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Tompkins Financial Corporation Reports Record Full Year and Fourth Quarter Earnings

January 25, 2019 9:00 AM

ITHACA, N.Y.--(BUSINESS WIRE)-- 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:

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.

For more information:

Stephen S. Romaine, President & CEO

Francis M. Fetsko, Executive VP, CFO & COO

Tompkins Financial Corporation 888-503-5753

Source: Tompkins Financial Corporation

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