Tompkins Financial Corporation Reports Increase in Fourth Quarter Earnings

Rhea-AI Summary

Tompkins Financial Corporation (NYSE American: TMP) reported a diluted EPS of $1.36 for Q4 2022, marking a 2.3% increase from Q4 2021. Net income remained unchanged at $19.5 million. For the year, diluted EPS fell by 2.6% to $5.89, with total net income of $85 million, reflecting a $4.2 million decline year-over-year. The drop was largely due to reduced net deferred loan fees from $11.2 million in 2021 to $3 million in 2022 and a shift from credit recoveries to a $2.8 million credit loss expense. The sale of VISA Class B shares yielded an $11.4 million gain, while available-for-sale securities incurred an $11.9 million loss. Total loans increased to $5.3 billion, while total deposits dropped to $6.6 billion.

Positive

• Q4 2022 diluted EPS increased 2.3% year-over-year.
• Net credit recoveries for the year indicating strong asset quality.
• Total loans as of December 31, 2022, were $5.3 billion, up 3.8% from 2021.
• Strong return on average equity of 13.25%, higher than previous three years.

Negative

• Full year net income decreased by $4.2 million compared to 2021.
• Total deposits decreased by $189.1 million or 2.8% year-over-year.
• Noninterest income fell by 4.2% in Q4 2022 compared to Q4 2021.

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

Tompkins Financial Corporation ("Tompkins" or the "Company") reported diluted earnings per share of $1.36 for the fourth quarter of 2022, up 2.3% compared to $1.33 reported in the fourth quarter of 2021. Net income for the fourth quarter of 2022 was $19.5 million, which was unchanged when compared to the same period in 2021.

For the year ended December 31, 2022, diluted earnings per share of $5.89 were down 2.6% compared to the year ended December 31, 2021. Net income for 2022 was $85.0 million, a decrease of $4.2 million compared to the year ended December 31, 2021. Significant contributors to the negative variance in annual net income included a reduction in net deferred loan fees associated with PPP loans from $11.2 million in 2021 to $3.0 million in 2022, as well as an increase in provision for credit loss expense, which was a credit of $2.2 million in 2021 versus an expense of $2.8 million in 2022.

During the fourth quarter of 2022, the Company sold its VISA Class B common shares, recognizing a pre-tax gain of $11.4 million. Also in the fourth quarter of 2022, the Company sold $147.9 million of available-for-sale securities, recognizing a pre-tax loss on the sale of $11.9 million. The available-for-sale securities sold during the quarter had an average yield of 0.41% and remaining life of 2.1 years. Proceeds from the sale of the VISA Class B shares and the available-for-sale securities were used to pay down overnight borrowings with the FHLB.

Tompkins President and CEO, Stephen Romaine, commented, "We are pleased to report earnings growth in the fourth quarter of 2022, when compared to the same quarter last year. The quality of our balance sheet remains a strength, as we had net credit recoveries for the year and nonperforming loans remain near historic lows. Our performance metrics remain strong as we begin a new year facing economic uncertainty and a challenging interest rate environment. We remain focused on growth that is built on quality customer relationships and on improving the overall efficiency of our Company."

SELECTED HIGHLIGHTS FOR THE PERIOD:

• Total loans at December 31, 2022 were $5.3 billion, up $60.5 million over the immediate prior quarter, reflecting an annualized increase of 4.7% from September 30, 2022, and up $193.4 million or 3.8% from December 31, 2021. Excluding PPP loans, total loans at December 31, 2022 were up 5.3% over year-end 2021.
• Total deposits at December 31, 2022 were $6.6 billion, down $189.1 million or 2.8% from December 31, 2021, while noninterest bearing deposits of $2.2 billion were up $14.4 million or 0.7% over the same time period.
• Net interest margin of 3.02% for the quarter ended December 31, 2022 was down from 3.04% for the quarter ended September 30, 2022, and up from 3.01% for the quarter ended December 31, 2021.
• Return on average equity for the year ended December 31, 2022 of 13.25% was higher than any of the previous three years.

NET INTEREST INCOME

Net interest margin was 3.02% for the fourth quarter of 2022, down compared to the 3.04% reported for the third quarter of 2022, and up compared to the 3.01% reported for the fourth quarter of 2021. The decrease in margin from the third quarter of 2022 was due primarily to the increase in interest expense on interest-bearing deposits and short-term borrowings, partially offset by higher yields on loan, securities and cash, reflective of the higher interest rate environment.

Net interest income was $57.3 million for the fourth quarter of 2022, down from $58.1 million for the third quarter of 2022 and $57.8 million for the fourth quarter of 2021. Full year net interest income was $230.3 million for the year ended December 31, 2022, up from $223.8 million reported for the year ended December 31, 2021.

Comparisons to prior periods are impacted by net fees on PPP loans, which have largely paid down during 2022. Net interest income in the current quarter included $5,000 of net deferred loan fees associated with PPP loans, down from $88,000 of net deferred PPP loan fees for the third quarter of 2022, and $3.2 million of net deferred PPP loan fees for the fourth quarter of 2021. Full year net interest income for 2021 included net deferred loan fees associated with PPP loans of $11.2 million and a $1.9 million purchase accounting charge related to the redemption of $15.2 million in trust preferred securities; full year net deferred loan fees on PPP loans in 2022 were $3.0 million.

Average loans for the quarter ended December 31, 2022 increased $145.7 million, or 2.9%, compared to the same period in 2021, and were in line with average loans for the third quarter of 2022. The increase in average loans as compared to the same period in the prior year was mainly in commercial and residential real estate loans, which were up 7.9% and 4.9%, respectively. Commercial and industrial loans were down 14.6%, mainly driven by lower PPP loan balances. Average loan yields for the quarter ended December 31, 2022 were up 27 basis points from the third quarter of 2022 and up 32 basis points compared to the same period in 2021.

Average loans for the year ended December 31, 2022 were in line with average loans for the year ended December 31, 2021. Average loan yields for the year ended December 31, 2022, were up 9 basis points compared to 2021, which reflects the impact of rising market interest rates in 2022.

Average total deposits for the fourth quarter of 2022 were down $261.8 million, or 3.8%, compared to the same period in 2021 and were down $108.1 million, or 1.6%, compared to average deposits for the third quarter of 2022. The decrease was largely driven by inflation and higher rate alternatives due to current interest rate environment and tighter monetary policy. The total cost of interest-bearing liabilities of 0.84% for the fourth quarter of 2022 represented an increase of 39 basis points over the third quarter of 2022, and an increase of 62 basis points over the same period in 2021.

Average total deposits for 2022 were flat compared to 2021. Average noninterest bearing deposits for 2022 were up $90.2 million, or 4.3%, compared to 2021. The total cost of interest-bearing liabilities for full year ended December 31, 2022 increased by 8 basis points to 0.43% from the same period in 2021.

NONINTEREST INCOME

Noninterest income of $18.4 million for the fourth quarter of 2022 was down 4.2% compared to the same period in 2021. Negatively impacting noninterest income during the quarter were lower wealth management fees, primarily due to market conditions, as well as a net loss on sale of securities of $455,000.

For the full year 2022, noninterest income of $78.0 million was down 1.1% from 2021. Year to date 2022 noninterest income reflected higher revenue from insurance commissions, deposit fees and card services fees, which were offset by lower wealth management fees and net losses of $634,000 on securities transactions.

NONINTEREST EXPENSE

Noninterest expense was $50.2 million for the fourth quarter of 2022, up $2.0 million, or 4.2%, over the fourth quarter of 2021, with the increase largely driven by higher personnel related costs. Increased spending on marketing and technology also contributed to expense growth in the fourth quarter of 2022 compared to the same period in 2021.

For the full year 2022, noninterest expense was $195.8 million, up $5.5 million, or 2.9%, over 2021. The growth in noninterest expense for the year-to-date period was primarily driven by increases in salaries, wages and benefits and other noninterest expense. Contributing to the growth in these expense items were nonrecurring expenses of $1.2 million, related to the consolidation and rebranding of the Company's four banking charters The year-to-date period in 2021 included $2.9 million in penalties related to the prepayment of $135.0 million in FHLB fixed rate advances.

INCOME TAX EXPENSE

The Company's effective tax rate was 18.6% for the fourth quarter of 2022, compared to 21.7% for the same period in 2021. The effective tax rate for the year ended December 31, 2022 was 22.4%, compared to 22.0% reported for 2021.

The Company's banking subsidiary has an investment in a real estate investment trust that provides certain benefits on its New York State tax return for qualifying entities. A condition to claim these benefits is that the consolidated company has qualified assets of no more than $8.0 billion for the taxable year. Prior to the fourth quarter of 2022, the Company expected to exceed the asset threshold and its effective tax rate reflected the anticipated loss of these tax benefits. With the decrease in total assets between September 30, 2022 and December 31, 2022, the Company retained the tax benefits, and as a result, adjusted its tax rate in the fourth quarter of 2022 to reflect the retention of the benefits. The Company will continue to monitor consolidated average assets to determine future eligibility.

ASSET QUALITY

The allowance for credit losses represented 0.87% of total loans and leases at December 31, 2022, up from 0.86% at September 30, 2022 and 0.84% at December 31, 2021. The ratio of the allowance to total nonperforming loans and leases improved to 139.85% at December 31, 2022, up compared to 128.27% at September 30, 2022 and 137.51% at December 31, 2021.

The provision for credit loss expense for the fourth quarter of 2022 was $1.4 million compared to $3.9 million for the same period in 2021. Provision expense for the year ended December 31, 2022 was an expense of $2.8 million, compared to a credit of $2.2 million for 2021. The increase in the provision for credit losses for the year-ended December 31, 2022 is mainly driven by current economic forecasts coupled with loan growth.

Nonperforming assets represented 0.43% of total assets at December 31, 2022, down from 0.45% at September 30, 2022, and up from 0.40% at December 31, 2021. At December 31, 2022, nonperforming loans and leases totaled $32.8 million, compared to $34.9 million at September 30, 2022 and $31.2 million at December 31, 2021.

Special Mention and Substandard loans and leases totaled $98.3 million at December 31, 2022, reflecting improvement from $106.7 million at September 30, 2022, and $137.6 million at December 31, 2021.

CAPITAL POSITION

Capital ratios at December 31, 2022 remained well above the regulatory minimums for well-capitalized institutions. The ratio of Total Capital to Risk-Weighted Assets was 14.42% at December 31, 2022, compared to 14.26% at September 30, 2022 and 14.23% at December 31, 2021. The ratio of Tier 1 capital to average assets was 9.34% at December 31, 2022, compared to 9.14% at September 30, 2022 and 8.72% at December 31, 2021.

ABOUT TOMPKINS FINANCIAL CORPORATION

Tompkins Financial Corporation is a banking and financial services company serving the Central, Western, and Hudson Valley regions of New York and the Southeastern region of Pennsylvania. Headquartered in Ithaca, NY, Tompkins Financial is parent to Tompkins Community Bank, Tompkins Insurance Agencies, Inc., and offers wealth management services through Tompkins Financial Advisors. For more information on Tompkins Financial, visit www.tompkinsfinancial.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. 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; estimated GDP growth and inflation trends; our ability to attract and retain deposits and access other sources of liquidity; the impact of the interest rate and inflationary environment on the Company's business, financial condition and results of operations; other income or cash flow anticipated from the Company’s operations, investment and/or lending activities; changes in laws and regulations affecting banks, bank holding companies and/or financial holding companies, such as SEC rule making, The Dodd-Frank Act, Basel III, 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 such as the war in the Ukraine, including the potential impact of widespread protests, civil unrest, and political uncertainty on the economy and the financial services industry; public health crises and pandemics, including the COVID-19 pandemic, and their effects on the economic and business environments in which we operate, including on our credit quality and business operations, as well as the impact on general economic and financial market conditions; cybersecurity threats and the cost of defending against them; 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
CONSOLIDATED STATEMENTS OF CONDITION
(In thousands, except share and per share data)	As of			As of
ASSETS	12/31/2022			12/31/2021
				(Audited)
Cash and noninterest bearing balances due from banks	$	18,572		$	23,078
Interest bearing balances due from banks		59,265			40,029
Cash and Cash Equivalents		77,837			63,107
Available-for-sale debt securities, at fair value (amortized cost of $1,831,791 at December 31, 2022 and $2,063,790 at December 31, 2021)		1,594,967			2,044,513
Held-to-maturity securities, at amortized cost (fair value of $261,692 at December 31, 2022 and $282,288 at December 31, 2021)		312,344			284,009
Equity securities, at fair value (amortized cost $777 at December 31, 2022 and $902 at December 31, 2021)		777			902
Total loans and leases, net of unearned income and deferred costs and fees		5,268,911			5,075,467
Less: Allowance for credit losses		45,934			42,843
Net Loans and Leases		5,222,977			5,032,624
Federal Home Loan Bank and other stock		17,720			10,996
Bank premises and equipment, net		82,140			85,416
Corporate owned life insurance		85,556			86,495
Goodwill		92,602			92,447
Other intangible assets, net		2,708			3,643
Accrued interest and other assets		181,058			115,830
Total Assets	$	7,670,686		$	7,819,982
LIABILITIES
Deposits:
Interest bearing:
Checking, savings and money market		3,820,739			4,016,025
Time		631,411			639,674
Noninterest bearing		2,150,145			2,135,736
Total Deposits		6,602,295			6,791,435
Federal funds purchased and securities sold under agreements to repurchase		56,278			66,787
Other borrowings		291,300			124,000
Other liabilities		103,423			108,819
Total Liabilities	$	7,053,296		$	7,091,041
EQUITY
Tompkins Financial Corporation shareholders' equity:
Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued: 14,555,741 at December 31, 2022; and 14,696,911 at December 31, 2021		1,456			1,470
Additional paid-in capital		302,763			312,538
Retained earnings		526,727			475,262
Accumulated other comprehensive loss		(208,689	)		(55,950	)
Treasury stock, at cost – 128,749 shares at December 31, 2022, and 122,824 shares at December 31, 2021		(6,279	)		(5,791	)
Total Tompkins Financial Corporation Shareholders’ Equity		615,978			727,529
Noncontrolling interests		1,412			1,412
Total Equity	$	617,390		$	728,941
Total Liabilities and Equity	$	7,670,686		$	7,819,982

TOMPKINS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data) (Unaudited)	Three Months Ended						Year Ended
	12/31/2022			12/31/2021			12/31/2022			12/31/2021
INTEREST AND DIVIDEND INCOME
Loans	$	58,930		$	53,086		$	217,607		$	214,684
Due from banks		181			77			371			343
Available-for-sale debt securities		6,939			6,252			27,929			23,440
Held-to-maturity securities		1,221			1,031			4,771			2,075
Federal Home Loan Bank and other stock		254			168			646			776
Total Interest and Dividend Income		67,525		$	60,614		$	251,324		$	241,318
INTEREST EXPENSE
Time certificates of deposits of $250,000 or more		909			478			2,298			2,202
Other deposits		6,973			1,810			13,870			8,645
Federal funds purchased and securities sold under agreements to repurchase		14			16			60			64
Trust preferred debentures		0			0			0			2,233
Other borrowings		2,335			499			4,815			4,382
Total Interest Expense		10,231			2,803			21,043			17,526
Net Interest Income		57,294			57,811			230,281			223,792
Less: Provision (credit) for credit loss expense		1,397			3,914			2,789			(2,219	)
Net Interest Income After Credit for Credit Loss Expense		55,897			53,897			227,492			226,011
NONINTEREST INCOME
Insurance commissions and fees		7,630			7,783			36,201			34,836
Wealth management fees		4,241			5,041			18,091			19,388
Service charges on deposit accounts		1,913			1,768			7,365			6,347
Card services income		2,791			2,775			11,024			10,826
Other income		2,231			1,795			5,925			7,203
Net (loss) gain on securities transactions		(455	)		(8	)		(634	)		249
Total Noninterest Income		18,351			19,154			77,972			78,849
NONINTEREST EXPENSE
Salaries and wages		25,249			24,561			98,261			96,038
Other employee benefits		6,342			6,285			24,969			24,172
Net occupancy expense of premises		3,163			3,137			13,093			13,179
Furniture and fixture expense		2,007			2,108			8,058			8,328
Amortization of intangible assets		218			329			873			1,317
Other operating expense		13,211			11,734			50,497			47,253
Total Noninterest Expenses		50,190			48,154			195,751			190,287
Income Before Income Tax Expense		24,058			24,897			109,713			114,573
Income Tax Expense		4,478			5,401			24,557			25,182
Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation		19,580			19,496			85,156			89,391
Less: Net Income Attributable to Noncontrolling Interests		32			31			126			127
Net Income Attributable to Tompkins Financial Corporation	$	19,548			19,465			85,030			89,264
Basic Earnings Per Share	$	1.36		$	1.34		$	5.92		$	6.08
Diluted Earnings Per Share	$	1.36		$	1.33		$	5.89		$	6.05

Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)
	Quarter Ended							Quarter Ended
	December 31, 2022							December 31, 2021
	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	$	58,488	$	181		1.23	%	$	228,570	$	77		0.13	%
Securities (1)
U.S. Government securities		2,186,858		7,627		1.38	%		2,248,954		6,728		1.19	%
State and municipal (2)		94,377		608		2.56	%		105,215		672		2.53	%
Other securities (2)		3,270		47		5.68	%		3,407		23		2.64	%
Total securities		2,284,505		8,282		1.44	%		2,357,576		7,423		1.25	%
FHLBNY and FRB stock		15,942		255		6.33	%		10,382		168		6.42	%
Total loans and leases, net of unearned income (2)(3)		5,209,721		59,140		4.50	%		5,064,028		53,354		4.18	%
Total interest-earning assets		7,568,656		67,858		3.56	%		7,660,556		61,022		3.16	%
Other assets		152,679							333,260
Total assets	$	7,721,335						$	7,993,816
LIABILITIES & EQUITY
Deposits
Interest-bearing deposits
Interest bearing checking, savings, & money market	$	3,905,570	$	5,888		0.60	%	$	4,130,652	$	793		0.08	%
Time deposits		615,493		1,994		1.28	%		663,713		1,495		0.89	%
Total interest-bearing deposits		4,521,063		7,882		0.69	%		4,794,365		2,288		0.19	%
Federal funds purchased & securities sold under agreements to repurchase		55,701		14		0.10	%		61,976		16		0.11	%
Other borrowings		251,797		2,335		3.68	%		110,370		499		1.79	%
Trust preferred debentures		0		0		0.00	%		0		0		0.00	%
Total interest-bearing liabilities		4,828,561		10,231		0.84	%		4,966,711		2,803		0.22	%
Noninterest bearing deposits		2,196,992							2,185,489
Accrued expenses and other liabilities		115,063							118,997
Total liabilities		7,140,615							7,271,197
Tompkins Financial Corporation Shareholders’ equity		579,223							721,123
Noncontrolling interest		1,497							1,496
Total equity		580,720							722,619
Total liabilities and equity	$	7,721,335						$	7,993,816
Interest rate spread						2.72	%						2.94	%
Net interest income/margin on earning assets				57,627		3.02	%				58,219		3.01	%
Tax Equivalent Adjustment				(333	)						(408	)
Net interest income per consolidated financial statements			$	57,294						$	57,811

Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)
	Year to Date Period Ended							Year to Date Period Ended
	December 31, 2022							December 31, 2021
	Average							Average
	Balance							Balance					Average
(Dollar amounts in thousands)	(YTD)		Interest					(YTD)		Interest			Yield/Rate
ASSETS
Interest-earning assets
Interest-bearing balances due from banks	$	85,788	$	371		0.43	%	$	307,253	$	343		0.11	%
Securities (1)
U.S. Government securities		2,265,226		30,587		1.35	%		2,003,450		23,145		1.16	%
State and municipal (2)		97,283		2,490		2.56	%		112,391		2,871		2.55	%
Other securities (2)		3,329		135		4.06	%		3,417		92		2.68	%
Total securities		2,365,838		33,212		1.40	%		2,119,258		26,108		1.23	%
FHLBNY and FRB stock		13,354		646		4.84	%		14,830		776		5.24	%
Total loans and leases, net of unearned income (2)(3)		5,142,098		218,494		4.25	%		5,184,491		215,709		4.16	%
Total interest-earning assets		7,607,078		252,723		3.32	%		7,625,832		242,936		3.19	%
Other assets		221,442							343,119
Total assets	$	7,828,520						$	7,968,951
LIABILITIES & EQUITY
Deposits
Interest-bearing deposits
Interest bearing checking, savings, & money market	$	4,029,008	$	10,389		0.26	%	$	4,034,969	$	3,736		0.09	%
Time deposits		611,708		5,779		0.94	%		711,381		7,111		1.00	%
Total interest-bearing deposits		4,640,716		16,168		0.35	%		4,746,350		10,847		0.23	%
Federal funds purchased & securities sold under agreements to repurchase		57,126		60		0.10	%		58,627		64		0.11	%
Other borrowings		195,110		4,815		2.47	%		217,799		4,382		2.01	%
Trust preferred debentures		0		0		0.00	%		7,367		2,233		30.32	%
Total interest-bearing liabilities		4,892,952		21,043		0.43	%		5,030,143		17,526		0.35	%
Noninterest bearing deposits		2,186,720							2,096,542
Accrued expenses and other liabilities		107,122							117,790
Total liabilities		7,186,794							7,244,475
Tompkins Financial Corporation Shareholders’ equity		640,258							723,009
Noncontrolling interest		1,468							1,467
Total equity		641,726							724,476
Total liabilities and equity	$	7,828,520						$	7,968,951
Interest rate spread						2.89	%						2.84	%
Net interest income/margin on earning assets				231,680		3.05	%				225,410		2.96	%
Tax Equivalent Adjustment				(1,399	)						(1,618	)
Net interest income per consolidated financial statements			$	230,281						$	223,792

Tompkins Financial Corporation - Summary Financial Data (Unaudited)

(In thousands, except per share data)
	Quarter-Ended										Year-Ended
Period End Balance Sheet	Dec-22		Sep-22		Jun-22		Mar-22		Dec-21		Dec-22
Securities	$	1,908,088	$	2,054,036	$	2,204,851	$	2,285,527	$	2,329,424	$	1,908,088
Total Loans		5,268,911		5,208,436		5,162,503		5,063,451		5,075,467		5,268,911
Allowance for credit losses		45,934		44,772		43,793		42,126		42,843		45,934
Total assets		7,670,686		7,779,941		7,842,461		7,891,111		7,819,982		7,670,686
Total deposits		6,602,295		6,936,726		6,769,521		7,016,739		6,791,435		6,602,295
Federal funds purchased and securities sold under agreements to repurchase		56,278		55,340		50,075		57,115		66,787		56,278
Other borrowings		291,300		101,000		295,600		60,000		124,000		291,300
Trust preferred debentures		0		0		0		0		0		0
Total common equity		615,978		571,453		622,843		656,049		727,529		615,978
Total equity		617,390		572,959		624,318		657,492		728,941		617,390

Average Balance Sheet
Average earning assets	$	7,568,656	$	7,639,123	$	7,621,588	$	7,598,922	$	7,660,556	$	7,607,078
Average assets		7,721,335		7,853,847		7,830,645		7,910,047		7,993,816		7,828,520
Average interest-bearing liabilities		4,828,561		4,861,857		4,901,345		4,982,075		4,966,711		4,892,952
Average equity		580,720		635,324		639,354		713,027		722,619		641,726

Share data
Weighted average shares outstanding (basic)		14,308,323		14,289,022		14,317,415		14,400,003		14,452,775		14,328,280
Weighted average shares outstanding (diluted)		14,385,884		14,367,149		14,387,601		14,478,183		14,532,480		14,404,294
Period-end shares outstanding		14,519,831		14,483,757		14,504,604		14,561,450		14,661,001		14,519,831
Common equity book value per share	$	42.42	$	39.45	$	42.94	$	45.05	$	49.62	$	42.42

Income Statement
Net interest income	$	57,294	$	58,111	$	58,262	$	56,614		$	57,811	$	230,281
Provision (credit) for credit loss expense (5)		1,397		1,056		856		(520	)		3,914		2,789
Noninterest income		18,351		20,692		18,944		19,985			19,154		77,972
Noninterest expense (5)		50,190		49,602		49,120		46,839			48,154		195,751
Income tax expense		4,478		6,774		6,329		6,976			5,401		24,557
Net income attributable to Tompkins Financial Corporation		19,548		21,340		20,869		23,273			19,465		85,030
Noncontrolling interests		32		31		32		31			31		126
Basic earnings per share (4)		1.36		1.49		1.45		1.61			1.34		5.92
Diluted earnings per share (4)		1.36		1.48		1.45		1.60			1.33		5.89

Nonperforming Assets
Nonaccrual loans and leases	$	28,289	$	30,013	$	24,665	$	25,200	$	26,033	$	28,290
Loans and leases 90 days past due and accruing		25		161		62		0		0		25
Troubled debt restructuring not included above		4,530		4,730		4,872		5,064		5,124		4,530
Total nonperforming loans and leases		32,844		34,904		29,599		30,264		31,157		32,845
OREO		152		335		122		88		135		152
Total nonperforming assets	$	32,996	$	35,239	$	29,721	$	30,352	$	31,292	$	32,997

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

	Quarter-Ended										Year-Ended
Delinquency - Total loan and lease portfolio	Dec-22		Sep-22		Jun-22		Mar-22		Dec-21		Dec-22
Loans and leases 30-89 days past due and
accruing	$	3,172	$	3,160	$	9,837	$	1,735	$	3,072	$	3,172
Loans and leases 90 days past due and accruing		25		161		62		0		0		25
Total loans and leases past due and accruing		3,197		3,321		9,899		1,735		3,072		3,197

Allowance for Credit Losses
Balance at beginning of period	$	44,772	$	43,793		$	42,126		$	42,843		$	46,259	$	42,843
Provision (credit) for credit losses		1,352		1,101			780			(734	)		3,600	$	2,499
Net loan and lease charge-offs (recoveries)		190		122			(887	)		(17	)		7,016	$	(592	)
Allowance for credit losses at end of period	$	45,934	$	44,772		$	43,793		$	42,126		$	42,843	$	45,934
Allowance for Credit Losses - Off-Balance Sheet Exposure
Balance at beginning of period	$	2,751	$	2,796		$	2,720		$	2,506		$	2,192	$	2,506
(Credit) provision for credit losses		45		(45	)		76			214			314	$	290
Allowance for credit losses at end of period	$	2,796	$	2,751		$	2,796		$	2,720		$	2,506	$	2,796

Loan Classification - Total Portfolio
Special Mention	$	49,752	$	66,730	$	72,270	$	92,380	$	85,530	$	49,752
Substandard		48,537		40,007		42,756		42,722		52,047		48,537

Ratio Analysis

Credit Quality
Nonperforming loans and leases/total loans and leases	0.62	%	0.67	%	0.57	%	0.60	%	0.61	%	0.62	%
Nonperforming assets/total assets	0.43	%	0.45	%	0.38	%	0.38	%	0.40	%	0.43	%
Allowance for credit losses/total loans and leases	0.87	%	0.86	%	0.85	%	0.83	%	0.84	%	0.87	%
Allowance/nonperforming loans and leases	139.86	%	128.27	%	147.95	%	139.20	%	137.51	%	139.85	%
Net loan and lease losses annualized/total average loans and leases	0.01	%	0.01	%	(0.07	) %	0.00	%	0.55	%	(0.01	) %

Capital Adequacy
Tier 1 Capital (to average assets)	9.34	%	9.14	%	9.02	%	8.89	%	8.72	%	9.34	%
Total Capital (to risk-weighted assets)	14.42	%	14.26	%	14.07	%	14.23	%	14.23	%	14.42	%

Profitability (period-end)
Return on average assets *	1.00	%	1.08	%	1.07	%	1.19	%	0.97	%	1.09	%
Return on average equity *	13.36	%	13.33	%	13.09	%	13.24	%	10.69	%	13.25	%
Net interest margin (TE) *	3.02	%	3.04	%	3.09	%	3.04	%	3.01	%	3.05	%
* Quarterly ratios have been annualized

(1) Average balances and yields on available-for-sale securities are based on historical amortized cost.
(2) Interest income includes the tax effects of taxable-equivalent adjustments using an effective income tax rate of 21% in 2022 and 2021 to increase tax exempt interest income to taxable-equivalent basis.
(3) Nonaccrual loans are included in the average asset totals presented above. Payments received on nonaccrual loans have been recognized as disclosed in Note 1 of the Company's consolidated financial statements included in Part I of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
(4) Earnings per share for the full fiscal year may not equal the sum of the quarterly earnings per share as a result of rounding of average shares.
(5) Amounts in prior periods' financial statements are reclassified when necessary to conform to the current period's presentation.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230127005049/en/

Stephen S. Romaine, President & CEO

Francis M. Fetsko, Executive VP, CFO & COO

Tompkins Financial Corporation (888) 503-5753

Source: Tompkins Financial Corporation

FAQ

What were Tompkins Financial's earnings results for Q4 2022?

Tompkins Financial reported diluted earnings per share of $1.36 for Q4 2022, up 2.3% from the prior year.

How did Tompkins Financial perform in 2022 compared to 2021?

For the year ended December 31, 2022, Tompkins reported diluted EPS of $5.89, down 2.6% from $6.04 in 2021.

What was the net income for Tompkins Financial in 2022?

Tompkins Financial's net income for 2022 was $85 million, a decline of $4.2 million compared to 2021.

How did Tompkins Financial's total loans change in 2022?

Total loans at December 31, 2022, increased to $5.3 billion, reflecting a 3.8% increase from December 31, 2021.

What impact did PPP loans have on Tompkins Financial's financial results?

The reduction in net deferred loan fees from PPP loans contributed to the decline in net income, decreasing from $11.2 million in 2021 to $3 million in 2022.