Tompkins Financial(TMP) - 2025 Q1 - Quarterly Results

Financial Highlights Tompkins Financial Corporation reported strong Q1 2025 results, with diluted EPS of $1.37 and net income of $19.7 million, driven by net interest income growth despite higher credit loss provisions Q1 2025 Key Financial Metrics | Metric | Q1 2025 | Q1 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Diluted EPS | $1.37 | $1.18 | +16.1% | | Net Income | $19.7 million | $16.9 million | +16.6% | | Net Interest Margin | 2.98% | 2.73% | +25 bps | | Total Loans | $6.07 billion | $5.64 billion | +7.6% | | Total Deposits | $6.75 billion | $6.45 billion | +4.7% | - The increase in net income was primarily driven by higher net interest income from loan growth and stabilized funding costs, along with growth in fee-based revenues, partially offset by a significantly higher provision for credit loss expense[2] - Provision for credit loss expense was $5.3 million, a substantial increase from $854,000 in Q1 2024 and $1.4 million in Q4 2024[4][14] Financial Performance Analysis Q1 2025 performance featured strong net interest income and margin expansion, boosted by a one-time gain, but asset quality weakened due to increased credit loss provisions Net Interest Income Net interest income increased 11.8% year-over-year to $56.7 million, driven by a 25 bps net interest margin expansion to 2.98% and 7.2% average loan growth Net Interest Income and Margin Analysis | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $56.7M | $56.3M | $50.7M | | Net Interest Margin | 2.98% | 2.93% | 2.73% | | Average Loans | $6.03B | $5.93B | $5.62B | - The increase in NIM compared to the prior year was mainly due to higher yields on average interest-earning assets (4.69% in Q1 2025 vs 4.47% in Q1 2024) and lower funding costs from an improved funding mix[6][7] - Average total deposits grew by 4.0% year-over-year to $6.6 billion[8] Noninterest Income and Expense Noninterest income rose 13.1% to $25.0 million due to a real estate sale gain, while noninterest expense increased modestly by 1.5% to $50.6 million from employee costs Noninterest Income & Expense (Q1 2025 vs Q1 2024) | Category | Q1 2025 | Q1 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Total Noninterest Income | $25.0M | $22.1M | +13.1% | | Total Noninterest Expense | $50.6M | $49.9M | +1.5% | - A $1.9 million gain on the sale of other real estate owned was the primary driver of the increase in noninterest income[10] - The increase in noninterest expense was mainly due to a $969,000 (3.1%) rise in salaries and wages and other employee benefits[11] Asset Quality Asset quality weakened in Q1 2025, with provision for credit losses surging to $5.3 million due to a $4.2 million specific reserve on a commercial real estate loan Asset Quality Indicators | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Provision for Credit Losses | $5.3M | $1.4M | $0.85M | | Allowance for Credit Losses / Total Loans | 1.01% | 0.94% | 0.92% | | Nonperforming Assets / Total Assets | 0.87% | 0.80% | 0.81% | | Nonperforming Loans | $71.1M | $50.9M | $62.7M | - A specific reserve of $4.2 million was added for one commercial real estate relationship totaling $18.1 million, which was a major driver for the increased provision expense[13][14] - The increase in nonperforming assets was largely due to moving one $17.3 million commercial real estate loan into nonperforming status[15] Balance Sheet, Capital, and Liquidity The company maintained strong capital ratios well above regulatory minimums and a stable liquidity position with $1.5 billion in accessible funding sources as of March 31, 2025 Capital Position Capital ratios remained robust and exceeded regulatory requirements, with Tier 1 capital to average assets improving to 9.31% at Q1 2025 Key Capital Ratios | Ratio | Mar 31, 2025 | Dec 31, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | :--- | | Tier 1 Capital to Average Assets | 9.31% | 9.27% | 9.08% | | Total Capital to Risk-Weighted Assets | 13.28% | 13.07% | 13.43% | - Capital ratios at March 31, 2025 remained well above the regulatory minimums for well-capitalized institutions[17] Liquidity Position The company maintained a stable liquidity position with ready access to $1.5 billion, representing 18.6% of total assets, through various wholesale funding sources - The company maintained ready access to liquidity of $1.5 billion, or 18.6% of total assets, at March 31, 2025[18] - Liquidity is enhanced by access to Federal funds, repurchase agreements, brokered deposits, Federal Reserve Bank's Discount Window, and FHLB advances[18] Financial Statements and Supplementary Data This section presents detailed unaudited financial statements for Q1 2025, including Consolidated Statements of Condition and Income, along with supplementary data and non-GAAP measure reconciliations Consolidated Statements of Condition The Consolidated Statement of Condition as of March 31, 2025, shows total assets of $8.20 billion, supported by increased deposits to $6.75 billion and total equity to $741.4 million Balance Sheet Highlights (in thousands) | Account | Mar 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $8,199,653 | $8,109,080 | | Net Loans and Leases | $6,005,622 | $5,963,426 | | Total Deposits | $6,753,502 | $6,471,805 | | Total Equity | $741,377 | $713,444 | Consolidated Statements of Income For Q1 2025, the company reported Net Interest Income of $56.7 million and Net Income of $19.7 million, compared to $50.7 million and $16.9 million respectively in Q1 2024 Income Statement Summary (in thousands) | Account | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $56,662 | $56,281 | $50,675 | | Provision for credit loss | $5,287 | $1,411 | $854 | | Noninterest Income | $25,032 | $20,829 | $22,137 | | Noninterest Expense | $50,607 | $49,966 | $49,857 | | Net Income | $19,679 | $19,658 | $16,872 | Non-GAAP Measures This section provides a reconciliation for the non-GAAP measure of Tangible Book Value Per Share, which increased to $44.88 in Q1 2025 Tangible Book Value Per Share (Non-GAAP) | Metric | Mar 31, 2025 | Dec 31, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | :--- | | Common equity book value per share (GAAP) | $51.36 | $49.42 | $46.37 | | Tangible book value per share (Non-GAAP) | $44.88 | $42.93 | $39.85 |