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Tompkins Financial Corporation (NYSEMKT:TMP) Tompkins Financial Corporation reported diluted earnings per share of $0.96 for the third quarter of 2015, representing the best third quarter in Company history and an increase of 4.35% over $0.92 reported for the third quarter of 2014.  Net income of $14.5 million for the third quarter of 2015, was up 5.6% from the $13.7 million reported for the same period in 2014.

For the year-to-date period ended September 30, 2015, diluted earnings per share were $2.96, reflecting an increase of 12.1% over the $2.64 reported for September 30, 2014.  Year to date net income was $44.6 million, an increase of 13.3% from the $39.4 million reported for the same period in 2014.  Year to date results were helped by a one-time curtailment gain of $3.6 million after tax ($0.24 per share), recognized in the second quarter of 2015, related to changes to the Company's pension plan.

If this gain was excluded from current year to date net income, diluted earnings per share would have been $2.72. The impact of this non-recurring item on the Company's financial statements is more fully detailed in the non-GAAP disclosure tables included with this press release.

President and CEO, Stephen S. Romaine said "We are very pleased to report on record earnings performance for the third quarter of 2015.  Continued growth in loans and deposits contributed to our success during the quarter, as earnings improved despite the challenging interest rate environment that continues to pressure net interest margin."

Selected Highlights For Third Quarter:

• Return on average equity was 11.29% for the quarter, up from 11.11% for the third quarter of 2014.
• Net interest income of $42.4 million was up 2.0% compared to the third quarter of 2014.
• Total loans of $3.6 billion were up 11.6% over September 30, 2014.
• Noninterest-bearing deposits of $1.1 billion were up 14.5% over the same period in 2014.
• Tangible book value per share increased 6.8% from the third quarter of 2014. Refer to Non-GAAP disclosure for additional details on tangible book value per share.

Net Interest Income

Net interest income of $42.4 million for the third quarter of 2015 reflected an increase of 2.0% when compared to the same period in 2014, despite a decline in net interest margin to 3.35% in the current period, down from 3.58% for the third quarter of 2014.  Offsetting the decline in net interest margin was solid balance sheet growth, which included a 10.3% increase in average loans from the same quarter last year, and a 13.7% increase in average noninterest-bearing deposits over the same period.  

For the year-to-date period, net interest income of $124.9 million was up 2.3% from the prior year, while net interest margin declined to 3.39% in 2015, compared to 3.58% in 2014.

Noninterest Income

Noninterest income was $17.4 million for the third quarter of 2015, and was in line with same period in 2014.  Year-to-date noninterest income of $54.0 million was 2.5% ahead of the $52.7 million reported for September 30, 2014, and included gains on the sale of other real estate owned totaling $924,000 for 2015.

Noninterest income represented 29.1% of total revenue for the third quarter of 2015, compared to 29.7% for the same period in 2014.  For the year-to-date period ending September 30, 2015, noninterest income represented 30.2% of total revenue, which was in line with the same period in 2014.

Noninterest Expense

Noninterest expense was $37.9 million for the third quarter of 2015, down 1.7% compared to the third quarter of 2014.  For the year-to-date period, noninterest expense was down 4.5% from the same period in 2014.  The decrease in noninterest expense for the year-to-date period was mainly due to a $6.0 million gain on a pension plan curtailment recorded in the third quarter of 2015.  The curtailment gain is related to a freeze of the Company’s defined benefit pension plan, which has been replaced with a more flexible defined contribution pension plan.

Asset Quality

Asset quality remains strong in the third quarter of 2015.  Nonperforming assets as a percentage of total assets represented 0.47% at September 30, 2015, down from 0.63% at September 30, 2014. Despite a modest increase from the 0.44% reported for the immediate prior quarter, the ratio remains well below the most recent Federal Reserve Board Peer Group Average1 of 0.80%.  Additionally, substandard and special mention loans declined by $15.2 million from the same period last year, and by $628,000 from the previous quarter.

Provision for loan and lease losses was $281,000 for the third quarter of 2015, up $340,000 from the negative provision of $59,000 reported for third quarter of 2014.  The increased provision expense over the third quarter of 2014 is primarily due to growth in the loan portfolio.

The Company’s allowance for loan and lease losses totaled $31.0 million at September 30, 2015.  The allowance represented 0.97% of total originated loans at September 30, 2015, compared to 0.99% at year-end 2014.  The allowance for loan and lease losses covered 133.18% of nonperforming loans and leases as of September 30, 2015, compared to 128.43% at year-end 2014.

Capital Position

Capital ratios remain well above the regulatory well capitalized minimums.  Tier 1 capital to average assets of 8.89% is up from 8.75% at December 31, 2014.  The ratio of tangible common equity to tangible assets (refer to Non-GAAP disclosures) improved to 7.51%, up from 7.40% reported at December 31, 2014

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