10-Q

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the transition period from _____ to ______

Commission File Number 1-12709

  

Tompkins Financial Corporation

(Exact name of registrant as specified in its charter)

New York	16-1482357
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

118 E. Seneca Street, P.O. Box 460, Ithaca, NY

(Address of principal executive offices)

14851

(Zip Code)

Registrant’s telephone number, including area code: (888) 503-5753

Former name, former address, and former fiscal year, if changed since last report: NA

Indicate the number of shares of the Registrant’s Common Stock outstanding as of the latest practicable date:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.10 par value	TMP	NYSE American, LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☒.

Indicate the number of shares of the Registrant's Common Stock outstanding as of the latest practicable date: 14,931,133 shares as of November 3, 2020.

TOMPKINS FINANCIAL CORPORATION

FORM 10-Q

INDEX

PART I -FINANCIAL INFORMATION
			PAGE
	Item 1 –	Financial Statements Consolidated Statements of Condition as of September 30, 2020 (Unaudited) and December 31, 2019 (Audited)	1
		Consolidated Statements of Income for the three and nine months ended September 30, 2020 and 2019 (Unaudited)	2
		Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2020 and 2019 (Unaudited)	3
		Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 (Unaudited)	4
		Consolidated Statements of Changes in Shareholders’ Equity for the three and nine months ended September 30, 2020 and 2019 (Unaudited)	6
		Notes to Unaudited Consolidated Financial Statements	8
	Item 2 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations	49
	Item 3 -	Quantitative and Qualitative Disclosures About Market Risk	71
	Item 4 -	Controls and Procedures	72
PART II - OTHER INFORMATION
	Item 1 –	Legal Proceedings	72
	Item 1A – Risk Factors		72
	Item 2 –	Unregistered Sales of Equity Securities and Use of Proceeds	74
	Item 3 -	Defaults Upon Senior Securities	74
	Item 4 -	Mine Safety Disclosures	75
	Item 5 -	Other Information	75
	Item 6 -	Exhibits	76
SIGNATURES			77

TOMPKINS FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CONDITION

(In thousands, except share and per share data) (Unaudited)	As of		As of
ASSETS	9/30/2020		12/31/2019
	(unaudited)		(audited)
Cash and noninterest bearing balances due from banks	$	22,065	$	136,010
Interest bearing balances due from banks	352,674		1,972
Cash and Cash Equivalents	374,739		137,982
Available-for-sale debt securities, at fair value (amortized cost of $1,637,255 at September 30, 2020 and $1,293,239 at December 31, 2019)	1,666,766		1,298,587
Equity securities, at fair value (amortized cost $932 at September 30, 2020 and $915 at December 31, 2019)	932		915
Total loans and leases, net of unearned income and deferred costs and fees	5,398,297		4,917,550
Less: Allowance for credit losses	52,293		39,892
Net Loans and Leases	5,346,004		4,877,658
Federal Home Loan Bank and other stock	17,919		33,695
Bank premises and equipment, net	89,015		94,355
Corporate owned life insurance	84,165		82,961
Goodwill	92,447		92,447
Other intangible assets, net	5,211		6,223
Accrued interest and other assets	117,304		100,800
Total Assets	$	7,794,502	$	6,725,623
LIABILITIES
Deposits:
Interest bearing:
Checking, savings and money market	3,979,253		3,080,686
Time	706,401		675,014
Noninterest bearing	1,915,584		1,457,221
Total Deposits	6,601,238		5,212,921
Federal funds purchased and securities sold under agreements to repurchase	63,573		60,346
Other borrowings	285,000		658,100
Trust preferred debentures	17,163		17,035
Other liabilities	113,917		114,167
Total Liabilities	$	7,080,891	$	6,062,569
EQUITY
Tompkins Financial Corporation shareholders' equity:
Common Stock - par value $0.10 per share: Authorized 25,000,000 shares; Issued: 14,962,162 at September 30, 2020; and 15,014,499 at December 31, 2019	1,496		1,501
Additional paid-in capital	337,329		338,507
Retained earnings	402,498		370,477
Accumulated other comprehensive loss	(23,864)		(43,564)
Treasury stock, at cost – 121,868 shares at September 30, 2020, and 123,956 shares at December 31, 2019	(5,355)		(5,279)
Total Tompkins Financial Corporation Shareholders’ Equity	712,104		661,642
Noncontrolling interests	1,507		1,412
Total Equity	$	713,611	$	663,054
Total Liabilities and Equity	$	7,794,502	$	6,725,623

See notes to unaudited consolidated financial statements.

1

TOMPKINS FINANCIAL CORPORATION

 CONSOLIDATED STATEMENTS OF INCOME 

	Three Months Ended				Nine Months Ended
(In thousands, except per share data) (Unaudited)	9/30/2020		9/30/2019		9/30/2020		9/30/2019
INTEREST AND DIVIDEND INCOME
Loans	$	57,892	$	57,621	$	169,639	$	169,685
Due from banks	83		11		90		31
Available-for-sale debt securities	6,035		6,511		20,101		22,055
Held-to-maturity securities	0		862		0		2,583
Federal Home Loan Bank and other stock	306		770		1,130		2,442
Total Interest and Dividend Income	64,316		65,775		190,960		196,796
INTEREST EXPENSE
Time certificates of deposits of $250,000 or more	755		823		2,458		2,184
Other deposits	3,450		7,583		13,723		20,409
Federal funds purchased and securities sold under agreements to repurchase	19		34		76		110
Trust preferred debentures	216		317		758		974
Other borrowings	1,623		3,862		6,357		15,731
Total Interest Expense	6,063		12,619		23,372		39,408
Net Interest Income	58,253		53,156		167,588		157,388
Less: Provision for credit loss expense	199		1,320		16,145		2,366
Net Interest Income After Provision for Credit Loss Expense	58,054		51,836		151,443		155,022
NONINTEREST INCOME
Insurance commissions and fees	8,916		8,517		24,216		24,314
Investment services income	4,292		4,175		12,414		12,166
Service charges on deposit accounts	1,444		2,191		4,675		6,210
Card services income	2,419		2,550		6,885		8,090
Other income	1,818		1,963		6,388		6,247
Net (loss) gain on securities transactions	(2)		138		446		434
Total Noninterest Income	18,887		19,534		55,024		57,461
NONINTEREST EXPENSE
Salaries and wages	23,951		22,960		69,482		66,149
Other employee benefits	6,690		5,821		18,260		17,094
Net occupancy expense of premises	3,162		3,236		9,530		10,095
Furniture and fixture expense	1,886		1,919		5,759		5,894
Amortization of intangible assets	371		421		1,120		1,251
Other operating expense	10,289		11,298		34,826		35,451
Total Noninterest Expenses	46,349		45,655		138,977		135,934
Income Before Income Tax Expense	30,592		25,715		67,490		76,549
Income Tax Expense	6,330		5,478		13,779		15,816
Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation	24,262		20,237		53,711		60,733
Less: Net Income Attributable to Noncontrolling Interests	32		31		101		95
Net Income Attributable to Tompkins Financial Corporation	$	24,230	$	20,206	$	53,610	$	60,638
Basic Earnings Per Share	$	1.63	$	1.34	$	3.60	$	3.99
Diluted Earnings Per Share	$	1.63	$	1.34	$	3.59	$	3.97

See notes to unaudited consolidated financial statements.

2

TOMPKINS FINANCIAL CORPORATION

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 

	Three Months Ended
(In thousands) (Unaudited)	9/30/2020		9/30/2019
Net income attributable to noncontrolling interests and Tompkins Financial Corporation	$	24,262	$	20,237
Other comprehensive (loss) income, net of tax:
Available-for-sale debt securities:
Change in net unrealized gain/(loss) during the period	(3,303)		3,111
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	0		(101)
Employee benefit plans:
Amortization of net retirement plan actuarial loss	447		310
Amortization of net retirement plan prior service cost	40		3
Other comprehensive (loss) income	(2,816)		3,323
Subtotal comprehensive income attributable to noncontrolling interests and Tompkins Financial Corporation	21,446		23,560
Less: Net income attributable to noncontrolling interests	(32)		(31)
Total comprehensive income attributable to Tompkins Financial Corporation	$	21,414	$	23,529

	Nine Months Ended
(In thousands) (Unaudited)	9/30/2020		9/30/2019
Net income attributable to noncontrolling interests and Tompkins Financial Corporation	$	53,711	$	60,733
Other comprehensive income, net of tax:
Available-for-sale debt securities:
Change in net unrealized gain/loss during the period	18,563		25,681
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	(324)		(305)
Employee benefit plans:
Amortization of net retirement plan actuarial loss	1,340		930
Amortization of net retirement plan prior service cost	121		8
Other comprehensive income	19,700		26,314
Subtotal comprehensive income attributable to noncontrolling interests and Tompkins Financial Corporation	73,411		87,047
Less: Net income attributable to noncontrolling interests	(101)		(95)
Total comprehensive income attributable to Tompkins Financial Corporation	$	73,310	$	86,952

See notes to unaudited consolidated financial statements.

3

TOMPKINS FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended
(In thousands) (Unaudited)	9/30/2020		9/30/2019
OPERATING ACTIVITIES
Net income attributable to Tompkins Financial Corporation	$	53,610	$	60,638
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit loss expense	16,145		2,366
Depreciation and amortization of premises, equipment, and software	7,654		7,495
Amortization of intangible assets	1,120		1,251
Earnings from corporate owned life insurance	(1,617)		(1,612)
Net amortization on securities	7,233		5,425
Amortization/accretion related to purchase accounting	(743)		(1,091)
Net gain on securities transactions	(446)		(434)
Net gain on sale of loans originated for sale	(1,245)		(139)
Proceeds from sale of loans originated for sale	36,568		11,532
Loans originated for sale	(38,484)		(9,961)
Net (gain) on sale of bank premises and equipment	(3)		(110)
Net excess tax benefit from stock based compensation	118		574
Stock-based compensation expense	3,372		3,009
Increase in accrued interest receivable	(18,919)		(488)
(Decrease) in accrued interest payable	(785)		(114)
Other, net	(2,262)		(4,132)
Net Cash Provided by Operating Activities	61,316		74,209
INVESTING ACTIVITIES
Proceeds from maturities, calls and principal paydowns of available-for-sale debt securities	405,886		232,792
Proceeds from sales of available-for-sale debt securities	42,333		176,249
Proceeds from maturities, calls and principal paydowns of held-to-maturity securities	0		9,205
Purchases of available-for-sale debt securities	(799,039)		(189,940)
Purchases of held-to-maturity securities	0		(7,589)
Net increase in loans	(478,455)		(28,395)
Proceeds from sale/redemptions of Federal Home Loan Bank stock	41,169		108,289
Purchases of Federal Home Loan Bank and other stock	(25,393)		(80,908)
Proceeds from sale of bank premises and equipment	4		449
Purchases of bank premises, equipment and software	(2,894)		(4,049)
Redemption of corporate owned life insurance	446		0
Net cash used in acquisition	0		(436)
Other, net	398		4,887
Net Cash (Used in) Provided by Investing Activities	(815,545)		220,554
FINANCING ACTIVITIES
Net increase in demand, money market, and savings deposits	1,356,930		416,882
Net increase in time deposits	31,856		64,831
Net increase (decrease) in Federal funds purchased and securities sold under agreements to repurchase	3,227		(31,301)
Increase in other borrowings	74,583		252,753
Repayment of other borrowings	(447,683)		(899,828)
Cash dividends	(23,296)		(22,869)
Repurchase of common stock	(5,620)		(26,992)
Shares issued for dividend reinvestment plan	1,529		0
Net shares issued related to restricted stock awards	(292)		(385)
Net proceeds from exercise of stock options	(248)		(816)
Net Cash Provided by (Used in) Financing Activities	990,986		(247,725)
Net Increase in Cash and Cash Equivalents	236,757		47,038
Cash and cash equivalents at beginning of period	137,982		80,389
Total Cash and Cash Equivalents at End of Period	$	374,739	$	127,427

See notes to unaudited consolidated financial statements.

4

TOMPKINS FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended
(In thousands) (Unaudited)	9/30/2020		9/30/2019
Supplemental Information:
Cash paid during the year for  - Interest	$	24,626	$	40,204
Cash paid during the year for  - Taxes	16,243		11,241
Transfer of loans to other real estate owned	192		774
Initial recognition of operating lease right-of-use assets	0		35,783
Initial recognition of operating lease liabilities	0		38,119
Right-of-use assets obtained in exchange for new lease liabilities	1,230		28

See notes to unaudited consolidated financial statements.

5

TOMPKINS FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(In thousands except share and per share data) (Unaudited)	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Non- controlling Interests		Total
Balances at July 1, 2019	$	1,520	$	355,284	$	344,513	$	(40,174)	$	(4,942)	$	1,476	$	657,677
Net income attributable to noncontrolling interests and Tompkins Financial Corporation					20,206						31		20,237
Other comprehensive income							3,323						3,323
Total Comprehensive Income													23,560
Cash dividends ($0.50 per share)					(7,554)								(7,554)
Net exercise of stock options (2,902 shares)	0		(106)										(106)
Common stock repurchased and returned to unissued status (185,107 shares)	(18)		(14,690)										(14,708)
Stock-based compensation expense			997										997
Directors deferred compensation plan ((2,027) shares)			169						(169)				0
Restricted stock activity ((2,764) shares)	(1)		0										(1)
Balances at September 30, 2019	$	1,501	$	341,654	$	357,165	$	(36,851)	$	(5,111)	$	1,507	$	659,865
Balances at July 1, 2020	$	1,495	$	335,268	$	386,025	$	(21,048)	$	(5,187)	$	1,476	$	698,029
Net income attributable to noncontrolling interests and Tompkins Financial Corporation					24,230						32		24,262
Other comprehensive loss							(2,816)						(2,816)
Total Comprehensive Income													21,446
Cash dividends ($0.52 per share)					(7,757)								(7,757)
Net exercise of stock options (417 shares)			(32)										(32)
Shares issued for dividend reinvestment plan (12,723 shares)	1		847										848
Stock-based compensation expense			1,078										1,078
Directors deferred compensation plan (2,776 shares)			168						(168)				0
Restricted stock activity ((1,346) shares)													0
Partial repurchase of noncontrolling interest											(1)		(1)
Balances at September 30, 2020	$	1,496	$	337,329	$	402,498	$	(23,864)	$	(5,355)	$	1,507	$	713,611

6

(In thousands except share and per share data)(Unaudited)	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Non- controlling Interests		Total
Balances at January 1, 2019	$	1,535	$	366,595	$	319,396	$	(63,165)	$	(4,902)	$	1,412	$	620,871
Net income attributable to noncontrolling interests and Tompkins Financial Corporation					60,638						95		60,733
Other comprehensive income							26,314						26,314
Total Comprehensive Income													87,047
Cash dividends ($1.00 per share)					(22,869)								(22,869)
Net exercise of stock options (15,201 shares)	1		(817)										(816)
Common stock repurchased and returned to unissued status (340,200 shares)	(34)		(26,958)										(26,992)
Stock-based compensation expense			3,009										3,009
Directors deferred compensation plan ((347) shares)			209						(209)				0
Restricted stock activity ((11,628) shares)	(1)		(384)										(385)
Balances at September 30, 2019	$	1,501	$	341,654	$	357,165	$	(36,851)	$	(5,111)	$	1,507	$	659,865
Balances at January 1, 2020	$	1,501	$	338,507	$	370,477	$	(43,564)	$	(5,279)	$	1,412	$	663,054
Impact of adoption of ASU 2016-13					1,707								1,707
Net income attributable to noncontrolling interests and Tompkins Financial Corporation					53,610						101		53,711
Other comprehensive income							19,700						19,700
Total Comprehensive Income													73,411
Cash dividends ($1.56 per share)					(23,296)								(23,296)
Net exercise of stock options (3,605 shares)			(248)										(248)
Common stock repurchased and returned to unissued status (71,288 shares)	(7)		(5,613)										(5,620)
Shares issued for dividend reinvestment plan (24,752 shares)	2		1,527										1,529
Stock-based compensation expense			3,372										3,372
Directors deferred compensation plan ((2,088) shares)			76						(76)				0
Restricted stock activity ((9,406) shares)			(292)										(292)
Partial repurchase of noncontrolling interest											(6)		(6)
Balances at September 30, 2020	$	1,496	$	337,329	$	402,498	$	(23,864)	$	(5,355)	$	1,507	$	713,611

See notes to unaudited consolidated financial statements

7

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Business

Tompkins Financial Corporation (“Tompkins” or the “Company”) is headquartered in Ithaca, New York and is registered as a Financial Holding Company with the Federal Reserve Board under the Bank Holding Company Act of 1956, as amended. The Company is a locally oriented, community-based financial services organization that offers a full array of products and services, including commercial and consumer banking, leasing, trust and investment management, financial planning and wealth management, and insurance services. At September 30, 2020, the Company’s subsidiaries included: four wholly-owned banking subsidiaries, Tompkins Trust Company (the “Trust Company”), The Bank of Castile (DBA Tompkins Bank of Castile), Mahopac Bank (DBA Tompkins Mahopac Bank), VIST Bank (DBA Tompkins VIST Bank); and a wholly-owned insurance agency subsidiary, Tompkins Insurance Agencies, Inc. (“Tompkins Insurance”). The Trust Company provides a full array of trust and investment services under the Tompkins Financial Advisors brand, including investment management, trust and estate, financial and tax planning as well as life, disability and long-term care insurance services. The Company’s principal offices are located at 118 E. Seneca Street, P.O. Box 460, Ithaca, New York, 14850, and its telephone number is (888) 503-5753. The Company’s common stock is traded on the NYSE American under the symbol “TMP.”

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

The Company’s banking subsidiaries are subject to examination and comprehensive regulation by various regulatory authorities, including the Federal Deposit Insurance Corporation (“FDIC”), the New York State Department of Financial Services (“NYSDFS”), and the Pennsylvania Department of Banking and Securities (“PDBS”). Each of these agencies issues regulations and requires the filing of reports describing the activities and financial condition of the entities under its jurisdiction. Likewise, such agencies conduct examinations on a recurring basis to evaluate the safety and soundness of the institutions, and to test compliance with various regulatory requirements, including: consumer protection, privacy, fair lending, the Community Reinvestment Act, the Bank Secrecy Act, sales of non-deposit investments, electronic data processing, and trust department activities.

The trust division of Tompkins Trust Company is subject to examination and comprehensive regulation by the FDIC and NYSDFS.

The Company’s insurance subsidiary is subject to examination and regulation by the NYSDFS and the Pennsylvania Insurance Department.

2. Basis of Presentation

The unaudited consolidated financial statements included in this quarterly report do not include all of the information and footnotes required by U.S. Generally Accepted Accounting Principles ("GAAP") for a full year presentation and certain disclosures have been condensed or omitted in accordance with rules and regulations of the SEC. In the application of certain accounting policies, management is required to make assumptions regarding the effect of matters that are inherently uncertain. These estimates and assumptions affect the reported amounts of certain assets, liabilities, revenues, and expenses in the unaudited consolidated financial statements. Different amounts could be reported under different conditions, or if different assumptions were used in the application of these accounting policies. The accounting policies that management considers critical in this respect are the determination of the allowance for credit losses and the review of its securities portfolio for other than temporary impairment.

8

In management’s opinion, the unaudited consolidated financial statements reflect all adjustments of a normal recurring nature. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year ended December 31, 2020. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Effective January 1, 2020, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 makes significant changes to the accounting for credit losses on financial instruments presented on an amortized cost basis and disclosures about them. These changes are discussed below, under "Impact of Adoption of ASU 2016-13".

Other than the changes resulting from the adoption of ASU 2016-13, there have been no significant changes to the Company’s accounting policies from those presented in the 2019 Annual Report on Form 10-K. Refer to MD&A under "Recently Issued Accounting Standards" of this Report for a discussion of recently issued accounting guidelines.

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

The Company has evaluated subsequent events for potential recognition and/or disclosure, and determined that no further disclosures were required.

The consolidated financial information included herein combines the results of operations, the assets, liabilities, and shareholders’ equity of the Company and its subsidiaries. Amounts in the prior periods’ unaudited consolidated financial statements are reclassified when necessary to conform to the current periods’ presentation. All significant intercompany balances and transactions are eliminated in consolidation.

Impact of Adoption of ASU 2016-13

Securities

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 (impairment) is due to credit-related factors or noncredit-related factors. 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 Statement 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. However, if the Company intends to sell an impaired available- for-sale debt security or more likely than not will be required to sell such a security before recovering its amortized cost basis, the entire impairment amount must be recognized in earnings with a corresponding adjustment to the security’s amortized cost basis. Because the security’s amortized cost basis is adjusted to fair value, there is no ACL in this situation.

Changes in the allowance for credit losses are recorded as provision (credit) for credit loss expense. Losses are charged against the ACL when management believes the uncollectability of an available-for-sale debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable on securities is excluded from the estimate of credit losses.

Acquired Loans

Acquired loans are recorded at fair value at the date of acquisition based on a discounted cash flow methodology that considers various factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and a discount rate reflecting the Company’s assessment of risk inherent in the cash flow estimates. Certain larger purchased loans are individually evaluated while certain purchased loans are grouped together according to similar risk characteristics and are treated in the aggregate when applying various valuation techniques. These cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change.

Prior to January 1, 2020, loans acquired in a business combination that had evidence of deterioration of credit quality since origination and for which it was probable, at acquisition, that the Company would be unable to collect all contractually required payments receivable were considered purchased credit impaired (“PCI”) loans. PCI loans were individually evaluated and recorded at fair value at the date of acquisition with no initial valuation allowance based on a discounted cash flow

9

methodology that considered various factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and a discount rate reflecting the Company’ assessment of risk inherent in the cash flow estimates. The difference between the undiscounted cash flows expected at acquisition and the investment in the loan, or the “accretable yield,” was recognized as interest income on a level-yield method over the life of the loan. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “non-accretable difference,” were not recognized on the Statement of Condition and did not result in any yield adjustments, loss accruals or valuation allowances. Increases in expected cash flows, including prepayments, subsequent to the initial investment were recognized prospectively through adjustment of the yield on the loan over its remaining life. Decreases in expected cash flows were recognized as impairment. Valuation allowances on PCI loans reflected only losses incurred after the acquisition (meaning the present value of all cash flows expected at acquisition that ultimately were not to be received).

Subsequent to January 1, 2020 in connection with the Company's adoption of ASU 2016-13, loans acquired in a business combination that have experienced more-than-insignificant deterioration in credit quality since origination are considered purchased credit deteriorated (“PCD”) loans. At the acquisition date, an estimate of expected credit losses is made for groups of PCD loans with similar risk characteristics and individual PCD loans without similar risk characteristics. This initial allowance for credit losses is allocated to individual PCD loans and added to the purchase price or acquisition date fair values to establish the initial amortized cost basis of the PCD loans. As the initial allowance for credit losses is added to the purchase price, there is no credit loss expense recognized upon acquisition of a PCD loan. Any difference between the unpaid principal balance of PCD loans and the amortized cost basis is considered to relate to noncredit factors and results in a discount or premium. Discounts and premiums are recognized through interest income on a level-yield method over the life of the loans. All loans considered to be PCI prior to January 1, 2020 were converted to PCD on that date.

The subsequent measurement of expected credit losses for all acquired loans is the same as the subsequent measurement of expected credit losses for originated loans.

Allowance for Credit Losses – Loans

Under the current expected credit loss model, the ACL on loans is a valuation allowance estimated at each balance sheet date in accordance with U.S. GAAP that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans.

The Company estimates the ACL on loans based on the underlying assets’ amortized cost basis, which is the amount at which the financing receivable is originated or acquired, adjusted for applicable accretion or amortization of premium, discount, collection of cash, and charge-offs. In the event that collection of principal becomes uncertain, the Company has policies in place to reverse accrued interest in a timely manner. Therefore, the Company has made a policy election to exclude accrued interest from the measurement of ACL.

Expected credit losses are reflected in the ACL through a charge to the provision for credit loss expense. When the Company deems all or a portion of a financial asset to be uncollectible, the appropriate amount is written off and the ACL is reduced by the same amount. In general, the principal balance of a loan is charged off in full or in part when management concludes, based on the available facts and circumstances, that collection of principal in full is not probable. Subsequent recoveries, if any, are credited to the ACL when received.

The Company measures expected credit losses of financial assets at the loan level by segment, by pooling loans when the financial assets share similar risk characteristics. Depending on the nature of the pool of financial assets with similar risk characteristics, the Company uses a discounted cash flow (“DCF”) method to estimate the expected credit losses. Allowance on loans that do not share risk characteristics are evaluated on an individual basis. The Company assigns a credit risk rating to all commercial and commercial real estate loans. The Company reviews commercial and commercial real estate loans rated Substandard or worse, on nonaccrual and greater than $250,000 for loss potential and when deemed appropriate assigns an allowance based on an individual evaluation.

The Company’s methodologies for estimating the ACL consider available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. The methodologies apply historical loss information, adjusted for asset-specific characteristics, economic conditions at the measurement date, and forecasts about future economic conditions expected to exist through the contractual lives of the financial assets that are reasonable and supportable, to the identified pools of financial assets with similar risk characteristics for which the historical loss experience was observed. The Company’s methodologies revert back to average historical loss information on a straight line basis over eight quarters when it can no longer develop reasonable and supportable forecasts.

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The Company has identified the following pools of financial assets with similar risk characteristics for measuring expected credit losses: commercial, commercial real estate, residential, home equity, consumer and leases. This segmentation was selected based on the differences in the risk profile of each of these categories and aligns well with regulatory reporting categories. This segmentation separates borrower type, collateral type and the nature of the loan. The differences in risk profiles of these segments enables the ACL to be more precise in its allocation due to the inherent risk in these specific portfolios.

Discounted Cash Flow Method

The Company uses the discounted cash flow method to estimate expected credit losses for the commercial, commercial real estate, residential, home equity, and consumer loan pools. For each of these loan segments, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, probability of default, and loss given default. The modeling of expected prepayment speeds, and time to recovery are based on historical internal 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 loan pools utilizing the DCF method, management utilizes and forecasts one or both of the following economic factors; national unemployment and gross domestic product as loss drivers.

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 an independent third party to inform its loss driver forecasts over the four-quarter forecast period. Other internal and external indicators of economic forecasts are also considered by management when developing the forecast metrics. The model considers a base case forecast and two alternative forecasts and assigns weightings to these three scenarios based on current conditions and expectations for future conditions.

The combination of adjustments for credit expectations (default and loss) and timing expectations (prepayment, curtailment, and time to recovery) produces an expected cash flow stream at the instrument level. Instrument effective yield is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce an instrument-level net present value of expected cash flows (“NPV”). An ACL is established for the difference between the instrument’s 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.

Individually Evaluated Financial Assets

Loans that do not share common risk characteristics are evaluated on an individual basis. For collateral dependent financial assets where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral less cost to sell, and the amortized cost basis of the asset as of the measurement date. The ACL may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the financial asset.

The Company’s estimate of the ACL reflects losses expected over the remaining contractual life of the assets. The contractual term does not consider extensions, renewals or modifications unless the Company has identified an expected troubled debt restructuring.

Troubled Debt Restructuring

A loan that has been modified or renewed is considered a troubled debt restructuring (“TDR”) when two conditions are met: 1) the borrower is experiencing financial difficulty and 2) concessions are made for the borrower's benefit that would not otherwise be considered for a borrower or transaction with similar credit risk characteristics. The Company’s ACL reflects all effects of a TDR when an individual asset is specifically identified as a reasonably expected TDR. The Company has determined that a TDR is reasonably expected no later than the point when the lender concludes that modification is the best

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course of action and it is at least reasonably possible that the troubled borrower will accept some form of concession from the lender to avoid a default. Reasonably expected TDRs and executed non-performing TDRs are evaluated individually to determine the required ACL. TDRs performing in accordance with their modified contractual terms for a reasonable period of time may be included in the Company’s existing pools based on the underlying risk characteristics of the loan to measure the ACL. The provisions of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") and interagency guidance issued by Federal banking regulators provided guidance and clarification related to modifications and deferral programs to assist borrowers who are negatively impacted by the COVID-19 national emergency. The guidance and clarifications detail certain provisions whereby banks are permitted to make deferrals and modifications to the terms of a loan which would not require the loan to be reported as a troubled debt restructuring ('TDR"). In accordance with the CARES Act and the interagency guidance, the Company elected to adopt the provisions to not report qualified loan modifications as troubled debt restructurings.

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, unused lines of credit and commercial letters of credit, issued to meet customer financing needs. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded.

The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancellable, through a charge to the provision for credit loss expense for off-balance sheet credit exposures included in other noninterest expense in the Company’s consolidated statements of income. The ACL on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the current expected credit loss model using similar methodologies as portfolio loans, taking into consideration the likelihood that funding will occur, and is included in other liabilities on the Company’s statements of condition.

3. Securities

Available-for-Sale Debt Securities

The following table summarizes available-for-sale debt securities held by the Company at September 30, 2020:

	Available-for-Sale Debt Securities
September 30, 2020	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(In thousands)
Obligations of U.S. Government sponsored entities	602,417		10,881		817		612,481
Obligations of U.S. states and political subdivisions	126,593		2,840		175		129,258
Mortgage-backed securities – residential, issued by
U.S. Government agencies	205,507		2,981		987		207,501
U.S. Government sponsored entities	700,238		15,785		863		715,160
U.S. corporate debt securities	2,500		0		134		2,366
Total available-for-sale debt securities	$	1,637,255	$	32,487	$	2,976	$	1,666,766

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 The following table summarizes available-for-sale debt securities held by the Company at December 31, 2019:  

	Available-for-Sale Debt Securities
December 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(In thousands)
U.S. Treasuries	$	1,840	$	0	$	0	$	1,840
Obligations of U.S. Government sponsored entities	367,551		5,021		84		372,488
Obligations of U.S. states and political subdivisions	96,668		1,178		61		97,785
Mortgage-backed securities – residential, issued by
U.S. Government agencies	164,643		1,327		1,519		164,451
U.S. Government sponsored entities	660,037		2,940		3,387		659,590
U.S. corporate debt securities	2,500		0		67		2,433
Total available-for-sale debt securities	$	1,293,239	$	10,466	$	5,118	$	1,298,587

The available-for-sale portfolio also includes callable securities that may be called by the issuer prior to maturity. The Company may from time to time sell debt securities from its available-for-sale portfolio. Realized gains on available-for-sale debt securities were $0 and $429,000 for the three and nine months ended September 30, 2020 and $133,000 and $999,000 for the three and nine months ended September 30, 2019. Realized losses on available-for-sale debt securities were $0 for the three and nine months ended September 30, 2020 and $0 and $595,000 for the three and nine months ended September 30, 2019. Proceeds from the sale of available-for-sale debt securities were $0 and $42.3 million for the three and nine months ended September 30, 2020, and $24.2 million and $176.2 million for the three and nine months ended September 30, 2019. Sales of available-for-sale investment securities were the result of general investment portfolio and interest rate risk management. The Company also recognized net losses of $2,000 and net gains of $17,000 for the three and nine months ended September 30, 2020, on equity securities, reflecting the change in fair value.

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The following table summarizes available-for-sale debt securities that had unrealized losses at September 30, 2020.

	Less than 12 Months				12 Months or Longer				Total
(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. Government sponsored entities	$	303,834	$	817	$	0	$	0	$	303,834	$	817
Obligations of U.S. states and political subdivisions	15,328		175		0		0		15,328		175
Mortgage-backed securities – residential, issued by
U.S. Government agencies	46,990		736		2,978		251		49,968		987
U.S. Government sponsored entities	111,120		794		5,512		69		116,632		863
U.S. corporate debt securities	0		0		2,366		134		2,366		134
Total available-for-sale debt securities	$	477,272	$	2,522	$	10,856	$	454	$	488,128	$	2,976

The following table summarizes available-for-sale debt securities that had unrealized losses at December 31, 2019.

	Less than 12 Months				12 Months or Longer				Total
(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. Government sponsored entities	$	18,654	$	76	$	3,479	$	8	$	22,133	$	84
Obligations of U.S. states and political subdivisions	10,456		54		2,300		7		12,756		61
Mortgage-backed securities – residential, issued by
U.S. Government agencies	54,846		489		45,999		1,030		100,845		1,519
U.S. Government sponsored entities	157,801		752		233,999		2,635		391,800		3,387
U.S. corporate debt securities	0		0		2,433		67		2,433		67
Total available-for-sale debt securities	$	241,757	$	1,371	$	288,210	$	3,747	$	529,967	$	5,118

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.

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

• Extent to which the fair value is less than the amortized cost basis.

• Adverse conditions specifically related to the security, an industry, or geographic area (changes in technology,

business practice).

• Payment structure of the debt security with respect to underlying issuer or obligor.

• Failure of the issuer to make scheduled payment of principal and/or interest.

• Changes to the rating of a security or issuer by a nationally recognized statistical rating organization.

• Changes in tax or regulatory guidelines that impact a security or underlying issuer.

For available for sale debt securities in an unrealized loss position, the Company evaluates the securities to determine whether the decline in the fair value below the amortized cost basis (technical impairment) is the result of changes in interest rates or reflects a fundamental change in the credit worthiness 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 balance sheet, 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.

The gross unrealized losses reported for residential mortgage-backed securities relate to investment securities issued by U.S. government sponsored entities such as Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, and

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U.S. government agencies such as Government National Mortgage Association. The total gross unrealized losses, shown in the tables above, were primarily attributable to changes in interest rates and levels of market liquidity, relative to when the investment securities were purchased, and not due to the credit-related quality of the investment securities. In addition, the Company maintains the ability and intent to hold these positions until the recovery of unrealized losses and does not believe that the Company would be required to sell any securities currently in an unrealized loss position.

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

September 30, 2020
(In thousands)	Amortized Cost		Fair Value
Available-for-sale debt securities:
Due in one year or less	$	53,447	$	54,083
Due after one year through five years	391,466		401,757
Due after five years through ten years	221,525		222,846
Due after ten years	65,072		65,419
Total	731,510		744,105
Mortgage-backed securities	905,745		922,661
Total available-for-sale debt securities	$	1,637,255	$	1,666,766

December 31, 2019
(In thousands)	Amortized Cost		Fair Value
Available-for-sale debt securities:
Due in one year or less	$	107,975	$	108,089
Due after one year through five years	270,477		274,798
Due after five years through ten years	77,710		79,165
Due after ten years	12,397		12,494
Total	468,559		474,546
Mortgage-backed securities	824,680		824,041
Total available-for-sale debt securities	$	1,293,239	$	1,298,587

The Company also holds non-marketable Federal Home Loan Bank New York (“FHLBNY”) stock, non-marketable Federal Home Loan Bank Pittsburgh (“FHLBPITT”) stock and non-marketable Atlantic Community Bankers Bank ("ACBB") stock, all of which are required to be held for regulatory purposes and for borrowing availability. The required investment in FHLB stock is tied to the Company’s borrowing levels with the FHLB. Holdings of FHLBNY stock, FHLBPITT stock, and ACBB stock totaled $11.9 million, $5.9 million and $95,000 at September 30, 2020, respectively. These securities are carried at par, which is also cost. The FHLBNY and FHLBPITT continue to pay dividends and repurchase stock. Quarterly, we evaluate our investment in the FHLB for impairment. We evaluate recent and long-term operating performance, liquidity, funding and capital positions, stock repurchase history, dividend history and impact of legislative and regulatory changes. Based on our most recent evaluation, as of September 30, 2020, we have determined that no impairment write-downs are currently required.

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4. Loans and Leases

Loans and leases at September 30, 2020 and December 31, 2019 were as follows:

(In thousands)	9/30/2020		12/31/2019
Commercial and industrial
Agriculture	$	89,068	$	105,786
Commercial and industrial other	790,749		902,275
PPP loans*	464,058		0
Subtotal commercial and industrial	1,343,875		1,008,061
Commercial real estate
Construction	182,605		213,637
Agriculture	198,049		184,898
Commercial real estate other	2,161,954		2,045,030
Subtotal commercial real estate	2,542,608		2,443,565
Residential real estate
Home equity	206,456		219,245
Mortgages	1,228,629		1,158,592
Subtotal residential real estate	1,435,085		1,377,837
Consumer and other
Indirect	9,534		12,964
Consumer and other	64,346		61,446
Subtotal consumer and other	73,880		74,410
Leases	14,877		17,322
Total loans and leases	5,410,325		4,921,195
Less: unearned income and deferred costs and fees	(12,028)		(3,645)
Total loans and leases, net of unearned income and deferred costs and fees	$	5,398,297	$	4,917,550
*Paycheck Protection Program ("PPP")

The Company has adopted comprehensive lending policies, underwriting standards and loan review procedures. Management reviews these policies and procedures on a regular basis. The Company discussed its lending policies and underwriting guidelines for its various lending portfolios in Note 3 – “Loans and Leases” in the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. There have been no significant changes in these policies and guidelines since the date of that report. As such, these policies are reflective of new originations as well as those balances held at September 30, 2020. The Company’s Board of Directors approves the lending policies at least annually. The Company recognizes that exceptions to policy guidelines may occasionally occur and has established procedures for approving exceptions to these policy guidelines. Management has also implemented reporting systems to monitor loan origination, loan quality, concentrations of credit, loan delinquencies and nonperforming loans and potential problem loans.

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

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The below table is an age analysis of past due loans, segregated by class of loans, as of September 30, 2020 and December 31, 2019.

September 30, 2020
(In thousands)	30-59 Days		60-89 Days		90 Days or More		Total Past Due		Current Loans		Total Loans
Loans and Leases
Commercial and industrial
Agriculture	$	0	$	0	$	0	$	0	$	89,068	$	89,068
Commercial and industrial other	923		96		1,443		2,462		788,287		790,749
PPP loans*	0		0		0		0		464,058		464,058
Subtotal commercial and industrial	923		96		1,443		2,462		1,341,413		1,343,875
Commercial real estate
Construction	0		0		0		0		182,605		182,605
Agriculture	0		0		0		0		198,049		198,049
Commercial real estate other	2,255		1,079		12,477		15,811		2,146,143		2,161,954
Subtotal commercial real estate	2,255		1,079		12,477		15,811		2,526,797		2,542,608
Residential real estate
Home equity	475		135		1,079		1,689		204,767		206,456
Mortgages	482		1,183		2,649		4,314		1,224,315		1,228,629
Subtotal residential real estate	957		1,318		3,728		6,003		1,429,082		1,435,085
Consumer and other
Indirect	86		32		57		175		9,359		9,534
Consumer and other	119		10		154		283		64,063		64,346
Subtotal consumer and other	205		42		211		458		73,422		73,880
Leases	0		0		0		0		14,877		14,877
Total loans and leases	4,340		2,535		17,859		24,734		5,385,591		5,410,325
Less: unearned income and deferred costs and fees	0		0		0		0		(12,028)		(12,028)
Total loans and leases, net of unearned income and deferred costs and fees	$	4,340	$	2,535	$	17,859	$	24,734	$	5,373,563	$	5,398,297

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December 31, 2019
(In thousands)	30-89 Days		90 Days or More		Current Loans		Total Loans		90 days and accruing1		Nonaccrual
Loans and Leases
Commercial and industrial
Agriculture	$	0	$	65	$	105,721	$	105,786	$	0	$	0
Commercial and industrial other	413		2,081		899,781		902,275		2		2,335
Subtotal commercial and industrial	413		2,146		1,005,502		1,008,061		2		2,335
Commercial real estate
Construction	0		0		213,637		213,637		0		0
Agriculture	0		0		184,898		184,898		0		0
Commercial real estate other	1,140		10,780		2,033,110		2,045,030		542		10,789
Subtotal commercial real estate	1,140		10,780		2,431,645		2,443,565		542		10,789
Residential real estate
Home equity	348		727		218,170		219,245		55		2,796
Mortgages	1,344		3,985		1,153,263		1,158,592		195		8,086
Subtotal residential real estate	1,692		4,712		1,371,433		1,377,837		250		10,882
Consumer and other
Indirect	312		60		12,592		12,964		0		117
Consumer and other	167		66		61,213		61,446		0		158
Subtotal consumer and other	479		126		73,805		74,410		0		275
Leases	0		0		17,322		17,322		0		0
Total loans and leases	3,724		17,764		4,899,707		4,921,195		794		24,281
Less: unearned income and deferred costs and fees	0		0		(3,645)		(3,645)		0		0
Total loans and leases, net of unearned income and deferred costs and fees	$	3,724	$	17,764	$	4,896,062	$	4,917,550	$	794	$	24,281

1 Includes acquired loans that were recorded at fair value at the acquisition date.

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The following table presents the amortized cost basis of loans on nonaccrual status and the amortized cost basis of loans on nonaccrual status for which there was no related allowance for credit losses. The below table is an age analysis of nonaccrual loans, segregated by class of loans, as of September 30, 2020.

(In thousands)	Nonaccrual Loans with no Allowance for Credit Losses		Nonaccrual Loans		Loans Past Due Over 89 Days and Accruing
Loans and Leases
Commercial and industrial
Commercial and industrial other	$	1,469	$	1,636	$	0
Subtotal commercial and industrial	1,469		1,636		0
Commercial real estate
Agriculture	120		120		0
Commercial real estate other	10,092		12,657		0
Subtotal commercial real estate	10,212		12,777		0
Residential real estate
Home equity	2,793		2,793		0
Mortgages	9,410		9,410		0
Subtotal residential real estate	12,203		12,203		0
Consumer and other
Indirect	144		144		0
Consumer and other	184		184		0
Subtotal consumer and other	328		328		0
Leases	0		0		0
Total loans and leases	$	24,212	$	26,944	$	0

The Company recognized $0 of interest income on nonaccrual loans during the three and nine months ended September 30, 2020.

5. Allowance for Credit Losses

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

The Company uses a DCF method to estimate expected credit losses for all loan segments excluding the leasing segment. For each of these loan segments, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, recovery lag probability of default, and loss give 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.

19

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 are also considered by management when developing the forecast metrics.

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

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

The Company adopted ASU 2016-13 using the prospective transition approach for financial assets purchased with credit deterioration ("PCD") that were previously classified as purchased credit impaired ("PCI") and accounted for under ASC 310-30. In accordance with the standard, the Company did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. The remaining discount on the PCD assets will be accreted into interest income on a level-yield method over the life of the loans.

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 September 30, 2020, 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 and State regulatory agencies, as part of their examination process, review the Company's allowance and may require the Company to recognize additions to the allowance bases on their judgements and information available to them at the time of their examinations.

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

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

The following table details activity in the allowance for credit losses on loans for the three and nine months ended September 30, 2020 and 2019. As previously discussed, the Company adopted ASU 2016-13 on January 1, 2020 using the modified retrospective approach. Results for the periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable U.S. GAAP. The transition adjustment included a decrease in the allowance of $2.5 million. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

Three Months Ended September 30, 2020
(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer and Other		Finance Leases		Total
Allowance for credit losses:
Beginning balance	$	11,113	$	24,286	$	15,012	$	1,596	$	75	$	52,082
Charge-offs	0		0		(30)		(145)		0		(175)
Recoveries	89		9		16		73		0		187
Provision (credit) for credit loss expense	(3,918)		4,264		(65)		(75)		(7)		199
Ending Balance	$	7,284	$	28,559	$	14,933	$	1,449	$	68	$	52,293

20

Three Months Ended September 30, 2019
(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer and Other		Finance Leases		Total
Allowance for credit losses:
Beginning balance	$	11,543	$	21,005	$	6,897	$	1,345	$	0	$	40,790
Charge-offs	(6)		(551)		(87)		(190)		0		(834)
Recoveries	10		2		15		68		0		95
Provision (credit) for credit loss expense	(256)		2,143		(733)		166		0		1,320
Ending Balance	$	11,291	$	22,599	$	6,092	$	1,389	$	0	$	41,371

Nine Months Ended September 30, 2020
(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer and Other		Finance Leases		Total
Allowance for credit losses:
Beginning balance, prior to adoption of ASC 326	$	10,541	$	21,608	$	6,381	$	1,362	$	0	$	39,892
Impact of adopting ASC 326	(2,008)		(5,917)		4,459		850		82		(2,534)
Charge-offs	(1)		(1,305)		(33)		(409)		0		(1,748)
Recoveries	125		40		178		195		0		538
Provision (credit) for credit loss expense	(1,373)		14,133		3,948		(549)		(14)		16,145
Ending Balance	$	7,284	$	28,559	$	14,933	$	1,449	$	68	$	52,293

Nine Months Ended September 30, 2019
(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer and Other		Finance Leases		Total
Allowance for credit losses:
Beginning balance	$	11,272	$	23,483	$	7,345	$	1,310	$	0	$	43,410
Charge-offs	(489)		(3,949)		(131)		(571)		0		(5,140)
Recoveries	92		107		319		217		0		735
Provision (credit) for credit loss expense	416		2,958		(1,441)		433		0		2,366
Ending Balance	$	11,291	$	22,599	$	6,092	$	1,389	$	0	$	41,371

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

(In thousands)	Real Estate		Business Assets		Other		Total		ACL Allocation
September 30, 2020
Commercial and Industrial	$	33	$	507	$	50	$	590	$	48
Commercial Real Estate	8,085		0		0		8,085		436
Commercial Real Estate - Agriculture	1,559		0		0		1,559		0
Residential - Mortgages	384		0		0		384		2
Total	$	10,061	$	507	$	50	$	10,618	$	486

21

The following tables present information pertaining to the allocation of the allowance for credit losses as of December 31, 2019, as determined in accordance with ASC 310, prior to the adoption of ASU 2016-13:

(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer and Other		Finance Leases		Total
Allowance for originated loans and leases
December 31, 2019
Individually evaluated for impairment	$	245	$	662	$	0	$	0	$	0	$	907
Collectively evaluated for impairment	10,296		20,895		6,360		1,356		0		38,907
Ending balance	$	10,541	$	21,557	$	6,360	$	1,356	$	0	$	39,814

(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer and Other		Finance Leases		Total
Allowance for acquired loans
December 31, 2019
Individually evaluated for impairment	$	0	$	0	$	0	$	0	$	0	$	0
Collectively evaluated for impairment	0		51		21		6		0		78
Ending balance	$	0	$	51	$	21	$	6	$	0	$	78

The recorded investment in loans and leases summarized on the basis of the Company’s impairment methodology as of December 31, 2019 was as follows:

(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer  and Other		Finance Leases		Total
Originated loans and leases
December 31, 2019
Individually evaluated for impairment	$	2,110	$	13,496	$	3,779	$	0	$	0	$	19,385
Collectively evaluated for impairment	966,875		2,283,152		1,340,687		73,625		17,322		4,681,661
Total	$	968,985	$	2,296,648	$	1,344,466	$	73,625	$	17,322	$	4,701,046

(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer  and Other		Finance Leases		Total
Acquired loans
December 31, 2019
Individually evaluated for impairment	$	2	$	714	$	2,114	$	0	$	0	$	2,830
Loans acquired with deteriorated credit quality	173		5,674		3,302		0		0		9,149
Collectively evaluated for impairment	38,901		140,529		27,955		785		0		208,170
Total	$	39,076	$	146,917	$	33,371	$	785	$	0	$	220,149

22

Prior to the adoption of ASC 326, a loan was considered impaired when, based on current information and events, it was probable that we would be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans consisted of non-homogenous nonaccrual loans, and all loans restructured in a troubled debt restructuring (TDR). Specific reserves on individually identified impaired loans that were not collateral dependent were measured based on the present value of expected future cash flows discounted at the original effective interest rate of each loan. For loans that were collateral dependent, impairment was measured based on the fair value of the collateral less estimated selling costs, and such impaired amounts were generally charged off. The majority of impaired loans were collateral dependent impaired loans that had limited exposure or require limited specific reserves because of the amount of collateral support with respect to these loans, and previous charge-offs. Interest payments on impaired 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.

Impaired loans at December 31, 2019 were as follows: 

	December 31, 2019
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
Originated loans and leases with no related allowance
Commercial & industrial
Commercial and industrial other	$	1,865	$	1,965	$	0
Commercial real estate
Commercial real estate other	10,205		11,017		0
Residential real estate
Home equity	3,779		3,992		0
Subtotal	$	15,849	$	16,974	$	0
Originated loans and leases with related allowance
Commercial & industrial
Commercial and industrial other	245		245		245
Commercial real estate
Commercial real estate other	3,291		3,291		662
Subtotal	$	3,536	$	3,536	$	907
Total	$	19,385	$	20,510	$	907

	December 31, 2019
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
Acquired loans with no related allowance
Commercial & industrial
Commercial and industrial other	$	2	$	2	$	0
Commercial real estate
Commercial real estate other	714		714		0
Residential real estate
Home equity	2,114		2,217		0
Total	$	2,830	$	2,933	$	0

23

The following table presents average impaired loans, as determined in accordance with ASC 310, prior to the adoption of ASU 2016-13, and interest recognized on such loans, for the three months ended September 30, 2019: 

	Three Months Ended September 30, 2019
(In thousands)	Average Recorded Investment		Interest Income Recognized
Originated loans and leases with no related allowance
Commercial & industrial
Commercial and industrial other	$	1,505	$	0
Commercial real estate
Commercial real estate other	7,380		0
Residential real estate
Home equity	3,963		0
Subtotal	$	12,848	$	0
Originated loans and leases with related allowance
Commercial & industrial
Commercial and industrial other	273		0
Commercial real estate
Commercial real estate other	1,708		0
Subtotal	$	1,981	$	0
Total	$	14,829	$	0

	Three Months Ended September 30, 2019
(In thousands)	Average Recorded Investment		Interest Income Recognized
Acquired loans and leases with no related allowance
Commercial & industrial
Commercial and industrial other	$	29	$	0
Commercial real estate
Commercial real estate other	857		0
Residential real estate
Home equity	2,585		0
Total	$	3,471	$	0

24

The average recorded investment and interest income recognized on impaired loans for the nine months ended September 30, 2019 was as follows:

	Nine Months Ended September 30, 2019
(In thousands)	Average Recorded Investment		Interest Income Recognized
Originated loans and leases with no related allowance
Commercial & industrial
Commercial and industrial other	$	2,123	$	0
Commercial real estate
Commercial real estate other	6,509		0
Residential real estate
Home equity	3,978		0
Subtotal	$	12,610	$	0
Originated loans and leases with related allowance
Commercial & industrial
Commercial and industrial other	154		0
Commercial real estate
Commercial real estate other	757		0
Subtotal	$	911	$	0
Total	$	13,521	$	0

	Nine Months Ended September 30, 2019
(In thousands)	Average Recorded Investment		Interest Income Recognized
Acquired loans and leases with no related allowance
Commercial & industrial
Commercial and industrial other	$	28	$	0
Commercial real estate
Commercial real estate other	834		0
Residential real estate
Home equity	2,606		0
Total	$	3,468	$	0

Loans are considered modified in a TDR when, due to a borrower’s financial difficulties, the Company makes concessions to the borrower that it would not otherwise consider. These modifications may include, among others, an extension for the term of the loan, and granting a period when interest-only payments can be made with the principal payments made over the remaining term of the loan or at maturity.

25

The following tables present information on loans modified in troubled debt restructuring during the periods indicated. Post-modification amounts are presented as of September 30, 2020 and 2019.

	Three Months Ended
September 30, 2020						Defaulted TDRs2
(In thousands)	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans		Post-Modification Outstanding Recorded Investment
Commercial real estate
Commercial real estate other1	1	$	196	$	196	0		$	0
Consumer and other
Consumer and other1	1	$	4	$	4	$	0	$	0
Total	2	$	200	$	200	0		$	0

 1 Represents the following concessions:  extension of term and reduction of rate.

2 TDRs that defaulted during the three months ended September 30, 2020 that were restructured in the prior twelve months.

	Three Months Ended
September 30, 2019						Defaulted TDRs2
(In thousands)	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans		Post-Modification Outstanding Recorded Investment
Commercial and Industrial
Commercial and industrial other1	1	$	9	$	9	0		$	0
Commercial real estate
Commercial real estate other1	1	$	1,577	$	1,577	0		$	0
Residential real estate
Home equity1	0	$	0	$	0	$	1	$	93
Total	2	$	1,586	$	1,586	1		$	93

 1 Represents the following concessions:  extension of term and reduction of rate.

2 TDRs that defaulted during the three months ended September 30, 2019 that were restructured in the prior twelve months.

	Nine Months Ended
September 30, 2020						Defaulted TDRs2
(In thousands)	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Post- Modification Outstanding Recorded Investment
Commercial & industrial
Commercial and industrial other1	0	$	0	$	0	0	$	0
Commercial real estate
Commercial real estate other1	1	196		196		1	37
Residential real estate
Home equity1	2	121		121		1	87
Consumer and other
Consumer and other1	1	$	4	$	4	0	$	0
Total	4	$	321	$	321	2	$	124

1 Represents the following concessions:  extension of term and reduction of rate.

2 TDRs that defaulted during the nine months ended September 30, 2020 that were restructured in the prior twelve months.

26

	Nine Months Ended
September 30, 2019						Defaulted TDRs2
(In thousands)	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Post- Modification Outstanding Recorded Investment
Commercial & industrial
Commercial and industrial other1	2	$	604	$	604	0	$	0
Commercial real estate
Commercial real estate other1	1	$	1,577	$	1,577	0	$	0
Residential real estate
Home equity1	1	$	168	$	168	1	$	93
Total	4	$	2,349	$	2,349	1	$	93

1 Represents the following concessions:  extension of term and reduction of rate.

2 TDRs that defaulted during the nine months ended September 30, 2019 that were restructured in the prior twelve months.

The following table presents credit quality indicators by total loans on an amortized cost basis by origination year as of September 30, 2020.

27

(In thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total Loans
Commercial & Industrial - Other:
Pass	$	61,772	$	78,283	$	61,289	$	65,282	$	38,317	$	303,190	$	160,124	$	11,790	$	780,047
Special Mention	69		494		529		1,281		2,458		26		1,456		0		6,313
Substandard	42		60		999		265		312		879		1,832		0		4,389
Total Commercial & Industrial - Other	$	61,883	$	78,837	$	62,817	$	66,828	$	41,087	$	304,095	$	163,412	$	11,790	$	790,749
Commercial and Industrial - PPP:
Pass	$	464,058	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	464,058
Special Mention	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Substandard	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Total Commercial and Industrial - PPP	$	464,058	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	464,058
Commercial and Industrial - Agriculture:
Pass	$	11,203	$	9,128	$	13,160	$	7,060	$	3,857	$	2,934	$	33,800	$	467	$	81,609
Special Mention	0		0		59		771		0		0		1,681		0		2,511
Substandard	100		91		0		220		0		2,309		2,228		0		4,948
Total Commercial and Industrial - Agriculture	$	11,303	$	9,219	$	13,219	$	8,051	$	3,857	$	5,243	$	37,709	$	467	$	89,068
Commercial Real Estate
Pass	$	157,664	$	234,828	$	240,343	$	246,787	$	304,856	$	732,205	$	65,076	$	44,039	$	2,025,798
Special Mention	0		14,439		19,172		6,869		34,367		30,733		526		0		106,106
Substandard	349		1,700		739		3,608		924		22,385		345		0		30,050
Total Commercial Real Estate	$	158,013	$	250,967	$	260,254	$	257,264	$	340,147	$	785,322	$	65,947	$	44,039	$	2,161,954
Commercial Real Estate - Agriculture:
Pass	$	16,925	$	35,850	$	44,991	$	21,833	$	17,562	$	45,966	$	121	$	5,655	$	188,903
Special Mention	1,516		0		579		1,379		1,064		150		0		0		4,688
Substandard	0		0		0		1,779		718		1,569		392		0		4,458
Total Commercial Real Estate - Agriculture	$	18,441	$	35,850	$	45,570	$	24,991	$	19,344	$	47,685	$	513	$	5,655	$	198,049
Commercial Real Estate - Construction
Pass	$	12,983	$	22,285	$	8,019	$	2,629	$	2,018	$	8,324	$	107,970	$	15,434	$	179,662
Special Mention	0		0		0		0		0		529		2,085		0		2,614
Substandard	0		0		0		0		0		329		0		0		329
Total Commercial Real Estate - Construction	$	12,983	$	22,285	$	8,019	$	2,629	$	2,018	$	9,182	$	110,055	$	15,434	$	182,605

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The following table presents credit quality indicators by total loans on an amortized cost basis by origination year as of September 30, 2020, continued.

(In thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total Loans
Residential - Home Equity
Performing	$	1,297	$	2,801	$	1,235	$	2,088	$	823	$	1,573	$	192,549	$	1,297	$	203,663
Nonperforming	0		18		0		0		197		390		2,188		0		2,793
Total Residential - Home Equity	$	1,297	$	2,819	$	1,235	$	2,088	$	1,020	$	1,963	$	194,737	$	1,297	$	206,456
Residential - Mortgages
Performing	$	232,860	$	198,718	$	129,779	$	166,414	$	191,858	$	286,255	$	12,391	$	944	$	1,219,219
Nonperforming	0		262		402		368		1,213		7,105		60		0		9,410
Total Residential - Mortgages	$	232,860	$	198,980	$	130,181	$	166,782	$	193,071	$	293,360	$	12,451	$	944	$	1,228,629
Consumer - Direct
Performing	$	12,884	$	12,595	$	8,728	$	7,534	$	3,219	$	11,904	$	7,298	$	0	$	64,162
Nonperforming	0		29		115		13		0		3		24		$	0	184
Total Consumer - Direct	$	12,884	$	12,624	$	8,843	$	7,547	$	3,219	$	11,907	$	7,322	$	0	$	64,346
Consumer - Indirect
Performing	$	1,266	$	2,200	$	3,840	$	1,388	$	521	$	175	$	0	$	0	$	9,390
Nonperforming	0		61		33		3		30		17		0		0		144
Total Consumer Indirect	$	1,266	$	2,261	$	3,873	$	1,391	$	551	$	192	$	0	$	0	$	9,534

The following tables present credit quality indicators (internal risk grade) by class of commercial and industrial loans and commercial real estate loans as of December 31, 2019. 

December 31, 2019
(In thousands)	Commercial & Industrial Other		Commercial & Industrial Agriculture		Commercial Real Estate Other		Commercial Real Estate Agriculture		Commercial Real Estate Construction		Total
Originated Loans and Leases
Internal risk grade:
Pass	$	851,517	$	89,892	$	1,857,142	$	166,888	$	212,302	$	3,177,741
Special Mention	8,306		1,698		16,623		3,173		0		29,800
Substandard	3,376		14,196		25,880		14,640		0		58,092
Total	$	863,199	$	105,786	$	1,899,645	$	184,701	$	212,302	$	3,265,633

29

December 31, 2019
(In thousands)	Commercial & Industrial Other		Commercial & Industrial Agriculture		Commercial Real Estate Other		Commercial Real Estate Agriculture		Commercial Real Estate Construction		Total
Acquired Loans and Leases
Internal risk grade:
Pass	$	38,879	$	0	$	143,175	$	197	$	1,335	$	183,586
Special Mention	0		0		0		0		0		0
Substandard	197		0		2,210		0		0		2,407
Total	$	39,076	$	0	$	145,385	$	197	$	1,335	$	185,993

The following tables present credit quality indicators by class of residential real estate loans and by class of consumer loans. Nonperforming loans include nonaccrual, impaired, and loans 90 days past due and accruing interest. All other loans were considered performing as of December 31, 2019. For purposes of this footnote, acquired loans that were recorded at fair value at the acquisition date and are 90 days or greater past due are considered performing.

December 31, 2019
(In thousands)	Residential Home Equity		Residential Mortgages		Consumer Indirect		Consumer Other		Total
Originated Loans and Leases
Performing	$	201,970	$	1,133,237	$	12,847	$	60,503	$	1,408,557
Nonperforming	1,924		7,335		117		158		9,534
Total	$	203,894	$	1,140,572	$	12,964	$	60,661	$	1,418,091

December 31, 2019
(In thousands)	Residential Home Equity		Residential Mortgages		Consumer Indirect		Consumer Other		Total
Acquired Loans and Leases
Performing	$	14,479	$	17,269	$	0	$	785	$	32,533
Nonperforming	872		751		0		0		1,623
Total	$	15,351	$	18,020	$	0	$	785	$	34,156

6. Earnings Per Share

Earnings per share in the table below, for the three and nine month periods ended September 30, 2020 and 2019 are calculated under the two-class method as required by ASC Topic 260, Earnings Per Share. ASC 260 provides that unvested share-based payment awards that contain nonforfeitable rights to dividends are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. The Company has issued restricted stock awards that contain such rights and are therefore considered participating securities. Basic earnings per common share are calculated by dividing net income allocable to common stock by the weighted average number of common shares, excluding participating securities, during the period. Diluted earnings per common share include the dilutive effect of participating securities.

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	Three Months Ended
(In thousands, except share and per share data)	9/30/2020		9/30/2019
Basic
Net income available to common shareholders	$	24,230	$	20,206
Less: income attributable to unvested stock-based compensation awards	(278)		(317)
Net earnings allocated to common shareholders	23,952		19,889
Weighted average shares outstanding, including unvested stock-based compensation awards	14,920,924		15,063,202
Less: average unvested stock-based compensation awards	(223,392)		(236,088)
Weighted average shares outstanding - Basic	14,697,532		14,827,114
Diluted
Net earnings allocated to common shareholders	23,952		19,889
Weighted average shares outstanding - Basic	14,697,532		14,827,114
Plus:  incremental shares from assumed conversion of stock-based compensation awards	30,209		60,512
Weighted average shares outstanding - Diluted	14,727,741		14,887,626
Basic EPS	$	1.63	$	1.34
Diluted EPS	$	1.63	$	1.34

Stock-based compensation awards representing 10,449 and 17,956 of common shares during the three months ended September 30, 2020 and 2019, respectively, were not included in the computations of diluted earnings per common share because the effect on those periods would have been anti-dilutive.

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	Nine Months Ended
(In thousands, except share and per share data)	9/30/2020		9/30/2019
Basic
Net income available to common shareholders	$	53,610	$	60,638
Less: income attributable to unvested stock-based compensation awards	(628)		(972)
Net earnings allocated to common shareholders	52,982		59,666
Weighted average shares outstanding, including unvested stock-based compensation awards	14,929,628		15,204,170
Less: unvested stock-based compensation awards	(230,181)		(236,088)
Weighted average shares outstanding - Basic	14,699,447		14,968,082
Diluted
Net earnings allocated to common shareholders	52,982		59,666
Weighted average shares outstanding - Basic	14,699,447		14,968,082
Plus: incremental shares from assumed conversion of stock-based compensation awards	39,474		67,698
Weighted average shares outstanding - Diluted	14,738,921		15,035,780
Basic EPS	$	3.60	$	3.99
Diluted EPS	$	3.59	$	3.97

Stock-based compensation awards representing approximately 10,090 and 18,396 of common shares during the nine months ended September 30, 2020 and 2019, respectively were not included in the computations of diluted earnings per common share because the effect on those periods would have been anti-dilutive.

7. Other Comprehensive Income (Loss)

The following tables present reclassifications out of accumulated other comprehensive income (loss) for the three and nine month periods ended September 30, 2020 and 2019.

	Three Months Ended September 30, 2020
(In thousands)	Before-Tax Amount		Tax (Expense) Benefit		Net of Tax
Available-for-sale debt securities:
Change in net unrealized gain/loss during the period	$	(4,374)	$	1,071	$	(3,303)
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	0		0		0
Net unrealized gains/losses	(4,374)		1,071		(3,303)
Employee benefit plans:
Amortization of net retirement plan actuarial gain	593		(146)		447
Amortization of net retirement plan prior service cost	53		(13)		40
Employee benefit plans	646		(159)		487
Other comprehensive (loss) income	$	(3,728)	$	912	$	(2,816)

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	Three Months Ended September 30, 2019
(In thousands)	Before-Tax Amount		Tax (Expense) Benefit		Net of Tax
Available-for-sale debt securities:
Change in net unrealized gain/loss during the period	$	4,122	$	(1,011)	$	3,111
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	(133)		32		(101)
Net unrealized gains/losses	3,989		(979)		3,010
Employee benefit plans:
Amortization of net retirement plan actuarial gain	411		(101)		310
Amortization of net retirement plan prior service cost	4		(1)		3
Employee benefit plans	415		(102)		313
Other comprehensive income	$	4,404	$	(1,081)	$	3,323

	Nine Months Ended September 30, 2020
(In thousands)	Before-Tax Amount		Tax (Expense) Benefit		Net of Tax
Available-for-sale debt securities:
Change in net unrealized gain/loss during the period	$	24,592	$	(6,029)	$	18,563
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	(429)		105		(324)
Net unrealized gains/losses	24,163		(5,924)		18,239
Employee benefit plans:
Amortization of net retirement plan actuarial loss	1,775		(435)		1,340
Amortization of net retirement plan prior service cost	160		(39)		121
Employee benefit plans	1,935		(474)		1,461
Other comprehensive income	$	26,098	$	(6,398)	$	19,700

	Nine Months Ended September 30, 2019
(In thousands)	Before-Tax Amount		Tax (Expense) Benefit		Net of Tax
Available-for-sale debt securities:
Change in net unrealized gain/loss during the period	$	34,014	$	(8,333)	$	25,681
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	(404)		99		(305)
Net unrealized gains/losses	33,610		(8,234)		25,376
Employee benefit plans:
Amortization of net retirement plan actuarial loss	1,232		(302)		930
Amortization of net retirement plan prior service cost	11		(3)		8
Employee benefit plans	1,243		(305)		938
Other comprehensive income	$	34,853	$	(8,539)	$	26,314

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

(In thousands)	Available-for- Sale Debt Securities		Employee Benefit Plans		Accumulated Other Comprehensive (Loss) Income
Balance at July 1, 2020	$	25,581	$	(46,629)	$	(21,048)
Other comprehensive (loss) income before reclassifications	(3,303)		0		(3,303)
Amounts reclassified from accumulated other comprehensive (loss) income	0		487		487
Net current-period other comprehensive (loss) income	(3,303)		487		(2,816)
Balance at September 30, 2020	$	22,278	$	(46,142)	$	(23,864)
Balance at January 1, 2020	$	4,039	$	(47,603)	$	(43,564)
Other comprehensive (loss) income before reclassifications	18,563		0		18,563
Amounts reclassified from accumulated other comprehensive (loss) income	(324)		1,461		1,137
Net current-period other comprehensive income	18,239		1,461		19,700
Balance at September 30, 2020	$	22,278	$	(46,142)	$	(23,864)

(In thousands)	Available-for- Sale Debit Securities		Employee Benefit Plans		Accumulated Other Comprehensive (Loss) Income
Balance at July 1, 2019	$	(1,223)	$	(38,951)	$	(40,174)
Other comprehensive income (loss) before reclassifications	3,111		0		3,111
Amounts reclassified from accumulated other comprehensive (loss) income	(101)		313		212
Net current-period other comprehensive income	3,010		313		3,323
Balance at September 30, 2019	$	1,787	$	(38,638)	$	(36,851)
Balance at January 1, 2019	$	(23,589)	$	(39,576)	$	(63,165)
Other comprehensive income (loss) before reclassifications	25,681		0		25,681
Amounts reclassified from accumulated other comprehensive (loss) income	(305)		938		633
Net current-period other comprehensive income	25,376		938		26,314
Balance at September 30, 2019	$	1,787	$	(38,638)	$	(36,851)

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The following tables present the amounts reclassified out of each component of accumulated other comprehensive (loss) income for the three and nine months ended September 30, 2020 and 2019.

Three Months Ended September 30, 2020
Details about Accumulated other Comprehensive Income (Loss) Components (In thousands)	Amount Reclassified from Accumulated Other Comprehensive (Loss) Income1		Affected Line Item in the Statement Where Net Income is Presented
Available-for-sale debt securities:
Unrealized gains and losses on available-for-sale debt securities	$	0	Net gain on securities transactions
	0		Tax expense
	0		Net of tax
Employee benefit plans:
Amortization of the following 2
Net retirement plan actuarial loss	(593)		Other operating expense
Net retirement plan prior service cost	(53)		Other operating expense
	(646)		Total before tax
	159		Tax benefit
	$	(487)	Net of tax

Three Months Ended September 30, 2019
Details about Accumulated other Comprehensive Income (Loss) Components (In thousands)	Amount Reclassified from Accumulated Other Comprehensive (Loss) Income1		Affected Line Item in the Statement Where Net Income is Presented
Available-for-sale debt securities:
Unrealized gains and losses on available-for-sale debt securities	$	133	Net gain on securities transactions
	(32)		Tax expense
	101		Net of tax
Employee benefit plans:
Amortization of the following2
Net retirement plan actuarial loss	(411)		Other operating expense
Net retirement plan prior service cost	(4)		Other operating expense
	(415)		Total before tax
	102		Tax benefit
	$	(313)	Net of tax

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Nine Months Ended September 30, 2020
Details about Accumulated other Comprehensive Income (Loss) Components (In thousands)	Amount Reclassified from Accumulated Other Comprehensive (Loss) Income1		Affected Line Item in the Statement Where Net Income is Presented
Available-for-sale debt securities:
Unrealized gains and losses on available-for-sale debt securities	$	429	Net gain on securities transactions
	(105)		Tax expense
	324		Net of tax
Employee benefit plans:
Amortization of the following2
Net retirement plan actuarial loss	(1,775)		Other operating expense
Net retirement plan prior service cost	(160)		Other operating expense
	(1,935)		Total before tax
	474		Tax benefit
	$	(1,461)	Net of tax

Nine Months Ended September 30, 2019
Details about Accumulated other Comprehensive Income (Loss) Components (In thousands)	Amount Reclassified from Accumulated Other Comprehensive (Loss) Income1		Affected Line Item in the Statement Where Net Income is Presented
Available-for-sale debt securities:
Unrealized gains and losses on available-for-sale debt securities	$	404	Net gain on securities transactions
	(99)		Tax expense
	305		Net of tax
Employee benefit plans:
Amortization of the following2
Net retirement plan actuarial loss	(1,232)		Other operating expense
Net retirement plan prior service cost	(11)		Other operating expense
	(1,243)		Total before tax
	305		Tax benefit
	$	(938)	Net of tax

1 Amounts in parentheses indicated debits in income statement.

2 The accumulated other comprehensive (loss) income components are included in the computation of net periodic benefit cost (See Note 8 - “Employee Benefit Plan”).

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8. Employee Benefit Plans

The following table sets forth the amount of the net periodic benefit cost recognized by the Company for the Company’s pension plan, post-retirement plan (Life and Health), and supplemental employee retirement plans (“SERP”) including the following components: service cost, interest cost, expected return on plan assets for the period, amortization of the unrecognized transitional obligation or transition asset, and the amounts of recognized gains and losses, prior service cost recognized, and gain or loss recognized due to settlement or curtailment.

Components of Net Periodic Benefit Cost

	Pension Benefits Three Months Ended				Life and Health Three Months Ended				SERP Benefits Three Months Ended
(In thousands)	9/30/2020		9/30/2019		9/30/2020		9/30/19		9/30/2020		9/30/2019
Service cost	$	0	$	0	$	43	$	40	$	54	$	38
Interest cost	593		734		61		72		228		228
Expected return on plan assets	(1,354)		(1,233)		0		0		0		0
Amortization of net retirement plan actuarial loss	353		333		39		0		200		78
Amortization of net retirement plan prior service (credit) cost	(2)		(3)		(15)		(15)		71		22
Net periodic benefit (income) cost	$	(410)	$	(169)	$	128	$	97	$	553	$	366

	Pension Benefits Nine Months Ended				Life and Health Nine Months Ended				SERP Benefits Nine Months Ended
(In thousands)	9/30/2020		9/30/2019		9/30/2020		9/30/2019		9/30/2020		9/30/2019
Service cost	$	0	$	0	$	129	$	120	$	161	$	115
Interest cost	1,778		2,202		183		217		685		684
Expected return on plan assets	(4,062)		(3,699)		0		0		0		0
Amortization of net retirement plan actuarial loss	1,058		1,000		116		0		600		232
Amortization of net retirement plan prior service cost (credit)	(7)		(8)		(45)		(46)		214		65
Net periodic benefit (income) cost	$	(1,233)	$	(505)	$	383	$	291	$	1,660	$	1,096

The service component of net periodic benefit cost for the Company's benefit plans is recorded as a part of salaries and wages in the consolidated statements of income. All other components are recorded as part of other operating expenses in the consolidated statements of income.

The Company realized approximately $1,461,000 and $938,000, net of tax, as amortization of amounts previously recognized in accumulated other comprehensive (loss) income, for the nine months ended September 30, 2020 and 2019, respectively.

The Company is not required to contribute to the pension plan in 2020, but it may make voluntary contributions. The Company did not contribute to the pension plan in the first nine months of 2020 and 2019.

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9. Other Income and Operating Expense

Other income and operating expense totals are presented in the table below.  Components of these totals exceeding 1% of the aggregate of total noninterest income and total noninterest expenses for any of the periods presented below are stated separately.

	Three Months Ended				Nine Months Ended
(In thousands)	9/30/2020		9/30/2019		9/30/2020		9/30/2019
Noninterest Income
Other service charges	$	720	$	809	$	2,108	$	2,405
Increase in cash surrender value of corporate owned life insurance	559		425		1,617		1,612
Net gains on the sales of loans originated for sale	378		25		1,245		139
Other income	161		704		1,418		2,091
Total other income	$	1,818	$	1,963	$	6,388	$	6,247
Noninterest Expenses
Marketing expense	$	927	$	899	$	2,806	$	3,706
Professional fees	1,398		2,426		4,654		7,169
Legal fees	418		347		955		788
Technology expense	2,941		2,813		8,771		8,016
Cardholder expense	827		811		2,396		2,372
Off-balance sheet commitments	(417)		0		1,273		0
Other expenses	4,195		4,002		13,971		13,400
Total other operating expense	$	10,289	$	11,298	$	34,826	$	35,451

10. Revenue Recognition

In addition to revenue from loans and securities, the Company also generates revenues from other services provided as described below.

Insurance Commissions and Fees

Fees are earned upon the effective date of bound coverage, as no significant performance obligation remains after coverage is bound. The Company has historically recognized revenue in this manner, with the noted exception related to installment billing discussed below.

Installment Billing - Agency Bill

Revenue associated with the issuance of policies is recognized upon the effective date of the associated policy regardless of the billing method. Revenue is accrued based upon the completion of the performance obligation creating a current asset for the unbilled revenue until such time as an invoice is generated, typically not to exceed twelve months.

Contingent Commissions

Contingent commissions represent a form of variable consideration associated with the same performance obligation, which is the placement of coverage, for which we earn core commissions. Contingent commissions are estimated with an appropriate constraint applied and accrued relative to the recognition of the corresponding core commissions. The resulting effect on the timing of recognition of contingent commissions will more closely follow a similar pattern as our core commissions with true-ups recognized when payments are received or as additional information that affects the estimate becomes available.

Refund of Commissions

The contract with the insurance carrier dictates the level of commissions paid to the Company that will be refunded to the carrier upon cancellation by the policyholder. As a result, the Company has established a liability for the estimated amount of commission to which the Company does not expect to be entitled, and a corresponding reduction to the gross commission received or receivable. The refund liability is updated at the end of each reporting period for changes in circumstances.

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Trust & Asset Management

Trust and asset management income is primarily comprised of fees earned from the management and administration of trusts and other customer assets. The Company’s performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days after month end through a direct charge to customers’ accounts. The Company does not earn performance-based incentives. Optional services such as real estate sales and tax return preparation services are also available to existing trust and asset management customers. The Company’s performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e., as incurred). Payment is received shortly after services are rendered.

Mutual Fund & Investment Income

Mutual fund and investment income consists of other recurring revenue streams such as commissions from sales of mutual funds and other investments, investment advisory fees from the Company’s Strategic Asset Management (“SAM”) Services wealth management product. Commissions from the sale of mutual funds and other investments are recognized on trade date, which is when the Company has satisfied its performance obligation. The Company also receives periodic service fees (i.e., trailers) from mutual fund companies typically based on a percentage of net asset value. Trailer revenue is recorded over time, usually monthly or quarterly, as net asset value is determined. Investment advisor fees from the wealth management product is earned over time and based on an annual percentage rate of the net asset value. The investment advisor fees are charged to the customer’s account in advance on the first month of the quarter, and the revenue is recognized over the following three-month period. The Company does engage a third party, LPL Financial, LLC (“LPL”), to satisfy part of this performance obligation, and therefore this income is reported net of any corresponding expenses paid to LPL.

Service Charges on Deposit Accounts

Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, and other deposit account related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.

Card Services Income

Fees, exchange, and other service charges are primarily comprised of debit and credit card income, ATM fees, merchant services income, and other service charges. Debit and credit card income is primarily comprised of interchange fees earned whenever the Company’s debit and credit cards are processed through card payment networks such as Mastercard. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. Merchant services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees. The Company’s performance obligation for fees and exchange are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month.

Other

Other service charges include revenue from processing wire and ACH transfers, lock box service and safe deposit box rental. Both wire transfer fees and lock box services are charged on per item basis. Wire and ACH transfer fees are charged at the time of transfer and charged directly to the customer account. Lock box customers are billed monthly and payments are received in the following month through a direct charge to customers’ accounts. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment. The Company determined that since rentals and renewals occur fairly consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation.

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The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of ASC 606, for the three and nine months ended September 30, 2020 and 2019.

	Three Months Ended
(In thousands)	09/30/2020		09/30/2019
Noninterest Income
In-scope of Topic 606:
Commissions and Fees	$	8,136	$	7,918
Installment Billing		175		150
Refund of Commissions		(104)		(51)
Contract Liabilities/Deferred Revenue		0		0
Contingent Commissions		709		500
Subtotal Insurance Revenues		8,916		8,517
Trust and Asset Management		3,070		2,920
Mutual Fund & Investment Income		1,222		1,255
Subtotal Investment Service Income		4,292		4,175
Service Charges on Deposit Accounts		1,444		2,191
Card Services Income		2,419		2,550
Other		285		306
Noninterest Income (in-scope of ASC 606)		17,356		17,739
Noninterest Income (out-of-scope of ASC 606)		1,531		1,795
Total Noninterest Income	$	18,887	$	19,534

	Nine Months Ended
(In thousands)	09/30/2020		09/30/2019
Noninterest Income
In-scope of Topic 606:
Commissions and Fees	$	22,545	$	21,984
Installment Billing		96		58
Refund of Commissions		(458)		(31)
Contract Liabilities/Deferred Revenue		(208)		(188)
Contingent Commissions		2,241		2,491
Subtotal Insurance Revenues		24,216		24,314
Trust and Asset Management		8,798		8,417
Mutual Fund & Investment Income		3,616		3,749
Subtotal Investment Service Income		12,414		12,166
Service Charges on Deposit Accounts		4,675		6,210
Card Services Income		6,885		8,090
Other		837		878
Noninterest Income (in-scope of ASC 606)		49,027		51,658
Noninterest Income (out-of-scope of ASC 606)		5,997		5,803
Total Noninterest Income	$	55,024	$	57,461

Contract Balances

Receivables primarily consist of amounts due for insurance and wealth management services performed for which the Company's performance obligations have been fully satisfied. Receivables amounted to $4.8 million and $2.0 million, respectively, at September 30, 2020, compared to $4.7 million and $2.0 million, respectively, at December 31, 2019 and were included in other assets in the accompanying unaudited Consolidated Statements of Condition.

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A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). The Company’s noninterest revenue streams, excluding some insurance commissions and fees, are largely based on transactional activity, or standard month-end revenue accruals such as asset management fees based on month-end market values. Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized. The Company does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of September 30, 2020 and December 31, 2019, the Company did not have any significant contract balances.

A contract liability balance is an entity’s obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. The Company often receives cash payments from customers in advance of the Company’s performance resulting in contract liabilities. As of September 30, 2020 and December 31, 2019, contract liabilities were $448,000 and $2,000,000, respectively, and are included within other liabilities in the accompanying unaudited Consolidated Statements of Condition. The liabilities include premiums due to insurance carriers in addition to unearned commission revenue.

The decrease in the contract liability balance during the nine-month period ended September 30, 2020 is primarily a result of timing differences in the recognition of revenue related to contract effective dates along with accompanying cash payments received in advance of satisfying performance obligations.

Contract Acquisition Costs

The Company is required to capitalize, and subsequently amortize into expense, certain incremental costs of obtaining a contract with a customer if these costs are expected to be recovered. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, sales commission). The Company utilizes the practical expedient which allows entities to immediately expense contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less.

11. Financial Guarantees

The Company currently does not issue any guarantees that would require liability recognition or disclosure, other than standby letters of credit. The Company extends standby letters of credit to its customers in the normal course of business. The standby letters of credit are generally short-term. As of September 30, 2020, the Company’s maximum potential obligation under standby letters of credit was $32.0 million compared to $28.2 million at December 31, 2019. Management uses the same credit policies to extend standby letters of credit that it uses for on-balance sheet lending decisions and may require collateral to support standby letters of credit based upon its evaluation of the counterparty. Management does not anticipate any significant losses as a result of these transactions, and has determined that the fair value of standby letters of credit is not significant.

12. Segment and Related Information

The Company manages its operations through three reportable business segments in accordance with the standards set forth in FASB ASC 280, “Segment Reporting”: (i) banking (“Banking”), (ii) insurance (“Tompkins Insurance”) and (iii) wealth management (“Tompkins Financial Advisors”). The Company’s insurance services and wealth management services, other than trust services, are managed separately from the Banking segment.

Banking

The Banking segment is primarily comprised of the Company’s four banking subsidiaries: Tompkins Trust Company, a commercial bank with fourteen banking offices located in Ithaca, NY and surrounding communities; The Bank of Castile (DBA Tompkins Bank of Castile), a commercial bank with sixteen banking offices located in the Genesee Valley region of New York State as well as Monroe County; Mahopac Bank (DBA Tompkins Mahopac Bank), a commercial bank with fourteen full-service banking offices located in the counties north of New York City; and VIST Bank (DBA Tompkins VIST Bank), a banking organization with twenty banking offices headquartered and operating in the areas surrounding southeastern Pennsylvania.

Insurance

The Company provides property and casualty insurance services and employee benefits consulting through Tompkins Insurance Agencies, Inc., a 100% wholly-owned subsidiary of the Company, headquartered in Batavia, New York. Tompkins Insurance is an independent insurance agency, representing many major insurance carriers and provides employee benefit consulting to employers in Western and Central New York and Southeastern Pennsylvania, assisting them with their medical, group life insurance and group disability insurance. Tompkins Insurance has five stand-alone offices in Western New York.

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Wealth Management

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

Summarized financial information concerning the Company’s reportable segments and the reconciliation to the Company’s consolidated results is shown in the following table. Investment in subsidiaries is netted out of the presentations below. The “Intercompany” column identifies the intercompany activities of revenues, expenses and other assets between the banking, insurance and wealth management services segments. The Company accounts for intercompany fees and services at an estimated fair value according to regulatory requirements for the services provided. Intercompany items relate primarily to the use of human resources, information systems, accounting and marketing services provided by any of the banks and the holding company. All other accounting policies are the same as those described in the summary of significant accounting policies in the 2019 Annual Report on Form 10-K.

As of and for the three months ended September 30, 2020
(In thousands)	Banking		Insurance		Wealth Management		Intercompany		Consolidated
Interest income	$	64,316	$	1	$	0	$	(1)	$	64,316
Interest expense	6,064		0		0		(1)		6,063
Net interest income	58,252		1		0		0		58,253
Provision for credit loss expense	199		0		0		0		199
Noninterest income	5,976		9,023		4,434		(546)		18,887
Noninterest expense	36,988		6,559		3,348		(546)		46,349
Income before income tax expense	27,041		2,465		1,086		0		30,592
Income tax expense	5,397		670		263		0		6,330
Net Income attributable to noncontrolling interests and Tompkins Financial Corporation	21,644		1,795		823		0		24,262
Less:  Net income attributable to noncontrolling interests	32		0		0		0		32
Net Income attributable to Tompkins Financial Corporation	$	21,612	$	1,795	$	823	$	0	$	24,230
Depreciation and amortization	$	2,474	$	57	$	18	$	0	$	2,549
Assets	7,738,933		42,269		26,956		(13,656)		7,794,502
Goodwill	64,585		19,866		7,996		0		92,447
Other intangibles, net	2,600		2,507		104		0		5,211
Net loans and leases	5,346,004		0		0		0		5,346,004
Deposits	6,613,421		0		0		(12,183)		6,601,238
Total Equity	657,370		32,095		24,146		0		713,611

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As of and for the three months ended September 30, 2019
(In thousands)	Banking		Insurance		Wealth Management		Intercompany		Consolidated
Interest income	$	65,775	$	1	$	0	$	(1)	$	65,775
Interest expense	12,620		0		0		(1)		12,619
Net interest income	53,155		1		0		0		53,156
Provision for credit loss expense	1,320		0		0		0		1,320
Noninterest income	7,134		8,620		4,310		(530)		19,534
Noninterest expense	36,309		6,672		3,204		(530)		45,655
Income before income tax expense	22,660		1,949		1,106		0		25,715
Income tax expense	4,669		526		283		0		5,478
Net Income attributable to noncontrolling interests and Tompkins Financial Corporation	17,991		1,423		823		0		20,237
Less:  Net income attributable to noncontrolling interests	31		0		0		0		31
Net Income attributable to Tompkins Financial  Corporation	$	17,960	$	1,423	$	823	$	0	$	20,206
Depreciation and amortization	$	2,483	$	56	$	10	$	0	$	2,549
Assets	6,575,073		42,753		23,497		(13,341)		6,627,982
Goodwill	64,370		19,866		8,211		0		92,447
Other intangibles, net	3,472		3,011		164		0		6,647
Net loans and leases	4,815,702		0		0		0		4,815,702
Deposits	5,382,174		0		0		(12,184)		5,369,990
Total Equity	605,572		33,116		21,177		0		659,865

Nine months ended September 30, 2020
(In thousands)	Banking		Insurance		Wealth Management		Intercompany		Consolidated
Interest income	$	190,960	$	3	$	0	$	(3)	$	190,960
Interest expense	23,375		0		0		(3)		23,372
Net interest income	167,585		3		0		0		167,588
Provision for credit loss expense	16,145		0		0		0		16,145
Noninterest income	19,217		24,533		12,903		(1,629)		55,024
Noninterest expense	111,387		19,479		9,740		(1,629)		138,977
Income before income tax expense	59,270		5,057		3,163		0		67,490
Income tax expense	11,665		1,362		752		0		13,779
Net Income attributable to noncontrolling interests and Tompkins Financial Corporation	47,605		3,695		2,411		0		53,711
Less:  Net income attributable to noncontrolling interests	101		0		0		0		101
Net Income attributable to Tompkins Financial Corporation	$	47,504	$	3,695	$	2,411	$	0	$	53,610
Depreciation and amortization	$	7,443	$	173	$	38	$	0	$	7,654

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Nine months ended September 30, 2019
(In thousands)	Banking		Insurance		Wealth Management		Intercompany		Consolidated
Interest income	$	196,797	$	2	$	0	$	(3)	$	196,796
Interest expense	39,410		0		0		(2)		39,408
Net interest income	157,387		2		0		(1)		$	157,388
Provision for credit loss expense	2,366		0		0		0		2,366
Noninterest income	21,852		24,621		12,567		(1,579)		57,461
Noninterest expense	108,704		19,279		9,529		(1,578)		135,934
Income before income tax expense	68,169		5,344		3,038		(2)		$	76,549
Income tax expense	13,650		1,418		748		0		15,816
Net Income attributable to noncontrolling interests and Tompkins Financial Corporation	54,519		3,926		2,290		(2)		$	60,733
Less:  Net income attributable to noncontrolling interests	95		0		0		0		95
Net Income attributable to Tompkins Financial Corporation	$	54,424	$	3,926	$	2,290	$	(2)	$	60,638
Depreciation and amortization	$	7,296	$	168	$	31	$	0	$	7,495

13. Fair Value Measurements

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

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

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

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

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

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The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019, segregated by the level of valuation inputs within the fair value hierarchy used to measure fair value.

Recurring Fair Value Measurements
September 30, 2020
(In thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Available-for-sale debt securities
Obligations of U.S. Government sponsored entities	$	612,481	$	0	$	612,481	$	0
Obligations of U.S. states and political subdivisions	129,258		0		129,258		0
Mortgage-backed securities – residential, issued by:
U.S. Government agencies	207,501		0		207,501		0
U.S. Government sponsored entities	715,160		0		715,160		0
U.S. corporate debt securities	2,366		0		2,366		0
Total Available-for-sale debt securities	$	1,666,766	$	0	$	1,666,766	$	0
Equity securities, at fair value	$	932	$	0	$	0	$	932

Recurring Fair Value Measurements
December 31, 2019
(In thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Available-for-sale debt securities
U.S. Treasuries	$	1,840	$	0	$	1,840	$	0
Obligations of U.S. Government sponsored entities	372,488		0		372,488		0
Obligations of U.S. states and political subdivisions	97,785		0		97,785		0
Mortgage-backed securities – residential, issued by:
U.S. Government agencies	164,451		0		164,451		0
U.S. Government sponsored entities	659,590		0		659,590		0
U.S. corporate debt securities	2,433		0		2,433		0
Total Available-for-sale debt securities	$	1,298,587	$	0	$	1,298,587	$	0
Equity securities, at fair value	$	915	$	0	$	0	$	915

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

The change in the fair value of equity securities valued using significant unobservable inputs (level 3), for the periods ended September 30, 2020 and December 31, 2019, was immaterial.

There were no transfers between Levels 1, 2 and 3 for the nine months ended September 30, 2020.

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

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Certain assets are measured at fair value on a nonrecurring basis. For the Company, these include loans held for sale, individually evaluated loans, and other real estate owned (“OREO”). For the three and nine months ended September 30, 2020, certain individually evaluated loans were remeasured and reported at fair value through a specific valuation allowance and/or partial charge-offs for credit losses based upon the fair value of the underlying collateral. Collateral values are estimated using Level 2 inputs based upon observable market data. In addition to collateral dependent evaluated loans, certain other real estate owned were remeasured and reported at fair value based upon the fair value of the underlying collateral. The fair values of other real estate owned are estimated using Level 2 inputs based on observable market data or Level 3 inputs based on customized discounting criteria. In general, the fair values of other real estate owned are based upon appraisals, with discounts made to reflect estimated costs to sell the real estate. Upon initial recognition, fair value write-downs are taken through a charge-off to the allowance for credit losses. Subsequent fair value write-downs on other real estate owned are reported in other noninterest expense.

Three months ended September 30, 2020
(In thousands)			Fair value measurements at reporting date using:						Gain (losses) from fair value changes
Assets:	As of 09/30/2020		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Three months ended 9/30/2020
Individually evaluated	$	6,330	$	0	$	6,330	$	0	$	0
Other real estate owned	36		0		36		0		(4)

Three months ended September 30, 2019
(In thousands)			Fair value measurements at reporting date using:						Gain (losses) from fair value changes
Assets:	As of 09/30/2019		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Three months ended 9/30/2019
Impaired loans	$	10,096	$	0	$	10,096	$	0	$	(550)
Other real estate owned	139		0		139		0		95

Nine months ended September 30, 2020
(In thousands)			Fair value measurements at reporting date using:						Gain (losses) from fair value changes
Assets:	As of 09/30/2020		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Nine months ended 9/30/2020
Individually evaluated	$	10,759	$	0	$	10,759	$	0	$	(1,305)
Other real estate owned	124		0		124		0		(27)

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Nine months ended September 30, 2019
(In thousands)			Fair value measurements at reporting date using:						Gain (losses) from fair value changes
Assets:	As of 09/30/2019		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Nine months ended 9/30/2019
Impaired loans	$	12,565	$	0	$	12,565	$	0	$	(4,184)
Other real estate owned	888		0		888		0		0

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments at September 30, 2020 and December 31, 2019. The carrying amounts shown in the table are included in the Consolidated Statements of Condition under the indicated captions.

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

Estimated Fair Value of Financial Instruments
September 30, 2020
(In thousands)	Carrying Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets:
Cash and cash equivalents	$	374,739	$	374,739	$	374,739	$	0	$	0
FHLB and other stock	17,919		17,919		0		17,919		0
Accrued interest receivable	38,212		38,212		0		38,212		0
Loans/leases, net1	5,346,004		5,370,911		0		10,759		5,360,152
Financial Liabilities:
Time deposits	$	706,401	$	714,256	$	0	$	714,256	$	0
Other deposits	5,894,837		5,894,837		0		5,894,837		0
Fed funds purchased and securities sold
under agreements to repurchase	63,573		63,573		0		63,573		0
Other borrowings	285,000		295,374		0		295,374		0
Trust preferred debentures	17,163		21,240		0		21,240		0
Accrued interest payable	1,702		1,702		0		1,702		0

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Estimated Fair Value of Financial Instruments
December 31, 2019
(In thousands)	Carrying Amount		Fair  Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets:
Cash and cash equivalents	$	137,982	$	137,982	$	137,982	$	0	$	0
FHLB and other stock	33,695		33,695		0		33,695		0
Accrued interest receivable	19,293		19,293		0		19,293		0
Loans/leases, net1	4,877,658		4,798,268		0		14,050		4,784,218
Financial Liabilities:
Time deposits	$	675,014	$	677,205	$	0	$	677,205	$	0
Other deposits	4,537,907		4,537,907		0		4,537,907		0
Fed funds purchased and securities
sold under agreements to repurchase	60,346		60,346		0		60,346		0
Other borrowings	658,100		659,895		0		659,895		0
Trust preferred debentures	17,035		21,904		0		21,904		0
Accrued interest payable	2,486		2,486		0		2,486		0

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

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

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

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

FHLB Stock: The carrying amount of FHLB stock approximates fair value. If the stock is redeemed, the Company will receive an amount equal to the par value of the stock. For miscellaneous equity securities, carrying value is cost.

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

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

Securities Sold Under Agreements to Repurchase: The carrying amounts of repurchase agreements and other short-term borrowings approximate their fair values. Fair values of long-term borrowings are estimated using a discounted cash flow approach, based on current market rates for similar borrowings. For securities sold under agreements to repurchase where the Company has elected the fair value option, the Company also receives pricing information from third parties, including the FHLB.

Other Borrowings: The fair values of other borrowings are estimated using discounted cash flow analysis, discounted at the Company’s current incremental borrowing rate for similar borrowing arrangements. For other borrowings where the Company has elected the fair value option, the Company also receives pricing information from third parties, including the FHLB.

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Trust Preferred Debentures: The fair value of the trust preferred debentures has been estimated using a discounted cash flow analysis which uses a discount factor of a market spread over current interest rates for similar instruments.

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

BUSINESS

Corporate Overview and Strategic Initiatives

Tompkins Financial Corporation (“Tompkins” or the “Company”) is headquartered in Ithaca, New York and is registered as a Financial Holding Company with the Federal Reserve Board under the Bank Holding Company Act of 1956, as amended. The Company is a locally oriented, community-based financial services organization that offers a full array of products and services, including commercial and consumer banking, leasing, trust and investment management, financial planning and wealth management, and insurance services. At September 30, 2020, the Company’s subsidiaries included: four wholly-owned banking subsidiaries, Tompkins Trust Company (the “Trust Company”), The Bank of Castile (DBA Tompkins Bank of Castile), Mahopac Bank (DBA Tompkins Mahopac Bank), VIST Bank (DBA Tompkins VIST Bank); and a wholly-owned insurance agency subsidiary, Tompkins Insurance Agencies, Inc. (“Tompkins Insurance”). The trust division of the Trust Company provides a full array of investment services, including investment management, trust and estate, financial and tax planning as well as life, disability and long-term care insurance services. The Company’s principal offices are located at 118 E. Seneca Street, Ithaca, New York, 14851, and its telephone number is (888) 503-5753. The Company’s common stock is traded on the NYSE American under the symbol “TMP.”

The Tompkins strategy centers around our core values and a commitment to delivering long-term value to our clients, communities, and shareholders. To achieve this, the Company has developed a variety of strategic initiatives focused on delivering high quality products and services; a continual focus on improving operational effectiveness, investing in our people through talent management and development, maintaining appropriate risk management programs, and delivering profitable growth across all of our business lines. The Company's growth strategy includes initiatives to grow organically through our current businesses, as well as through possible acquisitions of financial institutions, branches, and financial services businesses. As such, the Company has acquired, and from time to time considers acquiring, banks, thrift institutions, branch offices of banks or thrift institutions, or other businesses that would complement the Company’s business or its geographic reach. The Company generally targets merger or acquisition partners that are culturally similar and have experienced management and possess either significant market presence or have potential for improved profitability through financial management, economies of scale and expanded services.

Business Segments

Banking services consist primarily of attracting deposits from the areas served by the Company’s four banking subsidiaries’ 64 banking offices (44 offices in New York and 20 offices in Pennsylvania) and using those deposits to originate a variety of commercial loans, consumer loans, real estate loans (including commercial loans collateralized by real estate), and leases. The Company’s lending function is managed within the guidelines of a comprehensive Board-approved lending policy. Reporting systems are in place to provide management with ongoing information related to loan production, loan quality, concentrations of credit, loan delinquencies, and nonperforming and potential problem loans. Banking services also include a full suite of products such as debit cards, credit cards, remote deposit, electronic banking, mobile banking, cash management, and safe deposit services.

Wealth management services consist of investment management, trust and estate, financial and tax planning as well as life, disability and long-term care insurance services. Wealth management services are provided by the Trust Company under the trade name Tompkins Financial Advisors. Tompkins Financial Advisors has office locations, and services are available to customers, at the Company’s four subsidiary banks.

Insurance services include property and casualty insurance, employee benefit consulting, and life, long-term care and disability insurance. Tompkins Insurance is headquartered in Batavia, New York. Over the years, Tompkins Insurance has acquired smaller insurance agencies in the market areas serviced by the Company’s banking subsidiaries and successfully consolidated them into Tompkins Insurance. In the second quarter of 2019, Tompkins Insurance acquired the Cali Agency, Inc., an insurance agency located in western New York, in a cash transaction. The Company recorded the following intangible assets as a result of the acquisition: goodwill ($0.2 million), customer related intangible ($0.2 million) and a covenant-not-to-compete ($0.1 million). The values of the customer related intangible and covenant-not-to-compete are being amortized over 15 years and 5 years, respectively. The goodwill is not being amortized but will be evaluated at least annually for impairment. Tompkins Insurance offers services to customers of the Company’s banking subsidiaries by sharing offices with The Bank of Castile, Trust Company, and VIST Bank. In addition to these shared offices, Tompkins Insurance has five stand-alone offices in Western New York.

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

Competition

Competition for commercial banking and other financial services is strong in the Company’s market areas. In one or more aspects of its businesses, the Company’s subsidiaries compete with other commercial banks, savings and loan associations, credit unions, finance companies, Internet-based financial services companies, mutual funds, insurance companies, brokerage and investment banking companies, and other financial intermediaries. Some of these competitors have substantially greater resources and lending capabilities and may offer services that the Company does not currently provide. In addition, many of the Company’s non-bank competitors are not subject to the same extensive Federal regulations that govern financial holding companies and Federally-insured banks.

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

Regulation

Banking, insurance services and wealth management are highly regulated. As a financial holding company with four community banks, a registered investment adviser, and an insurance agency subsidiary, the Company and its subsidiaries are subject to examination and regulation by the Federal Reserve Board (“FRB”), Securities and Exchange Commission (“SEC”), the Federal Deposit Insurance Corporation (“FDIC”), the New York State Department of Financial Services, Pennsylvania Department of Banking and Securities, the Financial Industry Regulatory Authority, and the Pennsylvania Insurance Department.

OTHER IMPORTANT INFORMATION

The following discussion is intended to provide an understanding of the consolidated financial condition and results of operations of the Company for the three and nine months ended September 30, 2020. It should be read in conjunction with the Company’s Audited Consolidated Financial Statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and the Unaudited Consolidated Financial Statements and notes thereto included in Part I of this Quarterly Report on Form 10-Q.

In this Report, there are comparisons of the Company’s performance to that of a peer group, which is comprised of the group of 146 domestic bank holding companies with $3 billion to $10 billion in total assets as defined in the Federal Reserve’s “Bank Holding Company Performance Report” for June 30, 2020 (the most recent report available). Although the peer group data is presented based upon financial information that is one fiscal quarter behind the financial information included in this report, the Company believes that it is relevant to include certain peer group information for comparison to current quarter numbers.

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Forward-Looking Statements

This Quarterly Report on Form 10-Q 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", "will", "estimate", "intend", "continue", "believe", "expect", "plan", or "anticipate", 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; whether, when and how borrowers will repay deferred amounts and resume scheduled payments; the sufficiency of liquidity sources; the Company's exposure to changes in interest rates, and to new, changed, or extended government/regulatory expectations; the impact of changes in accounting standards; and trends, plans, prospects, growth and strategies. Forward-looking statements are made based on management’s expectations and beliefs concerning future events impacting the Company and are subject to certain 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. The following factors, in addition to those listed as Risk Factors in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019, and Item 1A in this Quarterly Report on Form 10-Q, are among those that could cause actual results to differ materially from the forward-looking statements: changes in general economic, market and regulatory conditions; the severity and duration of the COVID-19 outbreak and the impact of the outbreak (including the government’s response to the outbreak) on economic and financial markets, potential regulatory actions, and modifications to our operations, products, and services relating thereto; disruptions in our and our customers’ operations and loss of revenue due to pandemics, epidemics, widespread health emergencies, government-imposed travel/business restrictions, or outbreaks of infectious diseases such as the COVID-19, and the associated adverse impact on our financial position, liquidity, and our customers’ abilities or willingness to repay their obligations to us or willingness to obtain financial services products from the Company; a decision to amend or modify the terms under which our customers are obligated to repay amounts owed to us; the development of an interest rate environment that may adversely affect the Company’s interest rate spread, other income or cash flow anticipated from the Company’s operations, investment and/or lending activities; changes in laws and regulations affecting banks, bank holding companies and/or financial holding companies, such as the Dodd-Frank Act and Basel III and the Economic Growth, Regulatory Relief, and Consumer Protection Act; legislative and regulatory changes in response to COVID-19 with which we and our subsidiaries must comply, including the CARES Act and the rules and regulations promulgated thereunder, and federal, state and local government mandates; technological developments and changes; 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; uncertainties arising from national and global events, including the potential impact of widespread protests, civil unrest, and political uncertainty on the economy and the financial services industry; and financial resources in the amounts, at the times and on the terms required to support the Company’s future businesses.

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 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”), and the review of the securities portfolio for other-than-temporary impairment to be critical accounting policies because of the uncertainty and subjectivity involved in these policies and the material effect that estimates related to these areas can have on the Company’s results of operations. On January 1, 2020, the Company adopted ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which resulted in changes to the Company's existing critical accounting policy that existed at December 31, 2019.

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 2 – Basis of Presentation in the accompanying notes to the unaudited consolidated financial statements elsewhere in this report for further discussion of the allowance.

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For information on the Company's significant accounting policies and to gain a greater understanding of how the Company’s financial performance is reported, refer to Note 1 – “Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Refer to "Recently Issued Accounting Standards" in Management's Discussion and Analysis in this Quarterly Report on Form 10-Q for a discussion of recent accounting updates.

COVID-19 Pandemic and Recent Events

The COVID-19 global pandemic continued to present health and economic challenges on an unprecedented scale during the third quarter of 2020. During the third quarter, the Company continued to focus on the health and well-being of its workforce, meeting its clients' needs, and supporting its communities. The Company has designated a Pandemic Planning Committee, which includes key individuals across the Company as well as members of Senior Management, to oversee the Company’s response to COVID-19, and has implemented a number of risk mitigation measures designed to protect our employees and customers while maintaining services for our customers and community. These measures included restrictions on business travel, establishment of a remote work environment for most non-customer facing employees, and social distancing restrictions for those employees working at our offices and branch locations. In July 2020, we began initiating the reopening of our offices and reinstatement of branch services, and the return of our workforce, but as of September 30, 2020, approximately 85% of our noncustomer facing employees continued to work remotely. With a view toward protecting the health and well-being of the Company's workforce, customers, and visitors as we reopen, we implemented several new social distancing protocols and other protective measures, such as temperature screenings, distribution of personal protective equipment, and workforce self-certifications.

Tompkins continues to offer assistance to its customers affected by the COVID-19 pandemic by implementing a payment deferral program to assist both consumer and business borrowers that may be experiencing financial hardship due to COVID-19. Our standard program allows for the deferral of loan payments for up to 90 days. In certain cases we extend additional deferrals or other accommodations. Weekly deferral requests for the month of September were down 96.8% from peak levels the Company experienced in late March. As of September 30, 2020, total loans that continued in a deferral status amounted to approximately $120.0 million, representing 2.2% of total loans. Of the loans that had come out of the deferral program as of September 30, 2020, about 85.0% had made a payment and 0.18% were more than 30 days delinquent. We expect that loans that are currently in deferral will continue to accrue interest during the deferral period unless otherwise classified as nonperforming. The provisions of the CARES Act and interagency guidance issued by Federal banking regulators provided clarification related to modifications and deferral programs to assist borrowers who are negatively impacted by the COVID-19 national emergency. The guidance and clarifications detail certain provisions whereby banks are permitted to make deferrals and modifications to the terms of a loan which would not require the loan to be reported as a troubled debt restructuring. In accordance with the CARES Act and the interagency guidance, the Company elected to adopt the provisions to not report qualified loan modifications as troubled debt restructurings.

Management continues to monitor credit conditions carefully at the individual borrower level, as well as by industry segment, in order to be responsive to changing credit conditions. The table below list certain larger industry concentrations within our loan portfolio and the percentage of each segment that are currently in a deferral status.

Deferral Credit Concentrations
(in thousands)	As of September 30, 2020
Description	Portfolio Balance		Concentration*		Deferral Balance		Percent of Loans Currently in Deferral Status
Lessors of Residential Buildings and Dwellings	$	500,197	15.60	%	$	17,587	3.52	%
Hotels and Motels	190,432		5.90	%	3,063		1.61	%
Dairy Cattle and Milk Production	184,294		5.80	%	7,553		4.10	%
Health Care and Social Assistance	173,327		5.40	%	649		0.37	%
Lessors of Other Real Estate Property	126,615		4.00	%	2,754		2.18	%
	$	1,174,865			$	31,606
*Concentration is defined as outstanding loan balances as a percent of total commercial and commercial real estate

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The Company is also participating in the U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”). This program provides borrower guarantees for lenders, and envisions a certain amount of loan forgiveness for loan recipients who properly utilize funds, all in accordance with the rules and regulations established by the SBA for the PPP. The Company began accepting applications for PPP loans on April 3, 2020, and approved and funded 2,998 loans totaling approximately $465.6 million during the second quarter of 2020. At September 30, 2020, 295 loans totaling $51.9 million had been submitted to the SBA for forgiveness under the terms of the PPP program and are under review; no loans had been forgiven by the SBA as of September 30, 2020. As of October 26, 2020, the Company had received $6.2 million of funds related to 168 loans forgiven by the SBA. During the three and nine months ended September 30, 2020, the Company recorded net deferred loan fees of $2.5 million and $4.8 million, respectively, which are included in interest income, related to the PPP loan program.

As of September 30, 2020, the Company's nonperforming assets represented 0.44% of total assets, down from 0.47% at December 31, 2019. Despite relatively stable trends in nonperforming assets and other delinquency, some customers have experienced continued cash flow stress related to the pandemic, resulting in an increase in loans rated Special Mention, which totaled $122.7 million at September 30, 2020, up from $44.7 million at June 30, 2020. The downgrades to Special Mention were mainly in the retail, hospitality, and agriculture industries. At September 30, 2020, loans rated Substandard declined to $45.4 million from $48.0 million at June 30, 2020. As mentioned above, the Company is working with its customers who are dealing with hardships caused by the pandemic, and as part of those efforts, the Company implemented a loan payment deferral program and participates in the PPP. As of September 30, 2020, the Company had not experienced any significant impact to our liquidity or funding capabilities as a result of COVID-19. The Company’s participation as a lender in the PPP has been a use of liquidity; however, the Federal Reserve Bank has provided a lending facility that may be used by banks to obtain funding specifically for PPP loans. PPP loans would be pledged as collateral on a bank's borrowings under the Federal Reserve Bank's designated PPP lending facility.

RESULTS OF OPERATION

Performance Summary

Net income for the third quarter of 2020 was $24.2 million or $1.63 diluted earnings per share, compared to $20.2 million or $1.34 diluted earnings per share for the same period in 2019. Net income for the first nine months of 2020 was $53.6 million or $3.59 diluted earnings per share compared to $60.6 million or $3.97 diluted earnings per share for the first nine months of 2019. Net income for the quarter ended September 30, 2020, compared to the same period in the prior year, increased primarily due to an increase in net interest income and a decrease in provision expense, partially offset by a decrease in noninterest income and an increase in noninterest expense.

Return on average assets (“ROA”) for the quarter ended September 30, 2020 was 1.27%, compared to 1.21% for the quarter ended September 30, 2019. Return on average shareholders’ equity (“ROE”) for the third quarter of 2020 was 13.59%, compared to 12.15% for the same period in 2019. For the year-to-date period ended September 30, 2020, ROA and ROE totaled 0.99% and 10.33%, respectively, compared to 1.21% and 12.53%, for the same period in 2019.

Segment Reporting

The Company operates in the following three business segments, banking, insurance, and wealth management. Insurance is comprised of property and casualty insurance services and employee benefit consulting operated under the Tompkins Insurance Agencies, Inc. subsidiary. Wealth management activities include the results of the Company’s trust, financial planning, and wealth management services, organized under the Tompkins Financial Advisors brand. All other activities are considered banking.

Banking Segment

The banking segment reported net income of $21.6 million for the third quarter of 2020, an increase of $3.7 million or 20.3% from net income of $18.0 million for the same period in 2019. For the nine months ended September 30, 2020, the banking segment reported net income of $47.5 million, a decrease of $6.9 million or 12.7% from the same period in 2019.

Net interest income of $58.3 million for the third quarter of 2020 increased $5.1 million or 9.6% over the same period in 2019. For the nine months ended September 30, 2020, net interest income of $167.6 million was up $10.2 million or 6.5% compared to the first nine months of 2019. The increase in net interest income was mainly a result of a decrease in interest expense resulting from lower market interest rates and a shift in funding mix from borrowings to deposits. Interest income also benefited from loan growth and an asset mix consisting of a greater percentage of loans to total assets. Loan growth included $465.6 million of PPP loans originated during the second quarter of 2020.

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Provision for credit losses in the third quarter of 2020 was $199,000 compared to $1.3 million for the same period in 2019. Provision expense for the nine months ended September 30, 2020 was $16.1 million, compared to $2.4 million for the same period in 2019. The first quarter of 2020 included provision expense of $16.3 million related to the impact of the economic conditions due to COVID-19 on economic forecasts and other model assumptions relied upon by management in determining the allowance, and reflects the calculation of the allowance for credit losses in accordance with ASU 2016-13. For additional information see the section titled "The Allowance for Credit Losses" below.

Noninterest income of $6.0 million for the three months ended September 30, 2020 was down $1.2 million or 16.2% compared to the same period in 2019. For the nine months ended September 30, 2020, noninterest income of $19.2 million was down $2.6 million or 12.1% compared to the nine months ended September 30, 2019. The decrease in the three and nine month periods ended September 30, 2020, compared to the same periods in the prior year was mainly in fee based services and largely a result of the decrease in transactions attributable to the economic impact of pandemic-related travel and business restrictions, which reduced card services and service charge income. However, card services fees and deposit fees in the third quarter of 2020 were up over the second quarter of 2020, by 6.0% and 15.7%, respectively. This decrease was partially offset by gains on sales of residential loans, which were up $353,000 and $1.1 million for the three and nine months ended September 30, 2020 over the same periods in 2019.

Noninterest expense of $37.0 million for the third quarter of 2020, and $111.4 million for the nine months ended September 30, 2020, was up $679,000 or 1.9% and up $2.7 million or 2.5%, respectively, from the same periods in 2019. The increases were mainly attributed to increases in salary and wages and employee benefits reflecting normal annual merit increases, premium pay for employees required to be on-site during pandemic-related business restrictions, and incentive adjustments over the comparable periods in the prior year. Noninterest expenses for the nine months ended September 30, 2020, included $1.3 million related to the allowance for credit losses for off-balance sheet exposures.

Insurance Segment

The insurance segment reported record net income of $1.8 million for the three months ended September 30, 2020, which was up $372,000 or 26.1% compared to the third quarter of 2019. The increase was due to revenue growth and an overall decrease in expenses. Total revenue was up $403,000 or 4.7% for the third quarter of 2020 compared to the same quarter in the prior year. The increase in insurance commissions and fees in the third quarter of 2020 over the same period in 2019, was mainly in property and casualty commissions and contingency income. The decrease in expenses for the third quarter of 2020 compared to the third quarter of 2019 was a result of lower commissions and incentives related to a decrease in new business volumes in the third quarter of 2020 compared to the third quarter of 2019, as well as decreases in travel and entertainment related expenses, which were impacted by COVID-19 related travel restrictions. For the nine months ended September 30, 2020, net income was down $231,000 or 5.9% compared to the same period in the prior year. Total revenue was down $88,000 or 0.4% compared to the same period in the prior year. The decrease in revenues and net income for the nine months ended September 30, 2020 compared to the prior year is mainly due to lower contingency revenues and an increase in reserves for cancellations and policy changes as a result of economic uncertainties related to COVID-19. New business volumes have also been negatively impacted by COVID-19.

Noninterest expenses for the three months ended September 30, 2020 were down $113,000 or 1.7% compared to the three months ended September 30, 2019. Year-to-date noninterest expenses were up $200,000 or 1.0% compared to the nine months ended September 30, 2019. The increase in noninterest expense for the nine months ended September 30, 2020 was mainly the result of an increase in salaries and wages and employee benefits reflecting normal annual merit increases and increases in medical insurance premiums. Other expenses including new business commissions, auto and travel, entertainment, business meetings, supplies, building maintenance and sponsorships for the three and nine months ended September 30, 2020, were down compared to the same periods in the prior year, mainly a result of the pandemic-related travel and business restrictions.

Wealth Management Segment

The wealth management segment reported net income of $823,000 for the three months ended September 30, 2020, which was flat compared to the third quarter of 2019. Revenue for the third quarter of 2020 was up $124,000 or 2.9% compared to the third quarter of 2019; this was offset by an increase in salaries and wages expense compared to the same period prior year. For the nine months ended September 30, 2020, net income of $2.4 million was up $121,000 or 5.3% compared to the prior year, mainly due to an increase in advisory fee income over the same period prior year. Noninterest expense for the nine months ended September 30, 2020, was up 2.2% over the same period in 2019, driven mainly by increases in salary and wages.

Net Interest Income

The following tables show average interest-earning assets and interest-bearing liabilities, and the corresponding yield or cost associated with each for the three and nine month periods ended September 30, 2020 and 2019.

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Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)
	Quarter Ended						Quarter Ended
	September 30, 2020						September 30, 2019
	Average						Average
	Balance				Average		Balance				Average
(Dollar amounts in thousands)	(QTD)		Interest		Yield/Rate		(QTD)		Interest		Yield/Rate
ASSETS
Interest-earning assets
Interest-bearing balances due from banks	$	326,908	$	83	0.10	%	$	2,908	$	11	1.50	%
Securities (1)
U.S. Government securities	1,332,240		5,362		1.60	%	1,219,318		6,822		2.22	%
State and municipal (2)	122,932		816		2.64	%	91,675		639		2.76	%
Other securities (2)	3,433		25		2.88	%	3,419		39		4.52	%
Total securities	1,458,605		6,203		1.69	%	1,314,412		7,500		2.26	%
FHLBNY and FRB stock	18,319		307		6.66	%	33,359		770		9.16	%
Total loans and leases, net of unearned income (2)(3)	5,400,217		58,507		4.31	%	4,852,399		57,904		4.73	%
Total interest-earning assets	7,204,049		65,100		3.59	%	6,203,078		66,185		4.23	%
Other assets	377,960						418,334
Total assets	$	7,582,009					$	6,621,412
LIABILITIES & EQUITY
Deposits
Interest-bearing deposits
Interest bearing checking, savings,  & money market	3,796,615		1,671		0.18	%	2,998,574		5,424		0.72	%
Time deposits	697,026		2,534		1.45	%	694,822		2,982		1.70	%
Total interest-bearing deposits	4,493,641		4,205		0.37	%	3,693,396		8,406		0.90	%
Federal funds purchased & securities sold under agreements to repurchase	47,527		19		0.16	%	57,607		34		0.23	%
Other borrowings	303,587		1,623		2.13	%	647,112		3,862		2.37	%
Trust preferred debentures	17,135		216		5.02	%	16,964		317		7.41	%
Total interest-bearing liabilities	4,861,890		6,063		0.50	%	4,415,079		12,619		1.13	%
Noninterest bearing deposits	1,897,999						1,445,051
Accrued expenses and other liabilities	112,636						101,632
Total liabilities	6,872,525						5,961,762
Tompkins Financial Corporation Shareholders’ equity	707,996						658,159
Noncontrolling interest	1,488						1,491
Total equity	709,484						659,650
Total liabilities and equity	$	7,582,009					$	6,621,412
Interest rate spread					3.10	%					3.10	%
Net interest income/margin on earning assets			59,037		3.26	%			53,566		3.43	%
Tax Equivalent Adjustment			(784)						(410)
Net interest income per consolidated financial statements			$	58,253					$	53,156

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Average Consolidated Statements of Condition and Net Interest Analysis (Unaudited)
	Year to Date Period Ended						Year to Date Period Ended
	September 30, 2020						September 30, 2019
	Average						Average
	Balance				Average		Balance				Average
(Dollar amounts in thousands)	(YTD)		Interest		Yield/Rate		(YTD)		Interest		Yield/Rate
ASSETS
Interest-earning assets
Interest-bearing balances due from banks	$	111,775	$	90	0.11	%	$	2,460	$	31	1.68	%
Securities (1)
U.S. Government securities	1,242,659		18,236		1.96	%	1,338,807		22,990		2.30	%
State and municipal (2)	110,058		2,225		2.70	%	93,131		1,903		2.73	%
Other securities (2)	3,429		93		3.61	%	3,417		120		4.70	%
Total securities	1,356,146		20,554		2.02	%	1,435,355		25,013		2.33	%
FHLBNY and FRB stock	22,175		1,130		6.81	%	42,634		2,442		7.66	%
Total loans and leases, net of unearned income (2)(3)	5,197,757		170,853		4.39	%	4,816,140		170,540		4.73	%
Total interest-earning assets	6,687,853		192,627		3.85	%	6,296,589		198,026		4.21	%
Other assets	536,424						405,358
Total assets	$	7,224,278					$	6,701,947
LIABILITIES & EQUITY
Deposits
Interest-bearing deposits
Interest bearing checking, savings,  & money market	3,557,326		7,973		0.30	%	2,962,236		14,865		0.67	%
Time deposits	693,922		8,208		1.58	%	670,570		7,728		1.54	%
Total interest-bearing deposits	4,251,248		16,181		0.51	%	3,632,806		22,593		0.83	%
Federal funds purchased & securities sold under agreements to repurchase	54,481		76		0.19	%	61,482		110		0.24	%
Other borrowings	397,511		6,357		2.14	%	861,930		15,731		2.44	%
Trust preferred debentures	17,093		758		5.92	%	16,921		974		7.70	%
Total interest-bearing liabilities	4,720,332		23,372		0.66	%	4,573,139		39,408		1.15	%
Noninterest bearing deposits	1,699,317						1,380,399
Accrued expenses and other liabilities	111,643						101,483
Total liabilities	6,531,292						6,055,021
Tompkins Financial Corporation Shareholders’ equity	691,530						645,466
Noncontrolling interest	1,456						1,460
Total equity	692,986						646,926
Total liabilities and equity	$	7,224,278					$	6,701,947
Interest rate spread					3.19	%					3.05	%
Net interest income/margin on earning assets			169,255		3.38	%			158,618		3.37	%
Tax Equivalent Adjustment			(1,667)						(1,230)
Net interest income per consolidated financial statements			$	167,588					$	157,388

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

2 Interest income includes the tax effects of taxable-equivalent adjustments using an effective income tax rate of 21% in 2020 and 2019 to increase tax exempt interest income to taxable-equivalent basis.

3 Nonaccrual loans are included in the average asset totals presented above.  Payments received on nonaccrual loans have been recognized as disclosed in Note 1 of the Company’s consolidated financial statements included in Part 1 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.    

Net Interest Income 

Net interest income is the Company’s largest source of revenue, representing 75.5% and 75.3%, respectively, of total revenues for the three and nine months ended September 30, 2020, compared to 73.1% and 73.3% for the same periods in 2019. Net interest income is dependent on the volume and composition of interest earning assets and interest-bearing liabilities and the level of market interest rates. The above table shows average interest-earning assets and interest-bearing liabilities, and the corresponding yield or cost associated with each.

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Taxable-equivalent net interest income for the three months ended September 30, 2020, increased $5.1 million or 9.6% from the same period in the prior year. Taxable-equivalent net interest income for the nine month period ended September 30, 2020 increased by $10.2 million or 6.5% over the nine month period ended September 30, 2019. The increase compared to the prior year was mainly due to lower interest expense in the three and nine months ended September 30, 2020 compared to the same periods in the prior year, driven by lower market interest rates and by deposit growth, which contributed to a reduction in other borrowings. Net interest income also benefited from the growth in average earning assets in 2020 over 2019. These increases were partially offset by the decrease in average asset yields resulting from lower market interest rates. Net interest margin for the three months ended September 30, 2020 was 3.26% compared to 3.43% in 2019. Net interest margin for the nine months ended September 30, 2020 was 3.38% compared to 3.37% for the same period in 2019. The decrease in net interest margin for the third quarter of 2020 compared to the third quarter of 2019 was mainly due to a shift in composition of average earnings assets, with a greater mix of lower yielding average earnings assets, mainly securities and interest bearing balances, as well as a decrease in market interest rates. In the third quarter of 2020, there was a shift from noninterest bearing cash balances to interest bearing cash balances and securities, which added to interest income during the third quarter but also contributed to the decrease in the yield on average earning assets, adding 15 basis points to the decline in net interest margin for the third quarter compared to the second quarter of 2020.

Taxable-equivalent interest income for the three and nine months ended September 30, 2020, was $65.1 million and $192.6 million, respectively, down 1.6% and 2.7%, respectively, compared to the same periods in 2019. The year-over-year decrease in taxable-equivalent interest income was mainly a result of lower asset yields, partially offset by growth in average earning assets. Average asset yields for the first nine months of 2020 were down 36 basis points compared to the first nine months of 2019, which reflects the impact of reductions in market interest rates during the first nine months of 2020, and the addition of the lower yielding PPP loans originated in the second quarter of 2020. Average loan balances for the three and nine months ended September 30, 2020, were up $547.8 million or 11.3% and $381.6 million or 7.9%, respectively, while the average yield on loans decreased 42 basis points and 34 basis points, respectively, for the three and nine months ended September 30, 2020, compared to the same periods in 2019. The increase in average loans includes the benefit of $465.6 million of PPP loans originated in the second quarter of 2020. As a result of its participation in the SBA's PPP, in the three and nine months ended September 30, 2020, the Company recorded net deferred loan fees of $2.5 million and $4.8 million, respectively, which are included in interest income. Average securities balances for the three and nine months ended September 30, 2020, were up $144.2 million or 11.0% but down $79.2 million or 5.5%, respectively, and the average yield on securities was down 57 basis points and down 31 basis points, respectively, compared to the same periods in 2019.

Interest expense for the three and nine months ended September 30, 2020, decreased by $6.6 million or 52.0% and $16.0 million or 40.7%, respectively, compared to the same periods in 2019, driven mainly by decreases in rates paid on deposits and borrowings as a result of lower market interest rates. Growth in average deposit balances also resulted in a decrease in higher cost other borrowings. The average cost of interest-bearing deposits during the three and nine months ended September 30, 2020 was 0.37% and 0.51%, respectively, down 53 basis points and 32 basis points, compared to the same periods in 2019. Average interest-bearing deposits for the third quarter of 2020 were up $800.2 million or 21.7% compared to the same period in 2019, while year-to-date average interest-bearing deposits were up $618.4 million or 17.0% compared to the same period in 2019. Average noninterest bearing deposits were up $452.9 million or 31.3% for the three months ended September 30, 2020 when compared to the third quarter of 2019, and for the nine months ended September 30, 2020 were up $319.0 million or 23.1% with the same period in 2019. Average deposit balances continued to benefit from the $465.6 million of PPP loan originations during the second quarter of 2020, the majority of which were deposited into Tompkins checking accounts. Average other borrowings for the three and nine months ended September 30, 2020 were down $343.5 million or 53.1% and $464.4 million or 53.9%, respectively, compared to the same periods in 2019, mainly due to decreases in overnight borrowings with the FHLB as a result of deposit growth.

Provision for Credit Losses 

The provision for credit losses represents management’s estimate of the amount necessary to maintain the allowance for credit losses at an appropriate level. Provision for credit losses in the third quarter of 2020 was $199,000 compared to $1.3 million for the same period in 2019. The decrease over prior year is mainly due to lower net charge-offs in 2020. Net charge-offs in 2019 included the charge-off of one large credit of $3.3 million in the commercial real estate portfolio. Provision expense for the nine months ended September 30, 2020 was $16.1 million, compared to $2.4 million for the same period in 2019. The first quarter of 2020 included provision expense of $16.3 million related to the impact of the economic shutdown related to COVID-19 on economic forecasts and other model assumptions relied upon by management in determining the allowance, as well as normal adjustments for loan growth, and changing loan portfolio and segment mix, and is due to the calculation of the allowance for credit losses in accordance with ASU 2016-13. 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 

Noninterest income was $18.9 million for the third quarter of 2020, which was down 3.3% compared to the third quarter of 2019, and $55.0 million for the first nine months of 2020, down 4.2% from the same period prior year. Noninterest income represented 24.5% of total revenue for the third quarter of 2020 and 24.7% for the nine months ended September 30, 2020, compared to 26.9% and 26.7% for the same periods in 2019. The reduction in fee-based income in 2020 is largely related to pandemic-related travel and business restrictions, which reduced card services and service charge income. However, card services fees and deposit fees in the third quarter of 2020 were up over the second quarter of 2020, by 6.0% and 15.7%, respectively. In addition to the decrease in fee-based revenues when compared to the prior year, the reduction in noninterest income as a percentage of total revenues in 2020 compared to 2019 also reflects the increase in net interest income in 2020 over 2019.

Insurance commissions and fees, the largest component of noninterest income, were a record $8.9 million for the third quarter of 2020, an increase of 4.7% from the same period prior year. The increase in insurance commissions and fees in the third quarter of 2020 over the same period in 2019, was mainly in property and casualty commissions and contingency income. For the first nine months of 2020, insurance commissions and fees were down $98,000 or 0.4% compared to the same period in 2019. The decrease in revenues for the nine months period ended September 30, 2020 compared to the prior year is mainly due to lower contingency revenues and an increase in reserves for cancellations and policy changes as a result of economic uncertainties related to COVID-19. New business volumes have also been negatively impacted by COVID-19.

Investment services income of $4.3 million in the third quarter of 2020 was up $117,000 or 2.8% compared to the third quarter of 2019. For the first nine months of 2020, investment services income was up $248,000 or 2.0% compared to the same period in 2019, mainly due to an increase in advisory fee income resulting from the growth in assets under management, and higher estate and terminating trust fees earned in 2020. Investment services income includes trust services, financial planning, wealth management services, and brokerage related services. The fair value of assets managed by, or in custody of, Tompkins was $4.3 billion at September 30, 2020. The fair value of assets in custody at September 30, 2020 includes $1.2 billion of Company-owned securities where Tompkins Trust Company is custodian.

Card services income for the three and nine months ended September 30, 2020, was down $131,000 or 5.1% and $1.2 million or 14.9%, respectively, compared to the same periods in 2019. Debit card income, the largest component of card services income, was down $11,000 or 0.6% compared to the same quarter in the prior year, and down $346,000 or 6.6% from the first nine months of 2019. Contributing to the decrease from the prior year was a one-time incentive payment of $500,000 (pre-tax) related to our merchant card business received in the first quarter of 2019, and a decrease in transaction volume related to COVID-19. Transaction volumes did increase in the third quarter of 2020 compared to the second quarter of 2020, which resulted in a 3.6% increase in debit card income in the third quarter of 2020 over the second quarter of 2020.

The Company recognized a loss of $2,000 and gains of $446,000, respectively, on securities transactions for the three and nine months ended September 30, 2020, compared to $138,000 and $434,000, respectively, of gains for the same periods in 2019. The year-to-date 2020 gains include $178,000 of gains on the sales of available-for-sale debt securities, $251,000 of gains on securities called during the second quarter and $17,000 of realized gains from the change in the fair value of equity securities. The sales of available-for-sale debt securities are mainly the result of general portfolio maintenance and interest rate risk management.

Other income of $1.8 million in the third quarter of 2020 was down $145,000 or 7.4% compared to the same period in 2019. For the first nine months of 2020, other income of $6.4 million was up $141,000 or 2.3% compared to the same period in 2019. The decrease over prior year for the three months ended September 30, 2020, was mainly due to a credit received on software in the third quarter of 2019. The increase in other income for the nine months ended September 30, 2020 was largely due to income related to the gains on sales of residential mortgage loans of $378,000 and $1.2 million, respectively, compared to gains of $25,000 and $139,000, respectively, for the same periods prior year.

Noninterest Expense 

Noninterest expense was $46.3 million for the third quarter of 2020 and $139.0 million for the first nine months of 2020, up 1.5% and 2.2%, respectively, compared to the same periods in 2019.

Expenses associated with compensation and benefits comprise the largest component of noninterest expense, representing 66.1% and 63.1% of total noninterest expense for the three and nine months ended September 30, 2020. Salaries and wages expense for the three and nine months ended September 30, 2020 increased by $991,000 or 4.3% and $3.3 million or 5.0%, respectively, compared to the same periods in 2019. The increases were mainly due to normal merit adjustments, increase in average full time equivalent employees, and premium pay for employees who were required to be on premise during early stages of the shutdown related to COVID-19. Employee benefits for the three and nine months ended September 30, 2020,

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increased by $869,000 or 14.9% and $1.2 million or 6.8% over the same periods in 2019, mainly as a result of higher medical insurance premiums.

Other expense categories, not related to compensation and benefits, for the three and nine months ended September 30, 2020 were down 6.9% and 2.8% respectively compared to the same periods in 2019. Expenses for the third quarter and year to date period ended September 30, 2020, included ($417,000) and $1.3 million, respectively, related to allowance for credit losses for off-balance sheet exposures. Marketing expenses for the three and nine months ended September 30, 2020 were up $28,000 or 3.1% and down $903,000 or 24.4%, respectively, compared to the same periods in 2019. Professional fees for the three and nine months ended September 30, 2020, were down $1.0 million or 42.4% and $2.5 million or 35.1%, respectively, compared to the same periods in 2019. Business related travel and entertainment expenses decreased $415,000 or 83.5% and $841,000 or 62.8% for the three and nine months, respectively, ended September 30, 2020 when compared to the same periods in 2019, primarily due to limitations related to the COVID-19 shutdown and social distancing guidelines.

Income Tax Expense 

The provision for income taxes was $6.3 million for an effective rate of 20.7% for the third quarter of 2020, compared to tax expense of $5.5 million and an effective rate of 21.3% for the same quarter in 2019. For the first nine months of 2020, the provision for income taxes was $13.8 million for an effective rate of 20.4% compared to tax expense of $15.8 million and an effective rate of 20.7% for the same period in 2019. The effective rates differ from the U.S. statutory rate primarily due to the effect of tax-exempt income from loans, securities and life insurance assets, and the income tax effects associated with stock based compensation.

FINANCIAL CONDITION

Total assets were $7.8 billion at September 30, 2020, up $1.1 billion or 15.9% from December 31, 2019. The increase in total assets was mainly due to increases in loans, securities, and cash and cash equivalents balances. Total loan balances were $5.4 billion at September 30, 2020, up $480.7 million or 9.8% compared to the $4.9 billion reported at year-end 2019, mainly due to the addition of $465.6 million of PPP loans originated and funded in the second quarter of 2020. Total cash and cash equivalents were up $236.8 million or 171.6% over December 31, 2019. The increase in securities and cash and cash equivalents from year-end 2019 is largely due to the investment of excess liquidity into securities and interest bearing balances. Total deposits were up $1.4 billion or 26.6% from December 31, 2019. Other borrowings decreased $373.1 million or 56.7% from December 31, 2019, as deposit growth was used to reduce borrowings.

Securities

As of September 30, 2020, the Company’s securities portfolio was $1.7 billion or 21.4% of total assets, compared to $1.3 billion or 19.3% of total assets at year end 2019. The following table details the composition of available-for-sale debt securities.

Available-for-Sale Debt Securities
	September 30, 2020				December 31, 2019
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
U.S. Treasuries	$	0	$	0	$	1,840	$	1,840
Obligations of U.S. Government sponsored entities	602,417		612,481		367,551		$	372,488
Obligations of U.S. states and political subdivisions	126,593		129,258		96,668		97,785
Mortgage-backed securities - residential, issued by
U.S. Government agencies	205,507		207,501		164,643		164,451
U.S. Government sponsored entities	700,238		715,160		660,037		659,590
U.S. corporate debt securities	2,500		2,366		2,500		2,433
Total available-for-sale debt securities	$	1,637,255	$	1,666,766	$	1,293,239	$	1,298,587

As of September 30, 2020, the available-for-sale debt securities portfolio had net unrealized gains of $29.5 million compared to net unrealized gains of $5.3 million at December 31, 2019. The increase in unrealized gains related to the available-for-sale debt securities portfolio, which reflects the amount that the fair value exceeds amortized cost, was due primarily to changes in market interest rates during the first nine months of 2020. Management’s policy is to purchase investment grade securities that

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on average have relatively short duration, which helps mitigate interest rate risk and provides sources of liquidity without significant risk to capital.

The Company evaluates available for sale debt securities in an unrealized loss position to determine whether the decline in the fair value below the amortized cost basis (impairment) is the result of changes in interest rates or reflects a fundamental change in the credit worthiness 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 balance sheet, 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.

The Company determined that at September 30, 2020, all impaired available-for-sale debt securities was 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 worthiness of the underlying issuers. In addition, the Company maintains the ability and intent to hold these positions until the recovery of unrealized losses and does not believe that the Company would be required to sell any securities currently in an unrealized loss position. Therefore, the Company carried no ACL at September 30, 2020 and there was no credit loss expense recognized by the Company with respect to the securities portfolio during the three and nine months ended September 30, 2020.

Loans and Leases
Loans and leases as of the end of the third quarter and prior year-end periods were as follows:
(In thousands)	9/30/2020		12/31/2019
Commercial and industrial
Agriculture	$	89,068	$	105,786
Commercial and industrial other	790,749		902,275
PPP loans	464,058		0
Subtotal commercial and industrial	1,343,875		1,008,061
Commercial real estate
Construction	182,605		213,637
Agriculture	198,049		184,898
Commercial real estate other	2,161,954		2,045,030
Subtotal commercial real estate	2,542,608		2,443,565
Residential real estate
Home equity	206,456		219,245
Mortgages	1,228,629		1,158,592
Subtotal residential real estate	1,435,085		1,377,837
Consumer and other
Indirect	9,534		12,964
Consumer and other	64,346		61,446
Subtotal consumer and other	73,880		74,410
Leases	14,877		17,322
Total loans and leases	5,410,325		4,921,195
Less: unearned income and deferred costs and fees	(12,028)		(3,645)
Total loans and leases, net of unearned income and deferred costs and fees	$	5,398,297	$	4,917,550

Total loans and leases of $5.4 billion at September 30, 2020 were up $480.7 million or 9.8% from December 31, 2019. As of September 30, 2020, total loans and leases represented 69.3% of total assets compared to 73.1% of total assets at December 31, 2019. The decrease in total loans as a percentage of total assets reflects the growth in available-for-sale securities (up $368.2 million) and cash and cash equivalents (up $236.8 million) since December 31, 2019.

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Residential real estate loans, including home equity loans, were $1.4 billion at September 30, 2020, up $57.2 million or 4.2% compared to December 31, 2019, and comprised 26.6% of total loans and leases at September 30, 2020. Changes in residential loan balances are impacted by the Company’s decision to retain these loans or sell them in the secondary market due to interest rate considerations. The Company’s Asset/Liability Committee meets regularly and establishes standards for selling and retaining residential real estate mortgage originations.

The Company may sell residential real estate loans in the secondary market based on interest rate considerations. These residential real estate loans are generally sold to Federal Home Loan Mortgage Corporation (“FHLMC”) or State of New York Mortgage Agency (“SONYMA”) 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 the first nine months of 2020 and 2019, the Company retained the vast majority of residential mortgage loans originated, selling $35.3 million and $11.4 million, respectively, and recognizing gains of $1.2 million and $139,000, respectively, on these sales. These residential real estate loans were sold without recourse in accordance with standard secondary market loan sale agreements. When residential mortgage loans are sold, the Company typically retains all servicing rights, which provides the Company with a source of fee income. Mortgage servicing rights totaled $922,000 at September 30, 2020 and $805,000 at December 31, 2019. 

Commercial real estate loans and commercial and industrial loans totaled $2.5 billion and $1.3 billion, respectively, and represented 47.1% and 24.9%, respectively of total loans as of September 30, 2020. The commercial real estate portfolio was up $99.1 million or 4.1% over year-end 2019, while commercial and industrial loans were up $425.7 million or 33.3%. The increase in commercial and industrial loans over year-end included $464.1 million of PPP loans. As of September 30, 2020, agriculturally-related loans totaled $287.1 million or 5.3% of total loans and leases, compared to $290.7 million or 5.9% of total loans and leases at December 31, 2019. Agriculturally-related loans include loans to dairy farms and crop farms. Agriculturally-related loans are primarily made based on identified cash flows of the borrower with consideration given to underlying collateral, personal guarantees, and government related guarantees. Agriculturally-related loans are generally secured by the assets or property being financed or other business assets such as accounts receivable, livestock, equipment or commodities/crops.

The Company has adopted comprehensive lending policies, underwriting standards and loan review procedures. Management reviews these policies and procedures on a regular basis. The Company discussed its lending policies and underwriting guidelines for its various lending portfolios in Note 3 – “Loans and Leases” in the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. There have been no significant changes in these policies and guidelines since the date of that report. Therefore, both new originations as well as those balances held at September 30, 2020, reflect these policies and guidelines. 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. 

The Company's loan and lease customers are located primarily in the New York and Pennsylvania communities served by its four subsidiary banks. Although operating in numerous communities in New York State and Pennsylvania, the Company is still dependent on the general economic conditions of these states and the local economic conditions of the communities within those states in which the Company does business. The suspension of business activities in our market area has led to a significant increase in unemployment rates and has had a negative effect on our customers. There continues to be a great deal of uncertainty regarding how long those conditions will continue to exist. As a result, the economic consequences of the pandemic on our market area generally and on the Company in particular continue to be difficult to quantify.

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The Allowance for Credit Losses

During the first quarter of 2020, the Company adopted ASU No. 2016-13 - Financial Instruments - Credit Losses, also known as CECL. The below tables represents the allowance for credit losses calculated under the new accounting guidance as of September 30, 2020, and the prior period tables use the incurred loss methodology calculation used prior to adoption. The tables provide, as of the dates indicated, an allocation of the allowance for credit losses for inherent loan losses by type. The allocation is neither indicative of the specific amounts or the loan categories in which future charge-offs may occur, nor is it an indicator of future loss trends. The allocation of the allowance for credit losses to each category does not restrict the use of the allowance to absorb losses in any category.

(In thousands)	9/30/2020
Allowance for credit losses
Commercial and industrial	$	7,284
Commercial real estate	28,559
Residential real estate	14,933
Consumer and other	1,449
Finance leases	68
Total	$	52,293

(In thousands)	12/31/2019
Allowance for originated loans and leases
Commercial and industrial	$	10,541
Commercial real estate	21,557
Residential real estate	6,360
Consumer and other	1,356
Total	$	39,814
Allowance for acquired loans
Commercial real estate	$	51
Residential real estate	21
Consumer and other	6
Total	$	78

As a result of the adoption of ASC 326, the Company recorded a net cumulative-effect adjustment reducing the allowance for credit losses by $2.5 million from $39.9 million at December 31, 2019, to $37.4 million at January 1, 2020. As of September 30, 2020, the total allowance for credit losses was $52.3 million. The $14.9 million increase in the allowance at September 30, 2020, compared to January 1, 2020 was mainly due to a $14.9 million increase in the provision expense driven by changes in economic conditions and forecasts related to the impact of COVID-19, including forecasts of significantly slower economic growth and higher unemployment. The majority of the increase in the allowance and provision expense in 2020 was in the first quarter of 2020. The allowance was relatively flat between June 30, 2020 and September 30, 2020, as lower estimated reserves driven by improvements in forecasts for unemployment and the gross domestic product used in our model were offset by increases in qualitative reserves for loans within certain industries that may have an elevated level of risk due to the adverse economic impact of the COVID-19 pandemic, as well as loans that remain in the Company's payment deferral program implemented in response to the COVID-19 pandemic. The estimated reserves for the latter included an amount for accrued interest receivable. The qualitative reserves were added to all portfolio segments with the majority in commercial real estate and then residential real estate.

Total loans were $5.4 billion at September 30, 2020, which were flat compared to September 30, 2019 and up $480.7 million or 9.8% from December 31, 2019. The increase from year-end 2019 included $465.6 million of PPP loans. Since the PPP loans are guaranteed by the SBA, there are no reserves allocated to these loans. Credit quality metrics at September 30, 2020, were mixed compared to year-end 2019. Nonperforming assets represented 0.44% of total assets at September 30, 2020, compared to 0.47% at December 31, 2019. Nonperforming loans and leases were up $2.4 million or 7.6% from year end 2019 and represented 0.63% of total loans at September 30, 2020 compared to 0.64% at December 31, 2019. Loans internally-classified Special Mention or Substandard were up $77.7 million or 86.1% compared to December 31, 2019. The increase over

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December 31, 2019, was mainly a result of the downgrade of loans in the hospitality industry to Special Mention, reflecting cash flow stress related to the pandemic-related business and travel restrictions and social distancing guidelines. Many of these hospitality loans are in the Company's payment deferral program and are included in the estimate of qualitative reserves. The allowance for credit losses covered 154.68% of nonperforming loans and leases as of September 30, 2020, compared to 126.90% at December 31, 2019.

The Company’s allowance for credit losses totaled $52.3 million at September 30, 2020, which represented 0.97% of total loans, up from 0.81% at December 31, 2019, and 0.84% at September 30, 2019.

Activity in the Company’s allowance for credit losses during the first nine months of 2020 and 2019 is illustrated in the table below. 

Analysis of the Allowance for Credit Losses
(In thousands)	9/30/2020			9/30/2019
Average loans outstanding during period	$	5,197,757		$	4,816,140
Allowance at December 31, 2019	39,892			0
Impact of adopting ASC 326	(2,534)			0
Balance of allowance at beginning of year	37,358			43,410
LOANS CHARGED-OFF:
Commercial and industrial	1			489
Commercial real estate	1,305			3,949
Residential real estate	33			131
Consumer and other	409			571
Finance leases	0			0
Total loans charged-off	$	1,748		$	5,140
RECOVERIES OF LOANS PREVIOUSLY CHARGED-OFF:
Commercial and industrial	125			92
Commercial real estate	40			107
Residential real estate	178			319
Consumer and other	195			217
Finance Leases	0			0
Total loans recoveries	$	538		$	735
Net loans charged-off	1,210			4,405
Additions to allowance for credit losses charged to operations	16,145			2,366
Balance of allowance at end of period	$	52,293		$	41,371
Allowance for credit losses as a percentage of total loans and leases	0.97		%	0.84		%
Annualized net charge-offs on loans to average total loans and leases during the period	0.00		%	0.06		%

Net loan and lease charge-offs totaled $1.2 million for the nine months ended September 30, 2020, compared to net charge-offs of $4.4 million for the same period in 2019. The first nine months of 2019 included a $3.1 million write-down of one relationship in the commercial real estate portfolio. Annualized net charge-offs as a percentage of average loans and leases were 0.00% at September 30, 2020, compared to 0.06% at September 30, 2019.

The provision for credit losses in the third quarter of 2020 was $199,000, down compared to the $1.3 million reported for the same period in 2019. Provision expense for the nine months ended September 30, 2020 was $16.1 million, compared to $2.4 million for the same period in 2019. The first quarter of 2020 included provision expense of $16.3 million related to the impact of the economic conditions related to COVID-19 on economic forecasts and other model assumptions relied upon by management in determining the allowance. Net recoveries for the three months ended September 30, 2020, were $11,000 compared to net charge-offs of $739,000 reported for the same period in 2019.

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Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

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 the provision for credit loss expense on off-balance sheet credit exposures included in other noninterest expense in the Company’s consolidated statements of income. The allowance for credit losses for off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the current expected credit loss model using similar methodologies as portfolio loans, taking into consideration the likelihood that funding will occur, and is included in other liabilities on the Company’s statements of condition. As of September 30, 2020, the Company's reserve for off-balance sheet credit exposures was $2.1 million, compared to $2.5 million at June 30, 2020 and $477,000 at December 31, 2019. As a result of the adoption of ASC 326, the Company recorded a net cumulative-effect adjustment increasing the allowance for credit losses on off-balance sheet credit exposures by $381,000 from $477,000 at December 31, 2019, to $858,000 at January 1, 2020.

Analysis of Past Due and Nonperforming Loans
(In thousands)	9/30/2020			12/31/2019			9/30/2019
Loans 90 days past due and accruing
Total loans 90 days past due and accruing	$	0		$	0		$	0
Nonaccrual loans
Commercial and industrial	$	1,636		$	2,335		$	1,752
Commercial real estate	12,777			10,789			10,618
Residential real estate	12,203			10,882			10,949
Consumer and other	328			275			249
Total nonaccrual loans	$	26,944		$	24,281		$	23,568
Troubled debt restructurings not included above	6,864			7,154			6,528
Total nonperforming loans and leases	$	33,808		$	31,435		$	30,096
Other real estate owned	196			428			888
Total nonperforming assets	$	34,004		$	31,863		$	30,984
Allowance as a percentage of nonperforming loans and leases	154.68		%	126.90		%	137.46		%
Total nonperforming loans and leases as percentage of total loans and leases	0.63		%	0.64		%	0.62		%
Total nonperforming assets as percentage of total assets	0.44		%	0.47		%	0.47		%

1 The December 31, 2019, and September 30, 2019 columns in the above table exclude $794,000, and $1.2 million, respectively, of acquired loans that were 90 days past due and accruing interest.  At December 31, 2019 and September 30, 2019, purchased credit-impaired ("PCI") loans were excluded from past due and non-accrual loans reported because they continued to earn interest income from the accretable yield at the pool level. The PCI loan pools are accounted for as PCD loans (on a loan level basis with a related allowance for credit losses) under the CECL standard adopted at January 1, 2020 and reported in the past due loans and non-accrual loans in the table above at September 30, 2020.

Nonperforming assets include nonaccrual loans, troubled debt restructurings (“TDR”), and foreclosed real estate/other real estate owned. Total nonperforming assets of $34.0 million at September 30, 2020 were up $2.1 million or 6.7% compared to December 31, 2019, and up $3.0 million or 9.8% compared to September 30, 2019. Nonperforming assets represented 0.44% of total assets at September 30, 2020, down from 0.47% at December 31, 2019 and September 30, 2019. The Company’s ratio of nonperforming assets to total assets continues to compare favorably to our peer group’s most recent ratio of 0.58% at June 30, 2020.

Loans are considered modified in a TDR when, due to a borrower’s financial difficulties, the Company makes a concession(s) to the borrower that it would not otherwise consider and the borrower could not obtain elsewhere. These modifications may include, among others, an extension of the term of the loan, and granting a period when interest-only payments can be made, with the principal payments made over the remaining term of the loan or at maturity. 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”. Loans in the latter category include loans that meet the definition of a TDR but are performing in accordance with the modified terms and therefore classified as accruing loans. At September 30, 2020, the Company had $8.5 million in TDRs, and of that total $1.6 million was reported as nonaccrual and $6.9 million was considered performing and included in the table above.

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As previously noted, the Company participated in the SBA PPP. This program provides borrower guarantees for lenders, as well as loan forgiveness incentives for borrowers that utilize the loan proceeds to cover employee compensation-related expenses and certain other eligible business operating costs, all in accordance with the rules and regulations established by the SBA. The Company began accepting applications for PPP loans on April 3, 2020, and funded 2,998 PPP loans during the second quarter of 2020. Outstanding PPP loans totaled $464.1 million as of September 30, 2020.

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 required by applicable regulations. 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. 

The ratio of the allowance to nonperforming loans and leases (loans past due 90 days and accruing, nonaccrual loans and restructured troubled debt) was 154.68% at September 30, 2020, compared to 126.9% at December 31, 2019, and 137.46% at September 30, 2019. The Company’s nonperforming loans and leases are mostly made up of collateral dependent impaired loans with limited exposure or loans that require limited specific reserves due to the level of collateral available with respect to these loans and/or previous charge-offs.

The Company, through its internal loan review function, identified 37 commercial relationships from the loan portfolio totaling $28.5 million at September 30, 2020, that were potential problem loans. At December 31, 2019, the Company had identified 41 relationships totaling $44.0 million in the loan portfolio that were potential problem loans. Of the 37 relationships at September 30, 2020, that were Substandard, there were 10 relationships that equaled or exceeded $1.0 million, which in aggregate totaled $22.3 million, the largest of which was $4.8 million. The Company continues to monitor these potential problem relationships; however, management cannot predict the extent to which continued weak economic conditions or other factors may further impact borrowers. These 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 nonperforming. Accordingly, management's attention is focused on these credits, which are reviewed on at least a quarterly basis.

Capital

Total equity was $713.6 million at September 30, 2020, an increase of $50.6 million or 7.6% from December 31, 2019. The increase reflects growth in retained earnings and a decrease in accumulated other comprehensive losses.

Additional paid-in capital decreased by $1.2 million, from $338.5 million at December 31, 2019, to $337.3 million at September 30, 2020. The decrease was primarily attributable to the Company's repurchase of 71,288 shares of its common stock with an aggregate purchase price of $5.6 million pursuant to the Company's stock repurchase plan, and $540,000 related to the exercise of stock options, and grants of restricted stock. This was partially offset by $3.4 million attributed to stock-based compensation, $1.5 million related to shares issued in connection with the Company's dividend reinvestment program and $76,000 related to Director deferred compensation. The 71,288 shares repurchased were purchased in the first quarter of 2020; on March 19, 2020, following the announcement of the national emergency related to the COVID-19 pandemic, the Company suspended the repurchase of shares under the Company's share repurchase program. Management has not yet determined when it will resume repurchases under the share repurchase program. Any such decision will be based on, among other factors, the Company's financial and capital position.

Retained earnings increased by $32.0 million from $370.5 million at December 31, 2019, to $402.5 million at September 30, 2020, mainly reflecting net income of $53.6 million for the year-to-date period, less dividends paid of $23.3 million and the net cumulative effect adjustment related to the adoption of ASU 2016-13 of $1.7 million. Accumulated other comprehensive loss decreased from a net loss of $43.6 million at December 31, 2019, to a net loss of $23.9 million at September 30, 2020, reflecting an $18.2 million increase in unrealized gains on available-for-sale debt securities mainly due to changes in market rates and a $1.5 million decrease related to post-retirement benefit plans.

In connection with the effectiveness of the Basel III Capital Rules on January 1, 2015, the Company elected to opt-out of the requirement to include most components of other comprehensive income in regulatory capital. Accordingly, amounts reported as accumulated other comprehensive income/loss related to net unrealized gain or loss on available-for-sale debt securities and the funded status of the Company’s defined benefit post-retirement benefit plans do not increase or reduce regulatory capital and are not included in the calculation of risk-based capital and leverage ratios.

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Cash dividends paid in the first nine months of 2020 totaled approximately $23.3 million, representing 43.5% of year to date 2020 earnings. Dividends per common share of $1.56, for the first nine months of 2020 represents a 4.0% increase over cash dividends of $1.50 per common share paid in the first nine months of 2019. On October 23, 2020, the Tompkins Financial Corporation Board of Directors approved a fourth quarter cash dividend of $0.54 per share, an increase of 3.8% compared to the fourth quarter of 2019.

The Company and its subsidiary banks are subject to various regulatory capital requirements administered by Federal bank regulatory agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material adverse effect on the Company’s business, results of operation and financial condition. Under capital adequacy guidelines and the regulatory framework for prompt corrective action (PCA), banks must meet specific guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. Capital amounts and classifications of the Company and its subsidiary banks are also subject to qualitative judgments by regulators concerning components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the maintenance of minimum amounts and ratios of common equity Tier 1 capital, Total capital and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. Management believes that the Company and its subsidiary banks meet all capital adequacy requirements to which they are subject.

In addition to setting higher minimum capital ratios, the Basel III Capital Rules introduced a capital conservation buffer, which must be added to each of the minimum capital ratios and is designed to absorb losses during periods of economic stress. The capital conservation buffer was phased-in over a three year period that began on January 1, 2016, and was fully phased-in on January 1, 2019 at 2.5%.

The following table provides a summary of the Company’s capital ratios as of September 30, 2020: 

REGULATORY CAPITAL ANALYSIS
September 30, 2020	Actual				Minimum Capital Required - Basel III Fully Phased-In				Well Capitalized Requirement
(dollar amounts in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital (to risk weighted assets)	$	712,880	14.26	%	$	524,766	10.50	%	$	499,777	10.00	%
Tier 1 Capital (to risk weighted assets)	$	658,768	13.18	%	$	424,810	8.50	%	$	399,821	8.00	%
Tier 1 Common Equity (to risk weighted assets)	$	641,605	12.84	%	$	349,844	7.00	%	$	324,855	6.50	%
Tier 1 Capital (to average assets)	$	658,768	8.85	%	$	297,872	4.00	%	$	372,340	5.00	%

As of September 30, 2020, the Company’s capital ratios exceeded the minimum required capital ratios plus the fully phased-in capital conservation buffer, and the minimum required capital ratios for well capitalized institutions. The capital levels required to be considered well capitalized, presented in the above table, are based upon prompt corrective action regulations, as amended to reflect the changes under Basel III Capital Rules.

Total capital as a percent of risk weighted assets increased to 14.3% at September 30, 2020, compared with 13.5% as of December 31, 2019. Tier 1 capital as a percent of risk weighted assets increased from 12.7% at the end of 2019 to 13.2% as of September 30, 2020. Tier 1 capital as a percent of average assets was 8.9% at September 30, 2020, which is down from 9.6% at December 31, 2019. The Tier 1 capital to average assets ratio at September 30, 2020 was negatively impacted, due to the large increase in average assets, by $465.6 million of PPP loans originated in the second quarter of 2020. Common equity Tier 1 capital was 12.8% at the end of the third quarter of 2020, up from 12.3% at the end of 2019.

As of September 30, 2020, the capital ratios for the Company’s subsidiary banks also exceeded the minimum required capital ratios plus the required conservation buffer, the minimum required capital ratios plus the fully phased-in capital conservation buffer, and the minimum required capital ratios for well capitalized institutions.

In the first quarter of 2020, U.S. Federal regulatory authorities issued an interim final rule that provides banking organizations that adopt CECL during the 2020 calendar year with the option to delay for two years the estimated impact of CECL on regulatory capital relative to regulatory capital determined under the prior incurred loss methodology, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided during the initial two-year delay (i.e., a five-year transition in total). In connection with our adoption of CECL on January 1, 2020, we elected to utilize the five-year CECL transition.

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Deposits and Other Liabilities

Total deposits of $6.6 billion at September 30, 2020 were up $1.4 billion or 26.6% from December 31, 2019. The increase from year-end 2019 was primarily in non-interest bearing deposits, money market and savings balances and time deposits, which were up $458.4 million or 31.5%, $898.6 million or 29.2% and $31.4 million or 4.6% respectively from year-end 2019. Deposit balances benefited from the $465.6 million of PPP loan originations during the second quarter of 2020, the majority of which were deposited in Tompkins checking accounts. The growth also included $295.0 million of short-term brokered deposits. In April 2020, the Company obtained these short-term brokered deposits and actively increased liquid assets to further strengthen the Company's liquidity position in order to guard against the economic uncertainty related to the COVID-19 pandemic. Of the $295.0 million in brokered deposits, $95.0 million mature in December 2020 and $200.0 million mature in April 2021.

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 grew by $979.6 million or 22.8% to $5.3 billion at September 30, 2020, from year-end 2019. Core deposits represented 79.8% of total deposits at September 30, 2020, compared to 82.3% of total deposits at December 31, 2019. Core deposit balances at September 30, 2020, continued to benefit from $464.1 million of PPP loans, as the majority of these funds were deposited into the borrowers' accounts at Tompkins.

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 $63.6 million at September 30, 2020, and $60.3 million at December 31, 2019. Management generally views local repurchase agreements as an alternative to large time deposits.

The Company’s other borrowings totaled $285.0 million at September 30, 2020, down $373.1 million or 56.7% from $658.1 million at December 31, 2019. The decrease in borrowings was due to the seasonal growth in public deposits, core deposit growth and an increase in brokered deposits from year-end. Borrowings at September 30, 2020 included $285.0 million of FHLB term advances. Borrowings at year-end 2019 included $239.1 million in overnight advances from FHLB, $415.0 million of FHLB term advances, and a $4.0 million advance from a bank. Of the $285.0 million in FHLB term advances at September 30, 2020, $245.0 million is due in over one year. Maturities of advances due in over one year include: $70.0 million due over one year to two years; $105.0 million over two years to three years, and $70.0 million over three years to four years.

Liquidity

As of September 30, 2020, the Company had not experienced any significant impact to our liquidity or funding capabilities as a result of the COVID-19 pandemic. As previously noted, the Company participated in the SBA's PPP program. The Company began accepting applications for PPP loans on April 3, 2020, and funded 2,998 PPP loans during the second quarter of 2020. Outstanding PPP loans totaled $464.1 million as of September 30, 2020. The majority of the PPP loan proceeds were deposited into accounts at Tompkins, which contributed to the deposit growth in the second quarter. In April 2020, the Company obtained $295.0 million of short-term brokered deposits and actively increased liquid assets to further strengthen the Company's position so that the Company can continue to guard against economic uncertainty related to the COVID-19 pandemic. The Company has a long-standing liquidity plan in place that is designed to ensure that appropriate liquidity resources are available to fund the balance sheet. Additionally, given the uncertainties related to the impact of the COVID-19 crisis on liquidity, the Company has confirmed the availability of funds at the FHLB of NY and FHLB of Pittsburgh, completed actions required to activate participation in the Federal Reserve Bank PPP lending facility, and confirmed availability of Federal Fund lines with correspondent bank partners.

The objective of liquidity management is to ensure the availability of adequate funding sources to satisfy the 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 banks 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.

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Core deposits, discussed above under “Deposits and Other Liabilities”, are a primary and low cost funding source obtained primarily through the Company’s branch network. In addition to core deposits, the Company uses non-core funding sources to support asset growth. These non-core funding sources include time deposits of $250,000 or more, brokered time deposits, municipal money market 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 $1.7 billion at September 30, 2020 increased $38.8 million or 2.4% as compared to year-end 2019. Increases in brokered money market deposits and municipal money market deposits more than offset the decrease in overnight borrowings with the FHLB. Non-core funding sources, as a percentage of total liabilities, were 23.7% at September 30, 2020, compared to 27.1% at December 31, 2019. 

Non-core funding sources may require securities to be pledged against the underlying liability. Securities held at fair value were $1.4 billion at September 30, 2020 and $1.2 billion December 31, 2019, and were either pledged or sold under agreements to repurchase. Pledged securities represented 84.4% of total securities at September 30, 2020, compared to 89.7% of total securities at December 31, 2019.

Cash and cash equivalents totaled $374.7 million as of September 30, 2020 which increased from $138.0 million at December 31, 2019. Short-term investments, consisting of securities due in one year or less, decreased from $108.1 million at December 31, 2019, to $54.1 million on September 30, 2020.

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 $922.7 million at September 30, 2020 compared with $824.0 million at December 31, 2019. Outstanding principal balances of residential mortgage loans, consumer loans, and leases totaled approximately $1.5 billion at September 30, 2020, up $54.3 million or 3.7% compared with year-end 2019. Aggregate amortization from monthly payments on these assets provides significant additional cash flow to the Company.

The Company's 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 banks, the Company has borrowing relationships with the FHLB and correspondent banks, which provide secured and unsecured borrowing capacity. At September 30, 2020, the unused borrowing capacity on established lines with the FHLB was $2.1 billion.

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 September 30, 2020, total unencumbered residential mortgage loans and securities were $1.6 billion. Additional assets may also qualify as collateral for FHLB advances upon approval of the FHLB.

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 acquisition related intangible amortization expense, and significant nonrecurring income or expense on earnings, equity, and capital. In 2020, the Company had a nonrecurring write-down on a piece of real estate that was pending a sale.

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. 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. 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 Net Operating Income Available to Common Shareholders/Adjusted Diluted Earnings Per Share (Non-GAAP) and Adjusted Operating Return on Average Tangible Common Equity (Non-GAAP)
	Nine Months Ended September 30,
(In thousands, except per share data)	2020			2019
Net income available to common shareholders	$	53,610		$	60,638
Less: income attributable to unvested stock-based compensation awards	(628)			(972)
Net income available to common shareholders (GAAP)	52,982			59,666
Diluted earnings per share (GAAP)	$	3.59		$	3.97
Adjustments for non-operating income and expense:
Write-down of real estate pending sale	$	673		$	0
Total adjustments	673			0
Tax (benefit) expense	(165)			0
Total adjustments, net of tax	$	508		$	0
Net operating income available to common shareholders (Non-GAAP)	$	53,490		$	59,666
Weighted average shares outstanding (diluted)	14,738,921			15,035,780
Adjusted diluted earnings per share (Non-GAAP)	$	3.63		$	3.97
Net income available to common shareholders (GAAP)	$	52,982		$	59,666
Average Tompkins Financial Corporation shareholders' equity (GAAP)	692,986			646,926
Return on average shareholders' equity (GAAP)	15.37		%	18.60		%
Net operating income available to common shareholders (Non-GAAP)	$	53,490		$	59,666
Amortization of intangibles	1,120			1,251
Tax expense	278			311
Amortization of intangibles, net of tax	842			940
Adjusted net operating income available to common shareholders (Non-GAAP)	$	54,332		$	60,606
Average Tompkins Financial Corporation shareholders' common equity	691,530			645,466
Average goodwill and intangibles	97,323			98,733
Average Tompkins Financial Corporation shareholders' tangible common equity (Non-GAAP)	$	594,207		$	546,733
Adjusted operating return on average shareholders' tangible common equity (Non-GAAP)	9.14		%	11.09		%

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Newly Adopted Accounting Standards

ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 was effective for the Company on January 1, 2020. Upon adoption, a cumulative effect adjustment for the change in the allowance for credit losses was recognized in retained earnings.  The cumulative-effect adjustment to retained earnings, net of taxes, is comprised of the impact to the allowance for credit losses on outstanding loans and leases and the impact to the liability for off-balance sheet commitments. The Company adopted ASU 2016-13 on January 1, 2020 using the modified retrospective approach. Results for the periods beginning after January 1, 2020 are presented under Accounting Standards Codification (“ASC”) 326, while prior period amounts continue to be reported in accordance with previously applicable US GAAP. The Company recorded a net increase to retained earnings of $1.7 million, upon adoption. The transition adjustment includes a decrease in the allowance for credit losses on loans of $2.5 million, and an increase in the allowance for credit losses on off-balance sheet credit exposures of $0.4 million, net of the corresponding decrease in deferred tax assets of $0.4 million.

The Company adopted ASU 2016-13 using the prospective transition approach for financial assets purchased with credit deterioration (“PCD”) that were previously classified as purchased credit impaired (“PCI”) and accounted for under ASC 310-30. In accordance with the standard, the Company did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. The remaining discount on the PCD assets was determined to be related to noncredit factors and will be accreted into interest income on a level-yield method over the life of the loans.

ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment.” ASU 2017-04 eliminates Step 2 from the goodwill impairment test which required entities to compute the implied fair value of goodwill. Under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 was effective for the Company on January 1, 2020 and did not have a material impact on our consolidated financial statements.

ASU 2018-13, “Fair Value Measurement (Topic 820) - Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 modifies the disclosure requirements on fair value measurements in Topic 820. The amendments in this update remove disclosures that no longer are considered cost beneficial, modify/clarify the specific requirements of certain disclosures, and add disclosure requirements identified as relevant. ASU 2018-13 was effective for the Company on January 1, 2020, and did not have a significant impact on our consolidated financial statements.

ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” ASU 2018-15 clarifies certain aspects of ASU 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement,” which was issued in April 2015. Specifically, ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). ASU 2018-15 does not affect the accounting for the service element of a hosting arrangement that is a service contract. ASU 2018-15 was effective for the Company on January 1, 2020, and did not have a significant impact on our consolidated financial statements.

ASU 2020-03 "Codification Improvements to Financial Instruments." ASU 2020-03 revised a wide variety of topics in the Codification with the intent to make the Codification easier to understand and apply by eliminating inconsistencies and providing clarifications. ASU 2020-03 was effective immediately upon its release in March 2020 and did not have a significant impact on our consolidated financial statements.

Accounting Standards Pending Adoption

ASU 2018-14, “Compensation - Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20).” ASU 2018-14 amends and modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. The amendments in this update remove disclosures that no longer are considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. ASU 2018-14 will be effective for us on January 1, 2021, with early adoption permitted, and is not expected to have a significant impact on our consolidated financial statements.

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ASU No 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” ASU 2019-12 removes certain exceptions to the general principles in Topic 740 in Generally Accepted Accounting Principles. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020, with early adoption permitted. Tompkins is currently evaluating the potential impact of ASU 2019-12 on our consolidated financial statements.

ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The amendments in this update provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. It provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022. Tompkins is currently evaluating the potential impact of ASU 2020-04 on our consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Interest rate risk is the primary market risk category associated with the Company’s operations. Interest rate risk refers to the volatility of earnings caused by changes in interest rates. The Company manages interest rate risk using income simulation to measure interest rate risk inherent in its on-balance sheet and off-balance sheet financial instruments at a given point in time. The simulation models are used to estimate the potential effect of interest rate shifts on net interest income for future periods. Each quarter, the Company’s Asset/Liability Management Committee reviews the simulation results to determine whether the exposure of net interest income to changes in interest rates remains within levels approved by the Company’s Board of Directors. The Committee also considers strategies to manage this exposure and incorporates these strategies into the investment and funding decisions of the Company. The Company does not currently use derivatives, such as interest rate swaps, to manage its interest rate risk exposure, but may consider such instruments in the future.

The Company’s Board of Directors has set a policy that interest rate risk exposure will remain within a range whereby net interest income will not decline by more than 10% in one year as a result of a 100 basis point parallel change in rates. Based upon the simulation analysis performed as of August 31, 2020, a 200 basis point parallel upward change in interest rates over a one-year time frame would result in a one-year decrease in net interest income from the base case of approximately 2.5%, while a 100 basis point parallel decline in interest rates over a one-year period would result in an increase in one-year net interest income from the base case of 0.1%. The simulation assumes no balance sheet growth and no management action to address balance sheet mismatches.

The decrease in net interest income in the rising rate scenario is a result of the balance sheet showing a more liability sensitive position over a one year time horizon. As such, in the short-term net interest income is expected to trend slightly below the base assumption, as upward adjustments to rate sensitive deposits and short-term funding outpace increases to asset yields which are concentrated in intermediate to longer-term products. As intermediate and longer-term assets continue to reprice/adjust into higher rate environment and funding costs stabilize, net interest income is expected to trend upwards.

The down 100 basis point scenario increases net income slightly in the first year as a result of the Company's assets repricing downward to a lesser degree than the rates on the Company's interest bearing liabilities, mainly deposits and overnight borrowings. Rates on savings and money market accounts have moved down in the last 3 months, approaching historically low levels allowing little interest expense relief in the first year of a declining rate scenario. In addition, the model assumes that prepayments accelerate in the down interest rate environment resulting in additional pressure on asset yields as proceeds are reinvested at lower rates.

The most recent simulation of a base case scenario, which assumes interest rates remain unchanged from the date of the simulation, reflects a net interest margin that is declining slightly over the next 12 to 18 months.

Although the simulation model is useful in identifying potential exposure to interest rate movements, actual results may differ from those modeled as the repricing, maturity, and prepayment characteristics of financial instruments may change to a different degree than modeled. In addition, the model does not reflect actions that management may employ to manage the Company’s interest rate risk exposure. The Company’s current liquidity profile, capital position, and growth prospects, offer a level of flexibility for management to take actions that could offset some of the negative effects of unfavorable movements in interest rates. Management believes the current exposure to changes in interest rates is not significant in relation to the earnings and capital strength of the Company.

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In addition to the simulation analysis, management uses an interest rate gap measure. The table below is a Condensed Static Gap Report, which illustrates the anticipated repricing intervals of assets and liabilities as of September 30, 2020. The Company’s one-year net interest rate gap was a positive $12.6 million or 0.16% of total assets at September 30, 2020, compared with a negative $173.6 million or 2.58% of total assets at December 31, 2019. A positive gap position exists when the amount of interest-bearing assets maturing or repricing exceeds the amount of interest-earning liabilities maturing or repricing within a particular time period. This analysis suggests that the Company’s net interest income is equally at risk in both an increasing and decreasing rate environment over the next 12 months. An interest rate gap measure could be significantly affected by external factors such as a rise or decline in interest rates, loan or securities prepayments, and deposit withdrawals.

Condensed Static Gap - September 30, 2020						Repricing Interval
(In thousands)	Total		0-3 months			3-6 months			6-12 months			Cumulative 12 months
Interest-earning assets1	$	7,407,145	$	1,474,808		$	483,478		$	1,054,511		$	3,012,797
Interest-bearing liabilities	5,051,390		1,954,544			355,324			690,350			3,000,218
Net gap position			(479,736)			128,154			364,161			12,579
Net gap position as a percentage of total assets			(6.15)		%	1.64		%	4.67		%	0.16		%

 1 Balances of available securities are shown at amortized cost 

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of September 30, 2020.

Based upon that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Report on Form 10-Q, the Company's disclosure controls and procedures were effective.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings 

The Company is subject to various claims and legal actions that arise in the ordinary course of conducting business. As of September 30, 2020, management, after consultation with legal counsel, does not anticipate that the aggregate ultimate liability arising out of litigation pending or threatened against the Company or its subsidiaries will be material to the Company's consolidated financial position. On at least a quarterly basis, the Company assesses its liabilities and contingencies in connection with such legal proceedings. Although the Company does not believe that the outcome of pending litigation will be material to the Company's consolidated financial position, it cannot rule out the possibility that such outcomes will be material to the consolidated results of operations for a particular reporting period in the future.

Item 1A. Risk Factors

Except as set forth below, there have been no material changes in the risk factors previously disclosed under Item 1A. of the Company’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2019:

The ongoing COVID-19 pandemic and measures intended to prevent its spread have had, and likely will continue to have, a material adverse effect on our business, financial condition, liquidity, and results of operations. The nature and extent of such effects will depend on future developments, which are highly uncertain and are difficult to predict.

In December 2019, a novel coronavirus (COVID-19) was reported in China, and, in March 2020, the World Health Organization declared it a pandemic. On March 12, 2020, the President of the United States declared the COVID-19 outbreak in the United States a national emergency. The COVID-19 pandemic has caused significant economic stress in the United States and in the geographic markets that we serve. While the transmission rates of COVID-19 have slowed and business and travel restrictions have partially eased within the primary geographic markets we serve, national rates of transmission have continued to climb, and we may experience a resurgence in our geographic market. The extent to which COVID-19 and measures taken in response thereto impact our business, results of operations and financial condition will depend on future developments,

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which are highly uncertain and are difficult to predict. COVID-19, and governmental/regulatory measures taken in response thereto, have had and are likely to continue to have a material adverse impact on our results of operations and financial condition. Moreover, COVID-19 is likely to heighten or make more likely to occur many of our known risks, which are previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

The COVID-19 pandemic, and the actions taken by federal, state and local authorities in response thereto, have resulted, and will likely continue to result in, an unprecedented slow-down in economic activity, including the following:

•As a result of the COVID-19 pandemic, the national unemployment rate and unemployment rates in our geographic markets dramatically increased during the first half of 2020, and while they have decreased from their peak levels, they are expected to remain elevated typical levels for the foreseeable future.

•Stock markets generally, and bank stocks in particular, have significantly fluctuated in value.

•The Federal Reserve Board has reduced the benchmark federal funds rate to a target range of 0% to 0.25%, and the yields on 10 and 30-year treasury notes remain at historic lows.

•Various state governments and federal agencies are requiring lenders to provide forbearance and other relief to borrowers (e.g., waiving late payment and other fees).

•Business and travel restrictions, including within the geographic markets that we serve.

Certain industries have been particularly hard-hit, including the travel and hospitality industry, the restaurant industry and the retail industry. Finally, the spread of the coronavirus has caused us to modify our business practices, including employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences. We may take further actions as may be required by government authorities or that we determine are in the best interest of our employees, customers and business partners.

As a result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations:

•demand for our products and services has declined and may continue to decline, making it difficult to grow assets and income;

•if the economy is unable to fully reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;

•collateral for loans, especially real estate, may decline in value, which could cause credit losses to increase;

•we may face a decline in the value of our goodwill and other intangible assets;

•our allowance for credit losses may have to be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income;

•our profitability could be negatively impacted if borrowers repay deferred amounts and/or resume scheduled payments under terms which are less profitable than originally agreed, all of which may be further impacted by new, changed, or extended government/regulatory expectations or requirements;

•the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;

•the decline in the Federal Reserve Board’s target federal funds rate may cause the yield on our assets to decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and thereby reducing our net income;

•a material decrease in net income or a net loss over several quarters could result in a decrease in the rate of our quarterly cash dividend;

•our wealth management and trust revenues may decline with continuing market turmoil;

•a prolonged weakness in economic conditions resulting in a reduction of future projected earnings could result in our recording a valuation allowance against our current outstanding deferred tax assets;

•our cybersecurity and fraud risks may increase due to our transition of a large portion of our workforce to a remote work environment;

•the unavailability of a third party vendor, whom we rely on for certain services, could cause a lapse in a critical service; and

•Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs.

Moreover, our future success and profitability substantially depends on the management skills of our executive officers and directors, many of whom have held officer and director positions with us for many years. The unanticipated loss or unavailability of key employees due to the outbreak could harm our ability to operate our business or execute our business strategy. We may not be successful in finding and integrating suitable successors in the event of key employee loss or unavailability.

73

Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including the scope and duration of the pandemic and the successfulness of efforts to abate it; the continued effectiveness of our business continuity plan; the direct and indirect impact of the pandemic on our employees, customers, clients, counterparties and service providers, as well as other market participants; and actions taken by governmental authorities and other third parties in response to the pandemic, including when, how and to what extent the economy may be fully reopened.

Any one or a combination of the factors identified above could negatively impact our business, financial condition and results of operations and prospects.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number  of Shares that May Yet Be Purchased Under the Plans or Programs
	(a)	(b)		(c)	(d)
July 1, 2020 through July 31, 2020	2,140	$	58.12	0	328,712
August 1, 2020 through August 31, 2020	636	69.73		0	328,712
September 1, 2020 through September 30, 2020	0	0.00		0	328,712
Total	2,776	$	60.78	0	328,712

Included in the table above are 2,140 shares purchased in July 2020, at an average cost of $58.12, and 636 shares purchased in August 2020, at an average cost of $69.73, by the trustee of the rabbi trust established by the Company under the Company’s Stock Retainer Plan For Eligible Directors of Tompkins Financial Corporation and Participating Subsidiaries, which were part of the director deferred compensation under that plan.

On July 19, 2018, the Company's Board of Directors authorized a share repurchase plan (the "2018 Repurchase Plan") for the Company to repurchase up to 400,000 shares of the Company's common stock over the 24 months following the adoption of the plan. The 2018 Repurchase Plan could be suspended, modified or terminated by the Board of Directors at any time for any reason. Under the 2018 Repurchase Plan, the Company repurchased 393,004 shares through December 31, 2019, at an average price of $79.15.

On January 30, 2020, the Company’s Board of Directors authorized a new share repurchase plan (the “2020 Repurchase Plan”) to replace the 2018 Repurchase Plan. The 2020 Repurchase Plan provides for the repurchase of up to 400,000 shares of the Company’s common stock over the 24 months following adoption of the plan. As with the 2018 Repurchase Plan, shares may be repurchased from time to time under the 2020 Repurchase Plan in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in accordance with federal securities laws, and the repurchase program may be suspended, modified or terminated by the Board of Directors at any time for any reason. Under the 2020 Repurchase Plan, the Company repurchased 71,288 shares during the first quarter of 2020, at an average cost of $76.13. On March 19, 2020, following the announcement of the national emergency related to the COVID-19 pandemic, the Company suspended the purchase of shares under the 2020 Repurchase Plan. The Company did not purchase any shares under the 2020 Repurchase Plan during the second or third quarters of 2020.

Recent Sales of Unregistered Securities

None

Item 3. Defaults Upon Senior Securities

None 

74

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

75

Item 6.     Exhibits

EXHIBIT INDEX

Exhibit Number	Description
31.1	Certification of Principal Executive Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Certification of Principal Financial Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
32.1	Certification of Principal Certification of Principal Executive Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, 18 U.S.C. Section 1350.C. Section 1350
32.2	Certification of Principal Financial Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, 18 U.S.C. Section 1350
101 INS**	The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document
101 SCH**	Inline XBRL Taxonomy Extension Schema Document
101 CAL**	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101 DEF**	Inline XBRL Taxonomy Extension Definition Linkbase Document
101 LAB**	Inline XBRL Taxonomy Extension Label Linkbase Document
101 PRE**	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File - the cover page interactive data file does not appear in the interactive date file because its XBRL tags are embedded with the inline XBRL document.
** Attached as Exhibit 101 to this report are the following formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Condition as of September 30, 2020 and December 31, 2019; (ii) Consolidated Statements of Income for the three and nine months ended September 30, 2020 and 2019; (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2020 and 2019; (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019; (v) Consolidated Statements of Changes in Shareholders' Equity for the three and nine months ended September 30, 2020 and 2019; and (vi Notes to Unaudited Consolidated Financial Statements.

76

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 09, 2020

TOMPKINS FINANCIAL CORPORATION

By:	/s/ Stephen S. Romaine
	Stephen S. Romaine
	President and Chief Executive Officer
	(Principal Executive Officer)

By:	/s/ Francis M. Fetsko
	Francis M. Fetsko
	Executive Vice President, Chief Financial Officer, and Chief Operating Officer
	(Principal Financial Officer)
	(Principal Accounting Officer)

77

EX-31

Exhibit 31.1

CERTIFICATION

I, Stephen S. Romaine, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Tompkins Financial Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 09, 2020
/s/ Stephen S. Romaine
Stephen S. Romaine
President and Chief Executive Officer
(Principal Executive Officer)

EX-31

Exhibit 31.2

CERTIFICATION

I,  Francis M. Fetsko, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Tompkins Financial Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 09, 2020
/s/ Francis M. Fetsko
Francis M. Fetsko
Executive Vice President, Chief Financial Officer, and Chief Operating Officer
(Principal Financial Officer)
(Principal Accounting Officer)

EX-32

Exhibit 32.1

CERTIFICATION

In connection with the filing of the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2020 (the “Report”) by Tompkins Financial Corporation (the “Company”), the undersigned, as the Chief Executive Officer of the Company, hereby certifies pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

The Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 09, 2020
	/s/ Stephen S. Romaine
	Stephen S. Romaine
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION

In connection with the filing of the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2020 (the “Report”) by Tompkins Financial Corporation (the “Company”), the undersigned, as the Chief Financial Officer of the Company, hereby certifies pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

The Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 09, 2020
	/s/ Francis M. Fetsko
	Francis M. Fetsko
	Executive Vice President,
	Chief Financial Officer, and Chief Operating Officer
	(Principal Financial Officer)
	(Principal Accounting Officer)

XML

Cover Page - shares	9 Months Ended
	Sep. 30, 2020	Nov. 03, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	1-12709
Entity Registrant Name	Tompkins Financial Corp
Entity Incorporation, State or Country Code	NY
Entity Tax Identification Number	16-1482357
Entity Address, Address Line One	118 E. Seneca Street
Entity Address, Address Line Two	P.O. Box 460
Entity Address, City or Town	Ithaca
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	14851
City Area Code	888
Local Phone Number	503-5753
Title of 12(b) Security	Common Stock, $0.10 par value
Trading Symbol	TMP
Security Exchange Name	NYSEAMER
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		14,931,133
Entity Central Index Key	0001005817
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2020

XML

CONSOLIDATED STATEMENTS OF CONDITION - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
ASSETS
Cash and noninterest bearing balances due from banks	$ 22,065	$ 136,010
Interest bearing balances due from banks	352,674	1,972
Cash and Cash Equivalents	374,739	137,982
Available-for-sale debt securities, at fair value (amortized cost of $1,637,255 at September 30, 2020 and $1,293,239 at December 31, 2019)	1,666,766	1,298,587
Equity securities, at fair value (amortized cost $932 at September 30, 2020 and $915 at December 31, 2019)	932	915
Total loans and leases, net of unearned income and deferred costs and fees	5,398,297	4,917,550
Less: Allowance for credit losses	52,293	39,892
Net Loans and Leases	5,346,004	4,877,658
Federal Home Loan Bank and other stock	17,919	33,695
Bank premises and equipment, net	89,015	94,355
Corporate owned life insurance	84,165	82,961
Goodwill	92,447	92,447
Other intangible assets, net	5,211	6,223
Accrued interest and other assets	117,304	100,800
Total Assets	7,794,502	6,725,623
Interest bearing:
Checking, savings and money market	3,979,253	3,080,686
Time	706,401	675,014
Noninterest bearing	1,915,584	1,457,221
Total Deposits	6,601,238	5,212,921
Federal funds purchased and securities sold under agreements to repurchase	63,573	60,346
Other borrowings	285,000	658,100
Trust preferred debentures	17,163	17,035
Other liabilities	113,917	114,167
Total Liabilities	7,080,891	6,062,569
Tompkins Financial Corporation shareholders' equity:
Common Stock - par value $0.10 per share: Authorized 25,000,000 shares; Issued: 14,962,162 at September 30, 2020; and 15,014,499 at December 31, 2019	1,496	1,501
Additional paid-in capital	337,329	338,507
Retained earnings	402,498	370,477
Accumulated other comprehensive loss	(23,864)	(43,564)
Treasury stock, at cost – 121,868 shares at September 30, 2020, and 123,956 shares at December 31, 2019	(5,355)	(5,279)
Total Tompkins Financial Corporation Shareholders’ Equity	712,104	661,642
Noncontrolling interests	1,507	1,412
Total Equity	713,611	663,054
Total Liabilities and Equity	$ 7,794,502	$ 6,725,623

XML

CONSOLIDATED STATEMENTS OF CONDITION (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Available-for-sale securities, at amortized cost	$ 1,637,255	$ 1,293,239
Equity securities, at amortized cost	$ 932	$ 915
Common stock, par value (in dollars per share)	$ 0.10	$ 0.10
Common stock, authorized (in shares)	25,000,000	25,000,000
Common stock, issued (in shares)	14,962,162	15,014,499
Treasury stock, shares (in shares)	121,868	123,956

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
INTEREST AND DIVIDEND INCOME
Loans	$ 57,892	$ 57,621	$ 169,639	$ 169,685
Due from banks	83	11	90	31
Available-for-sale debt securities	6,035	6,511	20,101	22,055
Held-to-maturity securities	0	862	0	2,583
Federal Home Loan Bank and other stock	306	770	1,130	2,442
Interest income	64,316	65,775	190,960	196,796
INTEREST EXPENSE
Time certificates of deposits of $250,000 or more	755	823	2,458	2,184
Other deposits	3,450	7,583	13,723	20,409
Federal funds purchased and securities sold under agreements to repurchase	19	34	76	110
Trust preferred debentures	216	317	758	974
Other borrowings	1,623	3,862	6,357	15,731
Total Interest Expense	6,063	12,619	23,372	39,408
Net Interest Income	58,253	53,156	167,588	157,388
Less: Provision for credit loss expense	199	1,320	16,145	2,366
Net Interest Income After Provision for Credit Loss Expense	58,054	51,836	151,443	155,022
NONINTEREST INCOME
Insurance commissions and fees	8,916	8,517	24,216	24,314
Investment services income	4,292	4,175	12,414	12,166
Service charges on deposit accounts	1,444	2,191	4,675	6,210
Card services income	2,419	2,550	6,885	8,090
Other income	1,818	1,963	6,388	6,247
Net (loss) gain on securities transactions	(2)	138	446	434
Total Noninterest Income	18,887	19,534	55,024	57,461
NONINTEREST EXPENSE
Salaries and wages	23,951	22,960	69,482	66,149
Other employee benefits	6,690	5,821	18,260	17,094
Net occupancy expense of premises	3,162	3,236	9,530	10,095
Furniture and fixture expense	1,886	1,919	5,759	5,894
Amortization of intangible assets	371	421	1,120	1,251
Other operating expense	10,289	11,298	34,826	35,451
Total Noninterest Expenses	46,349	45,655	138,977	135,934
Income Before Income Tax Expense	30,592	25,715	67,490	76,549
Income Tax Expense	6,330	5,478	13,779	15,816
Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation	24,262	20,237	53,711	60,733
Less: Net Income Attributable to Noncontrolling Interests	32	31	101	95
Net Income Attributable to Tompkins Financial Corporation	$ 24,230	$ 20,206	$ 53,610	$ 60,638
Basic Earnings Per Share (in dollars per share)	$ 1.63	$ 1.34	$ 3.60	$ 3.99
Diluted Earnings Per Share (in dollars per share)	$ 1.63	$ 1.34	$ 3.59	$ 3.97

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Statement of Comprehensive Income [Abstract]
Net income attributable to noncontrolling interests and Tompkins Financial Corporation	$ 24,262	$ 20,237	$ 53,711	$ 60,733
Available-for-sale debt securities:
Change in net unrealized gain/(loss) during the period	(3,303)	3,111	18,563	25,681
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	0	(101)	(324)	(305)
Employee benefit plans:
Amortization of net retirement plan actuarial loss	447	310	1,340	930
Amortization of net retirement plan prior service cost	40	3	121	8
Other comprehensive (loss) income	(2,816)	3,323	19,700	26,314
Subtotal comprehensive income attributable to noncontrolling interests and Tompkins Financial Corporation	21,446	23,560	73,411	87,047
Less: Net income attributable to noncontrolling interests	(32)	(31)	(101)	(95)
Total comprehensive income attributable to Tompkins Financial Corporation	$ 21,414	$ 23,529	$ 73,310	$ 86,952

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
OPERATING ACTIVITIES
Net income attributable to Tompkins Financial Corporation	$ 53,610	$ 60,638
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit loss expense	16,145	2,366
Depreciation and amortization of premises, equipment, and software	7,654	7,495
Amortization of intangible assets	1,120	1,251
Earnings from corporate owned life insurance	(1,617)	(1,612)
Net amortization on securities	7,233	5,425
Amortization/accretion related to purchase accounting	(743)	(1,091)
Net gain on securities transactions	(446)	(434)
Net gain on sale of loans originated for sale	(1,245)	(139)
Proceeds from sale of loans originated for sale	36,568	11,532
Loans originated for sale	(38,484)	(9,961)
Net (gain) on sale of bank premises and equipment	(3)	(110)
Net excess tax benefit from stock based compensation	118	574
Stock-based compensation expense	3,372	3,009
Increase in accrued interest receivable	(18,919)	(488)
(Decrease) in accrued interest payable	(785)	(114)
Other, net	(2,262)	(4,132)
Net Cash Provided by Operating Activities	61,316	74,209
INVESTING ACTIVITIES
Proceeds from maturities, calls and principal paydowns of available-for-sale debt securities	405,886	232,792
Proceeds from sales of available-for-sale debt securities	42,333	176,249
Proceeds from maturities, calls and principal paydowns of held-to-maturity securities	0	9,205
Purchases of available-for-sale debt securities	(799,039)	(189,940)
Purchases of held-to-maturity securities	0	(7,589)
Net increase in loans	(478,455)	(28,395)
Proceeds from sale/redemptions of Federal Home Loan Bank stock	41,169	108,289
Purchases of Federal Home Loan Bank and other stock	(25,393)	(80,908)
Proceeds from sale of bank premises and equipment	4	449
Purchases of bank premises, equipment and software	(2,894)	(4,049)
Redemption of corporate owned life insurance	446	0
Net cash used in acquisition	0	(436)
Other, net	398	4,887
Net Cash (Used in) Provided by Investing Activities	(815,545)	220,554
FINANCING ACTIVITIES
Net increase in demand, money market, and savings deposits	1,356,930	416,882
Net increase in time deposits	31,856	64,831
Net increase (decrease) in Federal funds purchased and securities sold under agreements to repurchase	3,227	(31,301)
Increase in other borrowings	74,583	252,753
Repayment of other borrowings	(447,683)	(899,828)
Cash dividends	(23,296)	(22,869)
Repurchase of common stock	(5,620)	(26,992)
Shares issued for dividend reinvestment plan	1,529	0
Net shares issued related to restricted stock awards	(292)	(385)
Net proceeds from exercise of stock options	(248)	(816)
Net Cash Provided by (Used in) Financing Activities	990,986	(247,725)
Net Increase in Cash and Cash Equivalents	236,757	47,038
Cash and cash equivalents at beginning of period	137,982	80,389
Total Cash and Cash Equivalents at End of Period	374,739	127,427
Supplemental Information:
Cash paid during the year for  - Interest	24,626	40,204
Cash paid during the year for  - Taxes	16,243	11,241
Transfer of loans to other real estate owned	192	774
Initial recognition of operating lease right-of-use assets	0	35,783
Initial recognition of operating lease liabilities	0	38,119
Right-of-use assets obtained in exchange for new lease liabilities	$ 1,230	$ 28

XML

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Impact of adopting ASC 326	Common Stock	Additional Paid-in Capital	Retained Earnings	Retained Earnings Impact of adopting ASC 326	Accumulated Other Comprehensive (Loss) Income	Treasury Stock	Non- controlling Interests
Balances at Beginning at Dec. 31, 2018	$ 620,871		$ 1,535	$ 366,595	$ 319,396		$ (63,165)	$ (4,902)	$ 1,412
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income attributable to noncontrolling interests and Tompkins Financial Corporation	60,733				60,638				95
Other comprehensive income (loss)	26,314						26,314
Subtotal comprehensive income attributable to noncontrolling interests and Tompkins Financial Corporation	87,047
Cash dividends	(22,869)				(22,869)
Net exercise of stock options	(816)		1	(817)
Common stock repurchased and returned to unissued status (185,107 shares)	(26,992)		(34)	(26,958)
Stock-based compensation expense	3,009			3,009
Directors deferred compensation plan	0			209				(209)
Restricted stock activity	(385)		(1)	(384)
Balances at Ending at Sep. 30, 2019	659,865		1,501	341,654	357,165		(36,851)	(5,111)	1,507
Balances at Beginning at Jun. 30, 2019	657,677		1,520	355,284	344,513		(40,174)	(4,942)	1,476
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income attributable to noncontrolling interests and Tompkins Financial Corporation	20,237				20,206				31
Other comprehensive income (loss)	3,323						3,323
Subtotal comprehensive income attributable to noncontrolling interests and Tompkins Financial Corporation	23,560
Cash dividends	(7,554)				(7,554)
Net exercise of stock options	(106)		0	(106)
Common stock repurchased and returned to unissued status (185,107 shares)	(14,708)		(18)	(14,690)
Stock-based compensation expense	997			997
Directors deferred compensation plan	0			169				(169)
Restricted stock activity	(1)		(1)	0
Balances at Ending at Sep. 30, 2019	659,865		1,501	341,654	357,165		(36,851)	(5,111)	1,507
Balances at Beginning at Dec. 31, 2019	$ 663,054	$ 1,707	1,501	338,507	370,477	$ 1,707	(43,564)	(5,279)	1,412
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Accounting Standards Update [Extensible List]	us-gaap:AccountingStandardsUpdate201613Member
Net income attributable to noncontrolling interests and Tompkins Financial Corporation	$ 53,711				53,610				101
Other comprehensive income (loss)	19,700						19,700
Subtotal comprehensive income attributable to noncontrolling interests and Tompkins Financial Corporation	73,411
Cash dividends	(23,296)				(23,296)
Net exercise of stock options	248			248
Shares issued for dividend reinvestment plan	1,529		2	1,527
Common stock repurchased and returned to unissued status (185,107 shares)	(5,620)		(7)	(5,613)
Stock-based compensation expense	3,372			3,372
Directors deferred compensation plan	0			76				(76)
Restricted stock activity	(292)			(292)
Partial repurchase of noncontrolling interest	(6)								(6)
Balances at Ending at Sep. 30, 2020	713,611		1,496	337,329	402,498		(23,864)	(5,355)	1,507
Balances at Beginning at Jun. 30, 2020	698,029		1,495	335,268	386,025		(21,048)	(5,187)	1,476
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income attributable to noncontrolling interests and Tompkins Financial Corporation	24,262				24,230				32
Other comprehensive income (loss)	(2,816)						(2,816)
Subtotal comprehensive income attributable to noncontrolling interests and Tompkins Financial Corporation	21,446
Cash dividends	(7,757)				(7,757)
Net exercise of stock options	(32)			(32)
Shares issued for dividend reinvestment plan	848		1	847
Stock-based compensation expense	1,078			1,078
Directors deferred compensation plan	0			168				(168)
Restricted stock activity	0
Partial repurchase of noncontrolling interest	(1)								(1)
Balances at Ending at Sep. 30, 2020	$ 713,611		$ 1,496	$ 337,329	$ 402,498		$ (23,864)	$ (5,355)	$ 1,507

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Statement of Stockholders' Equity [Abstract]
Cash dividends (in dollars per share)	$ 0.52	$ 0.50	$ 1.56	$ 1.00
Net exercise of stock options (in shares)	417	2,902	3,605	15,201
Common stock repurchased and returned to unissued status (in shares)			71,288	340,200
Shares issued for dividend reinvestment plan (in shares)	12,723		24,752
Directors deferred compensation plan (in shares)	(2,776)	2,027	2,088	347
Restricted stock activity (in shares)	1,346	2,764	9,406	11,628

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Business

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business

Business

Tompkins Financial Corporation (“Tompkins” or the “Company”) is headquartered in Ithaca, New York and is registered as a Financial Holding Company with the Federal Reserve Board under the Bank Holding Company Act of 1956, as amended. The Company is a locally oriented, community-based financial services organization that offers a full array of products and services, including commercial and consumer banking, leasing, trust and investment management, financial planning and wealth management, and insurance services. At September 30, 2020, the Company’s subsidiaries included: four wholly-owned banking subsidiaries, Tompkins Trust Company (the “Trust Company”), The Bank of Castile (DBA Tompkins Bank of Castile), Mahopac Bank (DBA Tompkins Mahopac Bank), VIST Bank (DBA Tompkins VIST Bank); and a wholly-owned insurance agency subsidiary, Tompkins Insurance Agencies, Inc. (“Tompkins Insurance”). The Trust Company provides a full array of trust and investment services under the Tompkins Financial Advisors brand, including investment management, trust and estate, financial and tax planning as well as life, disability and long-term care insurance services. The Company’s principal offices are located at 118 E. Seneca Street, P.O. Box 460, Ithaca, New York, 14850, and its telephone number is (888) 503-5753. The Company’s common stock is traded on the NYSE American under the symbol “TMP.”

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

The Company’s banking subsidiaries are subject to examination and comprehensive regulation by various regulatory authorities, including the Federal Deposit Insurance Corporation (“FDIC”), the New York State Department of Financial Services (“NYSDFS”), and the Pennsylvania Department of Banking and Securities (“PDBS”). Each of these agencies issues regulations and requires the filing of reports describing the activities and financial condition of the entities under its jurisdiction. Likewise, such agencies conduct examinations on a recurring basis to evaluate the safety and soundness of the institutions, and to test compliance with various regulatory requirements, including: consumer protection, privacy, fair lending, the Community Reinvestment Act, the Bank Secrecy Act, sales of non-deposit investments, electronic data processing, and trust department activities.

The trust division of Tompkins Trust Company is subject to examination and comprehensive regulation by the FDIC and NYSDFS.

The Company’s insurance subsidiary is subject to examination and regulation by the NYSDFS and the Pennsylvania Insurance Department.

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Basis of Presentation

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The unaudited consolidated financial statements included in this quarterly report do not include all of the information and footnotes required by U.S. Generally Accepted Accounting Principles ("GAAP") for a full year presentation and certain disclosures have been condensed or omitted in accordance with rules and regulations of the SEC. In the application of certain accounting policies, management is required to make assumptions regarding the effect of matters that are inherently uncertain. These estimates and assumptions affect the reported amounts of certain assets, liabilities, revenues, and expenses in the unaudited consolidated financial statements. Different amounts could be reported under different conditions, or if different assumptions were used in the application of these accounting policies. The accounting policies that management considers critical in this respect are the determination of the allowance for credit losses and the review of its securities portfolio for other than temporary impairment.

In management’s opinion, the unaudited consolidated financial statements reflect all adjustments of a normal recurring nature. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year ended December 31, 2020. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Effective January 1, 2020, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 makes significant changes to the accounting for credit losses on financial instruments presented on an amortized cost basis and disclosures about them. These changes are discussed below, under "Impact of Adoption of ASU 2016-13".

Other than the changes resulting from the adoption of ASU 2016-13, there have been no significant changes to the Company’s accounting policies from those presented in the 2019 Annual Report on Form 10-K. Refer to MD&A under "Recently Issued Accounting Standards" of this Report for a discussion of recently issued accounting guidelines.

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

The Company has evaluated subsequent events for potential recognition and/or disclosure, and determined that no further disclosures were required.

The consolidated financial information included herein combines the results of operations, the assets, liabilities, and shareholders’ equity of the Company and its subsidiaries. Amounts in the prior periods’ unaudited consolidated financial statements are reclassified when necessary to conform to the current periods’ presentation. All significant intercompany balances and transactions are eliminated in consolidation.

Impact of Adoption of ASU 2016-13

Securities

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 (impairment) is due to credit-related factors or noncredit-related factors. 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 Statement 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. However, if the Company intends to sell an impaired available- for-sale debt security or more likely than not will be required to sell such a security before recovering its amortized cost basis, the entire impairment amount must be recognized in earnings with a corresponding adjustment to the security’s amortized cost basis. Because the security’s amortized cost basis is adjusted to fair value, there is no ACL in this situation.

Changes in the allowance for credit losses are recorded as provision (credit) for credit loss expense. Losses are charged against the ACL when management believes the uncollectability of an available-for-sale debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable on securities is excluded from the estimate of credit losses.

Acquired Loans

Acquired loans are recorded at fair value at the date of acquisition based on a discounted cash flow methodology that considers various factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and a discount rate reflecting the Company’s assessment of risk inherent in the cash flow estimates. Certain larger purchased loans are individually evaluated while certain purchased loans are grouped together according to similar risk characteristics and are treated in the aggregate when applying various valuation techniques. These cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change.

Prior to January 1, 2020, loans acquired in a business combination that had evidence of deterioration of credit quality since origination and for which it was probable, at acquisition, that the Company would be unable to collect all contractually required payments receivable were considered purchased credit impaired (“PCI”) loans. PCI loans were individually evaluated and recorded at fair value at the date of acquisition with no initial valuation allowance based on a discounted cash flow

methodology that considered various factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and a discount rate reflecting the Company’ assessment of risk inherent in the cash flow estimates. The difference between the undiscounted cash flows expected at acquisition and the investment in the loan, or the “accretable yield,” was recognized as interest income on a level-yield method over the life of the loan. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “non-accretable difference,” were not recognized on the Statement of Condition and did not result in any yield adjustments, loss accruals or valuation allowances. Increases in expected cash flows, including prepayments, subsequent to the initial investment were recognized prospectively through adjustment of the yield on the loan over its remaining life. Decreases in expected cash flows were recognized as impairment. Valuation allowances on PCI loans reflected only losses incurred after the acquisition (meaning the present value of all cash flows expected at acquisition that ultimately were not to be received).

Subsequent to January 1, 2020 in connection with the Company's adoption of ASU 2016-13, loans acquired in a business combination that have experienced more-than-insignificant deterioration in credit quality since origination are considered purchased credit deteriorated (“PCD”) loans. At the acquisition date, an estimate of expected credit losses is made for groups of PCD loans with similar risk characteristics and individual PCD loans without similar risk characteristics. This initial allowance for credit losses is allocated to individual PCD loans and added to the purchase price or acquisition date fair values to establish the initial amortized cost basis of the PCD loans. As the initial allowance for credit losses is added to the purchase price, there is no credit loss expense recognized upon acquisition of a PCD loan. Any difference between the unpaid principal balance of PCD loans and the amortized cost basis is considered to relate to noncredit factors and results in a discount or premium. Discounts and premiums are recognized through interest income on a level-yield method over the life of the loans. All loans considered to be PCI prior to January 1, 2020 were converted to PCD on that date.

The subsequent measurement of expected credit losses for all acquired loans is the same as the subsequent measurement of expected credit losses for originated loans.

Allowance for Credit Losses – Loans

Under the current expected credit loss model, the ACL on loans is a valuation allowance estimated at each balance sheet date in accordance with U.S. GAAP that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans.

The Company estimates the ACL on loans based on the underlying assets’ amortized cost basis, which is the amount at which the financing receivable is originated or acquired, adjusted for applicable accretion or amortization of premium, discount, collection of cash, and charge-offs. In the event that collection of principal becomes uncertain, the Company has policies in place to reverse accrued interest in a timely manner. Therefore, the Company has made a policy election to exclude accrued interest from the measurement of ACL.

Expected credit losses are reflected in the ACL through a charge to the provision for credit loss expense. When the Company deems all or a portion of a financial asset to be uncollectible, the appropriate amount is written off and the ACL is reduced by the same amount. In general, the principal balance of a loan is charged off in full or in part when management concludes, based on the available facts and circumstances, that collection of principal in full is not probable. Subsequent recoveries, if any, are credited to the ACL when received.

The Company measures expected credit losses of financial assets at the loan level by segment, by pooling loans when the financial assets share similar risk characteristics. Depending on the nature of the pool of financial assets with similar risk characteristics, the Company uses a discounted cash flow (“DCF”) method to estimate the expected credit losses. Allowance on loans that do not share risk characteristics are evaluated on an individual basis. The Company assigns a credit risk rating to all commercial and commercial real estate loans. The Company reviews commercial and commercial real estate loans rated Substandard or worse, on nonaccrual and greater than $250,000 for loss potential and when deemed appropriate assigns an allowance based on an individual evaluation.

The Company’s methodologies for estimating the ACL consider available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. The methodologies apply historical loss information, adjusted for asset-specific characteristics, economic conditions at the measurement date, and forecasts about future economic conditions expected to exist through the contractual lives of the financial assets that are reasonable and supportable, to the identified pools of financial assets with similar risk characteristics for which the historical loss experience was observed. The Company’s methodologies revert back to average historical loss information on a straight line basis over eight quarters when it can no longer develop reasonable and supportable forecasts.

The Company has identified the following pools of financial assets with similar risk characteristics for measuring expected credit losses: commercial, commercial real estate, residential, home equity, consumer and leases. This segmentation was selected based on the differences in the risk profile of each of these categories and aligns well with regulatory reporting categories. This segmentation separates borrower type, collateral type and the nature of the loan. The differences in risk profiles of these segments enables the ACL to be more precise in its allocation due to the inherent risk in these specific portfolios.

Discounted Cash Flow Method

The Company uses the discounted cash flow method to estimate expected credit losses for the commercial, commercial real estate, residential, home equity, and consumer loan pools. For each of these loan segments, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, probability of default, and loss given default. The modeling of expected prepayment speeds, and time to recovery are based on historical internal 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 loan pools utilizing the DCF method, management utilizes and forecasts one or both of the following economic factors; national unemployment and gross domestic product as loss drivers.

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 an independent third party to inform its loss driver forecasts over the four-quarter forecast period. Other internal and external indicators of economic forecasts are also considered by management when developing the forecast metrics. The model considers a base case forecast and two alternative forecasts and assigns weightings to these three scenarios based on current conditions and expectations for future conditions.

The combination of adjustments for credit expectations (default and loss) and timing expectations (prepayment, curtailment, and time to recovery) produces an expected cash flow stream at the instrument level. Instrument effective yield is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce an instrument-level net present value of expected cash flows (“NPV”). An ACL is established for the difference between the instrument’s 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.

Individually Evaluated Financial Assets

Loans that do not share common risk characteristics are evaluated on an individual basis. For collateral dependent financial assets where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral less cost to sell, and the amortized cost basis of the asset as of the measurement date. The ACL may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the financial asset.

The Company’s estimate of the ACL reflects losses expected over the remaining contractual life of the assets. The contractual term does not consider extensions, renewals or modifications unless the Company has identified an expected troubled debt restructuring.

Troubled Debt Restructuring

A loan that has been modified or renewed is considered a troubled debt restructuring (“TDR”) when two conditions are met: 1) the borrower is experiencing financial difficulty and 2) concessions are made for the borrower's benefit that would not otherwise be considered for a borrower or transaction with similar credit risk characteristics. The Company’s ACL reflects all effects of a TDR when an individual asset is specifically identified as a reasonably expected TDR. The Company has determined that a TDR is reasonably expected no later than the point when the lender concludes that modification is the best

course of action and it is at least reasonably possible that the troubled borrower will accept some form of concession from the lender to avoid a default. Reasonably expected TDRs and executed non-performing TDRs are evaluated individually to determine the required ACL. TDRs performing in accordance with their modified contractual terms for a reasonable period of time may be included in the Company’s existing pools based on the underlying risk characteristics of the loan to measure the ACL. The provisions of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") and interagency guidance issued by Federal banking regulators provided guidance and clarification related to modifications and deferral programs to assist borrowers who are negatively impacted by the COVID-19 national emergency. The guidance and clarifications detail certain provisions whereby banks are permitted to make deferrals and modifications to the terms of a loan which would not require the loan to be reported as a troubled debt restructuring ('TDR"). In accordance with the CARES Act and the interagency guidance, the Company elected to adopt the provisions to not report qualified loan modifications as troubled debt restructurings.

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, unused lines of credit and commercial letters of credit, issued to meet customer financing needs. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded.

The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancellable, through a charge to the provision for credit loss expense for off-balance sheet credit exposures included in other noninterest expense in the Company’s consolidated statements of income. The ACL on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the current expected credit loss model using similar methodologies as portfolio loans, taking into consideration the likelihood that funding will occur, and is included in other liabilities on the Company’s statements of condition.

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Securities

9 Months Ended

Sep. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Securities

Securities

Available-for-Sale Debt Securities

The following table summarizes available-for-sale debt securities held by the Company at September 30, 2020:

	Available-for-Sale Debt Securities
September 30, 2020	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(In thousands)
Obligations of U.S. Government sponsored entities	602,417		10,881		817		612,481
Obligations of U.S. states and political subdivisions	126,593		2,840		175		129,258
Mortgage-backed securities – residential, issued by
U.S. Government agencies	205,507		2,981		987		207,501
U.S. Government sponsored entities	700,238		15,785		863		715,160
U.S. corporate debt securities	2,500		0		134		2,366
Total available-for-sale debt securities	$	1,637,255	$	32,487	$	2,976	$	1,666,766

 The following table summarizes available-for-sale debt securities held by the Company at December 31, 2019:  

	Available-for-Sale Debt Securities
December 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(In thousands)
U.S. Treasuries	$	1,840	$	0	$	0	$	1,840
Obligations of U.S. Government sponsored entities	367,551		5,021		84		372,488
Obligations of U.S. states and political subdivisions	96,668		1,178		61		97,785
Mortgage-backed securities – residential, issued by
U.S. Government agencies	164,643		1,327		1,519		164,451
U.S. Government sponsored entities	660,037		2,940		3,387		659,590
U.S. corporate debt securities	2,500		0		67		2,433
Total available-for-sale debt securities	$	1,293,239	$	10,466	$	5,118	$	1,298,587

The available-for-sale portfolio also includes callable securities that may be called by the issuer prior to maturity. The Company may from time to time sell debt securities from its available-for-sale portfolio. Realized gains on available-for-sale debt securities were $0 and $429,000 for the three and nine months ended September 30, 2020 and $133,000 and $999,000 for the three and nine months ended September 30, 2019. Realized losses on available-for-sale debt securities were $0 for the three and nine months ended September 30, 2020 and $0 and $595,000 for the three and nine months ended September 30, 2019. Proceeds from the sale of available-for-sale debt securities were $0 and $42.3 million for the three and nine months ended September 30, 2020, and $24.2 million and $176.2 million for the three and nine months ended September 30, 2019. Sales of available-for-sale investment securities were the result of general investment portfolio and interest rate risk management. The Company also recognized net losses of $2,000 and net gains of $17,000 for the three and nine months ended September 30, 2020, on equity securities, reflecting the change in fair value.

The following table summarizes available-for-sale debt securities that had unrealized losses at September 30, 2020.

	Less than 12 Months				12 Months or Longer				Total
(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. Government sponsored entities	$	303,834	$	817	$	0	$	0	$	303,834	$	817
Obligations of U.S. states and political subdivisions	15,328		175		0		0		15,328		175
Mortgage-backed securities – residential, issued by
U.S. Government agencies	46,990		736		2,978		251		49,968		987
U.S. Government sponsored entities	111,120		794		5,512		69		116,632		863
U.S. corporate debt securities	0		0		2,366		134		2,366		134
Total available-for-sale debt securities	$	477,272	$	2,522	$	10,856	$	454	$	488,128	$	2,976

The following table summarizes available-for-sale debt securities that had unrealized losses at December 31, 2019.

	Less than 12 Months				12 Months or Longer				Total
(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. Government sponsored entities	$	18,654	$	76	$	3,479	$	8	$	22,133	$	84
Obligations of U.S. states and political subdivisions	10,456		54		2,300		7		12,756		61
Mortgage-backed securities – residential, issued by
U.S. Government agencies	54,846		489		45,999		1,030		100,845		1,519
U.S. Government sponsored entities	157,801		752		233,999		2,635		391,800		3,387
U.S. corporate debt securities	0		0		2,433		67		2,433		67
Total available-for-sale debt securities	$	241,757	$	1,371	$	288,210	$	3,747	$	529,967	$	5,118

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.

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

• Extent to which the fair value is less than the amortized cost basis.

• Adverse conditions specifically related to the security, an industry, or geographic area (changes in technology,

business practice).

• Payment structure of the debt security with respect to underlying issuer or obligor.

• Failure of the issuer to make scheduled payment of principal and/or interest.

• Changes to the rating of a security or issuer by a nationally recognized statistical rating organization.

• Changes in tax or regulatory guidelines that impact a security or underlying issuer.

For available for sale debt securities in an unrealized loss position, the Company evaluates the securities to determine whether the decline in the fair value below the amortized cost basis (technical impairment) is the result of changes in interest rates or reflects a fundamental change in the credit worthiness 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 balance sheet, 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.

The gross unrealized losses reported for residential mortgage-backed securities relate to investment securities issued by U.S. government sponsored entities such as Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, and

U.S. government agencies such as Government National Mortgage Association. The total gross unrealized losses, shown in the tables above, were primarily attributable to changes in interest rates and levels of market liquidity, relative to when the investment securities were purchased, and not due to the credit-related quality of the investment securities. In addition, the Company maintains the ability and intent to hold these positions until the recovery of unrealized losses and does not believe that the Company would be required to sell any securities currently in an unrealized loss position.

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

September 30, 2020
(In thousands)	Amortized Cost		Fair Value
Available-for-sale debt securities:
Due in one year or less	$	53,447	$	54,083
Due after one year through five years	391,466		401,757
Due after five years through ten years	221,525		222,846
Due after ten years	65,072		65,419
Total	731,510		744,105
Mortgage-backed securities	905,745		922,661
Total available-for-sale debt securities	$	1,637,255	$	1,666,766

December 31, 2019
(In thousands)	Amortized Cost		Fair Value
Available-for-sale debt securities:
Due in one year or less	$	107,975	$	108,089
Due after one year through five years	270,477		274,798
Due after five years through ten years	77,710		79,165
Due after ten years	12,397		12,494
Total	468,559		474,546
Mortgage-backed securities	824,680		824,041
Total available-for-sale debt securities	$	1,293,239	$	1,298,587

The Company also holds non-marketable Federal Home Loan Bank New York (“FHLBNY”) stock, non-marketable Federal Home Loan Bank Pittsburgh (“FHLBPITT”) stock and non-marketable Atlantic Community Bankers Bank ("ACBB") stock, all of which are required to be held for regulatory purposes and for borrowing availability. The required investment in FHLB stock is tied to the Company’s borrowing levels with the FHLB. Holdings of FHLBNY stock, FHLBPITT stock, and ACBB stock totaled $11.9 million, $5.9 million and $95,000 at September 30, 2020, respectively. These securities are carried at par, which is also cost. The FHLBNY and FHLBPITT continue to pay dividends and repurchase stock. Quarterly, we evaluate our investment in the FHLB for impairment. We evaluate recent and long-term operating performance, liquidity, funding and capital positions, stock repurchase history, dividend history and impact of legislative and regulatory changes. Based on our most recent evaluation, as of September 30, 2020, we have determined that no impairment write-downs are currently required.

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Loans and Leases

9 Months Ended

Sep. 30, 2020

Receivables [Abstract]

Loans and Leases

Loans and Leases

Loans and leases at September 30, 2020 and December 31, 2019 were as follows:

(In thousands)	9/30/2020		12/31/2019
Commercial and industrial
Agriculture	$	89,068	$	105,786
Commercial and industrial other	790,749		902,275
PPP loans*	464,058		0
Subtotal commercial and industrial	1,343,875		1,008,061
Commercial real estate
Construction	182,605		213,637
Agriculture	198,049		184,898
Commercial real estate other	2,161,954		2,045,030
Subtotal commercial real estate	2,542,608		2,443,565
Residential real estate
Home equity	206,456		219,245
Mortgages	1,228,629		1,158,592
Subtotal residential real estate	1,435,085		1,377,837
Consumer and other
Indirect	9,534		12,964
Consumer and other	64,346		61,446
Subtotal consumer and other	73,880		74,410
Leases	14,877		17,322
Total loans and leases	5,410,325		4,921,195
Less: unearned income and deferred costs and fees	(12,028)		(3,645)
Total loans and leases, net of unearned income and deferred costs and fees	$	5,398,297	$	4,917,550
*Paycheck Protection Program ("PPP")

The Company has adopted comprehensive lending policies, underwriting standards and loan review procedures. Management reviews these policies and procedures on a regular basis. The Company discussed its lending policies and underwriting guidelines for its various lending portfolios in Note 3 – “Loans and Leases” in the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. There have been no significant changes in these policies and guidelines since the date of that report. As such, these policies are reflective of new originations as well as those balances held at September 30, 2020. The Company’s Board of Directors approves the lending policies at least annually. The Company recognizes that exceptions to policy guidelines may occasionally occur and has established procedures for approving exceptions to these policy guidelines. Management has also implemented reporting systems to monitor loan origination, loan quality, concentrations of credit, loan delinquencies and nonperforming loans and potential problem loans.

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

The below table is an age analysis of past due loans, segregated by class of loans, as of September 30, 2020 and December 31, 2019.

September 30, 2020
(In thousands)	30-59 Days		60-89 Days		90 Days or More		Total Past Due		Current Loans		Total Loans
Loans and Leases
Commercial and industrial
Agriculture	$	0	$	0	$	0	$	0	$	89,068	$	89,068
Commercial and industrial other	923		96		1,443		2,462		788,287		790,749
PPP loans*	0		0		0		0		464,058		464,058
Subtotal commercial and industrial	923		96		1,443		2,462		1,341,413		1,343,875
Commercial real estate
Construction	0		0		0		0		182,605		182,605
Agriculture	0		0		0		0		198,049		198,049
Commercial real estate other	2,255		1,079		12,477		15,811		2,146,143		2,161,954
Subtotal commercial real estate	2,255		1,079		12,477		15,811		2,526,797		2,542,608
Residential real estate
Home equity	475		135		1,079		1,689		204,767		206,456
Mortgages	482		1,183		2,649		4,314		1,224,315		1,228,629
Subtotal residential real estate	957		1,318		3,728		6,003		1,429,082		1,435,085
Consumer and other
Indirect	86		32		57		175		9,359		9,534
Consumer and other	119		10		154		283		64,063		64,346
Subtotal consumer and other	205		42		211		458		73,422		73,880
Leases	0		0		0		0		14,877		14,877
Total loans and leases	4,340		2,535		17,859		24,734		5,385,591		5,410,325
Less: unearned income and deferred costs and fees	0		0		0		0		(12,028)		(12,028)
Total loans and leases, net of unearned income and deferred costs and fees	$	4,340	$	2,535	$	17,859	$	24,734	$	5,373,563	$	5,398,297

December 31, 2019
(In thousands)	30-89 Days		90 Days or More		Current Loans		Total Loans		90 days and accruing1		Nonaccrual
Loans and Leases
Commercial and industrial
Agriculture	$	0	$	65	$	105,721	$	105,786	$	0	$	0
Commercial and industrial other	413		2,081		899,781		902,275		2		2,335
Subtotal commercial and industrial	413		2,146		1,005,502		1,008,061		2		2,335
Commercial real estate
Construction	0		0		213,637		213,637		0		0
Agriculture	0		0		184,898		184,898		0		0
Commercial real estate other	1,140		10,780		2,033,110		2,045,030		542		10,789
Subtotal commercial real estate	1,140		10,780		2,431,645		2,443,565		542		10,789
Residential real estate
Home equity	348		727		218,170		219,245		55		2,796
Mortgages	1,344		3,985		1,153,263		1,158,592		195		8,086
Subtotal residential real estate	1,692		4,712		1,371,433		1,377,837		250		10,882
Consumer and other
Indirect	312		60		12,592		12,964		0		117
Consumer and other	167		66		61,213		61,446		0		158
Subtotal consumer and other	479		126		73,805		74,410		0		275
Leases	0		0		17,322		17,322		0		0
Total loans and leases	3,724		17,764		4,899,707		4,921,195		794		24,281
Less: unearned income and deferred costs and fees	0		0		(3,645)		(3,645)		0		0
Total loans and leases, net of unearned income and deferred costs and fees	$	3,724	$	17,764	$	4,896,062	$	4,917,550	$	794	$	24,281

1 Includes acquired loans that were recorded at fair value at the acquisition date.

The following table presents the amortized cost basis of loans on nonaccrual status and the amortized cost basis of loans on nonaccrual status for which there was no related allowance for credit losses. The below table is an age analysis of nonaccrual loans, segregated by class of loans, as of September 30, 2020.

(In thousands)	Nonaccrual Loans with no Allowance for Credit Losses		Nonaccrual Loans		Loans Past Due Over 89 Days and Accruing
Loans and Leases
Commercial and industrial
Commercial and industrial other	$	1,469	$	1,636	$	0
Subtotal commercial and industrial	1,469		1,636		0
Commercial real estate
Agriculture	120		120		0
Commercial real estate other	10,092		12,657		0
Subtotal commercial real estate	10,212		12,777		0
Residential real estate
Home equity	2,793		2,793		0
Mortgages	9,410		9,410		0
Subtotal residential real estate	12,203		12,203		0
Consumer and other
Indirect	144		144		0
Consumer and other	184		184		0
Subtotal consumer and other	328		328		0
Leases	0		0		0
Total loans and leases	$	24,212	$	26,944	$	0

The Company recognized $0 of interest income on nonaccrual loans during the three and nine months ended September 30, 2020.

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Allowance for Credit Losses

9 Months Ended

Sep. 30, 2020

Receivables [Abstract]

Allowance for Credit Losses

Allowance for Credit Losses

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

The Company uses a DCF method to estimate expected credit losses for all loan segments excluding the leasing segment. For each of these loan segments, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, recovery lag probability of default, and loss give 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 are also considered by management when developing the forecast metrics.

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

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

The Company adopted ASU 2016-13 using the prospective transition approach for financial assets purchased with credit deterioration ("PCD") that were previously classified as purchased credit impaired ("PCI") and accounted for under ASC 310-30. In accordance with the standard, the Company did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. The remaining discount on the PCD assets will be accreted into interest income on a level-yield method over the life of the loans.

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 September 30, 2020, 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 and State regulatory agencies, as part of their examination process, review the Company's allowance and may require the Company to recognize additions to the allowance bases on their judgements and information available to them at the time of their examinations.

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

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

The following table details activity in the allowance for credit losses on loans for the three and nine months ended September 30, 2020 and 2019. As previously discussed, the Company adopted ASU 2016-13 on January 1, 2020 using the modified retrospective approach. Results for the periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable U.S. GAAP. The transition adjustment included a decrease in the allowance of $2.5 million. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

Three Months Ended September 30, 2020
(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer and Other		Finance Leases		Total
Allowance for credit losses:
Beginning balance	$	11,113	$	24,286	$	15,012	$	1,596	$	75	$	52,082
Charge-offs	0		0		(30)		(145)		0		(175)
Recoveries	89		9		16		73		0		187
Provision (credit) for credit loss expense	(3,918)		4,264		(65)		(75)		(7)		199
Ending Balance	$	7,284	$	28,559	$	14,933	$	1,449	$	68	$	52,293

Three Months Ended September 30, 2019
(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer and Other		Finance Leases		Total
Allowance for credit losses:
Beginning balance	$	11,543	$	21,005	$	6,897	$	1,345	$	0	$	40,790
Charge-offs	(6)		(551)		(87)		(190)		0		(834)
Recoveries	10		2		15		68		0		95
Provision (credit) for credit loss expense	(256)		2,143		(733)		166		0		1,320
Ending Balance	$	11,291	$	22,599	$	6,092	$	1,389	$	0	$	41,371

Nine Months Ended September 30, 2020
(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer and Other		Finance Leases		Total
Allowance for credit losses:
Beginning balance, prior to adoption of ASC 326	$	10,541	$	21,608	$	6,381	$	1,362	$	0	$	39,892
Impact of adopting ASC 326	(2,008)		(5,917)		4,459		850		82		(2,534)
Charge-offs	(1)		(1,305)		(33)		(409)		0		(1,748)
Recoveries	125		40		178		195		0		538
Provision (credit) for credit loss expense	(1,373)		14,133		3,948		(549)		(14)		16,145
Ending Balance	$	7,284	$	28,559	$	14,933	$	1,449	$	68	$	52,293

Nine Months Ended September 30, 2019
(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer and Other		Finance Leases		Total
Allowance for credit losses:
Beginning balance	$	11,272	$	23,483	$	7,345	$	1,310	$	0	$	43,410
Charge-offs	(489)		(3,949)		(131)		(571)		0		(5,140)
Recoveries	92		107		319		217		0		735
Provision (credit) for credit loss expense	416		2,958		(1,441)		433		0		2,366
Ending Balance	$	11,291	$	22,599	$	6,092	$	1,389	$	0	$	41,371

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

(In thousands)	Real Estate		Business Assets		Other		Total		ACL Allocation
September 30, 2020
Commercial and Industrial	$	33	$	507	$	50	$	590	$	48
Commercial Real Estate	8,085		0		0		8,085		436
Commercial Real Estate - Agriculture	1,559		0		0		1,559		0
Residential - Mortgages	384		0		0		384		2
Total	$	10,061	$	507	$	50	$	10,618	$	486

The following tables present information pertaining to the allocation of the allowance for credit losses as of December 31, 2019, as determined in accordance with ASC 310, prior to the adoption of ASU 2016-13:

(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer and Other		Finance Leases		Total
Allowance for originated loans and leases
December 31, 2019
Individually evaluated for impairment	$	245	$	662	$	0	$	0	$	0	$	907
Collectively evaluated for impairment	10,296		20,895		6,360		1,356		0		38,907
Ending balance	$	10,541	$	21,557	$	6,360	$	1,356	$	0	$	39,814

(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer and Other		Finance Leases		Total
Allowance for acquired loans
December 31, 2019
Individually evaluated for impairment	$	0	$	0	$	0	$	0	$	0	$	0
Collectively evaluated for impairment	0		51		21		6		0		78
Ending balance	$	0	$	51	$	21	$	6	$	0	$	78

The recorded investment in loans and leases summarized on the basis of the Company’s impairment methodology as of December 31, 2019 was as follows:

(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer  and Other		Finance Leases		Total
Originated loans and leases
December 31, 2019
Individually evaluated for impairment	$	2,110	$	13,496	$	3,779	$	0	$	0	$	19,385
Collectively evaluated for impairment	966,875		2,283,152		1,340,687		73,625		17,322		4,681,661
Total	$	968,985	$	2,296,648	$	1,344,466	$	73,625	$	17,322	$	4,701,046

(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer  and Other		Finance Leases		Total
Acquired loans
December 31, 2019
Individually evaluated for impairment	$	2	$	714	$	2,114	$	0	$	0	$	2,830
Loans acquired with deteriorated credit quality	173		5,674		3,302		0		0		9,149
Collectively evaluated for impairment	38,901		140,529		27,955		785		0		208,170
Total	$	39,076	$	146,917	$	33,371	$	785	$	0	$	220,149

Prior to the adoption of ASC 326, a loan was considered impaired when, based on current information and events, it was probable that we would be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans consisted of non-homogenous nonaccrual loans, and all loans restructured in a troubled debt restructuring (TDR). Specific reserves on individually identified impaired loans that were not collateral dependent were measured based on the present value of expected future cash flows discounted at the original effective interest rate of each loan. For loans that were collateral dependent, impairment was measured based on the fair value of the collateral less estimated selling costs, and such impaired amounts were generally charged off. The majority of impaired loans were collateral dependent impaired loans that had limited exposure or require limited specific reserves because of the amount of collateral support with respect to these loans, and previous charge-offs. Interest payments on impaired 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.

Impaired loans at December 31, 2019 were as follows: 

	December 31, 2019
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
Originated loans and leases with no related allowance
Commercial & industrial
Commercial and industrial other	$	1,865	$	1,965	$	0
Commercial real estate
Commercial real estate other	10,205		11,017		0
Residential real estate
Home equity	3,779		3,992		0
Subtotal	$	15,849	$	16,974	$	0
Originated loans and leases with related allowance
Commercial & industrial
Commercial and industrial other	245		245		245
Commercial real estate
Commercial real estate other	3,291		3,291		662
Subtotal	$	3,536	$	3,536	$	907
Total	$	19,385	$	20,510	$	907

	December 31, 2019
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
Acquired loans with no related allowance
Commercial & industrial
Commercial and industrial other	$	2	$	2	$	0
Commercial real estate
Commercial real estate other	714		714		0
Residential real estate
Home equity	2,114		2,217		0
Total	$	2,830	$	2,933	$	0

The following table presents average impaired loans, as determined in accordance with ASC 310, prior to the adoption of ASU 2016-13, and interest recognized on such loans, for the three months ended September 30, 2019: 

	Three Months Ended September 30, 2019
(In thousands)	Average Recorded Investment		Interest Income Recognized
Originated loans and leases with no related allowance
Commercial & industrial
Commercial and industrial other	$	1,505	$	0
Commercial real estate
Commercial real estate other	7,380		0
Residential real estate
Home equity	3,963		0
Subtotal	$	12,848	$	0
Originated loans and leases with related allowance
Commercial & industrial
Commercial and industrial other	273		0
Commercial real estate
Commercial real estate other	1,708		0
Subtotal	$	1,981	$	0
Total	$	14,829	$	0

	Three Months Ended September 30, 2019
(In thousands)	Average Recorded Investment		Interest Income Recognized
Acquired loans and leases with no related allowance
Commercial & industrial
Commercial and industrial other	$	29	$	0
Commercial real estate
Commercial real estate other	857		0
Residential real estate
Home equity	2,585		0
Total	$	3,471	$	0

The average recorded investment and interest income recognized on impaired loans for the nine months ended September 30, 2019 was as follows:

	Nine Months Ended September 30, 2019
(In thousands)	Average Recorded Investment		Interest Income Recognized
Originated loans and leases with no related allowance
Commercial & industrial
Commercial and industrial other	$	2,123	$	0
Commercial real estate
Commercial real estate other	6,509		0
Residential real estate
Home equity	3,978		0
Subtotal	$	12,610	$	0
Originated loans and leases with related allowance
Commercial & industrial
Commercial and industrial other	154		0
Commercial real estate
Commercial real estate other	757		0
Subtotal	$	911	$	0
Total	$	13,521	$	0

	Nine Months Ended September 30, 2019
(In thousands)	Average Recorded Investment		Interest Income Recognized
Acquired loans and leases with no related allowance
Commercial & industrial
Commercial and industrial other	$	28	$	0
Commercial real estate
Commercial real estate other	834		0
Residential real estate
Home equity	2,606		0
Total	$	3,468	$	0

Loans are considered modified in a TDR when, due to a borrower’s financial difficulties, the Company makes concessions to the borrower that it would not otherwise consider. These modifications may include, among others, an extension for the term of the loan, and granting a period when interest-only payments can be made with the principal payments made over the remaining term of the loan or at maturity.

The following tables present information on loans modified in troubled debt restructuring during the periods indicated. Post-modification amounts are presented as of September 30, 2020 and 2019.

	Three Months Ended
September 30, 2020						Defaulted TDRs2
(In thousands)	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans		Post-Modification Outstanding Recorded Investment
Commercial real estate
Commercial real estate other1	1	$	196	$	196	0		$	0
Consumer and other
Consumer and other1	1	$	4	$	4	$	0	$	0
Total	2	$	200	$	200	0		$	0

 1 Represents the following concessions:  extension of term and reduction of rate.

2 TDRs that defaulted during the three months ended September 30, 2020 that were restructured in the prior twelve months.

	Three Months Ended
September 30, 2019						Defaulted TDRs2
(In thousands)	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans		Post-Modification Outstanding Recorded Investment
Commercial and Industrial
Commercial and industrial other1	1	$	9	$	9	0		$	0
Commercial real estate
Commercial real estate other1	1	$	1,577	$	1,577	0		$	0
Residential real estate
Home equity1	0	$	0	$	0	$	1	$	93
Total	2	$	1,586	$	1,586	1		$	93

 1 Represents the following concessions:  extension of term and reduction of rate.

2 TDRs that defaulted during the three months ended September 30, 2019 that were restructured in the prior twelve months.

	Nine Months Ended
September 30, 2020						Defaulted TDRs2
(In thousands)	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Post- Modification Outstanding Recorded Investment
Commercial & industrial
Commercial and industrial other1	0	$	0	$	0	0	$	0
Commercial real estate
Commercial real estate other1	1	196		196		1	37
Residential real estate
Home equity1	2	121		121		1	87
Consumer and other
Consumer and other1	1	$	4	$	4	0	$	0
Total	4	$	321	$	321	2	$	124

1 Represents the following concessions:  extension of term and reduction of rate.

2 TDRs that defaulted during the nine months ended September 30, 2020 that were restructured in the prior twelve months.

	Nine Months Ended
September 30, 2019						Defaulted TDRs2
(In thousands)	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Post- Modification Outstanding Recorded Investment
Commercial & industrial
Commercial and industrial other1	2	$	604	$	604	0	$	0
Commercial real estate
Commercial real estate other1	1	$	1,577	$	1,577	0	$	0
Residential real estate
Home equity1	1	$	168	$	168	1	$	93
Total	4	$	2,349	$	2,349	1	$	93

1 Represents the following concessions:  extension of term and reduction of rate.

2 TDRs that defaulted during the nine months ended September 30, 2019 that were restructured in the prior twelve months.

The following table presents credit quality indicators by total loans on an amortized cost basis by origination year as of September 30, 2020.

(In thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total Loans
Commercial & Industrial - Other:
Pass	$	61,772	$	78,283	$	61,289	$	65,282	$	38,317	$	303,190	$	160,124	$	11,790	$	780,047
Special Mention	69		494		529		1,281		2,458		26		1,456		0		6,313
Substandard	42		60		999		265		312		879		1,832		0		4,389
Total Commercial & Industrial - Other	$	61,883	$	78,837	$	62,817	$	66,828	$	41,087	$	304,095	$	163,412	$	11,790	$	790,749
Commercial and Industrial - PPP:
Pass	$	464,058	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	464,058
Special Mention	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Substandard	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Total Commercial and Industrial - PPP	$	464,058	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	464,058
Commercial and Industrial - Agriculture:
Pass	$	11,203	$	9,128	$	13,160	$	7,060	$	3,857	$	2,934	$	33,800	$	467	$	81,609
Special Mention	0		0		59		771		0		0		1,681		0		2,511
Substandard	100		91		0		220		0		2,309		2,228		0		4,948
Total Commercial and Industrial - Agriculture	$	11,303	$	9,219	$	13,219	$	8,051	$	3,857	$	5,243	$	37,709	$	467	$	89,068
Commercial Real Estate
Pass	$	157,664	$	234,828	$	240,343	$	246,787	$	304,856	$	732,205	$	65,076	$	44,039	$	2,025,798
Special Mention	0		14,439		19,172		6,869		34,367		30,733		526		0		106,106
Substandard	349		1,700		739		3,608		924		22,385		345		0		30,050
Total Commercial Real Estate	$	158,013	$	250,967	$	260,254	$	257,264	$	340,147	$	785,322	$	65,947	$	44,039	$	2,161,954
Commercial Real Estate - Agriculture:
Pass	$	16,925	$	35,850	$	44,991	$	21,833	$	17,562	$	45,966	$	121	$	5,655	$	188,903
Special Mention	1,516		0		579		1,379		1,064		150		0		0		4,688
Substandard	0		0		0		1,779		718		1,569		392		0		4,458
Total Commercial Real Estate - Agriculture	$	18,441	$	35,850	$	45,570	$	24,991	$	19,344	$	47,685	$	513	$	5,655	$	198,049
Commercial Real Estate - Construction
Pass	$	12,983	$	22,285	$	8,019	$	2,629	$	2,018	$	8,324	$	107,970	$	15,434	$	179,662
Special Mention	0		0		0		0		0		529		2,085		0		2,614
Substandard	0		0		0		0		0		329		0		0		329
Total Commercial Real Estate - Construction	$	12,983	$	22,285	$	8,019	$	2,629	$	2,018	$	9,182	$	110,055	$	15,434	$	182,605

The following table presents credit quality indicators by total loans on an amortized cost basis by origination year as of September 30, 2020, continued.

(In thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total Loans
Residential - Home Equity
Performing	$	1,297	$	2,801	$	1,235	$	2,088	$	823	$	1,573	$	192,549	$	1,297	$	203,663
Nonperforming	0		18		0		0		197		390		2,188		0		2,793
Total Residential - Home Equity	$	1,297	$	2,819	$	1,235	$	2,088	$	1,020	$	1,963	$	194,737	$	1,297	$	206,456
Residential - Mortgages
Performing	$	232,860	$	198,718	$	129,779	$	166,414	$	191,858	$	286,255	$	12,391	$	944	$	1,219,219
Nonperforming	0		262		402		368		1,213		7,105		60		0		9,410
Total Residential - Mortgages	$	232,860	$	198,980	$	130,181	$	166,782	$	193,071	$	293,360	$	12,451	$	944	$	1,228,629
Consumer - Direct
Performing	$	12,884	$	12,595	$	8,728	$	7,534	$	3,219	$	11,904	$	7,298	$	0	$	64,162
Nonperforming	0		29		115		13		0		3		24		$	0	184
Total Consumer - Direct	$	12,884	$	12,624	$	8,843	$	7,547	$	3,219	$	11,907	$	7,322	$	0	$	64,346
Consumer - Indirect
Performing	$	1,266	$	2,200	$	3,840	$	1,388	$	521	$	175	$	0	$	0	$	9,390
Nonperforming	0		61		33		3		30		17		0		0		144
Total Consumer Indirect	$	1,266	$	2,261	$	3,873	$	1,391	$	551	$	192	$	0	$	0	$	9,534

The following tables present credit quality indicators (internal risk grade) by class of commercial and industrial loans and commercial real estate loans as of December 31, 2019. 

December 31, 2019
(In thousands)	Commercial & Industrial Other		Commercial & Industrial Agriculture		Commercial Real Estate Other		Commercial Real Estate Agriculture		Commercial Real Estate Construction		Total
Originated Loans and Leases
Internal risk grade:
Pass	$	851,517	$	89,892	$	1,857,142	$	166,888	$	212,302	$	3,177,741
Special Mention	8,306		1,698		16,623		3,173		0		29,800
Substandard	3,376		14,196		25,880		14,640		0		58,092
Total	$	863,199	$	105,786	$	1,899,645	$	184,701	$	212,302	$	3,265,633

December 31, 2019
(In thousands)	Commercial & Industrial Other		Commercial & Industrial Agriculture		Commercial Real Estate Other		Commercial Real Estate Agriculture		Commercial Real Estate Construction		Total
Acquired Loans and Leases
Internal risk grade:
Pass	$	38,879	$	0	$	143,175	$	197	$	1,335	$	183,586
Special Mention	0		0		0		0		0		0
Substandard	197		0		2,210		0		0		2,407
Total	$	39,076	$	0	$	145,385	$	197	$	1,335	$	185,993

The following tables present credit quality indicators by class of residential real estate loans and by class of consumer loans. Nonperforming loans include nonaccrual, impaired, and loans 90 days past due and accruing interest. All other loans were considered performing as of December 31, 2019. For purposes of this footnote, acquired loans that were recorded at fair value at the acquisition date and are 90 days or greater past due are considered performing.

December 31, 2019
(In thousands)	Residential Home Equity		Residential Mortgages		Consumer Indirect		Consumer Other		Total
Originated Loans and Leases
Performing	$	201,970	$	1,133,237	$	12,847	$	60,503	$	1,408,557
Nonperforming	1,924		7,335		117		158		9,534
Total	$	203,894	$	1,140,572	$	12,964	$	60,661	$	1,418,091

December 31, 2019
(In thousands)	Residential Home Equity		Residential Mortgages		Consumer Indirect		Consumer Other		Total
Acquired Loans and Leases
Performing	$	14,479	$	17,269	$	0	$	785	$	32,533
Nonperforming	872		751		0		0		1,623
Total	$	15,351	$	18,020	$	0	$	785	$	34,156

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Earnings Per Share

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Earnings per share in the table below, for the three and nine month periods ended September 30, 2020 and 2019 are calculated under the two-class method as required by ASC Topic 260, Earnings Per Share. ASC 260 provides that unvested share-based payment awards that contain nonforfeitable rights to dividends are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. The Company has issued restricted stock awards that contain such rights and are therefore considered participating securities. Basic earnings per common share are calculated by dividing net income allocable to common stock by the weighted average number of common shares, excluding participating securities, during the period. Diluted earnings per common share include the dilutive effect of participating securities.

	Three Months Ended
(In thousands, except share and per share data)	9/30/2020		9/30/2019
Basic
Net income available to common shareholders	$	24,230	$	20,206
Less: income attributable to unvested stock-based compensation awards	(278)		(317)
Net earnings allocated to common shareholders	23,952		19,889
Weighted average shares outstanding, including unvested stock-based compensation awards	14,920,924		15,063,202
Less: average unvested stock-based compensation awards	(223,392)		(236,088)
Weighted average shares outstanding - Basic	14,697,532		14,827,114
Diluted
Net earnings allocated to common shareholders	23,952		19,889
Weighted average shares outstanding - Basic	14,697,532		14,827,114
Plus:  incremental shares from assumed conversion of stock-based compensation awards	30,209		60,512
Weighted average shares outstanding - Diluted	14,727,741		14,887,626
Basic EPS	$	1.63	$	1.34
Diluted EPS	$	1.63	$	1.34

Stock-based compensation awards representing 10,449 and 17,956 of common shares during the three months ended September 30, 2020 and 2019, respectively, were not included in the computations of diluted earnings per common share because the effect on those periods would have been anti-dilutive.

	Nine Months Ended
(In thousands, except share and per share data)	9/30/2020		9/30/2019
Basic
Net income available to common shareholders	$	53,610	$	60,638
Less: income attributable to unvested stock-based compensation awards	(628)		(972)
Net earnings allocated to common shareholders	52,982		59,666
Weighted average shares outstanding, including unvested stock-based compensation awards	14,929,628		15,204,170
Less: unvested stock-based compensation awards	(230,181)		(236,088)
Weighted average shares outstanding - Basic	14,699,447		14,968,082
Diluted
Net earnings allocated to common shareholders	52,982		59,666
Weighted average shares outstanding - Basic	14,699,447		14,968,082
Plus: incremental shares from assumed conversion of stock-based compensation awards	39,474		67,698
Weighted average shares outstanding - Diluted	14,738,921		15,035,780
Basic EPS	$	3.60	$	3.99
Diluted EPS	$	3.59	$	3.97

Stock-based compensation awards representing approximately 10,090 and 18,396 of common shares during the nine months ended September 30, 2020 and 2019, respectively were not included in the computations of diluted earnings per common share because the effect on those periods would have been anti-dilutive.

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Other Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2020

Stockholders' Equity Note [Abstract]

Other Comprehensive Income (Loss)

Other Comprehensive Income (Loss)

The following tables present reclassifications out of accumulated other comprehensive income (loss) for the three and nine month periods ended September 30, 2020 and 2019.

	Three Months Ended September 30, 2020
(In thousands)	Before-Tax Amount		Tax (Expense) Benefit		Net of Tax
Available-for-sale debt securities:
Change in net unrealized gain/loss during the period	$	(4,374)	$	1,071	$	(3,303)
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	0		0		0
Net unrealized gains/losses	(4,374)		1,071		(3,303)
Employee benefit plans:
Amortization of net retirement plan actuarial gain	593		(146)		447
Amortization of net retirement plan prior service cost	53		(13)		40
Employee benefit plans	646		(159)		487
Other comprehensive (loss) income	$	(3,728)	$	912	$	(2,816)

	Three Months Ended September 30, 2019
(In thousands)	Before-Tax Amount		Tax (Expense) Benefit		Net of Tax
Available-for-sale debt securities:
Change in net unrealized gain/loss during the period	$	4,122	$	(1,011)	$	3,111
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	(133)		32		(101)
Net unrealized gains/losses	3,989		(979)		3,010
Employee benefit plans:
Amortization of net retirement plan actuarial gain	411		(101)		310
Amortization of net retirement plan prior service cost	4		(1)		3
Employee benefit plans	415		(102)		313
Other comprehensive income	$	4,404	$	(1,081)	$	3,323

	Nine Months Ended September 30, 2020
(In thousands)	Before-Tax Amount		Tax (Expense) Benefit		Net of Tax
Available-for-sale debt securities:
Change in net unrealized gain/loss during the period	$	24,592	$	(6,029)	$	18,563
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	(429)		105		(324)
Net unrealized gains/losses	24,163		(5,924)		18,239
Employee benefit plans:
Amortization of net retirement plan actuarial loss	1,775		(435)		1,340
Amortization of net retirement plan prior service cost	160		(39)		121
Employee benefit plans	1,935		(474)		1,461
Other comprehensive income	$	26,098	$	(6,398)	$	19,700

	Nine Months Ended September 30, 2019
(In thousands)	Before-Tax Amount		Tax (Expense) Benefit		Net of Tax
Available-for-sale debt securities:
Change in net unrealized gain/loss during the period	$	34,014	$	(8,333)	$	25,681
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	(404)		99		(305)
Net unrealized gains/losses	33,610		(8,234)		25,376
Employee benefit plans:
Amortization of net retirement plan actuarial loss	1,232		(302)		930
Amortization of net retirement plan prior service cost	11		(3)		8
Employee benefit plans	1,243		(305)		938
Other comprehensive income	$	34,853	$	(8,539)	$	26,314

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

(In thousands)	Available-for- Sale Debt Securities		Employee Benefit Plans		Accumulated Other Comprehensive (Loss) Income
Balance at July 1, 2020	$	25,581	$	(46,629)	$	(21,048)
Other comprehensive (loss) income before reclassifications	(3,303)		0		(3,303)
Amounts reclassified from accumulated other comprehensive (loss) income	0		487		487
Net current-period other comprehensive (loss) income	(3,303)		487		(2,816)
Balance at September 30, 2020	$	22,278	$	(46,142)	$	(23,864)
Balance at January 1, 2020	$	4,039	$	(47,603)	$	(43,564)
Other comprehensive (loss) income before reclassifications	18,563		0		18,563
Amounts reclassified from accumulated other comprehensive (loss) income	(324)		1,461		1,137
Net current-period other comprehensive income	18,239		1,461		19,700
Balance at September 30, 2020	$	22,278	$	(46,142)	$	(23,864)

(In thousands)	Available-for- Sale Debit Securities		Employee Benefit Plans		Accumulated Other Comprehensive (Loss) Income
Balance at July 1, 2019	$	(1,223)	$	(38,951)	$	(40,174)
Other comprehensive income (loss) before reclassifications	3,111		0		3,111
Amounts reclassified from accumulated other comprehensive (loss) income	(101)		313		212
Net current-period other comprehensive income	3,010		313		3,323
Balance at September 30, 2019	$	1,787	$	(38,638)	$	(36,851)
Balance at January 1, 2019	$	(23,589)	$	(39,576)	$	(63,165)
Other comprehensive income (loss) before reclassifications	25,681		0		25,681
Amounts reclassified from accumulated other comprehensive (loss) income	(305)		938		633
Net current-period other comprehensive income	25,376		938		26,314
Balance at September 30, 2019	$	1,787	$	(38,638)	$	(36,851)

The following tables present the amounts reclassified out of each component of accumulated other comprehensive (loss) income for the three and nine months ended September 30, 2020 and 2019.

Three Months Ended September 30, 2020
Details about Accumulated other Comprehensive Income (Loss) Components (In thousands)	Amount Reclassified from Accumulated Other Comprehensive (Loss) Income1		Affected Line Item in the Statement Where Net Income is Presented
Available-for-sale debt securities:
Unrealized gains and losses on available-for-sale debt securities	$	0	Net gain on securities transactions
	0		Tax expense
	0		Net of tax
Employee benefit plans:
Amortization of the following 2
Net retirement plan actuarial loss	(593)		Other operating expense
Net retirement plan prior service cost	(53)		Other operating expense
	(646)		Total before tax
	159		Tax benefit
	$	(487)	Net of tax

Three Months Ended September 30, 2019
Details about Accumulated other Comprehensive Income (Loss) Components (In thousands)	Amount Reclassified from Accumulated Other Comprehensive (Loss) Income1		Affected Line Item in the Statement Where Net Income is Presented
Available-for-sale debt securities:
Unrealized gains and losses on available-for-sale debt securities	$	133	Net gain on securities transactions
	(32)		Tax expense
	101		Net of tax
Employee benefit plans:
Amortization of the following2
Net retirement plan actuarial loss	(411)		Other operating expense
Net retirement plan prior service cost	(4)		Other operating expense
	(415)		Total before tax
	102		Tax benefit
	$	(313)	Net of tax

Nine Months Ended September 30, 2020
Details about Accumulated other Comprehensive Income (Loss) Components (In thousands)	Amount Reclassified from Accumulated Other Comprehensive (Loss) Income1		Affected Line Item in the Statement Where Net Income is Presented
Available-for-sale debt securities:
Unrealized gains and losses on available-for-sale debt securities	$	429	Net gain on securities transactions
	(105)		Tax expense
	324		Net of tax
Employee benefit plans:
Amortization of the following2
Net retirement plan actuarial loss	(1,775)		Other operating expense
Net retirement plan prior service cost	(160)		Other operating expense
	(1,935)		Total before tax
	474		Tax benefit
	$	(1,461)	Net of tax

Nine Months Ended September 30, 2019
Details about Accumulated other Comprehensive Income (Loss) Components (In thousands)	Amount Reclassified from Accumulated Other Comprehensive (Loss) Income1		Affected Line Item in the Statement Where Net Income is Presented
Available-for-sale debt securities:
Unrealized gains and losses on available-for-sale debt securities	$	404	Net gain on securities transactions
	(99)		Tax expense
	305		Net of tax
Employee benefit plans:
Amortization of the following2
Net retirement plan actuarial loss	(1,232)		Other operating expense
Net retirement plan prior service cost	(11)		Other operating expense
	(1,243)		Total before tax
	305		Tax benefit
	$	(938)	Net of tax

1 Amounts in parentheses indicated debits in income statement.

2 The accumulated other comprehensive (loss) income components are included in the computation of net periodic benefit cost (See Note 8 - “Employee Benefit Plan”).

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Employee Benefit Plan

9 Months Ended

Sep. 30, 2020

Retirement Benefits [Abstract]

Employee Benefit Plan

Employee Benefit Plans

The following table sets forth the amount of the net periodic benefit cost recognized by the Company for the Company’s pension plan, post-retirement plan (Life and Health), and supplemental employee retirement plans (“SERP”) including the following components: service cost, interest cost, expected return on plan assets for the period, amortization of the unrecognized transitional obligation or transition asset, and the amounts of recognized gains and losses, prior service cost recognized, and gain or loss recognized due to settlement or curtailment.

Components of Net Periodic Benefit Cost

	Pension Benefits Three Months Ended				Life and Health Three Months Ended				SERP Benefits Three Months Ended
(In thousands)	9/30/2020		9/30/2019		9/30/2020		9/30/19		9/30/2020		9/30/2019
Service cost	$	0	$	0	$	43	$	40	$	54	$	38
Interest cost	593		734		61		72		228		228
Expected return on plan assets	(1,354)		(1,233)		0		0		0		0
Amortization of net retirement plan actuarial loss	353		333		39		0		200		78
Amortization of net retirement plan prior service (credit) cost	(2)		(3)		(15)		(15)		71		22
Net periodic benefit (income) cost	$	(410)	$	(169)	$	128	$	97	$	553	$	366

	Pension Benefits Nine Months Ended				Life and Health Nine Months Ended				SERP Benefits Nine Months Ended
(In thousands)	9/30/2020		9/30/2019		9/30/2020		9/30/2019		9/30/2020		9/30/2019
Service cost	$	0	$	0	$	129	$	120	$	161	$	115
Interest cost	1,778		2,202		183		217		685		684
Expected return on plan assets	(4,062)		(3,699)		0		0		0		0
Amortization of net retirement plan actuarial loss	1,058		1,000		116		0		600		232
Amortization of net retirement plan prior service cost (credit)	(7)		(8)		(45)		(46)		214		65
Net periodic benefit (income) cost	$	(1,233)	$	(505)	$	383	$	291	$	1,660	$	1,096

The service component of net periodic benefit cost for the Company's benefit plans is recorded as a part of salaries and wages in the consolidated statements of income. All other components are recorded as part of other operating expenses in the consolidated statements of income.

The Company realized approximately $1,461,000 and $938,000, net of tax, as amortization of amounts previously recognized in accumulated other comprehensive (loss) income, for the nine months ended September 30, 2020 and 2019, respectively.

The Company is not required to contribute to the pension plan in 2020, but it may make voluntary contributions. The Company did not contribute to the pension plan in the first nine months of 2020 and 2019.

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Other Income and Operating Expense

9 Months Ended

Sep. 30, 2020

Other Income and Expenses [Abstract]

Other Income and Operating Expense

Other Income and Operating Expense

Other income and operating expense totals are presented in the table below.  Components of these totals exceeding 1% of the aggregate of total noninterest income and total noninterest expenses for any of the periods presented below are stated separately.

	Three Months Ended				Nine Months Ended
(In thousands)	9/30/2020		9/30/2019		9/30/2020		9/30/2019
Noninterest Income
Other service charges	$	720	$	809	$	2,108	$	2,405
Increase in cash surrender value of corporate owned life insurance	559		425		1,617		1,612
Net gains on the sales of loans originated for sale	378		25		1,245		139
Other income	161		704		1,418		2,091
Total other income	$	1,818	$	1,963	$	6,388	$	6,247
Noninterest Expenses
Marketing expense	$	927	$	899	$	2,806	$	3,706
Professional fees	1,398		2,426		4,654		7,169
Legal fees	418		347		955		788
Technology expense	2,941		2,813		8,771		8,016
Cardholder expense	827		811		2,396		2,372
Off-balance sheet commitments	(417)		0		1,273		0
Other expenses	4,195		4,002		13,971		13,400
Total other operating expense	$	10,289	$	11,298	$	34,826	$	35,451

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Revenue Recognition

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

In addition to revenue from loans and securities, the Company also generates revenues from other services provided as described below.

Insurance Commissions and Fees

Fees are earned upon the effective date of bound coverage, as no significant performance obligation remains after coverage is bound. The Company has historically recognized revenue in this manner, with the noted exception related to installment billing discussed below.

Installment Billing - Agency Bill

Revenue associated with the issuance of policies is recognized upon the effective date of the associated policy regardless of the billing method. Revenue is accrued based upon the completion of the performance obligation creating a current asset for the unbilled revenue until such time as an invoice is generated, typically not to exceed twelve months.

Contingent Commissions

Contingent commissions represent a form of variable consideration associated with the same performance obligation, which is the placement of coverage, for which we earn core commissions. Contingent commissions are estimated with an appropriate constraint applied and accrued relative to the recognition of the corresponding core commissions. The resulting effect on the timing of recognition of contingent commissions will more closely follow a similar pattern as our core commissions with true-ups recognized when payments are received or as additional information that affects the estimate becomes available.

Refund of Commissions

The contract with the insurance carrier dictates the level of commissions paid to the Company that will be refunded to the carrier upon cancellation by the policyholder. As a result, the Company has established a liability for the estimated amount of commission to which the Company does not expect to be entitled, and a corresponding reduction to the gross commission received or receivable. The refund liability is updated at the end of each reporting period for changes in circumstances.

Trust & Asset Management

Trust and asset management income is primarily comprised of fees earned from the management and administration of trusts and other customer assets. The Company’s performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days after month end through a direct charge to customers’ accounts. The Company does not earn performance-based incentives. Optional services such as real estate sales and tax return preparation services are also available to existing trust and asset management customers. The Company’s performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e., as incurred). Payment is received shortly after services are rendered.

Mutual Fund & Investment Income

Mutual fund and investment income consists of other recurring revenue streams such as commissions from sales of mutual funds and other investments, investment advisory fees from the Company’s Strategic Asset Management (“SAM”) Services wealth management product. Commissions from the sale of mutual funds and other investments are recognized on trade date, which is when the Company has satisfied its performance obligation. The Company also receives periodic service fees (i.e., trailers) from mutual fund companies typically based on a percentage of net asset value. Trailer revenue is recorded over time, usually monthly or quarterly, as net asset value is determined. Investment advisor fees from the wealth management product is earned over time and based on an annual percentage rate of the net asset value. The investment advisor fees are charged to the customer’s account in advance on the first month of the quarter, and the revenue is recognized over the following three-month period. The Company does engage a third party, LPL Financial, LLC (“LPL”), to satisfy part of this performance obligation, and therefore this income is reported net of any corresponding expenses paid to LPL.

Service Charges on Deposit Accounts

Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, and other deposit account related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.

Card Services Income

Fees, exchange, and other service charges are primarily comprised of debit and credit card income, ATM fees, merchant services income, and other service charges. Debit and credit card income is primarily comprised of interchange fees earned whenever the Company’s debit and credit cards are processed through card payment networks such as Mastercard. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. Merchant services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees. The Company’s performance obligation for fees and exchange are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month.

Other

Other service charges include revenue from processing wire and ACH transfers, lock box service and safe deposit box rental. Both wire transfer fees and lock box services are charged on per item basis. Wire and ACH transfer fees are charged at the time of transfer and charged directly to the customer account. Lock box customers are billed monthly and payments are received in the following month through a direct charge to customers’ accounts. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment. The Company determined that since rentals and renewals occur fairly consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation.

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of ASC 606, for the three and nine months ended September 30, 2020 and 2019.

	Three Months Ended
(In thousands)	09/30/2020		09/30/2019
Noninterest Income
In-scope of Topic 606:
Commissions and Fees	$	8,136	$	7,918
Installment Billing		175		150
Refund of Commissions		(104)		(51)
Contract Liabilities/Deferred Revenue		0		0
Contingent Commissions		709		500
Subtotal Insurance Revenues		8,916		8,517
Trust and Asset Management		3,070		2,920
Mutual Fund & Investment Income		1,222		1,255
Subtotal Investment Service Income		4,292		4,175
Service Charges on Deposit Accounts		1,444		2,191
Card Services Income		2,419		2,550
Other		285		306
Noninterest Income (in-scope of ASC 606)		17,356		17,739
Noninterest Income (out-of-scope of ASC 606)		1,531		1,795
Total Noninterest Income	$	18,887	$	19,534

	Nine Months Ended
(In thousands)	09/30/2020		09/30/2019
Noninterest Income
In-scope of Topic 606:
Commissions and Fees	$	22,545	$	21,984
Installment Billing		96		58
Refund of Commissions		(458)		(31)
Contract Liabilities/Deferred Revenue		(208)		(188)
Contingent Commissions		2,241		2,491
Subtotal Insurance Revenues		24,216		24,314
Trust and Asset Management		8,798		8,417
Mutual Fund & Investment Income		3,616		3,749
Subtotal Investment Service Income		12,414		12,166
Service Charges on Deposit Accounts		4,675		6,210
Card Services Income		6,885		8,090
Other		837		878
Noninterest Income (in-scope of ASC 606)		49,027		51,658
Noninterest Income (out-of-scope of ASC 606)		5,997		5,803
Total Noninterest Income	$	55,024	$	57,461

Contract Balances

Receivables primarily consist of amounts due for insurance and wealth management services performed for which the Company's performance obligations have been fully satisfied. Receivables amounted to $4.8 million and $2.0 million, respectively, at September 30, 2020, compared to $4.7 million and $2.0 million, respectively, at December 31, 2019 and were included in other assets in the accompanying unaudited Consolidated Statements of Condition.

A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). The Company’s noninterest revenue streams, excluding some insurance commissions and fees, are largely based on transactional activity, or standard month-end revenue accruals such as asset management fees based on month-end market values. Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized. The Company does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of September 30, 2020 and December 31, 2019, the Company did not have any significant contract balances.

A contract liability balance is an entity’s obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. The Company often receives cash payments from customers in advance of the Company’s performance resulting in contract liabilities. As of September 30, 2020 and December 31, 2019, contract liabilities were $448,000 and $2,000,000, respectively, and are included within other liabilities in the accompanying unaudited Consolidated Statements of Condition. The liabilities include premiums due to insurance carriers in addition to unearned commission revenue.

The decrease in the contract liability balance during the nine-month period ended September 30, 2020 is primarily a result of timing differences in the recognition of revenue related to contract effective dates along with accompanying cash payments received in advance of satisfying performance obligations.

Contract Acquisition Costs

The Company is required to capitalize, and subsequently amortize into expense, certain incremental costs of obtaining a contract with a customer if these costs are expected to be recovered. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, sales commission). The Company utilizes the practical expedient which allows entities to immediately expense contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less.

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Financial Guarantees

9 Months Ended

Sep. 30, 2020

Guarantees [Abstract]

Financial Guarantees

Financial Guarantees

The Company currently does not issue any guarantees that would require liability recognition or disclosure, other than standby letters of credit. The Company extends standby letters of credit to its customers in the normal course of business. The standby letters of credit are generally short-term. As of September 30, 2020, the Company’s maximum potential obligation under standby letters of credit was $32.0 million compared to $28.2 million at December 31, 2019. Management uses the same credit policies to extend standby letters of credit that it uses for on-balance sheet lending decisions and may require collateral to support standby letters of credit based upon its evaluation of the counterparty. Management does not anticipate any significant losses as a result of these transactions, and has determined that the fair value of standby letters of credit is not significant.

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Segment and Related Information

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segment and Related Information

Segment and Related Information

The Company manages its operations through three reportable business segments in accordance with the standards set forth in FASB ASC 280, “Segment Reporting”: (i) banking (“Banking”), (ii) insurance (“Tompkins Insurance”) and (iii) wealth management (“Tompkins Financial Advisors”). The Company’s insurance services and wealth management services, other than trust services, are managed separately from the Banking segment.

Banking

The Banking segment is primarily comprised of the Company’s four banking subsidiaries: Tompkins Trust Company, a commercial bank with fourteen banking offices located in Ithaca, NY and surrounding communities; The Bank of Castile (DBA Tompkins Bank of Castile), a commercial bank with sixteen banking offices located in the Genesee Valley region of New York State as well as Monroe County; Mahopac Bank (DBA Tompkins Mahopac Bank), a commercial bank with fourteen full-service banking offices located in the counties north of New York City; and VIST Bank (DBA Tompkins VIST Bank), a banking organization with twenty banking offices headquartered and operating in the areas surrounding southeastern Pennsylvania.

Insurance

The Company provides property and casualty insurance services and employee benefits consulting through Tompkins Insurance Agencies, Inc., a 100% wholly-owned subsidiary of the Company, headquartered in Batavia, New York. Tompkins Insurance is an independent insurance agency, representing many major insurance carriers and provides employee benefit consulting to employers in Western and Central New York and Southeastern Pennsylvania, assisting them with their medical, group life insurance and group disability insurance. Tompkins Insurance has five stand-alone offices in Western New York.

Wealth Management

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

Summarized financial information concerning the Company’s reportable segments and the reconciliation to the Company’s consolidated results is shown in the following table. Investment in subsidiaries is netted out of the presentations below. The “Intercompany” column identifies the intercompany activities of revenues, expenses and other assets between the banking, insurance and wealth management services segments. The Company accounts for intercompany fees and services at an estimated fair value according to regulatory requirements for the services provided. Intercompany items relate primarily to the use of human resources, information systems, accounting and marketing services provided by any of the banks and the holding company. All other accounting policies are the same as those described in the summary of significant accounting policies in the 2019 Annual Report on Form 10-K.

As of and for the three months ended September 30, 2020
(In thousands)	Banking		Insurance		Wealth Management		Intercompany		Consolidated
Interest income	$	64,316	$	1	$	0	$	(1)	$	64,316
Interest expense	6,064		0		0		(1)		6,063
Net interest income	58,252		1		0		0		58,253
Provision for credit loss expense	199		0		0		0		199
Noninterest income	5,976		9,023		4,434		(546)		18,887
Noninterest expense	36,988		6,559		3,348		(546)		46,349
Income before income tax expense	27,041		2,465		1,086		0		30,592
Income tax expense	5,397		670		263		0		6,330
Net Income attributable to noncontrolling interests and Tompkins Financial Corporation	21,644		1,795		823		0		24,262
Less:  Net income attributable to noncontrolling interests	32		0		0		0		32
Net Income attributable to Tompkins Financial Corporation	$	21,612	$	1,795	$	823	$	0	$	24,230
Depreciation and amortization	$	2,474	$	57	$	18	$	0	$	2,549
Assets	7,738,933		42,269		26,956		(13,656)		7,794,502
Goodwill	64,585		19,866		7,996		0		92,447
Other intangibles, net	2,600		2,507		104		0		5,211
Net loans and leases	5,346,004		0		0		0		5,346,004
Deposits	6,613,421		0		0		(12,183)		6,601,238
Total Equity	657,370		32,095		24,146		0		713,611

As of and for the three months ended September 30, 2019
(In thousands)	Banking		Insurance		Wealth Management		Intercompany		Consolidated
Interest income	$	65,775	$	1	$	0	$	(1)	$	65,775
Interest expense	12,620		0		0		(1)		12,619
Net interest income	53,155		1		0		0		53,156
Provision for credit loss expense	1,320		0		0		0		1,320
Noninterest income	7,134		8,620		4,310		(530)		19,534
Noninterest expense	36,309		6,672		3,204		(530)		45,655
Income before income tax expense	22,660		1,949		1,106		0		25,715
Income tax expense	4,669		526		283		0		5,478
Net Income attributable to noncontrolling interests and Tompkins Financial Corporation	17,991		1,423		823		0		20,237
Less:  Net income attributable to noncontrolling interests	31		0		0		0		31
Net Income attributable to Tompkins Financial  Corporation	$	17,960	$	1,423	$	823	$	0	$	20,206
Depreciation and amortization	$	2,483	$	56	$	10	$	0	$	2,549
Assets	6,575,073		42,753		23,497		(13,341)		6,627,982
Goodwill	64,370		19,866		8,211		0		92,447
Other intangibles, net	3,472		3,011		164		0		6,647
Net loans and leases	4,815,702		0		0		0		4,815,702
Deposits	5,382,174		0		0		(12,184)		5,369,990
Total Equity	605,572		33,116		21,177		0		659,865

Nine months ended September 30, 2020
(In thousands)	Banking		Insurance		Wealth Management		Intercompany		Consolidated
Interest income	$	190,960	$	3	$	0	$	(3)	$	190,960
Interest expense	23,375		0		0		(3)		23,372
Net interest income	167,585		3		0		0		167,588
Provision for credit loss expense	16,145		0		0		0		16,145
Noninterest income	19,217		24,533		12,903		(1,629)		55,024
Noninterest expense	111,387		19,479		9,740		(1,629)		138,977
Income before income tax expense	59,270		5,057		3,163		0		67,490
Income tax expense	11,665		1,362		752		0		13,779
Net Income attributable to noncontrolling interests and Tompkins Financial Corporation	47,605		3,695		2,411		0		53,711
Less:  Net income attributable to noncontrolling interests	101		0		0		0		101
Net Income attributable to Tompkins Financial Corporation	$	47,504	$	3,695	$	2,411	$	0	$	53,610
Depreciation and amortization	$	7,443	$	173	$	38	$	0	$	7,654

Nine months ended September 30, 2019
(In thousands)	Banking		Insurance		Wealth Management		Intercompany		Consolidated
Interest income	$	196,797	$	2	$	0	$	(3)	$	196,796
Interest expense	39,410		0		0		(2)		39,408
Net interest income	157,387		2		0		(1)		$	157,388
Provision for credit loss expense	2,366		0		0		0		2,366
Noninterest income	21,852		24,621		12,567		(1,579)		57,461
Noninterest expense	108,704		19,279		9,529		(1,578)		135,934
Income before income tax expense	68,169		5,344		3,038		(2)		$	76,549
Income tax expense	13,650		1,418		748		0		15,816
Net Income attributable to noncontrolling interests and Tompkins Financial Corporation	54,519		3,926		2,290		(2)		$	60,733
Less:  Net income attributable to noncontrolling interests	95		0		0		0		95
Net Income attributable to Tompkins Financial Corporation	$	54,424	$	3,926	$	2,290	$	(2)	$	60,638
Depreciation and amortization	$	7,296	$	168	$	31	$	0	$	7,495

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Fair Value Measurements

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

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

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

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

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

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

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019, segregated by the level of valuation inputs within the fair value hierarchy used to measure fair value.

Recurring Fair Value Measurements
September 30, 2020
(In thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Available-for-sale debt securities
Obligations of U.S. Government sponsored entities	$	612,481	$	0	$	612,481	$	0
Obligations of U.S. states and political subdivisions	129,258		0		129,258		0
Mortgage-backed securities – residential, issued by:
U.S. Government agencies	207,501		0		207,501		0
U.S. Government sponsored entities	715,160		0		715,160		0
U.S. corporate debt securities	2,366		0		2,366		0
Total Available-for-sale debt securities	$	1,666,766	$	0	$	1,666,766	$	0
Equity securities, at fair value	$	932	$	0	$	0	$	932

Recurring Fair Value Measurements
December 31, 2019
(In thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Available-for-sale debt securities
U.S. Treasuries	$	1,840	$	0	$	1,840	$	0
Obligations of U.S. Government sponsored entities	372,488		0		372,488		0
Obligations of U.S. states and political subdivisions	97,785		0		97,785		0
Mortgage-backed securities – residential, issued by:
U.S. Government agencies	164,451		0		164,451		0
U.S. Government sponsored entities	659,590		0		659,590		0
U.S. corporate debt securities	2,433		0		2,433		0
Total Available-for-sale debt securities	$	1,298,587	$	0	$	1,298,587	$	0
Equity securities, at fair value	$	915	$	0	$	0	$	915

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

The change in the fair value of equity securities valued using significant unobservable inputs (level 3), for the periods ended September 30, 2020 and December 31, 2019, was immaterial.

There were no transfers between Levels 1, 2 and 3 for the nine months ended September 30, 2020.

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

Certain assets are measured at fair value on a nonrecurring basis. For the Company, these include loans held for sale, individually evaluated loans, and other real estate owned (“OREO”). For the three and nine months ended September 30, 2020, certain individually evaluated loans were remeasured and reported at fair value through a specific valuation allowance and/or partial charge-offs for credit losses based upon the fair value of the underlying collateral. Collateral values are estimated using Level 2 inputs based upon observable market data. In addition to collateral dependent evaluated loans, certain other real estate owned were remeasured and reported at fair value based upon the fair value of the underlying collateral. The fair values of other real estate owned are estimated using Level 2 inputs based on observable market data or Level 3 inputs based on customized discounting criteria. In general, the fair values of other real estate owned are based upon appraisals, with discounts made to reflect estimated costs to sell the real estate. Upon initial recognition, fair value write-downs are taken through a charge-off to the allowance for credit losses. Subsequent fair value write-downs on other real estate owned are reported in other noninterest expense.

Three months ended September 30, 2020
(In thousands)			Fair value measurements at reporting date using:						Gain (losses) from fair value changes
Assets:	As of 09/30/2020		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Three months ended 9/30/2020
Individually evaluated	$	6,330	$	0	$	6,330	$	0	$	0
Other real estate owned	36		0		36		0		(4)

Three months ended September 30, 2019
(In thousands)			Fair value measurements at reporting date using:						Gain (losses) from fair value changes
Assets:	As of 09/30/2019		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Three months ended 9/30/2019
Impaired loans	$	10,096	$	0	$	10,096	$	0	$	(550)
Other real estate owned	139		0		139		0		95

Nine months ended September 30, 2020
(In thousands)			Fair value measurements at reporting date using:						Gain (losses) from fair value changes
Assets:	As of 09/30/2020		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Nine months ended 9/30/2020
Individually evaluated	$	10,759	$	0	$	10,759	$	0	$	(1,305)
Other real estate owned	124		0		124		0		(27)

Nine months ended September 30, 2019
(In thousands)			Fair value measurements at reporting date using:						Gain (losses) from fair value changes
Assets:	As of 09/30/2019		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Nine months ended 9/30/2019
Impaired loans	$	12,565	$	0	$	12,565	$	0	$	(4,184)
Other real estate owned	888		0		888		0		0

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments at September 30, 2020 and December 31, 2019. The carrying amounts shown in the table are included in the Consolidated Statements of Condition under the indicated captions.

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

Estimated Fair Value of Financial Instruments
September 30, 2020
(In thousands)	Carrying Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets:
Cash and cash equivalents	$	374,739	$	374,739	$	374,739	$	0	$	0
FHLB and other stock	17,919		17,919		0		17,919		0
Accrued interest receivable	38,212		38,212		0		38,212		0
Loans/leases, net1	5,346,004		5,370,911		0		10,759		5,360,152
Financial Liabilities:
Time deposits	$	706,401	$	714,256	$	0	$	714,256	$	0
Other deposits	5,894,837		5,894,837		0		5,894,837		0
Fed funds purchased and securities sold
under agreements to repurchase	63,573		63,573		0		63,573		0
Other borrowings	285,000		295,374		0		295,374		0
Trust preferred debentures	17,163		21,240		0		21,240		0
Accrued interest payable	1,702		1,702		0		1,702		0

Estimated Fair Value of Financial Instruments
December 31, 2019
(In thousands)	Carrying Amount		Fair  Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets:
Cash and cash equivalents	$	137,982	$	137,982	$	137,982	$	0	$	0
FHLB and other stock	33,695		33,695		0		33,695		0
Accrued interest receivable	19,293		19,293		0		19,293		0
Loans/leases, net1	4,877,658		4,798,268		0		14,050		4,784,218
Financial Liabilities:
Time deposits	$	675,014	$	677,205	$	0	$	677,205	$	0
Other deposits	4,537,907		4,537,907		0		4,537,907		0
Fed funds purchased and securities
sold under agreements to repurchase	60,346		60,346		0		60,346		0
Other borrowings	658,100		659,895		0		659,895		0
Trust preferred debentures	17,035		21,904		0		21,904		0
Accrued interest payable	2,486		2,486		0		2,486		0

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

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

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

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

FHLB Stock: The carrying amount of FHLB stock approximates fair value. If the stock is redeemed, the Company will receive an amount equal to the par value of the stock. For miscellaneous equity securities, carrying value is cost.

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

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

Securities Sold Under Agreements to Repurchase: The carrying amounts of repurchase agreements and other short-term borrowings approximate their fair values. Fair values of long-term borrowings are estimated using a discounted cash flow approach, based on current market rates for similar borrowings. For securities sold under agreements to repurchase where the Company has elected the fair value option, the Company also receives pricing information from third parties, including the FHLB.

Other Borrowings: The fair values of other borrowings are estimated using discounted cash flow analysis, discounted at the Company’s current incremental borrowing rate for similar borrowing arrangements. For other borrowings where the Company has elected the fair value option, the Company also receives pricing information from third parties, including the FHLB.

Trust Preferred Debentures: The fair value of the trust preferred debentures has been estimated using a discounted cash flow analysis which uses a discount factor of a market spread over current interest rates for similar instruments.

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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

New Adopted Accounting Standards and Accounting Standards Pending Adoption

Impact of Adoption of ASU 2016-13

Securities

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 (impairment) is due to credit-related factors or noncredit-related factors. 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 Statement 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. However, if the Company intends to sell an impaired available- for-sale debt security or more likely than not will be required to sell such a security before recovering its amortized cost basis, the entire impairment amount must be recognized in earnings with a corresponding adjustment to the security’s amortized cost basis. Because the security’s amortized cost basis is adjusted to fair value, there is no ACL in this situation.

Changes in the allowance for credit losses are recorded as provision (credit) for credit loss expense. Losses are charged against the ACL when management believes the uncollectability of an available-for-sale debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable on securities is excluded from the estimate of credit losses.

Acquired Loans

Acquired loans are recorded at fair value at the date of acquisition based on a discounted cash flow methodology that considers various factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and a discount rate reflecting the Company’s assessment of risk inherent in the cash flow estimates. Certain larger purchased loans are individually evaluated while certain purchased loans are grouped together according to similar risk characteristics and are treated in the aggregate when applying various valuation techniques. These cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change.

Prior to January 1, 2020, loans acquired in a business combination that had evidence of deterioration of credit quality since origination and for which it was probable, at acquisition, that the Company would be unable to collect all contractually required payments receivable were considered purchased credit impaired (“PCI”) loans. PCI loans were individually evaluated and recorded at fair value at the date of acquisition with no initial valuation allowance based on a discounted cash flow

methodology that considered various factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and a discount rate reflecting the Company’ assessment of risk inherent in the cash flow estimates. The difference between the undiscounted cash flows expected at acquisition and the investment in the loan, or the “accretable yield,” was recognized as interest income on a level-yield method over the life of the loan. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “non-accretable difference,” were not recognized on the Statement of Condition and did not result in any yield adjustments, loss accruals or valuation allowances. Increases in expected cash flows, including prepayments, subsequent to the initial investment were recognized prospectively through adjustment of the yield on the loan over its remaining life. Decreases in expected cash flows were recognized as impairment. Valuation allowances on PCI loans reflected only losses incurred after the acquisition (meaning the present value of all cash flows expected at acquisition that ultimately were not to be received).

Subsequent to January 1, 2020 in connection with the Company's adoption of ASU 2016-13, loans acquired in a business combination that have experienced more-than-insignificant deterioration in credit quality since origination are considered purchased credit deteriorated (“PCD”) loans. At the acquisition date, an estimate of expected credit losses is made for groups of PCD loans with similar risk characteristics and individual PCD loans without similar risk characteristics. This initial allowance for credit losses is allocated to individual PCD loans and added to the purchase price or acquisition date fair values to establish the initial amortized cost basis of the PCD loans. As the initial allowance for credit losses is added to the purchase price, there is no credit loss expense recognized upon acquisition of a PCD loan. Any difference between the unpaid principal balance of PCD loans and the amortized cost basis is considered to relate to noncredit factors and results in a discount or premium. Discounts and premiums are recognized through interest income on a level-yield method over the life of the loans. All loans considered to be PCI prior to January 1, 2020 were converted to PCD on that date.

The subsequent measurement of expected credit losses for all acquired loans is the same as the subsequent measurement of expected credit losses for originated loans.

Allowance for Credit Losses – Loans

Under the current expected credit loss model, the ACL on loans is a valuation allowance estimated at each balance sheet date in accordance with U.S. GAAP that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans.

The Company estimates the ACL on loans based on the underlying assets’ amortized cost basis, which is the amount at which the financing receivable is originated or acquired, adjusted for applicable accretion or amortization of premium, discount, collection of cash, and charge-offs. In the event that collection of principal becomes uncertain, the Company has policies in place to reverse accrued interest in a timely manner. Therefore, the Company has made a policy election to exclude accrued interest from the measurement of ACL.

Expected credit losses are reflected in the ACL through a charge to the provision for credit loss expense. When the Company deems all or a portion of a financial asset to be uncollectible, the appropriate amount is written off and the ACL is reduced by the same amount. In general, the principal balance of a loan is charged off in full or in part when management concludes, based on the available facts and circumstances, that collection of principal in full is not probable. Subsequent recoveries, if any, are credited to the ACL when received.

The Company measures expected credit losses of financial assets at the loan level by segment, by pooling loans when the financial assets share similar risk characteristics. Depending on the nature of the pool of financial assets with similar risk characteristics, the Company uses a discounted cash flow (“DCF”) method to estimate the expected credit losses. Allowance on loans that do not share risk characteristics are evaluated on an individual basis. The Company assigns a credit risk rating to all commercial and commercial real estate loans. The Company reviews commercial and commercial real estate loans rated Substandard or worse, on nonaccrual and greater than $250,000 for loss potential and when deemed appropriate assigns an allowance based on an individual evaluation.

The Company’s methodologies for estimating the ACL consider available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. The methodologies apply historical loss information, adjusted for asset-specific characteristics, economic conditions at the measurement date, and forecasts about future economic conditions expected to exist through the contractual lives of the financial assets that are reasonable and supportable, to the identified pools of financial assets with similar risk characteristics for which the historical loss experience was observed. The Company’s methodologies revert back to average historical loss information on a straight line basis over eight quarters when it can no longer develop reasonable and supportable forecasts.

The Company has identified the following pools of financial assets with similar risk characteristics for measuring expected credit losses: commercial, commercial real estate, residential, home equity, consumer and leases. This segmentation was selected based on the differences in the risk profile of each of these categories and aligns well with regulatory reporting categories. This segmentation separates borrower type, collateral type and the nature of the loan. The differences in risk profiles of these segments enables the ACL to be more precise in its allocation due to the inherent risk in these specific portfolios.

Discounted Cash Flow Method

The Company uses the discounted cash flow method to estimate expected credit losses for the commercial, commercial real estate, residential, home equity, and consumer loan pools. For each of these loan segments, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, probability of default, and loss given default. The modeling of expected prepayment speeds, and time to recovery are based on historical internal 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 loan pools utilizing the DCF method, management utilizes and forecasts one or both of the following economic factors; national unemployment and gross domestic product as loss drivers.

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 an independent third party to inform its loss driver forecasts over the four-quarter forecast period. Other internal and external indicators of economic forecasts are also considered by management when developing the forecast metrics. The model considers a base case forecast and two alternative forecasts and assigns weightings to these three scenarios based on current conditions and expectations for future conditions.

The combination of adjustments for credit expectations (default and loss) and timing expectations (prepayment, curtailment, and time to recovery) produces an expected cash flow stream at the instrument level. Instrument effective yield is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce an instrument-level net present value of expected cash flows (“NPV”). An ACL is established for the difference between the instrument’s 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.

Individually Evaluated Financial Assets

Loans that do not share common risk characteristics are evaluated on an individual basis. For collateral dependent financial assets where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral less cost to sell, and the amortized cost basis of the asset as of the measurement date. The ACL may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the financial asset.

The Company’s estimate of the ACL reflects losses expected over the remaining contractual life of the assets. The contractual term does not consider extensions, renewals or modifications unless the Company has identified an expected troubled debt restructuring.

Troubled Debt Restructuring

A loan that has been modified or renewed is considered a troubled debt restructuring (“TDR”) when two conditions are met: 1) the borrower is experiencing financial difficulty and 2) concessions are made for the borrower's benefit that would not otherwise be considered for a borrower or transaction with similar credit risk characteristics. The Company’s ACL reflects all effects of a TDR when an individual asset is specifically identified as a reasonably expected TDR. The Company has determined that a TDR is reasonably expected no later than the point when the lender concludes that modification is the best

course of action and it is at least reasonably possible that the troubled borrower will accept some form of concession from the lender to avoid a default. Reasonably expected TDRs and executed non-performing TDRs are evaluated individually to determine the required ACL. TDRs performing in accordance with their modified contractual terms for a reasonable period of time may be included in the Company’s existing pools based on the underlying risk characteristics of the loan to measure the ACL. The provisions of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") and interagency guidance issued by Federal banking regulators provided guidance and clarification related to modifications and deferral programs to assist borrowers who are negatively impacted by the COVID-19 national emergency. The guidance and clarifications detail certain provisions whereby banks are permitted to make deferrals and modifications to the terms of a loan which would not require the loan to be reported as a troubled debt restructuring ('TDR"). In accordance with the CARES Act and the interagency guidance, the Company elected to adopt the provisions to not report qualified loan modifications as troubled debt restructurings.

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, unused lines of credit and commercial letters of credit, issued to meet customer financing needs. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded.

The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancellable, through a charge to the provision for credit loss expense for off-balance sheet credit exposures included in other noninterest expense in the Company’s consolidated statements of income. The ACL on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the current expected credit loss model using similar methodologies as portfolio loans, taking into consideration the likelihood that funding will occur, and is included in other liabilities on the Company’s statements of condition.

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Securities (Tables)

9 Months Ended

Sep. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Schedule of available-for-sale securities

The following table summarizes available-for-sale debt securities held by the Company at September 30, 2020:

	Available-for-Sale Debt Securities
September 30, 2020	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(In thousands)
Obligations of U.S. Government sponsored entities	602,417		10,881		817		612,481
Obligations of U.S. states and political subdivisions	126,593		2,840		175		129,258
Mortgage-backed securities – residential, issued by
U.S. Government agencies	205,507		2,981		987		207,501
U.S. Government sponsored entities	700,238		15,785		863		715,160
U.S. corporate debt securities	2,500		0		134		2,366
Total available-for-sale debt securities	$	1,637,255	$	32,487	$	2,976	$	1,666,766

 The following table summarizes available-for-sale debt securities held by the Company at December 31, 2019:  

	Available-for-Sale Debt Securities
December 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(In thousands)
U.S. Treasuries	$	1,840	$	0	$	0	$	1,840
Obligations of U.S. Government sponsored entities	367,551		5,021		84		372,488
Obligations of U.S. states and political subdivisions	96,668		1,178		61		97,785
Mortgage-backed securities – residential, issued by
U.S. Government agencies	164,643		1,327		1,519		164,451
U.S. Government sponsored entities	660,037		2,940		3,387		659,590
U.S. corporate debt securities	2,500		0		67		2,433
Total available-for-sale debt securities	$	1,293,239	$	10,466	$	5,118	$	1,298,587

Schedule of available-for-sale securities with unrealized losses

The following table summarizes available-for-sale debt securities that had unrealized losses at September 30, 2020.

	Less than 12 Months				12 Months or Longer				Total
(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. Government sponsored entities	$	303,834	$	817	$	0	$	0	$	303,834	$	817
Obligations of U.S. states and political subdivisions	15,328		175		0		0		15,328		175
Mortgage-backed securities – residential, issued by
U.S. Government agencies	46,990		736		2,978		251		49,968		987
U.S. Government sponsored entities	111,120		794		5,512		69		116,632		863
U.S. corporate debt securities	0		0		2,366		134		2,366		134
Total available-for-sale debt securities	$	477,272	$	2,522	$	10,856	$	454	$	488,128	$	2,976

The following table summarizes available-for-sale debt securities that had unrealized losses at December 31, 2019.

	Less than 12 Months				12 Months or Longer				Total
(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. Government sponsored entities	$	18,654	$	76	$	3,479	$	8	$	22,133	$	84
Obligations of U.S. states and political subdivisions	10,456		54		2,300		7		12,756		61
Mortgage-backed securities – residential, issued by
U.S. Government agencies	54,846		489		45,999		1,030		100,845		1,519
U.S. Government sponsored entities	157,801		752		233,999		2,635		391,800		3,387
U.S. corporate debt securities	0		0		2,433		67		2,433		67
Total available-for-sale debt securities	$	241,757	$	1,371	$	288,210	$	3,747	$	529,967	$	5,118

Schedule of amortized cost and estimated fair value of debt securities by contractual maturity

September 30, 2020
(In thousands)	Amortized Cost		Fair Value
Available-for-sale debt securities:
Due in one year or less	$	53,447	$	54,083
Due after one year through five years	391,466		401,757
Due after five years through ten years	221,525		222,846
Due after ten years	65,072		65,419
Total	731,510		744,105
Mortgage-backed securities	905,745		922,661
Total available-for-sale debt securities	$	1,637,255	$	1,666,766

December 31, 2019
(In thousands)	Amortized Cost		Fair Value
Available-for-sale debt securities:
Due in one year or less	$	107,975	$	108,089
Due after one year through five years	270,477		274,798
Due after five years through ten years	77,710		79,165
Due after ten years	12,397		12,494
Total	468,559		474,546
Mortgage-backed securities	824,680		824,041
Total available-for-sale debt securities	$	1,293,239	$	1,298,587

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Loans and Leases (Tables)

9 Months Ended

Sep. 30, 2020

Receivables [Abstract]

Schedule of loans and leases

Loans and leases at September 30, 2020 and December 31, 2019 were as follows:

(In thousands)	9/30/2020		12/31/2019
Commercial and industrial
Agriculture	$	89,068	$	105,786
Commercial and industrial other	790,749		902,275
PPP loans*	464,058		0
Subtotal commercial and industrial	1,343,875		1,008,061
Commercial real estate
Construction	182,605		213,637
Agriculture	198,049		184,898
Commercial real estate other	2,161,954		2,045,030
Subtotal commercial real estate	2,542,608		2,443,565
Residential real estate
Home equity	206,456		219,245
Mortgages	1,228,629		1,158,592
Subtotal residential real estate	1,435,085		1,377,837
Consumer and other
Indirect	9,534		12,964
Consumer and other	64,346		61,446
Subtotal consumer and other	73,880		74,410
Leases	14,877		17,322
Total loans and leases	5,410,325		4,921,195
Less: unearned income and deferred costs and fees	(12,028)		(3,645)
Total loans and leases, net of unearned income and deferred costs and fees	$	5,398,297	$	4,917,550
*Paycheck Protection Program ("PPP")

Schedule of age analysis of past due loans

The below table is an age analysis of past due loans, segregated by class of loans, as of September 30, 2020 and December 31, 2019.

September 30, 2020
(In thousands)	30-59 Days		60-89 Days		90 Days or More		Total Past Due		Current Loans		Total Loans
Loans and Leases
Commercial and industrial
Agriculture	$	0	$	0	$	0	$	0	$	89,068	$	89,068
Commercial and industrial other	923		96		1,443		2,462		788,287		790,749
PPP loans*	0		0		0		0		464,058		464,058
Subtotal commercial and industrial	923		96		1,443		2,462		1,341,413		1,343,875
Commercial real estate
Construction	0		0		0		0		182,605		182,605
Agriculture	0		0		0		0		198,049		198,049
Commercial real estate other	2,255		1,079		12,477		15,811		2,146,143		2,161,954
Subtotal commercial real estate	2,255		1,079		12,477		15,811		2,526,797		2,542,608
Residential real estate
Home equity	475		135		1,079		1,689		204,767		206,456
Mortgages	482		1,183		2,649		4,314		1,224,315		1,228,629
Subtotal residential real estate	957		1,318		3,728		6,003		1,429,082		1,435,085
Consumer and other
Indirect	86		32		57		175		9,359		9,534
Consumer and other	119		10		154		283		64,063		64,346
Subtotal consumer and other	205		42		211		458		73,422		73,880
Leases	0		0		0		0		14,877		14,877
Total loans and leases	4,340		2,535		17,859		24,734		5,385,591		5,410,325
Less: unearned income and deferred costs and fees	0		0		0		0		(12,028)		(12,028)
Total loans and leases, net of unearned income and deferred costs and fees	$	4,340	$	2,535	$	17,859	$	24,734	$	5,373,563	$	5,398,297

December 31, 2019
(In thousands)	30-89 Days		90 Days or More		Current Loans		Total Loans		90 days and accruing1		Nonaccrual
Loans and Leases
Commercial and industrial
Agriculture	$	0	$	65	$	105,721	$	105,786	$	0	$	0
Commercial and industrial other	413		2,081		899,781		902,275		2		2,335
Subtotal commercial and industrial	413		2,146		1,005,502		1,008,061		2		2,335
Commercial real estate
Construction	0		0		213,637		213,637		0		0
Agriculture	0		0		184,898		184,898		0		0
Commercial real estate other	1,140		10,780		2,033,110		2,045,030		542		10,789
Subtotal commercial real estate	1,140		10,780		2,431,645		2,443,565		542		10,789
Residential real estate
Home equity	348		727		218,170		219,245		55		2,796
Mortgages	1,344		3,985		1,153,263		1,158,592		195		8,086
Subtotal residential real estate	1,692		4,712		1,371,433		1,377,837		250		10,882
Consumer and other
Indirect	312		60		12,592		12,964		0		117
Consumer and other	167		66		61,213		61,446		0		158
Subtotal consumer and other	479		126		73,805		74,410		0		275
Leases	0		0		17,322		17,322		0		0
Total loans and leases	3,724		17,764		4,899,707		4,921,195		794		24,281
Less: unearned income and deferred costs and fees	0		0		(3,645)		(3,645)		0		0
Total loans and leases, net of unearned income and deferred costs and fees	$	3,724	$	17,764	$	4,896,062	$	4,917,550	$	794	$	24,281

1 Includes acquired loans that were recorded at fair value at the acquisition date.

The following table presents the amortized cost basis of loans on nonaccrual status and the amortized cost basis of loans on nonaccrual status for which there was no related allowance for credit losses. The below table is an age analysis of nonaccrual loans, segregated by class of loans, as of September 30, 2020.

(In thousands)	Nonaccrual Loans with no Allowance for Credit Losses		Nonaccrual Loans		Loans Past Due Over 89 Days and Accruing
Loans and Leases
Commercial and industrial
Commercial and industrial other	$	1,469	$	1,636	$	0
Subtotal commercial and industrial	1,469		1,636		0
Commercial real estate
Agriculture	120		120		0
Commercial real estate other	10,092		12,657		0
Subtotal commercial real estate	10,212		12,777		0
Residential real estate
Home equity	2,793		2,793		0
Mortgages	9,410		9,410		0
Subtotal residential real estate	12,203		12,203		0
Consumer and other
Indirect	144		144		0
Consumer and other	184		184		0
Subtotal consumer and other	328		328		0
Leases	0		0		0
Total loans and leases	$	24,212	$	26,944	$	0

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Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2020

Receivables [Abstract]

Schedule of allowance for loan and lease losses segregated by originated and acquired loan and lease portfolios and by portfolio segment

Three Months Ended September 30, 2020
(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer and Other		Finance Leases		Total
Allowance for credit losses:
Beginning balance	$	11,113	$	24,286	$	15,012	$	1,596	$	75	$	52,082
Charge-offs	0		0		(30)		(145)		0		(175)
Recoveries	89		9		16		73		0		187
Provision (credit) for credit loss expense	(3,918)		4,264		(65)		(75)		(7)		199
Ending Balance	$	7,284	$	28,559	$	14,933	$	1,449	$	68	$	52,293

Three Months Ended September 30, 2019
(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer and Other		Finance Leases		Total
Allowance for credit losses:
Beginning balance	$	11,543	$	21,005	$	6,897	$	1,345	$	0	$	40,790
Charge-offs	(6)		(551)		(87)		(190)		0		(834)
Recoveries	10		2		15		68		0		95
Provision (credit) for credit loss expense	(256)		2,143		(733)		166		0		1,320
Ending Balance	$	11,291	$	22,599	$	6,092	$	1,389	$	0	$	41,371

Nine Months Ended September 30, 2020
(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer and Other		Finance Leases		Total
Allowance for credit losses:
Beginning balance, prior to adoption of ASC 326	$	10,541	$	21,608	$	6,381	$	1,362	$	0	$	39,892
Impact of adopting ASC 326	(2,008)		(5,917)		4,459		850		82		(2,534)
Charge-offs	(1)		(1,305)		(33)		(409)		0		(1,748)
Recoveries	125		40		178		195		0		538
Provision (credit) for credit loss expense	(1,373)		14,133		3,948		(549)		(14)		16,145
Ending Balance	$	7,284	$	28,559	$	14,933	$	1,449	$	68	$	52,293

Nine Months Ended September 30, 2019
(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer and Other		Finance Leases		Total
Allowance for credit losses:
Beginning balance	$	11,272	$	23,483	$	7,345	$	1,310	$	0	$	43,410
Charge-offs	(489)		(3,949)		(131)		(571)		0		(5,140)
Recoveries	92		107		319		217		0		735
Provision (credit) for credit loss expense	416		2,958		(1,441)		433		0		2,366
Ending Balance	$	11,291	$	22,599	$	6,092	$	1,389	$	0	$	41,371

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

(In thousands)	Real Estate		Business Assets		Other		Total		ACL Allocation
September 30, 2020
Commercial and Industrial	$	33	$	507	$	50	$	590	$	48
Commercial Real Estate	8,085		0		0		8,085		436
Commercial Real Estate - Agriculture	1,559		0		0		1,559		0
Residential - Mortgages	384		0		0		384		2
Total	$	10,061	$	507	$	50	$	10,618	$	486

Schedule of allowance for loan and lease losses based on impairment methodology

The following tables present information pertaining to the allocation of the allowance for credit losses as of December 31, 2019, as determined in accordance with ASC 310, prior to the adoption of ASU 2016-13:

(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer and Other		Finance Leases		Total
Allowance for originated loans and leases
December 31, 2019
Individually evaluated for impairment	$	245	$	662	$	0	$	0	$	0	$	907
Collectively evaluated for impairment	10,296		20,895		6,360		1,356		0		38,907
Ending balance	$	10,541	$	21,557	$	6,360	$	1,356	$	0	$	39,814

(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer and Other		Finance Leases		Total
Allowance for acquired loans
December 31, 2019
Individually evaluated for impairment	$	0	$	0	$	0	$	0	$	0	$	0
Collectively evaluated for impairment	0		51		21		6		0		78
Ending balance	$	0	$	51	$	21	$	6	$	0	$	78

Schedule of recorded investment in loans and leases based on impairment methodology

The recorded investment in loans and leases summarized on the basis of the Company’s impairment methodology as of December 31, 2019 was as follows:

(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer  and Other		Finance Leases		Total
Originated loans and leases
December 31, 2019
Individually evaluated for impairment	$	2,110	$	13,496	$	3,779	$	0	$	0	$	19,385
Collectively evaluated for impairment	966,875		2,283,152		1,340,687		73,625		17,322		4,681,661
Total	$	968,985	$	2,296,648	$	1,344,466	$	73,625	$	17,322	$	4,701,046

(In thousands)	Commercial & Industrial		Commercial Real Estate		Residential Real Estate		Consumer  and Other		Finance Leases		Total
Acquired loans
December 31, 2019
Individually evaluated for impairment	$	2	$	714	$	2,114	$	0	$	0	$	2,830
Loans acquired with deteriorated credit quality	173		5,674		3,302		0		0		9,149
Collectively evaluated for impairment	38,901		140,529		27,955		785		0		208,170
Total	$	39,076	$	146,917	$	33,371	$	785	$	0	$	220,149

Schedule of average recorded investment and interest income on impaired loans

Impaired loans at December 31, 2019 were as follows: 

	December 31, 2019
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
Originated loans and leases with no related allowance
Commercial & industrial
Commercial and industrial other	$	1,865	$	1,965	$	0
Commercial real estate
Commercial real estate other	10,205		11,017		0
Residential real estate
Home equity	3,779		3,992		0
Subtotal	$	15,849	$	16,974	$	0
Originated loans and leases with related allowance
Commercial & industrial
Commercial and industrial other	245		245		245
Commercial real estate
Commercial real estate other	3,291		3,291		662
Subtotal	$	3,536	$	3,536	$	907
Total	$	19,385	$	20,510	$	907

	December 31, 2019
(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
Acquired loans with no related allowance
Commercial & industrial
Commercial and industrial other	$	2	$	2	$	0
Commercial real estate
Commercial real estate other	714		714		0
Residential real estate
Home equity	2,114		2,217		0
Total	$	2,830	$	2,933	$	0

The following table presents average impaired loans, as determined in accordance with ASC 310, prior to the adoption of ASU 2016-13, and interest recognized on such loans, for the three months ended September 30, 2019: 

	Three Months Ended September 30, 2019
(In thousands)	Average Recorded Investment		Interest Income Recognized
Originated loans and leases with no related allowance
Commercial & industrial
Commercial and industrial other	$	1,505	$	0
Commercial real estate
Commercial real estate other	7,380		0
Residential real estate
Home equity	3,963		0
Subtotal	$	12,848	$	0
Originated loans and leases with related allowance
Commercial & industrial
Commercial and industrial other	273		0
Commercial real estate
Commercial real estate other	1,708		0
Subtotal	$	1,981	$	0
Total	$	14,829	$	0

	Three Months Ended September 30, 2019
(In thousands)	Average Recorded Investment		Interest Income Recognized
Acquired loans and leases with no related allowance
Commercial & industrial
Commercial and industrial other	$	29	$	0
Commercial real estate
Commercial real estate other	857		0
Residential real estate
Home equity	2,585		0
Total	$	3,471	$	0

The average recorded investment and interest income recognized on impaired loans for the nine months ended September 30, 2019 was as follows:

	Nine Months Ended September 30, 2019
(In thousands)	Average Recorded Investment		Interest Income Recognized
Originated loans and leases with no related allowance
Commercial & industrial
Commercial and industrial other	$	2,123	$	0
Commercial real estate
Commercial real estate other	6,509		0
Residential real estate
Home equity	3,978		0
Subtotal	$	12,610	$	0
Originated loans and leases with related allowance
Commercial & industrial
Commercial and industrial other	154		0
Commercial real estate
Commercial real estate other	757		0
Subtotal	$	911	$	0
Total	$	13,521	$	0

	Nine Months Ended September 30, 2019
(In thousands)	Average Recorded Investment		Interest Income Recognized
Acquired loans and leases with no related allowance
Commercial & industrial
Commercial and industrial other	$	28	$	0
Commercial real estate
Commercial real estate other	834		0
Residential real estate
Home equity	2,606		0
Total	$	3,468	$	0

Schedule of loans modified in troubled debt restructuring

The following tables present information on loans modified in troubled debt restructuring during the periods indicated. Post-modification amounts are presented as of September 30, 2020 and 2019.

	Three Months Ended
September 30, 2020						Defaulted TDRs2
(In thousands)	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans		Post-Modification Outstanding Recorded Investment
Commercial real estate
Commercial real estate other1	1	$	196	$	196	0		$	0
Consumer and other
Consumer and other1	1	$	4	$	4	$	0	$	0
Total	2	$	200	$	200	0		$	0

 1 Represents the following concessions:  extension of term and reduction of rate.

2 TDRs that defaulted during the three months ended September 30, 2020 that were restructured in the prior twelve months.

	Three Months Ended
September 30, 2019						Defaulted TDRs2
(In thousands)	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans		Post-Modification Outstanding Recorded Investment
Commercial and Industrial
Commercial and industrial other1	1	$	9	$	9	0		$	0
Commercial real estate
Commercial real estate other1	1	$	1,577	$	1,577	0		$	0
Residential real estate
Home equity1	0	$	0	$	0	$	1	$	93
Total	2	$	1,586	$	1,586	1		$	93

 1 Represents the following concessions:  extension of term and reduction of rate.

2 TDRs that defaulted during the three months ended September 30, 2019 that were restructured in the prior twelve months.

	Nine Months Ended
September 30, 2020						Defaulted TDRs2
(In thousands)	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Post- Modification Outstanding Recorded Investment
Commercial & industrial
Commercial and industrial other1	0	$	0	$	0	0	$	0
Commercial real estate
Commercial real estate other1	1	196		196		1	37
Residential real estate
Home equity1	2	121		121		1	87
Consumer and other
Consumer and other1	1	$	4	$	4	0	$	0
Total	4	$	321	$	321	2	$	124

1 Represents the following concessions:  extension of term and reduction of rate.

2 TDRs that defaulted during the nine months ended September 30, 2020 that were restructured in the prior twelve months.

	Nine Months Ended
September 30, 2019						Defaulted TDRs2
(In thousands)	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Post- Modification Outstanding Recorded Investment
Commercial & industrial
Commercial and industrial other1	2	$	604	$	604	0	$	0
Commercial real estate
Commercial real estate other1	1	$	1,577	$	1,577	0	$	0
Residential real estate
Home equity1	1	$	168	$	168	1	$	93
Total	4	$	2,349	$	2,349	1	$	93

1 Represents the following concessions:  extension of term and reduction of rate.

2 TDRs that defaulted during the nine months ended September 30, 2019 that were restructured in the prior twelve months.

Schedule of credit quality indicators by class of commercial and industrial loans and commercial real estate loans

The following table presents credit quality indicators by total loans on an amortized cost basis by origination year as of September 30, 2020.

(In thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total Loans
Commercial & Industrial - Other:
Pass	$	61,772	$	78,283	$	61,289	$	65,282	$	38,317	$	303,190	$	160,124	$	11,790	$	780,047
Special Mention	69		494		529		1,281		2,458		26		1,456		0		6,313
Substandard	42		60		999		265		312		879		1,832		0		4,389
Total Commercial & Industrial - Other	$	61,883	$	78,837	$	62,817	$	66,828	$	41,087	$	304,095	$	163,412	$	11,790	$	790,749
Commercial and Industrial - PPP:
Pass	$	464,058	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	464,058
Special Mention	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Substandard	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Total Commercial and Industrial - PPP	$	464,058	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	464,058
Commercial and Industrial - Agriculture:
Pass	$	11,203	$	9,128	$	13,160	$	7,060	$	3,857	$	2,934	$	33,800	$	467	$	81,609
Special Mention	0		0		59		771		0		0		1,681		0		2,511
Substandard	100		91		0		220		0		2,309		2,228		0		4,948
Total Commercial and Industrial - Agriculture	$	11,303	$	9,219	$	13,219	$	8,051	$	3,857	$	5,243	$	37,709	$	467	$	89,068
Commercial Real Estate
Pass	$	157,664	$	234,828	$	240,343	$	246,787	$	304,856	$	732,205	$	65,076	$	44,039	$	2,025,798
Special Mention	0		14,439		19,172		6,869		34,367		30,733		526		0		106,106
Substandard	349		1,700		739		3,608		924		22,385		345		0		30,050
Total Commercial Real Estate	$	158,013	$	250,967	$	260,254	$	257,264	$	340,147	$	785,322	$	65,947	$	44,039	$	2,161,954
Commercial Real Estate - Agriculture:
Pass	$	16,925	$	35,850	$	44,991	$	21,833	$	17,562	$	45,966	$	121	$	5,655	$	188,903
Special Mention	1,516		0		579		1,379		1,064		150		0		0		4,688
Substandard	0		0		0		1,779		718		1,569		392		0		4,458
Total Commercial Real Estate - Agriculture	$	18,441	$	35,850	$	45,570	$	24,991	$	19,344	$	47,685	$	513	$	5,655	$	198,049
Commercial Real Estate - Construction
Pass	$	12,983	$	22,285	$	8,019	$	2,629	$	2,018	$	8,324	$	107,970	$	15,434	$	179,662
Special Mention	0		0		0		0		0		529		2,085		0		2,614
Substandard	0		0		0		0		0		329		0		0		329
Total Commercial Real Estate - Construction	$	12,983	$	22,285	$	8,019	$	2,629	$	2,018	$	9,182	$	110,055	$	15,434	$	182,605

The following table presents credit quality indicators by total loans on an amortized cost basis by origination year as of September 30, 2020, continued.

(In thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total Loans
Residential - Home Equity
Performing	$	1,297	$	2,801	$	1,235	$	2,088	$	823	$	1,573	$	192,549	$	1,297	$	203,663
Nonperforming	0		18		0		0		197		390		2,188		0		2,793
Total Residential - Home Equity	$	1,297	$	2,819	$	1,235	$	2,088	$	1,020	$	1,963	$	194,737	$	1,297	$	206,456
Residential - Mortgages
Performing	$	232,860	$	198,718	$	129,779	$	166,414	$	191,858	$	286,255	$	12,391	$	944	$	1,219,219
Nonperforming	0		262		402		368		1,213		7,105		60		0		9,410
Total Residential - Mortgages	$	232,860	$	198,980	$	130,181	$	166,782	$	193,071	$	293,360	$	12,451	$	944	$	1,228,629
Consumer - Direct
Performing	$	12,884	$	12,595	$	8,728	$	7,534	$	3,219	$	11,904	$	7,298	$	0	$	64,162
Nonperforming	0		29		115		13		0		3		24		$	0	184
Total Consumer - Direct	$	12,884	$	12,624	$	8,843	$	7,547	$	3,219	$	11,907	$	7,322	$	0	$	64,346
Consumer - Indirect
Performing	$	1,266	$	2,200	$	3,840	$	1,388	$	521	$	175	$	0	$	0	$	9,390
Nonperforming	0		61		33		3		30		17		0		0		144
Total Consumer Indirect	$	1,266	$	2,261	$	3,873	$	1,391	$	551	$	192	$	0	$	0	$	9,534

The following tables present credit quality indicators (internal risk grade) by class of commercial and industrial loans and commercial real estate loans as of December 31, 2019. 

December 31, 2019
(In thousands)	Commercial & Industrial Other		Commercial & Industrial Agriculture		Commercial Real Estate Other		Commercial Real Estate Agriculture		Commercial Real Estate Construction		Total
Originated Loans and Leases
Internal risk grade:
Pass	$	851,517	$	89,892	$	1,857,142	$	166,888	$	212,302	$	3,177,741
Special Mention	8,306		1,698		16,623		3,173		0		29,800
Substandard	3,376		14,196		25,880		14,640		0		58,092
Total	$	863,199	$	105,786	$	1,899,645	$	184,701	$	212,302	$	3,265,633

December 31, 2019
(In thousands)	Commercial & Industrial Other		Commercial & Industrial Agriculture		Commercial Real Estate Other		Commercial Real Estate Agriculture		Commercial Real Estate Construction		Total
Acquired Loans and Leases
Internal risk grade:
Pass	$	38,879	$	0	$	143,175	$	197	$	1,335	$	183,586
Special Mention	0		0		0		0		0		0
Substandard	197		0		2,210		0		0		2,407
Total	$	39,076	$	0	$	145,385	$	197	$	1,335	$	185,993

Schedule of credit quality indicators by class of residential real estate loans and consumer loans

The following tables present credit quality indicators by class of residential real estate loans and by class of consumer loans. Nonperforming loans include nonaccrual, impaired, and loans 90 days past due and accruing interest. All other loans were considered performing as of December 31, 2019. For purposes of this footnote, acquired loans that were recorded at fair value at the acquisition date and are 90 days or greater past due are considered performing.

December 31, 2019
(In thousands)	Residential Home Equity		Residential Mortgages		Consumer Indirect		Consumer Other		Total
Originated Loans and Leases
Performing	$	201,970	$	1,133,237	$	12,847	$	60,503	$	1,408,557
Nonperforming	1,924		7,335		117		158		9,534
Total	$	203,894	$	1,140,572	$	12,964	$	60,661	$	1,418,091

December 31, 2019
(In thousands)	Residential Home Equity		Residential Mortgages		Consumer Indirect		Consumer Other		Total
Acquired Loans and Leases
Performing	$	14,479	$	17,269	$	0	$	785	$	32,533
Nonperforming	872		751		0		0		1,623
Total	$	15,351	$	18,020	$	0	$	785	$	34,156

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Schedule of basic and diluted earnings per share

Earnings per share in the table below, for the three and nine month periods ended September 30, 2020 and 2019 are calculated under the two-class method as required by ASC Topic 260, Earnings Per Share. ASC 260 provides that unvested share-based payment awards that contain nonforfeitable rights to dividends are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. The Company has issued restricted stock awards that contain such rights and are therefore considered participating securities. Basic earnings per common share are calculated by dividing net income allocable to common stock by the weighted average number of common shares, excluding participating securities, during the period. Diluted earnings per common share include the dilutive effect of participating securities.

	Three Months Ended
(In thousands, except share and per share data)	9/30/2020		9/30/2019
Basic
Net income available to common shareholders	$	24,230	$	20,206
Less: income attributable to unvested stock-based compensation awards	(278)		(317)
Net earnings allocated to common shareholders	23,952		19,889
Weighted average shares outstanding, including unvested stock-based compensation awards	14,920,924		15,063,202
Less: average unvested stock-based compensation awards	(223,392)		(236,088)
Weighted average shares outstanding - Basic	14,697,532		14,827,114
Diluted
Net earnings allocated to common shareholders	23,952		19,889
Weighted average shares outstanding - Basic	14,697,532		14,827,114
Plus:  incremental shares from assumed conversion of stock-based compensation awards	30,209		60,512
Weighted average shares outstanding - Diluted	14,727,741		14,887,626
Basic EPS	$	1.63	$	1.34
Diluted EPS	$	1.63	$	1.34

	Nine Months Ended
(In thousands, except share and per share data)	9/30/2020		9/30/2019
Basic
Net income available to common shareholders	$	53,610	$	60,638
Less: income attributable to unvested stock-based compensation awards	(628)		(972)
Net earnings allocated to common shareholders	52,982		59,666
Weighted average shares outstanding, including unvested stock-based compensation awards	14,929,628		15,204,170
Less: unvested stock-based compensation awards	(230,181)		(236,088)
Weighted average shares outstanding - Basic	14,699,447		14,968,082
Diluted
Net earnings allocated to common shareholders	52,982		59,666
Weighted average shares outstanding - Basic	14,699,447		14,968,082
Plus: incremental shares from assumed conversion of stock-based compensation awards	39,474		67,698
Weighted average shares outstanding - Diluted	14,738,921		15,035,780
Basic EPS	$	3.60	$	3.99
Diluted EPS	$	3.59	$	3.97

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Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 30, 2020

Stockholders' Equity Note [Abstract]

Schedule of activity in accumulated other comprehensive income (loss) and amounts reclassified out of each component of accumulated other comprehensive (loss) income

The following tables present reclassifications out of accumulated other comprehensive income (loss) for the three and nine month periods ended September 30, 2020 and 2019.

	Three Months Ended September 30, 2020
(In thousands)	Before-Tax Amount		Tax (Expense) Benefit		Net of Tax
Available-for-sale debt securities:
Change in net unrealized gain/loss during the period	$	(4,374)	$	1,071	$	(3,303)
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	0		0		0
Net unrealized gains/losses	(4,374)		1,071		(3,303)
Employee benefit plans:
Amortization of net retirement plan actuarial gain	593		(146)		447
Amortization of net retirement plan prior service cost	53		(13)		40
Employee benefit plans	646		(159)		487
Other comprehensive (loss) income	$	(3,728)	$	912	$	(2,816)

	Three Months Ended September 30, 2019
(In thousands)	Before-Tax Amount		Tax (Expense) Benefit		Net of Tax
Available-for-sale debt securities:
Change in net unrealized gain/loss during the period	$	4,122	$	(1,011)	$	3,111
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	(133)		32		(101)
Net unrealized gains/losses	3,989		(979)		3,010
Employee benefit plans:
Amortization of net retirement plan actuarial gain	411		(101)		310
Amortization of net retirement plan prior service cost	4		(1)		3
Employee benefit plans	415		(102)		313
Other comprehensive income	$	4,404	$	(1,081)	$	3,323

	Nine Months Ended September 30, 2020
(In thousands)	Before-Tax Amount		Tax (Expense) Benefit		Net of Tax
Available-for-sale debt securities:
Change in net unrealized gain/loss during the period	$	24,592	$	(6,029)	$	18,563
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	(429)		105		(324)
Net unrealized gains/losses	24,163		(5,924)		18,239
Employee benefit plans:
Amortization of net retirement plan actuarial loss	1,775		(435)		1,340
Amortization of net retirement plan prior service cost	160		(39)		121
Employee benefit plans	1,935		(474)		1,461
Other comprehensive income	$	26,098	$	(6,398)	$	19,700

	Nine Months Ended September 30, 2019
(In thousands)	Before-Tax Amount		Tax (Expense) Benefit		Net of Tax
Available-for-sale debt securities:
Change in net unrealized gain/loss during the period	$	34,014	$	(8,333)	$	25,681
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	(404)		99		(305)
Net unrealized gains/losses	33,610		(8,234)		25,376
Employee benefit plans:
Amortization of net retirement plan actuarial loss	1,232		(302)		930
Amortization of net retirement plan prior service cost	11		(3)		8
Employee benefit plans	1,243		(305)		938
Other comprehensive income	$	34,853	$	(8,539)	$	26,314

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

(In thousands)	Available-for- Sale Debt Securities		Employee Benefit Plans		Accumulated Other Comprehensive (Loss) Income
Balance at July 1, 2020	$	25,581	$	(46,629)	$	(21,048)
Other comprehensive (loss) income before reclassifications	(3,303)		0		(3,303)
Amounts reclassified from accumulated other comprehensive (loss) income	0		487		487
Net current-period other comprehensive (loss) income	(3,303)		487		(2,816)
Balance at September 30, 2020	$	22,278	$	(46,142)	$	(23,864)
Balance at January 1, 2020	$	4,039	$	(47,603)	$	(43,564)
Other comprehensive (loss) income before reclassifications	18,563		0		18,563
Amounts reclassified from accumulated other comprehensive (loss) income	(324)		1,461		1,137
Net current-period other comprehensive income	18,239		1,461		19,700
Balance at September 30, 2020	$	22,278	$	(46,142)	$	(23,864)

(In thousands)	Available-for- Sale Debit Securities		Employee Benefit Plans		Accumulated Other Comprehensive (Loss) Income
Balance at July 1, 2019	$	(1,223)	$	(38,951)	$	(40,174)
Other comprehensive income (loss) before reclassifications	3,111		0		3,111
Amounts reclassified from accumulated other comprehensive (loss) income	(101)		313		212
Net current-period other comprehensive income	3,010		313		3,323
Balance at September 30, 2019	$	1,787	$	(38,638)	$	(36,851)
Balance at January 1, 2019	$	(23,589)	$	(39,576)	$	(63,165)
Other comprehensive income (loss) before reclassifications	25,681		0		25,681
Amounts reclassified from accumulated other comprehensive (loss) income	(305)		938		633
Net current-period other comprehensive income	25,376		938		26,314
Balance at September 30, 2019	$	1,787	$	(38,638)	$	(36,851)

Schedule of reclassifications out of accumulated other comprehensive income (loss)

The following tables present the amounts reclassified out of each component of accumulated other comprehensive (loss) income for the three and nine months ended September 30, 2020 and 2019.

Three Months Ended September 30, 2020
Details about Accumulated other Comprehensive Income (Loss) Components (In thousands)	Amount Reclassified from Accumulated Other Comprehensive (Loss) Income1		Affected Line Item in the Statement Where Net Income is Presented
Available-for-sale debt securities:
Unrealized gains and losses on available-for-sale debt securities	$	0	Net gain on securities transactions
	0		Tax expense
	0		Net of tax
Employee benefit plans:
Amortization of the following 2
Net retirement plan actuarial loss	(593)		Other operating expense
Net retirement plan prior service cost	(53)		Other operating expense
	(646)		Total before tax
	159		Tax benefit
	$	(487)	Net of tax

Three Months Ended September 30, 2019
Details about Accumulated other Comprehensive Income (Loss) Components (In thousands)	Amount Reclassified from Accumulated Other Comprehensive (Loss) Income1		Affected Line Item in the Statement Where Net Income is Presented
Available-for-sale debt securities:
Unrealized gains and losses on available-for-sale debt securities	$	133	Net gain on securities transactions
	(32)		Tax expense
	101		Net of tax
Employee benefit plans:
Amortization of the following2
Net retirement plan actuarial loss	(411)		Other operating expense
Net retirement plan prior service cost	(4)		Other operating expense
	(415)		Total before tax
	102		Tax benefit
	$	(313)	Net of tax

Nine Months Ended September 30, 2020
Details about Accumulated other Comprehensive Income (Loss) Components (In thousands)	Amount Reclassified from Accumulated Other Comprehensive (Loss) Income1		Affected Line Item in the Statement Where Net Income is Presented
Available-for-sale debt securities:
Unrealized gains and losses on available-for-sale debt securities	$	429	Net gain on securities transactions
	(105)		Tax expense
	324		Net of tax
Employee benefit plans:
Amortization of the following2
Net retirement plan actuarial loss	(1,775)		Other operating expense
Net retirement plan prior service cost	(160)		Other operating expense
	(1,935)		Total before tax
	474		Tax benefit
	$	(1,461)	Net of tax

Nine Months Ended September 30, 2019
Details about Accumulated other Comprehensive Income (Loss) Components (In thousands)	Amount Reclassified from Accumulated Other Comprehensive (Loss) Income1		Affected Line Item in the Statement Where Net Income is Presented
Available-for-sale debt securities:
Unrealized gains and losses on available-for-sale debt securities	$	404	Net gain on securities transactions
	(99)		Tax expense
	305		Net of tax
Employee benefit plans:
Amortization of the following2
Net retirement plan actuarial loss	(1,232)		Other operating expense
Net retirement plan prior service cost	(11)		Other operating expense
	(1,243)		Total before tax
	305		Tax benefit
	$	(938)	Net of tax

1 Amounts in parentheses indicated debits in income statement.

2 The accumulated other comprehensive (loss) income components are included in the computation of net periodic benefit cost (See Note 8 - “Employee Benefit Plan”).

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Employee Benefit Plan (Tables)

9 Months Ended

Sep. 30, 2020

Retirement Benefits [Abstract]

Schedule of components of net periodic benefit cost

Components of Net Periodic Benefit Cost

	Pension Benefits Three Months Ended				Life and Health Three Months Ended				SERP Benefits Three Months Ended
(In thousands)	9/30/2020		9/30/2019		9/30/2020		9/30/19		9/30/2020		9/30/2019
Service cost	$	0	$	0	$	43	$	40	$	54	$	38
Interest cost	593		734		61		72		228		228
Expected return on plan assets	(1,354)		(1,233)		0		0		0		0
Amortization of net retirement plan actuarial loss	353		333		39		0		200		78
Amortization of net retirement plan prior service (credit) cost	(2)		(3)		(15)		(15)		71		22
Net periodic benefit (income) cost	$	(410)	$	(169)	$	128	$	97	$	553	$	366

	Pension Benefits Nine Months Ended				Life and Health Nine Months Ended				SERP Benefits Nine Months Ended
(In thousands)	9/30/2020		9/30/2019		9/30/2020		9/30/2019		9/30/2020		9/30/2019
Service cost	$	0	$	0	$	129	$	120	$	161	$	115
Interest cost	1,778		2,202		183		217		685		684
Expected return on plan assets	(4,062)		(3,699)		0		0		0		0
Amortization of net retirement plan actuarial loss	1,058		1,000		116		0		600		232
Amortization of net retirement plan prior service cost (credit)	(7)		(8)		(45)		(46)		214		65
Net periodic benefit (income) cost	$	(1,233)	$	(505)	$	383	$	291	$	1,660	$	1,096

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Other Income and Operating Expense (Tables)

9 Months Ended

Sep. 30, 2020

Other Income and Expenses [Abstract]

Schedule of other income and operating expense

Other income and operating expense totals are presented in the table below.  Components of these totals exceeding 1% of the aggregate of total noninterest income and total noninterest expenses for any of the periods presented below are stated separately.

	Three Months Ended				Nine Months Ended
(In thousands)	9/30/2020		9/30/2019		9/30/2020		9/30/2019
Noninterest Income
Other service charges	$	720	$	809	$	2,108	$	2,405
Increase in cash surrender value of corporate owned life insurance	559		425		1,617		1,612
Net gains on the sales of loans originated for sale	378		25		1,245		139
Other income	161		704		1,418		2,091
Total other income	$	1,818	$	1,963	$	6,388	$	6,247
Noninterest Expenses
Marketing expense	$	927	$	899	$	2,806	$	3,706
Professional fees	1,398		2,426		4,654		7,169
Legal fees	418		347		955		788
Technology expense	2,941		2,813		8,771		8,016
Cardholder expense	827		811		2,396		2,372
Off-balance sheet commitments	(417)		0		1,273		0
Other expenses	4,195		4,002		13,971		13,400
Total other operating expense	$	10,289	$	11,298	$	34,826	$	35,451

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Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Schedule of disaggregation of noninterest income, segregated by revenue streams in-scope and out-of-scope of ASC 606

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of ASC 606, for the three and nine months ended September 30, 2020 and 2019.

	Three Months Ended
(In thousands)	09/30/2020		09/30/2019
Noninterest Income
In-scope of Topic 606:
Commissions and Fees	$	8,136	$	7,918
Installment Billing		175		150
Refund of Commissions		(104)		(51)
Contract Liabilities/Deferred Revenue		0		0
Contingent Commissions		709		500
Subtotal Insurance Revenues		8,916		8,517
Trust and Asset Management		3,070		2,920
Mutual Fund & Investment Income		1,222		1,255
Subtotal Investment Service Income		4,292		4,175
Service Charges on Deposit Accounts		1,444		2,191
Card Services Income		2,419		2,550
Other		285		306
Noninterest Income (in-scope of ASC 606)		17,356		17,739
Noninterest Income (out-of-scope of ASC 606)		1,531		1,795
Total Noninterest Income	$	18,887	$	19,534

	Nine Months Ended
(In thousands)	09/30/2020		09/30/2019
Noninterest Income
In-scope of Topic 606:
Commissions and Fees	$	22,545	$	21,984
Installment Billing		96		58
Refund of Commissions		(458)		(31)
Contract Liabilities/Deferred Revenue		(208)		(188)
Contingent Commissions		2,241		2,491
Subtotal Insurance Revenues		24,216		24,314
Trust and Asset Management		8,798		8,417
Mutual Fund & Investment Income		3,616		3,749
Subtotal Investment Service Income		12,414		12,166
Service Charges on Deposit Accounts		4,675		6,210
Card Services Income		6,885		8,090
Other		837		878
Noninterest Income (in-scope of ASC 606)		49,027		51,658
Noninterest Income (out-of-scope of ASC 606)		5,997		5,803
Total Noninterest Income	$	55,024	$	57,461

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Segment and Related Information (Table)

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Schedule of segment and related information

Summarized financial information concerning the Company’s reportable segments and the reconciliation to the Company’s consolidated results is shown in the following table. Investment in subsidiaries is netted out of the presentations below. The “Intercompany” column identifies the intercompany activities of revenues, expenses and other assets between the banking, insurance and wealth management services segments. The Company accounts for intercompany fees and services at an estimated fair value according to regulatory requirements for the services provided. Intercompany items relate primarily to the use of human resources, information systems, accounting and marketing services provided by any of the banks and the holding company. All other accounting policies are the same as those described in the summary of significant accounting policies in the 2019 Annual Report on Form 10-K.

As of and for the three months ended September 30, 2020
(In thousands)	Banking		Insurance		Wealth Management		Intercompany		Consolidated
Interest income	$	64,316	$	1	$	0	$	(1)	$	64,316
Interest expense	6,064		0		0		(1)		6,063
Net interest income	58,252		1		0		0		58,253
Provision for credit loss expense	199		0		0		0		199
Noninterest income	5,976		9,023		4,434		(546)		18,887
Noninterest expense	36,988		6,559		3,348		(546)		46,349
Income before income tax expense	27,041		2,465		1,086		0		30,592
Income tax expense	5,397		670		263		0		6,330
Net Income attributable to noncontrolling interests and Tompkins Financial Corporation	21,644		1,795		823		0		24,262
Less:  Net income attributable to noncontrolling interests	32		0		0		0		32
Net Income attributable to Tompkins Financial Corporation	$	21,612	$	1,795	$	823	$	0	$	24,230
Depreciation and amortization	$	2,474	$	57	$	18	$	0	$	2,549
Assets	7,738,933		42,269		26,956		(13,656)		7,794,502
Goodwill	64,585		19,866		7,996		0		92,447
Other intangibles, net	2,600		2,507		104		0		5,211
Net loans and leases	5,346,004		0		0		0		5,346,004
Deposits	6,613,421		0		0		(12,183)		6,601,238
Total Equity	657,370		32,095		24,146		0		713,611

As of and for the three months ended September 30, 2019
(In thousands)	Banking		Insurance		Wealth Management		Intercompany		Consolidated
Interest income	$	65,775	$	1	$	0	$	(1)	$	65,775
Interest expense	12,620		0		0		(1)		12,619
Net interest income	53,155		1		0		0		53,156
Provision for credit loss expense	1,320		0		0		0		1,320
Noninterest income	7,134		8,620		4,310		(530)		19,534
Noninterest expense	36,309		6,672		3,204		(530)		45,655
Income before income tax expense	22,660		1,949		1,106		0		25,715
Income tax expense	4,669		526		283		0		5,478
Net Income attributable to noncontrolling interests and Tompkins Financial Corporation	17,991		1,423		823		0		20,237
Less:  Net income attributable to noncontrolling interests	31		0		0		0		31
Net Income attributable to Tompkins Financial  Corporation	$	17,960	$	1,423	$	823	$	0	$	20,206
Depreciation and amortization	$	2,483	$	56	$	10	$	0	$	2,549
Assets	6,575,073		42,753		23,497		(13,341)		6,627,982
Goodwill	64,370		19,866		8,211		0		92,447
Other intangibles, net	3,472		3,011		164		0		6,647
Net loans and leases	4,815,702		0		0		0		4,815,702
Deposits	5,382,174		0		0		(12,184)		5,369,990
Total Equity	605,572		33,116		21,177		0		659,865

Nine months ended September 30, 2020
(In thousands)	Banking		Insurance		Wealth Management		Intercompany		Consolidated
Interest income	$	190,960	$	3	$	0	$	(3)	$	190,960
Interest expense	23,375		0		0		(3)		23,372
Net interest income	167,585		3		0		0		167,588
Provision for credit loss expense	16,145		0		0		0		16,145
Noninterest income	19,217		24,533		12,903		(1,629)		55,024
Noninterest expense	111,387		19,479		9,740		(1,629)		138,977
Income before income tax expense	59,270		5,057		3,163		0		67,490
Income tax expense	11,665		1,362		752		0		13,779
Net Income attributable to noncontrolling interests and Tompkins Financial Corporation	47,605		3,695		2,411		0		53,711
Less:  Net income attributable to noncontrolling interests	101		0		0		0		101
Net Income attributable to Tompkins Financial Corporation	$	47,504	$	3,695	$	2,411	$	0	$	53,610
Depreciation and amortization	$	7,443	$	173	$	38	$	0	$	7,654

Nine months ended September 30, 2019
(In thousands)	Banking		Insurance		Wealth Management		Intercompany		Consolidated
Interest income	$	196,797	$	2	$	0	$	(3)	$	196,796
Interest expense	39,410		0		0		(2)		39,408
Net interest income	157,387		2		0		(1)		$	157,388
Provision for credit loss expense	2,366		0		0		0		2,366
Noninterest income	21,852		24,621		12,567		(1,579)		57,461
Noninterest expense	108,704		19,279		9,529		(1,578)		135,934
Income before income tax expense	68,169		5,344		3,038		(2)		$	76,549
Income tax expense	13,650		1,418		748		0		15,816
Net Income attributable to noncontrolling interests and Tompkins Financial Corporation	54,519		3,926		2,290		(2)		$	60,733
Less:  Net income attributable to noncontrolling interests	95		0		0		0		95
Net Income attributable to Tompkins Financial Corporation	$	54,424	$	3,926	$	2,290	$	(2)	$	60,638
Depreciation and amortization	$	7,296	$	168	$	31	$	0	$	7,495

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Summary of financial assets and financial liabilities measured at fair value on recurring basis

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019, segregated by the level of valuation inputs within the fair value hierarchy used to measure fair value.

Recurring Fair Value Measurements
September 30, 2020
(In thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Available-for-sale debt securities
Obligations of U.S. Government sponsored entities	$	612,481	$	0	$	612,481	$	0
Obligations of U.S. states and political subdivisions	129,258		0		129,258		0
Mortgage-backed securities – residential, issued by:
U.S. Government agencies	207,501		0		207,501		0
U.S. Government sponsored entities	715,160		0		715,160		0
U.S. corporate debt securities	2,366		0		2,366		0
Total Available-for-sale debt securities	$	1,666,766	$	0	$	1,666,766	$	0
Equity securities, at fair value	$	932	$	0	$	0	$	932

Recurring Fair Value Measurements
December 31, 2019
(In thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Available-for-sale debt securities
U.S. Treasuries	$	1,840	$	0	$	1,840	$	0
Obligations of U.S. Government sponsored entities	372,488		0		372,488		0
Obligations of U.S. states and political subdivisions	97,785		0		97,785		0
Mortgage-backed securities – residential, issued by:
U.S. Government agencies	164,451		0		164,451		0
U.S. Government sponsored entities	659,590		0		659,590		0
U.S. corporate debt securities	2,433		0		2,433		0
Total Available-for-sale debt securities	$	1,298,587	$	0	$	1,298,587	$	0
Equity securities, at fair value	$	915	$	0	$	0	$	915

Schedule of assets measured at fair value on nonrecurring basis

Three months ended September 30, 2020
(In thousands)			Fair value measurements at reporting date using:						Gain (losses) from fair value changes
Assets:	As of 09/30/2020		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Three months ended 9/30/2020
Individually evaluated	$	6,330	$	0	$	6,330	$	0	$	0
Other real estate owned	36		0		36		0		(4)

Three months ended September 30, 2019
(In thousands)			Fair value measurements at reporting date using:						Gain (losses) from fair value changes
Assets:	As of 09/30/2019		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Three months ended 9/30/2019
Impaired loans	$	10,096	$	0	$	10,096	$	0	$	(550)
Other real estate owned	139		0		139		0		95

Nine months ended September 30, 2020
(In thousands)			Fair value measurements at reporting date using:						Gain (losses) from fair value changes
Assets:	As of 09/30/2020		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Nine months ended 9/30/2020
Individually evaluated	$	10,759	$	0	$	10,759	$	0	$	(1,305)
Other real estate owned	124		0		124		0		(27)

Nine months ended September 30, 2019
(In thousands)			Fair value measurements at reporting date using:						Gain (losses) from fair value changes
Assets:	As of 09/30/2019		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Nine months ended 9/30/2019
Impaired loans	$	12,565	$	0	$	12,565	$	0	$	(4,184)
Other real estate owned	888		0		888		0		0

Schedule of carrying amount and estimated fair value of financial instruments

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments at September 30, 2020 and December 31, 2019. The carrying amounts shown in the table are included in the Consolidated Statements of Condition under the indicated captions.

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

Estimated Fair Value of Financial Instruments
September 30, 2020
(In thousands)	Carrying Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets:
Cash and cash equivalents	$	374,739	$	374,739	$	374,739	$	0	$	0
FHLB and other stock	17,919		17,919		0		17,919		0
Accrued interest receivable	38,212		38,212		0		38,212		0
Loans/leases, net1	5,346,004		5,370,911		0		10,759		5,360,152
Financial Liabilities:
Time deposits	$	706,401	$	714,256	$	0	$	714,256	$	0
Other deposits	5,894,837		5,894,837		0		5,894,837		0
Fed funds purchased and securities sold
under agreements to repurchase	63,573		63,573		0		63,573		0
Other borrowings	285,000		295,374		0		295,374		0
Trust preferred debentures	17,163		21,240		0		21,240		0
Accrued interest payable	1,702		1,702		0		1,702		0

Estimated Fair Value of Financial Instruments
December 31, 2019
(In thousands)	Carrying Amount		Fair  Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets:
Cash and cash equivalents	$	137,982	$	137,982	$	137,982	$	0	$	0
FHLB and other stock	33,695		33,695		0		33,695		0
Accrued interest receivable	19,293		19,293		0		19,293		0
Loans/leases, net1	4,877,658		4,798,268		0		14,050		4,784,218
Financial Liabilities:
Time deposits	$	675,014	$	677,205	$	0	$	677,205	$	0
Other deposits	4,537,907		4,537,907		0		4,537,907		0
Fed funds purchased and securities
sold under agreements to repurchase	60,346		60,346		0		60,346		0
Other borrowings	658,100		659,895		0		659,895		0
Trust preferred debentures	17,035		21,904		0		21,904		0
Accrued interest payable	2,486		2,486		0		2,486		0

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

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Business (Details)	9 Months Ended
	Sep. 30, 2020 subsidiary
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of wholly owned subsidiaries	4

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Securities - Schedule of Available-for-Sales Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Debt Securities, Available-for-sale [Line Items]
Total available-for-sale debt securities	$ 1,637,255	$ 1,293,239
Gross Unrealized Gains	32,487	10,466
Gross Unrealized Losses	2,976	5,118
Fair Value	1,666,766	1,298,587
U.S. Treasuries
Debt Securities, Available-for-sale [Line Items]
Total available-for-sale debt securities		1,840
Gross Unrealized Gains		0
Gross Unrealized Losses		0
Fair Value		1,840
Obligations of U.S. Government sponsored entities
Debt Securities, Available-for-sale [Line Items]
Total available-for-sale debt securities	602,417	367,551
Gross Unrealized Gains	10,881	5,021
Gross Unrealized Losses	817	84
Fair Value	612,481	372,488
Obligations of U.S. states and political subdivisions
Debt Securities, Available-for-sale [Line Items]
Total available-for-sale debt securities	126,593	96,668
Gross Unrealized Gains	2,840	1,178
Gross Unrealized Losses	175	61
Fair Value	129,258	97,785
U.S. Government agencies
Debt Securities, Available-for-sale [Line Items]
Total available-for-sale debt securities	205,507	164,643
Gross Unrealized Gains	2,981	1,327
Gross Unrealized Losses	987	1,519
Fair Value	207,501	164,451
U.S. Government sponsored entities
Debt Securities, Available-for-sale [Line Items]
Total available-for-sale debt securities	700,238	660,037
Gross Unrealized Gains	15,785	2,940
Gross Unrealized Losses	863	3,387
Fair Value	715,160	659,590
U.S. corporate debt securities
Debt Securities, Available-for-sale [Line Items]
Total available-for-sale debt securities	2,500	2,500
Gross Unrealized Gains	0	0
Gross Unrealized Losses	134	67
Fair Value	$ 2,366	$ 2,433

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Securities - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Realized gains on available-for-sale debt securities	$ 0	$ 133	$ 429	$ 999
Realized losses on available-for-sale debt securities	0	0	0	595
Proceeds from sales of available-for-sale debt securities	0	$ 24,200	42,333	$ 176,249
Realized loss on equity securities, net	2
Realized gains on equity securities, net			17
Federal Home Loan Bank New York (FHLBNY)
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Holdings of FHLBNY, FHLBPITT and ACBB stock, amount of advances	11,900		11,900
Federal Home Loan Bank Pittsburgh (FHLBPITT)
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Holdings of FHLBNY, FHLBPITT and ACBB stock, amount of advances	5,900		5,900
Atlantic Central Bankers Bank (ACBB)
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Holdings of FHLBNY, FHLBPITT and ACBB stock, amount of advances	$ 95		$ 95

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Securities - Schedule of Securities with Unrealized Losses (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Available-for-sale securities
Fair Value, Less than 12 Months	$ 477,272	$ 241,757
Unrealized Losses, Less than 12 Months	2,522	1,371
Fair Value, 12 Months or Longer	10,856	288,210
Unrealized Losses, 12 Months or Longer	454	3,747
Fair Value	488,128	529,967
Unrealized Losses	2,976	5,118
Obligations of U.S. Government sponsored entities
Available-for-sale securities
Fair Value, Less than 12 Months	303,834	18,654
Unrealized Losses, Less than 12 Months	817	76
Fair Value, 12 Months or Longer	0	3,479
Unrealized Losses, 12 Months or Longer	0	8
Fair Value	303,834	22,133
Unrealized Losses	817	84
Obligations of U.S. states and political subdivisions
Available-for-sale securities
Fair Value, Less than 12 Months	15,328	10,456
Unrealized Losses, Less than 12 Months	175	54
Fair Value, 12 Months or Longer	0	2,300
Unrealized Losses, 12 Months or Longer	0	7
Fair Value	15,328	12,756
Unrealized Losses	175	61
U.S. Government agencies
Available-for-sale securities
Fair Value, Less than 12 Months	46,990	54,846
Unrealized Losses, Less than 12 Months	736	489
Fair Value, 12 Months or Longer	2,978	45,999
Unrealized Losses, 12 Months or Longer	251	1,030
Fair Value	49,968	100,845
Unrealized Losses	987	1,519
U.S. Government sponsored entities
Available-for-sale securities
Fair Value, Less than 12 Months	111,120	157,801
Unrealized Losses, Less than 12 Months	794	752
Fair Value, 12 Months or Longer	5,512	233,999
Unrealized Losses, 12 Months or Longer	69	2,635
Fair Value	116,632	391,800
Unrealized Losses	863	3,387
U.S. corporate debt securities
Available-for-sale securities
Fair Value, Less than 12 Months	0	0
Unrealized Losses, Less than 12 Months	0	0
Fair Value, 12 Months or Longer	2,366	2,433
Unrealized Losses, 12 Months or Longer	134	67
Fair Value	2,366	2,433
Unrealized Losses	$ 134	$ 67

XML

Securities - Schedule of Available-for-Sales Securities Amortized Cost and Estimated Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Amortized Cost
Total	$ 731,510	$ 468,559
Mortgage-backed securities	905,745	824,680
Total available-for-sale debt securities	1,637,255	1,293,239
Fair Value
Total	744,105	474,546
Mortgage-backed securities	922,661	824,041
Total available-for-sale debt securities	1,666,766	1,298,587
Available-for-sale securities
Amortized Cost
Due in one year or less	53,447	107,975
Due after one year through five years	391,466	270,477
Due after five years through ten years	221,525	77,710
Due after ten years	65,072	12,397
Fair Value
Due in one year or less	54,083	108,089
Due after one year through five years	401,757	274,798
Due after five years through ten years	222,846	79,165
Due after ten years	$ 65,419	$ 12,494

XML

Loans and Leases - Schedule of Loans and Leases (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	$ 5,410,325	$ 4,921,195
Less: unearned income and deferred costs and fees	(12,028)	(3,645)
Total loans and leases, net of unearned income and deferred costs and fees	5,398,297	4,917,550
Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	1,343,875	1,008,061
Commercial and industrial | Agriculture
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	89,068	105,786
Total loans and leases, net of unearned income and deferred costs and fees	89,068
Commercial and industrial | Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	790,749	902,275
Total loans and leases, net of unearned income and deferred costs and fees	790,749
Commercial and industrial | PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	464,058	0
Total loans and leases, net of unearned income and deferred costs and fees	464,058
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	2,542,608	2,443,565
Commercial real estate | Agriculture
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	198,049	184,898
Total loans and leases, net of unearned income and deferred costs and fees	198,049
Commercial real estate | Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	2,161,954	2,045,030
Total loans and leases, net of unearned income and deferred costs and fees	2,161,954
Commercial real estate | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	182,605	213,637
Total loans and leases, net of unearned income and deferred costs and fees	182,605
Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	1,435,085	1,377,837
Residential real estate | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	206,456	219,245
Total loans and leases, net of unearned income and deferred costs and fees	206,456
Residential real estate | Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	1,228,629	1,158,592
Total loans and leases, net of unearned income and deferred costs and fees	1,228,629
Consumer and other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	73,880	74,410
Consumer and other | Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	64,346	61,446
Consumer and other | Indirect
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	9,534	12,964
Total loans and leases, net of unearned income and deferred costs and fees	9,534
Leases
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	$ 14,877	$ 17,322

XML

Loans and Leases - Schedule of Past Due Loans and Leases (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Financing Receivable, Past Due [Line Items]
Past due loans	$ 24,734
Current Loans	5,385,591	$ 4,899,707
Total	5,410,325	4,921,195
Loans Past Due Over 89 Days and Accruing	0	794
Nonaccrual	26,944	24,281
Less: unearned income and deferred costs and fees	(12,028)	(3,645)
Total loans and leases, net of unearned income and deferred costs and fees	24,734
Total loans and leases, net of unearned income and deferred costs and fees	5,373,563	4,896,062
Total loans and leases, net of unearned income and deferred costs and fees	5,398,297	4,917,550
30-59 Days
Financing Receivable, Past Due [Line Items]
Past due loans	4,340
Total loans and leases, net of unearned income and deferred costs and fees	4,340
60-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans	2,535
Total loans and leases, net of unearned income and deferred costs and fees	2,535
90 Days or More
Financing Receivable, Past Due [Line Items]
Past due loans	17,859	17,764
Total loans and leases, net of unearned income and deferred costs and fees	17,859	17,764
30-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans		3,724
Total loans and leases, net of unearned income and deferred costs and fees		3,724
Commercial and industrial
Financing Receivable, Past Due [Line Items]
Past due loans	2,462
Current Loans	1,341,413	1,005,502
Total	1,343,875	1,008,061
Loans Past Due Over 89 Days and Accruing	0	2
Nonaccrual	1,636	2,335
Commercial and industrial | 30-59 Days
Financing Receivable, Past Due [Line Items]
Past due loans	923
Commercial and industrial | 60-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans	96
Commercial and industrial | 90 Days or More
Financing Receivable, Past Due [Line Items]
Past due loans	1,443	2,146
Commercial and industrial | 30-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans		413
Commercial and industrial | Agriculture
Financing Receivable, Past Due [Line Items]
Past due loans	0
Current Loans	89,068	105,721
Total	89,068	105,786
Loans Past Due Over 89 Days and Accruing		0
Nonaccrual		0
Total loans and leases, net of unearned income and deferred costs and fees	89,068
Commercial and industrial | Agriculture | 30-59 Days
Financing Receivable, Past Due [Line Items]
Past due loans	0
Commercial and industrial | Agriculture | 60-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans	0
Commercial and industrial | Agriculture | 90 Days or More
Financing Receivable, Past Due [Line Items]
Past due loans	0	65
Commercial and industrial | Agriculture | 30-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans		0
Commercial and industrial | Other
Financing Receivable, Past Due [Line Items]
Past due loans	2,462
Current Loans	788,287	899,781
Total	790,749	902,275
Loans Past Due Over 89 Days and Accruing	0	2
Nonaccrual	1,636	2,335
Total loans and leases, net of unearned income and deferred costs and fees	790,749
Commercial and industrial | Other | 30-59 Days
Financing Receivable, Past Due [Line Items]
Past due loans	923
Commercial and industrial | Other | 60-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans	96
Commercial and industrial | Other | 90 Days or More
Financing Receivable, Past Due [Line Items]
Past due loans	1,443	2,081
Commercial and industrial | Other | 30-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans		413
Commercial and industrial | PPP loans
Financing Receivable, Past Due [Line Items]
Past due loans	0
Current Loans	464,058
Total	464,058	0
Total loans and leases, net of unearned income and deferred costs and fees	464,058
Commercial and industrial | PPP loans | 30-59 Days
Financing Receivable, Past Due [Line Items]
Past due loans	0
Commercial and industrial | PPP loans | 60-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans	0
Commercial and industrial | PPP loans | 90 Days or More
Financing Receivable, Past Due [Line Items]
Past due loans	0
Commercial real estate
Financing Receivable, Past Due [Line Items]
Past due loans	15,811
Current Loans	2,526,797	2,431,645
Total	2,542,608	2,443,565
Loans Past Due Over 89 Days and Accruing	0	542
Nonaccrual	12,777	10,789
Commercial real estate | 30-59 Days
Financing Receivable, Past Due [Line Items]
Past due loans	2,255
Commercial real estate | 60-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans	1,079
Commercial real estate | 90 Days or More
Financing Receivable, Past Due [Line Items]
Past due loans	12,477	10,780
Commercial real estate | 30-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans		1,140
Commercial real estate | Agriculture
Financing Receivable, Past Due [Line Items]
Past due loans	0
Current Loans	198,049	184,898
Total	198,049	184,898
Loans Past Due Over 89 Days and Accruing	0	0
Nonaccrual	120	0
Total loans and leases, net of unearned income and deferred costs and fees	198,049
Commercial real estate | Agriculture | 30-59 Days
Financing Receivable, Past Due [Line Items]
Past due loans	0
Commercial real estate | Agriculture | 60-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans	0
Commercial real estate | Agriculture | 90 Days or More
Financing Receivable, Past Due [Line Items]
Past due loans	0	0
Commercial real estate | Agriculture | 30-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans		0
Commercial real estate | Other
Financing Receivable, Past Due [Line Items]
Past due loans	15,811
Current Loans	2,146,143	2,033,110
Total	2,161,954	2,045,030
Loans Past Due Over 89 Days and Accruing	0	542
Nonaccrual	12,657	10,789
Total loans and leases, net of unearned income and deferred costs and fees	2,161,954
Commercial real estate | Other | 30-59 Days
Financing Receivable, Past Due [Line Items]
Past due loans	2,255
Commercial real estate | Other | 60-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans	1,079
Commercial real estate | Other | 90 Days or More
Financing Receivable, Past Due [Line Items]
Past due loans	12,477	10,780
Commercial real estate | Other | 30-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans		1,140
Commercial real estate | Construction
Financing Receivable, Past Due [Line Items]
Past due loans	0
Current Loans	182,605	213,637
Total	182,605	213,637
Loans Past Due Over 89 Days and Accruing		0
Nonaccrual		0
Total loans and leases, net of unearned income and deferred costs and fees	182,605
Commercial real estate | Construction | 30-59 Days
Financing Receivable, Past Due [Line Items]
Past due loans	0
Commercial real estate | Construction | 60-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans	0
Commercial real estate | Construction | 90 Days or More
Financing Receivable, Past Due [Line Items]
Past due loans	0	0
Commercial real estate | Construction | 30-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans		0
Residential real estate
Financing Receivable, Past Due [Line Items]
Past due loans	6,003
Current Loans	1,429,082	1,371,433
Total	1,435,085	1,377,837
Loans Past Due Over 89 Days and Accruing	0	250
Nonaccrual	12,203	10,882
Residential real estate | 30-59 Days
Financing Receivable, Past Due [Line Items]
Past due loans	957
Residential real estate | 60-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans	1,318
Residential real estate | 90 Days or More
Financing Receivable, Past Due [Line Items]
Past due loans	3,728	4,712
Residential real estate | 30-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans		1,692
Residential real estate | Home equity
Financing Receivable, Past Due [Line Items]
Past due loans	1,689
Current Loans	204,767	218,170
Total	206,456	219,245
Loans Past Due Over 89 Days and Accruing	0	55
Nonaccrual	2,793	2,796
Total loans and leases, net of unearned income and deferred costs and fees	206,456
Residential real estate | Home equity | 30-59 Days
Financing Receivable, Past Due [Line Items]
Past due loans	475
Residential real estate | Home equity | 60-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans	135
Residential real estate | Home equity | 90 Days or More
Financing Receivable, Past Due [Line Items]
Past due loans	1,079	727
Residential real estate | Home equity | 30-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans		348
Residential real estate | Mortgages
Financing Receivable, Past Due [Line Items]
Past due loans	4,314
Current Loans	1,224,315	1,153,263
Total	1,228,629	1,158,592
Loans Past Due Over 89 Days and Accruing	0	195
Nonaccrual	9,410	8,086
Total loans and leases, net of unearned income and deferred costs and fees	1,228,629
Residential real estate | Mortgages | 30-59 Days
Financing Receivable, Past Due [Line Items]
Past due loans	482
Residential real estate | Mortgages | 60-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans	1,183
Residential real estate | Mortgages | 90 Days or More
Financing Receivable, Past Due [Line Items]
Past due loans	2,649	3,985
Residential real estate | Mortgages | 30-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans		1,344
Consumer and other
Financing Receivable, Past Due [Line Items]
Past due loans	458
Current Loans	73,422	73,805
Total	73,880	74,410
Loans Past Due Over 89 Days and Accruing	0	0
Nonaccrual	328	275
Consumer and other | 30-59 Days
Financing Receivable, Past Due [Line Items]
Past due loans	205
Consumer and other | 60-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans	42
Consumer and other | 90 Days or More
Financing Receivable, Past Due [Line Items]
Past due loans	211	126
Consumer and other | 30-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans		479
Consumer and other | Other
Financing Receivable, Past Due [Line Items]
Past due loans	283
Current Loans	64,063	61,213
Total	64,346	61,446
Loans Past Due Over 89 Days and Accruing	0	0
Nonaccrual	184	158
Consumer and other | Other | 30-59 Days
Financing Receivable, Past Due [Line Items]
Past due loans	119
Consumer and other | Other | 60-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans	10
Consumer and other | Other | 90 Days or More
Financing Receivable, Past Due [Line Items]
Past due loans	154	66
Consumer and other | Other | 30-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans		167
Consumer and other | Indirect
Financing Receivable, Past Due [Line Items]
Past due loans	175
Current Loans	9,359	12,592
Total	9,534	12,964
Loans Past Due Over 89 Days and Accruing	0	0
Nonaccrual	144	117
Total loans and leases, net of unearned income and deferred costs and fees	9,534
Consumer and other | Indirect | 30-59 Days
Financing Receivable, Past Due [Line Items]
Past due loans	86
Consumer and other | Indirect | 60-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans	32
Consumer and other | Indirect | 90 Days or More
Financing Receivable, Past Due [Line Items]
Past due loans	57	60
Consumer and other | Indirect | 30-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans		312
Leases
Financing Receivable, Past Due [Line Items]
Past due loans	0
Current Loans	14,877	17,322
Total	14,877	17,322
Loans Past Due Over 89 Days and Accruing	0	0
Nonaccrual	0	0
Leases | 30-59 Days
Financing Receivable, Past Due [Line Items]
Past due loans	0
Leases | 60-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans	0
Leases | 90 Days or More
Financing Receivable, Past Due [Line Items]
Past due loans	$ 0	0
Leases | 30-89 Days
Financing Receivable, Past Due [Line Items]
Past due loans		$ 0

XML

Loans and Leases - Nonaccrual Loans (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans with no Allowance for Credit Losses	$ 24,212,000	$ 24,212,000
Nonaccrual	26,944,000	26,944,000	$ 24,281,000
Loans Past Due Over 89 Days and Accruing	0	0	794,000
Interest on nonaccrual loans	0	0
Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans with no Allowance for Credit Losses	1,469,000	1,469,000
Nonaccrual	1,636,000	1,636,000	2,335,000
Loans Past Due Over 89 Days and Accruing	0	0	2,000
Commercial and industrial | Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans with no Allowance for Credit Losses	1,469,000	1,469,000
Nonaccrual	1,636,000	1,636,000	2,335,000
Loans Past Due Over 89 Days and Accruing	0	0	2,000
Commercial and industrial | Agriculture
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual			0
Loans Past Due Over 89 Days and Accruing			0
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans with no Allowance for Credit Losses	10,212,000	10,212,000
Nonaccrual	12,777,000	12,777,000	10,789,000
Loans Past Due Over 89 Days and Accruing	0	0	542,000
Commercial real estate | Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans with no Allowance for Credit Losses	10,092,000	10,092,000
Nonaccrual	12,657,000	12,657,000	10,789,000
Loans Past Due Over 89 Days and Accruing	0	0	542,000
Commercial real estate | Agriculture
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans with no Allowance for Credit Losses	120,000	120,000
Nonaccrual	120,000	120,000	0
Loans Past Due Over 89 Days and Accruing	0	0	0
Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans with no Allowance for Credit Losses	12,203,000	12,203,000
Nonaccrual	12,203,000	12,203,000	10,882,000
Loans Past Due Over 89 Days and Accruing	0	0	250,000
Residential real estate | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans with no Allowance for Credit Losses	2,793,000	2,793,000
Nonaccrual	2,793,000	2,793,000	2,796,000
Loans Past Due Over 89 Days and Accruing	0	0	55,000
Residential real estate | Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans with no Allowance for Credit Losses	9,410,000	9,410,000
Nonaccrual	9,410,000	9,410,000	8,086,000
Loans Past Due Over 89 Days and Accruing	0	0	195,000
Consumer and other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans with no Allowance for Credit Losses	328,000	328,000
Nonaccrual	328,000	328,000	275,000
Loans Past Due Over 89 Days and Accruing	0	0	0
Consumer and other | Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans with no Allowance for Credit Losses	184,000	184,000
Nonaccrual	184,000	184,000	158,000
Loans Past Due Over 89 Days and Accruing	0	0	0
Consumer and other | Indirect
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans with no Allowance for Credit Losses	144,000	144,000
Nonaccrual	144,000	144,000	117,000
Loans Past Due Over 89 Days and Accruing	0	0	0
Leases
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans with no Allowance for Credit Losses	0	0
Nonaccrual	0	0	0
Loans Past Due Over 89 Days and Accruing	$ 0	$ 0	$ 0

XML

Allowance for Credit Losses - Schedule of Detail in Allowance for Loan and Lease Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	$ 52,082	$ 40,790	$ 39,892	$ 43,410
Charge-offs	(175)	(834)	(1,748)	(5,140)
Recoveries	187	95	538	735
Provision for credit loss expense	199	1,320	16,145	2,366
Ending balance	52,293	41,371	52,293	41,371
Commercial and industrial
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	11,113	11,543	10,541	11,272
Charge-offs	0	(6)	(1)	(489)
Recoveries	89	10	125	92
Provision for credit loss expense	(3,918)	(256)	(1,373)	416
Ending balance	7,284	11,291	7,284	11,291
Commercial real estate
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	24,286	21,005	21,608	23,483
Charge-offs	0	(551)	(1,305)	(3,949)
Recoveries	9	2	40	107
Provision for credit loss expense	4,264	2,143	14,133	2,958
Ending balance	28,559	22,599	28,559	22,599
Residential real estate
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	15,012	6,897	6,381	7,345
Charge-offs	(30)	(87)	(33)	(131)
Recoveries	16	15	178	319
Provision for credit loss expense	(65)	(733)	3,948	(1,441)
Ending balance	14,933	6,092	14,933	6,092
Consumer and other
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	1,596	1,345	1,362	1,310
Charge-offs	(145)	(190)	(409)	(571)
Recoveries	73	68	195	217
Provision for credit loss expense	(75)	166	(549)	433
Ending balance	1,449	1,389	1,449	1,389
Finance Leases
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	75	0	0	0
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision for credit loss expense	(7)	0	(14)	0
Ending balance	$ 68	$ 0	68	$ 0
Impact of adopting ASC 326
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance			(2,534)
Impact of adopting ASC 326 | Commercial and industrial
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance			(2,008)
Impact of adopting ASC 326 | Commercial real estate
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance			(5,917)
Impact of adopting ASC 326 | Residential real estate
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance			4,459
Impact of adopting ASC 326 | Consumer and other
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance			850
Impact of adopting ASC 326 | Finance Leases
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance			$ 82

XML

Allowance for Credit Losses - Collateral Dependent Loans (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	$ 10,618
ACL Allocation	486
Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	10,061
Business Assets
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	507
Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	50
Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	590
ACL Allocation	48
Commercial and Industrial | Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	33
Commercial and Industrial | Business Assets
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	507
Commercial and Industrial | Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	50
Commercial Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	8,085
ACL Allocation	436
Commercial Real Estate | Agriculture
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	1,559
ACL Allocation	0
Commercial Real Estate | Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	8,085
Commercial Real Estate | Real Estate | Agriculture
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	1,559
Commercial Real Estate | Business Assets
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	0
Commercial Real Estate | Business Assets | Agriculture
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	0
Commercial Real Estate | Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	0
Commercial Real Estate | Other | Agriculture
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	0
Residential real estate | Residential - Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	384
ACL Allocation	2
Residential real estate | Real Estate | Residential - Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	384
Residential real estate | Business Assets | Residential - Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	0
Residential real estate | Other | Residential - Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	$ 0

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Allowance for Credit Losses - Loans Evaluated for Impairment (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	$ 486
Ending balance	52,293	$ 52,082	$ 39,892	$ 41,371	$ 40,790	$ 43,410
Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	48
Ending balance	7,284	11,113	10,541	11,291	11,543	11,272
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	436
Ending balance	28,559	24,286	21,608	22,599	21,005	23,483
Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Ending balance	14,933	15,012	6,381	6,092	6,897	7,345
Consumer and other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Ending balance	1,449	1,596	1,362	1,389	1,345	1,310
Finance Leases
Accounts, Notes, Loans and Financing Receivable [Line Items]
Ending balance	$ 68	$ 75	0	$ 0	$ 0	$ 0
Originated
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment			907
Collectively evaluated for impairment			38,907
Ending balance			39,814
Originated | Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment			245
Collectively evaluated for impairment			10,296
Ending balance			10,541
Originated | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment			662
Collectively evaluated for impairment			20,895
Ending balance			21,557
Originated | Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment			0
Collectively evaluated for impairment			6,360
Ending balance			6,360
Originated | Consumer and other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment			0
Collectively evaluated for impairment			1,356
Ending balance			1,356
Originated | Finance Leases
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment			0
Collectively evaluated for impairment			0
Ending balance			0
Acquired
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment			0
Collectively evaluated for impairment			78
Ending balance			78
Acquired | Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment			0
Collectively evaluated for impairment			0
Ending balance			0
Acquired | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment			0
Collectively evaluated for impairment			51
Ending balance			51
Acquired | Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment			0
Collectively evaluated for impairment			21
Ending balance			21
Acquired | Consumer and other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment			0
Collectively evaluated for impairment			6
Ending balance			6
Acquired | Finance Leases
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment			0
Collectively evaluated for impairment			0
Ending balance			$ 0

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Allowance for Credit Losses - Recorded Investment in Loans and Leases (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	$ 10,618
Total loans and leases, net of unearned income and deferred costs and fees	5,398,297	$ 4,917,550
Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	590
Commercial Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	$ 8,085
Originated
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment		19,385
Collectively evaluated for impairment		4,681,661
Total loans and leases, net of unearned income and deferred costs and fees		4,701,046
Originated | Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment		2,110
Collectively evaluated for impairment		966,875
Total loans and leases, net of unearned income and deferred costs and fees		968,985
Originated | Commercial Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment		13,496
Collectively evaluated for impairment		2,283,152
Total loans and leases, net of unearned income and deferred costs and fees		2,296,648
Originated | Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment		3,779
Collectively evaluated for impairment		1,340,687
Total loans and leases, net of unearned income and deferred costs and fees		1,344,466
Originated | Consumer and other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment		0
Collectively evaluated for impairment		73,625
Total loans and leases, net of unearned income and deferred costs and fees		73,625
Originated | Finance Leases
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment		0
Collectively evaluated for impairment		17,322
Total loans and leases, net of unearned income and deferred costs and fees		17,322
Acquired
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment		2,830
Loans acquired with deteriorated credit quality		9,149
Collectively evaluated for impairment		208,170
Total loans and leases, net of unearned income and deferred costs and fees		220,149
Acquired | Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment		2
Loans acquired with deteriorated credit quality		173
Collectively evaluated for impairment		38,901
Total loans and leases, net of unearned income and deferred costs and fees		39,076
Acquired | Commercial Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment		714
Loans acquired with deteriorated credit quality		5,674
Collectively evaluated for impairment		140,529
Total loans and leases, net of unearned income and deferred costs and fees		146,917
Acquired | Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment		2,114
Loans acquired with deteriorated credit quality		3,302
Collectively evaluated for impairment		27,955
Total loans and leases, net of unearned income and deferred costs and fees		33,371
Acquired | Consumer and other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment		0
Loans acquired with deteriorated credit quality		0
Collectively evaluated for impairment		785
Total loans and leases, net of unearned income and deferred costs and fees		785
Acquired | Finance Leases
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment		0
Loans acquired with deteriorated credit quality		0
Collectively evaluated for impairment		0
Total loans and leases, net of unearned income and deferred costs and fees		$ 0

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Allowance for Credit Losses - Recorded Investment and Related Allowance (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Originated
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	$ 15,849
Unpaid Principal Balance With No Related Allowance	16,974
Recorded Investment With Related Allowance	3,536
Unpaid Principal Balance With Related Allowance	3,536
Related Allowance	907
Recorded Investment	19,385
Unpaid Principal Balance	20,510
Originated | Commercial and industrial | Other
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	1,865
Unpaid Principal Balance With No Related Allowance	1,965
Recorded Investment With Related Allowance	245
Unpaid Principal Balance With Related Allowance	245
Related Allowance	245
Originated | Commercial real estate | Other
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	10,205
Unpaid Principal Balance With No Related Allowance	11,017
Recorded Investment With Related Allowance	3,291
Unpaid Principal Balance With Related Allowance	3,291
Related Allowance	662
Originated | Residential real estate | Home equity
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	3,779
Unpaid Principal Balance With No Related Allowance	3,992
Acquired
Financing Receivable, Impaired [Line Items]
Recorded Investment	2,830
Unpaid Principal Balance	2,933
Acquired | Commercial and industrial | Other
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	2
Unpaid Principal Balance With No Related Allowance	2
Acquired | Commercial real estate | Other
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	714
Unpaid Principal Balance With No Related Allowance	714
Acquired | Residential real estate | Home equity
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Related Allowance	2,114
Unpaid Principal Balance With No Related Allowance	$ 2,217

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Allowance for Credit Losses - Average Recorded Investment and Interest Income (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Originated
Financing Receivable, Impaired [Line Items]
Average Recorded Investment With No Related Allowance	$ 12,848	$ 12,610
Interest Income Recognized With No Related Allowance	0	0
Average Recorded Investment With Related Allowance	1,981	911
Interest Income Recognized With Related Allowance	0	0
Total Average Recorded Investment	14,829	13,521
Total Interest Income Recognized	0	0
Originated | Commercial and industrial | Other
Financing Receivable, Impaired [Line Items]
Average Recorded Investment With No Related Allowance	1,505	2,123
Interest Income Recognized With No Related Allowance	0	0
Average Recorded Investment With Related Allowance	273	154
Interest Income Recognized With Related Allowance	0	0
Originated | Commercial real estate | Other
Financing Receivable, Impaired [Line Items]
Average Recorded Investment With No Related Allowance	7,380	6,509
Interest Income Recognized With No Related Allowance	0	0
Average Recorded Investment With Related Allowance	1,708	757
Interest Income Recognized With Related Allowance	0	0
Originated | Residential real estate | Home equity
Financing Receivable, Impaired [Line Items]
Average Recorded Investment With No Related Allowance	3,963	3,978
Interest Income Recognized With No Related Allowance	0	0
Acquired
Financing Receivable, Impaired [Line Items]
Total Average Recorded Investment	3,471	3,468
Total Interest Income Recognized	0	0
Acquired | Commercial and industrial | Other
Financing Receivable, Impaired [Line Items]
Average Recorded Investment With No Related Allowance	29	28
Interest Income Recognized With No Related Allowance	0	0
Acquired | Commercial real estate | Other
Financing Receivable, Impaired [Line Items]
Average Recorded Investment With No Related Allowance	857	834
Interest Income Recognized With No Related Allowance	0	0
Acquired | Residential real estate | Home equity
Financing Receivable, Impaired [Line Items]
Average Recorded Investment With No Related Allowance	2,585	2,606
Interest Income Recognized With No Related Allowance	$ 0	$ 0

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Allowance for Credit Losses - Loans Modified in Troubled Debt Restructuring (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020 USD ($) loan	Sep. 30, 2019 USD ($) loan	Sep. 30, 2020 USD ($) loan	Sep. 30, 2019 USD ($) loan
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	2	2	4	4
Pre- Modification Outstanding Recorded Investment	$ 200	$ 1,586	$ 321	$ 2,349
Post-Modification Outstanding Recorded Investment	$ 200	$ 1,586	$ 321	$ 2,349
Number of Loans | loan	0	1,000	2	1
Post- Modification Outstanding Recorded Investment	$ 0	$ 93	$ 124	$ 93
Commercial real estate | Other
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	1	1	1	1
Pre- Modification Outstanding Recorded Investment	$ 196	$ 1,577	$ 196	$ 1,577
Post-Modification Outstanding Recorded Investment	$ 196	$ 1,577	$ 196	$ 1,577
Number of Loans | loan	0	0	1	0
Post- Modification Outstanding Recorded Investment	$ 0	$ 0	$ 37	$ 0
Residential real estate | Home equity
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan		0	2	1
Pre- Modification Outstanding Recorded Investment		$ 0	$ 121	$ 168
Post-Modification Outstanding Recorded Investment		$ 0	$ 121	$ 168
Number of Loans | loan		1,000	1	1
Post- Modification Outstanding Recorded Investment		$ 93	$ 87	$ 93
Commercial and Industrial | Other
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan		1	0	2
Pre- Modification Outstanding Recorded Investment		$ 9	$ 0	$ 604
Post-Modification Outstanding Recorded Investment		$ 9	$ 0	$ 604
Number of Loans | loan		0	0	0
Post- Modification Outstanding Recorded Investment		$ 0	$ 0	$ 0
Consumer and Other | Other
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | loan	1		1
Pre- Modification Outstanding Recorded Investment	$ 4		$ 4
Post-Modification Outstanding Recorded Investment	$ 4		$ 4
Number of Loans | loan	0		0
Post- Modification Outstanding Recorded Investment	$ 0		$ 0

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Allowance for Credit Losses - Credit Quality Indicators by Commercial and Industrial Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees	$ 5,398,297	$ 4,917,550
Commercial and industrial | Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	61,883
2021	78,837
2022	62,817
2023	66,828
2024	41,087
Prior	304,095
Revolving Loans Amortized Cost Basis	163,412
Revolving Loans Converted to Term	11,790
Total loans and leases, net of unearned income and deferred costs and fees	790,749
Commercial and industrial | Other | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	61,772
2021	78,283
2022	61,289
2023	65,282
2024	38,317
Prior	303,190
Revolving Loans Amortized Cost Basis	160,124
Revolving Loans Converted to Term	11,790
Total loans and leases, net of unearned income and deferred costs and fees	780,047
Commercial and industrial | Other | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	69
2021	494
2022	529
2023	1,281
2024	2,458
Prior	26
Revolving Loans Amortized Cost Basis	1,456
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	6,313
Commercial and industrial | Other | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	42
2021	60
2022	999
2023	265
2024	312
Prior	879
Revolving Loans Amortized Cost Basis	1,832
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	4,389
Commercial and industrial | PPP loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	464,058
2021	0
2022	0
2023	0
2024	0
Prior	0
Revolving Loans Amortized Cost Basis	0
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	464,058
Commercial and industrial | PPP loans | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	464,058
2021	0
2022	0
2023	0
2024	0
Prior	0
Revolving Loans Amortized Cost Basis	0
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	464,058
Commercial and industrial | PPP loans | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	0
2021	0
2022	0
2023	0
2024	0
Prior	0
Revolving Loans Amortized Cost Basis	0
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	0
Commercial and industrial | PPP loans | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	0
2021	0
2022	0
2023	0
2024	0
Prior	0
Revolving Loans Amortized Cost Basis	0
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	0
Commercial and industrial | Agriculture
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	11,303
2021	9,219
2022	13,219
2023	8,051
2024	3,857
Prior	5,243
Revolving Loans Amortized Cost Basis	37,709
Revolving Loans Converted to Term	467
Total loans and leases, net of unearned income and deferred costs and fees	89,068
Commercial and industrial | Agriculture | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	11,203
2021	9,128
2022	13,160
2023	7,060
2024	3,857
Prior	2,934
Revolving Loans Amortized Cost Basis	33,800
Revolving Loans Converted to Term	467
Total loans and leases, net of unearned income and deferred costs and fees	81,609
Commercial and industrial | Agriculture | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	0
2021	0
2022	59
2023	771
2024	0
Prior	0
Revolving Loans Amortized Cost Basis	1,681
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	2,511
Commercial and industrial | Agriculture | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	100
2021	91
2022	0
2023	220
2024	0
Prior	2,309
Revolving Loans Amortized Cost Basis	2,228
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	4,948
Commercial real estate | Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	158,013
2021	250,967
2022	260,254
2023	257,264
2024	340,147
Prior	785,322
Revolving Loans Amortized Cost Basis	65,947
Revolving Loans Converted to Term	44,039
Total loans and leases, net of unearned income and deferred costs and fees	2,161,954
Commercial real estate | Other | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	157,664
2021	234,828
2022	240,343
2023	246,787
2024	304,856
Prior	732,205
Revolving Loans Amortized Cost Basis	65,076
Revolving Loans Converted to Term	44,039
Total loans and leases, net of unearned income and deferred costs and fees	2,025,798
Commercial real estate | Other | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	0
2021	14,439
2022	19,172
2023	6,869
2024	34,367
Prior	30,733
Revolving Loans Amortized Cost Basis	526
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	106,106
Commercial real estate | Other | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	349
2021	1,700
2022	739
2023	3,608
2024	924
Prior	22,385
Revolving Loans Amortized Cost Basis	345
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	30,050
Commercial real estate | Agriculture
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	18,441
2021	35,850
2022	45,570
2023	24,991
2024	19,344
Prior	47,685
Revolving Loans Amortized Cost Basis	513
Revolving Loans Converted to Term	5,655
Total loans and leases, net of unearned income and deferred costs and fees	198,049
Commercial real estate | Agriculture | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	16,925
2021	35,850
2022	44,991
2023	21,833
2024	17,562
Prior	45,966
Revolving Loans Amortized Cost Basis	121
Revolving Loans Converted to Term	5,655
Total loans and leases, net of unearned income and deferred costs and fees	188,903
Commercial real estate | Agriculture | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	1,516
2021	0
2022	579
2023	1,379
2024	1,064
Prior	150
Revolving Loans Amortized Cost Basis	0
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	4,688
Commercial real estate | Agriculture | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	0
2021	0
2022	0
2023	1,779
2024	718
Prior	1,569
Revolving Loans Amortized Cost Basis	392
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	4,458
Commercial real estate | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	12,983
2021	22,285
2022	8,019
2023	2,629
2024	2,018
Prior	9,182
Revolving Loans Amortized Cost Basis	110,055
Revolving Loans Converted to Term	15,434
Total loans and leases, net of unearned income and deferred costs and fees	182,605
Commercial real estate | Construction | Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	12,983
2021	22,285
2022	8,019
2023	2,629
2024	2,018
Prior	8,324
Revolving Loans Amortized Cost Basis	107,970
Revolving Loans Converted to Term	15,434
Total loans and leases, net of unearned income and deferred costs and fees	179,662
Commercial real estate | Construction | Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	0
2021	0
2022	0
2023	0
2024	0
Prior	529
Revolving Loans Amortized Cost Basis	2,085
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	2,614
Commercial real estate | Construction | Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	0
2021	0
2022	0
2023	0
2024	0
Prior	329
Revolving Loans Amortized Cost Basis	0
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	$ 329
Originated
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		4,701,046
Originated | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		3,265,633
Originated | Pass | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		3,177,741
Originated | Special Mention | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		29,800
Originated | Substandard | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		58,092
Originated | Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		968,985
Originated | Commercial and industrial | Other | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		863,199
Originated | Commercial and industrial | Other | Pass | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		851,517
Originated | Commercial and industrial | Other | Special Mention | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		8,306
Originated | Commercial and industrial | Other | Substandard | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		3,376
Originated | Commercial and industrial | Agriculture | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		105,786
Originated | Commercial and industrial | Agriculture | Pass | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		89,892
Originated | Commercial and industrial | Agriculture | Special Mention | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		1,698
Originated | Commercial and industrial | Agriculture | Substandard | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		14,196
Originated | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		2,296,648
Originated | Commercial real estate | Other | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		1,899,645
Originated | Commercial real estate | Other | Pass | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		1,857,142
Originated | Commercial real estate | Other | Special Mention | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		16,623
Originated | Commercial real estate | Other | Substandard | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		25,880
Originated | Commercial real estate | Agriculture | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		184,701
Originated | Commercial real estate | Agriculture | Pass | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		166,888
Originated | Commercial real estate | Agriculture | Special Mention | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		3,173
Originated | Commercial real estate | Agriculture | Substandard | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		14,640
Originated | Commercial real estate | Construction | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		212,302
Originated | Commercial real estate | Construction | Pass | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		212,302
Originated | Commercial real estate | Construction | Special Mention | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		0
Originated | Commercial real estate | Construction | Substandard | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		0
Acquired
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		220,149
Acquired | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		185,993
Acquired | Pass | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		183,586
Acquired | Special Mention | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		0
Acquired | Substandard | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		2,407
Acquired | Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		39,076
Acquired | Commercial and industrial | Other | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		39,076
Acquired | Commercial and industrial | Other | Pass | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		38,879
Acquired | Commercial and industrial | Other | Special Mention | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		0
Acquired | Commercial and industrial | Other | Substandard | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		197
Acquired | Commercial and industrial | Agriculture | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		0
Acquired | Commercial and industrial | Agriculture | Pass | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		0
Acquired | Commercial and industrial | Agriculture | Special Mention | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		0
Acquired | Commercial and industrial | Agriculture | Substandard | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		0
Acquired | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		146,917
Acquired | Commercial real estate | Other | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		145,385
Acquired | Commercial real estate | Other | Pass | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		143,175
Acquired | Commercial real estate | Other | Special Mention | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		0
Acquired | Commercial real estate | Other | Substandard | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		2,210
Acquired | Commercial real estate | Agriculture | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		197
Acquired | Commercial real estate | Agriculture | Pass | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		197
Acquired | Commercial real estate | Agriculture | Special Mention | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		0
Acquired | Commercial real estate | Agriculture | Substandard | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		0
Acquired | Commercial real estate | Construction | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		1,335
Acquired | Commercial real estate | Construction | Pass | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		1,335
Acquired | Commercial real estate | Construction | Special Mention | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		0
Acquired | Commercial real estate | Construction | Substandard | Commercial Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		$ 0

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Allowance for Credit Losses - Credit Quality Indicators by Class of Residential Real Estate and Consumer Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees	$ 5,398,297	$ 4,917,550
Residential real estate | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	1,297
2021	2,819
2022	1,235
2023	2,088
2024	1,020
Prior	1,963
Revolving Loans Amortized Cost Basis	194,737
Revolving Loans Converted to Term	1,297
Total loans and leases, net of unearned income and deferred costs and fees	206,456
Residential real estate | Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	232,860
2021	198,980
2022	130,181
2023	166,782
2024	193,071
Prior	293,360
Revolving Loans Amortized Cost Basis	12,451
Revolving Loans Converted to Term	944
Total loans and leases, net of unearned income and deferred costs and fees	1,228,629
Residential real estate | Performing | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	1,297
2021	2,801
2022	1,235
2023	2,088
2024	823
Prior	1,573
Revolving Loans Amortized Cost Basis	192,549
Revolving Loans Converted to Term	1,297
Total loans and leases, net of unearned income and deferred costs and fees	203,663
Residential real estate | Performing | Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	232,860
2021	198,718
2022	129,779
2023	166,414
2024	191,858
Prior	286,255
Revolving Loans Amortized Cost Basis	12,391
Revolving Loans Converted to Term	944
Total loans and leases, net of unearned income and deferred costs and fees	1,219,219
Residential real estate | Nonperforming | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	0
2021	18
2022	0
2023	0
2024	197
Prior	390
Revolving Loans Amortized Cost Basis	2,188
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	2,793
Residential real estate | Nonperforming | Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	0
2021	262
2022	402
2023	368
2024	1,213
Prior	7,105
Revolving Loans Amortized Cost Basis	60
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	9,410
Consumer and other | Direct
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	12,884
2021	12,624
2022	8,843
2023	7,547
2024	3,219
Prior	11,907
Revolving Loans Amortized Cost Basis	7,322
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	64,346
Consumer and other | Indirect
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	1,266
2021	2,261
2022	3,873
2023	1,391
2024	551
Prior	192
Revolving Loans Amortized Cost Basis	0
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	9,534
Consumer and other | Performing | Direct
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	12,884
2021	12,595
2022	8,728
2023	7,534
2024	3,219
Prior	11,904
Revolving Loans Amortized Cost Basis	7,298
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	64,162
Consumer and other | Performing | Indirect
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	1,266
2021	2,200
2022	3,840
2023	1,388
2024	521
Prior	175
Revolving Loans Amortized Cost Basis	0
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	9,390
Consumer and other | Nonperforming | Direct
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	0
2021	29
2022	115
2023	13
2024	0
Prior	3
Revolving Loans Amortized Cost Basis	24
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	184
Consumer and other | Nonperforming | Indirect
Accounts, Notes, Loans and Financing Receivable [Line Items]
2020	0
2021	61
2022	33
2023	3
2024	30
Prior	17
Revolving Loans Amortized Cost Basis	0
Revolving Loans Converted to Term	0
Total loans and leases, net of unearned income and deferred costs and fees	$ 144
Originated
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		4,701,046
Originated | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		1,418,091
Originated | Performing | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		1,408,557
Originated | Nonperforming | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		9,534
Originated | Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		1,344,466
Originated | Residential real estate | Home equity | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		203,894
Originated | Residential real estate | Mortgages | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		1,140,572
Originated | Residential real estate | Performing | Home equity | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		201,970
Originated | Residential real estate | Performing | Mortgages | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		1,133,237
Originated | Residential real estate | Nonperforming | Home equity | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		1,924
Originated | Residential real estate | Nonperforming | Mortgages | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		7,335
Originated | Consumer and other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		73,625
Originated | Consumer and other | Indirect | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		12,964
Originated | Consumer and other | Other | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		60,661
Originated | Consumer and other | Performing | Indirect | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		12,847
Originated | Consumer and other | Performing | Other | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		60,503
Originated | Consumer and other | Nonperforming | Indirect | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		117
Originated | Consumer and other | Nonperforming | Other | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		158
Acquired
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		220,149
Acquired | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		34,156
Acquired | Performing | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		32,533
Acquired | Nonperforming | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		1,623
Acquired | Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		33,371
Acquired | Residential real estate | Home equity | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		15,351
Acquired | Residential real estate | Mortgages | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		18,020
Acquired | Residential real estate | Performing | Home equity | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		14,479
Acquired | Residential real estate | Performing | Mortgages | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		17,269
Acquired | Residential real estate | Nonperforming | Home equity | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		872
Acquired | Residential real estate | Nonperforming | Mortgages | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		751
Acquired | Consumer and other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		785
Acquired | Consumer and other | Indirect | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		0
Acquired | Consumer and other | Other | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		785
Acquired | Consumer and other | Performing | Indirect | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		0
Acquired | Consumer and other | Performing | Other | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		785
Acquired | Consumer and other | Nonperforming | Indirect | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		0
Acquired | Consumer and other | Nonperforming | Other | Residential And Consumer Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases, net of unearned income and deferred costs and fees		$ 0

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Earnings Per Share - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Basic
Net income available to common shareholders	$ 24,230	$ 20,206	$ 53,610	$ 60,638
Less: income attributable to unvested stock-based compensation awards	(278)	(317)	(628)	(972)
Net earnings allocated to common shareholders	$ 23,952	$ 19,889	$ 52,982	$ 59,666
Weighted average shares outstanding, including unvested stock-based compensation awards (in shares)	14,920,924	15,063,202	14,929,628	15,204,170
Less: unvested stock-based compensation awards (in shares)	(223,392)	(236,088)	(230,181)	(236,088)
Weighted average shares outstanding - Basic (in shares)	14,697,532	14,827,114	14,699,447	14,968,082
Diluted
Net earnings allocated to common shareholders	$ 23,952	$ 19,889	$ 52,982	$ 59,666
Weighted average shares outstanding - Basic (in shares)	14,697,532	14,827,114	14,699,447	14,968,082
Plus: Incremental shares from assumed conversion of stock-based compensation awards (in shares)	30,209	60,512	39,474	67,698
Weighted average shares outstanding - Diluted (in shares)	14,727,741	14,887,626	14,738,921	15,035,780
Basic EPS (in dollars per share)	$ 1.63	$ 1.34	$ 3.60	$ 3.99
Diluted EPS (in dollars per share)	$ 1.63	$ 1.34	$ 3.59	$ 3.97

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Earnings Per Share - Narrative (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earning per share (in shares)	10,449	17,956	10,090	18,396

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Other Comprehensive Income (Loss) - Schedule of Reclassifications (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Before-Tax Amount
Net unrealized gains/losses / Other comprehensive income (loss)	$ (3,728)	$ 4,404	$ 26,098	$ 34,853
Tax (Expense) Benefit
Net unrealized gains/losses / Other comprehensive income (loss)	912	(1,081)	(6,398)	(8,539)
Net of Tax
Other comprehensive (loss) income	(2,816)	3,323	19,700	26,314
Net unrealized gain/loss
Before-Tax Amount
Change in net unrealized gain/loss during the period	(4,374)	4,122	24,592	34,014
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	0	(133)	(429)	(404)
Net unrealized gains/losses / Other comprehensive income (loss)	(4,374)	3,989	24,163	33,610
Tax (Expense) Benefit
Change in net unrealized gain/loss during the period	1,071	(1,011)	(6,029)	(8,333)
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	0	32	105	99
Net unrealized gains/losses / Other comprehensive income (loss)	1,071	(979)	(5,924)	(8,234)
Net of Tax
Change in net unrealized gain/loss during the period	(3,303)	3,111	18,563	25,681
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	0	(101)	(324)	(305)
Other comprehensive (loss) income	(3,303)	3,010	18,239	25,376
Amortization of net retirement plan actuarial gain/loss
Before-Tax Amount
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	593	411	1,775	1,232
Tax (Expense) Benefit
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	(146)	(101)	(435)	(302)
Net of Tax
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	447	310	1,340	930
Amortization of net retirement plan prior service cost
Before-Tax Amount
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	53	4	160	11
Tax (Expense) Benefit
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	(13)	(1)	(39)	(3)
Net of Tax
Reclassification adjustment for net realized gain on sale of available-for-sale debt securities included in net income	40	3	121	8
Employee benefit plans
Before-Tax Amount
Net unrealized gains/losses / Other comprehensive income (loss)	646	415	1,935	1,243
Tax (Expense) Benefit
Net unrealized gains/losses / Other comprehensive income (loss)	(159)	(102)	(474)	(305)
Net of Tax
Other comprehensive (loss) income	$ 487	$ 313	$ 1,461	$ 938

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Other Comprehensive Income (Loss) - Schedule of Activity (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balances at Beginning	$ 698,029	$ 657,677	$ 663,054	$ 620,871
Other comprehensive (loss) income	(2,816)	3,323	19,700	26,314
Balances at Ending	713,611	659,865	713,611	659,865
Available-for- Sale Debt Securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balances at Beginning	25,581	(1,223)	4,039	(23,589)
Other comprehensive (loss) income before reclassifications	(3,303)	3,111	18,563	25,681
Amounts reclassified from accumulated other comprehensive (loss) income	0	(101)	(324)	(305)
Other comprehensive (loss) income	(3,303)	3,010	18,239	25,376
Balances at Ending	22,278	1,787	22,278	1,787
Employee Benefit Plans
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balances at Beginning	(46,629)	(38,951)	(47,603)	(39,576)
Other comprehensive (loss) income before reclassifications	0	0	0	0
Amounts reclassified from accumulated other comprehensive (loss) income	487	313	1,461	938
Other comprehensive (loss) income	487	313	1,461	938
Balances at Ending	(46,142)	(38,638)	(46,142)	(38,638)
Accumulated Other Comprehensive (Loss) Income
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balances at Beginning	(21,048)	(40,174)	(43,564)	(63,165)
Other comprehensive (loss) income before reclassifications	(3,303)	3,111	18,563	25,681
Amounts reclassified from accumulated other comprehensive (loss) income	487	212	1,137	633
Other comprehensive (loss) income	(2,816)	3,323	19,700	26,314
Balances at Ending	$ (23,864)	$ (36,851)	$ (23,864)	$ (36,851)

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Other Comprehensive Income (Loss) - Schedule of Amounts Reclassified Out of Each Component (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Net gain on securities transactions	$ 30,592	$ 25,715	$ 67,490	$ 76,549
Tax (expense) benefit	(6,330)	(5,478)	(13,779)	(15,816)
Other operating expense	(10,289)	(11,298)	(34,826)	(35,451)
Net of tax	24,230	20,206	53,610	60,638
Amount Reclassified from Accumulated Other Comprehensive (Loss) Income | Available-for-sale securities
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Net gain on securities transactions	0	133	429	404
Tax (expense) benefit	0	(32)	(105)	(99)
Net of tax	0	101	324	305
Amount Reclassified from Accumulated Other Comprehensive (Loss) Income | Net retirement plan actuarial loss
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Other operating expense	(593)	(411)	(1,775)	(1,232)
Amount Reclassified from Accumulated Other Comprehensive (Loss) Income | Net retirement plan prior service cost
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Other operating expense	(53)	(4)	(160)	(11)
Amount Reclassified from Accumulated Other Comprehensive (Loss) Income | Employee benefit plans
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Net gain on securities transactions	(646)	(415)	(1,935)	(1,243)
Tax (expense) benefit	159	102	474	305
Net of tax	$ (487)	$ (313)	$ (1,461)	$ (938)

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Employee Benefit Plan - Schedule of Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Pension Benefits
Components of net periodic benefit cost
Service cost	$ 0	$ 0	$ 0	$ 0
Interest cost	593	734	1,778	2,202
Expected return on plan assets	(1,354)	(1,233)	(4,062)	(3,699)
Amortization of net retirement plan actuarial loss	353	333	1,058	1,000
Amortization of net retirement plan prior service (credit) cost	(2)	(3)	(7)	(8)
Net periodic benefit (income) cost	(410)	(169)	(1,233)	(505)
Life and Health
Components of net periodic benefit cost
Service cost	43	40	129	120
Interest cost	61	72	183	217
Expected return on plan assets	0	0	0	0
Amortization of net retirement plan actuarial loss	39	0	116	0
Amortization of net retirement plan prior service (credit) cost	(15)	(15)	(45)	(46)
Net periodic benefit (income) cost	128	97	383	291
SERP Benefits
Components of net periodic benefit cost
Service cost	54	38	161	115
Interest cost	228	228	685	684
Expected return on plan assets	0	0	0	0
Amortization of net retirement plan actuarial loss	200	78	600	232
Amortization of net retirement plan prior service (credit) cost	71	22	214	65
Net periodic benefit (income) cost	$ 553	$ 366	$ 1,660	$ 1,096

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Employee Benefit Plan - Narrative (Details) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Retirement Benefits [Abstract]
Amortization of amounts previously recognized in accumulated other comprehensive income (loss)	$ 1,461,000	$ 938,000
Contribution to pension plan	$ 0	$ 0

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Other Income and Operating Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Other Income and Expenses [Abstract]
Reporting threshold for other income and operating expenses (percent, greater than)			1.00%
Noninterest Income
Other service charges	$ 720	$ 809	$ 2,108	$ 2,405
Increase in cash surrender value of corporate owned life insurance	559	425	1,617	1,612
Net gains on the sales of loans originated for sale	378	25	1,245	139
Other income	161	704	1,418	2,091
Total other income	1,818	1,963	6,388	6,247
Noninterest Expenses
Marketing expense	927	899	2,806	3,706
Professional fees	1,398	2,426	4,654	7,169
Legal fees	418	347	955	788
Technology expense	2,941	2,813	8,771	8,016
Cardholder expense	827	811	2,396	2,372
Off-balance sheet commitments	(417)	0	1,273	0
Other expenses	4,195	4,002	13,971	13,400
Other operating expense	$ 10,289	$ 11,298	$ 34,826	$ 35,451

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Revenue Recognition - Schedule of Disaggregation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Disaggregation of Revenue [Line Items]
Noninterest Income (in-scope of ASC 606)	$ 17,356	$ 17,739	$ 49,027	$ 51,658
Noninterest Income (out-of-scope of ASC 606)	1,531	1,795	5,997	5,803
Total Noninterest Income	18,887	19,534	55,024	57,461
Commissions and Fees
Disaggregation of Revenue [Line Items]
Noninterest Income (in-scope of ASC 606)	8,136	7,918	22,545	21,984
Installment Billing
Disaggregation of Revenue [Line Items]
Noninterest Income (in-scope of ASC 606)	175	150	96	58
Refund of Commissions
Disaggregation of Revenue [Line Items]
Noninterest Income (in-scope of ASC 606)	(104)	(51)	(458)	(31)
Contract Liabilities/Deferred Revenue
Disaggregation of Revenue [Line Items]
Noninterest Income (in-scope of ASC 606)	0	0	(208)	(188)
Contingent Commissions
Disaggregation of Revenue [Line Items]
Noninterest Income (in-scope of ASC 606)	709	500	2,241	2,491
Subtotal Insurance Revenues
Disaggregation of Revenue [Line Items]
Noninterest Income (in-scope of ASC 606)	8,916	8,517	24,216	24,314
Trust and Asset Management
Disaggregation of Revenue [Line Items]
Noninterest Income (in-scope of ASC 606)	3,070	2,920	8,798	8,417
Mutual Fund & Investment Income
Disaggregation of Revenue [Line Items]
Noninterest Income (in-scope of ASC 606)	1,222	1,255	3,616	3,749
Subtotal Investment Service Income
Disaggregation of Revenue [Line Items]
Noninterest Income (in-scope of ASC 606)	4,292	4,175	12,414	12,166
Service Charges on Deposit Accounts
Disaggregation of Revenue [Line Items]
Noninterest Income (in-scope of ASC 606)	1,444	2,191	4,675	6,210
Card Services Income
Disaggregation of Revenue [Line Items]
Noninterest Income (in-scope of ASC 606)	2,419	2,550	6,885	8,090
Other
Disaggregation of Revenue [Line Items]
Noninterest Income (in-scope of ASC 606)	$ 285	$ 306	$ 837	$ 878

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Revenue Recognition - Narrative (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Contract with customer, liability	$ 448	$ 2,000
Performance obligation, description of timing	one year
Insurance
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Contract with customer, asset, net	$ 4,800	4,700
Wealth Management
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Contract with customer, asset, net	$ 2,000	$ 2,000

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Financial Guarantees (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Guarantees [Abstract]
Obligations to extend credit for loan commitments	$ 32.0	$ 28.2

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Segment and Related Information - Narrative (Details)	9 Months Ended
	Sep. 30, 2020 office subsidiary_bank banking_office segment
Segment Reporting Information [Line Items]
Number of reportable segments | segment	3
Nature of operations, number of subsidiary banks | subsidiary_bank	4
Tompkins, Cayuga, Cortland and Schuyler Counties, New York
Segment Reporting Information [Line Items]
Nature of operations, number of banking offices	14
Wyoming, Livingston, Genessee, Orleans and Monroe, New York
Segment Reporting Information [Line Items]
Nature of operations, number of banking offices	16
Putnam Country, Dutchess Country and Westchester, New York
Segment Reporting Information [Line Items]
Nature of operations, number of banking offices	14
Berks, Montgomery, Philadelphia, Deleware and Schuylkill, Pennsylvania
Segment Reporting Information [Line Items]
Nature of operations, number of banking offices	20
Western New York
Segment Reporting Information [Line Items]
Number of offices | office	5
Tompkins Insurance Agencies Inc
Segment Reporting Information [Line Items]
Noncontrolling interest, ownership percentage by parent	100.00%

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Segment and Related Information - Schedule of Segment and Related Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018
Segment Reporting Information [Line Items]
Interest income	$ 64,316	$ 65,775	$ 190,960	$ 196,796
Interest expense	6,063	12,619	23,372	39,408
Net Interest Income	58,253	53,156	167,588	157,388
Provision for credit loss expense	199	1,320	16,145	2,366
Noninterest income	18,887	19,534	55,024	57,461
Noninterest expense	46,349	45,655	138,977	135,934
Income Before Income Tax Expense	30,592	25,715	67,490	76,549
Income tax expense	6,330	5,478	13,779	15,816
Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation	24,262	20,237	53,711	60,733
Less:  Net income attributable to noncontrolling interests	32	31	101	95
Net Income Attributable to Tompkins Financial Corporation	24,230	20,206	53,610	60,638
Depreciation and amortization	2,549	2,549	7,654	7,495
Assets	7,794,502	6,627,982	7,794,502	6,627,982		$ 6,725,623
Goodwill	92,447	92,447	92,447	92,447		92,447
Other intangibles, net	5,211	6,647	5,211	6,647		6,223
Net Loans and Leases	5,346,004	4,815,702	5,346,004	4,815,702		4,877,658
Deposits	6,601,238	5,369,990	6,601,238	5,369,990		5,212,921
Total Equity	713,611	659,865	713,611	659,865	$ 698,029	$ 663,054	$ 657,677	$ 620,871
Operating Segments | Banking
Segment Reporting Information [Line Items]
Interest income	64,316	65,775	190,960	196,797
Interest expense	6,064	12,620	23,375	39,410
Net Interest Income	58,252	53,155	167,585	157,387
Provision for credit loss expense	199	1,320	16,145	2,366
Noninterest income	5,976	7,134	19,217	21,852
Noninterest expense	36,988	36,309	111,387	108,704
Income Before Income Tax Expense	27,041	22,660	59,270	68,169
Income tax expense	5,397	4,669	11,665	13,650
Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation	21,644	17,991	47,605	54,519
Less:  Net income attributable to noncontrolling interests	32	31	101	95
Net Income Attributable to Tompkins Financial Corporation	21,612	17,960	47,504	54,424
Depreciation and amortization	2,474	2,483	7,443	7,296
Assets	7,738,933	6,575,073	7,738,933	6,575,073
Goodwill	64,585	64,370	64,585	64,370
Other intangibles, net	2,600	3,472	2,600	3,472
Net Loans and Leases	5,346,004	4,815,702	5,346,004	4,815,702
Deposits	6,613,421	5,382,174	6,613,421	5,382,174
Total Equity	657,370	605,572	657,370	605,572
Operating Segments | Insurance
Segment Reporting Information [Line Items]
Interest income	1	1	3	2
Interest expense	0	0	0	0
Net Interest Income	1	1	3	2
Provision for credit loss expense	0	0	0	0
Noninterest income	9,023	8,620	24,533	24,621
Noninterest expense	6,559	6,672	19,479	19,279
Income Before Income Tax Expense	2,465	1,949	5,057	5,344
Income tax expense	670	526	1,362	1,418
Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation	1,795	1,423	3,695	3,926
Less:  Net income attributable to noncontrolling interests	0	0	0	0
Net Income Attributable to Tompkins Financial Corporation	1,795	1,423	3,695	3,926
Depreciation and amortization	57	56	173	168
Assets	42,269	42,753	42,269	42,753
Goodwill	19,866	19,866	19,866	19,866
Other intangibles, net	2,507	3,011	2,507	3,011
Net Loans and Leases	0	0	0	0
Deposits	0	0	0	0
Total Equity	32,095	33,116	32,095	33,116
Operating Segments | Wealth Management
Segment Reporting Information [Line Items]
Interest income	0	0	0	0
Interest expense	0	0	0	0
Net Interest Income	0	0	0	0
Provision for credit loss expense	0	0	0	0
Noninterest income	4,434	4,310	12,903	12,567
Noninterest expense	3,348	3,204	9,740	9,529
Income Before Income Tax Expense	1,086	1,106	3,163	3,038
Income tax expense	263	283	752	748
Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation	823	823	2,411	2,290
Less:  Net income attributable to noncontrolling interests	0	0	0	0
Net Income Attributable to Tompkins Financial Corporation	823	823	2,411	2,290
Depreciation and amortization	18	10	38	31
Assets	26,956	23,497	26,956	23,497
Goodwill	7,996	8,211	7,996	8,211
Other intangibles, net	104	164	104	164
Net Loans and Leases	0	0	0	0
Deposits	0	0	0	0
Total Equity	24,146	21,177	24,146	21,177
Intercompany
Segment Reporting Information [Line Items]
Interest income	(1)	(1)	(3)	(3)
Interest expense	(1)	(1)	(3)	(2)
Net Interest Income	0	0	0	(1)
Provision for credit loss expense	0	0	0	0
Noninterest income	(546)	(530)	(1,629)	(1,579)
Noninterest expense	(546)	(530)	(1,629)	(1,578)
Income Before Income Tax Expense	0	0	0	(2)
Income tax expense	0	0	0	0
Net Income Attributable to Noncontrolling Interests and Tompkins Financial Corporation	0	0	0	(2)
Less:  Net income attributable to noncontrolling interests	0	0	0	0
Net Income Attributable to Tompkins Financial Corporation	0	0	0	(2)
Depreciation and amortization	0	0	0	0
Assets	(13,656)	(13,341)	(13,656)	(13,341)
Goodwill	0	0	0	0
Other intangibles, net	0	0	0	0
Net Loans and Leases	0	0	0	0
Deposits	(12,183)	(12,184)	(12,183)	(12,184)
Total Equity	$ 0	$ 0	$ 0	$ 0

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Fair Value Measurements - Summary of Financial Assets and Financial Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	$ 1,666,766	$ 1,298,587
Equity securities, at fair value	932	915
U.S. Treasuries
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities		1,840
Obligations of U.S. Government sponsored entities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	612,481	372,488
Obligations of U.S. states and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	129,258	97,785
U.S. Government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	207,501	164,451
U.S. Government sponsored entities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	715,160	659,590
U.S. corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	2,366	2,433
Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	0	0
Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	1,666,766	1,298,587
Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	0	0
Recurring | U.S. Treasuries | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities		0
Recurring | U.S. Treasuries | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities		1,840
Recurring | U.S. Treasuries | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities		0
Recurring | Obligations of U.S. Government sponsored entities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	0	0
Recurring | Obligations of U.S. Government sponsored entities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	612,481	372,488
Recurring | Obligations of U.S. Government sponsored entities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	0	0
Recurring | Obligations of U.S. states and political subdivisions | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	0	0
Recurring | Obligations of U.S. states and political subdivisions | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	129,258	97,785
Recurring | Obligations of U.S. states and political subdivisions | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	0	0
Recurring | U.S. Government agencies | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	0	0
Recurring | U.S. Government agencies | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	207,501	164,451
Recurring | U.S. Government agencies | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	0	0
Recurring | U.S. Government sponsored entities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	0	0
Recurring | U.S. Government sponsored entities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	715,160	659,590
Recurring | U.S. Government sponsored entities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	0	0
Recurring | U.S. corporate debt securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	0	0
Recurring | U.S. corporate debt securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	2,366	2,433
Recurring | U.S. corporate debt securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	0	0
Recurring | Equity securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities, at fair value	0	0
Recurring | Equity securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities, at fair value	0	0
Recurring | Equity securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities, at fair value	932	915
Recurring | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	1,666,766	1,298,587
Recurring | Fair Value | U.S. Treasuries
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities		1,840
Recurring | Fair Value | Obligations of U.S. Government sponsored entities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	612,481	372,488
Recurring | Fair Value | Obligations of U.S. states and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	129,258	97,785
Recurring | Fair Value | U.S. Government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	207,501	164,451
Recurring | Fair Value | U.S. Government sponsored entities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	715,160	659,590
Recurring | Fair Value | U.S. corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	2,366	2,433
Recurring | Fair Value | Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities, at fair value	$ 932	$ 915

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Fair Value Measurements - Schedule of Assets Measured at Fair Value on Nonrecurring Basis (Details) - Non-Recurring - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Individually evaluated	$ 6,330	$ 10,096	$ 10,759	$ 12,565
Gain (losses) from fair value changes on impaired loans	0	(550)	(1,305)	(4,184)
Other real estate owned	36	139	124	888
Gain (losses) from fair value changes on other real estate owned	(4)	95	(27)	0
Quoted prices in active markets for identical assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Individually evaluated	0	0	0	0
Other real estate owned	0	0	0	0
Significant other observable inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Individually evaluated	6,330	10,096	10,759	12,565
Other real estate owned	36	139	124	888
Significant unobservable inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Individually evaluated	0	0	0	0
Other real estate owned	$ 0	$ 0	$ 0	$ 0

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Fair Value Measurements - Schedule of Carrying Amount and Estimated Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Financial Assets:
FHLB and other stock	$ 17,919	$ 33,695
Financial Liabilities:
Time deposits	706,401	675,014
Fed funds purchased and securities sold under agreements to repurchase	63,573	60,346
Other borrowings	285,000	658,100
Trust preferred debentures	17,163	17,035
Level 1
Financial Assets:
Cash and cash equivalents	374,739	137,982
FHLB and other stock	0	0
Accrued interest receivable	0	0
Loans/leases, net	0	0
Financial Liabilities:
Time deposits	0	0
Other deposits	0	0
Fed funds purchased and securities sold under agreements to repurchase	0	0
Other borrowings	0	0
Trust preferred debentures	0	0
Accrued interest payable	0	0
Level 2
Financial Assets:
Cash and cash equivalents	0	0
FHLB and other stock	17,919	33,695
Accrued interest receivable	38,212	19,293
Loans/leases, net	10,759	14,050
Financial Liabilities:
Time deposits	714,256	677,205
Other deposits	5,894,837	4,537,907
Fed funds purchased and securities sold under agreements to repurchase	63,573	60,346
Other borrowings	295,374	659,895
Trust preferred debentures	21,240	21,904
Accrued interest payable	1,702	2,486
Level 3
Financial Assets:
Cash and cash equivalents	0	0
FHLB and other stock	0	0
Accrued interest receivable	0	0
Loans/leases, net	5,360,152	4,784,218
Financial Liabilities:
Time deposits	0	0
Other deposits	0	0
Fed funds purchased and securities sold under agreements to repurchase	0	0
Other borrowings	0	0
Trust preferred debentures	0	0
Accrued interest payable	0	0
Carrying Amount
Financial Assets:
Cash and cash equivalents	374,739	137,982
FHLB and other stock	17,919	33,695
Accrued interest receivable	38,212	19,293
Loans/leases, net	5,346,004	4,877,658
Financial Liabilities:
Time deposits	706,401	675,014
Other deposits	5,894,837	4,537,907
Fed funds purchased and securities sold under agreements to repurchase	63,573	60,346
Other borrowings	285,000	658,100
Trust preferred debentures	17,163	17,035
Accrued interest payable	1,702	2,486
Fair Value
Financial Assets:
Cash and cash equivalents	374,739	137,982
FHLB and other stock	17,919	33,695
Accrued interest receivable	38,212	19,293
Loans/leases, net	5,370,911	4,798,268
Financial Liabilities:
Time deposits	714,256	677,205
Other deposits	5,894,837	4,537,907
Fed funds purchased and securities sold under agreements to repurchase	63,573	60,346
Other borrowings	295,374	659,895
Trust preferred debentures	21,240	21,904
Accrued interest payable	$ 1,702	$ 2,486