Tompkins Financial Corporation Reports Improved First Quarter Financial Results

Tompkins Financial Corporation Reports Improved First Quarter Financial Results
 
ITHACA, NY - Tompkins Financial Corporation (NYSE American: TMP)
Tompkins Financial Corporation ("Tompkins" or the "Company") reported diluted earnings per share of $1.37 for the first quarter of 2025, unchanged from the immediate prior quarter, and up 16.1% from diluted earnings per share of $1.18 reported in the first quarter of 2024.
 
Net income for the first quarter of 2025 was $19.7 million, in line with the immediate prior quarter, and up 16.6% from the $16.9 million reported for the same period in 2024. The increase in net income from the first quarter of 2024 was mainly a result of higher net interest income, driven by increased interest income on loans, stabilized funding costs, and growth in fee-based revenues and other income, partially offset by higher provision for credit loss expense.
 
Tompkins President and CEO, Stephen Romaine, commented, "Our first quarter earnings continued the positive momentum from 2024. Our improved results were driven by growth in net interest income, noninterest income, and increased loan and deposit balances as compared to the first and fourth quarters of 2024. As we begin the year with new economic uncertainty, we believe that we remain well positioned with a strong balance sheet. We are committed to supporting our local communities and driving growth through building quality customer relationships."
 
SELECTED HIGHLIGHTS FOR THE PERIOD:

• Net interest margin for the first quarter of 2025 was 2.98%, improved from 2.93% for the immediate prior quarter, and 2.73% for the first quarter of 2024.

• Total average cost of funds of 1.84% for the first quarter of 2025 was down 4 basis points compared to the fourth quarter of 2024, and down 2 basis points compared to the same period last year, as a result of funding mix and lower interest rates.

• Provision expense for the first quarter of 2025 was $5.3 million, compared to $1.4 million for fourth quarter of 2024 and $854,000 for the first quarter of 2024. The provision is discussed below under Asset Quality.

• Total fee-based services revenues (revenue from insurance, wealth management, and service charges on deposit accounts and cards services) for the first quarter of 2025 were up $1.2 million or 6.1% compared to the first quarter of 2024.

• Other income for the first quarter of 2025 included a $1.9 million gain on the sale of other real estate owned.

• Total loans at March 31, 2025 were up $46.7 million, or 0.8% compared to December 31, 2024 (3.1% on an annualized basis), and up $426.1 million, or 7.6%, from March 31, 2024.

• Total deposits at March 31, 2025 were $6.8 billion, up $281.7 million, or 4.4%, from December 31, 2024 (17.4% on an annualized basis), and up $303.9 million, or 4.7%, from March 31, 2024.

• Loan to deposit ratio at March 31, 2025 was 89.8%, compared to 93.0% at December 31, 2024, and 87.5% at March 31, 2024.

• Regulatory Tier 1 capital to average assets was 9.31% at March 31, 2025, up compared to 9.27% at December 31, 2024, and 9.08% at March 31, 2024.

 
NET INTEREST INCOME
Net interest income was $56.7 million for the first quarter of 2025, up $381,000 or 0.7% compared to the fourth quarter of 2024, and up $6.0 million or 11.8% compared to the first quarter of 2024. The increase in net interest income compared to both periods was due to improvement in net interest margin, which is discussed below, and growth in average loans.
 
Net interest margin was 2.98% for the first quarter of 2025, up 5 basis points when compared to the immediate prior quarter, and up 25 basis points from 2.73% for the first quarter of 2024. The increase in net interest margin, when compared to the most recent prior quarter, was mainly due to lower funding costs reflecting a decrease in average deposit and borrowing rates. The increase in net interest margin when compared to the prior year period was mainly a result of higher yields on average interest earning assets and higher average loan balances, and lower funding costs resulting from improved funding mix.
 
Average loans for the quarter ended March 31, 2025 were up $93.6 million, or 1.6%, from the fourth quarter of 2024, and were up $403.8 million, or 7.2%, compared to the prior year period. The increase in average loans over both prior periods was mainly in the commercial real estate and commercial and industrial portfolios. The average yield on interest-earning assets for the quarter ended March 31, 2025 was 4.69%, a slight increase from 4.67% for the quarter ended December 31, 2024, and up 22 basis points from 4.47% for the quarter ended March 31, 2024.
 
Average total deposits of $6.6 billion for the first quarter of 2025 were up $38.5 million, or 0.6%, compared to the fourth quarter of 2024, and up $254.2 million, or 4.0%, compared to the first quarter of 2024. The cost of interest-bearing deposits of 2.23% for the first quarter of 2025 was down 8 basis points from 2.31% for the fourth quarter of 2024, and up 6 basis points from 2.17% for the first quarter of 2024. The ratio of average noninterest bearing deposits to average total deposits for the first quarter of 2025 was 26.9% compared to 28.0% for the fourth quarter of 2025, and 28.8% for the first quarter of 2024. The average cost of interest-bearing liabilities for the first quarter of 2025 of 2.44% represents a decrease of 9 basis points over the fourth quarter of 2024, and a decrease of 7 basis points compared to the same period in 2024.
 
NONINTEREST INCOME
Noninterest income of $25.0 million for the first quarter of 2025 was up $2.9 million or 13.1% compared to the first quarter of 2024. The increase in quarterly noninterest income when compared to the first quarter of 2024 was mainly due to other income which included a $1.9 million gain on the sale of other real estate owned. Also contributing to the increase in noninterest income were fee based revenues, which included insurance commissions and fees, up $1.3 million or 13.1%; and wealth management fees, up $182,000 or 3.7%; which were partially offset by lower card services income, down $313,000 or 10.6%. Card services income in the first quarter of 2024 included a $255,000 sign-on bonus related to the renewal of a card services contract.
 
NONINTEREST EXPENSE
Noninterest expense was $50.6 million for the first quarter of 2025, up $750,000 or 1.5% compared to the first quarter of 2024. Contributing to the year-over-year increase was salaries and wages and other employee benefits, up $969,000 or 3.1%. The increase in noninterest expense was partially offset by a decrease of $325,000 or 5.7% in net occupancy expense of premises and furniture and fixture expense.
 
INCOME TAX EXPENSE
The provision for income tax expense of $6.1 million for an effective rate of 23.7% for the first quarter of 2025, compared to tax expense of $6.0 million for an effective rate of 23.5% for the fourth quarter of 2024, and $5.2 million and an effective rate of 23.5% for the same quarter in 2024.
 
ASSET QUALITY
The allowance for credit losses represented 1.01% of total loans and leases at March 31, 2025, up from 0.94% at year-end 2024, and from 0.92% reported at March 31, 2024. The increase in the allowance for credit losses coverage ratio over prior quarter end and the end of the prior year first quarter was mainly driven by specific reserves on individually analyzed nonaccrual commercial real estate credits and updates to economic forecasts for unemployment and GDP. These were partially offset by lower qualitative reserves related to asset quality. A specific reserve of $4.2 million was added to one commercial real estate relationship totaling $18.1 million. The specific reserve reflects the estimated decrease in fair value of the collateral based on a new appraisal received at the end of the quarter which is currently under internal review. The property currently generates positive cash flow and a majority of it is tenant occupied. The ratio of the allowance to total nonperforming loans and leases was 85.85% at March 31, 2025, compared to 111.06% at December 31, 2024, and 82.47% at March 31, 2024. The decrease in the ratio compared to the prior quarter end was due to the increase in nonperforming loans and leases, discussed in more detail below.
 
Provision for credit losses for the first quarter of 2025 was $5.3 million compared to $854,000 for the first quarter of 2024. The increase in provision expense for the first quarter of 2025 was mainly due to the previously discussed specific reserve on one commercial real estate relationship, and updated economic forecasts. Net charge-offs for the three months ended March 31, 2025 were $733,000, compared to $857,000 for the fourth quarter of 2024, and $228,000 for the same period in 2024.
 
Nonperforming assets of $71.2 million represented 0.87% of total assets at March 31, 2025, up from $65.2 million or 0.80% at December 31, 2024, and $62.7 million or 0.81% at March 31, 2024. The increase in nonperforming assets at March 31, 2025 compared to December 31, 2024 was largely due to the addition of one commercial real estate loan for $17.3 million that was previously included in loans past due 30-89 days being moved into nonperforming loans and leases during the quarter, and was partially offset by the sale of other real estate owned of $14.3 million. The Company believes that the existing collateral securing this $17.3 million loan is sufficient to cover the exposure as of March 31, 2025. At March 31, 2025, nonperforming loans and leases totaled $71.1 million, compared to $50.9 million at December 31, 2024, and $62.7 million at March 31, 2024. Loans past due 30-89 days totaled $12.3 million at March 31, 2025, $28.8 million at December 31, 2024, and $8.0 million at March 31, 2024.
 
Special Mention and Substandard loans and leases totaled $110.8 million at March 31, 2025, compared to $111.1 million reported at December 31, 2024, and $118.7 million reported at March 31, 2024.
 
CAPITAL POSITION
Capital ratios at March 31, 2025 remained well above the regulatory minimums for well-capitalized institutions. The ratio of total capital to risk-weighted assets was 13.28% at March 31, 2025, compared to 13.07% at December 31, 2024, and 13.43% at March 31, 2024. The ratio of Tier 1 capital to average assets was 9.31% at March 31, 2025, compared to 9.27% at December 31, 2024, and 9.08% at March 31, 2024.
 
LIQUIDITY POSITION
The Company's liquidity position at March 31, 2025 was stable and consistent with the immediate prior quarter end. Liquidity is enhanced by ready access to national and regional wholesale funding sources including Federal funds purchased, repurchase agreements, brokered deposits, Federal Reserve Bank's Discount Window advances and Federal Home Loan Bank (FHLB) advances. The Company maintained ready access to liquidity of $1.5 billion, or 18.6% of total assets, at March 31, 2025.
 
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 and Tompkins Insurance Agencies, Inc. Tompkins Community Bank provides a full array of wealth management services under the Tompkins Financial Advisors brand, including investment management, trust and estate, financial and tax planning services. 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", "commit", or "anticipate", as well as the negative and other variations of these terms and other similar words. Examples of forward-looking statements may include statements regarding the sufficiency of existing collateral to cover exposure related to nonperforming loans and future growth. Forward-looking statements are made based on management’s expectations and beliefs concerning future events impacting the Company and are subject to 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 Report 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 and historical performance: changes in general economic, market and regulatory conditions; our ability to attract and retain deposits and other sources of liquidity; gross domestic product growth and inflation trends; 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, including the Dodd-Frank Act, and other federal, state and local government mandates; 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; increased supervisory and regulatory scrutiny of financial institutions; technological developments and changes; cybersecurity 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; the ability to access financial resources in the amounts, at the times, and on the terms required to support the Company's future businesses; and the economic impact, including market volatility, of national and global events, including the response to bank failures, war and geopolitical matters (including the war in Israel and surrounding regions and the war in Ukraine), tariffs and trade wars, widespread protests, civil unrest, political uncertainty, and pandemics or other public health crises. The Company does not undertake any obligation to update its forward-looking statements.