• Tompkins Financial Corp (TMP) reported a net loss of $33.4 million for Q3 2023, largely due to the sale of $429.6 million of available-for-sale debt securities.

• The company's diluted earnings per share for Q3 2023 were a loss of $2.35.

• Despite the loss, the company expects the transaction to favorably impact securities revenue in future periods.

• Year-to-date net income was a loss of $5.5 million, or a loss of $0.39 per diluted share.

• Warning! GuruFocus has detected 3 Warning Sign with TMP.

On October 27, 2023, Tompkins Financial Corp (TMP) released its third-quarter financial results. The company reported a net loss of $33.4 million for the third quarter of 2023, primarily due to the sale of $429.6 million of available-for-sale debt securities. This transaction resulted in an after-tax loss on the sale of securities of $47.5 million. Despite the operating loss in Q3 2023, the company expects the transaction to favorably impact securities revenue in future periods.

Financial Performance

The securities sold had an average yield of 0.93%, while the proceeds of the sale were largely reinvested into securities with an estimated yield of approximately 5.12%. The company estimates securities revenue to improve by approximately $15.4 million over the next twelve months. Despite the challenging economic environment for the banking industry, Tompkins Financial Corp (TMP) reported healthy capital and liquidity levels. The company also reported favorable growth trends, with annualized loan growth of 6.0% from Q2 to Q3 2023 and increased deposit balances over the same periods.

Key Financial Highlights

For the year-to-date period ended September 30, 2023, net income was a loss of $5.5 million, or a loss of $0.39 per diluted share. Year-to-date results were also negatively impacted by after-tax losses on the sale of securities totaling $52.9 million, or $3.69 loss per diluted share. For the same year-to-date period in 2022, net income was $65.5 million, or $4.53 per diluted share.

As of September 30, 2023, total loans were up $82.5 million, or 1.5% (6.1% on an annualized basis) compared to the immediate prior quarter, and up $226.4 million, or 4.3%, from September 30, 2022. Total deposits were $6.6 billion, up $168.8 million, or 2.5% (10.4% on an annualized basis) from June 30, 2023, and down $313.3 million, or 4.5%, from September 30, 2022.

Company's Outlook

Stephen Romaine, Tompkins President and CEO, commented on the company's performance, stating,

During the quarter we elected to proactively reposition the balance sheet which will improve securities revenue and we expect that the improved revenue will exceed the value of the loss recognized in the third quarter through time."