Tompkins Financial Corporation Announces Second Quarter Earnings: CEO Remains Optimistic Amidst Challenging Banking Environment

Tompkins Financial Corporation CEO Stephen Romaine Remains Positive Amidst Challenging Q2 Earnings


Tompkins Financial Corporation ("Tompkins" or the "Company") has reported its second-quarter earnings for 2023, revealing diluted earnings per share of $0.59, reflecting a decline of 56.3% from the previous quarter and 59.3% from the same quarter in 2022. Despite these challenges, the President and CEO, Stephen Romaine, remains positive about the company's performance, citing positive trends in certain key areas.

Positive Trends in the Second Quarter

Stephen Romaine highlighted some encouraging trends during the second quarter of 2023 and the first half of the year. These included annualized loan growth of 6.0% from the immediate prior quarter, stable noninterest-bearing deposit balances compared to the first quarter of the year, and year-to-date annualized fee income growth of 1.3% compared to the same period in 2022.

Loan and Deposit Growth

Total loans at June 30, 2023, increased by 6.0% annualized compared to the immediate prior quarter, reaching $5.4 billion. Additionally, total deposits were reported at $6.5 billion at the end of the second quarter, representing a decline of 0.84% from the previous quarter but a slower decline compared to the same period in 2022.

Net Interest Income and Margin

Net interest income for the second quarter of 2023 was reported at $51.9 million, down from $54.2 million in the first quarter of the same year and $58.3 million in the second quarter of 2022. The net interest margin for the second quarter of 2023 was 2.83%, reflecting a decline compared to both the first quarter of 2023 and the second quarter of 2022. This decrease was primarily due to higher interest rates on interest-bearing liabilities outpacing increases on interest-earning asset yields in the current interest rate environment.

Noninterest Income and Expenses

Noninterest income for the second quarter of 2023 amounted to $12.6 million, showing a decline of 33.4% compared to the second quarter of 2022. However, noninterest income still accounted for 19.6% of total revenue for the quarter. On the other hand, noninterest expenses for the second quarter of 2023 were $52.0 million, up 5.8% from the second quarter of 2022. This increase was mainly attributed to higher personnel-related expenses, including salaries and wages, reflecting annual merit adjustments.

Effective Tax Rate and Asset Quality

The Company's effective tax rate was 17.3% for the second quarter of 2023, lower than the 23.2% reported for the same period in 2022. The decrease is primarily due to the anticipated retention of certain New York State tax benefits. The allowance for credit losses increased to 0.91% of total loans and leases at June 30, 2023, from 0.87% at March 31, 2023, and 0.85% at June 30, 2022.

Capital and Liquidity Position

Tompkins Financial Corporation's capital ratios at June 30, 2023, remained well above the regulatory minimums for well-capitalized institutions. The ratio of total capital to risk-weighted assets was 14.48% at June 30, 2023, compared to 14.42% at December 31, 2022, and 14.07% at June 30, 2022. Additionally, the company repurchased 108,219 common shares during the second quarter of 2023, spending $6.3 million. Furthermore, the Board of Directors has authorized a new Stock Repurchase Program, allowing the repurchase of up to 400,000 shares of the Company's outstanding common stock over the next 24 months.

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