Tompkins Margin Expansion Restarts After a Flat Quarter

The Tip Desk · November 8, 2026 · 3 min read

Net interest income rose 4.5% to $77.3 million as the tax-equivalent margin reached 3.65% and period-end loans and deposits both grew.

Tompkins Financial Corporation (TMP), a banking and financial services company serving Central, Western and Hudson Valley New York and southeastern Pennsylvania, reported net interest income of $77.3 million for the third quarter of 2026, up $3.3 million, or 4.5%, from the second quarter. That sequential gain accelerated from a $2.1 million, or 3.0%, increase in the prior quarter.

The tax-equivalent net interest margin was 3.65%, up 7 basis points from 3.58% in the second quarter, after remaining in line in that prior period. The company said the quarter-over-quarter expansion was driven by higher yields on average interest-earning assets and growth in average loan balances. Average loans rose $119.1 million, or 1.8% (7.3% annualized), from the second quarter. Period-end total loans were $6.72 billion, up $127.8 million, or 1.9% (7.8% annualized), from June 30, 2026. The company attributed the average-loan increase primarily to commercial real estate and commercial and industrial portfolios. The average yield on total loans and leases was 5.60%.

Deposits reversed a prior-quarter outflow. Average total deposits increased $180.8 million, or 2.6%, to $7.2 billion, after period-end deposits had fallen $25.1 million, or 0.4%, in the second quarter. Period-end deposits were $7.4 billion, up $379.9 million, or 5.4%, from June 30. Average noninterest-bearing deposits totaled $2.0 billion, and the ratio of average noninterest-bearing deposits to average total deposits rose to 27.5% from 26.9%. The cost of interest-bearing deposits was 2.10%, up 3 basis points from the prior quarter. Total average cost of funds was 1.67%, down 1 basis point.

Diluted earnings per share were $2.00, down $0.04, or 2.0%, from the second quarter. Net income was $28.7 million, down $650,000, or 2.2%, from the prior quarter. Provision for credit losses doubled to $3.0 million from $1.5 million, which the company said was driven by loan growth and specific reserves for individually evaluated loans, partially offset by updated economic forecasts. Net charge-offs were $1.2 million.

Special Mention and Substandard loans and leases totaled $151.1 million, up from $140.0 million at June 30, 2026. Special Mention rose $6.8 million and Substandard $4.3 million, primarily from two commercial real estate relationships, including a $12.7 million downgrade to Special Mention and a $4.6 million migration to Substandard. Loans past due 30–89 days were $6.7 million. The allowance for credit losses was 0.90% of total loans and leases, and the allowance-to-nonperforming-loans ratio was 113.12%. Nonperforming assets of $53.8 million were 0.60% of total assets.

Noninterest income was $12.6 million. Wealth management fees rose $337,000, or 6.8%, service charges on deposit accounts rose $164,000, or 8.9%, and card service income rose $74,000, or 2.6%. Noninterest expense was $49.1 million. Salaries and wages and other employee benefits decreased $3.8 million, or 11.3%, versus the year-ago quarter, which the company said was partially offset by merit increases, higher health insurance costs, and higher technology expense.

Regulatory Tier 1 capital to average assets was 10.73% at September 30, 2026, up from 10.69% at June 30. Total capital to risk-weighted assets was 14.89%. The company repurchased 18,118 shares at an aggregate cost of $1.8 million under its 2025 Stock Repurchase Plan. President and CEO Stephen Romaine said the company approved another dividend increase payable in the fourth quarter of 2026, a 13.8% increase versus the dividend paid in the fourth quarter of 2025, following a 13% increase approved for the third quarter.