Tompkins Financial Corporation
Annual Report 2015

Plain-text annual report

2 THOUSAND 15 Corporate Report E M P O W E R I N G P E O P L E . Energizing growth. I M A G I N I N G M O R E . E M P O W E R I N G P E O P L E . Energizing growth. I M A G I N I N G M O R E . A young couple that was empowered to create the business of their dreams. A community that was energized when a factory was brought back to life. A company that imagined—and then built—a development that is both beautiful and sustainable. These are a few of the stories you will read about in these pages—stories that Tompkins helped make possible through our banking, insurance and wealth management services. Great ideas abound. And through the time-tested Tompkins ideals—strength, stability, local decision-making and commitment to community—more and more of those ideas are being brought to fruition. We are proud to have played a part. And we look forward to doing it again tomorrow.  FINANCIAL HIGHLIGHTS IN THOUSANDS, EXCEPT PER SHARE DATA 2015 2014 % CHANGE Total assets Net income attributable to Tompkins Financial Corporation Net operating income2 Diluted earnings per share Adjusted diluted earnings per share2 Cash dividends per share $5,689,995 $58,421 $53,985 $3.87 $3.63 $1.70 $5,269,561 $52,041 $52,041 $3.48 $3.48 $1.62 7.98 % 12.26 % 3.74 % 11.21 % 4.31 % 4.94 % SELECTED FINANCIAL DATA IN THOUSANDS, EXCEPT PER SHARE DATA 2015 2014 2013 2012 1 2011 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) $5,689,995 3,772,042 4,395,306 536,285 516,466 188,746 20,365 168,381 2,945 1,108 $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 $3,400,248 1,981,849 2,954,610 2,660,564 3,950,169 186,075 111,848 299,143 441,360 137,088 158,356 25,682 24,213 111,406 134,143 8,945 8,837 396 324 58,421 52,041 50,856 31,285 35,419 3.91 3.87 3.63 1.70 34.48 27.42 1.07 % 11.51 % 9.31 % 43.48 % 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 3.21 3.20 3.21 1.40 26.89 22.58 0.76 % 8.30 % 9.21 % 59.84 % 1.07 % 12.02 % 8.94 % 43.61 % 998 63 85 1,000 65 85 989 66 84 839 66 83 719 45 63 $3,852,972 $3,761,972 $3,443,636 $3,240,782 $2,780,622 1 Includes the impact of the acquisition of VIST Financial on August 1, 2012. 2 Adjusted diluted earnings per share and net operating income reflect adjustments made for certain nonrecurring items. Adjustments for nonrecurring items in 2015 included a $(3.6) million after-tax gain on a pension plan curtailment. There were no adjustments in 2014, 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. Adjusted diluted earnings per share and net operating income are non-GAAP measures that management believes provide management and investors with information that is useful in understanding the Company’s financial performance and condition. Refer to the Company’s Form 10-K for the calculation of these non-GAAP measures. 3 Tangible equity capital is used to calculate tangible book value per share and excludes from shareholders’ equity goodwill and other intangibles of $104.2 million in 2015, $106.9 million in 2014, $108.4 million in 2013, $110.9 million in 2012, and $48.0 million in 2011. 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. FI NAN CIAL H I G H LI G HTS | 1. D E A R F E L L O W shareholders Achieving success is rarely easy. What is even more difficult is achieving success that is consistent with our strategy of long-term, sustainable results, and doing it year after year. We are pleased to report that, through the work of our employees, the support of our shareholders and the trust of our customers, Tompkins Financial achieved our highest earnings ever, making it our third consecutive year of record earnings. By empowering people, we have energized growth—and we are imagining even more for the future. With adjustments for a non-recurring item which helped our 2015 results, diluted earnings per share were up 4.3% over the year ended December 31, 2014. Loans and non-interest bearing deposits were two key drivers of earnings in 2015, with both up over 11% from last year. Our fee-based businesses, Tompkins Financial Advisors and Tompkins Insurance Agencies, made strong contributions to our earnings. We also continued to see very positive trends in the improvement of asset quality and the reduction of our already low level of troubled loans. Last year, we saw a level of market disruption that was unprecedented in the regions we serve. In Pennsylvania, seven local competitors announced they would be acquired. Mergers were also announced in many of our other 2. | M E SS AG E TO SHAR EH O LD ER S 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 communities. We expect this activity to intensify in 2016. This We had several important changes to our Senior Leadership climate of change is unsettling for customers, but it represents Team in 2015. Rosemary Hyland retired after 15 years with a great opportunity for us. Past experience shows that our Company. She served most recently as Executive Vice customers are most at risk when their banks are merging. At President and Director of Human Resources. We are grateful times like this, our Company’s values—outstanding strength, to Rosemary for her tireless dedication and for helping our long-term stability, local decision-making and community human resources function reach new heights. We wish her commitment—are a breath of fresh air to potential customers. all the best in her retirement. Stepping into Rosemary’s role is Bonita Lindberg, who joined Tompkins on December 28. Through the Power of Partnership program, we have built Bonita comes to us from Cortland Regional Medical Center a high level of trust—and a growing number of referrals— and Albany International Corporation. Alyssa Fontaine joined among our various businesses. Bank employees, insurance Tompkins Financial as Executive Vice President and General producers and wealth advisors regularly refer customers to Counsel on January 1, 2016. Most recently, Alyssa was a one another, helping customers achieve their goals while partner at Harris Beach PLLC, where she focused on corporate developing confidence in our business lines. The continued growth of our banks, of Tompkins Financial Advisors† and of Tompkins Insurance Agencies, is largely due to the success of this program. transactional work, bank regulatory compliance and securities matters. It is always encouraging to speak of the incredible community involvement demonstrated by our organization. In 2015, we Our central presence in Ithaca is an important part of our saw this commitment continue to grow. More and more of history—and was key to our decision to develop a new our employees reached out to those in need—by serving headquarters building in downtown Ithaca. While still in in leadership roles, by volunteering their time and talents, the early stages of planning, this building will enable us to by organizing and participating in events and by giving of consolidate people and departments from seven different themselves in countless ways. While these activities help our locations throughout Ithaca, enhancing productivity and organization’s reputation, that is rarely the motivation behind creating closer working relationships. The seven-story them. Our people give of themselves simply because it is the building—located just one block from the Ithaca Commons— right thing to do. It is an honor to work with people who will bring 300 employees together under one roof. exhibit such selflessness. They are making our world a better We continue to innovate and add new technology to meet place. our customers’ rapidly evolving needs. Our mobile banking We invite all of our shareholders to join us for our Annual services expanded in 2015 with the addition of Mobile Check Meeting. The meeting will be in Central New York on May Deposit for businesses. As with all of our mobile and web- 9 at 5:30 p.m. at the Country Club of Ithaca. Shareholder based products, we are committed to rolling out products information meetings will be held in our other regions. In that work well right at introduction. Business Mobile Check Western New York, we will meet on May 17 at 5:30 p.m. at Deposit was no exception. With this addition, our customers the Genesee Country Village & Museum in Mumford. In now have more complete functionality to bank the way they Pennsylvania, our meeting will be on May 24 at 4:30 p.m. at want to. the DoubleTree Hilton in Reading. And in the Hudson Valley, we will meet on May 26 at 6:00 p.m. at the Mt. Kisco Country One significant change this year will be our switch from VISA Club. We look forward to seeing you at one of these meetings. to MasterCard for our debit card services. This change will provide customers with many new and important benefits, Thank you for all of your support throughout 2015. We such as EMV chips for enhanced security, Identity Theft appreciate your feedback, your ideas, your encouragement Resolution Services, and Zero Liability for unauthorized and your trust. It was truly a remarkable year. We look forward purchases. These expanded benefits give our customers the to working with you to extend this outstanding record of protection they need. The rollout of Debit MasterCard has success well into the future. been carefully planned to provide customers with a seamless transition. It will take place throughout the first half of the year. M E SS AG E TO SHAR EH O LD ER S | 3. It’s no simple matter to make great cider. For Melissa Madden and Garrett Miller, the process began in 2008 when they started Good Life Farm. “It’s very labor intensive,” says Melissa of their certified organic farm. “We plant 300 apple trees a year.” That undertaking has gradually transformed an open cornfield into a thriving apple orchard. The couple dreamed of having a cider house in the middle of their orchard—a dream that became a reality this past year. “Our assets were tied up in our farm,” says Melissa. “But Tompkins Trust Company loaned us the full amount we needed for the equipment. We couldn’t be making our cider here without them.” Melissa and Garrett also rely on Tompkins Insurance Agencies for policies on both their farm and the cider house. “They’re extremely easy to work with,” says Melissa. “They’re truly part of our team.” MELISSA MADDEN & GARRETT MILLER Owners Good Life Farm, Finger Lakes Cider House 4. | CENT R AL N EW YO R K The Central New York region experienced another very strong year in 2015. We enjoyed growth in every area of our business. It was gratifying to see the great successes achieved both by our customers and our employees. One of the biggest stories of the year is our expansion into the Syracuse area. We have already been servicing many clients in this region through our Auburn and Cortland branches. Our new Tompkins Financial Center office at Lyndon Corners, Fayetteville—scheduled to open in the second quarter of 2016— will provide our full experienced a strong reception from the ag line of services in banking, insurance and wealth community since making this a major focus management. In 2015, we grew our outstanding loan balances by 10%. Our commercial, small business and residential lending all exceeded their business two years ago. Our knowledgeable advisors are helping farms and farmers to be more successful, while also helping the economic vitality of the region overall. objectives. We also experienced solid core We were excited to see the re-opening of the deposit growth for the year. We credit our Ithaca Commons. Tompkins Trust Company was exceptional people and local decision-making a major supporter of the two-year renovation for these impressive achievements. project. We offered a special loan program Agricultural business continues to be a great success story in Central New York. We have for businesses to help with short-term cash flow during the construction period. We CENT R AL N EW YO R K | 5. 13 also provided funding for a new children’s Agencies continued to improve efficiencies playground and for the Bernie Milton Pavilion, throughout Central New York last year. The named for a beloved Ithaca musician. The Customer Care Center model helped to route Commons provides a beautiful new shopping calls more quickly, for continued high customer presence for Ithaca, and we are proud to be right satisfaction. Tompkins Financial Advisors held in the middle of it. numerous business development lunches with Tompkins Insurance Agencies and Tompkins Financial Advisors will both expand into the Syracuse area in 2016, following the bank’s movement into that region. Tompkins Insurance law firms and accounting firms, helping us reach many new customers. Along with the other regions, we surveyed customers across the Tompkins footprint, helping to identify opportunities for service improvement. 6. | CENT R AL N EW YO R K Andy and Hemant Patel— developers of 38 hotels in New York State and Pennsylvania— believe in keeping things local. “We host a holiday festival in every community where we have a hotel,” says Andy. “There’s no charge, and every child gets a present.” Their local focus made Tompkins Trust Company a natural choice. “We have had tremendous success partnering with them,” says Andy. When the partners encountered challenges in getting a loan for a project in Utica, Tompkins Trust Company stepped in to make it happen. “They always come through for us,” adds Hemant. Andy, whose foundation helped revitalize five schools where he grew up in India, especially appreciates Tompkins’ community involvement. “It’s great to work with people who care about more than just money,” says Andy. ANDY & HEMANT PATEL Managing Partners Visions Hotels CENT R AL N EW YO R K | 7. Central New York once again had a very active year in community support. We provided gifts of time and money to more than 200 charitable organizations throughout the area. It is amazing to be part of an organization that not only achieves great things as a business, but also makes a significant impact on the community. Thank you to all the exceptional people who go above and beyond to make this possible. The Town of York’s relationship with Tompkins Bank of Castile started simply enough. “They had the lowest rates,” says Jerry Deming, Town Supervisor for the last 16 years. Those low rates helped the town finance important upgrades to their infrastructure, getting fresh water to homes and dairy farms that needed it—a key to the community’s economic health. Jerry was impressed with the personal service he received. “We had an emergency on one project,” he says. “They came in on a Saturday to help us get the paperwork completed.” The town now works with Tompkins Insurance Agencies as well. “I can’t say enough good about them,” he says. “We still do our due diligence, making sure we are getting the best rates. And Tompkins always comes through for us.” JERRY DEMING Town Supervisor Town of York 8. | WE ST ER N N EW YO R K Western New York had another year of strong performance in 2015. We achieved record earnings, and our long-term commitment to this region yielded important growth on several fronts. Tompkins Bank of Castile had nearly $250 million in total loan originations last year. We made excellent progress in agricultural, commercial and real estate lending. Customers continue to appreciate our community-banking model, especially as competitors shift focus and resources away from our traditional geographies. Tompkins Bank of Castile had over a dozen new of the county and providing another important or greatly expanded relationships with cities, point of service for our clients. towns, villages and school districts throughout Western New York, helping municipal banking deposits rise by 62%. The reputation of our bank and of our employees as individuals, puts us in an excellent position to partner with many municipalities that are central to the communities we serve. We finished renovations on our new Customer Care Center in Batavia. This site centralizes customer service operations for all Tompkins banks and Tompkins Insurance Agencies, helping to improve both efficiency and customer satisfaction. It also helps support growth in the Pennsylvania insurance business while We also made great progress in Monroe County. positioning us for future growth opportunities. The addition of our Pittsford Tompkins Financial Center, offering banking, insurance and wealth management, is providing outstanding visibility. It is attracting new business from the east side Important progress occurred with the Western New York STAMP project. This business park in Genesee County represents a tremendous W E ST E R N N EW YO R K | 9. opportunity for our region, our bank and our regions. Customer claim satisfaction remains insurance agency. It combines infrastructure extremely high at 99.7%. We also expanded in and incentives to attract companies in Batavia through the acquisition of Shepard, nanotechnology, advanced manufacturing Maxwell & Hale Insurance, effective January 1, and bio-manufacturing. The park’s first tenant 2016. announced plans to build a plant that will eventually employ 1,000 workers. Tompkins Financial Advisors and Tompkins Bank of Castile continued to build important Tompkins Insurance Agencies continued relationships between bankers and wealth to improve efficiencies and effectiveness in managers. As a result, we saw significant wealth Western New York and throughout all of its management gains from a much broader 10. | WE ST ER N N EW YO R K Pete Zeliff never thought he would own a shoe company. But when P. W. Minor—a Batavia shoe manufacturer with a 148-year history—was in danger of closing its doors forever, he saw an opportunity he couldn’t pass up. “I wanted to resurrect the company,” says Pete. After purchasing the company’s assets, he ordered $2 million worth of new equipment and started bringing all of the production back to Batavia. He relied on Tompkins Bank of Castile for a line of credit and for all of the company’s banking and checking accounts. “They’re like a small town bank,” says Pete. “But they’ve got an appetite for a lot more than what a small town bank can do.” And that has helped Pete keep a small town shoe manufacturer alive while saving more than 50 local jobs. PETE ZELIFF CEO P.W. Minor W E ST E R N N EW YO R K | 11. customer base, including previously untapped geographies. Our employees in Western New York performed more than 13,000 hours of community service in 2015, supporting scores of community organizations. It is inspiring to see the deep community involvement of our employees, and we are proud to support their efforts. Al Lucchino has some expertise in choosing the right bank to support a growing business. Before he and his brother, Carl, purchased their Harley Davidson dealership, Al was a vice president in charge of leveraged buyouts at a NYC bank. “We had worked with some other banks,” says Al. “But we wanted to grow and expand. And we needed a more capable, larger lender.” Making the switch to Tompkins Mahopac Bank changed things dramatically. “Our refinancing reduced debt and freed up cash,” says Al. As a result, the brothers were able to greatly expand their selection of motorcycles, parts and accessories. The company now gets a complete range of banking services from Tompkins Mahopac. “They’re smart and they have the capacity to get the job done,” says Al. “And that lets you focus on your business.” CARL AND AL LUCCHINO Owners Harley Davidson of Danbury 12. | HUD S O N VALLEY With double-digit loan growth and strong deposit growth, Tompkins Mahopac Bank had the most profitable year in its history. Our exceptional employees and strong leadership team helped us build on our successes from the previous year. Bank merger activity in the Hudson Valley region created new opportunities for us in 2015. While many banks were changing, Tompkins Mahopac Bank provided an excellent alternative: a bank that provides local decision-making and the highest level of personalized service. We gained new business, often through referrals from existing customers, CPAs and attorneys who knew experienced success with programs such as First us and trusted us to “stay the course.” It is Home Club and Community One, which help interesting to note: Tompkins Mahopac Bank to make home buying more affordable. continues to receive a 5-star rating (superior) by Bauer Financial—a rating higher than many of our larger competitors. In commercial lending, we saw a significant increase in new activity during the second half of the year. Some of this was attributable to Tompkins Mahopac Bank had a significant the growth in the regional economy and to increase in residential loan originations the market disruption caused by bank merger throughout 2015. With home purchase activity activity in our area. We have an excellent increasing in our region, we expanded our reputation in the communities we serve, and outreach to first-time home buyers, offering businesses and professionals turned to us for seminars, programs and information through our long-term stability in this environment of various housing agencies in our region. We also change. H UD S O N VALLEY | 13. Credit quality continued to improve as we Tompkins Financial Advisors had a solid experienced a further reduction in problem year, with continued growth of assets under loans. Our improving economy was one factor management. The Power of Partnership in this success. More importantly, we have program is a key component in this success. We maintained our commitment to working with have worked hard to build close relationships our borrowers during challenging times in an between our bankers and wealth advisors. As a effort to get them back on their feet. As a result, result, they do not hesitate to make referrals to we have done more than improve credit quality. one another, helping customers understand the We have also built our reputation as bankers full breadth and depth of our services. who care about the local communities we serve. 14. | HUD S O N VALLEY National Resources does not mince words when it comes to speaking about Tompkins Mahopac Bank. “When the financial crisis occurred in 2008, a lot of the other banks vanished,” says Joe Cotter. “But Tompkins Mahopac stepped up. That level of loyalty is a game-changer.” With Tompkins’ support, National Resources has created stunning redevelopments that are successful and sustainable. Most recently, the bank provided financing for Hudson Harbor, a luxury residential and retail community on the Hudson River with a beautiful view of Manhattan and where residents don’t even need a car. “Tompkins has always been there for us,” says Lynne Ward. “They have that small bank feel. But they also have the capacity to do the larger loans we need.” JOE COTTER AND LYNNE WARD, Partners National Resources PAUL JANOS, Director of Sales Hudson Harbor H UD S O N VALLEY | 15. We continued to give back to more than 175 charitable organizations throughout our region, providing both volunteer efforts and financial support. It is inspiring to see the way our employees step up to give their time, energy and leadership to charitable organizations in our communities. Many banks claim to be community-oriented; our people consistently prove it. Thank you, once again, for making us proud. Settlement Music School in Philadelphia was founded on the belief that everyone should have the opportunity to learn through music. The school provides over 10,000 lessons, classes and activities per week without regard to age, race or financial circumstances. “We remove the barriers to participation,” says Helen Eaton, Executive Director. “And Tompkins helps us to do that.” After years of depending on Tompkins Insurance for medical, dental, life and disability insurance, the school recently turned to Tompkins VIST Bank to refinance a large loan. “They helped us reduce our debt service by 60%,” says Helen. “And the money we saved is being used to help families that need our financial help. It’s been a phenomenal experience.” HELEN EATON Executive Director Settlement Music School of Philadelphia 16. | S O UT H E A ST ER N PEN NSYLVAN IA Southeastern Pennsylvania made great strides forward in 2015. We experienced impressive growth in lending and deposits, and we saw ongoing improvement in asset quality. The exceptional efforts of our team resulted in Tompkins VIST Bank receiving a 5-star rating—the best possible rating— from Bauer Financial to start the new year. Tompkins VIST Bank had excellent growth in mortgage originations last year, thanks to a strong, dynamic team of talented professionals. We placed an emphasis on balanced organic loan growth in commercial, small business and agricultural lending. 2015 was our first year of agricultural lending, and this new undertaking saw tremendous success. it represents a great opportunity for Tompkins With an experienced ag lender to lead this new VIST Bank. As large, out-of-area banks move line of business, we were able to develop many in, we will continue to emphasize our local new banking relationships. Agriculture is the decision-making, highly personal service and largest industry in Pennsylvania, and we expect community orientation. Our local approach continued strong growth in this area. provides a powerful alternative to the rigid The improvement of asset quality has been a primary focus since the acquisition of VIST playbook offered by larger banks, and we expect to gain customers as these changes occur. Bank three years ago. We have made incredible Tompkins Insurance introduced a new 24-hour progress in reducing troubled loans and Customer Care Center to handle claims improving credit quality. processing, policy changes, billing questions, In 2015, seven of our local competitors announced that they would be acquired. This level of market disruption is extraordinary, and quotes and more. Consistent with our New York model, we co-located with the bank in two locations, Sinking Spring and Conshohocken, to S O UT H E A ST ER N PEN NS YLVAN IA | 17. bring our customers increased access to personal financial planning capabilities with the eMoney insurance. We implemented the Core Business tool. Along with the other regions, we helped to Unit in Pennsylvania to deliver a heightened create over 200 new financial plans for new and service level to our small- and medium-sized existing clients using this powerful new tool. business customers, with overwhelmingly positive customer feedback. One of the most exciting changes in our region is the way our people have embraced Tompkins Financial Advisors developed and community involvement. Our employees are instituted a new strategy for offering trust stepping up and working for a great variety services in Pennsylvania. We also increased our of organizations, whether acting in leadership 18. | S O UT H E A ST ER N PEN NSYLVAN I A “Sixty-seven years ago, my great grandfather won this business in a poker game,” says Deb Kearse. “And we continue to do things just a little bit differently.” Deb and her husband, Tom, believe in providing services no one would expect from a building supplies company—like continuing education classes for architects. So it was no surprise that they wanted an equally innovative banking partner. “We made a list of seven things we needed in a bank,” says Tom. “And Tompkins VIST Bank was seven for seven.” For example, Tompkins makes it easy for the business to quickly process checks at nine different locations. “They’ve made our lives easier,” says Tom. “This was a great move for our company and ourselves.” DEB & TOM KEARSE Owners Kohl Building Products S O UT H E A ST ER N PEN NSY LVAN IA | 19. capacities or serving on the front lines. While this creates a great name for us in our region, that is not our motivation. Serving the communities where we live is just the right thing to do. Thank you, to all our employees, for reaching out to help those people who need us most. It is an inspiring thing to see.  CONSOLIDATED STATEMENTS OF CONDITION 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 $1,390,255 at December 31, AS OF DECEMBER 31, 2015 2014 $56,261 1,996 58,257 $53,921 2,149 56,070 7,368 8,992 2015 and $1,397,458 at December 31, 2014) 1,385,684 1,402,236 Held-to-maturity securities, at amortized cost (fair value of $146,686 at December 31, 2015 and $89,036 at December 31, 2014) 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 146,071 3,310,768 14,031 447,243 32,004 3,740,038 158 29,969 60,331 75,792 91,792 12,448 82,087 $5,689,995 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 2,401,519 855,133 1,138,654 4,395,306 2,247,708 898,081 1,023,365 4,169,154 Federal funds purchased and securities sold under agreements to repurchase 136,513 147,037 Other borrowings, including certain amounts at fair value of $10,576 at December 31, 2015 and $10,961 at December 31, 2014 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: 15,015,594 at December 31, 2015; and 14,931,354 at December 31, 2014 Additional paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock, at cost – 116,126 shares at December 31, 2015, and 111,436 shares at December 31, 2014 Total Tompkins Financial Corporation Shareholders’ Equity Noncontrolling interests Total Equity Total Liabilities and Equity 536,285 37,509 67,916 $5,173,529 356,541 37,337 69,909 $4,779,978 1,502 350,823 197,445 (31,001 ) (3,755 ) 515,014 1,452 $516,466 $5,689,995 1,493 348,889 165,160 (24,011) (3,400) 488,131 1,452 $489,583 $5,269,561 20. | CO NS O LI DAT ED STAT E MENTS O F CO N D IT I O N  CONSOLIDATED STATEMENTS OF INCOME IN THOUSANDS, EXCEPT PER SHARE DATA Interest and Dividend Income Loans Due from banks 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 $250,000 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 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, 2015 2014 2013 $154,636 $150,966 4 352 29,525 3,100 1,129 188,746 1,367 9,084 2,709 2,308 4,897 20,365 168,381 2,945 165,436 29,286 15,416 9,325 7,837 (295 ) 385 8,878 1,108 71,940 72,707 16,025 12,312 6,146 2,992 2,013 0 37,667 149,862 87,514 28,962 58,552 131 $ 58,421 $3.91 $3.87 2 418 31,298 999 810 184,493 1,370 9,711 2,947 2,287 4,368 20,683 163,810 2,306 161,504 28,489 15,493 9,404 7,942 (269 ) 331 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 $151,711 10 589 31,360 685 749 185,104 3,000 9,765 3,749 2,599 4,862 23,975 161,129 6,161 154,968 27,916 15,109 8,495 7,216 (538 ) 555 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 CO NS O LI DAT ED STAT E M ENTS O F I N COM E | 21. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Price Low High Cash Dividends Amount Date Paid 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 2014 and 2015 are presented to the right. The per share dividends paid by the Company in each quarterly period in 2014 and 2015 and the payment dates of these dividends are also presented. 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 2015 1st Quarter $54.57 $50.91 2nd Quarter 55.48 50.65 3rd Quarter 55.45 50.81 4th Quarter 62.78 52.70 $3.87 $3.63 $3.48 $0.40 0.40 0.40 0.42 $0.42 0.42 0.42 0.44 $1.62 2/14/14 5/15/14 8/15/14 11/14/14 2/17/15 5/15/15 8/17/15 11/16/15 $1.70 0.00 0.00 Diluted Earnings1 PER SHARE IN DOLLARS Cash Dividends PER SHARE IN DOLLARS 1.The lighter shaded sections of the bars reflect GAAP earnings per share. The darker shaded sections in 2011, 2012, 2013 and 2015 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, 2015 and 2014, 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, 2015 (not presented herein); and in our report dated March 15, 2016 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. Rochester, NY March 15, 2016 22. | FI NAN CI AL H I G H LI G HTS TOMPKINS FINANCIAL CORPORATION BOARD OF DIRECTORS Patricia A. Johnson VP of Finance & Administration Lehigh University Frank C. Milewski VP Regional Operations Pathways Sandra A. Parker Retired President & CEO Rochester Business Alliance Michael H. Spain Executive Vice President Brown & Brown Alfred J. Weber President, Tweed-Weber, Inc. Craig Yunker Managing Partner, CY Farms 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 Susan A. Henry, Ph.D. Professor, Department of Molecular Biology and Genetics Cornell University TOM PKI NS FI NAN CIAL CO R P O R AT I O N B OAR D O F D I R ECTO R S | 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 Founder 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. Phillip J. Clark, P.E. Chairman 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 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 Executive Vice President, COO, CFO & Treasurer Tompkins Financial Corporation Edward C. Barrett, CPA Retired EVP & CFO VIST Bank James W. Fulmer Vice Chairman, Tompkins Financial Corporation Stephen S. Romaine President & CEO Tompkins Financial Corporation C. Compton Spain Attorney, Spain & Spain, PC James W. Fulmer Vice Chairman, Tompkins Financial Corporation Philip E. Hughes, Esq., CPA Vice Chairman Keystone Industries Patricia A. Johnson VP of Finance & Administration Lehigh University Michael H. Spain Executive Vice President Brown & Brown Frank C. Milewski VP, Regional Operations Pathways Harry J. O’Neill, III President Empire Group Karen A. Rightmire Executive Director The Wyomissing Foundation Stephen S. Romaine President & CEO Tompkins Financial Corporation TOMPKINS INSURANCE AGENCIES, INC. James W. Fulmer Chairman Vice Chairman, Tompkins Financial Corporation David S. Boyce President & CEO Stephen S. Romaine President & CEO Tompkins Financial Corporation Frank Vitagliano, Jr. Senior Vice President Tompkins Insurance Agencies 24. | B OAR D S O F D I R ECTO R S TOMPKINS FINANCIAL CORPORATION CORPORATE OFFICERS Stephen S. Romaine President & CEO David S. Boyce Executive Vice President Francis M. Fetsko Executive Vice President, COO, CFO & Treasurer Alyssa H. Fontaine Executive Vice President & General Counsel Scott L. Gruber Executive Vice President Gregory J. Hartz Executive Vice President 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 Bonita N. Lindberg Senior Vice President, Director of Human Resources 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 2015, 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 5,761 lbs of paper which has a postconsumer recycled percentage of 10%. 75 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 † Investment Services provided through Tompkins Wealth Advisors. Trust and Estate Services provided through Tompkins Trust Company. Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates. 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, Tompkins Financial Advisors and Tompkins Wealth Advisors are not registered broker/dealers and are not affiliated with LPL Financial. 

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