Tompkins Financial Corporation Reports Increase In Fourth Quarter Earnings And Record 2011 Earnings

Tompkins Financial Corporation (TMP–NYSE Amex)

Tompkins Financial Corporation reported net income of $9.4 million for the fourth quarter of 2011, an increase of 5.6% over the $8.9 million reported for the same period in 2010. Diluted earnings per share were $0.84 for the fourth quarter of 2011, a 3.7% increase over the $0.81 reported for the fourth quarter of 2010.

For the twelve months ended December 31, 2011, net income was $35.4 million, an increase of 4.7% over net income of $33.8 million for the same period in 2010. Full year 2011 diluted earnings per share totaled $3.20, an increase of 2.9% over the $3.11 reported for 2010.

Stephen S. Romaine, President and CEO stated, “2011 was a strong year for our Company with net income and total assets at record levels. In an economic environment that continued to be challenging, we were able to grow both loans and deposits in 2011. We are also pleased with the favorable trends that we are seeing in asset quality measures, with classified loans down from prior quarter and year end 2010.”

Selected highlights for the fourth quarter and year-to-date period included:
  • Return on average equity was 12.02% in 2011, which ranks in the top 15% of our most recent peer group average as published by the Federal Reserve 1.
  • Total loans were $2.0 billion at December 31, 2011, up $71.5 million or 3.7% from December 31, 2010.
  • Total deposits were $2.7 billion at December 31, 2011, up 6.6% from the same period in 2010. Noninterest-bearing deposits totaled $616.4 million at December 31, 2011, an increase of 17.8% over the same period in 2010.
  • Total revenue was $39.2 million for the fourth quarter of 2011 and $159.4 million for the twelve months ended December 31, 2011, down 2.4% and up 0.9%, respectively, compared to the same periods in 2010.
  • The net interest margin for the fourth quarter of 2011 was 3.62%, compared to 3.71% for the third quarter of 2011, and 3.75% for the fourth quarter of 2010. For the year to date, net interest margin was 3.72% in 2011, compared to 3.86% for 2010. Despite the decline in net interest margin over the past 12 months, net interest income of $28.0 million for the fourth quarter of 2011 and $111.4 million for the full year of 2011 were comparable to the same periods in 2010. Growth in interest earning assets, primarily in the securities portfolio, helped mitigate the earnings impact of the decline in margin.
  • Noninterest income was down 8.8% for the quarter and up 4.0% for the full year 2011 compared to the same periods in 2010. Card services income and insurance commissions and fees were up from the prior year for both the quarter and year to date periods. Investment services income was down 10.3% for the quarter and was flat for the twelve months ended December 31, 2011, when compared to the same periods in 2010. Other income was down $958,000 or 39.2% for the quarter and up $374,000 or 5.9% for the twelve months ended December 31, 2011 compared to the same periods in 2010. Contributing to the decrease from prior quarter were lower loan fees and lower gains on the sale of residential mortgage loans.
  • Noninterest expense for the fourth quarter of 2011 was $24.2 million, down 3.9% compared to the same period prior year. Noninterest expense for the year-to-date period was $98.6 million, comparable to the twelve months ended December 31, 2010. A reduction in FDIC insurance costs contributed to the decrease in noninterest expense for both the fourth quarter and full year.
  • Provision for loan and lease losses was $1.2 million for the fourth quarter of 2011, down from $4.9 million in the third quarter of 2011, and $1.4 million in the fourth quarter of 2010. For the full year, provision for loan and lease losses was $8.9 million, up from $8.5 million in 2010. The third quarter provision 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 third quarter.
  • Nonperforming assets were generally flat when compared to the most recent two quarters, and are down 8.2% when compared to the same quarter last year. The ratio of nonperforming assets to total assets of 1.26% at December 31, 2011, has improved for five consecutive quarters and remains well below the most recent peer averages of 3.10% published as of September 30, 2011, by the Federal Reserve 1. The Company continues to receive regular payments on over 64% of loan balances that we categorize as nonperforming.
  • The Company’s allowance for loan and lease losses totaled $27.6 million at December 31, 2011, which represented 1.39% of total loans, compared to $27.8 million and 1.46% at December 31, 2010. The allowance for loan and lease losses covered 66.65% of nonperforming loans as of December 31, 2011, reflecting improvement from 61.46% at December 31, 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 8.51%; and the ratio of total capital to risk-weighted assets was 14.17%.

Mr. Romaine, added, “Although the interest rate and economic environment will remain a challenge for our business, our strong balance sheet and earnings performance, along with a dedicated and professional team of employees, continues to position us well to take advantage of new growth opportunities.”

Tompkins Financial Corporation operates 45 banking offices in the New York State markets served by the Company's three community banks - Tompkins Trust Company, The Bank of Castile, and Mahopac National Bank, insurance through Tompkins Insurance Agencies, Inc. and wealth management through Tompkins Financial Advisors.

"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.

1 Federal Reserve peer ratio as of September 30, 2011, includes banks and bank holding companies with consolidated assets between $3 billion and $10 billion.
                 
TOMPKINS FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
 
(In thousands, except share and per share data) (Unaudited) As of As of
ASSETS 12/31/2011 12/31/2010
 
Cash and noninterest bearing balances due from banks $ 47,297 $ 47,339
Interest bearing balances due from banks 2,170 2,226
Money market funds           100           100  
Cash and Cash Equivalents 49,567 49,665
 
Trading securities, at fair value 19,598 22,837
Available-for-sale securities, at fair value 1,143,546 1,039,608
Held-to-maturity securities, fair value of $27,255 at December 31, 2011, and $56,064
at December 31, 2010 26,673 54,973
Loans and leases, net of unearned income and deferred costs and fees 1,981,849 1,910,358
Less: Allowance for loan and lease losses           27,593           27,832  
Net Loans and Leases 1,954,256 1,882,526
 
Federal Home Loan Bank stock and Federal Reserve Bank stock 19,070 21,985
Bank premises and equipment, net 44,712 46,103
Corporate owned life insurance 43,044 40,024
Goodwill 43,898 41,649
Other intangible assets, net 4,096 4,207
Accrued interest and other assets           51,788           56,766  
  Total Assets         $ 3,400,248         $ 3,260,343  
 
LIABILITIES
Deposits:
Interest bearing:
Checking, savings and money market 1,356,870 1,230,815
Time 687,321 741,829
  Noninterest bearing           616,373           523,229  
Total Deposits 2,660,564 2,495,873
 
Federal funds purchased and securities sold under agreements to repurchase 169,090 183,609
Other borrowings, including certain amounts at fair value of $12,093 at December 31, 2011
and $11,629 at December 31, 2010 186,075 244,193
Trust preferred debentures 25,065 25,060
Other liabilities           60,311           38,200  
  Total Liabilities         $ 3,101,105         $ 2,986,935  
 
EQUITY
Tompkins Financial Corporation shareholders' equity:
Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued:
11,159,466 at December 31, 2011; and 10,934,385 at December 31, 2010 1,116 1,093
Additional paid-in capital 206,395 198,114
Retained earnings 96,445 76,446
Accumulated other comprehensive loss (3,677 ) (1,260 )
Treasury stock, at cost – 95,105 shares at December 31, 2011, and 92,025 shares
at December 31, 2010 (2,588 ) (2,437 )
 
Total Tompkins Financial Corporation Shareholders’ Equity 297,691 271,956
Noncontrolling interests           1,452           1,452  
  Total Equity         $ 299,143         $ 273,408  
  Total Liabilities and Equity         $ 3,400,248         $ 3,260,343  
 
TOMPKINS FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
        Three Months Ended       Twelve Months Ended
(In thousands, except per share data) (Unaudited) 12/31/2011       12/31/2010 12/31/2011       12/31/2010
INTEREST AND DIVIDEND INCOME
Loans $ 26,280 $ 26,314 $ 103,998 $ 106,357
Due from banks 1 4 12 31
Federal funds sold 2 2 7 17
Trading securities 205 242 873 1,084
Available-for-sale securities 6,996 7,980 30,103 33,989
Held-to-maturity securities 240 375 1,185 1,535
Federal Home Loan Bank stock and Federal Reserve Bank stock           189           317           910           1,049  
Total Interest and Dividend Income           33,913           35,234           137,088           144,062  
INTEREST EXPENSE
Time certificates of deposits of $100,000 or more 758 938 3,292 4,297
Other deposits 2,156 2,873 9,795 13,380
Federal funds purchased and securities sold under agreements to repurchase 1,129 1,349 4,872 5,418
Trust preferred debentures 382 371 1,580 1,581
Other borrowings           1,489           1,842           6,143           7,611  
Total Interest Expense           5,914           7,373           25,682           32,287  
Net Interest Income           27,999           27,861           111,406           111,775  
Less: Provision for loan and lease losses           1,160           1,433           8,945           8,507  
Net Interest Income After Provision for Loan and Lease Losses           26,839           26,428           102,461           103,268  
NONINTEREST INCOME
Investment services income 3,196 3,564 14,287 14,329
Insurance commissions and fees 3,136 3,016 13,542 12,738
Service charges on deposit accounts 2,235 1,952 8,491 8,554
Card services income 1,275 1,138 5,060 4,285
Mark-to-market (loss) gain on trading securities (108 ) (339 ) 62 219
Mark-to-market gain (loss) on liabilities held at fair value 25 500 (464 ) (441 )
Other income 1,488 2,446 6,705 6,331
Net other-than-temporary impairment losses (65 ) 0 (65 ) (34 )
Net gain on securities transactions           15           4           396           178  
Total Noninterest Income           11,197           12,281           48,014           46,159  
NONINTEREST EXPENSES
Salaries and wages 10,914 10,911 44,140 42,530
Pension and other employee benefits 3,213 3,554 14,275 14,523
Net occupancy expense of premises 1,796 1,735 7,117 7,161
Furniture and fixture expense 1,138 1,109 4,463 4,421
FDIC insurance 471 1,022 2,527 3,768
Amortization of intangible assets 136 175 589 762
Other operating expense           6,532           6,677           25,441           25,880  
Total Noninterest Expenses           24,200           25,183           98,552           99,045  
Income Before Income Tax Expense           13,836           13,526           51,923           50,382  
Income Tax Expense           4,417           4,602           16,373           16,420  
Net Income attributable to Noncontrolling Interests and Tompkins Financial Corporation           9,419           8,924           35,550           33,962  
Less: Net income attributable to noncontrolling interests           32           32           131           131  
Net Income Attributable to Tompkins Financial Corporation         $ 9,387         $ 8,892         $ 35,419         $ 33,831  
Basic Earnings Per Share $ 0.84 $ 0.82 $ 3.21 $ 3.13
Diluted Earnings Per Share         $ 0.84         $ 0.81         $ 3.20         $ 3.11  
 
 
See accompanying notes to unaudited condensed consolidated financial statements.
 
Average Consolidated Balance Sheet and Net Interest Analysis        
            Quarter Ended       Year to Date Period Ended       Year to Date Period Ended
              December 31, 2011       December 31, 2011       December 31, 2010
Average             Average         Average        
Balance Average Balance Average Balance Average
(Dollar amounts in thousands)           (QTD)         Interest         Yield/Rate           (YTD)         Interest         Yield/Rate           (YTD)         Interest         Yield/Rate  
ASSETS
Interest-earning assets
Interest-bearing balances due from banks $ 20,815 $ 1 0.04 % $ 12,717 $ 12 0.09 % $ 25,189 $ 31 0.12 %
Money market funds 100 - 0.00 % 100 - 0.00 % 100 - 0.00 %
Securities (1)
U.S. Government securities 1,011,681 6,386 2.50 % 969,303 27,504 2.84 % 857,724 30,964 3.61 %
Trading securities 20,110 205 4.04 % 21,262 873 4.11 % 27,389 1,085 3.96 %
State and municipal (2) 82,632 1,156 5.55 % 95,039 5,143 5.41 % 107,376 6,059 5.64 %
Other securities (2) 12,790         146         4.53 %         13,971         648         4.64 %         17,465         849         4.86 %
Total securities 1,127,213 7,893 2.78 % 1,099,575 34,168 3.11 % 1,009,954 38,957 3.86 %
Federal Funds Sold 4,646 2 0.09 % 5,837 7 0.12 % 9,233 17 0.18 %
FHLBNY and FRB stock 17,068 189 4.44 % 17,992 910 5.06 % 19,597 1,049 5.35 %
Loans, net of unearned income (3)
Real estate 1,423,532 18,861 5.26 % 1,395,533 74,598 5.35 % 1,345,540 75,610 5.62 %
Commercial loans (2) 465,471 6,352 5.41 % 457,120 24,792 5.42 % 461,339 24,730 5.36 %
Consumer loans 65,749 1,118 6.74 % 68,364 4,712 6.89 % 80,412 5,619 6.99 %
Direct lease financing 6,457         94         5.77 %         7,523         446         5.93 %         10,692         643         6.01 %
Total loans, net of unearned income 1,961,209         26,425         5.34 %         1,928,540         104,548         5.42 %         1,897,983         106,602         5.62 %
Total interest-earning assets 3,131,051         34,511         4.37 %         3,064,761         139,645         4.56 %         2,962,056         146,656         4.95 %
 
Other assets 237,084 230,221 229,784
 
Total assets 3,368,135 3,294,982 3,191,840
                                                                                                       
LIABILITIES & EQUITY
Deposits
Interest-bearing deposits
Interest bearing checking, savings, & money market 1,400,283 1,047 0.30 % 1,350,659 4,741 0.35 % 1,226,852 5,994 0.49 %
Time deposits > $100,000 309,773 758 0.97 % 313,881 3,292 1.05 % 327,626 4,297 1.31 %
Time deposits < $100,000 388,100 1,109 1.13 % 401,902 5,033 1.25 % 432,804 6,984 1.61 %
Brokered time deposits < $100,000 13         0         0.00 %         1,731         21         1.21 %         24,886         402         1.62 %
Total interest-bearing deposits 2,098,169 2,914 0.55 % 2,068,173 13,087 0.63 % 2,012,168 17,677 0.88 %
Federal funds purchased & securities sold under
agreements to repurchase 170,358 1,129 2.63 % 173,692 4,872 2.80 % 185,563 5,418 2.92 %
Other borrowings 141,735 1,489 4.17 % 155,650 6,143 3.95 % 193,296 7,611 3.94 %
Trust preferred debentures 25,064         383         6.06 %         25,062         1,580         6.30 %         25,058         1,581         6.31 %
Total interest-bearing liabilities 2,435,326 5,915 0.96 % 2,422,577 25,682 1.06 % 2,416,085 32,287 1.34 %
 
Noninterest bearing deposits 584,514 539,917 468,219
Accrued expenses and other liabilities 40,756 37,868 41,593
Total liabilities 3,060,596 3,000,362 2,925,897
 
Tompkins Financial Corporation Shareholders’ equity 305,996 292,845 264,431
Noncontrolling interest 1,543 1,775 1,512
Total equity 307,539 294,620 265,943
 
Total liabilities and equity $ 3,368,135 $ 3,294,982 $ 3,191,840
Interest rate spread           3.41 %           3.50 %           3.61 %
Net interest income/margin on earning assets 28,596 3.62 % 113,963 3.72 % 114,369 3.86 %
 
Tax Equivalent Adjustment (597

)

 
(2,557

)

 
(2,594

)

 
 
  Net interest income per consolidated financial statements                   $ 27,999                             $ 111,406                             $ 111,775            
(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 a combined New York State and Federal effective income tax rate
of 40% 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, 2010.
 
Tompkins Financial Corporation - Summary Financial Data (Unaudited)
                                                                         
(In thousands, except per share data) Quarter-Ended       Year-Ended
  Dec-11           Sep-11           Jun-11           Mar-11           Dec-10           Dec-11  
                             
Period End Balance Sheet                                                                          
Securities         $ 1,189,817         $ 1,130,769         $ 1,138,563         $ 1,121,443         $ 1,117,418         $ 1,189,817  
Loans and leases, net of unearned income and deferred costs and fees           1,981,849           1,951,598           1,920,716           1,914,344           1,910,358           1,981,849  
Allowance for loan and lease losses           27,593           27,878           28,361           28,035           27,832           27,593  
Total assets           3,400,248           3,359,017           3,287,598           3,278,894           3,260,343           3,400,248  
                                                                           
Total deposits           2,660,564           2,675,674           2,572,008           2,612,517           2,495,873           2,660,564  
Federal funds purchased and securities sold under agreements to repurchase           169,090           171,943           178,545           182,009           183,609           169,090  
Other borrowings           186,075           138,001           172,643           140,353           244,193           186,075  
Trust preferred debentures           25,065           25,063           25,062           25,061           25,060           25,065  
Shareholders' equity           299,143           309,335           300,060           282,237           273,408           299,143  
 
Average Balance Sheet                                                                          
Average earning assets         $ 3,131,051         $ 3,050,346         $ 3,047,494         $ 3,029,188         $ 3,010,361         $ 3,064,761  
Average assets           3,368,135           3,286,159           3,271,895           3,252,549           3,243,822           3,294,982  
Average interest-bearing liabilities           2,435,326           2,391,576           2,432,556           2,431,145           2,424,998           2,422,577  
Average equity           307,539           303,861           288,341           277,283           280,051           294,620  
 
Share data                                                                          
Weighted average shares outstanding (basic)           11,074,330           11,049,831           10,974,615           10,905,197           10,888,138           11,002,106  
Weighted average shares outstanding (diluted)           11,104,623           11,124,331           11,016,515           10,955,430           10,936,042           11,035,384  
Period-end shares outstanding           11,123,556           11,122,886           11,051,894           10,952,410           10,898,475           11,123,556  
Book value per share           26.89           27.81           27.15           25.77           25.09           26.89  
 
Income Statement                                                                          
Net interest income         $ 27,999         $ 27,913         $ 27,952         $ 27,542         $ 27,861         $ 111,406  
Provision for loan/lease losses           1,160           4,870           1,005           1,910           1,433           8,945  
Noninterest income           11,197           12,312           12,013           12,492           12,281           48,014  
Noninterest expense           24,200           23,973           25,163           25,216           25,183           98,552  
Income tax expense           4,417           3,490           4,364           4,102           4,602           16,373  
Net income attributable to Tompkins Financial Corporation           9,387           7,859           9,400           8,773           8,892           35,419  
Noncontrolling interests           32           33           33           33           32           131  
Basic earnings per share         $ 0.84         $ 0.71         $ 0.86         $ 0.80         $ 0.82         $ 3.21  
Diluted earnings per share         $ 0.84         $ 0.71         $ 0.85         $ 0.80         $ 0.81         $ 3.20  
 
Asset Quality                                                                          
Net charge-offs           1,445           5,353           679           1,707           2,285           9,184  
Nonaccrual loans and leases           39,588           40,419           38,457           39,902           41,501           39,588  
Loans and leases 90 days past due and accruing           1,380           379           2,512           1,266           1,217           1,380  
Troubled debt restructurings not included above           428           441           0           2,411           2,564           428  
Total nonperforming loans and leases           41,396           41,239           40,969           43,579           45,282           41,396  
OREO           1,334           1,632           1,742           2,270           1,255           1,334  
Nonperforming assets           42,730           42,871           42,711           45,849           46,537           42,730  
Loan Classifications                                                                          
Special Mention           52,156           66,697           80,470           70,765           80,920           52,156  
Substandard           72,920           73,313           80,003           85,973           91,645           72,920  
Doubtful           1,494           509           2,450           2,468           0           1,494  
 
 
                                                                 
RATIO ANALYSIS Quarter-Ended Year-Ended  
Credit Quality           Dec-11           Sep-11           Jun-11           Mar-11           Dec-10           Dec-11  
Net loan and lease losses/ average loans
and leases *           0.29 %         1.10 %         0.14 %         0.36 %         0.48 %         0.48 %
Nonperforming loans and leases/loans and leases           2.09 %         2.11 %         2.13 %         2.28 %         2.37 %         2.09 %
Nonperforming assets/assets           1.26 %         1.28 %         1.30 %         1.40 %         1.43 %         1.26 %
Allowance/nonperforming loans and leases           66.65 %         67.60 %         69.23 %         64.33 %         61.46 %         66.65 %
Allowance/loans and leases           1.39 %         1.43 %         1.48 %         1.46 %         1.46 %         1.39 %
                                                                           
Capital Adequacy (period-end)                                                                          
Tier I capital / average assets           8.51 %         8.55 %         8.39 %         8.22 %         8.02 %         8.51 %
Total capital / risk-weighted assets           14.17 %         14.11 %         13.98 %         13.66 %         13.42 %         14.17 %
 
Profitability                                                                          
Return on average assets *           1.11 %         0.95 %         1.15 %         1.09 %         1.09 %         1.07 %
Return on average equity *           12.07 %         10.29 %         13.08 %         12.83 %         12.60 %         12.02 %
Net interest margin (TE) *           3.62 %         3.71 %         3.77 %         3.78 %         3.75 %         3.72 %
* Quarterly ratios have been annualized

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