Tompkins Financial

 Press Release:

Tompkins Financial Corporation ("Tompkins" or the "Company") reported diluted earnings per share of $1.35 for the first quarter of 2023, in line with the immediate prior quarter, and down 15.6% from diluted earnings per share of $1.60 reported in the first quarter of 2022. The first quarter results in the prior year included $2.0 million, pre-tax, ($0.10 per diluted share) in net fees related to the SBA's Paycheck Protection Program loans ("PPP"), compared to net fees of $2,000 in the current period.  

Net income for the first quarter of 2023 was $19.4 million, a decrease of 16.7% from the $23.3 million reported for the same period in 2022.  Increased funding costs coupled with increases in operating expense were the main drivers for the year-over-year decreases in net income.  

Tompkins President and CEO, Stephen Romaine, commented, "The first quarter of 2023 was a tumultuous quarter for the banking industry.  In times like these, our business model - built on strong customer relationships and sustainable financial performance - has helped differentiate Tompkins from companies with less tenable business models. Though we are not immune to certain headwinds facing our industry - as evident from reduced earnings in the first quarter - we are pleased to report an increase in our common equity for the second consecutive quarter, a strong liquidity position, while at the same time delivering an annualized return on equity of 12.45% in the first quarter of 2023." 

       

SELECTED HIGHLIGHTS FOR THE PERIOD: 

• Key profitability measures remained healthy in the first quarter, with a return on average assets of 1.03% (up from 1.00% last quarter); net interest margin of 2.99% (down from 3.02% last quarter); and return on equity of 12.45% (down from 13.36% last quarter). 
• Regulatory Tier 1 capital to average assets improved for the sixth consecutive quarter, ending the first quarter of 2023 at 9.63%. 
• Total loans at March 31 were $5.3 billion, in line with the immediate prior quarter, and up $210.2 million, or 4.2% from March 31, 2022.  Excluding PPP loans, total loans at March 31 were up 4.6% over the first quarter of 2022. 
• Total nonperforming assets at March 31 represented 0.37% of total assets and declined 13.7% from the most recent prior quarter.    

Total deposits at March 31 were $6.5 billion, reflecting a 1.4% decrease compared to year-end 2022 and a decline of 7.2% when compared to same period last year.   
  

NET INTEREST INCOME 

Net interest margin was 2.99% for the first quarter of 2023, compared to 3.02% reported for the fourth quarter of 2022, and 3.04% at March 31, 2022. The decrease in margin from the fourth quarter of 2022 was due primarily to the increase in interest rates on interest-bearing liabilities outpacing increases on interest earning asset yields due to the higher interest rate environment.   

Net interest income was $54.2 million for the first quarter of 2023, down from $57.3 million for the fourth quarter of 2022, and $56.6 million for the first quarter of 2022. Net interest income for the quarter ended  March 31 was impacted by increases in interest expense, which totaled $15.0 million for the first quarter of 2023 compared to $2.6 million for the same period in 2022, partially offset by increased interest and dividend income, which increased by $10.1 million when compared to March 31, 2022.    

Average loans for the quarter ended March 31, 2023 were up $41.6 million or 0.8% from the fourth quarter of 2022, and $195.3 million or 3.9% compared to the same period in 2022. The increase in average loans was mainly in the residential and commercial real estate portfolios compared to the quarter ended March 31, 2022.  Asset yields for the quarter ended March 31, 2023 were up 25 basis points compared to the quarter ended December 31, 2022, and up 63 basis points compared to the same period in 2022.    

Average total deposits for the first quarter of 2023 were down $144.9 million, or 2.2% compared to the fourth quarter of 2022, and down $328.2 million, or 4.8% compared to the same period in 2022.  The decrease was largely driven by a decline in stimulus funding and a tightening monetary policy that has led to a declining trend in bank deposits on a national level, as reported by the Federal Reserve. Average deposit balances at March 31 are $1.3 billion or 23.9% higher than pre-pandemic levels reported at December 31, 2019.  The cost of interest-bearing deposits increased to 1.10% for the first quarter of 2023, compared to 0.69% for the fourth quarter of 2022, and 0.17% for the first quarter last year. The increase was mainly driven by higher market interest rates as a result of the target federal funds rate increasing 450 basis points over the prior twelve months.   

The total cost of interest-bearing liabilities of 1.26% for the first quarter of 2023 represented an increase of 42 basis points over the fourth quarter of 2022, and an increase of 105 basis points over the same period in 2022. At March 31, the Company estimates total uninsured deposits of $2.6 billion, which is unchanged from December 31, 2022.  The uninsured deposit balance of $2.6 billion at March 31 is made up of $1.1 billion of collateralized government deposits and $1.5 billion of uninsured customer deposits without liquid collateral pledged.  Total insured deposits and collateralized government deposits represent 76.9% of the Company's total deposits of $6.5 billion at March 31.   

NONINTEREST INCOME 

Noninterest income of $20.4 million for the first quarter of 2023 was up $2.0 million, or 11.2% compared to the most recent prior quarter, and up $415,000, or 2.1% compared to the prior year quarter in 2022. Noninterest income represented 27.3% of total revenue at March 31, compared to 24.3% at December 31, 2022, and 26.1% at March 31, 2022. Increases in insurance and card service fees in the first quarter of 2023 compared to the prior year quarter were partially offset by lower wealth management fees, primarily due to market conditions.  

NONINTEREST EXPENSE 

Noninterest expense was $50.2 million for the first quarter of 2023, which was in line with the fourth quarter of 2022, and up $3.3 million, or 7.1% over the first quarter of 2022, with the increase largely driven by higher personnel-related costs. Increases in FDIC insurance rates, as well as increased spending on marketing and technology also contributed to expense growth in the first quarter of 2023 compared to the first quarter of 2022.   

INCOME TAX EXPENSE 

The Company's effective tax rate was 23.3% for the first quarter of 2023, compared to 23.0% for the same period in 2022.   

ASSET QUALITY 

The allowance for credit losses represented 0.87% of total loans and leases at March 31, 2023, unchanged from the prior quarter, and up from 0.83% at March 31, 2022. The ratio of the allowance to total nonperforming loans and leases improved to 162.11% for the first quarter of 2023, compared to 139.86% at December 31, 2022 and 139.20% at March 31, 2022.  

Provision for credit losses for the first quarter of 2023 was a credit of $825,000 compared to a credit of $520,000 for the same period in 2022. Net recoveries for the quarter ended March 31 were $1.3 million compared to net recoveries of $17,000 reported for the same period in 2022.         

Nonperforming assets represented 0.37% of total assets at March 31, down from 0.43% at December 31, 2022 and 0.38% at March 31, 2022.  At March 31, nonperforming loans and leases totaled $28.4 million, compared to $32.8 million at December 31, 2022 and $30.3 million at March 31, 2022.   

Special Mention and substandard loans and leases totaled $85.6 million at March 31, reflecting improvement from the $98.3 million reported for December 31, 2022 and the $135.1 million at March 31, 2022.  The improvement over prior quarter was mainly a result of upgrades on two large commercial real estate loans previously reported as Special Mention. 

CAPITAL POSITION 

Capital ratios at March 31, remained well above the regulatory minimums for well-capitalized institutions. The ratio of total capital to risk-weighted assets was 14.62% at March 31, compared to 14.42% at December 31, 2022 and 14.23% at March 31, 2022. The ratio of Tier 1 capital to average assets was 9.63% at March 31, compared to 9.34% at December 31, 2022 and 8.89% at March 31, 2022.  

LIQUIDITY POSITION 

The Company's liquidity is well positioned and remains stable from the fourth quarter of 2022.  Liquidity is enhanced by ready access to national and regional wholesale funding sources including Federal funds purchased, repurchase agreements, brokered deposits, Federal Reserve Bank Discount Window advances and FHLB advances.  The Company maintains ready access liquidity of $1.7 billion or 22.5% of assets.  As members of the FHLB, the Company can use certain unencumbered mortgage-related assets and securities to secure borrowings from the FHLB. At March 31 the Company had an available borrowing capacity at the FHLB of $1.3 billion as compared to $1.3 billion in the fourth quarter of 2022.  Through various programs at the Federal Reserve Bank, the Company has the ability to use certain unencumbered mortgage-related assets and securities to secure borrowings from the Federal Reserve Bank's Discount Window.  At March 31 the available borrowing capacity with the Federal Reserve Bank was $157.0 million, secured by investment securities.  In addition to the available borrowing lines at the FHLB and Federal Reserve Bank, at March 31, the Company maintained $265.3 million of unencumbered securities which could be pledged to further enhance secured borrowing capacity.   

 

Press release:

Tompkins Financial Corporation ("Tompkins" or the "Company") reported diluted earnings per share of $1.36 for the fourth quarter of 2022, up 2.3% compared to $1.33 reported in the fourth quarter of 2021.  Net income for the fourth quarter of 2022 was $19.5 million, which was unchanged when compared to the same period in 2021.   

For the year ended December 31, 2022, diluted earnings per share of $5.89 were down 2.6% compared to the year ended December 31, 2021.  Net income for 2022 was $85.0 million, a decrease of $4.2 million compared to the year ended December 31, 2021.  Significant contributors to the negative variance in annual net income included a reduction in net deferred loan fees associated with PPP loans from $11.2 million in 2021 to $3.0 million in 2022, as well as an increase in provision for credit loss expense, which was a credit of $2.2 million in 2021 versus an expense of $2.8 million in 2022.       

During the fourth quarter of 2022, the Company sold its VISA Class B common shares, recognizing a pre-tax gain of $11.4 million.  Also in the fourth quarter of 2022, the Company sold $147.9 million of available-for-sale securities, recognizing a pre-tax loss on the sale of $11.9 million. The available-for-sale securities sold during the quarter had an average yield of 0.41% and remaining life of 2.1 years.  Proceeds from the sale of the VISA Class B shares and the available-for-sale securities were used to pay down overnight borrowings with the FHLB. 

Tompkins President and CEO, Stephen Romaine, commented, "We are pleased to report earnings growth in the fourth quarter of 2022, when compared to the same quarter last year. The quality of our balance sheet remains a strength, as we had net credit recoveries for the year and nonperforming loans remain near historic lows.  Our performance metrics remain strong as we begin a new year facing economic uncertainty and a challenging interest rate environment. We remain focused on growth that is built on quality customer relationships and on improving the overall efficiency of our Company."       

SELECTED HIGHLIGHTS FOR THE PERIOD: 

• Total loans at December 31, 2022 were $5.3 billion, up $60.5 million over the immediate prior quarter, reflecting an annualized increase of 4.7% from September 30, 2022, and up $193.4 million or 3.8% from December 31, 2021.  Excluding PPP loans, total loans at December 31, 2022 were up 5.3% over year-end 2021. 
• Total deposits at December 31, 2022 were $6.6 billion, down $189.1 million or 2.8% from December 31, 2021, while noninterest bearing deposits of $2.2 billion were up $14.4 million or 0.7% over the same time period. 
• Net interest margin of 3.02% for the quarter ended December 31, 2022 was down from 3.04% for the quarter ended September 30, 2022, and up from 3.01% for the quarter ended December 31, 2021. 
• Return on average equity for the year ended December 31, 2022 of 13.25% was higher than any of the previous three years.  

NET INTEREST INCOME 
Net interest margin was 3.02% for the fourth quarter of 2022, down compared to the 3.04% reported for the third quarter of 2022, and up compared to the 3.01% reported for the fourth quarter of 2021.  The decrease in margin from the third quarter of 2022 was due primarily to the increase in interest expense on interest-bearing deposits and short-term borrowings, partially offset by higher yields on loan, securities and cash, reflective of the higher interest rate environment. 

Net interest income was $57.3 million for the fourth quarter of 2022, down from $58.1 million for the third quarter of 2022 and $57.8 million for the fourth quarter of 2021. Full year net interest income was $230.3 million for the year ended December 31, 2022, up from $223.8 million reported for the year ended December 31, 2021.  

Comparisons to prior periods are impacted by net fees on PPP loans, which have largely paid down during 2022.  Net interest income in the current quarter included $5,000 of net deferred loan fees associated with PPP loans, down from $88,000 of net deferred PPP loan fees for the third quarter of 2022, and $3.2 million of net deferred PPP loan fees for the fourth quarter of 2021.  Full year net interest income for 2021 included net deferred loan fees associated with PPP loans of $11.2 million and a $1.9 million purchase accounting charge related to the redemption of $15.2 million in trust preferred securities; full year net deferred loan fees on PPP loans in 2022 were $3.0 million. 

Average loans for the quarter ended December 31, 2022 increased $145.7 million, or 2.9%, compared to the same period in 2021, and were in line with average loans for the third quarter of 2022.  The increase in average loans as compared to the same period in the prior year was mainly in commercial and residential real estate loans, which were up 7.9% and 4.9%, respectively.  Commercial and industrial loans were down 14.6%, mainly driven by lower PPP loan balances.  Average loan yields for the quarter ended December 31, 2022 were up 27 basis points from the third quarter of 2022 and up 32 basis points compared to the same period in 2021.   

Average loans for the year ended December 31, 2022 were in line with average loans for the year ended December 31, 2021.  Average loan yields for the year ended December 31, 2022, were up 9 basis points compared to 2021, which reflects the impact of rising market interest rates in 2022.   

Average total deposits for the fourth quarter of 2022 were down $261.8 million, or 3.8%, compared to the same period in 2021 and were down $108.1 million, or 1.6%, compared to average deposits for the third quarter of 2022.  The decrease was largely driven by inflation and higher rate alternatives due to current interest rate environment and tighter monetary policy.  The total cost of interest-bearing liabilities of 0.84% for the fourth quarter of 2022 represented an increase of 39 basis points over the third quarter of 2022, and an increase of 62 basis points over the same period in 2021.

Average total deposits for 2022 were flat compared to 2021.  Average noninterest bearing deposits for 2022 were up $90.2 million, or 4.3%, compared to 2021.  The total cost of interest-bearing liabilities for full year ended December 31, 2022 increased by 8 basis points to 0.43% from the same period in 2021. 

NONINTEREST INCOME 
Noninterest income of $18.4 million for the fourth quarter of 2022 was down 4.2% compared to the same period in 2021.  Negatively impacting noninterest income during the quarter were lower wealth management fees, primarily due to market conditions, as well as a net loss on sale of securities of $455,000. 

For the full year 2022, noninterest income of $78.0 million was down 1.1% from 2021.  Year to date 2022 noninterest income reflected higher revenue from insurance commissions, deposit fees and card services fees, which were offset by lower wealth management fees and net losses of $634,000 on securities transactions.   

NONINTEREST EXPENSE 
Noninterest expense was $50.2 million for the fourth quarter of 2022, up $2.0 million, or 4.2%, over the fourth quarter of 2021, with the increase largely driven by higher personnel related costs. Increased spending on marketing and technology also contributed to expense growth in the fourth quarter of 2022 compared to the same period in 2021.   

For the full year 2022, noninterest expense was $195.8 million, up $5.5 million, or 2.9%, over 2021.  The growth in noninterest expense for the year-to-date period was primarily driven by increases in salaries, wages and benefits and other noninterest expense. Contributing to the growth in these expense items were nonrecurring expenses of $1.2 million, related to the consolidation and rebranding of the Company's four banking charters   The year-to-date period in 2021 included $2.9 million in penalties related to the prepayment of $135.0 million in FHLB fixed rate advances.   

INCOME TAX EXPENSE 
The Company's effective tax rate was 18.6% for the fourth quarter of 2022, compared to 21.7% for the same period in 2021.  The effective tax rate for the year ended December 31, 2022 was 22.4%, compared to 22.0% reported for 2021.   

The Company's banking subsidiary has an investment in a real estate investment trust that provides certain benefits on its New York State tax return for qualifying entities.  A condition to claim these benefits is that the consolidated company has qualified assets of no more than $8.0 billion for the taxable year.   Prior to the fourth quarter of 2022, the Company expected to exceed the asset threshold and its effective tax rate reflected the anticipated loss of these tax benefits.  With the decrease in total assets between September 30, 2022 and December 31, 2022, the Company retained the tax benefits, and as a result, adjusted its tax rate in the fourth quarter of 2022 to reflect the retention of the benefits.  The Company will continue to monitor consolidated average assets to determine future eligibility.   

ASSET QUALITY 
The allowance for credit losses represented 0.87% of total loans and leases at December 31, 2022, up from 0.86% at September 30, 2022 and 0.84% at December 31, 2021. The ratio of the allowance to total nonperforming loans and leases improved to 139.85% at December 31, 2022, up compared to 128.27% at September 30, 2022 and 137.51% at December 31, 2021.  

The provision for credit loss expense for the fourth quarter of 2022 was $1.4 million compared to $3.9 million for the same period in 2021.  Provision expense for the year ended December 31, 2022 was an expense of $2.8 million, compared to a credit of $2.2 million for 2021.  The increase in the provision for credit losses for the year-ended December 31, 2022 is mainly driven by current economic forecasts coupled with loan growth.        

Nonperforming assets represented 0.43% of total assets at December 31, 2022, down from 0.45% at September 30, 2022, and up from 0.40% at December 31, 2021.  At December 31, 2022, nonperforming loans and leases totaled $32.8 million, compared to $34.9 million at September 30, 2022 and $31.2 million at December 31, 2021.   

Special Mention and Substandard loans and leases totaled $98.3 million at December 31, 2022, reflecting improvement from $106.7 million at September 30, 2022, and $137.6 million at December 31, 2021. 

CAPITAL POSITION
Capital ratios at December 31, 2022 remained well above the regulatory minimums for well-capitalized institutions. The ratio of Total Capital to Risk-Weighted Assets was 14.42% at December 31, 2022, compared to 14.26% at September 30, 2022 and 14.23% at December 31, 2021. The ratio of Tier 1 capital to average assets was 9.34% at December 31, 2022, compared to 9.14% at September 30, 2022 and 8.72% at December 31, 2021. 

Press release:

Tompkins Financial Corporation ("Tompkins" or the "Company") reported diluted earnings per share of $1.48 for the third quarter of 2022, up 2.1% from $1.45 per share in the third quarter of 2021.  Net income for the third quarter of 2022 of $21.3 million was essentially unchanged when compared to the third quarter of 2021.   

For the year-to-date period ended September 30, 2022, diluted earnings per share was $4.53, down 4.0% from $4.72 for the same year-to-date period in 2021.  Year-to-date net income was $65.5 million for the period ended September 30, 2022, down $4.3 million, or 6.2%, from the same period in 2021.  The year-to-date net income variance was primarily attributable to the provision for credit losses, which was an expense of $1.4 million in 2022, versus a credit of $6.1 million in 2021, resulting in a pretax variance of $7.5 million. 

Tompkins President and CEO Stephen Romaine commented, "We noted several favorable trends during the third quarter of 2022.  Revenue increased for the second consecutive quarter and grew at an annualized rate of 8.3% over the second quarter of this year. Our total loans grew at an annualized rate of 3.8% during the quarter, although that growth rate is somewhat slower than the 7.8% growth we experienced in the second quarter of this year.  Our team did an excellent job supporting business in our communities with PPP loans and we are pleased that our loans outstanding under that program totaled less than $1 million as of September 30, 2022."  

SELECTED HIGHLIGHTS FOR THE PERIOD: 

1. Total loans at September 30, 2022 were $5.2 billion, up $45.9 million over the immediate prior quarter, reflecting an annualized increase of 3.6% from June 30, 2022.   
2. Net interest margin of 3.04% for the quarter ended September 30, 2022 was down as compared to the 3.09% for the quarter ended June 30, 2022, but increased from 2.89% for the same period in 2021. 
3. Total deposits at September 30, 2022 were $6.9 billion and were up 2.5% compared to the second quarter of 2022, and down 2.2% from the same period of 2021. 

 

NET INTEREST INCOME 
Net interest income was $58.1 million for the third quarter of 2022, which was in line with the most recent prior quarter.  The third quarter of 2022 showed increased interest income in both the loan and security portfolios, but was slightly offset by higher funding cost on both deposits and other borrowings.  Net interest income for the third quarter of 2022 was up $2.0 million, or 3.6% from the same period in 2021. Net interest income for the current quarter included $88,000 of net deferred loan fees associated with PPP loans, down from net deferred loan fees of $873,000 for the quarter ended June 30, 2022, and $3.3 million of net deferred loan fees in the third quarter of 2021. 

For the year-to-date period ended September 30, 2022, net interest income was $173.0 million, up $7.0 million or 4.2% compared to the year-to-date period ended September 30, 2021.  For the year-to-date period in 2022, net deferred loan fees associated with PPP loans were approximately $3.0 million, down from $8.0 million in the same period of 2021.   

Average loans for the quarter ended September 30, 2022 increased $70.0 million or 1.4%, compared to the same period in 2021.  The increase in average loans as compared to the same period prior year was mainly in commercial and residential real estate loans, which were up 7.6%, and 5.9%, respectively.  Commercial and industrial loans were down 21.1%, mainly driven by lower PPP loan balances.  Interest earning asset yields for the quarter ended September 30, 2022 were up 9 basis points from the second quarter of 2022 and up 17 basis points compared to the same period in 2021.   

Average total deposits for the third quarter of 2022 were down $137.4 million, or 2.0% compared to the same period in 2021.  Average noninterest bearing deposits for the quarter ended September 30, 2022 were up $84.7 million or 3.9% compared to the quarter ended September 30, 2021.  For the third quarter of 2022, the average rate paid on interest-bearing deposits of 0.36% was up 18 basis points from the second quarter of 2022, and 14 basis points from the same period in 2021.  The total cost of interest-bearing liabilities of 0.45% for the third quarter of 2022 represented an increase of 23 basis points over the second quarter of 2022, and an increase of 6 basis points versus the same period in 2021.   

 NONINTEREST INCOME 
Noninterest income of $20.7 million for the third quarter of 2022 and $59.6 million for the year-to-date period were both in-line with the same periods in 2021.  For the third quarter of 2022, total service-related fee categories were up $665,000 or 3.5% over the same quarter prior year, mainly driven by growth in  insurance commissions and fees, and service charges on deposit accounts, which were partially offset by lower wealth management fees. The decline in wealth management fees is mainly a result of market conditions. Other income was down from the same quarter last year, mainly due to lower earnings on bank-owned life insurance, which was down $603,000 compared to the same quarter in 2021, as certain separate account policies were unfavorably impacted by decreases in the market value of the underlying assets.  

NONINTEREST EXPENSE 
Noninterest expense was $49.6 million for the third quarter of 2022, down $578,000 or 1.2% from the third quarter of 2021.  For the year-to-date period, noninterest expense of $145.6 million was up $3.4 million or 2.4% from the same period in 2021.  Growth in noninterest expense for the year-to-date period was primarily driven by increases in salary and wage expense and other noninterest expense. Other noninterest expense for the three months ended and year-to-date period ended September 30, 2022, included nonrecurring expenses of $196,000 and $1.2 million, respectively, related to the consolidation and rebranding of the Company's four banking charters.  

INCOME TAX EXPENSE 
The Company's effective tax rate was 24.1% for the third quarter of 2022, compared to 23.7% for the same period in 2021.  The effective tax rate for the nine months ended September 30, 2022 was 23.4%, compared to 22.1% reported for the same period in 2021.   

The increase in the effective tax rate for the three and nine months ended September 30, 2022, over the same periods in 2021, is largely due to the anticipated loss of certain New York State tax benefits.  The Company's banking subsidiary has an investment in a real estate investment trust that provides certain benefits on its New York State tax return for qualifying entities.  A condition to claim the benefit is that the consolidated company has qualified average assets of no more than $8.0 billion for the taxable year.  The Company expects average assets to exceed the $8.0 billion threshold for the 2022 tax year.  As of September 30, 2022, the Company's consolidated average assets were slightly over the $8.0 billion threshold, as defined by New York State law.  The Company will continue to monitor the consolidated average assets during 2022 to determine future eligibility. 

ASSET QUALITY 
The allowance for credit losses represented 0.86% of total loans and leases at September 30, 2022, up from 0.85% at June 30, 2022 and down from 0.91% at September 30, 2021.  The allowance coverage as a percentage of  nonperforming loans and leases was 128.27% at September 30, 2022, down compared to 147.95% at June 30, 2022 and improved from the 76.15% reported at September 30, 2021. 

The provision for credit losses for the third quarter of 2022 was an expense of $1.1 million, compared to a credit of $1.2 million for the same period in 2021.  Provision for credit losses for the nine months ended September 30, 2022 was an expense of  $1.4 million, compared to a credit of $6.1 million for the same period in 2021.  The increase in provision for credit losses for both the three and nine month periods is mainly driven by current economic forecasts coupled with loan growth. 

Nonperforming assets represented 0.45% as of September 30, 2022, up from 0.40% at December 31, 2021, and down compared to 0.75% at September 30, 2021.  At September 30, 2022, nonperforming loans and leases totaled $34.9 million, compared to $31.2 million at December 31, 2021, and $60.7 million at September 30, 2021.   

Special Mention and Substandard loans and leases totaled $106.7 million at September 30, 2022, reflecting improvement from $137.6 million at December 31, 2021, and $115.0 million at June 30, 2022.  The decrease in Special Mention and Substandard loans, compared to the most recent prior quarter, was mainly due to improved asset quality in the hospitality industry as occupancy rates continue to increase. 

The Company funded a total of 5,140 applications for PPP loans totaling $694.1 million in 2020 and 2021. As of September 30, 2022, there were fourteen outstanding PPP loans totaling approximately $875,000.  Total net deferred fees on the remaining balance of PPP loans amounted to $18,000 at September 30, 2022.

CAPITAL POSITION
Capital ratios at September 30, 2022 remained well above the regulatory minimums for well-capitalized institutions. The ratio of Total Capital to Risk-Weighted Assets was 14.26% at September 30, 2022, compared to 14.23% at December 31, 2021, and 14.21% at September 30, 2021. The ratio of Tier 1 capital to average assets was 9.14% at September 30, 2022, compared to 8.72% at December 31, 2021, and 8.54% at September 30, 2021.  

During the third quarter of 2022, the Company repurchased 18,182 common shares at an aggregate cost of $1.3 million. These shares were purchased under the Company's Stock Repurchase Program announced in the third quarter of 2021. For the nine month period ended September 30, 2022, the Company repurchased 197,979 common shares at an aggregate cost of $15.4 million.   

ABOUT TOMPKINS FINANCIAL CORPORATION
Tompkins Financial Corporation is a banking and financial services company serving the Central, Western, and Hudson Valley regions of New York and the Southeastern region of Pennsylvania.  Headquartered in Ithaca, NY, Tompkins Financial is parent to Tompkins Community Bank and Tompkins Insurance Agencies, Inc., and offers wealth management services through Tompkins Financial Advisors. For more information on Tompkins Financial, visit www.tompkinsfinancial.com. 

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: 
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Forward-looking statements may be identified by use of such words as "may", "will", "estimate", "intend", "continue", "believe", "expect", "plan", or "anticipate", and other similar words. Forward-looking statements are made based on management’s expectations and beliefs concerning future events impacting the Company and are subject to certain uncertainties and factors relating to the Company’s operations and economic environment, all of which are difficult to predict and many of which are beyond the control of the Company, that could cause actual results of the Company to differ materially from those expressed and/or implied by forward-looking statements. The following factors, in addition to those listed as Risk Factors in Item 1A of our Annual Reports on Form 10-K and our Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission, are among those that could cause actual results to differ materially from the forward-looking statements; changes in general economic, market and regulatory conditions; estimated GDP growth and inflation trends; the ongoing dynamic nature of the COVID-19 pandemic and its impact; the impact of the interest rate and inflationary environment on the Company's business, financial condition and results of operations; other income or cash flow anticipated from the Company’s operations, investment and/or lending activities; changes in laws and regulations affecting banks, bank holding companies and/or financial holding companies, such as SEC rule making, The Dodd-Frank Act, Basel III, and state and local government mandates; technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; governmental and public policy changes, including environmental regulation; reliance on large customers; uncertainties arising from national and global events such as the war in the Ukraine, including the potential impact of widespread protests, civil unrest, and political uncertainty on the economy and the financial services industry; and financial resources in the amounts, at the times and on the terms required to support the Company’s future businesses. The Company does not undertake any obligation to update its forward-looking statements. 

Press release:

Enhancing its enterprise risk management (ERM) abilities,  Tompkins Community Bank announced this week that Adam P. Krick has been appointed as director of enterprise risk management. Krick will lead bank-wide efforts to develop Tompkins’ ERM function while building upon existing risk management strategies in his new role. 

“Adam is an exceptional leader with extensive experience in managing enterprise risk for financial corporations,” said Alyssa Fontaine, EVP, general counsel, and chief risk officer. “We’re thrilled to have him join our team and lead our efforts to grow and enhance our ERM program.” 

A 20-year financial industry veteran, Krick previously served as VP, deputy director of enterprise risk management at Customers Bank. He received his M.B.A. from Alvernia University and his B.S. in finance from the Pennsylvania State University. Krick is a member of the Institute of Internal Auditors and the Risk Management Association, as well as the American Bankers Association, through which he is currently participating in the Stonier Graduate School of Banking at The Wharton School. He holds designations as a Certified Internal Auditor (CIA) and a Certified Financial Services Auditor (CFSA), as well as a Certificate in Risk Management Assurance (CRMA). Krick resides in Berks County, Pennsylvania, with his wife, Teresa, and their two children.  

Press release:

Tompkins Financial Corporation reported diluted earnings per share of $1.45 for the second quarter of 2022, down 5.8% from $1.54 per share in the second quarter of 2021.  Net income for the second quarter of 2022 was $20.9 million, down $2.0 million or 8.6% when compared to the $22.8 million reported for the same period in 2021.  The decline in net income from the prior year was primarily attributable to a $3.9 million pretax variance in provision for credit losses, which was an expense of $856,000 in 2022, versus a credit of $3.1 million in 2021. 

For the year-to-date period ended June 30, 2022, diluted earnings per share were $3.05, down 6.4% from $3.26 for the same year-to-date period in 2021.  Year-to-date net income was $44.1 million for the six-month period ended June 30, 2022, down $4.3 million or 8.9%, when compared to $48.5 million for the same period in 2021.  Similar to the quarterly results, the year-to-date net income variance was primarily attributable to the provision for credit losses, which was an expense of $336,000 in 2022, versus a credit of $4.9 million in 2021, resulting in a pretax variance of $5.2 million. 

Tompkins President and CEO Stephen Romaine commented, "Results for the second quarter of 2022 included several favorable trends when compared to the most recent prior quarter, including an improved net interest margin, increased loan balances, and higher revenue. Notably, revenue was up 4.8% from the same quarter last year despite a $1.0 million decline in net deferred loan fees associated with Paycheck Protection Program ("PPP") Loans, as outstanding balances in the SBA administered program continue to decline."   

SELECTED HIGHLIGHTS FOR THE PERIOD: 

1. Total loans at June 30, 2022 were $5.2 billion, up $99.1 million over the immediate prior quarter, reflecting an annualized increase of 7.8% from March 31, 2022.   
2. PPP loan balances were $3.5 million at June 30, 2022, reflecting a decline of $20.6 million from March 31, 2022.  Total loans, exclusive of PPP loan balances, were up approximately 9.7% annualized over March 2022.    
3. Net interest margin improved to 3.09% for the second quarter of 2022, compared to 3.04% for the first quarter of 2022, and 2.91% for the same period in 2021. 
4. Nonperforming asset levels declined for the third consecutive quarter and the ratio of nonperforming loans as a percentage of total loans dropped to 0.57%, compared to 0.60% of total loans at March 31, 2022, and 0.61% at December 31, 2021.   
5. Total revenue for the second quarter of 2022 increased by 4.8% from the same quarter last year, and grew at annualized rate of 3.2% from the first quarter of 2022. 
   
   
   NET INTEREST INCOME 
   Net interest income was $58.3 million for the second quarter of 2022, up from $56.6 million for the most recent prior quarter, with the improvement largely driven by growth in total loans and higher yields on earning assets.  Net interest income for the second quarter of 2022 was up $3.4 million, or 6.2% from the same period in 2021. Net interest income for the current quarter included $873,000 of net deferred loan fees associated with PPP loans, down from net deferred loan fees of $2.0 million for the quarter ended March 31, 2022, and $1.9 million in the second quarter of 2021. 
   
   For the year-to-date period ended June 30, 2022, net interest income was $114.9 million, up $5.0 million or 4.5% compared to the year-to-date period ended June 30, 2021.  For the year-to-date period in 2022, net deferred loan fees associated with PPP loans were approximately $2.9 million, down from $4.7 million in the same period of 2021.   
   
   Average loans for the quarter ended June 30, 2022 were down $155.3 million, or 3.0%, compared to the same period in 2021.  The decrease in average loans was mainly in commercial loans and driven by a decrease in PPP loans from $259.0 million for the quarter ended June 30, 2021, compared to $4.0 million in the current quarter.  Asset yields for the quarter ended June 30, 2022 were up 5 basis points compared to the same period in 2021.   
   
   Average total deposits for the second quarter of 2022 were down $91.3 million, or 1.4% compared to the same period in 2021.  Average noninterest bearing deposits for the quarter ended June 30, 2022 were up $107.0 million or 5.1% compared to the quarter ended June 30, 2021.  For the second quarter of 2022, the average rate paid on interest-bearing deposits of 0.18% was down 6 basis points from the same period in 2021 and up 1 basis point from the first quarter of 2022.  The total cost of interest-bearing liabilities of 0.22% for the second quarter of 2022, represented a decline of 18 basis points versus the same period in 2021, and an increase of 1 basis point over the first quarter of 2022. 
   
   NONINTEREST INCOME 
   Noninterest income of $18.9 million for the second quarter of 2022 and $38.9 million for the year-to-date period were both up slightly from the same periods in 2021.  For the second quarter of 2022, total service-related fee categories were up $547,000 or 3.2% over the same quarter prior year, mainly driven by growth in insurance commissions and fees, and service charges on deposit accounts, which were partially offset by lower investment services income. The decline in investment services income is mainly a result of market conditions. Other income was down from the same quarter last year, driven by reduced income on bank-owned life insurance and lower gains on sales on residential loans.    
   
   NONINTEREST EXPENSE 
   Noninterest expense was $49.1 million for the second quarter of 2022, up $1.7 million or 3.5% from the second quarter of 2021.  For the year-to-date period, a noninterest expense of $96.0 million was up $4.0 million or 4.4% from the same period in 2021.  The increase in noninterest expense in the second quarter of 2022 over the same quarter last year was mainly in other expense, which was up $2.3 million or 21.4%, and included increases in marketing , technology, legal expense, printing and supplies, and cardholder expense.  Contributing to the growth in these expenses for the three months ended and year-to-date period ended June 30, 2022, were one-time expenses of $956,000 and $1.2 million, respectively, related to the consolidation of the Company's four banking charters into one charter, including the related conversion of the core banking system, which was completed in May of this year.   
   
   INCOME TAX EXPENSE 
   The Company's effective tax rate was 23.3% for the second quarter of 2022, compared to 22.3% for the same period in 2021.  The effective tax rate for the six months ended June 30, 2022 was 23.1%, compared to 21.3% reported for the same period in 2021.  The increase in the effective tax rate for the three and six months ended June 30, 2022, over the same periods in 2021 is largely due to the anticipated loss of certain New York State tax benefits.     
   
   The Company's banking subsidiary has an investment in a real estate investment trust that provides certain benefits on its New York State tax return for qualifying entities.  A condition to claim the benefit is that the consolidated company has qualified average assets of no more than $8.0 billion for the taxable year.  The Company expects average assets to exceed the $8.0 billion threshold for the 2022 tax year.  As of June 30, 2022, the Company's consolidated average assets, as defined by New York tax law, were slightly under the $8.0 billion threshold.  The Company will continue to monitor the consolidated average assets during 2022 to determine future eligibility. 
   
   ASSET QUALITY 
   The allowance for credit losses represented 0.85% of total loans and leases at June 30, 2022, up from 0.83% at March 31, 2022 and down from 0.92% at June 30, 2021.  The allowance coverage as a percentage of  nonperforming loans and leases improved to 147.95% at June 30, 2022, compared to 139.2% at March 31, 2022 and 88.31% at June 30, 2021. 
   
   The provision for credit losses for the second quarter of 2022 was an expense of $856,000, compared to a credit of $3.1 million for the same period in 2021.  Provision for credit losses for the six months ended June 30, 2022 was an expense of  $336,000, compared to a credit of $4.9 million for the same period in 2021.  The increase in provision for credit losses for both the three and six month periods is mainly driven by current economic forecasts coupled with loan growth. 
   
   Nonperforming assets represented 0.38% as of June 30, 2022, down from 0.40% at December 31, 2021, and 0.67% at June 30, 2021.  At June 30, 2022, nonperforming loans and leases totaled $29.6 million, compared to $31.2 million at December 31, 2021, and $53.8 million at June 30, 2021.   
   
   Special Mention and Substandard loans and leases totaled $115.0 million at June 30, 2022, reflecting improvement from $137.6 million at December 31, 2021, and $171.3 million at June 30, 2021.  The decrease in Special Mention and Substandard loans, compared to the same period prior year, was mainly due to improved asset quality in the hospitality industry as occupancy rates continue to increase.   
   
   As previously announced, the Company implemented a payment deferral program in 2020 to assist both consumer and business borrowers that may be experiencing financial hardship due to COVID-19. As of June 30, 2022, total loans that continued in a deferral status amounted to approximately $1.8 million, representing 0.04% of total loans compared to 2.5% at June 30, 2021.  At June 30, 2021, total loans in deferral status totaled $129.4 million.  
   
   The Company funded a total of 5,140 applications for PPP loans totaling $694.1 million in 2020 and 2021.  Out of the $694.1 million of PPP loans that the Company funded, approximately $690.8 million have been forgiven by the SBA under the terms of the program as of June 30, 2022, or paid back by the borrower.  As of June 30, 2022, there were twenty outstanding PPP loans totaling approximately $3.3 million.  Total net deferred fees on the remaining balance of PPP loans amounted to $106,000 at June 30, 2022. 
   
   CAPITAL POSITION 
   Capital ratios at June 30, 2022 remained well above the regulatory minimums for well-capitalized institutions. The ratio of Total Capital to Risk-Weighted Assets was 14.07% at June 30, 2022, compared to 14.23% at December 31, 2021, and 14.62% at June 30, 2021. The ratio of Tier 1 capital to average assets was 9.02% at June 30, 2022, compared to 8.72% at December 31, 2021, and 8.79% at June 30, 2021. 
   
   During the second quarter of 2022, the Company repurchased 49,629 common shares at an aggregate cost of $3.8 million. These shares were purchased under the Company's Stock Repurchase Program announced in the third quarter of 2021. For the six month period ended June 30, 2022, the Company repurchased 179,797 common shares at an aggregate cost of $14.1 million.   
   
   
   ABOUT TOMPKINS FINANCIAL CORPORATION 
   Tompkins Financial Corporation is a banking and financial services company serving the Central, Western, and Hudson Valley regions of New York and the Southeastern region of Pennsylvania.  Headquartered in Ithaca, NY, Tompkins Financial is parent to Tompkins Community Bank and Tompkins Insurance Agencies, Inc., and offers wealth management services through Tompkins Financial Advisors. For more information on Tompkins Financial, visit www.tompkinsfinancial.com. 

Press release:

Expanding the capabilities of its commercial lending team, Tompkins Community Bank has appointed both Bobby Uy and Brett Owen to vice president, commercial lending relationship manager. In their roles, Uy and Owen will deliver banking strategies that translate to increased profitability and operational efficiency for Tompkins’ clients while helping to strengthen the communities Tompkins serves.  

“The addition of Bobby and Brett to the commercial lending team bolsters Tompkins’ existing group and ensures that we will continue providing personalized guidance to help clients grow our community,” said Peter Hin, senior vice president, commercial lending. “I am personally excited to see their combined decades of expertise in action and know that our clients and community will benefit from meeting and working with these well-rounded professionals.” 

A 36-year veteran of the banking industry, Uy previously worked for HSBC Bank, USA. A graduate of the University of Rochester, Uy received his M.B.A. in finance and competitive and organizational strategy and has certification as a treasury professional from the Association of Finance Professionals. Uy currently serves as board member for the Diocese of Rochester and is a Rochester resident. He and his wife, Maria Angela, reside in Greece, NY and have four daughters and three grandchildren.  

Also a graduate of the University of Rochester’s M.B.A. in finance program, Owen previously worked for Genesee Regional Bank before joining Tompkins. With 14 years of experience in the financial services industry, Owen resides in Victor, NY with his wife, Lynda, and their daughter and son. He is a board member of the Victor Local Development Corporation.  

About Tompkins 
Founded in 1836, Tompkins Community Bank serves the Central, Western, and Hudson Valley regions of New York, and the Southeastern region of Pennsylvania. Through their unique local decision-making model, the bank offers personalized service and exceptional responsiveness, while delivering a broad range of products and services for consumers and businesses. Insurance services are offered through Tompkins Insurance Agencies, and wealth management services are available through Tompkins Financial Advisors. Further information is available at www.tompkinsbank.com.  

Expanding its commercial banking team in the Buffalo market, Tompkins Community Bank has appointed Julie Skinner to vice president, commercial banking relationship manager. Skinner brings 25 years of deep expertise in the banking and financial services industry to her position at Tompkins, having most recently served as vice president, business banking relationship manager at KeyBank. In her new role, Skinner will provide financial services and support to commercial clients in Erie and Niagara counties.  

“We aim to provide a consistently high level of service to our valued customers, particularly as the commercial real estate market continually shifts,” said Adam Desmond, regional market executive, commercial lending. “Adding Julie to our team is our way of doubling down on this priority. We know our commercial clients will benefit from her market knowledge, dedication, and expert insights.”  

Skinner received a bachelor’s degree in biology and art history from Duke University. She is a member of the Amherst Chamber of Commerce, the Buffalo Niagara Partnership, the Construction Exchange of Buffalo and WNY, Inc., s soon-to-be confirmed as a board member of the Junior Achievement of Western New York. She resides in Williamsville, NY with her husband and three children.  

Tompkins Financial announced the appointment of Alyssa Fontaine as chief risk officer, adding to her current role as executive vice president and general counsel. In her expanded role, Fontaine will continue to oversee the Company’s legal and corporate governance functions while also leading the corporate risk management team.  These responsibilities include corporate compliance, audit, information security, bank secrecy act/anti-money laundering compliance, third-party risk management, corporate security, and enterprise risk management. 

Fontaine began her career at Tompkins in 2016. Before joining Tompkins, she was a partner with Harris Beach PLLC. She focused on bank regulatory compliance and securities matters and worked closely with Tompkins as a corporate law partner.  

Fontaine is a graduate of Cornell University Law School and Brown University.  She received the “40 under Forty” award from the Central New York Business Journal and was named a Super Lawyers Rising Star.  She is a member of the Ithaca Community Childcare Center (IC3) and the Ithaca Little Red Lacrosse program. She also volunteers with the Cayuga Heights Elementary School PTA as an event leader. 

“Alyssa is a proven leader, elevating our corporate governance and legal departments to great success during her tenure,” said Steve Romaine, Tompkins Financial president and CEO. “I am pleased that Alyssa will expand her leadership and bring her expertise to our corporate risk management team as our industry continues to navigate an ever-evolving landscape.” 

Press release:

Tompkins Financial Corporation (the "Company") reported diluted earnings per share of $1.60 for the first quarter of 2022, down 7.0% from the diluted earnings per share of $1.72 reported in the first quarter of 2021.  Reduced income from Paycheck Protection Program loans ("PPP loans") and a smaller recapture to the provision for credit losses in the current quarter were the primary contributors to the reduced earnings when compared to the same quarter last year.  Net income for the first quarter of 2022 was $23.3 million, a decrease of 9.2% from $25.6 million for the same period in 2021.  

Tompkins President and CEO, Stephen Romaine, commented, "On January 1, 2022 the Company consolidated the four banks under one charter and the banking affiliate is now known as Tompkins Community Bank.  Results for the first quarter of 2022 included several favorable trends when compared to the most recent prior quarter and the same quarter last year.  These included an improved net interest margin, higher fee-based revenue, and lower past due and nonperforming loan balances.  Though net income for the first quarter of 2022 was below the same quarter last year, it exceeded the net income reported in each of the three most recent prior quarters."   

SELECTED HIGHLIGHTS FOR THE PERIOD: 

• Total loans at March 31, 2022 were $5.1 billion, down $12.0 million from December 31, 2021.  The decrease was driven by a $47.2 million decline in PPP loans, compared to year-end 2021.  Total loans, exclusive of PPP loan balances, were higher than the prior quarter for the third consecutive quarter. 
• Provision for credit losses was a recapture of $520,000 for the first quarter of 2022, compared to a recapture of $1.8 million for the first quarter of 2021. 
• Total nonperforming loans totaled $30.3 million, or 0.60% of total loans, at March 31,2022, compared to $31.2 million, or 0.61% of total loans, at December 31, 2021, and $47.7 million, or 0.90% of total loans, at March 31, 2021.   
• Total deposits of $7.0 billion at March 31, 2022 were up $225.3 million, or 3.3%, over December 31, 2021 and up $70.2 million, or 1.0%, over March 31, 2021. 
  
  NET INTEREST INCOME 
  Net interest margin was 3.04% for the first quarter of 2022, compared to 3.01% reported for both the same period in 2021 and the fourth quarter of 2021.  
  
  Net interest income was $56.6 million for the first quarter of 2022, an increase of $1.6 million from $55.0 million for the same period in 2021. Net interest income for the current quarter included $2.0 million of net deferred loan fees associated with PPP loans, compared to net deferred loan fees of $2.8 million in the first quarter of 2021. 
  
  Net interest income for the first quarter of 2022 was down $1.2 million from the immediate prior quarter, driven by a decline in net deferred loan fees associated with PPP loans, which totaled $2.0 million in the current quarter, compared to net deferred loan fees of  $3.2 million in the fourth quarter of 2021.   
  
  Average loans for the quarter ended March 31, 2022 were down $235.3 million, or 4.5%, compared to the same period in 2021.  The decrease in average loans was mainly in commercial loans and driven by a decrease in average PPP loans.  Asset yields for the quarter ended March 31, 2022 were down 8 basis points compared to the same period in 2021, and up 2 basis points compared to quarter ended December 31, 2021.   
  
  Average total deposits for the first quarter of 2022 were up $253.1 million, or 3.8% compared to the same period in 2021.  Average noninterest bearing deposits for the quarter ended March 31, 2022 were up $159.2 million or 8.2% compared to the quarter ended March 31, 2021.  For the first quarter of 2022, the average rate paid on interest-bearing deposits of 0.17%, was down 10 basis points from the same period in 2021.  The total cost of interest-bearing liabilities of 0.21% for the first quarter of 2022, represented a decline of 17 basis points versus the same period in 2021. 
  
  NONINTEREST INCOME 
  Noninterest income of $20.0 million for the first quarter of 2022 was in line with the same period in 2021, and represented 26.1% of total revenues. For the first quarter of 2022, all service-related fee categories showed improvement when compared to the same period prior year:  Insurance commissions and fees (up 1.7%), Investment services income (up 5.2%), Service charges on deposit accounts (up 21.0%), and Card services income (up 6.7%).  Offsetting improved service related fees was a loss of $47,000 on securities transactions, compared to a gain of $317,000 in the first quarter of 2021, and lower gains on sales on residential loans that were down $425,000 compared to the same quarter in 2021.   
  
  NONINTEREST EXPENSE 
  Noninterest expense was $46.8 million for the first quarter of 2022, up $2.3 million or 5.2% from the first quarter of 2021.  Salaries and employee benefits were up 3.3% compared to the same period in 2021, mainly due to normal annual merit increases and an increase in health insurance expense.  Other expense for the first quarter of 2022 increased by 13.1%, with the increase mainly due to higher marketing expense and technology expense when compared to the quarter ended March 31, 2021.   
  
  INCOME TAX EXPENSE 
  The Company's effective tax rate was 23.1% for the first quarter of 2022, compared to 20.7% for the same period in 2021.  The increase in the effective tax rate for the three months ended March 31, 2022, over the same period in 2021 is largely due to the anticipated loss of certain New York State tax benefits due to the expectation that average assets will exceed $8.0 billion for the 2022 tax year.     
  
  The Company's banking subsidiary has an investment in a real estate investment trust that provides certain benefits on its New York State tax return for qualifying entities.  A condition to claim the benefit is that the consolidated company has average assets of no more than $8.0 billion for the taxable year.  The Company expects average assets to exceed the $8.0 billion threshold for the 2022 tax year.  As of March 31, 2022, the Company's consolidated average assets, as defined by New York tax law, were slightly under the $8.0 billion threshold.  The Company will continue to monitor the consolidated average assets during 2022 to determine future eligibility. 
  
  ASSET QUALITY 
  Improved credit quality and improving macroeconomic trends contributed to a lower allowance for credit losses at March 31, 2022, when compared to March 31, 2021. The allowance for credit losses represented 0.83% of total loans and leases at March 31, 2022, down from 0.84% at December 31, 2021, and 0.93% at March 31, 2021. The ratio of the allowance to total nonperforming loans and leases was 139.20% at March 31, 2022, up from 137.51% at December 31, 2021 and 103.38% at March 31, 2021. 
  
  Provision for credit losses for the first quarter of 2022 was a credit of $520,000 compared to a credit of $1.8 million for the same period in 2021. Net recoveries for the quarter ended March 31, 2022 were $17,000 compared to net recoveries of $180,000 reported for the same period in 2021.   
  
  Nonperforming assets represented 0.38% as of March 31, 2022, down from 0.40% at December 31, 2021, and 0.59% at March 31, 2021.  At March 31, 2022, nonperforming loans and leases totaled $30.3 million, compared to $31.2 million at December 31, 2021, and $47.7 million at March 31, 2021.   
   
  Special Mention and Substandard loans and leases totaled $135.1 million at March 31, 2022, reflecting improvement from $137.6 million at December 31, 2021, and $185.2 million at March 31, 2021.  The decrease in Special Mention and Substandard loans, compared to the same period prior year, was mainly due to improved asset quality in the hospitality industry as occupancy rates continue to show improvement.  
   
  As previously announced, the Company implemented a payment deferral program in 2020 to assist both consumer and business borrowers that may be experiencing financial hardship due to COVID-19. As of March 31, 2022, total loans that continued in a deferral status amounted to approximately $2.6 million, representing 0.05% of total loans.  At March 31, 2021 total loans in deferral status totaled $195.6 million.  
   
  The Company began accepting applications for PPP loans on April 3, 2020, and continued through the initial program end date in 2020.  On January 19, 2021, the Company began accepting both first draw and second draw applications for the reopening of the PPP program.  The 2021 PPP program funding closed for new applications on May 12, 2021.  The Company funded a total of 5,140 applications totaling $694.1 million in 2020 and 2021.   
  
  Out of the $694.1 million of PPP loans that the Company funded, approximately $663.9 million have been forgiven by the SBA under the terms of the program as of March 31, 2022.  Total net deferred fees on the remaining balance of PPP loans amounted to $1.0 million at March 31, 2022.
   
  CAPITAL POSITION
  Capital ratios at March 31, 2022 remained well above the regulatory minimums for well-capitalized institutions. The ratio of Total Capital to Risk-Weighted Assets was 14.23% at March 31, 2022, compared to 14.23% at December 31, 2021, and 14.62% at March 31, 2021. The ratio of Tier 1 capital to average assets was 8.89% at March 31, 2022, compared to 8.72% at December 31, 2021, and 8.89% at March 31, 2021.
  
  During the first quarter of 2022, the Company repurchased 130,168 common shares at an aggregate cost of $10.4 million. These shares were purchased under the Company's Stock Repurchase Program announced in the third quarter of 2021.