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Tompkins Financial Corporation Reports Second Quarter Earnings

Tompkins Financial Corporation (NYSE American: TMP)

Tompkins Financial Corporation ("Tompkins" or the "Company") reported diluted earnings per share of $0.59 for the second quarter of 2023, down 56.3% from the immediate prior quarter, and down 59.3% from diluted earnings per share of $1.45 reported in the second quarter of 2022. Net income for the second quarter of 2023 was $8.5 million, down $12.4 million, or 59.4%, when compared to the $20.9 million reported for the same period in 2022.

Results for the current quarter were negatively affected by the sale of $80.9 million of available-for-sale securities. Though the sale resulted in a $7.1 million pre-tax loss on securities transactions during the quarter (or $0.37 per share), the transaction is expected to have a positive impact on future earnings. The available-for-sale securities sold in the second quarter of 2023 had an average yield of 0.48%, with a remaining average life of 2.3 years. Approximately $15.0 million of the proceeds from sale were reinvested in available-for-sale securities with an average yield of approximately 4.30%, while the remaining proceeds were used to pay down approximately $65.0 million of overnight borrowings with the Federal Home Loan Bank ("FHLB").

For the year-to-date period ended June 30, 2023, diluted earnings per share were $1.94, down 36.4% from $3.05 for the same year-to-date period in 2022. Year-to-date net income was $27.9 million for the six month period ended June 30, 2023, down $16.3 million, or 36.9%, when compared to $44.1 million for the same period in 2022. Year-to-date results were also negatively impacted by the loss on securities transactions described above.

Tompkins President and CEO, Stephen Romaine, commented, "The economic environment remains challenging for the banking industry. Despite these challenges, which continue to negatively affect our net interest income, we saw some positive trends during the second quarter and first half of 2023. These included annualized loan growth of 6.0% from the immediate prior quarter, stable noninterest bearing deposit balances when compared to the first quarter this year, and year-to-date annualized fee income growth of 1.3% over that same period in 2022."

SELECTED HIGHLIGHTS FOR THE PERIOD:

  • Total loans at June 30, 2023 were $5.4 billion, up 6.0% annualized compared to the immediate prior quarter, and up $189.9 million, or 3.7%, from June 30, 2022.
  • Total deposits at June 30, 2023 were $6.5 billion, down $54.4 million, or 0.84%, from March 31, 2023 and down $314.9 million, or 4.65%, from June 30, 2022. The year-over-year pace of decline of total deposits slowed in the second quarter, when compared to the year-over-year decline of 7.2% over the twelve month period ended March 31, 2023.
  • Loan to deposit ratio remains stable at 83% as compared to 81% for the prior quarter
  • Regulatory Tier 1 capital to average assets was 9.57% at June 30, 2023, compared to 9.63% at March 31, 2023 and 9.02% at June 30, 2022.
  • Total nonperforming assets at June 30, 2023 represented 0.41% of total assets, an increase of 10.8% from the immediate prior quarter.

NET INTEREST INCOME

Net interest income was $51.9 million for the second quarter of 2023, down from $54.2 million for the first quarter of 2023 and $58.3 million for the second quarter of 2022. Net interest margin was 2.83% for the second quarter of 2023, compared to 2.99% reported for the first quarter of 2023 and 3.09% reported for the second quarter of 2022. The decrease in net interest income and net interest margin from the first quarter of 2023 and the second quarter of 2022 was due primarily to the increase in interest rates on interest-bearing liabilities outpacing increases on interest earning asset yields due to the higher interest rate environment.

For the year-to-date period ended June 30, 2023, net interest income was $106.1 million, down $8.7 million or 7.6% when compared to the same period in 2022.

Average loans for the quarter ended June 30, 2023 were up $53.4 million, or 1.0%, from the first quarter of 2023, and $189.4 million, or 3.7%, compared to the same period in 2022. The increase in average loans was mainly in the commercial real estate portfolio compared to the first quarter of 2023, and the quarter ended June 30, 2022. The average yield on interest-earning assets for the quarter ended June 30, 2023 was 3.91%, up 10 basis points compared to the quarter ended March 31, 2023, and up 68 basis points compared to the quarter ended June 30, 2022.

Average total deposits for the second quarter of 2023 were down $121.4 million, or 1.8%, compared to the first quarter of 2023, and down $414.4 million, or 6.0%, compared to the same period in 2022. The decrease was largely driven by a decline in stimulus funding and a tightening monetary policy that has led to a declining trend in bank deposits on a national level, as reported by the Federal Reserve. The cost of interest-bearing deposits increased to 1.41% for the second quarter of 2023, compared to 1.10% for the first quarter of 2023, and 0.18% for the second quarter of 2022. The cost of interest-bearing deposits for the second quarter of 2023 increased 31 basis points from March 31, 2023, which is down from the 41 basis point increase in the cost of interest-bearing deposits for the first quarter of 2023, compared to the fourth quarter of 2022. Noninterest bearing deposits to total deposits at June 30, 2023, were 31.4% compared to 30.9% at March 31, 2023. The average cost of interest-bearing liabilities for the second quarter of 2023 of 1.64%, represents an increase of 38 basis points over the first quarter of 2023, and an increase of 142 basis points over the same period in 2022.

NONINTEREST INCOME

Noninterest income of $12.6 million for the second quarter of 2023 was down $6.3 million, or 33.4%, compared to the second quarter of 2022. Year-to-date noninterest income of $33.0 million was down $5.9 million, or 15.2%, compared to the same six month period in 2022. Noninterest income represented 19.6% of total revenue for the quarter ended June 30, 2023, compared to 24.5% for the quarter ended June 30, 2022. The decrease in noninterest income in the second quarter of 2023 was largely due to the sale of available-for-sale securities, which resulted in the recognition of a pre-tax loss of $7.1 million. Partially offsetting the decreases in noninterest income in the second quarter of 2023 compared to the prior year quarter were increases in fee income of $337,000 and an increase in income on bank-owned life insurance of $383,000.

NONINTEREST EXPENSE

Noninterest expense was $52.0 million for the second quarter of 2023, which was up $2.8 million, or 5.8%, over the second quarter of 2022. For the year-to-date period, noninterest expense of $102.1 million was up $6.2 million, or 6.4%, from the same period in 2022. The increase in noninterest expense in the second quarter of 2023 over the same quarter last year was mainly in higher personnel-related expenses, up $1.2 million. The increase in personnel-related expenses was mainly in salaries and wages and reflects annual merit adjustments. Significant components that increased in other expenses were professional fees which were up $405,000, other losses which were up $517,000, and marketing which was up $232,000, in each case as compared to the second quarter of 2022.

INCOME TAX EXPENSE

The Company's effective tax rate was 17.3% for the second quarter of 2023, compared to 23.2% for the same period in 2022. The effective tax rate for the six months ended June 30, 2023 was 21.6%, compared to 23.1% reported for the same period in 2022.

The decrease in the effective tax rate for the three and six months ended June 30, 2023, compared to the same periods in 2022 is largely due to the anticipated retention of certain New York State tax benefits. The Company's banking subsidiary has an investment in a real estate investment trust that provides certain benefits on its New York State tax return for qualifying entities. A condition to claim the benefit is that the consolidated company has qualified average assets of no more than $8.0 billion for the taxable year. Based on current estimates of average assets during 2023, the Company expects to retain the benefits in 2023.

ASSET QUALITY

The allowance for credit losses represented 0.91% of total loans and leases at June 30, 2023, up from 0.87% at March 31, 2023, and up from 0.85% at June 30, 2022. The ratio of the allowance to total nonperforming loans and leases was 154.76% for the second quarter of 2023, compared to 162.11% at March 31, 2023 and 147.95% at June 30, 2022.

Provision for credit losses for the second quarter of 2023 was $2.3 million compared to $856,000 for the same period in 2022. Provision for credit losses for the six months ended June 30, 2023 was $1.4 million, compared to $336,000 for the six months ended June 30, 2022. The increase in provision expense for both the quarter and year-to-date periods was mainly driven by weaker economic forecasts, loan growth, and changes in asset quality. Net recoveries for the quarter ended June 30, 2023 were $27,000 compared to net recoveries of $887,000 reported for the same period in 2022.

Nonperforming assets represented 0.41% of total assets at June 30, 2023, down from 0.43% at December 31, 2022 and up from the 0.38% reported at June 30, 2022. At June 30, 2023, nonperforming loans and leases totaled $31.4 million, compared to $32.8 million at December 31, 2022 and $29.6 million at June 30, 2022. The increase in loans past due 30-89 days at quarter end June 30, 2023 was mainly due to the inclusion of a $15.3 million commercial real estate loan.

Special Mention and Substandard loans and leases totaled $118.1 million at June 30, 2023, reflecting an increase from the $98.3 million reported at December 31, 2022, and $115.0 million at June 30, 2022. The increase over year-end in Special Mention and Substandard was mainly a result of the downgrade of one commercial real estate loan added to Special Mention during the second quarter of 2023 and the downgrade of one commercial real estate loan previously reported as Special Mention.

CAPITAL POSITION

Capital ratios at June 30, 2023 remained well above the regulatory minimums for well-capitalized institutions. The ratio of total capital to risk-weighted assets was 14.48% at June 30, 2023, compared to 14.42% at December 31, 2022 and 14.07% at June 30, 2022. The ratio of Tier 1 capital to average assets was 9.57% at June 30, 2023, compared to 9.34% at December 31, 2022 and 9.02% at June 30, 2022.

During the second quarter of 2023, the Company repurchased 108,219 common shares at an aggregate cost of $6.3 million. These shares were purchased under the Company's Stock Repurchase Program announced in the third quarter of 2021.

The Company announced today that its Board of Directors has authorized a new Stock Repurchase Program to repurchase up to 400,000 shares of the Company's outstanding common stock, par value $0.10 per share, from time to time, over the next 24 months.

LIQUIDITY POSITION

The Company's liquidity position remained stable from the first quarter of 2023. Liquidity is enhanced by ready access to national and regional wholesale funding sources including Federal funds purchased, repurchase agreements, brokered deposits, Federal Reserve Bank Discount Window advances and FHLB advances. The Company maintains ready access liquidity of $1.7 billion, or 22.3% of total assets at June 30, 2023. As members of the FHLB, the Company can use certain unencumbered mortgage-related assets and securities to secure borrowings from the FHLB. At June 30, 2023 the Company had an available borrowing capacity at the FHLB of $1.3 billion, unchanged from the first quarter of 2023. Through various programs at the Federal Reserve Bank, the Company has the ability to use certain unencumbered mortgage-related assets and securities to secure borrowings from the Federal Reserve Bank's Discount Window. At June 30, 2023 the available borrowing capacity with the Federal Reserve Bank was $245.7 million, secured by investment securities. In addition to the available borrowing lines at the FHLB and Federal Reserve Bank, at June 30, 2023, the Company maintained $137.7 million of unencumbered securities which could be pledged to further enhance secured borrowing capacity.

ABOUT TOMPKINS FINANCIAL CORPORATION

Tompkins Financial Corporation is a banking and 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 Community 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 Act of 1995:

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The statements contained in this press release that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements may be identified by use of such words as "may", "will", "estimate", "intend", "continue", "believe", "expect", "plan", or "anticipate", the negative and other variations of these terms and other similar words. Forward-looking statements are made based on management’s expectations and beliefs concerning future events impacting the Company and are subject to certain uncertainties and factors relating to the Company’s operations and economic environment, all of which are difficult to predict and many of which are beyond the control of the Company, that could cause actual results of the Company to differ materially from those expressed and/or implied by forward-looking statements and historical performance. The following factors, in addition to those listed as Risk Factors in Item 1A in our Annual Reports on Form 10-K and our Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission are among those that could cause actual results to differ materially from the forward-looking statements: changes in general economic, market and regulatory conditions; our ability to attract and retain deposits and access other sources of liquidity; GDP growth; the impact of the interest rate and inflationary environment on the Company's business, financial condition and results of operations; other income or cash flow anticipated from the Company's operations, investment and/or lending activities; changes in laws and regulations affecting banks, bank holding companies and/or financial holding companies, such as state and local government mandates, SEC rule-making, the Dodd-Frank Act and Basel III and the Economic Growth, Regulatory Relief, and Consumer Protection Act; the impact of any change in the FDIC insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount; technological developments and changes; cyber security incidents and threats, the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; governmental and public policy changes, including environmental regulation; reliance on large customers; uncertainties arising from national and global events, including the war in Ukraine, as well as the potential impact of widespread protests, civil unrest, political uncertainty on the economy and the financial services industry, and pandemics or other public health crises, including the COVID-19 pandemic; and access to financial resources in the amounts, at the times and on the terms required to support the Company’s future businesses. The Company does not undertake any obligation to update its forward-looking statements.

TOMPKINS FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CONDITION

(In thousands, except share and per share data)

As of

As of

ASSETS

06/30/2023

12/31/2022

 

 

(Audited)

 

 

 

Cash and noninterest bearing balances due from banks

$

65,916

 

$

18,572

 

Interest bearing balances due from banks

 

15,698

 

 

59,265

 

Cash and Cash Equivalents

 

81,614

 

 

77,837

 

 

 

 

Available-for-sale debt securities, at fair value (amortized cost of $1,688,051 at June 30, 2023 and $1,831,791 at December 31, 2022)

 

1,468,003

 

 

1,594,967

 

Held-to-maturity securities, at amortized cost (fair value of $262,444 at June 30, 2023 and $261,692 at December 31, 2022)

 

312,369

 

 

312,344

 

Equity securities, at fair value

 

778

 

 

777

 

Total loans and leases, net of unearned income and deferred costs and fees

 

5,352,365

 

 

5,268,911

 

Less: Allowance for credit losses

 

48,545

 

 

45,934

 

Net Loans and Leases

 

5,303,820

 

 

5,222,977

 

 

 

 

Federal Home Loan Bank and other stock

 

23,649

 

 

17,720

 

Bank premises and equipment, net

 

81,087

 

 

82,140

 

Corporate owned life insurance

 

86,709

 

 

85,556

 

Goodwill

 

92,602

 

 

92,602

 

Other intangible assets, net

 

2,513

 

 

2,708

 

Accrued interest and other assets

 

173,094

 

 

181,058

 

Total Assets

$

7,626,238

 

$

7,670,686

 

LIABILITIES

 

 

Deposits:

 

 

Interest bearing:

 

 

Checking, savings and money market

 

3,659,220

 

 

3,820,739

 

Time

 

770,594

 

 

631,411

 

Noninterest bearing

 

2,024,837

 

 

2,150,145

 

Total Deposits

 

6,454,651

 

 

6,602,295

 

 

 

 

Federal funds purchased and securities sold under agreements to repurchase

 

50,483

 

 

56,278

 

Other borrowings

 

387,100

 

 

291,300

 

Other liabilities

 

97,563

 

 

103,423

 

Total Liabilities

$

6,989,797

 

$

7,053,296

 

EQUITY

 

 

Tompkins Financial Corporation shareholders' equity:

 

 

Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued: 14,441,413 at June 30, 2023; and 14,555,741 at December 31, 2022

 

1,444

 

 

1,456

 

Additional paid-in capital

 

298,133

 

 

302,763

 

Retained earnings

 

537,095

 

 

526,727

 

Accumulated other comprehensive loss

 

(195,520

)

 

(208,689

)

Treasury stock, at cost – 124,265 shares at June 30, 2023, and 128,749 shares at December 31, 2022

 

(6,185

)

 

(6,279

)

Total Tompkins Financial Corporation Shareholders’ Equity

 

634,967

 

 

615,978

 

Noncontrolling interests

 

1,474

 

 

1,412

 

Total Equity

$

636,441

 

$

617,390

 

Total Liabilities and Equity

$

7,626,238

 

$

7,670,686

 

 

 

 

TOMPKINS FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data) (Unaudited)

Three Months Ended

Six Months Ended

 

06/30/2023

06/30/2022

06/30/2023

06/30/2022

INTEREST AND DIVIDEND INCOME

 

 

 

 

Loans

$

63,527

 

$

52,505

 

$

124,369

 

$

103,636

 

Due from banks

 

183

 

 

64

 

 

322

 

 

105

 

Available-for-sale debt securities

 

6,618

 

 

7,063

 

 

13,361

 

 

13,833

 

Held-to-maturity securities

 

1,219

 

 

1,201

 

 

2,433

 

 

2,330

 

Federal Home Loan Bank and other stock

 

323

 

 

120

 

 

623

 

 

225

 

Total Interest and Dividend Income

 

71,870

 

$

60,953

 

$

141,108

 

$

120,129

 

INTEREST EXPENSE

 

 

 

 

Time certificates of deposits of $250,000 or more

 

2,526

 

 

400

 

 

4,313

 

 

826

 

Other deposits

 

13,119

 

 

1,647

 

 

23,513

 

 

3,267

 

Federal funds purchased and securities sold under agreements to repurchase

 

15

 

 

15

 

 

29

 

 

31

 

Other borrowings

 

4,314

 

 

629

 

 

7,111

 

 

1,129

 

Total Interest Expense

 

19,974

 

 

2,691

 

 

34,966

 

 

5,253

 

Net Interest Income

 

51,896

 

 

58,262

 

 

106,142

 

 

114,876

 

Less: Provision for credit loss expense

 

2,253

 

 

856

 

 

1,428

 

 

336

 

Net Interest Income After Credit for Credit Loss Expense

 

49,643

 

 

57,406

 

 

104,714

 

 

114,540

 

NONINTEREST INCOME

 

 

 

 

Insurance commissions and fees

 

8,672

 

 

8,429

 

 

18,181

 

 

17,746

 

Wealth management fees

 

4,678

 

 

4,596

 

 

9,187

 

 

9,513

 

Service charges on deposit accounts

 

1,640

 

 

1,756

 

 

3,386

 

 

3,535

 

Card services income

 

3,087

 

 

2,959

 

 

5,769

 

 

5,502

 

Other income

 

1,603

 

 

1,241

 

 

3,544

 

 

2,717

 

Net loss on securities transactions

 

(7,065

)

 

(37

)

 

(7,052

)

 

(84

)

Total Noninterest Income

 

12,615

 

 

18,944

 

 

33,015

 

 

38,929

 

NONINTEREST EXPENSE

 

 

 

 

Salaries and wages

 

25,337

 

 

24,396

 

 

49,849

 

 

47,668

 

Other employee benefits

 

6,647

 

 

6,341

 

 

13,388

 

 

12,138

 

Net occupancy expense of premises

 

3,327

 

 

3,131

 

 

6,626

 

 

6,672

 

Furniture and fixture expense

 

2,105

 

 

2,004

 

 

4,159

 

 

3,995

 

Amortization of intangible assets

 

84

 

 

219

 

 

167

 

 

437

 

Other operating expense

 

14,468

 

 

13,029

 

 

27,937

 

 

25,049

 

Total Noninterest Expenses

 

51,968

 

 

49,120

 

 

102,126

 

 

95,959

 

Income Before Income Tax Expense

 

10,290

 

 

27,230

 

 

35,603

 

 

57,510

 

Income Tax Expense

 

1,784

 

 

6,329

 

 

7,685

 

 

13,305

 

Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation

 

8,506

 

 

20,901

 

 

27,918

 

 

44,205

 

Less: Net Income Attributable to Noncontrolling Interests

 

31

 

 

32

 

 

62

 

 

63

 

Net Income Attributable to Tompkins Financial Corporation

$

8,475

 

 

20,869

 

 

27,856

 

 

44,142

 

Basic Earnings Per Share

$

0.59

 

$

1.45

 

$

1.94

 

$

3.06

 

Diluted Earnings Per Share

$

0.59

 

$

1.45

 

$

1.94

 

$

3.05

 

 

 

 

 

 

Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)

 

Quarter Ended

Quarter Ended

 

June 30, 2023

June 30, 2022

 

Average

 

 

Average

 

 

 

Balance

 

Average

Balance

 

Average

(Dollar amounts in thousands)

(QTD)

Interest

Yield/Rate

(QTD)

Interest

Yield/Rate

ASSETS

 

 

 

 

 

 

Interest-earning assets

 

 

 

 

 

 

Interest-bearing balances due from banks

$

13,585

$

183

 

5.40

%

$

88,094

$

64

 

0.29

%

Securities (1)

 

 

 

 

 

 

U.S. Government securities

 

1,972,719

 

7,304

 

1.49

%

 

2,305,102

 

7,746

 

1.35

%

State and municipal (2)

 

92,194

 

590

 

2.57

%

 

97,481

 

619

 

2.55

%

Other securities (2)

 

3,288

 

56

 

6.86

%

 

3,337

 

28

 

3.40

%

Total securities

 

2,068,201

 

7,950

 

1.54

%

 

2,405,920

 

8,393

 

1.40

%

FHLBNY and FRB stock

 

23,211

 

323

 

5.59

%

 

12,234

 

120

 

3.92

%

Total loans and leases, net of unearned income (2)(3)

 

5,304,717

 

63,709

 

4.82

%

 

5,115,340

 

52,733

 

4.14

%

Total interest-earning assets

 

7,409,714

 

72,165

 

3.91

%

 

7,621,588

 

61,310

 

3.23

%

Other assets

 

226,086

 

 

 

209,057

 

 

Total assets

$

7,635,800

 

 

$

7,830,645

 

 

LIABILITIES & EQUITY

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

Interest-bearing deposits

 

 

 

 

 

 

Interest bearing checking, savings, & money market

$

3,701,229

$

10,590

 

1.15

%

$

4,073,279

$

890

 

0.09

%

Time deposits

 

745,970

 

5,055

 

2.72

%

 

603,791

 

1,157

 

0.77

%

Total interest-bearing deposits

 

4,447,199

 

15,645

 

1.41

%

 

4,677,070

 

2,047

 

0.18

%

Federal funds purchased & securities sold under agreements to repurchase

 

56,083

 

15

 

0.11

%

 

54,885

 

15

 

0.11

%

Other borrowings

 

379,744

 

4,314

 

4.56

%

 

169,390

 

629

 

1.49

%

Total interest-bearing liabilities

 

4,883,026

 

19,974

 

1.64

%

 

4,901,345

 

2,691

 

0.22

%

Noninterest bearing deposits

 

2,004,560

 

 

 

2,189,132

 

 

Accrued expenses and other liabilities

 

97,660

 

 

 

100,813

 

 

Total liabilities

 

6,985,246

 

 

 

7,191,290

 

 

Tompkins Financial Corporation Shareholders’ equity

 

649,097

 

 

 

637,896

 

 

Noncontrolling interest

 

1,457

 

 

 

1,459

 

 

Total equity

 

650,554

 

 

 

639,355

 

 

 

 

 

 

 

 

 

Total liabilities and equity

$

7,635,800

 

 

$

7,830,645

 

 

Interest rate spread

 

 

2.27

%

 

 

3.01

%

Net interest income/margin on earning assets

 

 

52,191

 

2.83

%

 

 

58,619

 

3.09

%

 

 

 

 

 

 

 

Tax Equivalent Adjustment

 

 

(295

)

 

 

 

(357

)

 

Net interest income per consolidated financial statements

 

$

51,896

 

 

 

$

58,262

 

 

 

Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)

 

Year to Date Period Ended

Year to Date Period Ended

 

June 30, 2023

June 30, 2022

 

Average

 

 

Average

 

 

 

Balance

 

 

Balance

 

Average

(Dollar amounts in thousands)

(YTD)

Interest

 

(YTD)

Interest

Yield/Rate

ASSETS

 

 

 

 

 

 

Interest-earning assets

 

 

 

 

 

 

Interest-bearing balances due from banks

$

13,161

$

322

 

4.93

%

$

110,984

$

105

 

0.19

%

Securities (1)

 

 

 

 

 

 

U.S. Government securities

 

2,002,846

 

14,728

 

1.48

%

 

2,299,389

 

15,108

 

1.32

%

State and municipal (2)

 

92,695

 

1,188

 

2.58

%

 

99,602

 

1,267

 

2.57

%

Other securities (2)

 

3,286

 

110

 

6.70

%

 

3,363

 

51

 

3.06

%

Total securities

 

2,098,827

 

16,026

 

1.54

%

 

2,402,354

 

16,426

 

1.38

%

FHLBNY and FRB stock

 

19,998

 

623

 

6.29

%

 

11,172

 

225

 

4.06

%

Total loans and leases, net of unearned income (2)(3)

 

5,278,145

 

124,744

 

4.77

%

 

5,085,808

 

104,088

 

4.13

%

Total interest-earning assets

 

7,410,131

 

141,715

 

3.86

%

 

7,610,318

 

120,844

 

3.20

%

Other assets

 

224,671

 

 

 

259,809

 

 

Total assets

$

7,634,802

 

 

$

7,870,127

 

 

LIABILITIES & EQUITY

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

Interest-bearing deposits

 

 

 

 

 

 

Interest bearing checking, savings, & money market

$

3,767,032

$

19,230

 

1.03

%

$

4,116,870

$

1,638

 

0.08

%

Time deposits

 

710,119

 

8,596

 

2.44

%

 

617,616

 

2,455

 

0.80

%

Total interest-bearing deposits

 

4,477,151

 

27,826

 

1.25

%

 

4,734,486

 

4,093

 

0.17

%

Federal funds purchased & securities sold under agreements to repurchase

 

56,799

 

29

 

0.10

%

 

59,536

 

31

 

0.11

%

Other borrowings

 

325,052

 

7,111

 

4.41

%

 

147,466

 

1,129

 

1.54

%

Total interest-bearing liabilities

 

4,859,002

 

34,966

 

1.45

%

 

4,941,488

 

5,253

 

0.21

%

Noninterest bearing deposits

 

2,034,961

 

 

 

2,149,201

 

 

Accrued expenses and other liabilities

 

99,905

 

 

 

103,451

 

 

Total liabilities

 

6,993,868

 

 

 

7,194,140

 

 

Tompkins Financial Corporation Shareholders’ equity

 

639,494

 

 

 

674,545

 

 

Noncontrolling interest

 

1,440

 

 

 

1,442

 

 

Total equity

 

640,934

 

 

 

675,987

 

 

 

 

 

 

 

 

 

Total liabilities and equity

$

7,634,802

 

 

$

7,870,127

 

 

Interest rate spread

 

 

2.41

%

 

 

2.99

%

Net interest income/margin on earning assets

 

 

106,749

 

2.90

%

 

 

115,591

 

3.06

%

 

 

 

 

 

 

 

Tax Equivalent Adjustment

 

 

(607

)

 

 

 

(715

)

 

Net interest income per consolidated financial statements

 

$

106,142

 

 

 

$

114,876

 

 

 

Tompkins Financial Corporation - Summary Financial Data (Unaudited)

 

(In thousands, except per share data)

 

 

 

 

 

 

 

Quarter-Ended

Year-Ended

Period End Balance Sheet

Jun-23

Mar-23

 

Dec-22

Sep-22

Jun-22

Dec-22

Securities

$

1,781,150

$

1,899,001

 

$

1,908,088

$

2,054,036

$

2,204,851

$

1,908,088

Total Loans

 

5,352,365

 

5,273,671

 

 

5,268,911

 

5,208,436

 

5,162,503

 

5,268,911

Allowance for credit losses

 

48,545

 

46,099

 

 

45,934

 

44,772

 

43,793

 

45,934

Total assets

 

7,626,238

 

7,644,371

 

 

7,670,686

 

7,779,941

 

7,842,461

 

7,670,686

Total deposits

 

6,454,651

 

6,509,009

 

 

6,602,295

 

6,936,726

 

6,769,521

 

6,602,295

Federal funds purchased and securities sold under agreements to repurchase

 

50,483

 

63,491

 

 

56,278

 

55,340

 

50,075

 

56,278

Other borrowings

 

387,100

 

327,000

 

 

291,300

 

101,000

 

295,600

 

291,300

Total common equity

 

634,967

 

648,322

 

 

615,978

 

571,453

 

622,843

 

615,978

Total equity

 

636,441

 

649,765

 

 

617,390

 

572,959

 

624,318

 

617,390

 

Average Balance Sheet

 

 

 

 

 

 

Average earning assets

$

7,409,714

$

7,410,553

 

$

7,568,656

$

7,639,123

$

7,621,588

$

7,607,078

Average assets

 

7,635,800

 

7,633,793

 

 

7,721,335

 

7,853,847

 

7,830,645

 

7,828,520

Average interest-bearing liabilities

 

4,883,026

 

4,834,712

 

 

4,828,561

 

4,861,857

 

4,901,345

 

4,892,952

Average equity

 

650,554

 

631,208

 

 

580,720

 

635,324

 

639,354

 

641,726

 

Share data

 

 

 

 

 

 

Weighted average shares outstanding (basic)

 

14,314,133

 

14,326,595

 

 

14,308,323

 

14,289,022

 

14,317,415

 

14,328,280

Weighted average shares outstanding (diluted)

 

14,346,787

 

14,389,673

 

 

14,385,884

 

14,367,149

 

14,387,601

 

14,404,294

Period-end shares outstanding

 

14,405,503

 

14,519,748

 

 

14,519,831

 

14,483,757

 

14,504,604

 

14,519,831

Common equity book value per share

$

44.08

$

44.65

 

$

42.42

$

39.45

$

42.94

$

42.42

Tangible book value per share (Non-GAAP)**

$

37.54

$

38.16

 

$

35.93

$

32.93

$

36.42

$

35.93

**See "Non-GAAP measures" below for a discussion of non-GAAP financial measures and a reconciliation of non-GAAP financial measures to the most directly comparable financial measures presented in accordance with GAAP.

 

Income Statement

 

 

 

 

 

 

Net interest income

$

51,896

$

54,246

 

$

57,294

$

58,111

$

58,262

$

230,281

(Credit) provision for credit loss expense (5)

 

2,253

 

(825

)

 

1,397

 

1,056

 

856

 

2,789

Noninterest income

 

12,615

 

20,400

 

 

18,351

 

20,692

 

18,944

 

77,972

Noninterest expense (5)

 

51,968

 

50,158

 

 

50,190

 

49,602

 

49,120

 

195,751

Income tax expense

 

1,784

 

5,901

 

 

4,478

 

6,774

 

6,329

 

24,557

Net income attributable to Tompkins Financial Corporation

 

8,475

 

19,381

 

 

19,548

 

21,340

 

20,869

 

85,030

Noncontrolling interests

 

31

 

31

 

 

32

 

31

 

32

 

126

Basic earnings per share (4)

 

0.59

 

1.35

 

 

1.36

 

1.49

 

1.45

 

5.92

Diluted earnings per share (4)

 

0.59

 

1.35

 

 

1.36

 

1.48

 

1.45

 

5.89

 

Nonperforming Assets

 

 

 

 

 

 

Nonaccrual loans and leases

$

31,333

$

28,424

 

$

28,289

$

30,013

$

24,665

$

28,289

Loans and leases 90 days past due and accruing

 

34

 

13

 

 

25

 

161

 

62

 

25

Performing troubled debt restructuring*

 

0

 

0

 

 

4,530

 

4,730

 

4,872

 

4,530

Total nonperforming loans and leases

 

31,367

 

28,437

 

 

32,844

 

34,904

 

29,599

 

32,844

OREO

 

36

 

36

 

 

152

 

335

 

122

 

152

Total nonperforming assets

$

31,403

$

28,473

 

$

32,996

$

35,239

$

29,721

$

32,996

*No amount shown for periods subsequent to the Company's adoption of ASU 2022-02 effective January 1, 2023.

 

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

 

 

Quarter-Ended

Year-Ended

Delinquency - Total loan and lease portfolio

Jun-23

 

Mar-23

 

Dec-22

Sep-22

 

Jun-22

 

Dec-22

 

Loans and leases 30-89 days past due and accruing

$

20,255

 

$

5,894

 

$

3,172

$

3,160

 

$

9,837

 

$

3,172

 

Loans and leases 90 days past due and accruing

 

34

 

 

13

 

 

25

 

161

 

 

62

 

 

25

 

Total loans and leases past due and accruing

 

20,289

 

 

5,907

 

 

3,197

 

3,321

 

 

9,899

 

 

3,197

 

Allowance for Credit Losses

Balance at beginning of period

$

46,099

 

$

45,934

 

$

44,772

$

43,793

 

$

42,126

 

$

42,843

 

Impact of adopting ASC 326

 

0

 

 

64

 

 

0

 

0

 

 

0

 

 

0

 

Provision (credit) for credit losses

 

2,419

 

 

(1,180

)

 

1,352

 

1,101

 

 

780

 

$

2,499

 

Net loan and lease (recoveries) charge-offs

 

(27

)

 

(1,281

)

 

190

 

122

 

 

(887

)

$

(592

)

Allowance for credit losses at end of period

$

48,545

 

$

46,099

 

$

45,934

$

44,772

 

$

43,793

 

$

45,934

 

 

 

 

 

 

 

 

Allowance for Credit Losses - Off-Balance Sheet Exposure

Balance at beginning of period

$

3,151

 

$

2,796

 

$

2,751

$

2,796

 

$

2,720

 

$

2,506

 

(Credit) provision for credit losses

 

(166

)

 

355

 

 

45

 

(45

)

 

76

 

$

290

 

Allowance for credit losses at end of period

$

2,985

 

$

3,151

 

$

2,796

$

2,751

 

$

2,796

 

$

2,796

 

 

Loan Classification - Total Portfolio

 

 

 

 

 

 

Special Mention

$

56,305

 

$

39,255

 

$

49,752

$

66,730

 

$

72,270

 

$

49,752

 

Substandard

 

61,820

 

 

46,315

 

 

48,537

 

40,007

 

 

42,756

 

 

48,537

 

 

Ratio Analysis

 

Credit Quality

 

 

 

 

 

 

Nonperforming loans and leases/total loans and leases

0.59

%

0.54

%

0.62

%

0.67

%

0.57

%

0.62

%

Nonperforming assets/total assets

0.41

%

0.37

%

0.43

%

0.45

%

0.38

%

0.43

%

Allowance for credit losses/total loans and leases

0.91

%

0.87

%

0.87

%

0.86

%

0.85

%

0.87

%

Allowance/nonperforming loans and leases

154.76

%

162.11

%

139.86

%

128.27

%

147.95

%

139.85

%

Net loan and lease losses annualized/total average loans and leases

0.00

%

(0.10

)%

0.01

%

0.01

%

(0.07

)%

(0.01

)%

 

Capital Adequacy

 

 

 

 

 

 

Tier 1 Capital (to average assets)

9.57

%

9.63

%

9.34

%

9.14

%

9.02

%

9.34

%

Total Capital (to risk-weighted assets)

14.48

%

14.62

%

14.42

%

14.26

%

14.07

%

14.42

%

 

Profitability (period-end)

 

 

 

 

 

 

Return on average assets *

0.45

%

1.03

%

1.00

%

1.08

%

1.07

%

1.09

%

Return on average equity *

5.22

%

12.45

%

13.36

%

13.33

%

13.09

%

13.25

%

Net interest margin (TE) *

2.83

%

2.99

%

3.02

%

3.04

%

3.09

%

3.05

%

* Quarterly ratios have been annualized

 

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

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 below tables. The Company believes the non-GAAP measures provide meaningful comparisons of our underlying operational performance and facilitate management's and investors' assessments of business and performance trends in comparison to others in the financial services industry. These non-GAAP financial measures should not be considered in isolation or as a measure of the Company's profitability or liquidity; they are in addition to, and are not a substitute for, financial measures under GAAP. The non-GAAP financial measures presented herein may be different from non-GAAP financial measures used by other companies, and may not be comparable to similarly titled measures reported by other companies. Further, the Company may utilize other measures to illustrate performance in the future. Non-GAAP financial measures have limitations since they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP.

Reconciliation of Tangible Book Value Per Share (non-GAAP) to Common Equity Book Value Per Share (GAAP)

 

Quarter-Ended

Year-ended

 

Jun-23

Mar-23

Dec-22

Sep-22

Jun-22

Dec-22

Total common equity

$

634,967

$

648,322

$

615,978

$

571,453

$

622,843

$

615,978

Less: Goodwill and intangibles

 

94,169

 

94,253

 

94,336

 

94,554

 

94,617

 

94,336

Tangible common equity (Non-GAAP)

 

540,798

 

554,069

 

521,642

 

476,899

 

528,226

 

521,642

Ending shares outstanding

 

14,405,503

 

14,519,748

 

14,519,831

 

14,483,757

 

14,504,604

 

14,519,831

Tangible book value per share (Non-GAAP)

$

37.54

$

38.16

$

35.93

$

32.93

$

36.42

$

35.93

(1) Average balances and yields on available-for-sale securities are based on historical amortized cost.

(2) Interest income includes the tax effects of taxable-equivalent adjustments using an effective income tax rate of 21% in 2023 and 2022 to increase tax exempt interest income to taxable-equivalent basis.

(3) 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, 2022.

(4) Earnings per share for the full fiscal year may not equal the sum of the quarterly earnings per share as a result of rounding of average shares.

(5) Amounts in prior periods' financial statements are reclassified when necessary to conform to the current period's presentation.

Contacts

Stephen S. Romaine, President & CEO

Francis M. Fetsko, Executive VP, CFO & COO

Tompkins Financial Corporation (888) 503-5753

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