TOMPKINS FINANCIAL CORP

Previous wording

Tompkins Financial Corporation ("Tompkins" or the "Company") is headquartered in Ithaca, New York and is registered as a Financial Holding Company with the Federal Reserve Board under the Bank Holding Company Act of 1956, as amended. The Company is a locally-oriented, community-based financial services organization that offers a full array of products and services, including commercial and consumer banking, leasing, trust and investment management, financial planning and wealth management, and insurance services. At September 30, 2025, the Company had one wholly-owned banking subsidiary, Tompkins Community Bank. Tompkins Community Bank provides a full array of wealth management services under the Tompkins Financial Advisors brand, including investment management, trust and estate, financial and tax planning as well as life, disability and long-term care insurance services. The Company also has a wholly-owned insurance agency subsidiary, Tompkins Insurance Agencies, Inc. ("Tompkins Insurance"). The Company’s principal offices are located at 118 E. Seneca Street, P.O. Box 460, Ithaca, NY, 14850, and its telephone number is (888) 503-5753. The Company’s common stock is traded on the NYSE American under the Symbol "TMP."

Current wording

Tompkins Financial Corporation ("Tompkins" or the "Company") is headquartered in Ithaca, New York and is registered as a Financial Holding Company with the Federal Reserve Board under the Bank Holding Company Act of 1956, as amended. The Company is a locally oriented, community-based financial services organization that offers a full array of products and services, including commercial and consumer banking, leasing, trust and investment management, and financial planning and wealth management. At March 31, 2026, the Company had one wholly-owned banking subsidiary, Tompkins Community Bank. Tompkins Community Bank provides a broad selection of wealth management services under the Tompkins Financial Advisors brand, including investment management, trust and estate, and financial and tax planning. On October 31, 2025, the Company sold all of the issued and outstanding shares of capital stock of its wholly-owned insurance subsidiary, Tompkins Insurance Agencies, Inc. ("TIA"), to Arthur J. Gallagher Risk Management Services, LLC ("Gallagher"). The Company’s principal offices are located at 118 E. Seneca Street, P.O. Box 460, Ithaca, NY, 14850, and its telephone number is (888) 503-5753. The Company’s common stock is traded on the NYSE American under the Symbol "TMP."

Previous wording

Wealth management services consist of investment management, trust and estate, financial and tax planning as well as life, disability and long-term care insurance services. Wealth management services are provided under the trade name Tompkins Financial Advisors. Tompkins Financial Advisors offers services to customers of Tompkins Community Bank and shares offices in each of the banking markets.

Current wording

Wealth management services consist of investment management, trust and estate, and financial and tax planning services. Wealth management services are provided under the trade name Tompkins Financial Advisors.

Previous wording

Competition for commercial banking and other financial services is strong in the Company’s market areas. In one or more aspects of its business, the Company’s subsidiaries compete with other commercial banks, savings and loan associations, credit unions, finance companies, Internet-based financial services companies, mutual funds, insurance companies, brokerage and investment banking companies, and other financial intermediaries. Some of these competitors have substantially greater resources and lending capabilities and may offer services that the Company does not currently provide. In addition, many of the Company’s non-bank competitors are not subject to the same extensive Federal regulations that govern financial holding companies and Federally-insured banks.

Current wording

Competition for commercial banking and other financial services is strong in the Company’s market areas. In one or more aspects of its business, Tompkins Community Bank competes with other commercial banks, savings and loan associations, credit unions, finance companies, internet-based financial services companies, mutual funds, brokerage and investment banking companies, and other financial intermediaries. Some of these competitors have substantially greater resources and lending capabilities and may offer services that the Company does not currently provide. The financial services industry continues to undergo rapid technological change with introductions of new technologies and services, including new ways that customers can make payments or manage their accounts, including through use of stablecoins and other forms of cryptocurrency, tokens, and other digital assets or alternative payment systems. The Company faces increasing competition from institutions not subject to the same the same extensive State and Federal regulations that govern financial holding companies and Federally-insured banks, including by financial technology companies, or "fintechs," which may offer bank-like products or services that compete directly with the Company’s products and services.

Previous wording

Banking, insurance services and wealth management are highly regulated. As a financial holding company including a community bank, a registered investment adviser, and an insurance agency subsidiary, the Company and its subsidiaries are subject to examination and regulation by the Federal Reserve Board ("FRB"), Securities and Exchange Commission ("SEC"), the Federal Deposit Insurance Corporation ("FDIC"), the New York State Department of Financial Services, the Financial Industry Regulatory Authority, and the Pennsylvania Insurance Department.

Current wording

Banking and wealth management are highly regulated. As a financial holding company including a community bank and a registered investment adviser, the Company and its subsidiary are subject to examination and regulation by the Federal Reserve Board ("FRB"), Securities and Exchange Commission ("SEC"), the Federal Deposit Insurance Corporation ("FDIC"), the New York State Department of Financial Services, and the Financial Industry Regulatory Authority.

Previous wording

The following discussion is intended to provide an understanding of the consolidated financial condition and results of operations of the Company for the three and nine months ended September 30, 2025. It should be read in conjunction with the Company’s Audited Consolidated Financial Statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, and the Unaudited Consolidated Financial Statements and notes thereto included in Part I of this Quarterly Report on Form 10-Q.

Current wording

The following discussion is intended to provide an understanding of the consolidated financial condition and results of operations of the Company for the three months ended March 31, 2026. It should be read in conjunction with the Company’s Audited Consolidated Financial Statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, and the Unaudited Consolidated Financial Statements and notes thereto included in Part I of this Quarterly Report on Form 10-Q.

Previous wording

This Report includes comparisons of the Company’s performance to that of a peer group, which is comprised of the group of 201 domestic bank holding companies with $3 billion to $10 billion in total assets as defined in the Federal Reserve’s "Bank Holding Company Performance Report" for June 30, 2025 (the most recent report available). Although the peer group data is presented based upon financial information that is one fiscal quarter behind the financial information included in this report, the Company believes that it is relevant to include certain peer group information for comparison to current quarter numbers.

Current wording

In this Report, there are comparisons of the Company’s performance to that of a peer group, which is comprised of 200 domestic bank holding companies with $3 billion to $10 billion in total assets as defined in the Federal Reserve’s "Bank Holding Company Performance Report" for December 31, 2025 (the most recent report available). Although the peer group data is presented based upon financial information that is one fiscal quarter behind the financial information included in this report, the Company believes that it is relevant to include certain peer group information for comparison to current quarter numbers.

Previous wording

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The statements contained in this Report that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements may be identified by use of such words as "may", "will", "estimate", "intend", "continue", "believe", "expect", "plan", "commit", or "anticipate", as well as the negative and other variations of these terms, and other similar words. Examples of forward-looking statements may include statements regarding the asset quality of the Company's loan portfolios; the level of the Company's allowance for credit losses; the sufficiency of collateral to cover exposure related to special mention and substandard loans; the sufficiency of liquidity sources; the Company's exposure to changes in interest rates, and to new, changed, or extended government/regulatory expectations; the need to sell securities before recovery of amortized cost; the impact of changes in accounting standards; and trends, plans, prospects, growth and strategies. Forward-looking statements are made based on management’s expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors relating to the Company’s operations and economic environment, all of which are difficult to predict and many of which are beyond the control of the Company, that could cause actual results of the Company to differ materially from those expressed and/or implied by forward-looking statements and historical performance. The following factors, in addition to those listed as Risk Factors in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2024, are among those that could cause actual results to differ materially from the forward-looking statements and historical performance: changes in general economic, market and regulatory conditions; our ability to attract and retain deposits and other sources of liquidity; gross domestic product growth and inflation trends; the impact of the interest rate and inflationary environment on the Company's business, financial condition and results of operations; other income or cash flow anticipated from the Company's operations, investment and/or lending activities; changes in laws and regulations affecting public companies, banks, bank holding companies and/or financial holding companies, including the Dodd-Frank Act, and other federal, state and local government mandates; the impact of any change in the FDIC insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount; changes in supervisory and regulatory scrutiny of financial institutions, technological developments and changes; cybersecurity incidents and threats; the ability to continue to introduce competitive new products and services …

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The statements contained in this Report that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements may be identified by use of such words as "may", "could", "should", "will", "would", "estimate", "intend", "continue", "believe", "expect", "plan", "commit", or "anticipate", as well as the negative and other variations of these terms and other similar words. Examples of forward-looking statements may include statements regarding; the sufficiency of liquidity sources; the Company's exposure to changes in interest rates, and to new, changed, or extended government/regulatory expectations; the need to sell securities before recovery of amortized cost; the impact of changes in accounting standards; and trends, plans, prospects, growth and strategies; projections of future financial condition, operating results, income, capital expenditures, costs or other financial items; anticipated regulatory and legislative changes; and other characterizations of future events or circumstances as well as other statements that are not statements of historical fact. Forward-looking statements are made based on management’s expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors relating to the Company’s operations and economic environment, all of which are difficult to predict and many of which are beyond the control of the Company, that could cause actual results of the Company to differ materially from those expressed and/or implied by forward-looking statements and historical performance. The following factors, in addition to those listed as Risk Factors in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, are among those that could cause actual results to differ materially from the forward-looking statements and historical performance: changes in general economic, market and regulatory conditions; our ability to attract and retain deposits and other sources of liquidity; gross domestic product growth and inflation trends; the impact of the interest rate and inflationary environment on the Company's business, financial condition and results of operations; other income or cash flow anticipated from the Company's operations, investment and/or lending activities; changes in laws and regulations affecting public companies, banks, bank holding companies and/or financial holding companies, including the Dodd-Frank Act, and other federal, state and local government mandates; the impact of any change in the FDIC insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount; changes in supervisory and regulatory scrutiny of financial institutions; technological developments and cha…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

The Company’s methodology for estimating the allowance considers available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. Refer to "Allowance for Credit Losses" below and to Note 5 - "Allowance for Credit Losses", and Note 1 – "Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, for additional information on the Company's methodology for estimating the allowance.

Current wording

The Company’s methodology for estimating the allowance considers available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. Refer to "Financial Condition - Allowance for Credit Losses" below, and to Note 5 - "Allowance for Credit Losses" and Note 1 – "Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

Previous wording

For information on the Company's significant accounting policies and to gain a greater understanding of how the Company’s financial performance is reported, refer to Note 1 – "Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Refer to Newly Adopted Accounting Standards" and "Accounting Standards Pending Adoption" in Note 2 - "Basis of Presentation" in the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for a discussion of recent accounting standards updates.

Current wording

For information on the Company's significant accounting policies and to gain a greater understanding of how the Company’s financial performance is reported, refer to Note 1 – "Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Refer to "Accounting Standards Pending Adoption" in Note 2 - "Basis of Presentation" in the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for a discussion of recent accounting standards updates.

Previous wording

The Company's significant accounting policies conform with GAAP and are described in Note 1 "Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. In applying those accounting policies, management of the Company is required to exercise judgment in determining many of the methodologies, assumptions and estimates to be utilized. Certain critical accounting estimates are more dependent on such judgment and in some cases may contribute to volatility in the Company's reported financial performance should the assumptions and estimates used change over time due to changes in circumstances. The most significant area in which management of the Company applies critical assumptions and estimates was the following:

Current wording

The Company's significant accounting policies conform with GAAP and are described in Note 1 "Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. In applying those accounting policies, management of the Company is required to exercise judgment in determining many of the methodologies, assumptions and estimates to be utilized. Certain critical accounting estimates are more dependent on such judgment and in some cases may contribute to volatility in the Company's reported financial performance should the assumptions and estimates used change over time due to changes in circumstances. The most significant area in which management of the Company applies critical assumptions and estimates is the following:

Previous wording

Changes in the circumstances considered when determining management's estimates and assumptions could result in changes in those estimates and assumptions, which could result in adjustment of the allowance for credit losses in future periods. A discussion of facts and circumstances considered by management in determining the allowance for credit losses is included in Note 5 - "Allowance for Credit Losses" in the Notes to the Unaudited Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Current wording

Changes in the circumstances considered when determining management's estimates and assumptions could result in changes in those estimates and assumptions, which could result in adjustment of the allowance for credit losses in future periods. A discussion of facts and circumstances considered by management in determining the allowance for credit losses is included herein in Note 5 - "Allowance for Credit Losses" in the Notes to the Unaudited Consolidated Financial Statements.

Previous wording

Return on average assets ("ROA") for the quarter ended September 30, 2025 was 1.13%, compared to 0.94% for the quarter ended September 30, 2024. Return on average shareholders’ equity ("ROE") for the third quarter of 2025 was 12.17%, compared to 10.65% for the third quarter of 2024. For the year-to-date period ended September 30, 2025, ROA and ROE totaled 1.06% and 11.56%, respectively, compared to 0.87% and 10.12%, for the same periods in 2024.

Current wording

Return on average assets ("ROA") for the quarter ended March 31, 2026 was 1.23%, compared to 0.99% for the quarter ended March 31, 2025. Return on average shareholders’ equity ("ROE") for the first quarter of 2026 was 11.11%, compared to 10.96% for the same period in 2025.

Previous wording

The Company operates in the following three business segments: banking, insurance, and wealth management. Insurance is comprised of property and casualty insurance services and employee benefit consulting operated under the Tompkins Insurance Agencies, Inc. subsidiary. Wealth management activities include the results of the Company’s trust, financial planning, and wealth management services, organized under the Tompkins Financial Advisors brand. All other activities are considered banking.

Current wording

The Company operates in the following two business segments: banking and wealth management. Wealth management activities include the results of the Company's trust, financial planning, and wealth management services provided by Tompkins Financial Advisors, a division of Tompkins Community Bank. All other activities are considered banking. Prior to the sale of TIA on October 31, 2025, the Company also had an insurance segment. TIA provided property and casualty insurance services and employee benefits consulting. For additional financial information on the Company's segments, refer to "Note 9 - Segment and Related Information" in the Notes to Consolidated Financial Statements in Part I of this Report on Form 10-Q.

Previous wording

The wealth management segment reported net income of $626,000 for the three months ended September 30, 2025, which was down $129,000 or 17.1% compared to the third quarter of 2024. Revenue for the three months ended September 30, 2025 was up $66,000 or 1.3%, compared to the three months ended September 30, 2024, primarily due to an increase in advisory fees. Noninterest expense for the three months ended September 30, 2025 was up $233,000 or 5.8%, compared to the same period in 2024, which was primarily due to an increase in affiliate service charges and technology expense.

Current wording

The wealth management segment reported net income of $914,000 for the three months ended March 31, 2026, which was up $93,000 or 11.3% compared to the first quarter of 2025. The increase in net income for the three month period ended March 31, 2026, compared to the same period in 2025, was mainly attributable to an increase in asset-based advisory revenue. Noninterest expense for the first quarter of 2026 was in line with the same period prior year.

Previous wording

The following tables show average interest-earning assets and interest-bearing liabilities, and the corresponding yield or cost associated with each, for the three and nine month periods ended September 30, 2025 and 2024 and the three months ended June 30, 2025:

Current wording

The following tables show average interest-earning assets and interest-bearing liabilities, and the corresponding yield or cost associated with each, for each of the three month periods ended March 31, 2026, December 31, 2025, and March 31, 2025:

Previous wording

Net interest income is the Company’s largest source of revenue, and is dependent on the volume and composition of interest earning assets and interest-bearing liabilities and the level of market interest rates. The above tables show average interest-earning assets and interest-bearing liabilities, and the corresponding yield or cost associated with each.

Current wording

Net interest income is the Company’s largest source of revenue, representing 85.9% of total revenues for the three months ended March 31, 2026, compared to 69.4% for the same period in 2025. Net interest income is dependent on the volume and composition of interest-earning assets and interest-bearing liabilities and the level of market interest rates. The above table shows average interest-earning assets and interest-bearing liabilities, and the corresponding yield or cost associated with each, for the periods indicated.

Previous wording

Average other borrowings for the three and nine months ended September 30, 2025 were down $174.1 million, or 24.5%, and $124.6 million, or 18.5%, respectively, compared to the same periods in 2024. The average rate paid on other borrowings for the three and nine months ended September 30, 2025 was down 81 basis points and 84 basis points, respectively, from the same periods in 2024.

Current wording

Average other borrowings for the three months ended March 31, 2026 were down $70.7 million or 12.6% compared to the same period in 2025. The average rate paid on other borrowings for the first quarter of 2026 was down 46 basis points from the same period in 2025.

Previous wording

The provision for income taxes was $7.4 million for an effective rate of 23.9% for the third quarter of 2025, compared to a tax provision of $5.9 million and an effective rate of 23.9% for the same quarter in 2024. For the first nine months of 2025, the provision for income taxes was $20.3 million for an effective rate of 23.9% compared to tax provision of $16.0 million and an effective rate of 23.7% for the same period in 2024. The effective rates differ from the U.S. and state statutory rates primarily due to the effect of tax-exempt income from loans, securities and life insurance assets, and the income tax effects associated with stock-based compensation.

Current wording

The provision for income taxes was $8.4 million for an effective rate of 24.4% for the first quarter of 2026, compared to provision expense of $6.1 million and an effective rate of 23.7% for the same quarter in 2025. The effective rates differ from the U.S. statutory rate primarily due to the effect of tax-exempt income from loans, securities and life insurance assets, and the income tax effects associated with stock-based compensation.

Previous wording

As of September 30, 2025, the Company’s securities portfolio was $1.6 billion, or 18.9% of total assets compared to $1.5 billion, or 19.1% of total assets at year end 2024. The following tables detail the composition of the securities portfolio:

Current wording

As of March 31, 2026, the Company’s securities portfolio was $1.7 billion or 19.6% of total assets, in line with year-end 2025. The following table details the composition of the securities portfolio:

Previous wording

As of September 30, 2025, the available-for-sale debt securities portfolio had net unrealized losses, which reflects the amount that the amortized cost exceeds fair value, of $89.7 million compared to net unrealized losses of $135.6 million at December 31, 2024. The decrease in unrealized losses related to the available-for-sale debt securities portfolio reflects interest rate volatility in the market, the volume and rates associated with securities purchases, and maturities in 2025. Management’s policy is to purchase investment grade securities that on average have relatively short duration, which helps mitigate interest rate risk and provides sources of liquidity without significant risk to capital.

Current wording

The increase in unrealized losses, which reflects the amount that amortized cost exceeds fair value, related to the available-for-sale debt and held-to-maturity debt portfolios was due primarily to changes in market interest rates during the first three months of 2026. Management’s policy is to purchase investment grade securities that on average have relatively short duration, which helps mitigate interest rate risk and provides sources of liquidity without significant risk to capital.

Previous wording

Loans and leases as of the end of the third quarter and prior year-end were as follows:

Current wording

Loans and leases as of the end of the first quarter and prior year-end were as follows:

Previous wording

The below table shows a more detailed break-out of commercial real estate ("CRE") loans as of September 30, 2025 and December 31, 2024:

Current wording

The table below shows a more detailed break-out of commercial real estate loans as of March 31, 2026 and December 31, 2025.

Previous wording

Total loans and leases of $6.3 billion at September 30, 2025 were up $268.1 million, or 4.5%, from December 31, 2024, mainly in the commercial real estate and commercial and industrial loan portfolios. As of September 30, 2025, total loans and leases represented 74.3% of total assets compared to 74.2% of total assets at December 31, 2024.

Current wording

Total loans and leases of $6.5 billion at March 31, 2026 were up $31.7 million or 0.5% from December 31, 2025. The increase was mainly in commercial real estate loans, which were up $19.8 million or 0.5%, to $3.7 billion at March 31, 2026. As of March 31, 2026, total loans and leases represented 74.5% of total assets compared to 74.4% of total assets at December 31, 2025.

Previous wording

The Company may sell residential real estate loans in the secondary market based on interest rate considerations. The Company's Asset/Liability Committee meets regularly and establishes standards for selling and retaining residential real estate mortgage originations. These residential real estate loans are generally sold to Federal Home Loan Mortgage Corporation ("FHLMC") or State of New York Mortgage Agency ("SONYMA") without recourse in accordance with standard secondary market loan sale agreements. These residential real estate loans also are subject to customary representations and warranties made by the Company, including representations and warranties related to gross incompetence and fraud. The Company has not had to repurchase any loans as a result of these representations and warranties.

Current wording

Residential real estate loans, including home equity loans, were $1.6 billion at March 31, 2026, down $2.2 million or 0.14% compared to December 31, 2025, and comprised 24.5% of total loans and leases at March 31, 2026. Changes in residential real estate loan balances are impacted by the Company’s decision to retain these loans or sell them in the secondary market due to interest rate considerations. The Company’s Asset/Liability Committee meets regularly and establishes standards for selling and retaining residential real estate mortgage originations. These residential real estate loans are generally sold to Federal Home Loan Mortgage Corporation ("FHLMC") without recourse in accordance with standard secondary market loan sale agreements. These residential real estate loans also are subject to customary representations and warranties made by the Company, including representations and warranties related to gross incompetence or negligence, and fraud. The Company has not had to repurchase any loans as a result of these representations and warranties.

Previous wording

During the first nine months of 2025 and 2024, the Company sold residential loans totaling $63.3 million and $29.5 million, respectively, recognizing gains of $1.6 million and $701,000, respectively. These residential real estate loans were sold without recourse in accordance with standard secondary market loan sale agreements. When residential mortgage loans are sold, the Company typically retains all servicing rights, which provides the Company with a source of fee income. Mortgage servicing rights totaled $1.5 million at September 30, 2025, and $1.1 million at December 31, 2024.

Current wording

During the first three months of 2026 and 2025, the Company sold residential real estate loans totaling $24.4 million and $11.6 million, respectively, recognizing gains on these sales of $705,000 and $454,000, respectively. These residential real estate loans were sold without recourse in accordance with standard secondary market loan sale agreements. When residential mortgage loans are sold, the Company typically retains all servicing rights, which provides the Company with a source of fee income. Mortgage servicing rights totaled $1.8 million at March 31, 2026 and $1.7 million at December 31, 2025.

Previous wording

Commercial real estate loans and commercial and industrial loans totaled $3.6 billion and $1.0 billion, respectively, and represented 56.8% and 16.6%, respectively, of total loans and leases as of September 30, 2025. The commercial real estate portfolio was up $192.8 million, or 5.7%, compared to December 31, 2024, while commercial and industrial loans were up $74.8 million, or 7.7%, compared to December 31, 2024.

Current wording

Commercial real estate loans and commercial and industrial loans totaled $3.7 billion and $1.1 billion, respectively, and represented 56.8% and 17.3%, respectively, of total loans at March 31, 2026. Commercial real estate loans and commercial and industrial loans as of March 31, 2026 were up $19.8 million or 0.5% and $17.2 million or 1.6% over year-end 2025, respectively.

Previous wording

As of September 30, 2025, agriculturally-related loans totaled $328.5 million, or 5.2%, of total loans and leases, compared to $327.6 million, or 5.4%, of total loans and leases at December 31, 2024. Agriculturally-related loans include loans to dairy farms and crop farms. Agriculturally-related loans are primarily made based on identified cash flows of the borrower with consideration given to underlying collateral, personal guarantees, and government related guarantees. Agriculturally-related loans are generally secured by the assets or property being financed or other business assets such as accounts receivable, livestock, equipment or commodities/crops.

Current wording

As of March 31, 2026, agriculturally-related loans totaled $342.7 million or 5.3% of total loans and leases, compared to $348.8 million or 5.4% of total loans and leases at December 31, 2025. Agriculturally-related loans include loans to dairy farms and crop farms. Agriculturally-related loans are primarily made based on identified cash flows of the borrower with consideration given to underlying collateral, personal guarantees, and government related guarantees. Agriculturally-related loans are generally secured by the assets or property being financed or other business assets such as accounts receivable, livestock, equipment or commodities/crops.

Previous wording

The Company’s loan and lease customers are located primarily in the New York and Pennsylvania communities served by its subsidiary bank. Although operating in numerous communities in New York and Pennsylvania, the Company is still dependent on the general economic conditions of these states and the local economic conditions of the communities within those states in which the Company does business.

Current wording

The Company’s loan and lease customers are located primarily in the New York and Pennsylvania communities served by its subsidiary bank. As a result of its geographic concentration in New York and Pennsylvania, the Company is dependent on the general economic conditions of these states and the local economic conditions of the communities within those states in which the Company does business.

Previous wording

The below table represents the allowance for credit losses as of September 30, 2025 and December 31, 2024. The table provides, as of the dates indicated, an allocation of the allowance for credit losses for inherent loan losses by type. The allocation is neither indicative of the specific amounts or the loan categories in which future charge-offs may occur, nor is it an indicator of future loss trends. The allocation of the allowance for credit losses to each category does not restrict the use of the allowance to absorb losses in any category.

Current wording

The tables below represent the allowance for credit losses as of March 31, 2026, December 31, 2025, and March 31, 2025. The tables provide, as of the dates indicated, an allocation of the allowance for credit losses for inherent loan losses by type. The allocation is neither indicative of the specific amounts or the loan categories in which future charge-offs may occur, nor is it an indicator of future loss trends. The allocation of the allowance for credit losses to each category does not restrict the use of the allowance to absorb losses in any category.

Previous wording

Activity in the Company’s allowance for credit losses during the first nine months of 2025 and 2024 is illustrated in the table below:

Current wording

Activity in the Company’s allowance for credit losses during the first three months of 2026 and 2025 is illustrated in the table below:

Previous wording

The provision for credit losses for loans was $2.5 million for the three months ended September 30, 2025, compared to $3.2 million for the same period in 2024. For the nine month period ended September 30, 2025, the provision for credit losses for loans was $10.5 million compared to $5.4 million for the same period in 2024. The provision expense for credit losses for loans is based upon the Company's quarterly evaluation of the appropriateness of the allowance for credit losses. The increase in provision expense for the year-to-date period compared to the same period in 2024 was mainly due to the partial charge-off of $4.7 million related to one commercial real estate relationship totaling $18.1 million, during the second quarter of 2025.

Current wording

The provision expense for credit losses for loans is based upon the Company's quarterly evaluation of the appropriateness of the allowance for credit losses. The provision for credit losses for loans for the first quarter of 2026 was $1.2 million compared to $5.3 million for the first quarter of 2025. The decrease in provision expense is mainly reflective of the previously discussed specific reserve on one commercial real estate relationship. Net charge-offs for the three months ended March 31, 2026 were $775,000, compared to $3.3 million for the fourth quarter of 2025, and $733,000 for the first quarter of 2025.

Previous wording

Asset quality measures at September 30, 2025 were mixed when compared with December 31, 2024. Nonperforming loans and leases were up $2.1 million, or 4.1%, compared to year end 2024 and represented 0.84% of total loans at September 30, 2025, down 1 basis point compared to December 31, 2024. Loans past due 30-89 days totaled $7.8 million at September 30, 2025, down $21.0 million from year-end 2024. Loans internally-classified Special Mention or Substandard were up $33.1 million, or 29.8%, compared to December 31, 2024. The increase was mainly a result of two loans totaling $41.2 million being downgraded to Special Mention during the third quarter of 2025. The two loans include one commercial real estate loan for $21.1 million that is secured by real estate and pledged securities, and one commercial loan for $20.1 million that is secured by all business assets. The Company believes that the existing collateral securing the loans is sufficient to cover the exposure.

Current wording

Asset quality measures at March 31, 2026 were stable compared to December 31, 2025. Loans internally-classified Special Mention or Substandard totaled $120.4 million at March 31, 2026, down $14.0 million or 10.4% compared to December 31, 2025. Loans past due 30-89 days totaled $5.9 million at March 31, 2026, down $2.9 million from year-end 2025.

Previous wording

Nonperforming assets include loans past due 90 days and accruing, nonaccrual loans, and foreclosed real estate/other real estate owned. Total nonperforming assets of $53.0 million at September 30, 2025 were down $12.2 million, or 18.7%, compared to December 31, 2024, and $9.7 million, or 15.5%, compared to September 30, 2024. The decrease in nonperforming assets at September 30, 2025 compared to December 31, 2024 was largely due to one property totaling approximately $14.3 million in other real estate owned that was sold during the first quarter of 2025. Nonperforming assets represented 0.63% of total assets at September 30, 2025, down from 0.80% at December 31, 2024, and 0.78% at September 30, 2024. Our peer group's average ratio of nonperforming assets to total assets was 0.60% at June 30, 2025.

Current wording

Nonperforming assets include loans past due 90 days and accruing, nonaccrual loans, and foreclosed real estate/other real estate owned. Total nonperforming assets of $51.7 million at March 31, 2026 were up $3.5 million or 7.3% compared to December 31, 2025, and down $19.5 million or 27.4% compared to March 31, 2025. Nonperforming assets represented 0.59% of total assets at March 31, 2026, up from 0.56% at December 31, 2025, and 0.87% at March 31, 2025. Our peer group's average ratio of nonperforming assets to total assets was 0.52% at December 31, 2025.

Previous wording

Total deposits of $7.1 billion at September 30, 2025 were up $581.3 million, or 9.0%, compared to December 31, 2024, and were up $475.2 million, or 7.2%, compared to September 30, 2024. The increase from year-end 2024 was primarily in checking, money market and savings accounts, which were up $345.9 million, or 9.7%, and time deposits, which were up $173.7 million, or 16.3%. The increase includes the seasonal inflow of municipal deposits reflecting the collection of tax receipts. The increase in time deposits included a $132.7 million increase in brokered time deposits.

Current wording

Total deposits of $7.1 billion at March 31, 2026 were up $116.4 million or 1.7% from December 31, 2025. The increase from year-end was primarily in checking, money market and savings balances, which collectively were up $147.6 million or 3.9%.

Previous wording

The Company is a participant in the IntraFi Network's IntraFi Cash Service (ICS) and Certificate of Deposit Account Registry Service (CDARS) programs. The Company uses these deposit sweep services to place customer funds from interest-bearing demand accounts, money market accounts, and/or time deposits to be placed with other participating network banks. Customer funds are placed at one or more participating banks to ensure that each deposit customer is eligible for the full amount of FDIC insurance. As a program participant, we receive reciprocal amounts of deposits from other participating network banks equal to the amount of our customer funds placed in the IntraFi Network. In addition to the reciprocal funding programs, the Company may utilize both the ICS and CDARS programs to obtain wholesale funding through One-Way Buy transactions. Funds obtained using One-Way Buy transactions are classified as brokered deposits. At September 30, 2025 the Company held $15.5 million in CDARS One-Way Buy funds and $12.5 million of ICS One-Way Buy funds.

Current wording

The Company is a participant in the IntraFi Network's IntraFi Cash Service (ICS) and Certificate of Deposit Account Registry Service (CDARS) programs. The Company uses these deposit sweep services to place customer funds from interest-bearing demand accounts, money market accounts, and/or time deposits to be placed with other participating network banks. Customer funds are placed at one or more participating banks to ensure that each deposit customer is eligible for the full amount of FDIC insurance. As a program participant, we receive reciprocal amounts of deposits from other participating network banks equal to the amount of our customer funds placed in the IntraFi Network. In addition to the reciprocal funding programs, the Company may utilize both the ICS and CDARS programs to obtain wholesale funding through One-Way Buy transactions. Funds obtained using one-way buy transactions are classified as brokered deposits. At March 31, 2026 the Company held $950,000 in CDARS one-way buy funds.

Previous wording

The most significant source of funding for the Company is core deposits. The Company defines core deposits as total deposits less time deposits of $250,000 or more, brokered deposits, municipal money market deposits, and reciprocal deposit relationships with municipalities. Core deposits increased by $360.0 million, or 6.8%, from year-end 2024, to $5.6 billion at September 30, 2025. Core deposits at September 30, 2025 were up $277.8 million, or 5.2% from September 30, 2024. Core deposits represented 79.7% of total deposits at September 30, 2025, compared to 81.3% of total deposits at December 31, 2024 and 81.3% at September 30, 2024.

Current wording

The most significant source of funding for the Company is core deposits. The Company defines core deposits as total deposits less time deposits of $250,000 or more, brokered deposits, municipal money market deposits and reciprocal deposit relationships with municipalities. Core deposits decreased by $14.4 million or 0.3% from year-end 2025, to $5.5 billion at March 31, 2026. Core deposits represented 78.0% of total deposits at March 31, 2026, compared to 79.5% of total deposits at December 31, 2025.

Previous wording

The Company uses both retail and wholesale repurchase agreements. Retail repurchase agreements are arrangements with local customers of the Company, in which the Company agrees to sell securities to the customer with an agreement to repurchase those securities at a specified later date. Retail repurchase agreements totaled $44.8 million at September 30, 2025, and $37.0 million at December 31, 2024. Management generally views retail repurchase agreements as an alternative to large time deposits.

Current wording

The Company uses both retail and wholesale repurchase agreements. Retail repurchase agreements are arrangements with local customers of the Company in which the Company agrees to sell securities to the customer with an agreement to repurchase those securities at a specified later date. Retail repurchase agreements totaled $68.1 million at March 31, 2026 and $45.6 million at December 31, 2025. Management generally views local repurchase agreements as an alternative to large time deposits.

Previous wording

The Company has established several unsecured Federal funds purchased lines through various correspondent bank relationships, totaling $149.0 million. Federal funds purchased from correspondent banks totaled $36.0 million as of September 30, 2025 compared to $0 at December 31, 2024.

Current wording

The Company has established several unsecured Federal funds purchased lines through various correspondent bank relationships, totaling $149.0 million as of March 31, 2026. At March 31, 2026, the Company had outstanding $50.0 million of overnight Federal funds purchased, which was unchanged from December 31, 2025.

Previous wording

The Company’s other borrowings totaled $444.9 million at September 30, 2025, down $345.4 million, or 43.7%, from $790.2 million at December 31, 2024. The decrease in other borrowings was mainly due to increased deposit balances. Borrowings at September 30, 2025 consisted of $271.5 million in FHLB overnight advances and $173.4 million of FHLB term advances, compared to $247.0 million FHLB overnight advances and $543.2 million of FHLB term advances at year end 2024. Of the $173.4 million in FHLB term advances at September 30, 2025, $98.4 million was due to mature in less than one year and $75.0 million was due to mature in over one year.

Current wording

The Company’s other borrowings totaled $449.4 million at March 31, 2026, down $115.0 million or 20.4% compared to $564.4 million at December 31, 2025. The increases in deposit balances, Federal funds purchased, and retail repurchase agreements contributed to the decrease in other borrowings. Other borrowings at March 31, 2026 included $325.0 million in overnight advances from the FHLB and $124.4 million of FHLB term advances. The $564.4 million in other borrowings at December 31, 2025 included $395.0 million in overnight advances from the FHLB and $169.4 million in term advances from the FHLB. Of the $124.4 million in FHLB term advances at March 31, 2026, $75.0 million is due in over one year; unchanged from December 31, 2025.

Previous wording

The Company and its subsidiary bank are subject to various regulatory capital requirements administered by Federal bank regulatory agencies. Failure to meet minimum capital requirements can lead to the initiation of certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material adverse effect on the Company’s business, results of operation and financial condition. Under capital adequacy guidelines and the regulatory framework for prompt corrective action (PCA), banks must meet specific guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. Capital amounts and classifications of the Company and its subsidiary banks are also subject to qualitative judgments by regulators concerning components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the maintenance of minimum amounts and ratios of common equity Tier 1 capital, Total capital and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. Management believes that as of September 30, 2025, the Company and its subsidiary bank met all capital adequacy requirements to which they are subject.

Current wording

The Company and its subsidiary bank are subject to various regulatory capital requirements administered by Federal bank regulatory agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material adverse effect on the Company’s business, results of operation and financial condition. Under capital adequacy guidelines and the regulatory framework for prompt corrective action (PCA), banks must meet specific guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. Capital amounts and classifications of the Company and its subsidiary banks are also subject to qualitative judgments by regulators concerning components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the maintenance of minimum amounts and ratios of common equity Tier 1 capital, Total capital and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. Management believes that the Company and its subsidiary bank meet all capital adequacy requirements to which they are subject.