Tompkins Financial Corporation (NYSE:TMP)

Tompkins Financial Corporation ("Tompkins" or the "Company") reported diluted earnings per share of $0.59 for the second quarter of 2023, down 56.3% from the immediate prior quarter, and down 59.3% from diluted earnings per share of $1.45 reported in the second quarter of 2022. Net income for the second quarter of 2023 was $8.5 million, down $12.4 million, or 59.4%, when compared to the $20.9 million reported for the same period in 2022.

Results for the current quarter were negatively affected by the sale of $80.9 million of available-for-sale securities. Though the sale resulted in a $7.1 million pre-tax loss on securities transactions during the quarter (or $0.37 per share), the transaction is expected to have a positive impact on future earnings. The available-for-sale securities sold in the second quarter of 2023 had an average yield of 0.48%, with a remaining average life of 2.3 years. Approximately $15.0 million of the proceeds from sale were reinvested in available-for-sale securities with an average yield of approximately 4.30%, while the remaining proceeds were used to pay down approximately $65.0 million of overnight borrowings with the Federal Home Loan Bank ("FHLB").

For the year-to-date period ended June 30, 2023, diluted earnings per share were $1.94, down 36.4% from $3.05 for the same year-to-date period in 2022. Year-to-date net income was $27.9 million for the six month period ended June 30, 2023, down $16.3 million, or 36.9%, when compared to $44.1 million for the same period in 2022. Year-to-date results were also negatively impacted by the loss on securities transactions described above.

Tompkins President and CEO, Stephen Romaine, commented, "The economic environment remains challenging for the banking industry. Despite these challenges, which continue to negatively affect our net interest income, we saw some positive trends during the second quarter and first half of 2023. These included annualized loan growth of 6.0% from the immediate prior quarter, stable noninterest bearing deposit balances when compared to the first quarter this year, and year-to-date annualized fee income growth of 1.3% over that same period in 2022."

SELECTED HIGHLIGHTS FOR THE PERIOD:

Total loans at June 30, 2023 were $5.4 billion, up 6.0% annualized compared to the immediate prior quarter, and up $189.9 million, or 3.7%, from June 30, 2022.
Total deposits at June 30, 2023 were $6.5 billion, down $54.4 million, or 0.84%, from March 31, 2023 and down $314.9 million, or 4.65%, from June 30, 2022. The year-over-year pace of decline of total deposits slowed in the second quarter, when compared to the year-over-year decline of 7.2% over the twelve month period ended March 31, 2023.
Loan to deposit ratio remains stable at 83% as compared to 81% for the prior quarter
Regulatory Tier 1 capital to average assets was 9.57% at June 30, 2023, compared to 9.63% at March 31, 2023 and 9.02% at June 30, 2022.
Total nonperforming assets at June 30, 2023 represented 0.41% of total assets, an increase of 10.8% from the immediate prior quarter.

NET INTEREST INCOME

Net interest income was $51.9 million for the second quarter of 2023, down from $54.2 million for the first quarter of 2023 and $58.3 million for the second quarter of 2022. Net interest margin was 2.83% for the second quarter of 2023, compared to 2.99% reported for the first quarter of 2023 and 3.09% reported for the second quarter of 2022. The decrease in net interest income and net interest margin from the first quarter of 2023 and the second quarter of 2022 was due primarily to the increase in interest rates on interest-bearing liabilities outpacing increases on interest earning asset yields due to the higher interest rate environment.

For the year-to-date period ended June 30, 2023, net interest income was $106.1 million, down $8.7 million or 7.6% when compared to the same period in 2022.

Average loans for the quarter ended June 30, 2023 were up $53.4 million, or 1.0%, from the first quarter of 2023, and $189.4 million, or 3.7%, compared to the same period in 2022. The increase in average loans was mainly in the commercial real estate portfolio compared to the first quarter of 2023, and the quarter ended June 30, 2022. The average yield on interest-earning assets for the quarter ended June 30, 2023 was 3.91%, up 10 basis points compared to the quarter ended March 31, 2023, and up 68 basis points compared to the quarter ended June 30, 2022.

Average total deposits for the second quarter of 2023 were down $121.4 million, or 1.8%, compared to the first quarter of 2023, and down $414.4 million, or 6.0%, compared to the same period in 2022. The decrease was largely driven by a decline in stimulus funding and a tightening monetary policy that has led to a declining trend in bank deposits on a national level, as reported by the Federal Reserve. The cost of interest-bearing deposits increased to 1.41% for the second quarter of 2023, compared to 1.10% for the first quarter of 2023, and 0.18% for the second quarter of 2022. The cost of interest-bearing deposits for the second quarter of 2023 increased 31 basis points from March 31, 2023, which is down from the 41 basis point increase in the cost of interest-bearing deposits for the first quarter of 2023, compared to the fourth quarter of 2022. Noninterest bearing deposits to total deposits at June 30, 2023, were 31.4% compared to 30.9% at March 31, 2023. The average cost of interest-bearing liabilities for the second quarter of 2023 of 1.64%, represents an increase of 38 basis points over the first quarter of 2023, and an increase of 142 basis points over the same period in 2022.

NONINTEREST INCOME

Noninterest income of $12.6 million for the second quarter of 2023 was down $6.3 million, or 33.4%, compared to the second quarter of 2022. Year-to-date noninterest income of $33.0 million was down $5.9 million, or 15.2%, compared to the same six month period in 2022. Noninterest income represented 19.6% of total revenue for the quarter ended June 30, 2023, compared to 24.5% for the quarter ended June 30, 2022. The decrease in noninterest income in the second quarter of 2023 was largely due to the sale of available-for-sale securities, which resulted in the recognition of a pre-tax loss of $7.1 million. Partially offsetting the decreases in noninterest income in the second quarter of 2023 compared to the prior year quarter were increases in fee income of $337,000 and an increase in income on bank-owned life insurance of $383,000.

NONINTEREST EXPENSE

Noninterest expense was $52.0 million for the second quarter of 2023, which was up $2.8 million, or 5.8%, over the second quarter of 2022. For the year-to-date period, noninterest expense of $102.1 million was up $6.2 million, or 6.4%, from the same period in 2022. The increase in noninterest expense in the second quarter of 2023 over the same quarter last year was mainly in higher personnel-related expenses, up $1.2 million. The increase in personnel-related expenses was mainly in salaries and wages and reflects annual merit adjustments. Significant components that increased in other expenses were professional fees which were up $405,000, other losses which were up $517,000, and marketing which was up $232,000, in each case as compared to the second quarter of 2022.

INCOME TAX EXPENSE

The Company's effective tax rate was 17.3% for the second quarter of 2023, compared to 23.2% for the same period in 2022. The effective tax rate for the six months ended June 30, 2023 was 21.6%, compared to 23.1% reported for the same period in 2022.

The decrease in the effective tax rate for the three and six months ended June 30, 2023, compared to the same periods in 2022 is largely due to the anticipated retention of certain New York State tax benefits. The Company's banking subsidiary has an investment in a real estate investment trust that provides certain benefits on its New York State tax return for qualifying entities. A condition to claim the benefit is that the consolidated company has qualified average assets of no more than $8.0 billion for the taxable year. Based on current estimates of average assets during 2023, the Company expects to retain the benefits in 2023.

ASSET QUALITY

The allowance for credit losses represented 0.91% of total loans and leases at June 30, 2023, up from 0.87% at March 31, 2023, and up from 0.85% at June 30, 2022. The ratio of the allowance to total nonperforming loans and leases was 154.76% for the second quarter of 2023, compared to 162.11% at March 31, 2023 and 147.95% at June 30, 2022.

Provision for credit losses for the second quarter of 2023 was $2.3 million compared to $856,000 for the same period in 2022. Provision for credit losses for the six months ended June 30, 2023 was $1.4 million, compared to $336,000 for the six months ended June 30, 2022. The increase in provision expense for both the quarter and year-to-date periods was mainly driven by weaker economic forecasts, loan growth, and changes in asset quality. Net recoveries for the quarter ended June 30, 2023 were $27,000 compared to net recoveries of $887,000 reported for the same period in 2022.

Nonperforming assets represented 0.41% of total assets at June 30, 2023, down from 0.43% at December 31, 2022 and up from the 0.38% reported at June 30, 2022. At June 30, 2023, nonperforming loans and leases totaled $31.4 million, compared to $32.8 million at December 31, 2022 and $29.6 million at June 30, 2022. The increase in loans past due 30-89 days at quarter end June 30, 2023 was mainly due to the inclusion of a $15.3 million commercial real estate loan.

Special Mention and Substandard loans and leases totaled $118.1 million at June 30, 2023, reflecting an increase from the $98.3 million reported at December 31, 2022, and $115.0 million at June 30, 2022. The increase over year-end in Special Mention and Substandard was mainly a result of the downgrade of one commercial real estate loan added to Special Mention during the second quarter of 2023 and the downgrade of one commercial real estate loan previously reported as Special Mention.

CAPITAL POSITION

Capital ratios at June 30, 2023 remained well above the regulatory minimums for well-capitalized institutions. The ratio of total capital to risk-weighted assets was 14.48% at June 30, 2023, compared to 14.42% at December 31, 2022 and 14.07% at June 30, 2022. The ratio of Tier 1 capital to average assets was 9.57% at June 30, 2023, compared to 9.34% at December 31, 2022 and 9.02% at June 30, 2022.

During the second quarter of 2023, the Company repurchased 108,219 common shares at an aggregate cost of $6.3 million. These shares were purchased under the Company's Stock Repurchase Program announced in the third quarter of 2021.

The Company announced today that its Board of Directors has authorized a new Stock Repurchase Program to repurchase up to 400,000 shares of the Company's outstanding common stock, par value $0.10 per share, from time to time, over the next 24 months.

LIQUIDITY POSITION

The Company's liquidity position remained stable from the first quarter of 2023. Liquidity is enhanced by ready access to national and regional wholesale funding sources including Federal funds purchased, repurchase agreements, brokered deposits, Federal Reserve Bank Discount Window advances and FHLB advances. The Company maintains ready access liquidity of $1.7 billion, or 22.3% of total assets at June 30, 2023. As members of the FHLB, the Company can use certain unencumbered mortgage-related assets and securities to secure borrowings from the FHLB. At June 30, 2023 the Company had an available borrowing capacity at the FHLB of $1.3 billion, unchanged from the first quarter of 2023. Through various programs at the Federal Reserve Bank, the Company has the ability to use certain unencumbered mortgage-related assets and securities to secure borrowings from the Federal Reserve Bank's Discount Window. At June 30, 2023 the available borrowing capacity with the Federal Reserve Bank was $245.7 million, secured by investment securities. In addition to the available borrowing lines at the FHLB and Federal Reserve Bank, at June 30, 2023, the Company maintained $137.7 million of unencumbered securities which could be pledged to further enhance secured borrowing capacity.

ABOUT TOMPKINS FINANCIAL CORPORATION

Tompkins Financial Corporation is a banking and 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 Community 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 Act of 1995:

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The statements contained in this press release that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements may be identified by use of such words as "may", "will", "estimate", "intend", "continue", "believe", "expect", "plan", or "anticipate", the negative and other variations of these terms and other similar words. Forward-looking statements are made based on management's expectations and beliefs concerning future events impacting the Company and are subject to certain uncertainties and factors relating to the Company's operations and economic environment, all of which are difficult to predict and many of which are beyond the control of the Company, that could cause actual results of the Company to differ materially from those expressed and/or implied by forward-looking statements and historical performance. The following factors, in addition to those listed as Risk Factors in Item 1A in our Annual Reports on Form 10-K and our Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission are among those that could cause actual results to differ materially from the forward-looking statements: changes in general economic, market and regulatory conditions; our ability to attract and retain deposits and access other sources of liquidity; GDP growth; the impact of the interest rate and inflationary environment on the Company's business, financial condition and results of operations; other income or cash flow anticipated from the Company's operations, investment and/or lending activities; changes in laws and regulations affecting banks, bank holding companies and/or financial holding companies, such as state and local government mandates, SEC rule-making, the Dodd-Frank Act and Basel III and the Economic Growth, Regulatory Relief, and Consumer Protection Act; the impact of any change in the FDIC insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount; technological developments and changes; cyber security incidents and threats, the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; governmental and public policy changes, including environmental regulation; reliance on large customers; uncertainties arising from national and global events, including the war in Ukraine, as well as the potential impact of widespread protests, civil unrest, political uncertainty on the economy and the financial services industry, and pandemics or other public health crises, including the COVID-19 pandemic; and access to financial resources in the amounts, at the times and on the terms required to support the Company's future businesses. The Company does not undertake any obligation to update its forward-looking statements.

TOMPKINS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(In thousands, except share and per share data)	As of			As of
ASSETS	06/30/2023			12/31/2022
				(Audited)

Cash and noninterest bearing balances due from banks	$	65,916		$	18,572
Interest bearing balances due from banks		15,698			59,265
Cash and Cash Equivalents		81,614			77,837

Available-for-sale debt securities, at fair value (amortized cost of $1,688,051 at June 30, 2023 and $1,831,791 at December 31, 2022)		1,468,003			1,594,967
Held-to-maturity securities, at amortized cost (fair value of $262,444 at June 30, 2023 and $261,692 at December 31, 2022)		312,369			312,344
Equity securities, at fair value		778			777
Total loans and leases, net of unearned income and deferred costs and fees		5,352,365			5,268,911
Less: Allowance for credit losses		48,545			45,934
Net Loans and Leases		5,303,820			5,222,977

Federal Home Loan Bank and other stock		23,649			17,720
Bank premises and equipment, net		81,087			82,140
Corporate owned life insurance		86,709			85,556
Goodwill		92,602			92,602
Other intangible assets, net		2,513			2,708
Accrued interest and other assets		173,094			181,058
Total Assets	$	7,626,238		$	7,670,686
LIABILITIES
Deposits:
Interest bearing:
Checking, savings and money market		3,659,220			3,820,739
Time		770,594			631,411
Noninterest bearing		2,024,837			2,150,145
Total Deposits		6,454,651			6,602,295

Federal funds purchased and securities sold under agreements to repurchase		50,483			56,278
Other borrowings		387,100			291,300
Other liabilities		97,563			103,423
Total Liabilities	$	6,989,797		$	7,053,296
EQUITY
Tompkins Financial Corporation shareholders' equity:
Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued: 14,441,413 at June 30, 2023; and 14,555,741 at December 31, 2022		1,444			1,456
Additional paid-in capital		298,133			302,763
Retained earnings		537,095			526,727
Accumulated other comprehensive loss		(195,520	)		(208,689	)
Treasury stock, at cost – 124,265 shares at June 30, 2023, and 128,749 shares at December 31, 2022		(6,185	)		(6,279	)
Total Tompkins Financial Corporation Shareholders' Equity		634,967			615,978
Noncontrolling interests		1,474			1,412
Total Equity	$	636,441		$	617,390
Total Liabilities and Equity	$	7,626,238		$	7,670,686

TOMPKINS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data) (Unaudited)	Three Months Ended						Six Months Ended
	06/30/2023			06/30/2022			06/30/2023			06/30/2022
INTEREST AND DIVIDEND INCOME
Loans	$	63,527		$	52,505		$	124,369		$	103,636
Due from banks		183			64			322			105
Available-for-sale debt securities		6,618			7,063			13,361			13,833
Held-to-maturity securities		1,219			1,201			2,433			2,330
Federal Home Loan Bank and other stock		323			120			623			225
Total Interest and Dividend Income		71,870		$	60,953		$	141,108		$	120,129
INTEREST EXPENSE
Time certificates of deposits of $250,000 or more		2,526			400			4,313			826
Other deposits		13,119			1,647			23,513			3,267
Federal funds purchased and securities sold under agreements to repurchase		15			15			29			31
Other borrowings		4,314			629			7,111			1,129
Total Interest Expense		19,974			2,691			34,966			5,253
Net Interest Income		51,896			58,262			106,142			114,876
Less: Provision for credit loss expense		2,253			856			1,428			336
Net Interest Income After Credit for Credit Loss Expense		49,643			57,406			104,714			114,540
NONINTEREST INCOME
Insurance commissions and fees		8,672			8,429			18,181			17,746
Wealth management fees		4,678			4,596			9,187			9,513
Service charges on deposit accounts		1,640			1,756			3,386			3,535
Card services income		3,087			2,959			5,769			5,502
Other income		1,603			1,241			3,544			2,717
Net loss on securities transactions		(7,065	)		(37	)		(7,052	)		(84	)
Total Noninterest Income		12,615			18,944			33,015			38,929
NONINTEREST EXPENSE
Salaries and wages		25,337			24,396			49,849			47,668
Other employee benefits		6,647			6,341			13,388			12,138
Net occupancy expense of premises		3,327			3,131			6,626			6,672
Furniture and fixture expense		2,105			2,004			4,159			3,995
Amortization of intangible assets		84			219			167			437
Other operating expense		14,468			13,029			27,937			25,049
Total Noninterest Expenses		51,968			49,120			102,126			95,959
Income Before Income Tax Expense		10,290			27,230			35,603			57,510
Income Tax Expense		1,784			6,329			7,685			13,305
Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation		8,506			20,901			27,918			44,205
Less: Net Income Attributable to Noncontrolling Interests		31			32			62			63
Net Income Attributable to Tompkins Financial Corporation	$	8,475			20,869			27,856			44,142
Basic Earnings Per Share	$	0.59		$	1.45		$	1.94		$	3.06
Diluted Earnings Per Share	$	0.59		$	1.45		$	1.94		$	3.05

Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)
	Quarter Ended							Quarter Ended
	June 30, 2023							June 30, 2022
	Average							Average
	Balance					Average		Balance					Average
(Dollar amounts in thousands)	(QTD)		Interest			Yield/Rate		(QTD)		Interest			Yield/Rate
ASSETS
Interest-earning assets
Interest-bearing balances due from banks	$	13,585	$	183		5.40	%	$	88,094	$	64		0.29	%
Securities (1)
U.S. Government securities		1,972,719		7,304		1.49	%		2,305,102		7,746		1.35	%
State and municipal (2)		92,194		590		2.57	%		97,481		619		2.55	%
Other securities (2)		3,288		56		6.86	%		3,337		28		3.40	%
Total securities		2,068,201		7,950		1.54	%		2,405,920		8,393		1.40	%
FHLBNY and FRB stock		23,211		323		5.59	%		12,234		120		3.92	%
Total loans and leases, net of unearned income (2)(3)		5,304,717		63,709		4.82	%		5,115,340		52,733		4.14	%
Total interest-earning assets		7,409,714		72,165		3.91	%		7,621,588		61,310		3.23	%
Other assets		226,086							209,057
Total assets	$	7,635,800						$	7,830,645
LIABILITIES & EQUITY
Deposits
Interest-bearing deposits
Interest bearing checking, savings, & money market	$	3,701,229	$	10,590		1.15	%	$	4,073,279	$	890		0.09	%
Time deposits		745,970		5,055		2.72	%		603,791		1,157		0.77	%
Total interest-bearing deposits		4,447,199		15,645		1.41	%		4,677,070		2,047		0.18	%
Federal funds purchased & securities sold under agreements to repurchase		56,083		15		0.11	%		54,885		15		0.11	%
Other borrowings		379,744		4,314		4.56	%		169,390		629		1.49	%
Total interest-bearing liabilities		4,883,026		19,974		1.64	%		4,901,345		2,691		0.22	%
Noninterest bearing deposits		2,004,560							2,189,132
Accrued expenses and other liabilities		97,660							100,813
Total liabilities		6,985,246							7,191,290
Tompkins Financial Corporation Shareholders' equity		649,097							637,896
Noncontrolling interest		1,457							1,459
Total equity		650,554							639,355

Total liabilities and equity	$	7,635,800						$	7,830,645
Interest rate spread						2.27	%						3.01	%
Net interest income/margin on earning assets				52,191		2.83	%				58,619		3.09	%

Tax Equivalent Adjustment				(295	)						(357	)
Net interest income per consolidated financial statements			$	51,896						$	58,262

Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)
	Year to Date Period Ended							Year to Date Period Ended
	June 30, 2023							June 30, 2022
	Average							Average
	Balance							Balance					Average
(Dollar amounts in thousands)	(YTD)		Interest					(YTD)		Interest			Yield/Rate
ASSETS
Interest-earning assets
Interest-bearing balances due from banks	$	13,161	$	322		4.93	%	$	110,984	$	105		0.19	%
Securities (1)
U.S. Government securities		2,002,846		14,728		1.48	%		2,299,389		15,108		1.32	%
State and municipal (2)		92,695		1,188		2.58	%		99,602		1,267		2.57	%
Other securities (2)		3,286		110		6.70	%		3,363		51		3.06	%
Total securities		2,098,827		16,026		1.54	%		2,402,354		16,426		1.38	%
FHLBNY and FRB stock		19,998		623		6.29	%		11,172		225		4.06	%
Total loans and leases, net of unearned income (2)(3)		5,278,145		124,744		4.77	%		5,085,808		104,088		4.13	%
Total interest-earning assets		7,410,131		141,715		3.86	%		7,610,318		120,844		3.20	%
Other assets		224,671							259,809
Total assets	$	7,634,802						$	7,870,127
LIABILITIES & EQUITY
Deposits
Interest-bearing deposits
Interest bearing checking, savings, & money market	$	3,767,032	$	19,230		1.03	%	$	4,116,870	$	1,638		0.08	%
Time deposits		710,119		8,596		2.44	%		617,616		2,455		0.80	%
Total interest-bearing deposits		4,477,151		27,826		1.25	%		4,734,486		4,093		0.17	%
Federal funds purchased & securities sold under agreements to repurchase		56,799		29		0.10	%		59,536		31		0.11	%
Other borrowings		325,052		7,111		4.41	%		147,466		1,129		1.54	%
Total interest-bearing liabilities		4,859,002		34,966		1.45	%		4,941,488		5,253		0.21	%
Noninterest bearing deposits		2,034,961							2,149,201
Accrued expenses and other liabilities		99,905							103,451
Total liabilities		6,993,868							7,194,140
Tompkins Financial Corporation Shareholders' equity		639,494							674,545
Noncontrolling interest		1,440							1,442
Total equity		640,934							675,987

Total liabilities and equity	$	7,634,802						$	7,870,127
Interest rate spread						2.41	%						2.99	%
Net interest income/margin on earning assets				106,749		2.90	%				115,591		3.06	%

Tax Equivalent Adjustment				(607	)						(715	)
Net interest income per consolidated financial statements			$	106,142						$	114,876

Tompkins Financial Corporation - Summary Financial Data (Unaudited)

(In thousands, except per share data)
	Quarter-Ended											Year-Ended
Period End Balance Sheet	Jun-23		Mar-23			Dec-22		Sep-22		Jun-22		Dec-22
Securities	$	1,781,150	$	1,899,001		$	1,908,088	$	2,054,036	$	2,204,851	$	1,908,088
Total Loans		5,352,365		5,273,671			5,268,911		5,208,436		5,162,503		5,268,911
Allowance for credit losses		48,545		46,099			45,934		44,772		43,793		45,934
Total assets		7,626,238		7,644,371			7,670,686		7,779,941		7,842,461		7,670,686
Total deposits		6,454,651		6,509,009			6,602,295		6,936,726		6,769,521		6,602,295
Federal funds purchased and securities sold under agreements to repurchase		50,483		63,491			56,278		55,340		50,075		56,278
Other borrowings		387,100		327,000			291,300		101,000		295,600		291,300
Total common equity		634,967		648,322			615,978		571,453		622,843		615,978
Total equity		636,441		649,765			617,390		572,959		624,318		617,390

Average Balance Sheet
Average earning assets	$	7,409,714	$	7,410,553		$	7,568,656	$	7,639,123	$	7,621,588	$	7,607,078
Average assets		7,635,800		7,633,793			7,721,335		7,853,847		7,830,645		7,828,520
Average interest-bearing liabilities		4,883,026		4,834,712			4,828,561		4,861,857		4,901,345		4,892,952
Average equity		650,554		631,208			580,720		635,324		639,354		641,726

Share data
Weighted average shares outstanding (basic)		14,314,133		14,326,595			14,308,323		14,289,022		14,317,415		14,328,280
Weighted average shares outstanding (diluted)		14,346,787		14,389,673			14,385,884		14,367,149		14,387,601		14,404,294
Period-end shares outstanding		14,405,503		14,519,748			14,519,831		14,483,757		14,504,604		14,519,831
Common equity book value per share	$	44.08	$	44.65		$	42.42	$	39.45	$	42.94	$	42.42
Tangible book value per share (Non-GAAP)**	$	37.54	$	38.16		$	35.93	$	32.93	$	36.42	$	35.93
**See "Non-GAAP measures" below for a discussion of non-GAAP financial measures and a reconciliation of non-GAAP financial measures to the most directly comparable financial measures presented in accordance with GAAP.

Income Statement
Net interest income	$	51,896	$	54,246		$	57,294	$	58,111	$	58,262	$	230,281
(Credit) provision for credit loss expense (5)		2,253		(825	)		1,397		1,056		856		2,789
Noninterest income		12,615		20,400			18,351		20,692		18,944		77,972
Noninterest expense (5)		51,968		50,158			50,190		49,602		49,120		195,751
Income tax expense		1,784		5,901			4,478		6,774		6,329		24,557
Net income attributable to Tompkins Financial Corporation		8,475		19,381			19,548		21,340		20,869		85,030
Noncontrolling interests		31		31			32		31		32		126
Basic earnings per share (4)		0.59		1.35			1.36		1.49		1.45		5.92
Diluted earnings per share (4)		0.59		1.35			1.36		1.48		1.45		5.89

Nonperforming Assets
Nonaccrual loans and leases	$	31,333	$	28,424		$	28,289	$	30,013	$	24,665	$	28,289
Loans and leases 90 days past due and accruing		34		13			25		161		62		25
Performing troubled debt restructuring*		0		0			4,530		4,730		4,872		4,530
Total nonperforming loans and leases		31,367		28,437			32,844		34,904		29,599		32,844
OREO		36		36			152		335		122		152
Total nonperforming assets	$	31,403	$	28,473		$	32,996	$	35,239	$	29,721	$	32,996
*No amount shown for periods subsequent to the Company's adoption of ASU 2022-02 effective January 1, 2023.

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

	Quarter-Ended														Year-Ended
Delinquency - Total loan and lease portfolio	Jun-23			Mar-23			Dec-22		Sep-22			Jun-22			Dec-22
Loans and leases 30-89 days past due and accruing	$	20,255		$	5,894		$	3,172	$	3,160		$	9,837		$	3,172
Loans and leases 90 days past due and accruing		34			13			25		161			62			25
Total loans and leases past due and accruing		20,289			5,907			3,197		3,321			9,899			3,197

Allowance for Credit Losses
Balance at beginning of period	$	46,099		$	45,934		$	44,772	$	43,793		$	42,126		$	42,843
Impact of adopting ASC 326		0			64			0		0			0			0
Provision (credit) for credit losses		2,419			(1,180	)		1,352		1,101			780		$	2,499
Net loan and lease (recoveries) charge-offs		(27	)		(1,281	)		190		122			(887	)	$	(592	)
Allowance for credit losses at end of period	$	48,545		$	46,099		$	45,934	$	44,772		$	43,793		$	45,934

Allowance for Credit Losses - Off-Balance Sheet Exposure
Balance at beginning of period	$	3,151		$	2,796		$	2,751	$	2,796		$	2,720		$	2,506
(Credit) provision for credit losses		(166	)		355			45		(45	)		76		$	290
Allowance for credit losses at end of period	$	2,985		$	3,151		$	2,796	$	2,751		$	2,796		$	2,796

Loan Classification - Total Portfolio
Special Mention	$	56,305		$	39,255		$	49,752	$	66,730		$	72,270		$	49,752
Substandard		61,820			46,315			48,537		40,007			42,756			48,537

Ratio Analysis

Credit Quality
Nonperforming loans and leases/total loans and leases	0.59	%	0.54	%	0.62	%	0.67	%	0.57	%	0.62	%
Nonperforming assets/total assets	0.41	%	0.37	%	0.43	%	0.45	%	0.38	%	0.43	%
Allowance for credit losses/total loans and leases	0.91	%	0.87	%	0.87	%	0.86	%	0.85	%	0.87	%
Allowance/nonperforming loans and leases	154.76	%	162.11	%	139.86	%	128.27	%	147.95	%	139.85	%
Net loan and lease losses annualized/total average loans and leases	0.00	%	(0.10	)%	0.01	%	0.01	%	(0.07	)%	(0.01	)%

Capital Adequacy
Tier 1 Capital (to average assets)	9.57	%	9.63	%	9.34	%	9.14	%	9.02	%	9.34	%
Total Capital (to risk-weighted assets)	14.48	%	14.62	%	14.42	%	14.26	%	14.07	%	14.42	%

Profitability (period-end)
Return on average assets *	0.45	%	1.03	%	1.00	%	1.08	%	1.07	%	1.09	%
Return on average equity *	5.22	%	12.45	%	13.36	%	13.33	%	13.09	%	13.25	%
Net interest margin (TE) *	2.83	%	2.99	%	3.02	%	3.04	%	3.09	%	3.05	%
* Quarterly ratios have been annualized

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

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 below tables. The Company believes the non-GAAP measures provide meaningful comparisons of our underlying operational performance and facilitate management's and investors' assessments of business and performance trends in comparison to others in the financial services industry. These non-GAAP financial measures should not be considered in isolation or as a measure of the Company's profitability or liquidity; they are in addition to, and are not a substitute for, financial measures under GAAP. The non-GAAP financial measures presented herein may be different from non-GAAP financial measures used by other companies, and may not be comparable to similarly titled measures reported by other companies. Further, the Company may utilize other measures to illustrate performance in the future. Non-GAAP financial measures have limitations since they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP.

Reconciliation of Tangible Book Value Per Share (non-GAAP) to Common Equity Book Value Per Share (GAAP)
	Quarter-Ended										Year-ended
	Jun-23		Mar-23		Dec-22		Sep-22		Jun-22		Dec-22
Total common equity	$	634,967	$	648,322	$	615,978	$	571,453	$	622,843	$	615,978
Less: Goodwill and intangibles		94,169		94,253		94,336		94,554		94,617		94,336
Tangible common equity (Non-GAAP)		540,798		554,069		521,642		476,899		528,226		521,642
Ending shares outstanding		14,405,503		14,519,748		14,519,831		14,483,757		14,504,604		14,519,831
Tangible book value per share (Non-GAAP)	$	37.54	$	38.16	$	35.93	$	32.93	$	36.42	$	35.93

(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 an effective income tax rate of 21% in 2023 and 2022 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, 2022.

(4) Earnings per share for the full fiscal year may not equal the sum of the quarterly earnings per share as a result of rounding of average shares.

(5) Amounts in prior periods' financial statements are reclassified when necessary to conform to the current period's presentation.

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