# Chemung Financial Corp: Form 10-Q for the period ended Jun 30, 2024

- Company: [Chemung Financial Corp](/companies/chmg.md) (CIK 763563)
- Form: 10-Q
- Filed: 2024-08-07
- Accepted by EDGAR: Aug 7, 2024, 14:22 ET
- Period: 2024-06-30
- Accession: 0000763563-24-000074
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/763563/000076356324000074/chmg-20240630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/763563/000076356324000074/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Income tax | 3 months, 2024-04-01 to 2024-06-30 | $1.3m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-01-01 to 2024-06-30 | $3.3m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | $5.0m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-01-01 to 2024-06-30 | $12.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-04-01 to 2024-06-30 | $1.05 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-01-01 to 2024-06-30 | $2.53 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-04-01 to 2024-06-30 | $1.05 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-01-01 to 2024-06-30 | $2.53 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-04-01 to 2024-06-30 | 4,770,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-01-01 to 2024-06-30 | 4,767,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-01-01 to 2024-06-30 | $14.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-01-01 to 2024-06-30 | $1.1m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2024-01-01 to 2024-06-30 | $2.9m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 6 months, 2024-01-01 to 2024-06-30 | $82.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-06-30 | $70.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2024-06-30 | $2.76bn | us-gaap:Assets |
| Total liabilities | at 2024-06-30 | $2.55bn | us-gaap:Liabilities |
| Shareholders' equity | at 2024-06-30 | $201.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 125,509 characters.

### Introduction

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, 2024. Reference should be made to the accompanying unaudited consolidated financial statements and footnotes, and the Corporation’s 2023 Annual Report on Form 10-K, which was filed with the SEC on March 13, 2024, for an understanding of the following discussion and analysis. See the list of commonly used abbreviations and terms on pages 3–6.

The MD&A included in this Form 10-Q contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of the Corporation's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. For a discussion of those risks and uncertainties and the factors that could cause the

Corporation’s actual results to differ materially from those risks and uncertainties, see Forward-looking Statements below, in Part I, Item 1A, Risk Factors, and on pages 20–31 of the Corporation’s 2023 Form 10-K. For a discussion of the use of non-GAAP financial measures, see pages 63-66 of the Corporation's 2023 Form 10-K, and pages 77-80 in this Form 10-Q.

The Corporation has been a financial holding company since 2000, the Bank was established in 1833 and CFS in 2001. Through the Bank and CFS, the Corporation provides a wide range of financial services, including demand, savings and time deposits, commercial, residential and consumer loans, interest rate swaps, letters of credit, wealth management services, employee benefit plans, insurance products, mutual funds, and brokerage services. The Bank relies substantially on a foundation of locally generated deposits. The Corporation, on a stand-alone basis, has minimal results of operations. The Bank derives its income primarily from interest and fees on loans, interest income on investment securities, WMG fee income, and fees received in connection with deposit and other services. The Bank’s operating expenses are interest expense paid on deposits and borrowings, salaries and employee benefit plans, and general operating expenses.

### Forward-looking Statements

This discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. The Corporation intends its forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in these sections. All statements regarding the Corporation's expected financial position and operating results, the Corporation's business strategy, the Corporation's financial plans, forecasted demographic and economic trends relating to the Corporation's industry and similar matters are forward-looking statements. These statements can sometimes be identified by the Corporation's use of forward-looking words such as "may," "will," "anticipate," "estimate," "expect," or "intend." The Corporation cannot guarantee that its expectations in such forward-looking statements will turn out to be correct. The Corporation's actual results could be materially different from expectations because of various factors, including changes in economic conditions or interest rates, credit risk, inflation, cybersecurity risks, difficulties in managing the Corporation’s growth, recent bank failures, changes in FDIC assessments, public health issues, geopolitical conflicts, competition, changes in law or the regulatory environment, and changes in general business and economic trends.

Information concerning these and other factors, including Risk Factors, can be found in the Corporation’s periodic filings with the SEC, including the discussion under the heading “Item 1A. Risk Factors” in the Corporation’s 2023 Annual Report on Form 10-K. These filings are available publicly on the SEC’s web site at http://www.sec.gov, on the Corporation's web site at http://www.chemungcanal.com or upon request from the Corporate Secretary at (607) 737-3746. Except as otherwise required by law, the Corporation undertakes no obligation to publicly update or revise its forward-looking statements, whether as a result of new information, future events, or otherwise.

### Critical Accounting Estimates

Critical accounting estimates include the areas where the Corporation has made what it considers to be particularly difficult, subjective, or complex judgments concerning estimates, and where these estimates can significantly affect the Corporation's financial results under different assumptions and conditions. The Corporation prepares its financial statements in conformity with GAAP. As a result, the Corporation is required to make certain estimates, judgments, and assumptions that it believes are reasonable based upon the information available at that time. These estimates, judgments, and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. Actual results could be different from these estimates. Significant accounting policies followed by the Corporation are presented in Note 1 – Summary of Significant Accounting Policies, to the Audited Consolidated Financial Statements included in its Annual Report on Form 10-K for the year ended December 31, 2023, and in Note 1 – Summary of Significant Accounting Policies of this Form 10-Q.

#### Allowance for Credit Losses

Management considers the allowance for credit losses to be a critical accounting estimate, given the uncertainty in estimating lifetime credit losses attributable to its portfolios of assets exhibiting credit risk, particularly in its loan portfolio, and the material effect that such judgments can have on the Corporation's results of operations. Determining the amount requires significant judgement on the part of management, is multi-faceted, and can be imprecise. The level of the allowance for credit losses on loans is based on management’s ongoing review of all relevant information, from internal and external sources, relating to past events, current conditions, and expectations of the future based on reasonable and supportable forecasts.

The allowance is established through a provision for credit losses in the Consolidated Statements of Income, and evaluation of the adequacy of the allowance for credit losses is performed by management on a quarterly basis. While management uses available information to anticipate credit losses, future additions to the allowance may be necessary based on changes in economic conditions or the composition of its portfolios. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Corporation's allowance for credit losses.

Because the Corporation's methodology for maintaining its allowance for credit losses is based on historical experience and trends, current economic information, forecasted data, and management's judgement, a range of estimates for the estimate of the allowance for credit losses may be supportable. Deteriorating economic conditions may lead to further required increases to the allowance; conversely, improvements to economic conditions may warrant further reductions to the allowance. In estimating the allowance for credit losses, management considers the sensitivity of the model and significant judgments and assumptions that could result in an amount that is materially different from management’s estimate, including as it relates to qualitative considerations.

As of June 30, 2024 and December 31, 2023, the allowance for credit losses totaled $21.0 million and $22.5 million, respectively. Due to the nature and composition of the Bank's lending activities, a significant portion of the allowance for credit losses is allocated to the commercial portfolio, both commercial real estate and commercial and industrial loans. As of June 30, 2024 and December 31, 2023, the allowance for credit losses allocated to the total commercial portfolio was $15.4 million and $17.1 million respectively, or 73.2% and 75.9%, respectively.

Changes in the FOMC's median forecasted year over year U.S. civilian unemployment rate and the year over year change in U.S GDP could have a material impact on the model's estimation of the allowance. 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 considers all currently available information. An immediate "shock" or increase of 100 basis points in the FOMC's projected rate of U.S. civilian unemployment, and a decrease of 50 basis points in the FOMC's projected rate of U.S. GDP growth would increase the model's total calculated allowance by $0.8 million, or 3.64%, to $21.8 million, assuming qualitative adjustment are kept at current levels, as of June 30, 2024.

While management has concluded that its current evaluation is reasonable under the circumstances, and that sensitivity analysis is based on a series of hypothetical scenarios not intended to represent management’s assumptions or judgement of factors as of June 30, 2024, it has also concluded that differing assumptions could materially impact allowance calculations, either positively or adversely.

*(in thousands, except per share data)*

| Consolidated Financial Highlights As of or for the Three Months Ended June 30, Mar. 31, RESULTS OF OPERATIONS 2024 2024 | As of or for the Six Months Ended Dec. 31, Sept. 30, June 30, June 30, June 30, 2023 2023 2023 2024 2023 |
| --- | ---: |
| Interest and dividend income $31,386 $31,219 | $30,033 $29,015 $27,796 $62,605 $54,026 |
| Interest expense 13,625 13,130 | 12,135 10,998 9,201 26,755 15,484 |
| Net interest income 17,761 18,089 | 17,898 18,017 18,595 35,850 38,542 |
| Provision (credit) for credit losses (a) 879 (2,040) | 2,300 449 236 (1,161) 513 |
| Net interest income after provision for credit losses 16,882 20,129 | 15,598 17,568 18,359 37,011 38,029 |
| Non-interest income 5,598 5,657 | 5,871 7,808 5,447 11,255 10,870 |
| Non-interest expense 16,219 16,698 | 16,826 15,668 15,913 32,917 31,749 |
| Income before income tax expense 6,261 9,088 | 4,643 9,708 7,893 15,349 17,150 |
| Income tax expense 1,274 2,038 | 841 2,060 1,613 3,312 3,600 |
| Net income $4,987 $7,050 | $3,802 $7,648 $6,280 $12,037 $13,550 |
| Basic and diluted earnings per share $1.05 $1.48 | $0.80 $1.61 $1.33 $2.53 $2.87 |
| Average basic and diluted shares outstanding 4,770 4,764 | 4,743 4,736 4,729 4,767 4,725 |
| **PERFORMANCE RATIOS - Annualized** |  |
| Return on average assets 0.73% 1.04% | 0.56% 1.14% 0.95% 0.89% 1.03% |
| Return on average equity 10.27% 14.48% | 8.63% 16.89% 13.97% 12.37% 15.43% |
| Return on average tangible equity (b) 11.56% 16.29% | 9.86% 19.22% 15.89% 13.93% 17.60% |
| Efficiency ratio (unadjusted) (c) 69.43% 70.32% | 70.79% 60.67% 66.19% 69.88% 64.25% |
| Efficiency ratio (adjusted) (b) 69.19% 70.07% | 70.42% 66.55% 65.94% 69.64% 64.01% |
| Non-interest expense to average assets 2.38% 2.47% | 2.48% 2.33% 2.41% 2.42% 2.42% |
| Loans to deposits 83.26% 80.77% | 81.20% 78.05% 79.24% 83.26% 79.24% |
| **AVERAGE YIELDS / RATES - Fully Taxable Equivalent** |  |
| Yield on loans 5.52% 5.51% | 5.31% 5.21% 5.09% 5.51% 4.99% |
| Yield on investments 2.27% 2.35% | 2.24% 2.22% 2.22% 2.31% 2.20% |
| Yield on interest-earning assets 4.69% 4.70% | 4.50% 4.40% 4.29% 4.69% 4.20% |
| Cost of interest-bearing deposits 2.86% 2.75% | 2.59% 2.44% 2.01% 2.80% 1.68% |
| Cost of borrowings 5.04% 5.15% | 5.52% 5.25% 5.13% 5.10% 5.01% |
| Cost of interest-bearing liabilities 2.94% 2.85% | 2.68% 2.47% 2.11% 2.90% 1.81% |
| Interest rate spread 1.75% 1.85% | 1.82% 1.93% 2.18% 1.79% 2.39% |
| Net interest margin, fully taxable equivalent (b) 2.66% 2.73% | 2.69% 2.73% 2.87% 2.69% 3.00% |
| **CAPITAL** |  |
| Total equity to total assets at end of period 7.30% 7.08% | 7.20% 6.28% 6.63% 7.30% 6.63% |
| Tangible equity to tangible assets at end of period (b) 6.56% 6.34% | 6.45% 5.52% 5.87% 6.56% 5.87% |
| Book value per share $42.17 $41.34 | $41.07 $35.90 $37.49 $42.17 $37.49 |
| Tangible book value per share (b) 37.59 36.77 | 36.48 31.29 32.88 37.59 32.88 |
| Period-end market value per share 48.00 42.48 | 49.80 39.61 38.41 48.00 38.41 |
| Dividends declared per share 0.31 0.31 | 0.31 0.31 0.31 0.62 0.62 |
| **AVERAGE BALANCES** |  |
| Loans and loans held for sale (d) $2,009,823 $1,989,185 | $1,956,022 $1,909,100 $1,880,224 $1,999,504 $1,864,853 |
| Earning assets 2,699,402 2,681,059 | 2,654,638 2,627,012 2,609,893 2,690,230 2,601,349 |
| Total assets 2,740,967 2,724,391 | 2,688,536 2,664,570 2,649,399 2,732,679 2,643,964 |
| Deposits 2,419,169 2,402,215 | 2,397,663 2,410,931 2,363,847 2,410,692 2,350,734 |
| Total equity 195,375 195,860 | 174,868 179,700 180,357 195,618 177,089 |
| Tangible equity (b) 173,551 174,036 | 153,044 157,876 158,553 173,794 155,265 |
| **ASSET QUALITY** |  |
| Net charge-offs $306 $182 | $171 $356 $146 $488 $415 |
| Non-performing loans (e) 8,195 7,835 | 10,411 6,826 7,304 8,195 7,304 |
| Non-performing assets (f) 8,872 8,394 | 10,737 7,055 7,471 8,872 7,471 |
| Allowance for credit losses (a) 21,031 20,471 | 22,517 20,252 20,172 21,031 20,172 |
| Annualized net charge-offs to average loans 0.06% 0.04% | 0.03% 0.07% 0.03% 0.05% 0.04% |
| Non-performing loans to total loans 0.41% 0.39% | 0.53% 0.35% 0.39% 0.41% 0.39% |
| Non-performing assets to total assets 0.32% 0.30% | 0.40% 0.26% 0.28% 0.32% 0.28% |
| Allowance for credit losses to total loans (a) 1.05% 1.02% | 1.14% 1.05% 1.07% 1.05% 1.07% |
| Allowance for credit losses to non-performing loans (a) 256.63% 261.28% | 216.28% 296.69% 276.17% 256.63% 276.17% |
| (a) Corporation adopted CECL as of January 1, 2023. | (d) Does not reflect Allowance for Credit Losses. |
| (b) See the GAAP to Non-GAAP reconciliations. | (e) Includes nonaccrual loans only. |
| (c) Non-interest expense divided by total net interest income plus non-interest income. | (f) Includes non-performing loans, other real estate owned, and repossessions. |

49

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 77-80 for further explanation and reconciliation of the Corporation’s use of non-GAAP measures.

### Consolidated Results of Operations

The following section of the MD&A provides a comparative discussion of the Corporation’s Consolidated Results of Operations on a reported basis for the three and six months ended June 30, 2024 and 2023. For a discussion of the Critical Accounting Estimates that affect the Consolidated Results of Operations, see pages 38-39 of this Form 10-Q and pages 47-48 of the Corporation’s 2023 Form 10-K.

#### Net Income

The following table presents selected financial information for the periods indicated, and the dollar and percent change (in thousands, except per share and ratio data):

|  | Three Months Ended June 30, 2024 | 2023 | Change | % Change | Six Months Ended June 30, 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net interest income | $17,761 | $18,595 | $(834) | (4.5)% | $35,850 | $38,542 | $(2,692) | (7.0)% |
| Non-interest income | 5,598 | 5,447 | 151 | 2.8% | 11,255 | 10,870 | 385 | 3.5% |
| Non-interest expense | 16,219 | 15,913 | 306 | 1.9% | 32,917 | 31,749 | 1,168 | 3.7% |
| Pre-provision income | 7,140 | 8,129 | (989) | (12.2)% | 14,188 | 17,663 | (3,475) | (19.7)% |
| Provision (credit) for credit losses(1) | 879 | 236 | 643 | 272.5% | (1,161) | 513 | (1,674) | (326.3)% |
| Income tax expense | 1,274 | 1,613 | (339) | (21.0)% | 3,312 | 3,600 | (288) | (8.0)% |
| Net income | $4,987 | $6,280 | $(1,293) | (20.6)% | $12,037 | $13,550 | $(1,513) | (11.2)% |
| Basic and diluted earnings per share | $1.05 | $1.33 | $(0.28) | (21.1)% | $2.53 | $2.87 | $(0.34) | (11.8)% |

*(1) Effective January 1, 2023, the allowance calculation is based upon the Current Expected Credit loss methodology.*

| Selected financial ratios: | Three Months Ended June 30, 2024 | 2023 | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Return on average assets (a) | 0.73% | 0.95% | 0.89% | 1.03% |
| Return on average equity (a) | 10.27% | 13.97% | 12.37% | 15.43% |
| Net interest margin, fully taxable equivalent (b) | 2.66% | 2.87% | 2.69% | 3.00% |
| Efficiency ratio (adjusted) (b) | 69.19% | 65.94% | 69.64% | 64.01% |
| Non-interest expense to average assets | 2.38% | 2.41% | 2.42% | 2.42% |
| (a) Annualized. |  |  |  |  |
| (b) See the GAAP to Non-GAAP reconciliations. |  |  |  |  |

Net income for the second quarter of 2024 was $5.0 million, or $1.05 per share, compared to $6.3 million, or $1.33 per share, for the same period in the prior year. Return on average equity for the current quarter was 10.27%, compared to 13.97% for the same period in the prior year. The decrease in net income was attributable to a decrease in net interest income and increases in non-interest expense and the provision for credit losses, offset by a decrease in income tax expense, and an increase in non-interest income.

Net income for the six months ended June 30, 2024 was $12.0 million, or $2.53 per share, compared to $13.6 million, or $2.87 per share, for the same period in the prior year. Return on average equity for the six months ended June 30, 2024 was 12.37%, compared to 15.43% for the same period in the prior year. The decrease in net income was attributable to a decrease in net interest income and an increase in non-interest expense, offset by decreases in the provision for credit losses and income tax expense, and an increase in non-interest income.

#### Net Interest Income

The following table presents net interest income for the periods indicated, and the dollar and percent change (in thousands):

|  | Three Months Ended June 30, 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Interest and dividend income | $31,386 | $27,796 | $3,590 | 12.9% |
| Interest expense | 13,625 | 9,201 | 4,424 | 48.1% |
| Net interest income | $17,761 | $18,595 | $(834) | (4.5)% |

Net interest income, which is the difference between the interest income earned on interest-earning assets such as loans and securities, and the interest expense paid on interest-bearing liabilities such as deposits and borrowings, is the largest contributor to the Corporation’s earnings.

Net interest income for the second quarter of 2024 decreased $0.8 million, or 4.5%, to $17.8 million compared to the same period in the prior year, due primarily to increases of $4.2 million in interest expense on deposits and $0.2 million in interest expense on borrowed funds, and a decrease of $0.4 million in interest and dividend income on taxable securities, offset by increases of $3.7 million in interest income on loans, including fees and $0.3 million in interest income on interest-earning deposits.

The increase in interest expense on deposits was due primarily to a 85 basis points increase in the average interest rate paid on total interest-bearing deposits, which included brokered deposits, due to the higher interest rate environment and increased competition, and an increase of $152.9 million in the average balance of customer interest-bearing deposits, primarily due to an increase in average balances of time deposits. The increase in average balances of customer time deposits was partially due to the continuation of CD campaigns in the current period. The average balance of brokered deposits decreased $55.0 million, and the average interest rate paid on brokered deposits increased 23 basis points, compared to the same period in the prior year.

The increase in interest expense on borrowed funds was primarily due to a $15.4 million increase in the average balances of borrowed funds, partially offset by a decrease of nine basis points in the average interest rate paid on borrowed funds, compared to the same period in the prior year. The composition of borrowed funds reflected the Corporation's shift to the lower cost, short-term funding sources of the Federal Reserve Bank Term Funding Program (BTFP) and FHLBNY term advances, partially replacing relatively higher cost FHLBNY overnight advances in the current period. The average balance of FHLBNY overnight advances decreased $43.1 million, and the average interest rate paid on FHLBNY overnight advances increased 29 basis points compared to the same period in the prior year.

Interest income on loans, including fees, increased primarily due to a $151.0 million increase in average commercial loan balances, compared to the same period in the prior year, and an increase of 33 basis points in the average yield on commercial loans between these periods, due to the rising interest rate environment. Commercial loan growth was primarily concentrated in the Albany region of New York, with additional growth in Western New York. Average consumer loan balances decreased $9.9 million, primarily due to lower indirect auto loan originations in the first half of 2024 compared to the prior year, while the average yield on consumer loans increased 78 basis points, primarily due to originations of higher rate indirect auto loans and interest rate increases on variable rate home equity loans. Average balances of residential mortgage loans decreased $11.4 million compared to the same period in the prior year, due to lower origination activity and an increase in sales of new originations into the secondary market, while the average yield on residential mortgage loans increased 23 basis points compared to the same period in the prior year.

Interest and dividend income on taxable securities decreased primarily due to a $59.8 million decrease in the average balances of taxable securities, primarily due to paydowns and maturities, compared to the same period in the prior year. Interest income on interest-earning deposits increased due to an increase in average balances, compared to the same period in the prior year.

Fully taxable equivalent net interest margin was 2.66% for the second quarter of 2024, compared to 2.87% for the same period in the prior year. Average interest-earning assets increased $89.5 million for the three months ended June 30, 2024 compared to the same period in the prior year. The average yield on interest-earning assets increased 40 basis points to 4.69%, and the average cost of interest-bearing liabilities increased 83 basis points to 2.94%, for the three months ended June 30, 2024, compared to the same period in the prior year, due to the higher rate environment as well as a shift in the overall deposit mix to higher cost deposits.

The following table presents net interest income for the periods indicated, and the dollar and percent change (in thousands):

|  | Six Months Ended June 30, 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Interest and dividend income | $62,605 | $54,026 | $8,579 | 15.9% |
| Interest expense | 26,755 | 15,484 | 11,271 | 72.8% |
| Net interest income | $35,850 | $38,542 | $(2,692) | (7.0)% |

Net interest income for the six months ended June 30, 2024 totaled $35.9 million compared to $38.5 million for the same period in the prior year, a decrease of $2.7 million, or 7.0% due primarily to an increase of $11.3 million in interest expense, partially offset by an increase of $8.6 million in interest and dividend income. The increase in interest expense for the first six months of 2024 was primarily attributed to increases of $11.0 million in interest expense on deposits and $0.3 million in interest expense on borrowed funds. The increase in interest and dividend income for the first six months of 2024 was primarily attributed to increases of $8.6 million in interest income on loans, including fees, and $0.4 million in interest income on interest-earning deposits, offset by a decrease of $0.4 million in interest and dividend income on taxable securities.

The increase in interest expense on deposits was primarily due to an increase in the average balances of $170.9 million of customer time deposits, and a 133 basis points increase in the average interest rates paid on customer time deposits for the first six months of 2024, compared to the same period in the prior year. The increase in average balances of customer time deposits was primarily attributable to the funding of loan growth, as well as a shift in deposit demand towards higher cost account types. The increase in the average interest rates paid on customer time deposits was due primarily to the higher interest rate environment, as well as competitive pressures to attract and retain customer time deposits. The average balances of brokered deposits decreased $23.7 million, and the average interest rates paid on brokered deposits increased 36 basis points, for the first six months of 2024, compared to the same period in the prior year.

Also contributing to the increase in interest expense on deposits was an increase of $3.9 million in interest expense on savings and money market accounts, due to an increase of 96 basis points in the average interest rates paid, despite a decrease of $45.0 million in the average balances on savings and money market accounts, for the six months ended June 30, 2024, compared to the same period in the prior year. Interest expense paid on interest-bearing checking accounts increased $1.7 million, primarily due a 109 basis points increase in the average interest rates paid, for the six months ended June 30, 2024, compared to the same period in the prior year. The increase in interest expense on borrowed funds was due primarily to a nine basis points increase in the average interest rate paid on borrowed funds, and a $9.1 million increase in average balances of borrowed funds for the current six months, when compared to the same period in the prior year, in order to fund loan growth.

The increase in interest income on loans, including fees, was mostly attributable to an increase of $148.4 million in the average balances, and a 45 basis points increase in the average yields, of the commercial loan portfolio, primarily due to increases in average interest rates on new loan originations. Average yields on the residential and consumer loan portfolios also increased by 23 basis points and 83 basis points, respectively, for the six months ended June 30, 2024, due to increases on variable rate loans and originations within the indirect auto portfolio at higher interest rates, compared to the same period in the prior year. The increase in interest income on interest-earning deposits was primarily attributed to a $15.7 million increase in the average balances of interest-earning deposits.

The decrease in interest and dividend income on taxable securities was mostly attributable to a $60.8 million decrease in the average balances of taxable securities for the six months ended June 30, 2024, compared to the same period in the prior year. The decrease in the average balances of taxable securities was mostly attributable to paydowns on securities within the portfolio.

The average yield on interest-earning assets increased 49 basis points, to 4.69%, while the average cost of interest-bearing liabilities increased 109 basis points, to 2.90% for the six months ended June 30, 2024 compared to the same period in the prior year. Average interest-earning assets increased $88.9 million for the six months ended June 30, 2024 compared to the same period in the prior year. Fully taxable equivalent net interest margin was 2.69% for the six months ended June 30, 2024 compared to 3.00% for the same period in the prior year.

#### Average Consolidated Balance Sheets and Interest Analysis

The following tables present certain information related to the Corporation’s average consolidated balance sheets and its consolidated statements of income for the three and six months ended June 30, 2024 and 2023. For the purpose of the tables below, nonaccrual loans are included in the daily average loan amounts outstanding. Daily balances were used for average balance computations. Investment securities are stated at amortized cost. Tax equivalent adjustments have been made in calculating yields on obligations of states and political subdivisions, tax-free commercial loans, and dividends on equity investments.

*AVERAGE CONSOLIDATED BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS*

*($ in thousands)*

| Interest-earning assets: | Three Months Ended June 30, 2024 Average Balance | Interest | Yield/Rate (3) | Three Months Ended June 30, 2023 Average Balance | Interest | Yield/Rate (3) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Commercial loans | $1,439,085 | $21,005 | 5.87% | $1,288,113 | $17,791 | 5.54% |
| Mortgage loans | 273,482 | 2,569 | 3.76% | 284,916 | 2,509 | 3.53% |
| Consumer loans | 297,256 | 3,996 | 5.41% | 307,195 | 3,545 | 4.63% |
| Taxable securities | 620,201 | 3,254 | 2.11% | 680,020 | 3,633 | 2.14% |
| Tax-exempt securities | 39,567 | 276 | 2.81% | 40,541 | 294 | 2.91% |
| Interest-earning deposits | 29,811 | 367 | 4.95% | 9,108 | 116 | 5.11% |
| Total interest-earning assets | 2,699,402 | 31,467 | 4.69% | 2,609,893 | 27,888 | 4.29% |
| Non-interest earning assets: |  |  |  |  |  |  |
| Cash and due from banks | 25,054 |  |  | 25,168 |  |  |
| Other assets | 37,120 |  |  | 34,478 |  |  |
| Allowance for credit losses (4) | (20,609) |  |  | (20,140) |  |  |
| Total assets | $2,740,967 |  |  | $2,649,399 |  |  |
| Interest-bearing liabilities: |  |  |  |  |  |  |
| Interest-bearing demand deposits | $305,620 | $1,391 | 1.83% | $286,573 | $723 | 1.01% |
| Savings and insured money market deposits | 854,456 | 4,317 | 2.03% | 902,741 | 3,050 | 1.36% |
| Time deposits | 529,063 | 5,643 | 4.29% | 346,953 | 2,679 | 3.10% |
| Brokered deposits | 101,182 | 1,360 | 5.41% | 156,196 | 2,017 | 5.18% |
| FHLBNY overnight advances | 10,824 | 151 | 5.52% | 53,965 | 703 | 5.23% |
| FRB advances and other debt | 61,809 | 763 | 4.96% | 3,213 | 29 | 3.62% |
| Total interest-bearing liabilities | 1,862,954 | 13,625 | 2.94% | 1,749,641 | 9,201 | 2.11% |
| Non-interest-bearing liabilities: |  |  |  |  |  |  |
| Demand deposits | 628,848 |  |  | 671,384 |  |  |
| Other liabilities | 53,790 |  |  | 48,017 |  |  |
| Total liabilities | 2,545,592 |  |  | 2,469,042 |  |  |
| Shareholders' equity | 195,375 |  |  | 180,357 |  |  |
| Total liabilities and shareholders’ equity | $2,740,967 |  |  | $2,649,399 |  |  |
| Fully taxable equivalent net interest income |  | 17,842 |  |  | 18,687 |  |
| Net interest rate spread (1) |  |  | 1.75% |  |  | 2.18% |
| Net interest margin, fully taxable equivalent (2) |  |  | 2.66% |  |  | 2.87% |
| Taxable equivalent adjustment |  | (81) |  |  | (92) |  |
| Net interest income |  | $17,761 |  |  | $18,595 |  |

*(1) Net interest rate spread is the difference in the average yield on interest-earning assets less the average rate on interest-bearing liabilities.*

*(2) Net interest margin is the ratio of fully taxable equivalent net interest income divided by average interest-earning assets.*

#### (3) Annualized.

#### (4) Corporation adopted CECL as of January 1, 2023.

*AVERAGE CONSOLIDATED BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS*

*($ in thousands)*

| Interest-earning assets: | Six Months Ended June 30, 2024 Average Balance | Interest | Yield/ Rate (3) | Six Months Ended June 30, 2023 Average Balance | Interest | Yield/ Rate (3) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Commercial loans | $1,423,018 | $41,647 | 5.89% | $1,274,658 | $34,376 | 5.44% |
| Mortgage loans | 275,571 | 5,166 | 3.75% | 285,251 | 4,981 | 3.52% |
| Consumer loans | 300,915 | 8,012 | 5.35% | 304,944 | 6,830 | 4.52% |
| Taxable securities | 626,747 | 6,814 | 2.19% | 687,508 | 7,218 | 2.12% |
| Tax-exempt securities | 39,916 | 558 | 2.81% | 40,654 | 599 | 2.97% |
| Interest-earning deposits | 24,063 | 573 | 4.79% | 8,334 | 213 | 5.15% |
| Total interest-earning assets | 2,690,230 | 62,770 | 4.69% | 2,601,349 | 54,217 | 4.20% |
| Non-interest earning assets: |  |  |  |  |  |  |
| Cash and due from banks | 25,154 |  |  | 25,126 |  |  |
| Other assets | 38,893 |  |  | 37,608 |  |  |
| Allowance for credit losses (4) | (21,598) |  |  | (20,119) |  |  |
| Total assets | $2,732,679 |  |  | $2,643,964 |  |  |
| Interest-bearing liabilities: |  |  |  |  |  |  |
| Interest-bearing demand deposits | $306,758 | $2,725 | 1.79% | $288,819 | $996 | 0.70% |
| Savings and insured money market deposits | 859,785 | 8,583 | 2.01% | 904,832 | 4,699 | 1.05% |
| Time deposits | 505,512 | 10,547 | 4.20% | 334,662 | 4,771 | 2.87% |
| Brokered deposits | 111,295 | 3,001 | 5.42% | 134,991 | 3,390 | 5.06% |
| FHLBNY overnight advances | 22,849 | 639 | 5.53% | 62,286 | 1,570 | 5.08% |
| FRB advances and other debt | 51,638 | 1,260 | 4.91% | 3,247 | 58 | 3.60% |
| Total interest-bearing liabilities | 1,857,837 | 26,755 | 2.90% | 1,728,837 | 15,484 | 1.81% |
| Non-interest-bearing liabilities: |  |  |  |  |  |  |
| Demand deposits | 627,342 |  |  | 687,430 |  |  |
| Other liabilities | 51,882 |  |  | 50,608 |  |  |
| Total liabilities | 2,537,061 |  |  | 2,466,875 |  |  |
| Shareholders' equity | 195,618 |  |  | 177,089 |  |  |
| Total liabilities and shareholders’ equity | $2,732,679 |  |  | $2,643,964 |  |  |
| Fully taxable equivalent net interest income |  | 36,015 |  |  | 38,733 |  |
| Net interest rate spread (1) |  |  | 1.79% |  |  | 2.39% |
| Net interest margin, fully taxable equivalent (2) |  |  | 2.69% |  |  | 3.00% |
| Taxable equivalent adjustment |  | (165) |  |  | (191) |  |
| Net interest income |  | $35,850 |  |  | $38,542 |  |

*(1) Net interest rate spread is the difference in the average yield on interest-earning assets less the average rate on interest-bearing liabilities.*

*(2) Net interest margin is the ratio of fully taxable equivalent net interest income divided by average interest-earning assets.*

#### (3) Annualized.

#### (4) Corporation adopted CECL as of January 1, 2023.

#### Changes Due to Rate and Volume

Net interest income can be analyzed in terms of the impact of changes in rates and volumes. The tables below illustrate the extent to which changes in interest rates and the volume of average interest-earning assets and interest-bearing liabilities have affected the Corporation’s interest income and interest expense during the three and six months ended June 30, 2024 and 2023. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate); (ii) changes attributable to changes in rates (changes in rates multiplied by prior volume); and (iii) the net changes. For purpose of these tables, changes that are not due solely to volume or rate changes have been allocated to these categories based on the respective percentage changes in average volume and rate. Due to the numerous simultaneous volume and rate changes during the periods analyzed, it is not possible to precisely allocate changes between volume and rates. In addition, average interest-earning assets include nonaccrual loans and taxable equivalent adjustments were made.

*RATE/VOLUME ANALYSIS OF NET INTEREST INCOME*

*(in thousands)*

| Interest and dividend income on: | Three Months Ended June 30, 2024 vs. 2023 Increase/(Decrease) Total Change | Due to Volume | Due to Rate |
| --- | ---: | ---: | ---: |
| Commercial loans | $3,214 | $2,131 | $1,083 |
| Mortgage loans | 60 | (102) | 162 |
| Consumer loans | 451 | (120) | 571 |
| Taxable investment securities | (379) | (327) | (52) |
| Tax-exempt investment securities | (18) | (7) | (11) |
| Interest-earning deposits | 251 | 255 | (4) |
| Total interest and dividend income, fully taxable equivalent | 3,579 | 1,830 | 1,749 |
| Interest expense on: |  |  |  |
| Interest-bearing demand deposits | 668 | 51 | 617 |
| Savings and insured money market deposits | 1,267 | (171) | 1,438 |
| Time deposits | 2,964 | 1,712 | 1,252 |
| Brokered deposits | (657) | (743) | 86 |
| FHLBNY overnight advances | (552) | (589) | 37 |
| FRB advances and other debt | 734 | 719 | 15 |
| Total interest expense | 4,424 | 979 | 3,445 |
| Net interest income, fully taxable equivalent | $(845) | $851 | $(1,696) |

55

*RATE/VOLUME ANALYSIS OF NET INTEREST INCOME*

*(in thousands)*

| Interest and dividend income on: | Six Months Ended June 30, 2024 vs. 2023 Increase/(Decrease) Total Change | Due to Volume | Due to Rate |
| --- | ---: | ---: | ---: |
| Commercial loans | $7,271 | $4,250 | $3,021 |
| Mortgage loans | 185 | (160) | 345 |
| Consumer loans | 1,182 | (90) | 1,272 |
| Taxable investment securities | (404) | (644) | 240 |
| Tax-exempt investment securities | (41) | (10) | (31) |
| Interest-earning deposits | 360 | 376 | (16) |
| Total interest and dividend income, fully taxable equivalent | 8,553 | 3,722 | 4,831 |
| Interest expense on: |  |  |  |
| Interest-bearing demand deposits | 1,729 | 66 | 1,663 |
| Savings and insured money market deposits | 3,884 | (247) | 4,131 |
| Time deposits | 5,776 | 3,028 | 2,748 |
| Brokered deposits | (389) | (622) | 233 |
| FHLBNY overnight advances | (931) | (1,062) | 131 |
| FRB advances and other debt | 1,202 | 1,173 | 29 |
| Total interest expense | 11,271 | 2,336 | 8,935 |
| Net interest income, fully taxable equivalent | $(2,718) | $1,386 | $(4,104) |

### Provision for credit losses

Management has established and maintains a methodology for determining and adjusting its allowance for credit losses in conformity with ASU 2016-13, *Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,* adopted by the Corporation on January 1, 2023. The allowance is based on a combination of quantitative and qualitative analysis and changes in the required allowance are recorded through income as a provision (credit). The quantitative portion of the model is significantly influenced by changes in projected economic conditions, as well as changes in the composition of the numerous loan portfolio segments. Qualitative adjustments reflect the degree to which management anticipates future outcomes may differ from those projected by the quantitative model.

The provision for credit losses increased $0.6 million for the second quarter of 2024, compared to the same period in the prior year. The increase was primarily attributable to less favorable changes in FOMC forecasted variables between the first and second quarters of 2024, compared to the favorable changes between the first and second quarters of 2023, a decline in modeled prepayment speeds, and a $0.2 million specific allocation on a commercial and industrial loan. FOMC projections for 2024 year-end U.S. civilian unemployment were unchanged between March and June 2024, while the 2025 year-end projections deteriorated slightly between March and June 2024, from 4.1% to 4.2%. Projections for 2024 and 2025 annual U.S. real GDP growth were unchanged between March and June 2024. 2024 and 2025 projections impacted the model equally for the second quarter of 2024. Total net charge offs increased $0.2 million in the second quarter of 2024, compared to the same period in the prior year.

The provision for credit losses for the six months ended June 30, 2024, was a credit of $1.2 million compared to a provision of $0.5 million for the same period in the prior year. The $1.7 million decrease in the provision for credit losses in the six months ended June 30, 2024, compared to the same period in the prior year, was primarily due to the annual review and update to the loss drivers used in the Bank's CECL model, which was reflected in the Corporation's allowance for credit losses in the first quarter of 2024. Loss drivers are the economic variables used when making forward looking projections to determine correlations between changes in economic variables and changes in historical loss experience. Recalibration of the loss drivers resulted in a decline in baseline loss rates utilized by the model, however the economic variables used were unchanged.

Net charge-offs for the three months ended June 30, 2024 were $0.3 million, compared to $0.1 million for the same period in the prior year. Net charge-offs for each of the three months ended June 30, 2024 and June 30, 2023 were primarily concentrated in the consumer indirect auto portfolio.

Net charge-offs for the six months ended June 30, 2024 were $0.5 million, compared to $0.4 million for the same period in the prior year. Net charge-offs for the six months ended June 30, 2024 were concentrated in the consumer indirect auto portfolio. Net charge-offs for the six months ended June 30, 2023 were primarily attributable to charge-offs in the consumer indirect auto portfolio, and a $0.2 million charge-off of a commercial and industrial loan.

### Non-interest income

The following table presents non-interest income for the periods indicated, and the dollar and percent change (dollars in thousands):

|  | Three Months Ended June 30, 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| WMG fee income | $2,860 | $2,603 | $257 | 9.9% |
| Service charges on deposit accounts | 964 | 959 | 5 | 0.5% |
| Interchange revenue from debit card transactions | 1,141 | 1,194 | (53) | (4.4)% |
| Changes in fair value of equity investments | 14 | (103) | 117 | N/M |
| Net gains on sales of loans held for sale | 39 | 18 | 21 | N/M |
| Net gains (losses) on sales of other real estate owned | (3) | 14 | (17) | N/M |
| Income from bank owned life insurance | 10 | 11 | (1) | N/M |
| CFS fee and commission income | 253 | 265 | (12) | (4.5)% |
| Other | 320 | 486 | (166) | (34.2)% |
| Total non-interest income | $5,598 | $5,447 | $151 | 2.8% |

Total non-interest income for the second quarter of 2024 increased $0.2 million compared to the same period in the prior year primarily due to an increases in WMG fee income and changes in fair value of equity investments, partially offset by a decrease in other non-interest income.

#### WMG Fee Income

The increase in WMG fee income can primarily be attributed to an increase in assets under management compared to the same period in the prior year.

#### Changes in Fair Value Equity Investments

The increase in changes in fair value of equity investments can primarily be attributed to a decline in the market value of a particular asset held by the Corporation during the same period in the prior year.

#### Other Non-Interest Income

The decrease in other non-interest income can primarily be attributed to a decrease in swap fee income during the current period, compared to the same period in the prior year.

The following table presents non-interest income for the periods indicated, and the dollar and percent change (in thousands):

|  | Six Months Ended June 30, 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| WMG fee income | $5,563 | $5,183 | $380 | 7.3% |
| Service charges on deposit accounts | 1,913 | 1,900 | 13 | 0.7% |
| Interchange revenue from debit card transactions | 2,204 | 2,327 | (123) | (5.3)% |
| Changes in fair value of equity investments | 115 | (31) | 146 | 471.0% |
| Net gains on sales of loans held for sale | 71 | 23 | 48 | 208.7% |
| Net gains (losses) on sales of other real estate owned | (3) | 14 | (17) | (121.4)% |
| Income from bank owned life insurance | 19 | 21 | (2) | (9.5)% |
| CFS fee and commission income | 481 | 506 | (25) | (4.9)% |
| Other | 892 | 927 | (35) | (3.8)% |
| Total non-interest income | $11,255 | $10,870 | $385 | 3.5% |

Total non-interest income for the six months ended June 30, 2024 increased $0.4 million compared to the same period in the prior year. The increase was primarily due to increases in WMG fee income and changes in fair value of equity investments, offset by a decrease in interchange revenue from debit card transactions.

#### WMG Fee Income

The increase in WMG fee income can primarily be attributed to an increase in assets under management compared to the same period in the prior year.

#### Changes in Fair Value of Equity Investments

The increase in the changes in fair value of equity investments was primarily due to an increase in the market value of assets held related to the Corporation's deferred compensation plan, relating to improvements in the financial markets compared to the same period in the prior year. This increase was also attributed to decline in the fair value of a particular equity investment held by the Corporation during the same period in the prior year.

#### Interchange Revenue from Debit Card Transactions

The decrease in interchange revenue from debit card transactions was primarily due to a decrease in client transaction volume compared to the same period in the prior year.

### Non-interest expense

The following table presents non-interest expense for the periods indicated, and the dollar and percent change (dollars in thousands):

| Compensation expense: | Three Months Ended June 30, 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Salaries and wages | $6,823 | $6,704 | $119 | 1.8% |
| Pension and other employee benefits | 2,078 | 1,808 | 270 | 14.9% |
| Other components of net periodic pension and postretirement benefits | (232) | (174) | (58) | (33.3)% |
| Total compensation expense | 8,669 | 8,338 | 331 | 4.0% |
| **Non-compensation expense:** |  |  |  |  |
| Net occupancy | 1,445 | 1,440 | 5 | 0.3% |
| Furniture and equipment | 397 | 461 | (64) | (13.9)% |
| Data processing | 2,297 | 2,473 | (176) | (7.1)% |
| Professional services | 558 | 602 | (44) | (7.3)% |
| Marketing and advertising | 388 | 170 | 218 | 128.2% |
| Other real estate owned expenses | 12 | 1 | 11 | N/M |
| FDIC insurance | 516 | 586 | (70) | (11.9)% |
| Loan expenses | 200 | 308 | (108) | (35.1)% |
| Other | 1,737 | 1,534 | 203 | 13.2% |
| Total non-compensation expense | 7,550 | 7,575 | (25) | (0.3)% |
| Total non-interest expense | $16,219 | $15,913 | $306 | 1.9% |

Total non-interest expense for the second quarter of 2024 increased $0.3 million compared to the same period in the prior year. The increase was due to an increase in total compensation expense, offset by a decrease in non-compensation expense. For the three months ended June 30, 2024, non-interest expense to average assets was 2.38%, compared to 2.41% for the same period in the prior year.

#### Compensation expense

The increase in compensation expense for the current period, compared to the same period in the prior year, can be primarily attributed to increases in pension and other employee benefits and salaries and wages. The increase in pension and other employee benefits for the current quarter was primarily attributable to an increase in employee healthcare expense, compared to the same period in the prior year. Salaries and wages increased in the current period, compared to the same period in the prior year primarily due to increases in base wages and an increase in the market value of the Corporation's deferred compensation plan.

#### Non-compensation expense

The decrease in non-compensation expense for the current period, compared to the same period in the prior year, can be primarily attributed to decreases in data processing and loan expenses, offset by increases in marketing and advertising and other non-interest expense. The decrease in data processing for the current period compared to the same period in the prior year was primarily due to a decrease in core processing expenses. The decrease in loan expenses was partially attributable to lower collection-related fees and overall lower origination activity in the current period. Marketing and advertising increased during the current period compared to the same period in the prior year primarily due to a deposit account promotion related to the Bank's 190th anniversary, increased advertising activity in the current period, and consulting engagements. Other non-interest expense increased primarily due to an increase in expenses related to community relations and other miscellaneous expenses.

The following table presents non-interest expense for the periods indicated, and the dollar and percent change (in thousands):

| Compensation expense: | Six Months Ended June 30, 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Salaries and wages | $13,839 | $13,487 | $352 | 2.6% |
| Pension and other employee benefits | 4,160 | 3,488 | 672 | 19.3% |
| Other components of net periodic pension and postretirement benefits | (464) | (348) | (116) | (33.3)% |
| Total compensation expense | 17,535 | 16,627 | 908 | 5.5% |
| **Non-compensation expense:** |  |  |  |  |
| Net occupancy | 2,938 | 2,905 | 33 | 1.1% |
| Furniture and equipment | 795 | 879 | (84) | (9.6)% |
| Data processing | 4,870 | 4,854 | 16 | 0.3% |
| Professional services | 1,117 | 1,042 | 75 | 7.2% |
| Marketing and advertising | 733 | 502 | 231 | 46.0% |
| Other real estate owned expenses | 61 | 39 | 22 | 56.4% |
| FDIC insurance | 1,093 | 1,083 | 10 | 0.9% |
| Loan expenses | 455 | 540 | (85) | (15.7)% |
| Other | 3,320 | 3,278 | 42 | 1.3% |
| Total non-compensation expense | 15,382 | 15,122 | 260 | 1.7% |
| Total non-interest expense | $32,917 | $31,749 | $1,168 | 3.7% |

Total non-interest expense for the six months ended June 30, 2024 increased $1.2 million compared to the same period in the prior year. The increase was due to increases in total compensation expense and total non-compensation expense. For each of the six months ended June 30, 2024 and 2023, non-interest expense to average assets was 2.42%.

#### Compensation expense

The increase in compensation expense for the current period, compared to the same period in the prior year, can be primarily attributed to increases in pension and other employee benefits and salaries and wages, offset by a decrease in other components of net periodic pension and postretirement benefits. The increase in pension and other employee benefits was attributable to an increase in healthcare related expenses for the current period, compared to the same period in the prior year. The increase in salaries and wages was primarily due to increases in base salaries and wages, which offset savings realized due to outsourcing, compared to the same period in the prior year. The decrease in other components of net periodic pension and postretirement benefits was primarily due to actuarial adjustments related to the Corporation's pension plans.

#### Non-compensation expense

The increase in non-compensation expense can primarily be attributed to increases in marketing and advertising and professional services, offset by a decrease in loan expenses. Marketing and advertising increased during the current period compared to the same period in the prior year primarily due to expenditures related to a deposit account promotion related to the Bank's 190th anniversary, and an increase in advertising activity in the current period. Professional services increased in the current period, compared to the same period in the prior year, primarily due to outsourced services related to the realignment of certain back office functions, new strategic consulting arrangements, and fee increases. The decrease in loan expenses was partially attributable to lower collection-related fees and overall lower origination activity.

### Income tax expense

The following table presents income tax expense and the effective tax rate for the periods indicated, and the dollar and percent change (dollars in thousands):

|  | Three Months Ended June 30, 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Income before income tax expense | $6,261 | $7,893 | $(1,632) | (20.7)% |
| Income tax expense | $1,274 | $1,613 | $(339) | (21.0)% |
| Effective tax rate | 20.3% | 20.4% |  |  |

Income tax expense for the three month periods ended June 30, 2024 and 2023 were $1.3 million and $1.6 million, respectively. The decrease in income tax expense was due primarily to a decrease of $1.6 million in income before income tax expense. The effective income tax rate decreased from 20.4% for the three months ended June 30, 2023 to 20.3% for the three months ended June 30, 2024.

The following table presents income tax expense and the effective tax rate for the periods indicated, and the dollar and percent change (in thousands):

|  | Six Months Ended June 30, 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Income before income tax expense | $15,349 | $17,150 | $(1,801) | (10.5)% |
| Income tax expense | $3,312 | $3,600 | $(288) | (8.0)% |
| Effective tax rate | 21.6% | 21.0% |  |  |

Income tax expense for the six month periods ended June 30, 2024 and 2023 were $3.3 million and $3.6 million, respectively. The decrease in income tax expense was due primarily to a decrease of $1.8 million in income before income tax expense. The effective income tax rate increased from 21.0% for the six months ended June 30, 2023 to 21.6% for the six months ended June 30, 2024.

### Financial Condition

The following table presents selected financial information as of the dates indicated, and the dollar and percent change (dollars in thousands):

| ASSETS | June 30, 2024 | December 31, 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Total cash and cash equivalents | $70,217 | $36,847 | $33,370 | 90.6% |
| Total investment securities, FHLB and FRB stock | 560,180 | 593,322 | (33,142) | (5.6)% |
| Loans, net of deferred loan fees | 2,011,472 | 1,972,664 | 38,808 | 2.0% |
| Allowance for credit losses | (21,031) | (22,517) | (1,486) | (6.6)% |
| Loans, net | 1,990,441 | 1,950,147 | 40,294 | 2.1% |
| Goodwill and other intangible assets, net | 21,824 | 21,824 | — | —% |
| Other assets | 113,151 | 108,389 | 4,762 | 4.4% |
| Total assets | $2,755,813 | $2,710,529 | $45,284 | 1.7% |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |  |  |
| Total deposits | $2,415,921 | $2,429,427 | $(13,506) | (0.6)% |
| Advances and other debt | 83,835 | 34,970 | 48,865 | 139.7% |
| Other liabilities | 54,835 | 50,891 | 3,944 | 7.7% |
| Total liabilities | 2,554,591 | 2,515,288 | 39,303 | 1.6% |
| Total shareholders’ equity | 201,222 | 195,241 | 5,981 | 3.1% |
| Total liabilities and shareholders’ equity | $2,755,813 | $2,710,529 | $45,284 | 1.7% |

#### Cash and Cash Equivalents

The increase in cash and cash equivalents can be attributed to changes in loans, deposits, borrowings, and securities.

#### Investment securities

The decrease in investment securities can mostly be attributed to $26.7 million in paydowns and maturities in the securities available for sale portfolio and a decrease in the fair value of the available for sale securities portfolio of $5.3 million.

#### Loans, net

The increase in loans, net of deferred loan fees, can primarily be attributed to increases of $31.8 million in commercial mortgages and $26.2 million in commercial and industrial loans, offset by decreases of $12.0 million in indirect consumer loans and $6.4 million in residential mortgages.

#### Allowance for Credit Losses

The decrease in the allowance for credit losses can primarily be attributed to the annual review and update of loss drivers used in the Bank's CECL model. The annual update to the loss drivers used in the Bank's CECL model resulted in baseline loss rates that were lower than in previous iterations of the model. This decrease was partially offset by lower modeled prepayment speeds and growth in the loan portfolio. FOMC forecasted economic variables used in the Bank's CECL model were stable between December 2023 and June 2024, with a slight deterioration in 2025 year-end U.S. civilian unemployment rate and improvement in both 2024 and 2025 year-end U.S. real GDP growth.

#### Other Assets

The increase in other assets can primarily be attributed to increases of $1.5 million in interest rate swap assets, due to an increase in the market value of swaps, and $1.5 million in deferred tax assets.

#### Deposits

The decrease in deposits can primarily be attributed to decreases of $34.0 million in non-interest bearing demand deposits and $10.6 million in insured money market deposits. Total time deposits decreased $5.6 million, primarily due to a $73.3 million decrease in brokered deposits, offset by an increase of $67.7 million in customer time deposits. Additionally, savings deposits decreased $0.6 million. These decreases were partially offset by an increase of $37.2 million in interest bearing demand deposits.

#### Advances and Other Debt

The increase in advances and other debt can primarily be attributed to a $50.0 million advance from the Federal Reserve Bank Term Funding Program (BTFP), and a $30.0 million short-term advance from the FHLBNY, offset by a decrease of $31.9 million in FHLBNY overnight borrowings.

#### Other liabilities

The increase in other liabilities can primarily be attributed to increases of $1.2 million in interest payable on borrowed funds,$0.9 million in interest payable on deposits, and $1.5 million in interest rate swap liabilities, which was primarily due to an increase in the market value of swaps.

#### Shareholders’ equity

Shareholders’ equity was $201.2 million at June 30, 2024 compared to $195.2 million at December 31, 2023. The increase can primarily be attributed to an increase of $9.1 million in retained earnings, partially offset by an increase in accumulated other comprehensive loss of $3.9 million. The increase in retained earnings can primarily be attributed to net income of $12.0 million, offset by $2.9 million in dividends declared, during the six months ended June 30, 2024. The increase in accumulated other comprehensive loss can primarily be attributed to a decrease in the fair market value of the available for sale securities portfolio due to unfavorable changes in market interest rates.

#### Assets under management or administration

The market value of total assets under management or administration in WMG was $2.377 billion as of June 30, 2024, including $412.1 million of assets held under management or administration for the Corporation, compared to $2.242 billion as of December 31, 2023, including $381.3 million of assets held under management or administration for the Corporation, an increase of $134.9 million, or 6.0%, due to an increase in assets under management primarily attributable to improvements in financial markets.

### Securities

The Corporation’s Funds Management Policy includes an investment policy that in general, requires debt securities purchased for the bond portfolio to carry a minimum agency rating of "Baa." After an independent credit analysis is performed, the policy also allows the Corporation to purchase local municipal obligations that are not rated. The Corporation intends to maintain a reasonable level of securities to provide adequate liquidity and in order to have securities available to pledge to secure public deposits, repurchase agreements, and other types of transactions. Fluctuations in the fair value of the Corporation’s securities relate primarily to changes in interest rates. Marketable securities are generally classified as Available for Sale, while certain investments in local municipal obligations are classified as Held to Maturity.

The available for sale segment of the securities portfolio totaled $550.9 million as of June 30, 2024, a decrease of $33.1 million, or 5.7%, from $584.0 million as of December 31, 2023. The decrease can mostly be attributed to $26.7 million in paydowns and maturities, and a decrease in the fair value of the portfolio of $5.3 million. The held to maturity securities portfolio consists of obligations of political subdivisions in the Corporation’s market areas. These securities totaled $0.7 million and $0.8 million as of June 30, 2024 and December 31, 2023, respectively.

Non-marketable equity securities as of June 30, 2024 and December 31, 2023 include shares of FRBNY stock and FHLBNY stock, carried at their cost. For each period, FRBNY stock and FHLBNY stock were $1.9 million and $3.6 million, respectively. The fair value of these securities is assumed to approximate their cost. The investment in these stocks is regulated by regulatory policies of the respective institutions.

### Loans

The table below presents the Corporation’s loan composition by segment as of the dates indicated, and the dollar and percent change from December 31, 2023 to June 30, 2024 (dollars in thousands):

*LOAN PORTFOLIO COMPOSITION*

|  | June 30, 2024 | % of Total Loans | December 31, 2023 | % of Total Loans | Dollar Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Commercial and industrial | $290,546 | 14.5% | $264,396 | 13.4% | $26,150 | 9.9% |
| Commercial mortgages: |  |  |  |  |  |  |
| Construction | 146,369 | 7.3% | 138,887 | 7.0% | 7,482 | 5.4% |
| Commercial mortgages, other | 1,008,343 | 50.1% | 984,038 | 49.9% | 24,305 | 2.5% |
| Residential mortgages | 271,620 | 13.5% | 277,992 | 14.1% | (6,372) | (2.3)% |
| Consumer loans: |  |  |  |  |  |  |
| Home equity lines and loans | 87,228 | 4.3% | 87,056 | 4.4% | 172 | 0.2% |
| Indirect consumer loans | 198,407 | 9.9% | 210,423 | 10.7% | (12,016) | (5.7)% |
| Direct consumer loans | 8,959 | 0.4% | 9,872 | 0.5% | (913) | (9.2)% |
| Total | $2,011,472 | 100.0% | $1,972,664 | 100.0% | $38,808 | 2.0% |

Portfolio loans totaled $2.011 billion as of June 30, 2024, an increase of $38.8 million, or 2.0%, from $1.973 billion as of December 31, 2023. The increase in loans can primarily be attributed to increases of $31.8 million in commercial mortgage loans and $26.2 million in commercial and industrial loans, offset by decreases of $12.0 million in indirect consumer loans and $6.4 million in residential mortgages.

Commercial lending continues to be a primary driver of asset growth for the Corporation, as demand for project financing remains robust, particularly in the Albany region. As of June 30, 2024, total commercial real estate loans, inclusive of construction loans, in the Capital region grew by $21.1 million. Commercial real estate loan growth in the Southern Tier of New York and Western New York regions were $5.5 million and $5.1 million, respectively. Growth in commercial and industrial loans between December 31, 2023 and June 30, 2024 was also concentrated in the Capital region, growing by $16.9 million. Commercial and industrial loan growth in the Southern Tier of New York and Western New York regions were $6.3 million and $2.9 million, respectively.

Residential mortgage loans totaled $271.6 million as of June 30, 2024, a decrease of $6.4 million, or 2.3%, compared to December 31, 2023. During the six months ended June 30, 2024, $13.0 million in residential mortgages were originated, of which $4.3 million were sold in the secondary market to Freddie Mac and FHLBNY. Demand for residential mortgage originations continues to be weaker as a result of the higher interest rate environment and low market mobility due to many borrowers securing lower interest rates in prior years. Indirect consumer loans totaled $198.4 million as of June 30, 2024, a decrease of $12.0 million, or 5.7%, from December 31, 2023 as consumer demand for auto originations continued to favor lower-cost used vehicles and turnover in the portfolio exceeded total origination activity.

The table below presents the Corporation’s outstanding loan balances by Bank division (in thousands):

*LOANS BY DIVISION*

|  | June 30, 2024 | December 31, 2023 | December 31, 2022 | December 31, 2021 | December 31, 2020 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Chemung Canal Trust Company\* | $653,569 | $665,701 | $651,516 | $592,172 | $658,468 |
| Capital Bank Division | 1,244,863 | 1,206,561 | 1,098,104 | 879,105 | 877,995 |
| Canal Bank Division | 113,040 | 100,402 | 79,828 | 46,972 | — |
| Total loans | $2,011,472 | $1,972,664 | $1,829,448 | $1,518,249 | $1,536,463 |

*\* All loans, excluding those originated by the Capital Bank and Canal Bank divisions.*

Commercial real estate lending represented the largest portion of the Corporation's loan portfolio as of June 30, 2024 and December 31, 2023. Commercial real estate lending is comprised of the "Construction" and "Commercial mortgage, other" segments of the loan portfolio, as presented in Note 4 - Loans and Allowance for Credit Losses to the Consolidated Financial Statements. As of June 30, 2024 and December 31, 2023, total commercial real estate loans totaled $1.155 billion and $1.123 billion, respectively. Management evaluates the risk inherent in its portfolio of commercial real estate loans using a variety of metrics, including but not limited to type, geography, collateral, and borrower or sponsor industry.

The table below presents commercial real estate loans by type and percentage as of June 30, 2024 and December 31, 2023 (dollars in thousands):

| Commercial real estate loans by type: | June 30, 2024 | % of Total | December 31, 2023 | % of Total | % Change |
| --- | ---: | ---: | ---: | ---: | ---: |
| Construction | $146,369 | 12.7% | $138,887 | 12.4% | 5.4% |
| 1-4 Family Residential(1) | 45,946 | 4.0% | 45,792 | 4.1% | 0.3% |
| Multifamily | 346,524 | 30.0% | 349,327 | 31.1% | (0.8)% |
| Owner-Occupied | 128,981 | 11.2% | 123,989 | 11.0% | 4.0% |
| Non-Owner Occupied | 486,892 | 42.1% | 464,930 | 41.4% | 4.7% |
| Total | $1,154,712 | 100.0% | $1,122,925 | 100.0% |  |

(1) *1-4 Family residential loans included in the commercial real estate portfolio segment are comprised of properties whose primary purpose is to generate rental income for the borrower, but are not considered multifamily properties within the confines of the FFIEC's Call Report definition of a multifamily property. This may include single family residences, duplexes, triplexes, and quadplexes.*

Commercial real estate loans are primarily made within the counties comprising the geographic footprint of the Corporation's physical branch network, as well as to borrowers whose business interests include projects that may be located in counties that are geographically contiguous with the Corporation's physical footprint. The location of collateral securing commercial real estate loans typically mirrors the location of the properties being financed. However, certain commercial real estate loans are secured by property other than the property being financed, and therefore the geographic location of collateral may differ from that of the financed property.

The table below presents commercial real estate loans by regional location of collateral and percentage as of June 30, 2024 and December 31, 2023 (dollars in thousands):

| Commercial real estate loans by regional location of collateral: | June 30, 2024 | % of Total | December 31, 2023 | % of Total | % Change |
| --- | ---: | ---: | ---: | ---: | ---: |
| Capital & Adirondacks | $743,281 | 64.4% | $736,971 | 65.6% | 0.9% |
| Southern Tier & Finger Lakes | 227,178 | 19.7% | 213,970 | 19.1% | 6.2% |
| Western New York | 132,806 | 11.5% | 123,202 | 11.0% | 7.8% |
| Other | 51,447 | 4.4% | 48,782 | 4.3% | 5.5% |
| Total | $1,154,712 | 100.0% | $1,122,925 | 100.0% |  |

65

The Corporation closely monitors economic and credit trends for the industries in which its commercial real estate borrowers are involved. Property types are designated based on the purpose of the collateral securing commercial real estate loans. The table below presents commercial real estate loans by borrower industry and percentage as of June 30, 2024 and December 31, 2023 (dollars in thousands):

| Commercial real estate loans by borrower industry: | June 30, 2024 | % of Total | December 31, 2023 | % of Total | % Change |
| --- | ---: | ---: | ---: | ---: | ---: |
| Construction & Land Development | $146,369 | 12.7% | $141,551 | 12.6% | 3.4% |
| Industrial | 46,198 | 4.0% | 41,784 | 3.8% | 10.6% |
| Warehouse & Storage | 81,461 | 7.1% | 65,379 | 5.8% | 24.6% |
| Retail | 202,402 | 17.5% | 195,561 | 17.4% | 3.5% |
| Office | 120,852 | 10.5% | 118,344 | 10.5% | 2.1% |
| Hotel | 49,540 | 4.2% | 55,533 | 4.9% | (10.8)% |
| 1-4 Family Residential Rental | 47,305 | 4.1% | 45,792 | 4.1% | 3.3% |
| Multifamily (5+) | 373,997 | 32.3% | 372,569 | 33.2% | 0.4% |
| Medical | 35,295 | 3.1% | 32,859 | 2.9% | 7.4% |
| Educational | 22,653 | 2.0% | 25,738 | 2.3% | (12.0)% |
| Other | 28,640 | 2.5% | 27,815 | 2.5% | 3.0% |
| Total | $1,154,712 | 100.0% | $1,122,925 | 100.0% |  |

Loan concentrations are considered to exist when there are amounts loaned to a multiple number of borrowers engaged in similar activities, which may cause them to be similarly impacted by economic or other conditions. Industries are identified using NAICS codes, and the Corporation monitors specific NAICS industry classifications of commercial loans to identify concentrations of greater than 10.0% of total loans. As of June 30, 2024 and December 31, 2023, commercial loans to borrowers involved in the real estate and real estate rental and leasing businesses were 50.6% and 49.5% of total loans, respectively. No other concentration of loans existed in the commercial loan portfolio in excess of 10.0% of total loans as of June 30, 2024 and December 31, 2023.

The table below presents the maturity of loans outstanding as of June 30, 2024 (in thousands):

|  | Within One Year | After One But Within Five Years | After Five But Within 15 Years | After 15 Years | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| Commercial and industrial | $98,147 | $108,872 | $79,833 | $3,694 | $290,546 |
| Commercial mortgages: |  |  |  |  |  |
| Construction | 31,515 | 37,005 | 77,526 | 323 | 146,369 |
| Commercial mortgages | 61,703 | 249,391 | 671,175 | 26,074 | 1,008,343 |
| Residential mortgages | 3,677 | 10,088 | 105,452 | 152,403 | 271,620 |
| Consumer loans: |  |  |  |  |  |
| Home equity lines and loans | 57 | 6,832 | 57,692 | 22,647 | 87,228 |
| Indirect consumer loans | 1,545 | 122,432 | 74,424 | 6 | 198,407 |
| Direct consumer loans | 308 | 5,742 | 1,772 | 1,137 | 8,959 |
| Total | $196,952 | $540,362 | $1,067,874 | $206,284 | $2,011,472 |

66

The tables below present the amounts due after one year, classified according to fixed interest rates and variable interest rates as of June 30, 2024 (in thousands):

| Loans maturing with fixed interest rates: | After One But Within Five Years | After Five But Within 15 Years | After 15 Years | Total |
| --- | ---: | ---: | ---: | ---: |
| Commercial and industrial | $64,446 | $34,047 | $417 | $98,910 |
| Commercial mortgages: |  |  |  |  |
| Construction | 6,346 | 26,679 | — | 33,025 |
| Commercial mortgages | 160,818 | 150,670 | 2,618 | 314,106 |
| Residential mortgages | 9,576 | 101,322 | 106,548 | 217,446 |
| Consumer loans: |  |  |  |  |
| Home equity lines and loans | 5,628 | 47,861 | 512 | 54,001 |
| Indirect consumer loans | 122,432 | 74,424 | 6 | 196,862 |
| Direct consumer loans | 5,709 | 718 | 53 | 6,480 |
| Total | $374,955 | $435,721 | $110,154 | $920,830 |

| Loans maturing with variable interest rates: | After One But Within Five Years | After Five But Within 15 Years | After 15 Years | Total |
| --- | ---: | ---: | ---: | ---: |
| Commercial and industrial | $44,387 | $45,839 | $3,278 | $93,504 |
| Commercial mortgages: |  |  |  | — |
| Construction | 30,800 | 50,682 | 323 | 81,805 |
| Commercial mortgages | 88,374 | 520,627 | 23,516 | 632,517 |
| Residential mortgages | 605 | 4,134 | 45,752 | 50,491 |
| Consumer loans: |  |  |  | — |
| Home equity lines and loans | 1,207 | 9,785 | 22,177 | 33,169 |
| Indirect consumer loans | — | — | — | — |
| Direct consumer loans | 34 | 1,086 | 1,084 | 2,204 |
| Total | $165,407 | $632,153 | $96,130 | $893,690 |

The Corporation has reporting systems to monitor: (i) loan origination and concentrations, (ii) delinquent loans, (iii) non-performing assets, including non-performing loans, certain loans made with modifications to borrowers experiencing financial difficulty, other real estate owned, and repossessed vehicles (iv) loans analyzed on an individual basis for credit risk, and (v) potential problem loans. Management reviews these systems on a regular basis.

#### Non-Performing Assets

Non-performing assets consist of nonaccrual loans, other real estate owned that has been acquired in partial or full satisfaction of loan obligations or upon foreclosure, and repossessed vehicles. Effective January 1, 2023, the Corporation adopted ASU 2022-02, which eliminated troubled debt restructuring accounting guidance. Prior to adoption, nonaccrual troubled debt restructurings were considered to be non-performing assets. The Corporation closely monitors loan modifications made to borrowers deemed to be experiencing financial difficulty in accordance with ASU 2022-02. As of June 30, 2024, there were five loans being monitored under ASU 2022-02 guidance, three of which were accruing, and two of which were nonaccrual and therefore included in non-performing loans.

Past due status on all loans is based on the contractual terms of the loan. It is generally the Corporation's policy that a loan 90 days past due be placed on nonaccrual status unless factors exist that would eliminate the need to classify a loan as such. A loan may also be designated as nonaccrual at any time if payment of principal or interest in full is not expected due to deterioration in the financial condition of the borrower. At the time loans are placed into nonaccrual status, the accrual of interest is discontinued and previously accrued interest is reversed. All payments received on nonaccrual loans are applied to principal. Loans are considered for return to accrual status when they become current as to principal and interest and remain current for a period of six consecutive months or when, in the opinion of management, the Corporation expects to receive all of its original principal and interest. In the case of nonaccrual loans where a portion of the loan has been charged off, the remaining balance is kept in nonaccrual status until the entire principal balance has been recovered.

The following table summarizes the Corporation's non-performing assets (dollars in thousands):

*NON-PERFORMING ASSETS*

|  | June 30, 2024 | December 31, 2023 |
| --- | ---: | ---: |
| Total non-performing loans | $8,195 | $10,411 |
| Other real estate owned and repossessed vehicles | 677 | 326 |
| Total non-performing assets | $8,872 | $10,737 |
| Ratio of non-performing loans to total loans | 0.41% | 0.53% |
| Ratio of non-performing assets to total assets | 0.32% | 0.40% |
| Ratio of allowance for credit losses to non-performing loans | 256.63% | 216.28% |
| Accruing loans past due 90 days or more (1) | $13 | $10 |

(1) *Not included in non-performing assets above.*

#### Non-Performing Loans and Assets

Non-performing loans totaled $8.2 million, or 0.41% of total loans as of June 30, 2024, compared to $10.4 million, or 0.53% of total loans as of December 31, 2023. Non-performing assets, which are comprised of non-performing loans, other real estate owned, and repossessed vehicles were $8.9 million, or 0.32% of total assets as of June 30, 2024, compared to $10.7 million, or 0.40% of total assets as of December 31, 2023. The decrease in non-performing loans was primarily attributable to the payoff of a nonaccrual commercial real estate loan totaling $1.9 million during the six month period ended June 30, 2024, as well as $1.8 million in paydown activity on other nonaccrual loans, partially offset by $2.4 million in newly designated nonaccrual loans. The decrease in non-performing assets can be attributed to the decrease in non-performing loans.

#### Loan Modifications to Borrowers Experiencing Financial Difficulty

The Corporation works closely with borrowers experiencing financial difficulties to identify viable solutions that minimize the potential for loss. The Corporation monitors modifications made to borrowers experiencing financial difficulty in which contractual cash flows are directly impacted. Modifications included under this guidance include principal reductions, reductions in effective interest rates, term extensions, significant payment delays, or a combination thereof. ASU 2022-02 was implemented on January 1, 2023 on a prospective basis, and as of June 30, 2024, the Corporation had five loans modified under this accounting guidance, which consisted of term extensions on two commercial and industrial loans, one commercial mortgage, and one home equity loan, and a payment delay on one residential mortgage. As of June 30, 2024, one of the aforementioned commercial and industrial loans given an extension of six months and the residential mortgage given a payment delay were non-performing, while the remainder of the modified loans were considered to be performing. During the six month period ended June 30, 2024, a $1.9 million commercial mortgage previously modified under ASU 2022-02 was paid off.

#### Individually Analyzed Loans

The Corporation analyzes loans on an individual basis when management determines that a loan no longer exhibits risk characteristics consistent with those in its designated pool of loans, in accordance with the Corporation's CECL methodology. The amortized cost basis of individually analyzed loans as of June 30, 2024 totaled $6.0 million, compared to $8.0 million as of December 31, 2023.

The majority of the Corporation's individually analyzed loans are secured and measured for credit loss based on collateral evaluations. It is the Corporation's policy to obtain updated appraisals by independent third parties on loans secured by real estate at the time a loan is determined to require individual analysis. A measurement is performed based upon the most recent appraisal on file to determine the amount of any specific allocation or charge-off. In determining the amount of any specific allocation or charge-off, the Corporation will make adjustments to reflect the estimated costs to sell the property. Upon receipt and review of updated appraisals, an additional measurement is performed to determine if any adjustments are necessary to reflect proper provisioning or charge-offs. Individually analyzed loans are reviewed on a quarterly basis to determine if any changes in credit quality or market conditions would require any additional allocation or recognition of additional charge-offs. Real estate values in each of the Corporation's market areas have remained stable in recent periods. Non-real estate collateral may be valued using (i) an appraisal, (ii) net book value of the collateral per the borrower’s financial statements, or (iii) accounts receivable aging reports, that may be adjusted based on management’s knowledge of the client and client’s business.

#### Allowance for Credit Losses

The allowance for credit losses is an amount that management believes will be adequate to absorb the estimated lifetime credit losses inherent in assets exhibiting credit risk as of the measurement date. The allowance is in conformity with the requirements established by ASC 326*-Financial Instruments-Credit Losses*, and is a departure from the allowance for loan losses (ALLL) that the Corporation previously estimated using an incurred loss methodology. The allowance covers loans, unfunded commitments, and certain debt securities exhibiting credit risk potential, and incorporates both quantitative and qualitative components.

Loans are analyzed on either an individual basis or a pooled basis, determined by risk characteristics. It is the Corporation's policy to analyze all nonaccrual commercial loans on an individual basis, unless specific circumstances warrant that the loan should continue to be analyzed on a pooled basis. Management may also individually analyze accruing loans based on specific risk characteristics or fact patterns. Individually analyzed loans are primarily valued based on the collateral method, however, certain loans may be valued using a cash flow analysis. Pooled loans are segmented based on groups of assigned FFIEC call codes, in order to provide enough granularity to meaningfully capture the risk profile of each instrument, yet broad enough to accurately allow for the application of certain pool-level assumptions.

Quantitative analysis is based on an estimated discounted cash flow analysis (DCF) performed at the loan level. The modeled reserve requirement equals the difference between the book balance of the instrument at the measurement date and the present value of assumed cash flows for the life of the loan. The underlying assumptions of the DCF are based on the relationship between a projected value of an economic indicator, and the implied historical loss experience amongst a group of curated peers. The Corporation utilized a regression analysis to determine suitable loss drivers for each pool of loans. Based on these results, a probability of default (PD) and loss given default (LGD), is assigned to each potential value of an economic indicator for each pool of loans, and is then applied to the portfolio to derive the statistical loss implications thereof. A hypothetical loss for each period of the DCF, as well as implied recovery of past losses, is incorporated into the DCF. The Corporation relies on FOMC data as the source for its readily available and reasonable economic forecast. The forecasted values are applied over a four-quarter period, and revert back to the historic mean of a lookback period over an eight-quarter horizon, on a straight-line basis.

Qualitative adjustments represent management's expectation of certain risks not being captured entirely in the quantitative portion of the model. Qualitative adjustment rates are applied to each instrument within a pool on a consistent basis. Factors considered as part of the qualitative adjustment analysis include economic considerations not captured by the model, changes in conditions within the Bank such as lending standards, personnel, and concentrations of credit, among others, as well as other external factors such as change in the regulatory and competitive landscape.

The allowance for credit losses is adjusted though a provision (credit) for credit losses, which is charged to operations. Separate provision accounts have been established for on-balance sheet credit exposures and off-balance sheet credit exposures, and are combined in the line item Provision (credit) for credit losses on the Corporation's Consolidated Statements of Income. Loans are charged against the allowance for credit losses when management believes that the collectability of all or a portion of the principal is unlikely. Management's evaluation of the adequacy of the allowance for credit losses is performed on a periodic basis and takes into consideration such factors as the outcomes of the quantitative analysis, a review of specific individually analyzed loans, and relevant qualitative adjustments. While management uses available information to recognize losses on credits, future additions to the allowance may be necessary based on changing economic conditions or portfolio composition. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Corporation's allowance for credit losses. Such agencies may require the Corporation to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.

The allowance for credit losses was $21.0 million as of June 30, 2024, and $22.5 million as of December 31, 2023. The allowance for credit losses was 256.63% of non-performing loans as of June 30, 2024, compared to 216.28% as of December 31, 2023. The ratio of allowance for credit losses to total loans was 1.05% as of June 30, 2024 and 1.14% as of December 31, 2023. Net charge-offs for the six months ended June 30, 2024 and June 30, 2023 were $0.5 million and $0.4 million, respectively. Net charge-off activity for the six months ended June 30, 2024 primarily reflected activity in the indirect auto segment of the consumer loan portfolio, while activity for the six months ended June 30, 2023 primarily reflected a partial charge off on a commercial and industrial loan, as well as charge-off activity in the indirect auto segment of the consumer loan portfolio.

The decrease in the allowance for credit losses was primarily attributable to the annual review and update performed on the loss drivers used as the basis for the Bank's CECL model. Loss drivers are the economic variables used to make forward looking credit loss projections. Recalibration of the loss drivers resulted in a decline in the baseline loss rates used in the CECL model, however, the composition of the economic variables selected as loss drivers did not change as a result of this update. In addition to the impact of the loss driver update, improvements in FOMC forecasted data and paydown activity on individually analyzed loans contributed to the decrease in the allowance for credit losses.

The table below summarizes the Corporation’s allowance for credit losses and non-performing loans outstanding by loan category as of June 30, 2024 and December 31, 2023 (dollars in thousands):

*ALLOWANCE BY LOAN CATEGORY*

| Balance as of June 30, 2024 | Allowance for credit losses | Allowance to loans(1) | Non-performing loans | Non-performing loans to loans(1) | Allowance to non-performing loans |
| --- | ---: | ---: | ---: | ---: | ---: |
| Commercial and industrial | $4,894 | 1.68% | $2,007 | 0.69% | 243.85% |
| Commercial mortgages | 10,530 | 0.91% | 3,947 | 0.34% | 266.78% |
| Residential mortgages | 2,106 | 0.78% | 1,438 | 0.53% | 146.45% |
| Consumer loans | 3,501 | 1.19% | 803 | 0.27% | 435.99% |
| Total | $21,031 | 1.05% | $8,195 | 0.41% | 256.63% |
| **Balance as of December 31, 2023** | **Allowance for credit losses** | **Allowance to loans(1)** | **Non-performing loans** | **Non-performing loans to loans(1)** | **Allowance to non-performing loans** |
| Commercial and industrial | $5,055 | 1.91% | $1,930 | 0.73% | 261.92% |
| Commercial mortgages | 12,026 | 1.07% | 5,969 | 0.53% | 201.47% |
| Residential mortgages | 2,194 | 0.79% | 1,315 | 0.47% | 166.84% |
| Consumer loans | 3,242 | 1.05% | 1,197 | 0.39% | 270.84% |
| Total | $22,517 | 1.14% | $10,411 | 0.53% | 216.28% |
| (1) Ratio is a percentage of loan category. |  |  |  |  |  |

70

The table below summarizes the Corporation’s consolidated credit ratios at June 30, 2024 and December 31, 2023:

| Consolidated Ratios | June 30, 2024 | December 31, 2023 |
| --- | ---: | ---: |
| Non-performing loans to total loans | 0.41% | 0.53% |
| Allowance for credit losses to total loans | 1.05% | 1.14% |
| Allowance for credit losses to non-performing loans | 256.63% | 216.28% |

The table below summarizes the Corporation’s ratio of net charge-offs and recoveries to average loans outstanding by loan category for the six months ended June 30, 2024 and June 30, 2023:

| Credit Ratios (1) | June 30, 2024 | June 30, 2023 |
| --- | ---: | ---: |
| Commercial and industrial | (0.02)% | 0.08% |
| Commercial mortgages | —% | —% |
| Residential mortgages | (0.01)% | —% |
| Consumer loans | 0.78% | 0.07% |
| Total | 0.05% | 0.04% |
| (1) Current period annualized. |  |  |

The table below summarizes the Corporation’s credit loss experience for the six months ended June 30, 2024 and 2023 (in thousands):

*SUMMARY OF CREDIT LOSS EXPERIENCE*

|  | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: |
| Balance of allowance for credit losses at beginning of period | $22,517 | $19,659 |
| Impact of ASC 326 Adoption | — | 374 |
| Charge-offs: |  |  |
| Commercial and industrial | — | 199 |
| Commercial mortgages | — | — |
| Residential mortgages | 19 | — |
| Consumer loans | 797 | 437 |
| Total charge-offs | $816 | $636 |
| Recoveries: |  |  |
| Commercial and industrial | $50 | $8 |
| Commercial mortgages | 2 | 1 |
| Residential mortgages | 49 | — |
| Consumer loans | 227 | 212 |
| Total recoveries | $328 | $221 |
| Net charge-offs (recoveries) | 488 | 415 |
| Provision (credit) for credit losses on-balance sheet exposure (1) | (998) | 554 |
| Balance of allowance for credit losses at end of period | $21,031 | $20,172 |

(1) *Additional provision related to off-balance sheet exposure was a credit of $163 thousand for the six months ended June 30, 2024 and a $41 thousand credit for the six months ended June 30, 2023.*

### Other Real Estate Owned and Repossessed Vehicles

OREO totaled $0.5 million as of June 30, 2024, and $0.3 million as of December 31, 2023, respectively. There were two residential mortgage properties and two home equity loan properties added to other real estate owned in the first six months of 2024. There was one residential mortgage property and two home equity properties sold from other real estate owned in the first six months of 2024, resulting in a net loss on sales of $3.0 thousand. The Corporation had $0.1 million in repossessed vehicles as of June 30, 2024, which is included in other assets on the Consolidated Balance Sheets, and is a component of nonperforming assets.

### Deposits

The table below summarizes the Corporation’s deposit composition by segment as of June 30, 2024, and December 31, 2023, and the dollar and percent change from December 31, 2023 to June 30, 2024 (in thousands):

*DEPOSITS*

|  | June 30, 2024 Amount | % of Total | December 31, 2023 Amount | % of Total | June 30, 2024 v. December 31, 2023 $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Non-interest-bearing demand deposits | $619,192 | 25.6% | $653,166 | 26.9% | $(33,974) | (5.2)% |
| Interest-bearing demand deposits | 328,370 | 13.6% | 291,138 | 12.0% | 37,232 | 12.8% |
| Money market deposits | 613,131 | 25.4% | 623,714 | 25.7% | (10,583) | (1.7)% |
| Savings deposits | 248,528 | 10.3% | 249,144 | 10.3% | (616) | (0.2)% |
| Certificates of deposit $250,000 or less | 426,788 | 17.7% | 365,058 | 15.0% | 61,730 | 16.9% |
| Certificates of deposit greater than $250,000 | 80,307 | 3.3% | 76,804 | 3.1% | 3,503 | 4.6% |
| Brokered deposits | 69,500 | 2.9% | 142,776 | 5.9% | (73,276) | (51.3)% |
| Other time deposits | 30,105 | 1.2% | 27,627 | 1.1% | 2,478 | 9.0% |
| Total | $2,415,921 | 100.0% | $2,429,427 | 100.0% | $(13,506) | (0.6)% |

Deposits totaled $2.416 billion as of June 30, 2024 compared to $2.429 billion as of December 31, 2023, a decrease of $13.5 million, or 0.6%. The decrease was primarily attributable to decreases of $73.3 million in brokered deposits, $34.0 million in non-interest bearing demand deposits, $10.6 million in insured money market deposits, and $0.6 million in savings deposits, offset by increases of $37.2 million in interest-bearing demand deposits and $67.7 million in customer time deposits.

The growth in customer deposits was due primarily to increases of $35.5 million in public deposits, $33.7 million in consumer deposits, $20.7 million in ICS deposits, and $11.8 million in CDARS deposits, offset by a decrease of $42.0 million in commercial deposits. As of June 30, 2024, demand deposit and money market deposits comprised 64.6% of total deposits compared to 64.5% as of December 31, 2023. The aggregate amount of the Corporation's outstanding uninsured deposits was 26.3% and 27.0% of total deposits, as of June 30, 2024 and December 31, 2023, respectively.

The table below presents the Corporation's deposits balances by Bank division (in thousands):

*DEPOSITS BY DIVISION*

|  | June 30, 2024 | December 31, 2023 | December 31, 2022 | December 31, 2021 | December 31, 2020 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Chemung Canal Trust Company\* | $2,045,565 | $2,042,679 | $1,888,991 | $1,738,000 | $1,686,270 |
| Capital Bank Division | 363,985 | 380,962 | 435,207 | 415,607 | 351,404 |
| Canal Bank Division | 6,371 | 5,786 | 3,002 | 1,811 | — |
| Total | $2,415,921 | $2,429,427 | $2,327,200 | $2,155,418 | $2,037,674 |

*\*All deposits, excluding those originated by the Capital Bank and Canal Bank divisions.*

In addition to consumer, commercial, and public deposits, other sources of funds include reciprocal deposits. The Regulatory Relief Act changed the definition of brokered deposits, such that subject to certain conditions, reciprocal deposits of another depository institution obtained through a deposit placement network for purposes of obtaining maximum deposit insurance would not be considered brokered deposits subject to the FDIC’s brokered-deposit regulations. This applies to the Corporation's participation in the CDARS and ICS programs. The CDARS and ICS programs involve a network of financial institutions that exchange funds among members in order to ensure FDIC insurance coverage on customer deposits above the single institution limit. The CDARS and ICS reciprocal program uses a sophisticated matching system, where funds are exchanged on a dollar-for-dollar basis, so that the equivalent of an original deposit comes back to the originating institution. Additionally, the CDARS and ICS One-Way Buy programs allow the Corporation to obtain wholesale brokered deposits through the system. Deposits obtained through the CDARS and ICS reciprocal programs were $458.0 million and $425.5 million as of June 30, 2024, and December 31, 2023, respectively. Brokered deposits, which include funds obtained through brokers or the CDARS and ICS One-Way Buy program, were $69.5 million and $142.8 million as of June 30, 2024, and December 31, 2023, respectively.

The Corporation’s deposit strategy is to fund the Bank with stable, low-cost deposits, primarily checking account deposits and other low interest-bearing deposit accounts. A checking account is the driver of a banking relationship and consumers consider the bank where they have their checking account as their primary bank. These customers will typically turn to their primary bank first when in need of other financial services. Strategies that have been developed and implemented to generate these deposits include: (i) acquiring deposits by entering new markets through branch acquisitions or de novo branching, (ii) an annual checking account marketing campaign, (iii) training branch employees to identify and meet client financial needs with Bank products and services, (iv) linking business and consumer loans to the customer's primary checking account at the Bank, (v) aggressively promoting direct deposit of client’s payroll checks or benefit checks and (vi) constantly monitoring the Corporation’s pricing strategies to ensure competitive products and services. The Corporation also considers brokered deposits to be an element of its deposit strategy and uses brokered deposits as a secondary source of funding to support growth.

### Borrowings

Borrowings increased by $48.9 million to $83.8 million as of June 30, 2024 from December 31, 2023, primarily attributable to a $50.0 million advance from the Federal Reserve, as the Corporation took advantage of lower interest rates offered by the Bank Term Funding Program (BTFP), and a $30.0 million three-month advance from the FHLBNY, offset by a decrease of $31.9 million in FHLBNY overnight advances compared to December 31, 2023. There were no outstanding FHLBNY or FRBNY term advances as of December 31, 2023.

### Shareholders’ Equity

Total shareholders' equity increased by $6.0 million from $195.2 million as of December 31, 2023 to $201.2 million as of June 30, 2024, primarily due to an increase in retained earnings, offset by an increase in accumulated other comprehensive loss. The increase in retained earnings of $9.1 million was due primarily to earnings of $12.0 million, offset by $2.9 million in dividends declared during the six months ended June 30, 2024. The increase in accumulated other comprehensive loss of $3.9 million can be mostly attributed to a decrease in the fair market value of the available for sale securities portfolio, due to higher interest rates. Treasury stock decreased by $0.5 million, primarily due to the issuance of shares related to the Corporation's employee benefit plans and grants issued under the Corporation's stock compensation plan. The total shareholders’ equity to total assets ratio was 7.30% as of June 30, 2024 compared to 7.20% as of December 31, 2023. The tangible equity to tangible assets ratio was 6.56% as of June 30, 2024 compared to 6.45% as of December 31, 2023. Book value per share increased to $42.17 as of June 30, 2024 from $41.07 as of December 31, 2023.

The Bank is subject to the capital adequacy guidelines of the Federal Reserve, which establishes a framework for the classification of financial institutions into five categories: well-capitalized, adequately capitalized, under-capitalized, significantly under-capitalized and critically under-capitalized. As of June 30, 2024, the Bank’s capital ratios were in excess of those required to be considered well-capitalized under regulatory capital guidelines.

When shares of the Corporation become available in the market, the Corporation may purchase them after careful consideration of the Corporation’s liquidity and capital positions. Purchases may be made from time to time on the open market or in privately negotiated transactions at the discretion of management. On January 8, 2021, the Corporation's Board of Directors approved a new stock repurchase program. Under the new repurchase program, the Corporation may repurchase up to 250,000 shares of its common stock, or approximately 5% of its then outstanding shares. The repurchase program permits shares to be repurchased in open market or privately negotiated transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. No shares were repurchased in the second quarter of 2024. As of June 30, 2024, the Corporation repurchased a total of 49,184 shares of common stock at a total cost of $2.0 million under the repurchase program, at the weighted average cost of $40.42 per share. Remaining buyback authority under the share repurchase program was 200,816 shares as of June 30, 2024.

### Liquidity

Liquidity management involves the ability to meet the cash flow requirements of deposit clients and borrowers, as well as the operating, investing, and financing activities of the Corporation. The Corporation uses a variety of resources to meet its liquidity needs. These include short term investments, cash flow from lending and investing activities, core-deposit growth and non-core funding sources, such as time deposits of $250,000 or more, brokered deposits, FHLBNY and FRB advances, and securities sold under agreements to repurchase.

The Corporation has a detailed Funds Management Policy that includes sections on liquidity measurement and management, and a Liquidity Contingency Plan that provides for the prompt and comprehensive response to unexpected demands for liquidity. This policy and plan are established and revised as needed by the management and Board ALCO committees. The ALCO is responsible for measuring liquidity, establishing liquidity targets and implementing strategies to achieve selected targets. The ALCO is responsible for coordinating activities across the Corporation to ensure that prudent levels of contingent or standby liquidity are available at all times. Based upon this ongoing assessment of liquidity considerations, management believes the Corporation’s sources of funding meet anticipated funding needs.

As of June 30, 2024, the Corporation's cash and cash equivalents balance was $70.2 million. The Corporation also maintains an investment portfolio of securities available for sale, comprised primarily of mortgage-backed securities, U.S. Gov't Treasury securities, Small Business Administration loan pools, and municipal bonds. Although this portfolio generates interest income for the Corporation, it also serves as an available source of liquidity and capital if the need should arise. As of June 30, 2024, the Corporation's investment in securities available for sale was $550.9 million, $206.4 million of which was not pledged as collateral.

The Corporation is a member of the FHLBNY, which allows it to access borrowings to enhance management's ability to satisfy future liquidity needs. The Bank had pledged a total of $247.7 million and $254.6 million of residential mortgage loans and home equity loans under a blanket lien arrangement, as of June 30, 2024 and December 31, 2023, respectively, as collateral for future borrowings. Based on this available collateral and securities also held as collateral, the Corporation was eligible to borrow up to a total of $221.4 million and $225.3 million as of June 30, 2024 and December 31, 2023, respectively. The Bank had outstanding FHLBNY borrowings of $30.0 million and $31.9 million as of June 30, 2024, and December 31, 2023, respectively. The Bank's unused borrowing capacity at the Federal Home Loan Bank of New York was $191.4 million as of June 30, 2024. Borrowings may be used on a short-terms basis for liquidity purposes or on a long-term basis to fund asset growth.

Uninsured deposits totaled $635.2 million as of June 30, 2024, and $655.7 million as of December 31, 2023, which included $188.8 million and $153.2 million of municipal deposits that were collateralized by pledged assets, respectively. The Corporation considers the level of uninsured deposits to be an important factor when considering liquidity management and strategic decisions due to their fluidity.

The Corporation also considers brokered deposits to be an element of its deposit strategy and anticipates that it may continue utilizing brokered deposits as a secondary source of funding to support growth. Brokered deposits may be used on a short-term basis for liquidity purposes or on a long-term basis to fund asset growth. Brokered deposits were $69.5 million and $142.8 million, as of June 30, 2024 and December 31, 2023, respectively. As of June 30, 2024, brokered deposits carried terms between three and 48 months with staggered maturities. The Corporation also had a total of $60.0 million of unsecured lines of credit with five different financial institutions, all of which were available as of June 30, 2024 and December 31, 2023.

On March 12, 2023, the Treasury Department, Federal Reserve, and FDIC jointly announced a new liquidity program, the Bank Term Funding Program (BTFP), in response to the failure of two banks earlier that week. Under the BTFP, institutions could pledge certain securities (i.e., securities eligible for purchase by the Federal Reserve Banks in open market operations) for the par value of the securities at a borrowing rate of ten basis points over the one-year overnight index swap rate. Certain U.S. federally insured depository institutions were eligible to participate in the BTFP. In January 2024, the Corporation utilized the BTFP, with an advance of $50.0 million, at an interest rate of 4.91%, which matures in January 2025, and may be repaid at any time without prepayment penalty. No new borrowings could be made under the BTFP after March 11, 2024. Also available to the Corporation is the Discount Window Lending provided by the Federal Reserve Bank.

#### Consolidated Cash Flows Analysis

The table below summarizes the Corporation's cash flows for the periods indicated (in thousands):

*CONSOLIDATED SUMMARY OF CASH FLOWS*

*(in thousands)*

|  | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: |
| Net cash provided by operating activities | $14,422 | $17,865 |
| Net cash used in investing activities | (13,634) | (34,694) |
| Net cash provided (used) by financing activities | 32,582 | 15,186 |
| Net increase (decrease) in cash and cash equivalents | $33,370 | $(1,643) |

#### Operating activities

The Corporation believes cash flows from operations, available cash balances, and its ability to generate cash through short-term and long-term borrowings are sufficient to fund the Corporation’s operating liquidity needs. Cash provided by operating activities in the first six months of 2024 and 2023 predominantly resulted from net income after non-cash operating adjustments.

#### Investing activities

Cash used in investing activities during the first six months of 2024 and 2023 predominantly resulted from a net increase in loans, offset by maturities and principal paydowns on securities available for sale.

#### Financing activities

Cash provided by financing activities during the first six months of 2024 predominantly resulted from term advances from the Federal Reserve BTFP and FHLB, offset by a decrease in deposits. Cash provided by financing activities during the first six months of 2023 predominantly resulted from the net repayment of overnight advances, offset by a net increase in deposits.

### Capital Resources

The Bank is subject to regulatory capital requirements administered by federal banking agencies. As a result of the Regulatory Relief Act, the FRB amended its small bank holding company and savings and loan holding company policy statement to provide that holding companies with consolidated assets of less than $3.0 billion that are (i) not engaged in significant non-banking activities, (ii) do not conduct significant off-balance sheet activities, and (iii) do not have a material amount of SEC-registered debt or equity securities, other than trust preferred securities, that contribute to an organization’s complexity, are not subject to regulatory capital requirements. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Under Basel III rules, the Bank must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is 2.50%. Organizations that fail to maintain the minimum capital conservation buffer could face restrictions on capital distributions or discretionary bonus payments to executive officers. The net unrealized gain or loss on available for sale securities and changes in the funded status of the defined benefit pension plan and other benefit plans are not included in calculating regulatory capital.

Pursuant to the Regulatory Relief Act, the FRB finalized a rule that established a community bank leverage ratio (tier 1 capital to average consolidated assets) at 9% for institutions under $10 billion in assets that such institutions may elect to utilize in lieu of the general applicable risk-based capital requirements under Basel III. Such institutions that meet the community bank leverage ratio and certain other qualifying criteria will automatically be deemed to be well-capitalized. The new rule took effect on January 1, 2020. The Bank has not elected to use the community bank leverage ratio.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. Management believes that, as of June 30, 2024 and December 31, 2023, the Bank met all capital adequacy requirements to which it was subject. As of December 31, 2018, the Corporation is no longer subject to FRB consolidated capital requirements applicable to bank holding companies, which are similar to those applicable to the Bank, until it reaches $3.0 billion in assets.

As of June 30, 2024, the most recent notification from the Federal Reserve Bank of New York categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based, common equity Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table below. There have been no conditions or events since that notification that management believes have changed the Bank's capital category.

The regulatory capital ratios as of June 30, 2024 and December 31, 2023 were calculated under Basel III rules. There is no threshold for well-capitalized status for bank holding companies.

The Corporation and the Bank’s capital ratios as of June 30, 2024 were as follows (in thousands, except ratio data):

| As of June 30, 2024 Total Capital (to Risk Weighted Assets): | Actual Amount | Ratio | Minimum Capital Adequacy Amount | Ratio | Minimum Capital Adequacy with Capital Buffer Amount | Ratio | To Be Well Capitalized Under Prompt Corrective Action Provisions Amount | Ratio |
| --- | ---: | ---: | ---: | ---: | --- | --- | ---: | ---: |
| Consolidated | $271,095 | 13.35% | N/A | N/A | N/A | N/A | N/A | N/A |
| Bank | $263,902 | 13.01% | $162,328 | 8.00% | $213,055 | 10.50% | $202,909 | 10.00% |
| Tier 1 Capital (to Risk Weighted Assets): |  |  |  |  |  |  |  |  |
| Consolidated | $249,309 | 12.28% | N/A | N/A | N/A | N/A | N/A | N/A |
| Bank | $242,116 | 11.93% | $121,746 | 6.00% | $172,473 | 8.50% | $162,328 | 8.00% |
| Common Equity Tier 1 Capital (to Risk Weighted Assets): |  |  |  |  |  |  |  |  |
| Consolidated | $249,309 | 12.28% | N/A | N/A | N/A | N/A | N/A | N/A |
| Bank | $242,116 | 11.93% | $91,309 | 4.50% | $142,037 | 7.00% | $131,891 | 6.50% |
| Tier 1 Capital (to Average Assets): |  |  |  |  |  |  |  |  |
| Consolidated | $249,309 | 8.85% | N/A | N/A | N/A | N/A | N/A | N/A |
| Bank | $242,116 | 8.61% | $112,540 | 4.00% | N/A | N/A | $140,675 | 5.00% |

76

The Corporation and the Bank’s capital ratios as of December 31, 2023 were as follows (in thousands, except ratio data):

| As of December 31, 2023 Total Capital (to Risk Weighted Assets): | Actual Amount | Ratio | Minimum Capital Adequacy Amount | Ratio | Minimum Capital Adequacy with Capital Buffer Amount | Ratio | To Be Well Capitalized Under Prompt Corrective Action Provisions Amount | Ratio |
| --- | ---: | ---: | ---: | ---: | --- | --- | ---: | ---: |
| Consolidated | $262,864 | 13.26% | N/A | N/A | N/A | N/A | N/A | N/A |
| Bank | $252,783 | 12.76% | $158,438 | 8.00% | $207,950 | 10.50% | $198,048 | 10.00% |
| Tier 1 Capital (to Risk Weighted Assets): |  |  |  |  |  |  |  |  |
| Consolidated | $239,429 | 12.08% | N/A | N/A | N/A | N/A | N/A | N/A |
| Bank | $229,348 | 11.58% | $118,829 | 6.00% | $168,341 | 8.50% | $158,438 | 8.00% |
| Common Equity Tier 1 Capital (to Risk Weighted Assets): |  |  |  |  |  |  |  |  |
| Consolidated | $239,429 | 12.08% | N/A | N/A | N/A | N/A | N/A | N/A |
| Bank | $229,348 | 11.58% | $89,122 | 4.50% | $138,634 | 7.00% | $128,731 | 6.50% |
| Tier 1 Capital (to Average Assets): |  |  |  |  |  |  |  |  |
| Consolidated | $239,429 | 8.62% | N/A | N/A | N/A | N/A | N/A | N/A |
| Bank | $229,348 | 8.26% | $111,034 | 4.00% | N/A | N/A | $138,792 | 5.00% |

### Dividend Restrictions

The Corporation’s principal source of funds for dividend payments is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to current year’s net income, combined with the retained net income of the preceding two years, subject to the capital requirements in the table above. As of June 30, 2024, the Bank could, without prior approval, declare dividends of approximately $52.1 million.

### Adoption of New Accounting Standards

Please refer to Note 1, Summary of Significant Accounting Policies - Recent Accounting Pronouncements for a discussion of new accounting standards.

### Explanation and Reconciliation of the Corporation’s Use of Non-GAAP Measures

The Corporation prepares its Consolidated Financial Statements in accordance with GAAP; these financial statements appear on pages 7–13. That presentation provides the reader with an understanding of the Corporation’s results that can be tracked consistently from year-to-year and enables a comparison of the Corporation’s performance with other companies’ GAAP financial statements.

In addition to analyzing the Corporation’s results on a reported basis, management uses certain non-GAAP financial measures, because it believes these non-GAAP financial measures provide information to investors about the underlying operational performance and trends of the Corporation and, therefore, facilitate a comparison of the Corporation with the performance of other companies. Non-GAAP financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used by other companies.

The SEC has adopted Regulation G, which applies to all public disclosures, including earnings releases, made by registered companies that contain “non-GAAP financial measures.” Under Regulation G, companies making public disclosures containing non-GAAP financial measures must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure and a statement of the Corporation’s reasons for utilizing the non-GAAP financial measure as part of its financial disclosures. The SEC has exempted from the definition of “non-GAAP financial measures” certain commonly used financial measures that are not based on GAAP. When these exempted measures are included in public disclosures, supplemental information is not required. The following measures used in this Report, which are commonly utilized by financial institutions, have not been specifically exempted by the SEC and may constitute "non-GAAP financial measures" within the meaning of the SEC's rules, although we are unable to state with certainty that the SEC would so regard them.

#### Fully Taxable Equivalent Net Interest Income and Net Interest Margin

Net interest income is commonly presented on a tax-equivalent basis. That is, to the extent that some component of the institution's net interest income, which is presented on a before-tax basis, is exempt from taxation (e.g., is received by the institution as a result of its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is added to the actual before-tax net interest income total. This adjustment is considered helpful in comparing one financial institution's net interest income to that of other institutions or in analyzing any institution’s net interest income trend line over time, to correct any analytical distortion that might otherwise arise from the fact that financial institutions vary widely in the proportions of their portfolios that are invested in tax-exempt securities, and that even a single institution may significantly alter over time the proportion of its own portfolio that is invested in tax-exempt obligations. Moreover, net interest income is itself a component of a second financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average interest-earning assets. For purposes of this measure as well, fully taxable equivalent net interest income is generally used by financial institutions, as opposed to actual net interest income, again to provide a better basis of comparison from institution to institution and to better demonstrate a single institution’s performance over time. The Corporation follows these practices.

*(in thousands, except ratio data)*

| NET INTEREST MARGIN - FULLY TAXABLE EQUIVALENT 2024 | As of or for the Three Months Ended June 30, 2024 | March 31, 2023 | Dec. 31, 2023 | Sept. 30, 2023 | June 30, 2024 | As of or for the Six Months Ended June 30, 2023 | June 30, |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net interest income (GAAP) | $17,761 | $18,089 | $17,898 | $18,017 | $18,595 | $35,850 | $38,542 |
| Fully taxable equivalent adjustment | 81 | 84 | 87 | 87 | 92 | 165 | 191 |
| Fully taxable equivalent net interest income (non-GAAP) | $17,842 | $18,173 | $17,985 | $18,104 | $18,687 | $36,015 | $38,733 |
| Average interest-earning assets (GAAP) | $2,699,402 | $2,681,059 | $2,654,638 | $2,627,012 | $2,609,893 | $2,690,230 | $2,601,349 |
| Net interest margin - fully taxable equivalent (non-GAAP) | 2.66% | 2.73% | 2.69% | 2.73% | 2.87% | 2.69% | 3.00% |

#### Efficiency Ratio

The unadjusted efficiency ratio is calculated as non-interest expense divided by total revenue (net interest income and non-interest income). The adjusted efficiency ratio is a non-GAAP financial measure which represents the Corporation’s ability to turn resources into revenue and is calculated as non-interest expense divided by total revenue (fully taxable equivalent net interest income and non-interest income), adjusted for one-time occurrences and amortization. This measure is meaningful to the Corporation, as well as to investors and analysts, in assessing the Corporation’s productivity measured by the amount of revenue generated for each dollar spent.

*(in thousands, except ratio data)*

| EFFICIENCY RATIO | As of or for the Three Months Ended June 30, 2024 | March 31, 2024 | Dec. 31, 2023 | Sept. 30, 2023 | June 30, 2023 | As of or for the Six Months Ended June 30, 2024 | June 30, 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net interest income (GAAP) | $17,761 | $18,089 | $17,898 | $18,017 | $18,595 | $35,850 | $38,542 |
| Fully taxable equivalent adjustment | 81 | 84 | 87 | 87 | 92 | 165 | 191 |
| Fully taxable equivalent net interest income (non-GAAP) | $17,842 | $18,173 | $17,985 | $18,104 | $18,687 | $36,015 | $38,733 |
| Non-interest income (GAAP) | $5,598 | $5,657 | $5,871 | $7,808 | $5,447 | $11,255 | $10,870 |
| Less: recognition of employee retention tax credit | — | — | — | (2,370) | — | — | — |
| Less: net (gains) losses on security transactions | — | — | 39 | — | — | — | — |
| Adjusted non-interest income (non-GAAP) | $5,598 | $5,657 | $5,910 | $5,438 | $5,447 | $11,255 | $10,870 |
| Non-interest expense (GAAP) | $16,219 | $16,698 | $16,826 | $15,668 | $15,913 | $32,917 | $31,749 |
| Efficiency ratio (unadjusted) | 69.43% | 70.32% | 70.79% | 60.67% | 66.19% | 69.88% | 64.25% |
| Efficiency ratio (adjusted) | 69.19% | 70.07% | 70.42% | 66.55% | 65.94% | 69.64% | 64.01% |

#### Tangible Equity and Tangible Assets (Period-End)

Tangible equity, tangible assets, and tangible book value per share are each non-GAAP financial measures. Tangible equity represents the Corporation’s stockholders’ equity, less goodwill and intangible assets. Tangible assets represents the Corporation’s total assets, less goodwill and other intangible assets. Tangible book value per share represents the Corporation’s tangible equity divided by common shares at period-end. These measures are meaningful to the Corporation, as well as to investors and analysts, in assessing the Corporation’s use of equity.

*(in thousands, except per share and ratio data)*

| TANGIBLE EQUITY AND TANGIBLE ASSETS (PERIOD END) 2024 | As of or for the Three Months Ended June 30, 2024 | March 31, 2023 | Dec. 31, 2023 | Sept. 30, 2023 | June 30, 2024 | As of or for the Six Months Ended June 30, 2023 | June 30, |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Total shareholders' equity (GAAP) | $201,222 | $197,128 | $195,241 | $170,064 | $177,426 | $201,222 | $177,426 |
| Less: intangible assets | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) |
| Tangible equity (non-GAAP) | $179,398 | $175,304 | $173,417 | $148,240 | $155,602 | $179,398 | $155,602 |
| Total assets (GAAP) | $2,755,813 | $2,784,890 | $2,710,529 | $2,707,834 | $2,674,673 | $2,755,813 | $2,674,673 |
| Less: intangible assets | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) |
| Tangible assets (non-GAAP) | $2,733,989 | $2,763,066 | $2,688,705 | $2,686,010 | $2,652,849 | $2,733,989 | $2,652,849 |
| Total equity to total assets at end of period (GAAP) | 7.30% | 7.08% | 7.20% | 6.28% | 6.63% | 7.30% | 6.63% |
| Book value per share (GAAP) | $42.17 | $41.34 | $41.07 | $35.90 | $37.49 | $42.17 | $37.49 |
| Tangible equity to tangible assets at end of period (non-GAAP) | 6.56% | 6.34% | 6.45% | 5.52% | 5.87% | 6.56% | 5.87% |
| Tangible book value per share (non-GAAP) | $37.59 | $36.77 | $36.48 | $31.29 | $32.88 | $37.59 | $32.88 |

79

#### Tangible Equity (Average)

Average tangible equity and return on average tangible equity are each non-GAAP financial measures. Average tangible equity represents the Corporation’s average stockholders’ equity, less average goodwill and intangible assets for the period. Return on average tangible equity measures the Corporation’s earnings as a percentage of average tangible equity. These measures are meaningful to the Corporation, as well as to investors and analysts, in assessing the Corporation’s use of equity.

*(in thousands, except ratio data)*

| TANGIBLE EQUITY (AVERAGE) | As of or for the Three Months Ended June 30, 2024 | March 31, 2024 | Dec. 31, 2023 | Sept. 30, 2023 | June 30, 2023 | As of or for the Six Months Ended June 30, 2024 | June 30, 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Total average shareholders' equity (GAAP) | $195,375 | $195,860 | $174,868 | $179,700 | $180,357 | $195,618 | $177,089 |
| Less: average intangible assets | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) |
| Average tangible equity (non-GAAP) | $173,551 | $174,036 | $153,044 | $157,876 | $158,533 | $173,794 | $155,265 |
| Return on average equity (GAAP) | 10.27% | 14.48% | 8.63% | 16.89% | 13.97% | 12.37% | 15.43% |
| Return on average tangible equity (non-GAAP) | 11.56% | 16.29% | 9.86% | 19.22% | 15.89% | 13.93% | 17.60% |

#### Adjustments for Certain Items of Income or Expense

In addition to disclosures of certain GAAP financial measures, including net income, EPS, ROA, and ROE, we may also provide comparative disclosures that adjust these GAAP financial measures for a particular period by removing from the calculation thereof the impact of certain transactions or other material items of income or expense occurring during the period, including certain nonrecurring items. The Corporation believes that the resulting non-GAAP financial measures may improve an understanding of its results of operations by separating out any such transactions or items that may have had a disproportionate positive or negative impact on the Corporation’s financial results during the particular period in question. In the Corporation’s presentation of any such non-GAAP (adjusted) financial measures not specifically discussed in the preceding paragraphs, the Corporation supplies the supplemental financial information and explanations required under Regulation G.

*(in thousands, except per share and ratio data)*

| NON-GAAP NET INCOME | As of or for the Three Months Ended June 30, 2024 | March 31, 2024 | Dec. 31, 2023 | Sept. 30, 2023 | June 30, 2023 | As of or for the Six Months Ended June 30, 2024 | June 30, 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Reported net income (GAAP) | $4,987 | $7,050 | $3,802 | $7,648 | $6,280 | $12,037 | $13,550 |
| Net (gains) losses on security transactions (net of tax) | — | — | 29 | — | — | — | — |
| Recognition of employee retention tax credit (net of tax) | — | — | — | (1,873) | — | — | — |
| Non-GAAP net income | $4,987 | $7,050 | $3,831 | $5,775 | $6,280 | $12,037 | $13,550 |
| Average basic and diluted shares outstanding | 4,770 | 4,764 | 4,743 | 4,736 | 4,729 | 4,767 | 4,725 |
| Reported basic and diluted earnings per share (GAAP) | $1.05 | $1.48 | $0.80 | $1.61 | $1.33 | $2.53 | $2.87 |
| Reported return on average assets (GAAP) | 0.73% | 1.04% | 0.56% | 1.14% | 0.95% | 0.89% | 1.03% |
| Reported return on average equity (GAAP) | 10.27% | 14.48% | 8.63% | 16.89% | 13.97% | 12.37% | 15.43% |
| Non-GAAP basic and diluted earnings per share | $1.05 | $1.48 | $0.81 | $1.21 | $1.33 | $2.53 | $2.87 |
| Non-GAAP return on average assets | 0.73% | 1.04% | 0.57% | 0.86% | 0.95% | 0.89% | 1.03% |
| Non-GAAP return on average equity | 10.27% | 14.48% | 8.69% | 12.75% | 13.97% | 12.37% | 15.43% |

80

## Market risk

As filed, 5,015 characters.

### Interest Rate Risk

Management considers interest rate risk to be the most significant market risk for the Corporation. Market risk is the risk of loss from adverse changes in market prices and rates. Interest rate risk is the exposure to adverse changes in the net income of the Corporation as a result of changes in interest rates.

The Corporation’s primary earnings source is net interest income, which is affected by changes in the level of interest rates, the relationship between rates, the impact of interest rate fluctuations on asset prepayments, the level and composition of deposits and liabilities, and credit quality of earning assets.

The Corporation’s objectives in its asset and liability management are to maintain a strong, stable net interest margin, to utilize its capital effectively without taking undue risks, to maintain adequate liquidity, and to reduce vulnerability of its operations to changes in interest rates. The Corporation's ALCO has the strategic responsibility for setting the policy guidelines on acceptable exposure to interest rate risk. These guidelines contain specific measures and limits regarding the risks, which are monitored on a regular basis. The ALCO is made up of the President and Chief Executive Officer, the Chief Financial Officer and Treasurer, the Asset Liability Management Officer, and other officers representing key functions.

Interest rate risk is the risk that net interest income will fluctuate as a result of a change in interest rates. It is the assumption of interest rate risk, along with credit risk, that drives the net interest margin of a financial institution. For that reason, the ALCO has established tolerance limits based upon various basis point changes in interest rates, with appropriate floors set for interest-bearing liabilities. As of June 30, 2024, it is estimated that immediate decreases in interest rates of 100-basis points and 200-basis points would positively impact the next 12 months net interest income by 3.00% and 4.83%, respectively. Immediate increases in interest rates of 100-basis points and 200-basis points would positively impact the next 12 months net interest income by 2.07% and 4.15%, respectively. All scenarios are within the Corporation's policy guidelines.

| Change in interest rates | Percentage Increase (Decrease) in Net Interest Income over 12 Months |
| --- | ---: |
| 200 basis points decrease | 4.83% |
| 100 basis points decrease | 3.00% |
| 100 basis points increase | 2.07% |
| 200 basis points increase | 4.15% |

A related component of interest rate risk is the expectation that the market value of the Corporation’s equity account will fluctuate with changes in interest rates. This component is a direct corollary to the earnings-impact component: an institution exposed to earnings erosion is also exposed to a decline in market value. As of June 30, 2024, it is estimated that immediate decreases in interest rates of 100-basis points and 200-basis points would positively impact the market value of the Corporation’s capital account by 4.57% and 6.52% respectively. Immediate increases in interest rates of 100-basis points and 200-basis points would positively impact the market value by 0.18% and 0.72% respectively. All scenarios are within the Corporation's policy guidelines.

| Change in interest rates | Percentage Increase (Decrease) in Present Value of Corporation's Equity |
| --- | ---: |
| 200 basis points decrease | 6.52% |
| 100 basis points decrease | 4.57% |
| 100 basis points increase | 0.18% |
| 200 basis points increase | 0.72% |

Management does recognize the need for certain hedging strategies during periods of anticipated higher fluctuations in interest rates and the Funds Management Policy provides for limited use of certain derivatives in asset liability management.

### Credit Risk

The Corporation manages credit risk consistent with state and federal laws governing the making of loans through written policies and procedures; loan review to identify loan problems at the earliest possible time; collection procedures (continued even after a loan is charged off); an adequate allowance for credit losses; and continuing education and training to ensure lending expertise. Diversification by loan product is maintained through offering commercial loans, 1-4 family mortgages, and a full range of consumer loans.

The Corporation monitors its loan portfolio carefully. The Loan Committee of the Corporation's Board of Directors is designated to receive required loan reports, oversee loan policy, and approve loans above authorized individual and Senior Loan Committee lending limits. The Senior Loan Committee, consisting of the President and Chief Executive Officer, Chief Financial Officer and Treasurer (non-voting), Chief Credit and Risk Officer, Business Client Division Manager, Retail Client Division Manager, Retail Loan Manager, Senior Commercial Real Estate Lender, and Commercial Loan Managers, implements the Board-approved loan policy.

## Controls and procedures

As filed, 1,591 characters.

### Evaluation of Disclosure Controls and Procedures

The Corporation's management, with the participation of its Chief Executive Officer, who is the Corporation's principal executive officer, and its Chief Financial Officer and Treasurer, who is the Corporation's principal financial and accounting officer, have evaluated the effectiveness of the Corporation's disclosure controls and procedures as of June 30, 2024 pursuant to Rule 13a-15 of the Exchange Act, as amended. Based upon that evaluation, the principal executive officer and principal financial and accounting officer have concluded that the Corporation's disclosure controls and procedures are effective as of June 30, 2024. In addition, there have been no changes in the Corporation's internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Corporation's internal control over financial reporting.

Disclosure controls and procedures are designed with the objective of ensuring that information required to be disclosed in reports filed by the Corporation under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

## Risk factors

As filed, 386 characters.

There have been no material changes in the risk factors set forth in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission on March 13, 2024. Additional risks not presently known to us, or that we currently deem immaterial, may adversely affect our business, financial condition or results of operations.

Filed Aug 7, 2024.
Source: SEC EDGAR, the filing index for accession 0000763563-24-000074. Last ingested by Listed: Oct 24, 2026, 14:54 ET. No prices; not investment advice.