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, 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."

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 June 30, 2026, the Company had one wholly-owned banking subsidiary, Tompkins Community Bank, which changed its name to Tompkins Bank & Trust effective July 20, 2026. Tompkins Bank & Trust 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

Banking services consist primarily of attracting deposits from the areas served by Tompkins Community Bank, which has 54 banking offices (38 offices in New York and 16 offices in Pennsylvania) and using those deposits to originate a variety of commercial loans, agricultural loans, consumer loans, real estate loans, and leases. The Company’s lending function is managed within the guidelines of a comprehensive Board-approved lending policy. Reporting systems are in place to provide management with ongoing information related to loan production, loan quality, concentrations of credit, loan delinquencies, and nonperforming and potential problem loans. Banking services also include a full suite of products such as debit cards, credit cards, remote deposit, electronic banking, mobile banking, cash management, and safe deposit services.

Current wording

The Company operates in two segments, banking and wealth management. Banking services consist primarily of attracting deposits from the areas served by Tompkins Bank & Trust, which has 54 banking offices (38 offices in New York and 16 offices in Pennsylvania) and using those deposits to originate a variety of commercial loans, agricultural loans, consumer loans, real estate loans, and leases. The Company’s lending function is managed within the guidelines of a comprehensive Board-approved lending policy. Reporting systems are in place to provide management with ongoing information related to loan production, loan quality, concentrations of credit, loan delinquencies, and nonperforming and potential problem loans. Banking services also include a full suite of products such as debit cards, credit cards, remote deposit, electronic banking, mobile banking, cash management, and safe deposit services.

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, 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.

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 Bank & Trust 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 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

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.

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 and six months ended June 30, 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

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.

Current wording

In this Report, there are comparisons of the Company’s performance to that of a peer group, which is comprised of 207 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 March 31, 2026 (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

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.

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 "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, for additional information on the Company's methodology for estimating the allowance.

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, 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.

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 Unaudited 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, 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:

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 was the following:

Previous wording

•Accounting for credit losses - The Company accounts for the allowance for credit losses using the current expected credit loss model. Under this model, the allowance for credit losses represents a valuation account that is deducted from the amortized cost basis of certain financial assets, including loans and leases, to present the net amount expected to be collected at the balance sheet date. A provision for credit losses is recorded to adjust the level of the allowance as deemed necessary by management. In estimating expected losses in the loan and lease portfolio, borrower-specific financial data and macro-economic assumptions are utilized to project losses over a reasonable and supportable forecast period. For certain loan pools that share similar risk characteristics, the Company utilizes statistically developed models to estimate amounts and timing of expected future cash flows, collateral values and other factors used to determine the borrowers' abilities to repay obligations. Such models consider historical correlations of credit losses with various macroeconomic assumptions including unemployment and gross domestic product. These forecasts may be adjusted for inherent limitations or biases of the models. Subsequent to the forecast period, the Company utilizes longer-term historical loss experience to estimate losses over the remaining contractual life of the loans.

Current wording

•Accounting for credit losses - The Company accounts for the allowance for credit losses using the current expected credit loss model. Under this model, the allowance for credit losses represents a valuation account that is deducted from the amortized cost basis of certain financial assets, including loans and leases, to present the net amount expected to be collected at the balance sheet date. A provision for credit losses is recorded to adjust the level of the allowance as deemed necessary by management. In estimating expected losses in the loan and lease portfolio, borrower-specific financial data and macro-economic assumptions are utilized to project losses over a reasonable and supportable forecast period. For certain loan pools that share similar risk characteristics, the Company utilizes statistically developed models to estimate amounts and timing of expected future cash flows, collateral values and other factors used to determine the borrowers' abilities to repay obligations. Such models consider historical correlations of credit losses with various macroeconomic assumptions including unemployment and gross domestic product. These forecasts may be adjusted for inherent limitations or biases of the models. Subsequent to the forecast period, the Company utilizes longer-term historical loss experience to estimate losses over the remaining contractual life of the loans. 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.

Previous 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.

Current wording

Return on average assets ("ROA") for the quarter ended June 30, 2026 was 1.36%, compared to 1.05% for the quarter ended June 30, 2025. Return on average shareholders’ equity ("ROE") for the second quarter of 2026 was 12.32%, compared to 11.48% for the second quarter of 2025. For the year-to-date period ended June 30, 2026, ROA and ROE totaled 1.30% and 11.72%, respectively, compared to 1.02% and 11.23%, for the same periods in 2025.

Previous 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.

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 Bank & Trust. 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 Unaudited Consolidated Financial Statements in Part I of this Report on Form 10-Q.

Previous wording

Noninterest income of $6.5 million for the three months ended March 31, 2026 was down $2.2 million or 25.2% compared to the same period in 2025. The decrease in noninterest income for the three months ended March 31, 2026 compared to the same period in 2025 was mainly attributable to a gain on the sale of other real estate owned ("OREO") of $1.9 million recorded in the prior period.

Current wording

Noninterest income was $7.8 million for the three months ended June 30, 2026, up 2.5% compared to $7.6 million for the same period in 2025. The increase in noninterest income for the three months ended June 30, 2026 was mainly attributable to increases in gains on sales of residential loans and card services income, partially offset by lower income related to bank owned life insurance. For the six months ended June 30, 2026, noninterest income was $14.3 million compared to $16.3 million for the six months ended June 30, 2025. The decrease in year-to-date noninterest income compared to the same period in 2025 was mainly attributable to a $1.9 million gain on the sale of other real estate owned ("OREO") in the prior year period.

Previous 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.

Current wording

The wealth management segment reported net income of $899,000 for the three months ended June 30, 2026, which was down $257,000 or 22.2% compared to the second quarter of 2025. For the six months ended June 30, 2026, net income of $1.8 million was down $165,000, or 8.3%, compared to the same period in the prior year. The decrease in net income for the three and six months ended June 30, 2026 compared to the prior year periods was primarily due to gains on the sale of certain customer accounts recorded in the second quarter of 2025, combined with an increase in noninterest expenses, mainly in technology and intercompany service allocations.

Previous 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:

Current 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 six month periods ended June 30, 2026 and 2025 and the three months ended March 31, 2026:

Previous 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.

Current 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.

Previous wording

Net interest margin for the three months ended March 31, 2026 was 3.57% compared to 3.42% for the most recent prior quarter, and 2.98% for the first quarter of 2025. The increase in net interest margin over the prior periods reflects growth in average loan balances, improved yields on average earnings assets, and lower funding costs.

Current wording

Net interest margin for the three months ended June 30, 2026 was 3.58% compared to 3.08% for the same period in 2025. Net interest margin for the six months ended June 30, 2026 was 3.58% compared to 3.03% for the same period in 2025. The increase in net interest margin for the three and six months ended June 30, 2026 compared to the same periods in 2025 reflects growth in average loan balances, improved yields on average earnings assets, and lower funding costs.

Previous wording

Interest income on securities, excluding dividends on FHLB stock, for the three months ended March 31, 2026, was up $5.0 million or 50.0% as compared to the same period in 2025. Average yield on securities for the first quarter of 2026 was up 113 basis points over the first quarter of 2025, mainly a result of the reinvestment within the portfolio at higher yields, including the previously reported repositioning of the portfolio in the fourth quarter of 2025. Average balances for securities for the first quarter of 2026 increased $33.3 million, or 2.0%, over the same period in 2025.

Current wording

Interest income on securities, excluding dividends on FHLB stock, for the three and six months ended June 30, 2026, was up $4.6 million or 43.6% and $9.6 million or 46.7% respectively, over the same periods in 2025. The average yield on total securities for the three and six months ended June 30, 2026, was up 101 and 107 basis points, respectively, over the same periods in 2025, mainly a result of the reinvestment within the portfolio at higher yields, including the previously reported repositioning of the portfolio in the fourth quarter of 2025. Average balances for securities for the three and six months ended June 30, 2026 increased $35.5 million, or 2.1%, and $34.4 million, or 2.0%, respectively, from the same periods in 2025.

Previous wording

Interest expense for the three months ended March 31, 2026 decreased by $2.0 million or 6.1% compared to the same period in 2025, driven mainly by a decrease in average rates paid on interest-bearing liabilities, partially offset by higher average balances of interest-bearing liabilities. The average cost of interest-bearing liabilities for the first quarter of 2026 was 2.21%, a decrease of 23 basis points from the first quarter of 2025, as a result of lower market interest rates and improved funding mix, as deposit growth contributed to a decrease in average borrowings.

Current wording

Interest expense for the three and six months ended June 30, 2026 decreased $1.6 million, or 4.7%, and $3.6 million or 5.4%, respectively, compared to the same periods in 2025, driven mainly by a decrease in average rates paid on interest-bearing liabilities, partially offset by higher average balances of interest-bearing liabilities. For the three and six months ended June 30, 2026, the average cost of interest-bearing liabilities was down 20 basis points and 21 basis points, respectively, from the same periods in 2025, while average interest-bearing liabilities were up $222.6 million or 4.1% and $207.7 million or 3.8%, respectively.

Previous 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.

Current wording

Average other borrowings for the three and six months ended June 30, 2026 were down $517,000 or 0.1%, and $35.4 million, or 6.4%, respectively, compared to the same periods in 2025. The average rate paid on other borrowings for the three and six months ended June 30, 2026 was down 43 basis points and 45 basis points, respectively, from the same periods in 2025.

Previous wording

Noninterest income was $11.8 million for the first quarter of 2026, down $13.2 million or 52.7% compared to the first quarter of 2025. Noninterest income represented 14.1% of total revenue for the three months ended March 31, 2026, compared to 30.6% for the same period in 2025. The decrease was mainly in insurance commissions and fees and reflects the sale of the Company's insurance subsidiary, TIA, in October 2025. Insurance revenues were $11.6 million in the first quarter of 2025.

Current wording

Noninterest income of $13.1 million for the three months ended June 30, 2026, was down $9.4 million or 41.7% from the second quarter of 2025, and noninterest income of $25.0 million for the six months ended June 30, 2026, was down $22.6 million, or 47.5%, from the same period in the prior year. The decrease was mainly in insurance commissions and fees and reflects the sale of the Company's insurance subsidiary, TIA, in October 2025. Insurance revenues were $9.6 million and $21.2 million for the three and six months, respectively, ended June 30, 2025.

Previous wording

Wealth management fees for the first quarter of 2026 were up $147,000 or 2.9% over the first quarter of 2025, driven by an increase in advisory assets under management. Wealth management fees include trust services, financial planning, wealth management services, and brokerage related services and are generally based on the market value of assets within an account and are thus impacted by volatility in equity and bond markets. The fair value of assets managed by, or in custody of, Tompkins was $2.9 billion at March 31, 2026, down from $3.1 billion at March 31, 2025.

Current wording

Wealth management fees of $5.2 million in the second quarter of 2026 were up $265,000 or 5.3% over the second quarter of 2025. For the first six months of 2026, wealth management fees were up $412,000, or 4.1% compared to the same period in 2025. Wealth management fees include trust services, financial planning, wealth management services, and brokerage related services. The fair value of assets managed by, or in custody of, Tompkins was $3.1 billion at June 30, 2026, up $261.7 million or 9.2% from June 30, 2025.

Previous wording

Other income of $2.1 million in the first quarter of 2026 was down $1.7 million or 44.8% compared to the same period in 2025. The decrease in the first quarter of 2026 compared to the same period in 2025 was driven by a $1.9 million gain on the sale of other real estate owned in 2025.

Current wording

Other income of $2.8 million in the second quarter of 2026 was down $201,000, or 6.7%, compared to the same period in 2025. For the first six months of 2026, other income of $4.9 million was down $1.9 million, or 28.2%, compared to the same period in 2025. The decrease for the three months ended June 30, 2026 compared to the same period in 2025 was driven by a $236,000 reduction in BOLI income. The decrease for the six months ended June 30, 2026 compared to the same period in 2025 was driven by a $1.9 million gain on the sale of other real estate owned in 2025.

Previous 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.

Current wording

The provision for income taxes was $9.2 million for an effective rate of 24.0% for the second quarter of 2026, compared to a tax provision of $6.8 million and an effective rate of 24.0% for the same quarter in 2025. For the first six months of 2026, the provision for income taxes was $17.6 million for an effective rate of 24.2% compared to tax provision of $12.9 million and an effective rate of 23.9% for the same period in 2025. 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.

Previous wording

Total assets were $8.7 billion at March 31, 2026, up $27.5 million or 0.3% from December 31, 2025. Cash and cash equivalents were up $38.6 million or 29.1%, total loans were up $31.7 million or 0.5%, total securities were up $6.9 million or 0.4% and loans held for sale were down $43.4 million compared to December 31, 2025. Total deposits were up $116.4 million or 1.7%, Federal funds purchased and securities sold under agreement to repurchase were up $22.6 million or 23.6%, and total borrowings were down $115.0 million or 20.4% from December 31, 2025.

Current wording

Total assets were $8.8 billion at June 30, 2026, up $133.3 million or 1.5% from December 31, 2025. Cash and cash equivalents were up $14.9 million or 11.3%, total loans were up $150.9 million or 2.3%, total securities were up $11.0 million or 0.7% and loans held for sale were down $43.4 million compared to December 31, 2025. Total deposits were up $91.3 million or 1.3%, Federal funds purchased and securities sold under agreement to repurchase were up $86.1 million or 90.1%, and total borrowings were down $18.1 million or 3.2% from December 31, 2025.

Previous 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:

Current wording

The Company’s securities portfolio was $1.7 billion at June 30, 2026 and December 31, 2025, representing 19.4% of total assets at June 30, 2026, compared to 19.6% of total assets at year end 2025. The following tables detail the composition of the securities portfolio:

Previous 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.

Current wording

As of June 30, 2026, the available-for-sale debt securities portfolio had net unrealized losses, which reflects the amount that the amortized cost exceeds fair value, of $26.8 million compared to net unrealized losses of $9.3 million at December 31, 2025. The increase 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 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

The Company did not recognize any net credit impairment charge to earnings on investment securities in the first quarter of 2026.

Current wording

The Company did not recognize any net credit impairment charge to earnings on investment securities in the second quarter or year-to-date period ending June 30, 2026.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

The below table shows a more detailed break-out of commercial real estate ("CRE") loans as of June 30, 2026 and December 31, 2025:

Previous 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.

Current wording

Total loans and leases of $6.6 billion at June 30, 2026 were up $150.9 million, or 2.3%, from December 31, 2025, mainly in the commercial real estate and commercial and industrial loan portfolios. As of June 30, 2026, total loans and leases represented 75.0% of total assets compared to 74.4% of total assets at December 31, 2025.

Previous 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.

Current wording

Residential real estate loans, including home equity loans, were $1.6 billion at June 30, 2026, up $16.1 million or 1.0% compared to December 31, 2025, and comprised 24.4% of total loans and leases at June 30, 2026. 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") 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.

Previous 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.

Current wording

During the first six months of 2026 and 2025, the Company sold residential loans totaling $43.2 million and $34.6 million, respectively, recognizing gains of $1.5 million and $1.0 million, 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 $1.9 million at June 30, 2026, and $1.7 million at December 31, 2025.

Previous 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.

Current wording

Commercial real estate loans and commercial and industrial loans totaled $3.7 billion and $1.2 billion, respectively, and represented 56.2% and 18.1%, respectively, of total loans and leases as of June 30, 2026. The commercial real estate portfolio was up $47.2 million, or 1.3%, compared to December 31, 2025, while commercial and industrial loans were up $90.5 million, or 8.2%, compared to December 31, 2025.

Previous 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.

Current wording

As of June 30, 2026, agriculturally-related loans totaled $358.9 million, or 5.4%, 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. 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.

Current 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.

Previous 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.

Current wording

The below table represents the allowance for credit losses as of June 30, 2026, December 31, 2025, and June 30, 2025. 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 other category.

Previous 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:

Current wording

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

Previous wording

As of March 31, 2026, the allowance for credit losses was $58.1 million, up $437,000 or 0.8% compared to December 31, 2025, and down $2.9 million or 4.8% compared to March 31, 2025. The allowance for credit losses as a percentage of total loans measured 0.90% at March 31, 2026, up compared to 0.89% reported at December 31, 2025, and down from 1.01% at March 31, 2025. The decrease in the allowance for credit losses coverage ratio at March 31, 2026, compared to March 31,

Current wording

As of June 30, 2026, the allowance for credit losses was $58.5 million, up $808,000 or 1.4% compared to December 31, 2025, and in line with the allowance at June 30, 2025. The allowance for credit losses as a percentage of total loans measured 0.89% at June 30, 2026, unchanged from December 31, 2025, and down from the 0.95% reported at June 30, 2025. The decrease in the allowance for credit losses coverage ratio compared to June 30, 2025 was mainly due to the improved economic forecasts for unemployment and gross domestic product.

Previous wording

The ratio of the allowance to nonperforming loans and leases was 113.06% at March 31, 2026, compared to 120.30% at December 31, 2025, and 85.85% at March 31, 2025. The decrease in the ratio compared to year-end 2025 was due to an increase in nonperforming loans and leases. At March 31, 2026 nonperforming loans and leases were $3.5 million or 7.2% higher than at December 31, 2025. The Company’s nonperforming loans and leases are mostly comprised of collateral-dependent loans with limited exposure or loans that require limited specific reserve due to the level of collateral available with respect to these loans and/or previous charge-offs.

Current wording

The ratio of the allowance to nonperforming loans and leases was 111.29% at June 30, 2026, compared to 120.30% at December 31, 2025, and 111.55% at June 30, 2025. The decrease in the ratio compared to year-end 2025 was due to an increase in nonperforming loans and leases. At June 30, 2026 nonperforming loans and leases were $4.6 million or 9.6% higher than at December 31, 2025. The Company’s nonperforming loans and leases are mostly comprised of collateral-dependent loans with limited exposure or loans that require limited specific reserve due to the level of collateral available with respect to these loans and/or previous charge-offs.

Previous 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.

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 second quarter of 2026 was $2.0 million compared to $2.8 million for the second quarter of 2025. For the six month period ended June 30, 2026, the provision for credit losses for loans was $3.2 million compared to $8.0 million for the same period in 2025. Net charge-offs for the three and six months ended June 30, 2026 were $1.6 million and $2.4 million, respectively, compared to $5.3 million and $6.0 million, respectively, for the same periods in 2025. The year-over-year decrease in net charge-offs was mainly due to a partial charge-off of $4.7 million during the second quarter of 2025 related to one commercial real estate relationship totaling $18.1 million.