Tompkins Financial Corporation Reports Third Quarter Earnings - Tompkins Finl (AMEX:TMP)

Tompkins Financial Corporation TMP

Tompkins Financial Corporation reported diluted earnings per share of $1.34 for the third quarter of 2019, down 1.5% from the $1.36 per share reported for the same quarter period last year. Net income was $20.2 million for the third quarter of 2019, down from the $20.9 million reported for the same period in 2018.

For the year-to-date period ended September 30, 2019, diluted earnings per share were $3.97, down 3.6% from the $4.12 per share reported for the same period in 2018. Year-to-date net income was $60.6 million for the period ended September 30, 2019, a decrease of $2.8 million from the same period in 2018.

President and CEO, Stephen S. Romaine said "Despite earnings being down slightly from the prior year, the quarter saw improvement over the second quarter of 2019 in terms of net interest margin, returns on equity and diluted earnings per share. Solid growth in deposits and reduced borrowing costs contributed to the overall improvement from the second quarter, as did higher revenue from insurance and wealth management business."

SELECTED HIGHLIGHTS FOR THE THIRD QUARTER:

Total loans of $4.9 billion were up 1.1% over total loans at September 30, 2018
Total deposits of $5.4 billion reflect an increase of 6.9% over the same period last year
Net interest margin was 3.43% for the third quarter of 2019, up from 3.34% for the second quarter of 2019, and up from 3.35% for the same quarter last year
Return on average equity was 12.15% for the third quarter of 2019, up from 11.96% for the second quarter of 2019, and down from 13.89% for the same quarter last year

NET INTEREST INCOME

Net interest income was relatively flat compared to the same quarter and year-to-date periods in 2018. Third quarter 2019 net interest income was $53.2 million, unchanged from the same quarter last year. Net interest income for the third quarter reflected an increase over the second quarter of 2019, driven largely by lower funding costs, which benefited from lower market interest rates, the paydown of borrowings, and growth in noninterest-bearing deposits. The net interest margin for the third quarter of 2019 was 3.43%, compared to 3.34% for the second quarter of 2019, and 3.35% reported for the same period in 2018.

Year-to-date net interest income of $157.4 million was down compared to the $158.6 million reported for the same period last year. Year-to-date yield on interest-earning assets of 4.21% in 2019 was up from 3.96% for the same period last year. Average loans were up $75.9 million, or 1.6% in the first nine months of 2019, compared to the same period in 2018. Average total deposits were up $169.0 million, or 3.5% in the first nine months of 2019, versus the same period in 2018. Average noninterest-bearing deposits for the first nine months of 2019 were up $14.2 million or 1.0% compared to the same period in 2018. The average rate paid on interest-bearing deposits increased 42 basis points in the first nine months of 2019, compared to the same period in 2018.

NONINTEREST INCOME

Noninterest income for the third quarter of 2019 was up 5.0% compared to the same period last year. Noninterest income represented 26.7% of total revenues in the first nine months of 2019, compared to 26.6% in the same period in 2018. Fee income associated with insurance, wealth management, deposit services, and card services were all up over the same quarter last year, with a combined increase of $903,000, or 5.5%.

NONINTEREST EXPENSE

Noninterest expense was $45.7 million for the third quarter of 2019, up $522,000, or 1.2%, over the third quarter of 2018. For the year-to-date period, noninterest expense was $135.9 million, up $2.1 million, or 1.6%, from the same period in 2018. The increase in noninterest expense for both the third quarter and year-to-date periods reflects normal annual increases in salaries and wages. Current quarter other operating expense was reduced by deposit insurance credits received from the FDIC, which included $1.2 million that were applied during the third quarter of 2019.

INCOME TAX EXPENSE

The Company's effective tax rate was 21.3% in the third quarter of 2019, compared to 20.6% for the same period in 2018.

ASSET QUALITY

Asset quality trends remained strong in the third quarter of 2019, despite an increase in nonperforming assets during the third quarter of 2019. Nonperforming assets represented 0.47% of total assets at September 30, 2019, compared to 0.42% at December 31, 2018, and 0.39% at September 30, 2018. Nonperforming asset levels remain below the most recent Federal Reserve Board Peer Group Average¹ of 0.60%.

Provision for loan and lease losses was $1.3 million for the third quarter of 2019, compared to $272,000 for the third quarter ended September 30, 2018. Net charge-offs for the third quarter of 2019 were $739,000 compared to $139,000 reported in the third quarter of 2018.

The Company's allowance for originated loan and lease losses totaled $41.2 million at September 30, 2019, and represented 0.89% of total originated loans and leases at September 30, 2019, up from 0.88% for the most recent prior quarter, and down from 0.91% at September 30, 2018. The total allowance represented 137.46% of total nonperforming loans and leases at September 30, 2019, compared to 163.25% at December 31, 2018, and 169.00% at September 30, 2018.

CAPITAL POSITION

Capital ratios remain well above the regulatory well capitalized minimums. The ratio of Tier 1 capital to average assets was 9.43% at September 30, 2019, improved from the 9.25% reported for the most recent prior quarter ended June 30, 2019, and the 8.89% reported for September 30, 2018.

ABOUT TOMPKINS FINANCIAL CORPORATION

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

"Safe Harbor" Statement under the Private Securities Litigation Reform of 1995:

This press release may include forward-looking statements with respect to revenue sources, growth, market risk, and corporate objectives. The Company assumes no duty, and specifically disclaims any obligation, to update forward-looking statements, and cautions that these statements are subject to numerous assumptions, risks, and uncertainties, all of which could change over time. Actual results could differ materially from forward-looking statements.

The statements made herein shall not confer upon any person any rights or remedies of any nature, and shall not be construed to establish, amend, or modify any benefit plan, program, agreement, or arrangement, nor to alter any existing at-will employment relationship between the Company and its employees.


TOMPKINS FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
(In thousands, except share and per share data)	As of			As of
ASSETS	09/30/2019			12/31/2018

Cash and noninterest bearing balances due from banks	$	124,939		$	78,524
Interest bearing balances due from banks		2,488			1,865
Cash and Cash Equivalents		127,427			80,389

Available-for-sale securities, at fair value (amortized cost of $1,140,086 at September 30, 2019 and $1,363,902 at December 31, 2018)		1,142,452			1,332,658
Held-to-maturity securities, at amortized cost (fair value of $142,583 at September 30, 2019 and $139,377 at December 31, 2018)		138,657			140,579
Equity securities, at fair value (amortized cost $1,000 at September 30, 2019 and $1,000 at December 31, 2018)		917			887
Originated loans and leases, net of unearned income and deferred costs and fees		4,628,616			4,568,741
Acquired loans		228,457			265,198
Less: Allowance for loan and lease losses		41,371			43,410
Net Loans and Leases		4,815,702			4,790,529

Federal Home Loan Bank and other stock		24,881			52,262
Bank premises and equipment, net		94,861			97,202
Corporate owned life insurance		82,516			81,928
Goodwill		92,447			92,283
Other intangible assets, net		6,647			7,628
Accrued interest and other assets		101,475			82,091
Total Assets	$	6,627,982		$	6,758,436
LIABILITIES
Deposits:
Interest bearing:
Checking, savings and money market		3,165,622			2,853,190
Time		701,444			637,295
Noninterest bearing		1,502,924			1,398,474
Total Deposits		5,369,990			4,888,959

Federal funds purchased and securities sold under agreements to repurchase		50,541			81,842
Other borrowings		429,000			1,076,075
Trust preferred debentures		16,992			16,863
Other liabilities		101,594			73,826
Total Liabilities	$	5,968,117		$	6,137,565
EQUITY
Tompkins Financial Corporation shareholders' equity:
Common Stock - par value $.10 per share: Authorized 25,000,000 shares; Issued: 15,011,660 at September 30, 2019; and 15,348,287 at December 31, 2018		1,501			1,535
Additional paid-in capital		341,654			366,595
Retained earnings		357,165			319,396
Accumulated other comprehensive loss		(36,851	)		(63,165	)
Treasury stock, at cost – 121,880 shares at September 30, 2019, and 122,227 shares at December 31, 2018		(5,111	)		(4,902	)
Total Tompkins Financial Corporation Shareholders' Equity		658,358			619,459

Noncontrolling interests		1,507			1,412
Total Equity	$	659,865		$	620,871
Total Liabilities and Equity	$	6,627,982		$	6,758,436

TOMPKINS FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data) (Unaudited)	Three Months Ended				Nine Months Ended
	09/30/2019		09/30/2018		09/30/2019		09/30/2018
INTEREST AND DIVIDEND INCOME
Loans	$	57,621	$	54,769	$	169,685	$	158,419
Due from banks		11		8		31		22
Available-for-sale securities		6,511		7,448		22,055		22,821
Held-to-maturity securities		862		860		2,583		2,572
Federal Home Loan Bank and other stock		770		899		2,442		2,433
Total Interest and Dividend Income		65,775		63,984		196,796		186,267
INTEREST EXPENSE
Time certificates of deposits of $250,000 or more		823		563		2,184		1,088
Other deposits		7,582		3,830		20,409		9,699
Federal funds purchased and securities sold under agreements to repurchase		34		35		110		115
Trust preferred debentures		317		318		974		904
Other borrowings		3,862		6,075		15,731		15,897
Total Interest Expense		12,619		10,821		39,408		27,703
Net Interest Income		53,156		53,163		157,388		158,564
Less: Provision for loan and lease losses		1,320		272		2,366		1,884
Net Interest Income After Provision for Loan and Lease Losses		51,836		52,891		155,022		156,680
NONINTEREST INCOME
Insurance commissions and fees		8,517		7,903		24,314		22,684
Investment services income		4,175		4,097		12,166		12,365
Service charges on deposit accounts		2,191		2,088		6,210		6,300
Card services income		2,550		2,442		8,090		7,209
Other income		1,963		2,057		6,247		8,743
Net gain on securities transactions		138		16		434		290
Total Noninterest Income		19,534		18,603		57,461		57,591
NONINTEREST EXPENSE
Salaries and wages		22,960		22,029		66,149		64,404
Other employee benefits		5,821		5,300		17,094		15,859
Net occupancy expense of premises		3,236		3,057		10,095		9,873
Furniture and fixture expense		1,919		1,814		5,894		5,461
Amortization of intangible assets		421		440		1,251		1,334
Other operating expense		11,298		12,493		35,451		36,908
Total Noninterest Expenses		45,655		45,133		135,934		133,839
Income Before Income Tax Expense		25,715		26,361		76,549		80,432
Income Tax Expense		5,478		5,427		15,816		16,939
Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation		20,237		20,934		60,733		63,493
Less: Net Income Attributable to Noncontrolling Interests		31		32		95		96
Net Income Attributable to Tompkins Financial Corporation	$	20,206	$	20,902	$	60,638	$	63,397
Basic Earnings Per Share	$	1.34	$	1.37	$	3.99	$	4.15
Diluted Earnings Per Share	$	1.34	$	1.36	$	3.97	$	4.12

Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)

	Quarter Ended						YTD Period Ended						YTD Period Ended
		September 30, 2019						September 30, 2019						September 30, 2018
		Average						Average						Average
		Balance			Average			Balance			Average			Balance			Average
(Dollar amounts in thousands)		(QTD)	Interest		Yield/ Rate			(YTD)	Interest		Yield/ Rate			(YTD)	Interest		Yield/ Rate
ASSETS
Interest-earning assets
Interest-bearing balances due from banks	$	2,908	$	11	1.50	%	$	2,460	$	31	1.68	%	$	2,121	$	22	1.39	%
Securities (4)
U.S. Government securities		1,219,318	6,822		2.22	%		1,338,807	22,990		2.30	%		1,438,322	23,763		2.21	%
State and municipal (5)		91,675	639		2.76	%		93,131	1,903		2.73	%		97,556	1,898		2.60	%
Other securities (5)		3,419	39		4.52	%		3,417	120		4.70	%		3,516	113		4.30	%
Total securities		1,314,412	7,500		2.26	%		1,435,355	25,013		2.33	%		1,539,394	25,774		2.24	%
FHLBNY and FRB stock		33,359	770		9.16	%		42,634	2,442		7.66	%		52,802	2,433		6.16	%

Total loans and leases, net of unearned income (5)(6)		4,852,399	57,904		4.73	%		4,816,140	170,540		4.73	%		4,740,257	159,398		4.50	%
Total interest-earning assets		6,203,078	66,185		4.23	%		6,296,589	198,026		4.21	%		6,334,574	187,627		3.96	%

Other assets		418,334						405,358						351,949

Total assets	$	6,621,412					$	6,701,947					$	6,686,523

LIABILITIES & EQUITY
Deposits
Interest-bearing deposits
Interest bearing checking, savings & money market	$	2,998,574	5,423		0.72	%	$	2,962,236	14,865		0.67	%	$	2,806,119	6,118		0.29	%
Time deposits		694,822	2,982		1.70	%		670,570	7,728		1.54	%		671,888	4,669		0.93	%
Total interest-bearing deposits		3,693,396	8,405		0.90	%		3,632,806	22,593		0.83	%		3,478,007	10,787		0.41	%

Federal funds purchased & securities sold under
agreements to repurchase		57,607	34		0.23	%		61,482	110		0.24	%		62,956	115		0.24	%
Other borrowings		647,112	3,862		2.37	%		861,930	15,731		2.44	%		1,113,120	15,897		1.91	%
Trust preferred debentures		16,964	318		7.44	%		16,921	974		7.70	%		16,749	904		7.22	%
Total interest-bearing liabilities		4,415,079	12,619		1.13	%		4,573,139	39,408		1.15	%		4,670,832	27,703		0.79	%

Non-interest bearing deposits		1,445,051						1,380,399						1,366,219
Accrued expenses and other liabilities		101,632						101,483						63,682
Total liabilities		5,961,762						6,055,021						6,100,733

Tompkins Financial Corporation Shareholders' equity		658,159						645,466						584,331
Noncontrolling interest		1,491						1,460						1,459
Total equity		659,650						646,926						585,790

Total liabilities and equity	$	6,621,412					$	6,701,947					$	6,686,523
Interest rate spread					3.10	%					3.05	%					3.17	%
Net interest income/margin on earning assets			53,566		3.43	%			158,618		3.37	%			159,924		3.38	%

Tax equivalent adjustments			(410)						(1,230)						(1,360)

Net interest income per consolidated financial statements			$	53,156					$	157,388					$	158,564

Tompkins Financial Corporation - Summary Financial Data (Unaudited)

(In thousands, except per share data)
	Quarter-Ended										Year-Ended
Period End Balance Sheet		Sep-19		Jun-19		Mar-19		Dec-18		Sep-18		Dec-18
Securities	$	1,282,026	$	1,330,719	$	1,484,151	$	1,474,124	$	1,452,788	$	1,474,124
Originated loans and leases, net of unearned income and deferred costs and fees (2)		4,628,616		4,608,483		4,532,803		4,568,741		4,531,241		4,568,741
Acquired loans and leases (3)		228,457		247,319		256,897		265,198		271,468		265,198
Allowance for loan and lease losses		41,371		40,790		40,328		43,410		41,358		43,410
Total assets		6,627,982		6,654,390		6,738,719		6,758,436		6,746,960		6,758,436
Total deposits		5,369,990		4,988,897		4,989,925		4,888,959		5,025,082		4,888,959
Federal funds purchased and securities sold under agreements to repurchase		50,541		63,978		66,918		81,842		52,875		81,842
Other borrowings		429,000		824,562		923,427		1,076,075		988,515		1,076,075
Trust preferred debentures		16,992		16,949		16,906		16,863		16,820		16,863
Total common equity		658,358		656,201		645,823		619,459		597,636		619,459
Total equity		659,865		657,677		647,267		620,871		599,144		620,871

Average Balance Sheet
Average earning assets	$	6,203,078	$	6,337,983	$	6,350,325	$	6,364,113	$	6,356,781	$	6,342,019
Average assets		6,621,412		6,742,409		6,743,360		6,710,944		6,716,452		6,692,678
Average interest-bearing liabilities		4,415,079		4,638,249		4,668,875		4,606,536		4,644,533		4,654,625
Average equity		659,650		650,079		630,731		606,238		597,211		590,944

Share data
Weighted average shares outstanding (basic)	14,827,114		15,019,710		15,060,175		15,057,673		15,047,405		15,039,229
Weighted average shares outstanding (diluted)	14,887,626		15,085,945		15,136,523		15,135,750		15,144,491		15,132,257
Period-end shares outstanding	14,975,750		15,160,719		15,314,078		15,312,377		15,277,915		15,312,377
Common equity book value per share	$	43.96	$	43.28	$	42.17	$	40.45	$	39.12	$	40.45
Tangible book value per share (Non-GAAP)(10)	$	37.40	$	36.77	$	35.73	$	33.98	$	32.60	$	33.98

Income Statement
Net interest income	$	53,156	$	52,318	$	51,914	$	53,236	$	53,163	$	211,800
Provision for loan/lease losses		1,320		601		445		2,058		272		3,942
Noninterest income		19,534		18,520		19,407		19,858		18,603		77,449
Noninterest expense		45,655		46,070		44,209		47,228		45,133		181,067
Income tax expense		5,478		4,743		5,595		4,866		5,427		21,805
Net income attributable to Tompkins Financial Corporation		20,206		19,392		21,040		18,911		20,902		82,308
Noncontrolling interests		31		32		32		31		32		127
Basic earnings per share (8)	$	1.34	$	1.27	$	1.37	$	1.24	$	1.37	$	5.39
Diluted earnings per share (8)	$	1.34	$	1.27	$	1.37	$	1.23	$	1.36	$	5.35

Nonperforming Assets
Originated nonaccrual loans and leases	$	21,404	$	16,543	$	15,165	$	19,340	$	17,518	$	19,340
Acquired nonaccrual loans and leases		2,164		2,363		2,579		2,856		2,659		2,856
Originated loans and leases 90 days past due and accruing		0		0		0		0		0		0
Troubled debt restructuring not included above		6,528		4,889		5,234		4,395		4,295		4,395
Total nonperforming loans and leases		30,096		23,795		22,978		26,591		24,472		26,591
OREO		888		2,229		1,595		1,595		1,870		1,595
Total nonperforming assets	$	30,984	$	26,024	$	24,573	$	28,186	$	26,342	$	28,186

Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued

		Quarter-Ended									Year-Ended
Delinquency - Originated loan and lease portfolio		Sep-19		Jun-19		Mar-19		Dec-18		Sep-18		Dec-18
Loans and leases 30-89 days past due and
accruing (2)	$	3,287	$	3,883	$	4,193	$	7,838	$	6,454	$	7,838
Loans and leases 90 days past due and accruing (2)		0		0		0		0		0		0
Total originated loans and leases past due and accruing (2)		3,287		3,883		4,193		7,838		6,454		7,838

Delinquency - Acquired loan and lease portfolio
Loans 30-89 days past due and accruing (3)(7)	$	232	$	493	$	474	$	67	$	1,109	$	67
Loans 90 days or more past due		1,219		1,229		1,218		1,316		1,420		1,316
Total acquired loans and leases past due and accruing		1,451		1,722		1,692		1,383		2,529		1,383
Total loans and leases past due and accruing	$	4,738	$	5,605	$	5,885	$	9,221	$	8,983	$	9,221

Allowance for Loan Losses - Originated loan and lease portfolio
Balance at beginning of period	$	40,689	$	40,245	$	43,321	$	41,289	$	41,111	$	39,686
Provision for loan and lease losses		1,245		590		480		2,046		208		3,897
Net loan and lease (recoveries) charge-offs		703		146		3,556		14		30		262
Allowance for loan and lease losses (originated
loan portfolio) - balance at end of period	$	41,231	$	40,689	$	40,245	$	43,321	$	41,289	$	43,321

Allowance for Loan Losses - Acquired loan and lease portfolio
Balance at beginning of period	$	101	$	83		$	89		$	69		$	114	$	85
Provision (credit) for loan and lease losses		75		11			(35	)		12			64		45
Net loan and lease (recoveries) charge-offs		36		(7	)		(29	)		(8	)		109		41
Allowance for loan and lease losses (acquired
loan portfolio) - balance at end of period		140		101			83			89			69		89

Total allowance for loan and lease losses	$	41,371	$	40,791		$	40,328		$	43,410		$	41,358	$	43,410

Loan Classification - Originated Portfolio
Special Mention	$	41,314	$	36,619	$	33,689	$	28,074	$	34,245	$	28,074
Substandard		58,873		44,770		35,895		43,963		49,597		43,963
Loan Classification - Acquired Portfolio
Special Mention		261		265		270		452		465		452
Substandard		2,809		2,857		2,830		2,914		3,041		2,914
Loan Classifications - Total Portfolio
Special Mention		41,575		36,884		33,959		28,526		34,710		28,526
Substandard		61,682		47,627		38,725		46,877		52,638		46,877

Ratio Analysis

Credit Quality
Nonperforming loans and leases/total loans and leases (7)	0.62	%	0.49	%	0.48	%	0.55	%	0.51	%	0.55	%
Nonperforming assets/total assets	0.47	%	0.39	%	0.36	%	0.42	%	0.39	%	0.42	%
Allowance for originated loan and lease losses/total originated loans and leases	0.89	%	0.88	%	0.89	%	0.95	%	0.91	%	0.95	%
Allowance/nonperforming loans and leases	137.46	%	171.42	%	175.51	%	163.25	%	169.00	%	163.25	%
Net loan and lease losses annualized/total average loans and leases	0.06	%	0.01	%	0.30	%	0.00	%	0.01	%	0.01	%

Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued
											Year-Ended
Capital Adequacy (period-end)	Sep-19		Jun-19		Mar-19		Dec-18		Sep-18			Dec-18
Tier 1 Capital (to average assets)	9.43	%	9.25	%	9.24	%	9.05	%	8.89	%		9.05	%
Common Equity Tier 1 Capital (to risk-weighted assets)	12.14	%	12.13	%	12.19	%	11.84	%	11.65	%		11.84	%

Profitability
Return on average assets *	1.21	%	1.15	%	1.27	%	1.12	%	1.23	%	1.23	%
Return on average equity *	12.15	%	11.96	%	13.53	%	12.38	%	13.89	%	13.93	%
Net interest margin (TE) *	3.43	%	3.34	%	3.34	%	3.34	%	3.35	%	3.37	%
* Quarterly ratios have been annualized

Non-GAAP Measures

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (GAAP). Where non-GAAP disclosures are used in this press release, the comparable GAAP measure, as well as reconciliation to the comparable GAAP measure, is provided in the below tables. The Company believes the non-GAAP measures provide meaningful comparisons of our underlying operational performance and facilitate management's and investors' assessments of business and performance trends in comparison to others in the financial services industry. 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. The non-GAAP financial measures 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.

Reconciliation of Diluted Earnings Per Share (GAAP) to Adjusted Diluted Earnings Per Share (non-GAAP)
		Quarter-Ended									Year-Ended
		Sep-19		Jun-19		Mar-19		Dec-18		Sep-18		Dec-18
Net income available to common shareholders	$	20,206	$	19,392	$	21,040	$	18,911	$	20,902	$	82,308
Income attributable to unvested stock-based compensation awards		317		306		349		291		318		1,315
Net earnings allocated to common shareholders (GAAP)		19,889		19,086		20,691		18,620		20,584		80,993
Weighted average shares outstanding (diluted)		14,887,626		15,085,945		15,136,523		15,135,750		15,144,491		15,132,257
Diluted earnings per share (8)	$	1.34	$	1.27	$	1.37	$	1.23	$	1.36	$	5.35
Adjustments for non-operating income and expense:
Gain on sale of real estate, net of tax		0		0		0		0		0		2,227
Write-down of impaired leases, net of tax		0		0		0		0		(388)		(1,915)
Adjusted net income (Non-GAAP) (10)		19,889		19,086		20,691		18,620		20,972		80,681
Weighted average shares outstanding (diluted)		14,887,626		15,085,945		15,136,523		15,135,750		15,144,491		15,132,257
Adjusted diluted earnings per share (Non-GAAP) (10)	$	1.34	$	1.27	$	1.37	$	1.23	$	1.38	$	5.33

Reconciliation of Common Equity Book Value Per Share (GAAP) to Tangible Book Value Per Share (non-GAAP)
Total common equity	$	658,358	$	656,201	$	645,823	$	619,459	$	597,636	$	619,459
Less: Goodwill and intangibles (9)		98,277		98,698		98,694		99,106		99,543		99,106
Tangible common equity (Non-GAAP) (10)		560,081		557,503		547,129		520,353		498,093		520,353
Ending shares outstanding		14,975,750		15,160,719		15,314,078		15,312,377		15,277,915		15,312,377
Tangible book value per share (Non-GAAP) (10)	$	37.40	$	36.77	$	35.73	$	33.98	$	32.60	$	33.98

Tompkins Financial Corporation - Summary Financial Data (Unaudited) - continued

Reconciliation of Year to Date Common Equity Diluted Earnings Per Share (GAAP) to Adjusted Diluted Earnings Per Share (non-GAAP)
	Sep-19		Sep-18
Net income available to common shareholders	$	60,638	$	63,397
Income attributable to unvested stock-based compensation awards		972		1,024
Net earnings allocated to common shareholders (GAAP)		59,666		62,373
Weighted average shares outstanding (diluted)		15,035,780		15,131,018
Diluted earnings per share (8)	$	3.97	$	4.12
Adjustments for non-operating income and expense:
Gain on sale of real estate, net of tax		0		2,227
Write-down of impaired leases, net of tax		0		(1,915	)
Adjusted net income (Non-GAAP) (10)		59,666		62,061
Weighted average shares outstanding (diluted)		15,035,780		15,131,018
Adjusted diluted earnings per share (Non-GAAP) (10)	$	3.97	$	4.10

(1)	Federal Reserve peer ratio as of June 30, 2019, includes banks and bank holding companies with consolidated assets between $3 billion and $10 billion.
(2)	"Originated" equals loans and leases not included by definition in "acquired loans".
(3)	"Acquired Loans and Leases" equals loans and leases acquired at fair value, accounted for in accordance with FASB ASC Topic 805.
(4)	Average balances and yields on available-for-sale securities are based on historical amortized cost.
(5)	Interest income includes the tax effects of taxable-equivalent basis.
(6)	Nonaccrual loans are included in the average asset totals presented above. Payments received on nonaccrual loans have been recognized as disclosed in Note 1 of the Company's consolidated financial statements included in Part I of the Company's annual report on Form 10-K for the fiscal year ended December 31, 2018.
(7)	Certain acquired loans and leases that are past due are not on nonaccrual and are not included in nonperforming loans. The risk of credit loss on these loans has been considered by virtue of the Corporation's estimate of acquisition-date fair value and these loans are considered accruing as the Corporation primarily recognizes interest income through accretion of the difference between the carrying value of these loans and their expected cash flows.
(8)	Earnings per share year-to-date may not equal the sum of the quarterly earnings per share as a result of rounding of average shares
(9)	"Goodwill and intangibles" equal Total Intangible Assets less Mortgage Servicing Rights in the above tables.
(10)	See "Non-GAAP Measures" above for a discussion of non-GAAP financial measures and a reconciliation of non-GAAP financial measures to the most directly comparable financial measure presented in accordance with GAAP.

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