CHEMUNG FINANCIAL CORP
For the period ended Sep 30, 2026. Filed Nov 5, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 5, 2026
CHMG$84.75-0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0001628280-26-054168
Item 2. : Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-05.
0001628280-26-070818
Item 2. : Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 238 previous paragraphs and 232 current paragraphs.
128 unchanged; 93 reworded; 11 added; 11 removed; 6 previous and 0 current paragraphs rearranged.
Tables are not compared: 43 previous and 44 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
Net interest incomefor the three months ended September 30, 2026 increased $3.0 millionto$25.7 million compared to the same period in the prior year, largely due to an increase of$3.1 million in interest income on loans and a decrease of$1.3 million in interest expense on deposits, partially offset by a decrease of$0.9 million in interest income on interest-earning deposits and an increase of$0.6 million in interest expense on borrowed funds.
Current report
Interest income on interest-earning deposits decreased to$0.2 million for the three months ended September 30, 2026, from$1.1 million for the same period in the prior year, primarily due to declines of$74.5 million in average balances and 69 basis points in the average yield on interest-earning deposits. Average balances decreased mostly as a result of the Corporation utilizing cash proceeds from the sale of available for sale securities and the issuance of subordinated debt in 2025 to fund loan growth and pay off wholesale funding liabilities in the second half of 2025. The decrease in the average yield was largely due to the net decrease in the Federal Funds Target Range Upper Limit between the periods.
Current report
Interest expense on borrowed funds increased to$1.6 million for the three months ended September 30, 2026, from $1.0 million for the same period in the prior year. The increase was mainly due to an increase of$61.1 million in average balances of total borrowed funds, partially offset by a decrease of 181 basis points in the average cost of total borrowed funds. The increase in average balances of borrowed funds was primarily due to an increase of$55.9 million in average balances of term advances and other debt, reflecting increased utilization of FHLBNY advances to fund loan growth following the deployment of excess cash in the second half of 2025. The decrease in the average cost of total borrowed funds was primarily due to subordinated debt comprising a smaller proportion of total borrowings in the current year period, as well as a decrease of 49 basis points in the average cost of term advances and other debt.
Current report
Interest expense on borrowed funds increased to $4.6 million for the first nine months of 2026, from $2.9 million for the same period in the prior year, largely as a result of the Corporation's issuance of $45.0 million in 7.75% fixed-to-floating rate subordinated notes in June 2025. Average balances of subordinated debt increased$25.8 million, as the notes were outstanding for the entire current year period. Average balances of FHLBNY overnight advances and term advances and other debt increased$3.2 million and$8.8 million, respectively, reflecting increased utilization of FHLBNY advances to fund loan growth, while their average costs decreased 68 and 59 basis points, respectively, reflecting the lower interest rate environment.
Current report
The provision for credit losses was a credit of $2.6 million for the three months ended September 30, 2026, compared to provision expense of $1.1 million for the same period in the prior year. The decrease was largely due to a $2.9 million partial recovery of a commercial and industrial loan participation in the current year period, received in connection with a legal settlement. This recovery resulted in net recoveries for the three months ended September 30, 2026 totaling $2.6 million, compared to net charge-offs of $0.1 million for the same period in the prior year. Also contributing to the decrease were favorable changes in model inputs for the Corporation's CECL model, including improvements in FOMC economic forecasts and modeled prepayment speeds.
Current report
Net recoveries for the nine months ended September 30, 2026 were $2.5 million, compared to net charge-offs of $1.3 million for the same period in the prior year. Besides the two recoveries mentioned in the preceding paragraph, which totaled $3.6 million, net charge-offs in the current year period largely consisted of normal activity in indirect consumer loan charge-offs and
Current report
$0.3 million in charge-offs concurrent with transferring commercial real estate balances to other real estate owned. Net charge-offs in the prior year period were largely due to a $0.7 million charge-off of a commercial and industrial loan which had carried a $0.7 million specific allocation in the allowance for credit losses, and normal indirect consumer loan charge-off activity.
Current report
The increase in other non-interest income was largely due to higher incentive income recognized under a debit card network agreement in the current year period, compared to the same period in the prior year.
Current report
The increase in non-compensation expense was largely due to an increase of $0.1 million in professional services. The increase in professional services primarily related to an increase in consulting services in support of corporate initiatives compared to the same period in the prior year.
Current report
Pre-Provision Net Revenue
Current report
Pre-provision net revenue (“PPNR”), adjusted PPNR, and the ratios of each to average assets and average equity are non-GAAP financial measures. PPNR represents the Corporation’s income before income tax expense, excluding the provision for credit losses. Adjusted PPNR further excludes the impact of certain transactions or other material items of income or expense that may have had a disproportionate positive or negative impact on the Corporation’s financial results during a particular period. These measures are meaningful to the Corporation, as well as investors and analysts, in assessing the Corporation’s ability to generate earnings sufficient to absorb credit losses and support capital, independent of the volatility and timing of provision expense.
Removed paragraphs (11)
Previous report
Recent Events
Previous report
During July 2026, the OCC conditionally approved the Bank's application to convert its state charter in the State of New York to a national bank charter. The Bank expects to complete its charter conversion to a national bank prior to the end of 2026.
Previous report
Interest expense on borrowed funds increased to $1.5 million for the three months ended June 30, 2026, from $1.2 million for the same period in the prior year. The increase was mainly due to an increase of 77 basis points in the average cost of total borrowed funds, largely the result of the Corporation's issuance of subordinated debt late in the prior year period, which was part of the Corporation's balance sheet repositioning efforts during 2025.
Previous report
Net interest income for the six months ended June 30, 2026 totaled $48.3 million compared to $40.6 million for the same period in the prior year, an increase of $7.6 million, largely due to an increase of $6.8 million in interest income on loans and a decrease of $5.0 million in interest expense on deposits, partially offset by a decrease of $2.2 million in interest income on taxable securities and an increase of $1.1 million in interest expense on borrowed funds.
Previous report
Interest expense on borrowed funds increased to $3.0 million for the first six months of 2026, from $1.9 million for the same period in the prior year, largely as a result of the Corporation's issuance of subordinated debt late in the prior year period. Average balances of total borrowed funds increased $25.9 million compared to the same period in the prior year and the average cost of total borrowed funds increased 94 basis points over the same period, each mostly due to the issuance of $45.0 million in 7.75% fixed-to-floating rate subordinated notes in June 2025. Average balances of other sources of borrowed funds declined $13.0 million compared to the same period in the prior year while the average cost of other sources of borrowed funds decreased 62 basis points compared to the same period in the prior year, mostly due to the declining interest rate environment since the prior year period.
Previous report
The provision for credit losses decreased to $0.6 million for the three months ended June 30, 2026, from $1.1 million for the same period in the prior year. The decrease was primarily due to relatively stable model inputs during the current year period, including minimal changes in the FOMC's projections for U.S. civilian unemployment and U.S. GDP growth, compared to modest deteriorations in forecasts in the prior year period, partially reflecting the expected impacts of new import tariffs at the time. Additionally, increases in certain qualitative adjustment rates contributed to the higher provision expense in the prior year period. Partially offsetting the overall decrease in provision for credit losses compared to the same period in the prior year was stronger loan growth in the current year period, which totaled $55.4 million, compared to growth of $34.8 million for the same period in the prior year.
Previous report
Net charge-offs totaled $0.2 million for the three months ended June 30, 2026, compared to $1.0 million for the same period in the prior year. However, $0.8 million in balances charged off in the prior year period had previously been specifically reserved against; excluding those loans noted above, net charge-offs were comparable between the two periods.
Previous report
Net charge-offs for the six months ended June 30, 2026 were $0.1 million, compared to $1.3 million for the same period in the prior year. $0.8 million in charge-offs in the prior year period had previously been specifically reserved against, while the current year period included a $0.7 million recovery on a commercial and industrial loan that had been charged off during the six months ended June 30, 2025. Remaining charge-offs for the six months ended June 30, 2026 and 2025 were largely concentrated in the indirect auto portfolio.
Previous report
Net Losses on Securities Transactions
Previous report
The increase in changes in fair value of equity investments was primarily due to a larger increase in the fair value of the assets held for the Corporation's deferred compensation plan in the current year period, when compared to the same period in the prior year.
Previous report
CFS Fee and Commission Income
Reworded paragraphs (93)
Previous wording
The following is the MD&A of the Corporation in this Quarterly Report on Form 10-Q for the three and six months ended June 30, 2026. Reference should be made to the accompanying unaudited consolidated financial statements and footnotes, and the Corporation’s 2025 Annual Report on Form 10-K, which was filed with the SEC on March 13, 2026, for an understanding of the following discussion and analysis. See the list of commonly used abbreviations and terms on pages 3-5.
Current wording
The following is the MD&A of the Corporation in this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2026. Reference should be made to the accompanying unaudited consolidated financial statements and footnotes, and the Corporation’s 2025 Annual Report on Form 10-K, which was filed with the SEC on March 13, 2026, for an understanding of the following discussion and analysis. See the list of commonly used abbreviations and terms on pages 3-5.
Previous wording
The MD&A included in this Form 10-Q contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of the Corporation's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. For a discussion of those risks and uncertainties and the factors that could cause the Corporation’s actual results to differ materially from those risks and uncerta inties, see Forward-looking Statements below, in Part II, Item 1A, Risk Factors, and on pages 19-29 of the Corporation’s 2025 Form 10-K. For a discussion of the use of non-GAAP financial measures, see pages 68-70 of the Corporation's 2025 Form 10-K, and pages 81-83 of this Form 10-Q.
Current wording
The MD&A included in this Form 10-Q contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of the Corporation's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. For a discussion of those risks and uncertainties and the factors that could cause the Corporation’s actual results to differ materially from those risks and uncerta inties, see Forward-looking Statements below, in Part II, Item 1A, Risk Factors, and on pages 19-29 of the Corporation’s 2025 Form 10-K. For a discussion of the use of non-GAAP financial measures, see pages 68-70 of the Corporation's 2025 Form 10-K, and pages 82-85 of this Form 10-Q.
Previous wording
As of June 30, 2026 and December 31, 2025, the allowance for credit losses totaled $25.2 million and $24.2 million, respectively. A significant portion of the allowance for credit losses is allocated to the commercial portfolio, and as of June 30, 2026 and December 31, 2025, the allowance for credit losses allocated to the total commercial portfolio was $20.4 million and $18.9 million, respectively, or 80.9% and 78.0% of the total allowance for credit losses on loans. For comparison, total commercial loans represented 78.1% and 76.4% of total loan balances as of June 30, 2026 and December 31, 2025, respectively. Given the concentration of the allowance for credit losses allocated to the commercial portfolio, and the significant judgments made by management to derive its estimates, management analyzes risks distinctive to commercial lending with a high degree of scrutiny.
Current wording
As of September 30, 2026 and December 31, 2025, the allowance for credit losses totaled $25.2 million and $24.2 million, respectively. A significant portion of the allowance for credit losses is allocated to the commercial portfolio, and as of September 30, 2026 and December 31, 2025, the allowance for credit losses allocated to the total commercial portfolio was $20.5 million and $18.9 million, respectively, or 81.3% and 78.0% of the total allowance for credit losses on loans. For comparison, total commercial loans represented 78.5% and 76.4% of total loan balances as of September 30, 2026 and December 31, 2025, respectively. Given the concentration of the allowance for credit losses allocated to the commercial portfolio, and the significant judgments made by management to derive its estimates, management analyzes risks distinctive to commercial lending with a high degree of scrutiny.
Previous wording
Changes in the FOMC's median forecasted U.S. civilian unemployment rate and year over year change in U.S. GDP could have a material impact on the model's estimation of the allowance. Currently, most pools utilize the FOMC's projections for unemployment as a loss driver, while certain pools utilize the FOMC's projections for U.S. GDP growth as a loss driver. Segmentation and attributes of loan pools are defined in Note 1 – Summary of Significant Accounting Policies to the Audited Consolidated Financial Statements in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2025. FOMC projections are sourced from a quarterly Summary of Projections, which accompanies select FOMC meetings. Each participant's projections represent the value to which selected variables would be expected to converge over time under appropriate monetary policy and considering all currently available information. An immediate "shock" or increase of 100 basis points in the FOMC's projected rate of U.S. civilian unemployment and a decrease of 50 basis points in the FOMC's projected rate of U.S. GDP growth would increase the model's total calculated allowance by $0.9 million, or 3.6%, to $26.2 million as of June 30, 2026, assuming qualitative adjustments were kept at current levels.
Current wording
Changes in the FOMC's median forecasted U.S. civilian unemployment rate and year over year change in U.S. GDP could have a material impact on the model's estimation of the allowance. Currently, most pools utilize the FOMC's projections for unemployment as a loss driver, while certain pools utilize the FOMC's projections for U.S. GDP growth as a loss driver. Segmentation and attributes of loan pools are defined in Note 1 – Summary of Significant Accounting Policies to the Audited Consolidated Financial Statements in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2025. FOMC projections are sourced from a quarterly Summary of Economic Projections, which accompanies select FOMC meetings. Each participant's projections represent the value to which selected variables would be expected to converge over time under appropriate monetary policy and considering all currently available information. An immediate "shock" or increase of 100 basis points in the FOMC's projected rate of U.S. civilian unemployment and a decrease of 50 basis points in the FOMC's projected rate of U.S. GDP growth would increase the model's total calculated allowance by $0.9 million, or 3.6%, to $26.1 million as of September 30, 2026, assuming qualitative adjustments were kept at current levels.
Previous wording
In addition to analyzing the Corporation’s results on a reported basis, management uses certain non-GAAP financial measures because it believes these non-GAAP financial measures provide information to investors about the underlying operational performance and trends of the Corporation, and therefore facilitate a comparison of the Corporation with the performance of other companies. Non-GAAP financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used by other companies. Refer to pages 81-83 for further explanation and reconciliation of the Corporation’s use of non-GAAP measures.
Current wording
In addition to analyzing the Corporation’s results on a reported basis, management uses certain non-GAAP financial measures because it believes these non-GAAP financial measures provide information to investors about the underlying operational performance and trends of the Corporation, and therefore facilitate a comparison of the Corporation with the performance of other companies. Non-GAAP financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used by other companies. Refer to pages 82-85 for further explanation and reconciliation of the Corporation’s use of non-GAAP measures.
Previous wording
The following section of the MD&A provides a comparative discussion of the Corporation’s Consolidated Results of Operations on a reported basis for the three and six months ended June 30, 2026 and 2025. For a discussion of the Critical Accounting Estimates that affect the Consolidated Results of Operations, see pages 47-48 of this Form 10-Q and page 39 of the Corporation’s 2025 Form 10-K.
Current wording
The following section of the MD&A provides a comparative discussion of the Corporation’s Consolidated Results of Operations on a reported basis for the three and nine months ended September 30, 2026 and 2025. For a discussion of the Critical Accounting Estimates that affect the Consolidated Results of Operations, see pages 48-49 of this Form 10-Q and page 39 of the Corporation’s 2025 Form 10-K.
Previous wording
The following table presents selected financial information for the periods indicated, and the dollar and percent change (in thousands, except per share and ratio data) adjusted for nonrecurring items (refer to the GAAP to Non-GAAP reconciliations, pages 81-83, for further information):
Current wording
The following table presents selected financial information for the periods indicated, and the dollar and percent change (in thousands, except per share and ratio data) adjusted for nonrecurring items (refer to the GAAP to Non-GAAP reconciliations, pages 82-85, for further information):
Previous wording
(1)Adjusted for $17.5 million loss on sale of securities available for sale and $0.6 million gain on sale of previous branch property during the three and six months ended June 30, 2025.
Current wording
(1)Adjusted for $17.5 million loss on sale of securities available for sale and $0.6 million gain on sale of previous branch property during the nine months ended September 30, 2025.
Previous wording
(2)Adjusted for tax impact of loss on sale of securities available for sale and gain on sale of previous branch property during the three and six months ended June 30, 2025.
Current wording
(2)Adjusted for tax impact of loss on sale of securities available for sale and gain on sale of previous branch property during the nine months ended September 30, 2025.
Previous wording
The Corporation reported net income for the three months ended June 30, 2026 of $8.8 million, or $1.82 per share, compared to a net loss of $6.5 million, or a net loss of $1.35 per share, for the same period in the prior year. Return on average equity for the three months ended June 30, 2026 was 13.19%, compared to (11.29)% for the same period in the prior year. The increase in net income for the three months ended June 30, 2026 was attributable to increases in net interest income and non-interest income, as well as a decrease in the provision for credit losses, offset by increases in non-interest expense and income tax expense.
Current wording
The Corporation reported net income for the three months ended September 30, 2026 of $12.7 million, or $2.63 per share, compared to net income of $7.8 million, or $1.62 per share, for the same period in the prior year. Return on average equity for the three months ended September 30, 2026 was 18.36%, compared to 12.89% for the same period in the prior year. The increase in net income for the three months ended September 30, 2026 was attributable to increases in net interest income and non-interest income, as well as a decrease in the provision for credit losses, offset by increases in non-interest expense and income tax expense.
Previous wording
Net income for thesix months ended June 30, 2026 was$18.0 million, or $3.73 per share, compared to a net loss of$0.4 million, or a net loss of$0.09 per share, for the same period in the prior year. Return on average equity for the six months ended June 30, 2026 was 13.71%, compared to(0.38)%for the same period in the prior year. The increase in net income for the six months ended June 30, 2026 was primarily attributable to an increase in non-interest income and net interest income, and a decrease in the provision for credit losses, offset by increases in non-interest expense and income tax expense.
Current wording
Net income for thenine months ended September 30, 2026 was$30.7 million, or $6.36 per share, compared to$7.4 million, or$1.53 per share, for the same period in the prior year. Return on average equity for the nine months ended September 30, 2026 was 15.32%, compared to 4.27%for the same period in the prior year. The increase in net income for the nine months ended September 30, 2026 was primarily attributable to an increase in non-interest income and net interest income, and a decrease in the provision for credit losses, offset by increases in non-interest expense and income tax expense.
Previous wording
During the three and six month periods ended June 30, 2025, the Corporation sold a significant portion of its available for sale securities portfolio, and recognized a $17.5 million loss on the sale. In addition, the Corporation recognized a gain of $0.6 million upon completing the sale of a previously held for sale branch property. Excluding these nonrecurring items, net income (as adjusted) for the three and six month periods ended June 30, 2025 was $6.3 million, or $1.31 per share, and $12.3 million, or $2.57 per share, respectively. Non-GAAP net income as presented in the MD&A has been adjusted for these two items. Refer to the GAAP to Non-GAAP reconciliations, on pages 81-83, for further information. Adjusted return on average equity for the three months ended June 30, 2025 was 11.07%, compared to 13.19% for the same period in the current year and adjusted return on average equity for the six months ended June 30, 2025 was 11.02%, compared to 13.71% for the same period in the current year.
Current wording
During the three months ended June 30, 2025, the Corporation sold a significant portion of its available for sale securities portfolio, and recognized a $17.5 million loss on the sale. In addition, the Corporation recognized a gain of $0.6 million upon completing the sale of a previously held for sale branch property. As both occurred in the second quarter of the prior year, only thenine month period comparisons were impacted. Excluding these nonrecurring items, net income (as adjusted) for thenine months ended September 30, 2025 was $20.1 million, or $4.19 per share, and adjusted return on average equity was 11.67%, compared to 15.32% for the same period in the current year. Refer to the GAAP to Non-GAAP reconciliations, on pages 82-85, for further information.
Previous wording
Interest income on loans increased to $32.8 million for the three months ended June 30, 2026, from $29.4 million for the same period in the prior year. The increase was mostly due to an increase of $230.0 million in average balances of total loans, as well as an increase of three basis points in the average yield on total loans, each compared to the same period in the prior year. Growth in average balances of total loans was concentrated in commercial real estate loans, with additional increases in commercial and industrial loans and residential mortgage loans, partially offset by a decline in total consumer loans. Growth in average balances of total commercial loans totaled $248.3 million, and reflected relatively balanced growth in the Corporation's Capital Bank and Canal Bank divisions in the Albany and Western New York markets, respectively, as well as growth within the Corporation's legacy Chemung Canal division. Average balances of residential mortgage loans increased largely due to increased origination activity in the second half of 2025 and the retention of a higher proportion of originated loans for investment. The decline in the average balance of total consumer loans was primarily due to a decrease in average balances of indirect auto loans, as the Corporation continued to prioritize other types of lending throughout 2025 and in the first six months of 2026.
Current wording
Interest income on loans, including fees, increased to$34.1 million for the three months ended September 30, 2026, from$31.0 million for the same period in the prior year. The increase was mostly due to an increase of$204.6 million in average balances of total loans, as well as an increase oftwo basis points in the average yield on total loans. Growth in average balances was concentrated in commercial loans, which increased$221.1 million, largely comprised of growth in commercial real estate loans in the Corporation's Canal Bank and Capital Bank divisions. Average balances of residential mortgage loans increased$9.5 million, mainly due to origination activity in the fourth quarter of 2025 and the first nine months of 2026, and the retention of a higher proportion of originated loans for investment. Average balances of consumer loans decreased$26.1 million, primarily due to a decline in indirect auto loans, as the Corporation continued to prioritize other types of lending.
Previous wording
The increase in the average yield on total loans was primarily due to a 30 basis point increase in the average yield on residential mortgage loans, partially offset by a three basis point decrease in the average yield on commercial loans, each compared to the same period in the prior year. The increase in the average yield on residential mortgage loans reflected higher interest rates on loans originated during 2025 and in the first six months of 2026 relative to the existing portfolio. The decrease in the average yield on commercial loans was mainly due to lower interest rates on variable rate loans resulting from declines in benchmark indices since the prior year period. A decrease of one basis point in the average yield on total consumer loans did not have a significant impact on net interest income compared to the same period in the prior year.
Current wording
The increase in the average yield on total loans reflected increases ofsix and 12 basis points in the average yields on residential mortgage loans and consumer loans, respectively, mostly offset by a decrease oftwo basis points in the average yield on commercial loans. The increase in the average yield on residential mortgage loans was largely due to yields on loans originated since the prior year period exceeding the portfolio's average yield. The increase in the average yield on consumer loans was largely due to the repricing of prior promotional home equity lines of credit from below-market introductory rates, partially offset by a lower average Prime rate. The decrease in the average yield on commercial loans was mainly due to lower interest rates on variable rate loans, as cumulative decreases of 75 basis points in the Federal Funds Target Range Upper Limit between September and December 2025 were only partially offset by a 25 basis point increase in September 2026. Partially offsetting the decrease were new loans originated at interest rates above the portfolio's average rate and the recognition of $0.2 million in prepayment penalties, deferred fees, and other fees associated with the payoff of two commercial real estate loans in the current year period.
Previous wording
Interest expense on deposits decreased to $8.7 million for the three months ended June 30, 2026, from $11.1 million for the same period in the prior year. The decrease was primarily due to a decrease of 39 basis points in the average cost of total interest-bearing deposits and a decline of $118.7 million in average balances of total interest-bearing deposits, including brokered deposits. The decrease in the average cost of interest-bearing deposits largely reflected a decrease of 39 basis points in the average cost of customer time deposits and a decrease of 20 basis points in the average cost of savings and money market deposits, each compared to the same period in the prior year, as well as the current year period including lower average balances of higher-cost brokered deposits. The decrease in the average cost of customer time deposits was mainly due to the discontinuation of certain higher-cost promotional offerings in the second half of 2025, resulting in many previous promotional certificates of deposit not being renewed at maturity. The decrease in the average cost of savings and money market deposits was mainly due to targeted reductions in tiered interest rates offered on money market deposits which occurred in the fourth quarter of 2025 and first quarter of 2026, as market interest rates declined.
Current wording
Interest expense on deposits decreased to $8.8 million for the three months ended September 30, 2026, from$10.2 million for the same period in the prior year. The decrease was primarily due to a decrease of 28 basis points in the average cost of total interest-bearing deposits and a decline of$28.4 million in average balances of total interest-bearing deposits. The decrease in the average cost of interest-bearing deposits was largely due to decreases of 37 and 18 basis points in the average cost of customer time deposits and savings and money market deposits, respectively. The decrease in the average cost of savings and money market deposits was mainly due to targeted reductions in tiered interest rates offered on money market deposits in the fourth quarter of 2025 and the first quarter of 2026, as market interest rates declined.
Previous wording
The decline in average balances of total interest-bearing deposits was largely attributable to a decline of $91.6 million in average balances of brokered deposits compared to the same period in the prior year. Reduced reliance on brokered deposits in the current year period was primarily the result of the Corporation's balance sheet repositioning efforts during 2025, which included the runoff of all outstanding brokered deposits during the three months ended September 30, 2025, as well as a shift in the Corporation's mix of wholesale funding sources toward FHLBNY short-term advances. Also contributing to the decline in average balances of total interest-bearing deposits was a decline of $67.2 million in average balances of customer time deposits compared to the same period in the prior year, due to the discontinuation of certain higher-cost promotional offerings in the second half of 2025, resulting in many previous promotional certificates of deposit not being renewed at maturity. Customer time deposits represented 19.2% of total average deposits during the three months ended June 30, 2026, compared to 21.3% during the same period in the prior year. Partially offsetting these declines was a $53.7 million increase in average balances of savings and money market deposits, largely due to growth in the Corporation's Canal Bank division and the introduction of a new escrow product during the current year period.
Current wording
The decline in average balances of total interest-bearing deposits was largely attributable to a decrease of$75.2 million in average balances of customer time deposits. The decreases in the average cost and average balances of customer time deposits were largely the result of the discontinuation of longer-term, higher-cost promotional offerings in the second half of 2025 in favor of shorter-term offerings, resulting in many previous promotional certificates of deposit not being renewed at maturity. Customer time deposits represented 18.3% of total average deposits during the three months ended September 30, 2026, compared to 21.7% during the same period in the prior year. Partially offsetting the decline was an increase of$66.4 million in average balances of savings and money market deposits, more than half of which was concentrated in the Corporation's Canal Bank division.
Previous wording
Fully taxable equivalent net interest margin was 3.63% for the six months ended June 30, 2026 compared to 3.00% for the same period in the prior year. Average interest-earning assets declined $55.3 million, while average interest-bearing liabilities declined $101.2 million, for the six months ended June 30, 2026, each compared to the same period in the prior year. The declines in the average balances of interest-earning assets and interest-bearing liabilities were mostly due to the effects of the Corporation's balance sheet repositioning efforts during 2025. The average yield on interest-earning assets increased 37 basis points, to 5.15%, while the average cost of interest-bearing liabilities decreased 29 basis points, to 2.27% for the six months ended June 30, 2026, each compared to the same period in the prior year.
Current wording
Fully taxable equivalent net interest margin was 3.74% for the three months ended September 30, 2026, compared to 3.45% for the same period in the prior year. Average interest-earning assets increased$114.4 million, while average interest-bearing liabilities increased$32.7 million, compared to the same period in the prior year. The average yield on interest-earning assets increased 10 basis points to 5.25%, while the average cost of interest-bearing liabilities decreased 21 basis points to 2.30%.
Previous wording
Net interest income for the three months ended June 30, 2026 increased $3.9 million to $24.7 million compared to the same period in the prior year, largely due to an increase of $3.4 million in interest income on loans and a decrease of $2.4 million in interest expense on deposits, partially offset by decreases of $0.9 million in interest and dividend income on taxable securities and $0.5 million in interest income on interest-earning deposits, and an increase of $0.4 million in interest expense on borrowed funds.
Current wording
Net interest income for the nine months ended September 30, 2026 totaled $73.9 million compared to $63.3 million for the same period in the prior year, an increase of $10.6 million, largely due to an increase of $9.9 million in interest income on loans and a decrease of $6.3 million in interest expense on deposits, partially offset by decreases of $2.2 million in interest income on taxable securities and $1.4 million in interest income on interest-earning deposits, and an increase of $1.7 million in interest expense on borrowed funds.
Previous wording
Interest income on loans increased to $64.3 million for the first six months of 2026, from $57.5 million for the same period in the prior year. The increase was mostly attributable to an increase of $240.7 million in average balances of commercial loans, compared to the same period in the prior year, largely concentrated in commercial real estate loans, partially offset by a decline of $28.3 million in average balances of total consumer loans, largely concentrated in indirect auto loans. Demand for commercial real estate loans in the Corporation's Canal Bank division in the Western New York market and Capital Bank division in the Albany market has remained strong since the prior year period. Average balances of indirect auto loans declined mostly due to the Corporation's prioritization of other types of lending since the prior year period. Also contributing to the increase in interest income on loans was an increase of six basis points in the average yield on total loans, compared to the same period in the prior year. The increase in the average yield on total loans was primarily due to an increase of 38 basis points in the average yield on residential mortgage loans, compared to the same period in the prior year, and was largely due to yields of mortgages originated between the prior year period and current year period substantially exceeding the yield of the overall portfolio, due to interest rates in the current environment remaining elevated compared to certain historic periods. Changes in the average yields on commercial and total consumer loans did not have a meaningful impact on the change in net interest income between the six months ended June 30, 2026 and 2025.
Current wording
Interest income on loans increased to $98.4 million for the first nine months of 2026, from $88.6 million for the same period in the prior year. The increase was mostly attributable to an increase of $234.1 million in average balances of commercial loans, largely concentrated in commercial real estate loans, partially offset by a decline of $27.6 million in average balances of total consumer loans, largely concentrated in indirect auto loans. Demand for commercial real estate loans in the Corporation's Canal Bank and Capital Bank divisions has remained strong, while indirect auto balances declined due to the Corporation's prioritization of other types of lending. The average yield on total loans increased four basis points, primarily due to an increase of 28 basis points in the average yield on residential mortgage loans, largely due to yields of mortgages originated since the prior year period exceeding the average yield of the overall portfolio. Changes in the average yields on commercial and total consumer loans did not have a significant impact on the change in net interest income.
Previous wording
Interest expense on deposits decreased to $17.2 million for the first six months of 2026, from $22.2 million for the same period in the prior year. The decrease was primarily due to a decrease of 41 basis points in the average cost of total interest-bearing deposits, as well as a decline of $127.0 million in average balances of total interest-bearing deposits, each compared to the same period in the prior year. The decrease in the average cost of total interest-bearing deposits was mainly due to a decrease of 48 basis points in the average cost of customer time deposits, a decrease of 19 basis points in the average cost of savings and money market deposits, and decreased utilization of higher-cost brokered deposits, each compared to the same period in the prior year. The average cost of customer time deposits decreased primarily due to the discontinuation of higher-cost promotional offerings during the current year period in favor of shorter-term lower-costing promotions, as well as a reduced reliance on costlier time deposits to fund asset growth following the Corporation's balance sheet repositioning in the prior year. The decrease in the average cost of savings and money market deposits was mainly due to targeted and tiered reductions in interest rates offered on money market accounts between the prior year period and current year period, partially as a result of the declining interest rate environment during the second half of 2025. Similarly to customer time deposits, the Corporation reduced its reliance on higher-cost brokered deposits following its balance sheet repositioning in the prior year. Average balances of brokered deposits and customer time deposits declined $86.4 million and $59.8 million, respectively, and were primarily responsible for the decline in average balances of total interest-bearing deposits. Customer time deposits comprised 19.6% of total average deposits for the six months ended June 30, 2026, compared to 21.2% for the same period in the prior year.
Current wording
Interest expense on deposits decreased to $26.1 million for the first nine months of 2026, from $32.4 million for the same period in the prior year. The decrease was primarily due to a decrease of 37 basis points in the average cost of total interest-bearing deposits, as well as a decline of $93.8 million in average balances of total interest-bearing deposits. The decrease in the average cost of deposits was mainly due to a decrease of 45 basis points in the average cost of customer time deposits, a decrease of 19 basis points in the average cost of savings and money market deposits, and decreased utilization of higher-cost brokered deposits. The average cost of customer time deposits decreased primarily due to the discontinuation of higher-cost promotional offerings in favor of shorter-term lower-costing promotions, as well as reduced reliance on time deposits to fund asset growth following the Corporation's balance sheet repositioning. The decrease in the average cost of savings and money market deposits was mainly due to targeted and tiered reductions in interest rates offered on money market accounts as market interest rates declined in the second half of 2025. Average balances of customer time deposits and brokered deposits declined $65.0 million and $57.3 million, respectively, and were primarily responsible for the decline in average balances of total interest-bearing deposits, partially offset by an increase of $40.8 million in average balances of savings and money market deposits. Customer time deposits comprised 19.1% of total average deposits for the nine months ended September 30, 2026, compared to 21.3% for the same period in the prior year.
Previous wording
Interest income on taxable securities decreased to $1.7 million for the three months ended June 30, 2026, from $2.5 million for the same period in the prior year. The decrease was largely due to a $211.4 million decline in average balances of taxable securities, attributable to sales of available for sale securities during the three months ended June 30, 2025 as part of the Corporation’s balance sheet repositioning efforts, as well as normal paydowns and maturities totaling $26.9 million between June 30, 2025 and 2026. Interest income on interest-earning deposits decreased mostly due to a decline of $40.9 million in average balances, compared to the same period in the prior year. Average balances of interest-earning deposits declined mostly as a result of the Corporation utilizing cash proceeds from the sales of available for sale securities during the three months ended June 30, 2025 to fund loan growth and pay off wholesale funding liabilities in the second half of 2025.
Current wording
Interest and dividend income on taxable securities decreased to $5.1 million for the first nine months of 2026, from $7.2 million for the same period in the prior year, primarily due to a decline of $160.5 million in average balances of taxable securities, partially offset by an increase of ten basis points in the average yield on taxable securities. The decline in average balances of taxable securities was mostly due to the sale of $244.8 million of available for sale securities during the three months ended June 30, 2025 as part of the Corporation's balance sheet repositioning efforts, as well as normal paydown activity on residential mortgage-backed securities. Interest income on interest-earning deposits decreased to $0.9 million for the first nine months of 2026, from $2.3 million for the same period in the prior year, due to declines of $38.0 million in average balances and 70 basis points in the average yield on interest-earning deposits. Average balances declined as cash proceeds from the 2025 balance sheet repositioning were used to fund loan growth and pay off wholesale funding liabilities.
Previous wording
Fully taxable equivalent net interest margin was 3.67% for the three months ended June 30, 2026, compared to 3.05% for the same period in the prior year. Average interest-earning assets declined $43.3 million for the three months ended June 30, 2026, while average interest-bearing liabilities declined $105.4 million, each compared to the same period in the prior year. The declines in the average balances of interest-earning assets and interest-bearing liabilities were mostly due to the effects of the Corporation's balance sheet repositioning efforts during 2025. The average yield on interest-earning assets increased 35 basis points to 5.18%, while the average cost ofinterest-bearing liabilities decreased 30 basis points to 2.27%, for the three months ended June 30, 2026, each compared to the same period in the prior year.
Current wording
Fully taxable equivalent net interest margin was 3.67% for the nine months ended September 30, 2026 compared to 3.15% for the same period in the prior year. Average interest-earning assets increased $1.9 million, as loan growth was largely offset by declines in average balances of securities and interest-earning deposits resulting from the Corporation's balance sheet repositioning efforts during 2025, while average interest-bearing liabilities declined $56.1 million. The average yield on interest-earning assets increased 29 basis points, to 5.19%, while the average cost of interest-bearing liabilities decreased 27 basis points, to 2.28%.
Previous wording
The following tables present certain information related to the Corporation’s average consolidated balance sheets and its consolidated statements of income for the three and six months ended June 30, 2026 and 2025. For the purpose of the tables below, nonaccrual loans are included in the daily average loan amounts outstanding. Daily balances were used for average balance computations. Investment securities are stated at amortized cost. Tax equivalent adjustments have been made in calculating yields on obligations of states and political subdivisions, tax-free commercial loans, and dividends on equity investments.
Current wording
The following tables present certain information related to the Corporation’s average consolidated balance sheets and its consolidated statements of income for the three and nine months ended September 30, 2026 and 2025. For the purpose of the tables below, nonaccrual loans are included in the daily average loan amounts outstanding. Daily balances were used for average balance computations. Investment securities are stated at amortized cost. Tax equivalent adjustments have been made in calculating yields on obligations of states and political subdivisions, tax-free commercial loans, and dividends on equity investments.
Previous wording
Net interest income can be analyzed in terms of the impact of changes in rates and volumes. The tables below illustrate the extent to which changes in interest rates and the volume of average interest-earning assets and interest-bearing liabilities have affected the Corporation’s interest income and interest expense during the three and six months ended June 30, 2026 and 2025. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate); (ii) changes attributable to changes in rates (changes in rates multiplied by prior volume); and (iii) the net changes. For purposes of these tables, changes that are not due solely to volume or rate changes have been allocated to these categories based on the respective percentage changes in average volume and rate. Due to the numerous simultaneous volume and rate changes during the periods analyzed, it is not possible to precisely allocate changes between volume and rates. In addition, average interest-earning assets include nonaccrual loans and taxable equivalent adjustments were made.
Current wording
Net interest income can be analyzed in terms of the impact of changes in rates and volumes. The tables below illustrate the extent to which changes in interest rates and the volume of average interest-earning assets and interest-bearing liabilities have affected the Corporation’s interest income and interest expense during the three and nine months ended September 30, 2026 and 2025. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate); (ii) changes attributable to changes in rates (changes in rates multiplied by prior volume); and (iii) the net changes. For purposes of these tables, changes that are not due solely to volume or rate changes have been allocated to these categories based on the respective percentage changes in average volume and rate. Due to the numerous simultaneous volume and rate changes during the periods analyzed, it is not possible to precisely allocate changes between volume and rates. In addition, average interest-earning assets include nonaccrual loans and taxable equivalent adjustments were made.
Previous wording
The provision for credit losses decreased to $1.2 million for the six months ended June 30, 2026, from $2.2 million for the same period in the prior year. The decrease was mainly due to the directionality of the impact from the annual loss driver update and recalibration applied to the Corporation's CECL model in the current year, compared to the update applied to the CECL model in the prior year period. The current year update resulted in lower modeled baseline loss rates, while the update in the prior year resulted in higher baseline loss rates. Partially offsetting the overall decrease in provision for credit losses compared to the same period in the prior year was an increase in specific allocations on individually analyzed loans, as well as stronger loan growth in the current year period, which totaled $97.6 million, compared to growth of $61.0 million for the same period in the prior year.
Current wording
The provision for credit losses was a credit of $1.4 million for the nine months ended September 30, 2026, compared to provision expense of $3.3 million for the same period in the prior year, a decrease of $4.7 million. The decrease was primarily due to a $2.9 million partial recovery of a commercial and industrial loan participation, received in connection with the settlement of related litigation during the third quarter of 2026, as well as a $0.7 million recovery on a commercial and industrial loan that had been charged off during the prior year period. Also contributing to the decrease was the direction of the impact from the annual update to the Corporation's CECL model, which is performed each year during the first quarter. The current year update resulted in lower modeled baseline loss rates, while the prior year update had resulted in higher baseline loss rates, as well as favorable changes in FOMC forecasts and modeled prepayment speeds in the current year period, compared to deteriorations in the prior year period. Partially offsetting the decrease were specific allocations on individually analyzed loans totaling $1.4 million, including $1.2 million on one non-owner occupied commercial real estate loan, in the current year period, compared to $0.2 million in total specific allocations during the same period in the prior year.
Previous wording
Total non-interest income for the three months ended June 30, 2026 increased $17.2 million compared to the same period in the prior year, largely due to a $17.5 million net loss on securities transactions in the prior year, increases of $0.2 million each in wealth management group fee income and changes in fair value of equity investments, as well as an increase of $0.1 million in CFS fee and commission income. The increase was partially offset by a decrease of $0.7 million in other non-interest income.
Current wording
Total non-interest income for the three months ended September 30, 2026 increased $0.2 million compared to the same period in the prior year, primarily due to increases of $0.2 million each in wealth management group fee income and other non-interest income. The increase was partially offset by a decrease of $0.2 million in changes in fair value of equity investments.
Previous wording
The increase in wealth management group fee income was primarily due to an increase in total assets under management in the current period, compared to the same period in the prior year, mainly due to improvements in financial markets between the second quarters of 2025 and 2026.
Current wording
Wealth management group fee income increased mainly due to an increase in the market value of assets under management, excluding assets under management or administration for the Corporation, of 4.4%, compared to September 30, 2025, largely due to improvements in financial markets between the third quarters of 2025 and 2026.
Previous wording
The increase in changes in fair value of equity investments was primarily due to a larger increase in the fair value of the assets held for the Corporation's deferred compensation plan in the current year period, when compared to the same period in the prior year.
Current wording
The decrease in the change in fair value of equity investments was mostly due to a decrease in the market value of the Corporation's deferred compensation plan in the current year period, compared to an increase in the same period in the prior year.
Previous wording
Total non-interest income for the six months ended June 30, 2026 increased $17.6 million compared to the same period in the prior year. The increase was primarily due to a $17.5 million net loss on securities transactions in the prior year, and increases of $0.5 million in wealth management group fee income and $0.4 million in CFS fee and commission income, partially offset by decreases of $0.7 million in other non-interest income and $0.1 million in service charges on deposit accounts.
Current wording
Total non-interest income for the nine months ended September 30, 2026 increased $17.9 million compared to the same period in the prior year. The increase was primarily due to a $17.5 million net loss on securities transactions in the prior year period, and increases of $0.7 million in wealth management group fee income and $0.5 million in CFS fee and commission income, partially offset by decreases of $0.5 million in other non-interest income and $0.2 million in service charges on deposit accounts.
Previous wording
The increase in wealth management group fee income was primarily due to an increase in total assets under management in the current period, compared to the same period in the prior year, mainly due to improvements in financial markets since the second quarter of 2025.
Current wording
The increase in wealth management group fee income was primarily due to an increase in total assets under management in the current period, compared to the same period in the prior year, mainly due to cumulative improvements in financial markets since the third quarter of 2025.
Previous wording
The increase in total CFS Group fee and commission income was largely due to recognition of additional income in the current year period following contractual changes with a broker-dealer, improvements in financial markets during the first six months of 2026, and organic client growth across the Corporation's footprint.
Current wording
The increase in total CFS Group fee and commission income was largely due to recognition of additional income in the current year period following contractual changes with a broker-dealer, improvements in financial markets during the first nine months of 2026, and organic client growth across the Corporation's footprint.
Previous wording
Total non-interest expense for the three months ended June 30, 2026 increased $1.6 million compared to the same period in the prior year. The increase was due to an increase in both total compensation expense and non-compensation expense compared to the same period in the prior year. For the three months ended June 30, 2026 and 2025, non-interest expense to average assets was 2.79% and 2.54%, respectively.
Current wording
Total non-interest expense for the three months ended September 30, 2026 increased $0.4 million compared to the same period in the prior year. The increase was due to an increase in both total compensation expense and non-compensation expense compared to the same period in the prior year. For the three months ended September 30, 2026 and 2025, non-interest expense to average assets was 2.56% and 2.61%, respectively.
Previous wording
The increase in compensation expense for the current period, compared to the same period in the prior year, was largely due to increases in salaries and wages, and pension and other employee benefits. Salaries and wages increased largely due to an increase in expenses relating to annual incentives as well as merit-based increases in salaries. Pension and other employee benefits increased primarily due to an increase in employee healthcare-based expenses.
Current wording
The increase in compensation expense for the current period, compared to the same period in the prior year, was largely due to an increase in salaries and wages, offset by a decrease in pension and other employee benefits. Salaries and wages increased largely due to an increase in expenses relating to annual incentives as well as merit-based increases in salaries. Pension and other employee benefits decreased mostly due to lower healthcare-related expenses compared to the same period in the prior year.
Previous wording
Total non-interest expense for the six months ended June 30, 2026 increased $2.1 million compared to the same period in the prior year. The increase was due to increases in both total compensation expense and total non-compensation expense. For the six months ended June 30, 2026 and 2025, non-interest expense to average assets was 2.69% and 2.50%, respectively.
Current wording
Total non-interest expense for the nine months ended September 30, 2026 increased $2.5 million compared to the same period in the prior year. The increase was due to increases in both total compensation expense and total non-compensation expense. For the nine months ended September 30, 2026 and 2025, non-interest expense to average assets was 2.65% and 2.54%, respectively.
Previous wording
The increase in compensation expense for the current period, compared to the same period in the prior year, was largely due to increases in salaries and wages, and pension and other employee benefits. Salaries and wages increased largely due to an increase in expenses relating to annual incentives as well as merit-based increases in salaries. Pension and other employee benefits increased primarily due to an increase in employee healthcare-based expenses.
Current wording
The increase in compensation expense for the current period, compared to the same period in the prior year, was largely due to increases in salaries and wages, and pension and other employee benefits. Salaries and wages increased largely due to an increase in expenses relating to annual incentives as well as merit-based increases in salaries. Pension and other employee benefits increased primarily due to an increase in payroll taxes and employer contributions.
Previous wording
The increase in non-compensation expense was largely due to an increase of $0.4 million in other non-interest expense compared to the same period in the prior year, as well as $0.2 million increases in each of professional services and loan expenses, partially offset by a decrease of $0.1 million in FDIC insurance. Other non-interest expense increased largely due to a $0.3 million write-down of a legacy non-marketable equity investment following the Corporation's reassessment of the investment's carrying value, which included additional qualitative information regarding its expected recoverability. Loan expense and professional services each increased due to increases in legal fees compared to the same period in the prior year. A significant portion of the increase in legal fees in professional services related to the Corporation's application to convert its charter to a national bank. Another portion of the increase in professional services related to recurring costs associated with the Corporation's subordinated debt. FDIC insurance decreased primarily due to favorable changes in metrics used to determine assessment rates.
Current wording
The increase in non-compensation expense was primarily due to increases of $0.5 million in other non-interest expense, $0.4 million in professional services and $0.2 million in loan expenses, partially offset by a decrease of $0.3 million in FDIC insurance expense. Other non-interest expense increased largely due to a $0.3 million write-down of a legacy non-marketable equity investment following the Corporation's reassessment of the investment's carrying value, which included additional qualitative information regarding its expected recoverability. Loan expense and professional services each increased due to increases in legal fees compared to the same period in the prior year. A significant portion of the increase in legal fees in professional services related to the Bank's application to convert its charter to a national bank. Another portion of the increase in professional services related to recurring costs associated with the Corporation's subordinated debt. Professional services also increased due to an increase in consulting services in support of corporate initiatives in the current period compared to the same period in the prior year. FDIC insurance decreased primarily due to favorable changes in metrics used to determine assessment rates.
Previous wording
Income tax expense for the three month period ended June 30, 2026 was $2.5 million, compared to an income tax benefit of $2.4 million for the three month period ended June 30, 2025. The increase in income tax expense was primarily due to an increase of $20.1 million in income before income tax expense, compared to the same period in the prior year. This increase was primarily due to the $17.5 million net loss recognized on the Corporation's sale of available for sale securities in the second quarter of 2025. The effective income tax rate was 22.0% for the three months ended June 30, 2026.
Current wording
Income tax expense for the three month period ended September 30, 2026 was $3.8 million, compared to $2.3 million for the three month period ended September 30, 2025. The increase in income tax expense was primarily due to an increase of $6.4 million in income before income tax expense, compared to the same period in the prior year. This increase included the $0.8 million income tax impact from the recovery of credit losses following the litigation settlement in the current quarter. The effective income tax rate was 23.0% for the three months ended September 30, 2026 compared to 22.6% for the three months ended September 30, 2025.
Previous wording
Income tax expense for the six month period ended June 30, 2026 was $5.1 million, compared to an income tax benefit of $0.7 million for the six month period ended June 30, 2025. The effective income tax rate was 22.1% for the six months ended June 30, 2026. The increase in income tax expense was primarily due to the $17.5 million net loss recognized on the Corporation's sale of available for sale securities in the second quarter of 2025.
Current wording
Income tax expense for the nine month period ended September 30, 2026 was $8.9 million, compared to $1.6 million for the nine month period ended September 30, 2025. The effective income tax rate was 22.5% for the nine months ended September 30, 2026 compared to 17.7% for the nine months ended September 30, 2025. The increase in income tax expense was primarily due to the $17.5 million net loss recognized on the Corporation's sale of available for sale securities in the second quarter of the prior year.
Previous wording
The decrease in total investment securities was mostly due to year to date net paydowns and maturities on available for sale securities, totaling $11.4 million. The market value of available for sale securities was relatively consistent compared to the prior year-end. Partially offsetting the decrease in total investment securities was an increase of $0.2 million in FHLBNY and FRBNY stock, at cost, primarily due to an increase in total borrowings through the FHLBNY as of June 30, 2026, compared to the prior year-end.
Current wording
The decrease in total investment securities was mostly due to year to date net paydowns and maturities on available for sale securities, totaling $20.5 million. Available for sale securities further decreased compared to the prior year-end due to a decrease in fair value of $11.2 million. Partially offsetting the decrease in total investment securities was the purchase of $4.9 million in collateralized mortgage obligations.
Previous wording
The increase in loans, net of deferred loan fees, was primarily due to an increase in non-owner occupied commercial real estate loans of $91.1 million, as well as increases of $11.5 million and $5.9 million in construction loans and home equity lines and loans, respectively, partially offset by a decrease of $19.9 million in indirect consumer loans.
Current wording
The increase in loans, net of deferred loan fees, was primarily due to an increase in non-owner occupied commercial real estate loans of $133.2 million, as well as increases of $10.1 million, $9.7 million and $8.2 million in owner occupied commercial real estate, construction loans and home equity lines and loans, respectively, partially offset by a decrease of $28.5 million in indirect consumer loans.
Showing the first 40 of 93 pairs. Open the source sections for the rest.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
Interest and dividend income on taxable securities decreased to $3.4 million for the first six months of 2026, from $5.6 million for the same period in the prior year. The decrease in interest and dividend income on taxable securities was primarily due to a decline of $234.3 million in average balances of taxable securities compared to the same period in the prior year. The decline in average balances of taxable securities was mostly due to the sale of $244.8 million of available for sale securities during the three months ended June 30, 2025 as part of the Corporation's balance sheet repositioning efforts in the prior year. Also contributing to the decrease in average balances of taxable securities compared to the prior year period was normal paydown activity on residential mortgage-backed securities between the prior year and current year periods.
Previous report — wording carried elsewhere
The increase in total CFS Group fee and commission income was largely due to recognition of additional income in the current year period following contractual changes with a broker-dealer, improvements in financial markets since the second quarter of 2025, and organic client growth across the Corporation's footprint.
Previous report — wording carried elsewhere
The Corporation recognized a pre-tax loss of $17.5 million on the sale of a portion of its available for sale securities portfolio in the second quarter of 2025.
Previous report — wording carried elsewhere
Changes in Fair Value of Equity Investments
Previous report — wording carried elsewhere
The decrease in other non-interest income was mostly due to a $0.6 million gain on the sale of a previous branch property during the second quarter of 2025.
Previous report — wording carried elsewhere
The increase in non-compensation expense was primarily due to increases of $0.4 million in other non-interest expense, $0.2 million in professional services and $0.2 million in loan expenses, partially offset by a decrease of $0.3 million in FDIC insurance expense. Other non-interest expense increased largely due to a $0.3 million write-down of a legacy non-marketable equity investment following the Corporation's reassessment of the investment's carrying value, which included additional qualitative information regarding its expected recoverability. Loan expense and professional services each increased due to increases in legal fees compared to the same period in the prior year. A significant portion of the increase in legal fees in professional services related to the Corporation's application to convert its charter to a national bank. Another portion of the increase in professional services related to recurring costs associated with the Corporation's subordinated debt. FDIC insurance decreased primarily due to favorable changes in metrics used to determine assessment rates.