CHMG Q3 Net Income Jumps 36% YOY, But YTD Plunges on Securities Losses

TL;DR

**CHMG's Q3 looks good, but don't ignore the massive YTD securities hit – proceed with caution.**

AI Summary

CHEMUNG FINANCIAL CORP (CHMG) reported a significant increase in net income for the three months ended September 30, 2025, reaching $7.792 million, up 36.22% from $5.720 million in the same period of 2024. However, net income for the nine months ended September 30, 2025, decreased substantially to $7.363 million from $17.757 million in 2024, primarily due to a $17.498 million net loss on securities transactions in 2025. Total assets decreased to $2.696 billion as of September 30, 2025, from $2.776 billion at December 31, 2024, driven by a reduction in securities available for sale from $531.442 million to $280.514 million. Loans, net, increased by 6.28% to $2.178 billion from $2.050 billion, while total deposits saw a slight decrease of 1.60% to $2.358 billion. The allowance for credit losses increased by 10.55% to $23.645 million, reflecting a higher provision for credit losses of $3.301 million for the nine months ended September 30, 2025, compared to a credit of $0.597 million in 2024. Shareholders' equity improved by 13.94% to $245.308 million from $215.309 million at December 31, 2024, largely due to a significant reduction in accumulated other comprehensive loss from $(65.065) million to $(39.076) million.

Why It Matters

This filing reveals a mixed financial picture for Chemung Financial Corp. While the strong Q3 net income growth of 36.22% is positive for investors, the substantial year-to-date decline in net income due to securities losses raises concerns about portfolio management and interest rate sensitivity. The increase in loans, net, suggests continued lending activity, which is good for customers, but the rising allowance for credit losses indicates potential future credit quality challenges. The reduction in available-for-sale securities could impact liquidity and future earnings potential, while the improved shareholders' equity provides a stronger capital base, potentially offering some stability in a competitive banking market.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant net loss on securities transactions of $17.498 million for the nine months ended September 30, 2025, which severely impacted year-to-date net income. Additionally, the allowance for credit losses increased by 10.55% to $23.645 million, and the provision for credit losses shifted from a $0.597 million credit in 2024 to a $3.301 million expense in 2025, indicating potential deterioration in loan portfolio quality.

Analyst Insight

Investors should scrutinize the details of the $17.498 million net loss on securities transactions and understand the underlying causes. Monitor future credit loss provisions and the quality of the loan portfolio, especially given the 10.55% increase in the allowance for credit losses. Consider if the Q3 net income rebound is sustainable or merely a temporary reprieve from broader challenges.

Financial Highlights

total Assets

$2.696B

net Income

$7.792M

eps

$1.62

Key Numbers

• $7.792M — Net income for Q3 2025 (Increased 36.22% from $5.720M in Q3 2024)
• $7.363M — Net income for YTD Q3 2025 (Decreased from $17.757M in YTD Q3 2024)
• $17.498M — Net losses on securities transactions (Impacted YTD Q3 2025 non-interest income)
• $2.696B — Total assets as of Sep 30, 2025 (Decreased from $2.776B at Dec 31, 2024)
• $280.514M — Securities available for sale as of Sep 30, 2025 (Decreased from $531.442M at Dec 31, 2024)
• $2.178B — Loans, net as of Sep 30, 2025 (Increased 6.28% from $2.050B at Dec 31, 2024)
• $23.645M — Allowance for credit losses as of Sep 30, 2025 (Increased 10.55% from $21.388M at Dec 31, 2024)
• $3.301M — Provision for credit losses for YTD Q3 2025 (Shifted from a credit of $0.597M in YTD Q3 2024)
• $245.308M — Total shareholders' equity as of Sep 30, 2025 (Increased 13.94% from $215.309M at Dec 31, 2024)
• $1.62 — Basic and diluted EPS for Q3 2025 (Increased from $1.19 in Q3 2024)

Key Players & Entities

• CHEMUNG FINANCIAL CORP (company) — registrant
• Chemung Canal Trust Company (company) — subsidiary bank
• Federal Home Loan Bank of New York (company) — financial institution
• Federal Reserve Bank of New York (company) — financial institution
• SEC (regulator) — Securities and Exchange Commission
• FASB (regulator) — Financial Accounting Standards Board
• FDIC (regulator) — Federal Deposit Insurance Corporation
• Nasdaq Stock Market LLC (company) — exchange for common stock

FAQ

Risk Factors

• Interest Rate Sensitivity [high — financial]: The company's profitability is sensitive to changes in interest rates. Fluctuations in market interest rates can impact net interest income and the fair value of investment securities. For instance, a significant increase in interest rates could lead to unrealized losses on the company's securities portfolio.
• Credit Risk [high — financial]: The company faces credit risk from its loan portfolio. An increase in the allowance for credit losses to $23.645 million from $21.388 million, with a provision of $3.301 million for the nine months of 2025, indicates management's concern about potential loan defaults, especially in a challenging economic environment.
• Securities Portfolio Volatility [high — market]: The company experienced a substantial $17.498 million net loss on securities transactions in the nine months ended September 30, 2025. This highlights the significant risk associated with the company's investment in securities available for sale, which decreased from $531.442 million to $280.514 million.
• Regulatory Compliance [medium — regulatory]: As a financial institution, CHMG is subject to extensive regulation. Changes in banking laws, capital requirements, and compliance standards can increase operational costs and impact business strategies. Failure to comply can result in significant penalties.
• Cybersecurity Threats [medium — operational]: The company's reliance on technology and digital platforms exposes it to cybersecurity risks. Data breaches or system failures could lead to financial losses, reputational damage, and regulatory scrutiny.

Industry Context

The banking industry is currently navigating a complex environment characterized by fluctuating interest rates, evolving regulatory landscapes, and increasing competition. Financial institutions are focused on managing interest rate risk, maintaining strong credit quality, and adapting to technological advancements. Deposit growth and loan demand are key indicators of performance, alongside the ability to generate non-interest income.

Regulatory Implications

As a financial institution, CHEMUNG FINANCIAL CORP is subject to stringent regulatory oversight from bodies like the Federal Reserve and the FDIC. Compliance with capital adequacy ratios, liquidity requirements, and consumer protection laws is paramount. Any shifts in regulatory policy, particularly concerning capital or lending standards, could materially impact the company's operations and profitability.

What Investors Should Do

1. Monitor the impact of securities portfolio performance
2. Assess credit quality trends and loan loss provisions
3. Evaluate the drivers of Q3 net income growth
4. Analyze the impact of interest rate changes on net interest margin

Key Dates

• 2025-09-30: End of Third Quarter 2025 — Reporting period for the 10-Q, showing mixed financial performance with strong Q3 net income but a significant YTD decline due to securities losses.
• 2024-09-30: End of Third Quarter 2024 — Comparison period for Q3 2025 results, highlighting a 36.22% increase in net income for the current quarter.
• 2024-12-31: End of Fiscal Year 2024 — Prior year-end balance sheet comparison point, showing a decrease in total assets and an increase in shareholders' equity.

Glossary

Securities available for sale

Investments in debt and equity securities that are not classified as held-to-maturity or trading securities. They are reported at fair value on the balance sheet, with unrealized gains and losses recorded in other comprehensive income. (A significant decrease in this category from $531.442 million to $280.514 million impacted total assets and reflects potential portfolio adjustments or market value changes.)

Allowance for credit losses

A contra-asset account that reduces the carrying amount of loans and leases to their estimated net realizable value. It represents management's estimate of potential losses in the loan portfolio. (An increase to $23.645 million, coupled with a higher provision, signals increased concern over the credit quality of the loan portfolio.)

Accumulated other comprehensive loss

A component of shareholders' equity that includes unrealized gains and losses on certain investments, foreign currency translation adjustments, and other items not recognized in net income. (A significant reduction in this loss from $(65.065) million to $(39.076) million contributed positively to the growth in shareholders' equity.)

Provision for credit losses

The amount charged to earnings during a period to establish or increase the allowance for credit losses. (The shift from a credit of $0.597 million in YTD Q3 2024 to a provision of $3.301 million in YTD Q3 2025 indicates a more conservative stance on credit risk.)

Year-Over-Year Comparison

Compared to the prior year, CHEMUNG FINANCIAL CORP (CHMG) shows a mixed performance. While Q3 2025 net income surged by 36.22% to $7.792 million, the year-to-date net income for the nine months ended September 30, 2025, declined significantly to $7.363 million from $17.757 million in 2024, largely due to a $17.498 million net loss on securities transactions. Total assets have decreased, driven by a reduction in securities available for sale, although the loan portfolio has grown. Shareholders' equity has improved, primarily due to a reduction in accumulated other comprehensive loss.

Key Financial Figures

• $0.01 — were 4,794,349 shares of Common Stock, $0.01 par value, outstanding. CHEMUNG FINAN

Filing Documents

• chmg-20250930.htm (10-Q) — 5081KB
• chmg10q09302025exh31-1.htm (EX-31.1) — 8KB
• chmg10q09302025exh31-2.htm (EX-31.2) — 8KB
• chmg10q09302025exh32-1.htm (EX-32.1) — 4KB
• chmg10q09302025exh32-2.htm (EX-32.2) — 4KB
• chmg-20250930_g1.jpg (GRAPHIC) — 163KB
• 0001628280-25-049947.txt ( ) — 21654KB
• chmg-20250930.xsd (EX-101.SCH) — 65KB
• chmg-20250930_cal.xml (EX-101.CAL) — 151KB
• chmg-20250930_def.xml (EX-101.DEF) — 489KB
• chmg-20250930_lab.xml (EX-101.LAB) — 939KB
• chmg-20250930_pre.xml (EX-101.PRE) — 747KB
• chmg-20250930_htm.xml (XML) — 5372KB

Financial Statements – Unaudited

Financial Statements – Unaudited Consolidated Balance Sheets 6 Consolidated Statements of Income 7 Consolidated Statements of Comprehensive Income 8 Consolidated Statements of Shareholders' Equity 9 Consolidated Statements of Cash Flows 11 Notes to Unaudited Consolidated Financial Statements 13 Item 2:

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 46 Item 3:

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 82 Item 4:

Controls and Procedures

Controls and Procedures 84 PART II. OTHER INFORMATION Item 1:

Legal Proceedings

Legal Proceedings 85 Item 1A:

Risk Factors

Risk Factors 85 Item 2: Unregistered Sales of Equity Securities and Use of Proceeds 85 Item 3: Defaults Upon Senior Securities 85 Item 4: Mine Safety Disclosures 85 Item 5: Other Information 85 Item 6: Exhibits 86

SIGNATURES

SIGNATURES 87 EXHIBIT INDEX 2 GLOSSARY OF ABBREVIATIONS AND TERMS To assist the reader the Corporation has provided the following list of commonly used abbreviations and terms included in the Notes to the Unaudited Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations. Abbreviations ACL Allowance for credit losses AFS Available for sale securities ALCO Asset-Liability Committee AOCI Accumulated other comprehensive income ASC Accounting Standards Codification ASU Accounting Standards Update Bank Chemung Canal Trust Company Basel III The Third Basel Accord of the Basel Committee on Banking Supervision Board of Directors Board of Directors of Chemung Financial Corporation CAM Common area maintenance charges CDARS Certificate of Deposit Account Registry Service CECL Current expected credit loss CFS CFS Group, Inc. Corporation Chemung Financial Corporation Dodd-Frank Act The Dodd-Frank Wall Street Reform and Consumer Protection Act EPS Earnings per share Exchange Act Securities Exchange Act of 1934 FASB Financial Accounting Standards Board FDIC Federal Deposit Insurance Corporation FFIEC Federal Financial Institutions Examination Council FHLBNY Federal Home Loan Bank of New York FOMC Federal Open Market Committee FRB Board of Governors of the Federal Reserve System FRBNY Federal Reserve Bank of New York Freddie Mac Federal Home Loan Mortgage Corporation HTM Held to maturity securities ICS Insured Cash Sweep Service LGD Loss given default MD&A Management's Discussion and Analysis of Financial Condition and Results of Operations NAICS North American Industry Classification System N/M Not meaningful OPEB Other postemployment benefits OREO Other real estate owned PD Probability of default ROAA Return on average assets ROAE Return on average equity REIT Real estate investment trust RWA Risk-weighted assets SBA Small Business Administration SEC Securities an

View Full Filing

View this 10-Q filing on SEC EDGAR