CHMG 10-K & 10-Q changes, risk factors and insider trading

In 2006, the Office of the Comptroller of the Currency, the FDIC, and the FRB (collectively, the “Agencies”) issued joint guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” (the “CRE Guidance”). Although the CRE Guidance did not establish specific lending limits, it provides that a bank’s commercial real estate lending exposure could receive increased supervisory scrutiny where total non-owner-occupiednon-owner occupied commercial real estate loans, including loans secured by apartment buildings, investor commercial real estate, and construction and land loans, represent 300% or more of an institution’s total risk-based capital, and outstanding balances of such loans has increased by 50% or more during the preceding 36 months. Non-owner occupied commercial real estate loans represented 399.4%384.9% of Bank risk-based capital as of December 31, 20242025 and outstanding balances of non-owner occupied commercial real estate loans increased by 53.2%37.1% during the 36 months preceding December 31, 2024.2025.

In December 2015, the Agencies released a new statement on prudent risk management for commercial real estate lending (the “2015 Statement”). In the 2015 Statement, the Agencies, among other things, indicate the intent to continue “to pay special attention” to commercial real estate lending activities and concentrations going forward. If the Bank’s regulators were to impose restrictions on the amount of such loans it can hold in its portfolio or require it to implement additional compliance measures, for reasons noted above or otherwise, the Corporation’s earnings wouldcould be adversely affected as wouldcould earnings per share.

LoanPurchased loan participations may have a higher risk of loss than loans the Bank originates because the Bank is not the lead bank and has limited control over credit monitoring.

The Corporation occasionally purchases commercial real estate and commercial and industrial loan participations secured by properties outside its market areas in which the Bank is not the lead bank. The Corporation has purchased loan participations secured by various types of collateral such as real estate, equipment, and other business assets located primarily in New York and Pennsylvania. Loan participations may have a higher risk of loss than loans the Bank originates because we rely on the lead bank to monitor the performance of the loan. Moreover, our decisions regarding the classification of a loan participation and credit loss provisions associated with a loan participation are made in part based upon information provided by the lead bank. A lead bank also may not monitor a participation loan in the same manner as we would for loans that the Bank originates. As of December 31, 2024,2025, loan participation balances where the Bank is not the lead bank totaled $168.2$195.8 million, or 8.1%8.6% of our loan portfolio. As of December 31, 2024,2025, commercial and industrial loan participations outside our market areas totaled $11.3$2.4 million, or 3.8%0.7% of the commercial and industrial loan portfolio, and commercial real estate loan participations outside our market areas totaled $2.1$3.0 million, or 0.2% of the commercial real estate portfolio. If the Bank’s underwriting of these participation loans is not sufficient, our non-performing loans may increase, negatively effectingaffecting our results of operations.

As of December 31, 2024,2025, $178.1$132.7 million, or 8.5%5.8% of our total loan portfolio, consisted of indirect automobile loans, primarily originated through automobile dealers for the purchase of new or used automobiles. The Corporation serves customers that cover a range of creditworthiness and the required terms and rates are reflective of those risk profiles. Automobile loans are inherently risky as they are often secured by assets that may be difficult to locate and can depreciate rapidly. In some cases, repossessed collateral for a defaulted automobile loan may not provide an adequate source of repayment for the outstanding loan and the remaining deficiency may not warrant further substantial collection efforts against the borrower. Automobile loan collections depend on the borrower's continuing financial stability, and therefore, are more likely to be adversely affected by job loss, divorce, illness, or personal bankruptcy. Additional risk elements associated with indirect lending include the limited personal contact with the borrower as a result of indirect lending through non-bank channels, namely automobile dealers.

The Corporation’s emphasis on the origination of commercial loans is one of the more significant factors in determining its allowance for credit losses. As the Corporation continues to increase the amountvolumes of these loans, additional or increased provisions for credit losses may be necessary, which may result in a decrease in earnings.

EffectiveThe JanuaryCorporation's 1,allowance 2023, the Corporation adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the Corporation to estimate the lifetime expectedfor credit losses in the loan portfolio as of the measurement date. This methodology is dependent on the relationship between economic variables and historic default, and there is no guarantee that these factors will be similarly correlated in the future. A departure or decoupling in correlation may increase the risk of allowance for credit losses being inadequate to absorb anticipated lifetime credit losses, and may require changes in the Corporation's methodology, which may result in increased provision requirements, materially adversely impacting the results of operations and financial condition.

Bank regulators periodically review the Corporation’s allowance for credit losses and may require the Corporation to increase its provision for credit losses or loan charge-offs. Any increase in the allowance for credit losses or loan charge-offs as required by these regulatory authorities could have a material adverse effect on the Corporation's results of operations and/or financial condition. In addition, any future credit deterioration,deterioration may require us to increase our allowance for credit losses in the future.losses.

As a bank, we are susceptible to fraudulent activity that may be committed against us or our clients, which may result in financial losses or increased costs to us or our clients, disclosure or misuse of our information or our client information, misappropriation of assets, privacy breaches against our clients, litigationlitigation, or damage to our reputation. We are subject to fraud and compliance risk, including but not limited to, in connection with the origination of loans, ACH transactions, wire transactions, ATM transactions, checking transactions, and debit cards that we have issued to our customerscustomers, and through our online banking portals. We have experienced losses due to apparent fraud.

The Bank owns a participating interest totaling $4.2 million in an approximately $36.0 million commercial credit facility on which the borrower defaulted due to fraudulent activity. On April 23, 2020 the Corporation received payment of $0.5 million from the lead bank related to its obligation under the participation agreements. The Bank continues to pursue recovery of the remaining $3.7 million, interest, and accumulated expenses as a result of purchasing the participationparticipating interest. While the Corporation believes this incident was an isolated occurrence, there can be no assurance that such losses will not occur again or that such acts will be detected in a timely manner. We maintain a system of internal controls and insurance coverage to mitigate against such risks, including data processing system failures and errors, and customer fraud. If our internal controls fail to prevent or detect any such occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could have a material adverse effect on our business, financial condition, and results of operations.

The primary sources of funds of the Bank are customer deposits and loan repayments. While scheduled loan repayments are a relatively stable source of funds, they are subject to the ability of borrowers to repay the loans. The ability of borrowers to repay loans can be adversely affected by a number of factors, including changes in economic conditions, adverse trends or events affecting business industry groups, reductions in real estate values or markets, business closings or lay-offs, inclement weather, which could be exacerbated by potential climate change, natural disastersdisasters, and international instability.

Market conditions may impact the competitive landscape for deposits in the banking industry. The elevated interest rate environment and future actions of the FRB may impact pricing and demand for deposits in the banking industry. Additionally, deposit levels may be affected by a number of factors, including rates paid by competitors, general interest rate levels, regulatory capital requirements, returns available to customers on alternative investments, and general economic conditions. As of December 31, 2024,2025, the Bank had $1.8 billion of deposit liabilities, representing 74.0%79.6% of total deposits, that had no maturity and, therefore, may be withdrawn by the depositor at any time without penalty. The withdrawal of more deposits than the Corporation anticipates could have an adverse impact on profitability as the Corporation may be required from time to time to rely on secondary sources of liquidity to meet withdrawal demands or otherwise fund operations. Such sources include advances from the Federal Home Loan BankFHLBNY and the Federal Reserve,FRBNY, sales of investment securities and loans, and federal funds lines of credit from correspondent banks, as well as out-of-market time deposits which could cause the Corporation’s overall cost of funding to increase. While the Corporation believes that these sources are currently adequate, there can be no assurance they will be sufficient to meet future liquidity demands, particularly if the Corporation continues to grow and experience increasing loan demand. The Corporation may be required to slow or discontinue loan growth, capital expenditures or other investments, or liquidate assets should such sources not be adequate.

In recent years, the FRB implementedengaged in significant monetary tighteningpolicy policies,tightening, increasing the federal funds rate by 525 basis points during 2022 and 2023, resulting in the upper bound of the federal funds rate peakingto atreaching 5.50% as ofat the end of 2023. These increases also represented the fastest pace of tightening by the FRB since the 1970s. In 2024 theThe FRB decreasedreduced the federal funds rate by 100 basis points,points in 2024 and 75 basis points in 2025, based on its perceived progress towards aits dual mandate to maximize employment and maintain stable price levels. Should the FRB determine in the future that insufficient progress has been made towards this dual mandate, they may choose to further increase interest rates. If interest rates paid on deposits and other borrowings change at a faster rate than interest rates received on loans and other investments, net interest income, and therefore earnings, could be adversely impacted.

The Corporation faces substantial competition in all phases of its operations from a variety of different competitors. Future growth and success will depend on the ability to compete effectively in this highly competitive environment. The Corporation competes for deposits, loans and other financial services with a variety of banks, thrifts, credit unionsunions, and other financial institutionsinstitutions, as well as other entities,entities which provide financial services. Some of the financial institutions and financial services organizations with which the Corporation competes with are not subject to the same degree of regulation as the Corporation. Many competitors have been in business for many years, have established customer bases, are larger, and have substantially higher lending limits. The financial services industry is also likely to become more competitive as further technological advances enable moreadditional companies to provide financial services. These technological advances may diminish the importance of depository institutions and other financial intermediaries in the transfer of funds between parties.

As part of the Corporation's strategy for continued growth, it may open additional branches. In 2021, the Corporation entered the Buffalo Metropolitan Area, opening a then full service branch in Clarence, New York. In 2024, the Corporation opened a full-service branch and regional banking center in Williamsville, New York and converted its Clarence branch into an administrative offices.office, which was closed in 2025. The Corporation anticipates it will open additional branches in Western New York, including a branch in West Seneca, New York. New branches do not initially contribute to operating profits due to the impact of overhead expenses and the start-up phase of generating loans and deposits. To the extent that additional branches are opened, the Corporation may experience the effects of higher operating expenses relative to operating income from the new operations, which may have an adverse effect on the Corporation's levels of net income, return on average equity, and return on average assets.

The Community Reinvestment Act (“CRA”), the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions. A successful regulatory challenge to an institution’s performance under the CRA or fair lending laws and regulations could result in a wide variety of sanctions, including the required payment of damages and civil money penalties, injunctive relief, imposition of restrictions on mergers and acquisitions activity and restrictions on expansion. On June 24, 2021, the Bank and the New York State Department of Financial ServicesNYSDFS agreed to the settlement provisions set forth in a Consent Order pertaining to alleged violations of New York’s Fair Lending Law and the federal Equal Credit Opportunity Act relating to the Bank’s indirect automobile lending program. The Bank has been informed by the NYSDFS that the Bank has satisfied all of its obligations under the 2021 Consent Order related to the Bank's indirect automobile lending program. Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on our business, financial condition, and results of operations.

The Corporation may be requiredneed to raise additionalaccess capital markets or manage its existing capital structure in the future, but thatsuch capital may not be available when it is needed, or it may only be available on unacceptable terms, which could adversely affect its financial condition and results of operations.

The Bank is required by federal and state regulatory authorities to maintain adequate levels of capital to support its operations. The Corporation may at some point need to raise additional capital to support the Bank’s continued growth or be required by regulators to increase its capital resources.levels. The Corporation’s ability to raise additional capital, ifrefinance needed,existing indebtedness, or otherwise manage its capital structure, will depend on conditions in the capital markets at that time, which are outside of its control, and on its financial performance. Accordingly, the Corporation may not be able to raise additional capital, if needed, on terms acceptable to it. If the Corporation cannot raise additional capitalcapital, or refinance or repay existing indebtedness, when needed, its ability to further expand the Bank’s operations and pursue its growth strategy could be materially impaired and its financial condition and liquidity could be materially and adversely affected. In addition, if the Corporation is unable to raise additional capital when required by bank regulators, it may be subject to adverse regulatory action.

Our risk management framework is designed to minimize risk and loss to us. We seek to identify, measure, monitor, report and control our exposure to risk, including strategic, market, liquidity, compliance and operational risks. While we use a broad and diversified set of risk monitoring and mitigation techniques, these techniques are inherently limited because they cannot anticipate the existence or future development of currently unanticipated or unknown risks. Recent economic conditions and heightenedGenerally, legislative and regulatory scrutiny ofover the financial services industry,industry amonghas otherbeen developments,substantial, haveand increasedsuch scrutiny is expected to remain, which increases our level of risk. In addition, the spring 2023 failures of Silicon Valley Bank, Signature Bank, and First Republic Bank resulted in decreased confidence in banks among depositors and other investors. Accordingly, if we are unable to fully anticipate or manage these risks, we could incur losses, impacting our results of operations and financial condition.

We operate in diverse markets and rely on the ability of our employees and systems to process a high number of transactions. Operational risk is the risk of loss resulting from our operations, including but not limited to, the risk of fraud by employees or persons outside our company, the execution of unauthorized transactions by employees, errors relating to transaction processing and technology, breaches of our internal control systems and compliance requirements, and business continuation and disaster recovery. The Corporation uses automated processing to enhance operational efficiencies by decreasing the level of manual inputs required to perform routine processes. Automated processes are initially programmed by employees who predefine the rules and logic for each task. Any errors in initial programming may lead to rapid propagation of errors in the dependent automated processes. Insurance coverage may not be available for certain operational losses, or where available, such losses may exceed insurance limits. This risk of loss also includes the potential legal actions that could arise as a result of operational deficiencies or as a result of non-compliance with applicable regulatory standards or customer attrition due to potential negative publicity. In the event of a breakdown in our internal control systems, improper operation of systems, or improper employee actions, we could suffer financial loss, face regulatory action, and/or suffer damage to our reputation.

The banking industry continues to undergo rapid technological changes with frequent introductions of new technology-driven products and services, most recently including the proliferation of artificial intelligence basedintelligence-based solutions. Technology has lowered barriers to entry and made it possible for "non-banks" to offer traditional bank products and services using innovative technological platforms such as those developed by fintech and blockchain companies. These "non-banks" may be able to achieve economies of scale and offer better pricing for banking products and services than the Corporation can. In July 2025, the GENIUS ACT was signed into law, establishing a comprehensive federal regulatory framework for payment stablecoins, which consumers and businesses may view as a substitute for traditional banking deposit products and services. The Corporation's future success will depend, in part, on the ability to address the needs of customers by using technology to provide products and services that will satisfy customer demands for convenience, as well as to create additional efficiencies in operations. Many competitors may have substantially greater resources to invest in technologicalemerging improvements,technologies, including those related to artificial intelligence. Although the Corporation has made investments related to automated processing, as described above, and other emerging technologies, there can be no assurance that the Corporation will be able to effectively implement new technology-driven products and services, be successful in marketing such products and services to customers, or realize operational efficiencies from such efforts. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on the Corporation's business and, in turn, its financial condition and results of operations.

Our operations depend upon our ability to protect our computer systems and network infrastructure against damage from physical theft, fire, power loss, telecommunications failure, or a similar catastrophic event, as well as from security breaches, denial of service attacks, viruses, worms, and other disruptive problems caused by hackers. Any damage or failure that causes an interruption in our operations could have a material adverse effect on our financial condition and results of operations. Computer break-ins, phishing, and other disruptions could also jeopardize the security of information stored in and transmitted through our computer systems and network infrastructure, which may result in significant liability to us and may cause existing and potential customers to refrain from doing business with us. Although we, with the help of third-party service providers, intend to continue to implement security technology and establish operational procedures designed to prevent such damage, our security measures may not be successful. In addition, advances in computer capabilities, new discoveries in the field of cryptographycryptography, or other developments could result in a compromise or breach of the algorithms we and our third-party service providers use to encrypt and protect customer transaction data. A failure of such security measures could have a material adverse effect on our financial condition and results of operations.

The potential for operational risk exposure exists throughout the Corporation's business and, as a result of the Corporation's interactions with and reliance on third parties, is not limited to the Corporation’s own internal operational functions. The Corporation relies on numerous third-party vendors and service providers to conduct aspects of its business operations and faces operational risks relating to them. The Corporation's vendors, service providers, and other third parties may expose the Corporation to risk as a result of human error, misconduct, malfeasance, or a failure or breach of systems, networks, and infrastructure. We expect third-party vendors, or a subcontractor thereof, to increasingly incorporate artificial intelligence embedded solutions into their product offerings and operational workflows. Biased, inaccurate, or misleading outputsoutput from artificial intelligence basedintelligence-based solutions used by third parties may not be easily detectable by the Corporation, and may compromise our ability to rely on the products or services of contracted third parties. As a result, the Corporation’s ability to conduct business may be adversely affected by any significant disruptions to third parties with whom the Corporation interacts or relies upon.

Management has identified certain accounting policies as being critical because they require management’s judgment to ascertain the valuationsvaluation of assets, liabilities, commitmentscommitments, and contingencies. A variety of factors could affect the ultimate value that is obtained either when earning income, recognizing an expense, recovering an asset, valuing an asset or liability, or reducing a liability. The Corporation has established detailed policies and control procedures that are intended to ensure these critical accounting estimates and judgments are well controlled and applied consistently. In addition, these policies and procedures are intended to ensure the process for changing methodologies occurs in an appropriate manner. Because of the uncertainty surrounding its judgments and the estimates pertaining to these matters, actual outcomes may be materially different from amounts previously estimated. For example, because of the inherent uncertainty of estimates, management cannot provide any assurance that the Bank will not significantly increase its allowance for credit losses if actual losses are more than the amount reserved.estimated. Any increase in its allowance for credit losses or loan charge-offs could have a material adverse effect on the Corporation's financial condition and results of operations. In addition, the Corporation cannot guarantee that it will not be required to adjust accounting policies or restate prior financial statements.

The Corporation is required to test its goodwill for impairment on a periodic basis. The impairment testing process considers a variety of factors, including the current market price of its common stock, the estimated net present value of its assets and liabilities, and information concerning the terminal valuation of similarly situated insured depository institutions. If an impairment determination is made in a future reporting period, its earnings and the book value of goodwill would be reduced by the amount of the impairment. If an impairment loss is recorded, it will have little or no impact on the tangible book value of the Corporation's common shares or its regulatory capital levels, but such an impairment loss could significantly restrict the Bank from paying a dividend to the Corporation. Further, deferred tax assets must be reduced by a valuation allowance if it is more likely than not that all of the deferred tax assets will not be realized. The valuation allowance would serve to reduce the deferred tax assets to an amount that would be more likely than not to be realized. The more likely than not threshold is a likelihood of more than 50 percent.

From time to time as part of the Corporation’s normal course of business, customers make claims and take legal action against the Corporation based on its actions or inactions related to the fiduciary responsibilities of the Wealth Management Group segment. If such claims and legal actions are not resolved in a manner favorable to the Corporation, they may result in financial liability and/or adversely affect the market perception of the Corporation and its products and services. This may also impact customer demand for the Corporation’s products and services. Any financial liability or reputationreputational damage could have a material adverse effect on the Corporation’s business, which, in turn, could have a material adverse effect on its financial condition and results of operations.

Severe weatherweather, natural disasters, and other naturalexternal disastersconditions can affect the Corporation’s business.

The Corporation's main office and its branch offices can be affected by natural disasters such as severe storms and flooding. These kinds of events could interrupt the Corporation's operations, particularly its ability to deliver deposit and other retail banking services to its customers and as a result, the Corporation's business could suffer serious harm. While the Corporation maintains adequate insurance against property and casualty losses arising from most natural disasters, and it has successfully overcome theprior challenges caused by past flooding in Central New York,challenges, there can be no assurance that it will be as successful if and when future disasters occur.

The national economy continues to experience elevated levels of inflation. As of December 31, 2024,2025, the year over year increase in the consumer price index (CPI) increase was 2.9%,2.7%, primarily driven by housing and transportationmedical care costs. The FOMC of the FRB, which sets the federal funds rate, has a preferred measure of inflation, the year over year change in personal consumption expenditures index (PCE), excluding food and energy, referred to as core PCE, which increased 2.8%.3.0%. Levels of inflation remain above the FRB long termlong-term target of approximately 2.0%, which may result in the FOMC keepingholding the federal funds rate elevated.at an elevated level. Tariffs, federal government trade policy and fiscal initiatives, and labor market pressures may continue to adversely impact inflation levels. Higher inflation, if sustained, could have an adverse effect on our business. Increases in interest rates in response to elevated levels of inflation has decreased the fair value of our available for sale securities portfolio, resulting in an increase in unrealized losses recorded in accumulated other comprehensive income. In addition, inflation-driven increases in our levels of non-interest expense could negatively impact our results of operations. Higher inflation and an elevated interest rate environment may also cause increased volatility in the business environment, which could adversely affect loan demand and borrowers’ ability to make repayments.

The Corporation's physical branch network, and by extension its lending footprint, is significantly concentrated in the upstate region of New York State. A deterioration in local economic conditions or in the residential or commercial real estate markets within our footprint could have an adverse effect on the quality of our loan portfolios, demand for our products and services, the ability of borrowers to make timely loan repayments, and the value of the collateral securing loans. If demographic, employment, or other growth factors in our market areas deteriorate for an extended period, subsequent income levels, deposits, and real estate development could be adversely impacted. Some of our larger competitors thatwhich are more geographically diverse may be better able to manage and mitigate risks posed by adverse conditions impacting only local or regional markets.

The Corporation's success depends, in large part, on its ability to attract and retain key people. Competition for the best people in most activities in which the Corporation engages can be intense and it may not be able to hire people or retain them. A key component of employee retention is providing a fair compensation base combined with the opportunity for additional compensation for above average performance. In this regard, the Corporation uses a stock-based compensation program that aligns the interest of the Corporation's executives and senior managers with the interests of the Corporation,Corporation and its shareholders.

The Corporation is a holding company and depends on its subsidiaries for dividends, distributionsdistributions, and other payments.

The Corporation is a legal entity separate and distinct from the Bank and other subsidiaries. Its principal source of cash flow, including cash flow to pay dividends to its shareholders,shareholders and service its subordinated debt, is dividends from the Bank. There are statutory and regulatory limitations on the payment of dividends by the Bank to the Corporation, as well as by the Corporation to its shareholders. FRB regulations affect the ability of the Bank to pay dividends and other distributions and to make loans to the Corporation. If the Bank is unable to make dividend payments to the Corporation and sufficient capital is not otherwise available, the Corporation may not be able to make dividend payments to its common shareholders.shareholders or its other obligations.

The Corporation has been a financial holding company since 2000, and the Bank was established in 1833,1833 and CFS inwas 2001, and Chemung Risk Management, Inc. (CRM)established in 2016.2001. 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 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.

This discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act, and the Private Securities Litigation Reform Act of 1995. 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, changes in FDIC assessments, public health issues, geopolitical conflicts, bank failures, difficulties in managing the Corporation’s growth, competition, changes in law or the regulatory environment, and changes in general business and economic trends. Information concerning these and other factors can be found in the Corporation’s periodic filings with the SEC, including the discussion under the heading “Item 1A. Risk Factors” of this annual report on Form 10-K. The Corporation's quarterly filings are available publicly on the SEC’s website at http://www.sec.gov, on the Corporation's website at http://www.chemungcanal.com or by written request to: Kathleen S. McKillip, Corporate Secretary, Chemung Financial Corporation, One Chemung Canal Plaza, Elmira, NY 14901. 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.

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 judgementjudgment 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.

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,judgment, 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 December 31, 2024,2025, the allowance for credit losses on loans totaled $21.4$24.2 million, compared to $22.5$21.4 million as of December 31, 2023.2024. 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 December 31, 20242025 and December 31, 2023,2024, the allowance for credit losses allocated to the total commercial portfolio was $15.7$18.9 million and $17.1$15.7 millionmillion, respectively, or 73.6%78.0% and 75.9%.73.6% of the total allowance for credit losses on loans. For comparison, total commercial loans represented 73.2%76.4% and 70.3%73.2% of total loan balances, respectively, as of December 31, 20242025 and 2023.2024. 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.SU.S. GDP could have a material impact on the model's estimation of the allowance. Currently, alla pools, with the exceptionmajority of theloan consumer loans pool,pools, as defined in Note 1 to the Consolidated Financial Statements, utilize the FOMC's projections for unemployment as a loss driver, while the consumercommercial pooland industrial, consumer, and other loans pools utilizes the FOMC's projections for GDP growth. 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 bps in the FOMC's projected rate of U.S. civilian unemployment, and a decrease of 50 bps in the FOMC's projected rate of U.S. GDP growth, would increase the model's total calculated allowance by $1.3$1.0 million, or 6.2%,4.0%, to $22.7$25.2 million, assuming qualitative adjustments arewere 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 judgementjudgment of factors as of December 31, 2024,2025, it has also concluded that differing assumptions could materially impact allowance calculations, either positively or adversely.

Management’s methodology and policy in determiningestimating the allowance for credit losses can be found in Note 1 to the Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K. The activity in the allowance for credit losses can be found in supporting tables in Note 4 to the Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

Net income for the year ended December 31, 20242025 was $23.7$15.1 million, or $4.96$3.14 per share, compared with net income of $25.0$23.7 million, or $5.28$4.96 per share, for the prior year. Return on average equity for the year ended December 31, 20242025 was 11.53%,6.40%, compared with 14.11%11.53% for the prior year. The decrease in net income for the year ended December 31, 2024,2025, compared to the prior year, was due to ana increasedecrease in non-interest expense,income, decreasesand increases in non-interest incomeexpense and net interest income, offset by decreases in the provision for credit losseslosses, partially offset by an increase in net interest income and a decrease in income tax expense.

Net interest income for the year ended December 31, 20242025 totaled $74.1$87.2 million, aan decreaseincrease of $0.4$13.1 million, or 0.5%,17.7%, compared with $74.5$74.1 million for the prior year. Fully taxable equivalent net interest margin was 2.76%3.26% for the year ended December 31, 20242025 compared withto 2.85%2.76% for the prior year. The decreaseincrease in net interest income was primarilydriven dueby toa increasesdecrease of $14.1$8.3 million in interest expense on deposits and $0.8increases of $8.2 million in interest expenseincome on borrowed funds,loans and $1.6 million in interest income on interest-earning deposits, partially offset by a decrease of $1.3$4.2 million in interest and dividend income on taxable securities, offset by increases of $14.9 million in interest income on loans including fees, and $0.9 million in interest income on interest-earning deposits.securities.

Average interest-earninginterest‑earning assets increaseddecreased $76.9$18.0 millionmillion, while average interest-bearinginterest‑bearing liabilities increaseddecreased $108.1$32.2 million during 2024,2025, each compared to the prior year, largely the result of the Corporation’s balance sheet repositioning efforts in the current year. The average yield on interest-earninginterest‑earning assets increased 4123 basis points to 4.74%,4.97%, while the average cost of interest-bearinginterest‑bearing liabilities increaseddecreased 6737 basis points to 2.87%2.50%. duringThe 2024,total cost of funds was 1.86% for the year ended December 31, 2025, compared to 2.15% in the prior year, botha primarily due to the lagging effectsdecrease of interest29 ratebasis increases during 2022 and 2023.points.

Management'sManagement has established and maintains a methodology for establishingdetermining and maintainingadjusting anits allowance for credit losses conformsin conformity with ASU 2016-13, Financial Instruments - CreditInstruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,Instruments. whichThe wasallowance adoptedis by the Corporation effective January 1, 2023. Basedbased on a combination of quantitative and qualitative analysis,analysis and changes toin the required allowance are recorded through income as a provision (credit). The quantitative portion of the analysismodel is significantly influenced by changes in projected economic conditionsconditions, andas well as changes in the composition of the numerous loan portfolio segments,segments. while qualitativeQualitative adjustments reflect the degree to which management anticipates actualfuture credit riskoutcomes may differ from the resultsthose projected by the quantitative analysis.model.

The provision for credit losses decreasedincreased $3.3$4.5 million, from a provision of $3.3 million for the year ended December 31, 2023 to a credit of $46 thousand for the year ended December 31, 2024.2024 to a provision of $4.4 million for the year ended December 31, 2025. The decreaseincrease was largely due to the annual review and update ofto the loss drivers used inwhich the Bank's CECL model. Updated loss drivers were applied to the CECL model inis thebased first quarter of 2024,upon, resulting in an increase in baseline loss rates during the current year, compared to a decrease in baseline loss rates as a result of the prior year's update, which led to a credit (provision recapture) offor $2.0the millionprior year. Additionally an increase in loan growth for the three monthsyear ended MarchDecember 31, 2024. Additionally, provisioning during 2023 included a $0.9 million specific allocation on a nonaccrual commercial real estate relationship, and higher growth-related provisioning2025 compared to 2024.loan Partiallygrowth offsettingfor thesethe decreasesprior wereyear, as well as unfavorable changes in model inputs during 2025, including a decline in modeled prepayment speeds,speeds whichand results ina higher estimatedmodeled creditunemployment losses,rate, andalso ancontributed to the increase. The increase of $0.2 million in net charge-offs for the year ended December 31, 20242025 compared to the prior year endeddid Decembernot 31,meaningfully 2023.contribute to the increase in provision for credit losses.

Non-interest income for the year ended December 31, 20242025 was $23.2$7.9 million compared with $24.5$23.2 million for the prior year, a decrease of $1.3$15.3 million, or 5.4%.65.8%. The decrease was due primarily to decreasesthe loss on securities sales transactions of $2.5$17.5 million. This was partially offset by increases of $1.4 million in other non-interest income and $0.2$0.4 million in interchangeservice revenuecharges fromon debitdeposit cardaccounts, transactions,as offsetwell byas an increase of $1.1$0.4 million in wealth management group fee income.

Wealth Managementmanagement Groupgroup Feefee Incomeincome and service charges on deposit accounts

The increaseincreases in wealth management group fee income wasand services charges on deposit accounts were primarily due to improvedfee equityschedule marketincreases, conditionswhich duringwere implemented in the second half of 2024.

Non-interest expensesexpense

The following table presents non-interest expensesexpense for the years ended December 31, 20242025 and 2023,2024, and the dollar and percent change (in thousands, except percentages):

Non-interest expense increased $3.0$3.5 million, or 4.7%,5.2%, in 2024.2025, compared to the prior year. The increase was primarily due primarily to increasesan increase of $2.1$3.4 million in total compensation expensesexpense, andas $0.9well as a $0.1 million increase in total non-compensation expenses.expense.

Compensation expensesexpense

Compensation expensesexpense increased $2.1$3.4 million, or 6.3%, when9.5%, compared to the prior year, primarily due to increases of $1.6$2.1 million in salaries and wages andas $0.7well as increases of $0.8 million in pension and other employee benefits,benefits offsetand by a decrease of $0.2$0.5 million in other components of net periodic pension benefits.

The increase in salaries and wages was primarily attributable to additional staffing in the Bank'sCorporation's newCanal Bank division in the Western New York market, including commercial lenders, wealth management professionals, and branch personnel, as well as merit-based wage increases, and promotions, which was partially offset by savings from the outsourcing of certain back office functions during 2024.increases. The increase in pension and other employee benefits was largely due to an increase in employee healthcare-related expenses,expense and payroll tax expense, compared to the prior year. The decreaseincrease in other components of net periodic pension benefits was primarily due to a change in annual actuarial estimates.

Non-compensation expensesexpense

Non-compensation expensesexpense increased $0.9$0.1 million, or 2.9%,0.3%, primarilymainly due to increases of $0.3$0.5 million in marketingother non-compensation expense and advertising, $0.3$0.4 million in dataprofessional processingservices, expense,offset andby $0.2decreases of $0.6 million in netFDIC occupancyinsurance and $0.1 million in other real estate owned expense.

The effective tax rate increased to 21.3%24.2% for the year ended December 31, 20242025 compared with 20.6%21.3% for the prior year. The increase in effective tax rate can be primarily attributed to an increase in the valuation allowance. The decrease in income tax expense can be primarily attributed to a decrease in pre-tax income.income, largely the result of losses realized on sales of available for sale securities.

The following is the MD&A of the Corporation in this Quarterly Report on Form 10-Q for the three and six months ended MarchJune 31,30, 2026. Reference should be made to the accompanying unaudited consolidated financial statements and footnotes, and the Corporation’s 2025 Annual Report on Form 10-K, which was filed with the SEC on March 13, 2026, for an understanding of the following discussion and analysis. See the list of commonly used abbreviations and terms on pages 3–5.3-5.

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,II, Item 1A, Risk Factors, and on pages 19–2919-29 of the Corporation’s 2025 Form 10-K. For a discussion of the use of non-GAAP financial measures, see pages 68-70 of the Corporation's 2025 Form 10-K, and pages 67-7081-83 of 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, residentialresidential, 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.

The allowance is established through a provision for credit losses in the Consolidated Statements of Income, and an 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 judgment, 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 MarchJune 31,30, 2026 and December 31, 2025, the allowance for credit losses totaled $24.9$25.2 million and $24.2 million, respectively. A significant portion of the allowance for credit losses is allocated to the commercial portfolio, to both commercial real estate and commercial and industrial loans. Asas of MarchJune 31,30, 2026 and December 31, 2025, the allowance for credit losses allocated to the total commercial portfolio was $20.0$20.4 million and $18.9 million, respectively, or 80.3%80.9% and 78.0% of the total allowance for credit losses on loans. For comparison, total commercial loans represented 77.3%78.1% and 76.4% of total loan balances as of MarchJune 31,30, 2026 and December 31, 2025, respectively. Given the concentration of the allowance for credit losses allocated to the commercial portfolio, and the significant judgments made by management to derive its estimates, management analyzes risks distinctive to commercial lending with a high degree of scrutiny.

Changes in the FOMC's median forecasted U.S. civilian unemployment rate and year over year change in U.SU.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 loancertain pools utilize the FOMC's projections for U.S. GDP growth as a loss driver. Segmentation and attributes of loan pools are defined in Note 1 – Summary of Significant Accounting Policies to the Audited Consolidated Financial Statements in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2025. FOMC projections are sourced from a quarterly Summary of Projections, which accompanies select FOMC meetings. Each participant's projections represent the value to which selected variables would be expected to converge over time under appropriate monetary policy,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,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 $1.5$0.9 million, or 5.9%,3.6%, to $26.3$26.2 million as of MarchJune 31,30, 2026, assuming qualitative adjustments were kept at current levels.

Future changes to the availability, frequency, or content of the FOMC's projections could require management to utilize alternative reasonable and supportable forecasts or modify certain forecasting assumptions used in the model. Any such changes could affect the comparability of model results between periods and may increase the judgment involved in estimating the allowance for credit losses. While management has concluded that its current evaluation is reasonable under the circumstances, and that sensitivity analysisand isshock analyses are based on a series of hypothetical scenarios not intended to represent management’s assumptions or judgment of factors as of MarchJune 31,30, 2026, it has also concluded that differing assumptions could materially impact allowance calculations, either positively or adversely.

The following section of the MD&A provides a comparative discussion of the Corporation’s Consolidated Results of Operations on a reported basis for the three and six months ended MarchJune 31,30, 2026 and 2025. For a discussion of the Critical Accounting Estimates that affect the Consolidated Results of Operations, see pages 41-4247-48 of this Form 10-Q and page 39 of the Corporation’s 2025 Form 10-K.

The Corporation reported net income for the firstthree quartermonths ofended June 30, 2026 of $9.2$8.8 million, or $1.91$1.82 per share, compared to $6.0a net loss of $6.5 million, or $1.26a net loss of $1.35 per share, for the same period in the prior year. Return on average equity for the currentthree quartermonths ended June 30, 2026 was 14.25%,13.19%, compared to 10.96%(11.29)% for the same period in the prior year. The increase in net income for the three months ended MarchJune 31,30, 2026 was attributable to increases in net interest income and non-interest income, as well as a decrease in the provision for credit losses, offset by increases in non-interest expense and income tax expense.

Net interest income for the firstthree quartermonths ofended June 30, 2026 increased $3.8$3.9 million, or 19.0%,million to $23.6$24.7 million compared to the same period in the prior year, largely due to an increase of $3.4 million in interest income on loans and a decrease of $2.6$2.4 million in interest expense on deposits, partially offset by a decreasedecreases of $1.3$0.9 million in interest and dividend income on taxable securities and $0.5 million in interest income on interest-earning deposits, and an increase of $0.7$0.4 million in interest expense ofon borrowed funds.

Interest income on loans, including fees,loans increased to $31.5$32.8 million for the three months ended MarchJune 31,30, 2026, from $28.1$29.4 million for the same period in the prior year. The increase was drivenmostly bydue ato $214.5an increase of $230.0 million increase in average balances of total loansloans, andas awell tenas an increase of three basis point increasepoints in the average yield on total loans, each compared to the same period in the prior year. Growth in average loanbalances balancesof total loans was concentrated in commercial real estate loans, with additional increases in commercial and industrial loans and residential mortgage loans, partially offset by a decreasedecline in total consumer loans. AverageGrowth in average balances of total commercial loans increasedtotaled $233.0$248.3 millionmillion, comparedand toreflected therelatively samebalanced periodgrowth in the prior year, reflecting growth primarily in the Corporation’sCorporation's Capital Bank divisionand Canal Bank divisions in the Albany market,and Western New York markets, respectively, as well as growth inwithin the Corporation's legacy Chemung Canal Bank division in the Western New York market.division. Average balances of residential mortgage loans increased $10.7 million compared to the same period in the prior year, largely due to increased origination activity compared to the same period in the priorsecond yearhalf of 2025 and the retention of a higher proportion of originated loans for investment. AverageThe balancesdecline in the average balance of total consumer loans decreased $29.2 million compared to the same period in the prior year,was primarily due to a reductiondecrease in average balances of indirect auto loan balances,loans, as the Corporation continued to prioritize other types of lending duringthroughout 2025 and year to date in the first six months of 2026.

The increase in the average yield on total loans was primarily due to a 4530 basis point increase in the average yield on residential mortgage loansloans, and,partially tooffset a lesser extent,by a three basis point increasedecrease in the average yield on commercial loans, each compared to the same period in the prior year. The increase in the average yield on residential mortgage loans wasreflected largelyhigher dueinterest to yieldsrates on residential mortgage loans originated during 2025 and yearin the first six months of 2026 relative to date in 2026 generally being higher than the portfolio'sexisting overall average yield.portfolio. The increasedecrease in the average yield on commercial loans was mainly due to strong origination volume during 2025, partially offset by lower interest rates on variable rate commercial loans resulting from declines in benchmark indices betweensince the firstprior quartersyear period. A decrease of 2025one andbasis 2026.point in the average yield on total consumer loans did not have a significant impact on net interest income compared to the same period in the prior year.

Interest expense on deposits decreased to $8.5$8.7 million for the three months ended MarchJune 31,30, 2026, from $11.2$11.1 million for the same period in the prior year. The decrease was primarily due to a 43decrease of 39 basis point declinepoints in the average cost of total interest‑bearinginterest-bearing deposits and a $135.5decline of $118.7 million decrease in average balances of total interest‑bearinginterest-bearing deposits, including brokered deposits. The declinedecrease in the average cost of interest‑bearinginterest-bearing deposits largely reflected decreasesa decrease of 5739 basis points in the average cost of customer time deposits and 19a decrease of 20 basis points in the average cost of savings and money market deposits.deposits, Ineach addition,compared to the same period in the prior year, as well as the current year period includedincluding lower average balances of higher‑costhigher-cost brokered deposits, which declined $81.1 million compared to the prior year period.deposits. The decrease in the average cost of customer time deposits was largelymainly due to the discontinuation of longer‑term,certain higher‑ratehigher-cost promotional offerings duringin the second half of 2025, resulting in favormany previous promotional certificates of shorter‑termdeposit offeringsnot withbeing ratesrenewed thatat were reduced over time as market interest rates declined. This strategy also contributed to a $52.3 million decrease in average balances of customer time deposits compared to the same period in the prior year. Customer time deposits represented 19.9% of total average deposits during the first quarter of 2026, compared to 21.1% during the same period in the prior year.maturity. The decrease in the average cost of savings and money market deposits was mostlymainly due to targeted reductions in tiered interest rates implementedoffered duringon money market deposits which occurred in the fourth quarter of 2025 and the first quarter of 20262026, in response to decliningas market interest rates.rates declined.

Interest income on taxable securities decreased to $1.7 million for the three months ended MarchJune 31,30, 2026, from $3.0$2.5 million for the same period in the prior year. The decrease was largely due to a $257.5$211.4 million decreasedecline in average balances of taxable securities, attributable to sales of available for sale securities during the secondthree quartermonths ofended June 30, 2025 as part of the Corporation’s balance sheet repositioning efforts, as well as normal paydowns and maturities totaling $35.9$26.9 million between theJune first quarters of30, 2025 and 2026. TheInterest income on interest-earning deposits decreased mostly due to a decline of $40.9 million in average yieldbalances, on taxable securities was comparablecompared to the same period in the prior year,year. decreasingAverage bybalances oneof basisinterest-earning point.deposits declined mostly as a result of the Corporation utilizing cash proceeds from the sales of available for sale securities during the three months ended June 30, 2025 to fund loan growth and pay off wholesale funding liabilities in the second half of 2025.

Fully taxable equivalent net interest margin was 3.60%3.67% for the three months ended MarchJune 31,30, 2026, compared to 2.96%3.05% for the same period in the prior year. Average interest-earning assets decreaseddeclined $67.5$43.3 million for the three months ended MarchJune 31,30, 2026, while average interest-bearing liabilities decreaseddeclined $96.9$105.4 million, each compared to the same period in the prior year. The decreasesdeclines ofin the average balances of interest-earning assets and average interest-bearing liabilities waswere mostly due to the effects of the Corporation's balance sheet repositioning efforts during 2025. The average yield on interest-earning assets increased 4135 basis points to 5.13%,5.18%, while the average cost of interest-bearing liabilities decreased 2830 basis points to 2.27%, for the three months ended MarchJune 31,30, 2026, each compared to the same period in the prior year. Total cost of funds was 1.67% for the three months ended March 31, 2026, compared to 1.92% for the same period in the prior year, a decrease of 25 basis points.

The following tabletables presentspresent certain information related to the Corporation’s average consolidated balance sheets and its consolidated statements of income for the three and six months ended MarchJune 31,30, 2026 and 2025. For the purpose of the tabletables 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.

Net interest income can be analyzed in terms of the impact of changes in rates and volumes. The tabletables below illustratesillustrate the extent to which changes in interest rates and the volume of average interest-earning assets and interest-bearing liabilities have affected the Corporation’s interest income and interest expense during the three and six months ended MarchJune 31,30, 2026 and 2025. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate); (ii) changes attributable to changes in rates (changes in rates multiplied by prior volume); and (iii) the net changes. For purposes of thisthese table,tables, changes that are not due solely to volume or rate changes have been allocated to these categories based on the respective percentage changes in average volume and rate. Due to the numerous simultaneous volume and rate changes during the periods analyzed, it is not possible to precisely allocate changes between volume and rates. In addition, average interest-earning assets include nonaccrual loans and taxable equivalent adjustments were made.

Total non-interest income for the three months ended MarchJune 31,30, 2026 increased $0.4$17.2 million compared to the same period in the prior year, largely due to a $17.5 million net loss on securities transactions in the prior year, increases of $0.3$0.2 million each in wealth management group fee income and changes in fair value of equity investments, as well as an increase of $0.1 million in CFS fee and commission income,income. The increase was partially offset by a decrease of $0.1$0.7 million in serviceother chargesnon-interest on deposit accounts.income.

The increase in wealth management group fee income was primarily due to an increase in total assets under management in the current period, compared to the same period in the prior year, mainly due to improvements in financial markets duringbetween the last threesecond quarters of 2025.2025 and 2026.

The increase in total CFS Group fee and commission income was largely due to the recognition of additional income in the current year period fromfollowing contractual changes with a broker-dealerbroker-dealer, asimprovements ain resultfinancial markets since the second quarter of changes2025, inand contractualorganic arrangements.client growth across the Corporation's footprint.