Tompkins Financial Corporation Reports Fourth Quarter Operating Results
Tompkins Financial Corporation Reports Fourth Quarter Operating Results
ITHACA, N.Y.--(BUSINESS WIRE)-- Tompkins Financial Corporation (TMP-NYSE MKT LLC)
Tompkins Financial Corporation today released operating results and selected other financial information for the three and twelve month periods ended December 31, 2012. The fourth quarter represents the first full quarter reflecting results inclusive of the VIST Financial Corporation acquisition, which closed on August 1, 2012.
Stephen S. Romaine, President and CEO commented, "2012 was an eventful year for our Company. The acquisition of VIST Financial gives us exciting new growth opportunities in a new geography with attractive demographics. Results for the year to date and the fourth quarter were negatively impacted by merger related costs. Excluding those costs, our per share earnings performance for the two quarters that have included results with VIST has been among the best of any six month period in our Company's long history."
Net Income for the fourth quarter of 2012 was $11.2 million, up from $9.4 million in the same period in 2011. Despite the rise in net income, diluted earnings per share of $0.77 for the quarter was down 8.3% from the fourth quarter of 2011 due to the greater number shares outstanding in 2012 as a result of shares issued to complete the VIST acquisition. Net income was reduced by after-tax merger related expenses of $462,000 in the fourth quarter of 2012 and $152,000 in the fourth quarter of 2011. Non-GAAP operating income, which excludes merger related expenses, was $11.6 million for the quarter, or $0.81 diluted operating earnings per share. This represents a decrease of 5.8% from the $0.86 diluted operating earnings per share reported for the fourth quarter of 2011. The decrease in current period operating performance is attributable to higher provision expense primarily related to loan charge-offs in the Hudson Valley Region. A more detailed discussion of credit quality is included later in this press release.
Net income for the year ended December 31, 2012 was $31.3 million, down from $35.4 million in 2011. Diluted earnings per share of $2.43 for the full year in 2012 represents a decline from diluted earnings per share of $3.20 in 2011. The decline from 2011 is primarily due to the $9.7 million ($0.76 diluted per share) in after tax merger related expenses included in 2012 results, versus $152,000 ($0.01 per share) in after tax merger related expenses included in 2011 results; as well as the increase in weighted average shares outstanding.
NET INTEREST INCOME
Net interest income for the fourth quarter of 2012 was $41.8 million, compared to $28.0 million for the same period in 2011. The increase in 2012 reflects the addition of VIST Bank, which was acquired on August 1, 2012. The net interest margin for the fourth quarter of 2012 was 3.83%, an improvement from the 3.66% margin reported in the third quarter of 2012, and from the 3.62% margin reported in the fourth quarter of 2011. The margin improvement in the most recent two quarters benefited from the inclusion of VIST Bank into the Company's combined results. The paydown of certain higher cost borrowings and non-core time deposits also helped the margin in the fourth quarter of 2012.
Noninterest income for the fourth quarter of 2012 was $15.6 million, up 39.4% over the same period in 2011. The largest category of improvement was insurance commissions and fees, which nearly doubled as a result of the VIST acquisition. The increase was partially offset by lower service charges on deposit accounts, which were impacted by regulatory changes implemented in the first quarter of 2012. Improvement in other income benefited from higher loan related fees (up $334,000) and gains on the sale of loans (up $187,000). Fourth quarter noninterest income also reflected $499,000 in losses on the sale of investments, which were used to pay down certain higher cost borrowings and non-core time deposits.
Noninterest expense for the fourth quarter of 2012 was $38.2 million, up 57.8% from the same period last year. The increase was mainly a result of the VIST acquisition and additional expenses related to the integration of VIST into the Company's operations beginning in the third quarter of this year. Mr. Romaine added, "We are pleased that our system conversion for VIST Bank was successfully completed in December 2012 and we are on track to realize the cost savings from the integration that were contemplated when the merger was announced."
Asset quality trends were generally positive during the quarter, despite a spike in the level of loan charge-offs. Mr. Romaine stated, "The charge-offs during the quarter consisted of a handful of loans that had previously been reported as nonperforming, classified and impaired. While deterioration in these credits during the fourth quarter resulted in elevated charge-offs, the result is that the overall risk profile of the loan portfolio has improved, as some of the most risky loans have now been removed from the balance sheet."
The ratio of nonperforming assets to total assets of 0.92% at December 31, 2012, has improved from a ratio of 1.26% as of the year ending December 31, 2011 and remains well below the most recent peer averages of 2.21% published the Federal Reserve1. The balance of originated loans classified as either Substandard or Special Mention improved for 2 consecutive quarters. The majority of the improvement from the third quarter of 2012 came in the more severe Substandard category, which declined by approximately $9.3 million. Although there was an increase in loans classified as Substandard or Special Mention in the acquired loan portfolio, the changes in risk ratings are not impactful to the credit marks that were recorded at the time of acquisition. Furthermore, the level of past due loans in the acquired portfolio have remained relatively steady between periods.
Provision for loan and lease losses was $5.7 million for the fourth quarter of 2012, up from $1.0 million for the third quarter of 2012, and $1.2 million in the fourth quarter of 2011. The increased provision was largely due to $7.6 million in net charge-offs during the quarter, which is up from $1.3 million in the third quarter of 2012, and $1.4 million in the fourth quarter 2011. Despite the elevated charge-offs in the most recent quarter, net charge-offs for the full year in 2012, represented only 0.49% of average total loans, which compares favorably to the most recent Federal Reserve peer ratio1 of 0.64%.
The Company's allowance for loan and lease losses totaled $24.6 million at December 31, 2012, which represented 1.16% of total originated loans, compared to an allowance for loan and lease losses of $27.6 million, representing 1.39% of total originated loans at December 31, 2011. The allowance for loan and lease losses covered 70.05% of originated nonperforming loans and leases as of December 31, 2012, up from 69.01% at September 30, 2012, and 66.66% at December 31, 2011.
Capital ratios remain well above the regulatory well capitalized minimums. Tier 1 capital as a percentage of average assets at December 31, 2012 was 7.95% and the ratio of total capital to risk-weighted assets was 12.94%.
ABOUT TOMPKINS FINANCIAL CORPORATION
Tompkins Financial Corporation is a financial services company with $4.8 billion in assets 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 Trust Company, The Bank of Castile, Mahopac National Bank, VIST Bank, Tompkins Insurance Agencies, Inc., and Tompkins Financial Advisors. For more information on Tompkins Financial, visit www.tompkinsfinancial.com.
This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (GAAP). Where non-GAAP disclosures are used in this press release, the comparable GAAP measure, as well as a reconciliation to the comparable GAAP measure, is provided in the accompanying tables. Management believes that these non-GAAP measures provide useful information. Non-GAAP measures should not be considered a substitute for financial measures determined in accordance with GAAP and investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. See "Tompkins Financial Corporation- Summary Financial Data" tables for Non-GAAP related calculations.
"Safe Harbor" Statement under the Private Securities Litigation Reform of 1995:
This press release may include forward-looking statements with respect to revenue sources, growth, market risk, and corporate objectives. The Company assumes no duty, and specifically disclaims any obligation, to update forward-looking statements, and cautions that these statements are subject to numerous assumptions, risks, and uncertainties, all of which could change over time. Actual results could differ materially from forward-looking statements.
|TOMPKINS FINANCIAL CORPORATION|
|CONDENSED CONSOLIDATED STATEMENTS OF CONDITION|
|(In thousands, except share and per share data) (Unaudited)||As of||As of|
|Cash and noninterest bearing balances due from banks||$||117,448||$||47,297|
|Interest bearing balances due from banks||1,482||2,170|
|Money market funds||0||100|
|Cash and Cash Equivalents||118,930||49,567|
|Trading securities, at fair value||16,450||19,598|
|Available-for-sale securities, at fair value||1,393,340||1,143,546|
|Held-to-maturity securities, fair value of $25,163 at December 31, 2012, and $27,255|
|at December 31, 2011||24,062||26,673|
|Originated loans and leases, net of unearned income and deferred costs and fees (2)||2,133,106||1,981,849|
|Less: Allowance for originated loan and lease losses||24,643||27,593|
|Acquired loans and leases, non-covered (3)||37,600||0|
|Acquired loans and leases, covered (3)||783,904||0|
|Net Loans and Leases||2,929,967||1,954,256|
|FDIC Idemnification Asset||4,385||0|
|Federal Home Loan Bank stock and Federal Reserve Bank stock||19,388||19,070|
|Bank premises and equipment, net||54,581||44,712|
|Corporate owned life insurance||65,102||43,044|
|Other intangible assets, net||18,643||4,096|
|Accrued interest and other assets||100,044||51,788|
|Checking, savings and money market||2,144,367||1,356,870|
|Federal funds purchased and securities sold under agreements to repurchase||213,973||169,090|
|Other borrowings, including certain amounts at fair value of $11,847 at December 31, 2012|
|and $12,093 at December 31, 2011||111,848||186,075|
|Trust preferred debentures||43,668||25,065|
|Tompkins Financial Corporation shareholders' equity:|
|Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued:|
|14,426,711 at December 31, 2012; and 11,159,466 at December 31, 2011||1,443||1,116|
|Additional paid-in capital||334,649||206,395|
|Accumulated other comprehensive loss||(2,106)||(3,677)|
|Treasury stock, at cost - 100,054 shares at December 31, 2012, and 95,105 shares|
|at December 31, 2011||(2,787)||(2,588)|
|Total Tompkins Financial Corporation Shareholders' Equity||439,908||297,691|
|Total Liabilities and Equity||$||4,837,197||$||3,400,248|
|TOMPKINS FINANCIAL CORPORATION|
|CONSOLIDATED STATEMENTS OF INCOME|
|Three Months Ended||Twelve Months Ended|
|(In thousands, except per share data) (Unaudited)||12/31/2012||12/31/2011||12/31/2012||12/31/2011|
|INTEREST AND DIVIDEND INCOME|
|Due from banks||19||1||32||12|
|Federal funds sold||0||2||2||7|
|Federal Home Loan Bank stock and Federal Reserve Bank stock||205||189||824||910|
|Total Interest and Dividend Income||48,768||33,913||158,356||137,088|
|Interest on deposits||3,805||2,914||12,231||13,087|
Federal funds purchased and securities sold under agreements to
|Trust preferred debentures||798||382||2,094||1,580|
|Total Interest Expense||6,919||5,914||24,213||25,682|
|Net Interest Income||41,849||27,999||134,143||111,406|
|Less: Provision for loan and lease losses||5,659||1,160||8,837||8,945|
|Net Interest Income After Provision for Loan and Lease Losses||36,190||26,839||125,306||102,461|
|Investment services income||3,836||3,196||14,340||14,287|
|Insurance commissions and fees||6,237||3,136||19,421||13,542|
|Service charges on deposit accounts||2,076||2,235||7,441||8,491|
|Card services income||1,678||1,275||6,030||5,060|
|Mark-to-market (loss) gain on trading securities||(134)||(108)||(332)||62|
|Mark-to-market gain (loss) on liabilities held at fair value||108||25||246||(464)|
|Net other-than-temporary impairment losses||(76)||(65)||(196)||(65)|