Chemung Financial Corporation

11/06/2025 | Press release | Distributed by Public on 11/06/2025 10:10

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

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 uncertainties, 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. Return 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 return 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 $8.5 million, for the nine months ended September 30, 2025, compared to the same period in the prior year. The average yield on interest-earning assets increased 18basis points, to 4.90%, while the average cost of interest-bearing liabilities decreased 37 basis points, to 2.55% for the nine months ended September 30, 2025, compared to the same period in the prior year.
Average Consolidated Balance Sheets and Interest Analysis
The following tables present certain information related to the Corporation's average consolidated balance sheets and its consolidated statements of income for the three and nine months ended September 30, 2025 and 2024. For the purpose of the tables below, nonaccrual loans are included in the daily average loan amounts outstanding. Daily balances were used for average balance computations. Investment securities are stated at amortized cost. Tax equivalent adjustments have been made in calculating yields on obligations of states and political subdivisions, tax-free commercial loans, and dividends on equity investments.
AVERAGE CONSOLIDATED BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS
Three Months Ended
September 30, 2025 		Three Months Ended
September 30, 2024
($ 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 millionin 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 classifications 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.
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.
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 %
Chemung Financial Corporation published this content on November 06, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 06, 2025 at 16:11 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]