Business Wire | Jul 24, 2020 09:00AM EDT

Tompkins Financial Corporation Reports Increased Second Quarter Earnings

Jul. 24, 2020

ITHACA, N.Y.--(BUSINESS WIRE)--Jul. 24, 2020--Tompkins Financial Corporation (NYSE American:TMP):

Tompkins Financial Corporation reported diluted earnings per share of $1.44 for the second quarter of 2020, up 13.4% compared to $1.27 reported in the second quarter of 2019. Net income for the second quarter of 2020 was $21.4 million, compared to $19.4 million reported for the same period in 2019.

For the year-to-date period ended June 30, 2020, diluted earnings per share were $1.97, down 25.1% from the same period in 2019. Year-to-date net income was $29.4 million, down from $40.4 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.

Mr. Romaine commented, "We are pleased to report strong financial results for the quarter despite a very challenging business climate. Although the longer term impact of the pandemic and related economic conditions are still unknown, there have been several recent positive trends noted with certain national economic indicators, such as reduced levels of unemployment, improving retail sales and improving consumer confidence. At Tompkins, we have seen several positive trends as well, with very strong mortgage application volumes in the second quarter, higher levels of debit card spending, and favorable credit quality measures when compared to last quarter. We are encouraged by some of these recent favorable trends, though the recent rise in COVID-19 cases nationally makes it clear that much uncertainty remains. We will remain vigilant in monitoring risk trends as we navigate these challenging times."

SELECTED HIGHLIGHTS FOR THE SECOND QUARTER:

* Total loans of $5.4 billion were up $568 million, or 11.7% over June 30, 2019. The increase over the prior year included $465.6 million of PPP loans funded during the second quarter of 2020. * Total deposits of $6.4 billion increased by $1.4 billion, or 27.8% over June 30, 2019. * Net interest margin was 3.45% for the second quarter of 2020, up from 3.44% for the first quarter of 2020, and 3.43% for the fourth quarter of 2019. * The ratio of Total Capital to risk-weighted assets improved to 13.95%, up from 13.62% at March 31, 2020, and 13.53% at December 31, 2019.

NET INTEREST INCOME Net interest income was $56.4 million for the second quarter of 2020, compared to $52.3 million reported for the second quarter of 2019. For the year-to-date period, net interest income was $109.3 million, an increase of $5.1 million or 4.9% from the same six-month period in 2019.

Net interest income benefited from growth in average loans. Average loans were up $297.7 million, or 6.2% in the first six months of 2020, compared to the same six 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 20 basis points compared to the first six months of 2019, which reflects the impact of reductions in market interest rates during the first six months of 2020, and the addition of the lower yielding PPP loans originated in the second quarter.

Average total deposits were up $778.1 million, or 15.7% in the first six months of 2020, versus the same period in 2019. Average noninterest deposits were up $251.3 billion or 18.7% in the first six 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 six months of 2020 decreased by 21 basis points over the same period in 2019.

Net interest margin was 3.45% for the second quarter of 2020, up compared to the 3.34% reported for the second quarter of 2019, and 3.44% for the first quarter of 2020. The improved net interest margin year-over-year was largely driven by lower funding costs, reflecting lower deposit rates and growth in deposit balances, which were used to reduce higher cost other borrowing balances.

As a result of its participation in the SBA's PPP, in the second quarter the Company recorded net deferred loan fees of $2.3 million, which are included in interest income.

NONINTEREST INCOME Noninterest income represented 24.8% of total revenues in the first six months of 2020, as compared to 26.7% in the same period in 2019. Noninterest income of $17.2 million for the second quarter of 2020 was down 7.3% compared to the same period in 2019. For the year-to-date period, noninterest income of $36.1 million was down 4.7% from the same period in 2019. Total fee based services in the second quarter of 2020 were $14.7 million, down 10.5% compared to the same period in 2019. The reduction in fee based income in 2020 is largely related to the pandemic-related travel and business restrictions, which reduced card services and service charge income. Other noninterest income for the second quarter of 2020 included $691,000 related to gains on sales of residential mortgage loans.

NONINTEREST EXPENSE Noninterest expense was $46.9 million for the second quarter of 2020, up $818,000, or 1.8%, over the second quarter of 2019. For the year-to-date period, noninterest expense was $92.6 million, up $2.3 million, or 2.6%, from the same period in 2019. The increase in noninterest expense for both the second quarter and year-to-date periods was primarily attributable to normal annual increases in salaries and wages. Other expense for the second quarter and year-to-date period of 2020 included $1.2 million and $1.7 million, respectively, related to allowance for credit losses for off-balance sheet exposures. Other expense during the quarter also included a loss of $675,000 related to the pending sale of real estate.

INCOME TAX EXPENSE The Company's effective tax rate was 20.5% for the second quarter of 2020, compared to 19.6% for the same period in 2019. The effective tax rate for the six months ended June 30, 2020 was 20.2%, compared to 20.3% reported for the same period in 2019.

ASSET QUALITY Asset quality trends remained strong in the second quarter of 2020. Nonperforming assets represented 0.40% of total assets at June 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 0.49%.

Provision for credit losses in the second quarter of 2020 was a negative provision of $348,000 compared to an expense of $601,000 for the same period in 2019. Provision expense for the six months ended June 30, 2020 was $15.9 million, compared to $1.0 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 second quarter of 2020 were $26,000 compared to net charge-offs of $139,000 reported in the second quarter of 2019.

The allowance for credit losses represented 0.96% of total loans and leases at June 30, 2020, compared to 1.06% at March 31, 2020, 0.81% at December 31, 2019, and 0.84% at June 30, 2019. The decline in the ratio during the second quarter this year is largely due to the increase in loan balances being largely driven by $465.6 million of PPP loans for which no reserves have been allocated. The ratio of the allowance to total nonperforming loans and leases was 172.62% at June 30, 2020, improved from 126.90% at December 31, 2019, and 171.42% at June 30, 2019.

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 employees and customers who have been impacted by the economic conditions associated with the COVID-19 pandemic. For non-executive employees affected by COVID-19, the Company implemented a low interest loan program. The Company also 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 last week of June were down 98% from peak levels the Company experienced in late March. As of June 30, 2020, the Company had granted payment deferral requests for approximately 3,900 loans totaling $2.3 billion to individuals and businesses. As of July 20, 2020, nearly 50% of loans that had received deferrals had begun making regular payments.

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 2,997 loans totaling about $465.6 million as of June 30, 2020.

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 13.95% at June 30, 2020, up from 13.62% at March 31, 2020, and 13.53% at December 31, 2019. The ratio of Tier 1 capital to average assets was 8.79% at June 30, 2020, down from 9.61% at December 31, 2019, and 9.25% at June 30, 2019. The current period Tier 1 capital to average assets was negatively impacted by $465.6 million of PPP loans originated in the second quarter of 2020.

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 Report on Form 10-K for the year ended December 31, 2019, 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; 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 06/30/2020 12/31/2019



Cash and noninterest bearing balances due from $ 472,108 $ 136,010 banks

Interest bearing balances due from banks 7,018 1,972

Cash and Cash Equivalents 479,126 137,982



Available-for-sale debt securities, at fairvalue (amortized cost of $1,301,271 at June 30, 1,335,153 1,298,587 2020 and $1,293,239 at December 31, 2019)

Equity securities, at fair value (amortized cost$934 at June 30, 2020 and $915 at December 31, 934 915 2019)

Total loans and leases, net of unearned income 5,424,285 4,917,550 and deferred costs and fees

Less: Allowance for credit losses 52,082 39,892

Net Loans and Leases 5,372,203 4,877,658



Federal Home Loan Bank and other stock 19,044 33,695

Bank premises and equipment, net 89,934 94,355

Corporate owned life insurance 83,606 82,961

Goodwill 92,447 92,447

Other intangible assets, net 5,500 6,223

Accrued interest and other assets 104,109 100,800

Total Assets $ 7,582,056 $ 6,725,623

LIABILITIES

Deposits:

Interest bearing:

Checking, savings and money market 3,759,478 3,080,686

Time 699,166 675,014

Noninterest bearing 1,918,877 1,457,221

Total Deposits 6,377,521 5,212,921



Federal funds purchased and securities sold 50,889 60,346 under agreements to repurchase

Other borrowings 325,000 658,100

Trust preferred debentures 17,120 17,035

Other liabilities 113,497 114,167

Total Liabilities $ 6,884,027 $ 6,062,569

EQUITY

Tompkins Financial Corporation shareholders' equity:

Common Stock - par value $.10 per share:Authorized 25,000,000 shares; Issued: 14,950,368 1,495 1,501 at June 30, 2020; and 15,014,499 at December 31,2019

Additional paid-in capital 335,268 338,507

Retained earnings 386,025 370,477

Accumulated other comprehensive loss (21,048 ) (43,564 )

Treasury stock, at cost - 119,092 shares at June30, 2020, and 123,956 shares at December 31, (5,187 ) (5,279 )2019

Total Tompkins Financial Corporation 696,553 661,642 Shareholders' Equity



Noncontrolling interests 1,476 1,412

Total Equity $ 698,029 $ 663,054

Total Liabilities and Equity $ 7,582,056 $ 6,725,623

TOMPKINS FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share Three Months Ended Six Months Endeddata) (Unaudited)

06/30/2020 06/30/ 06/30/ 06/30/ 2019 2020 2019

INTEREST AND DIVIDEND INCOME

Loans $ 56,133 $ 56,740 $ 111,747 $ 112,064

Due from banks 1 $ 10 7 $ 20

Available-for-sale debt securities 6,922 $ 7,686 14,066 $ 15,544

Held-to-maturity securities 0 $ 863 0 $ 1,721

Federal Home Loan Bank and other 389 $ 794 824 $ 1,672stock

Total Interest and Dividend Income 63,445 $ 66,093 126,644 $ 131,021

INTEREST EXPENSE

Time certificates of deposits of 860 774 1,703 $ 1,360$250,000 or more

Other deposits 3,917 6,816 10,272 $ 12,827

Federal funds purchased andsecurities sold under agreements to 21 33 57 $ 77repurchase

Trust preferred debentures 253 327 542 $ 656

Other borrowings 2,028 5,825 4,735 $ 11,869

Total Interest Expense 7,079 13,775 17,309 $ 26,789

Net Interest Income 56,366 52,318 109,335 $ 104,232

Less: Provision for credit loss (348 ) 601 15,946 $ 1,046expense

Net Interest Income After Provision 56,714 51,717 93,389 $ 103,186for Credit Loss Expense

NONINTEREST INCOME

Insurance commissions and fees 7,255 7,752 15,300 $ 15,797

Investment services income 3,920 3,907 8,122 $ 7,991

Service charges on deposit accounts 1,248 2,021 3,231 $ 4,019

Card services income 2,283 2,750 4,466 $ 5,540

Other income 2,466 1,806 4,570 $ 4,284

Net gain on securities transactions 5 284 448 $ 296

Total Noninterest Income 17,177 18,520 36,137 $ 37,927

NONINTEREST EXPENSE

Salaries and wages 23,037 22,088 45,531 $ 43,189

Other employee benefits 5,886 5,662 11,570 $ 11,273

Net occupancy expense of premises 3,040 3,258 6,368 $ 6,859

Furniture and fixture expense 1,888 1,996 3,873 $ 3,975

Amortization of intangible assets 375 418 749 $ 830

Other operating expense 12,662 12,648 24,537 $ 24,153

Total Noninterest Expenses 46,888 46,070 92,628 $ 90,279

Income Before Income Tax Expense 27,003 24,167 36,898 $ 50,834

Income Tax Expense 5,540 4,743 7,449 $ 10,338

Net Income Attributable toNoncontrolling Interests and 21,463 19,424 29,449 $ 40,496Tompkins Financial Corporation

Less: Net Income Attributable to 32 32 69 $ 64Noncontrolling Interests

Net Income Attributable to Tompkins $ 21,431 19,392 $ 29,380 $ 40,432Financial Corporation

Basic Earnings Per Share $ 1.44 $ 1.27 $ 1.97 $ 2.64

Diluted Earnings Per Share $ 1.44 $ 1.27 $ 1.97 $ 2.63

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



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

June 30, 2020 June 30, 2020 June 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 $ 4,541 $ 1 0.09 % $ 3,033 $ 7 0.46 % $ 2,232 $ 20 1.81 %from banks

Securities (2)

U.S. Government 1,199,999 6,298 2.11 % 1,197,376 12,874 2.16 % 1,399,542 16,168 2.33 %securities

State and 109,621 743 2.73 % 103,550 1,409 2.74 % 93,872 1,264 2.72 %municipal (3)

Other securities 3,433 32 3.75 % 3,428 68 3.99 % 3,416 81 4.78 %(3)

Total securities 1,313,053 7,073 2.17 % 1,304,354 14,351 2.21 % 1,496,830 17,513 2.36 %

FHLBNY and other 21,691 389 7.21 % 24,124 824 6.87 % 47,349 1,672 7.12 %stock



Total loans andleases, net of 5,276,794 56,441 4.30 % 5,095,414 112,348 4.43 % 4,797,709 112,636 4.73 %unearned income(3)(4)

Totalinterest-earning 6,616,079 63,904 3.89 % 6,426,925 127,530 3.99 % 6,344,120 131,841 4.19 %assets



Other assets 797,866 616,521 398,762



Total assets $ 7,413,945 $ 7,043,446 $ 6,742,882



LIABILITIES & EQUITY

Deposits

Interest-bearing deposits

Interest bearingchecking, $ 3,660,190 1,935 0.21 % $ 3,436,366 6,301 0.37 % $ 2,943,765 9,441 0.65 %savings & moneymarket

Time deposits 704,460 2,842 1.62 % 692,354 5,674 1.65 % 658,242 4,746 1.45 %

Totalinterest-bearing 4,364,650 4,777 0.44 % 4,128,720 11,975 0.58 % 3,602,007 14,187 0.79 %deposits



Federal fundspurchased & securities soldunder

agreements to 52,464 21 0.16 % 57,996 57 0.20 % 63,451 77 0.24 %repurchase

Other borrowings 391,547 2,028 2.08 % 444,988 4,735 2.14 % 971,119 11,869 2.46 %

Trust preferred 17,092 253 5.95 % 17,071 542 6.38 % 16,900 656 7.83 %debentures

Totalinterest-bearing 4,825,753 7,079 0.59 % 4,648,775 17,309 0.75 % 4,653,477 26,789 1.16 %liabilities



Non-interest 1,788,108 1,598,884 1,347,538 bearing deposits

Accrued expensesand other 109,609 111,141 101,409 liabilities

Total 6,723,470 6,358,800 6,102,424 liabilities



TompkinsFinancialCorporation 689,018 683,206 639,015 Shareholders'equity

Noncontrolling 1,457 1,440 1,443 interest

Total equity 690,475 684,646 640,458



Totalliabilities and $ 7,413,945 $ 7,043,446 $ 6,742,882 equity

Interest rate 3.30 % 3.24 % 3.03 %spread

Net interestincome/margin on 56,825 3.45 % 110,221 3.45 % 105,052 3.34 %earning assets



Tax equivalent (459 ) (886 ) (820 ) adjustments



Net interestincome perconsolidated $ 56,366 $ 109,335 $ 104,232 financialstatements

Tompkins Financial Corporation - Summary Financial Data (Unaudited)

(In thousands,except per share data)

Quarter-Ended Year-Ended

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

Securities $ 1,336,087 $ 1,353,567 $ 1,299,502 $ 1,282,026 $ 1,330,719 $ 1,299,502

Total Loans 5,424,285 4,937,822 4,917,550 4,857,073 4,855,802 4,917,550

Allowance for 52,082 52,404 39,892 41,371 40,790 39,892 credit losses

Total assets 7,582,056 6,743,114 6,725,623 6,627,982 6,654,390 6,725,623

Total deposits 6,377,521 5,409,363 5,212,921 5,369,990 4,988,897 5,212,921

Federal fundspurchased andsecurities sold 50,889 68,993 60,346 50,541 63,978 60,346 under agreementsto repurchase

Other borrowings 325,000 457,983 658,100 429,000 824,562 658,100

Trust preferred 17,120 17,078 17,035 16,992 16,949 17,035 debentures

Total common 696,553 681,153 661,642 658,358 656,201 661,642 equity

Total equity 698,029 682,597 663,054 659,865 657,677 663,054

Average Balance Sheet

Average earning $ 6,616,079 $ 6,237,773 $ 6,188,442 $ 6,203,078 $ 6,337,983 $ 6,268,440 assets

Average assets 7,413,945 6,672,948 6,613,202 6,621,412 6,742,409 6,679,578

Averageinterest-bearing 4,825,753 4,471,797 4,374,572 4,415,079 4,638,249 4,523,088 liabilities

Average equity 690,475 678,817 664,441 659,650 650,079 651,341

Share data

Weighted averageshares 14,681,956 14,718,948 14,726,023 14,827,114 15,019,710 14,907,057 outstanding(basic)

Weighted averageshares 14,714,848 14,774,269 14,790,503 14,887,626 15,085,945 14,973,951 outstanding(diluted)

Period-endshares 14,914,458 14,907,947 14,978,589 14,975,750 15,160,719 14,978,589 outstanding

Common equitybook value per $ 46.70 $ 45.69 $ 44.17 $ 43.96 $ 43.28 $ 44.17 share

Tangible bookvalue per share $ 40.19 $ 39.15 $ 37.64 $ 37.40 $ 36.77 $ 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 $ 56,366 $ 52,969 $ 53,240 $ 53,156 $ 52,318 $ 210,628 income

Provision(credit) for (348) 16,294 (1,000) 1,320 601 1,366 credit lossexpense

Noninterest 17,177 18,960 17,972 19,534 18,520 75,433 income

Noninterest 46,888 45,740 45,900 45,655 46,070 181,834 expense

Income tax 5,540 1,909 5,200 5,478 4,743 21,016 expense

Net incomeattributable toTompkins 21,431 7,949 21,080 20,206 19,392 81,718 FinancialCorporation

Noncontrolling 32 37 32 31 32 127 interests

Basic earnings $ 1.44 $ 0.53 $ 1.41 $ 1.34 $ 1.27 $ 5.39 per share (5)

Diluted earnings $ 1.44 $ 0.53 $ 1.40 $ 1.34 $ 1.27 $ 5.37 per share (5)

Nonperforming Assets

Nonaccrual loans $ 23,183 $ 23,556 $ 24,281 $ 23,568 $ 18,906 $ 24,281 and leases

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

Troubled debtrestructuring 6,988 7,137 7,154 6,528 4,889 7,154 not includedabove

Totalnonperforming 30,171 30,693 31,435 30,096 23,795 31,435 loans and leases

OREO 274 466 428 888 2,229 428

Totalnonperforming $ 30,445 $ 31,159 $ 31,863 $ 30,984 $ 26,024 $ 31,863 assets

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

Quarter-Ended Year-Ended

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

Loans and leases 30-89days past due and $ 8,352 $ 9,328 $ 3,724 $ 3,519 $ 4,376 $ 3,724 accruing

Loans and leases 90 days 0 0 794 1,219 1,229 794 past due and accruing

Total loans and leases 8,352 9,328 4,518 4,738 5,605 4,518 past due and accruing

Allowance for Credit Losses*

Balance atbeginning of $ 52,404 $ 39,892 $ 41,371 $ 40,790 $ 40,328 $ 43,410 period

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

Provision )(credit) for (348 16,294 (1,000 ) 1,320 601 1,366 credit losses

Net loan andlease (26 ) 1,248 479 739 139 4,884 (recoveries)charge-offs

Allowance forcredit losses $ 52,082 $ 52,404 $ 39,892 $ 41,371 $ 40,790 $ 39,892 at end ofperiod

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

LoanClassification - TotalPortfolio

Special $ 44,741 $ 37,121 29,800 $ 41,575 $ 36,884 $ 29,800 Mention

Substandard 48,046 52,894 60,499 61,682 47,627 60,499

Ratio Analysis

Credit Quality

Nonperformingloans andleases/total 0.56 % 0.62 % 0.64 % 0.62 % 60.49 % 0.64 %loans andleases (6)

Nonperformingassets/total 0.40 % 0.46 % 0.47 % 0.47 % 0.39 % 0.47 %assets

Allowance forcredit losses 0.96 % 1.06 % 0.81 % 0.85 % 0.84 % 0.81 %/total loansand leases

Allowance/nonperforming 172.62 % 170.74 % 126.90 % 137.46 % 171.42 % 126.90 %loans andleases

Net loan andlease lossesannualized/ 0.00 % 0.10 % 0.04 % 0.06 % 0.01 % 0.10 %total averageloans andleases

Capital Adequacy

Tier 1Capital (to 8.79 % 9.53 % 9.61 % 9.43 % 9.25 % 9.61 %averageassets)

Total Capital(to 13.95 % 13.62 % 13.53 % 13.36 % 13.34 % 13.53 %risk-weightedassets)

Profitability (period-end)

Return onaverage 1.16 % 0.48 % 1.26 % 1.21 % 1.15 % 1.22 %assets *

Return onaverage 12.48 % 4.71 % 12.59 % 12.15 % 11.96 % 12.55 %equity *

Net interest 3.45 % 3.44 % 3.44 % 3.43 % 3.34 % 3.39 %margin (TE) *

** Quarterlyratios have beenannualized

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. 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) and Reconciliation of Diluted Earnings Per Share (GAAP) to Adjusted Diluted Earnings Per Share (Non-GAAP)

Quarter-Ended Year-Ended

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

Net incomeavailable to $ 21,431 $ 7,949 $ 21,081 $ 20,206 $ 19,392 $ 81,718 commonshareholders

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

Net earningsallocated tocommon 21,180 7,850 20,747 19,889 19,086 80,412 shareholders(GAAP)

Dilutedearnings per $ 1.44 $ 0.53 $ 1.40 $ 1.34 $ 1.27 $ 5.37 share (GAAP)

Adjustmentsfornon-operating income andexpense:

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

Total 673 0 0 0 0 0 Adjustments

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

Totaladjustments, 508 0 0 0 0 0 net of tax

Net operatingincomeavailable to 21,688 7,850 20,747 19,889 19,086 80,412 commonshareholders(Non-GAAP)

Weightedaverageshares 14,714,848 14,774,269 14,790,503 14,887,626 15,085,945 14,973,951 outstanding(diluted)

Adjusteddilutedearnings per $ 1.47 $ 0.53 $ 1.40 $ 1.34 $ 1.27 $ 5.37 share(Non-GAAP)

Year-to-Date

Jun-20 Jun-19

Net income available to common shareholders $ 29,380 $ 40,432

Less: income attributable to unvested stock-based 350 655 compensation awards

Net earnings allocated to common shareholders (GAAP) 29,030 39,777

Diluted earnings per share (GAAP) $ 1.97 $ 2.64

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 29,538 39,777 (Non-GAAP)

Weighted average shares outstanding (diluted) 14,714,848 15,085,945

Adjusted diluted earnings per share (Non-GAAP) $ 2.01 $ 2.64

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

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

Totalcommon $ 696,553 $ 681,153 $ 661,642 $ 658,358 $ 656,201 $ 661,642 equity

Less:Goodwilland 97,107 97,481 97,855 98,277 98,698 97,855 intangibles(7)

Tangiblecommon 599,446 583,672 563,787 560,081 557,503 563,787 equity(Non-GAAP)

Endingshares 14,914,458 14,907,947 14,978,589 14,975,750 15,160,719 14,978,589 outstanding

Tangiblebook value $ 40.19 $ 39.15 $ 37.64 $ 37.40 $ 36.77 $ 37.64 per share(Non-GAAP)

(1) Federal Reserve peer ratio as of March 31, 2020 the most recent dataavailable, includes banks and bank holding companies with consolidated assetsbetween $3 billion and $10 billion.

(2) Average balances and yields on available-for-sale securities are based onhistorical 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 Note1 of the Company's consolidated financial statements included in Part I of theCompany'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 quarterlyearnings per share as a result of rounding of average shares

(6) Certain acquired loans and leases that are past due are not on nonaccrualand are not included in nonperforming loans. The risk of credit loss on theseloans has been considered by virtue of the Company's estimate ofacquisition-date fair value and these loans are considered accruing as theCompany primarily recognizes interest income through accretion of thedifference between the carrying value of these loans and their expected cashflows.

(7) "Goodwill and intangibles" as shown in the above tables, equal totalintangible 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