Tompkins Financial Corporation
Annual Report 2019

Plain-text annual report

20/ ANNUAL / 19 Making an impact for our customers for our community 200631_2019cover_b.indd 3 200631_2019cover_b.indd 3 3/13/20 11:50 AM 3/13/20 11:50 AM At Tompkins Financial Corporation, we are proud to be a truly local community bank. To us, it means more than where our buildings stand. It means we are invested in making a positive impact. We are committed to giving back to our communities. We are dedicated to cultivating meaningful relationships. As trusted partners, we are invested in the success of our customers. Through banking, insurance and wealth management services, we work hard to provide the right products, advice and tools to empower our customers— and help our regions grow and thrive. 200631_2019cover_b.indd 4 200631_2019cover_b.indd 4 3/13/20 11:50 AM 3/13/20 11:50 AM Financial Highlights IN THOUSANDS, EXCEPT PER SHARE DATA 2019 2018 % CHANGE Total assets Net income attributable to Tompkins Financial Corporation Diluted earnings per share Adjusted diluted earnings per share1 Cash dividends per share $6,725,623 81,718 5.37 5.37 2.02 $6,758,436 82,308 5.35 5.33 1.94 -0.49% -0.72% 0.37% 0.75% 4.12% IN THOUSANDS, EXCEPT PER SHARE DATA 2019 2018 2017 2016 2015 Selected Financial Data 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 (losses) 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 share1 Cash dividends per share Common equity per share 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) $6,725,623 4,917,550 5,212,921 658,100 663,054 261,378 50,750 210,628 1,366 645 $6,758,436 4,833,939 4,888,959 1,076,075 620,871 251,592 39,792 211,800 3,942 (466) $6,648,290 4,669,120 4,837,807 1,071,742 576,202 226,764 25,460 201,304 4,161 (407) $6,236,756 $5,689,995 3,772,042 4,258,033 4,395,306 4,625,139 536,285 884,815 516,466 549,405 188,746 202,739 20,365 22,103 168,381 180,636 4,321 2,945 1,108 926 81,718 82,308 52,494 59,340 58,421 5.39 5.37 5.37 2.02 44.17 1.22 % 12.55 % 9.75 % 37.48 % 5.39 5.35 5.33 1.94 40.45 1.23 % 13.93 % 8.83 % 35.99 % 3.46 3.43 4.42 1.82 37.65 0.82 % 9.09 % 9.04 % 52.60 % 3.94 3.91 3.91 1.77 36.20 3.91 3.87 3.63 1.70 34.38 1.01 % 10.85 % 9.28 % 44.92 % 1.07 % 11.51 % 9.31 % 43.48 % 1,047 64 87 1,035 66 83 1,041 65 84 1,019 66 85 998 63 85 $4,062,325 $3,806,274 $4,017,363 $3,941,484 $3,852,972 1 Adjusted diluted earnings per share reflects adjustments made for certain nonrecurring items. Adjustments for nonrecurring items in 2018 included a $2.2 million gain on sale of real estate and a $1.9 million write-down of impaired leases ($0.02 per share). Adjustments in 2017 included a $14.9 million ($0.99 per share) one-time non-cash write-down of net deferred tax assets related to the Tax Cuts and Jobs Act of 2017. Adjustments in 2015 included a $3.6 million ($0.24 per share) after-tax gain on a pension plan curtailment. There were no adjustments in 2019 and 2016. Adjusted diluted earnings per share is a non-GAAP measure. This adjusted measure is defined in the Company’s Form 10-K. 2019 Corp orate Rep or t | FINANCIAL HIGHLIGHTS — p.1 200631_2019Report_c.indd 1 200631_2019Report_c.indd 1 3/13/20 11:46 AM 3/13/20 11:46 AM Stephen S. Romaine P R E S I D E N T & C E O Dr. Thomas R. Rochon C H A I R M A N ——————————— | A MESSAGE FROM |——————————— Tom Rochon & Steve Romaine Since our founding in 1836, Tompkins has been a local community bank, dedicated to the unique needs of people and businesses throughout our region. While our industry faces significant, long-lasting structural challenges—including heightened regulatory pressure, a volatile interest rate environment, a slowing economy and formidable competition from non-banks—we at Tompkins ensure continued success by remaining steadfastly committed to the heart of our business: our relationships. As we focus on efficiency, delivering shareholder returns and December 31, 2018, the end of 2019 saw total loans of $4.9 billion investing in new technologies and growth opportunities, we continually improve the positive relationships we have worked up 1.7% and total deposits of $5.2 billion up 6.6%. Credit quality trends remained strong in 2019. As we embark on a new decade, so hard to cultivate. We take time to get to know our customers we remain focused on achieving our strategy of long-term and offer the products and services that will bring them closer to sustainability.  their goals. As our relationships grow stronger and our customers experience growing success, it creates positive change not only in Promoting an environment of highly-engaged and diverse their lives, but in the community around them. employees is essential to delivering superior results for our Our strong relationships made a powerful impact throughout 2019, resulting in growth in a number of key areas. We delivered our commitment to this initiative by engaging our employees in diversity and inclusion learning opportunities. We are also record diluted earnings per share of $5.37 for the full year, ensuring that the diversity of our people reflects the diversity of an increase of 0.4% over the previous year. Compared with our markets—this makes us a stronger company and is critical customers, shareholders and communities. We have heightened 2019 Corp orate Rep or t | ME SSAGE TO SHAREHOLDER S — p.2 200631_2019Report_c.indd 2 200631_2019Report_c.indd 2 3/13/20 11:46 AM 3/13/20 11:46 AM to the perpetuation of our industry, as employees of the future are clients which includes a premium checking account, credit increasingly diverse. card and line of credit. In addition, we transitioned our Social Responsibility Index (SRI) portfolio to an Environmental, Social We continue to innovate to make our customers’ lives easier and and Governance (ESG) portfolio. more secure. Our newly upgraded digital banking experience welcomed customers in June with a modern and consistent look In leadership news, Jennifer Tegan was appointed a director on and feel across their devices. The new digital platform is highly the holding company board in May. Ms. Tegan has served as a personalized and thoughtfully simplified, allowing customers to Director of Tompkins Trust Company since 2016 and is a Partner/ arrange their dashboard in a way that makes the most sense for Owner of Ithaca-based Cayuga Venture Fund (CVF), where she them, with a more straightforward way to manage accounts, move works with, supports and finances entrepreneurs in technology- money and send electronic Person-to-Person (P2P) payments. based companies. We believe that with her strong combination of leadership experience and involvement in economic development In this time of innovation, attention to security remains critically and civic engagement in Tompkins County, Ms. Tegan is uniquely important. Our new mobile app includes Touch or Face ID, qualified to serve on our Board of Directors. two-factor authentication and real-time transaction alerts. With enhanced card controls, customers can use the app to temporarily disable a misplaced card, turn it back on when located and report it lost or stolen if needed. Mobile payments are made more secure In addition to this achievement, Ms. Tegan has been named by WomenInc., a leading magazine dedicated to coverage of women’s success in business, to its 2019 Most Influential Corporate with the launch of Tompkins Digital Wallet. With a quick tap Directors listing—an honor she shares with fellow board director of their smartphone, customers can use Apple Pay® or Google Patricia Johnson. Their inclusion in the most comprehensive listing Pay™ to pay with their Tompkins Debit Mastercard or credit card of women executives, influencers and achievers contributing at millions of locations, and their physical card number is never leadership to corporate boards is remarkable and extremely well- passed through the merchant. For business customers, we launched Treasury Management for Business, with a sleek new look and customizable dashboard. We have improved and secured the login process, making login credentials consistent across the app and website and restricting access based on IP address, day and time of day. We have also added PIN verification to certain transactions for increased security. Plus, with enhanced communication via the message center, we continue to give our very best with every interaction. Our partnerships have remained strong and growing in 2019. Tompkins Insurance Agencies received significant recognition for positive customer relationships, operations and communication. They were named among the Top 100 largest independent property/casualty agencies in the nation by Insurance Journal for the fifth consecutive year. They were also named a Best Practices Agency by Independent Insurance Agents & Brokers of America, deserved. Congratulations, Jennifer and Pat, and please accept our sincere appreciation for your contributions to Tompkins Financial. All of our innovation and growth would not be possible without the support of our shareholders, who we look forward to seeing at our upcoming annual meeting. The Annual Meeting of Shareholders will be held at the Country Club of Ithaca on Tuesday, May 5 at 5:30 p.m. A recording of that meeting will be available in each of the regions at an informational viewing hosted by the local bank president. The meeting in western New York will be held on Tuesday, May 12 at 10:00 a.m. The meeting in the Hudson Valley will be held on Thursday, May 14 at 12:00 noon. The meeting for southeastern Pennsylvania will be held on Friday, May 15 at 12:00 noon. Please respond to Janet Hewitt at jhewitt@tompkinsfinancial.com or 607-274-2004 if you wish to reserve a space at one of the informational meetings. Locations for the informational meetings will be identified, as we determine attendance. Reservations are not required to attend the Annual Meeting in Ithaca. and received the 2019 Excellence in Social Media Award from the As we celebrate a year of customer success, community national Professional Insurance Agents Association. Tompkins Financial Advisors† continues to focus on strengthening the client experience. This year brought the launch of Tompkins Financial Advisors Premier Banking—an exclusive package, offered through our bank partners, for financial advising involvement and positive relationships, it is important that we thank the people who help us stay true to our values and honor our commitment to community. To our customers, our shareholders and our employees—thank you for your dedication and support in 2019. It is because of you that we grow stronger each year. 2019 Corp orate Rep or t | ME SSAGE TO SHAREHOLDER S — p.3 200631_2019Report_c.indd 3 200631_2019Report_c.indd 3 3/13/20 11:46 AM 3/13/20 11:46 AM A Confident Vision TRUE NORTH CENTER FOR CHILDREN Cynthia Fowler, Owner and Director Michael Fowler, Owner It has been more than a year since we moved our headquarters to its new location in Ithaca, and our relationships with our community and local businesses remain as strong and collaborative as ever. As the city of Ithaca continues to change and grow, we have increased our commitment to supporting a strong and thriving downtown. We are excited to open a new ATM at our former historic location, at what is now the Center for History and Culture, to continue providing our customers with exceptional and convenient service on the Ithaca Commons. We have once again partnered with the Downtown Ithaca Alliance to offer innovative and exciting events throughout the year—like the annual Fashion Week, Applefest and the new Winter Lights Festival—that promote community togetherness, the arts, local businesses and the talented people of our region. We kicked off this year’s United Way of Tompkins County campaign in September by hosting our second annual Community Carnival for a Cause on the Ithaca Commons. The event was envisioned, planned and executed entirely by Tompkins employees. It was a great success, with attendance nearly doubled from the year before. The family-friendly 2019 Corp orate Rep or t | CENTR AL NEW YORK — p.4 200631_2019Report_c.indd 4 200631_2019Report_c.indd 4 3/13/20 11:46 AM 3/13/20 11:46 AM Cynthia and Michael Fowler were ready to open their brand new full-service preschool and childcare center—they had a building designed, had made a down payment on a lot, and were excited to get started. But a few months into the project, their financing plan fell through. That’s where Tompkins Trust Company came in. “We were able to meet with Tompkins and they heard our story and had confidence that we would be able to get the customer base we needed to be financially stable,” says Cynthia, an experienced preschool director and early childhood educator. “They believed in our vision, and were willing to help with some work and creative planning.” With financing through Tompkins Trust Company and guidance from Tompkins Insurance Agencies, True North Center for Children opened in August 2019 with 12 classrooms, nearly two acres of natural space for outdoor play and enrollment near capacity. carnival engaged our community with activities, games, local celebrity cameos, educational demonstrations, prizes and fundraising for a wonderful cause. The carnival is just one of the ways our employees and partners worked together this year to support our community. We are proud that our people helped more than 250 organizations across central New York in 2019 by generously serving on nonprofit boards and committees, volunteering and fundraising. 2019 Corp orate Rep or t | CENTR AL NEW YORK — p.5 200631_2019Report_c.indd 5 200631_2019Report_c.indd 5 3/13/20 11:47 AM 3/13/20 11:47 AM Our Lyndon Corners office continues to grow in the Syracuse market, as our employees and partners deliver on their full suite of banking services. In the few years since opening, Lyndon Corners employees have developed excellent relationships with new customers and added value to existing ones. The commercial team in Syracuse has been a positive force for the local economy, welcoming many new customers and helping them exceed their business goals. We have had a powerful year in loan originations across our region in both personal and commercial lending. Tompkins Insurance Agencies has continued to expand its Syracuse presence, with a full team focused on serving customers in the surrounding area. Our in-house, dedicated claims department and 24/7 customer care center are real differentiators—both of which deliver a higher level of service that our customers, generation after generation, have come to expect. Tompkins Financial Advisors continues to offer valuable financial planning for customers, with robust technology and personalized service. We continue to focus on executing LAMBROU REAL ESTATE/ENP ASSOCIATES Costa Lambrou, General Manager Nick Lambrou, Owner 2019 Corp orate Rep or t | CENTR AL NEW YORK — p.6 200631_2019Report_c.indd 6 200631_2019Report_c.indd 6 3/13/20 11:47 AM 3/13/20 11:47 AM our regional strategy and ensuring that clients receive the highest level of care. There has been some exciting movement in senior leadership this year, as a new Banking Operations Manager came on board to help our teams with daily operations and project planning. In addition, we welcomed our new Chief Credit Officer to the Tompkins Trust Company Leadership Team. Thanks to a strong leadership team, a clear vision and the most dedicated and caring employees and partners we could possibly ask for, 2019 has been an outstanding year. The relationships we have built and continue to grow across central New York remain at the heart of everything we do. “I consider myself and my family to be products of Tompkins Trust Company,” says Nick Lambrou, owner of Lambrou Real Estate and ENP Associates. “Our success story is definitely supported by our business relationship.” Nick’s father started the family business with a small grocery store and four apartments in Ithaca’s Collegetown neighborhood more than half a century ago. They’ve Generations of Trust since quadrupled their holdings, expanding their footprint into downtown Ithaca and, with their new City Harbor development, the Ithaca waterfront. “Tompkins Trust gave us great advice about our City Harbor development. They helped us better determine the site plan and types of offerings for the market,” Nick says. “They challenge us to do our due diligence—to do the hard work and analysis and come up with the right plans. I trust them to guide us and to be there for us.” 2019 Corp orate Rep or t | CENTR AL NEW YORK — p.7 200631_2019Report_c.indd 7 200631_2019Report_c.indd 7 3/13/20 11:47 AM 3/13/20 11:47 AM 2019 was a momentous year for Tompkins Bank of Castile, as we celebrated our 150th anniversary. We found plenty of ways to celebrate, always staying true to our community banking spirit. In honor of our 150 years, we hosted a Batavia Muckdogs In 2019, we focused on ways to better support our business baseball game with free general admission for our employees and community members. With 2,779 customers, neighbors customers. We helped more local entrepreneurs turn their visions into realities with more than $5 million in SBA and friends in attendance, the event was a hit. guaranteed small business loans. We also hired a Business Development Officer to connect business owners with the We also partnered with Tompkins Insurance Agencies and right partners, products and services for their needs. Tompkins Financial Advisors to donate $150,000 to the YMCA Healthy Living Campus Campaign, a project that will be transformational for downtown Batavia. In addition, our employees spent more than 13,000 hours volunteering with nonprofit organizations in our region. In March, we held the Grand Opening of our financial center in Buffalo, where customers can access banking, wealth management and insurance services all under one roof. With this highly visible location and ease of collaboration, we grow even more effective for Buffalo customers. Agriculture was an important part of our founding 150 years ago, and it remains central to the economic fabric of our region. We continue to invest in our agriculture banking team to ensure that customers have expert advice as seasons and economic landscapes change. As one of the last truly independent banks dedicated to agriculture in western New York, we are committed to supporting the many farm families and businesses we serve. As a chemical engineer and small business owner, Daniel Canavan appreciates the responsive approach to problem solving he finds at Tompkins Bank of Castile—how he can get help when he needs it, no matter who he talks to. “Someone at the bank will answer the phone and we’ll work the problem. They’ll take ownership of the issue,” says Daniel, who co-owns the chemical analytics and manufacturing company, IsleChem, with his brother, Patrick. “Isn’t that what problem solving is really all about? It’s taking ownership of the problem until you can get the right answer to your client.” In 2017, the Canavans needed to solve their own ownership problem by refinancing. Converting their secondary debt to primary debt, Tompkins helped Daniel and Patrick remove the remaining financial stake IsleChem’s previous owners still had in the company. “They give us power and authority, and control to do what we need to do to grow our business.” 2019 Corp orate Rep or t | WE STERN NEW YORK — p.8 200631_2019Report_c.indd 8 200631_2019Report_c.indd 8 3/13/20 11:47 AM 3/13/20 11:47 AM Taking Ownership ISLECHEM Daniel Canavan Owner and Vice President 2019 Corp orate Rep or t | WE STERN NEW YORK — p.9 200631_2019Report_c.indd 9 200631_2019Report_c.indd 9 3/13/20 11:47 AM 3/13/20 11:47 AM GLOW YMCA Rob Walker, CEO A Healthier Community 2019 Corp orate Rep or t | WE STERN NEW YORK — p.10 200631_2019Report_c.indd 10 200631_2019Report_c.indd 10 3/13/20 11:47 AM 3/13/20 11:47 AM GLOW YMCA CEO Rob Walker says he is deeply satisfied with the offerings and guidance Tompkins Insurance Agencies provides—but that the relationship goes far deeper than insurance. “It’s much more than just the product, I’m buying the culture behind it,” Rob says. “It’s the culture Tompkins creates for its employees to take part and be helpful to the efforts in their local community.” These efforts include GLOW YMCA’s capital campaign to build a Healthy Living Campus in Batavia. With a generous gift and countless volunteer hours, the Tompkins Insurance Agencies, Tompkins Bank of Castile and Tompkins Financial Advisors teams are helping the Y reach their project goals. “Volunteers helped us look over our financing options and pro formas, keeping us level-headed so that outcomes can be met,” Rob says. Along with providing invaluable wellness resources to families in the region, the new facility is projected by the Genesee County Economic Development Center to bring $60 million into the area over its first 10 years. It is these and other longstanding relationships that form the cornerstone of our business. We are proud to have a number of decades-long, multi-generational customers who not only stay with us—they refer their friends and family. Through these referrals and our Power of Partnership program, we have continued to grow deposit and lending relationships in 2019. It’s a testament to the trust we build as true partners dedicated to customer satisfaction and success. Our presence has expanded in Warsaw, as Tompkins Insurance Agencies acquired Cali Agency, Inc. in May of 2019. We have been a solid part of the Warsaw community since 1935, and we are glad to be able to serve the needs of more of our neighbors there. Tompkins Insurance has also successfully re-established a relationship with BlueCross BlueShield of Western New York to connect customers with another trusted name in the region. Our partnerships grew stronger this year, as Tompkins Financial Advisors continued to build out its western New York team to better deliver the client experience. We recruited a new Chief Investment Officer for the entire Tompkins footprint who provides dedicated service to clients in our region as a portfolio manager. As we reflect on a century and a half of impactful work, it’s clear that our longevity is only possible thanks to our powerful partnerships, our dedicated people, and the lasting relationships we cultivate. 2019 Corp orate Rep or t | WE STERN NEW YORK — p.11 200631_2019Report_c.indd 11 200631_2019Report_c.indd 11 3/13/20 11:47 AM 3/13/20 11:47 AM An important area of focus in the Hudson Valley in 2019 was the growth of knowledge and expertise—for employees, customers and our community. Our continued commitment to understanding our customers’ needs has helped us see another record year of Community College and Westchester Community College, and creating scholarships for two local students in advanced earnings, with growth in commercial and residential loans and deposits in our region. manufacturing programs. The manufacturing sector is experiencing a strong return We have worked hard to provide vital educational programs in our community as well, so that our customers and neighbors to our region, which has led to a critical need for workforce development. We recognized a real opportunity to help can feel safe, secure and settled. Our free fraud prevention seminars have helped business owners and community address this challenge through education by expanding our partnerships with the Council of Industry, Dutchess members recognize threats and better protect themselves, and our first-time homebuyer education programs have helped more local families find a home to call their own. Handcrafted Success David Dunning purchased Country Road Associates in 2009 with a plan to build on the company’s decades of history giving new life to reclaimed barnwood. “Tompkins Mahopac Bank was the only bank that would listen,” David says. Other banks he approached with his business plan either weren’t interested or would only offer a small portion of the financing he needed. With help from Tompkins Mahopac Bank and Tompkins Financial Advisors, David bought the business and has grown it ever since. He says Tompkins’ focus on personal relationships has been a big part of his business success. “I call them and they know me by name. It’s so much easier when someone knows who you are. It makes it very simple and quick to accomplish something in business,” David says. “As opportunities have come along, we’ve been able to expand and purchase things very quickly because of our relationship with Tompkins.” 2019 Corp orate Rep or t | HUD S O N VALLEY — p.12 200631_2019Report_c.indd 12 200631_2019Report_c.indd 12 3/13/20 11:47 AM 3/13/20 11:47 AM COUNTRY ROAD ASSOCIATES David Dunning, Owner 2019 Corp orate Rep or t | HUD S O N VALLEY — p.13 200631_2019Report_c.indd 13 200631_2019Report_c.indd 13 3/13/20 11:47 AM 3/13/20 11:47 AM A Higher Standard ROSE HILL ASSET MANAGEMENT CORP Matthew Barbaccia Managing Partner John Colangelo, Jr. Managing Partner 2019 Corp orate Rep or t | HUDSON VALLEY — p.14 200631_2019Report_c.indd 14 200631_2019Report_c.indd 14 3/13/20 11:47 AM 3/13/20 11:47 AM “It was a breath of fresh air walking into a branch where people have worked for a long time and they understand that client relationships matter,” says John Colangelo, managing partner of Rose Hill Asset Management Corp, reflecting on the reasons he and business partner Matthew Barbaccia chose Tompkins Mahopac Bank to help finance their properties. As a college student at Fordham University’s Rose Hill Campus in the Bronx in the late 1990s, John had discovered that off-campus housing left a lot to be desired. He began buying and renovating properties, and joined forces with Matthew in 2009 to continue raising the standard of living for students. That’s when they decided it was time to raise their standard of banking as well. “Tompkins was true to their word,” John says. “They believed in our ability to manage and redevelop these properties and have been a critical partner in our success and growth.” Growing knowledge and expertise to best serve our customers also means ensuring that we have the right teams in place to provide the greatest value. In 2019, Tompkins Financial Advisors built out their full Hudson Valley team to deliver on the client experience. Our Power of Partnership referrals have remained solid throughout the year, as we’ve continued to work together to ensure that customers are getting the most out of their relationship. several branches to anyone who stopped in. In addition to reaffirming our customer appreciation and commitment to the needs of our community, these lunchtime events provided another opportunity to fundraise for local nonprofit partners. Serving our region in the most impactful ways requires a true commitment to knowing the people, families, businesses and organizations in our community—the challenges and We also work closely together to determine how we can best serve our community. Each year, our employees and partners share their knowledge about local causes to help decide where our support can do the most good. We are proud to have supported more than 160 charitable opportunities they face, the information and resources they need, and the types of partnerships they expect. Our dedicated employees and partners have made this commitment, and we are incredibly proud of the positive, impactful relationships they continue to build. organizations in 2019. Our employee-led Acorn Alliance program—in which employees volunteer their time in the community during business hours to help local nonprofits with their crucial work—expanded to support more than a dozen charitable organizations in 2019. Our popular Food Truck Fridays program also expanded, offering free lunch at 2019 Corp orate Rep or t | HUDSON VALLEY — p.15 200631_2019Report_c.indd 15 200631_2019Report_c.indd 15 3/13/20 11:47 AM 3/13/20 11:47 AM In 2019, that promise was fulfilled across the spectrum of banking, insurance and wealth management needs—and ——————— | BUILDING A PARTNERSHIP |——————— Since joining the Tompkins family in 2012, Tompkins VIST Bank has been a true community bank. Our people are driven to serve our markets with reliability, strong relationships and the highest level of professionalism. Community banking is not just our work, it’s our promise. “The easiest way to describe our relationship with Tompkins VIST Bank is—a partnership,” says Frank Barwis, owner of full-service site contracting company Barwis Construction LLC. After a previous banking relationship ended due As one of the largest industries in our region, agriculture is to frustrating changes in direction, a partnership is exactly what Barwis as vital to the local economy as it is to each individual farm Construction needed. As the Tompkins team already handles other aspects of Barwis’ business—from employee benefit plans to their General Liability and Worker’s Compensation insurance—Frank knew that making Tompkins Hand-in-hand with our positive lending relationships is our VIST his bank would bring the same high level of customer service and knowledgeable guidance for the years ahead. “We discuss our plans, lay out our short and long-term goals so that when it comes time to purchase equipment, the bank is already aware,” Frank says. “Because of their understanding of our company and industry, they’ve helped simplify our process of growth.” While we strive to provide more value for our customers, the Power of Partnership program has gained momentum in our region. Referrals between Tompkins VIST Bank, Tompkins commitment to strong asset quality. Our relationships are built on a foundation of trust that we will always do what’s best for our customers, with products and offerings that provide peace of mind. owner and family. Our continued focus on agriculture lending has helped our customers—and their farms—grow and thrive. especially in the lending space. Our mortgage team helped even more local families reach their homeownership goals in 2019 than we projected and have received wonderfully positive feedback from satisfied customers. work to meet the unique needs of our community. We are regulations, challenges and possibilities arise, we grow our to truly understand each industry we serve. As new risks, Our commercial loan portfolio remains diversified as we expertise so that we can provide the products, services, committed to putting in the time and research needed support and advice our customers need. significantly in 2018, hiring a senior wealth advisor, portfolio manager, and transitioning a trust officer. Last year we gave back to our communities by hosting Food Truck Fridays at our two Mahopac branches providing free lunch to anyone who stopped in. We served several- hundred community members through the program. We also continued to support more than 200 charitable organizations in the communities we serve and started the Acorn Alliance program that allows employees to volunteer for local nonprofits during business hours as just another way of serving the community. Tompkins Mahopac Bank once again “The easiest way to describe our relationship with Tompkins VIST Bank is: a received the highest rating possible, a partnership,” says Frank Barwis, owner of full-service site contracting company Barwis five-star rating, from Bauer Financial, a Construction LLC. After a previous banking relationship ended due to frustrating top independent financial ratings firm. Banks with four- and five-star ratings changes in direction, a partnership is exactly what Barwis Construction needed. As the like ours are considered financially Tompkins team already handles other aspects of Barwis’ business—from employee sound and operating well above their benefit plans to their General Liability and Workers’ Compensation insurance— regulatory capital requirements. Frank knew that making Tompkins VIST his bank would bring the same high level of customer service and knowledgeable guidance for the years ahead. “We discuss our plans, lay out our short and long-term goals so that when it comes time to purchase equipment, the bank is already aware,” Frank says. “Because of their understanding of our company and industry, they’ve helped simplify our process of growth.” growth and success in the region. Bankers and wealth advisors getting full value from our relationship with them. Tompkins Power of Partnership referrals remain a solid foundation for continue to work closely together to ensure customers are Financial Advisors grew the size and expertise of our team 2019 Corp orate Rep or t | S O UT H E A ST ER N PEN NSYLVAN I A — p.16 200631_2019Report_c.indd 16 200631_2019Report_c.indd 16 3/13/20 11:47 AM 3/13/20 11:47 AM BARWIS CONSTRUCTION LLC Frank Barwis, Owner Building a Partnership 2019 Corp orate Rep or t | S O UT H E A ST ER N PEN NSYLVAN I A — p.17 200631_2019Report_c.indd 17 200631_2019Report_c.indd 17 3/13/20 11:47 AM 3/13/20 11:47 AM Financial Advisors and Tompkins Insurance Agencies help us identify gaps in relationships and offer a more complete suite commercial insurance products and—most importantly— follow up with them personally. of products and services. As always, our commitment to our community includes While remaining focused on fiduciary delivery to clients and partners in 2019, Tompkins Financial Advisors has also giving back. Our employees have volunteered more than 10,000 hours with local nonprofit organizations to make a brought in new talent. With the addition of a Managing Director, Tompkins Financial Advisors now has full-time positive impact on those who need it most. Not only does this local involvement and service make a difference in leadership in the southeastern Pennsylvania region. our region—it makes a difference in the hearts and minds of our customers. When they see us volunteering and Year after year, Tompkins Insurance Agencies maintains a consistent, industry leading 99% customer satisfaction engaging meaningfully out in the community, it makes our relationships stronger. rate, based on survey responses from personal insurance customers who had a homeowners or auto claim. With a new automated marketing program, the team is able to reach out to customers who may benefit from personal or We could not be more proud of our employees and partners for their dedication to our customers, our values and our community throughout 2019. “We’ve dealt with really small banks and we’ve dealt with a really big bank. The really small banks can’t provide all the services we need. The big banks can provide all the services but we’re just a number; we mean nothing to them,” says Steve Parris, owner of PD Home & Garden, a home accent design, import and distribution company. “Tompkins VIST Bank fits that perfect sweet spot for us. They function like a small bank as far as accessibility and a great relationship, and they can provide all the services that a big bank provides.” The company, which Steve runs with his co-owner and wife Demi, has experienced double-digit sales growth each year since working with Tompkins VIST Bank. “We’re going to be with them for life.” 2019 Corp orate Rep or t | S O UT H E A ST ER N PEN NSYLVAN I A — p.18 200631_2019Report_c.indd 18 200631_2019Report_c.indd 18 3/13/20 11:48 AM 3/13/20 11:48 AM A Feeling of Home PD HOME & GARDEN Demi Parris & Steve Parris, Owners 2019 Corp orate Rep or t | S O UT H E A ST ER N PEN NSYLVAN I A — p.19 200631_2019Report_c.indd 19 200631_2019Report_c.indd 19 3/13/20 11:48 AM 3/13/20 11:48 AM 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 Available-for-sale securities, at fair value (amortized cost of $1,293,239 at December 31, 2019 and $1,363,902 at December 31, 2018) Held-to-maturity securities, at amortized cost (fair value of $0 at December 31, 2019 and $139,377 at December 31, 2018) Equity securities, at fair value (amortized cost $915 at December 31, 2019 and $887 at December 31, 2018) Originated loans and leases, net of unearned income and deferred costs and fees Acquired loans Less: Allowance for loan and lease losses Net Loans and Leases Federal Home Loan Bank and other 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 Federal funds purchased and securities sold under agreements to repurchase Other borrowings 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: 15,014,499 at December 31, 2019; and 15,348,287 at December 31, 2018 Additional paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock, at cost – 123,956 shares at December 31, 2019, and 122,227 shares at December 31, 2018 Total Tompkins Financial Corporation Shareholders’ Equity Noncontrolling interests Total Equity Total Liabilities and Equity YEAR ENDED DECEMBER 31, 2019 2018 $136,010 1,972 137,982 $78,524 1,865 80,389 1,298,587 1,332,658 0 140,579 915 4,697,401 220,149 39,892 4,877,658 33,695 94,355 82,961 92,447 6,223 100,800 $6,725,623 887 4,568,741 265,198 43,410 4,790,529 52,262 97,202 81,928 92,283 7,628 82,091 $6,758,436 3,080,686 675,014 1,457,221 5,212,921 60,346 658,100 17,035 114,167 $6,062,569 2,853,190 637,295 1,398,474 4,888,959 81,842 1,076,075 16,863 73,826 $6,137,565 1,501 338,507 370,477 (43,564) (5,279 ) 661,642 1,412 $663,054 $6,725,623 1,535 366,595 319,396 (63,165) (4,902) 619,459 1,412 $620,871 $6,758,436 2019 Corp orate Rep or t | STATE MENTS OF CONDITION — p.20 200631_2019Report_c.indd 20 200631_2019Report_c.indd 20 3/13/20 11:48 AM 3/13/20 11:48 AM Consolidated Statements of Income { CONSOLIDATED STATEMENTS OF INCOME } YEAR ENDED DECEMBER 31, IN THOUSANDS, EXCEPT PER SHARE DATA Interest and Dividend Income Loans Due from banks 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 Other income Net gain (loss) on securities transactions Total Noninterest Income Noninterest Expenses Salaries and wages Other employee benefits Net occupancy expense of premises Furniture and fixture expense Amortization of intangible assets 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, 2019 2018 2017 $226,723 41 28,460 3,151 3,003 261,378 3,095 27,809 143 1,276 18,427 50,750 210,628 1,366 209,262 31,091 16,434 8,321 10,526 8,416 645 75,433 89,399 23,488 13,210 7,815 1,673 46,249 181,834 102,861 21,016 81,845 127 $ 81,718 $5.39 $5.37 $214,370 31 30,377 3,437 3,377 251,592 1,712 14,883 152 1,227 21,818 39,792 211,800 3,942 207,858 29,369 17,288 8,435 9,693 13,130 (466 ) 77,449 85,625 22,090 13,309 7,351 1,771 50,921 181,067 104,240 21,805 82,435 127 $ 82,308 $5.39 $5.35 $191,410 37 29,721 3,475 2,121 226,764 1,880 10,253 235 1,158 11,934 25,460 201,304 4,161 197,143 28,778 15,665 8,437 9,100 7,631 (407) 69,204 81,948 21,458 13,214 7,028 1,932 45,525 171,105 95,242 42,620 52,622 128 $ 52,494 $3.46 $3.43 2019 Corp orate Rep or t | STATE MENTS OF INCOME — p.21 200631_2019Report_c.indd 21 200631_2019Report_c.indd 21 3/13/20 11:48 AM 3/13/20 11:48 AM Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s common stock is traded under the symbol “TMP” on the NYSE American. 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 2018 and 2019, are presented to the right. The per share dividends paid by the Company in each quarterly period in 2018 and 2019 and the payment dates of these dividends are also presented. $5.37 $5.35 $5.33 $3.87 $3.63 $3.91 $4.42 $3.43 Market Price Low High Cash Dividends Amount Date Paid 2018 1st Quarter $85.82 $74.35 $0.48 2/15/18 2nd Quarter 89.15 3rd Quarter 91.14 75.00 80.12 0.48 0.48 5/15/18 8/15/18 4th Quarter 83.00 69.67 0.50 11/15/18 2019 1st Quarter $81.13 $73.00 2nd Quarter 83.73 75.93 3rd Quarter 84.31 76.76 4th Quarter 91.14 78.52 $0.50 0.50 0.50 0.52 2/15/19 5/15/19 8/15/19 11/15/19 $2.02 $1.94 $1.77 $1.82 $1.70 0.00 0.00 15 16 17 18 19 Diluted Earnings1 PER SHARE IN DOLLARS 15 16 17 18 19 Cash Dividends PER SHARE IN DOLLARS 1. The darker shaded sections of the bars reflect GAAP earnings per share. The lighter bars reflect adjusted diluted earnings per share. Adjusted diluted earnings per share reflects adjustments made for certain nonrecurring items. Adjustments for nonrecurring items in 2018 included a $2.2 million gain on sale of real estate and a $1.9 million write-down of impaired leases ($0.02 per share). Adjustments in 2017 included a $14.9 million ($0.99 per share) one-time non-cash write-down of net deferred tax assets related to the Tax Cuts and Jobs Act of 2017. Adjustments in 2015 included a $3.6 million ($0.24 per share) after-tax gain on a pension plan curtailment. There were no adjustments in 2019 and 2016. Adjusted earnings per share is a non-GAAP measure. This adjusted measure is defined in the Company’s Form 10-K. The Shareholders and Board of Directors Tompkins Financial Corporation: Report of Independent Registered Public Accounting Firm 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, 2019, and the related consolidated statements of income, comprehensive income, cash flows, and changes in shareholders’ equity for the year then ended (not presented herein); and in our report dated March 2, 2020, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated financial statements is fairly stated, in all material respects, in relation to the consolidated financial statements from which it has been derived. Albany, New York March 2, 2020 March 1, 2018 2019 Corp orate Rep or t | FI NAN CIAL H I G H LI G HTS — p.22 200631_2019Report_c.indd 22 200631_2019Report_c.indd 22 3/13/20 11:48 AM 3/13/20 11:48 AM Tompkins Financial Corporation Board of Directors Frank C. Milewski Retired VP Regional Operations Pathways Health Michael H. Spain Executive Vice President Brown & Brown Jennifer R. Tegan Partner Cayuga Venture Fund Alfred J. Weber President, Tweed-Weber-Danks, Inc. Craig Yunker Managing Partner, CY Farms Thomas R. Rochon Chairman President, ERB Learn Stephen S. Romaine President & CEO James W. Fulmer Vice Chairman John E. Alexander Founder, The CBORD Group, Inc. Paul J. Battaglia, CPA Retired Director Freed Maxick CPAs, P.C. Daniel J. Fessenden Executive Director Fred L. Emerson Foundation, Inc. Patricia A. Johnson VP of Finance & Administration Lehigh University 2019 Corp orate Rep or t | CORPOR ATION BOARD OF DIRECTOR S — p.23 200631_2019Report_c.indd 23 200631_2019Report_c.indd 23 3/13/20 11:48 AM 3/13/20 11:48 AM Board of Directors TOMPKINS TRUST COMPANY TOMPKINS BANK OF CASTILE TOMPKINS MAHOPAC BANK TOMPKINS VIST BANK Stephen S. Romaine Chairman President & CEO Tompkins Financial Corporation James W. Fulmer Chairman Vice Chairman Tompkins Financial Corporation Michael Spain Chairman Executive Vice President Brown & Brown Alfred J. Weber Chairman President Tweed-Weber-Danks, Inc. Gregory J. Hartz President & CEO John M. McKenna President & CEO Gerald J. Klein, Jr. President & CEO Scott L. Gruber 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. Ryan Lombardi Vice President Student & Campus Life Cornell University Jennifer R. Tegan Partner Cayuga Venture Fund Paul J. Battaglia, CPA Retired Director Freed Maxick CPAs, P.C. Joseph G. Bucci Jr. Environmental Manager American Rock Salt Company, LLC David N. DeLaVergne Retired Senior Vice President Tompkins Bank of Castile John D. McClurg President McClurg Chrysler Dodge Jeep, Inc. & McClurg Chevrolet Buick, Inc. Stephen S. Romaine President & CEO Tompkins Financial Corporation Stephen R. Stoddard, DVM Partner Perry Veterinary Clinic Craig Yunker Managing Partner, CY Farms Francis M. Fetsko EVP, CFO, COO & Treasurer Tompkins Financial Corporation *Edward C. Barrett, CPA Retired EVP & CFO Tompkins VIST Bank Ita M. Rahilly, CPA, AEP Partner RBT CPAs, LLP James W. Fulmer Vice Chairman Tompkins Financial Corporation Kevin J. Plunkett Director of Strategic Initiatives Simone Development Companies Thomas R. Rochon President ERB Learn Stephen S. Romaine President & CEO Tompkins Financial Corporation C. Compton Spain Attorney, Spain & Spain, P.C. Philip E. Hughes, Esq., CPA Vice Chairman Keystone Industries Patricia A. Johnson VP of Finance & Administration Lehigh University Frank C. Milewski Retired VP Regional Operations Pathways Health Harry J. O’Neill, III President Empire Group Stephen S. Romaine President & CEO Tompkins Financial Corporation *Retired from Board December 31, 2019 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 2019 Corp orate Rep or t | BOARD OF DIRECTOR S — p.24 200631_2019Report_c.indd 24 200631_2019Report_c.indd 24 3/13/20 11:48 AM 3/13/20 11:48 AM Corporate Information TOMPKINS FINANCIAL CORPORATION CORPORATE OFFICERS Stephen S. Romaine President & Chief Executive Officer CORPORATE OFFICE 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 David S. Boyce Executive Vice President Francis M. Fetsko Executive Vice President, Chief Financial Officer, Chief Operating Officer & Treasurer Alyssa H. Fontaine Executive Vice President & General Counsel Scott L. Gruber Executive Vice President Gregory J. Hartz Executive Vice President Brian A. Howard Executive Vice President Gerald J. Klein, Jr. Executive Vice President John M. McKenna Executive Vice President Susan M. Valenti Executive Vice President Steven W. Cribbs Senior Vice President & Chief Risk Officer Bradley G. James Senior Vice President, Chief Technology Officer Bonita N. Lindberg Senior Vice President, Director of Human Resources Janet L. Hewitt Assistant Vice President, Corporate Administrative & Investor Relations Officer Kathleen A. Manley Assistant Vice President & Corporate Secretary STOCK LISTING Tompkins Financial Corporation common stock is traded on the NYSE American under the symbol TMP. The Tompkins Financial Stock Purchase Plan is administered by 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.astfinancial.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.astfinancial.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@astfinancial.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 2019, 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%. 6 trees preserved for the future 500 gallons wastewater flow saved 20 lbs solid waste not generated 2600 lbs net greenhouse gases prevented 2.5 million BTUs energy not consumed †Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Tompkins Trust Company and Tompkins Wealth Advisors are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Tompkins Wealth Advisors, and may also be employees of Tompkins Trust Company. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Tompkins Trust Company or Tompkins Wealth Advisors. Securities and insurance offered through LPL or its affiliates are: Not Insured by FDIC or Any Other Government Agency Not Bank Guaranteed Not Bank Deposits or Obligations May Lose Value 200631_2019cover_b.indd 5 200631_2019cover_b.indd 5 3/13/20 11:50 AM 3/13/20 11:50 AM 200631_2019cover_b.indd 2 200631_2019cover_b.indd 2 3/13/20 11:50 AM 3/13/20 11:50 AM 

Continue reading text version or see original annual report in PDF format above