Chemung Financial (NASDAQ: CHMG) swings from Q2 2025 loss to profit
Rhea-AI Filing Summary
Chemung Financial Corporation reported net income of 8,810 (in thousands) for the three months ended June 30, 2026, compared with a net loss of 6,452 a year earlier. For the first six months of 2026, net income was 18,009 versus a loss of 429, and basic earnings per share were 3.73 compared with (0.09).
Quarterly net interest income increased to 24,670, with a provision for credit losses of 561 versus 1,145 in the prior-year quarter. Total non-interest income was 6,503, compared with negative 10,705 in Q2 2025, which had included a 17,498 loss on securities transactions, while non-interest expense rose to 19,321 from 17,769.
Total assets were 2,820,202 at June 30, 2026, with loans, net, of 2,341,919 and deposits of 2,363,934. The allowance for credit losses was 25,232, and total shareholders’ equity was 270,361, including accumulated other comprehensive loss of 35,945.
Positive
- Year-to-date net income of 18,009 vs a 429 loss in the prior year reflects a return to profitability, alongside positive non-interest income and no repeat of the 17,498 securities loss recorded in 2025.
Negative
- None.
Filing Explained
At June 30, 2026, Chemung reported $133,669 thousand of borrowings, including $89,590 thousand scheduled to mature in July.
This Form 10-Q is an unaudited interim report for the quarter ended
At that date, Chemung Financial Corporation reported
The filing reports
Available-for-sale securities had a fair value of
The June 30 filing also lists unused lending capacity and other contingent exposures; these are contractual capacities that may expire without being fully funded. It also states that one finance lease had been signed but had not commenced, providing a specific item to track in a later report.
Key Figures
Q2 2026 Net Income: 8,810
Q2 2026 Basic EPS: 1.82
Total Assets: 2,820,202
+5 more
8 metrics
Q2 2026 Net Income
8,810
Net income for the three months ended June 30, 2026, in thousands
Q2 2026 Basic EPS
1.82
Basic and diluted earnings per share for the three months ended June 30, 2026
Total Assets
2,820,202
Total assets at June 30, 2026, in thousands
Total Deposits
2,363,934
Total deposits at June 30, 2026, in thousands
Loans, Net
2,341,919
Net loans at June 30, 2026, in thousands
Allowance for Credit Losses
25,232
Allowance for credit losses on loans at June 30, 2026, in thousands
Total Non-interest Income Q2 2026
6,503
Total non-interest income for the three months ended June 30, 2026, in thousands
Securities Loss Q2 2025
17,498
Realized pre-tax loss on sales of available for sale securities in Q2 2025, in thousands
Key Terms
Allowance for credit losses, Accumulated other comprehensive income (loss), Nonaccrual loans, Other real estate owned (OREO), +2 more
6 terms
Allowance for credit losses financial
"Allowance for credit losses | A contra asset account that estimates the lifetime amount the Corporation anticipates"
Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.
Accumulated other comprehensive income (loss) financial
"AOCI | Accumulated other comprehensive income and Accumulated other comprehensive loss"
A balance-sheet line that tracks certain gains and losses that haven’t flowed through the company’s profit-and-loss statement, such as unrealized changes in the value of investments, foreign-currency adjustments, and some pension-related items. Think of it like a storage closet for value swings the company hasn’t ‘realized’ by selling or settling them yet; it changes shareholders’ equity and helps investors see hidden volatility or potential future impacts on book value.
Nonaccrual loans financial
"The following table presents the amortized cost basis of nonaccrual loans without an associated allocation"
Nonaccrual loans are loans a lender has stopped counting toward interest income because the borrower is overdue or unlikely to pay; the lender only records cash payments received and may set aside extra funds to cover potential losses. For investors, a rising number or amount of nonaccrual loans signals weaker credit quality, lower future interest revenue and larger potential write-downs — similar to pausing expected subscription income when many customers stop paying.
Other real estate owned (OREO) financial
"Other real estate owned (OREO) | Represents real property owned by the Corporation"
Other real estate owned (OREO) is property a lender or financial institution has taken possession of after a borrower defaulted on a loan, typically through foreclosure or repossession. It matters to investors because a rising stock of OREO signals more bad loans and potential losses, while the value and ease of selling these properties affect a lender’s balance sheet and future profits—think of it like a store having to sell repossessed goods at a discount to recover money owed.
Risk-weighted assets financial
"Risk-Weighted Assets (RWA) | Risk-weighted assets, which is used to calculate regulatory capital ratios"
Risk-weighted assets are a bank’s assets (like loans and investments) adjusted by how risky regulators consider each one, so safer items count less and riskier items count more. Think of it as packing a suitcase where heavy, fragile items take up more “real” space; higher risk-weighted assets mean a bank must hold more capital as a cushion. Investors watch this because it affects a bank’s safety, regulatory limits and ability to lend or return money to shareholders.
Troubled Debt Restructurings financial
"modifications to loans where the borrower is considered to be experiencing financial difficulty, and which may require disclosure"
Troubled debt restructurings are situations where a lender and a struggling borrower agree to change loan terms—such as lowering the interest rate, extending payments, or forgiving part of the balance—because the borrower cannot meet the original deal. For investors, a TDR signals heightened credit risk and potential losses, like a company having to accept less cash now to avoid a default, which can reduce earnings, cash flow and the value of the lender’s assets.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did Chemung Financial (CHMG) perform financially in Q2 2026?
Chemung Financial reported net income of 8,810 (in thousands) for Q2 2026, compared with a net loss of 6,452 in Q2 2025. Year-to-date net income was 18,009 versus a 429 loss a year earlier.
How did net interest income and credit provisioning look for CHMG in Q2 2026?
Net interest income was 24,670 (in thousands) in Q2 2026, up from 20,808 a year earlier. The provision for credit losses was 561 versus 1,145 in Q2 2025, with an allowance of 25,232 at June 30, 2026.
How did non-interest income change for Chemung Financial (CHMG) versus 2025?
Non-interest income totaled 6,503 (in thousands) in Q2 2026, versus negative 10,705 in Q2 2025. The prior-year quarter included a 17,498 loss on securities transactions; there were no such losses in Q2 2026.
What does Chemung Financial’s balance sheet look like as of June 30, 2026?
At June 30, 2026, total assets were 2,820,202 (in thousands), loans, net, were 2,341,919, and deposits were 2,363,934. Shareholders’ equity was 270,361, including accumulated other comprehensive loss of 35,945.
What is Chemung Financial’s allowance for credit losses as of June 30, 2026?
The allowance for credit losses on loans was 25,232 (in thousands) at June 30, 2026, up from 24,209 at December 31, 2025. An additional 659 allowance related to unfunded commitments was recorded within other liabilities.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM | ||||||||||||||
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||||||||
For Quarterly period ended June 30, 2026
| Or | ||||||||||||||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||||||||
Commission File No. | ||||||||||||||
| (Exact name of registrant as specified in its charter) | |||||||||||||||||||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||||||||||||||
( | |||||||||||||||||||||||
| (Registrant's telephone number, including area code) | |||||||||||||||||||||||
| Securities registered pursuant to Section 12(b) of the Exchange Act: | ||||||||||||||
| Title of each class | Trading Symbol | Name of exchange on which registered | ||||||||||||
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. | |||||||||||||||||||||||
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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). | |||||||||||||||||||||||
| Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. | |||||||||||||||||||||||
| Large 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 the Exchange Act. ☐ | |||||||||||||||||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ☐ | |||||||||||||||||||||||
As of August 1, 2026, there were | |||||||||||||||||||||||
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES
INDEX
| PAGE | ||||||||
Glossary of Abbreviations and Terms | 3 | |||||||
PART I. | FINANCIAL INFORMATION | |||||||
Item 1: | Financial Statements – Unaudited | |||||||
Consolidated Balance Sheets | 6 | |||||||
Consolidated Statements of Income (Loss) | 7 | |||||||
Consolidated Statements of Comprehensive Income | 8 | |||||||
Consolidated Statements of Shareholders’ Equity | 9 | |||||||
Consolidated Statements of Cash Flows | 11 | |||||||
Notes to Unaudited Consolidated Financial Statements | 13 | |||||||
Item 2: | Management's Discussion and Analysis of Financial Condition and Results of Operations | 46 | ||||||
Item 3: | Quantitative and Qualitative Disclosures About Market Risk | 84 | ||||||
Item 4: | Controls and Procedures | 86 | ||||||
PART II. | OTHER INFORMATION | |||||||
Item 1: | Legal Proceedings | 1 | ||||||
Item 1A: | Risk Factors | 87 | ||||||
Item 2: | Unregistered Sales of Equity Securities and Use of Proceeds | 87 | ||||||
Item 3: | Defaults Upon Senior Securities | 87 | ||||||
Item 4: | Mine Safety Disclosures | 87 | ||||||
Item 5: | Other Information | 87 | ||||||
Item 6: | Exhibits | 88 | ||||||
SIGNATURES | 89 | |||||||
EXHIBIT INDEX | ||||||||
2
GLOSSARY OF ABBREVIATIONS AND TERMS
The terms “the Registrant,” “the Corporation,” “we,” “us,” and “our,” generally refer to Chemung Financial Corporation and its wholly owned subsidiaries collectively, except where the context indicates otherwise.
To assist the reader, the Corporation has provided the following list of commonly used abbreviations and terms included in the Notes to the Unaudited Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Abbreviations
| ACL | Allowance for credit losses | ||||
| AFS | Available for sale securities | ||||
| ALCO | Asset-Liability Committee | ||||
| AOCI | Accumulated other comprehensive income | ||||
| ASC | Accounting Standards Codification | ||||
| ASU | Accounting Standards Update | ||||
| AUA | Assets under administration | ||||
| AUM | Assets under management | ||||
| Bank | Chemung Canal Trust Company | ||||
| Basel III | The Third Basel Accord of the Basel Committee on Banking Supervision | ||||
| Board of Directors | Board of Directors of Chemung Financial Corporation | ||||
| CAM | Common area maintenance charges | ||||
| CDARS | Certificate of Deposit Account Registry Service | ||||
| CECL | Current expected credit loss | ||||
| CFS | CFS Group, Inc. | ||||
| Corporation | Chemung Financial Corporation | ||||
| Dodd-Frank Act | The Dodd-Frank Wall Street Reform and Consumer Protection Act | ||||
| EPS | Earnings per share | ||||
| Exchange Act | Securities Exchange Act of 1934 | ||||
| FASB | Financial Accounting Standards Board | ||||
| FDIC | Federal Deposit Insurance Corporation | ||||
| FFIEC | Federal Financial Institutions Examination Council | ||||
| FHLB | Federal Home Loan Bank | ||||
| FHLBNY | Federal Home Loan Bank of New York | ||||
| FOMC | Federal Open Market Committee | ||||
| FRB | Board of Governors of the Federal Reserve System | ||||
| FRBNY | Federal Reserve Bank of New York | ||||
| Freddie Mac | Federal Home Loan Mortgage Corporation | ||||
| HTM | Held to maturity securities | ||||
| ICS | Insured Cash Sweep Service | ||||
| LGD | Loss given default | ||||
| MD&A | Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||||
| NAICS | North American Industry Classification System | ||||
| NYSDFS | New York State Department of Financial Services | ||||
| OCC | Office of the Comptroller of the Currency | ||||
| OPEB | Other postemployment benefits | ||||
| OREO | Other real estate owned | ||||
| PD | Probability of default | ||||
| REIT | Real estate investment trust | ||||
3
| ROAA | Return on average assets | ||||
| ROAE | Return on average equity | ||||
| RWA | Risk-weighted assets | ||||
| SBA | Small Business Administration | ||||
| SEC | Securities and Exchange Commission | ||||
| Securities Act | Securities Act of 1933 | ||||
| SOFR | Secured Overnight Financing Rate | ||||
| WMG | Wealth Management Group | ||||
Terms
| Allowance for credit losses | A contra asset account that estimates the lifetime amount the Corporation anticipates will be unrecoverable from assets with credit risk in conformity with CECL requirements outlined in ASC 326. | ||||
| Assets under administration | Represents assets that are beneficially owned by clients and all investment decisions pertaining to these assets are also made by clients. | ||||
| Assets under management | Represents assets that are managed on behalf of clients. | ||||
| Basel III | A comprehensive set of reform measures designed to improve the regulation, supervision, and risk management within the banking sector. The reforms require banks to maintain proper leverage ratios and meet certain capital requirements. | ||||
| Benefit obligation | Refers to the projected benefit obligation for pension plans and the accumulated postretirement benefit obligation for OPEB plans. | ||||
| Brokered deposits | Refers to deposits obtained from or through the mediation or assistance of a deposit broker. | ||||
| Canal Bank | Division of Chemung Canal Trust Company located in the “Western Region” of New York State, including Erie County. | ||||
| Capital Bank | Division of Chemung Canal Trust Company located in the “Capital Region” of New York State including the counties of Albany, Saratoga, and Schenectady. | ||||
| CDARS | Product involving a network of financial institutions that exchange certificates of deposit among members in order to ensure FDIC insurance coverage on customer deposits above the single institution limit. Using a sophisticated matching system, funds are exchanged on a dollar-for-dollar basis, so that the equivalent of an original deposit comes back to the originating institution. | ||||
| Collateralized debt obligation | A structured financial product that pools together cash flow-generating assets, such as mortgages, bonds, and loans. | ||||
| Collateralized mortgage obligations | A type of mortgage-backed security with principal repayments organized according to their maturities and into different classes based on risk. The mortgages serve as collateral and are organized into classes based on their risk profile. | ||||
| Common area maintenance (CAM) | Expenses associated with shared-space maintenance of leased premises. | ||||
| Dodd-Frank Act | The Dodd-Frank Act was enacted on July 21, 2010 and significantly changed the bank regulatory landscape and has impacted and will continue to impact the lending, deposit, investment, trading, and operating activities of financial institutions and their holding companies. The Dodd-Frank Act requires various federal agencies to adopt a broad range of new rules and regulations. | ||||
| Executive Management Team | Senior leadership of Chemung Financial Corporation responsible for the Corporation's strategic direction and operations. | ||||
| Fully taxable equivalent basis | Income from tax-exempt loans and investment securities that have been increased by an amount equivalent to the taxes that would have been paid if this income were taxable at statutory rates; the corresponding income tax impact related to tax-exempt items is recorded within income tax expense. | ||||
| Holding company | Consists of the operations for Chemung Financial Corporation (parent only). | ||||
| ICS | Product involving a network of financial institutions that exchange interest-bearing money market deposits among members in order to ensure FDIC insurance coverage on customer deposits above the single institution limit. Using a sophisticated matching system, funds are exchanged on a dollar-for-dollar basis, so that the equivalent of an original deposit comes back to the originating institution. | ||||
4
| Loans held for sale | Residential real estate loans originated for sale on the secondary market with maturities from 15-30 years and other loans receivable designated for sale by management. | ||||
| Long-term lease obligation | An obligation extending beyond the current year, which is related to a long-term finance lease that is considered to have the economic characteristics of asset ownership. | ||||
| MasterCard | Payment card services vendor. | ||||
| Mortgage-backed securities | A type of asset-backed security that is secured by a collection of mortgages. | ||||
| Municipal clients | A political unit, such as a city, town, or village, incorporated for local self-government. | ||||
| N/A | Data is not applicable or available for the period presented. | ||||
| N/M | Not meaningful. | ||||
| Non-GAAP | A calculation not made according to GAAP. | ||||
| Obligations of state and political subdivisions | An obligation that is guaranteed by the full faith and credit of a state or political subdivision that has the power to tax. | ||||
| Obligations of U.S. Government | A federally guaranteed obligation backed by the full power of the U.S. government, including Treasury bills, Treasury notes, and Treasury bonds. | ||||
| Obligations of U.S. Government sponsored enterprises | Obligations of agencies originally established or chartered by the U.S. government to serve public purposes as specified by the U.S. Congress; these obligations are not explicitly guaranteed as to the timely payment of principal and interest by the full faith and credit of the U.S. government. | ||||
| Other real estate owned (OREO) | Represents real property owned by the Corporation, which is not directly related to its business and is most frequently the result of a foreclosure on real property. | ||||
| Political subdivision | A county, city, town, or other municipal corporation, a public authority, or a publicly-owned entity that is an instrumentality of a state or a municipal corporation. | ||||
| Pre-provision profit | Represents total net revenue less non-interest expense, before income tax expense. The Corporation believes that this financial measure is useful in assessing the ability of a bank to generate income in excess of its provision for credit losses. | ||||
| Regulatory Relief Act | The Economic Growth, Regulatory Relief and Consumer Protection Act was enacted on May 24, 2018 and provides certain limited amendments to the Dodd-Frank Act, as well as certain targeted modifications to other post-financial crisis regulatory requirements. In addition, the legislation establishes new consumer protections and amends various securities and investment company-related requirements. | ||||
| Risk-Weighted Assets (RWA) | Risk-weighted assets, which is used to calculate regulatory capital ratios, consist of on- and off-balance sheet exposures that are assigned to one of several broad risk categories and weighted by factors representing their risk and potential for default. On-balance sheet assets are risk-weighted based on the perceived credit risk associated with the obligor or counterparty, the nature of any collateral, and the guarantor, if any. Off-balance sheet exposures such as lending-related commitments, guarantees, derivatives, and other applicable off-balance sheet positions are risk-weighted by multiplying the contractual amount by the appropriate credit conversion factor to determine the on-balance sheet credit equivalent amount, which is then risk-weighted based on the same factors used for on-balance sheet assets. Risk-weighted assets also incorporate a measure for market risk related to applicable trading assets, including debt and equity instruments. | ||||
| SBA loan pools | Business loans partially guaranteed by the SBA. | ||||
| Securities sold under agreements to repurchase | Sale of securities together with an agreement for the seller to buy back the securities at a later date. | ||||
| Trust preferred securities | A hybrid security with characteristics of both subordinated debt and preferred stock which allows for early redemption by the issuer, makes fixed or variable payments, and matures at face value. | ||||
| Unaudited | Financial statements and information that have not been subjected to auditing procedures sufficient to permit an independent certified public accountant to express an opinion. | ||||
| WMG | Provides services as executor and trustee under wills and agreements, and guardian, custodian, trustee and agent for pension, profit-sharing and other employee benefit trusts, as well as various investment, financial planning, pension, estate planning and employee benefit administration services. | ||||
5
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| (in thousands, except share and per share data) | June 30, 2026 | December 31, 2025 | ||||||||||||
| ASSETS | ||||||||||||||
| Cash and due from financial institutions | $ | $ | ||||||||||||
| Interest-earning deposits in other financial institutions | ||||||||||||||
| Total cash and cash equivalents | ||||||||||||||
| Equity investments, at estimated fair value | ||||||||||||||
Securities available for sale, at estimated fair value (amortized cost of $ | ||||||||||||||
Securities held to maturity, at amortized cost (estimated fair value of $ | ||||||||||||||
| FHLBNY and FRBNY stock, at cost | ||||||||||||||
| Loans, net of deferred loan fees | ||||||||||||||
| Allowance for credit losses | ( | ( | ||||||||||||
| Loans, net | ||||||||||||||
| Loans held for sale | ||||||||||||||
| Premises and equipment, net | ||||||||||||||
| Operating lease right-of-use assets | ||||||||||||||
| Goodwill | ||||||||||||||
| Bank-owned life insurance | ||||||||||||||
| Interest rate swap assets | ||||||||||||||
| Accrued interest receivable and other assets | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||
| Deposits: | ||||||||||||||
| Non interest-bearing | $ | $ | ||||||||||||
| Interest-bearing | ||||||||||||||
| Total deposits | ||||||||||||||
| Overnight and short-term advances | ||||||||||||||
Subordinated debt, net of issuance costs of $ | ||||||||||||||
| Long-term finance lease obligation | ||||||||||||||
| Operating lease liabilities | ||||||||||||||
| Interest rate swap liabilities | ||||||||||||||
| Accrued interest payable and other liabilities | ||||||||||||||
| Total liabilities | ||||||||||||||
| Shareholders' equity: | ||||||||||||||
Common stock, $ | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
| Retained earnings | ||||||||||||||
Treasury stock, at cost; | ( | ( | ||||||||||||
| Accumulated other comprehensive loss | ( | ( | ||||||||||||
| Total shareholders' equity | ||||||||||||||
| Total liabilities and shareholders' equity | $ | $ | ||||||||||||
See accompanying notes to unaudited consolidated financial statements.
6
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| (in thousands, except per share data) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Interest and dividend income: | ||||||||||||||||||||||||||
| Loans, including fees | $ | $ | $ | $ | ||||||||||||||||||||||
| Taxable securities | ||||||||||||||||||||||||||
| Tax exempt securities | ||||||||||||||||||||||||||
| Interest-earning deposits | ||||||||||||||||||||||||||
| Total interest and dividend income | ||||||||||||||||||||||||||
| Interest expense: | ||||||||||||||||||||||||||
| Deposits | ||||||||||||||||||||||||||
| Borrowed funds | ||||||||||||||||||||||||||
| Total interest expense | ||||||||||||||||||||||||||
| Net interest income | ||||||||||||||||||||||||||
| Provision for credit losses | ||||||||||||||||||||||||||
| Net interest income after provision for credit losses | ||||||||||||||||||||||||||
| Non-interest income: | ||||||||||||||||||||||||||
| WMG fee income | ||||||||||||||||||||||||||
| Service charges on deposit accounts | ||||||||||||||||||||||||||
| Interchange revenue from debit card transactions | ||||||||||||||||||||||||||
| Net (losses) on securities transactions | ( | ( | ||||||||||||||||||||||||
| Changes in fair value of equity investments | ||||||||||||||||||||||||||
| Net gains on sales of loans held for sale | ||||||||||||||||||||||||||
| Net gains (losses) on sales of other real estate owned | ( | |||||||||||||||||||||||||
| Income from bank-owned life insurance | ||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Total non-interest income | ( | ( | ||||||||||||||||||||||||
| Non-interest expense: | ||||||||||||||||||||||||||
| Salaries and wages | ||||||||||||||||||||||||||
| Pension and other employee benefits | ||||||||||||||||||||||||||
| Other components of net periodic pension and postretirement benefits | ( | ( | ( | ( | ||||||||||||||||||||||
| Net occupancy | ||||||||||||||||||||||||||
| Furniture and equipment | ||||||||||||||||||||||||||
| Data processing | ||||||||||||||||||||||||||
| Professional services | ||||||||||||||||||||||||||
| Marketing and advertising | ||||||||||||||||||||||||||
| Other real estate owned | ||||||||||||||||||||||||||
| FDIC insurance | ||||||||||||||||||||||||||
| Loan expense | ||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Total non-interest expense | ||||||||||||||||||||||||||
| Income (loss) before income tax expense | ( | ( | ||||||||||||||||||||||||
| Income tax expense (benefit) | ( | ( | ||||||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||||||||||||
| Basic and diluted earnings (loss) per share | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
See accompanying notes to unaudited consolidated financial statements.
7
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
| Other comprehensive income (loss): | ||||||||||||||||||||||||||
| Unrealized holding gains (losses) on securities available for sale | ( | |||||||||||||||||||||||||
| Reclassification adjustment for losses realized in net income | ||||||||||||||||||||||||||
| Net unrealized gains (losses) on securities available for sale | ( | |||||||||||||||||||||||||
| Tax effect | ( | |||||||||||||||||||||||||
| Net of tax amount | ( | |||||||||||||||||||||||||
| Change in funded status of defined benefit pension plan and other benefit plans: | ||||||||||||||||||||||||||
| Reclassification adjustment for amortization of net actuarial loss | ||||||||||||||||||||||||||
| Total before tax effect | ||||||||||||||||||||||||||
| Tax effect | ||||||||||||||||||||||||||
| Net of tax amount | ||||||||||||||||||||||||||
| Total other comprehensive income (loss) | ( | |||||||||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | ||||||||||||||||||||||
See accompanying notes to unaudited consolidated financial statements.
8
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
| (in thousands, except share and per share data) | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||||||||||||||||
| Balances at March 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Net income (loss) | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
| Restricted stock awards | — | — | — | — | |||||||||||||||||||||||||||||||
| Restricted stock units for directors' deferred compensation plan | — | — | — | — | |||||||||||||||||||||||||||||||
Distribution of | — | ( | — | — | |||||||||||||||||||||||||||||||
Cash dividends declared ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Withholding of | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Sale of | — | — | — | ||||||||||||||||||||||||||||||||
| Balances at June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Balances at March 31, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Restricted stock awards | — | — | — | — | |||||||||||||||||||||||||||||||
| Restricted stock units for directors' deferred compensation plan | — | — | — | — | |||||||||||||||||||||||||||||||
Cash dividends declared ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Withholding of | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Sale of | — | — | — | ||||||||||||||||||||||||||||||||
| Balances at June 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
(a) All treasury stock sales were completed at the prevailing market price with the Chemung Canal Trust Company Profit Sharing, Savings, and Investment Plan which is a defined contribution plan sponsored by the Bank.
(b) Withheld shares of common stock represent shares withheld to cover employee taxes on vesting shares.
See accompanying notes to unaudited consolidated financial statements.
9
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
| (in thousands, except share and per share data) | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||||||||||||||||
| Balances at January 1, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Net income (loss) | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
| Restricted stock awards | — | — | — | — | |||||||||||||||||||||||||||||||
| Restricted stock units for directors' deferred compensation plan | — | — | — | — | |||||||||||||||||||||||||||||||
Distribution of | — | ( | — | — | |||||||||||||||||||||||||||||||
Cash dividends declared ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Distribution of | — | ( | — | — | |||||||||||||||||||||||||||||||
Withholding of | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Sale of | — | — | — | ||||||||||||||||||||||||||||||||
| Balances at June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Balances at January 1, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
| Restricted stock awards | — | — | — | — | |||||||||||||||||||||||||||||||
| Restricted stock units for directors' deferred compensation plan | — | — | — | — | |||||||||||||||||||||||||||||||
Distribution of | — | ( | — | — | |||||||||||||||||||||||||||||||
Cash dividends declared ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Distribution of | — | ( | — | — | |||||||||||||||||||||||||||||||
Withholding of | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Sale of | — | — | — | ||||||||||||||||||||||||||||||||
Forfeiture of | — | — | ( | — | ( | ||||||||||||||||||||||||||||||
| Balances at June 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
(a) All treasury stock sales were completed at the prevailing market price with the Chemung Canal Trust Company Profit Sharing, Savings, and Investment Plan which is a defined contribution plan sponsored by the Bank .
(b) Withheld shares of common stock represent shares withheld to cover employee taxes on vesting shares.
See accompanying notes to unaudited consolidated financial statements.
10
| CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES | |||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| (UNAUDITED) | |||||||||||
| (in thousands) | Six Months Ended June 30, | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | 2026 | 2025 | |||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Amortization of right-of-use assets | |||||||||||
| Provision for credit losses | |||||||||||
| Losses (gains) on disposal of fixed assets, net | ( | ||||||||||
| Depreciation and amortization of fixed assets | |||||||||||
| Amortization of premiums on securities, net | |||||||||||
| (Gains) on sales of loans held for sale, net | ( | ( | |||||||||
| Proceeds from sales of loans held for sale | |||||||||||
| Loans originated and held for sale | ( | ( | |||||||||
| Losses on sales of other real estate owned, net | |||||||||||
| Change in fair value of equity investments, net | ( | ( | |||||||||
| Losses on securities transactions, net | |||||||||||
| Write down of equity investments | |||||||||||
| Purchases of equity investments, net | ( | ( | |||||||||
| Amortization of deferred costs on subordinated debt | |||||||||||
| Losses (gains) on interest rate swaps, net | ( | ||||||||||
| Income from bank-owned life insurance | ( | ( | |||||||||
| Decrease (increase) in accrued interest receivable | ( | ||||||||||
| (Increase) in other assets | ( | ( | |||||||||
| (Decrease) in accrued interest payable | ( | ( | |||||||||
| (Decrease) in other liabilities | ( | ( | |||||||||
| (Payments on) operating leases | ( | ( | |||||||||
| Expense related to restricted stock units for directors' deferred compensation plan | |||||||||||
| Expense related to employee restricted stock awards | |||||||||||
| Net cash provided by operating activities | |||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Proceeds from sales, maturities, calls, and principal paydowns on securities available for sale | |||||||||||
| Proceeds from sales, maturities and principal collected on securities held to maturity | |||||||||||
| Purchases of securities held to maturity | ( | ||||||||||
| Purchases of FHLBNY and FRBNY stock | ( | ( | |||||||||
| Redemption of FHLBNY and FRBNY stock | |||||||||||
| Proceeds from sales of fixed assets | |||||||||||
| Purchases of premises and equipment | ( | ( | |||||||||
| Proceeds from sale of other real estate owned | |||||||||||
| Proceeds from bank owned life insurance | |||||||||||
| (Increase) in loans, net | ( | ( | |||||||||
| Net cash provided by (used in) investing activities | ( | ||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Increase in demand, interest-bearing demand, savings, and insured money market deposits | |||||||||||
| (Decrease) in time deposits | ( | ( | |||||||||
| (Decrease) in FHLBNY overnight advances, net | ( | ( | |||||||||
| Increase in FHLBNY term advances, net | |||||||||||
| (Payments on) finance leases | ( | ( | |||||||||
| Proceeds from subordinated debt issuance | |||||||||||
| Payment of subordinated debt issuance costs | ( | ||||||||||
| Purchase of treasury stock | ( | ( | |||||||||
| Sale of treasury stock | |||||||||||
| Cash dividends paid | ( | ( | |||||||||
| Net cash provided by financing activities | |||||||||||
| Increase in cash and cash equivalents, net | |||||||||||
| Cash and cash equivalents, beginning of period | |||||||||||
| Cash and cash equivalents, end of period | $ | $ | |||||||||
See accompanying notes to unaudited consolidated financial statements.
11
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(UNAUDITED)
| (in thousands) | Six Months Ended June 30, | ||||||||||
| Supplemental disclosure of cash flow information: | 2026 | 2025 | |||||||||
| Cash paid for: | |||||||||||
| Interest | $ | $ | |||||||||
| Income taxes | |||||||||||
| Supplemental disclosure of non-cash activity: | |||||||||||
| Transfer of loans to other real estate owned | |||||||||||
| Right-of-use assets obtained through operating lease liabilities | |||||||||||
See accompanying notes to unaudited consolidated financial statements.
12
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Corporation, through its wholly-owned subsidiaries, the Bank and CFS, provides a wide range of banking, financing, fiduciary, and other financial services to its clients. The Corporation and the Bank are subject to the regulations of certain federal and state agencies and undergo periodic examinations by those regulatory authorities.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in conformity with GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 8 of Regulation S-X of the Exchange Act. These financial statements include the accounts of the Corporation and its subsidiaries, and all significant intercompany balances and transactions are eliminated in consolidation.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and disclosures provided, and actual results could differ. In the opinion of management, all adjustments (consisting of normal recurring adjustments) and disclosures necessary for the fair presentation of the accompanying consolidated financial statements have been included. The unaudited consolidated financial statements should be read in conjunction with the Corporation's 2025 Annual Report on Form 10-K for the year ended December 31, 2025. The results of operations for any interim periods are not necessarily indicative of the results which may be expected for the entire year or any other period.
Reclassifications
Amounts in the prior year financial statements are reclassified whenever necessary to conform to the current year's presentation.
Accounting Standards Pending Adoption
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), which will require enhanced disaggregation of certain expense categories in the notes to the financial statements. The standard is effective for public business entities for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, and can be adopted on either a prospective or retrospective basis. The Corporation is evaluating the impact the standard will have on its disclosures and expects to provide additional disclosures upon adoption. The Corporation has not determined whether it will adopt the standard prospectively or retrospectively.
NOTE 2 EARNINGS PER COMMON SHARE
Basic earnings per share is calculated using the two-class method, which is net income available to common shareholders divided by the weighted average number of common shares outstanding during the period, excluding participating securities. All outstanding unvested share-based payment awards, including those related to directors' and employee stock awards, contain rights to non-forfeitable dividends and are considered participating securities for this calculation. Restricted stock awards are grants of participating securities and are considered outstanding at grant date. There were no dilutive securities issuable or outstanding for the three and six month periods ended June 30, 2026 and 2025, respectively.
13
The calculation of basic earnings per share for the three and six month periods ended June 30, 2026 and 2025 is shown below (in thousands, except share and per share data):
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | ||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| (Less) allocation of earnings & dividends to participating securities | ( | ( | |||||||||||||||||||||
| Net income (loss) available to common shareholders | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| (Less) participating securities | ( | ( | ( | ( | |||||||||||||||||||
| Weighted average number of shares outstanding used in the calculation of basic earnings per share | |||||||||||||||||||||||
| Basic earnings (loss) per common share | $ | $ | ( | $ | $ | ( | |||||||||||||||||
NOTE 3 SECURITIES
The following tables present the amortized cost and estimated fair value of securities available for sale as of June 30, 2026 and December 31, 2025 (in thousands):
| June 30, 2026 | ||||||||||||||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Allowance for Credit Losses | Estimated Fair Value | ||||||||||||||||||||||||||||
| Mortgage-backed securities, residential | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||||||||||||||||||
| Obligations of states and political subdivisions | ||||||||||||||||||||||||||||||||
| Corporate bonds and notes | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Allowance for Credit Losses | Estimated Fair Value | ||||||||||||||||||||||||||||
| Mortgage-backed securities, residential | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||||||||||||||||||
| Obligations of states and political subdivisions | ||||||||||||||||||||||||||||||||
| Corporate bonds and notes | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
The following tables present the amortized cost and estimated fair value of securities held to maturity as of June 30, 2026 and December 31, 2025 (in thousands):
| June 30, 2026 | ||||||||||||||||||||||||||||||||
| Amortized Cost | Unrecognized Gains | Unrecognized Losses | Allowance for Credit Losses | Estimated Fair Value | ||||||||||||||||||||||||||||
| Obligations of states and political subdivisions | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
14
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Amortized Cost | Unrecognized Gains | Unrecognized Losses | Allowance for Credit Losses | Estimated Fair Value | ||||||||||||||||||||||||||||
| Obligations of states and political subdivisions | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
There were no 244.8 million, resulting in a realized pre-tax loss of $17.5 million. Proceeds from and the gross realized gains and losses on sales and calls of securities available for sale for the three and six month periods ended June 30, 2025 are presented below (in thousands).
For the Three and Six Months Ended June 30, 2025 | |||||||||||
| Proceeds from sales | $ | ||||||||||
| Gross realized gains | $ | ||||||||||
| Gross realized (losses) | $ | ( | |||||||||
| Tax expense (benefit) | $ | ( | |||||||||
The amortized cost and estimated fair value of debt securities are shown below by contractual maturity (in thousands). Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.
| June 30, 2026 | ||||||||||||||||||||||||||
| Available for Sale | Held to Maturity | |||||||||||||||||||||||||
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||||||||||||
| Within one year | $ | $ | $ | $ | ||||||||||||||||||||||
| After one, but within five years | ||||||||||||||||||||||||||
| After five, but within ten years | ||||||||||||||||||||||||||
| After ten years | ||||||||||||||||||||||||||
| Mortgage-backed securities, residential | ||||||||||||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
Securities pledged as of June 30, 2026 and December 31, 2025 had a carrying value of $202.1 million and $178.2 million, respectively, and were pledged to secure public deposits.
The following tables summarize the investment securities available for sale with unrealized losses as of June 30, 2026 and December 31, 2025 by aggregated major security type and length of time in a continuous unrealized loss position (in thousands):
| Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||||||||||||||||
| June 30, 2026 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||||
| Mortgage-backed securities, residential | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||||||||||||||||||||||||
| Obligations of states and political subdivisions | ||||||||||||||||||||||||||||||||||||||
| Corporate bonds and notes | ||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
15
| Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||||||||||||||||
| December 31, 2025 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||||
| Mortgage-backed securities, residential | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||||||||||||||||||||||||
| Obligations of states and political subdivisions | ||||||||||||||||||||||||||||||||||||||
| Corporate bonds and notes | ||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Assessment of Available for Sale Debt Securities for Credit Risk
Management assesses the decline in fair value of investment securities on a regular basis. Unrealized losses on debt securities may occur from current market conditions, increases in interest rates since the time of purchase, a structural change in an investment, volatility in earnings of a specific issuer, or deterioration in credit quality of the issuer. Management evaluates both qualitative and quantitative factors to assess whether potential credit losses exist. The following is a discussion of the credit quality characteristics of portfolio segments carrying material unrealized losses as of June 30, 2026.
Obligations of U.S. Governmental agencies and sponsored enterprises:
As of June 30, 2026, the majority of the Corporation’s unrealized losses in available for sale investment securities related to mortgage-backed securities, issued by government-sponsored entities and agencies. Unrealized losses attributable to mortgage-backed securities were 96.2 % of total unrealized losses on available for sale securities as of June 30, 2026. Declines in fair value were attributable to changes in interest rates, not credit quality. The Corporation does not have the intent, and is not likely to be required, to sell these securities prior to anticipated recovery. Due to affiliations with U.S. governmental agencies and/or enterprises, the Corporation considers these obligations to carry zero loss estimates, and has not recorded an allowance for credit losses as of June 30, 2026.
Corporate bonds and notes:
The Corporation's corporate bonds and notes portfolio is comprised of subordinated debt issues of community and regional banks. Unrealized losses attributable to corporate bonds and notes were 2.9 % of total unrealized losses on available for sale securities as of June 30, 2026. Management considers the credit quality of these investments on an individual basis. Management reviewed the collectability of these securities, taking into consideration such factors as the financial condition of issuers, reported regulatory capital ratios of issuers, and credit ratings when available, among other pertinent factors. All corporate bond debt securities continue to accrue interest and make payments as expected with no defaults or deferrals on the part of the issuers. The decreases in fair value were attributable to changes in interest rates. Therefore, the Corporation considers the potential credit risk of these issuers to be immaterial, and has not recorded an allowance for credit losses as of June 30, 2026.
Equity Investments
16
NOTE 4 LOANS AND ALLOWANCE FOR CREDIT LOSSES
The composition of the loan portfolio, net of deferred origination fees and costs, is summarized as follows (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||||||||
| Commercial and industrial | $ | $ | ||||||||||||
| Commercial real estate: | ||||||||||||||
| Construction | ||||||||||||||
| Owner occupied commercial real estate | ||||||||||||||
| Non-owner occupied commercial real estate | ||||||||||||||
| Residential mortgages | ||||||||||||||
| Consumer loans: | ||||||||||||||
| Home equity lines and loans | ||||||||||||||
| Indirect consumer loans | ||||||||||||||
| Direct consumer loans | ||||||||||||||
| Total loans, net of deferred loan fees and costs | ||||||||||||||
| Allowance for credit losses | ( | ( | ||||||||||||
| Loans, net | $ | $ | ||||||||||||
The Corporation's concentrations of credit risk by loan type are reflected in the preceding table. The concentrations of credit risk associated with standby letters of credit, committed lines of credit, and commitments to originate new loans generally follow the loan classifications in the table above.
Accrued interest receivable on loans totaled $9.3 million as of June 30, 2026 and $8.9 million as of December 31, 2025, and is included in the accrued interest receivable and other assets line item on the Consolidated Balance Sheets, and is excluded from both the amortized cost basis of loans and estimate of the allowance for credit losses, as presented in this Note. Deferred loan costs, net of deferred loan fees, included in the amortized cost basis of loans as presented in this Note, totaled $3.6 million as of June 30, 2026 and $4.1 million as of December 31, 2025.
As of June 30, 2026, loans held for sale included $2.3 million in commercial credit card balances and $0.1 million in residential mortgages. Loans held for sale are excluded from the amortized cost basis of loans, as presented in this Note.
The following tables present the activity in the allowance for credit losses by portfolio segment for the three and six month periods ended June 30, 2026 and 2025 (in thousands):
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||||||||
| Allowance for credit losses | Commercial and Industrial | Commercial Real Estate | Residential Mortgages | Consumer Loans | Total | ||||||||||||||||||||||||
| Beginning balance, April 1, 2026 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ||||||||||||||||||||||||||
| Recoveries | |||||||||||||||||||||||||||||
| Net recoveries (charge-offs) | ( | ( | ( | ||||||||||||||||||||||||||
Provision (credit) (1) | ( | ||||||||||||||||||||||||||||
Ending balance, June 30, 2026 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
(1)Additional provision related to off-balance sheet exposure was $59 thousand for the three months ended June 30, 2026.
17
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||||||||
| Allowance for credit losses | Commercial and Industrial | Commercial Real Estate | Residential Mortgages | Consumer Loans | Total | ||||||||||||||||||||||||
| Beginning balance, April 1, 2025 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ||||||||||||||||||||||||||
| Recoveries | |||||||||||||||||||||||||||||
| Net recoveries (charge-offs) | ( | ( | ( | ||||||||||||||||||||||||||
Provision (1) | |||||||||||||||||||||||||||||
Ending balance, June 30, 2025 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
(1)Additional provision related to off-balance sheet exposure was $10 thousand for the three months ended June 30, 2025.
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||||||||
| Allowance for credit losses | Commercial and Industrial | Commercial Real Estate | Residential Mortgages | Consumer Loans | Total | ||||||||||||||||||||||||
| Beginning balance, January 1, 2026 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
| Recoveries | |||||||||||||||||||||||||||||
| Net recoveries (charge-offs) | ( | ( | ( | ||||||||||||||||||||||||||
Provision (credit) (1) | ( | ( | |||||||||||||||||||||||||||
Ending balance, June 30, 2026 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
(1)Additional provision related to off-balance sheet exposure was $73 thousand for the six months ended June 30, 2026.
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||||||||
| Allowance for credit losses | Commercial and Industrial | Commercial Real Estate | Residential Mortgages | Consumer Loans | Total | ||||||||||||||||||||||||
| Beginning balance, January 1, 2025 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ||||||||||||||||||||||||||
| Recoveries | |||||||||||||||||||||||||||||
| Net recoveries (charge-offs) | ( | ( | ( | ||||||||||||||||||||||||||
Provision (credit) (1) | ( | ||||||||||||||||||||||||||||
Ending balance, June 30, 2025 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
(1)Additional provision related to off-balance sheet exposure was a $294 thousand credit for the six months ended June 30, 2025.
The Corporation performs an annual update to the loss drivers used in modeling its estimate of the allowance for credit losses. Annual updates for the model were completed during the three month periods ended March 31, 2026 and 2025.
Unfunded Commitments
The allowance for credit losses on unfunded commitments represents amounts held against credit exposures which are not represented on the Consolidated Balance Sheets. The allowance is recognized as a liability, a component of other liabilities on the Consolidated Balance Sheets, with adjustments to the allowance recognized in the provision for credit losses line item on the Consolidated Statements of Income.
18
The following table presents the activity in the allowance for credit losses on unfunded commitments for the three and six month periods ended June 30, 2026 and 2025 (in thousands):
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||||
| Allowance for credit losses on unfunded commitments | June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | |||||||||||||||||||
| Beginning balance | $ | $ | $ | $ | |||||||||||||||||||
| Provision for credit losses on unfunded commitments | ( | ||||||||||||||||||||||
| Ending balance | $ | $ | $ | $ | |||||||||||||||||||
The following table presents the provision for credit losses on loans and unfunded commitments for the three and six month periods ended June 30, 2026 and 2025 (in thousands):
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||||||||
| Provision for credit losses | June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | ||||||||||||||||||||||
| Provision for credit losses on loans | $ | $ | $ | $ | ||||||||||||||||||||||
| Provision for credit losses on unfunded commitments | ( | |||||||||||||||||||||||||
| Total provision for credit losses | $ | $ | $ | $ | ||||||||||||||||||||||
The following tables present the balance in the allowance for credit losses by portfolio segment, as of June 30, 2026 and December 31, 2025 (in thousands):
| June 30, 2026 | |||||||||||||||||||||||||||||
| Allowance for credit losses | Commercial and Industrial | Commercial Real Estate | Residential Mortgages | Consumer Loans | Total | ||||||||||||||||||||||||
| Ending allowance balance attributable to loans: | |||||||||||||||||||||||||||||
| Individually analyzed | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Collectively analyzed | |||||||||||||||||||||||||||||
| Total ending allowance balance | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||
| Allowance for credit losses | Commercial and Industrial | Commercial Real Estate | Residential Mortgages | Consumer Loans | Total | ||||||||||||||||||||||||
| Ending allowance balance attributable to loans: | |||||||||||||||||||||||||||||
| Individually analyzed | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Collectively analyzed | |||||||||||||||||||||||||||||
| Total ending allowance balance | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
The following tables present the amortized cost basis of loans by portfolio segment, as of June 30, 2026 and December 31, 2025 (in thousands):
| June 30, 2026 | |||||||||||||||||||||||||||||
| Amortized cost basis of loans: | Commercial and Industrial | Commercial Real Estate | Residential Mortgages | Consumer Loans | Total | ||||||||||||||||||||||||
| Individually analyzed | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Collectively analyzed | |||||||||||||||||||||||||||||
| Total ending loans balance | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
19
| December 31, 2025 | |||||||||||||||||||||||||||||
| Amortized cost basis of loans: | Commercial and Industrial | Commercial Real Estate | Residential Mortgages | Consumer Loans | Total | ||||||||||||||||||||||||
| Individually analyzed | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Collectively analyzed | |||||||||||||||||||||||||||||
| Total ending loans balance | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Modifications to Loans Made to Borrowers Experiencing Financial Difficulty
The Corporation may occasionally make modifications to loans where the borrower is considered to be experiencing financial difficulty, and which may require disclosure in accordance with Financial Instruments-Credit Losses (Topic 326)-Troubled Debt Restructurings and Vintage Disclosures. Types of modifications considered under ASU 2022-02 include principal reductions, interest rate reductions, term extensions, significant payment delays, or a combination thereof.
The following tables summarize the amortized cost basis of loans modified during the three and six month periods ended June 30, 2026 (in thousands):
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||||||||
| Loans modified under ASU 2022-02: | Principal Reduction | Interest Rate Reduction | Term Extension | Payment Delay | Combination | Total | (%) of Loan Class (1) | ||||||||||||||||||||||||||||||||||
| Commercial and industrial | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||
| Commercial real estate | |||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial real estate | % | ||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
(1) Represents amortized cost basis of loans modified during the period as a percentage of the period-end loan balances by class.
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||||||||
| Loans modified under ASU 2022-02: | Principal Reduction | Interest Rate Reduction | Term Extension | Payment Delay | Combination | Total | (%) of Loan Class (1) | ||||||||||||||||||||||||||||||||||
| Commercial and industrial | $ | $ | $ | $ | $ | % | |||||||||||||||||||||||||||||||||||
| Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial real estate | % | ||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
(1) Represents amortized cost basis of loans modified during the period as a percentage of the period-end loan balances by class.
There were no loan modifications to borrowers experiencing financial difficulty during the three and six month periods ended June 30, 2025.
20
The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the three and six month periods ended June 30, 2026 (in thousands):
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||
| Effect of loan modifications under ASU 2022-02: | Principal Reduction (in thousands) | Weighted-average interest rate reduction (%) | Weighted-average term extension (in months) | Weighted-average payment delay (in months) | |||||||||||||||||||
| Commercial and industrial | $ | ||||||||||||||||||||||
| Commercial real estate: | |||||||||||||||||||||||
| Non-owner occupied commercial real estate | $ | ||||||||||||||||||||||
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||
| Effect of loan modifications under ASU 2022-02: | Principal Reduction (in thousands) | Weighted-average interest rate reduction (%) | Weighted-average term extension (in months) | Weighted-average payment delay (in months) | |||||||||||||||||||
| Commercial and industrial | $ | ||||||||||||||||||||||
| Commercial real estate: | |||||||||||||||||||||||
| Non-owner occupied commercial real estate | $ | ||||||||||||||||||||||
There were no
The Corporation had no outstanding commitments to lend additional amounts to borrowers for which modifications subject to ASU 2022-02 were made during the three and six month periods ended June 30, 2026 and 2025.
The Corporation monitors the performance of loans that have previously been modified under the guidance of ASU 2022-02 in order to gauge the effectiveness of modifications, and to determine the degree to which borrowers continue to demonstrate financial weakness following modification. The following tables present the performance of such loans that were modified in the twelve month periods preceding June 30, 2026 and June 30, 2025 (in thousands):
Twelve Months Ended June 30, 2026 | |||||||||||||||||||||||||||||
| Past Due Status of Modifications under ASU 2022-02: | 30-59 Days Past Due | 60-89 Days Past Due | Greater Than 89 Days Past Due | Loans Not Past Due | Total | ||||||||||||||||||||||||
| Commercial and industrial | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Commercial real estate: | |||||||||||||||||||||||||||||
| Non-owner occupied commercial real estate | |||||||||||||||||||||||||||||
| Residential mortgages | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Twelve Months Ended June 30, 2025 | |||||||||||||||||||||||||||||
| Past Due Status of Modifications under ASU 2022-02: | 30-59 Days Past Due | 60-89 Days Past Due | Greater Than 89 Days Past Due | Loans Not Past Due | Total | ||||||||||||||||||||||||
| Commercial and industrial | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Commercial real estate: | |||||||||||||||||||||||||||||
| Owner occupied commercial real estate | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
21
Collateral-Dependent Individually Analyzed Loans
As of June 30, 2026, the amortized cost basis of individually analyzed loans totaled $5.9 million, of which $3.3 million were considered collateral-dependent, and as of December 31, 2025, the amortized cost basis of individually analyzed loans totaled $4.2 million, of which $2.2 million were considered collateral-dependent. For collateral-dependent loans where the borrower is experiencing financial difficulty and repayment is likely to be substantially provided through the sale or operation of the collateral, the allowance for credit losses is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date.
Certain assets held as collateral may be exposed to future deterioration in fair value, particularly due to changes in real estate markets or usage. The Corporation closely monitors trends in real estate values throughout its market area to determine whether collateral values, after appropriate discounting, are likely to be sufficient to extinguish existing borrower indebtedness.
The following table presents the amortized cost basis and related allowance for credit losses of individually analyzed loans considered to be collateral-dependent as of June 30, 2026 and December 31, 2025 (in thousands):
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Amortized Cost Basis | Related Allowance | Amortized Cost Basis | Related Allowance | ||||||||||||||||||||
Commercial and industrial (2)(3)(4) | $ | $ | $ | $ | |||||||||||||||||||
| Commercial real estate: | |||||||||||||||||||||||
Owner occupied commercial real estate (1) | |||||||||||||||||||||||
Non-owner occupied commercial real estate (1) | |||||||||||||||||||||||
| Consumer loans: | |||||||||||||||||||||||
Home equity lines and loans (2) | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
(2) Secured by residential real estate.
(3) Secured by business assets.
(4) Secured by other collateral.
22
The following table presents the amortized cost basis of nonaccrual loans without an associated allocation in the allowance for credit losses, total nonaccrual loans, and loans past due greater than 90 days and still accruing, by class of loan as of June 30, 2026 and December 31, 2025 (in thousands):
| Nonaccrual with No Allowance for Credit Losses | Nonaccrual | Loans Past Due 90 Days or More and Still Accruing | |||||||||||||||||||||||||||||||||
| June 30, 2026 | December 31, 2025 | June 30, 2026 | December 31, 2025 | June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||
| Commercial and industrial | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Commercial real estate: | |||||||||||||||||||||||||||||||||||
| Construction | |||||||||||||||||||||||||||||||||||
| Owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||
| Residential mortgages | |||||||||||||||||||||||||||||||||||
| Consumer loans: | |||||||||||||||||||||||||||||||||||
| Home equity lines and loans | |||||||||||||||||||||||||||||||||||
| Indirect consumer loans | |||||||||||||||||||||||||||||||||||
| Direct consumer loans | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
There was an immaterial amount of interest income recognized on nonaccrual loans for the three and six month periods ended June 30, 2026 and 2025. Payments received on nonaccrual loans are generally applied to principal using the cost recovery method.
The following tables present the aging of the amortized cost basis of loans as of June 30, 2026 and December 31, 2025 (in thousands):
| June 30, 2026 | |||||||||||||||||||||||||||||||||||
| 30 - 59 Days Past Due | 60 - 89 Days Past Due | 90 Days or More Past Due | Total Past Due | Loans Not Past Due | Total | ||||||||||||||||||||||||||||||
| Commercial and industrial | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Commercial real estate: | |||||||||||||||||||||||||||||||||||
| Construction | |||||||||||||||||||||||||||||||||||
| Owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||
| Residential mortgages | |||||||||||||||||||||||||||||||||||
| Consumer loans: | |||||||||||||||||||||||||||||||||||
| Home equity lines and loans | |||||||||||||||||||||||||||||||||||
| Indirect consumer loans | |||||||||||||||||||||||||||||||||||
| Direct consumer loans | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
23
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
| 30 - 59 Days Past Due | 60 - 89 Days Past Due | 90 Days or More Past Due | Total Past Due | Loans Not Past Due | Total | ||||||||||||||||||||||||||||||
| Commercial and industrial | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Commercial real estate: | |||||||||||||||||||||||||||||||||||
| Construction | |||||||||||||||||||||||||||||||||||
| Owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||
| Residential mortgages | |||||||||||||||||||||||||||||||||||
| Consumer loans: | |||||||||||||||||||||||||||||||||||
| Home equity lines and loans | |||||||||||||||||||||||||||||||||||
| Indirect consumer loans | |||||||||||||||||||||||||||||||||||
| Direct consumer loans | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Credit Quality Indicators
The Corporation establishes a risk rating at origination for all commercial loans. The primary factors considered in assigning risk ratings include, but are not limited to, historic and future debt service coverage, collateral position, operating performance, liquidity, leverage, payment history, management ability, and the customer’s industry. Commercial relationship managers monitor all loans in their respective portfolios for any changes in the borrower’s ability to service its debt and affirm the risk ratings for the loans at least annually.
For retail loans, which include residential mortgages, indirect and direct consumer loans, and home equity lines and loans, once a loan is properly approved and closed, the Corporation evaluates credit quality based upon loan repayment. Retail loans that have been modified subject to ASU 2022-02, but are otherwise performing, are assigned a risk rating of Special Mention, as defined below. Retail loans are not rated until they become 90 days past due, or are modified under ASU 2022-02.
The Corporation uses the risk rating system to identify criticized and classified loans. Commercial relationships within the criticized and classified risk ratings are analyzed quarterly. The Corporation uses the following definitions for criticized and classified loans (which are consistent with regulatory guidelines):
Special Mention – Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or the institution’s credit position at some future date.
Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capability of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
Commercial loans not meeting the criteria above to be considered criticized or classified are considered to be pass rated loans. Loans listed as not rated are included in groups of homogeneous loans performing under the terms of the loan notes.
24
Based on the analyses performed as of June 30, 2026, the amortized cost basis of loans by class, risk category, and vintage, as well as gross charge-offs by class and vintage for the six month period ended June 30, 2026, were as follows (in thousands):
| Term Loans Amortized Cost by Origination Year | Revolving Loans Amortized Cost | Revolving Loans Converted to Term | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2024 | 2023 | 2022 | Prior | ||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Construction | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgages | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Not rated | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Home equity lines and loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Not rated | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Indirect consumer | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Not rated | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct consumer | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Not rated | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Total gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
25
Based on the analyses performed as of December 31, 2025, the amortized cost basis of loans by class, risk category, and vintage, as well as gross charge-offs by class and vintage for the year ended December 31, 2025, were as follows (in thousands):
| Term Loans Amortized Cost by Origination Year | Revolving Loans Amortized Cost | Revolving Loans Converted to Term | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2022 | 2021 | Prior | ||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Construction | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial real estate | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgages | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Not rated | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Home equity lines and loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Not rated | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Indirect consumer | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Not rated | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct consumer | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Not rated | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Total gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
26
NOTE 5 FAIR VALUE
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. There are three levels of inputs that may be used to measure fair value:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a reporting entity's own assumptions about the assumptions market participants would use in pricing an asset or liability.
The Corporation used the following methods and significant assumptions to estimate fair value:
Available for Sale Securities: The fair values of securities available for sale are usually determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs), or matrix pricing, which is a mathematical technique widely used to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3 inputs).
Equity Investments: Securities that are held to fund a non-qualified deferred compensation plan and securities that have a readily determinable fair market value are recorded with changes in fair value included in earnings. The fair values of equity investments is determined by quoted market prices (Level 1 inputs).
Collateral-Dependent Loans: Individually analyzed loans which receive a specific allocation as part of the allowance for credit losses or have been partially charged off and are considered collateral-dependent are carried at fair value. For collateral-dependent loans, fair value is commonly based on real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, typically resulting in the utilization of Level 3 inputs. These loans are analyzed on a quarterly basis for additional credit losses and adjusted accordingly.
Other Real Estate Owned (OREO) & Repossessed Vehicles: Assets acquired through or in lieu of loan foreclosures are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Subsequent declines in fair value are recorded through the establishment of a valuation allowance, which may be reversed should fair value increase after the establishment of the valuation allowance.
Appraisals for both collateral-dependent individually analyzed loans and OREO are performed by certified general appraisers (commercial properties) or certified residential appraisers (residential properties) whose qualifications and licenses have been reviewed and verified by the Corporation. Once received, appraisals are reviewed for reasonableness of assumptions, approaches utilized, Uniform Standards of Professional Appraisal Practice and other regulatory compliance, as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Appraisals are generally completed within the 12 month period prior to a property being placed into OREO and updated appraisals are typically completed for collateral-dependent loans when management determines analysis on an individual basis is required. For individually analyzed loans, appraisal values are adjusted based on the age of the appraisal, the position of the lien, the type of the property, and its condition.
27
The fair value of repossessed vehicles is estimated based on expected net liquidation proceeds on the sale of vehicles using an internally developed recovery rate, typically resulting in a Level 3 classification of inputs. The estimated recovery rate is applied to the then outstanding loan balance at the point of repossession and transfer to bank-owned assets, and is based primarily upon the Corporation's recent historical loss experience for similar repossessed vehicle loans.
Derivatives: The fair value of interest rate swaps is based on valuation models using observable market data as of the measurement date (Level 2 inputs). Derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair value of derivatives is determined using quantitative models utilizing multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices, and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The Corporation also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Corporation has considered the impact of any applicable credit enhancements, such as collateral postings. Although the Corporation has determined the majority of inputs used to value its derivatives are considered Level 2 inputs, credit valuation adjustments are based on credit default rate assumptions, which are considered Level 3 inputs. As of June 30, 2026, the Corporation evaluated the effect of credit valuation adjustments on the fair value of its derivative positions, and determined their impact was not significant; accordingly, the Corporation classifies the entirety of its derivative valuations within Level 2 of the hierarchy.
Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):
| Fair Value Measurement as of June 30, 2026 Using | |||||||||||||||||||||||
| Financial Assets: | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||
| Mortgage-backed securities, residential | $ | $ | $ | $ | |||||||||||||||||||
| Collateralized mortgage obligations | |||||||||||||||||||||||
| Obligations of states and political subdivisions | |||||||||||||||||||||||
| Corporate bonds and notes | |||||||||||||||||||||||
| Total available for sale securities | $ | $ | $ | $ | |||||||||||||||||||
| Equity investments, at fair value | $ | $ | $ | $ | |||||||||||||||||||
| Derivative assets | $ | $ | $ | $ | |||||||||||||||||||
| Financial Liabilities: | |||||||||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | |||||||||||||||||||
28
| Fair Value Measurement as of December 31, 2025 Using | |||||||||||||||||||||||
| Financial Assets: | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||
| Mortgage-backed securities, residential | $ | $ | $ | $ | |||||||||||||||||||
| Collateralized mortgage obligations | |||||||||||||||||||||||
| Obligations of states and political subdivisions | |||||||||||||||||||||||
| Corporate bonds and notes | |||||||||||||||||||||||
| Total available for sale securities | $ | $ | $ | $ | |||||||||||||||||||
| Equity investments, at fair value | $ | $ | $ | $ | |||||||||||||||||||
| Derivative assets | $ | $ | $ | $ | |||||||||||||||||||
| Financial Liabilities: | |||||||||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | |||||||||||||||||||
The Corporation transfers assets and liabilities between levels within the fair value inputs hierarchy when methodologies to obtain fair value change such that there are either more or fewer unobservable inputs as of the end of the indicated reporting period. The Corporation utilizes a beginning of reporting period timing assumption when recognizing transfers between hierarchy levels, consistent with ASC 820-10-50-2.
There were no transfers between Level 1 and Level 2 during the three and six month periods ended June 30, 2026 and 2025.
There were no transfers between Level 2 and Level 3 during the three and six month periods ended June 30, 2026. During the three month period ended June 30, 2025, the Corporation transferred 13 corporate subordinated debt issuances from Level 3 to Level 2 due to improved availability of observable market data for the issuances or similar issuances. The increased availability of observable inputs was attributable, in part, to greater issuance activity for comparable subordinated debt and improved market liquidity. During the six month period ended June 30, 2025, the Corporation transferred seven corporate subordinated debt issuances from Level 2 to Level 3 due to the lack of observable market data for the issuances or similar issuances. These transfers occurred during the three month period ended March 31, 2025. Each of these seven issuances was subsequently transferred back to Level 2 during the three month period ended June 30, 2025 and was included in the 13 issuances transferred from Level 3 to Level 2 during that period. Additionally, during the three month period ended June 30, 2025, one corporate subordinated debt issuance previously classified within Level 3 was redeemed by the issuer prior to its initial call date due to merger-related regulatory requirements, totaling $1.0 million.
The following tables present a reconciliation of assets measured at fair value on a recurring basis using unobservable inputs (Level 3) for the three and six month periods ended June 30, 2026 and 2025, and qualitative information regarding Level 3 significant unobservable inputs as of June 30, 2026 and December 31, 2025 (in thousands):
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||||
| Level 3 Financial Assets - Corporate bonds and notes | June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | |||||||||||||||||||
| Balance of recurring Level 3 assets as of beginning of period | $ | $ | $ | $ | |||||||||||||||||||
| Total gains or losses for the period: | |||||||||||||||||||||||
| Included in other comprehensive income | ( | ||||||||||||||||||||||
| Repayments, calls, and maturities | ( | ||||||||||||||||||||||
| Transfers into Level 3 | |||||||||||||||||||||||
| Transfers out of Level 3 | ( | ( | |||||||||||||||||||||
| Balance of recurring Level 3 assets as of end of period | $ | $ | $ | $ | |||||||||||||||||||
29
| June 30, 2026 | Fair Value | Valuation Technique | Unobservable Input | Range [Weighted Average] as of June 30, 2026 | |||||||||||||||||||
| Corporate bonds and notes | $ | Discounted cash flow | Market discount rate | [ | |||||||||||||||||||
| December 31, 2025 | Fair Value | Valuation Technique | Unobservable Input | Range [Weighted Average] as of December 31, 2025 | |||||||||||||||||||
| Corporate bonds and notes | $ | Discounted cash flow | Market discount rate | [ | |||||||||||||||||||
Assets and liabilities measured at fair value on a nonrecurring basis as of June 30, 2026 and December 31, 2025 are summarized below (in thousands):
| Fair Value Measurement as of June 30, 2026 Using | |||||||||||||||||||||||
| Financial Assets: | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||
| Collateral-dependent loans: | |||||||||||||||||||||||
| Commercial real estate: | |||||||||||||||||||||||
| Non-owner occupied commercial real estate | $ | $ | $ | $ | |||||||||||||||||||
| Other real estate owned: | |||||||||||||||||||||||
| Commercial real estate: | |||||||||||||||||||||||
| Non-owner occupied commercial real estate | $ | $ | $ | $ | |||||||||||||||||||
| Residential mortgages | |||||||||||||||||||||||
| Total other real estate owned, net | $ | $ | $ | $ | |||||||||||||||||||
| Repossessed vehicles | $ | $ | $ | $ | |||||||||||||||||||
| Fair Value Measurement as of December 31, 2025 Using | |||||||||||||||||||||||
| Financial Assets: | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||
| Collateral-dependent loans: | |||||||||||||||||||||||
| Commercial real estate: | |||||||||||||||||||||||
| Non-owner occupied commercial real estate | $ | $ | $ | $ | |||||||||||||||||||
| Repossessed vehicles | $ | $ | $ | $ | |||||||||||||||||||
30
The following tables present quantitative information regarding Level 3 significant unobservable inputs for assets and liabilities measured at fair value on a nonrecurring basis as of June 30, 2026 and December 31, 2025 (in thousands):
| Description | Fair Value as of June 30, 2026 | Valuation Technique | Unobservable Inputs | Range [Weighted Average] as of June 30, 2026 | ||||||||||||||||||||||
| Collateral-dependent loans: | ||||||||||||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||||||||
| Non-owner occupied commercial real estate | $ | Sales comparison | Adjustment to appraised value | [ | ||||||||||||||||||||||
| Other real estate owned: | ||||||||||||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||||||||
| Non-owner occupied commercial real estate | $ | Sales comparison | Adjustment to appraised value | [ | ||||||||||||||||||||||
| Non-owner occupied commercial real estate | Income approach | Adjustment to appraised value | [ | |||||||||||||||||||||||
| Residential mortgages | Sales comparison | Adjustment to appraised value | [ | |||||||||||||||||||||||
| Total other real estate owned, net | $ | |||||||||||||||||||||||||
| Repossessed vehicles | $ | Estimated liquidation value | Estimated recovery rate | [ | ||||||||||||||||||||||
| Description | Fair Value as of December 31, 2025 | Valuation Technique | Unobservable Inputs | Range [Weighted Average] as of December 31, 2025 | ||||||||||||||||||||||
| Collateral-dependent loans: | ||||||||||||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||||||||
| Non-owner occupied commercial real estate | $ | Income approach | Adjustment to appraised value | [ | ||||||||||||||||||||||
| Repossessed vehicles | $ | Estimated liquidation value | Estimated recovery rate | [ | ||||||||||||||||||||||
31
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts and estimated fair values of financial instruments, as of June 30, 2026 and December 31, 2025, are as follows (in thousands):
| June 30, 2026 | |||||||||||||||||||||||||||||
| Financial assets: | Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Estimated Fair Value (1) | ||||||||||||||||||||||||
| Cash and due from financial institutions | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Interest-earning deposits in other financial institutions | |||||||||||||||||||||||||||||
| Equity investments | |||||||||||||||||||||||||||||
| Securities available for sale | |||||||||||||||||||||||||||||
| Securities held to maturity | |||||||||||||||||||||||||||||
| FHLBNY and FRBNY stock | N/A | ||||||||||||||||||||||||||||
| Loans, net of deferred loan fees and loans held for sale | |||||||||||||||||||||||||||||
| Derivative assets | |||||||||||||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||
| Demand, savings, and insured money market deposits | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Time deposits | |||||||||||||||||||||||||||||
| FHLBNY advances | |||||||||||||||||||||||||||||
| Subordinated debt, net of deferred issuance costs | |||||||||||||||||||||||||||||
| Derivative liabilities | |||||||||||||||||||||||||||||
(1) Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
32
| December 31, 2025 | |||||||||||||||||||||||||||||
| Financial assets: | Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Estimated Fair Value (1) | ||||||||||||||||||||||||
| Cash and due from financial institutions | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Interest-earning deposits in other financial institutions | |||||||||||||||||||||||||||||
| Equity investments | |||||||||||||||||||||||||||||
| Securities available for sale | |||||||||||||||||||||||||||||
| Securities held to maturity | |||||||||||||||||||||||||||||
| FHLBNY and FRBNY stock | N/A | ||||||||||||||||||||||||||||
| Loans, net of deferred loan fees and loans held for sale | |||||||||||||||||||||||||||||
| Derivative assets | |||||||||||||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||
| Demand, savings, and insured money market deposits | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Time deposits | |||||||||||||||||||||||||||||
| FHLBNY overnight advances | |||||||||||||||||||||||||||||
| Subordinated debt, net of issuance costs | |||||||||||||||||||||||||||||
| Derivative liabilities | |||||||||||||||||||||||||||||
(1) Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
NOTE 6 LEASES
Operating Leases
The Corporation leases certain properties under long-term, operating lease agreements. The leases expire at various dates through 2033 and generally include renewal options. As of June 30, 2026, the weighted average remaining lease term was 5.54 years with a weighted average discount rate of 3.59 %. Rent expense was $0.3 million for the three months ended June 30, 2026. Rent expense was $0.5 million for the six months ended June 30, 2026. Certain leases provide for increases in future minimum annual rent payments as defined in the lease agreements. The Corporation’s operating lease agreements contain both lease and non-lease components, which are generally accounted for separately. The Corporation’s lease agreements do not contain any residual value guarantees.
Leased properties as of June 30, 2026 and December 31, 2025 classified as operating leases consist of the following (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||||||||
| Operating lease right-of-use assets | $ | $ | ||||||||||||
| Less: accumulated amortization | ( | ( | ||||||||||||
| Add: new leases/lease modifications | ||||||||||||||
| Operating lease right-of-use-assets, net | $ | $ | ||||||||||||
33
The following is a schedule by year of the undiscounted cash flows of the operating lease liabilities, excluding CAM charges, as of June 30, 2026 (in thousands):
| Year | Amount | |||||||
| 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| 2031 and thereafter | ||||||||
| Total minimum lease payments | ||||||||
| Less: amount representing interest | ( | |||||||
| Present value of net minimum lease payments | $ | |||||||
As of June 30, 2026, the Corporation had no operating leases that were signed but had not yet commenced.
Finance Leases
The Corporation leases certain buildings under finance leases. The lease arrangements require monthly payments through 2044. As of June 30, 2026, the weighted average remaining lease term of finance leases was 10.44 years with a weighted average discount rate of 4.12 %. The Corporation has included these leases in as of June 30, 2026 and December 31, 2025 as follows (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||||||||
| Buildings | $ | $ | ||||||||||||
| Less: accumulated amortization | ( | ( | ||||||||||||
| Net book value | $ | $ | ||||||||||||
The following is a schedule by year of future minimum lease payments under finance leases, together with the present value of net minimum lease payments as of June 30, 2026 (in thousands):
| Year | Amount | |||||||
| 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| 2031 and thereafter | ||||||||
| Total minimum lease payments | ||||||||
| Less: amount representing interest | ( | |||||||
| Present value of net minimum lease payments | $ | |||||||
As of June 30, 2026, the Corporation had one finance lease for a branch in West Seneca, New York that was signed, but had not yet commenced.
Related Party Transactions
34
NOTE 7 GOODWILL AND INTANGIBLE ASSETS
The changes in goodwill included in the core banking segment during the six month periods ended June 30, 2026 and 2025 were as follows (in thousands):
| 2026 | 2025 | |||||||||||||
| Beginning of year | $ | $ | ||||||||||||
| Acquired goodwill | ||||||||||||||
| Ending balance June 30, | $ | $ | ||||||||||||
The Corporation had no
NOTE 8 COMMITMENTS AND CONTINGENCIES
Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection are issued by the Corporation to manage clients' requests for funding and other needs. These instruments are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used and off-balance sheet risk of credit loss exists up to the face amount of these instruments. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral when the commitment is exercised. These transactions involve, to varying degrees, elements of credit, interest rate, and liquidity risk.
The following table presents the contractual amounts of financial instruments with off-balance sheet risk as of June 30, 2026 and December 31, 2025 (in thousands):
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Fixed Rate | Variable Rate | Fixed Rate | Variable Rate | ||||||||||||||||||||
| Commitments to make loans | $ | $ | $ | $ | |||||||||||||||||||
| Unused lines of credit | $ | $ | $ | $ | |||||||||||||||||||
| Standby letters of credit | $ | $ | $ | $ | |||||||||||||||||||
Commitments to make real estate and home equity loans are generally made for periods of sixty days or less. As of June 30, 2026, the fixed rate real estate and home equity commitments to make loans have interest rates ranging from 5.75 % to 7.00 % and maturities ranging from ten years to thirty years . Commitments to fund commercial draw notes are generally made for periods of three months to twenty-four months . As of June 30, 2026, the fixed rate commercial draw commitments have interest rates ranging from 6.50 % to 7.88 %.
Because many commitments and almost all standby letters of credit expire without being funded in whole or in part, the contract amounts are not estimates of future cash flows. Loan commitments and unused lines of credit have off-balance sheet credit risk because only origination fees are recognized on the Consolidated Balance Sheets until commitments are fulfilled or expire. The credit risk amounts are equal to the contractual amounts, assuming the amounts are fully advanced and collateral or other security is of no value. These commitments also have off-balance sheet interest rate risk in that the interest rate at which these commitments were made may not be at market rates on the date the commitments are fulfilled.
The Corporation maintains an allowance for credit losses on unfunded commitments in accordance with ASU 2016-13, Financial Instruments-Credit Losses (Topic 326). The allowance represents expected future credit losses on financial instruments with off-balance sheet credit risk which are not unconditionally cancellable by the Corporation. As of June 30, 2026 and December 31, 2025, the allowance for credit losses on unfunded commitments was $0.7 million and $0.6 million, respectively.
In the normal course of business, there are various outstanding claims and legal proceedings involving the Corporation or its subsidiaries. As of June 30, 2026, the Corporation believes that it is not a party to any pending legal, arbitration, or regulatory proceedings that could have a material adverse impact on its financial results or liquidity.
35
NOTE 9 BORROWED FUNDS
The following tables summarize the Corporation's borrowed funds outstanding as of June 30, 2026 and December 31, 2025 (in thousands):
| June 30, 2026 | |||||||||||||||||
| Balance | Maturity | Rate | |||||||||||||||
| FHLBNY overnight advances | $ | July 1, 2026 | % | ||||||||||||||
| FHLBNY term advances: | |||||||||||||||||
| Fixed rate advance | July 22, 2026 | % | |||||||||||||||
| Subordinated notes, net | June, 15, 2035 | % | |||||||||||||||
| Total borrowed funds | $ | ||||||||||||||||
| December 31, 2025 | |||||||||||||||||
| Balance | Maturity | Rate | |||||||||||||||
| FHLBNY overnight advances | $ | January 2, 2026 | % | ||||||||||||||
| Subordinated notes, net | June, 15, 2035 | % | |||||||||||||||
| Total borrowed funds | $ | ||||||||||||||||
On June 10, 2025, the Corporation issued $45.0 million of 7.75 % fixed-to-floating rate subordinated notes due June 15, 2035 in a private offering (the "Notes"). The Notes bear interest at a fixed rate of 7.75 % per year, payable semi-annually, for the first five years. From June 15, 2030 to the June 15, 2035 maturity date, the interest rate will adjust to a floating rate equal to a benchmark rate which is expected to be the then-current three-month term SOFR plus 415 basis points, payable quarterly. If the then three-month term SOFR is below zero, the three-month term SOFR for the Notes will be deemed zero. The Notes constitute unsecured and subordinated obligations of the Corporation and rank junior in right of payment to any senior indebtedness and obligations to general and secured creditors. Subject to limited exceptions, the Corporation cannot redeem the Notes before the fifth anniversary of the issuance date. Proceeds, net of debt issuance costs of $1.0 million, were $44.0 million. The Notes qualify at the holding company level as Tier 2 capital under the capital guidelines of the Federal Reserve Board, when applicable. Interest expense for the six months ended June 30, 2026 and June 30, 2025 was $1.8 million and $0.2 million, respectively.
NOTE 10 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Accumulated other comprehensive income (loss) represents the net unrealized holding gains or losses on securities available for sale and the funded status of the Corporation's defined benefit pension plan and other benefit plans, as of the Consolidated Balance Sheet dates, net of the related tax effect.
The following is a summary of the changes in accumulated other comprehensive income (loss) by component, net of tax, for the periods indicated (in thousands):
| Unrealized Gains and Losses on Securities Available for Sale | Defined Benefit and Other Benefit Plans | Total | ||||||||||||||||||
| Balance at April 1, 2026 | $ | ( | $ | ( | $ | ( | ||||||||||||||
| Other comprehensive income before reclassification | ( | ( | ||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive income | ||||||||||||||||||||
| Net current period other comprehensive income | ( | ( | ||||||||||||||||||
| Balance at June 30, 2026 | $ | ( | $ | ( | $ | ( | ||||||||||||||
36
| Unrealized Gains and Losses on Securities Available for Sale | Defined Benefit and Other Benefit Plans | Total | ||||||||||||||||||
| Balance at April 1, 2025 | $ | ( | $ | ( | $ | ( | ||||||||||||||
| Other comprehensive income before reclassification | ||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive income | ||||||||||||||||||||
| Net current period other comprehensive income | ||||||||||||||||||||
| Balance at June 30, 2025 | $ | ( | $ | ( | $ | ( | ||||||||||||||
| Unrealized Gains and Losses on Securities Available for Sale | Defined Benefit and Other Benefit Plans | Total | ||||||||||||||||||
| Balance at January 1, 2026 | $ | ( | $ | ( | $ | ( | ||||||||||||||
| Other comprehensive income before reclassification | ||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive income | ||||||||||||||||||||
| Net current period other comprehensive income | ||||||||||||||||||||
| Balance at June 30, 2026 | $ | ( | $ | ( | $ | ( | ||||||||||||||
| Unrealized Gains and Losses on Securities Available for Sale | Defined Benefit and Other Benefit Plans | Total | ||||||||||||||||||
| Balance at January 1, 2025 | $ | ( | $ | ( | $ | ( | ||||||||||||||
| Other comprehensive income before reclassification | ||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive income | ||||||||||||||||||||
| Net current period other comprehensive income | ||||||||||||||||||||
| Balance at June 30, 2025 | $ | ( | $ | ( | $ | ( | ||||||||||||||
The following is the reclassification out of accumulated other comprehensive income for the periods indicated (in thousands):
| Details about Accumulated Other Comprehensive Income (Loss) Components | Three Months Ended June 30, | Affected Line Item in the Statement Where Net Income (Loss) is Presented | ||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||
| Unrealized gains and losses on securities available for sale: | ||||||||||||||||||||
| Net realized losses on securities available for sale | $ | $ | Net (losses) on securities transactions | |||||||||||||||||
| Tax effect | ( | Income tax expense (benefit) | ||||||||||||||||||
| Net of tax | ||||||||||||||||||||
| Amortization of defined pension plan and other benefit plan items: | ||||||||||||||||||||
Actuarial losses (a) | $ | $ | Other components of net periodic pension and postretirement benefits | |||||||||||||||||
| Tax effect | ( | ( | Income tax expense (benefit) | |||||||||||||||||
| Net of tax | ||||||||||||||||||||
| Total reclassification for the period, net of tax | $ | $ | ||||||||||||||||||
(a) These accumulated other comprehensive income components are included in the computation of net periodic pension and other benefit plan costs (see Note 12 for additional information).
37
| Details about Accumulated Other Comprehensive Income (Loss) Components | Six Months Ended June 30, | Affected Line Item in the Statement Where Net Income (Loss) is Presented | ||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||
| Unrealized gains and losses on securities available for sale: | ||||||||||||||||||||
| Net realized losses on securities available for sale | $ | $ | Net (losses) on securities transactions | |||||||||||||||||
| Tax effect | ( | Income tax expense (benefit) | ||||||||||||||||||
| Net of tax | ||||||||||||||||||||
| Amortization of defined pension plan and other benefit plan items: | ||||||||||||||||||||
Actuarial losses (a) | Other components of net periodic pension and postretirement benefits | |||||||||||||||||||
| Tax effect | ( | ( | Income tax expense (benefit) | |||||||||||||||||
| Net of tax | ||||||||||||||||||||
| Total reclassification for the period, net of tax | $ | $ | ||||||||||||||||||
(a) These accumulated other comprehensive income components are included in the computation of net periodic pension and other benefit plan costs (see Note 12 for additional information).
NOTE 11 REVENUE FROM CONTRACTS WITH CUSTOMERS
All of the Corporation's revenue from contracts with customers within the scope of ASC 606 is recognized within non-interest income. The following tables present the Corporation's non-interest income by revenue stream and reportable segment for the three and six month periods ended June 30, 2026 and 2025 (in thousands). Items outside the scope of ASC 606 are noted as such.
| Three Months Ended June 30, 2026 | ||||||||||||||||||||||||||
| Revenue by Operating Segment: Non-interest income | Core Banking (b) | WMG | Holding Company and CFS | Total | ||||||||||||||||||||||
| Service charges on deposit accounts | ||||||||||||||||||||||||||
| Overdraft fees | $ | $ | $ | $ | ||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Interchange revenue from debit card transactions | ||||||||||||||||||||||||||
| WMG fee income | ||||||||||||||||||||||||||
| CFS fee and commission income | ||||||||||||||||||||||||||
Net gains on sales of loans(a) | ||||||||||||||||||||||||||
Loan servicing fees(a) | ||||||||||||||||||||||||||
Changes in fair value of equity investments(a) | ||||||||||||||||||||||||||
Income from bank-owned life insurance(a) | ||||||||||||||||||||||||||
Other(a) | ||||||||||||||||||||||||||
| Total non-interest income | $ | $ | $ | $ | ||||||||||||||||||||||
(a) Not within scope of ASC 606.
(b) The Core Banking column above includes amounts to eliminate transactions between segments.
38
| Three Months Ended June 30, 2025 | ||||||||||||||||||||||||||
| Revenue by Operating Segment: Non-interest income | Core Banking (b) | WMG | Holding Company and CFS | Total | ||||||||||||||||||||||
| Service charges on deposit accounts | ||||||||||||||||||||||||||
| Overdraft fees | $ | $ | $ | $ | ||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Interchange revenue from debit card transactions | ||||||||||||||||||||||||||
| WMG fee income | ||||||||||||||||||||||||||
| CFS fee and commission income | ||||||||||||||||||||||||||
| Net gains (losses) on sales of OREO | ||||||||||||||||||||||||||
Net gains on sales of loans(a) | ||||||||||||||||||||||||||
Loan servicing fees(a) | ||||||||||||||||||||||||||
Net (losses) on sales of securities(a) | ( | ( | ||||||||||||||||||||||||
Changes in fair value of equity investments(a) | ||||||||||||||||||||||||||
Income from bank-owned life insurance(a) | ||||||||||||||||||||||||||
Other(a) | ||||||||||||||||||||||||||
| Total non-interest income | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||
(a) Not within scope of ASC 606.
(b) The Core Banking column above includes amounts to eliminate transactions between segments.
Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||
| Revenue by Operating Segment: | Core Banking (b) | WMG | Holding Company and CFS | Total | ||||||||||||||||||||||
| Non-interest income | ||||||||||||||||||||||||||
| Service charges on deposit accounts | ||||||||||||||||||||||||||
| Overdraft fees | $ | $ | $ | $ | ||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Interchange revenue from debit card transactions | ||||||||||||||||||||||||||
| WMG fee income | ||||||||||||||||||||||||||
| CFS fee and commission income | ||||||||||||||||||||||||||
Net gains on sales of loans(a) | ||||||||||||||||||||||||||
Loan servicing fees(a) | ||||||||||||||||||||||||||
Changes in fair value of equity investments(a) | ||||||||||||||||||||||||||
Income from bank-owned life insurance(a) | ||||||||||||||||||||||||||
Other(a) | ||||||||||||||||||||||||||
| Total non-interest income | $ | $ | $ | $ | ||||||||||||||||||||||
(a) Not within scope of ASC 606.
(b) The Core Banking column above includes amounts to eliminate transactions between segments.
39
Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||
| Revenue by Operating Segment: | Core Banking (b) | WMG | Holding Company and CFS | Total | ||||||||||||||||||||||
| Non-interest income | ||||||||||||||||||||||||||
| Service charges on deposit accounts | ||||||||||||||||||||||||||
| Overdraft fees | $ | $ | $ | $ | ||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Interchange revenue from debit card transactions | ||||||||||||||||||||||||||
| WMG fee income | ||||||||||||||||||||||||||
| CFS fee and commission income | ||||||||||||||||||||||||||
| Net gains (losses) on sales of OREO | ( | ( | ||||||||||||||||||||||||
Net gains on sales of loans(a) | ||||||||||||||||||||||||||
Loan servicing fees(a) | ||||||||||||||||||||||||||
Net (losses) on sales of securities(a) | ( | ( | ||||||||||||||||||||||||
Change in fair value of equity investments(a) | ( | |||||||||||||||||||||||||
Income from bank-owned life insurance(a) | ||||||||||||||||||||||||||
Other(a) | ||||||||||||||||||||||||||
| Total non-interest income | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||
(a) Not within scope of ASC 606.
(b) The Core Banking column above includes amounts to eliminate transactions between segments.
A description of the Corporation's revenue streams accounted for under ASC 606 follows:
Service Charges on Deposit Accounts: The Corporation earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Corporation fulfills the customer's request. Account maintenance fees, which relate primarily to monthly maintenance, are recognized at the time the maintenance occurs. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer's account balance.
Interchange Revenue from Debit Card Transactions: The Corporation earns interchange fees from debit cardholder transactions conducted through the Mastercard payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to cardholders.
WMG Fee Income (Gross): The Corporation earns wealth management fees from its contracts with trust customers to manage assets for investment and/or to conduct transactions on their accounts. These fees are primarily earned over time as the Corporation provides the contracted monthly or quarterly services and are generally assessed based on a tiered scale of the market value of assets under management (AUM).
CFS Fee and Commission Income (Net): The Corporation earns fees from investment brokerage services provided to its customers by a third-party service provider. The Corporation receives commissions from the third-party service provider on a monthly basis based upon customer activity for the month. The Corporation (i) acts as an agent in arranging the relationship between the customer and the third-party service provider and (ii) does not control the services rendered to the customers. Investment brokerage fees are presented net of related costs. The Corporation also earns fees from tax services provided to its customers.
40
NOTE 12 COMPONENTS OF QUARTERLY AND YEAR TO DATE NET PERIODIC BENEFIT COSTS
The components of net periodic expense for the Corporation’s pension and other benefit plans for the periods indicated are as follows (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Qualified Pension Plan | ||||||||||||||||||||||||||
| Service cost, benefits earned during the period | $ | $ | $ | $ | ||||||||||||||||||||||
| Interest cost on projected benefit obligation | ||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | ||||||||||||||||||||||
| Amortization of unrecognized transition obligation | ||||||||||||||||||||||||||
| Amortization of unrecognized prior service cost | ||||||||||||||||||||||||||
| Amortization of unrecognized net loss | ||||||||||||||||||||||||||
| Net periodic pension benefit | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Supplemental Pension Plan | ||||||||||||||||||||||||||
| Service cost, benefits earned during the period | $ | $ | $ | $ | ||||||||||||||||||||||
| Interest cost on projected benefit obligation | ||||||||||||||||||||||||||
| Expected return on plan assets | ||||||||||||||||||||||||||
| Amortization of unrecognized prior service cost | ||||||||||||||||||||||||||
| Amortization of unrecognized net loss | ||||||||||||||||||||||||||
| Net periodic supplemental pension cost | $ | $ | $ | $ | ||||||||||||||||||||||
| Postretirement Plan, Medical and Life | ||||||||||||||||||||||||||
| Service cost, benefits earned during the period | $ | $ | $ | $ | ||||||||||||||||||||||
| Interest cost on projected benefit obligation | ||||||||||||||||||||||||||
| Expected return on plan assets | ||||||||||||||||||||||||||
| Amortization of unrecognized prior service cost | ||||||||||||||||||||||||||
| Amortization of unrecognized net loss | ||||||||||||||||||||||||||
| Net periodic postretirement, medical and life cost | $ | $ | $ | $ | ||||||||||||||||||||||
NOTE 13 SEGMENT REPORTING
The Corporation manages its operations through two primary business segments: core banking and WMG. The core banking segment provides revenues by attracting deposits from the general public and using such funds to originate consumer, commercial, commercial real estate, and residential mortgage loans, primarily in the Corporation’s local markets, and to invest in securities. The WMG services segment provides revenues by providing trust and investment advisory services to clients.
The Corporation's reportable segments are determined by the Executive Management Team (EMT), which collectively is designated Chief Operating Decision Maker (CODM). The CODM evaluates the financial performance of each business segment, which is based upon the business segment's net income. Components of net income for the business segments that are reviewed by the CODM include net interest income, provision for credit losses, non-interest income, non-interest expense, and income tax expense. The CODM, in conjunction with management committees (such as ALCO and Corporate loan committees) evaluates financial performance to make decisions related to the products and services that are offered, pricing, and the allocation of resources for each business segment.
Accounting policies for the segments are the same as those described in Note 1 of the Corporation’s 2025 Annual Report on Form 10-K, which was filed with the SEC on March 13, 2026. Summarized financial information concerning the Corporation’s reportable segments and the reconciliation to the Corporation’s consolidated results are shown in the following tables. Income taxes are allocated based on the separate taxable income of each entity and indirect overhead expenses are allocated based on reasonable and equitable allocations applicable to the reportable segment.
41
The Holding Company and CFS columns below include income and expenses related to insurance products, mutual funds, and brokerage services (in thousands).
| Three Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||
| Core Banking | WMG | Holding Company and CFS | Inter-Segment Eliminations | Consolidated Totals | ||||||||||||||||||||||||||||
| Interest and dividend income | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||||||||
| Net interest income | ( | |||||||||||||||||||||||||||||||
| Provision for credit losses | ||||||||||||||||||||||||||||||||
| Net interest income after provision for credit losses | ( | |||||||||||||||||||||||||||||||
| Non-interest income | ( | |||||||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
| Compensation expense and benefits | ||||||||||||||||||||||||||||||||
| Net occupancy expense | ( | |||||||||||||||||||||||||||||||
| Furniture and equipment expense | ||||||||||||||||||||||||||||||||
| Data processing & software expense | ||||||||||||||||||||||||||||||||
| Other non-interest expenses | ||||||||||||||||||||||||||||||||
| Total non-interest expense | ( | |||||||||||||||||||||||||||||||
| Income before income tax expense (benefit) | ( | |||||||||||||||||||||||||||||||
| Income tax expense (benefit) | ( | |||||||||||||||||||||||||||||||
| Segment net income (loss) | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||
| Supplemental Information: | ||||||||||||||||||||||||||||||||
Total assets as of June 30, 2026 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Capital expenditures | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Depreciation expense (1) | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
(1) Included in net occupancy and furniture and equipment expense in the table above.
42
| Three Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||
| Core Banking | WMG | Holding Company, and CFS | Inter-Segment Eliminations | Consolidated Totals | ||||||||||||||||||||||||||||
| Interest and dividend income | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||||||||
| Net interest income | ( | |||||||||||||||||||||||||||||||
| Provision for credit losses | ||||||||||||||||||||||||||||||||
| Net interest income after provision for credit losses | ( | |||||||||||||||||||||||||||||||
| Non-interest income | ( | ( | ( | |||||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
| Compensation expense and benefits | ||||||||||||||||||||||||||||||||
| Net occupancy expense | ( | |||||||||||||||||||||||||||||||
| Furniture and equipment expense | ||||||||||||||||||||||||||||||||
| Data processing & software expense | ||||||||||||||||||||||||||||||||
| Other non-interest expenses | ||||||||||||||||||||||||||||||||
| Total non-interest expense | ( | |||||||||||||||||||||||||||||||
| Income before income tax expense (benefit) | ( | ( | ( | |||||||||||||||||||||||||||||
| Income tax expense (benefit) | ( | ( | ( | |||||||||||||||||||||||||||||
| Segment net income (loss) | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||
| Supplemental Information: | ||||||||||||||||||||||||||||||||
Total assets as of June 30, 2025 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Capital expenditures | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Depreciation expense (1) | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
(1) Included in net occupancy and furniture and equipment expense in the table above.
| Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||
| Core Banking | WMG | Holding Company, and CFS | Inter-Segment Eliminations | Consolidated Totals | ||||||||||||||||||||||||||||
| Interest and dividend income | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||||||||
| Net interest income | ( | |||||||||||||||||||||||||||||||
| Provision for credit losses | ||||||||||||||||||||||||||||||||
| Net interest income after provision for credit losses | ( | |||||||||||||||||||||||||||||||
| Non-interest income | ( | |||||||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
| Compensation expense and benefits | ||||||||||||||||||||||||||||||||
| Net occupancy expense | ( | |||||||||||||||||||||||||||||||
| Furniture and equipment expense | ||||||||||||||||||||||||||||||||
| Data processing & software expense | ||||||||||||||||||||||||||||||||
| Other non-interest expenses | ||||||||||||||||||||||||||||||||
| Total non-interest expense | ( | |||||||||||||||||||||||||||||||
| Income before income tax expense (benefit) | ( | |||||||||||||||||||||||||||||||
| Income tax expense (benefit) | ( | |||||||||||||||||||||||||||||||
| Segment net income (loss) | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||
| Supplemental Information: | ||||||||||||||||||||||||||||||||
Total assets as of June 30, 2026 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Capital expenditures | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Depreciation expense (1) | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
(1) Included in net occupancy and furniture and equipment expense in the table above.
43
| Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||
| Core Banking | WMG | Holding Company, and CFS | Inter-Segment Eliminations | Consolidated Totals | ||||||||||||||||||||||||||||
| Interest and dividend income | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||||||||
| Net interest income | ( | |||||||||||||||||||||||||||||||
| Provision for credit losses | ||||||||||||||||||||||||||||||||
| Net interest income after provision for credit losses | ( | |||||||||||||||||||||||||||||||
| Non-interest income | ( | ( | ( | |||||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||
| Compensation expense and benefits | ||||||||||||||||||||||||||||||||
| Net occupancy expense | ( | |||||||||||||||||||||||||||||||
| Furniture and equipment expense | ||||||||||||||||||||||||||||||||
| Data processing & software expense | ||||||||||||||||||||||||||||||||
| Other non-interest expenses | ||||||||||||||||||||||||||||||||
| Total non-interest expense | ( | |||||||||||||||||||||||||||||||
| Income before income tax expense (benefit) | ( | ( | ( | |||||||||||||||||||||||||||||
| Income tax expense (benefit) | ( | ( | ( | |||||||||||||||||||||||||||||
| Segment net income (loss) | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||
| Supplemental Information: | ||||||||||||||||||||||||||||||||
Total assets as of June 30, 2025 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Capital expenditures | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Depreciation expense (1) | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
NOTE 14 STOCK COMPENSATION
On June 3, 2025, the Corporation's shareholders approved the Corporation's 2025 Equity Incentive Plan (the "2025 Plan"), which provides for the grant of stock-based awards to officers, employees, and directors of the Corporation and the Bank. Compensation expense is recognized over the vesting period of the awards based on the fair value of the common stock at issue date.
Pursuant to the 2025 Plan, the Corporation may make discretionary grants of restricted shares of the Corporation’s common stock to or for the benefit of employees selected to participate in the 2025 Plan, the chief executive officer and members of the Board of Directors. Awards are based on the performance, responsibility, and contributions of the individual and are targeted at an average of the peer group. The maximum number of shares of the Corporation’s common stock that may be awarded as restricted shares related to the 2025 Plan may not exceed 160,000 , upon which time a new plan may be created.
During the six months ended June 30, 2026 and 2025, 30,223 and 35,156 shares, respectively, were reissued from treasury to fund stock compensation. Effective for the 2024 fiscal year and thereafter, annual stock compensation is awarded the second month after the close of the fiscal year for the Corporation's employees and Chief Executive Officer. The expense related to these grants is recognized over a one year or a five year vesting period. Total expense related to stock compensation of $0.4 million and $0.3 million was recognized during the three month periods ended June 30, 2026 and 2025, respectively. Total expense related to stock compensation of $0.7 million and $0.6 million was recognized during the six month periods ended June 30, 2026 and 2025, respectively.
44
A summary of restricted stock activity for the three and six months ended June 30, 2026 is presented below:
| Shares | Weighted–Average Grant Date Fair Value | |||||||||||||
| Nonvested at April 1, 2026 | $ | |||||||||||||
| Granted | ||||||||||||||
| Vested | ( | $ | ||||||||||||
| Forfeited or cancelled | ||||||||||||||
| Nonvested at June 30, 2026 | $ | |||||||||||||
| Shares | Weighted–Average Grant Date Fair Value | |||||||||||||
| Nonvested at January 1, 2026 | $ | |||||||||||||
| Granted | $ | |||||||||||||
| Vested | ( | $ | ||||||||||||
| Forfeited or cancelled | ( | $ | ||||||||||||
| Nonvested at June 30, 2026 | $ | |||||||||||||
As of June 30, 2026, there was $2.9 million of total unrecognized compensation cost related to nonvested shares granted under the Corporation's equity incentive plans. The cost is expected to be recognized over a weighted-average period of 3.21 years. The total fair value of shares vested was $0.9 million and $0.6 million for the six month periods ended June 30, 2026 and 2025, respectively.
45
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations
Introduction
The following is the MD&A of the Corporation in this Quarterly Report on Form 10-Q for the three and six months ended June 30, 2026. Reference should be made to the accompanying unaudited consolidated financial statements and footnotes, and the Corporation’s 2025 Annual Report on Form 10-K, which was filed with the SEC on March 13, 2026, for an understanding of the following discussion and analysis. See the list of commonly used abbreviations and terms on pages 3-5.
The MD&A included in this Form 10-Q contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of the Corporation's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. For a discussion of those risks and uncertainties and the factors that could cause the Corporation’s actual results to differ materially from those risks and uncertainties, see Forward-looking Statements below, in Part II, Item 1A, Risk Factors, and on pages 19-29 of the Corporation’s 2025 Form 10-K. For a discussion of the use of non-GAAP financial measures, see pages 68-70 of the Corporation's 2025 Form 10-K, and pages 81-83 of this Form 10-Q.
The Corporation has been a financial holding company since 2000, the Bank was established in 1833 and CFS in 2001. Through the Bank and CFS, the Corporation provides a wide range of financial services, including demand, savings, and time deposits, commercial, residential, and consumer loans, interest rate swaps, letters of credit, wealth management services, employee benefit plans, insurance products, mutual funds, and brokerage services. The Bank relies substantially on a foundation of locally generated deposits. The Corporation, on a stand-alone basis, has minimal results of operations. The Bank derives its income primarily from interest and fees on loans, interest income on investment securities, WMG fee income, and fees received in connection with deposit and other services. The Bank’s operating expenses are interest expense paid on deposits and borrowings, salaries and employee benefit plans, and general operating expenses.
Forward-looking Statements
This discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. The Corporation intends its forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in these sections. All statements regarding the Corporation's expected financial position and operating results, the Corporation's business strategy, the Corporation's financial plans, forecasted demographic and economic trends relating to the Corporation's industry and similar matters are forward-looking statements. These statements can sometimes be identified by the Corporation's use of forward-looking words such as "may," "will," "anticipate," "estimate," "expect," or "intend." The Corporation cannot guarantee that its expectations in such forward-looking statements will turn out to be correct. The Corporation's actual results could be materially different from expectations because of various factors, including changes in economic conditions or interest rates, credit risk, inflation, tariffs, cybersecurity risks, difficulties in managing the Corporation’s growth, bank failures, changes in FDIC assessments, public health issues, geopolitical conflicts, competition, changes in law or the regulatory environment, and changes in general business and economic trends.
Information concerning these and other factors, including Risk Factors, can be found in the Corporation’s periodic filings with the SEC, including the discussion under the heading “Item 1A. Risk Factors” in the Corporation’s 2025 Annual Report on Form 10-K. These filings are available publicly on the SEC’s web site at http://www.sec.gov, on the Corporation's web site at http://www.chemungcanal.com or upon request from the Corporate Secretary at (607) 737-3746. Except as otherwise required by law, the Corporation undertakes no obligation to publicly update or revise its forward-looking statements, whether as a result of new information, future events, or otherwise.
Recent Events
During July 2026, the OCC conditionally approved the Bank's application to convert its state charter in the State of New York to a national bank charter. The Bank expects to complete its charter conversion to a national bank prior to the end of 2026.
46
Critical Accounting Estimates
Critical accounting estimates include the areas where the Corporation has made what it considers to be particularly difficult, subjective, or complex judgments concerning estimates, and where these estimates can significantly affect the Corporation's financial results under different assumptions and conditions. The Corporation prepares its financial statements in conformity with GAAP. As a result, the Corporation is required to make estimates, judgments, and assumptions that it believes are reasonable based upon the information available at that time. These estimates, judgments, and assumptions affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. Actual results could be different from these estimates. Significant accounting policies followed by the Corporation are presented in Note 1 – Summary of Significant Accounting Policies, to the Audited Consolidated Financial Statements included in its Annual Report on Form 10-K for the year ended December 31, 2025, and in Note 1 – Summary of Significant Accounting Policies of this Form 10-Q.
Allowance for Credit Losses
Management considers the allowance for credit losses to be a critical accounting estimate, given the uncertainty in estimating lifetime credit losses attributable to its portfolios of assets exhibiting credit risk, particularly in its loan portfolio, and the material effect that such judgments may have on the Corporation's results of operations. Determining the amount requires significant judgment on the part of management, is multi-faceted, and can be imprecise. The level of the allowance for credit losses on loans is based on management’s ongoing review of all relevant information, from internal and external sources, relating to past events, current conditions, and expectations of the future based on reasonable and supportable forecasts.
The allowance is established through a provision for credit losses in the Consolidated Statements of Income, and an evaluation of the adequacy of the allowance for credit losses is performed by management on a quarterly basis. While management uses available information to anticipate credit losses, future additions to the allowance may be necessary based on changes in economic conditions or the composition of its portfolios. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Corporation's allowance for credit losses.
Because the Corporation's methodology for maintaining its allowance for credit losses is based on historical experience and trends, current economic information, forecasted data, and management's judgment, a range of estimates for the allowance for credit losses may be supportable. Deteriorating conditions may lead to further required increases to the allowance; conversely, improvements to conditions may warrant reductions to the allowance. In estimating the allowance for credit losses, management considers the sensitivity of the model to significant judgments and assumptions that could result in an amount that is materially different from management’s estimate, including as it relates to qualitative considerations.
As of June 30, 2026 and December 31, 2025, the allowance for credit losses totaled $25.2 million and $24.2 million, respectively. A significant portion of the allowance for credit losses is allocated to the commercial portfolio, and as of June 30, 2026 and December 31, 2025, the allowance for credit losses allocated to the total commercial portfolio was $20.4 million and $18.9 million, respectively, or 80.9% and 78.0% of the total allowance for credit losses on loans. For comparison, total commercial loans represented 78.1% and 76.4% of total loan balances as of June 30, 2026 and December 31, 2025, respectively. Given the concentration of the allowance for credit losses allocated to the commercial portfolio, and the significant judgments made by management to derive its estimates, management analyzes risks distinctive to commercial lending with a high degree of scrutiny.
Changes in the FOMC's median forecasted U.S. civilian unemployment rate and year over year change in U.S. GDP could have a material impact on the model's estimation of the allowance. Currently, most pools utilize the FOMC's projections for unemployment as a loss driver, while certain pools utilize the FOMC's projections for U.S. GDP growth as a loss driver. Segmentation and attributes of loan pools are defined in Note 1 – Summary of Significant Accounting Policies to the Audited Consolidated Financial Statements in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2025. FOMC projections are sourced from a quarterly Summary of Projections, which accompanies select FOMC meetings. Each participant's projections represent the value to which selected variables would be expected to converge over time under appropriate monetary policy and considering all currently available information. An immediate "shock" or increase of 100 basis points in the FOMC's projected rate of U.S. civilian unemployment and a decrease of 50 basis points in the FOMC's projected rate of U.S. GDP growth would increase the model's total calculated allowance by $0.9 million, or 3.6%, to $26.2 million as of June 30, 2026, assuming qualitative adjustments were kept at current levels.
47
Future changes to the availability, frequency, or content of the FOMC's projections could require management to utilize alternative reasonable and supportable forecasts or modify certain forecasting assumptions used in the model. Any such changes could affect the comparability of model results between periods and may increase the judgment involved in estimating the allowance for credit losses. While management has concluded that its current evaluation is reasonable under the circumstances, and that sensitivity and shock analyses are based on a series of hypothetical scenarios not intended to represent management’s assumptions or judgment of factors as of June 30, 2026, it has also concluded that differing assumptions could materially impact allowance calculations, either positively or adversely.
48
| Consolidated Financial Highlights | As of or for the | ||||||||||||||||||||||||||||||||||||||||
| (in thousands, except per share data) | As of or for the Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||||
| June 30, | Mar 31, | Dec. 31, | Sept. 30, | Jun. 30, | June 30, | June 30, | |||||||||||||||||||||||||||||||||||
| RESULTS OF OPERATIONS | 2026 | 2026 | 2025 | 2025 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| Interest and dividend income | $ | 34,891 | $ | 33,585 | $ | 34,219 | $ | 33,884 | $ | 33,034 | $ | 68,476 | $ | 64,732 | |||||||||||||||||||||||||||
| Interest expense | 10,221 | 10,001 | 10,375 | 11,196 | 12,226 | 20,222 | 24,107 | ||||||||||||||||||||||||||||||||||
| Net interest income | 24,670 | 23,584 | 23,844 | 22,688 | 20,808 | 48,254 | 40,625 | ||||||||||||||||||||||||||||||||||
| Provision for credit losses | 561 | 601 | 1,136 | 1,064 | 1,145 | 1,162 | 2,237 | ||||||||||||||||||||||||||||||||||
| Net interest income after provision for credit losses | 24,109 | 22,983 | 22,708 | 21,624 | 19,663 | 47,092 | 38,388 | ||||||||||||||||||||||||||||||||||
| Non-interest income (loss) | 6,503 | 6,320 | 6,673 | 6,088 | (10,705) | 12,823 | (4,816) | ||||||||||||||||||||||||||||||||||
| Non-interest expense | 19,321 | 17,462 | 18,388 | 17,645 | 17,769 | 36,783 | 34,696 | ||||||||||||||||||||||||||||||||||
| Income (loss) before income tax expense | 11,291 | 11,841 | 10,993 | 10,067 | (8,811) | 23,132 | (1,124) | ||||||||||||||||||||||||||||||||||
| Income tax expense (benefit) | 2,481 | 2,642 | 3,252 | 2,275 | (2,359) | 5,123 | (695) | ||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 8,810 | $ | 9,199 | $ | 7,741 | $ | 7,792 | $ | (6,452) | $ | 18,009 | $ | (429) | |||||||||||||||||||||||||||
| Basic and diluted earnings (loss) per share | $ | 1.82 | $ | 1.91 | $ | 1.61 | $ | 1.62 | $ | (1.35) | $ | 3.73 | $ | (0.09) | |||||||||||||||||||||||||||
| Average basic and diluted shares outstanding | 4,838 | 4,825 | 4,811 | 4,811 | 4,808 | 4,830 | 4,798 | ||||||||||||||||||||||||||||||||||
| PERFORMANCE RATIOS - Annualized | |||||||||||||||||||||||||||||||||||||||||
| Return (loss) on average assets | 1.27 | % | 1.36 | % | 1.14 | % | 1.15 | % | (0.92) | % | 1.32 | % | (0.03) | % | |||||||||||||||||||||||||||
| Return (loss) on average equity | 13.19 | % | 14.25 | % | 12.17 | % | 12.89 | % | (11.29) | % | 13.71 | % | (0.38) | % | |||||||||||||||||||||||||||
| Return (loss) on average tangible equity (a) | 14.37 | % | 15.54 | % | 13.32 | % | 14.18 | % | (12.48) | % | 14.94 | % | (0.42) | % | |||||||||||||||||||||||||||
| Efficiency ratio (unadjusted) (b) | 61.98 | % | 58.39 | % | 60.25 | % | 61.32 | % | 175.88 | % | 60.22 | % | 96.89 | % | |||||||||||||||||||||||||||
| Efficiency ratio (adjusted) (a) | 61.85 | % | 58.27 | % | 60.12 | % | 61.18 | % | 65.69 | % | 60.10 | % | 65.67 | % | |||||||||||||||||||||||||||
| Non-interest expense to average assets | 2.79 | % | 2.59 | % | 2.71 | % | 2.61 | % | 2.54 | % | 2.69 | % | 2.50 | % | |||||||||||||||||||||||||||
| Loans to deposits | 100.14 | % | 99.91 | % | 99.95 | % | 93.38 | % | 86.37 | % | 100.14 | % | 86.37 | % | |||||||||||||||||||||||||||
| AVERAGE YIELDS / RATES - Fully Taxable Equivalent | |||||||||||||||||||||||||||||||||||||||||
| Yield on loans | 5.64 | % | 5.59 | % | 5.69 | % | 5.68 | % | 5.61 | % | 5.61 | % | 5.55 | % | |||||||||||||||||||||||||||
| Yield on investments | 2.27 | % | 2.28 | % | 2.40 | % | 2.55 | % | 2.27 | % | 2.27 | % | 2.26 | % | |||||||||||||||||||||||||||
| Yield on interest-earning assets | 5.18 | % | 5.13 | % | 5.18 | % | 5.15 | % | 4.83 | % | 5.15 | % | 4.78 | % | |||||||||||||||||||||||||||
| Cost of interest-bearing deposits | 2.06 | % | 2.05 | % | 2.18 | % | 2.36 | % | 2.45 | % | 2.06 | % | 2.47 | % | |||||||||||||||||||||||||||
| Cost of borrowings | 5.67 | % | 5.74 | % | 7.42 | % | 7.33 | % | 4.90 | % | 5.70 | % | 4.76 | % | |||||||||||||||||||||||||||
| Cost of interest-bearing liabilities | 2.27 | % | 2.27 | % | 2.34 | % | 2.51 | % | 2.57 | % | 2.27 | % | 2.56 | % | |||||||||||||||||||||||||||
| Cost of funds | 1.67 | % | 1.67 | % | 1.72 | % | 1.85 | % | 1.94 | % | 1.67 | % | 1.93 | % | |||||||||||||||||||||||||||
| Interest rate spread | 2.91 | % | 2.86 | % | 2.84 | % | 2.64 | % | 2.26 | % | 2.88 | % | 2.22 | % | |||||||||||||||||||||||||||
| Net interest margin, fully taxable equivalent (a) | 3.67 | % | 3.60 | % | 3.61 | % | 3.45 | % | 3.05 | % | 3.63 | % | 3.00 | % | |||||||||||||||||||||||||||
| CAPITAL | |||||||||||||||||||||||||||||||||||||||||
| Total equity to total assets at end of period | 9.59 | % | 9.57 | % | 9.40 | % | 9.10 | % | 8.24 | % | 9.59 | % | 8.24 | % | |||||||||||||||||||||||||||
| Tangible equity to tangible assets at end of period (a) | 8.88 | % | 8.84 | % | 8.66 | % | 8.36 | % | 7.53 | % | 8.88 | % | 7.53 | % | |||||||||||||||||||||||||||
| Book value per share | $ | 55.88 | $ | 54.36 | $ | 52.97 | $ | 50.98 | $ | 48.85 | $ | 55.88 | $ | 48.85 | |||||||||||||||||||||||||||
| Tangible book value per share (a) | 51.37 | 49.85 | 48.43 | 46.44 | 44.31 | 51.37 | 44.31 | ||||||||||||||||||||||||||||||||||
| Period-end market value per share | 74.58 | 53.82 | 55.80 | 52.52 | 48.47 | 74.58 | 48.47 | ||||||||||||||||||||||||||||||||||
| Dividends declared per share | 0.34 | 0.34 | 0.34 | 0.34 | 0.32 | 0.68 | 0.64 | ||||||||||||||||||||||||||||||||||
| AVERAGE BALANCES | |||||||||||||||||||||||||||||||||||||||||
| Loans and loans held for sale (c) | $ | 2,338,605 | $ | 2,292,239 | $ | 2,223,188 | $ | 2,171,673 | $ | 2,108,557 | $ | 2,315,550 | $ | 2,093,233 | |||||||||||||||||||||||||||
| Interest-earning assets | 2,706,598 | 2,662,192 | 2,625,177 | 2,617,680 | 2,749,856 | 2,684,518 | 2,739,813 | ||||||||||||||||||||||||||||||||||
| Total assets | 2,774,578 | 2,733,232 | 2,691,963 | 2,684,273 | 2,802,226 | 2,753,844 | 2,793,369 | ||||||||||||||||||||||||||||||||||
| Deposits | 2,352,242 | 2,319,614 | 2,340,931 | 2,343,596 | 2,432,713 | 2,336,019 | 2,439,119 | ||||||||||||||||||||||||||||||||||
| Total equity | 267,809 | 261,823 | 252,325 | 239,836 | 229,161 | 264,833 | 225,999 | ||||||||||||||||||||||||||||||||||
| Tangible equity (a) | 245,985 | 239,999 | 230,501 | 218,012 | 207,337 | 243,009 | 204,175 | ||||||||||||||||||||||||||||||||||
| ASSET QUALITY | |||||||||||||||||||||||||||||||||||||||||
| Net charge-offs (recoveries) | $ | 160 | $ | (94) | $ | 532 | $ | 86 | $ | 992 | $ | 66 | $ | 1,254 | |||||||||||||||||||||||||||
| Non-performing loans (d) | 9,160 | 7,627 | 7,908 | 7,762 | 8,237 | 9,160 | 8,237 | ||||||||||||||||||||||||||||||||||
| Non-performing assets (e) | 11,211 | 9,758 | 8,165 | 7,972 | 8,447 | 11,211 | 8,447 | ||||||||||||||||||||||||||||||||||
| Allowance for credit losses | 25,232 | 24,890 | 24,209 | 23,645 | 22,665 | 25,232 | 22,665 | ||||||||||||||||||||||||||||||||||
| Annualized net charge-offs (recoveries) to avg. loans | 0.03 | % | (0.02) | % | 0.09 | % | 0.02 | % | 0.19 | % | 0.01 | % | 0.12 | % | |||||||||||||||||||||||||||
| Non-performing loans to total loans | 0.39 | % | 0.33 | % | 0.35 | % | 0.35 | % | 0.39 | % | 0.39 | % | 0.39 | % | |||||||||||||||||||||||||||
| Non-performing assets to total assets | 0.40 | % | 0.36 | % | 0.30 | % | 0.30 | % | 0.30 | % | 0.40 | % | 0.30 | % | |||||||||||||||||||||||||||
| Allowance for credit losses to total loans | 1.07 | % | 1.08 | % | 1.07 | % | 1.07 | % | 1.06 | % | 1.07 | % | 1.06 | % | |||||||||||||||||||||||||||
| Allowance for credit losses to non-performing loans | 275.46 | % | 326.34 | % | 306.13 | % | 304.63 | % | 275.16 | % | 275.46 | % | 275.16 | % | |||||||||||||||||||||||||||
| (a) See the GAAP to Non-GAAP reconciliations. | (d) Includes nonaccrual loans only. | |||||||
| (b) Non-interest expense divided by total net interest income plus non-interest income. | (e) Includes non-performing loans, other real estate owned, and repossessions. | |||||||
| (c) Does not reflect allowance for credit losses. | ||||||||
49
In addition to analyzing the Corporation’s results on a reported basis, management uses certain non-GAAP financial measures because it believes these non-GAAP financial measures provide information to investors about the underlying operational performance and trends of the Corporation, and therefore facilitate a comparison of the Corporation with the performance of other companies. Non-GAAP financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used by other companies. Refer to pages 81-83 for further explanation and reconciliation of the Corporation’s use of non-GAAP measures.
Consolidated Results of Operations
The following section of the MD&A provides a comparative discussion of the Corporation’s Consolidated Results of Operations on a reported basis for the three and six months ended June 30, 2026 and 2025. For a discussion of the Critical Accounting Estimates that affect the Consolidated Results of Operations, see pages 47-48 of this Form 10-Q and page 39 of the Corporation’s 2025 Form 10-K.
Net Income
The following table presents selected financial information for the periods indicated, and the dollar and percent change (in thousands, except per share and ratio data):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | 2026 | 2025 | Change | % Change | |||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 24,670 | $ | 20,808 | $ | 3,862 | 18.6 | % | $ | 48,254 | $ | 40,625 | $ | 7,629 | 18.8 | % | ||||||||||||||||||||||||||||||||||
| Non-interest income | 6,503 | (10,705) | 17,208 | N/M | 12,823 | (4,816) | 17,639 | N/M | ||||||||||||||||||||||||||||||||||||||||||
| Non-interest expense | 19,321 | 17,769 | 1,552 | 8.7 | % | 36,783 | 34,696 | 2,087 | 6.0 | % | ||||||||||||||||||||||||||||||||||||||||
| Pre-provision income (loss) | 11,852 | (7,666) | 19,518 | N/M | 24,294 | 1,113 | 23,181 | N/M | ||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | 561 | 1,145 | (584) | (51.0) | % | 1,162 | 2,237 | (1,075) | (48.1) | % | ||||||||||||||||||||||||||||||||||||||||
| Income tax expense (benefit) | 2,481 | (2,359) | 4,840 | N/M | 5,123 | (695) | 5,818 | N/M | ||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 8,810 | $ | (6,452) | $ | 15,262 | N/M | $ | 18,009 | $ | (429) | $ | 18,438 | N/M | ||||||||||||||||||||||||||||||||||||
| Basic and diluted earnings (loss) per share | $ | 1.82 | $ | (1.35) | $ | 3.17 | N/M | $ | 3.73 | $ | (0.09) | $ | 3.82 | N/M | ||||||||||||||||||||||||||||||||||||
The following table presents selected financial information for the periods indicated, and the dollar and percent change (in thousands, except per share and ratio data) adjusted for nonrecurring items (refer to the GAAP to Non-GAAP reconciliations, pages 81-83, for further information):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | 2026 | 2025 | Change | % Change | |||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 24,670 | $ | 20,808 | $ | 3,862 | 18.6 | % | $ | 48,254 | $ | 40,625 | $ | 7,629 | 18.8 | % | ||||||||||||||||||||||||||||||||||
Non-interest income (1) | 6,503 | 6,164 | 339 | 5.5 | % | 12,823 | 12,053 | 770 | 6.4 | % | ||||||||||||||||||||||||||||||||||||||||
| Non-interest expense | 19,321 | 17,769 | 1,552 | 8.7 | % | 36,783 | 34,696 | 2,087 | 6.0 | % | ||||||||||||||||||||||||||||||||||||||||
| Pre-provision income | 11,852 | 9,203 | 2,649 | 28.8 | % | 24,294 | 17,982 | 6,312 | 35.1 | % | ||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | 561 | 1,145 | (584) | (51.0) | % | 1,162 | 2,237 | (1,075) | (48.1) | % | ||||||||||||||||||||||||||||||||||||||||
Income tax expense (2) | 2,481 | 1,736 | 745 | N/M | 5,123 | 3,400 | 1,723 | N/M | ||||||||||||||||||||||||||||||||||||||||||
| Net income - adjusted | $ | 8,810 | $ | 6,322 | $ | 2,488 | 39.4 | % | $ | 18,009 | $ | 12,345 | $ | 5,664 | 45.9 | % | ||||||||||||||||||||||||||||||||||
| Basic and diluted earnings per share - adjusted | $ | 1.82 | $ | 1.31 | $ | 0.51 | 38.9 | % | $ | 3.73 | $ | 2.57 | $ | 1.16 | 45.1 | % | ||||||||||||||||||||||||||||||||||
(1) Adjusted for $17.5 million loss on sale of securities available for sale and $0.6 million gain on sale of previous branch property during the three and six months ended June 30, 2025.
(2) Adjusted for tax impact of loss on sale of securities available for sale and gain on sale of previous branch property during the three and six months ended June 30, 2025.
50
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| Selected financial ratios: | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
Return on average assets (unadjusted) (a) | 1.27 | % | (0.92) | % | 1.32 | % | (0.03) | % | ||||||||||||||||||
Return on average assets (adjusted) (a)(b) | 1.27 | % | 0.90 | % | 1.32 | % | 0.89 | % | ||||||||||||||||||
Return on average equity (unadjusted) (a) | 13.19 | % | (11.29) | % | 13.71 | % | (0.38) | % | ||||||||||||||||||
Return on average equity (adjusted) (a)(b) | 13.19 | % | 11.07 | % | 13.71 | % | 11.02 | % | ||||||||||||||||||
Net interest margin, fully taxable equivalent (a)(b) | 3.67 | % | 3.05 | % | 3.63 | % | 3.00 | % | ||||||||||||||||||
Efficiency ratio (unadjusted) (b) | 61.98 | % | 175.88 | % | 60.22 | % | 96.89 | % | ||||||||||||||||||
Efficiency ratio (adjusted) (b) | 61.85 | % | 65.69 | % | 60.10 | % | 65.67 | % | ||||||||||||||||||
| Non-interest expense to average assets | 2.79 | % | 2.54 | % | 2.69 | % | 2.50 | % | ||||||||||||||||||
| (a) Annualized. | ||||||||||||||||||||||||||
(b) See the GAAP to Non-GAAP reconciliations. | ||||||||||||||||||||||||||
The Corporation reported net income for the three months ended June 30, 2026 of $8.8 million, or $1.82 per share, compared to a net loss of $6.5 million, or a net loss of $1.35 per share, for the same period in the prior year. Return on average equity for the three months ended June 30, 2026 was 13.19%, compared to (11.29)% for the same period in the prior year. The increase in net income for the three months ended June 30, 2026 was attributable to increases in net interest income and non-interest income, as well as a decrease in the provision for credit losses, offset by increases in non-interest expense and income tax expense.
Net income for the six months ended June 30, 2026 was $18.0 million, or $3.73 per share, compared to a net loss of $0.4 million, or a net loss of $0.09 per share, for the same period in the prior year. Return on average equity for the six months ended June 30, 2026 was 13.71%, compared to (0.38)% for the same period in the prior year. The increase in net income for the six months ended June 30, 2026 was primarily attributable to an increase in non-interest income and net interest income, and a decrease in the provision for credit losses, offset by increases in non-interest expense and income tax expense.
During the three and six month periods ended June 30, 2025, the Corporation sold a significant portion of its available for sale securities portfolio, and recognized a $17.5 million loss on the sale. In addition, the Corporation recognized a gain of $0.6 million upon completing the sale of a previously held for sale branch property. Excluding these nonrecurring items, net income (as adjusted) for the three and six month periods ended June 30, 2025 was $6.3 million, or $1.31 per share, and $12.3 million, or $2.57 per share, respectively. Non-GAAP net income as presented in the MD&A has been adjusted for these two items. Refer to the GAAP to Non-GAAP reconciliations, on pages 81-83, for further information. Adjusted return on average equity for the three months ended June 30, 2025 was 11.07%, compared to 13.19% for the same period in the current year and adjusted return on average equity for the six months ended June 30, 2025 was 11.02%, compared to 13.71% for the same period in the current year.
Net Interest Income
The following table presents net interest income for the periods indicated, and the dollar and percent change (in thousands):
| Three Months Ended June 30, | |||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | ||||||||||||||||||||
| Interest and dividend income | $ | 34,891 | $ | 33,034 | $ | 1,857 | 5.6 | % | |||||||||||||||
| Interest expense | 10,221 | 12,226 | (2,005) | (16.4) | % | ||||||||||||||||||
| Net interest income | $ | 24,670 | $ | 20,808 | $ | 3,862 | 18.6 | % | |||||||||||||||
Net interest income, which is the difference between the interest income earned on interest-earning assets such as loans and securities, and the interest expense paid on interest-bearing liabilities such as deposits and borrowings, is the largest contributor to the Corporation’s earnings.
51
Net interest income for the three months ended June 30, 2026 increased $3.9 million to $24.7 million compared to the same period in the prior year, largely due to an increase of $3.4 million in interest income on loans and a decrease of $2.4 million in interest expense on deposits, partially offset by decreases of $0.9 million in interest and dividend income on taxable securities and $0.5 million in interest income on interest-earning deposits, and an increase of $0.4 million in interest expense on borrowed funds.
Interest income on loans increased to $32.8 million for the three months ended June 30, 2026, from $29.4 million for the same period in the prior year. The increase was mostly due to an increase of $230.0 million in average balances of total loans, as well as an increase of three basis points in the average yield on total loans, each compared to the same period in the prior year. Growth in average balances of total loans was concentrated in commercial real estate loans, with additional increases in commercial and industrial loans and residential mortgage loans, partially offset by a decline in total consumer loans. Growth in average balances of total commercial loans totaled $248.3 million, and reflected relatively balanced growth in the Corporation's Capital Bank and Canal Bank divisions in the Albany and Western New York markets, respectively, as well as growth within the Corporation's legacy Chemung Canal division. Average balances of residential mortgage loans increased largely due to increased origination activity in the second half of 2025 and the retention of a higher proportion of originated loans for investment. The decline in the average balance of total consumer loans was primarily due to a decrease in average balances of indirect auto loans, as the Corporation continued to prioritize other types of lending throughout 2025 and in the first six months of 2026.
The increase in the average yield on total loans was primarily due to a 30 basis point increase in the average yield on residential mortgage loans, partially offset by a three basis point decrease in the average yield on commercial loans, each compared to the same period in the prior year. The increase in the average yield on residential mortgage loans reflected higher interest rates on loans originated during 2025 and in the first six months of 2026 relative to the existing portfolio. The decrease in the average yield on commercial loans was mainly due to lower interest rates on variable rate loans resulting from declines in benchmark indices since the prior year period. A decrease of one basis point in the average yield on total consumer loans did not have a significant impact on net interest income compared to the same period in the prior year.
Interest expense on deposits decreased to $8.7 million for the three months ended June 30, 2026, from $11.1 million for the same period in the prior year. The decrease was primarily due to a decrease of 39 basis points in the average cost of total interest-bearing deposits and a decline of $118.7 million in average balances of total interest-bearing deposits, including brokered deposits. The decrease in the average cost of interest-bearing deposits largely reflected a decrease of 39 basis points in the average cost of customer time deposits and a decrease of 20 basis points in the average cost of savings and money market deposits, each compared to the same period in the prior year, as well as the current year period including lower average balances of higher-cost brokered deposits. The decrease in the average cost of customer time deposits was mainly due to the discontinuation of certain higher-cost promotional offerings in the second half of 2025, resulting in many previous promotional certificates of deposit not being renewed at maturity. The decrease in the average cost of savings and money market deposits was mainly due to targeted reductions in tiered interest rates offered on money market deposits which occurred in the fourth quarter of 2025 and first quarter of 2026, as market interest rates declined.
The decline in average balances of total interest-bearing deposits was largely attributable to a decline of $91.6 million in average balances of brokered deposits compared to the same period in the prior year. Reduced reliance on brokered deposits in the current year period was primarily the result of the Corporation's balance sheet repositioning efforts during 2025, which included the runoff of all outstanding brokered deposits during the three months ended September 30, 2025, as well as a shift in the Corporation's mix of wholesale funding sources toward FHLBNY short-term advances. Also contributing to the decline in average balances of total interest-bearing deposits was a decline of $67.2 million in average balances of customer time deposits compared to the same period in the prior year, due to the discontinuation of certain higher-cost promotional offerings in the second half of 2025, resulting in many previous promotional certificates of deposit not being renewed at maturity. Customer time deposits represented 19.2% of total average deposits during the three months ended June 30, 2026, compared to 21.3% during the same period in the prior year. Partially offsetting these declines was a $53.7 million increase in average balances of savings and money market deposits, largely due to growth in the Corporation's Canal Bank division and the introduction of a new escrow product during the current year period.
52
Interest income on taxable securities decreased to $1.7 million for the three months ended June 30, 2026, from $2.5 million for the same period in the prior year. The decrease was largely due to a $211.4 million decline in average balances of taxable securities, attributable to sales of available for sale securities during the three months ended June 30, 2025 as part of the Corporation’s balance sheet repositioning efforts, as well as normal paydowns and maturities totaling $26.9 million between June 30, 2025 and 2026. Interest income on interest-earning deposits decreased mostly due to a decline of $40.9 million in average balances, compared to the same period in the prior year. Average balances of interest-earning deposits declined mostly as a result of the Corporation utilizing cash proceeds from the sales of available for sale securities during the three months ended June 30, 2025 to fund loan growth and pay off wholesale funding liabilities in the second half of 2025.
Interest expense on borrowed funds increased to $1.5 million for the three months ended June 30, 2026, from $1.2 million for the same period in the prior year. The increase was mainly due to an increase of 77 basis points in the average cost of total borrowed funds, largely the result of the Corporation's issuance of subordinated debt late in the prior year period, which was part of the Corporation's balance sheet repositioning efforts during 2025.
Fully taxable equivalent net interest margin was 3.67% for the three months ended June 30, 2026, compared to 3.05% for the same period in the prior year. Average interest-earning assets declined $43.3 million for the three months ended June 30, 2026, while average interest-bearing liabilities declined $105.4 million, each compared to the same period in the prior year. The declines in the average balances of interest-earning assets and interest-bearing liabilities were mostly due to the effects of the Corporation's balance sheet repositioning efforts during 2025. The average yield on interest-earning assets increased 35 basis points to 5.18%, while the average cost of interest-bearing liabilities decreased 30 basis points to 2.27%, for the three months ended June 30, 2026, each compared to the same period in the prior year.
The following table presents net interest income for the periods indicated, and the dollar and percent change (in thousands):
| Six Months Ended June 30, | |||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | ||||||||||||||||||||
| Interest and dividend income | $ | 68,476 | $ | 64,732 | $ | 3,744 | 5.8 | % | |||||||||||||||
| Interest expense | 20,222 | 24,107 | (3,885) | (16.1) | % | ||||||||||||||||||
| Net interest income | $ | 48,254 | $ | 40,625 | $ | 7,629 | 18.8 | % | |||||||||||||||
Net interest income for the six months ended June 30, 2026 totaled $48.3 million compared to $40.6 million for the same period in the prior year, an increase of $7.6 million, largely due to an increase of $6.8 million in interest income on loans and a decrease of $5.0 million in interest expense on deposits, partially offset by a decrease of $2.2 million in interest income on taxable securities and an increase of $1.1 million in interest expense on borrowed funds.
Interest income on loans increased to $64.3 million for the first six months of 2026, from $57.5 million for the same period in the prior year. The increase was mostly attributable to an increase of $240.7 million in average balances of commercial loans, compared to the same period in the prior year, largely concentrated in commercial real estate loans, partially offset by a decline of $28.3 million in average balances of total consumer loans, largely concentrated in indirect auto loans. Demand for commercial real estate loans in the Corporation's Canal Bank division in the Western New York market and Capital Bank division in the Albany market has remained strong since the prior year period. Average balances of indirect auto loans declined mostly due to the Corporation's prioritization of other types of lending since the prior year period. Also contributing to the increase in interest income on loans was an increase of six basis points in the average yield on total loans, compared to the same period in the prior year. The increase in the average yield on total loans was primarily due to an increase of 38 basis points in the average yield on residential mortgage loans, compared to the same period in the prior year, and was largely due to yields of mortgages originated between the prior year period and current year period substantially exceeding the yield of the overall portfolio, due to interest rates in the current environment remaining elevated compared to certain historic periods. Changes in the average yields on commercial and total consumer loans did not have a meaningful impact on the change in net interest income between the six months ended June 30, 2026 and 2025.
Interest expense on deposits decreased to $17.2 million for the first six months of 2026, from $22.2 million for the same period in the prior year. The decrease was primarily due to a decrease of 41 basis points in the average cost of total interest-bearing deposits, as well as a decline of $127.0 million in average balances of total interest-bearing deposits, each compared to the same period in the prior year. The decrease in the average cost of total interest-bearing deposits was mainly due to a decrease of 48 basis points in the average cost of customer time deposits, a decrease of 19 basis points in the average cost of savings and money market deposits, and decreased utilization of higher-cost brokered deposits, each compared to the same period in the prior year. The average cost of customer time deposits decreased primarily due to the discontinuation of higher-cost promotional offerings during the current year period in favor of shorter-term lower-costing promotions, as well as a reduced
53
reliance on costlier time deposits to fund asset growth following the Corporation's balance sheet repositioning in the prior year. The decrease in the average cost of savings and money market deposits was mainly due to targeted and tiered reductions in interest rates offered on money market accounts between the prior year period and current year period, partially as a result of the declining interest rate environment during the second half of 2025. Similarly to customer time deposits, the Corporation reduced its reliance on higher-cost brokered deposits following its balance sheet repositioning in the prior year. Average balances of brokered deposits and customer time deposits declined $86.4 million and $59.8 million, respectively, and were primarily responsible for the decline in average balances of total interest-bearing deposits. Customer time deposits comprised 19.6% of total average deposits for the six months ended June 30, 2026, compared to 21.2% for the same period in the prior year.
Interest and dividend income on taxable securities decreased to $3.4 million for the first six months of 2026, from $5.6 million for the same period in the prior year. The decrease in interest and dividend income on taxable securities was primarily due to a decline of $234.3 million in average balances of taxable securities compared to the same period in the prior year. The decline in average balances of taxable securities was mostly due to the sale of $244.8 million of available for sale securities during the three months ended June 30, 2025 as part of the Corporation's balance sheet repositioning efforts in the prior year. Also contributing to the decrease in average balances of taxable securities compared to the prior year period was normal paydown activity on residential mortgage-backed securities between the prior year and current year periods.
Interest expense on borrowed funds increased to $3.0 million for the first six months of 2026, from $1.9 million for the same period in the prior year, largely as a result of the Corporation's issuance of subordinated debt late in the prior year period. Average balances of total borrowed funds increased $25.9 million compared to the same period in the prior year and the average cost of total borrowed funds increased 94 basis points over the same period, each mostly due to the issuance of $45.0 million in 7.75% fixed-to-floating rate subordinated notes in June 2025. Average balances of other sources of borrowed funds declined $13.0 million compared to the same period in the prior year while the average cost of other sources of borrowed funds decreased 62 basis points compared to the same period in the prior year, mostly due to the declining interest rate environment since the prior year period.
Fully taxable equivalent net interest margin was 3.63% for the six months ended June 30, 2026 compared to 3.00% for the same period in the prior year. Average interest-earning assets declined $55.3 million, while average interest-bearing liabilities declined $101.2 million, for the six months ended June 30, 2026, each compared to the same period in the prior year. The declines in the average balances of interest-earning assets and interest-bearing liabilities were mostly due to the effects of the Corporation's balance sheet repositioning efforts during 2025. The average yield on interest-earning assets increased 37 basis points, to 5.15%, while the average cost of interest-bearing liabilities decreased 29 basis points, to 2.27% for the six months ended June 30, 2026, each compared to the same period in the prior year.
54
Average Consolidated Balance Sheets and Interest Analysis
The following tables present certain information related to the Corporation’s average consolidated balance sheets and its consolidated statements of income for the three and six months ended June 30, 2026 and 2025. For the purpose of the tables below, nonaccrual loans are included in the daily average loan amounts outstanding. Daily balances were used for average balance computations. Investment securities are stated at amortized cost. Tax equivalent adjustments have been made in calculating yields on obligations of states and political subdivisions, tax-free commercial loans, and dividends on equity investments.
| AVERAGE CONSOLIDATED BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS | |||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2026 | Three Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||||
| ($ in thousands) | Average Balance | Interest | Yield/Rate (3) | Average Balance | Interest | Yield/Rate (3) | |||||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||||||||
| Commercial loans | $ | 1,816,492 | $ | 26,384 | 5.83 | % | $ | 1,568,239 | $ | 22,909 | 5.86 | % | |||||||||||||||||||||||
| Residential mortgage loans | 285,723 | 3,159 | 4.43 | % | 276,391 | 2,847 | 4.13 | % | |||||||||||||||||||||||||||
| Consumer loans | 236,390 | 3,328 | 5.65 | % | 263,927 | 3,727 | 5.66 | % | |||||||||||||||||||||||||||
| Taxable securities | 322,178 | 1,669 | 2.08 | % | 533,573 | 2,533 | 1.90 | % | |||||||||||||||||||||||||||
| Tax-exempt securities | 10,951 | 89 | 3.26 | % | 31,967 | 239 | 3.00 | % | |||||||||||||||||||||||||||
| Interest-earning deposits | 34,864 | 325 | 3.74 | % | 75,759 | 855 | 4.53 | % | |||||||||||||||||||||||||||
| Total interest-earning assets | 2,706,598 | 34,954 | 5.18 | % | 2,749,856 | 33,110 | 4.83 | % | |||||||||||||||||||||||||||
| Non interest-earning assets: | |||||||||||||||||||||||||||||||||||
| Cash and due from banks | 25,474 | 25,005 | |||||||||||||||||||||||||||||||||
| Other assets | 67,713 | 49,911 | |||||||||||||||||||||||||||||||||
| Allowance for credit losses | (25,207) | (22,546) | |||||||||||||||||||||||||||||||||
| Total assets | $ | 2,774,578 | $ | 2,802,226 | |||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
| Interest-bearing demand deposits | $ | 321,366 | $ | 1,152 | 1.44 | % | $ | 334,957 | $ | 1,297 | 1.55 | % | |||||||||||||||||||||||
| Savings and insured money market deposits | 921,455 | 4,036 | 1.76 | % | 867,723 | 4,237 | 1.96 | % | |||||||||||||||||||||||||||
| Time deposits | 451,968 | 3,504 | 3.11 | % | 519,181 | 4,536 | 3.50 | % | |||||||||||||||||||||||||||
| Brokered deposits | 1,183 | 11 | 3.73 | % | 92,826 | 1,006 | 4.35 | % | |||||||||||||||||||||||||||
| FHLBNY overnight advances | 3,231 | 31 | 3.85 | % | 4,381 | 50 | 4.58 | % | |||||||||||||||||||||||||||
| Term advances and other debt | 60,031 | 589 | 3.94 | % | 79,413 | 893 | 4.51 | % | |||||||||||||||||||||||||||
| Subordinated debt | 44,064 | 898 | 8.17 | % | 10,254 | 207 | 8.10 | % | |||||||||||||||||||||||||||
| Total interest-bearing liabilities | 1,803,298 | 10,221 | 2.27 | % | 1,908,735 | 12,226 | 2.57 | % | |||||||||||||||||||||||||||
| Non interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
| Demand deposits | 656,270 | 618,026 | |||||||||||||||||||||||||||||||||
| Other liabilities | 47,201 | 46,304 | |||||||||||||||||||||||||||||||||
| Total liabilities | 2,506,769 | 2,573,065 | |||||||||||||||||||||||||||||||||
| Shareholders' equity | 267,809 | 229,161 | |||||||||||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 2,774,578 | $ | 2,802,226 | |||||||||||||||||||||||||||||||
| Fully taxable equivalent net interest income | 24,733 | 20,884 | |||||||||||||||||||||||||||||||||
Net interest rate spread (1) | 2.91 | % | 2.26 | % | |||||||||||||||||||||||||||||||
Net interest margin, fully taxable equivalent (2) | 3.67 | % | 3.05 | % | |||||||||||||||||||||||||||||||
| Taxable equivalent adjustment | (63) | (76) | |||||||||||||||||||||||||||||||||
| Net interest income | $ | 24,670 | $ | 20,808 | |||||||||||||||||||||||||||||||
(1) Net interest rate spread is the difference in the average yield on interest-earning assets less the average rate on interest-bearing liabilities.
(2) Net interest margin is the ratio of fully taxable equivalent net interest income divided by average interest-earning assets.
(3) Annualized.
55
| AVERAGE CONSOLIDATED BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS | |||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||||
| ($ in thousands) | Average Balance | Interest | Yield/ Rate (3) | Average Balance | Interest | Yield/ Rate (3) | |||||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||||||||
| Commercial loans | $ | 1,789,395 | $ | 51,495 | 5.80 | % | $ | 1,548,741 | $ | 44,605 | 5.81 | % | |||||||||||||||||||||||
| Residential mortgage loans | 285,965 | 6,284 | 4.43 | % | 275,960 | 5,548 | 4.05 | % | |||||||||||||||||||||||||||
| Consumer loans | 240,190 | 6,661 | 5.59 | % | 268,532 | 7,478 | 5.62 | % | |||||||||||||||||||||||||||
| Taxable securities | 324,657 | 3,359 | 2.09 | % | 558,952 | 5,559 | 2.01 | % | |||||||||||||||||||||||||||
| Tax-exempt securities | 10,938 | 174 | 3.21 | % | 34,846 | 518 | 3.00 | % | |||||||||||||||||||||||||||
| Interest-earning deposits | 33,373 | 628 | 3.79 | % | 52,782 | 1,180 | 4.51 | % | |||||||||||||||||||||||||||
| Total interest-earning assets | 2,684,518 | 68,601 | 5.15 | % | 2,739,813 | 64,888 | 4.78 | % | |||||||||||||||||||||||||||
| Non interest-earning assets: | |||||||||||||||||||||||||||||||||||
| Cash and due from banks | 25,857 | 25,527 | |||||||||||||||||||||||||||||||||
| Other assets | 68,371 | 50,083 | |||||||||||||||||||||||||||||||||
| Allowance for credit losses | (24,902) | (22,054) | |||||||||||||||||||||||||||||||||
| Total assets | $ | 2,753,844 | $ | 2,793,369 | |||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
| Interest-bearing demand deposits | $ | 327,011 | $ | 2,332 | 1.44 | % | $ | 335,556 | $ | 2,601 | 1.56 | % | |||||||||||||||||||||||
| Savings and insured money market deposits | 891,088 | 7,523 | 1.70 | % | 863,354 | 8,103 | 1.89 | % | |||||||||||||||||||||||||||
| Time deposits | 457,223 | 7,081 | 3.12 | % | 517,045 | 9,239 | 3.60 | % | |||||||||||||||||||||||||||
| Brokered deposits | 16,369 | 306 | 3.77 | % | 102,777 | 2,289 | 4.49 | % | |||||||||||||||||||||||||||
| FHLBNY overnight advances | 14,674 | 284 | 3.90 | % | 12,535 | 285 | 4.58 | % | |||||||||||||||||||||||||||
| Term advances and other debt | 46,617 | 901 | 3.90 | % | 61,780 | 1,383 | 4.51 | % | |||||||||||||||||||||||||||
| Subordinated debt | 44,051 | 1,795 | 8.22 | % | 5,155 | 207 | 8.10 | % | |||||||||||||||||||||||||||
| Total interest-bearing liabilities | 1,797,033 | 20,222 | 2.27 | % | 1,898,202 | 24,107 | 2.56 | % | |||||||||||||||||||||||||||
| Non interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
| Demand deposits | 644,328 | 620,387 | |||||||||||||||||||||||||||||||||
| Other liabilities | 47,650 | 48,781 | |||||||||||||||||||||||||||||||||
| Total liabilities | 2,489,011 | 2,567,370 | |||||||||||||||||||||||||||||||||
| Shareholders' equity | 264,833 | 225,999 | |||||||||||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 2,753,844 | $ | 2,793,369 | |||||||||||||||||||||||||||||||
| Fully taxable equivalent net interest income | 48,379 | 40,781 | |||||||||||||||||||||||||||||||||
Net interest rate spread (1) | 2.88 | % | 2.22 | % | |||||||||||||||||||||||||||||||
Net interest margin, fully taxable equivalent (2) | 3.63 | % | 3.00 | % | |||||||||||||||||||||||||||||||
| Taxable equivalent adjustment | (125) | (156) | |||||||||||||||||||||||||||||||||
| Net interest income | $ | 48,254 | $ | 40,625 | |||||||||||||||||||||||||||||||
(1) Net interest rate spread is the difference in the average yield on interest-earning assets less the average rate on interest-bearing liabilities.
(2) Net interest margin is the ratio of fully taxable equivalent net interest income divided by average interest-earning assets.
(3) Annualized.
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Changes Due to Rate and Volume
Net interest income can be analyzed in terms of the impact of changes in rates and volumes. The tables below illustrate the extent to which changes in interest rates and the volume of average interest-earning assets and interest-bearing liabilities have affected the Corporation’s interest income and interest expense during the three and six months ended June 30, 2026 and 2025. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate); (ii) changes attributable to changes in rates (changes in rates multiplied by prior volume); and (iii) the net changes. For purposes of these tables, changes that are not due solely to volume or rate changes have been allocated to these categories based on the respective percentage changes in average volume and rate. Due to the numerous simultaneous volume and rate changes during the periods analyzed, it is not possible to precisely allocate changes between volume and rates. In addition, average interest-earning assets include nonaccrual loans and taxable equivalent adjustments were made.
| RATE/VOLUME ANALYSIS OF NET INTEREST INCOME | ||||||||||||||||||||
| Three Months Ended June 30, 2026 vs. 2025 | ||||||||||||||||||||
| Increase/(Decrease) | ||||||||||||||||||||
| Total Change | Due to Volume | Due to Rate | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Interest and dividend income on: | ||||||||||||||||||||
| Commercial loans | $ | 3,475 | $ | 3,607 | $ | (132) | ||||||||||||||
| Residential mortgage loans | 312 | 98 | 214 | |||||||||||||||||
| Consumer loans | (399) | (388) | (11) | |||||||||||||||||
| Taxable investment securities | (864) | (1,078) | 214 | |||||||||||||||||
| Tax-exempt investment securities | (150) | (169) | 19 | |||||||||||||||||
| Interest-earning deposits | (530) | (401) | (129) | |||||||||||||||||
| Total interest and dividend income, fully taxable equivalent | 1,844 | 1,669 | 175 | |||||||||||||||||
| Interest expense on: | ||||||||||||||||||||
| Interest-bearing demand deposits | (145) | (52) | (93) | |||||||||||||||||
| Savings and insured money market deposits | (201) | 252 | (453) | |||||||||||||||||
| Time deposits | (1,032) | (552) | (480) | |||||||||||||||||
| Brokered deposits | (995) | (870) | (125) | |||||||||||||||||
| FHLBNY overnight advances | (19) | (12) | (7) | |||||||||||||||||
| Term advances and other debt | (304) | (200) | (104) | |||||||||||||||||
| Subordinated debt | 691 | 689 | 2 | |||||||||||||||||
| Total interest expense | (2,005) | (745) | (1,260) | |||||||||||||||||
| Net interest income, fully taxable equivalent | $ | 3,849 | $ | 2,414 | $ | 1,435 | ||||||||||||||
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| RATE/VOLUME ANALYSIS OF NET INTEREST INCOME | ||||||||||||||||||||
| Six Months Ended June 30, 2026 vs. 2025 | ||||||||||||||||||||
| Increase/(Decrease) | ||||||||||||||||||||
| Total Change | Due to Volume | Due to Rate | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Interest and dividend income on: | ||||||||||||||||||||
| Commercial loans | $ | 6,890 | $ | 6,926 | $ | (36) | ||||||||||||||
| Residential mortgage loans | 736 | 206 | 530 | |||||||||||||||||
| Consumer loans | (817) | (786) | (31) | |||||||||||||||||
| Taxable investment securities | (2,200) | (2,416) | 216 | |||||||||||||||||
| Tax-exempt investment securities | (344) | (378) | 34 | |||||||||||||||||
| Interest-earning deposits | (552) | (386) | (166) | |||||||||||||||||
| Total interest and dividend income, fully taxable equivalent | 3,713 | 3,166 | 547 | |||||||||||||||||
| Interest expense on: | ||||||||||||||||||||
| Interest-bearing demand deposits | (269) | (65) | (204) | |||||||||||||||||
| Savings and insured money market deposits | (580) | 254 | (834) | |||||||||||||||||
| Time deposits | (2,158) | (1,003) | (1,155) | |||||||||||||||||
| Brokered deposits | (1,983) | (1,665) | (318) | |||||||||||||||||
| FHLBNY overnight advances | (1) | 45 | (46) | |||||||||||||||||
| Term advances and other debt | (482) | (309) | (173) | |||||||||||||||||
| Subordinated debt | 1,588 | 1,585 | 3 | |||||||||||||||||
| Total interest expense | (3,885) | (1,158) | (2,727) | |||||||||||||||||
| Net interest income, fully taxable equivalent | $ | 7,598 | $ | 4,324 | $ | 3,274 | ||||||||||||||
Provision for credit losses
Management has established and maintains a methodology for determining and adjusting its allowance for credit losses based on a combination of quantitative and qualitative analysis, and changes in the required allowance are recorded through income as a provision. The quantitative portion of the model is significantly influenced by changes in projected economic conditions, as well as changes in the composition of the numerous loan portfolio segments. Qualitative adjustments reflect the degree to which management anticipates future outcomes may differ from those projected by the quantitative model.
The provision for credit losses decreased to $0.6 million for the three months ended June 30, 2026, from $1.1 million for the same period in the prior year. The decrease was primarily due to relatively stable model inputs during the current year period, including minimal changes in the FOMC's projections for U.S. civilian unemployment and U.S. GDP growth, compared to modest deteriorations in forecasts in the prior year period, partially reflecting the expected impacts of new import tariffs at the time. Additionally, increases in certain qualitative adjustment rates contributed to the higher provision expense in the prior year period. Partially offsetting the overall decrease in provision for credit losses compared to the same period in the prior year was stronger loan growth in the current year period, which totaled $55.4 million, compared to growth of $34.8 million for the same period in the prior year.
Net charge-offs totaled $0.2 million for the three months ended June 30, 2026, compared to $1.0 million for the same period in the prior year. However, $0.8 million in balances charged off in the prior year period had previously been specifically reserved against; excluding those loans noted above, net charge-offs were comparable between the two periods.
The provision for credit losses decreased to $1.2 million for the six months ended June 30, 2026, from $2.2 million for the same period in the prior year. The decrease was mainly due to the directionality of the impact from the annual loss driver update and recalibration applied to the Corporation's CECL model in the current year, compared to the update applied to the CECL model in the prior year period. The current year update resulted in lower modeled baseline loss rates, while the update in the prior year resulted in higher baseline loss rates. Partially offsetting the overall decrease in provision for credit losses compared to the same period in the prior year was an increase in specific allocations on individually analyzed loans, as well as stronger loan growth in the current year period, which totaled $97.6 million, compared to growth of $61.0 million for the same period in the prior year.
Net charge-offs for the six months ended June 30, 2026 were $0.1 million, compared to $1.3 million for the same period in the prior year. $0.8 million in charge-offs in the prior year period had previously been specifically reserved against, while the
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current year period included a $0.7 million recovery on a commercial and industrial loan that had been charged off during the six months ended June 30, 2025. Remaining charge-offs for the six months ended June 30, 2026 and 2025 were largely concentrated in the indirect auto portfolio.
Non-interest income
The following table presents non-interest income for the periods indicated, and the dollar and percent change (in thousands):
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | |||||||||||||||||||||||
| WMG fee income | $ | 3,191 | $ | 2,993 | $ | 198 | 6.6 | % | ||||||||||||||||||
| Service charges on deposit accounts | 1,038 | 1,114 | (76) | (6.8) | % | |||||||||||||||||||||
| Interchange revenue from debit card transactions | 1,107 | 1,110 | (3) | (0.3) | % | |||||||||||||||||||||
| Net (losses) on securities transactions | — | (17,498) | 17,498 | N/M | ||||||||||||||||||||||
| Changes in fair value of equity investments | 272 | 108 | 164 | 151.9 | % | |||||||||||||||||||||
| Net gains on sales of loans held for sale | 47 | 51 | (4) | (7.8) | % | |||||||||||||||||||||
| Net (losses) on sales of other real estate owned | — | 3 | (3) | N/M | ||||||||||||||||||||||
| Income from bank owned life insurance | 7 | 8 | (1) | (12.5) | % | |||||||||||||||||||||
| CFS fee and commission income | 394 | 270 | 124 | 45.9 | % | |||||||||||||||||||||
| Other | 447 | 1,136 | (689) | (60.7) | % | |||||||||||||||||||||
| Total non-interest income | $ | 6,503 | $ | (10,705) | $ | 17,208 | N/M | |||||||||||||||||||
Total non-interest income for the three months ended June 30, 2026 increased $17.2 million compared to the same period in the prior year, largely due to a $17.5 million net loss on securities transactions in the prior year, increases of $0.2 million each in wealth management group fee income and changes in fair value of equity investments, as well as an increase of $0.1 million in CFS fee and commission income. The increase was partially offset by a decrease of $0.7 million in other non-interest income.
Net Losses on Securities Transactions
The Corporation recognized a pre-tax loss of $17.5 million on the sale of a portion of its available for sale securities portfolio in the second quarter of 2025.
Wealth Management Group Fee Income
The increase in wealth management group fee income was primarily due to an increase in total assets under management in the current period, compared to the same period in the prior year, mainly due to improvements in financial markets between the second quarters of 2025 and 2026.
Changes in Fair Value of Equity Investments
The increase in changes in fair value of equity investments was primarily due to a larger increase in the fair value of the assets held for the Corporation's deferred compensation plan in the current year period, when compared to the same period in the prior year.
CFS Fee and Commission Income
The increase in total CFS Group fee and commission income was largely due to recognition of additional income in the current year period following contractual changes with a broker-dealer, improvements in financial markets since the second quarter of 2025, and organic client growth across the Corporation's footprint.
Other Non-Interest Income
The decrease in other non-interest income was mostly due to a $0.6 million gain on the sale of a previous branch property during the second quarter of 2025.
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The following table presents non-interest income for the periods indicated, and the dollar and percent change (in thousands):
| Six Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | |||||||||||||||||||||||
| WMG fee income | $ | 6,336 | $ | 5,860 | $ | 476 | 8.1 | % | ||||||||||||||||||
| Service charges on deposit accounts | 2,089 | 2,234 | (145) | (6.5) | % | |||||||||||||||||||||
| Interchange revenue from debit card transactions | 2,121 | 2,147 | (26) | (1.2) | % | |||||||||||||||||||||
| Net (losses) on securities transactions | — | (17,498) | 17,498 | N/M | ||||||||||||||||||||||
| Changes in fair value of equity investments | 201 | 61 | 140 | 229.5 | % | |||||||||||||||||||||
| Net gains on sales of loans held for sale | 68 | 91 | (23) | (25.3) | % | |||||||||||||||||||||
| Net (losses) on sales of other real estate owned | — | (8) | 8 | N/M | ||||||||||||||||||||||
| Income from bank owned life insurance | 14 | 16 | (2) | (12.5) | % | |||||||||||||||||||||
| CFS fee and commission income | 871 | 493 | 378 | 76.7 | % | |||||||||||||||||||||
| Other | 1,123 | 1,788 | (665) | (37.2) | % | |||||||||||||||||||||
| Total non-interest income | $ | 12,823 | $ | (4,816) | $ | 17,639 | N/M | |||||||||||||||||||
Total non-interest income for the six months ended June 30, 2026 increased $17.6 million compared to the same period in the prior year. The increase was primarily due to a $17.5 million net loss on securities transactions in the prior year, and increases of $0.5 million in wealth management group fee income and $0.4 million in CFS fee and commission income, partially offset by decreases of $0.7 million in other non-interest income and $0.1 million in service charges on deposit accounts.
Net Losses on Securities Transactions
The Corporation recognized a pre-tax loss of $17.5 million on the sale of a portion of its available for sale securities portfolio in the second quarter of 2025.
Wealth Management Group Fee Income
The increase in wealth management group fee income was primarily due to an increase in total assets under management in the current period, compared to the same period in the prior year, mainly due to improvements in financial markets since the second quarter of 2025.
Changes in Fair Value of Equity Investments
The increase in changes in fair value of equity investments was primarily due to a larger increase in the fair value of the assets held for the Corporation's deferred compensation plan in the current year period, when compared to the same period in the prior year.
CFS Fee and Commission Income
The increase in total CFS Group fee and commission income was largely due to recognition of additional income in the current year period following contractual changes with a broker-dealer, improvements in financial markets during the first six months of 2026, and organic client growth across the Corporation's footprint.
Other Non-Interest Income
The decrease in other non-interest income was mostly due to a $0.6 million gain on the sale of a previous branch property during the second quarter of 2025.
Service Charges on Deposit Accounts
The decrease in service charges on deposit accounts was mainly due to a decrease in non-sufficient fund (NSF) fees in the current period, compared to the same period in the prior year.
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Non-interest expense
The following table presents non-interest expense for the periods indicated, and the dollar and percent change (in thousands):
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | |||||||||||||||||||||||
| Compensation expense: | ||||||||||||||||||||||||||
| Salaries and wages | $ | 8,037 | $ | 7,579 | $ | 458 | 6.0 | % | ||||||||||||||||||
| Pension and other employee benefits | 2,286 | 2,112 | 174 | 8.2 | % | |||||||||||||||||||||
| Other components of net periodic pension and postretirement benefits | (142) | (113) | (29) | (25.7) | % | |||||||||||||||||||||
| Total compensation expense | 10,181 | 9,578 | 603 | 6.3 | % | |||||||||||||||||||||
| Non-compensation expense: | ||||||||||||||||||||||||||
| Net occupancy | 1,546 | 1,431 | 115 | 8.0 | % | |||||||||||||||||||||
| Furniture and equipment | 498 | 455 | 43 | 9.5 | % | |||||||||||||||||||||
| Data processing | 2,615 | 2,563 | 52 | 2.0 | % | |||||||||||||||||||||
| Professional services | 962 | 805 | 157 | 19.5 | % | |||||||||||||||||||||
| Marketing and advertising | 497 | 351 | 146 | 41.6 | % | |||||||||||||||||||||
| Other real estate owned expenses | 17 | 3 | 14 | N/M | ||||||||||||||||||||||
| FDIC insurance | 304 | 434 | (130) | (30.0) | % | |||||||||||||||||||||
| Loan expenses | 458 | 296 | 162 | 54.7 | % | |||||||||||||||||||||
| Other | 2,243 | 1,853 | 390 | 21.0 | % | |||||||||||||||||||||
| Total non-compensation expense | 9,140 | 8,191 | 949 | 11.6 | % | |||||||||||||||||||||
| Total non-interest expense | $ | 19,321 | $ | 17,769 | $ | 1,552 | 8.7 | % | ||||||||||||||||||
Total non-interest expense for the three months ended June 30, 2026 increased $1.6 million compared to the same period in the prior year. The increase was due to an increase in both total compensation expense and non-compensation expense compared to the same period in the prior year. For the three months ended June 30, 2026 and 2025, non-interest expense to average assets was 2.79% and 2.54%, respectively.
Compensation expense
The increase in compensation expense for the current period, compared to the same period in the prior year, was largely due to increases in salaries and wages, and pension and other employee benefits. Salaries and wages increased largely due to an increase in expenses relating to annual incentives as well as merit-based increases in salaries. Pension and other employee benefits increased primarily due to an increase in employee healthcare-based expenses.
Non-compensation expense
The increase in non-compensation expense was largely due to an increase of $0.4 million in other non-interest expense compared to the same period in the prior year, as well as $0.2 million increases in each of professional services and loan expenses, partially offset by a decrease of $0.1 million in FDIC insurance. Other non-interest expense increased largely due to a $0.3 million write-down of a legacy non-marketable equity investment following the Corporation's reassessment of the investment's carrying value, which included additional qualitative information regarding its expected recoverability. Loan expense and professional services each increased due to increases in legal fees compared to the same period in the prior year. A significant portion of the increase in legal fees in professional services related to the Corporation's application to convert its charter to a national bank. Another portion of the increase in professional services related to recurring costs associated with the Corporation's subordinated debt. FDIC insurance decreased primarily due to favorable changes in metrics used to determine assessment rates.
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The following table presents non-interest expense for the periods indicated, and the dollar and percent change (in thousands):
| Six Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | |||||||||||||||||||||||
| Compensation expense: | ||||||||||||||||||||||||||
| Salaries and wages | $ | 15,637 | $ | 14,788 | $ | 849 | 5.7 | % | ||||||||||||||||||
| Pension and other employee benefits | 4,408 | 4,034 | 374 | 9.3 | % | |||||||||||||||||||||
| Other components of net periodic pension and postretirement benefits | (284) | (226) | (58) | (25.7) | % | |||||||||||||||||||||
| Total compensation expense | 19,761 | 18,596 | 1,165 | 6.3 | % | |||||||||||||||||||||
| Non-compensation expense: | ||||||||||||||||||||||||||
| Net occupancy | 3,074 | 2,964 | 110 | 3.7 | % | |||||||||||||||||||||
| Furniture and equipment | 907 | 828 | 79 | 9.5 | % | |||||||||||||||||||||
| Data processing | 5,151 | 5,097 | 54 | 1.1 | % | |||||||||||||||||||||
| Professional services | 1,653 | 1,443 | 210 | 14.6 | % | |||||||||||||||||||||
| Marketing and advertising | 738 | 690 | 48 | 7.0 | % | |||||||||||||||||||||
| Other real estate owned expenses | 25 | 14 | 11 | 78.6 | % | |||||||||||||||||||||
| FDIC insurance | 619 | 873 | (254) | (29.1) | % | |||||||||||||||||||||
| Loan expenses | 792 | 574 | 218 | 38.0 | % | |||||||||||||||||||||
| Other | 4,063 | 3,617 | 446 | 12.3 | % | |||||||||||||||||||||
| Total non-compensation expense | 17,022 | 16,100 | 922 | 5.7 | % | |||||||||||||||||||||
| Total non-interest expense | $ | 36,783 | $ | 34,696 | $ | 2,087 | 6.0 | % | ||||||||||||||||||
Total non-interest expense for the six months ended June 30, 2026 increased $2.1 million compared to the same period in the prior year. The increase was due to increases in both total compensation expense and total non-compensation expense. For the six months ended June 30, 2026 and 2025, non-interest expense to average assets was 2.69% and 2.50%, respectively.
Compensation expense
The increase in compensation expense for the current period, compared to the same period in the prior year, was largely due to increases in salaries and wages, and pension and other employee benefits. Salaries and wages increased largely due to an increase in expenses relating to annual incentives as well as merit-based increases in salaries. Pension and other employee benefits increased primarily due to an increase in employee healthcare-based expenses.
Non-compensation expense
The increase in non-compensation expense was primarily due to increases of $0.4 million in other non-interest expense, $0.2 million in professional services and $0.2 million in loan expenses, partially offset by a decrease of $0.3 million in FDIC insurance expense. Other non-interest expense increased largely due to a $0.3 million write-down of a legacy non-marketable equity investment following the Corporation's reassessment of the investment's carrying value, which included additional qualitative information regarding its expected recoverability. Loan expense and professional services each increased due to increases in legal fees compared to the same period in the prior year. A significant portion of the increase in legal fees in professional services related to the Corporation's application to convert its charter to a national bank. Another portion of the increase in professional services related to recurring costs associated with the Corporation's subordinated debt. FDIC insurance decreased primarily due to favorable changes in metrics used to determine assessment rates.
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Income tax expense
The following table presents income tax expense and the effective tax rate for the periods indicated, and the dollar and percent change (dollars in thousands):
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | |||||||||||||||||||||||
| Income before income tax expense | $ | 11,291 | $ | (8,811) | $ | 20,102 | N/M | |||||||||||||||||||
| Income tax expense | $ | 2,481 | $ | (2,359) | $ | 4,840 | N/M | |||||||||||||||||||
| Effective tax rate | 22.0 | % | N/M | |||||||||||||||||||||||
Income tax expense for the three month period ended June 30, 2026 was $2.5 million, compared to an income tax benefit of $2.4 million for the three month period ended June 30, 2025. The increase in income tax expense was primarily due to an increase of $20.1 million in income before income tax expense, compared to the same period in the prior year. This increase was primarily due to the $17.5 million net loss recognized on the Corporation's sale of available for sale securities in the second quarter of 2025. The effective income tax rate was 22.0% for the three months ended June 30, 2026.
The following table presents income tax expense and the effective tax rate for the periods indicated, and the dollar and percent change (in thousands):
| Six Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | |||||||||||||||||||||||
| Income before income tax expense | $ | 23,132 | $ | (1,124) | $ | 24,256 | N/M | |||||||||||||||||||
| Income tax expense | $ | 5,123 | $ | (695) | $ | 5,818 | N/M | |||||||||||||||||||
| Effective tax rate | 22.1 | % | N/M | |||||||||||||||||||||||
Income tax expense for the six month period ended June 30, 2026 was $5.1 million, compared to an income tax benefit of $0.7 million for the six month period ended June 30, 2025. The effective income tax rate was 22.1% for the six months ended June 30, 2026. The increase in income tax expense was primarily due to the $17.5 million net loss recognized on the Corporation's sale of available for sale securities in the second quarter of 2025.
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Financial Condition
The following table presents selected financial information as of the dates indicated, and the dollar and percent change (dollars in thousands):
| ASSETS | June 30, 2026 | December 31, 2025 | Change | % Change | ||||||||||||||||||||||
| Total cash and cash equivalents | $ | 73,113 | $ | 50,097 | $ | 23,016 | 45.9 | % | ||||||||||||||||||
| Total investment securities, FHLBNY and FRBNY stock | 283,898 | 294,469 | (10,571) | (3.6) | % | |||||||||||||||||||||
| Loans, net of deferred loan fees | 2,367,151 | 2,269,561 | 97,590 | 4.3 | % | |||||||||||||||||||||
| Allowance for credit losses | (25,232) | (24,209) | 1,023 | 4.2 | % | |||||||||||||||||||||
| Loans, net | 2,341,919 | 2,245,352 | 96,567 | 4.3 | % | |||||||||||||||||||||
| Goodwill and other intangible assets, net | 21,824 | 21,824 | — | — | % | |||||||||||||||||||||
| Other assets | 99,448 | 98,493 | 955 | 1.0 | % | |||||||||||||||||||||
| Total assets | $ | 2,820,202 | $ | 2,710,235 | $ | 109,967 | 4.1 | % | ||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||
| Total deposits | $ | 2,363,934 | $ | 2,270,674 | $ | 93,260 | 4.1 | % | ||||||||||||||||||
| Advances and other debt | 92,855 | 90,554 | 2,301 | 2.5 | % | |||||||||||||||||||||
| Subordinated debt | 44,079 | 44,028 | 51 | 0.1 | % | |||||||||||||||||||||
| Other liabilities | 48,973 | 50,270 | (1,297) | (2.6) | % | |||||||||||||||||||||
| Total liabilities | 2,549,841 | 2,455,526 | 94,315 | 3.8 | % | |||||||||||||||||||||
| Total shareholders’ equity | 270,361 | 254,709 | 15,652 | 6.1 | % | |||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 2,820,202 | $ | 2,710,235 | $ | 109,967 | 4.1 | % | ||||||||||||||||||
Cash and Cash Equivalents
The increase in cash and cash equivalents was largely due to an increase in total deposits, paydowns and maturities of investment securities, and cash flow provided by operating activities, primarily offset by an increase in total loans.
Investment Securities
The decrease in total investment securities was mostly due to year to date net paydowns and maturities on available for sale securities, totaling $11.4 million. The market value of available for sale securities was relatively consistent compared to the prior year-end. Partially offsetting the decrease in total investment securities was an increase of $0.2 million in FHLBNY and FRBNY stock, at cost, primarily due to an increase in total borrowings through the FHLBNY as of June 30, 2026, compared to the prior year-end.
Loans, net
The increase in loans, net of deferred loan fees, was primarily due to an increase in non-owner occupied commercial real estate loans of $91.1 million, as well as increases of $11.5 million and $5.9 million in construction loans and home equity lines and loans, respectively, partially offset by a decrease of $19.9 million in indirect consumer loans.
Allowance for Credit Losses
The increase in the allowance for credit losses was mainly due to specific reserve allocations of $1.3 million, including $1.2 million in allocations on one non-owner occupied commercial real estate loan, as well as an increase in qualitative adjustments applied to the Corporation's CECL model and year to date loan growth. Partially offsetting this increase was the impact of the annual review and update to loss drivers used in the CECL model, which is implemented in the first quarter of each year.
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Other Assets
The increase in other assets was primarily due to an increase in other real estate owned, which totaled $1.9 million as of June 30, 2026, compared to no other real estate owned as of December 31, 2025, as well as an increase in operating lease right-of-use assets due to the commencement of a lease for a representative office in Buffalo, New York, and an increase in loans held for sale, due to an increase in residential mortgages originated for sale but not yet sold to Freddie Mac or FHLBNY. The increase was partially offset by a decrease in premises and equipment, largely due to normal depreciation of fixed assets.
Deposits
The increase in deposits was due to increases in both non interest-bearing deposits and interest-bearing deposits. The increase in total deposits was partially due to increases in insured cash sweep deposits for municipalities and the introduction of new product offerings, including a new escrow platform. Non interest-bearing deposits also benefited from targeted promotional activity, including enhanced debit card reward program incentives at account opening, introduced during the first quarter of 2026.
Advances and Other Debt
The increase in advances and other debt was mostly due to funding the increase in total loans, partially offset by an increase in total deposits compared to the prior year-end. Total FHLBNY overnight advances decreased $44.5 million while FHLBNY term advances increased $47.0 million, and was comprised of a one-month advance. Also included in advances and other debt were finance lease liabilities, which decreased $0.2 million compared to the prior year-end.
Subordinated Debt
Subordinated debt, net of deferred issuance costs, was in-line with the prior year-end. In June of the prior year, the Corporation issued $45.0 million in 7.75% fixed-to-floating rate notes in a private offering, due June 2035, net of $1.0 million in deferred issuance costs associated with the offering.
Other Liabilities
The decrease in other liabilities was primarily due to a net decrease in total accrued expenses and accrued interest payable, partially offset by increases in interest rate swap liabilities and operating lease liabilities. Interest rate swap liabilities increased mainly due to an increase in the fair value of interest rate swaps. The increase in operating lease liabilities was largely due to the Corporation's lease of office space in Buffalo, New York to operate as a representative office for Canal Bank operations.
Shareholders’ Equity
The increase in shareholders' equity was mainly due to an increase of $14.7 million in retained earnings and a decrease of $0.1 million in accumulated other comprehensive loss. The increase in retained earnings was primarily due to net income of $18.0 million for the six months ended June 30, 2026, partially offset by dividends declared of $3.3 million during the six months ended June 30, 2026.
Assets under management or administration
The market value of total assets under management or administration in the Wealth Management Group was $2.494 billion as of June 30, 2026, including $328.2 million of assets held under management or administration for the Corporation, an increase from $2.338 billion as of December 31, 2025, including $301.8 million of assets held under management or administration for the Corporation. Excluding assets under management or administration for the Corporation, the total market value of Wealth Management Group assets increased $128.6 million, or 6.3%, largely due to improvements in financial markets during the first six months of 2026, compared to conditions as of December 31, 2025.
As of June 30, 2026, CFS Group had total client assets of $319.4 million, including $114.6 million of advisory assets under management, compared to client assets of $299.4 million, including $104.1 million of advisory assets under management, as of December 31, 2025, an increase of $20.0 million in total client assets and $10.5 million in advisory assets.
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Securities
The available for sale segment of the securities portfolio totaled $269.0 million as of June 30, 2026, a decrease of $11.6 million, or 4.1%, from $280.6 million as of December 31, 2025. Securities available for sale decreased primarily due to net paydowns and maturities. Year to date net paydowns and maturities on available for sale securities totaled $11.4 million, largely on mortgage-backed securities totaling $10.3 million, maturities of municipal bonds totaling $0.5 million, and calls of corporate bonds totaling $0.5 million. Partially offsetting the overall decrease in the available for sale securities portfolio was an increase of $0.1 million in the fair value of securities compared to December 31, 2025. The held to maturity segment of the securities portfolio consists of obligations of political subdivisions in the Corporation’s market areas. These securities totaled $1.6 million as of June 30, 2026 and $0.6 million as of December 31, 2025.
Non-marketable equity securities as of June 30, 2026 and December 31, 2025 include shares of FRBNY stock and FHLBNY stock, carried at their cost. FRBNY stock and FHLBNY stock were $3.1 million and $6.6 million respectively as of June 30, 2026, and $3.0 million and $6.4 million respectively as of December 31, 2025. The fair value of these securities is assumed to approximate their cost. The investment in these stocks is regulated by regulatory policies of the respective institutions.
The Corporation’s Funds Management Policy includes an investment policy that, in general, requires debt securities purchased for the bond portfolio to carry a minimum agency rating of "Baa." After an independent credit analysis is performed, the policy also allows the Corporation to purchase local municipal obligations that are not rated. The Corporation intends to maintain a reasonable level of securities to provide adequate liquidity and in order to have securities available to pledge to secure public deposits, repurchase agreements, and other types of transactions. Fluctuations in the fair value of the Corporation’s securities relate primarily to changes in interest rates. Marketable securities are generally classified as available for sale, while certain investments in local municipal obligations are classified as held to maturity.
Loans
The table below presents the Corporation’s loan composition by segment as of the dates indicated, and the dollar and percent change from December 31, 2025 to June 30, 2026 (dollars in thousands):
| LOAN PORTFOLIO COMPOSITION | |||||||||||||||||||||||||||||||||||
| June 30, 2026 | % of Total Loans | December 31, 2025 | % of Total Loans | Change | % Change | ||||||||||||||||||||||||||||||
| Commercial and industrial | $ | 328,365 | 13.9 | % | $ | 324,185 | 14.3 | % | $ | 4,180 | 1.3 | % | |||||||||||||||||||||||
| Commercial real estate: | |||||||||||||||||||||||||||||||||||
| Construction | 131,885 | 5.6 | % | 120,418 | 5.3 | % | 11,467 | 9.5 | % | ||||||||||||||||||||||||||
| Owner occupied commercial real estate | 183,705 | 7.8 | % | 178,620 | 7.9 | % | 5,085 | 2.8 | % | ||||||||||||||||||||||||||
| Non-owner occupied commercial real estate | 1,201,796 | 50.8 | % | 1,110,689 | 48.9 | % | 91,107 | 8.2 | % | ||||||||||||||||||||||||||
| Residential mortgages | 286,875 | 12.1 | % | 286,885 | 12.6 | % | (10) | — | % | ||||||||||||||||||||||||||
| Consumer loans: | |||||||||||||||||||||||||||||||||||
| Home equity lines and loans | 115,628 | 4.8 | % | 109,723 | 4.9 | % | 5,905 | 5.4 | % | ||||||||||||||||||||||||||
| Indirect consumer loans | 112,767 | 4.7 | % | 132,699 | 5.8 | % | (19,932) | (15.0) | % | ||||||||||||||||||||||||||
| Direct consumer loans | 6,130 | 0.3 | % | 6,342 | 0.3 | % | (212) | (3.3) | % | ||||||||||||||||||||||||||
| Total | $ | 2,367,151 | 100.0 | % | $ | 2,269,561 | 100.0 | % | $ | 97,590 | 4.3 | % | |||||||||||||||||||||||
Portfolio loans totaled $2.367 billion as of June 30, 2026, an increase of $97.6 million, or 4.3%, from $2.270 billion as of December 31, 2025. The increase in total loans was due to increases of $107.7 million in commercial real estate loans and $4.2 million in commercial and industrial loans, partially offset by a decrease of $14.2 million in total consumer loans. Residential loans were in line with the prior year-end.
Commercial lending continued to be the primary source of asset growth for the Corporation, with demand remaining strong across the Corporation’s footprint, particularly for commercial real estate loans within the Capital Bank division in the Albany market and the Canal Bank division in the Western New York market. Commercial real estate loans in the Capital Bank and Canal Bank divisions increased $57.5 million and $52.9 million, respectively, compared to December 31, 2025. Growth in commercial and industrial loans was concentrated in the Canal Bank division, increasing $8.7 million compared to December 31, 2025, partially offset by modest declines in the Capital Bank and Chemung Canal divisions.
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Consumer loans decreased primarily due to a decrease of $19.9 million in indirect consumer loans, partially offset by an increase of $5.9 million in home equity lines and loans. The decrease in indirect consumer loans reflected the Corporation’s continued prioritization of other types of lending, which contributed to paydowns exceeding originations during the first six months of 2026. The increase in home equity lines and loans was mainly attributable to current year promotional activity and advances on home equity lines of credit originated through prior year promotional efforts, both of which included below-market introductory interest rates.
Residential mortgage loans were relatively unchanged from December 31, 2025 as a result of origination activity remaining below typical historical levels in the current elevated interest rate environment. During the first six months of 2026, the Corporation originated $21.4 million in total residential mortgages, including $3.7 million originated for sale in the secondary market to Freddie Mac and FHLBNY. Total residential mortgage originations decreased $2.9 million, or 12.0%, compared to the same period in the prior year.
The table below presents the Corporation’s outstanding loan balances by Bank division (in thousands):
| LOANS BY DIVISION | |||||||||||||||||||||||||||||
| June 30, 2026 | December 31, 2025 | December 31, 2024 | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||
| Chemung Canal Trust Company | $ | 588,625 | $ | 616,621 | $ | 626,903 | $ | 665,701 | $ | 651,516 | |||||||||||||||||||
| Capital Bank Division | 1,477,053 | 1,417,834 | 1,302,593 | 1,206,561 | 1,098,104 | ||||||||||||||||||||||||
| Canal Bank Division | 301,473 | 235,106 | 141,923 | 100,402 | 79,828 | ||||||||||||||||||||||||
| Total loans | $ | 2,367,151 | $ | 2,269,561 | $ | 2,071,419 | $ | 1,972,664 | $ | 1,829,448 | |||||||||||||||||||
Commercial real estate lending represented the largest component of the Corporation's loan portfolio as of June 30, 2026 and December 31, 2025. Commercial real estate lending is comprised of the construction, owner occupied commercial real estate, and non-owner occupied commercial real estate categories of the loan portfolio, as presented in Note 4 - Loans and Allowance for Credit Losses to the Consolidated Financial Statements. As of June 30, 2026 and December 31, 2025, total commercial real estate loans were $1.517 billion and $1.410 billion, respectively, representing 64.2% and 62.1% of total loan balances, respectively.
As the largest component of the Corporation's loan portfolio, quantitative and qualitative attributes of commercial real estate lending have a significant impact on management's strategic initiatives, and an understanding of these attributes is critical to assessing the Corporation's anticipated future liquidity needs and sensitivity to changes in interest rates. Management closely monitors maturity and repricing schedules as part of its broader risk management framework, enabling it to proactively manage economic volatility and promote longer-term portfolio stability. Management also evaluates the risk inherent in its commercial real estate portfolio using a variety of metrics, including, but not limited to, property type, geography, collateral, and borrower or sponsor industry.
The table below presents commercial real estate loans by maturity and repricing date as of June 30, 2026 (dollars in thousands):
| Commercial real estate loans: | 2026 | 2027 | 2028 | 2029 | 2030 | After 2030 (1) | Total | ||||||||||||||||||||||||||||||||||
| Maturing in: | $ | 76,254 | $ | 96,797 | $ | 93,310 | $ | 120,330 | $ | 231,563 | $ | 899,132 | $ | 1,517,386 | |||||||||||||||||||||||||||
| Percentage of total | 5.0 | % | 6.4 | % | 6.1 | % | 7.9 | % | 15.3 | % | 59.3 | % | 100.0 | % | |||||||||||||||||||||||||||
| Repricing in: | $ | 659,555 | $ | 90,224 | $ | 95,999 | $ | 101,019 | $ | 96,007 | $ | 474,582 | $ | 1,517,386 | |||||||||||||||||||||||||||
| Percentage of total | 43.5 | % | 5.9 | % | 6.3 | % | 6.7 | % | 6.3 | % | 31.3 | % | 100.0 | % | |||||||||||||||||||||||||||
(1) Includes fixed rate loans
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The table below presents commercial real estate loans by type and percentage as of June 30, 2026 and December 31, 2025 (dollars in thousands):
| Commercial real estate loans by type: | June 30, 2026 | % of Total | December 31, 2025 | % of Total | ||||||||||||||||||||||
| Construction | $ | 131,885 | 8.7 | % | $ | 120,418 | 8.5 | % | ||||||||||||||||||
1-4 family residential (1) | 51,846 | 3.5 | % | 53,982 | 3.9 | % | ||||||||||||||||||||
| Multifamily | 462,286 | 30.5 | % | 424,797 | 30.1 | % | ||||||||||||||||||||
| Owner occupied | 183,705 | 12.1 | % | 178,620 | 12.7 | % | ||||||||||||||||||||
| Non-owner occupied | 687,664 | 45.2 | % | 631,910 | 44.8 | % | ||||||||||||||||||||
| Total | $ | 1,517,386 | 100.0 | % | $ | 1,409,727 | 100.0 | % | ||||||||||||||||||
(1) 1-4 Family residential loans included in the commercial real estate portfolio segment are comprised of properties whose primary purpose is to generate rental income for the borrower, but are not considered multifamily properties within the FFIEC's Call Report definition of a multifamily property. This may include single family residences, duplexes, triplexes, and quadplexes.
Commercial real estate loans are primarily made within the counties comprising the Corporation's branch network, as well as to borrowers whose business interests include projects located in counties geographically contiguous to the Corporation's footprint. The location of collateral securing commercial real estate loans typically mirrors the location of the properties being financed. However, certain commercial real estate loans are secured by property other than the property being financed; therefore, the geographic location of collateral may differ from that of the financed property.
The table below presents commercial real estate loans by regional location of collateral and percentage as of June 30, 2026 and December 31, 2025 (dollars in thousands):
| Commercial real estate loans by regional location of collateral: | June 30, 2026 | % of Total | December 31, 2025 | % of Total | ||||||||||||||||||||||
| Capital Region | $ | 891,127 | 58.7 | % | $ | 843,763 | 59.8 | % | ||||||||||||||||||
| Southern Tier & Finger Lakes | 233,616 | 15.4 | % | 230,599 | 16.4 | % | ||||||||||||||||||||
| Western New York | 306,852 | 20.2 | % | 252,370 | 17.9 | % | ||||||||||||||||||||
Other (1) | 85,791 | 5.7 | % | 82,995 | 5.9 | % | ||||||||||||||||||||
| Total | $ | 1,517,386 | 100.0 | % | $ | 1,409,727 | 100.0 | % | ||||||||||||||||||
(1) Includes $80.5 million and $77.6 million in commercial real estate loans located outside of New York State as of June 30, 2026 and December 31, 2025, respectively.
The Corporation closely monitors economic and credit trends for the industries in which its commercial real estate borrowers are involved. Property types are designated based on the purpose of the collateral securing commercial real estate loans. The tables below present commercial real estate loans by borrower industry and percentage as well as the weighted average (WA) loan to value (LTV) ratio for each industry as of June 30, 2026 and December 31, 2025 (dollars in thousands):
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Commercial real estate loans by borrower industry: | Balances | % of Total | Balances | % of Total | |||||||||||||||||||
| Construction & land development | $ | 131,885 | 8.7 | % | $ | 120,418 | 8.6 | % | |||||||||||||||
| Industrial | 74,945 | 4.9 | % | 70,402 | 5.0 | % | |||||||||||||||||
| Warehouse & storage | 108,730 | 7.2 | % | 104,214 | 7.4 | % | |||||||||||||||||
| Retail | 266,161 | 17.5 | % | 264,230 | 18.7 | % | |||||||||||||||||
| Office | 147,341 | 9.7 | % | 145,585 | 10.3 | % | |||||||||||||||||
| Hotel | 90,918 | 6.0 | % | 80,563 | 5.7 | % | |||||||||||||||||
| 1-4 family residential rental | 52,248 | 3.4 | % | 54,264 | 3.8 | % | |||||||||||||||||
| Multifamily (5+) | 488,974 | 32.2 | % | 449,829 | 31.9 | % | |||||||||||||||||
| Medical | 68,618 | 4.5 | % | 54,395 | 4.0 | % | |||||||||||||||||
| Educational | 27,509 | 1.8 | % | 21,458 | 1.5 | % | |||||||||||||||||
| Other | 60,057 | 4.1 | % | 44,369 | 3.1 | % | |||||||||||||||||
| Total | $ | 1,517,386 | 100.0 | % | $ | 1,409,727 | 100.0 | % | |||||||||||||||
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| Weighted average loan to value ratio by industry: | June 30, 2026 | December 31, 2025 | |||||||||
| Industrial | 51.6 | % | 52.2 | % | |||||||
| Warehouse & storage | 61.6 | % | 63.6 | % | |||||||
| Retail | 59.3 | % | 58.6 | % | |||||||
| Office | 60.7 | % | 61.1 | % | |||||||
| Hotel | 49.4 | % | 53.0 | % | |||||||
| 1-4 family residential rental | 60.7 | % | 65.3 | % | |||||||
| Multifamily (5+) | 58.5 | % | 60.4 | % | |||||||
| Medical | 65.8 | % | 64.1 | % | |||||||
| Educational | 59.3 | % | 56.2 | % | |||||||
| Other | 53.4 | % | 48.3 | % | |||||||
| Total | 58.1 | % | 59.2 | % | |||||||
Loan concentrations are considered to exist when there are amounts loaned to multiple borrowers engaged in similar activities, which may cause them to be similarly impacted by economic or other conditions. Industries are identified using NAICS codes, and the Corporation monitors specific NAICS industry classifications of commercial loans to identify concentrations of greater than 10.0% of total loans. As of June 30, 2026 and December 31, 2025, commercial loans to borrowers involved in the real estate and real estate rental and leasing businesses were 53.3% and 52.1% of the Corporation's total loans, respectively. No other concentration of loans existed in the commercial loan portfolio in excess of 10.0% of total loans as of June 30, 2026 and December 31, 2025.
The table below presents the maturity of loans outstanding as of June 30, 2026 (in thousands):
| Within One Year | After One But Within Five Years | After Five But Within 15 Years | After 15 Years | Total | ||||||||||||||||||||||||||||
| Commercial and industrial | $ | 136,866 | $ | 134,739 | $ | 56,321 | $ | 439 | $ | 328,365 | ||||||||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||||||||||||||
| Construction | 10,109 | 40,772 | 81,004 | — | 131,885 | |||||||||||||||||||||||||||
| Owner occupied commercial real estate | 8,449 | 48,232 | 122,486 | 4,538 | 183,705 | |||||||||||||||||||||||||||
| Non-owner occupied commercial real estate | 101,599 | 483,870 | 602,301 | 14,026 | 1,201,796 | |||||||||||||||||||||||||||
| Residential mortgages | 9,964 | 13,578 | 73,780 | 189,553 | 286,875 | |||||||||||||||||||||||||||
| Consumer loans: | ||||||||||||||||||||||||||||||||
| Home equity lines and loans | 288 | 5,763 | 54,990 | 54,587 | 115,628 | |||||||||||||||||||||||||||
| Indirect consumer loans | 1,741 | 84,862 | 26,164 | — | 112,767 | |||||||||||||||||||||||||||
| Direct consumer loans | 310 | 3,627 | 1,311 | 882 | 6,130 | |||||||||||||||||||||||||||
| Total | $ | 269,326 | $ | 815,443 | $ | 1,018,357 | $ | 264,025 | $ | 2,367,151 | ||||||||||||||||||||||
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The tables below present the amounts due after one year, classified according to fixed interest rates and variable interest rates as of June 30, 2026 (in thousands):
| Loans maturing with fixed interest rates: | After One But Within Five Years | After Five But Within 15 Years | After 15 Years | Total | ||||||||||||||||||||||
| Commercial and industrial | $ | 69,022 | $ | 26,695 | $ | — | $ | 95,717 | ||||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||||||||
| Construction | 2,195 | — | — | 2,195 | ||||||||||||||||||||||
| Owner occupied commercial real estate | 16,293 | 22,687 | — | 38,980 | ||||||||||||||||||||||
| Non-owner occupied commercial real estate | 212,653 | 92,465 | — | 305,118 | ||||||||||||||||||||||
| Residential mortgages | 13,552 | 69,875 | 125,971 | 209,398 | ||||||||||||||||||||||
| Consumer loans: | ||||||||||||||||||||||||||
| Home equity lines and loans | 4,281 | 47,253 | 231 | 51,765 | ||||||||||||||||||||||
| Indirect consumer loans | 84,862 | 26,164 | — | 111,026 | ||||||||||||||||||||||
| Direct consumer loans | 3,627 | 373 | 56 | 4,056 | ||||||||||||||||||||||
| Total | $ | 406,485 | $ | 285,512 | $ | 126,258 | $ | 818,255 | ||||||||||||||||||
| Loans maturing with variable interest rates: | After One But Within Five Years | After Five But Within 15 Years | After 15 Years | Total | ||||||||||||||||||||||
| Commercial and industrial | $ | 65,717 | $ | 29,626 | $ | 439 | $ | 95,782 | ||||||||||||||||||
| Commercial real estate: | — | |||||||||||||||||||||||||
| Construction | 38,577 | 81,004 | — | 119,581 | ||||||||||||||||||||||
| Owner occupied commercial real estate | 31,939 | 99,799 | 4,538 | 136,276 | ||||||||||||||||||||||
| Non-owner occupied commercial real estate | 271,217 | 509,836 | 14,026 | 795,079 | ||||||||||||||||||||||
| Residential mortgages | 26 | 3,905 | 63,582 | 67,513 | ||||||||||||||||||||||
| Consumer loans: | — | |||||||||||||||||||||||||
| Home equity lines and loans | 1,482 | 7,737 | 54,356 | 63,575 | ||||||||||||||||||||||
| Indirect consumer loans | — | — | — | — | ||||||||||||||||||||||
| Direct consumer loans | — | 938 | 826 | 1,764 | ||||||||||||||||||||||
| Total | $ | 408,958 | $ | 732,845 | $ | 137,767 | $ | 1,279,570 | ||||||||||||||||||
Non-Performing Loans and Non-Performing Assets
Non-performing assets consist of non-performing loans, other real estate owned, acquired in partial or full satisfaction of loan obligations or through foreclosure, and repossessed vehicles. Non-performing loans are comprised of nonaccrual loans. Past due status for all loans is based on the contractual terms of the loan. It is generally the Corporation's policy to place a loan 90 days past due on nonaccrual status unless factors exist that would eliminate the need for such classification. A loan may also be designated as nonaccrual at any time if full payment of principal or interest is not expected due to deterioration in the financial condition of the borrower. When loans are placed on nonaccrual status, the accrual of interest is discontinued and previously accrued interest is reversed. Payments received on nonaccrual loans are generally applied to principal using the cost recovery method. Loans are considered for return to accrual status when they become current as to principal and interest and remain current for a period of six consecutive months or when, in the opinion of management, the Corporation expects to receive all original principal and interest. In the case of nonaccrual loans for which a portion of the balance has been charged off, the remaining balance is maintained on nonaccrual status until the entire principal balance has been recovered.
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The following table summarizes the Corporation's non-performing assets (dollars in thousands):
| NON-PERFORMING ASSETS | ||||||||||||||
| June 30, 2026 | December 31, 2025 | |||||||||||||
| Total non-performing loans | $ | 9,160 | $ | 7,908 | ||||||||||
| Other real estate owned and repossessed vehicles | 2,051 | 257 | ||||||||||||
| Total non-performing assets | $ | 11,211 | $ | 8,165 | ||||||||||
| Ratio of non-performing loans to total loans | 0.39 | % | 0.35 | % | ||||||||||
| Ratio of non-performing assets to total assets | 0.40 | % | 0.30 | % | ||||||||||
| Ratio of allowance for credit losses to non-performing loans | 275.46 | % | 306.13 | % | ||||||||||
Accruing loans past due 90 days or more (1) | $ | — | $ | 17 | ||||||||||
(1) Not included in non-performing assets above.
Non-performing loans totaled $9.2 million, or 0.39% of total loans as of June 30, 2026, compared to $7.9 million, or 0.35% of total loans as of December 31, 2025. Non-performing assets, which are comprised of non-performing loans, other real estate owned, and repossessed vehicles, were $11.2 million, or 0.40% of total assets as of June 30, 2026, compared to $8.2 million, or 0.30% of total assets as of December 31, 2025. The increase in non-performing loans was largely due to the addition of commercial loans totaling $4.6 million during the first six months of 2026, including one commercial and industrial loan with a balance of $2.2 million and one commercial real estate loan with a balance of $2.0 million. Partially offsetting the increase was the transfer of $2.0 million in commercial real estate loan balances to other real estate owned during the first six months of 2026, net of $0.3 million in related charge-offs, as well as the payoff of two nonaccrual commercial real estate loans totaling $0.6 million and $0.2 million in net paydowns on other non-performing commercial loans during the first six months of 2026. Also offsetting the overall increase in non-performing loans was a decrease of $0.5 million in total non-performing residential mortgage and consumer loans.
Loan Modifications to Borrowers Experiencing Financial Difficulty
The Corporation works closely with borrowers experiencing financial difficulties to identify viable solutions that minimize the potential for loss. The Corporation especially monitors modifications made to borrowers experiencing financial difficulty where contractual cash flows are directly impacted, including through principal reductions, reductions in effective interest rates, term extensions, significant payment delays, or a combination thereof. As of June 30, 2026, the Corporation had 11 active loans modified under such terms.
During the three month period ended June 30, 2026, the Corporation modified two loans to a single borrower experiencing financial difficulty. Both modifications consisted of payment delays whereby six months of principal and interest payments were deferred to the contractual maturity dates of the loans. Loans modified during the period totaled $3.7 million and included a $3.5 million non-owner occupied commercial real estate loan and a $0.2 million commercial and industrial loan. In addition, during the six month period ended June 30, 2026, the Corporation also modified one $0.1 million commercial and industrial loan, which was given a three-year term extension.
As of June 30, 2026, there was one previously modified home equity loan with a balance of $0.1 million that was greater than 90 days past due. All other active modified loans were performing in accordance with their modified terms as of June 30, 2026. During the six month period ended June 30, 2026, the Corporation recognized a $0.7 million recovery on a commercial and industrial loan that had previously been modified through a term extension and subsequently charged off.
Allowance for Credit Losses
The allowance for credit losses is an amount that management believes will be adequate to absorb the estimated lifetime credit losses inherent in assets exhibiting credit risk as of each measurement date. The allowance is in conformity with the requirements established by ASC 326 - Financial Instruments - Credit Losses and covers a range of assets including loans, unfunded commitments, and debt securities; incorporating both quantitative and qualitative components. As of June 30, 2026 and December 31, 2025, the Corporation did not allocate any allowance for credit losses to its portfolios of available for sale or
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held to maturity debt securities, due to the explicit or implicit U.S. Government guarantee as to principal and interest payments on the majority of the portfolio, and the immateriality of credit risk on remaining unguaranteed securities.
Loans are analyzed for credit loss on either an individual basis or a pooled (collective) basis, determined by risk characteristics. The Corporation begins analyzing loans on an individual basis when management determines a loan no longer exhibits risk characteristics consistent with the risk characteristics in its designated pool under the Corporation's CECL methodology. The amortized cost basis of individually analyzed loans as of June 30, 2026 totaled $5.9 million, compared to $4.2 million as of December 31, 2025. Remaining loans are analyzed on a pooled basis and are segmented based on groups of assigned FFIEC Call Report codes. Management seeks to disaggregate its loan portfolio in a granular enough manner to capture the risk profile of each loan, yet broad enough to accurately allow for the application of certain pool-level assumptions.
Certain of the Corporation's individually analyzed loans are secured and measured for credit loss based on collateral evaluations, using the collateral-dependent practical expedient prescribed by ASC 326. It is the Corporation's policy to obtain updated appraisals, by independent third parties, on loans secured by real estate at the time a loan is determined to require individual analysis. A measurement is performed based upon the most recent appraisal on file to determine the amount of any specific allocation to the allowance for credit losses or charge-off. In determining the amount of any specific allocation or charge-off, the Corporation makes adjustments to reflect the estimated costs to sell the property. Upon receipt and review of updated appraisals, an additional measurement is performed to determine if any adjustments are necessary to reflect proper provisioning or charge-offs. Individually analyzed loans are reviewed on a quarterly basis to determine if any changes in credit quality or market conditions would require additional allocations to the allowance for credit losses or recognition of additional charge-offs. Non-real estate collateral may be valued using (i) an appraisal, (ii) net book value of the collateral per the borrower’s financial statements, or (iii) accounts receivable aging reports, that may be adjusted based on management’s knowledge of the client and client’s business. If market conditions warrant, future appraisals are obtained for both real estate and non-real estate collateral. Certain individually analyzed loans determined not to be collateral-dependent are analyzed using a cash flow analysis.
For pooled loans, quantitative analysis is based on an estimated discounted cash flow analysis (DCF) performed at the loan level. The modeled reserve requirement equals the difference between the book balance of the loan as of the measurement date and the present value of assumed cash flows for the life of the loan. The underlying assumptions of the DCF are based on the relationship between a projected value of an economic indicator, and the implied historical loss experience amongst a group of curated peers. The Corporation utilizes a regression analysis to determine suitable loss drivers for each pool of loans. Based on these results, a probability of default (PD) and loss given default (LGD) is assigned to each potential value of a chosen economic indicator for each pool of loans, and is then applied to the portfolio to derive the statistical loss implications thereof. An estimated loss for each period of the DCF, as well as implied recovery of past losses, is incorporated into the DCF. The Corporation relies on FOMC data, including its projections for U.S. civilian unemployment and U.S. GDP growth, as the source for its readily available and reasonable economic forecast. The forecasted values are applied over a rolling four quarter period, and revert to the historic mean of the economic variable over an eight quarter period, on a straight-line basis.
Qualitative adjustments represent management's expectation of certain risks not being fully captured in the quantitative portion of the model. Qualitative adjustment rates are applied to each loan within a pool on a consistent basis. Factors considered as part of the qualitative adjustment analysis primarily include economic considerations not captured by the model, changes in conditions within the Bank such as lending standards, personnel, and concentrations of credit, among others, as well as external factors such as changes in the regulatory and competitive landscape.
The allowance for credit losses is increased through a provision for credit losses, which is charged to operations. Separate provision accounts have been established for on-balance sheet credit exposures and off-balance sheet credit exposures, and are combined in the line item provision for credit losses on the Consolidated Statements of Income. Loans are charged against the allowance for credit losses when management believes the collectability of all or a portion of the principal is unlikely. Management's evaluation of the adequacy of the allowance for credit losses is performed on a periodic basis and takes into consideration such factors as the outcomes of the quantitative analysis, a review of individually analyzed loans, and determinations concerning qualitative adjustments. While management uses available information to recognize estimated credit losses, future additions to the allowance may be necessary based on changing economic conditions or portfolio composition. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Corporation's allowance for credit losses. Such agencies may require the Corporation to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.
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The allowance for credit losses on loans was $25.2 million as of June 30, 2026, and $24.2 million as of December 31, 2025 and was 275.46% of non-performing loans as of June 30, 2026, compared to 306.13% as of December 31, 2025. The decrease in the ratio of the allowance for credit losses to non-performing loans was mainly due to the addition of a $2.2 million commercial and industrial loan to non-performing loans during the first six months of 2026 that, following analysis by management, did not require a specific allocation in the allowance for credit losses. Also contributing to the decrease was the transfer of $2.0 million in commercial real estate loan balances to other real estate owned during the first six months of 2026, which had previously carried specific allocations in the allowance for credit losses. The ratio of allowance for credit losses on loans to total loans was 1.07% as of both June 30, 2026 and December 31, 2025. Net charge-offs for the six months ended June 30, 2026 were $0.1 million and net charge-offs for the six months ended June 30, 2025 were $1.3 million.
The increase in the allowance for credit losses was largely due to $1.3 million in specific allocations made on individually analyzed loans during the first six months of 2026, including $1.2 million on one non-owner occupied commercial real estate loan. Also contributing to the increase was provisioning related to commercial real estate loan growth and additional qualitative adjustments made during the first six months of 2026. Partially offsetting the overall increase were charge-offs associated with specific allocations on loans transferred to other real estate owned during the first six months of 2026, as well as the impact of the annual review and update to loss drivers of the Corporation's CECL model, which are implemented in the first quarter each year and resulted in a net decrease in modeled loss rates in the current year. FOMC forecasts for both U.S. civilian unemployment and year-over-year U.S. GDP growth were stable as of June 30, 2026, compared to December 31, 2025. The FOMC's forecast for 2026 year-end U.S. civilian unemployment was 4.3% as of June 30, 2026, a decrease of ten basis points from December 31, 2025, while the forecast for U.S. GDP growth deteriorated ten basis points, from 2.3% as of December 31, 2025 to 2.2% as of June 30, 2026. Changes in FOMC forecasts did not have a significant effect on the Corporation's CECL model as of June 30, 2026 compared to December 31, 2025.
The table below summarizes the Corporation’s allowance for credit losses and non-performing loans outstanding by loan category as of June 30, 2026 and December 31, 2025 (dollars in thousands):
| ALLOWANCE BY LOAN CATEGORY | |||||||||||||||||||||||||||||
Balance as of June 30, 2026 | Allowance for credit losses | Allowance to loans(1) | Non-performing loans | Non-performing loans to loans(1) | Allowance to non-performing loans | ||||||||||||||||||||||||
| Commercial and industrial | $ | 4,213 | 1.28 | % | $ | 3,159 | 0.96 | % | 133.36 | % | |||||||||||||||||||
| Commercial real estate | 16,198 | 1.07 | % | 2,564 | 0.17 | % | 631.75 | % | |||||||||||||||||||||
| Residential mortgages | 2,401 | 0.84 | % | 1,342 | 0.47 | % | 178.91 | % | |||||||||||||||||||||
| Consumer loans | 2,420 | 1.03 | % | 2,095 | 0.89 | % | 115.51 | % | |||||||||||||||||||||
| Total | $ | 25,232 | 1.07 | % | $ | 9,160 | 0.39 | % | 275.46 | % | |||||||||||||||||||
Balance as of December 31, 2025 | Allowance for credit losses | Allowance to loans(1) | Non-performing loans | Non-performing loans to loans(1) | Allowance to non-performing loans | ||||||||||||||||||||||||
| Commercial and industrial | $ | 4,524 | 1.40 | % | $ | 779 | 0.24 | % | 580.74 | % | |||||||||||||||||||
| Commercial real estate | 14,363 | 1.02 | % | 3,167 | 0.22 | % | 453.52 | % | |||||||||||||||||||||
| Residential mortgages | 2,788 | 0.97 | % | 1,753 | 0.61 | % | 159.04 | % | |||||||||||||||||||||
| Consumer loans | 2,534 | 1.02 | % | 2,209 | 0.89 | % | 114.71 | % | |||||||||||||||||||||
| Total | $ | 24,209 | 1.07 | % | $ | 7,908 | 0.35 | % | 306.13 | % | |||||||||||||||||||
(1) Ratio is a percentage of loan category. | |||||||||||||||||||||||||||||
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The table below summarizes the Corporation’s consolidated credit ratios as of June 30, 2026 and December 31, 2025:
| Consolidated Ratios | June 30, 2026 | December 31, 2025 | ||||||||||||
| Non-performing loans to total loans | 0.39 | % | 0.35 | % | ||||||||||
| Allowance for credit losses to total loans | 1.07 | % | 1.07 | % | ||||||||||
| Allowance for credit losses, inclusive of unfunded commitments, to total loans | 1.09 | % | 1.09 | % | ||||||||||
| Allowance for credit losses to non-performing loans | 275.46 | % | 306.13 | % | ||||||||||
The table below summarizes the Corporation’s ratio of net charge-offs and recoveries to average loans outstanding by loan category for the six months ended June 30, 2026 and 2025:
| Net (Recovery) Charge-Off Ratio | June 30, 2026 | June 30, 2025 | ||||||||||||
| Commercial and industrial | (0.42) | % | 0.53 | % | ||||||||||
| Commercial real estate | 0.04 | % | — | % | ||||||||||
| Residential mortgages | (0.02) | % | (0.01) | % | ||||||||||
| Consumer loans | 0.39 | % | 0.37 | % | ||||||||||
| Total | 0.01 | % | 0.12 | % | ||||||||||
The table below summarizes the Corporation’s credit loss experience for the six months ended June 30, 2026 and 2025 (in thousands):
| SUMMARY OF CREDIT LOSS EXPERIENCE | |||||||||||
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Balance of allowance for credit losses at beginning of period | $ | 24,209 | $ | 21,388 | |||||||
Charge-offs: | |||||||||||
| Commercial and industrial | 1 | 777 | |||||||||
| Commercial real estate | 310 | — | |||||||||
| Residential mortgages | 8 | — | |||||||||
| Consumer loans | 784 | 742 | |||||||||
| Total charge-offs | $ | 1,103 | $ | 1,519 | |||||||
Recoveries: | |||||||||||
| Commercial and industrial | $ | 682 | $ | 9 | |||||||
| Commercial real estate | 1 | 2 | |||||||||
| Residential mortgages | 32 | 10 | |||||||||
| Consumer loans | 322 | 244 | |||||||||
| Total recoveries | $ | 1,037 | $ | 265 | |||||||
| Net charge-offs | 66 | 1,254 | |||||||||
Provision for credit losses on-balance sheet exposure (1) | 1,089 | 2,531 | |||||||||
| Balance of allowance for credit losses at end of period | $ | 25,232 | $ | 22,665 | |||||||
(1) Additional provision related to off-balance sheet exposure was $73 thousand for the six months ended June 30, 2026 and a credit of $294 thousand for the six months ended June 30, 2025.
Net charge-offs for the six months ended June 30, 2026 were largely due to normal charge-off activity in the Corporation's indirect auto portfolio, as well as $0.3 million in charge-offs relating to the transfer of four properties associated with multiple non-owner occupied commercial real estate loans to a single borrower to other real estate owned, partially offset by a $0.7 million recovery on a commercial and industrial loan which had been charged off during the six months ended June 30, 2025.
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Net charge-offs for the six months ended June 30, 2025 were mostly due to a $0.7 million charge-off of a commercial and industrial loan, all of which was subsequently recovered in the first six months of 2026, and normal charge-off activity in the Corporation's indirect auto portfolio.
Other Real Estate Owned and Repossessed Vehicles
Other real estate owned totaled $1.9 million as of June 30, 2026. There was no other real estate owned as of December 31, 2025. There were five properties added to other real estate owned in the first six months of 2026. Four of the properties added during the first six months of 2026 were associated with one commercial borrower group, and included one multifamily property and three 1-4 family residential rental properties, with a transfer date fair value totaling $1.7 million. The transfer date fair value was inclusive of $0.3 million in charge-offs at the time of transfer. Additionally, there was one residential mortgage transferred to other real estate owned in the first six months of 2026, totaling $0.2 million. There were no properties sold from other real estate owned in the first six months of 2026. The Corporation had $0.2 million in repossessed vehicles as of June 30, 2026 and $0.3 million as of December 31, 2025, which is included in other assets on the Consolidated Balance Sheets, and is a component of non-performing assets.
Deposits
The table below summarizes the Corporation’s deposit composition by segment as of June 30, 2026 and December 31, 2025, and the dollar and percent change from December 31, 2025 to June 30, 2026 (in thousands):
| DEPOSITS | |||||||||||||||||||||||||||||
June 30, 2026 v. December 31, 2025 | |||||||||||||||||||||||||||||
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||
| Amount | % of Total | Amount | % of Total | $ Change | % of Total Change | ||||||||||||||||||||||||
| Non interest-bearing demand deposits | $ | 681,912 | 28.9 | % | $ | 624,532 | 27.5 | % | $ | 57,380 | 1.4 | % | |||||||||||||||||
| Interest-bearing demand deposits | 312,521 | 13.2 | % | 326,645 | 14.4 | % | (14,124) | (1.2) | % | ||||||||||||||||||||
| Money market deposits | 680,752 | 28.8 | % | 601,391 | 26.5 | % | 79,361 | 2.3 | % | ||||||||||||||||||||
| Savings deposits | 256,375 | 10.9 | % | 254,490 | 11.2 | % | 1,885 | (0.3) | % | ||||||||||||||||||||
| Certificates of deposit $250,000 or less | 305,913 | 12.9 | % | 339,320 | 14.9 | % | (33,407) | (2.0) | % | ||||||||||||||||||||
| Certificates of deposit greater than $250,000 | 101,788 | 4.3 | % | 98,714 | 4.4 | % | 3,074 | (0.1) | % | ||||||||||||||||||||
| Other time deposits | 24,673 | 1.0 | % | 25,582 | 1.1 | % | (909) | (0.1) | % | ||||||||||||||||||||
| Total | $ | 2,363,934 | 100.0 | % | $ | 2,270,674 | 100.0 | % | $ | 93,260 | |||||||||||||||||||
Deposits totaled $2.364 billion as of June 30, 2026 compared to $2.271 billion as of December 31, 2025, an increase of $93.3 million, or 4.1%. The increase was attributable to an increase of $93.3 million in total customer deposits, and there were no brokered deposits as of either June 30, 2026 or December 31, 2025. The increase in total customer deposits was attributable to increases of $79.4 million in insured money market deposits, $57.4 million in non interest-bearing demand deposits, and $1.9 million in savings deposits. These increases were partially offset by decreases of $31.2 million in customer time deposits and $14.1 million in interest-bearing demand deposits.
The increases in money market deposits was mainly attributable to an increase in municipal insured cash sweep deposits, as well as an increase in deposits from commercial clients, partially due to the introduction of a new escrow product. The increase in non-interest bearing demand deposits was due to net inflows from individuals and commercial clients compared to prior year-end, partially due to a targeted checking account campaign during 2026. Non interest-bearing deposits comprised 28.8% and 27.5% of total deposits as of June 30, 2026 and December 31, 2025, respectively. Savings deposits increased mostly due to net inflows from individuals. The decrease in customer time deposits was largely due to maturities of previous higher-cost CD campaigns which were not renewed. The decrease in interest-bearing demand deposits reflected outflows for both commercial and consumer customers.
The growth in customer deposits was due primarily to increases of $41.3 million in ICS deposits, $34.0 million in commercial deposits, $26.5 million in consumer deposits, and $12.8 million in public deposits, offset by a decrease of $21.3 million in CDARS deposits, compared to December 31, 2025. As of June 30, 2026, demand deposit and money market deposits comprised 70.9% of total deposits compared to 68.4% as of December 31, 2025. The aggregate amount of the Corporation's outstanding uninsured deposits was 31.5% and 30.1% of total deposits, as of June 30, 2026 and December 31, 2025, respectively.
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The table below presents the Corporation's deposits balances by Bank division (in thousands):
| DEPOSITS BY DIVISION | |||||||||||||||||||||||||||||
| June 30, 2026 | December 31, 2025 | December 31, 2024 | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||
| Chemung Canal Trust Company | $ | 1,887,660 | $ | 1,857,387 | $ | 1,892,228 | $ | 1,899,903 | $ | 1,815,566 | |||||||||||||||||||
| Capital Bank Division | 378,351 | 363,745 | 399,411 | 380,962 | 435,207 | ||||||||||||||||||||||||
| Canal Bank Division | 97,923 | 49,542 | 13,085 | 5,786 | 3,002 | ||||||||||||||||||||||||
| Brokered Deposits | — | — | 92,159 | 142,776 | 73,452 | ||||||||||||||||||||||||
| Total | $ | 2,363,934 | $ | 2,270,674 | $ | 2,396,883 | $ | 2,429,427 | $ | 2,327,227 | |||||||||||||||||||
In addition to consumer, commercial, and public deposits, other sources of funds include reciprocal deposits. The Regulatory Relief Act changed the definition of brokered deposits, such that subject to certain conditions, reciprocal deposits of another depository institution obtained through a deposit placement network for purposes of obtaining maximum deposit insurance would not be considered brokered deposits subject to the FDIC’s brokered-deposit regulations. This applies to the Corporation's participation in the CDARS and ICS programs. The CDARS and ICS programs involve a network of financial institutions that exchange funds among members in order to ensure FDIC insurance coverage on customer deposits above the single institution limit. The CDARS and ICS reciprocal program uses a sophisticated matching system, where funds are exchanged on a dollar-for-dollar basis, so that the equivalent of an original deposit comes back to the originating institution. Additionally, the CDARS and ICS One-Way Buy programs allow the Corporation to obtain wholesale brokered deposits through the system. Deposits obtained through the CDARS and ICS reciprocal programs were $346.5 million and $326.5 million as of June 30, 2026, and December 31, 2025, respectively.
The Corporation’s deposit strategy is to fund the Bank with stable, low-cost deposits, primarily checking account deposits and other low interest-bearing deposit accounts. A checking account is the driver of a banking relationship and consumers consider the bank where they have their checking account as their primary bank. These customers will typically turn to their primary bank first when in need of other financial services. Strategies that have been developed and implemented to generate these deposits include: (i) acquiring deposits by entering new markets through branch acquisitions or de novo branching, (ii) an annual checking account marketing campaign, (iii) training branch employees to identify and meet client financial needs with Bank products and services, (iv) linking business and consumer loans to the customer's primary checking account at the Bank, (v) aggressively promoting direct deposit of client’s payroll checks or benefit checks and (vi) constantly monitoring the Corporation’s pricing strategies to ensure competitive products and services. The Corporation also considers brokered deposits to be an element of its deposit strategy and may use brokered deposits as a secondary source of funding to support growth.
Borrowings
Borrowings increased $2.4 million to $136.9 million as of June 30, 2026 from December 31, 2025. The Corporation's borrowed funds as of June 30, 2026 were comprised of a $42.6 million FHLBNY overnight advance, $47.0 million in FHLBNY term advances, $44.1 million in subordinated notes, and $3.2 million in long-term finance lease obligations. The Corporation’s borrowed funds as of December 31, 2025 were comprised of a $87.1 million FHLBNY overnight advance, $44.0 million in subordinated notes, and $3.5 million in long-term finance lease obligations. There were no outstanding FHLBNY or FRBNY term advances as of December 31, 2025.
On June 10, 2025, the Corporation issued $45.0 million of 7.75% fixed-to-floating rate subordinated notes due June 15, 2035 in a private offering (the "Notes"). The Notes bear interest at a fixed rate of 7.75% per year, payable semi-annually, for the first five years. From June 15, 2030 to the June 15, 2035 maturity date, the interest rate will adjust to a floating rate equal to a benchmark rate which is expected to be the then-current three-month term SOFR plus 415 basis points, payable quarterly.
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Shareholders’ Equity
Total shareholders' equity increased $15.7 million from $254.7 million as of December 31, 2025 to $270.4 million as of June 30, 2026. The increase can primarily be attributed to an increase of $14.7 million in retained earnings, partially offset by a decrease of $0.7 million in treasury stock. The increase in retained earnings was mainly due to net income of $18.0 million for the six months ended June 30, 2026, partially offset by dividends declared of $3.3 million during the six months ended June 30, 2026. Treasury stock decreased primarily due to the issuance of shares related to the Corporation's employee benefit plans and grants issued under the Corporation's stock compensation plan.. The total shareholders’ equity to total assets ratio was 9.59% as of June 30, 2026 compared to 9.40% as of December 31, 2025. The tangible equity to tangible assets ratio was 8.88% as of June 30, 2026 compared to 8.66% as of December 31, 2025. Book value per share increased to $55.88 as of June 30, 2026 from $52.97 as of December 31, 2025.
The Bank is subject to the capital adequacy guidelines of the Federal Reserve, which establishes a framework for the classification of financial institutions into five categories: well-capitalized, adequately capitalized, under-capitalized, significantly under-capitalized and critically under-capitalized. As of June 30, 2026, the Bank’s capital ratios were in excess of those required to be considered well-capitalized under regulatory capital guidelines.
When shares of the Corporation become available in the market, the Corporation may purchase them after careful consideration of the Corporation’s liquidity and capital positions. Purchases may be made from time to time on the open market or in privately negotiated transactions at the discretion of management. On January 8, 2021, the Corporation's Board of Directors approved a stock repurchase program. Under the repurchase program, the Corporation may repurchase up to 250,000 shares of its common stock, or approximately 5% of its then outstanding shares. The repurchase program permits shares to be repurchased in open market or privately negotiated transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. No shares were repurchased under the publicly announced repurchase program in the second quarter of 2026. As of June 30, 2026, the Corporation repurchased a total of 49,184 shares of common stock at a total cost of $2.0 million under the repurchase program, at the weighted average cost of $40.42 per share. Remaining buyback authority under the share repurchase program was 200,816 shares as of June 30, 2026.
Liquidity
Liquidity management involves the ability to meet the cash flow requirements of deposit clients and borrowers, as well as the operating, investing, and financing activities of the Corporation. The Corporation uses a variety of resources to meet its liquidity needs. These include short-term investments, cash flow from lending and investing activities, core-deposit growth and non-core funding sources, such as time deposits of $250,000 or more, brokered deposits, FHLBNY and FRB advances, and securities sold under agreements to repurchase.
The Corporation has a detailed Funds Management Policy that includes sections on liquidity measurement and management, and a Liquidity Contingency Plan that provides for the prompt and comprehensive response to unexpected demands for liquidity. This policy and plan are established and revised as needed by the management and Board ALCO committees. The ALCO is responsible for measuring liquidity, establishing liquidity targets and implementing strategies to achieve selected targets. The ALCO is responsible for coordinating activities across the Corporation to ensure that prudent levels of contingent or standby liquidity are available at all times. Based upon this ongoing assessment of liquidity considerations, management believes the Corporation’s sources of funding meet anticipated funding needs.
As of June 30, 2026, the Corporation's cash and cash equivalents balance was $73.1 million, increasing $23.0 million compared to December 31, 2025, largely due to an increase in deposits. The Corporation maintains an investment portfolio of securities available for sale, comprised of government sponsored entity mortgage-backed securities, collateralized mortgage obligations, municipal bonds, and corporate bonds. Although this portfolio generates interest income for the Corporation, it also serves as an available source of liquidity and capital if the need should arise. As of June 30, 2026, the Corporation's investment in securities available for sale was $269.0 million, $67.0 million of which was not pledged as collateral.
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The Corporation is a member of the FHLBNY, which allows it to access borrowings to enhance management's ability to satisfy future liquidity needs. As of June 30, 2026, the Bank had pledged a total of $256.8 million of residential mortgage loans and home equity loans under a blanket lien arrangement. Based on this available collateral, the Corporation was eligible to borrow up to a total of $180.9 million, and utilized $89.6 million as of June 30, 2026. As of December 31, 2025, the Bank had pledged a total of $255.1 million of residential mortgage loans and home equity loans under a blanket lien arrangement. Based upon this available collateral, the Corporation was eligible to borrow up to a total of $178.5 million, and utilized $87.1 million as of December 31, 2025. Borrowings may be used on a short-term basis for liquidity purposes or on a long-term basis to fund asset growth.
Uninsured deposits totaled $744.4 million as of June 30, 2026, and $682.5 million as of December 31, 2025, which included $174.2 million and $161.4 million of municipal deposits that were collateralized by pledged assets when appropriate, respectively. The aggregate amount of the Corporation's outstanding uninsured deposits was 31.5% and 30.1% of total deposits, as of June 30, 2026 and December 31, 2025, respectively. The Corporation considers the level of uninsured deposits to be an important factor when considering liquidity management and strategic decisions, due to their fluidity.
The Corporation also considers brokered deposits to be an element of its deposit strategy and anticipates that it may continue utilizing brokered deposits as a secondary source of funding to support growth. Brokered deposits may be used on a short-term basis for liquidity purposes or on a long-term basis to fund asset growth. The Corporation had no brokered deposits as of June 30, 2026 and December 31, 2025. The Corporation also had a total of $65.0 million of unsecured lines of credit with four different financial institutions, all of which were available as of June 30, 2026 and December 31, 2025. Also available to the Corporation is the Discount Window Lending program provided by the FRB, at which $7.5 million in borrowing capacity was available as of June 30, 2026.
Consolidated Cash Flows Analysis
The table below summarizes the Corporation's cash flows for the periods indicated (in thousands):
| CONSOLIDATED SUMMARY OF CASH FLOWS | ||||||||||||||
| (in thousands) | Six Months Ended June 30, | |||||||||||||
| 2026 | 2025 | |||||||||||||
| Net cash provided by operating activities | $ | 18,273 | $ | 16,926 | ||||||||||
| Net cash (used in) provided by investing activities | (87,614) | 197,068 | ||||||||||||
| Net cash provided by financing activities | 92,357 | 59,022 | ||||||||||||
| Net increase in cash and cash equivalents | $ | 23,016 | $ | 273,016 | ||||||||||
Operating activities
The Corporation believes cash flows from operations, available cash balances, and its ability to generate cash through short-term and long-term borrowings are sufficient to fund the Corporation’s operating liquidity needs. Cash provided by operating activities in the first six months of 2026 and 2025 primarily resulted from net income after non-cash operating adjustments.
Investing activities
Cash used in investing activities during the first six months of 2026 was primarily due to the increase in loans, partially offset by maturities and principal paydowns on securities available for sale. Cash provided by investing activities during the first six months of 2025 primarily resulted from the sale of available for sale securities during the second quarter of 2025, partially offset by a net increase in loans.
Financing activities
Cash provided by financing activities during the first six months of 2026 was primarily due to increases in total deposits. Cash provided by financing activities during the first six months of 2025 was primarily due to the issuance of $45.0 million in subordinated debt notes and a net increase in deposits, offset by a decrease in FHLBNY advances.
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Capital Resources
The Bank is subject to regulatory capital requirements administered by federal banking agencies. As a result of the Regulatory Relief Act, the FRB amended its small bank holding company and savings and loan holding company policy statement to provide that holding companies with consolidated assets of less than $3.0 billion that are (i) not engaged in significant non-banking activities, (ii) do not conduct significant off-balance sheet activities, and (iii) do not have a material amount of SEC-registered debt or equity securities, other than trust preferred securities, that contribute to an organization’s complexity, are not subject to regulatory capital requirements. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Under Basel III rules, the Bank must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is 2.50%. Organizations that fail to maintain the minimum capital conservation buffer could face restrictions on capital distributions or discretionary bonus payments to executive officers. The net unrealized gain or loss on available for sale securities and changes in the funded status of the defined benefit pension plan and other benefit plans are not included in calculating regulatory capital.
Pursuant to the Regulatory Relief Act, the FRB finalized a rule that established a community bank leverage ratio (Tier 1 capital to average consolidated assets) at 9.00% for institutions under $10.0 billion in assets that such institutions may elect to utilize in lieu of the general applicable risk-based capital requirements under Basel III. Such institutions that meet the community bank leverage ratio and certain other qualifying criteria will automatically be deemed to be well-capitalized. The rule took effect on January 1, 2020. Effective July 1, 2026, the FRB revised the minimum capital for the community bank leverage ratio to 8.00%. The Bank has not elected to use the community bank leverage ratio.
Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. Management believes that, as of June 30, 2026 and December 31, 2025, the Bank met all capital adequacy requirements to which it was subject. As of December 31, 2018, the Corporation is no longer subject to FRB consolidated capital requirements applicable to bank holding companies, which are similar to those applicable to the Bank, until it reaches $3.0 billion in assets.
As of June 30, 2026, the most recent notification from the Federal Reserve Bank of New York categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based, common equity Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table below. There have been no conditions or events since that notification that management believes have changed the Bank's capital category.
The regulatory capital ratios as of June 30, 2026 and December 31, 2025 were calculated under Basel III rules. There is no threshold for well-capitalized status for bank holding companies.
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The Corporation and the Bank’s capital ratios as of June 30, 2026 were as follows (in thousands, except ratio data):
| Actual | Minimum Capital Adequacy | Minimum Capital Adequacy with Capital Buffer | To Be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||||||||||||||||||||||||||||
| As of June 30, 2026 | Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||||||||||||||||||||
| Total Capital (to Risk Weighted Assets): | |||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | $ | 354,452 | 15.38 | % | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||
| Bank | $ | 344,463 | 14.96 | % | $ | 184,185 | 8.00 | % | $ | 241,743 | 10.50 | % | $ | 230,231 | 10.00 | % | |||||||||||||||||||||||||||||||
| Tier 1 Capital (to Risk Weighted Assets): | |||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | $ | 284,483 | 12.34 | % | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||
| Bank | $ | 318,573 | 13.84 | % | $ | 138,139 | 6.00 | % | $ | 195,696 | 8.50 | % | $ | 184,185 | 8.00 | % | |||||||||||||||||||||||||||||||
| Common Equity Tier 1 Capital (to Risk Weighted Assets): | |||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | $ | 284,483 | 12.34 | % | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||
| Bank | $ | 318,573 | 13.84 | % | $ | 103,604 | 4.50 | % | $ | 161,162 | 7.00 | % | $ | 149,650 | 6.50 | % | |||||||||||||||||||||||||||||||
| Tier 1 Capital (to Average Assets): | |||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | $ | 284,483 | 10.16 | % | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||
| Bank | $ | 318,573 | 11.38 | % | $ | 111,965 | 4.00 | % | N/A | N/A | $ | 139,956 | 5.00 | % | |||||||||||||||||||||||||||||||||
The Corporation and the Bank’s capital ratios as of December 31, 2025 were as follows (in thousands, except ratio data):
| Actual | Minimum Capital Adequacy | Minimum Capital Adequacy with Capital Buffer | To Be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2025 | Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||||||||||||||||||||
| Total Capital (to Risk Weighted Assets): | |||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | $ | 337,760 | 15.30 | % | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||
| Bank | $ | 326,594 | 14.80 | % | $ | 176,571 | 8.00 | % | $ | 231,749 | 10.50 | % | $ | 220,714 | 10.00 | % | |||||||||||||||||||||||||||||||
| Tier 1 Capital (to Risk Weighted Assets): | |||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | $ | 268,938 | 12.18 | % | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||
| Bank | $ | 301,800 | 13.67 | % | $ | 132,428 | 6.00 | % | $ | 187,607 | 8.50 | % | $ | 176,571 | 8.00 | % | |||||||||||||||||||||||||||||||
| Common Equity Tier 1 Capital (to Risk Weighted Assets): | |||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | $ | 268,938 | 12.18 | % | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||
| Bank | $ | 301,800 | 13.67 | % | $ | 99,321 | 4.50 | % | $ | 154,500 | 7.00 | % | $ | 143,464 | 6.50 | % | |||||||||||||||||||||||||||||||
| Tier 1 Capital (to Average Assets): | |||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | $ | 268,938 | 9.89 | % | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||
| Bank | $ | 301,800 | 11.10 | % | $ | 108,744 | 4.00 | % | N/A | N/A | $ | 135,930 | 5.00 | % | |||||||||||||||||||||||||||||||||
Dividend Restrictions
The Corporation’s principal source of funds for dividend payments is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to current year’s net income, combined with the retained net income of the preceding two years, subject to the capital requirements in the table above. As of June 30, 2026, the Bank could, without prior approval, declare dividends of approximately $48.8 million.
80
Adoption of New Accounting Standards
Please refer to Note 1, Summary of Significant Accounting Policies - Accounting Standards Pending Adoption, for a discussion of new accounting standards.
Explanation and Reconciliation of the Corporation’s Use of Non-GAAP Measures
The Corporation prepares its Consolidated Financial Statements in accordance with GAAP; these financial statements appear on pages 6–12. That presentation provides the reader with an understanding of the Corporation’s results that can be tracked consistently from year-to-year and enables a comparison of the Corporation’s performance with other companies’ GAAP financial statements.
In addition to analyzing the Corporation’s results on a reported basis, management uses certain non-GAAP financial measures, because it believes these non-GAAP financial measures provide information to investors about the underlying operational performance and trends of the Corporation and, therefore, facilitate a comparison of the Corporation with the performance of other companies. Non-GAAP financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used by other companies.
The SEC has adopted Regulation G, which applies to all public disclosures, including earnings releases, made by registered companies that contain “non-GAAP financial measures.” Under Regulation G, companies making public disclosures containing non-GAAP financial measures must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure and a statement of the Corporation’s reasons for utilizing the non-GAAP financial measure as part of its financial disclosures. The SEC has exempted from the definition of “non-GAAP financial measures” certain commonly used financial measures that are not based on GAAP. When these exempted measures are included in public disclosures, supplemental information is not required. The following measures used in this Report, which are commonly utilized by financial institutions, have not been specifically exempted by the SEC and may constitute "non-GAAP financial measures" within the meaning of the SEC's rules, although we are unable to state with certainty that the SEC would so regard them.
Fully Taxable Equivalent Net Interest Income and Net Interest Margin
Net interest income is commonly presented on a tax-equivalent basis. That is, to the extent that some component of the institution's net interest income, which is presented on a before-tax basis, is exempt from taxation (e.g., is received by the institution as a result of its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is added to the actual before-tax net interest income total. This adjustment is considered helpful in comparing one financial institution's net interest income to that of other institutions or in analyzing any institution’s net interest income trend line over time, to correct any analytical distortion that might otherwise arise from the fact that financial institutions vary widely in the proportions of their portfolios that are invested in tax-exempt obligations, and that even a single institution may significantly alter over time the proportion of its own portfolio that is invested in tax-exempt obligations. Moreover, net interest income is itself a component of a second financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average interest-earning assets. For purposes of this measure as well, fully taxable equivalent net interest income is generally used by financial institutions, as opposed to actual net interest income, again to provide a better basis of comparison from institution to institution and to better demonstrate a single institution’s performance over time. The Corporation follows these practices.
| As of or for the | |||||||||||||||||||||||||||||||||||||||||
| (in thousands, except ratio data) | As of or for the Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||||
| Net Interest Margin - Fully Taxable Equivalent | June 30, | March 31, | Dec. 31, | Sept. 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2026 | 2025 | 2025 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 24,670 | $ | 23,584 | $ | 23,844 | $ | 22,688 | $ | 20,808 | $ | 48,254 | $ | 40,625 | |||||||||||||||||||||||||||
| Fully taxable equivalent adjustment | 63 | 62 | 70 | 67 | 76 | 125 | 156 | ||||||||||||||||||||||||||||||||||
| Fully taxable equivalent net interest income (non-GAAP) | $ | 24,733 | $ | 23,646 | $ | 23,914 | $ | 22,755 | $ | 20,884 | $ | 48,379 | $ | 40,781 | |||||||||||||||||||||||||||
| Average interest-earning assets (GAAP) | $ | 2,706,598 | $ | 2,662,192 | $ | 2,625,177 | $ | 2,617,680 | $ | 2,749,856 | $ | 2,684,518 | $ | 2,739,813 | |||||||||||||||||||||||||||
| Net interest margin - fully taxable equivalent (non-GAAP) | 3.67 | % | 3.60 | % | 3.61 | % | 3.45 | % | 3.05 | % | 3.63 | % | 3.00 | % | |||||||||||||||||||||||||||
81
Efficiency Ratio
The unadjusted efficiency ratio is calculated as non-interest expense divided by total revenue (net interest income and non-interest income). The adjusted efficiency ratio is a non-GAAP financial measure which represents the Corporation’s ability to turn resources into revenue and is calculated as non-interest expense divided by total revenue (fully taxable equivalent net interest income and non-interest income), adjusted for one-time occurrences and amortization of intangible assets. This measure is meaningful to the Corporation, as well as to investors and analysts, in assessing the Corporation’s productivity measured by the amount of revenue generated for each dollar spent.
| As of or for the | |||||||||||||||||||||||||||||||||||||||||
| As of or for the Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||
| (in thousands, except ratio data) | June 30, | March 31, | Dec. 31, | Sept. 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||||||||
| Efficiency Ratio | 2026 | 2026 | 2025 | 2025 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 24,670 | $ | 23,584 | $ | 23,844 | $ | 22,688 | $ | 20,808 | $ | 48,254 | $ | 40,625 | |||||||||||||||||||||||||||
| Fully taxable equivalent adjustment | 63 | 62 | 70 | 67 | 76 | 125 | 156 | ||||||||||||||||||||||||||||||||||
| Fully taxable equivalent net interest income (non-GAAP) | $ | 24,733 | $ | 23,646 | $ | 23,914 | $ | 22,755 | $ | 20,884 | $ | 48,379 | $ | 40,781 | |||||||||||||||||||||||||||
| Non-interest income (GAAP) | $ | 6,503 | $ | 6,320 | $ | 6,673 | $ | 6,088 | $ | (10,705) | $ | 12,823 | $ | (4,816) | |||||||||||||||||||||||||||
| Less: net (gains) losses on securities transactions | — | — | — | — | 17,498 | — | 17,498 | ||||||||||||||||||||||||||||||||||
| Less: (gain) loss on sale of branch property | — | — | — | — | (629) | — | (629) | ||||||||||||||||||||||||||||||||||
| Adjusted non-interest income (non-GAAP) | $ | 6,503 | $ | 6,320 | $ | 6,673 | $ | 6,088 | $ | 6,164 | $ | 12,823 | $ | 12,053 | |||||||||||||||||||||||||||
| Non-interest expense (GAAP) | $ | 19,321 | $ | 17,462 | $ | 18,388 | $ | 17,645 | $ | 17,769 | $ | 36,783 | $ | 34,696 | |||||||||||||||||||||||||||
| Efficiency ratio (unadjusted) | 61.98 | % | 58.39 | % | 60.25 | % | 61.32 | % | 175.88 | % | 60.22 | % | 96.89 | % | |||||||||||||||||||||||||||
| Efficiency ratio (adjusted) | 61.85 | % | 58.27 | % | 60.12 | % | 61.18 | % | 65.69 | % | 60.10 | % | 65.67 | % | |||||||||||||||||||||||||||
Tangible Equity and Tangible Assets (Period-End)
Tangible equity, tangible assets, and tangible book value per share are each non-GAAP financial measures. Tangible equity represents the Corporation’s stockholders’ equity, less goodwill and other intangible assets. Tangible assets represent the Corporation’s total assets, less goodwill and other intangible assets. Tangible book value per share represents the Corporation’s tangible equity divided by common shares at period-end. These measures are meaningful to the Corporation, as well as to investors and analysts, in assessing the Corporation’s use of equity.
| As of or for the | |||||||||||||||||||||||||||||||||||||||||
| (in thousands, except per share and ratio data) | As of or for the Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||||
| Tangible Equity and Tangible Assets (Period End) | June 30, | March 31, | Dec. 31, | Sept. 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2026 | 2025 | 2025 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||
| Total shareholders' equity (GAAP) | $ | 270,361 | $ | 262,929 | $ | 254,709 | $ | 245,308 | $ | 234,966 | $ | 270,361 | $ | 234,966 | |||||||||||||||||||||||||||
| Less: intangible assets | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) | ||||||||||||||||||||||||||||||||||
| Tangible equity (non-GAAP) | $ | 248,537 | $ | 241,105 | $ | 232,885 | $ | 223,484 | $ | 213,142 | $ | 248,537 | $ | 213,142 | |||||||||||||||||||||||||||
| Total assets (GAAP) | $ | 2,820,202 | $ | 2,748,722 | $ | 2,710,235 | $ | 2,696,634 | $ | 2,852,488 | $ | 2,820,202 | $ | 2,852,488 | |||||||||||||||||||||||||||
| Less: intangible assets | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) | ||||||||||||||||||||||||||||||||||
| Tangible assets (non-GAAP) | $ | 2,798,378 | $ | 2,726,898 | $ | 2,688,411 | $ | 2,674,810 | $ | 2,830,664 | $ | 2,798,378 | $ | 2,830,664 | |||||||||||||||||||||||||||
| Total equity to total assets at end of period (GAAP) | 9.59 | % | 9.57 | % | 9.40 | % | 9.10 | % | 8.24 | % | 9.59 | % | 8.24 | % | |||||||||||||||||||||||||||
| Book value per share (GAAP) | $ | 55.88 | $ | 54.36 | $ | 52.97 | $ | 50.98 | $ | 48.85 | $ | 55.88 | $ | 48.85 | |||||||||||||||||||||||||||
| Tangible equity to tangible assets at end of period (non-GAAP) | 8.88 | % | 8.84 | % | 8.66 | % | 8.36 | % | 7.53 | % | 8.88 | % | 7.53 | % | |||||||||||||||||||||||||||
| Tangible book value per share (non-GAAP) | $ | 51.37 | $ | 49.85 | $ | 48.43 | $ | 46.44 | $ | 44.31 | $ | 51.37 | $ | 44.31 | |||||||||||||||||||||||||||
82
Tangible Equity (Average)
Average tangible equity and return on average tangible equity are each non-GAAP financial measures. Average tangible equity represents the Corporation’s average stockholders’ equity, less average goodwill and other intangible assets for the period. Return on average tangible equity measures the Corporation’s earnings as a percentage of average tangible equity. These measures are meaningful to the Corporation, as well as to investors and analysts, in assessing the Corporation’s use of equity.
| As of or for the | |||||||||||||||||||||||||||||||||||||||||
| As of or for the Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||
| (in thousands, except ratio data) | June 30, | March 31, | Dec. 31, | Sept. 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||||||||
| Tangible Equity (Average) | 2026 | 2026 | 2025 | 2025 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| Total average shareholders' equity (GAAP) | $ | 267,809 | $ | 261,823 | $ | 252,325 | $ | 239,836 | $ | 229,161 | $ | 264,833 | $ | 225,999 | |||||||||||||||||||||||||||
| Less: average intangible assets | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) | ||||||||||||||||||||||||||||||||||
| Average tangible equity (non-GAAP) | $ | 245,985 | $ | 239,999 | $ | 230,501 | $ | 218,012 | $ | 207,337 | $ | 243,009 | $ | 204,175 | |||||||||||||||||||||||||||
| Net income (GAAP) | $ | 8,810 | $ | 9,199 | $ | 7,741 | $ | 7,792 | $ | (6,452) | $ | 18,009 | $ | (429) | |||||||||||||||||||||||||||
| Return on average equity (GAAP) | 13.19 | % | 14.25 | % | 12.17 | % | 12.89 | % | (11.29) | % | 13.71 | % | (0.38) | % | |||||||||||||||||||||||||||
| Return on average tangible equity (non-GAAP) | 14.37 | % | 15.54 | % | 13.32 | % | 14.18 | % | (12.48) | % | 14.94 | % | (0.42) | % | |||||||||||||||||||||||||||
Adjustments for Certain Items of Income or Expense
In addition to disclosures of certain GAAP financial measures, including net income (loss), EPS, ROAA, and ROAE, the Corporation may also provide comparative disclosures that adjust these GAAP financial measures for a particular period by removing from the calculation thereof the impact of certain transactions or other material items of income or expense occurring during the period, including certain nonrecurring items. The Corporation believes that the resulting non-GAAP financial measures may improve an understanding of its results of operations by separating out any such transactions or items that may have had a disproportionate positive or negative impact on the Corporation’s financial results during the particular period in question. In the Corporation’s presentation of any such non-GAAP (adjusted) financial measures not specifically discussed in the preceding paragraphs, the Corporation supplies the supplemental financial information and explanations required under Regulation G.
| As of or for the | |||||||||||||||||||||||||||||||||||||||||
| As of or for the Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||
| (in thousands, except per share and ratio data) | June 30, | March 31, | Dec. 31, | Sept. 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||||||||
| Non-GAAP Net Income (Loss) | 2026 | 2026 | 2025 | 2025 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| Reported net income (loss) (GAAP) | $ | 8,810 | $ | 9,199 | $ | 7,741 | $ | 7,792 | $ | (6,452) | $ | 18,009 | $ | (429) | |||||||||||||||||||||||||||
| Net (gains) losses on securities transactions (net of tax) | — | — | — | — | 13,237 | — | 13,237 | ||||||||||||||||||||||||||||||||||
| Net (gain) loss on sale of branch property (net of tax) | — | — | — | — | (463) | — | (463) | ||||||||||||||||||||||||||||||||||
| Non-GAAP net income | $ | 8,810 | $ | 9,199 | $ | 7,741 | $ | 7,792 | $ | 6,322 | $ | 18,009 | $ | 12,345 | |||||||||||||||||||||||||||
| Average basic and diluted shares outstanding | 4,838 | 4,825 | 4,811 | 4,811 | 4,808 | 4,830 | 4,798 | ||||||||||||||||||||||||||||||||||
| Average total assets (GAAP) | $ | 2,774,578 | $ | 2,733,232 | $ | 2,691,963 | $ | 2,684,273 | $ | 2,802,226 | $ | 2,753,844 | $ | 2,793,369 | |||||||||||||||||||||||||||
| Average total shareholders' equity (GAAP) | 267,809 | 261,823 | 252,325 | 239,836 | 229,161 | 264,833 | 225,999 | ||||||||||||||||||||||||||||||||||
| Reported basic and diluted earnings (loss) per share (GAAP) | $ | 1.82 | $ | 1.91 | $ | 1.61 | $ | 1.62 | $ | (1.35) | $ | 3.73 | $ | (0.09) | |||||||||||||||||||||||||||
| Reported return on average assets (GAAP) | 1.27 | % | 1.36 | % | 1.14 | % | 1.15 | % | (0.92) | % | 1.32 | % | (0.03) | % | |||||||||||||||||||||||||||
| Reported return on average equity (GAAP) | 13.19 | % | 14.25 | % | 12.17 | % | 12.89 | % | (11.29) | % | 13.71 | % | (0.38) | % | |||||||||||||||||||||||||||
| Non-GAAP basic and diluted earnings per share | $ | 1.82 | $ | 1.91 | $ | 1.61 | $ | 1.62 | $ | 1.31 | $ | 3.73 | $ | 2.57 | |||||||||||||||||||||||||||
| Non-GAAP return on average assets | 1.27 | % | 1.36 | % | 1.14 | % | 1.15 | % | 0.90 | % | 1.32 | % | 0.89 | % | |||||||||||||||||||||||||||
| Non-GAAP return on average equity | 13.19 | % | 14.25 | % | 12.17 | % | 12.89 | % | 11.07 | % | 13.71 | % | 11.02 | % | |||||||||||||||||||||||||||
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ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
Management considers interest rate risk to be the most significant market risk for the Corporation. Market risk is the risk of loss from adverse changes in market prices and rates. Interest rate risk is the exposure to adverse changes in the net income of the Corporation as a result of changes in interest rates.
The Corporation’s primary earnings source is net interest income, which is affected by changes in the level of interest rates, the relationship between rates, the impact of interest rate fluctuations on asset prepayments, the level and composition of deposits and liabilities, and credit quality of interest-earning assets.
The Corporation’s objectives in its asset and liability management are to maintain a strong, stable net interest margin, to utilize its capital effectively without taking undue risks, to maintain adequate liquidity, and to reduce vulnerability of its operations to changes in interest rates. The Corporation's ALCO has the strategic responsibility for setting the policy guidelines on acceptable exposure to interest rate risk. These guidelines contain specific measures and limits regarding the risks, which are monitored on a regular basis. The ALCO is made up of the President and Chief Executive Officer, the Chief Financial Officer and Treasurer, the Asset Liability Management Officer, and other officers representing key functions.
Interest rate risk is the risk that net interest income will fluctuate as a result of a change in interest rates. It is the assumption of interest rate risk, along with credit risk, that drives the net interest margin of a financial institution. For that reason, the ALCO has established tolerance limits based upon various basis point changes in interest rates, with appropriate floors set for interest-bearing liabilities. As of June 30, 2026, it is estimated that immediate decreases of 100 basis points and 200 basis points in interest rates would negatively impact the next 12 months net interest income by 1.15% and 2.76%, respectively. Immediate increases of 100 basis points and 200 basis points would positively impact the next 12 months net interest income by 5.48% and 10.92%, respectively. All scenarios are within the Corporation's policy guidelines.
| Change in interest rates | Percentage Increase (Decrease) in Net Interest Income over 12 Months | ||||
| 200 basis points decrease | (2.76)% | ||||
| 100 basis points decrease | (1.15)% | ||||
| 100 basis points increase | 5.48% | ||||
| 200 basis points increase | 10.92% | ||||
A related component of interest rate risk is the expectation that the market value of the Corporation’s equity account will fluctuate with changes in interest rates. This component is a direct corollary to the earnings-impact component: an institution exposed to earnings erosion is also exposed to a decline in market value. As of June 30, 2026, it is estimated that immediate decreases of 100 basis points and 200 basis points in interest rates would negatively impact the market value of the Corporation’s capital account by 0.61% and 2.49%, respectively. Immediate increases in interest rates of 100 basis points and 200 basis points would positively impact the market value of the Corporation’s capital account by 3.48% and 6.50%, respectively. All scenarios are within the Corporation's policy guidelines.
| Change in interest rates | Percentage Increase (Decrease) in Present Value of Corporation's Equity | ||||
| 200 basis points decrease | (2.49)% | ||||
| 100 basis points decrease | (0.61)% | ||||
| 100 basis points increase | 3.48% | ||||
| 200 basis points increase | 6.50% | ||||
Management does recognize the need for certain hedging strategies during periods of anticipated higher fluctuations in interest rates and the Funds Management Policy provides for limited use of certain derivatives in asset liability management.
84
Credit Risk
The Corporation manages credit risk consistent with state and federal laws governing the making of loans through written policies and procedures; loan review to identify loan problems at the earliest possible time; collection procedures (continued even after a loan is charged off); an adequate allowance for credit losses; and continuing education and training to ensure lending expertise. Diversification by loan product is maintained through offering commercial loans, 1-4 family mortgages, and a full range of consumer loans.
The Corporation monitors its loan portfolio carefully. The Loan Committee of the Corporation's Board of Directors is designated to receive required loan reports, oversee loan policy, and approve loans above authorized individual and Senior Loan Committee lending limits. The Senior Loan Committee, consisting of the President and Chief Executive Officer, Chief Financial Officer and Treasurer (non-voting), Chief Credit Officer, and other lending and risk related personnel, implements the Board-approved loan policy.
85
ITEM 4: CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Corporation's management, with the participation of its Chief Executive Officer, who is the Corporation's principal executive officer, and its Chief Financial Officer and Treasurer, who is the Corporation's principal financial and accounting officer, have evaluated the effectiveness of the Corporation's disclosure controls and procedures as of June 30, 2026 pursuant to Rule 13a-15 of the Exchange Act, as amended. Based upon that evaluation, the principal executive officer and principal financial and accounting officer have concluded that the Corporation's disclosure controls and procedures are effective as of June 30, 2026. In addition, there have been no changes in the Corporation's internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporation's internal control over financial reporting.
Disclosure controls and procedures are designed with the objective of ensuring that information required to be disclosed in reports filed by the Corporation under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
86
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the normal course of business, there are various outstanding claims and legal proceedings involving the Corporation or its subsidiaries. On February 4, 2020, the Corporation filed a lawsuit against Pioneer Bank, Albany, New York, in the Supreme Court of the State of New York in the County of Albany. As disclosed in the Corporation’s September 12, 2019 Current Report on Form 8-K, the Bank owns a participating interest totaling $4.2 million in an approximately $36.0 million commercial credit facility on which the borrower defaulted due to fraudulent activity. The Corporation’s complaint alleged that Pioneer Bank, as lead bank, breached the participation agreement and engaged in fraud and negligent misrepresentation. The Corporation received a recovery of $0.5 million in April 2020. The Corporation and Pioneer Bank entered into a settlement agreement on August 6, 2026 to recover an additional $2.9 million. Upon finalization of the settlement agreement, the Corporation will file documentation with the Supreme Court of New York to discontinue the litigation and release Pioneer Bank from further claims.
Other than as noted above, the Corporation believes that it is not a party to any pending legal, arbitration, or regulatory proceedings that could have a material impact on our financial results or liquidity as of June 30, 2026.
ITEM 1A. RISK FACTORS
There have been no material changes in the risk factors set forth in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission on March 13, 2026. Additional risks not presently known to us, or that we currently deem immaterial, may adversely affect our business, financial condition, or results of operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c) Issuer Purchases of Equity Securities (1)
| Period | 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 | ||||||||||||||||||||||
| April 1 - April 30, 2026 | — | $ | — | — | 200,816 | |||||||||||||||||||||
| May 1 - May 31, 2026 | — | $ | — | — | 200,816 | |||||||||||||||||||||
| June 1 - June 30, 2026 | 147 | $ | 73.26 | — | 200,816 | |||||||||||||||||||||
Quarter Ended June 30, 2026 (2) | 147 | $ | 73.26 | — | 200,816 | |||||||||||||||||||||
(1) On January 8, 2021, the Corporation’s Board of Directors approved a new stock repurchase plan. Under the new repurchase program, the Corporation may repurchase up to 250,000 shares of its common stock, or approximately 5% of its outstanding shares. Purchases may be made from time to time on the open market or in private negotiated transactions and will be at the discretion of management. As of June 30, 2026 the Corporation has repurchased a total of 49,184 shares at the weighted average cost of $40.42 per share. | ||||||||||||||||||||||||||
(2) All shares purchased during the quarter represent shares that were elected to be withheld from the vesting of restricted stock awards to cover income tax withholdings for the individuals. | ||||||||||||||||||||||||||
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the second quarter of 2026, none of our directors or officers adopted terminated
87
ITEM 6. EXHIBITS
The following exhibits are either filed with this Form 10-Q or are incorporated herein by reference. The Corporation’s Securities Exchange Act File number is 000-13888.
| 3.1 | Certificate of Incorporation of Chemung Financial Corporation dated December 20, 1984 (as incorporated by reference to Exhibit 3.1 to Registrant's Form 10-K for the year ended December 31, 2007 filed with the Commission on March 13, 2008). | ||||
| 3.2 | Certificate of Amendment to the Certificate of Incorporation of Chemung Financial Corporation, dated March 28, 1988 (as incorporated by reference to Exhibit 3.2 to Registrant's Form 10-K for the year ended December 31, 2007 filed with the Commission on March 13, 2008). | ||||
| 3.3 | Certificate of Amendment to the Certificate of Incorporation of Chemung Financial Corporation, dated May 13, 1998 (as incorporated by reference to Exhibit 3.4 to Registrant’s Form 10-K for the year ended December 31, 2005 and filed with the Commission on March 15, 2006). | ||||
| 3.4 | Amended and Restated Bylaws of Chemung Financial Corporation, as amended August 17, 2022 (as incorporated by reference to Exhibit 3.1 to Registrant’s Form 8-K filed with the Commission on August 19, 2022). | ||||
| 31.1 | Certification of Principal Executive Officer of the Registrant pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.* | ||||
| 31.2 | Certification of Principal Financial Officer of the Registrant pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.* | ||||
| 32.1 | Certification of Principal Executive Officer of the Registrant pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. §1350.* | ||||
| 32.2 | Certification of Principal Financial Officer of the Registrant pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. §1350.* | ||||
| 101.INS | Instance Document* | ||||
| 101.SCH | XBRL Taxonomy Schema* | ||||
| 101.CAL | XBRL Taxonomy Calculation Linkbase* | ||||
| 101.DEF | XBRL Taxonomy Definition Linkbase* | ||||
| 101.LAB | XBRL Taxonomy Label Linkbase* | ||||
| 101.PRE | XBRL Taxonomy Presentation Linkbase* | ||||
| * | Filed herewith. | ||||
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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.
CHEMUNG FINANCIAL CORPORATION
| DATED: August 6, 2026 | By: /s/ Anders M. Tomson | ||||
| Anders M. Tomson President and Chief Executive Officer (Principal Executive Officer) | |||||
| DATED: August 6, 2026 | By: /s/ Dale M. McKim, III | ||||
| Dale M. McKim, III Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) | |||||
89
EXHIBIT INDEX
The following exhibits are either filed with this Form 10-Q or are incorporated herein by reference. The Corporation’s Securities Exchange Act File number is 000-13888
| 3.1 | Certificate of Incorporation of Chemung Financial Corporation dated December 20, 1984 (as incorporated by reference to Exhibit 3.1 to Registrant's Form 10-K for the year ended December 31, 2007 filed with the Commission on March 13, 2008). | ||||
| 3.2 | Certificate of Amendment to the Certificate of Incorporation of Chemung Financial Corporation, dated March 28, 1988 (as incorporated by reference to Exhibit 3.2 to Registrant's Form 10-K for the year ended December 31, 2007 filed with the Commission on March 13, 2008). | ||||
| 3.3 | Certificate of Amendment to the Certificate of Incorporation of Chemung Financial Corporation, dated May 13, 1998 (as incorporated by reference to Exhibit 3.4 to Registrant’s Form 10-K for the year ended December 31, 2005 and filed with the Commission on March 15, 2006). | ||||
| 3.4 | Amended and Restated Bylaws of Chemung Financial Corporation, as amended August 17, 2022 (as incorporated by reference to Exhibit 3.1 to Registrant’s Form 8-K filed with the Commission on August 19, 2022). | ||||
| 31.1 | Certification of Principal Executive Officer of the Registrant pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.* | ||||
| 31.2 | Certification of Principal Financial Officer of the Registrant pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.* | ||||
| 32.1 | Certification of Principal Executive Officer of the Registrant pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. §1350.* | ||||
| 32.2 | Certification of Principal Financial Officer of the Registrant pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. §1350.* | ||||
| 101.INS | Instance Document* | ||||
| 101.SCH | XBRL Taxonomy Schema* | ||||
| 101.CAL | XBRL Taxonomy Calculation Linkbase* | ||||
| 101.DEF | XBRL Taxonomy Definition Linkbase* | ||||
| 101.LAB | XBRL Taxonomy Label Linkbase* | ||||
| 101.PRE | XBRL Taxonomy Presentation Linkbase* | ||||
| * | Filed herewith. | ||||