UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
11-K
FOR
ANNUAL REPORTS OF EMPLOYEE STOCK
PURCHASE,
SAVINGS AND SIMILAR PLANS
PURSUANT
TO SECTION 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
☒
ANNUAL REPORT TO SECTION 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For
the Fiscal year ended: December 31, 2022
☐ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For
the transition period from ____ to ____
Commission
File Number: 1-12709
TOMPKINS
FINANCIAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
(Full
title of plan)
TOMPKINS
FINANCIAL CORPORATION
(Name
of issuer of the securities held pursuant to the plan)
118
E. Seneca Street, P.O. Box 460,
Ithaca,
New York 14851
(607)
273-3210
(Address
of principal executive offices)
![](https://www.sec.gov/Archives/edgar/data/1005817/000138713123007963/tompkinesop11k001.jpg)
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Plan
Administrator and Participants
Tompkins
Financial Corporation
Employee
Stock Ownership Plan
Opinion
on the Financial Statements
We
have audited the accompanying statements of net assets available for benefits of the Tompkins Financial Corporation Employee Stock
Ownership Plan (the “Plan”) as of December 31, 2022 and 2021, the related statements of changes in net assets available
for benefits for the years then ended, and the related notes (collectively, the “financial statements”). In our opinion,
the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December
31, 2022 and 2021, and the changes in net assets available for benefits for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.
Basis
for Opinion
These
financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the
Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Plan in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly,
we express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by the Plan’s management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Supplemental
Information
The
supplemental information in the accompanying Schedule of Assets Held for Investment Purposes at End of Year – December 31,
2022 and Schedule of Reportable Transactions Year Ended - December 31, 2022 have been subjected to audit procedures performed
in conjunction with the audit of the Plan’s
financial statements. The supplemental information is presented for the purpose of additional
analysis and is not a required part of the financial statements but includes supplemental information required by the Department
of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental
information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental
information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing
procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our
opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is
presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in all material respects,
in relation to the financial statements as a whole.
We
have served as the Plan’s auditor since 2006.
Elmira,
New York
June
26, 2023
TOMPKINS
FINANCIAL CORPORATION
EMPLOYEE
STOCK OWNERSHIP PLAN
STATEMENTS
OF NET ASSETS AVAILABLE FOR BENEFITS
| |
December 31, | |
| |
2022 | | |
2021 | |
ASSETS | |
| | |
| |
Investments, at fair value: | |
| | | |
| | |
Tompkins Financial Corporation common stock | |
$ | 47,142,561 | | |
$ | 49,245,015 | |
| |
| | | |
| | |
Employer contributions receivable | |
| 2,521,023 | | |
| 2,950,626 | |
NET ASSETS AVAILABLE FOR BENEFITS | |
$ | 49,663,584 | | |
$ | 52,195,641 | |
The
accompanying notes are an integral part of the financial statements.
TOMPKINS
FINANCIAL CORPORATION
EMPLOYEE
STOCK OWNERSHIP PLAN
STATEMENTS
OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
| |
December 31, | |
| |
2022 | | |
2021 | |
ADDITIONS | |
| | |
| |
Additions to net assets attributed to: | |
| | | |
| | |
Investment income: | |
| | | |
| | |
Interest and dividends | |
$ | 1,392,387 | | |
$ | 1,338,710 | |
Net appreciation in fair value of investments | |
| — | | |
| 7,548,733 | |
| |
| 1,392,387 | | |
| 8,887,443 | |
Employer contributions | |
| 2,521,023 | | |
| 2,950,626 | |
TOTAL ADDITIONS | |
| 3,913,410 | | |
| 11,838,069 | |
DEDUCTIONS | |
| | | |
| | |
Deductions from net assets attributed to: | |
| | | |
| | |
Net depreciation in fair value of investments | |
| 3,623,819 | | |
| — | |
Benefits paid to participants | |
| 2,690,339 | | |
| 4,733,302 | |
Administrative expenses | |
| 500 | | |
| 88,474 | |
TOTAL DEDUCTIONS | |
| 6,314,658 | | |
| 4,821,776 | |
| |
| | | |
| | |
NET (DECREASE) INCREASE | |
| (2,401,248 | ) | |
| 7,016,293 | |
Net assets available for benefits at beginning of year | |
| 52,195,641 | | |
| 45,457,244 | |
| |
| | | |
| | |
Transfer to Tompkins Retirement Savings Plan | |
| (130,809 | ) | |
| (277,896 | ) |
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR | |
$ | 49,663,584 | | |
$ | 52,195,641 | |
The
accompanying notes are an integral part of the financial statements.
TOMPKINS
FINANCIAL CORPORATION
EMPLOYEE
STOCK OWNERSHIP PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2022 AND 2021
NOTE
A: DESCRIPTION OF PLAN
The
following description of the Tompkins Financial Corporation Employee Stock Ownership Plan (the “Plan”) provides only
general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
General
The
Plan is an employee stock ownership plan covering eligible employees who have met certain age and service requirements. The Plan
is administered by the Executive, Compensation/Personnel Committee appointed by Tompkins Financial Corporation’s Board of
Directors, and is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). All
investments of the Plan are non-participant directed.
Effective
December 1, 2021, Principal Trust Company (Principal) became the trustee and custodian of the Plan. Principal Life Insurance Company
is the recordkeeper for the Plan. Prior to that date, Prudential Retirement Insurance and Annuity Company served as the recordkeeper
and Prudential Bank and Trust, F.S.B (“Prudential”) served as the trustee and custodian of the Plan.
Eligibility
An
employee shall become eligible for participation in the Plan on the first day of the month coinciding with or immediately following
completing one year of credited service and attaining the age of twenty-one. Leased employees, employees covered under a collective
bargaining agreement and “On-Call” employees are not eligible to participate.
Vesting
Participants
will become vested in all contributions and earnings upon completion of three years of service.
Contributions
Tompkins
Financial Corporation shall contribute to the Plan a discretionary amount, which shall not exceed 5% of participant compensation.
The Executive, Compensation/Personnel Committee approved a 3.5% and 4.0% discretionary contribution to the Plan for the years
ended December 31, 2022 and 2021, respectively. These contributions are used by the Employee Stock Ownership Plan to acquire company
common stock. These common stock shares are allocated annually to participant accounts. The Plan sponsor has the right to discontinue
such discretionary contributions at any time.
Diversification
and transfers
Diversification
is offered to participants close to retirement so that they may have the opportunity to move part of the value of their investment
in the Plan sponsor stock into investments which are more diversified. Participants who are at least age 55 with at least 10 years
of participation in the Plan may elect to diversify a portion of their account. Diversification is offered to each eligible participant
over multiple years. In each of the first five years, a participant may diversify up to 25 percent of the number of post-1986
shares allocated to his or her account, less any shares previously diversified. After the fifth year, the percentage changes to
50 percent.
TOMPKINS
FINANCIAL CORPORATION
EMPLOYEE
STOCK OWNERSHIP PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2022 AND 2021
NOTE
A: DESCRIPTION OF PLAN, Cont’d
Diversification
and transfers, Cont’d
The
funds elected to be diversified are transferred to the Tompkins Retirement Savings Plan and invested in funds as chosen by the
participant. During the years ended December 31, 2022 and 2021, the Plan transferred $130,809 and $277,896, respectively.
Participants’
accounts
Each
participant’s account is credited with an allocation of the Tompkins Financial Corporation’s discretionary and non-elective
contributions and an allocation of plan earnings (losses). Allocations of company contributions are based upon the participant’s
compensation and the allocations of plan earnings are based upon participant account balances. The benefit to which a participant
is entitled is the benefit that can be provided from the participant’s vested account. Forfeitures of non-vested account
balances may be allocated to participants’ accounts as company contributions.
Payment
of benefits
The
Plan provides for normal retirement benefits upon reaching the age of 65 and has provisions for disability, death, in-service
and termination benefits for those participants who are eligible to receive such benefits. A participant may receive the value
of the vested interest in his or her account as a lump-sum distribution or in installments.
Forfeitures
Forfeitures
of terminated participants’ non-vested accounts may be used to reduce employer contributions, to pay plan expenses, or allocated
amongst the accounts of participants. Forfeitures were used to reduce employer contributions for the years ended December 31,
2022 and 2021. Forfeited non-vested accounts to be utilized in future years as of December 31, 2022 and 2021 were $26,794 and
$34,649 respectively.
NOTE
B: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of accounting
The
financial statements of the Plan are prepared under the accrual basis of accounting.
Investment
valuation and income recognition
The
Plan’s investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. Purchases and sales of investments
are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date. Net appreciation (depreciation) includes the
Plan’s gains and losses on investments bought and sold as well as held during the year.
Administrative
expenses
The
Plan’s expenses are paid either by the Plan, participants, or the Plan sponsor, as provided by the plan document. Expenses
that are paid directly by the Plan sponsor are excluded from these financial statements.
TOMPKINS
FINANCIAL CORPORATION
EMPLOYEE
STOCK OWNERSHIP PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2022 AND 2021
NOTE
B: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Cont’d
Use
of estimates
The
preparation of financial statements in accordance with accounting principles generally accepted in the United States of America
requires the Plan’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates and
assumptions.
Payment
of benefits
Benefits
are recorded when paid.
Subsequent
events
The
Plan has evaluated subsequent events and determined no subsequent events have occurred requiring adjustments to the financial
statements or disclosures.
NOTE
C: FAIR VALUE MEASUREMENTS
Accounting
principles generally accepted in the United States of America provides a framework for measuring fair value. That framework provides
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 described
below:
| Level
1 | Inputs
to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets. |
| Level
2 | Inputs
to the valuation methodology include: |
| - | Quoted
prices for similar assets or liabilities in active markets; |
| - | Quoted
prices for identical or similar assets or liabilities in inactive markets; |
| - | Inputs
other than quoted prices that are observable for the asset and liability; |
| - | Inputs
that are derived principally from or corroborated by observable market data by correlation
or other means. |
If
the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full
term of the asset or liability.
| Level
3 | Inputs
to the valuation methodology are unobservable and significant to the fair value measurement. |
The
asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of
any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable
inputs and minimize the use of unobservable inputs.
TOMPKINS
FINANCIAL CORPORATION
EMPLOYEE
STOCK OWNERSHIP PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2022 AND 2021
NOTE
C: FAIR VALUE MEASUREMENTS, Cont’d
Following
is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies
used at December 31, 2022 and 2021.
Tompkins
Financial Corporation Common Stock: Valued at the closing price reported on the New York Stock Exchange.
The
preceding methods as described above may produce a fair value calculation that may not be indicative of net realizable value or
reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with
other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial
instruments could result in a different fair value measurement at the reporting date.
The
following table sets forth by level, within the fair value hierarchy, the Plan’s investments at fair value as of December 31,
2022 and 2021:
| |
Level 1 | | |
Total | |
December 31, 2022 | |
| | |
| |
Tompkins Financial Corporation common stock | |
$ | 47,142,561 | | |
$ | 47,142,561 | |
Total investments, at fair value | |
$ | 47,142,561 | | |
$ | 47,142,561 | |
| |
| | | |
| | |
December 31, 2021 | |
| | | |
| | |
Tompkins Financial Corporation common stock | |
$ | 49,245,015 | | |
$ | 49,245,015 | |
Total investments, at fair value | |
$ | 49,245,015 | | |
$ | 49,245,015 | |
NOTE
D: TAX STATUS
The
Internal Revenue Service has determined and informed the Company by a letter dated April 25, 2017, that the Plan and related trust
are designed in accordance with the applicable sections of the Internal Revenue Code (“IRC”). The Plan has been amended
since receiving the determination letter. However, the Plan administrator and the Plan’s legal counsel believe that the
Plan is designed and is currently being operated in compliance with the applicable requirements of IRC.
Accounting
principles generally accepted in the United States of America require Plan management to evaluate tax positions taken by the Plan
and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained
upon examination by the Internal Revenue Service. The Plan administrator has analyzed the tax positions taken by the Plan, and
has concluded that as of December 31, 2022 or 2021, there are no uncertain positions taken or expected to be taken that would
require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits
by taxing jurisdictions; however, there are currently no audits for any tax periods
in progress.
TOMPKINS
FINANCIAL CORPORATION
EMPLOYEE
STOCK OWNERSHIP PLAN
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2022 AND 2021
NOTE
E: PLAN TERMINATION
Although
it has not expressed any intent to do so, the Plan sponsor has the right under the Plan to discontinue its contributions at any
time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants have a fully
vested interest in their accounts and their accounts will be paid to them as provided by the plan document.
NOTE
F: TRANSACTIONS WITH PARTIES-IN-INTEREST
The
Plan invests primarily in Tompkins Financial Corporation common stock. Tompkins Financial Corporation is the Plan sponsor.
NOTE
G: RISKS AND UNCERTAINTIES
The
Plan invests primarily in Tompkins Financial Corporation common stock. These investment securities are exposed to market and credit
risks. Market risks include global events which could impact the value of investment securities, such as a pandemic or international
conflict. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes
in the values of investment securities will occur in the near term and that such changes could materially affect participants’
account balances and the amounts reported in the accompanying statements of net assets available for benefits.
TOMPKINS FINANCIAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
SUPPLEMENTAL SCHEDULES
TOMPKINS FINANCIAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
EIN: 15-0470650
PLAN #: 003
FORM 5500 - SCHEDULE H - PART IV
ITEM 4i - SCHEDULE OF ASSETS HELD FOR
INVESTMENT PURPOSES
AT END OF YEAR - DECEMBER 31, 2022
(a) | |
(b) | |
(c) | |
(d) | | |
(e) | |
Party in interest | |
Identity of issue,
borrower, lessor or similar party | |
Description of investment, including maturity date, rate of interest, collateral, par or maturity value | |
Cost | | |
Current Value | |
* | |
Tompkins Financial Corporation | |
607,663.8495 units Common Stock | |
| | | |
| | |
| |
| |
| |
$ | 30,232,265 | | |
$ | 47,142,561 | |
| |
| |
| |
| | | |
| | |
| |
| |
TOTAL INVESTMENTS | |
$ | 30,232,265 | | |
$ | 47,142,561 | |
TOMPKINS FINANCIAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
EIN: 15-0470650
PLAN #: 003
FORM 5500 - SCHEDULE H - PART IV
ITEM 4j - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED - DECEMBER 31, 2022
Reportable transactions are transactions or a series of transactions
in excess of 5% of the value of the Plan assets as of January 1, 2022 as defined in Section 2520.103-6 of the Department of
Labor’s Rules and Regulations for Reporting and Disclosure under ERISA:
(a) | |
(b) | |
(c) | | |
(d) | | |
(g) | | |
(h) | | |
(i) | |
Identity of party involved | |
Description of assets
(including interest rate and maturity in case of a loan) | |
Purchase price | | |
Selling price | | |
Cost of asset | | |
Current value of asset on transaction date | | |
Net gain or (loss) | |
Category (I): Individual transactions in excess of 5% of Plan assets | |
| | |
| | |
| | |
| | |
| |
Tompkins Financial Corporation | |
Purchase of 37,454 shares | |
$ | 2,959,241 | | |
| N/A | | |
$ | 2,959,241 | | |
$ | 2,959,241 | | |
| N/A | |
Category (II): Series of non-securities transaction in excess of 5% of Plan assets | |
| | | |
| | | |
| | | |
| | |
None | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Category (III): Series of securities transactions in excess of 5% of Plan assets | |
| | | |
| | | |
| | | |
| | |
Tompkins Financial Corporation | |
Series of 5 purchases | |
$ | 4,342,986 | | |
| N/A | | |
$ | 4,342,986 | | |
$ | 4,342,986 | | |
| N/A | |
Tompkins Financial Corporation | |
Series of 104 sales | |
| N/A | | |
$ | 2,726,039 | | |
$ | 2,904,772 | | |
$ | 2,726,039 | | |
$ | (178,733 | ) |
Category (IV): Series of transactions related to individual transactions in excess of 5% of Plan assets | | | |
| | | |
| | |
None | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Note: Columns ( e ) and ( f ) are not applicable.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the plan) have duly caused this annual report to be signed on its behalf
by the undersigned hereunto duly authorized.
TOMPKINS
FINANCIAL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN
|
|
|
|
Administrator: TOMPKINS COMMUNITY BANK |
|
|
|
Date: June 26, 2023 |
By: |
/s/ Francis M. Fetsko |
|
|
Francis M. Fetsko |
|
|
Executive Vice President |
|
|
Chief Financial Officer |
We hereby consent to the incorporation
by reference in the Registration Statements on Forms S-8 (No. 333-184582, 333-163977, 333-206043, and 333-229469) of Tompkins Financial
Corporation of our report dated June 26, 2023, relating to the financial statements and supplemental schedules of the Tompkins
Financial Corporation Employee Stock Ownership Plan which appear in this Form 11-K for the year ended December 31, 2022.