Tompkins Financial Corp (NYSEMKT:TMP)

Not your average bank, Tompkins is especially resistant to recession and well-poised to keep growing its dividend and rewarding investors. It's based in Ithaca, NY, where Cornell University and Ithaca College students and professors make up the majority of the population, and most residents are in some way dependent on the colleges for income. As you might expect, this creates an other-worldly little bubble economy in which if Cornell is booming, Tompkins County is booming, regardless of what the national economy is doing. Tompkins is very well-managed: though ROE has been falling recently, at 12% it's still higher than 90% of regional banks. At under half a billion in market cap, it's too small to really get noticed by the big guys, so this little gem remains undervalued.

Best of all, it's beautiful 3.6% yield is supported by a payout ratio of only about 40%, leaving plenty of room to increase dividends. And increase the dividend they do: even in the worst years of the recession, Tompkins raised the dividend by at least 5% a year every year. Buy, hold, reinvest the dividends, and just forget about it.

Sell risks: Cornell University folds, moves, or stops attracting wealthy students. The bank expands sufficiently beyond its major footprint around Tompkins County that it exposes itself to the more moribund economy of ex-Ithaca upstate New York.

This pick tracks back to a Nov '08 blog entry on Tompkins when it said 'no' to TARP.
http://caps.fool.com/Blogs/a-bank-that-said-no/109986

As the banking sector was showing some signs of strength in fall '10, I decided to give Tompkins a green thumb.

The bank trades at a reasonable PE, is predicted to continue growing earnings and pays a nice dividend. Tompkins made it through the financial crises without cutting the dividend and its current 3.5% yield is covered with only a 44% payout ratio.

If the market maintains the bull run, TMP isn't likely to go green. But, if the bull turns in to a bear, or even if it takes a breather and slows down or goes sideways, TMP is likely to catch up.

Disclosure - no position in TMP at time of posting.