QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2026
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.)
118 E. Seneca Street, P.O. Box 460, Ithaca, NY
(Address of principal executive offices)
14851
(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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.10 par value
TMP
NYSE American, LLC
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 every Interactive Data File required to be submitted 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 such files). Yes☒ No ☐.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer
☒
Accelerated Filer
☐
Non-Accelerated Filer
☐
Smaller Reporting Company
☐
Emerging Growth Company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of Exchange Act.☐
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: 14,350,449 shares as of October 28, 2026.
The acronyms and abbreviations identified below are used throughout this report, including the Notes to Unaudited Consolidated Financial Statements. You may find it helpful to refer to this page as you read this report. All references in the glossary to laws are to those laws as amended from time to time.
Term
Definition
ACL
Allowance for credit losses
AFS
Available for sale
ASC
Accounting Standards Codification
ASU
Accounting Standards Update
BHC Act
Bank Holding Company Act of 1956
BOLI
Bank owned life insurance
CECL
Current Expected Credit Losses
CRE
Commercial real estate
DIF
Deposit Insurance Fund
Dodd-Frank Act
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
ECL
Expected credit losses
ESOP
Employee Stock Ownership Plan
Exchange Act
Securities Exchange Act of 1934
FASB
Financial Accounting Standards Board
FDIC
Federal Deposit Insurance Corporation
FHLB
Federal Home Loan Bank
FHLBNY
Federal Home Loan Bank of New York
FHLMC
Federal Home Loan Mortgage Corporation
FRB
Federal Reserve Board
GAAP
U.S. Generally Accepted Accounting Principles
HTM
Held to maturity
NYSDFS
New York State Department of Financial Services
OREO
Other real estate owned
PCA
Prompt corrective action
PCD
Purchased with credit deterioration
PCI
Purchased credit impaired
ROU
Right-of-use
Sarbanes-Oxley
Sarbanes-Oxley Act of 2002
SBIC
Small business investment companies
SEC
Securities and Exchange Commission
Securities Act
Securities Act of 1933
SERP
Supplemental employee retirement plan
TDR
Troubled debt restructuring
Tompkins Annual Report
Tompkins Annual Report on Form 10-K for the year ended December 31, 2025
TIA
Tompkins Insurance Agencies, Inc.
Tompkins or the Company
Tompkins Financial Corporation
Item 1. Financial Statements
TOMPKINS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(In thousands, except share and per share data)(unaudited)
As of
As of
ASSETS
9/30/2026
12/31/2025
(unaudited)
(audited)
Cash and noninterest bearing balances due from banks
$
81,779
$
50,717
Interest bearing balances due from banks
160,372
82,100
Cash and Cash Equivalents
242,151
132,817
Available-for-sale debt securities, at fair value (amortized cost of $1,419,705 at September 30, 2026 and $1,391,379 at December 31, 2025)
1,337,945
1,382,068
Held-to-maturity debt securities, at amortized cost (fair value of $274,121 at September 30, 2026 and $283,860 December 31, 2025)
312,581
312,528
Equity securities, at fair value
749
800
Loans held for sale
0
43,440
Total loans and leases, net of unearned income and deferred costs and fees
6,724,973
6,446,245
Less: Allowance for credit losses
60,455
57,671
Net Loans and Leases
6,664,518
6,388,574
Federal Home Loan Bank and other stock
26,508
32,307
Bank premises and equipment, net
70,213
72,418
Corporate owned life insurance
79,559
77,843
Goodwill
72,736
72,736
Accrued interest and other assets
171,557
152,737
Total Assets
8,978,517
8,668,268
LIABILITIES
Deposits:
Interest bearing:
Checking, savings and money market
4,182,542
3,742,402
Time
1,252,938
1,298,393
Noninterest bearing
1,973,556
1,896,967
Total Deposits
7,409,036
6,937,762
Federal funds purchased and securities sold under agreements to repurchase
133,854
95,569
Other borrowings
406,712
564,446
Other liabilities
92,535
132,114
Total Liabilities
8,042,137
7,729,891
EQUITY
Shareholders' equity:
Common Stock - par value $0.10 per share: Authorized 25,000,000 shares; Issued: 14,391,116 at September 30, 2026; and 14,449,845 at December 31, 2025
1,440
1,446
Additional paid-in capital
295,991
299,206
Retained earnings
716,829
662,161
Accumulated other comprehensive loss
(73,187)
(19,054)
Treasury stock, at cost – 91,740 shares at September 30, 2026, and 104,492 shares at December 31, 2025
(4,693)
(5,382)
Total Equity
936,380
938,377
Total Liabilities and Equity
$
8,978,517
$
8,668,268
See notes to unaudited consolidated financial statements.
1
TOMPKINS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
Nine Months Ended
(In thousands, except per share data) (Unaudited)
9/30/2026
9/30/2025
9/30/2026
9/30/2025
INTEREST AND DIVIDEND INCOME
Loans
$
93,706
$
86,309
$
270,916
$
247,232
Due from banks
142
187
501
549
Available-for-sale debt securities
14,201
9,738
41,799
27,778
Held-to-maturity debt securities
1,225
1,224
3,665
3,661
Federal Home Loan Bank and other stock
535
598
1,538
1,944
Total Interest and Dividend Income
109,809
98,056
318,419
281,164
INTEREST EXPENSE
Time certificates of deposits of $250,000 or more
4,006
4,063
12,676
12,710
Other deposits
23,690
24,210
67,559
69,692
Federal funds purchased and securities sold under agreements to repurchase
43
23
120
125
Other borrowings
4,769
5,882
14,919
17,967
Total Interest Expense
32,508
34,178
95,274
100,494
Net Interest Income
77,301
63,878
223,145
180,670
Less: Provision for credit loss expense
3,012
2,490
6,016
10,557
Net Interest Income After Provision for Credit Loss Expense
74,289
61,388
217,129
170,113
NONINTEREST INCOME
Insurance commissions and fees
0
11,282
0
32,490
Wealth management fees
5,316
4,979
15,811
15,062
Service charges on deposit accounts
2,008
1,844
5,619
5,439
Card services income
2,965
2,891
8,903
8,667
Other income
2,305
2,557
7,238
9,424
Net (loss) gain on securities transactions
(42)
11
(51)
26
Total Noninterest Income
12,552
23,564
37,520
71,108
NONINTEREST EXPENSE
Salaries and wages
23,731
27,581
68,634
78,926
Other employee benefits
6,121
6,073
18,803
20,335
Net occupancy expense of premises
2,943
3,173
9,694
9,851
Furniture and fixture expense
2,006
1,825
6,058
5,681
Other operating expense
14,285
15,195
40,689
41,284
Total Noninterest Expenses
49,086
53,847
143,878
156,077
Income Before Income Tax Expense
37,755
31,105
110,771
85,144
Income Tax Expense
9,101
7,432
26,739
20,321
Net Income
$
28,654
$
23,673
$
84,032
$
64,823
Basic Earnings Per Share
$
2.01
$
1.66
$
5.90
$
4.55
Diluted Earnings Per Share
$
2.00
$
1.65
$
5.86
$
4.52
See notes to unaudited consolidated financial statements.
2
TOMPKINS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended
(In thousands) (Unaudited)
9/30/2026
9/30/2025
Net income
$
28,654
$
23,673
Other comprehensive (loss) income, net of tax:
Available-for-sale debt securities:
Change in net unrealized gain (loss) during the period
(41,199)
11,235
Employee benefit plans:
Amortization of net retirement plan actuarial loss
31
71
Amortization of net retirement plan prior service cost
37
36
Other comprehensive (loss) income
(41,131)
11,342
Total comprehensive (loss) income
$
(12,477)
$
35,015
Nine Months Ended
(In thousands) (Unaudited)
9/30/2026
9/30/2025
Net Income
$
84,032
$
64,823
Other comprehensive income, net of tax:
Available-for-sale debt securities:
Change in net unrealized gain (loss) during the period
(54,337)
34,396
Employee benefit plans:
Amortization of net retirement plan actuarial loss
94
213
Amortization of net retirement plan prior service cost
110
110
Other comprehensive (loss) income
(54,133)
34,719
Total comprehensive income
$
29,899
$
99,542
See notes to unaudited consolidated financial statements.
3
TOMPKINS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
(In thousands) (Unaudited)
9/30/2026
9/30/2025
OPERATING ACTIVITIES
Net income
$
84,032
$
64,823
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Provision for credit loss expense
6,016
10,557
Depreciation and amortization of premises, equipment, and software
6,944
6,241
Amortization of intangible assets
0
265
Earnings from corporate owned life insurance
(1,714)
(1,902)
Net amortization on securities
(9,005)
(2,020)
Amortization/accretion related to purchase accounting
(185)
(189)
(Decrease) increase in current year tax liability
(37,349)
166
Net loss (gain) on securities transactions
51
(26)
Net gain on sale of loans originated for sale
(1,931)
(1,634)
Proceeds from sale of loans originated for sale
78,780
64,982
Increase in loans originated for sale
(72,388)
(62,561)
Decrease in loans held for sale
43,440
0
Net (loss) gain on sale of bank premises and equipment
(66)
2
Stock-based compensation expense
2,759
2,965
Increase in accrued interest receivable
(2,294)
(1,117)
Increase in accrued interest payable
936
393
Other, net
(1,815)
(4,872)
Net Cash Provided by Operating Activities
96,211
76,073
INVESTING ACTIVITIES
Proceeds from maturities, calls and principal paydowns of available-for-sale debt securities
146,275
185,264
Purchases of available-for-sale debt securities
(165,648)
(196,952)
Net increase in loans
(286,013)
(288,443)
Proceeds from sale/redemptions of Federal Home Loan Bank stock
104,325
101,315
Purchases of Federal Home Loan Bank and other stock
(98,526)
(86,143)
Proceeds from sale of bank premises and equipment
99
47
Purchases of bank premises, equipment and software
(5,359)
(3,022)
Purchase of corporate owned life insurance
(2)
0
Proceeds from redemption of corporate owned life insurance
0
1,022
Proceeds from sale of other real estate owned
0
16,664
Net Cash (Used in) Provided by Investing Activities
(304,849)
(270,248)
FINANCING ACTIVITIES
Net increase in demand, money market, and savings deposits
516,729
407,589
Net (decrease) increase in time deposits
(45,276)
173,860
Net increase in Federal funds purchased and securities sold under agreements to repurchase
38,285
43,768
Increase in other borrowings
206,112
243,946
Repayment of other borrowings
(363,846)
(589,327)
Cash dividends
(29,117)
(26,523)
Treasury stock issued
130
89
Repurchase of common stock
(4,548)
0
Net shares issued related to restricted stock awards
(428)
(121)
Net proceeds from exercise of stock options
(69)
(12)
Net Cash Provided by (Used in) Financing Activities
317,972
253,269
Net Increase in Cash and Cash Equivalents
109,334
59,094
Cash and cash equivalents, beginning of the period
132,817
134,398
Total Cash and Cash Equivalents at End of Period
$
242,151
$
193,492
See notes to unaudited consolidated financial statements.
4
TOMPKINS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
(In thousands) (Unaudited)
9/30/2026
9/30/2025
Supplemental Information:
Cash paid during the year for - Interest
$
94,517
$
100,285
Cash paid during the year for - Taxes
63,921
19,974
Transfer of loans to other real estate owned
154
397
Transfer of loans to other assets
0
12,674
Right-of-use assets obtained in exchange for new lease liabilities
607
1,916
See notes to unaudited consolidated financial statements.
5
TOMPKINS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(In thousands except share and per share data) (Unaudited)
Common Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive (Loss) Income
Treasury Stock
Total
Balances at July 1, 2025
$
1,447
$
300,001
$
560,385
$
(95,115)
$
(4,925)
$
761,793
Net income
23,673
23,673
Other comprehensive income
11,342
11,342
Total Comprehensive Income
35,015
Cash dividends ($0.62 per share)
(8,946)
(8,946)
Net exercise of stock options (239 shares)
(9)
(9)
Treasury stock activity (590 shares)
31
7
38
Stock-based compensation expense
913
913
Directors deferred compensation plan (3,766 shares)
248
(247)
1
Restricted stock activity (514 shares)
0
Balances at September 30, 2025
$
1,447
$
301,184
$
575,112
$
(83,773)
$
(5,165)
$
788,805
Balances at July 1, 2026
$
1,442
$
296,831
$
698,243
$
(32,056)
$
(4,528)
$
959,932
Net income
28,654
28,654
Other comprehensive loss
(41,131)
(41,131)
Total Comprehensive Loss
(12,477)
Cash dividends ($0.70 per share)
(10,068)
(10,068)
Net exercise of stock options (718 shares)
(60)
(60)
Common stock repurchased and returned to unissued status (18,118 shares)
(1)
(1,767)
(1,768)
Treasury stock activity (538 shares)
45
7
52
Stock-based compensation expense
792
792
Directors deferred compensation plan ((1,757) shares)
172
(172)
0
Restricted stock activity (1,673 shares)
(1)
(22)
(23)
Balances at September 30, 2026
$
1,440
$
295,991
$
716,829
$
(73,187)
$
(4,693)
$
936,380
6
(In thousands except share and per share data)(Unaudited)
Common Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive (Loss) Income
Treasury Stock
Total
Balances at January 1, 2025
$
1,447
$
300,073
$
537,157
$
(118,492)
$
(6,741)
$
713,444
Net income
64,823
64,823
Other comprehensive income
34,719
34,719
Total Comprehensive Income
99,542
Cash dividends ($1.86 per share)
(26,868)
(26,868)
Net exercise of stock options (316 shares)
(12)
(12)
Treasury stock issued (1,720 shares)
89
22
111
Stock-based compensation expense
2,708
2,708
Directors deferred compensation plan ((28,112) shares)
(1,553)
1,554
1
Restricted stock activity (7,099 shares)
(121)
(121)
Balances at September 30, 2025
$
1,447
$
301,184
$
575,112
$
(83,773)
$
(5,165)
$
788,805
Balances at January 1, 2026
$
1,446
$
299,206
$
662,161
$
(19,054)
$
(5,382)
$
938,377
Net income
84,032
84,032
Other comprehensive loss
(54,133)
(54,133)
Total Comprehensive Income
29,899
Cash dividends ($2.04 per share)
(29,364)
(29,364)
Net exercise of stock options (827 shares)
(69)
(69)
Common stock repurchased and returned to unissued status (53,636 shares)
(5)
(4,543)
(4,548)
Treasury stock issued (1,895 shares)
130
24
154
Stock-based compensation expense
2,359
2,359
Directors deferred compensation plan ((10,857) shares)
(665)
665
0
Restricted stock activity (5,920 shares)
(1)
(427)
(428)
Balances at September 30, 2026
$
1,440
$
295,991
$
716,829
$
(73,187)
$
(4,693)
$
936,380
See notes to unaudited consolidated financial statements
7
NOTES TO UNAUDITED 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, and financial planning and wealth management. At September 30, 2026, the Company had one wholly-owned banking subsidiary, Tompkins Bank & Trust, which changed its name from Tompkins Community Bank effective July 20, 2026. Tompkins Bank & Trust provides a broad selection of trust and wealth management services under the Tompkins Financial Advisors brand, including investment management, trust and estate, and financial and tax planning services. On October 31, 2025, the Company sold all of the issued and outstanding shares of capital stock of its insurance subsidiary, Tompkins Insurance Agencies, Inc. ("TIA"), to Arthur J. Gallagher Risk Management Services, LLC ("Gallagher"). The Company’s principal offices are located at 118 E. Seneca Street, Ithaca, New York, 14850, and its telephone number is (888) 503-5753. The Company’s common stock is traded on the NYSE American 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 American for listed companies.
Tompkins Bank & Trust is subject to examination and comprehensive regulation by various regulatory authorities, including the Federal Deposit Insurance Corporation ("FDIC"), and the New York State Department of Financial Services ("NYSDFS"). Each of these agencies 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. These agencies also examine and regulate the trust business of Tompkins Bank & Trust.
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 U.S. Generally Accepted Accounting Principles ("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 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 policy that management considers critical in this respect is the determination of the allowance for credit losses. The Company has evaluated subsequent events for potential recognition and/or disclosure as of the date of these unaudited consolidated financial statements, and determined that no further disclosures were required.
In management’s opinion, the unaudited 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, 2026. The unaudited 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, 2025.
Accounting Standards Pending Adoption
ASU No. 2023-06, "Disclosure Improvements" amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification. The new guidance is intended to align GAAP requirements with those of the SEC. The ASU will become effective on the earlier of the date on which the SEC removes its related disclosure requirements from Regulation S-X or Regulation S-K, or June 30, 2027. Early adoption is prohibited. Adoption of ASU 2023-06 is not expected to have a material impact on our consolidated financial statements.
8
ASU No. 2024-03, "Disaggregation of Income Statement Expenses" requires new financial statement disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense captions, including employee compensation, depreciation, and intangible asset amortization. Tompkins is required to adopt this ASU prospectively for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption and retrospective application are permitted. Tompkins is currently evaluating the potential impact of ASU 2024-03 on our consolidated financial statements.
ASU No. 2025-11, "Interim Reporting (Topic 270): Narrow-Scope Improvements" was issued to improve the guidance within Topic 270, Interim Reporting, by clarifying applicability of the requirements. This guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Tompkins is currently evaluating the potential impact of ASU 2025-11 on our consolidated financial statements.
ASU No. 2025-12, "Codification Improvements" addresses suggestions received from stakeholders on the Accounting Standards Codification and to make other incremental improvements to generally accepted accounting principles (GAAP). This ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Adoption is not expected to have a material impact on our consolidated financial statements.
The Company reviews new accounting standards as issued. Management has not identified any other new standards that it believes will have a significant impact on the Company’s financial statements.
3. Securities
Available-for-Sale Debt Securities
The following table summarizes available-for-sale debt securities held by the Company at September 30, 2026 and December 31, 2025:
(In thousands)
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
September 30, 2026
U.S. Treasuries
$
50,659
$
22
$
2,587
$
48,094
Obligations of U.S. Government sponsored entities
355,556
0
21,332
334,224
Obligations of U.S. states and political subdivisions
80,155
0
9,261
70,894
Mortgage-backed securities – residential, issued by
U.S. Government agencies
293,429
0
14,697
278,732
U.S. Government sponsored entities
637,406
961
34,817
603,550
U.S. corporate debt securities
2,500
0
49
2,451
Total available-for-sale debt securities
$
1,419,705
$
983
$
82,743
$
1,337,945
December 31, 2025
U.S. Treasuries
$
55,492
$
213
$
1,925
$
53,780
Obligations of U.S. Government sponsored entities
354,128
5,928
11,653
348,403
Obligations of U.S. states and political subdivisions
81,517
7
5,214
76,310
Mortgage-backed securities – residential, issued by
U.S. Government agencies
315,001
852
2,357
313,496
U.S. Government sponsored entities
582,741
6,712
1,821
587,632
U.S. corporate debt securities
2,500
0
53
2,447
Total available-for-sale debt securities
$
1,391,379
$
13,712
$
23,023
$
1,382,068
9
Held-to-Maturity Debt Securities
The following table summarizes held-to-maturity debt securities held by the Company atSeptember 30, 2026 and December 31, 2025:
(In thousands)
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
September 30, 2026
U.S. Treasuries
$
85,664
$
0
$
9,121
$
76,543
Obligations of U.S. Government sponsored entities
226,917
0
29,339
197,578
Total held-to-maturity debt securities
$
312,581
$
0
$
38,460
$
274,121
December 31, 2025
U.S. Treasuries
$
85,831
$
0
$
7,037
$
78,794
Obligations of U.S. Government sponsored entities
226,697
0
21,631
205,066
Total held-to-maturity debt securities
$
312,528
$
0
$
28,668
$
283,860
The Company may from time to time sell debt securities from its available-for-sale portfolio. There were no realized gains or losses on sales of available-for-sale debt securities for the three and nine months ended September 30, 2026 andSeptember 30, 2025. The Company's investment portfolio includes callable securities that may be called prior to maturity. There were no realized gains or losses on called available-for-sale or held-to-maturity debt securities for the three and nine months ended September 30, 2026 and September 30, 2025. The Company recognized net losses on equity securities of $42,000and $51,000 for the three and nine months ended September 30, 2026, respectively, compared to net gains of $10,000 and $25,500 for the three and nine months ended September 30, 2025, respectively, reflecting the change in fair value.
The following table summarizes available-for-sale debt securities that had unrealized losses at September 30, 2026, and December 31, 2025:
Less than 12 Months
12 Months or Longer
Total
(In thousands)
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
September 30, 2026
U.S. Treasuries
$
4,671
$
231
$
28,542
$
2,356
$
33,213
$
2,587
Obligations of U.S. Government sponsored entities
195,772
6,503
133,494
14,829
329,266
21,332
Obligations of U.S. states and political subdivisions
13,682
621
57,018
8,640
70,700
9,261
Mortgage-backed securities – residential, issued by
U.S. Government agencies
267,981
14,204
10,751
493
278,732
14,697
U.S. Government sponsored entities
540,804
33,578
10,487
1,239
551,291
34,817
U.S. corporate debt securities
0
0
2,451
49
2,451
49
Total available-for-sale debt securities
$
1,022,910
$
55,137
$
242,743
$
27,606
$
1,265,653
$
82,743
December 31, 2025
U.S. Treasuries
$
0
$
0
$
38,936
$
1,925
$
38,936
$
1,925
Obligations of U.S. Government sponsored entities
0
0
141,606
11,653
141,606
11,653
Obligations of U.S. states and political subdivisions
2,530
2
65,279
5,212
67,809
5,214
Mortgage-backed securities – residential, issued by
U.S. Government agencies
179,250
2,129
12,051
228
191,301
2,357
U.S. Government sponsored entities
291,424
1,452
7,990
369
299,414
1,821
U.S. corporate debt securities
0
0
2,447
53
2,447
53
Total available-for-sale debt securities
$
473,204
$
3,583
$
268,309
$
19,440
$
741,513
$
23,023
10
The following table summarizes held-to-maturity debt securities that had unrealized losses at September 30, 2026 and December 31, 2025:
Less than 12 Months
12 Months or Longer
Total
(In thousands)
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
September 30, 2026
U.S. Treasuries
$
0
$
0
$
76,543
$
9,121
$
76,543
$
9,121
Obligations of U.S. Government sponsored entities
0
0
197,578
29,339
197,578
29,339
Total held-to-maturity debt securities
$
0
$
0
$
274,121
$
38,460
$
274,121
$
38,460
December 31, 2025
U.S. Treasuries
$
0
$
0
$
78,794
$
7,037
$
78,794
$
7,037
Obligations of U.S. Government sponsored entities
0
0
205,066
21,631
205,066
21,631
Total held-to-maturity debt securities
$
0
$
0
$
283,860
$
28,668
$
283,860
$
28,668
The Company evaluates available-for-sale debt securities for expected credit losses ("ECL") in unrealized loss positions at each measurement date to determine whether the decline in the fair value below the amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors.
Factors that may be indicative of ECL include, but are not limited to, the following:
•Extent to which the fair value is less than the amortized cost basis.
•Adverse conditions specifically related to the security, an industry, or geographic area (changes in technology, business practice).
•Payment structure of the debt security with respect to underlying issuer or obligor.
•Failure of the issuer to make scheduled payment of principal and/or interest.
•Changes to the rating of a security or issuer by a nationally recognized statistical rating organization.
•Changes in tax or regulatory guidelines that impact a security or underlying issuer.
For available-for-sale debt securities in an unrealized loss position, the Company evaluates the securities to determine whether the decline in the fair value below the amortized cost basis is the result of changes in interest rates or reflects a fundamental change in the creditworthiness of the underlying issuer. Any impairment that is not credit related is recognized in other comprehensive income (loss), net of applicable taxes. Credit-related impairment is recognized as an allowance for credit losses ("ACL") on the Consolidated Statements of Condition, limited to the amount by which the amortized cost basis exceeds the fair value, with a corresponding adjustment to earnings. Both the ACL and the adjustment to net income may be reversed if conditions change.
Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Management has made the accounting policy election to exclude accrued interest receivable on held-to-maturity debt securities from the estimate of credit losses. As of September 30, 2026, the held-to- maturity portfolio consisted of U.S. Treasury securities and securities issued by U.S. government-sponsored enterprises, including the Federal National Mortgage Agency, the Federal Home Loan Bank and the Federal Farm Credit Banks Funding Corporation. U.S. Treasury securities are backed by the full faith and credit of and/or guaranteed by the U.S. government, and it is expected that the securities will not be settled at prices less than the amortized cost bases of the securities. Securities issued by U.S. government agencies or U.S. government-sponsored enterprises carry the explicit and/or implicit guarantee of the U.S. government, are widely recognized as "low-risk," and have a long history of zero credit loss. As such, the Company did not record an allowance for credit losses for these securities as of September 30, 2026 or December 31, 2025.
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-related quality of the investment securities. The Company does
11
not have the intent to sell these securities and does not believe it is more likely than not that the Company will be required to sell these securities before a recovery of amortized cost.
The Company did not recognize any net credit impairment charge to earnings on investment securities in the second quarter of 2026 or the second quarter of 2025.
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, 2026
December 31, 2025
(In thousands)
Amortized Cost
Fair Value
Amortized Cost
Fair Value
Available-for-sale debt securities:
Due in one year or less
$
36,904
$
36,725
$
74,224
$
74,109
Due after one year through five years
230,718
215,633
238,913
231,336
Due after five years through ten years
219,094
201,359
180,500
175,495
Due after ten years
2,154
1,946
0
0
Total
488,870
455,663
493,637
480,940
Mortgage-backed securities
930,835
882,282
897,742
901,128
Total available-for-sale debt securities
$
1,419,705
$
1,337,945
$
1,391,379
$
1,382,068
September 30, 2026
December 31, 2025
(In thousands)
Amortized Cost
Fair Value
Amortized Cost
Fair Value
Held-to-maturity debt securities:
Due after one year through five years
$
302,628
$
265,634
$
174,870
$
160,547
Due after five years through ten years
9,953
8,487
137,658
123,313
Total held-to-maturity debt securities
$
312,581
$
274,121
$
312,528
$
283,860
The Company also holds non-marketable Federal Home Loan Bank of New York ("FHLBNY") 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 and ACBB stock totaled $26.4 million and $95,000, respectively, at September 30, 2026. These securities are carried at par, which is also cost. The FHLBNY continues to pay dividends and repurchase 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, 2026, we determined that no impairment write-downs were required.
12
4. Loans and Leases
Loans and leases at September 30, 2026 and December 31, 2025 were as follows:
(In thousands)
9/30/2026
12/31/2025
Commercial and industrial
Agriculture
$
122,061
$
114,475
Commercial and industrial other
1,109,694
986,173
Subtotal commercial and industrial
1,231,755
1,100,648
Commercial real estate
Construction
380,000
448,901
Agriculture
242,594
234,292
Commercial real estate other
3,157,228
2,978,842
Subtotal commercial real estate
3,779,822
3,662,035
Residential real estate
Home equity
253,759
227,654
Mortgages
1,370,834
1,363,532
Subtotal residential real estate
1,624,593
1,591,186
Consumer and other
Indirect
37
68
Consumer and other
84,016
86,399
Subtotal consumer and other
84,053
86,467
Leases
7,979
10,413
Total loans and leases
6,728,202
6,450,749
Less: unearned income and deferred costs and fees
(3,229)
(4,504)
Total loans and leases, net of unearned income and deferred costs and fees
$
6,724,973
$
6,446,245
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 4 – "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, 2025. There have been no significant changes in these policies and guidelines since the date of that report. 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 contractually 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.
13
The below tables are an age analysis of past due loans, segregated by class of loans and leases, as of September 30, 2026 and December 31, 2025:
(In thousands)
30-59 Days
60-89 Days
90 Days or More
Total Past Due
Current Loans
Total Loans
September 30, 2026
Commercial and industrial
Agriculture
$
100
$
0
$
39
$
139
$
121,922
$
122,061
Commercial and industrial other
705
1,408
7,166
9,279
1,100,415
1,109,694
Subtotal commercial and industrial
805
1,408
7,205
9,418
1,222,337
1,231,755
Commercial real estate
Construction
0
0
0
0
380,000
380,000
Agriculture
58
0
606
664
241,930
242,594
Commercial real estate other
92
1,442
20,899
22,433
3,134,795
3,157,228
Subtotal commercial real estate
150
1,442
21,505
23,097
3,756,725
3,779,822
Residential real estate
Home equity
655
250
2,768
3,673
250,086
253,759
Mortgages
0
1,471
10,116
11,587
1,359,247
1,370,834
Subtotal residential real estate
655
1,721
12,884
15,260
1,609,333
1,624,593
Consumer and other
Indirect
0
0
0
0
37
37
Consumer and other
429
92
34
555
83,461
84,016
Subtotal consumer and other
429
92
34
555
83,498
84,053
Leases
0
0
0
0
7,979
7,979
Total loans and leases
2,039
4,663
41,628
48,330
6,679,872
6,728,202
Less: unearned income and deferred costs and fees
0
0
0
0
(3,229)
(3,229)
Total loans and leases, net of unearned income and deferred costs and fees
$
2,039
$
4,663
$
41,628
$
48,330
$
6,676,643
$
6,724,973
14
(In thousands)
30-59 Days
60-89 Days
90 Days or More
Total Past Due
Current Loans
Total Loans
December 31, 2025
Commercial and industrial
Agriculture
$
4
$
0
$
0
$
4
$
114,471
$
114,475
Commercial and industrial other
1,818
1,543
5,136
8,497
977,676
986,173
Subtotal commercial and industrial
1,822
1,543
5,136
8,501
1,092,147
1,100,648
Commercial real estate
Construction
0
0
17,302
17,302
431,599
448,901
Agriculture
69
0
0
69
234,223
234,292
Commercial real estate other
474
775
4,507
5,756
2,973,086
2,978,842
Subtotal commercial real estate
543
775
21,809
23,127
3,638,908
3,662,035
Residential real estate
Home equity
1,286
107
2,040
3,433
224,221
227,654
Mortgages
0
2,331
8,225
10,556
1,352,976
1,363,532
Subtotal residential real estate
1,286
2,438
10,265
13,989
1,577,197
1,591,186
Consumer and other
Indirect
0
0
0
0
68
68
Consumer and other
295
104
191
590
85,809
86,399
Subtotal consumer and other
295
104
191
590
85,877
86,467
Leases
0
0
0
0
10,413
10,413
Total loans and leases
3,946
4,860
37,401
46,207
6,404,542
6,450,749
Less: unearned income and deferred costs and fees
0
0
0
0
(4,504)
(4,504)
Total loans and leases, net of unearned income and deferred costs and fees
$
3,946
$
4,860
$
37,401
$
46,207
$
6,400,038
$
6,446,245
15
The following tables present the amortized cost basis of loans and leases on nonaccrual status and the amortized cost basis of loans on nonaccrual status for which there was no related allowance for credit losses. The below tables are an age analysis of nonaccrual loans segregated by class of loans and leases, as of September 30, 2026 and December 31, 2025:
(In thousands)
Nonaccrual Loans and Leases with no ACL
Nonaccrual Loans and Leases
Loans and Leases Past Due Over 89 Days and Accruing
Nonaccrual Loans and Leases with no ACL
Nonaccrual Loans and Leases
Loans and Leases Past Due Over 89 Days and Accruing
September 30, 2026
December 31, 2025
Commercial and industrial
Agriculture
$
0
$
58
$
0
$
0
$
0
$
0
Commercial and industrial other
3,360
10,450
277
4,565
8,305
0
Subtotal commercial and industrial
3,360
10,508
277
4,565
8,305
0
Commercial real estate
Construction
0
0
0
0
17,303
0
Agriculture
0
667
0
0
92
0
Commercial real estate other
2,394
23,968
0
1,463
5,469
0
Subtotal commercial real estate
2,394
24,635
0
1,463
22,864
0
Residential real estate
Home equity
42
3,337
0
232
2,624
0
Mortgages
1,428
14,618
1
1,570
13,931
1
Subtotal residential real estate
1,470
17,955
1
1,802
16,555
1
Consumer and other
Consumer and other
0
30
35
0
70
145
Subtotal consumer and other
0
30
35
0
70
145
Total loans and leases
$
7,224
$
53,128
$
313
$
7,830
$
47,794
$
146
The Company did not recognize any interest income on nonaccrual loans during the three and nine months ended September 30, 2026 and 2025.
5. Allowance for Credit Losses
Management reviews the appropriateness of the allowance for credit losses ("allowance" or "ACL") 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 credit 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. 119, Measurement of Credit Losses on Financial Instruments ("CECL"), and Financial Instruments - Credit Losses and ASC Topic 326, Financial Instruments - Credit Losses.
The Company uses a Discounted Cash Flow ("DCF") method to estimate expected credit losses for all loan segments excluding the leasing segment. For each of these loan segments, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, recovery lag, probability of default, and loss given default. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on internal historical data.
The Company uses regression analysis of historical internal and peer data to determine suitable loss drivers to utilize when modeling lifetime probability of default and loss given default. This analysis also determines how expected probability of default and loss given default will react to forecasted levels of the loss drivers. For all loans utilizing the DCF method, management utilizes forecasts of national unemployment and a one year percentage change in national gross domestic product as loss drivers in the model.
For all DCF models, management has determined that four quarters represents a reasonable and supportable forecast period and reverts back to a historical loss rate over eight quarters on a straight-line basis. Management leverages economic projections
16
from a reputable and independent third party to inform its loss driver forecasts over the four-quarter forecast period. Other internal and external indicators of economic forecasts, and scenario weightings, are also considered by management when developing the forecast metrics.
Due to the size and characteristics of the leasing portfolio, the Company uses the remaining life method, using the historical loss rate of the commercial and industrial segment, to determine the allowance for credit losses.
The combination of adjustments for credit expectations and timing expectations produces an expected cash flow stream at the instrument level. Instrument effective yield is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce a net present value of expected cash flows ("NPV"). An ACL is established for the difference between the NPV and amortized cost basis.
Since the methodology is based upon historical experience and trends, current conditions, and reasonable and supportable forecasts, as well as management’s judgment, factors may arise that result in different estimates. In addition, various federal and State regulatory agencies, as part of their examination process, review the Company's allowance and may require the Company to recognize additions to the allowance based on their judgments and information available to them at the time of their examinations.
Loan Commitments and Allowance for Credit Losses on Off-Balance Sheet Credit Exposures
Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit. The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded. The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancellable, through a charge to credit loss expense for off-balance sheet credit exposures included in provision expense in the Company's consolidated statements of income.
The following tables detail activity in the allowance for credit losses on loans and leases for the three and nine months ended September 30, 2026 and 2025. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
(In thousands)
Commercial & Industrial
Commercial Real Estate
Residential Real Estate
Consumer and Other
Finance Leases
Total
Three Months Ended September 30, 2026
Beginning balance
$
11,432
$
35,835
$
10,050
$
1,105
$
57
$
58,479
Charge-offs
(770)
(412)
0
(221)
0
(1,403)
Recoveries
73
0
13
120
0
206
Provision (credit) for credit loss expense
2,287
900
112
(123)
(3)
3,173
Ending Balance
$
13,022
$
36,323
$
10,175
$
881
$
54
$
60,455
Three Months Ended September 30, 2025
Beginning balance
$
9,160
$
35,765
$
12,065
$
1,509
$
56
$
58,555
Charge-offs
(738)
0
0
(595)
0
(1,333)
Recoveries
18
0
55
140
0
213
Provision (credit) for credit loss expense
3,092
360
(1,242)
245
(1)
2,454
Ending Balance
$
11,532
$
36,125
$
10,878
$
1,299
$
55
$
59,889
17
(In thousands)
Commercial & Industrial
Commercial Real Estate
Residential Real Estate
Consumer and Other
Finance Leases
Total
Nine Months Ended September 30, 2026
Beginning balance
$
10,234
$
35,255
$
10,893
$
1,230
$
59
$
57,671
Charge-offs
(1,896)
(412)
(932)
(1,061)
0
(4,301)
Recoveries
192
6
152
388
0
738
Provision (credit) for credit loss expense
4,492
1,474
62
324
(5)
6,347
Ending Balance
$
13,022
$
36,323
$
10,175
$
881
$
54
$
60,455
Nine Months Ended September 30, 2025
Beginning balance
$
7,684
$
35,837
$
11,345
$
1,568
$
62
$
56,496
Charge-offs
(936)
(4,882)
0
(1,892)
0
(7,710)
Recoveries
69
4
90
440
0
603
Provision (credit) for credit loss expense
4,715
5,166
(557)
1,183
(7)
10,500
Ending Balance
$
11,532
$
36,125
$
10,878
$
1,299
$
55
$
59,889
The following tables detail activity in the liabilities for off-balance sheet credit exposures for the three and nine months ended September 30, 2026 and 2025:
(In thousands)
2026
2025
Three Months Ended September 30,
Liabilities for off-balance sheet credit exposures at beginning of period
$
1,263
$
1,484
Provision (Credit) for credit loss expense related to off-balance sheet credit exposures
(161)
36
Liabilities for off-balance sheet credit exposures at end of period
$
1,102
$
1,520
Nine Months Ended September 30,
Liabilities for off-balance sheet credit exposures at beginning of period
$
1,433
$
1,463
Provision (Credit) for credit loss expense related to off-balance sheet credit exposures
(331)
57
Liabilities for off-balance sheet credit exposures at end of period
$
1,102
$
1,520
The following tables present the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses, and the related allowance for credit losses allocated to these loans, as of September 30, 2026 and December 31, 2025:
(In thousands)
Real Estate
Business Assets
Other
Total
ACL Allocation
September 30, 2026
Commercial and Industrial
$
928
$
7,400
$
0
$
8,328
$
2,782
Commercial Real Estate
21,124
0
0
21,124
880
Total Loans and Leases
$
22,052
$
7,400
$
0
$
29,452
$
3,662
December 31, 2025
Commercial and Industrial
$
482
$
4,565
$
0
$
5,047
$
250
Commercial Real Estate
21,052
0
0
21,052
1,178
Total Loans and Leases
$
21,534
$
4,565
$
0
$
26,099
$
1,428
Loan Modifications to Borrowers Experiencing Financial Difficulty
When the Company modifies loans to borrowers experiencing financial difficulty, the modifications may include interest rate reductions, principal or interest forgiveness, forbearances, term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral.
18
The following tables show the amortized cost basis as of September 30, 2026 and December 31, 2025 of the modified loans to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of concession granted:
(In thousands)
Term Extension
Interest Rate Reduction
Payment Delay and Term Extension
Term Extension and Interest Rate Reduction
Payment Delay
Total
% of Total Class of Loans and Leases
September 30, 2026
Commercial and Industrial
Commercial and industrial other
$
346
$
194
$
0
$
0
$
0
$
540
0.05
%
Subtotal commercial and industrial
346
194
0
0
0
540
0.04
%
Commercial Real Estate
Commercial real estate other
0
463
0
0
373
836
0.03
%
Subtotal commercial real estate
0
463
0
0
373
836
0.02
%
Residential
Home equity
0
0
0
48
0
48
0.02
%
Mortgages
0
0
0
427
793
1,220
0.09
%
Subtotal residential
0
0
0
475
793
1,268
0.08
%
Consumer
Consumer and other
22
0
0
0
0
22
0.03
%
Subtotal consumer
22
0
0
0
0
22
0.03
%
Total loans and leases
$
368
$
657
$
0
$
475
$
1,166
$
2,666
0.04
%
(In thousands)
Term Extension
Interest Rate Reduction
Payment Delay and Term Extension
Term Extension and Interest Rate Reduction
Payment Delay
Total
% of Total Class of Loans and Leases
December 31, 2025
Commercial and Industrial
Commercial and industrial other
$
101
$
410
$
0
$
262
$
0
$
773
0.08
%
Subtotal commercial and industrial
101
410
0
262
0
773
0.07
%
Commercial Real Estate
Commercial real estate other
0
2,856
0
0
382
3,238
0.11
%
Subtotal commercial real estate
0
2,856
0
0
382
3,238
0.09
%
Residential
Home equity
0
0
0
50
0
50
0.02
%
Mortgages
0
0
0
109
953
1,062
0.08
%
Subtotal residential
0
0
0
159
953
1,112
0.07
%
Consumer
Consumer and other
23
0
0
0
0
23
0.03
%
Subtotal consumer
23
0
0
0
0
23
0.03
%
Total loans and leases
$
124
$
3,266
$
0
$
421
$
1,335
$
5,146
0.08
%
There were no loan modifications made to borrowers experiencing financial difficulty that defaulted during the three and nine months ended September 30, 2026 and December 31, 2025.
19
The following tables show the aging analysis of loan modifications made to borrowers experiencing financial difficulty as of September 30, 2026 and December 31, 2025:
Payment Status (Amortized Cost Basis)
(In thousands)
Current
30-59 Days Past Due
60-89 Days Past Due
90+ Days Past Due
Non-Accrual
Total
September 30, 2026
Commercial and Industrial
Commercial and industrial other
$
349
$
0
$
0
$
0
$
191
$
540
Subtotal commercial and industrial
349
0
0
0
191
540
Commercial Real Estate
Commercial real estate other
373
0
0
0
463
836
Subtotal commercial real estate
373
0
0
0
463
836
Residential Real Estate
Home equity
48
0
0
0
0
48
Mortgages
455
0
0
0
765
1,220
Subtotal residential real estate
503
0
0
0
765
1,268
Consumer and Other
Consumer and other
22
0
0
0
0
22
Subtotal consumer and other
22
0
0
0
0
22
Total
$
1,247
$
0
$
0
$
0
$
1,419
$
2,666
Payment Status (Amortized Cost Basis)
(In thousands)
Current
30-59 Days Past Due
60-89 Days Past Due
90+ Days Past Due
Non-Accrual
Total
December 31, 2025
Commercial and Industrial
Commercial and industrial other
$
474
$
262
$
0
$
0
$
37
$
773
Subtotal commercial and industrial
474
262
0
0
37
773
Commercial Real Estate
Commercial real estate other
3,238
0
0
0
0
3,238
Subtotal commercial real estate
3,238
0
0
0
0
3,238
Residential Real Estate
Home equity
50
0
0
0
0
50
Mortgages
260
0
0
0
802
1,062
Subtotal residential real estate
310
0
0
0
802
1,112
Consumer and Other
Consumer and other
23
0
0
0
0
23
Subtotal consumer and other
23
0
0
0
0
23
Total
$
4,045
$
262
$
0
$
0
$
839
$
5,146
20
The following tables present credit quality indicators by total loans on an amortized cost basis by origination year as of September 30, 2026 and December 31, 2025:
September 30, 2026
(In thousands)
2026
2025
2024
2023
2022
Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total Loans
Commercial and Industrial - Other:
Pass
$
201,039
$
149,254
$
86,206
$
66,331
$
43,213
$
131,427
$
354,334
$
34,045
$
1,065,849
Special Mention
0
290
2,082
57
8
2,914
25,894
610
31,855
Substandard
0
836
785
1,364
409
819
6,789
988
11,990
Total Commercial and Industrial - Other
$
201,039
$
150,380
$
89,073
$
67,752
$
43,630
$
135,160
$
387,017
$
35,643
$
1,109,694
Current-period gross writeoffs
$
0
$
269
$
675
$
250
$
792
$
296
$
0
$
0
$
2,282
Commercial and Industrial - Agriculture:
Pass
$
13,093
$
8,988
$
7,330
$
21,351
$
5,670
$
3,961
$
61,311
$
312
$
122,016
Special Mention
0
0
0
0
0
13
0
0
13
Substandard
0
20
0
0
0
12
0
0
32
Total Commercial and Industrial - Agriculture
$
13,093
$
9,008
$
7,330
$
21,351
$
5,670
$
3,986
$
61,311
$
312
$
122,061
Current-period gross writeoffs
$
0
$
50
$
0
$
0
$
3
$
0
$
0
$
0
$
53
Commercial Real Estate
Pass
$
201,075
$
406,686
$
341,441
$
309,397
$
305,030
$
1,453,359
$
13,282
$
26,285
$
3,056,555
Special Mention
0
9,413
0
7,380
7,301
28,610
0
0
52,704
Substandard
0
0
1,406
4,467
1,674
21,190
641
18,591
47,969
Total Commercial Real Estate
$
201,075
$
416,099
$
342,847
$
321,244
$
314,005
$
1,503,159
$
13,923
$
44,876
$
3,157,228
Current-period gross writeoffs
$
0
$
0
$
98
$
412
$
395
$
0
$
0
$
0
$
905
Commercial Real Estate - Agriculture:
Pass
$
25,959
$
27,733
$
22,034
$
10,161
$
37,844
$
110,182
$
5,860
$
2,007
$
241,780
Special Mention
0
0
0
0
0
116
0
0
116
Substandard
0
0
0
606
0
92
0
0
698
Total Commercial Real Estate - Agriculture
$
25,959
$
27,733
$
22,034
$
10,767
$
37,844
$
110,390
$
5,860
$
2,007
$
242,594
Current-period gross writeoffs
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Commercial Real Estate - Construction
Pass
$
0
$
2,297
$
50,273
$
3,680
$
0
$
0
$
287,224
$
30,813
$
374,287
Special Mention
0
0
0
0
0
0
5,713
0
5,713
Substandard
0
0
0
0
0
0
0
0
0
Total Commercial Real Estate - Construction
$
0
$
2,297
$
50,273
$
3,680
$
0
$
0
$
292,937
$
30,813
$
380,000
Current-period gross writeoffs
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
21
(In thousands)
2026
2025
2024
2023
2022
Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total Loans
Residential - Home Equity
Performing
$
1,318
$
1,326
$
707
$
1,113
$
1,108
$
15,107
$
227,516
$
2,227
$
250,422
Nonperforming
0
0
0
0
0
1,578
1,717
42
3,337
Total Residential - Home Equity
$
1,318
$
1,326
$
707
$
1,113
$
1,108
$
16,685
$
229,233
$
2,269
$
253,759
Current-period gross writeoffs
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Residential - Mortgages
Performing
$
100,564
$
110,725
$
96,638
$
110,575
$
150,575
$
787,139
$
0
$
0
$
1,356,216
Nonperforming
0
270
519
768
1,039
12,022
0
0
14,618
Total Residential - Mortgages
$
100,564
$
110,995
$
97,157
$
111,343
$
151,614
$
799,161
$
0
$
0
$
1,370,834
Current-period gross writeoffs
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Consumer - Direct
Performing
$
25,294
$
17,720
$
8,405
$
8,931
$
5,694
$
15,931
$
2,011
$
0
$
83,986
Nonperforming
0
0
11
6
2
11
0
0
30
Total Consumer - Direct
$
25,294
$
17,720
$
8,416
$
8,937
$
5,696
$
15,942
$
2,011
$
0
$
84,016
Current-period gross writeoffs
$
822
$
77
$
69
$
17
$
29
$
47
$
0
$
0
$
1,061
Consumer - Indirect
Performing
$
0
$
0
$
0
$
0
$
0
$
37
$
0
$
0
$
37
Nonperforming
0
0
0
0
0
0
0
0
0
Total Consumer - Indirect
$
0
$
0
$
0
$
0
$
0
$
37
$
0
$
0
$
37
Current-period gross writeoffs
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
22
December 31, 2025
(In thousands)
2025
2024
2023
2022
2021
Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total Loans
Commercial and Industrial - Other:
Pass
$
178,999
$
111,528
$
81,883
$
73,977
$
37,104
$
126,706
$
316,314
$
8,606
$
935,117
Special Mention
9,871
9,447
90
1,154
178
1,468
21,037
0
43,245
Substandard
0
423
1,433
0
390
192
5,032
341
7,811
Total Commercial and Industrial - Other
$
188,870
$
121,398
$
83,406
$
75,131
$
37,672
$
128,366
$
342,383
$
8,947
$
986,173
Current-period gross writeoffs
$
526
$
597
$
85
$
66
$
254
$
13
$
0
$
0
$
1,541
Commercial and Industrial - Agriculture:
Pass
$
11,890
$
9,337
$
24,659
$
7,539
$
1,418
$
3,852
$
55,263
$
470
$
114,428
Special Mention
0
0
0
0
22
25
0
0
47
Substandard
0
0
0
0
0
0
0
0
0
Total Commercial and Industrial - Agriculture
$
11,890
$
9,337
$
24,659
$
7,539
$
1,440
$
3,877
$
55,263
$
470
$
114,475
Current-period gross writeoffs
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Commercial Real Estate
Pass
$
409,529
$
320,178
$
256,566
$
310,051
$
374,436
$
1,204,064
$
19,291
$
19,216
$
2,913,331
Special Mention
6,500
305
927
1,961
1,362
45,932
0
0
56,987
Substandard
0
399
927
1,149
1,461
3,804
784
0
8,524
Total Commercial Real Estate
$
416,029
$
320,882
$
258,420
$
313,161
$
377,259
$
1,253,800
$
20,075
$
19,216
$
2,978,842
Current-period gross writeoffs
$
0
$
0
$
0
$
0
$
2,000
$
5,310
$
0
$
0
$
7,310
Commercial Real Estate - Agriculture:
Pass
$
26,485
$
23,114
$
11,133
$
41,082
$
20,087
$
103,609
$
4,488
$
4,026
$
234,024
Special Mention
0
0
0
0
0
141
0
0
141
Substandard
0
0
0
0
0
127
0
0
127
Total Commercial Real Estate - Agriculture
$
26,485
$
23,114
$
11,133
$
41,082
$
20,087
$
103,877
$
4,488
$
4,026
$
234,292
Current-period gross writeoffs
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Commercial Real Estate - Construction
Pass
$
0
$
13,222
$
30,274
$
1,542
$
15,688
$
349
$
344,568
$
25,659
$
431,302
Special Mention
0
0
0
0
0
0
297
0
297
Substandard
0
0
0
0
0
0
17,302
0
17,302
Total Commercial Real Estate - Construction
$
0
$
13,222
$
30,274
$
1,542
$
15,688
$
349
$
362,167
$
25,659
$
448,901
Current-period gross writeoffs
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
23
(In thousands)
2025
2024
2023
2022
2021
Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total Loans
Residential - Home Equity
Performing
$
1,613
$
767
$
1,448
$
1,309
$
795
$
17,309
$
200,118
$
1,671
$
225,030
Nonperforming
0
0
0
0
0
1,382
1,242
0
2,624
Total Residential - Home Equity
$
1,613
$
767
$
1,448
$
1,309
$
795
$
18,691
$
201,360
$
1,671
$
227,654
Current-period gross writeoffs
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Residential - Mortgages
Performing
$
113,023
$
104,677
$
120,785
$
160,682
$
220,793
$
629,641
$
0
$
0
$
1,349,601
Nonperforming
103
294
878
982
1,037
10,637
0
0
13,931
Total Residential - Mortgages
$
113,126
$
104,971
$
121,663
$
161,664
$
221,830
$
640,278
$
0
$
0
$
1,363,532
Current-period gross writeoffs
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Consumer - Direct
Performing
$
34,987
$
11,109
$
11,207
$
7,430
$
6,887
$
12,427
$
2,282
$
0
$
86,329
Nonperforming
0
0
2
21
0
40
7
0
70
Total Consumer - Direct
$
34,987
$
11,109
$
11,209
$
7,451
$
6,887
$
12,467
$
2,289
$
0
$
86,399
Current-period gross writeoffs
$
2,220
$
15
$
17
$
17
$
20
$
55
$
0
$
0
$
2,344
Consumer - Indirect
Performing
$
0
$
0
$
0
$
0
$
17
$
51
$
0
$
0
$
68
Nonperforming
0
0
0
0
0
0
0
0
0
Total Consumer - Indirect
$
0
$
0
$
0
$
0
$
17
$
51
$
0
$
0
$
68
Current-period gross writeoffs
$
0
$
0
$
0
$
0
$
0
$
15
$
0
$
0
$
15
6. Earnings Per Share
Earnings per share in the table below, for the three and nine month periods ended September 30, 2026 and 2025 are calculated under the two-class method as required by ASC Topic 260, Earnings Per Share (ASC 260). 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. Prior to 2019, the Company issued restricted stock awards that contained such rights and are therefore considered participating securities. Since 2019, the Company has issued restricted stock awards that do not have nonforfeitable rights to dividends and are therefore not 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 participating securities.
24
Three Months Ended
Nine Months Ended
(In thousands, except share and per share data)
9/30/2026
9/30/2025
9/30/2026
9/30/2025
Basic
Net income available to common shareholders
$
28,654
$
23,673
$
84,032
$
64,823
Less: income attributable to unvested stock-based compensation awards
0
0
0
0
Net earnings allocated to common shareholders
28,654
23,673
84,032
64,823
Weighted average shares outstanding, including unvested stock-based compensation awards
14,380,721
14,431,376
14,393,408
14,433,278
Less: average unvested stock-based compensation awards
(157,073)
(182,843)
(160,342)
(186,267)
Weighted average shares outstanding - Basic
14,223,648
14,248,533
14,233,066
14,247,011
Diluted
Net earnings allocated to common shareholders
28,654
23,673
84,032
64,823
Weighted average shares outstanding - Basic
14,223,648
14,248,533
14,233,066
14,247,011
Plus: incremental shares from assumed conversion of stock-based compensation awards
122,202
96,686
109,055
81,239
Weighted average shares outstanding - Diluted
14,345,850
14,345,219
14,342,121
14,328,249
Basic EPS
$
2.01
$
1.66
$
5.90
$
4.55
Diluted EPS
$
2.00
$
1.65
$
5.86
$
4.52
Stock-based compensation awards representing 1,047 and 134 common shares during the three months ended September 30, 2026 and 2025, respectively, were not included in the computations of diluted earnings per common share because the effect on those periods would have been anti-dilutive.
Stock-based compensation awards representing approximately 3,364 and 8,764 common shares during the nine months ended September 30, 2026 and 2025, respectively were not included in the computations of diluted earnings per common share because the effect on those periods would have been anti-dilutive.
25
7. Other Comprehensive Income (Loss)
The following tables present reclassifications out of accumulated other comprehensive income (loss) for the three and nine month periods ended September 30, 2026 and 2025:
Three Months Ended
(In thousands)
Before-Tax Amount
Tax (Expense) Benefit
Net of Tax
September 30, 2026
Available-for-sale debt securities:
Change in net unrealized (loss) gain during the period
$
(54,932)
$
13,733
$
(41,199)
Net unrealized (losses) gains
(54,932)
13,733
(41,199)
Employee benefit plans:
Amortization of net retirement plan actuarial gain (loss)
41
(10)
31
Amortization of net retirement plan prior service cost
50
(13)
37
Employee benefit plans
91
(23)
68
Other comprehensive loss
$
(54,841)
$
13,710
$
(41,131)
September 30, 2025
Available-for-sale debt securities:
Change in net unrealized (loss) gain during the period
$
14,980
$
(3,745)
$
11,235
Net unrealized gains (losses)
14,980
(3,745)
11,235
Employee benefit plans:
Amortization of net retirement plan actuarial gain (loss)
95
(24)
71
Amortization of net retirement plan prior service cost
49
(13)
36
Employee benefit plans
144
(37)
107
Other comprehensive income
$
15,124
$
(3,782)
$
11,342
Nine Months Ended
(In thousands)
Before-Tax Amount
Tax (Expense) Benefit
Net of Tax
September 30, 2026
Available-for-sale debt securities:
Change in net unrealized (loss) gain during the period
$
(72,449)
$
18,112
$
(54,337)
Net unrealized (losses) gains
(72,449)
18,112
(54,337)
Employee benefit plans:
Amortization of net retirement plan actuarial gain (loss)
124
(30)
94
Amortization of net retirement plan prior service cost
147
(37)
110
Employee benefit plans
271
(67)
204
Other comprehensive loss
$
(72,178)
$
18,045
$
(54,133)
September 30, 2025
Available-for-sale debt securities:
Change in net unrealized gain (loss) during the period
$
45,861
$
(11,465)
$
34,396
Net unrealized gains (losses)
45,861
(11,465)
34,396
Employee benefit plans:
Amortization of net retirement plan actuarial gain (loss)
285
(72)
213
Amortization of net retirement plan prior service cost
147
(37)
110
Employee benefit plans
432
(109)
323
Other comprehensive income
$
46,293
$
(11,574)
$
34,719
26
The following tables present the activity in our accumulated other comprehensive (loss) income for the periods indicated:
(In thousands)
Available-for- Sale Debt Securities
Employee Benefit Plans
Accumulated Other Comprehensive (Loss) Income
Balance at July 1, 2026
$
(20,122)
$
(11,934)
$
(32,056)
Other comprehensive income before reclassifications
(41,199)
0
(41,199)
Amounts reclassified from accumulated other comprehensive (loss) income
0
68
68
Net current-period other comprehensive (loss) income
(41,199)
68
(41,131)
Balance at September 30, 2026
$
(61,321)
$
(11,866)
$
(73,187)
Balance at January 1, 2026
$
(6,984)
$
(12,070)
$
(19,054)
Other comprehensive income (loss) before reclassifications
(54,337)
0
(54,337)
Amounts reclassified from accumulated other comprehensive income (loss)
0
204
204
Net current-period other comprehensive (loss) income
(54,337)
204
(54,133)
Balance at September 30, 2026
$
(61,321)
$
(11,866)
$
(73,187)
(In thousands)
Available-for- Sale Debt Securities
Employee Benefit Plans
Accumulated Other Comprehensive (Loss) Income
Balance at July 1, 2025
$
(78,533)
$
(16,582)
$
(95,115)
Other comprehensive loss before reclassifications
11,235
0
11,235
Amounts reclassified from accumulated other comprehensive (loss) income
0
107
107
Net current-period other comprehensive income (loss)
11,235
107
11,342
Balance at September 30, 2025
$
(67,298)
$
(16,475)
$
(83,773)
Balance at January 1, 2025
$
(101,694)
$
(16,798)
$
(118,492)
Other comprehensive loss before reclassifications
34,396
0
34,396
Amounts reclassified from accumulated other comprehensive (loss) income
0
323
323
Net current-period other comprehensive income (loss)
34,396
323
34,719
Balance at September 30, 2025
$
(67,298)
$
(16,475)
$
(83,773)
27
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, 2026 and 2025:
Details about Accumulated other Comprehensive Income (Loss) Components (In thousands)
Amount Reclassified from Accumulated Other Comprehensive (Loss) Income1
Affected Line Item in the Statement Where Net Income is Presented
9/30/2026
9/30/2025
Three Months Ended
Available-for-sale debt securities:
Unrealized gains and losses on available-for-sale debt securities
$
0
$
0
Net gain (loss) on securities transactions
0
0
Income tax expense
0
0
Net of tax
Employee benefit plans:
Amortization of the following2
Net retirement plan actuarial loss
(41)
(95)
Other operating expense
Net retirement plan prior service cost
(50)
(49)
Other operating expense
(91)
(144)
Total before tax
23
37
Income tax expense
$
(68)
$
(107)
Net of tax
Nine Months Ended
Available-for-sale debt securities:
Unrealized gain (loss) on available-for-sale debt securities
$
0
$
0
Net loss on securities transactions
0
0
Income tax expense
0
0
Net of tax
Employee benefit plans:
Amortization of the following2
Net retirement plan actuarial gain (loss)
(124)
(285)
Other operating expense
Net retirement plan prior service cost
(147)
(147)
Other operating expense
(271)
(432)
Total before tax
67
109
Income tax expense
$
(204)
$
(323)
Net of tax
1Amounts in parentheses indicate debits in income statement.
2The accumulated other comprehensive (loss) income components are included in the computation of net periodic benefit cost (See Note 11 - "Employee Benefit Plans" in the Company's Annual Report on Form 10-K for the year ended December 31, 2025).
8. 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, 2026, the Company’s maximum potential obligation under standby letters of credit was $37.4 million, up from the $36.5 million reported at December 31, 2025. 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.
9. Segment and Related Information
The Company manages its operations through two reportable business segments in accordance with the standards set forth in FASB ASC 280, "Segment Reporting": (i) banking and (ii) wealth management. The Company’s wealth management services, other than trust services, are managed separately from the banking segment.
28
On October 31, 2025, the Company sold all of the issued and outstanding shares of capital stock of its insurance subsidiary, TIA, to Gallagher. For the first 10 months of 2025, the Company had three operating segments: (i) banking, (ii) insurance services, and (iii) wealth management.
Banking
Tompkins Bank & Trust has twelve banking offices located in Ithaca, NY and surrounding communities; fourteen banking offices located in the Genesee Valley region of New York State, which includes Monroe County; twelve banking offices located in the counties north of New York City; and sixteen banking offices operating 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 regional markets.
Chief Operating Decision Maker
Our Chief Executive Officer ("CEO") is our chief operating decision maker. In order to allocate costs, capital and resources to each operating segment, we (i) identify the cost or opportunity value of funds within each business segment, (ii) measure the profitability of a particular business segment by relating appropriate costs to revenues, (iii) evaluate each business segment in a manner consistent with its economic impact on consolidated earnings, and (iv) enhance asset and liability pricing decisions. Our CEO reviews actual net income versus budgeted net income on a monthly basis to assess segment performance and to make decisions about allocating capital and personnel among the segments.
Segment Reporting
Summarized financial information concerning the Company’s reportable segments and the reconciliation to the Company’s consolidated results is shown in the following tables. 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 the bank and the holding company. All other accounting policies are the same as those described in the summary of significant accounting policies in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
Three Months Ended September 30, 2026
(In thousands)
Banking
Wealth Management
Intercompany
Consolidated
Interest income
$
109,809
$
0
$
0
$
109,809
Interest expense
32,508
0
0
32,508
Net interest income
77,301
0
0
77,301
Provision for credit loss expense
3,012
0
0
3,012
Noninterest income
7,143
5,409
0
12,552
Noninterest expense
44,774
4,312
0
49,086
Income before income tax expense
36,658
1,097
0
37,755
Income tax expense
8,828
273
0
9,101
Net Income
$
27,830
$
824
$
0
$
28,654
Depreciation and amortization
$
2,271
$
46
$
0
$
2,317
Assets
8,949,544
28,973
0
8,978,517
Goodwill
64,525
8,211
0
72,736
Other intangibles, net
2,135
0
0
2,135
Net loans and leases
6,664,518
0
0
6,664,518
Deposits
7,409,237
0
(201)
7,409,036
Total Equity
910,420
25,960
0
936,380
29
Three Months Ended September 30, 2025
(In thousands)
Banking
Insurance
Wealth Management
Intercompany
Consolidated
Interest income
$
98,056
$
1
$
0
$
(1)
$
98,056
Interest expense
34,179
0
0
(1)
34,178
Net interest income
63,877
1
0
0
63,878
Provision for credit loss expense
2,490
0
0
0
2,490
Noninterest income
7,662
11,414
5,085
(597)
23,564
Noninterest expense
42,707
7,487
4,250
(597)
53,847
Income before income tax expense
26,342
3,928
835
0
31,105
Income tax expense
6,149
1,074
209
0
7,432
Net Income
$
20,193
$
2,854
$
626
$
0
$
23,673
Depreciation and amortization
$
1,908
$
36
$
44
$
0
$
1,988
Assets
8,407,897
45,554
29,089
(13,809)
8,468,731
Goodwill
64,525
19,867
8,211
(1)
92,602
Other intangibles, net
1,552
773
0
0
2,325
Net loans and leases
6,228,182
0
0
0
6,228,182
Deposits
7,067,133
0
0
(14,063)
7,053,070
Total Equity
726,363
36,266
26,176
0
788,805
Nine Months Ended September 30, 2026
(In thousands)
Banking
Wealth Management
Intercompany
Consolidated
Interest income
$
318,419
$
0
$
0
$
318,419
Interest expense
95,274
0
0
95,274
Net interest income
223,145
0
0
223,145
Provision for credit loss expense
6,016
0
0
6,016
Noninterest income
21,416
16,104
0
37,520
Noninterest expense
131,288
12,590
0
143,878
Income before income tax expense
107,257
3,514
0
110,771
Income tax expense
25,862
877
0
26,739
Net Income
$
81,395
$
2,637
$
0
$
84,032
Depreciation and amortization
$
6,805
$
139
$
0
$
6,944
Nine Months Ended September 30, 2025
(In thousands)
Banking
Insurance
Wealth Management
Intercompany
Consolidated
Interest income
$
281,164
$
2
$
0
$
(2)
$
281,164
Interest expense
100,496
0
0
(2)
100,494
Net interest income
180,668
2
0
0
180,670
Provision for credit loss expense
10,557
0
0
0
10,557
Noninterest income
23,924
33,018
15,840
(1,674)
71,108
Noninterest expense
122,842
22,542
12,367
(1,674)
156,077
Income before income tax expense
71,193
10,478
3,473
0
85,144
Income tax expense
16,622
2,831
868
0
20,321
Net Income
$
54,571
$
7,647
$
2,605
$
0
$
64,823
Depreciation and amortization
$
5,991
$
118
$
132
$
0
$
6,241
30
10. Fair Value Measurements
FASB ASC Topic 820, Fair Value Measurements and Disclosures (ASC 820), defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value measurements. ASC 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 ASC 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).
31
The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2026 and December 31, 2025, segregated by the level of valuation inputs within the fair value hierarchy used to measure fair value:
Recurring Fair Value Measurements
(In thousands)
Total
(Level 1)
(Level 2)
(Level 3)
September 30, 2026
Assets
Available-for-sale debt securities
U.S. Treasuries
$
48,094
$
0
$
48,094
$
0
Obligations of U.S. Government sponsored entities
334,224
0
334,224
0
Obligations of U.S. states and political subdivisions
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 a 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.
The change in the fair value of equity securities valued using significant unobservable inputs (Level 3), for the periods ended September 30, 2026 and December 31, 2025, was immaterial.
There were no transfers between Levels 1, 2 and 3 for the nine months ended September 30, 2026 or the nine months ended September 30, 2025.
32
The Company determines fair value for its available-for-sale debt securities using an independent bond pricing service for identical assets or very similar securities. The Company determines fair value for its equity securities based on the underlying equity fund’s pricing and valuation procedures which consider recent sales price, market quotations from a pricing service, or market quotes from an independent broker-dealer. The Company has reviewed the pricing sources, including methodologies used, and finds them to be fairly stated.
Derivatives: The Company has contracted with a third party vendor to provide periodic valuations for its interest rate derivatives to determine the fair value of its interest rate contracts. The vendor utilizes standard valuation methodologies applicable to interest rate derivatives such as discounted cash flow analysis. Such valuations are based upon readily observable market data and are therefore considered Level 2 valuations by the Company.
Certain assets are measured at fair value on a nonrecurring basis. For the Company, these include loans held for sale, individually evaluated loans, and other real estate owned ("OREO"). For the three and nine months ended September 30, 2026, certain individually evaluated loans were remeasured and reported at fair value through a specific valuation allowance and/or partial charge-offs for credit losses based upon the fair value of the underlying collateral. Collateral values are estimated using Level 3 inputs based upon customized discounting criteria. In addition to collateral dependent evaluated loans, certain OREO was remeasured and reported at fair value based upon the fair value of the underlying collateral. The fair values of OREO 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 OREO are based upon appraisals, with discounts made to reflect estimated costs to sell the real estate. Upon initial recognition, fair value write-downs are taken through a charge-off to the allowance for credit losses. Subsequent fair value write-downs on OREO are reported in other noninterest expense.
(In thousands)
Fair value measurements at reporting date using:
Gain (losses) from fair value changes
Assets:
(Level 1)
(Level 2)
(Level 3)
Three months ended September 30, 2026
Individually evaluated loans
$
1,766
$
0
$
0
$
1,766
$
(413)
Other real estate owned
0
0
0
0
0
Three months ended September 30, 2025
Individually evaluated loans
$
16,362
$
0
$
0
$
16,362
$
(282)
Other real estate owned
0
0
0
0
56
(In thousands)
Fair value measurements at reporting date using:
Gain (losses) from fair value changes
Assets:
(Level 1)
(Level 2)
(Level 3)
Nine months ended September 30, 2026
Individually evaluated loans
$
23,470
$
0
$
0
$
23,470
$
(4,316)
Other real estate owned
384
0
0
384
0
Nine months ended September 30, 2025
Individually evaluated loans
$
26,398
$
0
$
0
$
26,398
$
(5,245)
Other real estate owned
0
0
0
0
1,954
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 GAAP and should be read in conjunction with the financial statements and notes included in this Report.
For loans where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the loan to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. For real estate loans, fair value of the loan’s collateral is determined by third party appraisals, which are then adjusted for the estimated selling and closing costs related to liquidation of the collateral. For this asset class, the actual valuation methods (income, sales comparable, or cost) vary based on the status of the project or property. For example, land is generally based on the sales comparable method while construction is based on the income and/or sales comparable methods. The unobservable inputs may vary depending on the individual assets with no one of
33
the three methods being the predominant approach. The Company reviews the third party appraisal for appropriateness and adjusts the value downward to consider selling and closing costs, which typically range from 5% to 8% of the appraised value. For non-real estate loans, fair value of the loan’s collateral may be determined using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business.
The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments at September 30, 2026 and December 31, 2025. The carrying amounts shown in the tables are included in the Consolidated Statements of Condition under the indicated captions.
Estimated Fair Value of Financial Instruments
(In thousands)
Carrying Amount
Fair Value
(Level 1)
(Level 2)
(Level 3)
September 30, 2026
Financial Assets:
Cash and cash equivalents
$
242,151
$
242,151
$
242,151
$
0
$
0
Securities - held-to-maturity
312,581
274,121
0
274,121
0
FHLB stock and other stock
26,508
26,508
0
26,508
0
Accrued interest receivable
32,991
32,991
0
32,991
0
Loans/leases, net1
6,664,518
6,289,367
0
0
6,289,367
Financial Liabilities:
Time deposits
$
1,252,938
$
1,244,865
$
0
$
1,244,865
$
0
Other deposits
6,156,098
6,156,098
0
6,156,098
0
Fed funds purchased and securities sold
under agreements to repurchase
133,854
133,854
0
133,854
0
Other borrowings
406,712
406,058
0
406,058
0
Accrued interest payable
5,856
5,856
0
5,856
0
December 31, 2025
Financial Assets:
Cash and cash equivalents
$
132,817
$
132,817
$
132,817
$
0
$
0
Securities - held-to-maturity
312,528
283,860
0
283,860
0
FHLB stock and other stock
32,307
32,307
0
32,307
0
Accrued interest receivable
30,697
30,697
0
30,697
0
Loans/leases, net1
6,432,014
6,129,089
0
0
6,129,089
Financial Liabilities:
Time deposits
$
1,298,393
$
1,296,714
$
0
$
1,296,714
$
0
Other deposits
5,639,369
5,639,369
0
5,639,369
0
Fed funds purchased and securities sold
under agreements to repurchase
95,569
95,569
0
95,569
0
Other borrowings
564,446
565,568
0
565,568
0
Accrued interest payable
4,920
4,920
0
4,920
0
1Lease 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 - Held-to-Maturity: Fair values for U.S. Treasury securities are based on quoted market prices. Fair values for obligations of U.S. government sponsored entities and mortgage-backed securities-residential are based on quoted market prices, where available, as provided by third party pricing vendors. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments in active markets and/or based upon a matrix pricing methodology,
34
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.
FHLB Stock and Other 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.
Loans and Leases: Fair value for loans is calculated using an exit price notion. The Company's valuation methodology takes into account factors such as estimated cash flows, including contractual cash flow and assumptions for prepayments; liquidity risk; and credit risk. The fair values of residential loans were estimated using discounted cash flow analyses, based upon available market benchmarks for rates and prepayment assumptions. The fair values of commercial and consumer loans were estimated using discounted cash flow analyses, based upon interest rates currently offered for loans and leases with similar terms and credit quality. The fair values of loans held for sale were determined based upon contractual prices for loans with similar characteristics.
Accrued Interest Receivable and Accrued Interest Payable: The carrying amount of these short term instruments approximates 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.
Fed Funds Purchased and Securities Sold Under Agreements to Repurchase: The carrying amount of these instruments approximates fair value because the instruments have short-term maturities.
Other borrowings: The fair value of other borrowings is based upon discounted cash flow analyses using current rates offered for FHLB advances, with similar terms.
11. Derivatives and Hedging Activities
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company also enters into interest rate derivatives to accommodate the business requirements of certain qualifying customers. All derivatives are recognized as other assets or other liabilities on the Company's Consolidated Statements of Condition at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and resulting designation.
Derivatives Designated as Hedging Instruments
Fair Value Hedges of Interest Rate Risk
The Company is exposed to changes in the fair value of certain of its fixed-rate assets due to changes in benchmark interest rates. The Company uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate. Interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount. As of September 30, 2026, the Company had no outstanding interest rate swaps.
For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income.
As of September 30, 2026 and December 31, 2025, the following amounts were recorded on the balance sheet related to cumulative basis adjustment for fair value hedges.
35
Line Item in the Statement of Financial Position in Which the Hedged Item is Included
Carrying Amount of the Hedged Assets/(Liabilities)
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets/(Liabilities)
Carrying Amount of the Hedged Assets/(Liabilities)
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets/(Liabilities)
9/30/2026
9/30/2026
12/31/2025
12/31/2025
Fixed Rate Loans1
$0
$0
$49,962
$(38)
Total
$0
$0
$49,962
$(38)
1These amounts include the amortized cost basis of closed portfolios of fixed rate loans used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolio anticipated to be outstanding for the designated hedged period. At September 30, 2026 and December 31, 2025, the amortized cost basis of the closed portfolios used in these hedging relationships was $0 and $658.5 million respectively; the cumulative basis adjustments associated with these hedging relationships was $0 and $38,000, respectively; and the amounts of the designated hedged items were $0 and $100.0 million respectively.
Derivatives Not Designated as Hedging Instruments
The Company enters into interest rate swaps to help commercial loan borrowers manage their interest rate risk. These interest rate swap contracts allow borrowers to convert variable-rate loan payments to fixed-rate loan payments. When the Company enters into an interest rate derivative contract with a commercial loan borrower, it simultaneously enters into a “mirror” interest rate contract with a third party. For interest rate swaps, the third party exchanges the client’s fixed-rate loan payments for variable-rate loan payments. The Company's credit policies with respect to interest rate contracts with commercial borrowers are similar to those used for loans. The Company retains the risk that is associated with the potential failure of counterparties and the risk inherent in originating loans. The interest rate contracts with counterparties are generally subject to bilateral collateralization terms. These derivatives are not designated as hedges and therefore, changes in fair value are recognized in earnings.
The Company has entered into risk participation agreements with other banks in commercial loan arrangements. Participating banks guarantee the performance on borrower-related interest rate swap contracts. These derivatives are not designated as hedges and therefore, changes in fair value are recognized in earnings.
Under a risk participation-out agreement, a derivative asset, the Company participates out a portion of the credit risk associated with the interest rate swap position executed with the commercial borrower for a fee paid to the participating bank. Under a risk participation-in agreement, a derivative liability, the Company assumes, or participates in, a portion of the credit risk associated with the interest rate swap position with the commercial borrower for a fee received from the other bank.
Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Statements of Condition
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated statements of condition as of September 30, 2026 and December 31, 2025. Amounts below are presented on a net basis in accordance with applicable accounting guidance.
36
(In thousands)
Notional Amount
Fair Value
Notional Amount
Fair Value
September 30, 2026
December 31, 2025
Derivative Assets
Derivatives designated as hedging instruments
Interest Rate Products
$
0
$
0
$
50,000
$
33
Total derivatives designated as hedging instruments
$
0
$
33
Derivatives not designated as hedging instruments
Interest Rate Products
$
247,390
$
6,261
$
249,273
$
5,032
Total derivatives not designated as hedging instruments
$
6,261
$
5,032
Derivative Liabilities
Derivatives not designated as hedging instruments
Interest Rate Products
$
247,390
$
6,207
$
249,273
$
5,312
Risk Participation Agreement
57,807
24
64,282
77
Total derivatives not designated as hedging instruments
$
6,231
$
5,389
Tabular Disclosure of the Effect of Fair Value and Cash Flow Hedge Accounting on the Consolidated Statements of Income
The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of income for the three and nine months ended September 30, 2026 and 2025:
The Effect of Fair Value and Cash Flow Hedge Accounting on the Consolidated Statements of Income
Location of Gain or (Loss) Recognized in Income on Derivative
Three Months Ended
Nine Months Ended
9/30/2026
9/30/2025
9/30/2026
9/30/2025
(In thousands)
Interest Income
Interest Income
Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value or cash flow hedges are recorded
$
0
$
216
$
61
$
757
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships in Subtopic 815-20
Interest contracts
Hedged items
0
173
38
671
Derivatives designated as hedging instruments
0
43
23
86
37
Tabular Disclosure of the Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of Income
The table below presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments on the consolidated statements of income for the three and nine months ended September 30, 2026 and 2025:
Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of Income
Derivatives Not Designated as Hedging Instruments under Subtopic 815-20
Location of Gain or (Loss) Recognized in Income on Derivative
Amount of Gain or (Loss) Recognized in Income on Derivative
Amount of Gain or (Loss) Recognized in Income on Derivative
(In thousands)
9/30/2026
9/30/2025
Three Months Ended
Interest Rate Products
Other Income
$
259
$
(4)
Risk Participation Agreement
Other Income
37
23
Total
$
296
$
19
Fee Income
Other income
$
7
$
424
Nine Months Ended
Interest Rate Products
Other Income
$
334
$
(199)
Risk Participation Agreement
Other Income
53
57
Total
$
387
$
(142)
Fee Income
Other income
$
243
$
682
Credit-risk-related Contingent Features
Applicable for OTC derivatives with dealers
The Company's agreements with each of its derivative counterparties contain cross default provisions that provide that the Company could be declared in default on its derivative obligations if the Company defaults on any of its indebtedness, including a default where repayment of the indebtedness has not been accelerated by the lender.
As of September 30, 2026 and December 31, 2025, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $25,000 and $5.3 million, respectively. As of September 30, 2026 and December 31, 2025, the Company had posted $6.1 million and $1.9 million, respectively, in collateral related to these agreements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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, and financial planning and wealth management. At September 30, 2026, the Company had one wholly-owned banking subsidiary, Tompkins Bank & Trust, which changed its name from Tompkins Community Bank effective July 20, 2026. Tompkins Bank & Trust provides a broad selection of wealth management services under the Tompkins Financial Advisors brand, including investment management, trust and estate, and financial and tax planning. On October 31, 2025, the Company sold all of the issued and outstanding shares of capital stock of its wholly-owned insurance subsidiary, Tompkins Insurance Agencies, Inc. ("TIA"), to Arthur J. Gallagher Risk Management Services, LLC ("Gallagher"). The Company’s principal offices are located at 118 E. Seneca Street, P.O. Box 460, Ithaca, NY, 14850, and its telephone number is (888) 503-5753. The Company’s common stock is traded on the NYSE American under the Symbol "TMP."
Tompkins' strategy centers around our core values and a commitment to delivering long-term value to our clients, communities, and shareholders. A key strategic initiative for the Company is a focus on responsible and sustainable growth, including initiatives to grow organically through our current businesses, as well as through possible acquisitions of financial institutions, branches, and financial services businesses. As such, the Company has acquired, and from time to time considers acquiring, banks, thrift institutions, branch offices of banks or thrift institutions, or other businesses 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.
Business Segments
The Company operates in two segments, banking and wealth management. Banking services consist primarily of attracting deposits from the areas served by Tompkins Bank & Trust, which has 54 banking offices (38 offices in New York and 16 offices in Pennsylvania) and using those deposits to originate a variety of commercial loans, agricultural loans, consumer loans, real estate loans, and leases. 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, and financial and tax planning services. Wealth management services are provided under the trade name Tompkins Financial Advisors.
The Company operated its wholly-owned insurance subsidiary, TIA, from 2001 until its sale to Gallagher on October 31, 2025. TIA was a full-service insurance agency that offered services such as property and casualty insurance, employee benefit consulting, and life, long-term care and disability insurance. TIA's revenue and expenses were consolidated into the Company's financial statements through October 31, 2025.
The Company’s principal expenses are interest on deposits, interest on borrowings, and operating and general administrative expenses, as well as provisions for credit 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 business, Tompkins Bank & Trust competes with other commercial banks, savings and loan associations, credit unions, finance companies, internet-based financial services companies, mutual funds, brokerage and investment banking companies, and other financial intermediaries. Some of these competitors have substantially greater resources and lending capabilities and may offer services that the Company does not currently provide. The financial services industry continues to undergo rapid technological change with introductions of new technologies and services, including new ways that customers can make payments or manage their accounts, including through use of stablecoins and other forms of cryptocurrency, tokens, and other digital assets or alternative payment systems. The Company faces increasing competition from institutions not subject to the same extensive State and Federal regulations that govern financial holding companies and Federally-insured banks, including by financial technology companies, or "fintechs," which may offer bank-like products or services that compete directly with the Company’s products and services.
39
Competition among financial institutions is based upon interest rates offered on deposit accounts, interest rates charged on loans and other credit and service charges, the quality and scope of the services rendered, the convenience of facilities and services, and, in the case of loans to commercial borrowers, relative lending limits. 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 the Company’s subsidiary bank 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. In addition, the Company focuses on providing unparalleled customer service, which includes offering a strong suite of products and services, including products that are accessible to our customers through digital means. Although management feels that this business model has caused the Company to grow its customer base in recent years and allows it to compete effectively in the markets we serve, we cannot assure you that such factors will result in future success.
Regulation
Banking and wealth management are highly regulated. As a financial holding company including a community bank and a registered investment adviser, the Company and its subsidiary 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, and the Financial Industry Regulatory Authority.
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, 2026. 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, 2025, 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, which is comprised of 202 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, 2026 (the most recent report available). Although the peer group data is presented based upon financial information that is one fiscal quarter behind the financial information included in this report, the Company believes that it is relevant to include certain peer group information for comparison to current quarter numbers.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The statements contained in this Report that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements may be identified by use of such words as "may", "could", "should", "will", "would", "estimate", "intend", "continue", "believe", "expect", "plan", "commit", or "anticipate", as well as the negative and other variations of these terms and other similar words. Examples of forward-looking statements may include statements regarding; the sufficiency of liquidity sources; the Company's exposure to changes in interest rates, and to new, changed, or extended government/regulatory expectations; the need to sell securities before recovery of amortized cost; the impact of changes in accounting standards; trends, plans, prospects, growth and strategies; projections of future financial condition, operating results, income, capital expenditures, costs or other financial items; anticipated regulatory and legislative changes; and other characterizations of future events or circumstances as well as other statements that are not statements of historical fact. Forward-looking statements are made based on management’s expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors relating to the Company’s operations and economic environment, all of which are difficult to predict and many of which are beyond the control of the Company, that could cause actual results of the Company to differ materially from those expressed and/or implied by forward-looking statements and historical performance. The following factors, in addition to those listed as Risk Factors in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, are among those that could cause actual results to differ materially from the forward-looking statements and historical performance: changes in general economic, market and regulatory conditions; our ability to attract and retain deposits and other sources of liquidity; gross domestic product growth and inflation trends; the impact of the interest rate and inflationary environment on the Company's business, financial condition and results of operations; changes in other income or cash flow anticipated from the Company's operations, investment and/or lending activities; changes in laws and regulations affecting public companies, banks, bank holding companies and/or financial holding companies, including the Dodd-Frank Act, and other federal, state and local government mandates; the impact of any change in the FDIC insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount; changes in supervisory and regulatory scrutiny of financial institutions; technological developments and changes; cybersecurity incidents and threats; the ability to continue to introduce competitive
40
new products and services on a timely, cost-effective basis; governmental and public policy changes, including environmental regulation; reliance on large customers and the geographic concentration of our business; the ability to access financial resources in the amounts, at the times, and on the terms required to support the Company's future businesses; and the economic impact, including potential market volatility, of national and global events, including the response to bank failures, war and geopolitical matters (including continuing or increasing hostilities in the Middle East and the war in Ukraine), tariffs and trade wars, widespread protests, civil unrest, political uncertainty, and pandemics or other public health crises; and the related financial stress on borrowers and changes to customer behavior and credit risk as a result of any of the foregoing. The Company does not undertake any obligation to update its forward-looking statements.
Critical Accounting Policies
The accounting and reporting policies followed by the Company conform, in all material respects, to U.S. generally accepted accounting principles ("GAAP") and to general practices within the financial services industry. 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 policy relating to the allowance for credit losses ("allowance", or "ACL") to be a critical accounting policy because of the uncertainty and subjectivity involved in this policy and the material effect that estimates related to this area can have on the Company’s results of operations.
The Company’s methodology for estimating the allowance considers available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. Refer to "Allowance for Credit Losses" below and to Note 5 - "Allowance for Credit Losses", and Note 1 – "Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, for additional information on the Company's methodology for estimating the allowance.
For information on the Company's significant 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 contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Refer to "Accounting Standards Pending Adoption" in Note 2 - "Basis of Presentation" in the Notes to Unaudited Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for a discussion of recent accounting standards updates.
Critical Accounting Estimates
The Company's significant accounting policies conform with GAAP and are described in Note 1 - "Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. In applying those accounting policies, management of the Company is required to exercise judgment in determining many of the methodologies, assumptions and estimates to be utilized. Certain critical accounting estimates are more dependent on such judgment and in some cases may contribute to volatility in the Company's reported financial performance should the assumptions and estimates used change over time due to changes in circumstances. The most significant area in which management of the Company applies critical assumptions and estimates was the following:
•Accounting for credit losses - The Company accounts for the allowance for credit losses using the current expected credit loss model. Under this model, the allowance for credit losses represents a valuation account that is deducted from the amortized cost basis of certain financial assets, including loans and leases, to present the net amount expected to be collected at the balance sheet date. A provision for credit losses is recorded to adjust the level of the allowance as deemed necessary by management. In estimating expected losses in the loan and lease portfolio, borrower-specific financial data and macro-economic assumptions are utilized to project losses over a reasonable and supportable forecast period. For certain loan pools that share similar risk characteristics, the Company utilizes statistically developed models to estimate amounts and timing of expected future cash flows, collateral values and other factors used to determine the borrowers' abilities to repay obligations. Such models consider historical correlations of credit losses with various macroeconomic assumptions including unemployment and gross domestic product. These forecasts may be adjusted for inherent limitations or biases of the models. Subsequent to the forecast period, the Company utilizes longer-term historical loss experience to estimate losses over the remaining contractual life of the loans. Changes in the circumstances considered when determining management's estimates and assumptions could result in
41
changes in those estimates and assumptions, which could result in adjustment of the allowance for credit losses in future periods. A discussion of facts and circumstances considered by management in determining the allowance for credit losses is included in Note 5 - "Allowance for Credit Losses" in the Notes to the Unaudited Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
RESULTS OF OPERATIONS
Performance Summary
Net income for the third quarter of 2026 was $28.7 million, or $2.00 diluted earnings per share, compared to $23.7 million, or $1.65 diluted earnings per share for the third quarter of 2025. Net income for the nine months ended September 30, 2026 was $84.0 million, or $5.86 diluted earnings per share, compared to $64.8 million, or $4.52 diluted earnings per share for the same period in 2025. The increase in net income and diluted earnings per share for the three and nine months ended September 30, 2026 compared to the same periods in 2025 largely reflects increases in our net interest margin as well as continued loan growth.
Return on average assets ("ROA") for the quarter ended September 30, 2026 was 1.30%, compared to 1.13% for the quarter ended September 30, 2025. Return on average shareholders’ equity ("ROE") for the third quarter of 2026 was 11.85%, compared to 12.17% for the third quarter of 2025. For the year-to-date period ended September 30, 2026, ROA and ROE totaled 1.30% and 11.77%, respectively, compared to 1.06% and 11.56%, for the same periods in 2025.
Segment Reporting
The Company operates in the following two business segments: banking and wealth management. Wealth management activities include the results of the Company's trust, financial planning, and wealth management services provided by Tompkins Financial Advisors, a division of Tompkins Bank & Trust. All other activities are considered banking. Prior to the sale of TIA on October 31, 2025, the Company also had an insurance segment. TIA provided property and casualty insurance services and employee benefits consulting. For additional financial information on the Company's segments, refer to "Note 9 - Segment and Related Information" in the Notes to Unaudited Consolidated Financial Statements in Part I of this Report on Form 10-Q.
Banking Segment
The banking segment reported net income of $27.8 million for the third quarter of 2026, an increase of $7.6 million, or 37.8%, compared to $20.2 million for the third quarter of 2025. For the nine months ended September 30, 2026, the banking segment reported net income of $81.4 million, up $26.8 million, or 49.2%, from the same period in 2025. The increase in net income for the three and nine months ended September 30, 2026 compared to the same periods in 2025 was mainly due to an increase in net interest income.
Net interest income of $77.3 million for the third quarter of 2026 was up $13.4 million, or 21.0%, from the same period in 2025. For the nine months ended September 30, 2026, net interest income of $223.1 million was up $42.5 million, or 23.5%, from the same period in 2025. The increase in net interest income for the three and nine months ended September 30, 2026 compared to the same periods in 2025 was primarily due to an improved net interest margin, which was driven by growth in average loan balances, higher average earning asset yields, and a reduction in average funding costs.
The provision for credit losses was $3.0 million for the three months ended September 30, 2026, compared to $2.5 million for the same period in 2025. For the nine months ended September 30, 2026, the provision for credit losses was $6.0 million compared to $10.6 million for the same period in 2025. For additional information, see the section titled "The Allowance for Credit Losses" below.
Noninterest income was $7.1 million for the three months ended September 30, 2026, down $519,000 or 6.8% compared to $7.7 million for the same period in 2025. The decrease in noninterest income for the three months ended September 30, 2026 was primarily attributable to the absence of intercompany service charge revenue following the sale of the insurance segment in October 2025. For the nine months ended September 30, 2026, noninterest income was $21.4 million compared to $23.9 million for the nine months ended September 30, 2025. The decrease in year-to-date noninterest income compared to the same period in 2025 was mainly attributable to a $1.9 million gain on the sale of other real estate owned ("OREO") in the prior year period and the absence of intercompany service charge revenue following the sale of the insurance segment in October 2025.
Noninterest expense of $44.8 million for the three months ended September 30, 2026, increased by $2.1 million or 4.8% compared to the same period in 2025. For the nine months ended September 30, 2026 noninterest expense of $131.3 million was up $8.4 million, or 6.9% compared to the same period in 2025. The increases in noninterest expense across both periods were primarily driven by salaries and employee benefits, technology, and net occupancy expense of premises.
42
Wealth Management Segment
The wealth management segment reported net income of $824,000 for the three months ended September 30, 2026, which was up $198,000 or 31.6% compared to the third quarter of 2025. For the nine months ended September 30, 2026, net income of $2.6 million was up $32,000, or 1.2%, compared to the same period in the prior year. The increase in net income for the three and nine months ended September 30, 2026 compared to the prior year periods was primarily attributable to higher assets under management and related fee revenue, driven primarily by favorable market performance.
Net Interest Income
The following tables show average interest-earning assets and interest-bearing liabilities, and the corresponding yield or cost associated with each, for the three and nine month periods ended September 30, 2026 and 2025 and the three months ended June 30, 2026:
Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)
Federal funds purchased & securities sold under agreements to repurchase
39,519
120
0.41
%
43,744
125
0.38
%
Other borrowings
508,443
14,919
3.92
%
549,192
17,967
4.37
%
Total interest-bearing liabilities
5,705,391
95,274
2.23
%
5,495,351
100,494
2.45
%
Noninterest bearing deposits
1,910,151
1,830,755
Accrued expenses and other liabilities
103,681
98,953
Total liabilities
7,719,223
7,425,059
Total equity
954,954
750,030
Total liabilities and equity
$
8,674,177
$
8,175,089
Interest rate spread
2.90
%
2.35
%
Net interest income (TE)/margin on earning assets
223,992
3.60
%
181,600
3.09
%
Tax Equivalent Adjustment
(847)
(930)
Net interest income
$
223,145
$
180,670
1 Average balances and yields on available-for-sale debt securities are based on historical amortized cost.
2 Interest income includes the tax effects of taxable-equivalent adjustments using an effective income tax rate of 21% in 2026 and 2025 to increase tax exempt interest income to taxable-equivalent basis.
3 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 1 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Net Interest Income
Net interest income is the Company’s largest source of revenue, and is dependent on the volume and composition of interest earning assets and interest-bearing liabilities and the level of market interest rates. The above tables show average interest-earning assets and interest-bearing liabilities, and the corresponding yield or cost associated with each.
Net interest income was $77.3 million and $223.1 million, respectively, for the three and nine months ended September 30, 2026, up $13.4 million, or 21.0%, and $42.5 million, or 23.5%, respectively, from the same periods in 2025. The increase in net interest income compared to both prior year periods was due to improvement in net interest margin, which is discussed below, and growth in average loans and deposits.
44
Net interest margin for the three months ended September 30, 2026 was 3.65% compared to 3.20% for the same period in 2025. Net interest margin for the nine months ended September 30, 2026 was 3.60% compared to 3.09% for the same period in 2025. The increase in net interest margin for the three and nine months ended September 30, 2026 compared to the same periods in 2025 was primarily attributable to growth in average loan balances, improved yields on average interest-earning assets, and lower funding costs.
Net interest margin of 3.65% for the third quarter of 2026 was up 7 basis points over the net interest margin of 3.58% for the second quarter of 2026, primarily driven by higher yields on average interest-earning assets and growth in average loan balances. The average cost of interest-bearing liabilities for the third quarter of 2026 was flat compared to the second quarter of 2026, while the average total cost of funds of 1.67% was down 1 basis point.
Interest income for the three and nine months ended September 30, 2026 was $109.8 million and $318.4 million, respectively, representing increases of 12.0% and 13.3% compared to the same periods in 2025. The growth was primarily driven by higher interest on loans, as well as increased interest income from securities. Interest on loans increased $7.4 million, or 8.6%, and $23.7 million, or 9.6%, for the three and nine-month periods in 2026 compared to the same periods in 2025. Average loan balances for the three and nine months ended September 30, 2026 were up $428.0 million, or 6.9%, and $411.1 million, or 6.7%, respectively, from the same periods in 2025.
Interest income on securities, excluding dividends on FHLB stock, for the three and nine months ended September 30, 2026, was up $4.5 million, or 40.7%, and $14.0 million, or 44.6%, respectively, over the same periods in 2025. The average yield on total securities for the three and nine months ended September 30, 2026, was up 95 and 103 basis points, respectively, over the same periods in 2025, mainly a result of the reinvestment within the portfolio at higher yields, including the previously reported repositioning of the portfolio in the fourth quarter of 2025. Average balances of securities for the three and nine months ended September 30, 2026 increased $43.9 million, or 2.6%, and $37.6 million, or 2.2%, respectively, from the same periods in 2025.
Interest expense for the three and nine months ended September 30, 2026 decreased $1.7 million, or 4.9%, and $5.2 million or 5.2%, respectively, compared to the same periods in 2025, driven mainly by a decrease in average rates paid on interest-bearing liabilities, partially offset by higher average balances of interest-bearing liabilities. For the three and nine months ended September 30, 2026, the average cost of interest-bearing liabilities was down 21 basis points and 22 basis points, respectively, compared to the same periods in 2025, while average interest-bearing liabilities were up $214.6 million, or 3.9%, and $210.0 million or 3.8%, respectively. The decrease in average rates paid on interest-bearing liabilities for the three and nine months ended September 30, 2026 compared to the same periods in 2025 reflects favorable changes in funding mix with growth in average deposits and lower average borrowings, as well as market-related interest rate changes over those periods.
The average cost of interest-bearing deposits for the three months ended September 30, 2026 was 2.10%, down 16 basis points from the same period in 2025, while the average cost of interest-bearing deposits for the nine month period ended September 30, 2026 was 2.08%, down 17 basis points from the same period in 2025. Average interest-bearing deposits for the three and nine months ended September 30, 2026, were up $272.2 million, or 5.5%, and $255.0 million, or 5.2%, respectively, from the same periods in 2025. Average noninterest bearing deposits for the three and nine months ended September 30, 2026, were up $89.2 million, or 4.7%, and $79.4 million, or 4.3%, respectively, from the same periods in 2025.
Average other borrowings for the three and nine months ended September 30, 2026 were down $51.3 million, or 9.6%, and $40.7 million, or 7.4%, respectively, compared to the same periods in 2025. The average rates paid on other borrowings for the three and nine months ended September 30, 2026 were both down 45 basis points, respectively, from the same periods in 2025.
Noninterest Income
Noninterest income of $12.6 million for the three months ended September 30, 2026, was down $11.0 million or 46.7% from the third quarter of 2025, and noninterest income of $37.5 million for the nine months ended September 30, 2026, was down $33.6 million, or 47.2%, from the same period in the prior year. The decrease was primarily in insurance commissions and fees and reflects the sale of the Company's insurance subsidiary, TIA, in the fourth quarter of 2025. Insurance commissions and fees were $11.3 million and $32.5 million for the three and nine months, respectively, ended September 30, 2025.
Wealth management fees of $5.3 million in the third quarter of 2026 were up $337,000 or 6.8% over the third quarter of 2025. For the first nine months of 2026, wealth management fees were up $749,000, or 5.0% compared to the same period in 2025. Wealth management fees include trust services, financial planning, wealth management services, and brokerage related services. The fair value of assets managed by, or in custody of, Tompkins was $3.1 billion at September 30, 2026, up $91.3 million or 3.1% from September 30, 2025.
45
Other income of $2.3 million in the third quarter of 2026 was down $252,000, or 9.9%, compared to the same period in 2025. For the first nine months of 2026, other income of $7.2 million was down $2.2 million, or 23.2%, compared to the same period in 2025. The decrease for the three months ended September 30, 2026 compared with the same period in 2025 was mainly driven by lower derivative swap fee income, down $139,000, and lower gains on the sales of residential mortgage loans, down $115,000. The decrease for the nine months ended September 30, 2026 compared to the same period in 2025 was driven by a $1.9 million gain on the sale of OREO recognized in the second quarter of 2025.
Noninterest Expense
Noninterest expense of $49.1 million for the third quarter of 2026 was down $4.8 million or 8.8% from the third quarter of 2025. Noninterest expense of $143.9 million for the first nine months of 2026 was down $12.2 million, or 7.8%, compared to the same period in 2025. The decrease in noninterest expense for both periods was primarily attributable to the sale of TIA in the fourth quarter of 2025.
The third quarter and year-to-date periods in 2025 included TIA-related salaries and wages and other employee benefits expenses of $6.1 million and $18.2 million, respectively; as well as other noninterest expenses of $1.4 million and $4.3 million, respectively.
For the three and nine months ended September 30, 2026, salaries and wages and other employee benefits decreased $3.8 million, or 11.3%, and $11.8 million, or 11.9%, respectively, for the three and nine months ended September 30, 2026, respectively. These decreases were partially offset by annual merit increases and higher other employee benefit costs, including health insurance, as well as increases in technology expense.
Income Tax Expense
The provision for income taxes was $9.1 million for an effective rate of 24.1% for the third quarter of 2026, compared to a tax provision of $7.4 million and an effective rate of 23.9% for the same quarter in 2025. For the first nine months of 2026, the provision for income taxes was $26.7 million for an effective rate of 24.1% compared to tax provision of $20.3 million and an effective rate of 23.9% for the same period in 2025. The effective rates differ from the U.S. and state statutory rates primarily due to the effect of tax-exempt income from loans, securities and life insurance assets, and the income tax effects associated with stock-based compensation.
FINANCIAL CONDITION
Total assets were $9.0 billion at September 30, 2026, up $310.2 million or 3.6% from December 31, 2025. Cash and cash equivalents were up $109.3 million or 82.3%, and total loans were up $278.7 million or 4.3%, while total securities were down $44.1 million or 2.6% and loans held for sale were down $43.4 million or 100.0% compared to December 31, 2025. Total deposits were up $471.3 million or 6.8%, Federal funds purchased and securities sold under agreement to repurchase were up $38.3 million or 40.1%, and total borrowings were down $157.7 million or 27.9% from December 31, 2025.
Securities
The Company’s securities portfolio was $1.7 billion at September 30, 2026 and December 31, 2025, representing 18.4% of total assets at September 30, 2026, compared to 19.6% of total assets at year end 2025. The following tables detail the composition of the securities portfolio:
Available-for-Sale Debt Securities
September 30, 2026
December 31, 2025
(In thousands)
Amortized Cost
Fair Value
Amortized Cost
Fair Value
U.S. Treasuries
$
50,659
$
48,094
$
55,492
$
53,780
Obligations of U.S. Government sponsored entities
355,556
334,224
354,128
348,403
Obligations of U.S. states and political subdivisions
80,155
70,894
81,517
76,310
Mortgage-backed securities - residential, issued by
U.S. Government agencies
293,429
278,732
315,001
313,496
U.S. Government sponsored entities
637,406
603,550
582,741
587,632
U.S. corporate debt securities
2,500
2,451
2,500
2,447
Total available-for-sale debt securities
$
1,419,705
$
1,337,945
$
1,391,379
$
1,382,068
46
Held-to-Maturity Debt Securities
September 30, 2026
December 31, 2025
(In thousands)
Amortized Cost
Fair Value
Amortized Cost
Fair Value
U.S. Treasuries
$
85,664
$
76,543
$
85,831
$
78,794
Obligations of U.S. Government sponsored entities
226,917
197,578
226,697
205,066
Total held-to-maturity debt securities
$
312,581
$
274,121
$
312,528
$
283,860
As of September 30, 2026, the available-for-sale debt securities portfolio had net unrealized losses, which reflects the amount that the amortized cost exceeds fair value, of $81.8 million compared to net unrealized losses of $9.3 million at December 31, 2025. The increase in unrealized losses related to the available-for-sale debt securities portfolio reflects interest rate volatility in the market, the volume and rates associated with securities purchases, and maturities in 2026. 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 Company did not recognize any net credit impairment charge to earnings on investment securities in the third quarter or year-to-date period ending September 30, 2026.
Loans and Leases
Loans and leases as of the end of the third quarter and prior year-end were as follows:
(In thousands)
9/30/2026
12/31/2025
Commercial and industrial
Agriculture
$
122,061
$
114,475
Commercial and industrial other
1,109,694
986,173
Subtotal commercial and industrial
1,231,755
1,100,648
Commercial real estate
Construction
380,000
448,901
Agriculture
242,594
234,292
Commercial real estate other
3,157,228
2,978,842
Subtotal commercial real estate
3,779,822
3,662,035
Residential real estate
Home equity
253,759
227,654
Mortgages
1,370,834
1,363,532
Subtotal residential real estate
1,624,593
1,591,186
Consumer and other
Indirect
37
68
Consumer and other
84,016
86,399
Subtotal consumer and other
84,053
86,467
Leases
7,979
10,413
Total loans and leases
6,728,202
6,450,749
Less: unearned income and deferred costs and fees
(3,229)
(4,504)
Total loans and leases, net of unearned income and deferred costs and fees
$
6,724,973
$
6,446,245
47
The below table shows a more detailed break-out of commercial real estate ("CRE") loans as of September 30, 2026 and December 31, 2025:
9/30/2026
12/31/2025
(In thousands)
Balance
% CRE
Balance
% CRE
Construction
$
380,000
10.05
%
$
448,901
12.26
%
Multi-family/Single family real estate
859,462
22.74
%
774,338
21.15
%
Agriculture
242,594
6.42
%
234,292
6.40
%
Retail1
488,483
12.92
%
508,523
13.89
%
Hotels/motels
192,696
5.10
%
181,026
4.94
%
Office space2
238,993
6.32
%
243,874
6.66
%
Industrial3
286,604
7.58
%
253,959
6.93
%
Mixed Use
397,395
10.52
%
362,900
9.91
%
Medical4
146,219
3.87
%
150,499
4.11
%
Other
547,376
14.48
%
503,723
13.75
%
Total
$
3,779,822
100.00
%
$
3,662,035
100.00
%
1Retail included 1.90% and 2.10%, respectively, of owner occupied real estate at September 30, 2026 and December 31, 2025.
2Office space included 1.64% and 1.65%, respectively, of owner occupied real estate at September 30, 2026 and December 31, 2025.
3Industrial included 3.28% and 2.79%, respectively, of owner occupied real estate at September 30, 2026 and December 31, 2025.
4Medical included 1.44% and 1.71%, respectively, of owner occupied real estate at September 30, 2026 and December 31, 2025.
Total loans and leases of $6.7 billion at September 30, 2026 were up $278.7 million, or 4.3%, from December 31, 2025, mainly in the commercial real estate and commercial and industrial loan portfolios. As of September 30, 2026, total loans and leases represented 74.9% of total assets compared to 74.4% of total assets at December 31, 2025.
Residential real estate loans, including home equity loans, were $1.6 billion at September 30, 2026, up $33.4 million or 2.1% compared to December 31, 2025, and comprised 24.2% of total loans and leases at September 30, 2026. The Company may sell residential real estate loans in the secondary market based on interest rate considerations. The Company's Asset/Liability Committee meets regularly and establishes standards for selling and retaining residential real estate mortgage originations. These residential real estate loans are generally sold to Federal Home Loan Mortgage Corporation ("FHLMC") 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.
During the first nine months of 2026 and 2025, the Company sold residential loans totaling $76.8 million and $63.3 million, respectively, recognizing gains of $1.9 million and $1.6 million, 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 totaled $2.1 million at September 30, 2026, and $1.7 million at December 31, 2025.
Commercial real estate loans and commercial and industrial loans totaled $3.8 billion and $1.2 billion, respectively, and represented 56.2% and 18.3%, respectively, of total loans and leases as of September 30, 2026. The commercial real estate portfolio was up $117.8 million, or 3.2%, compared to December 31, 2025, while commercial and industrial loans were up $131.1 million, or 11.9%, compared to December 31, 2025.
As of September 30, 2026, agriculturally-related loans totaled $364.7 million, or 5.4%, of total loans and leases, compared to $348.8 million, or 5.4%, of total loans and leases at December 31, 2025. Agriculturally-related loans include loans to dairy farms and 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.
48
The Company’s loan and lease customers are located primarily in the New York and Pennsylvania communities served by its subsidiary bank. Although operating in numerous communities in New York and Pennsylvania, the Company is still dependent on the general economic conditions of these states and the local economic conditions of the communities within those states in which the Company does business.
The Allowance for Credit Losses
The below table represents the allowance for credit losses as of September 30, 2026, December 31, 2025, and September 30, 2025. The table provides, as of the dates indicated, an allocation of the allowance for credit losses for 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 for credit losses to each category does not restrict the use of the allowance to absorb losses in any other category.
(In thousands)
09/30/2026
12/31/2025
9/30/2025
Allowance for credit losses
Commercial and industrial
$
13,022
$
10,234
$
11,532
Commercial real estate
36,323
35,255
36,125
Residential real estate
10,175
10,893
10,878
Consumer and other
881
1,230
1,299
Finance leases
54
59
55
Total
$
60,455
$
57,671
$
59,889
Allowance for credit losses as a percentage of total loans and leases
0.90
%
0.89
%
0.95
%
Allowance/nonperforming loans and leases
113.12
%
120.30
%
113.06
%
Activity in the Company’s allowance for credit losses during the first nine months of 2026 and 2025 is illustrated in the table below:
Analysis of the Allowance for Credit Losses
(In thousands)
9/30/2026
9/30/2025
Average loans outstanding during period
$
6,535,606
$
6,124,469
Balance of allowance at beginning of year
57,671
56,496
LOANS CHARGED-OFF:
Commercial and industrial
1,896
936
Commercial real estate
412
4,882
Residential real estate
932
0
Consumer and other
1,061
1,892
Total loans charged-off
$
4,301
$
7,710
RECOVERIES OF LOANS PREVIOUSLY CHARGED-OFF:
Commercial and industrial
192
69
Commercial real estate
6
4
Residential real estate
152
90
Consumer and other
388
440
Total loans recovered
$
738
$
603
Net loans charged-off (recovered)
3,563
7,107
Provision for credit losses related to loans
6,347
10,500
Balance of allowance at end of period
$
60,455
$
59,889
Annualized net charge-offs on loans to average total loans and leases during the period
0.07
%
0.16
%
49
As of September 30, 2026, the allowance for credit losses was $60.5 million, up $2.8 million or 4.8% compared to December 31, 2025, and up $566,000, or 0.9% compared to the allowance at September 30, 2025. The allowance for credit losses as a percentage of total loans measured 0.90% at September 30, 2026, compared to 0.89% at December 31, 2025, and 0.95% at September 30, 2025. The decrease in the allowance for credit losses coverage ratio compared to September 30, 2025 was mainly due to improved economic forecasts for unemployment and gross domestic product and lower qualitative reserves related to asset quality. The decrease was partially offset by additional specific reserves on individually evaluated nonaccrual commercial credits. The increase in the allowance for credit losses from year-end 2025 reflects loan growth, mainly in commercial real estate and commercial loans, and a one basis point increase in the coverage ratio. The increase in the coverage ratio was mainly driven by higher reserves for individually evaluated loans, and increased reserves for large loans and quantitative reserves resulting from loan growth, and updated model assumptions based on the annual model review. The increase was partially offset by lower reserves resulting from updated economic forecasts for unemployment and gross domestic product for the quarter.
The ratio of the allowance to nonperforming loans and leases was 113.12% at September 30, 2026, compared to 120.30% at December 31, 2025, and 113.06% September 30, 2025. The increase in the ratio compared to year-end 2025 was due to an increase in nonperforming loans and leases. At September 30, 2026 nonperforming loans and leases were $53.4 million, an increase of $5.5 million, or 11.5% compared to December 31, 2025. The Company’s nonperforming loans and leases are mostly comprised of collateral-dependent loans with limited exposure or loans that require limited specific reserve due to the level of collateral available with respect to these loans and/or previous charge-offs.
The provision expense for credit losses for loans is based upon the Company's quarterly evaluation of the appropriateness of the allowance for credit losses. The provision for credit losses for loans for the third quarter of 2026 was $3.2 million compared to $2.5 million for the third quarter of 2025. For the nine month period ended September 30, 2026, the provision for credit losses for loans was $6.3 million compared to $10.5 million for the same period in 2025. Net charge-offs for the three and nine months ended September 30, 2026 were $1.2 million and $3.6 million, respectively, compared to $1.1 million and $7.1 million, respectively, for the same periods in 2025. The decrease in provision expense and net charge-offs for the first nine months of 2026 compared to the same period in 2025 was mainly due to the partial charge-off of $4.7 million related to one commercial real estate relationship during the second quarter of 2025.
Allowance for Credit Losses for Off-Balance Sheet Credit Exposures
For the three months ended September 30, 2026, the provision for credit losses for off-balance sheet credit exposures was a credit of $161,000 compared to an expense of $36,000 for the same period in 2025. For the nine month period ended September 30, 2026, the provision for credit losses for off-balance sheet credit exposures was a credit of $331,000 compared to a $57,000 expense for the same period in 2025. The decrease for both periods in 2026 over 2025 was mainly attributable to a lighter commercial loan pipeline.
50
Analysis of Past Due and Nonperforming Loans
(In thousands)
9/30/2026
12/31/2025
9/30/2025
Loans 90 days past due and accruing
Commercial and industrial
$
277
$
0
$
0
Residential real estate
$
1
$
1
$
1
Consumer and other
35
145
165
Total loans 90 days past due and accruing
$
313
$
146
$
166
Nonaccrual loans
Commercial and industrial
$
10,508
$
8,305
$
4,978
Commercial real estate
24,635
22,864
31,122
Residential real estate
17,955
16,555
16,611
Consumer and other
30
70
94
Total nonaccrual loans
$
53,128
$
47,794
$
52,805
Total nonperforming loans and leases
$
53,441
$
47,940
$
52,971
Other real estate owned
384
229
0
Total nonperforming assets
$
53,825
$
48,169
$
52,971
Total nonperforming loans and leases as percentage of total loans and leases
0.79
%
0.74
%
0.84
%
Total nonperforming assets as percentage of total assets
0.60
%
0.56
%
0.63
%
Asset quality measures at September 30, 2026 were generally consistent compared to December 31, 2025, and favorable compared to September 30, 2025. The above table shows nonperforming loans and leases and total nonperforming assets at September 30, 2026 up from year-end 2025 and September 30, 2025.
Nonperforming assets include loans past due 90 days and accruing, nonaccrual loans, and foreclosed real estate/OREO. Total nonperforming assets of $53.8 million at September 30, 2026 were up $5.7 million, or 11.7%, compared to December 31, 2025, and $854,000, or 1.6%, compared to September 30, 2025. Nonperforming assets represented 0.60% of total assets at September 30, 2026, up from 0.56% at December 31, 2025, and down from 0.63% at September 30, 2025. The increase in nonperforming assets from year-end 2025 included one commercial relationship totaling $2.0 million and one commercial real estate relationship totaling $2.4 million.
Loan internally-classified Special Mention or Substandard totaled $151.1 million at September 30, 2026, compared to $134.5 million reported at December 31, 2025, and $144.2 million at September 30, 2025. The increases were primarily attributable to two commercial real estate relationships, including the downgrade of a $12.7 million credit to Special Mention and the migration of an existing $4.6 million Special Mention credit to Substandard during the third quarter of 2026.
Loans past due 30-89 days totaled $6.7 million or 0.10% of total loans at September 30, 2026, down from $8.8 million or 0.14% of total loans at year-end 2025 and down from $7.8 million or 0.12% of total loans at September 30, 2025.
Deposits and Other Liabilities
Total deposits of $7.4 billion at September 30, 2026 were up $471.3 million, or 6.8%, compared to December 31, 2025, and were up $356.0 million, or 5.0%, compared to September 30, 2025. The increase from year-end 2025 was primarily in checking, money market and savings accounts, which were up $440.1 million, or 11.8%, and non-interest bearing deposits, which were up $76.6 million, or 4.0% and was mainly due to the seasonal inflow of municipal deposits. Time deposits were down $45.5 million or 3.5% from year-end 2025.
The Company is a participant in the IntraFi Network's IntraFi Cash Service (ICS) and Certificate of Deposit Account Registry Service (CDARS) programs. The Company uses these deposit sweep services to place customer funds from interest-bearing demand accounts, money market accounts, and/or time deposits to be placed with other participating network banks. Customer funds are placed at one or more participating banks to ensure that each deposit customer is eligible for the full amount of FDIC insurance. As a program participant, we receive reciprocal amounts of deposits from other participating network banks equal to the amount of our customer funds placed in the IntraFi Network. In addition to the reciprocal funding programs, the Company may utilize both the ICS and CDARS programs to obtain wholesale funding through One-Way Buy transactions. Funds obtained using One-Way Buy transactions are classified as brokered deposits. At September 30, 2026 the Company held $960,000 in CDARS One-Way Buy funds.
51
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, brokered deposits, municipal money market deposits, and reciprocal deposit relationships with municipalities. Core deposits of $5.8 billion at September 30, 2026 increased by $296.3 million, or 5.4%, from year-end 2025, and increased by $191.7 million, or 3.4% from September 30, 2025. Core deposits represented 78.5% of total deposits at September 30, 2026, compared to 79.5% of total deposits at December 31, 2025 and 79.7% at September 30, 2025.
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 $29.9 million at September 30, 2026, and $45.6 million at December 31, 2025. Management generally views retail repurchase agreements as an alternative to large time deposits.
The Company has established several unsecured Federal funds purchased lines through various correspondent bank relationships, totaling $149.0 million. Federal funds purchased from correspondent banks totaled $104.0 million at September 30, 2026 compared to $50.0 million at December 31, 2025.
The Company’s other borrowings totaled $406.7 million at September 30, 2026, down $157.7 million, or 27.9%, from $564.4 million at December 31, 2025. Other borrowings at September 30, 2026 consisted of $205.6 million in FHLB overnight advances and $201.1 million of FHLB term advances, compared to $395.0 million FHLB overnight advances and $169.4 million of FHLB term advances at year end 2025. Of the $201.1 million in FHLB term advances at September 30, 2026, $176.1 million was due to mature in less than one year and $25.0 million was due to mature in over one year.
Capital
Total equity was $936.4 million at September 30, 2026, a decrease of $2.0 million, or 0.2%, from December 31, 2025. The decrease was mainly driven by a $54.0 million decrease in accumulated other comprehensive income due primarily to the increase in unrealized losses on available-for-sale securities and a $3.2 million decrease in additional paid in capital. These decreases were largely offset by a $54.7 million increase in retained earnings, reflecting net income of $84.0 million for the nine months ended September 30, 2026, less dividends of $29.4 million.
The Company and its subsidiary bank are subject to various regulatory capital requirements administered by Federal bank regulatory agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material adverse effect on the Company’s business, results of operation and financial condition. Under capital adequacy guidelines and the regulatory framework for prompt corrective action (PCA), banks must meet specific guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. Capital amounts and classifications of the Company and its subsidiary banks are also subject to qualitative judgments by regulators concerning components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the maintenance of minimum amounts and ratios of common equity Tier 1 capital, Total capital and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. Management believes that, as of September 30, 2026, the Company and its subsidiary bank met all capital adequacy requirements to which they are subject.
The following table provides a summary of the Company’s capital ratios as of September 30, 2026 compared to the regulatory requirements for well capitalized institutions:
Regulatory Capital Analysis
September 30, 2026
Actual
Well Capitalized Requirement
(dollar amounts in thousands)
Amount
Ratio
Amount
Ratio
Total Capital (to risk weighted assets)
$
998,358
14.89
%
$
670,668
10.00
%
Tier 1 Capital (to risk weighted assets)
936,801
13.97
%
536,534
8.00
%
Tier 1 Common Equity (to risk weighted assets)
936,801
13.97
%
435,934
6.50
%
Tier 1 Capital (to average assets)
936,801
10.73
%
436,545
5.00
%
As of September 30, 2026, the Company’s capital ratios exceeded the minimum required capital ratios plus the capital conservation buffer, and the minimum required capital ratios for well capitalized institutions. The capital levels required for an institution to be considered well capitalized, presented in the above table, are based upon prompt corrective action regulations, as amended to reflect the changes under Basel III Capital Rules.
52
Total capital as a percent of risk weighted assets increased to 14.9% at September 30, 2026, compared with 14.6% at December 31, 2025. Tier 1 capital as a percent of risk weighted assets increased to 14.0% at September 30, 2026 compared to 13.6% at December 31, 2025. Tier 1 capital as a percent of average assets was 10.7% at September 30, 2026, up from 10.6% at December 31, 2025. Common equity Tier 1 capital was 14.0% at September 30, 2026, up from 13.6% at December 31, 2025.
As of September 30, 2026, the capital ratios for the Company’s subsidiary bank also exceeded the minimum required capital ratios for well capitalized institutions, plus the fully phased-in capital conservation buffer.
Liquidity
The objective of liquidity management is to ensure the availability of adequate funding sources to satisfy anticipated demand for credit, deposit withdrawals, and business investment opportunities. The Company’s core deposit base and 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 bank 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 reputation in the communities it serves, along with its 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. Management measures liquidity, including the level of cash, unencumbered securities, and the availability of dependable borrowing sources. The Board has set a policy limit stating that reliable sources of liquidity should remain in excess of 6% of total assets. The ratio was 14.6% at September 30, 2026, and 16.2% at December 31, 2025. In addition, the Company maintains access to the Federal Reserve Bank borrowing facility, which improved the reliable sources of liquidity ratio by an additional 2.5% at September 30, 2026, and 2.9% at December 31, 2025, to 17.1% and 19.1%, respectively. The Company also maintains board policy limits requiring that on-balance sheet liquidity, which includes liquid assets including cash, overnight funds sold, short-term investments, fair value of encumbered investment securities, and the guaranteed portion of government and agency loans, remain above 3% of total assets. As of the end of the third quarter of 2026, this ratio was 9.3% compared to 11.1% at year-end 2025.
Core deposits, discussed above under "Deposits and Other Liabilities", are a primary and low-cost funding source obtained primarily through the Bank'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, municipal money market deposits, reciprocal deposits, bank borrowings, Federal funds purchased, 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 $2.1 billion at September 30, 2026 increased $55.5 million, or 2.7%, as compared to December 31, 2025. The increase from year-end 2025 was mainly in municipal money market deposits, Federal funds purchased and brokered deposits. Non-core funding sources, as a percentage of total liabilities, were 26.6% at September 30, 2026, compared to 26.9% at December 31, 2025.
Non-core funding sources may require securities to be pledged against the underlying liability. Securities held with a carrying value of $1.1 billion at September 30, 2026 and $887.5 million at December 31, 2025, were either pledged or sold under agreements to repurchase. Pledged securities represented 62.1% of total securities at September 30, 2026, compared to 52.1% of total securities at December 31, 2025.
Cash and cash equivalents totaled $242.2 million as of September 30, 2026 which increased from $132.8 million at December 31, 2025. Short-term investments, consisting of securities due in one year or less, decreased from $74.1 million at December 31, 2025, to $36.7 million at September 30, 2026.
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 $882.3 million at September 30, 2026 compared with $901.1 million at December 31, 2025. Outstanding principal balances of residential mortgage loans, consumer loans, and leases totaled approximately $1.7 billion at September 30, 2026, in line with December 31, 2025. Aggregate amortization from monthly payments on these assets provides significant additional cash flow to the Company.
The Company's liquidity is enhanced by ready access to national and regional wholesale funding sources including Federal funds purchased, repurchase agreements, brokered deposits, and FHLB advances. Through its subsidiary bank, the Company has borrowing relationships with the FHLB and correspondent banks, which provide secured and unsecured borrowing capacity. As a member of the FHLB, the Company can use certain unencumbered mortgage-related assets and securities to secure borrowings from the FHLB. At September 30, 2026, the established borrowing capacity with the FHLB was $1.3 billion, or 14.0% of total assets, with available unencumbered mortgage-related assets of $474.2 million. Additional assets may also
53
qualify as collateral for FHLB advances, upon approval of the FHLB. Additionally, through various programs at the Federal Reserve Bank, the Company has the ability to use certain unencumbered loans and securities to secure borrowings from the Federal Reserve Bank's Discount Window. At September 30, 2026 the Company's available borrowing capacity with the Federal Reserve Bank was $225.6 million, all of which was secured by loans. In addition to the available borrowing lines at the FHLB and Federal Reserve Bank, as of September 30, 2026, the Company maintained $572.3 million of unencumbered securities which could be pledged to further enhance secured borrowing capacity.
Non-GAAP Disclosure
The following table includes disclosure of non-GAAP financial measures. Tangible common equity, a non-GAAP financial measure, is total stockholders' equity less intangible assets. Tangible book value per share is tangible equity divided by total shares issued and outstanding. These measures adjust common equity per share to exclude the effects of goodwill and intangible amortization expense on earnings, equity, and capital. 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 should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with GAAP. Tangible common equity and tangible book value per share 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.
Reconciliation of Tangible Book Value Per Share (non-GAAP) to Common Equity Book Value Per Share (GAAP)
Quarter-Ended
Year-ended
(In thousands, except share and per share data)
9/30/2026
12/31/2025
Total common equity (GAAP)
$
936,380
$
938,377
Less: Goodwill and intangibles
72,766
72,766
Tangible common equity (Non-GAAP)
863,614
865,611
Ending shares outstanding
14,363,661
14,420,495
Common equity book value per share (GAAP)
$
65.19
$
65.07
Tangible book value per share (Non-GAAP)
$
60.12
$
60.03
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 Board-approved levels. The Committee also considers strategies to manage this exposure and incorporates these strategies into the investment and funding decisions of the Company. The Company uses derivatives to manage various risks and to accommodate the business requirements of its customers. Additional information on derivatives is available in "Note 11 - Derivatives and Hedging Activities" in the Notes to Unaudited Consolidated Financial Statements in Part I, of this Report on Form 10-Q.
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 200 basis point parallel change in rates over a one-year time frame. Based upon the most recent simulation analysis performed as of August 31, 2026, 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 1.3%, while a 200 basis point parallel decline in interest rates over a one-year period would result in a one year increase in net interest income of 0.6% from the base case. This simulation assumes no balance sheet growth, no changes in balance sheet mix, deposit rates move in a manner that reflects the historical relationship between deposit rate movement and changes in Federal funds rate, and no management action to address balance sheet mismatches.
The decrease in net interest income in the rising rate scenario is a result of the balance sheet showing a slightly more liability sensitive position over a one year time horizon due to the timing and magnitude of changes in asset yields and funding costs. As such, in a rising rate scenario, in the short-term, net interest income would be 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
54
balanced over short, intermediate, and longer-term products. As intermediate and longer-term assets continue to reprice/adjust into higher rate environment and funding costs stabilize, the simulation shows net interest income would be expected to trend upwards.
The 200 basis point decline scenario increases net interest income slightly in the first year as a result of the Company's assets repricing downward to a lesser degree than the rates on the Company's interest-bearing liabilities, mainly deposits and overnight borrowings. The model assumes that prepayments accelerate in the down interest rate environment resulting in additional pressure on asset yields as proceeds are reinvested at lower rates.
The most recent simulation of a base case scenario, which in addition to the above assumptions, also assumes interest rates remain unchanged from the date of the simulation, reflects a net interest margin that is increasing over the next 12 months.
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, balance sheet mix, 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 assesses the Company's exposure to changes in interest rates using 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, 2026. The Company’s one-year net interest rate gap was a positive $253.0 million, or 2.82% of total assets at September 30, 2026, compared with a negative $106.9 million, or 1.23% of total assets at December 31, 2025. A positive gap position exists when the amount of interest-earning assets maturing or repricing exceeds the amount of interest-bearing liabilities maturing or repricing within a particular time period. The one-year static gap analysis suggests that the Company’s net interest income has limited risk in an increasing rate environment over the next 12 months. The simulation analysis along with consideration of the one-year static gap measure demonstrates that the timing of repricing of the Company’s interest earning assets and interest-bearing liabilities over the next 12 months is relatively similar, suggesting net interest income contains minimal risk of decline in either a rising or falling rate environment over the next 12 months. 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, 2026
Repricing Interval
(In thousands)
Total
0-3 months
3-6 months
6-12 months
Cumulative 12 months
Interest-earning assets1
$
8,644,887
$
2,326,338
$
363,075
$
675,339
$
3,364,752
Interest-bearing liabilities
5,976,046
2,346,825
405,127
359,830
3,111,782
Net gap position
$
(20,487)
$
(42,052)
$
315,509
$
252,970
Net gap position as a percentage of total assets
(0.23)
%
(0.47)
%
3.51
%
2.82
%
1Balances 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, 2026.
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, 2026, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is subject to various claims and legal actions that arise in the ordinary course of conducting business. As of September 30, 2026, management, after consultation with legal counsel, does not anticipate that the aggregate ultimate liability arising out of litigation pending or threatened against the Company or its subsidiaries will be material to the Company's consolidated financial position. On at least a quarterly basis, the Company assesses its liabilities and contingencies in connection with such legal proceedings. Although the Company does not believe that the outcome of pending litigation will be material to the Company's consolidated financial position, it cannot rule out the possibility that such outcomes will be material to the consolidated results of operations for a particular reporting period in the future.
Item 1A. Risk Factors
There have been no material changes in the risk factors previously disclosed under Item 1A. in the Company's Annual Report on Form 10-K, for the fiscal year ended December 31, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
Total Number of Shares Purchased
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
(a)
(b)
(c)
(d)
July 1, 2026 through July 31, 2026
1,316
$
96.84
0
342,143
August 1, 2026 through August 31, 2026
486
101.27
0
342,143
September 1, 2026 through September 30, 2026
18,118
97.62
18,118
324,025
Total
19,920
$
97.66
18,118
324,025
Included in the table above are 1,316 shares purchased in July 2026, at an average cost of $96.84, and 441 shares purchased in August 2026, at an average cost of $101.41, 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 Wholly-Owned Subsidiaries (the "Director Retainer Plan"), which were part of the director deferred compensation under that plan. In addition, the table includes 45 shares delivered to the Company at an average price of $99.84 August 2026 to satisfy mandatory tax withholding requirements upon vesting of restricted stock under the Company's 2019 Equity Incentive Plan.
On July 24, 2025, the Company’s Board of Directors authorized a share repurchase plan (the “2025 Repurchase Plan”) under which the Company may repurchase up to 400,000 shares of the Company’s common stock over the 24 months following adoption of the plan. Shares may be repurchased from time to time under the 2025 Repurchase Plan in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in accordance with federal securities laws. The Company has no obligation to repurchase any shares and may discontinue repurchases at any time. As of September 30, 2026, 75,975 shares had been repurchased under the 2025 Repurchase Plan at an average price of $81.59.
Recent Sales of Unregistered Securities
On July 1, 2026, we issued an aggregate of 538 shares of our common stock to non-employee members of our Board of Directors who elected to receive all or a portion of their quarterly director retainer fees in Company stock pursuant to the Director Retainer Plan. These shares were valued at $95.92 per share, which was based on the closing share price as of July 1, 2026. The aggregate value of the issued shares was $51,604.96. The shares were issued to our non-employee directors in private transactions exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.
Cover Page Interactive Data File - the cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded with the inline XBRL document.
** Attached as Exhibit 101 to this report are the following formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Condition as of September 30, 2026 and December 31, 2025; (ii) Consolidated Statements of Income for the three and nine months ended September 30, 2026 and 2025; (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2026 and 2025; (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2026 and 2025; (v) Consolidated Statements of Changes in Shareholders' Equity for the three and nine months ended September 30, 2026 and 2025; and (vi) Notes to Unaudited Consolidated Financial Statements.
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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: October 30, 2026
TOMPKINS FINANCIAL CORPORATION
By:
/s/ Stephen S. Romaine
Stephen S. Romaine
President and Chief Executive Officer
(Principal Executive Officer)
By:
/s/ Matthew D. Tomazin
Matthew D. Tomazin
Executive Vice President and Chief Financial Officer
