Tompkins Financial Corporation 8-K

 

EXHIBIT 99.1 

 

 

 

For more information contact:

Stephen S. Romaine, President & CEO

Francis M. Fetsko, Executive VP, CFO & COO

Tompkins Financial Corporation (888)503-5753

 

For Immediate Release

Friday, April 27, 2018

 

Tompkins Financial Corporation Reports Record First Quarter Earnings.

 

ITHACA, NY - Tompkins Financial Corporation (NYSE American: TMP)

 

Tompkins Financial Corporation reported net income of $20.4 million for the first quarter of 2018, an increase of 30.0% from the $15.7 million reported for the same period in 2017. Diluted earnings per share were $1.33 for the first quarter of 2018, a 29.1% increase from $1.03 reported for the first quarter of 2017.

 

President and CEO, Stephen S. Romaine said “We are excited to start 2018 with very strong earnings growth. Solid loan growth, an improved net interest margin, and higher fee income all contributed to earnings improvement over the prior year. Our first quarter earnings also benefited from a lower tax rate in 2018.”

 

Selected highlights for first quarter:

 

•

Diluted earnings per share of $1.33 represent the best quarterly earnings in Company history, and are up 29.1% over the same period in 2017

 

•

Net interest income of $52.7 million was up 9.7% compared to the first quarter of 2017

 

•

Total loans of $4.7 billion were up 9.5% over the same period in 2017, and are up 0.8% compared to December 31, 2017

 

•

Total deposits of $4.9 billion reflect an increase of 1.6% over the same period last year, and are up 1.9% from December 31, 2017

 

 

NET INTEREST INCOME

 

Net interest income of $52.7 million for the first quarter of 2018 increased by $4.7 million, or 9.7% compared to the same period in 2017, and was up 1.4% compared to the fourth quarter of 2017. The increase in net interest income over prior year benefited from a 10.0% increase in average loans and a 13.7% increase in average noninterest-bearing deposits when compared to the same period in 2017. Net interest income was also positively impacted by reduced interest expense on time deposits, which benefited from accelerated accretion of purchase accounting deposit discounts from certain VIST acquired deposits. The net interest margin was 3.42% for the first quarter of 2018, up from 3.38% for the first quarter of 2017, and in line with the fourth quarter of 2017.

 

NONINTEREST INCOME

 

Noninterest income represented 25.3% of total revenues in the first quarter of 2018, compared to 26.4% in the same period in 2017, and 25.0% for the most recent prior quarter. Noninterest income of $17.8 million was up 3.4% compared to the same period last year, and up 3.0% over the fourth quarter of 2017. Contributing to the increase was fee based income related to insurance and investment services, card services and deposit account fees which improved a combined 5.5% over the same period in 2017.

 

NONINTEREST EXPENSE

 

Noninterest expense was $43.7 million for the first quarter of 2018, which was up 5.7% from the same period in 2017, and down 5.5% compared to the fourth quarter of 2017. The increase in noninterest expense was mainly related to higher salaries and wages in the first quarter of 2018. Other operating expenses in the fourth quarter of 2017 included $2.7 million related to a write off of a historic tax credit investment.

 

INCOME TAX EXPENSE

 

The Company’s effective tax rate was 22.0% in the first quarter of 2018, compared to 31.9% for the same period in 2017. The decrease is a direct result of The Tax Cuts and Jobs Act of 2017, which reduced the Federal statutory tax rate from 35% in 2017, to 21% in 2018.

 

ASSET QUALITY

 

Asset quality trends remained strong in the first quarter of 2018. Nonperforming assets represented 0.41% of total assets at March 31, 2018, up slightly from 0.38% at December 31, 2017. Nonperforming asset levels continue to be below the most recent Federal Reserve Board Peer Group Average¹ of 0.63%.

 

 

Provision for loan and lease losses was $567,000 for the first quarter of 2018, down from $769,000 reported for the first quarter of 2017. Net charge-offs for the first quarter of 2018 were $127,000 compared to $358,000 reported in the first quarter of 2017.

 

The Company’s allowance for originated loan and lease losses totaled $40.1 million at March 31, 2018, and represented 0.91% of total originated loans and leases at March 31, 2018, compared to 0.92% at March 31, 2017. The total allowance represented 159.34% of total nonperforming loans and leases at March 31, 2018, down from 180.02% at March 31, 2017, and 172.84% at December 31, 2017.

 

CAPITAL POSITION

 

Capital ratios remain well above the regulatory well capitalized minimums. The ratio of tangible common equity to tangible assets was 7.29% at March 31, 2018, improved from the 7.24% reported for the most recent prior quarter ended December 31, 2017, and down from 7.44% at March 31, 2017.

 

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, Tompkins Bank of Castile, Tompkins Mahopac Bank, Tompkins 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.

 

"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.

The statements made herein shall not confer upon any person any rights or remedies of any nature, and shall not be construed to establish, amend, or modify any benefit plan, program, agreement, or arrangement, nor to alter any existing at-will employment relationship between the Company and its employees.

 

 

TOMPKINS FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
(In thousands, except share and per share data) (Unaudited)					As of						As of
ASSETS					03/31/2018						12/31/2017
Cash and noninterest bearing balances due from banks				$	66,396					$	77,688
Interest bearing balances due from banks					1,706						6,615
		Cash and Cash Equivalents			68,102						84,303
Available-for-sale securities, at fair value (amortized cost of $1,408,360 at March 31,
		2018 and $1,409,996 at December 31, 2017)			1,371,664						1,392,775
Held-to-maturity securities, at amortized cost (fair value of $137,843 at March 31, 2018
		and $140,315 at December 31, 2017)			139,131						139,216
Originated loans and leases, net of unearned income and deferred costs and fees (2)					4,408,081						4,358,543
Acquired loans (3)					296,765						310,577
Less:  Allowance for loan and lease losses					40,211						39,771
		Net Loans and Leases			4,664,635						4,629,349
Federal Home Loan Bank and other stock					47,019						50,498
Bank premises and equipment, net					92,139						86,995
Corporate owned life insurance					80,623						80,106
Goodwill					92,291						92,291
Other intangible assets, net					8,791						9,263
Accrued interest and other assets					83,732						83,494
		Total Assets		$	6,648,128					$	6,648,290
LIABILITIES
Deposits:
		Interest bearing:
		Checking, savings and money market			2,893,619						2,651,632
		Time			685,600						748,250
		Noninterest bearing			1,350,684						1,437,925
		Total Deposits			4,929,903						4,837,807
Federal funds purchased and securities sold under agreements to repurchase					69,131						75,177
Other borrowings					995,074						1,071,742
Trust preferred debentures					16,734						16,691
Other liabilities					57,875						70,671
		Total Liabilities		$	6,068,717					$	6,072,088
EQUITY
Tompkins Financial Corporation shareholders' equity:
		Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued:
			15,321,245 at March 31, 2018; and 15,301,524 at December 31, 2017		1,532						1,530
		Additional paid-in capital			366,666						364,031
		Retained earnings			279,895						265,007
		Accumulated other comprehensive loss			(65,682				)		(51,296				)
		Treasury stock, at cost – 116,587 shares at March 31,2018, and 120,805 shares
			at December 31, 2017		(4,444				)		(4,492				)
		Total Tompkins Financial Corporation Shareholders’ Equity			577,967						574,780
Noncontrolling interests					1,444						1,422
		Total Equity		$	579,411					$	576,202
		Total Liabilities and Equity		$	6,648,128					$	6,648,290

 

 

TOMPKINS FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
							Three Months Ended
(In thousands, except per share data) (Unaudited)							03/31/2018						03/31/2017
INTEREST AND DIVIDEND INCOME
Loans						$	50,894					$	44,951
Due from banks							7						2
Available-for-sale securities							7,644						7,322
Held-to-maturity securities							858						878
Federal Home Loan Bank and other stock							737						468
Total Interest and Dividend Income							60,140						53,621
INTEREST EXPENSE
Time certificates of deposits of $250,000 or more							(14				)		441
Other deposits							2,783						2,347
Federal funds purchased and securities sold under agreements to
repurchase							46						108
Trust preferred debentures							279						367
Other borrowings							4,359						2,324
Total Interest Expense							7,453						5,587
Net Interest Income							52,687						48,034
Less:  Provision for loan and lease losses							567						769
Net Interest Income After Provision for Loan and Lease Losses							52,120						47,265
NONINTEREST INCOME
Insurance commissions and fees							7,394						7,118
Investment services income							4,246						3,791
Service charges on deposit accounts							2,132						2,167
Card services income							2,146						2,009
Other income							1,788						2,155
(Loss)/gain on sale of available-for-sale securities							124						0
Total Noninterest Income							17,830						17,240
NONINTEREST EXPENSE
Salaries and wages							20,998						19,635
Other employee benefits							5,376						5,634
Net occupancy expense of premises							3,646						3,511
Furniture and fixture expense							1,975						1,597
FDIC insurance							667						538
Amortization of intangible assets							451						493
Other operating expense							10,608						9,960
Total Noninterest Expenses							43,721						41,368
Income Before Income Tax Expense							26,229						23,137
Income Tax Expense							5,761						7,388
Net Income attributable to Noncontrolling Interests and Tompkins Financial Corporation							20,468						15,749
Less:  Net income attributable to noncontrolling interests							32						32
Net Income Attributable to Tompkins Financial Corporation						$	20,436					$	15,717
Basic Earnings Per Share						$	1.34					$	1.04
Diluted Earnings Per Share						$	1.33					$	1.03

 

 

Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)
			Quarter Ended								Quarter Ended
				March 31, 2018								March 31, 2017
				Average								Average
				Balance					Average			Balance					Average
(Dollar amounts in thousands)				(QTD)		Interest			Yield/Rate			(YTD)		Interest			Yield/Rate
ASSETS
Interest-earning assets
	Interest-bearing balances due from banks		$	2,565		$	7		1.11	%	$	5,214		$	2		0.16	%
	Securities (4)
		U.S. Government securities		1,454,229			7,954		2.22	%		1,479,516			7,659		2.10	%
		State and municipal (5)		99,766			643		2.61	%		100,698			840		3.38	%
		Other securities (5)		3,571			35		3.97	%		3,613			31		3.48	%
		Total securities		1,557,566			8,632		2.25	%		1,583,827			8,530		2.18	%
	FHLBNY and FRB stock			49,509			737		6.04	%		38,105			468		4.98	%
	Total loans and leases, net of unearned income (5)(6)			4,688,087			51,229		4.43	%		4,263,799			45,675		4.34	%
	Total interest-earning assets			6,297,727			60,605		3.90	%		5,890,945			54,674		3.76	%
Other assets				355,036								350,443
	Total assets		$	6,652,763							$	6,241,388
LIABILITIES & EQUITY
Deposits
	Interest-bearing deposits
		Interest bearing checking, savings,  & money market	$	2,796,197			1,646		0.24	%	$	2,664,848			1,061		0.16	%
		Time deposits		717,617			1,123		0.63	%		869,949			1,727		0.81	%
		Total interest-bearing deposits		3,513,814			2,769		0.32	%		3,534,797			2,788		0.32	%
Federal funds purchased & securities sold under
		agreements to repurchase		75,167			46		0.25	%		77,980			108		0.56	%
Other borrowings				1,053,311			4,359		1.68	%		791,136			2,324		1.19	%
Trust preferred debentures				16,706			279		6.77	%		23,588			367		6.31	%
	Total interest-bearing liabilities			4,658,998			7,453		0.65	%		4,427,501			5,587		0.51	%
Noninterest bearing deposits				1,351,307								1,188,567
Accrued expenses and other liabilities				67,495								69,423
	Total liabilities			6,077,800								5,685,491
Tompkins Financial Corporation Shareholders’ equity				573,536								554,428
Noncontrolling interest				1,427								1,469
	Total equity			574,963								555,897
	Total liabilities and equity		$	6,652,763							$	6,241,388
Interest rate spread									3.25	%							3.25	%
	Net interest income/margin on earning assets						53,152		3.42	%					49,088		3.38	%
Tax Equivalent Adjustment							(465	)							(1,054	)
	Net interest income per consolidated financial statements					$	52,687							$	48,034

 

 

Tompkins Financial Corporation - Summary Financial Data (Unaudited)

(In thousands, except per share data)
	Quarter-Ended															Year-Ended
Period End Balance Sheet		Mar-18			Dec-17			Sep-17			Jun-17			Mar-17			Dec-17
Securities	$	1,510,795		$	1,531,991		$	1,546,199		$	1,564,865		$	1,569,068		$	1,531,991
Originated loans and leases, net of unearned income and deferred costs and fees (2)		4,408,081			4,358,543			4,167,254			4,070,755			3,922,413			4,358,543
Acquired loans and leases (3)		296,765			310,577			323,259			347,841			375,380			310,577
Allowance for  loan and lease losses		40,211			39,771			38,038			37,157			36,166			39,771
Total assets		6,648,128			6,648,290			6,524,060			6,415,012			6,280,047			6,648,290
Total deposits		4,929,903			4,837,807			4,943,944			4,750,722			4,850,585			4,837,807
Federal funds purchased and securities sold under agreements to repurchase		69,131			75,177			73,874			50,360			70,716			75,177
Other borrowings		995,074			1,071,742			834,574			952,035			717,285			1,071,742
Trust preferred debentures		16,734			16,691			16,648			16,605			16,562			16,691
Total common equity		577,967			574,780			588,349			575,428			562,064			574,780
Total equity		579,411			576,202			589,868			576,915			563,518			576,202

 

Average Balance Sheet
Average earning assets	$	6,297,727		$	6,159,396		$	6,072,269		$	5,970,653		$	5,890,945		$	6,024,186
Average assets		6,652,763			6,552,414			6,430,497			6,329,847			6,241,388			6,389,504
Average interest-bearing liabilities		4,658,998			4,500,649			4,463,606			4,474,860			4,427,501			4,466,846
Average equity		574,963			593,956			586,671			572,741			555,893			577,446

 

Share data
Weighted average shares outstanding (basic)	15,013,478			14,988,542			14,966,231			14,944,934			14,900,938			14,950,432
Weighted average shares outstanding (diluted)	15,112,518			15,103,906			15,078,555			15,066,861			15,042,614			15,073,255
Period-end shares outstanding	15,285,335			15,265,614			15,202.444			15,189.453			15,181.198			15,265,614
Common equity book value per share	$	37.81		$	37.65		$	38.70		$	37.88		$	37.02		$	37.65
Tangible book value per share (Non-GAAP)	$	31.24		$	31.04		$	32.03		$	31.18		$	30.28		$	31.04

 

Income Statement
Net interest income	$	52,687		$	51,969		$	51,000		$	50,301		$	48,034		$	201,304
Provision for loan/lease losses		567			2,014			402			976			769			4,161
Noninterest income		17,830			17,312			17,202			17,450			17,240			69,204
Noninterest expense		43,721			46,286			41,883			41,568			41,368			171,105
Income tax expense		5,761			18,493			8,491			8,248			7,388			42,620
Net income attributable to Tompkins Financial Corporation		20,436			2,457			17,394			16,926			15,717			52,494
Noncontrolling interests		32			31			32			33			32			128
Basic earnings per share (8)	$	1.34		$	0.16		$	1.14		$	1.11		$	1.04		$	3.46
Diluted earnings per share (8)	$	1.33		$	0.16		$	1.14		$	1.11		$	1.03		$	3.43

 

 

 

Nonperforming Assets
Originated nonaccrual loans and leases	$	18,429		$	16,253		$	15,667		$	14,284		$	13,786		$	16,253
Acquired nonaccrual loans and leases		3,352			3,264			3,152			2,903			3,356			3,264
Originated loans and leases 90 days past due and accruing		0			44			0			639			0			44
Troubled debt restructurings not included above		3,455			3,449			3,541			2,980			2,948			3,449
Total nonperforming loans and leases		25,236			23,010			22,360			20,806			20,090			23,010
OREO		2,047			2,047			2,030			2,331			2,520			2,047
Total nonperforming assets	$	27,283		$	25,057		$	24,390		$	23,137		$	22,610		$	25,057

 

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

 

		Quarter-Ended														Year-Ended
Delinquency - Originated loan and lease portfolio		Mar-18			Dec-17			Sep-17			Jun-17			Mar-17			Dec-17
Loans and leases 30-89 days past due and accruing (2)	$	6,513		$	6,791		$	5,567		$	6,188		$	5,462		$	6,791
Loans and leases 90 days past due and accruing (2)		0			44			0			639			0			44
Total originated loans and leases past due and accruing (2)		6,513			6,835			5,567			6,827			5,462			6,835

 

Delinquency - Acquired loan and lease portfolio
Loans 30-89 days past due and accruing (3)(7)	$	823		$	1,256		$	2,857		$	751		$	907		$	1,256
Loans 90 days or more past due		1,077			1,146			1,306			2,581			2,701			1,146
Total acquired loans and leases past due and accruing		1,900			2,402			4,163			3,332			3,608			2,402
Total loans and leases past due and accruing	$	8,413		$	9,237		$	9,730		$	10,159		$	9,070		$	9,237

 

Allowance for Loan Losses - Originated loan and lease portfolio
Balance at beginning of period	$	39,686		$	37,903		$	36,960		$	35,915		$	35,598		$	35,598
Provision for loan and lease losses		609			1,849			931			846			602			4,428
Net loan and lease (recoveries) charge-offs		187			66			(12	)		(199	)		285			140
Allowance for loan and lease losses (originated
loan portfolio) - balance at end of period	$	40,107		$	39,686		$	37,903		$	36,960		$	35,915		$	39,686

 

Allowance for Loan Losses - Acquired loan and lease portfolio
Balance at beginning of period	$	85		$	135		$	197		$	251		$	157		$	157
Provision (credit) for loan and lease losses		(41	)		165			(529	)		130			167			(67	)
Net loan and lease (recoveries) charge-offs		(60	)		215			(467	)		184			73			5
Allowance for loan and lease losses (acquired
loan portfolio) - balance at end of period		104			85			135			197			251			85
Total allowance for loan and lease losses	$	40,211		$	39,771		$	38,038		$	37,157		$	36,166		$	39,771

 

 

 

Loan Classification - Originated Portfolio
Special Mention	$	34,546		$	46,074		$	50,423		$	38,488		$	18,861		$	46,074
Substandard		35,746			20,584			20,532			19,532			20,909			20,584
Loan Classification - Acquired Portfolio
Special Mention		476			525			539			547			519			525
Substandard		3,468			5,355			8,193			8,796			9,628			5,355
Loan Classifications - Total Portfolio
Special Mention		35,022			46,599			50,962			39,035			19,380			46,599
Substandard		39,214			25,939			28,725			28,328			30,537			25,939

 

Ratio Analysis

Credit Quality
Nonperforming loans and leases/total loans and leases (7)		0.54	%		0.49	%		0.50	%		0.47	%		0.47	%		0.49	%
Nonperforming assets/total assets		0.41	%		0.38	%		0.37	%		0.36	%		0.36	%		0.38	%
Allowance for originated loan and lease losses/total originated loans and leases		0.91	%		0.91	%		0.91	%		0.91	%		0.92	%		0.91	%
Allowance/nonperforming loans and leases		159.34	%		172.84	%		170.12	%		178.59	%		180.02	%		172.84	%
Net loan and lease losses (recoveries) annualized/total average loans and leases		0.01	%		0.02	%		(0.04	)%		0.00	%		0.03	%		0.00	%

 

 

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

	Quarter-Ended															Year-Ended
Capital Adequacy (period-end)		Mar-18			Dec-17			Sep-17			Jun-17			Mar-17			Dec-17
Tangible common equity/tangible assets		7.29	%		7.24	%		7.58	%		7.50	%		7.44	%		7.24	%

 

Profitability
Return on average assets *		1.25	%		0.15	%		1.07	%		1.07	%		1.02	%		0.82	%
Return on average equity *		14.41	%		1.64	%		11.77	%		11.85	%		11.47	%		9.09	%
Net interest margin (TE) *		3.42	%		3.42	%		3.40	%		3.45	%		3.38	%		3.41	%
* Quarterly ratios have been annualized

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.

 

 

Non-GAAP Disclosure - Adjusted Diluted Earnings Per Share
		Quarter-Ended														Year-Ended
		Mar-18			Dec-17			Sep-17			Jun-17			Mar-17			Dec-17
Net income available to common shareholders	$	20,436		$	2,457		$	17,394		$	16,926		$	15,717		$	52,494
Less: Income attributable to unvested stock-based compensation awards		351			26			266			266			260			818
Tangible common equity		20,085			2,431			17,128			16,660			15,457			51,676
Remeasurement of net deferred taxes		0			14,944			0			0			0			14,994
Net income (Non-GAAP)		20,085			17,375			17,128			16,660			15,457			66,620
Weighted average shares outstanding (diluted)	15,112,518			15,103,906			15,078,555			15,066,861			15,042,614			15,073,255
Adjusted diluted earnings per share (Non-GAAP)	$	1.33		$	1.15		$	1.14		$	1.11		$	1.03		$	4.42

 

Non-GAAP Disclosure - Tangible Book Value Per Share
Total common equity	$	577,967		$	574,780		$	588,349		$	575,428		$	562,064		$	574,780
Less:  Goodwill and intangibles (9)		100,436			100,887			101,360			101,840			102,326			100,887
Tangible common equity		477,531			473,893			486,989			473,588			459,738			473,893
Ending shares outstanding	15,285,335			15,265,614			15,202,444			15,189,453			15,181,198			15,265,614
Tangible book value per share (Non-GAAP)	$	31.24		$	31.04		$	32.03		$	31.18		$	30.28		$	31.04

 

(1) Federal Reserve peer ratio as of December 31, 2017, 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.

(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, 2017.

(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)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

(9) “Goodwill and intangibles” equal Total Intangible Assets less Mortgage Servicing Rights in the above tables.