Tompkins Financial Corporation : Reports Record Full Year and Fourth Quarter Earnings

Tompkins Financial Corporation (NYSE American: TMP)

Tompkins Financial Corporation reported record 2018 full year diluted earnings per share of $5.35, an increase of 56.0% compared to the $3.43 per share reported for the period ending December 31, 2017. For the fourth quarter of 2018, diluted earnings per share of $1.23 were up from the $0.16 per share reported in the same quarter last year.

As more fully disclosed in the Non-GAAP disclosure tables included in this press release, it is helpful to view comparisons to prior periods on an adjusted basis to exclude the impact of certain significant non-recurring items. Most notably, earnings per share and net income in the fourth quarter and year-to-date periods of 2017 were impacted by a one-time non-cash write-down of net deferred tax assets in the amount of $14.9 million as a result of the Tax Cuts and Jobs Act of 2017. On an adjusted basis, year-to-date diluted earnings per share for 2018 would have been $5.33, an increase of 20.6% over the adjusted diluted earnings per share of $4.42 reported for the year ending December 31, 2017. For the fourth quarter of 2018, adjusted diluted earnings per share of $1.23 reflected an increase of 7.0% over the $1.15 adjusted diluted earnings per share reported in same quarter last year. Refer to Non-GAAP Disclosure tables for additional details.

Due to changes in the Federal tax rates between periods, it is also helpful to view current period and prior period earnings performance on a pre-tax basis. Income before tax expense was $104.2 million for the year ended December 31, 2018, and $23.8 million in the fourth quarter of 2018, reflecting an increase of 9.4% and 13.5%, respectively, over the same periods in 2017.

President and CEO, Stephen S. Romaine said “We are pleased to once again report record earnings for both the full year and quarterly periods. The results are especially rewarding in today’s environment of uncertain economic conditions. During the quarter, our net interest margin remained relatively stable as growth in average noninterest bearing deposits helped soften the impact of rising market interest rates. Our diversified revenue sources have served us well in volatile markets, as fees from insurance, wealth management, and banking related services provide a revenue mix that is less dependent on interest rates. During 2018, each of these fee based business lines reflected growth over the prior year."

SELECTED HIGHLIGHTS FOR YEAR AND FOURTH QUARTER:

• Return on equity was 13.93% for the year ended December 31, 2018, compared to 9.09% for the full year ended December 31, 2017.
• Net interest income for the fourth quarter of 2018 increased over the third quarter of 2018, which represents the 15^th consecutive quarterly increase in net interest income.
• Net interest income for the full year was up 5.2% over 2017.
• Total loans of $4.8 billion at December 31, 2018, were up 3.5% over December 31, 2017, while total deposits of $4.9 billion were up 1.1% from the prior year end.
• Nonperforming assets remain near historically low levels and compare favorably to our industry peers, with nonperforming assets representing 0.42% of total assets at year-end 2018, compared to 0.38% at year-end 2017.

NET INTEREST INCOME

Net interest income of $53.2 million for the fourth quarter of 2018 was up 2.4% over the same period in 2017. For the full year, net interest income was $211.8 million, up $10.5 million, or 5.2% from the same period in 2017.

Growth in net interest income for the year ended December 31, 2018, was largely driven by $356.4 million of growth in average loans during the year, an increase of 8.1% over the prior period. Average deposits for the year ended December 31, 2018, increased $89.7 million, or 1.9% compared to the same period in 2017. Included in the growth of average deposits during 2018 was a $103.5 million increase in average noninterest bearing deposits, up 8.1% from the prior year average.

Net interest margin for 2018 was 3.37%, down slightly from the 3.41% reported for 2017. The decline in margin during the year was largely due to increases in market interest rates, which has resulted in funding costs rising at a faster pace than asset yields.

NONINTEREST INCOME

Noninterest income represented 26.8% of total revenues in 2018, compared to 25.6% in 2017. For the full year, noninterest income of $77.4 million was up $8.2 million, or 11.9%, when compared to 2017. Noninterest income was $19.9 million for the fourth quarter of 2018, and was up $2.5 million or 14.7% compared to the same period in 2017. Fee income business related to investment services, service charges on deposit accounts, and card services income all contributed to the increase over the fourth quarter of 2017. Declines in the stock market during the fourth quarter of 2018 resulted in lower investment services fees tied to assets under management, though the impact was offset by higher than normal fees associated with trust and estate activities.

Other income in the fourth quarter of 2018 included $2.5 million related to the collection of fees and nonaccrual interest for a credit that was charged off in 2010. Other income for the full year included a $2.9 million gain on the sale of two properties. The sale of these properties was related to the move of the Company’s headquarters in the second quarter of 2018.

NONINTEREST EXPENSE

Noninterest expense was $47.2 million for the fourth quarter of 2018, up $0.9 million, or 2.0%, over the fourth quarter of 2017. For the full year of 2018, noninterest expense was $181.1 million, up $10.0 million, or 5.8%, from the same period in 2017. Noninterest expense increases for both the full year and fourth quarter of 2018 included normal annual increases in salaries and wages. The higher noninterest expense in 2018 included lease write-downs of $2.0 million in the second quarter and $514,000 in the third quarter related to leases on recently vacated space. Results for the quarter and full year periods also include an increase of $1.5 million and $2.8 million, respectively, in professional fees, primarily related to investments in strengthening the Company’s compliance and information security infrastructure.

INCOME TAX EXPENSE

The Company's effective tax rate was 20.9% for the year ended December 31, 2018, compared to 44.8% for the same period in 2017. The decrease is a direct result of the $14.9 million non-cash write-down of net deferred tax assets recorded in the fourth quarter of 2017, which was caused by the decline in the Federal statutory tax rate from 35% in 2017, to 21% in 2018 as a result of the Tax Cuts and Jobs Act of 2017.

ASSET QUALITY

Asset quality trends remained strong in the fourth quarter of 2018. Nonperforming assets represented 0.42% of total assets at December 31, 2018, compared to 0.38% at December 31, 2017. Nonperforming asset levels continue to compare favorably to the most recent Federal Reserve Board Peer Group Average¹ of 0.61%.

Provision for loan and lease losses was $2.1 million for the fourth quarter of 2018, compared to $2.0 million for the fourth quarter of 2017. Net charge-offs for the fourth quarter of 2018 were $6,000 compared to net charge-offs of $281,000 in the fourth quarter of 2017.

The Company’s allowance for originated loan and lease losses totaled $43.3 million at December 31, 2018, and represented 0.95% of total originated loans and leases at December 31, 2018. At December 31, 2017, the allowance was $39.7 million and represented 0.91% of total originated loans and leases. Contributing to the $2.1 million increase in the allowance over the level reported at September 30, 2018, was an impairment reserve related to a single credit that was downgraded during the fourth quarter of 2018. The total allowance represented 163.25% of total nonperforming loans and leases at December 31, 2018, compared to 172.84% at December 31, 2017.

CAPITAL POSITION

Capital ratios remain well above the regulatory well capitalized minimums. The ratio of tangible common equity to tangible assets was 7.81% at December 31, 2018, improved from the 7.49% reported at September 30, 2018, and the 7.24% reported at December 31, 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		12/31/2018				12/31/2017
Cash and noninterest bearing balances due from banks		$	78,524			$	77,688
Interest bearing balances due from banks		1,865				6,615
Cash and Cash Equivalents		80,389				84,303
Available-for-sale securities, at fair value (amortized cost of $1,363,902 at December 31, 2018 and $1,408,996 at December 31, 2017)		1,332,658				1,391,862
Held-to-maturity securities, at amortized cost (fair value of $139,377 at December 31, 2018 and $140,315 at December 31, 2017)		140,579				139,216
Equity securities, at fair value (amortized cost $1,000 at December 31, 2018 and $1,000 at December 31, 2017)		887				913
Originated loans and leases, net of unearned income and deferred costs and fees (2)		4,568,741				4,358,543
Acquired loans (3)		265,198				310,577
Less: Allowance for loan and lease losses		43,410				39,771
Net Loans and Leases		4,790,529				4,629,349
Federal Home Loan Bank and other stock		52,262				50,498
Bank premises and equipment, net		97,202				86,995
Corporate owned life insurance		81,928				80,106
Goodwill		92,283				92,291
Other intangible assets, net		7,628				9,263
Accrued interest and other assets		82,091				83,494
Total Assets		$	6,758,436			$	6,648,290
LIABILITIES
Deposits:
Interest bearing:
Checking, savings and money market		2,853,190				2,651,632
Time		637,295				748,250
Noninterest bearing		1,398,474				1,437,925
Total Deposits		4,888,959				4,837,807
Federal funds purchased and securities sold under agreements to repurchase		81,842				75,177
Other borrowings		1,076,075				1,071,742
Trust preferred debentures		16,863				16,691
Other liabilities		73,826				70,671
Total Liabilities		$	6,137,565			$	6,072,088
EQUITY
Tompkins Financial Corporation shareholders' equity:
Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued: 15,363,255 at December 31, 2018; and 15,316,492 at December 31, 2017		1,535				1,530
Additional paid-in capital		366,595				364,031
Retained earnings		319,396				265,007
Accumulated other comprehensive loss		(63,165		)		(51,296		)
Treasury stock, at cost – 137,195 shares at December 31,2018, and 135,773 shares at December 31, 2017		(4,902		)		(4,492		)
Total Tompkins Financial Corporation Shareholders’ Equity		619,459				574,780
Noncontrolling interests		1,412				1,422
Total Equity		$	620,871			$	576,202
Total Liabilities and Equity		$	6,758,436			$	6,648,290

TOMPKINS FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
(In thousands, except per share data) (Unaudited)		Three Months Ended								Twelve Months Ended
		12/31/2018				12/31/2017				12/31/2018				12/31/2017
INTEREST AND DIVIDEND INCOME
Loans		$	55,951			$	50,153			$	214,370			$	191,410
Due from banks		9				22				31				37
Available-for-sale securities		7,556				7,337				30,377				29,721
Held-to-maturity securities		865				862				3,437				3,475
Federal Home Loan Bank and other stock		944				655				3,377				2,121
Total Interest and Dividend Income		65,325				59,029				251,592				226,764
INTEREST EXPENSE
Time certificates of deposits of $250,000 or more		624				516				1,712				1,880
Other deposits		5,184				2,745				14,883				10,253
Federal funds purchased and securities sold under agreements to
repurchase		37				40				152				235
Trust preferred debentures		323				270				1,227				1,158
Other borrowings		5,921				3,489				21,818				11,934
Total Interest Expense		12,089				7,060				39,792				25,460
Net Interest Income		53,236				51,969				211,800				201,304
Less: Provision for loan and lease losses		2,058				2,014				3,942				4,161
Net Interest Income After Provision for Loan and Lease Losses		51,178				49,955				207,858				197,143
NONINTEREST INCOME
Insurance commissions and fees		6,685				6,886				29,369				28,778
Investment services income		4,923				4,121				17,288				15,665
Service charges on deposit accounts		2,135				2,100				8,435				8,437
Card services income		2,484				2,225				9,693				9,100
Other income		4,387				1,964				13,130				7,631
(Loss) gain on securities transactions		(756		)		16				(466		)		(407		)
Total Noninterest Income		19,858				17,312				77,449				69,204
NONINTEREST EXPENSE
Salaries and wages		21,221				20,722				85,625				81,590
Other employee benefits		6,231				5,675				22,090				21,870
Net occupancy expense of premises		3,436				3,249				13,309				13,214
Furniture and fixture expense		1,890				2,209				7,351				7,028
FDIC insurance		535				752				2,618				2,527
Amortization of intangible assets		437				473				1,771				1,932
Other operating expense		13,478				13,206				48,303				42,944
Total Noninterest Expenses		47,228				46,286				181,067				171,105
Income Before Income Tax Expense		23,808				20,981				104,240				95,242
Income Tax Expense		4,866				18,493				21,805				42,620
Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation		18,942				2,488				82,435				52,622
Less: Net Income Attributable to Noncontrolling Interests		31				31				127				128
Net Income Attributable to Tompkins Financial Corporation		$	18,911			$	2,457			$	82,308			$	52,494
Basic Earnings Per Share		$	1.24			$	0.16			$	5.39			$	3.46
Diluted Earnings Per Share		$	1.23			$	0.16			$	5.35			$	3.43

Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)
		Quarter Ended												YTD Period Ended												YTD Period Ended
			December 31, 2018												December 31, 2018												December 31, 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		$	2,193			$	9				1.63	%		$	2,139			$	31				1.45	%		$	4,599			$	37				0.80	%
Securities (4)
U.S. Government securities			1,404,813			7,883					2.23	%			1,429,875			31,645					2.21	%			1,471,717			31,006					2.11	%
State and municipal (5)			95,809			622					2.58	%			97,116			2,520					2.59	%			100,595			3,393					3.37	%
Other securities (5)			3,414			40					4.65	%			3,491			153					4.38	%			3,597			129					3.59	%
Total securities			1,504,036			8,545					2.25	%			1,530,482			34,318					2.24	%			1,575,909			34,528					2.19	%
FHLBNY and FRB stock			48,888			944					7.66	%			51,815			3,377					6.52	%			42,465			2,121					4.99	%
Total loans and leases, net of unearned income (5)(6)			4,808,996			56,253					4.64	%			4,757,583			215,648					4.53	%			4,401,205			194,433					4.42	%
Total interest-earning assets			6,364,113			65,751					4.10	%			6,342,019			253,374					4.00	%			6,024,178			231,119					3.84	%
Other assets			346,831												350,659												365,326
Total assets		$	6,710,944											$	6,692,678											$	6,389,504
LIABILITIES & EQUITY
Deposits
Interest-bearing deposits
Interest bearing checking, savings & money market		$	2,872,090			3,728					0.51	%		$	2,822,747			9,847					0.35	%		$	2,674,204			5,141					0.19	%
Time deposits			643,720			2,080					1.28	%			664,788			6,748					1.02	%			827,181			6,992					0.85	%
Total interest-bearing deposits			3,515,810			5,808					0.66	%			3,487,535			16,595					0.48	%			3,501,385			12,133					0.35	%
Federal funds purchased & securities sold under
agreements to repurchase			65,004			37					0.23	%			63,472			152					0.24	%			64,888			235					0.36	%
Other borrowings			1,008,887			5,921					2.33	%			1,086,847			21,818					2.01	%			882,235			11,934					1.35	%
Trust preferred debentures			16,835			323					7.61	%			16,771			1,227					7.32	%			18,338			1,158					6.31	%
Total interest-bearing liabilities			4,606,536			12,089					1.04	%			4,654,625			39,792					0.85	%			4,466,846			25,460					0.57	%
Non-interest bearing deposits			1,431,009												1,382,550												1,279,027
Accrued expenses and other liabilities			67,161												64,559												66,185
Total liabilities			6,104,706												6,101,734												5,812,058
Tompkins Financial Corporation Shareholders’ equity			604,740												589,475												575,958
Noncontrolling interest			1,498												1,469												1,488
Total equity			606,238												590,944												577,446
Total liabilities and equity		$	6,710,944											$	6,692,678											$	6,389,504
Interest rate spread											3.06	%											3.14	%											3.27	%
Net interest income/margin on earning assets						53,662					3.34	%						213,582					3.37	%						205,659					3.41	%
Tax equivalent adjustments						(426			)									(1,782			)									(4,355			)
Net interest income per consolidated financial statements						$	53,236											$	211,800											$	201,304

Tompkins Financial Corporation - Summary Financial Data (Unaudited)
(In thousands, except per share data)
		Quarter-Ended															Year-Ended
Period End Balance Sheet		Dec-18			Sep-18			Jun-18			Mar-18			Dec-17			Dec-18
Securities		$	1,474,124		$	1,452,788		$	1,483,991		$	1,510,795		$	1,531,991		$	1,474,124
Originated loans and leases, net of unearned income and deferred costs and fees (2)			4,568,741			4,531,241			4,507,006			4,408,081			4,358,543			4,568,741
Acquired loans and leases (3)			265,198			271,468			284,187			296,765			310,577			265,198
Allowance for loan and lease losses			43,410			41,358			41,225			40,211			39,771			43,410
Total assets			6,758,436			6,746,960			6,745,800			6,648,128			6,648,290			6,758,436
Total deposits			4,888,959			5,025,082			4,792,229			4,929,903			4,837,807			4,888,959
Federal funds purchased and securities sold under agreements to repurchase			81,842			52,875			52,042			69,131			75,177			81,842
Other borrowings			1,076,075			988,515			1,229,956			995,074			1,071,742			1,076,075
Trust preferred debentures			16,863			16,820			16,777			16,734			16,691			16,863
Total common equity			619,459			597,636			589,173			577,967			574,780			619,459
Total equity			620,871			599,144			590,649			579,411			576,202			620,871
Average Balance Sheet
Average earning assets		$	6,364,113		$	6,356,781		$	6,348,562		$	6,297,727		$	6,159,396		$	6,342,019
Average assets			6,710,944			6,716,452			6,689,649			6,652,763			6,552,414			6,692,678
Average interest-bearing liabilities			4,606,536			4,644,533			4,709,122			4,658,998			4,500,649			4,654,625
Average equity			606,238			597,211			584,951			574,963			593,956			590,944
Share data
Weighted average shares outstanding(basic)			15,057,673		15,047,405				15,038,061			15,013,478			14,988,542			15,039,229
Weighted average shares outstanding(diluted)			15,135,750			15,144,491			15,135,970			15,112,518			15,103,906			15,132,257
Period-end shares outstanding			15,312,377		15,277,915				15,278,430			15,285,335			15,265,614			15,312,377
Common equity book value per share		$	40.45		$	39.12		$	38.56		$	37.81		$	37.65		$	40.45
Tangible book value per share (Non-GAAP)		$	33.98		$	32.60		$	32.02		$	31.24		$	31.04		$	33.98
Income Statement
Net interest income		$	53,236		$	53,163		$	52,714		$	52,687		$	51,969		$	211,800
Provision for loan/lease losses			2,058			272			1,045			567			2,014			3,942
Noninterest income			19,858			18,603			21,158			17,830			17,312			77,449
Noninterest expense			47,228			45,133			44,985			43,721			46,286			181,067
Income tax expense			4,866			5,427			5,751			5,761			18,493			21,805
Net income attributable to Tompkins Financial Corporation			18,911			20,902			22,059			20,436			2,457			82,308
Noncontrolling interests			31			32			32			32			31			127
Basic earnings per share (8)		$	1.24		$	1.37		$	1.44		$	1.34		$	0.16		$	5.39
Diluted earnings per share (8)		$	1.23		$	1.36		$	1.43		$	1.33		$	0.16		$	5.35
Nonperforming Assets
Originated nonaccrual loans and leases		$	19,340		$	17,518		$	19,082		$	18,429		$	16,253		$	19,340
Acquired nonaccrual loans and leases			2,856			2,659			2,673			3,352			3,264			2,856
Originated loans and leases 90 days past due and accruing			0			0			0			0			44			0
Troubled debt restructurings not included above			4,395			4,295			4,324			3,455			3,449			4,395
Total nonperforming loans and leases			26,591			24,472			26,079			25,236			23,010			26,591
OREO			1,595			1,870			2,233			2,047			2,047			1,595
Total nonperforming assets		$	28,186		$	26,342		$	28,312		$	27,283		$	25,057		$	28,186

Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued
		Quarter-Ended																					Year-Ended
Delinquency - Originated loan and lease portfolio			Dec-18					Sep-18				Jun-18				Mar-18				Dec-17			Dec-18
Loans and leases 30-89 days past due and accruing (2)
		$	7,796				$	6,454			$	5,875			$	6,513			$	6,791			$	7,796
Loans and leases 90 days past due and accruing (2)			0					0				0				0				44				0
Total originated loans and leases past due and accruing (2)			7,796					6,454				5,875				6,513				6,835				7,796
Delinquency - Acquired loan and lease portfolio
Loans 30-89 days past due and accruing (3)(7)		$	67				$	1,109			$	1,108			$	823			$	1,256			$	67
Loans 90 days or more past due			1,316					1,420				1,110				1,077				1,146				1,316
Total acquired loans and leases past due and accruing			1,383					2,529				2,218				1,900				2,402				1,383
Total loans and leases past due and accruing		$	9,179				$	8,983			$	8,093			$	8,413			$	9,237			$	9,179
Allowance for Loan Losses - Originated loan and lease portfolio
Balance at beginning of period		$	41,289				$	41,111			$	40,107			$	39,686			$	37,903			$	39,686
Provision for loan and lease losses			2,046					208				1,035				608				1,849				3,897
Net loan and lease (recoveries) charge-offs			14					30				31				187				66				262
Allowance for loan and lease losses (originated loan portfolio) - balance at end of period
		$	43,321				$	41,289			$	41,111			$	40,107			$	39,686			$	43,321
Allowance for Loan Losses - Acquired loan and lease portfolio
Balance at beginning of period		$	69				$	114			$	104			$	85			$	135			$	85
Provision (credit) for loan and lease losses			12					64				10				(41		)		165				45
Net loan and lease (recoveries) charge-offs			(8			)		109				0				(60		)		215				41
Allowance for loan and lease losses (acquired loan portfolio) - balance at end of period
			89					69				114				104				85				89
Total allowance for loan and lease losses		$	43,410				$	41,358			$	41,225			$	40,211			$	39,771			$	43,410
Loan Classification - Originated Portfolio
Special Mention		$	28,074				$	34,245			$	44,068			$	34,546			$	44,334			$	28,074
Substandard			43,963					49,597				41,572				35,746				20,584				43,963
Loan Classification - Acquired Portfolio
Special Mention			452					465				469				476				525				452
Substandard			2,914					3,041				3,180				3,468				5,355				2,914
Loan Classifications - Total Portfolio
Special Mention			28,526					34,710				44,537				35,022				46,599				28,526
Substandard			46,877					52,638				44,752				39,214				25,939				46,877
Ratio Analysis
Credit Quality
Nonperforming loans and leases/total loans and leases (7)			0.55	%				0.51	%			0.54	%			0.54	%			0.49	%			0.55%
Nonperforming assets/total assets			0.42	%				0.39	%			0.42	%			0.41	%			0.38	%			0.42%
Allowance for originated loan and lease losses/total originated loans and leases			0.95	%				0.91	%			0.91	%			0.91	%			0.91	%			0.95%
Allowance/nonperforming loans and leases			163.25	%				169.00	%			158.11	%			159.34	%			172.84	%			163.25%
Net loan and lease losses (recoveries) annualized/total average loans and leases			0.00	%				0.01	%			0.00	%			0.01	%			0.02	%			0.01%

Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued
																Year-Ended
Capital Adequacy (period-end)		Dec-18			Sep-18			Jun-18			Mar-18			Dec-17			Dec-18
Tangible common equity/tangible assets		7.81	%		7.49	%		7.36	%		7.29	%		7.24	%		7.81	%
Profitability
Return on average assets *		1.12	%		1.23	%		1.32	%		1.25	%		0.15	%		1.23	%
Return on average equity *		12.38	%		13.89	%		15.13	%		14.41	%		1.64	%		13.93	%
Net interest margin (TE) *		3.34	%		3.35	%		3.36	%		3.42	%		3.42	%		3.37	%
* 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 accompanying tables. Management believes that these non-GAAP measures provide useful information. Non-GAAP measures should not be considered a substitute for financial measures determined in accordance with GAAP and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. See "Tompkins Financial Corporation - Summary Financial Data (Unaudited)" tables for Non-GAAP related calculations.

Non-GAAP Disclosure - Adjusted Diluted Earnings Per Share
			Quarter-Ended																			Year-Ended
			Dec-18			Sep-18				Jun-18				Mar-18				Dec-17				Dec-18
Net income available to common shareholders		$	18,911			$	20,902			$	22,059			$	20,436			$	2,457			$	82,308
Income attributable to unvested stock-based compensation awards			291				318				359				347				26				1,315
Net earnings allocated to common shareholders			18,620				20,584				21,700				20,089				2,431				80,993
Remeasurement of net deferred taxes			0				0				0				0				14,944				0
Gain on sale of real estate, net of tax			0				0				2,227				0				0				2,227
Write-down of impaired leases, net of tax			0				(388)				(1,527)				0				0				(1,915)
Net income (Non-GAAP)			18,620				20,972				21,000				20,089				17,375				80,681
Weighted average shares outstanding (diluted)			15,135,750			15,144,491				15,135,970				15,112,518				15,103,906				15,132,257
Adjusted diluted earnings per share (Non-GAAP)		$	1.23			$	1.38			$	1.39			$	1.33			$	1.15			$	5.33
Non-GAAP Disclosure - Tangible Book Value Per Share
Total common equity		$	619,459			$	597,636			$	589,173			$	577,967			$	574,780			$	619,459
Less: Goodwill and intangibles (9)			99,106				99,543				99,983				100,436				100,887				99,106
Tangible common equity			520,353				498,093				489,190				477,531				473,893				520,353
Ending shares outstanding			15,312,377			15,277,915				15,278,430				15,285,335				15,265,614				15,312,377
Tangible book value per share (Non-GAAP)		$	33.98			$	32.60			$	32.02			$	31.24			$	31.04			$	33.98

Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued
Non-GAAP Disclosure - Year to date adjusted diluted earnings per share
			Dec-18					Dec-17
Net income available to common shareholders		$	82,308				$	52,494
Income attributable to unvested stock-based compensation awards			1,315					818
Net earnings allocated to common shareholders			80,993					51,676
Remeasurement of net deferred taxes			0					14,944
Gain on sale of real estate, net of tax			2,227					0
Write-down of impaired leases, net of tax			(1,915		)			0
Net income (Non-GAAP)			80,681					66,620
Weighted average shares outstanding (diluted)			15,132,257					15,073,255
Adjusted diluted earnings per share (Non-GAAP)		$	5.33				$	4.42

(1) Federal Reserve peer ratio as of September 30, 2018, includes banks and bank holding companies with consolidated assets between $3 billion and $10 billion.
(2) "Originated" equals loans and leases not included by definition in "acquired loans".
(3) "Acquired Loans and Leases" equals loans and leases acquired at fair value, accounted for in accordance with FASB ASC Topic 805.
(4) Average balances and yields on available-for-sale securities are based on historical amortized cost.
(5) Interest income includes the tax effects of taxable-equivalent basis.
(6) 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, 2017.
(7) 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 Corporation's estimate of acquisition-date fair value and these loans are considered accruing as the Corporation primarily recognizes interest income through accretion of the difference between the carrying value of these loans and their expected cash flows.
(8)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
(9) "Goodwill and intangibles" equal Total Intangible Assets less Mortgage Servicing Rights in the above tables.

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