Tompkins Financial Corporation
Annual Report 2014

Plain-text annual report

Looking ahead. TOGETHER. TompkinsFinancial.com CORPORATE REPORT | Two THOUSAND Fourteen  FINANCIAL HIGHLIGHTS IN THOUSANDS, EXCEPT PER SHARE DATA 2014 2013 % CHANGE Total assets Net income attributable to Tompkins Financial Corporation Net operating income1 Diluted earnings per share Adjusted diluted earnings per share1 Cash dividends per share $5,269,561 $52,041 $52,041 $3.48 $3.48 $1.62 $5,003,039 $50,856 $49,379 $3.46 $3.36 $1.54 5.33 % 2.33 % 5.39 % 0.58 % 3.57 % 5.19 % 1 These measures were adjusted to exclude nonrecurring items. These adjusted measures are considered non-GAAP measures and are defined in the Company’s Form 10-K. SELECTED FINANCIAL DATA IN THOUSANDS, EXCEPT PER SHARE DATA 2014 2013 2012 1 2011 2010 Financial Statement Highlights Assets Total loans Deposits Other borrowings Total equity Interest and dividend income Interest expense Net interest income Provision for loan and lease losses Net gains on securities transactions Net income attributable to Tompkins Financial Corporation Per Share Information Basic earnings per share Diluted earnings per share Adjusted diluted earnings per share2 Cash dividends per share Book value per share Tangible book value per share3 Selected Ratios Return on average assets Return on average equity Average shareholders’ equity to average assets Dividend payout ratio Other Selected Data IN WHOLE NUMBERS, UNLESS OTHERWISE NOTED Employees (average full-time equivalent) Banking offices Bank access centers (ATMs) Trust and investment services assets under management, or custody (in thousands) $5,269,561 3,393,288 4,169,154 356,541 489,583 184,493 20,683 163,810 2,306 391 $5,003,039 3,194,284 3,947,216 331,531 457,939 185,104 23,975 161,129 6,161 599 $4,837,197 2,954,610 3,950,169 111,848 441,360 158,356 24,213 134,143 8,837 324 $3,400,248 $3,260,343 1,910,358 1,981,849 2,495,873 2,660,564 244,193 186,075 273,408 299,143 144,062 137,088 32,287 25,682 111,775 111,406 8,507 8,945 178 396 52,041 50,856 31,285 35,419 33,831 3.51 3.48 3.48 1.62 32.87 25.69 1.03 % 10.76 % 9.54 % 46.15 % 3.48 3.46 3.36 1.54 31.05 23.70 1.03 % 11.47 % 9.00 % 44.25 % 2.44 2.43 3.16 1.46 30.67 22.96 0.76 % 8.30 % 9.21 % 59.84 % 3.21 3.20 3.21 1.40 26.89 22.58 3.13 3.11 3.11 1.33 25.09 20.88 1.07 % 12.02 % 8.94 % 43.61 % 1.06 % 12.72 % 8.33 % 42.49 % 1,037 65 85 989 66 84 839 66 83 719 45 63 726 45 69 $3,761,972 $3,443,636 $3,240,782 $2,780,622 $2,859,725 1 Includes the impact of the acquisition of VIST Financial on August 1, 2012. 2 Adjusted diluted earnings per share reflects adjustments made for certain nonrecurring items, including merger and integration expenses. There were no adjustments for nonrecurring items in 2014. Adjustments for 2013 included an $(846,000) after-tax gain on the redemption of trust preferred stock and a $(771,000) after-tax gain on a deposit conversion. Also, in 2013, 2012 and 2011, after-tax merger related expenses totaled $140,000, $9.7 million and $152,000, respectively. There was also an after-tax VISA accrual adjustment of $243,000 in 2012. There were no merger related expenses in prior years. Adjusted diluted earnings per share is a non-GAAP measure that management believes provides management and investors with information that is useful in understanding the Company’s financial performance and condition. 3 Tangible equity capital is used to calculate tangible book value per share and excludes goodwill and other intangibles of $106.9 million in 2014, $108.4 million in 2013, $110.9 million in 2012, $48.0 million in 2011, and $45.9 million in 2010. This is a non-GAAP measure that management believes provides management and investors with information that is useful in understanding the Company’s financial performance and condition. FINANCIAL HIGHLIGHTS | Two THOUSAND Fourteen —> 1 FINANCIAL HIGHLIGHTS | Two THOUSAND Fourteen —> 1 TOMPKINS FINANCIAL CORPORATION EXPERIENCED ANOTHER EXCELLENT YEAR IN 2014. It was a year in which we made many changes—in our Board leadership, in our brand, and in our technology. Shareholder Message We were able to make these changes with confidence, though, as our vision for our Company remained constant: one of strength, stability, profitability and growth, with a local focus, and a commitment to charitable work in the communities we serve. We are looking ahead—together—to achieving even more. We are pleased to report another year of record earnings for our Great progress was made in Pennsylvania last year, and other roles, including Vice Chairman of the Tompkins Our Annual Meeting will take place on May 4 at 5:30 Company. With adjustments for non-recurring items, diluted we look forward to continued success in this region. Financial Board of Directors. We would like to express PM at the Country Club of Ithaca. We will also be earnings per share were up 3.6% over last year. Credit quality Our efforts to work alongside our customers led to our gratitude to Jim for his exceptional leadership, and hosting several Shareholder Information Meetings: continued to improve as well, with non-performing assets down an exceptional improvement in asset quality. This is we look forward to his continued contributions. John in Western New York on May 6 at 5:30 PM at the over 30% from December 31, 2013. Year-end loan balances were up an impressive turnaround from when VIST first joined McKenna was named the new President and CEO of Genesee Country Village & Museum, in the Hudson by more than 6%, and average non-interest bearing deposits were our Company. We see great opportunities for growth Tompkins Bank of Castile. John was formerly Senior Valley region on May 14 at 6:00 PM at Villa Barone up by 12%. Fee-based revenue from insurance, investment services in Pennsylvania, and last year’s success positions us Vice President of Commercial Lending at Tompkins in Mahopac, and in Southeastern Pennsylvania on and deposit service charges was also up 3.6% for the year. well to take advantage of them. Bank of Castile and brings with him over 25 years of May 19 at 5:30 PM at the Crowne Plaza in Reading. banking experience. As always, we look forward to seeing all of our 2014 was Dr. Thomas Rochon’s first year as Chairman of the Board We continue to build on the synergies of our shareholders at these meetings. for Tompkins Financial. Tom has served as a Director since 2009. Pennsylvania and New York insurance businesses, Two of our corporate board members will be leaving This past summer, he led the board and senior management leveraging the strengths of both teams. Last year, in May of 2015: Jim Hardie and Bill Spain. Jim and Bill through an in-depth strategic planning process that reinforced we made significant strides in expanding our health have made great contributions to our Company over ongoing strategies which continue to prepare us well for the future. benefits business into Western and Central New the years. We appreciate their service, their insights York with the addition of a number of new, large and their friendship, and we wish them well in all their We completed a major rebranding of our Company, an effort that clients. We also enhanced the customer experience in future endeavors. affected every office and every employee. The “Tompkins” name Pennsylvania with a more efficient, personalized claim now takes the lead in all of our branding, in every territory. This process. Tompkins Insurance Agencies continues to rebranding was highly significant for us, creating a common thread enjoy retention rates that are above 95%, among the among all of our affiliates. So, for example, a customer of Tompkins best in the industry. Bank of Castile can now immediately see the connection with Tompkins Financial Advisors† and Tompkins Insurance Agencies. Tompkins Financial Advisors† enjoyed another year This linkage is also important for our publicly traded stock, helping of solid performance with growth in all regions. the financial community to recognize that all of our brands are Western New York, for example, saw double-digit part of Tompkins Financial. Our rebranding was a substantial growth in new assets, while the Hudson Valley region undertaking. Thanks to the efforts of our employees, it was increased growth in new clients by over 50%. Our completed on schedule and was well received in all of our regions. wealth management team introduced an impressive In 2014, we launched Business Mobile Banking for use on wealth advisors. In 2014, we also welcomed Steve smartphones, giving businesses convenient mobile banking services. Angelis as the new President of Tompkins Financial Our introduction of mobile check deposit gave customers the Advisors and Chris Kim as our new Chief new tool set to support both our customers and our ability to deposit checks from anywhere with their smartphones or Investment Officer. tablets. Our new credit cards, co-branded with American Express, come with innovative EMV chip technology, for increased security After 26 years of committed service, Jim and greater fraud protection. We are bringing this new technology Fulmer retired as President and CEO of to all of our cards. Our customers can now also enjoy Apple Pay Tompkins Bank of Castile. Jim’s success in capabilities, giving them the power to pay safely and securely with a this role has been extraordinary, taking the single touch of their iPhone. bank from five locations in two counties with assets of $85 million, to 16 offices in five counties with over $1.2 billion in assets. Jim will remain as Chairman of the Tompkins Bank of Castile Board of Directors. He will also continue in several Dr. Thomas R. Rochon | C H A I R M A N Stephen S. Romaine | P R E S I D E N T & C E O MESSAGE TO SHAREHOLDERS | Two THOUSAND Fourteen —> 3 Thank you to everyone who made 2014 another successful year for Tompkins Financial Corporation: our customers, who value and trust us; our employees, who consistently go above and beyond; and our shareholders, who provide extraordinary confidence and support. None of this is possible without you.Landscape contractor finds convenient, responsive service. Cayuga Landscape is the largest and most respected landscape contractor in Tompkins County. They are trusted for everything from creating home landscapes, to installing major horticultural projects for Cornell University. A landscaping project the company did for Tompkins Trust Company has grown into a close relationship with the bank. “We rely on Tompkins for our checking, savings and direct deposit,” says David Fernandez. “We also use Tompkins Insurance Agencies for our workers’ comp, general liability and other business insurance.” David especially appreciates the friendly staff who service his accounts. “They’re always professional,” he says. “When I need competent, timely advice, I can always depend on them.” Cayuga Landscape Co., Inc. - David Fernandez, President 2014 was a strong year for Central New York, with growth in mortgages, core deposits and commercial loans. We appreciate the continued efforts of all of our employees in making our success possible. We celebrated the one-year anniversary of our new office in In Central New York, we serve a population with a high rate of Cortland, NY. Our reception by the community has been excellent. turnover. So in 2014, we launched a Concierge Service to help We have truly been embraced as Cortland’s community bank, connect people who are new to our community with the banking, while experiencing double-digit growth in deposits and small insurance and wealth management services they need. This new business lending. Our success in Auburn also continued. We service is helping to relieve stress and ease the transition to our area, currently hold the second largest share in Cayuga County for while introducing people to our broad range of services. deposits. Our success in both of these markets shows the impact of treating people in the communities we serve as both valued As competitors have left the area, we stepped up our efforts customers and genuine friends. to garner more business from students. This effort led to a 70% Last year was a very good year for small business lending, with important segment for us, providing an entrée to new business in increase in student account acquisition in 2014. Students are a very continued growth and an overall expansion in our small business the Ithaca area, in particular. loan portfolio. We expanded our emphasis on agricultural business in 2014. This has already resulted in the acquisition of new We used social media such as Facebook to generate attention for agribusiness customers using deposit, loan, cash management and nonprofits. Local organizations created 60-second videos telling insurance services. about their work in the community. The public then voted on their favorites. Tompkins Trust Company made donations to important Tompkins Insurance Agencies experienced an expansion in community groups through this project. This was a small part of agricultural business, with a special focus on wineries. We also our efforts to support the communities where we live and work. purchased a small benefits firm in Ithaca. This acquisition enabled As always, we thank our employees for all they do to support us to gain share, create a stronger bond with current customers, charitable organizations in their neighborhoods. Their efforts— and expand our support of customers during healthcare reform. both in their day-to-day work and as volunteers—are inspiring and greatly appreciated. Tompkins Financial Advisors† had significant growth in new clients. We brought in a new Senior Trust Counsel, enabling us to reach out to new prospects in our region. Our wealth management organization continued to enjoy client retention rates of 95%, among the highest in the industry. We cannot thank our employees enough for the efforts that led to this outstanding level of client satisfaction. 4 —> Two THOUSAND Fourteen | CENTR AL NEW YORK CENTR AL NEW YORK | Two THOUSAND Fourteen —> 5 Hospicare gets help with its unique needs. Caring is central to hospice and palliative care. So it is not surprising that Dale Johnson’s nonprofit agency would choose a bank that truly cares about the community. “Tompkins Trust Company has been a major supporter of Women Swimmin’, our signature fundraising event,” says Dale. He also appreciates how the bank has responded to his agency’s unique requirements. “They give us the exact array of services we need,” says Dale. Hospicare also relies on Tompkins Trust Company for its trust needs and on Tompkins Insurance Agencies for its business insurance. “When we have a question, we don’t need to call New York or Boston or Charlotte,” he adds. “We can get the help we need right in our hometown.” Hospicare & Palliative Care Services Dale Johnson, Executive Director Grocery store executives return to their roots. After serving as executives with a $1.5 billion grocery chain, Greg Young and Myles da Cunha made a major life change—by purchasing two P & C Fresh stores. “We wanted to do something local,” says Myles. They started out with a large multinational bank. “But we were invisible from a customer service perspective,” says Greg. The switch to Tompkins Trust Company made perfect sense. “They have great technology,” says Myles. “But they also take the time to listen and connect.” Adds Greg: “We know the local farmers and the crops they’re growing. Tompkins Trust gives us that same kind of close, local relationship.” Hometown Markets, LLC - Myles da Cunha and Greg Young, Co-Owners 6 —> Two THOUSAND Fourteen | CENTR AL NEW YORK CENTR AL NEW YORK | Two THOUSAND Fourteen —> 7 Last year was another exceptional year in Western New York. While we grew and expanded, we also reaffirmed our commitment to areas that have been critical to our success throughout the years. In 2014, we opened a Tompkins Financial Center on Monroe Last year was one of strong growth in commercial loans. Diversity Avenue in Pittsford, one of the busiest parts of Monroe County. is important in commercial lending, and our loans covered This office acts as a billboard for our Company, reinforcing our industries ranging from manufacturing to agriculture. Lending commitment to the Rochester area. This new location houses to small businesses was a major focus, and this emphasis will insurance, wealth management, mortgage origination and continue into the future. Small businesses are one of our best banking. It has already helped us to acquire significant new sources of new checking accounts, wealth management services accounts in Monroe County. and insurance services. By helping these businesses succeed and grow, we also help the communities we serve to thrive. While we are expanding in urban areas like Monroe County, our commitment to traditional markets continues. In fact, the The quality of our loan portfolio continues to be very strong. exit of other banks from many markets has only created greater Classified loans and past due loans are at an extraordinarily low opportunities for us. Tompkins purchased and renovated a two- level. This not only has a positive impact on earnings, it allows story building on Main Street in Batavia, NY. This building is being us to stay focused on providing the highest quality service to used to support both banking and insurance. The purchase of this our current clients while also seeking relationships with new building demonstrates our commitment to growth in this region. customers. Tompkins Insurance Agencies continues to grow from our roots In 2014, Tompkins Financial placed third among mid-sized in Western New York. This past year, we were ranked the third companies for Rochester’s Top Workplaces. We were also largest insurance firm in Western New York by the Rochester honored to receive the Ethics Award—an outstanding reflection Business Journal, a ranking that covers a six-county region. of the values for which we stand. We thank our employees for Congratulations to everyone at Tompkins Insurance Agencies on making Tompkins Bank of Castile, Tompkins Insurance Agencies this excellent achievement. and Tompkins Financial Advisors† truly great places to work. None of this would be possible without their dedication and hard work. Tompkins Financial Advisors† experienced double-digit growth in new assets in Western New York and strengthened our In April, Joe Bucci will retire from the Tompkins Bank of Castile offerings by providing our customers and wealth advisors with Board and Jim Hardie will retire from the Tompkins Insurance powerful new tools. Our employees did an outstanding job Agencies Board. We would like to thank Joe and Jim for their sharing the benefits of these tools with our customers. outstanding contributions over the years, and we wish them all the best in the future. Local retailer finds service that’s faster and friendlier. John Gerhard has always had a focus on service—first as the Executive Director of a large law firm, and now as the owner of the Bird House, a nature-oriented retailer. “I got fed up with the service I was getting from our bank,” says John. “They were interested in their spreadsheets. My style was shaking hands.” He talked to Tompkins Bank of Castile about his commercial loans. “Within three days, I had proposals that made good sense,” he says. John gradually shifted all of his business to Tompkins. “I ended up with better rates, while getting better service,” says John. “Tompkins acts like they can’t do enough for me.” The Bird House John Gerhard, President 8 —> Two THOUSAND Fourteen | WESTERN NEW YORK WESTERN NEW YORK | Two THOUSAND Fourteen —> 9 Entertainment destination expands and thrives. Started as a drive-in movie theater “in the middle of nowhere,” the Charcoal Corral has grown steadily. “We started with five or six employees,” says Rick Stefanon, company President. “Now we have over a hundred.” As the business added miniature golf, live entertainment, food, ice cream and a family arcade, Tompkins Bank of Castile provided the financing. “They’ve always been here for me,” says Rick. “They never turned me down.” Rick also depends on Tompkins Insurance Agencies for all of his business insurance. “Whenever I’ve had an insurance issue, they automatically step right in and take care of it,” he says. “I’m worry-free.” Charcoal Corral - Rick Stefanon, President Campus services organization finds a trusted partner. “I can sleep at night, knowing that Tompkins is thinking about us,” says Mark Scott, Executive Director of Campus Auxiliary Services at SUNY Geneseo. The organization manages a wide array of services on the SUNY Geneseo campus—from dining and vending, to transportation and laundry services. The organization turned to Tompkins Insurance Agencies for its umbrella policies and liability insurance over eight years ago. Soon after, they switched their banking to Tompkins Bank of Castile. “We can get immediate answers from them,” says Mark. “They’ve even brought us change when we needed it. What bank on the planet does that? They truly see us as important.” Campus Auxiliary Services at SUNY Geneseo - Mark Scott, Executive Director 10 —> Two THOUSAND Fourteen | WESTERN NEW YORK WESTERN NEW YORK | Two THOUSAND Fourteen —> 11 Truck equipment and trailer dealer finds a simpler, friendlier bank. “Our bank was nickel-and-diming us with service charges,” says Matt Maneri, President of Hudson River Truck and Trailer. When a representative of Tompkins Mahopac Bank stopped by half a dozen times to share what they could offer, Matt decided to switch banks. Now, he couldn’t be more satisfied. Tompkins Mahopac Bank made it easy to get the line of credit his company needed for its large inventory of truck equipment and trailers. “Whenever we go to borrow money— whether it’s for a line of credit, or for a new piece of equipment—they make it simple.” The biggest benefit for Matt? “They make it easy to grow our business.” Hudson River Truck and Trailer Matt Maneri, President Lynn Maneri, Vice President Last year was the most successful year ever in the Hudson Valley region. Our consistent efforts over the past several years were rewarded with record earnings, noteworthy achievements and outstanding contributions to the communities we serve. In 2014, Tompkins Mahopac Bank reached a major milestone, 2014 was a year of new leadership for Tompkins Financial Advisors†. surpassing $1 billion in assets. This is a significant achievement. In the Hudson Valley, we welcomed a new Managing Director We would like to thank all of our employees who worked so hard who helped lead the region to an excellent year, increasing new to take us to this new level of success. Achievements like this are clients by over 55%. We look forward to further growth under his impossible without their hard work, dedication and willingness to leadership. go above and beyond. We stayed true to our mission of providing long-term value to our Our bank experienced a significant improvement in credit quality communities through responsible lending. With the First Home last year. This was achieved by working alongside our customers Club & Community One residential lending programs, we are through difficult economic times. By helping customers get back assisting first-time home buyers—an important catalyst for growth on their feet, we not only improved our credit quality, we helped in the local economy. We are also the only bank in the Hudson these businesses continue as a vital part of the communities we Valley region to participate in the Bridge to Success small business serve. The positive impact—both on our Company and on these lending program for businesses owned by minorities and women. communities—is noteworthy. Through these programs and others like them, we are stimulating growth in our communities while remaining committed to sensible Deposit growth was strong in 2014. The Yonkers Avenue office was lending practices. a big contributor, thanks to its new location and a concentrated effort by our employees to bring in new business. Our Wappingers In addition to supporting over 175 charitable organizations, we Falls office also experienced excellent growth in deposits as a result worked with four charities that had a special personal connection of concentrated new business efforts. We were highly successful to our employees: Maria Fareri Children’s Hospital, the Cystic throughout the rest of our region as many of our new customer Fibrosis Foundation, the ALS Association and Make-A-Wish. Efforts relationships came to us through referrals from existing satisfied like these truly demonstrate our dedication to the communities customers, a true reflection of the service excellence provided by we serve. Thank you to all of our employees for making our fund- our staff. This resulted in a substantial number of new customer raising efforts both highly meaningful and incredibly successful. relationships, creating a solid basis for further growth. 1 —> Two THOUSAND Fourteen | FINANCIAL HIGHLIGHTS HUDSON VALLEY | Two THOUSAND Fourteen —> 13 Construction company reacts nimbly to big opportunities. “We like unique projects,” says Paul Guillaro, President of Unicorn Contracting Corp. Paul needed a bank that could understand such unique projects—and help him to act on them. “Tompkins Mahopac Bank can give me a preliminary answer on a project within a week,” says Paul. As a result, he has turned to the bank for financing on five of his company’s recent projects. “They are very steady and consistent, and we are too,” he says. Paul appreciates how the bank supports his projects—and his business: “They are an important part of keeping our projects moving forward and helping Unicorn continue to grow.” Unicorn Contracting Corp. - Paul Guillaro, President Catering company seizes chance to expand. When Michele Savino and Peter DeVito wanted to expand their catering business to serve commercial airliners, they took the idea to their current bank. “They weren’t interested—they just wished us well!” says Michele. So the two partners talked to Tompkins Mahopac Bank. “They believed in us,” says Michele. And that enabled the partners to transform a 45,000 square foot building into a state-of-the-art catering facility. Michele and Peter have now moved all of their business banking to Tompkins Mahopac Bank. “They gave us the ability to go for what we believed in,” says Michele. “They are simply fantastic.” 121 Inflight Catering - Michele Savino and Peter DeVito, Co-Owners 14 —> Two THOUSAND Fourteen | HUDSON VALLEY HUDSON VALLEY | Two THOUSAND Fourteen —> 15 The Pennsylvania region saw many positive changes in 2014. We made great strides in improving asset quality, we placed exceptional new leaders in key areas, and we recommitted ourselves to helping our communities. Commercial lending at Tompkins VIST Bank continued to grow, VIST Capital Management was rebranded as Tompkins Financial with a focus on first-rate customer service and high asset quality. Advisors†. This change was well-received by both clients and Agricultural lending represents a big opportunity for Tompkins communities. Tompkins Financial Advisors† experienced a record- VIST Bank. So in 2014, we hired a new head of agricultural lending setting performance in Pennsylvania for the year. Thank you to all with 20 years of experience in this area. We are now well-positioned of our employees for their outstanding work in making this success to take advantage of the opportunities that exist in agricultural possible. business. We reaffirmed our commitment to small and medium- sized businesses and consumers. By improving our responsiveness, Several leadership changes at Tompkins VIST Bank helped increasing our visibility and investing in our communities, we are to invigorate our efforts in serving customers. These changes building something we can be proud to share with our neighbors. included new leaders for commercial lending, mortgage sales, retail As a result, we were selected Best Bank in Berks County for the operations and special assets. These leaders are bringing new energy second year in a row. and focus to their jobs, while helping to inspire our employees. Tompkins VIST Bank made incredible progress in reducing troubled People throughout our organization have become re-energized to loans and improving credit quality in 2014. This is an impressive serve their communities. By helping our employees connect with turnaround, one that was achieved in the true spirit of community organizations where they have a passion, we are seeing a significant banking. We worked hand-in-hand with our customers, increase in the number of employees who are giving back by improving credit quality while also building a strong reputation volunteering their time. We would like to express our deepest in the community. By working closely with our customers, we gratitude to our employees for their impressive contributions to reduced delinquencies significantly. It is hard to overestimate the their communities. In your efforts to go above and beyond, you importance of this achievement, and we thank our employees for are truly demonstrating the values that make Tompkins VIST Bank, all they did to make it happen. Tompkins Insurance and Tompkins Financial Advisors† special parts of the communities we serve. Tompkins Insurance purchased a voluntary benefits agency in Southeastern Pennsylvania, allowing us to offer new services that our customers will need under healthcare reform. We also opened a new office in Pottstown, providing much needed space and the opportunity for future expansion by banking, insurance and wealth management. 16 —> Two THOUSAND Fourteen | SOUTHE ASTERN PENNSYLVANIA Liberal arts college saves interest and adds programs. “We operate in an extremely competitive environment,” says Dr. Lex McMillan, President of Albright College. “So we’re always looking for ways we can make ourselves more competitive.” The college started out working with Tompkins Insurance for health, vision and dental insurance. Albright then turned to Tompkins VIST Bank for assistance with financing. “They helped us refinance our current debt with very attractive terms,” says Dr. McMillan. The refinancing saves Albright a significant amount in interest each year. “They are a genuine community bank,” says Dr. McMillan. “Their leadership walks the walk. They truly see us as both their partners and their neighbors.” Albright College Dr. Lex McMillan, President A regional zoo makes a big turnaround. When Al Zone took over as CEO of the Elmwood Park Zoo in 2011, the zoo was in financial trouble. But with the help of Tompkins VIST Bank, the zoo made a dramatic turnaround. A line of credit from Tompkins VIST took the pressure off—and helped the zoo create exciting new attractions. “Tompkins VIST has been phenomenal,” says Al. “With their help, we’ve taken revenue from $1.6 million to about $5 million.” Tompkins Insurance has also had an important impact, helping the zoo manage the risks of new additions like zip-lines. Says Al: “They’re just as excited about our growth as we are.” Elmwood Park Zoo - Al Zone, Executive Director and CEO Construction company gets support through highs and lows. “When George gives his word to a customer, he sticks to it,” says Tammy Rubright-Gallo, Secretary and Treasurer of Rubright Construction. “We wanted a bank that would be like that, too.” George and his company have worked with Tompkins VIST Bank for over a decade, relying on them for everything from commercial loans to checking accounts. “They understand the highs and the lows,” says George. “They’re not a fair weather friend.” George also depends on Tompkins Insurance for his company’s corporate insurance. “They’ve been here for us in the past,” says George. “And they’ll be here for us in the future.” Rubright Construction - George R. Rubright, Jr., President 18 —> Two THOUSAND Fourteen | SOUTHE ASTERN PENNSYLVANIA SOUTHEASTERN PENNSYLVANIA | Two THOUSAND Fourteen —> 19  CONSOLIDATED STATEMENTS OF CONDITION CONSOLIDATED STATEMENTS OF INCOME IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA Assets Cash and noninterest bearing balances due from banks Interest bearing balances due from banks Cash and Cash Equivalents Trading securities, at fair value Available-for-sale securities, at fair value (amortized cost of $1,397,458 at December 31, AS OF DECEMBER 31, 2014 2013 $53,921 2,149 56,070 $82,163 721 82,884 8,992 10,991 2014 and $1,368,736 at December 31, 2013) 1,402,236 1,354,811 Held-to-maturity securities, at amortized cost (fair value of $89,036 at December 31, 2014 and $19,625 at December 31, 2013) Originated loans and leases, net of unearned income and deferred costs and fees Acquired loans and leases, covered Acquired loans and leases, non-covered Less: Allowance for loan and lease losses Net Loans and Leases FDIC indemnification asset Federal Home Loan Bank stock Bank premises and equipment, net Corporate-owned life insurance Goodwill Other intangible assets, net Accrued interest and other assets Total Assets Liabilities Deposits: Interest bearing: Checking, savings and money market Time Noninterest bearing Total Deposits 88,168 2,839,974 19,319 533,995 28,997 3,364,291 1,903 21,259 59,800 73,725 92,243 14,649 86,225 $5,269,561 18,980 2,527,244 25,868 641,172 27,970 3,166,314 4,790 25,041 55,932 69,335 92,140 16,298 105,523 $5,003,039 2,247,708 898,081 1,023,365 4,169,154 2,190,616 865,702 890,898 3,947,216 Federal funds purchased and securities sold under agreements to repurchase 147,037 167,724 Other borrowings, including certain amounts at fair value of $10,961 at December 31, 2014 and $11,292 at December 31, 2013 Trust preferred debentures Other liabilities Total Liabilities Equity Tompkins Financial Corporation Shareholders’ Equity: Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued: 14,931,354 at December 31, 2014; and 14,785,007 at December 31, 2013 Additional paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock, at cost – 111,436 shares at December 31, 2014, and 105,449 shares at December 31, 2013 Total Tompkins Financial Corporation Shareholders’ Equity Noncontrolling interests Total Equity Total Liabilities and Equity 356,541 37,337 69,909 $4,779,978 331,531 37,169 61,460 $4,545,100 1,493 348,889 165,160 (24,011 ) (3,400 ) 488,131 1,452 $489,583 $5,269,561 1,479 346,096 137,102 (25,119 ) (3,071) 456,487 1,452 $457,939 $5,003,039 IN THOUSANDS, EXCEPT PER SHARE DATA Interest and Dividend Income Loans Due from banks Federal funds sold Trading securities Available-for-sale securities Held-to-maturity securities Federal Home Loan Bank stock and Federal Reserve Bank stock Total Interest and Dividend Income Interest Expense Time certificates of deposits of $100,000 or more Other deposits Federal funds purchased and securities sold under agreements to repurchase Trust preferred debentures Other borrowings Total Interest Expense Net Interest Income Less: Provision for loan and lease losses Net Interest Income After Provision for Loan and Lease Losses Noninterest Income Insurance commissions and fees Investment services income Service charges on deposit accounts Card services income Mark-to-market on trading securities Mark-to-market gain on liabilities held at fair value Net other-than-temporary impairment losses1 Other income Net gain on securities transactions Total Noninterest Income Noninterest Expenses Salaries and wages Pension and other employee benefits Net occupancy expense of premises Furniture and fixture expense FDIC insurance Amortization of intangible assets Merger and integration related expenses Other operating expenses Total Noninterest Expenses Income Before Income Tax Expense Income Tax Expense Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation Less: Net income attributable to noncontrolling interests Net Income Attributable to Tompkins Financial Corporation Basic Earnings Per Share Diluted Earnings Per Share YEAR ENDED DECEMBER 31, 2014 2013 2012 $150,966 $151,711 2 0 418 31,298 999 810 184,493 3,845 7,236 2,947 2,287 4,368 20,683 163,810 2,306 161,504 28,489 15,493 9,404 7,942 (269 ) 331 0 8,984 391 70,765 69,558 21,102 12,203 5,708 2,906 2,095 0 41,121 154,693 77,576 25,404 52,172 131 $ 52,041 $3.51 $3.48 10 0 589 31,360 685 749 185,104 4,832 7,933 3,749 2,599 4,862 23,975 161,129 6,161 154,968 27,916 15,109 8,495 7,216 (538 ) 555 0 10,546 599 69,898 67,200 22,164 11,757 5,701 3,214 2,197 228 40,641 153,102 71,764 20,777 50,987 131 $ 50,856 $3.48 $3.46 $124,662 32 2 744 31,232 860 824 158,356 3,322 8,910 4,451 2,094 5,436 24,213 134,143 8,837 125,306 19,421 14,340 7,441 6,030 (332 ) 246 (196 ) 7,534 324 54,808 51,700 18,075 8,969 4,996 2,685 1,264 15,584 34,335 137,608 42,506 11,090 31,416 131 $ 31,285 $2.44 $2.43 1 In 2014 and 2013, there were no other-than-temporary impairment (“OTTI”) charges recognized in noninterest income. In 2012, OTTI on securities available-for-sale totaling $196,000 was recognized in noninterest income. 20 —> Two THOUSAND Fourteen | CONSOLIDATED STATE MENTS OF CONDITION CONSOLIDATED STATEMENTS OF INCOME | Two THOUSAND Fourteen —> 21 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities TOMPKINS FINANCIAL CORPORATION BOARD OF DIRECTORS Patricia A. Johnson VP of Finance & Administration Lehigh University Frank C. Milewski Regional President Providence Service Corporation Sandra A. Parker Retired President & CEO Rochester Business Alliance Michael H. Spain President, Spain Agency, Inc. William D. Spain, Jr. Chairman, Tompkins Mahopac Bank Managing Partner Spain & Spain, PC Alfred J. Weber President, Tweed-Weber, Inc. Craig Yunker Managing Partner, CY Farms Dr. Thomas R. Rochon Chairman President, Ithaca College James W. Fulmer Vice Chairman Stephen S. Romaine President & CEO John E. Alexander Founder, The CBORD Group, Inc. Paul J. Battaglia, CPA Managing Director Freed Maxick CPAs, P.C. Daniel J. Fessenden Executive Director Fred L. Emerson Foundation, Inc. Carl E. Haynes President, Tompkins Cortland Community College James R. Hardie Vice Chairman, Tompkins Insurance Agencies, Inc. Susan A. Henry, Ph.D. Professor Department of Molecular Biology and Genetics Cornell University The Company’s common stock is traded under the symbol “TMP” on the NYSE MKT LLC. The high and low closing sale prices, which represent actual transactions as quoted on the Exchange, of the Company’s common stock for each quarterly period in 2013 and 2014 are presented to the right. The per share dividends paid by the Company in each quarterly period in 2013 and 2014 and the payment dates of these dividends are also presented. Market Price Low High Cash Dividends Amount Date Paid 2013 1st Quarter $42.59 $40.28 2nd Quarter 45.33 39.86 3rd Quarter 49.40 42.54 4th Quarter 51.61 43.52 2014 1st Quarter $50.30 $45.42 2nd Quarter 50.81 44.90 3rd Quarter 48.78 44.04 4th Quarter 56.18 43.98 $0.38 0.38 0.38 0.40 $0.40 0.40 0.40 0.42 2/15/13 5/15/13 8/15/13 11/15/13 2/14/14 5/15/14 8/15/14 11/14/14 $3.48 $3.46 $3.36 $1.40 $1.46 $1.33 $1.62 $1.54 $3.11 $3.21 $3.20 $3.16 $2.43 0.00 10 11 12 13 Diluted Earnings1 PER SHARE IN DOLLARS 0.00 14 10 11 12 Cash Dividends PER SHARE IN DOLLARS 13 14 1.The lighter shaded sections of the bars reflect GAAP earnings per share. The darker shaded sections in 2011, 2012 and 2013 reflect the after-tax impact of merger-related expenses as well as other nonrecurring items. Refer to the Company’s Form 10-K for the calculation of these non-GAAP measures. Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders Tompkins Financial Corporation We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of condition of Tompkins Financial Corporation and subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, cash flows, and changes in shareholders’ equity for each of the years in the three-year period ended December 31, 2014 (not presented herein); and in our report dated March 16, 2015 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated condensed financial statements is fairly stated, in all material respects, in relation to the consolidated financial statements from which it has been derived. Syracuse, NY March16, 2015 22 —> Two THOUSAND Fourteen | FINANCIAL HIGHLIGHTS TOMPKINS FINANCIAL CORPOR ATION BOARD OF DIRECTORS | Two THOUSAND Fourteen —> 23 TOMPKINS TRUST COMPANY TOMPKINS BANK OF CASTLE TOMPKINS MAHOPAC BANK TOMPKINS VIST BANK BOARDS OF DIRECTORS Stephen S. Romaine Chairman President & CEO Tompkins Financial Corporation James W. Fulmer Chairman John M. McKenna President & CEO* Gregory J. Hartz President & CEO John E. Alexander Founder The CBORD Group, Inc. Larry F. Baum CEO The Computing Center Daniel J. Fessenden Executive Director Fred L. Emerson Foundation, Inc. Carl E. Haynes President Tompkins Cortland Community College Susan A. Henry, Ph.D. Professor Department of Molecular Biology and Genetics Cornell University Thomas R. Rochon President Ithaca College Paul J. Battaglia, CPA Managing Director Freed Maxick, CPAs, P.C. Joseph G. Bucci Co-founder & Vice Chairman American Rock Salt Co., Inc. Founder & Owner Bucci Real Estate Phillip J. Clark, P.E. Chairman & CEO Clark Patterson Lee Thomas E. Cushing Vice President Secretary-Treasurer J.O. Cook, Inc. David N. DeLaVergne Retired Senior Vice President Tompkins Bank of Castile John D. McClurg President McClurg Chrysler Dodge Jeep, Inc. & McClurg Chevrolet Buick, Inc. Sandra A. Parker Retired President & CEO Rochester Business Alliance Stephen S. Romaine President & CEO Tompkins Financial Corporation Stephen R. Stoddard, DVM Partner Perry Veterinary Clinic Craig Yunker Managing Partner, CY Farms *Effective January 1, 2015 William D. Spain, Jr. Chairman Managing Partner Spain & Spain, PC Gerald J. Klein, Jr. President & CEO Alfred J. Weber Chairman President Tweed-Weber, Inc. Scott L. Gruber President & CEO Francis M. Fetsko EVP, COO, CFO & Treasurer Tompkins Financial Corporation Edward C. Barrett, CPA Retired EVP & CFO VIST Bank James W. Fulmer Vice Chairman, Tompkins Financial Corporation James W. Fulmer Vice Chairman, Tompkins Financial Corporation Stephen S. Romaine President & CEO Tompkins Financial Corporation Philip E. Hughes, Esq., CPA Vice Chairman Keystone Industries C. Compton Spain Attorney, Spain & Spain, PC Michael Spain President, Spain Agency, Inc. Patricia A. Johnson VP of Finance & Administration Lehigh University Frank C. Milewski Regional President Providence Service Corporation Harry J. O’Neill, III President Empire Group Karen A. Rightmire President The Wyomissing Foundation Stephen S. Romaine President & CEO Tompkins Financial Corporation TOMPKINS INSURANCE AGENCIES, INC. James W. Fulmer Chairman Vice Chairman, Tompkins Financial Corporation James R. Hardie Vice Chairman David S. Boyce President & CEO Stephen S. Romaine President & CEO Tompkins Financial Corporation Frank Vitagliano, Jr. Senior Vice President Tompkins Insurance Agencies 24 —> Two THOUSAND Fourteen | BOARDS OF DIRECTORS Looking ahead. TOGETHER. Almost every corporation has a vision for the future. What is less common is when that vision is truly shared— by customers, employees, shareholders and every facet of the organization. At Tompkins Financial, we are looking ahead—together— to many great things: To strength, stability and profitability that continue to lead our industry. To maintaining a local focus that gives individuals and businesses the highly personal attention they deserve. To community engagement that impacts more and more lives in the communities we serve. To continued growth, through opportunities in the markets we serve now and through expansion into new territories. It is a vision that is simple, powerful, and—most importantly—shared. We look ahead to achieving it. Together. TOMPKINS TRUST COMPANY TOMPKINS BANK OF CASTILE TOMPKINS MAHOPAC BANK TOMPKINS VIST BANK TOMPKINS INSURANCE AGENCIES TOMPKINS FINANCIAL ADVISORS TOMPKINS FINANCIAL CORPORATION CORPORATE OFFICERS Stephen S. Romaine President & CEO Stephen M. Angelis Executive Vice President David S. Boyce Executive Vice President Francis M. Fetsko Executive Vice President, CFO, COO & Treasurer Scott L. Gruber Executive Vice President Gregory J. Hartz Executive Vice President Rosemary G. Hyland Executive Vice President, Director of Human Resources Gerald J. Klein, Jr. Executive Vice President John M. McKenna Executive Vice President Susan M. Valenti Executive Vice President, Corporate Marketing Officer Bradley G. James Senior Vice President, Chief Technology Officer Gregory H. Smith Senior Vice President, Corporate Risk Manager Janet L. Hewitt Assistant Vice President, Corporate Administrative & Investor Relations Officer Kathleen A. Manley Assistant Vice President, Corporate Secretary CORPORATE INFORMATION CORPORATION OFFICE STOCK LISTING Tompkins Financial Corporation P.O. Box 460 Ithaca, NY 14851 (888)503-5753 Website: www.tompkinsfinancial.com E-mail: shareholder@tompkinsfinancial.com SUBSIDIARIES Tompkins Trust Company P.O. Box 460 Ithaca, NY 14851 (607) 273-3210 www.tompkinstrust.com Tompkins Bank of Castile 90 Main St. Batavia, NY 14020 (585) 345-0122 www.bankofcastile.com Tompkins Mahopac Bank 1441 Route 22 Brewster, NY 10509 (845) 278-1000 www.mahopacbank.com Tompkins VIST Bank P.O. Box 6219 Wyomissing, PA 19610 (610) 478-9922 www.vistbank.com Tompkins Insurance Agencies, Inc. 90 Main St. Batavia, NY 14020 (585) 344-0833 www.tompkinsins.com Tompkins Financial Advisors P.O. Box 6437 Ithaca, NY 14851 (607) 273-0037 www.tompkinsfinancialadvisors.com Tompkins Financial Corporation common stock is traded on the NYSE MKT LLC under the symbol TMP. The Tompkins Financial Stock Purchase Plan is administered by the American Stock Transfer & Trust Company, LLC as transfer agent for Tompkins Financial Corporation. It offers a convenient way for shareholders to increase their investment in the Company. The plan enables shareholders to reinvest all or part of their cash dividends or to make optional cash payments, with some restrictions, in order to purchase shares of Tompkins Financial Corporation common stock without incurring charges for brokerage commissions or service charges. Shareholders who are interested in the plan may receive enrollment information and a plan enrollment application by contacting: American Stock Transfer & Trust Company, LLC Toll-free number: 1-877-573-4008 Internet: www.amstock.com Mailing address: American Stock Transfer & Trust Company, LLC Attn: Dividend Reinvestment Department P.O. Box 922 Wall Street Station New York, NY 10269-0560 For answers to many of your shareholder questions or to request forms, visit American Stock Transfer & Trust Company’s website www.amstock.com or contact: American Stock Transfer & Trust Company, LLC Shareholder Relations 6201 15th Avenue Brooklyn, NY 11219 Overnight address: 6201 15th Avenue Brooklyn, NY 11219 1-800-937-5449 or 1-718-921-8200 E-mail address: info@amstock.com Also, Tompkins Financial Stock Purchase Plan enrollment information can be requested and shareholder questions answered by contacting the Company: Janet L. Hewitt, AVP Tompkins Financial Corporation P.O. Box 460 Ithaca, NY 14851 1-888-503-5753 or 1-607-274-2004 E-mail address: jhewitt@tompkinsfinancial.com Form 10-K Copies of the Company’s Form 10-K (Annual Report) for 2014, filed with the Securities and Exchange Commission, may be obtained by shareholders, by written request, from Francis M. Fetsko, Executive Vice President and Chief Financial Officer, P.O. Box 460, Ithaca, NY 14851. Copies can also be obtained from our website: www.tompkinsfinancial.com GO GREEN If you would like to receive future Tompkins Financial Corporation Corporate Reports and proxy materials electronically, please follow the instructions on your proxy card for voting via the internet and select the option for electronic transmission of proxy materials. The savings below are achieved when PC recycled paper is used in place of virgin fiber. This project uses 5,076 lbs of paper which has a postconsumer recycled percentage of 10%. 7.5 trees preserved for the future 625 lbs waterborne waste not created 3,229 gallons wastewater flow saved 205 lbs solid waste not generated 2,728 lbs net greenhouse gases prevented 2,237,127 BTUs energy not consumed † Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC. The investment products sold through LPL Financial are not insured Tompkins Trust Company deposits and are not FDIC insured. These products are not obligations of Tompkins Trust Company and are not endorsed, recommended or guaranteed by Tompkins Trust Company or any government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible. Tompkins Trust Company and Tompkins Financial Advisors are not registered broker/dealers and are not affiliated with LPL Financial. 

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