Tompkins Financial Corporation reported record earnings for the second quarter of 2026, coinciding with a sharp move higher in its share price. TMP stock rose 6.51% to $98.68 after the company posted stronger profitability, continued balance sheet expansion, higher lending activity, improved margins, and stronger capital levels.

The company said diluted earnings per share reached $2.04 in the second quarter of 2026. That figure was up 36.0% from the same period a year earlier and increased 12.1% from the first quarter of 2026.

Net income totaled $29.3 million for the quarter, representing a 36.5% increase from a year earlier and a 12.4% gain from the previous quarter. For the first six months of 2026, net income rose to $55.4 million, compared with $41.2 million in the prior-year period.

Record earnings support dividend increase

Tompkins also increased its quarterly dividend after reporting stronger earnings and capital growth. Management approved a dividend that was 13% higher than the payment made in the third quarter of 2025. The increase followed three consecutive quarters of record earnings.

Net interest income reached $74.0 million in the second quarter. The total was up 23.0% from the second quarter of 2025 and increased 3.0% from the prior quarter. For banks, net interest income is a central earnings driver because it reflects the spread between interest earned on loans and securities and interest paid on deposits and other funding.

The company’s net interest margin was 3.58%, unchanged from the first quarter of 2026. Compared with the prior year, however, the margin expanded by 50 basis points. Tompkins attributed the year-over-year improvement to higher loan yields and lower funding costs.

Average loans increased 6.5% from a year earlier during the quarter. Commercial real estate and commercial lending accounted for most of the growth. Average earning asset yields also improved compared with the same period last year.

Loan growth continues as insurance income declines

Total loans were higher at the end of June. Period-end loans rose 6.9% from June 2025 and increased 1.8% from March 2026. Annualized quarterly loan growth was 7.4%.

Average deposits also improved from a year earlier. Total average deposits rose 4.4% year over year despite seasonal municipal deposit outflows. Period-end deposits were approximately $7.0 billion.

Funding costs were stable during the quarter. The average cost of funds remained at 1.68%, while interest-bearing deposit costs declined from the prior year. Noninterest-bearing deposits continued to account for 26.9% of average deposits. Deposit mix remains important for bank profitability because noninterest-bearing balances generally provide a lower-cost funding source than interest-bearing accounts.

Noninterest income fell because of the sale of the company’s insurance business, which was completed in late 2025. Quarterly noninterest income was $13.1 million, down 41.7% from a year earlier. Wealth management, card services, and deposit fees recorded moderate increases.

Operating expenses also declined following the divestiture of the insurance unit. Noninterest expense decreased 8.8% year over year to $47.1 million. Lower salary and operating costs offset higher employee benefit expenses.

Income tax expense was $9.2 million for the quarter. The effective tax rate remained stable at 24.0%. For the first six months of 2026, tax expense increased along with stronger earnings.

Asset quality remains stable as capital ratios improve

Tompkins maintained stable credit quality during the quarter. The allowance for credit losses equaled 0.89% of total loans. Improved economic forecasts reduced reserve coverage compared with the prior year.

The provision for credit losses was unchanged from the previous quarter at $1.5 million. Net charge-offs totaled $1.6 million during the period. Earlier commercial real estate losses created a more difficult year-over-year comparison.

Nonperforming assets represented 0.60% of total assets at quarter-end. Loans past due between 30 and 89 days declined from the previous quarter. Several performing loans moved into the Special Mention classification during the period, making credit trends in the loan portfolio a relevant area to monitor in coming quarters.

Capital ratios remained well above regulatory requirements throughout the quarter. Tier 1 capital to average assets increased to 10.69%, compared with 9.36% a year earlier. Total capital to risk-weighted assets also improved, reaching 14.89%.

The company continued returning capital through share repurchases. Tompkins repurchased 11,787 shares during the second quarter and bought back 35,518 shares during the first six months of 2026.

Liquidity was stable at quarter-end despite seasonal funding changes. Available liquidity totaled $1.7 billion, equal to 19.4% of total assets. Management also maintained access to multiple wholesale funding sources to support future operations.