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Tompkins Financial Corporation Reports Increase In Third Quarter Earnings

Tompkins Financial Corporation (TMP–NYSE Amex)

Tompkins Financial Corporation reported net income of $7.9 million for the third quarter of 2011, an increase of 4.9% over the $7.5 million reported for the same period in 2010. Diluted earnings per share were $0.71 for the third quarter of 2011, a 2.9% increase over the $0.69 reported for the third quarter of 2010.

For the nine months ended September 30, 2011, net income was $26.0 million, compared to $24.9 million for the same period last year. Diluted earnings per share totaled $2.36 for the first nine months of 2011, an increase of 2.6% over the $2.30 reported for the first nine months of 2010.

Stephen S. Romaine, President and CEO stated, “Growth has been challenging in the current economic climate, which makes our results through the first nine months of the year especially rewarding. Net income, revenue, loans, and deposits all showed increases when compared to the prior year, and our year to date earnings reflected the best performance through the first nine months of the year in the Company’s history.”

Selected highlights for the third quarter and year-to-date period included:

  • Diluted earnings per share for the quarter and year to date periods remain ahead of prior year.
  • Total revenue was $40.2 million for the third quarter of 2011 and $120.2 million for the first nine months of 2011, up 2.9% and 2.1%, respectively, over the same periods in 2010.
  • Total loans were $2.0 billion at September 30, 2011, up $37.5 million or 2.0% from September 30, 2010.
  • Total deposits were $2.7 billion at quarter end, up 5.8% from the same period in 2010. Noninterest-bearing deposits totaled $570.4 million at September 30, 2011, an increase of 13.9% over the same period in 2010.
  • The net interest margin for the third quarter of 2011 was 3.71%, compared to 3.77% for the second quarter of 2011, and 3.85% for the third quarter of 2010. Despite the decline in net interest margin over the past 12 months, net interest income of $27.9 million for the third quarter of 2011 was comparable to the same quarter last year. Growth in interest earning assets, primarily in the securities portfolio, helped mitigate the earnings impact of the decline in margin.
  • Noninterest income was up 9.7% for the quarter and up 8.7% for the year-to-date period. Card services income, insurance commissions and fees, and investment services income were all up from the prior year for both the quarter and year to date periods. Similarly, other income was up for the quarter and year to date periods, and benefited from approximately $600,000 in nonrecurring gains on the sale of real estate and other assets in the third quarter of 2011.
  • Noninterest expense for the third quarter of 2011 was $24.0 million, down 3.5% over the same period prior year. Noninterest expense for the year-to-date period was $74.4 million, comparable to the nine months ended September 30, 2010. A reduction in FDIC insurance costs contributed to the reduction in noninterest expense, when compared to the third quarter of 2010.
  • Provision for loan and lease losses was $4.9 million for the third quarter of 2011, up from $1.0 million in the second quarter of 2011, and $3.5 million in the third quarter of 2010. The increase in the provision for loan and lease losses during the quarter was largely the result of an increase in loan charge-offs during the period, which included a single credit that represented 91.7% of the $5.5 million in gross charge offs during the quarter.
  • Nonperforming assets were generally flat when compared to the most recent prior quarter, and are down 23.2% when compared to the same quarter last year. The ratio of nonperforming assets to total assets of 1.28% at September 30, 2011, has improved for four consecutive quarters and remains well below the most recent peer averages of 3.24% published as of June 30, 2011, by the Federal Reserve 1. The Company continues to receive regular payments on over 60% of loan balances that we categorize as nonperforming.
  • The Company’s allowance for loan and lease losses totaled $27.9 million at September 30, 2011, which represented 1.43% of total loans, compared to $27.8 million and 1.46% at December 31, 2010 and $28.7 million and 1.50% at September 30, 2010. The allowance for loan and lease losses coverage of nonperforming loans was 67.60% as of September 30, 2011, reflecting improvement from 61.46% at December 31, 2010, and 53.15% at September 30, 2010.
  • Capital levels continued to improve during the quarter and ratios remain well above the regulatory well capitalized minimums. Tier 1 capital as a percentage of average assets was 8.55%; and the ratio of total capital to risk-weighted assets was 14.11%. Both of these regulatory capital ratios have improved for the last seven consecutive quarters.

Mr. Romaine, added, “Our strategy of balancing reasonable growth expectations with prudent management of risk has continued to serve us well in these challenging times. Despite an increase in net charge-offs during the quarter, the general trend in credit quality, as evidenced by a continued decline in classified loans, has continued to improve over the last several quarters. Although the interest rate and economic environment will remain a challenge for our business, we are extremely pleased to see continued growth in a majority of our key business lines.”

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