Regulations and Supervision

12 Months Ended

Dec. 31, 2011

Regulations And Supervision

Regulations and Supervision

Note 20 Regulations and Supervision

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 (set forth in the table below) of total capital and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital to average assets (as defined). Management believes that the Company and its subsidiary banks meet all capital adequacy requirements to which they are subject.

As of December 31, 2011, the most recent notifications from Federal bank regulatory agencies categorized the Tompkins Trust Company, The Bank of Castile and Mahopac National Bank as “well capitalized” under the regulatory framework for PCA. To be categorized as well capitalized, the Company and its subsidiary banks must maintain total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed the capital category of the Company or its subsidiary banks. Actual capital amounts and ratios of the Company and its subsidiary banks are as follows:

		Required to be	Required
		Adequately	to be
	Actual	Capitalized	Well Capitalized
(dollar amounts in thousands)	Amount/Ratio	Amount/Ratio	Amount/Ratio
December 31, 2011
Total Capital (to risk-weighted assets)
The Company (consolidated)	$307,893/14.2%	>$173,879/>8.0%	>$217,349/>10.0%
Trust Company	$129,152/14.2%	>$72,963/>8.0%	>$91,204/>10.0%
Castile	$78,864/12.2%	>$51,770/>8.0%	>$64,713/>10.0%
Mahopac	$85,533/14.5%	>$47,119/>8.0%	>$58,899/>10.0%
Tier I Capital (to risk-weighted assets)
The Company (consolidated)	$280,716/12.9%	>$86,940/>4.0%	>$130,409/>6.0%
Trust Company	$120,132/13.2%	>$36,482/>4.0%	>$54,722/>6.0%
Castile	$72,099/11.1%	>$25,885/>4.0%	>$38,828/>6.0%
Mahopac	$78,113/13.3%	>$23,560/>4.0%	>$35,339/>6.0%
Tier I Capital (to average assets)
The Company (consolidated)	$280,716//8.5%	>$98,966/>3.0%	>$164,944/>5.0%
Trust Company	$120,132/7.9%	>$45,569/>3.0%	>$75,949/>5.0%
Castile	$72,099/7.6%	>$28,304/>3.0%	>$47,173/>5.0%
Mahopac	$78,113/9.0%	>$26,033/>3.0%	>$43,389/>5.0%
December 31, 2010
Total Capital (to risk-weighted assets)
The Company (consolidated)	$281,108/13.4%	>$167,622/>8.0%	>$209,527/>10.0%
Trust Company	$122,664/13.7%	>$71,864/>8.0%	>$89,830/>10.0%
Castile	$71,470/11.8%	>$48,547/>8.0%	>$60,684/>10.0%
Mahopac	$80,494/13.9%	>$46,485/>8.0%	>$58,107/>10.0%
Tier I Capital (to risk-weighted assets)
The Company (consolidated)	$254,899/12.2%	>$83,811/>4.0%	>$125,716/>6.0%
Trust Company	$112,590/12.5%	>$35,932/>4.0%	>$53,898/>6.0%
Castile	$63,880/10.5%	>$24,274/>4.0%	>$33,410/>6.0%
Mahopac	$73,196/12.6%	>$23,243/>4.0%	>$34,864/>6.0%
Tier I Capital (to average assets)
The Company (consolidated)	$254,899/8.0%	>$95,312/>3.0%	>$158,853/>5.0%
Trust Company	$112,590/7.5%	>$45,088/>3.0%	>$75,146/>5.0%
Castile	$63,880/7.3%	>$26,126/>3.0%	>$43,544/>5.0%
Mahopac	$73,196/8.7%	>$25,387/>3.0%	>$42,311/>5.0%

Generally, dividends from the banking subsidiaries to the Company are limited to retained net profits for the current year and two preceding years, unless specific approval is received from the appropriate bank regulatory authority. At December 31, 2011, the retained net profits of the Company’s bank subsidiaries available to pay dividends were $50.8 million.

During 2009, the Company issued $20.5 million aggregate liquidation amount of 7.0% cumulative trust preferred securities through a newly-formed subsidiary, Tompkins Capital Trust I, a wholly-owned Delaware statutory trust (“Tompkins Capital Trust I”).  In accordance with the applicable accounting standards related to variable interest entities, the accounts of Tompkins Capital Trust I will not be included in the Company’s consolidated financial statements.  However, the $20.5 million in Tompkins’ Subordinated Debentures issued to Tompkins Capital Trust I is included in the Tier 1 capital of the Company for regulatory capital purposes pursuant to regulatory guidelines.  Under the recently enacted “Dodd-Frank Wall Street Reform and Consumer Protection Act,” outstanding trust preferred securities at the effective date of the Act will continue to qualify as Tier 1 capital for bank holding companies with total assets less than $15 billion.  However, trust preferred securities issued in the future may no longer qualify as Tier 1 capital.

In light of the recent economic downturn, bank regulatory agencies have been requiring many banks to maintain higher minimum capital ratios.  This is particularly true in the case of institutions with significant commercial real estate loan portfolios and/or increasing levels of non-performing assets, such as Mahopac National Bank, one of the Company’s three banking subsidiaries.  During the first quarter of 2010, Mahopac’s primary regulator, the Office of the Comptroller of the Currency, notified the Company that it was requiring Mahopac to maintain certain minimum capital ratios at levels higher than those otherwise required by applicable regulations.  The OCC is requiring Mahopac to maintain a Tier 1 capital to average assets ratio of 8.0%, a Tier 1 risk-based capital to risk-weighted capital ratio of 10.0% and a Total risk based capital to risk-weighted assets ratio of 12.0%.  Mahopac exceeded these minimum requirements at the time of the notification and continues to maintain ratios above these minimums.  Since Mahopac’s capital ratios were above the minimum requirements at the time of notification, there was not a material impact to Mahopac or the Company.  As of December 31, 2011, Mahopac had a Tier 1 capital to average assets ratio of 9.0%, a Tier 1 risk-based capital to risk-weighted capital ratio of 13.3% and a Total risk-based capital to risk-weighted assets ratio of 14.5%.

As of December 31, 2011, the capital ratios for the Company’s other two subsidiary banks, Tompkins Trust Company and The Bank of Castile, also exceeded the minimum levels required to be considered well capitalized.