TMP 10-K & 10-Q changes, risk factors and insider trading

Additionally, the profitable operation or management of the related farm properties, and the value thereof, is impacted by changes in U.S. government trade policies. Tariffs, retaliatory tariffs or other trade restrictions on products and materials that farm properties related to our agriculturally-related loans import or export could cause the costs of such farm operations and management to increase, the price of products from such farm operations to increase, demand for such products to decrease and the margins on such products to decrease. Such potential adverse effects on related farm property operations and management could reduce the related farm properties’ revenues, financial results and ability to service debt, which, in turn, could adversely affect our financial condition and results of operations. In addition, to the extent changes in the political environment related to the agriculture industry have a negative impact on usour customers or on the markets in which we operate, our business, results of operations and financial condition could be materially and adversely impacted in the future.

The Company could be subject to environmental risks and associated costs on real estate properties that are owned by the Company, real estate properties that collateralize the Company’s loans or realto estate properties thatwhich the Company obtains title to.title.

The Company owns various properties used in the operation of its business. In addition, from time to time, the Company forecloses on properties and either becomes involved in, or may be deemed to becomebe involvedparticipating inin, the management of its borrowers’ properties. The Company could be subject to environmental liabilities imposed by applicable federal and state laws with respect to any of these properties. For example, we may be held liable to a government entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or may be required to clean up hazardous or toxic substances, or chemical releases, at a property, or may be subject to common law claims by third parties for damages and costs resulting from environmental contamination emanating from the property. Additionally, a significant portion of our loan portfolio at December 31, 20242025 was secured by real estate and, if the real estate securing our assets is subject to environmental liability, our collateral position may be substantially weakened. Any such environmental liabilities imposed on the Company could have a material adverse impact on the Company's financial condition or results of operations.

As a result of the high percentage of the Company’s assets and liabilities that are in the form of interest-bearing or interest-related instruments, changes in interest rates, in the shape of the yield curve or in spreads between different market interest rates, can have a material effect on the Company’s business and profitability and the value of the Company’s assets and liabilities. For example, changes in interest rates or interest rate spreads have in the past and may in the future:

Adverse developments affecting the banking industry, and resulting media coverage,industry have contributed to market volatility and regulatory scrutiny in the bankingpast systemnegatively impacted, and havemay in the future negatively impactedimpact, the Company's results of operations and/or stock price, and such adverse effects on the Company could recur or continue.price.

Adverse events affecting the financial services industry generally, includingThe bank failures,failures hasthat occurred in 2023 caused decreased confidence in the banking system among investors, customers and counterparties,led whichto hasmarket generatedprice volatility throughout the financial services industry. Future adverse events affecting the financial services industry could again generate market volatility among publicly traded bank holding companies. Uncertainty and concern regarding soundness or creditworthiness of other financial institutions has been, and may be in the future, compounded by advances in technology that increase the speed at which deposits can be moved, as well as the speed and reach of media attention, including social media, and its ability to disseminate concerns or rumors, in each case potentially exacerbating liquidity concerns and market disruption within the financial services industry. Such events have, and anycould futureagain eventsin could,the future, adversely impact the market price and volatility of the Company's common stock.

A majority of the Company’s investment portfolio is comprised of securities which are collateralized by residential mortgages. These residential mortgage-backed securities include securities of U.S. government agencies, U.S. government-sponsored entities, and private-label collateralized mortgage obligations. The Company’s securities portfolio also includes obligations of U.S. government-sponsored entities, obligations of states and political subdivisions thereof, U.S. corporate debt securities and equity securities. A more detailed discussion of the investment portfolio, including types of securities held, the carrying and fair values, and contractual maturities, is provided in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report. Gains or losses on these instruments may have a direct impact on our results of operations, including higher or lower income and earnings, unless we adequately hedge our positions. The fair value of investments may be affected by factors other than the underlying performance of the issuer or composition of the obligations themselves, such as rating downgrades, adverse changes in the business climate, a lack of liquidity for resale of certain investment securities and changes in interest rates. For example, decreases in interest rates and increases in mortgage prepayment speeds, which are influenced by interest rates and other factors, could adversely impact the value of our securities collateralized by residential mortgages, causing a significant acceleration of purchase premium amortization on our mortgage portfolio because a decline in long-term interest rates shortens the expected lives of the securities. Conversely, increases in interest rates may result in a decrease in residential mortgage loan originations and mortgage prepayment speeds, directly impacting the value of these securities collateralized by residential mortgages. Management evaluates investment securities for expected credit-related impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. 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 on the Company's Consolidated Statements of Condition, limited to the amount by which the amortized cost basis exceeds the fair value, with a corresponding adjustment to earnings. The Company's financial condition, results of operations, and cash flows could be materially adversely affected by any impairment charges the Company is required to record to reflect a decline in the fair value of securities in its portfolio.

The Company’s business may be adversely affected by general economic conditions in local and national markets, the possibility of the economy’s return to recessionary conditionsconditions, and the possibility of further turmoil or volatility in the financial markets.

General economic conditions impact the banking and financial services industry. The U.S. and global economies have experienced volatility in recent years and may continue to do so for the foreseeable future. There can be no assurance that economic conditions will not deteriorate. Unfavorable or uncertain economic conditions can be caused by many macro and micro factors, including declines in economic growth, business activity or investor or business confidence, limitations on the availability or increases in the cost of credit and capital, increases in inflation or interest rates, the timing and impact of changing governmental policies, including changes in trade policies and tariffs and the impact of widespread protests, civil unrest, wars, pandemics and other public health crises. The Company is particularly affected by U.S. domestic economic conditions, including U.S. interest rates, the unemployment rate, housing prices, the level of consumer confidence, changes in consumer spending, the number of personal bankruptcies and other factors. A decline in U.S. domestic business and economic conditions, without rapid recovery, could have adverse effects on our business, including the following:

•demand for and income received from the Company's fee-based services, including investment services and insurancecard commissions and fees,services, could decline, the cost to the Company to provide any or all products and services could increase, and the levels of assets under management could materially impact revenues from our trust and wealth management businesses; and

The Company must maintain sufficient cash flow and liquid assets to satisfy current and future financial obligations, including demand for loans and deposit withdrawals, funding operating costs, and for other corporate purposes. As a part of our liquidity management, we use a number of funding sources in addition to core deposit growth and repayments and maturities of loans and investments. As we continue to grow, we are likely to become more dependent on these sources, which may include various short-term and long-term wholesale borrowings, including Federal funds purchased and securities sold under agreements to repurchase, brokered certificates of deposit, proceeds from the sale of loans, and borrowings from the FHLBNY and others. We also maintain available lines of credit with the FHLBNY that are secured by loans. Adverse operating results or changes in industry conditions could make it difficult or impossible for us to access these additional funding sources and could make our existing sources of funds more volatile. Our financial flexibility could be materially constrained if we are unable to maintain access to funding or if adequate financing is not available to accommodate future growth at acceptable interest rates. If we are required to rely more heavily on more expensive funding sources to support future growth, our revenues may not increase proportionately to cover our costs. In that case, our operating margins and profitability would be adversely affected. Further, the volatility inherent in some of these funding sources, particularly brokered deposits, may increase our exposure to liquidity risk. Any interruption in these sources of liquidity when needed could adversely affect our results of operations, financial condition, cash flow or regulatory capital levels. In addition, reduced liquidity could result from circumstances beyond our control, such as general market disruptions or operational problems that affect us or third parties. Management’s efforts to closely monitor our liquidity position for compliance with internal policies may not be successful or sufficient to deal with dramatic or unanticipated reductions in liquidity.

There are 11 branches of the FHLB, including New York. The FHLBNY is jointly and severally liable along with the other FHLBs for the consolidated obligations issued on behalf of the FHLBs through the Office of Finance. Dividends on, redemption of, or repurchase of shares of the FHLBNY’s capital stock cannot occur unless the principal and interest due on all consolidated obligations have been paid in full. If another FHLB were to default on its obligation to pay principal or interest on any consolidated obligations, the Federal Home LoanHousing Finance Agency (the "Finance Agency") may allocate the outstanding liability among one or more of the remaining Federal Home Loan Banks on a pro rata basis or on any other basis the Finance Agency may determine. As a result, the FHLBNY’s ability to pay dividends on, to redeem, or to repurchase shares of capital stock could be affected by the financial condition of one or more of the other Federal Home Loan Banks. Any such adverse effects on the FHLBNY could adversely affect our liquidity and the value of our investment in FHLBNY common stock, and could negatively impact our results of operations.

AAn declineimpairment in the value ofto our goodwill and other intangible assets could adversely affect our financial condition and results of operations.

As a financial institution, the Company is inherently exposed to operational risk in the form of theft and other fraudulent activity by employees, customers and other third parties targeting the Company and/or the Company’s customers or data. Such activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering and other dishonest acts. Although the Company devotes substantial resources to maintaining effective policies and internal controls to identify and prevent such incidents, given the increasing sophistication of possible perpetrators, the Company may experience financial losses orand reputational harm as a result of fraud. Fraudulent activity could have a material adverse effect on the Company’s business, financial condition and results of operations.

The Company, in its ordinary course of business, collects and retains large volumes of customer data, including personally identifiable information in various information systems that we maintain and in those maintained by third parties with whom we contract to provide data services. The Company also maintains important internal Company data such as personally identifiable information about its employees and information relating to operations. Customers and employees have been, and will continue to be, targeted by cybersecurity threats attempting to misappropriate confidential information such as passwords, bank account information or other personal or business information. TheCybercrimes are complex and continue to evolve and the Company's attempts to mitigate these threats may not be successful as cybercrimes are complex and continue to evolve.successful.

Climate change could have a material negative impact on the Company and its clients.

FederalTo varying degrees, federal and state banking regulators and supervisory authorities, investors, and other stakeholders have increasinglyexpressed viewedthe view that financial institutions asare important in helping to address the risks related to climate changechange, both directly and with respect to their clients, which may result in financial institutions coming under increased pressure regarding the disclosure and management of their climate risks and related lending and investment activities. Given that climate change could impose systemic risks upon the financial sector, either via disruptions in economic activity resulting from the physical impacts of climate change or changes in policies as the economy transitions to a less carbon-intensive environment, the Company may face regulatory risk of increasing focus on the Company’s resilience to climate-related risks, including in the context of stress testing for various climate stress scenarios. Ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices have resulted and may continue to result in higher regulatory, compliance, credit, and reputational risks and costs.

With the increased importance and focus on climate change, we are making efforts to enhance our governance of climate change-related risks and integrate climate considerations into our risk governance framework. Nonetheless, the risks associated with climate change are rapidly changing and evolving in an escalating fashion, making them difficult to assess due to limited data and other uncertainties. We could experience increased expenses resulting from strategic planning, litigation, and technology and market changes, and reputational harm as a result of negative public sentiment, regulatory scrutiny, and reduced investor and stakeholder confidence due to our response to climate change and our climate change strategy, which, in turn, could have a material negative impact on our business, results of operations, and financial condition.

The Company operates in a highly regulated environment and may be adversely impacted by current or future laws and regulations due to increased compliance costs, potential fines for noncompliance, and restrictions on our ability to offer products or services or buy or sell businesses.

The Company is subject to extensive state and federal laws and regulations, supervision and legislation that affect how it conducts its business. The majority of these laws and regulations are for the protection of consumers, depositors and the deposit insurance fund. The regulations influence such things as the Company’s lending practices, capital structure, investment practices, and dividend policy. The Dodd-Frank Act, which established the CFPB and enacted other reforms, has had, and may continue to have, a significant effect on the entire financial services industry. Compliance with these regulations and other initiatives negatively impacts revenue and increases our cost of doing business on an ongoing basis. Any new regulatory agenda could bring new or changed regulatory requirements and enforcement priorities, which could necessitate changes to the Company’s businesses, result in increased compliance costs and affect the profitability of suchour businesses. Refer to "Supervision and Regulation" in Part I, Item 1 - "Business" of this Report on Form 10‑K for additional information on material laws and regulations impacting the Company’s business.

Financial institutions have becomeare subject to increaseda high level of scrutiny, more intense supervision and regulation, and more supervisory findings and actions. Banking regulators are authorized to take supervisory actions that may restrict or limit a financial institution's activities. Regulatory restrictions on our activities could adversely affect our costs and revenues, and may impair our ability to execute our strategic plans. In addition, if our regulators identify a compliance failure, we may be assessed a fine, prohibited from completing a strategic acquisition or divestiture, or subject to other actions imposed by the regulatory authorities. The recent regulatory activity and increased scrutiny have resulted, and may continue to result, in increases in our costs of doing business, and could result in decreased revenues and net income, reduce our ability to effectively compete to attract and retain customers, or make it less attractive for us to continue providing certain products and services. Any future changes in federal or state law and regulations, as well as the interpretations and implementations, or modifications or repeals, of such laws and regulations, could have a material adverse effect on our business, financial condition or results of operations.

We are required to comply with anti-money laundering and anti-terrorism laws applicable to financial institutions. These laws and regulations require us, among other things, to enact policies and procedures to verify the identity of our customers, and to report suspicious transactions to regulatory agencies. These laws and regulations are complex and compliance with them requires costly, sophisticated monitoring systems and qualified personnel. The bank regulatory agencies have increased thetheir regulatory scrutiny of the anti-money laundering programs maintained by financial institutions. The policies and procedures that we have adopted in order to detect and prevent such illegal transactions may not be successful in eliminating all instances of such transactions. To the extent we fail to fully comply with applicable laws and regulations, we face the possibility of fines or other penalties, such as restrictions on our business activities, and we may also suffer reputational harm, all of which could have a material adverse effect on our business, results of operations and financial condition. Refer to "Supervision and Regulation" in Part I, Item 1 - "Business" of this Report on Form 10‑K for additional information on anti-money laundering and anti-terrorism laws impacting the Company’s business.

We will be subject to heightened regulatory requirements ifand compliance costs as we exceedapproach $10 billion in total consolidated assets.

The Company’s primary business of financial services involves substantial risk of legal liability. The Company and its subsidiaries are, from time to time, named or threatened to be named as defendants in various lawsuits arising from their respective business activities, including activities of companies they have acquired. In addition, from time to time, the Company is, or may become, the subject of governmental and self-regulatory agency information-gathering requests, reviews, investigations and proceedings and other forms of regulatory inquiry, including by bank regulatory agencies, the SEC and law enforcement authorities. The results of such proceedings could lead to delays in or prohibitionprohibitions toon acquireacquiring other companies, significant penalties, including monetary penalties, damages, adverse judgments, settlements, fines, injunctions, restrictions on the way in which the Company conducts its business, or reputational harm.

We continually monitor our suite of products and services, and prioritize new offerings based on our determination of customer demand, within regulatory parameters for financial products. We increasingly face competition from other banks and financial services companies that offer emerging financial technologies, including digital wallets, cryptocurrency and other digital currencies and digital financial transactions. We may invest significant time and resources in new products which become obsolete, or do not generate the revenues we had anticipated, or which are ultimately deemed unacceptable by regulatory authorities. As we expand the range and complexity of our products and services, we are exposed to increasingly complex risks, including compliance risks and potential fraud, and our employees and risk management systems may not be adequate to mitigate such risks effectively. Our failure to effectively identify and manage these risks and uncertainties could have a material adverse effect on our business.business, results of operations and financial condition.

The financial services industry is subject to rapid technological developments and innovations, including the use of AI technologies. The development and implementation of AI technologies is complex, and there are technical challenges associated with achieving the optimal level of accuracy, efficiency and reliability. The algorithms and models used in AI systems may have limitations, including biases, errors, or inability to handle certain data types or scenarios. The use of AI technologies by financial institutions and their customers, and the regulatory framework and expectations surrounding the use of AI technologies, are in their early stages. Flaws in the technology, questions regarding intellectual property rights and ownership of data, ethical issues associated with the use of AI, new or increased regulation concerning the use of AI by financial institutions, and other challenges related to the use of AI may limit its usefulness and expose us to competitive harm, potential legal liability, and brand or reputational harm. The Company's evaluation, implementation and oversight of AI technologies requires the time and attention of employees including management, which may detract from other business objectives. Furthermore, there is a risk of system failures, disruptions, or vulnerabilities that could compromise the integrity, security or privacy of generated content. If we are unable to successfully use and manage AI technologies, such limitations or failures could result in reputational damage, inefficiencies, increased costs, and competitive harm, any of which could have a material adverse effect on our financial condition and results of operations.

The following analysis is intended to provide the reader with a further understanding of the consolidated financial condition and results of operations of the Company and its operating subsidiaries for the periods shown. This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with other sections of this Report on Form 10-K, including Part I, "Item 1. Business," and Part II, "Item 8. Financial Statements and Supplementary Data." For a comparison of our operatingfinancial condition and results of operations for the year ended December 31, 2023 compared2024 to the year ended December 31, 2022,2023, please refer to Part II, Item 7 of the Company's 20232024 Annual Report on Form 10-K filed on February 29,28, 2024.2025.

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, and insurance services. In January 2022, the Company combined its four wholly-owned banking subsidiaries into one bank, with the Bank of Castile, Mahopac Bank, and VIST Bank merging with and into Tompkins Trust Company (the "Trust Company") with the Trust Company as the surviving institution. Immediately following the merger, the Trust Company changed its name to Tompkins Community Bank.management. At December 31, 2024,2025, the Company had one wholly-owned banking subsidiary, Tompkins Community Bank, and one wholly-owned insurance agency subsidiary, Tompkins Insurance andBank. Tompkins Financial Advisors, a division of Tompkins Community Bank, which providedprovides a full array of investment services, including investment management, trust and estate, financial and tax planning services. The Company’s principal offices are located at 118 E. Seneca Street, 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."

This Annual Report on Form 10-K 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 termsterms, and other similar words. Examples of forward-looking statements may include statements regarding the asset quality of the Company's loan portfolios; the level of the Company's allowance for credit losses; the sufficiency of collateral to cover exposure related to special mention and substandard loans; the sufficiency of liquidity sources; expectations regarding securities revenue in future periods; 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 expected increases in interest income attributable to recent sales of available-for-sale debt securities; the impact of changes in accounting standards; and trends, plans, prospects, growth and strategies.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,1A of this Report on Form 10-K, 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; 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; increasedchanges in supervisory and regulatory scrutiny of financial institutions; technological developments and changes; cybersecurity incidents and threats; the ability to continue to introduce competitive 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 thecontinuing waror increasing hostilities in Israelthe andMiddle surrounding regionsEast and the war in Ukraine), tariffs and trade wars, widespread protests, civil unrest, political uncertainty, and pandemics or other public health crises.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.

The Company's significant accounting policies conform with GAAP and are described in "Note 1 - Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements included in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K..10-K. 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 includewas the following:

Excluding the impact of the sale of TIA and realized losses on the sales of investment securities, adjusted net income, a non-GAAP financial measure, was $70.8$90.4 million for the year ended December 31, 2024,2025, up $8.4$19.6 million, or 13.5%,27.7%, when compared to the prior year. Earnings per diluted share, adjusted to exclude the impact of the sale of TIA and realized losses on sales of investment securities (“adjusted diluted earnings per share”), also a non-GAAP financial measure, of $4.96$6.31 for the year ended December 31, 2024,2025, increased $0.60$1.35 or 13.8%27.2% compared to the prior year. Reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures are presented in the "Non-GAAP Disclosure" on page 53.49.

In addition to earnings per share, key performance measurements for the Company include return on average shareholders’ equity (ROE) and return on average assets (ROA). ROE was 20.61% in 2025, compared to 10.33% in 2024, compared to 1.50% in 2023, while ROA was 1.96% in 2025 and 0.90% in 20242024. Tompkins’ 2025 ROE and 0.12% in 2023. Tompkins’ 2024 ROEROA compared favorably with a peer ratio of 9.67%,10.64%, whileand ROA1.09%, trailed by 3 basis points when compared to peer ROA of 0.93%.respectively. The peer group data presented here and elsewhere in this Annual Report on Form 10-K is derived from the FRB's "Bank Holding Company Performance Report", which covers banks and bank holding companies with assets between $3.0 billion and $10.0 billion as of September 30, 20242025 (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 period numbers. ROAROE and ROEROA adjusted to exclude the impact of the sale of TIA and realized losses on sales of investment securities ("adjusted ROAROE" and "adjusted ROEROA", which are non-GAAP financial measures), were 0.90%11.56% and 10.33%1.10% for the year ended December 31, 2024,2025, compared to 0.82%10.33% and 9.83%0.90% for the year ended December 31, 2023.2024. Reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures are presented in "Non-GAAP Disclosure" on page 53.49.

ThePrior to October 31, 2025, the Company operatesoperated in three business segments: banking, insurance and wealth management. Following the sale of TIA on October 31, 2025, the Company operates in two business segments: banking and wealth management. Insurance iswas comprised of property and casualty insurance services and employee benefit consulting operated under the Tompkins Insurance subsidiary. 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 Community Bank. All other activities are considered banking. For additional financial information on the Company’s segments, refer to "Note 2122 - Segment and Related Information" in the Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K. The Company adopted ASU No. 2023-07, "Segment Reporting: Improvements to Reportable Segment Disclosures", effective for the Company for fiscal years beginning after December 15, 2024.

The banking segment reported net income of $59.2$149.5 million for the year ended December 31, 2024,2025, up $59.2$90.3 million compared to net income of $74,000$59.2 million for 2023.2024. ResultsNet income for 20232025 included anthe after-taxgain lossand of $52.9 millionexpenses related to the sale of $510.5TIA and pre-tax losses of $78.7 million from the sale of available-for-sale debt securities. Earnings performance in 20242025 also benefited from increased net interest income, growthdriven by increased loan volume, increases in fee-basedaverage businessesasset yields and lower operatingaverage expensesfunding costs compared to 2023.2024.

The provision for credit loss expense was $6.6$11.5 million in 2024,2025, compared to a provision expense of $4.3$6.6 million in the prior year. The increase in the provision for credit losses in 20242025 over 20232024 was mainly driven by loan growth, an increase in net loan charge-offs, loan growth, and model assumption updates. The ratio of the allowance to total loans at December 31, 20242025 was 0.94%,0.89%, updown from 0.92%0.94% at December 31, 2023.2024. For additional information, see the section titled "The Allowance for Credit Losses" below.

Noninterest income of $30.0$141.2 million in 20242025 increased $73.7$111.2 million or 168.7%370.8% compared to 2023.2024. Noninterest income in 2023 included a$188.2 million related to the sale of TIA, partially offset by pre-tax losslosses of $70.0$78.7 million onfrom repositioning of the sales of available-for-sale debt securities in the second and third quarters of 2023.portfolio. The increase in 20242025 compared to 20232024 also included growtha $1.1 million increase in gains on sales of residential loans, which was partially offset by a $550,000 decrease in card services income, service charges on deposit accounts and other income. For the year ended December 31, 2024,2025, derivative income increasedrelated to customer swap arrangements decreased by $1.3 million$818,000 or 266.9% due46.0% mainly to fees collected from new customer interest rate swap arrangements, and bank owned life insurance earnings increased by $1.0 million or 60.3% over 2023 due to a $504,000 adjustment on BOLI policies surrendereddecrease in the previous year and settledvolume in 2025 compared to 2024.

The wealth management segment reported net income of $3.8$3.5 million for the year ended December 31, 2024,2025, ana increasedecrease of $906,000$310,000 or 31.5%8.2% compared to 2023.2024. Revenue of $20.5$21.4 million increasedwas $2.2up million$945,000 or 12.2%4.6% compared to 2023,2024. mainlyThe asincrease reflects a result of higher averagenon-recurring assets under management, favorable market conditions and gains of $558,000gain on the sale of certain customer accounts.accounts, with $921,000 recognized in 2025 compared to $558,000 in the prior year, as well as growth in advisory fee revenue driven by market appreciation and a more favorable business mix. Noninterest expensesexpense increasedof $16.8 million was up by $1.0$1.4 million or 7.1%8.8% compared to 2023.2024. The increase was mainly driven by salaries and employee benefits, up $809,000 or 8.0%, and technologyintercompany expenseservice relatedcharges, up $431,000 or 19.8% compared to the core wealth platform.2024. The fair value of assets under management or in custody at December 31, 20242025 totaled $3.1$3.0 billion, representing a decrease of $27.5$122.9 million or 0.9%4.0% compared to $3.1 billion at year-end 2023.2024. While thenew business production and market performance was favorable for the yearyear, was favorable, increases inoverall asset values weredeclined offsetdue byto salesthe non-recurring sale of certain customer accounts totaling about$188.5 $115.0million million.in assets, consisting largely of lower-yielding brokerage relationships sold, and additional low-yielding custody asset outflows.

Net interest income is the Company’s largest source of revenue, representing 55.9% of total revenues for the year ended December 31, 2025, and 70.6% of total revenues for the year ended December 31, 2024, and 95.3% of total revenues for the year ended December 31, 2023.2024. The decrease in the ratio of net interest income to revenuestotal revenue in 20242025 was largely driven by athe pre-tax gain of $188.2 million related to the sale of TIA, partially offset by the pre-tax loss of $70.0$78.7 million on the salessale of available-for-sale debt securities duringin 2023.the fourth quarter 2025, both of which are reported in noninterest income. Net interest income is dependent on the volume and composition of interest earning assets and interest-bearing liabilities and the level of market interest rates. Table 1 – Average Statements of Condition and Net Interest Analysis shows average interest-earning assets and interest-bearing liabilities, and the corresponding yield or cost associated with each.

Net interest income of $211.1$249.7 million for 20242025 increased by $1.6$38.6 million or 0.8%18.3% fromover 2023.2024. The slight increase was primarily due to increases in both average loan balances and average loan yields, largelyalong offsetwith by higherlower average funding costs in 20242025 compared to 2023.2024.

Net interest margin for 20242025 was 2.79%,3.17%, compared to 2.84%2.79% for 2023.2024. The decreaseincrease in net interest margin for the year ended December 31, 20242025 compared to the year ended December 31, 20232024 was primarily due to increasesincreased in the average rates paidyields on interest-bearinginterest liabilities outpacing increases on interest-earningearning assets yieldscoupled duewith tolower thefunding highercosts interestresulting ratefrom environment,improved asfunding well as increases in higher rate average other borrowings.mix.

The netNet interest margin was 2.93%3.42% for the fourth quarter of 2024,2025, up 1422 basis points when compared to the immediate prior quarter, and up 1149 basis points from 2.82%2.93% for the fourth quarter of 2023.2024. The increase in net interest margin, when compared to the most recent prior quarter, was mainlyprimarily due to securities purchased in the fourth quarter of 2025 yielding higher interest rates compared to securities sold during the same period in 2025, and lower funding costs resultingas froma growthresult inof averagelower depositsrates and lowerimproved marketfunding rates.mix. The increase in net interest margin when compared to the same period prior year was mainly a result of higher yields on average interest earning assets and higher average loan balances, andcoupled waswith partially offset by higherlower average funding costs.

Interest income increased $50.2$34.5 million or 16.9%9.9% in 20242025 fromover 2023,2024, driven by an increase in average interest-earning assets as well as higher interest earninginterest-earning asset yields due to the higher interest rate environment.yields. Average interest-earning assets for the year ended December 31, 2024,2025, increased $190.7$317.8 million, or 2.6%,4.2%, compared to 2023.2024, Theprimarily growthdue to an increase in average interest-earning assets was mainly in average loans, partially offset by a decrease in average securities.loans. For the year ended December 31, 2024,2025, the average yield on interest-earning assets increased 5625 basis points over 2023.2024.

Interest income on loans for the year ended December 31, 2024,2025, was up $41.5$32.6 million, or 15.9%10.8% compared to 2023,2024, driven by higher average balances and higher average yields. Average loans and leases increased $410.9$409.4 million or 7.7%7.1% in 20242025 compared to 2023,2024, and represented 75.9%78.0% of average earning assets in 20242025 compared to 72.3%75.9% in 2023. The increase was largely driven by growth in the commercial real estate and commercial and industrial portfolios.2024. The average yield on loans for the year ended December 31, 2024,2025, of 5.25%,5.43%, was up 3718 basis points fromover 2023. The increase in average loan yields was a result of market-related increases in interest rates on new loans, a significant increase in variable and adjustable rate loan yields driven by rising market interest rates, including the prime rate, and an increase in new loan originations.2024.

Interest income on securities, excluding dividends on FHLB stock, for the year ended December 31, 2024,2025, was up $7.1$2.5 million or 20.6%6.0% as compared to 2023,2024, as higher average yields more than offset lower average balances. The average yield on total securities for the year ended December 31, 2024,2025, increased 6227 basis points, while average balances for securities decreased $234.3$89.1 million, or 11.6%,5.0%, from 2023.2024. The increase in average securities yields was driven by market interest rate increases and the repositioning of the investment portfolio through the sale of approximately $510.5$564.2 million of available-for-sale investment securities in the secondfourth and third quartersquarter of 2023.2025. The securities sold had an average yield of 0.86%,1.56%, while the proceeds of the sale were largely reinvested into securities with an average estimated average yield of approximately 5.09%.4.52%. InThe 2024,weighted theaverage Company used the majoritylife of cash flow from the securities portfoliopurchased toand supportsold loanwas growth.approximately 5.5 years.

Interest expense for 20242025 increaseddecreased $48.6$4.1 million or 55.4%3.0% compared to 2023,2024, driven mainly by the increasedecrease in average rates paid on interest-bearing liabilities and improved funding mix, withas andeposit increasegrowth contributed to a decrease in average borrowings and average time deposits.borrowings. The average cost of interest-bearing deposits was 2.27%2.23% in 2024,2025, ana increasedecrease of 694 basis points from 1.58%2.27% in 2023,2024, while the average cost of interest-bearing liabilities increaseddecreased to 2.41% in 2025 from 2.60% in 2024 from 1.79% in 2023.2024.

Average interest bearinginterest-bearing deposits in 20242025 increased $80.0$371.0 million or 1.8%8.1% compared to 2023,2024, with average time deposits up $223.8$207.8 million or 28.2%20.4% and average interest-bearing checking, savings and money market deposits downup $143.8$163.2 million or 3.9%.4.6%. The growth in average time deposits included an increase in average brokered deposits of $79.3 million over prior year. Average noninterest bearing deposit balances in 20242025 decreasedincreased $156.8$13.1 million or 7.9%0.7% versus 20232024 and represented 28.7%27.2% of average total deposits in 20242025 compared to 30.8%28.7% in 2023.2024.

Average other borrowings increaseddecreased by $275.2$131.9 million or 75.7%20.7% in 20242025 fromcompared 2023.to 2024. The average rate paid on other borrowings for the year ended December 31, 2024,2025, was updown 4175 basis points over 2023. The increase in the cost of average borrowings was primarily the result of the greater utilization of comparatively higher rate overnight borrowingscompared to support loan growth.2024.

Changes in net interest income occur from a combination of changes in the volume of interest-earning assets and interest-bearing liabilities, and in the rate of interest earned or paid on them. The above table illustrates changes in interest income and interest expense attributable to changes in volume (change in average balance multiplied by prior year rate), changes in rate (change in rate multiplied by prior year volume), and the net change in net interest income. The net change attributable to the combined impact of volume and rate has been allocated to each in proportion to the absolute dollar amounts of the change. In 2024,2025, net interest income increased by $1.7$38.6 million, resulting from a $50.3$34.6 million increase in interest income, partiallyas offsetwell byas a $48.6$4.1 million increasedecrease in interest expense. The increase in interest income largely reflects increases in average loan balances and average loan and securities yields. The increasedecrease in interest expense reflects higherlower rates paid on interest-bearing liabilities, both deposits and other borrowings, andaccompanied increasesby inlower average other borrowings.

The provision for credit loss expense represents management’s estimate of the expense necessary to maintain the allowance for credit losses at an appropriate level. The ratioallowance for credit losses represented 0.89% of allowance to total loans and leases increasedat toDecember 31, 2025, from 0.94% at December 31, 2024 from 0.92% at December 31, 2023.2024. The increasedecrease in the ratio of allowance to total loans from year-end December 31, 20232024 was mainly a result of changes in qualitative factors relatingdue to loan growth and asset quality, model assumptions changes, and updates toupdated economic forecasts for unemployment and gross domestic product.product, Theas increasewell inas allowanceimproved forasset credit losses was partially offset by lower off-balance sheet reserves due to model changes related to utilization rates and a decrease in loan pipeline.quality. The provision for credit loss expense was $6.6$11.5 million in 2024,2025, compared to provision expense of $4.3$6.6 million in 2023.2024. The increase was mainly driven by a charge-off of $4.7 million in the second quarter of 2025 on a commercial real estate relationship totaling $18.1 million, and a charge-off of $2.4 million in the fourth quarter of 2025 on a commercial real estate relationship totaling $7.4 million. At the time of the charge-offs these commercial real estate relationships had specific reserves of $4.2 million and $1.6 million, respectively. The provision for credit losses for 20242025 included a provision credit of $807,000$30,000 related to off-balance sheet credit exposures compared to a provision credit of $526,000$807,000 for 2023.2024. The section captioned "Financial Condition – The Allowance for Credit Losses" below has further details on the allowance for credit losses and asset quality metrics.

Wealth management fees of $19.6$20.1 million in 20242025 increased $1.6 million$526,000 or 9.1%2.7% compared to 2023,2024, reflecting favorable market conditions, and an increase in average assets under management.appreciation. Wealth management fees include fees from 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$3.0 billion at December 31, 2024,2025, a decrease of $27.5$122.9 million or 0.9%4.0% from $3.1 billion at December 31, 2023.2024. While thenew business production and market performance for the year was favorable, the increases intotal asset valueslevels weredeclined offsetdue byto salesthe non‑recurring sale of certain customer accounts.accounts, consisting largely of lower-yielding brokerage relationships sold following the termination of our LPL relationship, and additional low-yielding custody outflows.

Service charges on deposit accounts of $7.3 million increased $375,000 or 5.4% in 20242025 were flat compared to 2023.2024. TheA increase was primarilydecrease in net overdraft fees andwas mainly offset by increases in service fees on personal and business accounts, reflective of increased transaction activity, resulting in part from newmarketing initiatives in 2024.2025.

Card services income increaseddecreased $569,000$555,000 or 5.0%4.6% in 20242025 overcompared 2023.to 2024. The primary components of card services income are fees related to interchange income and transaction fees for debit card transactions, credit card transactionstransactions, and ATM usage. The increasedecrease inwas 2024partially includedrelated to a $255,000 sign-on bonus related to the renewal of a card services contract.contract in 2024, accompanied by decreases in interchange rates from NYCE income.

Noninterest expense for the year ended 20242025 of $199.6$210.2 million,million decreasedincreased $3.7$10.6 million, or 1.8%5.3% compared to 2023.2024. The decreaseincrease in noninterest expense in 20242025 over 20232024 was mainly driven by lowerhigher salaries and wages and other expenses (technology, marketing, professional fees, retirementmarketing, planaudit expense,and examinations, and travel and meeting expensemeetings), partially offset by higher FDIC insurance expense..

Expenses associated with salaries and wages and employee benefits are the largest component of total noninterest expense. In 2024,2025, thesethe expenses increased $3.1$7.4 million or 2.5%7.3% increase in salaries and wages expense compared to 2023.2024 Salarieswas andmainly wagesattributable increasedto $3.8$4.3 million or 3.9% in 2024expense overrelated to the priorsale year,of drivenTIA mainlyas bywell as annual merit pay increases and incentive related accruals.adjustments. The number of employees as measured by average full time equivalents (FTEs) for 20242025 werewas 966,960, compared to 1,014966 for 2023. Other employee benefits decreased $672,000 or 2.5% over 2023, mainly in health insurance, which was down $880,000 or 7.7% in 2024 over 2023.2024.

Other operating expenses of $45.5$54.0 million decreasedincreased by $6.5$2.8 million or 12.5%5.4% compared to 2023,2024, including decreasesincreases in technology, down $1.3 million; marketing, downup $1.2 million$905,000; professional fees, downup $1.0$2.9 million; retirement plan expense, down $709,000; and travel and meeting expense, downup $667,000.$401,000. Partially offsetting these decreases, FDIC insurance expenseincreases was upa $1.4$1.6 million ordecrease 32.5%in year-over-year.certain post-retirement benefit expenses year-over-year, which was partially the result of curtailment gains of $916,000 related to certain benefit plans in connection with sale of TIA recognized in 2025.

Net income attributable to noncontrolling interests representsrepresented the portion of net income in consolidated majority-owned subsidiaries that is attributable to the minority owners of a subsidiary. The Company had net income attributable to noncontrolling interests of $123,000 in 2024, in line with 2023. The noncontrolling interests relaterelated to three real estate investment trusts ("REIT"), which were substantially owned by the Company,Company through the fourth quarter of 2024. In the fourth quarter of 2024, the Company's bank subsidiary approved the dissolution of the three REITs effective as discussedof belowDecember under31, "Income Tax Expense".2024.

The provision for income taxes provides for Federal, New York State, Pennsylvania and other miscellaneous state income taxes. The 20242025 provision was $22.0$63.8 million, which increased $19.5$41.8 million or 781.9%189.9% compared to the 20232024 provision. The increase in income tax expense between comparable periods reflects an increase in pre-tax income, as the prior year reflected realized losses on the sale of certain available-for-sale debt securities. The effective tax rate for the Company was 23.7%28.4% in 2024,2025, up from 20.8%23.7% in 2023. Contributing to the increase in the effective tax rate in 2024 was the loss of certain New York State tax benefits related to the Company's REIT subsidiaries, discussed below.2024. The effective rates for 20242025 and 20232024 differed from the U.S. statutory rate of 21.0% during those periods due to the effect of state taxes, tax-exempt income from loans, securities, and life insurance assets, investments in tax credits, and excesscompensation related adjustments. In addition, the effective tax benefitsrate in 2025 was impacted by the sale of stock-basedTIA compensation.which resulted in a significant increase to pre-tax income and an adjustment for goodwill with no tax-basis. A reconciliation from the statutory rate to the effective tax rate is provided in "Note 15 - Income Taxes" in the Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K.

Total assets were $8.1$8.7 billion at December 31, 2024,2025, up by 3.7%$559.2 million or $289.3 million6.9% from the previous year end. TotalThe increase over prior year end was mainly in loans increased $414.0 million or 7.4% from year-end 2023, while totaland securities decreasedand supported by $185.1deposit million or 10.7%. Total deposits at year-end 2024 increased $72.0 million or 1.1% from year-end 2023, while total borrowings increased $188.1 million or 31.3%.growth.

As of December 31, 2024,2025, total securities comprised 19.1%19.6% of total assets, compared to 22.1%19.1% of total assets at year-end 2023.2024. Securities decreasedincreased $185.1$150.6 million or 10.7%9.8% at December 31, 2024,2025, compared to December 31, 2023. Contributing to the decrease in securities from year-end 2023 was mainly maturities and principal payments on available-for-sale debt securities and, to a much lesser extent, sales of available-for-sale debt securities. These decreases were partially offset by securities purchases in 2024. A more detailed discussion of the securities portfolio is provided below in this section under the caption "Securities".

Total deposits at year-end 20242025 increased by $72.0$466.0 million or 1.1%7.2% compared to December 31, 2023.2024. AtContributing Decemberto 31,the 2024increase, time deposit balances increased $70.4by $230.0 million or 7.1%,21.5%; checking, savings and money market accounts increased by $74.1$183.5 million or 2.1%,5.2%; and noninterest bearing deposits decreasedincreased by $72.5$52.5 million or 3.8%, when compared to December 31, 2023.2.8%. Other borrowings, consisting mainly of short-term advances with the FHLB, increaseddecreased $188.1$225.8 million or 31.3%28.6% from December 31, 2023.2024. A more detailed discussion of deposits and borrowings is provided below in this section under the caption "Deposits and Other Liabilities".

The Consolidated Statements of Changes in Shareholders’ Equity included in the Consolidated Financial Statements of the Company contained in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K, detail changes in equity capital over prior year end. Total shareholders’ equity increased $43.5$224.9 million or 6.5%31.5% to $713.4$938.4 million at December 31, 2024,2025, from $669.9 million at December 31, 2023. Additional paid-in capital increased by $2.9 million, from $297.2 million at December 31, 2023, to $300.1$713.4 million at December 31, 2024. The $2.9 million increase includedmainly $3.9reflects millionnet attributedincome toof $161.1 million, a decrease in accumulated other comprehensive loss of $99.4 million, and stock-based compensation expense,of $3.0 million, partially offset by $1.2common stock dividends of $36.1 million ofand restrictedcommon stock activity. Retained earnings increased by $35.6 million, reflecting net incomerepurchased of $70.9$1.6 million, less dividends paid of $35.1 million for the year-ended December 31, 2024.million.

Accumulated other comprehensive loss decreased from $208.7$118.5 million at December 31, 20222024 to $125.0$19.1 million at December 31, 2023,2025, reflecting a $79.3$94.7 million decreaseincrease in unrealized losses on available-for-sale debt securities due to market interest rates and thea aforementioned $70.0$4.7 million pre-tax loss on available-for-sale debt securities sales, and $4.4 milliondecrease related to employee post-retirement benefit plans. The decrease in unrealized losses on available-for-sale securities was mainly a result of the sale of $564.2 million of available-for-sale securities at pre-tax loss of $78.7 million during the fourth quarter of 2025 as well as changes in market interest rates.

On July 20, 2023, the Company’s Board of Directors authorized a replacement share repurchase plan (the “2023 Repurchase Plan”) under which the Company maycould 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 theThe 2023 Repurchase Plan in open market transactions at prevailing market prices, in privately negotiated transactions, orexpired by otherits meansterms inon accordanceJuly with20, federal2025. securitiesThe laws,Company anddid thenot repurchase program may be suspended, modified or terminated by the Board of Directors at any time for any reason. As of December 31, 2024, there have been no shares repurchased under the 2023 Repurchase Plan.

The Company classifies its securities at date of purchase as available-for-sale, held-to-maturity or trading. SecuritiesMost of the securities held by the Company are generally classified as available-for-sale. Securities available-for-sale may be used to enhance total return, provide additional liquidity, or reduce interest rate risk. Securities in the held-to-maturity portfolio would consist of obligations of the U.S. Government, U.S. Government sponsored entities and obligations of state and political subdivisions. Securities in the trading portfolio would reflect those securities that the Company elects to account for at fair value, with the adoption of ASC Topic 825, Financial Instruments.

The Company’s total securities portfolio at December 31, 20242025 was $1.5$1.7 billion, compared to $1.7$1.5 billion at December 31, 2023.2024. The table below shows the composition of the available-for-sale and held-to-maturity debt securities portfolios as of year-end 2024,2025, 20232024 and 2022.2023. The decreaseincrease in securities from year-end 20232024 was mainlylargely adriven resultby $812.6 million of $198.4securities purchases during 2025 which were partially offset by $564.2 million of sales of available-for-sale debt securities and $228.0 million of payments, maturities and calls onduring available-for-salethe debt securities, and $39.9 million of sales of available-for-sale debt securities, partially offset by $55.9 million of securities purchases.year. Unrealized losses on the available-for-sale debt securities portfolio were $9.3 million at year-end 2025, down from $135.6 million at year-end 2024, up from $131.8 million at year-end 2023.2024. The increasesale of securities and market conditions contributed to the decrease in unrealized losses at yearyear-end end2025 2024 overfrom prior year end was primarily attributable to market conditions.end.

There have been no material changes in the risk factors previously disclosed under Item 1A. ofin the Company’sCompany's Annual Report on Form 10-K, for the fiscal year ended December 31, 2025.

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 MarchJune 31,30, 2026, the Company had one wholly-owned banking subsidiary, Tompkins Community Bank.Bank, which changed its name to Tompkins CommunityBank & Trust 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."

The Company operates in two segments, banking and wealth management. Banking services consist primarily of attracting deposits from the areas served by Tompkins CommunityBank 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.

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 CommunityBank 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 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.

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 six months ended MarchJune 31,30, 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 200207 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 DecemberMarch 31, 20252026 (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.

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 "Financial Condition - Allowance for Credit Losses" below,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, 2025.2025, 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.

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 iswas 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 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.

Net income for the firstsecond quarter of 2026 was $26.1$29.3 millionmillion, or $1.82$2.04 diluted earnings per share, compared to $19.7$21.5 millionmillion, or $1.37$1.50 diluted earnings per share for the second quarter of 2025. Net income for the six months ended June 30, 2026 was $55.4 million, or $3.86 diluted earnings per share, compared to $41.2 million, or $2.87 diluted earnings per share for the same period in 2025. The increase in net income fromand diluted earnings per share for the firstthree quarterand ofsix months ended June 30, 2026 compared to the same periods in 2025 waslargely mainlyreflects aincreases resultin of higherour net interest income,margin drivenas bywell increasedas interestcontinued incomeloan on loans and securities and lower funding costs; lower provision expense; and lower noninterest expenses.growth.

Return on average assets ("ROA") for the quarter ended MarchJune 31,30, 2026 was 1.23%,1.36%, compared to 0.99%1.05% for the quarter ended MarchJune 31,30, 2025. Return on average shareholders’ equity ("ROE") for the firstsecond quarter of 2026 was 11.11%,12.32%, compared to 10.96%11.48% for the second quarter of 2025. For the year-to-date period ended June 30, 2026, ROA and ROE totaled 1.30% and 11.72%, respectively, compared to 1.02% and 11.23%, for the same periodperiods in 2025.

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 CommunityBank 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.

NoninterestThe banking segment reported net income of $6.5$28.4 million for the threesecond quarter of 2026, an increase of $9.7 million, or 52.0%, compared to $18.7 million for the second quarter of 2025. For the six months ended MarchJune 31,30, 20262026, wasthe downbanking $2.2segment millionreported net income of $53.6 million, up $19.2 million, or 25.2%55.8%, compared tofrom the same period in 2025. The decreaseincrease in noninterestnet income for the three and six months ended MarchJune 31,30, 2026 compared to the same periodperiods in 2025 was mainly attributabledue to aan gain on the sale of other real estate owned ("OREO") of $1.9 million recordedincrease in thenet priorinterest period.income.

Noninterest expense of $43.6$42.9 million for the firstthree quartermonths ended June 30, 2026, increased by $2.5 million or 6.2% compared to the same period in 2025. For the six months ended June 30, 2026 noninterest expense of 2026$86.5 million was up $3.9$6.4 millionmillion, or 9.8%8.0% fromcompared to the same period in 2025. The increaseincreases wasin noninterest expense across both periods were primarily driven primarily by higher salaries and employee benefits, which increased $2.7 million, along with higher technologytechnology, and furniture,net fixtures,occupancy andexpense equipmentof expenses.premises.

The wealth management segment reported net income of $914,000$899,000 for the three months ended MarchJune 31,30, 2026, which was updown $93,000$257,000 or 11.3%22.2% compared to the firstsecond quarter of 2025. For the six months ended June 30, 2026, net income of $1.8 million was down $165,000, or 8.3%, compared to the same period in the prior year. The increasedecrease in net income for the three monthand periodsix months ended MarchJune 31,30, 2026,2026 compared to the sameprior periodyear periods was primarily due to gains on the sale of certain customer accounts recorded in the second quarter of 2025, wascombined mainly attributable towith an increase in asset-basednoninterest advisoryexpenses, revenue. Noninterest expense for the first quarter of 2026 wasmainly in linetechnology withand theintercompany sameservice period prior year.allocations.

Average 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 each of the three and six month periods ended MarchJune 31,30, 2026, December 31, 2025,2026 and 2025 and the three months ended March 31, 20252026:

Net interest income is the Company’s largest source of revenue, representing 85.9% of total revenues for the three months ended March 31, 2026, compared to 69.4% for the same period in 2025. Net interest incomeand is dependent on the volume and composition of interest-earninginterest earning assets and interest-bearing liabilities and the level of market interest rates. The above tabletables showsshow average interest-earning assets and interest-bearing liabilities, and the corresponding yield or cost associated with each, for the periods indicated.each.

Net interest income was $74.0 million and $145.8 million, respectively, for the three and six months ended MarchJune 31,30, 2026 of $71.9 million was2026, up $15.2$13.9 millionmillion, or 26.8%23.0%, and $29.1 million, or 24.9%, respectively, from the same periodperiods 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. The average yield on interest-earning assets for the three months ended March 31, 2026 was up 40 basis points over the same period in 2025, while the average cost of interest-bearing liabilities was down 23 basis points over the same period.

Net interest margin for the three months ended MarchJune 31,30, 2026 was 3.57%3.58% compared to 3.42%3.08% for the mostsame recentperiod priorin quarter,2025. andNet 2.98%interest margin for the firstsix quartermonths ofended June 30, 2026 was 3.58% compared to 3.03% for the same period in 2025. The increase in net interest margin overfor the priorthree and six months ended June 30, 2026 compared to the same periods in 2025 reflects growth in average loan balances, improved yields on average earnings assets, and lower funding costs.

Interest income for the three and six months ended MarchJune 31,30, 2026 was $102.7$105.9 million and $208.6 million, up $13.213.1% millionand or13.9%, 14.8%respectively, compared to the same periodperiods in 2025. The increase in interest income was mainly in interest and fees on loans, whichand interest on securities. Interest and fees on loans were up $8.5$7.8 million or 10.8%, driven by higher yields9.5% and higher$16.3 averagemillion balancesor for10.1% therespectively, three months ended March 31, 2026, compared tofrom the same periodperiods in 2025. Average loan balances for the firstthree quarterand ofsix months ended June 30, 2026 were up $409.5$395.7 million or 6.8%6.5% and $402.6 million or 6.6% respectively, from the firstsame quarterperiods of 2025, while the 5.50% average yield on loans for the first quarter of 2026 was up 19 basis points from the average yield on loans for the first quarter ofin 2025.

Interest income on securities, excluding dividends on FHLB stock, for the three and six months ended MarchJune 31,30, 2026, was up $5.0$4.6 million or 50.0%43.6% asand compared$9.6 tomillion or 46.7% respectively, over the same periodperiods in 2025. AverageThe average yield on total securities for the firstthree quarterand ofsix 2026months ended June 30, 2026, was up 113101 and 107 basis pointspoints, respectively, over the firstsame quarterperiods ofin 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 for securities for the firstthree quarterand ofsix months ended June 30, 2026 increased $33.3$35.5 million, or 2.1%, and $34.4 million, or 2.0%, overrespectively, from the same periodperiods in 2025.

Interest expense for the three and six months ended MarchJune 31,30, 2026 decreased by$1.6 $2.0million, or 4.7%, and $3.6 million or 6.1%5.4%, respectively, compared to the same periodperiods 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. TheFor the three and six months ended June 30, 2026, the average cost of interest-bearing liabilities for the first quarter of 2026 was 2.21%,down a decrease of 2320 basis points and 21 basis points, respectively, from the firstsame quarterperiods ofin 2025, aswhile aaverage resultinterest-bearing ofliabilities lowerwere marketup interest$222.6 ratesmillion or 4.1% and improved$207.7 fundingmillion mix,or as3.8%, deposit growth contributed to a decrease in average borrowings.respectively.

Average other borrowings for the three and six months ended MarchJune 31,30, 2026 were down $70.7 million$517,000 or 12.6%0.1%, and $35.4 million, or 6.4%, respectively, compared to the same periodperiods in 2025. The average rate paid on other borrowings for the firstthree quarterand ofsix months ended June 30, 2026 was down 4643 basis points and 45 basis points, respectively, from the same periodperiods in 2025.

Noninterest income wasof $11.8$13.1 million for the first quarter of 2026, down $13.2 million or 52.7% compared to the first quarter of 2025. Noninterest income represented 14.1% of total revenue for the three months ended MarchJune 31,30, 2026, comparedwas todown 30.6%$9.4 million or 41.7% from the second quarter of 2025, and noninterest income of $25.0 million for the six months ended June 30, 2026, was down $22.6 million, or 47.5%, from the same period in 2025.the prior year. The decrease was mainly in insurance commissions and fees and reflects the sale of the Company's insurance subsidiary, TIA, in October 2025. Insurance revenues were $11.6$9.6 million inand $21.2 million for the firstthree quarterand ofsix months, respectively, ended June 30, 2025.

Wealth management fees forof $5.2 million in the firstsecond quarter of 2026 were up $147,000$265,000 or 2.9%5.3% over the firstsecond quarter of 2025,2025. drivenFor bythe anfirst increasesix months of 2026, wealth management fees were up $412,000, or 4.1% compared to the same period in advisory assets under management.2025. Wealth management fees include trust services, financial planning, wealth management services, and brokerage related services and are generally based on the market value of assets within an account and are thus impacted by volatility in equity and bond markets.services. The fair value of assets managed by, or in custody of, Tompkins was $2.9 billion at March 31, 2026, down from $3.1 billion at MarchJune 31,30, 2026, up $261.7 million or 9.2% from June 30, 2025.

Other income of $2.1$2.8 million in the firstsecond quarter of 2026 was down $1.7$201,000, or 6.7%, compared to the same period in 2025. For the first six months of 2026, other income of $4.9 million was down $1.9 million, or 44.8%28.2%, compared to the same period in 2025. The decrease infor the firstthree quartermonths ofended June 30, 2026 compared to the same period in 2025 was driven by a $236,000 reduction in BOLI income. The decrease for the six months ended June 30, 2026 compared to the same period in 2025 was driven by a $1.9 million gain on the sale of other real estate owned in 2025.

Noninterest expense of $47.1 million for the second quarter of 2026 was $47.7down $4.6 million or 8.8% from the second quarter of 2025. Noninterest expense of $94.8 million for the first quartersix months of 2026,2026 was down $2.9$7.4 millionmillion, or 5.7%7.3%, compared to the same period in 2025. Noninterest expense as a percentage of total revenue for the first quarter of 2026 was 57.0% compared to 61.9% for the same period in 2025. The decrease mainlyin reflectsnoninterest expense for both periods was primarily attributable to the sale of the Company's insurance subsidiary, TIA,TIA in Octoberthe fourth quarter of 2025.

The provision for income taxes was $8.4$9.2 million for an effective rate of 24.4%24.0% for the firstsecond quarter of 2026, compared to a tax provision expense of $6.1$6.8 million and an effective rate of 23.7%24.0% for the same quarter in 2025. For the first six months of 2026, the provision for income taxes was $17.6 million for an effective rate of 24.2% compared to tax provision of $12.9 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 raterates 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.

Total assets were $8.7$8.8 billion at MarchJune 31,30, 2026, up $27.5$133.3 million or 0.3%1.5% from December 31, 2025. Cash and cash equivalents were up $38.6$14.9 million or 29.1%,11.3%, total loans were up $31.7$150.9 million or 0.5%,2.3%, total securities were up $6.9$11.0 million or 0.4%0.7% and loans held for sale were down $43.4 million compared to December 31, 2025. Total deposits were up $116.4$91.3 million or 1.7%,1.3%, Federal funds purchased and securities sold under agreement to repurchase were up $22.6$86.1 million or 23.6%,90.1%, and total borrowings were down $115.0$18.1 million or 20.4%3.2% from December 31, 2025.

As of March 31, 2026, theThe Company’s securities portfolio was $1.7 billion orat June 30, 2026 and December 31, 2025, representing 19.4% of total assets at June 30, 2026, compared to 19.6% of total assets,assets inat lineyear with year-endend 2025. The following tabletables detailsdetail the composition of the securities portfolio:

TheAs increaseof inJune 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 $26.8 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 andsecurities held-to-maturityportfolio debtreflects portfoliosinterest wasrate due primarily to changesvolatility in marketthe interestmarket, the volume and rates duringassociated thewith firstsecurities threepurchases, monthsand ofmaturities 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 firstsecond quarter ofor year-to-date period ending June 30, 2026.

Loans and leases as of the end of the firstsecond quarter and prior year-end were as follows:

The below table below shows a more detailed break-out of commercial real estate ("CRE") loans as of MarchJune 31,30, 2026 and December 31, 2025.2025:

Total loans and leases of $6.5$6.6 billion at MarchJune 31,30, 2026 were up $31.7$150.9 millionmillion, or 0.5%2.3%, from December 31, 2025. The increase was2025, mainly in the commercial real estate loans,and whichcommercial wereand upindustrial $19.8loan million or 0.5%, to $3.7 billion at March 31, 2026.portfolios. As of MarchJune 31,30, 2026, total loans and leases represented 74.5%75.0% 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 MarchJune 31,30, 2026, downup $2.2$16.1 million or 0.14%1.0% compared to December 31, 2025, and comprised 24.5%24.4% of total loans and leases at MarchJune 31,30, 2026. ChangesThe inCompany may sell residential real estate loan balances are impacted by the Company’s decision to retain these loans or sell them in the secondary market duebased toon interest rate considerations. The Company’sCompany'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 or negligence, and fraud. The Company has not had to repurchase any loans as a result of these representations and warranties.

During the first threesix months of 2026 and 2025, the Company sold residential real estate loans totaling $24.4$43.2 million and $11.6$34.6 million, respectively, recognizing gains on these sales of $705,000$1.5 million and $454,000,$1.0 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 $1.8$1.9 million at MarchJune 31,30, 20262026, and $1.7 million at December 31, 2025.

Commercial real estate loans and commercial and industrial loans totaled $3.7 billion and $1.1$1.2 billion, respectively, and represented 56.8%56.2% and 17.3%,18.1%, respectively, of total loans atand Marchleases 31,as of June 30, 2026. CommercialThe commercial real estate loansportfolio andwas up $47.2 million, or 1.3%, compared to December 31, 2025, while commercial and industrial loans as of March 31, 2026 were up $19.8$90.5 millionmillion, or 0.5%8.2%, andcompared $17.2to millionDecember or31, 1.6% over year-end 2025, respectively.2025.

As of MarchJune 31,30, 2026, agriculturally-related loans totaled $342.7$358.9 millionmillion, or 5.3%5.4%, of total loans and leases, compared to $348.8 millionmillion, or 5.4%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.

The Company’s loan and lease customers are located primarily in the New York and Pennsylvania communities served by its subsidiary bank. AsAlthough aoperating resultin ofnumerous its geographic concentrationcommunities 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 tables below representtable represents the allowance for credit losses as of MarchJune 31,30, 2026, December 31, 2025, and MarchJune 31,30, 2025. The tablestable provide,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.

Activity in the Company’s allowance for credit losses during the first threesix months of 2026 and 2025 is illustrated in the table below:

As of MarchJune 31,30, 2026, the allowance for credit losses was $58.1$58.5 million, up $437,000$808,000 or 0.8%1.4% compared to December 31, 2025, and downin $2.9line millionwith orthe 4.8%allowance comparedat toJune March 31,30, 2025. The allowance for credit losses as a percentage of total loans measured 0.90%0.89% at MarchJune 31,30, 2026, upunchanged compared to 0.89% reported atfrom December 31, 2025, and down from 1.01%the 0.95% reported at MarchJune 31,30, 2025. The decrease in the allowance for credit losses coverage ratio at March 31, 2026, compared to MarchJune 31,30, 2025,2025 was mainly due to lowerthe reservesimproved economic forecasts for individuallyunemployment analyzedand loans.gross Thedomestic allowance for credit losses at March 31, 2025, included a specific reserve of $4.2 million for one commercial real estate relationship totaling $18.1 million.product.