CHMG

MKT CAP $404.4MP/E 12.1DIV YIELD 1.62%FCF YIELD 11.22%REV TTM —NET INCOME $33.5M +199.3%NET DEBT $26M52W 50.35 – 85.23SEC XBRL · TTM TO Invalid Date

How CHMG rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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Summary of Strategic Actions During the year ended December 31, 2025, the Corporation completed certain strategic transactions which had a material impact on the Corporation's results of operations and the Corporation's financial condition as of December 31, 2025.
These included components of management's balance sheet repositioning efforts and the completion of the sale of a previous branch property as part of management's ongoing evaluation of its physical distribution network.
The following section provides a summary of these transactions.
Issuance of Subordinated Debt On June 10, 2025, the Corporation issued $45.0 million of ten-year 7.75% fixed-to-floating rate subordinated notes, due June 2035 (the "Notes").
The Notes bear interest at a fixed rate of 7.75 % per year, payable semi-annually, for the first five years.
Beginning on June 15, 2030 and until the maturity date, the Notes will adjust to a floating rate equal to the then current three- month term SOFR plus 415 basis points, payable quarterly.
The Notes constitute unsecured and subordinated obligations of the Corporation and rank junior in right of payment to any senior indebtedness and obligations to general and secured creditors.
Proceeds, net of debt issuance costs of $ 1.0 million, were $ 44.0 million.
Subject to limited exceptions, the Corporation cannot redeem the Notes before the fifth anniversary of the issuance date.
The Corporation intends to use the net proceeds from the issuance and sale of the Notes for general corporate purposes and to support regulatory capital ratios for growth initiatives.
The Notes qualify as Tier 2 regulatory capital at the holding company, when applicable, subject to an annual phase-out of 20% of the Notes face amount each year during the last five years of the Note's maturity.
From the proceeds of the Notes, the Corporation provided the Bank with a $37.0 million capital contribution, effectively downstreaming the regulatory capital impact of the Notes to the Bank as common equity Tier 1 capital, which is not subject to regulatory phase-out.
The Corporation believes the issuance of subordinated debt strengthens its overall regulatory capital position and improves commercial real estate concentration ratios, allowing for flexibility in pursuing loan growth in its key expansion markets.
Sale of Available for Sale Securities Subsequent to the Corporation's issuance of subordinated debt in June 2025, the Corporation sold available for sale securities with a book value of $244.8 million, or approximately 40% of its then total available for sale securities portfolio.
These sales resulted in a realized pre-tax loss of $17.5 million, or approximately 7% of the total book value of securities sold, resulting in proceeds of $227.3 million.
Securities sold as part of these sales included the Corporation's entire U.S.
Treasury and SBA-pooled loan securities portfolios, as well as portions of its mortgage-backed securities and municipal bonds portfolios.
A portion of proceeds from the sales were utilized to pay off $155.0 million in wholesale funding liabilities, including $100.0 million in brokered deposits and $55.0 million in FHLBNY term advances, in July 2025.
All wholesale funding liabilities were paid off at maturity and the Corporation did not incur any prepayment penalties as a result of these payoffs.
Sale of Previous Branch Property In April 2025, the Corporation completed the sale of its previous branch property at 806 Buffalo Street, Ithaca, New York.
As previously disclosed, all operations of the branch, formerly known as the "Ithaca Station" branch were consolidated into the nearby branch at 304 Elmira Road, Ithaca, New York in the fourth quarter of 2024.
The property had previously been classified as held for sale at its cost of $0.7 million, with proceeds from the sale totaling $1.3 million, resulting in the recognition of a $0.6 million gain during the year ended December 31, 2025.
Tax Implications - Deferred Tax Asset The resulting net loss of $17.5 million from the sale of available for sale securities occurred at the Bank, as well as the Corporation’s REIT entity.
Under IRC Sec. 582(c)(1), in the case of banks, the sale or exchange of a bond, debenture, note or certificate or other evidence of indebtedness shall not be considered a sale or exchange of a capital asset.
Therefore, the loss from the sale of securities at the Bank is considered ordinary in nature.
However, the REIT is not considered a “bank” under IRC Sec. 582(c) and therefore a sale of securities at the REIT is considered capital in nature.
The capital loss amounted to $11.5 million (gross) and represents a $2.7 million deferred tax asset as of December 31, 2025 subject to a five-year carryforward limitation.
Pursuant to ASC 740-10-30-5(e), 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.
The Corporation’s current tax planning strategies include the planned sale of appreciated investment securities and loans from the REIT entity.
These transactions are intended to generate future capital gains sufficient to utilize the capital loss carryforward prior to its expiration.
Management has demonstrated both the ability and intent to execute these strategies in a timely and economically feasible manner.
After detailed review, including various scenarios of changes in market interest rates, while the Corporation’s management has demonstrated the ability and intent to implement these prudent and reasonable actions, management determined that it is more likely than not that a portion of the deferred assets, including the capital loss carryforward, will not be realized.
Further, management will continue to monitor all available positive and negative evidence on at least a quarterly basis, consistent with ASC 740, and will promptly adjust the valuation allowance assessment if facts and circumstances change materially.
Non-GAAP Presentation The Corporation has identified both the sale of available for sale securities and the sale of the former Ithaca Station branch property as nonrecurring transactions and has made reference to non-GAAP figures within this MD&A where appropriate and useful to the reader of these financial statements.
Please refer to the GAAP to Non-GAAP reconciliations, pages 68-70, for further information.
Determining the amount requires significant judgment on the part of management, is multi-faceted, and can be imprecise.
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.
As of December 31, 2025, the allowance for credit losses on loans totaled $24.2 million, compared to $21.4 million as of December 31, 2024.

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Determining the amount requires significant judgement on the part of management, is multi-faceted, and can be imprecise.
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.
As of December 31, 2024, the allowance for credit losses on loans totaled $21.4 million, compared to $22.5 million as of December 31, 2023.
As of December 31, 2024 and December 31, 2023, the allowance for credit losses allocated to the total commercial portfolio was $15.7 million and $17.1 million respectively, or 73.6% and 75.9%.
For comparison, total commercial loans represented 73.2% and 70.3% of total loan balances, respectively, as of December 31, 2024 and 2023.
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, all pools, with the exception of the consumer loans pool, as defined in Note 1 to the Consolidated Financial Statements, utilize the FOMC's projections for unemployment as a loss driver, while the consumer pool utilizes the FOMC's projections for GDP growth.
GDP growth, would increase the model's total calculated allowance by $1.3 million, or 6.2%, to $22.7 million, assuming qualitative adjustments are 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 December 31, 2024, it has also concluded that differing assumptions could materially impact allowance calculations, either positively or adversely.
Management’s methodology and policy in determining 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 Part IV, Item 15 of this Annual Report on Form 10-K.
Consolidated Financial Highlights (in thousands, except per share data) As of or for the Years Ended December 31, December 31, RESULTS OF OPERATIONS 2024 2023 Interest and dividend income $ 127,564 $ 113,074 Interest expense 53,505 38,617 Net interest income 74,059 74,457 Provision (credit) for credit losses (46) 3,262 Net interest income after provision for credit losses 74,105 71,195 Non-interest income 23,230 24,549 Non-interest expenses 67,250 64,243 Income before income tax expense 30,085 31,501 Income tax expense 6,414 6,501 Net income $ 23,671 $ 25,000 Basic and diluted earnings per share $ 4.96 $ 5.28 Average basic and diluted shares outstanding 4,770 4,732 PERFORMANCE RATIOS Return on average assets 0.86 % 0.94 % Return on average equity 11.53 % 14.11 % Return on average tangible equity (a) 12.90 % 16.09 % Efficiency ratio (unadjusted) (b) 69.12 % 64.89 % Efficiency ratio (adjusted) (a) 68.89 % 66.20 % Non-interest expense to average assets 2.45 % 2.41 % Loans to deposits 86.42 % 81.20 % AVERAGE YIELDS / RATES - Fully Taxable Equivalent Yield on loans 5.57 % 5.13 % Yield on investments 2.28 % 2.21 % Yield on interest-earning assets 4.74 % 4.33 % Cost of interest-bearing deposits 2.79 % 2.11 % Cost of borrowings 5.03 % 5.17 % Cost of interest-bearing liabilities 2.87 % 2.20 % Interest rate spread 1.87 % 2.13 % Net interest margin, fully taxable equivalent (a) 2.76 % 2.85 % CAPITAL Total equity to total assets at end of year 7.76 % 7.20 % Tangible equity to tangible assets at end of year (a) 7.02 % 6.45 % Book value per share $ 45.13 $ 41.07 Tangible book value per share (a) 40.55 36.48 Year-end market value per share 48.81 49.80 Dividends declared per share 1.24 1.24 AVERAGE BALANCES Loans and loans held for sale (c) $ 2,016,481 $ 1,898,986 Interest-earning assets 2,698,148 2,621,251 Total assets 2,744,721 2,660,329 Deposits 2,419,744 2,377,736 Total equity 205,280 177,187 Tangible equity (a) 183,456 155,363 ASSET QUALITY Net charge-offs (recoveries) $ 1,160 $ 941 Non-performing loans (d) 8,954 10,411 Non-performing assets (e) 9,606 10,737 Allowance for credit losses 21,388 22,517 Annualized net charge-offs (recoveries) to average loans 0.06 % 0.05 % Non-performing loans to total loans 0.43 % 0.53 % Non-performing assets to total assets 0.35 % 0.40 % Allowance for credit losses to total loans 1.03 % 1.14 % Allowance for credit losses to non-performing loans 238.87 % 216.28 % (a) See the GAAP to Non-GAAP reconciliations on pages 65-68.
(b) Non-interest expense divided by total of net interest income plus (e) Includes non-performing loans plus other real estate owned and non-interest income. repossessions (c) Does not reflect allowance for credit losses.
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 years ended December 31, 2024 and 2023.
For a discussion of the Critical Accounting Estimates that affect the Consolidated Results of Operations, see page 38.
Net Income The following table presents selected financial information for the years indicated, and the dollar and percent change (in thousands, except per share and ratio data): Years Ended December 31, Percentage Change 2024 2023 Change Net interest income $ 74,059 $ 74,457 $ (398) (0.5) % Non-interest income 23,230 24,549 (1,319) (5.4) % Non-interest expenses 67,250 64,243 3,007 4.7 % Pre-provision income 30,039 34,763 (4,724) (13.6) % Provision for credit losses (46) 3,262 (3,308) (101.4) % Income tax expense 6,414 6,501 (87) (1.3) % Net income $ 23,671 $ 25,000 $ (1,329) (5.3) % Basic and diluted earnings per share $ 4.96 $ 5.28 $ (0.32) (6.1) % Selected financial ratios Return on average assets 0.86 % 0.94 % Return on average equity 11.53 % 14.11 % Net interest margin, fully taxable equivalent 2.76 % 2.85 % Efficiency ratio (adjusted) (a) 68.89 % 66.20 % Non-interest expense to average assets 2.45 % 2.41 % (a) See the GAAP to Non-GAAP reconciliations on pages 65-68.
Net income for the year ended December 31, 2024 was $23.7 million, or $4.96 per share, compared with net income of $25.0 million, or $5.28 per share, for the prior year.
Return on average equity for the year ended December 31, 2024 was 11.53%, compared with 14.11% for the prior year.
The decrease in net income for the year ended December 31, 2024, compared to the prior year, was due to an increase in non-interest expense, decreases in non-interest income and net interest income, offset by decreases in the provision for credit losses and income tax expense.
Net Interest Income The following table presents net interest income for the years indicated, and the dollar and percent change (in thousands): Years Ended December 31, Percentage Change 2024 2023 Change Interest and dividend income $ 127,564 $ 113,074 $ 14,490 12.8 % Interest expense 53,505 38,617 14,888 38.6 % Net interest income $ 74,059 $ 74,457 $ (398) (0.5) % Net interest income, which is the difference between the interest income earned on interest-earning assets such as loans and securities, and the interest expense recognized on interest-bearing liabilities such as deposits and borrowings, is the largest contributor to the Corporation’s earnings.
Net interest income for the year ended December 31, 2024 totaled $74.1 million, a decrease of $0.4 million, or 0.5%, compared with $74.5 million for the prior year.
Fully taxable equivalent net interest margin was 2.76% for the year ended December 31, 2024 compared with 2.85% for the prior year.
The decrease in net interest income was primarily due to increases of $14.1 million in interest expense on deposits and $0.8 million in interest expense on borrowed funds, and a decrease of $1.3 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.
The increase in interest expense on deposits was due primarily to a 68 basis points increase in the average rate paid on interest-bearing deposits, which included brokered deposits, and deposit campaigns primarily related to time deposits.
The increase in interest expense on borrowed funds was due primarily to a $16.2 million increase in average balances of borrowed funds, compared to the prior year, partially offset by a 14 basis points decrease in the average interest paid on total borrowings, compared to the prior year.
Average balances of borrowed funds in the current year consisted of FHLBNY overnight and term advances and a Federal Reserve Bank Term Funding Program Advance (BTFP), while borrowed funds in the prior year consisted primarily of FHLBNY overnight advances.
The decrease in interest and dividend income on taxable securities was primarily due to a decrease of $58.0 million in average balances of taxable securities, primarily due to paydowns on mortgage-backed and SBA pooled loan securities.
The average yield on taxable securities was comparable between 2023 and 2024.
The increase in interest income on loans, including fees was due primarily to an increase of $117.5 million in average total loan balances and an increase of 44 basis points increase in the average yield on loans.
The increase in average balances was concentrated in the commercial loan portfolio, which increased $136.8 million compared to the prior year.
Average balances of consumer loans and residential mortgage loans decreased $11.0 million and $8.3 million respectively, compared to the prior year.
The average yield on commercial loans increased 37 basis points, while the average yields on consumer loans and residential mortgage loans increased 69 and 30 basis points respectively, compared to the prior year.
The increase in interest income on interest-earning deposits was mainly due to an increase of $18.8 million in average balances of interest-earning deposits, due to an increase in deposits at the FRBNY.
Average interest-earning assets increased $76.9 million while average interest-bearing liabilities increased $108.1 million during 2024, compared to the prior year.
The average yield on interest-earning assets increased 41 basis points to 4.74%, while the average cost of interest-bearing liabilities increased 67 basis points to 2.87% during 2024, compared to the prior year, both primarily due to the lagging effects of interest rate increases during 2022 and 2023.
Average Consolidated Balance Sheet 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 years ended December 31, 2024, and 2023.
It also reflects the average yield on interest-earning assets and average cost of interest-bearing liabilities for the years ended December 31, 2024, and 2023.
AVERAGE CONSOLIDATED BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS Year Ended December 31, 2024 2023 (in thousands) Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Interest-earning assets: Commercial loans $ 1,446,493 $ 85,570 5.92 % $ 1,309,692 $ 72,698 5.55 % Mortgage loans 274,801 10,618 3.86 % 283,093 10,084 3.56 % Consumer loans 295,187 16,165 5.48 % 306,201 14,664 4.79 % Taxable securities 613,375 13,046 2.13 % 671,345 14,295 2.13 % Tax-exempt securities 39,032 1,103 2.83 % 40,506 1,171 2.89 % Interest-earning deposits 29,260 1,398 4.78 % 10,414 528 5.07 % Total interest-earning assets 2,698,148 127,900 4.74 % 2,621,251 113,440 4.33 % Non interest-earning assets: Cash and due from banks 25,112 25,419 Premises and equipment, net 14,766 15,514 Other assets 114,540 115,954 Allowance for credit losses (21,489) (20,212) AFS valuation allowance (86,356) (97,597) Total assets $ 2,744,721 $ 2,660,329 Interest-bearing liabilities: Interest-bearing demand deposits $ 313,070 $ 5,561 1.78 % $ 286,097 $ 3,136 1.10 % Savings and insured money market deposits 863,849 17,468 2.02 % 899,996 13,027 1.45 % Time deposits 526,727 22,221 4.22 % 375,545 12,414 3.31 % Brokered deposits 90,729 4,802 5.29 % 140,845 7,349 5.22 % FHLBNY overnight advances 21,907 1,151 5.17 % 48,851 2,577 5.28 % FRBNY advances and other debt 46,363 2,302 4.97 % 3,177 114 3.59 % Total interest-bearing liabilities 1,862,645 53,505 2.87 % 1,754,511 38,617 2.20 % Non interest-bearing liabilities: Demand deposits 625,369 675,253 Other liabilities 51,427 53,378 Total liabilities 2,539,441 2,483,142 Shareholders' equity 205,280 177,187 Total liabilities and shareholders’ equity $ 2,744,721 $ 2,660,329 Fully taxable equivalent net interest income 74,395 74,823 Net interest rate spread (1) 1.87 % 2.13 % Net interest margin, fully taxable equivalent (2) 2.76 % 2.85 % Taxable equivalent adjustment (336) (366) Net interest income $ 74,059 $ 74,457 (1) Net interest rate spread is the difference in the average yield on interest-earning assets less the average cost of interest-bearing liabilities.
Changes Due to Rate and Volume Net interest income can be analyzed in terms of the impact of changes in rates and volumes.
RATE/VOLUME ANALYSIS OF NET INTEREST INCOME 2024 vs. 2023 Increase/(Decrease) (in thousands) Total Change Due to Volume Due to Rate Interest income Commercial loans $ 12,872 $ 7,857 $ 5,015 Mortgage loans 534 (302) 836 Consumer loans 1,501 (547) 2,048 Taxable securities (1,249) (1,249) — Tax-exempt securities (68) (44) (24) Interest-earning deposits 870 902 (32) Total interest income 14,460 6,617 7,843 Interest expense Interest-bearing demand deposits 2,425 321 2,104 Savings and insured money market deposits 4,441 (542) 4,983 Time deposits 9,807 5,827 3,980 Brokered deposits (2,547) (2,645) 98 FHLBNY overnight advances (1,426) (1,374) (52) FRBNY advances and other debt 2,188 2,128 60 Total interest expense 14,888 3,715 11,173 Fully taxable equivalent net interest income $ (428) $ 2,902 $ (3,330) Provision for credit losses Management's methodology for establishing and maintaining an allowance for credit losses conforms with ASU 2016-13, F inancial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which was adopted by the Corporation effective January 1, 2023.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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