Tompkins Financial(TMP) - 2025 Q2 - Quarterly Results

Tompkins Financial Corporation Reports Improved Second Quarter Financial Results Financial Performance Summary Tompkins Financial Corporation reported strong financial results for the second quarter of 2025, with significant year-over-year and sequential growth in net income and earnings per share, primarily driven by net interest margin expansion and solid growth in average loans, deposits, and fee-based services revenue Q2 2025 Earnings Summary | Metric | Q2 2025 | Q1 2025 | Q2 2024 | Change (QoQ) | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | | Diluted EPS | $1.50 | $1.37 | $1.10 | +9.5% | +36.4% | | Net Income | $21.5M | $19.7M | $15.7M | +9.1% | +36.9% | Year-to-Date 2025 Earnings Summary | Metric | H1 2025 | H1 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Diluted EPS | $2.87 | $2.29 | +25.3% | | Net Income | $41.2M | $32.6M | +26.4% | - CEO Stephen Romaine attributed the positive results to net interest margin expansion and broad-based business growth, highlighting year-to-date average loan growth of 7.5%, average deposit growth of 5.2%, and fee-based services revenue growth of 4.5%[3] Key Performance Indicators - Q2 2025 | Indicator | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Interest Margin | 3.08% | 2.98% | 2.73% | | Total Loans (Period End) | $6.17B | $6.07B | $5.76B | | Total Deposits (Period End) | $6.7B | $6.7B | $6.3B | | Loan to Deposit Ratio | 91.9% | 89.8% | 91.7% | Detailed Financial Analysis The company's detailed financial performance for Q2 2025 shows robust growth in net interest income, driven by margin expansion and loan growth, with noninterest income increasing from fees, noninterest expenses rising moderately due to personnel costs, and a stable effective tax rate Net Interest Income Net interest income for Q2 2025 reached $60.1 million, increasing 18.0% year-over-year and 6.1% quarter-over-quarter, driven by a 35 basis point net interest margin expansion to 3.08% and a 7.8% increase in average loans Net Interest Income Performance | Period | Net Interest Income | Change (vs. prior period) | | :--- | :--- | :--- | | Q2 2025 | $60.1M | +6.1% vs Q1 2025 | | Q2 2025 | $60.1M | +18.0% vs Q2 2024 | | H1 2025 | $116.8M | +14.9% vs H1 2024 | - The net interest margin improved to 3.08% in Q2 2025, up 10 basis points from Q1 2025 and 35 basis points from Q2 2024, driven by higher yields on earning assets, increased average loan balances, and an improved funding mix[7] - Average loans for Q2 2025 grew by $442.0 million (7.8%) compared to Q2 2024, with the average yield on interest-earning assets rising to 4.79%[8] Noninterest Income Noninterest income for Q2 2025 reached $22.5 million, a 3.4% increase from Q2 2024, primarily driven by a 5.7% rise in insurance commissions and a 2.4% increase in wealth management fees, despite a 3.9% decline in card services income Noninterest Income Breakdown (Q2 2025 vs Q2 2024) | Category | Q2 2025 | Change (YoY) | | :--- | :--- | :--- | | Total Noninterest Income | $22.5M | +3.4% | | Insurance commissions and fees | $9.6M | +5.7% | | Wealth management fees | $5.0M | +2.4% | | Card services income | $3.2M | -3.9% | - Year-to-date noninterest income of $47.5 million was up 8.3% from the prior year, largely due to a $1.8 million increase in other income, which included a $1.9 million gain on the sale of other real estate owned[11] Noninterest Expense Noninterest expense increased by 3.4% to $51.6 million in Q2 2025 compared to the same period in 2024, primarily driven by a 6.6% increase in personnel-related expenses, with year-to-date expenses rising by 2.4% Noninterest Expense Summary | Period | Noninterest Expense | Change (YoY) | Key Driver | | :--- | :--- | :--- | :--- | | Q2 2025 | $51.6M | +3.4% | Personnel expenses (+6.6%) | | H1 2025 | $102.2M | +2.4% | Personnel expenses (+4.9%) | Income Tax Expense The provision for income tax was $6.8 million for Q2 2025, resulting in an effective tax rate of 24.0%, slightly higher than the 23.8% rate in Q2 2024, with the year-to-date rate at 23.9% Income Tax Provision and Effective Rate | Period | Tax Expense | Effective Tax Rate | | :--- | :--- | :--- | | Q2 2025 | $6.8M | 24.0% | | Q2 2024 | $4.9M | 23.8% | | H1 2025 | $12.9M | 23.9% | | H1 2024 | $10.1M | 23.6% | Financial Condition The company's financial condition as of June 30, 2025, remains strong, characterized by improving asset quality, robust capital, and a stable liquidity profile with ample funding access Asset Quality Asset quality improved, with nonperforming assets decreasing to 0.63% of total assets, largely due to a reclassification, and the allowance for credit losses to nonperforming loans ratio strengthening to 111.55% Key Asset Quality Ratios | Metric | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | :--- | | Allowance for credit losses / Total loans | 0.95% | 1.01% | 0.92% | | Nonperforming assets / Total assets | 0.63% | 0.87% | 0.79% | | Allowance / Nonperforming loans | 111.55% | 85.85% | 84.94% | - The company recorded a $4.7 million partial charge-off on one commercial real estate relationship, which was the main driver for the increase in net charge-offs to $5.3 million in Q2 2025[15] - Special Mention and Substandard loans decreased to $96.8 million at June 30, 2025, down from $110.8 million at March 31, 2025, and $116.2 million at June 30, 2024[17] Capital Position The company's capital position remains well above regulatory minimums, with the Tier 1 capital to average assets ratio improving to 9.36% at June 30, 2025, and a new stock repurchase program authorized for up to 400,000 shares Regulatory Capital Ratios | Ratio | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | :--- | | Total capital to risk-weighted assets | 13.15% | 13.28% | 13.26% | | Tier 1 capital to average assets | 9.36% | 9.31% | 9.15% | - A new Stock Repurchase Program was approved, authorizing the repurchase of up to 400,000 shares of common stock over the next 24 months[19] Liquidity Position The company's liquidity position was stable and robust as of June 30, 2025, maintaining ready access to $1.5 billion in liquidity, equivalent to 18.0% of total assets, through various wholesale funding sources - The company had available liquidity of $1.5 billion, or 18.0% of total assets, at the end of Q2 2025[20] - Liquidity sources include Federal funds purchased, repurchase agreements, brokered deposits, Federal Reserve Bank's Discount Window, and Federal Home Loan Bank (FHLB) advances[20] Consolidated Financial Statements and Other Data The appended financial statements provide a detailed view of the company's financial health, showing asset growth, drivers of net income, net interest margin analysis, multi-quarter trends, and non-GAAP measure reconciliation Consolidated Statements of Condition As of June 30, 2025, total assets stood at $8.37 billion, an increase from year-end 2024, supported by a rise in net loans to $6.11 billion and total deposits to $6.72 billion, with total shareholders' equity increasing to $761.8 million Selected Balance Sheet Data (in thousands) | Account | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $8,373,818 | $8,109,080 | | Net Loans and Leases | $6,114,099 | $5,963,426 | | Total Deposits | $6,715,795 | $6,471,805 | | Total Liabilities | $7,612,025 | $7,395,636 | | Total Equity | $761,793 | $713,444 | Consolidated Statements of Income For Q2 2025, the company generated $60.1 million in net interest income and $22.5 million in noninterest income, resulting in $21.5 million in net income, or $1.50 per diluted share, after a $2.8 million provision for credit losses and $51.6 million in noninterest expenses Income Statement Summary (in thousands, except per share data) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Interest Income | $60,130 | $50,953 | | Provision for credit loss | $2,780 | $2,172 | | Noninterest Income | $22,512 | $21,776 | | Noninterest Expenses | $51,623 | $49,942 | | Net Income | $21,471 | $15,682 | | Diluted EPS | $1.50 | $1.10 | Average Consolidated Statements of Condition and Net Interest Analysis This analysis details the net interest margin components, showing an average yield on interest-earning assets of 4.79% and an average rate on interest-bearing liabilities of 2.44% for Q2 2025, resulting in a 2.34% interest rate spread and a 3.08% tax-equivalent net interest margin Quarterly Net Interest Margin Analysis | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Avg. Yield on Interest-Earning Assets | 4.79% | 4.69% | 4.56% | | Avg. Rate on Interest-Bearing Liabilities | 2.44% | 2.44% | 2.64% | | Interest Rate Spread | 2.34% | 2.25% | 1.91% | | Net Interest Margin (Tax-Equivalent) | 3.08% | 2.98% | 2.73% | Summary Financial Data The summary data provides a five-quarter trend view of key financial metrics, highlighting steady increases in loans, assets, and equity, with profitability ratios like ROA at 1.05% and ROE at 11.48% for Q2 2025, and a significant decrease in nonperforming assets Quarterly Profitability Ratios (Annualized) | Ratio | Jun-25 | Mar-25 | Dec-24 | Sep-24 | Jun-24 | | :--- | :--- | :--- | :--- | :--- | :--- | | Return on average assets | 1.05% | 0.99% | 0.98% | 0.94% | 0.81% | | Return on average equity | 11.48% | 10.96% | 10.91% | 10.65% | 9.51% | | Net interest margin (TE) | 3.08% | 2.98% | 2.93% | 2.79% | 2.73% | Quarterly Nonperforming Assets (in thousands) | Period | Jun-25 | Mar-25 | Dec-24 | Sep-24 | Jun-24 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total nonperforming assets | $52,572 | $71,159 | $65,185 | $62,655 | $62,548 | Non-GAAP Measures The company presents a reconciliation for the non-GAAP measure of Tangible Book Value Per Share, which was $46.31 as of June 30, 2025, demonstrating growth from $44.88 in the prior quarter and $40.35 in the prior year Reconciliation of Book Value Per Share | Per Share Value | Jun-25 | Mar-25 | Jun-24 | | :--- | :--- | :--- | :--- | | Common equity book value (GAAP) | $52.79 | $51.36 | $46.86 | | Tangible book value (Non-GAAP) | $46.31 | $44.88 | $40.35 |