Tompkins Financial Corp (TMP) - Q2 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026. Tompkins Financial Corporation is a community-based financial holding company headquartered in Ithaca, New York, operating primarily through its subsidiary, Tompkins Bank & Trust. The Company operates two reportable segments: Banking and Wealth Management. Notably, the Company sold its insurance subsidiary, Tompkins Insurance Agencies, Inc. (TIA), on October 31, 2025; therefore, the current period results exclude insurance operations, unlike the prior year comparison.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | Q2 2025 (3 Months) | YTD 2026 (6 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Net Income | $29.3 million | $21.5 million | $55.4 million | $41.2 million |
| Diluted EPS | $2.04 | $1.50 | $3.86 | $2.87 |
| Net Interest Income | $74.0 million | $60.1 million | $145.8 million | $116.8 million |
| Net Interest Margin (NIM) | 3.58% | 3.08% | 3.58% | 3.03% |
| Provision for Credit Losses | $1.5 million | $2.8 million | $3.0 million | $8.1 million |
| Total Assets | $8.80 billion | $8.37 billion (Q2 2025) | $8.80 billion | $8.11 billion (YTD 2025) |
| Total Loans & Leases | $6.60 billion | $6.11 billion (Q2 2025) | $6.60 billion | $6.08 billion (YTD 2025) |
| Total Deposits | $7.03 billion | $6.72 billion (Q2 2025) | $7.03 billion | $6.72 billion (YTD 2025) |
| Return on Average Assets (ROA) | 1.36% | 1.05% | 1.30% | 1.02% |
| Return on Average Equity (ROE) | 12.32% | 11.48% | 11.72% | 11.23% |
Material Changes vs. Prior Period
- Profitability Surge: Net income increased 36.5% year-over-year for the quarter and 34.6% year-over-year for the six-month period. This growth was driven primarily by a significant expansion in Net Interest Margin (NIM) and loan growth.
- Noninterest Income Decline: Consolidated noninterest income dropped 41.7% for the quarter and 47.5% year-to-date. This decrease is almost entirely attributable to the sale of the insurance subsidiary (TIA) in late 2025, which removed approximately $9.6 million in quarterly insurance commissions.
- Expense Reduction: Noninterest expenses decreased 8.8% for the quarter and 7.3% year-to-date, largely due to the elimination of TIA-related salaries and operating costs.
- Asset Quality: Nonperforming assets increased to $52.9 million (0.60% of total assets) from $48.2 million at year-end 2025, driven by specific commercial and commercial real estate relationships. However, the ratio remains below the peer group average of 0.62%.
- Capital Strength: Total equity increased to $960 million. The Company remains "Well Capitalized" under regulatory guidelines, with a Common Equity Tier 1 ratio of 13.98%.
Outlook, Risks, and Management Commentary
- Interest Rate Environment: Management notes that the balance sheet is slightly liability-sensitive in the short term. A 200 basis point rise in rates is projected to decrease net interest income by 1.8% over one year, while a 200 basis point decline would increase it by 1.2%.
- Liquidity: The Company maintains strong liquidity with reliable sources exceeding 15% of total assets. Access to wholesale funding (FHLB and Federal Reserve) remains robust.
- Strategic Focus: The Company continues to focus on organic growth in banking and wealth management. Wealth management assets under management grew 9.2% to $3.1 billion.
- Risks: Key risks include interest rate volatility, credit quality deterioration in commercial real estate (specifically office and retail sectors), and competition from fintech companies. The Company faces no material legal proceedings as of the reporting date.
Investor Verification Checklist
- Insurance Segment Exit: Verify the full impact of the TIA sale on future noninterest income and expense baselines, as 2025 comparisons are no longer fully comparable.
- Commercial Real Estate (CRE) Exposure: Review the specific details of the $2.2 million commercial real estate relationship contributing to the rise in nonperforming assets.
- Deposit Composition: Monitor the shift in funding sources, specifically the increase in brokered time deposits and Federal funds purchased, which may indicate higher funding costs in the future.
- Securities Portfolio: Note the increase in net unrealized losses on available-for-sale securities to $26.8 million due to interest rate volatility; assess the potential impact on Accumulated Other Comprehensive Income (AOCI) and capital ratios if rates continue to rise.
- Share Repurchases: Confirm the status of the 2025 Repurchase Plan, under which 57,857 shares have been repurchased to date.