Tompkins Financial Corp. Posts First Quarter Earnings

Tompkins Financial Corp. reported net income of $12.6 million for the first quarter of 2014, an increase of 9.2 percent from the $11.5 million reported for the same period in 2013.

In a release on April 25, the Company noted that diluted earnings per share were $0.84 for the first quarter of 2014, a 6.3 percent increase from $0.79 reported for the first quarter of 2013. Prior period results included in this press release were impacted by certain non-recurring items.

President and CEO Stephen S. Romaine said, "We are pleased to start 2014 with the strongest first quarter in our history. In addition to earnings per share growth over the first quarter of 2013, loan and deposit levels increased from the same period last year, and from the most recent prior quarter. At the same time we saw continued improvement in nearly all credit quality indicators."

FIRST QUARTER SELECTED HIGHLIGHTS:

-Net interest income of $40.0 million was up 4.8 percent from the same period last year.

-Annualized return on average equity was 10.88 percent for the quarter ended March 31, compared to 10.53 percent for the same period in 2013.

-Tangible book value per share has increased for the third consecutive quarter, and is up 5.8 percent from the first quarter of 2013. Refer to Non-GAAP disclosure for additional details on tangible book value per share.

-Credit quality improved with non-performing assets representing 0.81 percent of total assets, which is the lowest this percentage has been over the past 20 quarters, and remains well below the most recent peer average of 1.69 percent by the Federal Reserve1.

-Total loans of $3.2 billion were up 7.0 percent over the same period in 2013, and were up an annualized 1.3 percent over year-end 2013.

-The average cost of deposits declined from 0.34 percent in the first quarter of 2013, to 0.28 percent in 2014. Average total deposits for the first quarter of 2014 were $4.0 billion, which is comparable to the same period in 2013.

NET INTEREST INCOME

Net interest income of $40.0 million for the first quarter of 2014 increased 4.8 percent compared to $38.2 million reported for the same period in 2013. Net interest income was down $2.6 million or 6.1 percent from the fourth quarter of 2013. The fourth quarter included higher interest income related to interest collected on the payoff of a nonaccrual loan and a higher level of purchase accounting accretion related to loans paid off during the fourth quarter of 2013. The net interest margin for the first quarter of 2014 was 3.60 percent compared to 3.57 percent for the first quarter of 2013 and 3.78 percent for the fourth quarter of 2013.

NONINTEREST INCOME

Noninterest income was $17.4 million for the first quarter of 2014, which was in line with both the same period prior year and the fourth quarter of 2013. Noninterest income represented 30.3 percent of total revenue for the first quarter of 2014, compared to 31.3 percent for the same period in 2013. Fee based services related to wealth management, deposit fees, and card services fees, were all up from the same period in 2013, while insurance revenues were in line with the prior year period. Other noninterest income was down from the first quarter of 2013, in part due to certain nonrecurring items in the first quarter of 2013. The first quarter of 2014 also saw a decline in realized gains on the sale of securities, when compared to the first quarter of 2013.

NONINTEREST EXPENSE

Noninterest expense was $38.2 million for the first quarter of 2014, up 1.8 percent compared to March 31, 2013, and down 5.1 percent from the fourth quarter of 2013. The increase in noninterest expense compared to the same period prior year is mainly a result of higher salary and wages expense. The decline in noninterest expense when compared to the fourth quarter of 2013 was driven by higher salary and wages in the fourth quarter, which included increased variable compensation accruals, reflecting the Company's strong performance in 2013.

ASSET QUALITY

Asset quality trends improved in nearly all categories during the quarter. Substandard and Special Mention loans declined by $39.5 million from the same period last year, and by $1.6 million from the most recent previous quarter. The percentage of nonperforming loans and leases to total loans and leases improved to 1.11 percent at March 31, compared to 1.24 percent reported at March 31, 2013.

Provision for loan and lease losses was $743,000 for the first quarter of 2014, which was an improvement of 28.4 percent compared to the first quarter of 2013. Net loan and lease charge-offs totaled $699,000 in the first quarter of 2014, down from $1.0 million in the first quarter of 2013.

The Company's allowance for originated loan and lease losses totaled $26.7 million at March 31, which represented 1.04 percent of total originated loans, compared to 1.11 percent at March 31, 2013 and 1.06 percent at year-end 2013. The allowance for loan and lease losses covered 78.88 percent of nonperforming loans and leases as of March 31, compared to 66.16 percent at March 31, 2013 and 71.65 percent at year-end 2013.

CAPITAL POSITION

Capital ratios remain well above the regulatory well capitalized minimums. Tier 1 capital to average assets improved for the fifth consecutive quarter, to 8.68 percent at March 31, and the ratio of total capital to risk-weighted assets was 13.68 percent.

Tompkins Financial Corp. is a financial services company.

More Information:

www.tompkinsfinancial.com

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