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Tompkins Financial Corporation announced that its Board of Directors approved payment of a regular quarterly cash dividend of $0.52 per share, payable on November 15, 2019, to common shareholders of record on October 29, 2019. The current dividend represents a 4.0% increase over the $0.50 cash dividend paid in the third quarter of 2019.

The company also reported diluted earnings per share of $1.34 for the third quarter of 2019, down 1.5% from the $1.36 per share reported for the same quarter last year. Net income was $20.2 million for the third quarter of 2019, down from the $20.9 million reported for the same period in 2018.

For the year-to-date period ended September 30, 2019, diluted earnings per share were $3.97, down 3.6% from the $4.12 per share reported for the same period in 2018. Year-to-date net income was $60.6 million for the period ended September 30, 2019, a decrease of $2.8 million from the same period in 2018.

President and CEO, Stephen S. Romaine said "Despite earnings being down slightly from the prior year, the quarter saw improvement over the second quarter of 2019 in terms of net interest margin, returns on equity and diluted earnings per share. Solid growth in deposits and reduced borrowing costs contributed to the overall improvement from the second quarter, as did higher revenue from insurance and wealth management businesses."

SELECTED HIGHLIGHTS FOR THE THIRD QUARTER:

Total loans of $4.9 billion were up 1.1% over total loans at September 30, 2018 Total deposits of $5.4 billion reflect an increase of 6.9% over the same period last year Net interest margin was 3.43% for the third quarter of 2019, up from 3.34% for the second quarter of 2019, and up from 3.35% for the same quarter last year Return on average equity was 12.15% for the third quarter of 2019, up from 11.96% for the second quarter of 2019, and down from 13.89% for the same quarter last year

NET INTEREST INCOME

Net interest income was relatively flat compared to the same quarter and year-to-date periods in 2018. Third quarter 2019 net interest income was $53.2 million, unchanged from the same quarter last year. Net interest income for the third quarter reflected an increase over the second quarter of 2019, driven largely by lower funding costs, which benefited from lower market interest rates, the paydown of borrowings, and growth in noninterest-bearing deposits. The net interest margin for the third quarter of 2019 was 3.43%, compared to 3.34% for the second quarter of 2019, and 3.35% reported for the third quarter of 2018.

Year-to-date net interest income of $157.4 million was down compared to the $158.6 million reported for the same period last year. Year-to-date yield on interest-earning assets of 4.21% in 2019 was up from 3.96% for the same period last year. Average loans were up $75.9 million, or 1.6% in the first nine months of 2019, compared to the same period in 2018. Average total deposits were up $169.0 million, or 3.5% in the first nine months of 2019, versus the same period in 2018. Average noninterest-bearing deposits for the first nine months of 2019 were up $14.2 million or 1.0% compared to the same period in 2018. The average rate paid on interest-bearing deposits increased 42 basis points in the first nine months of 2019, compared to the same period in 2018.

NONINTEREST INCOME

Noninterest income for the third quarter of 2019 was up 5.0% compared to the same period last year. Noninterest income represented 26.7% of total revenues in the first nine months of 2019, compared to 26.6% in the same period in 2018. Fee income associated with insurance, wealth management, deposit services, and card services were all up over the same quarter last year, with a combined increase of $903,000, or 5.5%.

NONINTEREST EXPENSE

Noninterest expense was $45.7 million for the third quarter of 2019, up $522,000, or 1.2%, over the third quarter of 2018. For the year-to-date period, noninterest expense was $135.9 million, up $2.1 million, or 1.6%, from the same period in 2018. The increase in noninterest expense for both the third quarter and year-to-date periods reflects normal annual increases in salaries and wages. Current quarter other operating expense was reduced by deposit insurance credits received from the FDIC, which included $1.2 million that were applied during the third quarter of 2019.

INCOME TAX EXPENSE

The Company's effective tax rate was 21.3% in the third quarter of 2019, compared to 20.6% for the same period in 2018.


ASSET QUALITY

Asset quality trends remained strong in the third quarter of 2019, despite an increase in nonperforming assets during the third quarter of 2019. Nonperforming assets represented 0.47% of total assets at September 30, 2019, compared to 0.42% at December 31, 2018, and 0.39% at September 30, 2018. Nonperforming asset levels remain below the most recent Federal Reserve Board Peer Group Average1 of 0.60%.

Provision for loan and lease losses was $1.3 million for the third quarter of 2019, compared to $272,000 for the third quarter of 2018. Net charge-offs for the third quarter of 2019 were $739,000 compared to $139,000 reported in the third quarter of 2018.

The Company's allowance for originated loan and lease losses totaled $41.2 million at September 30, 2019, and represented 0.89% of total originated loans and leases at September 30, 2019, up from 0.88% for the most recent prior quarter, and down from 0.91% at September 30, 2018. The total allowance represented 137.46% of total nonperforming loans and leases at September 30, 2019, compared to 163.25% at December 31, 2018, and 169.00% at September 30, 2018.

CAPITAL POSITION

Capital ratios remain well above the regulatory well capitalized minimums. The ratio of Tier 1 capital to average assets was 9.43% at September 30, 2019, improved from 9.25% reported for the quarter ended June 30, 2019, and 8.89% reported for September 30, 2018.

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