Tompkins Financial Reports 2021 Results

INTEREST-FREE INCOME
Non-interest revenue represented 24.9% of total revenue in the fourth quarter of 2021, compared to 24.6% in the same period in 2020. Non-interest revenue of $19.2 million for the fourth quarter of 2021 increased 1.7% compared to the same period in 2020. For the full year, non-interest revenue of $78.8 million increased 6.8% from compared to 2020. Compared to the prior year, 2021 insurance revenue increased by $3.3 million, or 10.6%, benefiting from new business growth and higher rates premium for commercial and personal insurance policies. Investment Services experienced revenue growth of $1.9 million, or 10.7%, benefiting from successful business development efforts as well as increased asset value charges in existing accounts. Card services revenue increased by $1.6 million, or 16.9%, and was largely attributable to customer spending activities which increased with improving economic conditions as restrictions related to the pandemic have eased.

NON-INTEREST EXPENSES
Non-interest expense was $48.2 million for the fourth quarter of 2021, up $1.5 million, or 3.3%, from the fourth quarter of 2020. full year, non-interest expense was $190.3 million, up $6.0 million, or 3.2%, from 2020. 2021 year-to-date includes $2.9 million in penalties related to the prepayment of $135.0 million in fixed rate advances from FHLB. Normal annual salary and wage increases, which increased $3.5 million or 3.8% from 2020, also contributed to the increase in non-interest expense for the year ended December 31, 2021.

INCOME TAX BURDEN
The Company’s effective tax rate was 21.7% for the fourth quarter of 2021, compared to 20.4% for the same period in 2020. The effective tax rate for the year ended December 31, 2021 was 22.0%, compared to 20.4% reported for 2020. The increase in the effective tax rate for the three months and year ended December 31, 2021 compared to the same periods in 2020 is due to a level higher taxable income compared to total income.

ASSET QUALITY
Improved credit quality and improving macroeconomic trends contributed to a decrease in the allowance for credit losses at December 31, 2021 compared to December 31, 2020. The allowance for credit losses was 0.84% ​​of the total loans and leases as of December 31, 2021, down from 0.91% as of September 30, 2021 and 0.98% as of December 31, 2020. The ratio of provision to total loans and leases past due s stands at 137.49% as of December 31, 2021, up from 76.15% as of September 30, 2021 and 112.87% as of December 31, 2020.

Provision for credit loss for the fourth quarter of 2021 was $3.9 million, compared to a credit of $205,000 for the same period in 2020. The provision charge for the year ended December 31, 2021 was a credit of $2.2 million, compared to a charge of $17.2 million for 2020. Provision for credit losses in 2020 included a provision charge of $16.8 million in the first quarter related to the impact economic conditions related to COVID-19. Net write-offs for the fourth quarter of 2021 were $7.0 million, compared to net write-offs of $630,000 reported in the fourth quarter of 2020. The fourth quarter of 2021 included a write-off of $7.0 million from a commercial real estate relationship that had previously flagged in nonperforming loans.

Non-performing assets represented 0.40% as of December 31, 2021, compared to 0.75% as of September 30, 2021 and 0.60% as of December 31, 2020. As of December 31, 2021, non-performing loans and leases totaled 31.2 million dollars, compared to 60.7 million dollars in September. December 30, 2021 and $45.8 million as of December 31, 2020.

Special mention and non-standard loans and leases totaled $137.6 million as of December 31, 2021, reflecting an improvement from $168.5 million as of September 30, 2021 and $189.9 million as of December 31, 2021. December 2020.

As previously announced, the Company has implemented a payment deferral program in 2020 to assist retail and business borrowers who may experience financial hardship due to COVID-19. As of December 31, 2021, total loans that continued in deferred status were approximately $4.5 million, representing 0.09% of total loans. As of December 31, 2020, total loans in deferred status were $212.2 million.

The Company began accepting PPP loan applications on April 3, 2020 and had funded 2,998 loans totaling approximately $465.6 million by the end of the initial program. On January 19, 2021, the Company began accepting first-draw and second-draw applications for the reopening of the PPP program. Funding for the 2021 PPP program closed for new applications on May 12, 2021. The Company funded 2,142 applications totaling $228.5 million in 2021.

Of the total $694.1 million in PPP loans the Company has funded, approximately $620.2 million has been canceled by the SBA under the program as of December 31, 2021. The total net deferred charges on the outstanding balance of PPP loans was $3.0. million as of December 31, 2021.

CAPITAL SITUATION
Capital ratios as of December 31, 2021 remained well above regulatory minimums for well capitalized institutions. The ratio of total capital to risk-weighted assets was 14.23% as of December 31, 2021, compared to 14.21% as of September 30, 2021 and 14.39% as of December 31, 2020. The Tier 1 capital ratio on average assets was 8.72% as of December 31, 2021, compared to 8.54% as of September 30, 2021 and 8.75% as of December 31, 2020.

During the fourth quarter of 2021, the Company repurchased 32,203 common shares at a total cost of $2.6 million. These shares were purchased under the company’s share buyback program announced in the third quarter of 2021. In 2021, the company repurchased 304,513 shares at a total cost of $23.8 million.

Mr. Romaine added: “We are delighted to announce that effective January 1, 2022, our four community banks have been consolidated into one charter. While we expect the change to be largely transparent to our customers, it will allow us to better leverage the Tompkins brand in all of our markets. We also anticipate operational efficiencies from change and will be better able to leverage product and technology improvements to benefit customers across our footprint. The combined bank will operate under the “Tompkins” brand. name, with a legal name of “Tompkins Community Bank”.

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 Pennsylvania region. Based in Ithaca, NY, Tompkins Financial is the parent company of Tompkins Community Bank, Tompkins Insurance Agencies, Inc., and offers wealth management services through Tompkins Financial Advisors. For more information about 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. Forward-looking statements are neither historical facts nor guarantees of future performance. Forward-looking statements can be identified by the use of words such as “may”, “will”, “estimate”, “intend”, “continue”, “believe”, “expect”, ” plan” or “anticipate”, and similar words. Forward-looking statements are made based on management’s expectations and beliefs regarding future events affecting the Company and are subject to certain uncertainties and factors relating to the Company’s business and economic environment, all of which are difficult to predict and many of which are out of control. of the Company, which could cause the actual results of the Company to differ materially from those expressed and/or implied by the forward-looking statements. The following factors, in addition to those listed as risk factors in Item 1A of our annual reports on Form 10-K and our quarterly reports on Form 10-Q filed with the Securities and Exchange Commission, are among those that could cause actual results to differ materially from forward-looking statements: changes in general economic, market and regulatory conditions; the continuing dynamic nature of the COVID-19 pandemic and the impact of COVID-19 (including government responses thereto), including the development and proliferation of variants such as Delta and Omicron, on economic and financial markets, potential regulatory actions and changes to our operations, products and related services; disruptions to our and our customers’ operations and loss of revenue due to pandemics, epidemics, widespread health emergencies, government-imposed travel/business restrictions or outbreaks of infectious diseases such as the coronavirus, and the associated adverse impact on our financial condition, liquidity and the ability of our customers to repay their obligations to us or their desire to obtain financial services products from the Company; the development of an interest rate environment that could adversely affect the Company’s interest rate spread, other income or cash flows expected from operating, investing and/or Company loan; changes in laws and regulations affecting banks, bank holding companies and/or financial holding companies, such as the Dodd-Frank Act, Basel III and the Economic Growth, Regulatory Relief and Consumer Protection Act; legislative and regulatory changes in response to COVID-19 with which we and our subsidiaries must comply, including the CARES Act and the Consolidated Appropriations Act of 2021 and the rules and regulations promulgated thereunder, as well as the state and local government mandates; technological developments and changes; the ability to continue to introduce new competitive products and services on a timely and cost-effective basis; changes in governmental and public policies, including environmental regulations; reliance on large customers; uncertainties arising from national and global events, including the potential impact of widespread protests, civil unrest and political uncertainty on the economy and the financial services industry; and financial resources in the amounts, at the times and on the terms necessary to support the future activities of the Company. The Company undertakes no obligation to update its forward-looking statements.

Marianne R. Winn