TOMPKINS FINANCIAL CORPTMP
TOMPKINS FINANCIAL CORP Fair Value Disclosure
Fair Value Measurements
FASB ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. FASB ASC Topic 820 also establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
The three levels of the fair value hierarchy 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 December 31, 2025 and 2024 segregated by the level of valuation inputs within the fair value hierarchy used to measure fair value:
| Recurring Fair Value Measurements | ||||||||||||||
| (In thousands) | Fair Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||
| December 31, 2025 | ||||||||||||||
| Assets | ||||||||||||||
| Available-for-sale debt securities | ||||||||||||||
| U.S. Treasuries | $ | 53,780 | $ | 0 | $ | 53,780 | $ | 0 | ||||||
| Obligations of U.S. Government sponsored entities | 348,403 | 0 | 348,403 | 0 | ||||||||||
| Obligations of U.S. states and political subdivisions | 76,310 | 0 | 76,310 | 0 | ||||||||||
| Mortgage-backed securities – residential, issued by: | ||||||||||||||
| U.S. Government agencies | 313,496 | 0 | 313,496 | 0 | ||||||||||
| U.S. Government sponsored entities | 587,632 | 0 | 587,632 | 0 | ||||||||||
| U.S. corporate debt securities | 2,447 | 0 | 2,447 | 0 | ||||||||||
| Total Available-for-sale debt securities | $ | 1,382,068 | $ | 0 | $ | 1,382,068 | $ | 0 | ||||||
| Equity securities, at fair value | 800 | 0 | 0 | 800 | ||||||||||
| Derivatives designated as hedging instruments | 33 | 0 | 33 | 0 | ||||||||||
| Derivatives not designated as hedging instruments | 5,032 | 0 | 5,032 | 0 | ||||||||||
| Liabilities | ||||||||||||||
| Derivatives not designated as hedging instruments | $ | 5,389 | $ | 0 | $ | 5,389 | $ | 0 | ||||||
| December 31, 2024 | ||||||||||||||
| Assets | ||||||||||||||
| Available-for-sale debt securities | ||||||||||||||
| U.S. Treasuries | $ | 71,497 | $ | 0 | $ | 71,497 | $ | 0 | ||||||
| Obligations of U.S. Government sponsored entities | 380,280 | 0 | 380,280 | 0 | ||||||||||
| Obligations of U.S. states and political subdivisions | 77,694 | 0 | 77,694 | 0 | ||||||||||
| Mortgage-backed securities – residential, issued by: | ||||||||||||||
| U.S. Government agencies | 63,254 | 0 | 63,254 | 0 | ||||||||||
| U.S. Government sponsored entities | 636,360 | 0 | 636,360 | 0 | ||||||||||
| U.S. corporate debt securities | 2,447 | 0 | 2,447 | 0 | ||||||||||
| Total Available-for-sale debt securities | $ | 1,231,532 | $ | 0 | $ | 1,231,532 | $ | 0 | ||||||
| Equity securities, at fair value | 768 | 0 | 0 | 768 | ||||||||||
| Derivatives designated as hedging instruments | 864 | 0 | 864 | 0 | ||||||||||
| Derivatives not designated as hedging instruments | 1,831 | 0 | 1,831 | 0 | ||||||||||
| Liabilities | ||||||||||||||
| Derivatives not designated as hedging instruments | $ | 2,073 | $ | 0 | $ | 2,073 | $ | 0 | ||||||
The change in the fair value of the $800,000 of equity securities valued using significant unobservable inputs (level 3), between January 1, 2025 and December 31, 2025 was immaterial.
Securities: Fair values for U.S. Treasury securities are based on quoted market prices. Fair values for obligations of U.S. government sponsored entities, mortgage-backed securities-residential, obligations of U.S. states and political subdivisions, and U.S. corporate debt securities are based on quoted market prices, where available, as provided by third party pricing vendors. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments in active markets and/or based upon 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 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 pricing service uses a variety of techniques to determine fair value, including market maker bids, quotes and pricing models. Inputs to the model include recent trades, benchmark interest rates, spreads, and actual and projected cash flows. The Company reviews the prices supplied by the independent pricing service, as well as their underlying pricing methodologies, for reasonableness and to ensure such prices are aligned with traditional pricing matrices. In general, the Company’s investment portfolio consists of traditional investments, nearly all of which are U.S. Treasury obligations, federal agency bullet or mortgage pass-through securities, or general obligation municipal bonds. Pricing for such instruments is fairly generic and is easily obtained. Quarterly, the Company will validate prices supplied by the independent pricing service by comparing to prices obtained from a second third-party source. Based on the inputs used by our independent pricing services, the Company identifies the appropriate level within the fair value hierarchy to report these fair values.
Derivatives: The Company has contracted with a third party vendor to provide periodic valuations for its interest rate derivatives to determine the fair value of its interest rate contracts. The vendor utilizes standard valuation methodologies applicable to interest rate derivatives such as discounted cash flow analysis. Such valuations are based upon readily observable market data and are therefore considered Level 2 valuations by the Company.
Certain assets are measured at fair value on a nonrecurring basis, that is, they are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. For the Company, these include loans held for sale, collateral dependent individually evaluated loans, other real estate owned, goodwill and other intangible assets. During 2025, certain collateral dependent individually evaluated loans and other real estate owned at December 31, 2025, were adjusted down to fair value. Collateral values are estimated using Level 3 inputs based upon observable market data. Real estate is generally valued using independent appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally available in the market.
The below table provides certain assets measured at fair value on a nonrecurring basis at December 31, 2025:
| Fair value measurements at reporting date using: | |||||||||||||||||
| (In thousands) | Quoted prices in active markets for identical assets | Significant other observable inputs | Significant unobservable inputs | Gain (losses) from fair value changes | |||||||||||||
| Assets: | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||
| December 31, 2025 | |||||||||||||||||
| Individually evaluated loans | $ | 25,394 | $ | 0 | $ | 0 | $ | 25,394 | $ | (7,673) | |||||||
| Other real estate owned | 229 | 0 | 0 | 229 | 1,954 | ||||||||||||
| December 31, 2024 | |||||||||||||||||
| Individually evaluated loans | $ | 7,471 | $ | 0 | $ | 0 | $ | 7,471 | $ | 249 | |||||||
| Other real estate owned | 14,314 | 0 | 0 | 14,314 | 43 | ||||||||||||
The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments at December 31, 2025 and 2024. The carrying amounts shown in the table are included in the Consolidated Statements of Condition under the indicated captions. The fair value estimates, methods and assumptions set forth below for the Company’s financial instruments, including those financial instruments carried at cost, are made solely to comply with disclosures required by GAAP and does not always incorporate the exit-price concept of fair value prescribed by ASC Topic 820-10 and should be read in conjunction with the financial statements and notes included in this Report.
| Estimated Fair Value of Financial Instruments | |||||||||||||||||
| (In thousands) | Carrying Amount | Fair Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
| December 31, 2025 | |||||||||||||||||
| Financial Assets: | |||||||||||||||||
| Cash and cash equivalents | $ | 132,817 | $ | 132,817 | $ | 132,817 | $ | 0 | $ | 0 | |||||||
| Securities - held-to-maturity | 312,528 | 283,860 | 0 | 283,860 | 0 | ||||||||||||
| FHLB stock and other stock | 32,307 | 32,307 | 0 | 32,307 | 0 | ||||||||||||
| Accrued interest receivable | 30,697 | 30,697 | 0 | 30,697 | 0 | ||||||||||||
Loans/leases, net1 | 6,432,014 | 6,129,089 | 0 | 0 | 6,129,089 | ||||||||||||
| Financial Liabilities: | |||||||||||||||||
| Time deposits | $ | 1,298,393 | $ | 1,296,714 | $ | 0 | $ | 1,296,714 | $ | 0 | |||||||
| Other deposits | 5,639,369 | 5,639,369 | 0 | 5,639,369 | 0 | ||||||||||||
| Fed funds purchased and securities sold | |||||||||||||||||
| under agreements to repurchase | 95,569 | 95,569 | 0 | 95,569 | 0 | ||||||||||||
| Other borrowings | 564,446 | 565,568 | 0 | 565,568 | 0 | ||||||||||||
| Accrued interest payable | 4,920 | 4,920 | 0 | 4,920 | 0 | ||||||||||||
| December 31, 2024 | |||||||||||||||||
| Financial Assets: | |||||||||||||||||
| Cash and cash equivalents | $ | 134,398 | $ | 134,398 | $ | 134,398 | $ | 0 | $ | 0 | |||||||
| Securities - held-to-maturity | 312,462 | 267,295 | 0 | 267,295 | 0 | ||||||||||||
| FHLB stock and other stock | 42,255 | 42,255 | 0 | 42,255 | 0 | ||||||||||||
| Accrued interest receivable | 28,823 | 28,823 | 0 | 28,823 | 0 | ||||||||||||
Loans/leases, net1 | 5,963,426 | 5,584,661 | 0 | 0 | 5,584,661 | ||||||||||||
| Financial Liabilities: | |||||||||||||||||
| Time deposits | $ | 1,068,375 | $ | 1,064,548 | $ | 0 | $ | 1,064,548 | $ | 0 | |||||||
| Other deposits | 5,403,430 | 5,403,430 | 0 | 5,403,430 | 0 | ||||||||||||
| Fed funds purchased and securities sold | |||||||||||||||||
| under agreements to repurchase | 37,036 | 37,036 | 0 | 37,036 | 0 | ||||||||||||
| Other borrowings | 790,247 | 789,915 | 0 | 789,915 | 0 | ||||||||||||
| Accrued interest payable | 4,854 | 4,854 | 0 | 4,854 | 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.
Securities - Held-to-Maturity: Fair values for U.S. Treasury securities are based on quoted market prices. Fair values for obligations of U.S. government sponsored entities, and mortgage-backed securities-residential are based on quoted market prices, where available, as provided by third party pricing vendors. If quoted market prices were not available, fair values are based on quoted market prices of comparable instruments in active markets and/or based upon a matrix pricing methodology, which uses comprehensive interest rate tables to determine market price, movement and yield relationships. These securities are reviewed periodically to determine if there are any events or changes in circumstances that would adversely affect their value.
FHLB Stock and Other Stock: The carrying amount of FHLB stock approximates fair value. If the stock is redeemed, the Company will receive an amount equal to the par value of the stock. For miscellaneous equity securities, carrying value is cost.
Loans and Leases: Fair value for loans is calculated using an exit price notion. The Company's valuation methodology takes into account factors such as estimated cash flows, including contractual cash flow and assumptions for prepayments; liquidity risk; and credit risk. The fair values of residential loans were estimated using discounted cash flow analyses, based upon available market benchmarks for rates and prepayment assumptions. The fair values of commercial and consumer loans were estimated using discounted cash flow analyses, based upon interest rates currently offered for loans and leases with similar terms and credit quality. The fair values of loans held for sale were determined based upon contractual prices for loans with similar characteristics.
Accrued Interest Receivable and Accrued Interest Payable: The carrying amount of these short-term instruments approximates fair value.
Deposits: The fair values disclosed for noninterest bearing accounts and accounts with no stated maturities are equal to the amount payable on demand at the reporting date. The fair value of time deposits is based upon discounted cash flow analyses using rates offered for FHLB advances, which is the Company’s primary alternative source of funds.
Fed Funds Purchased and Securities Sold Under Agreements to Repurchase: The carrying amount of these instruments approximates fair value because the instruments have short-term maturities.
Other borrowings: The fair value of other borrowings is based upon discounted cash flow analyses using current rates offered for FHLB advances, with similar terms.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.