Breaking Down Tompkins Financial Corporation (TMP) Financial Health: Key Insights for Investors

You're looking at Tompkins Financial Corporation (TMP) right now, trying to decide if its regional bank story still holds up in a volatile rate environment, and the Q3 2025 numbers defintely cut through the noise.

The direct takeaway is that their core business is performing better than expected, driven by margin expansion: they reported diluted earnings per share (EPS) of $1.65 for the third quarter, a strong 26.9% jump year-over-year, even missing the consensus estimate slightly. This performance pushed their year-to-date net income to a solid $64.8 million, a 26.6% increase from the same period in 2024. Here's the quick math: that EPS growth is fueled by a net interest margin boost to 3.20% in Q3 2025, up 41 basis points from the prior year, plus total assets climbing to $8.46 billion as of September 30, 2025. Still, you need to dig into the asset quality, where nonperforming assets sit at a manageable $53.0 million, or 0.63% of total assets, which is a good sign of balance sheet health.

Revenue Analysis

You're looking for a clear picture of Tompkins Financial Corporation (TMP)'s revenue engine, and the takeaway is that Net Interest Income (NII)-the money made from loans minus the money paid on deposits-remains the primary driver, but the fee-based segments are essential for diversification. The company is on track for a total revenue of approximately $316.92 million for the 2025 fiscal year, based on analyst forecasts and the last twelve months' performance ending Q3 2025.

The core of Tompkins Financial Corporation's revenue comes from its three distinct, but integrated, business segments: Banking, Insurance, and Wealth Management. The Banking segment is the clear revenue leader. For the third quarter of 2025 alone, the Banking segment's key driver, Net Interest Income, was a robust $63.878 million. That's a significant portion of the estimated total quarterly revenue of about $84.95 million for Q3 2025, showing the heavy reliance on traditional banking activities.

Here's a quick breakdown of the primary revenue sources and their contribution:

• Banking: Dominates via Net Interest Income from loans and securities.
• Insurance: Provides commissions and fees from property and casualty, plus employee benefits consulting.
• Wealth Management: Generates fees from trust, estate, and investment management services.

In terms of growth, the company is showing solid momentum. The forecast annual revenue growth rate for 2025-2027 is projected at 7.93%. To be fair, this is a more measured growth rate compared to the broader US Banks - Regional industry, but the company's recent performance has been strong, with a year-over-year revenue growth of 10.67% for the last twelve months ending September 30, 2025. This growth is largely driven by net interest margin expansion and loan growth. The Banking segment's net income for Q3 2025 was $20.2 million, a solid 36.3% increase year-over-year, which underscores its resilience.

The fee-based services (noninterest income) are a crucial secondary revenue stream that adds stability. For the first quarter of 2025, total fee-based services revenue (including insurance, wealth management, and card services) increased by $1.2 million, or 6.1%, compared to the first quarter of 2024. This noninterest income stream helps diversify the risk inherent in a purely interest-rate-dependent model. You can read more about the company's long-term vision here: Mission Statement, Vision, & Core Values of Tompkins Financial Corporation (TMP).

A major change in the revenue structure for Tompkins Financial Corporation is the sale of Tompkins Insurance Agencies, Inc., announced in late 2025. This move will defintely impact the Insurance segment's contribution going forward. While the full financial impact will be realized in 2026, it signals a strategic shift to focus more intently on the core banking and wealth management operations. This is a clear action to simplify the business model and concentrate capital.

Profitability Metrics

You're looking for a clear picture of Tompkins Financial Corporation (TMP)'s ability to turn revenue into profit, especially given the shifting rate environment. The direct takeaway is that Tompkins Financial Corporation has seen a sharp, positive reversal in its profitability trend in 2025, largely driven by Net Interest Margin (NIM) expansion and solid cost management. This is a defintely a good sign.

For a bank, we look at the Net Interest Margin (NIM) as the equivalent of a core gross profit margin, revealing the spread on core lending activities. Tompkins Financial Corporation's NIM has shown consistent strength, rising from 2.98% in Q1 2025 to a robust 3.20% by the third quarter of 2025. This 41 basis point improvement over the prior year's Q3 is the engine driving their earnings growth. The bank is successfully increasing yields on interest-earning assets while keeping funding costs, the bank's core cost of goods sold, under control.

Profitability Margins and Trends

The company's ability to convert its total revenue into bottom-line profit has dramatically improved. Net income for the third quarter of 2025 surged to $23.7 million, a 27.0% jump compared to the same period in 2024. This translates to a reported net profit margin of approximately 25.9% in the latest period, a striking turnaround from the 6.4% margin reported a year ago. To be fair, the longer-term five-year average earnings decline of 14.4% per year suggests past challenges, but the 2025 performance clearly reverses that negative trend.

Here's the quick math on the core profitability ratios for Q3 2025:

• Net Interest Margin (NIM): 3.20% (Core Gross Profit Margin)
• Operating Profit Margin (Income Before Provision & Tax): Approximately 38.43% (Calculated from $33.6 million operating profit on $87.44 million total revenue)
• Net Profit Margin: Approximately 25.9%

Operational Efficiency and Industry Comparison

Operational efficiency is strong, which is crucial for a regional bank. Tompkins Financial Corporation's efficiency ratio-non-interest operating expenses as a percentage of total income-improved to 54.6% in the third quarter of 2025, down from 56.1% in the prior year period. A lower ratio is better, so this move indicates solid cost management even while the company invests in future growth, as evidenced by a modest rise in year-to-date expenses of over 4%. This is a good number; anything below 60% is generally considered efficient in the banking sector.

When you stack Tompkins Financial Corporation up against the industry, the picture is generally favorable, though with a few caveats:

The bank is generating a slightly higher return on its assets (ROA) and equity (ROE) compared to the regional bank industry average, which is a strong indicator of management's effectiveness in deploying capital. Plus, their credit quality is excellent; their net charge-offs of 0.05% are significantly lower than the industry average of 0.67%. However, you should keep an eye on nonperforming assets, which were at 0.87% in Q1 2025, higher than the peer average of 0.49% for Q4 2024. This suggests a concentration of credit risk, likely tied to their heavy commercial real estate exposure.

If you want to dig deeper into who is buying and selling this stock, check out Exploring Tompkins Financial Corporation (TMP) Investor Profile: Who's Buying and Why?

Debt vs. Equity Structure

You're looking at Tompkins Financial Corporation (TMP) and asking the right question: how is this bank funding its growth? The short answer is that the company maintains a conservative, equity-heavy capital structure, which is a significant strength in the current rate environment.

As of late 2025, Tompkins Financial Corporation's debt profile shows a clear deleveraging trend from the prior year, a smart move given the cost of funds. The company's long-term debt, excluding short-term borrowings, stood at approximately $493.3 million in the first quarter of 2025, a notable reduction from the roughly $790.2 million reported at the end of 2024. That's a defintely positive signal for liquidity and interest expense management.

The Debt-to-Equity Balance: Conservative and Controlled

The core measure of financial leverage for any company is the Debt-to-Equity (D/E) ratio, which tells you how much debt is used to finance assets relative to shareholder capital. For Tompkins Financial Corporation, the ratio is manageable and competitive. Here's the quick math:

• Tompkins Financial Corporation D/E Ratio (Nov 2025): 0.56
• US Regional Banks Industry Average D/E Ratio (Nov 2025): 0.50

The company's ratio of 0.56 is slightly above the regional bank average of 0.50, but still indicates a healthy reliance on equity. This means for every dollar of shareholder equity, the company uses 56 cents of debt. To be fair, for a bank, a D/E ratio below 1.0 is generally considered conservative, so Tompkins Financial Corporation is well within that comfort zone, especially considering their total common equity was strong at $788.8 million as of September 30, 2025.

Capitalization and Financing Strategy

Tompkins Financial Corporation's financing strategy is clearly focused on retaining a robust capital cushion, relying on retained earnings (equity funding) and core deposits over expensive wholesale debt. This is why you see the long-term debt balance drop so sharply in 2025. This focus on equity and core deposits gives them a critical buffer.

The balance sheet reflects a strategic preference for equity funding, which is less risky than debt. This is further evidenced by their regulatory position: capital ratios at September 30, 2025, were reported as being well above the regulatory minimums for well-capitalized institutions. Plus, their Tier 1 capital ratio was a solid 9.31% in Q1 2025. That's a strong defensive posture.

While there have been no major, explicit credit rating announcements in 2025, the significant reduction in long-term debt and the maintenance of high capital ratios act as a de-facto credit positive. They are managing their balance sheet to minimize interest rate risk and funding costs, which is the smart move right now. If you want to dig deeper into who is buying the stock, you should read Exploring Tompkins Financial Corporation (TMP) Investor Profile: Who's Buying and Why?

Here's a snapshot of the core funding sources and metrics:

The action for you is to monitor the D/E ratio for any sharp upward moves, which would signal a shift to more expensive, riskier funding. For now, the structure is sound.

Liquidity and Solvency

You want to know if Tompkins Financial Corporation (TMP) has enough cash on hand to cover its near-term obligations, and the short answer is yes, but you defintely need to look past the standard industrial ratios to see the full picture for a bank.

For a traditional company, a current ratio (Current Assets / Current Liabilities) near 1.0 is the benchmark for short-term health. Tompkins Financial Corporation's current ratio is 0.92, and its quick ratio (excluding inventory, which is minimal for a bank) is 0.95. These ratios are slightly below 1.0, but for a financial institution, these metrics are less critical than in other sectors because a bank's primary liabilities are deposits, which are its core funding source, not traditional short-term debt.

The real measure of liquidity for a bank like Tompkins Financial Corporation is its available funding. As of September 30, 2025, the company had ready access to liquidity of $1.5 billion, which represents 17.8% of its total assets. This is a strong position, especially since it significantly exceeds the company's internal policy limit of 6%. This access comes from diverse sources, including wholesale funding, brokered deposits, and Federal Home Loan Bank (FHLB) advances.

• Liquidity access: $1.5 billion at Q3 2025.
• Current Ratio: 0.92.
• Quick Ratio: 0.95.

Cash Flow Dynamics and Working Capital

The cash flow statement for the third quarter of 2025 (Q3 2025) shows where the money is moving. Here's the quick math on the major cash flow categories, which tell a story of growth and reinvestment:

The bank generated strong cash from operations, which is what you want to see. This cash was then largely deployed into its loan portfolio, which is the core business of a bank.

While the term 'working capital' is less applicable, the trend in the loan-to-deposit ratio is a key indicator of liquidity pressure. The ratio stood at 91.9% at June 30, 2025, which is nearing the upper end of the preferred 80% to 90% range. This high ratio means the bank is lending out a large portion of its deposits, and while profitable, it suggests a need to continue aggressively growing its deposit base to fund future loan growth. This can hurt profitability if funding costs rise.

Near-Term Risks and Solvency Strengths

The primary liquidity strength is the substantial access to wholesale funding, which acts as a buffer. The key risk is the continued reliance on long-term debt and the high loan-to-deposit ratio. Tompkins Financial Corporation has been actively managing its debt, with long-term debt at $493.3 million in Q1 2025, down from a higher level at the end of 2024. This deleveraging is a positive sign.

Solvency-the ability to meet long-term debts-remains excellent. The company's total capital ratio was 13.27% and its Tier 1 capital ratio was 12.30% as of September 30, 2025. Both of these figures are comfortably above the regulatory minimums for a well-capitalized institution, giving them plenty of cushion. For a deeper dive into who is buying the stock, you should read Exploring Tompkins Financial Corporation (TMP) Investor Profile: Who's Buying and Why?

Action Item: Monitor the loan-to-deposit ratio in Q4 2025; if it pushes past 93%, that signals increased funding pressure. Finance: track Q4 deposit growth rate versus loan growth rate by year-end.

Valuation Analysis

You're looking for a clear signal on Tompkins Financial Corporation (TMP)-is it a buy, a hold, or a sell right now? Based on the latest metrics from the 2025 fiscal year, the stock is defintely trading in the realm of fairly valued, which is why the analyst consensus leans toward a 'Hold.' The stock's valuation ratios are attractive, but the near-term price target suggests limited upside.

Here's the quick math on the key valuation multiples, using data available as of November 2025. Tompkins Financial's Price-to-Earnings (P/E) ratio stands at a modest 11.06, which is significantly lower than the broader market average. This low P/E suggests the stock is inexpensive relative to its earnings power, a typical sign of an undervalued stock in the financials sector.

However, we must also look at Price-to-Book (P/B), which is critical for a bank. Tompkins Financial trades at a P/B ratio of approximately 1.20. This means you are paying $1.20 for every dollar of the company's book value (assets minus liabilities). While this is a reasonable premium for a well-established regional bank, it's not a deep-value P/B, which keeps the valuation from screaming 'undervalued.' For a deeper dive into the company's long-term strategy, you can check out their Mission Statement, Vision, & Core Values of Tompkins Financial Corporation (TMP).

The stock price trend over the last 12 months shows a recovery but also resistance. The stock has traded in a wide 52-week range, from a low of $54.16 to a high of $79.01. As of November 21, 2025, the closing price was $68.21, sitting almost exactly in the middle of that range. The market is clearly weighing the bank's solid fundamentals against broader economic uncertainty and interest rate risks.

For income investors, the dividend profile is compelling. Tompkins Financial has a long history of dividend increases-an impressive 38 consecutive years.

• Annualized Dividend: $2.60 per share.
• Current Dividend Yield: Approximately 3.71%.
• Payout Ratio (TTM): A healthy 42.3%.

A payout ratio below 50% is defintely sustainable, giving the bank ample room to continue its dividend growth streak even if earnings growth slows. That's a strong signal of financial stability.

The Wall Street consensus echoes this 'fairly valued' assessment. The majority of analysts rate Tompkins Financial as a 'Hold,' with an average 12-month price target of $70.00. Here is the breakdown:

So, what's the action? The low P/E suggests intrinsic value, but the tight analyst target means you shouldn't expect a major pop. If you own it, hold it for the reliable income and potential for long-term compounding. If you're looking to buy, wait for a dip closer to the 52-week low to build a position with a better margin of safety. The market sees a stable, well-run bank, not a growth rocket.

Risk Factors

You've seen Tompkins Financial Corporation (TMP) post strong headline earnings in 2025, with year-to-date net income hitting $64.8 million through Q3, up 26.6% from the prior year. That's great, but as a seasoned analyst, I look past the top line to the concentrated risks that could derail that momentum. The biggest near-term concern is clearly the bank's exposure to Commercial Real Estate (CRE), especially if the regional economy in New York and Pennsylvania softens. It's a classic concentration risk.

The company's CRE portfolio sits at a significant 56.7% of total loans as of Q2 2025. This isn't just an abstract number; we've already seen the impact on asset quality. In the first half of 2025, the company took a substantial hit from a single, troubled CRE relationship. This required a $4.2 million specific reserve in Q1, followed by a $4.7 million partial charge-off in Q2. That one event pushed nonperforming loans and leases (NPLs) up to $71.1 million in Q1 2025. You must factor in the possibility of similar, localized credit events given the regional focus of their lending.

Here's a snapshot of the operational and financial risks highlighted in the 2025 filings:

• Credit Quality Volatility: Net charge-offs spiked to $5.3 million in Q2 2025, a massive leap from $509,000 in Q2 2024. This directly impacts the Provision for Credit Losses, which was $5.3 million in Q1 2025 alone.
• Rising Operating Costs: Noninterest expenses are climbing, driven by higher compensation costs and technology investments. This expense growth is particularly visible in the Wealth Management segment, where rising technology costs contributed to a 17.1% year-over-year decline in net income to just $626,000 in Q3 2025.
• Growth Uncertainty: Despite the recent profit surge-fueled partly by net interest margin (NIM) expansion to 3.20% in Q3 2025-analysts still express caution over a lack of convincing forward revenue growth signals beyond the current interest rate cycle.

The company is defintely aware of these risks and has mitigation plans in place. They are managing the credit risk by proactively increasing their Allowance for Credit Losses (ACL) to $58.56 million as of Q2 2025. This prudent reserving helped the allowance coverage of NPLs rebound to a healthy 111.55% by June 30, 2025. Plus, the bank's capital position remains robust; the Tier 1 capital to average assets ratio stood at 9.41% in Q3 2025, which is well above regulatory minimums. They are financially strong enough to absorb a few more isolated credit losses. If you want to understand the foundation of their strategy, you should review their Mission Statement, Vision, & Core Values of Tompkins Financial Corporation (TMP).

The clear action for you is to keep a close eye on the quarter-over-quarter change in Nonperforming Assets and the Provision for Credit Losses, especially in the Q4 2025 report. That will tell you if the CRE issue was truly isolated or a sign of a broader trend.

Growth Opportunities

You're looking for a clear path forward for Tompkins Financial Corporation (TMP), and the story is simple: their near-term growth is anchored by core banking strength, but the real opportunity lies in how they deploy a massive infusion of new capital. The company is poised for a strategic reset, moving from a diversified model to a more focused, bank-centric growth engine.

The core business is performing well, driven by a strong interest rate environment. For the nine months ended September 30, 2025, diluted earnings per share (EPS) hit $4.52, a solid jump from the prior year. Analysts project full-year 2025 EPS to land around $5.85. Here's the quick math: that EPS estimate suggests an annual earnings growth rate of roughly 10%. We're seeing a forecast annual revenue growth rate of 7.93%, which is a steady, predictable pace for a regional bank.

• Net Interest Margin (NIM) improved to 3.08% in Q2 2025.
• Loan and deposit growth was a healthy 7% in Q3 2025.
• Total loans reached $6.22 billion as of September 30, 2025.

The growth is there, but it's not industry-leading. That's the realist view.

Strategic Capital Deployment: The TIA Sale

The most significant catalyst for future growth is the strategic sale of Tompkins Insurance Agencies, Inc. (TIA) to Arthur J. Gallagher & Co. in November 2025. This was a major, deliberate move. The transaction generated approximately $223 million in cash, resulting in a substantial pre-tax gain of $183 million. This is not just a one-time windfall; it's a capital reallocation strategy.

Management is clear: they will use these proceeds to replace the relative earnings from the insurance segment in the near term and, more importantly, to fund long-term strategic investments. This gives Tompkins Financial Corporation immense flexibility. This is where the real opportunity is defintely created.

The strategic initiatives that will drive the next phase of growth are focused and clear:

• M&A Activity: Pursuing possible acquisitions of smaller financial institutions, branches, or financial services businesses to expand their geographic reach.
• Digital Transformation: Investing in technology to enhance operational capabilities and customer experience, which is crucial for retaining deposits in a competitive environment.
• Core Banking Reinforcement: Continuing to grow organically through their primary banking segment, which contributed $20.2 million in net income in Q3 2025.

Competitive Advantages and Near-Term Risks

Tompkins Financial Corporation's competitive advantage is its deep focus on targeted local markets across New York and Pennsylvania, offering a full array of services from banking to wealth management under Tompkins Financial Advisors. This community-based model fosters loyalty and stable deposit bases. Plus, they have an impressive 38-year streak of increasing their dividend, a testament to financial discipline and a commitment to shareholder returns.

What this estimate hides, though, are the near-term risks. The loan-to-deposit ratio was high at 91.9% in Q2 2025, and net charge-offs were significantly higher in Q2 2025 at $5.3 million compared to $509,000 in Q2 2024. The bank needs to manage credit quality carefully as it pushes for loan growth. They must execute on their investment plan with the TIA proceeds to justify the strategic shift. For more on the company's long-term vision, you can review Mission Statement, Vision, & Core Values of Tompkins Financial Corporation (TMP).

Next Step: Monitor the first quarter 2026 earnings call for specific details on the allocation of the TIA sale proceeds, particularly any new acquisition announcements or major technology spending plans.