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Tompkins Financial Corporation Reports First Quarter Earnings

Tompkins Financial Corporation (TMP–NYSE Amex)

Tompkins Financial Corporation reported net income of $7.8 million for the first quarter of 2012, a decrease of 11.0% from the $8.8 million reported for the same period in 2011. Diluted earnings per share were $0.70 for the first quarter of 2012, a 12.5% decrease from $0.80 reported for the first quarter of 2011.

Stephen S. Romaine, President and CEO stated, “Quarterly earnings results were negatively impacted by the continued weak economic climate. Loan demand has remained slow and the low rate environment continues to put pressure on net interest margin. We are encouraged that despite pressure on net interest margin, net interest income remained relatively stable over the last twelve months and we continue to see improving trends in credit quality.”

Selected highlights for the first quarter:

  • Return on average equity was 10.35% for the first quarter of 2012.
  • Total loans were $2.0 billion at March 31, 2012, relatively unchanged from December 31, 2011, and up $63.2 million or 3.3% from March 31, 2011.
  • Total deposits were $2.9 billion at March 31, 2012, up 7.5% from December 31, 2011, and up 9.5% from March 31, 2011.
  • The net interest margin for the first quarter of 2012 was 3.51%, compared to 3.62% for the fourth quarter of 2011, and 3.78% for the first quarter of 2011. Despite the decline in net interest margin over the past 12 months, net interest income of $27.4 million for the first quarter of 2012 remains generally in line with the same period in 2011. Growth in interest earning assets, primarily in the securities portfolio, and funded primarily with core deposits, has helped mitigate the earnings impact from the decline in margin.
  • Noninterest income was down 6.7% for the quarter, when compared to the same period in 2011. Card services income and insurance commissions and fees were up from the prior year. Investment services income and deposits services fees were down from the same period last year. A majority of the decline in investment services revenue was the result of a planned decrease in the number of external broker dealer relationships, which was implemented in the third quarter of 2011. Other negative variances compared to the first quarter of 2011 included: a $118,000 decline in net mark-to-market gains on securities and liabilities held at fair value; a $93,000 decline in net realized gains on securities transactions; and a $565,000 decline in other income primarily from lower gains on the sale of residential mortgage loans and reduced income from the Company's investment in a small business investment company.
  • Noninterest expense for the first quarter of 2012 was $26.4 million, up 4.6% from the same period last year. Salaries and wages were up in part due to normal salary increases and in part due to higher incentive accruals for business development activities. Lower interest rates have contributed to the increase in the cost of pension and employee benefits. The increase in other operating expense was impacted by approximately $94,000 in expenses related to the pending merger with VIST Financial, and $310,000 related to marketing and business development. Increased expenses in the above categories were partially offset by a reduction in FDIC insurance costs.
  • Provision for loan and lease losses was $1.1 million for the first quarter of 2012, down from $1.2 million in the fourth quarter of 2011, and $1.9 million in the first quarter of 2011.
  • Nonperforming assets were $42.3 million at March 31, 2012, and have remained relatively flat over the last four quarters. The ratio of nonperforming assets to total assets of 1.19% at March 31, 2012, has improved for six consecutive quarters and remains well below the most recent peer averages of 2.87% published as of December 31, 2011, by the Federal Reserve 1. The Company continues to receive regular payments on over of loan balances that we categorize as nonperforming.
  • The Company’s allowance for loan and lease losses totaled $26.9 million at March 31, 2012, which represented 1.36% of total loans, compared to $27.6 million and 1.39% at December 31, 2011. The allowance for loan and lease losses covered 66.65% of nonperforming loans as of March 31, 2012, unchanged from December 31, 2011.
  • Capital ratios remain well above the regulatory well capitalized minimums. Tier 1 capital as a percentage of average assets at March 31, 2012 was 8.46%; and the ratio of total capital to risk-weighted assets was 14.37%.

Mr. Romaine, added, “The first quarter of 2012 was very significant in preparing us for continued success into the future. We announced the planned acquisition with VIST Financial Corporation and are excited by the opportunities as we expand our business into new markets. We remain on track to close this transaction during the third quarter of this year, pending required approvals. We also announced in March that we were successful in raising $38.2 million in equity capital, net of transaction costs, which closed on April 3, 2012. With this new capital, we are well positioned to pursue responsible growth opportunities and manage risk in the continued volatile market environment.”

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