Business Wire | Oct 23, 2020 09:05AM EDT

Tompkins Financial Corporation Reports Record Third Quarter Earnings

Oct. 23, 2020

ITHACA, N.Y.--(BUSINESS WIRE)--Oct. 23, 2020--Tompkins Financial Corporation (NYSE American: TMP)

Tompkins Financial Corporation reported diluted earnings per share of $1.63 for the third quarter of 2020, up 21.6% compared to $1.34 reported in the third quarter of 2019. Net income for the third quarter of 2020 was $24.2 million, an increase over the $20.2 million reported for the same period in 2019.

For the year-to-date period ended September 30, 2020, diluted earnings per share were $3.59, down 9.6% from the same period in 2019. Year-to-date net income was $53.6 million, down from $60.6 million, for the same period in 2019. Results for the 2020 year-to-date period were negatively impacted by economic stress resulting from the COVID-19 pandemic, which contributed to the $16.3 million provision for credit losses recognized during the first quarter of 2020.

President and CEO, Mr. Stephen Romaine commented, "We are pleased to report record earnings per share in the third quarter of 2020. When compared to the second quarter of 2020, we saw higher levels of net interest income and noninterest income, while expenses remained relatively stable. We are encouraged by these favorable trends, though the impact of the pandemic-related economic shut down continues to leave much uncertainty, especially in terms of the longer term credit outlook. While we have several customers who continue to be negatively impacted by the current economic environment, our nonperforming assets as a percentage of total assets were lower at September 30, 2020 than they were at the same time last year. We have also seen a declining trend of customers who are in a deferred payment status."

SELECTED HIGHLIGHTS FOR THE THIRD QUARTER:

* Total loans of $5.4 billion were up $541.2 million, or 11.1% over September 30, 2019. The increase over the prior period included $465.6 million of PPP loans funded during the second quarter of 2020. * Total deposits of $6.6 billion increased by $1.2 billion, or 22.9% over September 30, 2019. * The ratio of Total Capital to Risk-Weighted Assets improved to 14.26%, up from 13.95% at June 30, 2020, and 13.53% at December 31, 2019.

NET INTEREST INCOME

Net interest income was $58.3 million for the third quarter of 2020, compared to $53.2 million reported for the third quarter of 2019. For the year-to-date period, net interest income was $167.6 million, an increase of $10.2 million or 6.5% from the same nine-month period in 2019.

Net interest income benefited from growth in average loans and average deposits. Average loans were up $381.6 million, or 7.9% in the nine months ended September 30, 2020, compared to the same nine month period in 2019. The increase in average loans includes the benefit of $465.6 million of loans originated under the Small Business Administration's ("SBA") Paycheck Protection Program ("PPP") in the second quarter of 2020. Asset yields were down 36 basis points compared to the first nine months of 2019, which reflects the impact of reductions in market interest rates during the first nine months of 2020, and the addition of the lower yielding PPP loans originated in the second quarter. While PPP loans were a significant contributor to average loan growth for the year, increases in residential real estate loans (up 5.8% from 2019) and commercial real estate (up 6.0% from 2019), also contributed to the growth in year-to-date average loan balances.

Average total deposits were up $937.4 million, or 18.7% in the first nine months of 2020, versus the same period in 2019. Average noninterest deposits were up $318.9 million or 23.1% in the first nine months of 2020, compared to the same period in 2019. Average deposit balances benefited from $465.6 million of PPP loan originations during the second quarter of 2020, the majority of which were deposited in Tompkins checking accounts. The average rate paid on interest-bearing deposit products in the first nine months of 2020 decreased by 32 basis points from the same period in 2019. The total cost of interest-bearing liabilities declined by 49 basis points to 0.66% from the same period last year.

Net interest margin was 3.26% for the third quarter of 2020, down compared to the 3.43% reported for the third quarter of 2019, and 3.45% for the second quarter of 2020. The decline in net interest margin during the third quarter, when compared to the second quarter of 2020, was driven in part by a shift from noninterest-bearing cash balances to interest-bearing cash balances and securities. This shift from noninterest-bearing balances to earning assets resulted in an increase in interest income during the third quarter of 2020, but a 15 basis point decline in net interest margin, when compared to the immediate prior quarter. Net interest margin for the quarter was also negatively impacted by lower rates on interest earning assets, which were partially offset by lower funding costs.

As a result of its participation in the SBA's PPP, in the third quarter the Company recorded net deferred loan fees of $2.4 million, which are included in interest income. For the year-to-date period, net deferred loan fees from PPP loan originations were $4.8 million.

NONINTEREST INCOME

Noninterest income represented 24.7% of total revenues in the first nine months of 2020, as compared to 26.7% in the same period in 2019. Noninterest income of $18.9 million for the third quarter of 2020 was down 3.3% compared to the same period in 2019. For the year-to-date period, noninterest income of $55.0 million was down 4.2% from the same period in 2019. Total fee based services in the third quarter of 2020 were $17.1 million, down 2.1% compared to the same period in 2019. The reduction in fee based income in 2020, when compared to 2019, is largely related to the pandemic-related travel and business restrictions, which reduced card services fees and service charges on deposit accounts. It is noteworthy that card services fees and deposit fees in the third quarter of 2020 were up over the second quarter of 2020, by 6.0% and 15.7% respectively.

NONINTEREST EXPENSE

Noninterest expense was $46.3 million for the third quarter of 2020, up $694,000, or 1.5%, over the third quarter of 2019. For the year-to-date period, noninterest expense was $139.0 million, up $3.0 million, or 2.2%, from the same period in 2019. The increase in noninterest expense for both the third quarter and year-to-date periods was primarily attributable to normal annual increases in salaries and wages. Other expense for the third quarter and year-to-date periods of 2020 included a credit of $417,000 and an expense of $1.3 million, respectively, related to the allowance for credit losses for off-balance sheet exposures.

INCOME TAX EXPENSE

The Company's effective tax rate was 20.7% for the third quarter of 2020, compared to 21.3% for the same period in 2019. The effective tax rate for the nine months ended September 30, 2020 was 20.4%, compared to 20.7% reported for the same period in 2019.

ASSET QUALITY

Provision for credit losses in the third quarter of 2020 was $199,000 compared to $1.3 million for the same period in 2019. Provision expense for the nine months ended September 30, 2020 was $16.1 million, compared to $2.4 million for the same period in 2019. The first quarter of 2020 included provision expense of $16.3 million related to the impact of the economic shutdown related to COVID-19 on economic forecasts and other model assumptions relied upon by management in determining the allowance. Net recoveries for the third quarter of 2020 were $12,000 compared to net charge-offs of $739,000 reported in the third quarter of 2019.

The allowance for credit losses represented 0.97% of total loans and leases at September 30, 2020, up from 0.96% at June 30, 2020, 0.81% at December 31, 2019, and 0.85% at September 30, 2019. The ratio of the allowance to total nonperforming loans and leases was 154.68% at September 30, 2020, improved from 126.90% at December 31, 2019, and 137.46% at September 30, 2019.

Nonperforming assets represented 0.44% of total assets at September 30, 2020, down from 0.47% at December 31, 2019. Nonperforming asset levels continue to be below the most recent Federal Reserve Board Peer Group Average1 of 0.58%.

Despite relatively stable trends in nonperforming assets and other delinquency, some customers have experienced continued cash flow stress related to the pandemic related shut-down, resulting in an increase in loans rated as Special Mention. Total Special Mention loans totaled $122.7 million at the end of the third quarter, up from $44.7 million at June 30, 2020. Even so, the more severely rated Substandard credits declined during the quarter to $45.4 million at September 30, 2020, down from $48.0 million at June 30, 2020.

Overall credit quality has been supported by several initiatives initiated by the Company in response to the pandemic. As previously announced, Tompkins has initiated and participated in a number of credit initiatives to support customers who have been impacted by the economic conditions associated with the COVID-19 pandemic. The Company implemented a payment deferral program to assist both consumer and business borrowers that may be experiencing financial hardship due to COVID-19. Weekly deferral requests for the month of September were down 96.8% from peak levels the Company experienced in late March. As of September 30, 2020, total loans that continue in a deferral status amounted to approximately $120.0 million, representing 2.2% of total loans. Of loans that have come out of the deferral program as of September 30, 2020, about 85.0% had made a payment and 0.18% were more than 30 days delinquent.

As previously noted, the Company participated in the U.S. Small Business Administration (SBA) Paycheck Protection Program ("PPP"). This program provides borrower guarantees for lenders, as well as loan forgiveness incentives for borrowers that utilize the loan proceeds to cover employee compensation-related expenses and certain other eligible business operating costs, all in accordance with the rules and regulations established by the SBA. The Company began accepting applications for PPP loans on April 3, 2020, and had funded approximately 2,998 loans totaling about $465.6 million as of September 30, 2020. As of September 30, 2020 approximately 295 loans totaling $51.9 million have been submitted to the SBA for forgiveness under the terms of the PPP program.

CAPITAL POSITION

Capital ratios remained well above the regulatory minimums for well capitalized institutions. The ratio of Total Capital to Risk-Weighted Assets improved to 14.26% at September 30, 2020, up from 13.95% at June 30, 2020, and 13.53% at December 31, 2019. The ratio of Tier 1 capital to average assets was 8.85% at September 30, 2020, up from 8.79% at June 30, 2020, and down from 9.61% at December 31, 2019. The current period Tier 1 capital to average assets was negatively impacted by balance sheet growth associated with the PPP loans originated in the second quarter of 2020. In April of this year, the Company announced that it had temporarily suspended its share repurchase program. Management has not yet determined when it will resume repurchases under the share repurchase program. Any such decision will be based on, among other factors, the Company's financial and capital position.

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 contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Examples of forward-looking statements in this press release include, without limitation, those regarding the novel coronavirus (COVID-19) and our plans in response to the coronavirus. Forward-looking statements may be identified by use of such words as "may", "will", "estimate", "intend", "continue", "believe", "expect", "plan", or "anticipate", 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. The following factors, in addition to those listed as Risk Factors in Item 1A of 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; the severity and duration of the coronavirus outbreak and the impact of the outbreak (including the government's response to the outbreak) on economic and financial markets, potential regulatory actions, and modifications to our operations, products, and services relating thereto; disruptions in our and our customers' operations and loss of revenue due to pandemics, epidemics, widespread health emergencies, government-imposed travel/business restrictions, or outbreaks of infectious diseases such as the coronavirus, and the associated adverse impact on our financial position, liquidity, and our customers' abilities to repay their obligations to us or willingness to obtain financial services products from the Company; the development of an interest rate environment that may adversely affect the Company's interest rate spread, 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 the Dodd-Frank Act, Basel III and the Economic Growth, Regulatory Relief, and Consumer Protection Act; legislative and regulatory changes in response to COVID-19 with which we and our subsidiaries must comply, including the CARES Act and the rules and regulations promulgated thereunder, and state and local government mandates; technological developments and changes; 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 potential impact of widespread protests, civil unrest, and political uncertainty on the economy and the financial services industry; and 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

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION

(In thousands, except share and per share data) As of As of(Unaudited)

ASSETS 9/30/2020 12/31/2019



Cash and noninterest bearing balances due from $ 22,065 $ 136,010 banks

Interest bearing balances due from banks 352,674 1,972

Cash and Cash Equivalents 374,739 137,982



Available-for-sale debt securities, at fairvalue (amortized cost of $1,637,255 at 1,666,766 1,298,587 September 30, 2020 and $1,293,239 at December 31, 2019)

Equity securities, at fair value (amortizedcost $932 at September 30, 2020 and $915 at 932 915 December 31, 2019)

Total loans and leases, net of unearned income 5,398,297 4,917,550 and deferred costs and fees

Less: Allowance for credit losses 52,293 39,892

Net Loans and Leases 5,346,004 4,877,658



Federal Home Loan Bank and other stock 17,919 33,695

Bank premises and equipment, net 89,015 94,355

Corporate owned life insurance 84,165 82,961

Goodwill 92,447 92,447

Other intangible assets, net 5,211 6,223

Accrued interest and other assets 117,304 100,800

Total Assets $ 7,794,502 $ 6,725,623

LIABILITIES

Deposits:

Interest bearing:

Checking, savings and money market 3,979,253 3,080,686

Time 706,401 675,014

Noninterest bearing 1,915,584 1,457,221

Total Deposits 6,601,238 5,212,921



Federal funds purchased and securities sold 63,573 60,346 under agreements to repurchase

Other borrowings 285,000 658,100

Trust preferred debentures 17,163 17,035

Other liabilities 113,917 114,167

Total Liabilities $ 7,080,891 $ 6,062,569

EQUITY

Tompkins Financial Corporation shareholders' equity:

Common Stock - par value $.10 per share:Authorized 25,000,000 shares; Issued: 1,496 1,501 14,962,162 at September 30, 2020; and 15,014,499 at December 31, 2019

Additional paid-in capital 337,329 338,507

Retained earnings 402,498 370,477

Accumulated other comprehensive loss (23,864) (43,564)

Treasury stock, at cost - 121,868 shares atSeptember 30, 2020, and 123,956 shares at (5,355) (5,279) December 31, 2019

Total Tompkins Financial Corporation 712,104 661,642 Shareholders' Equity



Noncontrolling interests 1,507 1,412

Total Equity $ 713,611 $ 663,054

Total Liabilities and Equity $ 7,794,502 $ 6,725,623



TOMPKINS FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

Three Months Ended

Nine Months Ended

9/30/2020

9/30/2019

9/30/2020

9/30/2019

INTEREST AND DIVIDEND INCOME

Loans

$

57,892

$

57,621

$

169,639

$

169,685

Due from banks

83

11

90

31

Available-for-sale debt securities

6,035

6,511

20,101

22,055

Held-to-maturity securities

0

862

0

2,583

Federal Home Loan Bank and other stock

306

770

1,130

2,442

Total Interest and Dividend Income

64,316

$

65,775

190,960

$

196,796

INTEREST EXPENSE

Time certificates of deposits of $250,000 or more

755

823

2,458

2,184

Other deposits

3,450

7,583

13,723

20,409

Federal funds purchased and securities sold under agreements to repurchase

19

34

76

110

Trust preferred debentures

216

317

758

974

Other borrowings

1,623

3,862

6,357

15,731

Total Interest Expense

6,063

12,619

23,372

39,408

Net Interest Income

58,253

53,156

167,588

157,388

Less: Provision for credit loss expense

199

1,320

16,145

2,366

Net Interest Income After Provision for Credit Loss Expense

58,054

51,836

151,443

155,022

NONINTEREST INCOME

Insurance commissions and fees

8,916

8,517

24,216

24,314

Investment services income

4,292

4,175

12,414

12,166

Service charges on deposit accounts

1,444

2,191

4,675

6,210

Card services income

2,419

2,550

6,885

8,090

Other income

1,818

1,963

6,388

6,247

Net (loss) gain on securities transactions

(2)

138

446

434

Total Noninterest Income

18,887

19,534

55,024

$

57,461

NONINTEREST EXPENSE

Salaries and wages

23,951

22,960

69,482

66,149

Other employee benefits

6,690

5,821

18,260

17,094

Net occupancy expense of premises

3,162

3,236

9,530

10,095

Furniture and fixture expense

1,886

1,919

5,759

5,894

Amortization of intangible assets

371

421

1,120

1,251

Other operating expense

10,289

11,298

34,826

35,451

Total Noninterest Expenses

46,349

45,655

138,977

135,934

Income Before Income Tax Expense

30,592

25,715

67,490

76,549

Income Tax Expense

6,330

5,478

13,779

15,816

Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation

24,262

20,237

53,711

60,733

Less: Net Income Attributable to Noncontrolling Interests

32

31

101

95

Net Income Attributable to Tompkins Financial Corporation

$

24,230

20,206

$

53,610

60,638

Basic Earnings Per Share

$

1.63

$

1.34

$

3.60

$

3.99

Diluted Earnings Per Share

$

1.63

$

1.34

$

3.59

$

3.97

TOMPKINS FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per Three Months Ended Nine Months Endedshare data) (Unaudited)

9/30/2020 9/30/2019 9/30/2020 9/30/2019

INTEREST AND DIVIDEND INCOME

Loans $ 57,892 $ 57,621 $ 169,639 $ 169,685

Due from banks 83 11 90 31

Available-for-sale debt 6,035 6,511 20,101 22,055 securities

Held-to-maturity 0 862 0 2,583 securities

Federal Home Loan Bank 306 770 1,130 2,442 and other stock

Total Interest and 64,316 $ 65,775 190,960 $ 196,796 Dividend Income

INTEREST EXPENSE

Time certificates ofdeposits of $250,000 or 755 823 2,458 2,184 more

Other deposits 3,450 7,583 13,723 20,409

Federal funds purchasedand securities sold under 19 34 76 110 agreements to repurchase

Trust preferred 216 317 758 974 debentures

Other borrowings 1,623 3,862 6,357 15,731

Total Interest Expense 6,063 12,619 23,372 39,408

Net Interest Income 58,253 53,156 167,588 157,388

Less: Provision for 199 1,320 16,145 2,366 credit loss expense

Net Interest Income AfterProvision for Credit Loss 58,054 51,836 151,443 155,022 Expense

NONINTEREST INCOME

Insurance commissions and 8,916 8,517 24,216 24,314 fees

Investment services 4,292 4,175 12,414 12,166 income

Service charges on 1,444 2,191 4,675 6,210 deposit accounts

Card services income 2,419 2,550 6,885 8,090

Other income 1,818 1,963 6,388 6,247

Net (loss) gain on (2) 138 446 434 securities transactions

Total Noninterest Income 18,887 19,534 55,024 $ 57,461

NONINTEREST EXPENSE

Salaries and wages 23,951 22,960 69,482 66,149

Other employee benefits 6,690 5,821 18,260 17,094

Net occupancy expense of 3,162 3,236 9,530 10,095 premises

Furniture and fixture 1,886 1,919 5,759 5,894 expense

Amortization of 371 421 1,120 1,251 intangible assets

Other operating expense 10,289 11,298 34,826 35,451

Total Noninterest 46,349 45,655 138,977 135,934 Expenses

Income Before Income Tax 30,592 25,715 67,490 76,549 Expense

Income Tax Expense 6,330 5,478 13,779 15,816

Net Income Attributableto Noncontrolling 24,262 20,237 53,711 60,733 Interests and Tompkins Financial Corporation

Less: Net IncomeAttributable to 32 31 101 95 Noncontrolling Interests

Net Income Attributableto Tompkins Financial $ 24,230 20,206 $ 53,610 60,638 Corporation

Basic Earnings Per Share $ 1.63 $ 1.34 $ 3.60 $ 3.99

Diluted Earnings Per $ 1.63 $ 1.34 $ 3.59 $ 3.97 Share



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

Quarter Ended

Year to Date Period Ended

Year to Date Period Ended

September 30, 2020

September 30, 2020

September 30, 2019

Average

Average

Average

Balance

Average

Balance

Average

Balance

Average

(Dollar amounts in thousands)

Quarter Ended

Interest

Yield/ Rate

Year Ended

Interest

Yield/ Rate

Year Ended

Interest

Yield/ Rate

ASSETS

Interest-earning assets

Interest-bearing balances due from banks

326,908

$

83

0.10

%

111,775

$

90

0.11

%

2,460

$

31

1.68

%

Securities (2)

U.S. Government securities

1,332,240

5,362

1.60

%

1,242,659

18,236

1.96

%

1,338,807

22,990

2.30

%

State and municipal (3)

122,932

816

2.64

%

110,058

2,225

2.70

%

93,131

1,903

2.73

%

Other securities (3)

3,433

25

2.88

%

3,429

93

3.61

%

3,417

120

4.70

%

Total securities

1,458,605

6,203

1.69

%

1,356,146

20,554

2.02

%

1,435,355

25,013

2.33

%

FHLBNY and other stock

18,319

307

6.66

%

22,175

1,130

6.81

%

42,634

2,442

7.66

%

Total loans and leases, net of unearned income (3)(4)

5,400,217

58,507

4.31

%

5,197,757

170,853

4.39

%

4,816,140

170,540

4.73

%

Total interest-earning assets

7,204,049

65,100

3.59

%

6,687,853

192,627

3.85

%

6,296,589

198,026

4.21

%

Other assets

377,960

536,424

405,358

Total assets

7,582,009

7,224,278

6,701,947

LIABILITIES & EQUITY

Deposits

Interest-bearing deposits

Interest bearing checking, savings & money market

3,796,615

1,671

0.18

%

3,557,326

7,973

0.30

%

2,962,236

14,865

0.67

%

Time deposits

697,026

2,534

1.45

%

693,922

8,208

1.58

%

670,570

7,728

1.54

%

Total interest-bearing deposits

4,493,641

4,205

0.37

%

4,251,248

16,181

0.51

%

3,632,806

22,593

0.83

%

Federal funds purchased & securities sold under agreements to repurchase

47,527

19

0.16

%

54,481

76

0.19

%

61,482

110

0.24

%

Other borrowings

303,587

1,623

2.13

%

397,511

6,357

2.14

%

861,930

15,731

2.44

%

Trust preferred debentures

17,135

216

5.02

%

17,093

758

5.92

%

16,921

974

7.70

%

Total interest-bearing liabilities

4,861,890

6,063

0.50

%

4,720,332

23,372

0.66

%

4,573,139

39,408

1.15

%

Non-interest bearing deposits

1,897,999

1,699,317

1,380,399

Accrued expenses and other liabilities

112,636

111,643

101,483

Total liabilities

6,872,525

6,531,292

6,055,021

Tompkins Financial Corporation Shareholders' equity

707,996

691,530

645,466

Noncontrolling interest

1,488

1,456

1,460

Total equity

709,484

692,986

646,926

Total liabilities and equity

7,582,009

7,224,278

6,701,947

Interest rate spread

3.10

%

3.19

%

3.05

%

Net interest income/margin on earning assets

59,037

3.26

%

169,255

3.38

%

158,618

3.37

%

Tax equivalent adjustments

(784)

(1,667)

(1,230)

Net interest income per consolidated financial statements

$

58,253

$

167,588

$

157,388

Tompkins Financial Corporation - Summary Financial Data (Unaudited)

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

Quarter Ended Year to Date Period Ended Year to Date Period Ended

September 30, 2020 September 30, 2020 September 30, 2019

Average Average Average

Balance Average Balance Average Balance Average

(Dollar amounts Quarter Interest Yield/ Year Interest Yield/ Year Interest Yield/in thousands) Ended Rate Ended Rate Ended Rate

ASSETS

Interest-earning assets

Interest-bearingbalances due 326,908 $ 83 0.10 % 111,775 $ 90 0.11 % 2,460 $ 31 1.68 %from banks

Securities (2)

U.S. Government 1,332,240 5,362 1.60 % 1,242,659 18,236 1.96 % 1,338,807 22,990 2.30 %securities

State and 122,932 816 2.64 % 110,058 2,225 2.70 % 93,131 1,903 2.73 %municipal (3)

Other securities 3,433 25 2.88 % 3,429 93 3.61 % 3,417 120 4.70 %(3)

Total securities 1,458,605 6,203 1.69 % 1,356,146 20,554 2.02 % 1,435,355 25,013 2.33 %

FHLBNY and other 18,319 307 6.66 % 22,175 1,130 6.81 % 42,634 2,442 7.66 %stock



Total loans andleases, net of 5,400,217 58,507 4.31 % 5,197,757 170,853 4.39 % 4,816,140 170,540 4.73 %unearned income (3)(4)

Totalinterest-earning 7,204,049 65,100 3.59 % 6,687,853 192,627 3.85 % 6,296,589 198,026 4.21 %assets



Other assets 377,960 536,424 405,358



Total assets 7,582,009 7,224,278 6,701,947



LIABILITIES & EQUITY

Deposits

Interest-bearing deposits

Interest bearingchecking, 3,796,615 1,671 0.18 % 3,557,326 7,973 0.30 % 2,962,236 14,865 0.67 %savings & money market

Time deposits 697,026 2,534 1.45 % 693,922 8,208 1.58 % 670,570 7,728 1.54 %

Totalinterest-bearing 4,493,641 4,205 0.37 % 4,251,248 16,181 0.51 % 3,632,806 22,593 0.83 %deposits



Federal fundspurchased &securities sold 47,527 19 0.16 % 54,481 76 0.19 % 61,482 110 0.24 %under agreementsto repurchase

Other borrowings 303,587 1,623 2.13 % 397,511 6,357 2.14 % 861,930 15,731 2.44 %

Trust preferred 17,135 216 5.02 % 17,093 758 5.92 % 16,921 974 7.70 %debentures

Totalinterest-bearing 4,861,890 6,063 0.50 % 4,720,332 23,372 0.66 % 4,573,139 39,408 1.15 %liabilities



Non-interest 1,897,999 1,699,317 1,380,399 bearing deposits

Accrued expensesand other 112,636 111,643 101,483 liabilities

Total 6,872,525 6,531,292 6,055,021 liabilities



TompkinsFinancialCorporation 707,996 691,530 645,466 Shareholders'equity

Noncontrolling 1,488 1,456 1,460 interest

Total equity 709,484 692,986 646,926



Totalliabilities and 7,582,009 7,224,278 6,701,947 equity

Interest rate 3.10 % 3.19 % 3.05 %spread

Net interestincome/margin on 59,037 3.26 % 169,255 3.38 % 158,618 3.37 %earning assets



Tax equivalent (784) (1,667) (1,230) adjustments



Net interestincome perconsolidated $ 58,253 $ 167,588 $ 157,388 financialstatements

Tompkins Financial Corporation - Summary Financial Data (Unaudited)

(In thousands, except per share data)

Quarter-Ended Year-Ended

Period End Sep-20 Jun-20 Mar-20 Dec-19 Sep-19 Dec-19Balance Sheet

Securities $ 1,667,698 $ 1,336,087 $ 1,353,567 $ 1,299,502 $ 1,282,026 $ 1,299,502

Total Loans 5,398,297 5,424,285 4,937,822 4,917,550 4,857,073 4,917,550

Allowance for 52,293 52,082 52,404 39,892 41,371 39,892 credit losses

Total assets 7,794,502 7,582,056 6,743,114 6,725,623 6,627,982 6,725,623

Total deposits 6,601,238 6,377,521 5,409,363 5,212,921 5,369,990 5,212,921

Federal fundspurchased andsecurities sold 63,573 50,889 68,993 60,346 50,541 60,346 under agreementsto repurchase

Other borrowings 285,000 325,000 457,983 658,100 429,000 658,100

Trust preferred 17,163 17,120 17,078 17,035 16,992 17,035 debentures

Total common 712,104 696,553 681,153 661,642 658,358 661,642 equity

Total equity 713,611 698,029 682,597 663,054 659,865 663,054

Average Balance Sheet

Average earning $ 7,204,049 $ 6,616,079 $ 6,237,773 $ 6,188,442 $ 6,203,078 $ 6,268,440 assets

Average assets 7,582,009 7,413,945 6,672,948 6,613,202 6,621,412 6,679,578

Averageinterest-bearing 4,861,890 4,825,753 4,471,797 4,374,572 4,415,079 4,523,088 liabilities

Average equity 709,484 690,475 678,817 664,441 659,650 651,341

Share data

Weighted averageshares 14,697,532 14,681,956 14,718,948 14,726,023 14,827,114 14,907,057 outstanding(basic)

Weighted averageshares 14,727,741 14,714,848 14,774,269 14,790,503 14,887,626 14,973,951 outstanding(diluted)

Period-end shares 14,926,252 14,914,458 14,907,947 14,978,589 14,975,750 14,978,589 outstanding

Common equitybook value per $ 47.71 $ 46.70 $ 45.69 $ 44.17 $ 43.96 $ 44.17 share

Tangible bookvalue per share $ 41.23 $ 40.19 $ 39.15 $ 37.64 $ 37.40 $ 37.64 (Non-GAAP)**

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

Income Statement

Net interest $ 58,253 $ 56,366 $ 52,969 $ 53,240 $ 53,156 $ 210,628 income

Provision (credit)for credit loss 199 (348) 16,294 (1,000) 1,320 1,366 expense

Noninterest income 18,887 17,177 18,960 17,972 19,534 75,433

Noninterest 46,349 46,888 45,740 45,900 45,655 181,834 expense

Income tax expense 6,330 5,540 1,909 5,200 5,478 21,016

Net incomeattributable to 24,230 21,431 7,949 21,080 20,206 81,718 Tompkins FinancialCorporation

Noncontrolling 32 32 37 32 31,000 127 interests

Basic earnings per $ 1.63 $ 1.44 $ 0.53 $ 1.41 $ 1.34 $ 5.39 share (5)

Diluted earnings $ 1.63 $ 1.44 $ 0.53 $ 1.40 $ 1.34 $ 5.37 per share (5)

Nonperforming Assets

Nonaccrual loans $ 26,944 $ 23,183 $ 23,556 $ 24,281 $ 23,568 $ 24,281 and leases

Loans and leases90 days past due 0 0 0 0 0 0 and accruing

Troubled debtrestructuring not 6,864 6,988 7,137 7,154 6,528 7,154 included above

Totalnonperforming 33,808 30,171 30,693 31,435 30,096 31,435 loans and leases

OREO 196 274 466 428 888 428

Totalnonperforming $ 34,004 $ 30,445 $ 31,159 $ 31,863 $ 30,984 $ 31,863 assets

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

Quarter-Ended Year-Ended

Delinquency -Total loan and Sep-20 Jun-20 Mar-20 Dec-19 Sep-19 Dec-19lease portfolio

Loans and leases30-89 days past due and

accruing $ 6,875 $ 8,352 $ 9,328 $ 3,724 $ 3,519 $ 3,724

Loans and leases90 days past due 0 0 0 794 1,219 794 and accruing

Total loans andleases past due 6,875 8,352 9,328 4,518 4,738 4,518 and accruing

Allowance for Credit Losses*

Balance atbeginning of $ 52,082 $ 52,404 $ 39,892 $ 41,371 $ 40,790 $ 43,410 period

Impact ofadopting ASC 0 0 (2,534) 0 0 0 326

Provision(credit) for 199 (348) 16,294 (1,000) 1,320 1,366 credit losses

Net loan andlease (12) (26) 1,248 479 739 4,884 (recoveries)charge-offs

Allowance forcredit losses $ 52,293 $ 52,082 $ 52,404 $ 39,892 $ 41,371 $ 39,892 at end ofperiod

*CECL was adopted January 1, 2020. Prior periods reflect the allowance for credit losses for loans under the incurred loss methodology.

LoanClassification - TotalPortfolio

Special Mention $ 122,652 $ 44,741 $ 37,121 29,800 $ 41,575 $ 29,800

Substandard 45,384 48,046 52,894 60,499 61,682 60,499

Ratio Analysis

Credit Quality

Nonperformingloans and leases/ 0.63 % 0.56 % 0.62 % 0.64 % 0.62 % 0.64 %total loans andleases (6)

Nonperformingassets/total 0.44 % 0.40 % 0.46 % 0.47 % 0.47 % 0.47 %assets

Allowance forcredit losses/ 0.97 % 0.96 % 1.06 % 0.81 % 0.85 % 0.81 %total loans andleases

Allowance/nonperforming 154.68 % 172.62 % 170.74 % 126.90 % 137.46 % 126.90 %loans and leases

Net loan andlease lossesannualized/total 0.00 % 0.00 % 0.10 % 0.04 % 0.06 % 0.10 %average loans andleases

Capital Adequacy

Tier 1 Capital(to average 8.85 % 8.79 % 9.53 % 9.61 % 9.43 % 9.61 %assets)

Total Capital(to 14.26 % 13.95 % 13.62 % 13.53 % 13.36 % 13.53 %risk-weightedassets)

Profitability (period-end)

Return on 1.27 % 1.16 % 0.48 % 1.26 % 1.21 % 1.22 %average assets *

Return on 13.59 % 12.48 % 4.71 % 12.59 % 12.15 % 12.55 %average equity *

Net interest 3.26 % 3.45 % 3.44 % 3.44 % 3.43 % 3.39 %margin (TE) *

** Quarterlyratios 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 U.S. generally accepted accounting principles (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. 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 Net Income Attributable to Tompkins Financial Corporation(GAAP) to Net Operating Income Available to Common Shareholders (Non-GAAP) andReconciliation of Diluted Earnings Per Share (GAAP) to Adjusted DilutedEarnings Per Share (Non-GAAP)

Quarter-Ended Year-Ended

Sep-20 Jun-20 Mar-20 Dec-19 Sep-19 Dec-19

Net incomeavailable to $ 24,230 $ 21,431 $ 7,949 $ 21,081 $ 20,206 $ 81,718 commonshareholders

Less: incomeattributableto unvested 278 251 99 334 317 1,306 stock-basedcompensationsawards

Net earningsallocated tocommon 23,952 21,180 7,850 20,747 19,889 80,412 shareholders(GAAP)

Dilutedearnings per $ 1.63 $ 1.44 $ 0.53 $ 1.40 $ 1.34 $ 5.37 share (GAAP)

Adjustmentsfornon-operating income andexpense:

Write-down ofreal estate 0 673 0 0 0 0 pending sale

Total 0 673 0 0 0 0 Adjustments

Tax (benefit) 0 (165) 0 0 0 0 expense

Totaladjustments, 0 508 0 0 0 0 net of tax

Net operatingincomeavailable to 23,952 21,688 7,850 20,747 19,889 80,412 commonshareholders(Non-GAAP)

Weightedaverageshares 14,727,741 14,714,848 14,774,269 14,790,503 14,887,626 14,973,951outstanding(diluted)

Adjusteddilutedearnings per $ 1.63 $ 1.47 $ 0.53 $ 1.40 $ 1.34 $ 5.37 share(Non-GAAP)

Year-to-Date

Sep-20

Sep-19

Net income available to common shareholders

$

53,610

$

60,638

Less: income attributable to unvested stock-based compensation awards

628

972

Net earnings allocated to common shareholders (GAAP)

52,982

59,666

Diluted earnings per share (GAAP)

$

3.59

$

3.97

Adjustments for non-operating income and expense:

Write-down of real estate pending sale

673

0

Tax (benefit) expense

(165)

0

Total adjustments, net of tax

508

0

Net operating income available to common shareholders (Non-GAAP)

53,490

59,666

Weighted average shares outstanding (diluted)

14,738,921

15,035,780

Adjusted diluted earnings per share (Non-GAAP)

$

3.63

$

3.97

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

Year-to-Date

Sep-20 Sep-19

Net income available to common shareholders $ 53,610 $ 60,638

Less: income attributable to unvested stock-based 628 972 compensation awards

Net earnings allocated to common shareholders (GAAP) 52,982 59,666

Diluted earnings per share (GAAP) $ 3.59 $ 3.97

Adjustments for non-operating income and expense:

Write-down of real estate pending sale 673 0

Tax (benefit) expense (165) 0

Total adjustments, net of tax 508 0

Net operating income available to common shareholders 53,490 59,666 (Non-GAAP)

Weighted average shares outstanding (diluted) 14,738,921 15,035,780

Adjusted diluted earnings per share (Non-GAAP) $ 3.63 $ 3.97



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

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

Quarter-Ended Year-Ended

Sep-20 Jun-20 Mar-20 Dec-19 Sep-19 Dec-19

Totalcommon $ 712,104 $ 696,553 $ 681,153 $ 661,642 $ 658,358 $ 661,642 equity

Less:Goodwilland 96,735 97,107 97,481 97,855 98,277 97,855 intangibles(7)

Tangiblecommon 615,369 599,446 583,672 563,787 560,081 563,787 equity(Non-GAAP)

Endingshares 14,926,252 14,914,458 14,907,947 14,978,589 14,975,750 14,978,589 outstanding

Tangiblebook value $ 41.23 $ 40.19 $ 39.15 $ 37.64 $ 37.40 $ 37.64 per share(Non-GAAP)

(1) Federal Reserve peer ratio as of June 30, 2020 the most recent data available, includes banks and bank holding companies with consolidated assets between $3 billion and $10 billion.

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

(3) Interest income includes the tax effects of taxable-equivalent basis.

(4) 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, 2019.

(5) 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.

(6) 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 Company's estimate of acquisition-date fair value and these loans are considered accruing as the Company primarily recognizes interest income through accretion of the difference between the carrying value of these loans and their expected cash flows.

(7) "Goodwill and intangibles" as shown in the above tables, equal total intangible assets less mortgage servicing rights.

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CONTACT: Stephen S. Romaine, President & CEO Francis M. Fetsko, Executive VP, CFO & COO Tompkins Financial Corporation (888) 503-5753