Tompkins Financial Corporation Reports Fourth Quarter Operating Results

Please replace the release due to edits to financial tables: text has been changed in the "CONDENSED CONSOLIDATED STATEMENTS OF CONDITION" and a figure has been changed in the "Summary Financial Data."

The corrected release reads:

TOMPKINS FINANCIAL CORPORATION REPORTS FOURTH QUARTER OPERATING RESULTS

Tompkins Financial Corporation (TMP–NYSE MKT LLC)

Tompkins Financial Corporation today released operating results and selected other financial information for the three and twelve month periods ended December 31, 2012. The fourth quarter represents the first full quarter reflecting results inclusive of the VIST Financial Corporation acquisition, which closed on August 1, 2012.

Stephen S. Romaine, President and CEO commented, “2012 was an eventful year for our Company. The acquisition of VIST Financial gives us exciting new growth opportunities in a new geography with attractive demographics. Results for the year to date and the fourth quarter were negatively impacted by merger related costs. Excluding those costs, our per share earnings performance for the two quarters that have included results with VIST has been among the best of any six month period in our Company’s long history.”

SUMMARY HIGHLIGHTS

Net Income for the fourth quarter of 2012 was $11.2 million, up from $9.4 million in the same period in 2011. Despite the rise in net income, diluted earnings per share of $0.77 for the quarter was down 8.3% from the fourth quarter of 2011 due to the greater number shares outstanding in 2012 as a result of shares issued to complete the VIST acquisition. Net income was reduced by after-tax merger related expenses of $462,000 in the fourth quarter of 2012 and $152,000 in the fourth quarter of 2011. Non-GAAP operating income, which excludes merger related expenses, was $11.6 million for the quarter, or $0.81 diluted operating earnings per share. This represents a decrease of 5.8% from the $0.86 diluted operating earnings per share reported for the fourth quarter of 2011. The decrease in current period operating performance is attributable to higher provision expense primarily related to loan charge-offs in the Hudson Valley Region. A more detailed discussion of credit quality is included later in this press release.

Net income for the year ended December 31, 2012 was $31.3 million, down from $35.4 million in 2011. Diluted earnings per share of $2.43 for the full year in 2012 represents a decline from diluted earnings per share of $3.20 in 2011. The decline from 2011 is primarily due to the $9.7 million ($0.76 diluted per share) in after tax merger related expenses included in 2012 results, versus $152,000 ($0.01 per share) in after tax merger related expenses included in 2011 results; as well as the increase in weighted average shares outstanding.

NET INTEREST INCOME

Net interest income for the fourth quarter of 2012 was $41.8 million, compared to $28.0 million for the same period in 2011. The increase in 2012 reflects the addition of VIST Bank, which was acquired on August 1, 2012. The net interest margin for the fourth quarter of 2012 was 3.83%, an improvement from the 3.66% margin reported in the third quarter of 2012, and from the 3.62% margin reported in the fourth quarter of 2011. The margin improvement in the most recent two quarters benefited from the inclusion of VIST Bank into the Company’s combined results. The paydown of certain higher cost borrowings and non-core time deposits also helped the margin in the fourth quarter of 2012.

NONINTEREST INCOME

Noninterest income for the fourth quarter of 2012 was $15.6 million, up 39.4% over the same period in 2011. The largest category of improvement was insurance commissions and fees, which nearly doubled as a result of the VIST acquisition. The increase was partially offset by lower service charges on deposit accounts, which were impacted by regulatory changes implemented in the first quarter of 2012. Improvement in other income benefited from higher loan related fees (up $334,000) and gains on the sale of loans (up $187,000). Fourth quarter noninterest income also reflected $499,000 in losses on the sale of investments, which were used to pay down certain higher cost borrowings and non-core time deposits.

NONINTEREST EXPENSE

Noninterest expense for the fourth quarter of 2012 was $38.2 million, up 57.8% from the same period last year. The increase was mainly a result of the VIST acquisition and additional expenses related to the integration of VIST into the Company’s operations beginning in the third quarter of this year. Mr. Romaine added, “We are pleased that our system conversion for VIST Bank was successfully completed in December 2012 and we are on track to realize the cost savings from the integration that were contemplated when the merger was announced.”

ASSET QUALITY

Asset quality trends were generally positive during the quarter, despite a spike in the level of loan charge-offs. Mr. Romaine stated, “The charge-offs during the quarter consisted of a handful of loans that had previously been reported as nonperforming, classified and impaired. While deterioration in these credits during the fourth quarter resulted in elevated charge-offs, the result is that the overall risk profile of the loan portfolio has improved, as some of the most risky loans have now been removed from the balance sheet.”

The ratio of nonperforming assets to total assets of 0.92% at December 31, 2012, has improved from a ratio of 1.26% as of the year ending December 31, 2011 and remains well below the most recent peer averages of 2.21% published the Federal Reserve 1. The balance of originated loans classified as either Substandard or Special Mention improved for 2 consecutive quarters. The majority of the improvement from the third quarter of 2012 came in the more severe Substandard category, which declined by approximately $9.3 million. Although there was an increase in loans classified as Substandard or Special Mention in the acquired loan portfolio, the changes in risk ratings are not impactful to the credit marks that were recorded at the time of acquisition. Furthermore, the level of past due loans in the acquired portfolio have remained relatively steady between periods.

Provision for loan and lease losses was $5.7 million for the fourth quarter of 2012, up from $1.0 million for the third quarter of 2012, and $1.2 million in the fourth quarter of 2011. The increased provision was largely due to $7.6 million in net charge-offs during the quarter, which is up from $1.3 million in the third quarter of 2012, and $1.4 million in the fourth quarter 2011. Despite the elevated charge-offs in the most recent quarter, net charge-offs for the full year in 2012, represented only 0.49% of average total loans, which compares favorably to the most recent Federal Reserve peer ratio 1 of 0.64%.

The Company’s allowance for loan and lease losses totaled $24.6 million at December 31, 2012, which represented 1.16% of total originated loans, compared to an allowance for loan and lease losses of $27.6 million, representing 1.39% of total originated loans at December 31, 2011. The allowance for loan and lease losses covered 70.05% of originated nonperforming loans and leases as of December 31, 2012, up from 69.01% at September 30, 2012, and 66.66% at December 31, 2011.

CAPITAL POSITION

Capital ratios remain well above the regulatory well capitalized minimums. Tier 1 capital as a percentage of average assets at December 31, 2012 was 7.95% and the ratio of total capital to risk-weighted assets was 12.94%.

ABOUT TOMPKINS FINANCIAL CORPORATION

Tompkins Financial Corporation is a financial services company with $4.8 billion in assets 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 National Bank, VIST Bank, Tompkins Insurance Agencies, Inc., and 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 a 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” 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 of As of
ASSETS 12/31/2012 12/31/2011
 
 
Cash and noninterest bearing balances due from banks $ 117,448 $ 47,297
Interest bearing balances due from banks 1,482 2,170
Money market funds   0     100
Cash and Cash Equivalents 118,930 49,567
 
Trading securities, at fair value 16,450 19,598
Available-for-sale securities, at fair value 1,393,340 1,143,546
Held-to-maturity securities, fair value of $25,163 at December 31, 2012, and $27,255
at December 31, 2011 24,062 26,673
Originated loans and leases, net of unearned income and deferred costs and fees (2) 2,133,106 1,981,849
Less: Allowance for originated loan and lease losses 24,643 27,593

Acquired loans and leases, covered (3)
37,600 0

Acquired loans and leases, non-covered (3)
  783,904     0
Net Loans and Leases 2,929,967 1,954,256
 
FDIC Idemnification Asset 4,385 0
Federal Home Loan Bank stock and Federal Reserve Bank stock 19,388 19,070
Bank premises and equipment, net 54,581 44,712
Corporate owned life insurance 65,102 43,044
Goodwill 92,305 43,898
Other intangible assets, net 18,643 4,096
Accrued interest and other assets   100,044     51,788
  Total Assets $ 4,837,197   $ 3,400,248
 
LIABILITIES
Deposits:
Interest bearing:
Checking, savings and money market 2,144,367 1,356,870
Time 973,883 687,321
Noninterest bearing   831,919     616,373
Total Deposits 3,950,169 2,660,564
 
Federal funds purchased and securities sold under agreements to repurchase 213,973 169,090
Other borrowings, including certain amounts at fair value of $11,847 at December 31, 2012
and $12,093 at December 31, 2011 111,848 186,075
Trust preferred debentures 43,668 25,065
Other liabilities   76,179     60,311
  Total Liabilities $ 4,395,837   $ 3,101,105
 
EQUITY
Tompkins Financial Corporation shareholders' equity:
Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued:
14,426,711 at December 31, 2012; and 11,159,466 at December 31, 2011 1,443 1,116
Additional paid-in capital 334,649 206,395
Retained earnings 108,709 96,445
Accumulated other comprehensive loss (2,106) (3,677)
Treasury stock, at cost – 100,054 shares at December 31, 2012, and 95,105 shares
at December 31, 2011 (2,787) (2,588)
 
Total Tompkins Financial Corporation Shareholders’ Equity 439,908 297,691
Noncontrolling interests   1,452     1,452
  Total Equity $ 441,360   $ 299,143
  Total Liabilities and Equity $ 4,837,197   $ 3,400,248
 
 
TOMPKINS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
  Three Months Ended   Twelve Months Ended
(In thousands, except per share data) (Unaudited) 12/31/2012   12/31/2011 12/31/2012   12/31/2011
INTEREST AND DIVIDEND INCOME
Loans $ 39,952 $ 26,280 $ 124,662 $ 103,998
Due from banks 19 1 32 12
Federal funds sold 0 2 2 7
Trading securities 175 205 744 873
Available-for-sale securities 8,214 6,996 31,232 30,103
Held-to-maturity securities 203 240 860 1,185
Federal Home Loan Bank stock and Federal Reserve Bank stock     205     189     824     910
Total Interest and Dividend Income     48,768     33,913     158,356     137,088
INTEREST EXPENSE
Interest on deposits 3,805 2,914 12,231 13,087

Federal funds purchased and securities sold under agreements to

repurchase
1,111 1,129 4,451 4,872
Trust preferred debentures 798 382 2,094 1,580
Other borrowings     1,205     1,489     5,437     6,143
Total Interest Expense     6,919     5,914     24,213     25,682
Net Interest Income     41,849     27,999     134,143     111,406
Less: Provision for loan and lease losses     5,659     1,160     8,837     8,945
Net Interest Income After Provision for Loan and Lease Losses     36,190     26,839     125,306     102,461
NONINTEREST INCOME
Investment services income 3,836 3,196 14,340 14,287
Insurance commissions and fees 6,237 3,136 19,421 13,542
Service charges on deposit accounts 2,076 2,235 7,441 8,491
Card services income 1,678 1,275 6,030 5,060
Mark-to-market (loss) gain on trading securities (134) (108) (332) 62
Mark-to-market gain (loss) on liabilities held at fair value 108 25 246 (464)
Net other-than-temporary impairment losses (76) (65) (196) (65)
Other income 2,382 1,488 7,534 6,705
Net (loss) gain on securities transactions     (499)     15     324     396
Total Noninterest Income     15,608     11,197     54,808     48,014
NONINTEREST EXPENSES
Salaries and wages 15,427 10,914 51,700 44,140
Pension and other employee benefits 4,827 3,213 18,075 14,275
Net occupancy expense of premises 2,899 1,796 8,969 7,117
Furniture and fixture expense 1,416 1,138 4,996 4,463
FDIC insurance 844 471 2,685 2,527
Amortization of intangible assets 580 136 1,264 589
Merger and integration related expenses 770 174 15,584 174
Other operating expense     11,425     6,358     34,335     25,267
Total Noninterest Expenses     38,188     24,200     137,608     98,552
Income Before Income Tax Expense     13,610     13,836     42,506     51,923
Income Tax Expense     2,416     4,417     11,090     16,373

Net Income attributable to Noncontrolling Interests and Tompkins Financial Corporation
    11,194     9,419     31,416     35,550
Less: Net income attributable to noncontrolling interests     33     32     131     131
Net Income Attributable to Tompkins Financial Corporation   $ 11,161   $ 9,387   $ 31,285   $ 35,419
Basic Earnings Per Share $ 0.78 $ 0.84 $ 2.44 $ 3.21
Diluted Earnings Per Share   $ 0.77   $ 0.84   $ 2.43   $ 3.20
 
 
Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)
    Quarter Ended   Year to Date Period Ended   Year to Date Period Ended
        December 31, 2012   December 31, 2012   December 31, 2011
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 $ 27,905 $ 19 0.27% $ 21,442 $ 32 0.15% $ 12,717 $ 12 0.09%
Money market funds - - 0.00% 18 - 0.00% 100 - 0.00%
Securities (4)
U.S. Government securities 1,309,625 7,457 2.27% 1,205,759 28,547 2.37% 969,303 27,504 2.84%
Trading securities 17,080 175 4.08% 18,162 744 4.10% 21,262 873 4.11%
State and municipal (5) 105,944 1,352 5.08% 95,095 4,946 5.20% 95,039 5,143 5.41%
Other securities 11,745     140   4.74%     11,766     544   4.62%     13,971     648   4.64%
Total securities 1,444,394 9,124 2.51% 1,330,782 34,781 2.61% 1,099,575 34,168 3.11%
Federal Funds Sold - - 0.00% 1,837 2 0.11% 5,837 7 0.12%
FHLBNY and FRB stock 19,587 205 4.16% 18,479 824 4.46% 17,992 910 5.06%
Total loans, net of unearned income (6) 2,939,812     40,274   5.45%     2,382,109     125,541   5.27%     1,928,540     104,548   5.42%
Total interest-earning assets 4,431,698     49,622   4.45%     3,754,667     161,180   4.29%     3,064,761     139,645   4.56%
 
Other assets 469,676 337,806 230,221
 
Total assets 4,901,374 4,092,473 3,294,982
                                                   
LIABILITIES & EQUITY
 
Deposits
 
Interest-bearing deposits
Interest bearing checking, savings, & money market 2,166,739 1,604 0.29% 1,750,444 4,854 0.28% 1,350,659 4,741 0.35%
Time deposits 1,022,807     2,201   0.86%     846,166     7,377   0.87%     717,514     8,346   1.16%
Total interest-bearing deposits 3,189,546 3,805 0.47% 2,596,610 12,231 0.47% 2,068,173 13,087 0.63%

Federal funds purchased & securities sold underagreements
to repurchase 216,848 1,111 2.04% 200,906 4,451 2.22% 173,692 4,872 2.80%
Other borrowings 113,680 1,205 4.22% 132,746 5,437 4.10% 155,650 6,143 3.95%
Trust preferred debentures 43,657     798   7.27%     32,835     2,094   6.38%     25,062     1,580   6.30%
Total interest-bearing liabilities 3,563,731 6,919 0.77% 2,963,097 24,213 0.82% 2,422,577 25,682 1.06%
Noninterest bearing deposits 786,867 681,260 539,917
Accrued expenses and other liabilities 107,184 71,226 37,868
 
Total liabilities 4,457,782 3,715,583 3,000,362
 
Tompkins Financial Corporation Shareholders’ equity 442,051 375,378 292,845
 
Noncontrolling interest 1,541 1,512 1,775
 
Total equity 443,592 376,890 294,620
 
Total liabilities and equity $ 4,901,374 $ 4,092,473 $ 3,294,982
Interest rate spread     3.68%     3.47%     3.50%
Net interest income/margin on earning assets 42,703 3.83% 136,967 3.65% 113,963 3.72%
 
Tax Equivalent Adjustment (854) (2,824) (2,557)
 
  Net interest income per consolidated financial statements       $ 41,849             $ 134,143             $ 111,406    
 
 
Tompkins Financial Corporation - Summary Financial Data (Unaudited)

(In thousands, except per share data)
                                 
  Quarter-Ended   Year-Ended
  Dec-12     Sep-12     Jun-12     Mar-12     Dec-11     Dec-12
         
Period End Balance Sheet                              
Securities   $ 1,433,852   $ 1,516,913   $ 1,228,143   $ 1,285,685   $ 1,189,817   $ 1,433,852

Originated loans and leases, net of unearned income anddeferred costs and fees (2)
    2,133,106     2,060,539     2,019,681     1,977,569     1,981,849     2,133,106
Allowance for originated loan and lease losses     24,643     26,632     26,865     26,948     27,593     24,643
Acquired loans and leases (3)     821,504     869,211     0     0     0     821,504
Total assets     4,837,197     4,924,786     3,482,669     3,546,694     3,400,248     4,837,197
Total deposits     3,950,169     4,037,644     2,765,093     2,859,436     2,660,564     3,950,169

Federal funds purchased and securities sold under agreementsto repurchase
    213,973     206,996     161,662     169,456     169,090     213,973
Other borrowings     111,848     125,461     121,934     132,884     186,075     111,848
Trust preferred debentures     43,668     43,651     25,067     25,066     25,065     43,668
Shareholders' equity     441,360     440,950     353,700     305,967     299,143     441,360
 
Average Balance Sheet                                    
Average earning assets   $ 4,431,698   $ 4,087,264   $ 3,278,519   $ 3,211,533   $ 3,131,051   $ 3,754,667
Average assets     4,901,374     4,450,013     3,539,170     3,464,917     3,368,135     4,092,473
Average interest-bearing liabilities     3,563,731     3,248,839     2,521,285     2,507,146     2,435,326     2,963,097
Average equity     443,592     410,300     349,021     303,546     307,539     376,890
 
Share data                                    
Weighted average shares outstanding (basic)     14,332,672     13,580,771     12,146,622     11,103,192     11,074,330     12,797,173
Weighted average shares outstanding (diluted)     14,374,368     13,630,464     12,166,417     11,147,490     11,104,623     12,836,043
Period-end shares outstanding     14,390,801     14,358,230     12,223,790     11,197,370     11,123,556     14,390,801
Book value per share     30.67     30.71     28.94     27.32     26.89     30.67
Tangible book value per share (Non-GAAP)     22.96     22.71     24.96   22.99     22.58     22.96
 
Income Statement                                    
Net interest income   $ 41,849   $ 36,743   $ 28,110   $ 27,441   $ 27,999   $ 134,143
Provision for loan/lease losses     5,659     1,042     1,011     1,125     1,160     8,837
Noninterest income     15,608     14,773     12,766     11,661     11,197     54,808
Noninterest expense     38,188     46,194     26,855     26,371     24,200     137,608
Income tax expense     2,416     761     4,151     3,762     4,417     11,090
Net income attributable to Tompkins Financial Corporation     11,161     3,487     8,826     7,811     9,387     31,285
Noncontrolling interests     33     32     33     33     32     131
Basic earnings per share (9)   $ 0.78   $ 0.26   $ 0.72   $ 0.70   $ 0.84   $ 2.44
Diluted earnings per share (9)   $ 0.77   $ 0.25   $ 0.72   $ 0.70   $ 0.84   $ 2.43
 
           
  Quarter-Ended       Year-Ended
 

Dec-12
     

Sep-12
     

Jun-12
     

Mar-12
     

Dec-11
     

Dec-12
Asset Quality                                          
Nonaccrual loans and leases (7) $     37,740       $     36,996       $     36,749      

$
   

38,455
     

$
   

39,588
     

$
   

37,740
Loans and leases 90 days past due and accruing (7)       257             126             321            

1,552
           

1,380
            257
Troubled debt restructurings not included above (7)       1,532             1,468             1,507            

423
           

428
            1,532
Total nonperforming loans and leases (7)       39,529            

38,590
            38,577            

40,430
           

41,396
            39,529
OREO (8)       4,862             4,675             2,161            

1,906
           

1,334
            4,862
Total nonperforming assets       44,391             43,265             40,738            

42,336
           

42,730
            44,391
                             
Delinquency- Originated loan and lease portfolio                                          
Loans and leases 30-89 days past due and accruing (2) $     8,818       $     9,412      

$
   

10,149
     

$
   

12,080
     

$
   

13,171
     

$
   

8,818
Loans and leases 90 days past due and accruing (2)       257             126            

321
           

1,552
           

1,380
            257
Nonaccrual loans and leases (2)       33,388             36,996            

36,749
           

38,455
           

39,588
            33,388
Total past due and accruing and nonaccrual originated loans (2)       42,463             46,534            

47,219
           

52,087
           

54,139
            42,463
 
Delinquency- Acquired loan and lease portfolio                                          
Covered loans and leases 30-89 days past due and accruing (3)(7)       1,014             669             0            

0
           

0
            1,014

Covered loans and leases 90 days or more past due and accruing(3)(7)
      4,754             2,837             0            

0
           

0
            4,754

Non-covered loans and leases 30-89 days past due and accruing(3)(7)
      4,249             5,848             0            

0
           

0
            4,249

Non-covered loans and leases 90 days or more past due andaccruing (3)(7)
      14,506             19,339             0            

0
           

0
            14,506
Non-covered Nonaccrual loans and leases (3)       4,352             0             0            

0
           

0
            4,352

Total past due and accruing and nonaccrual acquired loans andleases
      28,875             28,693             0            

0
           

0
            28,875
 
Allowance for Loan Losses - Originated loan and lease portfolio                                          
Balance at beginning of period $     26,632       $     26,865       $     26,948      

$
   

27,593
     

$
   

27,878
     

$
   

27,593
Provision for loan and lease losses       5,659             1,042             1,011             1,125            

1,160
           

8,837

Net loan and lease charge-offs
     

7,648
           

1,275
           

1,094
           

1,770
           

1,445
           

11,787

Allowance for loan and lease losses (originatedloan portfolio)
     

24,643
           

26,632
           

26,865
           

26,948
           

27,593
           

24,643

Allowance for loan and lease losses (acquiredloan portfolio)
     

0
           

0
           

0
           

0
           

0
           

0
Total allowance for loan and lease losses       24,643             26,632             26,865             26,948            

27,593
           

24,643
 
Loan Classifications - Originated portfolio                                          
Special Mention $     56,342       $     58,598       $     63,652      

$
   

62,649
      $     52,156      

$
   

56,342
Substandard       45,083             54,383             58,185            

58,272
            72,920            

45,083
Doubtful       0             494             588             1,344             1,494            

0
 
Loan Classifications - Acquired portfolio                                          
Special Mention       25,381             17,743             0             0             0            

25,381
Substandard       45,207             39,860             0             0             0            

45,207
           
   

Quarter-Ended
   

Year-Ended
   

Dec-12
       

Sep-12
       

Jun-12
           

Mar-12
           

Dec-11
   

Dec-12

RATIO ANALYSIS
                                             

Credit Quality
                                                         

Nonperforming originated loans and leases/total originated loansand leases (2)(7)
 

1.65%
       

1.87%
       

1.91%
           

2.04%
           

2.09%
   

1.65%

Nonperforming assets/total assets
 

0.92%
       

0.88%
       

1.17%
           

1.19%
           

1.26%
   

0.92%

Allowance for loan and lease losses/total originated loans andleases
 

1.16%
       

1.29%
       

1.33%
           

1.36%
           

1.39%
   

1.16%

Allowance/nonperforming loans and leases
 

62.34%
       

69.01%
       

69.75%
           

66.65%
           

66.65%
   

62.34%

Net loan and lease losses (annualized)/total average loans andleases
 

1.03%
       

0.19%
       

0.22%
           

0.36%
           

0.29%
   

0.49%
 

Capital Adequacy (period-end)
Tier I capital / average assets   7.95%         8.50%         9.53%             8.46%             8.51%     7.95%
Total capital / risk-weighted assets   12.94%         12.42%         16.22%             14.37%             14.17%     12.94%
Tangible Common Equity / Tangible Assets   6.99%       6.78%         8.88%             7.36%             7.49%     6.99%
                 
Profitability                                  
Return on average assets *   0.91%         0.31%         1.00%             0.91%             1.11%     0.76%
Return on average equity *   10.01%         3.38%         10.17%             10.35%             12.07%     8.30%
Net interest margin (TE)   3.83%         3.66%         3.52%             3.51%             3.62%     3.65%
* Quarterly ratios have been annualized
 

Non-GAAP Disclosure

Reported net income (GAAP)
 

$

11,161
 

$

3,487
 

$

8,826
 

$

7,811
 

$

9,387
 

$

31,285
Adjustments (net of tax):                                    
Accrual adjustment VISA     0     0     (243)     0     0     (243)
Merger related expenses     462     8,424     703     75     152     9,664
Subtotal adjustments     462     8,424     460     75     152     9,421
Net operating income (Non-GAAP)     11,623     11,911     9,286     7,886     9,539     40,706
Weighted average shares outstanding (diluted)     14,374,368     13,630,464     12,166,417     11,147,490     11,104,623     12,836,043
Adjusted diluted earnings per share (Non-GAAP)  

$

0.81
 

$

0.87
 

$

0.76
 

$

0.71
 

$

0.86
 

$

3.17
 

 
         

Non-GAAP Disclosure
   

 
                             

Reported net income (GAAP)
 

$

11,161
 

$

3,487
 

$

8,826
 

$

7,811
 

$

9,387
 

$

31,285

Merger related expenses (net of tax)
   

462
   

8,424
   

703
   

75
   

152
   

9,664

Net operating income (Non-GAAP)
 

$

11,623
 

$

11,911
 

$

9,529
 

$

7,886
 

$

9,539
 

$

40,949

Amortization of intangibles, (net of tax)
   

348
   

256
   

74
   

80
   

81
   

758

Adjusted net operating income (Non-GAAP)
   

11,971
   

12,167
   

9,603
   

7,966
   

9,620
   

41,707

Average total shareholders' equity
   

443,592
   

410,300
   

349,021
   

303,546
   

307,539
   

376,890

Less: Average goodwill and intangibles
   

114,644
   

92,789
   

48,665
   

47,922
   

48,195
   

76,149

Average tangible shareholders' equity (Non-GAAP)
   

328,948
   

317,511
   

300,356
   

255,624
   

259,344
   

300,741

Adjusted operating return on shareholders' tangible equity(annualized) (Non-GAAP)
   

14.56%
   

15.24%
   

12.86%
   

12.53%
   

14.71%
   

13.87%
 
                                     
                             

Quarter-Ended
   

Year-Ended
                             

Dec-12
     

Sep-12
     

Jun-12
     

Mar-12
     

Dec-11
   

Dec-12

Non-GAAP Disclosure
                                                                     
Total shareholders' equity (GAAP)                        

$

441,360
 

$

440,950
 

$

353,700
 

$

305,967
 

$

299,143
 

$

441,360
Less: goodwill and intangibles                           110,947     114,920     48,652     48,569     47,994     110,947
Tangible shareholders' equity (Non-GAAP)                           330,413     326,030     305,048     257,398     251,149     330,413
Ending shares outstanding                           14,390,801     14,358,230     12,223,790     11,197,370     11,123,556     14,390,801
Tangible book value per share (Non-GAAP)                           22.96     22.71     24.96     22.99     22.58     22.96
                                 
                       
Non-GAAP Disclosure                 Year-to-date period ended
                  Dec-12   Dec-11
Reported net income (GAAP)                 $ 31,285   $ 35,419
Adjustments (net of tax):                          
Accrual adjustment VISA                   (243)     0
Merger related expenses                   9,664     152
Subtotal adjustments                   9,421     152
Net operating income (Non-GAAP)                   40,706     35,571
Weighted average shares outstanding (diluted)                   12,836,043     11,035,384
Adjusted diluted earnings per share (Non-GAAP)                 $ 3.17   $ 3.22
                 

(1) Federal Reserve peer ratio as of September 30, 2012, 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. 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. Because acquired loans are initially recorded at an amount estimated to be collectible, losses on such loans, when incurred, are first applied against the non-accretable difference established in purchase accounting and then to any allowance of loan losses recognized subsequent to acquisition. "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, 2011. (7) Acquired loans and leases are considered performing upon acquisition, regardless of whether the customer is contractually delinquent, as we can reasonably estimate the timing and amount of the expected cash flows on the acquired loans and we expect to fully collect the new carrying value of the loans. As such, we do not consider the loans to be nonaccrual or nonperforming. (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.

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