Business Wire | Jan 29, 2021 09:00AM EST

Tompkins Financial Corporation Reports Record Fourth Quarter Earnings

Jan. 29, 2021

ITHACA, N.Y.--(BUSINESS WIRE)--Jan. 29, 2021--Tompkins Financial Corporation (NYSE American: TMP)

Tompkins Financial Corporation reported diluted earnings per share of $1.61 for the fourth quarter of 2020, up 15.0% compared to $1.40 reported in the fourth quarter of 2019. Net income for the fourth quarter of 2020 was $24.0 million, a $2.9 million increase over net income reported for the same period in 2019.

For the fiscal year ended December 31, 2020, diluted earnings per share were $5.20, down 3.2% from 2019. 2020 net income was $77.6 million, down from $81.7 million, for 2019. Results for 2020 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, "2020 was a challenging year on many fronts, which makes it particularly rewarding that earnings for the fourth quarter reflect the best fourth quarter results in our Company's history. Favorable results were largely driven by improved net interest income, insurance commissions and wealth management fees, all of which were up from the fourth quarter of 2019. Despite the positive earnings trends for the quarter, our results for the full year were negatively impacted by the pandemic and related economic restrictions, which have continued to negatively impact customers. We continue to support our customers through our loan payment deferral program and funding of loans under the Paycheck Protection Program. At year end, we believe that we had adequately reserved for potential credit losses in the loan portfolio, though a great deal of uncertainty remains."

SELECTED HIGHLIGHTS FOR THE YEAR-END 2020:

* Total loans of $5.3 billion at December 31, 2020 were up $342.8 million, or 7.0% over December 31, 2019. The increase over the prior year-end included an outstanding principle balance of $291.3 million of PPP loans that were funded during the second quarter of 2020. * Total deposits of $6.4 billion was an increase of $1.2 billion, or 23.5% over December 31, 2019. * The ratio of Total Capital to Risk-Weighted Assets improved to 14.39%, up from 14.26% at September 30, 2020, and 13.53% at December 31, 2019.

NET INTEREST INCOME

Net interest income was $57.8 million for the fourth quarter of 2020, compared to $53.2 million reported for the same period in 2019. For the full fiscal year, net interest income was $225.3 million, an increase of $14.7 million or 7.0% from 2019.

Average loans for the year ended December 31, 2020 were up $398.0 million, or 8.2% compared to 2019. The increase in average loans includes $465.6 million in loans originated under the Small Business Administration's ("SBA") Paycheck Protection Program ("PPP") in the second quarter of 2020. Asset yields for the year ended December 31, 2020, were down 47 basis points compared to 2019, which reflects the impact of reductions in market interest rates in 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 5.7% from 2019) and commercial real estate (up 5.6% from 2019), also contributed to the growth in 2020 average loan balances.

Average total deposits for 2020 were up $1.0 billion, or 20.1% versus 2019. Average noninterest bearing deposits were up $349.9 million or 24.9% compared to 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. For 2020, the average rate paid on interest-bearing deposit products decreased by 38 basis points from 2019. The total cost of interest-bearing liabilities for 2020 declined by 52 basis points to 0.60% from 2019.

Net interest margin was 3.12% for the fourth quarter of 2020, down compared to the 3.44% reported for the fourth quarter of 2019, and 3.26% for the third quarter of 2020. The decline in net interest margin during the fourth quarter, when compared to the third quarter of 2020, was mainly due to a decrease in overall asset yields. The decrease in average asset yields was due to lower securities yields, as well as a slight shift in the composition of average earning assets, with a greater mix of lower yielding securities and interest bearing balances, and a decrease in average loan balances reflecting lower PPP loan balances. The decrease in net interest margin was partially offset by lower average funding costs.

As a result of its participation in the SBA's PPP, in the fourth quarter of 2020, the Company recorded net deferred loan fees of $4.5 million, which are included in interest income. For the fiscal year, net deferred loan fees from PPP loan originations were $9.2 million.

NONINTEREST INCOME

Noninterest income represented 24.6% of total revenues in the fourth quarter of 2020, compared to 25.2% in the same period in 2019. Noninterest income of $18.8 million for the fourth quarter of 2020 was up 4.8% compared to the same period in 2019. For the full fiscal year, noninterest income of $73.9 million was down 2.1% from 2019. Total fee based services for the year ended December 31, 2020 were $64.6 million, a decrease of 2.7% compared to 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.

NONINTEREST EXPENSE

Noninterest expense was $46.4 million for the fourth quarter of 2020, up $505,000, or 1.1%, over the fourth quarter of 2019. For the full fiscal year, noninterest expense was $185.4 million, up $3.5 million, or 2.0%, over 2019. The increase in noninterest expense for the year ended December 31, 2020 was primarily attributable to normal annual increases in salaries and wages, which were up $4.4 million or 3.9% over 2019.

INCOME TAX EXPENSE

The Company's effective tax rate was 20.4% for the fourth quarter of 2020, compared to 19.8% for the same period in 2019. The effective tax rate for the year ended December 31, 2020 was 20.4%, compared to 20.5% reported for 2019.

ASSET QUALITY

Provision for credit losses for the fourth quarter of 2020 was $6,000 compared to a negative $1.0 million for the same period in 2019. Provision expense for the year ended December 31, 2020 was $16.2 million, compared to $1.4 million for 2019. The first quarter of 2020 included provision expense of $16.3 million related to the impact of the economic conditions related to COVID-19 on economic forecasts and other model assumptions relied upon by management in determining the allowance. Net charge-offs for the fourth quarter of 2020 were $630,000 compared to net charge-offs of $479,000 reported in the fourth quarter of 2019.

The allowance for credit losses represented 0.98% of total loans and leases at December 31, 2020, up from 0.97% at September 30, 2020, and 0.81% at December 31, 2019. Nonperforming loans and leases totaled $45.8 million at December 31, 2020, compared to $33.8 million at September 30, 2020 and $31.4 million at December 31, 2019. The ratio of the allowance to total nonperforming loans and leases was 112.87% at December 31, 2020, down compared to 154.68% at September 30, 2020 and 126.90% at December 31, 2019. Nonperforming assets represented 0.60% of total assets at December 31, 2020, up from 0.44% at September 30, 2020, and up from 0.47% at December 31, 2019.

Special Mention loans totaled $121.3 million at the end of the fourth quarter of 2020, in line with the quarter ended September 30, 2020, and up compared to the $29.8 million reported for the fourth quarter of 2019. Total Substandard loans increased during the quarter to $68.6 million at December 31, 2020, compared to $45.4 million at September 30, 2020, and $60.5 million at December 31, 2019. The increases in nonperforming loans and leases and Substandard loans were mainly related to the downgrades of credit in the loan portfolio related to the hospitality industry. Included in the nonperforming and Substandard loans and leases are 17 loans totaling $17.8 million, that are currently in deferral status.

During 2020, overall credit quality was supported by several plans initiated by the Company in response to the COVID-19 pandemic. As previously announced, Tompkins 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 December were down 98.5% from peak levels the Company experienced in late March. As of December 31, 2020, total loans that continued in a deferral status amounted to approximately $212.2 million, representing 4.0% of total loans. Of loans that had come out of the deferral program as of December 31, 2020, about 94.4% had made at least one payment and only 0.13% were more than 30 days delinquent.

As previously noted, the Company participated in the PPP, which 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 when the initial program ended. As of December 31, 2020, approximately 1,484 PPP loans originated by the Company, totaling $244.0 million, had been submitted to the SBA for forgiveness under the terms of the PPP program, of which approximately 1,212 loans totaling $171.1 million had been forgiven by the SBA as of December 31, 2020.

Mr. Romaine added, "Our deferral program and our participation in the PPP program are examples of how Tompkins has remained committed to supporting our clients and communities during these challenging times. Through year end, we had supported approximately 6,800 customers with these programs. We are also pleased to be participating in the latest round of PPP financing and as of January 28, 2021 had submitted 1,007 PPP loan applications totaling $143.9 million to the SBA for approval."

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 14.39% at December 31, 2020, up from 14.26% at September 30, 2020, and 13.53% at December 31, 2019. The ratio of Tier 1 capital to average assets was 8.75% at December 31, 2020, compared to 8.85% at September 30, 2020, and 9.61% at December 31, 2019. The December 31, 2020 Tier 1 capital to average assets ratio was negatively impacted by balance sheet growth associated with the 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 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 Consolidated Appropriations Act, 2021 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

ASSETS 12/31/2020 12/31/2019



Cash and noninterest bearing balances due from $ 21,245 $ 136,010 banks

Interest bearing balances due from banks 367,217 1,972

Cash and Cash Equivalents 388,462 137,982



Available-for-sale debt securities, at fair value(amortized cost of $1,599,894 at December 31, 1,627,193 1,298,587 2020 and $1,293,239 at December 31, 2019)

Equity securities, at fair value (amortized cost$929 at December 31, 2020 and $915 at December 929 915 31, 2019)

Total loans and leases, net of unearned income 5,260,327 4,917,550 and deferred costs and fees

Less: Allowance for credit losses 51,669 39,892

Net Loans and Leases 5,208,658 4,877,658



Federal Home Loan Bank and other stock 16,382 33,695

Bank premises and equipment, net 88,709 94,355

Corporate owned life insurance 84,736 82,961

Goodwill 92,447 92,447

Other intangible assets, net 4,905 6,223

Accrued interest and other assets 109,750 100,800

Total Assets $ 7,622,171 $ 6,725,623

LIABILITIES

Deposits:

Interest bearing:

Checking, savings and money market 3,761,933 3,080,686

Time 746,234 675,014

Noninterest bearing 1,929,585 1,457,221

Total Deposits 6,437,752 5,212,921



Federal funds purchased and securities sold under 65,845 60,346 agreements to repurchase

Other borrowings 265,000 658,100

Trust preferred debentures 13,220 17,035

Other liabilities 122,665 114,167

Total Liabilities $ 6,904,482 $ 6,062,569

EQUITY

Tompkins Financial Corporation shareholders' equity:

Common Stock - par value $.10 per share:Authorized 25,000,000 shares; Issued: 14,964,389 1,496 1,501 at December 31, 2020; and 15,014,499 at December31, 2019

Additional paid-in capital 333,976 338,507

Retained earnings 418,413 370,477

Accumulated other comprehensive loss (32,074) (43,564)

Treasury stock, at cost - 124,849 shares atDecember 31, 2020, and 123,956 shares at December (5,534) (5,279) 31, 2019

Total Tompkins Financial Corporation 716,277 661,642 Shareholders' Equity



Noncontrolling interests 1,412 1,412

Total Equity $ 717,689 $ 663,054

Total Liabilities and Equity $ 7,622,171 $ 6,725,623



TOMPKINS FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

Three Months Ended

Twelve Months Ended

12/31/2020

12/31/2019

12/31/2020

12/31/2019

INTEREST AND DIVIDEND INCOME

Loans

$

57,674

$

57,039

$

227,313

$

226,723

Due from banks

104

9

194

41

Available-for-sale debt securities

5,349

6,406

25,450

28,460

Held-to-maturity securities

0

568

0

3,151

Federal Home Loan Bank and other stock

243

561

1,373

3,003

Total Interest and Dividend Income

63,370

$

64,583

254,330

$

261,378

INTEREST EXPENSE

Time certificates of deposits of $250,000 or more

717

912

3,175

3,095

Other deposits

3,066

7,399

16,789

27,809

Federal funds purchased and securities sold under agreements to repurchase

19

33

95

143

Trust preferred debentures

375

303

1,133

1,276

Other borrowings

1,442

2,696

7,799

18,427

Total Interest Expense

5,619

11,343

28,991

50,750

Net Interest Income

57,751

53,240

225,339

210,628

Less: Provision (credit) for credit loss expense

6

(1,000)

16,151

1,366

Net Interest Income After Provision for Credit Loss Expense

57,745

54,240

209,188

209,262

NONINTEREST INCOME

Insurance commissions and fees

7,289

6,777

31,505

31,091

Investment services income

5,106

4,268

17,520

16,434

Service charges on deposit accounts

1,637

2,110

6,312

8,321

Card services income

2,378

2,436

9,263

10,526

Other income

2,429

2,171

8,817

8,416

Net (loss) gain on securities transactions

(3)

210

443

645

Total Noninterest Income

18,836

17,972

73,860

$

75,433

NONINTEREST EXPENSE

Salaries and wages

23,037

23,250

92,519

89,399

Other employee benefits

6,552

6,394

24,812

23,488

Net occupancy expense of premises

3,400

3,115

12,930

13,210

Furniture and fixture expense

2,087

1,921

7,846

7,815

Amortization of intangible assets

364

421

1,484

1,673

Other operating expense

10,965

10,799

45,791

46,249

Total Noninterest Expenses

46,405

45,900

185,382

181,834

Income Before Income Tax Expense

30,176

26,312

97,666

102,861

Income Tax Expense

6,145

5,200

19,924

21,016

Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation

24,031

21,112

77,742

81,845

Less: Net Income Attributable to Noncontrolling Interests

53

32

154

127

Net Income Attributable to Tompkins Financial Corporation

$

23,978

21,080

$

77,588

81,718

Basic Earnings Per Share

$

1.61

$

1.41

$

5.22

$

5.39

Diluted Earnings Per Share

$

1.61

$

1.40

$

5.20

$

5.37

TOMPKINS FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

12/31/2020 12/31/2019 12/31/2020 12/31/2019

INTEREST AND DIVIDEND INCOME

Loans $ 57,674 $ 57,039 $ 227,313 $ 226,723

Due from banks 104 9 194 41

Available-for-sale debt 5,349 6,406 25,450 28,460 securities

Held-to-maturity securities 0 568 0 3,151

Federal Home Loan Bank and 243 561 1,373 3,003 other stock

Total Interest and Dividend 63,370 $ 64,583 254,330 $ 261,378 Income

INTEREST EXPENSE

Time certificates of 717 912 3,175 3,095 deposits of $250,000 or more

Other deposits 3,066 7,399 16,789 27,809

Federal funds purchased andsecurities sold under 19 33 95 143 agreements to repurchase

Trust preferred debentures 375 303 1,133 1,276

Other borrowings 1,442 2,696 7,799 18,427

Total Interest Expense 5,619 11,343 28,991 50,750

Net Interest Income 57,751 53,240 225,339 210,628

Less: Provision (credit) for 6 (1,000) 16,151 1,366 credit loss expense

Net Interest Income AfterProvision for Credit Loss 57,745 54,240 209,188 209,262 Expense

NONINTEREST INCOME

Insurance commissions and 7,289 6,777 31,505 31,091 fees

Investment services income 5,106 4,268 17,520 16,434

Service charges on deposit 1,637 2,110 6,312 8,321 accounts

Card services income 2,378 2,436 9,263 10,526

Other income 2,429 2,171 8,817 8,416

Net (loss) gain on (3) 210 443 645 securities transactions

Total Noninterest Income 18,836 17,972 73,860 $ 75,433

NONINTEREST EXPENSE

Salaries and wages 23,037 23,250 92,519 89,399

Other employee benefits 6,552 6,394 24,812 23,488

Net occupancy expense of 3,400 3,115 12,930 13,210 premises

Furniture and fixture 2,087 1,921 7,846 7,815 expense

Amortization of intangible 364 421 1,484 1,673 assets

Other operating expense 10,965 10,799 45,791 46,249

Total Noninterest Expenses 46,405 45,900 185,382 181,834

Income Before Income Tax 30,176 26,312 97,666 102,861 Expense

Income Tax Expense 6,145 5,200 19,924 21,016

Net Income Attributable toNoncontrolling Interests and 24,031 21,112 77,742 81,845 Tompkins FinancialCorporation

Less: Net IncomeAttributable to 53 32 154 127 Noncontrolling Interests

Net Income Attributable toTompkins Financial $ 23,978 21,080 $ 77,588 81,718 Corporation

Basic Earnings Per Share $ 1.61 $ 1.41 $ 5.22 $ 5.39

Diluted Earnings Per Share $ 1.61 $ 1.40 $ 5.20 $ 5.37



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

Quarter Ended

Quarter Ended

December 31, 2020

December 31, 2019

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

$

439,726

$

104

0.09

%

$

2,763

$

9

1.29

%

Securities (1)

U.S. Government securities

1,502,226

4,671

1.24

%

1,192,035

6,421

2.14

%

State and municipal (2)

127,580

823

2.57

%

93,275

643

2.73

%

Other securities (2)

3,430

24

2.78

%

3,417

37

4.30

%

Total securities

1,633,236

5,518

1.34

%

1,288,727

7,101

2.19

%

FHLBNY and FRB stock

16,766

244

5.80

%

25,469

561

8.74

%

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

5,318,607

57,949

4.33

%

4,871,483

57,332

4.67

%

Total interest-earning assets

7,408,335

63,815

3.43

%

6,188,442

65,003

4.17

%

Other assets

349,824

424,760

Total assets

$

7,758,159

$

6,613,202

LIABILITIES & EQUITY

Deposits

Interest-bearing deposits

Interest bearing checking, savings, & money market

3,927,433

1,457

0.15

%

3,140,707

5,234

0.66

%

Time deposits

734,009

2,326

1.26

%

692,541

3,077

1.76

%

Total interest-bearing deposits

4,661,442

3,783

0.32

%

3,833,248

8,311

0.86

%

Federal funds purchased & securities sold under agreements to repurchase

60,417

19

0.12

%

54,907

33

0.24

%

Other borrowings

271,087

1,442

2.12

%

469,410

2,696

2.28

%

Trust preferred debentures

17,091

375

8.73

%

17,007

303

7.07

%

Total interest-bearing liabilities

5,010,037

5,619

0.45

%

4,374,572

11,343

1.03

%

Noninterest bearing deposits

1,913,781

1,471,377

Accrued expenses and other liabilities

115,227

102,812

Total liabilities

7,039,045

5,948,761

Tompkins Financial Corporation Shareholders' equity

717,618

662,940

Noncontrolling interest

1,496

1,501

Total equity

719,114

664,441

Total liabilities and equity

$

7,758,159

$

6,613,202

Interest rate spread

2.98

%

3.14

%

Net interest income/margin on earning assets

58,196

3.12

%

53,660

3.44

%

Tax Equivalent Adjustment

(445)

(420)

Net interest income per consolidated financial statements

$

57,751

$

53,240

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

Quarter Ended Quarter Ended

December 31, 2020 December 31, 2019

Average Average

Balance Average Balance Average

(Dollar amounts (QTD) Interest Yield/ (QTD) Interest Yield/in thousands) Rate Rate

ASSETS

Interest-earning assets

Interest-bearingbalances due $ 439,726 $ 104 0.09 % $ 2,763 $ 9 1.29 %from banks

Securities (1)

U.S. Government 1,502,226 4,671 1.24 % 1,192,035 6,421 2.14 %securities

State and 127,580 823 2.57 % 93,275 643 2.73 %municipal (2)

Other securities 3,430 24 2.78 % 3,417 37 4.30 %(2)

Total securities 1,633,236 5,518 1.34 % 1,288,727 7,101 2.19 %

FHLBNY and FRB 16,766 244 5.80 % 25,469 561 8.74 %stock

Total loans andleases, net of 5,318,607 57,949 4.33 % 4,871,483 57,332 4.67 %unearned income(2)(3)

Totalinterest-earning 7,408,335 63,815 3.43 % 6,188,442 65,003 4.17 %assets

Other assets 349,824 424,760

Total assets $ 7,758,159 $ 6,613,202

LIABILITIES & EQUITY

Deposits

Interest-bearing deposits

Interest bearingchecking, 3,927,433 1,457 0.15 % 3,140,707 5,234 0.66 %savings, & moneymarket

Time deposits 734,009 2,326 1.26 % 692,541 3,077 1.76 %

Totalinterest-bearing 4,661,442 3,783 0.32 % 3,833,248 8,311 0.86 %deposits

Federal fundspurchased &securities sold 60,417 19 0.12 % 54,907 33 0.24 %under agreementsto repurchase

Other borrowings 271,087 1,442 2.12 % 469,410 2,696 2.28 %

Trust preferred 17,091 375 8.73 % 17,007 303 7.07 %debentures

Totalinterest-bearing 5,010,037 5,619 0.45 % 4,374,572 11,343 1.03 %liabilities

Noninterest 1,913,781 1,471,377 bearing deposits

Accrued expensesand other 115,227 102,812 liabilities

Total 7,039,045 5,948,761 liabilities

TompkinsFinancialCorporation 717,618 662,940 Shareholders'equity

Noncontrolling 1,496 1,501 interest

Total equity 719,114 664,441



Totalliabilities and $ 7,758,159 $ 6,613,202 equity

Interest rate 2.98 % 3.14 %spread

Net interestincome/margin on 58,196 3.12 % 53,660 3.44 %earning assets



Tax Equivalent (445) (420) Adjustment

Net interestincome perconsolidated $ 57,751 $ 53,240 financialstatements

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

Fiscal Year Ended

Fiscal Year Ended

December 31, 2020

December 31, 2019

Average

Average

Balance

Average

Balance

Average

(Dollar amounts in thousands)

(YTD)

Interest

Yield/Rate

(YTD)

Interest

Yield/Rate

ASSETS

Interest-earning assets

Interest-bearing balances due from banks

$

194,211

$

194

0.10

%

$

1,647

$

41

2.49

%

Securities (1)

U.S. Government securities

1,307,905

22,906

1.75

%

1,301,813

29,411

2.26

%

State and municipal (2)

114,462

3,048

2.66

%

93,168

2,547

2.73

%

Other securities (2)

3,430

117

3.40

%

3,417

158

4.62

%

Total securities

1,425,797

26,071

1.83

%

1,398,398

32,116

2.30

%

FHLBNY and FRB stock

20,815

1,374

6.60

%

38,308

3,003

7.84

%

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

5,228,135

228,805

4.38

%

4,830,089

227,869

4.72

%

Total interest-earning assets

6,868,958

256,444

3.73

%

6,268,442

263,029

4.20

%

Other assets

489,520

411,136

Total assets

$

7,358,478

$

6,679,578

LIABILITIES & EQUITY

Deposits

Interest-bearing deposits

Interest bearing checking, savings, & money market

3,650,358

9,430

0.26

%

3,007,221

20,099

0.67

%

Time deposits

703,999

10,534

1.50

%

676,106

10,805

1.60

%

Total interest-bearing deposits

4,354,357

19,964

0.46

%

3,683,327

30,904

0.84

%

Federal funds purchased & securities sold under agreements to repurchase

55,973

95

0.17

%

59,825

143

0.24

%

Other borrowings

365,732

7,799

2.13

%

762,993

18,427

2.42

%

Trust preferred debentures

17,092

1,133

6.63

%

16,943

1,276

7.53

%

Total interest-bearing liabilities

4,793,154

28,991

0.60

%

4,523,088

50,750

1.12

%

Noninterest bearing deposits

1,753,226

1,403,330

Accrued expenses and other liabilities

112,544

101,819

Total liabilities

6,658,924

6,028,237

Tompkins Financial Corporation Shareholders' equity

698,088

649,871

Noncontrolling interest

1,466

1,470

Total equity

699,554

651,341

Total liabilities and equity

$

7,358,478

$

6,679,578

Interest rate spread

3.13

%

3.07

%

Net interest income/margin on earning assets

227,453

3.31

%

212,279

3.39

%

Tax Equivalent Adjustment

(2,114)

(1,651)

Net interest income per consolidated financial statements

$

225,339

$

210,628

Tompkins Financial Corporation - Summary Financial Data (Unaudited)

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

Fiscal Year Ended Fiscal Year Ended

December 31, 2020 December 31, 2019

Average Average

Balance Average Balance Average

(Dollar amounts (YTD) Interest Yield/ (YTD) Interest Yield/in thousands) Rate Rate

ASSETS

Interest-earning assets

Interest-bearingbalances due $ 194,211 $ 194 0.10 % $ 1,647 $ 41 2.49 %from banks

Securities (1)

U.S. Government 1,307,905 22,906 1.75 % 1,301,813 29,411 2.26 %securities

State and 114,462 3,048 2.66 % 93,168 2,547 2.73 %municipal (2)

Other securities 3,430 117 3.40 % 3,417 158 4.62 %(2)

Total securities 1,425,797 26,071 1.83 % 1,398,398 32,116 2.30 %

FHLBNY and FRB 20,815 1,374 6.60 % 38,308 3,003 7.84 %stock

Total loans andleases, net of 5,228,135 228,805 4.38 % 4,830,089 227,869 4.72 %unearned income(2)(3)

Totalinterest-earning 6,868,958 256,444 3.73 % 6,268,442 263,029 4.20 %assets

Other assets 489,520 411,136

Total assets $ 7,358,478 $ 6,679,578

LIABILITIES & EQUITY

Deposits

Interest-bearing deposits

Interest bearingchecking, 3,650,358 9,430 0.26 % 3,007,221 20,099 0.67 %savings, & moneymarket

Time deposits 703,999 10,534 1.50 % 676,106 10,805 1.60 %

Totalinterest-bearing 4,354,357 19,964 0.46 % 3,683,327 30,904 0.84 %deposits

Federal fundspurchased &securities sold 55,973 95 0.17 % 59,825 143 0.24 %under agreementsto repurchase

Other borrowings 365,732 7,799 2.13 % 762,993 18,427 2.42 %

Trust preferred 17,092 1,133 6.63 % 16,943 1,276 7.53 %debentures

Totalinterest-bearing 4,793,154 28,991 0.60 % 4,523,088 50,750 1.12 %liabilities

Noninterest 1,753,226 1,403,330 bearing deposits

Accrued expensesand other 112,544 101,819 liabilities

Total 6,658,924 6,028,237 liabilities

TompkinsFinancialCorporation 698,088 649,871 Shareholders'equity

Noncontrolling 1,466 1,470 interest

Total equity 699,554 651,341



Totalliabilities and $ 7,358,478 $ 6,679,578 equity

Interest rate 3.13 % 3.07 %spread

Net interestincome/margin on 227,453 3.31 % 212,279 3.39 %earning assets



Tax Equivalent (2,114) (1,651) Adjustment

Net interestincome perconsolidated $ 225,339 $ 210,628 financialstatements

Tompkins Financial Corporation - Summary Financial Data (Unaudited)

(In thousands, except per sharedata) Quarter-Ended Year-Ended

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

Securities $ 1,628,122 $ 1,667,698 $ 1,336,087 $ 1,353,567 $ 1,299,502 $ 1,628,122

Total Loans 5,260,327 5,398,297 5,424,285 4,937,822 4,917,550 5,260,327

Allowance for 51,669 52,293 52,082 52,404 39,892 51,669 credit losses

Total assets 7,622,171 7,794,502 7,582,056 6,743,114 6,725,623 7,622,171

Total deposits 6,437,752 6,601,238 6,377,521 5,409,363 5,212,921 6,437,752

Federal fundspurchased andsecurities sold 65,845 63,573 50,889 68,993 60,346 65,845 under agreementsto repurchase

Other borrowings 265,000 285,000 325,000 457,983 658,100 265,000

Trust preferred 13,220 17,163 17,120 17,078 17,035 13,220 debentures

Total common 716,277 712,104 696,553 681,153 661,642 716,277 equity

Total equity 717,689 713,611 698,029 682,597 663,054 717,689

Average Balance Sheet

Average earning $ 7,408,335 $ 7,204,049 $ 6,616,079 $ 6,237,773 $ 6,188,442 $ 6,868,958 assets

Average assets 7,758,159 7,582,009 7,413,945 6,672,948 6,613,202 7,358,478

Averageinterest-bearing 5,010,037 4,861,890 4,825,753 4,471,797 4,374,572 4,793,154 liabilities

Average equity 719,114 709,484 690,475 678,817 664,441 699,554

Share data

Weighted averageshares 14,715,124 14,697,532 14,681,956 14,718,948 14,726,023 14,703,390 outstanding(basic)

Weighted averageshares 14,751,303 14,727,741 14,714,848 14,774,269 14,790,503 14,742,040 outstanding(diluted)

Period-endshares 14,928,479 14,926,252 14,914,458 14,907,947 14,978,589 14,928,479 outstanding

Common equitybook value per $ 47.98 $ 47.71 $ 46.70 $ 45.69 $ 44.17 $ 47.98 share

Income Statement

Net interest $ 57,751 $ 58,253 $ 56,366 $ 52,969 $ 53,240 $ 225,339 income

Provision(credit) for 6 199 (348) 16,294 (1,000) 16,151 credit lossexpense

Noninterest 18,836 18,887 17,177 18,960 17,972 73,860 income

Noninterest 46,405 46,349 46,888 45,740 45,900 185,382 expense

Income tax 6,145 6,330 5,540 1,909 5,200 19,924 expense

Net incomeattributable toTompkins 23,978 24,230 21,431 7,949 21,080 77,588 FinancialCorporation

Noncontrolling 53 32 32 37 32,000 154 interests

Basic earnings $ 1.61 $ 1.63 $ 1.44 $ 0.53 $ 1.41 $ 5.22 per share (5)

Diluted earnings $ 1.61 $ 1.63 $ 1.44 $ 0.53 $ 1.40 $ 5.20 per share (5)

Nonperforming Assets

Nonaccrual loans $ 38,976 $ 26,944 $ 23,183 $ 23,556 $ 24,281 $ 38,976 and leases

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

Troubled debtrestructuring 6,803 6,864 6,988 7,137 7,154 6,803 not includedabove

Totalnonperforming 45,779 33,808 30,171 30,693 31,435 45,779 loans and leases

OREO 88 196 274 466 428 88

Totalnonperforming $ 45,867 $ 34,004 $ 30,445 $ 31,159 $ 31,863 $ 45,867 assets

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

Quarter-Ended Year-Ended

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

Loans and leases30-89 days past $ 3,012 $ 6,875 $ 8,352 $ 9,328 $ 3,724 $ 3,012 due and accruing

Loans and leases90 days past due 0 0 0 0 794 0 and accruing

Total loans andleases past due 3,012 6,875 8,352 9,328 4,518 3,012 and accruing

Allowance for Credit Losses*

Balance atbeginning of $ 52,293 $ 52,082 $ 52,404 $ 39,892 $ 41,371 $ 39,892 period

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

Provision(credit) for 6 199 (348) 16,294 (1,000) 16,151 credit losses

Net loan andlease 630 (12) (26) 1,248 479 1,840 charge-offs(recoveries)

Allowance forcredit losses $ 51,669 $ 52,293 $ 52,082 $ 52,404 $ 39,892 $ 51,669 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 Mention $ 121,253 $ 122,652 $ 44,741 $ 37,121 29,800 $ 121,253

Substandard 68,645 45,384 48,046 52,894 60,499 68,645

Ratio Analysis

Credit Quality

Nonperformingloans and leases/ 0.87 % 0.63 % 0.56 % 0.62 % 0.64 % 0.87 %total loans andleases (6)

Nonperformingassets/total 0.60 % 0.44 % 0.40 % 0.46 % 0.47 % 0.60 %assets

Allowance forcredit losses/ 0.98 % 0.97 % 0.96 % 1.06 % 0.81 % 0.98 %total loans andleases

Allowance/nonperforming 112.87 % 154.68 % 172.62 % 170.74 % 126.90 % 112.87 %loans and leases

Net loan and leaselosses annualized/ 0.05 % 0.00 % 0.00 % 0.10 % 0.04 % 0.04 %total averageloans and leases

Capital Adequacy

Tier 1 Capital(to average 8.75 % 8.85 % 8.79 % 9.53 % 9.61 % 8.75 %assets)

Total Capital(to 14.39 % 14.26 % 13.95 % 13.62 % 13.53 % 14.39 %risk-weightedassets)

Profitability (period-end)

Return on average 1.23 % 1.27 % 1.16 % 0.48 % 1.26 % 1.05 %assets *

Return on average 13.26 % 13.59 % 12.48 % 4.71 % 12.59 % 11.09 %equity *

Net interest 3.12 % 3.26 % 3.45 % 3.44 % 3.44 % 3.31 %margin (TE) *

** Quarterlyratios have been annualized

(1) Federal Reserve peer ratio as of September 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 adjustments using an effective income tax rate of 21% in 2020 and 2019 to increase tax exempt interest income to 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 for the full fiscal year 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 and leases. 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210129005057/en/

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