# Chemung Financial Corp: Form 10-Q for the period ended Mar 31, 2025

- Company: [Chemung Financial Corp](/companies/chmg.md) (CIK 763563)
- Form: 10-Q
- Filed: 2025-05-07
- Accepted by EDGAR: May 7, 2025, 14:46 ET
- Period: 2025-03-31
- Accession: 0000763563-25-000074
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/763563/000076356325000074/chmg-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/763563/000076356325000074/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $1.7m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | $6.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | $1.26 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $1.26 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 4,791,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | $7.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $328.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2025-01-01 to 2025-03-31 | $1.5m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 3 months, 2025-01-01 to 2025-03-31 | $85.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-03-31 | $53.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2025-03-31 | $2.80bn | us-gaap:Assets |
| Total liabilities | at 2025-03-31 | $2.57bn | us-gaap:Liabilities |
| Shareholders' equity | at 2025-03-31 | $228.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 111,952 characters.

### Introduction

The following is the MD&A of the Corporation in this Quarterly Report on Form 10-Q for the three months ended March 31, 2025. Reference should be made to the accompanying unaudited consolidated financial statements and footnotes, and the Corporation’s 2024 Annual Report on Form 10-K, which was filed with the SEC on March 14, 2025, for an understanding of the following discussion and analysis. See the list of commonly used abbreviations and terms on pages 3–6.

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 2024 Form 10-K. For a discussion of the use of non-GAAP financial measures, see pages 64-67 of the Corporation's 2024 Form 10-K, and pages 67-70 in this Form 10-Q.

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, tariffs, cybersecurity risks, difficulties in managing the Corporation’s growth, recent bank failures, changes in FDIC assessments, public health issues, geopolitical conflicts, competition, changes in law or the regulatory environment, and changes in general business and economic trends.

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 2024 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, 2024, 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 may 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 conditions may lead to further required increases to the allowance; conversely, improvements to conditions may warrant reductions to the allowance. In estimating the allowance for credit losses, management considers the sensitivity of the model to 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 March 31, 2025 and December 31, 2024, the allowance for credit losses totaled $22.5 million and $21.4 million, respectively. A significant portion of the allowance for credit losses is allocated to the commercial portfolio, both commercial real estate and commercial and industrial loans. As of March 31, 2025 and December 31, 2024, the allowance for credit losses allocated to the total commercial portfolio was $17.2 million and $15.7 million respectively, or 76.6% and 73.6% of the total allowance for credit losses on loans. For comparison, total commercial loans represented 74.2% and 73.2% of total loan balances as of March 31, 2025 and December 31, 2024, respectively. Given the concentration of the allowance for credit losses allocated to the commercial portfolio, and the significant judgments made by management to derive its estimates, management analyzes risks distinctive to commercial lending with a high degree of scrutiny.

Changes in the FOMC's median forecasted year over year U.S. civilian unemployment rate and year over year change in U.S GDP could have a material impact on the model's estimation of the allowance. Currently, most pools utilize the FOMC's projections for unemployment as a loss driver, while the commercial and industrial, consumer, and other loans loan pools utilize the FOMC's projections for U.S. GDP growth. Segmentation and attributes of loan pools are defined in Note 1 – Summary of Significant Accounting Policies to the Audited Consolidated Financial Statements in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2024. FOMC projections are sourced from a quarterly Summary of Projections, which accompanies select FOMC meetings. Each participant's projections represent the value to which selected variables would be expected to converge over time under appropriate monetary policy, and considering all currently available information. An immediate "shock" or increase of 100 basis points in the FOMC's projected rate of U.S. civilian unemployment, and a decrease of 50 basis points in the FOMC's projected rate of U.S. GDP growth would increase the model's total calculated allowance by $0.8 million, or 3.8%, to $23.4 million as of March 31, 2025, assuming qualitative adjustments were kept at current levels.

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 March 31, 2025, 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 RESULTS OF OPERATIONS | As of or for the Three Months Ended Mar. 31, 2025 | Dec. 31, 2024 | Sept. 30, 2024 | June 30, 2024 | Mar. 31, 2024 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Interest and dividend income | $31,698 | $32,597 | $32,362 | $31,386 | $31,219 |
| Interest expense | 11,881 | 12,776 | 13,974 | 13,625 | 13,130 |
| Net interest income | 19,817 | 19,821 | 18,388 | 17,761 | 18,089 |
| Provision (credit) for credit losses | 1,092 | 551 | 564 | 879 | (2,040) |
| Net interest income after provision for credit losses | 18,725 | 19,270 | 17,824 | 16,882 | 20,129 |
| Non-interest income | 5,889 | 6,056 | 5,919 | 5,598 | 5,657 |
| Non-interest expense | 16,927 | 17,823 | 16,510 | 16,219 | 16,698 |
| Income before income tax expense | 7,687 | 7,503 | 7,233 | 6,261 | 9,088 |
| Income tax expense | 1,664 | 1,589 | 1,513 | 1,274 | 2,038 |
| Net income | $6,023 | $5,914 | $5,720 | $4,987 | $7,050 |
| Basic and diluted earnings per share | $1.26 | $1.24 | $1.19 | $1.05 | $1.48 |
| Average basic and diluted shares outstanding | 4,791 | 4,774 | 4,773 | 4,770 | 4,764 |
| **PERFORMANCE RATIOS - Annualized** |  |  |  |  |  |
| Return on average assets | 0.88% | 0.85% | 0.83% | 0.73% | 1.04% |
| Return on average equity | 10.96% | 10.73% | 10.81% | 10.27% | 14.48% |
| Return on average tangible equity (a) | 12.15% | 11.92% | 12.07% | 11.56% | 16.29% |
| Efficiency ratio (unadjusted) (b) | 65.85% | 68.88% | 67.92% | 69.43% | 70.32% |
| Efficiency ratio (adjusted) (a) | 65.64% | 68.64% | 67.69% | 69.19% | 70.07% |
| Non-interest expense to average assets | 2.47% | 2.57% | 2.39% | 2.38% | 2.47% |
| Loans to deposits | 86.20% | 86.42% | 82.78% | 83.26% | 80.77% |
| **AVERAGE YIELDS / RATES - Fully Taxable Equivalent** |  |  |  |  |  |
| Yield on loans | 5.49% | 5.61% | 5.65% | 5.52% | 5.51% |
| Yield on investments | 2.26% | 2.29% | 2.21% | 2.27% | 2.35% |
| Yield on interest-earning assets | 4.72% | 4.79% | 4.78% | 4.69% | 4.70% |
| Cost of interest-bearing deposits | 2.48% | 2.67% | 2.88% | 2.86% | 2.75% |
| Cost of borrowings | 4.54% | 4.74% | 5.08% | 5.04% | 5.15% |
| Cost of interest-bearing liabilities | 2.55% | 2.73% | 2.97% | 2.94% | 2.85% |
| Cost of funds | 1.92% | 2.04% | 2.24% | 2.20% | 2.13% |
| Interest rate spread | 2.17% | 2.06% | 1.81% | 1.75% | 1.85% |
| Net interest margin, fully taxable equivalent (a) | 2.96% | 2.92% | 2.72% | 2.66% | 2.73% |
| **CAPITAL** |  |  |  |  |  |
| Total equity to total assets at end of period | 8.16% | 7.76% | 7.95% | 7.30% | 7.08% |
| Tangible equity to tangible assets at end of period (a) | 7.44% | 7.02% | 7.22% | 6.56% | 6.34% |
| Book value per share | $47.49 | $45.13 | $46.22 | $42.17 | $41.34 |
| Tangible book value per share (a) | 42.95 | 40.55 | 41.65 | 37.59 | 36.77 |
| Period-end market value per share | 47.57 | 48.81 | 48.02 | 48.00 | 42.48 |
| Dividends declared per share | 0.32 | 0.31 | 0.31 | 0.31 | 0.31 |
| **AVERAGE BALANCES** |  |  |  |  |  |
| Loans and loans held for sale (c) | $2,077,739 | $2,046,270 | $2,020,280 | $2,009,823 | $1,989,185 |
| Earning assets | 2,729,661 | 2,711,995 | 2,699,968 | 2,699,402 | 2,681,059 |
| Total assets | 2,784,414 | 2,761,875 | 2,751,392 | 2,740,967 | 2,724,391 |
| Deposits | 2,445,597 | 2,446,662 | 2,410,735 | 2,419,169 | 2,402,215 |
| Total equity | 222,802 | 219,254 | 210,421 | 195,375 | 195,860 |
| Tangible equity (b) | 200,978 | 197,430 | 188,597 | 173,551 | 174,036 |
| **ASSET QUALITY** |  |  |  |  |  |
| Net charge-offs | $262 | $594 | $78 | $306 | $182 |
| Non-performing loans (d) | 9,881 | 8,954 | 10,545 | 8,195 | 7,835 |
| Non-performing assets (e) | 10,282 | 9,606 | 11,134 | 8,872 | 8,394 |
| Allowance for credit losses | 22,522 | 21,388 | 21,441 | 21,031 | 20,471 |
| Annualized net charge-offs to average loans | 0.05% | 0.12% | 0.02% | 0.06% | 0.04% |
| Non-performing loans to total loans | 0.47% | 0.43% | 0.52% | 0.41% | 0.39% |
| Non-performing assets to total assets | 0.37% | 0.35% | 0.40% | 0.32% | 0.30% |
| Allowance for credit losses to total loans | 1.07% | 1.03% | 1.06% | 1.05% | 1.02% |
| Allowance for credit losses to non-performing loans | 227.93% | 238.87% | 203.33% | 256.63% | 261.28% |

|  |  |
| --- | --- |
| (a) See the GAAP to Non-GAAP reconciliations. | (d) Includes nonaccrual loans only. |
| (b) Non-interest expense divided by total net interest income plus non-interest income. | (e) Includes non-performing loans, other real estate owned, and repossessions. |
| (c) Does not reflect Allowance for Credit Losses. |  |

43

In addition to analyzing the Corporation’s results on a reported basis, management uses certain non-GAAP financial measures because it believes these non-GAAP financial measures provide information to investors about the underlying operational performance and trends of the Corporation, and therefore facilitate a comparison of the Corporation with the performance of other companies. Non-GAAP financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used by other companies. Refer to pages 67-70 for further explanation and reconciliation of the Corporation’s use of non-GAAP measures.

### 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 months ended March 31, 2025 and 2024. For a discussion of the Critical Accounting Estimates that affect the Consolidated Results of Operations, see pages 41-42 of this Form 10-Q and page 37 of the Corporation’s 2024 Form 10-K.

#### 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 March 31, 2025 | 2024 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Net interest income | $19,817 | $18,089 | $1,728 | 9.6% |
| Non-interest income | 5,889 | 5,657 | 232 | 4.1% |
| Non-interest expense | 16,927 | 16,698 | 229 | 1.4% |
| Pre-provision income | 8,779 | 7,048 | 1,731 | 24.6% |
| Provision (credit) for credit losses | 1,092 | (2,040) | 3,132 | (153.5)% |
| Income tax expense | 1,664 | 2,038 | (374) | (18.4)% |
| Net income | $6,023 | $7,050 | $(1,027) | (14.6)% |
| Basic and diluted earnings per share | $1.26 | $1.48 | $(0.22) | (14.9)% |

| Selected financial ratios: | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Return on average assets (a) | 0.88% | 1.04% |
| Return on average equity (a) | 10.96% | 14.48% |
| Net interest margin, fully taxable equivalent (b) | 2.96% | 2.73% |
| Efficiency ratio (adjusted) (b) | 65.64% | 70.07% |
| Non-interest expense to average assets | 2.47% | 2.47% |
| (a) Annualized. |  |  |
| (b) See the GAAP to Non-GAAP reconciliations. |  |  |

Net income for the first quarter of 2025 was $6.0 million, or $1.26 per share, compared to $7.1 million, or $1.48 per share, for the same period in the prior year. Return on average equity for the current quarter was 10.96%, compared to 14.48% for the same period in the prior year. The decrease in net income was attributable to an increase in the provision for credit losses and an increase in non-interest expense, offset by increases in net interest income and non-interest income, and a decrease in income tax expense.

#### 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 March 31, 2025 | 2024 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Interest and dividend income | $31,698 | $31,219 | $479 | 1.5% |
| Interest expense | 11,881 | 13,130 | (1,249) | (9.5)% |
| Net interest income | $19,817 | $18,089 | $1,728 | 9.6% |

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 first quarter of 2025 increased $1.7 million, or 9.6%, to $19.8 million compared to the same period in the prior year, due primarily to decreases of $1.0 million in interest expense on deposits and $0.3 million in interest expense on borrowed funds, and an increase of $0.9 million in interest income on loans, including fees, partially offset by a decrease of $0.5 million in interest and dividend income on taxable securities.

Interest expense on deposits decreased to $11.2 million for the three months ended March 31, 2025 from $12.1 million for the same period in the prior year. The decrease in interest expense on deposits was due primarily to a decrease of 27 basis points in the average cost of total interest-bearing deposits, which was comprised of decreases of 21 basis points in the average cost of customer interest-bearing deposits and 82 basis points in the average cost of brokered deposits, both largely due to decreases in benchmark interest rates and the Corporation's balance sheet structure favoring shorter-term liabilities. Average balances of customer interest-bearing deposits increased $55.0 million, while average balances of brokered deposits decreased $8.6 million, compared to the same period in the prior year. The increase in average balances of customer interest-bearing deposits was primarily due to an increase of $32.9 million in average balances of customer time deposits. The average cost of customer time deposits decreased 38 basis points compared to the same period in the prior year, due to the Corporation's focus on shorter-term certificate of deposit campaigns during 2024, and a decrease in interest rates on campaign offerings in the current period. Customer time deposits comprised 21.1% of average total deposits for the first quarter of 2025, compared to 20.1% for the same period in the prior year. Additionally, an increase of $28.3 million in average balances of interest-bearing demand deposits positively benefited the average cost of interest-bearing deposits, as the 1.57% cost was lower than other types of interest-bearing deposits.

Interest expense on borrowed funds decreased to $0.7 million for the three months ended March 31, 2025 from $1.0 million for the same period in the prior year. The decrease in interest expense on borrowed funds was partially due to a decline in borrowing rates between the first quarter of 2024 and the first quarter of 2025, as well as a shift in the composition of borrowed funds between these periods. The average cost of borrowings decreased 61 basis points, compared to the same period in the prior year, comprised of decreases of 91 basis points and 32 basis points in the average cost of FHLBNY overnight advances and other advances and debt, which includes FHLBNY term advances, respectively. The composition of borrowings in the first quarter of 2025 was primarily comprised of FHLBNY term advances and FHLBNY overnight advances, while the composition of borrowings in the same period in the prior year was primarily comprised of a Federal Reserve Bank Term Funding Program (BTFP) advance and FHLBNY overnight advances.

Interest income on loans, including fees, increased to $28.1 million for the three months ended March 31, 2025, from $27.2 million for the same period in the prior year. The increase in interest income on loans, including fees, was largely due to an increase in average total loan balances of $88.6 million compared to the same period in the prior year, which was concentrated in the commercial loan portfolio. The average yield on total loans was relatively stable compared to the same period in the prior year, declining two basis points to 5.49% in the first quarter of 2025. Average balances of commercial loans increased $122.1 million in the first quarter of 2025 compared to the same period in the prior year, primarily due to growth in commercial real estate balances, while the average yield on commercial loans declined 15 basis points, largely due to repricing of benchmark indexes and $0.3 million in interest income recognized on the payoff of a nonaccrual commercial real estate loan in the same period of the prior year. Average balances of residential mortgage loans and consumer loans each decreased in the first quarter of 2025 compared to the same period in the prior year, decreasing $2.1 million and $31.4 million, respectively. The decrease in average balances of residential mortgage loans was partially due to relatively low levels of housing inventory across the Bank's footprint resulting in lower origination volume, which was comparable to the prior year, as well as a continued election to sell a significant portion of conforming mortgages into the secondary market. The decrease in average balances of consumer loans was primarily due to net runoff of indirect auto loans between the first quarters of 2024 and 2025. The average yield on residential mortgage loans and consumer loans each increased in the first quarter of 2025, compared to the same period in the prior year, increasing 24 and 27 basis points, respectively, each due to strong origination yields in recent periods, and normal runoff of older and typically lower yielding originations. Interest income on interest-earning deposits increased mainly due to a $11.2 million increase in average balances of interest-earning deposits, compared to the same period in the prior year, and despite a decrease of six basis points in the average yield on interest-earning deposits, due to a decrease in the interest rate paid on deposit balances at the Federal Reserve.

Interest and dividend income on taxable securities decreased to $3.0 million for the three months ended March 31, 2025 from $3.6 million for the same period in the prior year. Interest and dividend income on taxable securities decreased primarily due to paydowns and maturities of available for sale securities between the first quarter of 2024 and the first quarter of 2025, totaling $55.9 million, primarily on SBA pooled loan and mortgage-backed securities, as well as a decrease in the interest rates of variable rate SBA pooled loan securities, partially offset by purchases of available for sale securities totaling $5.0 million between these periods.

Fully taxable equivalent net interest margin was 2.96% for the first quarter of 2025, compared to 2.73% for the same period in the prior year. Average interest-earning assets increased $48.6 million for the three months ended March 31, 2025 compared to the same period in the prior year. The average yield on interest-earning assets increased two basis points to 4.72%, and the average cost of interest-bearing liabilities decreased 30 basis points to 2.55%, for the three months ended March 31, 2025, compared to the same period in the prior year, due to the change in the interest rate environment. The cost of funds was 1.92% for the three months ended March 31, 2025, compared to 2.13% for the same period in the prior year, a decrease of 21 basis points.

#### Average Consolidated Balance Sheets and Interest Analysis

The following table presents certain information related to the Corporation’s average consolidated balance sheets and its consolidated statements of income for the three months ended March 31, 2025 and 2024. For the purpose of the table below, nonaccrual loans are included in the daily average loan amounts outstanding. Daily balances were used for average balance computations. Investment securities are stated at amortized cost. Tax equivalent adjustments have been made in calculating yields on obligations of states and political subdivisions, tax-free commercial loans, and dividends on equity investments.

*AVERAGE CONSOLIDATED BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS*

*($ in thousands)*

| Interest-earning assets: | Three Months Ended March 31, 2025 Average Balance | Interest | Yield/Rate (3) | Three Months Ended March 31, 2024 Average Balance | Interest | Yield/Rate (3) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Commercial loans | $1,529,028 | $21,696 | 5.75% | $1,406,950 | $20,642 | 5.90% |
| Mortgage loans | 275,524 | 2,701 | 3.98% | 277,661 | 2,597 | 3.74% |
| Consumer loans | 273,187 | 3,751 | 5.57% | 304,574 | 4,016 | 5.30% |
| Taxable securities | 584,614 | 3,026 | 2.10% | 633,294 | 3,560 | 2.26% |
| Tax-exempt securities | 37,758 | 279 | 3.00% | 40,266 | 282 | 2.82% |
| Interest-earning deposits | 29,550 | 325 | 4.46% | 18,314 | 206 | 4.52% |
| Total interest-earning assets | 2,729,661 | 31,778 | 4.72% | 2,681,059 | 31,303 | 4.70% |
| Non interest-earning assets: |  |  |  |  |  |  |
| Cash and due from banks | 26,055 |  |  | 25,255 |  |  |
| Other assets | 50,256 |  |  | 40,665 |  |  |
| Allowance for credit losses | (21,558) |  |  | (22,588) |  |  |
| Total assets | $2,784,414 |  |  | $2,724,391 |  |  |
| Interest-bearing liabilities: |  |  |  |  |  |  |
| Interest-bearing demand deposits | $336,162 | $1,303 | 1.57% | $307,895 | $1,335 | 1.74% |
| Savings and insured money market deposits | 858,937 | 3,866 | 1.83% | 865,113 | 4,266 | 1.98% |
| Time deposits | 514,884 | 4,704 | 3.71% | 481,965 | 4,904 | 4.09% |
| Brokered deposits | 112,840 | 1,283 | 4.61% | 121,405 | 1,640 | 5.43% |
| FHLBNY overnight advances | 20,781 | 236 | 4.61% | 34,875 | 487 | 5.52% |
| FRB advances and other debt | 43,950 | 489 | 4.51% | 41,465 | 498 | 4.83% |
| Total interest-bearing liabilities | 1,887,554 | 11,881 | 2.55% | 1,852,718 | 13,130 | 2.85% |
| Non interest-bearing liabilities: |  |  |  |  |  |  |
| Demand deposits | 622,774 |  |  | 625,837 |  |  |
| Other liabilities | 51,284 |  |  | 49,976 |  |  |
| Total liabilities | 2,561,612 |  |  | 2,528,531 |  |  |
| Shareholders' equity | 222,802 |  |  | 195,860 |  |  |
| Total liabilities and shareholders’ equity | $2,784,414 |  |  | $2,724,391 |  |  |
| Fully taxable equivalent net interest income |  | 19,897 |  |  | 18,173 |  |
| Net interest rate spread (1) |  |  | 2.17% |  |  | 1.85% |
| Net interest margin, fully taxable equivalent (2) |  |  | 2.96% |  |  | 2.73% |
| Taxable equivalent adjustment |  | (80) |  |  | (84) |  |
| Net interest income |  | $19,817 |  |  | $18,089 |  |

(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.

#### Changes Due to Rate and Volume

Net interest income can be analyzed in terms of the impact of changes in rates and volumes. The table below illustrates the extent to which changes in interest rates and the volume of average interest-earning assets and interest-bearing liabilities have affected the Corporation’s interest income and interest expense during the three months ended March 31, 2025 and 2024. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate); (ii) changes attributable to changes in rates (changes in rates multiplied by prior volume); and (iii) the net changes. For purpose of this table, changes that are not due solely to volume or rate changes have been allocated to these categories based on the respective percentage changes in average volume and rate. Due to the numerous simultaneous volume and rate changes during the periods analyzed, it is not possible to precisely allocate changes between volume and rates. In addition, average interest-earning assets include nonaccrual loans and taxable equivalent adjustments were made.

*RATE/VOLUME ANALYSIS OF NET INTEREST INCOME*

*(in thousands)*

| Interest and dividend income on: | Three Months Ended March 31, 2025 vs. 2024 Increase/(Decrease) Total Change | Due to Volume | Due to Rate |
| --- | ---: | ---: | ---: |
| Commercial loans | $1,054 | $1,620 | $(566) |
| Mortgage loans | 104 | (24) | 128 |
| Consumer loans | (265) | (449) | 184 |
| Taxable investment securities | (534) | (278) | (256) |
| Tax-exempt investment securities | (3) | (19) | 16 |
| Interest-earning deposits | 119 | 122 | (3) |
| Total interest and dividend income, fully taxable equivalent | 475 | 972 | (497) |
| Interest expense on: |  |  |  |
| Interest-bearing demand deposits | (32) | 109 | (141) |
| Savings and insured money market deposits | (400) | (34) | (366) |
| Time deposits | (200) | 298 | (498) |
| Brokered deposits | (357) | (114) | (243) |
| FHLBNY overnight advances | (251) | (178) | (73) |
| FRB advances and other debt | (9) | 27 | (36) |
| Total interest expense | (1,249) | 108 | (1,357) |
| Net interest income, fully taxable equivalent | $1,724 | $864 | $860 |

### 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*. 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 $3.1 million for the first quarter of 2025, compared to the same period in the prior year. The increase was primarily due to the directionality of changes attributable to the annual update to loss drivers used in the Bank's CECL model. The update to loss drivers in the current year resulted in an increase in baseline loss rates, while the update in the prior year resulted in a decrease in baseline loss rates. This increase was also partially attributable to an increase of $0.1 million in net charge offs in the first quarter of 2025, compared to the first quarter of 2024.

### 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 March 31, 2025 | 2024 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| WMG fee income | $2,867 | $2,703 | $164 | 6.1% |
| Service charges on deposit accounts | 1,120 | 949 | 171 | 18.0% |
| Interchange revenue from debit card transactions | 1,037 | 1,063 | (26) | (2.4)% |
| Changes in fair value of equity investments | (47) | 101 | (148) | 146.5% |
| Net gains on sales of loans held for sale | 40 | 32 | 8 | 25.0% |
| Net gains (losses) on sales of other real estate owned | (11) | — | (11) | N/M |
| Income from bank owned life insurance | 8 | 9 | (1) | (11.1)% |
| CFS fee and commission income | 223 | 228 | (5) | (2.2)% |
| Other | 652 | 572 | 80 | 14.0% |
| Total non-interest income | $5,889 | $5,657 | $232 | 4.1% |

Total non-interest income for the first quarter of 2025 increased $0.2 million compared to the same period in the prior year, primarily due to increases in service charges on deposit accounts, WMG fee income and other non-interest income, partially offset by a decrease in the changes in fair value of equity investments.

#### Service Charges on Deposit Accounts

The increase in service charges on deposit accounts can primarily be attributed to fee rate increases which were implemented in the second half of 2024.

#### WMG Fee Income

The increase in WMG fee income can primarily be attributed to fee rate increases which were implemented in the second half of 2024.

#### Other Non-Interest Income

The increase in other non-interest income can primarily be attributed to an increase in interest rate swap fee income in the first quarter of 2025, when compared to the same period in the prior year.

#### Changes in Fair Value Equity Investments

The decrease in changes in fair value of equity investments can primarily be attributed to a decrease in the market value of assets held for the Corporation's deferred compensation plan.

### 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 March 31, 2025 | 2024 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Salaries and wages | $7,209 | $7,016 | $193 | 2.8% |
| Pension and other employee benefits | 1,922 | 2,082 | (160) | (7.7)% |
| Other components of net periodic pension and postretirement benefits | (113) | (232) | 119 | 51.3% |
| Total compensation expense | 9,018 | 8,866 | 152 | 1.7% |
| **Non-compensation expense:** |  |  |  |  |
| Net occupancy | 1,533 | 1,493 | 40 | 2.7% |
| Furniture and equipment | 373 | 398 | (25) | (6.3)% |
| Data processing | 2,534 | 2,573 | (39) | (1.5)% |
| Professional services | 638 | 559 | 79 | 14.1% |
| Marketing and advertising | 339 | 345 | (6) | (1.7)% |
| Other real estate owned expenses | 11 | 49 | (38) | N/M |
| FDIC insurance | 439 | 577 | (138) | (23.9)% |
| Loan expenses | 278 | 255 | 23 | 9.0% |
| Other | 1,764 | 1,583 | 181 | 11.4% |
| Total non-compensation expense | 7,909 | 7,832 | 77 | 1.0% |
| Total non-interest expense | $16,927 | $16,698 | $229 | 1.4% |

Total non-interest expense for the first quarter of 2025 increased $0.2 million compared to the same period in the prior year. The increase was due to increases in total compensation expense and non-compensation expense. For the three months ended March 31, 2025 and 2024, non-interest expense to average assets was 2.47%.

#### Compensation expense

The increase in compensation expense for the current period, compared to the same period in the prior year, was primarily due to increases in salaries and wages and other components of net periodic pension and postretirement benefits, partially offset by a decrease in pension and other employee benefits.

The increase in salaries and wages can be primarily attributed to an increase in base salaries, including merit-based increases and additional staffing for the Corporation's newly opened Western New York regional banking center. The increase in other components of net periodic pension and postretirement benefits was primarily due to actuarial adjustments related to the Corporation's pension plans. The decrease in pension and other employee benefit expense was largely due to lower employee healthcare-related expenses compared to the same period in the prior year.

#### Non-compensation expense

The increase in non-compensation expense for the current period, compared to the same period in the prior year, was primarily due to increases in other non-interest expense and professional services, partially offset by a decrease in FDIC insurance expense. The increase in other non-interest expense was primarily due to net recoveries of multiple large altered check charge-offs during the same period in the prior year as well as higher operational losses on the sale of repossessed vehicles during the first quarter of 2025, compared to the same period in the prior year. The increase in professional services was primarily due to additional consulting services compared to the same period in the prior year. The decrease in FDIC insurance was primarily due to a decrease in the Bank's assessment rate, due to an improvement in evaluated metrics.

### 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 March 31, 2025 | 2024 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Income before income tax expense | $7,687 | $9,088 | $(1,401) | (15.4)% |
| Income tax expense | $1,664 | $2,038 | $(374) | (18.4)% |
| Effective tax rate | 21.6% | 22.4% |  |  |

Income tax expense for the three month periods ended March 31, 2025 and 2024 were $1.7 million and $2.0 million, respectively. The decrease in income tax expense was due primarily to a decrease of $1.4 million in income before income tax expense. The effective income tax rate decreased from 22.4% for the three months ended March 31, 2024 to 21.6% for the three months ended March 31, 2025.

### Financial Condition

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

| ASSETS | March 31, 2025 | December 31, 2024 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Total cash and cash equivalents | $53,435 | $47,035 | $6,400 | 13.6% |
| Total investment securities, FHLB and FRB stock | 540,424 | 544,602 | (4,178) | (0.8)% |
| Loans, net of deferred loan fees | 2,097,636 | 2,071,419 | 26,217 | 1.3% |
| Allowance for credit losses | (22,522) | (21,388) | 1,134 | 5.3% |
| Loans, net | 2,075,114 | 2,050,031 | 25,083 | 1.2% |
| Goodwill and other intangible assets, net | 21,824 | 21,824 | — | —% |
| Other assets | 105,928 | 112,655 | (6,727) | (6.0)% |
| Total assets | $2,796,725 | $2,776,147 | $20,578 | 0.7% |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |  |  |
| Total deposits | $2,433,396 | $2,396,883 | $36,513 | 1.5% |
| Advances and other debt | 88,701 | 112,889 | (24,188) | (21.4)% |
| Other liabilities | 46,322 | 51,066 | (4,744) | (9.3)% |
| Total liabilities | 2,568,419 | 2,560,838 | 7,581 | 0.3% |
| Total shareholders’ equity | 228,306 | 215,309 | 12,997 | 6.0% |
| Total liabilities and shareholders’ equity | $2,796,725 | $2,776,147 | $20,578 | 0.7% |

#### 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 $13.6 million in paydowns and maturities in the securities available for sale portfolio, primarily attributable to paydowns on mortgage-backed securities and SBA pooled-loan securities. The market value of securities available for sale increased $11.0 million, due to favorable changes in market interest rates during the current period. Also contributing to the decrease in total investment securities was a decrease of $1.1 million in FHLB and FRB stock, at cost, mainly due to a decrease in total borrowing through the FHLBNY as of March 31, 2025, compared to the prior year-end.

#### Loans, net

The increase in loans, net of deferred loan fees, can primarily be attributed to increases of $43.3 million in commercial mortgages and $0.5 million in residential mortgages, offset by decreases of $3.8 million in commercial and industrial loans and $13.5 million in indirect consumer loans.

#### Allowance for Credit Losses

The increase in the allowance for credit losses was primarily due to the annual review and update to loss drivers used in the Bank's CECL model, which is applied to the model in the first quarter of each year. The update in the current year resulted in an increase in baseline loss rates used for modeling. The increase was also impacted by changes in the FOMC's forecasts, including higher U.S. civilian unemployment and lower U.S. GDP growth compared to the prior year-end, and a decline in prepayment speeds compared to the prior year-end.

#### Other Assets

The decrease in other assets can primarily be attributed to decreases of $3.3 million in interest rate swap assets, due to a decrease in the market value of swaps, and $2.9 million in deferred tax assets, due to improvements in the market value of the available for sale securities portfolio.

#### Deposits

The increase in deposits can primarily be attributed to increases of $33.3 million in interest-bearing demand deposits and $30.4 million in money market deposits. These increases were partially attributable to seasonal inflows of municipal deposits. Total time deposits decreased $25.0 million, consisting of decreases of $13.6 million in customer time deposits and $11.4 million in brokered deposits. The Bank's certificate of deposit campaign in the current year primarily consisted of a continuation of six and 15 month offerings, as well as the introduction of a 36 month offering. Savings deposits increased $4.0 million while non interest-bearing demand deposits decreased $6.1 million, when compared to December 31, 2024.

#### Advances and Other Debt

The decrease in advances and other debt can primarily be attributed to an increase in total deposits, which reduced the need for advances and other debt. Advances and other debt as of March 31, 2025 largely consisted of staggered three-month term advances from the FHLBNY, whereas the composition of advances and other debt as of the prior year-end consisted primarily of FHLBNY overnight advances.

#### Other liabilities

The decrease in other liabilities can primarily be attributed to a decrease of $3.3 million in interest rate swap liabilities, primarily due to a decrease in the market value of swaps.

#### Shareholders’ equity

Shareholders’ equity was $228.3 million at March 31, 2025 compared to $215.3 million at December 31, 2024. The increase can primarily be attributed to an increase of $4.5 million in retained earnings, and a decrease of $8.1 million in accumulated other comprehensive loss. The increase in retained earnings can primarily be attributed to net income of $6.0 million, offset by $1.5 million in dividends declared, during the three months ended March 31, 2025. The decrease in accumulated other comprehensive loss can primarily be attributed to an increase in the fair market value of the available for sale securities portfolio due to favorable changes in market interest rates at quarter end.

#### Assets under management or administration

The market value of total assets under management or administration in WMG was $2.203 billion as of March 31, 2025, including $305.5 million of assets held under management or administration for the Corporation, compared to $2.212 billion as of December 31, 2024, including $301.9 million of assets held under management or administration for the Corporation, a decrease of $9.5 million, or 0.4%, largely due to declines in markets during the first quarter of 2025.

### 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 $528.3 million as of March 31, 2025, a decrease of $3.1 million, or 0.6%, from $531.4 million as of December 31, 2024. The decrease can mostly be attributed to $13.6 million in paydowns and maturities, primarily attributable to paydowns on mortgage-backed securities and SBA pooled-loan securities. The fair value of the portfolio increased $11.0 million, due to favorable changes in interest rates during the current period. The held to maturity securities portfolio consists of obligations of political subdivisions in the Corporation’s market areas. These securities totaled $0.8 million as of March 31, 2025 and December 31, 2024.

Non-marketable equity securities as of March 31, 2025 and December 31, 2024 include shares of FRBNY stock and FHLBNY stock, carried at their cost. FRBNY stock and FHLBNY stock were $1.9 million and $6.1 million respectively as of March 31, 2025, and $1.9 million and $7.2 million respectively as of December 31, 2024. The fair value of these securities is assumed to approximate their cost. The investment in these stocks is regulated by regulatory policies of the respective institutions.

### 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, 2024 to March 31, 2025 (dollars in thousands):

*LOAN PORTFOLIO COMPOSITION*

|  | March 31, 2025 | % of Total Loans | December 31, 2024 | % of Total Loans | Dollar Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Commercial and industrial | $295,732 | 14.1% | $299,521 | 14.5% | $(3,789) | (1.3)% |
| Commercial mortgages: |  |  |  |  |  |  |
| Construction | 95,671 | 4.6% | 94,943 | 4.6% | 728 | 0.8% |
| Owner occupied commercial real estate | 155,027 | 7.4% | 142,279 | 6.8% | 12,748 | 9.0% |
| Non-owner occupied commercial real estate | 1,009,558 | 48.1% | 979,782 | 47.3% | 29,776 | 3.0% |
| Residential mortgages | 275,448 | 13.1% | 274,979 | 13.3% | 469 | 0.2% |
| Consumer loans: |  |  |  |  |  |  |
| Home equity lines and loans | 93,914 | 4.5% | 93,220 | 4.5% | 694 | 0.7% |
| Indirect consumer loans | 164,594 | 7.8% | 178,118 | 8.6% | (13,524) | (7.6)% |
| Direct consumer loans | 7,692 | 0.4% | 8,577 | 0.4% | (885) | (10.3)% |
| Total | $2,097,636 | 100.0% | $2,071,419 | 100.0% | $26,217 | 1.3% |

Portfolio loans totaled $2.098 billion as of March 31, 2025, an increase of $26.2 million, or 1.3%, from $2.071 billion as of December 31, 2024. The increase in loans can primarily be attributed to increases of $43.3 million in commercial mortgage loans and $0.5 million in residential mortgages, partially offset by decreases of $13.5 million in indirect consumer loans and $3.8 million in commercial and industrial loans.

Commercial lending continues to be a primary driver of asset growth for the Corporation, and demand remained strong in the current economic environment, particularly in the Capital Bank division and the newer Canal Bank division in Western New York. As of March 31, 2025, total commercial real estate loans, inclusive of construction loans, in the Canal Bank division grew $24.9 million, while commercial real estate loans in the Capital Bank and Chemung Canal divisions grew $15.9 million and $2.5 million, respectively, compared to December 31, 2024. Commercial and industrial loan balances in the Canal Bank and Capital Bank divisions decreased by $4.5 million and $2.2 million, respectively, compared to December 31, 2024, partially offset by an increase in commercial and industrial loan balances in the Chemung Canal region of $2.9 million.

Residential mortgage loans totaled $275.4 million as of March 31, 2025, an increase of $0.5 million, or 0.2%, compared to December 31, 2024. During the three months ended March 31, 2025, $9.4 million in residential mortgages were originated, of which $2.3 million were sold in the secondary market to Freddie Mac and FHLBNY. Residential mortgage originations continues to be weaker as a result of lower levels of housing inventory across the Corporation's footprint and the higher interest rate environment, relative to prior years. Total consumer loans decreased primarily due to a decrease of $13.5 million, or 7.6%, in indirect consumer loans compared to December 31, 2024, due to paydowns exceeding originations during 2025, and the relatively fast turnover rate in the portfolio.

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

*LOANS BY DIVISION*

|  | March 31, 2025 | December 31, 2024 | December 31, 2023 | December 31, 2022 | December 31, 2021 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Chemung Canal Trust Company (1) | $616,371 | $626,903 | $665,701 | $651,516 | $592,172 |
| Capital Bank Division | 1,318,287 | 1,302,593 | 1,206,561 | 1,098,104 | 879,105 |
| Canal Bank Division | 162,978 | 141,923 | 100,402 | 79,828 | 46,972 |
| Total loans | $2,097,636 | $2,071,419 | $1,972,664 | $1,829,448 | $1,518,249 |

(1) 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 March 31, 2025 and December 31, 2024. Commercial real estate lending is comprised of the construction, owner occupied commercial real estate, and non-owner occupied commercial real estate categories of the loan portfolio, as presented in Note 4 - Loans and Allowance for Credit Losses to the Consolidated Financial Statements. As of March 31, 2025 and December 31, 2024, total commercial real estate loans were $1.260 billion and $1.217 billion, respectively. As the largest component of the Corporation's loan portfolio, quantitative and qualitative attributes of commercial real estate such as maturity and repricing schedules may have a significant impact on management's strategic initiatives, and understanding such attributes is critical in understanding the Corporation's anticipated future liquidity needs and sensitivity to changes in interest rates. Management also evaluates the risk inherent in its portfolio of commercial real estate loans using a variety of metrics, including but not limited to type, geography, collateral, and borrower or sponsor industry.

The following table presents commercial real estate loans by maturity and repricing date as of March 31, 2025 (dollars in thousands):

| Commercial real estate loans: | 2025 | 2026 | 2027 | 2028 | 2029 | After 2029 (1) | Total |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Maturing in: | $74,218 | $67,438 | $82,576 | $89,340 | $104,988 | $841,696 | $1,260,256 |
| Percentage of total | 5.9% | 5.4% | 6.6% | 7.1% | 8.3% | 66.7% | 100.0% |
| Repricing in: | $454,989 | $91,416 | $95,639 | $103,281 | $120,019 | $394,912 | $1,260,256 |
| Percentage of total | 36.1% | 7.3% | 7.6% | 8.2% | 9.5% | 31.3% | 100.0% |

(1) Includes fixed rate loans

The table below presents commercial real estate loans by type and percentage as of March 31, 2025 and December 31, 2024 (dollars in thousands):

| Commercial real estate loans by type: | March 31, 2025 | % of Total | December 31, 2024 | % of Total | % Change |
| --- | ---: | ---: | ---: | ---: | ---: |
| Construction | $95,671 | 7.6% | $94,943 | 7.8% | 0.8% |
| 1-4 family residential (1) | 43,967 | 3.5% | 44,374 | 3.6% | (0.9)% |
| Multifamily | 406,021 | 32.2% | 398,728 | 32.8% | 1.8% |
| Owner occupied | 155,027 | 12.3% | 142,279 | 11.7% | 9.0% |
| Non-owner occupied | 559,570 | 44.4% | 536,680 | 44.1% | 4.3% |
| Total | $1,260,256 | 100.0% | $1,217,004 | 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 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 March 31, 2025 and December 31, 2024 (dollars in thousands):

| Commercial real estate loans by regional location of collateral: | March 31, 2025 | % of Total | December 31, 2024 | % of Total | % Change |
| --- | ---: | ---: | ---: | ---: | ---: |
| Capital Region | $795,960 | 63.2% | $783,342 | 64.3% | 1.6% |
| Southern Tier & Finger Lakes | 207,671 | 16.4% | 221,078 | 18.2% | (6.1)% |
| Western New York | 198,493 | 15.8% | 155,527 | 12.8% | 27.6% |
| Other | 58,132 | 4.6% | 57,057 | 4.7% | 1.9% |
| Total | $1,260,256 | 100.0% | $1,217,004 | 100.0% |  |

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 March 31, 2025 and December 31, 2024, as well as the weighted average (WA) loan to value (LTV) ratio for each industry as of March 31, 2025 (dollars in thousands):

| Commercial real estate loans by borrower industry: | March 31, 2025 | % of Total | WA LTV % | December 31, 2024 | % of Total | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Construction & land development | $95,671 | 7.6% | NA | $94,943 | 7.8% | 0.8% |
| Industrial | 66,844 | 5.3% | 51% | 62,817 | 5.3% | 6.4% |
| Warehouse & storage | 94,042 | 7.5% | 51% | 91,357 | 7.5% | 2.9% |
| Retail | 229,172 | 18.2% | 58% | 212,938 | 17.5% | 7.6% |
| Office | 132,109 | 10.5% | 62% | 122,248 | 10.0% | 8.1% |
| Hotel | 59,597 | 4.7% | 57% | 53,960 | 4.4% | 10.4% |
| 1-4 family residential rental | 43,856 | 3.5% | 62% | 44,374 | 3.6% | (1.2)% |
| Multifamily (5+) | 432,883 | 34.3% | 62% | 427,257 | 35.1% | 1.3% |
| Medical | 45,706 | 3.6% | 57% | 45,480 | 3.7% | 0.5% |
| Educational | 21,860 | 1.7% | 72% | 22,129 | 1.8% | (1.2)% |
| Other | 38,516 | 3.1% | 49% | 39,501 | 3.3% | (2.5)% |
| Total | $1,260,256 | 100.0% | 59% | $1,217,004 | 100.0% |  |

55

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 March 31, 2025 and December 31, 2024, commercial loans to borrowers involved in the real estate and real estate rental and leasing businesses were 51.3% and 50.9% 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 March 31, 2025 and December 31, 2024.

The table below presents the maturity of loans outstanding as of March 31, 2025 (in thousands):

|  | Within One Year | After One But Within Five Years | After Five But Within 15 Years | After 15 Years | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| Commercial and industrial | $96,781 | $118,801 | $77,531 | $2,619 | $295,732 |
| Commercial mortgages: |  |  |  |  |  |
| Construction | 10,168 | 27,177 | 58,326 | — | 95,671 |
| Owner occupied commercial real estate | 6,773 | 30,205 | 105,694 | 12,355 | 155,027 |
| Non-owner occupied commercial real estate | 77,131 | 289,394 | 622,095 | 20,938 | 1,009,558 |
| Residential mortgages | 8,426 | 11,356 | 92,123 | 163,543 | 275,448 |
| Consumer loans: |  |  |  |  |  |
| Home equity lines and loans | 191 | 7,063 | 59,198 | 27,462 | 93,914 |
| Indirect consumer loans | 1,435 | 121,233 | 41,925 | 1 | 164,594 |
| Direct consumer loans | 302 | 5,027 | 1,501 | 862 | 7,692 |
| Total | $201,207 | $610,256 | $1,058,393 | $227,780 | $2,097,636 |

The tables below present the amounts due after one year, classified according to fixed interest rates and variable interest rates as of March 31, 2025 (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 | $65,234 | $34,090 | $475 | $99,799 |
| Commercial mortgages: |  |  |  |  |
| Construction | 5,273 | 2,768 | — | 8,041 |
| Owner occupied commercial real estate | 8,702 | 21,601 | — | 30,303 |
| Non-owner occupied commercial real estate | 194,671 | 112,357 | 5,934 | 312,962 |
| Residential mortgages | 11,356 | 87,929 | 114,498 | 213,783 |
| Consumer loans: |  |  |  |  |
| Home equity lines and loans | 5,820 | 50,583 | 414 | 56,817 |
| Indirect consumer loans | 121,233 | 41,926 | 1 | 163,160 |
| Direct consumer loans | 5,020 | 453.668 | 50.108 | 5,524 |
| Total | $417,309 | $351,708 | $121,372 | $890,389 |

56

| 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 | $53,568 | $43,439 | $2,144 | $99,151 |
| Commercial mortgages: |  |  |  | — |
| Construction | 21,903 | 55,559 | — | 77,462 |
| Owner occupied commercial real estate | 21,502 | 84,094 | 12,355 | 117,951 |
| Non-owner occupied commercial real estate | 94,723 | 509,737 | 15,004 | 619,464 |
| Residential mortgages | — | 4,194 | 49,045 | 53,239 |
| Consumer loans: |  |  |  | — |
| Home equity lines and loans | 1,243 | 8,615 | 27,049 | 36,907 |
| Indirect consumer loans | — | — | — | — |
| Direct consumer loans | 8 | 1,047 | 811 | 1,866 |
| Total | $192,947 | $706,685 | $106,408 | $1,006,040 |

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

#### Non-Performing Loans and Non-Performing Assets

Non-performing assets consist of non-performing loans, other real estate owned that has been acquired in partial or full satisfaction of loan obligations or upon foreclosure, and vehicles that have been repossessed. Non-performing loans is comprised of nonaccrual 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. Payments received on nonaccrual loans are generally applied to principal using the cost recovery method. 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*

|  | March 31, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Total non-performing loans | $9,881 | $8,954 |
| Other real estate owned and repossessed vehicles | 401 | 652 |
| Total non-performing assets | $10,282 | $9,606 |
| Ratio of non-performing loans to total loans | 0.47% | 0.43% |
| Ratio of non-performing assets to total assets | 0.37% | 0.35% |
| Ratio of allowance for credit losses to non-performing loans | 227.93% | 238.87% |
| Accruing loans past due 90 days or more (1) | $24 | $23 |

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

Non-performing loans totaled $9.9 million, or 0.47% of total loans as of March 31, 2025, compared to $9.0 million, or 0.43% of total loans as of December 31, 2024. Non-performing assets, which are comprised of non-performing loans, other real estate owned, and repossessed vehicles were $10.3 million, or 0.37% of total assets as of March 31, 2025, compared to $9.6 million, or 0.35% of total assets as of December 31, 2024. The increase in non-performing loans was primarily due to $0.5 million in residential mortgage loans and $0.5 million in home equity lines and loans being placed into nonaccrual status during the three months ended March 31, 2025. The increase in each of these categories was largely attributable to a single loan in each category, both of which are considered well-collateralized. Non-performing commercial loans decreased $0.1 million compared to December 31, 2024, largely due to the payoff of a $0.3 million nonaccrual non-owner occupied loan during the three months ended March 31, 2025, partially offset by the addition of a $0.2 million commercial and industrial loan to nonaccrual during the same period.

#### 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, in accordance with ASU 2022-02. Modifications included under this guidance include principal reductions, reductions in effective interest rates, term extensions, significant payment delays, or a combination thereof. As of March 31, 2025, the Corporation had seven active loans modified under this accounting guidance. As of March 31, 2025, one commercial and industrial loan which was given an extension of six months during 2023 was in payment default, while the remainder of modified loans were performing under their modified terms. There were no loan modifications made to borrowers experiencing financial difficulty during the three month periods ended March 31, 2025 and 2024.

#### 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. The allowance for credit losses covers a broad range of assets including loans, unfunded commitments, and debt securities, incorporating both quantitative and qualitative components. As of March 31, 2025 and December 31, 2024, the Corporation did not allocate any allowance for credit losses to its portfolios of available for sale or held to maturity debt securities, due to either the explicit or implicit U.S. Government guarantee as to principal and interest payments on the majority of the portfolio, and the immateriality of credit risk on remaining unguaranteed securities.

Loans are analyzed for credit loss on either an individual basis or a pooled (collective) basis, determined by risk characteristics. The Corporation begins analyzing loans on an individual basis when management determines a loan no longer exhibited risk characteristics consistent with the risk characteristics in its designated pool under the Corporation's CECL methodology. The amortized cost basis of individually analyzed loans as of March 31, 2025 totaled $6.4 million, compared to $6.5 million as of December 31, 2024. Remaining loans are analyzed on a pooled basis and are segmented based on groups of assigned FFIEC Call Report codes. Management seeks to disaggregate its loan portfolio in a granular enough manner to capture the risk profile of each loan, yet broad enough to accurately allow for the application of certain pool-level assumptions.

A majority of the Corporation's individually analyzed loans are secured and measured for credit loss based on collateral evaluations, using the collateral-dependent practical expedient prescribed by ASC 326. 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 to the allowance for credit losses or charge-off. In determining the amount of any specific allocation or charge-off, the Corporation makes 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 additional allocations to the allowance for credit losses or recognition of additional charge-offs. Real estate values in each of the Corporation's market areas have remained stable. 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. If market conditions warrant, future appraisals are obtained for both real estate and non-real estate collateral. Certain individually analyzed loans determined not to be collateral-dependent are analyzed using a cash flow analysis.

For pooled loans, 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 loan as of 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 utilizes 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 a chosen economic indicator for each pool of loans, and is then applied to the portfolio to derive the statistical loss implications thereof. An estimated 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, including its projections for U.S. civilian unemployment and U.S. GDP growth, as the source for its readily available and reasonable economic forecast. The forecasted values are applied over a rolling four quarter period, and revert to the historic mean of the economic variable over an eight quarter period, on a straight-line basis.

Qualitative adjustments represent management's expectation of certain risks not being fully captured in the quantitative portion of the model. Qualitative adjustment rates are applied to each loan within a pool on a consistent basis. Factors considered as part of the qualitative adjustment analysis primarily 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 external factors such as change in the regulatory and competitive landscape.

The allowance for credit losses is increased through a provision 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 for credit losses on the Corporation's Consolidated Statements of Income. Loans are charged against the allowance for credit losses when management believes 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 individually analyzed loans, and determinations concerning qualitative adjustments. While management uses available information to recognize estimated credit losses, 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 on loans was $22.5 million as of March 31, 2025, and $21.4 million as of December 31, 2024. The allowance for credit losses on loans was 227.93% of non-performing loans as of March 31, 2025, compared to 238.87% as of December 31, 2024. The ratio of allowance for credit losses on loans to total loans was 1.07% as of March 31, 2025 and 1.03% as of December 31, 2024. Net charge-offs for the three months ended March 31, 2025 and March 31, 2024 were $0.3 million and $0.2 million, respectively. Net charge-off activity for the three months ended March 31, 2025 and 2024 was almost entirely concentrated in indirect auto loans.

The increase in the allowance for credit losses was largely due 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. The economic variable used as a loss driver used for the Bank's commercial and industrial and other loans pools were adjusted as a result of the annual update; the loss driver used in the prior year was the FOMC's projection for U.S civilian unemployment rate and the loss driver used in the current year is the FOMC's projection for U.S. GDP growth. Recalibration of loss drivers resulted in an increase in baseline loss rates used in CECL modeling, reflecting additional periods of data added to the analysis and normal maintenance of the composition of the peer groups used in modeling. Additionally, FOMC forecasts for both U.S. civilian unemployment and U.S. GDP growth deteriorated as of March 31, 2025 compared to December 31, 2024, as the FOMC incorporated elevated levels of economic uncertainty in the current environment into their forecasts. Prepayment speeds, which have an inverse relationship with modeled credit losses, also declined as of March 31, 2025 compared to December 31, 2024.

The table below summarizes the Corporation’s allowance for credit losses and non-performing loans outstanding by loan category as of March 31, 2025 and December 31, 2024 (dollars in thousands):

*ALLOWANCE BY LOAN CATEGORY*

| Balance as of March 31, 2025 | 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 | $5,153 | 1.74% | $1,697 | 0.57% | 303.65% |
| Commercial mortgages | 12,089 | 0.96% | 4,692 | 0.42% | 257.65% |
| Residential mortgages | 2,473 | 0.90% | 1,697 | 0.62% | 145.73% |
| Consumer loans | 2,807 | 1.05% | 1,795 | 0.67% | 156.38% |
| Total | $22,522 | 1.07% | $9,881 | 0.47% | 227.93% |
| **Balance as of December 31, 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 | $4,520 | 1.51% | $1,534 | 0.51% | 294.65% |
| Commercial mortgages | 11,214 | 0.92% | 4,959 | 0.41% | 226.13% |
| Residential mortgages | 2,259 | 0.82% | 1,372 | 0.50% | 164.65% |
| Consumer loans | 3,395 | 1.21% | 1,089 | 0.39% | 311.75% |
| Total | $21,388 | 1.03% | $8,954 | 0.43% | 238.87% |
| (1) Ratio is a percentage of loan category. |  |  |  |  |  |

The table below summarizes the Corporation’s consolidated credit ratios as of March 31, 2025 and December 31, 2024:

| Consolidated Ratios | March 31, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Non-performing loans to total loans | 0.47% | 0.43% |
| Allowance for credit losses to total loans | 1.07% | 1.03% |
| Allowance for credit losses to non-performing loans | 227.93% | 238.87% |

The table below summarizes the Corporation’s ratio of net charge-offs and recoveries to average loans outstanding by loan category for the three months ended March 31, 2025 and March 31, 2024:

| Net Charge-Off Ratio | March 31, 2025 | March 31, 2024 |
| --- | ---: | ---: |
| Commercial and industrial | —% | (0.01)% |
| Commercial mortgages | —% | —% |
| Residential mortgages | (0.01)% | —% |
| Consumer loans | 0.40% | 0.30% |
| Total | 0.05% | 0.04% |

60

The table below summarizes the Corporation’s credit loss experience for the three months ended March 31, 2025 and 2024 (in thousands):

*SUMMARY OF CREDIT LOSS EXPERIENCE*

|  | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Balance of allowance for credit losses at beginning of period | $21,388 | $22,517 |
| Charge-offs: |  |  |
| Commercial and industrial | 5 | — |
| Commercial mortgages | — | — |
| Residential mortgages | — | 16 |
| Consumer loans | 393 | 351 |
| Total charge-offs | $398 | $367 |
| Recoveries: |  |  |
| Commercial and industrial | $4 | $37 |
| Commercial mortgages | 1 | 1 |
| Residential mortgages | 5 | 22 |
| Consumer loans | 126 | 125 |
| Total recoveries | $136 | $185 |
| Net charge-offs (recoveries) | 262 | 182 |
| Provision (credit) for credit losses on-balance sheet exposure (1) | 1,396 | (1,864) |
| Balance of allowance for credit losses at end of period | $22,522 | $20,471 |

(1) Additional provision related to off-balance sheet exposure was a credit of $304 thousand for the three months ended March 31, 2025 and a credit of $176 thousand for the three months ended March 31, 2024.

### Other Real Estate Owned and Repossessed Vehicles

Other real estate owned totaled $0.2 million as of March 31, 2025, and $0.4 million as of December 31, 2024, respectively. There were no properties added to other real estate owned in the first three months of 2025. There was one residential mortgage property and two home equity properties sold from other real estate owned in the first three months of 2025, resulting in a net loss on sales of $11 thousand. The Corporation had $0.2 million in repossessed vehicles as of March 31, 2025, which is included in other assets on the Consolidated Balance Sheets, and is a component of non-performing assets.

### Deposits

The table below summarizes the Corporation’s deposit composition by segment as of March 31, 2025, and December 31, 2024, and the dollar and percent change from December 31, 2024 to March 31, 2025 (in thousands):

*DEPOSITS*

|  | March 31, 2025 Amount | % of Total | December 31, 2024 Amount | % of Total | March 31, 2025 v. December 31, 2024 $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Non interest-bearing demand deposits | $619,645 | 25.5% | $625,762 | 26.1% | $(6,117) | (1.0)% |
| Interest-bearing demand deposits | 339,790 | 14.0% | 306,536 | 12.8% | 33,254 | 10.8% |
| Money market deposits | 625,505 | 25.7% | 595,123 | 24.8% | 30,382 | 5.1% |
| Savings deposits | 249,541 | 10.3% | 245,550 | 10.2% | 3,991 | 1.6% |
| Certificates of deposit $250,000 or less | 385,575 | 15.8% | 401,563 | 16.8% | (15,988) | (4.0)% |
| Certificates of deposit greater than $250,000 | 104,292 | 4.2% | 101,125 | 4.3% | 3,167 | 3.1% |
| Brokered deposits | 80,799 | 3.3% | 92,159 | 3.8% | (11,360) | (12.3)% |
| Other time deposits | 28,249 | 1.2% | 29,065 | 1.2% | (816) | (2.8)% |
| Total | $2,433,396 | 100.0% | $2,396,883 | 100.0% | $36,513 | 1.5% |

61

Deposits totaled $2.433 billion as of March 31, 2025 compared to $2.397 billion as of December 31, 2024, an increase of $36.5 million, or 1.5%. The increase was primarily attributable to increases of $33.3 million in interest-bearing demand deposits, $30.4 million in insured money market deposits, and $4.0 million in savings deposits. These increases were partially attributable to seasonal inflows of municipal deposits. These increases were partially offset by decreases of $13.6 million in customer time deposits, $11.4 million in brokered deposits and $6.1 million in non interest-bearing demand deposits. The Bank's certificate of deposit campaign in the current year primarily consisted of a continuation of six and 15 month offerings, as well as the introduction of a 36 month offering.

The growth in customer deposits was due primarily to increases of $22.0 million in public deposits, $10.2 million in consumer deposits, $17.7 million in ICS deposits, and $8.0 million in commercial deposits. CDARS deposits decreased $10.1 million when compared to December 31, 2024. As of March 31, 2025, demand deposit and money market deposits comprised 65.1% of total deposits compared to 63.7% as of December 31, 2024. The aggregate amount of the Corporation's outstanding uninsured deposits was 28.4% and 27.2% of total deposits, as of March 31, 2025 and December 31, 2024, respectively.

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

*DEPOSITS BY DIVISION*

|  | March 31, 2025 | December 31, 2024 | December 31, 2023 | December 31, 2022 | December 31, 2021 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Chemung Canal Trust Company | $1,949,773 | $1,892,228 | $1,899,903 | $1,815,566 | $1,738,015 |
| Capital Bank Division | 379,007 | 399,411 | 380,962 | 435,207 | 415,607 |
| Canal Bank Division | 23,817 | 13,085 | 5,786 | 3,002 | 1,811 |
| Brokered Deposits | 80,799 | 92,159 | 142,776 | 73,452 | — |
| Total | $2,433,396 | $2,396,883 | $2,429,427 | $2,327,227 | $2,155,433 |

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 $395.0 million and $387.3 million as of March 31, 2025, and December 31, 2024, respectively. Brokered deposits, which include funds obtained through brokers or the CDARS and ICS One-Way Buy program, were $80.8 million and $92.2 million as of March 31, 2025, and December 31, 2024, 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 decreased $24.2 million to $88.7 million as of March 31, 2025 from December 31, 2024, primarily due to an increase in total deposits, reducing the need for wholesale borrowing. The Corporation’s borrowed funds as of March 31, 2025 were comprised of $85.0 million staggered three-month advances from the FHLBNY. The Corporation’s borrowed funds as of December 31, 2024 were comprised of a $109.1 million FHLBNY overnight advance. There were no outstanding FHLBNY or FRBNY term advances as of December 31, 2024.

### Shareholders’ Equity

Total shareholders' equity increased by $13.0 million from $215.3 million as of December 31, 2024 to $228.3 million as of March 31, 2025, primarily due to an increase in retained earnings and a decrease in accumulated other comprehensive loss. The increase in retained earnings of $4.5 million was due primarily to earnings of $6.0 million, offset by $1.5 million in dividends declared during the three months ended March 31, 2025. The decrease in accumulated other comprehensive loss of $8.1 million can be mostly attributed to an increase in the fair market value of the available for sale securities portfolio, primarily due to favorable changes in interest rates. Treasury stock decreased by $1.0 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 8.16% as of March 31, 2025 compared to 7.76% as of December 31, 2024. The tangible equity to tangible assets ratio was 7.44% as of March 31, 2025 compared to 7.02% as of December 31, 2024. Book value per share increased to $47.49 as of March 31, 2025 from $45.13 as of December 31, 2024.

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 March 31, 2025, 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 first quarter of 2025. As of March 31, 2025, 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 March 31, 2025.

### 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 March 31, 2025, the Corporation's cash and cash equivalents balance was $53.4 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 March 31, 2025, the Corporation's investment in securities available for sale was $528.3 million, $256.1 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 $246.6 million and $244.6 million of residential mortgage loans and home equity loans under a blanket lien arrangement, as of March 31, 2025 and December 31, 2024, 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 $222.3 million and $221.1 million as of March 31, 2025 and December 31, 2024, respectively. The Bank had no outstanding FHLBNY borrowings as of March 31, 2025, and $109.1 million as of December 31, 2024. The Bank's unused borrowing capacity at the FHLBNY was $222.3 million as of March 31, 2025. Borrowings may be used on a short-term basis for liquidity purposes or on a long-term basis to fund asset growth.

Uninsured deposits totaled $690.3 million as of March 31, 2025, and $652.3 million as of December 31, 2024, which included $167.6 million and $145.6 million of municipal deposits that were collateralized by pledged assets when appropriate, 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 $80.8 million and $92.2 million, as of March 31, 2025 and December 31, 2024, respectively. As of March 31, 2025, brokered deposits carried terms of 3 months, with staggered maturities. The Corporation also had a total of $75.0 million of unsecured lines of credit with five different financial institutions, all of which were available as of March 31, 2025 and December 31, 2024. Also available to the Corporation is the Discount Window Lending provided by the Federal Reserve Bank.

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

#### 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)*

|  | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Net cash provided by operating activities | $7,180 | $7,934 |
| Net cash used in investing activities | (11,633) | (17,866) |
| Net cash provided by financing activities | 10,853 | 67,947 |
| Net increase in cash and cash equivalents | $6,400 | $58,015 |

#### 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 three months of 2025 and 2024 primarily resulted from net income after non-cash operating adjustments.

#### Investing activities

Cash used in investing activities during the first three months of 2025 and 2024 primarily 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 three months of 2025 primarily resulted from staggered three-month advances from the FHLBNY and a net increase in deposits. Cash provided by financing activities during the first three months of 2024 predominantly resulted from an increase in deposits, including brokered deposits, and an advance from the Federal Reserve BTFP, offset by a net repayment of overnight advances held at the end of the prior quarter.

### 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 March 31, 2025 and December 31, 2024, 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 March 31, 2025, 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 March 31, 2025 and December 31, 2024 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 March 31, 2025 were as follows (in thousands, except ratio data):

| As of March 31, 2025 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 | $286,459 | 13.45% | N/A | N/A | N/A | N/A | N/A | N/A |
| Bank | $280,900 | 13.19% | $170,345 | 8.00% | $223,578 | 10.50% | $212,932 | 10.00% |
| Tier 1 Capital (to Risk Weighted Assets): |  |  |  |  |  |  |  |  |
| Consolidated | $263,401 | 12.37% | N/A | N/A | N/A | N/A | N/A | N/A |
| Bank | $257,842 | 12.11% | $127,759 | 6.00% | $180,992 | 8.50% | $170,345 | 8.00% |
| Common Equity Tier 1 Capital (to Risk Weighted Assets): |  |  |  |  |  |  |  |  |
| Consolidated | $263,401 | 12.37% | N/A | N/A | N/A | N/A | N/A | N/A |
| Bank | $257,842 | 12.11% | $95,819 | 4.50% | $149,052 | 7.00% | $138,406 | 6.50% |
| Tier 1 Capital (to Average Assets): |  |  |  |  |  |  |  |  |
| Consolidated | $263,401 | 9.26% | N/A | N/A | N/A | N/A | N/A | N/A |
| Bank | $257,842 | 9.07% | $113,716 | 4.00% | N/A | N/A | $142,145 | 5.00% |

The Corporation and the Bank’s capital ratios as of December 31, 2024 were as follows (in thousands, except ratio data):

| As of December 31, 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 | $280,778 | 13.35% | N/A | N/A | N/A | N/A | N/A | N/A |
| Bank | $275,179 | 13.09% | $168,137 | 8.00% | $220,680 | 10.50% | $210,172 | 10.00% |
| Tier 1 Capital (to Risk Weighted Assets): |  |  |  |  |  |  |  |  |
| Consolidated | $258,550 | 12.30% | N/A | N/A | N/A | N/A | N/A | N/A |
| Bank | $252,950 | 12.04% | $126,103 | 6.00% | $178,646 | 8.50% | $168,137 | 8.00% |
| Common Equity Tier 1 Capital (to Risk Weighted Assets): |  |  |  |  |  |  |  |  |
| Consolidated | $258,550 | 12.30% | N/A | N/A | N/A | N/A | N/A | N/A |
| Bank | $252,950 | 12.04% | $94,577 | 4.50% | $147,120 | 7.00% | $136,612 | 6.50% |
| Tier 1 Capital (to Average Assets): |  |  |  |  |  |  |  |  |
| Consolidated | $258,550 | 9.18% | N/A | N/A | N/A | N/A | N/A | N/A |
| Bank | $252,950 | 8.98% | $112,639 | 4.00% | N/A | N/A | $140,799 | 5.00% |

66

### 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 March 31, 2025, the Bank could, without prior approval, declare dividends of approximately $45.2 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 7–12. 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 2025 | As of or for the Three Months Ended Mar. 31, 2024 | Dec. 31, 2024 | Sept. 30, 2024 | June 30, 2024 | March 31, |
| --- | ---: | ---: | ---: | ---: | ---: |
| Net interest income (GAAP) | $19,817 | $19,821 | $18,388 | $17,761 | $18,089 |
| Fully taxable equivalent adjustment | 80 | 88 | 83 | 81 | 84 |
| Fully taxable equivalent net interest income (non-GAAP) | $19,897 | $19,909 | $18,471 | $17,842 | $18,173 |
| Average interest-earning assets (GAAP) | $2,729,661 | $2,711,995 | $2,699,968 | $2,699,402 | $2,681,059 |
| Net interest margin - fully taxable equivalent (non-GAAP) | 2.96% | 2.92% | 2.72% | 2.66% | 2.73% |

#### 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 of intangible assets. 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 Mar. 31, 2025 | Dec. 31, 2024 | Sept. 30, 2024 | June 30, 2024 | March 31, 2024 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Net interest income (GAAP) | $19,817 | $19,821 | $18,388 | $17,761 | $18,089 |
| Fully taxable equivalent adjustment | 80 | 88 | 83 | 81 | 84 |
| Fully taxable equivalent net interest income (non-GAAP) | $19,897 | $19,909 | $18,471 | $17,842 | $18,173 |
| Non-interest income (GAAP) | $5,889 | $6,056 | $5,919 | $5,598 | $5,657 |
| Non-interest expense (GAAP) | $16,927 | $17,823 | $16,510 | $16,219 | $16,698 |
| Efficiency ratio (unadjusted) | 65.85% | 68.88% | 67.92% | 69.43% | 70.32% |
| Efficiency ratio (adjusted) | 65.64% | 68.64% | 67.69% | 69.19% | 70.07% |

68

#### 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) 2025 | As of or for the Three Months Ended Mar. 31, 2024 | Dec. 31, 2024 | Sept. 30, 2024 | June 30, 2024 | March 31, |
| --- | ---: | ---: | ---: | ---: | ---: |
| Total shareholders' equity (GAAP) | $228,306 | $215,309 | $220,654 | $201,222 | $197,128 |
| Less: intangible assets | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) |
| Tangible equity (non-GAAP) | $206,482 | $193,485 | $198,830 | $179,398 | $175,304 |
| Total assets (GAAP) | $2,796,725 | $2,776,147 | $2,774,215 | $2,755,813 | $2,784,890 |
| Less: intangible assets | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) |
| Tangible assets (non-GAAP) | $2,774,901 | $2,754,323 | $2,752,391 | $2,733,989 | $2,763,066 |
| Total equity to total assets at end of period (GAAP) | 8.16% | 7.76% | 7.95% | 7.30% | 7.08% |
| Book value per share (GAAP) | $47.49 | $45.13 | $46.22 | $42.17 | $41.34 |
| Tangible equity to tangible assets at end of period (non-GAAP) | 7.44% | 7.02% | 7.22% | 6.56% | 6.34% |
| Tangible book value per share (non-GAAP) | $42.95 | $40.55 | $41.65 | $37.59 | $36.77 |

#### 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 Mar. 31, 2025 | Dec. 31, 2024 | Sept. 30, 2024 | June 30, 2024 | March 31, 2024 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Total average shareholders' equity (GAAP) | $222,802 | $219,254 | $210,421 | $195,375 | $195,860 |
| Less: average intangible assets | (21,824) | (21,824) | (21,824) | (21,824) | (21,824) |
| Average tangible equity (non-GAAP) | $200,978 | $197,430 | $188,597 | $173,551 | $174,036 |
| Return on average equity (GAAP) | 10.96% | 10.73% | 10.81% | 10.27% | 14.48% |
| Return on average tangible equity (non-GAAP) | 12.15% | 11.92% | 12.07% | 11.56% | 16.29% |

69

#### 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 Mar. 31, 2025 | Dec. 31, 2024 | Sept. 30, 2024 | June 30, 2024 | March 31, 2024 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Reported net income (GAAP) | $6,023 | $5,914 | $5,720 | $4,987 | $7,050 |
| Net (gains) losses on security transactions (net of tax) | — | — | — | — | — |
| Non-GAAP net income | $6,023 | $5,914 | $5,720 | $4,987 | $7,050 |
| Average basic and diluted shares outstanding | 4,791 | 4,774 | 4,773 | 4,770 | 4,764 |
| Reported basic and diluted earnings per share (GAAP) | $1.26 | $1.24 | $1.19 | $1.05 | $1.48 |
| Reported return on average assets (GAAP) | 0.88% | 0.85% | 0.83% | 0.73% | 1.04% |
| Reported return on average equity (GAAP) | 10.96% | 10.73% | 10.81% | 10.27% | 14.48% |

70

## Market risk

As filed, 4,952 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 interest-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 March 31, 2025, it is estimated that immediate decreases of 100 basis points and 200 basis points in interest rates would positively impact the next 12 months net interest income by 2.64% and 4.25%, respectively. Immediate increases of 100 basis points and 200 basis points would positively impact the next 12 months net interest income by 2.22% and 4.38%, 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 | 4.25% |
| 100 basis points decrease | 2.64% |
| 100 basis points increase | 2.22% |
| 200 basis points increase | 4.38% |

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 March 31, 2025, it is estimated that immediate decreases of 100 basis points and 200 basis points in interest rates would positively impact the market value of the Corporation’s capital account by 2.82% and 3.15%, respectively. Immediate increases in interest rates of 100 basis points and 200 basis points would positively impact the market value by 1.06% and 2.22%, 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 | 3.15% |
| 100 basis points decrease | 2.82% |
| 100 basis points increase | 1.06% |
| 200 basis points increase | 2.22% |

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 Officer, Chief Risk Officer, Business Client Division Manager, Divisional Presidents, and Commercial Loan Manager, implements the Board-approved loan policy.

## Controls and procedures

As filed, 1,593 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 March 31, 2025 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 March 31, 2025. 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, 2024, as filed with the Securities and Exchange Commission on March 14, 2025. 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 May 7, 2025.
Source: SEC EDGAR, the filing index for accession 0000763563-25-000074. Last ingested by Listed: Oct 24, 2026, 14:54 ET. No prices; not investment advice.