Tompkins Financial Corporation Reports Record Earnings Per Share for the Fourth Quarter of 2025

Tompkins Financial Corporation ("Tompkins" or the "Company") reported diluted earnings per share (GAAP) of $6.70 for the fourth quarter of 2025, up $5.33 or 389.1% compared to the fourth quarter of 2024. The Company had record operating diluted earnings per share (non-GAAP) for the fourth quarter of 2025 of $1.78. A reconciliation of these amounts can be found on page 14 of this press release. Net income for the fourth quarter of 2025 was $96.2 million, up $76.6 million, or 389.6%, compared to the $19.7 million reported for the fourth quarter of 2024.

For the year ended December 31, 2025, diluted earnings per share (GAAP) was $11.24, up $6.27 or 126.2% from the $4.97 reported for the year ended December 31, 2024. The Company had record operating diluted earnings per share (non-GAAP) for year ended December 31, 2025 of $6.31. A reconciliation of these amounts can be found on page 14 of this press release. Net income was $161.1 million for the year ended December 31, 2025, up $90.2 million or 127.3%, compared to $70.9 million reported for 2024.

The increase in diluted earnings per share and net income for both the fourth quarter and full year periods included the sale of all of the issued and outstanding shares of capital stock of the Company's wholly-owned subsidiary, Tompkins Insurance Agencies, Inc. ("TIA") to Arthur J. Gallagher & Co. (“Gallagher”) (NYSE: AJG) for approximately $223.0 million in cash, subject to customary purchase price adjustments. The transaction generated a pre-tax gain of $188.2 million, recognized in non-interest income. The Company also incurred $4.3 million in expenses related to the sale of TIA, which are reported in noninterest expense. Partially offsetting the increase for both the fourth quarter and full year periods was the sale of $564.2 million of available-for-sale debt securities during the fourth quarter of 2025, which resulted in a pre-tax loss of $78.7 million. The Company expects this sale to favorably impact securities revenue in future periods as the securities sold had an average yield of 1.56%, while the proceeds of the sale were largely reinvested into securities with an estimated yield of approximately 4.52%. The weighted average life of the securities purchased and sold was approximately 5.5 years.

Tompkins President and CEO, Stephen Romaine, commented, "We are pleased to report record quarterly net income and operating earnings for the fourth quarter of 2025. Our improved results were driven by strong loan and deposit growth, both of which were up over 7% for the year, and by an expanding net interest margin which was up 49 basis points over the fourth quarter of 2024. During the fourth quarter of 2025, we announced the sale of Tompkins Insurance Agencies, Inc. and restructured our balance sheet, which we believe leaves us with continued momentum heading into 2026 and provides us with capital to support strategic investments for the future."

SELECTED HIGHLIGHTS FOR THE PERIOD:

• Net interest margin improved to 3.42% in the fourth quarter of 2025, up 22 basis points from the immediate prior quarter, and up 49 basis points from the fourth quarter of 2024.
• Total loans at December 31, 2025 were up $158.2 million, or 2.5% compared to September 30, 2025 (10.1% on an annualized basis), and up $426.3 million, or 7.1%, from December 31, 2024.
• Total deposits at December 31, 2025 were $6.9 billion, down $115.3 million, or 1.6% compared to the most recent prior quarter end, and up $466.0 million, or 7.2%, from December 31, 2024.
• Total average cost of funds of 1.71% for the fourth quarter of 2025 was down 12 basis points compared to the most recent prior quarter, and down 17 basis points compared to the same period of the prior year.
• Loan to deposit ratio at December 31, 2025 was 92.9%, compared to 89.2% at September 30, 2025, and 93.0% at December 31, 2024.
• Regulatory Tier 1 capital to average assets was 10.62% at December 31, 2025, up compared to 9.41% at September 30, 2025, and 9.27% at December 31, 2024.
• Common equity book value per share (GAAP) increased 19.1% and tangible book value per share (Non-GAAP) increased 24.6% over the most recent prior quarter. A reconciliation of these amounts can be found on page 14 of this press release.

NET INTEREST INCOME

Net interest income was $69.1 million for the fourth quarter of 2025, up $5.2 million or 8.1% compared to the third quarter of 2025, and up $12.8 million or 22.7% compared to the fourth quarter of 2024. For the year ended December 31, 2025, net interest income was $249.7 million, up $38.6 million or 18.3% when compared to 2024. The increase in net interest income in the fourth quarter of 2025 and the full year period compared to the most recent prior quarter and the same periods in 2024 was due to improvement in net interest margin, which is discussed below, and growth in average loans.

Net interest margin was 3.42% for the fourth quarter of 2025, compared to 3.20% reported for the third quarter of 2025, and 2.93% reported for the fourth quarter of 2024. Net interest margin of 3.17% for the twelve months ended December 31, 2025 was up 38 basis points over 2024. The increases in net interest margin reflect growth in average loan balances, improved yields on average earnings assets, and lower funding costs as a result of lower rates and improved funding mix. Average yield on securities for the fourth quarter of 2025 was up 45 basis points over the third quarter of 2025 and up 68 basis points over the fourth quarter of 2024, mainly a result of the reinvestment within the portfolio at higher yields.

Average loans for the quarter ended December 31, 2025 were up $120.2 million, or 1.9%, over the most recent prior quarter, and were up $404.8 million, or 6.8%, compared to the same prior year period. The increase in average loans over both prior periods was mainly in the commercial real estate and commercial and industrial portfolios. The average yield on interest-earning assets for the quarter ended December 31, 2025 was 4.98%, an increase of 8 basis points from 4.90% for the quarter ended September 30, 2025, and up 31 basis points from 4.67% for the quarter ended December 31, 2024.

Average total deposits of $7.0 billion for the fourth quarter of 2025 were up $126.3 million, or 1.8%, compared to the third quarter of 2025, and up $390.8 million, or 5.9%, compared to the fourth quarter of 2024. The cost of interest-bearing deposits of 2.18% for the fourth quarter of 2025 was down 8 basis points compared to the most recent prior quarter, and down 13 basis points from 2.31% for the fourth quarter of 2024. The ratio of average noninterest bearing deposits to average total deposits for the fourth quarter of 2025 was 27.4% compared to 27.6% for the third quarter of 2025, and 28.0% for the fourth quarter of 2024. The average cost of interest-bearing liabilities for the fourth quarter of 2025 was 2.30%, down 15 basis points when compared to the most recent prior quarter, and down 23 basis points from the same period in 2024.

NONINTEREST INCOME

Noninterest income of $125.8 million for the fourth quarter of 2025 was up $104.9 million or 503.8% compared to the fourth quarter of 2024. Year-end noninterest income of $196.9 million was up $108.7 million or 123.4% compared to the same period in 2024. The increase in noninterest income is mainly due to the above-mentioned sale of TIA to Gallagher during the fourth quarter of 2025 resulting in a pre-tax gain of $188.2 million in other income, which was partially offset by the above-mentioned sale of available-for-sale securities at a pre-tax loss of $78.7 million. For the three and twelve months ended December 31, 2025, investment services income was up 3.6% and 2.7%, respectively over the same periods prior year, while card services income was down 2.9% and 4.6%, respectively over the same periods. Insurance revenue for the three and twelve months ended December 31, 2025 was down 63.7% and 9.0%, respectively, compared to the same periods in 2024, as a result of the sale of TIA during the fourth quarter of 2025.

NONINTEREST EXPENSE

Noninterest expense was $54.1 million for the fourth quarter of 2025, up $4.2 million or 8.3% compared to the same period in 2024. Noninterest expense for the full year ended December 31, 2025 was $210.2 million, an increase of $10.6 million or 5.3% compared to the $199.6 million reported for 2024. As previously stated, noninterest expense included $4.3 million of expenses related to the sale of TIA in the fourth quarter of 2025. Increases for both periods over the prior year periods were mainly in salaries and employee benefits, which were up $3.0 million or 8.9% for the fourth quarter of 2025, and up $7.7 million or 6.0% for the year ended December 31, 2025, compared to the same periods in 2024. The increases were a result of the expenses related to the sale of TIA and annual merit adjustments. In addition, professional fees were up $1.1 million or 69.6% and up $2.9 million or 45.0% for the fourth quarter and year ended December 31, 2025, compared to the same periods in 2024. The increase in professional fees reflects initiatives to support future growth.

INCOME TAX EXPENSE

Provision for income tax expense was $43.5 million for an effective rate of 31.1% for the fourth quarter of 2025, compared to $6.0 million for an effective rate of 23.5% for the fourth quarter of 2024. For the year ended December 31, 2025, the provision for income tax expense was $63.8 million for an effective rate of 28.4% compared to provision of $22.0 million for an effective rate of 23.7% for 2024. The fourth quarter and full year periods in 2025 were impacted by the sale of TIA, which added approximately $54.4 million to the provision for income tax expense for 2025. Also impacting both the quarter and full-year periods was a decrease in pre-tax income, due primarily to the above-mentioned realized losses on the sale of certain available-for-sale securities.

ASSET QUALITY

The allowance for credit losses was 0.89% of total loans and leases at December 31, 2025, down from 0.95% at September 30, 2025, and from 0.94% at December 31, 2024. The decrease in the allowance for credit losses compared to December 31, 2024 was mainly due to updated economic forecasts for unemployment and gross domestic product for the quarter, as well as improved asset quality. The ratio of the allowance to total nonperforming loans and leases was 120.30% at December 31, 2025, compared to 113.06% at September 30, 2025, and 111.06% at December 31, 2024. The increase in the ratio compared to the fourth quarter of 2024 was due to the decrease in nonperforming loans and leases, discussed in more detail below.

Provision for credit losses for the fourth quarter of 2025 was $1.0 million compared to $1.4 million for the fourth quarter of 2024. Provision for credit losses for the year-ended December 31, 2025 was $11.5 million compared to $6.6 million for the same period in 2024. The increase in provision expense for the full year period compared to 2024 was mainly driven by a charge-off of $4.7 million in the second quarter of 2025 on a commercial real estate relationship totaling $18.1 million, and a charge-off of $2.4 million in the fourth quarter of 2025 on a commercial real estate relationship totaling $7.4 million. At the time of the charge-offs, the two commercial real estate relationships had specific reserves of $4.2 million and $1.6 million, respectively. Net charge-offs for the three months ended December 31, 2025 were $3.3 million, compared to $1.1 million for the third quarter of 2025, and $857,000 for the fourth quarter of 2024.

Nonperforming assets of $48.2 million represented 0.56% of total assets at December 31, 2025, down from $53.0 million or 0.63% of total assets at September 30, 2025, and down from $65.2 million or 0.80% of total assets at December 31, 2024. The decrease in nonperforming assets at December 31, 2025 compared to prior year end was largely due to one nonperforming commercial real estate loan totaling $14.2 million moving into other real estate owned during the fourth quarter of 2024, and subsequently being sold in the first quarter of 2025. In addition, during the fourth quarter of 2025, a $7.4 million commercial real estate loan was removed from nonaccrual loans, reflecting a payoff of $5.0 million, with a partial charge-off of $2.4 million. Loans past due 30-89 days totaled $8.8 million at December 31, 2025, $7.8 million at September 30, 2025, and $28.8 million at December 31, 2024. The decrease in loans past due 30-89 days when compared to December 31, 2024 was mainly due to one commercial real estate loan totaling $17.3 million being moved to nonaccrual loans and leases in the first quarter of 2025.

Special Mention and Substandard loans and leases totaled $134.5 million at December 31, 2025, compared to $144.2 million reported at September 30, 2025, and $111.1 million reported at December 31, 2024.

CAPITAL POSITION

Capital ratios at December 31, 2025 remained well above the regulatory minimums for well-capitalized institutions. The ratio of total capital to risk-weighted assets was 14.55% at December 31, 2025, compared to 13.27% at September 30, 2025, and 13.07% at December 31, 2024. The ratio of Tier 1 capital to average assets was 10.62% at December 31, 2025, compared to 9.41% at September 30, 2025, and 9.27% at December 31, 2024. Capital ratios at December 31, 2025 were positively impacted by the proceeds of the sale of TIA.

During the fourth quarter of 2025, the Company repurchased 22,339 shares of common stock at an aggregate cost of $1.6 million. These shares were purchased under the Company's 2025 Stock Repurchase Plan announced in the third quarter of 2025.

LIQUIDITY POSITION

The Company's liquidity position at December 31, 2025 was consistent with its position at September 30, 2025. Liquidity is enhanced by ready access to national and regional wholesale funding sources including Federal funds purchased, repurchase agreements, brokered deposits, Federal Reserve Bank's Discount Window advances and Federal Home Loan Bank (FHLB) advances. The Company maintained ready access to liquidity of $1.7 billion, or 19.1% of total assets, at December 31, 2025.

ABOUT TOMPKINS FINANCIAL CORPORATION

Tompkins Financial Corporation is a banking and 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 Community Bank, which offers a full array of products and services, including commercial and consumer banking. Tompkins Community Bank provides wealth management services under the Tompkins Financial Advisors brand, including investment management, trust and estate, financial and tax planning services. For more information on Tompkins Financial, visit www.tompkinsfinancial.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The statements contained in this press release that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements may be identified by use of such words as "may", "will", "estimate", "intend", "continue", "believe", "expect", "plan", "commit", or "anticipate", as well as the negative and other variations of these terms and other similar words. Examples of forward-looking statements may include statements regarding revenue expectations, growth, and the sufficiency of collateral to cover exposure related to Special Mention and Substandard loans. Forward-looking statements are made based on management’s expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors relating to the Company’s operations and economic environment, all of which are difficult to predict and many of which are beyond the control of the Company, that could cause actual results of the Company to differ materially from those expressed and/or implied by forward-looking statements and historical performance. The following factors, in addition to those listed as Risk Factors in Item 1A in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission, are among those that could cause actual results to differ materially from the forward-looking statements and historical performance: changes in general economic, market and regulatory conditions; our ability to attract and retain deposits and other sources of liquidity; gross domestic product growth and inflation trends; the impact of the interest rate and inflationary environment on the Company's business, financial condition and results of operations; other income or cash flow anticipated from the Company's operations, investment and/or lending activities; changes in laws and regulations affecting public companies, banks, bank holding companies and/or financial holding companies, including the Dodd-Frank Act, and other federal, state and local government mandates; the impact of any change in the FDIC insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount; changing supervisory and regulatory scrutiny of financial institutions; technological developments and changes; cybersecurity incidents and threats; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; governmental and public policy changes, including environmental regulation; reliance on large customers; the geographic concentration of our business; the ability to access financial resources in the amounts, at the times, and on the terms required to support the Company's future businesses; and the economic impact, including market volatility, of national and global events, including the response to bank failures, war and geopolitical matters (including the war in Ukraine and the impacts of continued or escalating hostilities in the Middle East), tariffs and trade wars, widespread protests, civil unrest, political uncertainty, and pandemics or other public health crises, and the related changes to customer behavior or credit risk resulting from any of the foregoing. The Company does not undertake any obligation to update its forward-looking statements.