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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 February 18, 2020, to common shareholders of record on February 10, 2020. The current dividend represents a 4.0% increase over the $0.50 cash dividend paid in the first quarter of 2019.

The company reported record diluted earnings per share of $5.37 for the full year of 2019, an increase of 0.4% compared to the $5.35 per share reported for the twelve-month period ended December 31, 2018. For the fourth quarter of 2019, diluted earnings per share of $1.40 were up 13.8% over the $1.23 per share reported in the same quarter of 2018.

President and CEO, Stephen S. Romaine said, “We are pleased to report record earnings per share for the year ended December 31, 2019. When compared to the third quarter of 2019, the fourth quarter of 2019 benefited from growth in average loans and deposits, along with a slight improvement in net interest margin. Credit quality remains strong, and during the quarter we saw improving trends in classified and criticized credits.”


SELECTED HIGHLIGHTS FOR THE FOURTH QUARTER:

• Total loans of $4.9 billion were up 1.7% over total loans at December 31, 2018.
• Total deposits of $5.2 billion reflect an increase of 6.6% over the prior year end.
• Noninterest bearing deposits of $1.5 billion increased by 4.2% over December 31, 2018.
• Net interest margin was 3.44% for the fourth quarter of 2019, up from 3.34% reported for the fourth quarter of 2018, and up from 3.43% for the third quarter of 2019.
• Return on average equity was 12.59% for the fourth quarter of 2019, up from the 12.38% reported for the quarter ended December 31, 2018, and up from 12.15% for the third quarter of 2019.

NET INTEREST INCOME

Net interest income of $53.2 million for the fourth quarter of 2019 was unchanged from the same quarter of the prior year. The net interest margin for the fourth quarter of 2019 was 3.44%, compared to 3.34% reported for the quarter ended December 31, 2018, and 3.43% for the third quarter of 2019. When compared to the third quarter of 2019, the fourth quarter of 2019 saw lower yields on earning assets that were offset by lower funding costs.

For the full year ended December 31, 2019, net interest income of $210.6 million, was down 0.6% from the prior year. The impact of an improved net interest margin in 2019 was slightly offset by average balances in the securities portfolio, which were down $132.1 million or 8.6%.

NONINTEREST INCOME

Noninterest income represented 26.4% of total revenues in 2019, compared to 26.8% in 2018. Noninterest income for the fourth quarter of 2019 was $18.0 million, down 9.5% compared to the same period in 2018. For the full year, noninterest income of $75.4 million was down $2.0 million, or 2.6%, when compared to 2018. The negative variance to prior year was largely due to the fact that results from the fourth quarter of the prior year included higher than normal investment service fees associated with trust and estate activities, as well as approximately $2.5 million related to the collection of nonaccrual interest and fees associated with a loan that was previously charged off. Comparison of full year noninterest income to the prior year was also impacted by $2.9 million of gains on the sale of real estate that were realized in the second quarter of 2018.

NONINTEREST EXPENSE

Noninterest expense was $45.9 million for the fourth quarter of 2019, down 2.8%, from the fourth quarter of 2018. For the full year 2019, noninterest expense was $181.8 million, which was in line with 2018. Other operating expense in 2019 was reduced by $1.5 million of deposit insurance credits received from the FDIC, of which $0.4 million were applied during the fourth quarter of 2019. Noninterest expense in 2018 included $2.5 million related to the write-down of leases on vacated space, which was recognized in the second quarter of 2018.

INCOME TAX EXPENSE

The Company's effective tax rate was 19.8% in the fourth quarter of 2019, compared to 20.4% for the same period in 2018. For calendar year 2019, the Company’s effective tax rate was 20.5% compared to 20.9% for 2018.

ASSET QUALITY

Asset quality trends remained strong in the fourth quarter of 2019, as the ratio of nonperforming assets to total assets of 0.47% at December 31, 2019 was unchanged from the prior quarter end, and was up from 0.42% at December 31, 2018. Nonperforming asset levels at December 31, 2019 remained below the most recent Federal Reserve Board Peer Group Average1 of 0.60%.

The provision for loan and lease losses for the fourth quarter of 2019 was a negative $1.0 million compared to an expense of $2.1 million in the fourth quarter of 2018. For the full year, the provision for loan and lease losses was $1.4 million in 2019, compared to $3.9 million for the same period in 2018. Net charge-offs for the year ended December 31, 2019 were $4.9 million, compared to $0.3 million reported for the year-to-date period ended December 31, 2018. The year over year increase in net charge-offs was mainly attributable to the charge-off of one commercial real estate credit in the first quarter of 2019.

The Company’s allowance for originated loan and lease losses totaled $39.8 million at December 31, 2019, and represented 0.85% of total originated loans and leases, down from 0.89% at September 30, 2019, and 0.95% at December 31, 2018. Improving trends in classified and criticized loans in the most recent quarter, along with favorable trends in certain qualitative factors contributed to the lower allowance level at December 31, 2019. The allowance at December 31, 2018 included a specific reserve of $3.0 million related to one commercial real estate credit that was subsequently charged off in the first quarter of 2019, as noted above. The total allowance represented 126.90% of total nonperforming loans and leases at December 31, 2019, compared to 137.46% at September 30, 2019, and 163.25% at December 31, 2018.

CAPITAL POSITION

Capital ratios remained well above the regulatory minimums for well capitalized institutions. The ratio of Tier 1 capital to average assets was 9.61% at December 31, 2019, improved from 9.43% at September 30, 2019, and 9.05% at December 31, 2018. During the year ended December 31, 2019, the Company repurchased 376,021 common shares at an average price of $79.43 per share. During 2018, the Company repurchased 32,483 common shares at an average price of $75.36 per share.

Tompkins Financial Corporation also announced that its Board of Directors has authorized a new stock repurchase program of up to 400,000 shares of the company's outstanding common stock, par value $0.10 per share. This program replaces the company's existing 400,000 share repurchase program announced on July 20, 2018.

The new stock repurchase program is expected to be completed over the next 24 months.

The shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in accordance with federal securities laws. The actual timing, number and value of shares repurchased under the program will be determined by management at its discretion and will depend on a number of factors, including the market price of the Company's stock and general market and economic conditions, and applicable legal requirements.

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