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Tompkins Financial Corporation reported record diluted earnings per share of $3.48 for the year ended December 31, 2014, up from $3.46 per share reported in 2013.  The Company reported diluted earnings per share of $0.85 for the fourth quarter of 2014, down from the $0.96 reported for December 31, 2013.  Both quarterly and year-to-date results in 2013 included non-recurring income and expense items, which are more fully described in the non-GAAP disclosure tables included in this press release.

Adjusting for these non-recurring items, diluted earnings per share for the year ended December 31, 2014, reflected an increase of 3.6% over 2013; while diluted earnings per share for the quarter ended December 31, 2014, reflected a decrease of 6.6% from the same period in 2013.

President and CEO, Stephen S. Romaine said "We are excited to report on another record year of earnings for our Company.  These results were achieved through a combination of factors that included revenue growth from both Net Interest Income and Noninterest Income.  The current year results also benefited from improved credit quality trends that contributed to a reduced provision for loan and lease losses.  Nonperforming assets have improved for five consecutive quarters".

Selected Highlights For Fourth Quarter:

• Credit quality continues to improve with nonperforming asset down 11.8% compared to the most recent quarter end, and down 34.7% compared to December 31, 2013.
• Year end loan balances were up 6.2% over December 31, 2013 and are up 4.2% over the most recent quarter end.
• Average noninterest bearing deposits were up 12.1% as compared to the prior year, and are up 5.3% for the quarter as compared to the most recent quarter.
•  Year-to-date provision expense was down 62.6% compared to 2013, with year-to-date net charge offs down 54.9% from the prior year.
• Fee based income from insurance, investment services, and deposit service charges were all up from the same quarter last year, and were up a combined 3.6% for the full year.
• Tangible book value per share is up 8.4% from the fourth quarter of 2013. Refer to Non-GAAP disclosure for additional details on tangible book value per share.

Net Interest Income

Net interest income was $41.7 million for the fourth quarter of 2014, an increase of 0.3% over the most recent quarter and a decrease of 2.2% when compared to the same quarter in 2013.  Year-to-date net interest income of $163.8 million was up 1.7% compared to net interest income of $161.1 million reported for the same period in 2013.  Improved year-to-date net interest income was achieved mainly as a result of growth in average loans (up 6.1% from 2013) and average noninterest bearing deposits (up 12.1% from 2013).  The net interest margin for the fourth quarter of 2014 was 3.53%, compared to 3.58% for the prior quarter end, and 3.78% for the same period in 2013.

Noninterest Income

Noninterest income was $18.1 million for the fourth quarter of 2014, and $70.8 million year-to-date, up 3.5% and 1.2%, respectively, compared to December 31, 2013.  For the year-to-date period noninterest income represented 30.2% of total revenue which was in line with the same period in 2013.

Fee based revenue increased year-over-year with insurance revenues up 2.1%, investment revenue up 2.5%, deposit fee revenue up 10.7%, and card servicing revenue up 10.1%.  Revenue related to the fee based business areas represented 26.1% of total revenues, compared to 25.4% for 2013.

Noninterest Expense

Noninterest expense was $39.0 million for the fourth quarter of 2014, down 3.1% compared to the fourth quarter of 2013.  For the year-to-date period, noninterest expense was up 1.0% from the same period in 2013.  The slight decrease in noninterest expense compared to the prior quarter is mainly due to the decrease in salary and wage expense.

Asset Quality

Asset quality trends continue to improve with nonperforming assets down 11.8% compared to prior quarter end, and down 34.7% compared to December 31, 2013.  The percentages of nonperforming assets to total assets of 0.54% were down compared to prior quarter end and prior year end percentages of 0.63% and 0.87%, respectively.  Nonperforming assets levels have shown improvement for 23 consecutive quarters and remain well below the most recent peer average of 1.39% reported by the Federal Reserve1.  Substandard and Special Mention loans were $83.6 million at December 31, 2014, down from $85.4 million at the most recent prior quarter end and $128.3 million at the same quarter end last year.  Provision expense for loan and lease losses for the year-to-date period was down 62.6% compared to the 2013 year-to-date period, mainly a result of the asset quality improvements.

The Company's allowance for originated loan and lease losses totaled $28.2 million at December 31, 2014, which represented 0.99% of total originated loans, compared to $26.7 million or 1.06% at December 31, 2013 and $27.2 million or 1.02% at September 30, 2014.  The increase in the allowance when compared to the same period last year was primarily a result of loan growth and was partially offset by improved asset quality.  The allowance for loan and lease losses covered 128.4% of nonperforming loans and leases as of December 31, 2014, up from 71.7% at December 31, 2013 and 108.9% at the most recent prior quarter.

Capital Position

Capital ratios remain well above the regulatory well capitalized minimums.  Tier 1 capital to average assets was 8.75% at December 31, 2014, compared to 8.52% reported for the same period prior year.  The ratio of total capital to risk-weighted assets was 13.60% at December 31, 2014, up from 13.42% at December 31, 2013.

Tompkins Financial Corporation also announced Wednesday that its Board of Directors approved payment of a regular quarterly cash dividend of $0.42 per share, payable on February 17, 2015, to common shareholders of record on February 9, 2015.

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