Tompkins Financial Corporation Reports Fourth Quarter Financial Results

ITHACA, N.Y., January 26, 2024--(BUSINESS WIRE)--Tompkins Financial Corporation (NYSE American: TMP)

Tompkins Financial Corporation ("Tompkins" or the "Company") reported diluted earnings per share of $1.05 for the fourth quarter of 2023, down 22.8% compared to the fourth quarter of 2022. Net income for the fourth quarter of 2023 was $15.0 million, down $4.5 million or 23.3% compared to the $19.5 million reported for the fourth quarter of 2022. Contributing to the lower quarterly results were increased funding costs and increased operating expenses, which included costs related to three branch closures during the fourth quarter of 2023 as well as personnel-related charges.

For the year ended December 31, 2023, diluted earnings per share of $0.66 were down 88.8% compared to the year ended December 31, 2022. Net income for 2023 was $9.5 million, a decrease of $75.5 million compared to the year ended December 31, 2022. Significant contributors to the year-over-year decrease in net income included a previously announced after-tax loss of $52.9 million, or $3.69 loss per diluted share, related to the sale of $510.5 million of available-for-sale debt securities, increased funding costs and an increase in operating expenses. The sale of securities and subsequent reinvestment in the second and third quarters of 2023 is favorably impacting securities revenue as the securities sold had an average yield of 0.86%, while the proceeds of the sale were largely reinvested into securities with an estimated yield of approximately 5.09%. Average yields on securities for the fourth quarter of 2023 were 2.33%, compared to 1.59% for the third quarter of 2023, and 1.44% for the fourth quarter of 2022.

Tompkins President and CEO, Stephen Romaine, commented, "In the fourth quarter we continued to execute on strategic initiatives and are pleased to announce our expanded presence in Syracuse with the grand opening of our City Center office. For the quarter we saw positive momentum with our net interest margin expanding, strong quarterly loan growth driving full year loan growth of 6.4%, signs of stabilization in our deposit base and growth in our noninterest related revenue. During the quarter we also recognized non-recurring expenses relating to three branch closures and other personnel-related expenses intended to help offset future expense growth. While the economic environment remains challenging for the industry we look forward to 2024 with our strong capital and liquidity position to continue to drive growth of quality customer relationships."

SELECTED HIGHLIGHTS FOR THE PERIOD:

• Net interest margin for the fourth quarter of 2023 expanded to 2.82%, compared to 2.75% for the third quarter of 2023.

• Total loans at December 31, 2023 were up $171.1 million, or 3.2% (12.6% on an annualized basis), compared to the immediate prior quarter, and up $337.0 million, or 6.4%, from December 31, 2022.

• Total deposits at December 31, 2023 were $6.4 billion, down $223.6 million, or 3.4% (13.5% on an annualized basis), from September 30, 2023, and down $202.5 million, or 3.1%, from December 31, 2022.

• Loan to deposit ratio was 87.6%, compared to 82.1% for the immediate prior quarter.

• Regulatory Tier 1 capital to average assets was 9.08% at December 31, 2023, compared to 9.01% at September 30, 2023 and 9.34% at December 31, 2022.

NET INTEREST INCOME

Net interest income was $52.4 million for the fourth quarter of 2023, up from $51.0 million for the third quarter of 2023 and down from $57.3 million for the fourth quarter of 2022. Net interest margin was 2.82% for the fourth quarter of 2023, compared to 2.75% reported for the third quarter of 2023 and 3.02% reported for the fourth quarter of 2022. The increase in net interest income and net interest margin during the fourth quarter of this year compared to the third quarter of 2023 was primarily due to securities purchased in the second and third quarter of 2023 yielding higher interest rates compared to securities sold during the same periods. The increase in securities yields was partially offset by the reversal of $1.0 million of accrued interest during the fourth quarter related to loans that moved to nonaccrual status during the quarter, as described further below under the heading Asset Quality. The decreases in net interest income and net interest margin compared to the fourth quarter of last year were primarily attributable to increased interest costs on interest-bearing liabilities outpacing increased interest income on interest earning assets due to the higher interest rate environment.

For the year ended December 31, 2023, net interest income was $209.5 million, down $20.8 million, or 9.0%, when compared to the same period in 2022.

Average loans for the quarter ended December 31, 2023 were up $101.5 million, or 1.9%, from the third quarter of 2023, and were up $277.0 million, or 5.3%, compared to the quarter ended December 31, 2022. The increase in average loans over both prior periods was mainly in the commercial real estate portfolio. The average yield on interest-earning assets for the quarter ended December 31, 2023 was 4.3%, which was up from 4.1% for the quarter ended September 30, 2023, and up from 3.6% for the quarter ended December 31, 2022.

Average total deposits for the fourth quarter of 2023 were up $58.4 million, or 0.9%, compared to the third quarter of 2023, while period end balances were down $223.6 million compared to the third quarter of 2023 driven by seasonal deposit trends. Average deposits for the quarter were down $227.8 million, or 3.4%, compared to the same period in 2022. The decrease compared to the prior year was largely driven by inflation and persistent rate competition for deposits due to the current interest rate environment and tightening monetary policy. The cost of interest-bearing deposits increased to 2.04% for the fourth quarter of 2023, compared to 1.74% for the third quarter of 2023, and 0.69% for the fourth quarter of 2022. The cost of interest-bearing deposits for the fourth quarter of 2023 increased 135 basis points compared to the fourth quarter of 2022, and 123 basis points for the year ended December 31, 2023 compared to the same period in 2022. The ratio of average noninterest bearing deposits to average total deposits for the fourth quarter of 2023 was 29.6% compared to 31.0% for the third quarter of 2023, and 30.8% for the year ended December 31, 2023. The average cost of interest-bearing liabilities for the fourth quarter of 2023 of 2.25% represents an increase of 27 basis points over the third quarter of 2023, and an increase of 141 basis points over the same period in 2022.

NONINTEREST INCOME

Noninterest income of $18.9 million for the fourth quarter of 2023 was up 2.7% compared to the same period in 2022. The increase was mainly due to gains on securities transactions of $46,000 compared to losses on securities transactions of $455,000, and increases in fee-based revenues which include insurance commissions and fees, up $143,000, wealth management fees, up $181,000 and card services income, up $68,000.

Noninterest income for the year ended December 31, 2023 was $10.2 million, which represents a decrease in noninterest income of $67.7 million compared to the same period in 2022. The decrease in noninterest income was largely due to the previously noted sales of available-for-sale debt securities, mainly in the third quarter of 2023, which resulted in the recognition of a pre-tax loss of $70.0 million for the year ended December 31, 2023. Fee-based revenues, including insurance commissions and fees, wealth management fees, service charges on deposit accounts and card services income, for the year ended December 31, 2023 were collectively up $1.0 million, or 1.4%, over the same period in 2022.

NONINTEREST EXPENSE

Noninterest expense was $51.3 million for the fourth quarter of 2023, which was up $1.1 million, or 2.2%, over the fourth quarter of 2022. The increases were mainly in premises and furniture and fixtures, up $799,000, and other operating expenses, up $1.7 million; partially offset by lower salaries and wages. The increase in premises and furniture and fixtures was mainly due to $720,000 of expense related to branch closures. Contributing to the increase in other operating expense were: FDIC expense, up $723,000; technology, up $434,000; expenses related to the Company's retirement plans, up $428,000; charitable contributions and donations, up $315,000; and accrual for New York State minimum tax, up $207,000. Salaries and wages included $638,000 of personnel-related charges, which were more than offset by lower incentive related accruals.

For the year-to-date period, noninterest expense of $203.3 million was up $7.5 million, or 3.9%, from the same period in 2022. The increase in noninterest expense for the year-ended December 31, 2023 over the same period in 2022 was mainly in employee benefits and other noninterest expense. The increase in employee benefits was mainly in health insurance, which was up $1.8 million. Salaries and wages were down as annual merit increases were offset by lower incentive related accruals. Contributing to the increases in other expenses were the following: FDIC insurance, up $1.5 million; New York State minimum tax expense, up $830,000; professional fees, up $604,000; and charitable donations, up $317,000. Premises and furniture and fixtures expenses were up over prior year mainly as a result of expense related to branch closures of $879,000.

INCOME TAX EXPENSE

The provision for income tax expense of $3.1 million for an effective rate of 17.2% for the fourth quarter of 2023, compared to tax expense of $4.5 million and an effective rate of 18.6% for the same quarter in 2022. The fourth quarter 2023 included the impact of surrendering certain separate account BOLI policies, which added $1.8 million to tax expense for the quarter. For the year-ended 2023, the provision for income tax expense of $2.5 million for an effective rate of 20.6% compared to tax expense of $24.6 million and an effective rate of 22.4% for the same period in 2022. The decrease in income tax expense between comparable periods reflects the decrease in pre-tax income, due primarily to the realized losses on the sale of certain available-for-sale securities.

ASSET QUALITY

The allowance for credit losses represented 0.92% of total loans and leases at December 31, 2023, up from 0.91% at September 30, 2023, and up from 0.87% at December 31, 2022. The ratio of the allowance to total nonperforming loans and leases was 82.84% at December 31, 2023, compared to 156.96% at September 30, 2023 and 139.86% at December 31, 2022. The decrease in the ratio compared to prior periods was due to the increase in nonperforming loans and leases discussed in more detail below.

Provision for credit losses for the fourth quarter of 2023 was $1.8 million compared to $1.4 million for the same period in 2022. Provision for credit losses for the year ended December 31, 2023 was $4.3 million, compared to $2.8 million for the year ended December 31, 2022. The increase in provision expense for both the quarter and year-to-date periods was mainly driven by loan growth, economic forecasts, and changes in asset quality. Net charge-offs for the fourth quarter of 2023 were $410,000 compared to net charge-offs of $190,000 reported for the same period in 2022.

Nonperforming assets represented 0.80% of total assets at December 31, 2023, up from 0.41% reported at September 30, 2023 and 0.43% at December 31, 2022. At December 31, 2023, nonperforming loans and leases totaled $62.3 million, compared to $31.4 million at September 30, 2023 and $32.8 million at December 31, 2022. The increase in nonperforming loans at quarter-end December 31, 2023, was mainly due to the addition of one relationship with two commercial real estate properties in the hospitality portfolio totaling approximately $33.8 million. The Company believes that the existing collateral securing the loans is sufficient to cover the exposure as of December 31, 2023. These loans were included in loans past due 30-89 days and accruing at the end of third quarter of 2023. Loans past due 30-89 days and accruing as a percentage of total loans decreased from 0.75% at the end of the third quarter of 2023 to 0.08% at the end of the fourth quarter of 2023.

Special Mention and Substandard loans and leases totaled $123.1 million at December 31, 2023, reflecting an increase from the $122.9 million reported at September 30, 2023, and $98.3 million reported at December 31, 2022.

CAPITAL POSITION

Capital ratios at December 31, 2023 remained well above the regulatory minimums for well-capitalized institutions. The ratio of total capital to risk-weighted assets was 13.36% at December 31, 2023, compared to 13.46% at September 30, 2023, and 14.42% at December 31, 2022. The ratio of Tier 1 capital to average assets was 9.08% at December 31, 2023, compared to 9.01% at September 30, 2023, and 9.34% at December 31, 2022.

LIQUIDITY POSITION

The Company's liquidity position at December 31, 2023 was stable and consistent with the immediately prior quarter. Liquidity is enhanced by ready access to national and regional wholesale funding sources including Federal funds purchased, repurchase agreements, brokered deposits, Federal Reserve Bank Discount Window advances and Federal Home Loan Banks (FHLB) advances. The Company maintains ready access liquidity of $1.4 billion, or 18.3% of total assets at December 31, 2023. As a member of the FHLB, the Company can use certain unencumbered mortgage-related assets and securities to secure borrowings from the FHLB. At December 31, 2023 the Company had an available borrowing capacity at the FHLB of $642 million. Through various programs at the Federal Reserve Bank, the Company has the ability to use certain unencumbered mortgage-related assets and securities to secure borrowings from the Federal Reserve Bank's Discount Window. At December 31, 2023 the available borrowing capacity with the Federal Reserve Bank was $92.6 million, secured by investment securities. In addition to the available borrowing lines at the FHLB and Federal Reserve Bank, at December 31, 2023, the Company maintained $687.0 million of unencumbered securities which could be pledged to further enhance secured borrowing capacity.

ABOUT TOMPKINS FINANCIAL CORPORATION

Tompkins Financial Corporation is a banking and 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 Community 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 Act of 1995:

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The statements contained in this press release that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements may be identified by use of such words as "may", "will", "estimate", "intend", "continue", "believe", "expect", "plan", or "anticipate", the negative and other variations of these terms and other similar words. Examples of forward-looking statements may include statements regarding the expected increases in revenue attributable to the reinvestment of proceeds from the sale of available-for-sale debt securities in securities with higher estimated yields and the sufficiency of existing collateral to cover exposure related to nonperforming loans. Forward-looking statements are made based on management’s expectations and beliefs concerning future events impacting the Company and are subject to 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 and historical performance. The following factors, in addition to those listed as Risk Factors in Item 1A in our Annual Reports on Form 10-K and our Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission are among those that could cause actual results to differ materially from the forward-looking statements: changes in general economic, market and regulatory conditions; our ability to attract and retain deposits and other sources of liquidity; GDP growth and inflation trends; the impact of the interest rate and inflationary environment on the Company's business, financial condition and results of operations; 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, including the Dodd-Frank Act, and state and local government mandates; the impact of any change in the FDIC insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount; technological developments and changes; cybersecurity incidents and threats, 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; the ability to access financial resources in the amounts, at the times, and on the terms required to support the Company's future businesses; and the economic impact of national and global events, including the response to bank failures, the wars in Ukraine and Israel, widespread protests, civil unrest, political uncertainty, and pandemics or other public health crises. The Company does not undertake any obligation to update its forward-looking statements.

TOMPKINS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(In thousands, except share and per share data)	As of			As of
ASSETS	12/31/2023			12/31/2022
				(Audited)
Cash and noninterest bearing balances due from banks	$	67,212		$	18,572
Interest bearing balances due from banks		12,330			59,265
Cash and Cash Equivalents		79,542			77,837
Available-for-sale debt securities, at fair value (amortized cost of $1,548,482 at December 31, 2023 and $1,831,791 at December 31, 2022)		1,416,650			1,594,967
Held-to-maturity debt securities, at amortized cost (fair value of $267,455 at December 31, 2023 and $261,692 at December 31, 2022)		312,401			312,344
Equity securities, at fair value		787			777
Total loans and leases, net of unearned income and deferred costs and fees		5,605,935			5,268,911
Less: Allowance for credit losses		51,584			45,934
Net Loans and Leases		5,554,351			5,222,977
Federal Home Loan Bank and other stock		33,719			17,720
Bank premises and equipment, net		79,687			82,140
Corporate owned life insurance		67,884			85,556
Goodwill		92,602			92,602
Other intangible assets, net		2,327			2,708
Accrued interest and other assets		179,799			181,058
Total Assets	$	7,819,749		$	7,670,686
LIABILITIES
Deposits:
Interest bearing:
Checking, savings and money market		3,484,878			3,820,739
Time		998,013			631,411
Noninterest bearing		1,916,956			2,150,145
Total Deposits		6,399,847			6,602,295
Federal funds purchased and securities sold under agreements to repurchase		50,996			56,278
Other borrowings		602,100			291,300
Other liabilities		96,872			103,423
Total Liabilities	$	7,149,815		$	7,053,296
EQUITY
Tompkins Financial Corporation shareholders' equity:
Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued: 14,441,830 at December 31, 2023; and 14,555,741 at December 31, 2022		1,444			1,456
Additional paid-in capital		297,183			302,763
Retained earnings		501,510			526,727
Accumulated other comprehensive loss		(125,005	)		(208,689	)
Treasury stock, at cost – 132,097 shares at December 31, 2023, and 128,749 shares at December 31, 2022		(6,610	)		(6,279	)
Total Tompkins Financial Corporation Shareholders’ Equity		668,522			615,978
Noncontrolling interests		1,412			1,412
Total Equity	$	669,934		$	617,390
Total Liabilities and Equity	$	7,819,749		$	7,670,686

TOMPKINS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data) (Unaudited)	Three Months Ended					Year Ended
	12/31/2023		12/31/2022			12/31/2023			12/31/2022
INTEREST AND DIVIDEND INCOME
Loans	$	69,035	$	58,930		$	260,434		$	217,607
Due from banks		227		181			674			371
Available-for-sale debt securities		9,717		6,939			29,677			27,929
Held-to-maturity debt securities		1,222		1,221			4,876			4,771
Federal Home Loan Bank and other stock		584		254			1,697			646
Total Interest and Dividend Income		80,785	$	67,525		$	297,358		$	251,324
INTEREST EXPENSE
Time certificates of deposits of $250,000 or more		3,949		909			11,421			2,298
Other deposits		19,526		6,973			59,387			13,870
Federal funds purchased and securities sold under agreements to repurchase		14		14			58			60
Other borrowings		4,937		2,335			16,978			4,815
Total Interest Expense		28,426		10,231			87,844			21,043
Net Interest Income		52,359		57,294			209,514			230,281
Less: Provision for credit loss expense		1,761		1,397			4,339			2,789
Net Interest Income After Credit for Credit Loss Expense		50,598		55,897			205,175			227,492
NONINTEREST INCOME
Insurance commissions and fees		7,773		7,630			37,351			36,201
Wealth management fees		4,422		4,241			17,951			18,091
Service charges on deposit accounts		1,773		1,913			6,913			7,365
Card services income		2,859		2,791			11,488			11,024
Other income		1,977		2,231			6,511			5,925
Net gain (loss) on securities transactions		46		(455	)		(69,973	)		(634	)
Total Noninterest Income		18,850		18,351			10,241			77,972
NONINTEREST EXPENSE
Salaries and wages		23,710		25,249			97,370			98,261
Other employee benefits		6,626		6,342			27,333			24,969
Net occupancy expense of premises		3,544		3,163			13,278			13,093
Furniture and fixture expense		2,425		2,007			8,663			8,058
Amortization of intangible assets		84		218			334			873
Other operating expense		14,911		13,211			56,314			50,497
Total Noninterest Expenses		51,300		50,190			203,292			195,751
Income Before Income Tax Expense		18,148		24,058			12,124			109,713
Income Tax Expense		3,114		4,478			2,495			24,557
Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation		15,034		19,580			9,629			85,156
Less: Net Income Attributable to Noncontrolling Interests		31		32			124			126
Net Income Attributable to Tompkins Financial Corporation	$	15,003		19,548			9,505			85,030
Basic Earnings Per Share	$	1.06	$	1.36		$	0.66		$	5.92
Diluted Earnings Per Share	$	1.05	$	1.36		$	0.66		$	5.89

Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)
	Quarter Ended							Quarter Ended
	December 31, 2023							December 31, 2022
	Average							Average
	Balance					Average		Balance					Average
(Dollar amounts in thousands)	(QTD)		Interest			Yield/Rate		(QTD)		Interest			Yield/Rate
ASSETS
Interest-earning assets
Interest-bearing balances due from banks	$	14,351	$	227		6.28	%	$	58,488	$	181		1.23	%
Securities (1)
U.S. Government securities		1,789,043		10,411		2.31	%		2,186,858		7,627		1.38	%
State and municipal (2)		90,070		574		2.53	%		94,377		608		2.56	%
Other securities (2)		3,242		60		7.37	%		3,270		47		5.68	%
Total securities		1,882,355		11,045		2.33	%		2,284,505		8,282		1.44	%
FHLBNY and FRB stock		24,555		584		9.44	%		15,942		255		6.33	%
Total loans and leases, net of unearned income (2)(3)		5,486,715		69,197		5.00	%		5,209,721		59,140		4.50	%
Total interest-earning assets		7,407,976		81,053		4.34	%		7,568,656		67,858		3.56	%
Other assets		259,006							152,679
Total assets	$	7,666,982						$	7,721,335
LIABILITIES & EQUITY
Deposits
Interest-bearing deposits
Interest bearing checking, savings, & money market	$	3,643,919	$	14,915		1.62	%	$	3,905,570	$	5,888		0.60	%
Time deposits		925,790		8,560		3.67	%		615,493		1,994		1.28	%
Total interest-bearing deposits		4,569,709		23,475		2.04	%		4,521,063		7,882		0.69	%
Federal funds purchased & securities sold under agreements to repurchase		51,903		14		0.10	%		55,701		14		0.10	%
Other borrowings		398,932		4,937		4.91	%		251,797		2,335		3.68	%
Total interest-bearing liabilities		5,020,544		28,426		2.25	%		4,828,561		10,231		0.84	%
Noninterest bearing deposits		1,920,510							2,196,992
Accrued expenses and other liabilities		103,648							115,063
Total liabilities		7,044,702							7,140,615
Tompkins Financial Corporation Shareholders’ equity		620,789							579,223
Noncontrolling interest		1,491							1,497
Total equity		622,280							580,720
Total liabilities and equity	$	7,666,982						$	7,721,335
Interest rate spread						2.09	%						2.72	%
Net interest income/margin on earning assets				52,627		2.82	%				57,627		3.02	%
Tax Equivalent Adjustment				(268	)						(333	)
Net interest income per consolidated financial statements			$	52,359						$	57,294

Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)
	Year to Date Period Ended							Year to Date Period Ended
	December 31, 2023							December 31, 2022
	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	$	13,064	$	674		5.16	%	$	85,788	$	371		0.43	%
Securities (1)
U.S. Government securities		1,920,678		32,433		1.69	%		2,265,226		30,587		1.35	%
State and municipal (2)		91,407		2,338		2.56	%		97,283		2,490		2.56	%
Other securities (2)		3,272		229		6.99	%		3,329		135		4.06	%
Total securities		2,015,357		35,000		1.74	%		2,365,838		33,212		1.40	%
FHLBNY and FRB stock		22,284		1,697		7.63	%		13,354		646		4.84	%
Total loans and leases, net of unearned income (2)(3)		5,357,699		261,144		4.87	%		5,142,098		218,494		4.25	%
Total interest-earning assets		7,408,404		298,515		4.03	%		7,607,078		252,723		3.32	%
Other assets		233,268							221,442
Total assets	$	7,641,672						$	7,828,520
LIABILITIES & EQUITY
Deposits
Interest-bearing deposits
Interest bearing checking, savings, & money market	$	3,697,780	$	46,820		1.27	%	$	4,029,008	$	10,389		0.26	%
Time deposits		793,709		23,988		3.02	%		611,708		5,779		0.94	%
Total interest-bearing deposits		4,491,489		70,808		1.58	%		4,640,716		16,168		0.35	%
Federal funds purchased & securities sold under agreements to repurchase		55,773		58		0.10	%		57,126		60		0.10	%
Other borrowings		363,530		16,978		4.67	%		195,110		4,815		2.47	%
Total interest-bearing liabilities		4,910,792		87,844		1.79	%		4,892,952		21,043		0.43	%
Noninterest bearing deposits		1,994,861							2,186,720
Accrued expenses and other liabilities		101,287							107,122
Total liabilities		7,006,940							7,186,794
Tompkins Financial Corporation Shareholders’ equity		633,267							640,258
Noncontrolling interest		1,465							1,468
Total equity		634,732							641,726
Total liabilities and equity	$	7,641,672						$	7,828,520
Interest rate spread						2.24	%						2.89	%
Net interest income/margin on earning assets				210,671		2.84	%				231,680		3.05	%
Tax Equivalent Adjustment				(1,157	)						(1,399	)
Net interest income per consolidated financial statements			$	209,514						$	230,281

Tompkins Financial Corporation - Summary Financial Data (Unaudited)

(In thousands, except per share data)
	Quarter-Ended										Year-Ended
Period End Balance Sheet	Dec-23		Sep-23		Jun-23		Mar-23		Dec-22		Dec-23
Securities	$	1,729,838	$	1,701,636	$	1,781,150	$	1,899,001	$	1,908,088	$	1,729,838
Total Loans		5,605,935		5,434,860		5,352,365		5,273,671		5,268,911		5,605,935
Allowance for credit losses		51,584		49,336		48,545		46,099		45,934		51,584
Total assets		7,819,749		7,691,162		7,626,238		7,644,371		7,670,686		7,819,749
Total deposits		6,399,847		6,623,436		6,454,651		6,509,009		6,602,295		6,399,847
Federal funds purchased and securities sold under agreements to repurchase		50,996		56,120		50,483		63,491		56,278		50,996
Other borrowings		602,100		296,800		387,100		327,000		291,300		602,100
Total common equity		668,522		610,851		634,967		648,322		615,978		668,522
Total equity		669,934		612,356		636,441		649,765		617,390		669,934

Average Balance Sheet
Average earning assets	$	7,407,976	$	7,405,434	$	7,409,714	$	7,410,553	$	7,568,656	$	7,408,404
Average assets		7,666,982		7,629,876		7,635,800		7,633,793		7,721,335		7,641,672
Average interest-bearing liabilities		5,020,544		4,902,930		4,883,026		4,834,712		4,828,561		4,910,792
Average equity		622,280		634,980		650,554		631,208		580,720		634,732

Share data
Weighted average shares outstanding (basic)		14,194,503		14,185,763		14,314,133		14,326,595		14,308,323		14,254,661
Weighted average shares outstanding (diluted)		14,246,024		14,224,748		14,346,787		14,389,673		14,385,884		14,301,221
Period-end shares outstanding		14,405,920		14,350,177		14,405,503		14,519,748		14,519,831		14,405,920
Common equity book value per share	$	46.41	$	42.57	$	44.08	$	44.65	$	42.42	$	46.41
Tangible book value per share (Non-GAAP)**	$	39.88	$	36.01	$	37.54	$	38.16	$	35.93	$	39.88
**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	$	52,359	$	51,013		$	51,896	$	54,246		$	57,294	$	209,514
Provision (credit) for credit loss expense (5)		1,761		1,150			2,253		(825	)		1,397		4,339
Noninterest income		18,850		(41,624	)		12,615		20,400			18,351		10,241
Noninterest expense (5)		51,300		49,866			51,968		50,158			50,190		203,292
Income tax expense/(benefit)		3,114		(8,304	)		1,784		5,901			4,478		2,495
Net (loss)/income attributable to Tompkins Financial Corporation		15,003		(33,354	)		8,475		19,381			19,548		9,505
Noncontrolling interests		31		31			31		31			32		124
Basic earnings (loss) per share (4)		1.06		(2.35	)		0.59		1.35			1.36		0.66
Diluted earnings (loss) per share (4)		1.05		(2.35	)		0.59		1.35			1.36		0.66

Nonperforming Assets
Nonaccrual loans and leases	$	62,165	$	31,381	$	31,333	$	28,424	$	28,289	$	62,165
Loans and leases 90 days past due and accruing		101		52		34		13		25		101
Performing troubled debt restructuring*		0		0		0		0		4,530		0
Total nonperforming loans and leases		62,266		31,433		31,367		28,437		32,844		62,266
OREO		131		0		36		36		152		131
Total nonperforming assets	$	62,397	$	31,433	$	31,403	$	28,473	$	32,996	$	62,397
*No amount shown for periods subsequent to the Company's adoption of ASU 2022-02 effective January 1, 2023.

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

	Quarter-Ended										Year-Ended
Delinquency - Total loan and lease portfolio	Dec-23		Sep-23		Jun-23		Mar-23		Dec-22		Dec-23
Loans and leases 30-89 days past due and
accruing	$	4,210	$	40,893	$	20,255	$	5,894	$	3,172	$	4,210
Loans and leases 90 days past due and accruing		101		52		34		13		25		101
Total loans and leases past due and accruing		4,311		40,945		20,289		5,907		3,197		4,311

Allowance for Credit Losses
Balance at beginning of period	$	49,336		$	48,545	$	46,099		$	45,934		$	44,772	$	45,934
Impact of adopting ASC 326		0			0		0			64			0		64
Provision (credit) for credit losses		2,658			968		2,419			(1,180	)		1,352	$	4,865
Net loan and lease (recoveries) charge-offs		410			177		(27	)		(1,281	)		190	$	(721	)
Allowance for credit losses at end of period	$	51,584		$	49,336	$	48,545		$	46,099		$	45,934	$	51,584
Allowance for Credit Losses - Off-Balance Sheet Exposure
Balance at beginning of period	$	3,167		$	2,985	$	3,151		$	2,796		$	2,751	$	2,796
(Credit) provision for credit losses		(897	)		182		(166	)		355			45	$	(526	)
Allowance for credit losses at end of period	$	2,270		$	3,167	$	2,985		$	3,151		$	2,796	$	2,270

Loan Classification - Total Portfolio
Special Mention	$	50,368	$	65,993	$	56,305	$	39,255	$	49,752	$	50,368
Substandard		72,717		56,947		61,820		46,315		48,537		72,717

Ratio Analysis

Credit Quality
Nonperforming loans and leases/total loans and leases	1.11 %	0.58 %	0.59 %	0.54 %	0.62 %	1.11 %
Nonperforming assets/total assets	0.80 %	0.41 %	0.41 %	0.37 %	0.43 %	0.80 %
Allowance for credit losses/total loans and leases	0.92 %	0.91 %	0.91 %	0.87 %	0.87 %	0.92 %
Allowance/nonperforming loans and leases	82.84 %	156.96 %	154.76 %	162.11 %	139.86 %	82.84 %
Net loan and lease losses (recoveries) annualized/total average loans and leases	0.03 %	0.01 %	0.00 %	(0.10) %	0.01 %	(0.01) %

Capital Adequacy
Tier 1 Capital (to average assets)	9.08 %	9.01 %	9.57 %	9.63 %	9.34 %	9.08 %
Total Capital (to risk-weighted assets)	13.36 %	13.46 %	14.48 %	14.62 %	14.42 %	13.36 %

Profitability (period-end)
Return on average assets *	0.78 %	(1.73) %	0.45 %	1.03 %	1.00 %	0.12 %
Return on average equity *	9.56 %	(20.84) %	5.22 %	12.45 %	13.36 %	1.50 %
Net interest margin (TE) *	2.82 %	2.75 %	2.83 %	2.99 %	3.02 %	2.84 %
* 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 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 Tangible Book Value Per Share (non-GAAP) to Common Equity Book Value Per Share (GAAP)
	Quarter-Ended										Year-Ended
	Dec-23		Sep-23		Jun-23		Mar-23		Dec-22		Dec-23
Total common equity	$	668,522	$	610,851	$	634,967	$	648,322	$	615,978	$	668,522
Less: Goodwill and intangibles		94,003		94,086		94,169		94,253		94,336		94,003
Tangible common equity (Non-GAAP)		574,519		516,765		540,798		554,069		521,642		574,519
Ending shares outstanding		14,405,920		14,350,177		14,405,503		14,519,748		14,519,831		14,405,920
Tangible book value per share (Non-GAAP)	$	39.88	$	36.01	$	37.54	$	38.16	$	35.93	$	39.88

(1) Average balances and yields on available-for-sale securities are based on historical amortized cost.
(2) Interest income includes the tax effects of taxable-equivalent adjustments using an effective income tax rate of 21% in 2023 and 2022 to increase tax exempt interest income to taxable-equivalent basis.
(3) Nonaccrual loans are included in the average asset totals presented above. Payments received on nonaccrual loans have been recognized as disclosed in Note 1 of the Company's consolidated financial statements included in Part I of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
(4) Earnings per share for the full fiscal year may not equal the sum of the quarterly earnings per share as a result of rounding of average shares.
(5) Amounts in prior periods' financial statements are reclassified when necessary to conform to the current period's presentation.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240126335184/en/

Contacts

For more information:
Stephen S. Romaine, President & CEO
Matthew Tomazin, Executive VP, CFO & Treasurer
Tompkins Financial Corporation (888) 503-5753