Tompkins Financial (TMP 1.52%), a community-focused banking company serving New York and Pennsylvania, reported its second quarter fiscal 2025 results on July 25, 2025. The headline news: Both GAAP earnings per share and revenue for Q2 2025 surpassed Wall Street forecasts, highlighting growth in core banking activities and stronger net interest margin. Diluted earnings per share (GAAP) reached $1.50 for Q2 2025, beating analyst expectations of $1.43 and the prior year’s $1.10, while revenue (GAAP) came in at $82.6 million for Q2 2025 versus the anticipated $81.1 million and $72.7 million last year. The quarter showed positive momentum in lending, deposits, and fee revenues. However, the period also saw a notable $4.7 million charge-off tied to a single commercial real estate loan. Asset quality metrics improved overall, but the large charge-off signals a need for vigilance. Management described the period as one of continued growth for the six months ended Q2 2025, supported by stable capital and liquidity, with some cost pressures arising from higher personnel expenses.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| Diluted EPS | $1.50 | $1.43 | $1.10 | 36.4% |
| Net Income | $21.5 million | $15.7 million | 36.9% | |
| Revenue (Net Interest Income + Noninterest Income) | $82.6 million | $81.1 million | $72.7 million | 13.7% |
| Net Interest Margin | 3.08% | 2.73% | 0.35 pp | |
| Nonperforming Assets / Total Assets | 0.63% | 0.79% | (0.16) pp |
Source: Analyst estimates for the quarter provided by FactSet.
Company Profile and Strategic Focus
Tompkins Financial is a community banking company with 54 branches, mainly across New York and Pennsylvania. It provides retail banking, commercial lending, insurance, and wealth management services. Its business depends on close ties with local customers, which allows it to build stable deposit bases and make quick lending decisions. This personalized approach is a core part of the company’s operating model.
Recently, the business has focused on several key areas of success: maintaining its community-focused model, complying with regulatory requirements, investing in digital banking technology, managing competition from larger banks and fintech firms, and recruiting skilled teams. The ability to grow loans and deposits while delivering solid service and compliance with capital requirements continues to drive results.
Quarter Highlights: Growth, Margin, and Asset Quality
In Q2 2025, revenue, earnings per share, and net income all beat prior year numbers and analyst expectations. Net interest margin, which measures the difference between interest income and expenses on interest-bearing assets, rose to 3.08% in Q2 2025 from 2.73% in Q2 2024. This improvement was partly due to better loan yields and modest balance sheet growth. Net interest income was up 18.0% compared to the second quarter of 2024. Growth in fee-based revenue came mainly from insurance commissions, which were up 5.7% in Q2 2025, and wealth management fees were up 2.4% in Q2 2025, though card services income declined slightly, down 3.9% in Q2 2025.
Total loans reached $6.17 billion as of June 30, 2025, up $410.8 million, or 7.1%, from June 30, 2024, with the strongest activity in commercial real estate and business lending. Total deposits at June 30, 2025 were $6.7 billion. The loan-to-deposit ratio climbed to 91.9% as of Q2 2025, indicating that the bank’s deposit base has been put to work funding loans. Noninterest income, which covers revenue from sources other than lending—like insurance and wealth management services—increased 3.4% from the prior year in Q2 2025. Noninterest expense increased by 3.4% in Q2 2025, with salaries and benefits rising 6.6% in Q2 2025 due to annual merit increases. These higher staffing costs contributed to the increase in overall operating expenses.
Asset quality improved during Q2 2025, with nonperforming assets (loans or properties behind on payments or in default) falling to 0.63% of total assets at June 30, 2025, from 0.79% at June 30, 2024. The ratio of loan loss reserves to total loans was 0.95% as of Q2 2025. A provision for credit loss expense of $2.8 million was recorded for Q2 2025—partly reflecting a single $4.7 million charge-off from a commercial real estate loan. Net charge-offs, or loans written off as losses less recoveries, jumped to $5.3 million in Q2 2025 compared to $0.5 million in Q2 2024. Special mention and substandard loans, two categories used to grade potentially weaker-performing loans, have shown improvement compared to a year ago as of Q2 2025.
Capital ratios, which measure financial strength, remain comfortably above regulatory minimums. Tier 1 capital (the core funding cushion for banks) stood at 9.36% of average assets. The company also announced a fresh stock repurchase authorization covering up to 400,000 shares over the next 24 months, indicating available capital. Liquidity remains strong, with $1.5 billion available—about 18.0% of total assets as of Q2 2025.
Understanding Tompkins Financial’s Business and Strategic Objectives
Tompkins Financial operates as a community bank, which means it emphasizes local decision-making and personalized banking relationships. This approach is central to its strategy, helping it to attract and retain both retail and business customers. It offers conventional loans, checking and savings accounts, mortgage lending, and non-banking services such as insurance and wealth management.
Key efforts in recent years have included investment in digital transformation—such as automation, analytics, and improved cybersecurity. The goal is to meet evolving customer expectations and maintain efficiency as competition with larger banks and fintechs intensifies. Regulatory compliance is an ongoing focus as federal and state oversight remains strict. Finally, recruiting and retaining talented staff remains vital to delivering service—staffing expenses are now a substantial part of operating costs.
Quarter Details: Financial and Service Performance
Profitability improved in Q2 2025 as core business growth—lending, deposits, and service fees—drove revenue expansion. Notably, the net interest margin widened by 35 basis points year over year in Q2 2025, underpinning a sizable increase in net interest income. The company’s loan portfolio expanded, especially in commercial real estate and commercial & industrial lending. Deposit growth, while relatively flat through the quarter, rose 6.8% year-over-year, signaling steady engagement with retail and commercial customers.
Fee-based services, including insurance policies and wealth management, provided a modest boost to noninterest income. Insurance commissions and fees form a large part of this category and were up 5.7% in Q2 2025, wealth management fees gained 2.4% in Q2 2025, while card services income fell. Salaries and benefits, which account for most of the company’s noninterest expense, saw a 6.6% jump in Q2 2025 compared to Q2 2024 due to merit-based increases.
Credit quality measures are important for banks. The allowance for credit losses—the reserves set aside for potential loan defaults—was 0.95% of total loans at June 30, 2025 (Q2 2025), roughly in line with 0.92% at June 30, 2024. However, the period featured a large $4.7 million charge-off tied to a single commercial real estate loan. Management reported this property is still tenanted and generating positive cash flow, but the charge-off caused net charge-offs to spike. Despite this one-time event, nonperforming loans and assets declined, a positive sign for risk management. Management noted that the ratio of loan loss reserve to nonperforming loans rose to 111.55% at Q2 2025, due in part to the removal of this large troubled loan from the nonperforming category.
Regulatory capital and liquidity metrics remained robust and well above required minimums. the liquidity cushion equals 18.0% of total assets at June 30, 2025. This quarter did not see any change in the company’s regular dividend.
Looking Ahead: Guidance and Investor Focus
Management did not offer formal financial guidance for the coming quarter or fiscal year, but highlighted confidence in the bank’s capacity for growth and capital flexibility. The combination of a solid balance sheet, strong loan and deposit bases, and the recently authorized share repurchase program supports this view.
Investors will want to keep a close watch on asset quality, particularly within commercial real estate loans, given the sizable charge-off this quarter. Ongoing pressures from rising personnel and operating expenses could impact margins if revenue expansion slows. Management’s continued attention to digital enhancements and talent retention, along with any regulatory developments, will likely shape future results for Tompkins Financial.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
