CHEMUNG FINANCIAL CORP
For the period ended Jun 30, 2025. Filed Aug 7, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 7, 2025
CHMG$84.75-0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0000763563-25-000074
Item 2. : Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-07.
0000763563-25-000103
Item 2. : Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 184 previous paragraphs and 241 current paragraphs.
109 unchanged; 64 reworded; 59 added; 10 removed; 1 previous and 9 current paragraphs rearranged.
Tables are not compared: 35 previous and 44 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (59)
Current report
Summary of Strategic Actions
Current report
During the three month period ended June 30, 2025, the Corporation completed certain strategic transactions which had a material impact on the Corporation's results of operations for the three and six months ended June 30, 2025 and the Corporation's financial condition as of June 30, 2025. These included two components of management's balance sheet repositioning efforts and the completion of the sale of a previous branch property as part of management's ongoing evaluation of its physical distribution network. The following section provides a summary of these transactions.
Current report
Issuance of Subordinated Debt
Current report
On June 10, 2025, the Corporation issued $45.0 million of ten-year 7.75% fixed-to-floating rate subordinated notes, due June 2035 (the "Notes"). The Notes will bear interest at a fixed rate of 7.75% per year, payable semi-annually, for the first five years. Beginning on June 15, 2030 and until the maturity date, the Notes will adjust to a floating rate equal to the then current three- month term SOFR plus 415 basis points, payable quarterly. The Notes constitute unsecured and subordinated obligations of the Corporation and rank junior in right of payment to any senior indebtedness and obligations to general and secured creditors. Proceeds, net of debt issuance costs of $0.9 million, were $44.1 million. Subject to limited exceptions, the Corporation cannot redeem the Notes before the fifth anniversary of the issuance date. The Corporation intends to use the net proceeds from the issuance and sale of the Notes for general corporate purposes and to support regulatory capital ratios for growth initiatives. The Notes qualify as tier 2 regulatory capital at the holding company, when applicable, subject to an annual phase-out of 20% of the Notes face amount each year during the last five years of the Note's maturity. From the proceeds of the Notes, the Corporation provided the Bank with a $37.0 million capital contribution, effectively downstreaming the regulatory capital impact of the Notes to the Bank as common equity tier 1 capital, which is not subject to regulatory phase-out. The Corporation believes the issuance of subordinated debt strengthens its overall regulatory capital position and improves commercial real estate concentration ratios, allowing for flexibility in pursuing loan growth in its key expansion markets.
Current report
The following table summarizes the changes in the Corporation's and the Bank's regulatory capital and certain regulatory capital ratios as of June 30, 2025 compared to the prior quarter (dollars in thousands):
Current report
(1)CRE concentration ratio is calculated based on the sum of line items 1a1, 1a2, 1d, 1e2, and M3 from FFIEC Call Report schedule RC-C divided by RC-R I line item 47 for the Bank from FFIEC Call Report and HC-R line item 45a for the Corporation from FFIEC FR Y-9C.
Current report
(2) The Corporation is not subject to holding company capital requirements until total consolidated assets reach $3.0 billion.
Current report
Sale of Available for Sale Securities
Current report
Subsequent to the Corporation's issuance of subordinated debt in June 2025, the Corporation sold available for sale securities with a book value of $244.8 million, or approximately 40% of its then total available for sale securities portfolio. These sales resulted in a realized pre-tax loss of $17.5 million, or approximately 7% of the total book value of securities sold, resulting in proceeds of $227.3 million. Securities sold as part of these sales included the Corporation's entire U.S. Treasury securities and SBA-pooled loan securities portfolios, as well as portions of its mortgage-backed securities and municipal bonds portfolios. A portion of proceeds from the sales were utilized to pay off $155.0 million in wholesale funding liabilities subsequent to June 30, 2025, including $100.0 million in brokered deposits and $55.0 million in FHLB term advances, in July 2025. All wholesale funding liabilities were paid off at maturity and the Corporation did not incur any prepayment penalties as a result of these payoffs. Management anticipates a large portion of the remaining proceeds from the issuance of subordinated debt and sale of available for sale securities will be used to fund organic loan growth across the Corporation's footprint in future periods.
Current report
The following table presents selected information regarding details of the Corporation's sale of available for sale securities and its impact on the Corporation's portfolio of available for sale securities (dollars in thousands):
Current report
Sale of Previous Branch Property
Current report
In April 2025, the Corporation completed the sale of its previous branch property at 806 Buffalo Street, Ithaca, New York. As previously disclosed, all operations of the branch, formerly known as the "Ithaca Station" branch were consolidated into the nearby branch at 304 Elmira Road, Ithaca, New York in the fourth quarter of 2024. The property had previously been classified as held for sale at its cost of $0.7 million, with proceeds from the sale totaling $1.3 million, resulting in the recognition of a $0.6 million gain during the three months ended June 30, 2025.
Current report
Tax Implications - Deferred Tax Asset
Current report
The resulting net loss of $17.5 million from the sale of available for sale securities 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) and represents a $2.7 million deferred tax asset as of June 30, 2025 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 50 percent.
Current report
The Corporation’s current tax planning strategies include the planned sale of appreciated investment securities and loans held within 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.
Current report
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 as of June 30, 2025, including the capital loss carryforward, will be realized. Further, Management will continue to monitor all available evidence 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.
Current report
Non-GAAP Presentation
Current report
The Corporation has identified both the sale of available for sale securities and the sale of the former Ithaca Station branch property as nonrecurring transactions and has made reference to non-GAAP figures within this MD&A where appropriate and useful to the reader of these financial statements. Please refer to the GAAP to Non-GAAP reconciliations, pages 82-85, for further information.
Current report
Net Income (Loss)
Current report
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 82-85, for further information):
Current report
(1)Adjusted for the $17.5 million loss on sale of securities available for sale and $0.6 million gain on sale of previous branch property.
Current report
(2)Adjusted for tax impact of loss on sale of securities available for sale and gain on sale of previous branch property.
Current report
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 three andsix month periods ended June 30, 2025 was $6.3 million, or $1.31 per share, and $12.3 million, or $2.57 per share, respectively. Non-GAAP net income as presented in the MD&A has been adjusted for these two items. Refer to the GAAP to Non-GAAP reconciliations, on pages 82-85, for further information. Adjusted return on average equity for the current quarter was 11.07%, compared to 10.27% for the same period in the prior year. Adjusted return on average equity for the six months ended June 30, 2025 was 11.02%, compared to 12.37% for the same period in the prior year.
Current report
Net interest income for the second quarter of 2025 increased $3.0 million, or 17.2%, to $20.8 million compared to the same period in the prior year, due primarily to increases of $1.9 million in interest income on loans and $0.5 million in interest income on interest-earning deposits, and a decrease of $1.6 million in interest expense on deposits, partially offset by a decrease of $0.7 million in interest and dividend income on taxable securities.
Current report
Interest income on loans, including fees, increased to $29.4 million for the three months ended June 30, 2025, from $27.5 million for the same period in the prior year. Interest income on loans increased largely due to an increase of $98.7 million in average balances of total loans compared to the same period in the prior year, as well as an increase of nine 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 the commercial loan portfolio, which grew by $129.2 million compared to the same period in the prior year, largely comprised of growth within the commercial real estate portfolio, particularly in the Bank's Capital region and Western New York markets. The average yield on commercial loans decreased one basis point compared to the same period in the prior year, largely due to declines in benchmark interest rates on existing loans and the lower market interest rate environment on new originations.
Current report
Average balances of residential mortgage loans increased $2.9 million and the average yield on residential mortgage loans increased 37 basis points, each compared to the same period in the prior year. Mortgage loan origination activity increased in the first half of 2025 compared to the same period in the prior year, however overall origination volumes continue to trail levels experienced in recent years. The increase in the average yield on residential mortgages was partially driven by a shift in portfolio composition toward variable rate and construction-to-permanent mortgages, which are currently higher-yielding than fixed rate mortgages. Average balances of consumer loans decreased $33.3 million while the average yield on consumer loans increased 25 basis points, each compared to the same period in the prior year. The decrease in average balances was mainly due to a decrease in indirect auto origination activity, and normal portfolio turnover, as the Bank prioritized funding other types of lending over the past twelve month period. 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.
Current report
Interest income on interest-earning deposits increased to $0.9 million for the three months ended June 30, 2025, from $0.4 million for the same period in the prior year. Interest income on interest-earning deposits increased mainly due to an increase of $45.9 million in average balances of interest-earning deposits, despite a decrease of 42 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 proceeds from the Corporation's sale of available for sale securities in the second quarter of 2025 being held as deposits at the FRBNY in advance of $155.0 million in wholesale funding maturing early in the third quarter of 2025. 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 100 basis points between the second quarter of 2024 and second quarter of 2025. Deposits held at the FRBNY receive interest at a rate 10 basis points below the Federal Funds Target Range Upper Limit.
Current report
Interest expense on deposits decreased to $11.1 million for the three months ended June 30, 2025, from $12.7 million for the same period in the prior year. Interest expense on deposits decreased primarily due to a decrease of 79 basis points in the average cost of customer time deposits, as well as a decrease of 106 basis points in the average cost of brokered deposits, each compared to the same period in the prior year, resulting in a decrease of 83 basis points in the average cost of total time deposits. The decrease in the average cost of customer time deposits was largely due to changes in offered terms on CD campaigns, including a shift towards shorter duration products, while the decrease in the average cost of brokered deposits was largely due to the declining market interest rate environment, which the Corporation was able to take advantage of by primarily utilizing brokered deposits with original durations of three months or less. Average balances of customer time deposits comprised 21.3% of total average deposits for the second quarter of 2025, compared to 21.9% for the second quarter of 2024. Also contributing to the decrease in interest expense on deposits were decreases of 28 basis points and seven basis points in the average cost of interest-bearing demand deposits and savings and money market deposits, respectively, compared to the same period in the prior year. Combined, these decreases resulted in a decrease of 41 basis points in the total average cost of interest-bearing deposits compared to the same period in the prior year, from 2.86% in the second quarter of 2024 to 2.45% in the second quarter of 2025. The deposit beta on total deposits was 28% between these two periods.
Current report
Interest income of taxable securities decreased to $2.5 million for the three months ended June 30, 2025, from $3.3 million for the same period in the prior year. Interest income on taxable securities decreased largely due to a decrease of $86.6 million in average balances of taxable securities, as well as a decrease of 21 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 $57.2 million in paydowns and maturities of available for sale securities between the second quarters of 2024 and 2025, as well as $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. 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 second quarters 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.
Current report
Net interest income for the six months ended June 30, 2025 totaled $40.6 million compared to $35.9 million for the same period in the prior year, an increase of $4.8 million, or 13.3%, due to a decrease of $2.6 million in interest expense and an increase of $2.1 million in interest and dividend income. The decrease in interest expense for the first six months of 2025 was primarily attributed to a decrease of $2.6 million in interest expense on deposits. The increase in interest and dividend income for the first six months of 2025 was primarily attributed to increases of $2.8 million in interest income on loans, including fees and $0.6 million in interest income on interest-earning deposits, partially offset by a decrease of $1.3 million in interest and dividend income on taxable securities.
Current report
Interest expense on deposits decreased to $22.2 million for the first six months of 2025, from $24.9 million for the same period in the prior year. The decrease was primarily due to a 60 basis points decrease in the average cost of customer time deposits for the first six months of 2025, and despite an increase of $11.5 million in average balances of customer time deposits, compared to the same period in the prior year. The decrease in the average cost of customer time deposits was largely due to changes in offered terms on CD campaigns, including a shift towards shorter duration products. The average cost of brokered deposits decreased 93 basis points and average balances of brokered deposits decreased $8.5 million for the first six months of 2025, compared to the same period in the prior year. The decrease in the average cost of brokered deposits was largely due to the declining market interest rate environment, which the Corporation was able to take advantage of by primarily utilizing brokered deposits with original durations of three months or less. Average balances of customer time deposits comprised 21.2% of total average deposits for the first six months of 2025, compared to 21.0% for the same period in the prior year.
Current report
Also contributing to the decrease in interest expense on deposits was a decrease of $0.5 million in interest expense on savings and money market deposits. This decrease was primarily due to a 12 basis points decrease in the average cost of savings and money market accounts, and despite an increase of $3.6 million in average balances of savings and money market deposits, for the six months ended June 30, 2025, compared to the same period in the prior year. Combined, these changes resulted in a decrease of 33 basis points in the total average cost of interest-bearing deposits compared to the same period in the prior year, from 2.80% in the first half of 2024 to 2.47% in the first half of 2025. Interest expense on interest-bearing demand deposits decreased $0.1 million, primarily due to a 23 basis points decrease in the average cost of interest-bearing demand deposits, despite a $28.8 million increase in average balances of interest-bearing demand deposits for the six months ended June 30, 2025, compared to the same period in the prior year.
Current report
Interest income on loans, including fees, increased to $57.5 million for the first six months of 2025, from $54.7 million for the same period in the prior year. The increase was mostly attributable to an increase of $125.7 million in average balances of commercial loans. The yield on total loans increased four basis points compared to the same period in the prior year, from 5.51% to 5.55%. Average yields on the residential mortgage and consumer loan portfolios also increased 30 basis points and 27 basis points, respectively, for the six months ended June 30, 2025, while the average yield on the commercial loan portfolio decreased eight basis points for the same period. The increase in the average yield on residential mortgage loans was primarily due to higher origination yields between the first six 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.
Current report
Interest income on interest-earning deposits increased to $1.2 million for the first six months of 2025, from $0.6 million for the same period in the prior year. The increase was primarily due to a $28.7 million increase in average balances of interest-earning deposits, and despite a decrease of 28 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 proceeds from the Corporation's sale of available for sale securities in the second quarter of 2025 being held as deposits at the FRBNY in advance of $155.0 million in wholesale funding maturing early in the third quarter of 2025. 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 100 basis points between the first half of 2024 and the first half of 2025.
Current report
Interest and dividend income on taxable securities decreased to $5.6 million for the first six months of 2025, from $6.8 million for the same period in the prior year. The decrease in interest and dividend income on taxable securities was due to a $67.8 million decrease in the average balances and an 18 basis points decrease in the average yield on taxable securities for the six months ended June 30, 2025, compared to the same period in the prior year. The decrease in average balances was mainly attributable to $57.2 million in paydowns and maturities of available for sale securities between the first half of 2024 and 2025, as well as $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. 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 half 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.
Current report
Fully taxable equivalent net interest margin was 3.00% for the six months ended June 30, 2025 compared to 2.69% for the same period in the prior year. Average interest-earning assets increased $49.6 million, while average interest-bearing liabilities increased $40.4 million, for the six months ended June 30, 2025, compared to the same period in the prior year. The average yield on interest-earning assets increased nine basis points, to 4.78%, while the average cost of interest-bearing liabilities decreased 34 basis points, to 2.56% for the six months ended June 30, 2025, compared to the same period in the prior year.
Current report
(3) Annualized.
Current report
The provision for credit losses increased $0.3 million for the second quarter of 2025, compared to the same period in the prior year. The increase was largely due to stronger loan growth in the second quarter of 2025, which totaled $34.8 million, compared to loan growth of $7.9 million during the same period in the prior year, and changes in the FOMC's projections for increased unemployment and a decline in GDP growth during the second quarter of 2025, compared to stable projections during the same period in the prior year. Net charge-offs for the three months ended June 30, 2025 were $1.0 million, compared to $0.3 million for the same period in the prior year. $0.8 million in net charge-offs during the three months ended June 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 for the second quarter of 2025.
Current report
The provision for credit losses for the six months ended June 30, 2025 was $2.2 million, compared to a credit of $1.2 million for the same period in the prior year. The $3.4 million increase in the provision for credit losses in the six months ended June 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 six months ended June 30, 2025 were $1.3 million, compared to $0.5 million for the same period in the prior year. $0.8 million in net charge-offs during the six months ended June 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 six months ended June 30, 2025 and 2024 were largely concentrated in the consumer indirect auto portfolio.
Current report
Net Losses on Securities Transactions
Showing the first 40 of 59 passages. Open the source sections for the rest.
Removed paragraphs (10)
Previous report
Net Income
Previous report
Net interest income for the first quarter of 2025 increased $1.7 million, or 9.6%, to $19.8 million compared to the same period in the prior year, due primarily to decreases of $1.0 million in interest expense on deposits and $0.3 million in interest expense on borrowed funds, and an increase of $0.9 million in interest income on loans, including fees, partially offset by a decrease of $0.5 million in interest and dividend income on taxable securities.
Previous report
Interest expense on deposits decreased to $11.2 million for the three months ended March 31, 2025 from $12.1 million for the same period in the prior year. The decrease in interest expense on deposits was due primarily to a decrease of 27 basis points in the average cost of total interest-bearing deposits, which was comprised of decreases of 21 basis points in the average cost of customer interest-bearing deposits and 82 basis points in the average cost of brokered deposits, both largely due to decreases in benchmark interest rates and the Corporation's balance sheet structure favoring shorter-term liabilities. Average balances of customer interest-bearing deposits increased $55.0 million, while average balances of brokered deposits decreased $8.6 million, compared to the same period in the prior year. The increase in average balances of customer interest-bearing deposits was primarily due to an increase of $32.9 million in average balances of customer time deposits. The average cost of customer time deposits decreased 38 basis points compared to the same period in the prior year, due to the Corporation's focus on shorter-term certificate of deposit campaigns during 2024, and a decrease in interest rates on campaign offerings in the current period. Customer time deposits comprised 21.1% of average total deposits for the first quarter of 2025, compared to 20.1% for the same period in the prior year. Additionally, an increase of $28.3 million in average balances of interest-bearing demand deposits positively benefited the average cost of interest-bearing deposits, as the 1.57% cost was lower than other types of interest-bearing deposits.
Previous report
Interest expense on borrowed funds decreased to $0.7 million for the three months ended March 31, 2025 from $1.0 million for the same period in the prior year. The decrease in interest expense on borrowed funds was partially due to a decline in borrowing rates between the first quarter of 2024 and the first quarter of 2025, as well as a shift in the composition of borrowed funds between these periods. The average cost of borrowings decreased 61 basis points, compared to the same period in the prior year, comprised of decreases of 91 basis points and 32 basis points in the average cost of FHLBNY overnight advances and other advances and debt, which includes FHLBNY term advances, respectively. The composition of borrowings in the first quarter of 2025 was primarily comprised of FHLBNY term advances and FHLBNY overnight advances, while the composition of borrowings in the same period in the prior year was primarily comprised of a Federal Reserve Bank Term Funding Program (BTFP) advance and FHLBNY overnight advances.
Previous report
Interest income on loans, including fees, increased to $28.1 million for the three months ended March 31, 2025, from $27.2 million for the same period in the prior year. The increase in interest income on loans, including fees, was largely due to an increase in average total loan balances of $88.6 million compared to the same period in the prior year, which was concentrated in the commercial loan portfolio. The average yield on total loans was relatively stable compared to the same period in the prior year, declining two basis points to 5.49% in the first quarter of 2025. Average balances of commercial loans increased $122.1 million in the first quarter of 2025 compared to the same period in the prior year, primarily due to growth in commercial real estate balances, while the average yield on commercial loans declined 15 basis points, largely due to repricing of benchmark indexes and $0.3 million in interest income recognized on the payoff of a nonaccrual commercial real estate loan in the same period of the prior year. Average balances of residential mortgage loans and consumer loans each decreased in the first quarter of 2025 compared to the same period in the prior year, decreasing $2.1 million and $31.4 million, respectively. The decrease in average balances of residential mortgage loans was partially due to relatively low levels of housing inventory across the Bank's footprint resulting in lower origination volume, which was comparable to the prior year, as well as a continued election to sell a significant portion of conforming mortgages into the secondary market. The decrease in average balances of consumer loans was primarily due to net runoff of indirect auto loans between the first quarters of 2024 and 2025. The average yield on residential mortgage loans and consumer loans each increased in the first quarter of 2025, compared to the same period in the prior year, increasing 24 and 27 basis points, respectively, each due to strong origination yields in recent periods, and normal runoff of older and typically lower yielding originations. Interest income on interest-earning deposits increased mainly due to a $11.2 million increase in average balances of interest-earning deposits, compared to the same period in the prior year, and despite a decrease of six basis points in the average yield on interest-earning deposits, due to a decrease in the interest rate paid on deposit balances at the Federal Reserve.
Previous report
Interest and dividend income on taxable securities decreased to $3.0 million for the three months ended March 31, 2025 from $3.6 million for the same period in the prior year. Interest and dividend income on taxable securities decreased primarily due to paydowns and maturities of available for sale securities between the first quarter of 2024 and the first quarter of 2025, totaling $55.9 million, primarily on SBA pooled loan and mortgage-backed securities, as well as a decrease in the interest rates of variable rate SBA pooled loan securities, partially offset by purchases of available for sale securities totaling $5.0 million between these periods.
Previous report
The provision for credit losses increased $3.1 million for the first quarter of 2025, compared to the same period in the prior year. The increase was primarily due to the directionality of changes attributable to the annual update to loss drivers used in the Bank's CECL model. The update to loss drivers in the current year resulted in an increase in baseline loss rates, while the update in the prior year resulted in a decrease in baseline loss rates. This increase was also partially attributable to an increase of $0.1 million in net charge offs in the first quarter of 2025, compared to the first quarter of 2024.
Previous report
Changes in Fair Value Equity Investments
Previous report
The Corporation has reporting systems to monitor: (i) loan origination and concentrations, (ii) delinquent loans, (iii) non-performing assets, including non-performing loans, certain loans made with modifications to borrowers experiencing financial difficulty, other real estate owned, and repossessed vehicles (iv) loans analyzed on an individual basis for credit risk, and (v) potential problem loans. Management reviews the adequacy of these systems on a regular basis.
Previous report
On March 12, 2023, the Treasury Department, Federal Reserve, and FDIC jointly announced a new liquidity program, the Bank Term Funding Program (BTFP), in response to the failure of two banks earlier that week. Under the BTFP, institutions could pledge certain securities (i.e., securities eligible for purchase by the Federal Reserve Banks in open market operations) for the par value of the securities at a borrowing rate of ten basis points over the one-year overnight index swap rate. Certain U.S. federally insured depository institutions were eligible to participate in the BTFP. In January 2024, the Corporation utilized the BTFP, with an advance of $50.0 million, at an interest rate of 4.91%. No new borrowings could be made under the BTFP after March 11, 2024. This advance was repaid by the Corporation in the fourth quarter of 2024 without prepayment penalty.
Reworded paragraphs (64)
Previous wording
The following is the MD&A of the Corporation in this Quarterly Report on Form 10-Q for the three months ended March 31, 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 3–6.
Current wording
The following is the MD&A of the Corporation in this Quarterly Report on Form 10-Q for the three and six months ended June 30, 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.
Previous wording
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 uncerta inties, see Forward-looking Statements below, in Part I, Item 1A, Risk Factors, and on pages 20–31 of the Corporation’s 2024 Form 10-K. For a discussion of the use of non-GAAP financial measures, see pages 64-67 of the Corporation's 2024 Form 10-K, and pages 67-70 in this Form 10-Q.
Current wording
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 uncerta inties, see Forward-looking Statements below, in Part I, Item 1A, Risk Factors, and on pages 20–31 of the Corporation’s 2024 Form 10-K. For a discussion of the use of non-GAAP financial measures, see pages 64-67 of the Corporation's 2024 Form 10-K, and pages 82-85 in this Form 10-Q.
Previous wording
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, recent 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.
Current wording
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.
Previous wording
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 certain 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 at 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.
Current wording
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.
Previous wording
As of March 31, 2025 and December 31, 2024, the allowance for credit losses totaled $22.5 million and $21.4 million, respectively. A significant portion of the allowance for credit losses is allocated to the commercial portfolio, both commercial real estate and commercial and industrial loans. As of March 31, 2025 and December 31, 2024, the allowance for credit losses allocated to the total commercial portfolio was $17.2 million and $15.7 million respectively, or 76.6% and 73.6% of the total allowance for credit losses on loans. For comparison, total commercial loans represented 74.2% and 73.2% of total loan balances as of March 31, 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.
Current wording
As of June 30, 2025 and December 31, 2024, the allowance for credit losses totaled $22.7 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 June 30, 2025 and December 31, 2024, the allowance for credit losses allocated to the total commercial portfolio was $17.2 million and $15.7 million, respectively, or 76.1% and 73.6% of the total allowance for credit losses on loans. For comparison, total commercial loans represented 74.7% and 73.2% of total loan balances as of June 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.
Previous wording
Changes in the FOMC's median forecasted year over year 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. 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 $0.8 million, or 3.8%, to $23.4 million as of March 31, 2025, assuming qualitative adjustments were kept at current levels.
Current wording
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. 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 $0.8 million, or 3.6%, to $23.5 million as of June 30, 2025, assuming qualitative adjustments were kept at current levels.
Previous wording
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 67-70 for further explanation and reconciliation of the Corporation’s use of non-GAAP measures.
Current wording
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 82-85 for further explanation and reconciliation of the Corporation’s use of non-GAAP measures.
Previous wording
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 months ended March 31, 2025 and 2024. For a discussion of the Critical Accounting Estimates that affect the Consolidated Results of Operations, see pages 41-42 of this Form 10-Q and page 37 of the Corporation’s 2024 Form 10-K.
Current wording
The following section of the MD&A provides a comparative discussion of the Corporation’s Consolidated Results of Operations on a reported basis for the three and six months ended June 30, 2025 and 2024. For a discussion of the Critical Accounting Estimates that affect the Consolidated Results of Operations, see pages 49-50 of this Form 10-Q and page 37 of the Corporation’s 2024 Form 10-K.
Previous wording
Net income for the first quarter of 2025 was $6.0 million, or $1.26 per share, compared to $7.1 million, or $1.48 per share, for the same period in the prior year. Return on average equity for the current quarter was 10.96%, compared to 14.48% for the same period in the prior year. The decrease in net income was attributable to an increase in the provision for credit losses and an increase in non-interest expense, offset by increases in net interest income and non-interest income, and a decrease in income tax expense.
Current wording
The Corporation reported a net loss for the second quarter of 2025 of $6.5 million, or a net loss of $1.35 per share, compared to net income of $5.0 million, or $1.05 per share, for the same period in the prior year, anda net loss for the six months ended June 30, 2025 of $0.4 million, or a net loss of $0.09 per share, compared to net income of $12.0 million, or $2.53 per share, for the same period in the prior year. The decrease in net income for the three andsix month periods ended June 30, 2025 was attributable to a decrease in non-interest income and increases in non-interest expense and provision for credit losses, offset by an increase in net interest income and a decrease in income tax expense. Return on average equity for the current quarter was (11.29)%, compared to 10.27% for the same period in the prior year. Return on average equity for the six months ended June 30, 2025 was(0.38)%, compared to 12.37%for the same period in the prior year.
Previous wording
Fully taxable equivalent net interest margin was 2.96% for the first quarter of 2025, compared to 2.73% for the same period in the prior year. Average interest-earning assets increased $48.6 million for the three months ended March 31, 2025 compared to the same period in the prior year. The average yield on interest-earning assets increased twobasis points to 4.72%, and the average cost of interest-bearing liabilities decreased 30 basis points to 2.55%, for the three months ended March 31, 2025, compared to the same period in the prior year, due to the change in the interest rate environment. The cost of funds was 1.92%for the three months ended March 31, 2025, compared to 2.13% for the same period in the prior year, a decrease of 21 basis points.
Current wording
Fully taxable equivalent net interest margin was 3.05% for the second quarter of 2025, compared to 2.66% for the same period in the prior year. Average interest-earning assets increased $50.5 million for the three months ended June 30, 2025, while average interest-bearing liabilities increased $45.8 million, compared to the same period in the prior year. The average yield on interest-earning assets increased 14 basis points to 4.83%, while the average cost ofinterest-bearing liabilities decreased 37 basis points to 2.57%, for the three months ended June 30, 2025, compared to the same period in the prior year. Total cost of funds was 1.94%for the three months ended June 30, 2025, compared to 2.20% for the same period in the prior year, a decrease of 26 basis points.
Previous wording
The following table presents certain information related to the Corporation’s average consolidated balance sheets and its consolidated statements of income for the three months ended March 31, 2025 and 2024. For the purpose of the table 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.
Current wording
The following tables present certain information related to the Corporation’s average consolidated balance sheets and its consolidated statements of income for the three and six months ended June 30, 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.
Previous wording
Net interest income can be analyzed in terms of the impact of changes in rates and volumes. The table below illustrates 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 months ended March 31, 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 purpose of this table, 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.
Current wording
Net interest income can be analyzed in terms of the impact of changes in rates and volumes. The tables below illustrate the extent to which changes in interest rates and the volume of average interest-earning assets and interest-bearing liabilities have affected the Corporation’s interest income and interest expense during the three and six months ended June 30, 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.
Previous wording
Total non-interest income for the first quarter of 2025 increased $0.2 million compared to the same period in the prior year, primarily due to increases in service charges on deposit accounts, WMG fee income and other non-interest income, partially offset by a decrease in the changes in fair value of equity investments.
Current wording
Total non-interest income for the second quarter of 2025 decreased $16.3 million compared to the same period in the prior year, primarily due to a $17.5 million net loss on securities transactions, partially offset by increases of $0.8 million in other non-interest income, $0.2 million in service charges on deposit accounts, and $0.1 million in each of WMG fee income and change in fair value of equity investments.
Previous wording
The increase in other non-interest income can primarily be attributed to an increase in interest rate swap fee income in the first quarter of 2025, when compared to the same period in the prior year.
Current wording
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, when compared to the same period in the prior year.
Previous wording
The increase in WMG fee income can primarily be attributed to fee rate increases which were implemented in the second half of 2024.
Current wording
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 positive changes in financial markets during the second quarter of 2025.
Previous wording
The decrease in changes in fair value of equity investments can primarily be attributed to a decrease in the market value of assets held for the Corporation's deferred compensation plan.
Current wording
The increase in changes in fair value of equity investments can primarily be attributed to an increase in the market value of assets held for the Corporation's deferred compensation plan, when compared to the same period in the prior year.
Previous wording
Total non-interest expense for the first quarter of 2025 increased $0.2 million compared to the same period in the prior year. The increase was due to increases in total compensation expense and non-compensation expense. For the three months ended March 31, 2025 and 2024, non-interest expense to average assets was 2.47%.
Current wording
Total non-interest expense for the second quarter of 2025 increased $1.6 million compared to the same period in the prior year. The increase was due to increases in total compensation expense and non-compensation expense. For the three months ended June 30, 2025 and 2024, non-interest expense to average assets was 2.54% and 2.38%, respectively.
Previous wording
The increase in compensation expense for the current period, compared to the same period in the prior year, was primarily due to increases in salaries and wages and other components of net periodic pension and postretirement benefits, partially offset by a decrease in pension and other employee benefits.
Current wording
The increase in compensation expense for the current period, compared to the same period in the prior year, was primarily due to increases in salaries and wages and other components of net periodic pension and postretirement benefits.
Previous wording
The increase in salaries and wages can be primarily attributed to an increase in base salaries, including merit-based increases and additional staffing for the Corporation's newly opened Western New York regional banking center. 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. The decrease in pension and other employee benefit expense was largely due to lower employee healthcare-related expenses compared to the same period in the prior year.
Current wording
The increase in salaries and wages can be primarily attributed to an increase in base salaries, including merit-based increases and additional staffing for the Corporation's Western New York regional banking center. 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.
Previous wording
The increase in non-compensation expense for the current period, compared to the same period in the prior year, was primarily due to increases in other non-interest expense and professional services, partially offset by a decrease in FDIC insurance expense. The increase in other non-interest expense was primarily due to net recoveries of multiple large altered check charge-offs during the same period in the prior year as well as higher operational losses on the sale of repossessed vehicles during the first quarter of 2025, compared to the same period in the prior year. The increase in professional services was primarily due to additional consulting services compared to the same period in the prior year. The decrease in FDIC insurance was primarily due to a decrease in the Bank's assessment rate, due to an improvement in evaluated metrics.
Current wording
The increase in non-compensation expense was primarily due to increases of $0.3 million each in professional services and other non-interest expense and $0.2 million in data processing expense, offset by a decrease 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 other non-interest expense was primarily due to an increase in operational losses on sales of repossessed vehicles. 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 decrease in FDIC insurance expense was primarily due to improved metrics used to calculate the current year assessment.
Previous wording
Income tax expense for the three month periods ended March 31, 2025 and 2024 were $1.7 million and $2.0 million, respectively. The decrease in income tax expense was due primarily to a decrease of $1.4 million in income before income tax expense. The effective income tax rate decreased from 22.4% for the three months ended March 31, 2024 to 21.6% for the three months ended March 31, 2025.
Current wording
Income tax expense for the three month period ended June 30, 2025 was a tax benefit of $2.4 million, compared to a tax expense of $1.3 million for the three month period ended June 30, 2024, a decrease of $3.6 million. The decrease in income tax expense was primarily due to the $17.5 million net loss recognized on the Corporation's sale of available for sale securities in the second quarter of 2025. The effective income tax rate increased from 20.3% for the three months ended June 30, 2024 to 26.8% for the three months ended June 30, 2025.
Previous wording
The increase in cash and cash equivalents can be attributed to changes in loans, deposits, borrowings, and securities.
Current wording
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 Corporation's sale of available for sale securities in the second quarter of 2025. Cash balances as of June 30, 2025 were held almost entirely at the FRBNY and the Corporation utilized a portion of these proceeds to pay off wholesale funding which matured early in the third quarter of 2025. An increase of $72.1 million in total deposits, primarily due to inflows of municipal deposits, and proceeds from the Corporation's issuance of subordinated debt in the second quarter of 2025, also contributed to the increase in cash and cash equivalents balances.
Previous wording
The decrease in investment securities can mostly be attributed to $13.6 million in paydowns and maturities in the securities available for sale portfolio, primarily attributable to paydowns on mortgage-backed securities and SBA pooled-loan securities. The market value of securities available for sale increased $11.0 million, due to favorable changes in market interest rates during the current period. Also contributing to the decrease in total investment securities was a decrease of $1.1 million in FHLB and FRB stock, at cost, mainly due to a decrease in total borrowing through the FHLBNY as of March 31, 2025, compared to the prior year-end.
Current wording
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 $28.3 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 $12.6 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 $2.3 million in FHLB and FRB stock, at cost, mainly due to a decrease in total borrowings through the FHLBNY as of June 30, 2025, compared to the prior year end.
Previous wording
The increase in loans, net of deferred loan fees, can primarily be attributed to increases of $43.3 million in commercial mortgages and $0.5 million in residential mortgages, offset by decreases of $3.8 million in commercial and industrial loans and $13.5 million in indirect consumer loans.
Current wording
The increase in loans, net of deferred loan fees, can primarily be attributed to increases within the commercial real estate portfolio. Commercial mortgages increased $80.5 million, residential mortgages increased $3.2 million, and home equity lines and loans increased $8.3 million compared to the prior year end. These increases were offset by decreases of $24.8 million in indirect consumer loans, $5.0 million in commercial and industrial loans, and $1.2 million in direct consumer loans.
Previous wording
The increase in the allowance for credit losses was primarily 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. The update in the current year resulted in an increase in baseline loss rates used for modeling. The increase was also impacted by changes in the FOMC's forecasts, including higher U.S. civilian unemployment and lower U.S. GDP growth compared to the prior year-end, and a decline in prepayment speeds compared to the prior year-end.
Current wording
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. The update in the current year resulted in an increase in baseline loss rates used for modeling. Also contributing to the increase was loan growth, concentrated in commercial real estate, changes in the FOMC's economic forecasts, including higher U.S. civilian unemployment and lower U.S. GDP growth compared to the prior year-end, and a decline in prepayment speeds compared to the prior year-end. Partially offsetting the overall increase was the charge-off of $0.8 million in commercial and industrial loan balances during the six month periods ended June 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.
Previous wording
The decrease in other assets can primarily be attributed to decreases of $3.3 million in interest rate swap assets, due to a decrease in the market value of swaps, and $2.9 million in deferred tax assets, due to improvements in the market value of the available for sale securities portfolio.
Current wording
The decrease in other assets can primarily be attributed to a $5.1 million decrease in interest rate swap assets, due to a decrease in the fair value of interest rate swaps.
Previous wording
The increase in deposits can primarily be attributed to increases of $33.3 million in interest-bearing demand deposits and $30.4 million in money market deposits. These increases were partially attributable to seasonal inflows of municipal deposits. Total time deposits decreased $25.0 million, consisting of decreases of $13.6 million in customer time deposits and $11.4 million in brokered deposits. The Bank's certificate of deposit campaign in the current year primarily consisted of a continuation of six and 15 month offerings, as well as the introduction of a 36 month offering. Savings deposits increased $4.0 million while non interest-bearing demand deposits decreased $6.1 million, when compared to December 31, 2024.
Current wording
The increase in deposits can primarily be attributed to increases of $44.6 million in money market deposits and $41.6 million in interest-bearing demand deposits. These increases were partially attributable to seasonal inflows of municipal deposits. Total time deposits decreased $5.4 million, consisting of a decrease of $13.3 million in customer time deposits, offset by an increase of $7.8 million in brokered deposits. The decrease in customer time deposits was partially due to the maturity of previous CD campaign offerings which were not renewed. The Bank’s CD campaign strategy in 2025 included continued emphasis on offerings carrying six and 15 month terms, along with the addition of a 36 month option during 2025. Savings deposits decreased $7.3 million while non interest-bearing demand deposits decreased $1.4 million, when compared to December 31, 2024. All of the Corporation's brokered deposits matured in early July 2025 and were paid off in full using a portion of the proceeds from the sale of available for sale securities. Excluding brokered deposits, total deposits increased $64.2 million from December 31, 2024.
Previous wording
The decrease in advances and other debt can primarily be attributed to an increase in total deposits, which reduced the need for advances and other debt. Advances and other debt as of March 31, 2025 largely consisted of staggered three-month term advances from the FHLBNY, whereas the composition of advances and other debt as of the prior year-end consisted primarily of FHLBNY overnight advances.
Current wording
The decrease in advances and other debt can primarily be attributed to increases in cash and cash equivalents and total deposits, which reduced the need for advances and other debt. Advances and other debt as of June 30, 2025 largely consisted of a $55.0 million two-month term advance from the FHLBNY, which matured in July 2025, whereas the composition of advances and other debt as of the prior year end consisted primarily of FHLBNY overnight advances.
Previous wording
The decrease in other liabilities can primarily be attributed to a decrease of $3.3 million in interest rate swap liabilities, primarily due to a decrease in the market value of swaps.
Current wording
The decrease in other liabilities can primarily be attributed to a decrease of $5.0 million in interest rate swap liabilities, primarily due to a decrease in the fair value of interest rate swaps.
Previous wording
Shareholders’ equity was $228.3 million at March 31, 2025 compared to $215.3 million at December 31, 2024. The increase can primarily be attributed to an increase of $4.5 million in retained earnings, and a decrease of $8.1 million in accumulated other comprehensive loss. The increase in retained earnings can primarily be attributed to net income of $6.0 million, offset by $1.5 million in dividends declared, during the three months ended March 31, 2025. The decrease in accumulated other comprehensive loss can primarily be attributed to an increase in the fair market value of the available for sale securities portfolio due to favorable changes in market interest rates at quarter end.
Current wording
Shareholders’ equity was $235.0 million at June 30, 2025 compared to $215.3 million at December 31, 2024. The increase can primarily be attributed to a decrease of $22.4 million in accumulated other comprehensive loss partially offset by a decrease of $3.5 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 decrease in retained earnings was mainly due to a net loss of $0.4 million for the six months ended June 30, 2025, due to the Corporation's loss on the sale of available for sale securities, and dividends declared of $3.1 million during the six months ended June 30, 2025.
Previous wording
The market value of total assets under management or administration in WMG was $2.203 billion as of March 31, 2025, including $305.5 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, a decrease of $9.5 million, or 0.4%, largely due to declines in markets during the first quarter of 2025.
Current wording
The market value of total assets under management or administration in Wealth Management Group was $2.313 billion as of June 30, 2025, including $334.0 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 $101.0 million, or 4.5%. Excluding assets under management or administration for the Corporation, total market value of Wealth Management Group assets increased $69.0 million, or 3.7%, primarily due to improvements in financial markets during 2025, largely concentrated in the second quarter of 2025.
Previous wording
The available for sale segment of the securities portfolio totaled $528.3 million as of March 31, 2025, a decrease of $3.1 million, or 0.6%, from $531.4 million as of December 31, 2024. The decrease can mostly be attributed to $13.6 million in paydowns and maturities, primarily attributable to paydowns on mortgage-backed securities and SBA pooled-loan securities. The fair value of the portfolio increased $11.0 million, due to favorable changes in interest rates during the current period. The held to maturity securities portfolio consists of obligations of political subdivisions in the Corporation’s market areas. These securities totaled $0.8 million as of March 31, 2025 and December 31, 2024.
Current wording
The available for sale segment of the securities portfolio totaled $287.3 million as of June 30, 2025, a decrease of $244.1 million, or 45.9%, 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 $28.3 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 $12.6 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 June 30, 2025 and December 31, 2024, respectively.
Previous wording
Non-marketable equity securities as of March 31, 2025 and December 31, 2024 include shares of FRBNY stock and FHLBNY stock, carried at their cost. FRBNY stock and FHLBNY stock were $1.9 million and $6.1 million respectively as of March 31, 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.
Current wording
Non-marketable equity securities as of June 30, 2025 and December 31, 2024 include shares of FRBNY stock and FHLBNY stock, carried at their cost. FRBNY stock and FHLBNY stock were $1.9 million and $4.9 million respectively as of June 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.
Previous wording
Portfolio loans totaled $2.098 billion as of March 31, 2025, an increase of $26.2 million, or 1.3%, from $2.071 billion as of December 31, 2024. The increase in loans can primarily be attributed to increases of $43.3 million in commercial mortgage loans and $0.5 million in residential mortgages, partially offset by decreases of $13.5 million in indirect consumer loans and $3.8 million in commercial and industrial loans.
Current wording
Portfolio loans totaled $2.132 billion as of June 30, 2025, an increase of $61.0 million, or 2.9%, from $2.071 billion as of December 31, 2024. The increase in loans can primarily be attributed to increases of $80.5 million in commercial mortgage loans and $8.3 million in home equity lines and loans, partially offset by decreases of $24.8 million in indirect consumer loans and $5.0 million in commercial and industrial loans.
Previous wording
Commercial lending continues to be a primary driver of asset growth for the Corporation, and demand remained strong in the current economic environment, particularly in the Capital Bank division and the newer Canal Bank division in Western New York. As of March 31, 2025, total commercial real estate loans, inclusive of construction loans, in the Canal Bank division grew $24.9 million, while commercial real estate loans in the Capital Bank and Chemung Canal divisions grew $15.9 million and $2.5 million, respectively, compared to December 31, 2024. Commercial and industrial loan balances in the Canal Bank and Capital Bank divisions decreased by $4.5 million and $2.2 million, respectively, compared to December 31, 2024, partially offset by an increase in commercial and industrial loan balances in the Chemung Canal region of $2.9 million.
Current wording
Commercial lending demand remains strong across the Corporation's footprint, particularly in the Capital Bank and Canal Bank divisions in the Albany and Western New York markets, respectively. Commercial lending continues to be the primary driver of asset growth for the Corporation. 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. As of June 30, 2025, total commercial real estate loans, inclusive of construction loans, grew similarly in the Capital Bank and Canal Bank divisions, compared to December 31, 2024, increasing $38.9 million and $37.7 million, respectively. Additionally, commercial real estate loan growth in the legacy Chemung Canal division was $4.0 million over the same period. Commercial and industrial loan balances decreased in all three divisions between December 31, 2024 and June 30, 2025, with balances in the Chemung Canal legacy division decreasing $3.5 million, while balances in the Canal Bank and Capital Bank divisions decreased $1.0 million and $0.5 million, respectively.
Previous wording
Residential mortgage loans totaled $275.4 million as of March 31, 2025, an increase of $0.5 million, or 0.2%, compared to December 31, 2024. During the three months ended March 31, 2025, $9.4 million in residential mortgages were originated, of which $2.3 million were sold in the secondary market to Freddie Mac and FHLBNY. Residential mortgage originations continues to be weaker as a result of lower levels of housing inventory across the Corporation's footprint and the higher interest rate environment, relative to prior years. Total consumer loans decreased primarily due to a decrease of $13.5 million, or 7.6%, in indirect consumer loans compared to December 31, 2024, due to paydowns exceeding originations during 2025, and the relatively fast turnover rate in the portfolio.
Current wording
Residential mortgage loans totaled $278.2 million as of June 30, 2025, an increase of $3.2 million, or 1.2%, compared to December 31, 2024. During the six months ended June 30, 2025, $22.2 million in residential mortgages were originated, of which $4.9 million were sold in the secondary market to Freddie Mac and FHLBNY. Total balances of residential mortgage originations increased 41.4% compared to the same period in the prior year, however overall origination volumes continue to be weaker than in prior years. Total consumer loans decreased largely due to a decrease of $24.8 million, or 13.9%, in indirect consumer loans compared to December 31, 2024, due to paydowns exceeding originations during 2025, and the relatively fast turnover rate in the portfolio. The overall decrease in total consumer loans was partially offset by an increase of $8.3 million in home equity lines and loans, largely due to promotional efforts during 2025 relating to home equity lines of credit.
Previous wording
Commercial real estate lending represented the largest portion of the Corporation's loan portfolio as of March 31, 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 March 31, 2025 and December 31, 2024, total commercial real estate loans were $1.260 billion and $1.217 billion, respectively. As the largest component of the Corporation's loan portfolio, quantitative and qualitative attributes of commercial real estate such as maturity and repricing schedules may have a significant impact on management's strategic initiatives, and understanding such attributes is critical in understanding the Corporation's anticipated future liquidity needs and sensitivity to changes in interest rates. 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.
Current wording
Commercial real estate lending represented the largest portion of the Corporation's loan portfolio as of June 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 June 30, 2025 and December 31, 2024, total commercial real estate loans were $1.298 billion and $1.217 billion, respectively, representing 60.9% 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 such as maturity and repricing schedules may have a significant impact on management's strategic initiatives, and understanding such attributes is critical in understanding the Corporation's anticipated future liquidity needs and sensitivity to changes in interest rates. 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.
Previous wording
Non-performing loans totaled $9.9 million, or 0.47% of total loans as of March 31, 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 $10.3 million, or 0.37% of total assets as of March 31, 2025, compared to $9.6 million, or 0.35% of total assets as of December 31, 2024. The increase in non-performing loans was primarily due to $0.5 million in residential mortgage loans and $0.5 million in home equity lines and loans being placed into nonaccrual status during the three months ended March 31, 2025. The increase in each of these categories was largely attributable to a single loan in each category, both of which are considered well-collateralized. Non-performing commercial loans decreased $0.1 million compared to December 31, 2024, largely due to the payoff of a $0.3 million nonaccrual non-owner occupied loan during the three months ended March 31, 2025, partially offset by the addition of a $0.2 million commercial and industrial loan to nonaccrual during the same period.
Current wording
Non-performing loans totaled $8.2 million, or 0.39% of total loans as of June 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 $8.4 million, or 0.30% of total assets as of June 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 two nonaccrual commercial real estate loans, totaling $1.3 million, and the charge-off of two commercial and industrial loans during the three months ended June 30, 2025, totaling $0.8 million. Additionally, there were $0.7 million in total retail loan charge-offs during the six months ended June 30, 2025, and other real estate owned decreased $0.3 million compared to December 31, 2024. Partially offsetting the overall decrease in non-performing loans were the addition of $2.2 million in total retail loan balances and $0.3 million in commercial loan balances to nonaccrual status during the six months ended June 30, 2025.
Previous wording
The Corporation works closely with borrowers experiencing financial difficulties to identify viable solutions that minimize the potential for loss. The Corporation monitors modifications made to borrowers experiencing financial difficulty in which contractual cash flows are directly impacted, in accordance with ASU 2022-02. Modifications included under this guidance include principal reductions, reductions in effective interest rates, term extensions, significant payment delays, or a combination thereof. As of March 31, 2025, the Corporation had seven active loans modified under this accounting guidance. As of March 31, 2025, one commercial and industrial loan which was given an extension of six months during 2023 was in payment default, while the remainder of modified loans were performing under their modified terms. There were no loan modifications made to borrowers experiencing financial difficulty during the three month periods ended March 31, 2025 and 2024.
Current wording
The Corporation works closely with borrowers experiencing financial difficulties to identify viable solutions that minimize the potential for loss. The Corporation especially monitors modifications made to borrowers experiencing financial difficulty where contractual cash flows are directly impacted, including through principal reductions, reductions in effective interest rates, term extensions, significant payment delays, or a combination thereof. As of June 30, 2025, the Corporation had six active loans modified under such terms. During the three and six month periods ended June 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 June 30, 2025. There were no loan modifications made to borrowers experiencing financial difficulty during the three and six month periods ended June 30, 2025 and 2024.
Previous wording
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 broad range of assets including loans, unfunded commitments, and debt securities, incorporating both quantitative and qualitative components. As of March 31, 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 either 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.
Current wording
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 June 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 either 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.
Showing the first 40 of 64 pairs. Open the source sections for the rest.
Rearranged current paragraphs (9)
Current report — wording carried from elsewhere
The following table presents net interest income for the periods indicated, and the dollar and percent change (in thousands):
Current report — wording carried from elsewhere
(1) Net interest rate spread is the difference in the average yield on interest-earning assets less the average rate on interest-bearing liabilities.
Current report — wording carried from elsewhere
(2) Net interest margin is the ratio of fully taxable equivalent net interest income divided by average interest-earning assets.
Current report — wording carried from elsewhere
Changes in Fair Value of Equity Investments
Current report — wording carried from elsewhere
The following table presents non-interest income for the periods indicated, and the dollar and percent change (in thousands):
Current report — wording carried from elsewhere
The increase in service charges on deposit accounts can primarily be attributed to fee rate increases which were implemented in the second half of 2024.
Current report — wording carried from elsewhere
The following table presents non-interest expense for the periods indicated, and the dollar and percent change (in thousands):
Current report — wording carried from elsewhere
The increase in compensation expense for the current period, compared to the same period in the prior year, was primarily due to increases in salaries and wages and other components of net periodic pension and postretirement benefits, offset by a decrease in pension and other employee benefits. 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 other components of net periodic pension and postretirement benefits was primarily due to actuarial adjustments related to the Corporation's pension plans. The decrease in pension and other employee benefits was primarily attributable to a decrease in employee healthcare expenses for the current period, compared to the same period in the prior year.
Current report — wording carried from elsewhere
The following table presents income tax expense and the effective tax rate for the periods indicated, and the dollar and percent change (in thousands):
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
(1) All loans, excluding those originated by the Capital Bank and Canal Bank divisions.