Tompkins Financial

Press release:

ITHACA, NY - Tompkins Financial Corporation (NYSE American:TMP)

Tompkins Financial Corporation announced today that its Board of Directors approved payment of a regular quarterly cash dividend of $0.57 per share, payable on November 15, 2021, to common shareholders of record on November 2, 2021.  The dividend amount represents an increase of $0.03 or 5.6% over the dividend paid in the third quarter of 2021.

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, and Tompkins Insurance Agencies, Inc., and offers wealth management services through Tompkins Financial Advisors.  The Company’s banks have announced plans for a rebranding effort, pursuant to which the Company’s four wholly-owned banking subsidiaries will be combined into one bank, with The Bank of Castile, Mahopac Bank, and VIST Bank merging with and into Tompkins Trust Company.  The combined bank will conduct business under the “Tompkins” brand name, with a legal name of “Tompkins Community Bank.”

For more information on Tompkins Financial, visit www.tompkinsfinancial.com.

Press release:

ITHACA, NY - Tompkins Financial Corporation (NYSE American: TMP)

Tompkins Financial Corporation reported diluted earnings per share of $1.45 for the third quarter of 2021, compared to $1.63 reported for the third quarter of 2020.  Net income for the third quarter of 2021 was $21.3 million, compared to $24.2 million for the same period in 2020.  Results for the third quarter of 2021 were negatively impacted by approximately $4.1 million ($0.21 per share) of nonrecurring expenses related to the prepayment of borrowings and the redemption of trust preferred securities. Though these transactions had a negative impact on current period earnings, they are expected to have a favorable impact on future earnings by way of reduced interest expense.  Additional details on these nonrecurring transactions are described below.  

For the year-to-date period ended September 30, 2021, diluted earnings per share were $4.72, up 31.5% from $3.59 for the same year-to-date period in 2020.  Year-to-date net income was $69.8 million for the nine-month period ended September 30, 2021, up 30.2% compared to $53.6 million for the same period in 2020. 

Tompkins President and CEO, Stephen Romaine, commented, "We are pleased to report record earnings performance through the first nine months of 2021.  The third quarter of 2021 was down from the same quarter last year due to some nonrecurring expenses related to discretionary debt restructuring transactions.  Despite higher expenses related to these transactions, several positive revenue trends were noted during the quarter, including growth in both net interest income and noninterest income when compared to the second quarter this year."   

SELECTED HIGHLIGHTS FOR THE THIRD QUARTER:

•       Net interest income was $56.1 million for the third quarter of 2021, up from $54.8 million reported in the second quarter of 2021, and down from $58.3 million reported in the same quarter of 2020.  Net interest income in the third quarter of 2021 included a $1.2 million purchase accounting charge related to the redemption of $10.0 million in trust preferred securities. Net interest income for the second quarter of 2021 included a $650,000 purchase accounting charge related to the redemption of $5.2 million in trust preferred securities.

•       Total loans at September 30, 2021 were $5.1 billion compared to $5.4 billion at September 30, 2020, and $5.3 billion at year end 2020.  The $301.5 million change in total loans compared to September 30, 2020, reflected a decline of $322.1 million in loans under the U.S. Small Business Administration's Paycheck Protection Program ("PPP") at the end of the third quarter of 2021 compared to the end of the third quarter of 2020. 

•       Largely stable credit conditions and improving macroeconomic trends contributed to a lower allowance for credit losses at September 30, 2021 when compared to September 30, 2020.  The provision for credit losses for the quarter and year-to-date periods ended September 30, 2021 were credits of $1.2 million and $6.1 million, respectively, compared to a credit of $218,000 and an expense of $17.4 million, respectively, for the same periods in 2020.  

•       Noninterest income for the quarter was $20.9 million, reflecting an increase of 10.6% over the second quarter of 2021, and 10.4% over the third quarter of 2020. 

•       Noninterest expense for the quarter was $50.2 million, an increase of 5.8% over the second quarter of 2021, and 7.3% over the same quarter last year.  The increase in the third quarter of 2021 was largely related to $2.9 million of penalties related to prepayment of $135.0 million of FHLB borrowings.

NET INTEREST INCOME

The net interest margin was 2.89% for the third quarter of 2021, compared to 2.91% for the second quarter of 2021, and 3.26% for the third quarter of 2020.  Net interest income was $56.1 million for the third quarter of 2021, compared to $58.3 million for the third quarter of 2020.  Interest income for the third quarter of 2021 included $3.3 million of net deferred loan fees associated with PPP loans, compared to net deferred PPP loan fees of $2.4 million in the third quarter of 2020.  Interest expense for the third quarter of 2021 was negatively impacted by an accelerated non-cash purchase accounting discount of $1.2 million related to the redemption of $10.0 million in trust preferred securities.

For the year-to-date period ended September 30, 2021, net interest income of $166.0 million was down 1.0% when compared to the nine month period ended September 30, 2020.  For the year-to-date period in 2021, net deferred loan fees associated with PPP loans were approximately $8.0 million as compared to $4.8 million in the same period of 2020.  Interest expense for the nine months ended September 30, 2021, was negatively impacted by an accelerated non-cash purchase accounting discount of $1.9 million related to the redemption of $15.2 million in trust preferred securities.  The $15.2 million in redeemed trust preferred securities carried a weighted average interest rate of 5.26% at the time they were redeemed and had a weighted average final maturity of slightly more than 11 years. 

 

Average loans for the quarter ended September 30, 2021 were $5.1 billion compared to $5.4 billion in the same period in 2020.  The $285.0 million change in average loan balances was primarily due to a decline in average PPP loans from the third quarter of 2020 to the third quarter of 2021.

 

Average securities for the quarter ended September 30, 2021, were up $788.2 million or 54.0% when compared to the same period in 2020.  The increase is mainly a result of investing excess cash, driven by deposit growth and PPP loan forgiveness. 

Asset yields for the quarter ended September 30, 2021 were down 44 basis points compared to the quarter ended September 30, 2020, which reflects the impact of reductions in market interest rates over the trailing twelve-month period as well as a greater percentage of earning assets being comprised of lower yielding securities and interest bearing balances due from banks, when compared to the same period in 2020.

Average total deposits for the third quarter of 2021 were up $571.9 million, or 9.0% compared to the same period in 2020.  Average noninterest bearing deposits for the three months ended September 30, 2021 were up $267.5 million or 14.1% compared to the three months ended September 30, 2020.  Average deposit balances continue to benefit from the PPP loan program, as the majority of the proceeds of the PPP loans funded by Tompkins during 2020 and the first half of 2021 were deposited in Tompkins checking accounts. The total cost of interest-bearing liabilities was 0.39% for the quarter ended September 30, 2021, a decline of 11 basis points from the quarter ended September 30, 2020.

NONINTEREST INCOME

Noninterest income of $20.9 million for the third quarter of 2021, was up 10.4% compared to the same period in 2020.  For the year-to-date period, noninterest income of $59.7 million was up 8.5% from the same period in 2020.  Growth over the same quarter and nine-month periods in the prior year was supported by increases in nearly all fee income categories, including Insurance commissions and fees (up 10.3% for the quarter, 11.7% for the year-to-date period), Investment services income (up 15.5% for the quarter, 15.6% for the year-to-date period), Service charges on deposit accounts up (13.4% for the quarter, down 2.0% for the year-to-date period), and Card services income (up 12.3% for the quarter, 16.9% for the year-to-date period).   Noninterest income represented 27.1% of total revenues for the third quarter of 2021, as compared to 24.5% of total revenues for the third quarter of 2020.

NONINTEREST EXPENSE

Noninterest expense was $50.2 million for the third quarter of 2021, up $3.4 million, or 7.3%, from the third quarter of 2020.  For the year-to-date period, noninterest expense was $142.1 million, up $4.4 million or 3.2% from the same period in 2020.  Included in the quarter and year-to-date periods of 2021 were penalties of $2.9 million related to the prepayment of $135.0 million in FHLB fixed-rate advances.  The advances, which were paid off in September 2021, carried a weighted average interest rate of 2.26% and had a weighted average maturity of 1.25 years. 

INCOME TAX EXPENSE

The Company's effective tax rate was 23.7% for the third quarter of 2021, compared to 20.7% for the same period in 2020.  The effective tax rate for the nine months ended September 30, 2021 was 22.1%, compared to 20.4% reported for the same period in 2020. 

ASSET QUALITY

The allowance for credit losses represented 0.91% of total loans and leases at September 30, 2021, down from 0.92% at June 30, 2021, and 0.98% at December 31, 2020. The ratio of the allowance to total nonperforming loans and leases declined to 76.2% at September 30, 2021, compared to 88.3% at June 30, 2021, and 112.9% at December 31, 2020.

The provision for credit loss expense for the third quarter of 2021 was a credit of $1.2 million compared to a credit of $218,000 for the same period in 2020. Net charge-offs for the quarter ended September 30, 2021 were $69,000 compared to net recoveries of $12,000 reported for the same period in 2020. Provision expense for the nine months ended September 30, 2021 was a credit of $6.1 million, compared to an expense of $17.4 million for the same period in 2020. 

Nonperforming loans and leases totaled $60.7 million at September 30, 2021, compared to $53.8 million at June 30, 2021, and $45.8 million at December 31, 2020. The increase in nonperforming loans and leases compared to prior quarter end and year end 2020 was related to two commercial real estate relationships that moved into nonperforming status, totaling $9.1 million in the second quarter of 2021 and $7.5 million in the third quarter of 2021, which continue to accrue interest.  Nonperforming assets represented 0.75% of total assets at September 30, 2021, up from 0.67% at June 30, 2021, and 0.60% at December 31, 2020.

Special Mention and Substandard loans and leases totaled $168.5 million at September 30, 2021, reflecting an improvement from $171.3 million at June 30, 2021, and $189.9 million reported at December 31, 2020.

As previously announced, the Company implemented a payment deferral program in 2020 to assist both consumer and business borrowers that may be experiencing financial hardship due to COVID-19. As of September 30, 2021, total loans that continued in a deferral status amounted to approximately $12.8 million, representing 0.25% of total loans.  At June 30, 2021 total loans in deferral status totaled $129.4 million, and at December 31, 2020 total loans in deferral status totaled $212.2 million. Included in nonperforming loans and leases and Substandard loans and leases at September 30, 2021, were 2 loans totaling $3.0 million that remained in deferral status.

The Company began accepting applications for PPP loans on April 3, 2020, and had funded 2,998 loans totaling approximately $465.6 million when the initial program ended.  On January 19, 2021, the Company began accepting both first draw and second draw applications for the reopening of the PPP program.  The 2021 PPP program funding closed for new applications on May 12, 2021.  The Company funded 2,142 applications totaling $228.5 million in 2021. 

Out of the total $694.1 million of PPP loans that the Company had funded through October 12, 2021, approximately $552.0 million had been forgiven by the SBA under the terms of the program.  Total net deferred fees on the remaining balance of PPP loans amounted to $6.2 million at September 30, 2021.

CAPITAL POSITION

Capital ratios at September 30, 2021 remained well above the regulatory minimums for well-capitalized institutions. The ratio of Total Capital to Risk-Weighted Assets was 14.21% at September 30, 2021, down from 14.62% reported at June 30, 2021, and 14.39% at December 31, 2020. The ratio of Tier 1 capital to average assets was 8.54% at September 30, 2021, compared to 8.79% at June 30, 2021, and 8.75% at December 31, 2020.

 

During the third quarter of 2021, the Company repurchased 170,775 common shares at an aggregate cost of $13.2 million. These shares were purchased under the Company's previously announced 2020 Stock Repurchase Program.   During the first nine months of 2021, the Company repurchased 272,310 shares at an aggregate cost of $21.2 million.

 

The Company announced today that its Board of Directors has authorized a new stock repurchase program of up to 400,000 shares of the Company's outstanding common stock, par value $0.10 per share, over the next 24 months.  This program replaces the Company's existing 400,000 stock repurchase program announced on January 30, 2020. 

 

The shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in accordance with federal securities laws. The actual timing, number and value of shares repurchased under the program will be determined by management at its discretion and will depend on a number of factors, including the market price of the Company's stock and general market and economic conditions, and applicable legal requirements.

 

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, and Tompkins Insurance Agencies, Inc., and offers wealth management services through Tompkins Financial Advisors. The Company’s banks have announced plans for a rebranding effort, pursuant to which the Company’s four wholly-owned banking subsidiaries will be combined into one bank, with The Bank of Castile, Mahopac Bank, and VIST Bank merging with and into Tompkins Trust Company.  The combined bank will conduct business under the “Tompkins” brand name, with a legal name of “Tompkins Community Bank.”  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. Forward-looking statements are neither historical facts nor assurances of future performance. 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 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; the severity and duration of the COVID-19 pandemic and the impact of COVID-19 (including governments’ responses thereto) 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 Consolidated Appropriations Act, 2021 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; uncertainties arising from national and global events, including the potential impact of widespread protests, civil unrest, and political uncertainty on the economy and the financial services industry; 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.

Press release:

ITHACA -- Tompkins Financial Corporation (NYSE American: TMP) reported diluted earnings per share of $1.54 for the second quarter of 2021, up 6.9 percent from $1.44 per share in the second quarter of 2020. Net income for the second quarter of 2021 was $22.8 million, compared to $21.4 million for the same period in 2020.

For the year-to-date period ended June 30, 2021, diluted earnings per share were $3.26, up 65.5 percent from $1.97 for the same year-to-date period in 2020. Year-to-date net income was $48.5 million for the six month period ended June 30, 2021, up 64.9 percent compared to $29.4 million for the same period in 2020.

President and CEO, Stephen Romaine, said, "We are pleased to continue our favorable earnings trends in 2021 with another strong quarter of earnings. Though the current interest rate environment resulted in a narrowing of our net interest margin, our revenue for the first half of 2021 compared favorably to the prior year in all three of our primary business lines of banking, insurance, and wealth management.” 

SELECTED HIGHLIGHTS FOR THE SECOND QUARTER:

• Diluted earnings per share of $1.54 represents the best second quarter in the Company's history, and is up 6.9 percent over the same period in 2020.
• Provision for credit losses was a $3.1 million credit for the second quarter of 2021, compared to an $877,000 expense in the same period last year.
• Total deposits amounted to $6.8 billion at June 30, 2021, an increase of $459.5 million, or 7.2 percent over June 30, 2020.

NET INTEREST INCOME

Net interest income was $54.8 million for the second quarter of 2021, compared to $56.4 million reported for the second quarter of 2020. Interest income for the second quarter of 2021 included $1.9 million of net deferred loan fees associated with PPP loans, compared to net deferred loan fees of $2.3 million in the second quarter of 2020. Interest expense for the second quarter of 2021 was negatively impacted by an accelerated non-cash purchase accounting discount of $650,000 related to the redemption of $5.2 million of trust preferred securities.The net interest margin was 2.91 percent for the second quarter of 2021, compared to 3.45 percent reported for the same period in 2020, and 3.01 percent for the first quarter of 2021.

For the year-to-date period ended June 30, 2021, net interest income of $109.9 million was in line with the comparable six month period in 2020. For the year to date period in 2021, net deferred loan fees associated with PPP loans were approximately $4.7 million as compared to $2.3 million in the same period of 2020.

Average loans for the quarter ended June 30, 2021 were in line with the same period in 2020. Asset yields for the quarter ended June 30, 2021 were down 71 basis points compared to the quarter ended June 30, 2020, which reflects the impact of reductions in market interest rates over the trailing 12-month period as well as a greater percentage of earning assets being comprised of lower yielding securities and interest bearing balances due from banks, when compared to the same period in 2020. 

Average total deposits for the second quarter of 2021 were up $622.1 million, or 10.1 percent compared to the same period in 2020. Average noninterest bearing deposits for the three months ended June 30, 2021 were up $294.0 million or 16.4 percent compared to the three months ended June 30, 2020. Average deposit balances continue to benefit from the PPP loan program, as the majority of the proceeds of the PPP loans we funded were deposited in Tompkins checking accounts.

For the second quarter of 2021, the average rate paid on interest-bearing deposit products decreased by 20 basis points from the same period in 2020 due to the overall decline in market interest rates. The total cost of interest-bearing liabilities was 0.40 percent at June 30, 2021, a decline of 19 basis points from June 30, 2020.

NONINTEREST INCOME

Noninterest income of $18.9 million for the second quarter of 2021, was up 9.8 percent compared to the same period in 2020. For the year-to-date period, noninterest income of $38.8 million was up 7.5 percent from the same period in 2020. Growth over the same quarter last year was supported by increases in all fee income categories (insurance commissions and fees were up 11.0 percent, while investment services income was up 20.3 percent, service charges on deposit accounts increased 17.9 percent, and card services income was up 29.3 percent).

Noninterest income represented 25.6 percent of total revenues for the second quarter of 2021, as compared to 23.4 percent of total revenues for the second quarter of 2020.

NONINTEREST EXPENSE

Noninterest expense was $47.4 million for the second quarter of 2021, up $1.8 million, or 3.9 percent, from the second quarter of 2020. For the year-to-date period, noninterest expense was $92.0 million, up $1.0 million or 1.1 percent from the same period in 2020. Salaries and employee benefits for the second quarter of 2021 were up 5.9 percent when compared to the same quarter last year. 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, and increases in health insurance expense.

INCOME TAX EXPENSE

The Company's effective tax rate was 22.1 percent for the second quarter of 2021, compared to 20.5 percent for the same period in 2020. The effective tax rate for the six months ended June 30, 2021 was 21.3 percent, compared to 20.2 percent reported for the same period in 2020.

ASSET QUALITY

The allowance for credit losses represented 0.92 percent of total loans and leases at June 30, 2021, down from 0.93 percent at March 31, 2021, and 0.98 percent at Dec. 31, 2020. The ratio of the allowance to total nonperforming loans and leases was 88.3 percent at June 30, 2021, down compared to 103.4 percent at March 31, 2021, and 112.9 percent at Dec. 31, 2020.

The provision for credit losses for the second quarter of 2021 was a credit of $3.1 million compared to an expense of $877,000 for the same period in 2020. Net recoveries for the quarter ended June 30, 2021 were $884,000 compared to net recoveries of $26,000 reported for the same period in 2020. Provision expense for the six months ended June 30, 2021 was a credit of $4.9 million, compared to an expense of $17.6 million for the same period in 2020.

Nonperforming loans and leases totaled $53.8 million at June 30, 2021, compared to $47.7 million at March 31, 2021, and $45.8 million at Dec. 31, 2020. The increase in nonperforming loans and leases compared to prior year were mainly related to one commercial real estate relationship totaling $9.1 million, which was previously reported as Substandard, and downgrades of credits in the loan portfolio related to the hospitality industry, which was significantly impacted by the COVID-19 pandemic. Nonperforming assets represented 0.67 percent of total assets at June 30, 2021, up from 0.59 percent at March 31, 2021, and 0.60 percent at Dec. 31, 2020.

Special Mention and Substandard loans and leases totaled $171.3 million at June 30, 2021, reflecting improvement from $185.2 million at March 31, 2021, and $189.9 million reported at Dec. 31, 2020.

As previously announced, the Company implemented a payment deferral program in 2020 to assist both consumer and business borrowers that may be experiencing financial hardship due to COVID-19. As of June 30, 2021, total loans that continued in a deferral status amounted to approximately $129.4 million, representing 2.5 percent of total loans. At March 31, 2021 loans in deferral status totaled $195.6 million, and at Dec. 31, 2020 loans in deferral status totaled $212.2 million. Included in nonperforming loans and leases and Substandard loans and leases at June 30, 2021, were 9 loans totaling $22.1 million that remained in deferral status.

The Company began accepting applications for the PPP loans on April 3, 2020, and had funded 2,998 loans totaling approximately $465.6 million when the initial program ended. On Jan. 19, 2021, the Company began accepting both first draw and second draw applications for the reopening of the PPP program and as of July 19, 2021, the Company had funded an additional 2,481 applications totaling $261.2 million.

Out of the total$695.2 million of PPP loans that the Company had funded through July 19, 2021, approximately $471.4 million had been forgiven by the SBA under the terms of the program.

CAPITAL POSITION

Capital ratios at June 30, 2021 remained well above the regulatory minimums for well-capitalized institutions. The ratio of Total Capital to Risk-Weighted Assets was 14.62 percent at June 30, 2021, unchanged from March 31, 2021, and up from 14.39 percent at Dec. 31, 2020. The ratio of Tier 1 capital to average assets was 8.79 percent at June 30, 2021, compared to 8.89 percent at March 31, 2021, and 8.75 percent at Dec. 31, 2020.

During the second quarter of 2021, the Company repurchased 80,004 common shares at an aggregate cost of $6.5 million. These shares were purchased under the Company's previously announced 2020 Stock Repurchase Program. During the first six months of 2021, the Company repurchased 101,535 shares at an aggregate cost of $8.0 million.