Tompkins Financial Corporation Reports Improved Second Quarter Financial Results

Tompkins Financial Corporation ("Tompkins" or the "Company") reported diluted earnings per share of $1.50 for the second quarter of 2025, up 9.5% from the immediate prior quarter, and up 36.4% from the diluted earnings per share of $1.10 reported for the second quarter of 2024. Net income for the second quarter of 2025 was $21.5 million, up $1.8 million, or 9.1%, compared to the first quarter of 2025, and up $5.8 million, or 36.9%, when compared to the second quarter of 2024.

For the six months ended June 30, 2025, diluted earnings per share were $2.87, up 25.3% from the $2.29 reported for the six months ended June 30, 2024. Year-to-date net income was $41.2 million for the six months ended June 30, 2025, up $8.6 million or 26.4% when compared to $32.6 million for the same six month period in 2024.

Tompkins President and CEO, Stephen Romaine, commented, "Our second quarter financial results reflect continued positive momentum. Net income year-to-date was up over 25% as compared to 2024 and was mainly driven by net interest margin expansion and growth throughout our business. Our year-to-date results included average loan growth of 7.5%, average deposit growth of 5.2% and growth in fee-based services revenue of 4.5%. We believe our balance sheet remains well positioned to continue to support growth, while also committed to supporting our local communities, and building quality customer relationships."

SELECTED HIGHLIGHTS FOR THE PERIOD:

• • Net interest margin improved to 3.08% in the second quarter of 2025, up 10 basis points from the immediate prior quarter, and up 35 basis points from the second quarter of 2024.
• • Total loans at June 30, 2025 were up $106.0 million, or 1.8% compared to March 31, 2025 (7.0% on an annualized basis), and up $410.8 million, or 7.1%, from June 30, 2024.
• • Total deposits at June 30, 2025 were $6.7 billion, which were in line with the most recent prior quarter end, and up $429.9 million, or 6.8%, from June 30, 2024.
• • Total average cost of funds of 1.84% for the second quarter of 2025 was unchanged from the most recent prior quarter, and down 12 basis points compared to the same period of the prior year, as a result of funding mix and lower interest rates.
• • Provision expense for the second quarter of 2025 was $2.8 million, compared to $5.3 million for the first quarter of 2025 and $2.2 million for the second quarter of 2024.
• • Total fee-based services revenues (revenue from insurance, wealth management, service charges on deposit accounts, and card services) for the second quarter of 2025 were up $533,000 or 2.8% compared to the second quarter of 2024.
• • Loan to deposit ratio at June 30, 2025 was 91.9%, compared to 89.8% at March 31, 2025, and 91.7% at June 30, 2024.
• • Regulatory Tier 1 capital to average assets was 9.36% at June 30, 2025, up compared to 9.31% at March 31, 2025, and 9.15% at June 30, 2024.

NET INTEREST INCOME

Net interest income was $60.1 million for the second quarter of 2025, up $3.5 million or 6.1% compared to the first quarter of 2025, and up $9.2 million or 18.0% compared to the second quarter of 2024. The increase in net interest income compared to both periods was due to improvement in net interest margin, which is discussed below, and growth in average loans.

For the six months ended June 30, 2025, net interest income was $116.8 million, up $15.2 million or 14.9% when compared to the same period in 2024.

Net interest margin was 3.08% for the second quarter of 2025, up 10 basis points when compared to the immediate prior quarter, and up 35 basis points from 2.73% for the second quarter of 2024. The increase in net interest margin, when compared to the most recent prior quarter, was mainly due to increased yields on average interest earning assets and higher average loan balances. The increase over the prior year second quarter was due to the same factors, as well as lower funding costs resulting from improved funding mix.

Average loans for the quarter ended June 30, 2025 were up $104.2 million, or 1.7%, from the most recent prior quarter, and were up $442.0 million, or 7.8%, compared to the same prior year period. The increase in average loans over both prior periods was mainly in the commercial real estate and commercial and industrial portfolios. The average yield on interest-earning assets for the quarter ended June 30, 2025 was 4.79%, an increase of 10 basis points from 4.69% for the quarter ended March 31, 2025, and up 23 basis points from 4.56% for the quarter ended June 30, 2024.

Average total deposits of $6.7 billion for the second quarter of 2025 were up $109.3 million, or 1.7%, compared to the first quarter of 2025, and up $406.4 million, or 6.4%, compared to the second quarter of 2024. The cost of interest-bearing deposits of 2.24% for the second quarter of 2025 was up 1 basis point compared to the most recent prior quarter, and down 3 basis points from 2.27% for the second quarter of 2024. The ratio of average noninterest bearing deposits to average total deposits for the second quarter of 2025 was 27.0% compared to 26.9% for the first quarter of 2025, and 29.1% for the second quarter of 2024. The average cost of interest-bearing liabilities for the second quarter of 2025 was 2.44%, unchanged when compared to the most recent prior quarter, and down 20 basis points from the same period in 2024.

NONINTEREST INCOME

Noninterest income of $22.5 million for the second quarter of 2025 was up $736,000 or 3.4% compared to the second quarter of 2024, mainly due to an increase in insurance commissions and fees, which were up $522,000 or 5.7%, and an increase in wealth management fees, which were up $115,000 or 2.4%. These increases were partially offset by lower card services income, which was down $128,000 or 3.9%. Year-to-date noninterest income of $47.5 million was up $3.6 million or 8.3% compared to the same period in 2024, mainly due to a $1.8 million, or 36.7% increase in other income, which included a $1.9 million gain on the sale of other real estate owned, and an increase in insurance commissions and fees of $1.9 million or 9.6%. The increase for the year-to-date period also included an increase in wealth management fees of $297,000 or 3.0%. These increases were partially offset by lower card services income of $440,000 or 7.1%. Card services income in the first six months of 2024 included a $255,000 sign-on bonus related to the renewal of a card services contract.

NONINTEREST EXPENSE

Noninterest expense was $51.6 million for the second quarter of 2025, up $1.7 million or 3.4% compared to the same period in 2024. Noninterest expense for the year-to-date period ended June 30, 2025 was $102.2 million, an increase of $2.4 million or 2.4% compared to the $99.8 million reported for the same period in 2024. For both periods, the increase was mainly driven by personnel-related expenses, which were up $2.1 million or 6.6% in the second quarter of 2025, and up $3.0 million or 4.9% for the year-to-date period ended June 30, 2025, compared to the same quarter and year-to-date periods in 2024. The increase mainly reflects annual merit adjustments.

INCOME TAX EXPENSE

Provision for income tax expense was $6.8 million for an effective rate of 24.0% for the second quarter of 2025, compared to $4.9 million for an effective rate of 23.8% for the second quarter of 2024. For the first six months of 2025, the provision for income tax expense was $12.9 million and the effective tax rate was 23.9% compared to $10.1 million for an effective tax rate of 23.6% for the same period in 2024.

ASSET QUALITY

The allowance for credit losses represented 0.95% of total loans and leases at June 30, 2025, down from 1.01% at March 31, 2025, and up from 0.92% reported at June 30, 2024. The decrease in the allowance for credit losses coverage ratio compared to prior quarter end was mainly due to lower specific reserves for individually analyzed nonaccrual commercial real estate credits and lower qualitative reserves related to asset quality. These were partially offset by increased reserves driven by updates to economic forecasts for unemployment and GDP. During the second quarter of 2025, the Company recorded a partial charge-off of $4.7 million related to one commercial real estate relationship totaling $18.1 million, for which there was a specific reserve of $4.2 million. The specific reserve was added in the first quarter of 2025 and reflected the estimated decrease in fair value of the collateral based on a new appraisal received at the end of that quarter. The ratio of the allowance to total nonperforming loans and leases was 111.55% at June 30, 2025, compared to 85.85% at March 31, 2025, and 84.94% at June 30, 2024. The increase in the ratio compared to the prior quarter end and the end of the second quarter of the prior year was due to the decrease in nonperforming loans and leases, discussed in more detail below.

Provision for credit losses for the second quarter of 2025 was $2.8 million compared to $2.2 million for the second quarter of 2024. Provision for credit losses for the six months ended June 30, 2025 was $8.1 million compared to $3.0 million for the six months ended June 30, 2024. The increase in provision expense for the quarter and year-to-date periods compared to the same periods in 2024 was mainly due to the previously discussed charge-off on one commercial real estate relationship, and updated economic forecasts. Net charge-offs for the three months ended June 30, 2025 were $5.3 million, compared to $733,000 for the first quarter of 2025, and $509,000 for the second quarter of 2024. The increase in net charge-offs was mainly related to the previously discussed $4.7 million partial charge-off on one commercial real estate relationship.

Nonperforming assets of $52.6 million represented 0.63% of total assets at June 30, 2025, down from $71.2 million or 0.87% at March 31, 2025, and $62.5 million or 0.79% at June 30, 2024. The decrease in nonperforming assets at June 30, 2025 compared to March 31, 2025 was largely due to the above mentioned commercial real estate relationship totaling $18.1 million no longer being included in non-performing loans at the end of the second quarter of 2025. The balance, net of the $4.7 million charge-off, is now included in other assets on the Company's Consolidated Statements of Condition. The property currently generates positive cash flow and a majority of it is tenant occupied. At June 30, 2025, nonperforming loans and leases totaled $52.5 million, compared to $71.1 million at March 31, 2025, and $62.5 million at June 30, 2024. Loans past due 30-89 days totaled $5.9 million at June 30, 2025, $12.3 million at March 31, 2025, and $5.3 million at June 30, 2024.

Special Mention and Substandard loans and leases totaled $96.8 million at June 30, 2025, compared to $110.8 million reported at March 31, 2025, and $116.2 million reported at June 30, 2024.

CAPITAL POSITION

Capital ratios at June 30, 2025 remained well above the regulatory minimums for well-capitalized institutions. The ratio of total capital to risk-weighted assets was 13.15% at June 30, 2025, compared to 13.28% at March 31, 2025, and 13.26% at June 30, 2024. The ratio of Tier 1 capital to average assets was 9.36% at June 30, 2025, compared to 9.31% at March 31, 2025, and 9.15% at June 30, 2024.

The Company announced today that its Board of Directors has approved a new Stock Repurchase Program, authorizing the Company to repurchase up to 400,000 shares of its 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 at June 30, 2025 was stable and consistent with the quarter ended March 31, 2025. Liquidity is enhanced by ready access to national and regional wholesale funding sources including Federal funds purchased, repurchase agreements, brokered deposits, Federal Reserve Bank's Discount Window advances and Federal Home Loan Bank (FHLB) advances. The Company maintained ready access to liquidity of $1.5 billion, or 18.0% of total assets, at June 30, 2025.

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 and Tompkins Insurance Agencies, Inc. Tompkins Community Bank provides a full array of wealth management services under the Tompkins Financial Advisors brand, including investment management, trust and estate, financial and tax planning services. 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", "commit", or "anticipate", as well as the negative and other variations of these terms and other similar words. Examples of forward-looking statements may include statements regarding future growth. Forward-looking statements are made based on management’s expectations and beliefs concerning future events impacting the Company and are subject to 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 Report 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 and historical performance: changes in general economic, market and regulatory conditions; our ability to attract and retain deposits and other sources of liquidity; gross domestic product growth and inflation trends; 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, including the Dodd-Frank Act, and other federal, state and local government mandates; 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; increased supervisory and regulatory scrutiny of financial institutions; technological developments and changes; cybersecurity 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; the ability to access financial resources in the amounts, at the times, and on the terms required to support the Company's future businesses; and the economic impact, including market volatility, of national and global events, including the response to bank failures, war and geopolitical matters (including the war in Ukraine and the impacts of continued or escalating hostilities in the Middle East), tariffs and trade wars, widespread protests, civil unrest, political uncertainty, and pandemics or other public health crises. The Company does not undertake any obligation to update its forward-looking statements.