ELMIRA, N.Y. — Chemung Financial Corporation (NASDAQ: CHMG), parent company of Chemung Canal Trust Company, recently reported that its net income jumped 37 percent to $7.8 million in the third quarter from $5.7 million in the year-ago quarter as its balance sheet and margins improved.

The banking company’s earnings per share increased 36 percent to $1.62 per share from $1.19 a share in the same period, the banking company said.

“Third quarter results demonstrate the importance of the Corporation’s balance sheet repositioning efforts undertaken over the past two quarters. Net interest income growth of $1.9 million, or approximately 9% compared to the prior quarter, reflects the immediate positive impact these actions have had on earnings by enabling continued investment in quality loan opportunities while simultaneously managing funding costs,” Anders M. Tomson, president and CEO of Chemung Financial, said in the Oct. 21 earnings report. “These results affirm the strategic direction we’ve taken and the disciplined execution of our strategy by our team across all of our divisions. With strong pipelines in key markets and a continued focus on relationship banking, the Corporation remains well positioned to deliver long-term value for our clients, communities, and shareholders.”

Net interst income, expense

Chemung Financial’s net interest income for the third quarter of 2025 totaled $22.7 million, compared to $18.4 million for the same period in the prior year, an increase of 23.4 percent. It was driven by gains in interest income on loans and interest income on interest-earning deposits, along with a decline in interest expense on deposits, partially offset by a drop in interest income on taxable securities.

Interest income on loans at Chemung Financial increased largely due to a rise of $151.4 million in average balances of total loans, compared to the same period in the prior year, as well as an increase of 3 basis points in the average yield on total loans, compared to the prior-year period. The increase in average balances of total loans was concentrated in commercial loans, which rose $183.3 million compared to the year-earlier quarter, largely comprised of growth in commercial real estate, particularly in Chemung Financial’s Capital region and Western New York markets.

The average yield on commercial loans decreased 7 basis points compared to the same period a year ago, largely due to declines in benchmark interest rates on existing variable rate loans and the lower market interest-rate environment for new loans, the banking company noted.

Chemung Financial’s average balances of residential mortgage loans increased by $4.3 million and the average yield on residential mortgage loans increased 41 basis points, compared to the prior-year quarter. The increase in average balances of residential mortgage loans was largely due to stronger origination activity year-to-date in 2025 compared to a year earlier. However originations remain below typical historical levels, the banking company stated.

Average balances of consumer loans at Chemung Financial fell by $36.2 million in the third quarter versus a year prior, while the average yield on consumer loans increased by 5 basis points compared to the year-earlier quarter. The decline in average balances was largely due to normal portfolio turnover and lower origination activity in the indirect auto-portfolio segment, as Chemung Financial has continued prioritizing funding other types of lending during the past year, per the earnings report.

Interest income on interest-earning deposits increased in the third quarter, largely due to a rise of $64.3 million in average balances of interest-earning deposits, despite a decrease of 50 basis points in the average yield on interest-earning deposits, each compared to a year before. Average balances of interest-earning deposits increased primarily due to proceeds from Chemung Financial’s sale of available-for-sale securities and issuance of subordinated debt in the second quarter of 2025, net of payoffs of wholesale funding sources in this year’s third quarter and funding of commercial-loan growth.

Interest expense on deposits at Chemung Financial fell in the third quarter, mainly due to declines of $58.7 million in average balances of brokered deposits and $47 million in average balances of customer time deposits, as well as decreases of 104 and 88 basis points in the average cost of brokered deposits and customer time deposits, respectively, compared to last year’s third quarter. Average balances of brokered deposits decreased due to the banking company’s payoff of all outstanding balances of brokered deposits during July 2025, as part of its balance-sheet repositioning efforts, the earnings report stated. The dip in the average cost of brokered deposits compared to a year ago was largely due to the declining interest-rate environment, which Chemung Financial benefited from by largely utilizing brokered deposits with terms of three months or less.

Chemung Financial reported that its fully taxable equivalent net interest margin was 3.45 percent for the third quarter of 2025, compared to 2.72 percent in the same period in 2024. Average interest-earning assets decreased by $82.3 million, while average interest-bearing liabilities fell by $104.7 million, compared to the prior-year quarter, both primarily due to the net impact of the banking company’s balance-sheet repositioning efforts.

The average yield on interest-earning assets increased 37 basis points to 5.15 percent in the third quarter, while the average cost of interest-bearing liabilities fell 46 basis points to 2.51 percent, compared to a year before. The total cost of funds was 1.85 percent in the latest quarter, compared to 2.24 percent for the third quarter of 2024.

Provision for credit losses

Chemung Financial took a provision for credit losses of $1.1 million in this year’s third quarter, up from $600,000 in last year’s third quarter. The increase was mostly due to stronger loan growth in the third quarter of 2025, which totaled $69.9 million, compared to loan growth of $17.5 million for the same period in the prior year, and adjustments to model inputs between the third quarters of 2024 and 2025, per the earnings report.

Non-interest income, expense

Non-interest income for the third quarter of 2025 totaled $6.1 million at Chemung Financial, compared to $5.9 million in the same quarter in 2024, driven by increases in other non-interest income and service charges on deposits.

Other non-interest income increased mainly due to higher interest-rate swap fees, reflecting a rise in originations of loans with interest-rate swap exposures in the third quarter of 2025, compared to the same period in 2024. An increase in commission income attributable to the company’s CFS Group and higher service charges on deposit accounts, after phasing in fee-schedule increases, also helped.

Non-interest expense for Chemung Financial in the third quarter of 2025 totaled $17.6 million, up from $16.5 million in the year-ago period, an increase of 6.7 percent, driven by increases in salaries and wages, as well as pension and other employee benefits. That was partially offset by declines in FDIC insurance, as well as other non-interest expense and loan expense.

Salaries and wages at Chemung Financial increased largely due to a rise in base salaries, which included staffing in the banking company’s Western New York Canal Bank division, consisting of additional lending, branch, and wealth-management staff. Merit-based salary increases for existing employees also contributed to the rise. Pension and employee benefits increased largely due to higher employee health-care-related expenses compared to the same period in 2024.

Chemung Financial is a $2.7 billion financial-services holding company headquartered in Elmira. It operates 30 retail branches through Chemung Canal Trust Company, a full-service community bank with trust powers. Established in 1833, Chemung Canal Trust says it the oldest locally owned and managed community bank in New York state. Chemung Financial’s CFS Group, Inc. financial-services subsidiary offers non-traditional services including mutual funds, annuities, brokerage services, tax preparation services, and insurance.