TMP Tompkins Financial Corp - 10-K

Item 1A. Risk Factors

The Company's success depends on management's ability to identify and manage the risks inherent in its financial services business. These risks include credit risk, market risk, liquidity risk, operational risk, regulatory, compliance and legal risk, and strategic risk. We list below the material risks we face. Any of these risks could result in a material adverse impact on the Company's business, operating results, financial condition, liquidity, and cash flow, or may cause the Company's results to vary materially from recent results, or from the results implied by any forward-looking statements made by the Company.

Credit Risk

The Company is subject to increased business risk because the Company has a significant concentration of commercial real estate and commercial business loans, repayment of which is often dependent on the cash flows of the borrower.

The Company offers different types of commercial loans to a variety of businesses, and we believe commercial loans will continue to comprise a significant concentration of our loan portfolio in 2026 and beyond. Real estate lending is generally considered to be collateral-based lending with loan amounts based on predetermined loan-to-collateral values. As such, declines in real estate valuations in the Company’s market area would lower the value of the collateral securing these loans. Additionally, the Company has experienced, and expects to continue experiencing, increased competition in commercial real estate lending. This increased competition may inhibit the Company's ability to generate additional commercial real estate loans or maintain its current inventory of commercial real estate loans. The Company’s commercial business loans are made based primarily on the cash flow and creditworthiness of the borrower and secondarily on the underlying collateral provided by the borrower, with liquidation of the underlying real estate collateral being viewed as the primary source of repayment in the event of borrower default. The borrowers’ cash flow may be difficult to predict, and collateral securing these loans may fluctuate in value. Although commercial business loans are often collateralized by equipment, inventory, accounts receivable, or other business assets, the liquidation of collateral in the event of default is often an insufficient source of repayment. As of December 31, 2025, commercial and commercial real estate loans totaled $4.8 billion or 73.9% of the Company's total loans.

The Company’s agricultural loans are often dependent upon the health of the agricultural industry in the location of the borrower, and the ability of the borrower to repay may be affected by many factors outside of the borrower’s control.

As part of the Company’s commercial business lending activities, the Company originates agricultural loans, consisting of agricultural real estate loans and agricultural operating loans. As of December 31, 2025, $348.8 million or 5.4% of the Company’s total loan portfolio consisted of agriculturally-related loans, including $234.3 million in agricultural real estate loans and $114.5 million in agricultural operating loans. Payments on agricultural loans are dependent on the profitable operation or management of the related farm property. The success of the farm may be affected by many factors outside the control of the borrower, including adverse weather conditions that prevent the planting of a crop or limit crop yields (such as wind, hail, drought and floods), loss of livestock due to disease or other factors, declines in market prices for agricultural products and the impact of governmental regulations and subsidies (including changes in price supports and environmental regulations). Many farms are dependent upon a limited number of key individuals whose injury or death may significantly affect the successful operation of the farm. If the cash flow from a farming operation is diminished, the borrower’s ability to repay the loan may be impaired. While agricultural operating loans are generally secured by a blanket lien on the farm’s operating assets, any repossessed collateral in respect of a defaulted loan may not provide an adequate source of repayment of the outstanding balance.

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

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

The Company owns various properties used in the operation of its business. In addition, from time to time, the Company forecloses on properties and either becomes involved in, or may be deemed to be participating in, the management of its borrowers’ properties. The Company could be subject to environmental liabilities imposed by applicable federal and state laws with respect to any of these properties. For example, we may be held liable to a government entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or may be required to clean up hazardous or toxic substances, or chemical releases, at a property, or may be subject to common law claims by third parties for damages and costs resulting from environmental contamination emanating from the property. Additionally, a significant portion of our loan portfolio at December 31, 2025 was secured by real estate and, if the real estate securing our assets is subject to environmental liability, our collateral position may be substantially weakened. Any such environmental liabilities imposed on the Company could have a material adverse impact on the Company's financial condition or results of operations.

Market Risk

The Company’s business and financial performance are impacted significantly by market interest rates and movements in those rates. The monetary, tax and other policies of governmental agencies, including the Federal Reserve, have a significant impact on interest rates and overall financial market performance over which the Company has no control and which the Company may not be able to anticipate adequately.

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

• affect the difference between the interest that the Company earns on assets and the interest that the Company pays on liabilities, which impacts the Company's overall net interest income and profitability;

• adversely affect the ability of borrowers to meet obligations under variable or adjustable rate loans and other debt instruments, which in turn, affects the Company's loss rates on those assets;

• decrease the demand for interest rate-based products and services, including loans and deposits; and

• affect prepayment rates on the Company's loans and securities, which could adversely affect the Company's earnings, financial condition and cash flow.

The monetary, tax and other policies of the Federal government and its agencies, including the Federal Reserve, have a significant impact on interest rates and overall financial market performance. These governmental policies can thus affect the activities and results of operations of banking organizations such as the Company. An important function of the Federal Reserve is to regulate the national supply of bank credit and certain interest rates. The actions of the Federal Reserve influence the rates of interest that the Company charges on loans and that the Company pays on borrowings and interest-bearing deposits and can also affect the value of the Company’s on-balance sheet and off-balance sheet financial instruments. Also, due to the impact on rates for short-term funding, the Federal Reserve’s policies influence, to a significant extent, the Company’s cost of such funding. The Company cannot predict the nature or timing of future changes in monetary, tax and other policies or the effect that they may have on the Company’s business activities, financial condition and results of operations.

For information about how the Company manages its interest rate risk, refer to Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" of this Report.

Adverse developments affecting the banking industry have in the past negatively impacted, and may in the future negatively impact, the Company's results of operations and/or stock price.

The bank failures that occurred in 2023 caused decreased confidence in the banking system and led to market price volatility throughout the financial services industry. Future adverse events affecting the financial services industry could again generate market volatility among publicly traded bank holding companies. Uncertainty and concern regarding soundness or creditworthiness of other financial institutions may be compounded by advances in technology that increase the speed at which deposits can be moved, as well as the speed and reach of media attention, including social media, and its ability to disseminate concerns or rumors, in each case potentially exacerbating liquidity concerns and market disruption within the financial services

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industry. Such events have, and could again in the future, adversely impact the market price and volatility of the Company's common stock.

Additionally, high profile bank failures and other events affecting the banking industry have resulted in, and may continue to result in, potentially adverse changes to laws and regulations governing banks and bank holding companies or increased supervisory or enforcement activities, including higher capital requirements or FDIC insurance assessments or special assessments. Any of these changes could have a material impact on our business, financial condition and results of operations.

Declines in asset values may result in impairment charges and may adversely affect the value of the Company’s results of operations, financial condition and cash flows.

A majority of the Company’s investment portfolio is comprised of securities which are collateralized by residential mortgages. These residential mortgage-backed securities include securities of U.S. government agencies, U.S. government-sponsored entities, and private-label collateralized mortgage obligations. The Company’s securities portfolio also includes obligations of U.S. government-sponsored entities, obligations of states and political subdivisions thereof, U.S. corporate debt securities and equity securities. A more detailed discussion of the investment portfolio, including types of securities held, the carrying and fair values, and contractual maturities, is provided in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report. Gains or losses on these instruments may have a direct impact on our results of operations, including higher or lower income and earnings, unless we adequately hedge our positions. The fair value of investments may be affected by factors other than the underlying performance of the issuer or composition of the obligations themselves, such as rating downgrades, adverse changes in the business climate, a lack of liquidity for resale of certain investment securities and changes in interest rates. For example, decreases in interest rates and increases in mortgage prepayment speeds, which are influenced by interest rates and other factors, could adversely impact the value of our securities collateralized by residential mortgages, causing a significant acceleration of purchase premium amortization on our mortgage portfolio because a decline in long-term interest rates shortens the expected lives of the securities. Conversely, increases in interest rates may result in a decrease in residential mortgage loan originations and mortgage prepayment speeds, directly impacting the value of these securities collateralized by residential mortgages. Management evaluates investment securities for expected credit-related impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Any impairment that is not credit related is recognized in other comprehensive income (loss), net of applicable taxes. Credit-related impairment is recognized as an allowance for credit losses on the Company's Consolidated Statements of Condition, limited to the amount by which the amortized cost basis exceeds the fair value, with a corresponding adjustment to earnings. The Company's financial condition, results of operations, and cash flows could be materially adversely affected by any impairment charges the Company is required to record to reflect a decline in the fair value of securities in its portfolio.

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

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

• consumer and business confidence levels could be lowered and cause declines in credit usage, adverse changes in payment patterns, decreases in demand for loans or other financial products and services and decreases in deposits or investments in accounts with Company;

• the Company’s ability to assess the creditworthiness of its customers may be impaired if the models and approaches the Company uses to select, manage and underwrite its customers become less predictive of future behaviors;

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

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• the credit quality or value of loans and other assets or collateral securing loans may decrease.

The Company's business is concentrated in and largely dependent upon the continued growth and welfare of the general geographic markets in which we operate.

The Company's operations are heavily concentrated in New York State and, to a lesser extent, Pennsylvania and, as a result, the Company's financial condition, results of operations and cash flows are significantly impacted by changes in the economic conditions in those areas. Therefore, the Company’s financial performance generally, and in particular, the ability of borrowers to pay interest on and repay the principal of outstanding loans and the value of collateral securing these loans, is highly dependent upon the business environment in the markets where the Company operates, particularly New York State and Pennsylvania. The Company's success depends to a significant extent upon the business activity, population, income levels, deposits and real estate activity in these markets. Although our clients’ business and financial interests may extend well beyond these markets, adverse economic conditions that affect these markets could disproportionately reduce the Company's growth rate, affect the ability of the Company's clients to repay their loans to the Company, affect the value of collateral underlying loans and generally affect the Company's financial condition and results of operations. Because of the Company's geographic concentration, we are less able than other regional or national financial institutions to diversify our credit risks across multiple markets. For additional information on the Company's market area, see Part I, Item 1, "Business" of this Report on Form 10-K.

Liquidity Risk

The Company's funding sources may prove insufficient to replace deposits and support future growth.

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

The Company’s liquidity may be adversely affected by the soundness of other financial institutions.

Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. The Company has exposure to many different industries and counterparties, and routinely executes transactions with counterparties in the financial services industry. The most important counterparty for the Company, in terms of liquidity, is the Federal Home Loan Bank of New York ("FHLBNY"). The Company uses FHLBNY as its primary source of overnight funds and also has long-term advances and repurchase agreements with FHLBNY. The Company is required to maintain sufficient collateral in the form of commercial and residential real estate loans at FHLBNY. In addition, the Company is required to hold stock in FHLBNY. The amount of borrowed funds and repurchase agreements with the FHLBNY, and the amount of FHLBNY stock held by the Company, at its most recent fiscal year-end are discussed in Part II, Item 8 of this Report on Form 10-K.

There are 11 branches of the FHLB, including New York. The FHLBNY is jointly and severally liable along with the other FHLBs for the consolidated obligations issued on behalf of the FHLBs through the Office of Finance. Dividends on, redemption of, or repurchase of shares of the FHLBNY’s capital stock cannot occur unless the principal and interest due on all consolidated obligations have been paid in full. If another FHLB were to default on its obligation to pay principal or interest on any consolidated obligations, the Federal Housing Finance Agency (the "Finance Agency") may allocate the outstanding liability among one or more of the remaining Federal Home Loan Banks on a pro rata basis or on any other basis the Finance Agency may determine. As a result, the FHLBNY’s ability to pay dividends on, to redeem, or to repurchase shares of capital

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stock could be affected by the financial condition of one or more of the other Federal Home Loan Banks. Any such adverse effects on the FHLBNY could adversely affect our liquidity and the value of our investment in FHLBNY common stock, and could negatively impact our results of operations.

Systemic weakness in the FHLB system could result in higher costs of FHLB borrowings, reduced value of FHLB stock, and increased demand for alternative sources of liquidity that are more expensive, such as brokered time deposits, the discount window at the Federal Reserve, or lines of credit with correspondent banks. Any of these scenarios could adversely affect our liquidity, the value of our investment in FHLB common stock and our financial condition.

An impairment to our goodwill and other intangible assets could adversely affect our financial condition and results of operations.

As of December 31, 2025, the Company had $74.4 million of goodwill and other intangible assets. The Company is required to test its goodwill and intangible assets for impairment on a periodic basis. A significant decline in the Company’s expected future cash flows, a significant adverse change in business climate, slower growth rates or a significant and sustained decline in the price of the Company’s common stock, may necessitate our taking charges in the future related to the impairment of the Company’s goodwill and intangible assets. If we make an impairment determination in a future reporting period, the Company’s earnings and the book value of these intangible assets would be reduced by the amount of the impairment. Further, a goodwill impairment charge could significantly restrict the ability of our banking subsidiary to make dividend payments to us without prior regulatory approval, which could have a material adverse effect on our financial condition and results of operations.

The Company relies on cash dividends from its subsidiaries to fund its operations, and payment of those dividends could be discontinued at any time.

The Company is a financial holding company whose principal assets and sources of income are its wholly-owned subsidiaries. The Company is a separate and distinct legal entity from its subsidiaries, and therefore the Company relies primarily on dividends from its subsidiaries to meet its obligations and to provide funds for the payment of dividends to the Company’s shareholders, to the extent declared by the Company’s board of directors. Various federal and state laws and regulations limit the amount of dividends that a bank may pay to its parent company and impose regulatory capital and liquidity requirements on the Company and its banking subsidiary. Further, as a holding company, the Company’s right to participate in a distribution of assets upon the liquidation or reorganization of a subsidiary is subject to the prior claims of the subsidiary’s creditors (including, in the case of the Company’s banking subsidiary, the bank's depositors). If the Company were unable to receive dividends from its subsidiaries it would materially and adversely affect the Company’s liquidity and its ability to service its debt, pay its other obligations, or pay cash dividends on its common stock.

Operational Risks

The Company has been, and may continue to be, adversely affected by fraud.

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

A breach of information or other technological security, including as a result of cyber-attacks, could have a material adverse effect on our business, financial condition and results of operations.

In the ordinary course of business, we rely on electronic communications and information systems, both internally and as provided by third parties, including our customers, to conduct our operations and to store, process, and/or transmit sensitive data on a variety of computing platforms and networks and over the internet. We cannot be certain that all of our systems, or third-party systems upon which we rely, are free from vulnerability to attack or other technological difficulties or failures. Information security breaches and cybersecurity related incidents may include attempts to access information, including customer and company information, malicious code, computer viruses, phishing, denial of service attacks and other means of intrusion that could result in unauthorized access, misuse, loss or destruction of data (including confidential customer, employee and company information), account takeovers, and disruption of service or other functionality. These types of threats may derive from human error, fraud or malice on the part of external or internal parties, or may result from accidental

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technological failure. If information security is breached or difficulties or failures occur, despite the controls we and our third-party vendors have instituted, information may be lost or misappropriated or we and/or our customers may experience a disruption in essential service or operations. Any of the foregoing events could result in financial loss or costs, reputational harm or damages and litigation, regulatory investigation costs or remediation costs to us or others. Any of these consequences could have a material adverse effect on our financial condition and results of operations.

The pervasive and ongoing risk of cybersecurity threats and incidents could have a material adverse effect on our business, financial condition and results of operations.

The risk of a security breach or disruption, particularly through cyber-attack or cyber intrusion, has significantly increased, in part due to the expansion of new technologies, the increased use of the internet and mobile services and the increased intensity and sophistication of attempted attacks and intrusions from around the world. The threat from cyber-attacks is severe, attacks are sophisticated and increasing in volume, and attackers respond rapidly to changes in defensive measures. Breach attempts or other disruptions are constantly evolving and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected. Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures. Our systems and those of our customers and third-party service providers are under constant threat and it is possible that we could experience a significant event in the future. Our technologies, systems, networks and software, and those of other financial institutions have been, and are likely to continue to be, the target of cybersecurity threats and attacks, which may range from uncoordinated individual attempts to sophisticated and targeted measures directed at us. Risks and exposures related to cybersecurity attacks are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats as well as the expanding use of Internet banking, mobile banking and other technology-based products and services by us and our customers. Publicized information concerning security and cyber-related problems could cause us to incur reputational harm and discourage customers from using our electronic or web-based applications or solutions, which could harm their utility as a means of conducting commercial transactions. In addition, while we maintain specific "cyber" insurance coverage, which may apply in the event of many breach scenarios, the amount of coverage may not be adequate in any particular case. Furthermore, because cyber threat scenarios are inherently difficult to predict and can take many forms, some breaches may not be addressed and covered under our cyber insurance coverage, or even if covered, our coverage may not be sufficient. As cyber threats continue to evolve, we have been and may continue to be required to expend significant additional resources to modify our protective measures or to investigate and remediate any information security vulnerabilities, which may negatively impact our business, financial condition and results of operations.

The Company's business requires the collection and retention of large volumes of sensitive data, which is subject to extensive regulation and oversight and exposes our business to additional risks.

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

A security breach or other significant disruption of our information systems or those related to our customers, merchants and our third-party vendors, including as a result of cyber-attacks and/or human error could result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of confidential, sensitive or otherwise valuable information of ours or our customers. Unauthorized access and/or disclosure of the confidential information of ours or our customers could (i) result in a violation of applicable privacy, data breach and other laws, subjecting us to additional regulatory scrutiny and exposing us to civil litigation, governmental action and possible financial liability; (ii) require significant management attention and resources to remedy the damages that result; and/or (iii) harm our reputation and/or cause a decrease in the number of customers that choose to do business with us. The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

The Company's operations may be adversely affected if its external vendors do not perform as expected or if its access to third-party services is interrupted.

The Company relies on certain external vendors to provide products and services necessary to maintain the day-to-day operations of the Company. Some of the products and services provided by vendors include key components of our business infrastructure including data processing and storage and internet connections and network access, among other products and

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services. Accordingly, the Company’s operations are exposed to the risk that these vendors will not perform in accordance with the contracted arrangements or under service level agreements. The failure of an external vendor to perform in accordance with the contracted arrangements or under service level agreements, because of changes in the vendor’s organizational structure, financial condition, support for existing products and services or strategic focus or for any other reason, could disrupt the Company’s operations. If we are unable to find alternative sources for our vendors’ services and products quickly and cost-effectively, the failures of our vendors could have a material adverse impact on the Company’s business and, in turn, the Company’s financial condition and results of operations.

Additionally, our information technology and telecommunications systems interface with and depend on third-party systems, and we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. If sustained or repeated, a system failure or service denial could result in a deterioration of our ability to process new and renewal loans, gather deposits and provide customer service, compromise our ability to operate effectively, damage our reputation, result in a loss of customer business and subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on our financial condition and results of operations.

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

The Company’s business, as well as the operations and activities of our clients, could be negatively impacted by climate change. Climate change presents both immediate and long-term risks to the Company and its clients, and these risks are expected to increase over time. Climate change presents multi-faceted risks, including: operational risk from the physical effects of climate events on the Company and its clients’ facilities and other assets; credit risk from borrowers with significant exposure to climate risk; transition risks associated with the transition to a less carbon-dependent economy; and reputational risk from stakeholder concerns about our practices related to climate change, the Company’s carbon footprint, and the Company’s business relationships with clients who operate in carbon-intensive industries.

To varying degrees, federal and state banking regulators and supervisory authorities, investors, and other stakeholders have expressed the view that financial institutions are important in helping to address the risks related to climate change, both directly and with respect to their clients, which may result in financial institutions coming under increased pressure regarding the disclosure and management of their climate risks and related lending and investment activities. Ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices have resulted and may continue to result in higher regulatory, compliance, credit, and reputational risks and costs.

We could experience increased expenses resulting from strategic planning, litigation, and technology and market changes, and reputational harm as a result of negative public sentiment, regulatory scrutiny, and reduced investor and stakeholder confidence due to our response to climate change and our climate change strategy, which, in turn, could have a material negative impact on our business, results of operations, and financial condition.

Legal, Compliance and Regulatory Risks

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

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

Financial institutions are subject to a high level of scrutiny, intense supervision and regulation, and supervisory findings and actions. Banking regulators are authorized to take supervisory actions that may restrict or limit a financial institution's activities. Regulatory restrictions on our activities could adversely affect our costs and revenues, and may impair our ability to execute our strategic plans. In addition, if our regulators identify a compliance failure, we may be assessed a fine, prohibited from completing a strategic acquisition or divestiture, or subject to other actions imposed by the regulatory authorities. The recent regulatory activity and increased scrutiny have resulted, and may continue to result, in increases in our costs of doing business,

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and could result in decreased revenues and net income, reduce our ability to effectively compete to attract and retain customers, or make it less attractive for us to continue providing certain products and services. Any future changes in federal or state law and regulations, as well as the interpretations and implementations, or modifications or repeals, of such laws and regulations, could have a material adverse effect on our business, financial condition or results of operations.

The Company may be exposed to regulatory sanctions or liability if we do not timely detect and report money laundering or other illegal activities.

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

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

The Dodd-Frank Act and its implementing regulations impose enhanced supervisory requirements on bank holding companies with more than $10 billion in total consolidated assets. Based on our historical growth rates and current size, it is possible that our total assets will exceed $10 billion in the near future. Our total consolidated assets as of December 31, 2025 were $8.7 billion.

The Company has taken, and may continue to take, actions to prepare for compliance with the additional regulatory requirements that will apply if we cross this asset threshold. We have begun to incur additional costs, including investments in new technology and the hiring of qualified personnel, to prepare for such compliance. These additional compliance costs may continue to increase and may have a material adverse effect on our results of operations and financial condition.

The Company is or may become involved in lawsuits, legal proceedings, information-gathering requests, and investigations by governmental agencies or other parties that may lead to adverse consequences.

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

Although the Company establishes accruals for legal proceedings when information related to the loss contingencies represented by those matters indicates both that a loss is probable and that the amount of loss can be reasonably estimated, the Company does not have accruals for all legal proceedings where it faces a risk of loss. In addition, due to the inherent subjectivity of the assessments and unpredictability of the outcome of legal proceedings, amounts accrued may not represent the ultimate loss to the Company from the legal proceedings in question. Thus, the Company’s ultimate losses may be higher than the amounts accrued for legal loss contingencies, which could adversely affect the Company’s financial condition and results of operations.

Strategic Risk

The Company is subject to risks presented by acquisitions, which, if realized, could negatively affect our results of operations and financial condition.

The Company’s strategic initiatives include diversification within its markets, growth of its fee-based businesses, and growth internally and through acquisitions of financial institutions, branches, and financial services businesses. As such, the Company

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has acquired, and from time to time considers acquiring, banks, thrift institutions, branch offices of banks or thrift institutions, or other businesses within markets currently served by the Company or in other locations that would complement the Company’s business or its geographic reach. Any future acquisitions will be accompanied by the risks commonly encountered in acquisitions. These risks include: the difficulty of integrating operations and personnel, the potential disruption of our ongoing business, the inability of management to realize or maximize anticipated financial and strategic positions, increased operating costs, the inability to maintain uniform standards, controls, procedures and policies, the difficulty and cost of obtaining adequate financing, the potential for litigation risk, the potential loss of members of a key executive management group, the potential reputational damage and the impairment of relationships with employees and customers as a result of changes in ownership and management. Further, the asset quality or other financial characteristics of an acquired company may deteriorate after the acquisition agreement is signed or after the acquisition closes. We cannot provide any assurance that we will be successful in overcoming these risks or any other problems encountered in connection with acquisitions and any of these risks, if realized, could have an adverse effect on our results of operations and financial condition.

Our success depends on our ability to offer our customers an evolving suite of products and services, and we may not be able to effectively manage the risks inherent in the development of financial products and services.

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

The implementation and use of new and evolving Artificial Intelligence ("AI") technologies present uncertainties and challenges.

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

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following analysis is intended to provide the reader with a further understanding of the consolidated financial condition and results of operations of the Company and its subsidiaries for the periods shown. This Management’s Discussion and Analysis of

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Financial Condition and Results of Operations should be read in conjunction with other sections of this Report on Form 10-K, including Part I, "Item 1. Business," and Part II, "Item 8. Financial Statements and Supplementary Data." For a comparison of our financial condition and results of operations for the year ended December 31, 2024 to the year ended December 31, 2023, please refer to Part II, Item 7 of the Company's 2024 Annual Report on Form 10-K filed on February 28, 2025.

Overview

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 December 31, 2025, the Company had one wholly-owned banking subsidiary, Tompkins Community Bank. Tompkins Financial Advisors, a division of Tompkins Community Bank, provides a full array of investment services, including investment management, trust and estate, financial and tax planning services. The Company’s principal offices are located at 118 E. Seneca Street, Ithaca, NY, 14850, and its telephone number is: (888) 503-5753. The Company’s common stock is traded on the NYSE American under the symbol "TMP."

Forward-Looking Statements

This Annual Report on Form 10-K contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The statements contained in this Report that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements may be identified by use of such words as "may", "could", "should", "will", "would", "estimate", "intend", "continue", "believe", "expect", "plan", "commit", or "anticipate", as well as the negative and other variations of these terms, and other similar words. Examples of forward-looking statements may include statements regarding the asset quality of the Company's loan portfolios; the level of the Company's allowance for credit losses; the sufficiency of collateral to cover exposure related to special mention and substandard loans; the sufficiency of liquidity sources; expectations regarding securities revenue in future periods; the Company's exposure to changes in interest rates, and to new, changed, or extended government/regulatory expectations; the need to sell securities before recovery of amortized cost; the impact of changes in accounting standards; trends, plans, prospects, growth and strategies; projections of future financial condition, operating results, income, capital expenditures, costs or other financial items; anticipated regulatory and legislative changes; and other characterizations of future events or circumstances as well as other statements that are not statements of historical fact. Forward-looking statements are made based on management’s expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors relating to the Company’s operations and economic environment, all of which are difficult to predict and many of which are beyond the control of the Company, that could cause actual results of the Company to differ materially from those expressed and/or implied by forward-looking statements and historical performance. The following factors, in addition to those listed as Risk Factors in Item 1A of this Report on Form 10-K, are among those that could cause actual results to differ materially from the forward-looking statements and historical performance: changes in general economic, market and regulatory conditions; our ability to attract and retain deposits and other sources of liquidity; gross domestic product growth and inflation trends; the impact of the interest rate and inflationary environment on the Company's business, financial condition and results of operations; other income or cash flow anticipated from the Company's operations, investment and/or lending activities; changes in laws and regulations affecting public companies, banks, bank holding companies and/or financial holding companies, including the Dodd-Frank Act, and other federal, state and local government mandates; the impact of any change in the FDIC insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount; changes in supervisory and regulatory scrutiny of financial institutions; technological developments and changes; cybersecurity incidents and threats; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; governmental and public policy changes, including environmental regulation; reliance on large customers; the geographic concentration of our business; the ability to access financial resources in the amounts, at the times, and on the terms required to support the Company's future businesses; and the economic impact, including potential market volatility, of national and global events, including the response to bank failures, war and geopolitical matters (including continuing or increasing hostilities in the Middle East and the war in Ukraine), tariffs and trade wars, widespread protests, civil unrest, political uncertainty, and pandemics or other public health crises; and the related financial stress on borrowers and changes to customer behavior and credit risk as a result of any of the foregoing. The Company does not undertake any obligation to update its forward-looking statements.

Critical Accounting Policies

The accounting and reporting policies followed by the Company conform, in all material respects, to U.S. generally accepted accounting principles ("GAAP") and to general practices within the financial services industry. In the course of normal business

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activity, management must select and apply many accounting policies and methodologies and make estimates and assumptions that lead to the financial results presented in the Company’s consolidated financial statements and accompanying notes. There are uncertainties inherent in making these estimates and assumptions, which could materially affect the Company’s results of operations and financial position.

Management considers accounting estimates to be critical to reported financial results if (i) the accounting estimates require management to make assumptions about matters that are highly uncertain, and (ii) different estimates that management reasonably could have used for the accounting estimate in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, could have a material impact on the Company’s financial statements. Management considers the accounting policies relating to the allowance for credit losses ("allowance", or "ACL") to be a critical accounting policy because of the uncertainty and subjectivity involved in this policy and the material effect that estimates related to this area can have on the Company’s financial condition and results of operations.

The Company’s methodology for estimating the allowance considers available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. Refer to "Allowance for Credit Losses" below, "Note 5 - Allowance for Credit Losses", and "Note 1 - Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K for additional discussion regarding the allowance.

For information on the Company's significant accounting policies and to gain a greater understanding of how the Company’s financial performance is reported, refer to "Note 1 - Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K.

Critical Accounting Estimates

The Company's significant accounting policies conform with GAAP and are described in "Note 1 - Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements included in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K. In applying those accounting policies, management of the Company is required to exercise judgment in determining many of the methodologies, assumptions and estimates to be utilized. Certain critical accounting estimates are more dependent on such judgment and in some cases may contribute to volatility in the Company's reported financial performance should the assumptions and estimates used change over time due to changes in circumstances. The most significant area in which management of the Company applies critical assumptions and estimates was the following:

• Accounting for credit losses - The Company accounts for the allowance for credit losses using the current expected credit loss model. Under this model, the allowance for credit losses represents a valuation account that is deducted from the amortized cost basis of certain financial assets, including loans and leases, to present the net amount expected to be collected at the balance sheet date. A provision for credit losses is recorded to adjust the level of the allowance as deemed necessary by management. In estimating expected losses in the loan and lease portfolio, borrower-specific financial data and macro-economic assumptions are utilized to project losses over a reasonable and supportable forecast period. For certain loan pools that share similar risk characteristics, the Company utilizes statistically developed models to estimate amounts and timing of expected future cash flows, collateral values and other factors used to determine the borrowers' abilities to repay obligations. Such models consider historical correlations of credit losses with various macroeconomic assumptions including unemployment and gross domestic product. These forecasts may be adjusted for inherent limitations or biases of the models. Subsequent to the forecast period, the Company utilizes longer-term historical loss experience to estimate losses over the remaining contractual life of the loans. Changes in the circumstances considered when determining management's estimates and assumptions could result in changes in those estimates and assumptions, which could result in adjustment of the allowance for credit losses in future periods. A discussion of facts and circumstances considered by management in determining the allowance for credit losses is included herein in "Note 5 - Allowance for Credit Losses" in the Notes to the Unaudited Consolidated Financial Statements included in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K.

Results of Operations

General

The Company reported diluted earnings per share of $11.24 in 2025, an increase of 126.2% compared to diluted earnings per share of $4.97 in 2024. Net income for the year ended December 31, 2025, was $161.1 million, an increase of 127.3% compared to $70.9 million in 2024. The increase in both diluted earnings per share and net income included the sale of all of the

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issued and outstanding shares of capital stock of the Company's wholly owned subsidiary, Tompkins Insurance Agencies, Inc. ("TIA") to Arthur J. Gallagher Risk Management Services, LLC. (“Gallagher”) for approximately $223.0 million in cash, subject to customary purchase price adjustments, during the fourth quarter of 2025. The transaction generated a pre-tax gain of $188.2 million recognized in noninterest income. The Company also incurred $4.3 million of expenses related to the sale of TIA, which are included in noninterest expense. Partially offsetting the gain in 2025 was a sale of $564.2 million of available-for-sale debt securities, also during the fourth quarter of 2025, which resulted in an pre-tax loss on the sale of securities of $78.7 million. Management expects this sale to favorably impact securities revenue in future periods as the securities sold had an average yield of 1.56%, while the proceeds of the sale were largely reinvested into securities with an estimated yield of approximately 4.52% .

Excluding the impact of the sale of TIA and realized losses on sales of investment securities, adjusted net income, a non-GAAP financial measure, was $90.4 million for the year ended December 31, 2025, up $19.6 million, or 27.7%, when compared to the prior year. Earnings per diluted share, adjusted to exclude the impact of the sale of TIA and realized losses on sales of investment securities (“adjusted diluted earnings per share”), also a non-GAAP financial measure, of $6.31 for the year ended December 31, 2025, increased $1.35 or 27.2% compared to the prior year. Reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures are presented in the "Non-GAAP Disclosure" on page 49 .

In addition to earnings per share, key performance measurements for the Company include return on average shareholders’ equity (ROE) and return on average assets (ROA). ROE was 20.61% in 2025, compared to 10.33% in 2024, while ROA was 1.96% in 2025 and 0.90% in 2024. Tompkins’ 2025 ROE and ROA compared favorably with a peer ratio of 10.64%, and 1.09%, respectively. The peer group data presented here and elsewhere in this Annual Report on Form 10-K is derived from the FRB's "Bank Holding Company Performance Report", which covers banks and bank holding companies with assets between $3.0 billion and $10.0 billion as of September 30, 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 period numbers. ROE and ROA adjusted to exclude the impact of the sale of TIA and realized losses on sales of investment securities ("adjusted ROE" and "adjusted ROA", which are non-GAAP financial measures), were 11.56% and 1.10% for the year ended December 31, 2025, compared to 10.33% and 0.90% for the year ended December 31, 2024. Reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures are presented in "Non-GAAP Disclosure" on page 49 .

Segment Reporting

Prior to October 31, 2025, the Company operated in three business segments: banking, insurance and wealth management. Following the sale of TIA on October 31, 2025, the Company operates in two business segments: banking and wealth management. Insurance was comprised of property and casualty insurance services and employee benefit consulting operated under the Tompkins Insurance subsidiary. Wealth management activities include the results of the Company’s trust, financial planning, and wealth management services provided by Tompkins Financial Advisors, a division of Tompkins Community Bank. All other activities are considered banking. For additional financial information on the Company’s segments, refer to "Note 22 - Segment and Related Information" in the Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K. The Company adopted ASU No. 2023-07, "Segment Reporting: Improvements to Reportable Segment Disclosures", effective for the Company for fiscal years beginning after December 15, 2024.

Banking Segment

As previously mentioned, banking includes all activities of the Company except for insurance (which the Company engaged in through October 31, 2025), and wealth management. In addition to the operations of its banking subsidiary, the main other activity of the Company included in the banking segment is the operations of the parent holding company, Tompkins Financial Corporation, which has historically had minimal impact on the results of operations of the banking segment. As mentioned above, the Company sold TIA on October 31, 2025 and recognized a gain on the sale of $188.2 million, which is included in noninterest income. In addition, the Company recognized $4.3 million of noninterest expenses related to the sale. The net after-tax impact of the sale was approximately $129.0 million. Since the parent holding company was the sole owner of TIA, the transaction was recorded on the parent company's books, and is therefore included in the results of operations of the banking segment.

The banking segment reported net income of $149.5 million for the year ended December 31, 2025, up $90.3 million compared to net income of $59.2 million for 2024. Net income for 2025 included the gain and expenses related to the sale of TIA and pre-tax losses of $78.7 million from the sale of available-for-sale debt securities. Earnings performance in 2025 also benefited from

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increased net interest income, driven by increased loan volume, increases in average asset yields and lower average funding costs compared to 2024.

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

Noninterest income of $141.2 million in 2025 increased $111.2 million or 370.8% compared to 2024. Noninterest income included $188.2 million related to the sale of TIA, partially offset by pre-tax losses of $78.7 million from repositioning of the securities portfolio. The increase in 2025 compared to 2024 also included a $1.1 million increase in gains on sales of residential loans, which was partially offset by a $550,000 decrease in card services income. For the year ended December 31, 2025, derivative income related to customer swap arrangements decreased by $818,000 or 46.0% mainly due to a decrease in volume in 2025 compared to 2024.

Noninterest expense of $170.2 million for the year ended December 31, 2025, increased by $12.9 million or 8.2% compared to 2024. The increase was mainly attributable to an increase in salaries and wages and other employee benefits, up $10.1 million or 10.7%, and professional fees, up $3.0 million or 49.2%. The increase in salaries and wages and other employee benefits was mainly due to the previously mentioned $4.3 million in expenses related to the sale of TIA and normal merit adjustments.

Insurance Segment

The insurance segment reported net income of $8.1 million for 2025, which was up $247,000 or 3.2% compared to 2024. Noninterest revenue for 2025 decreased by $3.5 million or 8.7%, which was more than offset by a decrease in noninterest expense of $3.7 million or 12.9%. The decreases in both revenue and expense were largely due to the sale of TIA on October 31, 2025, which resulted in ten months of operating results in 2025 compared to 12 months in 2024.

Wealth Management Segment

The wealth management segment reported net income of $3.5 million for the year ended December 31, 2025, a decrease of $310,000 or 8.2% compared to 2024. Revenue of $21.4 million was up $945,000 or 4.6% compared to 2024. The increase reflects a higher non-recurring gain on the sale of certain customer accounts, with $921,000 recognized in 2025 compared to $558,000 in the prior year, as well as growth in advisory fee revenue driven by market appreciation and a more favorable business mix. Noninterest expense of $16.8 million was up by $1.4 million or 8.8% compared to 2024. The increase was mainly driven by salaries and employee benefits, up $809,000 or 8.0%, and intercompany service charges, up $431,000 or 19.8% compared to 2024. The fair value of assets under management or in custody at December 31, 2025 totaled $3.0 billion, representing a decrease of $122.9 million or 4.0% compared to $3.1 billion at year-end 2024. While new business production and market performance was favorable for the year, overall asset values declined due to the non-recurring sale of customer accounts totaling $188.5 million in assets, consisting largely of lower-yielding brokerage relationships sold, and additional low-yielding custody asset outflows.

Net Interest Income

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

Net interest income of $249.7 million for 2025 increased by $38.6 million or 18.3% over 2024. The increase was primarily due to increases in average loan balances and average loan yields, along with lower average funding costs in 2025 compared to 2024.

Net interest margin for 2025 was 3.17%, compared to 2.79% for 2024. The increase in net interest margin for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to increased yields on interest earning assets coupled with lower funding costs resulting from improved funding mix.

Net interest margin was 3.42% for the fourth quarter of 2025, up 22 basis points when compared to the immediate prior quarter, and up 49 basis points from 2.93% for the fourth quarter of 2024. The increase in net interest margin, when compared to the

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most recent prior quarter, was primarily due to securities purchased in the fourth quarter of 2025 yielding higher interest rates compared to securities sold during the same period in 2025, and lower funding costs as a result of lower rates and improved funding mix. The increase in net interest margin when compared to the same period prior year was mainly a result of higher yields on average interest earning assets and higher average loan balances, coupled with lower average funding costs.

Interest income increased $34.5 million or 9.9% in 2025 over 2024, driven by an increase in average interest-earning assets as well as higher interest-earning asset yields. Average interest-earning assets for the year ended December 31, 2025, increased $317.8 million, or 4.2%, compared to 2024, primarily due to an increase in average loans. For the year ended December 31, 2025, the average yield on interest-earning assets increased 25 basis points over 2024.

Interest income on loans for the year ended December 31, 2025, was up $32.6 million, or 10.8% compared to 2024, driven by higher average balances and higher average yields. Average loans and leases increased $409.4 million or 7.1% in 2025 compared to 2024, and represented 78.0% of average earning assets in 2025 compared to 75.9% in 2024. The average yield on loans for the year ended December 31, 2025, of 5.43%, was up 18 basis points over 2024.

Interest income on securities, excluding dividends on FHLB stock, for the year ended December 31, 2025, was up $2.5 million or 6.0% as compared to 2024, as higher average yields more than offset lower average balances. The average yield on total securities for the year ended December 31, 2025, increased 27 basis points, while average balances for securities decreased $89.1 million, or 5.0%, from 2024. The increase in average securities yields was driven by repositioning of the investment portfolio through the sale of approximately $564.2 million of available-for-sale investment securities in the fourth quarter of 2025. The securities sold had an average yield of 1.56%, while the proceeds of the sale were largely reinvested into securities with an average estimated yield of approximately 4.52%. The weighted average life of the securities purchased and sold was approximately 5.5 years.

Interest expense for 2025 decreased $4.1 million or 3.0% compared to 2024, driven mainly by the decrease in average rates paid on interest-bearing liabilities and improved funding mix, as deposit growth contributed to a decrease in average borrowings. The average cost of interest-bearing deposits was 2.23% in 2025, a decrease of 4 basis points from 2.27% in 2024, while the average cost of interest-bearing liabilities decreased to 2.41% in 2025 from 2.60% in 2024.

Average interest-bearing deposits in 2025 increased $371.0 million or 8.1% compared to 2024, with average time deposits up $207.8 million or 20.4% and average interest-bearing checking, savings and money market deposits up $163.2 million or 4.6%. The growth in average time deposits included an increase in average brokered deposits of $79.3 million over prior year. Average noninterest bearing deposit balances in 2025 increased $13.1 million or 0.7% versus 2024 and represented 27.2% of average total deposits in 2025 compared to 28.7% in 2024.

Average other borrowings decreased by $131.9 million or 20.7% in 2025 compared to 2024. The average rate paid on other borrowings for the year ended December 31, 2025, was down 75 basis points compared to 2024.

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Table 1 - Average Statements of Condition and Net Interest Analysis

For the Quarters Ended

December 31, 2025

September 30, 2025

December 31, 2024

(dollar amounts in thousands)

Average

Balance

(QTD)

Interest

Average

Yield/Rate

Average

Balance

(QTD)

Interest

Average

Yield/Rate

Average

Balance

(QTD)

Interest

Average

Yield/Rate

ASSETS

Interest-earning assets

Interest-bearing balances due from banks

Securities 1

U.S. Government securities

State and municipal 2

Other Securities 2

Total securities

FHLBNY and FRB stock

Total loans and leases, net of unearned income 2,3

Total interest-earning assets

Other assets

Total assets

LIABILITIES & EQUITY

Deposits

Interest-bearing deposits

Interest bearing checking, savings, & money market

Time deposits

Total interest-bearing deposits

Federal funds purchased & securities sold under agreements to repurchase

Other borrowings

Total interest-bearing liabilities

Noninterest bearing deposits

Accrued expenses and other liabilities

Total liabilities

Tompkins Financial Corporation Shareholders’ equity

Noncontrolling interest

Total equity

Total liabilities and equity

Interest rate spread

Tax-equivalent net interest income/margin on earning assets

Tax-equivalent adjustment

Net interest income

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For the year ended December 31,

(dollar amounts in thousands)

Average

Balance

(YTD)

Interest

Average

Yield/Rate

Average

Balance

(YTD)

Interest

Average

Yield/Rate

Average

Balance

(YTD)

Interest

Average

Yield/Rate

ASSETS

Interest-earning assets

Interest-bearing balances due from banks

Securities 1

U.S. Government securities

State and municipal 2

Other securities 2

Total securities

FHLBNY and FRB stock

Total loans and leases, net of unearned income 2,3

Total interest-earning assets

Other assets

Total assets

LIABILITIES & EQUITY

Deposits

Interest-bearing deposits

Interest bearing checking, savings, & money market

Time deposits

Total interest-bearing deposits

Federal funds purchased & securities sold under agreements to repurchase

Other borrowings

Total interest-bearing liabilities

Noninterest bearing deposits

Accrued expenses and other liabilities

Total liabilities

Tompkins Financial Corporation Shareholders’ equity

Noncontrolling interest

Total equity

Total liabilities and equity

Interest rate spread

Tax-equivalent net interest income/margin on earning assets

Tax-equivalent adjustment

Net interest income

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 tax-equivalent adjustments using the Federal income tax rate of 21.0% in 2025, 2024, and 2023 to increase tax exempt interest income to tax-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 - Summary of Significant Accounting Policies" of the Company’s consolidated financial statements included in Part 1 of this Report on Form 10-K.

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Table 2 - Analysis of Changes in Net Interest Income

Increase (Decrease) Due to Change

in Average

Increase (Decrease) Due to Change

in Average

(In thousands)(taxable equivalent)

Volume

Yield/Rate

Total

Volume

Yield/Rate

Total

INTEREST INCOME:

Interest-bearing balances due from bank

Investments 1

Taxable

Tax-exempt

FHLB and FRB stock

Loans, net 1

Total interest income

INTEREST EXPENSE:

Interest-bearing deposits:

Interest checking, savings and money market

Time

Federal funds purchased and securities sold under agreements to repurchase

Other borrowings

Total interest expense

Net interest income

1 Interest income includes the tax effects of tax-equivalent adjustments using the Federal income tax rate of 21.0% in 2025 , 2024 and 2023 to increase tax exempt interest income to tax-equivalent basis.

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

Provision for Credit Loss Expense

The provision for credit loss expense represents management’s estimate of the expense necessary to maintain the allowance for credit losses at an appropriate level. The allowance for credit losses represented 0.89% of total loans and leases at December 31, 2025, from 0.94% at December 31, 2024. The decrease in the ratio of allowance to total loans from year-end 2024 was due to updated economic forecasts for unemployment and gross domestic product, as well as improved asset quality. The provision for credit loss expense was $11.5 million in 2025, compared to provision expense of $6.6 million in 2024. The increase was mainly driven by a charge-off of $4.7 million in the second quarter of 2025 on a commercial real estate relationship totaling $18.1 million, and a charge-off of $2.4 million in the fourth quarter of 2025 on a commercial real estate relationship totaling $7.4 million. At the time of the charge-offs these commercial real estate relationships had specific reserves of $4.2 million and $1.6 million, respectively. The provision for credit losses for 2025 included a provision credit of $30,000 related to off-balance sheet credit exposures compared to a provision credit of $807,000 for 2024. The section captioned "Financial Condition – The Allowance for Credit Losses" below has further details on the allowance for credit losses and asset quality metrics.

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Noninterest Income

Year ended December 31,

(In thousands)

Insurance commissions and fees

Wealth management fees

Service charges on deposit accounts

Card services income

Gain on sale of TIA

Other income

Net gain (loss) on securities transactions

Total

Noninterest income of $196.9 million for the year-ended December 31, 2025 increased $108.7 million or 123.4% from 2024. Noninterest income represented 44.1% of total revenues in 2025, up from 29.5% in 2024.

As indicated by the above table, insurance commissions and fees decreased in 2025 compared to 2024 largely due to the sale of TIA on October 31, 2025, which resulted in ten months of operating results in 2025 compared to 12 months in 2024.

Wealth management fees of $20.1 million in 2025 increased $526,000 or 2.7% compared to 2024, reflecting market appreciation. Wealth management fees include fees from trust services, financial planning, wealth management services, and brokerage related services. The fair value of assets managed by, or in custody of, Tompkins was $3.0 billion at December 31, 2025, a decrease of $122.9 million or 4.0% from $3.1 billion at December 31, 2024. While new business production and market performance for the year was favorable, total asset levels declined due to the non‑recurring sale of certain customer accounts, consisting largely of lower-yielding brokerage relationships sold following the termination of our LPL relationship, and additional low-yielding custody outflows.

Service charges on deposit accounts of $7.3 million in 2025 were flat compared to 2024. A decrease in net overdraft fees was mainly offset by increases in service fees on personal and business accounts, reflective of increased transaction activity, resulting from marketing initiatives in 2025.

Card services income decreased $555,000 or 4.6% in 2025 compared to 2024. The primary components of card services income are fees related to interchange income and transaction fees for debit card transactions, credit card transactions, and ATM usage. The decrease was partially related to a $255,000 sign-on bonus related to the renewal of a card services contract in 2024, accompanied by decreases in interchange rates from NYCE income.

The gain on sale of TIA was related to the sale of the Company's insurance agency subsidiary to Gallagher in the fourth quarter of 2025 at a pre-tax gain of $188.2 million, as discussed above.

Other income of $12.9 million increased $2.8 million or 28.0% compared to 2024. The increase in 2025 compared to 2024 was mainly attributable to a $1.9 million gain on the sale of OREO and gains on sales of residential loans, which were up $1.2 million over 2024. These increases were partially offset by an $818,000 decrease in derivatives related income, and a $353,000 decrease in income related to bank owned life insurance.

The net loss on securities transactions for the year ended December 31, 2025 was $78.7 million, compared to gain of $32,000 for 2024. The loss was a result of the sale of $564.2 million of available-for-sale debt securities during the fourth quarter of 2025 as part of a previously discussed balance sheet repositioning.

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Noninterest Expense

Year ended December 31,

(In thousands)

Salaries and wages

Other employee benefits

Net occupancy expense of premises

Furniture and fixture expense

Amortization of intangible assets

Other operating expense

Total

Noninterest expense for the year ended 2025 of $210.2 million increased $10.6 million, or 5.3% compared to 2024. The increase in noninterest expense in 2025 over 2024 was mainly driven by higher salaries and wages and other expenses (professional fees, marketing, audit and examinations, and travel and meetings).

Expenses associated with salaries and wages and employee benefits are the largest component of total noninterest expense. In 2025, the $7.4 million or 7.3% increase in salaries and wages expense compared to 2024 was mainly attributable to $4.3 million in expense related to the sale of TIA as well as annual merit adjustments. The number of employees as measured by average full time equivalents (FTEs) for 2025 was 960, compared to 966 for 2024.

Other operating expenses of $54.0 million increased by $2.8 million or 5.4% compared to 2024, including increases in marketing, up $905,000; professional fees, up $2.9 million; and travel and meeting expense, up $401,000. Partially offsetting these increases was a $1.6 million decrease in certain post-retirement benefit expenses year-over-year, which was partially the result of curtailment gains of $916,000 related to certain benefit plans in connection with sale of TIA recognized in 2025.

Noncontrolling Interests

Net income attributable to noncontrolling interests represented the portion of net income in consolidated majority-owned subsidiaries that is attributable to the minority owners of a subsidiary. The noncontrolling interests related to three real estate investment trusts ("REIT"), which were substantially owned by the Company through the fourth quarter of 2024. In the fourth quarter of 2024, the Company's bank subsidiary approved the dissolution of the three REITs effective as of December 31, 2024.

Income Tax Expense

The provision for income taxes provides for Federal, New York State, Pennsylvania and other miscellaneous state income taxes. The 2025 provision was $63.8 million, which increased $41.8 million or 189.9% compared to the 2024 provision. The effective tax rate for the Company was 28.4% in 2025, up from 23.7% in 2024. The effective rates for 2025 and 2024 differed from the U.S. statutory rate of 21.0% during those periods due to the effect of state taxes, tax-exempt income from loans, securities, and life insurance assets, investments in tax credits, and compensation related adjustments. In addition, the effective tax rate in 2025 was impacted by the sale of TIA which resulted in a significant increase to pre-tax income and an adjustment for goodwill with no tax-basis. A reconciliation from the statutory rate to the effective tax rate is provided in "Note 15 - Income Taxes" in the Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K.

Financial Condition

Total assets were $8.7 billion at December 31, 2025, up by $559.2 million or 6.9% from the previous year end. The increase over prior year end was mainly in loans and securities and supported by deposit growth.

Loans and leases were 74.4% of total assets at December 31, 2025, compared to 74.2% of total assets at December 31, 2024. Total loan balances were $6.4 billion at December 31, 2025, an increase of $426.3 million or 7.1% compared to the $6.0 billion reported at year-end 2024. The increase was mainly in commercial real estate loans and commercial and industrial loans. A more detailed discussion of the loan portfolio is provided below in this section under the caption "Loans and Leases".

As of December 31, 2025, total securities comprised 19.6% of total assets, compared to 19.1% of total assets at year-end 2024. Securities increased $150.6 million or 9.8% at December 31, 2025, compared to December 31, 2024. A more detailed discussion of the securities portfolio is provided below in this section under the caption "Securities".

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Total deposits at year-end 2025 increased by $466.0 million or 7.2% compared to December 31, 2024. Contributing to the increase, time deposit balances increased by $230.0 million or 21.5%; checking, savings and money market accounts increased by $183.5 million or 5.2%; and noninterest bearing deposits increased by $52.5 million or 2.8%. Other borrowings, consisting mainly of short-term advances with the FHLB, decreased $225.8 million or 28.6% from December 31, 2024. A more detailed discussion of deposits and borrowings is provided below in this section under the caption "Deposits and Other Liabilities".

Shareholders’ Equity

The Consolidated Statements of Changes in Shareholders’ Equity included in the Consolidated Financial Statements of the Company contained in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K, detail changes in equity capital over prior year end. Total shareholders’ equity increased $224.9 million or 31.5% to $938.4 million at December 31, 2025, from $713.4 million at December 31, 2024. The increase mainly reflects net income of $161.1 million, a decrease in accumulated other comprehensive loss of $99.4 million, and stock-based compensation of $3.0 million, partially offset by common stock dividends of $36.1 million and common stock repurchased of $1.6 million.

Accumulated other comprehensive loss decreased from $118.5 million at December 31, 2024 to $19.1 million at December 31, 2025, reflecting a $94.7 million increase in unrealized losses on available-for-sale debt securities and a $4.7 million decrease related to employee post-retirement benefit plans. The decrease in unrealized losses on available-for-sale securities was mainly a result of the sale of $564.2 million of available-for-sale securities at pre-tax loss of $78.7 million during the fourth quarter of 2025 as well as changes in market interest rates.

The Company increased cash dividends per share by 28.3% in 2025 over 2024, which followed an increase of 1.7% in 2024 over 2023. Dividends per share were $3.13 in 2025, compared to $2.44 in 2024, and $2.40 in 2023. Cash dividends paid represented 22.4%, 49.6%, and 364.6% of after-tax net income in 2025, 2024, and 2023, respectively.

On July 20, 2023, the Company’s Board of Directors authorized a share repurchase plan (the “2023 Repurchase Plan”) under which the Company could repurchase up to 400,000 shares of the Company’s common stock over the 24 months following adoption of the plan. The 2023 Repurchase Plan expired by its terms on July 20, 2025. The Company did not repurchase any shares under the 2023 Repurchase Plan.

On July 24, 2025, the Company’s Board of Directors authorized a replacement 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. As of December 31, 2025, 22,339 shares had been repurchased under the 2025 Repurchase Plan at an average price of $73.86 per share.

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 operations 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 bank 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.

As of December 31, 2025, the capital ratios for the Company’s subsidiary bank exceeded the minimum levels required to be considered well capitalized. Additional information on the Company’s capital ratios and regulatory requirements is provided in "Note 20 - Regulations and Supervision" in the Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K.

Securities

The Company maintains a portfolio of securities such as U.S. Treasuries, U.S. government sponsored entities securities, U.S. government agencies, non-U.S. Government agencies or sponsored entities mortgage-backed securities, obligations of states and political subdivisions thereof and equity securities. Management typically invests in securities with short to intermediate

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average lives in order to better match the interest rate sensitivities of its assets and liabilities. Investment decisions are made within policy guidelines established by the Company’s Board of Directors. The investment policy established by the Company’s Board of Directors is based on the asset/liability management goals of the Company, and is monitored by the Company’s Asset/Liability Management Committee and Investment Committee. The intent of the policy is to establish a portfolio of high-quality diversified securities, which optimizes net interest income within safety and liquidity limits deemed acceptable by the Asset/Liability Management Committee.

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

The Company’s total securities portfolio at December 31, 2025 was $1.7 billion, compared to $1.5 billion at December 31, 2024. The table below shows the composition of the available-for-sale and held-to-maturity debt securities portfolios as of year-end 2025, 2024 and 2023. The increase in securities from year-end 2024 was largely driven by $812.6 million of securities purchases during 2025 which were partially offset by $564.2 million of sales of available-for-sale debt securities and $228.0 million of payments, maturities and calls during the year. Unrealized losses on the available-for-sale debt securities portfolio were $9.3 million at year-end 2025, down from $135.6 million at year-end 2024. The sale of securities and market conditions contributed to the decrease in unrealized losses at year-end 2025 from prior year end.

Additional information on the securities portfolio is available in "Note 3 - Securities" in the Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K, which details the types of securities held, the carrying and fair values, and the contractual maturities as of December 31, 2025 and 2024.

As of December 31,

Available-for-Sale Debt Securities

(In thousands)

Amortized

Cost

Fair Value

Amortized

Cost

Fair Value

Amortized

Cost

Fair Value

U.S. Treasuries

Obligations of U.S. Government sponsored entities

Obligations of U.S. states and political subdivisions

Mortgage-backed securities-residential, issued by

U.S. Government agencies

U.S. Government sponsored entities

U.S. corporate debt securities

Total available-for-sale debt securities

As of December 31,

Held-to-Maturity Debt Securities

(In thousands)

Amortized

Cost

Fair Value

Amortized

Cost

Fair Value

Amortized

Cost

Fair Value

U. S. Treasuries

Obligations of U.S. Government sponsored entities

Total held-to-maturity debt securities

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 (impairment) is due to credit-related factors or noncredit-related factors.

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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 NRSRO.

• 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, net of applicable taxes. Credit-related impairment is recognized as an allowance for credit losses ("ACL") on the Company's 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 December 31, 2025, the held-to-maturity portfolio consisted of U.S. Treasury securities and securities issued by U.S. government-sponsored enterprises, including Federal National Mortgage Agency, Federal Home Loan Bank, and 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 "risk-free," 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 December 31, 2025.

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 also holds non-marketable Federal Home Loan Bank New York ("FHLBNY") stock and non-marketable Atlantic Community Bankers Bank ("ACBB") stock, which are required to be held for regulatory purposes and for borrowing availability. The required investment in FHLBNY stock is tied to the Company’s borrowing levels with the FHLBNY. Holdings of FHLBNY stock and ACBB stock totaled $32.2 million and $95,000 at December 31, 2025, respectively, compared to $42.2 million and $95,000, respectively, at December 31, 2024. These securities are carried at par, which is also cost. During 2025, the FHLBNY continued to pay dividends and repurchase stock. As such, the Company has not recognized any impairment on its holdings of FHLBNY.

Management’s policy is to purchase investment grade securities that, on average, have relatively short expected durations. This policy helps mitigate interest rate risk and provides sources of liquidity without significant risk to capital. The contractual maturity distribution of debt securities and mortgage-backed securities as of December 31, 2025, along with the weighted average yield of each category, is presented in Table 3-Maturity Distribution below. Balances are shown at amortized cost and weighted average yields are calculated on a fully tax-equivalent basis. Expected maturities may differ from contractual maturities presented in Table 3-Maturity Distribution below, because issuers may have the right to call or prepay obligations with or without penalty and mortgage-backed securities may pay throughout the periods prior to contractual maturity.

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Table 3 - Maturity Distribution

As of December 31, 2025

Securities

Available-for-Sale 1

Securities

Held-to-Maturity

(dollar amounts in thousands)

Amount

Yield 2

Amount

Yield 2

U.S. Treasury

Within 1 year

Over 1 to 5 years

Over 5 to 10 years

Obligations of U.S. Government sponsored entities

Within 1 year

Over 1 to 5 years

Over 5 to 10 years

Over 10 years

Obligations of U.S. state and political subdivisions

Within 1 year

Over 1 to 5 years

Over 5 to 10 years

Over 10 years

Mortgage-backed securities - residential

Within 1 year

Over 1 to 5 years

Over 5 to 10 years

Over 10 years

Other securities

Over 1 to 5 years

Total securities

Within 1 year

Over 1 to 5 years

Over 5 to 10 years

Over 10 years

1  Balances of available-for-sale debt securities are shown at amortized cost.

2  Interest income includes the tax effects of tax-equivalent adjustments using a combined New York State and Federal effective income tax rate of 24.5% to increase tax-exempt interest income to tax-equivalent basis.

The average tax-equivalent yield on the securities portfolio was 2.63% in 2025, 2.36% in 2024 and 1.74% in 2023.

At December 31, 2025, there were no holdings of any one issuer, other than the U.S. Government sponsored entities, in an amount greater than 10% of the Company’s shareholders’ equity.

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Loans and Leases

Table 4 - Composition of Loan and Lease Portfolio

As of December 31,

(In thousands)

Commercial and industrial

Agriculture

Commercial and industrial other 1

Subtotal commercial and industrial

Commercial real estate

Construction

Agriculture

Commercial real estate other

Subtotal commercial real estate

Residential real estate

Home equity

Mortgages

Subtotal residential real estate

Consumer and other

Indirect

Consumer and other

Subtotal consumer and other

Leases

Total loans and leases

Less: unearned income and deferred costs and fees

Total loans and leases, net of unearned income and deferred costs and fees

1 Commercial and industrial other includes $7,000, $159,000, $404,000, $756,000, and $71.3 million respectively, of Payment Protection Program "PPP" loans as of December 31, 2025, 2024, 2023, 2022, and 2021.

The below table shows a more detailed breakout of commercial real estate ("CRE") loans as of December 31, 2025 and December 31, 2024:

As of December 31,

CRE Concentrations

(In thousands)

Balance

% CRE

Balance

% CRE

Construction

Multi-family/Single family real estate

Agriculture

Retail 1

Hotels/motels

Office space 2

Industrial 3

Mixed Use

Medical 4

Other

Total

1 Retail included 2.1% and 2.5%, respectively, of owner occupied real estate at December 31, 2025 and 2024.

2 Office space included 1.7%, respectively, of owner occupied real estate at both December 31, 2025 and 2024.

3 Industrial included 2.79% and 2.59%, respectively, of owner occupied real estate at December 31, 2025 and 2024 .

4 Medical included 1.71% and 2.37%, respectively, of owner occupied real estate at December 31, 2025 and 2024.

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Total loans and leases of $6.4 billion at December 31, 2025 increased $426.3 million or 7.1% from December 31, 2024. The increase was mainly in commercial real estate loans and commercial and industrial loans. At December 31, 2025, total loans and leases represented 74.4% of total assets compared to 74.2% of total assets at December 31, 2024.

Residential real estate loans, including home equity loans, were $1.6 billion at December 31, 2025, an increase of $20.3 million or 1.3% compared to $1.6 billion at year-end 2024. Residential real estate loans comprised 24.7% of total loans and leases at December 31, 2025 compared to 26.1% at December 31, 2024. Growth in residential loan balances is 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 Management Committee meets regularly and establishes standards for selling or retaining residential real estate mortgage originations.

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 and fraud. The Company has not had to repurchase any loans as a result of these representations and warranties.

During 2025, 2024, and 2023, the Company sold residential mortgage loans totaling $85.6 million, $40.1 million, and $4.5 million, respectively, and realized net gains on these sales of $2.2 million, $1.0 million, and $96,000, respectively. When residential mortgage loans are sold to FHLMC, the Company typically retains all servicing rights, which provides the Company with a source of fee income. In connection with the sales in 2025, 2024, and 2023, the Company recorded mortgage-servicing assets of $642,000, $299,000, and $34,000, respectively.

The Company originates fixed rate and adjustable rate residential mortgage loans. The Company also originates loans that have characteristics of both, such as a 7/6 adjustable rate mortgage, which has a fixed rate for the first seven years and then adjusts semi-annually thereafter. The majority of residential mortgage loans originated by the Company over the last several years have been fixed rate loans. Adjustable rate loans increased in 2024 and 2025 as a result of the higher interest rate environment. Adjustable rate residential real estate loans are underwritten based upon the initial rate when the fixed rate period is 5 years or longer. For loans with an initial fixed rate of less than 5 years, the fully indexed rate is utilized for ability to repay qualifying and underwriting. This underwriting practice matches secondary market guidelines.

Commercial real estate loans totaled $3.7 billion at December 31, 2025, an increase of $282.2 million or 8.4% compared to December 31, 2024, and represented 56.8% of total loans and leases at December 31, 2025, compared to 56.1% at December 31, 2024.

Commercial and industrial loans totaled $1.1 billion at December 31, 2025, which was an increase of $135.1 million or 14.0% from December 31, 2024. Commercial and industrial loans represented 17.1% of total loans at December 31, 2025 compared to 16.0% at December 31, 2024.

As of December 31, 2025, agriculturally-related loans totaled $348.8 million or 5.4% of total loans and leases compared to $327.6 million or 5.4% of total loans and leases at December 31, 2024. Agriculturally-related loans include loans to dairy farms and cash and vegetable 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 consumer loan portfolio includes personal installment loans, indirect automobile financing, and overdraft lines of credit. Consumer and other loans were $86.5 million at December 31, 2025, compared to $96.4 million at December 31, 2024.

The lease portfolio decreased by 16.6% to $10.4 million at December 31, 2025 from $12.5 million at December 31, 2024. As of December 31, 2025, commercial leases and municipal leases represented 100.0% of total leases.

The Company has adopted comprehensive lending policies, underwriting standards and loan review procedures. There were no significant changes to the Company’s existing policies, underwriting standards and loan review procedures during 2025. 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 originations, loan quality, concentrations of credit, loan delinquencies and nonperforming loans and potential problem loans.

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The Company’s loan and lease customers are located primarily in the New York and Pennsylvania communities served by its subsidiary bank. Although operating in numerous communities in New York and Pennsylvania, the Company is still dependent on the general economic conditions of these states and the local economic conditions of the communities within those states in which the Company does business.

Analysis of Past Due and Nonperforming Loans

As of December 31,

(In thousands)

Loans 90 days past due and accruing

Commercial and industrial

Residential real estate

Consumer and other

Total loans 90 days past due and accruing

Nonaccrual loans

Commercial and industrial

Commercial real estate

Residential real estate

Consumer and other

Total nonaccrual loans and leases

Troubled debt restructurings not included above

Total nonperforming loans and leases

Other real estate owned

Total nonperforming assets

Total nonperforming loans and leases as a percentage of total loans and leases

Total nonperforming assets as a percentage of total assets

Allowance as a percentage of nonperforming loans and leases

Asset quality measures were generally favorable at December 31, 2025 compared to December 31, 2024. The above table shows a decrease in nonperforming loans and nonperforming assets at year-end 2025 from year-end 2024. The Company’s total nonperforming assets as a percentage of total assets was 0.56% at December 31, 2025 compared to 0.80% at December 31, 2024, compared to its peer group's most recent ratio of 0.58% at September 30, 2025. The peer data is from the Federal Reserve Board and represents banks or bank holding companies with assets between $3.0 billion and $10.0 billion. The decrease in nonperforming assets was mainly due to a $14.2 million decrease related to one commercial property being transferred from commercial real estate loans into other real estate owned during the fourth quarter of 2024, and subsequently being sold in the first quarter of 2025.

Nonperforming loans and leases totaled $47.9 million at December 31, 2025 and decreased 5.8% from December 31, 2024. Nonperforming loans and leases represented 0.74% of total loans at December 31, 2025, compared to 0.85% of total loans at December 31, 2024. Nonperforming loans and leases in the commercial real estate portfolio at year-end 2025 decreased by $9.7 million compared to year-end 2024. During the fourth quarter of 2025, a $7.4 million commercial real estate loan was removed from nonaccrual loans, reflecting a payoff of $5.0 million, with a partial charge-off of $2.4 million.

Loans past due 30-89 days totaled $8.8 million or 0.14% of total loans at December 31, 2025, and $28.8 million or 0.48% of total loans at December 31, 2024. The decrease in loans past due 30-89 days when compared to December 31, 2024 was mainly due to one commercial real estate loan totaling $17.3 million being moved to nonaccrual loans and leases in the first quarter of 2025.

Loans internally-classified Special Mention or Substandard totaled $134.5 million at December 31, 2025, compared to $111.1 million at December 31, 2024. The increase at December 31, 2025 compared to prior year end was largely due to the downgrade of one performing commercial loan totaling $20.1 million to Substandard during 2025.

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The Company adopted ASU 2022-02 effective January 1, 2023. This standard eliminated the previous troubled debt restructuring ("TDR") accounting model and replaced it with guidance and disclosure requirements for identifying modifications to loans to borrowers experiencing financial difficulty. Modifications to borrowers experiencing financial difficulty 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. Prior year TDRs are included in the above table within the following categories: "loans 90 days past due and accruing", "nonaccrual loans", or "troubled debt restructurings not included above".

In general, the Company places a loan on nonaccrual status if principal or interest payments become 90 days or more past due and/or management deems the collectability of the principal and/or interest to be in question, as well as when called for by regulatory requirements. Although in nonaccrual status, the Company may continue to receive payments on these loans. These payments are generally recorded as a reduction to principal and interest income is recorded only after principal recovery is reasonably assured. For additional financial information on the difference between the interest income that would have been recorded if these loans and leases had been paid in accordance with their original terms and the interest income that was recorded, refer to "Note 4 - Loans and Leases" in the Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K.

The Company’s recorded investment in loans and leases that are individually evaluated totaled $26.1 million at December 31, 2025, and $31.7 million at December 31, 2024. A loan is individually evaluated when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. Individually evaluated loans consist of our non-homogenous nonaccrual loans and loans that are 90 days or more past due. Specific reserves on individually evaluated loans that are not collateral dependent are measured based on the present value of expected future cash flows discounted at the original effective interest rate of each loan. For loans that are collateral dependent, impairment is measured based on the fair value of the collateral less estimated selling costs, and such impaired amounts are generally charged off.

At December 31, 2025, there were specific reserves of $1.4 million, related to one commercial real estate relationship totaling $17.3 million and one residential real estate relationship totaling $2.4 million, compared to $1.7 million of specific reserves on three commercial real estate relationships totaling $7.5 million at December 31, 2024. The majority of the individually evaluated loans are collateral dependent loans that have limited exposure or require limited specific reserves because of the amount of collateral support with respect to these loans or the loans have been written down to fair value. Interest payments on individually evaluated loans are typically applied to principal unless collectability of the principal amount is reasonably assured. In these cases, interest is recognized on a cash basis. There was no interest income recognized on individually evaluated loans and leases for 2025, 2024 and 2023.

The ratio of the allowance to nonperforming loans was 120.30% at December 31, 2025, compared to 111.06% at December 31, 2024. The increase in the ratio from year-end 2025 from year-end 2024 was mainly due to the decrease in nonperforming loans discussed in more detail above and, to a lesser extent, the increase in the allowance for credit losses. The Company’s nonperforming loans are mostly made up of collateral dependent loans requiring little to no specific allowance due to the level of collateral available with respect to these loans and/or previous charge-offs.

Management reviews the loan portfolio for evidence of potential problem loans and leases. Potential problem loans and leases are loans and leases that are currently performing in accordance with contractual terms, but where known information about possible credit problems of the related borrowers causes management to have doubt as to the ability of such borrowers to comply with the present loan payment terms and may result in such loans and leases becoming nonperforming at some time in the future. Management considers loans and leases classified as Substandard, which continue to accrue interest, to be potential problem loans and leases. The Company, through its credit administration function, identified 12 commercial relationships in the loan portfolio totaling $5.0 million at December 31, 2025 that were potential problem loans. At December 31, 2024, there were 16 commercial relationships totaling $41.2 million that were considered potential problem loans. Of the 12 commercial relationships from the portfolio that were classified as potential problem loans at December 31, 2025, there was 1 relationship that individually equaled or exceeded $1.0 million, which totaled $1.6 million. The decrease in the aggregate amount of potential problem loans at year-end 2025 from year-end 2024 was mainly due to the downgrade of one commercial real estate loan totaling $17.3 million to being reported as individually evaluated.

Potential problem loans remain in a performing status due to a variety of factors, including payment history, the value of collateral supporting the credits, and personal or government guarantees. These factors, when considered in the aggregate, give management reason to believe that the current risk exposure on these loans does not warrant accounting for these loans as nonperforming. However, these loans do exhibit certain risk factors, which have the potential to cause them to become

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nonperforming. Accordingly, management’s attention is focused on these credits, which are reviewed on at least a quarterly basis.

The Allowance for Credit Losses

Management reviews the appropriateness of the ACL on a regular basis. Management considers the accounting policy relating to the ACL to be a critical accounting policy, given the inherent uncertainty in evaluating the levels of the ACL 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 ACL 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 loan level wherein payment expectations are adjusted for estimated prepayment speeds, 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 and forecasts 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.

The combination of adjustments for credit expectations and timing expectations produces an expected cash flow stream at the loan 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.

The model also considers the need to qualitatively adjust expected loss estimates for information not already captured in the loss estimation process. These qualitative factors include, but are not limited to, those suggested by the Interagency Policy Statement on Allowances for Credit Losses. These qualitative factor adjustments may increase or decrease the Company's estimate of expected credit losses.

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

Loans that do not share similar risk characteristics are evaluated on an individual basis. The ACL for individually evaluated loans is measured using the DCF method based on the loan's contractual interest rate, or at the loan's observable market price, or if the loan is collateral dependent, at the fair value of the collateral, less cost to sell.

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 December 31, 2025 considers the allowance to be appropriate, under adversely different conditions or assumptions, the Company would need to increase or decrease the allowance. In addition, various federal regulatory agencies and the NYSDFS, 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.

Tables 5 and 6 below show additional information on the ACL as of December 31, 2025 and the prior four years.

The allocation of the Company’s allowance as of December 31, 2025, and each of the previous four years is illustrated in the below table. The table provides an allocation of the allowance for credit losses for inherent loan losses by type. The allocation is

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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. The table shows a fairly consistent allocation of the loan portfolio and allowance over the period with commercial real estate and residential real estate representing the largest proportion of total loans and the allowance.

Table 5 - Allocation of the Allowance for Credit Losses

As of December 31,

(In thousands)

Total loans outstanding at end of year

Allocation of the ACL by loan type:

Commercial and industrial

Commercial real estate

Residential real estate

Consumer and other

Leases

Total

Allocation of the ACL as a percentage of total allowance:

Commercial and industrial

Commercial real estate

Residential real estate

Consumer and other

Leases

Total

Loan and lease types as a percentage of total loans and leases:

Commercial and industrial

Commercial real estate

Residential real estate

Consumer and other

Leases

Total

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Table 6 - Analysis of the Allowance for Credit Losses

As of December 31,

(In thousands)

Average loans outstanding during year

Balance of allowance at beginning of year

Impact of adopting ASU 2022-02

Loan charge-offs:

Commercial and industrial

Commercial real estate

Residential real estate

Consumer and other

Total loan charge-offs

Recoveries of loans previously charged-off:

Commercial and industrial

Commercial real estate

Residential real estate

Consumer and other

Total loan recoveries

Net loan charge-offs (recoveries)

Additions/(Reductions) to allowance charged to operations

Balance of allowance at end of year

Allowance as a percentage of total loans and leases outstanding

Net charge-offs (recoveries) as a percentage of average loans and leases outstanding during the year

The above table shows the activity in the allowance for credit losses over the past five years as well as the allowance coverage of total loans at the end of each of the past five years. As of December 31, 2025, the ACL was $57.7 million, an increase of $1.2 million or 2.1% from year-end 2024. The increase reflects provision for credit loss expense of $11.6 million, less net loan charge-offs of $10.4 million. The ratio of the allowance for credit losses as a percentage of total loans was 0.89% at year-end 2025 compared to 0.94% at year-end 2024.

The increase in the ACL from year-end 2024 reflects loan growth, mainly in commercial real estate and commercial and industrial loans, partially offset by updated model assumptions based on the annual model review and a decrease in qualitative reserves driven by asset quality improvements. Reserves on loans individually evaluated for impairment decreased approximately $284,000 from year end 2024 primarily related to the sale of two commercial relationships. This portion of the ACL estimate reflects the difference between fair value of collateral less costs to sell and the amortized cost basis of the loans.

Provision for credit losses loans for the year ended December 31, 2025 was $11.6 million compared to $7.4 million for the same period in 2024. The increase in provision expense for 2025 compared to 2024 was mainly driven by a charge-off of $4.7 million in the second quarter of 2025 on a commercial real estate relationship totaling $18.1 million, and a charge-off of $2.4 million in the fourth quarter of 2025 on a commercial real estate relationship totaling $7.4 million. At the time of the charge-offs, the two commercial real estate relationships had specific reserves of $4.2 million and $1.6 million, respectively. Net charge-offs / (recoveries) as a percentage of average loans was 0.17% for 2025 compared to 0.04% in 2024, and (0.01)% in 2023.

Management believes that, based upon its evaluation as of December 31, 2025, the allowance is appropriate.

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

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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 other noninterest expense in the Company's consolidated statements of income. As of December 31, 2025, the Company's reserve for off-balance sheet credit exposures was $1.4 million, compared to $1.5 million at December 31, 2024.

Deposits and Other Liabilities

Total deposits were $6.9 billion at December 31, 2025, an increase of $466.0 million or 7.2% compared to year-end 2024. The increase from year-end 2024 primarily consisted of increases in savings and money market balances which were up $183.5 million, and time deposits which were up $230.0 million. The increase in time deposits included $114.4 million of brokered time deposits.

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 increased by $255.4 million or 4.9% to $5.5 billion at year-end 2025 from $5.3 billion at year-end 2024. Core deposits represented 79.5% of total deposits at December 31, 2025, compared to 81.3% of total deposits at December 31, 2024.

Municipal money market accounts and reciprocal deposit relationships with municipalities totaled $404.0 million at year-end 2025, which decreased 5.3% from year-end 2024. In general, there is a seasonal pattern to municipal deposits starting with a low point during July and August. Account balances tend to increase throughout the fall and into the winter months from tax deposits and receive an additional inflow at the end of March from the electronic deposit of state funds.

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 $45.6 million at December 31, 2025, and $37.0 million at December 31, 2024. Management generally views local repurchase agreements as an alternative to large time deposits. Refer to "Note 9 - Federal Funds Purchased and Securities Sold Under Agreements to Repurchase" in the Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K for further details on the Company’s repurchase agreements.

The Company’s other borrowings totaled $564.4 million at year-end 2025, which were down $225.8 million from prior year end. The $564.4 million in 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. Borrowings of $790.2 million at year-end 2024 represented $247.0 million in overnight borrowings and $543.2 million in FHLB term advances. Of the $169.4 million in FHLB term advances at year-end 2025, $45.0 million were due within three months, $20.0 million were due between three months and six months, $29.4 million were due between six months and one year, and $75.0 million were due in over one year. Refer to "Note 10 - Other Borrowings" in Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K for further details on the Company’s term borrowings with the FHLB.

Liquidity Management

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 16.2% at December 31, 2025 and 14.7% at December 31, 2024. In addition, the Company maintains access to the Federal Reserve Bank borrowing facility, which improved the reliable sources of liquidity ratio by an additional 2.9% at December 31, 2025, and 1.7% at December 31, 2024, to 19.1% and 16.4%, 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

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value of encumbered investment securities, and the guaranteed portion of government and agency loans, remain above 3% of total assets. As of December 31, 2025, this ratio was 11.1%.

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, municipal money market deposits, brokered deposits, reciprocal deposits, bank borrowings, securities sold under agreements to repurchase and overnight and term advances from the FHLB. Rates and terms are the primary determinants of the mix of these funding sources. Non-core funding sources of $2.1 billion at December 31, 2025 increased $43.3 million, or 2.1% as compared to December 31, 2024. Non-core funding sources, as a percentage of total liabilities, were 26.9% at December 31, 2025, compared to 27.5% at December 31, 2024.

Non-core funding sources may require securities to be pledged against the underlying liability. Securities carried at $887.5 million at December 31, 2025 were either pledged or sold under agreements to repurchase, compared to $904.2 million at December 31, 2024. Pledged securities or securities sold under agreements to repurchase represented 52.1% of total securities at December 31, 2025, compared to 53.8% of total securities at December 31, 2024.

Cash and cash equivalents totaled $132.8 million as of December 31, 2025 which decreased from $134.4 million at December 31, 2024. Short-term investments, consisting of securities due in one year or less, decreased from $99.2 million at December 31, 2024, to $74.1 million at December 31, 2025.

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 $901.1 million at December 31, 2025 compared with $699.6 million at December 31, 2024. Outstanding principal balances of residential mortgage loans, consumer loans, and leases totaled approximately $1.7 billion at December 31, 2025, up $8.4 million, or 0.5% compared with December 31, 2024. 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 December 31, 2025, the established borrowing capacity with the FHLB was $1.3 billion, or 15.2% of total assets, with available unencumbered mortgage-related assets of $525.5 million. In addition to the $564.4 million of FHLB borrowings outstanding at December 31, 2025, the Company had utilized $225 million of availability at December 31, 2025, 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 December 31, 2025 the available borrowing capacity with the Federal Reserve Bank was $252.8 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 $799.1 million of unencumbered securities which could be pledged to further enhance secured borrowing capacity.

The Company has not identified any trends or circumstances that are reasonably likely to result in material increases or decreases in liquidity in the near term.

Table 7 - Loan Maturity

Remaining maturity of loans

December 31, 2025

(In thousands)

Total

Less than 1 year

After 1 year to 5 years

After 5 years to 15 years

After 15 years

Commercial and industrial

Commercial real estate

Residential real estate

Total

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Of the loan amounts shown above in Table 7 - Loan Maturity, maturing over 1 year, $2.3 billion have fixed rates and $3.5 billion have adjustable rates.

Off-Balance Sheet Arrangements

In the normal course of business, the Company is party to certain financial instruments, which in accordance with accounting principles generally accepted in the United States, are not included in its Consolidated Statements of Condition. These transactions include commitments under standby letters of credit, unused portions of lines of credit, and commitments to fund new loans and are undertaken to accommodate the financing needs of the Company’s customers. Loan commitments are agreements by the Company to lend monies at a future date. These loan and letter of credit commitments are subject to the same credit policies and reviews as the Company’s loans. Because most of these loan commitments expire within one year from the date of issue, the total amount of these loan commitments as of December 31, 2025, are not necessarily indicative of future cash requirements. Further information on these commitments and contingent liabilities is provided in "Note 17 - Commitments and Contingent Liabilities" in the Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K.

Contractual Obligations

The Company leases land, buildings, and equipment under operating lease arrangements extending to the year 2090. Most leases include options to renew for periods ranging from 5 to 20 years. In addition, the Company has a software contract for its core banking application through June 30, 2030 along with contracts for more specialized software programs through 2029. Further information on the Company’s lease arrangements is provided in "Note 7 - Premises and Equipment" in the Notes to Consolidated Financial Statements in Part II, "Item 8. Financial Statements and Supplementary Data" of this Report on Form 10-K. The Company’s contractual obligations as of December 31, 2025, are shown in Table 8-Contractual Obligations and Commitments below.

Table 8 - Contractual Obligations and Commitments

Contractual cash obligations

At December 31, 2025

Payments due within

(In thousands)

Total

1 year

1-3 years

3-5 years

After 5 years

Long-term debt

Operating leases 1

Software contracts

Total contractual cash obligations

1 Operating leases include renewals the Company considers reasonably certain to exercise.

Non-GAAP Disclosure

The following 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 are in addition to, and are not a substitute for, financial measures under 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. In the future, the Company may utilize other measures to illustrate performance. 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.

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Reconciliation of Net Income Available to Common Shareholders/Diluted Earnings Per Share (GAAP) to Adjusted Net Operating Income Available to Common Shareholders/Adjusted Diluted Earnings Per Share (Non-GAAP); Return on Average Assets and Return on Average Equity (GAAP) to Adjusted Return on Average Assets, Adjusted Return on Average Equity and Adjusted Operating Return on Average Shareholders' Tangible Common Equity (Non-GAAP)

For the year ended December 31,

(In thousands, except per share data)

Net income available to common shareholders

Less: income attributable to unvested stock-based compensation awards

Net earnings allocated to common shareholders (GAAP)

Diluted earnings per share (GAAP)

Adjustments for non-operating income and expense:

(Gain) loss on sale of investment securities

(Gain) from sale of Tompkins Insurance Agencies, Inc.

Total adjustments

Tax expense

Total adjustments, net of tax

Adjusted net income or operating income (Non-GAAP)

Adjusted net earnings allocated to common shareholders (Non-GAAP)

Weighted average shares outstanding (basic)

Weighted average shares outstanding (diluted)

Adjusted/operating basic earnings per share (Non-GAAP)

Adjusted/operating diluted earnings per share (Non-GAAP)

Net income available to common shareholders

Adjusted net income or operating income (Non-GAAP)

Average total assets

Return on average assets (GAAP)

Adjusted return on average assets (Non-GAAP)

Net income available to common shareholders

Adjusted net income or operating income (Non-GAAP)

Average total equity

Return on average equity (GAAP)

Adjusted return on average equity (Non-GAAP)

Adjusted net income or operating income (Non-GAAP)

Average Tompkins Financial Corporation shareholders' equity

Amortization of intangibles

Tax expense

Amortization of intangibles, net of tax

Adjusted net income or operating income (Non-GAAP)

Average Tompkins Financial Corporation shareholders' equity

Average goodwill and intangibles

Average Tompkins Financial Corporation shareholders' tangible common equity (Non-GAAP)

Adjusted operating return on average shareholders' tangible common equity (Non-GAAP)

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