TMP Tompkins Financial Corporation

Tompkins Financial Corporation (TMP–NYSE MKT LLC)

Tompkins Financial Corporation reported diluted earnings per share of $0.96 for the fourth quarter of 2013, representing the highest quarterly earnings in Company history. Year-to-date earnings were also at a record level, with diluted earnings per share of $3.46 for the year ended December 31, 2013, up from $2.43 per share reported for the same period in 2012.

Both current and prior period results were impacted by certain non-recurring items including, but not limited to, merger related expenses associated with the acquisition of VIST Financial Corporation completed on August 1, 2012. After adjusting for non-recurring income and expenses, quarter-to-date diluted earnings per share would have been $0.91 for the fourth quarter of 2013, up from $0.81 for the same period last year. On a year-to-date basis, adjusting for non-recurring items, diluted earnings per share would have been $3.36 for the year ended December 31, 2013, compared to $3.17 for the same period last year. Additional information on non-recurring adjustments to earnings per share is included in the non-GAAP disclosure tables included in this press release.

President and CEO, Stephen S. Romaine said “We are proud to report on another record year of earnings performance for Tompkins. 2013 was a rewarding year, as it was our first full year with operations in Pennsylvania. Business activity from our Pennsylvania franchise contributed to our record performance, as did the solid performance from our New York based Banking, Insurance and Wealth Management businesses. We finished the quarter with positive trends in most business areas, leaving us well positioned as we head into 2014.”

SELECTED HIGHLIGHTS FOR THE FOURTH QUARTER INCLUDED:

• Record quarter and year-to-date earnings per share
• Annual cash dividends per share increased by 5.2% in 2013, representing the 25th consecutive year of increased dividends
• Net interest income improved during the quarter as margin increased for the third consecutive quarter, aided by solid growth in loans (up 8.1% YTD) and noninterest-bearing deposits (up 7.1% YTD)
• Provision expense was lower for the current quarter, benefiting from $977,000 of net recoveries during the quarter, as gross recoveries of $3.1 million exceeded gross charge-offs of $2.1 million
• Credit Quality improved, with nonperforming assets down 12.4% during the quarter, and 2.5% from year end 2012
• Fee based revenue from insurance, investment services, service charges on deposits and card services were all up from the same period last year

A more detailed summary of financial performance is included below. Year-to-date growth percentages are impacted by a full year consolidation of the operations of VIST Financial in 2013, versus five months in 2012.

NET INTEREST INCOME

Net interest income of $42.6 million for the fourth quarter of 2013 represents an increase of 1.9% over the same quarter last year, and 5.3%, from the third quarter of 2013. The net interest margin for the fourth quarter of 2013 was 3.78%, compared to 3.83% for the fourth quarter of 2012, and 3.63% for the third quarter in 2013. Improvement in the current period, compared to the third quarter of 2013 benefited from loan prepayment income, interest related to the payoff of a nonaccrual loan, and growth in average loans and noninterest-bearing deposits.

For the year to date period, net interest income of $161.1 million reflects an increase of 20.1% over the same period in 2012.

NONINTEREST INCOME

Noninterest income was $17.4 million for the fourth quarter of 2013, up 11.7% over the same period in 2012, and down 5.9% from the third quarter of 2013. For the year to date period, noninterest income of $69.9 million represented 30.3% of total revenue, compared to 29.0% for the same period in 2012.

Trends in key fee income business areas in the fourth quarter of 2013 compare favorably to the same quarter last year. Insurance revenue was up 1.5%, Investment Services Income was up 2.4%, deposit fees were up 11.2%, and card services revenue was up 22.4%. The decline in noninterest income from the most recent prior quarter is primarily due to net losses on sale of loans of $345,000 in the fourth quarter of 2013, compared to net gains on loans sales of $115,000 in the third quarter of 2013. The current period noninterest income benefited from a $1.3 million gain associated with certain deposit accounts that converted to alternative products during the quarter. Year-to-date other income results in 2013 also benefited from a $1.4 million pre-tax gain on redemption of the Trust Preferred debenture in September of 2013.

NONINTEREST EXPENSE

Noninterest expense was $40.3 million in the fourth quarter of 2013, up 5.4% from the same period in 2012, and 7.2% compared to the third quarter of 2013. The increase over prior periods is mainly due to higher salary and benefit expenses.

ASSET QUALITY

Asset quality trends improved in nearly all categories during the quarter. Substandard and Special Mention loans declined by $18.1 million from the most recent previous quarter, and by $43.7 million from year end 2012. Net charge-offs were $2.8 million for the year ended December 31, 2013, compared to $11.8 million of net charge-offs for the same period in 2012. The fourth quarter of 2013 saw net recoveries of $977,000, compared to net charge-offs of $7.6 million in the fourth quarter of 2012. The percentage of nonperforming assets to total assets dropped to 0.87%, down from 1.00% at September 30, 2013, and 0.92% at year-end 2012. This nonperforming asset ratio continues to compare favorably to the most recent peer averages of 1.52% published as of September 30, 2013, by the Federal Reserve1.

The Company’s allowance for originated loan and lease losses totaled $26.7 million at December 31, 2013, which represented 1.06% of total originated loans, compared to 1.16% at December 31, 2012, reflecting improved overall quality of the originated portfolio. The allowance for loan and lease losses covered 71.65% of nonperforming loans and leases as of December 31, 2013, which compares to 62.34% as of December 31, 2012.

Several banks reported losses on the sale of trust preferred securities in the fourth quarter of 2013 due to initial indications that these securities would be deemed impermissible investments under the Volcker Rule. Tompkins did not invest in pooled trust preferred securities covered by this rule and therefore was not impacted by the Volcker Rule interpretations on pooled trust preferred securities.

CAPITAL POSITION

Capital ratios remain well above the regulatory well capitalized minimums and showed improving trends over the course of the most recent quarter and over the last 12 months. Tier 1 capital to average assets improved for the fourth consecutive quarter, to 8.52% at December 31, 2013. Total risk based capital of 13.42% was up modestly from the third quarter of 2013. Tangible book value per share was $23.70 at December 31, 2013, up from $22.82 at September 30, 2013. The improvement in capital ratios was primarily driven by growth in retained earnings. Refer to Non-GAAP disclosure for additional details on tangible book value per share.

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, The Bank of Castile, Mahopac Bank, 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.

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.

"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.

    TOMPKINS FINANCIAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CONDITION   (In thousands, except share and per share data) (Unaudited) As of As of ASSETS 12/31/2013 12/31/2012   Cash and noninterest bearing balances due from banks $ 82,163 $ 117,448 Interest bearing balances due from banks     721       1,482  

Cash and Cash Equivalents

82,884 118,930   Trading securities, at fair value 10,991 16,450

Available-for-sale securities, at fair value (amortized cost of $1,368,736 at December 31, 2013 and $1,349,416 at December 31, 2012)

1,354,811 1,393,340

Held-to-maturity securities, fair value of $19,625 at December 31, 2013, and $25,163 at December 31, 2012

18,980 24,062 Originated loans and leases, net of unearned income and deferred costs and fees 2,527,244 2,133,106 Acquired loans and leases, covered 25,868 37,600 Acquired loans and leases, non-covered 641,172 783,904 Less: Allowance for loan and lease losses     27,970       24,643  

Net Loans and Leases

3,166,314 2,929,967   FDIC Indemnification Asset 4,790 4,385 Federal Home Loan Bank stock and Federal Reserve Bank stock 25,041 19,388 Bank premises and equipment, net 55,932 54,581 Corporate owned life insurance 69,335 65,102 Goodwill 92,140 92,305 Other intangible assets, net 16,298 18,643 Accrued interest and other assets     105,523       100,044  

Total Assets

  $ 5,003,039     $ 4,837,197     LIABILITIES Deposits:

Interest bearing:

Checking, savings and money market

2,190,616 2,144,367

Time

865,702 973,883

Noninterest bearing

    890,898       831,919  

Total Deposits

3,947,216 3,950,169   Federal funds purchased and securities sold under agreements to repurchase 167,724 213,973

Other borrowings, including certain amounts at fair value of $11,292 at December 31, 2013 and $11,847 at December 31, 2012

331,531 111,848 Trust preferred debentures 37,169 43,668 Other liabilities     61,460       76,179  

Total Liabilities

  $ 4,545,100     $ 4,395,837     EQUITY Tompkins Financial Corporation shareholders' equity:

Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued:

14,785,007 at December 31, 2013; and 14,426,711 at December 31, 2012

1,479 1,443

Additional paid-in capital

346,096 334,649

Retained earnings

137,102 108,709

Accumulated other comprehensive loss

(25,119 ) (2,106 )

Treasury stock, at cost – 105,449 shares at December 31, 2013, and 100,054 shares at December 31, 2012

(3,071 ) (2,787 )  

Total Tompkins Financial Corporation Shareholders’ Equity

456,487 439,908 Noncontrolling interests     1,452       1,452  

Total Equity

  $ 457,939     $ 441,360  

Total Liabilities and Equity

  $ 5,003,039     $ 4,837,197       TOMPKINS FINANCIAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME   Three Months Ended   Twelve Months Ended (In thousands, except per share data) (Unaudited) 12/31/2013   12/31/2012 12/31/2013   12/31/2012 INTEREST AND DIVIDEND INCOME Loans $ 39,684 $ 39,952 $ 151,711 $ 124,662 Due from banks 1 19 10 32 Federal funds sold 0 0 0 2 Trading securities 117 175 589 744 Available-for-sale securities 8,138 8,214 31,360 31,232 Held-to-maturity securities 157 203 685 860 Federal Home Loan Bank stock and Federal Reserve Bank stock     211       205       749       824   Total Interest and Dividend Income     48,308       48,768       185,104       158,356   INTEREST EXPENSE Time certificates of deposits of $100,000 or more 1,181 825 4,832 3,322 Other deposits 1,841 2,980 7,933 8,910

Federal funds purchased and securities sold under agreements to repurchase

872 1,111 3,749 4,451 Trust preferred debentures 562 798 2,599 2,094 Other borrowings     1,228       1,205       4,862       5,436   Total Interest Expense     5,684       6,919       23,975       24,213   Net Interest Income     42,624       41,849       161,129       134,143   Less: Provision for loan and lease losses     585       5,659       6,161       8,837   Net Interest Income After Provision for Loan and Lease Losses     42,039       36,190       154,968       125,306   NONINTEREST INCOME Insurance commissions and fees 6,328 6,237 27,916 19,421 Investment services income 3,929 3,836 15,109 14,340 Service charges on deposit accounts 2,309 2,076 8,495 7,441 Card services income 2,053 1,678 7,216 6,030 Mark-to-market loss on trading securities (66 ) (134 ) (538 ) (332 ) Mark-to-market gain on liabilities held at fair value 12 108 555 246 Net other-than-temporary impairment losses 0 (76 ) 0 (196 ) Other income 2,998 2,382 10,546 7,534 (Loss) gain on sale of available-for-sale securities     (124 )     (499 )     599       324   Total Noninterest Income     17,439       15,608       69,898       54,808   NONINTEREST EXPENSES Salaries and wages 18,582 15,427 67,200 51,700 Pension and other employee benefits 5,150 4,827 22,164 18,075 Net occupancy expense of premises 2,892 2,899 11,757 8,969 Furniture and fixture expense 1,334 1,416 5,701 4,996 FDIC insurance 813 844 3,214 2,685 Amortization of intangible assets 549 580 2,197 1,264 Merger related expenses 0 770 228 15,584 Other operating expense     10,931       11,425       40,641       34,335   Total Noninterest Expenses     40,251       38,188       153,102       137,608   Income Before Income Tax Expense     19,227       13,610       71,764       42,506   Income Tax Expense     4,905       2,416       20,777       11,090   Net Income attributable to Noncontrolling Interests and Tompkins Financial Corporation     14,322       11,194       50,987       31,416   Less: Net income attributable to noncontrolling interests     32       33       131       131   Net Income Attributable to Tompkins Financial Corporation   $ 14,290     $ 11,161     $ 50,856     $ 31,285   Basic Earnings Per Share $ 0.97 $ 0.78 $ 3.48 $ 2.44 Diluted Earnings Per Share   $ 0.96     $ 0.77     $ 3.46     $ 2.43                       Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)   Quarter Ended Year to Date Period Ended Year to Date Period Ended       December 31, 2013     December 31, 2013     December 31, 2012 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

$ 1,244 $ 1 0.64% $ 2,005 $ 10 0.50% $ 21,442 $ 33 0.15%

Money market funds

- - 0.00% - - 0.00% 18 - 0.00%

Securities (4)

U.S. Government securities

1,304,043 7,548 2.30% 1,326,999 28,817 2.17% 1,205,759 28,546 2.37%

Trading securities

11,360 117 4.09% 14,188 589 4.15% 18,162 744 4.10%

State and municipal (5)

89,409 1,142 5.07% 95,276 4,893 5.14% 95,095 4,946 5.20%

Other securities (5)

6,876     55   3.17%     7,714     265   3.44%     11,766     544   4.62%

Total securities

1,411,688 8,862 2.49% 1,444,177 34,564 2.39% 1,330,782 34,780 2.61%

Federal Funds Sold

- - 0.00% - - 0.00% 1,837 2 0.11%

FHLBNY and FRB stock

22,453 211 3.73% 22,153 749 3.38% 18,479 824 4.46%  

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

3,135,714     40,129   5.08%     3,053,538     153,569   5.03%     2,382,109     125,541   5.27%

Total interest-earning assets

4,571,099     49,203   4.27%     4,521,873     188,892   4.18%     3,754,667     161,180   4.29%   Other assets 379,377 406,626 337,806  

Total assets

4,950,476 4,928,499 4,092,473                                                 LIABILITIES & EQUITY Deposits

Interest-bearing deposits

Interest bearing checking, savings, & money market

2,222,505 1,122 0.20% 2,224,028 4,938 0.22% 1,750,444 4,854 0.28%

Time deposits

893,181     1,900   0.84%     939,630     7,827   0.83%     846,166     7,378   0.87%

Total interest-bearing deposits

3,115,686 3,022 0.38% 3,163,658 12,765 0.40% 2,596,610 12,232 0.47%  

Federal funds purchased & securities sold under agreements to repurchase

168,423 872 2.05% 177,784 3,749 2.11% 200,906 4,451 2.22% Other borrowings 253,553 1,228 1.92% 222,345 4,862 2.19% 132,746 5,436 4.10% Trust preferred debentures 37,141     562   6.01%     41,643     2,599   6.24%     32,835     2,094   6.38%

Total interest-bearing liabilities

3,574,803 5,684 0.63% 3,605,430 23,975 0.67% 2,963,097 24,213 0.82%   Noninterest bearing deposits 853,361 806,387 681,260 Accrued expenses and other liabilities 72,867 73,117 71,226

Total liabilities

4,501,031 4,484,934 3,715,583   Tompkins Financial Corporation Shareholders’ equity 447,905 442,054 375,378 Noncontrolling interest 1,540 1,511 1,512

Total equity

449,445 443,565 376,890  

Total liabilities and equity

$ 4,950,476 $ 4,928,499 $ 4,092,473 Interest rate spread     3.64%     3.51%     3.48%

Net interest income/margin on earning assets

43,519 3.78% 164,917 3.65% 136,967 3.65%   Tax Equivalent Adjustment (895) (3,788) (2,824)  

Net interest income per consolidated financial statements

        $ 42,624             $ 161,129             $ 134,143         Tompkins Financial Corporation - Summary Financial Data (Unaudited)                                                 (In thousands, except per share data)   Quarter-Ended    

 

Year-Ended

    Dec-13       Sep-13       Jun-13       Mar-13       Dec-12       Dec-13             Period End Balance Sheet                                                 Securities   $ 1,384,782     $ 1,390,233     $ 1,469,315     $ 1,566,510     $ 1,433,852     $ 1,384,782   Originated loans and leases, net of unearned income and deferred costs and fees (2)     2,527,244       2,420,695       2,309,232       2,208,346       2,133,106       2,527,244   Acquired loans and leases (3)     667,040       698,617       745,951       785,449       821,504       667,040   Allowance for loan and lease losses     27,970       26,408       25,458       24,661       24,643       27,970   Total assets     5,003,039       4,932,428       4,931,883       4,987,280       4,837,197       5,003,039   Total deposits     3,947,216       3,972,756       3,912,910       4,072,352       3,950,169       3,947,216   Federal funds purchased and securities sold under agreements to repurchase     167,724       162,117       171,498       194,091       213,973       167,724   Other borrowings     331,531       242,177       299,098       156,649       111,848       331,531   Trust preferred debentures     37,169       37,127       43,703       43,687       43,668       37,169   Shareholders' equity     457,939       444,276       431,894       446,812       441,360       457,939     Average Balance Sheet                                                 Average earning assets   $ 4,571,099     $ 4,533,603     $ 4,571,428     $ 4,409,455     $ 4,431,698     $ 4,521,873   Average assets     4,950,476       4,897,678       4,965,895       4,899,727       4,901,374       4,928,499   Average interest-bearing liabilities     3,574,803       3,572,708       3,663,230       3,611,748       3,563,731       3,605,430   Average equity     449,445       434,482       447,088       443,277       443,592       443,565     Share data                                                 Weighted average shares outstanding (basic)     14,589,120       14,515,053       14,427,838       14,374,265       14,332,672       14,477,617   Weighted average shares outstanding (diluted)     14,731,786       14,622,512       14,496,859       14,436,757       14,374,368       14,573,919   Period-end shares outstanding     14,749,097       14,692,671       14,599,558       14,447,017       14,390,801       14,749,097   Book value per share     31.05       30.24       29.58       30.93       30.67       31.05   Tangible book value per share (Non-GAAP)     23.70       22.82       22.08       23.29       22.96       23.70     Income Statement                                                 Net interest income   $ 42,624     $ 40,473     $ 39,826     $ 38,206     $ 41,849     $ 161,129   Provision for loan/lease losses     585       2,049       2,489       1,038       5,659       6,161   Noninterest income     17,439       18,528       16,541       17,390       15,608       69,898   Noninterest expense     40,251       37,554       37,777       37,520       38,188       153,102   Income tax expense     4,905       5,316       5,061       5,495       2,416       20,777   Net income attributable to Tompkins Financial Corporation     14,290       14,049       11,007       11,510       11,161       50,856   Noncontrolling interests     32       33       33       33       33       131   Basic earnings per share (9)   $ 0.97     $ 0.96     $ 0.76     $ 0.80     $ 0.78     $ 3.48   Diluted earnings per share (9)   $ 0.96     $ 0.95     $ 0.75     $ 0.79     $ 0.77     $ 3.46     Nonperforming Assets                                                 Originated nonaccrual loans and leases   $ 29,875     $ 33,881     $ 32,100     $ 32,554     $ 33,388     $ 29,875   Acquired nonaccrual loans and leases     8,508       8,008       6,916       4,561       4,352       8,508   Originated loans and leases 90 days past due and accruing     607       1,217       156       157       257       607   Troubled debt restructurings not included above     45       46       0       0       1,532       45   Total nonperforming loans and leases     39,035       43,152       39,172       37,272       39,529       39,035   OREO (8)     4,253       6,264       4,918       3,950       4,862       4,253   Total nonperforming assets     43,288       49,416       44,090       41,222       44,391       43,288     Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued   Quarter-Ended    

 

Year-Ended

  Delinquency - Originated loan and lease portfolio     Dec-13       Sep-13       Jun-13       Mar-13       Dec-12       Dec-13  

Loans and leases 30-89 days past due and accruing (2)

  $ 5,762     $ 12,193     $ 9,597     $ 10,888     $ 7,990     $ 5,762   Loans and leases 90 days past due and accruing (2)     607       1,217       156       157       257       607   Total originated loans and leases past due and accruing (2)     6,369       13,410       9,753       11,045       8,247       6,369     Delinquency - Acquired loan and lease portfolio   Covered loans and leases 30-89 days past due and accruing (3)(7)     0       1,132       1,613       3,503       1,014       0  

Covered loans and leases 90 days or more past due and accruing (3)(7)

    2,416       2,980       3,091       3,809       4,272       2,416  

Non-covered loans and leases 30-89 days past due and accruing (3)(7)

    1,532       6,887       5,591       5,738       4,249       1,532  

Non-Covered loans and leases 90 days past due and accruing (3)(7)

    4,557       10,521       13,324       14,026       14,438       4,557     Total acquired loans and leases past due and accruing     8,505       21,520       23,619       27,076       23,973       8,505                                                     Total loans and leases past due and accruing   $ 14,874     $ 34,930     $ 33,372     $ 38,121     $ 32,220     $ 14,874     Allowance for Loan Losses - Originated loan and lease portfolio Balance at beginning of period   $ 25,722     $ 24,853     $ 24,598     $ 24,643     $ 26,632     $ 24,643   Provision for loan and lease losses     (325 )     1,499       (994 )     820       5,659       1,000   Net loan and lease (recoveries) charge-offs     (1,303 )     630       (1,249 )     865       7,648       (1,057 )

Allowance for loan and lease losses (originated loan portfolio) - balance at end of period

   

26,700

     

25,722

     

24,853

     

24,598

     

24,643

     

26,700

    Allowance for Loan Losses - Acquired loan and lease portfolio   Balance at beginning of period   $ 686     $ 605     $ 63     $ 0     $ 0     $ 0   Provision for loan and lease losses     910       549       3,483       218       0       5,160   Net loan and lease charge-offs     326       468       2,941       155       0       3,890   Allowance for loan and lease losses (acquired loan portfolio) - balance at end of period     1,270       686       605       63       0       1,270                                                     Total allowance for loan and lease losses     27,970       26,408       25,458       24,661       24,643       27,970     Loan Classification - Originated Portfolio                                                 Special Mention   $ 42,365     $ 42,975     $ 43,099     $ 48,468     $ 56,342     $ 42,365   Substandard     35,022       37,004       41,969       43,449       45,083       35,022   Loan Classification - Acquired Portfolio                                                 Special Mention     17,322       23,939       29,300       26,568       25,381       17,322   Substandard     33,561       42,433       55,079       47,698       45,207       33,561   Loan Classifications - Total Portfolio                                                 Special Mention     59,687       66,914       72,399       75,036       81,723       59,687   Substandard     68,583       79,437       97,048       91,147       90,290       68,583     Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued                                               RATIO ANALYSIS   Quarter-Ended    

 

Year-Ended

  Credit Quality     Dec-13       Sep-13       Jun-13       Mar-13       Dec-12       Dec-13   Nonperforming loans and leases/total loans and leases (7)     1.22 %     1.38 %     1.28 %     1.24 %     1.34 %     1.22 % Nonperforming assets/total assets     0.87 %     1.00 %     0.89 %     0.83 %     0.92 %     0.87 % Allowance for originated loan and lease losses/total originated loans and leases     1.06 %     1.06 %     1.08 %     1.11 %     1.16 %     1.06 % Allowance/nonperforming loans and leases     71.65 %     61.20 %     64.99 %     66.16 %     62.34 %     71.65 % Net loan and lease (recoveries) losses annualized/total average loans and leases     (0.12 %)     0.14 %     0.22 %     0.14 %     1.04 %     0.09 %   Capital Adequacy (period-end)                                                 Tier 1 capital / average assets     8.52 %     8.37 %     8.16 %     8.11 %     7.95 %     8.52 % Total capital / risk-weighted assets     13.42 %     13.32 %     13.34 %     12.93 %     12.94 %     13.40 % Tangible common equity / tangible assets     7.11 %     6.92 %     6.65 %     6.87 %     6.96 %     7.11 %   Profitability                                                 Return on average assets *     1.15 %     1.10 %     0.89 %     0.95 %     0.91 %     1.03 % Return on average equity *     12.62 %     12.83 %     9.87 %     10.53 %     10.01 %     11.47 % Net interest margin (TE) *     3.78 %     3.63 %     3.58 %     3.57 %     3.83 %     3.65 % * Quarterly ratios have been annualized   Non-GAAP Disclosure                                                 Reported noninterest income (GAAP)   $ 17,439     $ 18,528     $ 16,541     $ 17,390     $ 15,608     $ 69,898   Adjustments (pre-tax):                                                 Gain on redemption of trust preferred     0       (1,410 )     0       0       0       (1,410 ) Gain on deposit conversion     (1,285 )     0       0       0       0       (1,285 ) Noninterest income (Non-GAAP)   $ 16,154     $ 17,118     $ 16,541     $ 17,390     $ 15,608     $ 67,204     Non-GAAP Disclosure                                                 Reported net income (GAAP)   $ 14,290     $ 14,049     $ 11,007     $ 11,510     $ 11,161     $ 50,856   Adjustments (net of tax):                                                 Merger related expenses     0       0       22       118       462       140   Gain on redemption of trust preferred     0       (846 )     0       0       0       (846 ) Gain on deposit conversion     (771 )     0       0       0       0       (771 ) Subtotal adjustments     (771 )     (846 )     22       118       462       (1,477 ) Net operating income (Non-GAAP)     13,519       13,203       11,029       11,628       11,623       49,379   Adjusted diluted earnings per share (Non-GAAP) (9)   $ 0.91     $ 0.89     $ 0.75     $ 0.80     $ 0.81     $ 3.36    

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

                                              Non-GAAP Disclosure   Quarter-Ended    

 

Year-Ended

        Dec-13       Sep-13       Jun-13       Mar-13       Dec-12       Dec-13   Reported net income (GAAP)   $ 14,290     $ 14,049     $ 11,007     $ 11,510     $ 11,161     $ 50,856   Merger related expenses (net of tax)     0       0       22       118       462       140   Gain on redemption of trust preferred (net of tax)     0       (846 )     0       0       0       (846 ) Gain on deposit conversion     (771 )     0       0       0       0       (771 ) Net operating income (Non-GAAP)   $ 13,519     $ 13,203     $ 11,029     $ 11,628     $ 11,623     $ 49,379   Amortization of intangibles (net of tax)     329       327       328       334       348       1,318   Adjusted net operating income (Non-GAAP)     13,848       13,530       11,357       11,962       11,971       50,697                                                     Average total shareholders' equity     449,445       434,482       447,088       443,277       443,592       443,565   Less: Average goodwill and intangibles     108,729       109,277       110,037       110,687       114,644       109,676   Average tangible shareholders' equity (Non-GAAP)     340,716       325,205       337,051       332,590       328,948       333,889                                                     Adjusted operating return on shareholders' tangible equity (annualized) (Non-GAAP)     16.13 %     16.51 %     13.52 %     14.59 %     14.48 %     15.18 %     Non-GAAP Disclosure                         Total shareholders' equity (GAAP)   $ 457,939     $ 444,276     $ 431,894     $ 446,812     $ 441,360     $ 457,939   Less: goodwill and intangibles     108,438       108,981       109,540       110,314       110,948       108,438   Tangible shareholders' equity     349,501       335,295       322,354       336,498       330,412       349,501                                                     Ending shares outstanding     14,749,097       14,692,671       14,599,558       14,447,017       14,390,801       14,749,097   Tangible book value per share (Non-GAAP)     23.70       22.82       22.08       23.29       22.96       23.70                       Non-GAAP Disclosure   Year-to-date period ended       Dec-13     Dec-12   Net income attributable to Tompkins Financial           $     Corporation     50,856       31,285   Adjustments (net of tax):                 Accrual adjustment VISA     0       (243 ) Merger related expenses     140       9,664   Gain on redemption of trust preferred securities     (846 )     0   Gain on deposit conversion     (771 )     0   Subtotal adjustments     (1,477 )     9,421   Net operating income (Non-GAAP)     49,379       40,706   Adjusted diluted earnings per share   $ 3.36     $ 3.17     (1) Federal Reserve peer ratio as of September 30, 2013, 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. "Covered Loans" are loans for which the Company will share losses with the FDIC and consist of loans VIST Bank acquired as part of an FDIC-assisted transaction during the fourth quarter of 2010. (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, 2012. (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) Includes all other real estate owned, including those balances acquired through business combinations. (9)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.

Tompkins Financial CorporationStephen S. Romaine, President & CEOFrancis M. Fetsko, CFO & COO888-503-5753