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Tompkins Financial Corporation Reports Record Year-to-Date and Second Quarter Earnings

ITHACA, N.Y.--(BUSINESS WIRE)--

Tompkins Financial Corporation (NYSE American: TMP)

Tompkins Financial Corporation reported net income of $22.1 million for the second quarter of 2018, an increase of 30.3% from the $16.9 million reported for the same period in 2017. Year-to-date net income was $42.5 million, an increase of $9.9 million, or 30.2% over the same period in 2017.

Diluted earnings per share were $1.43 for the second quarter of 2018, up 28.8% over the second quarter of 2017. For the year-to-date period ended June 30, 2018, diluted earnings per share were $2.76, up 29.6% over the same period in 2017.

President and CEO, Stephen S. Romaine said “We are extremely pleased with our excellent results through the first half of 2018. The second quarter also marked a significant milestone for our Company. In May of this year, we moved our Corporate headquarters to a new building located across the street from our former headquarters location in downtown Ithaca. The move has allowed us to consolidate staff, which were previously located in seven different locations, into a new, modern, and more efficient space. The move has been extremely well received by our employees, clients, and the local community."

SELECTED HIGHLIGHTS FOR THE SECOND QUARTER AND YEAR-TO-DATE PERIODS:

  • Diluted earnings per share for the quarter and year-to-date periods reflect the highest earnings in Company history for the respective periods.
  • Quarterly results included certain unusual items that were primarily related to the move of our Corporate headquarters. These included approximately $2.9 million of gains related to sales of real estate and approximately $2.0 million of write downs associated with two leased properties that were recently vacated.
  • Return on Average Equity was 15.13% for the second quarter and 14.78% for the year-to-date period, which reflect the highest returns in more than 10 years.
  • Total loans of $4.8 billion were up 8.4% over the same period in 2017, and up 2.6% over December 31, 2017.

NET INTEREST INCOME

Net interest income of $52.7 million for the second quarter of 2018 increased by $2.4 million, or 4.8% compared to the same period in 2017. For the year-to-date period, net interest income was $105.4 million, up $7.1 million, or 7.2% from the same six-month period in 2017.

Net interest income benefited from growth in average loans and noninterest bearing deposits. Average loans were up $414.0 million, or 9.6% in the first six months of 2018, compared to the same six month period in 2017. Average noninterest bearing deposits were up $140.0 million, or 11.6% in the first six months of 2018, versus the same period in 2017. The net interest margin for the second quarter of 2018 was 3.36%, compared to 3.45% reported for the same period in 2017, and 3.42% for the quarter ended March 31, 2018. The decline in margin is largely due to loan growth out-pacing deposit growth, and the recent increases in market interest rates that have resulted in increased funding costs.

NONINTEREST INCOME

Noninterest income represented 28.6% of total revenues in the second quarter of 2018, compared to 25.8% in the same period in 2017, and 27.0% for the first six months of 2018. Noninterest income of $21.2 million was up 21.2% compared to the same period last year. Fee income associated with insurance, wealth management, deposit services, and card services for the second quarter of 2018 were up a combined $406,000 or 2.6% over the same period in 2017. The second quarter of 2018 also included a gain on sale of two properties totaling $2.9 million. The sale of these properties is related to the completion of the new Company headquarters building in the second quarter of 2018.

NONINTEREST EXPENSE

Noninterest expense was $45.0 million for the second quarter of 2018, up $3.4 million, or 8.2%, over the second quarter of 2017. For the year-to-date period, noninterest expense was $88.7 million, up $5.8 million, or 7.0%, from the same period in 2017. The increase in noninterest expense for both the second quarter and year-to-date periods included normal annual increases in salaries and wages. Noninterest expense for the second quarter of 2018 also included a $2.0 million write-down related to two leases on recently vacated space.

INCOME TAX EXPENSE

The Company's effective tax rate was 20.7% in the second quarter of 2018, compared to 32.7% for the same period in 2017. The decrease is a direct result of The Tax Cuts and Jobs Act of 2017, which reduced the Federal statutory tax rate from 35% in 2017, to 21% in 2018.

ASSET QUALITY

Asset quality trends remained strong in the second quarter of 2018. Nonperforming assets represented 0.42% of total assets at June 30, 2018, compared to 0.38% at December 31, 2017, and 0.36% at June 30, 2017. Nonperforming asset levels continue to be well below the most recent Federal Reserve Board Peer Group Average1 of 0.61%.

Provision for loan and lease losses was $1.0 million for the second quarter of 2018 and 2017. Net charge-offs for the second quarter of 2018 were $31,000 compared to net recoveries of $15,000 reported in the second quarter of 2017.

The Company’s allowance for originated loan and lease losses totaled $41.2 million at June 30, 2018, and represented 0.91% of total originated loans and leases at June 30, 2018, unchanged from both the most recent prior quarter, and June 30, 2017. The total allowance represented 158.08% of total nonperforming loans and leases at June 30, 2018, compared to 172.84% at December 31, 2017, and 178.59% at June 30, 2017.

CAPITAL POSITION

Capital ratios remain well above the regulatory well capitalized minimums. The ratio of tangible common equity to tangible assets was 7.36% at June 30, 2018, improved from the 7.29% reported for the most recent prior quarter ended March 31, 2018, and down from 7.50% at June 30, 2017.

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 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) (Unaudited)     As of     As of
ASSETS 06/30/2018 12/31/2017
   
Cash and noninterest bearing balances due from banks $ 80,702 $ 77,688
Interest bearing balances due from banks       1,971         6,615  
Cash and Cash Equivalents 82,673 84,303
 
Available-for-sale securities, at fair value (amortized cost of $1,385,805 at June 30,
2018 and $1,408,996 at December 31, 2017) 1,343,690 1,391,863
Held-to-maturity securities, at amortized cost (fair value of $137,221 at June 30, 2018
and $140,315 at December 31, 2017) 139,413 139,216
Equity securities, at fair value (amortized cost $1,000,000 at June 30, 2018
and $1,000,000 at December 31, 2017) 888 913
Originated loans and leases, net of unearned income and deferred costs and fees (2) 4,507,006 4,358,543
Acquired loans (3) 284,187 310,577
Less: Allowance for loan and lease losses       41,225         39,771  
Net Loans and Leases 4,749,968 4,629,349
 
Federal Home Loan Bank and other stock 58,770 50,498
Bank premises and equipment, net 93,994 86,995
Corporate owned life insurance 81,126 80,106
Goodwill 92,283 92,291
Other intangible assets, net 8,342 9,263
Accrued interest and other assets       94,653         83,494  
  Total Assets     $ 6,745,800       $ 6,648,290  
 
LIABILITIES
Deposits:
Interest bearing:
Checking, savings and money market 2,749,782 2,651,632
Time 635,004 748,250
Noninterest bearing       1,407,443         1,437,925  
Total Deposits 4,792,229 4,837,807
 
Federal funds purchased and securities sold under agreements to repurchase 52,042 75,177
Other borrowings 1,229,956 1,071,742
Trust preferred debentures 16,777 16,691
Other liabilities       64,147         70,671  
  Total Liabilities     $ 6,155,151       $ 6,072,088  
 
EQUITY
Tompkins Financial Corporation shareholders' equity:
Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued:
15,314,340 at June 30, 2018; and 15,301,524 at December 31, 2017 1,532 1,530
Additional paid-in capital 367,121 364,031
Retained earnings 294,553 265,007
Accumulated other comprehensive loss (69,436 ) (51,296 )
Treasury stock, at cost – 118,554 shares at June 30,2018, and 120,805 shares
at December 31, 2017 (4,597 ) (4,492 )
 
Total Tompkins Financial Corporation Shareholders’ Equity 589,173 574,780
Noncontrolling interests       1,476         1,422  
  Total Equity     $ 590,649       $ 576,202  
  Total Liabilities and Equity     $ 6,745,800       $ 6,648,290  
 
       
TOMPKINS FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
      Three Months Ended Six Months Ended
(In thousands, except per share data) (Unaudited) 06/30/2018     06/30/2017       06/30/2018       06/30/2017
INTEREST AND DIVIDEND INCOME
Loans $ 52,757 $ 47,357 $ 103,651 $ 92,308
Due from banks 7 4 13 6
Available-for-sale securities 7,729 7,647 15,373 14,969
Held-to-maturity securities 854 870 1,712 1,748
Federal Home Loan Bank and other stock         796         464         1,534         932
Total Interest and Dividend Income         62,143         56,342         122,283         109,963
INTEREST EXPENSE
Time certificates of deposits of $250,000 or more 540 466 525 907
Other deposits 3,087 2,482 5,870 4,829
Federal funds purchased and securities sold under agreements to
repurchase 34 43 80 151
Trust preferred debentures 306 256 586 623
Other borrowings         5,462         2,794         9,821         5,118
Total Interest Expense         9,429         6,041         16,882         11,628
Net Interest Income         52,714         50,301         105,401         98,335
Less: Provision for loan and lease losses         1,045         976         1,612         1,745
Net Interest Income After Provision for Loan and Lease Losses         51,669         49,325         103,789         96,590
NONINTEREST INCOME
Insurance commissions and fees 7,387 7,092 14,781 14,210
Investment services income 4,022 3,891 8,268 7,682
Service charges on deposit accounts 2,080 2,045 4,212 4,212
Card services income 2,621 2,676 4,767 4,685
Other income 4,898 1,746 6,686 3,901
Gain on sale of available-for-sale securities         150         0         274         0
Total Noninterest Income         21,158         17,450         38,988         34,690
NONINTEREST EXPENSE
Salaries and wages 21,377 20,480 42,375 40,116
Pension and other employee benefits 5,183 4,989 10,559 10,624
Net occupancy expense of premises 3,170 3,390 6,816 6,901
Furniture and fixture expense 1,673 1,637 3,648 3,234
FDIC insurance 704 617 1,371 1,155
Amortization of intangible assets 443 485 894 978
Other operating expense         12,435         9,970         23,043         19,928
Total Noninterest Expenses         44,985         41,568         88,706         82,936
Income Before Income Tax Expense         27,842         25,207         54,071         48,344
Income Tax Expense         5,751         8,248         11,512         15,637
Net Income attributable to noncontrolling interests and Tompkins Financial Corporation         22,091         16,959         42,559         32,707
Less: Net income attributable to noncontrolling interests         32         33         64         65
Net Income Attributable to Tompkins Financial Corporation       $ 22,059       $ 16,926       $ 42,495       $ 32,642
Basic Earnings Per Share $ 1.44 $ 1.11 $ 2.78 $ 2.15
Diluted Earnings Per Share       $ 1.43       $ 1.11       $ 2.76       $ 2.13
 
 
Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)
                                         
Quarter Ended YTD Period Ended YTD Period Ended
              June 30, 2018       June 30, 2018       June 30, 2017
Average Average Average
Balance Average Balance Average Balance Average
(Dollar amounts in thousands)         (QTD)     Interest     Yield/ Rate       (YTD)     Interest     Yield/ Rate       (YTD)     Interest     Yield/ Rate
ASSETS
Interest-earning assets
Interest-bearing balances due from banks $ 1,286 $ 7 2.18 % $ 1,922 $ 14 1.47 % $ 3,572

$

6 0.34 %
Securities (4)
U.S. Government securities 1,442,384 8,042 2.24 % 1,448,274 15,997 2.23 % 1,477,512 15,621 2.13 %
State and municipal (5) 97,189 628 2.59 % 98,470 1,271 2.60 % 101,598 1,701 3.38 %
Other securities (5)   3,544       39     4.41 %       3,558     74     4.19 %       3,608     64     3.58 %
Total securities 1,543,117 8,709 2.26 % 1,550,302 17,342 2.26 % 1,582,718 17,386 2.22 %
FHLBNY and FRB stock 53,967 796 5.92 % 51,750 1,534 5.98 % 39,426 932 4.77 %
 
Total loans and leases, net of unearned income (5)(6)   4,750,192       53,076     4.48 %       4,719,312     104,304     4.46 %       4,305,304     93,772     4.39 %
Total interest-earning assets   6,348,562       62,588     3.95 %       6,323,286     123,194     3.93 %       5,931,020     112,096     3.81 %
 
Other assets 341,087 348,024 354,842
 
Total assets       $ 6,689,649                   $ 6,671,310                 $ 6,285,862            
 
LIABILITIES & EQUITY
Deposits
Interest-bearing deposits
Interest bearing checking, savings & money market $ 2,832,800 1,940 0.27 % $ 2,814,601 3,587 0.26 % $ 2,680,639 2,265 0.17 %
Time deposits   661,502       1,687       1.02 %       689,404       2,808       0.82 %       867,571       3,471       0.81 %
Total interest-bearing deposits 3,494,302 3,627 0.42 % 3,504,005 6,395 0.37 % 3,548,210 5,736 0.33 %
 
Federal funds purchased & securities sold under
agreements to repurchase 54,246 34 0.25 % 64,649 80 0.25 % 69,560 151 0.44 %
Other borrowings 1,143,825 5,462 1.92 % 1,098,818 9,821 1.80 % 813,477 5,118 1.27 %
Trust preferred debentures   16,749       306     7.33 %       16,728     586     7.06 %       20,063     623     6.26 %
Total interest-bearing liabilities

 

4,709,122 9,429 0.80 % 4,684,200 16,882 0.73 % 4,451,310 11,628 0.53 %
 
Non-interest bearing deposits 1,337,311 1,344,270 1,204,272
Accrued expenses and other liabilities 58,265   62,856 65,915
Total liabilities

 

6,104,698 6,091,326 5,721,497
 
Tompkins Financial Corporation Shareholders’ equity 583,492 578,541 562,896
Noncontrolling interest 1,459   1,443 1,469
Total equity 584,951 579,984 564,365
 
Total liabilities and equity

$

6,689,649   $ 6,671,310 $ 6,285,862
Interest rate spread   3.15 %   3.20 %   3.28 %
Net interest income/margin on earning assets 53,159 3.36 % 106,312 3.39 % 100,468 3.42 %
 
Tax equivalent adjustments (445) (911) (2,133)
 
Net interest income per consolidated financial statements               $ 52,714                     $ 105,401                     $ 98,335        
 
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Tompkins Financial Corporation - Summary Financial Data (Unaudited)
 
(In thousands, except per share data)
Quarter-Ended Year-Ended
Period End Balance Sheet      

Jun-18

   

Mar-18

   

Dec-17

   

Sep-17

   

Jun-17

   

Dec-17

Securities       $ 1,483,991     $ 1,510,795     $ 1,531,991     $ 1,546,199     $ 1,564,865     $ 1,531,991

Originated loans and leases, net of unearned
income and deferred costs and fees (2)

        4,507,006       4,408,081       4,358,543       4,167,254       4,070,755       4,358,543
Acquired loans and leases (3)         284,187       296,765       310,577       323,259       347,841       310,577
Allowance for loan and lease losses         41,225       40,211       39,771       38,038       37,157       39,771
Total assets         6,745,800       6,648,128       6,648,290       6,524,060       6,415,012       6,648,290
Total deposits         4,792,229       4,929,903       4,837,807       4,943,944       4,750,722       4,837,807

Federal funds purchased and securities sold under
agreements to repurchase

        52,042       69,131       75,177       73,874       50,360       75,177
Other borrowings         1,229,956       995,074       1,071,742       834,574       952,035       1,071,742
Trust preferred debentures         16,777