CHMG 10-Q Quarterly Report Sept. 30, 2025

CHEMUNG FINANCIAL CORP

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chmg-20250930

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarterly period ended September 30, 2025

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 001-35741

CHEMUNG FINANCIAL CORP ORATION

(Exact name of registrant as specified in its charter)

New York

16-1237038

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

One Chemung Canal Plaza , Elmira , NY

14901

(Address of principal executive offices)

(Zip Code)

( 607 ) 737-3711 or (800) 836-3711

(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

Common stock, par value $.01 per share

CHMG

The Nasdaq Stock Market LLC

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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

☐

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 ☐ No ☒

As of October 31, 2025, there were 4,794,349 shares of Common Stock, $0.01 par value, outstanding.

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	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	82

Item 4:	Controls and Procedures	84

PART II.	OTHER INFORMATION

Item 1:	Legal Proceedings	85

Item 1A:	Risk Factors	85

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	85

Item 3:	Defaults Upon Senior Securities	85

Item 4:	Mine Safety Disclosures	85

Item 5:	Other Information	85

Item 6:	Exhibits	86

SIGNATURES		87

EXHIBIT INDEX

GLOSSARY OF ABBREVIATIONS AND TERMS

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
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
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
N/M			Not meaningful
OPEB			Other postemployment benefits
OREO			Other real estate owned
PD			Probability of default
ROAA			Return on average assets
ROAE			Return on average equity
REIT			Real estate investment trust
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			Contra asset account estimating 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 and includes the counties of Albany, Saratoga, and Schenectady.
CDARS			Product involving a network of financial institutions that exchange certificates of 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.
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, and to prepare various studies and reports for Congress.
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.
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/(loss)			Represents total net revenue less non-interest expense, before income tax expense (benefit). 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. The resulting risk-weighted values for each of the risk categories are then aggregated to determine total risk-weighted assets.
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.

CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(in thousands, except share and per share data)	September 30, 2025		December 31, 2024
ASSETS
Cash and due from financial institutions	$	32,445	$	26,224
Interest-earning deposits in other financial institutions	75,201		20,811
Total cash and cash equivalents	107,646		47,035

Equity investments, at estimated fair value	3,616		3,235
Securities available for sale, at estimated fair value (amortized cost of $ 331,286 , at September 30, 2025 and $ 617,271 at December 31, 2024, net of allowance for credit losses of $ 0 at September 30, 2025 and December 31, 2024, respectively)	280,514		531,442
Securities held to maturity, at amortized cost (estimated fair value of $ 680 at September 30, 2025 and $ 808 at December 31, 2024, respectively, net of allowance for credit losses of $ 0 at September 30, 2025 and December 31, 2024, respectively)	680		808
FHLBNY and FRBNY stock, at cost	5,524		9,117

Loans, net of deferred loan fees	2,202,356		2,071,419
Allowance for credit losses	( 23,645 )		( 21,388 )
Loans, net	2,178,711		2,050,031

Loans held for sale	3,075		—
Premises and equipment, net	15,376		16,375
Operating lease right-of-use assets	4,943		5,446
Goodwill	21,824		21,824

Bank-owned life insurance	2,976		2,952
Interest rate swap assets	17,966		23,829
Accrued interest receivable and other assets	53,783		64,053

Total assets	$	2,696,634	$	2,776,147

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non interest-bearing	$	633,216	$	625,762
Interest-bearing	1,725,300		1,771,121
Total deposits	2,358,516		2,396,883

Overnight and short-term advances	—		109,110
Subordinated debt, net of issuance costs of $ 998 and $ 0 , respectively	44,002		—


Long term finance lease obligation	3,530		3,779
Operating lease liabilities	5,124		5,629

Interest rate swap liabilities	18,056		23,851
Accrued interest payable and other liabilities	22,098		21,586
Total liabilities	2,451,326		2,560,838

Shareholders' equity:
Common stock, $ 0.01 par value per share, 10,000,000 shares authorized; 5,310,076 issued at September 30, 2025 and December 31, 2024	53		53
Additional paid-in capital	49,027		48,783
Retained earnings	250,373		247,705
Treasury stock, at cost; 515,322 shares at September 30, 2025 and 555,881 shares at December 31, 2024	( 15,069 )		( 16,167 )
Accumulated other comprehensive loss	( 39,076 )		( 65,065 )
Total shareholders' equity	245,308		215,309

Total liabilities and shareholders' equity	$	2,696,634	$	2,776,147

See accompanying notes to unaudited consolidated financial statements.

CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	2025		2024		2025		2024
Interest and dividend income:
Loans, including fees	$	31,033	$	28,611	$	88,567	$	83,323
Taxable securities	1,653		3,060		7,206		9,868
Tax exempt securities	80		250		545		762
Interest-earning deposits	1,118		441		2,298		1,014
Total interest and dividend income	33,884		32,362		98,616		94,967
Interest expense:
Deposits	10,171		13,005		32,403		37,861

Borrowed funds	1,025		969		2,900		2,868
Total interest expense	11,196		13,974		35,303		40,729
Net interest income	22,688		18,388		63,313		54,238
Provision (credit) for credit losses	1,064		564		3,301		( 597 )
Net interest income after provision for credit losses	21,624		17,824		60,012		54,835

Non-interest income:
WMG fee income	2,967		2,991		8,827		8,554
Service charges on deposit accounts	1,094		1,016		3,328		2,929
Interchange revenue from debit card transactions	1,073		1,123		3,220		3,327
Net (losses) on securities transactions	—		—		( 17,498 )		—
Changes in fair value of equity investments	136		118		197		233
Net gains on sales of loans held for sale	78		91		169		162
Net gains (losses) on sales of other real estate owned	—		( 19 )		( 8 )		( 22 )
Income from bank-owned life insurance	8		10		24		29
Other	732		589		3,013		1,962
Total non-interest income	6,088		5,919		1,272		17,174

Non-interest expense:
Salaries and wages	7,925		7,168		22,713		21,007
Pension and other employee benefits	2,298		1,627		6,332		5,787
Other components of net periodic pension and postretirement benefits	( 113 )		( 227 )		( 339 )		( 691 )
Net occupancy	1,371		1,422		4,335		4,360
Furniture and equipment	399		402		1,227		1,197
Data processing	2,534		2,567		7,631		7,437
Professional services	636		522		2,079		1,639


Marketing and advertising	203		210		893		943
Other real estate owned	8		55		22		116
FDIC insurance	352		524		1,225		1,617
Loan expense	262		353		836		808

Other	1,770		1,887		5,387		5,207
Total non-interest expense	17,645		16,510		52,341		49,427
Income before income tax expense	10,067		7,233		8,943		22,582
Income tax expense	2,275		1,513		1,580		4,825
Net income	$	7,792	$	5,720	$	7,363	$	17,757

Weighted average shares outstanding	4,811		4,773		4,802		4,769
Basic and diluted earnings per share	$	1.62	$	1.19	$	1.53	$	3.72

See accompanying notes to unaudited consolidated financial statements.

CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2025		2024		2025		2024
Net income	$	7,792	$	5,720	$	7,363	$	17,757
Other comprehensive income
Unrealized holding gains on securities available for sale	4,925		20,014		17,559		14,719
Reclassification adjustment for losses realized in net income	—		—		17,498		—
Net unrealized gains on securities available for sale	4,925		20,014		35,057		14,719
Tax effect	1,302		5,243		9,086		3,856
Net of tax amount	3,623		14,771		25,971		10,863

Change in funded status of defined benefit pension plan and other benefit plans:


Reclassification adjustment for amortization of net actuarial loss	8		7		24		20
Total before tax effect	8		7		24		20
Tax effect	2		2		6		5
Net of tax amount	6		5		18		15

Total other comprehensive income	3,629		14,776		25,989		10,878

Comprehensive income	$	11,421	$	20,496	$	33,352	$	28,635

See accompanying notes to unaudited consolidated financial statements.

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 June 30, 2024	$	53	$	48,102	$	239,021	$	( 16,043 )	$	( 69,911 )	$	201,222



Net income	—		—		5,720		—		—		5,720
Other comprehensive loss	—		—		—		—		14,776		14,776
Restricted stock awards	—		309		—		—		—		309
Restricted stock units for directors' deferred compensation plan	—		5		—		—		—		5

Cash dividends declared ($ 0.31 per share)	—		—		( 1,475 )		—		—		( 1,475 )



Repurchase of 215 shares of common stock	—		—		—		( 10 )		—		( 10 )
Sale of 2,274 shares of treasury stock (a)	—		41		—		66		—		107

Balances at September 30, 2024	$	53	$	48,457	$	243,266	$	( 15,987 )	$	( 55,135 )	$	220,654


Balances at June 30, 2025	$	53	$	48,502	$	244,211	$	( 15,095 )	$	( 42,705 )	$	234,966



Net income	—		—		7,792		—		—		7,792
Other comprehensive income	—		—		—		—		3,629		3,629
Restricted stock awards	—		339		—		—		—		339
Restricted stock units for directors' deferred compensation plan	—		6		—		—		—		6
Distribution of 299 shares of treasury stock grants for employee restricted stock awards	—		( 8 )		—		8		—		—
Cash dividends declared ($ 0.34 per share)	—		—		( 1,630 )		—		—		( 1,630 )



Repurchase of 214 shares of common stock	—		—		—		( 11 )		—		( 11 )
Sale of 4,621 shares of treasury stock (a)	—		98		—		135		—		233
Forfeiture of 2,130 shares of restricted stock awards	—		90		—		( 106 )		—		( 16 )
Balances at September 30, 2025	$	53	$	49,027	$	250,373	$	( 15,069 )	$	( 39,076 )	$	245,308

(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.

See accompanying notes to unaudited consolidated financial statements.

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, 2024	$	53	$	47,773	$	229,930	$	( 16,502 )	$	( 66,013 )	$	195,241


Net income	—		—		17,757		—		—		17,757
Other comprehensive loss	—		—		—		—		10,878		10,878
Restricted stock awards	—		922		—		—		—		922
Restricted stock units for directors' deferred compensation plan	—		15		—		—		—		15
Distribution of 5,942 shares of treasury stock grants for employee restricted stock awards	—		( 171 )		—		171		—		—
Cash dividends declared ($ 0.93 per share)	—		—		( 4,421 )		—		—		( 4,421 )
Distribution of 7,515 shares of treasury stock for directors' compensation	—		( 217 )		—		217		—		—


Repurchase of 1,922 shares of common stock	—		—		—		( 92 )		—		( 92 )
Sale of 7,744 shares of treasury stock (a)	—		130		—		224		—		354
Forfeiture of 115 shares of restricted stock awards	—		5		—		( 5 )		—		—
Balances at September 30, 2024	$	53	$	48,457	$	243,266	$	( 15,987 )	$	( 55,135 )	$	220,654


Balances at January 1, 2025	$	53	$	48,783	$	247,705	$	( 16,167 )	$	( 65,065 )	$	215,309



Net income	—		—		7,363		—		—		7,363
Other comprehensive income	—		—		—		—		25,989		25,989
Restricted stock awards	—		980		—		—		—		980
Restricted stock units for directors' deferred compensation plan	—		17		—		—		—		17
Distribution of 27,830 shares of treasury stock grants for employee restricted stock awards	—		( 810 )		—		810		—		—
Cash dividends declared ($ 0.98 per share)	—		—		( 4,695 )		—		—		( 4,695 )
Distribution of 7,625 shares of treasury stock for directors' compensation	—		( 222 )		—		222		—		—


Repurchase of 2,117 shares of common stock	—		—		—		( 101 )		—		( 101 )
Sale of 9,351 shares of treasury stock (a)	—		189		—		273		—		462
Forfeiture of 2,130 shares of restricted stock awards	—		90		—		( 106 )		—		( 16 )
Balances at September 30, 2025	$	53	$	49,027	$	250,373	$	( 15,069 )	$	( 39,076 )	$	245,308

See accompanying notes to unaudited consolidated financial statements.


CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)	Nine Months Ended September 30,
CASH FLOWS FROM OPERATING ACTIVITIES:	2025		2024
Net income	$	7,363	$	17,757
Adjustments to reconcile net income to net cash provided by operating activities:
(Increases in) amortization of right-of-use assets	503		11


Provision (credit) for credit losses	3,301		( 597 )
Gain on disposal of fixed assets, net	( 638 )		( 40 )
Depreciation and amortization of fixed assets	1,402		1,359
Amortization of premiums on securities, net	1,276		1,789
(Gains) on sales of loans held for sale, net	( 169 )		( 162 )
Proceeds from sales of loans held for sale	9,281		3,957
Loans originated and held for sale	( 12,187 )		( 3,795 )
Losses on sale of other real estate owned, net	8		22
Fair value adjustment on other real estate owned	—		13
Change in fair value of equity investments, net	( 197 )		( 233 )
Losses on securities transactions, net	17,498		—

Proceeds from sales of equity investments	88		134
Purchase of equity investments	( 272 )		( 99 )
Amortization of deferred costs on subordinated debt	30		—
Decrease (increase) in other assets and accrued interest receivable	2,673		( 952 )
(Decrease) increase in accrued interest payable	( 1,504 )		3,429
Expense related to restricted stock units for directors' deferred compensation plan	17		15

Expense related to employee restricted stock awards	980		922
Increases in (payments on) operating lease liabilities	( 505 )		( 7 )
(Gains) losses on interest rate swaps, net	68		( 13 )
Increase in other liabilities	174		99
Income from bank owned life insurance	( 24 )		( 29 )
Net cash provided by operating activities	29,166		23,580
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities available for sale	227,305		—
Proceeds from maturities, calls, and principal paydowns on securities available for sale	39,906		42,348
Proceeds from maturities and principal collected on securities held to maturity	128		128


Purchases of FHLBNY and FRBNY stock	( 11,589 )		( 16,848 )
Redemption of FHLBNY and FRBNY stock	15,182		18,157
Proceeds from sales of fixed assets	1,323		44
Purchases of premises and equipment	( 1,088 )		( 1,707 )
Proceeds from sale of other real estate owned	347		359

Net increase in loans	( 131,981 )		( 57,321 )
Net cash provided by (used in) investing activities	139,533		( 14,840 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand, interest-bearing demand, savings, and insured money market deposits	100,710		22,128
Net (decrease) in time deposits	( 139,077 )		( 434 )


Net increase (decrease) in FHLBNY advances	( 109,110 )		18,080

Increases in (payments on) finance leases	( 249 )		707


Proceeds from subordinated debt issuance	45,000		—
Payment of subordinated debt issuance costs	( 1,028 )		—
Purchase of treasury stock	( 101 )		( 92 )
Sale of treasury stock	462		354
Cash dividends paid	( 4,695 )		( 5,890 )
Net cash (used in) provided by financing activities	( 108,088 )		34,853
Net increase in cash and cash equivalents	60,611		43,593
Cash and cash equivalents, beginning of period	47,035		36,847
Cash and cash equivalents, end of period	$	107,646	$	80,440

See accompanying notes to unaudited consolidated financial statements.

CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

(UNAUDITED)


(in thousands)	Nine Months Ended September 30,
Supplemental disclosure of cash flow information:	2025		2024
Cash paid for:
Interest	$	36,807	$	37,300
Income taxes	3,823		4,659

Supplemental disclosure of non-cash activity:
Transfer of loans to other real estate owned	—		552
Transfer of fixed assets to held for sale	—		671

Right-of-use assets obtained through finance lease liabilities	—		935


Right-of-use assets obtained through operating lease liabilities	80		570

See accompanying notes to unaudited consolidated financial statements.

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 2024 Annual Report on Form 10-K for the year ended December 31, 2024. 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 Adopted in 2025

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , enhancing disclosure requirements for reportable segments, focusing on significant segment expenses, the identification of a segment's chief operating decision maker, and the metrics used by the chief operating decision maker in evaluating segment-level operating performance. The ASU was adopted for the annual period ended December 31, 2024 and adopted for interim periods beginning with the interim period ended March 31, 2025. Disclosure information relating to ASU 2023-07 can primarily be found in Note 13 - Segment Reporting to this Form 10-Q.

Accounting Standards Pending Adoption

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which will require public business entities to disclose annually a tabular rate reconciliation and income taxes paid information, including specific items such as state and local income tax, tax credits, nontaxable or nondeductible items, among others, and a separate disclosure requiring disaggregation of reconciling items as described above which equal or exceed 5% percent of the product of multiplying income from continuing operations by the applicable statutory income tax rate. Additionally, disclosure of income taxes paid by jurisdiction is required for each jurisdiction in which income taxes paid represented at least 5% of total income taxes paid. The ASU is effective for all public business entities for annual periods beginning after December 31, 2024. The adoption of this standard is expected to impact the Corporation's income tax disclosures in future Annual Report on Form 10-K filings.

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. The Corporation is evaluating the impact the standard will have on its disclosures and expects to provide additional disclosures upon adoption.

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 nine month periods ended September 30, 2025 and 2024, respectively.

The calculation of basic earnings per share for the three and nine month periods ended September 30, 2025 and 2024 is shown below (in thousands, except share and per share data):


	For the Three Months Ended				For the Nine Months Ended
	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
Net income	$	7,792	$	5,720	$	7,363	$	17,757
(Less) allocation of earnings & dividends to participating securities	( 115 )		( 75 )		( 102 )		( 233 )
Net income available to common shareholders	$	7,677	$	5,645	$	7,261	$	17,524

Weighted average common shares outstanding	4,810,682		4,772,889		4,802,228		4,768,640
(Less) participating securities	( 70,590 )		( 62,709 )		( 66,363 )		( 62,342 )
Weighted average number of shares outstanding used in the calculation of basic earnings per share	4,740,092		4,710,180		4,735,865		4,706,298
Basic earnings per common share	$	1.62	$	1.19	$	1.53	$	3.72

NOTE 3 SECURITIES

The following tables present the amortized cost and estimated fair value of securities available for sale as of September 30, 2025 and December 31, 2024 (in thousands):


	September 30, 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Estimated Fair Value

Mortgage-backed securities, residential	$	300,880	$	71	$	48,153	$	—	$	252,798
Obligations of states and political subdivisions	10,656		—		354		—		10,302
Corporate bonds and notes	19,750		—		2,336		—		17,414


Total	$	331,286	$	71	$	50,843	$	—	$	280,514


	December 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Estimated Fair Value
U.S. Treasury notes and bonds	$	59,880	$	—	$	2,974	$	—	$	56,906
Mortgage-backed securities, residential	441,191		14		75,271		—		365,934

Obligations of states and political subdivisions	37,059		—		1,554		—		35,505
Corporate bonds and notes	25,750		—		3,734		—		22,016
SBA loan pools	53,391		35		2,345		—		51,081
Total	$	617,271	$	49	$	85,878	$	—	$	531,442

The following tables present the amortized cost and estimated fair value of securities held to maturity as of September 30, 2025 and December 31, 2024 (in thousands):


	September 30, 2025
	Amortized Cost		Unrecognized Gains		Unrecognized Losses		Allowance for Credit Losses		Estimated Fair Value
Obligations of states and political subdivisions	$	680	$	—	$	—	$	—	$	680


	December 31, 2024
	Amortized Cost		Unrecognized Gains		Unrecognized Losses		Allowance for Credit Losses		Estimated Fair Value
Obligations of states and political subdivisions	$	808	$	—	$	—	$	—	$	808

There were no proceeds from sales and calls of securities resulting in gains or losses for the three month period ended September 30, 2025. However during the second quarter of 2025, the Corporation sold available for sale securities with a book value of $ 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 nine month period ended September 30, 2025 are presented below (in thousands). There were no proceeds from sales and calls of securities for the three and nine month periods ended September 30, 2024.


	For the Nine Months Ended September 30, 2025
Proceeds from sales	$	227,305
Gross realized gains	$	14
Gross realized (losses)	$	( 17,512 )
Tax expense (benefit)	$	( 4,261 )

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.


	September 30, 2025
	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	620	$	620	$	200	$	200
After one, but within five years	5,041		4,620		—		—
After five, but within ten years	24,479		22,227		480		480
After ten years	266		249		—		—
	30,406		27,716		680		680
Mortgage-backed securities, residential	300,880		252,798		—		—


Total	$	331,286	$	280,514	$	680	$	680

Securities pledged as of September 30, 2025 and December 31, 2024 had a carrying value of $ 212.8 million and $ 181.5 million respectively, and were pledged to secure public deposits.

The following tables summarize the investment securities available for sale with unrealized losses as of September 30, 2025 and December 31, 2024 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
September 30, 2025	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

Mortgage-backed securities, residential	$	—	$	—	$	247,760	$	48,153	$	247,760	$	48,153
Obligations of states and political subdivisions	—		—		9,742		354		9,742		354
Corporate bonds and notes	—		—		17,414		2,336		17,414		2,336

Total	$	—	$	—	$	274,916	$	50,843	$	274,916	$	50,843


	Less than 12 months				12 months or longer				Total
December 31, 2024	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury notes and bonds	$	—	$	—	$	56,906	$	2,974	$	56,906	$	2,974
Mortgage-backed securities, residential	5,006		111		359,722		75,160		364,728		75,271
Obligations of states and political subdivisions	107		3		35,398		1,551		35,505		1,554
Corporate bonds and notes	1,921		79		20,095		3,655		22,016		3,734
SBA loan pools	564		1		46,018		2,344		46,582		2,345
Total	$	7,598	$	194	$	518,139	$	85,684	$	525,737	$	85,878

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 September 30, 2025.

Obli g ations of U.S. Governmental a g encies and sponsored enterprises :

As of September 30, 2025, 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 94.7 % of total unrealized losses on available for sale securities. 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 September 30, 2025.

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 4.6 % of total unrealized losses on available for sale securities. 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 September 30, 2025.

Equity Investments

The Corporation holds a non-qualified deferred compensation plan to allow a select group of management and employees the opportunity to defer all or a portion of their annual compensation, and treats assets held under this plan as equity investments. As of September 30, 2025 and December 31, 2024, the fair value of investments held in relation to the deferred compensation plan was $ 3.0 million and $ 2.6 million, respectively. The Corporation also held $ 0.6 million of marketable securities as equity investments as of both September 30, 2025 and December 31, 2024.

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):


	September 30, 2025		December 31, 2024

Commercial and industrial	$	309,221	$	299,521

Commercial mortgages:
Construction	109,607		94,943
Owner occupied commercial real estate	169,914		142,279
Non-owner occupied commercial real estate	1,082,519		979,782
Residential mortgages	277,729		274,979
Consumer loans:

Home equity lines and loans	103,072		93,220
Indirect consumer loans	143,154		178,118
Direct consumer loans	7,140		8,577
Total loans, net of deferred loan fees and costs	2,202,356		2,071,419
Allowance for credit losses	( 23,645 )		( 21,388 )
Loans, net	$	2,178,711	$	2,050,031

The Corporation's concentrations of credit risk by loan type are reflected in the preceding table. The concentrations of credit risk 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 $ 8.6 million as of September 30, 2025 and $ 8.0 million as of December 31, 2024. Accrued interest receivable on loans is included in the accrued interest receivable and other assets line item on the Corporation's Consolidated Balance Sheets, and is excluded from the amortized cost basis of loans and estimate of the allowance for credit losses, as presented in this Note.

Owner occupied commercial real estate and non-owner occupied commercial real estate were previously presented as a combined loan category, commercial mortgages, other. Prior period information included in this Note has been disaggregated to reflect these standalone categories. The previously presented commercial mortgages, other loan category totaled $ 1.25 billion and $ 1.12 billion as of September 30, 2025 and December 31, 2024, respectively.

During the nine month period ended September 30, 2025, the Corporation transferred commercial credit card balances from loans held for investment to loans held for sale, following management's decision to pursue a sale of its commercial credit card receivables. These balances were previously included in the commercial and industrial loan category, as presented in the table above, and are included in the loans held for sale line item on the Corporation's Consolidated Balance Sheets. As of September 30, 2025 loans held for sale included $ 2.3 million in commercial credit card balances and $ 0.8 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 nine month periods ended September 30, 2025 and 2024 (in thousands):


	Three Months Ended September 30, 2025
Allowance for credit losses	Commercial and Industrial		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Beginning balance, July 1, 2025	$	4,524	$	12,714	$	2,597	$	2,830	$	22,665


Charge-offs	—		—		—		( 288 )		( 288 )
Recoveries	1		1		5		195		202
Net recoveries (charge-offs)	1		1		5		( 93 )		( 86 )
Provision (1)	52		1,023		31		( 40 )		1,066
Ending balance, September 30, 2025	$	4,577	$	13,738	$	2,633	$	2,697	$	23,645

(1) Additional provision related to off-balance sheet exposure was a $ 2 thousand credit for the three months ended September 30, 2025.


	Three Months Ended September 30, 2024
Allowance for credit losses	Commercial and Industrial		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Beginning balance, July 1, 2024	$	4,894	$	10,530	$	2,106	$	3,501	$	21,031


Charge-offs	( 18 )		—		( 1 )		( 286 )		( 305 )
Recoveries	68		1		8		150		227
Net recoveries (charge-offs)	50		1		7		( 136 )		( 78 )
Provision (1)	( 48 )		231		105		200		488
Ending balance, September 30, 2024	$	4,896	$	10,762	$	2,218	$	3,565	$	21,441

(1) Additional provision related to off-balance sheet exposure was $ 76 thousand for the three months ended September 30, 2024.


	Nine Months Ended September 30, 2025
Allowance for credit losses	Commercial and Industrial		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Beginning balance, January 1, 2025	$	4,520	$	11,214	$	2,259	$	3,395	$	21,388


Charge-offs	( 777 )		—		—		( 1,030 )		( 1,807 )
Recoveries	9		3		16		439		467
Net recoveries (charge-offs)	( 768 )		3		16		( 591 )		( 1,340 )
Provision (credit) (1)	825		2,521		358		( 107 )		3,597
Ending balance, September 30, 2025	$	4,577	$	13,738	$	2,633	$	2,697	$	23,645

(1) Additional provision related to off-balance sheet exposure was a $ 296 thousand credit for the nine months ended September 30, 2025.


	Nine Months Ended September 30, 2024
Allowance for credit losses	Commercial and Industrial		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Beginning balance, January 1, 2024	$	5,055	$	12,026	$	2,194	$	3,242	$	22,517


Charge-offs	( 18 )		—		( 21 )		( 1,083 )		( 1,122 )
Recoveries	118		3		57		378		556
Net recoveries (charge-offs)	100		3		36		( 705 )		( 566 )
Provision (1)	( 259 )		( 1,267 )		( 12 )		1,028		( 510 )
Ending balance, September 30, 2024	$	4,896	$	10,762	$	2,218	$	3,565	$	21,441

(1) Additional provision related to off-balance sheet exposure was a $ 87 thousand credit for the nine months ended September 30, 2024.

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, 2025 and 2024.

Unfunded Commitments

The allowance for credit losses on unfunded commitments is recognized as a liability, and included in the accrued interest payable and other liabilities line item on the Corporation's Consolidated Balance Sheets, with adjustments to the allowance recognized in the provision for credit losses on the Consolidated Statements of Income. The Corporation established an allowance for credit losses on unfunded commitments in conjunction with its adoption of ASC 326- Financial Instruments-Credit Losses .

The following table presents the activity in the allowance for credit losses on unfunded commitments for the three and nine month periods ended September 30, 2025 and 2024 (in thousands):


	For the Three Months Ended				For the Nine Months Ended
Allowance for credit losses on unfunded commitments	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
Beginning balance	$	548	$	756	$	842	$	919

Provision for credit losses on unfunded commitments	( 2 )		76		( 296 )		( 87 )
Ending balance	$	546	$	832	$	546	$	832

The following table presents the provision for credit losses on loans and unfunded commitments for the three and nine month periods ended September 30, 2025 and 2024 (in thousands):


	For the Three Months Ended				For the Nine Months Ended
Provision for credit losses	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
Provision for credit losses on loans	$	1,066	$	488	$	3,597	$	( 510 )
Provision for credit losses on unfunded commitments	( 2 )		76		( 296 )		( 87 )
Total provision for credit losses	$	1,064	$	564	$	3,301	$	( 597 )

The following tables present the balance in the allowance for credit losses by portfolio segment, as of September 30, 2025 and December 31, 2024 (in thousands):


	September 30, 2025
Allowance for credit losses	Commercial and Industrial		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Ending allowance balance attributable to loans:
Individually analyzed	$	616	$	164	$	—	$	—	$	780
Collectively analyzed	3,961		13,574		2,633		2,697		22,865

Total ending allowance balance	$	4,577	$	13,738	$	2,633	$	2,697	$	23,645


	December 31, 2024
Allowance for credit losses	Commercial and Industrial		Commercial Mortgages		Residential Mortgages		Consumer Loans		Totals
Ending allowance balance attributable to loans:
Individually analyzed	$	1,446	$	106	$	—	$	—	$	1,552
Collectively analyzed	3,074		11,108		2,259		3,395		19,836

Total ending allowance balance	$	4,520	$	11,214	$	2,259	$	3,395	$	21,388

The following tables present the amortized cost basis of loans by portfolio segment, as of September 30, 2025 and December 31, 2024 (in thousands):


	September 30, 2025
Amortized cost basis of loans:	Commercial and Industrial		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Individually analyzed	$	668	$	3,116	$	—	$	342	$	4,126
Collectively analyzed	308,553		1,358,924		277,729		253,024		2,198,230

Total ending loans balance	$	309,221	$	1,362,040	$	277,729	$	253,366	$	2,202,356


	December 31, 2024
Amortized cost basis of loans:	Commercial and Industrial		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Individually analyzed	$	1,512	$	4,959	$	—	$	—	$	6,471
Collectively analyzed	298,009		1,212,045		274,979		279,915		2,064,948

Total ending loans balance	$	299,521	$	1,217,004	$	274,979	$	279,915	$	2,071,419

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 nine month periods ended September 30, 2025 and 2024 (in thousands):


	Three Months Ended September 30, 2025
Loans modified under ASU 2022-02:	Principal Reduction		Interest Rate Reduction		Term Extension		Payment Delay		Combination		Total		(%) of Loan Class (1)






Non-owner occupied commercial real estate	$	—	$	—	$	—	$	3,431	$	—	$	3,431	0.32	%





Total	$	—	$	—	$	—	$	3,431	$	—	$	3,431

(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 three month period ended September 30, 2024.


	Nine Months Ended September 30, 2025
Loans modified under ASU 2022-02:	Principal Reduction		Interest Rate Reduction		Term Extension		Payment Delay		Combination		Total		(%) of Loan Class (1)






Non-owner occupied commercial real estate	$	—	$	—	$	—	$	3,431	$	—	$	3,431	0.32	%





Total	$	—	$	—	$	—	$	3,431	$	—	$	3,431

(1) Represents amortized cost basis of loans modified during the period as a percentage of the period-end loan balances by class.


	Nine Months Ended September 30, 2024
Loans modified under ASU 2022-02:	Principal Reduction		Interest Rate Reduction		Term Extension		Payment Delay		Combination		Total		(%) of Loan Class (1)







Residential mortgages	$	—	$	—	$	—	$	440	$	—	$	440	0.16	%




Total	$	—	$	—	$	—	$	440	$	—	$	440

(1) Represents amortized cost basis of loans modified during the period as a percentage of the period-end loan balances by class.

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during three and nine month periods ended September 30, 2025 and the nine month period ended September 30, 2024 (in thousands):

Three Months Ended September 30, 2025

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)

Non-owner occupied commercial real estate

$ —

— %

Nine Months Ended September 30, 2025

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)

Non-owner occupied commercial real estate

$ —

— %

Nine Months Ended September 30, 2024

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)

Residential mortgages

$ —

— %

There were no loans that experienced a payment default within twelve months of modification during the three and nine month periods ended September 30, 2025. There were no loans that experienced a payment default within twelve months of modification during the three month period ended September 30, 2024. During the nine month period ended September 30, 2024, the Corporation had one loan, a commercial and industrial loan which was given a six month term extension during the three month period ended September 30, 2023, which experienced a payment default within twelve months of modification. The remaining balance on this loan was charged-off during the nine month period ended September 30, 2025, totaling $ 0.7 million.

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 nine month periods ended September 30, 2025 and 2024.

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 September 30, 2025 and September 30, 2024 (in thousands):


	Twelve Months Ended September 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	$	—	$	—	$	—	$	334	$	334

Commercial mortgages:

Owner occupied commercial real estate	—		—		—		370		370
Non-owner occupied commercial real estate	—		—		—		3,431		3,431





Total	$	—	$	—	$	—	$	4,135	$	4,135


	Twelve Months Ended September 30, 2024
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	$	—	$	—	$	—	$	121	$	121





Residential mortgages	—		—		440		—		440




Total	$	—	$	—	$	440	$	121	$	561

Collateral-Dependent Individually Analyzed Loans

As of September 30, 2025, the amortized cost basis of individually analyzed loans totaled $ 4.1 million, of which $ 3.5 million were considered collateral-dependent, and as of December 31, 2024, the amortized cost basis of individually analyzed loans totaled $ 6.5 million, of which $ 5.1 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 loss of individually analyzed loans considered to be collateral-dependent as of September 30, 2025 and December 31, 2024 (in thousands):


	September 30, 2025				December 31, 2024
	Amortized Cost Basis		Related Allowance		Amortized Cost Basis		Related Allowance
Commercial and industrial (3)	$	64	$	12	$	130	$	65

Commercial mortgages:

Owner occupied commercial real estate (1)	658		7		1,377		15
Non-owner occupied commercial real estate (1) (2)	2,458		157		3,582		91

Consumer loans:
Home equity lines and loans (2)	342		—		—		—


Total	$	3,522	$	176	$	5,089	$	171

(1) Secured by commercial real estate.

(2) Secured by residential real estate.

(3) Secured by business assets.

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 September 30, 2025 and December 31, 2024 (in thousands):


	Nonaccrual with No Allowance for Credit Losses				Nonaccrual				Loans Past Due 90 Days or More and Still Accruing
	September 30, 2025		December 31, 2024		September 30, 2025		December 31, 2024		September 30, 2025		December 31, 2024
Commercial and industrial	$	154	$	76	$	763	$	1,534	$	21	$	23

Commercial mortgages:
Construction	—		—		—		—		—		—
Owner occupied commercial real estate	652		1,362		658		1,377		—		—
Non-owner occupied commercial real estate	157		2,619		2,458		3,582		—		—
Residential mortgages	1,905		1,372		1,905		1,372		—		—
Consumer loans:

Home equity lines and loans	1,009		613		1,009		613		—		—
Indirect consumer loans	862		474		862		474		—		—
Direct consumer loans	107		2		107		2		—		—
Total	$	4,846	$	6,518	$	7,762	$	8,954	$	21	$	23

There was an immaterial amount of interest income recognized on nonaccrual loans for the three and nine month periods ended September 30, 2025 and 2024. 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 September 30, 2025 and December 31, 2024 (in thousands):


	September 30, 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	$	884	$	52	$	64	$	1,000	$	308,221	$	309,221

Commercial mortgages:
Construction	—		—		—		—		109,607		109,607
Owner occupied commercial real estate	—		—		97		97		169,817		169,914
Non-owner occupied commercial real estate	376		25		2,301		2,702		1,079,817		1,082,519
Residential mortgages	1,532		786		997		3,315		274,414		277,729
Consumer loans:

Home equity lines and loans	424		15		272		711		102,361		103,072
Indirect consumer loans	2,119		696		460		3,275		139,879		143,154
Direct consumer loans	16		9		4		29		7,111		7,140
Total	$	5,351	$	1,583	$	4,195	$	11,129	$	2,191,227	$	2,202,356


	December 31, 2024
	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	$	140	$	201	$	702	$	1,043	$	298,478	$	299,521

Commercial mortgages:
Construction	—		—		—		—		94,943		94,943
Owner occupied commercial real estate	82		—		96		178		142,101		142,279
Non-owner occupied commercial real estate	950		—		3,162		4,112		975,670		979,782
Residential mortgages	1,529		662		696		2,887		272,092		274,979
Consumer loans:

Home equity lines and loans	231		—		364		595		92,625		93,220
Indirect consumer loans	2,101		719		235		3,055		175,063		178,118
Direct consumer loans	14		6		1		21		8,556		8,577
Total	$	5,047	$	1,588	$	5,256	$	11,891	$	2,059,528	$	2,071,419

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 terms of the loan notes.

Based on the analyses performed as of September 30, 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 nine month period ended September 30, 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 & industrial
Pass	$	34,611	$	36,244	$	26,023	$	27,535	$	13,728	$	18,060	$	122,589	$	2,527	$	281,317
Special mention	609		275		707		2,426		532		7,644		8,189		3,641		24,023
Substandard	—		334		13		—		44		—		2,721		80		3,192
Doubtful	—		20		—		—		—		584		—		85		689
Total	35,220		36,873		26,743		29,961		14,304		26,288		133,499		6,333		309,221
Gross charge-offs	—		—		—		—		772		—		5		—		777







Construction
Pass	17,456		28,578		37,355		14,024		8,882		1,378		1,934		—		109,607
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total	17,456		28,578		37,355		14,024		8,882		1,378		1,934		—		109,607
Gross charge-offs	—		—		—		—		—		—		—		—		—
Owner occupied commercial real estate
Pass	33,651		23,473		17,796		23,613		13,613		35,043		734		43		147,966
Special mention	1,211		—		4,716		2,269		6,584		3,633		2,000		—		20,413
Substandard	—		—		96		489		—		944		—		—		1,529
Doubtful	—		—		—		—		—		6		—		—		6
Total	34,862		23,473		22,608		26,371		20,197		39,626		2,734		43		169,914
Gross charge-offs	—		—		—		—		—		—		—		—		—
Non-owner occupied commercial real estate
Pass	125,997		103,508		114,535		247,529		138,179		308,293		9,080		737		1,047,858
Special mention	2,045		—		3,555		15,764		7,483		2,901		—		—		31,748
Substandard	—		—		2,170		132		—		611		—		—		2,913
Doubtful	—		—		—		—		—		—		—		—		—
Total	128,042		103,508		120,260		263,425		145,662		311,805		9,080		737		1,082,519
Gross charge-offs	—		—		—		—		—		—		—		—		—
Residential mortgages
Not rated	22,492		24,123		19,138		51,885		51,043		106,594		—		—		275,275
Special mention	—		—		—		—		426		—		—		—		426
Substandard	—		—		—		220		311		1,497		—		—		2,028
Total	22,492		24,123		19,138		52,105		51,780		108,091		—		—		277,729
Gross charge-offs	—		—		—		—		—		—		—		—		—
Home equity lines and loans
Not rated	5,721		12,474		9,147		11,567		4,315		10,784		46,556		1,386		101,950
Special mention	—		—		—		113		—		—		—		—		113
Substandard	—		—		23		213		—		191		116		466		1,009
Total	5,721		12,474		9,170		11,893		4,315		10,975		46,672		1,852		103,072
Gross charge-offs	—		—		—		—		—		—		—		—		—
Indirect consumer
Not rated	18,712		29,171		38,024		45,731		7,628		2,925		—		—		142,191
Substandard	—		304		311		287		37		24		—		—		963
Total	18,712		29,475		38,335		46,018		7,665		2,949		—		—		143,154
Gross charge-offs	1		157		424		231		107		43		—		—		963
Direct consumer
Not rated	1,337		1,565		896		694		87		180		2,353		14		7,126
Substandard	3		—		—		—		—		—		10		1		14
Total	1,340		1,565		896		694		87		180		2,363		15		7,140
Gross charge-offs	—		20		23		9		3		—		12		—		67

Total loans	$	263,845	$	260,069	$	274,505	$	444,491	$	252,892	$	501,292	$	196,282	$	8,980	$	2,202,356

Total gross charge-offs	$	1	$	177	$	447	$	240	$	882	$	43	$	17	$	—	$	1,807

Based on the analyses performed as of December 31, 2024, 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, 2024, were as follows (in thousands):


	Term Loans Amortized Cost by Origination Year												Revolving Loans Amortized Cost		Revolving Loans Converted to Term		Total
	2024		2023		2022		2021		2020		Prior
Commercial & industrial
Pass	$	44,130	$	32,157	$	34,862	$	16,787	$	8,326	$	27,452	$	108,819	$	1,380	$	273,913
Special mention	810		262		3,933		—		4,390		3,673		10,203		62		23,333
Substandard	99		—		8		733		30		—		379		318		1,567
Doubtful	21		—		—		—		—		687		—		—		708
Total	45,060		32,419		38,803		17,520		12,746		31,812		119,401		1,760		299,521
Gross charge-offs	—		84		200		6		—		—		12		—		302







Construction
Pass	19,344		46,954		17,568		9,058		—		1,536		483		—		94,943
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total	19,344		46,954		17,568		9,058		—		1,536		483		—		94,943
Gross charge-offs	—		—		—		—		—		—		—		—		—
Owner occupied commercial real estate
Pass	23,196		23,185		26,945		20,979		9,513		31,222		97		55		135,192
Special mention	—		370		—		109		—		2,206		2,000		—		4,685
Substandard	—		96		863		321		—		1,107		—		—		2,387
Doubtful	—		—		—		—		—		15		—		—		15
Total	23,196		23,651		27,808		21,409		9,513		34,550		2,097		55		142,279
Gross charge-offs	—		—		—		—		—		—		—		—		—
Non-owner occupied commercial real estate
Pass	97,155		109,354		267,280		141,864		97,828		233,084		6,696		777		954,038
Special mention	—		—		5,935		7,793		—		7,833		—		—		21,561
Substandard	—		2,148		146		—		1,014		875		—		—		4,183
Doubtful	—		—		—		—		—		—		—		—		—
Total	97,155		111,502		273,361		149,657		98,842		241,792		6,696		777		979,782
Gross charge-offs	—		—		—		—		—		—		—		—		—
Residential mortgages
Not rated	21,574		20,257		55,321		55,152		64,471		56,708		—		—		273,483
Substandard	—		—		85		771		220		420		—		—		1,496
Total	21,574		20,257		55,406		55,923		64,691		57,128		—		—		274,979
Gross charge-offs	—		—		—		—		—		21		—		—		21
Home equity lines and loans
Not rated	13,833		10,657		14,094		4,879		2,503		10,259		35,015		1,252		92,492
Special mention	—		—		115		—		—		—		—		—		115
Substandard	—		24		63		—		—		195		116		215		613
Total	13,833		10,681		14,272		4,879		2,503		10,454		35,131		1,467		93,220
Gross charge-offs	—		—		1		—		—		11		1		—		13
Indirect consumer
Not rated	37,746		52,480		67,237		13,266		4,194		2,726		—		—		177,649
Substandard	75		157		107		79		11		40		—		—		469
Total	37,821		52,637		67,344		13,345		4,205		2,766		—		—		178,118
Gross charge-offs	47		517		525		161		99		116		—		—		1,465
Direct consumer
Not rated	2,420		1,681		1,454		275		41		225		2,455		14		8,565
Substandard	—		—		—		—		—		—		10		2		12
Total	2,420		1,681		1,454		275		41		225		2,465		16		8,577
Gross charge-offs	5		21		20		14		—		4		8		—		72

Total loans	$	260,403	$	299,782	$	496,016	$	272,066	$	192,541	$	380,263	$	166,273	$	4,075	$	2,071,419

Total gross charge-offs	$	52	$	622	$	746	$	181	$	99	$	152	$	21	$	—	$	1,873

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 value 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 loss and adjusted accordingly.

Other Real Estate Owned (OREO) : 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.

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 counter-party'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.

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):


			Fair Value Measurement as of September 30, 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	$	252,798	$	—	$	252,798	$	—

Obligations of states and political subdivisions	10,302		—		10,302		—
Corporate bonds and notes	17,414		—		11,345		6,069

Total available for sale securities	$	280,514	$	—	$	274,445	$	6,069

Equity investments, at fair value	$	3,139	$	3,139	$	—	$	—
Derivative assets	$	17,966	$	—	$	17,966	$	—

Financial Liabilities:
Derivative liabilities	$	18,056	$	—	$	18,056	$	—


			Fair Value Measurement as of December 31, 2024 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)
U.S. Treasury notes and bonds	$	56,906	$	56,906	$	—	$	—
Mortgage-backed securities, residential	365,934		—		365,934		—

Obligations of states and political subdivisions	35,505		—		35,505		—
Corporate bonds and notes	22,016		—		9,884		12,132
SBA loan pools	51,081		—		51,081		—


Total available for sale securities	$	531,442	$	56,906	$	462,404	$	12,132

Equity investments, at fair value	$	2,759	$	2,759	$	—	$	—
Derivative assets	$	23,829	$	—	$	23,829	$	—

Financial Liabilities:
Derivative liabilities	$	23,851	$	—	$	23,851	$	—

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 nine month periods ended September 30, 2025 and 2024.

There were no transfers between Level 2 and Level 3 during the three month periods ended September 30, 2025 and 2024. During the nine month period ended September 30, 2025, the Corporation transferred its investment in seven corporate subordinated debt issuances into Level 3 from Level 2 due to the lack of available observable market data for the issuances or issuances of similar size and structure. Each of these transfers occurred during the three month period ended March 31, 2025. During the nine month period ended September 30, 2025, the Corporation transferred its investment in 13 corporate subordinated debt issuances out of Level 3 and into Level 2, including each of the seven issuances which were transferred into Level 3 during the first nine months of 2025. Each of these transfers out of Level 3 occurred during the second quarter of 2025. The transfers out of Level 3 were primarily due to improved availability of observable market data for the issuances or issuances of similar size and structure. The improved availability of observable inputs was partially attributable to increased issuance activity for subordinated debt of similar entities and an improvement in general market liquidity. There was one corporate subordinated debt issuance previously classified using Level 3 inputs which was redeemed by the issuer prior to its initial call date due to merger-related regulatory requirements during the nine month period ended September 30, 2025, totaling $ 1.0 million. During the nine month period ended September 30, 2024, the Corporation transferred its investment in one corporate subordinated debt issuance out of Level 3 and into Level 2, due to availability of market data for the specific issuer.

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 nine month periods ended September 30, 2025 and 2024, and qualitative information regarding Level 3 significant unobservable inputs as of September 30, 2025 and December 31, 2024 (in thousands):


	For the Three Months Ended				For the Nine Months Ended
Level 3 Financial Assets - Corporate bonds and notes	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
Balance of recurring Level 3 assets as of beginning of period	$	5,880	$	6,175	$	12,132	$	7,530
Total gains or losses for the period:
Included in other comprehensive income	189		36		1,338		430
Repayments, calls, and maturities	—		—		( 1,000 )		—
Transfers into Level 3	—		—		9,629		—
Transfers out of Level 3	—		—		( 16,030 )		( 1,749 )
Balance of recurring Level 3 assets as of end of period	$	6,069	$	6,211	$	6,069	$	6,211

September 30, 2025

Fair Value

Valuation Technique

Unobservable Input

Range [Weighted Average] as of September 30, 2025

Corporate bonds and notes

6,069

Discounted cash flow

Market discount rate

10.75 % - 10.75 %

[ 10.75 %]

December 31, 2024

Fair Value

Valuation Technique

Unobservable Input

Range [Weighted Average] as of December 31, 2024

Corporate bonds and notes

12,132

Discounted cash flow

Market discount rate

7.25 % - 12.00 %

[ 10.82 %]

Assets and liabilities measured at fair value on a non-recurring basis as of September 30, 2025 and December 31, 2024 are summarized below (in thousands):


			Fair Value Measurement as of September 30, 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 mortgages:


Non-owner occupied commercial real estate	$	2,146	$	—	$	—	$	2,146



Total collateral-dependent loans	$	2,146	$	—	$	—	$	2,146
Other real estate owned:





Consumer loans:
Home equity lines and loans	$	56	$	—	$	—	$	56
Total other real estate owned, net	$	56	$	—	$	—	$	56


			Fair Value Measurement as of December 31, 2024 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 and industrial	$	11	$	—	$	—	$	11
Commercial mortgages:


Non-owner occupied commercial real estate	873		—		—		873



Total collateral-dependent loans	$	884	$	—	$	—	$	884
Other real estate owned:




Residential mortgages	$	126	$	—	$	—	$	126
Consumer loans:
Home equity lines and loans	285		—		—		285
Total other real estate owned, net	$	411	$	—	$	—	$	411

The fair value of other real estate owned is presented net of a $ 32 thousand valuation allowance as of December 31, 2024.

The following tables present quantitative information regarding Level 3 significant unobservable inputs for assets and liabilities measured at fair value on a non-recurring basis as of September 30, 2025 and December 31, 2024 (in thousands):

Description

Fair Value as of September 30, 2025

Valuation Technique

Unobservable Inputs

Range [Weighted Average] as of September 30, 2025

Collateral-dependent loans:

Commercial mortgages:

Non-owner occupied commercial real estate

2,146

Income approach

Adjustment to appraised value

— % - 19.57 %

[ 17.61 %]

Total collateral-dependent loans

2,146

Other real estate owned:

Consumer loans:

Home equity lines and loans

Sales comparison

Adjustment to appraised value

20.80 % - 20.80 %

[ 20.80 %]

Total other real estate owned, net

Description

Fair Value as of December 31, 2024

Valuation Technique

Unobservable Inputs

Range [Weighted Average] as of December 31, 2024

Collateral-dependent loans:

Commercial and industrial

Net present value

Discount rate

41.29 % - 41.29 %

[ 41.29 %]

Commercial mortgages:

Non-owner occupied commercial real estate

873

Income approach

Adjustment to appraised value

16.86 % - 16.86 %

[ 16.86 %]

Total collateral-dependent loans

884

Other real estate owned:

Residential mortgages

126

Sales comparison

Adjustment to appraised value

20.80 % - 20.80 %

[ 20.80 %]

Consumer loans:

Home equity lines and loans

285

Sales comparison

Adjustment to appraised value

20.80 % - 20.80 %

[ 20.80 %]

Total other real estate owned, net

411

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values of financial instruments, as of September 30, 2025 and December 31, 2024, are as follows (in thousands):


	September 30, 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	$	32,445	$	32,445	$	—	$	—	$	32,445
Interest-earning deposits in other financial institutions	75,201		75,201		—		—		75,201
Equity investments	3,616		3,616		—		—		3,616
Securities available for sale	280,514		—		274,445		6,069		280,514
Securities held to maturity	680		—		—		680		680
FHLBNY and FRBNY stock	5,524		—		—		—		N/A
Loans, net and loans held for sale	2,205,431		—		—		2,134,472		2,134,472
Derivative assets	17,966		—		17,966		—		17,966
Financial liabilities:
Deposits:
Demand, savings, and insured money market deposits	$	1,873,681	$	1,873,681	$	—	$	—	$	1,873,681
Time deposits	484,835		—		485,423		—		485,423





Subordinated debt, net of deferred issuance costs	44,002		—		46,286		—		46,286
Derivative liabilities	18,056		—		18,056		—		18,056

(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.


	December 31, 2024
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	$	26,224	$	26,224	$	—	$	—	$	26,224
Interest-earning deposits in other financial institutions	20,811		20,811		—		—		20,811
Equity investments	3,235		3,235		—		—		3,235
Securities available for sale	531,442		56,906		462,404		12,132		531,442
Securities held to maturity	808		—		—		808		808
FHLBNY and FRBNY stock	9,117		—		—		—		N/A
Loans, net and loans held for sale	2,071,419		—		—		1,981,851		1,981,851


Derivative assets	23,829		—		23,829		—		23,829
Financial liabilities:
Deposits:
Demand, savings, and insured money market deposits	$	1,772,971	$	1,772,971	$	—	$	—	$	1,772,971
Time deposits	623,912		—		622,920		—		622,920

FHLBNY advances	109,110		—		109,083		—		109,083


Derivative liabilities	23,851		—		23,851		—		23,851

NOTE 6 LEASES

Operating Leases

The Corporation leases certain branch properties under long-term, operating lease agreements. The leases expire at various dates through 2033 and generally include renewal options. As of September 30, 2025, the weighted average remaining lease term was 6.17 years with a weighted average discount rate of 3.53 %. Rent expense was $ 0.2 million for the three months ended September 30, 2025. Rent expense was $ 0.7 million for the nine months ended September 30, 2025. 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 branch properties as of September 30, 2025 and December 31, 2024 classified as operating leases consist of the following (in thousands):


	September 30, 2025		December 31, 2024
Operating lease right-of-use assets	$	5,446	$	5,648
Less: accumulated amortization	( 583 )		( 772 )
Less: lease termination	—		—
Add: lease modifications	80		570
Operating lease right-of-use-assets, net	$	4,943	$	5,446

The following is a schedule by year of the undiscounted cash flows of the operating lease liabilities, excluding CAM charges, as of September 30, 2025 (in thousands):


Year	Amount
2025	$	240
2026	965
2027	977
2028	845
2029	827
2030 and thereafter	1,860
Total minimum lease payments	5,714
Less: amount representing interest	( 590 )
Present value of net minimum lease payments	$	5,124

As of September 30, 2025, 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 September 30, 2025, the weighted average remaining lease term of finance leases was 10.88 years with a weighted average discount rate of 4.06 %. The Corporation has included these leases in premises and equipment as of September 30, 2025 and December 31, 2024 as follows (in thousands):


	September 30, 2025		December 31, 2024
Buildings	$	6,507	$	6,507
Less: accumulated depreciation	( 3,520 )		( 3,236 )
Net book value	$	2,987	$	3,271

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 September 30, 2025 (in thousands):


Year	Amount
2025	$	123
2026	502
2027	505
2028	505
2029	511
2030 and thereafter	2,436
Total minimum lease payments	4,582
Less: amount representing interest	( 1,052 )
Present value of net minimum lease payments	$	3,530

As of September 30, 2025, the Corporation had no finance leases that were signed, but had not yet commenced.

Related Party Transactions

The Bank leases its branch located at 2 Rush Street, Schenectady, New York, under a lease agreement through February, 2033 from a member of the Corporation's Board of Directors with monthly rent and CAM related expenses totaling $ 9 thousand per m onth. Rent and CAM related expenses paid to this Board member totaled $ 28 thousand for each of the three month periods ended September 30, 2025 and 2024, respectively. Rent and CAM related expenses paid to this Board mem ber totaled $ 83 thousand and $ 82 thousand for the nine month periods ended September 30, 2025 and 2024, respectively.

NOTE 7 GOODWILL AND INTANGIBLE ASSETS

The changes in goodwill included in the core banking segment during the nine month periods ended September 30, 2025 and 2024 were as follows (in thousands):


	2025		2024
Beginning of year	$	21,824	$	21,824
Acquired goodwill	—		—
Ending balance September 30,	$	21,824	$	21,824

The Corporation had no aggregate amortization expense for the three and nine month periods ended September 30, 2025 and 2024.

The amount of goodwill reflected in the Corporation's Unaudited Consolidated Financial Statements is required to be tested by management for impairment on at least an annual basis. Goodwill impairment testing is performed annually as of December 31 and no impairment charges were incurred as of the last test on December 31, 2024.

NOTE 8 COMMITMENTS AND CONTINGENCIES

The Corporation is a party to certain financial instruments with off-balance sheet risk such as commitments under standby letters of credit, unused portions of lines of credit, overdraft protection, and commitments to fund new loans. In accordance with GAAP, these financial instruments are not recorded in the financial statements. The Corporation's policy is to record such instruments when funded. These transactions involve, to varying degrees, elements of credit, interest rate, and liquidity risk. Such transactions are generally used by the Corporation to manage clients' requests for funding and other client needs.

The following table presents the contractual amounts of financial instruments with off-balance sheet risk as of September 30, 2025 and December 31, 2024 (in thousands):


	September 30, 2025				December 31, 2024
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	12,070	$	53,413	$	12,025	$	67,501
Unused lines of credit	$	5,957	$	409,187	$	4,484	$	355,872
Standby letters of credit	$	—	$	19,806	$	—	$	19,180

Commitments to make real estate and home equity loans are generally made for periods of sixty days or less. As of September 30, 2025, the fixed rate real estate and home equity commitments to make loans have interest rates ranging from 5.63 % to 7.25 % and maturities ranging from five years to thirty years . Commitments to fund commercial draw notes are generally made for periods of three months to twenty-four months . As of September 30, 2025, the fixed rate commercial draw commitments have interest rates ranging from 4.49 % 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 Corporation's 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 September 30, 2025 and December 31, 2024, the allowance for credit losses on unfunded commitments was $ 0.5 million and $ 0.8 million, respectively.

In the normal course of business, there are various outstanding claims and legal proceedings involving the Corporation or its subsidiaries. At September 30, 2025, 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.

NOTE 9 BORROWED FUNDS

The following tables summarize the Corporation's borrowed funds outstanding as of September 30, 2025 and December 31, 2024 (in thousands):


	September 30, 2025
	Balance		Maturity	Rate




Subordinated notes, net	$	44,002	June, 15, 2035	7.75	%


	December 31, 2024
	Balance		Maturity	Rate
FHLBNY overnight advances	$	109,110	January 2, 2025	4.69	%

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 note 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 Corporation intends to use the net proceeds from the issuance and sale of the Notes for general corporate purposes and to support regulatory capital ratios for growth initiatives. The Notes qualify at the holding company level as Tier 2 capital under the capital guidelines of the Federal Reserve Board, when applicable.

Collateral at the FHLBNY consisted of $ 245.9 million and $ 244.6 million of residential mortgage loans and home equity loans under a blanket lien arrangement as of September 30, 2025 and December 31, 2024, respectively. Based on this available collateral, the Corporation was eligible to borrow up to a total of $ 169.7 million as of September 30, 2025 at the FHLBNY, all of which was available.

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 July 1, 2025	$	( 40,991 )	$	( 1,714 )	$	( 42,705 )


Other comprehensive income before reclassification	3,623		—		3,623
Amounts reclassified from accumulated other comprehensive income	—		6		6
Net current period other comprehensive income	3,623		6		3,629
Balance at September 30, 2025	$	( 37,368 )	$	( 1,708 )	$	( 39,076 )


	Unrealized Gains and Losses on Securities Available for Sale		Defined Benefit and Other Benefit Plans		Total
Balance at July 1, 2024	$	( 66,708 )	$	( 3,203 )	$	( 69,911 )


Other comprehensive income before reclassification	14,771		—		14,771
Amounts reclassified from accumulated other comprehensive income	—		5		5
Net current period other comprehensive income	14,771		5		14,776
Balance at September 30, 2024	$	( 51,937 )	$	( 3,198 )	$	( 55,135 )


	Unrealized Gains and Losses on Securities Available for Sale		Defined Benefit and Other Benefit Plans		Total
Balance at January 1, 2025	$	( 63,339 )	$	( 1,726 )	$	( 65,065 )


Other comprehensive income before reclassification	12,734		—		12,734
Amounts reclassified from accumulated other comprehensive income	13,237		18		13,255
Net current period other comprehensive income	25,971		18		25,989
Balance at September 30, 2025	$	( 37,368 )	$	( 1,708 )	$	( 39,076 )


	Unrealized Gains and Losses on Securities Available for Sale		Defined Benefit and Other Benefit Plans		Total
Balance at January 1, 2024	$	( 62,800 )	$	( 3,213 )	$	( 66,013 )


Other comprehensive income before reclassification	10,863		—		10,863
Amounts reclassified from accumulated other comprehensive income	—		15		15
Net current period other comprehensive income	10,863		15		10,878
Balance at September 30, 2024	$	( 51,937 )	$	( 3,198 )	$	( 55,135 )

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 September 30,				Affected Line Item in the Statement Where Net Income (Loss) is Presented
	2025		2024




Amortization of defined pension plan and other benefit plan items:


Actuarial losses (a)	$	8	$	7	Other components of net periodic pension and postretirement benefits
Tax effect	( 2 )		( 2 )		Income tax expense (benefit)
Net of tax	6		5
Total reclassification for the period, net of tax	$	6	$	5

(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).


Details about Accumulated Other Comprehensive Income (Loss) Components	Nine Months Ended September 30,				Affected Line Item in the Statement Where Net Income (Loss) is Presented
	2025		2024
Unrealized gains and losses on securities available for sale:
Net realized losses on securities available for sale	$	17,498	$	—	Net (losses) on securities transactions
Tax effect	( 4,261 )		—		Income tax expense (benefit)
Net of tax	13,237		—
Amortization of defined pension plan and other benefit plan items:


Actuarial losses (a)	24		20		Other components of net periodic pension and postretirement benefits
Tax effect	( 6 )		( 5 )		Income tax expense (benefit)
Net of tax	18		15
Total reclassification for the period, net of tax	$	13,255	$	15

(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 in 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 nine month periods ended September 30, 2025 and 2024 (in thousands). Items outside the scope of ASC 606 are noted as such.


	Three Months Ended September 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	$	699	$	—	$	—	$	699
Other	395		—		—		395
Interchange revenue from debit card transactions	1,073		—		—		1,073
WMG fee income	—		2,967		—		2,967
CFS fee and commission income	—		—		300		300

Net gains on sales of loans (a)	78		—		—		78
Loan servicing fees (a)	39		—		—		39

Changes in fair value of equity investments (a)	126		—		10		136
Income from bank-owned life insurance (a)	8		—		—		8
Other (a)	393		—		—		393
Total non-interest income	$	2,811	$	2,967	$	310	$	6,088

(a) Not within scope of ASC 606.

(b) The Core Banking column above includes amounts to eliminate transactions between segments.


	Three Months Ended September 30, 2024
Revenue by Operating Segment: Non-interest income	Core Banking (b)		WMG		Holding Company and CFS		Total
Service charges on deposit accounts
Overdraft fees	$	768	$	—	$	—	$	768
Other	248		—		—		248
Interchange revenue from debit card transactions	1,123		—		—		1,123
WMG fee income	—		2,991		—		2,991
CFS fee and commission income	—		—		306		306
Net gains (losses) on sales of OREO	( 19 )		—		—		( 19 )
Net gains on sales of loans (a)	91		—		—		91
Loan servicing fees (a)	36		—		—		36

Changes in fair value of equity investments (a)	119		—		( 1 )		118
Income from bank-owned life insurance (a)	10		—		—		10
Other (a)	247		—		—		247
Total non-interest income	$	2,623	$	2,991	$	305	$	5,919

(a ) Not within scope of ASC 606.

(b) The Core Banking column above includes amounts to eliminate transactions between segments.


	Nine Months Ended September 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	$	2,149	$	—	$	—	$	2,149
Other	1,179		—		—		1,179
Interchange revenue from debit card transactions	3,220		—		—		3,220
WMG fee income	—		8,827		—		8,827
CFS fee and commission income	—		—		793		793
Net gains (losses) on sales of OREO	( 8 )		—		—		( 8 )
Net gains on sales of loans (a)	169		—		—		169
Loan servicing fees (a)	111		—		—		111
Net (losses) on sales of securities (a)	( 17,498 )		—		—		( 17,498 )
Changes in fair value of equity investments (a)	197		—		—		197
Income from bank-owned life insurance (a)	24		—		—		24
Other (a)	2,109		—		—		2,109
Total non-interest income	$	( 8,348 )	$	8,827	$	793	$	1,272

(a) Not within scope of ASC 606.

(b) The Core Banking column above includes amounts to eliminate transactions between segments.


	Nine Months Ended September 30, 2024
Revenue by Operating Segment:	Core Banking (b)		WMG		Holding Company and CFS		Total
Non-interest income
Service charges on deposit accounts
Overdraft fees	$	2,196	$	—	$	—	$	2,196
Other	733		—		—		733
Interchange revenue from debit card transactions	3,327		—		—		3,327
WMG fee income	—		8,554		—		8,554
CFS fee and commission income	—		—		787		787
Net gains on sales of OREO	( 22 )		—		—		( 22 )
Net gains on sales of loans (a)	162		—		—		162
Loan servicing fees (a)	108		—		—		108

Change in fair value of equity securities (a)	259		—		( 26 )		233
Income from bank-owned life insurance (a)	29		—		—		29
Other (a)	1,067		—		—		1,067
Total non-interest income	$	7,859	$	8,554	$	761	$	17,174

(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 included 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 Income 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.

Net Gains/Losses on Sales of OREO: The Corporation records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Corporation finances the sale of OREO to the buyer, the Corporation assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Corporation adjusts the transaction price and related gain (loss) on sale if a significant financing component is present.

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 September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Qualified Pension Plan
Service cost, benefits earned during the period	$	—	$	—	$	—	$	—
Interest cost on projected benefit obligation	391		383		1,173		1,139
Expected return on plan assets	( 524 )		( 629 )		( 1,572 )		( 1,887 )
Amortization of unrecognized transition obligation	—		—		—		—
Amortization of unrecognized prior service cost	—		—		—		—
Amortization of unrecognized net loss	—		—		—		—
Net periodic pension benefit	$	( 133 )	$	( 246 )	$	( 399 )	$	( 748 )

Supplemental Pension Plan
Service cost, benefits earned during the period	$	—	$	—	$	—	$	—
Interest cost on projected benefit obligation	11		11		33		33
Expected return on plan assets	—		—		—		—
Amortization of unrecognized prior service cost	—		—		—		—
Amortization of unrecognized net loss	3		3		9		9
Net periodic supplemental pension cost	$	14	$	14	$	42	$	42

Postretirement Plan, Medical and Life
Service cost, benefits earned during the period	$	—	$	—	$	—	$	—
Interest cost on projected benefit obligation	1		1		3		3
Expected return on plan assets	—		—		—		—
Amortization of unrecognized prior service cost	—		—		—		—
Amortization of unrecognized net loss	5		4		15		11
Net periodic postretirement, medical and life cost	$	6	$	5	$	18	$	14

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), who collectively are 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 2024 Annual Report on Form 10-K, which was filed with the SEC on March 14, 2025. Summarized financial information concerning the Corporation’s reportable segments and the reconciliation to the Corporation’s consolidated results are shown in the following table. 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.

The Holding Company and CFS columns below includes income and expenses related to insurance products, mutual funds, and brokerage services (in thousands).


	Three Months Ended September 30, 2025
	Core Banking		WMG		Holding Company and CFS		Inter-Segment Eliminations		Consolidated Totals
Interest and dividend income	$	33,884	$	—	$	3	$	( 3 )	$	33,884
Interest expense	10,301		—		898		( 3 )		11,196
Net interest income	23,583		—		( 895 )		—		22,688
Provision for credit losses	1,064		—		—		—		1,064
Net interest income after provision for credit losses	22,519		—		( 895 )		—		21,624
Non-interest income	2,813		2,967		311		( 3 )		6,088
Non-interest expenses:

Compensation expense and benefits	8,174		1,698		238		—		10,110
Net occupancy expense	1,312		59		3		( 3 )		1,371
Furniture and equipment expense	384		12		3		—		399
Data processing & software expense	2,232		297		5		—		2,534
Other non-interest expenses	3,072		74		85		—		3,231
Total non-interest expense	15,174		2,140		334		( 3 )		17,645
Income before income tax expense (benefit)	10,158		827		( 918 )		—		10,067
Income tax expense (benefit)	2,337		190		( 252 )		—		2,275
Segment net income (loss)	$	7,821	$	637	$	( 666 )	$	—	$	7,792
Supplemental Information:
Total assets as of September 30, 2025	$	2,663,118	$	2,871	$	289,937	$	( 259,292 )	$	2,696,634
Capital expenditures	$	400	$	—	$	—	$	—	$	400
Depreciation expense (1)	$	447	$	14	$	—	$	—	$	461

(1) Included in net occupancy and furniture and equipment expense in the table above.


	Three Months Ended September 30, 2024
	Core Banking		WMG		Holding Company, and CFS		Inter-Segment Eliminations		Consolidated Totals
Interest and dividend income	$	32,354	$	—	$	9	$	( 1 )	$	32,362
Interest expense	13,975		—		—		( 1 )		13,974
Net interest income	18,379		—		9		—		18,388
Provision for credit losses	564		—		—		—		564
Net interest income after provision for credit losses	17,815		—		9		—		17,824
Non-interest income	2,625		2,991		305		( 2 )		5,919
Non-interest expenses:

Compensation expense and benefits	6,973		1,383		212		—		8,568
Net occupancy expense	1,362		60		2		( 2 )		1,422
Furniture and equipment expense	369		30		3		—		402
Data processing & software expense	2,255		308		4		—		2,567
Other non-interest expenses	3,346		116		89		—		3,551
Total non-interest expense	14,305		1,897		310		( 2 )		16,510
Income before income tax expense (benefit)	6,135		1,094		4		—		7,233
Income tax expense (benefit)	1,280		223		10		—		1,513
Segment net income (loss)	$	4,855	$	871	$	( 6 )	$	—	$	5,720
Supplemental Information:
Total assets as of September 30, 2024	$	2,777,492	$	3,108	$	220,503	$	( 226,888 )	$	2,774,215
Capital expenditures	$	607	$	—	$	—	$	—	$	607
Depreciation expense (1)	$	409	$	14	$	—	$	—	$	423

(1) Included in net occupancy and furniture and equipment expense in the table above.


	Nine Months Ended September 30, 2025
	Core Banking		WMG		Holding Company, and CFS		Inter-Segment Eliminations		Consolidated Totals
Interest and dividend income	$	98,615	$	—	$	6	$	( 5 )	$	98,616
Interest expense	34,203		—		1,105		( 5 )		35,303
Net interest income	64,412		—		( 1,099 )		—		63,313
Provision for credit losses	3,301		—		—		—		3,301
Net interest income after provision for credit losses	61,111		—		( 1,099 )		—		60,012
Non-interest income	( 8,339 )		8,827		794		( 10 )		1,272
Non-interest expenses:

Compensation expense and benefits	23,600		4,432		674		—		28,706
Net occupancy expense	4,144		191		10		( 10 )		4,335
Furniture and equipment expense	1,152		53		22		—		1,227
Data processing & software expense	6,692		919		20		—		7,631
Other non-interest expenses	9,680		427		335		—		10,442
Total non-interest expense	45,268		6,022		1,061		( 10 )		52,341
Income before income tax expense (benefit)	7,504		2,805		( 1,366 )		—		8,943
Income tax expense (benefit)	1,344		624		( 388 )		—		1,580
Segment net income (loss)	$	6,160	$	2,181	$	( 978 )	$	—	$	7,363
Supplemental Information:
Total assets as of September 30, 2025	$	2,663,118	$	2,871	$	289,937	$	( 259,292 )	$	2,696,634
Capital expenditures	$	1,088	$	—	$	—	$	—	$	1,088
Depreciation expense (1)	$	1,357	$	45	$	—	$	—	$	1,402

1 Included in net occupancy and furniture and equipment expense in the table above.


	Nine Months Ended September 30, 2024
	Core Banking		WMG		Holding Company, and CFS		Inter-Segment Eliminations		Consolidated Totals
Interest and dividend income	$	94,942	$	—	$	30	$	( 5 )	$	94,967
Interest expense	40,734		—		—		( 5 )		40,729
Net interest income	54,208		—		30		—		54,238
Provision for credit losses	( 597 )		—		—		—		( 597 )
Net interest income after provision for credit losses	54,805		—		30		—		54,835
Non-interest income	7,864		8,554		761		( 5 )		17,174
Non-interest expenses:

Compensation expense and benefits	21,481		4,047		575		—		26,103
Net occupancy expense	4,182		178		5		( 5 )		4,360
Furniture and equipment expense	1,107		71		19		—		1,197
Data processing & software expense	6,589		834		14		—		7,437
Other non-interest expenses	9,595		399		336		—		10,330
Total non-interest expense	42,954		5,529		949		( 5 )		49,427
Income before income tax expense (benefit)	19,715		3,025		( 158 )		—		22,582
Income tax expense (benefit)	4,224		647		( 46 )		—		4,825
Segment net income (loss)	$	15,491	$	2,378	$	( 112 )	$	—	$	17,757
Supplemental Information:
Total assets as of September 30, 2024	$	2,777,492	$	3,108	$	220,503	$	( 226,888 )	$	2,774,215
Capital expenditures	$	1,707	$	—	$	—	$	—	$	1,707
Depreciation expense (1)	$	1,317	$	42	$	—	$	—	$	1,359

(1) Included in net occupancy and furniture and equipment expense in the table above.

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. One grant has been issued under the 2025 Plan. The Corporation's prior plans shall remain in existence solely for the purpose of administering outstanding grants.

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 nine months ended September 30, 2025 and 2024, 35,455 and 13,457 shares, respectively, were re-issued 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 $ 0.5 million and $ 0.3 million was recognized during the three month periods ended September 30, 2025 and 2024, respectively. Total expense related to stock compensation of $ 1.1 million and $ 0.9 million was recognized during the nine month periods ended September 30, 2025 and 2024, respectively.

A summary of restricted stock activity for the three and nine months ended September 30, 2025 is presented below:


	Shares	Weighted–Average Grant Date Fair Value
Nonvested at July 1, 2025	72,447	$ 48.28
Granted	299	$ 50.27
Vested	( 595 )	$ 38.59
Forfeited or cancelled	( 2,130 )	$ 47.97
Nonvested at September 30, 2025	70,021	$ 48.38


	Shares	Weighted–Average Grant Date Fair Value
Nonvested at January 1, 2025	49,703	$ 46.67
Granted	35,455	$ 50.45
Vested	( 13,007 )	$ 47.55
Forfeited or cancelled	( 2,130 )	$ 47.97
Nonvested at September 30, 2025	70,021	$ 48.38

As of September 30, 2025, there was $ 2.4 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 3.58 years. The total fair value of shares vested was $ 0.6 million and $ 0.7 million for the nine month periods ended September 30, 2025 and 2024, respectively.

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 nine months ended September 30, 2025. Reference should be made to the accompanying unaudited consolidated financial statements and footnotes, and the Corporation’s 2024 Annual Report on Form 10-K, which was filed with the SEC on March 14, 2025, 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 uncer ta inties, see Forward-looking Statements below, in Part I, Item 1A, Risk Factors, and on pages 20–31 of the Corporation’s 2024 Form 10-K. For a discussion of the use of non-GAAP financial measures, see pages 64-67 of the Corporation's 2024 Form 10-K, and pages 79-81 in 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 2024 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.

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, 2024, 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 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 estimate of 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 September 30, 2025 and December 31, 2024, the allowance for credit losses totaled $23.6 million and $21.4 million, respectively. A significant portion of the allowance for credit losses is allocated to the commercial portfolio, to both commercial real estate and commercial and industrial loans. As of September 30, 2025 and December 31, 2024, the allowance for credit losses allocated to the total commercial portfolio was $18.3 million and $15.7 million, respectively, or 77.5% and 73.6% of the total allowance for credit losses on loans. For comparison, total commercial loans represented 75.9% and 73.2% of total loan balances as of September 30, 2025 and December 31, 2024, 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 the commercial and industrial, consumer, and other loans loan 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, 2024. 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 $1.5 million, or 6.2%, to $25.1 million as of September 30, 2025, assuming qualitative adjustments were kept at current levels.

While management has concluded that its current evaluation is reasonable under the circumstances, and that sensitivity analysis is based on a series of hypothetical scenarios not intended to represent management’s assumptions or judgment of factors as of September 30, 2025, it has also concluded that differing assumptions could materially impact allowance calculations, either positively or adversely.


Consolidated Financial Highlights																As of or for the
(in thousands, except per share data)	As of or for the Three Months Ended															Nine Months Ended
	Sept. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Sept. 30,			Sept. 30,			Sept. 30,
RESULTS OF OPERATIONS	2025			2025			2025			2024			2024			2025			2024
Interest and dividend income	$	33,884		$	33,034		$	31,698		$	32,597		$	32,362		$	98,616		$	94,967
Interest expense	11,196			12,226			11,881			12,776			13,974			35,303			40,729
Net interest income	22,688			20,808			19,817			19,821			18,388			63,313			54,238
Provision (credit) for credit losses	1,064			1,145			1,092			551			564			3,301			(597)
Net interest income after provision for credit losses	21,624			19,663			18,725			19,270			17,824			60,012			54,835
Non-interest income (loss)	6,088			(10,705)			5,889			6,056			5,919			1,272			17,174
Non-interest expense	17,645			17,769			16,927			17,823			16,510			52,341			49,427
Income (loss) before income tax expense	10,067			(8,811)			7,687			7,503			7,233			8,943			22,582
Income tax expense (benefit)	2,275			(2,359)			1,664			1,589			1,513			1,580			4,825
Net income (loss)	$	7,792		$	(6,452)		$	6,023		$	5,914		$	5,720		$	7,363		$	17,757
Basic and diluted earnings (loss) per share	$	1.62		$	(1.35)		$	1.26		$	1.24		$	1.19		$	1.53		$	3.72
Average basic and diluted shares outstanding	4,811			4,808			4,791			4,774			4,773			4,802			4,769
PERFORMANCE RATIOS - Annualized
Return (loss) on average assets	1.15		%	(0.92)		%	0.88		%	0.85		%	0.83		%	0.36		%	0.87		%
Return (loss) on average equity	12.89		%	(11.29)		%	10.96		%	10.73		%	10.81		%	4.27		%	11.82		%
Return (loss) on average tangible equity (a)	14.18		%	(12.48)		%	12.15		%	11.92		%	12.07		%	4.71		%	13.27		%
Efficiency ratio (unadjusted) (b)	61.32		%	175.88		%	65.85		%	68.88		%	67.92		%	81.04		%	69.21		%
Efficiency ratio (adjusted) (a)	61.18		%	65.69		%	65.64		%	68.64		%	67.69		%	64.08		%	68.97		%
Non-interest expense to average assets	2.61		%	2.54		%	2.47		%	2.57		%	2.39		%	2.54		%	2.41		%
Loans to deposits	93.38		%	86.37		%	86.20		%	86.42		%	82.78		%	93.38		%	82.78		%
AVERAGE YIELDS / RATES - Fully Taxable Equivalent
Yield on loans	5.68		%	5.61		%	5.49		%	5.61		%	5.65		%	5.60		%	5.56		%
Yield on investments	2.55		%	2.27		%	2.26		%	2.29		%	2.21		%	2.34		%	2.28		%
Yield on interest-earning assets	5.15		%	4.83		%	4.72		%	4.79		%	4.78		%	4.90		%	4.72		%
Cost of interest-bearing deposits	2.36		%	2.45		%	2.48		%	2.67		%	2.88		%	2.43		%	2.83		%
Cost of borrowings	7.33		%	4.90		%	4.54		%	4.74		%	5.08		%	5.43		%	5.09		%
Cost of interest-bearing liabilities	2.51		%	2.57		%	2.55		%	2.73		%	2.97		%	2.55		%	2.92		%
Cost of funds	1.85		%	1.94		%	1.92		%	2.04		%	2.24		%	1.90		%	2.19		%
Interest rate spread	2.64		%	2.26		%	2.17		%	2.06		%	1.81		%	2.35		%	1.80		%
Net interest margin, fully taxable equivalent (a)	3.45		%	3.05		%	2.96		%	2.92		%	2.72		%	3.15		%	2.70		%
CAPITAL
Total equity to total assets at end of period	9.10		%	8.24		%	8.16		%	7.76		%	7.95		%	9.10		%	7.95		%
Tangible equity to tangible assets at end of period (a)	8.36		%	7.53		%	7.44		%	7.02		%	7.22		%	8.36		%	7.22		%
Book value per share	$	50.98		$	48.85		$	47.49		$	45.13		$	46.22		$	50.98		$	46.22
Tangible book value per share (a)	46.44			44.31			42.95			40.55			41.65			46.44			41.65
Period-end market value per share	52.52			48.47			47.57			48.81			48.02			52.52			48.02
Dividends declared per share	0.34			0.32			0.32			0.31			0.31			0.98			0.93
AVERAGE BALANCES
Loans and loans held for sale (c)	$	2,171,673		$	2,108,557		$	2,077,739		$	2,046,270		$	2,020,280		$	2,119,666		$	2,006,479
Interest-earning assets	2,617,680			2,749,856			2,729,661			2,711,995			2,699,968			2,698,654			2,693,499
Total assets	2,684,273			2,802,226			2,784,414			2,761,875			2,751,392			2,756,604			2,738,962
Deposits	2,343,596			2,432,713			2,445,597			2,446,662			2,410,735			2,406,929			2,410,706
Total equity	239,836			229,161			222,802			219,254			210,421			230,662			200,588
Tangible equity (a)	218,012			207,337			200,978			197,430			188,597			208,838			178,764
ASSET QUALITY
Net charge-offs	$	86		$	992		$	262		$	594		$	78		$	1,340		$	566
Non-performing loans (d)	7,762			8,237			9,881			8,954			10,545			7,762			10,545
Non-performing assets (e)	7,972			8,447			10,282			9,606			11,134			7,972			11,134
Allowance for credit losses	23,645			22,665			22,522			21,388			21,441			23,645			21,441
Annualized net charge-offs to average loans	0.02		%	0.19		%	0.05		%	0.12		%	0.02		%	0.08		%	0.04		%
Non-performing loans to total loans	0.35		%	0.39		%	0.47		%	0.43		%	0.52		%	0.35		%	0.52		%
Non-performing assets to total assets	0.30		%	0.30		%	0.37		%	0.35		%	0.40		%	0.30		%	0.40		%
Allowance for credit losses to total loans	1.07		%	1.06		%	1.07		%	1.03		%	1.06		%	1.07		%	1.06		%
Allowance for credit losses to non-performing loans	304.63		%	275.16		%	227.93		%	238.87		%	203.33		%	304.63		%	203.33		%


(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.

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 79-81 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 nine months ended September 30, 2025 and 2024. For a discussion of the Critical Accounting Estimates that affect the Consolidated Results of Operations, see pages 46-47 of this Form 10-Q and page 37 of the Corporation’s 2024 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 September 30,								Nine Months Ended September 30,
	2025		2024		Change		% Change		2025		2024		Change		% Change
Net interest income	$	22,688	$	18,388	$	4,300	23.4	%	$	63,313	$	54,238	$	9,075	16.7	%
Non-interest income	6,088		5,919		169		2.9	%	1,272		17,174		(15,902)		(92.6)	%
Non-interest expense	17,645		16,510		1,135		6.9	%	52,341		49,427		2,914		5.9	%
Pre-provision income	11,131		7,797		3,334		42.8	%	12,244		21,985		(9,741)		(44.3)	%
Provision (credit) for credit losses	1,064		564		500		88.7	%	3,301		(597)		3,898		652.9	%
Income tax expense	2,275		1,513		762		50.4	%	1,580		4,825		(3,245)		(67.3)	%
Net income	$	7,792	$	5,720	$	2,072	36.2	%	$	7,363	$	17,757	$	(10,394)	(58.5)	%

Basic and diluted earnings per share	$	1.62	$	1.19	$	0.43	36.1	%	$	1.53	$	3.72	$	(2.19)	(58.9)	%

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 79-81, for further information):


	Three Months Ended September 30,								Nine Months Ended September 30,
	2025		2024		Change		% Change		2025		2024		Change		% Change
Net interest income	$	22,688	$	18,388	$	4,300	23.4	%	$	63,313	$	54,238	$	9,075	16.7	%
Non-interest income (1)	6,088		5,919		169		2.9	%	18,141		17,174		967		5.6	%
Non-interest expense	17,645		16,510		1,135		6.9	%	52,341		49,427		2,914		5.9	%
Pre-provision income	11,131		7,797		3,334		42.8	%	29,113		21,985		7,128		32.4	%
Provision (credit) for credit losses	1,064		564		500		88.7	%	3,301		(597)		3,898		652.9	%
Income tax expense (2)	2,275		1,513		762		50.4	%	5,675		4,825		850		17.6	%
Net income - adjusted	$	7,792	$	5,720	$	2,072	36.2	%	$	20,137	$	17,757	$	2,380	13.4	%

Basic and diluted earnings per share - adjusted	$	1.62	$	1.19	$	0.43	36.1	%	$	4.19	$	3.72	$	0.47	12.6	%

(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 second quarter, 2025.

(2) Adjusted for tax impact of loss on sale of securities available for sale and gain on sale of previous branch property, during second quarter, 2025.


	Three Months Ended September 30,				Nine Months Ended September 30,
Selected financial ratios:	2025		2024		2025		2024
Return on average assets (unadjusted) (a)	1.15	%	0.83	%	0.36	%	0.87	%
Return on average assets (adjusted) (a)(b)	1.15	%	0.83	%	0.98	%	0.87	%
Return on average equity (unadjusted) (a)	12.89	%	10.81	%	4.27	%	11.82	%
Return on average equity (adjusted) (a)(b)	12.89	%	10.81	%	11.67	%	11.82	%
Net interest margin, fully taxable equivalent (a)(b)	3.45	%	2.72	%	3.15	%	2.70	%
Efficiency ratio (unadjusted) (b)	61.32	%	67.92	%	81.04	%	69.21	%
Efficiency ratio (adjusted) (b)	61.18	%	67.69	%	64.08	%	68.97	%
Non-interest expense to average assets	2.61	%	2.39	%	2.54	%	2.41	%

(a) Annualized.
(b) See the GAAP to Non-GAAP reconciliations.

The Corporation reported net income for the third quarter of 2025 of $7.8 million, or $1.62 per share, compared to $5.7 million, or $1.19 per share, for the same period in the prior year. Return on average equity for the current quarter was 12.89%, compared to 10.81% for the same period in the prior year. The increase in net income for the three months ended September 30, 2025 was attributable to increases in net interest income and non-interest income, offset by increases in the provision for credit losses, non-interest expense, and income tax expense.

Net income for the nine months ended September 30, 2025 was $7.4 million, or $1.53 per share, compared to $17.8 million, or $3.72 per share, for the same period in the prior year. R eturn on average equity for the nine months ended September 30, 2025 was 4.27% , compared to 11.82% for the same period in the prior year. The decrease in net income for the nine months ended September 30, 2025 was primarily attributable to a decrease in non-interest income, and increases in the provision for credit losses and non-interest expense, offset by an increase in net interest income and a decrease in income tax expense.

During the second quarter of 2025, the Corporation sold a 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 nine month period ended September 30, 2025 was $20.1 million, or $4.19 per share. 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 79-81, for further information. Adjusted r eturn on average equity for the nine months ended September 30, 2025 was 11.67% , compared to 11.82% for the same period in the prior 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 September 30,
	2025		2024		Change		% Change
Interest and dividend income	$	33,884	$	32,362	$	1,522	4.7	%
Interest expense	11,196		13,974		(2,778)		(19.9)	%
Net interest income	$	22,688	$	18,388	$	4,300	23.4	%

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.

Net interest income for the third quarter of 2025 increased $4.3 million, or 23.4%, to $22.7 million compared to the same period in the prior year, due primarily to increases of $2.4 million in interest income on loans and $0.7 million in interest income on interest-earning deposits, and a decrease of $2.8 million in interest expense on deposits, partially offset by a decrease of $1.4 million in interest and dividend income on taxable securities.

Interest income on loans, including fees, increased to $31.0 million for the three months ended September 30, 2025, from $28.6 million for the same period in the prior year. Interest income on loans increased largely due to an increase of $151.4 million in average balances of total loans compared to the same period in the prior year, as well as an increase of three basis points in the average yield on total loans compared to the same period in the prior year. The increase in average balances of total loans was concentrated in commercial loans, which increased $183.3 million compared to the same period in the prior year, largely comprised of growth in commercial real estate loans, particularly in the Corporation's Capital region and Western New York markets. The average yield on commercial loans decreased seven basis points compared to the same period in the prior year, largely due to declines in benchmark interest rates on existing variable rate loans, the lower market interest rate environment for new originations, and $0.2 million in interest income recognized on the payoff of a nonaccrual commercial real estate loan in the third quarter of 2024.

Average balances of residential mortgage loans increased $4.3 million and the average yield on residential mortgage loans increased 41 basis points, each compared to the same period in the prior year. The increase in average balances of residential mortgage loans was largely due to stronger origination activity year-to-date in 2025 compared to the same period in the prior year, however originations remain below typical historical levels. The increase in the average yield on residential mortgage loans was largely due to the higher interest rate environment resulting in origination yields which exceed the portfolio's average yield, as well as the recognition of interest income on the payoff of a previously nonaccrual loan and deferred fee income on early payoffs during the current period. Average balances of consumer loans decreased $36.2 million, while the average yield on consumer loans increased five basis points compared to the same period in the prior year. The decrease in average balances was largely due to normal portfolio turnover and lower origination activity in the indirect auto portfolio segment, as the Corporation has continued prioritizing funding other types of lending during the past year, and the increase in the average yield on consumer loans was primarily due to portfolio turnover in the indirect auto portfolio as older, lower-yielding balances were replaced by higher-yielding balances. The increase in average yield on consumer loans was partially offset by lower yields on originations of promotional home equity lines of credit and the impact of declines in benchmark interest rates, such as the Prime rate, over the past year on variable rate home equity loans and lines.

Interest income on interest-earning deposits increased to $1.1 million for the three months ended September 30, 2025, from $0.4 million for the same period in the prior year. Interest income on interest-earning deposits increased largely due to an increase of $64.3 million in average balances of interest-earning deposits, despite a decrease of 50 basis points in the average yield on interest-earning deposits, each compared to the same period in the prior year. Average balances of interest-earning deposits increased primarily due to proceeds from the Corporation's sale of available for sale securities and issuance of subordinated debt in the second quarter of 2025, net of payoffs of wholesale funding sources in the third quarter of 2025 and funding of commercial loan growth. The decrease in the average yield on interest-earning deposits was largely due to a decrease in the Federal Funds Target Range Upper Limit of 125 basis points between the third quarter of 2024 and third quarter of 2025. Deposits held at the FRBNY receive interest at a rate of 10 basis points below the Federal Funds Target Range Upper Limit.

Interest expense on deposits decreased to $10.2 million for the three months ended September 30, 2025, from $13.0 million for the same period in the prior year. Interest expense on deposits decreased mainly due to decreases of $58.7 million in average balances of brokered deposits and $47.0 million in average balances of customer time deposits, as well as decreases of 104 and 88 basis points in the average cost of brokered deposits and customer time deposits, respectively, compared to the same period in the prior year. Average balances of brokered deposits decreased due to the Corporation's payoff of all outstanding balances of brokered deposits during July 2025 as part of its balance sheet repositioning efforts. The decrease in the average cost of brokered deposits compared to the same period in the prior year was largely due to the declining interest rate environment, which the Corporation benefited from by largely utilizing brokered deposits with terms of three months or less. Average balances and the average cost of customer time deposits each decreased largely due to changes in the Corporation's promotional CD campaign offerings over the past year, including a shift in strategic focus beginning in 2024 toward shorter-term offerings to take advantage of the declining interest rate environment. Average balances of customer time deposits decreased to 21.7% of total average deposits in the third quarter of 2025 from 23.0% in the third quarter of 2024.

Including customer time deposits, average balances of total interest-bearing customer deposits decreased $25.6 million, compared to the same period in the prior year and the average cost of customer interest-bearing deposits decreased 44 basis points, compared to the same period in the prior year. Combined, these changes resulted in a decrease of 52 basis points in the average cost of interest-bearing deposits compared to the same period in the prior year, from 2.88% in the third quarter of 2024 to 2.36% in the third quarter of 2025. Additionally, average balances of non-interest bearing deposits increased $17.2 million compared to the same period in the prior year. The deposit beta on total deposits was 34% between the third quarters of 2024 and 2025.

Interest income on taxable securities decreased to $1.7 million for the three months ended September 30, 2025, from $3.1 million for the same period in the prior year. Interest income on taxable securities decreased largely due to a decrease of $271.3 million in average balances of taxable securities, as well as a decrease of four basis points in the average yield on taxable securities, both compared to the same period in the prior year. The decrease in average balances was mainly attributable to $244.8 million in sales of available for sale securities during the second quarter of 2025 as part of the Corporation's balance sheet repositioning efforts and normal paydown activity between the third quarters of 2024 and 2025. The decrease in the average yield on taxable securities was primarily due to the average yield of securities sold in the second quarter of 2025 being higher than the overall average yield on the portfolio at the time of the sale.

Fully taxable equivalent net interest margin was 3.45% for the third quarter of 2025, compared to 2.72% for the same period in the prior year. Average interest-earning assets decreased $82.3 million for the three months ended September 30, 2025, while average interest-bearing liabilities decreased $104.7 million, compared to the same period in the prior year. The average yield on interest-earning assets increased 37 basis points to 5.15%, while the average cost of interest-bearing liabilities decreased 46 basis points to 2.51% , for the three months ended September 30, 2025 , compared to the same period in the prior year. Total cost of funds was 1.85% for the three months ended September 30, 2025, compared to 2.24% for the same period in the prior year, a decrease of 39 basis points.

The following table presents net interest income for the periods indicated, and the dollar and percent change (in thousands):


	Nine Months Ended September 30,
	2025		2024		Change		% Change
Interest and dividend income	$	98,616	$	94,967	$	3,649	3.8	%
Interest expense	35,303		40,729		(5,426)		(13.3)	%
Net interest income	$	63,313	$	54,238	$	9,075	16.7	%

Net interest income for the nine months ended September 30, 2025 totaled $63.3 million compared to $54.2 million for the same period in the prior year, an increase of $9.1 million, or 16.7%, due to a decrease of $5.4 million in interest expense and an increase of $3.6 million in interest and dividend income. The decrease in interest expense for the first nine months of 2025 was primarily attributed to a decrease of $5.5 million in interest expense on deposits. The increase in interest and dividend income for the first nine months of 2025 was primarily attributed to increases of $5.2 million in interest income on loans, including fees and $1.3 million in interest income on interest-earning deposits, partially offset by a decrease of $2.7 million in interest and dividend income on taxable securities.

Interest expense on deposits decreased to $32.4 million for the first nine months of 2025, from $37.9 million for the same period in the prior year. The decrease was primarily due to a decrease in interest expense on customer time deposits compared to the same period in the prior year. The decrease in interest expense on customer time deposits was primarily due to a decrease of $8.2 million in average balances of customer time deposits and a 69 basis points decrease in the average cost of customer time deposits for the first nine months of 2025, compared to the same period in the prior year, largely due to changes in offered terms on CD campaigns. Average balances of customer time deposits comprised 21.3% of total average deposits for the first nine months of 2025, compared to 21.7% for the same period in the prior year. The average cost of brokered deposits decreased 93 basis points and average balances of brokered deposits decreased $25.5 million for the first nine months of 2025, compared to the same period in the prior year.

Also contributing to the decrease in interest expense on deposits were decreases of $0.7 million in interest expense on savings and money market deposits and $0.3 million on interest-bearing demand deposits. The decrease in interest expense on savings and money market deposits was primarily due to a 12 basis points decrease in the average cost of savings and money market accounts, despite an increase of $4.5 million in average balances of savings and money market deposits, for the nine months ended September 30, 2025, compared to the same period in the prior year. The decrease in interest expense on interest-bearing demand deposits was primarily due to a 25 basis points decrease in the average cost of interest-bearing demand deposits, despite a $24.2 million increase in average balances of interest-bearing demand deposits for the nine months ended September 30, 2025, compared to the same period in the prior year. Combined with the decline in interest expense on time deposits, these changes resulted in a decrease of 40 basis points in the total average cost of interest-bearing deposits compared to the same period in the prior year, from 2.83% in the first nine months of 2024 to 2.43% in the first nine months of 2025.

Interest expense on borrowed funds of $2.9 million was consistent with the same period in the prior year, primarily a result of the Corporation's balance sheet restructuring efforts in the second quarter of 2025 which reduced the Corporation's usage of brokered deposits and FHLNBY overnight and term advances. The average balances of term advances and other debt decreased $14.8 million and the average cost of term advances and other debt decreased 47 basis points compared to the same period in the prior year. The Corporation paid off $100.0 million in brokered deposits and $55.0 million in short-term FHLBNY advances in July, 2025 as part of its balance sheet repositioning efforts. The average balances of FHLBNY overnight advances decreased $7.0 million for the first nine months of 2025 and the average cost of FHLBNY overnight advances decreased 93 basis points, compared to the same period in the prior year.

Interest income on loans, including fees, increased to $88.6 million for the first nine months of 2025, from $83.3 million for the same period in the prior year. The increase was mostly attributable to an increase of $145.2 million in average balances of commercial loans, compared to the same period in the prior year, largely concentrated in commercial real estate. The average yield on commercial loans decreased eight basis points compared to the same period in the prior year, primarily due to the impact of decreases in benchmark indices on variable rate loans. Average yields on the residential mortgage and consumer loan portfolios increased 34 basis points and 19 basis points, respectively, for the nine months ended September 30, 2025, compared to the same period in the prior year. The increase in the average yield on residential mortgage loans was primarily due to higher origination yields between the first nine months of 2024 and 2025, while the increase in average yield on the consumer loan portfolio was primarily attributable to lower rate loans being replaced by higher-yield production. The average yield on total loans increased four basis points compared to the same period in the prior year, from 5.56% to 5.60%.

Interest income on interest-earning deposits increased to $2.3 million for the first nine months of 2025, from $1.0 million for the same period in the prior year. The increase was primarily due to a $40.7 million increase in average balances of interest-earning deposits, despite a decrease of 37 basis points in the average yield on interest-earning deposits, each compared to the same period in the prior year. The increase in average balances was largely due to remaining proceeds from the Corporation's sale of available for sale securities in the second quarter of 2025 being held as deposits at the FRBNY. The decrease in the average yield on interest-earning deposits was largely due to a decrease in the Federal Funds Target Range Upper Limit of 125 basis points between the first nine months of 2024 and 2025.

Interest and dividend income on taxable securities decreased to $7.2 million for the first nine months of 2025, from $9.9 million for the same period in the prior year. The decrease in interest and dividend income on taxable securities was primarily due to a $136.4 million decrease in the average balances of and a 13 basis points decrease in the average yield on taxable securities for the nine months ended September 30, 2025, compared to the same period in the prior year. The decrease in average balances was mainly attributable to $244.8 million in sales of available for sale securities during the second quarter of 2025 as part of the Corporation's balance sheet repositioning efforts. Additionally, there were $53.9 million in paydowns and maturities of available for sale securities between the first nine months of 2024 and 2025. The decrease in the average yield on taxable securities was mainly attributable to decreases in interest rates earned on variable rate securities such as SBA pooled-loan securities between the first nine months of 2024 and 2025, as well as the average yield of securities sold in the second quarter 2025 being higher than the overall average yield on the portfolio at the time of the sale.

Fully taxable equivalent net interest margin was 3.15% for the nine months ended September 30, 2025 compared to 2.70% for the same period in the prior year. Average interest-earning assets increased $5.2 million, while average interest-bearing liabilities decreased $8.5 million , for the nine months ended September 30, 2025, compared to the same period in the prior year. The average yield on interest-earning assets increased 18 basis points, to 4.90%, while the average cost of interest-bearing liabilities decreas ed 37 basis points, to 2.55% for the nine months ended September 30, 2025, compared to the same period in the prior year.

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 nine months ended September 30, 2025 and 2024. 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 September 30, 2025						Three Months Ended September 30, 2024
($ in thousands)	Average Balance		Interest		Yield/Rate (3)		Average Balance		Interest		Yield/Rate (3)
Interest-earning assets:
Commercial loans	$	1,636,743	$	24,383	5.91	%	$	1,453,418	$	21,854	5.98	%
Residential mortgage loans	277,682		3,063		4.38	%	273,374		2,713		3.97	%
Consumer loans	257,248		3,638		5.61	%	293,488		4,102		5.56	%
Taxable securities	334,290		1,656		1.97	%	605,631		3,063		2.01	%
Tax-exempt securities	11,864		93		3.11	%	38,537		272		2.81	%
Interest-earning deposits	99,853		1,118		4.44	%	35,520		441		4.94	%
Total interest-earning assets	2,617,680		33,951		5.15	%	2,699,968		32,445		4.78	%

Non interest-earning assets:
Cash and due from banks	26,580						25,086
Other assets	62,923						47,571
Allowance for credit losses	(22,910)						(21,233)
Total assets	$	2,684,273					$	2,751,392

Interest-bearing liabilities:
Interest-bearing demand deposits	$	326,464	$	1,287	1.56	%	$	311,406	$	1,445	1.85	%
Savings and insured money market deposits	870,958		4,376		1.99	%	864,541		4,607		2.12	%
Time deposits	507,557		4,429		3.46	%	554,605		6,056		4.34	%
Brokered deposits	7,174		79		4.37	%	65,913		897		5.41	%
FHLBNY overnight advances	23		—		—	%	541		7		5.06	%
Term advances and other debt	11,331		127		4.45	%	75,305		962		5.08	%
Subordinated debt	44,105		898		8.08	%	—		—		N/A
Total interest-bearing liabilities	1,767,612		11,196		2.51	%	1,872,311		13,974		2.97	%

Non interest-bearing liabilities:
Demand deposits	631,443						614,270
Other liabilities	45,382						54,390
Total liabilities	2,444,437						2,540,971
Shareholders' equity	239,836						210,421
Total liabilities and shareholders’ equity	$	2,684,273					$	2,751,392
Fully taxable equivalent net interest income			22,755						18,471
Net interest rate spread (1)					2.64	%					1.81	%
Net interest margin, fully taxable equivalent (2)					3.45	%					2.72	%
Taxable equivalent adjustment			(67)						(83)
Net interest income			$	22,688					$	18,388

(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.


AVERAGE CONSOLIDATED BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS
	Nine Months Ended September 30, 2025						Nine Months Ended September 30, 2024
($ in thousands)	Average Balance		Interest		Yield/ Rate (3)		Average Balance		Interest		Yield/ Rate (3)
Interest-earning assets:
Commercial loans	$	1,578,397	$	68,988	5.84	%	$	1,433,224	$	63,501	5.92	%
Residential mortgage loans	276,540		8,611		4.16	%	274,834		7,879		3.82	%
Consumer loans	264,729		11,116		5.61	%	298,421		12,114		5.42	%
Taxable securities	483,242		7,215		2.00	%	619,657		9,877		2.13	%
Tax-exempt securities	27,101		611		3.01	%	39,453		830		2.81	%
Interest-earning deposits	68,645		2,298		4.48	%	27,910		1,014		4.85	%
Total interest-earning assets	2,698,654		98,839		4.90	%	2,693,499		95,215		4.72	%

Non interest-earning assets:
Cash and due from banks	25,882						25,131
Other assets	54,411						41,807
Allowance for credit losses	(22,343)						(21,475)
Total assets	$	2,756,604					$	2,738,962

Interest-bearing liabilities:
Interest-bearing demand deposits	$	332,492	$	3,888	1.56	%	$	308,318	$	4,170	1.81	%
Savings and insured money market deposits	865,917		12,479		1.93	%	861,382		13,190		2.05	%
Time deposits	513,847		13,669		3.56	%	521,997		16,603		4.25	%
Brokered deposits	70,560		2,367		4.49	%	96,056		3,898		5.42	%
FHLBNY overnight advances	8,319		286		4.60	%	15,359		646		5.53	%
Term advances and other debt	44,778		1,509		4.51	%	59,584		2,222		4.98	%
Subordinated debt	18,281		1,105		8.08	%	—		—		N/A
Total interest-bearing liabilities	1,854,194		35,303		2.55	%	1,862,696		40,729		2.92	%

Non interest-bearing liabilities:
Demand deposits	624,113						622,953
Other liabilities	47,635						52,725
Total liabilities	2,525,942						2,538,374
Shareholders' equity	230,662						200,588
Total liabilities and shareholders’ equity	$	2,756,604					$	2,738,962
Fully taxable equivalent net interest income			63,536						54,486
Net interest rate spread (1)					2.35	%					1.80	%
Net interest margin, fully taxable equivalent (2)					3.15	%					2.70	%
Taxable equivalent adjustment			(223)						(248)
Net interest income			$	63,313					$	54,238

(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.

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 nine months ended September 30, 2025 and 2024. 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 September 30, 2025 vs. 2024
	Increase/(Decrease)
	Total Change		Due to Volume		Due to Rate
(in thousands)
Interest and dividend income on:
Commercial loans	$	2,529	$	2,783	$	(254)
Residential mortgage loans	350		46		304
Consumer loans	(464)		(501)		37
Taxable investment securities	(1,407)		(1,347)		(60)
Tax-exempt investment securities	(179)		(205)		26
Interest-earning deposits	677		726		(49)
Total interest and dividend income, fully taxable equivalent	1,506		1,502		4

Interest expense on:
Interest-bearing demand deposits	(158)		70		(228)
Savings and insured money market deposits	(231)		36		(267)
Time deposits	(1,627)		(480)		(1,147)
Brokered deposits	(818)		(673)		(145)
FHLBNY overnight advances	(7)		(4)		(3)
Term advances and other debt	(835)		(728)		(107)
Subordinated debt	898		898		—
Total interest expense	(2,778)		(881)		(1,897)
Net interest income, fully taxable equivalent	$	4,284	$	2,383	$	1,901


RATE/VOLUME ANALYSIS OF NET INTEREST INCOME
	Nine Months Ended September 30, 2025 vs. 2024
	Increase/(Decrease)
	Total Change		Due to Volume		Due to Rate
(in thousands)
Interest and dividend income on:
Commercial loans	$	5,487	$	6,355	$	(868)
Residential mortgage loans	732		48		684
Consumer loans	(998)		(1,409)		411
Taxable investment securities	(2,662)		(2,084)		(578)
Tax-exempt investment securities	(219)		(275)		56
Interest-earning deposits	1,284		1,367		(83)
Total interest and dividend income, fully taxable equivalent	3,624		4,002		(378)

Interest expense on:
Interest-bearing demand deposits	(282)		315		(597)
Savings and insured money market deposits	(711)		69		(780)
Time deposits	(2,934)		(257)		(2,677)
Brokered deposits	(1,531)		(930)		(601)
FHLBNY overnight advances	(360)		(263)		(97)
Term advances and other debt	(713)		(517)		(196)
Subordinated debt	1,105		1,105		—
Total interest expense	(5,426)		(478)		(4,948)
Net interest income, fully taxable equivalent	$	9,050	$	4,480	$	4,570

Provision for credit losses

Management has established and maintains a methodology for determining and adjusting its allowance for credit losses in conformity with ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . The allowance is based on a combination of quantitative and qualitative analysis and changes in the required allowance are recorded through income as a provision (credit). 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 for the third quarter of 2025 was $1.1 million, compared to $0.6 million for the same period in the prior year. The $0.5 million increase in the provision for credit losses was largely due to stronger loan growth in the third quarter of 2025, which totaled $69.9 million, compared to loan growth of $17.5 million during the same period in the prior year, as well as changes in other model inputs such as a decrease in modeled prepayment speeds. Net charge-offs for both the three months ended September 30, 2025 and 2024 were $0.1 million.

The provision for credit losses for the nine months ended September 30, 2025 was $3.3 million, compared to a credit of $0.6 million for the same period in the prior year. The $3.9 million increase in the provision for credit losses in the nine months ended September 30, 2025, compared to the same period in the prior year was largely driven by the directionality of the impact from the annual loss driver update applied to the Bank's CECL model in the first quarter of the current year, compared to the loss driver update applied in the first quarter of the prior year. The current year update resulted in higher modeled baseline loss rates, while the update in the prior year resulted in lower baseline loss rates. Net charge-offs for the nine months ended September 30, 2025 were $1.3 million, compared to $0.6 million for the same period in the prior year. $0.8 million in net charge-offs during the nine months ended September 30, 2025 related to two commercial and industrial loans which had specific allocations in the allowance for credit losses, and therefore did not impact provision expense. Remaining charge-offs for the nine months ended September 30, 2025 and 2024 were largely concentrated in the consumer 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 September 30,
	2025		2024		Change		% Change
WMG fee income	$	2,967	$	2,991	$	(24)	(0.8)	%
Service charges on deposit accounts	1,094		1,016		78		7.7	%
Interchange revenue from debit card transactions	1,073		1,123		(50)		(4.5)	%

Changes in fair value of equity investments	136		118		18		15.3	%
Net gains on sales of loans held for sale	78		91		(13)		(14.3)	%
Net (losses) on sales of other real estate owned	—		(19)		19		N/M
Income from bank owned life insurance	8		10		(2)		(20.0)	%
CFS fee and commission income	300		306		(6)		(2.0)	%
Other	432		283		149		52.7	%
Total non-interest income	$	6,088	$	5,919	$	169	2.9	%

Total non-interest income for the third quarter of 2025 increased $0.2 million compared to the same period in the prior year, primarily due to increases of $0.1 million each in other non-interest income and service charges on deposit accounts.

Other Non-Interest Income

The increase in other non-interest income can primarily be attributed to an increase in interest rate swap fees reflecting an increase in originations of loans with interest rate swap exposures in the third quarter of 2025, compared to the same period in the prior year.

Service Charges on Deposit Accounts

The increase in service charges on deposit accounts can primarily be attributed to fee schedule increases which were phased in during the fourth quarter of 2024.

The following table presents non-interest income for the periods indicated, and the dollar and percent change (in thousands):


	Nine Months Ended September 30,
	2025		2024		Change		% Change
WMG fee income	$	8,827	$	8,554	$	273	3.2	%
Service charges on deposit accounts	3,328		2,929		399		13.6	%
Interchange revenue from debit card transactions	3,220		3,327		(107)		(3.2)	%
Net (losses) on securities transactions	(17,498)		—		(17,498)		N/M
Changes in fair value of equity investments	197		233		(36)		(15.5)	%
Net gains on sales of loans held for sale	169		162		7		4.3	%
Net (losses) on sales of other real estate owned	(8)		(22)		14		63.6	%
Income from bank owned life insurance	24		29		(5)		(17.2)	%
CFS fee and commission income	793		787		6		0.8	%
Other	2,220		1,175		1,045		88.9	%
Total non-interest income	$	1,272	$	17,174	$	(15,902)	(92.6)	%

Total non-interest income for the nine months ended September 30, 2025 decreased $15.9 million compared to the same period in the prior year. The decrease was primarily due to a $17.5 million net loss on securities transactions, partially offset by increases of $1.0 million in other non-interest income, $0.4 million in services charges on deposit accounts, and $0.3 million in WMG fee 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.

Other Non-Interest Income

The increase in other non-interest income can primarily be attributed to a $0.6 million gain on the sale of a previous branch property during the second quarter of 2025 and an increase of $0.3 million in swap fee income compared to the same period in the prior year.

Service Charges on Deposit Accounts

The increase in service charges on deposit accounts can primarily be attributed to fee rate increases which were phased in during the fourth quarter of 2024.

WMG Fee Income

The increase in WMG fee income can primarily be attributed to fee rate increases which were implemented in the second half of 2024 as well as improved market conditions during the first nine months of 2025.

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 September 30,
	2025		2024		Change		% Change
Compensation expense:
Salaries and wages	$	7,925	$	7,168	$	757	10.6	%
Pension and other employee benefits	2,298		1,627		671		41.2	%
Other components of net periodic pension and postretirement benefits	(113)		(227)		114		50.2	%
Total compensation expense	10,110		8,568		1,542		18.0	%

Non-compensation expense:
Net occupancy	1,371		1,422		(51)		(3.6)	%
Furniture and equipment	399		402		(3)		(0.7)	%
Data processing	2,534		2,567		(33)		(1.3)	%
Professional services	636		522		114		21.8	%


Marketing and advertising	203		210		(7)		(3.3)	%
Other real estate owned expenses	8		55		(47)		N/M
FDIC insurance	352		524		(172)		(32.8)	%
Loan expenses	262		353		(91)		(25.8)	%
Other	1,770		1,887		(117)		(6.2)	%
Total non-compensation expense	7,535		7,942		(407)		(5.1)	%
Total non-interest expense	$	17,645	$	16,510	$	1,135	6.9	%

Total non-interest expense for the third quarter of 2025 increased $1.1 million compared to the same period in the prior year. The increase was due to an increase in total compensation expense partially offset by a decrease in non-compensation expense. For the three months ended September 30, 2025 and 2024, non-interest expense to average assets was 2.61% and 2.39%, respectively.

Compensation expense

The increase in compensation expense for the current period, compared to the same period in the prior year, was primarily due to increases in all compensation expense components. The increase in salaries and wages can be primarily attributed to an increase in base salaries, which included staffing for the Corporation's Western New York Canal Bank division, consisting of additional lending, branch, and wealth management personnel. Also contributing to the increase were merit-based salary increases for existing employees. Pension and employee benefits increased largely due to an increase in employee healthcare-related expenses compared to the same period in the prior year. The increase in other components of net periodic pension and postretirement benefits was primarily due to actuarial adjustments related to the Corporation's pension plans.

Non-compensation expense

The decrease in non-compensation expense for the current period, compared to the same period in the prior year, was primarily due to decreases in FDIC insurance, other non-interest expense, and loan expenses, offset by an increase in professional services. FDIC insurance decreased largely due to favorable changes in metrics used to determine assessment rates. Other non-interest expense decreased due to decreases across a number of expense categories included in the line item. Loan expense decreased largely due to decreases in legal expenses compared to the same period in the prior year. The increase in professional services was primarily due to an increase in consulting expenses, partially attributable to revenue enhancement initiatives in 2024.

The following table presents non-interest expense for the periods indicated, and the dollar and percent change (in thousands):


	Nine Months Ended September 30,
	2025		2024		Change		% Change
Compensation expense:
Salaries and wages	$	22,713	$	21,007	$	1,706	8.1	%
Pension and other employee benefits	6,332		5,787		545		9.4	%
Other components of net periodic pension and postretirement benefits	(339)		(691)		352		50.9	%
Total compensation expense	28,706		26,103		2,603		10.0	%

Non-compensation expense:
Net occupancy	4,335		4,360		(25)		(0.6)	%
Furniture and equipment	1,227		1,197		30		2.5	%
Data processing	7,631		7,437		194		2.6	%
Professional services	2,079		1,639		440		26.8	%


Marketing and advertising	893		943		(50)		(5.3)	%
Other real estate owned expenses	22		116		(94)		(81.0)	%
FDIC insurance	1,225		1,617		(392)		(24.2)	%
Loan expenses	836		808		28		3.5	%
Other	5,387		5,207		180		3.5	%
Total non-compensation expense	23,635		23,324		311		1.3	%
Total non-interest expense	$	52,341	$	49,427	$	2,914	5.9	%

Total non-interest expense for the nine months ended September 30, 2025 increased $2.9 million compared to the same period in the prior year. The increase was due to increases in total compensation expense and total non-compensation expense. For the nine months ended September 30, 2025 and 2024, non-interest expense to average assets was 2.54% and 2.41%, respectively.

Compensation expense

The increase in compensation expense for the current period, compared to the same period in the prior year, was due to increases in all compensation expense components. The increase in salaries and wages included additional staffing for the Corporation's Western New York regional banking center and the timing of annual raises compared to the same period in the prior year. The increase in pension and other employee benefits was primarily attributable to an increase in employee healthcare expenses for the current period, compared to the same period in the prior year. The increase in other components of net periodic pension and postretirement benefits was primarily due to actuarial adjustments related to the Corporation's pension plans.

Non-compensation expense

The increase in non-compensation expense was primarily due to increases of $0.4 million in professional services, $0.2 million in data processing expense and $0.2 million in other non-interest expense, partially offset by a decrease of $0.4 million in FDIC insurance expense. The increase in professional services was mainly due to an increase in consulting expenses, partially attributable to revenue enhancement initiatives in 2024. The increase in data processing was primarily due to an increase in core service provider expenses and additional expenses related to Canal Bank operations in Western New York. The increase in other non-interest expense was primarily due to moderate increases related to losses on sales of repossessed vehicles, directors' fees and recruitment expenses compared to the same period in the prior year. The decrease in FDIC insurance expense was primarily due to improved metrics used to calculate the current year assessment.

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 September 30,
	2025			2024			Change		% Change
Income before income tax expense	$	10,067		$	7,233		$	2,834	39.2	%
Income tax expense	$	2,275		$	1,513		$	762	50.4	%
Effective tax rate	22.6		%	20.9		%

Income tax expense for the three month periods ended September 30, 2025 and 2024 were $2.3 million and $1.5 million, respectively. The increase in income tax expense was primarily due to an increase of $2.8 million in income before income tax expense, compared to the same period in the prior year. The effective income tax rate increased from 20.9% for the three months ended September 30, 2024 to 22.6% for the three months ended September 30, 2025.

The following table presents income tax expense and the effective tax rate for the periods indicated, and the dollar and percent change (in thousands):


	Nine Months Ended September 30,
	2025			2024			Change		% Change
Income before income tax expense	$	8,943		$	22,582		$	(13,639)	(60.4)	%
Income tax expense	$	1,580		$	4,825		$	(3,245)	(67.3)	%
Effective tax rate	17.7		%	21.4		%

Income tax expense for the nine month period ended September 30, 2025 was $1.6 million, compared to $4.8 million for the nine month period ended September 30, 2024, a decrease of $3.2 million. The effective income tax rate decreased from 21.4% for the nine months ended September 30, 2024 to 17.7% for the nine months ended September 30, 2025. The decrease in income tax expense and decrease in the effective tax rate 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.

Financial Condition

The following table presents selected financial information as of the dates indicated, and the dollar and percent change (dollars in thousands):


ASSETS	September 30, 2025		December 31, 2024		Change		% Change
Total cash and cash equivalents	$	107,646	$	47,035	$	60,611	128.9	%
Total investment securities, FHLB and FRB stock	290,334		544,602		(254,268)		(46.7)	%

Loans, net of deferred loan fees	2,202,356		2,071,419		130,937		6.3	%
Allowance for credit losses	(23,645)		(21,388)		2,257		10.6	%
Loans, net	2,178,711		2,050,031		128,680		6.3	%

Goodwill and other intangible assets, net	21,824		21,824		—		—	%
Other assets	98,119		112,655		(14,536)		(12.9)	%
Total assets	$	2,696,634	$	2,776,147	$	(79,513)	(2.9)	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Total deposits	$	2,358,516	$	2,396,883	$	(38,367)	(1.6)	%
Advances and other debt	3,530		112,889		(109,359)		(96.9)	%
Subordinated debt	44,002		—		44,002		N/A
Other liabilities	45,278		51,066		(5,788)		(11.3)	%
Total liabilities	2,451,326		2,560,838		(109,512)		(4.3)	%

Total shareholders’ equity	245,308		215,309		29,999		13.9	%
Total liabilities and shareholders’ equity	$	2,696,634	$	2,776,147	$	(79,513)	(2.9)	%

Cash and Cash Equivalents

The increase in cash and cash equivalents can be attributed to changes in loans, deposits, borrowings, and securities. Cash and cash equivalents increased largely due to proceeds of $227.3 million from the sale of available for sale securities in the second quarter of 2025 as part of the Corporation's balance sheet restructuring efforts. The Corporation's issuance of subordinated debt in the second quarter of 2025 also contributed to the increase in cash and cash equivalents. The Corporation utilized a portion of these proceeds to pay off $155.0 million in wholesale funding which matured early in the third quarter of 2025.

Investment securities

The decrease in investment securities can primarily be attributed to the sale of available for sale securities with a market value totaling $227.3 million in the second quarter of 2025. The sale of securities included the Corporation's entire portfolio of U.S. Treasury and SBA pooled-loan securities, as well as portions of the mortgage-backed securities and municipal bonds portfolios. Year to date net paydowns and maturities on available for sale securities totaled $39.9 million, largely on mortgage-backed and SBA pooled-loan securities. Partially offsetting the overall decrease in the available for sale securities portfolio was an increase of $17.6 million in the fair value of securities, mainly due to favorable changes in interest rates compared to December 31, 2024. Also contributing to the decrease in total investment securities was a decrease of $3.6 million in FHLB and FRB stock, at cost, mainly due to a decrease in total borrowings through the FHLBNY as of September 30, 2025, compared to the prior year end.

Loans, net

The increase in loans, net of deferred loan fees, can primarily be attributed to increases within the commercial real estate portfolio. Commercial mortgages increased $145.0 million, home equity lines and loans increased $9.9 million, commercial and industrial loans increased $9.7 million, and residential mortgages increased $2.8 million, compared to the prior year end. These increases were offset by decreases of $35.0 million in indirect consumer loans and $1.4 million in direct consumer loans.

Allowance for Credit Losses

The increase in the allowance for credit losses was largely due to the annual review and update to loss drivers used in the Bank's CECL model, which is applied to the model in the first quarter of each year and year-to-date loan growth, concentrated in commercial real estate. The update in the current year resulted in an increase in baseline loss rates used for modeling. Also contributing to the increase were deteriorations in FOMC economic forecasts compared to prior year end, a decline in modeled prepayment speeds, and other adjustments to model inputs. Partially offsetting the overall increase was the charge-off of $0.8 million in commercial and industrial loan balances during the nine month periods ended September 30, 2025 which had carried specific allocations in the allowance as of December 31, 2024, and a net decrease in overall qualitative adjustment rates, due to improvements in evaluated internal portfolio metrics and regional economic outlooks.

Other Assets

The decrease in other assets can primarily be attributed to a $6.4 million decrease in deferred tax assets, primarily due to an increase in the market value of the available for sale securities portfolio and including a portion of deferred tax assets reclassified as current tax assets due to the recognition of the sale of available for sale securities, and a $5.9 million decrease in interest rate swap assets, due to a decrease in the fair value of interest rate swaps.

The sale of available for sale securities during the second quarter of 2025 resulted in a net loss of $17.5 million and occurred at both the Bank and the Corporation’s REIT entity. Under IRC Sec. 582(c)(1), in the case of banks, the sale or exchange of a bond, debenture, note or certificate or other evidence of indebtedness shall not be considered a sale or exchange of a capital asset. Therefore, the loss from the sale of securities at the Bank is considered ordinary in nature. However, the REIT is not considered a “bank” under IRC Sec. 582(c) and therefore a sale of securities at the REIT is considered capital in nature. The capital loss amounted to $11.5 million (gross) attributable to the REIT and represents a $2.7 million deferred tax asset subject to a 5-year carryforward limitation. Pursuant to ASC 740-10-30-5(e), deferred tax assets must be reduced by a valuation allowance if it is more likely than not that all of the deferred tax assets will not be realized. The valuation allowance would serve to reduce the deferred tax assets to an amount that would be more likely than not to be realized. The more likely than not threshold is a likelihood of more than fifty percent.

The Corporation’s current tax planning strategies include the planned sale of appreciated investment securities and loans from the REIT entity. These transactions are intended to generate future capital gains sufficient to fully utilize the capital loss carryforward prior to its expiration. Management has demonstrated both the ability and intent to execute these strategies in a timely and economically feasible manner.

After detailed review, the Corporation’s Management has demonstrated the ability and intent to implement these prudent and reasonable actions, and that it is more likely than not that all of the deferred assets, including the capital loss carryforward, will be realized. Further, Management will continue to monitor all available positive and negative evidence on at least a quarterly basis, consistent with ASC 740, and will promptly adjust the valuation allowance assessment if facts and circumstances change materially.

Deposits

The decrease in deposits can primarily be attributed to decreases of $92.2 million in brokered deposits, partially offset by an increase of $53.8 million in total customer deposits. The decrease in brokered deposits was due to the payoff of all outstanding brokered deposits at maturity in the third quarter of 2025. The increase in total customer deposits was attributable to increases of $57.2 million in money market deposits, $49.7 million in interest-bearing demand deposits and $7.5 million in non interest-bearing demand deposits. These increases were partially offset by decreases of $46.9 million in customer time deposits and $13.6 million in savings deposits.

Advances and Other Debt

The decrease in advances and other debt can primarily be attributed to an increase in cash and cash equivalents due to the Corporation's balance sheet restructuring efforts, which reduced the need for wholesale funding. As a result, the Corporation paid off $55.0 million in FHLBNY term advances which matured in the third quarter of 2025. The composition of advances and other debt as of September 30, 2025 consisted only of finance lease liabilities, whereas the composition of advances and other debt as of the prior year end consisted primarily of FHLBNY overnight advances.

Subordinated Debt

Subordinated debt, net of deferred issuance costs, increased due to the issuance of $45.0 million in 7.75% fixed-to-floating rate notes (the "Notes") in June 2025 in a private offering. There were $1.0 million in deferred issuance costs associated with the offering. The subordinated debt qualifies as tier 2 capital at the holding company, when applicable, and tier 1 capital at the Bank. Of the $45.0 million in subordinated debt issued, $37.0 million was downstreamed to the Bank, qualifying as tier 1 capital. The Notes carry an original term of ten years and are redeemable by the Corporation beginning in June 2030, and beginning in June 2030 will float based on the then current Three-Month Term SOFR, plus 415 basis points. Further details regarding the offering can be found in the Corporation's Form 8-K filed with the Securities and Exchange Commission on June 10, 2025.

Other liabilities

The decrease in other liabilities can primarily be attributed to a decrease of $5.8 million in interest rate swap liabilities, primarily due to a decrease in the fair value of interest rate swaps.

Shareholders’ equity

Shareholders’ equity was $245.3 million at September 30, 2025 compared to $215.3 million at December 31, 2024. The increase can primarily be attributed to a decrease of $26.0 million in accumulated other comprehensive loss and an increase of $2.7 million in retained earnings. The decrease in accumulated other comprehensive loss was largely due to the reclassification of a portion of losses attributable to the available for sale securities portfolio into current period earnings, due to the Corporation's sale of available for sale securities in the second quarter of 2025, as well as an increase in the fair value of securities available for sale, mainly due to favorable changes in market interest rates. The increase in retained earnings was mainly due to net income of $7.4 million for the nine months ended September 30, 2025, which included a $13.2 million loss on the sale of available for sale securities in the second quarter of 2025, net of tax, partially offset by dividends declared of $4.7 million during the nine months ended September 30, 2025.

Assets under management or administration

The market value of total assets under management or administration in Wealth Management Group was $2.393 billion as of September 30, 2025, including $335.2 million of assets held under management or administration for the Corporation, compared to $2.212 billion as of December 31, 2024, including $301.9 million of assets held under management or administration for the Corporation, an increase of $180.6 million, or 8.1%. Excluding assets under management or administration for the Corporation, total market value of Wealth Management Group assets increased $147.3 million, or 7.9%, primarily due to improvements in financial markets during 2025.

Securities

The available for sale segment of the securities portfolio totaled $280.5 million as of September 30, 2025, a decrease of $250.9 million, or 47.2%, from $531.4 million as of December 31, 2024. Securities available for sale decreased primarily due to the Corporation's strategic balance sheet repositioning, which included the sale of available for sale securities with a market value totaling $227.3 million in the second quarter of 2025. The sale of securities included the Corporation's entire portfolio of U.S. Treasury and SBA pooled-loan securities, as well as portions of the mortgage-backed securities and municipal bonds portfolios. Year to date net paydowns and maturities on available for sale securities totaled $39.9 million, largely on mortgage-backed and SBA pooled-loan securities. Partially offsetting the overall decrease in the available for sale securities portfolio was an increase of $17.6 million in the fair value of securities, mainly due to favorable changes in interest rates compared to December 31, 2024. The held to maturity securities portfolio consists of obligations of political subdivisions in the Corporation’s market areas. These securities totaled $0.7 million and $0.8 million as of September 30, 2025 and December 31, 2024, respectively.

Non-marketable equity securities as of September 30, 2025 and December 31, 2024 include shares of FRBNY stock and FHLBNY stock, carried at their cost. FRBNY stock and FHLBNY stock were $3.0 million and $2.5 million respectively as of September 30, 2025, and $1.9 million and $7.2 million respectively as of December 31, 2024. 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, 2024 to September 30, 2025 (dollars in thousands):


LOAN PORTFOLIO COMPOSITION
	September 30, 2025		% of Total Loans		December 31, 2024		% of Total Loans		Change		% Change
Commercial and industrial	$	309,221	14.0	%	$	299,521	14.5	%	$	9,700	3.2	%

Commercial mortgages:
Construction	109,607		5.0	%	94,943		4.6	%	14,664		15.4	%
Owner occupied commercial real estate	169,914		7.7	%	142,279		6.8	%	27,635		19.4	%
Non-owner occupied commercial real estate	1,082,519		49.2	%	979,782		47.3	%	102,737		10.5	%
Residential mortgages	277,729		12.6	%	274,979		13.3	%	2,750		1.0	%
Consumer loans:

Home equity lines and loans	103,072		4.7	%	93,220		4.5	%	9,852		10.6	%
Indirect consumer loans	143,154		6.5	%	178,118		8.6	%	(34,964)		(19.6)	%
Direct consumer loans	7,140		0.3	%	8,577		0.4	%	(1,437)		(16.8)	%
Total	$	2,202,356	100.0	%	$	2,071,419	100.0	%	$	130,937	6.3	%

Portfolio loans totaled $2.202 billion as of September 30, 2025, an increase of $130.9 million, or 6.3%, from $2.071 billion as of December 31, 2024. The increase in loans can be attributed to increases of $145.0 million in commercial mortgages, $9.7 million in commercial and industrial loans, and $2.8 million in residential mortgages, offset by a decrease of $26.5 million in consumer loans.

Commercial lending continues to be a primary driver of growth for the Corporation, and demand remains strong across the Corporation's footprint, particularly for commercial real estate in the Capital Bank and Canal Bank divisions in the Albany and Western New York markets, respectively. Loan growth in the Canal Bank division has accelerated in 2025 after the opening of a regional banking center and expansion of the commercial lending team in that market. Total commercial loan balances in the Canal Bank division increased 38.6% to $184.7 million as of September 30, 2025, from $133.3 million as of December 31, 2024. Commercial real estate loans, including construction loans, increased year-to-date for all three regional divisions, led by a $72.7 million increase for the Capital Bank division. Commercial real estate balances for the Canal Bank and Chemung Canal divisions increased $51.4 million and $25.1 million year-to-date, respectively. Commercial and industrial loan balances increased $5.9 million and $5.6 million in the Chemung Canal and Capital Bank divisions, respectively, while balances for Canal Bank decreased $1.8 million year-to-date.

Residential mortgage loans totaled $277.7 million as of September 30, 2025, an increase of $2.8 million, or 1.0%, compared to December 31, 2024. During the nine months ended September 30, 2025, the Corporation originated $41.7 million in residential mortgages, including $10.3 million originated to be sold in the secondary market to Freddie Mac and FHLBNY. Total balances of residential mortgage originations increased 37.0% compared to the same period in the prior year; however overall origination volumes remain below typical historic levels. Total consumer loans decreased $26.5 million, or 0.5%, largely due to a decrease of $35.0 million, or 19.6%, in indirect consumer loans compared to December 31, 2024, partially offset by an increase of $9.9 million in home equity lines and loans. The decrease in indirect consumer loans was primarily due to the prioritization of other types of lending, resulting in paydowns exceeding originations during 2025 year to date, as well as the relatively fast turnover rate in the portfolio. The increase in home equity lines and loans was mainly due to home equity line of credit promotional efforts during 2025, which included offering a below-market introductory interest rate.

The table below presents the Corporation’s outstanding loan balances by Bank division (in thousands):


LOANS BY DIVISION
	September 30, 2025		December 31, 2024		December 31, 2023		December 31, 2022		December 31, 2021
Chemung Canal Trust Company	$	617,916	$	626,903	$	665,701	$	651,516	$	592,172
Capital Bank Division	1,387,803		1,302,593		1,206,561		1,098,104		879,105
Canal Bank Division	196,637		141,923		100,402		79,828		46,972
Total loans	$	2,202,356	$	2,071,419	$	1,972,664	$	1,829,448	$	1,518,249

Commercial real estate lending represented the largest portion of the Corporation's loan portfolio as of September 30, 2025 and December 31, 2024. 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 September 30, 2025 and December 31, 2024, total commercial real estate loans were $1.362 billion and $1.217 billion, respectively, representing 61.9% and 58.7% of total loan balances, respectively. As the largest component of the Corporation's loan portfolio, quantitative and qualitative attributes of commercial real estate have a significant impact on management's strategic initiatives, and understanding such attributes are critical in understanding 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 measures to proactively manage economic volatility and promote longer-term portfolio stability. Management also evaluates the risk inherent in its portfolio of commercial real estate loans using a variety of metrics, including but not limited to type, geography, collateral, and borrower or sponsor industry.

The table below presents commercial real estate loans by maturity and repricing date as of September 30, 2025 (dollars in thousands):


Commercial real estate loans:	2025			2026			2027			2028			2029			After 2029 (1)			Total
Maturing in:	$	32,336		$	80,885		$	84,085		$	88,106		$	118,675		$	957,953		$	1,362,040
Percentage of total	2.4		%	5.9		%	6.2		%	6.5		%	8.7		%	70.3		%	100.0		%

Repricing in:	$	482,961		$	82,168		$	94,323		$	102,515		$	116,173		$	483,900		$	1,362,040
Percentage of total	35.5		%	6.0		%	6.9		%	7.5		%	8.5		%	35.6		%	100.0		%

(1) Includes fixed rate loans

The table below presents commercial real estate loans by type and percentage as of September 30, 2025 and December 31, 2024 (dollars in thousands):


Commercial real estate loans by type:	September 30, 2025		% of Total		December 31, 2024		% of Total		% Change
Construction	$	109,607	8.0	%	$	94,943	7.8	%	15.4	%
1-4 family residential (1)	54,464		4.1	%	44,374		3.6	%	22.7	%
Multifamily	425,373		31.2	%	398,728		32.8	%	6.7	%
Owner occupied	169,914		12.5	%	142,279		11.7	%	19.4	%
Non-owner occupied	602,682		44.2	%	536,680		44.1	%	12.3	%
Total	$	1,362,040	100.0	%	$	1,217,004	100.0	%	11.9	%

(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 geographic footprint of the Corporation's physical branch network, as well as to borrowers whose business interests include projects that may be located in counties that are geographically contiguous with the Corporation's physical 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, and 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 September 30, 2025 and December 31, 2024 (dollars in thousands):


Commercial real estate loans by regional location of collateral:	September 30, 2025		% of Total		December 31, 2024		% of Total		% Change
Capital Region	$	841,640	61.8	%	$	783,342	64.3	%	7.4	%
Southern Tier & Finger Lakes	226,048		16.6	%	221,078		18.2	%	2.2	%
Western New York	224,642		16.5	%	155,527		12.8	%	44.4	%
Other (1)	69,710		5.1	%	57,057		4.7	%	22.2	%
Total	$	1,362,040	100.0	%	$	1,217,004	100.0	%	11.9	%

(1) Includes $61.2 million in commercial real estate loans located outside of New York State.

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 table below presents commercial real estate loans by borrower industry and percentage as of September 30, 2025 and December 31, 2024, as well as the weighted average (WA) loan to value (LTV) ratio for each industry as of September 30, 2025 (dollars in thousands):


Commercial real estate loans by borrower industry:	September 30, 2025		% of Total		WA LTV %		December 31, 2024		% of Total		% Change
Construction & land development	$	109,607	8.0	%	NA		$	94,943	7.8	%	15.4	%
Industrial	68,552		5.0	%	52.9	%	62,817		5.3	%	9.1	%
Warehouse & storage	99,826		7.3	%	56.6	%	91,357		7.5	%	9.3	%
Retail	247,301		18.2	%	58.3	%	212,938		17.5	%	16.1	%
Office	132,159		9.7	%	60.6	%	122,248		10.0	%	8.1	%
Hotel	75,195		5.5	%	54.6	%	53,960		4.4	%	39.4	%
1-4 family residential rental	55,561		4.1	%	65.7	%	44,374		3.6	%	25.2	%
Multifamily (5+)	460,279		33.8	%	60.3	%	427,257		35.1	%	7.7	%
Medical	50,980		3.7	%	62.7	%	45,480		3.7	%	12.1	%
Educational	21,811		1.6	%	56.5	%	22,129		1.8	%	(1.4)	%
Other	40,769		3.1	%	49.8	%	39,501		3.3	%	3.2	%
Total	$	1,362,040	100.0	%	58.8	%	$	1,217,004	100.0	%	11.9	%

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 classificat ions of commercial loans to identify concentrations of greater than 10 .0% of total loans. As of September 30, 2025 and December 31, 2024, commercial loans to borrowers involved in the real estate and real estate rental and leasing businesses were 52.0% and 50.9% of total loans, respectively. No other concentration of loans existed in the commercial loan portfolio in excess of 10.0% of total loans as of September 30, 2025 and December 31, 2024.

The table below presents the maturity of loans outstanding as of September 30, 2025 (in thousands):


	Within One Year		After One But Within Five Years		After Five But Within 15 Years		After 15 Years		Total
Commercial and industrial	$	99,557	$	139,337	$	68,624	$	1,703	$	309,221

Commercial mortgages:
Construction	10,512		50,010		49,085		—		109,607
Owner occupied commercial real estate	8,365		44,501		111,622		5,426		169,914
Non-owner occupied commercial real estate	82,990		363,808		617,871		17,850		1,082,519
Residential mortgages	10,109		12,843		83,680		171,097		277,729
Consumer loans:
Home equity lines and loans	225		6,461		57,243		39,143		103,072
Indirect consumer loans	1,300		109,139		32,715		—		143,154
Direct consumer loans	357		4,285		1,410		1,088		7,140
Total	$	213,415	$	730,384	$	1,022,250	$	236,307	$	2,202,356

The tables below present the amounts due after one year, classified according to fixed interest rates and variable interest rates as of September 30, 2025 (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	$	65,306	$	35,808	$	30	$	101,144

Commercial mortgages:
Construction	3,098		1,016		—		4,114
Owner occupied commercial real estate	16,914		21,734		—		38,648
Non-owner occupied commercial real estate	197,682		108,312		3,301		309,295
Residential mortgages	12,843		79,836		118,776		211,455
Consumer loans:
Home equity lines and loans	5,143		48,901		404		54,448
Indirect consumer loans	109,139		32,716		—		141,855
Direct consumer loans	4,285		398		54		4,737
Total	$	414,410	$	328,721	$	122,565	$	865,696


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	$	74,031	$	32,816	$	1,673	$	108,520

Commercial mortgages:							—
Construction	46,912		48,069		—		94,981
Owner occupied commercial real estate	27,587		89,888		5,426		122,901
Non-owner occupied commercial real estate	166,126		509,559		14,549		690,234
Residential mortgages	—		3,844		52,321		56,165
Consumer loans:							—
Home equity lines and loans	1,318		8,341		38,739		48,398
Indirect consumer loans	—		—		—		—
Direct consumer loans	—		1,012		1,034		2,046
Total	$	315,974	$	693,529	$	113,742	$	1,123,245

Non-Performing Loans and Non-Performing Assets

Non-performing assets consist of non-performing loans, other real estate owned that has been acquired in partial or full satisfaction of loan obligations or upon foreclosure, and vehicles that have been repossessed. Non-performing loans is comprised of nonaccrual loans. Past due status on all loans is based on the contractual terms of the loan. It is generally the Corporation's policy that a loan 90 days past due be placed on nonaccrual status unless factors exist that would eliminate the need to classify a loan as such. A loan may also be designated as nonaccrual at any time if payment of principal or interest in full is not expected due to deterioration in the financial condition of the borrower. At the time loans are placed into 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 of its original principal and interest. In the case of nonaccrual loans where a portion of the loan has been charged off, the remaining balance is kept in nonaccrual status until the entire principal balance has been recovered.

The following table summarizes the Corporation's non-performing assets (dollars in thousands):


NON-PERFORMING ASSETS
	September 30, 2025			December 31, 2024


Total non-performing loans	$	7,762		$	8,954
Other real estate owned and repossessed vehicles	210			652

Total non-performing assets	$	7,972		$	9,606

Ratio of non-performing loans to total loans	0.35		%	0.43		%
Ratio of non-performing assets to total assets	0.30		%	0.35		%
Ratio of allowance for credit losses to non-performing loans	304.63		%	238.87		%
Accruing loans past due 90 days or more (1)	$	21		$	23

(1) Not included in non-performing assets above.

Non-performing loans totaled $7.8 million, or 0.35% of total loans as of September 30, 2025, compared to $9.0 million, or 0.43% of total loans as of December 31, 2024. Non-performing assets, which are comprised of non-performing loans, other real estate owned, and repossessed vehicles were $8.0 million, or 0.30% of total assets as of September 30, 2025, compared to $9.6 million, or 0.35% of total assets as of December 31, 2024. The decrease in non-performing loans was largely due to the payoff of four nonaccrual commercial real estate loans totaling $1.6 million during the nine months ended September 30, 2025 and the charge-off of two commercial and industrial loans during the second quarter of 2025, totaling $0.8 million. Additionally, there were $0.6 million in paydowns on other non-performing commercial loans, partially offset by $0.4 million in additions to nonaccrual commercial loans during the nine months ended September 30, 2025. Non-performing retail loans increased $1.4 million compared to December 31, 2024, driven by $3.1 million in additions to nonaccrual retail loans, partially offset by $0.7 million in net charge-offs and $1.2 million in paydowns during the nine months ended September 30, 2025.

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 September 30, 2025, the Corporation had seven active loans modified under such terms. There was one loan modification made to a borrower experiencing financial difficulty during the three and nine month period ended September 30, 2025; a payment delay on a $3.4 million non-owner occupied commercial real estate loan. During the nine month period ended September 30, 2025, a $0.7 million unsecured commercial and industrial loan which had previously been given a six month term extension was fully charged-off. All other active loans were performing on their modified terms as of September 30, 2025.

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 the measurement date. The allowance is in conformity with the requirements established by ASC 326 - Financial Instruments - Credit Losses. The allowance for credit losses covers a range of assets including loans, unfunded commitments, and debt securities, incorporating both quantitative and qualitative components. As of September 30, 2025 and December 31, 2024, the Corporation did not allocate any allowance for credit losses to its portfolios of available for sale or 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 September 30, 2025 totaled $4.1 million, compared to $6.5 million as of December 31, 2024. 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.

A majority 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. Real estate values in each of the Corporation's market areas have remained stable. 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 Corporation's 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.

The allowance for credit losses on loans was $23.6 million as of September 30, 2025, and $21.4 million as of December 31, 2024. The allowance for credit losses on loans was 304.63% of non-performing loans as of September 30, 2025, compared to 238.87% as of December 31, 2024. The ratio of allowance for credit losses on loans to total loans was 1.07% as of September 30, 2025 and 1.03% as of December 31, 2024. Net charge-offs for the nine months ended September 30, 2025 and 2024 were $1.3 million and $0.6 million, respectively.

The increase in the allowance for credit losses was largely due to the annual review and update performed on the loss drivers used as the basis for the Bank's CECL model, commercial loan growth, and changes in model inputs such as economic forecasts and prepayment speeds. The overall increase in the allowance for credit losses was partially offset by a decrease in the allowance for credit losses on individually analyzed loans, due to two charge-offs on loans which carried specific reserve allocations, as well as a net decrease in qualitative adjustments applied to the Bank's CECL model as of September 30, 2025 compared to December 31, 2024.

Loss drivers are the economic variables used to make forward looking credit loss projections. The economic variable used as a loss driver used for the Bank's commercial and industrial and other loans pools were adjusted as a result of the annual update; the loss driver used in the prior year was the FOMC's projection for U.S civilian unemployment rate and the loss driver used in the current year is the FOMC's projection for U.S. GDP growth. Recalibration of loss drivers resulted in an increase in baseline loss rates used in CECL modeling, reflecting additional periods of data added to the analysis and normal evaluation of the composition of the peer groups used in modeling. Commercial loan growth totaled $154.7 million for the nine months ended September 30, 2025, or 11.3%, contributing to the increase in the allowance for credit losses. FOMC forecasts for both U.S. civilian unemployment and year-over-year U.S. GDP growth deteriorated as of September 30, 2025, compared to December 31, 2024, with the projection for year-end 2025 U.S. civilian unemployment increasing 20 basis points and the projection for U.S. GDP growth decreasing 50 basis points. The FOMC has incorporated elevated levels of uncertainty into their forecasts based on the current environment. Prepayment speeds, which have an inverse relationship with modeled credit losses, also declined as of September 30, 2025, compared to December 31, 2024.

The table below summarizes the Corporation’s allowance for credit losses and non-performing loans outstanding by loan category as of September 30, 2025 and December 31, 2024 (dollars in thousands):


ALLOWANCE BY LOAN CATEGORY
Balance as of September 30, 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	$	4,577	1.48	%	$	763	0.25	%	599.87	%
Commercial mortgages	13,738		1.01	%	3,116		0.23	%	440.89	%
Residential mortgages	2,633		0.95	%	1,905		0.69	%	138.22	%
Consumer loans	2,697		1.06	%	1,978		0.78	%	136.35	%
Total	$	23,645	1.07	%	$	7,762	0.35	%	304.63	%

Balance as of December 31, 2024	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	$	4,520	1.51	%	$	1,534	0.51	%	294.65	%
Commercial mortgages	11,214		0.92	%	4,959		0.41	%	226.13	%
Residential mortgages	2,259		0.82	%	1,372		0.50	%	164.65	%
Consumer loans	3,395		1.21	%	1,089		0.39	%	311.75	%
Total	$	21,388	1.03	%	$	8,954	0.43	%	238.87	%

(1) Ratio is a percentage of loan category.

The table below summarizes the Corporation’s consolidated credit ratios as of September 30, 2025 and December 31, 2024:


Consolidated Ratios	September 30, 2025		December 31, 2024
Non-performing loans to total loans	0.35	%	0.43	%
Allowance for credit losses to total loans	1.07	%	1.03	%

Allowance for credit losses to non-performing loans	304.63	%	238.87	%

The table below summarizes the Corporation’s ratio of net charge-offs and recoveries to average loans outstanding by loan category for the nine months ended September 30, 2025 and 2024:


Net Charge-Off Ratio	September 30, 2025		September 30, 2024
Commercial and industrial	0.33	%	(0.05)	%
Commercial mortgages	—	%	—	%
Residential mortgages	(0.01)	%	(0.02)	%
Consumer loans	0.30	%	0.31	%
Total	0.08	%	0.04	%

The table below summarizes the Corporation’s credit loss experience for the nine months ended September 30, 2025 and 2024 (in thousands):


SUMMARY OF CREDIT LOSS EXPERIENCE
	Nine Months Ended September 30,
	2025		2024
Balance of allowance for credit losses at beginning of period	$	21,388	$	22,517

Charge-offs :
Commercial and industrial	777		18
Commercial mortgages	—		—
Residential mortgages	—		21
Consumer loans	1,030		1,083
Total charge-offs	$	1,807	$	1,122
Recoveries :
Commercial and industrial	$	9	$	118
Commercial mortgages	3		3
Residential mortgages	16		57
Consumer loans	439		378
Total recoveries	$	467	$	556
Net charge-offs (recoveries)	1,340		566
Provision (credit) for credit losses on-balance sheet exposure (1)	3,597		(510)

Balance of allowance for credit losses at end of period	$	23,645	$	21,441

(1) Additional provision related to off-balance sheet exposure was a credit of $296 thousand for the nine months ended September 30, 2025 and a credit of $87 thousand for the nine months ended September 30, 2024.

Other Real Estate Owned and Repossessed Vehicles

Other real estate owned totaled $0.1 million as of September 30, 2025, and $0.4 million as of December 31, 2024. As of September 30, 2025 there was only one property included in other real estate owned, which had previously been associated with a home equity loan. There were no properties added to other real estate owned in the first nine months of 2025. There were a total of five properties sold from other real estate owned in the first nine months of 2025, including one property which had carried a $32 thousand valuation allowance at the time of sale. The Corporation's net loss on the sale of other real estate owned during the first nine months of 2025 was $8 thousand. The Corporation had $0.2 million in repossessed vehicles as of September 30, 2025 and $0.1 million as of December 31, 2024, 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 September 30, 2025 and December 31, 2024, and the dollar and percent change from December 31, 2024 to September 30, 2025 (in thousands):


DEPOSITS
									September 30, 2025 v. December 31, 2024
	September 30, 2025				December 31, 2024
	Amount		% of Total		Amount		% of Total		$ Change		% Change
Non interest-bearing demand deposits	$	633,216	26.8	%	$	625,762	26.1	%	$	7,454	1.2	%
Interest-bearing demand deposits	356,271		15.1	%	306,536		12.8	%	49,735		16.2	%
Money market deposits	652,289		27.7	%	595,123		24.8	%	57,166		9.6	%
Savings deposits	231,905		9.8	%	245,550		10.2	%	(13,645)		(5.6)	%
Certificates of deposit $250,000 or less	353,341		15.0	%	401,563		16.8	%	(48,222)		(12.0)	%
Certificates of deposit greater than $250,000	104,402		4.5	%	101,125		4.3	%	3,277		3.2	%
Brokered deposits	—		—	%	92,159		3.8	%	(92,159)		(100.0)	%
Other time deposits	27,092		1.1	%	29,065		1.2	%	(1,973)		(6.8)	%
Total	$	2,358,516	100.0	%	$	2,396,883	100.0	%	$	(38,367)	(1.6)	%

Deposits totaled $2.359 billion as of September 30, 2025 compared to $2.397 billion as of December 31, 2024, a decrease of $38.4 million, or 1.6%. The decrease was primarily attributable to decreases of $92.2 million in brokered deposits, partially offset by an increase of $53.8 million in total customer deposits. The decrease in brokered deposits was due to the payoff of all outstanding brokered deposits at maturity in the third quarter of 2025 utilizing proceeds from the Corporation's sale of available for sale securities and issuance of subordinated debt. The increase in total customer deposits was attributable to increases of $57.2 million in insured money market deposits, $49.7 million in interest-bearing demand deposits, and $7.5 million in non interest-bearing demand deposits. These increases were partially offset by decreases of $46.9 million in customer time deposits and $13.6 million in savings deposits.

Both the increases in money market deposits and interest-bearing demand deposits were mainly attributable to seasonal inflows of municipal deposits, as well as net inflows of commercial client deposits compared to prior year-end. The increase in non-interest bearing demand deposits was primarily due to net inflows from both individuals and commercial clients compared to prior year-end. Non interest-bearing deposits comprised 26.8% and 26.1% of total deposits as of September 30, 2025 and December 31, 2024, respectively. The increase in non interest-bearing demand deposits to total deposits was largely the result of a decrease in brokered deposits compared to prior year-end. The decrease in customer time deposits was largely due to maturities of previous CD campaigns which were not renewed. In 2025, the Corporation has focused on shorter-duration CD campaigns and has reduced interest rates on campaign offerings since prior year-end. The Corporation's reliance on growth in time deposit balances to fund asset growth declined year-to-date during 2025 as a result of strengthened liquidity from the net proceeds of the Corporation's balance sheet repositioning, as well as increases in other deposit account types.

The growth in customer deposits was due primarily to increases of $59.4 million in public deposits, $30.9 million in commercial deposits and $13.1 million in ICS deposits, offset by decreases of $39.8 million in CDARS deposits and $9.7 million in consumer deposits, when compared to December 31, 2024. As of September 30, 2025, demand deposit and money market deposits comprised 69.6% of total deposits compared to 63.7% as of December 31, 2024. The aggregate amount of the Corporation's outstanding uninsured deposits was 31.4% and 27.2% of total deposits, as of September 30, 2025 and December 31, 2024, respectively.

The table below presents the Corporation's deposits balances by Bank division (in thousands):


DEPOSITS BY DIVISION
	September 30, 2025		December 31, 2024		December 31, 2023		December 31, 2022		December 31, 2021
Chemung Canal Trust Company	$	1,930,158	$	1,892,228	$	1,899,903	$	1,815,566	$	1,738,015
Capital Bank Division	381,445		399,411		380,962		435,207		415,607
Canal Bank Division	46,913		13,085		5,786		3,002		1,811
Brokered Deposits	—		92,159		142,776		73,452		—
Total	$	2,358,516	$	2,396,883	$	2,429,427	$	2,327,227	$	2,155,433

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 $360.6 million and $387.3 million as of September 30, 2025, and December 31, 2024, respectively. The Corporation paid off its brokered deposits, which included funds obtained through brokers, at maturity in the third quarter of 2025, whereas it held a balance of $92.2 million as of December 31, 2024.

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 decreased $65.4 million to $47.5 million as of September 30, 2025 from December 31, 2024, primarily due to an increase in cash and cash equivalents, reducing the need for wholesale borrowings. The Corporation utilized a portion of the proceeds from its balance sheet restructuring in the second quarter of 2025 to pay off $55.0 million of FHLBNY short-term advances which matured in the third quarter of 2025. The Corporation’s borrowed funds as of December 31, 2024 were comprised of a $109.1 million FHLBNY overnight advance. There were no outstanding FHLBNY or FRBNY term advances as of December 31, 2024.

Shareholders’ Equity

Total shareholders' equity increased by $30.0 million from $215.3 million as of December 31, 2024 to $245.3 million as of September 30, 2025. The increase can primarily be attributed to a decrease of $26.0 million in accumulated other comprehensive loss and an increase of $2.7 million in retained earnings. The decrease in accumulated other comprehensive loss was largely due to the reclassification of a portion of losses attributable to the available for sale securities portfolio into current period earnings, due to the Corporation's sale of available for sale securities in the second quarter of 2025, as well as an increase in the fair value of securities available for sale, mainly due to favorable changes in market interest rates. The increase in retained earnings was mainly due to net income of $7.4 million for the nine months ended September 30, 2025 which included a $13.2 million loss on the sale of available for sale securities in the second quarter of 2025, net of tax, partially offset by dividends declared of $4.7 million during the nine months ended September 30, 2025. Treasury stock decreased by $1.1 million, 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 9.10% as of September 30, 2025 compared to 7.76% as of December 31, 2024. The tangible equity to tangible assets ratio was 8.36% as of September 30, 2025 compared to 7.02% as of December 31, 2024. Book value per share increased to $50.98 as of September 30, 2025 from $45.13 as of December 31, 2024.

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 September 30, 2025, 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 new stock repurchase program. Under the new 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 in the third quarter of 2025. As of September 30, 2025, 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 September 30, 2025.

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 September 30, 2025, the Corporation's cash and cash equivalents balance was $107.6 million, largely consisting of remaining proceeds from the Corporation's sale of a portion of the available for sale securities portfolio and subordinated debt issuance in the second quarter of 2025. The Corporation continues to maintain an investment portfolio of securities available for sale, comprised of government sponsored entity mortgage-backed securities, 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 September 30, 2025, the Corporation's investment in securities available for sale was $280.5 million, $67.7 million of which was not pledged as collateral.

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 September 30, 2025, the Bank had pledged a total of $245.9 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 $169.7 million as of September 30, 2025. The Bank did not have any outstanding FHLBNY advances as of September 30, 2025. As of December 31, 2024, the Bank had pledged a total of $244.6 million of residential mortgage loans and home equity loans under a blanket lien arrangement, and $60.0 million of U.S. Treasury bonds held as collateral. Based upon this available collateral, the Corporation was eligible to borrow up to a total of $221.1 million, and utilized $109.1 million as of December 31, 2024. 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 $740.4 million as of September 30, 2025, and $652.3 million as of December 31, 2024, which included $204.9 million and $145.6 million of municipal deposits that were collateralized by pledged assets when appropriate, respectively. The aggregate amount of the Corporation's outstanding uninsured deposits was 31.4% and 27.2% of total deposits, as of September 30, 2025 and December 31, 2024, 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 September 30, 2025, and $92.2 million, as of December 31, 2024. The Corporation also had a total of $75.0 million of unsecured lines of credit with five different financial institutions, all of which were available as of September 30, 2025 and December 31, 2024. Also available to the Corporation is the Discount Window Lending provided by the FRB, at which $7.9 million in borrowing capacity was available as of September 30, 2025.

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)	Nine Months Ended September 30,
	2025		2024
Net cash provided by operating activities	$	29,166	$	23,580
Net cash provided (used) in investing activities	139,533		(14,840)
Net cash (used) provided by financing activities	(108,088)		34,853
Net increase in cash and cash equivalents	$	60,611	$	43,593

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 nine months of 2025 and 2024 primarily resulted from net income after non-cash operating adjustments.

Investing activities

Cash provided by investing activities during the first nine months of 2025 was primarily due to proceeds from the sale of available for sale securities during the second quarter of 2025. Cash used in investing activities during the first nine months of 2024 primarily resulted from a net increase in loans, partially offset by maturities and principal paydowns on securities available for sale.

Financing activities

Cash used in financing activities during the first nine months of 2025 was primarily due to decreases in total deposits, including brokered deposits, and FHLBNY advances, partially offset by the issuance of subordinated debt in the second quarter of 2025. Cash provided by financing activities during the first nine months of 2024 was primarily due to a net increase in deposits and a net increase in FHLBNY advances.

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% 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 new rule took effect on January 1, 2020. 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 September 30, 2025 and December 31, 2024, 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 September 30, 2025, 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 September 30, 2025 and December 31, 2024 were calculated under Basel III rules. There is no threshold for well-capitalized status for bank holding companies.

The Corporation and the Bank’s capital ratios as of September 30, 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 September 30, 2025	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital (to Risk Weighted Assets):
Consolidated	$	330,753	15.44	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	318,768	14.88	%	$	171,349	8.00	%	$	224,896	10.50	%	$	214,186	10.00	%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	262,560	12.26	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	294,577	13.75	%	$	128,512	6.00	%	$	182,058	8.50	%	$	171,349	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	262,560	12.26	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	294,577	13.75	%	$	96,384	4.50	%	$	149,930	7.00	%	$	139,221	6.50	%
Tier 1 Capital (to Average Assets):
Consolidated	$	262,560	9.66	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	294,577	10.84	%	$	108,650	4.00	%	N/A		N/A		$	135,813	5.00	%

The Corporation and the Bank’s capital ratios as of December 31, 2024 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, 2024	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital (to Risk Weighted Assets):
Consolidated	$	280,778	13.35	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	275,179	13.09	%	$	168,137	8.00	%	$	220,680	10.50	%	$	210,172	10.00	%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	258,550	12.30	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	252,950	12.04	%	$	126,103	6.00	%	$	178,646	8.50	%	$	168,137	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	258,550	12.30	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	252,950	12.04	%	$	94,577	4.50	%	$	147,120	7.00	%	$	136,612	6.50	%
Tier 1 Capital (to Average Assets):
Consolidated	$	258,550	9.18	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	252,950	8.98	%	$	112,639	4.00	%	N/A		N/A		$	140,799	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 September 30, 2025, the Bank could, without prior approval, declare dividends of approximately $44.3 million.

Adoption of New Accounting Standards

Please refer to Note 1, Summary of Significant Accounting Policies - Recent Accounting Pronouncements 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 securities, 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															Nine Months Ended
Net Interest Margin - Fully Taxable Equivalent	Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Sept. 30,			Sept. 30,			Sept. 30,
	2025			2025			2025			2024			2024			2025			2024
Net interest income (GAAP)	$	22,688		$	20,808		$	19,817		$	19,821		$	18,388		$	63,313		$	54,238
Fully taxable equivalent adjustment	67			76			80			88			83			223			248
Fully taxable equivalent net interest income (non-GAAP)	$	22,755		$	20,884		$	19,897		$	19,909		$	18,471		$	63,536		$	54,486

Average interest-earning assets (GAAP)	$	2,617,680		$	2,749,856		$	2,729,661		$	2,711,995		$	2,699,968		$	2,698,654		$	2,693,499

Net interest margin - fully taxable equivalent (non-GAAP)	3.45		%	3.05		%	2.96		%	2.92		%	2.72		%	3.15		%	2.70		%

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															Nine Months Ended
(in thousands, except ratio data)	Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Sept. 30,			Sept. 30,			Sept. 30,
Efficiency Ratio	2025			2025			2025			2024			2024			2025			2024
Net interest income (GAAP)	$	22,688		$	20,808		$	19,817		$	19,821		$	18,388		$	63,313		$	54,238
Fully taxable equivalent adjustment	67			76			80			88			83			223			248
Fully taxable equivalent net interest income (non-GAAP)	$	22,755		$	20,884		$	19,897		$	19,909		$	18,471		$	63,536		$	54,486

Non-interest income (GAAP)	$	6,088		$	(10,705)		$	5,889		$	6,056		$	5,919		$	1,272		$	17,174


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)	$	6,088		$	6,164		$	5,889		$	6,056		$	5,919		$	18,141		$	17,174

Non-interest expense (GAAP)	$	17,645		$	17,769		$	16,927		$	17,823		$	16,510		$	52,341		$	49,427




Efficiency ratio (unadjusted)	61.32		%	175.88		%	65.85		%	68.88		%	67.92		%	81.04		%	69.21		%
Efficiency ratio (adjusted)	61.18		%	65.69		%	65.64		%	68.64		%	67.69		%	64.08		%	68.97		%

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 represents 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															Nine Months Ended
Tangible Equity and Tangible Assets (Period End)	Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Sept. 30,			Sept. 30,			Sept. 30,
	2025			2025			2025			2024			2024			2025			2024
Total shareholders' equity (GAAP)	$	245,308		$	234,966		$	228,306		$	215,309		$	220,654		$	245,308		$	220,654
Less: intangible assets	(21,824)			(21,824)			(21,824)			(21,824)			(21,824)			(21,824)			(21,824)
Tangible equity (non-GAAP)	$	223,484		$	213,142		$	206,482		$	193,485		$	198,830		$	223,484		$	198,830

Total assets (GAAP)	$	2,696,634		$	2,852,488		$	2,796,725		$	2,776,147		$	2,774,215		$	2,696,634		$	2,774,215
Less: intangible assets	(21,824)			(21,824)			(21,824)			(21,824)			(21,824)			(21,824)			(21,824)
Tangible assets (non-GAAP)	$	2,674,810		$	2,830,664		$	2,774,901		$	2,754,323		$	2,752,391		$	2,674,810		$	2,752,391

Total equity to total assets at end of period (GAAP)	9.10		%	8.24		%	8.16		%	7.76		%	7.95		%	9.10		%	7.95		%
Book value per share (GAAP)	$	50.98		$	48.85		$	47.49		$	45.13		$	46.22		$	50.98		$	46.22

Tangible equity to tangible assets at end of period (non-GAAP)	8.36		%	7.53		%	7.44		%	7.02		%	7.22		%	8.36		%	7.22		%
Tangible book value per share (non-GAAP)	$	46.44		$	44.31		$	42.95		$	40.55		$	41.65		$	46.44		$	41.65

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															Nine Months Ended
(in thousands, except ratio data)	Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Sept. 30,			Sept. 30,			Sept. 30,
Tangible Equity (Average)	2025			2025			2025			2024			2024			2025			2024
Total average shareholders' equity (GAAP)	$	239,836		$	229,161		$	222,802		$	219,254		$	210,421		$	230,662		$	200,588
Less: average intangible assets	(21,824)			(21,824)			(21,824)			(21,824)			(21,824)			(21,824)			(21,824)
Average tangible equity (non-GAAP)	$	218,012		$	207,337		$	200,978		$	197,430		$	188,597		$	208,838		$	178,764

Return on average equity (GAAP)	12.89		%	(11.29)		%	10.96		%	10.73		%	10.81		%	4.27		%	11.82		%
Return on average tangible equity (non-GAAP)	14.18		%	(12.48)		%	12.15		%	11.92		%	12.07		%	4.71		%	13.27		%

Adjustments for Certain Items of Income or Expense

In addition to disclosures of certain GAAP financial measures, including net income (loss), EPS, ROA, and ROE, 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															Nine Months Ended
(in thousands, except per share and ratio data)	Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Sept. 30,			Sept. 30,			Sept. 30,
Non-GAAP Net Income (Loss)	2025			2025			2025			2024			2024			2025			2024
Reported net income (loss) (GAAP)	$	7,792		$	(6,452)		$	6,023		$	5,914		$	5,720		$	7,363		$	17,757

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	$	7,792		$	6,322		$	6,023		$	5,914		$	5,720		$	20,137		$	17,757

Average basic and diluted shares outstanding	4,811			4,808			4,791			4,774			4,773			4,802			4,769

Reported basic and diluted earnings (loss) per share (GAAP)	$	1.62		$	(1.35)		$	1.26		$	1.24		$	1.19		$	1.53		$	3.72
Reported return on average assets (GAAP)	1.15		%	(0.92)		%	0.88		%	0.85		%	0.83		%	0.36		%	0.87		%
Reported return on average equity (GAAP)	12.89		%	(11.29)		%	10.96		%	10.73		%	10.81		%	4.27		%	11.82		%

Non-GAAP basic and diluted earnings per share	$	1.62		$	1.31		$	1.26		$	1.24		$	1.19		$	4.19		$	3.72
Non-GAAP return on average assets	1.15		%	0.90		%	0.88		%	0.85		%	0.83		%	0.98		%	0.87		%
Non-GAAP return on average equity	12.89		%	11.07		%	10.96		%	10.73		%	10.81		%	11.67		%	11.82		%

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 September 30, 2025, 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 0.19% and 0.97%, respectively. Immediate increases of 100 basis points and 200 basis points would positively impact the next 12 months net interest income by 4.49% and 8.88%, 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			(0.97)%
100 basis points decrease			(0.19)%
100 basis points increase			4.49%
200 basis points increase			8.88%

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 September 30, 2025, it is estimated that an immediate decrease of 100 basis points in interest rates would positively impact the market value of the Corporation’s capital account by 0.43%, while a decrease of 200 basis points in interest rates would negatively impact the market value by 0.45%. 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 2.83% and 5.06%, 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			(0.45)%
100 basis points decrease			0.43%
100 basis points increase			2.83%
200 basis points increase			5.06%

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.

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, Chief Risk Officer, Business Client Division Manager, Divisional Presidents, and Commercial Loan Manager, implements the Board-approved loan policy.

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 September 30, 2025 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 September 30, 2025. In addition, there have been no changes in the Corporation's internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is 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.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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 Bank’s complaint alleges 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, and continues to pursue recovery of the remaining $3.7 million and accumulated expenses as a result of purchasing the participation interest.

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 adverse impact on our financial results or liquidity as of September 30, 2025.

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, 2024, as filed with the Securities and Exchange Commission on March 14, 2025. 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


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
July 1 - July 31, 2025	—	$	—	—	200,816
August 1 - August 31, 2025	—	$	—	—	200,816
September 1 - September 30, 2025	—	$	—	—	200,816
Quarter ended September 30, 2025	—	$	—	—	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 September 30, 2025 the Corporation has repurchased a total of 49,184 shares at the weighted average cost of $40.42 per share.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

During the third quarter of 2025 , none of our directors or officers adopted or terminated any contract, instruction, or written plan for the purchase or sale of Corporation securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as that term is used in SEC regulations.

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.

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: November 6, 2025			By: /s/ Anders M. Tomson
			Anders M. Tomson President and Chief Executive Officer (Principal Executive Officer)


DATED: November 6, 2025			By: /s/ Dale M. McKim, III
			Dale M. McKim, III Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

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.

TABLE OF CONTENTS

Note 1 Summary Of Significant Accounting Policies Note 2 Earnings Per Common Share Note 3 Securities Note 4 Loans and Allowance For Credit Losses Note 5 Fair Value Note 6 Leases Note 7 Goodwill and Intangible Assets Note 8 Commitments and Contingencies Note 9 Borrowed Funds Note 10 Accumulated Other Comprehensive Income (loss)Note 11 Revenue From Contracts with Customers Note 12 Components Of Quarterly and Year To Date Net Periodic Benefit Costs Note 13 Segment Reporting Note 14 Stock Compensation Item 2: Management's Discussion and Analysis Of Financial Condition and Results Of Operations Item 3: Quantitative and Qualitative Disclosures About Market Risk Item 4: Controls and Procedures Part II. Other Information Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 3. Defaults Upon Senior Securities Item 4. Mine Safety Disclosures Item 5. Other Information Item 6. Exhibits

Exhibits

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 Registrants 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 Registrants 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.*

CHMG 10-Q Quarter ended Sept. 30, 2025

Exhibits