Tompkins Financial Corporation Reports Increase in Fourth Quarter Earnings and Record 2011 Earnings

Share Name	Share Symbol	Market	Type
Tompkins Financial Corporation	AMEX:TMP	AMEX	Common Stock

	Price Change	% Change	Share Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	3.20	5.88%	57.58	57.72	54.69	54.69	93,617	22:30:00

Tompkins Financial (AMEX:TMP)
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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 Reserve1.
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 Reserve1. 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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TMP Tompkins Financial Corporation