Tompkins Financial TMP Form 10-Q filing Q1 FY2026

Glossary of Abbreviations and Acronyms

The acronyms and abbreviations identified below are used throughout this report, including the Notes to Consolidated Financial Statements. You may find it helpful to refer to this page as you read this report. All references in the glossary to laws are to those laws as amended from time to time.

Term Definition

ACL Allowance for credit losses

AFS Available for sale

ASC Accounting Standards Codification

ASU Accounting Standards Update

BHC Act Bank Holding Company Act of 1956

BOLI Bank owned life insurance

CECL Current Expected Credit Losses

CRE Commercial real estate

DIF Deposit Insurance Fund

Dodd-Frank Act Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

ECL Expected credit losses

ESOP Employee Stock Ownership Plan

Exchange Act Securities Exchange Act of 1934

FASB Financial Accounting Standards Board

FDIC Federal Deposit Insurance Corporation

FHLB Federal Home Loan Bank

FHLBNY Federal Home Loan Bank of New York

FHLMC Federal Home Loan Mortgage Corporation

FRB Federal Reserve Board

GAAP U.S. Generally Accepted Accounting Principles

HTM Held to maturity

NYSDFS New York State Department of Financial Services

OREO Other real estate owned

PCA Prompt corrective action

PCD Purchased with credit deterioration

PCI Purchased credit impaired

ROU Right-of-use

Sarbanes-Oxley Sarbanes-Oxley Act of 2002

SBIC Small business investment companies

SEC Securities and Exchange Commission

Securities Act Securities Act of 1933

SERP Supplemental employee retirement plan

SONYMA State of New York Mortgage Agency

TDR Troubled debt restructuring

Tompkins Annual Report Tompkins Annual Report on Form 10-K for the year ended December 31, 2024

TIA Tompkins Insurance Agencies, Inc.

Tompkins or the Company Tompkins Financial Corporation

Item 1. Consolidated Statements of Condition as of March 31, 202

Item 1. Financial Statements

See notes to unaudited consolidated financial statements.

See notes to unaudited consolidated financial statements.

See notes to unaudited consolidated financial statements.

See notes to unaudited consolidated financial statements.

See notes to unaudited consolidated financial statements.

See notes to unaudited consolidated financial statements.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Business

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 financial products and services, including commercial and consumer banking, leasing, trust and investment management, and financial planning and wealth management. At March 31, 2026, the Company had one wholly-owned banking subsidiary, Tompkins Community Bank. Tompkins Community Bank provides a broad selection of trust and wealth management services under the Tompkins Financial Advisors brand, including investment management, trust and estate, and financial and tax planning services. On October 31, 2025, the Company sold all of the issued and outstanding shares of capital stock of its 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, Ithaca, New York, 14850, and its telephone number is (888) 503-5753. The Company’s common stock is traded on the NYSE American under the symbol "TMP."

As a registered financial holding company, the Company is regulated under the Bank Holding Company Act of 1956 ("BHC Act"), as amended and is subject to examination and comprehensive regulation by the Federal Reserve Board ("FRB"). The Company is also subject to the jurisdiction of the Securities and Exchange Commission ("SEC") and is subject to disclosure and regulatory requirements under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. The Company is subject to the rules of the NYSE American for listed companies.

Tompkins Community Bank is subject to examination and comprehensive regulation by various regulatory authorities, including the Federal Deposit Insurance Corporation ("FDIC"), and the New York State Department of Financial Services ("NYSDFS"). Each of these agencies issues regulations and requires the filing of reports describing the activities and financial condition of the entities under its jurisdiction. Likewise, such agencies conduct examinations on a recurring basis to evaluate the safety and soundness of the institutions, and to test compliance with various regulatory requirements, including: consumer protection, privacy, fair lending, the Community Reinvestment Act, the Bank Secrecy Act, sales of non-deposit investments, electronic data processing, and trust department activities. These agencies also examine and regulate the trust business of Tompkins Community Bank.

2. Basis of Presentation

The unaudited consolidated financial statements included in this quarterly report do not include all of the information and footnotes required by U.S. Generally Accepted Accounting Principles ("GAAP") for a full year presentation and certain disclosures have been condensed or omitted in accordance with rules and regulations of the SEC. In the application of certain accounting policies, management is required to make assumptions regarding the effect of matters that are inherently uncertain. These estimates and assumptions affect the reported amounts of certain assets, liabilities, revenues, and expenses in the unaudited consolidated financial statements. Different amounts could be reported under different conditions, or if different assumptions were used in the application of these accounting policies. The accounting policy that management considers critical in this respect is the determination of the allowance for credit losses. The Company has evaluated subsequent events for potential recognition and/or disclosure as of the date of these unaudited consolidated financial statements, and determined that no further disclosures were required.

In management’s opinion, the unaudited consolidated financial statements reflect all adjustments of a normal recurring nature. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year ended December 31, 2026. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Cash and cash equivalents in the consolidated statements of cash flow include cash and noninterest bearing balances due from banks, interest-bearing balances due from banks, and money market funds. Management regularly evaluates the credit risk associated with the counterparties to these transactions and believes that the Company is not exposed to any significant credit risk on cash and cash equivalents.

Accounting Standards Pending Adoption

ASU No. 2023-06, "Disclosure Improvements" amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification. The new guidance is intended to align GAAP requirements with those of the SEC. The ASU will become effective on the earlier of the date on which the SEC removes its related disclosure requirements

from Regulation S-X or Regulation S-K, or June 30, 2027. Early adoption is prohibited. Adoption of ASU 2023-06 is not expected to have a material impact on our consolidated financial statements.

ASU No. 2024-03, "Disaggregation of Income Statement Expenses" requires new financial statement disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense captions, including employee compensation, depreciation, and intangible asset amortization. Tompkins is required to adopt this ASU prospectively for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption and retrospective application are permitted. Tompkins is currently evaluating the potential impact of ASU 2024-03 on our consolidated financial statements.

ASU No. 2025-11, "Interim Reporting (Topic 270): Narrow-Scope Improvements" was issued to improve the guidance within Topic 270, Interim Reporting, by clarifying applicability of the requirements. This guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Tompkins is currently evaluating the potential impact of ASU 2025-11 on our consolidated financial statements.

ASU No. 2025-12, "Codification Improvements" addresses suggestions received from stakeholders on the Accounting Standards Codification and to make other incremental improvements to generally accepted accounting principles (GAAP). This ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Adoption is not expected to have a material impact on our consolidated financial statements.

The Company reviews new accounting standards as issued. Management has not identified any other new standards that it believes will have a significant impact on the Company’s financial statements.

3. Securities

Available-for-Sale Debt Securities

The following table summarizes available-for-sale debt securities held by the Company at March 31, 2026 and December 31, 2025:

Held-to-Maturity Debt Securities

The following table summarizes held-to-maturity debt securities held by the Company at March 31, 2026 and December 31, 2025:

The Company may from time to time sell debt securities from its available-for-sale portfolio. There were no sales of available-for-sale debt securities for the three months ended March 31, 2026 or the three months ended March 31, 2025. The Company's available-for-sale portfolio includes callable securities that may be called prior to maturity. There were no realized gains (losses) on called available-for-sale debt securities for the three months ended March 31, 2026 or the three months ended March 31, 2025. The Company also recognized net losses on equity securities of $5,000 for the three months ended March 31, 2026 and net gains of $14,000 for the same period during 2025, reflecting the change in fair value.

The following table summarizes available-for-sale debt securities that had unrealized losses at March 31, 2026 and December 31, 2025:

The following table summarizes held-to-maturity debt securities that had unrealized losses at March 31, 2026 and December 31, 2025:

The Company evaluates available-for-sale debt securities for expected credit losses ("ECL") in unrealized loss positions at each measurement date to determine whether the decline in the fair value below the amortized cost basis is due to credit-related factors or noncredit-related factors.

Factors that may be indicative of ECL include, but are not limited to, the following:

• Extent to which the fair value is less than the amortized cost basis.
• Adverse conditions specifically related to the security, an industry, or geographic area (changes in technology, business practice).
• Payment structure of the debt security with respect to underlying issuer or obligor.
• Failure of the issuer to make scheduled payment of principal and/or interest.
• Changes to the rating of a security or issuer by a nationally recognized statistical rating organization.
• Changes in tax or regulatory guidelines that impact a security or underlying issuer.

For available-for-sale debt securities in an unrealized loss position, the Company evaluates the securities to determine whether the decline in the fair value below the amortized cost basis is the result of changes in interest rates or reflects a fundamental change in the creditworthiness of the underlying issuer. 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 ("ACL") on the Consolidated Statements of Condition, limited to the amount by which the amortized cost basis exceeds the fair value, with a corresponding adjustment to earnings. Both the ACL and the adjustment to net income may be reversed if conditions change.

Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Management has made the accounting policy election to exclude accrued interest receivable on held-to-maturity debt securities from the estimate of credit losses. As of March 31, 2026, the held-to- maturity portfolio consisted of U.S. Treasury securities and securities issued by U.S. government-sponsored enterprises, including the Federal National Mortgage Agency and the Federal Farm Credit Banks Funding Corporation. U.S. Treasury securities are backed by the full faith and credit of and/or guaranteed by the U.S. government, and it is expected that the securities will not be settled at prices less than the amortized cost bases of the securities. Securities issued by U.S. government agencies or U.S. government-sponsored enterprises carry the explicit and/or implicit guarantee of the U.S. government, are widely recognized as "low-risk," and have a long history of zero credit loss. As such, the Company did not record an allowance for credit losses for these securities as of March 31, 2026 or December 31, 2025.

The gross unrealized losses reported for residential mortgage-backed securities relate to investment securities issued by U.S. government sponsored entities such as Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, and U.S. government agencies such as Government National Mortgage Association. The total gross unrealized losses, shown in the tables above, were primarily attributable to changes in interest rates and levels of market liquidity, relative to when the investment securities were purchased, and not due to the credit-related quality of the investment securities. The Company does

not have the intent to sell these securities and does not believe it is more likely than not that the Company will be required to sell these securities before a recovery of amortized cost.

The Company did not recognize any net credit impairment charge to earnings on investment securities in the first quarter of 2026 or the first quarter of 2025.

The amortized cost and estimated fair value of debt securities by contractual maturity are shown in the following table. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities are shown separately since they are not due at a single maturity date.

The Company also holds non-marketable Federal Home Loan Bank New York ("FHLBNY") stock and non-marketable Atlantic Community Bankers Bank ("ACBB") stock, all of which are required to be held for regulatory purposes and for borrowing availability. The required investment in Federal Home Loan Bank ("FHLB") stock is tied to the Company’s borrowing levels with the FHLB. Holdings of FHLBNY stock and ACBB stock totaled $27.1 million and $95,000, respectively, at March 31, 2026 compared to $32.2 million and $95,000, respectively, at December 31, 2025. These securities are carried at par, which is also cost. The FHLBNY continues to pay dividends and repurchase stock. Quarterly, we evaluate our investment in the FHLB for impairment. We evaluate recent and long-term operating performance, liquidity, funding and capital positions, stock repurchase history, dividend history and impact of legislative and regulatory changes. Based on our most recent evaluation, as of March 31, 2026, we determined that no impairment write-downs were required.

4. Loans and Leases

Loans and Leases at March 31, 2026 and December 31, 2025 were as follows:

The Company has adopted comprehensive lending policies, underwriting standards and loan review procedures. Management reviews these policies and procedures on a regular basis. The Company discussed its lending policies and underwriting guidelines for its various lending portfolios in Note 4 – "Loans and Leases" 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. There have been no significant changes in these policies and guidelines since the date of that report. The Company’s Board of Directors approves the lending policies at least annually. The Company recognizes that exceptions to policy guidelines may occasionally occur and has established procedures for approving exceptions to these policy guidelines. Management has also implemented reporting systems to monitor loan origination, loan quality, concentrations of credit, loan delinquencies and nonperforming loans and potential problem loans.

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments are due. Generally loans are placed on nonaccrual status if principal or interest payments become 90 days or more contractually past due and/or management deems the collectability of the principal and/or interest to be in question as well as when required by regulatory agencies. When interest accrual is discontinued, all unpaid accrued interest is reversed. Payments received on loans on nonaccrual are generally applied to reduce the principal balance of the loan. Loans are generally returned to accrual status when all the principal and interest amounts contractually due are brought current, the borrower has established a payment history, and future payments are reasonably assured. When management determines that the collection of principal in full is not probable, management will charge-off a partial amount or full amount of the loan balance. Management considers specific facts and circumstances relative to each individual credit in making such a determination. For residential and consumer loans, management uses specific regulatory guidance and thresholds for determining charge-offs.

The below tables are an age analysis of past due loans, segregated by class of loans as of March 31, 2026 and December 31, 2025:

The following tables present the amortized cost basis of loans on nonaccrual status and the amortized cost basis of loans on nonaccrual status for which there was no related allowance for credit losses. The below tables are an age analysis of nonaccrual loans segregated by class of loans, as of March 31, 2026 and December 31, 2025:

The Company recognized $0 of interest income on nonaccrual loans during the three months ended March 31, 2026.

5. Allowance for Credit Losses

Management reviews the appropriateness of the allowance for credit losses ("allowance" or "ACL") on a regular basis. Management considers the accounting policy relating to the allowance to be a critical accounting policy, given the inherent uncertainty in evaluating the levels of the allowance required to cover credit losses in the portfolio and the material effect that assumptions could have on the Company’s results of operations. The Company has developed a methodology to measure the amount of estimated credit loss exposure inherent in the loan portfolio to assure that an appropriate allowance is maintained. The Company’s methodology is based upon guidance provided in SEC Staff Accounting Bulletin No. 119, Measurement of Credit Losses on Financial Instruments ("CECL"), and Financial Instruments - Credit Losses and ASC Topic 326, Financial Instruments - Credit Losses.

The Company uses a Discounted Cash Flow ("DCF") method to estimate expected credit losses for all loan segments excluding the leasing segment. For each of these loan segments, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, recovery lag, probability of default, and loss given default. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on internal historical data.

The Company uses regression analysis of historical internal and peer data to determine suitable loss drivers to utilize when modeling lifetime probability of default and loss given default. This analysis also determines how expected probability of default and loss given default will react to forecasted levels of the loss drivers. For all loans utilizing the DCF method, management utilizes forecasts of national unemployment and a one year percentage change in national gross domestic product as loss drivers in the model.

For all DCF models, management has determined that four quarters represents a reasonable and supportable forecast period and reverts back to a historical loss rate over eight quarters on a straight-line basis. Management leverages economic projections from a reputable and independent third-party to inform its loss driver forecasts over the four-quarter forecast period. Other

internal and external indicators of economic forecasts, and scenario weightings, are also considered by management when developing the forecast metrics.

Due to the size and characteristics of the leasing portfolio, the Company uses the remaining life method, using the historical loss rate of the commercial and industrial segment, to determine the allowance for credit losses.

The combination of adjustments for credit expectations and timing expectations produces an expected cash flow stream at the instrument level. Instrument effective yield is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce a net present value of expected cash flows ("NPV"). An ACL is established for the difference between the NPV and amortized cost basis.

Since the methodology is based upon historical experience and trends, current conditions, and reasonable and supportable forecasts, as well as management’s judgment, factors may arise that result in different estimates. While management’s evaluation of the allowance as of March 31, 2026, considers the allowance to be appropriate, under different conditions or assumptions, the Company would need to increase or decrease the allowance. In addition, various federal and State regulatory agencies, as part of their examination process, review the Company's allowance and may require the Company to recognize additions to the allowance based on their judgments and information available to them at the time of their examinations.

Loan Commitments and Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans, and commercial letters of credit. The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded. The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancellable, through a charge to credit loss expense for off-balance sheet credit exposures included in provision for credit loss expense in the Company's consolidated statements of income.

The following table details activity in the allowance for credit losses on loans and leases for the three months ended March 31, 2026 and 2025. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

The following table details activity in the liabilities for off-balance sheet credit exposures for the three months ended March 31, 2026 and 2025:

The following table presents the amortized cost basis of collateral-dependent loans, which are individually evaluated to determine expected credit losses, and the related allowance for credit losses allocated to these loans:

Loan Modifications to Borrowers Experiencing Financial Difficulty

When the Company modifies loans to borrowers experiencing financial difficulty, the modifications may include interest rate reductions, principal or interest forgiveness, forbearances, term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral.

The following tables show the amortized cost basis as of March 31, 2026 and December 31, 2025 of the loans modified to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of concession granted:

There were no loan modifications made to borrowers experiencing financial difficulty that had defaulted as of March 31, 2026 and December 31, 2025.

The following tables show the aging analysis of loan modifications made to borrowers experiencing financial difficulty as of March 31, 2026 and December 31, 2025:

The following tables present credit quality indicators by total loans on an amortized cost basis by origination year as of March 31, 2026 and December 31, 2025:

6. Earnings Per Share

Earnings per share in the table below, for the three month periods ended March 31, 2026 and 2025 are calculated under the two-class method as required by ASC Topic 260, Earnings Per Share (ASC 260). ASC 260 provides that unvested share-based payment awards that contain nonforfeitable rights to dividends are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. Prior to 2019, the Company issued restricted stock awards that contained such rights and are therefore considered participating securities. Since 2019, the Company has issued restricted stock awards that do not have nonforfeitable rights to dividends and are therefore not considered participating securities. Basic earnings per common share are calculated by dividing net income allocable to common stock by the weighted average number of common shares, excluding participating securities, during the period. Diluted earnings per common share include the dilutive effect of participating securities.

Stock-based compensation awards representing 8,209 and 13,488 of common shares during the three months ended March 31, 2026 and 2025, respectively, were not included in the computations of diluted earnings per common share because the effect on those periods would have been anti-dilutive.

7. Other Comprehensive Income (Loss)

The following table presents reclassifications out of the accumulated other comprehensive income (loss) for the three month periods ended March 31, 2026 and 2025:

The following table presents the activity in our accumulated other comprehensive income (loss) for the periods indicated:

The following table presents the amounts reclassified out of each component of accumulated other comprehensive (loss) income for the three months ended March 31, 2026 and 2025:

1 Amounts in parentheses indicate debits in income statement.

8. Financial Guarantees

The Company currently does not issue any guarantees that would require liability recognition or disclosure, other than standby letters of credit. The Company extends standby letters of credit to its customers in the normal course of business. The standby letters of credit are generally short-term. As of March 31, 2026, the Company’s maximum potential obligation under standby letters of credit was $36.8 million compared to $36.5 million at December 31, 2025. Management uses the same credit policies to extend standby letters of credit that it uses for on-balance sheet lending decisions and may require collateral to support standby letters of credit based upon its evaluation of the counterparty. Management does not anticipate any significant losses as a result of these transactions, and has determined that the fair value of standby letters of credit is not significant.

9. Segment and Related Information

The Company manages its operations through two reportable business segments in accordance with the standards set forth in FASB ASC 280, "Segment Reporting": (i) banking and (ii) wealth management. The Company’s wealth management services, other than trust services, are managed separately from the banking segment.

On October 31, 2025, the Company sold all of the issued and outstanding shares of capital stock of its insurance subsidiary, TIA, to Gallagher. For the first 10 months of 2025, the Company had three operating segments: (i) banking, (ii) insurance services, and (iii) wealth management.

Banking

Tompkins Community Bank has twelve banking offices located in Ithaca, NY and surrounding communities; fourteen banking offices located in the Genesee Valley region of New York State, which includes Monroe County; twelve banking offices located in the counties north of New York City; and sixteen banking offices operating in southeastern Pennsylvania.

Wealth Management

The wealth management segment is generally organized under the Tompkins Financial Advisors brand. Tompkins Financial Advisors offers a comprehensive suite of financial services to customers, including trust and estate services, investment management and financial and insurance planning for individuals, corporate executives, small business owners and high net worth individuals. Tompkins Financial Advisors has offices in each of the Company’s regional markets.

Chief Operating Decision Maker

Our Chief Executive Officer ("CEO") is our chief operating decision maker. In order to allocate costs, capital and resources to each operating segment, we (i) identify the cost or opportunity value of funds within each business segment, (ii) measure the profitability of a particular business segment by relating appropriate costs to revenues, (iii) evaluate each business segment in a manner consistent with its economic impact on consolidated earnings, and (iv) enhance asset and liability pricing decisions. Our CEO reviews actual net income versus budgeted net income on a monthly basis to assess segment performance and to make decisions about allocating capital and personnel among the segments.

Segment Reporting

Summarized financial information concerning the Company’s reportable segments and the reconciliation to the Company’s consolidated results is shown in the following tables. Investment in subsidiaries is netted out of the presentations below. The “Intercompany” column identifies the intercompany activities of revenues, expenses and other assets between the banking, insurance and wealth management services segments. The Company accounts for intercompany fees and services at an estimated fair value according to regulatory requirements for the services provided. Intercompany items relate primarily to the use of human resources, information systems, accounting and marketing services provided by the bank and the holding company. All other accounting policies are the same as those described in the summary of significant accounting policies in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

10. Fair Value Measurements

FASB ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value measurements. FASB ASC Topic 820 also establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Transfers between levels, when determined to be appropriate, are recognized at the end of each reporting period.

The three levels of the fair value hierarchy under FASB ASC Topic 820 are:

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025, segregated by the level of valuation inputs within the fair value hierarchy used to measure fair value:

Securities: Fair values for U.S. Treasury securities are based on quoted market prices. Fair values for obligations of U.S. government sponsored entities, mortgage-backed securities-residential, obligations of U.S. states and political subdivisions, and U.S. corporate debt securities are based on quoted market prices, where available, as provided by third-party pricing vendors. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments in active markets and/or based upon a matrix pricing methodology, which uses comprehensive interest rate tables to determine market price, movement and yield relationships. These securities are reviewed periodically to determine if there are any events or changes in circumstances that would adversely affect their value.

The change in the fair value of equity securities valued using significant unobservable inputs (level 3), between December 31, 2025 and March 31, 2026, was immaterial.

There were no transfers between Levels 1, 2 and 3 for the three months ended March 31, 2026.

The Company determines fair value for its available-for-sale debt securities using an independent bond pricing service for identical assets or very similar securities. The Company determines fair value for its equity securities based on the underlying equity fund’s pricing and valuation procedures which consider recent sales price, market quotations from a pricing service, or market quotes from an independent broker-dealer. The Company has reviewed the pricing sources, including methodologies used, and finds them to be fairly stated.

Derivatives: The Company has contracted with a third-party vendor to provide periodic valuations for its interest rate derivatives to determine the fair value of its interest rate contracts. The vendor utilizes standard valuation methodologies applicable to interest rate derivatives such as discounted cash flow analysis. Such valuations are based upon readily observable market data and are therefore considered Level 2 valuations by the Company.

Certain assets are measured at fair value on a nonrecurring basis. For the Company, these include loans held for sale, collateral-dependent individually evaluated loans, and other real estate owned ("OREO"). As of March 31, 2026 and 2025, certain collateral-dependent evaluated loans were remeasured and reported at fair value through a specific valuation allowance and/or partial charge-offs for credit losses based upon the fair value of the underlying collateral. Collateral values are estimated using Level 3 inputs. Upon initial recognition, fair value write-downs are taken through a charge-off to the allowance for credit losses. Subsequent fair value write-downs on other real estate owned are reported in other noninterest expense.

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments at March 31, 2026 and 2025. The carrying amounts shown in the table are included in the Consolidated Statements of Condition under the indicated captions:

The fair value estimates, methods and assumptions set forth below for the Company's financial instruments, including those financial instruments carried at cost, are made solely to comply with disclosures required by GAAP and should be read in conjunction with the financial statements and notes included herein.

For loans where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the loan to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. For real estate loans, fair value of the loan’s collateral is determined by third-party appraisals, which are then adjusted for the estimated selling and closing costs related to liquidation of the collateral. For this asset class, the actual valuation methods (income, sales-comparable, or cost) vary based on the status of the project or property. For example, land is generally based on the sales-comparable method while construction is based on the income and/or sales-comparable methods. The unobservable inputs may vary depending on the individual assets with no one of

the three methods being the predominant approach. The Company reviews the third-party appraisal for appropriateness and adjusts the value downward to consider selling and closing costs, which typically range from 5% to 8% of the appraised value. For non-real estate loans, fair value of the loan’s collateral may be determined using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business.

1 Lease receivables, although excluded from the scope of ASC Topic 825, are included in the estimated fair value amounts at their carrying value.

The following methods and assumptions were used in estimating fair value disclosures for financial instruments.

Cash and Cash Equivalents: The carrying amounts reported in the Consolidated Statements of Condition for cash, noninterest-bearing deposits, money market funds, and Federal funds sold approximate the fair value of those assets.

Securities - Held-to-Maturity: Fair values for U.S. Treasury securities are based on quoted market prices. Fair values for obligations of U.S. government sponsored entities and mortgage-backed securities-residential are based on quoted market prices, where available, as provided by third-party pricing vendors. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments in active markets and/or based upon a matrix pricing methodology,

which uses comprehensive interest rate tables to determine market price, movement and yield relationships. These securities are reviewed periodically to determine if there are any events or changes in circumstances that would adversely affect their value.

FHLB Stock and Other Stock: The carrying amount of FHLB stock approximates fair value. If the stock is redeemed, the Company will receive an amount equal to the par value of the stock. For other stock reported above, carrying value is cost.

Loans and Leases: Fair value for loans is calculated using an exit price notion. The Company's valuation methodology takes into account factors such as estimated cash flows, including contractual cash flow and assumptions for prepayments; liquidity risk; and credit risk. The fair values of residential loans were estimated using discounted cash flow analyses, based upon available market benchmarks for rates and prepayment assumptions. The fair values of commercial and consumer loans were estimated using discounted cash flow analyses, based upon interest rates currently offered for loans and leases with similar terms and credit quality. The fair values of loans held for sale were determined based upon contractual prices for loans with similar characteristics.

Accrued Interest Receivable and Accrued Interest Payable: The carrying amount of these short term instruments approximates fair value.

Deposits: The fair values disclosed for noninterest bearing accounts and accounts with no stated maturities are equal to the amount payable on demand at the reporting date. The fair value of time deposits is based upon discounted cash flow analyses using rates offered for FHLB advances, which is the Company’s primary alternative source of funds.

Fed Funds Purchased and Securities Sold Under Agreements to Repurchase: The carrying amount of these instruments approximates fair value because the instruments have short-term maturities.

Other borrowings: The fair value of other borrowings is based upon discounted cash flow analyses using current rates offered for FHLB advances, with similar terms.

11. Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company also enters into interest rate derivatives to accommodate the business requirements of certain qualifying customers. All derivatives are recognized as other assets or other liabilities on the Company's Consolidated Statements of Condition at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and resulting designation.

Derivatives Designated as Hedging Instruments

Fair Value Hedges of Interest Rate Risk

The Company is exposed to changes in the fair value of certain of its fixed-rate assets due to changes in benchmark interest rates. The Company uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate. Interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount. As of March 31, 2026, the Company had interest rate swaps with a total notional amount of $50.0 million hedging fixed-rate residential mortgage loans.

For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income.

As of March 31, 2026 and December 31, 2025, the following amounts were recorded on the consolidated statements of condition related to cumulative basis adjustment for fair value hedges.

Derivatives Not Designated as Hedging Instruments

The Company enters into interest rate swaps to help commercial loan borrowers manage their interest rate risk. These interest rate swap contracts allow borrowers to convert variable-rate loan payments to fixed-rate loan payments. When the Company enters into an interest rate derivative contract with a commercial loan borrower, it simultaneously enters into a “mirror” interest rate contract with a third-party. For interest rate swaps, the third-party exchanges the client’s fixed-rate loan payments for variable-rate loan payments. The Company's credit policies with respect to interest rate contracts with commercial borrowers are similar to those used for loans. The Company retains the risk that is associated with the potential failure of counterparties and the risk inherent in originating loans. The interest rate contracts with counterparties are generally subject to bilateral collateralization terms. These derivatives are not designated as hedges and therefore, changes in fair value are recognized in earnings.

The Company has entered into risk participation agreements with other banks in commercial loan arrangements. Participating banks guarantee the performance on borrower-related interest rate swap contracts. These derivatives are not designated as hedges and therefore, changes in fair value are recognized in earnings.

Under a risk participation-out agreement, a derivative asset, the Company participates out a portion of the credit risk associated with the interest rate swap position executed with the commercial borrower for a fee paid to the participating bank. Under a risk participation-in agreement, a derivative liability, the Company assumes, or participates in, a portion of the credit risk associated with the interest rate swap position with the commercial borrower for a fee received from the other bank.

Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Statements of Condition

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated statements of condition as of March 31, 2026 and December 31, 2025.

Tabular Disclosure of the Effect of Fair Value and Cash Flow Hedge Accounting on the Consolidated Statements of Income

The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of income for the three months ended March 31, 2026 and 2025:

Tabular Disclosure of the Effect of Derivatives Not Designated as Hedging Instruments on the Income Statement

The table below presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments on the consolidated statements of income for the three months ending March 31, 2026 and March 31, 2025:

Credit-risk-related Contingent Features

Applicable for OTC derivatives with dealers

The Company's agreements with each of its derivative counterparties provide that if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.

As of March 31, 2026 and December 31, 2025, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $3.9 million and $5.3 million, respectively. As of March 31, 2026 and December 31, 2025, the Company had posted $3.4 million and $1.9 million, respectively, in collateral related to these agreements.

Item 2. -

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

BUSINESS

Overview

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 March 31, 2026, the Company had one wholly-owned banking subsidiary, Tompkins Community Bank. Tompkins Community Bank 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."

Tompkins' strategy centers around our core values and a commitment to delivering long-term value to our clients, communities, and shareholders. A key strategic initiative for the Company is a focus on responsible and sustainable growth, including initiatives to grow organically through our current businesses, as well as through possible acquisitions of financial institutions, branches, and financial services businesses. As such, the Company has acquired, and from time to time considers acquiring, banks, thrift institutions, branch offices of banks or thrift institutions, or other businesses that would complement the Company’s business or its geographic reach. The Company generally targets merger or acquisition partners that are culturally similar and have experienced management and possess either significant market presence or have potential for improved profitability through financial management, economies of scale and expanded services.

Business Segments

Banking services consist primarily of attracting deposits from the areas served by Tompkins Community Bank, 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.

Wealth management services consist of investment management, trust and estate, and financial and tax planning services. Wealth management services are provided under the trade name Tompkins Financial Advisors.

The Company operated its wholly-owned insurance subsidiary, TIA, from 2001 until its sale to Gallagher on October 31, 2025. TIA was a full-service insurance agency that offered services such as property and casualty insurance, employee benefit consulting, and life, long-term care and disability insurance. TIA's revenue and expenses were consolidated into the Company's financial statements through October 31, 2025.

The Company’s principal expenses are interest on deposits, interest on borrowings, and operating and general administrative expenses, as well as provisions for credit losses. Funding sources, other than deposits, include borrowings, securities sold under agreements to repurchase, and cash flow from lending and investing activities.

Competition

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 Community Bank 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.

Competition among financial institutions is based upon interest rates offered on deposit accounts, interest rates charged on loans and other credit and service charges, the quality and scope of the services rendered, the convenience of facilities and services, and, in the case of loans to commercial borrowers, relative lending limits. Management believes that a community-based financial organization is better positioned to establish personalized financial relationships with both commercial customers and individual households. The Company’s community commitment and involvement in its primary market areas, as well as its commitment to quality and personalized financial services, are factors that contribute to the Company’s competitiveness. Management believes that the Company’s subsidiary bank can compete successfully in its primary market areas by making prudent lending decisions quickly and more efficiently than its competitors, without compromising asset quality or profitability. In addition, the Company focuses on providing unparalleled customer service, which includes offering a strong suite of products and services, including products that are accessible to our customers through digital means. Although management feels that this business model has caused the Company to grow its customer base in recent years and allows it to compete effectively in the markets it serves, we cannot assure you that such factors will result in future success.

Regulation

Banking and wealth management are highly regulated. As a financial holding company including a community bank and a registered investment adviser, the Company and its subsidiary are subject to examination and regulation by the Federal Reserve Board ("FRB"), Securities and Exchange Commission ("SEC"), the Federal Deposit Insurance Corporation ("FDIC"), the New York State Department of Financial Services, and the Financial Industry Regulatory Authority.

OTHER IMPORTANT INFORMATION

The following discussion is intended to provide an understanding of the consolidated financial condition and results of operations of the Company for the three months ended March 31, 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 200 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 December 31, 2025 (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.

RESULTS OF OPERATIONS

Performance Summary

Net income for the first quarter of 2026 was $26.1 million or $1.82 diluted earnings per share, compared to $19.7 million or $1.37 diluted earnings per share for the same period in 2025. The increase in net income from the first quarter of 2025 was mainly a result of higher net interest income, driven by increased interest income on loans and securities and lower funding costs; lower provision expense; and lower noninterest expenses.

Return on average assets ("ROA") for the quarter ended March 31, 2026 was 1.23%, compared to 0.99% for the quarter ended March 31, 2025. Return on average shareholders’ equity ("ROE") for the first quarter of 2026 was 11.11%, compared to 10.96% for the same period in 2025.

Segment Reporting

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 Community Bank. 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 Consolidated Financial Statements in Part I of this Report on Form 10-Q.

Banking Segment

The banking segment reported net income of $25.2 million for the first quarter of 2026, an increase of $9.5 million or 60.4% from net income of $15.7 million for the same period in 2025. The increase in net income for the first quarter of 2026 compared to the first quarter of 2025 was primarily due to an increase in net interest margin and a reduction in provision expense. Net interest income of $71.9 million for the first quarter of 2026 was up $15.2 million or 26.8% from the same period in 2025. The increase in net interest income was primarily due to higher yields on interest earning assets, growth in average interest earning assets and a reduction in funding costs. The provision for credit loss expense was $1.5 million for the three months ended March 31, 2026, compared to a provision expense of $5.3 million for the same period in 2025.

Noninterest income of $6.5 million for the three months ended March 31, 2026 was down $2.2 million or 25.2% compared to the same period in 2025. The decrease in noninterest income for the three months ended March 31, 2026 compared to the same period in 2025 was mainly attributable to a gain on the sale of other real estate owned ("OREO") of $1.9 million recorded in the prior period.

Noninterest expense of $43.6 million for the first quarter of 2026 was up $3.9 million or 9.8% from the same period in 2025. The increase was driven primarily by higher salaries and employee benefits, which increased $2.7 million, along with higher technology and furniture, fixtures, and equipment expenses.

Wealth Management Segment

The wealth management segment reported net income of $914,000 for the three months ended March 31, 2026, which was up $93,000 or 11.3% compared to the first quarter of 2025. The increase in net income for the three month period ended March 31, 2026, compared to the same period in 2025, was mainly attributable to an increase in asset-based advisory revenue. Noninterest expense for the first quarter of 2026 was in line with the same period prior year.

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 month periods ended March 31, 2026, December 31, 2025, and March 31, 2025:

1 Average balances and yields on available-for-sale debt securities are based on historical amortized cost.

2 Interest income includes the tax effects of taxable-equivalent adjustments using an effective income tax rate of 21% in 2026 and 2025 to increase tax exempt interest income to taxable-equivalent basis.

3 Nonaccrual loans are included in the average asset totals presented above. Payments received on nonaccrual loans have been recognized as disclosed in Note 1 of the Company’s consolidated financial statements included in Part 1 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Net Interest Income

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 income is dependent on the volume and composition of interest-earning assets and interest-bearing liabilities and the level of market interest rates. The above table

shows average interest-earning assets and interest-bearing liabilities, and the corresponding yield or cost associated with each, for the periods indicated.

Net interest income for the three months ended March 31, 2026 of $71.9 million was up $15.2 million or 26.8% from the same period in 2025. The increase in net interest income 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 March 31, 2026 was 3.57% compared to 3.42% for the most recent prior quarter, and 2.98% for the first quarter of 2025. The increase in net interest margin over the prior periods reflects growth in average loan balances, improved yields on average earnings assets, and lower funding costs.

Interest income for the three months ended March 31, 2026 was $102.7 million, up $13.2 million or 14.8% compared to the same period in 2025. The increase in interest income was mainly in interest and fees on loans, which were up $8.5 million or 10.8%, driven by higher yields and higher average balances for the three months ended March 31, 2026, compared to the same period in 2025. Average loan balances for the first quarter of 2026 were up $409.5 million or 6.8% from the first quarter 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 of 2025.

Interest income on securities, excluding dividends on FHLB stock, for the three months ended March 31, 2026, was up $5.0 million or 50.0% as compared to the same period in 2025. Average yield on securities for the first quarter of 2026 was up 113 basis points over the first quarter of 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 first quarter of 2026 increased $33.3 million, or 2.0%, over the same period in 2025.

Interest expense for the three months ended March 31, 2026 decreased by $2.0 million or 6.1% compared to the same period 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. The average cost of interest-bearing liabilities for the first quarter of 2026 was 2.21%, a decrease of 23 basis points from the first quarter of 2025, as a result of lower market interest rates and improved funding mix, as deposit growth contributed to a decrease in average borrowings.

Average interest-bearing deposits for the first quarter of 2026 were up $268.2 million or 5.5% over the same period in 2025. The growth was largely in interest-bearing checking, savings, and money market accounts, which were up $141.5 million or 3.8% for the first quarter of 2026 compared to the same period in 2025. The average cost of interest-bearing deposits for the first quarter of 2026 compared to the same period in 2025 was down 17 basis points or 7.6%. Average noninterest bearing deposit balances for the first quarter of 2026 increased $76.4 million or 4.3% compared to the first quarter of 2025.

Average other borrowings for the three months ended March 31, 2026 were down $70.7 million or 12.6% compared to the same period in 2025. The average rate paid on other borrowings for the first quarter of 2026 was down 46 basis points from the same period in 2025.

Noninterest Income

Noninterest income was $11.8 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 March 31, 2026, compared to 30.6% for the same period in 2025. 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 million in the first quarter of 2025.

Wealth management fees for the first quarter of 2026 were up $147,000 or 2.9% over the first quarter of 2025, driven by an increase in advisory assets under management. 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. 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 March 31, 2025.

Other income of $2.1 million in the first quarter of 2026 was down $1.7 million or 44.8% compared to the same period in 2025. The decrease in the first quarter of 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

Noninterest expense was $47.7 million for the first quarter of 2026, down $2.9 million or 5.7% 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 mainly reflects the sale of the Company's insurance subsidiary, TIA, in October 2025.

Expenses associated with salaries and wages and employee benefits are the largest component of noninterest expense, representing 60.3% of total noninterest expense for the first quarter of 2026, compared to 63.4% for the first quarter of 2025. Salaries and wages and employee benefits expense for the three months ended March 31, 2026 were down $3.3 million or 10.4% compared to the first quarter of 2025. Salaries, wages and employee benefits expense attributable to TIA were $6.0 million in the first quarter of 2025. Partially offsetting the decrease in employee related costs relative to the sale of TIA, were increases in strategic hiring in the bank, annual merit increases and increases in other employee benefits. Also contributing to the year-over-year decrease were net occupancy expenses, down $115,000 or 3.2%, and amortization expense, down $84,000 or 100.0%, with first quarter 2025 TIA expenses in the same categories of $279,000 and $81,000, respectively.

Income Tax Expense

The provision for income taxes was $8.4 million for an effective rate of 24.4% for the first quarter of 2026, compared to provision expense of $6.1 million and an effective rate of 23.7% for the same quarter in 2025. The effective rates differ from the U.S. statutory rate 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.

FINANCIAL CONDITION

Total assets were $8.7 billion at March 31, 2026, up $27.5 million or 0.3% from December 31, 2025. Cash and cash equivalents were up $38.6 million or 29.1%, total loans were up $31.7 million or 0.5%, total securities were up $6.9 million or 0.4% and loans held for sale were down $43.4 million compared to December 31, 2025. Total deposits were up $116.4 million or 1.7%, Federal funds purchased and securities sold under agreement to repurchase were up $22.6 million or 23.6%, and total borrowings were down $115.0 million or 20.4% from December 31, 2025.

Securities

As of March 31, 2026, the Company’s securities portfolio was $1.7 billion or 19.6% of total assets, in line with year-end 2025. The following table details the composition of the securities portfolio:

The increase in unrealized losses, which reflects the amount that amortized cost exceeds fair value, related to the available-for-sale debt and held-to-maturity debt portfolios was due primarily to changes in market interest rates during the first three months

of 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 first quarter of 2026.

Loans and Leases

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

The table below shows a more detailed break-out of commercial real estate loans as of March 31, 2026 and December 31, 2025.

Total loans and leases of $6.5 billion at March 31, 2026 were up $31.7 million or 0.5% from December 31, 2025. The increase was mainly in commercial real estate loans, which were up $19.8 million or 0.5%, to $3.7 billion at March 31, 2026. As of March 31, 2026, total loans and leases represented 74.5% 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 March 31, 2026, down $2.2 million or 0.14% compared to December 31, 2025, and comprised 24.5% of total loans and leases at March 31, 2026. Changes in residential real estate loan balances are impacted by the Company’s decision to retain these loans or sell them in the secondary market due to interest rate considerations. The Company’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 three months of 2026 and 2025, the Company sold residential real estate loans totaling $24.4 million and $11.6 million, respectively, recognizing gains on these sales of $705,000 and $454,000, 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 million at March 31, 2026 and $1.7 million at December 31, 2025.

Commercial real estate loans and commercial and industrial loans totaled $3.7 billion and $1.1 billion, respectively, and represented 56.8% and 17.3%, respectively, of total loans at March 31, 2026. Commercial real estate loans and commercial and industrial loans as of March 31, 2026 were up $19.8 million or 0.5% and $17.2 million or 1.6% over year-end 2025, respectively.

As of March 31, 2026, agriculturally-related loans totaled $342.7 million or 5.3% of total loans and leases, compared to $348.8 million or 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. As a result of its geographic concentration in New York and Pennsylvania, the Company is 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.

Allowance for Credit Losses

The tables below represent the allowance for credit losses as of March 31, 2026, December 31, 2025, and March 31, 2025. The tables provide, 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 category.

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

As of March 31, 2026, the allowance for credit losses was $58.1 million, up $437,000 or 0.8% compared to December 31, 2025, and down $2.9 million or 4.8% compared to March 31, 2025. The allowance for credit losses as a percentage of total loans measured 0.90% at March 31, 2026, up compared to 0.89% reported at December 31, 2025, and down from 1.01% at March 31, 2025. The decrease in the allowance for credit losses coverage ratio at March 31, 2026, compared to March 31,

2025, was mainly due to lower reserves for individually analyzed loans. The 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.

The ratio of the allowance to nonperforming loans and leases was 113.06% at March 31, 2026, compared to 120.30% at December 31, 2025, and 85.85% at March 31, 2025. The decrease in the ratio compared to year-end 2025 was due to an increase in nonperforming loans and leases. At March 31, 2026 nonperforming loans and leases were $3.5 million or 7.2% higher than at December 31, 2025. The Company’s nonperforming loans and leases are mostly comprised of collateral-dependent loans with limited exposure or loans that require limited specific reserve due to the level of collateral available with respect to these loans and/or previous charge-offs.

The provision expense for credit losses for loans is based upon the Company's quarterly evaluation of the appropriateness of the allowance for credit losses. The provision for credit losses for loans for the first quarter of 2026 was $1.2 million compared to $5.3 million for the first quarter of 2025. The decrease in provision expense is mainly reflective of the previously discussed specific reserve on one commercial real estate relationship. Net charge-offs for the three months ended March 31, 2026 were $775,000, compared to $3.3 million for the fourth quarter of 2025, and $733,000 for the first quarter of 2025.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

For the three months ended March 31, 2026, the provision for credit losses on off-balance sheet credit exposures was $290,000 compared to $27,000 for the same period in 2025. The year-over-year increase in provision expense was mainly a result of increases in off-balance sheet exposures related to the commercial loan pipeline. For additional information on the Company's off-balance sheet commitments, refer to "Note 5 - Allowance for Credit Losses" in the Notes to Consolidated Financial Statements in Part I of this Report on Form 10-Q.

Asset quality measures at March 31, 2026 were stable compared to December 31, 2025. Loans internally-classified Special Mention or Substandard totaled $120.4 million at March 31, 2026, down $14.0 million or 10.4% compared to December 31, 2025. Loans past due 30-89 days totaled $5.9 million at March 31, 2026, down $2.9 million from year-end 2025.

Nonperforming assets include loans past due 90 days and accruing, nonaccrual loans, and foreclosed real estate/other real estate owned. Total nonperforming assets of $51.7 million at March 31, 2026 were up $3.5 million or 7.3% compared to December 31, 2025, and down $19.5 million or 27.4% compared to March 31, 2025. Nonperforming assets represented 0.59% of total assets at March 31, 2026, up from 0.56% at December 31, 2025, and 0.87% at March 31, 2025. Our peer group's average ratio of nonperforming assets to total assets was 0.52% at December 31, 2025.

Deposits and Other Liabilities

Total deposits of $7.1 billion at March 31, 2026 were up $116.4 million or 1.7% from December 31, 2025. The increase from year-end was primarily in checking, money market and savings balances, which collectively were up $147.6 million or 3.9%.

The increase in checking, money market and savings balances was mainly in municipal deposits. The increase was partially offset by decreases in non-interest bearing deposits, down $25.2 million or 1.3%.

The Company is a participant in the IntraFi Network's IntraFi Cash Service (ICS) and Certificate of Deposit Account Registry Service (CDARS) programs. The Company uses these deposit sweep services to place customer funds from interest-bearing demand accounts, money market accounts, and/or time deposits to be placed with other participating network banks. Customer funds are placed at one or more participating banks to ensure that each deposit customer is eligible for the full amount of FDIC insurance. As a program participant, we receive reciprocal amounts of deposits from other participating network banks equal to the amount of our customer funds placed in the IntraFi Network. In addition to the reciprocal funding programs, the Company may utilize both the ICS and CDARS programs to obtain wholesale funding through One-Way Buy transactions. Funds obtained using one-way buy transactions are classified as brokered deposits. At March 31, 2026 the Company held $950,000 in CDARS one-way buy funds.

The most significant source of funding for the Company is core deposits. The Company defines core deposits as total deposits less time deposits of $250,000 or more, brokered deposits, municipal money market deposits and reciprocal deposit relationships with municipalities. Core deposits decreased by $14.4 million or 0.3% from year-end 2025, to $5.5 billion at March 31, 2026. Core deposits represented 78.0% of total deposits at March 31, 2026, compared to 79.5% of total deposits at December 31, 2025.

The Company uses both retail and wholesale repurchase agreements. Retail repurchase agreements are arrangements with local customers of the Company in which the Company agrees to sell securities to the customer with an agreement to repurchase those securities at a specified later date. Retail repurchase agreements totaled $68.1 million at March 31, 2026 and $45.6 million at December 31, 2025. Management generally views local repurchase agreements as an alternative to large time deposits.

The Company has established several unsecured Federal funds purchased lines through various correspondent bank relationships, totaling $149.0 million as of March 31, 2026. At March 31, 2026, the Company had outstanding $50.0 million of overnight Federal funds purchased, which was unchanged from December 31, 2025.

The Company’s other borrowings totaled $449.4 million at March 31, 2026, down $115.0 million or 20.4% compared to $564.4 million at December 31, 2025. The increases in deposit balances, Federal funds purchased, and retail repurchase agreements contributed to the decrease in other borrowings. Other borrowings at March 31, 2026 included $325.0 million in overnight advances from the FHLB and $124.4 million of FHLB term advances. The $564.4 million in other borrowings at December 31, 2025 included $395.0 million in overnight advances from the FHLB and $169.4 million in term advances from the FHLB. Of the $124.4 million in FHLB term advances at March 31, 2026, $75.0 million is due in over one year; unchanged from December 31, 2025.

Capital

Total equity was $946.7 million at March 31, 2026, an increase of $8.4 million or 0.9% from December 31, 2025. The increase was mainly a result of the $16.4 million or 2.5% increase in retained earnings; partially offset by a $7.1 million increase in accumulated other comprehensive loss, reflecting the change in unrealized loss on available-for-sale debt securities from an unrealized loss of $7.0 million at December 31, 2025 to an unrealized loss of $14.1 million at March 31, 2026.

Cash dividends paid in the first three months of 2026 totaled approximately $9.7 million or $0.67 per common share, representing 37.0% of year to date 2026 earnings through March 31, 2026, and up 8.1% compared to cash dividends of $8.9 million or $0.62 per common share paid in the first three months of 2025.

On July 24, 2025, the Company’s Board of Directors authorized a share repurchase plan (the “2025 Repurchase Plan”) under which the Company may 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 the 2025 Repurchase Plan in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in accordance with federal securities laws. The Company has no obligation to repurchase any shares and may discontinue repurchases at any time. The Company repurchased 23,731 shares at an average price of $76.55 during the first quarter of 2026. As of March 31, 2026, a total of 46,070 shares at an average price of $75.25 had been repurchased under the 2025 Repurchase Plan.

The Company and its subsidiary bank are subject to various regulatory capital requirements administered by Federal bank regulatory agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material adverse effect on the Company’s business, results of operation and financial condition. Under capital adequacy guidelines and the regulatory framework for prompt corrective action (PCA), banks must meet specific guidelines that involve quantitative measures of assets, liabilities, and certain

off-balance-sheet items as calculated under regulatory accounting practices. Capital amounts and classifications of the Company and its subsidiary banks are also subject to qualitative judgments by regulators concerning components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the maintenance of minimum amounts and ratios of common equity Tier 1 capital, Total capital and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. Management believes that the Company and its subsidiary bank meet all capital adequacy requirements to which they are subject.

The following table provides a summary of the Company’s capital ratios as of March 31, 2026:

As of March 31, 2026, the Company’s capital ratios exceeded the minimum required capital ratios plus the fully phased-in capital conservation buffer, and the minimum required capital ratios for well capitalized institutions. The capital levels required to be considered well capitalized, presented in the above table, are based upon prompt corrective action regulations, as amended to reflect the changes under Basel III Capital Rules.

Total capital as a percentage of risk weighted assets was 14.8% at March 31, 2026, up from 14.6% as of December 31, 2025. Tier 1 capital as a percentage of risk weighted assets was 13.9% as of March 31, 2026, an increase from 13.6% at year-end 2025. Tier 1 capital as a percentage of average assets was 10.6% at March 31, 2026, unchanged from December 31, 2025. Common equity Tier 1 capital was 13.9% at the end of the first quarter of 2026, up from 13.6% at the end of 2025.

As of March 31, 2026, the capital ratios for the Company’s subsidiary bank also exceeded the minimum required capital ratios plus the fully phased-in capital conservation buffer, and the minimum required capital ratios for well capitalized institutions.

Liquidity

The objective of liquidity management is to ensure the availability of adequate funding sources to satisfy anticipated demand for credit, deposit withdrawals, and business investment opportunities. The Company’s large, stable core deposit base and strong capital position are the foundation for the Company’s liquidity position. The Company uses a variety of resources to meet its liquidity needs, which include deposits, cash and cash equivalents, short-term investments, cash flow from lending and investing activities, repurchase agreements, and borrowings. The Company’s Asset/Liability Management Committee monitors asset and liability positions of the Company’s subsidiary bank individually and on a combined basis. The Committee reviews periodic reports on liquidity and interest rate sensitivity positions. Comparisons with industry and peer groups are also monitored. The Company’s strong reputation in the communities it serves, along with its strong financial condition, provides access to numerous sources of liquidity as described below. Management believes these diverse liquidity sources provide sufficient means to meet all demands on the Company’s liquidity that are reasonably likely to occur. Management measures liquidity, including the level of cash, unencumbered securities, and the availability of dependable borrowing sources. The Board has set a policy limit stating that reliable sources of liquidity should remain in excess of 6% of total assets. The ratio was 16.1% at March 31, 2026 and 16.2% at December 31, 2025. In addition, the Company maintains access to the Federal Reserve Bank borrowing facility, which improved the reliable sources of liquidity ratio by an additional 2.8% at March 31, 2026, and 2.9% at December 31, 2025, to 18.9% and 19.1%, respectively. The Company also maintains board policy limits requiring that on-balance sheet liquidity, which includes liquid assets including cash, overnight funds sold, short-term investments, fair value of encumbered investment securities, and the guaranteed portion of government and agency loans, remain above 3% of total assets. As of March 31, 2026, this ratio was 9.6%.

Core deposits, discussed above under "Deposits and Other Liabilities", are a primary and low-cost funding source obtained primarily through the Company’s branch network. In addition to core deposits, the Company uses non-core funding sources to support asset growth. These non-core funding sources include time deposits of $250,000 or more, brokered deposits, municipal money market deposits, reciprocal deposits, bank borrowings, securities sold under agreements to repurchase, overnight and term advances from the FHLB, and other funding sources. Rates and terms are the primary determinants of the mix of these funding sources. Non-core funding sources of $2.1 billion at March 31, 2026 increased $38.4 million or 1.8% as compared to

year end 2025. Non-core funding sources, as a percentage of total liabilities, were 27.3% at March 31, 2026, compared to 26.9% at December 31, 2025.

Non-core funding sources may require securities to be pledged against the underlying liability. Securities carried at $1.0 billion at March 31, 2026, and $887.5 million at December 31, 2025, were either pledged or sold under agreements to repurchase. Pledged securities represented 60.6% of total securities at March 31, 2026, compared to 52.1% of total securities at December 31, 2025.

Cash and cash equivalents totaled $171.4 million as of March 31, 2026 which increased from $132.8 million at December 31, 2025. Short-term investments, consisting of securities due in one year or less, decreased from $74.1 million at December 31, 2025 to $62.6 million at March 31, 2026.

Cash flow from the loan and investment portfolios provides a significant source of liquidity. These assets may have stated maturities in excess of one year, but have monthly principal reductions. Total mortgage-backed securities, at fair value, were $927.6 million at March 31, 2026 compared with $901.1 million at December 31, 2025. Outstanding principal balances of residential mortgage loans, consumer loans, and leases totaled approximately $1.7 billion at March 31, 2026, unchanged compared with December 31, 2025. Aggregate amortization from monthly payments on these assets provides significant additional cash flow to the Company.

Liquidity is enhanced by ready access to national and regional wholesale funding sources including Federal funds purchased, repurchase agreements, brokered certificates of deposit, and FHLB advances. Through its subsidiary bank, the Company has borrowing relationships with the FHLB and correspondent banks, which provide secured and unsecured borrowing capacity. As members of the FHLB, the Company’s subsidiary banks can use certain unencumbered mortgage-related assets and securities to secure additional borrowings from the FHLB. At March 31, 2026 the established borrowing capacity with the FHLB was $1.3 billion, or 14.8% of total assets, with available unencumbered mortgage-related assets of $564.7 million. In addition to the $449.4 million of FHLB borrowings outstanding at March 31, 2026 the Company had utilized $270.0 million of availability at March 31, 2026, to collateralize municipal deposits through several standby letters of credit with the FHLB. Additional assets may also qualify as collateral for FHLB advances upon approval of the FHLB.

Through various programs at the Federal Reserve Bank, the Company has the ability to use certain unencumbered loans and securities to secure borrowings from the Federal Reserve Bank's Discount Window. At March 31, 2026 the available borrowing capacity with the Federal Reserve Bank was $245.9 million, secured by commercial and mortgage-related loans. In addition to the available borrowing lines at the FHLB and Federal Reserve Bank, the Company maintains $653.0 million of unencumbered securities which could be pledged to further enhance secured borrowing capacity.

Non-GAAP Disclosures

The following tables include disclosure of non-GAAP financial measures. The first table shows a reconciliation of tangible book value per share (non-GAAP) to common equity book value per share (GAAP). Tangible common equity, a non-GAAP financial measure, is total stockholders' equity less intangible assets. Tangible book value per share is tangible equity divided by total shares issued and outstanding. These measures adjust common equity per share to exclude the effects of goodwill and intangible amortization expense on earnings, equity, and capital. The second table summarizes the Company’s results of operations on a GAAP basis and on an operating (non-GAAP) basis for the periods indicated. The non-GAAP financial measures adjust GAAP measures to exclude the effects of non-operating items, such as the effects of the sales of available-for-sale debt securities, and significant nonrecurring income or expense on earnings, equity, and capital.

The Company believes the non-GAAP measures provide meaningful comparisons of our underlying operational performance and facilitate management's and investors' assessments of business and performance trends in comparison to others in the financial services industry. These non-GAAP financial measures should not be considered in isolation or as a measure of the Company's profitability or liquidity; they should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with GAAP. The non-GAAP financial measures presented herein may be different from non-GAAP financial measures used by other companies, and may not be comparable to similarly titled measures reported by other companies. Further, the Company may utilize other measures to illustrate performance in the future. Non-GAAP financial measures have limitations since they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP.