Tompkins Financial Corporation
Annual Report 2020

Plain-text annual report

2O2O Service | Stability | Strength DELIVERING FOR OUR CLIENTS & COMMUNITIES TOMPKINS FINANCIAL CORPORATION IS PROUD TO SERVE A VITALLY IMPORTANT ROLE AS A TRUSTED, DEDICATED AND TRULY LOCAL COMMUNITY BANK. No matter what may be going on around the world, our focus is—and always will be—our customers and neighbors. WHEN THE INDIVIDUALS, FAMILIES, BUSINESSES AND ORGANIZATIONS OF OUR REGIONS FACE CHALLENGES, WE ARE HERE TO HELP THEM NAVIGATE EACH NEW DAY. Our banking, insurance and wealth management teams are committed to delivering the service, stability and strength our customers and communities need. THAT’S THE ROLE OF A LOCALLY FOCUSED COMMUNITY BANK. THAT’S THE PROMISE OF TOMPKINS. FINANCIAL HIGHLIGHTS IN THOUSANDS, EXCEPT PER SHARE DATA 2020 2019 % CHANGE Total assets Net income attributable to Tompkins Financial Corporation Diluted earnings per share Adjusted diluted earnings per share1 Cash dividends per share $7,622,171 $6,725,623 81,718 5.37 5.37 2.02 77,588 5.20 5.24 2.10 13.33% -5.05% -3.17% -2.42% 4.00% The following consolidated selected financial data is taken from the Company’s audited consolidated financial statements as of and for the five years ended December 31, 2020. The following selected financial data should be read in conjunction with the consolidated financial statements and the notes thereto in Part II, Item 8. of this report. All of the Company’s acquisitions during the five year period were accounted for using the purchase method. Accordingly, the operating results of the acquired companies are included in the Company’s results of operations since their respective acquisition dates. IN THOUSANDS, EXCEPT PER SHARE DATA 2020 2019 2018 2017 2016 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 credit loss expense 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) $7,622,171 5,260,327 6,437,752 265,000 717,689 254,330 28,991 225,339 16,151 443 $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 $6,236,756 4,258,033 4,669,120 4,625,139 4,837,807 884,815 1,071,742 549,405 576,202 202,739 226,764 25,460 22,103 180,636 201,304 4,321 4,161 926 (407) 77,588 81,718 82,308 52,494 59,340 5.22 5.20 5.24 2.10 47.98 1.05 % 11.09 % 9.51 % 40.23 % 1,057 64 85 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 3.94 3.91 3.91 1.77 36.20 0.82 % 1.01 % 9.09 % 10.85 % 9.04 % 9.28 % 52.60 % 44.92 % 1,041 1,047 1,035 64 66 65 87 83 84 1,019 66 85 $4,447,019 $ 4,062,325 $ 3,806,274 $ 4,017,363 $ 3,941,484 1 Adjusted diluted earnings per share reflects adjustments made for certain nonrecurring items. Adjustments for nonrecurring items in 2020 included a $673,000 loss on the write-down of real estate pending sale ($0.04 per share). Adjustments 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. 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. 2020 Corporate Report | FINANCIAL HIGHLIGHTS | 1 A message from Tom Rochon & Steve Romaine Dr. Thomas R. Rochon C H A I R Stephen S. Romaine P R E S I D E N T & C E O We entered 2020 with a strong financial position, coming off a year of record earnings per share in 2019, and with our 2019 risk-based capital ratio at its highest level since 2014. Our long-held philosophy of maintaining Tompkins as a sustainable high performing company, supported with prudent risk management practices, was more important than ever during this tumultuous year. This year, diluted earnings per share were down 3.2% to $5.20 for the full year, largely due to the provision expense for the first quarter of 2020 of $16.3 million. It is important to note that this was not a result of specific credit risks currently identified in the loan portfolio—it was due to the impact of the economic shutdown related to COVID-19 on economic forecasts and other model assumptions relied upon by management in determining the allowance. Compared with December 31, 2019, the end of 2020 saw total deposits of $6.4 billion up 23.5%, and total loans of $5.3 billion up 7.0%. Growth in both areas was due, in part, to our participation in the Paycheck Protection Program (PPP). As banking was deemed an essential industry with a key role in the government’s plans to shore up the economy, we moved swiftly to implement previously developed business continuity and pandemic plans early in the year. Significant investments we made to digital technologies and internal systems over recent years were proven invaluable, as improved remote banking and remote working capabilities allowed us to operate with limited disruption to business. During the first quarter of 2020, we designated a Pandemic Planning Committee, made up of members of senior management, to oversee our company-wide response to COVID-19. We implemented a number of risk mitigation measures designed to keep our employees and customers safe, including restrictions on business travel and the establishment of a remote work environment for nearly 100% of our non- retail employees. We also implemented drive-up-only or by- appointment-only operations across our branch network. Our preparedness and commitment to unwavering service meant that we could provide the help our customers needed, quickly and efficiently. Prior to New York State’s loan forbearance announcement, we had already put together a program to provide business and individual customers the ability to defer loan payments during the crisis. The customer response to this initiative has been tremendous, and we continue to help our customers through this program today. As of December 31, 2020, more than 90% of loans that received deferrals have returned to payment status. In early spring, the Small Business Administration (SBA) was looking to banks to administer the PPP to help fund small businesses and their workers during the pause in normal business. Because all of our banks are certified SBA lenders, we were quick to answer the call—and we were one of the first banks to do so. Our customers’ gratitude has been profound as we have worked tirelessly to serve their needs. We funded 2,998 loans totaling approximately $465.6 million through the end of the 2020 program. We continue to help local businesses by participating in the 2021 PPP program. As the pandemic unfolded, the stock market became increasingly volatile—and Tompkins Financial Advisors† was there to provide advice, guidance and a steadying hand for our clients. 2 | MESSAGE TO SHAREHOLDERS | 2020 Corporate Report For nearly two centuries, Tompkins Financial has been a stable presence helping our customers through times of prosperity as well as times of uncertainty. Though we could not have anticipated the circumstances we have been experiencing due to COVID-19, we are extremely proud of the exceptional way the Tompkins team has stepped up to address the specific needs of our customers and communities. Our chief investment officer and advisors regularly connected with clients through frequent communications, including market updates, blogs and ongoing conversations to help put their minds at ease. Reflecting on the past year’s challenges, and considering the lens through which we view the world today, Tompkins Financial Advisors’ 2019 transition of our Social Responsibility Index portfolio to an Environmental, Social and Governance (ESG) portfolio has proven a vital and insightful move. Tompkins Insurance Agencies was also helping customers weather the storm, with enhancements including new cloud technology, increased self-service capabilities and the introduction of Saturday Customer Care Center hours. We would like to congratulate the insurance team on their continued national recognition—they were once again ranked one of the Top 100 Largest Commercial Insurance Brokers in the country by Business Insurance Magazine, one of the Top 100 Property & Casualty Agencies in the country by Insurance Journal Magazine and a Best Practices Agency by the Independent Insurance Agents & Brokers of America. In leadership news, we are excited to welcome Tompkins Mahopac Bank director Ita M. Rahilly to the Tompkins Financial Board of Directors. Ms. Rahilly’s qualifications to sit on our Board include 25 years of extensive experience dealing with financial and accounting matters for clients, complex organizations and closely held businesses and their shareholders. She has also acquired a deep understanding of the Hudson Valley business environment during her years working with commercial clients in the region. As always, our ability to remain focused on helping customers thrive is made possible thanks in large part to our shareholders. Our Annual Meeting of Shareholders will be held on May 11, 2021 at 5:30 p.m. Information about how to participate and vote was sent to shareholders in March 2021. Through a year when health and safety were top of mind, we have been more committed than ever to the well-being of our people. Over 85% of our workforce continued working remotely as of year-end, and we have remained diligent about social distancing for employees required to complete essential on-site functions. We have stayed true to our word in not furloughing any employees during the period of social distancing, as well as continuing to pay employees even if they could not perform their job function. We have also continued to recruit and promote team members. We prioritized crucial work toward equity and social justice throughout the year—launching our first ever employee- driven Diversity, Inclusion and Belonging group, in addition to establishing regional focus groups to address social justice at the local community level. We also sponsored Racial Equity Institute (REI) Training for 120 team members plus 80 community members. While these were great steps forward, we know there is still much to be done. In 2021, we will continue to assess company “norms,” including systemic and structural barriers, to promote a workplace culture of belonging. As we look back on 2020 and look forward to the year ahead, it is important that our employees know how much their dedication means to us. Our ability to help customers through this challenging year was thanks to the remarkably hard-working, community- focused individuals and teams across our lines of business and regions. We conclude by thanking you for your work toward enabling our communities to heal and thrive. 2020 Corporate Report | MESSAGE TO SHAREHOLDERS | 3 Tompkins Trust Company — CENTRAL NEW YORK — At Tompkins Trust Company, we are wholly committed to the people and businesses that call Central New York home. As a true community bank, we are uniquely invested in the families, neighborhoods and organizations of our region—especially as global events and economic shifts impact them in new ways. Even as our employees were dealing with many held extensive training across our banking, insurance of the same challenges as our customers, such as and wealth teams on using Webex for video transitioning to remote work or balancing family conferencing, and they have been meeting virtually needs, they stepped up to provide invaluable with clients and prospects ever since. help, guidance and support. With residential mortgage rates at historic lows, Our teams stayed informed about the latest our teams worked diligently to help local COVID-19 developments and worked to understand homebuyers and homeowners take advantage of the how to best serve customers in the way they needed rate environment. We delivered a record number of to be served. We worked with the SBA to provide home mortgages, with strong purchase activity and PPP loans to 650 Central New York companies, for a record volumes in terms of new residential mortgage total of $102 million in assistance, which supported loans and refinancing. 6,000 local jobs. We also acted very quickly in the early stages of the pandemic to offer relief through Our Syracuse office continues to grow and has loan payment deferrals—and more than 1,400 exceeded its commercial loan and deposit plan for customers took advantage of this program. the fifth consecutive year, with loans above $250 When it became clear that in-person banking would not always be possible, we leveraged technology to keep business moving forward. Thanks to our enhanced digital banking platforms, we were able to see a significant increase in digital banking. We also million and deposits more than doubling since the end of 2019. Our Syracuse office, with the addition of a branch manager, has rounded out its full complement of business lines to help customers with their banking, insurance and financial advising needs. 4 | CENTRAL NEW YORK | 2020 Corporate Report A HEALTHY WAY Forward Dr. Josie McAllister has worked with Tompkins Trust Company and Tompkins Insurance Agencies since founding Dermatology Associates of Ithaca in 2011. “As we’ve grown and evolved as a practice, they’ve been able to help us every step of the way,” Dr. McAllister says. DERMATOLOGY ASSOCIATES of ITHACA Dr. Josie McAllister, Founder 2020 Corporate Report | CENTRAL NEW YORK | 5 When the practice needed a larger office space, the Tompkins team told Dr. McAllister about a space perfectly suited to their needs: the former Tompkins Insurance building. After a successful bidding process, the practice was ready to move in—after making a few updates. “Tompkins provided crucial financing, as well as extremely valuable advice, oversight and support to keep the project on time and on budget,” says Dr. McAllister. Soon after the project was completed, COVID-19 drastically changed the way the practice had to function. The Tompkins team was there to assist with the PPP loan process, and the practice was able to remain fully staffed and accessible to patients. “It really helps to have a bank that we know is here for us.” As 2020 brought a number of unique challenges, we are so proud of how our banking, insurance and wealth teams came through for the people of Central New York in remarkable, inspiring ways—supporting customers through a number of transitions and helping our communities stay strong during an incredibly difficult time in history. The Tompkins Financial Advisors team made a number of key hires in the region, including wealth advisors. They also designed and delivered a monthly virtual financial education series for the women of Central New York called “Women and Wellness”—which is expanding into our other regions with plans to cover finance as well as additional wellness topics. As always, our commitment to our community went far beyond our customers’ financial needs. We were honored to receive the Corporate Philanthropist of the Year Award from the Southern Tier Chapter of the Association of Fundraising Professionals. We supported more than 100 local nonprofit organizations with financial contributions and/or volunteer time during this particularly difficult year and helped put food on our neighbors’ holiday tables through our “Banksgiving” initiative. We also sent food to essential workers who were working on the front lines of the crisis. 6 | CENTRAL NEW YORK | 2020 Corporate Report Tompkins Bank of Castile — WESTERN NEW YORK — In early 2020, the Genesee County Chamber of Commerce honored Tompkins Bank of Castile as the 2019 Business of the Year—an award which recognizes organizations that demonstrate significant business stability, commitment to the community and leadership. We are incredibly proud of this recognition and we are even more proud of how we followed through on each of those points in the year that followed. Throughout the COVID-19 pandemic, we have restaurant closures, we were there to provide PPP worked to keep the safety of our customers loan assistance and loan payment relief they needed and employees front and center, while offering to keep business moving forward. uninterrupted customer service. When many banks found themselves overwhelmed with PPP Through it all, we continued to help customers with loan applications, our employees put in night and their day-to-day banking needs without disruption. weekend hours to ensure that customers were able It was a high volume year in both mortgage loans to receive the assistance they needed—and it paid and refinancing, as we helped customers take off for our region in a big way. We helped customers advantage of the year’s lower interest rates. We with 738 PPP loans, which meant more than $120 also rolled out a new and improved version of million reinvested in our community and more than our commercial management system, providing 7,000 local jobs protected. customers hands-on support and assistance every step of the way. In the Buffalo area, we continued With a loan relief plan in place prior to New York’s to build momentum and brand recognition, and announcement, we were well-prepared to lead our have made significant progress in developing new customers and communities through this difficult customer relationships and expanding existing ones. time. And as the last truly independent bank dedicated to agriculture in our region, we also held Equity and inclusion remained an important area of true to our commitment to support our local farm focus across our region. We implemented a Western customers. When the dairy industry faced unique New York Diversity and Inclusion Team to enhance demand challenges in the spring due to school and our understanding and expand our engagement in 2020 Corporate Report | WESTERN NEW YORK | 7 2020 Corporate Report | WESTERN NEW YORK | 7 A SHARED SET of Values LIBERTY PUMPS Charlie Cook, CEO Robyn Brookhart, President and COO 8 | WESTERN NEW YORK | 2020 Corporate Report Liberty Pumps focuses on creating innovative, reliable products and building strong customer relationships—while also supporting their local community and creating a positive work environment. “Working with Tompkins Bank of Castile, it’s clear that they share those values,” says Charlie Cook, Liberty Pumps CEO. The team at Tompkins helped the pump manufacturer fund an employee stock ownership plan (ESOP) to give their employees greater ownership of the business. In addition to supporting this evolution of Liberty Pumps’ corporate philosophy, Tompkins assisted with the financing they needed to grow their physical footprint to more than 247,000 square feet. “Tompkins is very competitive, flexible and nimble. They’re always there when we need them,” Charlie says. “They give us confidence in our financial picture and they’ve helped us double our business more than once.” supporting racial equity. The initial focus of the team initiative. On a more global level, Tompkins Financial has been around education and awareness, with a Advisors continued to encourage our Environmental, plan to leverage that understanding into actionable, Social and Governance portfolio as world events impactful activities. We also participated in Rochester’s have prompted clients and companies to embrace 21-Day Racial Equity Challenge, a region-wide effort responsible investing. led by the United Way to empower individuals and organizations with the knowledge needed to confront racism, bias and other social inequities. Together with our insurance and wealth partners, we also maintained our strong focus on community involvement. Knowing that community need in In such a challenging year, we are incredibly proud of how our employees led our customers and communities through the uncertainty. Many customers have reached out to let 2020 was greater than ever, we proactively reached us know how much they appreciate the out to support the vital work of local nonprofit ongoing communication, knowledgeable organizations through donations, even as they were unable to hold their annual fundraising events. We also organized food delivery for our frontline health care workers and provided funding for local food pantries to feed families through our “Banksgiving” help, and clear dedication of our teams— and we echo that sentiment wholeheartedly. 2020 Corporate Report | WESTERN NEW YORK | 9 of Values Solutions MADE SIMPLE Tompkins Mahopac Bank — HUDSON VALLEY — At Tompkins Mahopac Bank, we found ourselves near the epicenter of the U.S. COVID-19 crisis, and it was vital that we acted swiftly and effectively to help our customers and communities through every new development and each disruption to business as usual. We moved quickly to develop efficient solutions the SBA. We employed a simplified application and open the process for PPP applications – assisting portal so customers could apply online and review customers along the way and ensuring smooth applications for accuracy. We then worked with communication between our customers and customers to fill in the blanks. 10 | HUDSON VALLEY | 2020 Corporate Report PASCAL COFFEE ROASTERS Dean Pialtos, President and CEO Charles Pialtos, Executive VP and CFO James Ranni, Treasurer As a fourth generation family business established more than 100 years ago, Pascal Coffee Roasters makes it a point to get to know their customers and understand their needs—and they wanted to work with a local bank that would do the same. The PPP process was a tremendous undertaking happening in the market and with the CARES Act by our staff, who worked long hours and over the and putting minds at ease. weekends to get applications processed and into the SBA system on a timely basis. We helped more than It was a record year for new residential mortgage 800 businesses through the PPP process, funded loans as borrowers took advantage of low interest $116 million in loans and protected more than rates to lower their payments or shorten their loan 8,000 local jobs. terms. The record volume also included a surge in activity for new home and condominium purchases Throughout the year, we were sure to maintain open in our region as borrowing became more affordable and consistent communication with our customers. in the existing rate environment. As business Our teams began utilizing Webex video conferencing, and consumer spending slowed and economic where our teams worked together to virtually assist conditions felt uncertain, we helped customers who customers with banking, investment management, were opting to increase their liquid reserves, which residential mortgages and more. The team at resulted in a substantial increase in deposits. Tompkins Financial Advisors also expanded its Investment Committee client outreach—delivering With proper planning and safety measures, we timely, calming content, breaking down what was successfully relocated our LaGrange Branch to a 2020 Corporate Report | HUDSON VALLEY | 11 new, modern office. The new space provides incredibly important in-home healthcare work for customers with a fresh and modern environment individuals with disabilities. It was also important in which to do business with us. As a way to to us to continue offering informative educational celebrate our new location with the community, programming for our customers and local we partnered with the Arlington Central School community members. We hosted virtual business District to provide much-needed art supplies fraud protection and first time homebuyer to students navigating remote learning. We events, and plan to expand with more topics in also partnered with the LaGrange Library on 2021 to help our customers and neighbors grow their Capital Campaign to help them with their knowledge. their own relocation. Our employees’ commitment to our community shone through during a trying year for local families and organizations. We had our best United Way Workplace Campaign ever, raising more than $5,000 in a short period of time. We were also able to shift the focus of our “Acorn Alliance 2020 brought obstacles none of us could have imagined, and we are in awe of the way our employees rose to the occasion in the face of each new shift in the financial environment. Our teams have proven once again how Community Volunteering” program to offer extraordinarily dedicated they are to the financial support to organizations facing budget communities of the Hudson Valley. shortfalls. Through our “Food to the Front Lines” program, we had food brought to direct support professionals—frontline workers who do “They know who we are. They’re loyal, they’re hard working and they’re there for us,” says company President and CEO Dean Pialtos, who runs the business with help from his mother, Barbara, brother, Charles, and cousin, James Ranni. As COVID-19 caused travel restrictions in early 2020, local country clubs saw their membership numbers growing—along with their coffee and brewing equipment needs. The Pialtos family worked with the team at Tompkins to secure a loan for more trucks and equipment so they could continue to grow these vital customer relationships. “They came through for us,” Dean says. “I see a long relationship with Tompkins. They’re good people.” 12 | HUDSON VALLEY | 2020 Corporate Report Tompkins VIST Bank — SOUTHEASTERN PENNSYLVANIA — In a year marked by unimaginable change, Tompkins VIST Bank employees have gone above and beyond to serve our customers and communities. Thanks to our strong reputation in our region and the environment our employees have created through teamwork and dedication, we have been able to continue growing our teams and providing much needed support to the people of Southeastern PA. Small businesses and their employees are crucial to This has allowed us to continue to grow customer our region’s economy and key to us as a community relationships safely and effectively from a distance, bank. Without hesitation, our teams worked around and to maximize our Power of Partnership program the clock to process PPP loans as quickly and as our insurance and wealth partners were able to efficiently as possible to help customers receive this join the virtual meetings from anywhere. crucial lifeline. We provided 767 local companies with a total of $127 million in PPP loans—protecting more COVID-19 also brought an increase in fraud across than 7,000 jobs in the process. the industry. With our new digital business banking system, launched in February, our customers had Our employees work hard to proactively help access to new features and enhanced security customers find solutions to any issue. We were measures to help them stay protected. one of the first banks to create a loan deferment program to provide much needed assistance and Even during a challenging year, we were able to relief to consumer and commercial customers bring in new deposit relationships and expand faced with unexpected financial burdens during existing ones by remaining true to who we are—a the pandemic crisis. locally focused, financially stable community bank committed to helping the families and businesses in As COVID-19 necessitated a change in normal our region thrive. business, we shifted to virtual business development using the Webex video conferencing platform. 2020 Corporate Report | SOUTHEASTERN PENNSYLVANIA | 13 SCHATZ ELECTRIC, INC. Jeff Schatz, Owner/President Powering Growth 14 | SOUTHEASTERN PENNSYLVANIA | 2020 Corporate Report Our mortgage team had a record-breaking year nonprofit organizations, boards and committees. both in mortgage loan dollars and homeowners Our community support also came in the served—the team’s loan origination goal for the form of virtual educational events, including an year was met by August of 2020. It was also a very Accountant-Lawyer Alliance webinar, a virtual strong year in agriculture lending, as we continue version of our first time homebuyer event and a to offer lending solutions to a diverse community cybersecurity webinar for small business customers. of critical food production businesses. Our commitment to this vital sector of our regional economy is unwavering. As a community bank, we have seen first-hand the the Tompkins VIST Bank team demonstrated pandemic’s impact on individuals and businesses. the utmost patience, teamwork, dedication Despite the challenges COVID-19 created in 2020, With food insecurity issues prevalent in our region and Thanksgiving expected to be especially difficult for many this past year, we launched our “Banksgiving” initiative and donated $15,000 that was spread among several food banks in the Southeastern PA region. We also continued to support our local United Ways and many members of our banking, insurance and wealth teams continued their active involvement with and perseverance in serving our customers, our communities—and supporting each other. All year long, our employees delivered on our community banking promises, and we could not be more grateful. “In 45 years as an electrical contractor, I’ve seen a lot of changes—mostly with technology. You’ve got to keep up or you’re out of business,” says Jeff Schatz, owner and president of Schatz Electric, Inc. “There’s no question that Tompkins VIST Bank has kept up.” As his company has grown, Jeff has worked with his team at Tompkins—including Tompkins Insurance Agencies—to keep his business moving forward, using new products and services such as remote deposit to increase efficiency. “Of course, the latest issue has been the COVID-19 virus and they have made a lot of changes to make sure everybody was safe and secure. But we still didn’t have an interruption in any of our banking business,” Jeff says. “I feel confident that Tompkins supports our growth. And that’s a good feeling.” 2020 Corporate Report | SOUTHEASTERN PENNSYLVANIA | 15 Powering Growth 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 debt securities, at fair value (amortized cost of $1,599,894 at December 31, 2020 and $1,293,239 at December 31, 2019) Equity securities, at fair value (amortized cost $929 at December 31, 2020 and $915 at December 31, 2019) Total loans and leases, net of unearned income and deferred costs and fees Less: Allowance for credit 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: 14,964,389 at December 31, 2020; and 15,014,499 at December 31, 2019 Additional paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock, at cost – 124,849 shares at December 31, 2020, and 123,956 shares at December 31, 2019 Total Tompkins Financial Corporation Shareholders’ Equity Noncontrolling interests Total Equity Total Liabilities and Equity 16 | FINANCIAL HIGHLIGHTS | 2020 Corporate Report YEAR ENDED DECEMBER 31, 2020 2019 $21,245 367,217 388,462 $136,010 1,972 137,982 1,627,193 1,298,587 929 5,260,327 51,669 915 4,917,550 39,892 5,208,658 4,877,658 16,382 88,709 84,736 92,447 4,905 109,750 33,695 94,355 82,961 92,447 6,223 100,800 $7,622,171 $6,725,623 3,761,933 746,234 1,929,585 3,080,686 675,014 1,457,221 6,437,752 5,212,921 65,845 265,000 13,220 122,665 60,346 658,100 17,035 114,167 $6,904,482 $6,062,569 1,496 333,976 418,413 (32,074) (5,534) 716,277 1,412 $717,689 $7,622,171 1,501 338,507 370,477 (43,564) (5,279) 661,642 1,412 $663,054 $6,725,623 CONSOLIDATED STATEMENTS of INCOME IN THOUSANDS, EXCEPT PER SHARE DATA INTEREST AND DIVIDEND INCOME Loans Due from bank Available-for-sale securities Held-to-maturity securities Federal Home Loan Bank stock and Federal Reserve Bank stock YEAR ENDED DECEMBER 31, 2020 2019 2018 $227,313 $226,723 194 41 28,460 25,450 0 1,373 3,151 3,003 $214,370 31 30,377 3,437 3,377 Total Interest and Dividend Income 254,330 261,378 251,592 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 Credit Loss Expense 3,095 27,809 3,175 16,789 95 1,133 1,276 7,799 18,427 143 28,991 50,750 1,712 14,883 152 1,227 21,818 39,792 225,339 210,628 211,800 16,151 1,366 3,942 Net Interest Income After Provision for Credit Loss Expense 209,188 209,262 207,858 NONINTEREST INCOME Insurance commissions and fees 31,505 31,091 29,369 17,288 Investment services income 16,434 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 17,520 6,312 9,263 8,817 443 8,321 10,526 8,416 645 8,435 9,693 13,130 (466) 73,860 75,433 77,449 92,519 24,812 12,930 7,846 1,484 45,791 89,399 23,488 13,210 7,815 1,673 46,249 85,625 22,090 13,309 7,351 1,771 50,921 185,382 181,834 181,067 97,666 19,924 77,742 154 $77,588 $5.22 $5.20 102,861 104,240 21,016 81,845 127 $81,718 $5.39 $5.37 21,805 82,435 127 $82,308 $5.39 $5.35 2020 Corporate Report | FINANCIAL HIGHLIGHTS | 17 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 2019 and 2020, are presented to the right. The per share dividends paid by the Company in each quarterly period in 2019 and 2020 and the payment dates of these dividends are also presented. Market Price Cash Dividends High Low Amount Date Paid 2019 1st Quarter $81.13 $73.00 $0.50 2/15/19 2nd Quarter 83.73 75.93 0.50 5/15/19 3rd Quarter 84.31 76.76 0.50 8/15/19 4th Quarter 91.14 78.52 0.52 11/15/19 2020 1st Quarter $92.88 $61.75 $0.52 2/18/20 2nd Quarter 74.99 56.02 0.52 5/18/20 3rd Quarter 70.64 55.47 0.52 8/14/20 4th Quarter 71.79 54.65 0.54 11/13/20 $5.37 $5.35 $5.33 $5.24 $5.20 $4.42 $3.43 $3.91 $2.10 $2.02 $1.94 $1.77 $1.82 0.00 0.00 16 17 18 19 20 Diluted Earnings1 PER SHARE IN DOLLARS 16 17 18 19 20 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 2020 included a $673,000 write-down of real estate pending sale ($0.04 per share). 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. 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. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Shareholders and Board of Directors Tompkins Financial Corporation: We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statement of condition of Tompkins Financial Corporation and subsidiaries as of December 31, 2020, 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 1, 2021, 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. Rochester, New York March 1, 2021 March 1, 2018 18 | FINANCIAL HIGHLIGHTS | 2020 Corporate Report TOMPKINS FINANCIAL CORPORATION BOARD of DIRECTORS Thomas R. Rochon Chair President, ERB Learn Stephen S. Romaine President & CEO James W. Fulmer Vice Chair 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 Frank C. Milewski Retired VP Regional Operations Pathways Health Ita M. Rahilly, CPA, AEP Partner RBT CPAs, LLP Michael H. Spain Executive Vice President Brown & Brown Jennifer R. Tegan Managing Director NY Ventures Alfred J. Weber President Tweed-Weber-Danks, Inc. Craig Yunker Managing Partner CY Farms 2020 Corporate Report | BOARD OF DIRECTORS | 19 BOARDS of DIRECTORS TOMPKINS TRUST COMPANY TOMPKINS BANK OF CASTILE TOMPKINS MAHOPAC BANK TOMPKINS VIST BANK Stephen S. Romaine Chair President & CEO Tompkins Financial Corporation James W. Fulmer Chair Vice Chair Tompkins Financial Corporation Michael H. Spain Chair Executive Vice President Brown & Brown Alfred J. Weber Chair 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. Paul J. Battaglia, CPA Retired Director Freed Maxick CPAs, P.C. Francis M. Fetsko EVP, CFO, COO & Treasurer Tompkins Financial Corporation Helen S. Eaton CEO Settlement Music School Johanna B. Anderson Executive Director Ithaca Neighborhood Housing Services Joseph G. Bucci Jr. Environmental Manager American Rock Salt Company, LLC Kevin J. Plunkett Director of Strategic Initiatives Simone Development Companies Larry F. Baum Founder The Computing Center Nancy E. Catarisano, CPA Managing Partner Insero & Co. CPAs, LLP Ita M. Rahilly, CPA, AEP Partner RBT CPAs, LLP Daniel J. Fessenden Executive Director Fred L. Emerson Foundation, Inc. David N. DeLaVergne Retired Senior Vice President Tompkins Bank of Castile Thomas R. Rochon President ERB Learn Ryan T. Lombardi VP Student & Campus Life Cornell University Jennifer R. Tegan Managing Director NY Ventures Stephen S. Romaine President & CEO Tompkins Financial Corporation C. Compton Spain Attorney Spain & Spain, PC 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 James W. Fulmer Vice Chair Tompkins Financial Corporation Philip E. Hughes, Esq., CPA Vice Chair 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 TOMPKINS INSURANCE AGENCIES, INC. James W. Fulmer Chair Vice Chair Tompkins Financial Corporation David S. Boyce President & CEO Stephen S. Romaine President & CEO Tompkins Financial Corporation 20 | BOARDS OF DIRECTORS | 2020 Corporate Report 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 Corporate Marketing Officer 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 Officer Amanda L. Lippincott Corporate Secretary & Legal Analyst 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 Website: 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: Wendy Fonder Tompkins Financial Corporation P.O. Box 460 Ithaca, NY 14851 1-888-503-5753 or 1-607-274-2096 E-mail address: wfonder@tompkinsfinancial.com Form 10-K Copies of the Company’s Form 10-K (Annual Report) for 2020, 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 1,810 lbs of paper which has a postconsumer recycled percentage of 10%. 2.2 trees preserved for the future 200 gallons of wastewater flow saved 10 lbs solid waste not generated 1,000 lbs net greenhouse gases prevented .9 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 

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