings per share (8) | $3.97 | $4.12 |
| Adjustments for non-operating income and expense: | | |
| Gain on sale of real estate, net of tax | 0 | | 2,227 | |
| Write-down of impaired leases, net of tax | 0 | | (1,915 | ) |
| Adjusted net income (Non-GAAP) (10) | 59,666 | | 62,061 | |
| Weighted average shares outstanding (diluted) | 15,035,780 | | 15,131,018 | |
| Adjusted diluted earnings per share (Non-GAAP) (10) | $3.97 | $4.10 |
(1) Federal Reserve peer ratio as of June 30, 2019, 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.
(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, 2018.
(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)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.
(9) "Goodwill and intangibles" equal Total Intangible Assets less Mortgage Servicing Rights in the above tables.
(10) See "Non-GAAP Measures" above for a discussion of non-GAAP financial measures and a reconciliation of non-GAAP financial measures to the most directly comparable financial measure presented in accordance with GAAP.
