Tompkins Financial Corporation reported net income of $20.4 million for the first quarter of 2018, an increase of 30.0% from the $15.7 million reported for the same period in 2017. Diluted earnings per share were $1.33 for the first quarter of 2018, a 29.1% increase from $1.03 reported for the first quarter of 2017.

President and CEO, Stephen S. Romaine said “We are excited to start 2018 with very strong earnings growth. Solid loan growth, an improved net interest margin, and higher fee income all contributed to earnings improvement over the prior year. Our first quarter earnings also benefited from a lower tax rate in 2018.”

Selected highlights for first quarter:

• Diluted earnings per share of $1.33 represent the best quarterly earnings in Company history, and are up 29.1% over the same period in 2017
• Net interest income of $52.7 million was up 9.7% compared to the first quarter of 2017
• Total loans of $4.7 billion were up 9.5% over the same period in 2017, and are up 0.8% compared to December 31, 2017
• Total deposits of $4.9 billion reflect an increase of 1.6% over the same period last year, and are up 1.9% from December 31, 2017

NET INTEREST INCOME

Net interest income of $52.7 million for the first quarter of 2018 increased by $4.7 million, or 9.7% compared to the same period in 2017, and was up 1.4% compared to the fourth quarter of 2017. The increase in net interest income over prior year benefited from a 10.0% increase in average loans and a 13.7% increase in average noninterest-bearing deposits when compared to the same period in 2017. Net interest income was also positively impacted by reduced interest expense on time deposits, which benefited from accelerated accretion of purchase accounting deposit discounts from certain VIST acquired deposits. The net interest margin was 3.42% for the first quarter of 2018, up from 3.38% for the first quarter of 2017, and in line with the fourth quarter of 2017.

NONINTEREST INCOME

Noninterest income represented 25.3% of total revenues in the first quarter of 2018, compared to 26.4% in the same period in 2017, and 25.0% for the most recent prior quarter. Noninterest income of $17.8 million was up 3.4% compared to the same period last year, and up 3.0% over the fourth quarter of 2017. Contributing to the increase was fee based income related to insurance and investment services, card services and deposit account fees which improved a combined 5.5% over the same period in 2017.

NONINTEREST EXPENSE

Noninterest expense was $43.7 million for the first quarter of 2018, which was up 5.7% from the same period in 2017, and down 5.5% compared to the fourth quarter of 2017. The increase in noninterest expense was mainly related to higher salaries and wages in the first quarter of 2018. Other operating expenses in the fourth quarter of 2017 included $2.7 million related to a write off of a historic tax credit investment.

INCOME TAX EXPENSE

The Company’s effective tax rate was 22.0% in the first quarter of 2018, compared to 31.9% for the same period in 2017. The decrease is a direct result of The Tax Cuts and Jobs Act of 2017, which reduced the Federal statutory tax rate from 35% in 2017, to 21% in 2018.

ASSET QUALITY

Asset quality trends remained strong in the first quarter of 2018. Nonperforming assets represented 0.41% of total assets at March 31, 2018, up slightly from 0.38% at December 31, 2017. Nonperforming asset levels continue to be below the most recent Federal Reserve Board Peer Group Average1 of 0.63%.

Provision for loan and lease losses was $567,000 for the first quarter of 2018, down from $769,000 reported for the first quarter of 2017. Net charge-offs for the first quarter of 2018 were $127,000 compared to $358,000 reported in the first quarter of 2017.

The Company’s allowance for originated loan and lease losses totaled $40.1 million at March 31, 2018, and represented 0.91% of total originated loans and leases at March 31, 2018, compared to 0.92% at March 31, 2017. The total allowance represented 159.34% of total nonperforming loans and leases at March 31, 2018, down from 180.02% at March 31, 2017, and 172.84% at December 31, 2017.

CAPITAL POSITION

Capital ratios remain well above the regulatory well capitalized minimums. The ratio of tangible common equity to tangible assets was 7.29% at March 31, 2018, improved from the 7.24% reported for the most recent prior quarter ended December 31, 2017, and down from 7.44% at March 31, 2017.

ABOUT TOMPKINS FINANCIAL CORPORATION

Tompkins Financial Corporation is a 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 Trust Company, Tompkins Bank of Castile, Tompkins Mahopac Bank, Tompkins VIST Bank, Tompkins Insurance Agencies, Inc., and offers wealth management services through Tompkins Financial Advisors. For more information on Tompkins Financial, visit www.tompkinsfinancial.com.