EX-99.1 2 q22023pressrelease.htm EX-99.1
For more information contact:
Stephen S. Romaine, President & CEO
Francis M. Fetsko, Executive VP, CFO & COO
Tompkins Financial Corporation (888) 503-5753
For Immediate Release
Friday, July 21, 2023
Tompkins Financial Corporation Reports Second Quarter Earnings
ITHACA, NY - Tompkins Financial Corporation (NYSE American: 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.