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What changed in TOMPKINS FINANCIAL CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of TOMPKINS FINANCIAL CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+452 added−425 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-01)

Top changes in TOMPKINS FINANCIAL CORP's 2023 10-K

452 paragraphs added · 425 removed · 317 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

66 edited+26 added−34 removed101 unchanged
Biggest changeFor example, the Sarbanes-Oxley requirements include: (1) requirements for audit committees, including independence and financial expertise; (2) certification of financial statements by the chief executive officer and chief financial officer of the reporting company; (3) standards for auditors and regulation of audits; (4) disclosure and reporting requirements for the reporting company and directors and executive officers; and (5) a range of civil and criminal penalties for fraud and other violations of securities laws. 9 Table of Contents Anti-Money Laundering and the USA Patriot Act The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 ("USA PATRIOT Act"), the Bank Secrecy Act, the Money Laundering Control Act, and other federal laws, collectively impose obligations on all financial institutions, including the Company, to implement policies, procedures and controls which are reasonably designed to detect and report instances of money laundering and the financing of terrorism.
Biggest changeAnti-Money Laundering and the USA Patriot Act The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 ("USA PATRIOT Act"), the Bank Secrecy Act, the Money Laundering Control Act, and other federal laws, collectively impose obligations on all financial institutions, including the Company, to implement policies, procedures and controls which are reasonably designed to detect and report instances of money laundering and the financing of terrorism.
The Company’s common stock is traded on the NYSE American under the symbol "TMP." Tompkins was organized in 1995, under the laws of the State of New York, as a bank holding company for the Trust Company, a commercial bank that has operated in Ithaca, New York and surrounding communities since 1836.
The Company’s common stock is traded on the NYSE American under the symbol "TMP." Tompkins was organized in 1995, under the laws of the State of New York, as a bank holding company for Tompkins Trust Company (the "Trust Company"), a commercial bank that has operated in Ithaca, New York and surrounding communities since 1836.
The Company’s lending function is managed within the guidelines of a comprehensive Board of Directors-approved lending policy. Policies and procedures are reviewed on a regular basis. Reporting systems are in place to provide 1 Table of Contents management with ongoing information related to loan production, loan quality, concentrations of credit, loan delinquencies and nonperforming and potential problem loans.
The Company’s lending function is managed within the guidelines of a comprehensive Board of Directors-approved lending policy. Policies and procedures are reviewed on a regular basis. Reporting systems are in place to provide management with ongoing information related to loan production, loan quality, concentrations of credit, loan delinquencies and 1 Table of Contents nonperforming and potential problem loans.
Federal Home Loan Bank System The Federal Home Loan Banks (the FHLBs) are a group of cooperatives that lending institutions use to finance housing and economic development in local communities. We are a member of the FHLB of New York ("FHLBNY"). FHLB members are required to maintain a minimum investment in capital stock of the applicable FHLB.
Federal Home Loan Bank ("FHLB") System The Federal Home Loan Banks (the "FHLBs") are a group of cooperatives that lending institutions use to finance housing and economic development in local communities. We are a member of the FHLB of New York ("FHLBNY"). FHLB members are required to maintain a minimum investment in capital stock of the applicable FHLB.
Community Reinvestment Act The CRA and the regulations issued thereunder are intended to encourage banks to help meet the credit needs of their entire service area, including low and moderate income neighborhoods, consistent with the safe and sound operations of such banks.
Community Reinvestment Act ("CRA") The CRA and the regulations issued thereunder are intended to encourage banks to help meet the credit needs of their entire service area, including low and moderate income neighborhoods, consistent with the safe and sound operations of such banks.
The Company has an independent third party loan review process that samples, reviews, and validates the risk identification and assessment made by the lenders and credit personnel. The results of these reviews are presented to the Board of Directors of the Company’s banking subsidiary, and the Company’s Audit and Examining Committee.
The Company has an independent third party loan review process that samples, reviews, and validates the risk identification and assessment made by the lenders and credit personnel. The results of these reviews are presented to the Board of Directors of the Company’s banking subsidiary, and the Company’s Audit and Risk Committee.
Regulatory Reform Various legislation, some of which may be extensive and comprehensive in nature, is introduced in Congress and New York's legislature from time to time. Such legislation may change applicable statues and the operating environment in substantial and unpredictable ways.
Regulatory Reform Legislation, some of which may be extensive and comprehensive in nature, is introduced in Congress and New York's legislature from time to time. Such legislation may change applicable statues and the operating environment in substantial and unpredictable ways.
The Company's activities, or those of its subsidiary bank, Tompkins Community Bank, are also subject to regulation under the Federal Reserve Act, the Federal Deposit Insurance Act, the Dodd-Frank Act, the Truth-in-Lending Act (which governs disclosures of credit terms to consumer borrowers), the Truth-in-Savings Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act (which governs the manner in which consumer debts may be collected by collection agencies), the Home Mortgage Disclosure Act (which requires financial institutions to provide certain information about home mortgage and refinanced loans), the Servicemembers Civil Relief Act, Section 5 of the Federal Trade Commission Act (which prohibits unfair or deceptive acts and practices in or affecting commerce), the Real Estate Settlement Procedures Act, and the Electronic Funds Transfer Act, as well as other federal, state and local laws.
The Company's activities, or those of its subsidiary bank, Tompkins Community Bank, are also subject to regulation under the Federal Reserve Act, the Federal Deposit Insurance Act, the Dodd-Frank Act, the Truth-in-Lending Act (which governs disclosures of credit terms to consumer borrowers), the Truth-in-Savings Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act (which governs the manner in which consumer debts may be collected by collection agencies), the Home Mortgage Disclosure Act (which requires financial institutions to provide certain information about home mortgage and refinanced loans), the Servicemembers Civil Relief Act, Section 5 of the Federal Trade Commission Act (which prohibits unfair or deceptive acts and practices in or affecting commerce), the Real Estate Settlement 3 Table of Contents Procedures Act, and the Electronic Funds Transfer Act, as well as other federal, state and local laws.
These regulations also provide for regulatory assessment of a bank’s record in meeting the needs of its service area when considering applications to establish branches, merger applications and applications to acquire the assets and assume the liabilities of another bank. As of December 31, 2022, the Company’s subsidiary bank had a rating of outstanding.
These regulations also provide for regulatory assessment of a bank’s record in meeting the needs of its service area when considering applications to establish branches, merger applications and applications to acquire the assets and assume the liabilities of another bank. As of December 31, 2023, the Company’s subsidiary bank had a rating of outstanding.
In addition to these shared offices, Tompkins Insurance has five stand-alone offices in Western New York, and one stand-alone office in Tompkins County, New York. Wealth management services consist of investment management, trust and estate, financial and tax planning as well as life, disability and long-term care insurance services.
In addition to these shared offices, Tompkins Insurance has four stand-alone offices in Western New York, and one stand-alone office in Tompkins County, New York. Wealth management services consist of investment management, trust and estate, financial and tax planning as well as life, disability and long-term care insurance services.
A description of markets served by Tompkins Community Bank are included below: Tompkins Central New York ("CNY") We operate 12 branches in our CNY market, with the largest market area being Tompkins County, which has a population of approximately 105,000.
A description of markets served by Tompkins Community Bank are included below: Tompkins Central New York ("CNY") We operate 12 branches in our CNY market, with the largest market area being Tompkins County, which has a population of approximately 107,000.
The Dodd-Frank Act permanently increased the maximum amount of deposit insurance to $250,000 per deposit category, per depositor, per institution retroactive to January 1, 2008. Tompkins Community Bank pays deposit insurance premiums to the FDIC based on assessment rates established by the FDIC.
The Dodd-Frank Act permanently increased the maximum amount of deposit insurance to $250,000 per deposit category, per depositor, per institution retroactive to January 1, 2008. Tompkins Community Bank pays deposit insurance premiums to the FDIC based on assessment rates established by the FDIC. Deposit insurance premiums are based on assets.
It also would clarify eligible CRA activities, such as affordable housing, that are focused on LMI, underserved, and rural communities. • Tailor CRA evaluations and data collection to bank size and type. The proposal recognizes differences in bank size and business models.
It also would clarify eligible CRA activities, such as affordable housing, that are focused on LMI, underserved, and rural communities. • Tailors CRA evaluations and data collection to bank size and type. The proposal recognizes differences in bank size and business models.
Therefore, the Company is subject to the reporting, information disclosure, proxy solicitation and other requirements imposed on public companies by the SEC under the Exchange Act. Additionally, Company insiders are subject to security trading limitations and are required to file insider ownership reports with the SEC.
Therefore, the Company is subject to the reporting, information disclosure, proxy solicitation and other requirements imposed on public companies by the SEC under the Exchange Act. Additionally, Company insiders are subject to securities trading limitations and are required to file insider ownership reports with the SEC.
The 13 banking offices include 5 full-service offices in Putnam County, New York, 3 full-service offices in Dutchess County, New York, and 5 full-service offices in Westchester County, New York. Putnam County has a population of approximately 98,000 and is about 60 miles north of Manhattan.
The 13 banking offices include 5 full-service offices in Putnam County, New York, 3 full-service offices in Dutchess County, New York, and 5 full-service offices in Westchester County, New York. Putnam County has a population of approximately 97,000 and is about 60 miles north of Manhattan.
The Dodd-Frank Act additionally requires capital requirements to be counter-cyclical so that the required amount of capital increases in times of economic expansion and decreases in times of economic contraction, consistent with safety and soundness. Under federal regulations, bank holding companies and banks must meet certain risk-based capital requirements.
The Dodd-Frank Act additionally requires capital requirements to be counter-cyclical so that the required amount of capital increases in times of economic expansion and decreases in times of economic contraction, consistent with safety and soundness. 6 Table of Contents Under federal regulations, bank holding companies and banks must meet certain risk-based capital requirements.
These limitations require disclosure of privacy policies and certain security breaches to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to a non-affiliated third party. These provisions affect, among other things, how consumer information is transmitted through diversified financial companies and conveyed to outside vendors.
These limitations require disclosure of privacy policies and certain security breaches to consumers and, in some circumstances, allow consumers to 9 Table of Contents prevent disclosure of certain personal information to a non-affiliated third party. These provisions affect, among other things, how consumer information is transmitted through diversified financial companies and conveyed to outside vendors.
Various statutes and regulations limit the availability of cash dividends from Tompkins Community Bank and the dividends paid by Tompkins Community Bank are regulated by the NYSDFS and the FDIC under their general supervisory authority as it relates to a bank's capital requirements.
Various statutes and regulations limit the availability of cash dividends from Tompkins Community Bank and the dividends paid by Tompkins Community Bank are regulated by the NYSDFS and the FDIC under their general supervisory authority as it relates to a bank's 5 Table of Contents capital requirements.
Local Acorn Community Alliance teams were established in each of the Company's markets to support our external DEI initiatives through their focus on providing Education, Volunteering and Sponsorship opportunities that meet the needs of their local communities. Available Information The Company maintains a website at www.tompkinsfinancial.com.
Local Acorn Community Alliance teams were established in each of the Company's markets to support our external diversity, equity, and inclusion initiatives through their focus on providing Education, Volunteering and Sponsorship opportunities that meet the needs of their local communities. Available Information The Company maintains a website at www.tompkinsfinancial.com.
The Company's Diversity, Inclusion and Belonging 12 Table of Contents Change Agent members play an important role in recommending educational opportunities, celebrating cultural events, and serving on a variety of teams that enhance our employee engagement.
The Company's Diversity, Inclusion and Belonging Change Agent members play an important role in recommending educational opportunities, celebrating cultural events, and serving on a variety of teams that enhance our employee engagement.
The main business office for WNY is located in Batavia, New York and is shared with Tompkins Insurance. Our WNY market is a six-county market, much of which is rural in nature, but also includes Monroe County (population approximately 755,000), where the city of Rochester is located, and Erie County (population approximately 951,000) located near Buffalo, New York.
The main business office for WNY is located in Batavia, New York and is shared with Tompkins Insurance. Our WNY market is a six-county market, much of which is rural in nature, but also includes Monroe County (population approximately 764,000), where the city of Rochester is located, and Erie County (population approximately 965,000) located near Buffalo, New York.
Tompkins Insurance offers services to customers of the Tompkins Community Bank by sharing offices within Western New York, Central New York and Pennsylvania. In addition to these shared offices, Tompkins Insurance has five stand-alone offices in Western New York, and 1 located in Tompkins County.
Tompkins Insurance offers services to customers of the Tompkins Community Bank by sharing offices within Western New York, Central New York and Pennsylvania. In addition to these shared offices, Tompkins Insurance has four stand-alone offices in Western New York, and 1 office located in Tompkins County.
The Board also approved to increase initial base deposit insurance assessment rate schedules uniformly by 2 basis points, which became effective January 1, 2023 and will be applicable to the first quarterly assessment period of 2023.
The Board also approved to increase initial base deposit insurance assessment rate schedules uniformly by 2 basis points, which became effective January 1, 2023 and was applicable to the first quarterly assessment period of 2023.
A key component of the Company's recruitment and retention strategy is to offer employees at all levels the opportunity to participate in the Company’s success. The Company maintains a robust Profit-Sharing plan for all employees who meet minimum service requirements. As of December 31, 2022, 75% of all employees received a profit-sharing contribution during 2022.
A key component of the Company's recruitment and retention strategy is to offer employees at all levels the opportunity to participate in the Company’s success. The Company maintains a robust Profit-Sharing plan for all employees who meet minimum service requirements. As of December 31, 2023, 83% of all employees received a profit-sharing contribution during 2023.
The Company also offers incentive and/or equity compensation plans or programs to employees at many levels of the Company and, as of December 31, 2022, 53% of all employees had an opportunity to earn supplemental compensation reflective of their position and overall contributions towards the Company’s strategic objectives.
The Company also offers incentive and/or equity compensation plans or programs to employees at many levels of the Company and, as of December 31, 2023, 54% of all employees had an opportunity to earn supplemental compensation reflective of their position and overall contributions towards the Company’s strategic objectives.
Another important tool in the Company's recruiting and retention strategy was the implementation of a remote or hybrid scheduling option for the majority of team members. Today over half of the Company's employees have taken advantage of this opportunity.
Another important tool in the Company's recruiting and retention strategy is the availability of a remote or hybrid scheduling option for the majority of team members. Today over half of the Company's employees have taken advantage of this opportunity.
The Company is also subject to the jurisdiction of the Securities and Exchange Commission ("SEC") and is subject to 3 Table of Contents disclosure and regulatory requirements under the Securities Act of 1933, as amended (the "Securities Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange Act").
The Company is also subject to the jurisdiction of the Securities and Exchange Commission ("SEC") and is subject to disclosure and regulatory requirements under the Securities Act of 1933, as amended (the "Securities Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Banking services consist primarily of attracting deposits from the areas served by Tompkins Community Bank's 60 banking offices (41 offices in New York and 19 offices in Pennsylvania), and using those deposits to originate a variety of commercial loans, agricultural loans, consumer loans, real estate loans, and leases in those same areas.
Banking services consist primarily of attracting deposits from the areas served by Tompkins Community Bank's 56 banking offices (40 offices in New York and 16 offices in Pennsylvania), and using those deposits to originate a variety of commercial loans, agricultural loans, consumer loans, real estate loans, and leases in those same areas.
Tompkins Community Bank is required to comply with the rules of the CFPB; however, these rules are generally enforced by our primary regulator, the FDIC. 10 Table of Contents Cybersecurity The Company is also subject to data security standards and privacy and data breach notice requirements as established by federal and state regulators.
Tompkins Community Bank is required to comply with the rules of the CFPB; however, these rules are generally enforced by our primary regulator, the FDIC. Cybersecurity The Company is subject to data security standards and privacy and data breach notice requirements as established by federal and state regulators. See Item 1C.
The population of the counties in our WNY market, other than Monroe and Erie, is approximately 200,000. Tompkins Hudson Valley New York ("HV") We operate 13 banking offices in our HV market.
The population of the counties in our WNY market, other than Monroe and Erie, is approximately 199,000. 2 Table of Contents Tompkins Hudson Valley New York ("HV") We operate 13 banking offices in our HV market.
Employees and Human Capital Tompkins culture is underpinned by its core values, including “a commitment to our employees.” As of December 31, 2022, the Company had 1,072 total employees, which included 978 full-time employees and 94 part-time and temporary employees.
Employees and Human Capital Tompkins culture is underpinned by its core values, including “a commitment to our employees.” As of December 31, 2023, the Company had 1,032 total employees, which included 942 full-time employees and 90 part-time and temporary employees.
For further information concerning the regulatory capital requirements, actual capital amounts and the ratios of Tompkins and Tompkins Community Bank, see the discussion in "Note 20 - Regulations and Supervision" in Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K.
For further information concerning the regulatory capital requirements, actual capital amounts and the ratios of Tompkins and Tompkins Community Bank, see the discussion in "Note 20 - Regulations and Supervision" in Notes to Consolidated Financial Statements in Part II, "Item 8.
The proposal would update CRA assessment areas to include activities associated with online and mobile banking, branchless banking, and hybrid models. • Provide greater clarity, consistency, and transparency. The proposal would adopt a metrics-based approach to CRA evaluations of retail lending and community development financing, which includes public benchmarks, for greater clarity and consistency.
The final rule updates the CRA assessment areas to include activities associated with online and mobile banking, branchless banking, and hybrid models. • Provides greater clarity, consistency, and transparency. The final rule adopts a metrics-based approach to CRA evaluations of retail lending and community development financing, which includes public benchmarks, for greater clarity and consistency.
Tompkins Community Bank also has a full service branch in Fayetteville, New York which is located in Onondaga County. 2 Table of Contents Tompkins Western New York ("WNY") We operate 16 banking offices in our WNY market, in towns situated in and around the areas commonly known as the Genesee Valley region of New York State.
Tompkins Community Bank also has two full-service branches in Fayetteville and Syracuse, New York which are located in Onondaga County. Tompkins Western New York ("WNY") We operate 15 banking offices in our WNY market, in towns situated in and around the areas commonly known as the Genesee Valley region of New York State.
In addition, prior approval of the FRB may be required in certain circumstances prior to our repurchasing shares of our common stock. 5 Table of Contents In connection with the decision regarding dividends and share repurchase programs, our Board will take into account general business conditions, our financial results, projected cash flows, capital requirements, contractual, legal and regulatory restrictions on the payment of dividends by Tompkins Community Bank to the Company and such other factors as deemed relevant.
In connection with the decision regarding dividends and share repurchase programs, our Board will take into account general business conditions, our financial results, projected cash flows, capital requirements, contractual, legal and regulatory restrictions on the payment of dividends by Tompkins Community Bank to the Company and such other factors as deemed relevant.
Under the FDIA, the FDIC may terminate deposit insurance upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. 8 Table of Contents FDIC insurance expense totaled $2.8 million, $2.8 million, $2.4 million in 2022, 2021 and 2020, respectively.
Under the FDIA, the FDIC may terminate deposit insurance upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.
The Company is also mindful of macroeconomic factors such as inflation and record low unemployment in all four of its markets, and it routinely undertakes a salary review to confirm that its total compensation is aligned with the market.
The Company is also mindful of macroeconomic factors 11 Table of Contents impacting the financial services industry such as inflation, rising interest rates and continued low unemployment in all four of its markets and it routinely undertakes a salary review to confirm that its total compensation is aligned with the market.
The Company is a locally oriented, community-based financial services organization that offers a full array of products and services, including commercial and consumer banking, leasing, trust and investment management, financial planning and wealth management, and insurance services.
The Company is a locally-oriented, community-based financial services organization that offers a full array of products and services, including commercial and consumer banking, leasing, trust and investment management, financial planning and wealth management, and insurance services. At December 31, 2023, the Company had one wholly-owned banking subsidiary, Tompkins Community Bank.
Federal Bank Holding Company Regulation We are a bank holding company subject to regulation under the BHC Act and the examination and reporting requirements of the FRB. In general, the BHC Act limits the business of bank holding companies to banking, managing or controlling banks and other activities that the FRB has determined to be so closely related to banking.
In general, the BHC Act limits the business of bank holding companies to banking, managing or controlling banks and other activities that the FRB has determined to be so closely related to banking.
The proposal would promote community engagement and financial inclusion. It would also emphasize smaller-value loans and investments that can have high impact and be more responsive to the needs of LMI communities. • Adapt to changes in the banking industry, including internet and mobile banking.
It also emphasizes smaller-value loans and investments that can have high impact and be more responsive to the needs of LMI communities. • Adapts to changes in the banking industry, including internet and mobile banking.
Risk Factors for a discussion of risks related to cybersecurity.
Cybersecurity for a detailed discussion of cybersecurity and Item 1A. Risk Factors for a discussion of risks related to cybersecurity.
Under such circumstances, we may not pay a dividend should the FRB object until such time as we receive approval from the FRB or no longer need to provide notice under applicable regulations.
Under such circumstances, we may not pay a dividend should the FRB object until such time as we receive approval from the FRB or no longer need to provide notice under applicable regulations. In addition, prior approval of the FRB may be required in certain circumstances prior to our repurchasing shares of our common stock.
We cannot predict whether any such legislation will be enacted, and, if enacted, the effect that it, or any implementing regulations would have on our financial condition or results of operations.
Such legislation could change banking laws and the operating environment of Tompkins in substantial, but unpredictable ways. We cannot predict whether any such legislation will be enacted, and, if enacted, the effect that it, or any implementing regulations would have on our financial condition or results of operations.
Under this guidance, incentive compensation based on employee performance indicators may only be paid if the bank has effective risk management, oversight and control systems in place.
Under this guidance, incentive compensation based on employee performance indicators may only be paid if the bank has effective risk management, oversight and control systems in place. We believe the Company is compliant with all applicable state and federal regulation regarding incentive compensation.
Dutchess County has a population of approximately 297,000, and Westchester County has a population of approximately 998,000 . Tompkins Pennsylvania ("PA") PA operates 19 banking offices in Pennsylvania, including one limited-service office.
Dutchess County has a population of approximately 295,000, and Westchester County has a population of approximately 1,021,000. Tompkins Pennsylvania ("PA") We operate 16 banking offices in Pennsylvania, including one limited-service office.
The 19 banking offices include 12 offices in Berks County, 4 offices in Montgomery County, 1 office in Philadelphia County, 1 office in Delaware County and 1 office in Schuylkill County. The population of the counties served by PA is Philadelphia: 1.6 million, Montgomery: 861,000, Delaware: 574,000, Berks: 429,000 and Schuylkill: 143,000. The main office is located in Wyomissing, Pennsylvania.
The 16 banking offices include 10 offices in Berks County, 3 offices in Montgomery County, 1 office in Philadelphia County, 1 office in Delaware County and 1 office in Schuylkill County. The population of the counties served by PA is Philadelphia: 1.6 million, Montgomery: 846,000, Delaware: 582,000, Berks: 434,000 and Schuylkill: 141,000. The main office is located in Wyomissing, Pennsylvania.
If a financial holding company ceases to meet these capital and management requirements, the FRB’s regulations provide that the financial holding company must enter into an agreement with the FRB to comply with all applicable capital and management requirements.
A financial holding company’s status will also depend upon it maintaining its status as "well-capitalized" and "well-managed" under applicable FRB regulations. If a financial holding company ceases to meet these capital and management requirements, the FRB’s regulations provide that the financial holding company must enter into an agreement with the FRB to comply with all applicable capital and management requirements.
Wealth management services are provided under the trade name Tompkins Financial Advisors. Tompkins Financial Advisors has office locations, and services are available, at certain of Tompkins Community Bank's branch locations.
Wealth management services are provided under the trade name Tompkins Financial Advisors. Tompkins Financial Advisors has office locations, and services are available, at certain of Tompkins Community Bank's branch locations. Subsidiaries Tompkins Community Bank Tompkins Community Bank operates 56 branches, 40 branches in New York, and 16 located in Pennsylvania.
To maintain financial holding company status, a financial holding company and all of its depository institution subsidiaries must be "well capitalized" and "well managed." A depository institution subsidiary is considered to be "well capitalized" if it satisfies the requirements for this status discussed in the section captioned "Capital Adequacy and Prompt Corrective Action," below.
A depository institution subsidiary is considered to be "well-capitalized" if it satisfies the requirements for this status discussed in the section captioned "Capital Adequacy and Prompt Corrective Action," below. A depository institution subsidiary is considered "well-managed" if it received a composite rating and management rating of at least "satisfactory" in its most recent examination.
Deposit Insurance Substantially all of the deposits of Tompkins Community Bank's deposits are insured up to applicable limits by the Deposit Insurance Fund ("DIF") of the FDIC and are subject to deposit insurance assessments to maintain the DIF.
Financial Statements and Supplementary Data" of this Report on Form 10-K. 7 Table of Contents Deposit Insurance Substantially all of the deposits of Tompkins Community Bank's deposits are insured up to applicable limits by the Deposit Insurance Fund ("DIF") of the FDIC and are subject to deposit insurance assessments to maintain the DIF.
In the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment. 6 Table of Contents Capital Adequacy and Prompt Corrective Action Bank holding companies and banks are subject to various regulatory capital requirements administered by state and federal agencies.
In the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment.
However, FRB regulations prohibit all card issuers, including Tompkins Community Bank, from restricting the number of networks over which electronic debit transactions may be processed to fewer than two unaffiliated networks, or inhibiting a merchant's ability to direct the routing of the electronic debit transaction over any network that the card issuer has enabled to process them. 4 Table of Contents Volcker Rule The Dodd-Frank Act required the federal financial regulatory agencies to adopt rules that prohibit banks and their affiliates from engaging in proprietary trading and investing in certain covered funds.
However, FRB regulations prohibit all card issuers, including Tompkins Community Bank, from restricting the number of networks over which electronic debit transactions may be processed to fewer than two unaffiliated networks, or inhibiting a merchant's ability to direct the routing of the electronic debit transaction over any network that the card issuer has enabled to process them.
Under the Dodd-Frank Act, the Federal Reserve must apply consolidated capital requirements to depository institution holding companies that are no less stringent than those currently applied to depository institutions.
Risk-based capital requirements determine the adequacy of capital based on the risk inherent in various classes of assets and off-balance sheet items. Under the Dodd-Frank Act, the Federal Reserve must apply consolidated capital requirements to depository institution holding companies that are no less stringent than those currently applied to depository institutions.
Because its Shared Services group is part of Tompkins Community Bank, these employees are included in the bank employee count listed above. No employees are covered by a collective bargaining agreement, and the Company believes its employee relations are excellent. The Company’s demand for qualified candidates at all levels of its organization grows as the Company’s business grows.
Of the Company’s total employees, 859 are employed by Tompkins Community Bank, and 173 employees are employed by our subsidiary Tompkins Insurance Agencies, Inc. No employees are covered by a collective bargaining agreement, and the Company believes its employee relations are excellent. The Company’s demand for qualified candidates at all levels of its organization grows as the Company’s business grows.
Tompkins Community Bank is subject to examination and comprehensive regulation by various regulatory authorities, including the Federal Deposit Insurance Corporation ("FDIC"), and the New York State Department of Financial Services ("NYSDFS"). Each of these agencies issue regulations and requires the filing of reports describing the activities and financial condition of the entities under its jurisdiction.
Tompkins Community Bank is a state chartered bank and a non-member of the Federal Reserve System and is subject to examination and comprehensive regulation by various regulatory authorities, including the Federal Deposit Insurance Corporation ("FDIC"), and the New York State Department of Financial Services ("NYSDFS").
The Company is in compliance, and management believes that the Company will continue to be in compliance, with the targeted capital ratios as such requirements are phased in.
The Company is in compliance, and management believes that the Company will continue to be in compliance, with the targeted capital ratios as such requirements are phased in. In July 2023, the federal banking regulators proposed revisions to the Basel III Capital Rules to implement the Basel Committee’s 2017 standards and make other changes to the Basel III Capital Rules.
The FRB reviews, as part of the regular, risk-focused examination process, the incentive compensation arrangements of banking organizations, such as the Company, that are not "large, complex banking organizations." The findings of the supervisory initiatives are included in reports of examination and deficiencies can lead to limitations on the Company’s abilities and even enforcement actions. 11 Table of Contents The Company is also subject to the NYSDFS rule "Guidance on Incentive Compensation Arrangements," which directs all New York state regulated banks (including the Tompkins Community Bank) to ensure that any employee incentive arrangements do not encourage inappropriate risk-taking or improper sales practices.
The FRB reviews, as part of the regular, risk-focused examination process, the incentive compensation arrangements of banking organizations, such as the Company, that are not "large, complex banking organizations." The findings of the supervisory initiatives are included in reports of examination and deficiencies can lead to limitations on the Company’s abilities and even enforcement actions.
The Company will continue to evaluate the impact of any changes to the regulations implementing the CRA. Federal Securities Laws The common stock of the Company is registered with the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
The remaining requirements, including data reporting requirements become applicable on January 1, 2027. The Company is evaluating the impact of the amendments to the regulations implementing the CRA. Federal Securities Laws The common stock of the Company is registered with the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
The proposal has the following key elements: • Expand access to credit, investment, and basic banking services in low-and moderate-income communities. Under the proposal, the agencies would evaluate bank performance across the varied activities they conduct and communities in which they operate so that CRA is a strong and effective tool to address inequities in access to credit.
Under the final rule, the agencies will evaluate bank performance across the varied activities they conduct and communities in which they operate so that CRA is a strong and effective tool to address inequities in access to credit. The final rule seeks to promote community engagement and financial inclusion.
These initiatives may include proposals to expand or contract the powers of bank holding companies and depository institutions, proposals to change the financial institution regulatory environment, or proposals that affect public companies generally. Such legislation could change banking laws and the operating environment of Tompkins in substantial, but unpredictable ways.
Other Governmental Initiatives From time to time, legislative and regulatory initiatives are introduced in Congress and state legislatures, as well as by regulatory authorities. These initiatives may include proposals to expand or contract the powers of bank holding companies and depository institutions, proposals to change the financial institution regulatory environment, or proposals that affect public companies generally.
Effective January 1, 2022, the Company's four wholly-owned banking subsidiaries were combined into one bank, with the Bank of of Castile, Mahopac Bank, and VIST Bank merging with and into Tompkins Trust Company (the "Trust Company" or the "Bank") with the Trust Company as the surviving institution.
In January 2021, Tompkins combined its four wholly-owned banking subsidiaries into one bank, with the Bank of Castile, Mahopac Bank, and VIST Bank merging with and into the Trust Company. Immediately following the merger, the Trust Company changed its name to Tompkins Community Bank.
These agencies may establish higher minimum requirements if, for example, a banking organization previously has received special attention or has a high susceptibility to interest rate risk. Risk-based capital requirements determine the adequacy of capital based on the risk inherent in various classes of assets and off-balance sheet items.
Capital Adequacy and Prompt Corrective Action Bank holding companies and banks are subject to various regulatory capital requirements administered by state and federal agencies. These agencies may establish higher minimum requirements if, for example, a banking organization previously has received special attention or has a high susceptibility to interest rate risk.
On May 5, 2022, the Federal Reserve Board, FDIC, and OCC announced a joint proposal to strengthen and modernize regulations implementing the Community Reinvestment Act to better achieve the purposes of the law. Building on feedback from stakeholders and research, the agencies accepted public comments on their joint proposal through August 5, 2022.
On October 24, 2023, the Federal Reserve Board, FDIC, and OCC issued a joint final rule that amends the regulations implementing the Community Reinvestment Act to better achieve the purposes of the law.
As of December 31, 2022, Tompkins Community Bank had consolidated total assets of $7.6 billion, consolidated total loans of $5.3 billion, and consolidated total deposits of $6.6 billion.
Tompkins has operated in Ithaca, New York and surrounding communities since 1836. Tompkins Community Bank provides wealth management services through Tompkins Financial Advisors, a division of Tompkins Community Bank. As of December 31, 2023, Tompkins Community Bank had consolidated total assets of $7.8 billion, consolidated total loans of $5.6 billion, and consolidated total deposits of $6.4 billion.
Additionally, the FRB, OCC and FDIC have issued comprehensive final guidance on incentive compensation policies intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking.
The Company has adopted a clawback policy that is intended to comply with the NYSE American listing standards.The Company's right to recover excess incentive compensation provided by this policy are in addition to any other remedies available to the Company under applicable law, policy or agreement, including without limitation those rights described under Section 304 of Sarbanes-Oxley. 10 Table of Contents Additionally, the FRB, OCC and FDIC have issued comprehensive final guidance on incentive compensation policies intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking.
The statutory provision is commonly called the "Volcker Rule," and is not applicable to depository institutions and their holding companies whose total assets do not exceed $10 billion. As of December 31, 2022, the Company's total assets on a consolidated basis did not exceed $10 billion.
Volcker Rule The Dodd-Frank Act required the federal financial regulatory agencies to adopt rules that prohibit banks and their affiliates from engaging in proprietary trading and investing in certain covered funds. The statutory provision is commonly called the "Volcker Rule," and is not applicable to depository institutions and their holding companies whose total assets do not exceed $10 billion.
Removed
Immediately following the merger, the Trust Company changed its name to Tompkins Community Bank. At December 31, 2022, the Company had one wholly-owned banking subsidiary, Tompkins Community Bank.
Added
Each of these agencies issue regulations and requires the filing of reports describing the activities and financial condition of the entities under its jurisdiction.
Removed
Subsidiaries Tompkins Community Bank At December 31, 2021, the Company’s subsidiaries included four wholly-owned banking subsidiaries, the Trust Company, The Bank of Castile (DBA Tompkins Bank of Castile), Mahopac Bank (DBA Tompkins Mahopac Bank), and VIST Bank (DBA Tompkins VIST Bank).
Added
As of December 31, 2023, the Company's total assets on a consolidated basis were $7.8 billion. 4 Table of Contents Federal Bank Holding Company ("BHC") Regulation We are a bank holding company subject to regulation under the BHC Act and the examination and reporting requirements of the FRB.
Removed
Effective January 1, 2022, the Company’s four wholly-owned banking subsidiaries were combined into one bank, with The Bank of Castile, Mahopac Bank, and VIST Bank merging with and into the Trust Company with the Trust Company as the surviving institution.
Added
The proposal introduces revised credit risk, equity risk, operational risk, credit valuation adjustment risk and market risk requirements, among other changes.
Removed
Immediately following the merger, the Trust Company changed its name to "Tompkins Community Bank." Tompkins Community Bank operates 60 branches, 41 branches in New York, and 19 located in Pennsylvania. Tompkins has operated in Ithaca, New York and surrounding communities since 1836. Tompkins Community Bank provides wealth management services through Tompkins Financial Advisors, a division of Tompkins Community Bank.
Added
However, the revised capital requirements of the proposed rule would not apply to Tompkins or Tompkins Community Bank because they have less than $100 billion in total consolidated assets and trading assets and liabilities below the threshold for market risk requirements.
Removed
A depository institution subsidiary is considered "well managed" if it received a composite rating and management rating of at least "satisfactory" in its most recent examination. A financial holding company’s status will also depend upon it maintaining its status as "well capitalized" and "well managed" under applicable FRB regulations.
Added
The FDIC calculates deposit insurance assessment rates for established small banks, generally those banks with less than $10 billion of assets that have been insured for at least five years, using the CAMELS rating system and other factors.
Removed
The Basel III Capital Rules also provide for a "countercyclical capital buffer" that is applicable to only certain covered institutions and is not expected to apply to Tompkins for the foreseeable future. The Basel III Capital Rules imposed stricter regulatory capital deductions from and adjustments to capital, with most deductions and adjustments taken against CET1 capital.
Added
The CAMELS rating system is a supervisory rating system designed to take into account and reflect all financial and operational risks that a bank may face, including capital adequacy, asset quality, management capability, earnings, liquidity and sensitivity to market risk.
Removed
These include, for example, the requirement that (i) mortgage servicing assets, net of associated deferred tax liabilities; (ii) deferred tax assets, which cannot be realized through net operating loss carrybacks, net of any relative valuation allowances and net of deferred tax liabilities; and (iii) significant investments (i.e. 10% or greater ownership) in unconsolidated financial institutions be deducted from CET1 to the extent that any one such category exceeds 10% of CET1 or all such categories in the aggregate exceed 15% of CET1.
Added
To determine a bank’s assessment rate, each of seven financial ratios and a weighted average of CAMELS component ratings are multiplied by a corresponding pricing multiplier.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA security breach or other significant disruption of our information systems or those related to our customers, merchants and our third party vendors, including as a result of cyber-attacks, could (i) disrupt the proper functioning of our internal, or our third-party vendors’, 19 Table of Contents networks and systems and therefore our operations and/or those of certain of our customers; (ii) result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of confidential, sensitive or otherwise valuable information of ours or our customers; (iii) result in a violation of applicable privacy, data breach and other laws, subjecting us to additional regulatory scrutiny and expose the us to civil litigation, governmental fines and possible financial liability; (iv) require significant management attention and resources to remedy the damages that result; or (v) harm our reputation or cause a decrease in the number of customers that choose to do business with us.
Biggest changeUnauthorized access and/or disclosure of the confidential information of ours or our customers could (i) result in a violation of applicable privacy, data breach and other laws, subjecting us to additional regulatory scrutiny and exposing us to civil litigation, governmental action and possible financial liability; (ii) require significant management attention and resources to remedy the damages that result; and/or (iii) harm our reputation or and/or cause a decrease in the number of customers that choose to do business with us.
The success of the farm may be affected by many factors outside the control of the borrower, including adverse weather conditions that prevent the planting of a crop or limit crop yields (such as hail, drought and floods), loss of livestock due to disease or other factors, declines in market prices for agricultural products and the impact of governmental regulations and subsidies (including changes in price supports and environmental regulations).
The success of the farm may be affected by many factors outside the control of the borrower, including adverse weather conditions that prevent the planting of a crop or limit crop yields (such as wind, hail, drought and floods), loss of livestock due to disease or other factors, declines in market prices for agricultural products and the impact of governmental regulations and subsidies (including changes in price supports and environmental regulations).
While we maintain specific "cyber" insurance coverage, which would apply in the event of many breach scenarios, the amount of coverage may not be adequate in any particular case. Furthermore, because cyber threat scenarios are inherently difficult to predict and can take many forms, some breaches may not be covered under our cyber insurance coverage.
While we maintain specific "cyber" insurance coverage, which would apply in the event of many breach scenarios, the amount of coverage may not be adequate in any particular case. Furthermore, because cyber threat scenarios are inherently difficult to predict and can take many forms, some breaches may not be addressed and covered under our cyber insurance coverage.
In the Company's ordinary course of business, it collects and retains large volumes of customer data, including personally identifiable information in various information systems that we maintain and maintained by third parties with whom we contract to provide data services.
In the Company's ordinary course of business, it collects and retains large volumes of customer data, including personally identifiable information in various information systems that we maintain and in those maintained by third parties with whom we contract to provide data services.
A decline in U.S. domestic business and economic conditions, without rapid recovery, could have adverse effects on our business, including the following: • consumer and business confidence levels could be lowered and cause declines in credit usage, adverse changes in payment patterns, decreases in demand for loans or other financial products and services and decreases in deposits or investments in accounts with Company; • the Company’s ability to assess the creditworthiness of its customers may be impaired if the models and approaches the Company uses to select, manage and underwrite its customers become less predictive of future behaviors; • demand for and income received from the Company's fee-based services, including investment services and insurance commissions and fees, could decline, the cost to the Company to provide any or all products and services could increase, and the levels of assets under management could materially impact revenues from our trust and wealth management businesses; and 15 Table of Contents • the credit quality or value of loans and other assets or collateral securing loans may decrease.
A decline in U.S. domestic business and economic conditions, without rapid recovery, could have adverse effects on our business, including the following: • consumer and business confidence levels could be lowered and cause declines in credit usage, adverse changes in payment patterns, decreases in demand for loans or other financial products and services and decreases in deposits or investments in accounts with Company; • the Company’s ability to assess the creditworthiness of its customers may be impaired if the models and approaches the Company uses to select, manage and underwrite its customers become less predictive of future behaviors; • demand for and income received from the Company's fee-based services, including investment services and insurance commissions and fees, could decline, the cost to the Company to provide any or all products and services could increase, and the levels of assets under management could materially impact revenues from our trust and wealth management businesses; and • the credit quality or value of loans and other assets or collateral securing loans may decrease.
General Risks Our success depends on our ability to offer our customers an evolving suite of products and services, and we may not be able to effectively manage the risks inherent in the development of financial products and services.
Our success depends on our ability to offer our customers an evolving suite of products and services, and we may not be able to effectively manage the risks inherent in the development of financial products and services.
Ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices may result in higher regulatory, compliance, credit, and reputational risks and costs. With the increased importance and focus on climate change, we are making efforts to enhance our governance of climate change-related risks and integrate climate considerations into our risk governance framework.
Ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices have and may continue to result in higher regulatory, compliance, credit, and reputational risks and costs. With the increased importance and focus on climate change, we are making efforts to enhance our governance of climate change-related risks and integrate climate considerations into our risk governance framework.
The Company also maintains important internal Company data such as personally identifiable information about its employees and information relating to operations. Customers and employees have been, and will continue to be, targeted by cybersecurity threats attempting to misappropriate passwords, bank account information or other personal information.
The Company also maintains important internal Company data such as personally identifiable information about its employees and information relating to operations. Customers and employees have been, and will continue to be, targeted by cybersecurity threats attempting to misappropriate confidential information such as passwords, bank account information or other personal or business information.
Additionally, a significant portion of our loan portfolio at December 31, 2022 was secured by real estate and, if the real estate securing our assets is subject to environmental liability, our collateral position may be substantially weakened.
Additionally, a significant portion of our loan portfolio at December 31, 2023 was secured by real estate and, if the real estate securing our assets is subject to environmental liability, our collateral position may be substantially weakened.
The Company operates in a highly regulated environment and may be adversely impacted by current or future laws and regulations due to increased compliance costs, potential fines for noncompliance, and restrictions on our ability to offer products or buy or sell businesses.
Legal, Compliance and Regulatory Risks The Company operates in a highly regulated environment and may be adversely impacted by current or future laws and regulations due to increased compliance costs, potential fines for noncompliance, and restrictions on our ability to offer products or buy or sell businesses.
Item 1A. Risk Factors The Company's success depends on management's ability to identify and manage the risks inherent in its financial services business. These risks include credit risk, market risk, liquidity risk, operational risk, model risk, compliance and legal risk, and strategic and reputation risk. We list below the material risks we face.
Item 1A. Risk Factors The Company's success depends on management's ability to identify and manage the risks inherent in its financial services business. These risks include credit risk, market risk, liquidity risk, operational risk, regulatory, compliance and legal risk, and strategic risk. We list below the material risks we face.
Many farms are dependent upon a limited number of key individuals whose injury or death may significantly affect the successful operation of 13 Table of Contents the farm. If the cash flow from a farming operation is diminished, the borrower’s ability to repay the loan may be impaired.
Many farms are dependent upon a limited number of key individuals whose injury or death may significantly affect the successful operation of the farm. If the cash flow from a farming operation is diminished, the borrower’s ability to repay the loan may be impaired.
We cannot provide any assurance that we 20 Table of Contents will be successful in overcoming these risks or any other problems encountered in connection with acquisitions and any of these risks, if realized, could have an adverse effect on our results of operations and financial condition.
We cannot provide any assurance that we will be successful in overcoming these risks or any other problems encountered in connection with acquisitions and any of these risks, if realized, could have an adverse effect on our results of operations and financial condition.
The Company's operations are heavily concentrated in the New York State and, to a lesser extent, Pennsylvania and, as a result, the Company's financial condition, results of operations and cash flows are significantly impacted by changes in the economic conditions in those areas.
The Company's operations are heavily concentrated in the New York State and, to a lesser extent, Pennsylvania and, as a result, the Company's financial condition, results of operations and cash flows are significantly impacted by changes in the economic 15 Table of Contents conditions in those areas.
Information security breaches and cybersecurity-related incidents may include attempts to access information, including customer and company information, malicious code, computer viruses, phishing, denial of service attacks and other means of intrusion that could result in unauthorized access, misuse, loss or destruction of data (including confidential customer or employee information), account takeovers, unavailability of service or other events.
Information security breaches and cybersecurity-related incidents may include attempts to access information, including customer and company information, malicious code, computer viruses, phishing, denial of service attacks and other means of intrusion that could result in unauthorized access, misuse, loss or destruction of data (including confidential customer, employee and company information), account takeovers, and disruption of service or other functionality.
The actions of the Federal Reserve influence the rates of interest that the Company charges on loans and that the Company pays on borrowings and interest-bearing deposits 16 Table of Contents and can also affect the value of the Company’s on-balance sheet and off-balance sheet financial instruments.
The actions of the Federal Reserve influence the rates of interest that the Company charges on loans and that the Company pays on borrowings and interest-bearing deposits and can also affect the value of the Company’s on-balance sheet and off-balance sheet financial instruments.
Based on our historical growth rates and current size, it is possible that our total assets could exceed $10 billion dollars in the future. Our total consolidated assets on December 31, 2022 were $7.7 billion. The Dodd-Frank Act and its implementing regulations impose enhanced supervisory requirements on bank holding companies with more than $10 billion in total consolidated assets.
Based on our historical growth rates and current size, it is possible that our total assets could exceed $10 billion dollars in the future. Our total consolidated assets on December 31, 2023 were $7.8 billion. Th e Dodd-Frank Act and its implementing regulations impose enhanced supervisory requirements on bank holding companies with more than $10 billion in total consolidated assets.
The Company offers different types of commercial loans to a variety of businesses, and we believe commercial loans will continue to comprise a significant concentration of our loan portfolio in 2023 and beyond. Real estate lending is generally considered to be collateral-based lending with loan amounts based on predetermined loan-to-collateral values.
The Company offers different types of commercial loans to a variety of businesses, and we believe commercial loans will continue to comprise a significant concentration of our loan portfolio in 2024 and beyond. Real estate lending is generally 12 Table of Contents considered to be collateral-based lending with loan amounts based on predetermined loan-to-collateral values.
Risks Related to the Company’s Business The Company is subject to increased business risk because the Company has a significant concentration of commercial real estate and commercial business loans, repayment of which is often dependent on the cash flows of the borrower.
Credit Risk The Company is subject to increased business risk because the Company has a significant concentration of commercial real estate and commercial business loans, repayment of which is often dependent on the cash flows of the borrower.
The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition and results of operations. A breach of information or other technological security, including as a result of cyber-attacks, could have a material adverse effect on our business, financial condition and results of operations.
A breach of information or other technological security, including as a result of cyber-attacks, could have a material adverse effect on our business, financial condition and results of operations.
In the ordinary course of business we rely on electronic communications and information systems, both internal and provided by external third parties, to conduct our operations and to store, process, and/or transmit sensitive data on a variety of computing platforms and networks and over the Internet.
In the ordinary course of business, we rely on electronic communications and information systems, both internally and as provided by third parties, including our customers, to conduct our operations and to store, process, and/or transmit sensitive data on a variety of computing platforms and networks and over the Internet.
The Company’s business, as well as the operations and activities of our clients, could be negatively impacted by climate change. Climate change presents both immediate and long-term risks to the Company and its clients, and these risks are expected to increase over time.
Climate change could have a material negative impact on the Company and clients. The Company’s business, as well as the operations and activities of our clients, could be negatively impacted by climate change. Climate change presents both immediate and long-term risks to the Company and its clients, and these risks are expected to increase over time.
As of December 31, 2022, commercial and commercial real estate loans totaled $3.6 billion or 69.2% of total loa ns. The Company’s agricultural loans are often dependent upon the health of the agricultural industry in the location of the borrower, and the ability of the borrower to repay may be affected by many factors outside of the borrower’s control.
As of December 31, 2023, commercial and commercial real estate loans totaled $3.9 billion or 70.2% of total loans. The Company’s agricultural loans are often dependent upon the health of the agricultural industry in the location of the borrower, and the ability of the borrower to repay may be affected by many factors outside of the borrower’s control.
Unfavorable or uncertain economic conditions can be caused by many macro and micro factors, including declines in economic growth, business activity or investor or business confidence, limitations on the availability or increases in the cost of credit and capital, increases in inflation or interest rates, the timing and impact of changing governmental policies and other factors.
Unfavorable or uncertain economic conditions can be caused by many macro and micro factors, including declines in economic growth, business activity or investor or business confidence, limitations on the availability or increases in the cost of credit and capital, increases in inflation or interest rates, the timing and impact of changing governmental policies, and the impact of widespread protests, civil unrest, wars, pandemics and other public health crises.
We are required to comply with anti-money laundering and anti-terrorism laws. These laws and regulations require us, among things, to enact policies and procedures to confirm the identity of our customers, and to report suspicious transactions to regulatory agencies. These laws and regulations are complex and require costly, sophisticated monitoring systems and qualified personnel.
These laws and regulations require us, among things, to enact policies and procedures to confirm the identity of our customers, and to report suspicious transactions to regulatory agencies. These laws and regulations are complex and require costly, sophisticated monitoring systems and qualified personnel.
Further, a goodwill impairment charge could significantly restrict the ability of our banking subsidiary to make dividend payments to us without prior regulatory approval, which could have a material adverse effect on our financial condition and results of operations. The Company may be adversely affected by the soundness of other financial institutions.
Further, a goodwill impairment charge could significantly restrict the ability of our banking subsidiary to make dividend payments to us without prior regulatory approval, which could have a material adverse effect on our financial condition and results of operations.
These residential mortgage-backed securities include securities of U.S. government agencies, U.S. government-sponsored entities, and private-label collateralized mortgage obligations. The Company’s securities portfolio also includes obligations of U.S. government-sponsored entities, obligations of states and political subdivisions thereof, U.S. corporate debt securities and equity securities.
A majority of the Company’s investment portfolio is comprised of securities which are collateralized by residential mortgages. These residential mortgage-backed securities include securities of U.S. government agencies, U.S. government-sponsored entities, and private-label collateralized mortgage obligations. The Company’s securities portfolio also includes obligations of U.S. government-sponsored entities, obligations of states and political subdivisions thereof, U.S. corporate debt securities and equity securities.
The Company and its subsidiaries are, from time to time, named or threatened to be named as defendants in various lawsuits arising from their respective business activities, including activities of companies they have acquired.
The Company’s primary business of financial services involves substantial risk of legal liability. The Company and its subsidiaries are, from time to time, named or threatened to be named as defendants in various lawsuits arising from their respective business activities, including activities of companies they have acquired.
If the Company were unable to receive dividends from its subsidiaries it would materially and adversely affect the Company’s liquidity and its ability to service its debt, pay its other obligations, or pay cash dividends on its common stock.
If the Company were unable to receive dividends from its subsidiaries it would materially and adversely affect the Company’s liquidity and its ability to service its debt, pay its other obligations, or pay cash dividends on its common stock. Operational Risks The Company has been, and may continue to be, adversely affected by fraud.
The amount of borrowed funds and repurchase agreements with the FHLBNY, and the amount of FHLBNY stock held by the Company, at its most recent fiscal year-end are discussed in Part II, Item 8 of this Report on Form 10-K. There are 11 branches of the FHLB, including New York.
In addition, the Company is required to hold stock in FHLBNY. The amount of borrowed funds and repurchase agreements with the FHLBNY, and the amount of FHLBNY stock held by the Company, at its most recent fiscal year-end are discussed in Part II, Item 8 of this Report on Form 10-K.
As part of the Company’s commercial business lending activities, the Company originates agricultural loans, consisting of agricultural real estate loans and agricultural operating loans. As of December 31, 2022, $300.0 million or 5.7% of the Company’s total loan portfolio consisted of agriculturally-related loans, including $215.0 million in agricultural real estate loans and $85.1 million in agricultural operating loans.
As part of the Company’s commercial business lending activities, the Company originates agricultural loans, consisting of agricultural real estate loans and agricultural operating loans. As of December 31, 2023, $322.9 million or 5.8% of the Company’s total loan portfolio consisted of agriculturally-related loans, including $221.7 million in agricultural real estate loans and $101.2 million in agricultural operating loans.
Systemic weakness in the FHLB could result in higher costs of FHLB borrowings, reduced value of FHLB stock, and increased demand for alternative sources of liquidity that are more expensive, such as brokered time deposits, the discount window at the Federal Reserve, or lines of credit with correspondent banks.
Any such adverse effects on the FHLBNY could adversely affect our liquidity, the value of our investment in FHLBNY common stock, and could negatively impact our results of operations. 16 Table of Contents Systemic weakness in the FHLB could result in higher costs of FHLB borrowings, reduced value of FHLB stock, and increased demand for alternative sources of liquidity that are more expensive, such as brokered time deposits, the discount window at the Federal Reserve, or lines of credit with correspondent banks.
The Company's attempts to mitigate these threats may not be successful as cybercrimes are complex and continue to evolve. Publicized information concerning security and cyber-related problems could cause us to incur reputational harm and discourage customers from using our electronic or web-based applications or solutions, which could harm their utility as a means of conducting commercial transactions.
Publicized information concerning security and cyber-related problems could cause us to incur reputational harm and discourage customers from using our electronic or web-based applications or solutions, which could harm their utility as a means of conducting commercial transactions.
For information about how the Company manages its interest rate risk, refer to Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" of this Report. The Company's funding sources may prove insufficient to replace deposits and support future growth.
For information about how the Company manages its interest rate risk, refer to Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" of this Report.
As cyber threats continue to evolve, we may be required to expend significant additional resources to modify our protective measures or to investigate and remediate any information security vulnerabilities. The Company is subject to risks presented by acquisitions, which, if realized, could negatively affect our results of operations and financial condition.
As cyber threats continue to evolve, we have been and may continue to be required to expend significant additional resources to modify our protective measures or to investigate and remediate any information security vulnerabilities, which may negatively impact our business, financial condition and results of operations.
The FHLBNY severally liable along with the other FHLBs for the consolidated obligations issued on behalf of the FHLBs through the Office of Finance. Dividends on, redemption of, or repurchase of shares of the FHLBNY’s capital stock cannot occur unless the principal and interest due on all consolidated obligations have been paid in full.
Dividends on, redemption of, or repurchase of shares of the FHLBNY’s capital stock cannot occur unless the principal and interest due on all consolidated obligations have been paid in full.
Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. The Company has exposure to many different industries and counterparties, and routinely executes transactions with counterparties in the financial services industry. The most important counterparty for the Company, in terms of liquidity, is the Federal Home Loan Bank of New York ("FHLBNY").
The Company’s liquidity may be adversely affected by the soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. The Company has exposure to many different industries and counterparties, and routinely executes transactions with counterparties in the financial services industry.
The Company uses FHLBNY as its primary source of overnight funds and also has long-term 14 Table of Contents advances and repurchase agreements with FHLBNY. The Company has placed sufficient collateral in the form of commercial and residential real estate loans at FHLBNY. In addition, the Company is required to hold stock in FHLBNY.
The most important counterparty for the Company, in terms of liquidity, is the Federal Home Loan Bank of New York ("FHLBNY"). The Company uses FHLBNY as its primary source of overnight funds and also has long-term advances and repurchase agreements with FHLBNY. The Company has placed sufficient collateral in the form of commercial and residential real estate loans at FHLBNY.
As a result, the Company cannot predict the effect that future premium rates will have on its operations. Decreases in premium rates could adversely affect its operations and revenues. The Company’s business and financial performance are impacted significantly by market interest rates and movements in those rates.
As a result, 19 Table of Contents the Company cannot predict the effect that future premium rates will have on its operations. Decreases in premium rates could adversely affect its operations and revenues.
Climate change presents multi-faceted risks, including: operational risk from the physical effects of climate events on the Company and its clients’ facilities and other assets; credit risk from borrowers with significant exposure to climate risk; transition risks associated with the transition to a less carbon- dependent economy; and reputational risk from stakeholder concerns about our practices related to climate change, the Company’s carbon footprint, and the Company’s business relationships with clients who operate in carbon-intensive industries. 17 Table of Contents Federal and state banking regulators and supervisory authorities, investors, and other stakeholders have increasingly viewed financial institutions as important in helping to address the risks related to climate change both directly and with respect to their clients, which may result in financial institutions coming under increased pressure regarding the disclosure and management of their climate risks and related lending and investment activities.
Climate change presents multi-faceted risks, including: operational risk from the physical effects of climate events on the Company and its clients’ facilities and other assets; credit risk from borrowers with significant exposure to climate risk; transition risks associated with the transition to a less carbon- dependent economy; and reputational risk from stakeholder concerns about our practices related to climate change, the Company’s carbon footprint, and the Company’s business relationships with clients who operate in carbon-intensive industries.
The Company must maintain sufficient cash flow and liquid assets to satisfy current and future financial obligations, including demand for loans and deposit withdrawals, funding operating costs, and for other corporate purposes. As a part of our liquidity management, we use a number of funding sources in addition to core deposit growth and repayments and maturities of loans and investments.
Liquidity Risk The Company's funding sources may prove insufficient to replace deposits and support future growth. The Company must maintain sufficient cash flow and liquid assets to satisfy current and future financial obligations, including demand for loans and deposit withdrawals, funding operating costs, and for other corporate purposes.
Any of these consequences could have a material adverse effect on our financial condition and results of operations.
The pervasive and ongoing risk of cybersecurity threats and incidents could have a material adverse effect on our business, financial condition and results of operations.
The Company is or may become involved in lawsuits, legal proceedings, information-gathering requests, and investigations by governmental agencies or other parties that may lead to adverse consequences. The Company’s primary business of financial services involves substantial risk of legal liability.
These additional compliance costs, if they occur, may adversely affect our business, results of operations and financial condition. 20 Table of Contents The Company is or may become involved in lawsuits, legal proceedings, information-gathering requests, and investigations by governmental agencies or other parties that may lead to adverse consequences.
The Company's operations may be adversely affected if its external vendors do not perform as expected or if its access to third-party services is interrupted. The Company relies on certain external vendors to provide products and services necessary to maintain the day-to-day operations of the Company.
The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition and results of operations. The Company's operations may be adversely affected if its external vendors do not perform as expected or if its access to third-party services is interrupted.
These types of threats may derive from human error, fraud or malice on the part of external or internal parties, or may result from accidental technological failure. Further, to access our products and services our customers may use computers and mobile devices that are beyond our security control systems.
These types of threats may derive from human error, fraud or malice on the part of external or internal parties, or may result from accidental technological failure.
Thus, the Company’s ultimate losses may be higher than the amounts accrued for legal loss contingencies, which could adversely affect the Company’s financial condition and results of operations. Climate change could have a material negative impact on the Company and clients.
Thus, the Company’s ultimate losses may be higher than the amounts accrued for legal loss contingencies, which could adversely affect the Company’s financial condition and results of operations. Strategic Risk The Company is subject to risks presented by acquisitions, which, if realized, could negatively affect our results of operations and financial condition.
The Company is a financial holding company whose principal assets and sources of income are its wholly-owned subsidiaries.
The Company relies on cash dividends from its subsidiaries to fund its operations, and payment of those dividends could be discontinued at any time. The Company is a financial holding company whose principal assets and sources of income are its wholly-owned subsidiaries.
The threat from cyber-attacks is severe, attacks are sophisticated and increasing in volume, and attackers respond rapidly to changes in defensive measures. Our systems and those of our customers and third-party service providers are under constant threat and it is possible that we could experience a significant event in the future.
Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures. Our systems and those of our customers and third-party service providers are under constant threat and it is possible that we could experience a significant event in the future.
Some of the products and services provided by vendors include key components of our business infrastructure including data processing and storage and internet connections and network access, among other products and services. Accordingly, the Company’s operations are exposed to the risk that these vendors will not perform in accordance with the contracted arrangements or under service level agreements.
Accordingly, the Company’s operations are exposed to the risk that these vendors will not perform in accordance with the contracted arrangements or under service level agreements.
A decline in the value of our goodwill and other intangible assets could adversely affect our financial condition and results of operations. As of December 31, 2022, the Company had $95.3 million of goodwill and other intangible assets. The Company is required to test its goodwill and intangible assets for impairment on a periodic basis.
Any of these scenarios could adversely affect our liquidity, the value of our investment in FHLB common stock and our financial condition. A decline in the value of our goodwill and other intangible assets could adversely affect our financial condition and results of operations. As of December 31, 2023, the Company had $94.9 million of goodwill and other intangible assets.
If information security is breached or difficulties or failures occur, despite the controls we and our third party vendors have instituted, information may be lost or misappropriated, resulting in financial loss or costs, reputational harm or damages and litigation, regulatory investigation costs or remediation costs to us or others.
If information security is breached or difficulties or failures occur, despite the controls we and our third-party vendors have instituted, information may be lost or misappropriated or we and/or our customers may experience a 17 Table of Contents disruption in essential service or operations.
Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in breach attempts or other disruptions are constantly evolving and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected.
The threat from cyber-attacks is severe, attacks are sophisticated and increasing in volume, and attackers respond rapidly to changes in defensive measures. Breach attempts or other disruptions are constantly evolving and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected.
We may, therefore, incur significant compliance costs in an effort to ensure compliance before we reach $10 billion in total consolidated assets. These additional compliance costs, if they occur, may adversely affect our business, results of operations and financial condition. The Company may be adversely affected by fraud.
We may, therefore, incur significant compliance costs in an effort to ensure compliance before we reach $10 billion in total consolidated assets.
Declines in asset values may result in impairment charges and may adversely affect the value of the Company’s results of operations, financial condition and cash flows. A majority of the Company’s investment portfolio is comprised of securities which are collateralized by residential mortgages.
Any of these changes could have a material impact on our business, financial condition and results of operations. 14 Table of Contents Declines in asset values may result in impairment charges and may adversely affect the value of the Company’s results of operations, financial condition and cash flows.
Any such environmental 18 Table of Contents liabilities imposed on the Company could have a material adverse impact on the Company's financial condition or results of operations. The Company may be exposed to regulatory sanctions or liability if we do not timely detect and report money laundering or other illegal activities.
The Company may be exposed to regulatory sanctions or liability if we do not timely detect and report money laundering or other illegal activities. We are required to comply with anti-money laundering and anti-terrorism laws.
Removed
In 2020, 2021, and 2022, the U.S. government implemented tariffs on certain products, and certain countries or entities, such as Mexico, Canada, China and the European Union, have issued or continue to threaten retaliatory tariffs against products from the United States, including agricultural products.
Added
Any such environmental liabilities imposed on the Company could have a material adverse impact on the Company's financial condition or results of operations. 13 Table of Contents Market Risk The Company’s business and financial performance are impacted significantly by market interest rates and movements in those rates.
Removed
Any such adverse effects on the FHLBNY could adversely affect our liquidity, the value of our investment in FHLBNY common stock, and could negatively impact our results of operations.
Added
Adverse developments affecting the banking industry, and resulting media coverage, have contributed to market volatility and eroded confidence in the banking system and could have a material effect on the Company's results of operations and/or stock price.
Removed
Any of these scenarios could adversely affect our liquidity, the value of our investment in FHLB common stock and our financial condition. The Company relies on cash dividends from its subsidiaries to fund its operations, and payment of those dividends could be discontinued at any time.
Added
Events affecting the financial services industry, including bank failures, have resulted in decreased confidence in banks among investors, customers and counterparties, which generated significant market volatility among publicly traded bank holding companies.
Removed
Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures.
Added
As a result, customers may choose to maintain deposits with other financial institutions or invest in higher yielding short term fixed income securities, which could adversely impact our liquidity and results of operations.
Removed
COVID-19 Pandemic and Recent Events The COVID-19 global pandemic continued to present health and economic challenges in the fourth quarter of 2022, but conditions were generally improved from 2021.
Added
Uncertainty and concern regarding soundness or creditworthiness of other financial institutions has been, and may be in the future, compounded by advances in technology that increase the speed at which deposits can be moved, as well as the speed and reach of media attention, including social media, and its ability to disseminate concerns or rumors, in each case potentially exacerbating liquidity concerns and market disruption within the financial services industry, and may increase the risk of a wider economic recession.
Removed
In accordance with the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") and the interagency guidance, the Company elected to adopt the provisions to not report qualified loan modifications as troubled debt restructurings ("TDRs"). The relief related to TDRs under the CARES Act was extended by the Consolidated Appropriations Act, 2021.
Added
These events have, and could continue to, adversely impact the market price and volatility of the Company's common stock. High profile bank failures and other events may also result in potentially adverse changes to laws or regulations governing banks and bank holding companies or result in the impositions of restrictions through supervisory or enforcement activities, including higher capital requirements.
Removed
Under the Consolidated Appropriations Act, relief under the CARES Act was extended until the earlier of (i) 60 days after the date the COVID-19 national emergency comes to an end or (ii) January 1, 2022.
Added
As a part of our liquidity management, we use a number of funding sources in addition to core deposit growth and repayments and maturities of loans and investments.
Removed
Management continues to monitor credit conditions carefully at the individual borrower level, as well as by industry segment, in order to be responsive to changing credit conditions.
Added
There are 11 branches of the FHLB, including New York. The FHLBNY severally liable along with the other FHLBs for the consolidated obligations issued on behalf of the FHLBs through the Office of Finance.
Added
The Company is required to test its goodwill and intangible assets for impairment on a periodic basis.
Added
Any of the foregoing events could result in financial loss or costs, reputational harm or damages and litigation, regulatory investigation costs or remediation costs to us or others. Any of these consequences could have a material adverse effect on our financial condition and results of operations.
Added
The Company's attempts to mitigate these threats may not be successful as cybercrimes are complex and continue to evolve.
Added
A security breach or other significant disruption of our information systems or those related to our customers, merchants and our third-party vendors, including as a result of cyber-attacks and/or human error could result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of confidential, sensitive or otherwise valuable information of ours or our customers.
Added
The Company relies on certain external vendors to provide products and services necessary to maintain the day-to-day operations of the Company. Some of the products and services provided by vendors include key components of our business infrastructure including data processing and storage and internet connections and network access, among other products and 18 Table of Contents services.
Added
Federal and state banking regulators and supervisory authorities, investors, and other stakeholders have increasingly viewed financial institutions as important in helping to address the risks related to climate change both directly and with respect to their clients, which may result in financial institutions coming under increased pressure regarding the disclosure and management of their climate risks and related lending and investment activities.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed2 unchanged
Biggest changeItem 2. Properties The Company’s executive offices are located at 118 East Seneca Street in Ithaca, New York. Tompkins Community Bank has 60 branch offices, of which 29 are owned and 31 are leased at market rents. The Company’s insurance subsidiary has 6 stand-alone offices, of which 3 are owned by the Company and 3 are leased at market rents.
Biggest changeItem 2. Properties The Company’s executive offices are located at 118 East Seneca Street in Ithaca, New York. Tompkins Community Bank has 56 branch offices, of which 25 are owned and 31 are leased at market rents. The Company’s insurance subsidiary has 5 stand-alone offices, of which 3 are owned by the Company and 2 are leased at market rents.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeAs of December 31, 2022, management, after consultation with legal counsel, does not anticipate that the aggregate ultimate liability arising out of litigation pending or threatened against the Company or its subsidiaries will be material to the Company’s consolidated financial position. On at least a quarterly basis, the Company assesses its liabilities and contingencies in connection with such legal proceedings.
Biggest changeAs of December 31, 2023, management, after consultation with legal counsel, does not anticipate that the aggregate ultimate liability arising out of litigation pending or threatened against the Company or its subsidiaries will be material to the Company’s consolidated financial position. On at least a quarterly basis, the Company assesses its liabilities and contingencies in connection with such legal proceedings.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

14 edited+8 added−3 removed0 unchanged
Biggest changeKunkel has been employed by the Company since December 2021 as Chief Operating Officer of VIST Bank and Executive Vice President of the Company. In May 18, 2022, Ms. Kunkel was appointed president of Tompkins Community Bank PA, overseeing Tompkins’ activities in the Pennsylvania market. Prior to joining Tompkins Community Bank Ms.
Biggest changeGuarino currently serves on the marketing and fundraising committee of Hub585, Inc., a nonprofit organization focused on youth and families. Ginger G. Kunkel has been employed by the Company since December 2021 as Executive Vice President and Chief Operating Officer of Tompkins Community Bank PA. In May 2022, Ms.
Romaine was appointed President and Chief Executive Officer of the Company effective January 1, 2007. From 2003 through 2006, he served as President and Chief Executive Officer of Mahopac Bank. Mr. Romaine currently serves on the board of the Federal Home Loan Bank of New York and the New York Bankers Association. David S.
Romaine has served as President and Chief Executive Officer of the Company since January 2007. From 2003 through 2006, he served as President and Chief Executive Officer of Mahopac Bank. Mr. Romaine currently serves on the board of the Federal Home Loan Bank of New York and the New York Bankers Association. David S.
DeMilia joined Tompkins Mahopac Bank in April 2008 as a regional vice president, providing commercial banking services in Westchester County. In 2014, he was promoted to senior vice president before becoming Tompkins Mahopac 22 Table of Contents Bank’s senior commercial loan officer in October 2018.
DeMilia joined Tompkins Mahopac Bank in April 2008 as a regional vice president, providing commercial banking services in Westchester County. In 2014, he was promoted to senior vice president before becoming Tompkins Community Bank Hudson Valley senior commercial loan officer in October 2018.
Item 4. Mine Safety Disclosures Not applicable. Information About Our Executive Officers The information concerning the Company’s executive officers is provided below as of March 1, 2023. Name Age Title Year Joined Company Stephen S. Romaine 58 President and CEO January 2000 David S. Boyce 56 Executive Vice President January 2001 David M.
Item 4. Mine Safety Disclosures Not applicable. 23 Table of Contents Information About Our Executive Officers The information concerning the Company’s executive officers is provided below as of February 29, 2024. Name Age Title Year Joined Company Stephen S. Romaine 59 President and CEO January 2000 David S. Boyce 57 Executive Vice President January 2001 David M.
Boyce has been employed by the Company since January 2001 and was promoted to Executive Vice President in April 2004. He was appointed President and Chief Executive Officer of Tompkins Insurance in 2002. He has been employed by Tompkins Insurance and a predecessor company to Tompkins Insurance for 34 years. David M.
Boyce joined the Company in January 2001 and was appointed President and Chief Executive Officer of Tompkins Insurance in 2002. He was promoted to Executive Vice President in April 2004. Mr. Boyce has served Tompkins Insurance and its predecessor company for 35 years. David M.
He was appointed President and CEO of Tompkins Community Bank WNY effective January 1, 2015 and President of Tompkins Community Bank effective January 1, 2022. From 2009 to 2014, Mr. McKenna was a senior vice president at The Bank of Castile, concentrating in commercial lending. Mr. McKenna previously served on the New York Bankers Association Political Action Committee (NYBA PAC).
He was appointed President of Tompkins Community Bank WNY effective January 1, 2015 and President of Tompkins Community Bank effective January 1, 2022. From 2009 to 2014, Mr. McKenna was a senior vice president at The Bank of Castile, concentrating in commercial lending. Mr.
Kunkel 52 Executive Vice President December 2021 John M. McKenna 56 Executive Vice President April 2009 Susan M. Valenti 68 Executive Vice President of Corporate Marketing March 2012 Bonita N. Lindberg 66 Senior Vice President, Director of Human Resources December 2015 Business Experience of the Executive Officers: Stephen S.
Kunkel 53 Executive Vice President December 2021 John M. McKenna 57 Executive Vice President April 2009 Susan M. Valenti 69 Executive Vice President of Corporate Marketing March 2012 Bonita N. Lindberg 67 Senior Vice President, Director of Human Resources December 2015 Diane D Torcello 61 Executive Vice President May 2005 Business Experience of the Executive Officers: Stephen S.
She had previously been a partner in the corporate/securities practice group of Harris Beach PLLC, a regional law firm which she joined in 2006. Ms. Fontaine serves on the American Bankers Association General Counsels Committee. Gregory J.
She had previously been a partner in the corporate/securities practice group of Harris Beach PLLC, a regional law firm which she joined in 2006. Ms. Fontaine serves on the American Bankers Association General Counsels Committee. Johanna B. Anderson joined the Company in July 2023 as President of Tompkins Community Bank CNY and Executive Vice President. Ms.
Lindberg served as Director of Human Resources at Cortland Regional Medical Center (2014 - 2015); prior to that she served as the Vice President of Human Resources and Director of Organizational Development at Albany International Corporation. 23 Table of Contents PART II
Lindberg joined the Company in December 2015 as Senior Vice President, Director of Human Resources. Before joining the Company, Ms. Lindberg served as Director of Human Resources at Cortland Regional Medical Center from 2014 to 2015. Ms. Lindberg previously served as the Vice President of Human Resources and Director of Organizational Development at Albany International Corporation. Diane D.
In July 2003, he was promoted to Executive Vice President and he assumed the additional role of Chief Operating Officer in April 2012. Alyssa H. Fontaine joined the Company in January 2016 as Executive Vice President and General Counsel. She took on the additional responsibility of Chief Risk Officer in the first quarter of 2022.
(NASDAQ: NBT), a registered financial holding company with its principal headquarters located in Norwich, New York. Alyssa H. Fontaine joined the Company in January 2016 as Executive Vice President and General Counsel. She took on the additional responsibility of Chief Risk Officer in the first quarter of 2022.
In June 2021, he was appointed president and CEO of Tompkins Mahopac Bank, overseeing Tompkins’ activities in the Hudson Valley region. Francis M. Fetsko has been employed by the Company since 1996, and has served as Chief Financial Officer since December 2000. He also serves as the Chief Financial Officer for Tompkins Community Bank.
In June 2021, he was appointed President of Tompkins Community Bank Hudson Valley overseeing Tompkins’ activities in the Hudson Valley region. Matthew D. Tomazin has served as Executive Vice President, Chief Financial Officer & Treasurer of the Company since October 2023. Mr.
Kunkel spent 7 years at Riverview Financial Corporation, most recently as Chief Operating Officer of the Bank and Corporation where she led the Commercial, Retail, Operations/IT, Trust and Wealth Management teams. John M. McKenna has been employed by the Company since April 2009.
Kunkel served as Senior Executive Vice President and Chief Operating Officer of Riverview Financial Corporation from January 2019 to December 2021 and as Executive Vice President, Chief Banking Officer from March 2014 to January 2019. John M. McKenna has been employed by the Company since April 2009.
Susan M. Valenti joined Tompkins in March of 2012 as Senior Vice President, Corporate Marketing. She was promoted to Executive Vice President of the Company in June 2014. Bonita N. Lindberg joined Tompkins in December 2015 as Senior Vice President, Director of Human Resources. Before joining the Company, Ms.
She was promoted to Executive Vice President of the Company in June 2014. Prior to joining the Company, Ms. Valenti spent 23 years at JPMorgan Chase working in a variety of marketing roles, most recently as Vice President of Chase Private Client Marketing Executive. Bonita N.
DeMilia 47 Executive Vice President April 2008 Francis M. Fetsko 58 Executive Vice President, COO, and CFO October 1996 Alyssa H. Fontaine 42 Executive Vice President, General Counsel, and CRO January 2016 Gregory J. Hartz 62 Executive Vice President August 2002 Brian A. Howard 58 Executive Vice President July 2016 Ginger G.
DeMilia 48 Executive Vice President April 2008 Matthew D. Tomazin 39 Executive Vice President, CFO and Treasurer April 2019 Alyssa H. Fontaine 43 Executive Vice President, General Counsel, and CRO January 2016 Johanna B Anderson 44 Executive Vice President July 2023 Charles J Guarino 48 Executive Vice President and COO March 2019 Ginger G.
Removed
Hartz has been employed by the Company since 2002 and was appointed President and Chief Executive Officer of Tompkins Community Bank CNY and Executive Vice President of the Company effective January 1, 2007. Mr. Hartz is past Chair of the Independent Bankers Association of New York State. Mr.
Added
Tomazin joined the Company in April 2019 as Vice President and Senior Quantitative Analyst and served as Senior Vice President and Treasurer from February 2021 to September 2023. From 2008 until April 2019, Mr. Tomazin served in accounting and strategic finance roles, most recently as Vice President and Assistant Treasurer with NBT Bancorp Inc.
Removed
Hartz has announced his retirement from the Company, and will be retiring during the second quarter of 2023. Brian A. Howard has been employed by the Company since July 2016 and was appointed President of Tompkins Financial Advisors and Executive Vice President of the Company effective July 25, 2016.
Added
Anderson had served on the Tompkins Community Bank CNY Board and Board Loan Committee since 2020. Prior to joining the Company, Ms. Anderson served as Executive Director of Ithaca Neighborhood Housing Services, a nonprofit organization dedicated to expanding housing opportunities to low and moderate-income residents in Central New York from August 2017 to June 2023. Charles J.
Removed
Prior to joining Tompkins, he served as a Senior Vice President, Market Manager for Key Bank covering the Central New York region from May 2012 to July 2016, where he oversaw the bank’s full service wealth management division for high net worth clients. Ginger G.
Added
Guarino joined the Company in March 2019 as Senior Vice President, Manager of Retail & Small Business Lending, overseeing the bank's consumer, residential, small business and specialty lending areas. In October 2023, he was promoted to Executive Vice President and Chief Banking Operations Officer. Prior to joining the Company, Mr. Guarino spent 24 years with Financial Institutions, Inc.
Added
(NASDAQ:FISI), a registered financial holding company with its principal headquarters located 24 Table of Contents in Warsaw, New York. There, Mr. Guarino oversaw areas such as marketing, retail banking, retail lending, wealth management and indirect auto lending, most recently serving as Senior Vice President, Chief Retail Lending Executive from June 2016 to March 2019. Mr.
Added
Kunkel was appointed President of Tompkins Community Bank PA, overseeing Tompkins’ activities in the Pennsylvania market. Prior to joining Tompkins Community Bank, Ms. Kunkel spent 7 years at Riverview Financial Corporation, a bank holding company headquartered in Harrisburg, Pennsylvania where she led the Commercial, Retail, Operations/IT, Trust and Wealth Management teams. Ms.
Added
McKenna has served as a member of the State Charter Advisory Board of the New York State Department of Financial Services since February 2024. Mr. McKenna previously served on the New York Bankers Association Political Action Committee. Susan M. Valenti joined the Company in March 2012 as Senior Vice President, Corporate Marketing.
Added
Torcello joined the Company in May 2005. In May 2023, she was appointed Executive Vice President and President of Tompkins Community Bank WNY overseeing Tompkins’ activities in the Western New York market. From 2013 until May 2023, Ms.
Added
Torcello served as Senior Vice President and Community Banking Manager for Western New York, where she oversaw all staff and operations in the Western New York branch network. 25 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+2 added−1 removed4 unchanged
Biggest changeTotal Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs Period (a) (b) (c) (d) October 1, 2022 through October 31, 2022 2,148 $ 75.20 0 $ 169,818 November 1, 2022 through November 30, 2022 21,221 $ 81.71 0 $ 169,818 December 1, 2022 through December 31, 2022 0 $ 0.00 0 $ 169,818 Total 23,369 $ 81.12 0 $ 169,818 Included above are 2,148 shares purchased in October 2022, at an average cost of $75.20, and 657 shares purchased in November 2022, at an average cost of $84.22, by the trustee of the rabbi trust established by the Company under the Company’s Stock Retainer Plan For Eligible Directors of Tompkins Financial Corporation and Participating Subsidiaries, which were part of the director deferred compensation under that plan.
Biggest changeIssuer Purchases of Equity Securities The following table reflects all Company repurchases, including those made pursuant to publicly announced plans or programs, during the quarter ended December 31, 2023: Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs Period (a) (b) (c) (d) October 1, 2023 through October 31, 2023 3,006 $ 49.92 0 $ 400,000 November 1, 2023 through November 30, 2023 17,248 $ 51.40 0 $ 400,000 December 1, 2023 through December 31, 2023 589 $ 61.76 0 $ 400,000 Total 20,843 $ 51.48 0 $ 400,000 Included above are 3,006 shares purchased in October 2023, at an average cost of $49.92, and 995 shares purchased in November 2023, at an average cost of $57.43, by the trustee of the rabbi trust established by the Company under the Company’s Stock Retainer Plan For Eligible Directors of Tompkins Financial Corporation and Participating Subsidiaries, which were part of the director deferred compensation under that plan.
On October 22, 2021, the Company’s Board of Directors authorized a share repurchase plan (the "2021 Repurchase Plan") for the repurchase of up to 400,000 shares of the Company’s common stock over the 24 months following adoption of the plan.
On October 22, 2021, the Company’s Board of Directors authorized a share repurchase plan (the "2021 Repurchase Plan") for the repurchase of up to 400,000 shares of the Company’s common stock over the 24 months following adoption of the 2021 Repurchase Plan.
Shares may be repurchased from time to time under the 2021 Repurchase Plan in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in accordance with federal securities laws, and the repurchase program may be suspended, modified or terminated by the Board of Directors at any time for any reason.
Shares may be repurchased from time to time under the 2023 Repurchase Plan in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in accordance with federal securities laws, and the repurchase program may be suspended, modified or terminated by the Board of Directors at any time for any reason.
The graph assumes $100.00 was invested on December 31, 2017, in the Company’s common stock and the comparison groups and assumes the reinvestment of all cash dividends prior to any tax effect and retention of all stock dividends.
The graph assumes $100.00 was invested on December 31, 2018, in the Company’s common stock and the comparison groups and assumes the reinvestment of all cash dividends prior to any tax effect and retention of all stock dividends.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Price and Dividend Information The Company’s common stock is traded under the symbol "TMP" on the NYSE American. As of February 27, 2023, there are approximately 2,753 holders of shares of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Price and Dividend Information The Company’s common stock is traded under the symbol "TMP" on the NYSE American. As of February 27, 2024, there are approximately 2,628 holders of shares of our common stock.
Recent Sales of Unregistered Securities None. 24 Table of Contents Performance Graph The following graph compares the Company’s cumulative total stockholder return over the five-year period from December 31, 2017 through December 31, 2022, with (1) the total return for the NASDAQ Composite and (2) the total return for S&P U.S. BMI Banks index.
Performance Graph The following graph compares the Company’s cumulative total stockholder return over the five-year period from December 31, 2018 through December 31, 2023, with (1) the total return for the NASDAQ Composite and (2) the total return for S&P U.S. BMI Banks index.
In addition, the table includes 20,564 shares delivered to the Company in November 2022 at an average cost of $81.63 to satisfy mandatory tax withholding requirements upon vesting of restricted stock under the Company's 2009 and 2019 Equity Plans.
In addition, the table includes 16,253 and 589 shares delivered to the Company in November 2023 and December 2023, respectively, at an average cost of $51.40 and $61.76, respectively, to satisfy mandatory tax withholding requirements upon vesting of restricted stock under the Company's 2009 and 2019 Equity Plans.
Under the 2021 Repurchase Plan, the Company had repurchased 230,182 shares through December 31, 2022, at an average cost of $78.31.
Under the 2021 Repurchase Plan, the Company had repurchased 380,182 shares as of July 20, 2023, at an average cost of $70.14. No further shares will be repurchased under the 2021 Repurchase Plan.
The performance graph represents past performance and should not be considered an indication of future performance. Period Ending Index 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 Tompkins Financial Corporation 100.00 94.45 118.11 94.08 114.56 109.52 NASDAQ Composite 100.00 97.16 132.81 192.47 235.15 158.65 S&P U.S. BMI Banks Index 100.00 83.54 114.74 100.10 136.10 112.89
The performance graph represents past performance and should not be considered an indication of future performance. Period Ending Index 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Tompkins Financial Corporation 100.00 125.05 99.60 121.29 115.95 93.66 NASDAQ Composite 100.00 136.69 198.10 242.03 163.28 236.17 S&P U.S. BMI Banks Index 100.00 137.36 119.83 162.92 135.13 147.41 27 Table of Contents Item 6. Reserved
Removed
Issuer Purchases of Equity Securities The following table reflects all Company repurchases, including those made pursuant to publicly announced plans or programs, during the quarter ended December 31, 2022.
Added
On July 20, 2023, the Company’s Board of Directors authorized a replacement share repurchase plan (the “2023 Repurchase Plan”) under which it may repurchase up to 400,000 shares of the Company’s common stock over the 24 months following adoption of the plan.
Added
As of December 31, 2023, no shares have been repurchased under the 2023 Repurchase Plan. 26 Table of Contents Recent Sales of Unregistered Securities None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

164 edited+84 added−62 removed85 unchanged
Biggest changeNon-GAAP financial measures have limitations since they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP. 51 Table of Contents Reconciliation of Net Income Available to Common Shareholders/Diluted Earnings Per Share (GAAP) to Net Operating Income Available to Common Shareholders/Adjusted Diluted Earnings Per Share (Non-GAAP) and Adjusted Operating Return on Average Tangible Common Equity (Non-GAAP) For the year ended December 31, (In thousands, except per share data) 2022 2021 2020 2019 2018 Net income available to common shareholders $ 85,030 $ 89,264 $ 77,588 $ 81,718 $ 82,308 Less: income attributable to unvested stock-based compensations awards (250) (615) (857) (1,306) (1315) Net earnings allocated to common shareholders (GAAP) 84,780 88,649 76,731 80,412 80,993 Diluted earnings per share (GAAP) 5.89 6.05 5.20 5.37 5.35 Adjustments for non-operating income and expense: Purchase accounting related to redemption of trust preferred securities 0 1,849 0 0 0 Penalties on prepayment of FHLB borrowings 0 2,929 0 0 0 Gain on sale of real estate 0 0 0 0 (2,950) Write-down of impaired leases 0 0 0 0 2,536 Write-down of real estate pending sale 0 0 673 0 0 Total adjustments 0 4,778 673 0 (414) Tax expense 0 1,171 165 0 102 Total adjustments, net of tax 0 3,607 508 0 (312) Net operating income available to common shareholders (Non-GAAP) 84,780 92,256 77,239 80,412 80,681 Weighted average shares outstanding (diluted) 14,404,294 14,648,167 14,751,303 14,973,951 15,132,257 Adjusted diluted earnings per share (Non-GAAP) 5.89 6.30 5.24 5.37 5.33 Net earnings allocated to common shareholders (Non-GAAP) 84,780 92,256 76,731 80,412 80,681 Average Tompkins Financial Corporation shareholders' equity (GAAP) 640,258 723,009 699,554 649,871 589,475 Amortization of intangibles 873 1,317 1,484 1,673 1,771 Tax expense 214 323 364 410 434 Amortization of intangibles, net of tax 659 994 1,120 1,263 1,337 Adjusted net operating income available to common shareholders' (Non-GAAP) 85,439 93,250 77,851 81,675 82,018 Average Tompkins Financial Corporation shareholders' equity 723,009 723,009 698,088 649,871 589,475 Average goodwill and intangibles 94,677 95,719 97,134 98,104 99,999 Average Tompkins Financial Corporation shareholders' tangible common equity (Non-GAAP) $ 628,332 $ 627,290 $ 600,954 $ 551,767 $ 489,476 Adjusted operating return on average shareholders' tangible common equity (Non-GAAP) 13.60 % 14.87 % 12.95 % 14.80 % 16.76 % Newly Adopted Accounting Standards ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .
Biggest changeNon-GAAP financial measures have limitations since they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP. 54 Table of Contents Reconciliation of Net Income Available to Common Shareholders/Diluted Earnings Per Share (GAAP) to Net Operating Income Available to Common Shareholders/Adjusted Diluted Earnings Per Share (Non-GAAP); Return on Average Assets and Return on Average Equity to Adjusted Return on Average Assets and Adjusted Return on Average Equity; and Adjusted Operating Return on Average Tangible Common Equity (Non-GAAP) For the year ended December 31, (In thousands, except per share data) 2023 2022 2021 2020 2019 Net income available to common shareholders $ 9,505 $ 85,030 $ 89,264 $ 77,588 $ 81,718 Less: income attributable to unvested stock-based compensations awards (42) (250) (615) (857) (1,306) Net earnings allocated to common shareholders (GAAP) 9,463 84,780 88,649 76,731 80,412 Diluted earnings per share (GAAP) 0.66 5.89 6.05 5.20 5.37 Adjustments for non-operating income and expense: Loss (gain) on sale of investment securities 70,019 634 (249) (443) (645) Purchase accounting related to redemption of trust preferred securities 0 0 1,849 0 0 Penalties on prepayment of FHLB borrowings 0 0 2,929 0 0 Write-down of real estate pending sale 0 0 0 673 0 Total adjustments 70,019 634 4,529 230 (645) Tax expense 17,155 155 1,110 56 (158) Total adjustments, net of tax 52,864 479 3,419 174 (487) Adjusted net income (Non-GAAP) 62,369 85,509 92,683 77,762 81,231 Net earnings allocated to common shareholders (Non-GAAP) 62,327 85,259 92,068 76,905 79,925 Weighted average shares outstanding (basic) 14,254,661 14,328,280 14,568,763 14,703,390 14,907,057 Weighted average shares outstanding (diluted) 14,301,221 14,404,294 14,648,167 14,751,303 14,973,951 Adjusted basic earnings per share (Non-GAAP) 4.37 5.95 6.32 5.23 5.36 Adjusted diluted earnings per share (Non-GAAP) 4.36 5.92 6.29 5.21 5.34 Net income available to common shareholders 9,505 85,030 89,264 77,588 81,718 Adjusted net income (Non-GAAP) 62,369 85,509 92,683 77,762 81,231 Average total assets 7,641,672 7,828,520 7,968,951 7,358,478 6,679,578 Return on average assets 0.12 % 1.09 % 1.12 % 1.05 % 1.22 % Adjusted return on average assets (Non-GAAP) 0.82 % 1.09 % 1.16 % 1.06 % 1.22 % Net income available to common shareholders 9,505 85,030 89,264 77,588 81,718 Adjusted net income (Non-GAAP) 62,369 85,509 92,683 77,762 81,231 Average total equity 634,732 641,725 724,477 699,554 651,341 Return on average equity 1.50 % 13.25 % 12.32 % 11.09 % 12.55 % Adjusted return on average equity (Non-GAAP) 9.83 % 13.32 % 12.79 % 11.12 % 12.47 % Net earnings allocated to common shareholders (Non-GAAP) 62,327 85,259 92,068 76,905 79,925 Average Tompkins Financial Corporation shareholders' equity (GAAP) 633,267 640,258 723,009 698,088 649,871 Amortization of intangibles 334 873 1,317 1,484 1,673 Tax expense 82 214 323 364 410 Amortization of intangibles, net of tax 252 659 994 1,120 1,263 Adjusted net operating income available to common shareholders' (Non-GAAP) 62,579 85,918 93,062 78,025 81,188 Average Tompkins Financial Corporation shareholders' equity 633,267 640,258 723,009 698,088 649,871 Average goodwill and intangibles 94,169 94,677 95,719 97,134 98,104 Average Tompkins Financial Corporation shareholders' tangible common equity (Non-GAAP) $ 539,098 $ 545,581 $ 627,290 $ 600,954 $ 551,767 Adjusted operating return on average shareholders' tangible common equity (Non-GAAP) 11.61 % 15.75 % 14.84 % 12.98 % 14.71 % 55 Table of Contents Newly Adopted Accounting Standards ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The amendments in this update provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.
On October 22, 2021, the Company’s Board of Directors authorized a share repurchase plan (the "2021 Repurchase Plan") for the repurchase of up to 400,000 shares of the Company’s common stock over the 24 months following adoption of the plan.
On October 22, 2021, the Company’s Board of Directors authorized a share repurchase plan (the "2021 Repurchase Plan") for the repurchase of up to 400,000 shares of the Company’s common stock over the 24 months following adoption of the 2021 Repurchase Plan.
The Company’s principal offices are located at 118 E. Seneca Street, Ithaca, NY, 14850, and its telephone number is (888) 503-5753. The Company’s common stock is traded on the NYSE American under the Symbol "TMP." Forward-Looking Statements This Annual Report on Form 10-K contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.
The Company’s principal offices are located at 118 E. Seneca Street, Ithaca, NY, 14850, and its telephone number is: (888) 503-5753. The Company’s common stock is traded on the NYSE American under the Symbol "TMP." Forward-Looking Statements This Report on Form 10-K contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.
These non-core funding sources include time deposits of $250,000 or more, brokered time deposits, municipal money market deposits, reciprocal deposits, bank borrowings, securities sold under agreements to repurchase, overnight borrowings and term advances from the FHLB and other funding sources. Rates and terms are the primary determinants of the mix of these funding sources.
These non-core funding sources include time deposits of $250,000 or more, municipal money market deposits, brokered deposits, reciprocal deposits, bank borrowings, securities sold under agreements to repurchase and overnight and term advances from the FHLB. Rates and terms are the primary determinants of the mix of these funding sources.
Net charge-offs of $6.0 million in 2021, were mainly due to one commercial real estate relationship that included two loans and was charged off in the fourth quarter of 2021.
Net charge-offs of $6.0 million in 2021, were mainly due to one commercial real estate relationship that included two loans and was charged off in the fourth quarter of 2022.
Management has made the accounting policy election to exclude accrued interest receivable on held-to-maturity debt securities from the estimate of credit losses. As of December 31, 2022, the held-to- maturity portfolio consisted of U.S. Treasury securities and securities issued by U.S. government-sponsored enterprises, including Federal National Mortgage Agency, Federal Home Loan Bank, and Federal Farm Credit Banks Funding Corporation. U.S.
Management has made the accounting policy election to exclude accrued interest receivable on held-to-maturity debt securities from the estimate of credit losses. As of December 31, 2023, the held-to- maturity portfolio consisted of U.S. Treasury securities and securities issued by U.S. government-sponsored enterprises, including Federal National Mortgage Agency, Federal Home Loan Bank, and Federal Farm Credit Banks Funding Corporation. U.S.
The Company’s methodology is based upon guidance provided in SEC Staff Accounting Bulletin No. 119, Measurement of Credit Losses on Financial Instruments ("CECL"), and Financial Instruments - Credit Losses and ASC Topic 326, Financial Instruments - Credit Losses. 44 Table of Contents The Company uses a discounted cash flow ("DCF") method to estimate expected credit losses for all loan segments excluding the leasing segment.
The Company’s methodology is based upon guidance provided in SEC Staff Accounting Bulletin No. 119, Measurement of Credit Losses on Financial Instruments ("CECL"), and Financial Instruments - Credit Losses and ASC Topic 326, Financial Instruments - Credit Losses. 48 Table of Contents The Company uses a discounted cash flow ("DCF") method to estimate expected credit losses for all loan segments excluding the leasing segment.
Additional information on the Company’s capital ratios and regulatory requirements is provided in "Note 20 - Regulations and Supervision" in Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K. 36 Table of Contents Securities The Company maintains a portfolio of securities such as U.S.
Additional information on the Company’s capital ratios and regulatory requirements is provided in "Note 20 - Regulations and Supervision" in Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K. 39 Table of Contents Securities The Company maintains a portfolio of securities such as U.S.
The capital conservation buffer was phased-in over a three year period that began on January 1, 2016, and was fully phased-in on January 1, 2019 at 2.5%. As of December 31, 2022, the capital ratios for the Company’s subsidiary bank exceeded the minimum levels required to be considered well capitalized.
The capital conservation buffer was phased-in over a three year period that began on January 1, 2016, and was fully phased-in on January 1, 2019 at 2.5%. As of December 31, 2023, the capital ratios for the Company’s subsidiary bank exceeded the minimum levels required to be considered well capitalized.
Securities issued by U.S. government agencies or U.S. government-sponsored enterprises carry the explicit and/or implicit guarantee of the U.S. government, are widely recognized as "risk-free," and have a long history of zero credit loss. As such, the Company did not record an allowance for credit losses for these securities as of December 31, 2022.
Securities issued by U.S. government agencies or U.S. government-sponsored enterprises carry the explicit and/or implicit guarantee of the U.S. government, are widely recognized as "risk-free," and have a long history of zero credit loss. As such, the Company did not record an allowance for credit losses for these securities as of December 31, 2023.
A provision for credit losses is recorded to adjust the level of the allowance as deemed necessary by management. In estimating expected los ses in the loan and lease portfolio, borrower-specific financial data and macro-economic assumptions are utilized to project losses over a reasonable and supportable forecast period.
A provision for credit losses is recorded to adjust the level of the allowance as deemed necessary by management. In estimating expected losses in the loan and lease portfolio, borrower-specific financial data and macro-economic assumptions are utilized to project losses over a reasonable and supportable forecast period.
Shares may be repurchased from time to time under the 2021 Repurchase Plan in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in accordance with federal securities laws, and the repurchase program may be suspended, modified or terminated by the Board of Directors at any time for any reason.
Shares may be repurchased from time to time under the 2023 Repurchase Plan in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in accordance with federal securities laws, and the repurchase program may be suspended, modified or terminated by the Board of Directors at any time for any reason.
As of December 31, 2022, commercial leases and municipal leases represented 100.0% of total leases. The Company has adopted comprehensive lending policies, underwriting standards and loan review procedures. There were no significant changes to the Company’s existing policies, underwriting standards and loan review during 2022. The Company’s Board of Directors approves the lending policies at least annually.
As of December 31, 2023, commercial leases and municipal leases represented 100.0% of total leases. The Company has adopted comprehensive lending policies, underwriting standards and loan review procedures. There were no significant changes to the Company’s existing policies, underwriting standards and loan review during 2023. The Company’s Board of Directors approves the lending policies at least annually.
Refer to "Allowance for Credit Losses" below, "Note 4 - Allowance for Credit Losses", and "Note 1 – Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K for the year ended December 31, 2022.
Refer to "Allowance for Credit Losses" below, "Note 4 - Allowance for Credit Losses", and "Note 1 – Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K for the year ended December 31, 2023.
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. As of December 31, 2022, the Company's consolidated average assets, as defined by New York tax law, were under the $8.0 billion threshold.
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. As of December 31, 2023, the Company's consolidated average assets, as defined by New York tax law, were under the $8.0 billion threshold.
At December 31, 2022, the Company had one wholly-owned banking subsidiary, Tompkins Community Bank. The Company also has a wholly-owned insurance agency subsidiary, Tompkins Insurance. Tompkins Financial Advisors, a division of Tompkins Community Bank provides a full array of investment services, including investment management, trust and estate, financial and tax planning services.
At December 31, 2023, the Company had one wholly-owned banking subsidiary, Tompkins Community Bank. The Company also has a wholly-owned insurance agency subsidiary, Tompkins Insurance. Tompkins Financial Advisors, a division of Tompkins Community Bank provides a full array of investment services, including investment management, trust and estate, financial and tax planning services.
Financial Statements and Supplementary Data" of this Report on Form 10-K for the year ended December 31, 2022. Critical Accounting Estimates The Company's significant accounting policies conform with GAAP and are described in Note 1 of the Notes to Consolidated Financial Statements.
Financial Statements and Supplementary Data" of this Report on Form 10-K for the year ended December 31, 2023. Critical Accounting Estimates The Company's significant accounting policies conform with GAAP and are described in Note 1 of the Notes to Consolidated Financial Statements.
Interest payments on individually evaluated loans are typically applied to principal unless collectability of the principal amount is reasonably assured. In these cases, interest is recognized on a cash basis. There was no interest income recognized on individually evaluated loans and leases for 2022, 2021 and 2020.
Interest payments on individually evaluated loans are typically applied to principal unless collectability of the principal amount is reasonably assured. In these cases, interest is recognized on a cash basis. There was no interest income recognized on individually evaluated loans and leases for 2023, 2022 and 2021.
The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancelable, through a charge to credit loss expense for off-balance sheet credit exposures included in other noninterest expense in the Company's consolidated statements of income.
The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancellable, through a charge to credit loss expense for off-balance sheet credit exposures included in other noninterest expense in the Company's consolidated statements of income.
For certain loan pools that share similar risk characteristics, the Company utilizes statistically developed models to estimate amounts and timing of expected future cash flows, collateral values and other factors used to determine the borrowers' abilities to repay obligations. Such models consider historical correlations of credit losses with various macroeconomic assumptions including unemployment and gross domestic product.
For certain loan pools that share similar risk characteristics, the Company utilizes statistically developed models to estimate amounts and timing of expected future cash flows, collat eral values and other factors used to determine the borrowers' abilities to repay obligations. Such models consider historical correlations of credit losses with various macroeconomic assumptions including unemployment and gross domestic product.
The peer group data is derived from the FRB's "Bank Holding Company Performance Report", which covers banks and bank holding companies with assets between $3.0 billion and $10.0 billion as of September 30, 2022 (the most recent report available).
The peer group data is derived from the FRB's "Bank Holding Company Performance Report", which covers banks and bank holding companies with assets between $3.0 billion and $10.0 billion as of September 30, 2023 (the most recent report available).
The intent of the policy is to establish a portfolio of high quality diversified securities, which optimizes net interest income within safety and liquidity limits deemed acceptable by the Asset/Liability Management Committee. The Company classifies its securities at date of purchase as available-for-sale, held-to-maturity or trading.
The intent of the policy is to establish a portfolio of high quality diversified securities, which optimizes net interest income within safety and liquidity limits deemed acceptable by the Asset/Liability Management Committee. The Company classifies its securities at date of purchase as available-for-sale, held-to-maturity or trading. Securities are generally classified as available-for-sale.
Expected maturities will differ from contractual maturities presented in Table 3-Maturity Distribution below, because issuers may have the right to call or prepay obligations with or without penalty and mortgage-backed securities will pay throughout the periods prior to contractual maturity. 39 Table of Contents Table 3 - Maturity Distribution As of December 31, 2022 Securities Available-for-Sale 1 Securities Held-to-Maturity (dollar amounts in thousands) Amount Yield 2 Amount Yield 2 U.S.
Expected maturities will differ from contractual maturities presented in Table 3-Maturity Distribution below, because issuers may have the right to call or prepay obligations with or without penalty and mortgage-backed securities will pay throughout the periods prior to contractual maturity. 42 Table of Contents Table 3 - Maturity Distribution As of December 31, 2023 Securities Available-for-Sale 1 Securities Held-to-Maturity (dollar amounts in thousands) Amount Yield 2 Amount Yield 2 U.S.
While management’s evaluation of the allowance as of December 31, 2022, considers the allowance to be appropriate, under adversely different conditions or assumptions, the Company would need to increase or decrease the allowance.
While management’s evaluation of the allowance as of December 31, 2023 considers the allowance to be appropriate, under adversely different conditions or assumptions, the Company would need to increase or decrease the allowance.
The allocation of the Company’s allowance as of December 31, 2022, and each of the previous four years is illustrated in Table 5- Allocation of the Allowance for Credit Losses , below.
The allocation of the Company’s allowance as of December 31, 2023, and each of the previous four years is illustrated in Table 5- Allocation of the Allowance for Credit Losses , below.
Accounting Standards Pending Adoption ASU No. 2022-03, "Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions." The amendments in this update provides clarification on guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and provides new disclosure requirements for equity securities subject to contractual sale restrictions, that are measured at fair value.
ASU No. 2022-03, "Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions." The amendments in this update provides clarification on guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and provides new disclosure requirements for equity securities subject to contractual sale restrictions, that are measured at fair value.
The statements contained in this Report that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements may be identified by use of such words as "may", "will", "estimate", "intend", "continue", "believe", "expect", "plan", or "anticipate", the negative and other variations of these terms and other similar words.
The statements contained in this Report that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties. 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.
Financial Statements and Supplementary Data." Overview The Company is headquartered in Ithaca, New York and is registered as a Financial Holding Company with the Federal Reserve Board under the Bank Holding Company Act of 1956, as amended.
Overview The Company is headquartered in Ithaca, New York and is registered as a Financial Holding Company with the Federal Reserve Board under the Bank Holding Company Act of 1956, as amended.
The average tax-equivalent yield on the securities portfolio was 1.40% in 2022, 1.23% in 2021 and 1.83% in 2020. At December 31, 2022, there were no holdings of any one issuer, other than the U.S.
The average tax-equivalent yield on the securities portfolio was 1.74% in 2023, 1.40% in 2022 and 1.23% in 2021. At December 31, 2023, there were no holdings of any one issuer, other than the U.S.
Government sponsored entities 225,866 188,151 197,320 195,920 0 0 Total held-to-maturity securities $ 312,344 $ 261,692 $ 284,009 $ 282,288 $ 0 $ 0 The Company evaluates available-for-sale debt securities for expected credit losses ("ECL") in unrealized loss positions at each measurement date to determine whether the decline in the fair value below the amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors.
Government sponsored entities 226,135 192,240 225,866 188,151 197,320 195,920 Total held-to-maturity debt securities $ 312,401 $ 267,455 $ 312,344 $ 261,692 $ 284,009 $ 282,288 The Company evaluates available-for-sale debt securities for expected credit losses ("ECL") in unrealized loss positions at each measurement date to determine whether the decline in the fair value below the amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors.
Management measures liquidity, including the level of cash, unencumbered securities, and the availability of of dependable borrowing sources. The board has set a policy limit stating that reliable sources of liquidity should remain in excess of 6% of total assets. The ratio was 21.6% of assets at December 31, 2022.
Management measures liquidity, including the level of cash, unencumbered securities, and the availability of dependable borrowing sources. The board has set a policy limit stating that reliable sources of liquidity should remain in excess of 6% of total assets. The ratio was 18.3% of assets at December 31, 2023.
These loan and letter of credit commitments are subject to the same credit policies and reviews as the Company’s loans. Because most of these loan commitments expire within one year from the date of issue, the total amount of these loan commitments as of December 31, 2022, are not necessarily indicative of future cash requirements.
These loan and letter of credit commitments are subject to the same credit policies and reviews as the Company’s loans. Because most of these loan commitments expire within one year from the 53 Table of Contents date of issue, the total amount of these loan commitments as of December 31, 2023, are not necessarily indicative of future cash requirements.
Of the $50.0 million in FHLB term advances at year-end 2022, $40.0 million are due in over one year. Refer to "Note 9 - Other Borrowings" in Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K for further details on the Company’s term borrowings with the FHLB.
Of the $125.0 million in FHLB term advances at year-end 2023, $85.0 million are due in over one year. Refer to "Note 9 - Other Borrowings" in Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K for further details on the Company’s term borrowings with the FHLB.
Securities in the trading portfolio would reflect those securities that the Company elects to account for at fair value, with the adoption of ASC Topic 825, Financial Instruments . The Company’s total securities portfolio at December 31, 2022 was $1.9 billion compared to $2.3 billion at December 31, 2021.
Securities in the trading portfolio would reflect those securities that the Company elects to account for at fair value, with the adoption of ASC Topic 825, Financial Instruments . The Company’s total securities portfolio at December 31, 2023 was $1.7 billion compared to $1.9 billion at December 31, 2022.
Noncontrolling Interests Net income attributable to noncontrolling interests represents the portion of net income in consolidated majority-owned subsidiaries that is attributable to the minority owners of a subsidiary. The Company had net income attributable to noncontrolling interests of $126,000 in 2022, in line with 2021.
Noncontrolling Interests Net income attributable to noncontrolling interests represents the portion of net income in consolidated majority-owned subsidiaries that is attributable to the minority owners of a subsidiary. The Company had net income attributable to noncontrolling interests of $124,000 in 2023, in line with 2022.
Effective January 1, 2022, the Company's four wholly-owned banking subsidiaries were combined into one bank, with the Bank of of Castile, Mahopac Bank, and VIST Bank merging with and into Tompkins Trust Company (the "Trust Company") with the Trust Company as the surviving institution. Immediately following the merger, the Trust Company changed its name to Tompkins Community Bank.
In January 2022, the Company combined its four wholly-owned banking subsidiaries into one bank, with the Bank of Castile, Mahopac Bank, and VIST Bank merging with and into Tompkins Trust Company (the "Trust Company") with the Trust Company as the surviving institution. Immediately following the merger, the Trust Company changed its name to Tompkins Community Bank.
In addition to earnings per share, key performance measurements for the Company include return on average shareholders’ equity (ROE) and return on average assets (ROA). ROE was 13.25% in 2022, compared to 12.32% in 2021, while ROA was 1.09% in 2022 and 1.12% in 2021.
In addition to earnings per share, key performance measurements for the Company include return on average shareholders’ equity (ROE) and return on average assets (ROA). ROE was 1.50% in 2023, compared to 13.25% in 2022, while ROA was 0.12% in 2023 and 1.09% in 2022.
Financial Statements and Supplementary Data" of this Report on Form 10-K. The Company’s recorded investment in loans and leases that are individually evaluated totaled $20.8 million at December 31, 2022, and $20.5 million at December 31, 2021.
Financial Statements and Supplementary Data" of this Report on Form 10-K. The Company’s recorded investment in loans and leases that are individually evaluated totaled $44.4 million at December 31, 2023, and $20.8 million at December 31, 2022.
The Company uses both retail and wholesale repurchase agreements. Retail repurchase agreements are arrangements with local customers of the Company, in which the Company agrees to sell securities to the customer with an agreement to repurchase those securities at a specified later date. Retail repurchase agreements totaled $56.3 million at December 31, 2022, and $66.8 million at December 31, 2021.
The Company uses both retail and wholesale repurchase agreements. Retail repurchase agreements are arrangements with local customers of the Company, in which the Company agrees to sell securities to the customer with an agreement to repurchase those securities at a specified later date. Retail repurchase agreements totaled $51.0 million at December 31, 2023, and $56.3 million at December 31, 2022.
Accumulated other comprehensive loss increased from $56.0 million at December 31, 2021 to $208.7 million at December 31, 2022, reflecting a $164.2 million increase in unrealized losses on available-for-sale debt securities due to market interest rates, partially offset by a $11.5 million actuarial gain associated with employee benefit plans.
Accumulated other comprehensive loss increased from $56.0 million at December 31, 2021 to $208.7 million at December 31, 2022; reflecting a $164.2 million increase in unrealized losses on available-for-sale debt securities due to market interest rates; partially offset by a $11.5 million related to employee post-retirement benefit plans.
Management considers loans and leases classified as Substandard, which continue to accrue interest, to be potential problem loans and leases. The Company, through its credit administration function, identified 17 commercial relationships totaling $33.3 million at December 31, 2022 that were potential problem loans.
Management considers loans and leases classified as Substandard, which continue to accrue interest, to be potential problem loans and leases. The Company, through its credit administration function, identified 17 commercial relationships totaling $26.0 million at December 31, 2023 that were potential problem loans.
The effective tax rate for the Company was 22.4% in 2022, up from 22.0% in 2021. The effective rates for 2022 and 2021 differed from the U.S. statutory rate of 21.0% during those periods due to the effect of tax-exempt income from loans, securities, and life insurance assets, investments in tax credits, and excess tax benefits of stock based compensation.
The effective rates for 2023 and 2022 differed from the U.S. statutory rate of 21.0% during those periods due to the effect of tax-exempt income from loans, securities, and life insurance assets, investments in tax credits, and excess tax benefits of stock based compensation.
As of December 31, 2022, agriculturally-related loans totaled $300.0 million or 5.7% of total loans and leases compared to $295.1 million or 5.8% of total loans and leases at December 31, 2021. Agriculturally-related loans include loans to dairy farms and cash and vegetable crop farms.
As of December 31, 2023, agriculturally-related loans totaled $322.9 million or 5.8% of total loans and leases compared to $300.0 million or 5.7% of total loans and leases at December 31, 2022. Agriculturally-related loans include loans to dairy farms and cash and vegetable crop farms.
The increase in revenue was mainly in property and casualty commissions, which were up $1.8 million or 7.7% in 2022 over 2021. Contingency revenue was down $300,000 or 6.8% in 2022 compared to 2021. Revenue growth in 2022 benefited from business development efforts and generally higher policy premium levels.
The increase in revenue was mainly in property and casualty commissions, which were up $1.8 million or 5.4% in 2023 over 2022. Contingency revenue was down $546,000 or 13.6% in 2023 compared to 2022. Revenue growth in 2023 benefited from business development efforts and generally higher policy premium levels.
Under regulatory requirements, amounts reported as accumulated other comprehensive income/loss related to net unrealized gain or loss on available-for-sale debt securities and the funded status of the Company’s defined benefit post-retirement benefit plans do not increase or reduce regulatory capital and are not included in the calculation of risk-based capital and leverage capital ratios. 35 Table of Contents Total shareholders’ equity increased $11.3 million or 1.6% to $728.9 million at December 31, 2021, from $717.7 million at December 31, 2020.
Under regulatory requirements, amounts reported as accumulated other comprehensive income/loss related to net unrealized gain or loss on available-for-sale debt securities and the funded status of the Company’s defined benefit post-retirement benefit plans do not increase or reduce regulatory capital and are not included in the calculation of risk-based capital and leverage capital ratios. 38 Table of Contents Total shareholders’ equity decreased $111.6 million or 15.3% to $617.4 million at December 31, 2022, from $728.9 million at December 31, 2021.
Other than geographic and general economic risks, management is not aware of any material concentrations of credit risk to any industry or individual borrower. 42 Table of Contents Analysis of Past Due and Nonperforming Loans As of December 31, (In thousands) 2022 2021 2020 2019 2018 Loans 90 days past due and accruing 1 Commercial and industrial $ 25 $ 0 $ 0 $ 0 $ 0 Total loans 90 days past due and accruing $ 25 $ 0 $ 0 $ 0 $ 0 Nonaccrual loans Commercial and industrial $ 618 $ 533 $ 1,775 $ 2,335 $ 1,883 Commercial real estate 13,858 13,893 23,627 10,789 8,007 Residential real estate 13,544 11,178 13,145 10,882 12,072 Consumer and other 269 429 429 275 234 Total nonaccrual loans and leases $ 28,289 $ 26,033 $ 38,976 $ 24,281 $ 22,196 Troubled debt restructurings not included above 4,530 5,124 6,803 7,154 4,395 Total nonperforming loans and leases $ 32,844 $ 31,157 $ 45,779 $ 31,435 $ 26,591 Other real estate owned 152 135 88 428 1,595 Total nonperforming assets $ 32,996 $ 31,292 $ 45,867 $ 31,863 $ 28,186 Total nonperforming loans and leases as a percentage of total loans and leases 0.62 % 0.61 % 0.87 % 0.64 % 0.55 % Total nonperforming assets as a percentage of total assets 0.43 % 0.40 % 0.60 % 0.47 % 0.42 % Allowance as a percentage of nonperforming loans and leases 139.86 % 137.51 % 112.87 % 126.90 % 163.25 % 1 The 2020, 2019 and 2018 columns in the above table exclude $794,000, $1.3 million, and $1.1 million, respectively, of acquired loans that were 90 days past due and accruing interest.
Other than geographic and general economic risks, management is not aware of any material concentrations of credit risk to any industry or individual borrower. 46 Table of Contents Analysis of Past Due and Nonperforming Loans As of December 31, (In thousands) 2023 2022 2021 2020 2019 Loans 90 days past due and accruing 1 Commercial and industrial $ 0 $ 25 $ 0 $ 0 $ 0 Consumer and other 101 0 0 0 0 Total loans 90 days past due and accruing $ 101 $ 25 $ 0 $ 0 $ 0 Nonaccrual loans Commercial and industrial $ 2,273 $ 618 $ 533 $ 1,775 $ 2,335 Commercial real estate 44,450 13,858 13,893 23,627 10,789 Residential real estate 15,172 13,544 11,178 13,145 10,882 Consumer and other 270 269 429 429 275 Total nonaccrual loans and leases $ 62,165 $ 28,289 $ 26,033 $ 38,976 $ 24,281 Troubled debt restructurings not included above 0 4,530 5,124 6,803 7,154 Total nonperforming loans and leases $ 62,266 $ 32,844 $ 31,157 $ 45,779 $ 31,435 Other real estate owned 131 152 135 88 428 Total nonperforming assets $ 62,397 $ 32,996 $ 31,292 $ 45,867 $ 31,863 Total nonperforming loans and leases as a percentage of total loans and leases 1.11 % 0.62 % 0.61 % 0.87 % 0.64 % Total nonperforming assets as a percentage of total assets 0.80 % 0.43 % 0.40 % 0.60 % 0.47 % Allowance as a percentage of nonperforming loans and leases 82.84 % 139.86 % 137.51 % 112.87 % 126.90 % 1 The 2020 and 2019 columns in the above table exclude $794,000 and $1.3 million, respectively, of acquired loans that were 90 days past due and accruing interest.
The noncontrolling interests relate to three real estate investment trusts, which are substantially owned by the Company. Income Tax Expense The provision for income taxes provides for Federal, New York State, Pennsylvania and other miscellaneous state income taxes. The 2022 provision was $24.6 million, which decreased $625,000 or 2.5% compared to the 2021 provision.
The noncontrolling interests relate to three real estate investment trusts, which are substantially owned by the Company. Income Tax Expense The provision for income taxes provides for Federal, New York State, Pennsylvania and other miscellaneous state income taxes. The 2023 provision was $2.5 million, which decreased $22.1 million or 89.8% compared to the 2022 provision.
The Company’s total nonperforming assets as a percentage of total assets was 0.43% at December 31, 2022, compared to 0.40% at December 31, 2021, and compares to its peer group's most recent ratio of 0.37% at September 30, 2022.
The Company’s total nonperforming assets as a percentage of total assets was 0.80% at December 31, 2023, compared to 0.43% at December 31, 2022, and compared to its peer group's most recent ratio of 0.34% at September 30, 2023.
The Company defines core deposits as total deposits less time deposits of $250,000 or more, brokered deposits, municipal money market deposits and reciprocal deposit relationships with municipalities. Core deposits decreased by $200.3 million or 3.5% to $5.6 billion at year-end 2022 from $5.8 billion at year-end 2021.
The Company defines core deposits as total deposits less time deposits of $250,000 or more, brokered deposits, municipal money market deposits and reciprocal deposit relationships with municipalities. Core deposits decreased by $390.4 million or 7.0% to $5.2 billion at year-end 2023 from $5.6 billion at year-end 2022.
The provision for credit loss expense was $2.8 million in 2022, compared to provision credit of $2.2 million in 2021. The provision for credit losses for 2022 included a provision of $290,000 related to off-balance sheet credit exposures compared to a provision of $586,000, respectively, for 2021.
The provision for credit loss expense was $4.3 million in 2023, compared to provision expense of $2.8 million in 2022. The provision for credit losses for 2023 included a provision credit of $526,000 related to off-balance sheet credit exposures compared to a provision expense of $290,000 for 2022.
The peer data is from the Federal Reserve Board and represents banks or bank holding companies with assets between $3.0 billion and $10.0 billion. Nonperforming loans and leases totaled $32.8 million at December 31, 2022 and increased 5.4% from December 31, 2021.
The peer data is from the Federal Reserve Board and represents banks or bank holding companies with assets between $3.0 billion and $10.0 billion. Nonperforming loans and leases totaled $62.3 million at December 31, 2023 and increased 89.6% from December 31, 2022.
Table 6 - Analysis of the Allowance for Credit Losses shows the activity in the allowance for credit losses over the past five years. The allowance at December 31, 2022 was $45.9 million, an increase of $3.1 million from year-end 2021, reflecting a provision expense of $2.5 million and net recoveries of $592,000 for the year-ended December 31, 2022.
Table 6 - Analysis of the Allowance for Credit Losses shows the activity in the allowance for credit losses over the past five years. The allowance at December 31, 2023 was $51.6 million, an increase of $5.7 million from year-end 2022, reflecting a provision expense of $4.9 million and net recoveries of $721,000 for the year-ended December 31, 2023.
The allocation of the allowance for credit losses to each category does not restrict the use of the allowance to absorb losses in any category. 46 Table of Contents Table 5 - Allocation of the Allowance for Credit Losses As of December 31, (In thousands) 2022 2021 2020 2019 2018 Total loans outstanding at end of year $ 5,268,911 $ 5,075,467 $ 5,260,327 $ 4,917,550 $ 4,833,939 Allocation of the ACL by loan type: Commercial and industrial $ 6,039 $ 6,335 $ 9,239 $ 10,541 $ 11,272 Commercial real estate 27,287 24,813 30,546 21,608 23,483 Residential real estate 11,154 10,139 10,257 6,381 7,345 Consumer and other 1,358 1,492 1,562 1,362 1,310 Leases 96 64 65 0 0 Total $ 45,934 $ 42,843 $ 51,669 $ 39,892 $ 43,410 Allocation of the ACL as a percentage of total allowance: Commercial and industrial 13 % 15 % 18 % 26 % 26 % Commercial real estate 60 % 58 % 59 % 54 % 54 % Residential real estate 24 % 24 % 20 % 16 % 17 % Consumer and other 3 % 3 % 3 % 3 % 3 % Leases 0 % 0 % 0 % 0 % 0 % Total 100 % 100 % 100 % 100 % 100 % Loan and lease types as a percentage of total loans and leases: Commercial and industrial 16 % 18 % 23 % 21 % 22 % Commercial real estate 54 % 52 % 49 % 50 % 49 % Residential real estate 29 % 29 % 27 % 28 % 28 % Consumer and other 1 % 1 % 1 % 1 % 1 % Leases 0 % 0 % 0 % 0 % 0 % Total 100 % 100 % 100 % 100 % 100 % The above table shows a fairly consistent allocation of the loan portfolio and allowance over the period with commercial real estate and residential real estate representing the largest proportion of total loans and the allowance.
Table 5 - Allocation of the Allowance for Credit Losses As of December 31, (In thousands) 2023 2022 2021 2020 2019 Total loans outstanding at end of year $ 5,605,935 $ 5,268,911 $ 5,075,467 $ 5,260,327 $ 4,917,550 Allocation of the ACL by loan type: Commercial and industrial $ 6,667 $ 6,039 $ 6,335 $ 9,239 $ 10,541 Commercial real estate 31,581 27,287 24,813 30,546 21,608 Residential real estate 11,700 11,154 10,139 10,257 6,381 Consumer and other 1,557 1,358 1,492 1,562 1,362 Leases 79 96 64 65 0 Total $ 51,584 $ 45,934 $ 42,843 $ 51,669 $ 39,892 Allocation of the ACL as a percentage of total allowance: Commercial and industrial 13 % 13 % 15 % 18 % 26 % Commercial real estate 61 % 60 % 58 % 59 % 54 % Residential real estate 23 % 24 % 24 % 20 % 16 % Consumer and other 3 % 3 % 3 % 3 % 3 % Leases 0 % 0 % 0 % 0 % 0 % Total 100 % 100 % 100 % 100 % 100 % Loan and lease types as a percentage of total loans and leases: Commercial and industrial 15 % 16 % 18 % 23 % 21 % Commercial real estate 55 % 54 % 52 % 49 % 50 % Residential real estate 28 % 29 % 29 % 27 % 28 % Consumer and other 2 % 1 % 1 % 1 % 1 % Leases 0 % 0 % 0 % 0 % 0 % Total 100 % 100 % 100 % 100 % 100 % 50 Table of Contents The above table shows a fairly consistent allocation of the loan portfolio and allowance over the period with commercial real estate and residential real estate representing the largest proportion of total loans and the allowance.
The consumer loan portfolio includes personal installment loans, indirect automobile financing, and overdraft lines of credit. Consumer and other loans were $77.6 million at December 31, 2022, compared to $72.1 million at December 31, 2021. The lease portfolio increased by 15.7% to $16.1 million at December 31, 2022 from $13.9 million at December 31, 2021.
The consumer loan portfolio includes personal installment loans, indirect automobile financing, and overdraft lines of credit. Consumer and other loans were $97.8 million at December 31, 2023, compared to $77.6 million at December 31, 2022. The lease portfolio decreased by 4.7% to $15.4 million at December 31, 2023 from $16.1 million at December 31, 2022.
Securities, other than certain obligations of states and political subdivisions thereof, are generally classified as available-for-sale. Securities available-for-sale may be used to enhance total return, provide additional liquidity, or reduce interest rate risk. Securities in the held-to-maturity portfolio would consists of obligations of the U.S. Government, U.S. Government sponsored entities and obligations of state and political subdivisions.
Securities available-for-sale may be used to enhance total return, provide additional liquidity, or reduce interest rate risk. Securities in the held-to-maturity portfolio would consist of obligations of the U.S. Government, U.S. Government sponsored entities and obligations of state and political subdivisions.
The increase in the provision for credit losses in 2022 over 2021 is mainly driven by current economic forecasts coupled with loan growth. The allowance to total loan ratio at December 31, 2022 was 0.87%, up from 0.84% at December 31, 2021. For additional information, see the section titled "The Allowance for Credit Losses" below.
The increase in the provision for credit losses in 2023 over 2022 was mainly driven by loan growth, current economic forecasts and changes in asset quality. The allowance to total loan ratio at December 31, 2023 was 0.92%, up from 0.87% at December 31, 2022. For additional information, see the section titled "The Allowance for Credit Losses" below.
The following factors, in addition to those listed as Risk Factors in Item 1A are among those that could cause actual results to differ materially from the forward-looking statements: changes in general economic, market and regulatory conditions; GDP growth and inflation trends; the impact of the interest rate and inflationary environment on the Company' business, financial condition and results of operations; other income or cash flow anticipated f rom 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 the Dodd-Frank Act and Basel III and the Economic Growth, Regulatory Relief, and Consumer Protection Act; the impact of any change in the FDIC insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount; 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, including the war in Ukraine, as well as the potential impact of widespread protests, civil unrest, political uncertainty on the economy and the financial services industry, and pandemics or other public health crises, including the COVID-19 pandemic; and financial resources in the amounts, at the times and on the terms required to support the Company’s future businesses. 26 Table of Contents Critical Accounting Policies The accounting and reporting policies followed by the Company conform, in all material respects, to U.S. generally accepted accounting principles ("GAAP") and to general practices within the financial services industry.
The following factors, in addition to those listed as Risk Factors in Item 1A are among those that could cause actual results to differ materially from the forward-looking statements and historical performance: changes in general economic, market and regulatory conditions; our ability to attract and retain deposits and other sources of liquidity; gross domestic product growth and inflation trends; 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, including the Dodd-Frank Act, and state and local government mandates; the impact of any change in the FDIC insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount; technological developments and changes; cybersecurity incidents and threats; 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; the ability to access financial resources in the amounts, at the times, and on the terms required to support the Company's future businesses; and the economic impact of national and global events, including the response to recent bank failures, the wars in Ukraine and Israel, widespread protests, civil unrest, political uncertainty, and pandemics or other public health crises. 28 Table of Contents Critical Accounting Policies The accounting and reporting policies followed by the Company conform, in all material respects, to U.S. generally accepted accounting principles ("GAAP") and to general practices within the financial services industry.
Management believes that, based upon its evaluation as of December 31, 2022, the allowance is appropriate. Deposits and Other Liabilities Total deposits were $6.6 billion at December 31, 2022, a decrease of $189.1 million or 2.8% compared to year-end 2021.
Management believes that, based upon its evaluation as of December 31, 2023, the allowance is appropriate. 51 Table of Contents Deposits and Other Liabilities Total deposits were $6.4 billion at December 31, 2023, a decrease of $202.4 million or 3.1% compared to year-end 2022.
Although the peer group data is presented based upon financial information that is one fiscal quarter behind the financial information included in this report, the Company believes that it is relevant to include certain peer group information for comparison to current period numbers. Segment Reporting The Company operates in three business segments: banking, insurance and wealth management.
Although the peer group data is presented based upon financial information that is one fiscal quarter behind the financial information included in this report, the Company believes that it is relevant to include certain peer group information for comparison to current period numbers.
Further information on the Company’s lease arrangements is provided in "Note 6 Premises and Equipment" in Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K.
Further information on the Company’s lease arrangements is provided in "Note 6 Premises and Equipment" in Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K. The Company’s contractual obligations as of December 31, 2023, are shown in Table 8-Contractual Obligations and Commitments below.
The Company’s other borrowings totaled $291.3 million at year-end 2022, which were up $167.3 million over prior year end. Loan growth and lower deposit balances compared to year-end 2021 contributed to the increase in borrowings year-over-year.
The Company’s other borrowings totaled $602.1 million at year-end 2023, which were up $310.8 million over prior year end. Loan growth and lower deposit balances compared to year-end 2022 contributed to the increase in borrowings year-over-year.
ASU 2022-06 is effective for fiscal years ending beginning after December 15, 2023 and interim periods in those years, and is not expected to have a significant impact on our consolidated financial statements.
ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods in those years, and its adoption is not expected to have a significant effect on our financial statements.
Provision expense decreased in 2021, as businesses opened and economic conditions continued to improve, resulting in the ability to reverse some of the provision expense booked in the first quarter of 2020 related to the COVID-19 pandemic. 47 Table of Contents Table 6 - Analysis of the Allowance for Credit Losses December 31, (In thousands) 2022 2021 2020 2019 2018 Average loans outstanding during year $ 5,142,099 $ 5,184,492 $ 5,228,135 $ 4,830,089 $ 4,757,583 Balance of allowance at beginning of year 42,843 51,669 39,892 43,410 39,771 Impact of adopting ASU 2016-13 0 0 (2,534) 0 0 Loans charged-off: Commercial and industrial $ 559 $ 274 $ 2 $ 696 $ 334 Commercial real estate 50 6,957 1,903 4,015 142 Residential real estate 53 77 84 256 614 Consumer and other 544 438 482 823 1,350 Leases 0 0 0 0 0 Total loans charged-off $ 1,206 $ 7,746 $ 2,471 $ 5,790 $ 2,440 Recoveries of loans previously charged-off: Commercial and industrial $ 195 $ 118 $ 131 $ 103 $ 156 Commercial real estate 951 1,175 58 174 843 Residential real estate 346 236 194 334 459 Consumer and other 306 196 248 295 679 Total loan recoveries $ 1,798 $ 1,725 $ 631 $ 906 $ 2,137 Net loan charged-off (592) 6,021 1,840 4,884 303 Additions/(Reductions) to allowance charged to operations 2,499 (2,805) 16,151 1,366 3,942 Balance of allowance at end of year $ 45,934 $ 42,843 $ 51,669 $ 39,892 $ 43,410 Allowance as a percentage of total loans and leases outstanding 0.87 % 0.84 % 0.98 % 0.81 % 0.90 % Net charge-offs as a percentage of average loans and leases outstanding during the year (0.01) % 0.12 % 0.04 % 0.10 % 0.01 % As a result of the adoption of ASU 2016-13, the Company recorded a net cumulative-effect adjustment reducing the allowance for credit losses by $2.5 million from $39.9 million at December 31, 2019 to $37.4 million at January 1, 2020.
Table 6 - Analysis of the Allowance for Credit Losses As of December 31, (In thousands) 2023 2022 2021 2020 2019 Average loans outstanding during year $ 5,357,699 $ 5,142,099 $ 5,184,492 $ 5,228,135 $ 4,830,089 Balance of allowance at beginning of year 45,934 42,843 51,669 39,892 43,410 Impact of adopting ASU 2022-02 64 0 0 0 0 Impact of adopting ASU 2016-13 0 0 0 (2,534) 0 Loans charged-off: Commercial and industrial $ 34 $ 559 $ 274 $ 2 $ 696 Commercial real estate 0 50 6,957 1,903 4,015 Residential real estate 20 53 77 84 256 Consumer and other 1,045 544 438 482 823 Leases 0 0 0 0 0 Total loans charged-off $ 1,099 $ 1,206 $ 7,746 $ 2,471 $ 5,790 Recoveries of loans previously charged-off: Commercial and industrial $ 87 $ 195 $ 118 $ 131 $ 103 Commercial real estate 1,292 951 1,175 58 174 Residential real estate 186 346 236 194 334 Consumer and other 255 306 196 248 295 Total loan recoveries $ 1,820 $ 1,798 $ 1,725 $ 631 $ 906 Net loan (recoveries) charged-off (721) (592) 6,021 1,840 4,884 Additions/(Reductions) to allowance charged to operations 4,865 2,499 (2,805) 16,151 1,366 Balance of allowance at end of year $ 51,584 $ 45,934 $ 42,843 $ 51,669 $ 39,892 Allowance as a percentage of total loans and leases outstanding 0.92 % 0.87 % 0.84 % 0.98 % 0.81 % Net (recoveries) charge-offs as a percentage of average loans and leases outstanding during the year (0.01) % (0.01) % 0.12 % 0.04 % 0.10 % As a result of the adoption of ASU 2016-13, the Company recorded a net cumulative-effect adjustment reducing the allowance for credit losses by $2.5 million from $39.9 million at December 31, 2019 to $37.4 million at January 1, 2020.
Insurance is comprised of property and casualty insurance services and employee benefit consulting operated under the Tompkins Insurance, subsidiary. Wealth management activities include the results of the Company’s trust, financial planning, and wealth management services provided by Tompkins Financial Advisors, a division of Tompkins Community Bank. All other activities are considered banking.
Segment Reporting The Company operates in three business segments: banking, insurance and wealth management. Insurance is comprised of property and casualty insurance services and employee benefit consulting operated under the Tompkins Insurance, subsidiary. Wealth management activities include the results of the Company’s trust, financial planning, and wealth management services provided by Tompkins Financial Advisors, a division of Tompkins Community Bank.
S. Treasuries $ 86,478 $ 73,541 $ 86,689 $ 86,368 $ 0 $ 0 Obligations of U.S.
S. Treasuries $ 86,266 $ 75,215 $ 86,478 $ 73,541 $ 86,689 $ 86,368 Obligations of U.S.
The net change attributable to the combined impact of volume and rate has been allocated to each in proportion to the absolute dollar amounts of the change. In 2022, net interest income increased by $6.3 million, resulting from a $9.8 million increase in interest income, partially offset by a $3.5 million increase in interest expense.
The net change attributable to the combined impact of volume and rate has been allocated to each in proportion to the absolute dollar amounts of the change. In 2023, net interest income decreased by $21.0 million, resulting from a $66.8 million increase in interest expense, partially offset from a $45.8 million increase in interest income.
At December 31, 2021, there were 25 commercial relationships totaling $36.5 million in the loan portfolio that were considered potential problem loans. Of the 17 commercial relationships from the portfolio that were classified as potential problem loans at December 31, 2022, there were 5 relationships that equaled or exceeded $1.0 million, which in aggregate totaled $29.7 million.
At December 31, 2022, there were 17 commercial relationships totaling $33.3 million in the loan portfolio that were considered potential problem loans. Of the 17 commercial relationships from the portfolio that were classified as potential problem loans at December 31, 2023, there were 4 relationships that equaled or exceeded $1.0 million, which in aggregate totaled $22.9 million.
Residential real estate loans, including home equity loans, were $1.5 billion at December 31, 2022, an increase of $61.4 million or 4.2% compared to $1.5 billion at year-end 2021. Residential real estate loans comprised 29.1% of total loans and leases at December 31, 2022 compared to 29.0% at December 31, 2021.
Residential real estate loans, including home equity loans, were $1.6 billion at December 31, 2023, an increase of $26.7 million or 1.7% compared to $1.5 billion at year-end 2022. Residential real estate loans comprised 27.9% of total loans and leases at December 31, 2023 compared to 29.1% at December 31, 2022.
Financial Statements and Supplementary Data" of this Report on Form 10-K, detail changes in equity capital over prior year end. Total shareholders’ equity decreased $111.6 million or 15.3% to $617.4 million at December 31, 2022, from $728.9 million at December 31, 2021.
Financial Statements and Supplementary Data" of this Report on Form 10-K, detail changes in equity capital over prior year end. Total shareholders’ equity increased $52.5 million or 8.5% to $669.9 million at December 31, 2023, from $617.4 million at December 31, 2022.
The $291.3 million in borrowings at December 31, 2022, represented $241.3 million in overnight advances from the FHLB and $50.0 million in term advances from the FHLB. Borrowings of $124.0 million at year-end 2021 represented $14.0 million in overnight borrowings and $110.0 million in FHLB term advances.
The $602.1 million in borrowings at December 31, 2023, represented $477.1 million in overnight advances from the FHLB and $125.0 million in term advances from the FHLB. Borrowings of $291.3 million at year-end 2022 represented $241.3 million in overnight borrowings and $50.0 million in FHLB term advances.
Nonperforming loans and leases represented 0.62% of total loans at December 31, 2022, compared to 0.61% of total loans at December 31, 2021, and 0.87% of total loans at December 31, 2020. Nonperforming loans and leases in the residential real estate portfolio at year-end 2022 increased by $2.4 million compared to 2021.
Nonperforming loans and leases represented 1.11% of total loans at December 31, 2023, compared to 0.62% of total loans at December 31, 2022, and 0.61% of total loans at December 31, 2021. Nonperforming loans and leases in the commercial real estate portfolio at year-end 2023 increased by $30.6 million compared to year-end 2022.
Specific reserves on individually evaluated loans that are not collateral dependent are measured based on the present value of expected future cash flows discounted at the original effective interest rate of each loan.
Individually evaluated loans consist of our non-homogenous nonaccrual loans and loans that are 90 days or more past due. Specific reserves on individually evaluated loans that are not collateral dependent are measured based on the present value of expected future cash flows discounted at the original effective interest rate of each loan.
At December 31, 2022 noninterest bearing deposits increased by $14.4 million or 0.7%, time deposit balances decreased $8.3 million or 1.3% and checking, savings and money market accounts decreased $195.3 million or 4.9% when compared to December 31, 2021. Other borrowings, consisting mainly of short term advances with the FHLB, increased $167.3 million or 53.2% from December 31, 2021.
At December 31, 2023 noninterest bearing deposits decreased by $233.2 million or 10.8%, time deposit balances increased $366.6 million or 58.1% and checking, savings and money market accounts decreased $335.9 million or 8.8% when compared to December 31, 2022. Other borrowings, consisting mainly of short term advances with the FHLB, increased $310.8 million or 106.7% from December 31, 2022.
The decrease from year-end 2021 consisted of savings and money market balances, and time deposit balances, which were down $195.3 million, and $8.3 million, respectively. This was partially offset by an increase in noninterest bearing deposits, which increased $14.4 million.
The decrease from year-end 2022 consisted of savings and money market balances, and noninterest bearing deposits, which were down $335.9 million, and $233.2 million, respectively. This was partially offset by an increase in time deposit balances, which increased $366.6 million.
The section captioned "Financial Condition – The Allowance for Credit Losses" below has further details on the allowance for credit losses and asset quality metrics. 32 Table of Contents Noninterest Income Year ended December 31, (In thousands) 2022 2021 2020 Insurance commissions and fees $ 36,201 $ 34,836 $ 31,505 Investment services 18,091 19,388 17,520 Service charges on deposit accounts 7,365 6,347 6,312 Card services 11,024 10,826 9,263 Other income 5,925 7,203 8,817 Net gain on securities transactions (634) 249 443 Total $ 77,972 $ 78,849 $ 73,860 Noninterest income of $78.0 million for the year-ended December 31, 2022 decreased $877,000 or 1.1% from 2021.
The section captioned "Financial Condition – The Allowance for Credit Losses" below has further details on the allowance for credit losses and asset quality metrics. 35 Table of Contents Noninterest Income Year ended December 31, (In thousands) 2023 2022 2021 Insurance commissions and fees $ 37,351 $ 36,201 $ 34,836 Wealth management fees 17,951 18,091 19,388 Service charges on deposit accounts 6,913 7,365 6,347 Card services income 11,488 11,024 10,826 Other income 6,511 5,925 7,203 Net (loss) gain on securities transactions (69,973) (634) 249 Total $ 10,241 $ 77,972 $ 78,849 Noninterest income of $10.2 million for the year-ended December 31, 2023 decreased $67.7 million or 86.9% from 2022.
A detailed discussion of the securities portfolio is provided below in this section under the caption "Securities". Total deposits at year-end 2022 decreased by $189.1 million or 2.8% compared to December 31, 2021.
These were partially offset by securities purchases in 2023. A detailed discussion of the securities portfolio is provided below in this section under the caption "Securities". Total deposits at year-end 2023 decreased by $202.4 million or 3.1% compared to December 31, 2022.
Government securities 2,265,226 30,587 1.35 % 2,003,450 23,145 1.16 % 1,307,905 22,906 1.75 % State and municipal 2 97,283 2,490 2.56 % 112,391 2,871 2.55 % 114,462 3,048 2.66 % Other securities 2 3,329 135 4.06 % 3,417 92 2.68 % 3,430 117 3.40 % Total securities 2,365,838 33,212 1.40 % 2,119,258 26,108 1.23 % 1,425,797 26,071 1.83 % FHLBNY and FRB stock 13,354 646 4.84 % 14,830 776 5.24 % 20,815 1,373 6.60 % Total loans and leases, net of unearned income 2,3 5,142,098 218,494 4.25 % 5,184,491 215,709 4.16 % 5,228,135 228,806 4.38 % Total interest-earning assets 7,607,078 252,723 3.32 % 7,625,832 242,936 3.19 % 6,868,958 256,444 3.73 % Other assets 221,442 343,119 489,520 Total assets $ 7,828,520 $ 7,968,951 $ 7,358,478 LIABILITIES & EQUITY Deposits Interest-bearing deposits Interest bearing checking, savings, & money market $ 4,029,008 $ 10,389 0.26 % $ 4,034,969 $ 3,736 0.09 % $ 3,650,358 $ 9,430 0.26 % Time deposits 611,708 5,779 0.94 % 711,381 7,111 1.00 % 703,999 10,534 1.50 % Total interest-bearing deposits 4,640,716 16,168 0.35 % 4,746,350 10,847 0.23 % 4,354,357 19,964 0.46 % Federal funds purchased & securities sold under agreements to repurchase 57,126 60 0.10 % 58,627 64 0.11 % 55,973 95 0.17 % Other borrowings 195,110 4,815 2.47 % 217,799 4,382 2.01 % 365,732 7,799 2.13 % Trust preferred debentures 0 0 0.00 % 7,367 2,233 30.32 % 17,092 1,133 6.63 % Total interest-bearing liabilities 4,892,952 21,043 0.43 % 5,030,143 17,526 0.35 % 4,793,154 28,991 0.60 % Noninterest bearing deposits 2,186,720 2,096,542 1,753,226 Accrued expenses and other liabilities 107,122 117,790 112,544 Total liabilities 7,186,795 7,244,475 6,658,924 Tompkins Financial Corporation Shareholders’ equity 640,258 723,009 698,088 Noncontrolling interest 1,468 1,467 1,466 Total equity 641,725 724,476 699,554 Total liabilities and equity $ 7,828,520 $ 7,968,951 $ 7,358,478 Interest rate spread 2.89 % 2.84 % 3.13 % Net interest income /margin on earning assets 231,680 3.05 % 225,410 2.96 % 227,453 3.31 % Tax Equivalent Adjustment (1,399) (1,618) (2,114) Net interest income per consolidated financial statements $ 230,281 $ 223,792 $ 225,339 1 Average balances and yields on available-for-sale debt securities are based on historical amortized cost. 2 Interest income includes the tax effects of tax-equivalent adjustments using the Federal income tax rate of 21.0% in 2022, 2021, and 2020 to increase tax exempt interest income to tax-equivalent basis. 3 Nonaccrual loans are included in the average asset totals presented above.
Government securities 1,920,678 32,433 1.69 % 2,265,226 30,587 1.35 % 2,003,450 23,145 1.16 % Trading securities 0 0 0.00 % 0 0 0.00 % 0 0 0.00 % State and municipal 2 91,407 2,338 2.56 % 97,283 2,490 2.56 % 112,391 2,871 2.55 % Other securities 2 3,272 229 6.99 % 3,329 135 4.06 % 3,417 92 2.68 % Total securities 2,015,357 35,000 1.74 % 2,365,838 33,212 1.40 % 2,119,258 26,108 1.23 % FHLBNY and FRB stock 22,284 1,697 7.63 % 13,354 646 4.84 % 14,830 776 5.24 % Total loans and leases, net of unearned income 2,3 5,357,699 261,144 4.87 % 5,142,098 218,494 4.25 % 5,184,491 215,709 4.16 % Total interest-earning assets 7,408,404 298,515 4.03 % 7,607,078 252,723 3.32 % 7,625,832 242,936 3.19 % Other assets 233,268 221,442 343,119 Total assets $ 7,641,672 $ 7,828,520 $ 7,968,951 LIABILITIES & EQUITY Deposits Interest-bearing deposits Interest bearing checking, savings, & money market $ 3,697,780 $ 46,820 1.27 % $ 4,029,008 $ 10,389 0.26 % $ 4,034,969 $ 3,736 0.09 % Time deposits 793,709 23,988 3.02 % 611,708 5,779 0.94 % 711,381 7,111 1.00 % Total interest-bearing deposits 4,491,489 70,808 1.58 % 4,640,716 16,168 0.35 % 4,746,350 10,847 0.23 % Federal funds purchased & securities sold under agreements to repurchase 55,773 58 0.10 % 57,126 60 0.10 % 58,627 64 0.11 % Other borrowings 363,530 16,978 4.67 % 195,110 4,815 2.47 % 217,799 4,382 2.01 % Trust preferred debentures 0 0 0.00 % 0 0 0.00 % 7,367 2,233 30.32 % Total interest-bearing liabilities 4,910,792 87,844 1.79 % 4,892,952 21,043 0.43 % 5,030,143 17,526 0.35 % Noninterest bearing deposits 1,994,861 2,186,720 2,096,542 Accrued expenses and other liabilities 101,287 107,122 117,790 Total liabilities 7,006,940 7,186,795 7,244,475 Tompkins Financial Corporation Shareholders’ equity 633,267 640,258 723,009 Noncontrolling interest 1,465 1,468 1,467 Total equity 634,732 641,725 724,476 Total liabilities and equity $ 7,641,672 $ 7,828,520 $ 7,968,951 Interest rate spread 2.24 % 2.89 % 2.84 % Net interest income/margin on earning assets 210,671 2.84 % 231,680 3.05 % 225,410 2.96 % Tax Equivalent Adjustment (1,157) (1,399) (1,618) Net interest income per consolidated financial statements $ 209,514 $ 230,281 $ 223,792 1 Average balances and yields on available-for-sale debt securities are based on historical amortized cost. 2 Interest income includes the tax effects of tax-equivalent adjustments using the Federal income tax rate of 21.0% in 2023, 2022, and 2021 to increase tax exempt interest income to tax-equivalent basis. 3 Nonaccrual loans are included in the average asset totals presented above.
Government sponsored entities 805,603 686,222 879,102 870,556 691,562 705,480 U.S. corporate debt securities 2,500 2,378 2,500 2,424 2,500 2,379 Total available-for-sale debt securities $ 1,831,791 $ 1,594,967 $ 2,063,790 $ 2,044,513 $ 1,599,894 $ 1,627,193 37 Table of Contents As of December 31, Held-to-Maturity Securities 2022 2021 2020 (In thousands) Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value U.
Government sponsored entities 819,303 720,830 805,603 686,222 879,102 870,556 U.S. corporate debt securities 2,500 2,294 2,500 2,378 2,500 2,424 Total available-for-sale debt securities $ 1,548,482 $ 1,416,650 $ 1,831,791 $ 1,594,967 $ 2,063,790 $ 2,044,513 40 Table of Contents As of December 31, Held-to-Maturity Debt Securities 2023 2022 2021 (In thousands) Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value U.
The allowance coverage to nonperforming loans and leases was 139.86% at December 31, 2022 compared to 137.50% at December 31, 2021. 45 Table of Contents The increase in the ACL from year-end 2021 reflects updated economic forecasts for unemployment and gross domestic product ("GDP") coupled with loan growth, mainly in the real estate portfolios.
The allowance coverage to nonperforming loans and leases was 82.84% at December 31, 2023 compared to 139.86% at December 31, 2022. 49 Table of Contents The increase in the ACL from year-end 2022 reflects loan growth, mainly in the real estate portfolios, and changes in asset quality; partially offset by improvements in economic forecasts for unemployment and gross domestic product ("GDP").
Core deposits represented 84.5% of total deposits at December 31, 2022, compared to 85.1% of total deposits at December 31, 2021. 48 Table of Contents Municipal money market accounts and reciprocal deposit relationships with municipalities totaled $679.0 million at year-end 2022, which decreased 18.12% from year-end 2021.
Core deposits represented 81.1% of total deposits at December 31, 2023, compared to 84.5% of total deposits at December 31, 2022. Municipal money market accounts and reciprocal deposit relationships with municipalities totaled $542.1 million at year-end 2023, which decreased 25.3% from year-end 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+1 added−0 removed14 unchanged
Biggest changeThe Company does not currently use derivatives, such as interest rate swaps, to manage its interest rate risk exposure, but may consider such instruments in the future. 53 Table of Contents The Company’s Board of Directors has set a policy that interest rate risk exposure will remain within a range whereby net interest income will not decline by more than 10% in one year as a result of a 100 basis point parallel change in rates.
Biggest changeThe Company’s Board of Directors has set a policy that interest rate risk exposure will remain within a range whereby net interest income will not decline by more than 10% in one year as a result of a 100 basis point parallel change in rates.
Table 9-Interest Rate Risk Analysis below is a Condensed Static Gap Report, which illustrates the anticipated repricing intervals of assets and liabilities as of December 31, 2022.
Table 9-Interest Rate Risk Analysis below is a Condensed Static Gap Report, which illustrates the anticipated repricing intervals of assets and liabilities as of December 31, 2023.
As such, in the short-term net interest income is expected to trend slightly below the base assumption, as upward adjustments to rate sensitive deposits and short-term funding outpace increases to asset yields which are concentrated in intermediate to longer-term products.
As such, in the short-term net interest income is expected to trend slightly below the base 57 Table of Contents assumption, as upward adjustments to rate sensitive deposits and short-term funding outpace increases to asset yields which are concentrated in intermediate to longer-term products.
Based upon the most recent simulation analysis performed as of November 30, 2022, a 200 basis point parallel upward change in interest rates over a one-year time frame would result in a one-year decrease in net interest income from the base case of approximately 4.0%, while a 200 basis point parallel decline in interest rates over a one-year period would result in a one year increase in net interest income of 1.9% from the base case.
Based upon the most recent simulation analysis performed as of November 30, 2023, a 200 basis point parallel upward change in interest rates over a one-year time frame would result in a one-year decrease in net interest income from the base case of approximately 5.3%, while a 200 basis point parallel decline in interest rates over a one-year period would result in a one year increase in net interest income of 4.6% from the base case.
The Company’s one-year interest rate gap was a negative $656.5 million or 8.56% of total assets at December 31, 2022, compared with a negative $331.5 million or 4.24% of total assets at December 31, 2021.
The Company’s one-year interest rate gap was a negative $836.6 million or 10.70% of total assets at December 31, 2023, compared with a negative $656.5 million or 8.56% of total assets at December 31, 2022.
The change from year-end 2021 to year-end 2022 is mainly due to the sale of investment securities which were used to reduce borrowings with the FHLB and overall outpace declines in deposit balances.
The change from year-end 2022 to year-end 2023 is mainly due to the increase in borrowings with the FHLB, which were used to support loan growth given the decrease in deposit balances year-over-year.
Table 9 - Interest Rate Risk Analysis Condensed Static Gap - December 31, 2022 (In thousands) Total 0-3 months 3-6 months 6-12 months 12 months Interest-earning assets 1 $ 7,490,808 $ 976,378 $ 299,423 $ 554,986 $ 1,830,787 Interest-bearing liabilities 4,799,728 2,225,269 86,921 175,127 2,487,317 Net gap position (1,248,891) 212,502 379,859 (656,530) Net gap position as a percentage of total assets (16.28) % 2.77 % 4.95 % (8.56) % 1 Balances of available-for-sale debt securities are shown at amortized cost. 54 Table of Contents [This Page Intentionally Left Blank] 55 Table of Contents
Table 9 - Interest Rate Risk Analysis Condensed Static Gap - December 31, 2023 (In thousands) Total 0-3 months 3-6 months 6-12 months 12 months Interest-earning assets 1 $ 7,513,654 $ 1,089,463 $ 332,291 $ 702,192 $ 2,123,946 Interest-bearing liabilities 5,135,988 2,436,139 304,305 220,067 2,960,511 Net gap position (1,346,676) 27,986 482,125 (836,565) Net gap position as a percentage of total assets (17.22) % 0.36 % 6.17 % (10.70) % 1 Balances of available-for-sale debt securities are shown at amortized cost. 58 Table of Contents [This Page Intentionally Left Blank] 59 Table of Contents
Added
The Company uses derivatives to manage various risks and to accommodate the business requirements of its customers. Additional information on derivatives is available in "Note 23 Derivatives and Hedging Activities" in Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K.

Other TMP 10-K year-over-year comparisons