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Tompkins Financial Corporation Reports Third Quarter Earnings

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

Tompkins Financial Corporation (NYSE American: TMP)

Tompkins Financial Corporation reported diluted earnings per share of $1.34 for the third quarter of 2019, down 1.5% from the $1.36 per share reported for the same quarter period last year. Net income was $20.2 million for the third quarter of 2019, down from the $20.9 million reported for the same period in 2018.

For the year-to-date period ended September 30, 2019, diluted earnings per share were $3.97, down 3.6% from the $4.12 per share reported for the same period in 2018. Year-to-date net income was $60.6 million for the period ended September 30, 2019, a decrease of $2.8 million from the same period in 2018.

President and CEO, Stephen S. Romaine said “Despite earnings being down slightly from the prior year, the quarter saw improvement over the second quarter of 2019 in terms of net interest margin, returns on equity and diluted earnings per share. Solid growth in deposits and reduced borrowing costs contributed to the overall improvement from the second quarter, as did higher revenue from insurance and wealth management business.”

SELECTED HIGHLIGHTS FOR THE THIRD QUARTER:

  • Total loans of $4.9 billion were up 1.1% over total loans at September 30, 2018
  • Total deposits of $5.4 billion reflect an increase of 6.9% over the same period last year
  • Net interest margin was 3.43% for the third quarter of 2019, up from 3.34% for the second quarter of 2019, and up from 3.35% for the same quarter last year
  • Return on average equity was 12.15% for the third quarter of 2019, up from 11.96% for the second quarter of 2019, and down from 13.89% for the same quarter last year

NET INTEREST INCOME

Net interest income was relatively flat compared to the same quarter and year-to-date periods in 2018. Third quarter 2019 net interest income was $53.2 million, unchanged from the same quarter last year. Net interest income for the third quarter reflected an increase over the second quarter of 2019, driven largely by lower funding costs, which benefited from lower market interest rates, the paydown of borrowings, and growth in noninterest-bearing deposits. The net interest margin for the third quarter of 2019 was 3.43%, compared to 3.34% for the second quarter of 2019, and 3.35% reported for the same period in 2018.

Year-to-date net interest income of $157.4 million was down compared to the $158.6 million reported for the same period last year. Year-to-date yield on interest-earning assets of 4.21% in 2019 was up from 3.96% for the same period last year. Average loans were up $75.9 million, or 1.6% in the first nine months of 2019, compared to the same period in 2018. Average total deposits were up $169.0 million, or 3.5% in the first nine months of 2019, versus the same period in 2018. Average noninterest-bearing deposits for the first nine months of 2019 were up $14.2 million or 1.0% compared to the same period in 2018. The average rate paid on interest-bearing deposits increased 42 basis points in the first nine months of 2019, compared to the same period in 2018.

NONINTEREST INCOME

Noninterest income for the third quarter of 2019 was up 5.0% compared to the same period last year. Noninterest income represented 26.7% of total revenues in the first nine months of 2019, compared to 26.6% in the same period in 2018. Fee income associated with insurance, wealth management, deposit services, and card services were all up over the same quarter last year, with a combined increase of $903,000, or 5.5%.

NONINTEREST EXPENSE

Noninterest expense was $45.7 million for the third quarter of 2019, up $522,000, or 1.2%, over the third quarter of 2018. For the year-to-date period, noninterest expense was $135.9 million, up $2.1 million, or 1.6%, from the same period in 2018. The increase in noninterest expense for both the third quarter and year-to-date periods reflects normal annual increases in salaries and wages. Current quarter other operating expense was reduced by deposit insurance credits received from the FDIC, which included $1.2 million that were applied during the third quarter of 2019.

INCOME TAX EXPENSE

The Company's effective tax rate was 21.3% in the third quarter of 2019, compared to 20.6% for the same period in 2018.

ASSET QUALITY

Asset quality trends remained strong in the third quarter of 2019, despite an increase in nonperforming assets during the third quarter of 2019. Nonperforming assets represented 0.47% of total assets at September 30, 2019, compared to 0.42% at December 31, 2018, and 0.39% at September 30, 2018. Nonperforming asset levels remain below the most recent Federal Reserve Board Peer Group Average1 of 0.60%.

Provision for loan and lease losses was $1.3 million for the third quarter of 2019, compared to $272,000 for the third quarter ended September 30, 2018. Net charge-offs for the third quarter of 2019 were $739,000 compared to $139,000 reported in the third quarter of 2018.

The Company’s allowance for originated loan and lease losses totaled $41.2 million at September 30, 2019, and represented 0.89% of total originated loans and leases at September 30, 2019, up from 0.88% for the most recent prior quarter, and down from 0.91% at September 30, 2018. The total allowance represented 137.46% of total nonperforming loans and leases at September 30, 2019, compared to 163.25% at December 31, 2018, and 169.00% at September 30, 2018.

CAPITAL POSITION

Capital ratios remain well above the regulatory well capitalized minimums. The ratio of Tier 1 capital to average assets was 9.43% at September 30, 2019, improved from the 9.25% reported for the most recent prior quarter ended June 30, 2019, and the 8.89% reported for September 30, 2018.

ABOUT TOMPKINS FINANCIAL CORPORATION

Tompkins Financial Corporation is a financial services company serving the Central, Western, and Hudson Valley regions of New York and the Southeastern region of Pennsylvania. Headquartered in Ithaca, NY, Tompkins Financial is parent to Tompkins Trust Company, Tompkins Bank of Castile, Tompkins Mahopac Bank, Tompkins VIST Bank, Tompkins Insurance Agencies, Inc., and offers wealth management services through Tompkins Financial Advisors. For more information on Tompkins Financial, 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)

As of

As of

ASSETS

09/30/2019

12/31/2018

 

 

 

Cash and noninterest bearing balances due from banks

$

 

124,939

 

$

 

78,524

 

Interest bearing balances due from banks

 

2,488

 

 

1,865

 

Cash and Cash Equivalents

 

127,427

 

 

80,389

 

 

 

 

Available-for-sale securities, at fair value (amortized cost of $1,140,086 at September 30, 2019 and
$1,363,902 at December 31, 2018)

 

1,142,452

 

 

1,332,658

 

Held-to-maturity securities, at amortized cost (fair value of $142,583 at September 30, 2019 and
$139,377 at December 31, 2018)

 

138,657

 

 

140,579

 

Equity securities, at fair value (amortized cost $1,000 at September 30, 2019 and $1,000 at
December 31, 2018)

 

917

 

 

887

 

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

 

4,628,616

 

 

4,568,741

 

Acquired loans

 

228,457

 

 

265,198

 

Less: Allowance for loan and lease losses

 

41,371

 

 

43,410

 

Net Loans and Leases

 

4,815,702

 

 

4,790,529

 

 

 

 

Federal Home Loan Bank and other stock

 

24,881

 

 

52,262

 

Bank premises and equipment, net

 

94,861

 

 

97,202

 

Corporate owned life insurance

 

82,516

 

 

81,928

 

Goodwill

 

92,447

 

 

92,283

 

Other intangible assets, net

 

6,647

 

 

7,628

 

Accrued interest and other assets

 

101,475

 

 

82,091

 

Total Assets

$

 

6,627,982

 

$

 

6,758,436

 

LIABILITIES

 

 

Deposits:

 

 

Interest bearing:

 

 

Checking, savings and money market

 

3,165,622

 

 

2,853,190

 

Time

 

701,444

 

 

637,295

 

Noninterest bearing

 

1,502,924

 

 

1,398,474

 

Total Deposits

 

5,369,990

 

 

4,888,959

 

 

 

 

Federal funds purchased and securities sold under agreements to repurchase

 

50,541

 

 

81,842

 

Other borrowings

 

429,000

 

 

1,076,075

 

Trust preferred debentures

 

16,992

 

 

16,863

 

Other liabilities

 

101,594

 

 

73,826

 

Total Liabilities

$

 

5,968,117

 

$

 

6,137,565

 

EQUITY

 

 

Tompkins Financial Corporation shareholders' equity:

 

 

Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued: 15,011,660 at
September 30, 2019; and 15,348,287 at December 31, 2018

 

1,501

 

 

1,535

 

Additional paid-in capital

 

341,654

 

 

366,595

 

Retained earnings

 

357,165

 

 

319,396

 

Accumulated other comprehensive loss

 

(36,851

)

 

(63,165

)

Treasury stock, at cost – 121,880 shares at September 30, 2019, and 122,227 shares at December
31, 2018

 

(5,111

)

 

(4,902

)

Total Tompkins Financial Corporation Shareholders’ Equity

 

658,358

 

 

619,459

 

 

 

 

Noncontrolling interests

 

1,507

 

 

1,412

 

Total Equity

$

 

659,865

 

$

 

620,871

 

Total Liabilities and Equity

$

 

6,627,982

 

$

 

6,758,436

 

 

 

 

 

TOMPKINS FINANCIAL CORPORATION

 

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

 

(In thousands, except per share data) (Unaudited)

Three Months Ended

Nine Months Ended

 

09/30/2019

09/30/2018

09/30/2019

09/30/2018

INTEREST AND DIVIDEND INCOME

 

 

 

 

Loans

$

 

57,621

 

$

 

54,769

 

$

 

169,685

 

$

 

158,419

 

Due from banks

 

11

 

 

8

 

 

31

 

 

22

 

Available-for-sale securities

 

6,511

 

 

7,448

 

 

22,055

 

 

22,821

 

Held-to-maturity securities

 

862

 

 

860

 

 

2,583

 

 

2,572

 

Federal Home Loan Bank and other stock

 

770

 

 

899

 

 

2,442

 

 

2,433

 

Total Interest and Dividend Income

 

65,775

 

 

63,984

 

 

196,796

 

 

186,267

 

INTEREST EXPENSE

 

 

 

 

Time certificates of deposits of $250,000 or more

 

823

 

 

563

 

 

2,184

 

 

1,088

 

Other deposits

 

7,582

 

 

3,830

 

 

20,409

 

 

9,699

 

Federal funds purchased and securities sold under agreements to repurchase

 

34

 

 

35

 

 

110

 

 

115

 

Trust preferred debentures

 

317

 

 

318

 

 

974

 

 

904

 

Other borrowings

 

3,862

 

 

6,075

 

 

15,731

 

 

15,897

 

Total Interest Expense

 

12,619

 

 

10,821

 

 

39,408

 

 

27,703

 

Net Interest Income

 

53,156

 

 

53,163

 

 

157,388

 

 

158,564

 

Less: Provision for loan and lease losses

 

1,320

 

 

272

 

 

2,366

 

 

1,884

 

Net Interest Income After Provision for Loan and Lease Losses

 

51,836

 

 

52,891

 

 

155,022

 

 

156,680

 

NONINTEREST INCOME

 

 

 

 

Insurance commissions and fees

 

8,517

 

 

7,903

 

 

24,314

 

 

22,684

 

Investment services income

 

4,175

 

 

4,097

 

 

12,166

 

 

12,365

 

Service charges on deposit accounts

 

2,191

 

 

2,088

 

 

6,210

 

 

6,300

 

Card services income

 

2,550

 

 

2,442

 

 

8,090

 

 

7,209

 

Other income

 

1,963

 

 

2,057

 

 

6,247

 

 

8,743

 

Net gain on securities transactions

 

138

 

 

16

 

 

434

 

 

290

 

Total Noninterest Income

 

19,534

 

 

18,603

 

 

57,461

 

 

57,591

 

NONINTEREST EXPENSE

 

 

 

 

Salaries and wages

 

22,960

 

 

22,029

 

 

66,149

 

 

64,404

 

Other employee benefits

 

5,821

 

 

5,300

 

 

17,094

 

 

15,859

 

Net occupancy expense of premises

 

3,236

 

 

3,057

 

 

10,095

 

 

9,873

 

Furniture and fixture expense

 

1,919

 

 

1,814

 

 

5,894

 

 

5,461

 

Amortization of intangible assets

 

421

 

 

440

 

 

1,251

 

 

1,334

 

Other operating expense

 

11,298

 

 

12,493

 

 

35,451

 

 

36,908

 

Total Noninterest Expenses

 

45,655

 

 

45,133

 

 

135,934

 

 

133,839

 

Income Before Income Tax Expense

 

25,715

 

 

26,361

 

 

76,549

 

 

80,432

 

Income Tax Expense

 

5,478

 

 

5,427

 

 

15,816

 

 

16,939

 

Net Income Attributable to Noncontrolling Interests and Tompkins Financial
Corporation

 

20,237

 

 

20,934

 

 

60,733

 

 

63,493

 

Less: Net Income Attributable to Noncontrolling Interests

 

31

 

 

32

 

 

95

 

 

96

 

Net Income Attributable to Tompkins Financial Corporation

$

 

20,206

 

$

 

20,902

 

$

 

60,638

 

$

 

63,397

 

Basic Earnings Per Share

$

 

1.34

 

$

 

1.37

 

$

 

3.99

 

$

 

4.15

 

Diluted Earnings Per Share

$

 

1.34

 

$

 

1.36

 

$

 

3.97

 

$

 

4.12

 

 

 

 

 

 

 

 

 

Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

YTD Period Ended

YTD Period Ended

 

 

 

September 30, 2019

 

September 30, 2019

 

September 30, 2018

 

 

 

Average

 

 

 

Average

 

 

 

Average

 

 

 

 

 

Balance

 

Average

 

Balance

 

Average

 

Balance

 

Average

(Dollar amounts in thousands)

 

(QTD)

Interest

Yield/
Rate

 

(YTD)

Interest

Yield/
Rate

 

(YTD)

Interest

Yield/
Rate

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing balances due from banks

$

2,908

 

$

11

 

1.50

%

$

2,460

$

31

 

1.68

%

$

2,121

$

22

 

1.39

%

Securities (4)

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government securities

 

1,219,318

 

6,822

2.22

%

 

1,338,807

22,990

2.30

%

 

1,438,322

23,763

2.21

%

State and municipal (5)

 

91,675

 

639

2.76

%

 

93,131

1,903

2.73

%

 

97,556

1,898

2.60

%

Other securities (5)

 

3,419

 

39

4.52

%

 

3,417

120

4.70

%

 

3,516

113

4.30

%

Total securities

 

1,314,412

 

7,500

2.26

%

 

1,435,355

25,013

2.33

%

 

1,539,394

25,774

2.24

%

FHLBNY and FRB stock

 

33,359

 

770

9.16

%

 

42,634

2,442

7.66

%

 

52,802

2,433

6.16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans and leases, net of unearned income (5)(6)

 

4,852,399

 

57,904

4.73

%

 

4,816,140

170,540

4.73

%

 

4,740,257

159,398

4.50

%

Total interest-earning assets

 

6,203,078

 

66,185

4.23

%

 

6,296,589

198,026

4.21

%

 

6,334,574

187,627

3.96

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Other assets

 

418,334

 

 

 

 

405,358

 

 

 

351,949

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

6,621,412

 

 

 

$

6,701,947

 

 

$

6,686,523

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES & EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing checking, savings & money market

$

2,998,574

 

5,423

0.72

%

$

2,962,236

14,865

0.67

%

$

2,806,119

6,118

0.29

%

Time deposits

 

694,822

 

2,982

 

1.70

%

 

670,570

 

7,728

 

1.54

%

 

671,888

 

4,669

 

0.93

%

Total interest-bearing deposits

 

3,693,396

 

8,405

0.90

%

 

3,632,806

22,593

0.83

%

 

3,478,007

10,787

0.41

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds purchased & securities sold under

 

 

 

 

 

 

 

 

 

 

 

 

agreements to repurchase

 

57,607

 

34

0.23

%

 

61,482

110

0.24

%

 

62,956

115

0.24

%

Other borrowings

 

647,112

 

3,862

2.37

%

 

861,930

15,731

2.44

%

 

1,113,120

15,897

1.91

%

Trust preferred debentures

 

16,964

 

318

7.44

%

 

16,921

974

7.70

%

 

16,749

904

7.22

%

Total interest-bearing liabilities

 

4,415,079

 

12,619

1.13

%

 

4,573,139

39,408

1.15

%

 

4,670,832

27,703

0.79

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing deposits

 

1,445,051

 

 

 

 

1,380,399

 

 

 

1,366,219

 

 

Accrued expenses and other liabilities

 

101,632

 

 

 

 

101,483

 

 

 

63,682

 

 

Total liabilities

 

5,961,762

 

 

 

 

6,055,021

 

 

 

6,100,733

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tompkins Financial Corporation Shareholders’ equity

 

658,159

 

 

 

 

645,466

 

 

 

584,331

 

 

Noncontrolling interest

 

1,491

 

 

 

 

1,460

 

 

 

1,459

 

 

Total equity

 

659,650

 

 

 

 

646,926

 

 

 

585,790

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and equity

$

6,621,412

 

 

 

$

6,701,947

 

 

$

6,686,523

 

 

Interest rate spread

 

 

 

3.10

%

 

 

 

3.05

%

 

 

 

3.17

%

Net interest income/margin on earning assets

 

 

53,566

3.43

%

 

 

158,618

3.37

%

 

 

159,924

3.38

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax equivalent adjustments

 

 

(410)

 

 

 

(1,230)

 

 

 

(1,360)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income per consolidated financial
statements

 

 

$

53,156

 

 

 

 

$

157,388

 

 

 

 

$

158,564

 

 

 

Tompkins Financial Corporation - Summary Financial Data (Unaudited)

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter-Ended

Year-Ended

Period End Balance Sheet

 

Sep-19

 

Jun-19

 

Mar-19

 

Dec-18

 

Sep-18

 

Dec-18

Securities

$

1,282,026

 

$

1,330,719

 

$

1,484,151

 

$

1,474,124

 

$

1,452,788

 

$

1,474,124

 

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

 

4,628,616

 

 

4,608,483

 

 

4,532,803

 

 

4,568,741

 

 

4,531,241

 

 

4,568,741

 

Acquired loans and leases (3)

 

228,457

 

 

247,319

 

 

256,897

 

 

265,198

 

 

271,468

 

 

265,198

 

Allowance for loan and lease losses

 

41,371

 

 

40,790

 

 

40,328

 

 

43,410

 

 

41,358

 

 

43,410

 

Total assets

 

6,627,982

 

 

6,654,390

 

 

6,738,719

 

 

6,758,436

 

 

6,746,960

 

 

6,758,436

 

Total deposits

 

5,369,990

 

 

4,988,897

 

 

4,989,925

 

 

4,888,959

 

 

5,025,082

 

 

4,888,959

 

Federal funds purchased and securities sold under agreements to repurchase

 

50,541

 

 

63,978

 

 

66,918

 

 

81,842

 

 

52,875

 

 

81,842

 

Other borrowings

 

429,000

 

 

824,562

 

 

923,427

 

 

1,076,075

 

 

988,515

 

 

1,076,075

 

Trust preferred debentures

 

16,992

 

 

16,949

 

 

16,906

 

 

16,863

 

 

16,820

 

 

16,863

 

Total common equity

 

658,358

 

 

656,201

 

 

645,823

 

 

619,459

 

 

597,636

 

 

619,459

 

Total equity

 

659,865

 

 

657,677

 

 

647,267

 

 

620,871

 

 

599,144

 

 

620,871

 

...

Average Balance Sheet