TMP Tompkins Financial Corporation

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 15th 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, 2018and $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 atDecember 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 atDecember 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 December31, 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 unearnedincome 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 underagreements 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 FinancialCorporation

    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 andaccruing

    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 andaccruing (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 andaccruing (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 andaccruing

    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 (originatedloan 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 (acquiredloan 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 andleases (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/totaloriginated 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-basedcompensation 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20190125005063/en/

For more information:Stephen S. Romaine, President & CEOFrancis M. Fetsko, Executive VP, CFO & COOTompkins Financial Corporation 888-503-5753