United
States
Securities
and Exchange Commission
Washington,
D.C. 20549
FORM
10-Q
|
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended September 30, 2015
OR
☐ |
TRANSITION REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the transition period from _____ to ______
Commission
File Number 1-12709
Tompkins
Financial Corporation
(Exact
name of registrant as specified in its charter)
New
York |
16-1482357 |
(State or other jurisdiction
of incorporation or organization) |
(I.R.S. Employer
Identification No.) |
The
Commons, P.O. Box 460, Ithaca, NY |
14851 |
(Address of principal
executive offices) |
(Zip Code) |
Registrant’s
telephone number, including area code: (888) 503-5753
Former
name, former address, and former fiscal year, if changed since last report: NA
Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐.
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer ☐ |
Accelerated Filer ☒ |
Non-Accelerated Filer ☐ (Do not check if
a smaller reporting company) |
Smaller Reporting Company ☐ |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☒.
Indicate
the number of shares of the Registrant’s Common Stock outstanding as of the latest practicable date:
Class |
|
Outstanding
as of October 30, 2015 |
Common Stock, $0.10 par value |
|
14,901,276 shares |
TOMPKINS
FINANCIAL CORPORATION
FORM
10-Q
INDEX
TOMPKINS FINANCIAL CORPORATION |
CONDENSED
CONSOLIDATED STATEMENTS OF CONDITION |
(In
thousands, except share and per share data) (Unaudited) |
|
As
of |
|
As
of |
ASSETS |
|
09/30/2015 |
|
12/31/2014 |
|
|
|
|
|
Cash
and noninterest bearing balances due from banks |
|
$ |
105,074 |
|
|
$ |
53,921 |
|
Interest
bearing balances due from banks |
|
|
2,019 |
|
|
|
2,149 |
|
Cash
and Cash Equivalents |
|
|
107,093 |
|
|
|
56,070 |
|
|
|
|
|
|
|
|
|
|
Trading
securities, at fair value |
|
|
7,749 |
|
|
|
8,992 |
|
Available-for-sale
securities, at fair value (amortized cost of $1,378,138 at September 30, 2015 and $1,397,458 at December 31, 2014) |
|
|
1,388,283 |
|
|
|
1,402,236 |
|
Held-to-maturity
securities, at amortized cost (fair value of $149,112 at September 30, 2015 and $89,036 at December 31, 2014) |
|
|
146,300 |
|
|
|
88,168 |
|
Originated
loans and leases, net of unearned income and deferred costs and fees |
|
|
3,149,386 |
|
|
|
2,839,974 |
|
Acquired
loans and leases, covered |
|
|
15,576 |
|
|
|
19,319 |
|
Acquired
loans and leases, non-covered |
|
|
469,351 |
|
|
|
533,995 |
|
Less:
Allowance for loan and lease losses |
|
|
30,965 |
|
|
|
28,997 |
|
Net
Loans and Leases |
|
|
3,603,348 |
|
|
|
3,364,291 |
|
|
|
|
|
|
|
|
|
|
FDIC
indemnification asset |
|
|
334 |
|
|
|
1,903 |
|
Federal
Home Loan Bank stock |
|
|
23,562 |
|
|
|
21,259 |
|
Bank
premises and equipment, net |
|
|
60,060 |
|
|
|
59,800 |
|
Corporate
owned life insurance |
|
|
75,368 |
|
|
|
73,725 |
|
Goodwill |
|
|
92,243 |
|
|
|
92,243 |
|
Other
intangible assets, net |
|
|
13,028 |
|
|
|
14,649 |
|
Accrued
interest and other assets |
|
|
77,350 |
|
|
|
86,225 |
|
Total
Assets |
|
$ |
5,594,718 |
|
|
$ |
5,269,561 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
Interest
bearing: |
|
|
|
|
|
|
|
|
Checking,
savings and money market |
|
|
2,447,841 |
|
|
|
2,247,708 |
|
Time |
|
|
877,422 |
|
|
|
898,081 |
|
Noninterest
bearing |
|
|
1,111,810 |
|
|
|
1,023,365 |
|
Total
Deposits |
|
|
4,437,073 |
|
|
|
4,169,154 |
|
Federal
funds purchased and securities sold under agreements to repurchase |
|
|
134,941 |
|
|
|
147,037 |
|
Other
borrowings, including certain amounts at fair value of $10,736 at September 30, 2015 and $10,961 at December 31, 2014 |
|
|
398,946 |
|
|
|
356,541 |
|
Trust
preferred debentures |
|
|
37,466 |
|
|
|
37,337 |
|
Other
liabilities |
|
|
68,333 |
|
|
|
69,909 |
|
Total
Liabilities |
|
$ |
5,076,759 |
|
|
$ |
4,779,978 |
|
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
|
Tompkins
Financial Corporation shareholders' equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued: 14,941,486 at September 30, 2015; and 14,931,354 at December
31, 2014 |
|
|
1,494 |
|
|
|
1,493 |
|
Additional
paid-in capital |
|
|
350,397 |
|
|
|
348,889 |
|
Retained
earnings |
|
|
190,175 |
|
|
|
165,160 |
|
Accumulated
other comprehensive loss |
|
|
(22,028 |
) |
|
|
(24,011 |
) |
Treasury
stock, at cost - 113,787 shares at September 30, 2015, and 111,436 shares at December 31, 2014 |
|
|
(3,629 |
) |
|
|
(3,400 |
) |
|
|
|
|
|
|
|
|
|
Total
Tompkins Financial Corporation Shareholders’ Equity |
|
|
516,409 |
|
|
|
488,131 |
|
Noncontrolling
interests |
|
|
1,550 |
|
|
|
1,452 |
|
Total
Equity |
|
$ |
517,959 |
|
|
$ |
489,583 |
|
Total
Liabilities and Equity |
|
$ |
5,594,718 |
|
|
$ |
5,269,561 |
|
See notes to consolidated
financial statements |
TOMPKINS
FINANCIAL CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
Three
Months Ended |
|
Nine Months
Ended |
(In
thousands, except per share data) (Unaudited) |
|
09/30/2015 |
|
09/30/2014 |
|
09/30/2015 |
|
09/30/2014 |
INTEREST
AND DIVIDEND INCOME |
|
|
|
|
|
|
|
|
Loans |
|
$ |
39,235 |
|
|
$ |
38,298 |
|
|
$ |
114,670 |
|
|
$ |
112,601 |
|
Due
from banks |
|
|
1 |
|
|
|
0 |
|
|
|
3 |
|
|
|
2 |
|
Trading
securities |
|
|
86 |
|
|
|
102 |
|
|
|
270 |
|
|
|
321 |
|
Available-for-sale
securities |
|
|
7,031 |
|
|
|
7,718 |
|
|
|
22,219 |
|
|
|
23,637 |
|
Held-to-maturity
securities |
|
|
915 |
|
|
|
288 |
|
|
|
2,185 |
|
|
|
626 |
|
Federal
Home Loan Bank stock and Federal Reserve Bank stock |
|
|
262 |
|
|
|
212 |
|
|
|
834 |
|
|
|
616 |
|
Total
Interest and Dividend Income |
|
|
47,530 |
|
|
|
46,618 |
|
|
|
140,181 |
|
|
|
137,803 |
|
INTEREST
EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time
certificates of deposits of $250,000 or more |
|
|
369 |
|
|
|
387 |
|
|
|
1,058 |
|
|
|
1,022 |
|
Other
deposits |
|
|
2,284 |
|
|
|
2,439 |
|
|
|
6,837 |
|
|
|
7,324 |
|
Federal
funds purchased and securities sold under agreements to repurchase |
|
|
685 |
|
|
|
683 |
|
|
|
2,020 |
|
|
|
2,263 |
|
Trust
preferred debentures |
|
|
583 |
|
|
|
573 |
|
|
|
1,726 |
|
|
|
1,714 |
|
Other
borrowings |
|
|
1,223 |
|
|
|
961 |
|
|
|
3,596 |
|
|
|
3,362 |
|
Total
Interest Expense |
|
|
5,144 |
|
|
|
5,043 |
|
|
|
15,237 |
|
|
|
15,685 |
|
Net
Interest Income |
|
|
42,386 |
|
|
|
41,575 |
|
|
|
124,944 |
|
|
|
122,118 |
|
Less:
Provision for loan and lease losses |
|
|
281 |
|
|
|
(59 |
) |
|
|
1,412 |
|
|
|
751 |
|
Net
Interest Income After Provision for Loan and Lease Losses |
|
|
42,105 |
|
|
|
41,634 |
|
|
|
123,532 |
|
|
|
121,367 |
|
NONINTEREST
INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
commissions and fees |
|
|
7,564 |
|
|
|
7,520 |
|
|
|
22,341 |
|
|
|
21,823 |
|
Investment
services income |
|
|
3,674 |
|
|
|
3,636 |
|
|
|
11,518 |
|
|
|
11,549 |
|
Service
charges on deposit accounts |
|
|
2,410 |
|
|
|
2,506 |
|
|
|
6,812 |
|
|
|
7,010 |
|
Card
services income |
|
|
2,001 |
|
|
|
1,936 |
|
|
|
5,844 |
|
|
|
5,968 |
|
Mark-to-market
loss on trading securities |
|
|
(69 |
) |
|
|
(87 |
) |
|
|
(206 |
) |
|
|
(181 |
) |
Mark-to-market
gain on liabilities held at fair value |
|
|
81 |
|
|
|
132 |
|
|
|
226 |
|
|
|
260 |
|
Other
income |
|
|
1,669 |
|
|
|
1,892 |
|
|
|
6,390 |
|
|
|
6,129 |
|
Gain
on sale of available-for-sale securities |
|
|
92 |
|
|
|
20 |
|
|
|
1,105 |
|
|
|
151 |
|
Total
Noninterest Income |
|
|
17,422 |
|
|
|
17,555 |
|
|
|
54,030 |
|
|
|
52,709 |
|
NONINTEREST
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
and wages |
|
|
18,357 |
|
|
|
17,553 |
|
|
|
54,319 |
|
|
|
51,859 |
|
Pension
and other employee benefits |
|
|
5,368 |
|
|
|
4,941 |
|
|
|
10,843 |
|
|
|
15,964 |
|
Net
occupancy expense of premises |
|
|
2,891 |
|
|
|
2,969 |
|
|
|
9,303 |
|
|
|
9,296 |
|
Furniture
and fixture expense |
|
|
1,532 |
|
|
|
1,451 |
|
|
|
4,465 |
|
|
|
4,247 |
|
FDIC
insurance |
|
|
729 |
|
|
|
682 |
|
|
|
2,218 |
|
|
|
2,228 |
|
Amortization
of intangible assets |
|
|
496 |
|
|
|
518 |
|
|
|
1,503 |
|
|
|
1,570 |
|
Other
operating expense |
|
|
8,509 |
|
|
|
10,423 |
|
|
|
27,841 |
|
|
|
30,511 |
|
Total
Noninterest Expenses |
|
|
37,882 |
|
|
|
38,537 |
|
|
|
110,492 |
|
|
|
115,675 |
|
Income
Before Income Tax Expense |
|
|
21,645 |
|
|
|
20,652 |
|
|
|
67,070 |
|
|
|
58,401 |
|
Income
Tax Expense |
|
|
7,115 |
|
|
|
6,897 |
|
|
|
22,405 |
|
|
|
18,951 |
|
Net
Income attributable to Noncontrolling Interests and Tompkins Financial Corporation |
|
|
14,530 |
|
|
|
13,755 |
|
|
|
44,665 |
|
|
|
39,450 |
|
Less:
Net income attributable to noncontrolling interests |
|
|
33 |
|
|
|
33 |
|
|
|
98 |
|
|
|
98 |
|
Net
Income Attributable to Tompkins Financial Corporation |
|
$ |
14,497 |
|
|
$ |
13,722 |
|
|
$ |
44,567 |
|
|
$ |
39,352 |
|
Basic
Earnings Per Share |
|
$ |
0.97 |
|
|
$ |
0.92 |
|
|
$ |
2.98 |
|
|
$ |
2.65 |
|
Diluted
Earnings Per Share |
|
$ |
0.96 |
|
|
$ |
0.92 |
|
|
$ |
2.96 |
|
|
$ |
2.64 |
|
See
notes to consolidated financial statements
Consolidated
Statements of Comprehensive Income
|
|
Three Months Ended |
(In
thousands) (Unaudited) |
|
09/30/2015 |
|
09/30/2014 |
Net
income attributable to noncontrolling interests and Tompkins Financial Corporation |
|
$ |
14,530 |
|
|
$ |
13,755 |
|
Other
comprehensive income, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale
securities: |
|
|
|
|
|
|
|
|
Change
in net unrealized gain (loss) during the period |
|
|
5,515 |
|
|
|
(4,123 |
) |
Reclassification
adjustment for net realized gain on sale of available-for-sale securities included in net income |
|
|
(55 |
) |
|
|
(12 |
) |
|
|
|
|
|
|
|
|
|
Employee
benefit plans: |
|
|
|
|
|
|
|
|
Amortization
of net retirement plan actuarial gain |
|
|
122 |
|
|
|
159 |
|
Amortization
of net retirement plan prior service cost |
|
|
11 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss) |
|
|
5,593 |
|
|
|
(3,975 |
) |
|
|
|
|
|
|
|
|
|
Subtotal
comprehensive income attributable to noncontrolling interests and Tompkins Financial Corporation |
|
|
20,123 |
|
|
|
9,780 |
|
Less:
Net income attributable to noncontrolling interests |
|
|
(33 |
) |
|
|
(33 |
) |
Total
comprehensive income attributable to Tompkins Financial Corporation |
|
$ |
20,090 |
|
|
$ |
9,747 |
|
See
notes to unaudited condensed consolidated financial statements.
Consolidated
Statements of Comprehensive Income
|
|
Nine
Months Ended |
(In
thousands) (Unaudited) |
|
09/30/2015 |
|
09/30/2014 |
Net
income attributable to noncontrolling interests and Tompkins Financial Corporation |
|
$ |
44,665 |
|
|
$ |
39,450 |
|
Other
comprehensive income, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale
securities: |
|
|
|
|
|
|
|
|
Change
in net unrealized gain during the period |
|
|
3,883 |
|
|
|
7,918 |
|
Reclassification
adjustment for net realized gain on sale of available-for-sale securities included in net income |
|
|
(663 |
) |
|
|
(90 |
) |
|
|
|
|
|
|
|
|
|
Employee
benefit plans: |
|
|
|
|
|
|
|
|
Recognized
actuarial gain due to curtailment |
|
|
(3,196 |
) |
|
|
0 |
|
Net
retirement plan loss |
|
|
1,170 |
|
|
|
0 |
|
Amortization
of net retirement plan actuarial gain |
|
|
999 |
|
|
|
479 |
|
Amortization
of net retirement plan prior service cost |
|
|
(210 |
) |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income |
|
|
1,983 |
|
|
|
8,309 |
|
|
|
|
|
|
|
|
|
|
Subtotal
comprehensive income attributable to noncontrolling interests and Tompkins Financial Corporation |
|
|
46,648 |
|
|
|
47,759 |
|
Less:
Net income attributable to noncontrolling interests |
|
|
(98 |
) |
|
|
(98 |
) |
Total
comprehensive income attributable to Tompkins Financial Corporation |
|
$ |
46,550 |
|
|
$ |
47,661 |
|
See notes
to unaudited condensed consolidated financial statements.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In
thousands) (Unaudited) |
|
09/30/2015 |
|
09/30/2014 |
OPERATING
ACTIVITIES |
|
|
|
|
Net
income attributable to Tompkins Financial Corporation |
|
$ |
44,567 |
|
|
$ |
39,352 |
|
Adjustments
to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Provision
for loan and lease losses |
|
|
1,412 |
|
|
|
751 |
|
Depreciation
and amortization of premises, equipment, and software |
|
|
4,834 |
|
|
|
4,203 |
|
Amortization
of intangible assets |
|
|
1,503 |
|
|
|
1,570 |
|
Earnings
from corporate owned life insurance |
|
|
(1,643 |
) |
|
|
(1,431 |
) |
Net
amortization on securities |
|
|
9,011 |
|
|
|
7,824 |
|
Amortization/accretion
related to purchase accounting |
|
|
(4,348 |
) |
|
|
(6,147 |
) |
Mark-to-market
loss on trading securities |
|
|
206 |
|
|
|
181 |
|
Mark-to-market
gain on liabilities held at fair value |
|
|
(226 |
) |
|
|
(260 |
) |
Net
gain on securities transactions |
|
|
(1,105 |
) |
|
|
(151 |
) |
Net
gain on sale of loans originated for sale |
|
|
(21 |
) |
|
|
(345 |
) |
Proceeds
from sale of loans originated for sale |
|
|
1,402 |
|
|
|
19,007 |
|
Loans
originated for sale |
|
|
(1,784 |
) |
|
|
(18,357 |
) |
Gain
on conversion of deposits |
|
|
0 |
|
|
|
(140 |
) |
Net
loss on sale of bank premises and equipment |
|
|
24 |
|
|
|
2 |
|
Gain
on pension curtailment |
|
|
(6,003 |
) |
|
|
0 |
|
Stock-based
compensation expense |
|
|
1,410 |
|
|
|
1,081 |
|
(Increase)
decrease in accrued interest receivable |
|
|
(920 |
) |
|
|
92 |
|
Increase
(decrease) in accrued interest payable |
|
|
84 |
|
|
|
(294 |
) |
Proceeds
from maturities and payments of trading securities |
|
|
1,026 |
|
|
|
1,323 |
|
Other,
net |
|
|
11,242 |
|
|
|
9,494 |
|
Net
Cash Provided by Operating Activities |
|
|
60,671 |
|
|
|
57,755 |
|
INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds
from maturities, calls and principal paydowns of available-for-sale securities |
|
|
181,015 |
|
|
|
157,157 |
|
Proceeds
from sales of available-for-sale securities |
|
|
115,800 |
|
|
|
48,005 |
|
Proceeds
from maturities, calls and principal paydowns of held-to-maturity securities |
|
|
10,567 |
|
|
|
10,325 |
|
Purchases
of available-for-sale securities |
|
|
(285,625 |
) |
|
|
(219,695 |
) |
Purchases
of held-to-maturity securities |
|
|
(68,939 |
) |
|
|
(38,981 |
) |
Net
increase in loans |
|
|
(237,574 |
) |
|
|
(60,416 |
) |
Net
(increase) decrease in Federal Home Loan Bank stock |
|
|
(2,303 |
) |
|
|
10,203 |
|
Proceeds
from sale of bank premises and equipment |
|
|
73 |
|
|
|
172 |
|
Purchases
of bank premises and equipment |
|
|
(4,621 |
) |
|
|
(7,445 |
) |
Purchase
of corporate owned life insurance |
|
|
0 |
|
|
|
(2,500 |
) |
Net
cash used in acquisition |
|
|
0 |
|
|
|
(415 |
) |
Other,
net |
|
|
514 |
|
|
|
386 |
|
Net
Cash Used in Investing Activities |
|
|
(291,093 |
) |
|
|
(103,204 |
) |
FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
|
Net
increase in demand, money market, and savings deposits |
|
|
288,578 |
|
|
|
200,550 |
|
Net
(decrease) increase in time deposits |
|
|
(19,559 |
) |
|
|
66,568 |
|
Net
decrease in Federal funds purchases and securities sold under agreements to repurchase |
|
|
(11,247 |
) |
|
|
(38,507 |
) |
Increase
in other borrowings |
|
|
285,960 |
|
|
|
149,845 |
|
Repayment
of other borrowings |
|
|
(243,330 |
) |
|
|
(314,606 |
) |
Cash
dividends |
|
|
(18,827 |
) |
|
|
(17,781 |
) |
Common
stock issued |
|
|
50 |
|
|
|
50 |
|
Repurchase
of common stock |
|
|
(3,279 |
) |
|
|
(2,932 |
) |
Shares
issued for dividend reinvestment plan |
|
|
0 |
|
|
|
2,186 |
|
Shares
issued for employee stock ownership plan |
|
|
1,595 |
|
|
|
1,528 |
|
Net
shares issued related to restricted stock awards |
|
|
(195 |
) |
|
|
64 |
|
Net
proceeds from exercise of stock options |
|
|
1,469 |
|
|
|
633 |
|
Tax
benefit from stock option exercises |
|
|
230 |
|
|
|
84 |
|
Net
Cash Provided by Financing Activities |
|
|
281,445 |
|
|
|
47,682 |
|
Net
Increase in Cash and Cash Equivalents |
|
|
51,023 |
|
|
|
2,233 |
|
Cash
and cash equivalents at beginning of period |
|
|
56,070 |
|
|
|
82,884 |
|
Total
Cash & Cash Equivalents at End of Period |
|
|
107,093 |
|
|
|
85,117 |
|
See
notes to unaudited condensed consolidated financial statements.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In
thousands) (Unaudited) |
|
09/30/2015 |
|
09/30/2014 |
Supplemental
Information: |
|
|
|
|
Cash
paid during the year for - Interest |
|
$ |
16,253 |
|
|
$ |
18,033 |
|
Cash
paid during the year for - Taxes |
|
|
15,102 |
|
|
|
3,258 |
|
Transfer
of loans to other real estate owned |
|
|
1,046 |
|
|
|
4,697 |
|
See
notes to unaudited condensed consolidated financial statements.
CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
thousands except share and per share data) |
|
Common
Stock |
|
Additional
Paid-in Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive (Loss) Income |
|
Treasury
Stock |
|
Non-
controlling Interests |
|
Total |
Balances
at January 1, 2014 |
|
$ |
1,479 |
|
|
$ |
346,096 |
|
|
$ |
137,102 |
|
|
$ |
(25,119 |
) |
|
$ |
(3,071 |
) |
|
$ |
1,452 |
|
|
$ |
457,939 |
|
Net
income attributable to noncontrolling interests and Tompkins Financial Corporation |
|
|
|
|
|
|
|
|
|
|
39,352 |
|
|
|
|
|
|
|
|
|
|
|
98 |
|
|
|
39,450 |
|
Other
comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,309 |
|
|
|
|
|
|
|
|
|
|
|
8,309 |
|
Total
Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,759 |
|
Cash
dividends ($1.20 per share) |
|
|
|
|
|
|
|
|
|
|
(17,781 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17,781 |
) |
Net
exercise of stock options and related tax benefit (36,885 shares) |
|
|
4 |
|
|
|
713 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
717 |
|
Stock-based
compensation expense |
|
|
|
|
|
|
1,081 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,081 |
|
Common
stock repurchased and returned to unissued status (65,059 shares) |
|
|
(7 |
) |
|
|
(2,925 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,932 |
) |
Shares
issued for dividend reinvestment plan (46,081 shares) |
|
|
4 |
|
|
|
2,182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,186 |
|
Shares
issued for employee stock ownership plan (31,192 shares) |
|
|
3 |
|
|
|
1,525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,528 |
|
Directors
deferred compensation plan (3,339 shares) |
|
|
|
|
|
|
206 |
|
|
|
|
|
|
|
|
|
|
|
(206 |
) |
|
|
|
|
|
|
0 |
|
Common
stock issued for purchase acquisition (1,080 shares) |
|
|
|
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50 |
|
Restricted
stock activity ((5,184) shares) |
|
|
|
|
|
|
64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64 |
|
Balances
at September 30, 2014 |
|
$ |
1,483 |
|
|
$ |
348,992 |
|
|
$ |
158,673 |
|
|
$ |
(16,810 |
) |
|
$ |
(3,277 |
) |
|
$ |
1,550 |
|
|
$ |
490,611 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances
at January 1, 2015 |
|
$ |
1,493 |
|
|
$ |
348,889 |
|
|
$ |
165,160 |
|
|
$ |
(24,011 |
) |
|
$ |
(3,400 |
) |
|
$ |
1,452 |
|
|
$ |
489,583 |
|
Net
income attributable to noncontrolling interests and Tompkins Financial Corporation |
|
|
|
|
|
|
|
|
|
|
44,567 |
|
|
|
|
|
|
|
|
|
|
|
98 |
|
|
|
44,665 |
|
Other
comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,983 |
|
|
|
|
|
|
|
|
|
|
|
1,983 |
|
Total
Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,648 |
|
Cash
dividends ($1.26 per share) |
|
|
|
|
|
|
|
|
|
|
(18,827 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18,827 |
) |
Net
exercise of stock options and related tax benefit (59,973 shares) |
|
|
6 |
|
|
|
1,693 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,699 |
|
Common
stock repurchased and returned to unissued status (63,181 shares) |
|
|
(6 |
) |
|
|
(3,273 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,279 |
) |
Stock-based
compensation expense |
|
|
|
|
|
|
1,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,410 |
|
Shares
issued for employee stock ownership plan (29,575 shares) |
|
|
3 |
|
|
|
1,592 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,595 |
|
Directors
deferred compensation plan (2,351 shares) |
|
|
|
|
|
|
229 |
|
|
|
|
|
|
|
|
|
|
|
(229 |
) |
|
|
|
|
|
|
0 |
|
Restricted
stock activity ((17,195) shares) |
|
|
(2 |
) |
|
|
(193 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(195 |
) |
Common
stock issued for purchase acquisition (960 shares) |
|
|
|
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50 |
|
Adoption
of ASU 2014-01 Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounting
for Investments in Qualified |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affordable
Housing Projects |
|
|
|
|
|
|
|
|
|
|
(725 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(725 |
) |
Balances
at September 30, 2015 |
|
$ |
1,494 |
|
|
$ |
350,397 |
|
|
$ |
190,175 |
|
|
$ |
(22,028 |
) |
|
$ |
(3,629 |
) |
|
$ |
1,550 |
|
|
$ |
517,959 |
|
See
notes to unaudited condensed consolidated financial statements
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.
Business
Tompkins
Financial Corporation (“Tompkins” or 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 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 September 30, 2015, the Company’s subsidiaries included: four wholly-owned banking subsidiaries, Tompkins
Trust Company (the “Trust Company”), The Bank of Castile (DBA Tompkins Bank of Castile), Mahopac Bank (formerly
known as Mahopac National Bank, DBA Tompkins Mahopac Bank), VIST Bank (DBA Tompkins VIST Bank); and a wholly-owned insurance agency
subsidiary, Tompkins Insurance Agencies, Inc. (“Tompkins Insurance”). The trust division of the Trust Company provides
a full array of investment services, including investment management, trust and estate, financial and tax planning as well as
life, disability and long-term care insurance services. The Company’s principal offices are located at The Commons, Ithaca,
New York, 14851, and its telephone number is (888) 503-5753. The Company’s common stock is traded on the NYSE MKT LLC under
the Symbol “TMP.”
As
a registered financial holding company, the Company is regulated under the Bank Holding Company Act of 1956 (“BHC Act”),
as amended and is subject to examination and comprehensive regulation by the Federal Reserve Board (“FRB”). 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, and the Securities Exchange Act of 1934,
as amended. The Company is subject to the rules of the NYSE MKT LLC for listed companies.
The
Company’s banking subsidiaries are subject to examination and comprehensive regulation by various regulatory authorities,
including the Federal Deposit Insurance Corporation (“FDIC”), the New York State Department of Financial Services
(“NYSDFS”), and the Pennsylvania Department of Banking and Securities (“PDBS”). Each of these agencies
issues regulations and requires the filing of reports describing the activities and financial condition of the entities under
its jurisdiction. Likewise, such agencies conduct examinations on a recurring basis to evaluate the safety and soundness of the
institutions, and to test compliance with various regulatory requirements, including: consumer protection, privacy, fair lending,
the Community Reinvestment Act, the Bank Secrecy Act, sales of non-deposit investments, electronic data processing, and trust
department activities.
The
trust division of Tompkins Trust Company is subject to examination and comprehensive regulation by the FDIC and NYSDFS.
The
Company’s insurance subsidiary is subject to examination and regulation by the NYSDFS and the Pennsylvania Insurance Department.
2.
Basis of Presentation
The
unaudited consolidated financial statements included in this quarterly report do not include all of the information and footnotes
required by GAAP for a full year presentation and certain disclosures have been condensed or omitted in accordance with rules
and regulations of the SEC. In the application of certain accounting policies, management is required to make assumptions regarding
the effect of matters that are inherently uncertain. These estimates and assumptions affect the reported amounts of certain assets,
liabilities, revenues, and expenses in the unaudited condensed consolidated financial statements. Different amounts could be reported
under different conditions, or if different assumptions were used in the application of these accounting policies. The accounting
policies that management considers critical in this respect are the determination of the allowance for loan and lease losses,
the expenses and liabilities associated with the Company’s pension and post-retirement benefits, and the review of its
securities portfolio for other than temporary impairment.
In
management’s opinion, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring
nature. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected
for the full year ended December 31, 2015. The unaudited condensed consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and the notes thereto in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2014. Other than ASU 2014-01, "Investments, Accounting for Investments in Qualified Affordable
Housing Projects", there have been no significant changes to the Company’s accounting policies from those presented
in the 2014 Annual Report on Form 10-K. Refer to Note 3- “Accounting Standards Updates” of this Report for a discussion
of recently issued accounting guidelines.
Cash
and cash equivalents in the consolidated statements of cash flow include cash and noninterest bearing balances due from banks,
interest-bearing balances due from banks, and money market funds. Management regularly evaluates the credit risk associated with
the counterparties to these transactions and believes that the Company is not exposed to any significant credit risk on cash and
cash equivalents.
The
Company has evaluated subsequent events for potential recognition and/or disclosure, and determined that no further disclosures
were required.
The
consolidated financial information included herein combines the results of operations, the assets, liabilities, and shareholders’
equity of the Company and its subsidiaries. Amounts in the prior periods’ unaudited condensed consolidated financial statements
are reclassified when necessary to conform to the current periods’ presentation. All significant intercompany balances
and transactions are eliminated in consolidation.
3.
Accounting Standards Updates
ASU
2014-01, “Investments (Topic 323), Accounting for Investments in Qualified Affordable Housing Projects.”
The amendments in this ASU provide guidance on accounting for investments by a reporting entity in flow-through limited liability
entities that manage or invest in affordable housing projects that qualify for the low-income housing tax credit. The amendments
permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing
projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method,
an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognize
the net investment performance in the income statement as a component of income tax expense (benefit). The amendments in this
ASU became effective for the Company for annual periods beginning January 1, 2015 and if material will be applied retrospectively
to all periods presented. A reporting entity that uses the effective yield method to account for its investments in qualified
affordable housing projects before the date of adoption may continue to apply the effective yield method for those preexisting
investments.
The
Company previously accounted for its investments in qualified affordable housing projects under the cost method; however, the
Company determined that its investments in its qualified affordable housing projects meet the conditions set forth in ASU 2014-01
to account for these investments under the proportional amortization method. The Company believes that amortizing its investments
in qualified affordable housing projects as a component of income tax expense rather than as a component of operating expenses
better reflects the nature and intent of these investments. As a result of adopting ASU 2014-01, the Company recognized additional
income tax expense attributable to the amortization of investments in qualified affordable housing projects of $0.1 million and
$0.3 million during the three and nine months ended September 30, 2015, respectively. While the adoption of ASU 2014-01 requires
retrospective application to all periods presented, the Company did not restate income tax expense for the three and nine months
ended September 30, 2014 as the amount of additional income tax expense attributable to the amortization of investments in qualified
affordable housing projects was not considered material. The net
effect of adoption is $725,000 and is reported in the Statement of Changes in Shareholder’s Equity for the nine months
ended September 30, 2015. The Company’s remaining investment in qualified affordable housing projects, net of amortization
totaled $2.7 million and $3.9 million at September 30, 2015 and December 31, 2014, respectively.
ASU
2014-12 “Compensation—Stock
Compensation” (Topic 718”):
Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite
Service Period, a consensus of the FASB Emerging Issues Task Force (ASU 2014-12). ASU 2014-12 requires that a performance target
that affects vesting of share-based payment awards and that could be achieved after the requisite service period be treated as
a performance condition. Compensation cost should be recognized in the period in which it becomes probable that the performance
target will be achieved and should represent the compensation cost attributable to the periods for which the requisite service
has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service
period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period.
The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards
that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends
when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved.
ASU 2014-12 is effective for all entities for interim and annual periods beginning after December 15, 2015, with early adoption
permitted. An entity may apply the amendments in ASU 2014-12 either (i) prospectively to all awards granted or modified after
the effective date or (ii) retrospectively to all awards with performance targets that are outstanding as of the beginning of
the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of
ASU 2014-12 is not expected to have a material impact on the Company’s consolidated financial condition or results of operations
because the Company has not historically granted performance-based stock compensation.
4.
Securities
Available-for-Sale Securities |
The following table summarizes available-for-sale securities
held by the Company at September 30, 2015: |
|
|
Available-for-Sale
Securities |
September
30, 2015 |
|
Amortized
Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Fair
Value |
(in
thousands) |
|
|
|
|
|
|
|
|
Obligations
of U.S. Government sponsored entities |
|
$ |
548,390 |
|
|
$ |
9,103 |
|
|
$ |
222 |
|
|
$ |
557,271 |
|
Obligations
of U.S. states and political subdivisions |
|
|
73,585 |
|
|
|
1,000 |
|
|
|
180 |
|
|
|
74,405 |
|
Mortgage-backed
securities residential, issued by |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Government agencies |
|
|
100,448 |
|
|
|
1,878 |
|
|
|
772 |
|
|
|
101,554 |
|
U.S.
Government sponsored entities |
|
|
652,015 |
|
|
|
5,153 |
|
|
|
5,423 |
|
|
|
651,745 |
|
Non-U.S.
Government agencies or sponsored entities |
|
|
200 |
|
|
|
3 |
|
|
|
0 |
|
|
|
203 |
|
U.S.
corporate debt securities |
|
|
2,500 |
|
|
|
0 |
|
|
|
338 |
|
|
|
2,162 |
|
Total
debt securities |
|
|
1,377,138 |
|
|
|
17,137 |
|
|
|
6,935 |
|
|
|
1,387,340 |
|
Equity
securities |
|
|
1,000 |
|
|
|
0 |
|
|
|
57 |
|
|
|
943 |
|
Total
available-for-sale securities |
|
$ |
1,378,138 |
|
|
$ |
17,137 |
|
|
$ |
6,992 |
|
|
$ |
1,388,283 |
|
The following table summarizes available-for-sale
securities held by the Company at December 31, 2014:
|
|
Available-for-Sale
Securities |
December
31, 2014 |
|
Amortized
Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Fair
Value |
(in
thousands) |
|
|
|
|
|
|
|
|
Obligations
of U.S. Government sponsored entities |
|
$ |
553,300 |
|
|
$ |
6,222 |
|
|
$ |
1,702 |
|
|
$ |
557,820 |
|
Obligations
of U.S. states and political subdivisions |
|
|
70,790 |
|
|
|
999 |
|
|
|
279 |
|
|
|
71,510 |
|
Mortgage-backed
securities residential, issued by |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Government agencies |
|
|
108,931 |
|
|
|
2,339 |
|
|
|
1,344 |
|
|
|
109,926 |
|
U.S.
Government sponsored entities |
|
|
660,195 |
|
|
|
7,309 |
|
|
|
8,384 |
|
|
|
659,120 |
|
Non-U.S.
Government agencies or sponsored entities |
|
|
267 |
|
|
|
4 |
|
|
|
0 |
|
|
|
271 |
|
U.S.
corporate debt securities |
|
|
2,500 |
|
|
|
0 |
|
|
|
338 |
|
|
|
2,162 |
|
Total
debt securities |
|
|
1,395,983 |
|
|
|
16,873 |
|
|
|
12,047 |
|
|
|
1,400,809 |
|
Equity
securities |
|
|
1,475 |
|
|
|
0 |
|
|
|
48 |
|
|
|
1,427 |
|
Total
available-for-sale securities |
|
$ |
1,397,458 |
|
|
$ |
16,873 |
|
|
$ |
12,095 |
|
|
$ |
1,402,236 |
|
Held-to-Maturity
Securities |
The following table summarizes
held-to-maturity securities held by the Company at September 30, 2015: |
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-Maturity
Securities |
September
30, 2015 |
|
Amortized
Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Fair
Value |
(in
thousands) |
|
|
|
|
|
|
|
|
Obligations
of U.S. Government sponsored entities |
|
$ |
132,577 |
|
|
$ |
2,455 |
|
|
$ |
70 |
|
|
$ |
134,962 |
|
Obligations
of U.S. states and political subdivisions |
|
$ |
13,723 |
|
|
$ |
427 |
|
|
$ |
0 |
|
|
$ |
14,150 |
|
Total
held-to-maturity debt securities |
|
$ |
146,300 |
|
|
$ |
2,882 |
|
|
$ |
70 |
|
|
$ |
149,112 |
|
The following table summarizes
held-to-maturity securities held by the Company at December 31, 2014: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-Maturity
Securities |
December
31, 2014 |
|
Amortized
Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Fair
Value |
(in
thousands) |
|
|
|
|
|
|
|
|
Obligations
of U.S. Government sponsored entities |
|
$ |
71,906 |
|
|
$ |
400 |
|
|
$ |
37 |
|
|
$ |
72,269 |
|
Obligations
of U.S. states and political subdivisions |
|
|
16,262 |
|
|
|
505 |
|
|
|
0 |
|
|
|
16,767 |
|
Total
held-to-maturity debt securities |
|
$ |
88,168 |
|
|
$ |
905 |
|
|
$ |
37 |
|
|
$ |
89,036 |
|
The
Company may from time to time sell investment securities from its available-for-sale portfolio. Realized gains on sales, including
called securities, of available-for-sale securities were $92,000 and $1,107,000 for the three and nine months ending September
30, 2015 and $20,000 and $186,000 in the same periods during 2014. Realized losses on available-for-sale securities sold were
$0 and $2,000 for the three and nine months ending September 30, 2015 and $0 and $78,000 for the three and nine months ending
September 30, 2014, respectively. The sales of available-for-sale investment securities were the result of general investment
portfolio and interest rate risk management.
The
following table summarizes available-for-sale securities that had unrealized losses at September 30, 2015:
|
|
|
|
|
|
|
|
|
Less
than 12 Months |
|
12
Months or Longer |
|
Total |
(in
thousands) |
|
Fair
Value |
|
Unrealized
Losses |
|
Fair
Value |
|
Unrealized
Losses |
|
Fair
Value |
|
Unrealized
Losses |
Obligations
of U.S. Government sponsored entities |
|
$ |
31,937 |
|
|
$ |
141 |
|
|
$ |
998 |
|
|
$ |
81 |
|
|
$ |
32,935 |
|
|
$ |
222 |
|
Obligations
of U.S. states and political subdivisions |
|
|
15,917 |
|
|
|
153 |
|
|
|
4,944 |
|
|
|
27 |
|
|
|
20,861 |
|
|
|
180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed
securities - issued by |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Government agencies |
|
|
14,457 |
|
|
|
61 |
|
|
|
31,826 |
|
|
|
711 |
|
|
|
46,283 |
|
|
|
772 |
|
U.S.
Government sponsored entities |
|
|
216,329 |
|
|
|
1,023 |
|
|
|
194,511 |
|
|
|
4,400 |
|
|
|
410,840 |
|
|
|
5,423 |
|
U.S.
corporate debt securities |
|
|
0 |
|
|
|
0 |
|
|
|
2,163 |
|
|
|
338 |
|
|
|
2,163 |
|
|
|
338 |
|
Equity
securities |
|
|
0 |
|
|
|
0 |
|
|
|
943 |
|
|
|
57 |
|
|
|
943 |
|
|
|
57 |
|
Total
available-for-sale securities |
|
$ |
278,640 |
|
|
$ |
1,378 |
|
|
$ |
235,385 |
|
|
$ |
5,614 |
|
|
$ |
514,025 |
|
|
$ |
6,992 |
|
The
following table summarizes held-to-maturity securities that had unrealized losses at September 30, 2015.
|
|
|
|
|
|
|
|
|
Less
than 12 Months |
|
12
Months or Longer |
|
Total |
(in
thousands) |
|
Fair
Value |
|
Unrealized
Losses |
|
Fair
Value |
|
Unrealized
Losses |
|
Fair
Value |
|
Unrealized
Losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations
of U.S. Government sponsored entities |
|
$ |
15,041 |
|
|
$ |
70 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
15,041 |
|
|
$ |
70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
held-to-maturity securities |
|
$ |
15,041 |
|
|
$ |
70 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
15,041 |
|
|
$ |
70 |
|
The following
table summarizes available-for-sale securities that had unrealized losses at December 31, 2014:
|
|
|
|
|
|
|
|
|
Less
than 12 Months |
|
12
Months or Longer |
|
Total |
(in
thousands) |
|
Fair
Value |
|
Unrealized
Losses |
|
Fair
Value |
|
Unrealized
Losses |
|
Fair
Value |
|
Unrealized
Losses |
Obligations
of U.S. Government sponsored entities |
|
$ |
71,363 |
|
|
$ |
385 |
|
|
$ |
65,497 |
|
|
$ |
1,317 |
|
|
$ |
136,860 |
|
|
$ |
1,702 |
|
Obligations
of U.S. states and political subdivisions |
|
|
15,451 |
|
|
|
124 |
|
|
|
8,102 |
|
|
|
155 |
|
|
|
23,553 |
|
|
|
279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed
securities – residential, issued by |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Government agencies |
|
|
2,623 |
|
|
|
21 |
|
|
|
28,502 |
|
|
|
1,323 |
|
|
|
31,125 |
|
|
|
1,344 |
|
U.S.
Government sponsored entities |
|
|
162,377 |
|
|
|
719 |
|
|
|
271,503 |
|
|
|
7,665 |
|
|
|
433,880 |
|
|
|
8,384 |
|
U.S.
corporate debt securities |
|
|
0 |
|
|
|
0 |
|
|
|
2,163 |
|
|
|
338 |
|
|
|
2,163 |
|
|
|
338 |
|
Equity
securities |
|
|
0 |
|
|
|
0 |
|
|
|
952 |
|
|
|
48 |
|
|
|
952 |
|
|
|
48 |
|
Total
available-for-sale securities |
|
$ |
251,814 |
|
|
$ |
1,249 |
|
|
$ |
376,719 |
|
|
$ |
10,846 |
|
|
$ |
628,533 |
|
|
$ |
12,095 |
|
The following table summarizes held-to-maturity
securities that had unrealized losses at December 31, 2014.
|
|
|
|
|
|
|
|
|
Less
than 12 Months |
|
12
Months or Longer |
|
Total |
(in
thousands) |
|
Fair
Value |
|
Unrealized
Losses |
|
Fair
Value |
|
Unrealized
Losses |
|
Fair
Value |
|
Unrealized
Losses |
Obligations
of U.S. Government sponsored entities |
|
$ |
15,095 |
|
|
$ |
37 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
15,095 |
|
|
$ |
37 |
|
Total
held-to-maturity securities |
|
$ |
15,095 |
|
|
$ |
37 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
15,095 |
|
|
$ |
37 |
|
The
gross unrealized losses reported for residential mortgage-backed securities relate to investment securities issued by U.S. government
sponsored entities such as Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, and U.S. government
agencies such as Government National Mortgage Association. The total gross unrealized losses, shown in the tables above, were
primarily attributable to changes in interest rates and levels of market liquidity, relative to when the investment securities
were purchased, and not due to the credit quality of the investment securities.
The
Company does not intend to sell other-than-temporarily impaired investment securities that are in an unrealized loss position
until recovery of unrealized losses (which may be until maturity), and it is not more-likely-than not that the Company will be
required to sell the investment securities, before recovery of their amortized cost basis, which may be at maturity. Accordingly,
as of September 30, 2015, and December 31, 2014, management has determined that the unrealized losses detailed in the tables
above are not other-than-temporary.
Ongoing
Assessment of Other-Than-Temporary Impairment
On
a quarterly basis, the Company performs an assessment to determine whether there have been any events or economic circumstances
indicating that a security with an unrealized loss has suffered other-than-temporary impairment (“OTTI”). A debt
security is considered impaired if the fair value is less than its amortized cost basis (including any previous OTTI charges)
at the reporting date. If impaired, the Company then assesses whether the unrealized loss is other-than-temporary. An unrealized
loss on a debt security is generally deemed to be other-than-temporary and a credit loss is deemed to exist if the present value,
discounted at the security’s effective rate, of the expected future cash flows is less than the amortized cost basis of
the debt security. As a result, the credit loss component of an other-than-temporary impairment write-down for debt securities
is recorded in earnings while the remaining portion of the impairment loss is recognized, net of tax, in other comprehensive income
provided that the Company does not intend to sell the underlying debt security and it is more-likely-than not that the Company
would not have to sell the debt security prior to recovery of the unrealized loss, which may be to maturity. If the Company intended
to sell any securities with an unrealized loss or it is more-likely-than not that the Company would be required to sell the investment
securities, before recovery of their amortized cost basis, then the entire unrealized loss would be recorded in earnings.
The
Company considers the following factors in determining whether a credit loss exists.
|
- |
The length of time and the extent to
which the fair value has been less than the amortized cost basis; |
|
- |
The level of credit enhancement provided
by the structure which includes, but is not limited to, credit subordination positions, excess spreads, overcollateralization,
protective triggers; |
|
- |
Changes in the near term prospects of
the issuer or underlying collateral of a security, such as changes in default rates, loss severities given default and significant
changes in prepayment assumptions; |
|
- |
The level of excess cash flow generated
from the underlying collateral supporting the principal and interest payments of the debt securities; and |
|
- |
Any adverse change to the credit conditions
of the issuer or the security such as credit downgrades by the rating agencies. |
As
a result of the other-than-temporarily impairment review process, the Company does not consider any investment security held at
September 30, 2015 to be other-than-temporarily impaired.
The amortized
cost and estimated fair value of debt securities by contractual maturity are shown in the following table. Expected maturities
may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or
prepayment penalties. Mortgage-backed securities are shown separately since they are not due at a single maturity date.
September
30, 2015 |
|
|
(in
thousands) |
|
Amortized
Cost |
|
Fair
Value |
Available-for-sale
securities: |
|
|
|
|
Due
in one year or less |
|
$ |
58,948 |
|
|
$ |
59,481 |
|
Due
after one year through five years |
|
|
368,588 |
|
|
|
376,105 |
|
Due
after five years through ten years |
|
|
183,578 |
|
|
|
185,264 |
|
Due
after ten years |
|
|
13,361 |
|
|
|
12,988 |
|
Total |
|
|
624,475 |
|
|
|
633,838 |
|
Mortgage-backed
securities |
|
|
752,663 |
|
|
|
753,502 |
|
Total
available-for-sale debt securities |
|
$ |
1,377,138 |
|
|
$ |
1,387,340 |
|
December
31, 2014 |
|
|
|
|
(in
thousands) |
|
Amortized
Cost |
|
Fair
Value |
Available-for-sale
securities: |
|
|
|
|
Due
in one year or less |
|
$ |
67,281 |
|
|
$ |
68,350 |
|
Due
after one year through five years |
|
|
342,548 |
|
|
|
347,230 |
|
Due
after five years through ten years |
|
|
199,724 |
|
|
|
199,276 |
|
Due
after ten years |
|
|
17,037 |
|
|
|
16,636 |
|
Total |
|
|
626,590 |
|
|
|
631,492 |
|
Mortgage-backed
securities |
|
|
769,393 |
|
|
|
769,317 |
|
Total
available-for-sale debt securities |
|
$ |
1,395,983 |
|
|
$ |
1,400,809 |
|
September
30, 2015 |
|
|
|
|
(in
thousands) |
|
Amortized
Cost |
|
Fair
Value |
Held-to-maturity
securities: |
|
|
|
|
Due
in one year or less |
|
$ |
8,991 |
|
|
$ |
9,022 |
|
Due
after one year through five years |
|
|
14,441 |
|
|
|
14,914 |
|
Due
after five years through ten years |
|
|
122,700 |
|
|
|
124,981 |
|
Due
after ten years |
|
|
168 |
|
|
|
195 |
|
Total
held-to-maturity debt securities |
|
$ |
146,300 |
|
|
$ |
149,112 |
|
December
31, 2014 |
|
|
|
|
(in
thousands) |
|
Amortized
Cost |
|
Fair
Value |
Held-to-maturity
securities: |
|
|
|
|
Due
in one year or less |
|
$ |
11,400 |
|
|
$ |
11,471 |
|
Due
after one year through five years |
|
|
3,440 |
|
|
|
3,694 |
|
Due
after five years through ten years |
|
|
73,020 |
|
|
|
73,518 |
|
Due
after ten years |
|
|
308 |
|
|
|
353 |
|
Total
held-to-maturity debt securities |
|
$ |
88,168 |
|
|
$ |
89,036 |
|
The
Company also holds non-marketable Federal Home Loan Bank New York (“FHLBNY”) stock, non-marketable Federal Home
Loan Bank Pittsburgh (“FHLBPITT”) stock and non-marketable Atlantic Community Bankers Bank (“ACBB”)
stock, all of which are required to be held for regulatory purposes and for borrowing availability. The required investment in
FHLB stock is tied to the Company’s borrowing levels with the FHLB. Holdings of FHLBNY stock, FHLBPITT stock, and ACBB
stock totaled $15.1 million, $8.3 million and $95,000 at September 30, 2015, respectively. These securities are carried at par,
which is also cost. The FHLBNY and FHLBPITT continue to pay dividends and repurchase stock. As such, the Company has not recognized
any impairment on its holdings of FHLBNY and FHLBPITT stock. Quarterly, we evaluate our investment in the FHLB for impairment.
We evaluate recent and long-term operating performance, liquidity, funding and capital positions, stock repurchase history, dividend
history and impact of legislative and regulatory changes. Based on our most recent evaluation, as of September 30, 2015, we have
determined that no impairment write-downs are currently required.
Trading
Securities
The
following summarizes trading securities, at estimated fair value, as of:
(in
thousands) |
|
|
09/30/2015 |
|
|
12
/31/2014 |
|
|
|
|
|
|
|
|
|
Obligations
of U.S. Government sponsored entities |
|
$ |
6,814 |
|
|
$ |
7,404 |
|
Mortgage-backed
securities – residential, issued by U.S. Government sponsored entities |
|
|
935 |
|
|
|
1,588 |
|
Total |
|
$ |
7,749 |
|
|
$ |
8,992 |
|
The
decrease in the trading portfolio reflects maturities or payments during the three and nine months ended September 30, 2015. For
the three and nine months ended September 30, 2015, net mark-to-market losses related to the securities trading portfolio were
$69,000 and $206,000, respectively, compared to net mark-to-market losses for the three and nine months ended September 30, 2014
of $87,000 and $181,000, respectively.
The
Company pledges securities as collateral for public deposits and other borrowings, and sells securities under agreements to repurchase.
Securities carried of $1.3 billion and $1.1 billion at September 30, 2015, and December 31, 2014, respectively, were either pledged
or sold under agreements to repurchase.
5. Loans and Leases |
Loans and Leases at September 30, 2015 and December 31,
2014 were as follows: |
|
|
|
09/30/2015 |
|
|
|
12/31/2014 |
|
(in
thousands) |
|
|
Originated |
|
|
|
Acquired |
|
|
|
Total
Loans and Leases |
|
|
|
Originated |
|
|
|
Acquired |
|
|
|
Total Loans
and Leases |
|
Commercial
and industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture |
|
$ |
65,831 |
|
|
$ |
0 |
|
|
$ |
65,831 |
|
|
$ |
78,507 |
|
|
$ |
0 |
|
|
$ |
78,507 |
|
Commercial
and industrial other |
|
|
741,411 |
|
|
|
90,643 |
|
|
|
832,054 |
|
|
|
688,529 |
|
|
|
97,034 |
|
|
|
785,563 |
|
Subtotal
commercial and industrial |
|
|
807,242 |
|
|
|
90,643 |
|
|
|
897,885 |
|
|
|
767,036 |
|
|
|
97,034 |
|
|
|
864,070 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
|
86,050 |
|
|
|
34,239 |
|
|
|
120,289 |
|
|
|
72,427 |
|
|
|
35,906 |
|
|
|
108,333 |
|
Agriculture |
|
|
84,135 |
|
|
|
2,154 |
|
|
|
86,289 |
|
|
|
58,994 |
|
|
|
3,182 |
|
|
|
62,176 |
|
Commercial
real estate other |
|
|
1,104,085 |
|
|
|
267,126 |
|
|
|
1,371,211 |
|
|
|
979,621 |
|
|
|
308,488 |
|
|
|
1,288,109 |
|
Subtotal
commercial real estate |
|
|
1,274,270 |
|
|
|
303,519 |
|
|
|
1,577,789 |
|
|
|
1,111,042 |
|
|
|
347,576 |
|
|
|
1,458,618 |
|
Residential
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
equity |
|
|
200,149 |
|
|
|
45,370 |
|
|
|
245,519 |
|
|
|
186,957 |
|
|
|
56,008 |
|
|
|
242,965 |
|
Mortgages |
|
|
796,661 |
|
|
|
28,939 |
|
|
|
825,600 |
|
|
|
710,904 |
|
|
|
32,282 |
|
|
|
743,186 |
|
Subtotal
residential real estate |
|
|
996,810 |
|
|
|
74,309 |
|
|
|
1,071,119 |
|
|
|
897,861 |
|
|
|
88,290 |
|
|
|
986,151 |
|
Consumer
and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect |
|
|
17,788 |
|
|
|
0 |
|
|
|
17,788 |
|
|
|
18,298 |
|
|
|
0 |
|
|
|
18,298 |
|
Consumer
and other |
|
|
41,608 |
|
|
|
880 |
|
|
|
42,488 |
|
|
|
35,874 |
|
|
|
1,095 |
|
|
|
36,969 |
|
Subtotal
consumer and other |
|
|
59,396 |
|
|
|
880 |
|
|
|
60,276 |
|
|
|
54,172 |
|
|
|
1,095 |
|
|
|
55,267 |
|
Leases |
|
|
14,339 |
|
|
|
0 |
|
|
|
14,339 |
|
|
|
12,251 |
|
|
|
0 |
|
|
|
12,251 |
|
Covered
loans |
|
|
0 |
|
|
|
15,576 |
|
|
|
15,576 |
|
|
|
0 |
|
|
|
19,319 |
|
|
|
19,319 |
|
Total
loans and leases |
|
|
3,152,057 |
|
|
|
484,927 |
|
|
|
3,636,984 |
|
|
|
2,842,362 |
|
|
|
553,314 |
|
|
|
3,395,676 |
|
Less:
unearned income and deferred costs and fees |
|
|
(2,671 |
) |
|
|
0 |
|
|
|
(2,671 |
) |
|
|
(2,388 |
) |
|
|
0 |
|
|
|
(2,388 |
) |
Total
loans and leases, net of unearned income and deferred costs and fees |
|
$ |
3,149,386 |
|
|
$ |
484,927 |
|
|
$ |
3,634,313 |
|
|
$ |
2,839,974 |
|
|
$ |
553,314 |
|
|
$ |
3,393,288 |
|
The outstanding principal balance and the related carrying
amount of the Company’s loans acquired in the VIST Bank acquisition are as follows at September 30, 2015 and December 31,
2014: |
(in
thousands) |
|
09/30/2015 |
|
12/31/2014 |
Acquired
Credit Impaired Loans |
|
|
|
|
Outstanding
principal balance |
|
$ |
34,424 |
|
|
$ |
44,273 |
|
Carrying
amount |
|
|
28,150 |
|
|
|
34,410 |
|
|
|
|
|
|
|
|
|
|
Acquired
Non-Credit Impaired Loans |
|
|
|
|
|
|
|
|
Outstanding
principal balance |
|
|
461,766 |
|
|
|
525,182 |
|
Carrying
amount |
|
|
456,608 |
|
|
|
518,904 |
|
|
|
|
|
|
|
|
|
|
Total
Acquired Loans |
|
|
|
|
|
|
|
|
Outstanding
principal balance |
|
|
496,190 |
|
|
|
569,455 |
|
Carrying
amount |
|
|
484,758 |
|
|
|
553,314 |
|
The following tables present changes in accretable yield
on loans acquired from VIST Bank that were considered credit impaired. |
(in
thousands) |
|
|
Balance
at January 1, 2014 |
|
$ |
10,954 |
|
Accretion |
|
|
(4,598 |
) |
Disposals
(loans paid in full) |
|
|
(250 |
) |
Reclassifications
to/from nonaccretable difference1 |
|
|
2,498 |
|
Balance
at December 31, 2014 |
|
$ |
8,604 |
|
|
|
|
|
|
(in
thousands) |
|
|
|
|
Balance at January 1,
2015 |
|
$ |
8,604 |
|
Accretion |
|
|
(2,018 |
) |
Disposals
(loans paid in full) |
|
|
(66 |
) |
Reclassifications
to/from nonaccretable difference1 |
|
|
1,350 |
|
Balance
at September 30, 2015 |
|
$ |
7,870 |
|
1 Results in increased interest income
as a prospective yield adjustment over the remaining life of the loans, as well as increased interest income from loan sales,
modification and prepayments. |
At
September 30, 2015, acquired loans included $15.6 million of covered loans. VIST Bank had previously acquired these loans in an
FDIC assisted transaction in the fourth quarter of 2010. In accordance with a loss sharing agreement with the FDIC, certain losses
and expenses relating to covered loans may be reimbursed by the FDIC at 70% or, if net losses exceed certain levels specified
in the loss sharing agreements, 80%. See Note 7 – “FDIC Indemnification Asset Related to Covered Loans” for
further discussion of the loss sharing agreements and related FDIC indemnification assets.
The
Company has adopted comprehensive lending policies, underwriting standards and loan review procedures. Management reviews these
policies and procedures on a regular basis. The Company discussed its lending policies and underwriting guidelines for its various
lending portfolios in Note 3 – “Loans and Leases” in the Notes to Consolidated Financial Statements contained
in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. There have been no significant changes
in these policies and guidelines. As such, these policies are reflective of new originations as well as those balances held at
September 30, 2015. The Company’s Board of Directors approves the lending policies at least annually. The Company recognizes
that exceptions to policy guidelines may occasionally occur and has established procedures for approving exceptions to these policy
guidelines. Management has also implemented reporting systems to monitor loan origination, loan quality, concentrations of credit,
loan delinquencies and nonperforming loans and potential problem loans.
Loans
are considered past due if the required principal and interest payments have not been received as of the date such payments are
due. Generally loans are placed on nonaccrual status if principal or interest payments become 90 days or more past due and/or
management deems the collectability of the principal and/or interest to be in question as well as when required by regulatory
agencies. When interest accrual is discontinued, all unpaid accrued interest is reversed. Payments received on loans on nonaccrual
are generally applied to reduce the principal balance of the loan. Loans are generally returned to accrual status when all the
principal and interest amounts contractually due are brought current, the borrower has established a payment history, and future
payments are reasonably assured. When management determines that the collection of principal in full is not probable, management
will charge-off a partial amount or full amount of the loan balance. Management considers specific facts and circumstances relative
to each individual credit in making such a determination. For residential and consumer loans, management uses specific regulatory
guidance and thresholds for determining charge-offs.
Acquired
loans that met the criteria for nonaccrual of interest prior to the acquisition may be considered performing after the date of
acquisition, regardless of whether the customer is contractually delinquent, if we can reasonably estimate the timing and amount
of the expected cash flows on such loans and if the Company expects to fully collect the new carrying value of the loans. As such,
we may no longer consider the loan to be nonaccrual or nonperforming and may accrue interest on these loans, including the impact
of any accretable discount. To the extent we cannot reasonably estimate cash flows, interest income recognition is discontinued.
The Company has determined that it can reasonably estimate future cash flows on our acquired loans that are past due 90 days or
more and accruing interest and the Company expects to fully collect the carrying value of the loans.
The
below table is an age analysis of past due loans, segregated by originated and acquired loan and lease portfolios, and by class
of loans, as of September 30, 2015 and December 31, 2014.
September
30, 2015 |
(in
thousands) |
|
30-89
days |
|
90
days or more |
|
Current
Loans |
|
Total
Loans |
|
90
days and accruing1 |
|
Nonaccrual |
Originated
Loans and Leases |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
65,831 |
|
|
$ |
65,831 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Commercial
and industrial other |
|
|
482 |
|
|
|
1,766 |
|
|
|
739,163 |
|
|
|
741,411 |
|
|
|
0 |
|
|
|
1,543 |
|
Subtotal
commercial and industrial |
|
|
482 |
|
|
|
1,766 |
|
|
|
804,994 |
|
|
|
807,242 |
|
|
|
0 |
|
|
|
1,543 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
|
0 |
|
|
|
0 |
|
|
|
86,050 |
|
|
|
86,050 |
|
|
|
0 |
|
|
|
0 |
|
Agriculture |
|
|
0 |
|
|
|
32 |
|
|
|
84,103 |
|
|
|
84,135 |
|
|
|
0 |
|
|
|
110 |
|
Commercial
real estate other |
|
|
163 |
|
|
|
5,134 |
|
|
|
1,098,788 |
|
|
|
1,104,085 |
|
|
|
0 |
|
|
|
5,758 |
|
Subtotal
commercial real estate |
|
|
163 |
|
|
|
5,166 |
|
|
|
1,268,941 |
|
|
|
1,274,270 |
|
|
|
0 |
|
|
|
5,868 |
|
Residential
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
equity |
|
|
867 |
|
|
|
1,458 |
|
|
|
197,824 |
|
|
|
200,149 |
|
|
|
57 |
|
|
|
1,574 |
|
Mortgages |
|
|
1,361 |
|
|
|
5,335 |
|
|
|
789,965 |
|
|
|
796,661 |
|
|
|
0 |
|
|
|
5,568 |
|
Subtotal
residential real estate |
|
|
2,228 |
|
|
|
6,793 |
|
|
|
987,789 |
|
|
|
996,810 |
|
|
|
57 |
|
|
|
7,142 |
|
Consumer
and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect |
|
|
495 |
|
|
|
111 |
|
|
|
17,182 |
|
|
|
17,788 |
|
|
|
0 |
|
|
|
115 |
|
Consumer
and other |
|
|
182 |
|
|
|
151 |
|
|
|
41,275 |
|
|
|
41,608 |
|
|
|
0 |
|
|
|
153 |
|
Subtotal
consumer and other |
|
|
677 |
|
|
|
262 |
|
|
|
58,457 |
|
|
|
59,396 |
|
|
|
0 |
|
|
|
268 |
|
Leases |
|
|
0 |
|
|
|
0 |
|
|
|
14,339 |
|
|
|
14,339 |
|
|
|
0 |
|
|
|
0 |
|
Total
loans and leases |
|
|
3,550 |
|
|
|
13,987 |
|
|
|
3,134,520 |
|
|
|
3,152,057 |
|
|
|
57 |
|
|
|
14,821 |
|
Less:
unearned income and deferred costs and fees |
|
|
0 |
|
|
|
0 |
|
|
|
(2,671 |
) |
|
|
(2,671 |
) |
|
|
0 |
|
|
|
0 |
|
Total
originated loans and leases, net of unearned income and deferred costs and fees |
|
$ |
3,550 |
|
|
$ |
13,987 |
|
|
$ |
3,131,849 |
|
|
$ |
3,149,386 |
|
|
$ |
57 |
|
|
$ |
14,821 |
|
Acquired
Loans and Leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial other |
|
|
4 |
|
|
|
869 |
|
|
|
89,770 |
|
|
|
90,643 |
|
|
|
350 |
|
|
|
651 |
|
Subtotal
commercial and industrial |
|
|
4 |
|
|
|
869 |
|
|
|
89,770 |
|
|
|
90,643 |
|
|
|
350 |
|
|
|
651 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
|
0 |
|
|
|
363 |
|
|
|
33,876 |
|
|
|
34,239 |
|
|
|
0 |
|
|
|
363 |
|
Agriculture |
|
|
0 |
|
|
|
0 |
|
|
|
2,154 |
|
|
|
2,154 |
|
|
|
0 |
|
|
|
0 |
|
Commercial
real estate other |
|
|
224 |
|
|
|
1,854 |
|
|
|
265,048 |
|
|
|
267,126 |
|
|
|
577 |
|
|
|
1,491 |
|
Subtotal
commercial real estate |
|
|
224 |
|
|
|
2,217 |
|
|
|
301,078 |
|
|
|
303,519 |
|
|
|
577 |
|
|
|
1,854 |
|
Residential
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
equity |
|
|
256 |
|
|
|
641 |
|
|
|
44,473 |
|
|
|
45,370 |
|
|
|
47 |
|
|
|
947 |
|
Mortgages |
|
|
544 |
|
|
|
1,862 |
|
|
|
26,533 |
|
|
|
28,939 |
|
|
|
1,095 |
|
|
|
1,456 |
|
Subtotal
residential real estate |
|
|
800 |
|
|
|
2,503 |
|
|
|
71,006 |
|
|
|
74,309 |
|
|
|
1,142 |
|
|
|
2,403 |
|
Consumer
and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
and other |
|
|
0 |
|
|
|
0 |
|
|
|
880 |
|
|
|
880 |
|
|
|
0 |
|
|
|
0 |
|
Subtotal
consumer and other |
|
|
0 |
|
|
|
0 |
|
|
|
880 |
|
|
|
880 |
|
|
|
0 |
|
|
|
0 |
|
Covered
loans |
|
|
309 |
|
|
|
508 |
|
|
|
14,759 |
|
|
|
15,576 |
|
|
|
508 |
|
|
|
0 |
|
Total
acquired loans and leases, net of unearned income and deferred costs and fees |
|
$ |
1,337 |
|
|
$ |
6,097 |
|
|
$ |
477,493 |
|
|
$ |
484,927 |
|
|
$ |
2,577 |
|
|
$ |
4,908 |
|
December
31, 2014 |
(in
thousands) |
|
30-89
days |
|
90
days or more |
|
Current
Loans |
|
Total
Loans |
|
90
days and accruing1 |
|
Nonaccrual |
Originated
loans and leases |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
78,507 |
|
|
$ |
78,507 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Commercial
and industrial other |
|
|
889 |
|
|
|
1,329 |
|
|
|
686,311 |
|
|
|
688,529 |
|
|
|
0 |
|
|
|
1,435 |
|
Subtotal
commercial and industrial |
|
|
889 |
|
|
|
1,329 |
|
|
|
764,818 |
|
|
|
767,036 |
|
|
|
0 |
|
|
|
1,435 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
|
206 |
|
|
|
0 |
|
|
|
72,221 |
|
|
|
72,427 |
|
|
|
0 |
|
|
|
0 |
|
Agriculture |
|
|
0 |
|
|
|
105 |
|
|
|
58,889 |
|
|
|
58,994 |
|
|
|
0 |
|
|
|
131 |
|
Commercial
real estate other |
|
|
760 |
|
|
|
3,247 |
|
|
|
975,614 |
|
|
|
979,621 |
|
|
|
0 |
|
|
|
4,911 |
|
Subtotal
commercial real estate |
|
|
966 |
|
|
|
3,352 |
|
|
|
1,106,724 |
|
|
|
1,111,042 |
|
|
|
0 |
|
|
|
5,042 |
|
Residential
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
equity |
|
|
1,414 |
|
|
|
1,061 |
|
|
|
184,482 |
|
|
|
186,957 |
|
|
|
59 |
|
|
|
1,279 |
|
Mortgages |
|
|
2,963 |
|
|
|
5,308 |
|
|
|
702,633 |
|
|
|
710,904 |
|
|
|
47 |
|
|
|
6,194 |
|
Subtotal
residential real estate |
|
|
4,377 |
|
|
|
6,369 |
|
|
|
887,115 |
|
|
|
897,861 |
|
|
|
106 |
|
|
|
7,473 |
|
Consumer
and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect |
|
|
542 |
|
|
|
75 |
|
|
|
17,681 |
|
|
|
18,298 |
|
|
|
0 |
|
|
|
101 |
|
Consumer
and other |
|
|
75 |
|
|
|
4 |
|
|
|
35,795 |
|
|
|
35,874 |
|
|
|
0 |
|
|
|
248 |
|
Subtotal
consumer and other |
|
|
617 |
|
|
|
79 |
|
|
|
53,476 |
|
|
|
54,172 |
|
|
|
0 |
|
|
|
349 |
|
Leases |
|
|
0 |
|
|
|
0 |
|
|
|
12,251 |
|
|
|
12,251 |
|
|
|
0 |
|
|
|
0 |
|
Total
loans and leases |
|
|
6,849 |
|
|
|
11,129 |
|
|
|
2,824,384 |
|
|
|
2,842,362 |
|
|
|
106 |
|
|
|
14,299 |
|
Less:
unearned income and deferred costs and fees |
|
|
0 |
|
|
|
0 |
|
|
|
(2,388 |
) |
|
|
(2,388 |
) |
|
|
0 |
|
|
|
0 |
|
Total
originated loans and leases, net of unearned income and deferred costs and fees |
|
$ |
6,849 |
|
|
$ |
11,129 |
|
|
$ |
2,821,996 |
|
|
$ |
2,839,974 |
|
|
$ |
106 |
|
|
$ |
14,299 |
|
Acquired
loans and leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial other |
|
|
5 |
|
|
|
1,156 |
|
|
|
95,873 |
|
|
|
97,034 |
|
|
|
475 |
|
|
|
681 |
|
Subtotal
commercial and industrial |
|
|
5 |
|
|
|
1,156 |
|
|
|
95,873 |
|
|
|
97,034 |
|
|
|
475 |
|
|
|
681 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
|
0 |
|
|
|
1,759 |
|
|
|
34,147 |
|
|
|
35,906 |
|
|
|
1,385 |
|
|
|
436 |
|
Agriculture |
|
|
0 |
|
|
|
0 |
|
|
|
3,182 |
|
|
|
3,182 |
|
|
|
0 |
|
|
|
0 |
|
Commercial
real estate other |
|
|
0 |
|
|
|
1,918 |
|
|
|
306,570 |
|
|
|
308,488 |
|
|
|
77 |
|
|
|
2,042 |
|
Subtotal
commercial real estate |
|
|
0 |
|
|
|
3,677 |
|
|
|
343,899 |
|
|
|
347,576 |
|
|
|
1,462 |
|
|
|
2,478 |
|
Residential
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
equity |
|
|
135 |
|
|
|
704 |
|
|
|
55,169 |
|
|
|
56,008 |
|
|
|
177 |
|
|
|
592 |
|
Mortgages |
|
|
1,041 |
|
|
|
907 |
|
|
|
30,334 |
|
|
|
32,282 |
|
|
|
500 |
|
|
|
978 |
|
Subtotal
residential real estate |
|
|
1,176 |
|
|
|
1,611 |
|
|
|
85,503 |
|
|
|
88,290 |
|
|
|
677 |
|
|
|
1,570 |
|
Consumer
and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
and other |
|
|
5 |
|
|
|
0 |
|
|
|
1,090 |
|
|
|
1,095 |
|
|
|
0 |
|
|
|
0 |
|
Subtotal
consumer and other |
|
|
5 |
|
|
|
0 |
|
|
|
1,090 |
|
|
|
1,095 |
|
|
|
0 |
|
|
|
0 |
|
Covered
loans |
|
|
533 |
|
|
|
914 |
|
|
|
17,872 |
|
|
|
19,319 |
|
|
|
914 |
|
|
|
0 |
|
Total
acquired loans and leases, net of unearned income and deferred costs and fees |
|
$ |
1,719 |
|
|
$ |
7,358 |
|
|
$ |
544,237 |
|
|
$ |
553,314 |
|
|
$ |
3,528 |
|
|
$ |
4,729 |
|
1 Includes
acquired loans that were recorded at fair value at the acquisition date.
6.
Allowance for Loan and Lease Losses
Originated
Loans and Leases
Management
reviews the appropriateness of the allowance for loan and lease losses (“allowance”) on a regular basis. Management
considers the accounting policy relating to the allowance to be a critical accounting policy, given the inherent uncertainty in
evaluating the levels of the allowance required to cover credit losses in the portfolio and the material effect that assumptions
could have on the Company’s results of operations. The Company has developed a methodology to measure the amount of estimated
loan loss exposure inherent in the loan portfolio to assure that an appropriate allowance is maintained. The Company’s
methodology is based upon guidance provided in SEC Staff Accounting Bulletin No. 102, Selected Loan Loss Allowance Methodology
and Documentation Issues and ASC Topic 310, Receivables and ASC Topic 450, Contingencies.
The
model is comprised of five major components that management has deemed appropriate in evaluating the appropriateness of the allowance
for loan and lease losses. While none of these components, when used independently, is effective in arriving at a reserve level
that appropriately measures the risk inherent in the portfolio, management believes that using them collectively, provides reasonable
measurement of the loss exposure in the portfolio. The five components include: impaired loans; individually reviewed and graded
loans; past due and nonaccrual loans; historical loss experience; and qualitative or subjective analysis.
Since
the methodology is based upon historical experience and trends as well as management’s judgment, factors may arise that
result in different estimates. Significant factors that could give rise to changes in these estimates may include, but are not
limited to, changes in economic conditions in the local area, concentration of risk, changes in interest rates, and declines in
local property values. While management’s evaluation of the allowance as of September 30, 2015, considers the allowance
to be appropriate, under adversely different conditions or assumptions, the Company would need to increase or decrease the allowance.
Acquired
Loans and Leases
Acquired
loans accounted for under ASC 310-30
For
our acquired loans, our allowance for loan losses is estimated based upon our expected cash flows for these loans. To the extent
that we experience a deterioration in borrower credit quality resulting in a decrease in our expected cash flows subsequent to
the acquisition of the loans, an allowance for loan losses would be established based on our estimate of future credit losses
over the remaining life of the loans.
Acquired
loans accounted for under ASC 310-20
We
establish our allowance for loan losses through a provision for credit losses based upon an evaluation process that is similar
to our evaluation process used for originated loans. This evaluation, which includes a review of loans on which full collectability
may not be reasonably assured, considers, among other matters, the estimated fair value of the underlying collateral, economic
conditions, historical net loan loss experience, carrying value of the loans, which includes the remaining net purchase discount
or premium, and other factors that warrant recognition in determining our allowance for loan losses.
The
following tables detail activity in the allowance for loan and lease losses segregated by originated and acquired loan and lease
portfolios and by portfolio segment for the three and nine months ended September 30, 2015 and 2014. Allocation of a portion of
the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
Three
months ended September 30, 2015 |
(in
thousands) |
|
Commercial
and Industrial |
|
Commercial
Real Estate |
|
Residential
Real Estate |
|
Consumer
and Other |
|
Finance
Leases |
|
Total |
|
Allowance
for originated loans and leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance |
|
$ |
8,224 |
|
|
$ |
13,487 |
|
|
$ |
5,583 |
|
|
$ |
2,134 |
|
|
$ |
0 |
|
|
$ |
29,428 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs |
|
|
(125 |
) |
|
|
0 |
|
|
|
(96 |
) |
|
|
(241 |
) |
|
|
0 |
|
|
|
(462 |
) |
Recoveries |
|
|
557 |
|
|
|
587 |
|
|
|
58 |
|
|
|
109 |
|
|
|
0 |
|
|
|
1,311 |
|
Provision
(credit) |
|
|
(184 |
) |
|
|
141 |
|
|
|
(98 |
) |
|
|
314 |
|
|
|
|
|
|
|
173 |
|
Ending
Balance |
|
$ |
8,472 |
|
|
$ |
14,215 |
|
|
$ |
5,447 |
|
|
$ |
2,316 |
|
|
$ |
0 |
|
|
$ |
30,450 |
|
Three
months ended September 30, 2015 |
(in
thousands) |
|
Commercial
and Industrial |
|
Commercial
Real Estate |
|
Residential
Real Estate |
|
Consumer
and Other |
|
Covered
Loans |
|
Total |
|
Allowance
for acquired loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance |
|
$ |
384 |
|
|
$ |
167 |
|
|
$ |
100 |
|
|
$ |
12 |
|
|
$ |
0 |
|
|
$ |
663 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs |
|
|
0 |
|
|
|
(60 |
) |
|
|
(208 |
) |
|
|
(5 |
) |
|
|
0 |
|
|
|
(273 |
) |
Recoveries |
|
|
0 |
|
|
|
17 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
17 |
|
Provision
(credit) |
|
|
(18 |
) |
|
|
(61 |
) |
|
|
194 |
|
|
|
(7 |
) |
|
|
0 |
|
|
|
108 |
|
Ending
Balance |
|
$ |
366 |
|
|
$ |
63 |
|
|
$ |
86 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
515 |
|
Three
months ended September 30, 2014 |
(in
thousands) |
|
Commercial
and Industrial |
|
Commercial
Real Estate |
|
Residential
Real Estate |
|
Consumer
and Other |
|
Finance
Leases |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for originated loans and leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance |
|
$ |
8,562 |
|
|
$ |
10,389 |
|
|
$ |
5,445 |
|
|
$ |
2,356 |
|
|
$ |
0 |
|
|
$ |
26,752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs |
|
|
(21 |
) |
|
|
(6 |
) |
|
|
(118 |
) |
|
|
(286 |
) |
|
|
0 |
|
|
|
(431 |
) |
Recoveries |
|
|
68 |
|
|
|
944 |
|
|
|
1 |
|
|
|
115 |
|
|
|
0 |
|
|
|
1,128 |
|
Provision
(credit) |
|
|
249 |
|
|
|
(645 |
) |
|
|
95 |
|
|
|
37 |
|
|
|
0 |
|
|
|
(264 |
) |
Ending
Balance |
|
$ |
8,858 |
|
|
$ |
10,682 |
|
|
$ |
5,423 |
|
|
$ |
2,222 |
|
|
$ |
0 |
|
|
$ |
27,185 |
|
Three
months ended September 30, 2014 |
(in
thousands) |
|
Commercial
and Industrial |
|
Commercial
Real Estate |
|
Residential
Real Estate |
|
Consumer
and Other |
|
Covered
Loans |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for acquired loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance |
|
$ |
159 |
|
|
$ |
460 |
|
|
$ |
49 |
|
|
$ |
97 |
|
|
$ |
0 |
|
|
$ |
765 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs |
|
|
(218 |
) |
|
|
(80 |
) |
|
|
(68 |
) |
|
|
(3 |
) |
|
|
0 |
|
|
|
(369 |
) |
Recoveries |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Provision
(credit) |
|
|
154 |
|
|
|
(20 |
) |
|
|
147 |
|
|
|
(76 |
) |
|
|
0 |
|
|
|
205 |
|
Ending
Balance |
|
$ |
95 |
|
|
$ |
360 |
|
|
$ |
128 |
|
|
$ |
18 |
|
|
$ |
0 |
|
|
$ |
601 |
|
Nine
months ended September 30, 2015 |
(in
thousands) |
|
Commercial
and Industrial |
|
Commercial
Real Estate |
|
Residential
Real Estate |
|
Consumer
and Other |
|
Finance
Leases |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for originated loans and leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance |
|
$ |
9,157 |
|
|
$ |
12,069 |
|
|
$ |
5,030 |
|
|
$ |
1,900 |
|
|
$ |
0 |
|
|
$ |
28,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs |
|
|
(169 |
) |
|
|
(14 |
) |
|
|
(408 |
) |
|
|
(751 |
) |
|
|
0 |
|
|
|
(1,342 |
) |
Recoveries |
|
|
792 |
|
|
|
1,064 |
|
|
|
107 |
|
|
|
391 |
|
|
|
0 |
|
|
|
2,354 |
|
Provision
(credit) |
|
|
(1,308 |
) |
|
|
1,096 |
|
|
|
718 |
|
|
|
776 |
|
|
|
0 |
|
|
|
1,282 |
|
Ending
Balance |
|
$ |
8,472 |
|
|
$ |
14,215 |
|
|
$ |
5,447 |
|
|
$ |
2,316 |
|
|
$ |
0 |
|
|
$ |
30,450 |
|
Nine
months ended September 30, 2015 |
(in
thousands) |
|
Commercial
and Industrial |
|
Commercial
Real Estate |
|
Residential
Real Estate |
|
Consumer
and Other |
|
Covered
Loans |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for acquired loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance |
|
$ |
431 |
|
|
$ |
337 |
|
|
$ |
51 |
|
|
$ |
22 |
|
|
$ |
0 |
|
|
$ |
841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs |
|
|
(53 |
) |
|
|
(216 |
) |
|
|
(320 |
) |
|
|
(5 |
) |
|
|
0 |
|
|
|
(594 |
) |
Recoveries |
|
|
7 |
|
|
|
129 |
|
|
|
2 |
|
|
|
0 |
|
|
|
0 |
|
|
|
138 |
|
Provision
(credit) |
|
|
(19 |
) |
|
|
(187 |
) |
|
|
353 |
|
|
|
(17 |
) |
|
|
0 |
|
|
|
130 |
|
Ending
Balance |
|
$ |
366 |
|
|
$ |
63 |
|
|
$ |
86 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
515 |
|
Nine
months ended September 30, 2014 |
(in
thousands) |
|
Commercial
and Industrial |
|
Commercial
Real Estate |
|
Residential
Real Estate |
|
Consumer
and Other |
|
Finance
Leases |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for originated loans and leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance |
|
$ |
8,406 |
|
|
$ |
10,459 |
|
|
$ |
5,771 |
|
|
$ |
2,059 |
|
|
$ |
5 |
|
|
$ |
26,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs |
|
|
(275 |
) |
|
|
(619 |
) |
|
|
(385 |
) |
|
|
(952 |
) |
|
|
0 |
|
|
|
(2,231 |
) |
Recoveries |
|
|
557 |
|
|
|
1,506 |
|
|
|
87 |
|
|
|
375 |
|
|
|
0 |
|
|
|
2,525 |
|
Provision
(credit) |
|
|
170 |
|
|
|
(664 |
) |
|
|
(50 |
) |
|
|
740 |
|
|
|
(5 |
) |
|
|
191 |
|
Ending
Balance |
|
$ |
8,858 |
|
|
$ |
10,682 |
|
|
$ |
5,423 |
|
|
$ |
2,222 |
|
|
$ |
0 |
|
|
$ |
27,185 |
|
Nine
months ended September 30, 2014 |
(in
thousands) |
|
Commercial
and Industrial |
|
Commercial
Real Estate |
|
Residential
Real Estate |
|
Consumer
and Other |
|
Covered
Loans |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for acquired loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance |
|
$ |
168 |
|
|
$ |
770 |
|
|
$ |
274 |
|
|
$ |
58 |
|
|
$ |
0 |
|
|
$ |
1,270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs |
|
|
(243 |
) |
|
|
(631 |
) |
|
|
(345 |
) |
|
|
(10 |
) |
|
|
0 |
|
|
|
(1,229 |
) |
Recoveries |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Provision
(credit) |
|
|
170 |
|
|
|
221 |
|
|
|
199 |
|
|
|
(30 |
) |
|
|
0 |
|
|
|
560 |
|
Ending
Balance |
|
$ |
95 |
|
|
$ |
360 |
|
|
$ |
128 |
|
|
$ |
18 |
|
|
$ |
0 |
|
|
$ |
601 |
|
At September
30, 2015 and December 31, 2014, the allocation of the allowance for loan and lease losses summarized on the basis of the Company’s
impairment methodology was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Commercial
and Industrial |
|
Commercial
Real Estate |
|
Residential
Real Estate |
|
Consumer
and Other |
|
Finance
Leases |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for originated loans and leases |
|
|
|
|
|
|
September
30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually
evaluated for impairment |
|
$ |
0 |
|
|
$ |
1,023 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
1,023 |
|
Collectively
evaluated for impairment |
|
|
8,472 |
|
|
|
13,192 |
|
|
|
5,447 |
|
|
|
2,316 |
|
|
|
0 |
|
|
|
29,427 |
|
Ending
balance |
|
$ |
8,472 |
|
|
$ |
14,215 |
|
|
$ |
5,447 |
|
|
$ |
2,316 |
|
|
$ |
0 |
|
|
$ |
30,450 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Commercial
and Industrial |
|
Commercial
Real Estate |
|
Residential
Real Estate |
|
Consumer
and Other |
|
Covered
Loans |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for acquired loans |
|
|
|
|
|
|
|
|
September
30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
Individually
evaluated for impairment |
|
$ |
366 |
|
|
$ |
30 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
396 |
|
Collectively
evaluated for impairment |
|
|
0 |
|
|
|
33 |
|
|
|
86 |
|
|
|
0 |
|
|
|
0 |
|
|
|
119 |
|
Ending
balance |
|
$ |
366 |
|
|
$ |
63 |
|
|
$ |
86 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Commercial
and Industrial |
|
Commercial
Real Estate |
|
Residential
Real Estate |
|
Consumer
and Other |
|
Finance
Leases |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for originated loans and leases |
|
|
|
|
|
|
|
|
December
31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
Individually
evaluated for impairment |
|
$ |
0 |
|
|
$ |
652 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
652 |
|
Collectively
evaluated for impairment |
|
|
9,157 |
|
|
|
11,417 |
|
|
|
5,030 |
|
|
|
1,900 |
|
|
|
0 |
|
|
|
27,504 |
|
Ending
balance |
|
$ |
9,157 |
|
|
$ |
12,069 |
|
|
$ |
5,030 |
|
|
$ |
1,900 |
|
|
$ |
0 |
|
|
$ |
28,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Commercial
and Industrial |
|
Commercial
Real Estate |
|
Residential
Real Estate |
|
Consumer
and Other |
|
Covered
Loans |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for acquired loans |
|
|
|
|
|
|
|
|
December
31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
Individually
evaluated for impairment |
|
$ |
414 |
|
|
$ |
100 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
514 |
|
Collectively
evaluated for impairment |
|
|
17 |
|
|
|
237 |
|
|
|
51 |
|
|
|
22 |
|
|
|
0 |
|
|
|
327 |
|
Ending
balance |
|
$ |
431 |
|
|
$ |
337 |
|
|
$ |
51 |
|
|
$ |
22 |
|
|
$ |
0 |
|
|
$ |
841 |
|
The recorded investment in loans and leases summarized
on the basis of the Company’s impairment methodology as of September 30, 2015 and December 31, 2014 was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Commercial
and Industrial |
|
Commercial
Real Estate |
|
Residential
Real Estate |
|
Consumer
and Other |
|
Finance
Leases |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated
loans and leases |
|
|
|
|
|
|
|
|
September
30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
Individually
evaluated for impairment |
|
$ |
1,075 |
|
|
$ |
9,486 |
|
|
$ |
1,386 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
11,947 |
|
Collectively
evaluated for impairment |
|
|
806,167 |
|
|
|
1,264,784 |
|
|
|
995,424 |
|
|
|
59,396 |
|
|
|
14,339 |
|
|
|
3,140,110 |
|
Total |
|
$ |
807,242 |
|
|
$ |
1,274,270 |
|
|
$ |
996,810 |
|
|
$ |
59,396 |
|
|
$ |
14,339 |
|
|
$ |
3,152,057 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Commercial
and Industrial |
|
Commercial
Real Estate |
|
Residential
Real Estate |
|
Consumer
and Other |
|
Covered
Loans |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired
loans |
|
|
|
|
|
|
|
|
|
|
|
|
September
30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
Individually
evaluated for impairment |
|
$ |
1,174 |
|
|
$ |
6,314 |
|
|
$ |
1,218 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
8,706 |
|
Loans
acquired with deteriorated credit quality |
|
$ |
595 |
|
|
$ |
9,483 |
|
|
$ |
3,868 |
|
|
$ |
0 |
|
|
$ |
14,204 |
|
|
$ |
28,150 |
|
Collectively
evaluated for impairment |
|
|
88,874 |
|
|
|
287,722 |
|
|
|
69,223 |
|
|
|
880 |
|
|
|
1,372 |
|
|
|
448,071 |
|
Total |
|
$ |
90,643 |
|
|
$ |
303,519 |
|
|
$ |
74,309 |
|
|
$ |
880 |
|
|
$ |
15,576 |
|
|
$ |
484,927 |
|
|
(in
thousands) |
|
Commercial
and Industrial |
|
Commercial
Real Estate |
|
Residential
Real Estate |
|
Consumer
and Other |
|
Finance
Leases |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated
loans and leases |
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
Individually
evaluated for impairment |
|
$ |
1,283 |
|
|
|
7,675 |
|
|
$ |
1,408 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
10,366 |
|
Collectively
evaluated for impairment |
|
|
765,753 |
|
|
|
1,103,367 |
|
|
|
896,453 |
|
|
|
54,172 |
|
|
|
12,251 |
|
|
|
2,831,996 |
|
Total |
|
$ |
767,036 |
|
|
$ |
1,111,042 |
|
|
$ |
897,861 |
|
|
$ |
54,172 |
|
|
$ |
12,251 |
|
|
$ |
2,842,362 |
|
|
(in
thousands) |
|
Commercial
and Industrial |
|
Commercial
Real Estate |
|
Residential
Real Estate |
|
Consumer
and Other |
|
Covered
Loans |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired
loans |
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
Individually
evaluated for impairment |
|
$ |
628 |
|
|
|
1,195 |
|
|
$ |
440 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
2,263 |
|
Loans
acquired with deteriorated credit quality |
|
|
995 |
|
|
|
11,640 |
|
|
|
3,669 |
|
|
|
0 |
|
|
|
18,106 |
|
|
|
34,410 |
|
Collectively
evaluated for impairment |
|
|
95,411 |
|
|
|
334,741 |
|
|
|
84,181 |
|
|
|
1,095 |
|
|
|
1,213 |
|
|
|
516,641 |
|
Total |
|
$ |
97,034 |
|
|
$ |
347,576 |
|
|
$ |
88,290 |
|
|
$ |
1,095 |
|
|
$ |
19,319 |
|
|
$ |
553,314 |
|
A
loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due
according to the contractual terms of the loan agreement. Impaired loans consist of our non-homogenous nonaccrual loans, and all
loans restructured in a troubled debt restructuring (TDR). Specific reserves on individually identified impaired 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. For loans that are collateral dependent, impairment is measured based on the fair value of the collateral
less estimated selling costs, and such impaired amounts are generally charged off. The majority of impaired loans are collateral
dependent impaired loans that have limited exposure or require limited specific reserves because of the amount of collateral support
with respect to these loans, and previous charge-offs. Interest payments on impaired 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. Impaired
loans are as follows:
|
|
|
09/30/2015 |
|
|
12/31/2014 |
|
(in
thousands) |
|
|
Recorded
Investment |
|
|
|
Unpaid
Principal Balance |
|
|
|
Related
Allowance |
|
|
|
Recorded
Investment |
|
|
|
Unpaid
Principal Balance |
|
|
|
Related
Allowance |
|
Originated loans and leases
with no related allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
other |
|
$ |
1,075 |
|
|
$ |
1,080 |
|
|
$ |
0 |
|
|
$ |
1,283 |
|
|
$ |
1,307 |
|
|
$ |
0 |
|
Commercial real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
other |
|
|
7,211 |
|
|
|
7,540 |
|
|
|
0 |
|
|
|
6,021 |
|
|
|
6,628 |
|
|
|
0 |
|
Residential real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
equity |
|
|
1,386 |
|
|
|
1,386 |
|
|
|
0 |
|
|
|
1,408 |
|
|
|
1,499 |
|
|
|
0 |
|
Subtotal |
|
$ |
9,672 |
|
|
$ |
10,006 |
|
|
$ |
0 |
|
|
$ |
8,712 |
|
|
$ |
9,434 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated loans and leases
with related allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
real estate other |
|
|
2,275 |
|
|
|
2,298 |
|
|
|
1,023 |
|
|
|
1,654 |
|
|
|
1,654 |
|
|
|
652 |
|
Subtotal |
|
$ |
2,275 |
|
|
$ |
2,298 |
|
|
$ |
1,023 |
|
|
$ |
1,654 |
|
|
$ |
1,654 |
|
|
$ |
652 |
|
Total |
|
$ |
11,947 |
|
|
$ |
12,304 |
|
|
$ |
1,023 |
|
|
$ |
10,366 |
|
|
$ |
11,088 |
|
|
$ |
652 |
|
|
|
|
09/30/2015 |
|
12/31/2014 |
|
(in
thousands) |
|
|
Recorded
Investment |
|
|
|
Unpaid
Principal Balance |
|
|
|
Related
Allowance |
|
|
|
Recorded
Investment |
|
|
|
Unpaid
Principal Balance |
|
|
|
Related
Allowance |
|
Acquired
loans with no related allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and in?dustrial other |
|
$ |
371 |
|
|
$ |
371 |
|
|
$ |
0 |
|
|
$ |
64 |
|
|
$ |
64 |
|
|
$ |
0 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
|
363 |
|
|
|
363 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Commercial
real estate other |
|
|
5,951 |
|
|
|
6,143 |
|
|
|
0 |
|
|
|
941 |
|
|
|
1,204 |
|
|
|
0 |
|
Residential
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
equity |
|
|
1,218 |
|
|
|
1,218 |
|
|
|
0 |
|
|
|
440 |
|
|
|
440 |
|
|
|
0 |
|
Subtotal |
|
$ |
7,903 |
|
|
$ |
8,095 |
|
|
$ |
0 |
|
|
$ |
1,445 |
|
|
$ |
1,708 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired
loans with related allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial other |
|
|
803 |
|
|
|
803 |
|
|
|
396 |
|
|
|
564 |
|
|
|
564 |
|
|
|
414 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
real estate other |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
254 |
|
|
|
254 |
|
|
|
100 |
|
Subtotal |
|
$ |
803 |
|
|
$ |
803 |
|
|
$ |
396 |
|
|
$ |
818 |
|
|
$ |
818 |
|
|
$ |
514 |
|
Total |
|
$ |
8,706 |
|
|
$ |
8,898 |
|
|
$ |
396 |
|
|
$ |
2,263 |
|
|
$ |
2,526 |
|
|
$ |
514 |
|
The average recorded investment and interest income recognized
on impaired loans for the three and nine months ended September 30, 2015 and 2014 was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended 09/30/2015 |
|
|
|
Three
Months Ended 09/30/2014 |
|
(in
thousands) |
|
|
Average
Recorded Investment |
|
|
|
Interest
Income Recognized |
|
|
|
Average
Recorded Investment |
|
|
|
Interest
Income Recognized |
|
Originated
loans and leases with no related allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial other |
|
|
755 |
|
|
|
0 |
|
|
|
1,422 |
|
|
|
0 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
real estate other |
|
|
7,972 |
|
|
|
0 |
|
|
|
7,940 |
|
|
|
42 |
|
Residential
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
equity |
|
|
1,137 |
|
|
|
0 |
|
|
|
1,038 |
|
|
|
0 |
|
Subtotal |
|
$ |
9,864 |
|
|
$ |
0 |
|
|
$ |
10,400 |
|
|
$ |
42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated
loans and leases with related allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial other |
|
|
0 |
|
|
|
0 |
|
|
|
511 |
|
|
|
7 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
real estate other |
|
|
1,110 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Subtotal |
|
$ |
1,110 |
|
|
$ |
0 |
|
|
$ |
511 |
|
|
$ |
7 |
|
Total |
|
$ |
10,974 |
|
|
$ |
0 |
|
|
$ |
10,911 |
|
|
$ |
49 |
|
|
|
Three
Months Ended 09/30/2015 |
|
Three
Months Ended 09/30/2014 |
(in
thousands) |
|
Average
Recorded Investment |
|
Interest
Income Recognized |
|
Average
Recorded Investment |
|
Interest
Income Recognized |
Acquired
loans with no related allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial other |
|
|
558 |
|
|
|
0 |
|
|
|
343 |
|
|
|
0 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
|
366 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Commercial
real estate other |
|
|
4,582 |
|
|
|
0 |
|
|
|
1,312 |
|
|
|
0 |
|
Residential
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
equity |
|
|
1,065 |
|
|
|
0 |
|
|
|
290 |
|
|
|
0 |
|
Subtotal |
|
$ |
6,571 |
|
|
$ |
0 |
|
|
$ |
1,945 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired
loans with related allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial other |
|
|
805 |
|
|
|
0 |
|
|
|
449 |
|
|
|
0 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
real estate other |
|
|
0 |
|
|
|
0 |
|
|
|
271 |
|
|
|
0 |
|
Subtotal |
|
$ |
805 |
|
|
$ |
0 |
|
|
$ |
720 |
|
|
$ |
0 |
|
Total |
|
$ |
7,376 |
|
|
$ |
0 |
|
|
$ |
2,665 |
|
|
$ |
0 |
|
|
|
Nine
Months Ended 09/30/2015 |
|
Nine
Months Ended 09/30/2014 |
(in
thousands) |
|
Average
Recorded Investment |
|
Interest
Income Recognized |
|
Average
Recorded Investment |
|
Interest
Income Recognized |
Originated
loans and leases with no related allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
|
|
|
|
|
|
Commercial
and industrial other |
|
|
567 |
|
|
|
0 |
|
|
|
1,636 |
|
|
|
0 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
real estate other |
|
|
8,123 |
|
|
|
0 |
|
|
|
7,871 |
|
|
|
42 |
|
Residential
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
equity |
|
|
1,104 |
|
|
|
0 |
|
|
|
1,038 |
|
|
|
0 |
|
Subtotal |
|
$ |
9,794 |
|
|
$ |
0 |
|
|
$ |
10,545 |
|
|
$ |
42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated
loans and leases with related allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial other |
|
|
0 |
|
|
|
0 |
|
|
|
511 |
|
|
|
7 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
real estate other |
|
|
949 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Subtotal |
|
$ |
949 |
|
|
$ |
0 |
|
|
$ |
511 |
|
|
$ |
7 |
|
Total |
|
$ |
10,743 |
|
|
$ |
0 |
|
|
$ |
11,056 |
|
|
$ |
49 |
|
|
|
Nine
Months Ended 09/30/2015 |
|
Nine
Months Ended 09/30/2014 |
(in
thousands) |
|
Average
Recorded Investment |
|
Interest
Income Recognized |
|
Average
Recorded Investment |
|
Interest
Income Recognized |
Acquired
loans with no related allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial other |
|
|
565 |
|
|
|
0 |
|
|
|
346 |
|
|
|
0 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
|
369 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Commercial
real estate other |
|
|
3,820 |
|
|
|
0 |
|
|
|
1,333 |
|
|
|
0 |
|
Residential
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
equity |
|
|
1,064 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Residential
real estate other |
|
|
0 |
|
|
|
0 |
|
|
|
290 |
|
|
|
0 |
|
Subtotal |
|
$ |
5,818 |
|
|
$ |
0 |
|
|
$ |
1,969 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired
loans with related allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial other |
|
|
809 |
|
|
|
0 |
|
|
|
454 |
|
|
|
0 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
real estate other |
|
|
0 |
|
|
|
0 |
|
|
|
271 |
|
|
|
0 |
|
Residential
real estate |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Subtotal |
|
$ |
809 |
|
|
$ |
0 |
|
|
$ |
725 |
|
|
$ |
0 |
|
Total |
|
$ |
6,627 |
|
|
$ |
0 |
|
|
$ |
2,694 |
|
|
$ |
0 |
|
Loans
are considered modified in a TDR when, due to a borrower’s financial difficulties, the Company makes a concession(s) to
the borrower that it would not otherwise consider. These modifications may include, among others, an extension for the term of
the loan, and granting a period when interest-only payments can be made with the principal payments made over the remaining term
of the loan or at maturity.
The
following tables present information on loans modified in troubled debt restructuring during the periods indicated.
September
30, 2015 |
|
|
|
Three
months ended |
|
|
|
|
|
|
|
|
|
|
Defaulted
TDRs4 |
(in
thousands) |
|
Number
of Loans |
|
Pre-Modification
Outstanding Recorded Investment |
|
Post-Modification
Outstanding Recorded Investment |
|
Number
of Loans |
|
Post-Modification
Outstanding Recorded Investment |
Commercial
and industrial |
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial other1 |
|
|
1 |
|
|
$ |
52 |
|
|
$ |
52 |
|
|
|
2 |
|
|
$ |
311 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
real estate other2 |
|
|
1 |
|
|
|
1,938 |
|
|
|
1,938 |
|
|
|
0 |
|
|
|
0 |
|
Residential
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
equity3 |
|
|
2 |
|
|
|
76 |
|
|
|
76 |
|
|
|
1 |
|
|
|
43 |
|
Total |
|
|
4 |
|
|
$ |
2,066 |
|
|
$ |
2,066 |
|
|
|
3 |
|
|
$ |
354 |
|
1 Represents
the following concessions: extension of term and reduction of rate |
2 Represents the following concessions:
reduction of rate |
3 Represents the following concessions:
extension of term and reduction of rate |
4 TDRs that defaulted during the three
months ended September 30, 2015 that were restructured in the prior twelve months. |
September
30, 2015 |
|
Nine
months ended |
|
|
|
|
|
|
|
|
Defaulted
TDRs4 |
(in
thousands) |
|
Number
of Loans |
|
Pre-Modification
Outstanding Recorded Investment |
|
Post-Modification
Outstanding Recorded Investment |
|
Number
of Loans |
|
Post-Modification
Outstanding Recorded Investment |
Commercial
and industrial |
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial other1 |
|
|
5 |
|
|
$ |
433 |
|
|
$ |
433 |
|
|
|
2 |
|
|
$ |
311 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
real estate other2 |
|
|
3 |
|
|
$ |
2,552 |
|
|
$ |
2,552 |
|
|
|
0 |
|
|
$ |
0 |
|
Residential
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
equity3 |
|
|
14 |
|
|
|
1,558 |
|
|
|
1,558 |
|
|
|
4 |
|
|
|
279 |
|
Total
|
|
|
22 |
|
|
$ |
4,543 |
|
|
$ |
4,543 |
|
|
|
6 |
|
|
$ |
590 |
|
1 Represents the following concessions:
extension of term (2 loans $319,000) and reduction of rate (3 loans $114,000) |
2 Represents the following concessions:
extension of term (1 loan $28,000) and reduction of rate (1 loan $2.5 million) |
3 Represents the following concessions:
extension of term (9 loans $1.2 million) and reduction of rate (5 loans $928,000) |
4 TDRs that defaulted during the nine months
ended September 30, 2015 that had been restructured in the prior twelve months. |
September
30, 2014 |
|
Nine
months ended |
|
|
|
|
|
|
|
|
Defaulted
TDRs4 |
(in
thousands) |
|
Number
of Loans |
|
Pre-Modification
Outstanding Recorded Investment |
|
Post-Modification
Outstanding Recorded Investment |
|
Number
of Loans |
|
Post-Modification
Outstanding Recorded Investment |
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial other1 |
|
|
1 |
|
|
$ |
88 |
|
|
$ |
88 |
|
|
|
0 |
|
|
$ |
0 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
real estate other2 |
|
|
1 |
|
|
|
480 |
|
|
|
480 |
|
|
|
1 |
|
|
|
63 |
|
Residential
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
equity3 |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1 |
|
|
|
195 |
|
Total
|
|
|
2 |
|
|
$ |
568 |
|
|
$ |
568 |
|
|
|
2 |
|
|
$ |
258 |
|
1 Represents the following concessions:
extension of term and reduction in rate |
2 Represents the following concessions:
extension of term and reduction of rate |
3 TDRs that defaulted during the nine months
ended September 30, 2014 that were restructured in the prior twelve months. |
The following tables present credit quality indicators
(internal risk grade) by class of commercial and industrial loans and commercial real estate loans as of September 30, 2015 and
December 31, 2014. |
September
30, 2015 |
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Commercial
and Industrial Other |
|
Commercial
and Industrial Agriculture |
|
Commercial
Real Estate Other |
|
Commercial
Real Estate Agriculture |
|
Commercial
Real Estate Construction |
|
Total |
Originated
Loans and Leases |
|
|
|
|
|
|
|
|
|
|
Internal
risk grade: |
|
|
|
|
|
|
|
|
|
|
Pass |
|
$ |
735,770 |
|
|
$ |
64,778 |
|
|
$ |
1,070,148 |
|
|
$ |
83,277 |
|
|
$ |
82,469 |
|
|
$ |
2,036,442 |
|
Special Mention |
|
|
1,690 |
|
|
|
164 |
|
|
|
19,555 |
|
|
|
143 |
|
|
|
3,581 |
|
|
|
25,133 |
|
Substandard |
|
|
3,951 |
|
|
|
889 |
|
|
|
14,382 |
|
|
|
715 |
|
|
|
0 |
|
|
|
19,937 |
|
Total |
|
$ |
741,411 |
|
|
$ |
65,831 |
|
|
$ |
1,104,085 |
|
|
$ |
84,135 |
|
|
$ |
86,050 |
|
|
$ |
2,081,512 |
|
September
30, 2015 |
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Commercial
and Industrial Other |
|
Commercial
and Industrial Agriculture |
|
Commercial
Real Estate Other |
|
Commercial
Real Estate Agriculture |
|
Commercial
Real Estate Construction |
|
Total |
Acquired
Loans |
|
|
|
|
|
|
|
|
|
|
Internal
risk grade: |
|
|
|
|
|
|
|
|
|
|
Pass |
|
$ |
85,897 |
|
|
$ |
0 |
|
|
$ |
248,455 |
|
|
$ |
2,154 |
|
|
$ |
32,527 |
|
|
$ |
369,033 |
|
Special
Mention |
|
|
201 |
|
|
|
0 |
|
|
|
1,245 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,446 |
|
Substandard |
|
|
4,545 |
|
|
|
0 |
|
|
|
17,426 |
|
|
|
0 |
|
|
|
1,712 |
|
|
|
23,683 |
|
Total |
|
$ |
90,643 |
|
|
$ |
0 |
|
|
$ |
267,126 |
|
|
$ |
2,154 |
|
|
$ |
34,239 |
|
|
$ |
394,162 |
|
December
31, 2014 |
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Commercial
and Industrial Other |
|
Commercial
and Industrial Agriculture |
|
Commercial
Real Estate Other |
|
Commercial
Real Estate Agriculture |
|
Commercial
Real Estate Construction |
|
Total |
Originated
Loans and Leases |
Internal risk grade: |
Pass |
|
$ |
670,478 |
|
|
$ |
78,250 |
|
|
$ |
945,898 |
|
|
$ |
58,455 |
|
|
$ |
68,696 |
|
|
$ |
1,821,777 |
|
Special Mention |
|
|
12,602 |
|
|
|
151 |
|
|
|
19,692 |
|
|
|
155 |
|
|
|
3,731 |
|
|
|
36,331 |
|
Substandard |
|
|
5,449 |
|
|
|
106 |
|
|
|
14,031 |
|
|
|
384 |
|
|
|
0 |
|
|
|
19,970 |
|
Total |
|
$ |
688,529 |
|
|
$ |
78,507 |
|
|
$ |
979,621 |
|
|
$ |
58,994 |
|
|
$ |
72,427 |
|
|
$ |
1,878,078 |
|
December
31, 2014 |
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Commercial
and Industrial Other |
|
Commercial
and Industrial Agriculture |
|
Commercial
Real Estate Other |
|
Commercial
Real Estate Agriculture |
|
Commercial
Real Estate Construction |
|
Total |
Acquired
Loans |
Internal risk grade: |
Pass |
|
$ |
94,054 |
|
|
$ |
0 |
|
|
$ |
288,193 |
|
|
$ |
1,352 |
|
|
$ |
33,686 |
|
|
$ |
417,285 |
|
Special Mention |
|
|
83 |
|
|
|
0 |
|
|
|
5,675 |
|
|
|
0 |
|
|
|
0 |
|
|
|
5,758 |
|
Substandard |
|
|
2,897 |
|
|
|
0 |
|
|
|
14,620 |
|
|
|
1,830 |
|
|
|
2,220 |
|
|
|
21,567 |
|
Total |
|
$ |
97,034 |
|
|
$ |
0 |
|
|
$ |
308,488 |
|
|
$ |
3,182 |
|
|
$ |
35,906 |
|
|
$ |
444,610 |
|
The following
tables present credit quality indicators by class of residential real estate loans and by class of consumer loans. Nonperforming
loans include nonaccrual, impaired, and loans 90 days past due and accruing interest. All other loans are considered performing
as of September 30, 2015 and December 31, 2014. For purposes of this footnote, acquired loans that were recorded at fair value
at the acquisition date and are 90 days or greater past due are considered performing.
September
30, 2015 |
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Residential
Home Equity |
|
Residential
Mortgages |
|
Consumer
Indirect |
|
Consumer
Other |
|
Total |
Originated Loans and
Leases |
|
|
|
|
|
|
|
|
|
|
Performing |
|
$ |
198,518 |
|
|
$ |
791,093 |
|
|
$ |
17,673 |
|
|
$ |
41,455 |
|
|
$ |
1,048,739 |
|
Nonperforming |
|
|
1,631 |
|
|
|
5,568 |
|
|
|
115 |
|
|
|
153 |
|
|
|
7,467 |
|
Total |
|
$ |
200,149 |
|
|
$ |
796,661 |
|
|
$ |
17,788 |
|
|
$ |
41,608 |
|
|
$ |
1,056,206 |
|
September
30, 2015 |
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Residential
Home Equity |
|
Residential
Mortgages |
|
Consumer
Indirect |
|
Consumer
Other |
|
Total |
Acquired Loans |
|
|
|
|
|
|
|
|
|
|
Performing |
|
$ |
44,376 |
|
|
$ |
26,388 |
|
|
$ |
0 |
|
|
$ |
880 |
|
|
$ |
71,644 |
|
Nonperforming |
|
|
994 |
|
|
|
2,551 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3,545 |
|
Total |
|
$ |
45,370 |
|
|
$ |
28,939 |
|
|
$ |
0 |
|
|
$ |
880 |
|
|
$ |
75,189 |
|
December
31, 2014 |
(in
thousands) |
|
Residential
Home Equity |
|
Residential
Mortgages |
|
Consumer
Indirect |
|
Consumer
Other |
|
Total |
Originated
Loans and Leases |
Performing |
|
$ |
185,619 |
|
|
$ |
704,663 |
|
|
$ |
18,197 |
|
|
$ |
35,626 |
|
|
$ |
944,105 |
|
Nonperforming |
|
|
1,338 |
|
|
|
6,241 |
|
|
|
101 |
|
|
|
248 |
|
|
|
7,928 |
|
Total |
|
$ |
186,957 |
|
|
$ |
710,904 |
|
|
$ |
18,298 |
|
|
$ |
35,874 |
|
|
$ |
952,033 |
|
December
31, 2014 |
(in
thousands) |
|
Residential
Home Equity |
|
Residential
Mortgages |
|
Consumer
Indirect |
|
Consumer
Other |
|
Total |
Acquired
Loans |
Performing |
|
$ |
55,416 |
|
|
$ |
31,304 |
|
|
$ |
0 |
|
|
$ |
1,095 |
|
|
$ |
87,815 |
|
Nonperforming |
|
|
592 |
|
|
|
978 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,570 |
|
Total |
|
$ |
56,008 |
|
|
$ |
32,282 |
|
|
$ |
0 |
|
|
$ |
1,095 |
|
|
$ |
89,385 |
|
7.
FDIC Indemnification Asset Related to Covered Loans
Certain
loans acquired in the VIST Financial acquisition were covered loans with loss share agreements with the FDIC. Under the terms
of loss sharing agreements, the FDIC will reimburse the Company for 70 percent of net losses on covered single family assets up
to $4.0 million, and 70 percent of net losses incurred on covered commercial assets up to $12.0 million. The FDIC will increase
its reimbursement of net losses to 80 percent if net losses exceed the $4.0 million and $12 million thresholds, respectively.
The term for loss sharing on residential real estate loans is ten years, while the term for loss sharing on non-residential real
estate loans is five years in respect to losses and eight years in respect to loss recoveries. The loss share period for the residential
real estate loans expires on December 31, 2020, while the loss share period for the nonresidential real estate loans expires December
31, 2015.
The
receivable arising from the loss sharing agreements (referred to as the “FDIC indemnification asset” on our consolidated
statements of financial condition) is measured separately from covered loans because the agreements are not contractually part
of the covered loans and are not transferable should the Company choose to dispose of the covered loans. As of the acquisition
date with VIST Financial, the Company recorded an aggregate FDIC indemnification asset of $4.4 million, consisting of the present
value of the expected future cash flows the Company expected to receive from the FDIC under loss sharing agreements. The FDIC
indemnification asset is reduced as loss sharing payments are received from the FDIC for losses realized on covered loans. Actual
or expected losses in excess of the acquisition date estimates and accretion of the acquisition date present value discount will
result in an increase in the FDIC indemnification asset and the immediate recognition of non-interest income in our financial
statements.
A
decrease in expected losses would generally result in a corresponding decline in the FDIC indemnification asset and the non-accretable
difference. Reductions in the FDIC indemnification asset due to actual or expected losses that are less than the acquisition date
estimates are recognized prospectively over the shorter of (i) the estimated life of the applicable covered loans or (ii) the
term of the loss sharing agreements with the FDIC.
Changes
in the FDIC indemnification asset during the nine months ended September 30, 2015 are shown below.
Nine months
ended September 30, 2015 |
(in thousands) |
Nine
Months Ended |
|
|
|
|
Balance, beginning of the period |
$ |
1,903 |
|
Prospective adjustment for additional cash flows |
|
(585) |
|
Increase due to impairment on covered loans |
|
0 |
|
Reimbursements from the FDIC |
|
(984) |
Balance, end of
period |
$ |
334 |
8.
Earnings Per Share
Earnings
per share in the table below, for the three and nine month periods ending September 30, 2015 and 2014 are calculated under the
two-class method as required by ASC Topic 260, Earnings Per Share. ASC 260 provides that unvested share-based payment awards that
contain nonforfeitable rights to dividends are participating securities and shall be included in the computation of earnings per
share pursuant to the two-class method. The Company has issued restricted stock awards that contain such rights and are therefore
considered participating securities. Basic earnings per common share are calculated by dividing net income allocable to common
stock by the weighted average number of common shares, excluding participating securities, during the period. Diluted earnings
per common share include the dilutive effect of additional potential shares from stock compensations awards.
|
|
Three
Months Ended |
(in
thousands, except share and per share data) |
|
09/30/2015 |
|
09/30/2014 |
Basic |
|
|
|
|
Net
income available to common shareholders |
|
$ |
14,497 |
|
|
$ |
13,722 |
|
Less:
dividends and undistributed earnings allocated to unvested restricted stock awards |
|
|
(189 |
) |
|
|
(119 |
) |
Net
earnings allocated to common shareholders |
|
|
14,308 |
|
|
|
13,603 |
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding, including participating securities |
|
|
14,934,287 |
|
|
|
14,839,663 |
|
|
|
|
|
|
|
|
|
|
Less:
average participating securities |
|
|
(194,372 |
) |
|
|
(127,954 |
) |
Weighted
average shares outstanding - Basic |
|
|
14,739,915 |
|
|
|
14,711,709 |
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
Net
earnings allocated to common shareholders |
|
|
14,308 |
|
|
|
13,603 |
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding - Basic |
|
|
14,739,915 |
|
|
|
14,711,709 |
|
|
|
|
|
|
|
|
|
|
Dilutive
effect of common stock options or restricted stock awards |
|
|
126,820 |
|
|
|
83,634 |
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding - Diluted |
|
|
14,866,735 |
|
|
|
14,795,343 |
|
|
|
|
|
|
|
|
|
|
Basic
EPS |
|
|
0.97 |
|
|
|
0.92 |
|
Diluted
EPS |
|
|
0.96 |
|
|
|
0.92 |
|
The dilutive effect of common stock options or
restricted awards calculation for the three months ended September 30, 2015 and 2014 excludes stock options, stock appreciation
rights and restricted stock awards covering an aggregate of 78,255 and 208,324 shares, respectively, because the exercise prices
were greater than the average market price during these periods.
|
|
Nine Months
Ended |
(in
thousands, except share and per share data) |
|
09/30/2015 |
|
09/30/2014 |
Basic |
|
|
|
|
Net
income available to common shareholders |
|
$ |
44,567 |
|
|
$ |
39,352 |
|
Less:
dividends and undistributed earnings allocated to unvested restricted stock awards |
|
|
(609 |
) |
|
|
(353 |
) |
Net
earnings allocated to common shareholders |
|
|
43,958 |
|
|
|
38,999 |
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding, including participating securities |
|
|
14,937,988 |
|
|
|
14,821,992 |
|
|
|
|
|
|
|
|
|
|
Less:
average participating securities |
|
|
(206,886 |
) |
|
|
(133,066 |
) |
Weighted
average shares outstanding - Basic |
|
|
14,731,102 |
|
|
|
14,688,926 |
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
Net
earnings allocated to common shareholders |
|
|
43,958 |
|
|
|
38,999 |
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding - Basic |
|
|
14,731,102 |
|
|
|
14,688,926 |
|
|
|
|
|
|
|
|
|
|
Dilutive
effect of common stock options or restricted stock awards |
|
|
129,874 |
|
|
|
108,594 |
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding - Diluted |
|
|
14,860,976 |
|
|
|
14,797,520 |
|
|
|
|
|
|
|
|
|
|
Basic
EPS |
|
|
2.98 |
|
|
|
2.65 |
|
Diluted
EPS |
|
|
2.96 |
|
|
|
2.64 |
|
The dilutive effect of common stock options or
restricted awards calculation for the nine months ended September 30, 2015 and 2014 excludes stock options, stock appreciation
rights and restricted stock awards covering an aggregate of 241,066 and 116,527 shares, respectively, because the exercise prices
were greater than the average market price during these periods.
9. Other Comprehensive
Income (Loss)
The following table presents
reclassifications out of the accumulated other comprehensive income for the three and nine month periods ended September 30, 2015
and 2014.
|
|
Three
months ended September 30, 2015 |
|
|
|
(in
thousands) |
|
Before-Tax
Amount |
|
Tax
(Expense) Benefit |
|
Net
of Tax |
Available-for-sale
securities: |
|
|
|
|
|
|
|
|
|
|
|
|
Change
in net unrealized gain/loss during the period |
|
$ |
9,193 |
|
|
$ |
(3,678 |
) |
|
$ |
5,515 |
|
Reclassification
adjustment for net realized gain on sale of available-for-sale securities included in net income |
|
|
(92 |
) |
|
|
37 |
|
|
|
(55 |
) |
Net
unrealized gains |
|
|
9,101 |
|
|
|
(3,641 |
) |
|
|
5,460 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
benefit plans: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of net retirement plan actuarial gain |
|
|
201 |
|
|
|
(79 |
) |
|
|
122 |
|
Amortization
of net retirement plan prior service cost |
|
|
20 |
|
|
|
(9 |
) |
|
|
11 |
|
Employee
benefit plans |
|
|
221 |
|
|
|
(88 |
) |
|
|
133 |
|
Other
comprehensive income (loss) |
|
$ |
9,322 |
|
|
$ |
(3,729 |
) |
|
$ |
5,593 |
|
|
|
Three
months ended September 30, 2014 |
|
|
|
(in
thousands) |
|
Before-Tax
Amount |
|
Tax
(Expense) Benefit |
|
Net
of Tax |
Available-for-sale
securities: |
|
|
|
|
|
|
|
|
|
|
|
|
Change
in net unrealized gain/loss during the period |
|
$ |
(6,871 |
) |
|
$ |
2,748 |
|
|
$ |
(4,123 |
) |
Reclassification
adjustment for net realized gain on sale of available-for-sale securities included in net income |
|
|
(20 |
) |
|
|
8 |
|
|
|
(12 |
) |
Net
unrealized losses |
|
|
(6,891 |
) |
|
|
2,756 |
|
|
|
(4,135 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
benefit plans: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of net retirement plan actuarial gain |
|
|
266 |
|
|
|
(107 |
) |
|
|
159 |
|
Amortization
of net retirement plan prior service cost |
|
|
1 |
|
|
|
0 |
|
|
|
1 |
|
Employee
benefit plans |
|
|
267 |
|
|
|
(107 |
) |
|
|
160 |
|
Other
comprehensive (loss) income |
|
$ |
(6,624 |
) |
|
$ |
2,649 |
|
|
$ |
(3,975 |
) |
|
|
Nine
months ended September 30, 2015 |
|
|
|
(in
thousands) |
|
Before-Tax
Amount |
|
Tax
(Expense) Benefit |
|
Net
of Tax |
Available-for-sale
securities: |
|
|
|
|
|
|
|
|
|
|
|
|
Change
in net unrealized gain/loss during the period |
|
$ |
6,472 |
|
|
$ |
(2,589 |
) |
|
$ |
3,883 |
|
Reclassification
adjustment for net realized gain on sale of available-for-sale securities included in net income |
|
|
(1,105 |
) |
|
|
442 |
|
|
|
(663 |
) |
Net
unrealized gains (losses) |
|
|
5,367 |
|
|
|
(2,147 |
) |
|
|
3,220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
benefit plans: |
|
|
|
|
|
|
|
|
|
|
|
|
Recognized
actuarial gain due to curtailment |
|
|
(5,326 |
) |
|
|
2,130 |
|
|
|
(3,196 |
) |
Net
retirement plan loss |
|
|
1,950 |
|
|
|
(780 |
) |
|
|
1,170 |
|
Amortization
of net retirement plan actuarial gain |
|
|
1,663 |
|
|
|
(664 |
) |
|
|
999 |
|
Amortization
of net retirement plan prior service credit |
|
|
(351 |
) |
|
|
141 |
|
|
|
(210 |
) |
Employee
benefit plans |
|
|
(2,064 |
) |
|
|
827 |
|
|
|
(1,237 |
) |
Other
comprehensive income (loss) |
|
$ |
3,303 |
|
|
$ |
(1,320 |
) |
|
$ |
1,983 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine
months ended September 30, 2014 |
|
|
|
(in
thousands) |
|
Before-Tax
Amount |
|
Tax
(Expense) Benefit |
|
Net
of Tax |
Available-for-sale
securities: |
|
|
|
|
|
|
|
|
|
|
|
|
Change
in net unrealized gain/loss during the period |
|
$ |
13,195 |
|
|
$ |
(5,277 |
) |
|
$ |
7,918 |
|
Reclassification
adjustment for net realized gain on sale of available-for-sale securities included in net income |
|
|
(151 |
) |
|
|
61 |
|
|
|
(90 |
) |
Net
unrealized gains (losses) |
|
|
13,044 |
|
|
|
(5,216 |
) |
|
|
7,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
benefit plans: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of net retirement plan actuarial gain |
|
|
798 |
|
|
|
(319 |
) |
|
|
479 |
|
Amortization
of net retirement plan prior service cost |
|
|
3 |
|
|
|
(1 |
) |
|
|
2 |
|
Employee
benefit plans |
|
|
801 |
|
|
|
(320 |
) |
|
|
481 |
|
Other
comprehensive income (loss) |
|
$ |
13,845 |
|
|
$ |
(5,536 |
) |
|
$ |
8,309 |
|
The following
table presents the activity in our accumulated other comprehensive income (loss) for the periods indicated:
(in
thousands) |
|
Available-for-Sale
Securities |
|
Employee
Benefit Plans |
|
Accumulated
Other Comprehensive Income |
Balance
at July 1, 2015 |
|
$ |
627 |
|
|
$ |
(28,248 |
) |
|
$ |
(27,621 |
) |
Other
comprehensive loss before reclassifications |
|
|
5,515 |
|
|
|
0 |
|
|
|
5,515 |
|
Amounts
reclassified from accumulated other comprehensive loss |
|
|
(55 |
) |
|
|
133 |
|
|
|
78 |
|
Net
current-period other comprehensive income (loss) |
|
|
5,460 |
|
|
|
133 |
|
|
|
5,593 |
|
Balance
at September 30, 2015 |
|
$ |
6,087 |
|
|
$ |
(28,115 |
) |
|
$ |
(22,028 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at January 1, 2015 |
|
$ |
2,867 |
|
|
$ |
(26,878 |
) |
|
$ |
(24,011 |
) |
Other
comprehensive income before reclassifications |
|
|
3,883 |
|
|
|
0 |
|
|
|
3,883 |
|
Amounts
reclassified from accumulated other comprehensive loss |
|
|
(663 |
) |
|
|
(1,237 |
) |
|
|
(1,900 |
) |
Net
current-period other comprehensive income (loss) |
|
|
3,220 |
|
|
|
(1,237 |
) |
|
|
1,983 |
|
Balance
at September 30, 2015 |
|
$ |
6,087 |
|
|
$ |
(28,115 |
) |
|
$ |
(22,028 |
) |
(in
thousands) |
|
Available-for-Sale
Securities |
|
Employee
Benefit Plans |
|
Accumulated
Other Comprehensive Income |
Balance
at July 1, 2014 |
|
$ |
3,606 |
|
|
$ |
(16,441 |
) |
|
$ |
(12,835 |
) |
Other
comprehensive income (loss) before reclassifications |
|
|
(4,123 |
) |
|
|
0 |
|
|
|
(4,123 |
) |
Amounts
reclassified from accumulated other comprehensive income |
|
|
(12 |
) |
|
|
160 |
|
|
|
148 |
|
Net
current-period other comprehensive (loss) income |
|
|
(4,135 |
) |
|
|
160 |
|
|
|
(3,975 |
) |
Balance
at September 30, 2014 |
|
$ |
(529 |
) |
|
$ |
(16,281 |
) |
|
$ |
(16,810 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at January 1, 2014 |
|
$ |
(8,357 |
) |
|
$ |
(16,762 |
) |
|
$ |
(25,119 |
) |
Other
comprehensive income before reclassifications |
|
|
7,918 |
|
|
|
0 |
|
|
|
7,918 |
|
Amounts
reclassified from accumulated other comprehensive (loss) income |
|
|
(90 |
) |
|
|
481 |
|
|
|
391 |
|
Net
current-period other comprehensive income |
|
|
7,828 |
|
|
|
481 |
|
|
|
8,309 |
|
Balance
at September 30, 2014 |
|
$ |
(529 |
) |
|
$ |
(16,281 |
) |
|
$ |
(16,810 |
) |
The
following tables present the amounts reclassified out of each component of accumulated other comprehensive (loss) income for the
three and nine months ended September 30, 2015 and 2014. In the below tables the accumulated other comprehensive income components
are included in the computation of net periodic benefit cost (See Note 10 - “Employee Benefit Plan”), and amounts
in parentheses indicate debits to the income statement.
Three
months ended September 30, 2015
Details
about Accumulated other Comprehensive Income Components (in thousands) |
|
Amount
Reclassified from Accumulated Other Comprehensive (Loss) Income |
|
Affected
Line Item in the Statement Where Net Income is Presented |
Available-for-sale securities: |
|
|
|
|
|
|
Unrealized gains and losses
on available-for-sale securities |
|
$ |
92 |
|
|
Net gain on securities transactions |
|
|
|
(37 |
) |
|
Tax expense |
|
|
|
55 |
|
|
Net of tax |
Employee benefit plans: |
|
|
|
|
|
|
Amortization of the following |
|
|
|
|
|
|
Net retirement plan
actuarial loss |
|
|
(201 |
) |
|
|
Net
retirement plan prior service credit |
|
|
(20 |
) |
|
|
|
|
|
(221 |
) |
|
Total before tax |
|
|
|
88 |
|
|
Tax benefit |
|
|
|
(133 |
) |
|
Net of tax |
Nine
months ended September 30, 2015
Details
about Accumulated other Comprehensive Income Components (in thousands) |
|
Amount
Reclassified from Accumulated Other Comprehensive (Loss) Income |
|
Affected
Line Item in the Statement Where Net Income is Presented |
Available-for-sale securities: |
|
|
|
|
Unrealized gains and losses
on available-for-sale securities |
|
$ |
1,105 |
|
|
Net gain on securities transactions |
|
|
|
(442 |
) |
|
Tax expense |
|
|
|
663 |
|
|
Net of tax |
Employee benefit plans: |
|
|
|
|
|
|
Amortization of the following |
|
|
|
|
|
|
Net retirement plan
actuarial loss |
|
|
(1,663 |
) |
|
|
Net
retirement plan prior service cost |
|
|
351 |
|
|
|
|
|
|
(1,312 |
) |
|
Total before tax |
|
|
|
523 |
|
|
Tax benefit |
|
|
|
(789 |
) |
|
Net of tax |
Three
months ended September 30, 2014
Details
about Accumulated other Comprehensive Income Components (in thousands) |
|
Amount
Reclassified from Accumulated Other Comprehensive Income |
|
Affected
Line Item in the Statement Where Net Income is Presented |
Available-for-sale securities: |
|
|
|
|
Unrealized gains and losses
on available-for-sale securities |
|
$ |
20 |
|
|
Net gain on securities transactions |
|
|
|
(8 |
) |
|
Tax expense |
|
|
|
12 |
|
|
Net of tax |
Employee benefit plans: |
|
|
|
|
|
|
Amortization of the following |
|
|
|
|
|
|
Net retirement plan
actuarial loss |
|
|
(266 |
) |
|
|
Net
retirement plan prior service cost |
|
|
(1 |
) |
|
|
|
|
|
(267 |
) |
|
Total before tax |
|
|
|
107 |
|
|
Tax benefit |
|
|
|
(160 |
) |
|
Net of tax |
Nine
months ended September 30, 2014
Details
about Accumulated other Comprehensive Income Components (in thousands) |
|
Amount
Reclassified from Accumulated Other Comprehensive (Loss) Income |
|
Affected
Line Item in the Statement Where Net Income is Presented |
Available-for-sale securities: |
|
|
|
|
Unrealized gains and losses
on available-for-sale securities |
|
$ |
151 |
|
|
Net gain on securities transactions |
|
|
|
(61 |
) |
|
Tax expense |
|
|
|
90 |
|
|
Net of tax |
Employee benefit plans: |
|
|
|
|
|
|
Amortization of the following |
|
|
|
|
|
|
Net retirement plan
actuarial loss |
|
|
(798 |
) |
|
|
Net
retirement plan prior service cost |
|
|
(3 |
) |
|
|
|
|
|
(801 |
) |
|
Total before tax |
|
|
|
320 |
|
|
Tax benefit |
|
|
|
(481 |
) |
|
Net of tax |
10.
Employee Benefit Plan
The
following table sets forth the amount of the net periodic benefit cost recognized by the Company for the Company’s pension
plan, post-retirement plan (Life and Health), and supplemental employee retirement plans (“SERP”) including the
following components: service cost, interest cost, expected return on plan assets for the period, amortization of the unrecognized
transitional obligation or transition asset, and the amounts of recognized gains and losses, prior service cost recognized, and
gain or loss recognized due to settlement or curtailment.
Components
of Net Periodic Benefit Cost
|
|
Pension
Benefits |
|
Life and
Health |
|
SERP Benefits |
|
|
Three
Months Ended |
|
Three
Months Ended |
|
Three
Months Ended |
(in
thousands) |
|
|
09/30/2015 |
|
|
|
09/30/2014 |
|
|
|
09/30/2015 |
|
|
|
09/30/2014 |
|
|
|
09/30/2015 |
|
|
|
09/30/2014 |
|
Service
cost |
|
$ |
22 |
|
|
$ |
608 |
|
|
$ |
59 |
|
|
$ |
50 |
|
|
$ |
50 |
|
|
$ |
56 |
|
Interest
cost |
|
|
145 |
|
|
|
767 |
|
|
|
81 |
|
|
|
92 |
|
|
|
232 |
|
|
|
216 |
|
Expected
return on plan assets |
|
|
(240 |
) |
|
|
(1,256 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Amortization
of net retirement plan actuarial loss |
|
|
41 |
|
|
|
215 |
|
|
|
5 |
|
|
|
0 |
|
|
|
156 |
|
|
|
51 |
|
Amortization
of net retirement plan prior service (credit) cost |
|
|
(3 |
) |
|
|
(31 |
) |
|
|
4 |
|
|
|
4 |
|
|
|
18 |
|
|
|
28 |
|
Net
periodic benefit cost |
|
$ |
(35 |
) |
|
$ |
303 |
|
|
$ |
149 |
|
|
$ |
146 |
|
|
$ |
456 |
|
|
$ |
351 |
|
Components
of Net Period Benefit Cost
|
|
Pension
Benefits |
|
Life and
Health |
|
SERP Benefits |
|
|
Nine Months
Ended |
|
Nine Months
Ended |
|
Nine Months
Ended |
(in
thousands) |
|
09/30/2015 |
|
09/30/2014 |
|
09/30/2015 |
|
09/30/2014 |
|
09/30/2015 |
|
09/30/2014 |
Service
cost |
|
$ |
1,394 |
|
|
$ |
1,825 |
|
|
$ |
177 |
|
|
$ |
151 |
|
|
$ |
150 |
|
|
$ |
167 |
|
Interest
cost |
|
|
1,610 |
|
|
|
2,302 |
|
|
|
242 |
|
|
|
275 |
|
|
|
696 |
|
|
|
649 |
|
Expected
return on plan assets |
|
|
(2,748 |
) |
|
|
(3,768 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Amortization
of net retirement plan actuarial loss |
|
|
1,180 |
|
|
|
644 |
|
|
|
14 |
|
|
|
0 |
|
|
|
469 |
|
|
|
154 |
|
Amortization
of net retirement plan prior service cost (credit) |
|
|
(417 |
) |
|
|
(92 |
) |
|
|
12 |
|
|
|
12 |
|
|
|
54 |
|
|
|
84 |
|
Recognized
actuarial gain due to curtailments |
|
|
(6,003 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Net
periodic benefit cost |
|
$ |
(4,984 |
) |
|
$ |
911 |
|
|
$ |
445 |
|
|
$ |
438 |
|
|
$ |
1,369 |
|
|
$ |
1,054 |
|
The
net periodic benefit cost for the Company’s benefit plans are recorded as a component of salaries and benefits in the consolidated
statements of income.
The
Company realized approximately $1.2 million and $481,000, net of tax, as amortization of amounts previously recognized in accumulated
other comprehensive income, for the nine months ended September 30, 2015 and 2014, respectively.
The
Company is not required to contribute to the pension plan in 2015, but it may make voluntary contributions. The Company did not
contribute to the pension plan in the nine months ended September 30, 2015 or 2014.
Effective
July 31, 2015, the Retirement Plan (Accruing Pension Plan) was frozen (participants will no longer accrue benefits after July
31, 2015). The plan freeze was reflected on June 30, 2015, and in accordance with ASC 715 Compensation – Retirement Benefits,
a curtailment was triggered. Under a Curtailment due to a plan freeze, any unrecognized Prior Service Cost bases must be fully
recognized in benefit cost at the time of the curtailment. The sum of unrecognized Prior Service Cost bases as of June 30, 2015
was $6.0 million.
11. Other
Income and Operating Expense
Other
income and operating expense totals are presented in the table below. Components of these totals exceeding 1% of the aggregate
of total noninterest income and total noninterest expenses for any of the years presented below are stated separately.
|
|
Three
Months Ended |
|
Nine Months
Ended |
(in
thousands) |
|
09/30/2015 |
|
09/30/2014 |
|
09/30/2015 |
|
09/30/2014 |
Noninterest
Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
service charges |
|
$ |
710 |
|
|
$ |
708 |
|
|
$ |
2,208 |
|
|
$ |
2,511 |
|
Increase
in cash surrender value of corporate owned life insurance |
|
|
474 |
|
|
|
456 |
|
|
|
1,643 |
|
|
|
1,431 |
|
Net
gain on sale of loans |
|
|
11 |
|
|
|
125 |
|
|
|
21 |
|
|
|
345 |
|
Other
income |
|
|
474 |
|
|
|
603 |
|
|
|
2,518 |
|
|
|
1,842 |
|
Total
other income |
|
$ |
1,669 |
|
|
$ |
1,892 |
|
|
$ |
6,390 |
|
|
$ |
6,129 |
|
Noninterest
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing
expense |
|
$ |
919 |
|
|
$ |
1,029 |
|
|
$ |
3,373 |
|
|
$ |
3,448 |
|
Professional
fees |
|
|
1,334 |
|
|
|
1,585 |
|
|
|
4,248 |
|
|
|
4,484 |
|
Legal
fees |
|
|
377 |
|
|
|
130 |
|
|
|
1,130 |
|
|
|
1,191 |
|
Software
licensing and maintenance |
|
|
1,186 |
|
|
|
1,196 |
|
|
|
3,407 |
|
|
|
3,512 |
|
Cardholder
expense |
|
|
684 |
|
|
|
678 |
|
|
|
1,951 |
|
|
|
2,076 |
|
Other
expenses |
|
|
4,009 |
|
|
|
5,805 |
|
|
|
13,732 |
|
|
|
15,800 |
|
Total
other operating expense |
|
$ |
8,509 |
|
|
$ |
10,423 |
|
|
$ |
27,841 |
|
|
$ |
30,511 |
|
12.
Financial Guarantees
The
Company currently does
not issue
any guarantees
that would
require liability
recognition or disclosure,
other than standby
letters of credit.
The Company extends
standby letters of
credit to
its customers
in the
normal course of
business. The standby
letters of
credit are generally short-term.
As of September
30, 2015, the Company’s maximum potential
obligation under standby letters of credit
was $58.4 million compared
to $58.2 million at December
31, 2014. Management uses
the same
credit policies
to extend
standby letters
of credit that
it uses for
on-balance sheet
lending decisions
and may require collateral
to support standby letters of
credit based upon its evaluation
of the counterparty.
Management does not anticipate
any significant losses as a result
of these transactions, and has
determined that the
fair value
of standby letters of credit is
not significant.
13.
Segment and Related Information
The
Company manages its operations through three reportable business segments in accordance with the standards set forth in FASB ASC
280, “Segment Reporting”: (i) banking (“Banking”), (ii) insurance (“Tompkins Insurance Agencies,
Inc.”) and (iii) wealth management (“Tompkins Financial Advisors”). The Company’s insurance services
and wealth management services, other than trust services, are managed separately from the Banking segment.
Banking
The
Banking segment is primarily comprised of the four banking subsidiaries: Tompkins Trust Company, a commercial bank with thirteen
banking offices located in Ithaca, NY and surrounding communities; The Bank of Castile (DBA Tompkins Bank of Castile), a commercial
bank with seventeen banking offices located in the Genesee Valley region of New York State as well as Monroe County; Mahopac Bank
(DBA Tompkins Mahopac Bank), a commercial bank with fourteen full-service banking offices located in the counties north of New
York City; and VIST Bank (DBA Tompkins VIST Bank), a banking organization with nineteen banking offices headquartered and operating
in the areas surrounding southeastern Pennsylvania.
Insurance
The
Company provides property and casualty insurance services and employee benefits consulting through Tompkins Insurance Agencies,
Inc., a 100% wholly-owned subsidiary of the Company, headquartered in Batavia, New York. Tompkins Insurance is an independent
insurance agency, representing many major insurance carriers and provides employee benefit consulting to employers in Western
and Central New York and Southeastern Pennsylvania, assisting them with their medical, group life insurance and group disability
insurance. Through the 2012 acquisition of VIST Financial, Tompkins Insurance expanded its operations with the addition of VIST
Insurance, a full service insurance agency offering a similar array of insurance products as Tompkins Insurance in southeastern
Pennsylvania.
Wealth
Management
The
Wealth Management segment is generally organized under the Tompkins Financial Advisors brand. Tompkins Financial Advisors offers
a comprehensive suite of financial services to customers, including trust and estate services, investment management and financial
and insurance planning for individuals, corporate executives, small business owners and high net worth individuals. Tompkins Financial
Advisors has offices in each of the Company’s four subsidiary banks.
Summarized
financial information concerning the Company’s reportable segments and the reconciliation to the Company’s consolidated
results is shown in the following table. Investment in subsidiaries is netted out of the presentations below. The “Intercompany”
column identifies the intercompany activities of revenues, expenses and other assets between the banking, insurance and wealth
management services segments. The Company accounts for intercompany fees and services at an estimated fair value according to
regulatory requirements for the services provided. Intercompany items relate primarily to the use of human resources, information
systems, accounting and marketing services provided by any of the banks and the holding company. All other accounting policies
are the same as those described in the summary of significant accounting policies in the 2014 Annual Report on Form 10-K.
As
of and for the three months ended September 30, 2015 |
(in
thousands) |
|
Banking |
|
Insurance |
|
Wealth
Management |
|
Intercompany |
|
Consolidated |
Interest
income |
|
$ |
47,490 |
|
|
$ |
0 |
|
|
$ |
40 |
|
|
$ |
0 |
|
|
$ |
47,530 |
|
Interest
expense |
|
|
5,144 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
5,144 |
|
Net
interest income |
|
|
42,346 |
|
|
|
0 |
|
|
|
40 |
|
|
|
0 |
|
|
|
42,386 |
|
Provision
for loan and lease losses |
|
|
281 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
281 |
|
Noninterest
income |
|
|
6,293 |
|
|
|
7,621 |
|
|
|
3,788 |
|
|
|
(280 |
) |
|
|
17,422 |
|
Noninterest
expense |
|
|
29,247 |
|
|
|
6,069 |
|
|
|
2,846 |
|
|
|
(280 |
) |
|
|
37,882 |
|
Income
before income tax expense |
|
|
19,111 |
|
|
|
1,552 |
|
|
|
982 |
|
|
|
0 |
|
|
|
21,645 |
|
Income
tax expense |
|
|
6,156 |
|
|
|
634 |
|
|
|
325 |
|
|
|
0 |
|
|
|
7,115 |
|
Net
Income attributable to noncontrolling interests and Tompkins Financial Corporation |
|
|
12,955 |
|
|
|
918 |
|
|
|
657 |
|
|
|
0 |
|
|
|
14,530 |
|
Less:
Net income attributable to noncontrolling interests |
|
|
33 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
33 |
|
Net
Income attributable to Tompkins Financial Corporation
|
|
$ |
12,922 |
|
|
$ |
918 |
|
|
$ |
657 |
|
|
$ |
0 |
|
|
$ |
14,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization |
|
$ |
1,503 |
|
|
$ |
93 |
|
|
$ |
30 |
|
|
$ |
0 |
|
|
$ |
1,626 |
|
Assets |
|
|
5,551,880 |
|
|
|
36,825 |
|
|
|
13,782 |
|
|
|
(7,769 |
) |
|
|
5,594,718 |
|
Goodwill |
|
|
64,500 |
|
|
|
19,662 |
|
|
|
8,081 |
|
|
|
0 |
|
|
|
92,243 |
|
Other
intangibles, net |
|
|
8,173 |
|
|
|
4,388 |
|
|
|
467 |
|
|
|
0 |
|
|
|
13,028 |
|
Net
loans and leases |
|
|
3,603,348 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3,603,348 |
|
Deposits |
|
|
4,444,332 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(7,259 |
) |
|
|
4,437,073 |
|
Total
Equity |
|
|
478,567 |
|
|
|
27,776 |
|
|
|
11,616 |
|
|
|
0 |
|
|
|
517,959 |
|
As
of and for the three months ended September 30, 2014 |
(in
thousands) |
|
Banking |
|
Insurance |
|
Wealth
Management |
|
Intercompany |
|
Consolidated |
Interest
income |
|
$ |
46,583 |
|
|
$ |
1 |
|
|
$ |
35 |
|
|
$ |
(1 |
) |
|
$ |
46,618 |
|
Interest
expense |
|
|
5,044 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(1 |
) |
|
|
5,043 |
|
Net
interest income |
|
|
41,539 |
|
|
|
1 |
|
|
|
35 |
|
|
|
0 |
|
|
|
41,575 |
|
Provision
for loan and lease losses |
|
|
(59 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(59 |
) |
Noninterest
income |
|
|
6,607 |
|
|
|
7,555 |
|
|
|
3,746 |
|
|
|
(353 |
) |
|
|
17,555 |
|
Noninterest
expense |
|
|
30,129 |
|
|
|
5,977 |
|
|
|
2,784 |
|
|
|
(353 |
) |
|
|
38,537 |
|
Income
before income tax expense |
|
|
18,076 |
|
|
|
1,579 |
|
|
|
997 |
|
|
|
0 |
|
|
|
20,652 |
|
Income
tax expense |
|
|
5,903 |
|
|
|
653 |
|
|
|
341 |
|
|
|
0 |
|
|
|
6,897 |
|
Net
Income attributable to noncontrolling interests and
Tompkins Financial Corporation |
|
|
12,173 |
|
|
|
926 |
|
|
|
656 |
|
|
|
0 |
|
|
|
13,755 |
|
Less:
Net income attributable to noncontrolling interests |
|
|
33 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
33 |
|
Net
Income attributable to Tompkins Financial Corporation
|
|
$ |
12,140 |
|
|
$ |
926 |
|
|
$ |
656 |
|
|
$ |
0 |
|
|
$ |
13,722 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization |
|
$ |
1,320 |
|
|
$ |
75 |
|
|
$ |
36 |
|
|
$ |
0 |
|
|
$ |
1,431 |
|
Assets |
|
|
5,049,237 |
|
|
|
34,742 |
|
|
|
13,634 |
|
|
|
(6,694 |
) |
|
|
5,090,919 |
|
Goodwill |
|
|
64,500 |
|
|
|
19,662 |
|
|
|
8,081 |
|
|
|
0 |
|
|
|
92,243 |
|
Other
intangibles, net |
|
|
9,681 |
|
|
|
4,987 |
|
|
|
538 |
|
|
|
0 |
|
|
|
15,206 |
|
Net
loans and leases |
|
|
3,229,683 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3,229,683 |
|
Deposits |
|
|
4,219,127 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(6,267 |
) |
|
|
4,212,860 |
|
Total
Equity |
|
|
453,317 |
|
|
|
27,177 |
|
|
|
10,117 |
|
|
|
0 |
|
|
|
490,611 |
|
For
the nine months ended September 30, 2015 |
(in
thousands) |
|
Banking |
|
Insurance |
|
Wealth
Management |
|
Intercompany |
|
Consolidated |
Interest
income |
|
$ |
140,066 |
|
|
$ |
2 |
|
|
$ |
114 |
|
|
$ |
(1 |
) |
|
$ |
140,181 |
|
Interest
expense |
|
|
15,238 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(1 |
) |
|
|
15,237 |
|
Net
interest income |
|
|
124,828 |
|
|
|
2 |
|
|
|
114 |
|
|
|
0 |
|
|
|
124,944 |
|
Provision
for loan and lease losses |
|
|
1,412 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,412 |
|
Noninterest
income |
|
|
20,346 |
|
|
|
22,508 |
|
|
|
11,919 |
|
|
|
(743 |
) |
|
|
54,030 |
|
Noninterest
expense |
|
|
85,092 |
|
|
|
17,653 |
|
|
|
8,490 |
|
|
|
(743 |
) |
|
|
110,492 |
|
Income
before income tax expense |
|
|
58,670 |
|
|
|
4,857 |
|
|
|
3,543 |
|
|
|
0 |
|
|
|
67,070 |
|
Income
tax expense |
|
|
19,260 |
|
|
|
1,951 |
|
|
|
1,194 |
|
|
|
0 |
|
|
|
22,405 |
|
Net
Income attributable to noncontrolling interests and Tompkins Financial Corporation |
|
|
39,410 |
|
|
|
2,906 |
|
|
|
2,349 |
|
|
|
0 |
|
|
|
44,665 |
|
Less:
Net income attributable to noncontrolling interests |
|
|
98 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
98 |
|
Net
Income attributable to Tompkins Financial Corporation |
|
$ |
39,312 |
|
|
$ |
2,906 |
|
|
$ |
2,349 |
|
|
$ |
0 |
|
|
$ |
44,567 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization |
|
$ |
4,465 |
|
|
$ |
276 |
|
|
$ |
93 |
|
|
$ |
0 |
|
|
$ |
4,834 |
|
For
the nine months ended September 30, 2014 |
(in
thousands) |
|
Banking |
|
Insurance |
|
Wealth
Management |
|
Intercompany |
|
Consolidated |
Interest
income |
|
$ |
137,703 |
|
|
$ |
5 |
|
|
$ |
100 |
|
|
$ |
(5 |
) |
|
$ |
137,803 |
|
Interest
expense |
|
|
15,688 |
|
|
|
2 |
|
|
|
0 |
|
|
|
(5 |
) |
|
|
15,685 |
|
Net
interest income |
|
|
122,015 |
|
|
|
3 |
|
|
|
100 |
|
|
|
0 |
|
|
|
122,118 |
|
Provision
for loan and lease losses |
|
|
751 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
751 |
|
Noninterest
income |
|
|
19,835 |
|
|
|
21,918 |
|
|
|
11,990 |
|
|
|
(1,034 |
) |
|
|
52,709 |
|
Noninterest
expense |
|
|
90,560 |
|
|
|
17,541 |
|
|
|
8,608 |
|
|
|
(1,034 |
) |
|
|
115,675 |
|
Income
before income tax expense |
|
|
50,539 |
|
|
|
4,380 |
|
|
|
3,482 |
|
|
|
0 |
|
|
|
58,401 |
|
Income
tax expense |
|
|
15,982 |
|
|
|
1,776 |
|
|
|
1,193 |
|
|
|
0 |
|
|
|
18,951 |
|
Net
Income attributable to noncontrolling interests and Tompkins Financial Corporation |
|
|
34,557 |
|
|
|
2,604 |
|
|
|
2,289 |
|
|
|
0 |
|
|
|
39,450 |
|
Less:
Net income attributable to noncontrolling interests |
|
|
98 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
98 |
|
Net
Income attributable to Tompkins Financial Corporation |
|
$ |
34,459 |
|
|
$ |
2,604 |
|
|
$ |
2,289 |
|
|
$ |
0 |
|
|
$ |
39,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization |
|
$ |
3,909 |
|
|
$ |
184 |
|
|
$ |
110 |
|
|
$ |
0 |
|
|
$ |
4,203 |
|
14.
Fair Value
FASB
ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles and expands disclosures about fair value measurements. FASB ASC Topic 820 also
establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy
gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements)
and the lowest priority to unobservable inputs (Level 3 measurements). Transfers between levels, when determined to be appropriate,
are recognized at the end of each reporting period.
The
three levels of the fair value hierarchy under FASB ASC Topic 820 are:
Level
1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted
assets or liabilities;
Level
2 – Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or
liabilities in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the
full term of the asset or liability;
Level
3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable
(i.e., supported by little or no market activity).
The
following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September
30, 2015 and December 31, 2014, segregated by the level of valuation inputs within the fair value hierarchy used to measure fair
value.
Recurring
Fair Value Measurements |
|
|
|
|
|
|
|
|
September
30, 2015 |
|
|
|
|
|
|
|
|
(in
thousands) |
|
Total |
|
(Level
1) |
|
(Level
2) |
|
(Level
3) |
Trading
securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations
of U.S. Government sponsored entities |
|
$ |
6,814 |
|
|
$ |
6,814 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Mortgage-backed
securities – residential U.S. Government sponsored entities |
|
|
935 |
|
|
|
935 |
|
|
|
|
|
|
|
0 |
|
Available-for-sale
securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations
of U.S. Government sponsored entities |
|
|
557,271 |
|
|
|
0 |
|
|
|
557,271 |
|
|
|
0 |
|
Obligations
of U.S. states and political subdivisions |
|
|
74,405 |
|
|
|
0 |
|
|
|
74,405 |
|
|
|
0 |
|
Mortgage-backed
securities – residential, issued by: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Government agencies |
|
|
101,554 |
|
|
|
0 |
|
|
|
101,554 |
|
|
|
0 |
|
U.S.
Government sponsored entities |
|
|
651,745 |
|
|
|
0 |
|
|
|
651,745 |
|
|
|
0 |
|
Non-U.S.
Government agencies or sponsored entities |
|
|
203 |
|
|
|
0 |
|
|
|
203 |
|
|
|
0 |
|
U.S.
corporate debt securities |
|
|
2,162 |
|
|
|
0 |
|
|
|
2,162 |
|
|
|
0 |
|
Equity
securities |
|
|
943 |
|
|
|
0 |
|
|
|
0 |
|
|
|
943 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
borrowings |
|
|
10,736 |
|
|
|
0 |
|
|
|
10,736 |
|
|
|
0 |
|
The change in the fair value
of available-for-sale equity securities valued using significant unobservable inputs (level 3), between January 1, 2015 and September
30, 2015 was mainly due to the reclassification of $475,000 of securities from available-for-sale securities to other assets to
reflect the nonmarketable nature of these securities.
Recurring
Fair Value Measurements |
|
|
|
|
|
|
|
|
December
31, 2014 |
|
|
|
|
|
|
|
|
(in
thousands) |
|
Total |
|
(Level
1) |
|
(Level
2) |
|
(Level
3) |
Trading
securities |
|
|
|
|
|
|
|
|
Obligations
of U.S. Government sponsored entities |
|
$ |
7,404 |
|
|
$ |
0 |
|
|
$ |
7,404 |
|
|
$ |
0 |
|
Mortgage-backed
securities – residential U.S. Government sponsored entities |
|
|
1,588 |
|
|
|
0 |
|
|
|
1,588 |
|
|
|
0 |
|
Available-for-sale
securities |
|
|
. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations
of U.S. Government sponsored entities |
|
|
557,820 |
|
|
|
0 |
|
|
|
557,820 |
|
|
|
0 |
|
Obligations
of U.S. states and political subdivisions |
|
|
71,510 |
|
|
|
0 |
|
|
|
71,510 |
|
|
|
0 |
|
Mortgage-backed
securities – residential, issued by: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Government agencies |
|
|
109,926 |
|
|
|
0 |
|
|
|
109,926 |
|
|
|
0 |
|
U.S.
Government sponsored entities |
|
|
659,120 |
|
|
|
0 |
|
|
|
659,120 |
|
|
|
0 |
|
Non-U.S.
Government agencies or sponsored entities |
|
|
271 |
|
|
|
0 |
|
|
|
271 |
|
|
|
0 |
|
U.S.
corporate debt securities |
|
|
2,162 |
|
|
|
0 |
|
|
|
2,162 |
|
|
|
0 |
|
Equity
securities |
|
|
1,427 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,427 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
borrowings |
|
|
10,961 |
|
|
|
0 |
|
|
|
10,961 |
|
|
|
0 |
|
The change in the fair value
of the $1.4 million of available-for-sale securities valued using significant unobservable inputs (level 3), between January 1,
2014 and December 31, 2014 was immaterial.
There
were no transfers between Levels 1, 2 and 3 for the three months ended September 30, 2015.
The
Company determines fair value for its trading securities using independently quoted market prices. The Company determines fair
value for its available-for-sale securities using an independent bond pricing service for identical assets or very similar securities.
The Company has reviewed the pricing sources, including methodologies used, and finds them to be fairly stated.
Fair
values of borrowings are estimated using Level 2 inputs based upon observable market data. The Company determines fair value for
its borrowings using a discounted cash flow technique based upon expected cash flows and current spreads on FHLB advances with
the same structure and terms. The Company also receives pricing information from third parties, including the FHLB. The pricing
obtained is considered representative of the transfer price if the liabilities were assumed by a third party. The Company’s
potential credit risk did not have a material impact on the quoted settlement prices used in measuring the fair value of the FHLB
borrowings at September 30, 2015.
Certain
assets are measured at fair value on a nonrecurring basis. For the Company, these include loans held for sale, collateral dependent
impaired loans, and other real estate owned (“OREO”). During the third quarter of 2015, certain collateral dependent
impaired loans were remeasured and reported at fair value through a specific valuation allowance and/or partial charge-offs for
loan and lease losses based upon the fair value of the underlying collateral. Collateral values are estimated using Level 2 inputs
based upon observable market data. In addition to collateral dependent impaired loans, certain other real estate owned were remeasured
and reported at fair value based upon the fair value of the underlying collateral. The fair values of other real estate owned
are estimated using Level 2 inputs based on observable market data or Level 3 inputs based on customized discounting criteria.
In general, the fair values of other real estate owned are based upon appraisals, with discounts made to reflect estimated costs
to sell the real estate. Upon initial recognition, fair value write-downs on other real estate owned are taken through a charge-off
to the allowance for loan and lease losses. Subsequent fair value write-downs on other real estate owned are reported in other
noninterest expense.
Three
months ended September 30, 2015
|
|
|
|
Fair
value measurements at reporting date using: |
|
Gain
(losses) from fair value changes |
|
|
As of |
|
Quoted prices in active markets
for identical assets |
|
Significant other observable
inputs |
|
Significant unobservable
inputs |
|
Three months ended |
Assets: |
|
09/30/2015 |
|
(Level
1) |
|
(Level
2) |
|
(Level
3) |
|
09/30/2015 |
Impaired
Loans |
|
$ |
1,362 |
|
|
$ |
0 |
|
|
$ |
1,362 |
|
$ |
0 |
|
|
$ |
0 |
|
Other
real estate owned |
|
|
1,049 |
|
|
|
0 |
|
|
|
1,049 |
|
|
0 |
|
|
|
(30 |
) |
Three months ended September 30, 2014
|
|
|
|
Fair
value measurements at reporting date using: |
|
Gain
(losses) from fair value changes |
|
|
As of |
|
Quoted prices in active markets
for identical assets |
|
Significant other observable
inputs |
|
Significant unobservable
inputs |
|
Three months ended |
Assets: |
|
09/30/2014 |
|
(Level
1) |
|
(Level
2) |
|
(Level
3) |
|
09/30/2014 |
Impaired
Loans |
|
$ |
8,149 |
|
|
$ |
0 |
|
|
$ |
8,149 |
|
$ |
0 |
|
|
$ |
(67 |
) |
Other
real estate owned |
|
|
2,689 |
|
|
|
0 |
|
|
|
2,689 |
|
|
0 |
|
|
|
10 |
|
Nine
months ended September 30, 2015
|
|
|
|
Fair
value measurements at reporting date using: |
|
Gain
(losses) from fair value changes |
|
|
As of |
|
Quoted prices in active markets
for identical assets |
|
Significant other observable
inputs |
|
Significant unobservable
inputs |
|
Nine months ended |
Assets: |
|
09/30/2015 |
|
(Level
1) |
|
(Level
2) |
|
(Level
3) |
|
09/30/2015 |
Impaired
Loans |
|
$ |
4,307 |
|
|
$ |
0 |
|
|
$ |
4,307 |
|
$ |
0 |
|
|
$ |
(80 |
) |
Other
real estate owned |
|
|
2,629 |
|
|
|
0 |
|
|
|
2,629 |
|
|
0 |
|
|
|
786 |
|
Nine
months ended September 30, 2014
|
|
|
|
Fair
value measurements at reporting date using: |
|
Gain
(losses) from fair value changes |
|
|
As of |
|
Quoted prices in active markets
for identical assets |
|
Significant other observable
inputs |
|
Significant unobservable
inputs |
|
Nine months ended |
Assets: |
|
09/30/2014 |
|
(Level
1) |
|
(Level
2) |
|
(Level
3) |
|
09/30/2014 |
Impaired
Loans |
|
$ |
9,226 |
|
|
$ |
0 |
|
|
$ |
9,226 |
|
$ |
0 |
|
|
$ |
(252 |
) |
Other
real estate owned |
|
|
5,182 |
|
|
|
0 |
|
|
|
5,182 |
|
|
0 |
|
|
|
(32 |
) |
The
following table presents the carrying amounts and estimated fair values of the Company’s financial instruments at September
30, 2015 and December 31, 2014. The carrying amounts shown in the table are included in the Consolidated Statements of Condition
under the indicated captions.
The
fair value estimates, methods and assumptions set forth below for the Company’s financial instruments, including those
financial instruments carried at cost, are made solely to comply with disclosures required by generally accepted accounting principles
in the United States and do not always incorporate the exit-price concept of fair value prescribed by ASC Topic 820-10 and should
be read in conjunction with the financial statements and notes included in this Report.
Estimated
Fair Value of Financial Instruments |
|
|
|
|
|
|
|
|
|
|
September
30, 2015 |
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Carrying
Amount |
|
Fair
Value |
|
(Level
1) |
|
(Level
2) |
|
(Level
3) |
Financial
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents |
|
$ |
107,093 |
|
|
$ |
107,093 |
|
|
$ |
107,093 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Securities
- held to maturity |
|
|
146,300 |
|
|
|
149,112 |
|
|
|
0 |
|
|
|
149,112 |
|
|
|
0 |
|
FHLB
stock |
|
|
23,562 |
|
|
|
23,562 |
|
|
|
0 |
|
|
|
23,562 |
|
|
|
0 |
|
Accrued
interest receivable |
|
|
17,439 |
|
|
|
17,439 |
|
|
|
0 |
|
|
|
17,439 |
|
|
|
0 |
|
Loans/leases,
net1 |
|
|
3,603,348 |
|
|
|
3,624,408 |
|
|
|
0 |
|
|
|
4,307 |
|
|
|
3,620,101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time
deposits |
|
$ |
877,422 |
|
|
$ |
879,294 |
|
|
$ |
0 |
|
|
$ |
879,294 |
|
|
$ |
0 |
|
Other
deposits |
|
|
3,559,651 |
|
|
|
3,559,651 |
|
|
|
0 |
|
|
|
3,559,651 |
|
|
|
0 |
|
Fed
funds purchased and securities sold under agreements to repurchase |
|
|
134,941 |
|
|
|
137,266 |
|
|
|
0 |
|
|
|
137,266 |
|
|
|
0 |
|
Other
borrowings |
|
|
388,210 |
|
|
|
391,879 |
|
|
|
0 |
|
|
|
391,879 |
|
|
|
0 |
|
Trust
preferred debentures |
|
|
37,466 |
|
|
|
42,861 |
|
|
|
0 |
|
|
|
42,861 |
|
|
|
0 |
|
Accrued
interest payable |
|
|
1,952 |
|
|
|
1,952 |
|
|
|
0 |
|
|
|
1,952 |
|
|
|
0 |
|
Estimated
Fair Value of Financial Instruments |
|
|
|
|
|
|
|
|
|
|
December
31, 2014 |
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Carrying
Amount |
|
Fair
Value |
|
(Level
1) |
|
(Level
2) |
|
(Level
3) |
Financial
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents |
|
$ |
56,070 |
|
|
$ |
56,070 |
|
|
$ |
56,070 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Securities
- held to maturity |
|
|
88,168 |
|
|
|
89,036 |
|
|
|
0 |
|
|
|
89,036 |
|
|
|
0 |
|
FHLB
and FRB stock |
|
|
21,259 |
|
|
|
21,259 |
|
|
|
0 |
|
|
|
21,259 |
|
|
|
0 |
|
Accrued
interest receivable |
|
|
16,518 |
|
|
|
16,518 |
|
|
|
0 |
|
|
|
16,518 |
|
|
|
0 |
|
Loans/leases,
net1 |
|
|
3,364,291 |
|
|
|
3,383,742 |
|
|
|
0 |
|
|
|
2,891 |
|
|
|
3,380,851 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time
deposits |
|
$ |
898,081 |
|
|
$ |
899,871 |
|
|
$ |
0 |
|
|
$ |
899,871 |
|
|
$ |
0 |
|
Other
deposits |
|
|
3,271,073 |
|
|
|
3,271,073 |
|
|
|
0 |
|
|
|
3,271,073 |
|
|
|
0 |
|
Fed
funds purchased and securities sold under agreements to repurchase |
|
|
147,037 |
|
|
|
151,201 |
|
|
|
0 |
|
|
|
151,201 |
|
|
|
0 |
|
Other
borrowings |
|
|
345,580 |
|
|
|
350,043 |
|
|
|
0 |
|
|
|
350,043 |
|
|
|
0 |
|
Trust
preferred debentures |
|
|
37,337 |
|
|
|
39,453 |
|
|
|
0 |
|
|
|
39,453 |
|
|
|
0 |
|
Accrued
interest payable |
|
|
1,868 |
|
|
|
1,868 |
|
|
|
0 |
|
|
|
1,868 |
|
|
|
0 |
|
1 Lease receivables, although
excluded from the scope of ASC Topic 825, are included in the estimated fair value amounts at their carrying value.
The
following methods and assumptions were used in estimating fair value disclosures for financial instruments.
Cash
and Cash Equivalents: The carrying amounts reported in the
Consolidated Statements of Condition for cash, noninterest-bearing deposits, money market funds, and Federal funds sold approximate
the fair value of those assets.
Securities:
Fair values for U.S. Treasury securities are based on quoted
market prices. Fair values for obligations of U.S. government sponsored entities, mortgage-backed securities-residential, obligations
of U.S. states and political subdivisions, and U.S. corporate debt securities are based on quoted market prices, where available,
as provided by third party pricing vendors. If quoted market prices were not available, fair values are based on quoted market
prices of comparable instruments in active markets and/or based upon matrix pricing methodology, which uses comprehensive interest
rate tables to determine market price, movement and yield relationships. These securities are reviewed periodically to determine
if there are any events or changes in circumstances that would adversely affect their value.
Loans
and Leases: The fair values of residential loans are estimated
using discounted cash flow analyses, based upon available market benchmarks for rates and prepayment assumptions. The fair values
of commercial and consumer loans are estimated using discounted cash flow analyses, based upon interest rates currently offered
for loans and leases with similar terms and credit quality. The fair value of loans held for sale are determined based upon contractual
prices for loans with similar characteristics.
FHLB
STOCK: The carrying amount of FHLB stock approximates fair value. If the stock is redeemed, the Company will receive an amount
equal to the par value of the stock. For miscellaneous equity securities, carrying value is cost.
ACCRUED
INTEREST RECEIVABLE AND ACCRUED INTEREST PAYABLE: The carrying amount of these short term instruments approximate fair value.
Deposits:
The fair values disclosed for noninterest bearing accounts
and accounts with no stated maturities are equal to the amount payable on demand at the reporting date. The fair value of time
deposits is based upon discounted cash flow analyses using rates offered for FHLB advances, which is the Company’s primary
alternative source of funds.
Securities
Sold Under Agreements to Repurchase: The carrying amounts
of repurchase agreements and other short-term borrowings approximate their fair values. Fair values of long-term borrowings are
estimated using a discounted cash flow approach, based on current market rates for similar borrowings. For securities sold under
agreements to repurchase where the Company has elected the fair value option, the Company also receives pricing information from
third parties, including the FHLB.
Other
Borrowings: The fair values of other borrowings are estimated
using discounted cash flow analysis, discounted at the Company’s current incremental borrowing rate for similar borrowing
arrangements. For other borrowings where the Company has elected the fair value option, the Company also receives pricing information
from third parties, including the FHLB.
TRUST
PREFERRED DEBENTURES: The fair value of the trust preferred debentures has been estimated using a discounted cash flow analysis
which uses a discount factor of a market spread over current interest rates for similar instruments.
Item 2. |
Management’s Discussion
and Analysis of Financial Condition and Results of Operations |
BUSINESS
Corporate
Overview and Strategic Initiatives
Tompkins
Financial Corporation (“Tompkins” or 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 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 September 30, 2015, the Company’s subsidiaries included: four wholly-owned banking subsidiaries, Tompkins
Trust Company (the “Trust Company”), The Bank of Castile (DBA Tompkins Bank of Castile), Mahopac Bank (formerly
known as Mahopac National Bank, DBA Tompkins Mahopac Bank), VIST Bank (DBA Tompkins VIST Bank); and a wholly-owned insurance agency
subsidiary, Tompkins Insurance Agencies, Inc. (“Tompkins Insurance”). The trust division of the Trust Company provides
a full array of investment services, including investment management, trust and estate, financial and tax planning as well as
life, disability and long-term care insurance services. The Company’s principal offices are located at The Commons, Ithaca,
New York, 14851, and its telephone number is (888) 503-5753. The Company’s common stock is traded on the NYSE MKT LLC under
the symbol “TMP.”
The
Company’s strategic initiatives include diversification within its markets, growth of its fee-based businesses, and growth
internally and through acquisitions of financial institutions, branches, and financial services businesses. As such, the Company
from time to time considers acquiring banks, thrift institutions, branch offices of banks or thrift institutions, or other businesses
within markets currently served by the Company or in other locations that would complement the Company’s business or its
geographic reach. The Company generally targets merger or acquisition partners that are culturally similar and have experienced
management and possess either significant market presence or have potential for improved profitability through financial management,
economies of scale and expanded services. The Company has pursued acquisition opportunities in the past, and continues to review
new opportunities.
Business
Segments
Banking
services consist primarily of attracting deposits from the areas served by the Company’s four banking subsidiaries’
63 banking offices (44 offices in New York and 19 offices in Pennsylvania) and using those deposits to originate a variety of
commercial loans, consumer loans, real estate loans (including commercial loans collateralized by real estate), and leases. The
Company’s lending function is managed within the guidelines of a comprehensive Board-approved lending policy. Reporting
systems are in place to provide management with ongoing information related to loan production, loan quality, concentrations of
credit, loan delinquencies, and nonperforming and potential problem loans. Banking services also include a full suite of products
such as debit cards, credit cards, remote deposit, electronic banking, mobile banking, cash management, and safe deposit services.
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. Wealth management services are under the trade name Tompkins Financial Advisors. Tompkins
Financial Advisors has office locations at all four of the Company’s subsidiary banks.
Insurance
services include property and casualty insurance, employee benefit consulting, and life, long-term care and disability insurance.
Tompkins Insurance is headquartered in Batavia, New York. Over the past fourteen years, Tompkins Insurance has acquired smaller
insurance agencies in the market areas serviced by the Company’s banking subsidiaries and successfully consolidated them
into Tompkins Insurance. The VIST Financial acquisition in 2012, which included VIST Insurance, was the largest acquisition and
nearly doubled the Company’s annual insurance revenues. Tompkins Insurance offers services to customers of the Company’s
banking subsidiaries by sharing offices with The Bank of Castile, Trust Company, and VIST Bank. In addition to these shared offices,
Tompkins Insurance has five stand-alone offices in Western New York, two stand-alone offices in Tompkins County, New York and
one stand-alone office in Montgomery County, Pennsylvania.
The
Company’s principal expenses are interest on deposits, interest on borrowings, and operating and general administrative
expenses, as well as provisions for loan and lease losses. Funding sources, other than deposits, include borrowings, securities
sold under agreements to repurchase, and cash flow from lending and investing activities.
Competition
Competition
for commercial banking and other financial services is strong in the Company’s market areas. In one or more aspects of
its businesses, the Company’s subsidiaries compete with other commercial banks, savings and loan associations, credit unions,
finance companies, Internet-based financial services companies, mutual funds, insurance companies, brokerage and investment banking
companies, and other financial intermediaries. Some of these competitors have substantially greater resources and lending capabilities
and may offer service that the Company does not currently provide. In addition, many of the Company’s non-bank competitors
are not subject to the same extensive Federal regulations that govern financial holding companies and Federally-insured banks.
Management
believes that a community based financial organization is better positioned to establish personalized financial relationships
with both commercial customers and individual households. The Company’s community commitment and involvement in its primary
market areas, as well as its commitment to quality and personalized financial services, are factors that contribute to the Company’s
competitiveness. Management believes that each of the Company’s subsidiary banks can compete successfully in its primary
market areas by making prudent lending decisions quickly and more efficiently than its competitors, without compromising asset
quality or profitability, although no assurances can be given that such factors will assure success.
Regulation
Banking,
insurance services and wealth management are highly regulated. As a financial holding company with four community banks, a registered
investment advisor, and an insurance agency subsidiary, the Company and its subsidiaries are subject to examination and regulation
by the Federal Reserve Board (“FRB”), Securities and Exchange Commission (“SEC”), the Federal Deposit
Insurance Corporation (“FDIC”), the New York State Department of Financial Services, Pennsylvania Department of
Banking and Securities, Financial Industry Regulatory Authority, and the Pennsylvania Insurance Department.
OTHER
IMPORTANT INFORMATION
The
following discussion is intended to provide an understanding of the consolidated financial condition and results of operations
of the Company for the three and nine months ended September 30, 2015. It should be read in conjunction with the Company’s
Audited Consolidated Financial Statements and the notes thereto included in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2014, and the Unaudited Consolidated Financial Statements and notes thereto included in Part I of
this Quarterly Report on Form 10-Q.
In
this Report there are comparisons of the Company’s performance to that of a peer group. Unless otherwise stated, this peer
group is comprised of the group of 117 domestic bank holding companies with $3 billion to $10 billion in total assets as defined
in the Federal Reserve’s “Bank Holding Company Performance Report” for June 30, 2015 (the most recent report
available).
Forward-Looking
Statements
The
Company is making this statement in order to satisfy the “Safe Harbor” provision contained in the Private Securities
Litigation Reform Act of 1995. The statements contained in this Quarterly Report on Form 10-Q that are not statements of historical
fact may include forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements
are made based on management’s expectations and beliefs concerning future events impacting the Company and are subject
to certain uncertainties and factors relating to the Company’s operations and economic environment, all of which are difficult
to predict and many of which are beyond the control of the Company. These uncertainties and factors that could cause actual results
of the Company to differ materially from those matters expressed and/or implied by such forward-looking statements. The following
factors are among those that could cause actual results to differ materially from the forward-looking statements: changes in general
economic, market and regulatory conditions; the development of an interest rate environment that may adversely affect the Company’s
interest rate spread, other income or cash flow anticipated from the Company’s operations, investment and/or lending activities;
changes in laws and regulations affecting banks, insurance companies, bank holding companies and/or financial holding companies,
such as the Dodd-Frank Wall Street Reform and Consumer Protection Act and Basel III; 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; protection and validity of intellectual property rights; reliance on large
customers; the expenses and reputational damage if there were ever a material cybersecurity breach; financial resources in the
amounts, at the times and on the terms required to support the Company’s future businesses; and other factors discussed
elsewhere in this Quarterly Report on Form 10-Q and in other reports we file with the SEC, in particular the “Risk Factors”
discussed in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. In addition, such
forward-looking statements could be affected by general industry and market conditions and growth rates, general economic and
political conditions (including changes in economic conditions in the Company’s primary market areas), including interest
rate and currency exchange rate fluctuations, and other factors.
Critical
Accounting Policies
The
accounting and reporting policies followed by the Company conform, in all material respects, to accounting principles generally
accepted in the United States and to general practices within the financial services industry. In the course of normal business
activity, management must select and apply many accounting policies and methodologies and make estimates and assumptions that
lead to the financial results presented in the Company’s consolidated financial statements and accompanying notes. There
are uncertainties inherent in making these estimates and assumptions, which could materially affect the Company’s results
of operations and financial position.
Management
considers accounting estimates to be critical to reported financial results if (i) the accounting estimates require management
to make assumptions about matters that are highly uncertain, and (ii) different estimates that management reasonably could have
used for the accounting estimate in the current period, or changes in the accounting estimate that are reasonably likely to occur
from period to period, could have a material impact on the Company’s financial statements. Management considers the accounting
policies relating to the allowance for loan and lease losses (“allowance”), pension and postretirement benefits,
the review of the securities portfolio for other-than-temporary impairment, and acquired loans to be critical accounting policies
because of the uncertainty and subjectivity involved in these policies and the material effect that estimates related to these
areas can have on the Company’s results of operations.
For
additional information on critical accounting policies and to gain a greater understanding of how the Company’s financial
performance is reported, refer to Note 1 – “Summary of Significant Accounting Policies” in the Notes to Consolidated
Financial Statements, and the section captioned “Critical Accounting Policies” in Management’s Discussion
and Analysis of Financial Condition and Results of Operations, contained in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2014. There have been no significant changes in the Company’s application of critical accounting
policies since December 31, 2014. Refer to Note 3 – “Accounting Standards Updates” in the Notes to Unaudited
Consolidated Financial Statements included in Part I of this Quarterly Report on Form 10-Q for a discussion of recent accounting
updates.
OVERVIEW
Net
income for the third quarter was $14.5 million or $0.96 diluted earnings per share, compared to $13.7 million or $0.92 diluted
earnings per share for the same period in 2014. Net income for the first nine months of 2015 was $44.6 million or $2.96 diluted
earnings per share, compared to $39.4 million or $2.64 diluted earnings per share in the first nine months of 2014. Results for
the year to date were positively impacted by a one-time curtailment gain of $3.6 million, after-tax, related to changes to the
Company’s defined benefit pension plan. Exclusive of this one-time gain, net income and diluted earnings per share for
the first nine months of 2015 were $41.0 million and $2.72, respectively.
Return
on average assets (“ROA”) for the quarter ended September 30, 2015 was 1.05%, compared to 1.08% for the quarter
ended September 30, 2014. Return on average shareholders’ equity (“ROE”) for the third quarter of 2015 was
11.29%, compared to 11.11%, for the same period in 2014. Tompkins’ 2015 third quarter ROA and ROE compare to the most recent
peer average ratios of 0.98% and 8.70%, respectively, ranking Tompkins’ ROA in the 71st percentile and ROE in
the 84th percentile of the peer group.
The
following table summarizes the Company’s results of operations for the periods indicated on a GAAP basis and on an operating
(non-GAAP) basis for the periods indicated. Operating results in the below table exclude nonrecurring income and expenses. The
Company believes the non-GAAP measures provide meaningful comparisons of our underlying operational performance and facilitates
management’s and investors’ assessments of business and performance trends in comparison to others in the financial
services industry. In addition, the Company believes the exclusion of the nonoperating items from our performance enables management
and investors to perform a more effective evaluation and comparison of our results and to assess performance in relation to our
ongoing operations. These non-GAAP financial measures should not be considered in isolation or as a measure of the Company’s
profitability or liquidity; they are in addition to, and are not a substitute for, financial measures under GAAP. Net operating
income, adjusted diluted earnings per share, and operating return on average tangible equity capital as presented herein may be
different from non-GAAP financial measures used by other companies, and may not be comparable to similarly titled measures reported
by other companies. Further, the Company may utilize other measures to illustrate performance in the future. Non-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.
Adjusted Diluted Earnings Per
Share
|
|
Three
Months Ended |
|
Nine Months Ended |
(in
thousands, except per share data) |
|
09/30/2015 |
|
09/30/2014 |
|
09/30/2015 |
|
09/30/2014 |
Net
income attributable to Tompkins Financial Corporation |
|
$ |
14,497 |
|
|
$ |
13,722 |
|
|
$ |
44,567 |
|
|
$ |
39,352 |
|
Less:
dividends and undistributed earnings allocated to unvested stock awards |
|
|
(189 |
) |
|
|
(119 |
) |
|
|
(609 |
) |
|
|
(353 |
) |
Net
income available to common shareholders (GAAP) |
|
|
14,308 |
|
|
|
13,603 |
|
|
|
43,958 |
|
|
|
38,999 |
|
Diluted
earnings per share (GAAP) |
|
|
0.96 |
|
|
|
0.92 |
|
|
|
2.96 |
|
|
|
2.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
for non-operating income and expense, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
on pension plan curtailment |
|
|
0 |
|
|
|
0 |
|
|
|
(3,602 |
) |
|
|
0 |
|
Total
adjustments, net of tax |
|
|
0 |
|
|
|
0 |
|
|
|
(3,602 |
) |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
operating income available to common shareholders (Non-GAAP) |
|
|
14,308 |
|
|
|
13,603 |
|
|
|
40,356 |
|
|
|
38,999 |
|
Adjusted
diluted earnings per share (Non-GAAP) |
|
|
0.96 |
|
|
|
0.92 |
|
|
|
2.72 |
|
|
|
2.64 |
|
Operating Return on Average Tangible Common Equity
(Non-GAAP)
|
|
Three
Months Ended |
|
Nine Months Ended |
(in
thousands) |
|
09/30/2015 |
|
09/30/2014 |
|
09/30/2015 |
|
09/30/2014 |
Net
operating income available to common shareholders (Non-GAAP) |
|
|
14,308 |
|
|
|
13,603 |
|
|
|
40,356 |
|
|
|
38,999 |
|
Amortization
of intangibles, net of tax |
|
|
298 |
|
|
|
311 |
|
|
|
902 |
|
|
|
942 |
|
Adjusted
net operating income available to common shareholders (Non-GAAP) |
|
|
14,606 |
|
|
|
13,914 |
|
|
|
41,258 |
|
|
|
39,941 |
|
Average
Tompkins Financial Corporation shareholders’ common equity |
|
|
507,984 |
|
|
|
488,386 |
|
|
|
502,622 |
|
|
|
478,077 |
|
Average
goodwill and intangibles1 |
|
|
104,633 |
|
|
|
106,471 |
|
|
|
105,132 |
|
|
|
106,949 |
|
Average
Tompkins financial Corporation shareholders’ tangible common equity (Non-GAAP) |
|
|
403,351 |
|
|
|
381,915 |
|
|
|
397,490 |
|
|
|
371,128 |
|
Adjusted
operating return on average shareholders’ tangible common equity (Non-GAAP) |
|
|
14.37 |
% |
|
|
14.46 |
% |
|
|
13.88 |
% |
|
|
14.39 |
% |
1 Average goodwill and intangibles
exclude mortgage servicing rights
Segment
Reporting
The
Company operates in the following 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 Agencies, Inc.
subsidiary. Wealth management activities include the results of the Company’s trust, financial planning, and wealth management
services, organized under the Tompkins Financial Advisors brand. All other activities are considered banking.
Banking
Segment
The
banking segment reported net income of $12.9 million for the third quarter of 2015, up $782,000 or 6.4% from net income of $12.1
million for the same period in 2014. For the nine months ended September 30, 2015, the banking segment reported net income of
$39.3 million, up $4.9 million or 14.1% over the same period in 2014.
Net
interest income of $42.3 million for the third quarter of 2015 was up $807,000 or 1.9% over the same period in 2014. For the nine
months ended September 30, 2015, net interest income of $124.8 million was up $2.8 million or 2.3% compared to prior year. Growth
in average earning assets and lower funding costs offset the effect of lower asset yields and contributed to favorable year-over-year
comparisons. Net interest margin for the nine months ended September 30, 2015 was 3.39% compared to 3.58% for the same period
prior year.
The
provision for loan and lease losses was $281,000 for the three months ended September 30, 2015; up from a credit of $59,000 for
the same period in 2014. Provision expense also increased for the nine months ended September 30, 2015 to $1.4 million from $751,000
in the previous year. The increase in provision expense was largely attributable to growth in total loans.
Noninterest
income for the three months ended September 30, 2015 of $6.3 million was down $314,000 or 4.8% compared to the same period in
2014, and for the nine months ended September 30, 2015 was up $511,000 or 2.6% to $20.3 million compared to $19.8 million for
the nine months ended September 30, 2014. The primary contributors to the decrease in the third quarter of 2015 compared to the
third quarter of 2014 were: service charges on deposit accounts were down $96,000, mainly due to lower overdraft fees; gains on
the sales of residential mortgage loans were down $114,000, mainly a result of the decision to hold more loans in the portfolio;
and other income was down $129,000. The primary contributors to the increase for the nine months ended September 30, 2015 compared
to the same period in 2014 were: cycle fees on deposit accounts were up $120,000, primarily in personal and business checking;
increased realized gains on available for sale securities of $72,000; and increased card services fees of $65,000, primarily due
to income from debit cards.
Noninterest
expense of $29.2 million for the third quarter and $85.1 million for the nine months ended September 30, 2015 were down $882,000
or 2.9% and down $5.5 million or 6.0%, respectively, from the same periods in 2014. The favorable quarterly comparison is mainly
a result of lower professional fees and lower amortization of our FDIC Indemnification asset in 2015 than 2014. The year to date
decline is primarily attributed to the curtailment of the Company’s defined benefit pension plan, which resulted in a $5.5
million credit to pension and other employee benefits expense in the second quarter of 2015 in accordance with accounting guidance.
This decrease was partially offset by an increase in salaries and wages due to normal annual merit and market increases, increases
in incentive compensation, as well as an increase in the number of employees.
Insurance
Segment
The
insurance segment reported net income of $918,000 for the three months ended September 30, 2015; down $8,000 or 0.9% from the
third quarter of 2014. For the nine month period ended September 30, 2015, net income rose $302,000 or 11.6% compared to 2014.
Noninterest income was up $66,000 or 0.9% in the third quarter of 2015, compared to the same period in 2014 and up $590,000 or
2.7% to $22.5 million for the nine months ended September 30, 2015. Noninterest expenses for the three months ended September
30, 2015 were up $92,000 or 1.5% compared to the third quarter of 2014 and for the first nine months of 2015 were up $112,000
or 0.6% compared to the same period in 2014. The increase in noninterest expense for the third quarter and year ending September
30, 2015 is the result of increases in salaries and wages reflecting normal annual merit adjustments and sales commissions. The
year over year increase was partially offset by a second quarter adjustment of $462,000 related to the curtailment of the Company’s
defined pension plan mentioned above.
Wealth
Management Segment
The
wealth management segment reported net income of $657,000 for the three months ended September 30, 2015, flat compared to the
third quarter of 2014. Net income for the nine months ended September 30, 2015 increased $60,000 or 2.6% to $2.3 million compared
to the same period in 2014. Noninterest income was up $42,000 or 1.1% for the third quarter of 2015 and down $71,000 or 0.6% for
the first nine months of 2015 compared to the prior year. Noninterest expenses for the three months ended September 30, 2015 were
up $62,000 or 2.2% and were down $118,000 or 1.4% for the nine months ended September 30, 2015 compared to the same period of
2014. The third quarter increase in noninterest expense is due primarily to the increases in salaries and wages reflecting normal
annual merit adjustments.
Average
Consolidated Statements of Condition and Net Interest Analysis (Unaudited)
|
|
Quarter
Ended September 30, 2015 |
|
Year
to Date Period Ended September
30, 2015 |
|
Year
to Date Period Ended September
30, 2014 |
(Dollar
amounts in thousands) |
|
Average
Balance (QTD) |
|
Interest |
|
Average
Yield/Rate |
|
Average
Balance (YTD) |
|
Interest |
|
Average
Yield/Rate |
|
Average
Balance (YTD) |
|
Interest |
|
Average
Yield/Rate |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning
assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
balances due from banks |
|
$ |
1,957 |
|
|
$ |
1 |
|
|
|
0.20 |
% |
|
$ |
1,725 |
|
|
$ |
3 |
|
|
|
0.23 |
% |
|
$ |
782 |
|
|
$ |
2 |
|
|
|
0.34 |
% |
Securities
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Government securities |
|
|
1,438,436 |
|
|
|
7,439 |
|
|
|
2.05 |
% |
|
|
1,441,360 |
|
|
|
22,807 |
|
|
|
2.12 |
% |
|
|
1,304,141 |
|
|
|
22,163 |
|
|
|
2.27 |
% |
Trading
securities |
|
|
8,008 |
|
|
|
86 |
|
|
|
4.26 |
% |
|
|
8,437 |
|
|
|
270 |
|
|
|
4.28 |
% |
|
|
10,327 |
|
|
|
321 |
|
|
|
4.16 |
% |
State
and municipal (2) |
|
|
85,554 |
|
|
|
783 |
|
|
|
3.63 |
% |
|
|
86,846 |
|
|
|
2,486 |
|
|
|
3.83 |
% |
|
|
96,992 |
|
|
|
3,157 |
|
|
|
4.35 |
% |
Other
securities (2) |
|
|
3,705 |
|
|
|
31 |
|
|
|
3.32 |
% |
|
|
3,740 |
|
|
|
91 |
|
|
|
3.25 |
% |
|
|
4,571 |
|
|
|
107 |
|
|
|
3.13 |
% |
Total
securities |
|
|
1,535,703 |
|
|
|
8,339 |
|
|
|
2.15 |
% |
|
|
1,540,383 |
|
|
|
25,654 |
|
|
|
2.23 |
% |
|
|
1,416,031 |
|
|
|
25,748 |
|
|
|
2.43 |
% |
FHLBNY
and FRB stock |
|
|
26,556 |
|
|
|
262 |
|
|
|
3.93 |
% |
|
|
23,771 |
|
|
|
834 |
|
|
|
4.69 |
% |
|
|
20,192 |
|
|
|
616 |
|
|
|
4.08 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
loans and leases, net of unearned income (2)(3) |
|
|
3,574,449 |
|
|
|
39,913 |
|
|
|
4.43 |
% |
|
|
3,479,528 |
|
|
|
116,547 |
|
|
|
4.48 |
% |
|
|
3,218,371 |
|
|
|
113,924 |
|
|
|
4.73 |
% |
Total
interest-earning assets |
|
|
5,138,665 |
|
|
|
48,517 |
|
|
|
3.75 |
% |
|
|
5,045,407 |
|
|
|
143,038 |
|
|
|
3.79 |
% |
|
|
4,655,376 |
|
|
|
140,290 |
|
|
|
4.03 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
assets |
|
|
347,980 |
|
|
|
|
|
|
|
|
|
|
|
352,808 |
|
|
|
|
|
|
|
|
|
|
|
368,584 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets |
|
|
5,486,645 |
|
|
|
|
|
|
|
|
|
|
|
5,398,215 |
|
|
|
|
|
|
|
|
|
|
|
5,023,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
& EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
bearing checking, savings, & money market |
|
|
2,322,974 |
|
|
|
949 |
|
|
|
0.16 |
% |
|
|
2,332,674 |
|
|
|
2,863 |
|
|
|
0.16 |
% |
|
|
2,265,787 |
|
|
|
3,276 |
|
|
|
0.19 |
% |
Time
deposits |
|
|
890,933 |
|
|
|
1,704 |
|
|
|
0.76 |
% |
|
|
904,911 |
|
|
|
5,032 |
|
|
|
0.75 |
% |
|
|
901,283 |
|
|
|
5,070 |
|
|
|
0.75 |
% |
Total
interest-bearing deposits |
|
|
3,213,907 |
|
|
|
2,653 |
|
|
|
0.33 |
% |
|
|
3,237,585 |
|
|
|
7,895 |
|
|
|
0.33 |
% |
|
|
3,167,070 |
|
|
|
8,346 |
|
|
|
0.35 |
% |
Federal
funds purchased & securities sold under agreements to repurchase |
|
|
134,620 |
|
|
|
685 |
|
|
|
2.02 |
% |
|
|
136,073 |
|
|
|
2,020 |
|
|
|
1.98 |
% |
|
|
147,775 |
|
|
|
2,263 |
|
|
|
2.05 |
% |
Other
borrowings |
|
|
470,060 |
|
|
|
1,223 |
|
|
|
1.03 |
% |
|
|
413,819 |
|
|
|
3,596 |
|
|
|
1.16 |
% |
|
|
258,578 |
|
|
|
3,362 |
|
|
|
1.74 |
% |
Trust
preferred debentures |
|
|
37,438 |
|
|
|
583 |
|
|
|
6.18 |
% |
|
|
37,395 |
|
|
|
1,726 |
|
|
|
6.17 |
% |
|
|
37,227 |
|
|
|
1,714 |
|
|
|
6.16 |
% |
Total
interest-bearing liabilities |
|
|
3,856,025 |
|
|
|
5,144 |
|
|
|
0.53 |
% |
|
|
3,824,872 |
|
|
|
15,237 |
|
|
|
0.53 |
% |
|
|
3,610,650 |
|
|
|
15,685 |
|
|
|
0.58 |
% |
Noninterest
bearing deposits |
|
|
1,052,669 |
|
|
|
|
|
|
|
|
|
|
|
1,003,318 |
|
|
|
|
|
|
|
|
|
|
|
879,691 |
|
|
|
|
|
|
|
|
|
Accrued
expenses and other liabilities |
|
|
68,433 |
|
|
|
|
|
|
|
|
|
|
|
65,902 |
|
|
|
|
|
|
|
|
|
|
|
54,040 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities |
|
|
4,977,127 |
|
|
|
|
|
|
|
|
|
|
|
4,894,092 |
|
|
|
|
|
|
|
|
|
|
|
4,544,381 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tompkins
Financial Corporation Shareholders’ equity |
|
|
507,984 |
|
|
|
|
|
|
|
|
|
|
|
502,622 |
|
|
|
|
|
|
|
|
|
|
|
478,078 |
|
|
|
|
|
|
|
|
|
Noncontrolling
interest |
|
|
1,534 |
|
|
|
|
|
|
|
|
|
|
|
1,501 |
|
|
|
|
|
|
|
|
|
|
|
1,501 |
|
|
|
|
|
|
|
|
|
Total
equity |
|
|
509,518 |
|
|
|
|
|
|
|
|
|
|
|
504,123 |
|
|
|
|
|
|
|
|
|
|
|
479,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and equity |
|
$ |
5,486,645 |
|
|
|
|
|
|
|
|
|
|
$ |
5,398,215 |
|
|
|
|
|
|
|
|
|
|
$ |
5,023,960 |
|
|
|
|
|
|
|
|
|
Interest
rate spread |
|
|
|
|
|
|
|
|
|
|
3.22 |
% |
|
|
|
|
|
|
|
|
|
|
3.26 |
% |
|
|
|
|
|
|
|
|
|
|
3.45 |
% |
Net
interest income/margin on earning assets |
|
|
|
|
|
|
43,373 |
|
|
|
3.35 |
% |
|
|
|
|
|
|
127,801 |
|
|
|
3.39 |
% |
|
|
|
|
|
|
124,605 |
|
|
|
3.58 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Equivalent
Adjustment |
|
|
|
|
|
|
(987 |
) |
|
|
|
|
|
|
|
|
|
|
(2,857 |
) |
|
|
|
|
|
|
|
|
|
|
(2,487 |
) |
|
|
|
|
Net
interest income per consolidated financial statements |
|
|
|
|
|
$ |
42,386 |
|
|
|
|
|
|
|
|
|
|
$ |
124,944 |
|
|
|
|
|
|
|
|
|
|
$ |
122,118 |
|
|
|
|
|
1 Average balances and yields on available-for-sale
securities are based on historical amortized cost |
2 Interest income includes the tax effects of taxable-equivalent
adjustments using a combined New York State and Federal effective income tax rate of 40% to increase tax exempt interest income
to taxable-equivalent basis. |
3 Nonaccrual loans are included in the average asset
totals presented above. Payment received on nonaccrual loans have been recognized as disclosed in Note 1 of the Company’s
condensed consolidated financial statements included in Part 1 of the Company’s annual report on Form 10-K for the fiscal
year ended December 31, 2014. |
Net
Interest Income
Net
interest income is the Company’s largest source of revenue, representing 70.9% and 69.8% of total revenues for the three
and nine month periods ended September 30, 2015, compared to 70.3% and 69.9% for the same periods in 2015. Net interest income
is dependent on the volume and composition of interest earning assets and interest-bearing liabilities and the level of market
interest rates. The above table shows average interest-earning assets and interest-bearing liabilities, and the corresponding
yield or cost associated with each.
Taxable-equivalent
net interest income for the three and nine months ended September 30, 2015 was up 2.3% and 2.6%, respectively, over the same periods
in 2014. Taxable-equivalent net interest income in 2015 benefitted from growth in average earning assets, which increased by 9.4%
and 8.4% for the three and nine month periods ended September 30, 2015, and growth in noninterest bearing deposits which increased
by 13.7% and 14.1% compared to the same periods prior year. These factors offset the impact of lower asset yields and lower net
interest margins compared to prior year. The taxable equivalent net interest margin was 3.35% and 3.58%, respectively, for the
three and nine month periods ended September 30, 2015 compared to 3.58% for the same periods in 2014.
Taxable-equivalent
interest income for the three and nine month periods ended September 30, 2015 was $48.5 million and $143.0 million, respectively,
which is up 2.3% and 2.0% from the same periods in 2014. Growth in average earning assets offset lower asset yields. The average
yield on interest earning assets declined 26 basis points or 6.5% and 24 basis points or 6.0% for the three and nine months ended
September 30, 2015 compared to the same periods in 2014. Average loan balances for the three and nine months ended September 30,
2015 were up $333.6 million or 10.3%, and $261.2 million or 8.1%, respectively, while the average yields on loans for the same
periods were down 31 basis points and 25 basis points, respectively, compared to the same periods in 2014. Average loan balances
represented about 69.6% and 69.0% of average earning assets for the three and nine months ended September 30, 2015, up from 69.0%
and down from 69.1%, respectively, for the same periods in 2014. Average securities balances for the three months ended September
30, 2015 were up $100.5 million or 7.0%, and for the nine months ended September 30, 2015 were up by $124.4 million or 8.8% from
the same periods in 2014. The average yield on securities for the third quarter of 2015 was down 19 basis points and for the nine
months ended September 30, 2015 was down 20 basis points compared to the same periods prior year.
Interest
expense for the three and nine months ended September 30, 2015 increased by $101,000 or 2.0% and decreased $448,000 or 2.9%, respectively,
compared to the same periods in 2014. Both periods benefitted from lower average rates paid on deposits and borrowings; however,
this benefit was more than offset by higher average balances of deposits and borrowings in the third quarter of 2015 compared
to the third quarter of 2014, resulting in the increase in interest expense. The average rate paid on interest bearing deposits
was 0.33% during both the three and nine months ended September 30, 2015, down 2 basis points from the same periods in 2014. Average
interest bearing deposits for the third quarter of 2015 were up $47.8 million or 1.5% compared to the same period in 2014, while
year-to-date average interest bearing deposits were up $70.5 million or 2.2% from the same period in 2014. Average noninterest
bearing deposits for the three and nine month periods ended September 30, 2015 were up $126.7 million or 13.7% and $123.6 million
or 14.1%, respectively, compared to the same periods in 2014. Average other borrowings for the three and nine months ended September
30, 2015 increased by $221.4 million or 89.1% and $155.2 million or 60.0%, respectively, compared to the same periods in 2014.
The increase was mainly in overnight borrowings with the FHLB, which contributed to the decrease in average funding cost in this
category in 2015.
Provision
for Loan and Lease Losses
The
provision for loan and lease losses represents management’s estimate of the amount necessary to maintain the allowance
for loan and lease losses at an adequate level. The provision for loan and lease losses was an expense of $281,000 for the third
quarter of 2015 and $1.4 million for the nine months ended September 30, 2015, compared to a credit of $59,000 and expense of
$751,000 for the respective periods in 2014. The increase in provision expense was mainly a result of growth in total loans over
prior year. Asset quality metrics were improved from prior year, with lower levels of nonperforming loans and leases and criticized
and classified loans compared to prior year. The section captioned “Financial Condition – Allowance for Loan and
Lease Losses and Nonperforming Assets” below has further details on the allowance for loan and lease losses and asset quality
metrics.
Noninterest
Income
Noninterest
income was $17.4 million for the third quarter of 2015 and $54.0 million for the nine months ended September 30, 2015, representing
a decrease of 0.8% for the quarter and an increase of 2.5% for the year to date, compared to the same periods prior year. Noninterest
income represented 29.1% of total revenue for the three months ended September 30, 2015 compared to 29.7% in the third quarter
of 2014, and 30.2% for the nine months ended September 30, 2015 compared to 30.1% for the same period in 2014.
Insurance
commissions and fees were $7.6 million and $22.3 million for the three and nine months ended September 30, 2015, compared to $7.5
million and $21.8 million, respectively, for the same periods in 2014. The increase for the year to date period in 2015 is mainly
due to growth in property and casualty policies and financial services policies.
Investment
services income was $3.7 million in third quarter of 2015, an increase of 1.0% from $3.6 million in the third quarter of 2014.
Investment services income of $11.5 million for the first nine months of 2015 was unchanged from the comparable period in 2014.
Investment services income includes trust services, financial planning, wealth management services, and brokerage related services.
With fees largely based on the market value and the mix of assets managed, the general direction of the stock market can have
a considerable impact on fee income. The fair value of assets managed by, or in custody of, Tompkins was $3.8 billion at September
30, 2015, up 3.6% from $3.7 billion at September 30, 2014. These figures include $1.1 billion and $1.0 billion, respectively,
of Company-owned securities where Tompkins Trust Company is custodian. The increase in assets under management contributed to
an increase in trust and wealth management fees in 2015 over prior year. Fees from brokerage services were down in 2015 from 2014.
At the end of the first quarter of 2015, the Company concluded operations attributable to its internal broker dealer and registered
investment advisory group and engaged a new broker dealer of record. This transition has contributed to the decrease in year over
year brokerage services income.
Service
charges on deposit accounts were down $96,000 or 3.8% for the third quarter of 2015 compared to the third quarter of 2014 and
down $198,000 or 2.8% for the nine months ended September 30, 2015 compared to the same period in 2014. The decrease was mainly
due to a decrease in overdraft fees offset by higher personal and business cycle fees. Overdraft fees, the largest component of
service charges on deposit accounts, were down $192,000 or 10.8% and $395,000 or 7.9% for both the three and nine months ended
September 30, 2015 compared to same periods prior year.
Card
services income for the three months and nine months ended September 30, 2015 was up $65,000 or 3.4% and down $124,000 or 2.1%
compared to the same periods in 2014. Debit card income, the largest component of card services income, was up $68,000 or 5.0%
for the third quarter and down $166,000 or 3.8% for the nine months ended September 30, 2015.
The
Company recognized gains on the sales/calls of available-for-sale securities of $92,000 and $1.1 million for the three and nine
months ended September 30, 2015, which were up from gains of $20,000 and $151,000, respectively, for the same periods in 2014.
Sales of available-for-sale securities are generally the result of general portfolio maintenance and interest rate risk management.
Other
income of $1.7 million in the third quarter of 2015 was down 11.8% from the third quarter of 2014. For the first nine months of
2015, other income was $6.4 million, up 4.3% from the same period in 2014. The significant components of other income are other
service charges, increases in cash surrender value of corporate owned life insurance (“COLI”), gains on the sales
of residential mortgage loans and income from miscellaneous equity investments. The primary contributors to the decrease in the
third quarter of 2015 compared to the third quarter of 2014 were: gains on the sales of residential mortgage loans were down by
$114,000, mainly a result of the decision to hold more loans in portfolio; and other income was down $129,000, mainly a result
of lower income on miscellaneous investments.
Noninterest
Expense
Noninterest
expense of $37.9 million and $110.5 million for the three and nine months ended September 30, 2015, was down 1.7% and 4.5%, respectively,
compared to the same periods in 2014. The year to date decline is mainly attributable to the curtailment of the Company’s
defined benefit pension plan, which resulted in a $6.0 million credit to pension and other employee benefits expense in the second
quarter of 2015 in accordance with accounting guidance. Excluding the pension gain in 2015, total noninterest expenses for the
first nine months of 2015 would be up less than 1% from 2014.
Salaries
and wages expense for the three and nine months ended September 30, 2015 were up by $804,000 or 4.6% and $2.5 million or 4.7%,
respectively, over the same periods in 2014. The increases reflect additional employees, annual merit increases and higher accruals
for incentive compensation. Pension and other employee related benefits were up 8.6% for the third quarter of 2015 and down 32.1%
for the nine months ended September 30, 2015 compared to the same periods in 2014. Pension expense is down year over year, mainly
a result of pension curtailment discussed above.
Net
occupancy expense was $2.9 million for the third quarter of 2015, down $78,000 or 2.6% from the same period in 2014 and was $9.3
million for the nine months ended September 30, 2015, unchanged from the same period in 2014.
Other
operating expense for the three and nine months ended September 30, 2015 was down 18.4% and 8.8%, respectively, compared to the
same periods prior year. The favorable quarterly comparison is mainly a result of lower professional fees and lower amortization
of our FDIC Indemnification asset in 2015 than 2014.
Overall,
all other expense categories remained relatively flat compared to the same period prior year.
Income
Tax Expense
The
provision for income taxes was $7.1 million for an effective rate of 32.9% for the third quarter of 2015, compared to tax expense
of $6.9 million and an effective rate of 33.4% for the same quarter in 2014. For the first nine months of 2015, the tax provision
was $22.4 million for an effective rate of 33.4% compared to a tax provision of $18.9 million and an effective rate of 32.5% for
the same period in 2014. The effective rates differ from the U.S. statutory rate of 35.0% during the comparable periods primarily
due to the effect of tax-exempt income from loans, securities and life insurance assets.
FINANCIAL
CONDITION
Total
assets were $5.6 billion at September 30, 2015, up $325.2 million or 6.2% over December 31, 2014. The growth over year-end was
primarily attributable to growth in originated loans, which were up $309.4 million or 10.9%, increased cash and cash equivalents,
which were up $51.0 million or 91.0%, and growth in held-to-maturity securities, which were up $58.1 million or 65.9%. This growth
was partially offset by a decrease in acquired loans, which were down $68.4 million or 12.4%. Total deposits increased $267.9
million or 6.4% compared to December 31, 2014, mainly a result of an inflow of municipal deposits. Other borrowings increased
$42.4 million or 11.9% from December 31, 2014, as a result of loan growth outpacing deposit growth.
Securities
As
of September 30, 2015, the Company’s securities portfolio was $1.5 billion or 27.6% of total assets, compared to $1.4 billion
or 28.5% of total assets at year-end 2014. The following table details the composition of available-for-sale and held-to-maturity
securities.
Available-for-Sale
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
09 |
/30/2015 |
12/31/2014 |
(in
thousands) |
|
|
Amortized
Cost |
|
|
|
Fair
Value |
|
|
|
Amortized
Cost |
|
|
|
Fair
Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations
of U.S. Government sponsored entities |
|
$ |
548,390 |
|
|
$ |
557,271 |
|
|
$ |
553,300 |
|
|
$ |
557,820 |
|
Obligations
of U.S. states and political subdivisions |
|
|
73,585 |
|
|
|
74,405 |
|
|
|
70,790 |
|
|
|
71,510 |
|
Mortgage-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Government agencies |
|
|
100,448 |
|
|
|
101,554 |
|
|
|
108,931 |
|
|
|
109,926 |
|
U.S.
Government sponsored entities |
|
|
652,015 |
|
|
|
651,745 |
|
|
|
660,195 |
|
|
|
659,120 |
|
Non-U.S.
Government agencies or sponsored entities |
|
|
200 |
|
|
|
203 |
|
|
|
267 |
|
|
|
271 |
|
U.S.
corporate debt securities |
|
|
2,500 |
|
|
|
2,162 |
|
|
|
2,500 |
|
|
|
2,162 |
|
Total
debt securities |
|
|
1,377,138 |
|
|
|
1,387,340 |
|
|
|
1,395,983 |
|
|
|
1,400,809 |
|
Equity
securities |
|
|
1,000 |
|
|
|
943 |
|
|
|
1,475 |
|
|
|
1,427 |
|
Total
available-for-sale securities |
|
$ |
1,378,138 |
|
|
$ |
1,388,283 |
|
|
$ |
1,397,458 |
|
|
$ |
1,402,236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-Maturity
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
09 |
/30/2015 |
|
12/31/2014 |
(in
thousands) |
|
|
Amortized
Cost |
|
|
|
Fair
Value |
|
|
|
Amortized
Cost |
|
|
|
Fair
Value |
|
Obligations
of U.S. Government sponsored entities |
|
$ |
132,577 |
|
|
$ |
134,962 |
|
|
$ |
71,906 |
|
|
$ |
72,269 |
|
Obligations
of U.S. states and political subdivisions |
|
$ |
13,723 |
|
|
$ |
14,150 |
|
|
$ |
16,262 |
|
|
$ |
16,767 |
|
Total
held-to-maturity debt securities |
|
$ |
146,300 |
|
|
$ |
149,112 |
|
|
$ |
88,168 |
|
|
$ |
89,036 |
|
Unrealized
gains, which represent the amount by which the fair value exceeds amortized cost, in the available-for-sale securities portfolio
increased as of September 30, 2015, compared to unrealized gains at December 31, 2014, as a result of favorable movement in market
interest rates. Management’s policy is to purchase investment grade securities that on average have relatively short duration,
which helps mitigate interest rate risk and provides sources of liquidity without significant risk to capital. The increase in
the held-to-maturity portfolio was due to purchases of Obligations of U.S. Government sponsored entities during the nine month
period ended September 30, 2015.
The
Company has no investments in preferred stock of U.S. government sponsored entities and no investments in pools of Trust Preferred
securities. Quarterly, the Company evaluates all investment securities with a fair value less than amortized cost to identify
any other-than-temporary impairment as defined under generally accepted accounting principles.
As
a result of the other-than-temporarily impairment review process, the Company does not consider any investment security held at
September 30, 2015 to be other-than-temporarily impaired. Future changes in interest rates or the credit quality and credit support
of the underlying issuers may reduce the market value of these and other securities. If such decline is determined to be other
than temporary, the Company will record the necessary charge to earnings and/or accumulated other comprehensive income to reduce
the securities to their then current fair value.
The
Company maintained a trading portfolio with a fair value of $7.7 million as of September 30, 2015, compared to $9.0 million at
December 31, 2014. The decrease in the trading portfolio reflects maturities or payments during the three and nine months ended
September 30, 2015. For the three and nine months ended September 30, 2015, net mark-to-market losses related to the securities
trading portfolio were $69,000 and $206,000, respectively, compared to net mark-to-market losses for the three and nine months
ended September 30, 2014 of $87,000 and $181,000, respectively.
Loans
and Leases
Loans
and leases at September 30, 2015 and December 31, 2014 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
09/30/2015 |
12/31/2014 |
(in
thousands) |
|
|
Originated |
|
|
|
Acquired |
|
|
|
Total
Loans and Leases |
|
|
|
Originated |
|
|
|
Acquired |
|
|
|
Total Loans
and Leases |
|
Commercial
and industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture |
|
$ |
65,831 |
|
|
$ |
0 |
|
|
$ |
65,831 |
|
|
$ |
78,507 |
|
|
$ |
0 |
|
|
$ |
78,507 |
|
Commercial
and industrial other |
|
|
741,411 |
|
|
|
90,643 |
|
|
|
832,054 |
|
|
|
688,529 |
|
|
|
97,034 |
|
|
|
785,563 |
|
Subtotal
commercial and industrial |
|
|
807,242 |
|
|
|
90,643 |
|
|
|
897,885 |
|
|
|
767,036 |
|
|
|
97,034 |
|
|
|
864,070 |
|
Commercial
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
|
86,050 |
|
|
|
34,239 |
|
|
|
120,289 |
|
|
|
72,427 |
|
|
|
35,906 |
|
|
|
108,333 |
|
Agriculture |
|
|
84,135 |
|
|
|
2,154 |
|
|
|
86,289 |
|
|
|
58,994 |
|
|
|
3,182 |
|
|
|
62,176 |
|
Commercial
real estate other |
|
|
1,104,085 |
|
|
|
267,126 |
|
|
|
1,371,211 |
|
|
|
979,621 |
|
|
|
308,488 |
|
|
|
1,288,109 |
|
Subtotal
commercial real estate |
|
|
1,274,270 |
|
|
|
303,519 |
|
|
|
1,577,789 |
|
|
|
1,111,042 |
|
|
|
347,576 |
|
|
|
1,458,618 |
|
Residential
real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
equity |
|
|
200,149 |
|
|
|
45,370 |
|
|
|
245,519 |
|
|
|
186,957 |
|
|
|
56,008 |
|
|
|
242,965 |
|
Mortgages |
|
|
796,661 |
|
|
|
28,939 |
|
|
|
825,600 |
|
|
|
710,904 |
|
|
|
32,282 |
|
|
|
743,186 |
|
Subtotal
residential real estate |
|
|
996,810 |
|
|
|
74,309 |
|
|
|
1,071,119 |
|
|
|
897,861 |
|
|
|
88,290 |
|
|
|
986,151 |
|
Consumer
and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indirect |
|
|
17,788 |
|
|
|
0 |
|
|
|
17,788 |
|
|
|
18,298 |
|
|
|
0 |
|
|
|
18,298 |
|
Consumer
and other |
|
|
41,608 |
|
|
|
880 |
|
|
|
42,488 |
|
|
|
35,874 |
|
|
|
1,095 |
|
|
|
36,969 |
|
Subtotal
consumer and other |
|
|
59,396 |
|
|
|
880 |
|
|
|
60,276 |
|
|
|
54,172 |
|
|
|
1,095 |
|
|
|
55,267 |
|
Leases |
|
|
14,339 |
|
|
|
0 |
|
|
|
14,339 |
|
|
|
12,251 |
|
|
|
0 |
|
|
|
12,251 |
|
Covered
loans |
|
|
0 |
|
|
|
15,576 |
|
|
|
15,576 |
|
|
|
0 |
|
|
|
19,319 |
|
|
|
19,319 |
|
Total
loans and leases |
|
|
3,152,057 |
|
|
|
484,927 |
|
|
|
3,636,984 |
|
|
|
2,842,362 |
|
|
|
553,314 |
|
|
|
3,395,676 |
|
Less:
unearned income and deferred costs and fees |
|
|
(2,671 |
) |
|
|
0 |
|
|
|
(2,671 |
) |
|
|
(2,388 |
) |
|
|
0 |
|
|
|
(2,388 |
) |
Total
loans and leases, net of unearned income and deferred costs and fees |
|
$ |
3,149,386 |
|
|
$ |
484,927 |
|
|
$ |
3,634,313 |
|
|
$ |
2,839,974 |
|
|
$ |
553,314 |
|
|
$ |
3,393,288 |
|
Residential
real estate loans, including home equity loans at September 30, 2015 were $1.1 billion, up $85.0 million or 8.6% compared to December
31, 2014, and comprised 29.5% of total loans and leases. Growth in residential loan balances is impacted by the Company’s
decision to retain these loans or sell them in the secondary market due to interest rate considerations. The Company’s
Asset/Liability Committee meets regularly and establishes standards for selling and retaining residential real estate mortgage
originations.
The
Company may sell residential real estate loans in the secondary market based on interest rate considerations. These residential
real estate loans are generally sold to Federal Home Loan Mortgage Corporation (“FHLMC”) or State of New York Mortgage
Agency (“SONYMA”) without recourse in accordance with standard secondary market loan sale agreements. These residential
real estate loans also are subject to customary representations and warranties made by the Company, including representations
and warranties related to gross incompetence and fraud. The Company has not had to repurchase any loans as a result of these representations
and warranties. While in the past in rare circumstances the Company agreed to sell residential real estate loans with recourse,
the Company has not done so in the past several years and the amount of such loans included on the Company’s balance sheet
at September 30, 2015 was insignificant. The Company has never had to repurchase a loan sold with recourse.
During
the first nine months of 2015 and 2014, the Company sold residential mortgage loans totaling $1.4 million and $18.7 million, respectively,
and realized gains on these sales of $21,000 and $345,000, respectively. These residential real estate loans were sold without
recourse in accordance with standard secondary market loan sale agreements. When residential mortgage loans are sold, the Company
typically retains all servicing rights, which provides the Company with a source of fee income. Mortgage servicing rights, at
amortized basis, totaled $922,000 at September 30, 2015 and $1.0 million at December 31, 2014.
The
Company has not originated any hybrid loans, such as payment option ARMs. The Company underwrites residential real estate loans
in accordance with secondary market standards in effect at the time of origination, including loan-to-value (“LTV”)
and documentation requirements. The Company does not underwrite low or reduced documentation loans other than those that meet
secondary market standards for low or reduced documentation loans. In those instances, W-2’s and paystubs are used instead
of sending Verification of Employment forms to employers to verify income and bank deposit statements are used instead of Verification
of Deposit forms mailed to financial institutions to verify deposit balances.
Commercial
and industrial loans and commercial real estate loans totaled $897.9 million and $1.6 billion, and represented 24.7% and 43.4%,
respectively of total loans as of September 30, 2015. The commercial real estate portfolio was up 8.2% over year-end 2014, while
commercial and industrial loans were up 3.9%. As of September 30, 2015, agriculturally-related loans totaled $152.1 million or
4.2% of total loans and leases, up from $140.7 million or 4.2% of total loans and leases at December 31, 2014. There is generally
an increase in agriculturally-related loans at year end related to tax planning and these loans are typically paid down over the
first part of the year. Agriculturally-related loans include loans to dairy farms and cash and vegetable crop farms. Agriculturally-related
loans are primarily made based on identified cash flows of the borrower with consideration given to underlying collateral, personal
guarantees, and government related guarantees. Agriculturally-related loans are generally secured by the assets or property being
financed or other business assets such as accounts receivable, livestock, equipment or commodities/crops.
The
acquired loans in the above table reflect loans acquired in the acquisition of VIST Financial Corp. during the third quarter of
2012. The acquired loans were recorded at fair value pursuant to the purchase accounting guidelines in FASB ASC 805 – “Fair
Value Measurements and Disclosures” (as determined by the present value of expected future cash flows) with no valuation
allowance (i.e., the allowance for loan losses). Upon acquisition, the Company evaluated whether each acquired loan (regardless
of size) was within the scope of ASC 310-30, “Receivables – Loans and Debt Securities Acquired with Deteriorated
Credit Quality”. The carrying value of the acquired loans reflects management’s best estimate of the amount to be
realized from the acquired loan and lease portfolios. However, the amounts the Company actually realizes on these loans could
differ materially from the carrying value reflected in these financial statements, based upon the timing of collections on the
acquired loans in future periods, underlying collateral values and the ability of borrowers to continue to make payments.
The
carrying value of acquired loans acquired and accounted for in accordance with ASC Subtopic 310-30, “Receivables Loans
and Debt Securities Acquired with Deteriorated Credit Quality,” was $28.2 million at September 30, 2015 as compared to
$34.4 million at December 31, 2014. Under ASC Subtopic 310-30, loans may be aggregated and accounted for as pools of loans if
the loans being aggregated have common risk characteristics. The Company elected to account for the loans with evidence of credit
deterioration individually rather than aggregate them into pools. The difference between the undiscounted cash flows expected
at acquisition and the investment in the acquired loans, or the “accretable yield,” is recognized as interest income
utilizing the level-yield method over the life of each loan. Contractually required payments for interest and principal that exceed
the undiscounted cash flows expected at acquisition, or the “non-accretable difference,” are not recognized as a
yield adjustment, as a loss accrual or as a valuation allowance.
Increases
in expected cash flows subsequent to the acquisition are recognized prospectively through an adjustment of the yield on the loans
over the remaining life. Subsequent decreases to the expected cash flows require us to evaluate the need for an addition to the
allowance for loan losses. Valuation allowances (recognized in the allowance for loan losses) on these impaired loans reflect
only losses incurred after the acquisition (representing all cash flows that were expected at acquisition but currently are not
expected to be received).
The
carrying value of loans not exhibiting evidence of credit impairment at the time of the acquisition (i.e. loans outside of the
scope of ASC 310-30) was $456.6 million at September 30, 2015. At acquisition, these loans were recorded at fair value, including
a credit discount. Credit losses on acquired performing loans are estimated based on analysis of the performing portfolio. The
purchased performing portfolio also included a general interest rate mark (premium). Both the credit discount and interest rate
mark are accreted/amortized as a yield adjustment over the estimated lives of the loans. Interest is accrued daily on the outstanding
principal balance of purchased performing loans.
At
September 30, 2015, acquired loans included $15.6 million of covered loans. VIST Financial Corp had acquired these loans in an
FDIC assisted transaction in the fourth quarter of 2010. In accordance with loss sharing agreements with the FDIC, certain losses
and expenses relating to covered loans may be reimbursed by the FDIC at 70% or, if certain levels of reimbursement are reached,
80%. See Note 7 – “FDIC Indemnification Asset Related to Covered Loans” in the Notes to Unaudited Condensed
Consolidated Financial Statements included in Part I of this Quarterly Report on Form 10-Q.
The
Company has adopted comprehensive lending policies, underwriting standards and loan review procedures. Management reviews these
policies and procedures on a regular basis. The Company discussed its lending policies and underwriting guidelines for its various
lending portfolios in Note 3 – “Loans and Leases” in the Notes to Consolidated Financial Statements contained
in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. There
have been no significant changes in these policies and guidelines. As such, these policies are reflective of new originations
as well as those balances held at September 30, 2015. The Company’s Board of
Directors approves the lending policies at least annually. The Company recognizes that exceptions to policy guidelines may occasionally
occur and has established procedures for approving exceptions to these policy guidelines. Management has also implemented
reporting systems to monitor loan originations, loan quality, concentrations of credit, loan delinquencies and nonperforming loans
and potential problem loans.
The
Company’s loan and lease customers are located primarily in the New York and Pennsylvania communities served by its four
subsidiary banks. Although operating in numerous communities in New York State and Pennsylvania, the Company is still dependent
on the general economic conditions of these states. Other than geographic and general economic risks, management is not aware
of any material concentrations of credit risk to any industry or individual borrower.
The
Allowance for Loan and Lease Losses
The
tables below provide, as of the dates indicated, an allocation of the allowance for probable and inherent loan losses by type.
The allocation is neither indicative of the specific amounts or the loan categories in which future charge-offs may occur, nor
is it an indicator of future loss trends. The allocation of the allowance to each category does not restrict the use of the allowance
to absorb losses in any category.
|
|
|
|
|
|
|
(in
thousands) |
|
09/30/2015 |
|
12/31/2014 |
|
09/30/2014 |
|
|
|
|
|
|
|
Allowance for originated
loans and leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
$ |
8,472 |
|
|
$ |
9,157 |
|
|
$ |
8,858 |
|
Commercial
real estate |
|
|
14,215 |
|
|
|
12,069 |
|
|
|
10,682 |
|
Residential
real estate |
|
|
5,447 |
|
|
|
5,030 |
|
|
|
5,423 |
|
Consumer
and other |
|
|
2,316 |
|
|
|
1,900 |
|
|
|
2,222 |
|
Total |
|
$ |
30,450 |
|
|
$ |
28,156 |
|
|
$ |
27,185 |
|
|
|
|
|
|
|
|
(in
thousands) |
|
09/30/2015 |
|
12/31/2014 |
|
09/30/2014 |
|
|
|
|
|
|
|
Allowance
for acquired loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
$ |
366 |
|
|
$ |
431 |
|
|
$ |
95 |
|
Commercial
real estate |
|
|
63 |
|
|
|
337 |
|
|
|
360 |
|
Residential
real estate |
|
|
86 |
|
|
|
51 |
|
|
|
128 |
|
Consumer
and other |
|
|
0 |
|
|
|
22 |
|
|
|
18 |
|
Total |
|
$ |
515 |
|
|
$ |
841 |
|
|
$ |
601 |
|
As
of September 30, 2015, the total allowance for loan and lease losses was $31.0 million, which was up $2.0 million or 6.8% over
year-end 2014. The increase in the allowance compared to year-end was mainly due to growth in the originated loan portfolio. Loans
internally-classified Special Mention, Substandard and Doubtful were down from prior year as were the level of nonperforming loans
and leases. The allowance for loan and lease losses covered 133.18% of nonperforming loans and leases as of September 30, 2015,
compared to 128.43% at December 31, 2014, and 108.92% at September 30, 2014.
The
Company’s allowance for originated loan and lease losses totaled $30.5 million at September 30, 2015, which represented
0.97% of total originated loans, compared to 0.98% at prior quarter end, and 1.02% at September 30, 2014. Originated loans internally-classified
as Special Mention, Substandard and Doubtful totaled $45.1 million at September 30, 2015, which were down $2.2 million or 4.7%
compared to prior quarter, and down $8.7 million or 16.1% compared to September 30, 2014. The decrease is mainly due to paydowns
of classified assets and upgrades of risk ratings in our commercial loan portfolio and commercial real estate construction portfolios
as a result of improving financial conditions of our commercial customers.
The
allowance for acquired loans at September 30, 2015 was $515,000, down $326,000 or 38.8% from year-end 2014 and down $86,000 or
14.3% compared to September 30, 2014. The amount of acquired loans internally-classified as Special Mention, Substandard and Doubtful
totaled $25.1 million at September 30, 2015, up from $23.5 million at prior quarter end and down from $31.6 million at September
30, 2014. Loan pay downs coupled with charge offs contributed to the decrease from the same quarter prior year. Nonaccrual acquired
loans were $4.9 million as of September 30, 2015 compared to $5.0 million at prior quarter end, and $5.0 million at September
30, 2014.
Activity
in the Company’s allowance for loan and lease losses during the nine months of 2015 and 2014 is illustrated in the table
below.
Analysis
of the Allowance for Originated Loan and Lease Losses
(in
thousands) |
|
|
09/30/2015 |
|
|
|
09/30/2014 |
|
Average
originated loans outstanding during period |
|
$ |
2,960,045 |
|
|
$ |
2,586,982 |
|
Balance
of originated allowance at beginning of year |
|
$ |
28,156 |
|
|
$ |
26,700 |
|
|
|
|
|
|
|
|
|
|
ORIGINATED
LOANS CHARGED-OFF: |
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
169 |
|
|
|
275 |
|
Commercial
real estate |
|
|
14 |
|
|
|
619 |
|
Residential
real estate |
|
|
408 |
|
|
|
385 |
|
Consumer
and other |
|
|
751 |
|
|
|
952 |
|
Total
loans charged-off |
|
$ |
1,342 |
|
|
$ |
2,231 |
|
|
|
|
|
|
|
|
|
|
RECOVERIES
OF ORIGINATED LOANS PREVIOUSLY CHARGED-OFF: |
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
792 |
|
|
|
557 |
|
Commercial
real estate |
|
|
1,064 |
|
|
|
1,506 |
|
Residential
real estate |
|
|
107 |
|
|
|
87 |
|
Consumer
and other |
|
|
391 |
|
|
|
375 |
|
Total
loans recoveries |
|
$ |
2,354 |
|
|
$ |
2,525 |
|
Net
loans (recovered) charged-off |
|
|
(1,012 |
) |
|
|
(294 |
) |
Additions
to originated allowance charged to operations |
|
|
1,282 |
|
|
|
191 |
|
Balance
of originated allowance at end of period |
|
$ |
30,450 |
|
|
$ |
27,185 |
|
Allowance
for originated loans and leases as a percentage of originated loans and leases |
|
|
0.97 |
% |
|
|
1.02 |
% |
Annualized
net (recoveries) charge-offs on originated loans to average total originated loans and leases during the period |
|
|
(0.05 |
%) |
|
|
(0.02 |
%) |
Analysis of the Allowance for Acquired Loan
Losses
(in
thousands) |
|
|
09/30/2015 |
|
|
|
09/30/2014 |
|
Average
acquired loans outstanding during period |
|
$ |
519,483 |
|
|
$ |
631,389 |
|
Balance
of acquired allowance at beginning of year |
|
|
841 |
|
|
|
1,270 |
|
|
|
|
|
|
|
|
|
|
ACQUIRED
LOANS CHARGED-OFF: |
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
53 |
|
|
|
243 |
|
Commercial
real estate |
|
|
216 |
|
|
|
631 |
|
Residential
real estate |
|
|
320 |
|
|
|
345 |
|
Consumer
and other |
|
|
5 |
|
|
|
10 |
|
Total
loans charged-off |
|
$ |
594 |
|
|
$ |
1,229 |
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
7 |
|
|
|
0 |
|
Commercial
real estate |
|
|
129 |
|
|
|
0 |
|
Residential
real estate |
|
|
2 |
|
|
|
0 |
|
Total
loans recovered |
|
$ |
138 |
|
|
$ |
0 |
|
Net
loans charged-off |
|
|
456 |
|
|
|
1,229 |
|
Additions
to acquired allowance charged to operations |
|
|
130 |
|
|
|
560 |
|
Balance
of acquired allowance at end of period |
|
$ |
515 |
|
|
$ |
601 |
|
Allowance
for acquired loans as a percentage of acquired loans outstanding |
|
|
0.10 |
% |
|
|
0.10 |
% |
Annualized
net (recoveries) charge-offs on acquired loans as a percentage of average acquired loans outstanding during the period |
|
|
0.12 |
% |
|
|
0.26 |
% |
Annualized
total net charge-offs as a percentage of average loans and leases outstanding during the period |
|
|
(0.02 |
%) |
|
|
0.04 |
% |
For
the three months ended September 30, 2015, net loan and lease recoveries totaled $593,000 compared to net loan and lease recoveries
of $328,000 for the same period in 2014. For the nine months ended September 30, 2015, net loan and lease recoveries were $556,000
compared to net charge-offs of $935,000 for the same period in 2014. In 2015 and 2014, the Company recognized significant recoveries
on two commercial relationships that were previously charged-off. Annualized net (recoveries) charge-offs for the nine month period
ended September 30, 2015 as a percentage of average total loans and leases was (0.02%) compared to 0.04% for the nine months ended
September 30, 2014. The most recent peer ratio is 0.08%.
For
the three and nine months ended September 30, 2015, the provision for loan and lease losses was $281,000 and $1.4 million compared
to a provision credit of $59,000 and provision expense of $751,000 for the same periods in 2014. The increase in provision for
loan and lease losses in 2015 compared to 2014 was mainly a result of growth in total loans, which was partially offset by generally
favorable asset quality trends.
Analysis of Past Due and Nonperforming
Loans |
(in
thousands) |
|
|
09/30/20151 |
|
|
|
12/31/20141 |
|
|
|
09/30/20141 |
|
Loans
90 days past due and accruing |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Residential
real estate |
|
|
57 |
|
|
|
106 |
|
|
|
395 |
|
Total
loans 90 days past due and accruing |
|
|
57 |
|
|
|
106 |
|
|
|
395 |
|
Nonaccrual
loans |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial |
|
|
2,194 |
|
|
|
2,116 |
|
|
|
2,400 |
|
Commercial
real estate |
|
|
7,722 |
|
|
|
7,520 |
|
|
|
8,378 |
|
Residential
real estate |
|
|
9,545 |
|
|
|
9,043 |
|
|
|
10,087 |
|
Consumer
and other |
|
|
268 |
|
|
|
349 |
|
|
|
452 |
|
Total
nonaccrual loans |
|
|
19,729 |
|
|
|
19,028 |
|
|
|
21,317 |
|
Troubled
debt restructurings not included above |
|
|
3,465 |
|
|
|
3,444 |
|
|
|
3,800 |
|
Total
nonperforming loans and leases |
|
|
23,251 |
|
|
|
22,578 |
|
|
|
25,512 |
|
Other
real estate owned |
|
|
3,188 |
|
|
|
5,683 |
|
|
|
6,533 |
|
Total
nonperforming assets |
|
$ |
26,439 |
|
|
$ |
28,261 |
|
|
$ |
32,045 |
|
Allowance
as a percentage of nonperforming loans and leases |
|
|
133.18 |
% |
|
|
128.43 |
% |
|
|
108.92 |
% |
Total
nonperforming loans and leases as percentage of total loans and leases |
|
|
0.64 |
% |
|
|
0.67 |
% |
|
|
0.78 |
% |
Total
nonperforming assets as percentage of total assets |
|
|
0.47 |
% |
|
|
0.54 |
% |
|
|
0.63 |
% |
1 The September 30, 2015, December 31,
2014, and September 30, 2014 columns in the above table exclude $2.6 million, $3.5 million, and $4.3 million, respectively, of
acquired loans that are 90 days past due and accruing interest. These loans were originally recorded at fair value on the acquisition
date of August 1, 2012. These loans are considered to be accruing as we can reasonably estimate future cash flows on these acquired
loans and we expect to fully collect the carrying value of these loans. Therefore, we are accreting the difference between the
carrying value of these loans and their expected cash flows into interest income. |
Nonperforming
assets include nonaccrual loans, troubled debt restructurings (“TDR”), and foreclosed real estate/other real estate
owned. Nonperforming assets represented 0.47% of total assets at September 30, 2015, compared to 0.54% at December 31, 2014, and
0.63% at September 30, 2014. The Company’s ratio of nonperforming assets to
total assets continues to compare favorably to our peer group’s most recent ratio of 1.02% at June 30, 2015.
Total
nonperforming loans and leases were up $673,000 or 3.0% from year end 2014, and down $2.3 million or 8.9% from September 30, 2014.
A breakdown of nonperforming loans by portfolio segment is shown above. The decrease in nonperforming commercial real estate loans
since September 30, 2014 is mainly due to significant payments received on two large commercial relationships in 2014. Total nonperforming
assets were down $1.8 million from December 31, 2014 and $5.6 million from September 30, 2014. The decrease is mainly due to the
sale of one property that was acquired through foreclosure in the second quarter of 2014.
Loans
are considered modified in a TDR when, due to a borrower’s financial difficulties, the Company makes a concession(s) to
the borrower that it would not otherwise consider and the borrower could not obtain elsewhere. These modifications may include,
among others, an extension of the term of the loan, and granting a period when interest-only payments can be made, with the principal
payments made over the remaining term of the loan or at maturity. TDRs are included in the above table within the following categories:
“loans 90 days past due and accruing”, “nonaccrual loans”, or “troubled debt restructurings
not included above”. Loans in the latter category include loans that meet the definition of a TDR but are performing in
accordance with the modified terms and therefore classified as accruing loans. At September 30, 2015 the Company had $7.3 million
in TDRs, and of that total $3.8 million were reported as nonaccrual and $3.5 million were considered performing and included in
the table above.
In
general, the Company places a loan on nonaccrual status if principal or interest payments become 90 days or more past due and/or
management deems the collectability of the principal and/or interest to be in question, as well as when required by applicable
regulations. Although in nonaccrual status, the Company may continue to receive payments on these loans. These payments are generally
recorded as a reduction to principal, and interest income is recorded only after principal recovery is reasonably assured.
The
Company’s recorded investment in loans and leases that are considered impaired totaled $20.7 million at September 30, 2015,
compared to $12.6 million at December 31, 2014 and $13.5 million at September 30, 2014. The increase in impaired loans over year
end 2014, was mainly a result of one credit in the acquired portfolio. A loan is impaired when, based on current information
and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement.
Impaired loans consist of our non-homogenous nonaccrual loans, and all TDRs. Specific reserves on individually identified impaired
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. For loans that are collateral dependent, impairment is measured based on the fair
value of the collateral less estimated selling costs, and such impaired amounts are generally charged off.
The
year-to-date average recorded investment in impaired loans and leases was $17.4 million at September 30, 2015, compared to $13.7
million at September 30, 2014. At September 30, 2015 there was a specific reserve of $1.4 million on impaired loans compared to
$1.2 million of specific reserves at December 31, 2014. The specific reserve of $1.1 million reported at September 30, 2015 includes
specific reserves of $1.0 million for two commercial real estate loans in the originated portfolio and specific reserves of $396,000
on 5 loans within the acquired portfolio. The majority of impaired loans are collateral dependent impaired loans that have limited
exposure or require limited specific reserve because of the amount of collateral support with respect to these loans and previous
charge-offs. Interest payments on impaired 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.
The
ratio of the allowance to nonperforming loans (loans past due 90 days and accruing, nonaccrual loans and restructured troubled
debt) was 133.18% at September 30, 2015, improved from 128.43% in December 31, 2014, and 108.92% at September 30, 2014. The improvement
in the ratio reflects the decrease in nonperforming loans over the year as well as an increase in the total allowance. The Company’s
nonperforming loans are mostly made up of collateral dependent impaired loans with limited exposure or require limited specific
reserve due to the level of collateral available with respect to these loans and/or previous charge-offs. The Company’s
peer group ratio as provided by the Federal Reserve Bank was 176.4% as of September 30, 2015.
Management
reviews the loan portfolio continuously for evidence of potential problem loans and leases. Potential problem loans and leases
are loans and leases that are currently performing in accordance with contractual terms, but where known information about possible
credit problems of the related borrowers causes management to have doubt as to the ability of such borrowers to comply with the
present loan payment terms and may result in such loans and leases becoming nonperforming at some time in the future. Management
considers loans and leases classified as Substandard, which continue to accrue interest, to be potential problem loans and leases.
The Company, through its internal loan review function, identified 31 commercial relationships from the originated portfolio and
27 commercial relationships from the acquired portfolio totaling $13.0 million and $15.2 million, respectively at September 30,
2015 that were potential problem loans. At December 31, 2014, the Company had identified 34 relationships totaling $14.8 million
in the originated portfolio and 21 relationships totaling $8.8 million in the acquired portfolio that were potential problem loans.
Of the 31 commercial relationships in the originated portfolio at September 30, 2015, that were Substandard, there were 3 relationships
that equaled or exceeded $1.0 million, which in aggregate totaled $6.7 million, the largest of which was $3.4 million. Of the
27 commercial relationships from the acquired loan portfolio at September 30, 2015, that were Substandard, there were 4 relationships
that equaled or exceeded $1.0 million, which in aggregate totaled $7.8 million, the largest of which is $3.0 million. The Company
continues to monitor these potential problem relationships; however, management cannot predict the extent to which continued weak
economic conditions or other factors may further impact borrowers. These loans remain in a performing status due to a variety
of factors, including payment history, the value of collateral supporting the credits, and personal or government guarantees.
These factors, when considered in the aggregate, give management reason to believe that the current risk exposure on these loans
does not warrant accounting for these loans as nonperforming. However, these loans do exhibit certain risk factors, which have
the potential to cause them to become nonperforming. Accordingly, management’s attention is focused on these credits, which
are reviewed on at least a quarterly basis.
Capital
Total
equity was $518.0 million at September 30, 2015, an increase of $28.4 million or 5.8% from December 31, 2014. The increase reflects
growth in retained earnings, additional paid-in capital and a reduction of accumulated other comprehensive losses.
Additional
paid-in capital increased by $1.5 million, from $348.9 million at December 31, 2014, to $350.4 million at September 30, 2015.
The increase is primarily attributable to the following: $1.6 million related to shares issued under the employee stock ownership
plan, $1.7 million related to shares issued for the exercise of stock options, and $1.4 million related to stock-based compensation.
These increases were partially offset by a $3.3 million reduction attributed to the repurchase of common stock. Retained earnings
increased by $25.0 million from $165.2 million at December 31, 2014, to $190.2 million at September 30, 2015, reflecting net income
of $44.6 million less dividends paid of $18.8 million. Retained earnings were also impacted by the adoption of accounting guidance
related to accounting for investments in qualified affordable housing projects in the first quarter of 2015. The adoption resulted
in a $725,000 reduction of retained earnings. Accumulated other comprehensive loss declined from a net loss of $24.0 million at
December 31, 2014 to a net loss of $22.0 million at September 30, 2015, reflecting a $3.2 million increase in unrealized gains
on available-for-sale securities due to changes in market rates, and a $1.3 million decrease related to postretirement benefit
plans. During the second quarter of 2015, the Company recorded a one-time $3.2 million loss to accumulated other comprehensive
income due to the curtailment of its defined benefit pension plan in accordance with FASB ASC 715. Under regulatory requirements,
amounts reported as accumulated other comprehensive income/loss related to net unrealized gain or loss on available-for-sale 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 ratios.
Cash
dividends paid in the first nine months of 2015 totaled approximately $18.8 million, representing 42.2% of year to date 2015 earnings.
Cash dividends of $1.26 per common share paid in the first nine months of 2015 were up 5.0% over cash dividends of $1.20 per common
share paid in the first nine months of 2014.
On
July 24, 2014, the Company’s Board of Directors authorized, at the discretion of senior management, the repurchase of up
to 400,000 shares of the Company’s outstanding common stock. Purchases may be made on the open market or in privately negotiated
transactions over the 24 months following adoption of the repurchase program. The Company repurchased 27,892 shares in the second
quarter of 2015 at an average price of $51.66 and 35,289 shares in the third quarter of 2015 at an average price of $52.11. As
of September 30, 2015 the Company has repurchased an aggregate of 164,647 shares under the plan at an average price of $47.90.
The
Company and its banking subsidiaries are subject to various regulatory capital requirements administered by Federal banking agencies.
In July 2013, the FRB approved and published the final Basel III Capital Rules establishing a new comprehensive capital framework
for U.S. banking organizations. The rules implement the Basel Committee’s December 2010 framework known as “Basel
III” for strengthening international capital standards as well as certain provisions of the Dodd-Frank Act. The Basel III
Capital Rules substantially revise the risk-based capital requirements applicable to bank holding companies and depository institutions,
including Tompkins Financial, compared to the current U.S. risk-based capital rules. The Basel III Capital Rules define the components
of capital, and address risk weights and other issues affecting the denominator in banking institutions’ regulatory capital
ratios. It also replaces the existing risk-weighting approach, with a more risk-sensitive approach based, in part, on the standardized
approach in the Basel Committee’s 2004 “Basel II” capital accords and implements the requirements of Section 939A
of the Dodd-Frank Act to remove references to credit ratings utilized in the federal banking agencies’ rules. The Basel
III Capital Rules were effective for Tompkins on January 1, 2015 (subject to a phase-in period).
As
required under Dodd-Frank, a new capital ratio, “common equity tier 1 capital ratio” (CET1) was established. This
ratio allows only common equity to qualify as tier 1 capital. The new CET1 ratio also will include most elements of accumulated
other comprehensive income, including unrealized securities gains and losses, as part of both total regulatory capital (numerator)
and total assets (denominator). Community banks however were given the opportunity to make a one-time irrevocable election to
include or not to include certain elements of other comprehensive income, most notably unrealized securities gains or losses.
Tompkins elected to not include the certain items of other comprehensive income in its capital calculation.
In
addition to setting higher minimum capital ratios, the new rules, introduce a capital conservation buffer, which must be added
to each of the minimum capital ratios and is designed to absorb losses during periods of economic stress. The capital conservation
buffer will be phased-in over five years beginning on January 1, 2016 and will be set at 2.5% when fully phased-in. If a banking
organization fails to hold capital above minimum capital ratios, including the capital conservation buffer, it will be subject
to certain restrictions on capital distributions and discretionary bonus payments.
The
final rules eliminated the proposed phase-out over 10 years of Trust Preferred Services, or “TRUPs” as tier 1 capital
for banks, such as Tompkins Financial, that have less than $15 billion in total assets. Under the final rule, grandfathered TRUPs,
such as Tompkins Financial’s outstanding TRUPs, would continue to qualify as tier 1 capital until they mature or are redeemed,
up to a limit of 25% of tier 1 capital (for grandfathered TRUPs and other grandfathered tier 1 capital components).
The
following table provides a summary of the Company’s capital ratios as of September 30, 2015.
REGULATORY
CAPITAL ANALYSIS |
|
|
|
|
|
|
|
|
September
30, 2015 |
|
Actual |
|
Well
Capitalized Requirement |
(dollar
amounts in thousands) |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
Total
Capital (to risk weighted assets) |
|
$ |
511,668 |
|
|
|
13.29 |
% |
|
$ |
385,139 |
|
|
|
10.00 |
% |
Tier
1 Capital (to risk weighted assets) |
|
$ |
478,761 |
|
|
|
12.43 |
% |
|
$ |
308,110 |
|
|
|
8.00 |
% |
Tier
1 Common Equity (to risk weighted assets) |
|
$ |
441,295 |
|
|
|
11.46 |
% |
|
$ |
250,340 |
|
|
|
6.50 |
% |
Tier
1 Capital (to average assets) |
|
$ |
478,761 |
|
|
|
8.89 |
% |
|
$ |
269,410 |
|
|
|
5.00 |
% |
As
illustrated above, the Company’s capital ratios at September 30, 2015 remained above the minimum requirements for well
capitalized institutions. Total capital as a percent of risk weighted assets decreased from 13.6% as of December 31, 2014 to 13.3%
at September 30, 2015. Tier 1 capital as a percent of risk weighted assets decreased from 12.8% at the end of 2014 to 12.4% as
of September 30, 2015. Tier 1 capital as a percent of average assets was 8.9% at September 30, 2015 up from 8.7% at year-end December
31, 2014. Tier 1 common equity capital was 11.5% at the end of the third quarter of 2015, comparable to the first quarter of 2015.
All risk based capital ratios were negatively impacted by the new Basel III requirements the Company was subject to in the reporting
period.
As
of September 30, 2015, the capital ratios for the Company’s subsidiary banks also exceeded the minimum levels required
to be considered well capitalized.
Deposits
and Other Liabilities
Total
deposits of $4.4 billion at September 30, 2015 increased $267.9 million or 6.4% from December 31, 2014. The increase from year-end
2014 was comprised mainly of increases in money market savings and interest bearing checking deposits (up $200.1 million), and
non interest bearing deposits (up $88.4 million) offset by lower time deposit accounts (down $20.7 million).
The
most significant source of funding for the Company is core deposits. The Company defines core deposits as total deposits less
time deposits of $250,000 or more (formerly $100,000), brokered deposits and municipal money market deposits. Core deposits of
$3.6 billion increased $218.7 million at September 30, 2015 compared to year-end 2014. Core deposits represented 81.1% of total
deposits at September 30, 2015, unchanged from December 31, 2014.
Municipal
money market savings and interest checking accounts of $522.6 million at September 30, 2015 decreased $135.6 million or 20.6%
from $658.2 million at year-end 2014. In general, there is a seasonal pattern to municipal deposits starting with a low point
during July and August. Account balances tend to increase throughout the fall and into the winter months from tax deposits and
the Company receives an additional inflow at the end of March from the electronic deposit of state funds.
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 $49.5 million at September 30, 2015, and $60.7 million at December
31, 2014. Management generally views local repurchase agreements as an alternative to large time deposits. The Company’s
wholesale repurchase agreements totaled $85.4 million at September 30, 2015 and included $55.0 million with the FHLB and $30.4
million with a large financial institution. Wholesale repurchase agreements totaled $86.3 million at December 31, 2014.
The
Company’s other borrowings totaled $398.9 million at September 30, 2015, up $42.4 million or 11.9% from $356.5 million
at December 31, 2014. Borrowings at September 30, 2015 included $64.7 million in FHLB overnight advances, $320.7 million of FHLB
term advances, and a $13.5 million advance from a bank. Borrowings at year-end 2014 included $232.1 million in overnight advances
from FHLB, $111.0 million of FHLB term advances, and a $13.5 million
advance from a bank. Of the $320.7 million in FHLB term advance at September 30, 2015, $125.0 million is due over one year. In
2007, the Company elected the fair value option under FASB ASC Topic 825 for
a $10.0 million advance with the FHLB. The fair value of this advance decreased by $226,000 (net mark-to-market gain of
$226,000) over the nine months ended September 30, 2015.
Liquidity
The
objective of liquidity management is to ensure the availability of adequate funding sources to satisfy the demand for credit,
deposit withdrawals, and business investment opportunities. The Company’s large, stable core deposit base and strong capital
position are the foundation for the Company’s liquidity position. The Company uses a variety of resources to meet its liquidity
needs, which include deposits, cash and cash equivalents, short-term investments, cash flow from lending and investing activities,
repurchase agreements, and borrowings. The Company’s Asset/Liability Management Committee monitors asset and liability
positions of the Company’s subsidiary banks individually and on a combined basis. The Committee reviews periodic reports
on liquidity and interest rate sensitivity positions. Comparisons with industry and peer groups are also monitored. The Company’s
strong reputation in the communities it serves, along with its strong financial condition, provides access to numerous sources
of liquidity as described below. Management believes these diverse liquidity sources provide sufficient means to meet all demands
on the Company’s liquidity that are reasonably likely to occur.
Core
deposits, discussed above under “Deposits and Other Liabilities”, are a primary and low cost funding source obtained
primarily through the Company’s branch network. In addition to core deposits, the Company uses non-core funding sources
to support asset growth. These non-core funding sources include time deposits of $250,000 or more, brokered time deposits, national
deposit listing services, municipal money market 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. Non-core
funding sources of $1.4 billion at September 30, 2015 increased $79.0 million or 6.2% as compared to year end 2014. Non-core funding
sources, as a percentage of total liabilities, were 27.0% at September 30, 2015, unchanged from December 31, 2014. The increase
in non-core funding sources reflects an increase in FHLB borrowings, municipal money market deposits, and non-core time deposits.
Non-core
funding sources may require securities to be pledged against the underlying liability. Securities carried at $1.3 billion and
$1.1 billion at September 30, 2015 and December 31, 2014, respectively, were either pledged or sold under agreements to repurchase.
Pledged securities represented 83.0% of total securities at September 30, 2015, compared to 72.3% of total securities at December
31, 2014.
Cash
and cash equivalents totaled $107.1 million as of September 30, 2015 which increased from $56.1 million at December 31, 2014.
Short-term investments, consisting of securities due in one year or less, decreased from $79.8 million at December 31, 2014, to
$68.5 million on September 30, 2015. The Company also had $7.7 million of securities designated as trading securities at September
30, 2015.
Cash
flow from the loan and investment portfolios provides a significant source of liquidity.
These assets may have stated maturities in excess of one year, but have monthly principal reductions. Total mortgage-backed securities,
at fair value, were $753.5 million at September 30, 2015 compared with $769.3 million at December 31, 2014. Outstanding principal
balances of residential mortgage loans, consumer loans, and leases totaled approximately $1.1 billion at September 30,
2015 as compared to $1.1 billion at December 31, 2014. Aggregate amortization from monthly payments on these assets provides significant
additional cash flow to the Company.
Liquidity
is enhanced by ready access to national and regional wholesale funding sources including Federal funds purchased, repurchase agreements,
brokered certificates of deposit, and FHLB advances. Through its subsidiary banks, the Company has borrowing relationships with
the FHLB and correspondent banks, which provide secured and unsecured borrowing capacity. At September 30, 2015, the unused borrowing
capacity on established lines with the FHLB was $1.2 billion. As members of the FHLB, the Company’s subsidiary banks can
use certain unencumbered mortgage-related assets and securities to secure additional borrowings from the FHLB. At September 30,
2015, total unencumbered residential mortgage loans and securities of the Company were $536.1 million. Additional assets may also
qualify as collateral for FHLB advances upon approval of the FHLB.
The
Company has not identified any trends or circumstances that are reasonably likely to result in material increases or decreases
in liquidity in the near term.
The Company
continues to evaluate the potential impact on liquidity management of regulatory proposals, including Basel III and those required
under the Dodd-Frank Act.
Item 3. |
Quantitative and Qualitative
Disclosure About Market Risk |
Interest
rate risk is the primary market risk category associated with the Company’s operations. Interest rate risk refers to the
volatility of earnings caused by changes in interest rates. The Company manages interest rate risk using income simulation to
measure interest rate risk inherent in its on-balance sheet and off-balance sheet financial instruments at a given point in time.
The simulation models are used to estimate the potential effect of interest rate shifts on net interest income for future periods.
Each quarter, the Company’s Asset/Liability Management Committee reviews the simulation results to determine whether the
exposure of net interest income to changes in interest rates remains within levels approved by the Company’s Board of Directors.
The Committee also considers strategies to manage this exposure and incorporates these strategies into the investment and funding
decisions of the Company. The 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.
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. Based upon the
simulation analysis performed as of August 31, 2015 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 1.0%, while a 100 basis
point parallel decline in interest rates over a one-year period would result in an decrease in one-year net interest income from
the base case of 1.0%. The simulation assumes no balance sheet growth and no management action to address balance sheet mismatches.
If
rates rise in a parallel fashion (+200 basis points over 12 months, or +400 basis points over 24 months), 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 market movements stabilize
over the next 12 to 24 months, funding cost increases slow while asset yields continue to cycle into the higher rate environment.
As a result, net interest income improves for the remainder of the projection period.
Although
the simulation model is useful in identifying potential exposure to interest rate movements, actual results may differ from those
modeled as the repricing, maturity, and prepayment characteristics of financial instruments may change to a different degree than
modeled. In addition, the model does not reflect actions that management may employ to manage the Company’s interest rate
risk exposure. The Company’s current liquidity profile, capital position, and growth
prospects, offer a level of flexibility for management to take actions that could offset some of the negative effects of
unfavorable movements in interest rates. Management believes the current exposure
to changes in interest rates is not significant in relation to the earnings and capital strength of the Company.
In
addition to the simulation analysis, management uses an interest rate gap measure. The table below is a Condensed Static Gap Report,
which illustrates the anticipated repricing intervals of assets and liabilities as of September 30, 2015. The Company’s
one-year net interest rate gap was a negative $249.2 million or 4.5% of total assets at September 30, 2015, compared with a negative
$225.8 million or 4.28% of total assets at December 31, 2014. A negative gap position exists when the amount of interest-bearing
liabilities maturing or repricing exceeds the amount of interest-earning assets maturing or repricing within a particular time
period. This analysis suggests that the Company’s net interest income is moderately more vulnerable to an increasing rate
environment than it is to a prolonged declining interest rate environment. An interest rate gap measure could be significantly
affected by external factors such as a rise or decline in interest rates, loan or securities prepayments, and deposit withdrawals.
Condensed
Static Gap – September 30, 2015 |
|
|
|
Repricing Interval |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Total |
|
0-3
months |
|
3-6
months |
|
6-12
months |
|
Cumulative
12 months |
|
|
|
|
|
|
|
|
|
|
|
Interest-earning
assets1 |
|
$ |
5,192,080 |
|
|
$ |
1,012,675 |
|
|
$ |
265,649 |
|
|
$ |
436,336 |
|
|
$ |
1,714,660 |
|
Interest-bearing
liabilities |
|
|
3,896,615 |
|
|
|
1,416,598 |
|
|
|
250,793 |
|
|
|
296,420 |
|
|
|
1,963,811 |
|
Net
gap position |
|
|
|
|
|
|
(403,923 |
) |
|
|
14,856 |
|
|
|
139,916 |
|
|
|
(249,151 |
) |
Net
gap position as a percentage of total assets |
|
|
|
|
|
|
(7.22 |
%) |
|
|
0.27 |
% |
|
|
2.50 |
% |
|
|
(4.45 |
%) |
1 Balances of
available securities are shown at amortized cost |
Item 4. |
Controls and Procedures |
Evaluation
of Disclosure Controls and Procedures
The
Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined
in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of September 30, 2015. Based upon that evaluation,
the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by
this Report on Form 10-Q, the Company’s disclosure controls and procedures were effective.
Changes
in Internal Control Over Financial Reporting
There
were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended September
30, 2015, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over
financial reporting.
PART
II - OTHER INFORMATION
Item 1. |
Legal Proceedings |
Due
to the nature of the Company’s business, the Company is party to a certain amount of litigation arising out of the ordinary
course of the Company’s business. In the opinion of management, there are no pending claims which, if determined adversely,
would have a material effect on the Company’s results of operations or financial condition.
There
have been no material changes in the risk factors previously disclosed under Item 1A. of the Company’s Annual Report on
Form 10-K, as amended, for the fiscal year ended December 31, 2014.
Item 2. |
Unregistered Sales of
Equity Securities and the Use of Proceeds |
Issuer Purchases of
Equity Securities |
|
|
|
|
|
|
|
|
|
|
Total
Number of Shares Purchased (a) |
|
Average
Price Paid Per Share (b) |
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or Programs (c) |
|
Maximum
Number of Shares that May Yet Be Purchased Under the Plans or Programs (d) |
|
|
|
|
|
|
|
|
|
July 1, 2015
through July 31, 2015 |
|
|
1,724 |
|
|
$ |
53.92 |
|
|
|
0 |
|
|
|
270,642 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 1, 2015 through
August 31, 2015 |
|
|
5,380 |
|
|
|
52.22 |
|
|
|
3,589 |
|
|
|
267,053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 1, 2015 through
September 30, 2015 |
|
|
32,062 |
|
|
|
52.18 |
|
|
|
31,700 |
|
|
|
235,353 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
39,166 |
|
|
$ |
52.26 |
|
|
|
35,289 |
|
|
|
235,353 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included
in the table above are 1,724 shares purchased in July 2015, at an average cost of $53.92, and 596 shares purchased in August 2015,
at an average cost of $54.42 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 and were part of the director deferred
compensation under that plan. In addition, (i) 1,195 shares tendered by employees, with an average value of $52.96, in July 2015,
in order to cover option exercise prices, and (ii) 362 shares, with an average value of $52.98; which were withheld in September 2015
from vested restricted stock grants in order to fund the employee’s tax liabilities in connection therewith.
On
July 24, 2014, the Company’s Board of Directors authorized a new stock repurchase plan for the Company to repurchase up
to 400,000 shares of the Company’s common stock. Purchases may be made over the 24 months following adoption of the plan.
The repurchase program may be suspended, modified or terminated at any time for any reason. As of the date of this report, the
Company has repurchased 164,647 shares under this program, at an average price of $47.90.
Recent Sales of Unregistered Securities |
|
|
None |
|
|
|
Item 3. |
Defaults Upon Senior Securities |
|
|
|
None |
|
|
Item 4. |
Mine Safety Disclosure |
|
|
|
Not applicable |
|
|
Item 5. |
Other Information |
|
|
None |
|
|
|
Item 6. |
Exhibits |
The information
called for by this item is incorporated by reference to the Exhibit Index included in this Quarterly Report on Form 10-Q, immediately
following the signature page.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Date: |
November 09, 2015 |
|
|
TOMPKINS FINANCIAL CORPORATION |
|
|
By: |
/S/ Stephen S.
Romaine |
|
|
Stephen S. Romaine |
|
|
President and Chief Executive Officer |
|
|
(Principal Executive Officer) |
|
|
|
By: |
/S/ Francis M. Fetsko |
|
|
Francis M. Fetsko |
|
Executive Vice President, Chief Financial Officer, and Chief Operating
Officer |
|
|
(Principal Financial Officer) |
|
(Principal Accounting Officer) |
EXHIBIT
INDEX
Exhibit
Number |
Description |
|
|
31.1 |
Certification
of Principal Executive Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended. |
|
|
31.2 |
Certification
of Principal Financial Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended. |
|
|
32.1 |
Certification
of Principal Executive Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, 18 U.S.C. Section
1350 |
|
|
32.2 |
Certification
of Principal Financial Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, 18 U.S.C. Section
1350 |
|
|
101 |
The following
materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, formatted in XBRL
(eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Condition as of September 30, 2015 and December
31, 2014; (ii) Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2015 and 2014; (iii)
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2015 and 2014; (iv)
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014; (v) Condensed Consolidated
Statements of Changes in Shareholders’ Equity for the nine months ended September 30, 2015 and 2014; and (vi) Notes to
Unaudited Condensed Consolidated Financial Statements. |
70
Tompkins Financial Corporation 10-Q
Exhibit 31.1
CERTIFICATION
I, Stephen S. Romaine, certify that:
1. I have reviewed this quarterly report on
Form 10-Q of Tompkins Financial Corporation;
2. Based on my knowledge, this report does
not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements,
and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying
officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
(a) Designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;
(b) Designed such internal control over financial
reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s
disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in
the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying
officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material
weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect
the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that
involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/S/Stephen S. Romaine |
|
Stephen S. Romaine |
|
President and Chief Executive Officer |
|
(Principal Executive Officer) |
|
Tompkins Financial Corporation 10-Q
Exhibit 31.2
CERTIFICATION
I, Francis M. Fetsko, certify that:
1. I have reviewed this quarterly report on
Form 10-Q of Tompkins Financial Corporation;
2. Based on my knowledge, this report does
not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements,
and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying
officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
(a) Designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;
(b) Designed such internal control over financial
reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s
disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in
the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying
officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material
weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect
the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that
involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/S/ Francis M. Fetsko |
|
Francis M. Fetsko |
|
Executive Vice President, Chief Financial Officer, and Chief Operating Officer |
|
(Principal Financial Officer) |
|
(Principal Accounting Officer)
|
|
Tompkins Financial Corporation 10-Q
Exhibit 32.1
CERTIFICATION
In connection with the filing of the Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 2015 (the “Report”) by Tompkins Financial Corporation
(the “Company”), the undersigned, as the Chief Executive Officer of the Company, hereby certifies pursuant to 18 U.S.C.
§1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
The Report fully complies with the requirements
of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934; and
The information contained in the Report fairly
presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement
required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and
Exchange Commission or its staff upon request.
November 09, 2015 |
|
|
|
/S/ Stephen S. Romaine |
|
|
Stephen S. Romaine |
|
|
President and Chief Executive Officer |
|
|
(Principal Executive Officer) |
|
Tompkins Financial Corporation 10-Q
Exhibit 32.2
CERTIFICATION
In connection with the filing of the Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 2015 (the “Report”) by Tompkins Financial Corporation
(the “Company”), the undersigned, as the Chief Financial Officer of the Company, hereby certifies pursuant to 18 U.S.C.
§1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
The Report fully complies with the requirements
of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934; and
The information contained in the Report fairly
presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement
required by Section 906 has ben provided to the Company and will be retained by the Company and furnished to the Securities and
Exchange Commission or its staff upon request.
November 09, 2015 |
|
|
|
/S/ Francis M. Fetsko |
|
|
Francis M. Fetsko |
|
|
Executive Vice President, |
|
|
Chief Financial Officer, and Chief Operating Officer |
|
|
(Principal Financial Officer) |
|
|
(Principal Accounting Officer) |
|
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