Tompkins Financial

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.

Press releases:

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

Tompkins Financial Corporation reports cash dividend

Tompkins Financial Corporation announced today that its Board of Directors approved payment of a regular quarterly cash dividend of $0.54 per share, payable on May 17, 2021, to common shareholders of record on May 11, 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. For more information on Tompkins Financial, visit www.tompkinsfinancial.com.

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Tompkins Financial Corporation reports record first quarter earnings

Tompkins Financial Corporation reported diluted earnings per share of $1.72 for the first quarter of 2021, 224.5 percent over the first quarter of 2020. Net income was $25.6 million for the first quarter of 2021, an increase of 222.4 percent from the $7.9 million reported for the same period in 2020.

President and CEO Stephen Romaine said, "We are extremely pleased to start off 2021 with record quarterly earnings. Results for the quarter, when compared to the same period last year, reflected favorable revenue trends for all three business lines, including increased net interest income, increased insurance commissions, and increased investment services fees. At the same time, expenses for the quarter were down from the same quarter last year.

"Growth comparisons to the previous year are significantly impacted by the change in provision for credit losses from a $16.3 million expense in the first quarter of 2020, compared to a $2.5 million credit in the first quarter of 2021. The provision for the first quarter of 2020 reflected the highly uncertain economic conditions related to the onset of the COVID-19 pandemic and economic forecasts and other model assumptions relied upon by management in determining the allowance.”

SELECTED HIGHLIGHTS FOR THE FIRST QUARTER:

• Diluted earnings per share of $1.72 represents the best quarter in the Company's history, and is up 224.5 percent over the same period in 2020.

• Provision for credit losses was a $2.5 million credit for the first quarter of 2021, compared to an expense of $16.3 million for the same period last year.

• Total loans of $5.3 billion at March 31, 2021 were up $355.0 million, or 7.2 percent over March 31, 2020. Loan growth over the prior period includes a $370.0 million increase related to loans originated under the Small Business Association (SBA) Paycheck Protection Program (PPP).

• Total deposits of $6.9 billion at March 31, 2021, an increase of $1.5 billion, or 28.4 percent over March 31,

2020

NET INTEREST INCOME
Net interest income was $55 million for the first quarter of 2021, up from $53.0 million for the same period in 2020, and down from $57.8 million for the most recent prior quarter. Net interest income for the current quarter included $2.8 million of net deferred loan fees associated with PPP loans, compared to net deferred loan fees of $4.5 million in the fourth quarter of 2020. There were no net deferred loan fees related to PPP loans in the first quarter of 2020. Net interest income in the first quarter of 2021 also benefited from lower rates paid on deposit products due to lower market interest rates.

Average loans for the quarter ended March 31, 2021 were up $377.3 million, or 7.7 percent compared to the same period in 2020. The increase in average loans was mainly in commercial loans, driven largely by PPP loans and commercial real estate loans. Asset yields for the quarter ended March 31, 2021, were down 84 basis points compared to the quarter ended March 31, 2020, which reflects the impact of reductions in market interest rates over the past 12 months as well as the increase in average securities and average interest bearing balances due from banks. While PPP loans were a significant contributor to average loan growth, increases in commercial real estate and residential loans were up 5.6 percent and 1.7 percent, respectively, over the same period in the prior year.

Average total deposits for the first quarter of 2021 were up $1.3 billion, or 25.4 percent compared to the same period in 2020. Average noninterest bearing deposits for the three months ended March 31, 2021 were up $540 million or 38.3 percent compared to the three months ended March 31, 2020. Average deposit balances during the first quarter of 2021 benefited from PPP loan originations, the majority of which were deposited in Tompkins checking accounts. For the first quarter of 2021, the average rate paid on interest-bearing deposit products decreased by 47 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 0.38 percent at March 31, 2021, a decline of 54 basis points from March 31, 2020.

Net interest margin was 3.01 percent for the first quarter of 2021, compared to 3.44 percent reported for the same period in 2020, and 3.12 percent for the fourth quarter of 2020.

NONINTEREST INCOME
Noninterest income of $20.0 million was up 5.4 percent compared to the same period in 2020. Growth over the same quarter last year was supported by a 13.9-percent increase in insurance commissions and fees, an 11.2-percent increase in investment services income, and a 9.2-percent increase in card services income. These increases were partially offset by lower deposit fees and lower gains on securities transactions. Noninterest income represented 26.6 percent of total revenues for the first quarter of 2021.

NONINTEREST EXPENSE
Noninterest expense was $45.2 million for the first quarter of 2021, down $549,000, or 1.2 percent, from the first quarter of 2020. Salaries and employee benefits were relatively flat when compared to the same quarter last

year. The decrease in noninterest expense for the first quarter of 2021 was primarily attributable to lower marketing expenses, which were down $447,000 from the first quarter of 2020.

INCOME TAX EXPENSE
The Company's effective tax rate was 20.7 percent for the first quarter of 2021, compared to 19.4 percent for the same period in 2020.

ASSET QUALITY
Provision for credit losses for the first quarter of 2021 was a credit of $2.5 million compared to an expense of $16.3 million for the same period in 2020. Net recoveries for the quarter ended March 31, 2021 were $180,000 compared to charge-offs of $1.2 million reported for the same period in 2020.

The allowance for credit losses represented 0.93 percent of total loans and leases at March 31, 2021, down from 1.06 percent at March 31, 2020, and 0.98 percent at Dec. 31, 2020. Nonperforming loans and leases totaled $47.7 million at March 31, 2021, compared to $30.7 million at March 31, 2020, and $45.8 million at Dec. 31, 2020. The ratio of the allowance to total nonperforming loans and leases was 103.38 percent at March 31, 2021, down compared to 170.74 percent at March 31, 2020, and 112.87 percent at Dec. 31, 2020. Nonperforming assets represented 0.59 percent of total assets at March 31, 2021, up from 0.46 percent at March 31, 2020, and down from 0.60 percent at Dec. 31, 2020.

Special Mention and Substandard loans and leases totaled $185.2 million at March 31, 2021, up compared to the $90.0 million at March 31, 2020, and down compared to the $189.9 million reported at Dec. 31, 2020. Total Substandard loans and leases of $68.5 million at March 31, 2021, were in line with Dec. 31, 2020, and up compared to the $52.9 million reported at March 31, 2020. The increases in nonperforming loans and leases and Substandard loans compared to prior year, were mainly related to the downgrades of credits in the loan portfolio related to the hospitality industry, which was significantly impacted by the COVID-19 pandemic. Included in the nonperforming loans and leases and Substandard loans and leases are 12 loans totaling $35.5 million that are currently in deferral status.

During 2020 and 2021, overall credit quality has been supported by several plans initiated by the Company in response to the COVID-19 pandemic. As previously announced, Tompkins initiated and participated in a number of credit initiatives to support customers who have been impacted by the economic conditions associated with the COVID-19 pandemic. The Company implemented a payment deferral program to assist both consumer and business borrowers that may be experiencing financial hardship due to COVID-19. As of March 31, 2021, total loans that continued in a deferral status amounted to approximately $195.6 million, representing 3.7 percent of total loans.

As previously noted, the Company participated in the PPP, which provides SBA 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 had funded 2,998 loans totaling approximately $465.6 million when the initial program ended. As of April 10, 2021, approximately 2,314 of these PPP loans totaling $300.8 million had been forgiven by the SBA under the terms of the PPP program.

In addition, on Jan. 19, 2021, the Company began accepting both first draw and second draw applications for the reopening of the PPP program. As of April 10, 2021, the Company had submitted 2,013 applications totaling $223.4 million to the SBA, of which 1,919 applications totaling $215.9 million had been approved by the SBA and disbursed to customers.

CAPITAL POSITION
Capital ratios at March 31, 2021 remained well above the regulatory minimums for well-capitalized institutions. The ratio of Total Capital to Risk-Weighted Assets improved to 14.62 percent at March 31, 2021, up from 13.62 percent at March 31, 2020, and 14.39 percent at Dec. 31, 2020. The ratio of Tier 1 capital to average assets was 8.89 percent at March 31, 2021, compared to 9.53 percent at March 31, 2020, and 8.75 percent at Dec. 31, 2020.