Tompkins Financial Corporation Reports Record Second Quarter Earnings

Tompkins Financial Corporation (NYSEMKT:TMP)

Tompkins Financial Corporation reported net income of $13.1 million for the second quarter of 2014, an increase of 18.7% from the $11.0 million reported for the same period in 2013. Diluted earnings per share were $0.87 for the second quarter of 2014, a 16.0% increase from $0.75 reported for the second quarter of 2013. This represents the best second quarter in Company history.

For the year-to-date period ended June 30, 2014, net income was $25.6 million, an increase of 13.8% from the $22.5 million reported for the same period in 2013. Diluted earnings per share were $1.72 for the year-to-date period ended June 30, 2014, up 11.0% compared to the $1.55 per share reported for the same period last year.

Prior period results included in this press release were impacted by certain non-recurring items, which are more fully described in the non-GAAP disclosure tables included with this press release.

President and CEO, Stephen S. Romaine said, “We are very pleased with the earnings growth for both quarter and year to date periods. Growth in loans, securities, and core deposits contributed to improvement in net interest income. Meanwhile, a low level of net charge-offs and reductions in nonperforming asset levels resulted in a modest provision expense for the quarter.”

SELECTED HIGHLIGHTS FOR SECOND QUARTER:

  • Diluted earnings per share for the quarter and six months ended June 30, 2014, reflect the best second quarter and year-to-date results in the Company’s history.
  • Net interest income of $40.5 million was up 1.7% from the same period last year.
  • Provision expense declined to $67,000 for the second quarter of 2014, compared to $2.5 million for the same period in 2013.
  • Credit quality improved with total non-performing assets at June 30, 2014 down 18.0% from the most recent prior quarter, and down 24.0% from the same period last year.
  • Total loans at June 30, 2014 were up 5.7% over the same period in 2013, and were up an annualized 2.2% over year-end 2013.
  • Core deposits (total deposits less time deposit greater than $250,000, brokered deposits, and municipal money market deposits) at June 30, 2014 were up 2.0% when compared to the same period in 2013.
  • Tangible book value per share has increased for the fourth consecutive quarter, and is up 16.3% from the second quarter of 2013. Refer to Non-GAAP disclosure for additional details on tangible book value per share.
  • Annualized return on average equity was 10.91% for the quarter ended June 30, 2014, compared to 9.87% for the same period in 2013.

NET INTEREST INCOME

Net interest income of $40.5 million for the second quarter of 2014 increased 1.73% compared to $39.8 million reported for the same period in 2013. The net interest margin for the second quarter of 2014 was 3.55%, compared to 3.58% for the same period in 2013. For the year-to-date period, net interest income of $80.5 million was up 3.2% from the prior year. The net interest margin of 3.58% for the first six months of 2014 was relatively unchanged from the 3.59% reported in the first six months of 2013.

NONINTEREST INCOME

Noninterest income was $17.7 million for the second quarter of 2014, up 7.1% compared to the same period last year. For the first six months of 2014, noninterest income was up 3.6% over the same period in 2013.

Noninterest income represented 30.4% of total revenue for the second quarter of 2014, compared to 29.3% for the same period in 2013. Fee based revenue related to wealth management, deposit fees, and card services fees, were all up from the same period in 2013, while insurance revenues were down 1.7% compared to the same period prior year.

NONINTEREST EXPENSE

Noninterest expense was $38.9 million for the second quarter of 2014, up 3.1% compared to the second quarter of 2013. For the year-to-date period, noninterest expense was up 2.4% from the same period in 2013. The increase in noninterest expense compared to the same period prior year is mainly a result of higher salary and wages expense. Non-employee related expenses for the second quarter of 2014 were relatively unchanged from the same quarter last year.

ASSET QUALITY

Asset quality trends improved in nearly all categories during the quarter. Substandard and Special Mention loans declined by $70.3 million from the same period last year, and by $27.6 million from the most recent prior quarter. The percentage of nonperforming loans and leases to total loans and leases improved to 0.83% at June 30, 2014, compared to 1.28% reported at June 30, 2013. The percentage of nonperforming assets to total assets improved to 0.66%, which is the lowest this percentage has been over the past 21 quarters, and remains well below the most recent peer average of 1.56% by the Federal Reserve1.

Provision for loan and lease losses was $67,000 for the second quarter of 2014, down from $2.5 million reported in the second quarter of 2013. Net loan and lease charge-offs totaled $564,000 in the second quarter of 2014, down from $1.7 million in the second quarter of 2013.

The Company's allowance for originated loan and lease losses totaled $26.8 million at June 30, 2014, which represented 1.02% of total originated loans, compared to $24.9 million or 1.08% at June 30, 2013 and $26.7 million or 1.04% at March 31, 2014. The increase in the allowance when compared to the same period last year was mainly a result of loan growth and was partially offset by improved asset quality. The allowance for loan and lease losses covered 103.08% of nonperforming loans and leases as of June 30, 2014, up from 64.99% at June 30, 2013 and 78.88% at the most recent prior quarter.

CAPITAL POSITION

Capital ratios remain well above the regulatory well capitalized minimums. Tier 1 capital to average assets improved for the sixth consecutive quarter, to 8.79% at June 30, 2014, and the ratio of total capital to risk-weighted assets was 13.92%, up from 13.34% at June 30, 2013.

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, The Bank of Castile, Mahopac Bank, 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.

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 accompanying tables. Management believes that these non-GAAP measures provide useful information. Non-GAAP measures should not be considered a substitute for financial measures determined in accordance with GAAP and investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. See “Tompkins Financial Corporation - Summary Financial Data (Unaudited)” tables for Non-GAAP related calculations.

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

This press release may include forward-looking statements with respect to revenue sources, growth, market risk, and corporate objectives. The Company assumes no duty, and specifically disclaims any obligation, to update forward-looking statements, and cautions that these statements are subject to numerous assumptions, risks, and uncertainties, all of which could change over time. Actual results could differ materially from forward-looking statements.

TOMPKINS FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION

(In thousands, except share and per share data) (Unaudited)As ofAs of
ASSETS06/30/201412/31/2013
Cash and noninterest bearing balances due from banks $ 82,640 $ 82,163
Interest bearing balances due from banks 779 721

Cash and Cash Equivalents

83,41982,884
Trading securities, at fair value 10,009 10,991

Available-for-sale securities, at fair value (amortized cost of $1,373,243 at June 30,

2014 and $1,368,736 at December 31, 2013)

1,379,254

1,354,811
Held-to-maturity securities, at amortized cost (fair value of $31,629 at June 30, 2014

and $19,625 at December 31, 2013)

30,963 18,980
Originated loans and leases, net of unearned income and deferred costs and fees 2,610,289 2,527,244
Acquired loans and leases, covered 22,165 25,868
Acquired loans and leases, non-covered 596,514 641,172
Less: Allowance for loan and lease losses 27,517 27,970

Net Loans and Leases

3,201,4513,166,314
FDIC Indemnification Asset 3,490 4,790
Federal Home Loan Bank stock 21,028 25,041
Bank premises and equipment, net 58,808 55,932
Corporate owned life insurance 72,812 69,335
Goodwill 92,243 92,140
Other intangible assets, net 15,485 16,298
Accrued interest and other assets 88,859 105,523

Total Assets

$5,057,821$5,003,039
LIABILITIES
Deposits:

Interest bearing:

Checking, savings and money market

2,239,259 2,190,616

Time

901,650 865,702

Noninterest bearing

903,480 890,898

Total Deposits

4,044,3893,947,216
Federal funds purchased and securities sold under agreements to repurchase 144,796 167,724
Other borrowings, including certain amounts at fair value of $11,164 at June 30, 2014

and $11,292 at December 31, 2013

287,158 331,531

Trust preferred debentures

37,254 37,169
Other liabilities 54,987 61,460

Total Liabilities

$4,568,584$4,545,100
EQUITY
Tompkins Financial Corporation shareholders' equity:

Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued:

14,889,349 at June 30, 2014; and 14,785,007 at December 31, 2013

1,489 1,479

Additional paid-in capital

351,324 346,096

Retained earnings

150,893 137,102

Accumulated other comprehensive loss

(12,835) (25,119)

Treasury stock, at cost – 106,129 shares at June 30, 2014, and 105,449 shares

at December 31, 2013

(3,151) (3,071)

Total Tompkins Financial Corporation Shareholders’ Equity

487,720456,487
Noncontrolling interests 1,517 1,452

Total Equity

$489,237$457,939

Total Liabilities and Equity

$5,057,821$5,003,039

See notes to consolidated financial statements

TOMPKINS FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months EndedSix Months Ended

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

06/30/201406/30/201306/30/201406/30/2013
INTEREST AND DIVIDEND INCOME
Loans $ 37,348 $ 37,550 $ 74,302 $ 73,979
Due from banks 0 1 1 8
Trading securities 107 160 219 325
Available-for-sale securities 7,984 7,912 15,920 15,392
Held-to-maturity securities 186 177 338 368
Federal Home Loan Bank stock and Federal Reserve Bank stock 194 160 404 345

Total Interest and Dividend Income

45,81945,96091,18490,417
INTEREST EXPENSE
Time certificates of deposits of $100,000 or more 951 1,239 1,903 2,443
Other deposits 1,826 2,016 3,616 4,198
Federal funds purchased and securities sold under agreements to
repurchase 763 966 1,580 1,976
Trust preferred debentures 571 690 1,141 1,377
Other borrowings 1,192 1,223 2,401 2,391

Total Interest Expense

5,3036,13410,64112,385

Net Interest Income

40,51639,82680,54378,032

Less: Provision for loan and lease losses

67 2,489 810 3,527

Net Interest Income After Provision for Loan and Lease Losses

40,44937,33779,73374,505
NONINTEREST INCOME
Insurance commissions and fees 7,046 7,167 14,303 14,428
Investment services income 3,902 3,698 7,912 7,486
Service charges on deposit accounts 2,388 2,024 4,504 3,932
Card services income 1,920 1,690 4,032 3,428
Mark-to-market loss on trading securities (34) (270) (93) (385)
Mark-to-market gain on liabilities held at fair value 63 347 128 424
Other income 2,399 1,810 4,238 4,176
Gain on sale of available-for-sale securities 36 75 130 442

Total Noninterest Income

17,72016,54135,15433,931
NONINTEREST EXPENSES
Salaries and wages 17,660 16,291 34,306 31,863
Pension and other employee benefits 4,978 5,338 11,023 11,408
Net occupancy expense of premises 3,066 2,954 6,326 6,015
Furniture and fixture expense 1,459 1,462 2,796 2,919
FDIC insurance 735 821 1,546 1,593
Amortization of intangible assets 525 547 1,052 1,104
Merger related expenses 0 37 0 233
Other operating expense 10,505 10,327 20,089 20,163

Total Noninterest Expenses

38,92837,77777,13875,298

Income Before Income Tax Expense

19,24116,10137,74933,138

Income Tax Expense

6,148 5,061 12,054 10,557
Net Income attributable to Noncontrolling Interests and Tompkins
Financial Corporation13,09311,04025,69522,581

Less: Net income attributable to noncontrolling interests

32 33 65 65

Net Income Attributable to Tompkins Financial Corporation

$13,061$11,007$25,630$22,516
Basic Earnings Per Share$0.88$0.76$1.73$1.55
Diluted Earnings Per Share$0.87$0.75$1.72$1.55
See notes to consolidated financial statements

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

Quarter Ended
June 30, 2014

Year to Date Period Ended
June 30, 2014

Year to Date Period Ended
June 30, 2013

(Dollar amounts in thousands)

Average
Balance
(QTD)

Interest

Average
Yield/Rate

Average
Balance
(YTD)

Interest

Average
Yield/Rate

Average
Balance
(YTD)

Interest

Average
Yield/Rate

ASSETS
Interest-earning assets

Interest-bearing balances due from banks

$ 746 $ - 0.00% $ 885 $ 1 0.23% $ 2,760 $ 8 0.58%

Securities (4)

U.S. Government securities

1,317,080 7,504 2.29% 1,301,015 14,877 2.31% 1,342,524 14,060 2.11%

Trading securities

10,338 107 4.15% 10,584 219 4.17% 15,732 325 4.17%

State and municipal (5)

91,870 1,017 4.44% 89,964 2,127 4.77% 99,179 2,558 5.20%

Other securities (5)

4,269 32 3.01% 4,729 76 3.24% 8,295 150 3.65%

Total securities

1,423,557 8,660 2.44% 1,406,292 17,299 2.48% 1,465,730 17,093 2.35%

FHLBNY and FRB stock

21,196 194 3.67% 20,670 404 3.94% 20,942 345 3.32%

Total loans and leases, net of unearned income (5)(6)

3,221,223 37,762 4.70% 3,206,950 75,161 4.73% 3,001,458 74,906 5.03%

Total interest-earning assets

4,666,72246,6164.01%4,634,79792,8654.04%4,490,89092,3524.15%
Other assets 363,673 371,552 442,103

Total assets

5,030,3955,006,3494,932,993
LIABILITIES & EQUITY
Deposits

Interest-bearing deposits

Interest bearing checking, savings, & money market

2,257,254 1,114 0.20% 2,272,478 2,211 0.20% 2,255,128 2,682 0.24%

Time deposits

901,602 1,663 0.74% 895,073 3,308 0.75% 970,239 3,959 0.82%

Total interest-bearing deposits

3,158,856 2,777 0.35% 3,167,551 5,519 0.35% 3,225,367 6,641 0.42%
Federal funds purchased & securities sold under

agreements to repurchase

145,623 763 2.10% 153,939 1,580 2.07% 187,289 1,976 2.13%
Other borrowings 278,424 1,192 1.72% 263,633 2,401 1.84% 181,292 2,391 2.66%
Trust preferred debentures 37,227 571 6.15% 37,205 1,141 6.18% 43,683 1,377 6.36%

Total interest-bearing liabilities

3,620,1305,3030.59%3,622,32810,6410.59%3,637,63112,3850.69%
Noninterest bearing deposits 877,219 856,161 778,201
Accrued expenses and other liabilities 52,983 53,539 71,969

Total liabilities

4,550,332 4,532,028 4,487,801

Tompkins Financial Corporation Shareholders’ equity

478,561 472,836 443,708
Noncontrolling interest 1,502 1,485 1,484

Total equity

480,063474,321445,192

Total liabilities and equity

$5,030,395$5,006,349$4,932,993
Interest rate spread 3.42%3.45%3.46%

Net interest income/margin on earning assets

41,3133.55%82,2243.58%79,9673.59%
Tax Equivalent Adjustment (797)(1,681)(1,935)

Net interest income per consolidated financial statements

$40,516$80,543$78,032
Tompkins Financial Corporation - Summary Financial Data (Unaudited)
(In thousands, except per share data) Quarter-EndedYear-Ended
Jun-14 Mar-14 Dec-13 Sep-13 Jun-13 Dec-13
Period End Balance Sheet
Securities $ 1,420,226 $ 1,408,918 $ 1,384,782 $ 1,390,233 $ 1,469,315 $ 1,384,782
Originated loans and leases, net of unearned income and deferred costs and fees (2) 2,610,289 2,555,522 2,527,244 2,420,695 2,309,232 2,527,244
Acquired loans and leases (3) 618,679 648,690 667,040 698,617 745,951 667,040
Allowance for loan and lease losses 27,517 28,014 27,970 26,408 25,458 27,970
Total assets 5,057,821 5,041,800 5,003,039 4,932,428 4,931,883 5,003,039
Total deposits 4,044,389 4,105,170 3,947,216 3,972,756 3,912,910 3,947,216
Federal funds purchased and securities sold under agreements to repurchase 144,796 158,794 167,724 162,117 171,498 167,724
Other borrowings 287,158 214,616 331,531 242,177 299,098 331,531
Trust preferred debentures 37,254 37,211 37,169 37,127 43,703 37,169
Shareholders' equity 489,237 473,822 457,939 444,276 431,894 457,939
Average Balance Sheet
Average earning assets $ 4,666,722 $ 4,602,517 $ 4,571,099 $ 4,533,603 $ 4,571,428 $ 4,521,873
Average assets 5,030,395 4,982,033 4,950,476 4,897,678 4,965,895 4,928,499
Average interest-bearing liabilities 3,620,130 3,624,555 3,574,803 3,572,708 3,663,230 3,605,430
Average equity 480,063 468,515 449,445 434,482 447,088 443,565
Share data
Weighted average shares outstanding (basic) 14,709,881 14,644,548 14,589,120 14,515,053 14,427,838 14,477,617
Weighted average shares outstanding (diluted) 14,821,191 14,775,386 14,731,786 14,622,512 14,496,859 14,573,919
Period-end shares outstanding 14,853,439 14,829,007 14,749,097 14,692,671 14,599,558 14,749,097
Book value per share 32.94 31.95 31.05 30.24 29.58 31.05
Tangible book value per share (Non-GAAP) 25.68 24.65 23.70 22.82 22.08 23.70
Income Statement
Net interest income $ 40,516 $ 40,027 $ 42,624 $ 40,473 $ 39,826 $ 161,129
Provision for loan/lease losses 67 743 585 2,049 2,489 6,161
Noninterest income 17,720 17,434 17,439 18,528 16,541 69,898
Noninterest expense 38,928 38,210 40,251 37,554 37,777 153,102
Income tax expense 6,148 5,906 4,905 5,316 5,061 20,777
Net income attributable to Tompkins Financial Corporation 13,061 12,602 14,290 14,049 11,007 50,856
Noncontrolling interests 32 33 32 33 33 131
Basic earnings per share (9) $ 0.88 $ 0.85 $ 0.97 $ 0.96 $ 0.76 $ 3.48
Diluted earnings per share (9) $ 0.87 $ 0.84 $ 0.96 $ 0.95 $ 0.75 $ 3.46
Nonperforming Assets
Originated nonaccrual loans and leases $ 16,918 $ 26,974 $ 29,875 $ 33,881 $ 32,100 $ 29,875
Acquired nonaccrual loans and leases 5,907 6,936 8,508 8,008 6,916 8,508
Originated loans and leases 90 days past due and accruing 543 339 607 1,217 156 607
Troubled debt restructurings not included above 3,327 1,266 45 46 0 45
Total nonperforming loans and leases 26,695 35,515 39,035 43,152 39,172 39,035
OREO (8) 6,795 5,351 4,253 6,264 4,918 4,253
Total nonperforming assets 33,490 40,866 43,288 49,416 44,090 43,288
Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued
Quarter-EndedYear-Ended
Delinquency - Originated loan and lease portfolio Jun-14 Mar-14 Dec-13 Sep-13 Jun-13 Dec-13
Loans and leases 30-89 days past due and
accruing (2) $ 5,221 $ 5,660 $ 5,762 $ 12,193 $ 9,597 $ 5,762
Loans and leases 90 days past due and accruing (2) 543 339 607 1,217 156 607
Total originated loans and leases past due and accruing (2) 5,764 5,999 6,369 13,410 9,753 6,369
Delinquency - Acquired loan and lease portfolio
Covered loans and leases 30-89 days past due and accruing (3)(7) 0 635 0 1,132 1,613 0
Covered loans and leases 90 days or more past
due and accruing (3)(7) 904 1,135 2,416 2,980 3,091 2,416
Non-covered loans and leases 30-89 days past
due and accruing (3)(7) 1,620 2,293 1,532 6,887 5,591 1,532
Non-covered loans and leases 90 days past
due and accruing (3)(7) 3,048 3,746 4,557 10,521 13,324 4,557
Total acquired loans and leases past due and accruing 5,572 7,809 8,505 21,520 23,619 8,505
Total loans and leases past due and accruing $ 11,336 $ 13,808 $ 14,874 $ 34,930 $ 33,372 $ 14,874
Allowance for Loan Losses - Originated loan and lease portfolio
Balance at beginning of period $ 26,661 $ 26,700 $ 25,722 $ 24,853 $ 24,598 $ 24,643
Provision for loan and lease losses (56) 511 (325) 1,499 (994) 1,000
Net loan and lease (recoveries) charge-offs (147) 550 (1,303) 630 (1,249) (1,057)
Allowance for loan and lease losses (originated 26,752 26,661 26,700 25,722 24,853 26,700
loan portfolio) - balance at end of period
Allowance for Loan Losses - Acquired loan and lease portfolio
Balance at beginning of period $ 1,353 $ 1,270 $ 686 $ 605 $ 63 $ 0
Provision for loan and lease losses 123 232 910 549 3,483 5,161
Net loan and lease charge-offs 711 149 326 468 2,941 3,891
Allowance for loan and lease losses (acquired
loan portfolio) - balance at end of period 765 1,353 1,270 686 605 1,270
Total allowance for loan and lease losses 27,517 28,014 27,970 26,408 25,458 27,970
Loan Classification - Originated Portfolio
Special Mention $ 35,484 $ 44,725 $ 42,365 $ 42,975 $ 43,099 $ 42,365
Substandard 21,253 32,917 35,022 37,004 41,969 35,022
Loan Classification - Acquired Portfolio
Special Mention 12,124 14,936 17,322 23,939 29,300 17,322
Substandard 30,273 34,137 33,561 42,433 55,079 33,561
Loan Classifications - Total Portfolio
Special Mention 47,608 59,661 59,687 66,914 72,399 59,687
Substandard 51,526 67,054 68,583 79,437 97,048 68,583
Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued
RATIO ANALYSISQuarter-EndedYear-Ended
Credit Quality Jun-14 Mar-14 Dec-13 Sep-13 Jun-13 Dec-13
Nonperforming loans and leases/total loans and leases (7) 0.83% 1.11% 1.22% 1.38% 1.28% 1.22%
Nonperforming assets/total assets 0.66% 0.81% 0.87% 1.00% 0.89% 0.87%
Allowance for originated loan and lease losses/total originated loans and leases 1.02% 1.04% 1.06% 1.06% 1.08% 1.06%
Allowance/nonperforming loans and leases 103.08% 78.88% 71.65% 61.20% 64.99% 71.65%
Net loan and lease losses (recoveries) annualized/total average loans and leases 0.07% 0.09% (0.12%) 0.14% 0.22% 0.09%
Capital Adequacy (period-end)
Tier 1 capital / average assets 8.79% 8.68% 8.52% 8.37% 8.16% 8.52%
Total capital / risk-weighted assets 13.92% 13.67% 13.42% 13.32% 13.34% 13.42%
Tangible common equity / tangible assets 7.68% 7.38% 7.11% 6.92% 6.65% 7.11%
Profitability
Return on average assets * 1.04% 1.02% 1.15% 1.10% 0.89% 1.03%
Return on average equity * 10.91% 10.88% 12.62% 12.83% 9.87% 11.47%
Net interest margin (TE) * 3.55% 3.60% 3.78% 3.63% 3.58% 3.65%
* Quarterly ratios have been annualized
Non-GAAP Disclosure
Reported noninterest income (GAAP) $ 17,720 $ 17,434 $ 17,439 $ 18,528 $ 16,541 $ 69,898
Adjustments (pre-tax):
Gain on redemption of trust preferred 0 0 0 (1,410) 0 (1,410)
Gain on deposit conversion 0 0 (1,285) 0 0 (1,285)
Noninterest income (Non-GAAP) $ 17,720 $ 17,434 $ 16,154 $ 17,118 $ 16,541 $ 67,203
Non-GAAP Disclosure
Reported net income (GAAP) $ 13,061 $ 12,569 $ 14,290 $ 14,049 $ 11,007 $ 50,856
Adjustments (net of tax):
Merger related expenses 0 0 0 0 22 140
Gain on redemption of trust preferred 0 0 0 (846) 0 (846)
Gain on deposit conversion 0 0 (771) 0 0 (771)
Subtotal adjustments 0 0 (771) (846) 22 (1,477)
Net operating income (Non-GAAP) 13,061 12,569 13,519 13,203 11,029 49,379
Adjusted diluted earnings per share (Non-GAAP) (9) $ 0.87 $ 0.84 $ 0.91 $ 0.89 $ 0.75 $ 3.36

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

Non-GAAP DisclosureQuarter-EndedYear-Ended
Jun-14 Mar-14 Dec-13 Sep-13 Jun-13 Dec-13
Reported net income (GAAP) $ 13,061 $ 12,569 $ 14,290 $ 14,049 $ 11,007 $ 50,856
Merger related expenses (net of tax) 0 0 0 0 22 140
Gain on redemption of trust preferred (net of tax) 0 0 0 (846) 0 (846)
Gain on deposit conversion 0 0 (771) 0 0 (771)
Net operating income (Non-GAAP) $ 13,061 $ 12,569 $ 13,519 $ 13,203 $ 11,029 $ 49,379
Amortization of intangibles (net of tax) 315 316 329 327 328 1,318
Adjusted net operating income (Non-GAAP) 13,376 12,885 13,848 13,530 11,357 50,697
Average total shareholders' equity 480,063 468,515 449,445 434,482 447,088 443,565
Less: Average goodwill and intangibles 108,019 108,437 108,729 109,277 110,037 109,676
Average tangible shareholders' equity (Non-GAAP) 372,044 360,078 340,716 325,205 337,051 333,889
Adjusted operating return on shareholders' tangible equity (annualized) (Non-GAAP) 14.42% 14.51% 16.13% 16.51% 13.52% 15.18%
Non-GAAP Disclosure
Total shareholders' equity (GAAP) $ 489,237 $ 473,822 $ 457,939 $ 444,276 $ 431,894 $ 457,939
Less: goodwill and intangibles 107,728 108,250 108,438 108,981 109,540 108,438
Tangible shareholders' equity 381,509 365,572 349,501 335,295 322,354 349,501
Ending shares outstanding 14,853,439 14,829,007 14,749,097 14,692,671 14,599,558 14,749,097
Tangible book value per share (Non-GAAP) 25.68 24.65 23.70 22.82 22.08 23.70
Non-GAAP Disclosure Year-to-date period ended
Jun-14 Jun-13
Net income attributable to Tompkins Financial $
Corporation 25,630 22,516
Adjustments (net of tax):
Merger related expenses 0 155
Subtotal adjustments 0 155
Net operating income (Non-GAAP) 25,630 22,671
Adjusted diluted earnings per share $ 1.72 $ 1.56

(1)

Federal Reserve peer ratio as of March 31, 2014, includes banks and bank holding companies with consolidated assets between $3 billion and $10 billion.

(2)

"Originated" equals loans and leases not included by definition in "acquired loans".

(3)

"Acquired Loans and Leases" equals loans and leases acquired at fair value, accounted for in accordance with FASB ASC Topic 805. "Covered Loans" are loans for which the Company will share losses with the FDIC and consist of loans VIST Bank acquired as part of an FDIC-assisted transaction during the fourth quarter of 2010.

(4)

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

(5)

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

(6)

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, 2013.

(7)

Certain acquired loans and leases that are past due are not on nonaccrual and are not included in nonperforming loans. The risk of credit loss on these loans has been considered by virtue of the Corporation's estimate of acquisition-date fair value and these loans are considered accruing as the Corporation primarily recognizes interest income through accretion of the difference between the carrying value of these loans and their expected cash flows.

(8)

Includes all other real estate owned, including those balances acquired through business combinations.

(9)

Earnings per share year-to-date may not equal the sum of the quarterly earnings per share as a result of rounding of average shares.

Contacts:

Tompkins Financial Corporation
Stephen S. Romaine, President & CEO
Francis M. Fetsko, CFO & COO
888-503-5753

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