Tompkins Financial Corporation (NYSE American: TMP)

Tompkins Financial Corporation announced net income attributable to common shareholders of $7.9 million, or $0.53 per diluted common share for the first quarter of 2020, compared to $21.0 million, or $1.37 per diluted common share, for the first quarter of 2019. Results for the first quarter of 2020 were negatively impacted by current economic stress resulting from the COVID-19 pandemic, which contributed to the $16.3 million provision for credit losses recognized during the quarter under the new current expected credit losses (CECL) accounting standard. Refer to "Asset Quality" section for further discussion of the impact on the Company's financial statements upon adoption of this new accounting guidance.

"These are clearly unprecedented times for our country and our communities. I am extremely proud of the exceptional way the Tompkins team has stepped up to the current environment by addressing the specific challenges of our clients and communities who are facing hardships due to the COVID-19 pandemic. Though these are unprecedented times, Tompkins enters this environment well prepared to face the many challenges and difficulties we are all dealing with as a result of the pandemic. Over recent years, we have invested significantly in digital technologies to improve capabilities that allow our customers to bank remotely. We have also invested significantly in our internal systems, which allowed nearly 100% of our non-retail employees to transition quickly and securely to remote working environments with limited disruption to our business. Furthermore, we entered 2020 with a strong financial position, coming off a year of record earnings per share in 2019, and with our 2019 Risk Based Capital Ratio at its highest level since 2014."

SELECTED HIGHLIGHTS FOR THE FIRST QUARTER:

Despite the decline in earnings from the prior year, there were several favorable trends noted during the first quarter of 2020, including:

  • Total loans of $4.9 billion were up 3.1% over March 31, 2019
  • Total deposits of $5.4 billion increased by 8.4% over March 31, 2019
  • Noninterest bearing deposits of $1.4 billion increased by 5.6% over March 31, 2019
  • Net interest margin was 3.44% for the first quarter of 2020, up from 3.34% for the first quarter of 2019, and 3.43% for the fourth quarter of 2019

NET INTEREST INCOME

Net interest margin was 3.44% for the first quarter of 2020, up compared to the 3.34% reported for the first quarter of 2019, and 3.43% for the trailing quarter ended December 31, 2019. The improved net interest margin year-over-year was largely driven by lower other borrowing balances and funding costs, primarily in other borrowings. Net interest income of $53.0 million for the first quarter of 2020 was up 2.0% compared to the first quarter of 2019.

NONINTEREST INCOME

Noninterest income represented 26.4% of total revenues in the first quarter of 2020, compared to 27.2% in the first quarter of 2019. Noninterest income of $19.0 million was down 2.3% compared to the same period in 2019. Noninterest income in the first quarter of 2019 included a one-time incentive payment of $500,000 (pre-tax) related to our card services business.

NONINTEREST EXPENSE

Noninterest expense was $45.7 million for the first quarter of 2020, which was up 3.5% from the same period in 2019, and in line with the fourth quarter of 2019. The increase in noninterest expense from the same period last year was mainly related to higher salaries and wages in the first quarter of 2020, largely reflective of merit increases awarded in 2019.

INCOME TAX EXPENSE

The Company's effective tax rate was 19.4% in the first quarter of 2020, compared to 21.0% for the same period in 2019.

ASSET QUALITY

Asset quality trends remained strong in the first quarter of 2020. Nonperforming assets represented 0.46% of total assets at March 31, 2020, down slightly from 0.47% at December 31, 2019. Nonperforming asset levels continue to be below the most recent Federal Reserve Board Peer Group Average1 of 0.56%.

Net charge-offs for the first quarter of 2020 were $1.2 million compared to $3.5 million reported in the first quarter of 2019. Net charge-offs of $1.2 million in the first quarter of 2020 was largely related to a single credit, while the first quarter of 2019 included a $3.1 million write-down of one credit, both in the commercial real estate portfolio.

The Company adopted Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“CECL”), effective January 1, 2020. The Company recorded a net increase to retained earnings of $1.7 million upon adoption of the new standard. The transition adjustment at January 1, 2020 included a $2.5 million decrease in the allowance for credit losses on loans, and a $0.4 million increase in the allowance for credit losses on off-balance sheet credit exposures, net of the corresponding $0.4 million decrease in deferred tax assets. The provision for credit losses for the first quarter of 2020 was $16.3 million, increasing the allowance for credit losses to $52.4 million at March 31, 2020. The increase in the first quarter of 2020 was not a direct result of specific credit risks currently identified in the loan portfolio; rather, the increase was largely a result of the impact of the current economic shutdown related to COVID-19 on economic forecasts and other model assumptions relied upon by management in determining the allowance.

The allowance for credit losses represented 1.06% of total loans and leases at March 31, 2020, compared to 0.81% at December 31, 2019, and 0.84% at March 31, 2019. The ratio of the allowance to total nonperforming loans and leases was 170.74% at March 31, 2020, compared to 126.90% at December 31, 2019, and 175.51% at March 31, 2019.

CAPITAL POSITION

Capital ratios remained well above the regulatory minimums for well capitalized institutions. The ratio of Tier 1 capital to average assets was 9.53% at March 31, 2020, down slightly from 9.61% at December 31, 2019, and improved from 9.24% at March 31, 2019. Consistent with the Company's capital planning practices, during the quarter ended March 31, 2020, the Company repurchased 71,288 shares of common stock at an average price of $78.83 per share. On March 19, 2020, following the announcement of the national emergency related to the COVID-19 pandemic, the Company suspended the purchase of shares under the Company’s share repurchase program. During the quarter ended December 31, 2019, the Company repurchased 35,821 shares of common stock at an average price of $80.25 per share. There were no shares repurchased during the first quarter of 2019.

IMPACT OF, AND RESPONSE TO, COVID-19 PANDEMIC

Economic Environment

The COVID-19 outbreak has led to government-mandated closures and stay at home orders across the nation, which have resulted in deteriorating economic conditions throughout the U.S. The various government orders issued in response to the pandemic are significantly impacting the U.S. labor market, consumer spending and business investments. During March 2020, in response to the deteriorating economic conditions, the Federal Reserve reduced the federal funds rate 1.5 percentage points, to .00 to .25 percent. The Federal Reserve also provided a pandemic-related stimulus package estimated at $4.0 trillion, in order to ease the stress on financial markets. In addition, the United States Congress passed the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), which would provide approximately $2.5 trillion of support to U.S. citizens and businesses affected by COVID-19.

Company Response

During the first quarter of 2020, the Company designated a Pandemic Planning Committee, made up of members of Senior Management, to oversee the Company’s response to COVID-19. The Company implemented a number of risk mitigation measures designed to protect our employees and customers, while maintaining services for our customers and community. These measures included restrictions on business travel and establishment of a remote work environment for all non-customer facing employees. The Company also implemented drive-up only or by appointment only operations across its branch network.

Currently, over 85% of our workforce is working remotely and we have imposed social distancing restrictions and provided premium pay for those employees who are required to be on premise to complete essential on-site functions. Due to the significant uncertainty of the current economic climate, and the Company's ongoing response to the pandemic and related shutdowns, annual pay increases for our Company's executive officers (which is comprised of our Senior Leadership Team members) have been deferred indefinitely.

As previously announced, Tompkins has initiated and participated in a number of credit initiatives to support employees and customers who have been impacted by the shutdown associated with the COVID-19 pandemic. For non-executive employees affected by COVID-19, the Company implemented a low interest loan program. The Company also implemented a payment deferral program to assist both consumer and business borrowers that may be experiencing financial hardship due to COVID-19. The current standard program allows for the deferral of loan payments for up to 90 days and customers will be able to request a payment deferral until the middle of May 2020. As of April 20, 2020, the Company had granted payment deferral requests for approximately 2,800 loans to individuals and businesses.

The Company is participating in the U.S. Small Business Administration (SBA) Paycheck Protection Program (“PPP”). This program provides borrower guarantees for lenders, as well as loan forgiveness incentives for borrowers that utilize the loan proceeds to cover employee compensation-related expenses and certain other eligible business operating costs, all in accordance with the rules and regulations established by the SBA. The Company began accepting applications for PPP loans on April 3, 2020, and has approved approximately 2,900 loans totaling about $500 million.

Mr. Romaine added, “We enter the second quarter of 2020 in a period of significant uncertainty surrounding the COVID-19 pandemic and related economic shut-downs. Our long held philosophy of maintaining Tompkins as a sustainable high performing company, supported with prudent risk management practices, is now more important than ever. We believe our healthy capital and liquidity positions will provide flexibility to respond to current challenges. The overall impact of COVID-19 on our consolidated results of operations for the three months ended March 31, 2020 was limited, with the exception of our provision for credit losses. We did see some slowdown toward the end of the first quarter in other areas of our business, including reduced transaction volumes in our card services business, a decrease in wealth management fees due to the decline in financial markets, and decreases in certain other fee related income. However, the extent to which the COVID-19 pandemic will affect our business, results of operation and financial condition going forward is difficult to predict and depends on numerous evolving factors.”

There is currently a great deal of uncertainty regarding the length of the COVID-19 pandemic and the efficacy of the extraordinary measures being put in place to address it. If efforts to contain COVID-19 are not as successful as anticipated, if restrictions on movement last into the third quarter or beyond, or if the federal government's economic stimulus packages are ineffective or delayed, the current economic downturn will likely be much longer and much more severe. The deeper the economic downturn is, and the longer it lasts, the more it will damage consumer fundamentals and sentiment. Similarly, an extended global recession due to COVID-19 would weaken the U.S. recovery and damage business fundamentals. As a result, the pandemic and its consequences, including responsive measures to manage it, have negatively impacted, and may continue to negatively impact, demand for and profitability of our products and services, the valuation of our assets, the ability of borrowers to satisfy obligations, and our ability to meet the needs of our customers, all of which could have a material adverse effect on our business and financial performance.

ABOUT TOMPKINS FINANCIAL CORPORATION

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

"Safe Harbor" Statement under the Private Securities Litigation Reform of 1995:

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Examples of forward-looking statements in this press release include, without limitation, those regarding the novel coronavirus (COVID-19) and our plans in response to the coronavirus. Forward-looking statements may be identified by use of such words as "may", "will", "estimate", "intend", "continue", "believe", "expect", "plan", or "anticipate", and other similar words. Forward-looking statements are made based on management’s expectations and beliefs concerning future events impacting the Company and are subject to certain uncertainties and factors relating to the Company’s operations and economic environment, all of which are difficult to predict and many of which are beyond the control of the Company, that could cause actual results of the Company to differ materially from those expressed and/or implied by forward-looking statements. The following factors, in addition to those listed as Risk Factors in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019, are among those that could cause actual results to differ materially from the forward-looking statements: changes in general economic, market and regulatory conditions; the severity and duration of the coronavirus outbreak and the impact of the outbreak (including the government’s response to the outbreak) on economic and financial markets, potential regulatory actions, and modifications to our operations, products, and services relating thereto; disruptions in our and our customers’ operations and loss of revenue due to pandemics, epidemics, widespread health emergencies, government-imposed travel/business restrictions, or outbreaks of infectious diseases such as the coronavirus, and the associated adverse impact on our financial position, liquidity, and our customers’ abilities to repay their obligations to us or willingness to obtain financial services products from the Company; the development of an interest rate environment that may adversely affect the Company’s interest rate spread, other income or cash flow anticipated from the Company’s operations, investment and/or lending activities; changes in laws and regulations affecting banks, bank holding companies and/or financial holding companies, such as the Dodd-Frank Act, Basel III and the Economic Growth, Regulatory Relief, and Consumer Protection Act; legislative and regulatory changes in response to COVID-19 with which we and our subsidiaries must comply, including the CARES Act and the rules and regulations promulgated thereunder, and state and local government mandates; technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; governmental and public policy changes, including environmental regulation; reliance on large customers; and financial resources in the amounts, at the times and on the terms required to support the Company’s future businesses. The Company does not undertake any obligation to update its forward-looking statements.

 

TOMPKINS FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION

(In thousands, except share and per share data)

As of

As of

ASSETS

03/31/2020

12/31/2019

 

 

 

Cash and noninterest bearing balances due from banks

$

110,998

 

$

136,010

 

Interest bearing balances due from banks

4,265

 

1,972

 

Cash and Cash Equivalents

115,263

 

137,982

 

 

 

 

Available-for-sale securities, at fair value (amortized cost of $1,318,416 at March 31, 2020 and $1,293,239 at December 31, 2019)

1,352,637

 

1,298,587

 

Equity securities, at fair value (amortized cost $930 at March 31, 2020 and $915 at December 31, 2019)

930

 

915

 

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

4,724,277

 

4,697,401

 

Acquired loans

213,545

 

220,149

 

Less: Allowance for credit losses

52,404

 

39,892

 

Net Loans and Leases

4,885,418

 

4,877,658

 

 

 

 

Federal Home Loan Bank and other stock

24,212

 

33,695

 

Bank premises and equipment, net

93,604

 

94,355

 

Corporate owned life insurance

82,872

 

82,961

 

Goodwill

92,447

 

92,447

 

Other intangible assets, net

5,847

 

6,223

 

Accrued interest and other assets

89,884

 

100,800

 

Total Assets

$

6,743,114

 

$

6,725,623

 

LIABILITIES

 

 

Deposits:

 

 

Interest bearing:

 

 

Checking, savings and money market

3,273,813

 

3,080,686

 

Time

708,933

 

675,014

 

Noninterest bearing

1,426,617

 

1,457,221

 

Total Deposits

5,409,363

 

5,212,921

 

 

 

 

Federal funds purchased and securities sold under agreements to repurchase

68,993

 

60,346

 

Other borrowings

457,983

 

658,100

 

Trust preferred debentures

17,078

 

17,035

 

Other liabilities

107,100

 

114,167

 

Total Liabilities

$

6,060,517

 

$

6,062,569

 

EQUITY

 

 

Tompkins Financial Corporation shareholders' equity:

 

 

Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued: 14,943,857 at March 31, 2020; and 15,014,499 at December 31, 2019

1,494

 

1,501

 

Additional paid-in capital

333,662

 

338,507

 

Retained earnings

372,344

 

370,477

 

Accumulated other comprehensive loss

(21,271

)

(43,564

)

Treasury stock, at cost – 117,940 shares at March 31, 2020, and 123,956 shares at December 31, 2019

(5,076

)

(5,279

)

Total Tompkins Financial Corporation Shareholders’ Equity

681,153

 

661,642

 

 

 

 

Noncontrolling interests

1,444

 

1,412

 

Total Equity

$

682,597

 

$

663,054

 

Total Liabilities and Equity

$

6,743,114

 

$

6,725,623

 

 

 

 

 

TOMPKINS FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

Three Months Ended

 

03/31/2020

03/31/2019

INTEREST AND DIVIDEND INCOME

 

 

Loans

$

55,614

 

$

55,324

 

Due from banks

6

 

10

 

Available-for-sale securities

7,144

 

7,858

 

Held-to-maturity securities

0

 

858

 

Federal Home Loan Bank and other stock

435

 

878

 

Total Interest and Dividend Income

63,199

 

64,928

 

INTEREST EXPENSE

 

 

Time certificates of deposits of $250,000 or more

843

 

586

 

Other deposits

6,356

 

6,011

 

Federal funds purchased and securities sold under agreements to repurchase

36

 

44

 

Trust preferred debentures

289

 

329

 

Other borrowings

2,706

 

6,044

 

Total Interest Expense

10,230

 

13,014

 

Net Interest Income

52,969

 

51,914

 

Less: Provision for credit loss expense

16,294

 

445

 

Net Interest Income After Provision for Credit Loss Expense

36,675

 

51,469

 

NONINTEREST INCOME

 

 

Insurance commissions and fees

8,045

 

8,045

 

Investment services income

4,202

 

4,084

 

Service charges on deposit accounts

1,983

 

1,998

 

Card services income

2,183

 

2,790

 

Other income

2,104

 

2,478

 

Net gain on securities transactions

443

 

12

 

Total Noninterest Income

18,960

 

19,407

 

NONINTEREST EXPENSE

 

 

Salaries and wages

22,494

 

21,101

 

Other employee benefits

5,684

 

5,611

 

Net occupancy expense of premises

3,328

 

3,601

 

Furniture and fixture expense

1,985

 

1,979

 

Amortization of intangible assets

374

 

412

 

Other operating expense

11,875

 

11,505

 

Total Noninterest Expenses

45,740

 

44,209

 

Income Before Income Tax Expense

9,895

 

26,667

 

Income Tax Expense

1,909

 

5,595

 

Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation

7,986

 

21,072

 

Less: Net Income Attributable to Noncontrolling Interests

37

 

32

 

Net Income Attributable to Tompkins Financial Corporation

$

7,949

 

$

21,040

 

Basic Earnings Per Share

$

0.53

 

$

1.37

 

Diluted Earnings Per Share

$

0.53

 

$

1.37

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

Quarter Ended

 

 

 

March 31, 2020

March 31, 2019

 

 

 

 

Average

 

 

 

Average

 

 

 

 

 

 

Balance

 

Average

 

Balance

 

Average

(Dollar amounts in thousands)

 

Quarter

Ended

Interest

Yield/

Rate

 

Year

Ended

Interest

Yield/

Rate

ASSETS

 

 

 

 

 

 

 

 

Interest-earning assets

 

 

 

 

 

 

 

 

 

Interest-bearing balances due from banks

$

1,525

 

$

6

1.58

%

$

2,334

$

10

1.74

%

 

Securities (2)

 

 

 

 

 

 

 

 

 

 

U.S. Government securities

 

1,194,754

 

6,576

2.21

%

 

1,409,305

8,172

2.35

%

 

 

State and municipal (3)

 

97,480

 

666

2.75

%

 

94,609

626

2.68

%

 

 

Other securities (3)

 

3,422

 

36

4.23

%

 

3,415

41

4.87

%

 

 

Total securities

 

1,295,656

 

7,278

2.26

%

 

1,507,329

8,839

2.38

%

 

FHLBNY and other stock

 

26,558

 

435

6.59

%

 

48,055

878

7.41

%

 

 

 

 

 

 

 

 

 

 

 

 

Total loans and leases, net of unearned income (3)(4)

 

4,914,034

 

55,906

4.58

%

 

4,792,607

55,614

4.71

%

 

Total interest-earning assets

 

6,237,773

 

63,625

4.10

%

 

6,350,325

65,341

4.17

%

 

 

 

 

 

 

 

 

 

 

 

Other assets

 

435,175

 

 

 

 

393,035

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

6,672,948

 

 

 

$

6,743,360

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES & EQUITY

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

 

 

 

 

 

 

 

 

Interest bearing checking, savings & money market

$

3,212,543

 

4,366

0.55

%

$

2,940,416

4,470

0.62

%

 

 

Time deposits

 

680,248

 

2,833

1.68

%

 

645,144

2,127

1.34

%

 

 

Total interest-bearing deposits

 

3,892,791

 

7,199

0.74

%

 

3,585,560

6,597

0.75

%

 

 

 

 

 

 

 

 

 

 

 

Federal funds purchased & securities sold under

 

 

 

 

 

 

 

 

 

 

agreements to repurchase

 

63,528

 

36

0.23

%

 

72,664

44

0.25

%

Other borrowings

 

498,428

 

2,706

2.18

%

 

993,773

6,044

2.47

%

Trust preferred debentures

 

17,050

 

289

6.82

%

 

16,878

329

7.90

%

 

Total interest-bearing liabilities

 

4,471,797

 

10,230

0.92

%

 

4,668,875

13,014

1.13

%

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing deposits

 

1,409,661

 

 

 

 

1,338,623

 

 

Accrued expenses and other liabilities

 

112,673

 

 

 

 

105,131

 

 

 

Total liabilities

 

5,994,131

 

 

 

 

6,112,629

 

 

 

 

 

 

 

 

 

 

 

 

 

Tompkins Financial Corporation Shareholders’ equity

 

677,394

 

 

 

 

629,305

 

 

Noncontrolling interest

 

1,423

 

 

 

 

1,426

 

 

 

Total equity

 

678,817

 

 

 

 

630,731

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and equity

$

6,672,948

 

 

 

$

6,743,360

 

 

Interest rate spread

 

 

 

3.18

%

 

 

 

3.04

%

 

Net interest income/margin on earning assets

 

 

53,395

3.44

%

 

 

52,327

3.34

%

 

 

 

 

 

 

 

 

 

 

 

Tax equivalent adjustments

 

 

(426)

 

 

 

(413)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income per consolidated financial statements

 

 

$

52,969

 

 

 

$

51,914

 

 

Tompkins Financial Corporation - Summary Financial Data (Unaudited)

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter-Ended

Year-Ended

Period End Balance Sheet

Mar-20

Dec-19

Sep-19

Jun-19

Mar-19

Dec-19

Securities

$

1,353,567

 

$

1,299,502

 

$

1,282,026

 

$

1,330,719

 

$

1,484,151

 

$

1,299,502

 

Total Loans

 

4,937,822

 

 

4,917,550

 

 

4,857,073

 

 

4,855,802

 

 

4,789,700

 

 

4,917,550

 

Allowance for credit losses

 

52,404

 

 

39,892

 

 

41,371

 

 

40,790

 

 

40,328

 

 

39,892

 

Total assets

 

6,743,114

 

 

6,725,623

 

 

6,627,982

 

 

6,654,390

 

 

6,738,719

 

 

6,725,623

 

Total deposits

 

5,409,363

 

 

5,212,921

 

 

5,369,990

 

 

4,988,897

 

 

4,989,925

 

 

5,212,921

 

Federal funds purchased and securities sold under agreements to repurchase

 

68,993

 

 

60,346

 

 

50,541

 

 

63,978

 

 

66,918

 

 

60,346

 

Other borrowings

 

457,983

 

 

658,100

 

 

429,000

 

 

824,562

 

 

923,427

 

 

658,100

 

Trust preferred debentures

 

17,078

 

 

17,035

 

 

16,992

 

 

16,949

 

 

16,906

 

 

17,035

 

Total common equity

 

681,153

 

 

661,642

 

 

658,358

 

 

656,201

 

 

645,823

 

 

661,642

 

Total equity

 

682,597

 

 

663,054

 

 

659,865

 

 

657,677

 

 

647,267

 

 

663,054

 

Average Balance Sheet

 

 

 

 

 

 

 

 

 

 

 

 

Average earning assets

$

6,237,773

 

$

6,188,442

 

$

6,203,078

 

$

6,337,983

 

$

6,350,325

 

$

6,268,440

 

Average assets

 

6,672,948

 

 

6,613,202

 

 

6,621,412

 

 

6,742,409

 

 

6,743,360

 

 

6,679,578

 

Average interest-bearing liabilities

 

4,471,797

 

 

4,374,572

 

 

4,415,079

 

 

4,638,249

 

 

4,668,875

 

 

4,523,088

 

Average equity

 

678,817

 

 

664,441

 

 

659,650

 

 

650,079

 

 

630,731

 

 

651,341

 

Share data

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding (basic)

14,718,948

 

14,726,023

 

14,827,114

 

15,019,710

 

15,060,175

 

14,907,057

 

Weighted average shares outstanding (diluted)

14,774,269

 

14,790,503

 

14,887,626

 

15,085,945

 

15,136,523

 

14,973,951

 

Period-end shares outstanding

14,907,947

 

14,978,589

 

14,975,750

 

15,160,719

 

15,314,078

 

14,978,589

 

Common equity book value per share

$

45.69

 

$

44.17

 

$

43.96

 

$

43.28

 

$

42.17

 

$

44.17

 

Tangible book value per share (Non-GAAP)**

$

39.15

 

$

37.64

 

$

37.40

 

$

36.77

 

$

35.73

 

$

37.64

 

** See "Non-GAAP measures" below for a discussion of non-GAAP financial measures and a reconciliation of non-GAAP financial measures to the most directly comparable financial measures presented in accordance with GAAP.

Income Statement

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

$

52,969

 

$

53,240

 

$

53,156

 

$

52,318

 

$

51,914

 

$

210,628

 

Provision for credit loss expense

 

16,294

 

 

(1,000

)

 

1,320

 

 

601

 

 

445

 

 

1,366

 

Noninterest income

 

18,960

 

 

17,972

 

 

19,534

 

 

18,520

 

 

19,407

 

 

75,433

 

Noninterest expense

 

45,740

 

 

45,900

 

 

45,655

 

 

46,070

 

 

44,209

 

 

181,834

 

Income tax expense

 

1,909

 

 

5,200

 

 

5,478

 

 

4,743

 

 

5,595

 

 

21,016

 

Net income attributable to Tompkins Financial Corporation

 

7,949

 

 

21,080

 

 

20,206

 

 

19,392

 

 

21,040

 

 

81,718

 

Noncontrolling interests

 

37

 

 

32

 

 

31

 

 

32

 

 

32

 

 

127

 

Basic earnings per share (5)

$

0.53

 

$

1.41

 

$

1.34

 

$

1.27

 

$

1.37

 

$

5.39

 

Diluted earnings per share (5)

$

0.53

 

$

1.40

 

$

1.34

 

$

1.27

 

$

1.37

 

$

5.37

 

Nonperforming Assets

 

 

 

 

 

 

 

 

 

 

 

 

Originated nonaccrual loans and leases

$

21,472

 

$

22,485

 

$

21,404

 

$

16,543

 

$

15,165

 

$

22,485

 

Acquired nonaccrual loans and leases

 

2,084

 

 

1,796

 

 

2,164

 

 

2,363

 

 

2,579

 

 

1,796

 

Originated loans and leases 90 days past due and accruing

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

Troubled debt restructuring not included above

 

7,137

 

 

7,154

 

 

6,528

 

 

4,889

 

 

5,234

 

 

7,154

 

Total nonperforming loans and leases

 

30,693

 

 

31,435

 

 

30,096

 

 

23,795

 

 

22,978

 

 

31,435

 

OREO

 

466

 

 

428

 

 

888

 

 

2,229

 

 

1,595

 

 

428

 

Total nonperforming assets

$

31,159

 

$

31,863

 

$

30,984

 

$

26,024

 

$

24,573

 

$

31,863

 

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

 

Quarter-Ended

Year-Ended

Delinquency - Originated loan and lease portfolio

 

Mar-20

 

Dec-19

 

Sep-19

 

Jun-19

 

Mar-19

 

Dec-19

Loans and leases 30-89 days past due and

 

 

 

 

 

 

 

 

 

 

 

 

accruing

$

8,953

 

$

3,559

 

$

3,287

 

$

3,883

 

$

4,193

 

$

3,559

 

Loans and leases 90 days past due and accruing

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

Total originated loans and leases past due and accruing

 

8,953

 

 

3,559

 

 

3,287

 

 

3,883

 

 

4,193

 

 

3,559

 

Delinquency - Acquired loan and lease portfolio

Loans 30-89 days past due and accruing (6)

$

375

 

$

165

 

$

232

 

$

493

 

$

474

 

$

165

 

Loans 90 days or more past due

 

0

 

 

794

 

 

1,219

 

 

1,229

 

 

1,218

 

 

794

 

Total acquired loans and leases past due and accruing

 

375

 

 

959

 

 

1,451

 

 

1,722

 

 

1,692

 

 

959

 

Total loans and leases past due and accruing

$

9,328

 

$

4,518

 

$

4,738

 

$

5,605

 

$

5,885

 

$

4,518

 

Allowance for Credit Losses

Balance at beginning of period

$

39,892

 

$

41,371

 

$

40,790

 

$

40,328

 

$

43,410

 

$

43,410

 

Impact of adopting ASC 326

 

(2,534

)

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

Provision (credit) for credit losses

 

16,294

 

 

(1,000

)

 

1,320

 

 

601

 

 

445

 

 

1,366

 

Net loan and lease charge-offs

 

1,248

 

 

479

 

 

739

 

 

139

 

 

3,527

 

 

4,884

 

Allowance for credit losses at end of period

$

52,404

 

$

39,892

 

$

41,371

 

$

40,790

 

$

40,328

 

$

39,892

 

Loan Classification - Originated Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

Special Mention

$

37,121

 

$

29,800

 

$

41,314

 

$

36,619

 

$

33,689

 

$

29,800

 

Substandard

 

51,951

 

 

58,092

 

 

58,873

 

 

44,770

 

 

35,895

 

 

58,092

 

Loan Classification - Acquired Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

Special Mention

 

0

 

 

0

 

 

261

 

 

265

 

 

270

 

 

0

 

Substandard

 

943

 

 

2,407

 

 

2,809

 

 

2,857

 

 

2,830

 

 

2,407

 

Loan Classifications - Total Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

Special Mention

 

37,121

 

 

29,800

 

 

41,575

 

 

36,884

 

 

33,959

 

 

29,800

 

Substandard

 

52,894

 

 

60,499

 

 

61,682

 

 

47,627

 

 

38,725

 

 

60,499

 

Ratio Analysis

Credit Quality

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans and leases/total loans and leases (6)

 

0.62

%

 

0.64

%

 

0.62

%

 

0.49

%

 

0.48

%

 

0.64

%

Nonperforming assets/total assets

 

0.46

%

 

0.47

%

 

0.47

%

 

0.39

%

 

0.36

%

 

0.47

%

Allowance for credit losses/total loans and leases

 

1.06

%

 

0.81

%

 

0.85

%

 

0.84

%

 

0.84

%

 

0.81

%

Allowance/nonperforming loans and leases

 

170.74

%

 

126.90

%

 

137.46

%

 

171.42

%

 

175.51

%

 

126.90

%

Net loan and lease losses annualized/total average loans and leases

 

0.10

%

 

0.04

%

 

0.06

%

 

0.01

%

 

0.30

%

 

0.10

%

Capital Adequacy

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 Capital (to average assets)

 

9.53

%

 

9.61

%

 

9.43

%

 

9.25

%

 

9.24

%

 

9.61

%

Common Equity Tier 1 Capital (to risk-weighted assets)

 

12.20

%

 

12.33

%

 

12.14

%

 

12.13

%

 

12.19

%

 

12.33

%

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

 

Quarter Ended

Year-Ended

Profitability (period-end)

 

Mar-20

 

Dec-19

 

Sep-19

 

Jun-19

 

Mar-19

 

Dec-19

Return on average assets *

 

0.48

%

 

1.26

%

 

1.21

%

 

1.15

%

 

1.27

%

 

1.22

%

Return on average equity *

 

4.71

%

 

12.59

%

 

12.15

%

 

11.96

%

 

13.53

%

 

12.55

%

Net interest margin (TE) *

 

3.44

%

 

3.44

%

 

3.43

%

 

3.34

%

 

3.34

%

 

3.39

%

* Quarterly ratios have been annualized

 

 

 

 

 

 

 

 

 

 

 

 

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 Common Equity Book Value Per Share (GAAP) to Tangible Book Value Per Share (non-GAAP)

Total common equity

$

681,153

 

$

661,642

 

$

658,358

 

$

656,201

 

$

645,823

 

$

661,642

 

Less: Goodwill and intangibles (7)

 

97,481

 

 

97,855

 

 

98,277

 

 

98,698

 

 

98,694

 

 

97,855

 

Tangible common equity (Non-GAAP)

 

583,672

 

 

563,787

 

 

560,081

 

 

557,503

 

 

547,129

 

 

563,787

 

Ending shares outstanding

14,907,947

 

14,978,589

 

14,975,750

 

15,160,719

 

15,314,078

 

14,978,589

 

Tangible book value per share (Non-GAAP)

$

39.15

 

$

37.64

 

$

37.40

 

$

36.77

 

$

35.73

 

$

37.64

 

(1) Federal Reserve peer ratio as of December 31, 2019, the most recent data available, includes banks and bank holding companies with consolidated assets between $3 billion and $10 billion.

(2) Average balances and yields on available-for-sale securities are based on historical amortized cost.

(3) Interest income includes the tax effects of taxable-equivalent basis.

(4) Nonaccrual loans are included in the average asset totals presented above. Payments received on nonaccrual loans have been recognized as disclosed in Note 1 of the Company's consolidated financial statements included in Part I of the Company's annual report on Form 10-K for the fiscal year ended December 31, 2019.

(5) Earnings per share year-to-date may not equal the sum of the quarterly earnings per share as a result of rounding of average shares

(6) Certain acquired loans and leases that are past due are not on nonaccrual and are not included in nonperforming loans. The risk of credit loss on these loans has been considered by virtue of the Company's estimate of acquisition-date fair value and these loans are considered accruing as the Company primarily recognizes interest income through accretion of the difference between the carrying value of these loans and their expected cash flows.

(7) "Goodwill and intangibles" as shown in the above tables, equal total intangible assets less mortgage servicing rights.