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, July 24, 2020
Tompkins Financial Corporation Reports Increased Second Quarter Earnings
ITHACA, NY - Tompkins Financial Corporation (NYSE American: TMP)
Tompkins Financial Corporation reported diluted earnings per share of $1.44 for the second quarter of 2020, up 13.4% compared to $1.27 reported in the second quarter of 2019. Net income for the second quarter of 2020 was $21.4 million, compared to $19.4 million reported for the same period in 2019.
For the year-to-date period ended June 30, 2020, diluted earnings per share were $1.97, down 25.1% from the same period in 2019. Year-to-date net income was $29.4 million, down from $40.4 million, for the same period in 2019. Results for the 2020 year-to-date period were negatively impacted by economic stress resulting from the COVID-19 pandemic, which contributed to the $16.3 million provision for credit losses recognized during the first quarter of 2020.
Mr. Romaine commented, “We are pleased to report strong financial results for the quarter despite a very challenging business climate. Although the longer term impact of the pandemic and related economic conditions are still unknown, there have been several recent positive trends noted with certain national economic indicators, such as reduced levels of unemployment, improving retail sales and improving consumer confidence. At Tompkins, we have seen several positive trends as well, with very strong mortgage application volumes in the second quarter, higher levels of debit card spending, and favorable credit quality measures when compared to last quarter. We are encouraged by some of these recent favorable trends, though the recent rise in COVID-19 cases nationally makes it clear that much uncertainty remains. We will remain vigilant in monitoring risk trends as we navigate these challenging times.”
SELECTED HIGHLIGHTS FOR THE SECOND QUARTER:
| ● | Total loans of $5.4 billion were up $568 million, or 11.7% over June 30, 2019. The increase over the prior year included $465.6 million of PPP loans funded during the second quarter of 2020. |
| ● | Total deposits of $6.4 billion increased by $1.4 billion, or 27.8% over June 30, 2019. |
| ● | Net interest margin was 3.45% for the second quarter of 2020, up from 3.44% for the first quarter of 2020, and 3.43% for the fourth quarter of 2019 |
| ● | The ratio of Total Capital to risk-weighted assets improved to 13.95%, up from 13.62% at March 31, 2020, and 13.53% at December 31, 2019. |
NET INTEREST INCOME
Net interest income was $56.4 million for the second quarter of 2020, compared to $52.3 million reported for the second quarter of 2019. For the year-to-date period, net interest income was $109.3 million, an increase of $5.1 million or 4.9% from the same six-month period in 2019.
Net interest income benefited from growth in average loans. Average loans were up $297.7 million, or 6.2% in the first six months of 2020, compared to the same six month period in 2019. The increase in average loans includes the benefit of $465.6 million of loans originated under the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”) in the second quarter of 2020. Asset yields were down 20 basis points compared to the first six months of 2019, which reflects the impact of reductions in market interest rates during the first six months of 2020, and the addition of the lower yielding PPP loans originated in the second quarter.
Average total deposits were up $778.1 million, or 15.7% in the first six months of 2020, versus the same period in 2019. Average noninterest deposits were up $251.3 billion or 18.7% in the first six months of 2020, compared to the same period in 2019. Average deposit balances benefited from $465.6 million of PPP loan originations during the second quarter of 2020, the majority of which were deposited in Tompkins checking accounts. The average rate paid on interest-bearing deposit products in the first six months of 2020 decreased by 21 basis points over the same period in 2019.
Net interest margin was 3.45% for the second quarter of 2020, up compared to the 3.34% reported for the second quarter of 2019, and 3.44% for the first quarter of 2020. The improved net interest margin year-over-year was largely driven by lower funding costs, reflecting lower deposit rates and growth in deposit balances, which were used to reduce higher cost other borrowing balances.
As a result of its participation in the SBA’s PPP, in the second quarter the Company recorded net deferred loan fees of $2.3 million, which are included in interest income.
NONINTEREST INCOME
Noninterest income represented 24.8% of total revenues in the first six months of 2020, as compared to 26.7% in the same period in 2019. Noninterest income of $17.2 million for the second quarter of 2020 was down 7.3% compared to the same period in 2019. For the year-to-date period, noninterest income of $36.1 million was down 4.7% from the same period in 2019. Total fee based services in the second quarter of 2020 were $14.7 million, down 10.5% compared to the same period in 2019. The reduction in fee based income in 2020 is largely related to the pandemic-related travel and business restrictions, which reduced card services and service charge income. Other noninterest income for the second quarter of 2020 included $691,000 related to gains on sales of residential mortgage loans.
NONINTEREST EXPENSE
Noninterest expense was $46.9 million for the second quarter of 2020, up $818,000, or 1.8%, over the second quarter of 2019. For the year-to-date period, noninterest expense was $92.6 million, up $2.3 million, or 2.6%, from the same period in 2019. The increase in noninterest expense for both the second quarter and year-to-date periods was primarily attributable to normal annual increases in salaries and wages. Other expense for the second quarter and year-to-date period of 2020 included $1.2 million and $1.7 million, respectively, related to allowance for credit losses for off-balance sheet exposures. Other expense during the quarter also included a loss of $675,000 related to the pending sale of real estate.
INCOME TAX EXPENSE
The Company’s effective tax rate was 20.5% for the second quarter of 2020, compared to 19.6% for the same period in 2019. The effective tax rate for the six months ended June 30, 2020 was 20.2%, compared to 20.3% reported for the same period in 2019.
ASSET QUALITY
Asset quality trends remained strong in the second quarter of 2020. Nonperforming assets represented 0.40% of total assets at June 30, 2020, down from 0.47% at December 31, 2019. Nonperforming asset levels continue to be below the most recent Federal Reserve Board Peer Group Average1 of 0.49%.
Provision for credit losses in the second quarter of 2020 was a negative provision of $348,000 compared to an expense of $601,000 for the same period in 2019. Provision expense for the six months ended June 30, 2020 was $15.9 million, compared to $1.0 million for the same period in 2019. The first quarter of 2020 included provision expense of $16.3 million related to the impact of the economic shutdown related to COVID-19 on economic forecasts and other model assumptions relied upon by management in determining the allowance. Net recoveries for the second quarter of 2020 were $26,000 compared to net charge-offs of $139,000 reported in the second quarter of 2019.
The allowance for credit losses represented 0.96% of total loans and leases at June 30, 2020, compared to 1.06% at March 31, 2020, 0.81% at December 31, 2019, and 0.84% at June 30, 2019. The decline in the ratio during the second quarter this year is largely due to the increase in loan balances being largely driven by $465.6 million of PPP loans for which no reserves have been allocated. The ratio of the allowance to total nonperforming loans and leases was 172.62% at June 30, 2020, improved from 126.90% at December 31, 2019, and 171.42% at June 30, 2019.
Overall credit quality has been supported by several initiatives initiated by the Company in response to the pandemic. As previously announced, Tompkins has initiated and participated in a number of credit initiatives to support employees and customers who have been impacted by the economic conditions associated with the COVID-19 pandemic. For non-executive employees affected by COVID-19, the Company implemented a low interest loan program. The Company also implemented a payment deferral program to assist both consumer and business borrowers that may be experiencing financial hardship due to COVID-19. Weekly deferral requests for the last week of June were down 98% from peak levels the Company experienced in late March. As of June 30, 2020, the Company had granted payment deferral requests for approximately 3,900 loans totaling $2.3 billion to individuals and businesses. As of July 20, 2020, nearly 50% of loans that had received deferrals had begun making regular payments.
As previously noted, the Company participated in the U.S. Small Business Administration (SBA) Paycheck Protection Program (“PPP”). This program provides borrower guarantees for lenders, as well as loan forgiveness incentives for borrowers that utilize the loan proceeds to cover employee compensation-related expenses and certain other eligible business operating costs, all in accordance with the rules and regulations established by the SBA. The Company began accepting applications for PPP loans on April 3, 2020, and had funded approximately 2,997 loans totaling about $465.6 million as of June 30, 2020.
CAPITAL POSITION
Capital ratios remained well above the regulatory minimums for well capitalized institutions. The ratio of Total capital to risk-weighted assets improved to 13.95% at June 30, 2020, up from 13.62% at March 31, 2020, and 13.53% at December 31, 2019. The ratio of Tier 1 capital to average assets was 8.79% at June 30, 2020, down from 9.61% at December 31, 2019, and 9.25% at June 30, 2019. The current period Tier 1 capital to average assets was negatively impacted by $465.6 million of PPP loans originated in the second quarter of 2020.
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, visit www.tompkinsfinancial.com.
“Safe Harbor” Statement under the Private Securities Litigation Reform of 1995:
This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Examples of forward-looking statements in this press release include, without limitation, those regarding the novel coronavirus (COVID-19) and our plans in response to the coronavirus. Forward-looking statements may be identified by use of such words as “may”, “will”, “estimate”, “intend”, “continue”, “believe”, “expect”, “plan”, or “anticipate”, and other similar words. Forward-looking statements are made based on management’s expectations and beliefs concerning future events impacting the Company and are subject to certain uncertainties and factors relating to the Company’s operations and economic environment, all of which are difficult to predict and many of which are beyond the control of the Company, that could cause actual results of the Company to differ materially from those expressed and/or implied by forward-looking statements. The following factors, in addition to those listed as Risk Factors in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019, are among those that could cause actual results to differ materially from the forward-looking statements: changes in general economic, market and regulatory conditions; the severity and duration of the coronavirus outbreak and the impact of the outbreak (including the government’s response to the outbreak) on economic and financial markets, potential regulatory actions, and modifications to our operations, products, and services relating thereto; disruptions in our and our customers’ operations and loss of revenue due to pandemics, epidemics, widespread health emergencies, government-imposed travel/business restrictions, or outbreaks of infectious diseases such as the coronavirus, and the associated adverse impact on our financial position, liquidity, and our customers’ abilities to repay their obligations to us or willingness to obtain financial services products from the Company; the development of an interest rate environment that may adversely affect the Company’s interest rate spread, other income or cash flow anticipated from the Company’s operations, investment and/or lending activities; changes in laws and regulations affecting banks, bank holding companies and/or financial holding companies, such as the Dodd-Frank Act, Basel III and the Economic Growth, Regulatory Relief, and Consumer Protection Act; legislative and regulatory changes in response to COVID-19 with which we and our subsidiaries must comply, including the CARES Act and the rules and regulations promulgated thereunder, and state and local government mandates; technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; governmental and public policy changes, including environmental regulation; reliance on large customers; and financial resources in the amounts, at the times and on the terms required to support the Company’s future businesses. The Company does not undertake any obligation to update its 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 | | 06/30/2020 | | | 12/31/2019 | |
| | | | | | | |
| Cash and noninterest bearing balances due from banks | | $ | 472,108 | | | $ | 136,010 | |
| Interest bearing balances due from banks | | | 7,018 | | | | 1,972 | |
| Cash and Cash Equivalents | | | 479,126 | | | | 137,982 | |
| | | | | | | | | |
| Available-for-sale debt securities, at fair value (amortized cost of $1,301,271 at June 30, 2020 and $1,293,239 at December 31, 2019) | | | 1,335,153 | | | | 1,298,587 | |
| Equity securities, at fair value (amortized cost $934 at June 30, 2020 and $915 at December 31, 2019) | | | 934 | | | | 915 | |
| Total loans and leases, net of unearned income and deferred costs and fees | | | 5,424,285 | | | | 4,917,550 | |
| Less: Allowance for credit losses | | | 52,082 | | | | 39,892 | |
| Net Loans and Leases | | | 5,372,203 | | | | 4,877,658 | |
| | | | | | | | | |
| Federal Home Loan Bank and other stock | | | 19,044 | | | | 33,695 | |
| Bank premises and equipment, net | | | 89,934 | | | | 94,355 | |
| Corporate owned life insurance | | | 83,606 | | | | 82,961 | |
| Goodwill | | | 92,447 | | | | 92,447 | |
| Other intangible assets, net | | | 5,500 | | | | 6,223 | |
| Accrued interest and other assets | | | 104,109 | | | | 100,800 | |
| Total Assets | | $ | 7,582,056 | | | $ | 6,725,623 | |
| LIABILITIES | | | | | | | | |
| Deposits: | | | | | | | | |
| Interest bearing: | | | | | | | | |
| Checking, savings and money market | | | 3,759,478 | | | | 3,080,686 | |
| Time | | | 699,166 | | | | 675,014 | |
| Noninterest bearing | | | 1,918,877 | | | | 1,457,221 | |
| Total Deposits | | | 6,377,521 | | | | 5,212,921 | |
| | | | | | | | | |
| Federal funds purchased and securities sold under agreements to repurchase | | | 50,889 | | | | 60,346 | |
| Other borrowings | | | 325,000 | | | | 658,100 | |
| Trust preferred debentures | | | 17,120 | | | | 17,035 | |
| Other liabilities | | | 113,497 | | | | 114,167 | |
| Total Liabilities | | $ | 6,884,027 | | | $ | 6,062,569 | |
| EQUITY | | | | | | | | |
| Tompkins Financial Corporation shareholders’ equity: | | | | | | | | |
| Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued: 14,950,368 at June 30, 2020; and 15,014,499 at December 31, 2019 | | | 1,495 | | | | 1,501 | |
| Additional paid-in capital | | | 335,268 | | | | 338,507 | |
| Retained earnings | | | 386,025 | | | | 370,477 | |
| Accumulated other comprehensive loss | | | (21,048 | ) | | | (43,564 | ) |
| Treasury stock, at cost – 119,092 shares at June 30, 2020, and 123,956 shares at December 31, 2019 | | | (5,187 | ) | | | (5,279 | ) |
| Total Tompkins Financial Corporation Shareholders’ Equity | | | 696,553 | | | | 661,642 | |
| | | | | | | | | |
| Noncontrolling interests | | | 1,476 | | | | 1,412 | |
| Total Equity | | $ | 698,029 | | | | 663,054 | |
| Total Liabilities and Equity | | $ | 7,582,056 | | | | 6,725,623 | |
TOMPKINS FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
| (In thousands, except per share data) (Unaudited) | | Three Months Ended | | | Six Months Ended | |
| | | | 06/30/2020 | | | | 06/30/2019 | | | | 06/30/2020 | | | | 06/30/2019 | |
| INTEREST AND DIVIDEND INCOME | | | | | | | | | | | | | | | | |
| Loans | | $ | 56,133 | | | $ | 56,740 | | | $ | 111,747 | | | $ | 112,064 | |
| Due from banks | | | 1 | | | $ | 10 | | | | 7 | | | $ | 20 | |
| Available-for-sale debt securities | | | 6,922 | | | $ | 7,686 | | | | 14,066 | | | $ | 15,544 | |
| Held-to-maturity securities | | | 0 | | | $ | 863 | | | | 0 | | | $ | 1,721 | |
| Federal Home Loan Bank and other stock | | | 389 | | | $ | 794 | | | | 824 | | | $ | 1,672 | |
| Total Interest and Dividend Income | | | 63,445 | | | $ | 66,093 | | | | 126,644 | | | $ | 131,021 | |
| INTEREST EXPENSE | | | | | | | | | | | | | | | | |
| Time certificates of deposits of $250,000 or more | | | 860 | | | | 774 | | | | 1,703 | | | $ | 1,360 | |
| Other deposits | | | 3,917 | | | | 6,816 | | | | 10,272 | | | $ | 12,827 | |
| Federal funds purchased and securities sold under agreements to repurchase | | | 21 | | | | 33 | | | | 57 | | | $ | 77 | |
| Trust preferred debentures | | | 253 | | | | 327 | | | | 542 | | | $ | 656 | |
| Other borrowings | | | 2,028 | | | | 5,825 | | | | 4,735 | | | $ | 11,869 | |
| Total Interest Expense | | | 7,079 | | | | 13,775 | | | | 17,309 | | | $ | 26,789 | |
| Net Interest Income | | | 56,366 | | | | 52,318 | | | | 109,335 | | | $ | 104,232 | |
| Less: Provision for credit loss expense | | | (348 | ) | | | 601 | | | | 15,946 | | | $ | 1,046 | |
| Net Interest Income After Provision for Credit Loss Expense | | | 56,714 | | | | 51,717 | | | | 93,389 | | | $ | 103,186 | |
| NONINTEREST INCOME | | | | | | | | | | | | | | | | |
| Insurance commissions and fees | | | 7,255 | | | | 7,752 | | | | 15,300 | | | $ | 15,797 | |
| Investment services income | | | 3,920 | | | | 3,907 | | | | 8,122 | | | $ | 7,991 | |
| Service charges on deposit accounts | | | 1,248 | | | | 2,021 | | | | 3,231 | | | $ | 4,019 | |
| Card services income | | | 2,283 | | | | 2,750 | | | | 4,466 | | | $ | 5,540 | |
| Other income | | | 2,466 | | | | 1,806 | | | | 4,570 | | | $ | 4,284 | |
| Net gain on securities transactions | | | 5 | | | | 284 | | | | 448 | | | $ | 296 | |
| Total Noninterest Income | | | 17,177 | | | | 18,520 | | | | 36,137 | | | $ | 37,927 | |
| NONINTEREST EXPENSE | | | | | | | | | | | | | | | | |
| Salaries and wages | | | 23,037 | | | | 22,088 | | | | 45,531 | | | $ | 43,189 | |
| Other employee benefits | | | 5,886 | | | | 5,662 | | | | 11,570 | | | $ | 11,273 | |
| Net occupancy expense of premises | | | 3,040 | | | | 3,258 | | | | 6,368 | | | $ | 6,859 | |
| Furniture and fixture expense | | | 1,888 | | | | 1,996 | | | | 3,873 | | | $ | 3,975 | |
| Amortization of intangible assets | | | 375 | | | | 418 | | | | 749 | | | $ | 830 | |
| Other operating expense | | | 12,662 | | | | 12,648 | | | | 24,537 | | | $ | 24,153 | |
| Total Noninterest Expenses | | | 46,888 | | | | 46,070 | | | | 92,628 | | | $ | 90,279 | |
| Income Before Income Tax Expense | | | 27,003 | | | | 24,167 | | | | 36,898 | | | $ | 50,834 | |
| Income Tax Expense | | | 5,540 | | | | 4,743 | | | | 7,449 | | | $ | 10,338 | |
| Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation | | | 21,463 | | | | 19,424 | | | | 29,449 | | | $ | 40,496 | |
| Less: Net Income Attributable to Noncontrolling Interests | | | 32 | | | | 32 | | | | 69 | | | $ | 64 | |
| Net Income Attributable to Tompkins Financial Corporation | | $ | 21,431 | | | | 19,392 | | | $ | 29,380 | | | $ | 40,432 | |
| Basic Earnings Per Share | | $ | 1.44 | | | $ | 1.27 | | | $ | 1.97 | | | $ | 2.64 | |
| Diluted Earnings Per Share | | $ | 1.44 | | | $ | 1.27 | | | $ | 1.97 | | | $ | 2.63 | |
| | | | | | | | | | | | | | | | | |
Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)
| | | | Quarter Ended | | Year to Date Period Ended | Year to Date Period Ended |
| | | | | June 30, 2020 | | June 30, 2020 | | June 30, 2019 |
| | | | | Average | | | | Average | | | | Average | | |
| | | | | Balance | | Average | | Balance | | Average | | Balance | | Average |
| (Dollar amounts in thousands) | | Quarter Ended | Interest | Yield/ Rate | | Year Ended | Interest | Yield/ Rate | | Year Ended | Interest | Yield/ Rate |
| ASSETS | | | | | | | | | | | | |
| Interest-earning assets | | | | | | | | | | | | |
| | Interest-bearing balances due from banks | $ | 4,541 | | $ | 1 | | 0.09 | % | $ | 3,033 | $ | 7 | | 0.46 | % | $ | 2,232 | $ | 20 | | 1.81 | % |
| | Securities (2) | | | | | | | | | | | | |
| | | U.S. Government securities | | 1,199,999 | | 6,298 | 2.11 | % | | 1,197,376 | 12,874 | 2.16 | % | | 1,399,542 | 16,168 | 2.33 | % |
| | | State and municipal (3) | | 109,621 | | 743 | 2.73 | % | | 103,550 | 1,409 | 2.74 | % | | 93,872 | 1,264 | 2.72 | % |
| | | Other securities (3) | | 3,433 | | 32 | 3.75 | % | | 3,428 | 68 | 3.99 | % | | 3,416 | 81 | 4.78 | % |
| | | Total securities | | 1,313,053 | | 7,073 | 2.17 | % | | 1,304,354 | 14,351 | 2.21 | % | | 1,496,830 | 17,513 | 2.36 | % |
| | FHLBNY and other stock | | 21,691 | | 389 | 7.21 | % | | 24,124 | 824 | 6.87 | % | | 47,349 | 1,672 | 7.12 | % |
| | | | | | | | | | | | | | | |
| | Total loans and leases, net of unearned income (3)(4) | | 5,276,794 | | 56,441 | 4.30 | % | | 5,095,414 | 112,348 | 4.43 | % | | 4,797,709 | 112,636 | 4.73 | % |
| | Total interest-earning assets | | 6,616,079 | | 63,904 | 3.89 | % | | 6,426,925 | 127,530 | 3.99 | % | | 6,344,120 | 131,841 | 4.19 | % |
| | | | | | | | | | | | | | | |
| Other assets | | 797,866 | | | | | 616,521 | | | | 398,762 | | |
| | | | | | | | | | | | | | | |
| | Total assets | $ | 7,413,945 | | | | $ | 7,043,446 | | | $ | 6,742,882 | | |
| | | | | | | | | | | | | | | |
| LIABILITIES & EQUITY | | | | | | | | | | | | |
| Deposits | | | | | | | | | | | | |
| | Interest-bearing deposits | | | | | | | | | | | | |
| | | Interest bearing checking, savings & money market | $ | 3,660,190 | | 1,935 | 0.21 | % | $ | 3,436,366 | 6,301 | 0.37 | % | $ | 2,943,765 | 9,441 | 0.65 | % |
| | | Time deposits | | 704,460 | | 2,842 | | 1.62 | % | | 692,354 | | 5,674 | | 1.65 | % | | 658,242 | | 4,746 | | 1.45 | % |
| | | Total interest-bearing deposits | | 4,364,650 | | 4,777 | 0.44 | % | | 4,128,720 | 11,975 | 0.58 | % | | 3,602,007 | 14,187 | 0.79 | % |
| | | | | | | | | | | | | | | |
| Federal funds purchased & securities sold under | | | | | | | | | | | | |
| | | agreements to repurchase | | 52,464 | | 21 | 0.16 | % | | 57,996 | 57 | 0.20 | % | | 63,451 | 77 | 0.24 | % |
| Other borrowings | | 391,547 | | 2,028 | 2.08 | % | | 444,988 | 4,735 | 2.14 | % | | 971,119 | 11,869 | 2.46 | % |
| Trust preferred debentures | | 17,092 | | 253 | 5.95 | % | | 17,071 | 542 | 6.38 | % | | 16,900 | 656 | 7.83 | % |
| | Total interest-bearing liabilities | | 4,825,753 | | 7,079 | 0.59 | % | | 4,648,775 | 17,309 | 0.75 | % | | 4,653,477 | 26,789 | 1.16 | % |
| | | | | | | | | | | | | | | |
| Non-interest bearing deposits | | 1,788,108 | | | | | 1,598,884 | | | | 1,347,538 | | |
| Accrued expenses and other liabilities | | 109,609 | | | | | 111,141 | | | | 101,409 | | |
| | Total liabilities | | 6,723,470 | | | | | 6,358,800 | | | | 6,102,424 | | |
| | | | | | | | | | | | | | | |
| Tompkins Financial Corporation Shareholders’ equity | | 689,018 | | | | | 683,206 | | | | 639,015 | | |
| Noncontrolling interest | | 1,457 | | | | | 1,440 | | | | 1,443 | | |
| | Total equity | | 690,475 | | | | | 684,646 | | | | 640,458 | | |
| | | | | | | | | | | | | | | |
| | Total liabilities and equity | $ | 7,413,945 | | | | $ | 7,043,446 | | | $ | 6,742,882 | | |
| Interest rate spread | | | | 3.30 | % | | | | 3.24 | % | | | | 3.03 | % |
| | Net interest income/margin on earning assets | | | 56,825 | 3.45 | % | | | 110,221 | 3.45 | % | | | 105,052 | 3.34 | % |
| | | | | | | | | | | | | | | |
| Tax equivalent adjustments | | | (459) | | | | (886) | | | | (820) | |
| | | | | | | | | | | | | | | |
| | Net interest income per consolidated financial statements | | | $ | 56,366 | | | | | $ | 109,335 | | | | | $ | 104,232 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Tompkins Financial Corporation - Summary Financial Data (Unaudited)
| (In thousands, except per share data) | | | | | | | | | | | | |
| | Quarter-Ended | Year-Ended |
| Period End Balance Sheet | | Jun-20 | | Mar-20 | | Dec-19 | | Sep-19 | | Jun-19 | | Dec-19 |
| Securities | $ | 1,336,087 | | $ | 1,353,567 | | $ | 1,299,502 | | $ | 1,282,026 | | $ | 1,330,719 | | $ | 1,299,502 | |
| Total Loans | | 5,424,285 | | | 4,937,822 | | | 4,917,550 | | | 4,857,073 | | | 4,855,802 | | | 4,917,550 | |
| Allowance for credit losses | | 52,082 | | | 52,404 | | | 39,892 | | | 41,371 | | | 40,790 | | | 39,892 | |
| Total assets | | 7,582,056 | | | 6,743,114 | | | 6,725,623 | | | 6,627,982 | | | 6,654,390 | | | 6,725,623 | |
| Total deposits | | 6,377,521 | | | 5,409,363 | | | 5,212,921 | | | 5,369,990 | | | 4,988,897 | | | 5,212,921 | |
| Federal funds purchased and securities sold under agreements to repurchase | | 50,889 | | | 68,993 | | | 60,346 | | | 50,541 | | | 63,978 | | | 60,346 | |
| Other borrowings | | 325,000 | | | 457,983 | | | 658,100 | | | 429,000 | | | 824,562 | | | 658,100 | |
| Trust preferred debentures | | 17,120 | | | 17,078 | | | 17,035 | | | 16,992 | | | 16,949 | | | 17,035 | |
| Total common equity | | 696,553 | | | 681,153 | | | 661,642 | | | 658,358 | | | 656,201 | | | 661,642 | |
| Total equity | | 698,029 | | | 682,597 | | | 663,054 | | | 659,865 | | | 657,677 | | | 663,054 | |
| Average Balance Sheet | | | | | | | | | | | | |
| Average earning assets | $ | 6,616,079 | | $ | 6,237,773 | | $ | 6,188,442 | | $ | 6,203,078 | | $ | 6,337,983 | | $ | 6,268,440 | |
| Average assets | | 7,413,945 | | | 6,672,948 | | | 6,613,202 | | | 6,621,412 | | | 6,742,409 | | | 6,679,578 | |
| Average interest-bearing liabilities | | 4,825,753 | | | 4,471,797 | | | 4,374,572 | | | 4,415,079 | | | 4,638,249 | | | 4,523,088 | |
| Average equity | | 690,475 | | | 678,817 | | | 664,441 | | | 659,650 | | | 650,079 | | | 651,341 | |
| Share data | | | | | | | | | | | | |
| Weighted average shares outstanding (basic) | 14,681,956 | | 14,718,948 | | 14,726,023 | | 14,827,114 | | 15,019,710 | | 14,907,057 | |
| Weighted average shares outstanding (diluted) | 14,714,848 | | 14,774,269 | | 14,790,503 | | 14,887,626 | | 15,085,945 | | 14,973,951 | |
| Period-end shares outstanding | 14,914,458 | | 14,907,947 | | 14,978,589 | | 14,975,750 | | 15,160,719 | | 14,978,589 | |
| Common equity book value per share | $ | 46.70 | | $ | 45.69 | | $ | 44.17 | | $ | 43.96 | | $ | 43.28 | | $ | 44.17 | |
| Tangible book value per share (Non-GAAP)** | $ | 40.19 | | $ | 39.15 | | $ | 37.64 | | $ | 37.40 | | $ | 36.77 | | $ | 37.64 | |
| ** See “Non-GAAP measures” below for a discussion of non-GAAP financial measures and a reconciliation of non-GAAP financial measures to the most directly comparable financial measures presented in accordance with GAAP. |
| Income Statement | | | | | | | | | | | | |
| Net interest income | $ | 56,366 | | $ | 52,969 | | $ | 53,240 | | $ | 53,156 | | $ | 52,318 | | $ | 210,628 | |
| Provision (credit) for credit loss expense | | (348) | | | 16,294 | | | (1,000) | | | 1,320 | | | 601 | | | 1,366 | |
| Noninterest income | | 17,177 | | | 18,960 | | | 17,972 | | | 19,534 | | | 18,520 | | | 75,433 | |
| Noninterest expense | | 46,888 | | | 45,740 | | | 45,900 | | | 45,655 | | | 46,070 | | | 181,834 | |
| Income tax expense | | 5,540 | | | 1,909 | | | 5,200 | | | 5,478 | | | 4,743 | | | 21,016 | |
| Net income attributable to Tompkins Financial Corporation | | 21,431 | | | 7,949 | | | 21,080 | | | 20,206 | | | 19,392 | | | 81,718 | |
| Noncontrolling interests | | 32 | | | 37 | | | 32 | | | 31 | | | 32 | | | 127 | |
| Basic earnings per share (5) | $ | 1.44 | | $ | 0.53 | | $ | 1.41 | | $ | 1.34 | | $ | 1.27 | | $ | 5.39 | |
| Diluted earnings per share (5) | $ | 1.44 | | $ | 0.53 | | $ | 1.40 | | $ | 1.34 | | $ | 1.27 | | $ | 5.37 | |
| Nonperforming Assets | | | | | | | | | | | | |
| Nonaccrual loans and leases | $ | 23,183 | | $ | 23,556 | | $ | 24,281 | | $ | 23,568 | | $ | 18,906 | | $ | 24,281 | |
| Loans and leases 90 days past due and accruing | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
| Troubled debt restructuring not included above | | 6,988 | | | 7,137 | | | 7,154 | | | 6,528 | | | 4,889 | | | 7,154 | |
| Total nonperforming loans and leases | | 30,171 | | | 30,693 | | | 31,435 | | | 30,096 | | | 23,795 | | | 31,435 | |
| OREO | | 274 | | | 466 | | | 428 | | | 888 | | | 2,229 | | | 428 | |
| Total nonperforming assets | $ | 30,445 | | $ | 31,159 | | $ | 31,863 | | $ | 30,984 | | $ | 26,024 | | $ | 31,863 | |
Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued
| | | Quarter-Ended | Year-Ended |
| Delinquency - Total loan and lease portfolio | | Jun-20 | | Mar-20 | | Dec-19 | | Sep-19 | | Jun-19 | | Dec-19 |
| Loans and leases 30-89 days past due and accruing | $ | 8,352 | | $ | 9,328 | | $ | 3,724 | | $ | 3,519 | | $ | 4,376 | | $ | 3,724 | |
| Loans and leases 90 days past due and accruing | | 0 | | | 0 | | | 794 | | | 1,219 | | | 1,229 | | | 794 | |
| Total loans and leases past due and accruing | | 8,352 | | | 9,328 | | | 4,518 | | | 4,738 | | | 5,605 | | | 4,518 | |
| Allowance for Credit Losses* |
| Balance at beginning of period | $ | 52,404 | | $ | 39,892 | | $ | 41,371 | | $ | 40,790 | | $ | 40,328 | | $ | 43,410 | |
| Impact of adopting ASC 326 | | 0 | | | (2,534) | | | 0 | | | 0 | | | 0 | | | 0 | |
| Provision (credit) for credit losses | | (348) | | | 16,294 | | | (1,000) | | | 1,320 | | | 601 | | | 1,366 | |
| Net loan and lease (recoveries) charge-offs | | (26) | | | 1,248 | | | 479 | | | 739 | | | 139 | | | 4,884 | |
| Allowance for credit losses at end of period | $ | 52,082 | | $ | 52,404 | | $ | 39,892 | | $ | 41,371 | | $ | 40,790 | | $ | 39,892 | |
| *CECL was adopted January 1, 2020. Prior periods reflect the allowance for credit losses for loans under the incurred loss methodology. |
| Loan Classification - Total Portfolio | | | | | | | | | | | | |
| Special Mention | $ | 44,741 | | $ | 37,121 | | | 29,800 | | $ | 41,575 | | $ | 36,884 | | $ | 29,800 | |
| Substandard | | 48,046 | | | 52,894 | | | 60,499 | | | 61,682 | | | 47,627 | | | 60,499 | |
Ratio Analysis
| Credit Quality | | | | | | | | | | | | |
| Nonperforming loans and leases/total loans and leases (6) | | 0.56 | % | | 0.62 | % | | 0.64 | % | | 0.62 | % | | 0.49 | % | | 0.64 | % |
| Nonperforming assets/total assets | | 0.40 | % | | 0.46 | % | | 0.47 | % | | 0.47 | % | | 0.39 | % | | 0.47 | % |
| Allowance for credit losses/total loans and leases | | 0.96 | % | | 1.06 | % | | 0.81 | % | | 0.85 | % | | 0.84 | % | | 0.81 | % |
| Allowance/nonperforming loans and leases | | 172.62 | % | | 170.74 | % | | 126.90 | % | | 137.46 | % | | 171.42 | % | | 126.90 | % |
| Net loan and lease losses annualized/total average loans and leases | | 0.00 | % | | 0.10 | % | | 0.04 | % | | 0.06 | % | | 0.01 | % | | 0.10 | % |
| Capital Adequacy | | | | | | | | | | | | |
| Tier 1 Capital (to average assets) | | 8.79 | % | | 9.53 | % | | 9.61 | % | | 9.43 | % | | 9.25 | % | | 9.61 | % |
| Total Capital (to risk-weighted assets) | | 13.95 | % | | 13.62 | % | | 13.53 | % | | 13.36 | % | | 13.34 | % | | 13.53 | % |
| Profitability (period-end) | | | | | | | | | | | | |
| Return on average assets * | | 1.16 | % | | 0.48 | % | | 1.26 | % | | 1.21 | % | | 1.15 | % | | 1.22 | % |
| Return on average equity * | | 12.48 | % | | 4.71 | % | | 12.59 | % | | 12.15 | % | | 11.96 | % | | 12.55 | % |
| Net interest margin (TE) * | | 3.45 | % | | 3.44 | % | | 3.44 | % | | 3.43 | % | | 3.34 | % | | 3.39 | % |
| ** 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 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. 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 Net Income Attributable to Tompkins Financial Corporation (GAAP) to Net Operating Income Available to Common Shareholders (Non-GAAP) and Reconciliation of Diluted Earnings Per Share (GAAP) to Adjusted Diluted Earnings Per Share (Non-GAAP) |
| | | Quarter-Ended | Year-Ended |
| | | Jun-20 | | Mar-20 | | Dec-19 | | Sep-19 | | Jun-19 | | Dec-19 |
| Net income available to common shareholders | $ | 21,431 | | $ | 7,949 | | $ | 21,081 | | $ | 20,206 | | $ | 19,392 | | $ | 81,718 | |
| Less: income attributable to unvested stock-based compensations awards | | 251 | | | 99 | | | 334 | | | 317 | | | 306 | | | 1,306 | |
| Net earnings allocated to common shareholders (GAAP) | | 21,180 | | | 7,850 | | | 20,747 | | | 19,889 | | | 19,086 | | | 80,412 | |
| Diluted earnings per share (GAAP) | $ | 1.44 | | $ | 0.53 | | $ | 1.40 | | $ | 1.34 | | $ | 1.27 | | $ | 5.37 | |
| | | | | | | | | | | | | |
| Adjustments for non-operating income and expense: | | | | | | | | | | | | |
| Write-down of real estate pending sale | | 673 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
| Total Adjustments | | 673 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
| Tax (benefit) expense | | (165) | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
| Total adjustments, net of tax | | 508 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
| Net operating income available to common shareholders (Non-GAAP) | | 21,688 | | | 7,850 | | | 20,747 | | | 19,889 | | | 19,086 | | | 80,412 | |
| Weighted average shares outstanding (diluted) | 14,714,848 | 14,774,269 | 14,790,503 | 14,887,626 | 15,085,945 | 14,973,951 |
| Adjusted diluted earnings per share (Non-GAAP) | $ | 1.47 | | $ | 0.53 | | $ | 1.40 | | $ | 1.34 | | $ | 1.27 | | $ | 5.37 | |
| | Year-to-Date |
| | Jun-20 | Jun-19 |
| Net income available to common shareholders | $ | 29,380 | | $ | 40,432 | |
| Less: income attributable to unvested stock-based compensation awards | 350 | | 655 | |
| Net earnings allocated to common shareholders (GAAP) | 29,030 | | 39,777 | |
| Diluted earnings per share (GAAP) | $ | 1.97 | | $ | 2.64 | |
| Adjustments for non-operating income and expense: | | |
| Write-down of real estate pending sale | 673 | | 0 | |
| Tax (benefit) expense | (165) | | 0 | |
| Total adjustments, net of tax | 508 | | 0 | |
| Net operating income available to common shareholders (Non-GAAP) | 29,538 | | 39,777 | |
| Weighted average shares outstanding (diluted) | 14,714,848 | | 15,085,945 | |
| Adjusted diluted earnings per share (Non-GAAP) | $ | 2.01 | | $ | 2.64 | |
| | | |
Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued
| Reconciliation of Common Equity Book Value Per Share (GAAP) to Tangible Book Value Per Share (non-GAAP) |
| Total common equity | $ | 696,553 | | $ | 681,153 | | $ | 661,642 | | $ | 658,358 | | $ | 656,201 | | $ | 661,642 | |
| Less: Goodwill and intangibles (7) | | 97,107 | | | 97,481 | | | 97,855 | | | 98,277 | | | 98,698 | | | 97,855 | |
| Tangible common equity (Non-GAAP) | | 599,446 | | | 583,672 | | | 563,787 | | | 560,081 | | | 557,503 | | | 563,787 | |
| Ending shares outstanding | 14,914,458 | | 14,907,947 | | 14,978,589 | | 14,975,750 | | 15,160,719 | | 14,978,589 | |
| Tangible book value per share (Non-GAAP) | $ | 40.19 | | $ | 39.15 | | $ | 37.64 | | $ | 37.40 | | $ | 36.77 | | $ | 37.64 | |
(1) Federal Reserve peer ratio as of March 31, 2020 the most recent data available, includes banks and bank holding companies with consolidated assets between $3 billion and $10 billion.
(2) Average balances and yields on available-for-sale securities are based on historical amortized cost.
(3) Interest income includes the tax effects of taxable-equivalent basis.
(4) 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, 2019.
(5) 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
(6) 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 Company's estimate of acquisition-date fair value and these loans are considered accruing as the Company primarily recognizes interest income through accretion of the difference between the carrying value of these loans and their expected cash flows.
(7) "Goodwill and intangibles" as shown in the above tables, equal total intangible assets less mortgage servicing rights.
