10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023 OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _____________

Commission File Number 001-35741

CHEMUNG FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

New York	16-1237038
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One Chemung Canal Plaza, Elmira, New York	14901
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code:  (607) 737-3711

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, Par Value $0.01 Per Share	CHMG	Nasdaq Stock Market, LLC
Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller Reporting Company ☒ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Based upon the closing price of the registrant's Common Stock as of June 30, 2023, the aggregate market value of the voting stock held by non-affiliates of the registrant was $145,072,803.

As of March 1, 2024, there were 4,750,674 shares of Common Stock, $0.01 par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Annual Meeting of Shareholders to be held on June 4, 2024 are incorporated by reference into Part III, Items 10, 11, 12, 13, and 14 of this Form 10-K.

CHEMUNG FINANCIAL CORPORATION

ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2023

Form 10-K Item Number:		Page No.
PART I		6
Item 1.	Business	6
Item 1A.	Risk Factors	20
Item 1B.	Unresolved Staff Comments	30
Item 1C.	Cybersecurity	30
Item 2.	Properties	31
Item 3.	Legal Proceedings	33
Item 4.	Mine Safety Disclosures	33
PART II		34
Item 5.	Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	34
Item 6.	Reserved	35
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	36
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	67
Item 8.	Financial Statements and Supplementary Data	68
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	69
Item 9A.	Controls and Procedures	69
Item 9B.	Other Information	69
Item 9C.	Disclosure Regarding Foreign Jurisdictions That Prevent Inspections	69
PART III		70
Item 10.	Directors, Executive Officers and Corporate Governance	70
Item 11.	Executive Compensation	70
Item 12.	Security Ownership of Certain Beneficial Owners and Management, and Related Stockholder Matters	70
Item 13.	Certain Relationships and Related Transactions, and Director Independence	70
Item 14.	Principal Accountant Fees and Services	70
PART IV		71
Item 15.	Exhibits and Financial Statement Schedules	71
Item 16.	Form 10-K Summary	72
	Index to Consolidated Financial Statements	73
	Report of Independent Registered Public Accounting Firm-Crowe LLP	F-1
	SIGNATURES	F-59

Some of the information contained in this report concerning the markets and industry in which we operate is derived from publicly available information and from industry sources.  Although we believe that this publicly available information and information provided by these industry sources are reliable, we have not independently verified the accuracy of any of this information.

To assist the reader, the Corporation has provided the following list of commonly used abbreviations and terms included in Parts I through IV.

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
BHCA	Bank Holding Company Act of 1956
Board of Directors	Board of Directors of Chemung Financial Corporation
BOLI	Bank Owned Life Insurance
CAM	Common area maintenance charges
CARES Act	Coronavirus Aid, Relief, and Economic Security Act
CAPM	Capital Asset Pricing Model
CBLR	Community Bank Leverage Ratio
CDARS	Certificate of Deposit Account Registry Service
CDO	Collateralized Debt Obligation
CECL	Current Expected Credit Loss
CFPB	Consumer Financial Protection Bureau
CFS	CFS Group, Inc.
Corporation	Chemung Financial Corporation
COVID-19	Coronavirus disease 2019
CRA	Community Reinvestment Act
CRM	Chemung Risk Management, Inc.
DIF	Deposit Insurance Fund
Dodd-Frank Act	The Dodd-Frank Wall Street Reform and Consumer Protection Act
ECOA	Equal Credit Opportunity Act
EPS	Earnings per share
Exchange Act	Securities Exchange Act of 1934
FACT Act	Fair and Accurate Credit Transactions Act of 2003
FASB	Financial Accounting Standards Board
FCRA	Fair Credit Reporting Act
FDIA	Federal Deposit Insurance Act
FDIC	Federal Deposit Insurance Corporation
FFIEC	Federal Financial Institution Examination Council
FHLBNY	Federal Home Loan Bank of New York
FINRA	Financial Industry Regulatory Authority
FOFC	Fort Orange Financial Corporation
FRB	Board of Governors of the Federal Reserve System
FRBNY	Federal Reserve Bank of New York
Freddie Mac	Federal Home Loan Mortgage Corporation

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FTC	Federal Trade Commission
GAAP	U.S. Generally Accepted Accounting Principles
GLB Act	Gramm-Leach-Bliley Act
HTM	Held to maturity securities
ICS	Insured Cash Sweep Service
IPS	Investment Policy Statement
LIBOR	London Interbank Offered Rate
MD&A	Management’s Discussion and Analysis of Financial Condition and Results of Operations
NAICS	North American Industry Classification System
N/M	Not meaningful
NYSDFS	New York State Department of Financial Services
OPEB	Other postemployment benefits
OREO	Other real estate owned
PCI	Purchased credit impaired
Regulatory Relief Act	The Economic Growth, Regulatory Relief and Consumer Protection Act of 2018
RESPA	Real Estate Settlement Procedures Act
Riegle-Neal Act	Riegle-Neal Interstate Banking and Branching Efficiency Act
ROA	Return on average assets
ROE	Return on average equity
RWA	Risk-weighted assets
SOFR	Secured Overnight Financing Rate
SBA	Small Business Administration
SEC	U.S. Securities and Exchange Commission
Security Guidelines	Interagency Guidelines Establishing Information Security Standards
Securities Act	Securities Act of 1933
Sarbanes-Oxley	Sarbanes-Oxley Act of 2002
Tax Act	Tax Cuts and Jobs Act of 2017
TDRs	Troubled debt restructurings
USA PATRIOT Act	Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
WMG	Wealth Management Group

Terms

Accumulated benefit obligation	An approximate measure of the pension plan liability, which is based on the assumption that the pension plan is to be terminated immediately and does not consider any future salary increases.
Allowance for Credit Losses	Replaces the Allowance for Loan and Lease Losses as the contra asset account valuating the lifetime amount the Corporation anticipates will be unrecoverable from assets with credit risk. The ACL conforms with CECL requirements as outlined in ASU 2016-13, and was implemented by the Corporation January 1, 2023.
Allowance for credit losses to total loans	Represents period-end allowance for credit losses divided by retained loans.
Assets under administration	Represents assets that are beneficially owned by clients and all investment decisions pertaining to these assets are also made by clients.
Assets under management	Represents assets that are managed on behalf of clients.
Basel III	A comprehensive set of reform measures designed to improve the regulation, supervision, and risk management within the banking sector. The reforms require banks to maintain proper leverage ratios and meet certain capital requirements.
Benefit obligation	Refers to the projected benefit obligation for pension plans and the accumulated postretirement benefit obligation for OPEB plans.

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Capital Bank	Division of Chemung Canal Trust Company located in the “Capital Region” of New York State and includes the counties of Albany, Saratoga, & Schenectady.
Captive insurance company	A company that provides risk-mitigation services for its parent company.
CDARS	Product involving a network of financial institutions that exchange certificates of deposits among members in order to ensure FDIC insurance coverage on customer deposits above the single institution limit. Using a sophisticated matching system, funds are exchanged on a dollar-for-dollar basis, so that the equivalent of an original deposit comes back to the originating institution.
Collateralized debt obligation	A structured financial product that pools together cash flow-generating assets, such as mortgages, bonds, and loans.
Collateralized mortgage obligations	A type of mortgage-backed security with principal repayments organized according to their maturities and into different classes based on risk. The mortgages serve as collateral and are organized into classes based on their risk profile.
Dodd-Frank Act	The Dodd-Frank Act was enacted on July 21, 2010 and significantly changed the bank regulatory landscape and has impacted and will continue to impact the lending, deposit, investment, trading and operating activities of financial institutions and their holding companies. The Dodd-Frank Act requires various federal agencies to adopt a broad range of new rules and regulations, and to prepare various studies and reports for Congress.
Economic Growth, Regulatory Relief, and Consumer Protection Act	The Economic Growth, Regulatory Relief, and Consumer Protection Act was signed on May, 24 2018 and repeals or modifies certain provisions to the Dodd-Frank Act and will ease certain regulations on all but the largest banks.
Fully taxable equivalent basis	Income from tax-exempt loans and investment securities that have been increased by an amount equivalent to the taxes that would have been paid if this income were taxable at statutory rates; the corresponding income tax impact related to tax-exempt items is recorded within income tax expense.
GAAP	Accounting principles generally accepted in the United States of America.
Holding company	Consists of the operations for Chemung Financial Corporation (parent only).
ICS	Product involving a network of financial institutions that exchange interest-bearing money market deposits among members in order to ensure FDIC insurance coverage on customer deposits above the single institution limit. Using a sophisticated matching system, funds are exchanged on a dollar-for-dollar basis, so that the equivalent of an original deposit comes back to the originating institution.
Loans held for sale	Residential real estate loans originated for sale on the secondary market with maturities from 15-30 years.
Long term lease obligation	An obligation extending beyond the current year, which is related to a long term capital lease that is considered to have the economic characteristics of asset ownership.
Mortgage-backed securities	A type of asset-backed security that is secured by a collection of mortgages.
Municipal clients	A political unit, such as a city, town, or village, incorporated for local self-government.
N/A	Data is not applicable or available for the period presented.
N/M	Data is not meaningful in the context presented.
Non-GAAP	A calculation not made according to GAAP.
Obligations of state and political subdivisions	An obligation that is guaranteed by the full faith and credit of a state or political subdivision that has the power to tax.
Obligations of U.S. Government	A federally guaranteed obligation backed by the full power of the U.S. government, including Treasury bills, Treasury notes and Treasury bonds.
Obligations of U.S. Government sponsored enterprise obligations	Obligations of agencies originally established or chartered by the U.S. government to serve public purposes as specified by the U.S. Congress; these obligations are not explicitly guaranteed as to the timely payment of principal and interest by the full faith and credit of the U.S. government.
OREO	Represents real property owned by the Corporation, which is not directly related to its business and is most frequently the result of a foreclosure on real property.
Political subdivision	A county, city, town, or other municipal corporation, a public authority, or a publicly-owned entity that is an instrumentality of a state or a municipal corporation.

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Pre-provision profit/(loss)	Represents total net revenue less non-interest expense, before income tax expense (benefit). The Corporation believes that this financial measure is useful in assessing the ability of a bank to generate income in excess of its provision for credit losses.
Projected benefit obligation	An approximate measure of the pension plan liability, which is based on the assumption that the plan will not terminate in the near future and that employees will continue to work and receive future salary increases.
Regulatory Relief Act	The Regulatory Relief Act was signed on May, 24 2018 and repeals or modifies certain provisions to the Dodd-Frank Act and will ease certain regulations on all but the largest banks.
RWA	Risk-weighted assets, which is used to calculate regulatory capital ratios, consist of on- and off-balance sheet assets that are assigned to one of several broad risk categories and weighted by factors representing their risk and potential for default. On-balance sheet assets are risk-weighted based on the perceived credit risk associated with the obligor or counterparty, the nature of any collateral, and the guarantor, if any. Off-balance sheet assets such as lending-related commitments, guarantees, derivatives and other applicable off-balance sheet positions are risk-weighted by multiplying the contractual amount by the appropriate credit conversion factor to determine the on-balance sheet credit equivalent amount, which is then risk-weighted based on the same factors used for on-balance sheet assets. Risk-weighted assets also incorporate a measure for market risk related to applicable trading assets-debt and equity instruments. The resulting risk-weighted values for each of the risk categories are then aggregated to determine total risk-weighted assets.
SBA loan pools	Business loans partially guaranteed by the SBA.
Securities sold under agreements to repurchase	Sale of securities together with an agreement for the seller to buy back the securities at a later date.
Tax Act	The Tax Act was enacted on December 22, 2017 and amended the Internal Revenue Code of 1986. The legislation reduced the U.S. federal corporate income tax rate from 35 percent to 21 percent, with some related business deductions and credits being either reduced or eliminated.
TDR	A TDR was deemed to have occured when the Corporation modified the original terms of a loan agreement by granting a concession to a borrower that is experiencing financial difficulty. TDR accounting guidance was superseded by ASU 2022-02, effective January 1, 2023. The Corporation discloses and accounts for loan modifications that have a direct impact on contractual cash flows made to borrowers experiencing financial difficulty in accordance with ASU 2022-02.
Trust preferred securities	A hybrid security with characteristics of both subordinated debt and preferred stock which allows for early redemption by the issuer, makes fixed or variable payments, and matures at face value.
Unaudited	Financial statements and information that have not been subjected to auditing procedures sufficient to permit an independent certified public accountant to express an opinion.
WMG	Provides services as executor and trustee under wills and agreements, and guardian, custodian, trustee and agent for pension, profit-sharing and other employee benefit trusts, as well as various investment, financial planning, pension, estate planning and employee benefit administration services.

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PART I

ITEM 1.  BUSINESS

General

The Corporation was incorporated on January 2, 1985 under the laws of the State of New York and is headquartered in Elmira, NY. The Corporation was organized for the purpose of acquiring the Bank. The Bank was established in 1833 under the name Chemung Canal Bank, and was subsequently granted a New York State bank charter in 1895. In 1902, the Bank was reorganized as a New York State trust company under the name Elmira Trust Company, and its name was changed to Chemung Canal Trust Company in 1903.

The Corporation became a financial holding company in June 2000. Financial holding company status provided the Corporation with the flexibility to offer an array of financial services, such as insurance products, mutual funds, and brokerage services, which provide additional sources of fee-based income and allow the Corporation to better serve its customers. The Corporation established a financial services subsidiary, CFS, in September 2001 which offers non-banking financial services such as mutual funds, annuities, brokerage services, insurance and tax preparation services. CRM, a wholly-owned subsidiary of the Corporation, was formed and began operations on May 31, 2016 as a Nevada-based captive insurance company. During the fourth quarter of 2023, CRM was dissolved by the Corporation effective December 6, 2023. The dissolution of CRM did not have a significant impact to financial results for the year ended December 31, 2023.

The Corporation’s Board of Directors has concluded that the expansion of the franchise’s geographic footprint, an increase in the Bank’s interest earning assets, and the generation of new sources of non-interest income are important components of its strategic plan. Over the last 15 years, the Corporation and the Bank have completed the following transactions to grow the franchise:

•On March 14, 2008, the Bank acquired three branches from Manufacturers and Traders Trust Company in Broome and Tioga counties in New York. At the time of the acquisition, the Bank assumed $64.4 million in deposits and acquired $12.6 million in loans.

•On May 29, 2009, the Corporation acquired Canton Bancorp, Inc., the holding company of Bank of Canton based in Canton, Pennsylvania. At the time of the merger, Canton Bancorp, Inc. had $81.1 million in assets, $58.8 million in loans and $72.9 million in deposits.

•On April 8, 2011, the Corporation acquired FOFC, the holding company of Capital Bank & Trust Company based in Albany, New York. At the time of the merger, Capital Bank had $254.4 million in assets, $170.7 million in loans and $199.2 million in deposits.

•On November 23, 2013, the Bank completed the acquisition of six branch offices from Bank of America located in Cayuga, Cortland, Seneca, and Tompkins counties in New York. As part of the transaction, the Corporation acquired $177.7 million in deposits and $1.2 million in loans.

•As of April 2, 2021, the Corporation received all regulatory approvals to operate a branch office in a new market in the Buffalo Metropolitan Area.

•The Corporation intends to open a full-service branch in Williamsville, New York during 2024.

As a result of these transactions and organic growth, the Corporation had $2.711 billion in consolidated assets, $1.973 billion in loans, $2.429 billion in deposits, and $195.2 million in shareholders’ equity at December 31, 2023.

Growth Strategy

The Corporation’s growth strategy is to leverage its branch and digital network in current or new markets to build client relationships and grow loans and deposits. Consistent with the Corporation’s community-banking model, and subject to market conditions, emphasis is placed on acquiring stable, low-cost deposits, such as checking account deposits and other low interest-bearing deposits to fund high-quality loans. The Corporation evaluates potential acquisition targets based on the economic viability of their markets, the degree to which they can be effectively integrated into the Corporation’s current operations, and the degree to which they are accretive to capital and earnings.

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Description of Business

The Corporation, through the Bank and CFS, 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 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.

In order to compete with other financial services companies, the Corporation relies upon personal relationships established with clients by its officers, employees, and directors. The Corporation has maintained a strong community orientation by supporting the active participation of officers and employees in local charitable, civic, school, religious, and community development activities. The Corporation believes that its emphasis on local relationship banking together with a prudent approach to lending are important factors in its success and growth.

For additional information, including information concerning the results of operations of the Corporation and its subsidiaries, see Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7. Other than as described above, there were no material changes in the manner of doing business by the Corporation or its subsidiaries during the fiscal year ended December 31, 2023.

Lending Activities

Lending Strategy

The Corporation’s objective is to channel deposits gathered locally into high-quality, market-yielding loans without taking unacceptable credit and/or interest rate risk. The Corporation seeks to have a diversified loan portfolio consisting of commercial and industrial loans, commercial mortgages, residential mortgages, home equity lines of credit and home equity term loans, direct consumer loans, and indirect automobile loans. The Bank operates with a traditional community bank model where the relationship manager possesses credit skills and has significant influence over credit decisions. This creates value since clients and prospects know they are dealing with a decision maker.

Lending Authority

The Board of Directors establishes the lending policies, underwriting standards, and loan approval limits of the Bank. In accordance with those policies, the Board of Directors has designated certain officers to consider and approve loans within their designated authority. These officers exercise substantial authority over credit and pricing decisions, subject to loan committee approval for larger credits. The Bank recognizes that exceptions to the lending policies may occasionally occur and has established procedures for approving exceptions to these policies.

In underwriting loans, primary emphasis is placed on the borrower’s financial condition, including ability to generate cash flow to support the debt and other cash expenses. In addition, substantial consideration is given to collateral value and marketability as well as the borrower’s character, reputation and other relevant factors. Interest rates charged by the Bank vary with degree of risk, type, size, complexity, repricing frequency, and other relevant factors associated with the loans. Competition from other financial services companies also impacts interest rates charged on loans.

The Corporation has also implemented reporting systems to monitor loan originations, loan quality, concentration of credit, loan delinquencies, non-performing loans, and potential problem loans.

Lending Segments

The Bank segments its loan portfolio into the following major lending categories: (i) commercial and industrial, (ii) commercial mortgages, (iii) residential mortgages, and (iv) consumer loans.

Commercial and industrial loans primarily consist of loans to small to mid-sized businesses in the Bank's market area in a diverse range of industries. These loans are of higher risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. Further, the collateral securing the loans may depreciate over time, may be difficult to appraise, and may fluctuate in value. The credit risk related to commercial loans is largely influenced by general economic conditions and the resulting impact on a borrower’s operations or on the value of underlying collateral, if any.

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Commercial mortgage loans generally have larger balances and involve a greater degree of risk than residential mortgage loans, and they, therefore, pose higher potential losses on an individual customer basis. Loan repayment is often dependent on the successful operation and management of the properties and/or the businesses occupying the properties, as well as on the collateral securing the loan. Economic events or conditions in the real estate market could have an adverse impact on the cash flows generated by properties securing the Bank’s commercial real estate loans and on the value of such properties.

The Bank offers interest rate swaps to certain larger commercial mortgage borrowers. These swaps allow the Bank to originate a mortgage based on short-term SOFR rates and allow the borrower to swap into a longer term fixed rate. The Bank simultaneously sells an offsetting back-to-back swap to an investment grade national bank so that it does not retain this fixed-rate risk. The swap agreements are free-standing derivatives and are recorded at fair value in the Bank's consolidated balance sheets.

The Bank offers fixed-rate and adjustable-rate residential mortgage loans to individuals with maturities of up to 30 years that are fully amortizing with monthly loan payments. Mortgages are generally underwritten according to U.S. government sponsored enterprise guidelines designated as "A" or "A-" and referred to as "conforming loans." The Bank also originates jumbo loans above conforming loan amounts which generally are consistent with secondary market guidelines for these loans; however, these are typically held for investment. The Bank does not offer a subprime mortgage lending program. The Bank's secondary market lending is generally sold on a servicing-retained basis. Residential mortgage loans are generally made on the basis of the borrower’s ability to make repayment from his or her employment and other income, and are secured by real property whose value tends to be more easily ascertainable. Credit risk for these types of loans is generally influenced by general economic conditions, the characteristics of individual borrowers, and the nature of the loan collateral.

The consumer loan segment includes home equity lines of credit and home equity loans, which exhibit many of the same risk characteristics as residential mortgages. Indirect and other consumer loans may entail greater credit risk than residential mortgage and home equity loans, particularly in the case of other consumer loans which are unsecured or, in the case of indirect consumer loans, secured by depreciable assets, such as automobiles, recreational vehicles, or boats. In such cases, any repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance. In addition, consumer loan collections are dependent on the borrower’s continuing financial stability, thus are more likely to be affected by adverse personal circumstances such as job loss, divorce, illness, or personal bankruptcy. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans.

Funding Activities

Funding Strategy

The Corporation’s deposit strategy is to fund the Bank, subject to market conditions, with stable, low-cost deposits, primarily checking account deposits and low interest-bearing deposit accounts. A checking account is the driver of a banking relationship and consumers consider the bank where they have their checking account as their primary bank. These customers will typically turn to their primary bank first when in need of other financial services. The Corporation also considers brokered deposits to be an element of its deposit strategy and anticipates that it will continue the use of brokered deposits as a secondary source of funding to support growth. Borrowings may be used on a short-term basis for liquidity purposes or on a long-term basis to fund asset growth.

Funding Sources

The Corporation’s primary sources of funds are deposits, principal and interest payments on loans and securities, borrowings and funds generated from operations of the Bank. The Bank also has access to advances from the FHLBNY, other financial institutions, and the FRBNY. Contractual loan and securities payments are a relatively stable source of funds, while deposit inflows and outflows and loan prepayments are significantly influenced by general market interest rates and economic conditions.

The Corporation considers core deposits, consisting of non-interest-bearing and interest-bearing checking accounts, savings accounts, and insured money market deposits, to be a significant component of its deposits. The Corporation monitors the activity on these core deposits and, based on historical experience and pricing strategy, believes it will continue to retain a large portion of such accounts. The Bank is currently not limited with respect to the rates that it may offer on deposit products. The Bank believes it is competitive in the types of accounts and interest rates it has offered on its deposit products. The Bank regularly evaluates the internal cost of funds, surveys rates offered by competitors, reviews cash flow requirements for lending and liquidity, and executes rate changes when necessary as part of its asset/liability management, profitability and growth strategies.

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The flow of deposits is influenced significantly by general economic conditions, changes in prevailing interest rates and competition. The Bank’s deposits are obtained predominantly from the areas in which its retail offices are located. The Bank relies primarily on customer service, long-standing relationships and other banking services, including loans and wealth management services, to attract and retain these deposits. However, market interest rates and rates offered by competing financial institutions affect the Bank’s ability to attract and retain deposits. The Bank utilizes a combination of traditional media, including print, television, and radio, as well as digital when advertising its deposit products.

Investment Activities

The general objective of the Bank's investment portfolio is to provide liquidity when loan demand is high, and to absorb excess funds when demand is low. The securities portfolio also provides a medium for certain interest risk measures intended to maintain an appropriate balance between interest income from loans and total interest income. The Bank only invests in high-quality investment-grade securities such as mortgage-backed securities and obligations of states and political subdivisions. Investment decisions are made in accordance with the Bank's investment policy and include consideration of risk, return, duration, and portfolio concentrations.

Derivative Financial Instruments

The Bank offers interest rate swaps to commercial loan customers who wish to fix the interest rates on their loans, and the Bank matches these swaps using offsetting swaps with Domestic Systemically Important Banks (D-SIBs). These swaps are considered free standing derivatives and are carried at fair value on the consolidated balance sheets, with gains and losses recorded through other non-interest income. The swaps are not designated as hedging derivatives. Additionally, the Bank participates in risk participation agreements with dealer banks on commercial loans in which it participates. The Bank may receive an upfront fee for participating in the credit exposure of the interest rate swap associated with the commercial loan in which it is a participant and the fee received is recognized immediately in other non-interest income. The Bank is exposed to its share of the credit loss equal to the fair value of the interest rate swap in the event of nonperformance by the counterparty of the interest rate swap.

The Bank has a policy for managing its derivative financial instruments, and the policy and program activity are overseen by the ALCO. Under the policy, derivative financial instruments with counterparties, who are not customers, are limited to a Domestic Systemically Important Bank (D-SIB). Cash and/or certain qualified securities are required to serve as collateral when exposures exceed $100 thousand, with a minimum collateral coverage of $150 thousand. The credit worthiness of the customer is reviewed internally by the Bank's credit department.

Wealth Management Strategy

With $2.242 billion of assets under management or administration at December 31, 2023, including $381.3 million of assets held under management or administration for the Corporation, WMG is responsible for the largest component of the Corporation's non-interest income. Wealth management services provided by the Bank include services as executor and trustee under wills and agreements, and guardian, custodian, trustee, and agent for pension, profit-sharing and other employee benefit trusts, as well as various investment, pension, estate planning, and employee benefit administrative services. The Corporation’s growth strategy also includes the acquisition of trust businesses to generate new sources of fee income.

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Market Area and Competition

The Bank operates 31 branch offices located in 13 counties in New York and Bradford County in Pennsylvania. Bank branch offices are located in the following New York counties: Chemung, where the Bank is headquartered, Broome, Cayuga, Cortland, Erie, Schuyler, Seneca, Steuben, Tioga and Tompkins. The Bank also operates under the name “Capital Bank, a division of Chemung Canal Trust Company,” with branch offices located in Albany, Saratoga, and Schenectady counties in New York.

Albany, Saratoga, and Schenectady counties rely heavily on business related to New York State government activities, the nanotechnology industry, and colleges located within these counties. The Capital region of New York has become a hub for both private and public investment in semiconductor-related activity, recently highlighted by the announcement of a $10 billion partnership to establish the only publicly-owned EUV lithography research facility in North America. Major partners in the initiative include Applied Materials, Micron, IBM, and Tokyo Electron, and the facility aims to compliment the existing semiconductor supply chain presence of companies such as ASML and GlobalFoundries, as well as enhance the research capabilities of local universities such as Rensselaer Polytechnic Institute and SUNY Polytechnic. Tompkins County is dominated by the presence of Cornell University and Ithaca College. The world headquarters of Corning Incorporated, the region’s largest employer, is located in Steuben County. The remaining New York counties have a combination of service, small manufacturing and tourism-related businesses, with colleges located in Broome, Chemung, and Cortland counties. Bradford County's largest employers are a combination of service and small manufacturing businesses, along with the natural gas industry.

During 2021, the Corporation entered a new market in the Buffalo Metropolitan Area. After New York City, this region is the second largest population center in New York State. Erie County has a diverse mix of industrial, light manufacturing, high technology and service-oriented private sector companies. The region also has reliance on higher education with the University at Buffalo, SUNY Buffalo as well as several private colleges. The region's largest employers are affiliated with the healthcare industry, primarily located in the medical corridor.

Within all these market areas, the Bank encounters intense competition in the lending and deposit gathering aspects of its business from local, regional and national commercial banks and thrift institutions, credit unions, and other providers of financial services such as brokerage firms, investment companies, insurance companies, fintech, and internet banking entities. The Bank also competes with non-financial institutions, including retail stores and certain utilities that maintain their own credit programs, as well as governmental agencies that make loans to certain borrowers. Many of these competitors are not subject to regulation as extensive as that affecting the Bank and, as a result, may have a competitive advantage over the Bank in certain respects. This is particularly true of credit unions because their pricing structure is not encumbered by the payment of income taxes and not subject to certain regulations such as CRA.

Similarly, the competition for the Bank's wealth management services is primarily from local offices of national brokerage firms, independent investment advisors, national and regional banks, as well as internet based brokerage and advisory firms. The Bank operates full-service wealth management centers in Chemung, Broome, and Albany counties in New York.

Human Capital Resources

In order to accomplish our mission to remain a strong financial-services organization and create value for shareholders, clients, employees and the communities we serve, we must attract and retain the highest quality talent in each of our markets. We offer an inclusive, safe and healthy work environment, maintain the highest standards of business ethics and provide opportunities for career development and advancement, along with a competitive benefits package.

Employee Profile

As of December 31, 2023 we employed 339 full time equivalent employees in 31 locations in New York and Pennsylvania. None of our employees are represented by any collective bargaining unit or is a party to a collective bargaining agreement. We believe our relationship with our employees to be good. As of December 31, 2023 our workforce was 72% female and 28% male, and our average tenure was 8.2 years. Our Executive Management Team has an average tenure of 12.5 years. We continue to focus on diversity and inclusion among our workforce.

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Total Rewards

We offer a competitive total rewards package for all employees, including competitive base pay, incentive plans for all employees, a 401(k) match, a non-discretionary company 401(k) contribution, health, dental, and vision insurance, life insurance, company contributions to a health savings account, paid time off, family leave, flexible work schedules, tuition reimbursement, and the opportunity to volunteer in the community during work hours.

Health and Safety

The health, safety and well-being of our employees is paramount to the success of our business. In addition to our insurance offerings and leave programs, we offer an employee assistance program, along with welfare programs, fitness reimbursement, and an on-site flu-shot clinic.

Talent

We believe investing in our employees not only helps with retention, but also keeps employees engaged and focused. We encourage all employees to join career circles, find a mentor, apply for our leadership program, job shadow, attend diversity, equity and inclusion, and supervisor discussions, and other trainings offered. The success of our company depends on the success of our employees.

Available Information

The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding the Corporation. In addition, the Corporation maintains a corporate website at www.chemungcanal.com. The Corporation makes available free of charge through the Bank's website its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act. These items are available as soon as reasonably practicable after we electronically file or furnish such material with the SEC. The contents of the Bank's website are not a part of this report. These materials are also available free of charge by written request to: Kathleen S. McKillip, Corporate Secretary, Chemung Financial Corporation, One Chemung Canal Plaza, Elmira, NY 14901.

Supervision and Regulation

The Corporation and the Bank are subject to comprehensive regulation, supervision and examination by regulatory authorities. Numerous statutes and regulations apply to the Corporation’s and, to a greater extent, the Bank’s operations, including required reserves, investments, loans, deposits, issuances of securities, payments of dividends, and establishment of branches. Set forth below is a brief description of some of these laws and regulations. The description does not purport to be complete, and is qualified in its entirety by reference to the text of the applicable laws and regulations.

The Corporation

Bank Holding Company Act

The Corporation is a bank holding company registered with, and subject to regulation and examination by, the FRB pursuant to the BHCA, as amended. The FRB regulates and requires the filing of reports describing the activities of bank holding companies, and conducts periodic examinations to test compliance with applicable regulatory requirements. The FRB has enforcement authority over bank holding companies, including, among other things, the ability to assess civil money penalties, to issue cease and desist or removal orders, and to require a bank holding company to divest subsidiaries.

The Corporation generally may engage in the activities permissible for a bank holding company, which includes banking, managing or controlling banks, performing certain servicing activities for subsidiaries, and engaging in other activities that the FRB has determined to be so closely related to banking as to be a proper incident thereto, as set forth in the FRB's Regulation Y. As the Corporation has elected financial holding company status, it may also engage in a broader range of activities that are determined by the FRB and the Secretary of the Treasury to be financial in nature or incidental to financial activities or, with the prior approval of the FRB, activities that are determined by the FRB to be complementary to a financial activity and that do not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally.

The BHCA prohibits a bank holding company from acquiring direct or indirect ownership or control of more than 5% of the voting shares of any bank, or increasing such ownership or control of any bank, without the prior approval of the FRB.

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Interstate Banking and Branching

Under the Riegle-Neal Act, subject to certain concentration limits and other requirements, adequately capitalized bank holding companies, such as the Corporation, are permitted to acquire banks and bank holding companies located in any state. Any bank that is a subsidiary of a bank holding company is permitted to receive deposits, renew time deposits, close loans, service loans, and receive loan payments as an agent for any other bank subsidiary of that bank holding company. Subject to certain conditions, banks are permitted to acquire branch offices outside of their home states by merging with out-of-state banks, purchasing branches in other states, and establishing de novo branch offices in other states.

In April 2008, banking regulators in the states of New Jersey, New York, and Pennsylvania entered into a Memorandum of Understanding (the "Interstate MOU") to clarify their respective roles, as home and host state regulators, regarding interstate branching activity on a regional basis pursuant to the Riegle-Neal Amendments Act of 1997. The Interstate MOU established the regulatory responsibilities of the respective state banking regulators regarding bank regulatory examinations and is intended to reduce the regulatory burden on state-chartered banks branching within the region by elimination duplicative host state compliance exams.

Under the Interstate MOU, the activities of branches the Bank established in Pennsylvania would be governed by New York state law to the same extent that the Federal law governs the activities of the branch of an out-of-state national bank in such host states. Issues regarding whether a particular host state law is preempted are to be determined in the first instance by the NYSDFS. In the event that the NYSDFS and the applicable host state regulator disagree regarding whether a particular host state law is pre-empted, the NYSDFS and the applicable host state regulator would use their reasonable best efforts to consider all points of view to resolve the disagreement.

New York Law

The Corporation is organized under New York law and is subject to the New York Business Corporation Law, which governs the rights and obligations of directors and shareholders and other corporate matters.

The Corporation is also a bank holding company as defined in the New York Banking Law by virtue of its ownership and control of the Bank. Generally, this means that the NYSDFS must approve the Corporation’s acquisition of control of other banking institutions and similar transactions.

Federal Securities Law

The Corporation is subject to the information, reporting, proxy solicitation, insider trading, and other rules contained in the Exchange Act, the disclosure requirements of the Securities Act and the regulations of the SEC thereunder. In addition, the Corporation must comply with the corporate governance and listing standards of the Nasdaq Stock Market to maintain the listing of its common stock on the exchange. These standards include rules relating to a listed company's board of directors, audit committees and independent director oversight of executive compensation, the director nomination process, a code of conduct and shareholder meetings.

The SEC has adopted certain proxy disclosure rules regarding executive compensation and corporate governance, with which the Corporation must comply. They include: (i) disclosure of total compensation of key officers of the Corporation, including disclosure of restricted and unrestricted stock awards compensation; (ii) disclosure regarding any potential conflict of interest of any compensation consultants of the Corporation; (iii) disclosure regarding audit and compensation committee independence and experience, qualifications, skills and diversity of its directors and any director nominees; (iv) “say-on-pay” disclosure; (v) pay vs. performance disclosure; and (vi) information relating to the leadership structure of the Corporation’s Board of Directors and the Board of Directors' role in the risk management process. In October 2022, the SEC adopted a final rule implementing the incentive-based compensation recovery (“clawback”) provisions of the Dodd-Frank Act. The final rule directed national securities exchanges, including Nasdaq, to require listed companies to develop and implement clawback policies to recover erroneously awarded incentive-based compensation from current or former executive officers in the event of a required accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws, and to disclose their clawback policies and any actions taken under these policies. Nasdaq amended its proposed listing standards relating to clawbacks to provide that listed companies had until December 1, 2023 to adopt a compliant clawback policy. The Corporation met such requirement.

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Sarbanes-Oxley

The Corporation is also subject to Sarbanes-Oxley. Sarbanes-Oxley established laws affecting public companies’ corporate governance, accounting obligations, and corporate reporting by: (i) creating a federal accounting oversight body; (ii) revamping auditor independence rules; (iii) enacting corporate responsibility and governance measures; (iv) enhancing disclosures by public companies, their directors, and their executive officers; (v) strengthening the powers and resources of the SEC; and (vi) imposing criminal and civil penalties for securities fraud and related wrongful conduct.

The SEC has adopted regulations under Sarbanes-Oxley, including: (i) executive compensation disclosure rules; (ii) standards of independence for directors who serve on the Corporation’s audit committee; (iii) disclosure requirements as to whether at least one member of the Corporation’s audit committee qualifies as a “financial expert” as defined in SEC regulations; (iv) whether the Corporation has adopted a code of ethics applicable to its chief executive officer, chief financial officer, or those persons performing similar functions; (v) and disclosure requirements regarding the operations of Board of Directors' nominating committees and the means, if any, by which security holders may communicate with directors.

Support of Subsidiary Banks

The Dodd-Frank Act, discussed in the section of this document entitled “Additional Important Legislation and Regulation,” codifies the FRB’s long-standing policy of requiring bank holding companies to act as a source of financial and managerial strength to their subsidiary banks. Accordingly, the Corporation is expected to commit resources to support its banking subsidiaries, including at times when it may not be advantageous for the Corporation to do so.

Capital Distributions

A bank holding company is generally required to give the FRB prior written notice of any purchase or redemption of then outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of the company’s consolidated net worth. The FRB may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe and unsound practice, or would violate any law, regulation, FRB order or directive, or any condition imposed by, or written agreement with, the FRB. There is an exception to this approval requirement for well-capitalized bank holding companies that meet certain other conditions.

The FRB has issued a policy statement regarding capital distributions, including dividends, by bank holding companies. In general, the FRB’s policies provide that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the bank holding company appears consistent with the organization’s capital needs, asset quality and overall financial condition. Under applicable laws, the ability of a bank holding company to pay dividends may be restricted if a subsidiary bank becomes undercapitalized. In addition, the FRB has issued guidance which requires consultation with the agency prior to a bank holding company’s payment of dividends or repurchase or redemption of its stock under certain circumstances. These regulatory policies could affect the ability of the Corporation to pay dividends, repurchase its stock or otherwise engage in capital distributions.

The Bank

General

The Bank is a commercial bank chartered under the laws of New York State and is supervised by the NYSDFS. The Bank also is a member bank of the FRB and, therefore, the FRB serves as its primary federal regulator. The FDIC insures the Bank’s deposit accounts up to applicable limits. The Bank must file reports with the FFIEC, the FRB and the FDIC concerning its activities and financial condition and must obtain regulatory approval before commencing certain activities or engaging in transactions such as mergers and other business combinations or the establishment, closing, purchase, or sale of branch offices. This regulatory structure gives the regulatory authorities extensive discretion in the enforcement of laws and regulations and the supervision of the Bank.

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Loans to One Borrower

The Bank generally may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of its unimpaired capital and surplus. Up to an additional 10% of unimpaired capital and surplus can be lent if the additional amount is fully secured by certain readily marketable collateral. At December 31, 2023, the Bank’s legal lending limit on loans to one borrower was $37.7 million for loans not fully secured by readily marketable collateral and $41.4 million for loans secured by readily marketable collateral. The Bank’s internal limit on loans is set at $15.0 million. At December 31, 2023, the Bank did not have any loans or agreements to extend credit to a single or related group of borrowers in excess of its legal lending limit.

Branching

Subject to the approval of the NYSDFS and FRB, New York-chartered member commercial banks may establish branch offices anywhere within New York State, except in communities having populations of less than 50,000 inhabitants in which another New York-chartered commercial bank or a national bank has its principal office. Additionally, under the Dodd-Frank Act, state-chartered banks may generally branch into other states to the same extent as commercial banks chartered under the laws of that state may branch.

Payment of Dividends

The Bank is subject to substantial regulatory restrictions affecting its ability to pay dividends to the Corporation. Under FRB and NYSDFS regulations, the Bank may not pay a dividend without prior approval of the FRB and the NYSDFS if the total amount of all dividends declared during such calendar year, including the proposed dividend, exceeds the sum of its retained net income to date during the calendar year and its retained net income over the preceding two calendar years. As of December 31, 2023, approximately $59.4 million was available for the payment of dividends by the Bank to the Corporation without prior approval. The Bank's ability to pay dividends also is subject to the Bank being in compliance with regulatory capital requirements. At December 31, 2023, the Bank was in compliance with these requirements.

Standards for Safety and Soundness

The FRB has adopted guidelines prescribing safety and soundness standards. These guidelines establish general standards relating to capital adequacy, asset quality, management, earnings performance, liquidity and sensitivity to market risk.  In evaluating these safety and soundness standards, the FRB considers internal controls and information systems, internal audit systems, loan documentation, credit underwriting, exposure to changes in interest rates, asset growth, compensation, fees, and benefits. In general, the guidelines require appropriate systems and practices to identify and manage the risks and exposures specified in the guidelines. The FRB may order an institution that has been given notice that it is not satisfying these safety and soundness standards to submit a compliance plan, and if an institution fails to do so, the FRB must issue an order directing action to correct the deficiency and may issue an order directing other action. If an institution fails to comply with such an order, the FRB may seek to enforce such order in judicial proceedings and to impose civil money penalties.

Real Estate Lending Standards

The FRB has adopted guidelines that generally require each FRB state member bank to establish and maintain written internal real estate lending standards that are consistent with safe and sound banking practices and appropriate to the size of the bank and the nature and scope of its real estate lending activities. The standards also must be consistent with accompanying FRB guidelines, which include loan-to-value ratios for the different types of real estate loans.

Transactions with Related Parties

The Federal Reserve Act governs transactions between the Bank and its affiliates, specifically the Corporation, and CFS. In general, an affiliate of the Bank is any company that controls, is controlled by, or is under common control with the Bank. Generally, the Federal Reserve Act limits the extent to which the Bank or its subsidiaries may engage in “covered transactions” with any one affiliate to 10% of the Bank’s capital stock and surplus, and contains an aggregate limit of 20% of capital stock and surplus for covered transactions with all affiliates. Covered transactions include loans, asset purchases, the issuance of guarantees, and similar transactions. Certain transactions must be collateralized according to the requirements of the statute. In addition, all covered transactions and other transactions between the Bank and its affiliates must be on terms and conditions that are substantially the same as, or at least as favorable to, the Bank.

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Section 22(h) of the Federal Reserve Act and its implementing Regulation O restricts a bank's loans to its directors, executive officers, and principal stockholders ("Insiders"). Loans to Insiders (and their related entities) may not exceed, together with all other outstanding loans to such persons and affiliated entities, the Bank's total capital and surplus. Loans to Insiders above specified amounts must receive the prior approval of the Bank's Board of Directors. The loans must be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features, except that such Insiders may receive preferential loans made under a benefit or compensation program that is widely available to the Bank's employees and does not give preference to the Insider over the employees. Loans to executive officers are subject to additional restrictions on the types and amounts of permissible loans.

Deposit Insurance

The FDIC insures the deposits of the Bank up to regulatory limits and the deposits are subject to the deposit insurance premium assessments of the DIF. The FDIC currently maintains a risk-based assessment system under which assessment rates vary based on the level of risk posed by the institution to the DIF. Therefore, the assessment rate may change if any of these measurements change.

For institutions of the Bank’s asset size, the FDIC operates a risk-based premium system that determines assessment rates from financial modeling designed to estimate the probability of the bank’s failure over a three-year period. Assessment rates for institutions of the Bank’s size ranged from 1.5 to 30 basis points effective through December 31, 2022. The FDIC has authority to increase insurance assessments and adopted a final rule in October 2022 to increase initial base deposit insurance assessment rates by 2 basis points beginning in the first quarterly assessment period of 2023. As a result, effective January 1, 2023, assessment rates for institutions of the Bank’s size ranged from 3.5 to 32 basis points. The FDIC may also issue special assessments. In 2023, the FDIC issued a special assessment for banks with total consolidated assets of $5 billion or more in order to recover losses sustained by the DIF as a result of the March 2023 failures of Silicon Valley Bank and Signature Bank.

Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed in writing. Management of the Bank does not know of any practice, condition, or violation that may lead to termination of the Bank’s deposit insurance.

Regulatory Capital Requirements

Federal regulations require banks to meet certain minimum capital standards. The minimum capital standards consist of a common equity Tier 1 (“CET1”) capital ratio of 4.5% of risk-weighted assets, a uniform leverage ratio of 4%, a Tier 1 capital to risk-weighted assets ratio of 6% of risk-weighted assets and a total capital ratio of at least 8% of risk-weighted assets. In order to be considered well-capitalized, the Bank must have a CET1 ratio of 6.5%, a Tier 1 ratio of 8%, a total risk-based capital ratio of 10% and a leverage ratio of 5%. The regulatory standards require unrealized gains and losses on certain “available for sale” securities holdings to be included for purposes of calculating regulatory capital unless a one-time opt-out is exercised. The Bank has exercised this one-time opt-out and therefore excluded unrealized gains and losses on certain “available-for-sale” securities holdings for purposes of calculating regulatory capital. Additional restraints are also imposed on the inclusion in regulatory capital of mortgage-servicing assets, deferred tax assets and minority interests.

Common equity Tier 1 capital is generally defined as common stockholders’ equity, including retained earnings but excluding accumulated other comprehensive income. Tier 1 capital is generally defined as Common equity Tier 1 capital and Additional Tier 1 capital. Additional Tier 1 capital generally includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus meeting specific requirements, and may include cumulative preferred stock, long-term perpetual preferred stock, mandatory convertible securities, subordinated debt and intermediate preferred stock. Also included in Tier 2 capital is the allowance for credit losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions like the Bank that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values. Additionally, a bank that retains credit risk in connection with an asset sale may be required to maintain additional regulatory capital because of the recourse back to the bank. In assessing an institution’s capital adequacy, the federal regulators take into consideration not only these numeric factors but also qualitative factors as well and has the authority to establish higher capital requirements for individual associations where necessary.

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In determining the amount of risk-weighted assets, all assets, including certain off-balance sheet assets, are multiplied by a risk-weight factor assigned by federal regulations based on the risks believed inherent in the type of asset. The capital requirements assign a higher risk weight to asset categories believed to present a great risk. For example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight of 50% is generally assigned to prudently underwritten first lien one to four family residential mortgages, a risk weight of 100% is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans and a risk weight of between 0% and 600% is assigned to permissible equity interests, depending on certain specified factors.

The regulations limit a banking organization’s capital distributions and certain discretionary bonus payments to executives if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements.

The Corporation is not subject to FRB consolidated capital requirements applicable to bank holding companies, which are similar to those applicable to the Bank, until it reaches $3.0 billion in assets.

In assessing a state member bank’s capital adequacy, the FRB takes into consideration not only these numeric factors but also qualitative factors, and has the authority to establish higher capital requirements for individual banks where necessary. Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. The Bank, in accordance with its internal prudential standards, targets as its goal the maintenance of capital ratios which exceed these minimum requirements and that are consistent with its risk profile. As of December 31, 2023, the Bank exceeded all regulatory capital ratios necessary to be considered well capitalized.

On October 29, 2019, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporations (collectively, the "Federal Agencies") adopted a final rule (the "Final Rule") to simplify the regulatory capital requirements for eligible community banks and holding companies that opt into the Community Bank Leverage Ratio ("CBLR") framework, as required by Section 201 of the Economic Growth, Relief and Consumer Protection Act of 2018.

Under the Final Rule, a depository institution or holding company that satisfies certain qualifying criteria, including having less than $10 billion in average total consolidated assets and a leverage ratio of greater than 9%, would be considered a "qualifying community banking organization" and may elect (but is not required) to use the CBLR framework. If this election is made, the qualifying community banking organization would be considered to have satisfied the Federal Agencies' generally applicable risk-weighted and leverage capital requirements (the "Basel III capital framework") and would be considered to be well-capitalized under the Federal Agencies' prompt corrective action ("PCA") rules. Under the CBLR framework, a qualifying community banking organization would satisfy the regulatory capital requirements by calculating and reporting a single leverage ratio, i.e., the CBLR, which would require significantly less data than needed to calculate the capital ratios, under the Basel III capital framework and eliminate the time consuming need to risk-weight assets. The Final Rule took effect on January 1, 2020. As of December 31, 2023, the Bank has not elected to use the community bank leverage ratio.

Prompt Corrective Action

The FDIA requires the federal banking agencies to resolve the problems of insured banks at the least possible loss to the DIF. The FRB has adopted prompt corrective action regulations to carry out this statutory mandate. The FRB’s regulations authorize, and in some situations, require, the FRB to take certain supervisory actions against undercapitalized state member banks, including the imposition of restrictions on asset growth and other forms of expansion. The prompt corrective action regulations place state member banks in one of the following five categories based on the bank’s capital:

•well-capitalized (at least 5% leverage capital, 6.5% common equity Tier 1 risk-based capital, 8% Tier 1 risk-based capital and 10% total risk-based capital);

•adequately capitalized (at least 4% leverage capital, 4.5% common equity Tier 1 risk-based capital, 6% Tier 1 risk-based capital and 8% total risk-based capital);

•undercapitalized (less than 4% leverage capital, 4.5% common equity Tier 1 risk-based capital, 6% Tier 1 risk-based capital or 8% total risk-based capital);

•significantly undercapitalized (less than 3% leverage capital, 3% common equity Tier 1 risk-based capital, 4% Tier 1 risk-based capital or 6% total risk-based capital); and

•critically undercapitalized (less than 2% tangible capital).

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As an institution’s capital decreases within the three undercapitalized categories listed above, the severity of the action that is authorized or required to be taken by the FRB for state member banks under the prompt corrective action regulations increases. All banks are prohibited from paying dividends or other capital distributions or paying management fees to any controlling person if, following such distribution, the bank would be undercapitalized. The FRB is required to monitor closely the condition of an undercapitalized institution and to restrict the growth of its assets.

An undercapitalized state member bank is required to file a capital restoration plan with the FRB within 45 days (or other timeframe prescribed by the FRB) of the date the bank receives notice that it is within any of the three undercapitalized categories, and the plan must be guaranteed by its parent holding company, subject to a cap on the guarantee that is the lesser of: (i) an amount equal to 5.0% of the bank’s total assets at the time it was notified that it became undercapitalized; and (ii) the amount that is necessary to restore the bank’s capital ratios to the levels required to be classified as “adequately classified,” as those ratios and levels are defined as of the time the bank failed to comply with the plan. If the bank fails to submit an acceptable plan, it is treated as if it were “significantly undercapitalized.” Banks that are significantly or critically undercapitalized are subject to a wider range of regulatory requirements and restrictions including, with respect to critically undercapitalized status, the appointment of a receiver or conservator within specified periods of time.

The NYSDFS possesses enforcement power over New York State-chartered banks pursuant to New York law. This includes authority to order a New York State bank to, among other things, cease an apparent violation of law, discontinue unauthorized or unsafe banking practices or maintain prescribed books and accounts. Such orders are enforceable by financial penalties. Upon a finding by the NYSDFS that a bank director or officer has violated any law or regulation or continued unauthorized or unsafe practices in conducting its business after having been notified by the NYSDFS to discontinue such violation or practices, such director or officer may be removed from office after notice and an opportunity to be heard. The NYSDFS also has authority to appoint a conservator or receiver (which may be the FDIC) for a bank under certain circumstances.

Under federal law, the FRB possesses authority to bring enforcement actions against member banks and their ‘‘institution-affiliated parties,’’ including directors, officers, employees and, under certain circumstances, a stockholder, attorney, appraiser or accountant. Such enforcement action can occur for matters such as failure to comply with applicable law or regulations or engaging in unsafe or unsound banking practices. Possible enforcement actions range from an informal measure, such as a memorandum of understanding, to formal actions, such as a written agreement, cease and desist order, civil money penalty, capital directive, removal of directors or officers or the appointment of a conservator or receiver. The FRB also possesses authority to bring enforcement actions against bank holding companies, their nonbanking subsidiaries and their “institution-affiliated parties.”

Federal Home Loan Bank

The Bank is also a member of the FHLBNY, which provides a central credit facility primarily for member institutions for home mortgage and neighborhood lending. The Bank is subject to the rules and requirements of the FHLBNY, including the requirement to acquire and hold shares of capital stock in the FHLBNY. The Bank was in compliance with the rules and requirements of the FHLBNY at December 31, 2023.

Community Reinvestment Act

Under the federal CRA, the Bank, consistent with its safe and sound operation, must help meet the credit needs of its entire community, including low and moderate income neighborhoods. The FRB and NYSDFS periodically assess the Bank's compliance with CRA requirements. The Bank received a “satisfactory” rating for CRA on its last performance evaluations which were conducted by the NYSDFS as of June 30, 2019, and the FRB as of October 7, 2019. On October 24, 2023, the FRB issued a final rule to strengthen and modernize the federal CRA regulations. Under the final rule, banks with assets of at least $2 billion as of December 31 in both of the prior two calendar years will be a “large bank.” The FRB will evaluate large banks under four performance tests: the Retail Lending Test, the Retail Services and Products Test, the Community Development Financing Test, and the Community Development Services Test. The applicability date for the majority of the provisions in the CRA regulations is January 1, 2026, and additional requirements will be applicable on January 1, 2027.

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Fair Lending and Consumer Protection Laws

The Bank must also comply with the federal Equal Credit Opportunity Act and the New York Executive Law 296-a, which prohibit creditors from discrimination in their lending practices on bases specified in these statutes. In addition, the Bank is subject to a number of federal statutes and regulations implementing them, which are designed to protect the general public, borrowers, depositors, and other customers of depository institutions. These include the Bank Secrecy Act, the Truth in Lending Act, the Home Ownership and Equity Protection Act, the Truth in Savings Act, the Home Mortgage Disclosure Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Electronic Funds Transfers Act, the FCRA, the Right to Financial Privacy Act, the Expedited Funds Availability Act, the Flood Disaster Protection Act, the Fair Debt Collection Practices Act, Helping Families Save Their Homes Act, and the Consumer Protection for Depository Institutions Sales of Insurance regulation. The FRB and, in some instances, other regulators, including the U.S. Department of Justice, the FTC, the CFPB and state Attorneys General, may take enforcement action against institutions that fail to comply with these laws.

Prohibitions against Tying Arrangements

Subject to some exceptions, regulations under the BHCA and the Federal Reserve Act prohibits banks from extending credit to or offering any other service, or fixing or varying the consideration for such extension of credit or service, on the condition that the customer obtain some additional service from the bank or its affiliates or not obtain services of a competitor of the bank.

Privacy Regulations

Regulations under the Federal Reserve Act generally require the Bank to disclose its privacy policy. The policy must identify with whom the Bank shares its customers’ “nonpublic personal information,” at the time of establishing the customer relationship and annually thereafter. In addition, the Bank must provide its customers with the ability to “opt out” of having their personal information shared with unaffiliated third parties and not to disclose account numbers or access codes to non-affiliated third parties for marketing purposes. The Bank’s privacy policy complies with Federal Reserve Act regulations.

The USA PATRIOT Act

The Bank is subject to the USA PATRIOT Act, which gives the federal government powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing, and broadened anti-money laundering requirements. The USA PATRIOT Act imposes affirmative obligations on financial institutions, including the Bank, to establish anti-money laundering programs which require: (i) the establishment of internal policies, procedures, and controls; (ii) the designation of an anti-money laundering compliance officer; (iii) ongoing employee training programs; (iv) an independent audit function to test the anti-money laundering program; and (v) due diligence of customers using a risk-based approach. The FRB must consider the Bank’s effectiveness in combating money laundering when ruling on merger and other applications.

CFS

CFS is subject to supervision by other regulatory authorities as determined by the activities in which it is engaged. Insurance activities are supervised by the NYSDFS, and brokerage activities are subject to supervision by the SEC and FINRA.

Additional Important Legislation and Regulation

The Regulatory Relief Act

On May 24, 2018, the Regulatory Relief Act was enacted, which repeals or modifies certain provisions of the Dodd-Frank Act and eases regulations on all but the largest banks. The Regulatory Relief Act’s provisions include, among other things: (i) exempting banks with less than $10 billion in assets from the ability-to-repay requirements for certain qualified residential mortgage loans held in portfolio; (ii) allows usage of Uniform Standards of Professional Appraisal Practice (USPAP) compliant evaluations for certain transactions valued at less than $400,000 in rural areas instead of appraisals, providing specific criteria are met; (iii) exempting banks that originate fewer than 500 open-end and 500 closed-end mortgages from HMDA’s expanded data disclosures; (iv) clarifying that, subject to various conditions, reciprocal deposits of another depository institution obtained using a deposit broker through a deposit placement network for purposes of obtaining maximum deposit insurance would not be considered brokered deposits subject to the FDIC’s brokered-deposit regulations; (v) raising eligibility for the 18-month exam cycle from $1 billion to banks with $3 billion in assets; (vi) allowing qualifying federal savings banks to elect to operate with National Bank powers; and (vii) simplifying capital calculations by requiring regulators to establish for institutions under $10 billion in assets a community bank leverage ratio at a percentage not less than 8% and not greater than 10% that such institutions may elect to replace the general applicable risk-based capital requirements for determining well-capitalized status.

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The Dodd-Frank Act

The Dodd-Frank Act, enacted on July 21, 2010, significantly changed the bank regulatory landscape and has impacted and will continue to impact the lending, deposit, investment, trading and operating activities of financial institutions and their holding companies. Among other things, the Dodd-Frank Act (i) created the Consumer Financial Protection Bureau as an independent bureau to assume responsibility for the implementation of the federal financial consumer protection and fair lending laws and regulations, a function previously assigned to prudential regulators; (although institutions of less than $10 billion in assets, continue to be examined for compliance with consumer protection and fair lending laws and regulations by, and be subject to the primary enforcement authority of their primary federal bank regulator rather than the Consumer Financial Protection Bureau); (ii) directed changes in the way that institutions are assessed for deposit insurance; (iii) as discussed under “Regulatory Capital Requirements,” mandated the revision of regulatory capital requirements; (iv) codified the FRB’s long-standing policy that a bank holding company must serve as a source of financial and managerial strength for its subsidiary banks; (v) required regulations requiring originators of certain securitized loans to retain a percentage of the risk for the transferred loans; (vi) stipulated regulatory rate-setting for certain debit card interchange fees; (vii) repealed restrictions on the payment of interest on commercial demand deposits; (viii) enacted the so-called Volcker Rule, which generally prohibits banking organizations from engaging in proprietary trading and from investing in, sponsoring or having certain relationships with hedge funds; (ix) contained a number of reforms related to mortgage originations; and (x) as discussed under “Federal Securities Law,” enacted certain proxy disclosures regarding executive compensation and corporate governance.

NYSDFS Cybersecurity Rule

Effective March 1, 2017, the NYSDFS requires New York chartered banks to establish and maintain a cybersecurity program designed to protect consumers and ensure the safety and soundness of the bank. NYSDFS requires regulated financial institutions to establish a cybersecurity program; designed to protect the confidentiality, integrity and availability of its Information Systems; implement and maintain a written policy or policies setting forth its policies and procedures for the protection of its systems and Nonpublic Information stored on those systems; designate a Chief Information Security Officer responsible for implementing, overseeing and enforcing its program and policy; and have policies and procedures designed to ensure the security of information systems and nonpublic information accessible to, or held by Third Party Service Providers.

In November, 2023, the NYSDFS finalized amendments to its cybersecurity regulations that represent a significant update to the regulation of cybersecurity practices. The amendments generally fall within the following five categories: (i) increased mandatory controls associated with common attack vectors, (ii) enhanced requirements for privileged accounts, (iii) enhanced notification obligations, (iv) expansion of cyber governance practices, and (v) additional cybersecurity requirements for larger companies.

Gramm-Leach-Bliley Act

Under the privacy and data security provisions of the Financial Modernization Act of 1999, also known as the GLB Act, and rules promulgated thereunder, all financial institutions, including the Corporation, the Bank and CFS are required to establish policies and procedures to restrict the sharing of nonpublic customer data with nonaffiliated parties at the customer's request and to protect customer data from unauthorized access. In addition, the FCRA, as amended by the FACT Act, includes many provisions affecting the Corporation, Bank, and/or CFS including provisions concerning obtaining consumer reports, furnishing information to consumer reporting agencies, maintaining a program to prevent identity theft, sharing of certain information among affiliated companies, and other provisions. For instance, the FCRA requires persons subject to the FCRA to notify their customers if they report negative information about them to a credit bureau or if they are granted credit on terms less favorable than those generally available. The FRB and the FTC have extensive rulemaking authority under the FACT Act, and the Corporation and the Bank are subject to the rules that have been promulgated by the FRB and FTC thereunder, including recent rules regarding limitations on affiliate marketing and implementation of programs to identify, detect and mitigate the risk of identity theft through red flags. The GLB Act and the FCRA also impose requirements regarding data security and the safeguarding of customer information. The Bank is subject to the Security Guidelines, which implement section 501(b) of the GLB Act and section 216 of the FACT Act. The Security Guidelines establish standards relating to administrative, technical, and physical safeguards to ensure the security, confidentiality, integrity and the proper disposal of customer information.

The Corporation has developed policies and procedures for itself and its subsidiaries to maintain compliance with all privacy, information sharing and notification provisions of the GLB Act and the FCRA.

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ITEM 1A.  RISK FACTORS

The Corporation’s business is subject to many risks and uncertainties. Although the Corporation seeks ways to manage these risks and develop programs to control those that management can control, the Corporation ultimately cannot predict the extent to which these risks and uncertainties could affect the Corporation's results. Actual results may differ materially from management's expectations. The following discussion sets forth what the Corporation currently believes could be the most significant factors of which it is currently aware that could affect the Corporation's business, results of operations or financial condition. You should consider all of the following risks together with all of the other information in this Annual Report on Form 10-K.

Risks Related to Lending

Economic conditions may adversely affect the Corporation’s financial performance.

The Corporation's businesses and results of operation are affected by the financial markets and general economic conditions in the United States, and particularly to adverse conditions in New York and Pennsylvania. Key economic factors affecting the Corporation include the level and volatility of short-term and long-term interest rates, inflation, home prices, unemployment and under-employment levels, bankruptcies, household income, consumer spending, fluctuations in both debt and equity capital markets and currencies, liquidity of the financial markets, the availability and the cost of capital and credit, investor sentiment, confidence in the financial markets, and the sustainability of economic growth. The deterioration of any of these conditions could adversely affect the Corporation's consumer and commercial businesses, its securities and derivatives portfolios, its level of charge-offs and provision for credit losses, the carrying value of the Corporation's deferred tax assets, its capital levels and liquidity, and the Corporation's results of operations.

A decline or prolonged weakness in business and economic conditions generally or specifically in the principal markets in which the Corporation does business could have one or more of the following adverse effects on the Corporation’s business:

i.a decrease in the demand for loans and other products and services;

ii.a decrease in the value of the Corporation’s loans or other assets secured by consumer or commercial real estate;

iii.an impairment of certain of the Corporation’s intangible assets, such as goodwill; and

iv.an increase in the number of borrowers and counter-parties who become delinquent, file for protection under bankruptcy laws or default on their loans or other obligations to the Corporation.

Additionally, in light of economic conditions, the Corporation’s ability to assess the creditworthiness of its customers may be impaired if the models and approaches that it uses to select, manage and underwrite loans become less predictive of future behaviors. Further, competition in the Corporation’s industry may intensify as a result of consolidation of financial services companies in response to adverse market conditions and the Corporation may face increased regulatory scrutiny, which may increase its costs and limit its ability to pursue business opportunities.

Imposition of limits by bank regulators on commercial real estate lending activities could curtail the Corporation’s growth and adversely affect our earnings.

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-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 the outstanding balance of the commercial real estate loan portfolio has increased by 50% or more during the preceding 36 months. Commercial real estate loans represent 403.6% of Bank risk-based capital at December 31, 2023 and the outstanding balance of our commercial real estate loan portfolio has increased by greater than 50% during the 36 months preceding December 31, 2023.

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 would be adversely affected as would earnings per share.

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Commercial real estate and commercial and industrial loans increase the Corporation’s exposure to credit risks.

At December 31, 2023, the Corporation’s portfolio of commercial real estate and commercial and industrial loans totaled $1.387 billion or 70.3% of total loans. The Corporation plans to continue to emphasize the origination of these types of loans, which generally expose the Corporation to a greater risk of nonpayment and loss than residential real estate or consumer loans because repayment of commercial real estate and commercial and industrial loans often depends on the successful operation and income stream of the borrower’s business. Additionally, such loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to residential real estate and consumer loans. Also, some of the Corporation’s borrowers have more than one commercial loan outstanding. Consequently, an adverse development with respect to one loan or one credit relationship can expose the Corporation to a significantly greater risk of loss compared to an adverse development with respect to residential real estate and consumer loans. In some instances, the Corporation has originated unsecured commercial loans to certain high net worth individuals who are personally liable. This type of commercial loan has an increased risk of loss if the Corporation is unable to collect repayment through legal action due to personal bankruptcy or other financial limitations of the borrower. The Corporation targets its business lending and marketing strategy towards small to medium-sized businesses. These small to medium-sized businesses generally have fewer financial resources in terms of capital or borrowing capacity than larger entities. If general economic conditions negatively impact these businesses, the Corporation’s results of operations and financial condition may be adversely affected. Changes in occupancy trends resulting from shifts in macroeconomic conditions could adversely impact our commercial borrowers, particularly in relation to borrowers with substantial office or retail-specific exposures.

Loan participations may have a higher risk of loss than loans the Bank originates because the Bank is not the lead lender 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 area in which the Bank is not the lead lender. 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 lender 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 lender. A lead lender also may not monitor a participation loan in the same manner as we would for loans that the Bank originates. At December 31, 2023, loan participation balances where the Bank is not the lead lender totaled $177.6 million, or 9.00% of our loan portfolio. At December 31, 2023, commercial and industrial loan participations outside our market area totaled $11.6 million, or 4.38% of the commercial and industrial loan portfolio. There were no commercial real estate loan participations outside our market area. If the Bank’s underwriting of these participation loans is not sufficient, our non-performing loans may increase and our earnings may decrease.

We are subject to environmental liability risk associated with lending activities.

A significant portion of our loan portfolio is secured by real estate, and we could become subject to environmental liabilities with respect to one or more of these properties. During the ordinary course of business, we may foreclose on and take title to properties securing defaulted loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous conditions or toxic substances are found on these properties, we may be liable for remediation costs, as well as for personal injury and property damage, civil fines and criminal penalties regardless of when the hazardous conditions or toxic substances first affected any particular property. Environmental laws may require us to incur substantial expenses to address unknown liabilities and may materially reduce the affected property’s value or limit our ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability. Although we have policies and procedures to perform an environmental review before initiating any foreclosure action on nonresidential real property, these reviews may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on us.

The foreclosure process may adversely impact the Bank’s recoveries on non-performing loans.

The Judicial foreclosure process is protracted, which delays our ability to resolve non-performing loans through the sale of the underlying collateral. The longer timelines have been the result of additional consumer protection initiatives related to the foreclosure process, increased documentary requirements and judicial scrutiny, and, both voluntary and mandatory programs under which lenders may consider loan modifications or other alternatives to foreclosure. These reasons, historical issues at the largest mortgage loan servicers, and the legal and regulatory responses have impacted the foreclosure process and completion time of foreclosures for residential mortgage lenders. This may result in a material adverse effect on collateral values and the Corporation’s ability to minimize its losses.

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The Corporation's portfolio of indirect automobile lending exposes it to increased credit risks.

At December 31, 2023, $210.4 million, or 10.7% of our total loan portfolio, consisted of 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 allowance for credit losses may prove to be insufficient to absorb losses in the loan portfolio.

The Corporation’s customers may not repay their loans according to the original terms, and the collateral securing the payment of those loans may be insufficient to pay any remaining loan balance. Hence, the Corporation may experience significant credit losses, which could have a material adverse effect on the Corporation's operating results. Management makes various assumptions and judgments about the collectability of its loan portfolio, including the creditworthiness of its borrowers and the value of the real estate and other assets serving as collateral for the repayment of loans. In determining the amount of the allowance for credit losses, management relies on its CECL methodology, loan quality reviews, past experience, and an evaluation of forward-looking economic forecasts, among other factors. If these assumptions prove to be incorrect, the allowance for credit losses may not be sufficient to cover future losses in the Corporation’s loan portfolio, resulting in additions to the allowance. Material additions to the allowance would materially decrease earnings.

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 amount of these loans, additional or increased provisions for credit losses may be necessary, which may result in a decrease in earnings.

Effective January 1, 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 expected 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 that the allowance for credit losses is 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, may require us to increase our allowance for credit losses in the future.

The Corporation is subject to risks and losses resulting from fraudulent activities that could adversely impact its financial performance and results of operations.

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, litigation 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 customers 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 $461,309 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 participation 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.

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Use of appraisals when underwriting loans secured by real property may not accurately represent the net value of collateral the Bank can realize at a future date.

When evaluating decisions to extend credit that is to be secured by real property, it is generally the requirement of the Bank to require an appraisal on the property being collateralized. Appraisals are only an estimate of the value of the property as of the time of the appraisal, and real estate values may fluctuate over short periods of time, whether on a market basis, or in relation to a specific property. Therefore, appraised estimates may not accurately represent the net value of collateral in periods after loan closing. If an appraisal does not reflect the amount that may be realized on the sale of real property, we may not be able to realize an amount which is equal to the indebtedness secured by the property. Additionally, appraisals are relied upon to establish the fair value of other real estate owned, and to determine specific allocations to the allowance for credit losses on loans that are individually analyzed using the collateral method. Inaccuracies in these valuations due to appraisals may result in representation in the consolidated financial statements that is not reflective of current conditions existing as of or subsequent to the measurement date, and could materially adversely impact our results of operation and financial condition.

Risks Related to Liquidity

Liquidity needs could adversely affect the Corporation’s financial condition and results of operation.

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 disasters and international instability.

Market conditions may impact the competitive landscape for deposits in the banking industry. The rising interest rate environment and future actions 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. At December 31, 2023, the Bank had $1.8 billion of deposit liabilities, representing 74.8% 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 proceeds from Federal Home Loan Bank and Federal Reserve advances, 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.

Risks Related to Changes in Interest Rates

The Corporation is subject to interest rate risk, and fluctuations in market interest rates may affect its interest margin and income, demand for products, defaults on loans, loan prepayments and the fair value of its financial instruments.

The Corporation’s earnings and cash flows depend largely upon its net interest income. Interest rates are highly sensitive to many factors that are beyond the Corporation's control, including general economic conditions and policies of governmental and regulatory agencies, particularly the FRB. Changes in monetary policy, including changes in interest rates, could influence the interest the Corporation receives on loans and investments and the amount of interest it pays on deposits and borrowings, which may affect net interest margin. Such changes could also affect (i) demand for products and services and price competition, in turn affecting our ability to originate loans and obtain deposits; (ii) the fair value of the Corporation’s financial assets and liabilities; (iii) the average duration of its mortgage-backed securities portfolio and other interest-earning assets; (iv) levels of defaults on loans; and (v) loan prepayments.

During 2022 and 2023, in response to accelerated inflation, the FRB implemented monetary tightening policies, resulting in significantly increased interest rates. If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, net interest income, and therefore earnings, could be adversely affected. In addition, the Corporation’s net interest margin may contract in a rising rate environment because its funding costs may increase faster than the yield earned on its interest-earning assets. In a rising rate environment, demand for loans may decrease and loans with adjustable interest rates are more likely to experience a higher rate of default. Additionally, changes in interest rates also affect the fair value of the securities portfolio. Generally, the value of securities moves inversely with changes in interest rates. The combination of these events may adversely affect the Corporation’s financial condition and results of operations.

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Earnings could also be adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on deposits and other borrowings. In addition, in a falling rate environment or the recent pandemic-related environment where the FRB held the targeted federal funds rate near 0.00%, loans and certain investments may be prepaid sooner than the Corporation expects, which could result in a delay between when the Corporation receives the prepayment and when it is able to redeploy the funds into new interest-earning assets and in a decrease in the amount of interest income the Corporation is able to earn on those assets. If the Corporation is unable to manage these risks effectively, its financial condition and results of operations could be materially adversely affected.

Any substantial, unexpected or prolonged change in market interest rates could have a material adverse effect on the Corporation’s financial condition and results of operations. Also, the Corporation’s interest rate risk modeling techniques and assumptions likely may not fully predict or capture the impact of actual interest rate changes on its balance sheet.

Risks Related to Competition

Strong competition within the Corporation's industry and market area could limit its growth and profitability.

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 unions and other financial institutions as well as other 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 more 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.

The Corporation may not be able to attract and retain skilled people.

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 to 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, and its shareholders.

The Corporation's compensation practices are designed to be competitive and comparable to those of its peers, however, the unexpected loss of services of one or more of the Corporation's key personnel could have a material adverse impact on the business because it would lose the employees’ skills, knowledge of the market, and years of industry experience and may have difficulty promptly finding qualified replacement personnel.

Risks Related to Business Strategy

The Corporation’s growth strategy may not prove to be successful and its market value and profitability may suffer.

As part of the Corporation's strategy for continued growth, it may open additional branches. In 2021, the Corporation opened a full-service branch in Clarence, New York, and plans to open a second full-service branch in Williamsville, New York in 2024. 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.

In addition, the Corporation may acquire banks and related businesses that it believes provide a strategic fit with its business, such as the 2011 acquisition of FOFC and the 2013 acquisition of six branches from Bank of America. To the extent that the Corporation grows through acquisitions, it cannot provide assurance that such strategic decisions will be accretive to earnings.

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The risks presented by acquisitions could adversely affect the Corporation's financial condition and results of operations.

The business strategy of the Corporation has included and may continue to include growth through acquisition from time to time. Any future acquisitions will be accompanied by the risks commonly encountered in acquisitions. These risks may include, among other things: its ability to realize anticipated cost savings, the difficulty of integrating operations and personnel, the loss of key employees, the potential disruption of its or the acquired company’s ongoing business in such a way that could result in decreased revenues, the inability of its management to maximize its financial and strategic position, the inability to maintain uniform standards, controls, procedures and policies, and the impairment of relationships with the acquired company’s employees and customers as a result of changes in ownership and management.

Risks Related to Laws and Regulations

The Corporation operates in a highly regulated environment and may be adversely affected by changes in laws and regulations.

Currently, the Corporation and its subsidiaries are subject to extensive regulation, supervision, and examination by regulatory authorities. For example, the FRB regulates the Corporation, and the FRB, the FDIC and the NYSDFS regulate the Bank. Such regulators govern the activities in which the Corporation and its subsidiaries may engage. These regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of a bank, the classification of assets by a bank, and the adequacy of a bank’s allowance for credit losses. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, or legislation, could have a material impact on the Corporation and its operations. The Corporation believes that it is in substantial compliance with applicable federal, state and local laws, rules and regulations. As the Corporation's business is highly regulated, the laws, rules and applicable regulations are subject to regular modification and change. There can be no assurance that proposed laws, rules and regulations, or any other law, rule or regulation, will not be adopted in the future, which could make compliance more difficult or expensive or otherwise adversely affect the Corporation's business, financial condition or prospects.

Monetary policies and regulations of the Federal Reserve Board could adversely affect our business, financial condition and results of operations.

In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the FRB. An important function of the FRB is to regulate the money supply and credit conditions. Among the instruments used by the FRB to implement these objectives are open market purchases and sales of U.S. government securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits. Throughout 2022 and 2023, the FRB increased the upper bound of the federal funds rate by 525 basis points, which increased market rates dramatically. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits, as well as the value of the Corporation's investment securities.

The monetary policies and regulations of the FRB have had a significant effect on the operating results of financial institutions in the past and are expected to continue to do so in the future. The effects of such policies upon our business, financial condition and results of operations cannot be predicted.

We are subject to the Community Reinvestment Act and fair lending laws, and alleged failure to comply with fair lending laws has led to material penalties.

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 Services 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 agreed to pay restitution to impacted borrowers of $53,000 and a civil monetary penalty of $350,000 to the New York State Department of Financial Services. 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.

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Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions.

The USA PATRIOT and Bank Secrecy Acts require financial institutions to develop programs to prevent financial institutions from being used for money laundering and terrorist activities. If such activities are detected, financial institutions are obligated to file suspicious activity reports with the U.S. Treasury’s Office of Financial Crimes Enforcement Network. These rules require financial institutions to establish procedures for identifying and verifying the identity of customers seeking to open new financial accounts. Failure to comply with these regulations could result in fines or sanctions. In recent years, several banking institutions have received large fines for non-compliance with these laws and regulations. While we have developed policies and procedures designed to assist in compliance with these laws and regulations, these policies and procedures may not be effective in preventing violations of these laws and regulations.

The Corporation may be required to raise additional capital in the future, but that 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. The Corporation’s ability to raise additional capital, if needed, 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 capital 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.

Changes in tax rates could adversely affect the Corporation's results of operations and financial condition.

The Corporation is subject to the income tax laws of the United States, its states, and municipalities. The income tax laws of the jurisdictions in which the Corporation operates are complex and subject to different interpretations by the taxpayer and the relevant government taxing authorities. In establishing a provision for income tax expense, the Corporation must make judgments and interpretations about the application of these inherently complex tax laws to its business activities, as well as the timing of when certain items may affect taxable income.

The provision for income taxes is composed of current and deferred taxes. Deferred taxes arise from differences between assets and liabilities measured for financial reporting versus income tax return purposes. Deferred tax assets are recognized if, in the Corporation's judgment, their realizability is determined to be more likely than not. The Corporation performs regular reviews to ascertain the realizability of its deferred tax assets. These reviews include the Corporation's estimates and assumptions regarding future taxable income, which incorporates various tax planning strategies.

Risks Related to Operational Matters

The Corporation's controls and procedures may fail or be circumvented, which may result in a material adverse effect on its business.

Management regularly reviews and updates its internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met.

Our risk management framework may not be effective in mitigating risk and reducing the potential for significant losses.

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 heightened legislative and regulatory scrutiny of the financial services industry, among other developments, have increased our level of risk. In addition in March 2023, the 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.

26

We face significant operational risks because the financial services business involves a high volume of transactions.

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. Insurance coverage may not be available for such 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 Corporation continually encounters technological change and the failure to understand and adapt to these changes could adversely affect its business.

The banking industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services. 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 fintech and blockchain. These "digital banks" may be able to achieve economies of scale and offer better pricing for banking products and services than the Corporation can. 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 have substantially greater resources to invest in technological improvements. There can be no assurance that the Corporation will be able to effectively implement new technology-driven products and services or be successful in marketing such products and services to customers. 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.

Systems failures or breaches of our network security could subject us to increased operating costs as well as litigation and other liabilities.

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 cryptography 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.

It is possible that we could incur significant costs associated with a breach of our computer systems. While we have cyber liability insurance, there are limitations on coverage. Furthermore, cyber incidents carry a greater risk of injury to our reputation. Finally, depending on the type of incident, banking regulators can impose restrictions on our business and consumer laws may require reimbursement of customer losses.

Operating systems and infrastructure, managed or supplied by third parties on whom we rely, could be interrupted, compromised, or otherwise breached.

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. 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.

27

Risks Related to Accounting Matters

The Corporation's accounting policies and estimates are critical to how the Corporation reports its financial condition and results of operations, and any changes to such accounting policies and estimates could materially affect how the Corporation reports its financial condition and results of operations.

Management has identified certain accounting policies as being critical because they require management’s judgment to ascertain the valuations of assets, liabilities, commitments 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 that these critical accounting estimates and judgments are well controlled and applied consistently. In addition, these policies and procedures are intended to ensure that 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. 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.

Further, from time to time, the FASB and SEC change the financial accounting and reporting standards that govern the preparation of the Corporation's financial statements. These changes can be hard to predict and can materially impact how the Corporation records and reports its financial condition and results of operations. In some cases, the Corporation could be required to apply a new or revised standard retroactively, resulting in its restating prior period financial statements or otherwise adversely affecting its financial condition or results of operations.

The Corporation holds certain intangible assets that could be classified as impaired in the future. If these assets are considered to be either partially or fully impaired in the future, its earnings and the book values of these assets would decrease.

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.

Financial counterparties expose the Corporation to risks.

The Corporation has increased its use of derivative financial instruments, primarily interest rate swaps, which exposes it to financial and contractual risks with counterparty banks. The Corporation maintains correspondent bank relationships, manages certain loan participations, engages in securities transactions, and engages in other activities with financial counterparties that are customary to its industry. Financial risks are inherent in these counterparty relationships.

Risks Related to Wealth Management

Involvement in wealth management creates risks associated with the industry.

The Corporation’s wealth management operations present special risks not borne by institutions that focus exclusively on other traditional retail and commercial banking products. For example, the investment advisory industry is subject to fluctuations in the stock market that may have a significant adverse effect on transaction fees, client activity and client investment portfolio gains and losses. Also, additional or modified regulations may adversely affect our wealth management operations. In addition, our wealth management operations are dependent on a small number of established financial advisors, whose departure could result in the loss of a significant number of client accounts. A significant decline in fees and commissions or trading losses suffered in the investment portfolio could adversely affect our income and potentially require the contribution of additional capital to support our operations.

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There may be claims and litigation pertaining to fiduciary responsibility.

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 reputation 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.

General Business Risk Factors

Severe weather and other natural disasters 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 the challenges caused by past flooding in Central New York, there can be no assurance that it will be as successful if and when disasters occur.

Additionally, global markets may be adversely affected by natural disasters, the emergence of widespread health emergencies or pandemics, such as COVID-19, cyber-attacks or campaigns, military conflict such as the current conflict between Russia and Ukraine, terrorism, or other geopolitical events. Global market disruptions may affect our business liquidity. Also, any sudden or prolonged market downturn in the U.S. or abroad, as a result of the above factors or otherwise could result in a decline in revenue and adversely affect our results of operations and financial condition, including capital and liquidity levels.

Inflation can have an adverse impact on our business and on our customers.

The national economy continues to experience elevated levels of inflation. As of December 31, 2023, the year over year consumer price index (“CPI”) increase was 3.4%, primarily driven by increases in food and energy prices. The FOMC of the FRB's preferred measure of inflation, the year over year personal consumption expenditures index ("PCE"), excluding food end energy, increased 2.9%. As a result, the FRB raised benchmark interest rates by 100 basis points in 2023 to combat continued inflation. High inflation, if sustained, could have an adverse effect on our business. The recent increase in interest rates in response to elevated levels of inflation has decreased the fair value of our securities portfolio, resulting in an increase in unrealized losses recorded in accumulated other comprehensive income on the shareholders’ equity section of our balance sheet. In addition, inflation-driven increases in our levels of non-interest expense could negatively impact our results of operations. High inflation and increasing interest rates could also cause increased volatility in the business environment, which could adversely affect loan demand and borrowers’ ability to repay loans.

The geographic concentration of the Corporation's market in upstate New York makes it more sensitive to adverse changes in regional conditions than larger or more geographically diversified competitors.

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 timely repay loans, and the value of the collateral securing loans. If demographic, employment, or other growth in our market is negative for an extended period, subsequent income levels, deposits, and real estate development could be adversely impacted. Some of our larger competitors that are more geographically diverse may be better able to manage and mitigate risks posed by adverse conditions impacting only local or regional markets.

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Risks Relating to Ownership of Our Common Stock

The Corporation’s common stock is not heavily traded, and the stock price may fluctuate significantly.

The Corporation’s common stock is traded on the NASDAQ under the symbol “CHMG.” Certain brokers currently make a market in the common stock, but such transactions are infrequent and the volume of shares traded is relatively small. Management cannot predict whether these or other brokers will continue to make a market in our common stock. Prices on stock that is not heavily traded, such as our common stock, can be more volatile than heavily traded stock. Factors such as our financial results, the introduction of new products and services by us or our competitors, publicity regarding the banking industry, and various other factors affecting the banking industry may have a significant impact on the market price of the shares of the common stock. Management also cannot predict the extent to which an active public market for our common stock will develop or be sustained in the future. Accordingly, shareholders may not be able to sell their shares of our common stock at the volumes, prices, or times that they desire.

The Corporation is a holding company and depends on its subsidiaries for dividends, distributions 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, 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.

Provisions of the Corporation's certificate of incorporation, bylaws, as well as New York law and certain banking laws, could delay or prevent a takeover of the Corporation by a third party.

Provisions of the Corporation’s certificate of incorporation and bylaws, New York law, and state and federal banking laws, including regulatory approval requirements, could delay, defer or prevent a third party from acquiring the Corporation, despite the possible benefit to the Corporation’s shareholders, or otherwise adversely affect the market price of the Corporation’s common stock. These provisions include: a two-thirds affirmative vote of all outstanding shares of Corporation stock for certain business combinations; a supermajority shareholder vote of 75% of outstanding stock for business combinations involving 10% shareholders; the election of directors to staggered terms of three years; and advance notice requirements for nominations for election to the Corporation’s Board of Directors and for proposing matters that shareholders may act on at a shareholder meeting. In addition, the Corporation is subject to New York law, which among other things prohibits the Corporation from engaging in a business combination with any interested shareholder for a period of five years from the date the person became an interested shareholder unless certain conditions are met. These provisions may discourage potential takeover attempts, discouraging bids for the Corporation’s common stock at a premium over market price or adversely affect the market price of, and the voting and other rights of the holders of the Corporation’s common stock. These provisions could also discourage proxy contests and make it more difficult for shareholders to elect directors other than candidates nominated by the Board of Directors.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. CYBERSECURITY

The Corporation regards information as one of its most valuable assets. As a result, safeguards have been implemented to protect corporate informational assets and associated technology resources have been established to maintain the integrity, availability, and privacy of confidential information of those assets. The Corporation has established an Information and Cyber Security Program (“Program”) that includes standards and procedures to ensure that all information belonging to or held by the Corporation will be appropriately evaluated, classified, and protected against likely forms of unauthorized or inappropriate access, use, disclosure, modification, destruction, and denial.

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Enterprise Risk Management embeds risk management into the oversight of cybersecurity as an integral part of the business with comprehensive internal control and assurance processes linked to key risks which are then reported to the Board of Directors (“Board”). Risk oversight, including cybersecurity is a key risk which has been delegated to the Enterprise Risk Committee of the Board (“ERC”). Cybersecurity is integrated into the Corporation's Enterprise Risk Management Policy, Enterprise Risk Management Committee Charter, Escalation Policy, Risk Appetite Statement, Information Technology Steering Meetings, and Division Risk Meetings. Employees are trained on their first day of employment with regards to cybersecurity and additional training is rolled out for all employees throughout the year.

The Corporation engages with a multitude of third-party assessors, consultants, auditors and other third parties to support and maintain a robust information security practice. These partners are credentialed cybersecurity firms that assist to monitor and maintain the performance and effectiveness of our processes, procedures, and internal controls, as well as the various products and services that are deployed in our environment. The Corporation has a Third Party Risk Management program in place to monitor for any potential material risks from cybersecurity threats regarding any third-party service providers. Through our Third Party Risk Management Program we risk rate our vendors and conduct a thorough review prior to the execution of any agreement and then on an ongoing risk-based basis. The review consists of due diligence documents and information such as the Service Organizational Control (“SOC”) Reports, Information and Data Security, Business Continuity Testing and Penetration Testing.

The risks from cybersecurity threats, including any previous cybersecurity incidents, have not materially affected the Corporation to date, including our business strategy, operations, or financial condition. Cybersecurity is an evolving threat that does have the potential to materially affect the Corporation, including our business strategy, operations, or financial condition. However, with our system of internal controls, cyber defense mechanisms in place and the tenure and experience of our Chief Information Security Officer (“CISO”) and Information Security Analysts, we have sought to reduce the residual risk that is inherent of cybersecurity.

The CISO reports to ERC on a quarterly basis regarding the cybersecurity program and material cybersecurity risks. The quarterly report includes the following information: information security incidents, internal phishing risk, defensive coverage and response of our endpoints, and internal and external vulnerability scan results. The ERC is also apprised of training, regulation or guidance changes, and new products and services utilized by the Information Security Department. In addition to a cybersecurity risk assessment that is performed by the CISO, management is responsible for conducting a risk assessment to identify data security, information technology, and cybersecurity risk factors impacting their business line. The results are reviewed by the Risk Division and presented to ERC.

The CISO has over 26 years of experience with information technology management, information security, compliance, audit, and process improvement. Our Information Security Analysts have a combined 22 years of experience with information security, information technology servers and information technology networks. The CISO and Information Security Analysts are active members of the following management level committees at the Bank: Information Technology Steering Committee and the Change Control Committee.

The Program is led by our CISO, who reports directly to the Senior Risk Officer. Additionally, the CISO meets regularly and works in tandem with the Chief Information Officer and various members of Information Technology. The Information Security Department meets regularly with employees through hosted educational sessions, all-employee call presentations, Officers’ meeting presentations and individual Branch network visits. Line of business leaders regularly reach out to the CISO with regards to cybersecurity risk prevention, questions, and training. The CISO has a standing agenda item for the Information Technology Steering Committee meeting as well as ERC in order to inform the committees about prevention, detection, mitigation and remediation of cybersecurity incidents. If there are any incidents that require information to be presented to the Executive Management Team or the Board, the Senior Risk Officer presents that information. The CISO reports to ERC on a quarterly basis regarding the cybersecurity program and material cybersecurity risks.

ITEM 2.  PROPERTIES

All properties owned or leased by the Bank are considered to be in good condition. For additional information about the Corporation’s facilities, including rental expenses, see "Note 5 Premises and Equipment" in Notes to Consolidated Financial Statements in Part IV, Item 15. Exhibits and Financial Statement Schedules of this report. The Corporation holds no real estate in its own name.

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Corporate Headquarters
Executive and Administrative Offices
One Chemung Canal Plaza, Elmira, NY 14901
Wealth Management Group Regional Offices
305 E. Water Street, Elmira, NY 14901
127 Court Street, Binghamton, NY 13901
132-136 State Street, Albany, NY 12207
Full-Service Branches - New York
Albany County	Saratoga County
*132-136 State St., Albany, NY 12207	*25 Park Ave., Clifton Park, NY 12065
*65 Wolf Rd., Albany, NY 12205	*3057 Route 50, Saratoga Springs, NY 12866
*581 Loudon Rd., Latham, NY 12110
*1365 New Scotland Rd., Slingerlands, NY 12159	Schenectady County
	*2 Rush St., Schenectady, NY 12305
Broome County
*127 Court St., Binghamton,  NY 13901	Schuyler County
*100 Rano Blvd., Vestal, NY 13850	318 N. Franklin St., Watkins Glen, NY 14891
	303 W. Main St., Montour Falls, NY 14865
Cayuga County
*110 Genesee St., Auburn, NY 13021	Seneca County
185 Grant Ave., Auburn, NY 13021	54 Fall St., Seneca Falls, NY 13148
Chemung County	Steuben County
One Chemung Canal Plaza, Elmira, NY 14901	*201 Bath and Hammondsport RR, Bath, NY 14810
628 W. Church St., Elmira, NY 14905	149 West Market St., Corning, NY 14830
951 Pennsylvania Ave., Elmira, NY 14904
100 W. McCann's Blvd., Elmira Heights, NY 14903	Tioga County
29 Arnot Rd., Horseheads, NY 14845	203 Main St., Owego, NY 13827
602 S. Main St., Horseheads, NY 14845	405 Chemung St., Waverly, NY 14892
Cortland County	Tompkins County
*1094 State Rte. 222, Cortland, NY 13045	806 W. Buffalo St., Ithaca, NY 14850
	304 Elmira Rd., Ithaca, NY 14850
Erie County	*909 Hanshaw Rd., Ithaca, NY 14850
*9159 Main Street, Clarence, NY 14031
*^5529 Main Street, Williamsville, NY 14221
Full-Service Branches - Pennsylvania (Bradford County)
5 West Main St., Canton, PA 17724	159 Canton St., Troy, PA 16947
CFS Group
One Chemung Canal Plaza, Elmira, NY 14901
Available by appointment at all bank locations
* Leased facilities and/or property
^ Leased, pending opening as full-service branch in 2024

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Leased Off-Site ATM Locations
Albany Capital Center	Albany, NY
E-Z Food Mart	Elmira, NY
Ithaca College	Ithaca, NY

ITEM 3.  LEGAL PROCEEDINGS

In the normal course of business, there are various outstanding claims and legal proceedings involving the Corporation or its subsidiaries. On February 4, 2020, the Corporation filed a lawsuit against Pioneer Bank, Albany, New York, in the Supreme Court of the State of New York in the County of Albany. As disclosed in the Corporation's September 12, 2019 Current Report on Form 8-K, 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. The Corporation's complaint alleges that Pioneer Bank, as lead bank, breached the participation agreement and engaged in fraud and negligent misrepresentation. The Corporation received a recovery of $0.5 million in April 2020, and continues to pursue recovery of the remaining $3.7 million and accumulated expenses as a result of purchasing the participation interest.

Other than as noted above, the Corporation believes that it is not a party to any pending legal, arbitration, or regulatory proceedings that could have a material adverse impact on its financial results or liquidity as of December 31, 2023.

ITEM 4.  MINE SAFETY DISCLOSURES

None.

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PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Corporation's common stock is traded on the Nasdaq Global Select Market under the symbol "CHMG."

Under New York law, the Corporation may pay dividends on its common stock either: (i) out of surplus, so that the Corporation’s net assets remaining after such payment equal the amount of its stated capital, or (ii) if there is no surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. The payment of dividends on the Corporation's common stock is dependent, in large part, upon receipt of dividends from the Bank, which is subject to certain restrictions which may limit its ability to pay the Corporation dividends. See Item 1, “Business – Supervision and Regulation-The Bank-Payment of Dividends” for an explanation of legal limitations on the Bank’s ability to pay dividends.

As of March 1, 2024, there were 437 registered holders of record of the Corporation's stock.

The table below sets forth the information with respect to purchases made by the Corporation of our common stock during the quarter ended December 31, 2023: 

Period			Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the plans or programs
10/01/23	-	10/31/23	—	$	—	—	200,816
11/01/23	-	11/30/23	—	$	—	—	200,816
12/01/23	-	12/31/23	—	$	—	—	200,816
Quarter ended 12/31/2023			—	$	—	—	200,816

On January 8, 2021 the Corporation announced that the Board of Directors approved a new stock repurchase program whereby the Corporation may repurchase up to 250,000 shares of its common stock, or approximately 5% of its outstanding shares. Purchases may be made from time to time on the open market or in private negotiated transactions and will be at the discretion of management. As of March 1, 2024, a total of 49,184 shares were repurchased at an average cost of $40.42 per share.

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STOCK PERFORMANCE GRAPH

The following graph compares the yearly change in the cumulative total shareholder return on the Corporation’s common stock against the cumulative total return of the NASDAQ Composite Index, KBW NASDAQ Bank Index, and S&P U.S. SmallCap Banks Index for the period of five years commencing December 31, 2018.

		Period Ending
Index	12/31/2018	12/31/2019	12/31/2020	12/31/2021	12/31/2022	12/31/2023
Chemung Financial Corporation	100.00	105.27	87.26	122.65	124.57	139.17
NASDAQ Composite Index	100.00	136.69	198.10	242.03	163.28	236.17
KBW NASDAQ Bank Index	100.00	136.13	122.09	168.88	132.75	131.57
S&P U.S. SmallCap Banks Index	100.00	125.46	113.94	158.62	139.85	140.55

The cumulative total return includes (1) dividends paid and (2) changes in the share price of the Corporation’s common stock and assumes that all dividends were reinvested. The above graph assumes that the value of the investment in Chemung Financial Corporation and each index was $100 on December 31, 2018.

The Total Returns Index for NASDAQ Composite, KBW NASDAQ Bank Index, and S&P SmallCap Bank Indices were obtained from S&P Global Market Intelligence, New York, NY.

ITEM 6.  [RESERVED]

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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Overview

The following is the MD&A of the Corporation in this Form 10-K at December 31, 2023 and 2022, and for the years ended December 31, 2023, and 2022. The purpose of this discussion is to focus on information about the financial condition and results of operations of the Corporation. Reference should be made to the accompanying audited consolidated financial statements and footnotes for an understanding of the following discussion and analysis. See the list of commonly used abbreviations and terms on pages 2-5.

The MD&A included in this Form 10-K 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.

The Corporation has been a financial holding company since 2000, and the Bank was established in 1833, CFS in 2001, and Chemung Risk Management, Inc. (CRM) in 2016. 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.

CRM, a wholly-owned subsidiary of the Corporation, was formed and began operations on May 31, 2016 as a Nevada-based captive insurance company. Effective December 6, 2023, the State of Nevada, Department of Business and Industry, and the Division of Insurance, acknowledged the dissolution of Chemung Risk Management, Inc.

Forward-looking Statements

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, cybersecurity risks, changes in FDIC assessments, 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.

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Critical Accounting Estimates

Critical accounting estimates include the areas where the Corporation has made what it considers to be particularly difficult, subjective, or complex judgments concerning estimates, and where these estimates can significantly affect the Corporation's financial results under different assumptions and conditions. The Corporation prepares its financial statements in conformity with GAAP. As a result, the Corporation is required to make certain estimates, judgments, and assumptions that it believes are reasonable based upon the information available at that time. These estimates, judgments, and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the years presented. Actual results could be different from these estimates.

Allowance for Credit Losses

Management considers the allowance for credit losses to be a critical accounting estimate, given the uncertainty in estimating lifetime credit losses attributable to its portfolios of assets exhibiting credit risk, particularly in its loan portfolio, and the material effect that such judgments can have on the Corporation's results of operations. Determining the amount requires significant judgement on the part of management, is multi-faceted, and can be imprecise. The level of the allowance for credit losses on loans is based on management’s ongoing review of all relevant information, from internal and external sources, relating to past events, current conditions, and expectations of the future based on reasonable and supportable forecasts.

The allowance is established through a provision for credit losses in the Consolidated Statements of Income, and evaluation of the adequacy of the allowance for credit losses is performed by management on a quarterly basis. While management uses available information to anticipate credit losses, future additions to the allowance may be necessary based on changes in economic conditions or the composition of its portfolios. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Corporation's allowance for credit losses.

Because the Corporation's methodology for maintaining its allowance for credit losses is based on historical experience and trends, current economic information, forecasted data, and management's judgement, a range of estimates for the estimate of the allowance for credit losses may be supportable. Deteriorating conditions may lead to further required increases to the allowance; conversely, improvements to conditions may warrant further reductions to the allowance. In estimating the allowance for credit losses, management considers the sensitivity of the model and 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, 2023, the allowance for credit losses totaled $22.5 million, compared to an allowance for loan losses of $19.7 million as of December 31, 2022. A significant portion of the allowance for credit losses is allocated to the commercial portfolio, both commercial real estate and commercial and industrial. As of December 31, 2023 and December 31, 2022, the allowance for credit losses (allowance for loan losses for December 31, 2022), allocated to the total commercial portfolio was $17.1 million and $14.9 million respectively, or 75.9% and 76.0%. Given the concentration of the allowance for credit losses allocated to the total commercial real estate and commercial and industrial portfolios, and the significant judgments made by management to derive qualitative factors, management closely analyzes the impact that changes in judgments relating to these portfolios could have on the allowance.

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. 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 $1.5 million, or 6.8%, to $24.0 million, assuming qualitative adjustment 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, 2023, 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 is depicted in supporting tables in Note 4 to the Consolidated Financial Statements included Part IV, Item 15 of this Annual Report on Form 10-K.

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Consolidated Financial Highlights (in thousands, except per share data)		As of or for the Years Ended
		December 31,			December 31,
RESULTS OF OPERATIONS		2023			2022
Interest and dividend income		$	113,074		$	81,475
Interest expense		38,617			7,296
Net interest income		74,457			74,179
Provision for credit losses (a)		3,262			(554)
Net interest income after provision for credit losses (a)		71,195			74,733
Non-interest income		24,549			21,436
Non-interest expenses		64,243			59,280
Income before income tax expense		31,501			36,889
Income tax expense		6,501			8,106
Net income		$	25,000		$	28,783
Basic and diluted earnings per share		$	5.28		$	6.13
Average basic and diluted shares outstanding		4,732			4,693
PERFORMANCE RATIOS
Return on average assets		0.94		%	1.15		%
Return on average equity		14.11		%	15.93		%
Return on average tangible equity (b)		16.09		%	18.12		%
Efficiency ratio (unadjusted) (c)		64.89		%	62.00		%
Efficiency ratio (adjusted) (b)		66.20		%	61.71		%
Non-interest expense to average assets		2.41		%	2.37		%
Loans to deposits		81.20		%	78.61		%
AVERAGE YIELDS / RATES - Fully Taxable Equivalent
Yield on loans		5.13		%	4.14		%
Yield on investments		2.21		%	1.71		%
Yield on interest-earning assets		4.33		%	3.35		%
Cost of interest-bearing deposits		2.11		%	0.44		%
Cost of borrowings		5.17		%	2.76		%
Cost of interest-bearing liabilities		2.20		%	0.47		%
Interest rate spread		2.13		%	2.88		%
Net interest margin, fully taxable equivalent		2.85		%	3.05		%
CAPITAL
Total equity to total assets at end of year		7.20		%	6.29		%
Tangible equity to tangible assets at end of year (b)		6.45		%	5.51		%
Book value per share		$	41.07		$	35.32
Tangible book value per share (b)		36.48			30.69
Year-end market value per share		49.80			45.87
Dividends declared per share		1.24			1.24
AVERAGE BALANCES
Loans (d)		$	1,898,986		$	1,646,576
Interest-earning assets		2,621,251			2,444,287
Total assets		2,660,329			2,496,099
Deposits		2,377,736			2,255,326
Total equity		177,187			180,684
Tangible equity (b)		155,363			158,857
ASSET QUALITY
Net charge-offs (recoveries)		$	941		$	812
Non-performing loans (e)		10,411			8,178
Non-performing assets (f)		10,737			8,373
Allowance for credit losses (a)		22,517			19,659
Annualized net charge-offs (recoveries) to average loans		0.05		%	0.05		%
Non-performing loans to total loans		0.53		%	0.45		%
Non-performing assets to total assets		0.40		%	0.32		%
Allowance for credit losses to total loans (a)		1.14		%	1.07		%
Allowance for credit losses to non-performing loans (a)		216.28		%	240.39		%
(a) Corporation adopted CECL January 1, 2023.	(d) Includes loans held for sale and does not reflect the ACL.
(b) See the GAAP to Non-GAAP reconciliations Pages 63-66.	(e) Includes non-accrual loans only.
(c) Non-interest expense divided by total of net interest income plus	(f) Includes non-performing loans plus other real estate owned.
non-interest income.

38

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, 2023 and 2022. For a discussion of the Critical Accounting Estimates that affect the Consolidated Results of Operations, see page 37.

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
	2023			2022			Change
Net interest income	$	74,457		$	74,179		$	278	0.4	%
Non-interest income	24,549			21,436			3,113		14.5	%
Non-interest expenses	64,243			59,280			4,963		8.4	%
Pre-provision income	34,763			36,335			(1,572)		(4.3)	%
Provision for credit losses (a)	3,262			(554)			3,816		N/M
Income tax expense	6,501			8,106			(1,605)		(19.8)	%
Net income	$	25,000		$	28,783		$	(3,783)	(13.1)	%
Basic and diluted earnings per share	$	5.28		$	6.13		$	(0.85)	(13.9)	%
Selected financial ratios
Return on average assets	0.94		%	1.15		%
Return on average equity	14.11		%	15.93		%
Net interest margin, fully taxable equivalent	2.85		%	3.05		%
Efficiency ratio (adjusted) (b)	66.20		%	61.71		%
Non-interest expense to average assets	2.41		%	2.37		%

(a) The Corporation adopted CECL on January 1, 2023.

(b) See the GAAP to Non-GAAP reconciliations on pages 63-66

Net income for the year ended December 31, 2023 was $25.0 million, or $5.28 per share, compared with net income of $28.8 million, or $6.13 per share, for the prior year. Return on average equity for the year ended December 31, 2023 was 14.11%, compared with 15.93% for the prior year. The decrease in net income for the year ended December 31, 2023, compared to the prior year, was due to increases in the provision for credit losses and non-interest expenses, offset by increases in non-interest income and net interest income, and a decrease in 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
	2023		2022		Change
Interest and dividend income	$	113,074	$	81,475	$	31,599	38.8	%
Interest expense	38,617		7,296		31,321		429.3	%
Net interest income	$	74,457	$	74,179	$	278	0.4	%

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.

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Net interest income for the year ended December 31, 2023 totaled $74.5 million, an increase of $0.3 million, or 0.4%, compared with $74.2 million for the prior year. Fully taxable equivalent net interest margin was 2.85% for the year ended December 31, 2023 compared with 3.05% for the prior year. The increase in net interest income was primarily due to increases of $29.2 million in interest income on loans, including fees, $2.2 million in interest and dividend income on taxable securities, and $0.3 million in interest income on interest-earning deposits, offset by increases of $29.3 million in interest expense on deposits, and $2.1 million in interest expense on borrowed funds.

The increase in interest income on loans, including fees was due primarily to a 99 basis points increase in the average yield on loans, primarily related to the commercial and consumer loan portfolios due to an increase in interest rates, and a $252.4 million increase in average loan balances. The increases in the average loan balances were primarily concentrated in the commercial loan portfolio, as well as the indirect auto segment of the consumer loan portfolio. The increase in interest and dividend income on taxable securities was due primarily to a 48 basis points increase in the average yield, due to an increase in interest rates on existing variable rate securities, despite a decrease in the average invested balances of $63.6 million, primarily due to paydowns on mortgage-backed and SBA pooled-loan securities. The increase in interest income on interest-earning deposits was due primarily to the increase in interest rates on overnight deposits with the average yield on interest-earning deposits increasing from 1.24% in 2022 to 5.07% in 2023.

The increase in interest expense on deposits was due primarily to a 167 basis points increase in average rates paid on interest-bearing deposits which included brokered deposits, due to the higher interest rate environment, and a shift in the mix of deposits towards higher cost interest-bearing accounts such as time deposits, when compared to the prior year. The increase in interest expense on borrowed funds was due primarily to a $29.1 million increase in the average balances and 266 basis points increase in interest rates of overnight FHLBNY borrowings, when compared to the prior year.

Average interest-earning assets increased $177.0 million in 2023 when compared to the prior year. The average yield on average interest-earning assets increased 98 basis points, and the average cost of interest-bearing liabilities increased 173 basis points, when compared to the prior year, both due to the rising interest rate environment over the past two years.

40

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, 2023, and 2022. It also reflects the average yield on interest-earning assets and average cost of interest-bearing liabilities for the years ended December 31, 2023, and 2022. For the purpose of the table below, non-accruing loans are included in the daily average loan amounts outstanding. Daily balances were used for average balance computations. Investment securities are stated at amortized cost. Tax equivalent adjustments have been made in calculating yields on obligations of states and political subdivisions, tax-free commercial loans and dividends on equity investments.

AVERAGE CONSOLIDATED BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS
	Year Ended December 31,
	2023						2022
(in thousands)	Average Balance		Interest		Yield/ Rate		Average Balance		Interest		Yield/ Rate
Interest-earning assets:
Commercial loans	$	1,309,692	$	72,698	5.55	%	$	1,143,908	$	50,146	4.38	%
Mortgage loans	283,093		10,084		3.56	%	274,067		9,226		3.37	%
Consumer loans	306,201		14,664		4.79	%	228,601		8,857		3.87	%
Taxable securities	671,345		14,295		2.13	%	734,898		12,107		1.65	%
Tax-exempt securities	40,506		1,171		2.89	%	41,915		1,304		3.11	%
Interest-earning deposits	10,414		528		5.07	%	20,898		260		1.24	%
Total interest-earning assets	2,621,251		113,440		4.33	%	2,444,287		81,900		3.35	%
Non-interest earning assets:
Cash and due from banks	25,419						24,497
Premises and equipment, net	15,514						16,978
Other assets	115,954						90,879
Allowance for credit losses (1)	(20,212)						(19,453)
AFS valuation allowance	(97,597)						(61,089)
Total assets	$	2,660,329					$	2,496,099
Interest-bearing liabilities:
Interest-bearing demand deposits	$	286,097	$	3,136	1.10	%	$	278,946	$	412	0.15	%
Savings and insured money market deposits	899,996		13,027		1.45	%	949,597		2,241		0.24	%
Time deposits	375,545		12,414		3.31	%	253,433		2,733		1.08	%
Brokered deposits	140,845		7,349		5.22	%	44,229		1,269		2.87	%
FHLBNY overnight advances	48,851		2,577		5.28	%	19,759		518		2.62	%
Long-term capital leases	3,177		114		3.59	%	3,449		123		3.57	%
Total interest-bearing liabilities	1,754,511		38,617		2.20	%	1,549,413		7,296		0.47	%
Non-interest bearing liabilities:
Demand deposits	675,253						729,121
Other liabilities	53,378						36,881
Total liabilities	2,483,142						2,315,415
Shareholders' equity	177,187						180,684
Total liabilities and shareholders’ equity	$	2,660,329					$	2,496,099
Fully taxable equivalent net interest income			74,823						74,604
Net interest rate spread (2)					2.13	%					2.88	%
Net interest margin, fully taxable equivalent (3)					2.85	%					3.05	%
Taxable equivalent adjustment			(366)						(425)
Net interest income			$	74,457					$	74,179

(1) The Corporation adopted CECL January 1, 2023.

(2) Net interest rate spread is the difference in the average yield on interest-earning assets less the average cost of interest-bearing liabilities.

(3) Net interest margin is the ratio of fully taxable equivalent net interest income divided by average interest-earning assets.

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Changes Due to Rate and Volume

Net interest income can be analyzed in terms of the impact of changes in rates and volumes. The table below illustrates the extent to which changes in interest rates and in the volume of average interest-earning assets and interest-bearing liabilities have affected the Corporation’s interest income and interest expense during the years indicated. 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 this table, changes that are not due solely to volume or rate changes have been allocated to these categories based on the respective percentage changes in average volume and rate. Due to the numerous simultaneous volume and rate changes during the years analyzed, it is not possible to precisely allocate changes between volume and rates. In addition, average interest-earning assets include non-accrual loans and taxable equivalent adjustments were made.

RATE/VOLUME ANALYSIS OF NET INTEREST INCOME
	2023 vs. 2022
	Increase/(Decrease)
(in thousands)	Total Change		Due to Volume		Due to Rate
Interest income
Commercial loans	$	22,552	$	7,932	$	14,620
Mortgage loans	858		316		542
Consumer loans	5,807		3,415		2,392
Taxable securities	2,188		(1,115)		3,303
Tax-exempt securities	(133)		(43)		(90)
Interest-earning deposits	268		(186)		454
Total interest income	31,540		10,319		21,221

Interest expense
Interest-bearing demand deposits	2,724		11		2,713
Savings and insured money market deposits	10,786		(125)		10,911
Time deposits	9,681		1,832		7,849
Brokered deposits	6,080		4,422		1,658
FHLBNY overnight advances	2,059		1,219		840
Long-term capital leases	(9)		(8)		(1)
Total interest expense	31,321		7,351		23,970
Fully taxable equivalent net interest income	$	219	$	2,968	$	(2,749)

Provision for credit losses

Management performs an ongoing assessment of the adequacy of the allowance for credit losses based on its current expected credit losses (CECL) methodology, which includes loans individually analyzed, as well as loans analyzed on a pooled basis. The Corporation's methodology estimates the lifetime losses in its loan portfolio by utilizing an expected discounted cash flow approach. Based on FOMC forecasted data points, the model is supplemented by qualitative considerations including relevant economic influences, portfolio concentrations, and other external factors. The Corporation adopted the CECL accounting standard on January 1, 2023.

The provision for credit losses for the year ended December 31, 2023 was $3.3 million compared to a credit of $0.6 million for the prior year. The increase was primarily due to a $0.9 million specific allocation on a commercial real estate relationship during 2023, and the impact on the allowance for credit losses methodology of the adoption of CECL as of January 1, 2023.

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Increased loan volume, and changes to model inputs, including a decline in the prepayment rates of many of the model's loan pools, drove the increase. Declining prepayments impact the application of discounted cash flows by increasing the principal subject to discounting in later periods. Additionally, management increased the qualitative adjustment rate applied to the consumer loan portfolio, considering changes in economic conditions that may not be reflected in the FOMC's forecasted data points, but may adversely impact consumers' financial strength. These increases were offset by relatively favorable changes in the FOMC's forecasted data points. Between December 2022 and December 2023, the FOMC's unemployment projection for year-end 2024 decreased from 4.6% to 4.1%, while the FOMC's projection for year-end U.S. GDP annual growth rate decreased from 1.6% to 1.4%. However, the year-end 2023 projected GDP growth rate, which impacted the model throughout the year, improved from 0.5% to 2.6% between December 2022 and December 2023.

Net charge-offs for the years ended December 31, 2023 and 2022 were $0.9 million and $0.8 million, respectively.

Non-interest income

The following table presents non-interest income for the years indicated, and the dollar and percent change (in thousands):

	Years Ended December 31,						Percentage Change
	2023		2022		Change
Wealth management group fee income	$	10,460	$	10,280	$	180	1.8	%
Service charges on deposit accounts	3,919		3,788		131		3.5	%
Interchange revenue from debit card transactions	4,606		4,603		3		0.1	%
Net (losses) on securities transactions	(39)		—		(39)		N/M
Change in fair value of equity investments	103		(349)		452		N/M
Net gains on sales of loans held for sale	144		107		37		34.6	%
Net gains (losses) on sales of other real estate owned	37		60		(23)		(38.3)	%
Income from bank owned life insurance	43		46		(3)		(6.5)	%
CFS fee and commission income	994		1,079		(85)		(7.9)	%
Other	4,282		1,822		2,460		135.0	%
Total non-interest income	$	24,549	$	21,436	$	3,113	14.5	%

Non-interest income for the year ended December 31, 2023 was $24.5 million compared with $21.4 million for the prior year, an increase of $3.1 million, or 14.5%. The increase was due primarily to increases of $2.5 million in other non-interest income, $0.5 million in change in fair value of equity investments, $0.2 million in WMG fee income, and $0.1 million in service charges on deposit accounts.

Other non-interest income

Other non-interest income increased compared to the prior year primarily due to the $2.4 million recognition of an employee retention tax credit in the third quarter of 2023.

Change in Fair Value of Equity Investments

Change in fair value of equity investments increased in 2023 compared to the prior year primarily due to an improvement in the market value of assets held for the Corporation's deferred compensation plan.

Wealth Management Group Fee Income

The increase in wealth management group fee income was primarily attributed to an increase in the market value of total assets under management or administration, due to improved conditions in equity markets in 2023, when compared to the prior year.

Service Charges on Deposit Accounts

The increase in service charges on deposit accounts was primarily due to an increase in non-sufficient fund fees when compared to the prior year.

43

Non-interest expenses

The following table presents non-interest expenses for the years indicated, and the dollar and percent change (in thousands):

	Years Ended December 31,						Percentage Change
	2023		2022		Change
Compensation expenses:
Salaries and wages	$	26,832	$	25,054	$	1,778	7.1	%
Pension and other employee benefits	7,368		7,668		(300)		(3.9)	%
Other components of net periodic pension cost (benefits)	(676)		(1,648)		972		59.0	%
Total compensation expenses	33,524		31,074		2,450		7.9	%
Non-compensation expenses:
Net occupancy	5,637		5,539		98		1.8	%
Furniture and equipment	1,728		1,906		(178)		(9.3)	%
Data processing	9,840		8,919		921		10.3	%
Professional services	2,293		2,171		122		5.6	%
Amortization of intangible assets	—		15		(15)		(100.0)	%
Marketing and advertising	923		941		(18)		(1.9)	%
Other real estate owned expense	(20)		(5)		(15)		300.0	%
FDIC insurance	2,128		1,356		772		56.9	%
Loan expense	1,047		1,001		46		4.6	%
Other	7,143		6,363		780		12.3	%
Total non-compensation expenses	30,719		28,206		2,513		8.9	%
Total non-interest expenses	$	64,243	$	59,280	$	4,963	8.4	%

Non-interest expense increased $5.0 million, or 8.4% in 2023. The increase was due primarily to increases of $2.5 million in total compensation expenses and $2.5 million in total non-compensation expenses.

Compensation expenses

Compensation expenses increased $2.5 million, or 7.9% when compared to the prior year, primarily due to increases of $1.8 million in salaries and wages and $1.0 million in other components of net periodic pension benefits, offset by a decrease of $0.3 million in pension and other employee benefits.

The increase in salaries and wages was primarily attributable to an increase in the market value of the Corporation's deferred compensation plans and base salary increases, while the increase in other components of net periodic pension benefits was primarily due to a change in factors used to prepare annual actuarial estimates. The decrease in pension and other employee benefits was primarily due to a decrease in employee healthcare expenses when compared to the prior year.

Non-compensation expenses

Non-compensation expenses increased $2.5 million, or 8.9%, primarily due to increases of $0.9 million in data processing expense, $0.8 million in FDIC insurance expense, and $0.8 million in other non-interest expense.

The increase in data processing expense was primarily due to ongoing enhancements to our cybersecurity capabilities, outsourced debit card processing to a third-party vendor, and an increase in wealth management software expenses. FDIC insurance expense increased due to an increase in the assessment rate effective January 1, 2023. The increase in other non-interest expense was primarily due to the recapture of $0.2 million in accrued telecommunication expenses during the prior year, and an increase in non-loan charge-offs in the current year.

44

Income tax expense

The following table presents income tax expense and the effective tax rate for the years indicated, and the dollar and percent change (in thousands):

	Years Ended December 31,								Percentage Change
	2023			2022			Change
Income before income tax expense	$	31,501		$	36,889		$	(5,388)	(14.6)	%
Income tax expense	$	6,501		$	8,106		$	(1,605)	(19.8)	%
Effective tax rate	20.6		%	22.0		%

The effective tax rate decreased to 20.6% for the year ended December 31, 2023 compared with 22.0% for the prior year. The decrease in income tax expense can be primarily attributed to a decrease in pre-tax income.

Financial Condition

The following table presents selected financial information at December 31, 2023 and 2022, and the dollar and percent change (in thousands):

	December 31, 2023		December 31, 2022		Change		Percentage Change
Assets
Total cash and cash equivalents	$	36,847	$	55,869	$	(19,022)	(34.0)	%
Total investment securities, FHLB, and FRB stock	593,322		646,040		(52,718)		(8.2)	%
Loans, net of deferred loan fees	1,972,664		1,829,448		143,216		7.8	%
Allowance for loan losses	(22,517)		(19,659)		2,858		14.5	%
Loans, net	1,950,147		1,809,789		140,358		7.8	%
Goodwill and other intangible assets, net	21,824		21,824		—		—	%
Other assets	108,389		112,031		(3,642)		(3.3)	%
Total assets	$	2,710,529	$	2,645,553	$	64,976	2.5	%
Liabilities and Shareholders’ Equity
Total deposits	$	2,429,427	$	2,327,227	$	102,200	4.4	%
Capital lease obligations and FHLBNY advances	34,970		99,137		(64,167)		(64.7)	%
Other liabilities	50,891		52,801		(1,910)		(3.6)	%
Total liabilities	2,515,288		2,479,165		36,123		1.5	%
Total shareholders’ equity	195,241		166,388		28,853		17.3	%
Total liabilities and shareholders’ equity	$	2,710,529	$	2,645,553	$	64,976	2.5	%

Cash and cash equivalents

The decrease in cash and cash equivalents can be mostly attributed to changes in securities, loans, deposits, and borrowings, offset by net income.

Investment securities

The decrease in investment securities was primarily due to a decrease of $48.6 million in securities available for sale. Net paydowns on securities available for sale during the year totaled $59.8 million, primarily attributable to paydowns on mortgage-backed securities and SBA pooled-loan securities, partially offset by an increase in the market value of $11.5 million, due to favorable changes in fixed income market valuation during the year. Securities held to maturity decreased $1.6 million due to the sale of securities held by Chemung Risk Management, Inc. relating to its dissolution. In addition, FHLB stock decreased $2.7 million due to lower FHLBNY overnight advance borrowings as of the end of the current year, compared to the the prior year end.

45

Loans, net

The increase in total loans, net, was concentrated in the commercial loan portfolio, which increased $138.1 million, or 11.1%. Commercial demand for financing continues to be strong across the Corporation's footprint, led by commercial real estate activity in the Albany, NY metro area. Consumer loans increased $12.8 million, or 4.3%, primarily driven by strong origination activity in the indirect auto segment. These increases were offset by a decrease of $7.7 million, or 2.7%, in the residential mortgage loan portfolio, due to a decrease in demand, as well as an increase in new originations being sold into the secondary market.

Allowance for Credit Losses

The allowance for credit losses on loans was $22.5 million as of December 31, 2023, and the allowance for loan losses was $19.7 million as of December 31, 2022. The allowance for credit losses on unfunded commitments, a component of other liabilities, was $0.9 million as of December 31, 2023. The increase in the allowance for credit losses, including unfunded commitments, was driven by a $1.5 million adjustment recognized upon adoption of ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), the specific allocation of $0.9 million on a commercial real estate relationship, provisioning related to loan growth, changes in model variables, and qualitative considerations. The $1.5 million one-time implementation adjustment was comprised of $1.1 million reflecting the establishment of an allowance for credit losses on unfunded commitments, and a $0.4 million increase in the allowance for credit losses, reflecting the change in methodology.

During the fourth quarter of 2023, in addition to the $0.9 million specific allocation made in relation to a commercial real estate relationship, the Corporation allocated additional amounts to its allowance for credit losses in accordance with its CECL methodology. One of the inputs utilized by the model is an assumed prepayment rate, calculated at the pool level, and based on a three-year rolling historical average of the Corporation's own prepayment experience. During 2023, prepayment levels declined across most pools of loans, but was especially prevalent amongst residential mortgages. Prepayment speeds had a meaningful impact on the allowance during the fourth quarter. Prepayment assumptions and modeled present value of cash flows have a direct relationship. As prepayment assumptions decline, the modeled present value of cash flows declines, increasing the assumed allowance requirements. Additionally, loan growth, and to a lesser degree, changes in FOMC economic forecasted data points, increased reserve requirements during the fourth quarter.

Goodwill and other intangible assets, net

There were no impairments of goodwill or other intangible assets during the years ended December 31, 2023 and 2022.

Other Assets

The decrease in other assets can be mostly attributed to a decrease of $2.6 million in interest rate swap assets, primarily due to changes in interest rates.

Deposits

The growth in deposits was attributable to an increase of $209.9 million in time deposits, or 52.2%, which includes customer time deposits and brokered deposits. Customer time deposits increased $140.6 million, while brokered deposits increased $69.3 million. Interest-bearing demand deposits increased $19.5 million. These increases were offset by decreases of $80.2 million in non-interest bearing demand deposits, $29.9 million in savings deposits, and $17.1 million in insured money market deposits. Non-interest bearing deposits comprised 26.9% and 31.4% of total deposits as of December 31, 2023 and December 31, 2022, respectively.

Capital Lease Obligations and FHLBNY Advances

The decrease in capital lease obligations and FHLBNY advances can be mostly attributed to a decrease of $63.9 million in FHLBNY overnight advances.

Other Liabilities

The decrease in other liabilities can be mostly attributed to a $2.6 million decrease in interest rate swap liabilities, primarily due to changes in interest rates.

46

Shareholders’ equity

The increase in shareholders' equity was due primarily to an increase of $18.1 million in retained earnings and a decrease of $9.2 million in accumulated other comprehensive loss. The increase in retained earnings was due primarily to net income of $25.0 million, offset by $5.9 million in dividends declared and a $1.1 million one-time adjustment due to the implementation of CECL. The improvement in accumulated other comprehensive loss was primarily due to an improvement in the fair value of the available for sale securities portfolio, when compared to the prior year. Treasury stock decreased $1.1 million primarily due to the impact of the issuance of shares related to the Corporation's employee benefit plans.

Assets under management or administration

The market value of total assets under management or administration in WMG was $2.242 billion, including $381.3 million of assets held under management or administration for the Corporation, at December 31, 2023 compared to $2.053 billion, including $346.5 million of assets held under management or administration for the Corporation at December 31, 2022, an increase of $189.4 million, or 9.2%. The increase in total assets under management or administration for the Corporation can be mostly attributed to broad improvements in the financial markets during the year.

Balance Sheet Comparisons

The table below contains selected year-end and average balance sheet information at and for the years ended December 31, 2023 and 2022 (in millions):

SELECTED BALANCE SHEET INFORMATION
	YEAR-END BALANCE SHEET						AVERAGE BALANCE SHEET
	2023		2022		% Change		2023		2022		% Change
Total assets	$	2,710.5	$	2,645.6	2.5	%	$	2,660.3	$	2,496.1	6.6	%
Interest-earning assets (1)	2,580.6		2,502.0		3.1	%	2,621.3		2,444.3		7.2	%
Loans (2)	1,972.7		1,829.4		7.8	%	1,899.0		1,646.6		15.3	%
Investments (3)	607.9		672.6		(9.6)	%	722.3		797.7		(9.5)	%
Deposits	2,429.4		2,327.2		4.4	%	2,377.7		2,255.3		5.4	%
Borrowings (4)	35.0		99.1		(64.7)	%	52.0		23.2		124.1	%
Allowance for credit losses (5)	22.5		19.7		14.2	%	20.2		19.5		3.6	%
Shareholders’ equity	195.2		166.4		17.3	%	177.2		180.7		(1.9)	%

(1)    Interest-earning assets include: securities available for sale at estimated fair value, securities held to maturity at amortized cost, loans and loans held for sale net of deferred loan fees, interest-earning deposits, FHLBNY stock, FRBNY stock, equity investments, and federal funds sold.

(2) Loans and loans held for sale, net of deferred loan fees.

(3) Investments include securities available for sale at estimated fair value, securities held to maturity, at amortized cost, equity investments, FHLBNY stock, FRBNY stock, federal funds sold and interest-earning deposits.

(4)    Borrowings include overnight advances and capitalized lease obligations.

(5) The Corporation adopted CECL on January 1, 2023.

Cash and Cash Equivalents

Total cash and cash equivalents decreased $19.0 million when compared to December 31, 2022, due to decreases of $12.0 million in interest-earning deposits at other financial institutions, and $7.1 million in cash and due from financial institutions.

47

Securities

The Corporation’s Funds Management Policy includes an investment policy that in general, requires debt securities purchased for the bond portfolio to carry a minimum agency rating of "Baa." After an independent credit analysis is performed, the policy also allows the Corporation to purchase local municipal obligations that are not rated. The Corporation intends to maintain a reasonable level of securities to provide adequate liquidity and in order to have securities available to pledge to secure public deposits, repurchase agreements, and other types of transactions. Fluctuations in the fair value of the Corporation’s securities relate primarily to changes in interest rates.

Marketable securities are generally classified as Available for Sale, while certain investments in local municipal obligations are classified as Held to Maturity. The available for sale segment of the securities portfolio totaled $584.0 million at December 31, 2023, a decrease of $48.6 million, or 7.7%, from $632.6 million at December 31, 2022. The decrease was primarily due to $59.6 million in paydowns, and sales of $1.2 million related to the dissolution of CRM, offset by an increase in the fair value of the portfolio of $11.5 million due to decreases in benchmark yields, and purchases of $3.2 million. The held to maturity segment of the securities portfolio consists of obligations of political subdivisions in the Corporation’s market areas. These securities totaled $0.8 million at December 31, 2023, a decrease of $1.6 million or 67.6%, from $2.4 million at December 31, 2022, due primarily to maturities, and the dissolution of CRM in 2023.

Non-marketable equity securities at December 31, 2023 include shares of FRBNY stock and FHLBNY stock, carried at their cost of $1.9 million and $3.6 million, respectively. The fair value of these securities is assumed to approximate their cost. The investment in these stocks is regulated by regulatory policies of the respective institutions.

The table below sets forth the carrying amounts and maturities of held to maturity debt securities at December 31, 2023 and the weighted average yields of such securities (all yields are calculated on the basis of the amortized cost and weighted for the scheduled maturity of each security (in thousands):

MATURITIES AND YIELDS OF HELD TO MATURITY SECURITIES
	Within One Year				After One, But Within Five Years				After Five, But Within Ten Years				After Ten Years
	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
Obligations of states and political subdivisions	$	—	N/A		$	145	3.79	%	$	640	3.92	%	$	—	N/A
Total	$	—	—	%	$	145	3.79	%	$	640	3.92	%	$	—	N/A

The weighted-average yield on the Corporation's held to maturity debt securities at December 31, 2023 was 3.90%, related to obligations of states and political subdivisions. Management evaluates securities for credit loss exposure on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For the years ended December 31, 2023 and 2022, the Corporation had no credit loss charges relating to its investment securities.

48

Loans

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

The table below presents the Corporation’s loan composition by type and percentage of total loans for the years ended December 31, 2023 and December 31, 2022 (in thousands, except percentages):

LOAN COMPOSITION
	December 31,								% Change
	2023		% of Total		2022		% of Total		2022 to 2023
Commercial and agricultural:
Commercial and industrial	$	264,140	13.4	%	$	252,044	13.8	%	4.8	%
Agricultural	256		—	%	249		—	%	2.8	%
Commercial mortgages:
Construction	138,887		7.0	%	108,243		5.9	%	28.3	%
Commercial mortgages, other	984,038		49.9	%	888,670		48.7	%	10.7	%
Residential mortgages	277,992		14.1	%	285,672		15.6	%	(2.7)	%
Consumer loans:
Home equity lines and loans	87,056		4.4	%	81,401		4.4	%	6.9	%
Indirect consumer loans	210,423		10.7	%	202,124		11.0	%	4.1	%
Direct consumer loans	9,872		0.5	%	11,045		0.6	%	(10.6)	%
Total	$	1,972,664	100.0	%	$	1,829,448	100.0	%

Portfolio loans totaled $1.973 billion at December 31, 2023 and $1.829 billion at December 31, 2022, an increase of $143.2 million, or 7.8%. The increase was driven by increases of $126.0 million in commercial real estate loans, or 12.6%, $12.1 million, or 4.8% in commercial and industrial loans, and $8.3 million, or 4.1% in indirect auto loans, offset primarily by a decrease in residential mortgages of $7.7 million, or 2.7%.

The increase in total commercial real estate was the result of a $95.4 million increase in commercial mortgages, other, primarily driven by increases in multi-family properties, and a $30.6 million increase in construction loans. Commercial real estate lending continues to be the primary driver of asset growth for the Corporation, as demand for project financing remains robust across the Corporation's footprint, particularly in the Albany and Buffalo regions. At December 31, 2023, commercial real estate loans in the Albany and Buffalo regions have grown $91.5 million and $30.3 million from December 31, 2022, respectively. The increase in commercial and industrial loans was relatively evenly distributed across the Corporation's footprint.

The increase in indirect auto loans was attributable to a renewed focus in the program beginning in late 2021, following a pricing and dealer network restructuring, continuing through 2023, as well as continued robust demand for automobiles coupled with elevated auto pricing nationwide. A decrease in residential mortgage loans was due to weak demand for new originations in the current higher interest rate environment, and lower market mobility due to many borrowers "locking in" lower rates secured in previous years, as well as the Corporation selling a larger proportion of its residential mortgage originations into the secondary market. Mortgage originations held on the balance sheet totaled $20.8 million and mortgage loans originated and sold into the secondary market totaled $6.4 million for the year ended December 31, 2023.

49

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

LOANS BY DIVISION
	December 31,
	2023		2022		2021		2020		2019
Chemung Canal Trust Company*^	$	766,103	$	731,344	$	658,468	$	576,399	$	603,133
Capital Bank Division	1,206,561		1,098,104		877,995		732,820		708,773
Total loans	$	1,972,664	$	1,829,448	$	1,536,463	$	1,309,219	$	1,311,906
*All loans, excluding those originated by the Capital Bank Division.
^ Includes $100.4 million and $79.8 million in the Western New York Market as of December 31, 2023 and 2022, respectively.

Loan concentrations are considered to exist when there are amounts loaned to a multiple number of borrowers engaged in similar activities which would cause them to be similarly impacted by changes in economic or other conditions. The Bank’s concentration policy limits consider the volume of commercial loans to any one specific industry, sponsor, collateral type and location. As of December 31, 2023 and 2022, total non-owner occupied commercial real estate loans divided by total Bank risk based capital was 403.6% and 397.7%, respectively.

The Corporation also monitors specific NAICS industry classifications of commercial loans to identify concentrations greater than 10.0% of total loans. At December 31, 2023 and 2022, commercial loans to borrowers involved in the real estate, and real estate rental and leasing businesses were 49.5% and 48.3% of total loans, respectively. No other concentration of loans existed in the commercial loan portfolio in excess of 10.0% of total loans as of December 31, 2023 and 2022.

Commercial real estate lending represented the largest portion of the Corporation's loan portfolio as of December 31, 2023 and 2022. Commercial real estate lending is comprised of the Construction and Commercial mortgage, other segments of the loan portfolio, as presented in Note 4-Loans and Allowance for Credit Losses. As of December 31, 2023 and 2022, total commercial real estate loans totaled $1.123 billion and $0.997 billion respectively. Management evaluates the risk inherent in its portfolio of commercial real estate loans using a variety of metrics, including but not limited to type, geography, collateral, and borrower or sponsor industry.

The table below presents commercial real estate loans by type and percentage at December 31, 2023 and 2022 (in thousands, except percentages):

Commercial real estate loans by type:	2023		% of Total		2022		% of Total		% Change 2022 to 2023
Construction	$	138,887	12.4	%	$	108,243	10.9	%	28.3	%
1-4 Family Residential (1)	45,792		4.1	%	38,736		3.9	%	18.2	%
Multifamily	349,327		31.1	%	305,103		30.6	%	14.5	%
Owner-Occupied	123,989		11.0	%	106,088		10.6	%	16.9	%
Non-Owner Occupied	464,930		41.4	%	438,743		44.0	%	6.0	%
Total	$	1,122,925	100.0	%	$	996,913	100.0	%

____________________________________________________________________________________________________________________________________________________________

(1) 1-4 Family residential loans included in the commercial real estate portfolio segment are comprised of properties whose primary purpose is to generate rental income for the borrower, but are not considered multifamily properties within the confines of the FFIEC's Call Report definition of a multifamily property. This may include single family residences, duplexes, triplexes, and quadplexes.

Commercial real estate loans are primarily made within the counties comprising the geographic footprint of the Corporation's physical branch network, as well as to borrowers whose business interests include projects that may be located in counties that are geographically contiguous with the Corporation's physical footprint. The location of collateral securing commercial real estate loans typically mirrors the location of the properties being financed. However, certain commercial real estate loans are secured by property other than the property being financed, and therefore the geographic location of collateral may differ from that of the financed property.

50

The table below presents the amortized basis of commercial real estate loans by regional location of collateral and percentage at December 31, 2023 and 2022 (in thousands, except percentages):

Commercial real estate loans by regional location of collateral: (6)	2023		% of Total		2022		% of Total		% Change 2022 to 2023
Capital & Adirondacks (1)	$	736,971	65.6	%	$	658,100	66.0	%	12.0	%
Southern Tier & Finger Lakes (2)	213,970		19.1	%	198,179		19.9	%	8.0	%
Western New York (3)	123,202		11.0	%	94,311		9.5	%	30.6	%
Other (4) (5)	48,782		4.3	%	46,323		4.6	%	5.3	%
Total	$	1,122,925	100.0	%	$	996,913	100.0	%

______________________________________________________________________________________________________

(1) Albany, Franklin, Montgomery, Rensselaer, Saratoga, Schenectady, and Warren counties of New York.

(2) Broome, Cayuga, Chemung, Onondaga, Steuben, and Tompkins counties of New York.

(3) Erie and Monroe counties of New York

(4) Bradford County, Pennsylvania.

(5) Other region comprises all locations outside of New York State and Downstate New York, which includes the lower Hudson Valley, New York City, and Long Island.

(6) Counties included in the footnotes above represent those counties which have at least a $5.0 million amortized basis in commercial real estate loans as of December 31, 2023. Counties with less than $5.0 million are also included in the table above.

The Corporation closely monitors economic and credit trends for the industries in which its commercial real estate borrowers are involved. Property types are designated based on the purpose of the collateral securing commercial real estate loans. The table below presents the amortized basis of commercial real estate loans by borrower industry and percentage at December 31, 2023 (in thousands, except percentages):

Commercial real estate loans by borrower industry:	December 31, 2023		% of Total
Construction & Land Development	$	141,551	12.6	%
Industrial	41,784		3.8	%
Warehouse & Storage	65,379		5.8	%
Retail	195,561		17.4	%
Office	117,212		10.4	%
Hotel	55,533		4.9	%
1-4 Family Residential Rental	47,708		4.2	%
Multifamily (5+)	371,687		33.2	%
Medical	32,859		2.9	%
Educational	25,738		2.3	%
Other	27,913		2.5	%
Total	$	1,122,925	100.0	%

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The table below shows the maturity of loans outstanding as of December 31, 2023. Also provided are the amounts due after one year, classified according to fixed interest rates and variable interest rates (in thousands):

	Within One Year		After One But Within Five Years		After Five But Within 15 Years		After 15 Years		Total
Commercial and agricultural:
Commercial and industrial	$	85,584	$	103,200	$	71,710	$	3,646	$	264,140
Agricultural	—		256		—		—		256
Commercial mortgages:
Construction	27,697		34,283		75,875		1,032		138,887
Commercial mortgages	50,540		247,254		659,619		26,625		984,038
Residential mortgages	3,721		10,597		112,676		150,998		277,992
Consumer loans:
Home equity lines and loans	234		5,889		57,866		23,067		87,056
Indirect consumer loans	1,587		114,025		94,808		3		210,423
Direct consumer loans	343		6,142		1,942		1,445		9,872
Total	$	169,706	$	521,646	$	1,074,496	$	206,816	$	1,972,664

	LOAN AMOUNTS CONTRACTUALLY DUE AFTER DECEMBER 31, 2024
Loans maturing with fixed interest rates:	After One But Within Five Years		After Five But Within 15 Years		After 15 Years		Total
Commercial and agricultural:
Commercial and industrial	$	64,976	$	32,417	$	421	$	97,814
Agricultural	193		—		—		193
Commercial mortgages:
Construction	6,606		22,360		—		28,966
Commercial mortgages	142,681		152,998		2,716		298,395
Residential mortgages	10,078		108,270		104,139		222,487
Consumer loans:
Home equity lines and loans	5,099		46,830		522		52,451
Indirect consumer loans	114,025		94,808		3		208,836
Direct consumer loans	6,289		1,138		213		7,640
Total	$	349,947	$	458,821	$	108,014	$	916,782

Loans maturing with variable interest rates:
Commercial and agricultural:
Commercial and industrial	$	37,932	$	39,585	$	3,225	$	80,742
Agricultural	63		—		—		63
Commercial mortgages:							—
Construction	27,742		53,450		1,032		82,224
Commercial mortgages	104,584		506,372		24,147		635,103
Residential mortgages	584		4,625		46,575		51,784
Consumer loans:							—
Home equity lines and loans	794		10,985		22,592		34,371
Indirect consumer loans	—		—		—		—
Direct consumer loans	—		658		1,231		1,889
Total	$	171,699	$	615,675	$	98,802	$	886,176

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Non-Performing Assets

Non-performing assets consist of non-accrual loans and other real estate owned that has been acquired in partial or full satisfaction of loan obligations or upon foreclosure. Effective January 1, 2023, the Corporation adopted ASU 2022-02, which eliminated troubled debt restructuring accounting guidance. Prior to adoption, certain troubled debt restructurings were considered to be non-performing assets. The Corporation monitors loan modifications made to borrowers deemed to be experiencing financial difficulty. As of December 31, 2023, there were five loans being monitored under ASU 2022-02 guidance, three of which were accruing with a total amortized basis of $0.5 million, and two of which were non-accrual, with a total amortized basis of $2.8 million. The non-accrual modifications are included in non-performing loans.

Past due status on all loans is based on the contractual terms of the loan. It is generally the Corporation's policy that a loan 90 days past due be placed on non-accrual status unless factors exist that would eliminate the need to classify a loan as such. A loan may also be designated as non-accrual at any time if payment of principal or interest in full is not expected due to deterioration in the financial condition of the borrower. At the time loans are placed in non-accrual status, the accrual of interest is discontinued and previously accrued interest is reversed. All payments received on non-accrual loans are applied to principal. Loans are considered for return to accrual status when they become current as to principal and interest and remain current for a period of six consecutive months or when, in the opinion of management, the Corporation expects to receive all of its original principal and interest. In the case of non-accrual loans where a portion of the loan has been charged off, the remaining balance is kept in non-accrual status until the entire principal balance has been recovered.

The following table summarizes the Corporation's non-performing assets as of December 31, (in thousands):

NON-PERFORMING ASSETS

	2023			2022			2021			2020			2019
Non-accrual loans	$	10,411		$	4,143		$	3,469		$	6,011		$	9,938
Non-accrual troubled debt restructurings	—			4,035			4,645			3,941			8,070
Total non-performing loans	10,411			8,178			8,114			9,952			18,008
Other real estate owned	326			195			113			237			517
Total non-performing assets	$	10,737		$	8,373		$	8,227		$	10,189		$	18,525
Ratio of non-performing loans to total loans	0.53		%	0.45		%	0.54		%	0.65		%	1.38		%
Ratio of non-performing assets to total assets	0.40		%	0.32		%	0.34		%	0.45		%	1.04		%
Ratio of allowance for credit losses to non-performing loans	216.28		%	240.39		%	259.17		%	210.25		%	130.38		%
Accruing loans past due 90 days or more (1)	$	9		$	1		$	4		$	2		$	7
Accruing troubled debt restructurings (1)	$	—		$	1,405		$	5,643		$	2,790		$	952

(1) These loans are not included in non-performing assets above.

Interest income recorded on non-accrual loans was $163 thousand and $56 thousand, as of December 31, 2023, and 2022, respectively.

Non-Performing Loans

Non-performing loans totaled $10.4 million at December 31, 2023, or 0.53% of total loans, compared with $8.2 million at December 31, 2022, or 0.45% of total loans. The increase in non-performing loans at December 31, 2023 as compared to December 31, 2022 can primarily be attributed to the addition of one commercial real estate relationship, totaling $3.1 million, comprised of a $2.2 million participation in a construction project, and a $0.9 million credit secured by a negative pledge. This increase was partially offset by the removal of a commercial and industrial loan from non-accrual status, and paydown activity on existing non-performing loans. Non-performing assets, which are comprised of non-performing loans and other real estate owned, was $10.7 million, or 0.40% of total assets, at December 31, 2023, compared with $8.4 million, or 0.32% of total assets, at December 31, 2022. The amortized basis of accruing loans past due 90 days or more was less than $0.1 million at December 31, 2023 and December 31, 2022.

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Loan Modifications to Borrowers Experiencing Financial Difficulty

The Corporation works closely with borrowers that have financial difficulties to identify viable solutions that minimize the potential for loss. Previously, the Corporation applied troubled debt restructuring (TDR) accounting guidance for loan modifications made to borrowers experiencing financial difficulty, where a concession was made by the Corporation. Effective January 1, 2023, the Corporation adopted ASU 2022-02, which supersedes TDR guidance. The Corporation monitors modifications made to borrowers experiencing financial difficulty in which the contractual cash flows were directly impacted. Modifications that are included under this guidance include principal reductions, reductions in the effective interest rate, term extensions greater than insignificant payment delays, or a combination thereof. ASU 2022-02 was implemented on a prospective basis, and as of December 31, 2023, the Corporation had five loans that were modified under the new accounting guidance, totaling $3.3 million. The modifications were term extensions on two commercial and industrial loans, one commercial mortgage and one home equity loan, as well as a four month payment delay deemed to be greater than insignificant on a commercial mortgage. As of December 31, 2023, all modifications with the exception of one term extension of six months on a commercial and industrial loan, were considered to be performing under their modified terms. The commercial and industrial loan that was granted a six month extension was not performing under its modified terms, is non-accrual, and totaled $0.9 million.

Individually Analyzed Loans

Effective January 1, 2023, the Corporation began analyzing loans on an individual basis when management determined that the individual loan no longer exhibited risk characteristics consistent with the risk characteristics existing in its designated pool of loans, under the Corporation's CECL methodology. This differs from the definition of loans considered to be impaired as of December 31, 2022. The amortized cost basis of individually analyzed loans at December 31, 2023 totaled $8.0 million, compared to impaired loans of $7.5 million at December 31, 2022. Included in this total were $2.0 million of loans for which specific allocations of $2.0 million were made to the allowance for credit losses. As of December 31, 2022, the impaired loan total included $2.8 million of loans for which specific impairment allowances of $1.1 million were allocated to the allowance for loan losses.

A majority of the Corporation's individually analyzed loans are secured and measured for credit loss based on collateral evaluations.  It is the Corporation's policy to obtain updated appraisals, by independent third parties, on loans secured by real estate at the time a loan is determined to require individual analysis. A measurement is performed based upon the most recent appraisal on file to determine the amount of any specific allocation or charge-off. In determining the amount of any specific allocation or charge-off, the Corporation will make adjustments to reflect the estimated costs to sell the property. Upon receipt and review of updated appraisals, an additional measurement is performed to determine if any adjustments are necessary to reflect proper provisioning or charge-offs. Individually analyzed loans are reviewed on a quarterly basis to determine if any changes in credit quality or market conditions would require any additional allocation or recognition of additional charge-offs. Real estate values in each of the Corporation's market areas have remained stable. Non-real estate collateral may be valued using (i) an appraisal, (ii) net book value of the collateral per the borrower’s financial statements, or (iii) accounts receivable aging reports, that may be adjusted based on management’s knowledge of the client and client’s business. If market conditions warrant, future appraisals are obtained for both real estate and non-real estate collateral.

Allowance for Credit Losses

The allowance for credit losses is an amount that management believes will be adequate to absorb the estimated lifetime credit losses inherent in assets exhibiting credit risk as of the measurement date. The allowance is in conformity with the requirements established by ASC 326-Financial Instruments-Credit Losses. The new guidance was adopted effective January 1, 2023, and is a departure from the allowance for loan losses (ALLL) that the Corporation previously estimated using an incurred loss methodology. The allowance covers loans, unfunded commitments, and certain debt securities exhibiting credit risk potential, and incorporates both quantitative and qualitative components.

Loans are analyzed on either an individual basis or a pooled basis, determined by risk characteristics. Loans that no longer exhibit risk characteristics substantially consistent with those of loans analyzed within a given pool may necessitate being analyzed individually, based on management discretion. Individually analyzed loans are primarily valued based on the collateral method, however, select loans may be evaluated using a cash flow analysis. Pooled loans are segmented based on groups of assigned FFIEC call codes, in order to provide enough granularity to meaningfully capture the risk profile of each instrument, yet broad enough to accurately allow for the application of certain pool-level assumptions.

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Quantitative analysis is based on an estimated discounted cash flow analysis (DCF) performed at the loan level. The modeled reserve requirement equals the difference between the book balance of the instrument at the measurement date and the present value of assumed cash flows for the life of the loan. The underlying assumptions of the DCF are based on the relationship between a projected value of an economic indicator, and the implied historical loss experience amongst a group of curated peers. The Corporation utilized a regression analysis to determine suitable loss drivers for each pool of loans. Based on these results, a probability of default (PD) and loss given default (LGD), is assigned to each potential value of an economic indicator for each pool of loans, and is then applied to the portfolio to derive the statistical loss implications thereof. A hypothetical loss for each period of the DCF, as well as implied recovery of past losses, is incorporated into the DCF. The Corporation relies on FOMC data, including its projections for U.S. civilian unemployment and U.S. GDP growth, as the source for its readily available and reasonable economic forecast. The forecasted values are applied over a rolling four quarter period, and revert to the historic mean of a look back period over an eight quarter period, on a straight-line basis.

Qualitative adjustments represent management's expectation of certain risks not being fully captured in the quantitative portion of the model. Qualitative adjustment rates are applied to each instrument within a pool on a consistent basis. Factors considered as part of the qualitative adjustment analysis include economic considerations not captured by the model, changes in conditions within the Bank such as lending standards, personnel, and concentrations of credit, among others, as well as external factors such as change in the regulatory and competitive landscape.

The allowance for credit losses is increased through a provision for credit losses, which is charged to operations. Separate provision accounts have been established for on-balance sheet credit exposures and off-balance sheet credit exposures, and are combined in the line item "provision for credit losses" on the Corporation's Consolidated Statements of Income. Loans are charged against the allowance for credit losses when management believes that the collectability of all or a portion of the principal is unlikely. Management's evaluation of the adequacy of the allowance for credit losses is performed on a periodic basis and takes into consideration such factors as the outcomes of the quantitative analysis, a review of specific individually analyzed loans, and determinations for qualitative adjustments. While management uses available information to recognize losses on credits, future additions to the allowance may be necessary based on changing economic conditions or portfolio composition. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Corporation's allowance for credit losses. Such agencies may require the Corporation to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.

The allowance for credit losses was $22.5 million as of December 31, 2023, compared to an allowance for loan losses of $19.7 million as December 31, 2022. The allowance for credit losses was 216.28% of non-performing loans as of December 31, 2023 compared to 240.39% of the allowance for loan losses as of December 31, 2022. The ratio of allowance for credit losses to total loans was 1.14% as of December 31, 2023 and the ratio of allowance for loan losses to total loans was 1.07% as of December 31, 2022, respectively. Including the allowance allocated to unfunded commitments, the ratio of the allowances for credit losses was 1.19% as of December 31, 2023. The increase in the allowance for credit losses was attributable to the impact of the implementation of ASU 2016-13, increased loan volume, the impact of changes in the modeled economic forecasts, and increased qualitative provisioning. The quantitative portion of the ACL model was impacted by improvements in the FOMC forecasted unemployment rate and U.S. GDP growth rate for both year-end 2023 and 2024, which offset additional provisioning relating to lower prepayment assumptions, loan growth, additional qualitative provisioning in the consumer portfolio segment, and specific allocations made on individually analyzed loans.

Net charge-offs for the year ended December 31, 2023 were $0.9 million compared with net charge-offs of $0.8 million for the year ended December 31, 2022. The ratio of net charge-offs (recoveries) to average loans outstanding was 0.05% for 2023 and 2022. Net charge-offs for the year ended December 31, 2023 can primarily be attributed to the $0.3 million charge-off of a commercial and industrial loan, as well as increased consumer charge-offs due to increased loan volume in the Corporation's indirect auto lending portfolio. Net charge-offs for the year ended December 31, 2022 were primarily attributable to a $0.7 million charge off on a commercial real estate loan.

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The table below summarizes the Corporation’s allowance for credit losses, non-accrual loans, and ratio of net charge-offs and recoveries to average loans outstanding by loan category at or for the year ended December 31, 2023, and the allowance for loan losses, non-accrual loans, and ratio of net charge-offs and recoveries to average loans outstanding by loan category at or for the year ended December 31, 2022, by category (in thousands):

ALLOWANCE AND LOAN CREDIT RATIOS BY LOAN CATEGORY
Balance at December 31, 2023	Allowance for credit losses		Allowance to loans1		Non-performing loans		Non-performing loans to loans1		Allowance to non-performing loans		Net charge-offs (recoveries) to average loans
Commercial and agricultural	$	5,055	1.91	%	$	1,930	0.73	%	261.92	%	0.10	%
Commercial mortgages	12,026		1.07	%	5,969		0.53	%	201.47	%	—	%
Residential mortgages	2,194		0.79	%	1,315		0.47	%	166.84	%	0.01	%
Consumer loans	3,242		1.05	%	1,197		0.39	%	270.84	%	0.21	%
Total	$	22,517	1.14	%	$	10,411	0.53	%	216.28	%	0.05	%
(1) Ratio represents a percentage of loan category.
Balance at December 31, 2022	Allowance for loan losses		Allowance to loans1		Non-performing loans		Non-performing loans to loans1		Allowance to non-performing loans		Net charge-offs (recoveries) to average loans
Commercial and agricultural	$	3,373	1.34	%	$	1,946	0.77	%	173.33	%	(0.01)	%
Commercial mortgages	11,576		1.16	%	3,933		0.39	%	294.33	%	0.08	%
Residential mortgages	1,845		0.65	%	986		0.35	%	187.12	%	(0.01)	%
Consumer loans	2,865		0.97	%	1,313		0.45	%	218.20	%	0.07	%
Total	$	19,659	1.07	%	$	8,178	0.45	%	240.39	%	0.05	%
(1) Ratio represents a percentage of loan category.
Consolidated Ratios at December 31,							2023		2022
Non-performing loans to total loans							0.53	%	0.45	%
Allowance for credit losses to total loans (1)							1.14	%	1.07	%
Allowance for credit losses including unfunded commitments to total loans (1)							1.19	%	1.07	%
Allowance for credit losses to non-performing loans (1)							216.28	%	240.39	%

________________________________________________________________________________________________________________________________________

(1) December 31, 2022 ratios reflect the Corporations's allowance for loan losses.

The decrease in the allowance to non-accrual loans was primarily due to a $2.2 million increase in non-accrual loans from year end 2022 to year end 2023, without an equivalent increase in the allowance allocated to non-accrual loans. This was primarily attributable to the addition of a $3.1 million commercial real estate relationship being placed on non-accrual, $2.2 million of which was well-collateralized, and required no specific allowance allocation. The increase in the allowance for credit losses to outstanding loans can be attributed to the $0.9 million specific allocation made to the allowance in relation to the aforementioned non-accruing commercial real estate relationship, a change in methodology to reflect the adoption of CECL, and changes in the CECL model during the year. Refer to Note 4 of the audited Consolidated Financial Statements appearing elsewhere in this report for components used in the credit ratios presented above.

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The table below summarizes the Corporation's credit loss experience for the years ended December 31, 2023 and 2022 (in thousands, except ratio data):

SUMMARY OF CREDIT LOSS EXPERIENCE
	2023		2022(1)
Allowance for credit losses at beginning of year	$	19,659	$	21,025
Impact of ASC 326 Adoption	374		—
Charge-offs:
Commercial and agricultural	281		20
Commercial mortgages	—		687
Residential mortgages	32		17
Consumer loans	1,070		770
Total Charge-Offs	1,383		1,494
Recoveries:
Commercial and agricultural	22		42
Commercial mortgages	4		3
Residential mortgages	—		40
Consumer loans	416		597
Total Recoveries	442		682
Net charge-offs	941		812
Provision (credit) for credit losses on-balance sheet exposure(2)	3,425		(554)
Allowance for credit losses at end of year	$	22,517	$	19,659

(1) December 31, 2022 reflects the Corporations's allowance for loan losses.

(2) Additional provision related to off-balance sheet exposure was $163 thousand for the year ended December 31, 2023.

Other Real Estate Owned

At December 31, 2023, OREO totaled $0.3 million compared to $0.2 million at December 31, 2022. There were three properties relating to residential mortgages and two properties relating to residential home equity loans added to OREO in 2023. Three residential properties were sold from OREO during 2023.

Deposits

The table below summarizes the Corporation’s deposit composition by segment at December 31, 2023, and 2022, and the dollar and percent change from December 31, 2022 to December 31, 2023 (in thousands, except percentages):

DEPOSITS
	2023				2022				2023 v. 2022
	Amount		% of Total		Amount		% of Total		$ Change		% Change
Non-interest-bearing demand deposits	$	653,166	26.9	%	$	733,329	31.4	%	$	(80,163)	(10.9)	%
Interest-bearing demand deposits	291,138		12.0	%	271,645		11.7	%	19,493		7.2	%
Insured money market deposits	623,714		25.7	%	640,840		27.5	%	(17,126)		(2.7)	%
Savings deposits	249,144		10.3	%	279,029		12.0	%	(29,885)		(10.7)	%
Certificates of deposit $250,000 or less	365,058		15.0	%	272,182		11.7	%	92,876		34.1	%
Certificates of deposit greater than $250,000	76,804		3.1	%	31,547		1.4	%	45,257		143.5	%
Brokered deposits	142,776		5.9	%	73,452		3.2	%	69,324		94.4	%
Other time deposits	27,627		1.1	%	25,203		1.1	%	2,424		9.6	%
Total deposits	$	2,429,427	100.0	%	$	2,327,227	100.0	%	$	102,200	4.4	%

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Deposits totaled $2.429 billion at December 31, 2023, compared with $2.327 billion at December 31, 2022, an increase of $102.2 million, or 4.4%. At December 31, 2023, demand deposit and insured money market deposits comprised 64.5% of total deposits compared with 70.7% at December 31, 2022.

The growth in deposits was attributable to an increase of $209.9 million in time deposits, or 52.2%, which includes customer time deposits and brokered deposits. Customer time deposits increased $140.6 million, and brokered deposits increased $69.3 million. Interest-bearing demand deposits increased $19.5 million. These increases were offset by decreases of $80.2 million in non-interest bearing demand deposits, $29.9 million in savings deposits, and $17.1 million in insured money market deposits, primarily due to the higher interest rate environment, and a shift in the mix of deposits towards higher cost interest-bearing accounts such as time deposits, when compared to the prior year

At December 31, 2023, public funds deposits totaled $293.1 million compared to $298.9 million at December 31, 2022. The Corporation has developed a program for the retention and management of public funds deposits. These deposits are from public entities, such as school districts and municipalities. There is a seasonal component to public deposit levels associated with annual tax collections. Public funds deposits generally increase at the end of the first and third quarters. Public funds deposit accounts above the FDIC insured limit are collateralized by municipal bonds and eligible government and government agency securities such as those issued by the FHLB, Fannie Mae, and Freddie Mac.

The table below summarizes the Corporation’s public funds deposit composition by segment (in thousands, except percentages) as of December 31, 2023 and 2022:

Public Funds:	2023			2022
Non-interest-bearing demand deposits	$	13,595		$	20,274
Interest-bearing demand deposits	63,370			62,219
Insured money market deposits	186,192			205,112
Savings deposits	7,708			8,120
Time deposits	22,196			3,125
Total public funds	$	293,061		$	298,850
Total deposits	$	2,429,427		$	2,327,227
Percentage of public funds to total deposits	12.1		%	12.8		%

The aggregate amount of the Corporation's outstanding uninsured deposits was $655.7 million, or 27.0% of total deposits, and $700.9 million, or 30.1% of total deposits, as of December 31, 2023 and 2022, respectively. As of December 31, 2023, the aggregate amount of the Corporation's outstanding certificates of deposit in amounts greater than $250,000 was $76.8 million. The table below presents the Corporation's scheduled maturity of those certificates as of December 31, 2023 (in thousands):

	Maturities
3 months or less	$	28,603
Over 3 through 6 months	36,017
Over 6 through 12 months	11,056
Over 12 months	1,128
Total	$	76,804

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

DEPOSITS BY DIVISION
	December 31,
	2023		2022		2021		2020		2019
Chemung Canal Trust Company*	$	2,048,465	$	1,892,020	$	1,739,826	$	1,686,370	$	1,317,225
Capital Bank Division	380,962		435,207		415,607		351,404		254,913
Total deposits	$	2,429,427	$	2,327,227	$	2,155,433	$	2,037,774	$	1,572,138
*All deposits, excluding those originated by the Capital Bank Division, and including brokered deposits.

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In addition to consumer, commercial and public deposits, other sources of funds include brokered deposits. The Regulatory Relief Act changed the definition of brokered deposits, such that subject to certain conditions, reciprocal deposits of another depository institution obtained through a deposit placement network for purposes of obtaining maximum deposit insurance would not be considered brokered deposits subject to the FDIC's brokered-deposit regulations. This applies to the Corporation's participation in the CDARS and ICS programs. The CDARS and ICS programs involve a network of financial institutions that exchange funds among members in order to ensure FDIC insurance coverage on customer deposits above the single institution limit. Using a sophisticated matching system, funds are exchanged on a dollar-for-dollar basis, so that the equivalent of an original deposit comes back to the originating institution. Deposits placed in the CDARS and ICS programs were $424.6 million and $441.6 million as of December 31, 2023 and 2022, respectively.

The Corporation’s deposit strategy is to fund the Bank with stable, low-cost deposits, primarily checking account deposits and other low interest-bearing deposit accounts. A checking account is the driver of a banking relationship and consumers consider the bank where they have their checking account as their primary bank. These customers will typically turn to their primary bank first when in need of other financial services. Strategies that have been developed and implemented to generate these deposits include: (i) acquire deposits by entering new markets through denovo branching, (ii) training branch employees to identify and meet client financial needs with Bank products and services, (iii) link business and consumer loans to a primary checking account at the Bank, (iv) aggressively promote direct deposit of client’s payroll checks or benefit checks and (v) constantly monitor the Corporation’s pricing strategies to ensure competitive products and services. The Corporation also considers brokered deposits to be an element of its deposit strategy and anticipates continued use of brokered deposits as a secondary source of funding to support asset growth.

Information regarding deposits is included in Note 8 to the consolidated financial statements appearing elsewhere in this report.

Borrowings

FHLBNY overnight advances were $31.9 million and $95.8 million at December 31, 2023 and 2022, respectively, decreasing $63.9 million at December 31, 2023 when compared to December 31, 2022. For each year ended December 31, 2023, and 2022 respectively, the average outstanding balance of borrowings that mature in one year or less did not exceed 30% of shareholders' equity. There were no FHLBNY or FRB term advances as of and for the years ended December 31, 2023, and 2022.

Information regarding FHLBNY advances is included in Note 9 of the audited Consolidated Financial Statements appearing elsewhere in this report. There were no securities sold under agreements to repurchase as of and for the years ended December 31, 2023, or 2022.

Derivatives

The Corporation offers interest rate swap agreements to qualified commercial lending customers. These agreements allow the Corporation’s customers to effectively fix the interest rate on a variable rate loan by entering into a separate agreement. Simultaneous with the execution of such an agreement with a customer, the Corporation enters into a matching interest rate swap agreement with an unrelated third party provider, which allows the Corporation to continue to receive the variable rate under the loan agreement with the customer. The agreement with the third party is not designated as a hedge contract, therefore changes in fair value are recorded through other non-interest income. Assets and liabilities associated with the agreements are recorded in Interest rate swap assets and Interest rate swap liabilities on the Consolidated Balance Sheets. Gains and losses are recorded as other non-interest income. The Corporation is exposed to credit loss equal to the fair value of the interest rate swaps, not the notional amount of the derivatives, in the event of nonperformance by the counterparty to the interest rate swap agreements. Additionally, the swap agreements are free-standing derivatives and are recorded at fair value in the Corporation's Consolidated Balance Sheets, which typically involves a day one gain. Since the terms of the two interest rate swap agreements are identical, the income statement impact to the Corporation is limited to the day one gain and an allowance for credit loss exposure, in the event of nonperformance. The Corporation recognized $0.3 million in swap income for each of the years ended December 31, 2023 and 2022, respectively.

The Corporation also participates in the credit exposure of certain interest rate swaps in which it participates in the related commercial loan. The Corporation receives an upfront fee for participating in the credit exposure of the interest rate swap and recognizes the fee to other non-interest income immediately. The Corporation is exposed to its share of the credit loss equal to the fair value of the derivatives in the event of nonperformance by the counter-party of the interest rate swap. The Corporation determines the fair value of the credit loss exposure using historical losses of the loan category associated with the credit exposure.

Information regarding derivatives is included in Note 11 to the consolidated financial statements appearing elsewhere in this report.

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Shareholders’ Equity

Total shareholders’ equity was $195.2 million at December 31, 2023, compared with $166.4 million at December 31, 2022, an increase of $28.9 million, or 17.3%. The increase in shareholders' equity was due primarily to an increase of $18.1 million in retained earnings and a decrease of $9.2 million in accumulated other comprehensive loss. The increase in retained earnings was due primarily to net income of $25.0 million, offset by $5.9 million in dividends declared and a $1.1 million one-time adjustment due to the implementation of CECL. The improvement in accumulated other comprehensive loss was primarily due to improvements to the fair value of the available for sale securities portfolio, when compared to the prior year.

Treasury stock decreased $1.1 million primarily due to the Corporation's issuance of shares related to the Corporation's employee benefit plans. Total shareholders’ equity to total assets ratio was 7.20% at December 31, 2023 compared with 6.29% at December 31, 2022. Tangible equity to tangible assets ratio was 6.45% at December 31, 2023, compared with 5.51% at December 31, 2022.1

The Bank is subject to the capital adequacy guidelines of the Federal Reserve, which establish a framework for the classification of financial institutions into five categories: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. As of December 31, 2023, the Bank’s capital ratios were in excess of those required to be considered well-capitalized under regulatory capital guidelines. A comparison of the Bank’s actual capital ratios to the ratios required to be adequately or well-capitalized at December 31, 2023 and 2022, is included in Footnote 20 of the audited Consolidated Financial Statements. For more information regarding current capital regulations see Part I-“Business-Supervision and Regulation-Regulatory Capital Requirements.”

Cash dividends declared during 2023 totaled $5.9 million, or $1.24 per share, compared to $5.8 million, or $1.24 per share in 2022. Dividends declared during 2023 amounted to 23.41% of net income compared to 20.15% of net income for 2022. Management seeks to continue generating sufficient capital internally, while continuing to pay dividends to the Corporation’s shareholders.

When shares of the Corporation become available in the market, the Corporation may purchase them after careful consideration of the Corporation’s liquidity and capital positions. Purchases may be made from time to time on the open market or in privately negotiated transactions at the discretion of management. On January 8, 2021, the Corporation announced that the Board of Directors approved a stock repurchase program. Under the repurchase program, the Corporation may repurchase up to 250,000 shares of its common stock, or approximately 5% of its then outstanding shares. The repurchase program permits shares to be repurchased in open market or privately negotiated transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Act of 1934. As of December 31, 2023, the Corporation repurchased a total of 49,184 shares of common stock at a total cost of $2.0 million under the repurchase program at the weighted average cost of $40.42 per share. The remaining buyback authority under the share repurchase program was 200,816 shares as of December 31, 2023.

On June 22, 2023, the Corporation filed with the SEC a Form S-3 Registration Statement under the Securities Act of 1933. The Corporation's Board of Directors approved the filing with the SEC of a Shelf Registration Statement to register for sale from time to time up to $75 million of the following securities: (i) shares of common stock; (ii) unsecured debt securities, which may consist of notes, debentures or other evidences of indebtedness; (iii) warrants; (iv) purchase contracts; (v) units consisting of any combination of the foregoing; and (vi) subscription rights to purchase shares of common stock or debt securities. The SEC declared the registration statement effective on July 13, 2023.

1 See the GAAP to Non-GAAP reconciliation on pages 63-65.

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Liquidity

Liquidity management involves the ability to meet the cash flow requirements of deposit clients, borrowers, and the operating, investing, and financing activities of the Corporation. The Corporation uses a variety of resources to meet its liquidity needs. These include short term investments, cash flow from lending and investing activities, core-deposit growth and non-core funding sources, such as time deposits of $250,000 or more, brokered deposits, securities sold under agreements to repurchase and other borrowings.

The Corporation is a member of the FHLBNY, which allows it to access borrowings which enhance management's ability to satisfy future liquidity needs. The Bank has pledged $254.6 million and $254.4 million of residential mortgage and home equity loans under a blanket lien arrangement at December 31, 2023 and 2022, respectively, as collateral for future borrowings. Based on this available collateral and current advances outstanding, the Corporation was eligible to borrow up to a total of $225.3 million, and $195.6 million at December 31, 2023 and 2022, respectively. FHLBNY overnight borrowing was $31.9 million and $95.8 million at December 31, 2023 and 2022, respectively. In addition, the Corporation had a total of $60.0 million of unsecured lines of credit with five different financial institutions, all of which were available at December 31, 2023.

On March 12, 2023, the Treasury Department, Federal Reserve, and FDIC jointly announced a new liquidity program, the Bank Term Funding Program (BTFP), in response to the failure of two banks earlier that week. Under the BTFP, institutions can pledge certain securities (i.e., securities eligible for purchase by the Federal Reserve Banks in open market operations) for the par value of the securities at a borrowing rate of ten basis points over the one-year overnight index swap rate. There will be no fees with the advance. Certain U.S. federally insured depository institutions are eligible to participate in the BTFP. The Bank is eligible to participate. Subsequent to December 31, 2023, the Corporation received approval for, and has pledged collateral at the Federal Reserve for the purpose of utilizing the BTFP. The BTFP expired on March 11, 2024. Also available to the Corporation is the Discount Window Lending provided by the Federal Reserve Bank.

The Corporation has a detailed Funds Management Policy that includes sections on liquidity measurement and management, and a Liquidity Contingency Plan that provide for the prompt and comprehensive response to unexpected demands for liquidity. This policy and plan are established and revised as needed by the management and Board ALCO committees. The ALCO is responsible for measuring liquidity, establishing liquidity targets and implementing strategies to achieve selected targets. The ALCO is responsible for coordinating activities across the Corporation to ensure that prudent levels of contingent or standby liquidity are available at all times. Based on the ongoing assessment of the liquidity considerations, management believes the Corporation’s sources of funding meet anticipated funding needs.

Consolidated Cash Flows Analysis

The table below summarizes the Corporation's cash flows on a direct basis, for the years indicated (in thousands):

CONSOLIDATED SUMMARY OF CASH FLOWS
	Years Ended December 31,
(in thousands)	2023		2022
Net cash provided by operating activities	$	30,881	$	35,047
Net cash provided (used) by investing activities	(82,381)		(252,620)
Net cash provided (used) by financing activities	32,478		246,461
Net increase (decrease) in cash and cash equivalents	$	(19,022)	$	28,888

Operating activities

The Corporation believes cash flows from operations, available cash balances and its ability to generate cash through borrowings are sufficient to fund the Corporation’s operating liquidity needs. Cash provided by operating activities in the years ended December 31, 2023 and 2022 predominantly resulted from net income after non-cash operating adjustments.

Investing activities

Cash used in investing activities during the years ended December 31, 2023 and 2022 predominantly resulted from a net increase in loans, offset by maturities, and principal collected on securities available for sale.

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Financing activities

Cash provided by financing activities during the years ended December 31, 2023 and 2022 resulted primarily from an increase in certificate of deposits, brokered deposits, and FHLBNY overnight advances, offset by the payment of dividends to shareholders.

Off-balance Sheet Arrangements

In the normal course of operations, the Corporation engages in a variety of financial transactions that, in accordance with GAAP are not recorded in the financial statements. The Corporation is also a party to certain financial instruments with off balance sheet risk such as commitments under standby letters of credit, unused portions of lines of credit, commitments to fund new loans, interest rate swaps, and risk participation agreements. The Corporation's policy is to record such instruments when funded. These transactions involve, to varying degrees, elements of credit, interest rate, and liquidity risk. Such transactions are generally used by the Corporation to manage clients' requests for funding and other client needs.

The table below shows the Corporation’s off-balance sheet arrangements as of December 31, 2023 (in thousands):

COMMITMENT MATURITY BY PERIOD
	Total		2024		2025-2026		2027-2028		2029 and thereafter
Standby letters of credit	$	11,317	$	7,476	$	774	$	3,047	$	20
Unused portions of lines of credit (1)	251,777		251,777		—		—		—
Commitments to fund new loans	102,599		102,599		—		—		—
Total	$	365,693	$	361,852	$	774	$	3,047	$	20
(1) Not included in this total are unused portions of home equity lines of credit, credit card lines and consumer overdraft protection lines of credit, since no contractual maturity dates exist for these types of loans. Commitments to outside parties under these lines of credit were $62.9 million, $13.7 million and $7.5 million, respectively, at December 31, 2023.

Capital Resources

The Bank is subject to regulatory capital requirements administered by federal banking agencies. As a result of the Regulatory Relief Act, the FRB amended its small bank holding company and savings and loan holding company policy statement to provide that holding companies with consolidated assets of less than $3 billion that are (i) not engaged in significant non-banking activities, (ii) do not conduct significant off-balance sheet activities, and (iii) do not have a material amount of SEC-registered debt or equity securities, other than trust preferred securities, that contribute to an organization’s complexity, are not subject to regulatory capital requirements. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Under Basel III rules, the Bank must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is 2.50%. Organizations that fail to maintain the minimum capital conservation buffer could face restrictions on capital distributions or discretionary bonus payments to executive officers. The net unrealized gain or loss on available for sale securities and changes in the funded status of the defined benefit pension plan and other benefit plans are not included in computing regulatory capital.

Pursuant to the Regulatory Relief Act, the FRB finalized a rule that established a community bank leverage ratio (tier 1 capital to average consolidated assets) at 9% for institutions under $10 billion in assets that such institutions may elect to utilize in lieu of the general applicable risk-based capital requirements under Basel III. Such institutions that meet the community bank leverage ratio and certain other qualifying criteria will automatically be deemed to be well-capitalized. As of December 31, 2023 the Bank has not elected to use the community bank leverage ratio.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, under capitalized, significantly under capitalized, and critically under capitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. Management believes that, as of December 31, 2023 and December 31, 2022 the Corporation and Bank met all capital adequacy requirements to which they were subject. As of December 31, 2018, the Corporation is no longer subject to FRB consolidated capital requirements applicable to bank holding companies, which are similar to those applicable to the Bank, until it reaches $3.0 billion in assets.

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As of December 31, 2023, the most recent notification from the Federal Reserve Bank of New York categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based, common equity Tier 1 risk-based and Tier 1 leverage ratios. There have been no conditions or events since that notification that management believes have changed the Bank's capital category. Additionally, the Bank exceeded the capital conservation buffer above the adequately capitalized risk-based capital ratios, as of December 31, 2023.

The regulatory capital ratios as of December 31, 2023 and 2022 were calculated under Basel III rules. There is no threshold for well-capitalized status for bank holding companies. Refer to Note 19 of the audited Consolidated Financial Statements appearing elsewhere in this report for a table summarizing the Corporation's and the Bank's actual and required regulatory capital ratios. For more information regarding current capital regulations see Part I-“Business-Supervision and Regulation-Regulatory Capital Requirements.”

Dividend Restrictions

The Corporation’s principal source of funds for dividend payments is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net income, combined with the retained net income of the preceding two years. At December 31, 2023, the Bank could, without prior approval, declare dividends of approximately $59.4 million.

Adoption of New Accounting Standards

For a discussion of the impact of recently issued accounting standards, please see Note 1 to the Corporation's audited Consolidated Financial Statements which begins on page F-10.

Explanation and Reconciliation of the Corporation’s Use of Non-GAAP Measures

The Corporation prepares its Consolidated Financial Statements in accordance with GAAP; these financial statements appear on pages F-4 through F-9. That presentation provides the reader with an understanding of the Corporation’s results that can be tracked consistently from year-to-year and enables a comparison of the Corporation’s performance with other companies’ GAAP financial statements.

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

The SEC has adopted Regulation G, which applies to all public disclosures, including earnings releases, made by registered companies that contain “non-GAAP financial measures.” Under Regulation G, companies making public disclosures containing non-GAAP financial measures must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure and a statement of the Corporation’s reasons for utilizing the non-GAAP financial measure as part of its financial disclosures. The SEC has exempted from the definition of “non-GAAP financial measures” certain commonly used financial measures that are not based on GAAP. When these exempted measures are included in public disclosures, supplemental information is not required. The following measures used in this Report, which are commonly utilized by financial institutions, have not been specifically exempted by the SEC and may constitute "non-GAAP financial measures" within the meaning of the SEC's rules, although we are unable to state with certainty that the SEC would so regard them.

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Fully Taxable Equivalent Net Interest Income and Net Interest Margin

Net interest income is commonly presented on a tax-equivalent basis. That is, to the extent that some component of the institution's net interest income, which is presented on a before-tax basis, is exempt from taxation (e.g., is received by the institution as a result of its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is added to the actual before-tax net interest income total. This adjustment is considered helpful in comparing one financial institution's net interest income to that of other institutions or in analyzing any institution’s net interest income trend line over time, to correct any analytical distortion that might otherwise arise from the fact that financial institutions vary widely in the proportions of their portfolios that are invested in tax-exempt securities, and that even a single institution may significantly alter over time the proportion of its own portfolio that is invested in tax-exempt obligations. Moreover, net interest income is itself a component of a second financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average interest-earning assets. For purposes of this measure as well, fully taxable equivalent net interest income is generally used by financial institutions, as opposed to actual net interest income, again to provide a better basis of comparison from institution to institution and to better demonstrate a single institution’s performance over time. The Corporation follows these practices.

(in thousands, except ratio data)	As of or for the Years Ended December 31,
Net Interest Margin - Fully Taxable Equivalent	2023			2022
Net interest income (GAAP)	$	74,457		$	74,179
Fully taxable equivalent adjustment	366			425
Fully taxable equivalent net interest income (non-GAAP)	$	74,823		$	74,604
Average interest-earning assets (GAAP)	$	2,621,251		$	2,444,287
Net interest margin - fully taxable equivalent (non-GAAP)	2.85		%	3.05		%

Efficiency Ratio

The unadjusted efficiency ratio is calculated as non-interest expense divided by total revenue (net interest income and non-interest income). The adjusted efficiency ratio is a non-GAAP financial measure which represents the Corporation’s ability to turn resources into revenue and is calculated as non-interest expense divided by total revenue (fully taxable equivalent net interest income and non-interest income), adjusted for one-time occurrences and amortization. This measure is meaningful to the Corporation, as well as investors and analysts, in assessing the Corporation’s productivity measured by the amount of revenue generated for each dollar spent.

(in thousands, except ratio data)	As of or for the Years Ended December 31,
Efficiency Ratio	2023			2022
Net interest income (GAAP)	$	74,457		$	74,179
Fully taxable equivalent adjustment	366			425
Fully taxable equivalent net interest income (non-GAAP)	$	74,823		$	74,604
Non-interest income (GAAP)	$	24,549		$	21,436
Less: net (gains) losses on security transactions	39			—
Less: recognition of employee retention tax credit	(2,370)			—
Adjusted non-interest income (non-GAAP)	$	22,218		$	21,436
Non-interest expense (GAAP)	$	64,243		$	59,280
Less: amortization of intangible assets	—			(15)
Adjusted non-interest expense (non-GAAP)	$	64,243		$	59,265
Efficiency ratio (unadjusted)	64.89		%	62.00		%
Efficiency ratio (adjusted)	66.20		%	61.71		%

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Tangible Equity and Tangible Assets (Year-End)

Tangible equity, tangible assets, and tangible book value per share are each non-GAAP financial measures. Tangible equity represents the Corporation’s stockholders’ equity, less goodwill and intangible assets. Tangible assets represents the Corporation’s total assets, less goodwill and other intangible assets. Tangible book value per share represents the Corporation’s equity divided by common shares at year-end. These measures are meaningful to the Corporation, as well as investors and analysts, in assessing the Corporation’s use of equity.

(in thousands, except per share and ratio data)	As of or for the Years Ended December 31,
TANGIBLE EQUITY AND TANGIBLE ASSETS (YEAR END)	2023			2022
Total shareholders' equity (GAAP)	$	195,241		$	166,388
Less: intangible assets	(21,824)			(21,824)
Tangible equity (non-GAAP)	$	173,417		$	144,564
Total assets (GAAP)	$	2,710,529		$	2,645,553
Less: intangible assets	(21,824)			(21,824)
Tangible assets (non-GAAP)	$	2,688,705		$	2,623,729
Total equity to total assets at end of year (GAAP)	7.20		%	6.29		%
Book value per share (GAAP)	$	41.07		$	35.32
Tangible equity to tangible assets at end of year (non-GAAP)	6.45		%	5.51		%
Tangible book value per share (non-GAAP)	$	36.48		$	30.69

Tangible Equity (Average)

Average tangible equity and return on average tangible equity are each non-GAAP financial measures. Average tangible equity represents the Corporation’s average stockholders’ equity, less average goodwill and intangible assets for the year. Return on average tangible equity measures the Corporation’s earnings as a percentage of average tangible equity. These measures are meaningful to the Corporation, as well as investors and analysts, in assessing the Corporation’s use of equity.

(in thousands, except ratio data)	As of or for the Years Ended December 31,
TANGIBLE EQUITY (AVERAGE)	2023			2022
Total average shareholders' equity (GAAP)	$	177,187		$	180,684
Less: average intangible assets	(21,824)			(21,827)
Average tangible equity (non-GAAP)	$	155,363		$	158,857
Return on average equity (GAAP)	14.11		%	15.93		%
Return on average tangible equity (non-GAAP)	16.09		%	18.12		%

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Adjustments for Certain Items of Income or Expense

In addition to disclosures of certain GAAP financial measures, including net income, EPS, ROA, and ROE, we may also provide comparative disclosures that adjust these GAAP financial measures for a particular year by removing from the calculation thereof the impact of certain transactions or other material items of income or expense occurring during the year, including certain nonrecurring items. The Corporation believes that the resulting non-GAAP financial measures may improve an understanding of its results of operations by separating out any such transactions or items that may have had a disproportionate positive or negative impact on the Corporation’s financial results during the particular year in question. In the Corporation’s presentation of any such non-GAAP (adjusted) financial measures not specifically discussed in the preceding paragraphs, the Corporation supplies the supplemental financial information and explanations required under Regulation G.

(in thousands, except per share and ratio data)	As of or for the Years Ended December 31,
NON-GAAP NET INCOME	2023			2022
Reported net income (loss) (GAAP)	$	25,000		$	28,783
Net (gains) losses on security transactions (net of tax)	29			—
Recognition of employee retention tax credit	(1,873)			—
Net income (non-GAAP)	$	23,156		$	28,783
Average basic and diluted shares outstanding	4,732			4,693
Reported basic and diluted earnings per share (GAAP)	$	5.28		$	6.13
Reported return on average assets (GAAP)	0.94		%	1.15		%
Reported return on average equity (GAAP)	14.11		%	15.93		%
Basic and diluted earnings per share (non-GAAP)	$	4.89		$	6.13
Return on average assets (non-GAAP)	0.87		%	1.15		%
Return on average equity (non-GAAP)	13.07		%	15.93		%

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ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Management considers interest rate risk to be the most significant market risk for the Corporation. Market risk is the risk of loss from adverse changes in market prices and rates. Interest rate risk is the exposure to adverse changes in the net income of the Corporation as a result of changes in interest rates.

The Corporation’s primary earnings source is net interest income, which is affected by changes in the level of interest rates, the relationship between rates, the impact of interest rate fluctuations on asset prepayments, the level and composition of deposits and liabilities, and credit quality of interest-earning assets.

The Corporation’s objectives in its asset and liability management are to maintain a strong, stable net interest margin, to utilize its capital effectively without taking undue risks, to maintain adequate liquidity, and to reduce vulnerability of its operations to changes in interest rates. The Corporation's ALCO has the strategic responsibility for setting the policy guidelines on acceptable exposure to interest rate risk. These guidelines contain specific measures and limits regarding the risks, which are monitored on a regular basis. The ALCO is made up of the President and Chief Executive Officer, the Chief Financial Officer, the Asset Liability Management Officer, and other officers representing key functions.

Interest rate risk is the risk that net interest income will fluctuate as a result of a change in interest rates. It is the assumption of interest rate risk, along with credit risk, that drives the net interest margin of a financial institution. For that reason, the ALCO has established tolerance limits based upon various basis point changes in interest rates, with appropriate floors set for interest-bearing liabilities. At December 31, 2023, it is estimated that immediate decreases of 100-basis points and 200-basis points in interest rates would positively impact the next 12 months net interest income by 4.07% and 7.27%, respectively, while immediate increases of 100-basis points and 200-basis points would positively impact the next 12 months net interest income by 1.28% and 2.53%, respectively. All scenarios are within the Corporation's policy guidelines.

Change in interest rates	Percentage Increase (Decrease) in Net Interest Income over 12 Months
200 basis points decrease	7.27%
100 basis points decrease	4.07%
100 basis points increase	1.28%
200 basis points increase	2.53%

A related component of interest rate risk is the expectation that the market value of the Corporation’s capital account will fluctuate with changes in interest rates. This component is a direct corollary to the earnings-impact component: an institution exposed to earnings erosion is also exposed to shrinkage in market value. At December 31, 2023, it is estimated that immediate decreases of 100-basis points and 200-basis points in interest rates would positively impact the market value of the Corporation’s capital account by 4.99% and 8.32%, respectively. Immediate increases of 100-basis points and 200-basis points in interest rates would positively impact the market value by 0.09% and 0.36%, respectively, which are within the Corporation’s policy guidelines.

Change in interest rates	Percentage Increase (Decrease) in Present Value of Corporation's Equity
200 basis points decrease	8.32%
100 basis points decrease	4.99%
100 basis points increase	0.09%
200 basis points increase	0.36%

Management does recognize the need for certain hedging strategies during periods of anticipated higher fluctuations in interest rates and the Funds Management Policy provides for limited use of certain derivatives in asset liability management.

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Credit Risk

The Corporation manages credit risk consistent with state and federal laws governing the making of loans through written policies and procedures; loan review to identify loan problems at the earliest possible time; collection procedures (continued even after a loan is charged off); an adequate allowance for credit losses; and continuing education and training to ensure lending expertise. Diversification by loan product is maintained through offering commercial loans, 1-4 family mortgages, and a full range of consumer loans.

The Corporation monitors its loan portfolio carefully. The Loan Committee of the Corporation's Board of Directors is designated to receive required loan reports, oversee loan policy, and approve loans above authorized individual and Senior Loan Committee lending limits. The Senior Loan Committee, consisting of the President and Chief Executive Officer, Chief Financial Officer and Treasurer (non-voting member), Chief Credit and Risk Officer, Business Client Division Manager, Divisional President, and Commercial Loan Manager, implements the Board-approved loan policy.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements listed in Part IV, Item 15 are filed as part of this report and appear on pages F-1 through F-65.

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ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

Item 9A.  CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

The Corporation's management, with the participation of our Chief Executive Officer, who is the Corporation's principal executive officer, and our Chief Financial Officer and Treasurer, who is the Corporation's principal financial officer, evaluated the effectiveness of the Corporation's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Exchange Act) as of December 31, 2023. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer and Treasurer have concluded that the Corporation's disclosure controls and procedures are effective as of December 31, 2023.

(b) Management's Report on Internal Control over Financial Reporting

We, as members of management of the Corporation, are responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Corporation's internal control over financial reporting is a process designed to provide reasonable assurance to the Corporation's management and Board of Directors regarding the reliability of financial reporting and the preparation of the Corporation's financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Corporation, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Corporation are being made only in accordance with authorizations of management and directors of the Corporation, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Corporation's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

As of December 31, 2023 management assessed the effectiveness of the Corporation's internal control over financial reporting based on criteria established in the 2013 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). The objective of this assessment was to determine whether the Corporation's internal control over financial reporting was effective as of December 31, 2023. Based on the assessment, we assert that the Corporation maintained effective internal control over financial reporting as of December 31, 2023 based on the specified criteria.

(c) Changes in Internal Control over Financial Reporting

During the fourth quarter of 2023, there have been no changes in the Corporation’s internal control over financial reporting that have materially affected, or that are reasonably likely to material affect, the Corporation’s internal control over financial reporting.

/s/ Anders M. Tomson	/s/ Dale M. McKim, III
Anders M. Tomson	Dale M. McKim, III
President and Chief Executive Officer	Chief Financial Officer and Treasurer
March 13, 2024	March 13, 2024

Item 9B. OTHER INFORMATION

During the fourth quarter of 2023, none of our directors or officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Corporation securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as that term is used in SEC regulations.

Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

None.

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PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information responsive to this Item 10 is incorporated herein by reference to the Corporation's definitive proxy statement for its 2024 Annual Meeting of Shareholders, which will be filed with the SEC within 120 days after the Corporation’s 2023 fiscal year end.

ITEM 11.  EXECUTIVE COMPENSATION

Information responsive to this Item 11 is incorporated herein by reference to the Corporation's definitive proxy statement for its 2024 Annual Meeting of Shareholders, which will be filed with the SEC within 120 days after the Corporation’s 2023 fiscal year end.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND RELATED STOCKHOLDER MATTERS

Information responsive to this Item 12 is incorporated herein by reference to the Corporation's definitive proxy statement for its 2024 Annual Meeting of Shareholders, which will be filed with the SEC within 120 days after the Corporation’s 2023 fiscal year end.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information responsive to this Item 13 is incorporated herein by reference to the Corporation's definitive proxy statement for its 2024 Annual Meeting of Shareholders, which will be filed with the SEC within 120 days after the Corporation’s 2023 fiscal year end.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information responsive to this Item 14 is incorporated herein by reference to the Corporation's definitive proxy statement for its 2024 Annual Meeting of Shareholders, which will be filed with the SEC within 120 days after the Corporation’s 2023 fiscal year end.

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PART IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) (1)    The following consolidated financial statements of the Corporation appear on pages F-1 through F-65 of this report and are incorporated in Part II, Item 8:

Report of Independent Registered Public Accounting Firm-Crowe LLP PCAOB #173

Consolidated Financial Statements:

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Income for the two years ended December 31, 2023

Consolidated Statements of Comprehensive Income (Loss) for the two years ended December 31, 2023

Consolidated Statements of Shareholders' Equity for the two years ended December 31, 2023

Consolidated Statements of Cash Flows for the two years ended December 31, 2023

Notes to Consolidated Financial Statements

(2)Financial statement schedules have been omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or the Notes thereto under Item 8, "Financial Statements and Supplementary Data".

(b)                          The following exhibits are either filed with this Form 10-K or are incorporated herein by reference.

The Corporation's Securities Exchange Act file number is 000-13888.

Exhibit	The following exhibits are either filed with this Form 10-K or are incorporated herein by reference.  The Corporation’s Securities Exchange Act file number is 000-13888.
3.1	Certificate of Incorporation of Chemung Financial Corporation dated December 20, 1984 (as incorporated by reference to Exhibit 3.1 to Registrant's Form 10-K for the year ended December 31, 2007 and filed with the Commission on March 13, 2008).
3.2	Certificate of Amendment to the Certificate of Incorporation of Chemung Financial Corporation, dated March 28, 1988 (as incorporated by reference to Exhibit 3.2 to Registrant's Form 10-K for the year ended December 31, 2007 and filed with the Commission on March 13, 2008).
3.3	Certificate of Amendment to the Certificate of Incorporation of Chemung Financial Corporation, dated May 13, 1998 (as incorporated by reference to Exhibit 3.4 to Registrant’s Form 10-K for the year ended December 31, 2005 and filed with the Commission on March 15, 2006).
3.4	Amended and Restated Bylaws of Chemung Financial Corporation, as amended August 17, 2022 (as incorporated by reference to Exhibit 3.2 to Registrant’s Form 8-K and filed with the Commission on August 17, 2022).
4.1	Specimen Stock Certificate (filed as Exhibit 4.1 to Registrant's Form 10-K for the year ended December 31, 2002 and incorporated herein by reference).
4.2	Description of Common Stock Registered Under Section 12 of the Securities Exchange Act of 1934, filed herewith (as incorporated by reference to Exhibit 4.2 to Registrant's Form 10-K for the year ended December 31, 2019 and filed with the Commission on March 12, 2020).
10.1	Chemung Financial Corporation 2014 Omnibus Plan and Component Plans (Chemung Financial Corporation Restricted Stock Plan, Chemung Financial Corporation Incentive Compensation Plan, Chemung Financial Corporation Directors’ Compensation Plan and Chemung Financial Corporation/Chemung Canal Trust Company Directors’ Deferred Fee Plan) (filed as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5 to Registrant’s Form S-8 filed with the Commssion on January 27, 2015 and incorporated herein by reference).
10.2	Change of Control Agreement dated December 19, 2018 between Chemung Canal Trust Company and Anders M. Tomson, President and Chief Executive Officer (filed as Exhibit 10.1 to Registrant’s Form 8-K filed with the Commission on December 19, 2018 and incorporated herein by reference).
10.3	Change of Control Agreement dated December 18, 2019 between Chemung Canal Trust Company and Karl F. Krebs, Executive Vice President and Chief Financial Officer (filed as Exhibit 10.1 to Registrant’s Form 8-K filed with the Commission on December 23, 2019 and incorporated herein by reference).
10.4	Change of Control Agreement dated December 18, 2019 between Chemung Canal Trust Company and Peter K. Cosgrove, Executive Vice President and Chief Credit Officer, filed herewith.*

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10.5	Change of Control Agreement dated December 18, 2019 between Chemung Canal Trust Company and Daniel D. Fariello, President of Capital Bank Division (filed as Exhibit 10.2 to Registrant’s Form 8-K filed with the Commission on December 23, 2019 and incorporated herein by reference).
10.6	Change of Control Agreement dated December 18, 2019 between Chemung Canal Trust Company and Loren D. Cole, Executive Vice President and Chief Information Officer, (as incorporated by reference to Exhibit 10.8 to Registrant's Form 10-K for the year ended December 31, 2019 and filed with the Commission on March 12, 2020).
10.7	Chemung Financial Corporation 2021 Equity Incentive Plan (filed as Exhibit 10.1 to Registrant's Form 8-K filed with the Commission on June 8, 2021 and incorporated herein by reference).
10.8	Consent Order between Chemung Canal Trust Company and the New York State Department of Financial Services dated June 24, 2021 (filed as Exhibit 10.1 to Registrant's Form 8-K filed with the Commission on June 29, 2021 and incorporated herein by reference).
10.9	Form of Incentive Stock Option Award Agreement (filed as Exhibit 10.2 to Registrant's Registration Statement on Form S-8 (333-257227) filed with the Commission on June 21, 2021 and incorporated herein by reference).
10.10	Form of Non-Qualified Stock Option Award Agreement (filed as Exhibit 10.3 to Registrant's Registration Statement on Form S-8 (333-257227) filed with the Commission on June 21, 2021 and incorporated herein by reference).
10.11	Form of Restricted Stock Award Agreement (filed as Exhibit 10.4 to Registrant's Registration Statement on Form S-8 (333-257227) filed with the Commission on June 21, 2021 and incorporated herein by reference).
10.12	Chemung Canal Trust Company Defined Contribution Supplemental Executive Retirement Plan, (as incorporated by reference to Exhibit 10.12 to Registrant's Form 10-K for the year ended December 31, 2021 and filed with the Commission on March 23, 2022).
10.13	Chemung Canal Trust Company Defined Contribution Supplemental Executive Retirement Plan-Amendment Number One, as amended on November 16, 2022 (filed as Exhibit 10.1 to Registrant's Form 8-K filed with the Commission on November 21, 2022 and incorporated herein by reference).
10.14	Change of Control Agreement dated June 2, 2023 between Chemung Canal Trust Company and Dale M. McKim, III, Executive Vice President, Chief Financial Officer and Treasurer, (filed as Exhibit 10.1 to Registrant's Form 8-K filed with the Commission on June 2, 2023 and incorporated herein by reference).
10.15	Post-Employment Consulting Agreement between Chemung Canal Trust Company and Karl F. Krebs, former Executive Vice President, Chief Financial Officer and Treasurer, (filed as Exhibit 10.1 to Registrant's Form 8-K filed with the Commission on June 29, 2023 and incorporated herein by reference).
21	Subsidiaries of the Registrant.*
23.0	Consent of Crowe LLP, Independent Registered Public Accounting Firm.*
31.1	Certification of President and Chief Executive Officer of the Registrant pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.*
31.2	Certification of Treasurer and Chief Financial Officer of the Registrant pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.*
32.1	Certification of President and Chief Executive Officer of the Registrant pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 19 U.S.C. §1350.*
32.2	Certification of Treasurer and Chief Financial Officer of the Registrant pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 19 U.S.C. §1350.*
97	Policy Relating to Recovery of Erroneously Awarded Compensation, filed herewith.*
101.INS	Instance Document
101.SCH	XBRL Taxonomy Schema*
101.CAL	XBRL Taxonomy Calculation Linkbase*
101.DEF	XBRL Taxonomy Definition Linkbase*
101.LAB	XBRL Taxonomy Label Linkbase*
101.PRE	XBRL Taxonomy Presentation Linkbase*
*	Filed herewith.

ITEM 16.  10-K SUMMARY

None.

72

CHEMUNG FINANCIAL CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Pages F-1 to F-65

	Page
Report of Independent Registered Public Accounting Firm-Crowe LLP PCAOB #173	F-1
Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 2023 and 2022	F-4
Consolidated Statements of Income for the two years ended December 31, 2023	F-5
Consolidated Statements of Comprehensive Income (Loss) for the two years ended December 31, 2023	F-6
Consolidated Statements of Shareholders' Equity for the two years ended December 31, 2023	F-7
Consolidated Statements of Cash Flows for the two years ended December 31, 2023	F-8
Notes to Consolidated Financial Statements	F-10

73

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Chemung Financial Corporation and Subsidiaries

Elmira, New York

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Chemung Financial Corporation and Subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income (loss), shareholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO.

Explanatory Paragraph – Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for credit losses effective January 1, 2023 due to the adoption of ASC 326.

Basis for Opinion

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting, as disclosed in Item 9A. Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

F-1

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses –Loans Collectively Evaluated for Impairment

As described in Notes 1 and 4 and the explanatory paragraph above, the Company adopted ASC 326 Financial Instruments – Credit Losses as of January 1, 2023, using the modified retrospective method. In doing so, the Company recorded a decrease to retained earnings of $1.1 million, net of tax, for the cumulative effect of adopting ASC 326, as noted in the Consolidated Statements of Shareholders’ Equity. The 2023 provision for credit losses was $3.3 million. As of December 31, 2023, the ACL on loans was $22.5 million. ASC 326 requires the measurement of expected lifetime credit losses for financial assets measured at amortized cost at the reporting date. The measurement is based on historical experience and trends, current economic information, forecasted data, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio.

Management employs a process and methodology to estimate the ACL on loans collectively evaluated for impairment for both the quantitative and qualitative components.

The quantitative component of the estimate relies on the statistical relationship between the projected value of an economic indicator and the implied historical loss experience among a curated group of peers. Management utilizes a regression analysis to identify suitable economic variables, known as loss drivers, for each pool of loans. Based on the results of this analysis, a probability of default (PD) and a loss given default(LGD) is assigned to each potential value of an economic indicator for each pool of loans, which is applied to derive the statistical loss implications thereof. The DCF incorporates a hypothetical loss for each period of the calculation, as well as assumed recoveries of past losses, to reach a present value for each loan. The reserve applied to a specific instrument is the difference between the sum of the present value of future cash flows and the book balance of the loan at the measurement date.

The ACL model incorporates qualitative loss factor adjustments in order to calibrate the model for risk in each portfolio segment that reflects management's expectation of loss conditions differing from those already captured in the quantitative component of the model.

We identified auditing the ACL on loans collectively evaluated for impairment as a critical audit matter because the methodology to determine the estimate for credit losses significantly changed upon adoption of ASC 326, including changes made to loss estimation models, the application of new accounting policies, and the use of significant judgments by management for both the quantitative and qualitative components. Performing audit procedures to evaluate the implementation and subsequent application of ASC 326 for credit losses involved a high degree of auditor judgment and required significant effort, including the need to involve valuation specialists.

The primary procedures we performed to address this critical audit matter included:

F-2

a.Testing the design and operating effectiveness of controls over the evaluation of the ACL related to loans collectively evaluated for impairment, including controls addressing:

i.The selection and application of new accounting policies involved in the adoption of ASC 326.

ii.Data inputs, judgments and calculations used to determine the qualitative loss factors.

iii.Information technology and financial applications used in the ACL process.

iv.Problem loan identification and delinquency monitoring.

v.Management’s evaluation of qualitative loss factors.

b.Substantively testing management’s process, including evaluating their judgments and assumptions, for developing the ACL on loans collectively evaluated for impairment, which included:

i.Evaluating the appropriateness of the Company’s accounting policies, judgments and elections involved in the adoption of ASC 326.

ii.Testing the mathematical accuracy of the ACL calculation.

iii.Utilizing internal specialists to perform procedures to assist in evaluating the relevance of macroeconomic loss drivers.

iv.Testing the relevance and reliability of the internal and external data used in the qualitative allocation.

v.Evaluating the reasonableness of management’s judgments related to the qualitative loss factors to determine if the loss factors are calculated in accordance with management’s policies and were consistently applied from the point of adoption to year end.

Crowe LLP

We have served as the Company's auditor since 2006.

Grand Rapids, Michigan

March 13, 2024

F-3

CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	DECEMBER 31,
(in thousands, except share and per share amounts)	2023		2022
ASSETS
Cash and due from financial institutions	$	22,247	$	29,309
Interest-earning deposits in other financial institutions	14,600		26,560
Total cash and cash equivalents	36,847		55,869
Equity investments, at fair value	3,046		2,830
Securities available for sale, at estimated fair value (amortized cost of $669,092, net of allowance for credit losses on securities of $0 at December 31, 2023; and amortized cost of $729,198, net of allowance for credit losses on securities of $0 at December 31, 2022)	583,993		632,589
Securities held to maturity, (estimated fair value of $785 at December 31, 2023 and $2,402 at December 31, 2022 net allowance for credit losses of $0 at December 31, 2023 and December 31, 2022, respectively)	785		2,424
FHLBNY and FRBNY Stock, at cost	5,498		8,197
Loans, net of deferred loan fees	1,972,664		1,829,448
Allowance for credit losses(1)	(22,517)		(19,659)
Loans, net	1,950,147		1,809,789
Premises and equipment, net	14,571		16,113
Operating lease right-of-use assets	5,648		6,449
Goodwill	21,824		21,824
Bank owned life insurance	2,914		2,871
Interest rate swap assets	23,942		26,706
Accrued interest and other assets	61,314		59,892
Total assets	$	2,710,529	$	2,645,553
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest-bearing	$	653,166	$	733,329
Interest-bearing	1,776,261		1,593,898
Total deposits	2,429,427		2,327,227
FHLBNY overnight advances	31,920		95,810
Capital lease obligation	3,050		3,327
Operating lease liabilities	5,827		6,620
Dividends payable	1,469		1,455
Interest rate swap liabilities	23,981		26,761
Accrued interest payable and other liabilities	19,614		17,965
Total liabilities	2,515,288		2,479,165
Shareholders' equity:
Common stock, $0.01 par value per share, 10,000,000 shares authorized; 5,310,076 issued at December 31, 2023 and December 31, 2022	53		53
Additional-paid-in capital	47,773		47,331
Retained earnings	229,930		211,859
Treasury stock, at cost (572,663 shares at December 31, 2023; 615,448 shares at December 31, 2022)	(16,502)		(17,598)
Accumulated other comprehensive (loss)	(66,013)		(75,257)
Total shareholders' equity	195,241		166,388
Total liabilities and shareholders' equity	$	2,710,529	$	2,645,553

(1) Effective January 1, 2023, the allowance calculation is based upon Current Expected Credit loss methodology. Prior to January 1, 2023, the allowance calculation was based upon incurred loss methodology. Refer to Note 1 for further discussion.

See accompanying notes to consolidated financial statements.

F-4

CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	YEARS ENDED DECEMBER 31,
(in thousands, except per share amounts)	2023		2022
Interest and Dividend Income:
Loans, including fees	$	97,228	$	68,051
Taxable securities	14,283		12,096
Tax exempt securities	1,035		1,068
Interest-earning deposits	528		260
Total interest and dividend income	113,074		81,475
Interest Expense:
Deposits	35,926		6,655
Borrowed funds	2,691		641
Total interest expense	38,617		7,296
Net interest income	74,457		74,179
Provision (credit) for credit losses(1)	3,262		(554)
Net interest income after provision for credit losses	71,195		74,733
Non-Interest Income:
Wealth management group fee income	10,460		10,280
Service charges on deposit accounts	3,919		3,788
Interchange revenue from debit card transactions	4,606		4,603
Net (losses) on securities transactions	(39)		—
Change in fair value of equity investments	103		(349)
Net gain on sales of loans held for sale	144		107
Net gains (losses) on sales of other real estate owned	37		60
Income from bank owned life insurance	43		46
Other	5,276		2,901
Total non-interest income	24,549		21,436
Non-Interest Expenses:
Salaries and wages	26,832		25,054
Pension and other employee benefits	7,368		7,668
Other components of net periodic pension cost (benefit)	(676)		(1,648)
Net occupancy expenses	5,637		5,539
Furniture and equipment expenses	1,728		1,906
Data processing expense	9,840		8,919
Professional services	2,293		2,171
Amortization of intangible assets	—		15
Marketing and advertising expense	923		941
Other real estate owned expenses	(20)		(5)
FDIC insurance	2,128		1,356
Loan expense	1,047		1,001
Other	7,143		6,363
Total non-interest expenses	64,243		59,280
Income before income tax expense	31,501		36,889
Income tax expense	6,501		8,106
Net income	$	25,000	$	28,783
Weighted average shares outstanding (in thousands)	4,732		4,693
Basic and diluted earnings per share	$	5.28	$	6.13

(1) Effective January 1, 2023, the allowance calculation is based upon Current Expected Credit loss methodology. Prior to January 1, 2023, the allowance calculation was based upon incurred loss methodology. Refer to Note 1 for further discussion.

See accompanying notes to consolidated financial statements.

F-5

CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	YEARS ENDED DECEMBER 31,
(in thousands)	2023		2022
Net income	$	25,000	$	28,783
Other comprehensive income (loss):
Unrealized holding gain (loss) on securities available for sale	11,524		(93,224)
Reclassification adjustment (losses) realized in net income	(14)		—
Net unrealized gain (loss)	11,510		(93,224)
Tax effect	(3,014)		24,423
Net of tax amount	8,496		(68,801)
Change in funded status of defined benefit pension plan and other benefit plans:
Net gain arising during the period	950		63
Reclassification adjustment for amortization of net actuarial losses	63		38
Total before tax effect	1,013		101
Tax effect	(265)		(27)
Net of tax amount	748		74
Total other comprehensive income (loss)	9,244		(68,727)
Comprehensive income (loss)	$	34,244	$	(39,944)

See accompanying notes to consolidated financial statements.

F-6

CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive (Loss)		Total
Balances at December 31, 2021	$	53	$	46,901	$	188,877	$	(17,846)	$	(6,530)	$	211,455
Net income	—		—		28,783		—		—		28,783
Other comprehensive income	—		—				—		(68,727)		(68,727)
Restricted stock awards	—		795		—		—		—		795
Distribution of 25,011 shares of treasury stock granted for employee restricted stock awards, net	—		(712)		—		712		—		—
Restricted stock units for directors' deferred compensation plan	—		20		—		—		—		20
Cash dividends declared ($1.24 per share)	—		—		(5,801)		—		—		(5,801)
Distribution of 8,575 shares of treasury stock for directors' compensation	—		131		—		244		—		375
Sale of 9,367 shares of treasury stock (a)	—		158		—		266		—		424
Repurchase of 20,786 shares of common stock	—		—		—		(933)		—		(933)
Forfeiture of 895 shares of restricted stock awards	—		38		—		(41)		—		$	(3)
Balances at December 31, 2022	$	53	$	47,331	$	211,859	$	(17,598)	$	(75,257)	$	166,388

	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive (Loss)		Total
Balances at December 31, 2022	$	53	$	47,331	$	211,859	$	(17,598)	$	(75,257)	$	166,388
Cumulative effect of accounting change (b)	—		—		(1,076)		—		—		(1,076)
Balances at January 1, 2023	53		47,331		210,783		(17,598)		(75,257)		165,312
Net income	—		—		25,000		—		—		25,000
Other comprehensive income	—		—				—		9,244		9,244
Restricted stock awards	—		1,139		—		—		—		1,139
Distribution of 26,166 shares of treasury stock granted for employee restricted stock awards, net	—		(752)		—		752		—		—
Restricted stock units for directors' deferred compensation plan	—		20		—		—		—		20
Cash dividends declared ($1.24 per share)	—		—		(5,853)		—				(5,853)
Distribution of 8,492 shares of treasury stock for directors' compensation	—		(147)		—		243		—		96
Sale of 14,994 shares of treasury stock (a)	—		171		—		430		—		601
Repurchase of 6,541 shares of common stock	—		—		—		(316)		—		(316)
Forfeiture of 326 shares of restricted stock awards	—		11		—		(13)		—		(2)
Balances at December 31, 2023	$	53	$	47,773	$	229,930	$	(16,502)	$	(66,013)	$	195,241

(a) All treasury stock sales were completed at the prevailing market price with the Chemung Canal Trust Company Profit Sharing, Savings, and Investment Plan which is a defined contribution plan sponsored by the Bank.

(b) Implementation of ASC 326. See Adoption of New Accounting Standards" discussion in Note 1.

See accompanying notes to consolidated financial statements.

F-7

CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)	YEARS ENDED DECEMBER 31,
CASH FLOWS FROM OPERATING ACTIVITIES:	2023		2022
Net income	$	25,000	$	28,783
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of right-of-use assets	801		785
Amortization of intangible assets	—		15
Deferred income tax (benefit) expense	(1,609)		1,722
Provision for credit losses	3,425		(554)
Loss on disposal of fixed assets	3		56
Depreciation and amortization of fixed assets	2,001		2,226
Amortization of premiums on securities, net	2,458		3,761
Gains on sales of loans held for sale, net	(144)		(107)
Proceeds from sales of loans held for sale	6,569		5,819
Loans originated and held for sale	(6,425)		(5,316)
Net (gains) on sale of other real estate owned	(37)		(60)
Write-downs on OREO	3		—
Net change in fair value of equity investments	(103)		349
Net purchases of equity investments	(113)		(215)
Net (gains) on interest rate swaps	(16)		(173)
(Increase) in other assets	(1,298)		(28,071)
Increase in accrued interest payable	2,115		654
Expense related to restricted stock units for directors' deferred compensation plan	20		290
Expense related to employee restricted stock awards	1,139		795
Payments on operating leases	(1,594)		(1,195)
Increase (decrease) in other liabilities	(1,271)		25,529
Income from bank owned life insurance	(43)		(46)
Net cash provided by operating activities	30,881		35,047
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales, maturities, calls, and principal paydowns on securities available for sale	60,852		86,206
Proceeds from sales, maturities and principal collected on securities held to maturity	1,613		2,335
Purchases of securities available for sale	(3,209)		(23,743)
Purchases of securities held to maturity	—		(980)
Purchase of FHLBNY and FRBNY stock	(99,926)		(36,214)
Redemption of FHLBNY and FRBNY stock	102,625		32,235
Purchases of premises and equipment	(462)		(426)
Proceeds from sale of other real estate owned	288		326
Net (increase) in loans	(144,162)		(312,359)
Net cash (used by) provided by investing activities	(82,381)		(252,620)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) in demand, interest-bearing demand, savings, and insured money market deposits	(107,681)		(34,233)
Net increase in time deposits	209,881		206,027
Net change in FHLBNY overnight advances	(63,890)		81,240
Principal payments made on capital leases	(277)		(267)
Purchase of treasury stock	(316)		(933)
Sale of treasury stock	601		424
Cash dividends paid	(5,840)		(5,797)
Net cash (used in) provided by financing activities	32,478		246,461
Net increase (decrease) in cash and cash equivalents	(19,022)		28,888
Cash and cash equivalents, beginning of period	55,869		26,981
Cash and cash equivalents, end of period	$	36,847	$	55,869

F-8

CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
	2023		2022
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest	$	36,502	$	6,642
Income Taxes	$	7,863	$	5,625
Supplemental disclosure of non-cash activity:
Transfer of loans to other real estate owned	$	378	$	348
Dividends declared, not yet paid	$	1,469	$	1,455

See accompanying notes to consolidated financial statements.

F-9

CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023 and 2022

(1)    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

The Corporation, through its wholly-owned subsidiaries, the Bank and CFS Group, Inc., provides a wide range of banking, financing, fiduciary and other financial services to its clients. The Corporation is subject to the regulations of certain federal and state agencies and undergoes periodic examinations by those regulatory agencies.

Chemung Risk Management, Inc., (CRM), a wholly-owned subsidiary of the Corporation, was a Nevada-based captive insurance company which insured against certain risks unique to the operations of the Corporation and its subsidiaries and for which insurance may not have been currently available or economically feasible in today's insurance marketplace. CRM was dissolved by the Corporation, effective December 6, 2023.

BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared in conformity with GAAP and include the accounts of the Corporation and its subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions based on available information.  These estimates and assumptions affect the amounts reported in the financial statements and disclosures provided, and actual results could differ.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash and amounts due from banks, demand interest-bearing deposits, and time deposits with other financial institutions.

EQUITY INVESTMENTS

Securities that are held to fund a non-qualified deferred compensation plan and securities that have a readily determinable fair market value, are recorded at fair value with changes in fair value and interest and dividend income included in earnings.

SECURITIES

Management determines the appropriate classification of securities at the time of purchase. If management has the intent and the Corporation has the ability at the time of purchase to hold securities until maturity, they are classified as held to maturity and carried at amortized cost. Securities to be held for indefinite periods of time or not intended to be held to maturity are classified as available for sale and carried at fair value. Premiums and discounts are amortized or accreted over the life of the related security as an adjustment of yield using the interest method. Dividend and interest income is recognized when collected. Unrealized holding gains and losses on securities classified as available for sale are excluded from earnings and are reported as accumulated other comprehensive income (loss) in shareholders' equity, net of the related tax effects, until realized. Realized gains and losses are determined using the specific identification method.

Management assesses available for sale securities in an unrealized loss position on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation, to determine whether it intends to sell, or it is more likely than not that it will be required to sell a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as a write down through earnings.

F-10

Available for sale securities in a loss position that do not meet either of the aforementioned criteria, are reviewed by management to determine whether the unrealized loss is due to credit related circumstances, or other non-credit related factors. In making this determination, management evaluates a range of factors including the extent to which fair value is less than amortized cost, existing conditions that may adversely impact the issuer, changes to the credit rating of either the issuer or the specific security, among other considerations. An allowance for credit losses is established for securities, when upon evaluation, management has determined that the unrealized losses are due at least in part to credit conditions. The allowance for credit losses is determined as the difference, if any, between the present value of expected cash flows and the amortized basis of the security, limited to the extent that amortized basis exceeds fair value.

The Corporation holds the majority of its available for sale securities in obligations that are issued by U.S. Government entities or agencies and enterprises affiliated with the U.S. Government. Due to the explicit or implicit guarantee of the full faith and credit of the U.S. Government, the Corporation considers these securities to carry a near zero credit loss implication. Securities included under this implication include U.S. Treasury securities, mortgage backed securities issued by government-sponsored agencies, and SBA pooled loan securities. Securities that do not fall under this categorization primarily relate to corporate subordinated debt issues.

FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK STOCK

The Bank is a member of both the FHLBNY and the FRBNY.  FHLBNY members are required to own a certain amount of stock based on the level of borrowings and other factors, while FRBNY members are required to own a certain amount of stock based on a percentage of the Bank’s capital stock and surplus. FHLBNY and FRBNY stock are carried at cost and classified as non-marketable equities and periodically evaluated for impairment based on ultimate recovery of par value. Cash and stock dividends are reported as income.

LOANS

Loans are stated at their amortized basis, which is the amount of unpaid principal balance net of deferred loan cost and fees. An accounting policy election was made to exclude accrued interest receivable from the amortized cost basis of loans. Accrued interest receivable is included in the "Accrued interest and other assets" line item in the Corporation's Consolidated Balance Sheets. The Corporation has the ability and intent to hold its loans for the foreseeable future. The Corporation’s loan portfolio is comprised of the following segments: (i) commercial and agricultural, (ii) commercial mortgages, (iii) residential mortgages, and (iv) consumer loans.

Commercial and agricultural loans primarily consist of loans to small to mid-sized businesses in the Corporation’s market area in a diverse range of industries. These loans are typically made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. Commercial mortgage loans are generally non-owner occupied commercial properties or owner occupied commercial real estate with larger balances. Repayment of these loans is often dependent upon the successful operation and management of the properties and the businesses occupying the properties, as well as on the collateral securing the loan. Residential mortgage loans are generally made on the basis of the borrower’s ability to make repayment from their employment and other income, but are secured by real property. Consumer loans include home equity lines of credit and home equity loans, which exhibit many of the same characteristics as residential mortgages. Indirect and other consumer loans are typically secured by depreciable assets, such as automobiles, and are dependent on the borrower’s continuing financial stability.

Interest on loans is accrued and credited to operations using the interest method. Past due status is based on the contractual terms of the loan. The accrual of interest is generally discontinued and previously accrued interest is reversed when loans become 90 days delinquent. Loans may also be placed on non-accrual status if management believes such classification is otherwise warranted. All payments received on non-accrual loans are applied to principal. Loans are returned to accrual status when they become current as to principal and interest and remain current for a period of six consecutive months or when, in the opinion of management, the Corporation expects to receive all of its original principal and interest. Loan origination fees and certain direct loan origination costs are deferred and amortized over the life of the loan as an adjustment to yield, using the interest method.

LOAN MODIFICATIONS TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY

Effective January 1, 2023, the Corporation adopted ASU 2022-02 Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructurings (TDR) and Vintage Disclosures, which superseded existing TDR measurement and disclosures, and added additional disclosure requirements related to modifications made on loans to borrowers experiencing financial difficulty. Under prior guidance, a TDR was deemed to have occurred when the Corporation modified a loan to a borrower experiencing financial difficulty, and where a concession was made by the Corporation.

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Consistent with ASU 2022-02, the Corporation now evaluates loan modifications to borrowers experiencing financial difficulty on the basis and extent of their direct impact on contractual cash flows. Modifications under this guidance include principal forgiveness, interest rate reductions, more than insignificant payment delays, term extensions, or a combination thereof. Payment delays are generally considered insignificant when the duration of the delay is less than or equal to three months.

Once a loan modification is determined to meet the aforementioned criteria, a determination is made as to whether the modification represents the continuation of an existing loan, or a new loan, in accordance with ASC-310-20-35-9 through 11. The Corporation considers a loan modification to represent the establishment of a new loan if the resulting terms are at least as favorable to the Corporation as the terms made to other borrowers with similar risk profiles. In the event that a modification is determined to represent a new loan, all unamortized deferred costs and fees are to be recognized through interest income at the point the modification is granted. Modifications that do not meet this criteria shall be considered a continuation of an existing loan, and all unamortized deferred costs and fees are to be carried forward as part of the modified loan's basis.

ALLOWANCE FOR CREDIT LOSSES

The allowance is an amount that management believes will be adequate to absorb estimated lifetime credit losses inherent in its portfolios of assets exhibiting credit risk. The Corporation adopted ASC 326 - Financial Instruments-Credit Losses effective January 1, 2023. The allowance for credit losses is estimated using the Corporation's CECL methodology, and replaces the incurred loss methodology used to estimate its allowance for loan and lease losses under prior guidance. CECL methodology utilizes historical information, current conditions, and reasonable and supportable economic forecasts to estimate the allowance for credit losses.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU supersedes prior GAAP by replacing the incurred loss impairment method with a methodology that reflects lifetime expected credit losses and requires the consideration of a broader range of reasonable and supportable information to form credit loss estimates. In November 2019, the FASB adopted an amendment to postpone the effective date of ASU 2016-13 to January 2023 for certain entities, including certain Securities and Exchange Commission filers, public business entities, and private companies. As a smaller reporting company, the Corporation was eligible for and elected delayed adoption.

The Corporation adopted the standard, effective January 1, 2023, and recognized a one-time cumulative adjustment to retained earnings as of January 1, 2023 to reflect the change in methodology. The cumulative-effect adjustment did not have an impact on prior year results. Retained earnings was reduced by $1.5 million, or $1.1 million, net of tax, effective January 1. The $1.5 million adjustment was reflective of the establishment of an allowance for credit losses on unfunded commitments, totaling $1.1 million, and a $0.4 million addition to the allowance for credit losses on loans, reflecting the change in methodology.

Under the Corporation's CECL methodology, loans are analyzed on either a pooled basis, or an individual basis, based on an assessment of risk factors. Loans that exhibit similar risk characteristics and are pooled based on their assigned FFIEC call codes. When it is determined that a loan no longer exhibits risk characteristics consistent with its assigned pool, it is designated for individual analysis. Pooled loans utilize both a quantitative and qualitative component to determine the appropriate estimate of the allowance for credit losses. The quantitative component is based on an estimated discounted cash flow (DCF) analysis, performed at the loan level. The underlying assumptions on which the DCF calculation is based incorporate the relationship between a projected value of an economic indicator, and the implied historical loss experience amongst a group of peers established by management. The Corporation utilizes a regression analysis to identify suitable economic variables, known as loss drivers, for each pool of loans. Based on the results of this analysis, a probability of default (PD) and a loss given default (LGD) is assigned to each potential value of an economic indicator for each pool of loans, which is applied to derive the statistical loss implications thereof. The DCF incorporates a hypothetical loss for each period of the calculation, as well as assumed recoveries of past losses, to reach a present value for each loan. The modeled allowance for credit losses for each individual loan is the book balance of the loan as of the measurement date, less the present value of cash flows. Forecasted economic variables are applied over a four quarter period, and revert to the historical mean of the economic variable over an eight quarter period, on a straight line basis.

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Based on assigned FFIEC call codes, and the risk characteristics of lending activities and collateral among loans within call codes, the Corporation has disaggregated its loan portfolio into the following nine pools:

Construction - Commercial and retail loans secured by real estate and made for the purposes of on-site construction or land development. This portfolio primarily consists of commercial construction loans, as well as a small number of residential single family construction to permanent loans. Construction loans are commonly evaluated using an "as-stabilized" or "as completed" appraisal, and the Corporation seeks sponsors who can provide adequate equity in the project at inception, or who have a well-documented history of successfully completing similar projects. Risks specific to construction lending include changes in market conditions prior to the completion of a construction phase, quality of work performed and cost overruns, and the realization of borrower assurances including but not limited to pre-sales, tenant contracts, and financial covenants.

Home Equity Lines of Credit and Junior Liens - Retail loans that are secured by secondary or inferior lien positions on 1-4 family residential real estate. Repayment sources primarily rely on borrowers' primary source of income, and are determined based on a borrower's equity position in the collateralized property. Default risk on secondary liens is greater than on primary liens, as a borrower is likely to prioritize payments on any outstanding indebtedness on the primary lien position. Secondary lien positions are additionally exposed to greater market risk in the event of foreclosure, and therefore are more sensitive to changes in underlying collateral valuations than primary lien positions.

1-4 Family Residential First Liens - Retail and commercial loans secured by primary lien positions on 1-4 family residential real estate. For retail loans secured by primary liens on residential property, repayment is primarily dependent on borrowers' primary source of income. For commercial loans secured by primary liens on residential property, repayment sources may be more diverse. Significant risk factors include localized economic conditions, that may impact both the collateralized property's value, as well as employment prospects for borrowers who rely on their primary source of income as means of repayment, and regulatory risks specific to housing that may inhibit a bank's ability to pursue means of repayment.

Multifamily - Commercial real estate secured by residential properties comprising of greater than four livable units. Multifamily properties are commonly managed by the borrower and rented to tenants for residential purposes. Repayment sources primarily consist of rental income from the property. Risks associated with multifamily projects include the borrower's ability to attract and maintain a base of tenants at rental rates in excess of those required to finance, manage, and maintain the property, as well as risks relating to demographic considerations in the population of prospective tenants.

Owner Occupied Commercial Real Estate - Commercial real estate loans secured by property that is occupied and or operated by the primary borrower or a related entity. Cash flow from the operation of the borrower's businesses are generally the primary source of repayment for owner occupied commercial real estate. Borrower industry and the competence of business operators are generally the primary risks associated with this type of lending activity.

Non Owner Occupied Commercial Real Estate - Commercial real estate loans secured by properties that are maintained and managed by the borrowers, but rely on rental income from outside commercial organizations to provide cash flow for repayment. Successful operations of tenant businesses significantly impacts borrowers' ability to finance these obligations. A primary risk relating to real estate of this nature is the limited influence that a borrower can have on the successful operation of tenant businesses, and the possibility of not being able to find suitable or willing replacement tenants, should vacancies arise. The Corporation seeks to lend in this segment to sponsors who have demonstrated the capability of aligning with strong and dependable tenants, considering both the current environment that tenants operate in, as well as future prospects for their industries, including their need for comparable space in the future.

Commercial and industrial loans - Commercial purpose loans that are primarily secured by the assets of borrowers businesses. Loans within this segment are made to an array of industry types, and may also include loans that are for commercial real estate purposes, but are secured by assets other than real estate. Management identifies the primary similarity amongst loans in this pool to be collateral risk exposure common to these loans. Business assets may have significant variation in collateral value, and the value that may be realized by the Corporation, should the need to liquidate arise. Normal usage and industry specificity can have a significant impact on collateral values. The successful operation of borrower businesses provides the primary source of repayment for these loans.

Consumer - Retail loans primarily secured by vehicle or other personal collateral. Indirect auto lending comprises the majority of lending activity in this pool. Primarily, repayment is largely dependent on borrowers' primary income source, through employment or otherwise. Broader economic conditions, as well as specific personal skill sets, can significantly influence a borrower's ability to maintain adequate employment necessary to finance these loans. Relationships with auto dealer networks also impacts the quality of borrowers seeking financing for vehicles, subject to the Corporation's system of underwriting and loan review. Collateral values in this pool typically depreciate relatively quickly, compared to other asset classes, and expose the Corporation to risk.

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Other - Loans to borrowers whose organizations are primarily engaged in activities other than traditional business operations, such as non profit entities including medical groups, clubs and associations, religious organizations, museums, among others. These loans are generally classified based on their organizational structure.

The qualitative component of the pooled allowance is supplemented by qualitative adjustments. Qualitative adjustments represent the extent to which management determines that its expectation of risk differs from the results of the quantitative analysis, in large part capturing risk factors that may not be fully captured by the quantitative model. Management uses the following nine qualitative factors when considering appropriate adjustment: (1) lending policies and procedures, including underwriting standards and collection, charge-off and recovery policies, (2) national and local economic and business conditions and developments, including the condition of various market segments, (3) loan profiles and volume of the portfolio, (4) the experience, ability, and depth of lending management and staff, (5) the volume and severity of past due, classified and watch-list loans, non-accrual loans, troubled debt restructurings, and other modifications (6) the quality of the Bank’s loan review system and the degree of oversight by the Bank’s Board of Directors, (7) collateral related considerations including: secured vs. unsecured, type, and valuations, (8) the existence and effect of any concentrations of credit, and changes in the level of such concentrations, (9) the effect of external factors, such as competition and legal and regulatory requirements, on the level of estimated credit losses in the Bank’s current portfolio.

Loans deemed to require individual analysis are primarily valuated and measured for credit loss based on collateral. A measurement is performed based on the most recently available appraisal performed on individually analyzed loans. It is the Corporation's policy to obtain updated appraisals, by independent third parties, on loans secured by real estate at the time a loan is determined to require individual analysis. A specific allocation to the allowance is made on collateral dependent loans to the extent that the value of collateral, net of adjustments made to account for estimated selling costs and management applied discounting, is less than the book value of the loan on the measurement date. Loans not considered to be collaterally dependent are analyzed using the cash flow approach. A cash flow analysis is performed using a loan's effective interest rate, and discounted to determine appropriate fair value. To the extent that a loan's book balance exceeds the present value of cash flows, a specific allocation to the allowance for credit losses is made.

The Corporation established an allowance for credit losses on unfunded commitments, effective January 1, 2023. The Corporation records an allowance for credit losses on unfunded commitments utilizing a methodology congruent with its methodology for estimating lifetime credit losses on its portfolio of loans, as presented on the Corporation's consolidated balance sheet. The Corporation disaggregates unfunded commitments into pools consistent with its methodology for pooling loans represented on the balance sheet. A funding rate is determined to represent the amount of currently unfunded commitments that are estimated to become funded, based on historical experience. The loss rate applied to the estimated funded balance is consistent with the overall loss rate applied to its equivalent pool of loans on the balance sheet. The Corporation is not required to establish an allowance for credit losses on commitments that are deemed to be unconditionally cancellable at the sole discretion of the Corporation.

Debt securities are included under the guidance of ASC-326 - Financial Instruments-Credit Losses. The Corporation evaluates the necessity to establish and maintain an allowance for credit losses on debt securities consistent with its policies in the aforementioned section of this Note labeled "Securities."

The allowance for credit losses is increased through a provision for credit losses charged to operations. Instruments (loans and debt securities) are charged against their respective allowance for credit losses when management believes that the collectability of all or a portion of the principal is unlikely. Management's evaluation of the adequacy of the allowance for credit losses is performed on a periodic basis and takes into consideration such factors as the credit risk grade assigned to the instrument, historical credit loss experience, and review of information specific and pertinent to the borrower or issuer. While management uses available information to recognize credit losses on loans and securities, future additions to the allowance may be necessary based on changes in economic conditions, regulatory requirements, or other new information.

LOANS HELD FOR SALE

Certain mortgage loans are originated with the intent to sell. The Bank typically retains the right to service the mortgages upon sale. Loans held for sale are recorded at the lower of cost or fair value in the aggregate and are regularly evaluated for changes in fair value.  Commitments to sell loans that are originated for sale are recorded at fair value. If necessary, a valuation allowance is established with a charge to income for unrealized losses attributable to a change in market rates.

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LEASES

Leases are classified as operating or finance leases on the lease commencement date. At inception, the Corporation determines the lease term by considering the minimum lease term and all optional renewal periods that the Corporation is reasonably certain to renew. The discount rate used in determining lease liability is based upon incremental borrowing rates the Corporation could obtain for similar loans as of the date of commencement or renewal.

The Corporation records operating leases on the balance sheet as a lease liability equal to the present value of future minimum payments under the lease terms, and a right-of-use asset equal to the lease liability. The lease term is also used to calculate straight-line rent expense. The Corporation's leases do not contain residual value guarantees or material variable lease payments that may impact the Corporation's ability to pay dividends or cause the Corporation to incur additional expenses. Rent expense and variable lease expense are included in net occupancy expenses on the Corporation's Consolidated Statements of Income.

Finance leases are recorded at the lesser of the present value of future cash outlays using a discounted cash flow, or fair value at the beginning of the lease term. Initially, a finance lease is recorded as a building asset, and is depreciated over the shorter of the term of the lease or the estimated life of the asset. A corresponding long term lease obligation is recorded, which amortizes as payments are made on the lease. Interest expense is incurred using the discount rate determined at the beginning of the lease term. Amortization of the right-of-use assets arising from finance leases is expensed through net occupancy expense, and the interest on the related lease liability is expensed through interest expense on borrowings on the Corporation Consolidated Statements of Income.

PREMISES AND EQUIPMENT

Land is carried at cost, while buildings, equipment, leasehold improvements and furniture are stated at cost less accumulated depreciation and amortization. Depreciation is charged to current operations using the straight-line method over the estimated useful lives of the assets, which range from 15 to 50 years for buildings and from 3 to 10 years for equipment and furniture.  Amortization of leasehold improvements and leased equipment is recognized using the straight-line method over the shorter of the lease term or the estimated life of the asset. Leases of branch offices, which have been capitalized, are included within buildings and depreciated on the straight-line method over the shorter of the lease term or the estimated life of the asset.

BANK OWNED LIFE INSURANCE

BOLI is recorded at the amount that can be realized under the insurance contracts at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. Changes in the cash surrender value are recorded in other non-interest income.

OTHER REAL ESTATE

Real estate acquired through foreclosure or deed in lieu of foreclosure is recorded at estimated fair value of the property less estimated costs to dispose at the time of acquisition to establish a new carrying value. Write downs from the carrying value of the loan to estimated fair value, which are required at the time of foreclosure, are charged to the allowance for credit losses. Subsequent adjustments to the carrying values of such properties resulting from declines in fair value result in the establishment of a valuation allowance and are charged to operations in the period in which the declines occur.

INCOME TAXES

The Corporation files a consolidated tax return. Deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for unused tax loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates to apply to taxable income in the years in which temporary differences are expected to be recovered or settled, or the tax loss carry forwards are expected to be utilized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

A tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded.

F-15

WEALTH MANAGEMENT GROUP FEE INCOME

Assets held in a fiduciary or agency capacity for customers are not included in the accompanying consolidated balance sheets, since such assets are not assets of the Corporation. Wealth Management Group income is recognized on the accrual method as earned based on contractual rates applied to the balances of individual trust accounts. The audited market value of trust assets under administration total $2.242 billion, including $381.3 million of assets held under management or administration for the Corporation, at December 31, 2023 and $2.053 billion, including $346.5 million of assets held under management or administration for the Corporation, at December 31, 2022.

POSTRETIREMENT BENEFITS

Pension Plan:

The Chemung Canal Trust Company Pension Plan is a non-contributory defined benefit pension plan. The Pension Plan is a “qualified plan” under the IRS Code and therefore must be funded. Contributions are deposited to the Plan and held in trust. The Plan assets may only be used to pay retirement benefits and eligible plan expenses. The plan was amended such that new employees hired on or after July 1, 2010 would not be eligible to participate in the plan, however, existing participants at that time would continue to accrue benefits.

On October 20, 2016, the Corporation amended its noncontributory defined benefit pension plan (“pension plan”) to freeze future retirement benefits after December 31, 2016. Beginning on January 1, 2017, both the pay-based and service-based component of the formula used to determine retirement benefits in the pension plan were frozen so that participants no longer earn further retirement benefits.

Under the Plan, pension benefits are based upon final average annual compensation where the annual compensation is total base earnings paid plus commissions. Bonuses, overtime, and dividends are excluded. The normal retirement benefit equals 1.2% of final average compensation (highest consecutive five years of annual compensation in the prior ten years) times years of service (up to a maximum of 25 years), plus 1% of average monthly compensation for each additional year of service (up to a maximum of 10 years), plus 0.65% of average monthly compensation in excess of covered compensation for each year of credited service up to 35 years. Covered compensation is the average of the social security taxable wage base in effect for the 35 year period prior to normal social security retirement age. See Note 13 for further details.

Defined Contribution Profit Sharing, Savings and Investment Plan:

The Corporation also sponsors a 401(K) defined contribution profit sharing, savings and investment plan which covers all eligible employees. The Corporation contributes a non-discretionary 3% of gross annual wages (as defined by the 401(k) plan) for each participant, regardless of the participant’s deferral, in addition to a 50% match up to 6% of gross annual wages. All contributions made on or after January 1, 2017 will vest immediately. The plan's assets consist of Chemung Financial Corporation common stock, as well as other common and preferred stocks, U.S. Government securities, corporate bonds and notes, and mutual funds. The plan’s expense is the amount of non-discretionary and matching contributions and is charged to non-interest expenses in the consolidated statements of income.

Defined Benefit Health Care Plan:

The Corporation sponsors a defined benefit health care plan that provides postretirement medical benefits to employees who meet minimum age and service requirements. Current retirees between the ages of 55 and 65, will continue to be eligible for coverage under the Corporation's self-insured plan, contributing 50% of the cost of the coverage. Employees who retired after July 1, 2006, and become Medicare eligible will only have access to the Medicare Blue PPO plan.  The cost of the plan is based on actuarial computations of current and future benefits for employees, and is charged to non-interest expenses in the consolidated statements of income. See Note 13 for further details. On October 20, 2016, the Corporation amended its defined benefit health care plan to not allow any new retirees into the plan, effective January 1, 2017.

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Executive Supplemental Pension Plan:

U.S. laws place limitations on compensation amounts that may be included under the Pension Plan. The Executive Supplemental Pension Plan was provided to executives in order to produce total retirement benefits, as a percentage of compensation that is comparable to employees whose compensation is not restricted by the annual compensation limit. Pension amounts, which exceed the applicable Internal Revenue Service code limitations, will be paid under the Executive Supplemental Pension Plan.

The Executive Supplemental Pension Plan is a “non-qualified plan” under the Internal Revenue Service Code. Contributions to the Plan are not held in trust; therefore, they may be subject to the claims of creditors in the event of bankruptcy or insolvency. When payments come due under the Plan, cash is distributed from general assets. The cost of the plan is based on actuarial computations of current and future benefits for executives, and is charged to non-interest expense in the consolidated statements of income.

Defined Contribution Supplemental Executive Retirement Plan:

The Defined Contribution Supplemental Executive Retirement Plan is provided to certain executives to motivate and retain key management employees by providing a nonqualified retirement benefit that is payable at retirement, disability, death and certain other events.

The Supplemental Executive Retirement Plan is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation benefits for a select group of management or highly compensated employees under Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974. The plan’s expense is the Corporation’s annual contribution plus interest credits.

STOCK-BASED COMPENSATION

2021 Equity Incentive Plan

The Corporation's 2021 Equity Incentive Plan (the "2021 Plan") is designed to align the interests of the Corporation’s executives, senior managers and directors with the interests of the Corporation and its shareholders, to ensure the Corporation’s compensation practices are competitive and comparable with those of its peers, and to promote the retention of select management-level employees and directors. Under the terms of the 2021 Plan, the Compensation and Personnel Committee may approve discretionary grants of restricted shares of the Corporation’s common stock to or for the benefit of employees selected to participate in the 2021 Plan, the chief executive officer and members of the Board of Directors. Awards are based on the performance, responsibility and contributions of the individual and are targeted at the median of the peer group. The maximum number of shares of the Corporation’s common stock that may be awarded as restricted shares related to the 2021 Plan may not exceed 170,000, upon which time the 2021 Plan will be amended, presented and approved by the Corporation's shareholders to include additional shares of the Corporation's common stock. Awards under the 2021 Plans may be vested no earlier than the first anniversary of the date on which the award is granted. Compensation expense for shares granted will be recognized over the vesting period of the award based upon the fair value of shares granted as of the grant date.

A Directors Deferred Fee Plan, an addendum to the 2021 Plan, for non-employee directors of the Corporation or the Bank, provides that directors may elect to defer receipt of all or any part of their fees. Deferrals are either credited with interest compounded quarterly at the Applicable Federal Rate for short-term debt instruments or converted to units, which appreciate or depreciate, as would an actual share of the Corporation’s common stock purchased on the deferral date. Cash deferrals will be paid into an interest bearing account and paid in cash. Units will be paid in shares of common stock. All directors’ fees are charged to non-interest expenses in the consolidated statements of income. Please see Note 14 for further details.

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Non-qualified Deferred Compensation Plan:

The Deferred Compensation Plan allows a select group of management and employees to defer all or a portion of their annual compensation to a future date. Eligible employees are generally highly compensated employees and are designated by the Board of Directors from time to time. Investments in the plan are recorded as equity investments and deferred amounts are an unfunded liability of the Corporation. The plan requires deferral elections be made before the beginning of the calendar year during which the participant will perform the services to which the compensation relates. Participants in the Plan are required to elect a form of distribution, either lump sum payment or annual installments not to exceed ten years, and a time of distribution, either a specified age or a specified date. The terms and conditions for the deferral of compensation are subject to the provisions of 409A of the IRS Code. The income from investments is recorded in dividend income and non-interest income in the consolidated statements of income. The cost of the plan is recorded in non-interest expenses in the consolidated statements of income.

GOODWILL AND INTANGIBLE ASSETS

Goodwill resulting from business combinations prior to January 1, 2009 represents the excess of the purchase price over the fair value of the net assets of businesses acquired. Goodwill resulting from business combinations after January 1, 2009, is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually. The Corporation has selected December 31 as the date to perform the annual impairment test. Goodwill is the only intangible asset with an indefinite life on the Corporation's balance sheet. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. The balances are reviewed for impairment on an ongoing basis or whenever events or changes in business circumstances warrant a review of the carrying value. If impairment is determined to exist, the related write-down of the intangible asset's carrying value is charged to operations. Based on these impairment reviews, the Corporation determined that goodwill and other intangible assets were not impaired at December 31, 2023.

The Corporation's intangible assets related to the purchase of the trust business of Partners Trust Bank in May of 2007, were fully amortized as of December 31, 2022.

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

The Corporation has the ability to enter into sales of securities under agreements to repurchase. The agreements are treated as financings, and the obligations to repurchase securities sold are reflected as liabilities in the consolidated balance sheets. The amount of the securities underlying the agreements continues to be carried in the Corporation's securities portfolio. The Corporation has agreed to repurchase securities identical to those sold. The securities underlying the agreements are under the Corporation's control. As of December 31, 2023, the Corporation had no securities sold under agreements to repurchase.

DERIVATIVES

The Corporation utilizes interest rate swaps with commercial borrowers and third-party counterparties as well as agreements with lead banks in participation loan relationships wherein the Corporation guarantees a portion of the fair value of an interest rate swap entered into by the lead bank. These transactions are accounted for as derivatives. The Company’s derivatives are entered into in connection with its asset and liability management activities and not for trading purposes.

The Company does not have any derivatives that are designated as hedges and therefore all derivatives are considered free standing and are recorded at fair value as derivative assets or liabilities on the consolidated balance sheets, with changes in fair value recognized in the consolidated statements of income as non-interest income.

Premiums received when entering into derivative contracts are recognized as part of the fair value of the derivative asset or liability and are carried at fair value with any gain/loss at inception and any changes in fair value reflected in income.

The Corporation does not typically require its commercial customers to post cash or securities as collateral on its back-to-back interest rate swap program. The Corporation may need to post collateral, either cash or certain qualified securities, in proportion to potential increases in unrealized loss positions.

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OTHER FINANCIAL INSTRUMENTS

The Corporation is a party to certain other financial instruments with off-balance sheet risk such as unused portions of lines of credit and commitments to fund new loans. The Corporation's policy is to record such instruments when funded.

EARNINGS PER COMMON SHARE

Basic earnings per share is net income divided by the weighted average number of common shares outstanding during the period. Issuable shares, including those related to directors’ restricted stock shares, are considered outstanding and are included in the computation of basic earnings per share. All outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends are considered participating securities for this calculation. Restricted stock awards are grants of participating securities and are considered outstanding at grant date. Earnings per share information is adjusted to present comparative results for stock splits and stock dividends that occur.

COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale and changes in the funded status of the Corporation’s defined benefit pension plan and other benefit plans, net of the related tax effect, which are also recognized as separate components of equity.

SEGMENT REPORTING

The Corporation has identified separate operating segments and internal financial information is primarily reported and aggregated in two lines of business, banking and wealth management services.

RECLASSIFICATION

Amounts in the prior years' consolidated financial statements are reclassified whenever necessary to conform to the current year's presentation. Reclassification adjustments had no impact on prior year net income or shareholders' equity.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The objective of the ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The ASU supersedes current GAAP by replacing the incurred loss impairment method with a methodology that reflects lifetime expected credit losses and requires the consideration of a broader range of reasonable and supportable information to form credit loss estimates. In November 2019, the FASB adopted an amendment to postpone the effective date of ASU 2016-13 to January 2023 for certain entities, including certain Securities and Exchange Commission filers, public business entities, and private companies. As a smaller reporting company, the Corporation is eligible for and elected delayed adoption.

The Corporation adopted the standard, effective January 1, 2023, and recognized a one-time cumulative adjustment to retained earnings as of January 1, 2023 to reflect the change in methodology. The cumulative-effect adjustment did not have an impact on prior year results. Retained earnings was reduced by $1.5 million, or $1.1 million, net of tax, effective January 1. The $1.5 million adjustment was reflective of the establishment of an allowance for credit losses on unfunded commitments, totaling $1.1 million, and a $0.4 million addition to the allowance for credit losses on loans, reflecting the change in methodology.

Further details regarding the Corporation's adoption of ASU 2013-16 and its methodology thereof can be found in the preceding sections of this Note 1, as well as in Note 4 - Loans and Allowance for Credit Losses, as well as throughout Management's Discussion and Analysis of Financial Condition and Results of Operations.

F-19

In March 2022, the FASB issued ASU 2022-02, which eliminates creditor accounting guidance for TDRs for entities that have adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) and enhances Vintage Disclosures of Gross Writeoffs. This ASU eliminates Subtopic 310-40 guidance for TDRs, and requires creditors to apply the loan refinancing and restructuring guidance in Subtopic 310-20 when evaluating modifications granted to borrowers experiencing financial difficulty to determine whether the modification is considered a continuation of an existing loan or a new loan. The vintage disclosure component of the ASU requires entities to disclose current-period gross writeoffs by origination year for financing receivables and investment leases within the scope of Subtopic 326-20. The Corporation adopted adopt ASU 2022-02 concurrently with the adoption of ASU 2016-13.

In December 2022, the FASB issued ASU No. 2022-06, Deferral of the Sunset Date of Topic 848, and defers the date for which accounting relief can be applied under Topic 848. ASU 2022-06 applies to entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The objective of the guidance in Topic 848 is to ease the burden in accounting related to the recognition of the effects of reference rate reform on financial reporting. A sunset provision was included within Topic 848 based on expectations of when LIBOR would cease being published. The Corporation had adopted the accounting relief provisions of Topic 848 effective October 1, 2020. The amendments in ASU 2022-06 defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be able to apply the accounting relief in Topic 848. ASU 2022-06 was effective for all entities upon its issuance. The adoption of the provisions of Topic 848, as amended, did not have a material impact on the Corporation’s consolidated financial statements, and the Corporation has transitioned all financial instruments that previously referenced LIBOR benchmarks.

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements, which and modifies the disclosure or presentation requirements of a variety of Topics in the Accounting Standards Codification, in response to SEC Release No. 33-10532, Disclosure Update and Simplifications, issued on August 17, 2018. The SEC identified several disclosure requirements that overlap with U.S. GAAP, but require incremental information to comply with disclosure standards in Regulations S-X and Regulation S-K. ASU 2023-06 codifies specific amendments to align the codification with SEC regulations. The effective date for each amendment is that date on which each disclosure requirement is removed from Regulation S-K and Regulation S-X. The Corporation anticipates that certain amendments will pertain to the Corporation's financial disclosures or presentation, but cannot determine with certainty which amendments are applicable until removal from Regulation S-K or Regulation S-X.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, enhancing disclosure requirements for reportable segments, focusing on significant segment expenses, and the identification of a segment's chief decision making officer, and the metrics used by the chief decision making officer in evaluating segment-level operating performance. The ASU is effective for fiscal years beginning after December 15, 2023. The Corporation will begin providing enhanced segment reporting disclosures in accordance with ASU 2023-07 for the fiscal year ending December 31, 2024, and for interim periods thereafter.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, which will require public business entities to disclose annually a tabular rate reconciliation, including specific items such as state and local income tax, tax credits, nontaxable or nondeductible items, among others, and a separate disclosure requiring disaggregation of reconciling items as described above which equal or exceed 5% percent of the product of multiplying income from continuing operations by the applicable statutory income tax rate. The ASU is effective for all public business entities for annual periods beginning after December 31, 2024.

USE OF ANALOGOUS ACCOUNTING STANDARDS

Under U.S. GAAP, there is no specific guidance related to government assistance received by a for-profit entity that is not in the form of a loan, income tax credit, or revenue from a contract with a customer. Therefore, the Corporation must rely upon analogous accounting standards to determine appropriate treatment when such circumstances arise. The Corporation accounted for the recognition of the Employee Retention Tax Credit (ERTC) using ASC 958-605, Revenue Recognition for Not-for-Profit entities. ASC 958-10-15-1 specifies that certain Subtopics within ASC 958-605 also apply to business entities.

The Corporation considers the recognition of the ERTC to be analogous to the stipulations for "conditional contributions" under ASC 958-605-20. Conditional contributions have at least one barrier needing to be overcome before the recipient is entitled to the assets transferred or promised; there must be a right-of-return to the contributor; and barriers to the condition should be measurable. The Corporation recognized the gross amount of the ERTC through non-interest income during the period in which the barrier was overcome, identified as the period during which amended tax returns were filed. The Corporation incurred and recognized additional income tax expense during the period in relation to its amended tax returns.

F-20

(2)    RESTRICTIONS ON CASH AND DUE FROM BANK ACCOUNTS

Generally, the Corporation is required to maintain balances with the Federal Reserve Bank of New York based upon outstanding balances of deposit transaction accounts. However, as of March 15, 2020, the Federal Reserve Board reduced reserve requirement ratios to zero percent, effective March 26, 2020. Therefore, at December 31, 2023 and 2022, there were no reserve requirements with the Federal Reserve Bank of New York.

The Corporation maintains a pre-funded settlement account with a financial institution in the amount of $1.6 million for electronic funds transaction settlement purposes at December 31, 2023 and 2022.

The Corporation also maintains a collateral restricted account with a financial institution related to the Corporation's interest rate swap program. The account serves as collateral in the event of default on the interest rate swaps with the counterparties. No collateral was held at the financial institution as of December 31, 2023, and 2022.

(3)     SECURITIES

Amortized cost and estimated fair value of securities available for sale at December 31, 2023 and 2022 are as follows (in thousands):

	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Estimated Fair Value
U.S. treasury notes and bonds	$	59,812	$	—	$	4,480	$	—	$	55,332
Mortgage-backed securities, residential	476,240		6		72,422		—		403,824
Collateralized mortgage obligations	—		—		—		—		—
Obligations of states and political subdivisions	39,503		—		817		—		38,686
Corporate bonds and notes	25,750		—		5,081		—		20,669
SBA loan pools	67,787		75		2,380		—		65,482
Total	$	669,092	$	81	$	85,180	$	—	$	583,993

	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. treasury notes and bonds	$	61,800	$	—	$	6,225	$	55,574
Mortgage-backed securities, residential	518,838		—		83,707		435,131
Collateralized mortgage obligations	—		—		—		—
Obligations of states and political subdivisions	39,828		2		938		38,892
Corporate bonds and notes	25,750		—		3,780		21,970
SBA loan pools	82,982		155		2,116		81,022
Total	$	729,198	$	157	$	96,766	$	632,589

Proceeds from the sale of available for sale securities for the year ended December 31, 2023 were $1.2 million, and a gross loss of $14 thousand was realized on these sales. The sales were executed by Chemung Risk Management, Inc., which served as a wholly owned captive insurance company based in the State of Nevada, until dissolution by the Corporation effective December 6, 2023. There were no proceeds from sales and calls of securities resulting in gains or losses during the year ended December 31, 2022. The tax benefit related to these net realized losses was $4 thousand for the year ended December 31, 2023.

F-21

The amortized cost and estimated fair value of debt securities available for sale are shown below by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately (in thousands):

	December 31, 2023
	Amortized Cost		Estimated Fair Value
Within one year	$	5,678	$	5,594
After one, but within five years	101,391		94,363
After five, but within ten years	17,526		14,302
After ten years	470		428
Mortgage-backed securities: residential	476,240		403,824
SBA loan pools	67,787		65,482
Total	$	669,092	$	583,993

Amortized cost and estimated fair value of securities held to maturity at December 31, 2023 and 2022 are as follows (in thousands):

	December 31, 2023
	Amortized Cost		Unrecognized Gains		Unrecognized Losses		Estimated Fair Value		Allowance for Credit Losses
Obligations of states and political subdivisions	$	785	$	—	$	—	$	785	$	—
Time deposits with other financial institutions	—		—		—		—		—
	$	785	$	—	$	—	$	785	$	—

	December 31, 2022
	Amortized Cost		Unrecognized Gains		Unrecognized Losses		Estimated Fair Value
Obligations of states and political subdivisions	$	952	$	—	$	—	$	952
Time deposits with other financial institutions	1,472		—		22		1,450
	$	2,424	$	—	$	22	$	2,402

Proceeds from the sale of held to maturity securities for the year ended December 31, 2023 were $1.0 million, and a gross loss of $25 thousand was realized on these sales. The sales were executed by Chemung Risk Management, Inc., which served as a wholly owned captive insurance company based in the State of Nevada, until dissolution by the Corporation effective December 6, 2023. There were no proceeds from sales of securities held to maturity during the year ended December 31, 2022.

The contractual maturity of securities held to maturity was as follows at December 31, 2023 (in thousands):

	December 31, 2023
	Amortized Cost		Fair Value
Within one year	$	—	$	—
After one, but within five years	145		145
After five, but within ten years	640		640
After ten years	—		—
Total	$	785	$	785

F-22

The following tables summarize the investment securities available for sale with unrealized losses, for which an allowance for credit losses has not been recorded as of December 31, 2023, and an other than temporary impairment (OTTI) has not been recorded as of December 31, 2022 aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
2023
U.S. treasury notes and bonds	$	—	$	—	$	55,332	$	4,480	$	55,332	$	4,480
Mortgage-backed securities: residential	—		—		402,986		72,422		402,986		72,422
Obligations of states and political subdivisions	17,891		241		20,686		576		38,577		817
Corporate bonds and notes	7,492		2,508		13,177		2,573		20,669		5,081
SBA loan pools	3,914		13		54,468		2,367		58,382		2,380
Total temporarily impaired securities	$	29,297	$	2,762	$	546,649	$	82,418	$	575,946	$	85,180

	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
2022
U.S. treasury notes and bonds	$	1,011	$	30	$	54,563	$	6,195	$	55,574	$	6,225
Mortgage-backed securities, residential	79,891		7,621		355,240		76,086		435,131		83,707
Obligations of states and political subdivisions	37,847		938		—		—		37,847		938
Corporate bonds and notes	4,515		485		7,455		3,295		11,970		3,780
SBA loan pools	14,333		925		51,123		1,191		65,456		2,116
Total temporarily impaired securities	$	137,597	$	9,999	$	468,381	$	86,767	$	605,978	$	96,766

Pledged Securities

The fair value of securities pledged to secure public funds on deposit or for other purposes as required by law was $255.0 million at December 31, 2023 and $213.8 million at December 31, 2022.

Concentrations

There are no securities of a single issuer (other than securities of U.S. Government sponsored enterprises) that exceeded 10% of shareholders' equity at December 31, 2023 or 2022.

Assessment of Available for Sale Debt Securities for Credit Risk

Management assesses the change in fair value of investment securities on a regular basis. Unrealized losses on debt securities may occur from current market conditions, increases in interest rates since the time of purchase, structural changes in an investment, volatility in financial results of specific issuers, or deterioration in credit quality of issuers. Management assesses both qualitative and quantitative factors to determine whether any credit-related allowance is required. The following is a discussion of the credit quality characteristics of major portfolio segments carrying material unrealized losses as of December 31, 2023.

F-23

Obligations of U.S. Governmental agencies and sponsored enterprises:

As of December 31, 2023, a significant portion of the Corporation’s unrealized losses in available for sale investment securities related to mortgage-backed securities, issued by government-sponsored entities and agencies. Declines in fair value are attributable to changes in interest rates and market liquidity, not credit quality. The Corporation does not have the intent, and it is not likely to be required, to sell these securities prior to their anticipated recovery. All mortgage-backed securities in the available for sale securities portfolio as of December 31, 2023 were issued by FHLMC, FNMA, or GNMA. Because the Corporation considers these obligations to carry zero credit loss estimates, no allowance for credit losses was recorded as of December 31, 2023.

Corporate bonds and notes:

The Corporation's corporate bonds and notes portfolio is comprised of subordinated debt issues of community and regional banks. Management considers the credit quality of these investments on an individual basis. Management reviews the collectability of these securities, taking into consideration such factors as the financial condition of issuers, reported regulatory capital ratios of the issuers, and credit ratings when available, among other pertinent factors. All corporate bond debt securities continue to accrue interest and make payments as expected with no defaults or deferrals on the part of the issuers. Therefore, the Corporation considers the potential credit risk of the issuers to be immaterial, and no allowance for credit losses was recorded as of December 31, 2023.

Other-Than-Temporary-Impairment

Prior to the adoption of ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), the Corporation evaluated its portfolio of available for sale securities for Other than Temporary Impairment (OTTI). As of December 31, 2022, the majority of the Corporation’s unrealized losses in the investment securities portfolio related to mortgage-backed securities. At December 31, 2022, the unrealized losses related to mortgage-backed were securities issued by U.S. government sponsored entities, Fannie Mae and Freddie Mac. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Corporation does not have the intent to sell these securities and it is not likely that it will be required to sell these securities before their anticipated recovery, the Corporation does not consider these securities to be other-than-temporarily impaired at December 31, 2022.

Equity Method Investments

The Corporation holds a non-qualified deferred compensation plan to allow a select group of management and employees the opportunity to defer all or a portion of their annual compensation, and treats assets held under this plan as equity method investments. As of December 31, 2023 and December 31, 2022, the fair value of investments held in relation to the deferred compensation plan was $2.4 million and $2.1 million, respectively. The Corporation also held $0.6 million of marketable securities as equity method investments for each of the years ended December 31, 2023 and 2022.

F-24

(4)     LOANS AND ALLOWANCE FOR CREDIT LOSSES

The composition of the loan portfolio, net of deferred loan fees at December 31, 2023 and 2022 is summarized as follows (in thousands):

	2023		2022
Commercial and agricultural:
Commercial and industrial	$	264,140	$	252,044
Agricultural	256		249
Commercial mortgages:
Construction	138,887		108,243
Commercial mortgages, other	984,038		888,670
Residential mortgages	277,992		285,672
Consumer loans:
Home equity lines and loans	87,056		81,401
Indirect consumer loans	210,423		202,124
Direct consumer loans	9,872		11,045
Total loans, net of deferred loan fees	1,972,664		1,829,448
Allowance for credit losses	(22,517)		(19,659)
Loans, net of allowance for credit losses	$	1,950,147	$	1,809,789

The Corporation's concentrations of credit risk by loan type are reflected in the preceding table. The concentrations of credit risk with standby letters of credit, committed lines of credit and commitments to originate new loans generally follow the loan classifications in the table above.

Accrued interest receivable on loans amounted to $7.8 million at December 31, 2023 and $6.5 million at December 31, 2022. Accrued interest receivable on loans is included in the Accrued interest receivable and other assets line item on the Corporation's Consolidated Balance Sheets, and is excluded from the amortized cost basis of loans and estimate of the allowance for credit losses, as presented in this Note. Recorded investment balances of loans as of December 31, 2022 included accrued interest receivable.

The Corporation had no residential mortgages held for sale as of December 31, 2023 and December 31, 2022. When the Corporation has loans classified as held for sale, they are not included in the table above.

Residential mortgage and home equity loans totaling $254.6 million at December 31, 2023 and $254.4 million at December 31, 2022 were pledged under a blanket collateral agreement for the Corporation's line of credit with the FHLBNY.

The following tables present the activity in the allowance for credit losses by portfolio segment for the year ended December 31, 2023 and the allowance for loan losses for the year ended December 31, 2022 , respectively (in thousands):

	December 31, 2023
Allowance for credit losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Beginning balance, January 1, 2023	$	3,373	$	11,576	$	1,845	$	2,865	$	19,659
Cumulative effect adjustment for the adoption of ASC-326	909		(695)		(16)		176		374
Beginning balance after cumulative effect adjustment, January 1, 2023	4,282		10,881		1,829		3,041		20,033
Charge Offs:	(281)		—		(32)		(1,070)		(1,383)
Recoveries:	22		4		—		416		442
Net (charge offs) recoveries	(259)		4		(32)		(654)		(941)
Provision (1)	1,032		1,141		397		855		3,425
Ending balance, December 31, 2023	$	5,055	$	12,026	$	2,194	$	3,242	$	22,517

(1) Additional provision related to off-balance sheet exposure was a credit of $163 thousand for the year ended December 31, 2023.

F-25

	December 31, 2022
Allowance for loan losses	Commercial, and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Beginning balance:	$	3,591	$	13,556	$	1,803	$	2,075	$	21,025
Charge Offs:	(20)		(687)		(17)		(770)		(1,494)
Recoveries:	42		3		40		597		682
Net recoveries (charge offs)	22		(684)		23		(173)		(812)
Provision	(240)		(1,296)		19		963		(554)
Ending balance	$	3,373	$	11,576	$	1,845	$	2,865	$	19,659

Unfunded Commitments

The allowance for credit losses on unfunded commitments represents the amount held against credit exposures that are not represented on the Consolidated Balance Sheets. The allowance is recognized as a liability, a component of Other liabilities on the Consolidated Balance Sheets, with adjustments to the allowance recognized in the provision for credit losses line item on the Consolidated Statements of Income. The Corporation established a reserve for unfunded commitments in conjunction with its adoption of ASC 326-Financial Instruments-Credit Losses.

The following table presents the activity in the allowance for credit losses on unfunded commitments for the years ended December 31, 2023 and 2022:

Allowance for credit losses on unfunded commitments	For the Twelve Months Ended December 31,
	2023		2022
Beginning balance	$	—	$	—
Impact of adoption of ASC-326	1,082		—
Provision for credit losses on unfunded commitments	(163)		—
Ending balance	$	919	$	—

The following table presents the provision for credit losses on loans and unfunded commitments for the year ended December 31, 2023 , based upon the current expected credit loss methodology, and the provision for loan losses on loans for the year ended December 31, 2022, based upon the incurred loss methodology:

	For the Twelve Months Ended December 31,
Provision for credit losses	2023		2022
Provision for credit losses on loans	$	3,425	$	(554)
Provision for credit losses on unfunded commitments	(163)		—
Total provision (credit) for credit losses	$	3,262	$	(554)

F-26

The following tables present the balance in the Allowance for credit losses and the amortized cost basis in loans by portfolio segment and based on analysis status as of December 31, 2023 and the allowance for loan losses and the amortized cost basis in loans by portfolio as of December 31, 2022, respectively (in thousands):

	December 31, 2023
Allowance for credit losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Ending allowance balance attributable to loans:
Individually analyzed	$	1,928	$	27	$	—	$	—	$	1,955
Collectively analyzed	3,127		11,999		2,194		3,242		20,562
Total ending allowance balance	$	5,055	$	12,026	$	2,194	$	3,242	$	22,517

	December 31, 2022
Allowance for loan losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,078	$	38	$	—	$	31	$	1,147
Collectively evaluated for impairment	2,295		11,538		1,845		2,834		18,512
Total ending allowance balance	$	3,373	$	11,576	$	1,845	$	2,865	$	19,659

	December 31, 2023
Loans	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Loans individually analyzed	$	2,067	$	5,968	$	—	$	—	$	8,035
Loans collectively analyzed	262,329		1,116,957		277,992		307,351		1,964,629
Total ending loans balance	$	264,396	$	1,122,925	$	277,992	$	307,351	$	1,972,664

	December 31, 2022
Loans	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Loans individually evaluated for impairment	$	2,112	$	4,383	$	723	$	264	$	7,482
Loans collectively evaluated for impairment	250,181		992,530		284,949		294,306		1,821,966
Total ending loans balance	$	252,293	$	996,913	$	285,672	$	294,570	$	1,829,448

Modifications to Loans Made to Borrowers Experiencing Financial Difficulty

Effective January 1, 2023, the Corporation adopted ASU 2022-02, Financial Instruments-Credit Losses (Topic 326)-Troubled Debt Restructurings and Vintage Disclosures, on a prospective basis. The Corporation may occasionally make modifications to loans where the borrower is considered to be experiencing financial difficulty. Types of modifications considered under ASU 2022-02 include principal reductions, interest rate reductions, term extensions, significant payment delays, or a combination thereof.

F-27

The following table summarizes the amortized cost basis of loans modified during the year ended December 31, 2023 (in thousands):

	December 31, 2023
Loans modified under ASU 2022-02	Principal Reduction		Interest Rate Reduction		Term Extension		Payment Delay		Combination		Total		(%) of Loan Class (1)
Commercial and agricultural:
Commercial & industrial	$	—	$	—	$	1,011	$	—	$	—	$	1,011	0.38	%
Agricultural	—		—		—		—		—		—		—	%
Commercial mortgages:
Construction	—		—		—		—		—		—		—	%
Commercial mortgages, other	—		—		272		1,878		—		2,150		0.22	%
Residential mortgages	—		—		—		—		—		—		—	%
Consumer loans:
Home equity lines and loans	—		—		116		—		—		116		0.13	%
Indirect consumer loans	—		—		—		—		—		—		—	%
Direct consumer loans	—		—		—		—		—		—		—	%
Total	$	—	$	—	$	1,399	$	1,878	$	—	$	3,277

(1) Represents the amortized cost basis of loans modified during the period as a percentage of the period-end loan balances by class.

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the year ended December 31, 2023:

Effect of loan modifications under ASU 2022-02	Principal reduction (in thousands)		Weighted average interest rate reduction (%)		Weighted average term extension (in months)	Weighted-average payment delay (in months)
Commercial and agricultural:
Commercial & industrial	$	—	—	%	12 months
Agricultural	$	—	—	%
Commercial mortgages:
Construction	$	—	—	%
Commercial mortgages, other	$	—	—	%	60 months	4 months
Residential mortgages	$	—	—	%
Consumer loans:
Home equity lines and loans	$	—	—	%	180 months
Indirect consumer loans	$	—	—	%
Direct consumer loans	$	—	—	%

The Corporation closely monitors the performance of loans that have been modified in accordance with ASU 2022-02 in order to understand the effectiveness of its modification efforts. There was one commercial and industrial loan modified to borrowers experiencing financial difficulty during the prior twelve months that sustained a payment default on the modified terms during the year ended December 31, 2023. An allocation totaling $0.9 million was included for this modified loan in the allowance for credit losses as of December 31, 2023.

F-28

Individually Analyzed Loans

Effective January 1, 2023, the Corporation began analyzing loans on an individual basis when management determined that the loan no longer exhibited risk characteristics consistent with the risk characteristics existing in its designated pool of loans, under the Corporation's CECL methodology. Loans individually analyzed include certain non-accrual commercial, as well as certain accruing loans previously identified under prior troubled debt restructuring (TDR) guidance.

As of December 31, 2023, the amortized cost basis of individually analyzed loans was $8.0 million, of which $6.3 million were considered collateral dependent. For collateral dependent loans where the borrower is experiencing financial difficulty and repayment is likely to be substantially provided through the sale or operation of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan, at measurement date. Certain assets held as collateral may be exposed to future deterioration in fair value, particularly due to changes in real estate markets or usage.

The following table presents the amortized cost basis and related allowance for credit loss of individually analyzed loans considered to be collateral dependent as of December 31, 2023 (in thousands):

	December 31, 2023
	Amortized Cost Basis		Related Allowance
Commercial and agricultural:
Commercial and industrial (1) (2)	$	353	$	214
Agricultural (2)	26		26
Commercial mortgages:
Construction (1)	2,209		—
Commercial mortgages, other (1) (2) (3)	3,759		27
Total	$	6,347	$	267

(1) Secured by commercial real estate

(2) Secured by business assets

(3) Secured by residential real estate

Differing from the methodology for analyzing loans on an individual basis used as of December 31, 2023, as described above, prior to January 1, 2023, the Corporation considered a loan to be impaired for credit analysis purposes when, based on currently available information, it was deemed probable that the Corporation would not be able to collect on the loan's contractually determined principal and interest payments. Impaired loans included loans on non-accrual status and troubled debt restructurings (TDRs). The Corporation identified loss allocations for impaired loans on an individual basis, and in conformity with its methodology under the incurred loss framework.

F-29

The following is a summary of impaired loans as of December 31, 2022 (in thousands):

	December 31, 2022
With no related allowance recorded:	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
Commercial and agricultural:
Commercial and industrial	$	1,026	$	1,025	$	—
Commercial mortgages:
Construction	5		5		—
Commercial mortgages	4,346		4,341		—
Residential mortgages	767		760		—
Consumer loans:
Home equity lines and loans	154		138		—
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial	1,086		1,088		1,078
Commercial mortgages:
Commercial mortgages	38		38		38
Consumer loans:
Home equity lines and loans	126		127		31
Total	$	7,548	$	7,522	$	1,147

The following table presents the average amortized basis and interest income recognized for loans individually analyzed, by class, as of December 31, 2023 and loans individually evaluated for impairment, by class, as of December 31, 2022, (in thousands):

	December 31, 2023				December 31, 2022
With no related allowance recorded:	Average Amortized Cost Basis		Interest Income Recognized (1)		Average Amortized Cost Basis		Interest Income Recognized (1)
Commercial and agricultural:
Commercial and industrial	$	431	$	—	$	814	$	—
Agricultural	—		—		—		—
Commercial mortgages:
Construction	443		103		71		—
Commercial mortgages	3,988		5		4,211		14
Residential mortgages	288		—		864		37
Consumer loans:
Home equity lines & loans	99		—		153		—
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial	1,328		55		1,453		5
Agricultural	11		—		—		—
Commercial mortgages:
Construction	—		—		—		—
Commercial mortgages	33		—		1,258		—
Residential mortgages	—		—		—		—
Consumer loans:
Home equity lines and loans	25		—		137		—
Direct consumer loans	—		—		—		—
Total	$	6,646	$	163	$	8,961	$	56

(1) Cash basis interest income approximates interest income recognized.

F-30

The following table presents the amortized cost basis of non-accrual loans with no related allowance for credit losses, total non-accrual loans, and loans pasts due for 90 days or greater which are still accruing, by class of loans, as of December 31, 2023 and December 31, 2022 (in thousands):

	Non-accrual with no allowance for credit losses				Non-accrual				Loans Past Due 90 Days or More and Still Accruing
	2023		2022		2023		2022		2023		2022
Commercial and agricultural:
Commercial and industrial	$	76	$	1,035	$	1,904	$	1,946	$	10	$	1
Agricultural	—		—		26		—		—		—
Commercial mortgages:
Construction	2,209		5		2,209		5		—		—
Commercial mortgages	3,732		3,890		3,760		3,928		—		—
Residential mortgages	1,315		986		1,315		986		—		—
Consumer loans:
Credit cards	—		—		—		—		—		—
Home equity lines and loans	508		729		508		760		—		—
Indirect consumer loans	687		540		687		540		—		—
Direct consumer loans	2		13		2		13		—		—
Total	$	8,529	$	7,198	$	10,411	$	8,178	$	10	$	1

F-31

The following tables present the aging of the amortized cost basis in loans as of December 31, 2023 and December 31, 2022 (in thousands):

	December 31, 2023
	30 - 59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial and agricultural:
Commercial and industrial	$	1,196	$	31	$	10	$	1,237	$	262,903	$	264,140
Agricultural	—		—		—		—		256		256
Commercial mortgages:
Construction	2,164		—		2,207		4,371		134,516		138,887
Commercial mortgages	1,022		103		261		1,386		982,652		984,038
Residential mortgages	2,244		201		585		3,030		274,962		277,992
Consumer loans:
Credit cards	—		—		—		—		—		—
Home equity lines and loans	461		87		366		914		86,142		87,056
Indirect consumer loans	2,473		501		426		3,400		207,023		210,423
Direct consumer loans	2		20		—		22		9,850		9,872
Total	$	9,562	$	943	$	3,855	$	14,360	$	1,958,304	$	1,972,664

	December 31, 2022
	30 - 59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial and agricultural:
Commercial and industrial	$	74	$	3	$	1	$	78	$	251,966	$	252,044
Agricultural	—		—		—		—		249		249
Commercial mortgages:
Construction	—		—		—		—		108,243		108,243
Commercial mortgages	1,058		—		486		1,544		887,126		888,670
Residential mortgages	1,360		709		294		2,363		283,309		285,672
Consumer loans:
Credit cards	—		—		—		—		—		—
Home equity lines and loans	193		121		442		756		80,645		81,401
Indirect consumer loans	1,397		193		250		1,840		200,284		202,124
Direct consumer loans	2		19		1		22		11,023		11,045
Total	$	4,084	$	1,045	$	1,474	$	6,603	$	1,822,845	$	1,829,448

F-32

Credit Quality Indicators

The Corporation establishes a risk rating at origination for all commercial loans. The main factors considered in assigning risk ratings include, but are not limited to: historic and future debt service coverage, collateral position, operating performance, liquidity, leverage, payment history, management ability, and the customer’s industry. Commercial relationship managers monitor all loans in their respective portfolios for any changes in the borrower’s ability to service its debt and affirm the risk ratings for the loans at least annually.

For retail loans, which include residential mortgages, indirect and direct consumer loans, and home equity lines and loans, once a loan is appropriately approved and closed, the Corporation evaluates credit quality based upon loan repayment. Retail loans are not rated until they become 90 days past due.

The Corporation uses its risk rating system to identify criticized and classified loans. Commercial relationships within the criticized and classified risk ratings are analyzed quarterly.  The Corporation uses the following definitions for criticized and classified loans (which are consistent with regulatory guidelines):

Special Mention – Loans classified as special mention have a potential weakness that deserves management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or the institution’s credit position at some future date.

Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capability of the obligor or of the collateral pledged, if any.  Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Commercial loans not meeting the criteria above to be considered criticized or classified, are considered to be pass rated loans. Loans listed as not rated, are included in groups of homogeneous loans performing under terms of the loan notes.

F-33

Based on the analyses performed as of December 31, 2023, the risk category of the amortized cost basis of loans by class of loans and vintage, as well as the gross charge-offs by loan class and vintage for the period, are as follows (in thousands):

	Term Loans - Amortized Cost by Origination Year													Revolving Loans Amortized Cost		Revolving Loans Converted to Term		Total
	2023		2022		2021		2020		2019			Prior
Commercial & Industrial
Pass	$	41,601	$	35,768	$	17,506	$	10,195	$	33,436		$	7,746	$	92,114	$	—	$	238,366
Special Mention	185		2,103		—		—		—			432		9,730		10,672		23,122
Substandard	—		24		991		109		23			456		—		161		1,764
Doubtful	—		—		—		—		—			790		75		23		888
Total	41,786		37,895		18,497		10,304		33,459			9,424		101,919		10,856		264,140
Gross charge offs	—		—		—		—		9			272		—		—		281
Agricultural
Pass	—		15		150		—		—			—		65		—		230
Special Mention	—		—		—		—		—			—		—		—		—
Substandard	—		—		—		—		—			—		—		26		26
Doubtful	—		—		—		—		—			—		—		—		—
Total	—		15		150		—		—			—		65		26		256
Gross charge offs	—		—		—		—		—			—		—		—		—
Construction
Pass	11,275		1,445		—		—		28			1,178		122,752		—		136,678
Special Mention	—		—		—		—		—			—		—		—		—
Substandard	—		—		—		—		2,207			2		—		—		2,209
Doubtful	—		—		—		—		—			—		—		—		—
Total	11,275		1,445		—		—		2,235			1,180		122,752		—		138,887
Gross charge offs	—		—		—		—		—			—		—		—		—
Commercial mortgages
Pass	91,636		207,277		123,040		90,635		39,175			168,878		233,999		—		954,640
Special Mention	—		2,533		8,189		2,609		—			3,216		—		5,426		21,973
Substandard	272		1,107		345		1,022		—			4,143		97		412		7,398
Doubtful	—		—		—		—		—			27		—		—		27
Total	91,908		210,917		131,574		94,266		39,175			176,264		234,096		5,838		984,038
Gross charge offs	—		—		—		—		—			—		—		—		—
Residential mortgages
Not rated	14,027		50,556		49,428		69,070		15,093			44,628		33,875		—		276,677
Substandard	—		75		346		—		169			725		—		—		1,315
Total	14,027		50,631		49,774		69,070		15,262			45,353		33,875		—		277,992
Gross charge offs	—		32		—		—		—			—		—		—		32
Home equity lines and loans
Not rated	13,743		16,621		5,797		3,110		2,845			10,342		34,090		—		86,548
Substandard	—		77		—		—		—		(1)	293		25		113		508
Total	13,743		16,698		5,797		3,110		2,845			10,635		34,115		113		87,056
Gross charge offs	—		—		—		—		—			—		6		—		6
Indirect consumer
Not rated	72,264		98,008		23,015		9,192		3,870			3,387		—		—		209,736
Substandard	119		246		135		48		36			103		—		—		687
Total	72,383		98,254		23,150		9,240		3,906			3,490		—		—		210,423
Gross charge offs	184		375		215		121		21			55		—		—		971
Direct consumer
Not rated	3,005		2,745		785		256		53			357		2,669		—		9,870
Substandard	—		—		—		2		—			—		—		—		2
Total	3,005		2,745		785		258		53			357		2,669		—		9,872
Gross charge offs	4		15		8		6		—			54		6		—		93
	—						—		—			—		—		—
Total loans	$	248,127	$	418,600	$	229,727	$	186,248	$	96,935		$	246,703	$	529,491	$	16,833	$	1,972,664
Total Gross charge-offs	$	188	$	422	$	223	$	127	$	30		$	381	$	12	$	—	$	1,383

F-34

Prior to the adoption of ASC 326-Financial Instruments-Credit Losses, loans not meeting the criteria above that were analyzed individually as part of the above described process were considered pass rated loans as of December 31, 2022. Based upon the analyses performed as of December 31, 2022, the risk category of the recorded investment of loans by class of loans was as follows (in thousands):

	December 31, 2022
	Not Rated		Pass		Special Mention		Substandard		Doubtful		Total
Commercial and agricultural:
Commercial and industrial	$	—	$	235,900	$	13,349	$	2,899	$	893	$	253,041
Agricultural	—		250		—		—		—		250
Commercial mortgages:
Construction	—		108,488		178		5		—		108,671
Commercial mortgages	—		860,389		23,938		7,825		38		892,190
Residential mortgages	285,459		—		—		986		—		286,445
Consumer loans
Credit cards	—		—		—		—		—		—
Home equity lines and loans	80,942		—		—		760		—		81,702
Indirect consumer loans	202,050		—		—		540		—		202,590
Direct consumer loans	11,094		—		—		13		—		11,107
Total	$	579,545	$	1,205,027	$	37,465	$	13,028	$	931	$	1,835,996

The Corporation considers the performance of the loan portfolio and its impact on the allowance for credit losses. For residential and consumer loan classes, the Corporation also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. Non-performing loans include non-accrual loans.

For residential and consumer loan classes, the Corporation evaluated credit quality based on the aging status of the loan, which was presented by payment activity. The following table presents the amortized cost basis in residential and consumer loans based on payment activity as of December 31, 2023 (in thousands):

	December 31, 2023
			Consumer Loans
	Residential Mortgages		Home Equity Lines and Loans		Indirect Consumer Loans		Other Direct Consumer Loans
Performing	$	276,677	$	86,548	$	209,736	$	9,870
Non-Performing	1,315		508		687		2
Total	$	277,992	$	87,056	$	210,423	$	9,872

Prior to the adoption of ASC 326-Financial Instruments-Credit Losses, the Corporation also evaluated credit quality based on the aging status of the loan, which was presented, by payment activity. The following table presents the recorded investment in residential and consumer loans based on payment activity as of December 31, 2022 (in thousands):

	December 31, 2022
			Consumer Loans
	Residential Mortgages		Home Equity Lines and Loans		Indirect Consumer Loans		Other Direct Consumer Loans
Performing	$	285,459	$	80,942	$	202,050	$	11,094
Non-Performing	986		760		540		13
Total	$	286,445	$	81,702	$	202,590	$	11,107

F-35

(5)    PREMISES AND EQUIPMENT

Premises and equipment at December 31, 2023 and 2022 are as follows (in thousands):

	2023		2022
Land	$	4,664	$	4,674
Buildings	40,727		40,419
Projects in progress	11		82
Equipment and furniture	37,237		36,964
Leasehold improvements	4,874		4,874
	87,513		87,013
Less accumulated depreciation and amortization	72,942		70,900
Net book value	$	14,571	$	16,113

Depreciation expense was $2.0 million and $2.2 million for 2023 and 2022, respectively.

Finance Leases

The Corporation leases certain buildings under finance leases. The lease arrangements require monthly payments through 2036.

The Corporation has included these finance leases in premises and equipment as follows:

	2023		2022
Buildings	$	5,572	$	5,572
Accumulated depreciation	(2,872)		(2,540)
Net book value	$	2,700	$	3,032

F-36

(6)    LEASES

Operating Leases

The Corporation leases certain branch properties under long-term, operating lease agreements. The leases expire at various dates through 2033 and generally include renewal options. As of December 31, 2023, the weighted average remaining lease term was 7.9 years with a weighted average discount rate of 3.40%. Rent expense was $1.0 million for each of the years ended December 31, 2023 and 2022. Certain leases provide for increases in future minimum annual rent payments as defined in the lease agreements. The Corporation’s operating lease agreements contain both lease and non-lease components, which are generally accounted for separately. The Corporation’s lease agreements do not contain any residual value guarantees.

Leased branch properties at December 31, 2023 and December 31, 2022 consist of the following (in thousands):

	2023		2022
Operating lease right-of-use asset	$	6,449	$	7,234
Less: accumulated amortization	(801)		(785)
Less: lease termination	—		—
Add: new lease agreement and modifications	—		—
Operating lease right-of-use-assets, net	$	5,648	$	6,449

The following is a schedule by year of the undiscounted cash flows of the operating lease liabilities, excluding CAM charges, as of December 31, 2023 (in thousands):

Year	Amount
2024	$	924
2025	841
2026	845
2027	854
2028	721
2029 and thereafter	2,446
Total minimum lease payments	6,631
Less: amount representing interest	(804)
Present value of net minimum lease payments	$	5,827

As of December 31, 2023, the Corporation had one operating lease that was signed on October 19, 2023, but had not yet commenced.

Finance Leases

The Corporation leases certain buildings under finance leases. The lease arrangements require monthly payments through 2036. As of December 31, 2023, the weighted average remaining lease term was 9.3 years with a weighted average discount rate of 3.42%. The Corporation has included these leases in premises and equipment as of December 31, 2023 and December 31, 2022.

F-37

The following is a schedule by year of future minimum lease payments under the capitalized lease, together with the present value of net minimum lease payments as of December 31, 2023 (in thousands):

Year	Amount
2024	$	391
2025	409
2026	425
2027	428
2028	428
2029 and thereafter	1,560
Total minimum lease payments	3,641
Less: amount representing interest	(591)
Present value of net minimum lease payments	$	3,050

As of December 31, 2023, the Corporation had no finance leases that were signed, but had not yet commenced.

(7)            GOODWILL AND INTANGIBLE ASSETS

The changes in goodwill included in the core banking segment during the years ended December 31, 2023 and 2022 were as follows (in thousands):

	2023		2022
Beginning of year	$	21,824	$	21,824
Acquired goodwill	—		—
End of year	$	21,824	$	21,824

Acquired intangible assets were as follows at December 31, 2023 and 2022 (in thousands):

	At December 31, 2023				At December 31, 2022
	Balance Acquired		Accumulated Amortization		Balance Acquired		Accumulated Amortization
Core deposit intangibles	$	5,975	$	5,975	$	5,975	$	5,975
Other customer relationship intangibles	5,633		5,633		5,633		5,633
Total	$	11,608	$	11,608	$	11,608	$	11,608

There is no aggregate amortization expense for 2023, and $15 thousand for 2022. There is no remaining estimated aggregate amortization expense at December 31, 2023.

F-38

(8)    DEPOSITS

A summary of deposits at December 31, 2023 and 2022 is as follows (in thousands):

	2023		2022
Non-interest-bearing demand deposits	$	653,166	$	733,329
Interest-bearing demand deposits	291,138		271,645
Insured money market deposits	623,714		640,840
Savings deposits	249,144		279,029
Certificates of deposits $250,000 or less	365,058		272,182
Certificates of deposits greater than $250,000	76,804		31,547
Brokered deposits 1	142,776		73,452
Other time deposits 2	27,627		25,203
Total	$	2,429,427	$	2,327,227

1 Brokered deposits which are individually $250,000 and under.

2 Includes Individual Retirement Accounts and Christmas Club Accounts.

Total customer deposits include reciprocal balances from checking, insured money market deposits, and CDs received from participating banks in nationwide deposit networks as a result of our customers electing to participate in Corporate offered ICS/CDARS programs allowing enhanced FDIC insurance protection. In general, the equivalent of the customers' original deposited funds comes back to the Corporation and are carried within the time deposits category.

Scheduled maturities of time deposits at December 31, 2023, are summarized as follows (in thousands):

Year	Maturities
2024 1	$	578,675
2025	13,244
2026	4,313
2027 2	11,688
2028	1,395
2029	2,950
Total	$	612,265

1 $133.3 million of 2024 maturities represent brokered deposits.

2 $9.5 million of 2027 maturities represent brokered deposits which are

callable by the Corporation on February 28, 2024 and monthly thereafter.

Time deposits that meet or exceed the FDIC Insurance limit of $250 thousand at December 31, 2023 and 2022 were $81.0 million and $36.4 million, respectively.

F-39

(9)    FEDERAL HOME LOAN BANK TERM ADVANCES AND OVERNIGHT ADVANCES

FHLBNY overnight advances totaled $31.9 million and $95.8 million as of December 31, 2023 and 2022, respectively. The Corporation held no fixed rate term advances as of December 31, 2023 and 2022, respectively.

The following is a summary of FHLBNY overnight advances as of December 31, 2023 and 2022. The carrying amount includes the advance balance plus purchase accounting adjustments that are amortized over the term of the advance (in thousands):

2023					2022
Amount		Rate		Maturity Date	Amount		Rate		Maturity Date
$	31,920	5.64	%	January 2, 2024	$	95,810	4.61	%	January 3, 2023

The Bank has pledged $254.6 million and $254.4 million of residential mortgage and home equity loans under a blanket lien arrangement at December 31, 2023 and 2022, respectively, as collateral for future borrowings. Based on this collateral and additional securities held, the Bank's unused borrowing capacity at the FHLBNY was $193.4 million at December 31, 2023.

(10)    REVENUE FROM CONTRACTS WITH CUSTOMERS

All of the Corporation's revenue from contracts with customers in the scope of ASC 606 is recognized within non-interest income. The following tables present the Corporation's non-interest income by revenue stream and reportable segment for the years ended December 31, 2023 and 2022 (in thousands). Items outside the scope of ASC 606 are noted as such.

	Year ended December 31, 2023
Revenue by Operating Segment:	Core Banking		WMG		Holding Company, CFS, and CRM(b)(c)		Total
Non-interest income
Service charges on deposit accounts
Overdraft fees	$	3,096	$	—	$	—	$	3,096
Other	823		—		—		823
Interchange revenue from debit card transactions	4,606		—		—		4,606
WMG fee income	—		10,460		—		10,460
CFS fee and commission income	—		—		995		995
Net gains (losses) on sales of OREO	37		—		—		37
Net gains on sales of loans(a)	144		—		—		144
Net gains on sales of securities(a)	(39)		—		—		(39)
Loan servicing fees(a)	144		—		—		144
Change in fair value of equity securities(a)	228		—		(125)		103
Income from bank-owned life insurance(a)	43		—		—		43
Other(a)	4,068		—		69		4,137
Total non-interest income	$	13,150	$	10,460	$	939	$	24,549

(a) Not within scope of ASC 606.

(b) The Holding Company, CFS, and CRM column above includes amounts to eliminate transactions between segments.

(c) Chemung Risk Management, Inc. (CRM) was dissolved December 6, 2023.

F-40

	Year ended December 31, 2022
Revenue by Operating Segment:	Core Banking		WMG		Holding Company, CFS, and CRM(b)		Total
Non-interest income
Service charges on deposit accounts
Overdraft fees	$	3,084	$	—	$	—	$	3,084
Other	704		—		—		704
Interchange revenue from debit card transactions	4,603		—		—		4,603
WMG fee income	—		10,280		—		10,280
CFS fee and commission income	—		—		1,079		1,079
Net gains (losses) on sales of OREO	60		—		—		60
Net gains on sales of loans(a)	107		—		—		107
Loan servicing fees(a)	153		—		—		153
Change in fair value of equity securities(a)	(353)		—		4		(349)
Income from bank-owned life insurance(a)	46		—		—		46
Other(a)	1,821		—		(152)		1,669
Total non-interest income	$	10,225	$	10,280	$	931	$	21,436

(a) Not within scope of ASC 606.

(b) The Holding Company, CFS, and CRM column above includes amounts to eliminate transactions between segments.

A description of the Corporation's revenue streams accounted for under ASC 606 follows:

Service Charges on Deposit Accounts: The Corporation earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which included services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Corporation fulfills the customer's request. Account maintenance fees, which relate primarily to monthly maintenance, are recognized at the time the maintenance occurs. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer's account balance.

Interchange Income from Debit Card Transactions: The Corporation earns interchange fees from debit cardholder transactions conducted through the Mastercard payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to cardholders.

WMG Fee Income (Gross): The Corporation earns wealth management fees from its contracts with trust customers to manage assets for investment, and/or to conduct transactions on their accounts. These fees are primarily earned over time as the Corporation provides the contracted monthly or quarterly services and are generally assessed based on a tiered scale of the market value of assets under management (AUM) at quarter-end.

CFS Fee and Commission Income (Net): The Corporation earns fees from investment brokerage services provided to its customers by a third-party service provider. The Corporation receives commissions from the third-party service provider on a monthly basis based upon customer activity for the month. The Corporation (i) acts as an agent in arranging the relationship between the customer and the third-party service provider and (ii) does not control the services rendered to the customers. Investment brokerage fees are presented net of related costs. The Corporation also earns fees from tax services provided to its customers.

Net Gains/Losses on Sales of OREO: The Corporation records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Corporation finances the sale of OREO to the buyer, the Corporation assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Corporation adjusts the transaction price and related gain (loss) on sale if a significant financing component is present.

F-41

(11)    DERIVATIVES

As part of the Corporation's product offerings, the Corporation acts as an interest rate swap counterparty for certain commercial borrowers in the normal course of servicing our customers. The interest rate swap agreements are free-standing derivatives and are recorded at fair value in the Corporation's consolidated balance sheets. The Corporation manages its exposure to such interest rate swaps by entering into corresponding and offsetting interest rate swaps with third parties that mirror the terms of the interest rate swaps it has with the commercial borrowers. These positions directly offset each other and the Corporation's exposure is the fair value of the derivatives due to potential changes in credit risk of our commercial borrowers and third parties. The Corporation also enters into risk participation agreements with dealer banks on commercial loans in which it participates. The Corporation receives an upfront fee for participating in the credit exposure of the interest rate swap associated with the commercial loan in which it is a participant and the fee received is recognized immediately in other non-interest income. The Corporation is exposed to its share of the credit loss equal to the fair value of the interest rate swap in the event of nonperformance by the counterparty of the interest rate swap. The Corporation determines the fair value of the credit loss exposure using an estimated credit default rate based on the historical performance of similar assets.

The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements. At December 31, 2023, the Corporation held derivatives not designated as hedging instruments with a total notional amount of $647.5 million. Derivatives not designated as hedging instruments included back-to-back interest rate swaps of $631.1 million, consisting of $315.5 million of interest rate swaps with commercial borrowers and an additional $315.5 million of offsetting interest rate swaps with third-party counter-parties on substantially the same terms, and risk participation agreements with dealer banks of $16.4 million. Free-standing derivatives are not designated as hedges for accounting purposes and are therefore recorded at fair value with changes in fair value recorded in other non-interest income.

Accrued interest receivable and payable related to these swaps of $665 thousand and $447 thousand, as of December 31, 2023 and 2022, respectively, was included in other assets and liabilities.

The following table presents information regarding derivative financial instruments, at December 31:

2023
Derivatives not designated as hedging instruments:	Number of Instruments	Notional Amount		Weighted Average Maturity (in years)	Weighted Average Interest Rate Received	Weighted Average Contract Pay Rate	Fair Value
Interest rate swap agreements on loans with commercial loan customers	47	$	315,526	6.6	4.36%	7.36%	$	(19,355)
Interest rate swap agreements with third-party counter-parties	47	315,526		6.6	7.36%	4.36%	19,316
Risk participation agreements	4	16,432		7.8			—
Total	98	$	647,484				$	(39)

2022
Derivatives not designated as hedging instruments:	Number of Instruments	Notional Amount		Weighted Average Maturity (in years)	Weighted Average Interest Rate Received		Weighted Average Contract Pay Rate		Fair Value
Interest rate swap agreements on loans with commercial loan customers	42	$	265,619	7.1	3.94	%	6.35	%	$	(26,436)
Interest rate swap agreements with third-party counter-parties	42	265,619		7.1	6.35	%	3.94	%	26,381
Risk participation agreements	3	13,764		9.6					—
Total	87	$	545,002						$	(55)

There was an immaterial off-balance sheet exposure for the risk participation agreements as of December 31, 2023, and December 31, 2022.

F-42

Amounts included in the Consolidated Statements of Income related to derivatives not designated as hedging were as follows:

	Years Ended December 31,
Derivatives not designated as hedging instruments:	2023		2022
Interest rate swap agreements with commercial loan customers:
Unrealized (loss) recognized in non-interest income	$	7,081	$	(17,430)
Interest rate swap agreements with third-party counter-parties:
Unrealized gain recognized in non-interest income	(7,065)		17,698
Risk participation agreements:
Unrealized gain (loss) recognized in non-interest income	—		15
Unrealized gain (loss) recognized in non-interest income	$	16	$	283

(12)            INCOME TAXES

For the years ended December 31, 2023 and 2022, income tax expense attributable to income from operations consisted of the following (in thousands):

	2023		2022
Current expense:
Federal	$	7,149	$	5,501
State	961		883
Total current	8,110		6,384
Deferred expense/(benefit):
Federal	(1,271)		1,365
State	(338)		357
Total deferred	(1,609)		1,722
Income tax expense	$	6,501	$	8,106

Income tax expense differed from the amounts computed by applying the U.S. Federal statutory income tax rate to income before income tax expense as follows (in thousands):

	2023			2022
Statutory federal tax rate	21		%	21		%
Tax computed at statutory rate	$	6,615		$	7,747
Increase (reduction) resulting from:
Tax-exempt income	(509)			(434)
831(b) premium adjustment	(202)			(309)
Dividend exclusion	(9)			(7)
State taxes, net of Federal impact	580			988
Nondeductible interest expense	38			8
Other items, net	(12)			113
Income tax expense	$	6,501		$	8,106
Effective tax rate	20.6		%	22.0		%

The lower tax expense in 2023 when compared to 2022 can be attributed to a decrease in pretax income.

F-43

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2023 and 2022, are presented below (in thousands):

Deferred tax assets:	2023		2022
Allowance for credit losses	$	5,775	$	5,147
Depreciation	1,408		1,133
Deferred compensation and directors' fees	1,388		1,128
Operating lease liabilities	1,484		1,688
Purchase accounting adjustment – fixed assets	153		153
Net unrealized losses on securities available for sale	22,296		25,310
Defined benefit pension and other benefit plans	1,054		1,320
Nonaccrued interest	484		415
Accrued expense	96		117
Other items, net	133		112
Total gross deferred tax assets	34,271		36,523
Deferred tax liabilities:
Deferred loan fees and costs	1,389		1,358
Prepaid pension	4,144		4,055
Discount accretion	121		108
Core deposit intangible	1,790		1,733
REIT dividend	—		561
Operating lease right-of-use assets	1,484		1,688
Accrual for employee benefit plans	8		5
Other	210		219
Total gross deferred tax liabilities	9,146		9,727
Net deferred tax asset	$	25,125	$	26,796

Realization of deferred tax assets is dependent upon the generation of future taxable income. A valuation allowance is recognized when it is more likely than not that some portion of the deferred tax assets will not be realized. In assessing the need for a valuation allowance, management considers the scheduled reversal of the deferred tax assets, the level of historical taxable income and projected future taxable income over the periods in which the temporary differences comprising the deferred tax assets will be deductible.  Based on its assessment, management determined that no valuation allowance is necessary.

As of December 31, 2023 and 2022, the Corporation did not have any unrecognized tax benefits.

The Corporation accounts for interest and penalties related to uncertain tax positions as part of its provision for Federal and State income taxes. As of December 31, 2023 and 2022, the Corporation did not accrue any interest or penalties related to its uncertain tax positions.

The Corporation is not currently subject to examinations by Federal taxing authorities for the years prior to 2020 and for New York State taxing authorities for the year prior to 2020. New York State taxing authorities recently completed audits of the Corporation for the years 2018, 2019, and 2020. There were no adjustments as a result of the New York State audits.

F-44

(13)    PENSION PLAN AND OTHER BENEFIT PLANS

Pension Plan

The Corporation has a noncontributory defined benefit pension plan covering certain employees. The plan's defined benefit formula generally based payments to retired employees upon their length of service multiplied by a percentage of the average monthly pay over the last five years of employment.

New employees hired on or after July 10, 2010 were not eligible to participate in the plan, however, existing participants at that time continued to accrue benefits. On October 20, 2016, the Corporation amended its noncontributory defined benefit pension plan (“pension plan”) to freeze future retirement benefits after December 31, 2016. Beginning on January 1, 2017, both the pay-based and service-based component of the formula used to determine retirement benefits in the pension plan were frozen so that participants will no longer earn further retirement benefits.

The Corporation uses a December 31 measurement date for its pension plan.

The following table presents (1) changes in the plan's projected benefit obligation and plan assets, and (2) the plan's funded status at December 31, 2023 and 2022 (in thousands):

Change in projected benefit obligation:	2023		2022
Benefit obligation at beginning of year	$	30,506	$	40,404
Service cost	—		—
Interest cost	1,605		1,130
Actuarial (gain) loss	1,098		(8,856)
Curtailments	—		—
Settlements	—		—
Benefits paid	(2,186)		(2,172)
Benefit obligation at end of year	$	31,023	$	30,506

Change in plan assets:	2023		2022
Fair value of plan assets at beginning of year	$	44,656	$	52,987
Actual return on plan assets	4,480		(6,159)
Employer contributions	—		—
Settlements	—		—
Benefits paid	(2,186)		(2,172)
Fair value of plan assets at end of year	$	46,950	$	44,656
Funded status	$	15,927	$	14,150

Amount recognized in accumulated other comprehensive income (loss) at December 31, 2023 and 2022 consist of the following (in thousands):

	2023		2022
Net actuarial loss	$	3,961	$	4,988
Prior service cost	—		—
Total before tax effects	$	3,961	$	4,988

The accumulated benefit obligation at December 31, 2023 and 2022 was $31.0 million and $30.5 million, respectively.

Actuarial losses in the Projected Benefit Obligation (PBO) in 2023 were primarily the result of the decrease in discount rate. The decrease in discount rate caused the PBO to increase by $1.0 million. The update in mortality table caused the PBO to decrease by $0.2 million. Other sources of gain/loss such as plan experience, updated census data and minor adjustments to actuarial assumptions generated a combined loss of less than 1% of expected year end obligations.

F-45

The principal actuarial assumptions used in determining the projected benefit obligation as of December 31, 2023 and 2022 were as follows:

	2023		2022
Discount rate	5.07	%	5.42	%
Assumed rate of future compensation increase	N/A		N/A
Weighted-average interest crediting rate	N/A		N/A

Components of net periodic benefit cost and other amounts recognized in other comprehensive income (loss) in 2023 and 2022 consist of the following (in thousands):

Net periodic benefit cost	2023		2022
Service cost, benefits earned during the year	$	—	$	—
Interest cost on projected benefit obligation	1,605		1,130
Expected return on plan assets	(2,391)		(2,851)
Amortization of net loss	36		—
Amortization of  prior service cost	—		—
Recognized (gain) loss due to settlements	—		—
Net periodic cost (benefit)	$	(750)	$	(1,721)

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):	2023		2022
Net actuarial (gain) loss	$	(990)	$	154
Recognized loss	(37)		—
Amortization of prior service cost	—		—
Total recognized in other comprehensive income (loss) (before tax effect)	$	(1,027)	$	154
Total recognized in net (benefit) cost and other comprehensive income (loss) (before tax effect)	$	(1,777)	$	(1,567)

During 2023, the plan's total unrecognized net loss decreased by $1.0 million. The variance between the actual and expected return on plan assets during 2023 decreased the total unrecognized net loss by $2.1 million. Because the total unrecognized net gain or loss is less than the greater of 10% of the projected benefit obligation or 10% of the plan assets, no amortization is necessary. As of January 1, 2023, the average expected future life expectancy of plan participants was 10.2 years. Actual results for 2024 will depend on the 2024 actuarial valuation of the plan.

The principal actuarial assumptions used in determining the net periodic benefit cost for the years ended December 31, 2023, 2022 were as follows:

	2023		2022
Discount rate	5.42	%	2.87	%
Expected return on assets	5.50	%	5.50	%
Assumed rate of future compensation increase	N/A		N/A
Weighted-average interest crediting rate	N/A		N/A

The Corporation changes important assumptions whenever conditions warrant changes. At December 31, 2023 the Corporation used the Society of Actuaries PRI-2012 Private Retirement Plans Mortality Table with Mortality Improvement Scale MP-2021 as a basis for the Plan's valuation. At December 31, 2022, the Corporation used IRS Static 2023 Mortality Table with Mortality Improvement Scale MP-2021 as a basis for the Plan's valuation. The discount rate is evaluated at least annually and the expected long-term return on plan assets will typically be revised every three to five years, or as conditions warrant. 

F-46

The Corporation's overall investment strategy is to achieve a mix of investments for long-term growth and for near-term benefit payments with a wide diversification of asset types. The target allocations for plan assets are shown in the table below. Equity securities primarily include investments in common or preferred shares of both U.S. and international companies. Debt securities include U.S. Treasury and Government bonds as well as U.S. Corporate bonds. Other investments may consist of mutual funds, money market funds and cash & cash equivalents. While no significant changes in the asset allocations are expected during 2024, the Corporation may make changes at any time.

The expected return on plan assets was determined based on a CAPM using historical and expected future returns of the various asset classes, reflecting the target allocations described below.

Asset Class	Target Allocation 2023	Percentage of Plan Assets at December 31,				Expected Long-Term Rate of Return
		2023		2022
Large cap domestic equities	30% - 60%	41	%	39	%	11.8	%
Mid-cap domestic equities	0% - 8%	2	%	2	%	11.5	%
Small-cap domestic equities	0% - 6%	1	%	1	%	9.7	%
International equities	0% - 8%	3	%	3	%	6.9	%
Intermediate fixed income	33% - 63%	37	%	43	%	7.0	%
Alternative assets	0% - 15%	—	%	—	%	2.9	%
Cash	0% - 20%	16	%	12	%	1.2	%
Total		100	%	100	%

The investment policy of the plan is to provide for long-term growth of principal and income without undue exposure to risk.  The focus is on long-term capital appreciation and income generation. The Corporation maintains an IPS that guides the investment allocation in the plan. The IPS describes the target asset allocation positions as shown in the table above.

The Corporation has appointed an Employee Pension and Profit Sharing Committee to manage the general philosophy, objectives and process of the plan. The Employee Pension and Profit Sharing Committee meets with the Investment Manager periodically to review the plan's performance and to ensure that the current investment allocation is within the guidelines set forth in the IPS. Only the Employee Pension and Profit Sharing Committee, in consultation with the Investment Manager, can make adjustments to maintain target ranges and for any permanent changes to the IPS. Quarterly, the Board of Directors' Trust and Employee Benefits Committee reviews the performance of the plan with the Investment Manager.

As of December 31, 2023 and 2022, the Corporation's pension plan did not hold any direct investment in the Corporation's common stock.

The Corporation used the following methods and significant assumptions to estimate the fair value of each type of financial instrument held by the pension plan:

Fair value is the exchange price that would be received for an asset in the principal or most advantageous market for the asset in an orderly transaction between market participants on the measurement date. The fair value hierarchy described below requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).

Discounted cash flows are calculated using spread and optionality. During times when trading is more liquid, broker quotes are used (if available) to validate the model. Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.

F-47

The fair value of the plan assets at December 31, 2023 and 2022, by asset class are as follows (in thousands):

			Fair Value Measurement at December 31, 2023 Using
Plan Assets	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash	$	7,503	$	7,503	$	—	$	—
Equity securities:
U.S. companies	19,374		19,374		—		—
Mutual funds	17,905		17,905		—		—
Debt securities:
U.S. Treasuries/Government bonds	1,920		1,920		—		—
U.S. Corporate bonds	248		248		—		—
Total plan assets	$	46,950	$	46,950	$	—	$	—

			Fair Value Measurement at December 31, 2022 Using
Plan Assets	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash	$	5,374	$	5,374	$	—	$	—
Equity securities:
U.S. companies	17,526		17,526		—		—
Mutual funds	19,619		19,619		—		—
Debt securities:
U.S. Treasuries/Government bonds	1,891		1,891		—		—
U.S. Corporate bonds	246		246		—		—
Total plan assets	$	44,656	$	44,656	$	—	$	—

The following table presents the estimated benefit payments for each of the next five years and the aggregate amount expected to be paid in years six through ten for the pension plan (in thousands):

Calendar Year	Future Expected Benefit Payments
2024	$	2,390
2025	$	2,369
2026	$	2,372
2027	$	2,353
2028	$	2,324
2029-2032	$	11,222

The Corporation does not expect to contribute to the plan during 2024. Funding requirements for subsequent years are uncertain and will significantly depend on changes in assumptions used to calculate plan funding levels, the actual return on plan assets, changes in the employee groups covered by the plan, and any legislative or regulatory changes affecting plan funding requirements. For tax planning, financial planning, cash flow management or cost reduction purposes the Corporation may increase, accelerate, decrease or delay contributions to the plan to the extent permitted by law.

F-48

Defined Contribution Profit Sharing, Savings and Investment Plan

On October 20, 2016, the Bank amended its defined contribution profit sharing, savings, and investment plan for all active participants to supersede the current contribution formula used by the Plan, which included eliminating the 1000 hours of service requirement to participate in employer contributions. Beginning on January 1, 2017, the Bank began contributing a non-discretionary 3% of gross annual wages for each participant, regardless of the participant’s deferral, and eliminated discretionary contributions for participants hired prior to July 1, 2010. Additionally, beginning January 1, 2017 the Bank began contributing a 50% match up to 6% of gross annual wages.

Expense related to these plans totaled $1.4 million for each of the years ended December 31, 2023 and 2022. The plan's assets at December 31, 2023 and 2022 include 124,214 and 121,847 shares, respectively, of Chemung Financial Corporation common stock, as well as other common and preferred stocks, U.S. Government securities, corporate bonds and notes, and mutual funds.

Defined Benefit Health Care Plan

On October 20, 2016, the Corporation amended its defined benefit health care plan to not allow any new retirees into the plan, effective January 1, 2017. The effects of this freeze are reflected in the defined benefit health care plan disclosures as of December 31, 2017.

The Corporation uses a December 31 measurement date for its defined benefit health care plan.

The following table presents (1) changes in the plan's accumulated postretirement benefit obligation and (2) the plan's funded status at December 31, 2023 and 2022 (in thousands):

Changes in accumulated postretirement benefit obligation:	2023		2022
Accumulated postretirement benefit obligation - beginning of year	$	95	$	194
Service cost	—		—
Interest cost	5		3
Participant contributions	18		18
Amendments	—		—
Actuarial (gain) loss	3		(71)
Benefits paid	(45)		(49)
Accumulated postretirement benefit obligation at end of year	$	76	$	95

Change in plan assets:	2023		2022
Fair value of plan assets at beginning of year	$	—	$	—
Employer contribution	27		31
Plan participants’ contributions	18		18
Benefits paid	(45)		(49)
Fair value of plan assets at end of year	$	—	$	—
Unfunded status	$	(76)	$	(95)

F-49

Amount recognized in accumulated other comprehensive income (loss) at December 31, 2023 and 2022 consist of the following (in thousands):

	2023		2022
Net actuarial loss	$	102	$	118
Prior service credit	—		—
Total before tax effects	$	102	$	118

Weighted-average assumption for disclosure as of December 31:	2023	2022
Discount rate	5.07%	5.42%
Assumed rate of future compensation increase	N/A	N/A
Health care cost trend: Initial (Pre-65/Post 65)	8.00% / 7.00%	7.50% / 6.50%
Health care cost trend: Ultimate (Pre-65/Post 65)	4.75% / 4.75%	4.75% / 4.75%
Year ultimate cost trend reached	2033 / 2032	2032 / 2030

The components of net periodic postretirement benefit cost for the years ended December 31, 2023 and 2022 are as follows (in thousands):

Net periodic cost (benefit)	2023		2022
Service cost	$	—	$	—
Interest cost	5		3
Expected return on plan assets	—		—
Amortization of prior service benefit	—
Recognized actuarial loss	19		18
Recognized prior service benefit due to curtailments	—		—
Net periodic postretirement cost (benefit)	$	24	$	21

Other changes in plan assets and benefit obligations   recognized  in other comprehensive income (loss):	2023		2022
Net actuarial (gain) loss	$	3	$	(71)
Recognized actuarial loss	(19)		(18)
Prior service credit			—
Amortization of prior service benefit			—
Total recognized in other comprehensive income (loss)(before tax effect)	$	(16)	$	(89)
Total recognized in net benefit cost and other comprehensive income (loss) (before tax effect)	$	8	$	(68)

Actuarial loss for 2023 is primarily the net impact of a decrease in discount rate, which increased the Accumulated Postretirement Benefit Obligation (APBO) by $1 thousand, the updating of mortality tables, which decreased the APBO by $4 thousand, and the reflection of updated data, claims experience and health care trend rates (HCTR), which (combined) increased the APBO by $6 thousand. All other sources of gain or loss had a combined net impact of less than $1 thousand.

During 2023 the plan's total unrecognized net loss decreased by $16 thousand. Because the total unrecognized net gain or loss in the plan exceeds 10% of the accumulated postretirement benefit obligation, the excess will be amortized over the average future life expectancy of all plan participants. As of January 1, 2023, the average future life expectancy of all plan participants was 6.0 years. Actual results for 2024 will depend on the 2024 actuarial valuation of the plan.

The change in unrecognized gain/loss is one measure of the degree to which important assumptions have coincided with actual experience. During 2023, the unrecognized net loss decreased by 16% of the December 31, 2022 accumulated postretirement benefit obligation. The Corporation changes important assumptions whenever changing conditions warrant. The discount rate and per capita costs are typically changed at least annually. Other material assumptions include rates of participant mortality and rates of increase in medical costs.

F-50

Weighted-average assumptions for net periodic cost as of December 31:	2023	2022
Discount rate	5.42%	2.87%
Expected return on plan assets	N/A	N/A
Assumed rate of future compensation increase	N/A	N/A
Health care cost trend: Initial	8.00% / 7.00%	7.50% / 6.50%
Health care cost tread: Ultimate	4.75% / 4.75%	4.75% / 4.75%
Year ultimate reached	2033 / 2032	2032 / 2030

The following table presents the estimated benefit payments for each of the next five years and the aggregate amount expected to be paid in years six through ten (in thousands):

Calendar Year	Future Estimated Benefit Payments
2024	$	12
2025	$	11
2026	$	11
2027	$	10
2028	$	9
2029-2032	$	32

The Corporation’s policy is to contribute the amount required to fund postretirement benefits as they become due to retirees. The amount expected to be required in contributions to the plan during 2024 is $12 thousand.

Executive Supplemental Pension Plan

The Corporation also sponsors an Executive Supplemental Pension Plan for certain former executive officers to restore certain pension benefits that may be reduced due to limitations under the Internal Revenue Code. The benefits under this plan are unfunded as of December 31, 2023 and 2022.

The Corporation uses a December 31 measurement date for its Executive Supplemental Pension Plan.

The following table presents Executive Supplemental Pension plan status at December 31, 2023 and 2022 (in thousands):

Change in projected benefit obligation:	2023		2022
Benefit obligation at beginning of year	$	948	$	1,173
Service cost	—		—
Interest cost	48		32
Actuarial (gain) loss	37		(148)
Benefits paid	(109)		(109)
Projected benefit obligation at end of year	$	924	$	948

Changes in plan assets:	2023		2022
Fair value of plan assets at beginning of year	$	—	$	—
Employer contributions	109		109
Benefits paid	(109)		(109)
Fair value of plan assets at end of year	$	—	$	—
Unfunded status	$	(924)	$	(948)

F-51

Amounts recognized in accumulated other comprehensive income (loss) at December 31, 2023 and 2022 consist of the following (in thousands):

	2023		2022
Net actuarial loss	$	202	$	172
Prior service cost	—		—
Total before tax effects	$	202	$	172

Accumulated benefit obligation at December 31, 2023 and 2022 was $0.9 million and $0.9 million, respectively.

Weighted-average assumption for disclosure as of December 31:	2023		2022
Discount rate	5.07	%	5.42	%
Assumed rate of future compensation increase	N/A		N/A
Weighted-average interest crediting rate	N/A		N/A

The components of net periodic benefit cost for the years ended December 31, 2023 and 2022 are as follows (in thousands):

Net periodic benefit cost	2023		2022
Service cost	$	—	$	—
Interest cost	48		32
Recognized actuarial loss	7		19
Net periodic postretirement benefit cost	$	55	$	51

Other changes in plan assets and benefit obligation recognized in other comprehensive income (loss):	2023		2022
Net actuarial (gain) loss	$	37	$	(148)
Recognized actuarial loss	(7)		(20)
Total recognized in other comprehensive income (loss) (before tax effect)	$	30	$	(168)
Total recognized in net benefit cost and other comprehensive income (loss) (before tax effect)	$	85	$	(117)

During 2023, there was a $20 thousand increase in the projected benefit obligation as a result of the decrease in discount rate. Offsetting this was a mortality decrease of $8 thousand, due to the update in the mortality assumption. There was also a $25 thousand increase in PBO due to participant mortality (longevity) experience. There were no other significant sources of gain or loss during 2023.

During 2023, the plan's total unrecognized net loss increased by $30 thousand. Because the total unrecognized net gain or loss exceeds the greater of 10% of the projected benefit obligation or 10% of the plan assets, the excess will be amortized over the average future life expectancy of all participants. As of January 1, 2024, the average future life expectancy of plan participants was 10.17 years.

Weighted-average assumptions for net periodic cost as of December 31:	2023		2022
Discount rate	5.42	%	2.87	%
Expected asset return	N/A		N/A
Assumed rate of future compensation increase	N/A		N/A
Weighted-average interest crediting rate	N/A		N/A

The discount rate was determined by projecting the plan's expected future benefit payments as defined for the projected benefit obligation, discounting those expected payments using a theoretical zero-coupon spot yield curve derived from a universe of high-quality bonds as of the measurement date, and solving for the single equivalent discount rate that resulted in the same projected benefit obligation.

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The change in unrecognized net gain or loss is one measure of the degree to which important assumptions have coincided with actual experience. During 2023 the unrecognized net loss increased 3.2% of the December 31, 2022 projected benefit obligation.

The following table presents the estimated benefit payments for each of the next five years and the aggregate amount expected to be paid in years six through ten for the Supplemental Pension Plan (in thousands):

Calendar Year	Future Estimated Benefit Payments
2024	$	108
2025	$	105
2026	$	100
2027	$	96
2028	$	90
2029-2032	$	368

Contributions for an unfunded pension plan are equal to the benefit payments being made during the year. The Corporation expects to contribute $110 thousand to the plan during 2024.

Defined Contribution Supplemental Executive Retirement Plan

The Corporation also sponsors a Defined Contribution Supplemental Executive Retirement Plan for certain current executive officers, which was initiated in 2012. The plan is unfunded as of December 31, 2023 and is intended to provide nonqualified deferred compensation benefits payable at retirement, disability, death or certain other events. The accrued obligation for the plan as of December 31, 2023 and 2022 was $3.4 million and $2.9 million, respectively. A total of $0.6 million and $0.5 million was expensed during the years ended December 31, 2023 and 2022, respectively. In addition to each participant's account being credited with the annual company contribution, each account will receive a quarterly interest credit that will be calculated based upon the average yield on five year U.S. Treasury Notes.

(14)    STOCK COMPENSATION

On June 8, 2021, the Corporation's shareholders approved the Corporation's 2021 Equity Incentive Plan (the "2021 Plan") which provides for the grant of stock-based awards to officers, employees and directors of the Corporation and the Bank. A Form S-8 Registration Statement was filed with the SEC on June 18, 2021 registering shares to be awarded under the 2021 Plan. The 2021 Plan provides officers, employees and directors of the Corporation and the Bank with additional incentives to promote the growth and performance of the Corporation. The prior plan shall remain in existence solely for the purpose of administering outstanding grants.

Under the terms of the Corporation's 2021 Equity Incentive Plan (the "2021 Plan"), the Corporation may make discretionary grants of restricted shares of the Corporation’s common stock to or for the benefit of employees selected to participate in the 2021 Plan, the Chief Executive Officer and members of the Board of Directors. Awards are based on the performance, responsibility and contributions of the individual and are targeted at an average of the peer group. The maximum number of shares of the Corporation’s common stock that may be awarded as restricted shares related to the 2021 Plan may not exceed 170,000, upon which time a new plan will be filed. Awards under the 2021 Plan may be vested no earlier than the first anniversary of the date on which the award is granted. Shares fully vest on the fifth anniversary of the grant date for employees, and on the first anniversary of the grant date for the Chief Executive Officer and members of the Board of Directors. Compensation expense for shares granted is recognized based on the fair value of the stock at the issue date.

Total compensation expense related to this plan was $1.2 million in both 2023 and 2022. During 2023 and 2022, a total of 34,658 and 33,586 shares, respectively, were re-issued from treasury to fund stock compensation.

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A summary of restricted stock activity as of December 31, 2023, and changes during the year ended is presented below:

	Shares	Weighted–Average Grant Date Fair Value
Nonvested at December 31, 2022	55,402	$	44.57
Granted	34,658	$	46.96
Vested	(26,750)	$	44.60
Forfeited or Cancelled	(326)	$	43.73
Nonvested at December 31, 2023	62,984	$	45.87

As of December 31, 2023, there was $1.4 million of total unrecognized compensation cost related to nonvested shares granted under the prior Plan and the 2021 Plan. The cost is expected to be recognized over a weighted-average period of 3.32 years. The total fair value of shares vested during the years ended December 31, 2023 and 2022 were $0.6 million and $0.7 million, respectively.

(15)    RELATED PARTY TRANSACTIONS

Members of the Board of Directors, certain Corporation officers, and their immediate families directly, or through entities in which they are principal owners (more than 10% interest) or board members, were customers of, and had loans and other transactions with the Corporation. These loans are summarized as follows for the years ended December 31, 2023 and 2022 (in thousands):

	2023		2022
Balance at beginning of year	$	28,062	$	51,192
New loans or additional advances	77		990
Effect of changes in composition of related parties	(4)		(22,607)
Repayments	(2,077)		(1,513)
Balance at end of year	$	26,058	$	28,062

Deposits from principal officers, directors, and their affiliates at December 31, 2023 and 2022 were $36.0 million and $28.4 million, respectively.

The Bank leases its branch located at 1365 New Scotland Road, Slingerlands, New York, under a lease agreement through July 2029 from a former member of the Corporation's Board of Directors who retired from the Corporation's Board of Directors as of June 7, 2022. Rent and CAM paid to this Board member while serving on the Board totaled $25 thousand for the year ended December 31, 2022.

The Bank leases its branch located at 2 Rush Street, Schenectady, New York, under a lease agreement through February, 2033 from a member of the Corporation's Board of Directors with monthly rent and CAM expense totaling $9 thousand and $8 thousand per month for the years ended December 31, 2023 and 2022, respectively. Rent and CAM paid to this Board member totaled $118 thousand and $102 thousand for the years ended December 2023 and 2022, respectively.

WMG provided trust services to members of the Board of Directors, certain Corporation officers, and their immediate families directly, or through entities in which they are principal owners or board members. WMG fee income for the trust services provided totaled $0.6 million for each of the years ended December 31, 2023 and 2022, respectively.

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(16)    COMMITMENTS AND CONTINGENCIES

Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

The contractual amounts of financial instruments with off-balance sheet risk at year-end were as follows (in thousands):

	2023				2022
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	23,809	$	78,790	$	44,481	$	75,028
Unused lines of credit	$	3,387	$	332,439	$	2,887	$	326,188
Standby letters of credit	$	—	$	11,317	$	—	$	17,211

Commitments to make real estate and home equity loans are generally made for periods of sixty days or less. As of December 31, 2023, the fixed rate real estate and home equity commitments to make loans have interest rates ranging from 5.75% to 8.13% and maturities ranging from seven years to thirty years. Commitments to fund commercial draw notes are generally made for periods of three months to twenty-four months. As of December 31, 2023, the fixed rate commercial draw commitments have interest rates ranging from 2.79% to 8.17%.

Because many commitments and almost all standby letters of credit expire without being funded in whole or in part, the contract amounts are not estimates of future cash flows. Loan commitments and unused lines of credit have off-balance sheet credit risk because only origination fees are recognized on the consolidated balance sheet until commitments are fulfilled or expire. The credit risk amounts are equal to the contractual amounts, assuming the amounts are fully advanced and collateral or other security is of no value. The Corporation does not anticipate losses as a result of these transactions. These commitments also have off-balance sheet interest rate risk in that the interest rate at which these commitments were made may not be at market rates on the date the commitments are fulfilled.

In conjunction with the Corporation's adoption of ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), an allowance for credit losses on unfunded commitments was established as of January 1, 2023. The allowance is based on the same methodology as the allowance for credit losses on loans. As of December 31, 2023, the allowance for credit losses on unfunded commitments was $0.9 million.

The Corporation has issued conditional commitments in the form of standby letters of credit to guarantee payment on behalf of a customer and guarantee the performance of a customer to a third party. Standby letters of credit generally arise in connection with lending relationships. The credit risk involved in issuing these instruments is essentially the same as that involved in extending loans to customers. Contingent obligations under standby letters of credit totaled $11.3 million at December 31, 2023 and represent the maximum potential future payments the Corporation could be required to make. Typically, these instruments have terms of twelve months or less and expire unused; therefore, the total amounts do not necessarily represent future cash requirements. Each customer is evaluated individually for creditworthiness under the same underwriting standards used for commitments to extend credit and on-balance sheet instruments. Corporation policies governing loan collateral apply to standby letters of credit at the time of credit extension. The carrying amount and fair value of the Corporation's standby letters of credit at December 31, 2023 was not significant.

In the normal course of business, there are various outstanding claims and legal proceedings involving the Corporation or its subsidiaries. The Corporation believes that it is not a party to any pending legal, arbitration, or regulatory proceedings that could have a material adverse impact on its financial results or liquidity.

F-55

(17)    PARENT COMPANY FINANCIAL INFORMATION

Condensed parent company only financial statement information of Chemung Financial Corporation is as follows (investment in subsidiaries is recorded using the equity method of accounting) (in thousands):

BALANCE SHEETS - DECEMBER 31	2023		2022
Assets:
Cash and cash equivalents	$	6,635	$	2,708
Investment in subsidiary - Chemung Canal Trust Company	185,159		157,493
Investment in subsidiary - CFS Group, Inc.	1,418		1,294
Investment in subsidiary - Chemung Risk Management, Inc.1	—		2,887
Dividends receivable from subsidiary bank	1,469		1,455
Equity investments, at fair value	204		329
Other assets	1,850		1,728
Total assets	$	196,735	$	167,894
Liabilities and shareholders' equity:
Dividends payable	$	1,469	$	1,455
Other liabilities	25		51
Total liabilities	1,494		1,506
Shareholders' equity:
Total shareholders' equity	195,241		166,388
Total liabilities and shareholders' equity	$	196,735	$	167,894

1 Chemung Risk Management, Inc. was dissolved effective December 6, 2023.

STATEMENTS OF INCOME - YEARS ENDED DECEMBER 31	2023		2022
Dividends from subsidiary bank and non-bank	$	7,204	$	7,051
Interest and dividend income	11		7
Non-interest income	(125)		10
Non-interest expenses	345		586
Income before impact of subsidiaries' undistributed earnings	6,745		6,482
Equity in undistributed earnings of Chemung Canal Trust Company	18,267		21,638
Equity in undistributed earnings of CFS Group, Inc.	124		220
Distributed earnings of Chemung Risk Management, Inc.1	(301)		250
Income before income tax	24,835		28,590
Income tax benefit	(165)		(193)
Net income	$	25,000	$	28,783

1 Chemung Risk Management, Inc. was dissolved effective December 6, 2023.

F-56

STATEMENTS OF CASH FLOWS - YEARS ENDED DECEMBER 31	2023		2022
Cash flows from operating activities:
Net Income	$	25,000	$	28,783
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed earnings of Chemung Canal Trust Company	(18,267)		(21,638)
Equity in undistributed earnings of CFS Group, Inc.	(124)		(220)
Distributed earnings of Chemung Risk Management, Inc.1	301		(250)
Change in dividend receivable	(14)		(5)
Change in other assets	(122)		(211)
Change in other liabilities	(1,085)		(733)
Expense related to restricted stock units directors' deferred compensation plan	20		20
Expense to employee restricted stock awards	1,139		795
Net cash provided by operating activities	6,848		6,541
Cash flow from investing activities:
Proceeds from dissolution of Chemung Risk Management, Inc.1	2,634		—
Net cash provided by investing activities	2,634		—
Cash flow from financing activities:
Cash dividends paid	(5,840)		(5,797)
Purchase of treasury stock	(316)		(933)
Sale of treasury stock	601		424
Net cash used in financing activities	(5,555)		(6,306)
Increase (decrease) in cash and cash equivalents	3,927		235
Cash and cash equivalents at beginning of year	2,708		2,473
Cash and cash equivalents at end of year	$	6,635	$	2,708

1 Chemung Risk Management, Inc. was dissolved effective December 6, 2023.

(18)    FAIR VALUES

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Corporation used the following methods and significant assumptions to estimate fair value:

Available for Sale Securities: The fair values of securities available for sale are usually determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs), or matrix pricing, which is a mathematical technique widely used to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3 inputs).

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Equity Investments: Securities that are held to fund a non-qualified deferred compensation plan and securities that have a readily determinable fair market value, are recorded with changes in fair value included in earnings. The fair values of equity investments are determined by quoted market prices (Level 1 inputs).

Individually Analyzed Loans: At the time a loan is considered for individual analysis, it is valued at the lower of cost or fair value. Individually analyzed loans carried at fair value have been partially charged-off or receive specific allocations as part of the allowance for credit loss accounting treatment. For collateral dependent loans, fair value is commonly based on real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, typically resulting in a Level 3 fair value classification. These loans are analyzed on a quarterly basis for additional valuation changes and adjusted accordingly.

OREO: Assets acquired through or instead of loan foreclosures are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent impaired loans and OREO are performed by certified general appraisers (commercial properties) or certified residential appraisers (residential properties) whose qualifications and licenses have been reviewed and verified by the Corporation. Once received, appraisals are reviewed for reasonableness of assumptions, approaches utilized, Uniform Standards of Professional Appraisal Practice and other regulatory compliance, as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Appraisals are generally completed within the previous 12 month period prior to a property being placed into OREO. On impaired loans, appraisal values are adjusted based on the age of the appraisal, the position of the lien, the type of the property and its condition.

Derivatives: The fair values of interest rate swaps are based on valuation models using observable market data as of the measurement date (Level 2 inputs). Derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices, and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The Corporation also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counter-party's nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Corporation has considered the impact of any applicable credit enhancements, such as collateral postings. Although the Corporation has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with credit risk participation are based on credit default rate assumptions (Level 3 inputs).

F-58

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

			Fair Value Measurement at December 31, 2023 Using
Financial Assets:	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. treasury notes and bonds	$	55,332	$	55,332	$	—	$	—
Mortgage-backed securities, residential	403,824		—		403,824		—
Obligations of states and political subdivisions	38,686		—		38,686		—
Corporate bonds and notes	20,669		—		13,139		7,530
SBA loan pools	65,482		—		65,482		—
Total available for sale securities	$	583,993	$	55,332	$	521,131	$	7,530
Equity Investments	$	2,552	$	2,552	$	—	$	—
Derivative assets	$	23,942	$	—	$	23,942	$	—
Financial Liabilities:
Derivative liabilities	$	23,981	$	—	$	23,981	$	—

			Fair Value Measurement at December 31, 2022 Using
Financial Assets:	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. treasury notes and bonds	$	55,574	$	55,574	$	—	$	—
Mortgage-backed securities, residential	435,131		—		435,131		—
Obligations of states and political subdivisions	38,892		—		38,892		—
Corporate bonds and notes	21,970		—		21,970		—
SBA loan pools	81,022		—		81,022		—
Total available for sale securities	$	632,589	$	55,574	$	577,015	$	—
Equity investments	$	2,246	$	2,246	$	—	$	—
Derivative assets	$	26,706	$	—	$	26,706	$	—
Financial Liabilities:
Derivative liabilities	$	26,761	$	—	$	26,761	$	—

There were no transfers between Level 1 and Level 2 during the twelve month periods ending December 31, 2023 and 2022.

F-59

The Corporation transfers assets and liabilities between levels within the hierarchy when the methodology to obtain the fair value changes such that there are either more or fewer unobservable inputs as of the end of the reporting period. The Corporation transferred its investment in six corporate sub-debt issuances from Level 2 to Level 3 in the twelve month period ended December 31, 2023. Illiquidity in new issuances of comparable bonds and the size of issuances led to pricing difficulties, and the transfer to Level 3 within the period. The Corporation utilizes a "beginning of reporting period" timing assumption when recognizing transfers between hierarchy levels, consistent with ASC 820-10-50-2.

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using unobservable inputs (Level 3) for the years ended December 31, 2023 and 2022.

Corporate Bonds: Level 3 Financial Assets	2023		2022
Balance of recurring Level 3 assets at January 1	$	—	$	—
Total gains and losses for the period:
Included in other comprehensive income	(1,096)		—
Transfers into Level 3	9,955		—
Transfers out of Level 3	(1,329)		—
Balance of recurring Level 3 assets at December 31	$	7,530	$	—

December 31, 2023	Fair Value		Valuation Techniques	Unobservable Input	Range [Weighted Average] at
Corporate bonds and notes	$	7,530	Discounted cash flow	Market discount rate	12.50% -12.50% [12.50%]

There were two corporate bonds with a fair value of $1.3 million which were transferred out of Level 3 and into Level 2 during the year ended December 31, 2023 based on the availability of observable market data for these investments.

There were no financial assets measured on a recurring basis that were considered to be Level 3 fair value by the Corporation at December 31, 2022. Assets and liabilities measured at fair value on a non-recurring basis at December 31, 2023 and 2022 were

considered to be immaterial to the presentation of the consolidated financial statements.

F-60

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values of other financial instruments, at December 31, 2023 and December 31, 2022, are as follows (in thousands):

			Fair Value Measurements at December 31, 2023 Using
Financial assets:	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Estimated Fair Value 1
Cash and due from financial institutions	$	22,247	$	22,247	$	—	$	—	$	22,247
Interest-bearing deposits in other financial institutions	14,600		14,600		—		—		14,600
Equity investments	3,046		3,046		—		—		3,046
Securities available for sale	583,993		55,332		521,131		7,530		583,993
Securities held to maturity	785		—		—		785		785
FHLBNY and FRBNY stock	5,498		—		—		—		N/A
Loans, net and loans held for sale	1,972,664		—		—		1,875,390		1,875,390
Derivative assets	23,942		—		23,942		—		23,942
Financial liabilities:
Deposits:
Demand, savings, and insured money market deposits	$	1,817,162	$	1,817,162	$	—	$	—	$	1,817,162
Time deposits	612,265		—		609,863		—		609,863
FHLBNY overnight advances	31,920		—		31,925		—		31,925
Derivative liabilities	23,981		—		23,981		—		23,981

1 Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

F-61

			Fair Value Measurements at December 31, 2022 Using
Financial Assets:	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Estimated Fair Value 1
Cash and due from financial institutions	$	29,309	$	29,309	$	—	$	—	$	29,309
Interest-bearing deposits in other financial institutions	26,560		26,560		—		—		26,560
Equity investments	2,830		2,830		—		—		2,830
Securities available for sale	632,589		55,574		577,015		—		632,589
Securities held to maturity	2,424		—		1,450		952		2,402
FHLBNY and FRBNY stock	8,197		—		—		—		N/A
Loans, net and loans held for sale	1,829,448		—		—		1,757,171		1,757,171
Derivative assets	26,706		—		26,706		—		26,706
Financial liabilities:
Deposits:
Demand, savings, and insured money market deposits	$	1,924,843	$	1,924,843	$	—	$	—	$	1,924,843
Time deposits	402,384		—		403,572		—		403,572
FHLBNY overnight advances	95,810		—		—		—		—
Derivative liabilities	26,761		—		26,761		—		26,761

1 Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

(19)    REGULATORY CAPITAL REQUIREMENTS

The Bank is subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Under Basel III rules, the Bank must hold a capital conservation buffer of 2.5 % above the adequately capitalized risk-based capital ratios. Organizations that fail to maintain the minimum capital conservation buffer could face restrictions on capital distributions or discretionary bonus payments to executive officers. The net unrealized gain or loss on available for sale securities and changes in the funded status of the defined benefit pension plan and other benefit plans are not included in computing regulatory capital. Management believes as of December 31, 2023, the Bank met all capital adequacy requirements to which they are subject.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At December 31, 2023, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. The Corporation is no longer subject to FRB consolidated capital requirements applicable to bank holding companies, which are similar to those applicable to the Bank, until it reaches $3.0 billion in assets.

As of December 31, 2023, the most recent notification from the Federal Reserve Bank of New York categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based, common equity Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There have been no conditions or events since that notification that management believes have changed the Bank's or the Corporation's capital category.

F-62

The Corporation’s principal source of funds for dividend payments is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net income, combined with the retained net income of the preceding two years, subject to the capital requirements in the table below.  During 2024, the Bank could, without prior approval, declare dividends of approximately $59.4 million plus any 2024 net income retained to the date of the dividend declaration.

The actual capital amounts and ratios of the Corporation and the Bank are presented in the following tables (in thousands):

	Actual				Minimal Capital Adequacy				Minimal Capital Adequacy with Capital Buffer				To Be Well Capitalized Under Prompt Corrective Action Provisions
As of December 31, 2023	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital (to Risk Weighted Assets):
Consolidated	$	262,864	13.26	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	252,783	12.76	%	$	158,438	8.00	%	$	207,950	10.50	%	$	198,048	10.00	%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	239,429	12.08	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	229,348	11.58	%	$	118,829	6.00	%	$	168,341	8.50	%	$	158,438	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	239,429	12.08	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	229,348	11.58	%	$	89,122	4.50	%	$	138,634	7.00	%	$	128,731	6.50	%
Tier 1 Capital (to Average Assets):
Consolidated	$	239,429	8.62	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	229,348	8.26	%	$	111,034	4.00	%	N/A		N/A		$	138,792	5.00	%

	Actual				Minimum Capital Adequacy				Minimal Capital Adequacy with Capital Buffer				To Be Well Capitalized Under Prompt Corrective Action Provisions
As of December 31, 2022	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital (to Risk Weighted Assets):
Consolidated	$	239,478	12.57	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	230,560	12.10	%	$	152,414	8.00	%	$	200,044	10.50	%	$	190,518	10.00	%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	219,820	11.54	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	210,901	11.07	%	$	114,311	6.00	%	$	161,940	8.50	%	$	152,414	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	219,820	11.54	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	210,901	11.07	%	$	85,733	4.50	%	$	133,363	7.00	%	$	123,837	6.50	%
Tier 1 Capital (to Average Assets):
Consolidated	$	219,820	8.23	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	210,901	7.91	%	$	106,616	4.00	%	N/A		N/A		$	133,270	5.00	%

F-63

(20)    ACCUMULATED OTHER COMPREHENSIVE INCOME OR LOSS

Accumulated other comprehensive income or loss represents the net unrealized holding gains or losses on securities available for sale and the funded status of the Corporation's defined benefit pension plan and other benefit plans, as of the consolidated balance sheet dates, net of the related tax effect.

The following is a summary of the changes in accumulated other comprehensive income or loss by component, net of tax, for the periods indicated (in thousands):

	Unrealized Gains and Losses on Securities Available for Sale		Defined Benefit and Other Benefit Plans		Total
Balance at January 1, 2023	$	(71,296)	$	(3,961)	$	(75,257)
Other comprehensive income (loss) before reclassification	8,506		702		9,208
Amounts reclassified from accumulated other comprehensive income (loss)	(10)		46		36
Net current period other comprehensive income (loss)	8,496		748		9,244
Balance at December 31, 2023	$	(62,800)	$	(3,213)	$	(66,013)

Balance at January 1, 2022	$	(2,495)	$	(4,035)	$	(6,530)
Other comprehensive income (loss) before reclassification	(68,801)		47		(68,754)
Amounts reclassified from accumulated other comprehensive income (loss)	—		27		27
Net current period other comprehensive income (loss)	(68,801)		74		(68,727)
Balance at December 31, 2022	$	(71,296)	$	(3,961)	$	(75,257)

The following is the reclassification out of accumulated other comprehensive income (loss) for the periods indicated (in thousands):

Details about Accumulated Other Comprehensive Income (Loss) Components	Year Ended December 31,				Affected Line Item  in the Statement Where Net Income is Presented
	2023		2022
Unrealized gains and losses on securities available for sale:
Realized gains (losses) on securities available for sale	$	(14)	$	—	Net gains (losses) on securities transactions
Tax effect	4		—		Income tax expense
Net of tax	(10)		—
Amortization of defined pension plan and other benefit plan items:
Actuarial losses (a)	63		38		Other components of net periodic pension and postretirement benefits
Tax effect	(16)		(11)		Income tax expense
Net of tax	47		27
Total reclassification for the period, net of tax	$	37	$	27

(a) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and other benefit plan costs (see Note 13 for additional information).

F-64

(21)    SEGMENT REPORTING

The Corporation manages its operations through two primary business segments: core banking and WMG. The core banking segment provides revenues by attracting deposits from the general public and using such funds to originate consumer, commercial, commercial real estate, and residential mortgage loans, primarily in the Corporation’s local markets, and to invest in securities. The WMG services segment provides revenues by providing trust and investment advisory services to clients.

Accounting policies for the segments are the same as those described in Note 1. Summarized financial information concerning the Corporation’s reportable segments and the reconciliation to the Corporation’s consolidated results are shown in the following table. Income taxes are allocated based on the separate taxable income of each entity and indirect overhead expenses are allocated based on reasonable and equitable allocations applicable to the reportable segment. The Holding Company, CFS, and CRM column below includes amounts to eliminate transactions between segments as well as income and expenses related to insurance products, mutual funds, brokerage services, and captive insurance (in thousands).

Year ended December 31, 2023	Core Banking		WMG		Holding Company, CFS and CRM1		Consolidated Totals
Interest and dividend income	$	112,947	$	—	$	127	$	113,074
Interest expense	38,617		—		—		38,617
Net interest income	74,330		—		127		74,457
Provision for credit losses	3,262		—		—		3,262
Net interest income after provision for credit losses	71,068		—		127		71,195
Non-interest income	13,150		10,460		939		24,549
Legal settlements	—		—		—		—
Non-interest expenses	55,982		7,061		1,200		64,243
Income (loss) before income tax expense	28,236		3,399		(134)		31,501
Income tax expense (benefit)	5,869		730		(98)		6,501
Segment net income (loss)	$	22,367	$	2,669	$	(36)	$	25,000
Segment assets	$	2,706,373	$	2,627	$	1,529	$	2,710,529

1 Chemung Risk Management, Inc. (CRM) was dissolved December 6, 2023.

Year ended December 31, 2022	Core Banking		WMG		Holding Company, CFS and CRM			Consolidated Totals
Interest and dividend income	$	81,425	$	—	$	50		$	81,475
Interest expense	7,296		—		—			7,296
Net interest income	74,129		—		50			74,179
Provision for loan losses	(554)		—		—			(554)
Net interest income after provision for loan losses	74,683		—		50			74,733
Non-interest income	10,225		10,280		931			21,436
Legal settlements	—		—		—		0	—
Non-interest expenses	51,301		6,582		1,397			59,280
Income (loss) before income tax expense	33,607		3,698		(416)			36,889
Income tax expense (benefit)	7,361		851		(106)			8,106
Segment net income (loss)	$	26,246	$	2,847	$	(310)		$	28,783
Segment assets	$	2,635,043	$	2,559	$	7,951		$	2,645,553

F-65

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CHEMUNG FINANCIAL CORPORATION
DATED: MARCH 13, 2024	By: /s/ Anders M. Tomson
	Anders M. Tomson President and Chief Executive Officer (Principal Executive Officer)

DATED: MARCH 13, 2024	By:  /s/ Dale M. McKim, III
	Dale M. McKim, III Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been executed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Raimundo C. Archibold, Jr.	Director	March 13, 2024
Raimundo C. Archibold, Jr.
/s/ Ronald M. Bentley	Director	March 13, 2024
Ronald M. Bentley
/s/ David M. Buicko	Director	March 13, 2024
David M. Buicko
/s/ David J. Dalrymple	Director and Chairman of the Board of Directors	March 13, 2024
David J. Dalrymple
/s/ Robert H. Dalrymple	Director	March 13, 2024
Robert H. Dalrymple
/s/ Richard E. Forrestel, Jr.	Director	March 13, 2024
Richard E. Forrestel, Jr.
/s/ Denise V. Gonick	Director	March 13, 2024
Denise V. Gonick
/s/ Stephen M. Lounsberry, III	Director	March 13, 2024
Stephen M. Lounsberry, III
/s/ Joseph F. Meade, IV	Director	March 13, 2024
Joseph F. Meade, IV
/s/ Jeffrey B. Streeter	Director	March 13, 2024
Jeffrey B. Streeter

(Signatures, continued)

F-59

Signature	Title	Date
/s/ G. Thomas Tranter, Jr.	Director	March 13, 2024
G. Thomas Tranter, Jr.
/s/ Thomas R. Tyrrell	Director	March 13, 2024
Thomas R. Tyrrell
/s/ Anders M. Tomson	Chief Executive Officer and President	March 13, 2024
Anders M. Tomson
/s/ Dale M. McKim, III	Chief Financial Officer and Treasurer	March 13, 2024
Dale M. McKim, III

F-60

EXHIBIT INDEX

Exhibit	The following exhibits are either filed with this Form 10-K or are incorporated herein by reference.  The Corporation’s Securities Exchange Act file number is 000-13888.
3.1	Certificate of Incorporation of Chemung Financial Corporation dated December 20, 1984 (as incorporated by reference to Exhibit 3.1 to Registrant's Form 10-K for the year ended December 31, 2007 and filed with the Commission on March 13, 2008).
3.2	Certificate of Amendment to the Certificate of Incorporation of Chemung Financial Corporation, dated March 28, 1988 (as incorporated by reference to Exhibit 3.2 to Registrant's Form 10-K for the year ended December 31, 2007 and filed with the Commission on March 13, 2008).
3.3	Certificate of Amendment to the Certificate of Incorporation of Chemung Financial Corporation, dated May 13, 1998 (as incorporated by reference to Exhibit 3.4 to Registrant’s Form 10-K for the year ended December 31, 2005 and filed with the Commission on March 15, 2006).
3.4	Amended and Restated Bylaws of Chemung Financial Corporation, as amended August 17, 2022 (as incorporated by reference to Exhibit 3.2 to Registrant’s Form 8-K and filed with the Commission on August 17, 2022).
4.1	Specimen Stock Certificate (filed as Exhibit 4.1 to Registrant's Form 10-K for the year ended December 31, 2002 and incorporated herein by reference).
4.2	Description of Common Stock Registered Under Section 12 of the Securities Exchange Act of 1934, filed herewith (as incorporated by reference to Exhibit 4.2 to Registrant's Form 10-K for the year ended December 31, 2019 and filed with the Commission on March 12, 2020).
10.1	Chemung Financial Corporation 2014 Omnibus Plan and Component Plans (Chemung Financial Corporation Restricted Stock Plan, Chemung Financial Corporation Incentive Compensation Plan, Chemung Financial Corporation Directors’ Compensation Plan and Chemung Financial Corporation/Chemung Canal Trust Company Directors’ Deferred Fee Plan) (filed as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5 to Registrant’s Form S-8 filed with the Commssion on January 27, 2015 and incorporated herein by reference).
10.2	Change of Control Agreement dated December 19, 2018 between Chemung Canal Trust Company and Anders M. Tomson, President and Chief Executive Officer (filed as Exhibit 10.1 to Registrant’s Form 8-K filed with the Commission on December 19, 2018 and incorporated herein by reference).
10.3	Change of Control Agreement dated December 18, 2019 between Chemung Canal Trust Company and Karl F. Krebs, Executive Vice President and Chief Financial Officer (filed as Exhibit 10.1 to Registrant’s Form 8-K filed with the Commission on December 23, 2019 and incorporated herein by reference).
10.4	Change of Control Agreement dated December 18, 2019 between Chemung Canal Trust Company and Peter K. Cosgrove, Executive Vice President and Chief Credit Officer, filed herewith.*
10.5	Change of Control Agreement dated December 18, 2019 between Chemung Canal Trust Company and Daniel D. Fariello, President of Capital Bank Division (filed as Exhibit 10.2 to Registrant’s Form 8-K filed with the Commission on December 23, 2019 and incorporated herein by reference).
10.6	Change of Control Agreement dated December 18, 2019 between Chemung Canal Trust Company and Loren D. Cole, Executive Vice President and Chief Information Officer, (as incorporated by reference to Exhibit 10.8 to Registrant's Form 10-K for the year ended December 31, 2019 and filed with the Commission on March 12, 2020).
10.7	Chemung Financial Corporation 2021 Equity Incentive Plan (filed as Exhibit 10.1 to Registrant's Form 8-K filed with the Commission on June 8, 2021 and incorporated herein by reference).
10.8	Consent Order between Chemung Canal Trust Company and the New York State Department of Financial Services dated June 24, 2021 (filed as Exhibit 10.1 to Registrant's Form 8-K filed with the Commission on June 29, 2021 and incorporated herein by reference).
10.9	Form of Incentive Stock Option Award Agreement (filed as Exhibit 10.2 to Registrant's Registration Statement on Form S-8 (333-257227) filed with the Commission on June 21, 2021 and incorporated herein by reference).
10.10	Form of Non-Qualified Stock Option Award Agreement (filed as Exhibit 10.3 to Registrant's Registration Statement on Form S-8 (333-257227) filed with the Commission on June 21, 2021 and incorporated herein by reference).
10.11	Form of Restricted Stock Award Agreement (filed as Exhibit 10.4 to Registrant's Registration Statement on Form S-8 (333-257227) filed with the Commission on June 21, 2021 and incorporated herein by reference).
10.12	Chemung Canal Trust Company Defined Contribution Supplemental Executive Retirement Plan, (as incorporated by reference to Exhibit 10.12 to Registrant's Form 10-K for the year ended December 31, 2021 and filed with the Commission on March 23, 2022).
10.13	Chemung Canal Trust Company Defined Contribution Supplemental Executive Retirement Plan-Amendment Number One, as amended on November 16, 2022 (filed as Exhibit 10.1 to Registrant's Form 8-K filed with the Commission on November 21, 2022 and incorporated herein by reference).
10.14	Change of Control Agreement dated June 2, 2023 between Chemung Canal Trust Company and Dale M. McKim, III, Executive Vice President, Chief Financial Officer and Treasurer, (filed as Exhibit 10.1 to Registrant's Form 8-K filed with the Commission on June 2, 2023 and incorporated herein by reference).
10.15	Post-Employment Consulting Agreement between Chemung Canal Trust Company and Karl F. Krebs, former Executive Vice President, Chief Financial Officer and Treasurer, (filed as Exhibit 10.1 to Registrant's Form 8-K filed with the Commission on June 29, 2023 and incorporated herein by reference).
21	Subsidiaries of the Registrant.*
23	Consent of Crowe LLP, Independent Registered Public Accounting Firm.*

31.1	Certification of President and Chief Executive Officer of the Registrant pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.*
31.2	Certification of Treasurer and Chief Financial Officer of the Registrant pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.*
32.1	Certification of President and Chief Executive Officer of the Registrant pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 19 U.S.C. §1350.*
32.2	Certification of Treasurer and Chief Financial Officer of the Registrant pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 19 U.S.C. §1350.*
97	Policy Relating to Recovery of Erroneously Awarded Compensation, filed herewith.*
101.INS	Instance Document
101.SCH	XBRL Taxonomy Schema*
101.CAL	XBRL Taxonomy Calculation Linkbase*
101.DEF	XBRL Taxonomy Definition Linkbase*
101.LAB	XBRL Taxonomy Label Linkbase*
101.PRE	XBRL Taxonomy Presentation Linkbase*
*	Filed herewith.

EX-10.4

CHANGE OF CONTROL AGREEMENT

THIS CHANGE OF CONTROL AGREEMENT (“Agreement”) is hereby entered into on this 18th day of December, 2019, by and between CHEMUNG CANAL TRUST COMPANY, a trust company chartered under the laws of the State of New York with its principal office located at One Chemung Canal Plaza, Elmira, New York 14902 (“Bank”), and PETER K. COSGROVE (“Executive”).Any reference to the “Company” shall mean Chemung Financial Corporation, the stock holding company of the Bank, or any successor thereto.

WHEREAS, Executive serves as EXECUTIVE VICE PRESIDENT & CHIEF CREDIT OFFICER (the “Executive Position”); and

WHEREAS, the Bank desires to set forth the severance benefits Executive would receive in the event of a termination of Executive’s employment with the Bank following the occurrence of a Change of Control;

NOW THEREFORE, to ensure Executive’s continued dedication to the Bank and to induce Executive to remain and continue in the employ of the Bank, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereby agree as follows:

1.CHANGE OF CONTROL. This Agreement shall become operative only if and when there has occurred a “Change of Control” of the Company or the Bank. A “Change of Control” shall mean (1) any merger, consolidation or other corporate reorganization in which the Company or the Bank is not the surviving corporation, (2) the event that any “person” (as that term is used in Section

2.s 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the beneficial owner, directly or indirectly, of securities of the Company or the Bank representing thirty percent (30%) or more of the combined voting power of the Bank’s then outstanding securities, provided that the acquisition of additional securities or voting power by a person who, as of the date of this Agreement, already is the direct or indirect beneficial owner of twenty percent (20%) of such combined voting power, shall not constitute a Change of Control, or (3) the event in which a majority of the members of the Company’s or the Bank’s Board of Directors is replaced during any twenty-four (24) month period by Directors whose appointment or election is not endorsed by two-thirds (2/3) of the members of the Company’s or the Bank’s Board of Directors (who were either members of the Board of Directors of the Company or the Bank, as applicable, at the beginning of such twenty-four (24) month period or who was appointed to the Company’s or the Bank’s Board during such twenty-four (24) month period as a result of a directive, supervisory agreement or order issued by the primary federal regulator of the Company or the Bank) prior to the date of appointment or election.

2. TERMINATION.

(a) If, after the occurrence of a Change of Control, Executive’s employment is terminated by the Bank without Cause or Executive voluntarily terminates employment for Good Reason within the twelve (12) month period immediately following the effective date of the Change of Control,, the Bank shall pay to Executive, in addition to any other compensation, remuneration, or benefits due to Executive under any other plan, contract, or arrangement with the Bank, the Severance Pay described in Section 3 of this Agreement in equal monthly installments for the twenty-four (24) months immediately following the effective date of the termination of Executive’s employment.Except as otherwise provided in Section 2(e), the first such installment to be paid on the first day of the first month immediately following the month in which Executive’s employment is terminated.

(b) For the purposes of this section, the Bank shall have “Cause” to terminate Executive’s employment if Executive engages in personal dishonesty, willful misconduct, breach of fiduciary duty, willful violation of any law, rule, or regulation (other than traffic violations or similar offenses), gross insubordination, or gross negligence. For the purposes of this paragraph, no act or failure to act shall be considered “willful” unless done or omitted to be done, by the Executive not in good faith and without a reasonable belief that Executive’s action or omission is in the best interests of the Bank. In no event shall Executive be deemed to have been terminated for Cause unless and until

there shall have been delivered to Executive a copy of a certification by a majority of the non-officer members of the Board of Directors finding that the Executive was guilty of conduct deemed to be Cause within the meaning of this paragraph.

(c)For purposes of this section, “Good Reason” exists if, without Executive’s express written consent, any of the following occurs: (1) a material reduction in Executive’s base salary or benefits in effect as of the effective date of the Change in Control; (2) a material reduction in Executive’s authority, duties or responsibilities from the position and attributes associated with the Executive Position (or any successor executive position in effect as of the effective date of the Change in Control); (3) a relocation of Executive’s principal place of employment in effect immediately prior to the effective date of the Change in Control, resulting in an increase of Executive’s commute of thirty (30) miles or more; or (4) a material breach of this Agreement by the Bank.Notwithstanding the foregoing, no such event shall constitute “Good Reason” unless (A) Executive shall have given written notice of such event to the Bank within ninety (90) days after the initial occurrence thereof, (B) the Bank shall have failed to cure the situation within thirty (30) days following the delivery of such notice (or such longer cure period as may be agreed upon by the parties), and (C) Executive terminates employment within thirty (30) days after expiration of such cure period.

(d)Notwithstanding anything in this Agreement to the contrary, to the extent that a payment or benefit described in this Agreement constitutes “non-qualified deferred compensation” under Section 409A of the Code, and to the extent that such payment or benefit is payable upon the Executive’s termination of employment, then such payments or benefits will be payable only upon the Executive’s “Separation from Service.”For purposes of this Agreement, a “Separation from Service” will have occurred if the Bank and Executive reasonably anticipate that either no further services will be performed by Executive after the date of termination (whether as an employee or as an independent contractor) or the level of further services performed is less than 20 percent of the average level of bona fide services in the 36 months immediately preceding the termination.For all purposes hereunder, the definition of Separation from Service shall be interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii).

(e)Notwithstanding the foregoing, if Executive is a “Specified Employee” (i.e., a “key employee” of a publicly traded company within the meaning of Section 409A of the Code and the final regulations issued thereunder) and any payment under this Agreement is triggered due to Executive’s Separation from Service, then solely to the extent necessary to avoid penalties under Section 409A of the Code, no payment shall be made during the first six (6) months following Executive’s Separation from Service.Rather, any payment which would otherwise be paid to Executive during such period shall be accumulated and paid to Executive in a lump sum on the first day of the seventh month following such Separation from Service.All subsequent payments shall be paid in the manner specified in this Agreement.

(f)To the extent that a payment or benefit described in this Agreement constitutes “non-qualified deferred compensation” under Section 409A of the Code, such payment that is payable pursuant to this Agreement is intended to constitute a “separate payment” for purposes of Treasury Regulation 1.409A-2(b)(ii).

3. SEVERANCE PAY. Severance Pay payable to the Executive pursuant to this Agreement shall mean 2 times the sum of Executive’s: (i) highest annual rate of base salary; and (ii) highest annual incentive award, regardless if paid in the form of cash or unrestricted stock pursuant to the Company’s or the Bank’s incentive compensation plan(s) paid to, or earned by, Executive during the calendar year of the Change in Control or either of the two (2) calendar years immediately preceding the Change in Control. Severance Pay shall be reduced by all amounts that are required to be withheld or deducted under federal, state or municipal law.

4. REGULATORY LIMITS. The provisions of this Section 4 shall control as to continuing rights and obligations under this agreement notwithstanding any other provision of this Agreement, for so long as the Bank shall be regulated by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the New York State Department of Financial Services or any other federal or state banking agency (each a “Regulator”).

(a) All obligations under this Agreement shall be terminated, except to the extent determined by any Regulator that continuation thereof is necessary for the continued operation of the Bank at the time the Regulator enters into an agreement to provide assistance to or on behalf of the Bank, or approves a supervisory merger to resolve problems related to the operation of the Bank, or when the Bank is determined by a Regulator to be in an unsafe or unsound condition, notwithstanding the vesting of any rights of the parties.

(b) All obligations under this Agreement shall be subject to and conditioned upon the Bank’s satisfaction of and compliance with all state and federal laws, rules, and regulations applicable to the Bank, notwithstanding the vesting of any rights hereunder. The Bank shall be relieved of all obligations under this Agreement to the extent that performance or satisfaction of such obligations would violate or be inconsistent with any federal or state law, rule, or regulation (including, without limitation, safety and soundness standards and related regulatory guidance), any order, directive or notice from a Regulator, or any formal or informal agreement, safety and soundness compliance plan, or other agreement or plan entered into by and between the Bank and any Regulator. Whether the obligations of this Agreement are inconsistent with any law, rule, regulation, order, directive, notice, agreement, or plan just described shall be deemed determined if so found by any Regulator or by an opinion of the Bank’s counsel, a copy or written summary of which finding or opinion of counsel shall be provided by the Bank to Executive within five (5) business days of the Bank’s notice of such a determination.

(c) The payment, accrual and/or vesting of any Severance Pay shall be suspended in the event the Bank receives any notice from any Regulator indicating an intent to issue an order or directive requiring the Bank to take prompt corrective action or to take or refrain from taking any other action, or to the extent that the Bank or any affiliate is prohibited from paying any Severance Pay by Section 18(k) of the Federal Deposit Insurance Act, 12 C.F.R. Part 359 or any other applicable law.

(d) In the event that any Regulator terminates or requires the Bank by order or directive to terminate Executive, Bank shall be relieved of all obligations under this Agreement and this Agreement shall be terminated and shall have no further force and effect.

(e) In the event that the Bank is relieved of any or all of its obligations under this Agreement as a result of the application of this Section 4 or that any or all of such obligations is suspended, the Bank shall provide, within five (5) business days of the Bank’s notice of relief or suspension, written notice to Executive describing the extent to which the Bank has been relieved of its obligations under this Agreement or to which such obligations have been suspended and the reason(s) therefor.

5. SUCCESSORS. This Agreement shall inure to the benefit of and be enforceable by Executive’s personal representatives and heirs. In the event that Executive dies while any amounts remain payable to Executive hereunder, all such amounts shall be paid in accordance with the terms of this Agreement to designee(s) or, if there is no such designee, to Executive’s estate.

6. SEVERABILITY. In the event that any court or other authority of competent jurisdiction determines that any provision of this Agreement is invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall be limited to such provision and shall not affect the validity, legality, or enforceability of any other provision. Any provision in this Agreement which is invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be invalid, illegal or unenforceable, only to the extent required by such jurisdiction and without rendering such provision invalid, illegal, or unenforceable in any other jurisdiction.

7. NO RIGHT TO CONTINUE EMPLOYMENT. This Agreement shall not give Executive any right to remain in the employ of the Bank. Subject to the severance provisions in this Agreement or in any other written agreement between the Bank and Executive, the Bank reserves the right to terminate Executive’s employment at any time.

8. AMENDMENT; WAIVER. No provision of this Agreement may be modified or waived except by a written instrument executed by Executive and on behalf of the Bank by an authorized representative, which instrument specifically refers to this Section 8. No waiver of compliance with any condition or provision of this

Agreement shall be deemed or constitute a waiver of any other provision or condition of this Agreement and shall not operate to preclude or limit any future waivers or modifications of the Agreement.

9. NOTICES. For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States first-class registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to Executive:	Most recent address on file with the Bank
If to the Bank	Chemung Canal Trust Company
	One Chemung Canal Plaza
	P.O. Box 1522
	Elmira, New York 14902-1522

or at such other address as any party may furnish to the other in writing. Notices of change of address shall be effective only upon receipt.

10. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties and supersedes all current and prior agreements and understandings, whether written or oral, between the parties, with respect to the subject matter hereof.

11. GOVERNING LAW. This Agreement shall be interpreted and construed in accordance with the laws of the State of New York, without regard to any conflicts of law rules or principles.

12. JURISDICTION; VENUE; WAIVER OF JURY TRIAL. The Bank and Executive agree that any action or proceeding seeking to enforce any provision of, or based on any claim arising out of, or otherwise relating to this Agreement shall be brought in the courts of the State of New York, or, if it has or can acquire jurisdiction, in the United States District Court for the Western District of New York. The Bank and Executive each give their consent to the jurisdiction of these courts in any such action or proceeding and hereby waive any object to venue being laid in such courts. The Bank and Executive further agree to waive their respective rights to a trial by jury in any such action or proceeding.

13. SECTION HEADINGS. All Section headings herein are included for the purposes of convenience only and shall not be deemed to have any effect on the construction or interpretation of any provision of this Agreement.

IN WITNESS WHEREOF, the parties hereto have hereby executed this Agreement as of the date set forth above.

CHEMUNG CANAL TRUST COMPANY,
By:	/s/ Anders M. Tomson
	Its: President & Chief Executive Officer
EXECUTIVE
	/s/ Peter K. Cosgrove

EX-21

EXHIBIT 21

CHEMUNG FINANCIAL CORPORATION

Subsidiary List

Name	State of Incorporation
Chemung Canal Trust Company	New York
CFS Group, Inc.	New York

EX-23

EXHIBIT 23

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the registration statement on Form S-8 (File No. 333-104663, 333-201715 and 333-257227), Form S-3 (File No. 333-272829 and 333-185400) of Chemung Financial Corporation of our report dated March 13, 2024, related to the consolidated financial statements, appearing in this Annual Report on Form 10-K of Chemung Financial Corporation for the year ended December 31, 2023.

/s/ Crowe LLP

Grand Rapids, Michigan

March 13, 2024

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER OF CHEMUNG FINANCIAL CORPORATION PURSUANT TO RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934.

I, Anders M. Tomson, certify that:

1.  I have reviewed this report on Form 10-K of Chemung Financial Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  March 13, 2024

By:         /s/ Anders M. Tomson

Anders M. Tomson

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER AND TREASURER OF CHEMUNG FINANCIAL CORPORATION PURSUANT TO RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934.

I, Karl F. Krebs, certify that:

1.  I have reviewed this report on Form 10-K of Chemung Financial Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  March 13, 2024

By:/s/ Dale M. McKim, III

Dale M. McKim, III

Chief Financial Officer and Treasurer

(Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

    CERTIFICATION OF CHIEF EXECUTIVE OFFICER OF CHEMUNG FINANCIAL CORPORATION PURSUANT TO RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934 AND 19 U.S.C. §1350.

The undersigned, the Chief Executive Officer of Chemung Financial Corporation (the "Corporation"), hereby certifies that, to his knowledge on the date hereof:

a) the Annual Report on Form 10-K of the Corporation for the period ended December 31, 2023, filed on the date hereof with the Securities and Exchange Commission (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ Anders M. Tomson

Anders M. Tomson

President and Chief Executive Officer

March 13, 2024

EX-32.2

EXHIBIT 32.2

    CERTIFICATION OF CHIEF FINANCIAL OFFICER AND TREASURER OF CHEMUNG FINANCIAL CORPORATION PURSUANT TO RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934 AND 19 U.S.C. §1350.

The undersigned, the Chief Financial Officer and Treasurer of Chemung Financial Corporation (the "Corporation"), hereby certifies that, to his knowledge on the date hereof:

a) the annual Report on Form 10-K of the Corporation for the period ended December 31, 2023, filed on the date hereof with the Securities and Exchange Commission (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ Dale M. McKim, III

Dale M. McKim, III

Chief Financial Officer and Treasurer

March 13, 2024

EX-97

CHEMUNG FINANCIAL CORPORATION CLAWBACK POLICY

The Board of Directors (the “Board”) of Chemung Financial Corporation (the “Company”) believes that it is in the best interests of the Company and its stockholders to adopt this Clawback Policy (the “Policy”), which provides for the recovery of certain incentive compensation in the event of an Accounting Restatement (as defined below).

The Company has adopted the Policy as a supplement to any other clawback policies or provisions in effect now or in the future at the Company.To the extent this Policy applies to compensation payable to a person covered by this Policy, it shall supersede any other conflicting provision or policy maintained by the Company and shall be the only clawback policy applicable to such compensation and no other clawback policy shall apply; provided that, if the other policy or provision provides that a greater amount of compensation is subject to clawback, the other policy or provision shall apply to the amount in excess of the amount subject to clawback under this Policy.

This Policy shall be interpreted to comply with the clawback rules found in 17 C.F.R. §240.10D and the related listing rules of the national securities exchange or national securities association (the “Exchange”) on which the Company has listed securities, and, to the extent this Policy is in any manner deemed inconsistent with those rules, this Policy shall be treated as retroactively amended to be compliant with such rules.

1.Definitions.The terms listed below shall have the same meaning as defined in Rule 10D-1(d) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).As of the date of the adoption of this Policy, the following terms have the following definitions under Rule 10D-1(d):

(a)    “Accounting Restatement” means an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.

(b)    “Accounting Restatement Date” means the earlier to occur of: (i) the date the Board, a committee of the Board, or the officer or officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement or (ii) the date a court, regulatory agency, or other legally authorized body directs the Company to prepare an Accounting Restatement.

(c)    Erroneously Awarded Compensation” means, in the event of an Accounting Restatement, the amount of Incentive-Based Compensation previously received that exceeds the amount of Incentive-Based Compensation that otherwise would have been received had it been determined based on the restated amounts in such Accounting Restatement. The amount of Erroneously Awarded Compensation shall be determined on a gross basis without regard to any taxes paid by the relevant Executive Officer; provided, however, that for Incentive-Based Compensation based on the Company’s stock price or total shareholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in an Accounting

Restatement: (i) the amount of Erroneously Awarded Compensation shall be based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return upon which the Incentive-Based Compensation was received and (ii) the Company must maintain documentation of the determination of such reasonable estimate and provide such documentation to the Stock Exchange.

(d)    “Executive Officer” means the Company’s president, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice-president of the Company in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the Company. An executive officer of the Company’s parent or subsidiary is deemed an “Executive Officer” if the executive officer performs policy making functions for the Company.

(e)    “Financial Reporting Measure” means any measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measure that is derived wholly or in part from such measure; provided, however, that a Financial Reporting Measure is not required to be presented within the Company’s financial statements or included in a filing with the Securities and Exchange Commission to qualify as a “Financial Reporting Measure.” For purposes of this Policy, “Financial Reporting Measure” includes, but is not limited to, stock price and total shareholder return.

(f)    “Incentive-Based Compensation” means any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure.

(g)    Received” means incentive-based compensation received in the Company’s fiscal period during which the Financial Reporting Measure specified in the incentive-based compensation award is attained, even if the payment or grant of the incentive-based compensation occurs after the end of that period.

2.Application of the Policy.This Policy applies in the event the Company is required to prepare an Accounting Restatement and it shall apply to all Incentive-Based Compensation Received by a person: (a) after beginning service as an Executive Officer; (b) who served as an Executive Officer at any time during the performance period for such Incentive-Based Compensation; (c) while the Company had a class of securities listed on a national securities exchange or a national securities association; and (d) during the three completed fiscal years immediately preceding the Accounting Restatement Date. In addition to such last three completed fiscal years, the immediately preceding clause (d) includes any transition period that results from a change in the Company’s fiscal year within or immediately following such three completed fiscal years; provided, however, that a transition period between the last day of the Company’s previous fiscal year end and the first day of its new fiscal year that comprises a period of nine to twelve months shall be deemed a completed fiscal year.

3.Recovery Period.The Incentive-Based Compensation subject to clawback is the Incentive-Based Compensation Received during the three completed fiscal years immediately preceding the date the Company is required to prepare an Accounting Restatement as described in Section 2 of this Policy; provided that the individual served as an Executive Officer at any time during the performance period applicable to the Incentive-Based Compensation in question.The date the Company is required to prepare an Accounting Restatement shall be determined pursuant to Exchange Act Rule 10D-1(b)(1)(ii).

(a)Notwithstanding the foregoing, the Policy shall only apply if the Incentive-Based Compensation is received (1) while the Company has a class of securities listed on an Exchange and (2) on or after October 2, 2023.

(b)See Exchange Act Rule10D-1(b)(1)(i)(D) for certain circumstances under which the Policy will apply to Incentive-Based Compensation received during a transition period arising due to a change in the Company’s fiscal year.

4.Erroneously Awarded Compensation.The amount of Incentive-Based Compensation subject to the Policy (“Erroneously Awarded Compensation”) is the amount of Incentive-Based Compensation received that exceeds the amount of Incentive Based-Compensation that otherwise would have been received had it been determined based on the restated amounts in the Company’s financial statements and shall be computed without regard to any taxes paid.

For Incentive-Based Compensation based on stock price or total shareholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in an Accounting Restatement: (1) the amount shall be based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return upon which the Incentive-Based Compensation was received; and (2) the Company must maintain documentation of the determination of that reasonable estimate and provide such documentation to the Exchange.

5.The Company shall recover reasonably promptly any Erroneously Awarded Compensation except to the extent that the conditions of paragraphs (a), (b), or (c) below apply.The Compensation Committee of the Board of Directors (the “Committee”) shall determine the repayment schedule for each amount of Erroneously Awarded Compensation in a manner that complies with this “reasonably promptly” requirement.The determination will be consistent with any applicable legal guidance, by the Securities and Exchange Commission, judicial opinion, or otherwise.The determination of “reasonably promptly” may vary from case to case and the Committee is authorized to adopt additional rules to further describe what repayment schedules satisfy this requirement.

(a)Erroneously Awarded Compensation need not be recovered if the direct expense paid to a third party to assist in enforcing the Policy would exceed the amount to be recovered and the Committee determines that recovery would be impracticable. Before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on expense of enforcement, the Company shall make a reasonable attempt to recover the Erroneously Awarded Compensation, document the reasonable attempt(s) to recover, and provide that documentation to the Exchange, as required.

(b)If applicable, Erroneously Awarded Compensation need not be recovered if recovery would violate home country law where that law was adopted prior to November 28, 2022.Before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on violation of home country law, the Company shall obtain an opinion of home country counsel, acceptable to the Exchange, that recovery would result in a violation and will provide the opinion to the Exchange.

(c)Erroneously Awarded Compensation need not be recovered if recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the registrant, to fail to meet the requirements of Section 401(a)(13) or Section 411(a) of the Internal Revenue Code of 1986, as amended, and regulations thereunder.

6.Committee Decisions. Decisions of the Committee with respect to this Policy shall be final, conclusive, and binding on all Executive Officers subject to this policy, unless determined by a court of competent jurisdiction to be an abuse of discretion.

7.No Indemnification. Notwithstanding anything to the contrary in any other policy of the Company, the governing docs of the Company or any agreement between the Company and an Executive Officer, no Executive Officer will be indemnified by the Company against the loss of any Erroneously Awarded Compensation.

8.Agreement to Policy by Executive Officers.The Committee shall take reasonable steps to inform Executive Officers of this Policy and the Executive Officers shall acknowledge receipt and adherence to this Policy in writing.

9.Exhibit Filing Requirement. A copy of this Policy and any amendments thereto shall be filed as an exhibit to the Company’s Annual Report on Form 10-K.

10.Amendment. The Board of Directors may amend, modify, or supplement all or any portion of this Policy at any time and from time to time in its discretion.

[TO BE SIGNED BY EACH OF THE COMPANY’S EXECUTIVE OFFICERS]

Clawback Policy Acknowledgment

I, the undersigned, agree and acknowledge that I am fully bound by, and subject to, the terms and conditions of Chemung Financial Corporation’s Clawback Policy (as may be amended, restated, supplemented or otherwise modified from time to time, the “Policy”) and that I have been provided a copy of the Policy. In the event of any inconsistency between the Policy and the terms of any employment or similar agreement to which I am a party, or the terms of any compensation plan, program, or agreement under which any compensation has been granted, awarded, earned, or paid, the terms of the Policy shall govern. If the Committee determines that any amounts granted, awarded, earned, or paid to me must be forfeited or reimbursed to the Company, I will promptly take any action necessary to effectuate such forfeiture and/or reimbursement.

Name	Date:
Title

XML

COVER - USD ($)

12 Months Ended

Dec. 31, 2023

Mar. 01, 2024

Jun. 30, 2023

Cover [Abstract]

Document Type

10-K

Document Annual Report

true

Document Period End Date

Dec. 31, 2023

Current Fiscal Year End Date

--12-31

Document Transition Report

false

Entity File Number

001-35741

Entity Registrant Name

CHEMUNG FINANCIAL CORP

Entity Incorporation, State or Country Code

NY

Entity Tax Identification Number

16-1237038

Entity Address, Address Line One

One Chemung Canal Plaza

Entity Address, City or Town

Elmira

Entity Address, State or Province

NY

Entity Address, Postal Zip Code

14901

City Area Code

607

Local Phone Number

737-3711

Title of 12(b) Security

Common Stock, Par Value $0.01 Per Share

Trading Symbol

CHMG

Security Exchange Name

NASDAQ

Entity Well-known Seasoned Issuer

No

Entity Voluntary Filers

No

Entity Current Reporting Status

Yes

Entity Interactive Data Current

Yes

Entity Filer Category

Accelerated Filer

Entity Small Business

true

Entity Emerging Growth Company

false

ICFR Auditor Attestation Flag

true

Document Financial Statement Error Correction

false

Entity Shell Company

false

Entity Public Float

$ 145,072,803

Entity Common Stock, Shares Outstanding

4,750,674

Documents Incorporated by Reference

Portions of the Proxy Statement for the Annual Meeting of Shareholders to be held on June 4, 2024 are incorporated by reference into Part III, Items 10, 11, 12, 13, and 14 of this Form 10-K.

Entity Central Index Key

0000763563

Document Fiscal Year Focus

2023

Document Fiscal Period Focus

FY

Amendment Flag

false

XML

AUDIT INFORMATION	12 Months Ended
	Dec. 31, 2023
Audit Information [Abstract]
Auditor Firm ID	173
Auditor Name	Crowe LLP
Auditor Location	Grand Rapids, Michigan

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands		Dec. 31, 2023	Dec. 31, 2022
ASSETS
Cash and due from financial institutions		$ 22,247	$ 29,309
Interest-earning deposits in other financial institutions		14,600	26,560
Total cash and cash equivalents		36,847	55,869
Equity investments, at fair value		3,046	2,830
Securities available for sale, at estimated fair value (amortized cost of $669,092, net of allowance for credit losses on securities of $0 at December 31, 2023; and amortized cost of $729,198, net of allowance for credit losses on securities of $0 at December 31, 2022)		583,993	632,589
Securities held to maturity, (estimated fair value of $785 at December 31, 2023 and $2,402 at December 31, 2022 net allowance for credit losses of $0 at December 31, 2023 and December 31, 2022, respectively)		785	2,424
FHLBNY and FRBNY Stock, at cost		5,498	8,197
Loans, net of deferred loan fees		1,972,664	1,829,448
Allowance for credit losses	[1]	(22,517)	(19,659)
Loans, net		1,950,147	1,809,789
Premises and equipment, net		14,571	16,113
Operating lease right-of-use assets		5,648	6,449
Goodwill		21,824	21,824
Bank owned life insurance		2,914	2,871
Interest rate swap assets		23,942	26,706
Accrued interest and other assets		61,314	59,892
Total assets		2,710,529	2,645,553
Deposits:
Non-interest-bearing		653,166	733,329
Interest-bearing		1,776,261	1,593,898
Total deposits		2,429,427	2,327,227
FHLBNY overnight advances		31,920	95,810
Capital lease obligation		3,050	3,327
Operating lease liabilities		5,827	6,620
Dividends payable		1,469	1,455
Interest rate swap liabilities		23,981	26,761
Accrued interest payable and other liabilities		19,614	17,965
Total liabilities		2,515,288	2,479,165
Shareholders' equity:
Common stock, $0.01 par value per share, 10,000,000 shares authorized; 5,310,076 issued at December 31, 2023 and December 31, 2022		53	53
Additional-paid-in capital		47,773	47,331
Retained earnings		229,930	211,859
Treasury stock, at cost (572,663 shares at December 31, 2023; 615,448 shares at December 31, 2022)		(16,502)	(17,598)
Accumulated other comprehensive (loss)		(66,013)	(75,257)
Total shareholders' equity		195,241	166,388
Total liabilities and shareholders' equity		$ 2,710,529	$ 2,645,553

[1] Effective January 1, 2023, the allowance calculation is based upon Current Expected Credit loss methodology. Prior to January 1, 2023, the allowance calculation was based upon incurred loss methodology. Refer to Note 1 for further discussion.

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Amortized cost	$ 669,092	$ 729,198
Allowance for credit loss	0	0
Securities held to maturity, estimated fair value	785	2,402
Securities held to maturity, allowance for credit loss	$ 0	$ 0
Common stock par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	10,000,000	10,000,000
Common stock, shares issued (in shares)	5,310,076	5,310,076
Treasury stock, at cost (in shares)	572,663	615,448

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands		12 Months Ended
		Dec. 31, 2023	Dec. 31, 2022
Interest and Dividend Income:
Loans, including fees		$ 97,228,000	$ 68,051,000
Taxable securities		14,283,000	12,096,000
Tax exempt securities		1,035,000	1,068,000
Interest-earning deposits		528,000	260,000
Total interest and dividend income		113,074,000	81,475,000
Interest Expense:
Deposits		35,926,000	6,655,000
Borrowed funds		2,691,000	641,000
Total interest expense		38,617,000	7,296,000
Net interest income		74,457,000	74,179,000
Provision (credit) for credit losses	[1]	3,262,000	(554,000)
Net interest income after provision for credit losses		71,195,000	74,733,000
Non-Interest Income:
Net (losses) on securities transactions		(39,000)	0
Change in fair value of equity investments		103,000	(349,000)
Net gain on sales of loans held for sale		144,000	107,000
Net gains (losses) on sales of other real estate owned		37,000	60,000
Income from bank owned life insurance		43,000	46,000
Other		5,276,000	2,901,000
Total non-interest income		24,549,000	21,436,000
Non-Interest Expenses:
Salaries and wages		26,832,000	25,054,000
Pension and other employee benefits		7,368,000	7,668,000
Other components of net periodic pension cost (benefit)		(676,000)	(1,648,000)
Net occupancy expenses		5,637,000	5,539,000
Furniture and equipment expenses		1,728,000	1,906,000
Data processing expense		9,840,000	8,919,000
Professional services		2,293,000	2,171,000
Amortization of intangible assets		0	15,000
Marketing and advertising expense		923,000	941,000
Other real estate owned expenses		(20,000)	(5,000)
FDIC insurance		2,128,000	1,356,000
Loan expense		1,047,000	1,001,000
Other		7,143,000	6,363,000
Total non-interest expenses		64,243,000	59,280,000
Income before income tax expense		31,501,000	36,889,000
Income tax expense		6,501,000	8,106,000
Net income		$ 25,000,000	$ 28,783,000
Weighted average shares outstanding (in thousands)
Weighted average shares outstanding, basic (in shares)		4,732	4,693
Weighted average shares outstanding, diluted (in shares)		4,732	4,693
Basic and diluted earnings per share
Basic earnings per share (in dollars per share)		$ 5.28	$ 6.13
Diluted earnings per share (in dollars per share)		$ 5.28	$ 6.13
Wealth management group fee income
Non-Interest Income:
Revenues from contracts with customer		$ 10,460,000	$ 10,280,000
Service charges on deposit accounts
Non-Interest Income:
Revenues from contracts with customer		3,919,000	3,788,000
Interchange revenue from debit card transactions
Non-Interest Income:
Revenues from contracts with customer		$ 4,606,000	$ 4,603,000

[1] Effective January 1, 2023, the allowance calculation is based upon Current Expected Credit loss methodology. Prior to January 1, 2023, the allowance calculation was based upon incurred loss methodology. Refer to Note 1 for further discussion.

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Statement of Comprehensive Income [Abstract]
Net income	$ 25,000	$ 28,783
Other comprehensive income (loss):
Unrealized holding gain (loss) on securities available for sale	11,524	(93,224)
Reclassification adjustment (losses) realized in net income	(14)	0
Net unrealized gain (loss)	11,510	(93,224)
Tax effect	(3,014)	24,423
Net of tax amount	8,496	(68,801)
Change in funded status of defined benefit pension plan and other benefit plans:
Net gain arising during the period	950	63
Reclassification adjustment for amortization of net actuarial losses	63	38
Total before tax effect	1,013	101
Tax effect	(265)	(27)
Net of tax amount	748	74
Total other comprehensive income (loss)	9,244	(68,727)
Comprehensive income (loss)	$ 34,244	$ (39,944)

XML

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands		Total	Cumulative Effect, Period of Adoption, Adjustment	[2]	Cumulative Effect, Period of Adoption, Adjusted Balance	Common Stock	Common Stock Cumulative Effect, Period of Adoption, Adjusted Balance	Additional Paid-in Capital	Additional Paid-in Capital Cumulative Effect, Period of Adoption, Adjusted Balance	Retained Earnings	Retained Earnings Cumulative Effect, Period of Adoption, Adjustment	[2]	Retained Earnings Cumulative Effect, Period of Adoption, Adjusted Balance	Treasury Stock	Treasury Stock Cumulative Effect, Period of Adoption, Adjusted Balance	Accumulated Other Comprehensive (Loss)	Accumulated Other Comprehensive (Loss) Cumulative Effect, Period of Adoption, Adjusted Balance
Beginning balance at Dec. 31, 2021		$ 211,455				$ 53		$ 46,901		$ 188,877				$ (17,846)		$ (6,530)
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Net income		28,783								28,783
Other comprehensive income		(68,727)														(68,727)
Restricted stock awards		795						795
Distribution of shares of treasury stock granted for employee restricted stock awards, net		0						(712)						712
Restricted stock units for directors' deferred compensation plan		20						20
Cash dividends declared		(5,801)								(5,801)
Distribution of shares of treasury stock for directors' compensation		375						131						244
Sale of shares of treasury stock	[1]	424						158						266
Repurchase of common stock		(933)												(933)
Forfeiture of restricted stock awards		(3)						38						(41)
Ending balance at Dec. 31, 2022		$ 166,388	$ (1,076)		$ 165,312	53	$ 53	47,331	$ 47,331	211,859	$ (1,076)		$ 210,783	(17,598)	$ (17,598)	(75,257)	$ (75,257)
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Accounting Standards Update [Extensible Enumeration]		Accounting Standards Update 2016-13 [Member]
Net income		$ 25,000								25,000
Other comprehensive income		9,244														9,244
Restricted stock awards		1,139						1,139
Distribution of shares of treasury stock granted for employee restricted stock awards, net		0						(752)						752
Restricted stock units for directors' deferred compensation plan		20						20
Cash dividends declared		(5,853)								(5,853)
Distribution of shares of treasury stock for directors' compensation		96						(147)						243
Sale of shares of treasury stock	[1]	601						171						430
Repurchase of common stock		(316)												(316)
Forfeiture of restricted stock awards		(2)						11						(13)
Ending balance at Dec. 31, 2023		$ 195,241				$ 53		$ 47,773		$ 229,930				$ (16,502)		$ (66,013)

[1] All treasury stock sales were completed at the prevailing market price with the Chemung Canal Trust Company Profit Sharing, Savings, and Investment Plan which is a defined contribution plan sponsored by the Bank.

[2] Implementation of ASC 326. See Adoption of New Accounting Standards" discussion in Note 1.

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Distribution of shares of treasury stock granted for employee restricted stock awards (in shares)	26,166	25,011
Cash dividends declared (in dollars per share)	$ 1.24	$ 1.24
Distribution of shares of treasury stock for directors' compensation (in shares)	8,492	8,575
Sale of shares of treasury stock (in shares)	14,994	9,367
Purchase of shares of treasury stock (in shares)	6,541	20,786
Restricted stock awards, forfeited (in shares)	326	895

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 25,000,000	$ 28,783,000
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of right-of-use assets	801,000	785,000
Amortization of intangible assets	0	15,000
Deferred income tax (benefit) expense	(1,609,000)	1,722,000
Provision for credit losses	3,425,000	(554,000)
Loss on disposal of fixed assets	3,000	56,000
Depreciation and amortization of fixed assets	2,001,000	2,226,000
Amortization of premiums on securities, net	2,458,000	3,761,000
Gains on sales of loans held for sale, net	(144,000)	(107,000)
Proceeds from sales of loans held for sale	6,569,000	5,819,000
Loans originated and held for sale	(6,425,000)	(5,316,000)
Net (gains) on sale of other real estate owned	(37,000)	(60,000)
Write-downs on OREO	3,000	0
Net change in fair value of equity investments	(103,000)	349,000
Proceeds from sales of equity investments	(113,000)	(215,000)
Net (gains) on interest rate swaps	(16,000)	(173,000)
(Increase) in other assets	(1,298,000)	(28,071,000)
Increase in accrued interest payable	2,115,000	654,000
Expense related to restricted stock units for directors' deferred compensation plan	20,000	290,000
Expense related to employee restricted stock awards	1,139,000	795,000
Payments on operating leases	(1,594,000)	(1,195,000)
Increase (decrease) in other liabilities	(1,271,000)	25,529,000
Income from bank owned life insurance	(43,000)	(46,000)
Net cash provided by operating activities	30,881,000	35,047,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales, maturities, calls, and principal paydowns on securities available for sale	60,852,000	86,206,000
Proceeds from sales, maturities and principal collected on securities held to maturity	1,613,000	2,335,000
Purchases of securities available for sale	(3,209,000)	(23,743,000)
Purchases of securities held to maturity	0	(980,000)
Purchase of FHLBNY and FRBNY stock	(99,926,000)	(36,214,000)
Redemption of FHLBNY and FRBNY stock	102,625,000	32,235,000
Purchases of premises and equipment	(462,000)	(426,000)
Proceeds from sale of other real estate owned	288,000	326,000
Net (increase) in loans	(144,162,000)	(312,359,000)
Net cash (used by) provided by investing activities	(82,381,000)	(252,620,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) in demand, interest-bearing demand, savings, and insured money market deposits	(107,681,000)	(34,233,000)
Net increase in time deposits	209,881,000	206,027,000
Net change in FHLBNY overnight advances	(63,890,000)	81,240,000
Principal payments made on capital leases	(277,000)	(267,000)
Purchase of treasury stock	(316,000)	(933,000)
Sale of treasury stock	601,000	424,000
Cash dividends paid	(5,840,000)	(5,797,000)
Net cash (used in) provided by financing activities	32,478,000	246,461,000
Net increase (decrease) in cash and cash equivalents	(19,022,000)	28,888,000
Cash and cash equivalents, beginning of period	55,869,000	26,981,000
Cash and cash equivalents, end of period	36,847,000	55,869,000
Cash paid during the year for:
Interest	36,502,000	6,642,000
Income Taxes	7,863,000	5,625,000
Supplemental disclosure of non-cash activity:
Transfer of loans to other real estate owned	378,000	348,000
Dividends declared, not yet paid	$ 1,469,000	$ 1,455,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

The Corporation, through its wholly-owned subsidiaries, the Bank and CFS Group, Inc., provides a wide range of banking, financing, fiduciary and other financial services to its clients. The Corporation is subject to the regulations of certain federal and state agencies and undergoes periodic examinations by those regulatory agencies.

Chemung Risk Management, Inc., (CRM), a wholly-owned subsidiary of the Corporation, was a Nevada-based captive insurance company which insured against certain risks unique to the operations of the Corporation and its subsidiaries and for which insurance may not have been currently available or economically feasible in today's insurance marketplace. CRM was dissolved by the Corporation, effective December 6, 2023.

BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared in conformity with GAAP and include the accounts of the Corporation and its subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions based on available information.  These estimates and assumptions affect the amounts reported in the financial statements and disclosures provided, and actual results could differ.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash and amounts due from banks, demand interest-bearing deposits, and time deposits with other financial institutions.

EQUITY INVESTMENTS

Securities that are held to fund a non-qualified deferred compensation plan and securities that have a readily determinable fair market value, are recorded at fair value with changes in fair value and interest and dividend income included in earnings.

SECURITIES

Management determines the appropriate classification of securities at the time of purchase. If management has the intent and the Corporation has the ability at the time of purchase to hold securities until maturity, they are classified as held to maturity and carried at amortized cost. Securities to be held for indefinite periods of time or not intended to be held to maturity are classified as available for sale and carried at fair value. Premiums and discounts are amortized or accreted over the life of the related security as an adjustment of yield using the interest method. Dividend and interest income is recognized when collected. Unrealized holding gains and losses on securities classified as available for sale are excluded from earnings and are reported as accumulated other comprehensive income (loss) in shareholders' equity, net of the related tax effects, until realized. Realized gains and losses are determined using the specific identification method.

Management assesses available for sale securities in an unrealized loss position on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation, to determine whether it intends to sell, or it is more likely than not that it will be required to sell a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as a write down through earnings.

Available for sale securities in a loss position that do not meet either of the aforementioned criteria, are reviewed by management to determine whether the unrealized loss is due to credit related circumstances, or other non-credit related factors. In making this determination, management evaluates a range of factors including the extent to which fair value is less than amortized cost, existing conditions that may adversely impact the issuer, changes to the credit rating of either the issuer or the specific security, among other considerations. An allowance for credit losses is established for securities, when upon evaluation, management has determined that the unrealized losses are due at least in part to credit conditions. The allowance for credit losses is determined as the difference, if any, between the present value of expected cash flows and the amortized basis of the security, limited to the extent that amortized basis exceeds fair value.

The Corporation holds the majority of its available for sale securities in obligations that are issued by U.S. Government entities or agencies and enterprises affiliated with the U.S. Government. Due to the explicit or implicit guarantee of the full faith and credit of the U.S. Government, the Corporation considers these securities to carry a near zero credit loss implication. Securities included under this implication include U.S. Treasury securities, mortgage backed securities issued by government-sponsored agencies, and SBA pooled loan securities. Securities that do not fall under this categorization primarily relate to corporate subordinated debt issues.

FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK STOCK

The Bank is a member of both the FHLBNY and the FRBNY.  FHLBNY members are required to own a certain amount of stock based on the level of borrowings and other factors, while FRBNY members are required to own a certain amount of stock based on a percentage of the Bank’s capital stock and surplus. FHLBNY and FRBNY stock are carried at cost and classified as non-marketable equities and periodically evaluated for impairment based on ultimate recovery of par value. Cash and stock dividends are reported as income.

LOANS

Loans are stated at their amortized basis, which is the amount of unpaid principal balance net of deferred loan cost and fees. An accounting policy election was made to exclude accrued interest receivable from the amortized cost basis of loans. Accrued interest receivable is included in the "Accrued interest and other assets" line item in the Corporation's Consolidated Balance Sheets. The Corporation has the ability and intent to hold its loans for the foreseeable future. The Corporation’s loan portfolio is comprised of the following segments: (i) commercial and agricultural, (ii) commercial mortgages, (iii) residential mortgages, and (iv) consumer loans.

Commercial and agricultural loans primarily consist of loans to small to mid-sized businesses in the Corporation’s market area in a diverse range of industries. These loans are typically made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. Commercial mortgage loans are generally non-owner occupied commercial properties or owner occupied commercial real estate with larger balances. Repayment of these loans is often dependent upon the successful operation and management of the properties and the businesses occupying the properties, as well as on the collateral securing the loan. Residential mortgage loans are generally made on the basis of the borrower’s ability to make repayment from their employment and other income, but are secured by real property. Consumer loans include home equity lines of credit and home equity loans, which exhibit many of the same characteristics as residential mortgages. Indirect and other consumer loans are typically secured by depreciable assets, such as automobiles, and are dependent on the borrower’s continuing financial stability.

Interest on loans is accrued and credited to operations using the interest method. Past due status is based on the contractual terms of the loan. The accrual of interest is generally discontinued and previously accrued interest is reversed when loans become 90 days delinquent. Loans may also be placed on non-accrual status if management believes such classification is otherwise warranted. All payments received on non-accrual loans are applied to principal. Loans are returned to accrual status when they become current as to principal and interest and remain current for a period of six consecutive months or when, in the opinion of management, the Corporation expects to receive all of its original principal and interest. Loan origination fees and certain direct loan origination costs are deferred and amortized over the life of the loan as an adjustment to yield, using the interest method.

LOAN MODIFICATIONS TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY

Effective January 1, 2023, the Corporation adopted ASU 2022-02 Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructurings (TDR) and Vintage Disclosures, which superseded existing TDR measurement and disclosures, and added additional disclosure requirements related to modifications made on loans to borrowers experiencing financial difficulty. Under prior guidance, a TDR was deemed to have occurred when the Corporation modified a loan to a borrower experiencing financial difficulty, and where a concession was made by the Corporation.

Consistent with ASU 2022-02, the Corporation now evaluates loan modifications to borrowers experiencing financial difficulty on the basis and extent of their direct impact on contractual cash flows. Modifications under this guidance include principal forgiveness, interest rate reductions, more than insignificant payment delays, term extensions, or a combination thereof. Payment delays are generally considered insignificant when the duration of the delay is less than or equal to three months.

Once a loan modification is determined to meet the aforementioned criteria, a determination is made as to whether the modification represents the continuation of an existing loan, or a new loan, in accordance with ASC-310-20-35-9 through 11. The Corporation considers a loan modification to represent the establishment of a new loan if the resulting terms are at least as favorable to the Corporation as the terms made to other borrowers with similar risk profiles. In the event that a modification is determined to represent a new loan, all unamortized deferred costs and fees are to be recognized through interest income at the point the modification is granted. Modifications that do not meet this criteria shall be considered a continuation of an existing loan, and all unamortized deferred costs and fees are to be carried forward as part of the modified loan's basis.

ALLOWANCE FOR CREDIT LOSSES

The allowance is an amount that management believes will be adequate to absorb estimated lifetime credit losses inherent in its portfolios of assets exhibiting credit risk. The Corporation adopted ASC 326 - Financial Instruments-Credit Losses effective January 1, 2023. The allowance for credit losses is estimated using the Corporation's CECL methodology, and replaces the incurred loss methodology used to estimate its allowance for loan and lease losses under prior guidance. CECL methodology utilizes historical information, current conditions, and reasonable and supportable economic forecasts to estimate the allowance for credit losses.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU supersedes prior GAAP by replacing the incurred loss impairment method with a methodology that reflects lifetime expected credit losses and requires the consideration of a broader range of reasonable and supportable information to form credit loss estimates. In November 2019, the FASB adopted an amendment to postpone the effective date of ASU 2016-13 to January 2023 for certain entities, including certain Securities and Exchange Commission filers, public business entities, and private companies. As a smaller reporting company, the Corporation was eligible for and elected delayed adoption.

The Corporation adopted the standard, effective January 1, 2023, and recognized a one-time cumulative adjustment to retained earnings as of January 1, 2023 to reflect the change in methodology. The cumulative-effect adjustment did not have an impact on prior year results. Retained earnings was reduced by $1.5 million, or $1.1 million, net of tax, effective January 1. The $1.5 million adjustment was reflective of the establishment of an allowance for credit losses on unfunded commitments, totaling $1.1 million, and a $0.4 million addition to the allowance for credit losses on loans, reflecting the change in methodology.

Under the Corporation's CECL methodology, loans are analyzed on either a pooled basis, or an individual basis, based on an assessment of risk factors. Loans that exhibit similar risk characteristics and are pooled based on their assigned FFIEC call codes. When it is determined that a loan no longer exhibits risk characteristics consistent with its assigned pool, it is designated for individual analysis. Pooled loans utilize both a quantitative and qualitative component to determine the appropriate estimate of the allowance for credit losses. The quantitative component is based on an estimated discounted cash flow (DCF) analysis, performed at the loan level. The underlying assumptions on which the DCF calculation is based incorporate the relationship between a projected value of an economic indicator, and the implied historical loss experience amongst a group of peers established by management. The Corporation utilizes a regression analysis to identify suitable economic variables, known as loss drivers, for each pool of loans. Based on the results of this analysis, a probability of default (PD) and a loss given default (LGD) is assigned to each potential value of an economic indicator for each pool of loans, which is applied to derive the statistical loss implications thereof. The DCF incorporates a hypothetical loss for each period of the calculation, as well as assumed recoveries of past losses, to reach a present value for each loan. The modeled allowance for credit losses for each individual loan is the book balance of the loan as of the measurement date, less the present value of cash flows. Forecasted economic variables are applied over a four quarter period, and revert to the historical mean of the economic variable over an eight quarter period, on a straight line basis.

Based on assigned FFIEC call codes, and the risk characteristics of lending activities and collateral among loans within call codes, the Corporation has disaggregated its loan portfolio into the following nine pools:

Construction - Commercial and retail loans secured by real estate and made for the purposes of on-site construction or land development. This portfolio primarily consists of commercial construction loans, as well as a small number of residential single family construction to permanent loans. Construction loans are commonly evaluated using an "as-stabilized" or "as completed" appraisal, and the Corporation seeks sponsors who can provide adequate equity in the project at inception, or who have a well-documented history of successfully completing similar projects. Risks specific to construction lending include changes in market conditions prior to the completion of a construction phase, quality of work performed and cost overruns, and the realization of borrower assurances including but not limited to pre-sales, tenant contracts, and financial covenants.

Home Equity Lines of Credit and Junior Liens - Retail loans that are secured by secondary or inferior lien positions on 1-4 family residential real estate. Repayment sources primarily rely on borrowers' primary source of income, and are determined based on a borrower's equity position in the collateralized property. Default risk on secondary liens is greater than on primary liens, as a borrower is likely to prioritize payments on any outstanding indebtedness on the primary lien position. Secondary lien positions are additionally exposed to greater market risk in the event of foreclosure, and therefore are more sensitive to changes in underlying collateral valuations than primary lien positions.

1-4 Family Residential First Liens - Retail and commercial loans secured by primary lien positions on 1-4 family residential real estate. For retail loans secured by primary liens on residential property, repayment is primarily dependent on borrowers' primary source of income. For commercial loans secured by primary liens on residential property, repayment sources may be more diverse. Significant risk factors include localized economic conditions, that may impact both the collateralized property's value, as well as employment prospects for borrowers who rely on their primary source of income as means of repayment, and regulatory risks specific to housing that may inhibit a bank's ability to pursue means of repayment.

Multifamily - Commercial real estate secured by residential properties comprising of greater than four livable units. Multifamily properties are commonly managed by the borrower and rented to tenants for residential purposes. Repayment sources primarily consist of rental income from the property. Risks associated with multifamily projects include the borrower's ability to attract and maintain a base of tenants at rental rates in excess of those required to finance, manage, and maintain the property, as well as risks relating to demographic considerations in the population of prospective tenants.

Owner Occupied Commercial Real Estate - Commercial real estate loans secured by property that is occupied and or operated by the primary borrower or a related entity. Cash flow from the operation of the borrower's businesses are generally the primary source of repayment for owner occupied commercial real estate. Borrower industry and the competence of business operators are generally the primary risks associated with this type of lending activity.

Non Owner Occupied Commercial Real Estate - Commercial real estate loans secured by properties that are maintained and managed by the borrowers, but rely on rental income from outside commercial organizations to provide cash flow for repayment. Successful operations of tenant businesses significantly impacts borrowers' ability to finance these obligations. A primary risk relating to real estate of this nature is the limited influence that a borrower can have on the successful operation of tenant businesses, and the possibility of not being able to find suitable or willing replacement tenants, should vacancies arise. The Corporation seeks to lend in this segment to sponsors who have demonstrated the capability of aligning with strong and dependable tenants, considering both the current environment that tenants operate in, as well as future prospects for their industries, including their need for comparable space in the future.

Commercial and industrial loans - Commercial purpose loans that are primarily secured by the assets of borrowers businesses. Loans within this segment are made to an array of industry types, and may also include loans that are for commercial real estate purposes, but are secured by assets other than real estate. Management identifies the primary similarity amongst loans in this pool to be collateral risk exposure common to these loans. Business assets may have significant variation in collateral value, and the value that may be realized by the Corporation, should the need to liquidate arise. Normal usage and industry specificity can have a significant impact on collateral values. The successful operation of borrower businesses provides the primary source of repayment for these loans.

Consumer - Retail loans primarily secured by vehicle or other personal collateral. Indirect auto lending comprises the majority of lending activity in this pool. Primarily, repayment is largely dependent on borrowers' primary income source, through employment or otherwise. Broader economic conditions, as well as specific personal skill sets, can significantly influence a borrower's ability to maintain adequate employment necessary to finance these loans. Relationships with auto dealer networks also impacts the quality of borrowers seeking financing for vehicles, subject to the Corporation's system of underwriting and loan review. Collateral values in this pool typically depreciate relatively quickly, compared to other asset classes, and expose the Corporation to risk.

Other - Loans to borrowers whose organizations are primarily engaged in activities other than traditional business operations, such as non profit entities including medical groups, clubs and associations, religious organizations, museums, among others. These loans are generally classified based on their organizational structure.

The qualitative component of the pooled allowance is supplemented by qualitative adjustments. Qualitative adjustments represent the extent to which management determines that its expectation of risk differs from the results of the quantitative analysis, in large part capturing risk factors that may not be fully captured by the quantitative model. Management uses the following nine qualitative factors when considering appropriate adjustment: (1) lending policies and procedures, including underwriting standards and collection, charge-off and recovery policies, (2) national and local economic and business conditions and developments, including the condition of various market segments, (3) loan profiles and volume of the portfolio, (4) the experience, ability, and depth of lending management and staff, (5) the volume and severity of past due, classified and watch-list loans, non-accrual loans, troubled debt restructurings, and other modifications (6) the quality of the Bank’s loan review system and the degree of oversight by the Bank’s Board of Directors, (7) collateral related considerations including: secured vs. unsecured, type, and valuations, (8) the existence and effect of any concentrations of credit, and changes in the level of such concentrations, (9) the effect of external factors, such as competition and legal and regulatory requirements, on the level of estimated credit losses in the Bank’s current portfolio.

Loans deemed to require individual analysis are primarily valuated and measured for credit loss based on collateral. A measurement is performed based on the most recently available appraisal performed on individually analyzed loans. It is the Corporation's policy to obtain updated appraisals, by independent third parties, on loans secured by real estate at the time a loan is determined to require individual analysis. A specific allocation to the allowance is made on collateral dependent loans to the extent that the value of collateral, net of adjustments made to account for estimated selling costs and management applied discounting, is less than the book value of the loan on the measurement date. Loans not considered to be collaterally dependent are analyzed using the cash flow approach. A cash flow analysis is performed using a loan's effective interest rate, and discounted to determine appropriate fair value. To the extent that a loan's book balance exceeds the present value of cash flows, a specific allocation to the allowance for credit losses is made.

The Corporation established an allowance for credit losses on unfunded commitments, effective January 1, 2023. The Corporation records an allowance for credit losses on unfunded commitments utilizing a methodology congruent with its methodology for estimating lifetime credit losses on its portfolio of loans, as presented on the Corporation's consolidated balance sheet. The Corporation disaggregates unfunded commitments into pools consistent with its methodology for pooling loans represented on the balance sheet. A funding rate is determined to represent the amount of currently unfunded commitments that are estimated to become funded, based on historical experience. The loss rate applied to the estimated funded balance is consistent with the overall loss rate applied to its equivalent pool of loans on the balance sheet. The Corporation is not required to establish an allowance for credit losses on commitments that are deemed to be unconditionally cancellable at the sole discretion of the Corporation.

Debt securities are included under the guidance of ASC-326 - Financial Instruments-Credit Losses. The Corporation evaluates the necessity to establish and maintain an allowance for credit losses on debt securities consistent with its policies in the aforementioned section of this Note labeled "Securities."

The allowance for credit losses is increased through a provision for credit losses charged to operations. Instruments (loans and debt securities) are charged against their respective allowance for credit losses when management believes that the collectability of all or a portion of the principal is unlikely. Management's evaluation of the adequacy of the allowance for credit losses is performed on a periodic basis and takes into consideration such factors as the credit risk grade assigned to the instrument, historical credit loss experience, and review of information specific and pertinent to the borrower or issuer. While management uses available information to recognize credit losses on loans and securities, future additions to the allowance may be necessary based on changes in economic conditions, regulatory requirements, or other new information.

LOANS HELD FOR SALE

Certain mortgage loans are originated with the intent to sell. The Bank typically retains the right to service the mortgages upon sale. Loans held for sale are recorded at the lower of cost or fair value in the aggregate and are regularly evaluated for changes in fair value.  Commitments to sell loans that are originated for sale are recorded at fair value. If necessary, a valuation allowance is established with a charge to income for unrealized losses attributable to a change in market rates.

LEASES

Leases are classified as operating or finance leases on the lease commencement date. At inception, the Corporation determines the lease term by considering the minimum lease term and all optional renewal periods that the Corporation is reasonably certain to renew. The discount rate used in determining lease liability is based upon incremental borrowing rates the Corporation could obtain for similar loans as of the date of commencement or renewal.

The Corporation records operating leases on the balance sheet as a lease liability equal to the present value of future minimum payments under the lease terms, and a right-of-use asset equal to the lease liability. The lease term is also used to calculate straight-line rent expense. The Corporation's leases do not contain residual value guarantees or material variable lease payments that may impact the Corporation's ability to pay dividends or cause the Corporation to incur additional expenses. Rent expense and variable lease expense are included in net occupancy expenses on the Corporation's Consolidated Statements of Income.

Finance leases are recorded at the lesser of the present value of future cash outlays using a discounted cash flow, or fair value at the beginning of the lease term. Initially, a finance lease is recorded as a building asset, and is depreciated over the shorter of the term of the lease or the estimated life of the asset. A corresponding long term lease obligation is recorded, which amortizes as payments are made on the lease. Interest expense is incurred using the discount rate determined at the beginning of the lease term. Amortization of the right-of-use assets arising from finance leases is expensed through net occupancy expense, and the interest on the related lease liability is expensed through interest expense on borrowings on the Corporation Consolidated Statements of Income.

PREMISES AND EQUIPMENT

Land is carried at cost, while buildings, equipment, leasehold improvements and furniture are stated at cost less accumulated depreciation and amortization. Depreciation is charged to current operations using the straight-line method over the estimated useful lives of the assets, which range from 15 to 50 years for buildings and from 3 to 10 years for equipment and furniture.  Amortization of leasehold improvements and leased equipment is recognized using the straight-line method over the shorter of the lease term or the estimated life of the asset. Leases of branch offices, which have been capitalized, are included within buildings and depreciated on the straight-line method over the shorter of the lease term or the estimated life of the asset.

BANK OWNED LIFE INSURANCE

BOLI is recorded at the amount that can be realized under the insurance contracts at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. Changes in the cash surrender value are recorded in other non-interest income.

OTHER REAL ESTATE

Real estate acquired through foreclosure or deed in lieu of foreclosure is recorded at estimated fair value of the property less estimated costs to dispose at the time of acquisition to establish a new carrying value. Write downs from the carrying value of the loan to estimated fair value, which are required at the time of foreclosure, are charged to the allowance for credit losses. Subsequent adjustments to the carrying values of such properties resulting from declines in fair value result in the establishment of a valuation allowance and are charged to operations in the period in which the declines occur.

INCOME TAXES

The Corporation files a consolidated tax return. Deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for unused tax loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates to apply to taxable income in the years in which temporary differences are expected to be recovered or settled, or the tax loss carry forwards are expected to be utilized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

A tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded.

WEALTH MANAGEMENT GROUP FEE INCOME

Assets held in a fiduciary or agency capacity for customers are not included in the accompanying consolidated balance sheets, since such assets are not assets of the Corporation. Wealth Management Group income is recognized on the accrual method as earned based on contractual rates applied to the balances of individual trust accounts. The audited market value of trust assets under administration total $2.242 billion, including $381.3 million of assets held under management or administration for the Corporation, at December 31, 2023 and $2.053 billion, including $346.5 million of assets held under management or administration for the Corporation, at December 31, 2022.

POSTRETIREMENT BENEFITS

Pension Plan:

The Chemung Canal Trust Company Pension Plan is a non-contributory defined benefit pension plan. The Pension Plan is a “qualified plan” under the IRS Code and therefore must be funded. Contributions are deposited to the Plan and held in trust. The Plan assets may only be used to pay retirement benefits and eligible plan expenses. The plan was amended such that new employees hired on or after July 1, 2010 would not be eligible to participate in the plan, however, existing participants at that time would continue to accrue benefits.

On October 20, 2016, the Corporation amended its noncontributory defined benefit pension plan (“pension plan”) to freeze future retirement benefits after December 31, 2016. Beginning on January 1, 2017, both the pay-based and service-based component of the formula used to determine retirement benefits in the pension plan were frozen so that participants no longer earn further retirement benefits.

Under the Plan, pension benefits are based upon final average annual compensation where the annual compensation is total base earnings paid plus commissions. Bonuses, overtime, and dividends are excluded. The normal retirement benefit equals 1.2% of final average compensation (highest consecutive five years of annual compensation in the prior ten years) times years of service (up to a maximum of 25 years), plus 1% of average monthly compensation for each additional year of service (up to a maximum of 10 years), plus 0.65% of average monthly compensation in excess of covered compensation for each year of credited service up to 35 years. Covered compensation is the average of the social security taxable wage base in effect for the 35 year period prior to normal social security retirement age. See Note 13 for further details.

Defined Contribution Profit Sharing, Savings and Investment Plan:

The Corporation also sponsors a 401(K) defined contribution profit sharing, savings and investment plan which covers all eligible employees. The Corporation contributes a non-discretionary 3% of gross annual wages (as defined by the 401(k) plan) for each participant, regardless of the participant’s deferral, in addition to a 50% match up to 6% of gross annual wages. All contributions made on or after January 1, 2017 will vest immediately. The plan's assets consist of Chemung Financial Corporation common stock, as well as other common and preferred stocks, U.S. Government securities, corporate bonds and notes, and mutual funds. The plan’s expense is the amount of non-discretionary and matching contributions and is charged to non-interest expenses in the consolidated statements of income.

Defined Benefit Health Care Plan:

The Corporation sponsors a defined benefit health care plan that provides postretirement medical benefits to employees who meet minimum age and service requirements. Current retirees between the ages of 55 and 65, will continue to be eligible for coverage under the Corporation's self-insured plan, contributing 50% of the cost of the coverage. Employees who retired after July 1, 2006, and become Medicare eligible will only have access to the Medicare Blue PPO plan.  The cost of the plan is based on actuarial computations of current and future benefits for employees, and is charged to non-interest expenses in the consolidated statements of income. See Note 13 for further details. On October 20, 2016, the Corporation amended its defined benefit health care plan to not allow any new retirees into the plan, effective January 1, 2017.

Executive Supplemental Pension Plan:

U.S. laws place limitations on compensation amounts that may be included under the Pension Plan. The Executive Supplemental Pension Plan was provided to executives in order to produce total retirement benefits, as a percentage of compensation that is comparable to employees whose compensation is not restricted by the annual compensation limit. Pension amounts, which exceed the applicable Internal Revenue Service code limitations, will be paid under the Executive Supplemental Pension Plan.

The Executive Supplemental Pension Plan is a “non-qualified plan” under the Internal Revenue Service Code. Contributions to the Plan are not held in trust; therefore, they may be subject to the claims of creditors in the event of bankruptcy or insolvency. When payments come due under the Plan, cash is distributed from general assets. The cost of the plan is based on actuarial computations of current and future benefits for executives, and is charged to non-interest expense in the consolidated statements of income.

Defined Contribution Supplemental Executive Retirement Plan:

The Defined Contribution Supplemental Executive Retirement Plan is provided to certain executives to motivate and retain key management employees by providing a nonqualified retirement benefit that is payable at retirement, disability, death and certain other events.

The Supplemental Executive Retirement Plan is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation benefits for a select group of management or highly compensated employees under Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974. The plan’s expense is the Corporation’s annual contribution plus interest credits.

STOCK-BASED COMPENSATION

2021 Equity Incentive Plan

The Corporation's 2021 Equity Incentive Plan (the "2021 Plan") is designed to align the interests of the Corporation’s executives, senior managers and directors with the interests of the Corporation and its shareholders, to ensure the Corporation’s compensation practices are competitive and comparable with those of its peers, and to promote the retention of select management-level employees and directors. Under the terms of the 2021 Plan, the Compensation and Personnel Committee may approve discretionary grants of restricted shares of the Corporation’s common stock to or for the benefit of employees selected to participate in the 2021 Plan, the chief executive officer and members of the Board of Directors. Awards are based on the performance, responsibility and contributions of the individual and are targeted at the median of the peer group. The maximum number of shares of the Corporation’s common stock that may be awarded as restricted shares related to the 2021 Plan may not exceed 170,000, upon which time the 2021 Plan will be amended, presented and approved by the Corporation's shareholders to include additional shares of the Corporation's common stock. Awards under the 2021 Plans may be vested no earlier than the first anniversary of the date on which the award is granted. Compensation expense for shares granted will be recognized over the vesting period of the award based upon the fair value of shares granted as of the grant date.

A Directors Deferred Fee Plan, an addendum to the 2021 Plan, for non-employee directors of the Corporation or the Bank, provides that directors may elect to defer receipt of all or any part of their fees. Deferrals are either credited with interest compounded quarterly at the Applicable Federal Rate for short-term debt instruments or converted to units, which appreciate or depreciate, as would an actual share of the Corporation’s common stock purchased on the deferral date. Cash deferrals will be paid into an interest bearing account and paid in cash. Units will be paid in shares of common stock. All directors’ fees are charged to non-interest expenses in the consolidated statements of income. Please see Note 14 for further details.

Non-qualified Deferred Compensation Plan:

The Deferred Compensation Plan allows a select group of management and employees to defer all or a portion of their annual compensation to a future date. Eligible employees are generally highly compensated employees and are designated by the Board of Directors from time to time. Investments in the plan are recorded as equity investments and deferred amounts are an unfunded liability of the Corporation. The plan requires deferral elections be made before the beginning of the calendar year during which the participant will perform the services to which the compensation relates. Participants in the Plan are required to elect a form of distribution, either lump sum payment or annual installments not to exceed ten years, and a time of distribution, either a specified age or a specified date. The terms and conditions for the deferral of compensation are subject to the provisions of 409A of the IRS Code. The income from investments is recorded in dividend income and non-interest income in the consolidated statements of income. The cost of the plan is recorded in non-interest expenses in the consolidated statements of income.

GOODWILL AND INTANGIBLE ASSETS

Goodwill resulting from business combinations prior to January 1, 2009 represents the excess of the purchase price over the fair value of the net assets of businesses acquired. Goodwill resulting from business combinations after January 1, 2009, is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually. The Corporation has selected December 31 as the date to perform the annual impairment test. Goodwill is the only intangible asset with an indefinite life on the Corporation's balance sheet. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. The balances are reviewed for impairment on an ongoing basis or whenever events or changes in business circumstances warrant a review of the carrying value. If impairment is determined to exist, the related write-down of the intangible asset's carrying value is charged to operations. Based on these impairment reviews, the Corporation determined that goodwill and other intangible assets were not impaired at December 31, 2023.

The Corporation's intangible assets related to the purchase of the trust business of Partners Trust Bank in May of 2007, were fully amortized as of December 31, 2022.

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

The Corporation has the ability to enter into sales of securities under agreements to repurchase. The agreements are treated as financings, and the obligations to repurchase securities sold are reflected as liabilities in the consolidated balance sheets. The amount of the securities underlying the agreements continues to be carried in the Corporation's securities portfolio. The Corporation has agreed to repurchase securities identical to those sold. The securities underlying the agreements are under the Corporation's control. As of December 31, 2023, the Corporation had no securities sold under agreements to repurchase.

DERIVATIVES

The Corporation utilizes interest rate swaps with commercial borrowers and third-party counterparties as well as agreements with lead banks in participation loan relationships wherein the Corporation guarantees a portion of the fair value of an interest rate swap entered into by the lead bank. These transactions are accounted for as derivatives. The Company’s derivatives are entered into in connection with its asset and liability management activities and not for trading purposes.

The Company does not have any derivatives that are designated as hedges and therefore all derivatives are considered free standing and are recorded at fair value as derivative assets or liabilities on the consolidated balance sheets, with changes in fair value recognized in the consolidated statements of income as non-interest income.

Premiums received when entering into derivative contracts are recognized as part of the fair value of the derivative asset or liability and are carried at fair value with any gain/loss at inception and any changes in fair value reflected in income.

The Corporation does not typically require its commercial customers to post cash or securities as collateral on its back-to-back interest rate swap program. The Corporation may need to post collateral, either cash or certain qualified securities, in proportion to potential increases in unrealized loss positions.

OTHER FINANCIAL INSTRUMENTS

The Corporation is a party to certain other financial instruments with off-balance sheet risk such as unused portions of lines of credit and commitments to fund new loans. The Corporation's policy is to record such instruments when funded.

EARNINGS PER COMMON SHARE

Basic earnings per share is net income divided by the weighted average number of common shares outstanding during the period. Issuable shares, including those related to directors’ restricted stock shares, are considered outstanding and are included in the computation of basic earnings per share. All outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends are considered participating securities for this calculation. Restricted stock awards are grants of participating securities and are considered outstanding at grant date. Earnings per share information is adjusted to present comparative results for stock splits and stock dividends that occur.

COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale and changes in the funded status of the Corporation’s defined benefit pension plan and other benefit plans, net of the related tax effect, which are also recognized as separate components of equity.

SEGMENT REPORTING

The Corporation has identified separate operating segments and internal financial information is primarily reported and aggregated in two lines of business, banking and wealth management services.

RECLASSIFICATION

Amounts in the prior years' consolidated financial statements are reclassified whenever necessary to conform to the current year's presentation. Reclassification adjustments had no impact on prior year net income or shareholders' equity.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The objective of the ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The ASU supersedes current GAAP by replacing the incurred loss impairment method with a methodology that reflects lifetime expected credit losses and requires the consideration of a broader range of reasonable and supportable information to form credit loss estimates. In November 2019, the FASB adopted an amendment to postpone the effective date of ASU 2016-13 to January 2023 for certain entities, including certain Securities and Exchange Commission filers, public business entities, and private companies. As a smaller reporting company, the Corporation is eligible for and elected delayed adoption.

The Corporation adopted the standard, effective January 1, 2023, and recognized a one-time cumulative adjustment to retained earnings as of January 1, 2023 to reflect the change in methodology. The cumulative-effect adjustment did not have an impact on prior year results. Retained earnings was reduced by $1.5 million, or $1.1 million, net of tax, effective January 1. The $1.5 million adjustment was reflective of the establishment of an allowance for credit losses on unfunded commitments, totaling $1.1 million, and a $0.4 million addition to the allowance for credit losses on loans, reflecting the change in methodology.

Further details regarding the Corporation's adoption of ASU 2013-16 and its methodology thereof can be found in the preceding sections of this Note 1, as well as in Note 4 - Loans and Allowance for Credit Losses, as well as throughout Management's Discussion and Analysis of Financial Condition and Results of Operations.

In March 2022, the FASB issued ASU 2022-02, which eliminates creditor accounting guidance for TDRs for entities that have adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) and enhances Vintage Disclosures of Gross Writeoffs. This ASU eliminates Subtopic 310-40 guidance for TDRs, and requires creditors to apply the loan refinancing and restructuring guidance in Subtopic 310-20 when evaluating modifications granted to borrowers experiencing financial difficulty to determine whether the modification is considered a continuation of an existing loan or a new loan. The vintage disclosure component of the ASU requires entities to disclose current-period gross writeoffs by origination year for financing receivables and investment leases within the scope of Subtopic 326-20. The Corporation adopted adopt ASU 2022-02 concurrently with the adoption of ASU 2016-13.

In December 2022, the FASB issued ASU No. 2022-06, Deferral of the Sunset Date of Topic 848, and defers the date for which accounting relief can be applied under Topic 848. ASU 2022-06 applies to entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The objective of the guidance in Topic 848 is to ease the burden in accounting related to the recognition of the effects of reference rate reform on financial reporting. A sunset provision was included within Topic 848 based on expectations of when LIBOR would cease being published. The Corporation had adopted the accounting relief provisions of Topic 848 effective October 1, 2020. The amendments in ASU 2022-06 defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be able to apply the accounting relief in Topic 848. ASU 2022-06 was effective for all entities upon its issuance. The adoption of the provisions of Topic 848, as amended, did not have a material impact on the Corporation’s consolidated financial statements, and the Corporation has transitioned all financial instruments that previously referenced LIBOR benchmarks.

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements, which and modifies the disclosure or presentation requirements of a variety of Topics in the Accounting Standards Codification, in response to SEC Release No. 33-10532, Disclosure Update and Simplifications, issued on August 17, 2018. The SEC identified several disclosure requirements that overlap with U.S. GAAP, but require incremental information to comply with disclosure standards in Regulations S-X and Regulation S-K. ASU 2023-06 codifies specific amendments to align the codification with SEC regulations. The effective date for each amendment is that date on which each disclosure requirement is removed from Regulation S-K and Regulation S-X. The Corporation anticipates that certain amendments will pertain to the Corporation's financial disclosures or presentation, but cannot determine with certainty which amendments are applicable until removal from Regulation S-K or Regulation S-X.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, enhancing disclosure requirements for reportable segments, focusing on significant segment expenses, and the identification of a segment's chief decision making officer, and the metrics used by the chief decision making officer in evaluating segment-level operating performance. The ASU is effective for fiscal years beginning after December 15, 2023. The Corporation will begin providing enhanced segment reporting disclosures in accordance with ASU 2023-07 for the fiscal year ending December 31, 2024, and for interim periods thereafter.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, which will require public business entities to disclose annually a tabular rate reconciliation, including specific items such as state and local income tax, tax credits, nontaxable or nondeductible items, among others, and a separate disclosure requiring disaggregation of reconciling items as described above which equal or exceed 5% percent of the product of multiplying income from continuing operations by the applicable statutory income tax rate. The ASU is effective for all public business entities for annual periods beginning after December 31, 2024.

USE OF ANALOGOUS ACCOUNTING STANDARDS

Under U.S. GAAP, there is no specific guidance related to government assistance received by a for-profit entity that is not in the form of a loan, income tax credit, or revenue from a contract with a customer. Therefore, the Corporation must rely upon analogous accounting standards to determine appropriate treatment when such circumstances arise. The Corporation accounted for the recognition of the Employee Retention Tax Credit (ERTC) using ASC 958-605, Revenue Recognition for Not-for-Profit entities. ASC 958-10-15-1 specifies that certain Subtopics within ASC 958-605 also apply to business entities.

The Corporation considers the recognition of the ERTC to be analogous to the stipulations for "conditional contributions" under ASC 958-605-20. Conditional contributions have at least one barrier needing to be overcome before the recipient is entitled to the assets transferred or promised; there must be a right-of-return to the contributor; and barriers to the condition should be measurable. The Corporation recognized the gross amount of the ERTC through non-interest income during the period in which the barrier was overcome, identified as the period during which amended tax returns were filed. The Corporation incurred and recognized additional income tax expense during the period in relation to its amended tax returns.

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RESTRICTIONS ON CASH AND DUE FROM BANK ACCOUNTS

12 Months Ended

Dec. 31, 2023

RESTRICTIONS ON CASH AND DUE FROM BANK ACCOUNTS [Abstract]

RESTRICTIONS ON CASH AND DUE FROM BANK ACCOUNTS

RESTRICTIONS ON CASH AND DUE FROM BANK ACCOUNTS

Generally, the Corporation is required to maintain balances with the Federal Reserve Bank of New York based upon outstanding balances of deposit transaction accounts. However, as of March 15, 2020, the Federal Reserve Board reduced reserve requirement ratios to zero percent, effective March 26, 2020. Therefore, at December 31, 2023 and 2022, there were no reserve requirements with the Federal Reserve Bank of New York.

The Corporation maintains a pre-funded settlement account with a financial institution in the amount of $1.6 million for electronic funds transaction settlement purposes at December 31, 2023 and 2022.

The Corporation also maintains a collateral restricted account with a financial institution related to the Corporation's interest rate swap program. The account serves as collateral in the event of default on the interest rate swaps with the counterparties. No collateral was held at the financial institution as of December 31, 2023, and 2022.

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SECURITIES

12 Months Ended

Dec. 31, 2023

Investments, Debt and Equity Securities [Abstract]

SECURITIES

SECURITIES

Amortized cost and estimated fair value of securities available for sale at December 31, 2023 and 2022 are as follows (in thousands):

	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Estimated Fair Value
U.S. treasury notes and bonds	$	59,812	$	—	$	4,480	$	—	$	55,332
Mortgage-backed securities, residential	476,240		6		72,422		—		403,824
Collateralized mortgage obligations	—		—		—		—		—
Obligations of states and political subdivisions	39,503		—		817		—		38,686
Corporate bonds and notes	25,750		—		5,081		—		20,669
SBA loan pools	67,787		75		2,380		—		65,482
Total	$	669,092	$	81	$	85,180	$	—	$	583,993

	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. treasury notes and bonds	$	61,800	$	—	$	6,225	$	55,574
Mortgage-backed securities, residential	518,838		—		83,707		435,131
Collateralized mortgage obligations	—		—		—		—
Obligations of states and political subdivisions	39,828		2		938		38,892
Corporate bonds and notes	25,750		—		3,780		21,970
SBA loan pools	82,982		155		2,116		81,022
Total	$	729,198	$	157	$	96,766	$	632,589

Proceeds from the sale of available for sale securities for the year ended December 31, 2023 were $1.2 million, and a gross loss of $14 thousand was realized on these sales. The sales were executed by Chemung Risk Management, Inc., which served as a wholly owned captive insurance company based in the State of Nevada, until dissolution by the Corporation effective December 6, 2023. There were no proceeds from sales and calls of securities resulting in gains or losses during the year ended December 31, 2022. The tax benefit related to these net realized losses was $4 thousand for the year ended December 31, 2023.

The amortized cost and estimated fair value of debt securities available for sale are shown below by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately (in thousands):

	December 31, 2023
	Amortized Cost		Estimated Fair Value
Within one year	$	5,678	$	5,594
After one, but within five years	101,391		94,363
After five, but within ten years	17,526		14,302
After ten years	470		428
Mortgage-backed securities: residential	476,240		403,824
SBA loan pools	67,787		65,482
Total	$	669,092	$	583,993

Amortized cost and estimated fair value of securities held to maturity at December 31, 2023 and 2022 are as follows (in thousands):

	December 31, 2023
	Amortized Cost		Unrecognized Gains		Unrecognized Losses		Estimated Fair Value		Allowance for Credit Losses
Obligations of states and political subdivisions	$	785	$	—	$	—	$	785	$	—
Time deposits with other financial institutions	—		—		—		—		—
	$	785	$	—	$	—	$	785	$	—

	December 31, 2022
	Amortized Cost		Unrecognized Gains		Unrecognized Losses		Estimated Fair Value
Obligations of states and political subdivisions	$	952	$	—	$	—	$	952
Time deposits with other financial institutions	1,472		—		22		1,450
	$	2,424	$	—	$	22	$	2,402

Proceeds from the sale of held to maturity securities for the year ended December 31, 2023 were $1.0 million, and a gross loss of $25 thousand was realized on these sales. The sales were executed by Chemung Risk Management, Inc., which served as a wholly owned captive insurance company based in the State of Nevada, until dissolution by the Corporation effective December 6, 2023. There were no proceeds from sales of securities held to maturity during the year ended December 31, 2022.

The contractual maturity of securities held to maturity was as follows at December 31, 2023 (in thousands):

	December 31, 2023
	Amortized Cost		Fair Value
Within one year	$	—	$	—
After one, but within five years	145		145
After five, but within ten years	640		640
After ten years	—		—
Total	$	785	$	785

The following tables summarize the investment securities available for sale with unrealized losses, for which an allowance for credit losses has not been recorded as of December 31, 2023, and an other than temporary impairment (OTTI) has not been recorded as of December 31, 2022 aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
2023
U.S. treasury notes and bonds	$	—	$	—	$	55,332	$	4,480	$	55,332	$	4,480
Mortgage-backed securities: residential	—		—		402,986		72,422		402,986		72,422
Obligations of states and political subdivisions	17,891		241		20,686		576		38,577		817
Corporate bonds and notes	7,492		2,508		13,177		2,573		20,669		5,081
SBA loan pools	3,914		13		54,468		2,367		58,382		2,380
Total temporarily impaired securities	$	29,297	$	2,762	$	546,649	$	82,418	$	575,946	$	85,180

	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
2022
U.S. treasury notes and bonds	$	1,011	$	30	$	54,563	$	6,195	$	55,574	$	6,225
Mortgage-backed securities, residential	79,891		7,621		355,240		76,086		435,131		83,707
Obligations of states and political subdivisions	37,847		938		—		—		37,847		938
Corporate bonds and notes	4,515		485		7,455		3,295		11,970		3,780
SBA loan pools	14,333		925		51,123		1,191		65,456		2,116
Total temporarily impaired securities	$	137,597	$	9,999	$	468,381	$	86,767	$	605,978	$	96,766

Pledged Securities

The fair value of securities pledged to secure public funds on deposit or for other purposes as required by law was $255.0 million at December 31, 2023 and $213.8 million at December 31, 2022.

Concentrations

There are no securities of a single issuer (other than securities of U.S. Government sponsored enterprises) that exceeded 10% of shareholders' equity at December 31, 2023 or 2022.

Assessment of Available for Sale Debt Securities for Credit Risk

Management assesses the change in fair value of investment securities on a regular basis. Unrealized losses on debt securities may occur from current market conditions, increases in interest rates since the time of purchase, structural changes in an investment, volatility in financial results of specific issuers, or deterioration in credit quality of issuers. Management assesses both qualitative and quantitative factors to determine whether any credit-related allowance is required. The following is a discussion of the credit quality characteristics of major portfolio segments carrying material unrealized losses as of December 31, 2023.

Obligations of U.S. Governmental agencies and sponsored enterprises:

As of December 31, 2023, a significant portion of the Corporation’s unrealized losses in available for sale investment securities related to mortgage-backed securities, issued by government-sponsored entities and agencies. Declines in fair value are attributable to changes in interest rates and market liquidity, not credit quality. The Corporation does not have the intent, and it is not likely to be required, to sell these securities prior to their anticipated recovery. All mortgage-backed securities in the available for sale securities portfolio as of December 31, 2023 were issued by FHLMC, FNMA, or GNMA. Because the Corporation considers these obligations to carry zero credit loss estimates, no allowance for credit losses was recorded as of December 31, 2023.

Corporate bonds and notes:

The Corporation's corporate bonds and notes portfolio is comprised of subordinated debt issues of community and regional banks. Management considers the credit quality of these investments on an individual basis. Management reviews the collectability of these securities, taking into consideration such factors as the financial condition of issuers, reported regulatory capital ratios of the issuers, and credit ratings when available, among other pertinent factors. All corporate bond debt securities continue to accrue interest and make payments as expected with no defaults or deferrals on the part of the issuers. Therefore, the Corporation considers the potential credit risk of the issuers to be immaterial, and no allowance for credit losses was recorded as of December 31, 2023.

Other-Than-Temporary-Impairment

Prior to the adoption of ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), the Corporation evaluated its portfolio of available for sale securities for Other than Temporary Impairment (OTTI). As of December 31, 2022, the majority of the Corporation’s unrealized losses in the investment securities portfolio related to mortgage-backed securities. At December 31, 2022, the unrealized losses related to mortgage-backed were securities issued by U.S. government sponsored entities, Fannie Mae and Freddie Mac. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Corporation does not have the intent to sell these securities and it is not likely that it will be required to sell these securities before their anticipated recovery, the Corporation does not consider these securities to be other-than-temporarily impaired at December 31, 2022.

Equity Method Investments

The Corporation holds a non-qualified deferred compensation plan to allow a select group of management and employees the opportunity to defer all or a portion of their annual compensation, and treats assets held under this plan as equity method investments. As of December 31, 2023 and December 31, 2022, the fair value of investments held in relation to the deferred compensation plan was $2.4 million and $2.1 million, respectively. The Corporation also held $0.6 million of marketable securities as equity method investments for each of the years ended December 31, 2023 and 2022.

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LOANS AND ALLOWANCE FOR CREDIT LOSSES

12 Months Ended

Dec. 31, 2023

Loans and Leases Receivable Disclosure [Abstract]

LOANS AND ALLOWANCE FOR LOAN LOSSES

LOANS AND ALLOWANCE FOR CREDIT LOSSES

The composition of the loan portfolio, net of deferred loan fees at December 31, 2023 and 2022 is summarized as follows (in thousands):

	2023		2022
Commercial and agricultural:
Commercial and industrial	$	264,140	$	252,044
Agricultural	256		249
Commercial mortgages:
Construction	138,887		108,243
Commercial mortgages, other	984,038		888,670
Residential mortgages	277,992		285,672
Consumer loans:
Home equity lines and loans	87,056		81,401
Indirect consumer loans	210,423		202,124
Direct consumer loans	9,872		11,045
Total loans, net of deferred loan fees	1,972,664		1,829,448
Allowance for credit losses	(22,517)		(19,659)
Loans, net of allowance for credit losses	$	1,950,147	$	1,809,789

The Corporation's concentrations of credit risk by loan type are reflected in the preceding table. The concentrations of credit risk with standby letters of credit, committed lines of credit and commitments to originate new loans generally follow the loan classifications in the table above.

Accrued interest receivable on loans amounted to $7.8 million at December 31, 2023 and $6.5 million at December 31, 2022. Accrued interest receivable on loans is included in the Accrued interest receivable and other assets line item on the Corporation's Consolidated Balance Sheets, and is excluded from the amortized cost basis of loans and estimate of the allowance for credit losses, as presented in this Note. Recorded investment balances of loans as of December 31, 2022 included accrued interest receivable.

The Corporation had no residential mortgages held for sale as of December 31, 2023 and December 31, 2022. When the Corporation has loans classified as held for sale, they are not included in the table above.

Residential mortgage and home equity loans totaling $254.6 million at December 31, 2023 and $254.4 million at December 31, 2022 were pledged under a blanket collateral agreement for the Corporation's line of credit with the FHLBNY.

The following tables present the activity in the allowance for credit losses by portfolio segment for the year ended December 31, 2023 and the allowance for loan losses for the year ended December 31, 2022 , respectively (in thousands):

	December 31, 2023
Allowance for credit losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Beginning balance, January 1, 2023	$	3,373	$	11,576	$	1,845	$	2,865	$	19,659
Cumulative effect adjustment for the adoption of ASC-326	909		(695)		(16)		176		374
Beginning balance after cumulative effect adjustment, January 1, 2023	4,282		10,881		1,829		3,041		20,033
Charge Offs:	(281)		—		(32)		(1,070)		(1,383)
Recoveries:	22		4		—		416		442
Net (charge offs) recoveries	(259)		4		(32)		(654)		(941)
Provision (1)	1,032		1,141		397		855		3,425
Ending balance, December 31, 2023	$	5,055	$	12,026	$	2,194	$	3,242	$	22,517

(1) Additional provision related to off-balance sheet exposure was a credit of $163 thousand for the year ended December 31, 2023.

	December 31, 2022
Allowance for loan losses	Commercial, and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Beginning balance:	$	3,591	$	13,556	$	1,803	$	2,075	$	21,025
Charge Offs:	(20)		(687)		(17)		(770)		(1,494)
Recoveries:	42		3		40		597		682
Net recoveries (charge offs)	22		(684)		23		(173)		(812)
Provision	(240)		(1,296)		19		963		(554)
Ending balance	$	3,373	$	11,576	$	1,845	$	2,865	$	19,659

Unfunded Commitments

The allowance for credit losses on unfunded commitments represents the amount held against credit exposures that are not represented on the Consolidated Balance Sheets. The allowance is recognized as a liability, a component of Other liabilities on the Consolidated Balance Sheets, with adjustments to the allowance recognized in the provision for credit losses line item on the Consolidated Statements of Income. The Corporation established a reserve for unfunded commitments in conjunction with its adoption of ASC 326-Financial Instruments-Credit Losses.

The following table presents the activity in the allowance for credit losses on unfunded commitments for the years ended December 31, 2023 and 2022:

Allowance for credit losses on unfunded commitments	For the Twelve Months Ended December 31,
	2023		2022
Beginning balance	$	—	$	—
Impact of adoption of ASC-326	1,082		—
Provision for credit losses on unfunded commitments	(163)		—
Ending balance	$	919	$	—

The following table presents the provision for credit losses on loans and unfunded commitments for the year ended December 31, 2023 , based upon the current expected credit loss methodology, and the provision for loan losses on loans for the year ended December 31, 2022, based upon the incurred loss methodology:

	For the Twelve Months Ended December 31,
Provision for credit losses	2023		2022
Provision for credit losses on loans	$	3,425	$	(554)
Provision for credit losses on unfunded commitments	(163)		—
Total provision (credit) for credit losses	$	3,262	$	(554)

The following tables present the balance in the Allowance for credit losses and the amortized cost basis in loans by portfolio segment and based on analysis status as of December 31, 2023 and the allowance for loan losses and the amortized cost basis in loans by portfolio as of December 31, 2022, respectively (in thousands):

	December 31, 2023
Allowance for credit losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Ending allowance balance attributable to loans:
Individually analyzed	$	1,928	$	27	$	—	$	—	$	1,955
Collectively analyzed	3,127		11,999		2,194		3,242		20,562
Total ending allowance balance	$	5,055	$	12,026	$	2,194	$	3,242	$	22,517

	December 31, 2022
Allowance for loan losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,078	$	38	$	—	$	31	$	1,147
Collectively evaluated for impairment	2,295		11,538		1,845		2,834		18,512
Total ending allowance balance	$	3,373	$	11,576	$	1,845	$	2,865	$	19,659

	December 31, 2023
Loans	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Loans individually analyzed	$	2,067	$	5,968	$	—	$	—	$	8,035
Loans collectively analyzed	262,329		1,116,957		277,992		307,351		1,964,629
Total ending loans balance	$	264,396	$	1,122,925	$	277,992	$	307,351	$	1,972,664

	December 31, 2022
Loans	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Loans individually evaluated for impairment	$	2,112	$	4,383	$	723	$	264	$	7,482
Loans collectively evaluated for impairment	250,181		992,530		284,949		294,306		1,821,966
Total ending loans balance	$	252,293	$	996,913	$	285,672	$	294,570	$	1,829,448

Modifications to Loans Made to Borrowers Experiencing Financial Difficulty

Effective January 1, 2023, the Corporation adopted ASU 2022-02, Financial Instruments-Credit Losses (Topic 326)-Troubled Debt Restructurings and Vintage Disclosures, on a prospective basis. The Corporation may occasionally make modifications to loans where the borrower is considered to be experiencing financial difficulty. Types of modifications considered under ASU 2022-02 include principal reductions, interest rate reductions, term extensions, significant payment delays, or a combination thereof.

The following table summarizes the amortized cost basis of loans modified during the year ended December 31, 2023 (in thousands):

	December 31, 2023
Loans modified under ASU 2022-02	Principal Reduction		Interest Rate Reduction		Term Extension		Payment Delay		Combination		Total		(%) of Loan Class (1)
Commercial and agricultural:
Commercial & industrial	$	—	$	—	$	1,011	$	—	$	—	$	1,011	0.38	%
Agricultural	—		—		—		—		—		—		—	%
Commercial mortgages:
Construction	—		—		—		—		—		—		—	%
Commercial mortgages, other	—		—		272		1,878		—		2,150		0.22	%
Residential mortgages	—		—		—		—		—		—		—	%
Consumer loans:
Home equity lines and loans	—		—		116		—		—		116		0.13	%
Indirect consumer loans	—		—		—		—		—		—		—	%
Direct consumer loans	—		—		—		—		—		—		—	%
Total	$	—	$	—	$	1,399	$	1,878	$	—	$	3,277

(1) Represents the amortized cost basis of loans modified during the period as a percentage of the period-end loan balances by class.

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the year ended December 31, 2023:

Effect of loan modifications under ASU 2022-02	Principal reduction (in thousands)		Weighted average interest rate reduction (%)		Weighted average term extension (in months)	Weighted-average payment delay (in months)
Commercial and agricultural:
Commercial & industrial	$	—	—	%	12 months
Agricultural	$	—	—	%
Commercial mortgages:
Construction	$	—	—	%
Commercial mortgages, other	$	—	—	%	60 months	4 months
Residential mortgages	$	—	—	%
Consumer loans:
Home equity lines and loans	$	—	—	%	180 months
Indirect consumer loans	$	—	—	%
Direct consumer loans	$	—	—	%

The Corporation closely monitors the performance of loans that have been modified in accordance with ASU 2022-02 in order to understand the effectiveness of its modification efforts. There was one commercial and industrial loan modified to borrowers experiencing financial difficulty during the prior twelve months that sustained a payment default on the modified terms during the year ended December 31, 2023. An allocation totaling $0.9 million was included for this modified loan in the allowance for credit losses as of December 31, 2023.

Individually Analyzed Loans

Effective January 1, 2023, the Corporation began analyzing loans on an individual basis when management determined that the loan no longer exhibited risk characteristics consistent with the risk characteristics existing in its designated pool of loans, under the Corporation's CECL methodology. Loans individually analyzed include certain non-accrual commercial, as well as certain accruing loans previously identified under prior troubled debt restructuring (TDR) guidance.

As of December 31, 2023, the amortized cost basis of individually analyzed loans was $8.0 million, of which $6.3 million were considered collateral dependent. For collateral dependent loans where the borrower is experiencing financial difficulty and repayment is likely to be substantially provided through the sale or operation of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan, at measurement date. Certain assets held as collateral may be exposed to future deterioration in fair value, particularly due to changes in real estate markets or usage.

The following table presents the amortized cost basis and related allowance for credit loss of individually analyzed loans considered to be collateral dependent as of December 31, 2023 (in thousands):

	December 31, 2023
	Amortized Cost Basis		Related Allowance
Commercial and agricultural:
Commercial and industrial (1) (2)	$	353	$	214
Agricultural (2)	26		26
Commercial mortgages:
Construction (1)	2,209		—
Commercial mortgages, other (1) (2) (3)	3,759		27
Total	$	6,347	$	267

(1) Secured by commercial real estate

(2) Secured by business assets

(3) Secured by residential real estate

Differing from the methodology for analyzing loans on an individual basis used as of December 31, 2023, as described above, prior to January 1, 2023, the Corporation considered a loan to be impaired for credit analysis purposes when, based on currently available information, it was deemed probable that the Corporation would not be able to collect on the loan's contractually determined principal and interest payments. Impaired loans included loans on non-accrual status and troubled debt restructurings (TDRs). The Corporation identified loss allocations for impaired loans on an individual basis, and in conformity with its methodology under the incurred loss framework.

The following is a summary of impaired loans as of December 31, 2022 (in thousands):

	December 31, 2022
With no related allowance recorded:	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
Commercial and agricultural:
Commercial and industrial	$	1,026	$	1,025	$	—
Commercial mortgages:
Construction	5		5		—
Commercial mortgages	4,346		4,341		—
Residential mortgages	767		760		—
Consumer loans:
Home equity lines and loans	154		138		—
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial	1,086		1,088		1,078
Commercial mortgages:
Commercial mortgages	38		38		38
Consumer loans:
Home equity lines and loans	126		127		31
Total	$	7,548	$	7,522	$	1,147

The following table presents the average amortized basis and interest income recognized for loans individually analyzed, by class, as of December 31, 2023 and loans individually evaluated for impairment, by class, as of December 31, 2022, (in thousands):

	December 31, 2023				December 31, 2022
With no related allowance recorded:	Average Amortized Cost Basis		Interest Income Recognized (1)		Average Amortized Cost Basis		Interest Income Recognized (1)
Commercial and agricultural:
Commercial and industrial	$	431	$	—	$	814	$	—
Agricultural	—		—		—		—
Commercial mortgages:
Construction	443		103		71		—
Commercial mortgages	3,988		5		4,211		14
Residential mortgages	288		—		864		37
Consumer loans:
Home equity lines & loans	99		—		153		—
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial	1,328		55		1,453		5
Agricultural	11		—		—		—
Commercial mortgages:
Construction	—		—		—		—
Commercial mortgages	33		—		1,258		—
Residential mortgages	—		—		—		—
Consumer loans:
Home equity lines and loans	25		—		137		—
Direct consumer loans	—		—		—		—
Total	$	6,646	$	163	$	8,961	$	56

(1) Cash basis interest income approximates interest income recognized.

The following table presents the amortized cost basis of non-accrual loans with no related allowance for credit losses, total non-accrual loans, and loans pasts due for 90 days or greater which are still accruing, by class of loans, as of December 31, 2023 and December 31, 2022 (in thousands):

	Non-accrual with no allowance for credit losses				Non-accrual				Loans Past Due 90 Days or More and Still Accruing
	2023		2022		2023		2022		2023		2022
Commercial and agricultural:
Commercial and industrial	$	76	$	1,035	$	1,904	$	1,946	$	10	$	1
Agricultural	—		—		26		—		—		—
Commercial mortgages:
Construction	2,209		5		2,209		5		—		—
Commercial mortgages	3,732		3,890		3,760		3,928		—		—
Residential mortgages	1,315		986		1,315		986		—		—
Consumer loans:
Credit cards	—		—		—		—		—		—
Home equity lines and loans	508		729		508		760		—		—
Indirect consumer loans	687		540		687		540		—		—
Direct consumer loans	2		13		2		13		—		—
Total	$	8,529	$	7,198	$	10,411	$	8,178	$	10	$	1

The following tables present the aging of the amortized cost basis in loans as of December 31, 2023 and December 31, 2022 (in thousands):

	December 31, 2023
	30 - 59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial and agricultural:
Commercial and industrial	$	1,196	$	31	$	10	$	1,237	$	262,903	$	264,140
Agricultural	—		—		—		—		256		256
Commercial mortgages:
Construction	2,164		—		2,207		4,371		134,516		138,887
Commercial mortgages	1,022		103		261		1,386		982,652		984,038
Residential mortgages	2,244		201		585		3,030		274,962		277,992
Consumer loans:
Credit cards	—		—		—		—		—		—
Home equity lines and loans	461		87		366		914		86,142		87,056
Indirect consumer loans	2,473		501		426		3,400		207,023		210,423
Direct consumer loans	2		20		—		22		9,850		9,872
Total	$	9,562	$	943	$	3,855	$	14,360	$	1,958,304	$	1,972,664

	December 31, 2022
	30 - 59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial and agricultural:
Commercial and industrial	$	74	$	3	$	1	$	78	$	251,966	$	252,044
Agricultural	—		—		—		—		249		249
Commercial mortgages:
Construction	—		—		—		—		108,243		108,243
Commercial mortgages	1,058		—		486		1,544		887,126		888,670
Residential mortgages	1,360		709		294		2,363		283,309		285,672
Consumer loans:
Credit cards	—		—		—		—		—		—
Home equity lines and loans	193		121		442		756		80,645		81,401
Indirect consumer loans	1,397		193		250		1,840		200,284		202,124
Direct consumer loans	2		19		1		22		11,023		11,045
Total	$	4,084	$	1,045	$	1,474	$	6,603	$	1,822,845	$	1,829,448

Credit Quality Indicators

The Corporation establishes a risk rating at origination for all commercial loans. The main factors considered in assigning risk ratings include, but are not limited to: historic and future debt service coverage, collateral position, operating performance, liquidity, leverage, payment history, management ability, and the customer’s industry. Commercial relationship managers monitor all loans in their respective portfolios for any changes in the borrower’s ability to service its debt and affirm the risk ratings for the loans at least annually.

For retail loans, which include residential mortgages, indirect and direct consumer loans, and home equity lines and loans, once a loan is appropriately approved and closed, the Corporation evaluates credit quality based upon loan repayment. Retail loans are not rated until they become 90 days past due.

The Corporation uses its risk rating system to identify criticized and classified loans. Commercial relationships within the criticized and classified risk ratings are analyzed quarterly.  The Corporation uses the following definitions for criticized and classified loans (which are consistent with regulatory guidelines):

Special Mention – Loans classified as special mention have a potential weakness that deserves management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or the institution’s credit position at some future date.

Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capability of the obligor or of the collateral pledged, if any.  Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Commercial loans not meeting the criteria above to be considered criticized or classified, are considered to be pass rated loans. Loans listed as not rated, are included in groups of homogeneous loans performing under terms of the loan notes.

Based on the analyses performed as of December 31, 2023, the risk category of the amortized cost basis of loans by class of loans and vintage, as well as the gross charge-offs by loan class and vintage for the period, are as follows (in thousands):

	Term Loans - Amortized Cost by Origination Year													Revolving Loans Amortized Cost		Revolving Loans Converted to Term		Total
	2023		2022		2021		2020		2019			Prior
Commercial & Industrial
Pass	$	41,601	$	35,768	$	17,506	$	10,195	$	33,436		$	7,746	$	92,114	$	—	$	238,366
Special Mention	185		2,103		—		—		—			432		9,730		10,672		23,122
Substandard	—		24		991		109		23			456		—		161		1,764
Doubtful	—		—		—		—		—			790		75		23		888
Total	41,786		37,895		18,497		10,304		33,459			9,424		101,919		10,856		264,140
Gross charge offs	—		—		—		—		9			272		—		—		281
Agricultural
Pass	—		15		150		—		—			—		65		—		230
Special Mention	—		—		—		—		—			—		—		—		—
Substandard	—		—		—		—		—			—		—		26		26
Doubtful	—		—		—		—		—			—		—		—		—
Total	—		15		150		—		—			—		65		26		256
Gross charge offs	—		—		—		—		—			—		—		—		—
Construction
Pass	11,275		1,445		—		—		28			1,178		122,752		—		136,678
Special Mention	—		—		—		—		—			—		—		—		—
Substandard	—		—		—		—		2,207			2		—		—		2,209
Doubtful	—		—		—		—		—			—		—		—		—
Total	11,275		1,445		—		—		2,235			1,180		122,752		—		138,887
Gross charge offs	—		—		—		—		—			—		—		—		—
Commercial mortgages
Pass	91,636		207,277		123,040		90,635		39,175			168,878		233,999		—		954,640
Special Mention	—		2,533		8,189		2,609		—			3,216		—		5,426		21,973
Substandard	272		1,107		345		1,022		—			4,143		97		412		7,398
Doubtful	—		—		—		—		—			27		—		—		27
Total	91,908		210,917		131,574		94,266		39,175			176,264		234,096		5,838		984,038
Gross charge offs	—		—		—		—		—			—		—		—		—
Residential mortgages
Not rated	14,027		50,556		49,428		69,070		15,093			44,628		33,875		—		276,677
Substandard	—		75		346		—		169			725		—		—		1,315
Total	14,027		50,631		49,774		69,070		15,262			45,353		33,875		—		277,992
Gross charge offs	—		32		—		—		—			—		—		—		32
Home equity lines and loans
Not rated	13,743		16,621		5,797		3,110		2,845			10,342		34,090		—		86,548
Substandard	—		77		—		—		—		(1)	293		25		113		508
Total	13,743		16,698		5,797		3,110		2,845			10,635		34,115		113		87,056
Gross charge offs	—		—		—		—		—			—		6		—		6
Indirect consumer
Not rated	72,264		98,008		23,015		9,192		3,870			3,387		—		—		209,736
Substandard	119		246		135		48		36			103		—		—		687
Total	72,383		98,254		23,150		9,240		3,906			3,490		—		—		210,423
Gross charge offs	184		375		215		121		21			55		—		—		971
Direct consumer
Not rated	3,005		2,745		785		256		53			357		2,669		—		9,870
Substandard	—		—		—		2		—			—		—		—		2
Total	3,005		2,745		785		258		53			357		2,669		—		9,872
Gross charge offs	4		15		8		6		—			54		6		—		93
	—						—		—			—		—		—
Total loans	$	248,127	$	418,600	$	229,727	$	186,248	$	96,935		$	246,703	$	529,491	$	16,833	$	1,972,664
Total Gross charge-offs	$	188	$	422	$	223	$	127	$	30		$	381	$	12	$	—	$	1,383

Prior to the adoption of ASC 326-Financial Instruments-Credit Losses, loans not meeting the criteria above that were analyzed individually as part of the above described process were considered pass rated loans as of December 31, 2022. Based upon the analyses performed as of December 31, 2022, the risk category of the recorded investment of loans by class of loans was as follows (in thousands):

	December 31, 2022
	Not Rated		Pass		Special Mention		Substandard		Doubtful		Total
Commercial and agricultural:
Commercial and industrial	$	—	$	235,900	$	13,349	$	2,899	$	893	$	253,041
Agricultural	—		250		—		—		—		250
Commercial mortgages:
Construction	—		108,488		178		5		—		108,671
Commercial mortgages	—		860,389		23,938		7,825		38		892,190
Residential mortgages	285,459		—		—		986		—		286,445
Consumer loans
Credit cards	—		—		—		—		—		—
Home equity lines and loans	80,942		—		—		760		—		81,702
Indirect consumer loans	202,050		—		—		540		—		202,590
Direct consumer loans	11,094		—		—		13		—		11,107
Total	$	579,545	$	1,205,027	$	37,465	$	13,028	$	931	$	1,835,996

The Corporation considers the performance of the loan portfolio and its impact on the allowance for credit losses. For residential and consumer loan classes, the Corporation also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. Non-performing loans include non-accrual loans.

For residential and consumer loan classes, the Corporation evaluated credit quality based on the aging status of the loan, which was presented by payment activity. The following table presents the amortized cost basis in residential and consumer loans based on payment activity as of December 31, 2023 (in thousands):

	December 31, 2023
			Consumer Loans
	Residential Mortgages		Home Equity Lines and Loans		Indirect Consumer Loans		Other Direct Consumer Loans
Performing	$	276,677	$	86,548	$	209,736	$	9,870
Non-Performing	1,315		508		687		2
Total	$	277,992	$	87,056	$	210,423	$	9,872

Prior to the adoption of ASC 326-Financial Instruments-Credit Losses, the Corporation also evaluated credit quality based on the aging status of the loan, which was presented, by payment activity. The following table presents the recorded investment in residential and consumer loans based on payment activity as of December 31, 2022 (in thousands):

	December 31, 2022
			Consumer Loans
	Residential Mortgages		Home Equity Lines and Loans		Indirect Consumer Loans		Other Direct Consumer Loans
Performing	$	285,459	$	80,942	$	202,050	$	11,094
Non-Performing	986		760		540		13
Total	$	286,445	$	81,702	$	202,590	$	11,107

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PREMISES AND EQUIPMENT

12 Months Ended

Dec. 31, 2023

Property, Plant and Equipment [Abstract]

PREMISES AND EQUIPMENT

PREMISES AND EQUIPMENT

Premises and equipment at December 31, 2023 and 2022 are as follows (in thousands):

	2023		2022
Land	$	4,664	$	4,674
Buildings	40,727		40,419
Projects in progress	11		82
Equipment and furniture	37,237		36,964
Leasehold improvements	4,874		4,874
	87,513		87,013
Less accumulated depreciation and amortization	72,942		70,900
Net book value	$	14,571	$	16,113

Depreciation expense was $2.0 million and $2.2 million for 2023 and 2022, respectively.

Finance Leases

The Corporation leases certain buildings under finance leases. The lease arrangements require monthly payments through 2036.

The Corporation has included these finance leases in premises and equipment as follows:

	2023		2022
Buildings	$	5,572	$	5,572
Accumulated depreciation	(2,872)		(2,540)
Net book value	$	2,700	$	3,032

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LEASES

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

LEASES

LEASES

Operating Leases

The Corporation leases certain branch properties under long-term, operating lease agreements. The leases expire at various dates through 2033 and generally include renewal options. As of December 31, 2023, the weighted average remaining lease term was 7.9 years with a weighted average discount rate of 3.40%. Rent expense was $1.0 million for each of the years ended December 31, 2023 and 2022. Certain leases provide for increases in future minimum annual rent payments as defined in the lease agreements. The Corporation’s operating lease agreements contain both lease and non-lease components, which are generally accounted for separately. The Corporation’s lease agreements do not contain any residual value guarantees.

Leased branch properties at December 31, 2023 and December 31, 2022 consist of the following (in thousands):

	2023		2022
Operating lease right-of-use asset	$	6,449	$	7,234
Less: accumulated amortization	(801)		(785)
Less: lease termination	—		—
Add: new lease agreement and modifications	—		—
Operating lease right-of-use-assets, net	$	5,648	$	6,449

The following is a schedule by year of the undiscounted cash flows of the operating lease liabilities, excluding CAM charges, as of December 31, 2023 (in thousands):

Year	Amount
2024	$	924
2025	841
2026	845
2027	854
2028	721
2029 and thereafter	2,446
Total minimum lease payments	6,631
Less: amount representing interest	(804)
Present value of net minimum lease payments	$	5,827

As of December 31, 2023, the Corporation had one operating lease that was signed on October 19, 2023, but had not yet commenced.

Finance Leases

The Corporation leases certain buildings under finance leases. The lease arrangements require monthly payments through 2036. As of December 31, 2023, the weighted average remaining lease term was 9.3 years with a weighted average discount rate of 3.42%. The Corporation has included these leases in premises and equipment as of December 31, 2023 and December 31, 2022.

The following is a schedule by year of future minimum lease payments under the capitalized lease, together with the present value of net minimum lease payments as of December 31, 2023 (in thousands):

Year	Amount
2024	$	391
2025	409
2026	425
2027	428
2028	428
2029 and thereafter	1,560
Total minimum lease payments	3,641
Less: amount representing interest	(591)
Present value of net minimum lease payments	$	3,050

As of December 31, 2023, the Corporation had no finance leases that were signed, but had not yet commenced.

LEASES

LEASES

Operating Leases

The Corporation leases certain branch properties under long-term, operating lease agreements. The leases expire at various dates through 2033 and generally include renewal options. As of December 31, 2023, the weighted average remaining lease term was 7.9 years with a weighted average discount rate of 3.40%. Rent expense was $1.0 million for each of the years ended December 31, 2023 and 2022. Certain leases provide for increases in future minimum annual rent payments as defined in the lease agreements. The Corporation’s operating lease agreements contain both lease and non-lease components, which are generally accounted for separately. The Corporation’s lease agreements do not contain any residual value guarantees.

Leased branch properties at December 31, 2023 and December 31, 2022 consist of the following (in thousands):

	2023		2022
Operating lease right-of-use asset	$	6,449	$	7,234
Less: accumulated amortization	(801)		(785)
Less: lease termination	—		—
Add: new lease agreement and modifications	—		—
Operating lease right-of-use-assets, net	$	5,648	$	6,449

The following is a schedule by year of the undiscounted cash flows of the operating lease liabilities, excluding CAM charges, as of December 31, 2023 (in thousands):

Year	Amount
2024	$	924
2025	841
2026	845
2027	854
2028	721
2029 and thereafter	2,446
Total minimum lease payments	6,631
Less: amount representing interest	(804)
Present value of net minimum lease payments	$	5,827

As of December 31, 2023, the Corporation had one operating lease that was signed on October 19, 2023, but had not yet commenced.

Finance Leases

The Corporation leases certain buildings under finance leases. The lease arrangements require monthly payments through 2036. As of December 31, 2023, the weighted average remaining lease term was 9.3 years with a weighted average discount rate of 3.42%. The Corporation has included these leases in premises and equipment as of December 31, 2023 and December 31, 2022.

The following is a schedule by year of future minimum lease payments under the capitalized lease, together with the present value of net minimum lease payments as of December 31, 2023 (in thousands):

Year	Amount
2024	$	391
2025	409
2026	425
2027	428
2028	428
2029 and thereafter	1,560
Total minimum lease payments	3,641
Less: amount representing interest	(591)
Present value of net minimum lease payments	$	3,050

As of December 31, 2023, the Corporation had no finance leases that were signed, but had not yet commenced.

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GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

The changes in goodwill included in the core banking segment during the years ended December 31, 2023 and 2022 were as follows (in thousands):

	2023		2022
Beginning of year	$	21,824	$	21,824
Acquired goodwill	—		—
End of year	$	21,824	$	21,824

Acquired intangible assets were as follows at December 31, 2023 and 2022 (in thousands):

	At December 31, 2023				At December 31, 2022
	Balance Acquired		Accumulated Amortization		Balance Acquired		Accumulated Amortization
Core deposit intangibles	$	5,975	$	5,975	$	5,975	$	5,975
Other customer relationship intangibles	5,633		5,633		5,633		5,633
Total	$	11,608	$	11,608	$	11,608	$	11,608

There is no aggregate amortization expense for 2023, and $15 thousand for 2022. There is no remaining estimated aggregate amortization expense at December 31, 2023.

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DEPOSITS

12 Months Ended

Dec. 31, 2023

Deposits [Abstract]

DEPOSITS

DEPOSITS

A summary of deposits at December 31, 2023 and 2022 is as follows (in thousands):

	2023		2022
Non-interest-bearing demand deposits	$	653,166	$	733,329
Interest-bearing demand deposits	291,138		271,645
Insured money market deposits	623,714		640,840
Savings deposits	249,144		279,029
Certificates of deposits $250,000 or less	365,058		272,182
Certificates of deposits greater than $250,000	76,804		31,547
Brokered deposits 1	142,776		73,452
Other time deposits 2	27,627		25,203
Total	$	2,429,427	$	2,327,227

1 Brokered deposits which are individually $250,000 and under.

2 Includes Individual Retirement Accounts and Christmas Club Accounts.

Total customer deposits include reciprocal balances from checking, insured money market deposits, and CDs received from participating banks in nationwide deposit networks as a result of our customers electing to participate in Corporate offered ICS/CDARS programs allowing enhanced FDIC insurance protection. In general, the equivalent of the customers' original deposited funds comes back to the Corporation and are carried within the time deposits category.

Scheduled maturities of time deposits at December 31, 2023, are summarized as follows (in thousands):

Year	Maturities
2024 1	$	578,675
2025	13,244
2026	4,313
2027 2	11,688
2028	1,395
2029	2,950
Total	$	612,265

1 $133.3 million of 2024 maturities represent brokered deposits.

2 $9.5 million of 2027 maturities represent brokered deposits which are

callable by the Corporation on February 28, 2024 and monthly thereafter.

Time deposits that meet or exceed the FDIC Insurance limit of $250 thousand at December 31, 2023 and 2022 were $81.0 million and $36.4 million, respectively.

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FEDERAL HOME LOAN BANK TERM ADVANCES AND OVERNIGHT ADVANCES

12 Months Ended

Dec. 31, 2023

Advance from Federal Home Loan Bank [Abstract]

FEDERAL HOME LOAN BANK TERM ADVANCES AND OVERNIGHT ADVANCES

FEDERAL HOME LOAN BANK TERM ADVANCES AND OVERNIGHT ADVANCES

FHLBNY overnight advances totaled $31.9 million and $95.8 million as of December 31, 2023 and 2022, respectively. The Corporation held no fixed rate term advances as of December 31, 2023 and 2022, respectively.

The following is a summary of FHLBNY overnight advances as of December 31, 2023 and 2022. The carrying amount includes the advance balance plus purchase accounting adjustments that are amortized over the term of the advance (in thousands):

2023					2022
Amount		Rate		Maturity Date	Amount		Rate		Maturity Date
$	31,920	5.64	%	January 2, 2024	$	95,810	4.61	%	January 3, 2023

The Bank has pledged $254.6 million and $254.4 million of residential mortgage and home equity loans under a blanket lien arrangement at December 31, 2023 and 2022, respectively, as collateral for future borrowings. Based on this collateral and additional securities held, the Bank's unused borrowing capacity at the FHLBNY was $193.4 million at December 31, 2023.

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REVENUE FROM CONTRACTS WITH CUSTOMERS

12 Months Ended

Dec. 31, 2023

Revenue from Contract with Customer [Abstract]

REVENUE FROM CONTRACTS WITH CUSTOMERS

REVENUE FROM CONTRACTS WITH CUSTOMERS

All of the Corporation's revenue from contracts with customers in the scope of ASC 606 is recognized within non-interest income. The following tables present the Corporation's non-interest income by revenue stream and reportable segment for the years ended December 31, 2023 and 2022 (in thousands). Items outside the scope of ASC 606 are noted as such.

	Year ended December 31, 2023
Revenue by Operating Segment:	Core Banking		WMG		Holding Company, CFS, and CRM(b)(c)		Total
Non-interest income
Service charges on deposit accounts
Overdraft fees	$	3,096	$	—	$	—	$	3,096
Other	823		—		—		823
Interchange revenue from debit card transactions	4,606		—		—		4,606
WMG fee income	—		10,460		—		10,460
CFS fee and commission income	—		—		995		995
Net gains (losses) on sales of OREO	37		—		—		37
Net gains on sales of loans(a)	144		—		—		144
Net gains on sales of securities(a)	(39)		—		—		(39)
Loan servicing fees(a)	144		—		—		144
Change in fair value of equity securities(a)	228		—		(125)		103
Income from bank-owned life insurance(a)	43		—		—		43
Other(a)	4,068		—		69		4,137
Total non-interest income	$	13,150	$	10,460	$	939	$	24,549

(a) Not within scope of ASC 606.

(b) The Holding Company, CFS, and CRM column above includes amounts to eliminate transactions between segments.

(c) Chemung Risk Management, Inc. (CRM) was dissolved December 6, 2023.

	Year ended December 31, 2022
Revenue by Operating Segment:	Core Banking		WMG		Holding Company, CFS, and CRM(b)		Total
Non-interest income
Service charges on deposit accounts
Overdraft fees	$	3,084	$	—	$	—	$	3,084
Other	704		—		—		704
Interchange revenue from debit card transactions	4,603		—		—		4,603
WMG fee income	—		10,280		—		10,280
CFS fee and commission income	—		—		1,079		1,079
Net gains (losses) on sales of OREO	60		—		—		60
Net gains on sales of loans(a)	107		—		—		107
Loan servicing fees(a)	153		—		—		153
Change in fair value of equity securities(a)	(353)		—		4		(349)
Income from bank-owned life insurance(a)	46		—		—		46
Other(a)	1,821		—		(152)		1,669
Total non-interest income	$	10,225	$	10,280	$	931	$	21,436

(a) Not within scope of ASC 606.

(b) The Holding Company, CFS, and CRM column above includes amounts to eliminate transactions between segments.

A description of the Corporation's revenue streams accounted for under ASC 606 follows:

Service Charges on Deposit Accounts: The Corporation earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which included services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Corporation fulfills the customer's request. Account maintenance fees, which relate primarily to monthly maintenance, are recognized at the time the maintenance occurs. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer's account balance.

Interchange Income from Debit Card Transactions: The Corporation earns interchange fees from debit cardholder transactions conducted through the Mastercard payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to cardholders.

WMG Fee Income (Gross): The Corporation earns wealth management fees from its contracts with trust customers to manage assets for investment, and/or to conduct transactions on their accounts. These fees are primarily earned over time as the Corporation provides the contracted monthly or quarterly services and are generally assessed based on a tiered scale of the market value of assets under management (AUM) at quarter-end.

CFS Fee and Commission Income (Net): The Corporation earns fees from investment brokerage services provided to its customers by a third-party service provider. The Corporation receives commissions from the third-party service provider on a monthly basis based upon customer activity for the month. The Corporation (i) acts as an agent in arranging the relationship between the customer and the third-party service provider and (ii) does not control the services rendered to the customers. Investment brokerage fees are presented net of related costs. The Corporation also earns fees from tax services provided to its customers.

Net Gains/Losses on Sales of OREO: The Corporation records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Corporation finances the sale of OREO to the buyer, the Corporation assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Corporation adjusts the transaction price and related gain (loss) on sale if a significant financing component is present.

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DERIVATIVES

12 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES

DERIVATIVES

As part of the Corporation's product offerings, the Corporation acts as an interest rate swap counterparty for certain commercial borrowers in the normal course of servicing our customers. The interest rate swap agreements are free-standing derivatives and are recorded at fair value in the Corporation's consolidated balance sheets. The Corporation manages its exposure to such interest rate swaps by entering into corresponding and offsetting interest rate swaps with third parties that mirror the terms of the interest rate swaps it has with the commercial borrowers. These positions directly offset each other and the Corporation's exposure is the fair value of the derivatives due to potential changes in credit risk of our commercial borrowers and third parties. The Corporation also enters into risk participation agreements with dealer banks on commercial loans in which it participates. The Corporation receives an upfront fee for participating in the credit exposure of the interest rate swap associated with the commercial loan in which it is a participant and the fee received is recognized immediately in other non-interest income. The Corporation is exposed to its share of the credit loss equal to the fair value of the interest rate swap in the event of nonperformance by the counterparty of the interest rate swap. The Corporation determines the fair value of the credit loss exposure using an estimated credit default rate based on the historical performance of similar assets.

The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements. At December 31, 2023, the Corporation held derivatives not designated as hedging instruments with a total notional amount of $647.5 million. Derivatives not designated as hedging instruments included back-to-back interest rate swaps of $631.1 million, consisting of $315.5 million of interest rate swaps with commercial borrowers and an additional $315.5 million of offsetting interest rate swaps with third-party counter-parties on substantially the same terms, and risk participation agreements with dealer banks of $16.4 million. Free-standing derivatives are not designated as hedges for accounting purposes and are therefore recorded at fair value with changes in fair value recorded in other non-interest income.

Accrued interest receivable and payable related to these swaps of $665 thousand and $447 thousand, as of December 31, 2023 and 2022, respectively, was included in other assets and liabilities.

The following table presents information regarding derivative financial instruments, at December 31:

2023
Derivatives not designated as hedging instruments:	Number of Instruments	Notional Amount		Weighted Average Maturity (in years)	Weighted Average Interest Rate Received	Weighted Average Contract Pay Rate	Fair Value
Interest rate swap agreements on loans with commercial loan customers	47	$	315,526	6.6	4.36%	7.36%	$	(19,355)
Interest rate swap agreements with third-party counter-parties	47	315,526		6.6	7.36%	4.36%	19,316
Risk participation agreements	4	16,432		7.8			—
Total	98	$	647,484				$	(39)

2022
Derivatives not designated as hedging instruments:	Number of Instruments	Notional Amount		Weighted Average Maturity (in years)	Weighted Average Interest Rate Received		Weighted Average Contract Pay Rate		Fair Value
Interest rate swap agreements on loans with commercial loan customers	42	$	265,619	7.1	3.94	%	6.35	%	$	(26,436)
Interest rate swap agreements with third-party counter-parties	42	265,619		7.1	6.35	%	3.94	%	26,381
Risk participation agreements	3	13,764		9.6					—
Total	87	$	545,002						$	(55)

There was an immaterial off-balance sheet exposure for the risk participation agreements as of December 31, 2023, and December 31, 2022.

Amounts included in the Consolidated Statements of Income related to derivatives not designated as hedging were as follows:

	Years Ended December 31,
Derivatives not designated as hedging instruments:	2023		2022
Interest rate swap agreements with commercial loan customers:
Unrealized (loss) recognized in non-interest income	$	7,081	$	(17,430)
Interest rate swap agreements with third-party counter-parties:
Unrealized gain recognized in non-interest income	(7,065)		17,698
Risk participation agreements:
Unrealized gain (loss) recognized in non-interest income	—		15
Unrealized gain (loss) recognized in non-interest income	$	16	$	283

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INCOME TAXES

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

For the years ended December 31, 2023 and 2022, income tax expense attributable to income from operations consisted of the following (in thousands):

	2023		2022
Current expense:
Federal	$	7,149	$	5,501
State	961		883
Total current	8,110		6,384
Deferred expense/(benefit):
Federal	(1,271)		1,365
State	(338)		357
Total deferred	(1,609)		1,722
Income tax expense	$	6,501	$	8,106

Income tax expense differed from the amounts computed by applying the U.S. Federal statutory income tax rate to income before income tax expense as follows (in thousands):

	2023			2022
Statutory federal tax rate	21		%	21		%
Tax computed at statutory rate	$	6,615		$	7,747
Increase (reduction) resulting from:
Tax-exempt income	(509)			(434)
831(b) premium adjustment	(202)			(309)
Dividend exclusion	(9)			(7)
State taxes, net of Federal impact	580			988
Nondeductible interest expense	38			8
Other items, net	(12)			113
Income tax expense	$	6,501		$	8,106
Effective tax rate	20.6		%	22.0		%

The lower tax expense in 2023 when compared to 2022 can be attributed to a decrease in pretax income.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2023 and 2022, are presented below (in thousands):

Deferred tax assets:	2023		2022
Allowance for credit losses	$	5,775	$	5,147
Depreciation	1,408		1,133
Deferred compensation and directors' fees	1,388		1,128
Operating lease liabilities	1,484		1,688
Purchase accounting adjustment – fixed assets	153		153
Net unrealized losses on securities available for sale	22,296		25,310
Defined benefit pension and other benefit plans	1,054		1,320
Nonaccrued interest	484		415
Accrued expense	96		117
Other items, net	133		112
Total gross deferred tax assets	34,271		36,523
Deferred tax liabilities:
Deferred loan fees and costs	1,389		1,358
Prepaid pension	4,144		4,055
Discount accretion	121		108
Core deposit intangible	1,790		1,733
REIT dividend	—		561
Operating lease right-of-use assets	1,484		1,688
Accrual for employee benefit plans	8		5
Other	210		219
Total gross deferred tax liabilities	9,146		9,727
Net deferred tax asset	$	25,125	$	26,796

Realization of deferred tax assets is dependent upon the generation of future taxable income. A valuation allowance is recognized when it is more likely than not that some portion of the deferred tax assets will not be realized. In assessing the need for a valuation allowance, management considers the scheduled reversal of the deferred tax assets, the level of historical taxable income and projected future taxable income over the periods in which the temporary differences comprising the deferred tax assets will be deductible.  Based on its assessment, management determined that no valuation allowance is necessary.

As of December 31, 2023 and 2022, the Corporation did not have any unrecognized tax benefits.

The Corporation accounts for interest and penalties related to uncertain tax positions as part of its provision for Federal and State income taxes. As of December 31, 2023 and 2022, the Corporation did not accrue any interest or penalties related to its uncertain tax positions.

The Corporation is not currently subject to examinations by Federal taxing authorities for the years prior to 2020 and for New York State taxing authorities for the year prior to 2020. New York State taxing authorities recently completed audits of the Corporation for the years 2018, 2019, and 2020. There were no adjustments as a result of the New York State audits.

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PENSION PLAN AND OTHER BENEFIT PLANS

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

PENSION PLAN AND OTHER BENEFIT PLANS

PENSION PLAN AND OTHER BENEFIT PLANS

Pension Plan

The Corporation has a noncontributory defined benefit pension plan covering certain employees. The plan's defined benefit formula generally based payments to retired employees upon their length of service multiplied by a percentage of the average monthly pay over the last five years of employment.

New employees hired on or after July 10, 2010 were not eligible to participate in the plan, however, existing participants at that time continued to accrue benefits. On October 20, 2016, the Corporation amended its noncontributory defined benefit pension plan (“pension plan”) to freeze future retirement benefits after December 31, 2016. Beginning on January 1, 2017, both the pay-based and service-based component of the formula used to determine retirement benefits in the pension plan were frozen so that participants will no longer earn further retirement benefits.

The Corporation uses a December 31 measurement date for its pension plan.

The following table presents (1) changes in the plan's projected benefit obligation and plan assets, and (2) the plan's funded status at December 31, 2023 and 2022 (in thousands):

Change in projected benefit obligation:	2023		2022
Benefit obligation at beginning of year	$	30,506	$	40,404
Service cost	—		—
Interest cost	1,605		1,130
Actuarial (gain) loss	1,098		(8,856)
Curtailments	—		—
Settlements	—		—
Benefits paid	(2,186)		(2,172)
Benefit obligation at end of year	$	31,023	$	30,506

Change in plan assets:	2023		2022
Fair value of plan assets at beginning of year	$	44,656	$	52,987
Actual return on plan assets	4,480		(6,159)
Employer contributions	—		—
Settlements	—		—
Benefits paid	(2,186)		(2,172)
Fair value of plan assets at end of year	$	46,950	$	44,656
Funded status	$	15,927	$	14,150

Amount recognized in accumulated other comprehensive income (loss) at December 31, 2023 and 2022 consist of the following (in thousands):

	2023		2022
Net actuarial loss	$	3,961	$	4,988
Prior service cost	—		—
Total before tax effects	$	3,961	$	4,988

The accumulated benefit obligation at December 31, 2023 and 2022 was $31.0 million and $30.5 million, respectively.

Actuarial losses in the Projected Benefit Obligation (PBO) in 2023 were primarily the result of the decrease in discount rate. The decrease in discount rate caused the PBO to increase by $1.0 million. The update in mortality table caused the PBO to decrease by $0.2 million. Other sources of gain/loss such as plan experience, updated census data and minor adjustments to actuarial assumptions generated a combined loss of less than 1% of expected year end obligations.

The principal actuarial assumptions used in determining the projected benefit obligation as of December 31, 2023 and 2022 were as follows:

	2023		2022
Discount rate	5.07	%	5.42	%
Assumed rate of future compensation increase	N/A		N/A
Weighted-average interest crediting rate	N/A		N/A

Components of net periodic benefit cost and other amounts recognized in other comprehensive income (loss) in 2023 and 2022 consist of the following (in thousands):

Net periodic benefit cost	2023		2022
Service cost, benefits earned during the year	$	—	$	—
Interest cost on projected benefit obligation	1,605		1,130
Expected return on plan assets	(2,391)		(2,851)
Amortization of net loss	36		—
Amortization of  prior service cost	—		—
Recognized (gain) loss due to settlements	—		—
Net periodic cost (benefit)	$	(750)	$	(1,721)

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):	2023		2022
Net actuarial (gain) loss	$	(990)	$	154
Recognized loss	(37)		—
Amortization of prior service cost	—		—
Total recognized in other comprehensive income (loss) (before tax effect)	$	(1,027)	$	154
Total recognized in net (benefit) cost and other comprehensive income (loss) (before tax effect)	$	(1,777)	$	(1,567)

During 2023, the plan's total unrecognized net loss decreased by $1.0 million. The variance between the actual and expected return on plan assets during 2023 decreased the total unrecognized net loss by $2.1 million. Because the total unrecognized net gain or loss is less than the greater of 10% of the projected benefit obligation or 10% of the plan assets, no amortization is necessary. As of January 1, 2023, the average expected future life expectancy of plan participants was 10.2 years. Actual results for 2024 will depend on the 2024 actuarial valuation of the plan.

The principal actuarial assumptions used in determining the net periodic benefit cost for the years ended December 31, 2023, 2022 were as follows:

	2023		2022
Discount rate	5.42	%	2.87	%
Expected return on assets	5.50	%	5.50	%
Assumed rate of future compensation increase	N/A		N/A
Weighted-average interest crediting rate	N/A		N/A

The Corporation changes important assumptions whenever conditions warrant changes. At December 31, 2023 the Corporation used the Society of Actuaries PRI-2012 Private Retirement Plans Mortality Table with Mortality Improvement Scale MP-2021 as a basis for the Plan's valuation. At December 31, 2022, the Corporation used IRS Static 2023 Mortality Table with Mortality Improvement Scale MP-2021 as a basis for the Plan's valuation. The discount rate is evaluated at least annually and the expected long-term return on plan assets will typically be revised every three to five years, or as conditions warrant. 

The Corporation's overall investment strategy is to achieve a mix of investments for long-term growth and for near-term benefit payments with a wide diversification of asset types. The target allocations for plan assets are shown in the table below. Equity securities primarily include investments in common or preferred shares of both U.S. and international companies. Debt securities include U.S. Treasury and Government bonds as well as U.S. Corporate bonds. Other investments may consist of mutual funds, money market funds and cash & cash equivalents. While no significant changes in the asset allocations are expected during 2024, the Corporation may make changes at any time.

The expected return on plan assets was determined based on a CAPM using historical and expected future returns of the various asset classes, reflecting the target allocations described below.

Asset Class	Target Allocation 2023	Percentage of Plan Assets at December 31,				Expected Long-Term Rate of Return
		2023		2022
Large cap domestic equities	30% - 60%	41	%	39	%	11.8	%
Mid-cap domestic equities	0% - 8%	2	%	2	%	11.5	%
Small-cap domestic equities	0% - 6%	1	%	1	%	9.7	%
International equities	0% - 8%	3	%	3	%	6.9	%
Intermediate fixed income	33% - 63%	37	%	43	%	7.0	%
Alternative assets	0% - 15%	—	%	—	%	2.9	%
Cash	0% - 20%	16	%	12	%	1.2	%
Total		100	%	100	%

The investment policy of the plan is to provide for long-term growth of principal and income without undue exposure to risk.  The focus is on long-term capital appreciation and income generation. The Corporation maintains an IPS that guides the investment allocation in the plan. The IPS describes the target asset allocation positions as shown in the table above.

The Corporation has appointed an Employee Pension and Profit Sharing Committee to manage the general philosophy, objectives and process of the plan. The Employee Pension and Profit Sharing Committee meets with the Investment Manager periodically to review the plan's performance and to ensure that the current investment allocation is within the guidelines set forth in the IPS. Only the Employee Pension and Profit Sharing Committee, in consultation with the Investment Manager, can make adjustments to maintain target ranges and for any permanent changes to the IPS. Quarterly, the Board of Directors' Trust and Employee Benefits Committee reviews the performance of the plan with the Investment Manager.

As of December 31, 2023 and 2022, the Corporation's pension plan did not hold any direct investment in the Corporation's common stock.

The Corporation used the following methods and significant assumptions to estimate the fair value of each type of financial instrument held by the pension plan:

Fair value is the exchange price that would be received for an asset in the principal or most advantageous market for the asset in an orderly transaction between market participants on the measurement date. The fair value hierarchy described below requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).

Discounted cash flows are calculated using spread and optionality. During times when trading is more liquid, broker quotes are used (if available) to validate the model. Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.

The fair value of the plan assets at December 31, 2023 and 2022, by asset class are as follows (in thousands):

			Fair Value Measurement at December 31, 2023 Using
Plan Assets	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash	$	7,503	$	7,503	$	—	$	—
Equity securities:
U.S. companies	19,374		19,374		—		—
Mutual funds	17,905		17,905		—		—
Debt securities:
U.S. Treasuries/Government bonds	1,920		1,920		—		—
U.S. Corporate bonds	248		248		—		—
Total plan assets	$	46,950	$	46,950	$	—	$	—

			Fair Value Measurement at December 31, 2022 Using
Plan Assets	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash	$	5,374	$	5,374	$	—	$	—
Equity securities:
U.S. companies	17,526		17,526		—		—
Mutual funds	19,619		19,619		—		—
Debt securities:
U.S. Treasuries/Government bonds	1,891		1,891		—		—
U.S. Corporate bonds	246		246		—		—
Total plan assets	$	44,656	$	44,656	$	—	$	—

The following table presents the estimated benefit payments for each of the next five years and the aggregate amount expected to be paid in years six through ten for the pension plan (in thousands):

Calendar Year	Future Expected Benefit Payments
2024	$	2,390
2025	$	2,369
2026	$	2,372
2027	$	2,353
2028	$	2,324
2029-2032	$	11,222

The Corporation does not expect to contribute to the plan during 2024. Funding requirements for subsequent years are uncertain and will significantly depend on changes in assumptions used to calculate plan funding levels, the actual return on plan assets, changes in the employee groups covered by the plan, and any legislative or regulatory changes affecting plan funding requirements. For tax planning, financial planning, cash flow management or cost reduction purposes the Corporation may increase, accelerate, decrease or delay contributions to the plan to the extent permitted by law.

Defined Contribution Profit Sharing, Savings and Investment Plan

On October 20, 2016, the Bank amended its defined contribution profit sharing, savings, and investment plan for all active participants to supersede the current contribution formula used by the Plan, which included eliminating the 1000 hours of service requirement to participate in employer contributions. Beginning on January 1, 2017, the Bank began contributing a non-discretionary 3% of gross annual wages for each participant, regardless of the participant’s deferral, and eliminated discretionary contributions for participants hired prior to July 1, 2010. Additionally, beginning January 1, 2017 the Bank began contributing a 50% match up to 6% of gross annual wages.

Expense related to these plans totaled $1.4 million for each of the years ended December 31, 2023 and 2022. The plan's assets at December 31, 2023 and 2022 include 124,214 and 121,847 shares, respectively, of Chemung Financial Corporation common stock, as well as other common and preferred stocks, U.S. Government securities, corporate bonds and notes, and mutual funds.

Defined Benefit Health Care Plan

On October 20, 2016, the Corporation amended its defined benefit health care plan to not allow any new retirees into the plan, effective January 1, 2017. The effects of this freeze are reflected in the defined benefit health care plan disclosures as of December 31, 2017.

The Corporation uses a December 31 measurement date for its defined benefit health care plan.

The following table presents (1) changes in the plan's accumulated postretirement benefit obligation and (2) the plan's funded status at December 31, 2023 and 2022 (in thousands):

Changes in accumulated postretirement benefit obligation:	2023		2022
Accumulated postretirement benefit obligation - beginning of year	$	95	$	194
Service cost	—		—
Interest cost	5		3
Participant contributions	18		18
Amendments	—		—
Actuarial (gain) loss	3		(71)
Benefits paid	(45)		(49)
Accumulated postretirement benefit obligation at end of year	$	76	$	95

Change in plan assets:	2023		2022
Fair value of plan assets at beginning of year	$	—	$	—
Employer contribution	27		31
Plan participants’ contributions	18		18
Benefits paid	(45)		(49)
Fair value of plan assets at end of year	$	—	$	—
Unfunded status	$	(76)	$	(95)

Amount recognized in accumulated other comprehensive income (loss) at December 31, 2023 and 2022 consist of the following (in thousands):

	2023		2022
Net actuarial loss	$	102	$	118
Prior service credit	—		—
Total before tax effects	$	102	$	118

Weighted-average assumption for disclosure as of December 31:	2023	2022
Discount rate	5.07%	5.42%
Assumed rate of future compensation increase	N/A	N/A
Health care cost trend: Initial (Pre-65/Post 65)	8.00% / 7.00%	7.50% / 6.50%
Health care cost trend: Ultimate (Pre-65/Post 65)	4.75% / 4.75%	4.75% / 4.75%
Year ultimate cost trend reached	2033 / 2032	2032 / 2030

The components of net periodic postretirement benefit cost for the years ended December 31, 2023 and 2022 are as follows (in thousands):

Net periodic cost (benefit)	2023		2022
Service cost	$	—	$	—
Interest cost	5		3
Expected return on plan assets	—		—
Amortization of prior service benefit	—
Recognized actuarial loss	19		18
Recognized prior service benefit due to curtailments	—		—
Net periodic postretirement cost (benefit)	$	24	$	21

Other changes in plan assets and benefit obligations   recognized  in other comprehensive income (loss):	2023		2022
Net actuarial (gain) loss	$	3	$	(71)
Recognized actuarial loss	(19)		(18)
Prior service credit			—
Amortization of prior service benefit			—
Total recognized in other comprehensive income (loss)(before tax effect)	$	(16)	$	(89)
Total recognized in net benefit cost and other comprehensive income (loss) (before tax effect)	$	8	$	(68)

Actuarial loss for 2023 is primarily the net impact of a decrease in discount rate, which increased the Accumulated Postretirement Benefit Obligation (APBO) by $1 thousand, the updating of mortality tables, which decreased the APBO by $4 thousand, and the reflection of updated data, claims experience and health care trend rates (HCTR), which (combined) increased the APBO by $6 thousand. All other sources of gain or loss had a combined net impact of less than $1 thousand.

During 2023 the plan's total unrecognized net loss decreased by $16 thousand. Because the total unrecognized net gain or loss in the plan exceeds 10% of the accumulated postretirement benefit obligation, the excess will be amortized over the average future life expectancy of all plan participants. As of January 1, 2023, the average future life expectancy of all plan participants was 6.0 years. Actual results for 2024 will depend on the 2024 actuarial valuation of the plan.

The change in unrecognized gain/loss is one measure of the degree to which important assumptions have coincided with actual experience. During 2023, the unrecognized net loss decreased by 16% of the December 31, 2022 accumulated postretirement benefit obligation. The Corporation changes important assumptions whenever changing conditions warrant. The discount rate and per capita costs are typically changed at least annually. Other material assumptions include rates of participant mortality and rates of increase in medical costs.

Weighted-average assumptions for net periodic cost as of December 31:	2023	2022
Discount rate	5.42%	2.87%
Expected return on plan assets	N/A	N/A
Assumed rate of future compensation increase	N/A	N/A
Health care cost trend: Initial	8.00% / 7.00%	7.50% / 6.50%
Health care cost tread: Ultimate	4.75% / 4.75%	4.75% / 4.75%
Year ultimate reached	2033 / 2032	2032 / 2030

The following table presents the estimated benefit payments for each of the next five years and the aggregate amount expected to be paid in years six through ten (in thousands):

Calendar Year	Future Estimated Benefit Payments
2024	$	12
2025	$	11
2026	$	11
2027	$	10
2028	$	9
2029-2032	$	32

The Corporation’s policy is to contribute the amount required to fund postretirement benefits as they become due to retirees. The amount expected to be required in contributions to the plan during 2024 is $12 thousand.

Executive Supplemental Pension Plan

The Corporation also sponsors an Executive Supplemental Pension Plan for certain former executive officers to restore certain pension benefits that may be reduced due to limitations under the Internal Revenue Code. The benefits under this plan are unfunded as of December 31, 2023 and 2022.

The Corporation uses a December 31 measurement date for its Executive Supplemental Pension Plan.

The following table presents Executive Supplemental Pension plan status at December 31, 2023 and 2022 (in thousands):

Change in projected benefit obligation:	2023		2022
Benefit obligation at beginning of year	$	948	$	1,173
Service cost	—		—
Interest cost	48		32
Actuarial (gain) loss	37		(148)
Benefits paid	(109)		(109)
Projected benefit obligation at end of year	$	924	$	948

Changes in plan assets:	2023		2022
Fair value of plan assets at beginning of year	$	—	$	—
Employer contributions	109		109
Benefits paid	(109)		(109)
Fair value of plan assets at end of year	$	—	$	—
Unfunded status	$	(924)	$	(948)

Amounts recognized in accumulated other comprehensive income (loss) at December 31, 2023 and 2022 consist of the following (in thousands):

	2023		2022
Net actuarial loss	$	202	$	172
Prior service cost	—		—
Total before tax effects	$	202	$	172

Accumulated benefit obligation at December 31, 2023 and 2022 was $0.9 million and $0.9 million, respectively.

Weighted-average assumption for disclosure as of December 31:	2023		2022
Discount rate	5.07	%	5.42	%
Assumed rate of future compensation increase	N/A		N/A
Weighted-average interest crediting rate	N/A		N/A

The components of net periodic benefit cost for the years ended December 31, 2023 and 2022 are as follows (in thousands):

Net periodic benefit cost	2023		2022
Service cost	$	—	$	—
Interest cost	48		32
Recognized actuarial loss	7		19
Net periodic postretirement benefit cost	$	55	$	51

Other changes in plan assets and benefit obligation recognized in other comprehensive income (loss):	2023		2022
Net actuarial (gain) loss	$	37	$	(148)
Recognized actuarial loss	(7)		(20)
Total recognized in other comprehensive income (loss) (before tax effect)	$	30	$	(168)
Total recognized in net benefit cost and other comprehensive income (loss) (before tax effect)	$	85	$	(117)

During 2023, there was a $20 thousand increase in the projected benefit obligation as a result of the decrease in discount rate. Offsetting this was a mortality decrease of $8 thousand, due to the update in the mortality assumption. There was also a $25 thousand increase in PBO due to participant mortality (longevity) experience. There were no other significant sources of gain or loss during 2023.

During 2023, the plan's total unrecognized net loss increased by $30 thousand. Because the total unrecognized net gain or loss exceeds the greater of 10% of the projected benefit obligation or 10% of the plan assets, the excess will be amortized over the average future life expectancy of all participants. As of January 1, 2024, the average future life expectancy of plan participants was 10.17 years.

Weighted-average assumptions for net periodic cost as of December 31:	2023		2022
Discount rate	5.42	%	2.87	%
Expected asset return	N/A		N/A
Assumed rate of future compensation increase	N/A		N/A
Weighted-average interest crediting rate	N/A		N/A

The discount rate was determined by projecting the plan's expected future benefit payments as defined for the projected benefit obligation, discounting those expected payments using a theoretical zero-coupon spot yield curve derived from a universe of high-quality bonds as of the measurement date, and solving for the single equivalent discount rate that resulted in the same projected benefit obligation.

The change in unrecognized net gain or loss is one measure of the degree to which important assumptions have coincided with actual experience. During 2023 the unrecognized net loss increased 3.2% of the December 31, 2022 projected benefit obligation.

The following table presents the estimated benefit payments for each of the next five years and the aggregate amount expected to be paid in years six through ten for the Supplemental Pension Plan (in thousands):

Calendar Year	Future Estimated Benefit Payments
2024	$	108
2025	$	105
2026	$	100
2027	$	96
2028	$	90
2029-2032	$	368

Contributions for an unfunded pension plan are equal to the benefit payments being made during the year. The Corporation expects to contribute $110 thousand to the plan during 2024.

Defined Contribution Supplemental Executive Retirement Plan

The Corporation also sponsors a Defined Contribution Supplemental Executive Retirement Plan for certain current executive officers, which was initiated in 2012. The plan is unfunded as of December 31, 2023 and is intended to provide nonqualified deferred compensation benefits payable at retirement, disability, death or certain other events. The accrued obligation for the plan as of December 31, 2023 and 2022 was $3.4 million and $2.9 million, respectively. A total of $0.6 million and $0.5 million was expensed during the years ended December 31, 2023 and 2022, respectively. In addition to each participant's account being credited with the annual company contribution, each account will receive a quarterly interest credit that will be calculated based upon the average yield on five year U.S. Treasury Notes.

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STOCK COMPENSATION

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

STOCK COMPENSATION

STOCK COMPENSATION

On June 8, 2021, the Corporation's shareholders approved the Corporation's 2021 Equity Incentive Plan (the "2021 Plan") which provides for the grant of stock-based awards to officers, employees and directors of the Corporation and the Bank. A Form S-8 Registration Statement was filed with the SEC on June 18, 2021 registering shares to be awarded under the 2021 Plan. The 2021 Plan provides officers, employees and directors of the Corporation and the Bank with additional incentives to promote the growth and performance of the Corporation. The prior plan shall remain in existence solely for the purpose of administering outstanding grants.

Under the terms of the Corporation's 2021 Equity Incentive Plan (the "2021 Plan"), the Corporation may make discretionary grants of restricted shares of the Corporation’s common stock to or for the benefit of employees selected to participate in the 2021 Plan, the Chief Executive Officer and members of the Board of Directors. Awards are based on the performance, responsibility and contributions of the individual and are targeted at an average of the peer group. The maximum number of shares of the Corporation’s common stock that may be awarded as restricted shares related to the 2021 Plan may not exceed 170,000, upon which time a new plan will be filed. Awards under the 2021 Plan may be vested no earlier than the first anniversary of the date on which the award is granted. Shares fully vest on the fifth anniversary of the grant date for employees, and on the first anniversary of the grant date for the Chief Executive Officer and members of the Board of Directors. Compensation expense for shares granted is recognized based on the fair value of the stock at the issue date.

Total compensation expense related to this plan was $1.2 million in both 2023 and 2022. During 2023 and 2022, a total of 34,658 and 33,586 shares, respectively, were re-issued from treasury to fund stock compensation.

A summary of restricted stock activity as of December 31, 2023, and changes during the year ended is presented below:

	Shares	Weighted–Average Grant Date Fair Value
Nonvested at December 31, 2022	55,402	$	44.57
Granted	34,658	$	46.96
Vested	(26,750)	$	44.60
Forfeited or Cancelled	(326)	$	43.73
Nonvested at December 31, 2023	62,984	$	45.87

As of December 31, 2023, there was $1.4 million of total unrecognized compensation cost related to nonvested shares granted under the prior Plan and the 2021 Plan. The cost is expected to be recognized over a weighted-average period of 3.32 years. The total fair value of shares vested during the years ended December 31, 2023 and 2022 were $0.6 million and $0.7 million, respectively.

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RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2023

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

Members of the Board of Directors, certain Corporation officers, and their immediate families directly, or through entities in which they are principal owners (more than 10% interest) or board members, were customers of, and had loans and other transactions with the Corporation. These loans are summarized as follows for the years ended December 31, 2023 and 2022 (in thousands):

	2023		2022
Balance at beginning of year	$	28,062	$	51,192
New loans or additional advances	77		990
Effect of changes in composition of related parties	(4)		(22,607)
Repayments	(2,077)		(1,513)
Balance at end of year	$	26,058	$	28,062

Deposits from principal officers, directors, and their affiliates at December 31, 2023 and 2022 were $36.0 million and $28.4 million, respectively.

The Bank leases its branch located at 1365 New Scotland Road, Slingerlands, New York, under a lease agreement through July 2029 from a former member of the Corporation's Board of Directors who retired from the Corporation's Board of Directors as of June 7, 2022. Rent and CAM paid to this Board member while serving on the Board totaled $25 thousand for the year ended December 31, 2022.

The Bank leases its branch located at 2 Rush Street, Schenectady, New York, under a lease agreement through February, 2033 from a member of the Corporation's Board of Directors with monthly rent and CAM expense totaling $9 thousand and $8 thousand per month for the years ended December 31, 2023 and 2022, respectively. Rent and CAM paid to this Board member totaled $118 thousand and $102 thousand for the years ended December 2023 and 2022, respectively.

WMG provided trust services to members of the Board of Directors, certain Corporation officers, and their immediate families directly, or through entities in which they are principal owners or board members. WMG fee income for the trust services provided totaled $0.6 million for each of the years ended December 31, 2023 and 2022, respectively.

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

The contractual amounts of financial instruments with off-balance sheet risk at year-end were as follows (in thousands):

	2023				2022
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	23,809	$	78,790	$	44,481	$	75,028
Unused lines of credit	$	3,387	$	332,439	$	2,887	$	326,188
Standby letters of credit	$	—	$	11,317	$	—	$	17,211

Commitments to make real estate and home equity loans are generally made for periods of sixty days or less. As of December 31, 2023, the fixed rate real estate and home equity commitments to make loans have interest rates ranging from 5.75% to 8.13% and maturities ranging from seven years to thirty years. Commitments to fund commercial draw notes are generally made for periods of three months to twenty-four months. As of December 31, 2023, the fixed rate commercial draw commitments have interest rates ranging from 2.79% to 8.17%.

Because many commitments and almost all standby letters of credit expire without being funded in whole or in part, the contract amounts are not estimates of future cash flows. Loan commitments and unused lines of credit have off-balance sheet credit risk because only origination fees are recognized on the consolidated balance sheet until commitments are fulfilled or expire. The credit risk amounts are equal to the contractual amounts, assuming the amounts are fully advanced and collateral or other security is of no value. The Corporation does not anticipate losses as a result of these transactions. These commitments also have off-balance sheet interest rate risk in that the interest rate at which these commitments were made may not be at market rates on the date the commitments are fulfilled.

In conjunction with the Corporation's adoption of ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), an allowance for credit losses on unfunded commitments was established as of January 1, 2023. The allowance is based on the same methodology as the allowance for credit losses on loans. As of December 31, 2023, the allowance for credit losses on unfunded commitments was $0.9 million.

The Corporation has issued conditional commitments in the form of standby letters of credit to guarantee payment on behalf of a customer and guarantee the performance of a customer to a third party. Standby letters of credit generally arise in connection with lending relationships. The credit risk involved in issuing these instruments is essentially the same as that involved in extending loans to customers. Contingent obligations under standby letters of credit totaled $11.3 million at December 31, 2023 and represent the maximum potential future payments the Corporation could be required to make. Typically, these instruments have terms of twelve months or less and expire unused; therefore, the total amounts do not necessarily represent future cash requirements. Each customer is evaluated individually for creditworthiness under the same underwriting standards used for commitments to extend credit and on-balance sheet instruments. Corporation policies governing loan collateral apply to standby letters of credit at the time of credit extension. The carrying amount and fair value of the Corporation's standby letters of credit at December 31, 2023 was not significant.

In the normal course of business, there are various outstanding claims and legal proceedings involving the Corporation or its subsidiaries. The Corporation believes that it is not a party to any pending legal, arbitration, or regulatory proceedings that could have a material adverse impact on its financial results or liquidity.

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PARENT COMPANY FINANCIAL INFORMATION

12 Months Ended

Dec. 31, 2023

Condensed Financial Information Disclosure [Abstract]

PARENT COMPANY FINANCIAL INFORMATION

PARENT COMPANY FINANCIAL INFORMATION

Condensed parent company only financial statement information of Chemung Financial Corporation is as follows (investment in subsidiaries is recorded using the equity method of accounting) (in thousands):

BALANCE SHEETS - DECEMBER 31	2023		2022
Assets:
Cash and cash equivalents	$	6,635	$	2,708
Investment in subsidiary - Chemung Canal Trust Company	185,159		157,493
Investment in subsidiary - CFS Group, Inc.	1,418		1,294
Investment in subsidiary - Chemung Risk Management, Inc.1	—		2,887
Dividends receivable from subsidiary bank	1,469		1,455
Equity investments, at fair value	204		329
Other assets	1,850		1,728
Total assets	$	196,735	$	167,894
Liabilities and shareholders' equity:
Dividends payable	$	1,469	$	1,455
Other liabilities	25		51
Total liabilities	1,494		1,506
Shareholders' equity:
Total shareholders' equity	195,241		166,388
Total liabilities and shareholders' equity	$	196,735	$	167,894

1 Chemung Risk Management, Inc. was dissolved effective December 6, 2023.

STATEMENTS OF INCOME - YEARS ENDED DECEMBER 31	2023		2022
Dividends from subsidiary bank and non-bank	$	7,204	$	7,051
Interest and dividend income	11		7
Non-interest income	(125)		10
Non-interest expenses	345		586
Income before impact of subsidiaries' undistributed earnings	6,745		6,482
Equity in undistributed earnings of Chemung Canal Trust Company	18,267		21,638
Equity in undistributed earnings of CFS Group, Inc.	124		220
Distributed earnings of Chemung Risk Management, Inc.1	(301)		250
Income before income tax	24,835		28,590
Income tax benefit	(165)		(193)
Net income	$	25,000	$	28,783

1 Chemung Risk Management, Inc. was dissolved effective December 6, 2023.

STATEMENTS OF CASH FLOWS - YEARS ENDED DECEMBER 31	2023		2022
Cash flows from operating activities:
Net Income	$	25,000	$	28,783
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed earnings of Chemung Canal Trust Company	(18,267)		(21,638)
Equity in undistributed earnings of CFS Group, Inc.	(124)		(220)
Distributed earnings of Chemung Risk Management, Inc.1	301		(250)
Change in dividend receivable	(14)		(5)
Change in other assets	(122)		(211)
Change in other liabilities	(1,085)		(733)
Expense related to restricted stock units directors' deferred compensation plan	20		20
Expense to employee restricted stock awards	1,139		795
Net cash provided by operating activities	6,848		6,541
Cash flow from investing activities:
Proceeds from dissolution of Chemung Risk Management, Inc.1	2,634		—
Net cash provided by investing activities	2,634		—
Cash flow from financing activities:
Cash dividends paid	(5,840)		(5,797)
Purchase of treasury stock	(316)		(933)
Sale of treasury stock	601		424
Net cash used in financing activities	(5,555)		(6,306)
Increase (decrease) in cash and cash equivalents	3,927		235
Cash and cash equivalents at beginning of year	2,708		2,473
Cash and cash equivalents at end of year	$	6,635	$	2,708

1 Chemung Risk Management, Inc. was dissolved effective December 6, 2023.

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FAIR VALUES

12 Months Ended

Dec. 31, 2023

Fair Value Disclosures [Abstract]

FAIR VALUES

FAIR VALUES

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Corporation used the following methods and significant assumptions to estimate fair value:

Available for Sale Securities: The fair values of securities available for sale are usually determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs), or matrix pricing, which is a mathematical technique widely used to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3 inputs).

Equity Investments: Securities that are held to fund a non-qualified deferred compensation plan and securities that have a readily determinable fair market value, are recorded with changes in fair value included in earnings. The fair values of equity investments are determined by quoted market prices (Level 1 inputs).

Individually Analyzed Loans: At the time a loan is considered for individual analysis, it is valued at the lower of cost or fair value. Individually analyzed loans carried at fair value have been partially charged-off or receive specific allocations as part of the allowance for credit loss accounting treatment. For collateral dependent loans, fair value is commonly based on real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, typically resulting in a Level 3 fair value classification. These loans are analyzed on a quarterly basis for additional valuation changes and adjusted accordingly.

OREO: Assets acquired through or instead of loan foreclosures are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent impaired loans and OREO are performed by certified general appraisers (commercial properties) or certified residential appraisers (residential properties) whose qualifications and licenses have been reviewed and verified by the Corporation. Once received, appraisals are reviewed for reasonableness of assumptions, approaches utilized, Uniform Standards of Professional Appraisal Practice and other regulatory compliance, as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Appraisals are generally completed within the previous 12 month period prior to a property being placed into OREO. On impaired loans, appraisal values are adjusted based on the age of the appraisal, the position of the lien, the type of the property and its condition.

Derivatives: The fair values of interest rate swaps are based on valuation models using observable market data as of the measurement date (Level 2 inputs). Derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices, and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The Corporation also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counter-party's nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Corporation has considered the impact of any applicable credit enhancements, such as collateral postings. Although the Corporation has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with credit risk participation are based on credit default rate assumptions (Level 3 inputs).

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

			Fair Value Measurement at December 31, 2023 Using
Financial Assets:	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. treasury notes and bonds	$	55,332	$	55,332	$	—	$	—
Mortgage-backed securities, residential	403,824		—		403,824		—
Obligations of states and political subdivisions	38,686		—		38,686		—
Corporate bonds and notes	20,669		—		13,139		7,530
SBA loan pools	65,482		—		65,482		—
Total available for sale securities	$	583,993	$	55,332	$	521,131	$	7,530
Equity Investments	$	2,552	$	2,552	$	—	$	—
Derivative assets	$	23,942	$	—	$	23,942	$	—
Financial Liabilities:
Derivative liabilities	$	23,981	$	—	$	23,981	$	—

			Fair Value Measurement at December 31, 2022 Using
Financial Assets:	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. treasury notes and bonds	$	55,574	$	55,574	$	—	$	—
Mortgage-backed securities, residential	435,131		—		435,131		—
Obligations of states and political subdivisions	38,892		—		38,892		—
Corporate bonds and notes	21,970		—		21,970		—
SBA loan pools	81,022		—		81,022		—
Total available for sale securities	$	632,589	$	55,574	$	577,015	$	—
Equity investments	$	2,246	$	2,246	$	—	$	—
Derivative assets	$	26,706	$	—	$	26,706	$	—
Financial Liabilities:
Derivative liabilities	$	26,761	$	—	$	26,761	$	—

There were no transfers between Level 1 and Level 2 during the twelve month periods ending December 31, 2023 and 2022.

The Corporation transfers assets and liabilities between levels within the hierarchy when the methodology to obtain the fair value changes such that there are either more or fewer unobservable inputs as of the end of the reporting period. The Corporation transferred its investment in six corporate sub-debt issuances from Level 2 to Level 3 in the twelve month period ended December 31, 2023. Illiquidity in new issuances of comparable bonds and the size of issuances led to pricing difficulties, and the transfer to Level 3 within the period. The Corporation utilizes a "beginning of reporting period" timing assumption when recognizing transfers between hierarchy levels, consistent with ASC 820-10-50-2.

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using unobservable inputs (Level 3) for the years ended December 31, 2023 and 2022.

Corporate Bonds: Level 3 Financial Assets	2023		2022
Balance of recurring Level 3 assets at January 1	$	—	$	—
Total gains and losses for the period:
Included in other comprehensive income	(1,096)		—
Transfers into Level 3	9,955		—
Transfers out of Level 3	(1,329)		—
Balance of recurring Level 3 assets at December 31	$	7,530	$	—

December 31, 2023	Fair Value		Valuation Techniques	Unobservable Input	Range [Weighted Average] at
Corporate bonds and notes	$	7,530	Discounted cash flow	Market discount rate	12.50% -12.50% [12.50%]

There were two corporate bonds with a fair value of $1.3 million which were transferred out of Level 3 and into Level 2 during the year ended December 31, 2023 based on the availability of observable market data for these investments.

There were no financial assets measured on a recurring basis that were considered to be Level 3 fair value by the Corporation at December 31, 2022. Assets and liabilities measured at fair value on a non-recurring basis at December 31, 2023 and 2022 were

considered to be immaterial to the presentation of the consolidated financial statements.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values of other financial instruments, at December 31, 2023 and December 31, 2022, are as follows (in thousands):

			Fair Value Measurements at December 31, 2023 Using
Financial assets:	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Estimated Fair Value 1
Cash and due from financial institutions	$	22,247	$	22,247	$	—	$	—	$	22,247
Interest-bearing deposits in other financial institutions	14,600		14,600		—		—		14,600
Equity investments	3,046		3,046		—		—		3,046
Securities available for sale	583,993		55,332		521,131		7,530		583,993
Securities held to maturity	785		—		—		785		785
FHLBNY and FRBNY stock	5,498		—		—		—		N/A
Loans, net and loans held for sale	1,972,664		—		—		1,875,390		1,875,390
Derivative assets	23,942		—		23,942		—		23,942
Financial liabilities:
Deposits:
Demand, savings, and insured money market deposits	$	1,817,162	$	1,817,162	$	—	$	—	$	1,817,162
Time deposits	612,265		—		609,863		—		609,863
FHLBNY overnight advances	31,920		—		31,925		—		31,925
Derivative liabilities	23,981		—		23,981		—		23,981

1 Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

			Fair Value Measurements at December 31, 2022 Using
Financial Assets:	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Estimated Fair Value 1
Cash and due from financial institutions	$	29,309	$	29,309	$	—	$	—	$	29,309
Interest-bearing deposits in other financial institutions	26,560		26,560		—		—		26,560
Equity investments	2,830		2,830		—		—		2,830
Securities available for sale	632,589		55,574		577,015		—		632,589
Securities held to maturity	2,424		—		1,450		952		2,402
FHLBNY and FRBNY stock	8,197		—		—		—		N/A
Loans, net and loans held for sale	1,829,448		—		—		1,757,171		1,757,171
Derivative assets	26,706		—		26,706		—		26,706
Financial liabilities:
Deposits:
Demand, savings, and insured money market deposits	$	1,924,843	$	1,924,843	$	—	$	—	$	1,924,843
Time deposits	402,384		—		403,572		—		403,572
FHLBNY overnight advances	95,810		—		—		—		—
Derivative liabilities	26,761		—		26,761		—		26,761

1 Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

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REGULATORY CAPITAL REQUIREMENTS

12 Months Ended

Dec. 31, 2023

Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]

REGULATORY CAPITAL REQUIREMENTS

REGULATORY CAPITAL REQUIREMENTS

The Bank is subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Under Basel III rules, the Bank must hold a capital conservation buffer of 2.5 % above the adequately capitalized risk-based capital ratios. Organizations that fail to maintain the minimum capital conservation buffer could face restrictions on capital distributions or discretionary bonus payments to executive officers. The net unrealized gain or loss on available for sale securities and changes in the funded status of the defined benefit pension plan and other benefit plans are not included in computing regulatory capital. Management believes as of December 31, 2023, the Bank met all capital adequacy requirements to which they are subject.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At December 31, 2023, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. The Corporation is no longer subject to FRB consolidated capital requirements applicable to bank holding companies, which are similar to those applicable to the Bank, until it reaches $3.0 billion in assets.

As of December 31, 2023, the most recent notification from the Federal Reserve Bank of New York categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based, common equity Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There have been no conditions or events since that notification that management believes have changed the Bank's or the Corporation's capital category.

The Corporation’s principal source of funds for dividend payments is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net income, combined with the retained net income of the preceding two years, subject to the capital requirements in the table below.  During 2024, the Bank could, without prior approval, declare dividends of approximately $59.4 million plus any 2024 net income retained to the date of the dividend declaration.

The actual capital amounts and ratios of the Corporation and the Bank are presented in the following tables (in thousands):

	Actual				Minimal Capital Adequacy				Minimal Capital Adequacy with Capital Buffer				To Be Well Capitalized Under Prompt Corrective Action Provisions
As of December 31, 2023	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital (to Risk Weighted Assets):
Consolidated	$	262,864	13.26	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	252,783	12.76	%	$	158,438	8.00	%	$	207,950	10.50	%	$	198,048	10.00	%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	239,429	12.08	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	229,348	11.58	%	$	118,829	6.00	%	$	168,341	8.50	%	$	158,438	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	239,429	12.08	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	229,348	11.58	%	$	89,122	4.50	%	$	138,634	7.00	%	$	128,731	6.50	%
Tier 1 Capital (to Average Assets):
Consolidated	$	239,429	8.62	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	229,348	8.26	%	$	111,034	4.00	%	N/A		N/A		$	138,792	5.00	%

	Actual				Minimum Capital Adequacy				Minimal Capital Adequacy with Capital Buffer				To Be Well Capitalized Under Prompt Corrective Action Provisions
As of December 31, 2022	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital (to Risk Weighted Assets):
Consolidated	$	239,478	12.57	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	230,560	12.10	%	$	152,414	8.00	%	$	200,044	10.50	%	$	190,518	10.00	%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	219,820	11.54	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	210,901	11.07	%	$	114,311	6.00	%	$	161,940	8.50	%	$	152,414	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	219,820	11.54	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	210,901	11.07	%	$	85,733	4.50	%	$	133,363	7.00	%	$	123,837	6.50	%
Tier 1 Capital (to Average Assets):
Consolidated	$	219,820	8.23	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	210,901	7.91	%	$	106,616	4.00	%	N/A		N/A		$	133,270	5.00	%

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ACCUMULATED OTHER COMPREHENSIVE INCOME OR LOSS

12 Months Ended

Dec. 31, 2023

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME OR LOSS

ACCUMULATED OTHER COMPREHENSIVE INCOME OR LOSS

Accumulated other comprehensive income or loss represents the net unrealized holding gains or losses on securities available for sale and the funded status of the Corporation's defined benefit pension plan and other benefit plans, as of the consolidated balance sheet dates, net of the related tax effect.

The following is a summary of the changes in accumulated other comprehensive income or loss by component, net of tax, for the periods indicated (in thousands):

	Unrealized Gains and Losses on Securities Available for Sale		Defined Benefit and Other Benefit Plans		Total
Balance at January 1, 2023	$	(71,296)	$	(3,961)	$	(75,257)
Other comprehensive income (loss) before reclassification	8,506		702		9,208
Amounts reclassified from accumulated other comprehensive income (loss)	(10)		46		36
Net current period other comprehensive income (loss)	8,496		748		9,244
Balance at December 31, 2023	$	(62,800)	$	(3,213)	$	(66,013)

Balance at January 1, 2022	$	(2,495)	$	(4,035)	$	(6,530)
Other comprehensive income (loss) before reclassification	(68,801)		47		(68,754)
Amounts reclassified from accumulated other comprehensive income (loss)	—		27		27
Net current period other comprehensive income (loss)	(68,801)		74		(68,727)
Balance at December 31, 2022	$	(71,296)	$	(3,961)	$	(75,257)

The following is the reclassification out of accumulated other comprehensive income (loss) for the periods indicated (in thousands):

Details about Accumulated Other Comprehensive Income (Loss) Components	Year Ended December 31,				Affected Line Item  in the Statement Where Net Income is Presented
	2023		2022
Unrealized gains and losses on securities available for sale:
Realized gains (losses) on securities available for sale	$	(14)	$	—	Net gains (losses) on securities transactions
Tax effect	4		—		Income tax expense
Net of tax	(10)		—
Amortization of defined pension plan and other benefit plan items:
Actuarial losses (a)	63		38		Other components of net periodic pension and postretirement benefits
Tax effect	(16)		(11)		Income tax expense
Net of tax	47		27
Total reclassification for the period, net of tax	$	37	$	27

(a) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and other benefit plan costs (see Note 13 for additional information).

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SEGMENT REPORTING

12 Months Ended

Dec. 31, 2023

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING

The Corporation manages its operations through two primary business segments: core banking and WMG. The core banking segment provides revenues by attracting deposits from the general public and using such funds to originate consumer, commercial, commercial real estate, and residential mortgage loans, primarily in the Corporation’s local markets, and to invest in securities. The WMG services segment provides revenues by providing trust and investment advisory services to clients.

Accounting policies for the segments are the same as those described in Note 1. Summarized financial information concerning the Corporation’s reportable segments and the reconciliation to the Corporation’s consolidated results are shown in the following table. Income taxes are allocated based on the separate taxable income of each entity and indirect overhead expenses are allocated based on reasonable and equitable allocations applicable to the reportable segment. The Holding Company, CFS, and CRM column below includes amounts to eliminate transactions between segments as well as income and expenses related to insurance products, mutual funds, brokerage services, and captive insurance (in thousands).

Year ended December 31, 2023	Core Banking		WMG		Holding Company, CFS and CRM1		Consolidated Totals
Interest and dividend income	$	112,947	$	—	$	127	$	113,074
Interest expense	38,617		—		—		38,617
Net interest income	74,330		—		127		74,457
Provision for credit losses	3,262		—		—		3,262
Net interest income after provision for credit losses	71,068		—		127		71,195
Non-interest income	13,150		10,460		939		24,549
Legal settlements	—		—		—		—
Non-interest expenses	55,982		7,061		1,200		64,243
Income (loss) before income tax expense	28,236		3,399		(134)		31,501
Income tax expense (benefit)	5,869		730		(98)		6,501
Segment net income (loss)	$	22,367	$	2,669	$	(36)	$	25,000
Segment assets	$	2,706,373	$	2,627	$	1,529	$	2,710,529

1 Chemung Risk Management, Inc. (CRM) was dissolved December 6, 2023.

Year ended December 31, 2022	Core Banking		WMG		Holding Company, CFS and CRM			Consolidated Totals
Interest and dividend income	$	81,425	$	—	$	50		$	81,475
Interest expense	7,296		—		—			7,296
Net interest income	74,129		—		50			74,179
Provision for loan losses	(554)		—		—			(554)
Net interest income after provision for loan losses	74,683		—		50			74,733
Non-interest income	10,225		10,280		931			21,436
Legal settlements	—		—		—		0	—
Non-interest expenses	51,301		6,582		1,397			59,280
Income (loss) before income tax expense	33,607		3,698		(416)			36,889
Income tax expense (benefit)	7,361		851		(106)			8,106
Segment net income (loss)	$	26,246	$	2,847	$	(310)		$	28,783
Segment assets	$	2,635,043	$	2,559	$	7,951		$	2,645,553

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Pay vs Performance Disclosure - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Pay vs Performance Disclosure
Total reclassification for the period, net of tax	$ 25,000	$ 28,783

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Insider Trading Arrangements	3 Months Ended	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted		false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

ORGANIZATION

ORGANIZATION

The Corporation, through its wholly-owned subsidiaries, the Bank and CFS Group, Inc., provides a wide range of banking, financing, fiduciary and other financial services to its clients. The Corporation is subject to the regulations of certain federal and state agencies and undergoes periodic examinations by those regulatory agencies.

Chemung Risk Management, Inc., (CRM), a wholly-owned subsidiary of the Corporation, was a Nevada-based captive insurance company which insured against certain risks unique to the operations of the Corporation and its subsidiaries and for which insurance may not have been currently available or economically feasible in today's insurance marketplace. CRM was dissolved by the Corporation, effective December 6, 2023.

BASIS OF PRESENTATION AND USE OF ANALOGOUS ACCOUNTING STANDARDS

BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared in conformity with GAAP and include the accounts of the Corporation and its subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions based on available information.  These estimates and assumptions affect the amounts reported in the financial statements and disclosures provided, and actual results could differ.

USE OF ANALOGOUS ACCOUNTING STANDARDS

Under U.S. GAAP, there is no specific guidance related to government assistance received by a for-profit entity that is not in the form of a loan, income tax credit, or revenue from a contract with a customer. Therefore, the Corporation must rely upon analogous accounting standards to determine appropriate treatment when such circumstances arise. The Corporation accounted for the recognition of the Employee Retention Tax Credit (ERTC) using ASC 958-605, Revenue Recognition for Not-for-Profit entities. ASC 958-10-15-1 specifies that certain Subtopics within ASC 958-605 also apply to business entities.

The Corporation considers the recognition of the ERTC to be analogous to the stipulations for "conditional contributions" under ASC 958-605-20. Conditional contributions have at least one barrier needing to be overcome before the recipient is entitled to the assets transferred or promised; there must be a right-of-return to the contributor; and barriers to the condition should be measurable. The Corporation recognized the gross amount of the ERTC through non-interest income during the period in which the barrier was overcome, identified as the period during which amended tax returns were filed. The Corporation incurred and recognized additional income tax expense during the period in relation to its amended tax returns.

CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash and amounts due from banks, demand interest-bearing deposits, and time deposits with other financial institutions.

EQUITY INVESTMENTS

EQUITY INVESTMENTS

Securities that are held to fund a non-qualified deferred compensation plan and securities that have a readily determinable fair market value, are recorded at fair value with changes in fair value and interest and dividend income included in earnings.

SECURITIES

SECURITIES

Management determines the appropriate classification of securities at the time of purchase. If management has the intent and the Corporation has the ability at the time of purchase to hold securities until maturity, they are classified as held to maturity and carried at amortized cost. Securities to be held for indefinite periods of time or not intended to be held to maturity are classified as available for sale and carried at fair value. Premiums and discounts are amortized or accreted over the life of the related security as an adjustment of yield using the interest method. Dividend and interest income is recognized when collected. Unrealized holding gains and losses on securities classified as available for sale are excluded from earnings and are reported as accumulated other comprehensive income (loss) in shareholders' equity, net of the related tax effects, until realized. Realized gains and losses are determined using the specific identification method.

Management assesses available for sale securities in an unrealized loss position on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation, to determine whether it intends to sell, or it is more likely than not that it will be required to sell a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as a write down through earnings.

Available for sale securities in a loss position that do not meet either of the aforementioned criteria, are reviewed by management to determine whether the unrealized loss is due to credit related circumstances, or other non-credit related factors. In making this determination, management evaluates a range of factors including the extent to which fair value is less than amortized cost, existing conditions that may adversely impact the issuer, changes to the credit rating of either the issuer or the specific security, among other considerations. An allowance for credit losses is established for securities, when upon evaluation, management has determined that the unrealized losses are due at least in part to credit conditions. The allowance for credit losses is determined as the difference, if any, between the present value of expected cash flows and the amortized basis of the security, limited to the extent that amortized basis exceeds fair value.

The Corporation holds the majority of its available for sale securities in obligations that are issued by U.S. Government entities or agencies and enterprises affiliated with the U.S. Government. Due to the explicit or implicit guarantee of the full faith and credit of the U.S. Government, the Corporation considers these securities to carry a near zero credit loss implication. Securities included under this implication include U.S. Treasury securities, mortgage backed securities issued by government-sponsored agencies, and SBA pooled loan securities. Securities that do not fall under this categorization primarily relate to corporate subordinated debt issues.

FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK STOCK

FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK STOCK

The Bank is a member of both the FHLBNY and the FRBNY.  FHLBNY members are required to own a certain amount of stock based on the level of borrowings and other factors, while FRBNY members are required to own a certain amount of stock based on a percentage of the Bank’s capital stock and surplus. FHLBNY and FRBNY stock are carried at cost and classified as non-marketable equities and periodically evaluated for impairment based on ultimate recovery of par value. Cash and stock dividends are reported as income.

LOANS

LOANS

Loans are stated at their amortized basis, which is the amount of unpaid principal balance net of deferred loan cost and fees. An accounting policy election was made to exclude accrued interest receivable from the amortized cost basis of loans. Accrued interest receivable is included in the "Accrued interest and other assets" line item in the Corporation's Consolidated Balance Sheets. The Corporation has the ability and intent to hold its loans for the foreseeable future. The Corporation’s loan portfolio is comprised of the following segments: (i) commercial and agricultural, (ii) commercial mortgages, (iii) residential mortgages, and (iv) consumer loans.

Commercial and agricultural loans primarily consist of loans to small to mid-sized businesses in the Corporation’s market area in a diverse range of industries. These loans are typically made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. Commercial mortgage loans are generally non-owner occupied commercial properties or owner occupied commercial real estate with larger balances. Repayment of these loans is often dependent upon the successful operation and management of the properties and the businesses occupying the properties, as well as on the collateral securing the loan. Residential mortgage loans are generally made on the basis of the borrower’s ability to make repayment from their employment and other income, but are secured by real property. Consumer loans include home equity lines of credit and home equity loans, which exhibit many of the same characteristics as residential mortgages. Indirect and other consumer loans are typically secured by depreciable assets, such as automobiles, and are dependent on the borrower’s continuing financial stability.

Interest on loans is accrued and credited to operations using the interest method. Past due status is based on the contractual terms of the loan. The accrual of interest is generally discontinued and previously accrued interest is reversed when loans become 90 days delinquent. Loans may also be placed on non-accrual status if management believes such classification is otherwise warranted. All payments received on non-accrual loans are applied to principal. Loans are returned to accrual status when they become current as to principal and interest and remain current for a period of six consecutive months or when, in the opinion of management, the Corporation expects to receive all of its original principal and interest. Loan origination fees and certain direct loan origination costs are deferred and amortized over the life of the loan as an adjustment to yield, using the interest method.

LOAN MODIFICATIONS TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY AND ALLOWANCE FOR CREDIT LOSSES

LOAN MODIFICATIONS TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY

Effective January 1, 2023, the Corporation adopted ASU 2022-02 Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructurings (TDR) and Vintage Disclosures, which superseded existing TDR measurement and disclosures, and added additional disclosure requirements related to modifications made on loans to borrowers experiencing financial difficulty. Under prior guidance, a TDR was deemed to have occurred when the Corporation modified a loan to a borrower experiencing financial difficulty, and where a concession was made by the Corporation.

Consistent with ASU 2022-02, the Corporation now evaluates loan modifications to borrowers experiencing financial difficulty on the basis and extent of their direct impact on contractual cash flows. Modifications under this guidance include principal forgiveness, interest rate reductions, more than insignificant payment delays, term extensions, or a combination thereof. Payment delays are generally considered insignificant when the duration of the delay is less than or equal to three months.

Once a loan modification is determined to meet the aforementioned criteria, a determination is made as to whether the modification represents the continuation of an existing loan, or a new loan, in accordance with ASC-310-20-35-9 through 11. The Corporation considers a loan modification to represent the establishment of a new loan if the resulting terms are at least as favorable to the Corporation as the terms made to other borrowers with similar risk profiles. In the event that a modification is determined to represent a new loan, all unamortized deferred costs and fees are to be recognized through interest income at the point the modification is granted. Modifications that do not meet this criteria shall be considered a continuation of an existing loan, and all unamortized deferred costs and fees are to be carried forward as part of the modified loan's basis.

ALLOWANCE FOR CREDIT LOSSES

The allowance is an amount that management believes will be adequate to absorb estimated lifetime credit losses inherent in its portfolios of assets exhibiting credit risk. The Corporation adopted ASC 326 - Financial Instruments-Credit Losses effective January 1, 2023. The allowance for credit losses is estimated using the Corporation's CECL methodology, and replaces the incurred loss methodology used to estimate its allowance for loan and lease losses under prior guidance. CECL methodology utilizes historical information, current conditions, and reasonable and supportable economic forecasts to estimate the allowance for credit losses.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU supersedes prior GAAP by replacing the incurred loss impairment method with a methodology that reflects lifetime expected credit losses and requires the consideration of a broader range of reasonable and supportable information to form credit loss estimates. In November 2019, the FASB adopted an amendment to postpone the effective date of ASU 2016-13 to January 2023 for certain entities, including certain Securities and Exchange Commission filers, public business entities, and private companies. As a smaller reporting company, the Corporation was eligible for and elected delayed adoption.

The Corporation adopted the standard, effective January 1, 2023, and recognized a one-time cumulative adjustment to retained earnings as of January 1, 2023 to reflect the change in methodology. The cumulative-effect adjustment did not have an impact on prior year results. Retained earnings was reduced by $1.5 million, or $1.1 million, net of tax, effective January 1. The $1.5 million adjustment was reflective of the establishment of an allowance for credit losses on unfunded commitments, totaling $1.1 million, and a $0.4 million addition to the allowance for credit losses on loans, reflecting the change in methodology.

Under the Corporation's CECL methodology, loans are analyzed on either a pooled basis, or an individual basis, based on an assessment of risk factors. Loans that exhibit similar risk characteristics and are pooled based on their assigned FFIEC call codes. When it is determined that a loan no longer exhibits risk characteristics consistent with its assigned pool, it is designated for individual analysis. Pooled loans utilize both a quantitative and qualitative component to determine the appropriate estimate of the allowance for credit losses. The quantitative component is based on an estimated discounted cash flow (DCF) analysis, performed at the loan level. The underlying assumptions on which the DCF calculation is based incorporate the relationship between a projected value of an economic indicator, and the implied historical loss experience amongst a group of peers established by management. The Corporation utilizes a regression analysis to identify suitable economic variables, known as loss drivers, for each pool of loans. Based on the results of this analysis, a probability of default (PD) and a loss given default (LGD) is assigned to each potential value of an economic indicator for each pool of loans, which is applied to derive the statistical loss implications thereof. The DCF incorporates a hypothetical loss for each period of the calculation, as well as assumed recoveries of past losses, to reach a present value for each loan. The modeled allowance for credit losses for each individual loan is the book balance of the loan as of the measurement date, less the present value of cash flows. Forecasted economic variables are applied over a four quarter period, and revert to the historical mean of the economic variable over an eight quarter period, on a straight line basis.

Based on assigned FFIEC call codes, and the risk characteristics of lending activities and collateral among loans within call codes, the Corporation has disaggregated its loan portfolio into the following nine pools:

Construction - Commercial and retail loans secured by real estate and made for the purposes of on-site construction or land development. This portfolio primarily consists of commercial construction loans, as well as a small number of residential single family construction to permanent loans. Construction loans are commonly evaluated using an "as-stabilized" or "as completed" appraisal, and the Corporation seeks sponsors who can provide adequate equity in the project at inception, or who have a well-documented history of successfully completing similar projects. Risks specific to construction lending include changes in market conditions prior to the completion of a construction phase, quality of work performed and cost overruns, and the realization of borrower assurances including but not limited to pre-sales, tenant contracts, and financial covenants.

Home Equity Lines of Credit and Junior Liens - Retail loans that are secured by secondary or inferior lien positions on 1-4 family residential real estate. Repayment sources primarily rely on borrowers' primary source of income, and are determined based on a borrower's equity position in the collateralized property. Default risk on secondary liens is greater than on primary liens, as a borrower is likely to prioritize payments on any outstanding indebtedness on the primary lien position. Secondary lien positions are additionally exposed to greater market risk in the event of foreclosure, and therefore are more sensitive to changes in underlying collateral valuations than primary lien positions.

1-4 Family Residential First Liens - Retail and commercial loans secured by primary lien positions on 1-4 family residential real estate. For retail loans secured by primary liens on residential property, repayment is primarily dependent on borrowers' primary source of income. For commercial loans secured by primary liens on residential property, repayment sources may be more diverse. Significant risk factors include localized economic conditions, that may impact both the collateralized property's value, as well as employment prospects for borrowers who rely on their primary source of income as means of repayment, and regulatory risks specific to housing that may inhibit a bank's ability to pursue means of repayment.

Multifamily - Commercial real estate secured by residential properties comprising of greater than four livable units. Multifamily properties are commonly managed by the borrower and rented to tenants for residential purposes. Repayment sources primarily consist of rental income from the property. Risks associated with multifamily projects include the borrower's ability to attract and maintain a base of tenants at rental rates in excess of those required to finance, manage, and maintain the property, as well as risks relating to demographic considerations in the population of prospective tenants.

Owner Occupied Commercial Real Estate - Commercial real estate loans secured by property that is occupied and or operated by the primary borrower or a related entity. Cash flow from the operation of the borrower's businesses are generally the primary source of repayment for owner occupied commercial real estate. Borrower industry and the competence of business operators are generally the primary risks associated with this type of lending activity.

Non Owner Occupied Commercial Real Estate - Commercial real estate loans secured by properties that are maintained and managed by the borrowers, but rely on rental income from outside commercial organizations to provide cash flow for repayment. Successful operations of tenant businesses significantly impacts borrowers' ability to finance these obligations. A primary risk relating to real estate of this nature is the limited influence that a borrower can have on the successful operation of tenant businesses, and the possibility of not being able to find suitable or willing replacement tenants, should vacancies arise. The Corporation seeks to lend in this segment to sponsors who have demonstrated the capability of aligning with strong and dependable tenants, considering both the current environment that tenants operate in, as well as future prospects for their industries, including their need for comparable space in the future.

Commercial and industrial loans - Commercial purpose loans that are primarily secured by the assets of borrowers businesses. Loans within this segment are made to an array of industry types, and may also include loans that are for commercial real estate purposes, but are secured by assets other than real estate. Management identifies the primary similarity amongst loans in this pool to be collateral risk exposure common to these loans. Business assets may have significant variation in collateral value, and the value that may be realized by the Corporation, should the need to liquidate arise. Normal usage and industry specificity can have a significant impact on collateral values. The successful operation of borrower businesses provides the primary source of repayment for these loans.

Consumer - Retail loans primarily secured by vehicle or other personal collateral. Indirect auto lending comprises the majority of lending activity in this pool. Primarily, repayment is largely dependent on borrowers' primary income source, through employment or otherwise. Broader economic conditions, as well as specific personal skill sets, can significantly influence a borrower's ability to maintain adequate employment necessary to finance these loans. Relationships with auto dealer networks also impacts the quality of borrowers seeking financing for vehicles, subject to the Corporation's system of underwriting and loan review. Collateral values in this pool typically depreciate relatively quickly, compared to other asset classes, and expose the Corporation to risk.

Other - Loans to borrowers whose organizations are primarily engaged in activities other than traditional business operations, such as non profit entities including medical groups, clubs and associations, religious organizations, museums, among others. These loans are generally classified based on their organizational structure.

The qualitative component of the pooled allowance is supplemented by qualitative adjustments. Qualitative adjustments represent the extent to which management determines that its expectation of risk differs from the results of the quantitative analysis, in large part capturing risk factors that may not be fully captured by the quantitative model. Management uses the following nine qualitative factors when considering appropriate adjustment: (1) lending policies and procedures, including underwriting standards and collection, charge-off and recovery policies, (2) national and local economic and business conditions and developments, including the condition of various market segments, (3) loan profiles and volume of the portfolio, (4) the experience, ability, and depth of lending management and staff, (5) the volume and severity of past due, classified and watch-list loans, non-accrual loans, troubled debt restructurings, and other modifications (6) the quality of the Bank’s loan review system and the degree of oversight by the Bank’s Board of Directors, (7) collateral related considerations including: secured vs. unsecured, type, and valuations, (8) the existence and effect of any concentrations of credit, and changes in the level of such concentrations, (9) the effect of external factors, such as competition and legal and regulatory requirements, on the level of estimated credit losses in the Bank’s current portfolio.

Loans deemed to require individual analysis are primarily valuated and measured for credit loss based on collateral. A measurement is performed based on the most recently available appraisal performed on individually analyzed loans. It is the Corporation's policy to obtain updated appraisals, by independent third parties, on loans secured by real estate at the time a loan is determined to require individual analysis. A specific allocation to the allowance is made on collateral dependent loans to the extent that the value of collateral, net of adjustments made to account for estimated selling costs and management applied discounting, is less than the book value of the loan on the measurement date. Loans not considered to be collaterally dependent are analyzed using the cash flow approach. A cash flow analysis is performed using a loan's effective interest rate, and discounted to determine appropriate fair value. To the extent that a loan's book balance exceeds the present value of cash flows, a specific allocation to the allowance for credit losses is made.

The Corporation established an allowance for credit losses on unfunded commitments, effective January 1, 2023. The Corporation records an allowance for credit losses on unfunded commitments utilizing a methodology congruent with its methodology for estimating lifetime credit losses on its portfolio of loans, as presented on the Corporation's consolidated balance sheet. The Corporation disaggregates unfunded commitments into pools consistent with its methodology for pooling loans represented on the balance sheet. A funding rate is determined to represent the amount of currently unfunded commitments that are estimated to become funded, based on historical experience. The loss rate applied to the estimated funded balance is consistent with the overall loss rate applied to its equivalent pool of loans on the balance sheet. The Corporation is not required to establish an allowance for credit losses on commitments that are deemed to be unconditionally cancellable at the sole discretion of the Corporation.

Debt securities are included under the guidance of ASC-326 - Financial Instruments-Credit Losses. The Corporation evaluates the necessity to establish and maintain an allowance for credit losses on debt securities consistent with its policies in the aforementioned section of this Note labeled "Securities."

The allowance for credit losses is increased through a provision for credit losses charged to operations. Instruments (loans and debt securities) are charged against their respective allowance for credit losses when management believes that the collectability of all or a portion of the principal is unlikely. Management's evaluation of the adequacy of the allowance for credit losses is performed on a periodic basis and takes into consideration such factors as the credit risk grade assigned to the instrument, historical credit loss experience, and review of information specific and pertinent to the borrower or issuer. While management uses available information to recognize credit losses on loans and securities, future additions to the allowance may be necessary based on changes in economic conditions, regulatory requirements, or other new information.

LOANS HELD FOR SALE

LOANS HELD FOR SALE

Certain mortgage loans are originated with the intent to sell. The Bank typically retains the right to service the mortgages upon sale. Loans held for sale are recorded at the lower of cost or fair value in the aggregate and are regularly evaluated for changes in fair value.  Commitments to sell loans that are originated for sale are recorded at fair value. If necessary, a valuation allowance is established with a charge to income for unrealized losses attributable to a change in market rates.

LEASES

LEASES

Leases are classified as operating or finance leases on the lease commencement date. At inception, the Corporation determines the lease term by considering the minimum lease term and all optional renewal periods that the Corporation is reasonably certain to renew. The discount rate used in determining lease liability is based upon incremental borrowing rates the Corporation could obtain for similar loans as of the date of commencement or renewal.

The Corporation records operating leases on the balance sheet as a lease liability equal to the present value of future minimum payments under the lease terms, and a right-of-use asset equal to the lease liability. The lease term is also used to calculate straight-line rent expense. The Corporation's leases do not contain residual value guarantees or material variable lease payments that may impact the Corporation's ability to pay dividends or cause the Corporation to incur additional expenses. Rent expense and variable lease expense are included in net occupancy expenses on the Corporation's Consolidated Statements of Income.

Finance leases are recorded at the lesser of the present value of future cash outlays using a discounted cash flow, or fair value at the beginning of the lease term. Initially, a finance lease is recorded as a building asset, and is depreciated over the shorter of the term of the lease or the estimated life of the asset. A corresponding long term lease obligation is recorded, which amortizes as payments are made on the lease. Interest expense is incurred using the discount rate determined at the beginning of the lease term. Amortization of the right-of-use assets arising from finance leases is expensed through net occupancy expense, and the interest on the related lease liability is expensed through interest expense on borrowings on the Corporation Consolidated Statements of Income.

PREMISES AND EQUIPMENT

PREMISES AND EQUIPMENT

Land is carried at cost, while buildings, equipment, leasehold improvements and furniture are stated at cost less accumulated depreciation and amortization. Depreciation is charged to current operations using the straight-line method over the estimated useful lives of the assets, which range from 15 to 50 years for buildings and from 3 to 10 years for equipment and furniture.  Amortization of leasehold improvements and leased equipment is recognized using the straight-line method over the shorter of the lease term or the estimated life of the asset. Leases of branch offices, which have been capitalized, are included within buildings and depreciated on the straight-line method over the shorter of the lease term or the estimated life of the asset.

BANK OWNED LIFE INSURANCE

BANK OWNED LIFE INSURANCE

BOLI is recorded at the amount that can be realized under the insurance contracts at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. Changes in the cash surrender value are recorded in other non-interest income.

OTHER REAL ESTATE

OTHER REAL ESTATE

Real estate acquired through foreclosure or deed in lieu of foreclosure is recorded at estimated fair value of the property less estimated costs to dispose at the time of acquisition to establish a new carrying value. Write downs from the carrying value of the loan to estimated fair value, which are required at the time of foreclosure, are charged to the allowance for credit losses. Subsequent adjustments to the carrying values of such properties resulting from declines in fair value result in the establishment of a valuation allowance and are charged to operations in the period in which the declines occur.

INCOME TAXES

INCOME TAXES

The Corporation files a consolidated tax return. Deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for unused tax loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates to apply to taxable income in the years in which temporary differences are expected to be recovered or settled, or the tax loss carry forwards are expected to be utilized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

A tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded.

WEALTH MANAGEMENT GROUP FEE INCOME

WEALTH MANAGEMENT GROUP FEE INCOME

Assets held in a fiduciary or agency capacity for customers are not included in the accompanying consolidated balance sheets, since such assets are not assets of the Corporation. Wealth Management Group income is recognized on the accrual method as earned based on contractual rates applied to the balances of individual trust accounts.

POSTRETIREMENT BENEFITS

POSTRETIREMENT BENEFITS

Pension Plan:

The Chemung Canal Trust Company Pension Plan is a non-contributory defined benefit pension plan. The Pension Plan is a “qualified plan” under the IRS Code and therefore must be funded. Contributions are deposited to the Plan and held in trust. The Plan assets may only be used to pay retirement benefits and eligible plan expenses. The plan was amended such that new employees hired on or after July 1, 2010 would not be eligible to participate in the plan, however, existing participants at that time would continue to accrue benefits.

On October 20, 2016, the Corporation amended its noncontributory defined benefit pension plan (“pension plan”) to freeze future retirement benefits after December 31, 2016. Beginning on January 1, 2017, both the pay-based and service-based component of the formula used to determine retirement benefits in the pension plan were frozen so that participants no longer earn further retirement benefits.

Under the Plan, pension benefits are based upon final average annual compensation where the annual compensation is total base earnings paid plus commissions. Bonuses, overtime, and dividends are excluded. The normal retirement benefit equals 1.2% of final average compensation (highest consecutive five years of annual compensation in the prior ten years) times years of service (up to a maximum of 25 years), plus 1% of average monthly compensation for each additional year of service (up to a maximum of 10 years), plus 0.65% of average monthly compensation in excess of covered compensation for each year of credited service up to 35 years. Covered compensation is the average of the social security taxable wage base in effect for the 35 year period prior to normal social security retirement age. See Note 13 for further details.

Defined Contribution Profit Sharing, Savings and Investment Plan:

The Corporation also sponsors a 401(K) defined contribution profit sharing, savings and investment plan which covers all eligible employees. The Corporation contributes a non-discretionary 3% of gross annual wages (as defined by the 401(k) plan) for each participant, regardless of the participant’s deferral, in addition to a 50% match up to 6% of gross annual wages. All contributions made on or after January 1, 2017 will vest immediately. The plan's assets consist of Chemung Financial Corporation common stock, as well as other common and preferred stocks, U.S. Government securities, corporate bonds and notes, and mutual funds. The plan’s expense is the amount of non-discretionary and matching contributions and is charged to non-interest expenses in the consolidated statements of income.

Defined Benefit Health Care Plan:

The Corporation sponsors a defined benefit health care plan that provides postretirement medical benefits to employees who meet minimum age and service requirements. Current retirees between the ages of 55 and 65, will continue to be eligible for coverage under the Corporation's self-insured plan, contributing 50% of the cost of the coverage. Employees who retired after July 1, 2006, and become Medicare eligible will only have access to the Medicare Blue PPO plan.  The cost of the plan is based on actuarial computations of current and future benefits for employees, and is charged to non-interest expenses in the consolidated statements of income. See Note 13 for further details. On October 20, 2016, the Corporation amended its defined benefit health care plan to not allow any new retirees into the plan, effective January 1, 2017.

Executive Supplemental Pension Plan:

U.S. laws place limitations on compensation amounts that may be included under the Pension Plan. The Executive Supplemental Pension Plan was provided to executives in order to produce total retirement benefits, as a percentage of compensation that is comparable to employees whose compensation is not restricted by the annual compensation limit. Pension amounts, which exceed the applicable Internal Revenue Service code limitations, will be paid under the Executive Supplemental Pension Plan.

The Executive Supplemental Pension Plan is a “non-qualified plan” under the Internal Revenue Service Code. Contributions to the Plan are not held in trust; therefore, they may be subject to the claims of creditors in the event of bankruptcy or insolvency. When payments come due under the Plan, cash is distributed from general assets. The cost of the plan is based on actuarial computations of current and future benefits for executives, and is charged to non-interest expense in the consolidated statements of income.

Defined Contribution Supplemental Executive Retirement Plan:

The Defined Contribution Supplemental Executive Retirement Plan is provided to certain executives to motivate and retain key management employees by providing a nonqualified retirement benefit that is payable at retirement, disability, death and certain other events.

The Supplemental Executive Retirement Plan is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation benefits for a select group of management or highly compensated employees under Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974. The plan’s expense is the Corporation’s annual contribution plus interest credits.

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

2021 Equity Incentive Plan

The Corporation's 2021 Equity Incentive Plan (the "2021 Plan") is designed to align the interests of the Corporation’s executives, senior managers and directors with the interests of the Corporation and its shareholders, to ensure the Corporation’s compensation practices are competitive and comparable with those of its peers, and to promote the retention of select management-level employees and directors. Under the terms of the 2021 Plan, the Compensation and Personnel Committee may approve discretionary grants of restricted shares of the Corporation’s common stock to or for the benefit of employees selected to participate in the 2021 Plan, the chief executive officer and members of the Board of Directors. Awards are based on the performance, responsibility and contributions of the individual and are targeted at the median of the peer group. The maximum number of shares of the Corporation’s common stock that may be awarded as restricted shares related to the 2021 Plan may not exceed 170,000, upon which time the 2021 Plan will be amended, presented and approved by the Corporation's shareholders to include additional shares of the Corporation's common stock. Awards under the 2021 Plans may be vested no earlier than the first anniversary of the date on which the award is granted. Compensation expense for shares granted will be recognized over the vesting period of the award based upon the fair value of shares granted as of the grant date.

A Directors Deferred Fee Plan, an addendum to the 2021 Plan, for non-employee directors of the Corporation or the Bank, provides that directors may elect to defer receipt of all or any part of their fees. Deferrals are either credited with interest compounded quarterly at the Applicable Federal Rate for short-term debt instruments or converted to units, which appreciate or depreciate, as would an actual share of the Corporation’s common stock purchased on the deferral date. Cash deferrals will be paid into an interest bearing account and paid in cash. Units will be paid in shares of common stock. All directors’ fees are charged to non-interest expenses in the consolidated statements of income. Please see Note 14 for further details.

Non-qualified Deferred Compensation Plan:

The Deferred Compensation Plan allows a select group of management and employees to defer all or a portion of their annual compensation to a future date. Eligible employees are generally highly compensated employees and are designated by the Board of Directors from time to time. Investments in the plan are recorded as equity investments and deferred amounts are an unfunded liability of the Corporation. The plan requires deferral elections be made before the beginning of the calendar year during which the participant will perform the services to which the compensation relates. Participants in the Plan are required to elect a form of distribution, either lump sum payment or annual installments not to exceed ten years, and a time of distribution, either a specified age or a specified date. The terms and conditions for the deferral of compensation are subject to the provisions of 409A of the IRS Code. The income from investments is recorded in dividend income and non-interest income in the consolidated statements of income. The cost of the plan is recorded in non-interest expenses in the consolidated statements of income.

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

Goodwill resulting from business combinations prior to January 1, 2009 represents the excess of the purchase price over the fair value of the net assets of businesses acquired. Goodwill resulting from business combinations after January 1, 2009, is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually. The Corporation has selected December 31 as the date to perform the annual impairment test. Goodwill is the only intangible asset with an indefinite life on the Corporation's balance sheet. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. The balances are reviewed for impairment on an ongoing basis or whenever events or changes in business circumstances warrant a review of the carrying value. If impairment is determined to exist, the related write-down of the intangible asset's carrying value is charged to operations. Based on these impairment reviews, the Corporation determined that goodwill and other intangible assets were not impaired at December 31, 2023.

The Corporation's intangible assets related to the purchase of the trust business of Partners Trust Bank in May of 2007, were fully amortized as of December 31, 2022.

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

The Corporation has the ability to enter into sales of securities under agreements to repurchase. The agreements are treated as financings, and the obligations to repurchase securities sold are reflected as liabilities in the consolidated balance sheets. The amount of the securities underlying the agreements continues to be carried in the Corporation's securities portfolio. The Corporation has agreed to repurchase securities identical to those sold. The securities underlying the agreements are under the Corporation's control. As of December 31, 2023, the Corporation had no securities sold under agreements to repurchase.

DERIVATIVES

DERIVATIVES

The Corporation utilizes interest rate swaps with commercial borrowers and third-party counterparties as well as agreements with lead banks in participation loan relationships wherein the Corporation guarantees a portion of the fair value of an interest rate swap entered into by the lead bank. These transactions are accounted for as derivatives. The Company’s derivatives are entered into in connection with its asset and liability management activities and not for trading purposes.

The Company does not have any derivatives that are designated as hedges and therefore all derivatives are considered free standing and are recorded at fair value as derivative assets or liabilities on the consolidated balance sheets, with changes in fair value recognized in the consolidated statements of income as non-interest income.

Premiums received when entering into derivative contracts are recognized as part of the fair value of the derivative asset or liability and are carried at fair value with any gain/loss at inception and any changes in fair value reflected in income.

The Corporation does not typically require its commercial customers to post cash or securities as collateral on its back-to-back interest rate swap program. The Corporation may need to post collateral, either cash or certain qualified securities, in proportion to potential increases in unrealized loss positions.

OTHER FINANCIAL INSTRUMENTS

OTHER FINANCIAL INSTRUMENTS

The Corporation is a party to certain other financial instruments with off-balance sheet risk such as unused portions of lines of credit and commitments to fund new loans. The Corporation's policy is to record such instruments when funded.

EARNINGS PER COMMON SHARE

EARNINGS PER COMMON SHARE

Basic earnings per share is net income divided by the weighted average number of common shares outstanding during the period. Issuable shares, including those related to directors’ restricted stock shares, are considered outstanding and are included in the computation of basic earnings per share. All outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends are considered participating securities for this calculation. Restricted stock awards are grants of participating securities and are considered outstanding at grant date. Earnings per share information is adjusted to present comparative results for stock splits and stock dividends that occur.

COMPREHENSIVE INCOME (LOSS)

COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale and changes in the funded status of the Corporation’s defined benefit pension plan and other benefit plans, net of the related tax effect, which are also recognized as separate components of equity.

SEGMENT REPORTING

SEGMENT REPORTING

The Corporation has identified separate operating segments and internal financial information is primarily reported and aggregated in two lines of business, banking and wealth management services.

RECLASSIFICATION

RECLASSIFICATION

Amounts in the prior years' consolidated financial statements are reclassified whenever necessary to conform to the current year's presentation. Reclassification adjustments had no impact on prior year net income or shareholders' equity.

RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The objective of the ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The ASU supersedes current GAAP by replacing the incurred loss impairment method with a methodology that reflects lifetime expected credit losses and requires the consideration of a broader range of reasonable and supportable information to form credit loss estimates. In November 2019, the FASB adopted an amendment to postpone the effective date of ASU 2016-13 to January 2023 for certain entities, including certain Securities and Exchange Commission filers, public business entities, and private companies. As a smaller reporting company, the Corporation is eligible for and elected delayed adoption.

The Corporation adopted the standard, effective January 1, 2023, and recognized a one-time cumulative adjustment to retained earnings as of January 1, 2023 to reflect the change in methodology. The cumulative-effect adjustment did not have an impact on prior year results. Retained earnings was reduced by $1.5 million, or $1.1 million, net of tax, effective January 1. The $1.5 million adjustment was reflective of the establishment of an allowance for credit losses on unfunded commitments, totaling $1.1 million, and a $0.4 million addition to the allowance for credit losses on loans, reflecting the change in methodology.

Further details regarding the Corporation's adoption of ASU 2013-16 and its methodology thereof can be found in the preceding sections of this Note 1, as well as in Note 4 - Loans and Allowance for Credit Losses, as well as throughout Management's Discussion and Analysis of Financial Condition and Results of Operations.

In March 2022, the FASB issued ASU 2022-02, which eliminates creditor accounting guidance for TDRs for entities that have adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) and enhances Vintage Disclosures of Gross Writeoffs. This ASU eliminates Subtopic 310-40 guidance for TDRs, and requires creditors to apply the loan refinancing and restructuring guidance in Subtopic 310-20 when evaluating modifications granted to borrowers experiencing financial difficulty to determine whether the modification is considered a continuation of an existing loan or a new loan. The vintage disclosure component of the ASU requires entities to disclose current-period gross writeoffs by origination year for financing receivables and investment leases within the scope of Subtopic 326-20. The Corporation adopted adopt ASU 2022-02 concurrently with the adoption of ASU 2016-13.

In December 2022, the FASB issued ASU No. 2022-06, Deferral of the Sunset Date of Topic 848, and defers the date for which accounting relief can be applied under Topic 848. ASU 2022-06 applies to entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The objective of the guidance in Topic 848 is to ease the burden in accounting related to the recognition of the effects of reference rate reform on financial reporting. A sunset provision was included within Topic 848 based on expectations of when LIBOR would cease being published. The Corporation had adopted the accounting relief provisions of Topic 848 effective October 1, 2020. The amendments in ASU 2022-06 defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be able to apply the accounting relief in Topic 848. ASU 2022-06 was effective for all entities upon its issuance. The adoption of the provisions of Topic 848, as amended, did not have a material impact on the Corporation’s consolidated financial statements, and the Corporation has transitioned all financial instruments that previously referenced LIBOR benchmarks.

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements, which and modifies the disclosure or presentation requirements of a variety of Topics in the Accounting Standards Codification, in response to SEC Release No. 33-10532, Disclosure Update and Simplifications, issued on August 17, 2018. The SEC identified several disclosure requirements that overlap with U.S. GAAP, but require incremental information to comply with disclosure standards in Regulations S-X and Regulation S-K. ASU 2023-06 codifies specific amendments to align the codification with SEC regulations. The effective date for each amendment is that date on which each disclosure requirement is removed from Regulation S-K and Regulation S-X. The Corporation anticipates that certain amendments will pertain to the Corporation's financial disclosures or presentation, but cannot determine with certainty which amendments are applicable until removal from Regulation S-K or Regulation S-X.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, enhancing disclosure requirements for reportable segments, focusing on significant segment expenses, and the identification of a segment's chief decision making officer, and the metrics used by the chief decision making officer in evaluating segment-level operating performance. The ASU is effective for fiscal years beginning after December 15, 2023. The Corporation will begin providing enhanced segment reporting disclosures in accordance with ASU 2023-07 for the fiscal year ending December 31, 2024, and for interim periods thereafter.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, which will require public business entities to disclose annually a tabular rate reconciliation, including specific items such as state and local income tax, tax credits, nontaxable or nondeductible items, among others, and a separate disclosure requiring disaggregation of reconciling items as described above which equal or exceed 5% percent of the product of multiplying income from continuing operations by the applicable statutory income tax rate. The ASU is effective for all public business entities for annual periods beginning after December 31, 2024.

FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Corporation used the following methods and significant assumptions to estimate fair value:

Available for Sale Securities: The fair values of securities available for sale are usually determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs), or matrix pricing, which is a mathematical technique widely used to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3 inputs).

Equity Investments: Securities that are held to fund a non-qualified deferred compensation plan and securities that have a readily determinable fair market value, are recorded with changes in fair value included in earnings. The fair values of equity investments are determined by quoted market prices (Level 1 inputs).

Individually Analyzed Loans: At the time a loan is considered for individual analysis, it is valued at the lower of cost or fair value. Individually analyzed loans carried at fair value have been partially charged-off or receive specific allocations as part of the allowance for credit loss accounting treatment. For collateral dependent loans, fair value is commonly based on real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, typically resulting in a Level 3 fair value classification. These loans are analyzed on a quarterly basis for additional valuation changes and adjusted accordingly.

OREO: Assets acquired through or instead of loan foreclosures are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent impaired loans and OREO are performed by certified general appraisers (commercial properties) or certified residential appraisers (residential properties) whose qualifications and licenses have been reviewed and verified by the Corporation. Once received, appraisals are reviewed for reasonableness of assumptions, approaches utilized, Uniform Standards of Professional Appraisal Practice and other regulatory compliance, as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Appraisals are generally completed within the previous 12 month period prior to a property being placed into OREO. On impaired loans, appraisal values are adjusted based on the age of the appraisal, the position of the lien, the type of the property and its condition.

Derivatives: The fair values of interest rate swaps are based on valuation models using observable market data as of the measurement date (Level 2 inputs). Derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices, and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The Corporation also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counter-party's nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Corporation has considered the impact of any applicable credit enhancements, such as collateral postings. Although the Corporation has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with credit risk participation are based on credit default rate assumptions (Level 3 inputs).

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SECURITIES (Tables)

12 Months Ended

Dec. 31, 2023

Investments, Debt and Equity Securities [Abstract]

Amortized Cost and Estimated Fair Value of Securities Available for Sale

Amortized cost and estimated fair value of securities available for sale at December 31, 2023 and 2022 are as follows (in thousands):

	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Estimated Fair Value
U.S. treasury notes and bonds	$	59,812	$	—	$	4,480	$	—	$	55,332
Mortgage-backed securities, residential	476,240		6		72,422		—		403,824
Collateralized mortgage obligations	—		—		—		—		—
Obligations of states and political subdivisions	39,503		—		817		—		38,686
Corporate bonds and notes	25,750		—		5,081		—		20,669
SBA loan pools	67,787		75		2,380		—		65,482
Total	$	669,092	$	81	$	85,180	$	—	$	583,993

	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. treasury notes and bonds	$	61,800	$	—	$	6,225	$	55,574
Mortgage-backed securities, residential	518,838		—		83,707		435,131
Collateralized mortgage obligations	—		—		—		—
Obligations of states and political subdivisions	39,828		2		938		38,892
Corporate bonds and notes	25,750		—		3,780		21,970
SBA loan pools	82,982		155		2,116		81,022
Total	$	729,198	$	157	$	96,766	$	632,589

Amortized Cost and Estimated Fair Value of Debt Securities Available for Sale by Contractual Maturity

Securities not due at a single maturity date are shown separately (in thousands):

	December 31, 2023
	Amortized Cost		Estimated Fair Value
Within one year	$	5,678	$	5,594
After one, but within five years	101,391		94,363
After five, but within ten years	17,526		14,302
After ten years	470		428
Mortgage-backed securities: residential	476,240		403,824
SBA loan pools	67,787		65,482
Total	$	669,092	$	583,993

Amortized Cost and Estimated Fair Value of Securities Held to Maturity

Amortized cost and estimated fair value of securities held to maturity at December 31, 2023 and 2022 are as follows (in thousands):

	December 31, 2023
	Amortized Cost		Unrecognized Gains		Unrecognized Losses		Estimated Fair Value		Allowance for Credit Losses
Obligations of states and political subdivisions	$	785	$	—	$	—	$	785	$	—
Time deposits with other financial institutions	—		—		—		—		—
	$	785	$	—	$	—	$	785	$	—

	December 31, 2022
	Amortized Cost		Unrecognized Gains		Unrecognized Losses		Estimated Fair Value
Obligations of states and political subdivisions	$	952	$	—	$	—	$	952
Time deposits with other financial institutions	1,472		—		22		1,450
	$	2,424	$	—	$	22	$	2,402

Contractual Maturities of Securities Held to Maturity

The contractual maturity of securities held to maturity was as follows at December 31, 2023 (in thousands):

	December 31, 2023
	Amortized Cost		Fair Value
Within one year	$	—	$	—
After one, but within five years	145		145
After five, but within ten years	640		640
After ten years	—		—
Total	$	785	$	785

Debt Securities, Available-for-Sale, Unrealized Loss Position, Fair Value

The following tables summarize the investment securities available for sale with unrealized losses, for which an allowance for credit losses has not been recorded as of December 31, 2023, and an other than temporary impairment (OTTI) has not been recorded as of December 31, 2022 aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
2023
U.S. treasury notes and bonds	$	—	$	—	$	55,332	$	4,480	$	55,332	$	4,480
Mortgage-backed securities: residential	—		—		402,986		72,422		402,986		72,422
Obligations of states and political subdivisions	17,891		241		20,686		576		38,577		817
Corporate bonds and notes	7,492		2,508		13,177		2,573		20,669		5,081
SBA loan pools	3,914		13		54,468		2,367		58,382		2,380
Total temporarily impaired securities	$	29,297	$	2,762	$	546,649	$	82,418	$	575,946	$	85,180

	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
2022
U.S. treasury notes and bonds	$	1,011	$	30	$	54,563	$	6,195	$	55,574	$	6,225
Mortgage-backed securities, residential	79,891		7,621		355,240		76,086		435,131		83,707
Obligations of states and political subdivisions	37,847		938		—		—		37,847		938
Corporate bonds and notes	4,515		485		7,455		3,295		11,970		3,780
SBA loan pools	14,333		925		51,123		1,191		65,456		2,116
Total temporarily impaired securities	$	137,597	$	9,999	$	468,381	$	86,767	$	605,978	$	96,766

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LOANS AND ALLOWANCE FOR CREDIT LOSSES (Tables)

12 Months Ended

Dec. 31, 2023

Loans and Leases Receivable Disclosure [Abstract]

Composition of Loan Portfolio by Type

The composition of the loan portfolio, net of deferred loan fees at December 31, 2023 and 2022 is summarized as follows (in thousands):

	2023		2022
Commercial and agricultural:
Commercial and industrial	$	264,140	$	252,044
Agricultural	256		249
Commercial mortgages:
Construction	138,887		108,243
Commercial mortgages, other	984,038		888,670
Residential mortgages	277,992		285,672
Consumer loans:
Home equity lines and loans	87,056		81,401
Indirect consumer loans	210,423		202,124
Direct consumer loans	9,872		11,045
Total loans, net of deferred loan fees	1,972,664		1,829,448
Allowance for credit losses	(22,517)		(19,659)
Loans, net of allowance for credit losses	$	1,950,147	$	1,809,789

Allowance for Loan Losses by Portfolio Segment

The following tables present the activity in the allowance for credit losses by portfolio segment for the year ended December 31, 2023 and the allowance for loan losses for the year ended December 31, 2022 , respectively (in thousands):

	December 31, 2023
Allowance for credit losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Beginning balance, January 1, 2023	$	3,373	$	11,576	$	1,845	$	2,865	$	19,659
Cumulative effect adjustment for the adoption of ASC-326	909		(695)		(16)		176		374
Beginning balance after cumulative effect adjustment, January 1, 2023	4,282		10,881		1,829		3,041		20,033
Charge Offs:	(281)		—		(32)		(1,070)		(1,383)
Recoveries:	22		4		—		416		442
Net (charge offs) recoveries	(259)		4		(32)		(654)		(941)
Provision (1)	1,032		1,141		397		855		3,425
Ending balance, December 31, 2023	$	5,055	$	12,026	$	2,194	$	3,242	$	22,517

(1) Additional provision related to off-balance sheet exposure was a credit of $163 thousand for the year ended December 31, 2023.

	December 31, 2022
Allowance for loan losses	Commercial, and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Beginning balance:	$	3,591	$	13,556	$	1,803	$	2,075	$	21,025
Charge Offs:	(20)		(687)		(17)		(770)		(1,494)
Recoveries:	42		3		40		597		682
Net recoveries (charge offs)	22		(684)		23		(173)		(812)
Provision	(240)		(1,296)		19		963		(554)
Ending balance	$	3,373	$	11,576	$	1,845	$	2,865	$	19,659

Unfunded Commitments

The allowance for credit losses on unfunded commitments represents the amount held against credit exposures that are not represented on the Consolidated Balance Sheets. The allowance is recognized as a liability, a component of Other liabilities on the Consolidated Balance Sheets, with adjustments to the allowance recognized in the provision for credit losses line item on the Consolidated Statements of Income. The Corporation established a reserve for unfunded commitments in conjunction with its adoption of ASC 326-Financial Instruments-Credit Losses.

The following table presents the activity in the allowance for credit losses on unfunded commitments for the years ended December 31, 2023 and 2022:

Allowance for credit losses on unfunded commitments	For the Twelve Months Ended December 31,
	2023		2022
Beginning balance	$	—	$	—
Impact of adoption of ASC-326	1,082		—
Provision for credit losses on unfunded commitments	(163)		—
Ending balance	$	919	$	—

The following table presents the provision for credit losses on loans and unfunded commitments for the year ended December 31, 2023 , based upon the current expected credit loss methodology, and the provision for loan losses on loans for the year ended December 31, 2022, based upon the incurred loss methodology:

	For the Twelve Months Ended December 31,
Provision for credit losses	2023		2022
Provision for credit losses on loans	$	3,425	$	(554)
Provision for credit losses on unfunded commitments	(163)		—
Total provision (credit) for credit losses	$	3,262	$	(554)

The following tables present the balance in the Allowance for credit losses and the amortized cost basis in loans by portfolio segment and based on analysis status as of December 31, 2023 and the allowance for loan losses and the amortized cost basis in loans by portfolio as of December 31, 2022, respectively (in thousands):

	December 31, 2023
Allowance for credit losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Ending allowance balance attributable to loans:
Individually analyzed	$	1,928	$	27	$	—	$	—	$	1,955
Collectively analyzed	3,127		11,999		2,194		3,242		20,562
Total ending allowance balance	$	5,055	$	12,026	$	2,194	$	3,242	$	22,517

	December 31, 2022
Allowance for loan losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,078	$	38	$	—	$	31	$	1,147
Collectively evaluated for impairment	2,295		11,538		1,845		2,834		18,512
Total ending allowance balance	$	3,373	$	11,576	$	1,845	$	2,865	$	19,659

	December 31, 2023
Loans	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Loans individually analyzed	$	2,067	$	5,968	$	—	$	—	$	8,035
Loans collectively analyzed	262,329		1,116,957		277,992		307,351		1,964,629
Total ending loans balance	$	264,396	$	1,122,925	$	277,992	$	307,351	$	1,972,664

	December 31, 2022
Loans	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Loans individually evaluated for impairment	$	2,112	$	4,383	$	723	$	264	$	7,482
Loans collectively evaluated for impairment	250,181		992,530		284,949		294,306		1,821,966
Total ending loans balance	$	252,293	$	996,913	$	285,672	$	294,570	$	1,829,448

Financing Receivable, Modified

he following table summarizes the amortized cost basis of loans modified during the year ended December 31, 2023 (in thousands):

	December 31, 2023
Loans modified under ASU 2022-02	Principal Reduction		Interest Rate Reduction		Term Extension		Payment Delay		Combination		Total		(%) of Loan Class (1)
Commercial and agricultural:
Commercial & industrial	$	—	$	—	$	1,011	$	—	$	—	$	1,011	0.38	%
Agricultural	—		—		—		—		—		—		—	%
Commercial mortgages:
Construction	—		—		—		—		—		—		—	%
Commercial mortgages, other	—		—		272		1,878		—		2,150		0.22	%
Residential mortgages	—		—		—		—		—		—		—	%
Consumer loans:
Home equity lines and loans	—		—		116		—		—		116		0.13	%
Indirect consumer loans	—		—		—		—		—		—		—	%
Direct consumer loans	—		—		—		—		—		—		—	%
Total	$	—	$	—	$	1,399	$	1,878	$	—	$	3,277

(1) Represents the amortized cost basis of loans modified during the period as a percentage of the period-end loan balances by class.

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the year ended December 31, 2023:

Effect of loan modifications under ASU 2022-02	Principal reduction (in thousands)		Weighted average interest rate reduction (%)		Weighted average term extension (in months)	Weighted-average payment delay (in months)
Commercial and agricultural:
Commercial & industrial	$	—	—	%	12 months
Agricultural	$	—	—	%
Commercial mortgages:
Construction	$	—	—	%
Commercial mortgages, other	$	—	—	%	60 months	4 months
Residential mortgages	$	—	—	%
Consumer loans:
Home equity lines and loans	$	—	—	%	180 months
Indirect consumer loans	$	—	—	%
Direct consumer loans	$	—	—	%

Schedule Of Analysis Of Collateral Dependent Loans

The following table presents the amortized cost basis and related allowance for credit loss of individually analyzed loans considered to be collateral dependent as of December 31, 2023 (in thousands):

	December 31, 2023
	Amortized Cost Basis		Related Allowance
Commercial and agricultural:
Commercial and industrial (1) (2)	$	353	$	214
Agricultural (2)	26		26
Commercial mortgages:
Construction (1)	2,209		—
Commercial mortgages, other (1) (2) (3)	3,759		27
Total	$	6,347	$	267

(1) Secured by commercial real estate

(2) Secured by business assets

(3) Secured by residential real estate

Financing Receivable, Troubled Debt

The following is a summary of impaired loans as of December 31, 2022 (in thousands):

	December 31, 2022
With no related allowance recorded:	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
Commercial and agricultural:
Commercial and industrial	$	1,026	$	1,025	$	—
Commercial mortgages:
Construction	5		5		—
Commercial mortgages	4,346		4,341		—
Residential mortgages	767		760		—
Consumer loans:
Home equity lines and loans	154		138		—
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial	1,086		1,088		1,078
Commercial mortgages:
Commercial mortgages	38		38		38
Consumer loans:
Home equity lines and loans	126		127		31
Total	$	7,548	$	7,522	$	1,147

The following table presents the average amortized basis and interest income recognized for loans individually analyzed, by class, as of December 31, 2023 and loans individually evaluated for impairment, by class, as of December 31, 2022, (in thousands):

	December 31, 2023				December 31, 2022
With no related allowance recorded:	Average Amortized Cost Basis		Interest Income Recognized (1)		Average Amortized Cost Basis		Interest Income Recognized (1)
Commercial and agricultural:
Commercial and industrial	$	431	$	—	$	814	$	—
Agricultural	—		—		—		—
Commercial mortgages:
Construction	443		103		71		—
Commercial mortgages	3,988		5		4,211		14
Residential mortgages	288		—		864		37
Consumer loans:
Home equity lines & loans	99		—		153		—
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial	1,328		55		1,453		5
Agricultural	11		—		—		—
Commercial mortgages:
Construction	—		—		—		—
Commercial mortgages	33		—		1,258		—
Residential mortgages	—		—		—		—
Consumer loans:
Home equity lines and loans	25		—		137		—
Direct consumer loans	—		—		—		—
Total	$	6,646	$	163	$	8,961	$	56

(1) Cash basis interest income approximates interest income recognized.

Recorded Investment in Past Due and Non-Accrual Status by Class of Loans

The following table presents the amortized cost basis of non-accrual loans with no related allowance for credit losses, total non-accrual loans, and loans pasts due for 90 days or greater which are still accruing, by class of loans, as of December 31, 2023 and December 31, 2022 (in thousands):

	Non-accrual with no allowance for credit losses				Non-accrual				Loans Past Due 90 Days or More and Still Accruing
	2023		2022		2023		2022		2023		2022
Commercial and agricultural:
Commercial and industrial	$	76	$	1,035	$	1,904	$	1,946	$	10	$	1
Agricultural	—		—		26		—		—		—
Commercial mortgages:
Construction	2,209		5		2,209		5		—		—
Commercial mortgages	3,732		3,890		3,760		3,928		—		—
Residential mortgages	1,315		986		1,315		986		—		—
Consumer loans:
Credit cards	—		—		—		—		—		—
Home equity lines and loans	508		729		508		760		—		—
Indirect consumer loans	687		540		687		540		—		—
Direct consumer loans	2		13		2		13		—		—
Total	$	8,529	$	7,198	$	10,411	$	8,178	$	10	$	1

The following tables present the aging of the amortized cost basis in loans as of December 31, 2023 and December 31, 2022 (in thousands):

	December 31, 2023
	30 - 59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial and agricultural:
Commercial and industrial	$	1,196	$	31	$	10	$	1,237	$	262,903	$	264,140
Agricultural	—		—		—		—		256		256
Commercial mortgages:
Construction	2,164		—		2,207		4,371		134,516		138,887
Commercial mortgages	1,022		103		261		1,386		982,652		984,038
Residential mortgages	2,244		201		585		3,030		274,962		277,992
Consumer loans:
Credit cards	—		—		—		—		—		—
Home equity lines and loans	461		87		366		914		86,142		87,056
Indirect consumer loans	2,473		501		426		3,400		207,023		210,423
Direct consumer loans	2		20		—		22		9,850		9,872
Total	$	9,562	$	943	$	3,855	$	14,360	$	1,958,304	$	1,972,664

	December 31, 2022
	30 - 59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial and agricultural:
Commercial and industrial	$	74	$	3	$	1	$	78	$	251,966	$	252,044
Agricultural	—		—		—		—		249		249
Commercial mortgages:
Construction	—		—		—		—		108,243		108,243
Commercial mortgages	1,058		—		486		1,544		887,126		888,670
Residential mortgages	1,360		709		294		2,363		283,309		285,672
Consumer loans:
Credit cards	—		—		—		—		—		—
Home equity lines and loans	193		121		442		756		80,645		81,401
Indirect consumer loans	1,397		193		250		1,840		200,284		202,124
Direct consumer loans	2		19		1		22		11,023		11,045
Total	$	4,084	$	1,045	$	1,474	$	6,603	$	1,822,845	$	1,829,448

Risk Category of Recorded Investment of Loans by Class of Loans

Based on the analyses performed as of December 31, 2023, the risk category of the amortized cost basis of loans by class of loans and vintage, as well as the gross charge-offs by loan class and vintage for the period, are as follows (in thousands):

	Term Loans - Amortized Cost by Origination Year													Revolving Loans Amortized Cost		Revolving Loans Converted to Term		Total
	2023		2022		2021		2020		2019			Prior
Commercial & Industrial
Pass	$	41,601	$	35,768	$	17,506	$	10,195	$	33,436		$	7,746	$	92,114	$	—	$	238,366
Special Mention	185		2,103		—		—		—			432		9,730		10,672		23,122
Substandard	—		24		991		109		23			456		—		161		1,764
Doubtful	—		—		—		—		—			790		75		23		888
Total	41,786		37,895		18,497		10,304		33,459			9,424		101,919		10,856		264,140
Gross charge offs	—		—		—		—		9			272		—		—		281
Agricultural
Pass	—		15		150		—		—			—		65		—		230
Special Mention	—		—		—		—		—			—		—		—		—
Substandard	—		—		—		—		—			—		—		26		26
Doubtful	—		—		—		—		—			—		—		—		—
Total	—		15		150		—		—			—		65		26		256
Gross charge offs	—		—		—		—		—			—		—		—		—
Construction
Pass	11,275		1,445		—		—		28			1,178		122,752		—		136,678
Special Mention	—		—		—		—		—			—		—		—		—
Substandard	—		—		—		—		2,207			2		—		—		2,209
Doubtful	—		—		—		—		—			—		—		—		—
Total	11,275		1,445		—		—		2,235			1,180		122,752		—		138,887
Gross charge offs	—		—		—		—		—			—		—		—		—
Commercial mortgages
Pass	91,636		207,277		123,040		90,635		39,175			168,878		233,999		—		954,640
Special Mention	—		2,533		8,189		2,609		—			3,216		—		5,426		21,973
Substandard	272		1,107		345		1,022		—			4,143		97		412		7,398
Doubtful	—		—		—		—		—			27		—		—		27
Total	91,908		210,917		131,574		94,266		39,175			176,264		234,096		5,838		984,038
Gross charge offs	—		—		—		—		—			—		—		—		—
Residential mortgages
Not rated	14,027		50,556		49,428		69,070		15,093			44,628		33,875		—		276,677
Substandard	—		75		346		—		169			725		—		—		1,315
Total	14,027		50,631		49,774		69,070		15,262			45,353		33,875		—		277,992
Gross charge offs	—		32		—		—		—			—		—		—		32
Home equity lines and loans
Not rated	13,743		16,621		5,797		3,110		2,845			10,342		34,090		—		86,548
Substandard	—		77		—		—		—		(1)	293		25		113		508
Total	13,743		16,698		5,797		3,110		2,845			10,635		34,115		113		87,056
Gross charge offs	—		—		—		—		—			—		6		—		6
Indirect consumer
Not rated	72,264		98,008		23,015		9,192		3,870			3,387		—		—		209,736
Substandard	119		246		135		48		36			103		—		—		687
Total	72,383		98,254		23,150		9,240		3,906			3,490		—		—		210,423
Gross charge offs	184		375		215		121		21			55		—		—		971
Direct consumer
Not rated	3,005		2,745		785		256		53			357		2,669		—		9,870
Substandard	—		—		—		2		—			—		—		—		2
Total	3,005		2,745		785		258		53			357		2,669		—		9,872
Gross charge offs	4		15		8		6		—			54		6		—		93
	—						—		—			—		—		—
Total loans	$	248,127	$	418,600	$	229,727	$	186,248	$	96,935		$	246,703	$	529,491	$	16,833	$	1,972,664
Total Gross charge-offs	$	188	$	422	$	223	$	127	$	30		$	381	$	12	$	—	$	1,383

Prior to the adoption of ASC 326-Financial Instruments-Credit Losses, loans not meeting the criteria above that were analyzed individually as part of the above described process were considered pass rated loans as of December 31, 2022. Based upon the analyses performed as of December 31, 2022, the risk category of the recorded investment of loans by class of loans was as follows (in thousands):

	December 31, 2022
	Not Rated		Pass		Special Mention		Substandard		Doubtful		Total
Commercial and agricultural:
Commercial and industrial	$	—	$	235,900	$	13,349	$	2,899	$	893	$	253,041
Agricultural	—		250		—		—		—		250
Commercial mortgages:
Construction	—		108,488		178		5		—		108,671
Commercial mortgages	—		860,389		23,938		7,825		38		892,190
Residential mortgages	285,459		—		—		986		—		286,445
Consumer loans
Credit cards	—		—		—		—		—		—
Home equity lines and loans	80,942		—		—		760		—		81,702
Indirect consumer loans	202,050		—		—		540		—		202,590
Direct consumer loans	11,094		—		—		13		—		11,107
Total	$	579,545	$	1,205,027	$	37,465	$	13,028	$	931	$	1,835,996

Recorded Investment in Residential and Consumer Loans Based on Payment Activity

For residential and consumer loan classes, the Corporation evaluated credit quality based on the aging status of the loan, which was presented by payment activity. The following table presents the amortized cost basis in residential and consumer loans based on payment activity as of December 31, 2023 (in thousands):

	December 31, 2023
			Consumer Loans
	Residential Mortgages		Home Equity Lines and Loans		Indirect Consumer Loans		Other Direct Consumer Loans
Performing	$	276,677	$	86,548	$	209,736	$	9,870
Non-Performing	1,315		508		687		2
Total	$	277,992	$	87,056	$	210,423	$	9,872

Prior to the adoption of ASC 326-Financial Instruments-Credit Losses, the Corporation also evaluated credit quality based on the aging status of the loan, which was presented, by payment activity. The following table presents the recorded investment in residential and consumer loans based on payment activity as of December 31, 2022 (in thousands):

	December 31, 2022
			Consumer Loans
	Residential Mortgages		Home Equity Lines and Loans		Indirect Consumer Loans		Other Direct Consumer Loans
Performing	$	285,459	$	80,942	$	202,050	$	11,094
Non-Performing	986		760		540		13
Total	$	286,445	$	81,702	$	202,590	$	11,107

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PREMISES AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2023

Property, Plant and Equipment [Abstract]

Schedule of Premises and Equipment

Premises and equipment at December 31, 2023 and 2022 are as follows (in thousands):

	2023		2022
Land	$	4,664	$	4,674
Buildings	40,727		40,419
Projects in progress	11		82
Equipment and furniture	37,237		36,964
Leasehold improvements	4,874		4,874
	87,513		87,013
Less accumulated depreciation and amortization	72,942		70,900
Net book value	$	14,571	$	16,113

The Corporation has included these finance leases in premises and equipment as follows:

	2023		2022
Buildings	$	5,572	$	5,572
Accumulated depreciation	(2,872)		(2,540)
Net book value	$	2,700	$	3,032

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LEASES (Tables)

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

Assets and Liabilities, Lessee

Leased branch properties at December 31, 2023 and December 31, 2022 consist of the following (in thousands):

	2023		2022
Operating lease right-of-use asset	$	6,449	$	7,234
Less: accumulated amortization	(801)		(785)
Less: lease termination	—		—
Add: new lease agreement and modifications	—		—
Operating lease right-of-use-assets, net	$	5,648	$	6,449

Lessee, Operating Lease, Liability, Maturity

The following is a schedule by year of the undiscounted cash flows of the operating lease liabilities, excluding CAM charges, as of December 31, 2023 (in thousands):

Year	Amount
2024	$	924
2025	841
2026	845
2027	854
2028	721
2029 and thereafter	2,446
Total minimum lease payments	6,631
Less: amount representing interest	(804)
Present value of net minimum lease payments	$	5,827

Finance Lease, Liability, Maturity

The following is a schedule by year of future minimum lease payments under the capitalized lease, together with the present value of net minimum lease payments as of December 31, 2023 (in thousands):

Year	Amount
2024	$	391
2025	409
2026	425
2027	428
2028	428
2029 and thereafter	1,560
Total minimum lease payments	3,641
Less: amount representing interest	(591)
Present value of net minimum lease payments	$	3,050

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GOODWILL AND INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes in Goodwill

The changes in goodwill included in the core banking segment during the years ended December 31, 2023 and 2022 were as follows (in thousands):

	2023		2022
Beginning of year	$	21,824	$	21,824
Acquired goodwill	—		—
End of year	$	21,824	$	21,824

Schedule of Acquired Intangible Assets

Acquired intangible assets were as follows at December 31, 2023 and 2022 (in thousands):

	At December 31, 2023				At December 31, 2022
	Balance Acquired		Accumulated Amortization		Balance Acquired		Accumulated Amortization
Core deposit intangibles	$	5,975	$	5,975	$	5,975	$	5,975
Other customer relationship intangibles	5,633		5,633		5,633		5,633
Total	$	11,608	$	11,608	$	11,608	$	11,608

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DEPOSITS (Tables)

12 Months Ended

Dec. 31, 2023

Deposits [Abstract]

Summary of Deposits

A summary of deposits at December 31, 2023 and 2022 is as follows (in thousands):

	2023		2022
Non-interest-bearing demand deposits	$	653,166	$	733,329
Interest-bearing demand deposits	291,138		271,645
Insured money market deposits	623,714		640,840
Savings deposits	249,144		279,029
Certificates of deposits $250,000 or less	365,058		272,182
Certificates of deposits greater than $250,000	76,804		31,547
Brokered deposits 1	142,776		73,452
Other time deposits 2	27,627		25,203
Total	$	2,429,427	$	2,327,227

1 Brokered deposits which are individually $250,000 and under.

2 Includes Individual Retirement Accounts and Christmas Club Accounts.

Scheduled Maturities of Time Deposits

Scheduled maturities of time deposits at December 31, 2023, are summarized as follows (in thousands):

Year	Maturities
2024 1	$	578,675
2025	13,244
2026	4,313
2027 2	11,688
2028	1,395
2029	2,950
Total	$	612,265

1 $133.3 million of 2024 maturities represent brokered deposits.

2 $9.5 million of 2027 maturities represent brokered deposits which are

callable by the Corporation on February 28, 2024 and monthly thereafter.

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FEDERAL HOME LOAN BANK TERM ADVANCES AND OVERNIGHT ADVANCES (Tables)

12 Months Ended

Dec. 31, 2023

Advance from Federal Home Loan Bank [Abstract]

Schedule of Federal Home Loan Bank, Advances, by Branch of FHLB Bank

The following is a summary of FHLBNY overnight advances as of December 31, 2023 and 2022. The carrying amount includes the advance balance plus purchase accounting adjustments that are amortized over the term of the advance (in thousands):

2023					2022
Amount		Rate		Maturity Date	Amount		Rate		Maturity Date
$	31,920	5.64	%	January 2, 2024	$	95,810	4.61	%	January 3, 2023

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REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)

12 Months Ended

Dec. 31, 2023

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following tables present the Corporation's non-interest income by revenue stream and reportable segment for the years ended December 31, 2023 and 2022 (in thousands). Items outside the scope of ASC 606 are noted as such.

	Year ended December 31, 2023
Revenue by Operating Segment:	Core Banking		WMG		Holding Company, CFS, and CRM(b)(c)		Total
Non-interest income
Service charges on deposit accounts
Overdraft fees	$	3,096	$	—	$	—	$	3,096
Other	823		—		—		823
Interchange revenue from debit card transactions	4,606		—		—		4,606
WMG fee income	—		10,460		—		10,460
CFS fee and commission income	—		—		995		995
Net gains (losses) on sales of OREO	37		—		—		37
Net gains on sales of loans(a)	144		—		—		144
Net gains on sales of securities(a)	(39)		—		—		(39)
Loan servicing fees(a)	144		—		—		144
Change in fair value of equity securities(a)	228		—		(125)		103
Income from bank-owned life insurance(a)	43		—		—		43
Other(a)	4,068		—		69		4,137
Total non-interest income	$	13,150	$	10,460	$	939	$	24,549

(a) Not within scope of ASC 606.

(b) The Holding Company, CFS, and CRM column above includes amounts to eliminate transactions between segments.

(c) Chemung Risk Management, Inc. (CRM) was dissolved December 6, 2023.

	Year ended December 31, 2022
Revenue by Operating Segment:	Core Banking		WMG		Holding Company, CFS, and CRM(b)		Total
Non-interest income
Service charges on deposit accounts
Overdraft fees	$	3,084	$	—	$	—	$	3,084
Other	704		—		—		704
Interchange revenue from debit card transactions	4,603		—		—		4,603
WMG fee income	—		10,280		—		10,280
CFS fee and commission income	—		—		1,079		1,079
Net gains (losses) on sales of OREO	60		—		—		60
Net gains on sales of loans(a)	107		—		—		107
Loan servicing fees(a)	153		—		—		153
Change in fair value of equity securities(a)	(353)		—		4		(349)
Income from bank-owned life insurance(a)	46		—		—		46
Other(a)	1,821		—		(152)		1,669
Total non-interest income	$	10,225	$	10,280	$	931	$	21,436

(a) Not within scope of ASC 606.

(b) The Holding Company, CFS, and CRM column above includes amounts to eliminate transactions between segments.

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DERIVATIVES (Tables)

12 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments

The following table presents information regarding derivative financial instruments, at December 31:

2023
Derivatives not designated as hedging instruments:	Number of Instruments	Notional Amount		Weighted Average Maturity (in years)	Weighted Average Interest Rate Received	Weighted Average Contract Pay Rate	Fair Value
Interest rate swap agreements on loans with commercial loan customers	47	$	315,526	6.6	4.36%	7.36%	$	(19,355)
Interest rate swap agreements with third-party counter-parties	47	315,526		6.6	7.36%	4.36%	19,316
Risk participation agreements	4	16,432		7.8			—
Total	98	$	647,484				$	(39)

2022
Derivatives not designated as hedging instruments:	Number of Instruments	Notional Amount		Weighted Average Maturity (in years)	Weighted Average Interest Rate Received		Weighted Average Contract Pay Rate		Fair Value
Interest rate swap agreements on loans with commercial loan customers	42	$	265,619	7.1	3.94	%	6.35	%	$	(26,436)
Interest rate swap agreements with third-party counter-parties	42	265,619		7.1	6.35	%	3.94	%	26,381
Risk participation agreements	3	13,764		9.6					—
Total	87	$	545,002						$	(55)

Schedule of Derivatives Not Designated as Hedging Instruments, Statements of Income

Amounts included in the Consolidated Statements of Income related to derivatives not designated as hedging were as follows:

	Years Ended December 31,
Derivatives not designated as hedging instruments:	2023		2022
Interest rate swap agreements with commercial loan customers:
Unrealized (loss) recognized in non-interest income	$	7,081	$	(17,430)
Interest rate swap agreements with third-party counter-parties:
Unrealized gain recognized in non-interest income	(7,065)		17,698
Risk participation agreements:
Unrealized gain (loss) recognized in non-interest income	—		15
Unrealized gain (loss) recognized in non-interest income	$	16	$	283

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Components of Income Tax Expense Attributable to Income from Operations

For the years ended December 31, 2023 and 2022, income tax expense attributable to income from operations consisted of the following (in thousands):

	2023		2022
Current expense:
Federal	$	7,149	$	5,501
State	961		883
Total current	8,110		6,384
Deferred expense/(benefit):
Federal	(1,271)		1,365
State	(338)		357
Total deferred	(1,609)		1,722
Income tax expense	$	6,501	$	8,106

Reconciliation of Income Tax Expense

Income tax expense differed from the amounts computed by applying the U.S. Federal statutory income tax rate to income before income tax expense as follows (in thousands):

	2023			2022
Statutory federal tax rate	21		%	21		%
Tax computed at statutory rate	$	6,615		$	7,747
Increase (reduction) resulting from:
Tax-exempt income	(509)			(434)
831(b) premium adjustment	(202)			(309)
Dividend exclusion	(9)			(7)
State taxes, net of Federal impact	580			988
Nondeductible interest expense	38			8
Other items, net	(12)			113
Income tax expense	$	6,501		$	8,106
Effective tax rate	20.6		%	22.0		%

Deferred Tax Assets and Deferred Tax Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2023 and 2022, are presented below (in thousands):

Deferred tax assets:	2023		2022
Allowance for credit losses	$	5,775	$	5,147
Depreciation	1,408		1,133
Deferred compensation and directors' fees	1,388		1,128
Operating lease liabilities	1,484		1,688
Purchase accounting adjustment – fixed assets	153		153
Net unrealized losses on securities available for sale	22,296		25,310
Defined benefit pension and other benefit plans	1,054		1,320
Nonaccrued interest	484		415
Accrued expense	96		117
Other items, net	133		112
Total gross deferred tax assets	34,271		36,523
Deferred tax liabilities:
Deferred loan fees and costs	1,389		1,358
Prepaid pension	4,144		4,055
Discount accretion	121		108
Core deposit intangible	1,790		1,733
REIT dividend	—		561
Operating lease right-of-use assets	1,484		1,688
Accrual for employee benefit plans	8		5
Other	210		219
Total gross deferred tax liabilities	9,146		9,727
Net deferred tax asset	$	25,125	$	26,796

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PENSION PLAN AND OTHER BENEFIT PLANS (Tables)

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Change in Benefit Obligation

The following table presents (1) changes in the plan's projected benefit obligation and plan assets, and (2) the plan's funded status at December 31, 2023 and 2022 (in thousands):

Change in projected benefit obligation:	2023		2022
Benefit obligation at beginning of year	$	30,506	$	40,404
Service cost	—		—
Interest cost	1,605		1,130
Actuarial (gain) loss	1,098		(8,856)
Curtailments	—		—
Settlements	—		—
Benefits paid	(2,186)		(2,172)
Benefit obligation at end of year	$	31,023	$	30,506

The following table presents (1) changes in the plan's accumulated postretirement benefit obligation and (2) the plan's funded status at December 31, 2023 and 2022 (in thousands):

Changes in accumulated postretirement benefit obligation:	2023		2022
Accumulated postretirement benefit obligation - beginning of year	$	95	$	194
Service cost	—		—
Interest cost	5		3
Participant contributions	18		18
Amendments	—		—
Actuarial (gain) loss	3		(71)
Benefits paid	(45)		(49)
Accumulated postretirement benefit obligation at end of year	$	76	$	95

The following table presents Executive Supplemental Pension plan status at December 31, 2023 and 2022 (in thousands):

Change in projected benefit obligation:	2023		2022
Benefit obligation at beginning of year	$	948	$	1,173
Service cost	—		—
Interest cost	48		32
Actuarial (gain) loss	37		(148)
Benefits paid	(109)		(109)
Projected benefit obligation at end of year	$	924	$	948

Change in Plan Assets

Change in plan assets:	2023		2022
Fair value of plan assets at beginning of year	$	44,656	$	52,987
Actual return on plan assets	4,480		(6,159)
Employer contributions	—		—
Settlements	—		—
Benefits paid	(2,186)		(2,172)
Fair value of plan assets at end of year	$	46,950	$	44,656
Funded status	$	15,927	$	14,150

Change in plan assets:	2023		2022
Fair value of plan assets at beginning of year	$	—	$	—
Employer contribution	27		31
Plan participants’ contributions	18		18
Benefits paid	(45)		(49)
Fair value of plan assets at end of year	$	—	$	—
Unfunded status	$	(76)	$	(95)

Changes in plan assets:	2023		2022
Fair value of plan assets at beginning of year	$	—	$	—
Employer contributions	109		109
Benefits paid	(109)		(109)
Fair value of plan assets at end of year	$	—	$	—
Unfunded status	$	(924)	$	(948)

Amount Recognized in Accumulated Other Comprehensive Income

Amount recognized in accumulated other comprehensive income (loss) at December 31, 2023 and 2022 consist of the following (in thousands):

	2023		2022
Net actuarial loss	$	3,961	$	4,988
Prior service cost	—		—
Total before tax effects	$	3,961	$	4,988

Amount recognized in accumulated other comprehensive income (loss) at December 31, 2023 and 2022 consist of the following (in thousands):

	2023		2022
Net actuarial loss	$	102	$	118
Prior service credit	—		—
Total before tax effects	$	102	$	118

Amounts recognized in accumulated other comprehensive income (loss) at December 31, 2023 and 2022 consist of the following (in thousands):

	2023		2022
Net actuarial loss	$	202	$	172
Prior service cost	—		—
Total before tax effects	$	202	$	172

Assumptions Used in Determining Benefit Obligation

The principal actuarial assumptions used in determining the projected benefit obligation as of December 31, 2023 and 2022 were as follows:

	2023		2022
Discount rate	5.07	%	5.42	%
Assumed rate of future compensation increase	N/A		N/A
Weighted-average interest crediting rate	N/A		N/A

Weighted-average assumption for disclosure as of December 31:	2023		2022
Discount rate	5.07	%	5.42	%
Assumed rate of future compensation increase	N/A		N/A
Weighted-average interest crediting rate	N/A		N/A

Components of Net Periodic Benefit Cost

Components of net periodic benefit cost and other amounts recognized in other comprehensive income (loss) in 2023 and 2022 consist of the following (in thousands):

Net periodic benefit cost	2023		2022
Service cost, benefits earned during the year	$	—	$	—
Interest cost on projected benefit obligation	1,605		1,130
Expected return on plan assets	(2,391)		(2,851)
Amortization of net loss	36		—
Amortization of  prior service cost	—		—
Recognized (gain) loss due to settlements	—		—
Net periodic cost (benefit)	$	(750)	$	(1,721)

The components of net periodic postretirement benefit cost for the years ended December 31, 2023 and 2022 are as follows (in thousands):

Net periodic cost (benefit)	2023		2022
Service cost	$	—	$	—
Interest cost	5		3
Expected return on plan assets	—		—
Amortization of prior service benefit	—
Recognized actuarial loss	19		18
Recognized prior service benefit due to curtailments	—		—
Net periodic postretirement cost (benefit)	$	24	$	21

The components of net periodic benefit cost for the years ended December 31, 2023 and 2022 are as follows (in thousands):

Net periodic benefit cost	2023		2022
Service cost	$	—	$	—
Interest cost	48		32
Recognized actuarial loss	7		19
Net periodic postretirement benefit cost	$	55	$	51

Schedule of Other Amounts Recognized in Other Comprehensive Income

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):	2023		2022
Net actuarial (gain) loss	$	(990)	$	154
Recognized loss	(37)		—
Amortization of prior service cost	—		—
Total recognized in other comprehensive income (loss) (before tax effect)	$	(1,027)	$	154
Total recognized in net (benefit) cost and other comprehensive income (loss) (before tax effect)	$	(1,777)	$	(1,567)

Other changes in plan assets and benefit obligations   recognized  in other comprehensive income (loss):	2023		2022
Net actuarial (gain) loss	$	3	$	(71)
Recognized actuarial loss	(19)		(18)
Prior service credit			—
Amortization of prior service benefit			—
Total recognized in other comprehensive income (loss)(before tax effect)	$	(16)	$	(89)
Total recognized in net benefit cost and other comprehensive income (loss) (before tax effect)	$	8	$	(68)

Other changes in plan assets and benefit obligation recognized in other comprehensive income (loss):	2023		2022
Net actuarial (gain) loss	$	37	$	(148)
Recognized actuarial loss	(7)		(20)
Total recognized in other comprehensive income (loss) (before tax effect)	$	30	$	(168)
Total recognized in net benefit cost and other comprehensive income (loss) (before tax effect)	$	85	$	(117)

Assumptions Used in Determining Net Periodic Benefit Cost

The principal actuarial assumptions used in determining the net periodic benefit cost for the years ended December 31, 2023, 2022 were as follows:

	2023		2022
Discount rate	5.42	%	2.87	%
Expected return on assets	5.50	%	5.50	%
Assumed rate of future compensation increase	N/A		N/A
Weighted-average interest crediting rate	N/A		N/A

Weighted-average assumptions for net periodic cost as of December 31:	2023		2022
Discount rate	5.42	%	2.87	%
Expected asset return	N/A		N/A
Assumed rate of future compensation increase	N/A		N/A
Weighted-average interest crediting rate	N/A		N/A

Target Assets Allocations

The expected return on plan assets was determined based on a CAPM using historical and expected future returns of the various asset classes, reflecting the target allocations described below.

Asset Class	Target Allocation 2023	Percentage of Plan Assets at December 31,				Expected Long-Term Rate of Return
		2023		2022
Large cap domestic equities	30% - 60%	41	%	39	%	11.8	%
Mid-cap domestic equities	0% - 8%	2	%	2	%	11.5	%
Small-cap domestic equities	0% - 6%	1	%	1	%	9.7	%
International equities	0% - 8%	3	%	3	%	6.9	%
Intermediate fixed income	33% - 63%	37	%	43	%	7.0	%
Alternative assets	0% - 15%	—	%	—	%	2.9	%
Cash	0% - 20%	16	%	12	%	1.2	%
Total		100	%	100	%

Fair Value of Plan Assets

The fair value of the plan assets at December 31, 2023 and 2022, by asset class are as follows (in thousands):

			Fair Value Measurement at December 31, 2023 Using
Plan Assets	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash	$	7,503	$	7,503	$	—	$	—
Equity securities:
U.S. companies	19,374		19,374		—		—
Mutual funds	17,905		17,905		—		—
Debt securities:
U.S. Treasuries/Government bonds	1,920		1,920		—		—
U.S. Corporate bonds	248		248		—		—
Total plan assets	$	46,950	$	46,950	$	—	$	—

			Fair Value Measurement at December 31, 2022 Using
Plan Assets	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash	$	5,374	$	5,374	$	—	$	—
Equity securities:
U.S. companies	17,526		17,526		—		—
Mutual funds	19,619		19,619		—		—
Debt securities:
U.S. Treasuries/Government bonds	1,891		1,891		—		—
U.S. Corporate bonds	246		246		—		—
Total plan assets	$	44,656	$	44,656	$	—	$	—

Estimated Benefit Payments

The following table presents the estimated benefit payments for each of the next five years and the aggregate amount expected to be paid in years six through ten for the pension plan (in thousands):

Calendar Year	Future Expected Benefit Payments
2024	$	2,390
2025	$	2,369
2026	$	2,372
2027	$	2,353
2028	$	2,324
2029-2032	$	11,222

The following table presents the estimated benefit payments for each of the next five years and the aggregate amount expected to be paid in years six through ten (in thousands):

Calendar Year	Future Estimated Benefit Payments
2024	$	12
2025	$	11
2026	$	11
2027	$	10
2028	$	9
2029-2032	$	32

The following table presents the estimated benefit payments for each of the next five years and the aggregate amount expected to be paid in years six through ten for the Supplemental Pension Plan (in thousands):

Calendar Year	Future Estimated Benefit Payments
2024	$	108
2025	$	105
2026	$	100
2027	$	96
2028	$	90
2029-2032	$	368

Weighted-Average Assumption for Disclosure of Health Care Cost Trend

Weighted-average assumption for disclosure as of December 31:	2023	2022
Discount rate	5.07%	5.42%
Assumed rate of future compensation increase	N/A	N/A
Health care cost trend: Initial (Pre-65/Post 65)	8.00% / 7.00%	7.50% / 6.50%
Health care cost trend: Ultimate (Pre-65/Post 65)	4.75% / 4.75%	4.75% / 4.75%
Year ultimate cost trend reached	2033 / 2032	2032 / 2030

Weighted-Average Assumption for Net Periodic Cost

Weighted-average assumptions for net periodic cost as of December 31:	2023	2022
Discount rate	5.42%	2.87%
Expected return on plan assets	N/A	N/A
Assumed rate of future compensation increase	N/A	N/A
Health care cost trend: Initial	8.00% / 7.00%	7.50% / 6.50%
Health care cost tread: Ultimate	4.75% / 4.75%	4.75% / 4.75%
Year ultimate reached	2033 / 2032	2032 / 2030

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STOCK COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Summary of Restricted Stock Activity

A summary of restricted stock activity as of December 31, 2023, and changes during the year ended is presented below:

	Shares	Weighted–Average Grant Date Fair Value
Nonvested at December 31, 2022	55,402	$	44.57
Granted	34,658	$	46.96
Vested	(26,750)	$	44.60
Forfeited or Cancelled	(326)	$	43.73
Nonvested at December 31, 2023	62,984	$	45.87

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RELATED PARTY TRANSACTIONS (Tables)

12 Months Ended

Dec. 31, 2023

Related Party Transactions [Abstract]

Summary of Related Party Loans

These loans are summarized as follows for the years ended December 31, 2023 and 2022 (in thousands):

	2023		2022
Balance at beginning of year	$	28,062	$	51,192
New loans or additional advances	77		990
Effect of changes in composition of related parties	(4)		(22,607)
Repayments	(2,077)		(1,513)
Balance at end of year	$	26,058	$	28,062

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COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Contractual Amounts of Financial Instruments with Off-Balance Sheet Risk

The contractual amounts of financial instruments with off-balance sheet risk at year-end were as follows (in thousands):

	2023				2022
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	23,809	$	78,790	$	44,481	$	75,028
Unused lines of credit	$	3,387	$	332,439	$	2,887	$	326,188
Standby letters of credit	$	—	$	11,317	$	—	$	17,211

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PARENT COMPANY FINANCIAL INFORMATION (Tables)

12 Months Ended

Dec. 31, 2023

Condensed Financial Information Disclosure [Abstract]

Parent Company Statement of Financial Position

Condensed parent company only financial statement information of Chemung Financial Corporation is as follows (investment in subsidiaries is recorded using the equity method of accounting) (in thousands):

BALANCE SHEETS - DECEMBER 31	2023		2022
Assets:
Cash and cash equivalents	$	6,635	$	2,708
Investment in subsidiary - Chemung Canal Trust Company	185,159		157,493
Investment in subsidiary - CFS Group, Inc.	1,418		1,294
Investment in subsidiary - Chemung Risk Management, Inc.1	—		2,887
Dividends receivable from subsidiary bank	1,469		1,455
Equity investments, at fair value	204		329
Other assets	1,850		1,728
Total assets	$	196,735	$	167,894
Liabilities and shareholders' equity:
Dividends payable	$	1,469	$	1,455
Other liabilities	25		51
Total liabilities	1,494		1,506
Shareholders' equity:
Total shareholders' equity	195,241		166,388
Total liabilities and shareholders' equity	$	196,735	$	167,894

Parent Company Statement of Income

STATEMENTS OF INCOME - YEARS ENDED DECEMBER 31	2023		2022
Dividends from subsidiary bank and non-bank	$	7,204	$	7,051
Interest and dividend income	11		7
Non-interest income	(125)		10
Non-interest expenses	345		586
Income before impact of subsidiaries' undistributed earnings	6,745		6,482
Equity in undistributed earnings of Chemung Canal Trust Company	18,267		21,638
Equity in undistributed earnings of CFS Group, Inc.	124		220
Distributed earnings of Chemung Risk Management, Inc.1	(301)		250
Income before income tax	24,835		28,590
Income tax benefit	(165)		(193)
Net income	$	25,000	$	28,783

1 Chemung Risk Management, Inc. was dissolved effective December 6, 2023.

Parent Company Statement of Cash Flows

STATEMENTS OF CASH FLOWS - YEARS ENDED DECEMBER 31	2023		2022
Cash flows from operating activities:
Net Income	$	25,000	$	28,783
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed earnings of Chemung Canal Trust Company	(18,267)		(21,638)
Equity in undistributed earnings of CFS Group, Inc.	(124)		(220)
Distributed earnings of Chemung Risk Management, Inc.1	301		(250)
Change in dividend receivable	(14)		(5)
Change in other assets	(122)		(211)
Change in other liabilities	(1,085)		(733)
Expense related to restricted stock units directors' deferred compensation plan	20		20
Expense to employee restricted stock awards	1,139		795
Net cash provided by operating activities	6,848		6,541
Cash flow from investing activities:
Proceeds from dissolution of Chemung Risk Management, Inc.1	2,634		—
Net cash provided by investing activities	2,634		—
Cash flow from financing activities:
Cash dividends paid	(5,840)		(5,797)
Purchase of treasury stock	(316)		(933)
Sale of treasury stock	601		424
Net cash used in financing activities	(5,555)		(6,306)
Increase (decrease) in cash and cash equivalents	3,927		235
Cash and cash equivalents at beginning of year	2,708		2,473
Cash and cash equivalents at end of year	$	6,635	$	2,708

1 Chemung Risk Management, Inc. was dissolved effective December 6, 2023.

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FAIR VALUES (Tables)

12 Months Ended

Dec. 31, 2023

Fair Value Disclosures [Abstract]

Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

			Fair Value Measurement at December 31, 2023 Using
Financial Assets:	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. treasury notes and bonds	$	55,332	$	55,332	$	—	$	—
Mortgage-backed securities, residential	403,824		—		403,824		—
Obligations of states and political subdivisions	38,686		—		38,686		—
Corporate bonds and notes	20,669		—		13,139		7,530
SBA loan pools	65,482		—		65,482		—
Total available for sale securities	$	583,993	$	55,332	$	521,131	$	7,530
Equity Investments	$	2,552	$	2,552	$	—	$	—
Derivative assets	$	23,942	$	—	$	23,942	$	—
Financial Liabilities:
Derivative liabilities	$	23,981	$	—	$	23,981	$	—

			Fair Value Measurement at December 31, 2022 Using
Financial Assets:	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. treasury notes and bonds	$	55,574	$	55,574	$	—	$	—
Mortgage-backed securities, residential	435,131		—		435,131		—
Obligations of states and political subdivisions	38,892		—		38,892		—
Corporate bonds and notes	21,970		—		21,970		—
SBA loan pools	81,022		—		81,022		—
Total available for sale securities	$	632,589	$	55,574	$	577,015	$	—
Equity investments	$	2,246	$	2,246	$	—	$	—
Derivative assets	$	26,706	$	—	$	26,706	$	—
Financial Liabilities:
Derivative liabilities	$	26,761	$	—	$	26,761	$	—

Information Related To Level 3 Non-Recurring Fair Value Measurement

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using unobservable inputs (Level 3) for the years ended December 31, 2023 and 2022.

Corporate Bonds: Level 3 Financial Assets	2023		2022
Balance of recurring Level 3 assets at January 1	$	—	$	—
Total gains and losses for the period:
Included in other comprehensive income	(1,096)		—
Transfers into Level 3	9,955		—
Transfers out of Level 3	(1,329)		—
Balance of recurring Level 3 assets at December 31	$	7,530	$	—

December 31, 2023	Fair Value		Valuation Techniques	Unobservable Input	Range [Weighted Average] at
Corporate bonds and notes	$	7,530	Discounted cash flow	Market discount rate	12.50% -12.50% [12.50%]

Carrying Value and Estimated Fair Value of Other Financial Instruments

The carrying amounts and estimated fair values of other financial instruments, at December 31, 2023 and December 31, 2022, are as follows (in thousands):

			Fair Value Measurements at December 31, 2023 Using
Financial assets:	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Estimated Fair Value 1
Cash and due from financial institutions	$	22,247	$	22,247	$	—	$	—	$	22,247
Interest-bearing deposits in other financial institutions	14,600		14,600		—		—		14,600
Equity investments	3,046		3,046		—		—		3,046
Securities available for sale	583,993		55,332		521,131		7,530		583,993
Securities held to maturity	785		—		—		785		785
FHLBNY and FRBNY stock	5,498		—		—		—		N/A
Loans, net and loans held for sale	1,972,664		—		—		1,875,390		1,875,390
Derivative assets	23,942		—		23,942		—		23,942
Financial liabilities:
Deposits:
Demand, savings, and insured money market deposits	$	1,817,162	$	1,817,162	$	—	$	—	$	1,817,162
Time deposits	612,265		—		609,863		—		609,863
FHLBNY overnight advances	31,920		—		31,925		—		31,925
Derivative liabilities	23,981		—		23,981		—		23,981

1 Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

			Fair Value Measurements at December 31, 2022 Using
Financial Assets:	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Estimated Fair Value 1
Cash and due from financial institutions	$	29,309	$	29,309	$	—	$	—	$	29,309
Interest-bearing deposits in other financial institutions	26,560		26,560		—		—		26,560
Equity investments	2,830		2,830		—		—		2,830
Securities available for sale	632,589		55,574		577,015		—		632,589
Securities held to maturity	2,424		—		1,450		952		2,402
FHLBNY and FRBNY stock	8,197		—		—		—		N/A
Loans, net and loans held for sale	1,829,448		—		—		1,757,171		1,757,171
Derivative assets	26,706		—		26,706		—		26,706
Financial liabilities:
Deposits:
Demand, savings, and insured money market deposits	$	1,924,843	$	1,924,843	$	—	$	—	$	1,924,843
Time deposits	402,384		—		403,572		—		403,572
FHLBNY overnight advances	95,810		—		—		—		—
Derivative liabilities	26,761		—		26,761		—		26,761

1 Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

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REGULATORY CAPITAL REQUIREMENTS (Tables)

12 Months Ended

Dec. 31, 2023

Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]

Actual Capital Amounts and Ratios of Corporation and Bank

The actual capital amounts and ratios of the Corporation and the Bank are presented in the following tables (in thousands):

	Actual				Minimal Capital Adequacy				Minimal Capital Adequacy with Capital Buffer				To Be Well Capitalized Under Prompt Corrective Action Provisions
As of December 31, 2023	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital (to Risk Weighted Assets):
Consolidated	$	262,864	13.26	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	252,783	12.76	%	$	158,438	8.00	%	$	207,950	10.50	%	$	198,048	10.00	%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	239,429	12.08	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	229,348	11.58	%	$	118,829	6.00	%	$	168,341	8.50	%	$	158,438	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	239,429	12.08	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	229,348	11.58	%	$	89,122	4.50	%	$	138,634	7.00	%	$	128,731	6.50	%
Tier 1 Capital (to Average Assets):
Consolidated	$	239,429	8.62	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	229,348	8.26	%	$	111,034	4.00	%	N/A		N/A		$	138,792	5.00	%

	Actual				Minimum Capital Adequacy				Minimal Capital Adequacy with Capital Buffer				To Be Well Capitalized Under Prompt Corrective Action Provisions
As of December 31, 2022	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital (to Risk Weighted Assets):
Consolidated	$	239,478	12.57	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	230,560	12.10	%	$	152,414	8.00	%	$	200,044	10.50	%	$	190,518	10.00	%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	219,820	11.54	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	210,901	11.07	%	$	114,311	6.00	%	$	161,940	8.50	%	$	152,414	8.00	%
Common Equity Tier 1 Capital (to Risk Weighted Assets):
Consolidated	$	219,820	11.54	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	210,901	11.07	%	$	85,733	4.50	%	$	133,363	7.00	%	$	123,837	6.50	%
Tier 1 Capital (to Average Assets):
Consolidated	$	219,820	8.23	%	N/A		N/A		N/A		N/A		N/A		N/A
Bank	$	210,901	7.91	%	$	106,616	4.00	%	N/A		N/A		$	133,270	5.00	%

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ACCUMULATED OTHER COMPREHENSIVE INCOME OR LOSS (Tables)

12 Months Ended

Dec. 31, 2023

Equity [Abstract]

Summary of Changes in Accumulated Other Comprehensive Income or Loss by Component, Net of Tax

The following is a summary of the changes in accumulated other comprehensive income or loss by component, net of tax, for the periods indicated (in thousands):

	Unrealized Gains and Losses on Securities Available for Sale		Defined Benefit and Other Benefit Plans		Total
Balance at January 1, 2023	$	(71,296)	$	(3,961)	$	(75,257)
Other comprehensive income (loss) before reclassification	8,506		702		9,208
Amounts reclassified from accumulated other comprehensive income (loss)	(10)		46		36
Net current period other comprehensive income (loss)	8,496		748		9,244
Balance at December 31, 2023	$	(62,800)	$	(3,213)	$	(66,013)

Balance at January 1, 2022	$	(2,495)	$	(4,035)	$	(6,530)
Other comprehensive income (loss) before reclassification	(68,801)		47		(68,754)
Amounts reclassified from accumulated other comprehensive income (loss)	—		27		27
Net current period other comprehensive income (loss)	(68,801)		74		(68,727)
Balance at December 31, 2022	$	(71,296)	$	(3,961)	$	(75,257)

Reclassification Out of Accumulated Other Comprehensive Income

The following is the reclassification out of accumulated other comprehensive income (loss) for the periods indicated (in thousands):

Details about Accumulated Other Comprehensive Income (Loss) Components	Year Ended December 31,				Affected Line Item  in the Statement Where Net Income is Presented
	2023		2022
Unrealized gains and losses on securities available for sale:
Realized gains (losses) on securities available for sale	$	(14)	$	—	Net gains (losses) on securities transactions
Tax effect	4		—		Income tax expense
Net of tax	(10)		—
Amortization of defined pension plan and other benefit plan items:
Actuarial losses (a)	63		38		Other components of net periodic pension and postretirement benefits
Tax effect	(16)		(11)		Income tax expense
Net of tax	47		27
Total reclassification for the period, net of tax	$	37	$	27

(a) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and other benefit plan costs (see Note 13 for additional information).

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SEGMENT REPORTING (Tables)

12 Months Ended

Dec. 31, 2023

Segment Reporting [Abstract]

Summarized Financial Information Concerning Reportable Segments And Reconciliation To Consolidated Results

The Holding Company, CFS, and CRM column below includes amounts to eliminate transactions between segments as well as income and expenses related to insurance products, mutual funds, brokerage services, and captive insurance (in thousands).

Year ended December 31, 2023	Core Banking		WMG		Holding Company, CFS and CRM1		Consolidated Totals
Interest and dividend income	$	112,947	$	—	$	127	$	113,074
Interest expense	38,617		—		—		38,617
Net interest income	74,330		—		127		74,457
Provision for credit losses	3,262		—		—		3,262
Net interest income after provision for credit losses	71,068		—		127		71,195
Non-interest income	13,150		10,460		939		24,549
Legal settlements	—		—		—		—
Non-interest expenses	55,982		7,061		1,200		64,243
Income (loss) before income tax expense	28,236		3,399		(134)		31,501
Income tax expense (benefit)	5,869		730		(98)		6,501
Segment net income (loss)	$	22,367	$	2,669	$	(36)	$	25,000
Segment assets	$	2,706,373	$	2,627	$	1,529	$	2,710,529

1 Chemung Risk Management, Inc. (CRM) was dissolved December 6, 2023.

Year ended December 31, 2022	Core Banking		WMG		Holding Company, CFS and CRM			Consolidated Totals
Interest and dividend income	$	81,425	$	—	$	50		$	81,475
Interest expense	7,296		—		—			7,296
Net interest income	74,129		—		50			74,179
Provision for loan losses	(554)		—		—			(554)
Net interest income after provision for loan losses	74,683		—		50			74,733
Non-interest income	10,225		10,280		931			21,436
Legal settlements	—		—		—		0	—
Non-interest expenses	51,301		6,582		1,397			59,280
Income (loss) before income tax expense	33,607		3,698		(416)			36,889
Income tax expense (benefit)	7,361		851		(106)			8,106
Segment net income (loss)	$	26,246	$	2,847	$	(310)		$	28,783
Segment assets	$	2,635,043	$	2,559	$	7,951		$	2,645,553

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Loans, Premises and Equipment and Wealth Management and Group Fee Income (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Period of delinquency after which a loan is placed on non-accrual status (days)	90 days
Assets under management	$ 2,242.0	$ 2,053.0
Chemung Financial Corporation
Property, Plant and Equipment [Line Items]
Assets under management	$ 381.3	$ 346.5
Buildings | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful lives (years)	15 years
Buildings | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful lives (years)	50 years
Equipment and Furniture | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful lives (years)	3 years
Equipment and Furniture | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful lives (years)	10 years

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Allowance for Credit Losses (Details) - USD ($) $ in Thousands		Dec. 31, 2023		Dec. 31, 2022		Dec. 31, 2021
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Stockholders' equity		$ (195,241)		$ (166,388)		$ (211,455)
Allowance for credit losses on unfunded commitments		22,517	[1]	19,659	[1]	21,025
Unfunded Loan Commitment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on unfunded commitments		919		0		0
Retained Earnings
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Stockholders' equity		$ (229,930)		(211,859)		(188,877)
Cumulative Effect, Period of Adoption, Adjustment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Stockholders' equity	[2]			1,076
Allowance for credit losses on unfunded commitments				374
Cumulative Effect, Period of Adoption, Adjustment | Unfunded Loan Commitment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on unfunded commitments				1,082		$ 0
Cumulative Effect, Period of Adoption, Adjustment | Loan Portfolio
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on unfunded commitments				400
Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Stockholders' equity, before tax				1,500
Stockholders' equity	[2]			$ 1,076

[1] Effective January 1, 2023, the allowance calculation is based upon Current Expected Credit loss methodology. Prior to January 1, 2023, the allowance calculation was based upon incurred loss methodology. Refer to Note 1 for further discussion.

[2] Implementation of ASC 326. See Adoption of New Accounting Standards" discussion in Note 1.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Postretirement Benefits (Details)		12 Months Ended
	Jan. 01, 2017	Dec. 31, 2023
Defined Contribution Profit Sharing, Savings and Investment Plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Defined contribution plan, employer non-discretionary contribution amount	3.00%	3.00%
Contribution cost percentage	50.00%	50.00%
Defined contribution plan, employer matching contribution, percent of employees' gross pay	6.00%	6.00%
Pension Plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Normal retirement benefit as percentage of final average compensation (in hundredths)		1.20%
Number of consecutive years considered in final average compensation		5 years
Number of prior years considered in final average compensation		10 years
Maximum service period (years)		25 years
Normal retirement additional benefit		1.00%
Maximum additional service years		10 years
Percentage of average monthly compensation in excess of covered compensation for each year of credited service		0.65%
Maximum period of credited service (years)		35 years
Covered compensation period (years)		35 years
Other Postretirement Benefit Plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Contribution cost percentage		50.00%
Other Postretirement Benefit Plan | Minimum
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Retiree age group range		55 years
Other Postretirement Benefit Plan | Maximum
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Retiree age group range		65 years

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Stock-based compensation (Details)	12 Months Ended
	Dec. 31, 2023 segment shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of operating segments | segment	2
Deferred Compensation, Share-based Payments
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum annual installments period (years)	10 years
2021 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares) | shares	170,000

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RESTRICTIONS ON CASH AND DUE FROM BANK ACCOUNTS (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022	Mar. 26, 2020
RESTRICTIONS ON CASH AND DUE FROM BANK ACCOUNTS [Abstract]
Cash reserve requirement (percent)			0.00%
Reserve requirement	$ 1,600,000	$ 1,600,000
Derivative, collateral, obligation to return cash	$ 0	$ 0

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SECURITIES - Securities Available for Sale (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Amortized cost and estimated fair value of debt securities available-for-sale
Amortized Cost	$ 669,092	$ 729,198
Gross Unrealized Gains	81	157
Gross Unrealized Losses	85,180	96,766
Allowance for Credit Losses	0
Estimated Fair Value	583,993	632,589
Amortized Cost
Within one year	5,678
After one, but within five years	101,391
After five, but within ten years	17,526
After ten years	470
Total	669,092	729,198
Fair Value
Within one year	5,594
After one, but within five years	94,363
After five, but within ten years	14,302
After ten years	428
Total	583,993	632,589
U.S. treasury notes and bonds
Amortized cost and estimated fair value of debt securities available-for-sale
Amortized Cost	59,812	61,800
Gross Unrealized Gains	0	0
Gross Unrealized Losses	4,480	6,225
Allowance for Credit Losses	0
Estimated Fair Value	55,332	55,574
Amortized Cost
Total	59,812	61,800
Fair Value
Total	55,332	55,574
Mortgage-backed securities, residential
Amortized cost and estimated fair value of debt securities available-for-sale
Amortized Cost	476,240	518,838
Gross Unrealized Gains	6	0
Gross Unrealized Losses	72,422	83,707
Allowance for Credit Losses	0
Estimated Fair Value	403,824	435,131
Amortized Cost
Without single maturity date	476,240
Total	476,240	518,838
Fair Value
Without single maturity date	403,824
Total	403,824	435,131
Collateralized mortgage obligations
Amortized cost and estimated fair value of debt securities available-for-sale
Amortized Cost	0	0
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Allowance for Credit Losses	0
Estimated Fair Value	0	0
Amortized Cost
Total	0	0
Fair Value
Total	0	0
Obligations of states and political subdivisions
Amortized cost and estimated fair value of debt securities available-for-sale
Amortized Cost	39,503	39,828
Gross Unrealized Gains	0	2
Gross Unrealized Losses	817	938
Allowance for Credit Losses	0
Estimated Fair Value	38,686	38,892
Amortized Cost
Total	39,503	39,828
Fair Value
Total	38,686	38,892
Corporate bonds and notes
Amortized cost and estimated fair value of debt securities available-for-sale
Amortized Cost	25,750	25,750
Gross Unrealized Gains	0	0
Gross Unrealized Losses	5,081	3,780
Allowance for Credit Losses	0
Estimated Fair Value	20,669	21,970
Amortized Cost
Total	25,750	25,750
Fair Value
Total	20,669	21,970
SBA loan pools
Amortized cost and estimated fair value of debt securities available-for-sale
Amortized Cost	67,787	82,982
Gross Unrealized Gains	75	155
Gross Unrealized Losses	2,380	2,116
Allowance for Credit Losses	0
Estimated Fair Value	65,482	81,022
Amortized Cost
Without single maturity date	67,787
Total	67,787	82,982
Fair Value
Without single maturity date	65,482
Total	$ 65,482	$ 81,022

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SECURITIES - Narrative (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Debt Securities, Available-for-sale [Line Items]
Proceeds from the sale of available for sale securities		$ 0
Realized loss	$ 39,000	0
Tax benefit on realized loss	4,000
Proceeds from the sale of held to maturity securities	1,000,000	0
Loss on sale of held-to-maturity securities	25,000
Deferred Compensation Plan
Debt Securities, Available-for-sale [Line Items]
Investments, fair value	2,400,000	2,100,000
Marketable Securities
Debt Securities, Available-for-sale [Line Items]
Investments, fair value	600,000	$ 600,000
Chemung Risk Management
Debt Securities, Available-for-sale [Line Items]
Proceeds from the sale of available for sale securities	1,200,000
Realized loss	$ 14,000

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SECURITIES - Securities Held to Maturity (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Amortized cost and estimated fair value of securities held to maturity
Total	$ 785	$ 2,424
Unrecognized Gains	0	0
Unrecognized Losses	0	22
Estimated Fair Value	785	2,402
Allowance for Credit Losses	0
Amortized Cost
Within one year	0
After one, but within five years	145
After five, but within ten years	640
After ten years	0
Total	785	2,424
Fair Value
Within one year	0
After one, but within five years	145
After five, but within ten years	640
After ten years	0
Total	785	2,402
Obligations of states and political subdivisions
Amortized cost and estimated fair value of securities held to maturity
Total	785	952
Unrecognized Gains	0	0
Unrecognized Losses	0	0
Estimated Fair Value	785	952
Allowance for Credit Losses	0
Amortized Cost
Total	785	952
Fair Value
Total	785	952
Time deposits with other financial institutions
Amortized cost and estimated fair value of securities held to maturity
Total	0	1,472
Unrecognized Gains	0	0
Unrecognized Losses	0	22
Estimated Fair Value	0	1,450
Allowance for Credit Losses	0
Amortized Cost
Total	0	1,472
Fair Value
Total	$ 0	$ 1,450

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SECURITIES - Investment Securities Available for Sale in Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Fair Value
Less than 12 months	$ 29,297	$ 137,597
12 months or longer	546,649	468,381
Total	575,946	605,978
Unrealized Losses
Less than 12 months	2,762	9,999
12 months or longer	82,418	86,767
Total	85,180	96,766
U.S. treasury notes and bonds
Fair Value
Less than 12 months	0	1,011
12 months or longer	55,332	54,563
Total	55,332	55,574
Unrealized Losses
Less than 12 months	0	30
12 months or longer	4,480	6,195
Total	4,480	6,225
Mortgage-backed securities, residential
Fair Value
Less than 12 months	0	79,891
12 months or longer	402,986	355,240
Total	402,986	435,131
Unrealized Losses
Less than 12 months	0	7,621
12 months or longer	72,422	76,086
Total	72,422	83,707
Obligations of states and political subdivisions
Fair Value
Less than 12 months	17,891	37,847
12 months or longer	20,686	0
Total	38,577	37,847
Unrealized Losses
Less than 12 months	241	938
12 months or longer	576	0
Total	817	938
Corporate bonds and notes
Fair Value
Less than 12 months	7,492	4,515
12 months or longer	13,177	7,455
Total	20,669	11,970
Unrealized Losses
Less than 12 months	2,508	485
12 months or longer	2,573	3,295
Total	5,081	3,780
SBA loan pools
Fair Value
Less than 12 months	3,914	14,333
12 months or longer	54,468	51,123
Total	58,382	65,456
Unrealized Losses
Less than 12 months	13	925
12 months or longer	2,367	1,191
Total	$ 2,380	$ 2,116

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SECURITIES - Securities Pledged and Equity Method Investments (Details) - USD ($) $ in Millions	Dec. 31, 2023	Dec. 31, 2022
Asset Pledged as Collateral | Deposits
Financial Instruments Owned and Pledged as Collateral [Line Items]
Financial instruments, owned, at fair value	$ 255.0	$ 213.8

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LOANS AND ALLOWANCE FOR CREDIT LOSSES - Loan Portfolio (Details) - USD ($) $ in Thousands	Dec. 31, 2023		Dec. 31, 2022		Dec. 31, 2021
Composition of loan portfolio [Abstract]
Total loans, net of deferred loan fees and costs	$ 1,972,664		$ 1,829,448
Allowance for credit losses	(22,517)	[1]	(19,659)	[1]	$ (21,025)
Loans, net	1,950,147		1,809,789
Construction
Composition of loan portfolio [Abstract]
Total loans, net of deferred loan fees and costs	138,887
Home equity lines and loans
Composition of loan portfolio [Abstract]
Total loans, net of deferred loan fees and costs	87,056
Indirect consumer loans
Composition of loan portfolio [Abstract]
Total loans, net of deferred loan fees and costs	210,423
Direct consumer loans
Composition of loan portfolio [Abstract]
Total loans, net of deferred loan fees and costs	9,872
Commercial and Agricultural
Composition of loan portfolio [Abstract]
Total loans, net of deferred loan fees and costs	264,396		252,293
Allowance for credit losses	(5,055)		(3,373)		(3,591)
Commercial Mortgages
Composition of loan portfolio [Abstract]
Total loans, net of deferred loan fees and costs	1,122,925		996,913
Allowance for credit losses	(12,026)		(11,576)		(13,556)
Commercial Mortgages | Construction
Composition of loan portfolio [Abstract]
Total loans, net of deferred loan fees and costs	138,887		108,243
Commercial Mortgages | Commercial mortgages, other
Composition of loan portfolio [Abstract]
Total loans, net of deferred loan fees and costs	984,038		888,670
Residential Mortgages
Composition of loan portfolio [Abstract]
Total loans, net of deferred loan fees and costs	277,992		285,672
Allowance for credit losses	(2,194)		(1,845)		(1,803)
Consumer Loans
Composition of loan portfolio [Abstract]
Total loans, net of deferred loan fees and costs	307,351		294,570
Allowance for credit losses	(3,242)		(2,865)		$ (2,075)
Consumer Loans | Home equity lines and loans
Composition of loan portfolio [Abstract]
Total loans, net of deferred loan fees and costs	87,056		81,401
Consumer Loans | Indirect consumer loans
Composition of loan portfolio [Abstract]
Total loans, net of deferred loan fees and costs	210,423		202,124
Consumer Loans | Direct consumer loans
Composition of loan portfolio [Abstract]
Total loans, net of deferred loan fees and costs	9,872		11,045
Commercial and industrial
Composition of loan portfolio [Abstract]
Total loans, net of deferred loan fees and costs	264,140
Commercial and industrial | Commercial and Agricultural
Composition of loan portfolio [Abstract]
Total loans, net of deferred loan fees and costs	264,140		252,044
Allowance for credit losses	(900)
Agricultural
Composition of loan portfolio [Abstract]
Total loans, net of deferred loan fees and costs	256
Agricultural | Commercial and Agricultural
Composition of loan portfolio [Abstract]
Total loans, net of deferred loan fees and costs	$ 256		$ 249

[1] Effective January 1, 2023, the allowance calculation is based upon Current Expected Credit loss methodology. Prior to January 1, 2023, the allowance calculation was based upon incurred loss methodology. Refer to Note 1 for further discussion.

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LOANS AND ALLOWANCE FOR CREDIT LOSSES - Narrative (Details)	12 Months Ended
	Dec. 31, 2023 USD ($) loan		Dec. 31, 2022 USD ($)		Dec. 31, 2021 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accrued interest receivable on loans	$ 7,800,000		$ 6,500,000
Residential mortgages held for sale	0		0
Allowance for credit losses	22,517,000	[1]	19,659,000	[1]	$ 21,025,000
Loans individually analyzed	$ 8,035,000		7,482,000
Number of days past due after which a retail loan is rated	90 days
Collateral Pledged
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses	$ 267,000
Loans individually analyzed	6,347,000
Residential Mortgages and Home Equity Loans | Asset Pledged as Collateral
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financial instruments, owned, at fair value	254,600,000		254,400,000
Commercial and Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses	5,055,000		3,373,000		$ 3,591,000
Loans individually analyzed	$ 2,067,000		$ 2,112,000
Commercial and Agricultural | Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of contracts modified | loan	1
Allowance for credit losses	$ 900,000

[1] Effective January 1, 2023, the allowance calculation is based upon Current Expected Credit loss methodology. Prior to January 1, 2023, the allowance calculation was based upon incurred loss methodology. Refer to Note 1 for further discussion.

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LOANS AND ALLOWANCE FOR CREDIT LOSSES - Allowances For Credit Losses (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2023		Dec. 31, 2022
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance		$ 19,659	[1]	$ 21,025
Charge-offs		(1,383)		(1,494)
Recoveries		442		682
Net recoveries (charge-offs)		(941)		(812)
Provision		3,425		(554)
Ending balance	[1]	22,517		19,659
Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance		374
Ending balance				374
Cumulative Effect, Period of Adoption, Adjusted Balance
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance		20,033
Ending balance				20,033
Commercial and industrial
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance		3,373		3,591
Charge-offs		(281)		(20)
Recoveries		22		42
Net recoveries (charge-offs)		(259)		22
Provision		1,032		(240)
Ending balance		5,055		3,373
Commercial and industrial | Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance		909
Ending balance				909
Commercial and industrial | Cumulative Effect, Period of Adoption, Adjusted Balance
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance		4,282
Ending balance				4,282
Commercial Mortgages
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance		11,576		13,556
Charge-offs		0		(687)
Recoveries		4		3
Net recoveries (charge-offs)		4		(684)
Provision		1,141		(1,296)
Ending balance		12,026		11,576
Commercial Mortgages | Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance		(695)
Ending balance				(695)
Commercial Mortgages | Cumulative Effect, Period of Adoption, Adjusted Balance
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance		10,881
Ending balance				10,881
Residential Mortgages
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance		1,845		1,803
Charge-offs		(32)		(17)
Recoveries		0		40
Net recoveries (charge-offs)		(32)		23
Provision		397		19
Ending balance		2,194		1,845
Residential Mortgages | Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance		(16)
Ending balance				(16)
Residential Mortgages | Cumulative Effect, Period of Adoption, Adjusted Balance
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance		1,829
Ending balance				1,829
Consumer Loans
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance		2,865		2,075
Charge-offs		(1,070)		(770)
Recoveries		416		597
Net recoveries (charge-offs)		(654)		(173)
Provision		855		963
Ending balance		3,242		2,865
Consumer Loans | Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance		176
Ending balance				176
Consumer Loans | Cumulative Effect, Period of Adoption, Adjusted Balance
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance		3,041
Ending balance				3,041
Unfunded Loan Commitment
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance		0		0
Provision		(163)		0
Ending balance		919		0
Unfunded Loan Commitment | Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance		$ 1,082		0
Ending balance				$ 1,082

[1] Effective January 1, 2023, the allowance calculation is based upon Current Expected Credit loss methodology. Prior to January 1, 2023, the allowance calculation was based upon incurred loss methodology. Refer to Note 1 for further discussion.

XML

LOANS AND ALLOWANCE FOR CREDIT LOSSES - Provision for Credit Losses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Financing Receivable, Allowance for Credit Loss [Line Items]
Provision	$ 3,425	$ (554)
Loans And Unfunded Commitments
Financing Receivable, Allowance for Credit Loss [Line Items]
Provision	3,262	(554)
Loans Portfolio Segment
Financing Receivable, Allowance for Credit Loss [Line Items]
Provision	3,425	(554)
Unfunded Loan Commitment
Financing Receivable, Allowance for Credit Loss [Line Items]
Provision	$ (163)	$ 0

XML

LOANS AND ALLOWANCE FOR CREDIT LOSSES - Allowances by Impairment (Details) - USD ($) $ in Thousands	Dec. 31, 2023		Dec. 31, 2022		Dec. 31, 2021
Allowance for loan losses
Individually evaluated for impairment	$ 1,955		$ 1,147
Collectively evaluated for impairment	20,562		18,512
Total ending allowance balance	22,517	[1]	19,659	[1]	$ 21,025
Loans:
Loans individually analyzed	8,035		7,482
Loans collectively analyzed	1,964,629		1,821,966
Total loans, net of deferred loan fees and costs	1,972,664		1,829,448
Collateral Pledged
Allowance for loan losses
Total ending allowance balance	267
Loans:
Loans individually analyzed	6,347
Commercial and Agricultural
Allowance for loan losses
Individually evaluated for impairment	1,928		1,078
Collectively evaluated for impairment	3,127		2,295
Total ending allowance balance	5,055		3,373		3,591
Loans:
Loans individually analyzed	2,067		2,112
Loans collectively analyzed	262,329		250,181
Total loans, net of deferred loan fees and costs	264,396		252,293
Commercial Mortgages
Allowance for loan losses
Individually evaluated for impairment	27		38
Collectively evaluated for impairment	11,999		11,538
Total ending allowance balance	12,026		11,576		13,556
Loans:
Loans individually analyzed	5,968		4,383
Loans collectively analyzed	1,116,957		992,530
Total loans, net of deferred loan fees and costs	1,122,925		996,913
Residential Mortgages
Allowance for loan losses
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	2,194		1,845
Total ending allowance balance	2,194		1,845		1,803
Loans:
Loans individually analyzed	0		723
Loans collectively analyzed	277,992		284,949
Total loans, net of deferred loan fees and costs	277,992		285,672
Consumer Loans
Allowance for loan losses
Individually evaluated for impairment	0		31
Collectively evaluated for impairment	3,242		2,834
Total ending allowance balance	3,242		2,865		$ 2,075
Loans:
Loans individually analyzed	0		264
Loans collectively analyzed	307,351		294,306
Total loans, net of deferred loan fees and costs	$ 307,351		$ 294,570

[1] Effective January 1, 2023, the allowance calculation is based upon Current Expected Credit loss methodology. Prior to January 1, 2023, the allowance calculation was based upon incurred loss methodology. Refer to Note 1 for further discussion.

XML

LOANS AND ALLOWANCE FOR CREDIT LOSSES - Modifications (Details) $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2023 USD ($)	Dec. 31, 2023 USD ($)
Financing Receivable, Modifications [Line Items]
Amortized cost basis	$ 3,277
Commercial and Agricultural | Commercial and industrial
Financing Receivable, Modifications [Line Items]
Amortized cost basis	$ 1,011
% of Loan Class	0.38%
Weighted-average interest rate reduction (%)		0.00%
Weighted-average term extension (in months)		12 months
Commercial and Agricultural | Agricultural
Financing Receivable, Modifications [Line Items]
Amortized cost basis	$ 0
% of Loan Class	0.00%
Weighted-average interest rate reduction (%)		0.00%
Commercial Mortgages | Construction
Financing Receivable, Modifications [Line Items]
Amortized cost basis	$ 0
% of Loan Class	0.00%
Weighted-average interest rate reduction (%)		0.00%
Commercial Mortgages | Commercial mortgages, other
Financing Receivable, Modifications [Line Items]
Amortized cost basis	$ 2,150
% of Loan Class	0.22%
Weighted-average interest rate reduction (%)		0.00%
Weighted-average term extension (in months)		60 months
Weighted-average payment delay (in months)		4 months
Residential Mortgages
Financing Receivable, Modifications [Line Items]
Amortized cost basis	$ 0
% of Loan Class	0.00%
Weighted-average interest rate reduction (%)		0.00%
Consumer Loans | Home equity lines and loans
Financing Receivable, Modifications [Line Items]
Amortized cost basis	$ 116
% of Loan Class	0.13%
Weighted-average interest rate reduction (%)		0.00%
Weighted-average term extension (in months)		180 months
Consumer Loans | Indirect consumer loans
Financing Receivable, Modifications [Line Items]
Amortized cost basis	$ 0
% of Loan Class	0.00%
Weighted-average interest rate reduction (%)		0.00%
Consumer Loans | Direct consumer loans
Financing Receivable, Modifications [Line Items]
Amortized cost basis	$ 0
% of Loan Class	0.00%
Weighted-average interest rate reduction (%)		0.00%
Principal Reduction
Financing Receivable, Modifications [Line Items]
Amortized cost basis	$ 0
Principal Reduction | Commercial and Agricultural | Commercial and industrial
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Principal Reduction	0	$ 0
Principal Reduction | Commercial and Agricultural | Agricultural
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Principal Reduction	0	0
Principal Reduction | Commercial Mortgages | Construction
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Principal Reduction	0	0
Principal Reduction | Commercial Mortgages | Commercial mortgages, other
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Principal Reduction	0	0
Principal Reduction | Residential Mortgages
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Principal Reduction	0	0
Principal Reduction | Consumer Loans | Home equity lines and loans
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Principal Reduction	0	0
Principal Reduction | Consumer Loans | Indirect consumer loans
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Principal Reduction	0	0
Principal Reduction | Consumer Loans | Direct consumer loans
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Principal Reduction	0	$ 0
Interest Rate Reduction
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Interest Rate Reduction | Commercial and Agricultural | Commercial and industrial
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Interest Rate Reduction | Commercial and Agricultural | Agricultural
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Interest Rate Reduction | Commercial Mortgages | Construction
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Interest Rate Reduction | Commercial Mortgages | Commercial mortgages, other
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Interest Rate Reduction | Residential Mortgages
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Interest Rate Reduction | Consumer Loans | Home equity lines and loans
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Interest Rate Reduction | Consumer Loans | Indirect consumer loans
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Interest Rate Reduction | Consumer Loans | Direct consumer loans
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Term Extension
Financing Receivable, Modifications [Line Items]
Amortized cost basis	1,399
Term Extension | Commercial and Agricultural | Commercial and industrial
Financing Receivable, Modifications [Line Items]
Amortized cost basis	1,011
Term Extension | Commercial and Agricultural | Agricultural
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Term Extension | Commercial Mortgages | Construction
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Term Extension | Commercial Mortgages | Commercial mortgages, other
Financing Receivable, Modifications [Line Items]
Amortized cost basis	272
Term Extension | Residential Mortgages
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Term Extension | Consumer Loans | Home equity lines and loans
Financing Receivable, Modifications [Line Items]
Amortized cost basis	116
Term Extension | Consumer Loans | Indirect consumer loans
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Term Extension | Consumer Loans | Direct consumer loans
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Payment Delay
Financing Receivable, Modifications [Line Items]
Amortized cost basis	1,878
Payment Delay | Commercial and Agricultural | Commercial and industrial
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Payment Delay | Commercial and Agricultural | Agricultural
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Payment Delay | Commercial Mortgages | Construction
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Payment Delay | Commercial Mortgages | Commercial mortgages, other
Financing Receivable, Modifications [Line Items]
Amortized cost basis	1,878
Payment Delay | Residential Mortgages
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Payment Delay | Consumer Loans | Home equity lines and loans
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Payment Delay | Consumer Loans | Indirect consumer loans
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Payment Delay | Consumer Loans | Direct consumer loans
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Combination
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Combination | Commercial and Agricultural | Commercial and industrial
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Combination | Commercial and Agricultural | Agricultural
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Combination | Commercial Mortgages | Construction
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Combination | Commercial Mortgages | Commercial mortgages, other
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Combination | Residential Mortgages
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Combination | Consumer Loans | Home equity lines and loans
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Combination | Consumer Loans | Indirect consumer loans
Financing Receivable, Modifications [Line Items]
Amortized cost basis	0
Combination | Consumer Loans | Direct consumer loans
Financing Receivable, Modifications [Line Items]
Amortized cost basis	$ 0

XML

LOANS AND ALLOWANCE FOR CREDIT LOSSES - Collateral Dependent (Details) - USD ($) $ in Thousands	Dec. 31, 2023		Dec. 31, 2022		Dec. 31, 2021
Financing Receivable, Allowance for Credit Loss [Line Items]
Amortized Cost Basis	$ 8,035		$ 7,482
Related Allowance	22,517	[1]	19,659	[1]	$ 21,025
Commercial and Agricultural
Financing Receivable, Allowance for Credit Loss [Line Items]
Amortized Cost Basis	2,067		2,112
Related Allowance	5,055		3,373		3,591
Commercial Mortgages
Financing Receivable, Allowance for Credit Loss [Line Items]
Amortized Cost Basis	5,968		4,383
Related Allowance	12,026		$ 11,576		$ 13,556
Collateral Pledged
Financing Receivable, Allowance for Credit Loss [Line Items]
Amortized Cost Basis	6,347
Related Allowance	267
Commercial Real Estate And Business Assets | Commercial and Agricultural | Commercial and industrial
Financing Receivable, Allowance for Credit Loss [Line Items]
Amortized Cost Basis	353
Related Allowance	214
Commercial Real Estate And Business Assets | Commercial and Agricultural | Agricultural
Financing Receivable, Allowance for Credit Loss [Line Items]
Amortized Cost Basis	26
Related Allowance	26
Commercial Real Estate and Residential Real Estate | Commercial Mortgages | Construction
Financing Receivable, Allowance for Credit Loss [Line Items]
Amortized Cost Basis	2,209
Related Allowance	0
Commercial Real Estate and Residential Real Estate | Commercial Mortgages | Commercial mortgages, other
Financing Receivable, Allowance for Credit Loss [Line Items]
Amortized Cost Basis	3,759
Related Allowance	$ 27

[1] Effective January 1, 2023, the allowance calculation is based upon Current Expected Credit loss methodology. Prior to January 1, 2023, the allowance calculation was based upon incurred loss methodology. Refer to Note 1 for further discussion.

XML

LOANS AND ALLOWANCE FOR CREDIT LOSSES - Impaired Loans (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Impaired Financing Receivable, Unpaid Principal Balance [Abstract]
Total		$ 7,548
Impaired Financing Receivable, Recorded Investment [Abstract]
Total		7,522
Allowance for Loan Losses Allocated		1,147
Average Amortized Cost Basis
Average recorded investment, total	$ 6,646	8,961
Interest Income Recognized
Total	163	56
Residential Mortgages
Impaired Financing Receivable, Unpaid Principal Balance [Abstract]
With no related allowance recorded		767
Impaired Financing Receivable, Recorded Investment [Abstract]
With no related allowance recorded		760
Average Amortized Cost Basis
With no related allowance recorded	288	864
With an allowance recorded	0	0
Interest Income Recognized
With no related allowance recorded	0	37
With an allowance recorded	0	0
Construction | Commercial Mortgages
Impaired Financing Receivable, Unpaid Principal Balance [Abstract]
With no related allowance recorded		5
Impaired Financing Receivable, Recorded Investment [Abstract]
With no related allowance recorded		5
Average Amortized Cost Basis
With no related allowance recorded	443	71
With an allowance recorded	0	0
Interest Income Recognized
With no related allowance recorded	103	0
With an allowance recorded	0	0
Commercial mortgages | Commercial Mortgages
Impaired Financing Receivable, Unpaid Principal Balance [Abstract]
With no related allowance recorded		4,346
With an allowance recorded		38
Impaired Financing Receivable, Recorded Investment [Abstract]
With no related allowance recorded		4,341
With an allowance recorded		38
Allowance for Loan Losses Allocated		38
Average Amortized Cost Basis
With no related allowance recorded	3,988	4,211
With an allowance recorded	33	1,258
Interest Income Recognized
With no related allowance recorded	5	14
With an allowance recorded	0	0
Home equity lines and loans | Consumer Loans
Impaired Financing Receivable, Unpaid Principal Balance [Abstract]
With no related allowance recorded		154
With an allowance recorded		126
Impaired Financing Receivable, Recorded Investment [Abstract]
With no related allowance recorded		138
With an allowance recorded		127
Allowance for Loan Losses Allocated		31
Average Amortized Cost Basis
With no related allowance recorded	99	153
With an allowance recorded	25	137
Interest Income Recognized
With no related allowance recorded	0	0
With an allowance recorded	0	0
Direct consumer loans | Consumer Loans
Average Amortized Cost Basis
With an allowance recorded	0	0
Interest Income Recognized
With an allowance recorded	0	0
Commercial and Agricultural Sector | Commercial and industrial
Impaired Financing Receivable, Unpaid Principal Balance [Abstract]
With no related allowance recorded		1,026
With an allowance recorded		1,086
Impaired Financing Receivable, Recorded Investment [Abstract]
With no related allowance recorded		1,025
With an allowance recorded		1,088
Allowance for Loan Losses Allocated		1,078
Average Amortized Cost Basis
With no related allowance recorded	431	814
With an allowance recorded	1,328	1,453
Interest Income Recognized
With no related allowance recorded	0	0
With an allowance recorded	55	5
Commercial and Agricultural Sector | Agricultural
Average Amortized Cost Basis
With no related allowance recorded	0	0
With an allowance recorded	11	0
Interest Income Recognized
With no related allowance recorded	0	0
With an allowance recorded	$ 0	$ 0

XML

LOANS AND ALLOWANCE FOR CREDIT LOSSES - Receivables Past Due (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit losses	$ 8,529	$ 7,198
Non-accrual	10,411	8,178
Loans Past Due 90 Days or More and Still Accruing	10	1
Financing receivable	1,972,664	1,829,448
Total Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	14,360	6,603
30 - 59 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	9,562	4,084
60 - 89 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	943	1,045
90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	3,855	1,474
Loans Not Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	1,958,304	1,822,845
Construction
Financing Receivable, Past Due [Line Items]
Financing receivable	138,887
Commercial mortgages
Financing Receivable, Past Due [Line Items]
Financing receivable	984,038
Home equity lines and loans
Financing Receivable, Past Due [Line Items]
Financing receivable	87,056
Indirect consumer loans
Financing Receivable, Past Due [Line Items]
Financing receivable	210,423
Direct consumer loans
Financing Receivable, Past Due [Line Items]
Financing receivable	9,872
Commercial Mortgages
Financing Receivable, Past Due [Line Items]
Financing receivable	1,122,925	996,913
Commercial Mortgages | Construction
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit losses	2,209	5
Non-accrual	2,209	5
Loans Past Due 90 Days or More and Still Accruing	0	0
Financing receivable	138,887	108,243
Commercial Mortgages | Construction | Total Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	4,371	0
Commercial Mortgages | Construction | 30 - 59 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	2,164	0
Commercial Mortgages | Construction | 60 - 89 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	0	0
Commercial Mortgages | Construction | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	2,207	0
Commercial Mortgages | Construction | Loans Not Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	134,516	108,243
Commercial Mortgages | Commercial mortgages
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit losses	3,732	3,890
Non-accrual	3,760	3,928
Loans Past Due 90 Days or More and Still Accruing	0	0
Financing receivable	984,038	888,670
Commercial Mortgages | Commercial mortgages | Total Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	1,386	1,544
Commercial Mortgages | Commercial mortgages | 30 - 59 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	1,022	1,058
Commercial Mortgages | Commercial mortgages | 60 - 89 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	103	0
Commercial Mortgages | Commercial mortgages | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	261	486
Commercial Mortgages | Commercial mortgages | Loans Not Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	982,652	887,126
Residential Mortgages
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit losses	1,315	986
Non-accrual	1,315	986
Loans Past Due 90 Days or More and Still Accruing	0	0
Financing receivable	277,992	285,672
Residential Mortgages | Total Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	3,030	2,363
Residential Mortgages | 30 - 59 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	2,244	1,360
Residential Mortgages | 60 - 89 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	201	709
Residential Mortgages | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	585	294
Residential Mortgages | Loans Not Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	274,962	283,309
Consumer Loans
Financing Receivable, Past Due [Line Items]
Financing receivable	307,351	294,570
Consumer Loans | Credit cards
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit losses	0	0
Non-accrual	0	0
Loans Past Due 90 Days or More and Still Accruing	0	0
Financing receivable	0	0
Consumer Loans | Credit cards | Total Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	0	0
Consumer Loans | Credit cards | 30 - 59 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	0	0
Consumer Loans | Credit cards | 60 - 89 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	0	0
Consumer Loans | Credit cards | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	0	0
Consumer Loans | Credit cards | Loans Not Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	0	0
Consumer Loans | Home equity lines and loans
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit losses	508	729
Non-accrual	508	760
Loans Past Due 90 Days or More and Still Accruing	0	0
Financing receivable	87,056	81,401
Consumer Loans | Home equity lines and loans | Total Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	914	756
Consumer Loans | Home equity lines and loans | 30 - 59 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	461	193
Consumer Loans | Home equity lines and loans | 60 - 89 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	87	121
Consumer Loans | Home equity lines and loans | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	366	442
Consumer Loans | Home equity lines and loans | Loans Not Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	86,142	80,645
Consumer Loans | Indirect consumer loans
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit losses	687	540
Non-accrual	687	540
Loans Past Due 90 Days or More and Still Accruing	0	0
Financing receivable	210,423	202,124
Consumer Loans | Indirect consumer loans | Total Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	3,400	1,840
Consumer Loans | Indirect consumer loans | 30 - 59 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	2,473	1,397
Consumer Loans | Indirect consumer loans | 60 - 89 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	501	193
Consumer Loans | Indirect consumer loans | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	426	250
Consumer Loans | Indirect consumer loans | Loans Not Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	207,023	200,284
Consumer Loans | Direct consumer loans
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit losses	2	13
Non-accrual	2	13
Loans Past Due 90 Days or More and Still Accruing	0	0
Financing receivable	9,872	11,045
Consumer Loans | Direct consumer loans | Total Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	22	22
Consumer Loans | Direct consumer loans | 30 - 59 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	2	2
Consumer Loans | Direct consumer loans | 60 - 89 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	20	19
Consumer Loans | Direct consumer loans | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	0	1
Consumer Loans | Direct consumer loans | Loans Not Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	9,850	11,023
Commercial and Agricultural Sector | Commercial and industrial
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit losses	76	1,035
Non-accrual	1,904	1,946
Loans Past Due 90 Days or More and Still Accruing	10	1
Financing receivable	264,140	252,044
Commercial and Agricultural Sector | Commercial and industrial | Total Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	1,237	78
Commercial and Agricultural Sector | Commercial and industrial | 30 - 59 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	1,196	74
Commercial and Agricultural Sector | Commercial and industrial | 60 - 89 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	31	3
Commercial and Agricultural Sector | Commercial and industrial | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	10	1
Commercial and Agricultural Sector | Commercial and industrial | Loans Not Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	262,903	251,966
Commercial and Agricultural Sector | Agricultural
Financing Receivable, Past Due [Line Items]
Non-accrual with no allowance for credit losses	0	0
Non-accrual	26	0
Loans Past Due 90 Days or More and Still Accruing	0	0
Financing receivable	256	249
Commercial and Agricultural Sector | Agricultural | Total Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	0	0
Commercial and Agricultural Sector | Agricultural | 30 - 59 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	0	0
Commercial and Agricultural Sector | Agricultural | 60 - 89 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	0	0
Commercial and Agricultural Sector | Agricultural | 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	0	0
Commercial and Agricultural Sector | Agricultural | Loans Not Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable	$ 256	$ 249

XML

LOANS AND ALLOWANCE FOR CREDIT LOSSES - Credit Quality Indicator (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	$ 248,127
2022	418,600
2021	229,727
2020	186,248
2019	96,935
Prior	246,703
Revolving Loans Amortized Cost	529,491
Revolving Loans Converted to Term	16,833
Total loans, net of deferred loan fees and costs	1,972,664	$ 1,829,448
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
2023	188
2022	422
2021	223
2020	127
2019	30
Prior	381
Revolving Loans Amortized Cost	12
Revolving Loans Converted to Term	0
Total	1,383	1,494
Recorded investment		1,835,996
Not rated
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		579,545
Pass
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		1,205,027
Special mention
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		37,465
Substandard
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		13,028
Doubtful
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		931
Construction
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	11,275
2022	1,445
2021	0
2020	0
2019	2,235
Prior	1,180
Revolving Loans Amortized Cost	122,752
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	138,887
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	0
Total	0
Construction | Pass
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	11,275
2022	1,445
2021	0
2020	0
2019	28
Prior	1,178
Revolving Loans Amortized Cost	122,752
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	136,678
Construction | Special mention
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	0
Construction | Substandard
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	0
2022	0
2021	0
2020	0
2019	2,207
Prior	2
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	2,209
Construction | Doubtful
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	0
Commercial mortgages
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	91,908
2022	210,917
2021	131,574
2020	94,266
2019	39,175
Prior	176,264
Revolving Loans Amortized Cost	234,096
Revolving Loans Converted to Term	5,838
Total loans, net of deferred loan fees and costs	984,038
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	0
Total	0
Commercial mortgages | Pass
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	91,636
2022	207,277
2021	123,040
2020	90,635
2019	39,175
Prior	168,878
Revolving Loans Amortized Cost	233,999
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	954,640
Commercial mortgages | Special mention
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	0
2022	2,533
2021	8,189
2020	2,609
2019	0
Prior	3,216
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	5,426
Total loans, net of deferred loan fees and costs	21,973
Commercial mortgages | Substandard
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	272
2022	1,107
2021	345
2020	1,022
2019	0
Prior	4,143
Revolving Loans Amortized Cost	97
Revolving Loans Converted to Term	412
Total loans, net of deferred loan fees and costs	7,398
Commercial mortgages | Doubtful
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	27
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	27
Home equity lines and loans
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	13,743
2022	16,698
2021	5,797
2020	3,110
2019	2,845
Prior	10,635
Revolving Loans Amortized Cost	34,115
Revolving Loans Converted to Term	113
Total loans, net of deferred loan fees and costs	87,056
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans Amortized Cost	6
Revolving Loans Converted to Term	0
Total	6
Home equity lines and loans | Not rated
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	13,743
2022	16,621
2021	5,797
2020	3,110
2019	2,845
Prior	10,342
Revolving Loans Amortized Cost	34,090
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	86,548
Home equity lines and loans | Substandard
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	0
2022	77
2021	0
2020	0
2019	0
Prior	293
Revolving Loans Amortized Cost	25
Revolving Loans Converted to Term	113
Total loans, net of deferred loan fees and costs	508
Indirect consumer loans
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	72,383
2022	98,254
2021	23,150
2020	9,240
2019	3,906
Prior	3,490
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	210,423
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
2023	184
2022	375
2021	215
2020	121
2019	21
Prior	55
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	0
Total	971
Indirect consumer loans | Not rated
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	72,264
2022	98,008
2021	23,015
2020	9,192
2019	3,870
Prior	3,387
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	209,736
Indirect consumer loans | Substandard
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	119
2022	246
2021	135
2020	48
2019	36
Prior	103
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	687
Direct consumer loans
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	3,005
2022	2,745
2021	785
2020	258
2019	53
Prior	357
Revolving Loans Amortized Cost	2,669
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	9,872
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
2023	4
2022	15
2021	8
2020	6
2019	0
Prior	54
Revolving Loans Amortized Cost	6
Revolving Loans Converted to Term	0
Total	93
Direct consumer loans | Not rated
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	3,005
2022	2,745
2021	785
2020	256
2019	53
Prior	357
Revolving Loans Amortized Cost	2,669
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	9,870
Direct consumer loans | Substandard
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	0
2022	0
2021	0
2020	2
2019	0
Prior	0
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	2
Commercial and industrial
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	41,786
2022	37,895
2021	18,497
2020	10,304
2019	33,459
Prior	9,424
Revolving Loans Amortized Cost	101,919
Revolving Loans Converted to Term	10,856
Total loans, net of deferred loan fees and costs	264,140
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
2023	0
2022	0
2021	0
2020	0
2019	9
Prior	272
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	0
Total	281
Commercial and industrial | Pass
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	41,601
2022	35,768
2021	17,506
2020	10,195
2019	33,436
Prior	7,746
Revolving Loans Amortized Cost	92,114
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	238,366
Commercial and industrial | Special mention
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	185
2022	2,103
2021	0
2020	0
2019	0
Prior	432
Revolving Loans Amortized Cost	9,730
Revolving Loans Converted to Term	10,672
Total loans, net of deferred loan fees and costs	23,122
Commercial and industrial | Substandard
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	0
2022	24
2021	991
2020	109
2019	23
Prior	456
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	161
Total loans, net of deferred loan fees and costs	1,764
Commercial and industrial | Doubtful
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	790
Revolving Loans Amortized Cost	75
Revolving Loans Converted to Term	23
Total loans, net of deferred loan fees and costs	888
Agricultural
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	0
2022	15
2021	150
2020	0
2019	0
Prior	0
Revolving Loans Amortized Cost	65
Revolving Loans Converted to Term	26
Total loans, net of deferred loan fees and costs	256
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	0
Total	0
Agricultural | Pass
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	0
2022	15
2021	150
2020	0
2019	0
Prior	0
Revolving Loans Amortized Cost	65
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	230
Agricultural | Special mention
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	0
Agricultural | Substandard
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	26
Total loans, net of deferred loan fees and costs	26
Agricultural | Doubtful
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	0
Residential Mortgages
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	14,027
2022	50,631
2021	49,774
2020	69,070
2019	15,262
Prior	45,353
Revolving Loans Amortized Cost	33,875
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	277,992	285,672
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
2023	0
2022	32
2021	0
2020	0
2019	0
Prior	0
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	0
Total	32	17
Recorded investment		286,445
Residential Mortgages | Not rated
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	14,027
2022	50,556
2021	49,428
2020	69,070
2019	15,093
Prior	44,628
Revolving Loans Amortized Cost	33,875
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	276,677
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		285,459
Residential Mortgages | Pass
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Residential Mortgages | Special mention
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Residential Mortgages | Substandard
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	0
2022	75
2021	346
2020	0
2019	169
Prior	725
Revolving Loans Amortized Cost	0
Revolving Loans Converted to Term	0
Total loans, net of deferred loan fees and costs	1,315
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		986
Residential Mortgages | Doubtful
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Commercial and Agricultural
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	264,396	252,293
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Total	281	20
Commercial and Agricultural | Commercial and industrial
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	264,140	252,044
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		253,041
Commercial and Agricultural | Commercial and industrial | Not rated
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Commercial and Agricultural | Commercial and industrial | Pass
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		235,900
Commercial and Agricultural | Commercial and industrial | Special mention
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		13,349
Commercial and Agricultural | Commercial and industrial | Substandard
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		2,899
Commercial and Agricultural | Commercial and industrial | Doubtful
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		893
Commercial and Agricultural | Agricultural
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	256	249
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		250
Commercial and Agricultural | Agricultural | Not rated
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Commercial and Agricultural | Agricultural | Pass
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		250
Commercial and Agricultural | Agricultural | Special mention
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Commercial and Agricultural | Agricultural | Substandard
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Commercial and Agricultural | Agricultural | Doubtful
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Commercial Mortgages
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	1,122,925	996,913
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Total	0	687
Commercial Mortgages | Construction
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	138,887	108,243
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		108,671
Commercial Mortgages | Construction | Not rated
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Commercial Mortgages | Construction | Pass
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		108,488
Commercial Mortgages | Construction | Special mention
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		178
Commercial Mortgages | Construction | Substandard
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		5
Commercial Mortgages | Construction | Doubtful
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Commercial Mortgages | Commercial mortgages
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	984,038	888,670
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		892,190
Commercial Mortgages | Commercial mortgages | Not rated
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Commercial Mortgages | Commercial mortgages | Pass
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		860,389
Commercial Mortgages | Commercial mortgages | Special mention
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		23,938
Commercial Mortgages | Commercial mortgages | Substandard
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		7,825
Commercial Mortgages | Commercial mortgages | Doubtful
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		38
Consumer Loans
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	307,351	294,570
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Total	1,070	770
Consumer Loans | Credit cards
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	0	0
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Consumer Loans | Credit cards | Not rated
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Consumer Loans | Credit cards | Pass
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Consumer Loans | Credit cards | Special mention
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Consumer Loans | Credit cards | Substandard
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Consumer Loans | Credit cards | Doubtful
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Consumer Loans | Home equity lines and loans
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	87,056	81,401
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		81,702
Consumer Loans | Home equity lines and loans | Performing
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	86,548
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		80,942
Consumer Loans | Home equity lines and loans | Non-Performing
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	508
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		760
Consumer Loans | Home equity lines and loans | Not rated
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		80,942
Consumer Loans | Home equity lines and loans | Pass
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Consumer Loans | Home equity lines and loans | Special mention
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Consumer Loans | Home equity lines and loans | Substandard
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		760
Consumer Loans | Home equity lines and loans | Doubtful
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Consumer Loans | Indirect consumer loans
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	210,423	202,124
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		202,590
Consumer Loans | Indirect consumer loans | Performing
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	209,736
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		202,050
Consumer Loans | Indirect consumer loans | Non-Performing
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	687
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		540
Consumer Loans | Indirect consumer loans | Not rated
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		202,050
Consumer Loans | Indirect consumer loans | Pass
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Consumer Loans | Indirect consumer loans | Special mention
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Consumer Loans | Indirect consumer loans | Substandard
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		540
Consumer Loans | Indirect consumer loans | Doubtful
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Consumer Loans | Direct consumer loans
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	9,872	11,045
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		11,107
Consumer Loans | Direct consumer loans | Not rated
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		11,094
Consumer Loans | Direct consumer loans | Pass
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Consumer Loans | Direct consumer loans | Special mention
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Consumer Loans | Direct consumer loans | Substandard
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		13
Consumer Loans | Direct consumer loans | Doubtful
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		0
Consumer Loans | Residential Mortgages
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	277,992
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		286,445
Consumer Loans | Residential Mortgages | Performing
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	276,677
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		285,459
Consumer Loans | Residential Mortgages | Non-Performing
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	1,315
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		986
Consumer Loans | Other Direct Consumer Loans
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	9,872
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		11,107
Consumer Loans | Other Direct Consumer Loans | Performing
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	9,870
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		11,094
Consumer Loans | Other Direct Consumer Loans | Non-Performing
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss, by Origination Year [Abstract]
Total loans, net of deferred loan fees and costs	$ 2
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss, Writeoff, by Origination Year [Abstract]
Recorded investment		$ 13

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PREMISES AND EQUIPMENT - Premises and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Premises and equipment [Abstract]
Premises and equipment, gross	$ 87,513	$ 87,013
Less accumulated depreciation and amortization	72,942	70,900
Net book value	14,571	16,113
Depreciation expense	2,001	2,226
Land
Premises and equipment [Abstract]
Premises and equipment, gross	4,664	4,674
Buildings
Premises and equipment [Abstract]
Premises and equipment, gross	40,727	40,419
Projects in progress
Premises and equipment [Abstract]
Premises and equipment, gross	11	82
Equipment and furniture
Premises and equipment [Abstract]
Premises and equipment, gross	37,237	36,964
Leasehold improvements
Premises and equipment [Abstract]
Premises and equipment, gross	$ 4,874	$ 4,874

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PREMISES AND EQUIPMENT - Leases in Premises and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Property, Plant and Equipment [Abstract]
Buildings	$ 5,572	$ 5,572
Accumulated depreciation	(2,872)	(2,540)
Net book value	$ 2,700	$ 3,032

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LEASES - Narrative (Details)	12 Months Ended
	Dec. 31, 2023 USD ($) lease	Dec. 31, 2022 USD ($)
Leases [Abstract]
Operating lease, weighted average remaining lease term (years)	7 years 10 months 24 days
Operating lease, weighted average discount rate	3.40%
Rent expense	$ 1,000,000	$ 1,000,000
Number operating lease not yet commenced | lease	1
Finance lease, weighted average remaining lease term (years)	9 years 3 months 18 days
Finance lease, weighted average discount rate	3.42%
Finance lease not yet commenced	$ 0

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LEASES - Leased Branch Properties (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Leases [Abstract]
Operating lease right-of-use asset	$ 6,449	$ 7,234
Less: accumulated amortization	(801)	(785)
Less: lease termination	0	0
Add: new lease agreement and modifications	0	0
Operating lease right-of-use-assets, net	$ 5,648	$ 6,449

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LEASES - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Leases [Abstract]
2024	$ 924
2025	841
2026	845
2027	854
2028	721
2029 and thereafter	2,446
Total minimum lease payments	6,631
Less: amount representing interest	(804)
Present value of net minimum lease payments	$ 5,827	$ 6,620

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LEASES - Future Minimum Lease Payment Obligations Under Capital Leases (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Leases [Abstract]
2024	$ 391
2025	409
2026	425
2027	428
2028	428
2029 and thereafter	1,560
Total minimum lease payments	3,641
Less: amount representing interest	(591)
Present value of net minimum lease payments	$ 3,050	$ 3,327

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GOODWILL AND INTANGIBLE ASSETS - Changes in Goodwill (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Goodwill [Roll Forward]
Beginning of year	$ 21,824	$ 21,824
Acquired goodwill	0	0
End of year	$ 21,824	$ 21,824

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GOODWILL AND INTANGIBLE ASSETS - Acquired intangible assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Acquired Finite-Lived Intangible Assets [Line Items]
Balance Acquired	$ 11,608	$ 11,608
Accumulated Amortization	11,608	11,608
Core deposit intangibles
Acquired Finite-Lived Intangible Assets [Line Items]
Balance Acquired	5,975	5,975
Accumulated Amortization	5,975	5,975
Other customer relationship intangibles
Acquired Finite-Lived Intangible Assets [Line Items]
Balance Acquired	5,633	5,633
Accumulated Amortization	$ 5,633	$ 5,633

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GOODWILL AND INTANGIBLE ASSETS - Narrative (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of intangible assets	$ 0	$ 15,000

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DEPOSITS (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Summary of deposits [Abstract]
Non-interest-bearing demand deposits	$ 653,166	$ 733,329
Interest-bearing demand deposits	291,138	271,645
Insured money market deposits	623,714	640,840
Savings deposits	249,144	279,029
Certificates of deposits $250,000 or less	365,058	272,182
Certificates of deposits greater than $250,000	76,804	31,547
Brokered deposits	142,776	73,452
Other time deposits	27,627	25,203
Total deposits	2,429,427	$ 2,327,227
Scheduled maturities of time deposits [Abstract]
2024	578,675
2025	13,244
2026	4,313
2027	11,688
2028	1,395
2029	2,950
Total	612,265
Brokered deposit maturities in year one	133,300
Brokered deposit maturities in year four	$ 9,500

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DEPOSITS - Narrative (Details) - USD ($) $ in Millions	Dec. 31, 2023	Dec. 31, 2022
Insurance [Abstract]
Time deposits that meet or exceed the FDIC Insurance limit of $250 thousand	$ 81.0	$ 36.4

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FEDERAL HOME LOAN BANK TERM ADVANCES AND OVERNIGHT ADVANCES - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Federal Home Loan Bank, Advances, Maturity Periods [Line Items]
FHLBNY overnight advances	$ 31,920	$ 95,810
Maximum amount eligible to borrow	193,400
Residential Mortgages and Home Equity Loans | Asset Pledged as Collateral
Federal Home Loan Bank, Advances, Maturity Periods [Line Items]
Financial instruments, owned, at fair value	$ 254,600	$ 254,400

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FEDERAL HOME LOAN BANK TERM ADVANCES AND OVERNIGHT ADVANCES (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Advance from Federal Home Loan Bank [Abstract]
FHLBNY overnight advances	$ 31,920	$ 95,810
FHLBNY interest rate	5.64%	4.61%

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REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Disaggregation of Revenue [Line Items]
Net gains (losses) on sales of OREO	$ 37	$ 60
Net gains on sales of securities	(39)	0
Change in fair value of equity securities	103	(349)
Income from bank-owned life insurance	43	46
Non-interest income	24,549	21,436
Intersegment Eliminations
Disaggregation of Revenue [Line Items]
Non-interest income	939	931
Overdraft fees
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	3,096	3,084
Other
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	823	704
Interchange revenue from debit card transactions
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	4,606	4,603
WMG fee income
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	10,460	10,280
CFS fee and commission income
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	995	1,079
Net gains (losses) on sales of OREO
Disaggregation of Revenue [Line Items]
Net gains (losses) on sales of OREO	37	60
Net gains on sales of loans
Disaggregation of Revenue [Line Items]
Revenue not from contract with customer	144	107
Loan servicing fees
Disaggregation of Revenue [Line Items]
Revenue not from contract with customer	144	153
Income from bank-owned life insurance
Disaggregation of Revenue [Line Items]
Income from bank-owned life insurance	43	46
Other
Disaggregation of Revenue [Line Items]
Revenue not from contract with customer	4,137	1,669
Core Banking | Operating Segments
Disaggregation of Revenue [Line Items]
Net gains on sales of securities	(39)
Change in fair value of equity securities	228	(353)
Non-interest income	13,150	10,225
Core Banking | Overdraft fees | Operating Segments
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	3,096	3,084
Core Banking | Other | Operating Segments
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	823	704
Core Banking | Interchange revenue from debit card transactions | Operating Segments
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	4,606	4,603
Core Banking | WMG fee income | Operating Segments
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	0	0
Core Banking | CFS fee and commission income | Operating Segments
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	0	0
Core Banking | Net gains (losses) on sales of OREO | Operating Segments
Disaggregation of Revenue [Line Items]
Net gains (losses) on sales of OREO	37	60
Core Banking | Net gains on sales of loans | Operating Segments
Disaggregation of Revenue [Line Items]
Revenue not from contract with customer	144	107
Core Banking | Loan servicing fees | Operating Segments
Disaggregation of Revenue [Line Items]
Revenue not from contract with customer	144	153
Core Banking | Income from bank-owned life insurance | Operating Segments
Disaggregation of Revenue [Line Items]
Income from bank-owned life insurance	43	46
Core Banking | Other | Operating Segments
Disaggregation of Revenue [Line Items]
Revenue not from contract with customer	4,068	1,821
WMG | Operating Segments
Disaggregation of Revenue [Line Items]
Net gains on sales of securities	0
Change in fair value of equity securities	0	0
Non-interest income	10,460	10,280
WMG | Overdraft fees | Operating Segments
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	0	0
WMG | Other | Operating Segments
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	0	0
WMG | Interchange revenue from debit card transactions | Operating Segments
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	0	0
WMG | WMG fee income | Operating Segments
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	10,460	10,280
WMG | CFS fee and commission income | Operating Segments
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	0	0
WMG | Net gains (losses) on sales of OREO | Operating Segments
Disaggregation of Revenue [Line Items]
Net gains (losses) on sales of OREO	0	0
WMG | Net gains on sales of loans | Operating Segments
Disaggregation of Revenue [Line Items]
Revenue not from contract with customer	0	0
WMG | Loan servicing fees | Operating Segments
Disaggregation of Revenue [Line Items]
Revenue not from contract with customer	0	0
WMG | Income from bank-owned life insurance | Operating Segments
Disaggregation of Revenue [Line Items]
Income from bank-owned life insurance	0	0
WMG | Other | Operating Segments
Disaggregation of Revenue [Line Items]
Revenue not from contract with customer	0	0
Holding Company, CFS, and CRM | Intersegment Eliminations
Disaggregation of Revenue [Line Items]
Net gains on sales of securities	0
Change in fair value of equity securities	(125)	4
Non-interest income	939	931
Holding Company, CFS, and CRM | Overdraft fees | Intersegment Eliminations
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	0	0
Holding Company, CFS, and CRM | Other | Intersegment Eliminations
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	0	0
Holding Company, CFS, and CRM | Interchange revenue from debit card transactions | Intersegment Eliminations
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	0	0
Holding Company, CFS, and CRM | WMG fee income | Intersegment Eliminations
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	0	0
Holding Company, CFS, and CRM | CFS fee and commission income | Intersegment Eliminations
Disaggregation of Revenue [Line Items]
Revenues from contracts with customer	995	1,079
Holding Company, CFS, and CRM | Net gains (losses) on sales of OREO | Intersegment Eliminations
Disaggregation of Revenue [Line Items]
Net gains (losses) on sales of OREO	0	0
Holding Company, CFS, and CRM | Net gains on sales of loans | Intersegment Eliminations
Disaggregation of Revenue [Line Items]
Revenue not from contract with customer	0	0
Holding Company, CFS, and CRM | Loan servicing fees | Intersegment Eliminations
Disaggregation of Revenue [Line Items]
Revenue not from contract with customer	0	0
Holding Company, CFS, and CRM | Income from bank-owned life insurance | Intersegment Eliminations
Disaggregation of Revenue [Line Items]
Income from bank-owned life insurance	0	0
Holding Company, CFS, and CRM | Other | Intersegment Eliminations
Disaggregation of Revenue [Line Items]
Revenue not from contract with customer	$ 69	$ (152)

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DERIVATIVES - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Derivative
Derivative [Line Items]
Accrued interest receivable	$ 665
Accrued interest payable		$ 447
Derivatives not designated as hedging instruments:
Derivative [Line Items]
Notional amount	647,484	545,002
Derivatives not designated as hedging instruments: | Swap
Derivative [Line Items]
Notional amount	631,100
Derivatives not designated as hedging instruments: | Interest rate swap agreements on loans with commercial loan customers
Derivative [Line Items]
Notional amount	315,526	265,619
Derivatives not designated as hedging instruments: | Interest rate swap agreements with third-party counter-parties
Derivative [Line Items]
Notional amount	315,526	265,619
Derivatives not designated as hedging instruments: | Risk participation agreements
Derivative [Line Items]
Notional amount	$ 16,432	$ 13,764

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DERIVATIVES - Derivative Financial Instruments (Details) - Derivatives not designated as hedging instruments: $ in Thousands	12 Months Ended
	Dec. 31, 2023 USD ($) instrument	Dec. 31, 2022 USD ($) instrument
Derivative [Line Items]
Number of Instruments | instrument	98	87
Notional Amount	$ 647,484	$ 545,002
Fair Value	(39)	(55)
Unrealized gain (loss) recognized in other non-interest income	$ 16	$ 283
Interest rate swap agreements on loans with commercial loan customers
Derivative [Line Items]
Number of Instruments | instrument	47	42
Notional Amount	$ 315,526	$ 265,619
Weighted Average Maturity (in years)	6 years 7 months 6 days	7 years 1 month 6 days
Fair Value	$ (19,355)	$ (26,436)
Unrealized gain (loss) recognized in other non-interest income	$ 7,081	$ (17,430)
Interest rate swap agreements on loans with commercial loan customers | Weighted Average Interest Rate Received
Derivative [Line Items]
Average interest rate	4.36%	3.94%
Interest rate swap agreements on loans with commercial loan customers | Weighted Average Contract Pay Rate
Derivative [Line Items]
Average interest rate	7.36%	6.35%
Interest rate swap agreements with third-party counter-parties
Derivative [Line Items]
Number of Instruments | instrument	47	42
Notional Amount	$ 315,526	$ 265,619
Weighted Average Maturity (in years)	6 years 7 months 6 days	7 years 1 month 6 days
Fair Value	$ 19,316	$ 26,381
Unrealized gain (loss) recognized in other non-interest income	$ (7,065)	$ 17,698
Interest rate swap agreements with third-party counter-parties | Weighted Average Interest Rate Received
Derivative [Line Items]
Average interest rate	7.36%	6.35%
Interest rate swap agreements with third-party counter-parties | Weighted Average Contract Pay Rate
Derivative [Line Items]
Average interest rate	4.36%	3.94%
Risk participation agreements
Derivative [Line Items]
Number of Instruments | instrument	4	3
Notional Amount	$ 16,432	$ 13,764
Weighted Average Maturity (in years)	7 years 9 months 18 days	9 years 7 months 6 days
Fair Value	$ 0	$ 0
Unrealized gain (loss) recognized in other non-interest income	$ 0	$ 15

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INCOME TAXES - Components of Tax Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Current expense:
Federal	$ 7,149	$ 5,501
State	961	883
Total current	8,110	6,384
Deferred expense/(benefit):
Federal	(1,271)	1,365
State	(338)	357
Total deferred	(1,609)	1,722
Income tax expense	$ 6,501	$ 8,106

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INCOME TAXES - Reconciliation of Income Tax Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Reconciliation of income tax expense [Abstract]
Statutory federal tax rate	21.00%	21.00%
Tax computed at statutory rate	$ 6,615	$ 7,747
Tax-exempt income	(509)	(434)
831(b) premium adjustment	(202)	(309)
Dividend exclusion	(9)	(7)
State taxes, net of Federal impact	580	988
Nondeductible interest expense	38	8
Other items, net	(12)	113
Income tax expense	$ 6,501	$ 8,106
Effective tax rate	20.60%	22.00%

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INCOME TAXES - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Deferred tax assets:
Allowance for credit losses	$ 5,775	$ 5,147
Depreciation	1,408	1,133
Deferred compensation and directors' fees	1,388	1,128
Operating lease liabilities	1,484	1,688
Purchase accounting adjustment – fixed assets	153	153
Net unrealized losses on securities available for sale	22,296	25,310
Defined benefit pension and other benefit plans	1,054	1,320
Nonaccrued interest	484	415
Accrued expense	96	117
Other items, net	133	112
Total gross deferred tax assets	34,271	36,523
Deferred tax liabilities:
Deferred loan fees and costs	1,389	1,358
Prepaid pension	4,144	4,055
Discount accretion	121	108
Core deposit intangible	1,790	1,733
REIT dividend	0	561
Operating lease right-of-use assets	1,484	1,688
Accrual for employee benefit plans	8	5
Other	210	219
Total gross deferred tax liabilities	9,146	9,727
Net deferred tax asset	$ 25,125	$ 26,796

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INCOME TAXES - Narrative (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Unrecognized tax benefits	$ 0	$ 0
Accrued interest or penalties related to uncertain tax positions	$ 0	$ 0

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PENSION PLAN AND OTHER BENEFIT PLANS - Additional Information (Details) - USD ($)			12 Months Ended
	Jan. 01, 2017	Oct. 20, 2016	Dec. 31, 2023	Dec. 31, 2022
Defined Benefit Plan Disclosure [Line Items]
Period of employment multiplier			5 years
Actuarial gain (loss), decrease due to change in mortality losses			$ 200,000
Average total life expectancy of participants (years)			10 years 2 months 12 days
Hours requirement to be eligible		1000 hours
Percentage increase (decrease) in unrecognized net loss of the projected benefit obligation			(0.16)
All other sources gain (loss) (less than)			$ 1,000
Defined Contribution Profit Sharing, Savings and Investment Plan
Defined Benefit Plan Disclosure [Line Items]
Defined contribution plan, employer non-discretionary contribution amount	3.00%		3.00%
Contribution cost percentage	50.00%		50.00%
Defined contribution plan, employer matching contribution, percent of employees' gross pay	6.00%		6.00%
Total expense			$ 1,400,000
Chemung common stock included in defined contribution plan assets (in shares)			124,214	121,847
Defined Contribution Supplemental Executive Retirement Plan
Defined Benefit Plan Disclosure [Line Items]
Total expense			$ 600,000	$ 500,000
Balance in the plan			3,400,000	2,900,000
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Accumulated benefit obligation			31,000,000	30,500,000
Actuarial gain (loss), increase due to change in discount rate			$ 1,000,000
Percentage of combined loss of expected year end obligations (less than)			0.01
Other comprehensive income, defined benefit plans, decrease in net unamortized gain loss arising during period net of tax			$ 1,000,000
Other comprehensive income, defined benefit plans, increase (decrease) in net unamortized gain loss arising during period net of tax, due to variance of actual and expected return on plan assets			$ 2,100,000
Total unrecognized net loss increased percentage of obligation amortization threshold			10.00%
Total unrecognized net loss increased (decreased) percentage of plan assets threshold			10.00%
Pension Plan | Minimum
Defined Benefit Plan Disclosure [Line Items]
Evaluation period of expected long-term return on plan assets			3 years
Pension Plan | Maximum
Defined Benefit Plan Disclosure [Line Items]
Evaluation period of expected long-term return on plan assets			5 years
Other Postretirement Benefit Plan
Defined Benefit Plan Disclosure [Line Items]
Other comprehensive income, defined benefit plans, decrease in net unamortized gain loss arising during period net of tax			$ 16,000
Contribution cost percentage			50.00%
Decrease in accumulated benefit obligation due to change in discount rate			$ 1,000
Increase in accumulated benefit obligation due to discount rate, claims and date experience			$ 6,000
Average future working lifetime of active participants			6 years
Estimated employer contributions in next fiscal year			$ 12,000
Executive Supplemental Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Accumulated benefit obligation			900,000	$ 900,000
Actuarial gain (loss), increase due to change in discount rate			20,000
Actuarial gain (loss), decrease due to change in mortality losses			$ 8,000
Total unrecognized net loss increased percentage of obligation amortization threshold			10.00%
Total unrecognized net loss increased (decreased) percentage of plan assets threshold			10.00%
Average total life expectancy of participants (years)			10 years 2 months 1 day
Decrease in accumulated benefit obligation due to discount rate, health care trend rates			$ 4,000
Percentage increase (decrease) in unrecognized net loss of the projected benefit obligation			0.032
Estimated employer contributions in next fiscal year			$ 110,000
Actuarial gain (loss), increase (decrease) due to change in mortality longevity			25,000
Defined benefit plan, increase in total unrecognized net loss			30,000
All other sources gain (loss) (less than)			$ 0

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PENSION PLAN AND OTHER BENEFIT PLANS - Changes in Projected Benefit Obligation and Plan Assets, and Funded Status (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Pension Plan
Change in projected benefit obligation:
Benefit obligation at beginning of year	$ 30,506	$ 40,404
Service cost	0	0
Interest cost	1,605	1,130
Actuarial (gain) loss	1,098	(8,856)
Curtailments	0	0
Settlements	0	0
Benefits paid	(2,186)	(2,172)
Benefit obligation at end of year	31,023	30,506
Change in plan assets:
Fair value of plan assets at beginning of year	44,656	52,987
Actual return on plan assets	4,480	(6,159)
Employer contributions	0	0
Settlements	0	0
Benefits paid	(2,186)	(2,172)
Fair value of plan assets at end of year	46,950	44,656
Funded status of plan	15,927	14,150
Defined Benefit Health Care Plan
Change in projected benefit obligation:
Benefit obligation at beginning of year	95	194
Service cost	0	0
Interest cost	5	3
Participant contributions	18	18
Amendments	0	0
Actuarial (gain) loss	3	(71)
Benefits paid	(45)	(49)
Benefit obligation at end of year	76	95
Change in plan assets:
Fair value of plan assets at beginning of year	0	0
Employer contributions	27	31
Plan participants’ contributions	18	18
Benefits paid	(45)	(49)
Fair value of plan assets at end of year	0	0
Funded status of plan	(76)	(95)
Executive Supplemental Pension Plan
Change in projected benefit obligation:
Benefit obligation at beginning of year	948	1,173
Service cost	0	0
Interest cost	48	32
Actuarial (gain) loss	37	(148)
Benefits paid	(109)	(109)
Benefit obligation at end of year	924	948
Change in plan assets:
Fair value of plan assets at beginning of year	0	0
Employer contributions	109	109
Benefits paid	(109)	(109)
Fair value of plan assets at end of year	0	0
Funded status of plan	$ (924)	$ (948)

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PENSION PLAN AND OTHER BENEFIT PLANS - Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Net actuarial loss	$ 3,961	$ 4,988
Prior service cost	0	0
Total before tax effects	3,961	4,988
Defined Benefit Health Care Plan
Defined Benefit Plan Disclosure [Line Items]
Net actuarial loss	102	118
Prior service cost	0	0
Total before tax effects	102	118
Executive Supplemental Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Net actuarial loss	202	172
Prior service cost	0	0
Total before tax effects	$ 202	$ 172

XML

PENSION PLAN AND OTHER BENEFIT PLANS - Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 0	$ 0
Interest cost	1,605	1,130
Expected return on plan assets	(2,391)	(2,851)
Amortization of net loss	36	0
Amortization of  prior service cost	0	0
Recognized (gain) loss due to settlements	0	0
Net periodic cost (benefit)	(750)	(1,721)
Other Postretirement Benefit Plan
Defined Benefit Plan Disclosure [Line Items]
Service cost	0	0
Interest cost	5	3
Expected return on plan assets	0	0
Amortization of net loss	19	18
Amortization of  prior service cost	0
Recognized prior service benefit due to curtailments	0	0
Net periodic cost (benefit)	24	21
Executive Supplemental Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Service cost	0	0
Interest cost	48	32
Amortization of net loss	7	19
Net periodic cost (benefit)	$ 55	$ 51

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PENSION PLAN AND OTHER BENEFIT PLANS - Other Changes In Plan Assets And Benefit Obligations Recognized In Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Defined Benefit Plan Disclosure [Line Items]
Net actuarial (gain) loss	$ 950	$ 63
Recognized loss	63	38
Total before tax effect	1,013	101
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Net actuarial (gain) loss	(990)	154
Recognized loss	(37)	0
Amortization of prior service cost	0	0
Total before tax effect	(1,027)	154
Total recognized in net (benefit) cost and other comprehensive income (loss) (before tax effect)	(1,777)	(1,567)
Other Postretirement Benefit Plan
Defined Benefit Plan Disclosure [Line Items]
Net actuarial (gain) loss	3	(71)
Recognized loss	(19)	(18)
Prior service credit		0
Amortization of prior service cost		0
Total before tax effect	(16)	(89)
Total recognized in net (benefit) cost and other comprehensive income (loss) (before tax effect)	8	(68)
Executive Supplemental Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Net actuarial (gain) loss	37	(148)
Recognized loss	(7)	(20)
Total before tax effect	30	(168)
Total recognized in net (benefit) cost and other comprehensive income (loss) (before tax effect)	$ 85	$ (117)

XML

PENSION PLAN AND OTHER BENEFIT PLANS - Weighted-average Assumptions For Net Periodic Cost (Details)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Discount rate	5.07%	5.42%
Discount rate	5.42%	2.87%
Expected return on assets	5.50%	5.50%
Other Postretirement Benefit Plan
Defined Benefit Plan Disclosure [Line Items]
Discount rate	5.07%	5.42%
Discount rate	5.42%	2.87%
Other Postretirement Benefit Plan | Minimum
Defined Benefit Plan Disclosure [Line Items]
Health care cost trend rate assumed, next fiscal year	8.00%	7.50%
Health care cost trend: Initial	8.00%	7.50%
Health care cost trend: Ultimate (Pre-65/Post 65)	4.75%	4.75%
Other Postretirement Benefit Plan | Maximum
Defined Benefit Plan Disclosure [Line Items]
Health care cost trend rate assumed, next fiscal year	7.00%	6.50%
Health care cost trend: Initial	7.00%	6.50%
Health care cost trend: Ultimate (Pre-65/Post 65)	4.75%	4.75%
Executive Supplemental Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Discount rate	5.07%	5.42%
Discount rate	5.42%	2.87%

XML

PENSION PLAN AND OTHER BENEFIT PLANS - Target Allocations Of Plan Assets (Details) - Pension Plan	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Defined Benefit Plan Disclosure [Line Items]
Percentage of plan assets (in hundredths)	100.00%	100.00%
Expected return on assets	5.50%	5.50%
Large cap domestic equities
Defined Benefit Plan Disclosure [Line Items]
Percentage of plan assets (in hundredths)	41.00%	39.00%
Expected return on assets	11.80%
Mid-cap domestic equities
Defined Benefit Plan Disclosure [Line Items]
Percentage of plan assets (in hundredths)	2.00%	2.00%
Expected return on assets	11.50%
Small-cap domestic equities
Defined Benefit Plan Disclosure [Line Items]
Percentage of plan assets (in hundredths)	1.00%	1.00%
Expected return on assets	9.70%
International equities
Defined Benefit Plan Disclosure [Line Items]
Percentage of plan assets (in hundredths)	3.00%	3.00%
Expected return on assets	6.90%
Intermediate fixed income
Defined Benefit Plan Disclosure [Line Items]
Percentage of plan assets (in hundredths)	37.00%	43.00%
Expected return on assets	7.00%
Alternative assets
Defined Benefit Plan Disclosure [Line Items]
Percentage of plan assets (in hundredths)	0.00%	0.00%
Expected return on assets	2.90%
Cash
Defined Benefit Plan Disclosure [Line Items]
Percentage of plan assets (in hundredths)	16.00%	12.00%
Expected return on assets	1.20%
Minimum | Large cap domestic equities
Defined Benefit Plan Disclosure [Line Items]
Target allocation, minimum (in hundredths)	30.00%
Minimum | Mid-cap domestic equities
Defined Benefit Plan Disclosure [Line Items]
Target allocation, minimum (in hundredths)	0.00%
Minimum | Small-cap domestic equities
Defined Benefit Plan Disclosure [Line Items]
Target allocation, minimum (in hundredths)	0.00%
Minimum | International equities
Defined Benefit Plan Disclosure [Line Items]
Target allocation, minimum (in hundredths)	0.00%
Minimum | Intermediate fixed income
Defined Benefit Plan Disclosure [Line Items]
Target allocation, minimum (in hundredths)	33.00%
Minimum | Alternative assets
Defined Benefit Plan Disclosure [Line Items]
Target allocation, minimum (in hundredths)	0.00%
Minimum | Cash
Defined Benefit Plan Disclosure [Line Items]
Target allocation, minimum (in hundredths)	0.00%
Maximum | Large cap domestic equities
Defined Benefit Plan Disclosure [Line Items]
Target allocation, minimum (in hundredths)	60.00%
Maximum | Mid-cap domestic equities
Defined Benefit Plan Disclosure [Line Items]
Target allocation, minimum (in hundredths)	8.00%
Maximum | Small-cap domestic equities
Defined Benefit Plan Disclosure [Line Items]
Target allocation, minimum (in hundredths)	6.00%
Maximum | International equities
Defined Benefit Plan Disclosure [Line Items]
Target allocation, minimum (in hundredths)	8.00%
Maximum | Intermediate fixed income
Defined Benefit Plan Disclosure [Line Items]
Target allocation, minimum (in hundredths)	63.00%
Maximum | Alternative assets
Defined Benefit Plan Disclosure [Line Items]
Target allocation, minimum (in hundredths)	15.00%
Maximum | Cash
Defined Benefit Plan Disclosure [Line Items]
Target allocation, minimum (in hundredths)	20.00%

XML

PENSION PLAN AND OTHER BENEFIT PLANS - Fair Value Plan Assets By Asset Class (Details) - Pension Plan - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	$ 46,950	$ 44,656	$ 52,987
Carrying Value
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	46,950	44,656
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	46,950	44,656
Fair Value | Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value | Significant Unobservable Inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Cash | Carrying Value
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	7,503	5,374
Cash | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	7,503	5,374
Cash | Fair Value | Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Cash | Fair Value | Significant Unobservable Inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
U.S. companies | Carrying Value
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	19,374	17,526
U.S. companies | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	19,374	17,526
U.S. companies | Fair Value | Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
U.S. companies | Fair Value | Significant Unobservable Inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Mutual funds | Carrying Value
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	17,905	19,619
Mutual funds | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	17,905	19,619
Mutual funds | Fair Value | Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Mutual funds | Fair Value | Significant Unobservable Inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
U.S. Treasuries/Government bonds | Carrying Value
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,920	1,891
U.S. Treasuries/Government bonds | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,920	1,891
U.S. Treasuries/Government bonds | Fair Value | Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
U.S. Treasuries/Government bonds | Fair Value | Significant Unobservable Inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
U.S. Corporate bonds | Carrying Value
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	248	246
U.S. Corporate bonds | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	248	246
U.S. Corporate bonds | Fair Value | Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
U.S. Corporate bonds | Fair Value | Significant Unobservable Inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	$ 0	$ 0

XML

PENSION PLAN AND OTHER BENEFIT PLANS - Estimated Benefit Payments (Details) $ in Thousands	Dec. 31, 2023 USD ($)
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
2024	$ 2,390
2025	2,369
2026	2,372
2027	2,353
2028	2,324
2029-2032	11,222
Other Postretirement Benefit Plan
Defined Benefit Plan Disclosure [Line Items]
2024	12
2025	11
2026	11
2027	10
2028	9
2029-2032	32
Executive Supplemental Pension Plan
Defined Benefit Plan Disclosure [Line Items]
2024	108
2025	105
2026	100
2027	96
2028	90
2029-2032	$ 368

XML

STOCK COMPENSATION - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Restricted Stock
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Total unrecognized compensation cost related to nonvested shares granted under the plan	$ 1.4
Weighted-average period for recognition (in years)	3 years 3 months 25 days
Total fair value of shares vested	$ 0.6	$ 0.7
2021 Equity Incentive Plan
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Number of shares authorized (in shares)	170,000
Expense related to stock compensation recognized	$ 1.2	$ 1.2
Number of treasury shares reissued to fund stock compensation (in shares)	34,658	33,586

XML

STOCK COMPENSATION - Restricted Stock Plan (Details) - Restricted Stock	12 Months Ended
	Dec. 31, 2023 $ / shares shares
Shares
Nonvested, beginning of period (in shares) | shares	55,402
Granted (in shares) | shares	34,658
Vested (in shares) | shares	(26,750)
Forfeited or cancelled (in shares) | shares	(326)
Nonvested, end of period (in shares) | shares	62,984
Weighted–Average Grant Date Fair Value
Nonvested, beginning of period (in dollars per share) | $ / shares	$ 44.57
Granted (in dollars per share) | $ / shares	46.96
Vested (in dollars per share) | $ / shares	44.60
Forfeitures or cancelled (in dollars per share) | $ / shares	43.73
Nonvested, end of period (in dollars per share) | $ / shares	$ 45.87

XML

RELATED PARTY TRANSACTIONS - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Related Party Transactions [Line Items]
Deposit liabilities	$ 36,000	$ 28,400
Rent expense	1,000	1,000
Fee income	97,228	68,051
Management | Wealth management group fee income | Operating Segments | Trust Services
Related Party Transactions [Line Items]
Fee income	600	600
1365 New Scotland Road, Slingerlands, New York | Director
Related Party Transactions [Line Items]
Rent expense		25
2 Rush Street, Schenectady, New York
Related Party Transactions [Line Items]
Monthly rent expense	9	8
2 Rush Street, Schenectady, New York | Director
Related Party Transactions [Line Items]
Rent expense	$ 118	$ 102
Minimum
Related Party Transactions [Line Items]
Related party principal ownership threshold (percent)	10.00%

XML

RELATED PARTY TRANSACTIONS - Related Party Loans (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Loans to Related Parties [Roll Forward]
Beginning balance	$ 1,809,789
Ending balance	1,950,147	$ 1,809,789
Related Party
Loans to Related Parties [Roll Forward]
Beginning balance	28,062	51,192
New loans or additional advances	77	990
Effect of changes in composition of related parties	(4)	(22,607)
Repayments	(2,077)	(1,513)
Ending balance	$ 26,058	$ 28,062

XML

COMMITMENTS AND CONTINGENCIES - Off-Balance Sheet Risk (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Fixed Rate | Commitments to make loans
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contractual amounts of financial instruments with off-balance sheet risk	$ 23,809	$ 44,481
Fixed Rate | Unused lines of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contractual amounts of financial instruments with off-balance sheet risk	3,387	2,887
Fixed Rate | Standby letters of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contractual amounts of financial instruments with off-balance sheet risk	0	0
Variable Rate | Commitments to make loans
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contractual amounts of financial instruments with off-balance sheet risk	78,790	75,028
Variable Rate | Unused lines of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contractual amounts of financial instruments with off-balance sheet risk	332,439	326,188
Variable Rate | Standby letters of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contractual amounts of financial instruments with off-balance sheet risk	$ 11,317	$ 17,211

XML

COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023		Dec. 31, 2022		Dec. 31, 2021
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Allowance for credit losses on unfunded commitments	$ 22,517	[1]	$ 19,659	[1]	$ 21,025
Contingent obligations	11,300
Unfunded Loan Commitment
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Allowance for credit losses on unfunded commitments	$ 919		$ 0		$ 0
Minimum | Fixed Rate
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Interest rate on fixed-rate commitments to make loans	5.75%
Maturity period of fixed-rate commitments to make loans (years)	7 years
Commitments period to make fixed-rate commercial draw notes (months)	3 months
Interest rate on fixed-rate commitments to make commercial draw notes (in hundredths)	2.79%
Maximum
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Commitments period to make real estate and home equity loans (days)	60 days
Off-balance sheet financial instruments, standard term	12 months
Maximum | Fixed Rate
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Interest rate on fixed-rate commitments to make loans	8.13%
Maturity period of fixed-rate commitments to make loans (years)	30 years
Commitments period to make fixed-rate commercial draw notes (months)	24 months
Interest rate on fixed-rate commitments to make commercial draw notes (in hundredths)	8.17%

[1] Effective January 1, 2023, the allowance calculation is based upon Current Expected Credit loss methodology. Prior to January 1, 2023, the allowance calculation was based upon incurred loss methodology. Refer to Note 1 for further discussion.

XML

PARENT COMPANY FINANCIAL INFORMATION - BALANCE SHEETS (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Assets:
Cash and cash equivalents	$ 22,247	$ 29,309
Debt Securities, Available-for-Sale	583,993	632,589
Total assets	2,710,529	2,645,553
Liabilities and shareholders' equity:
Dividends payable	1,469	1,455
Total liabilities	2,515,288	2,479,165
Shareholders' equity:
Total shareholders' equity	195,241	166,388	$ 211,455
Total liabilities and shareholders' equity	2,710,529	2,645,553
Parent Company
Assets:
Cash and cash equivalents	6,635	2,708
Dividends receivable from subsidiary bank	1,469	1,455
Debt Securities, Available-for-Sale	204	329
Other assets	1,850	1,728
Total assets	196,735	167,894
Liabilities and shareholders' equity:
Dividends payable	1,469	1,455
Other liabilities	25	51
Total liabilities	1,494	1,506
Shareholders' equity:
Total shareholders' equity	195,241	166,388
Total liabilities and shareholders' equity	196,735	167,894
Parent Company | Chemung Canal Trust Company
Assets:
Investment in subsidiary	185,159	157,493
Parent Company | CFS Group Inc.
Assets:
Investment in subsidiary	1,418	1,294
Parent Company | Chemung Risk Management
Assets:
Investment in subsidiary	$ 0	$ 2,887

XML

PARENT COMPANY FINANCIAL INFORMATION - STATEMENTS OF INCOME (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
STATEMENTS OF INCOME [Abstract]
Income before income tax expense	$ 31,501	$ 36,889
Income tax benefit	6,501	8,106
Net income	25,000	28,783
Parent Company
STATEMENTS OF INCOME [Abstract]
Dividends from subsidiary bank and non-bank	7,204	7,051
Interest and dividend income	11	7
Non-interest income	(125)	10
Non-interest expenses	345	586
Income before impact of subsidiaries' undistributed earnings	6,745	6,482
Income before income tax expense	24,835	28,590
Income tax benefit	(165)	(193)
Net income	25,000	28,783
Parent Company | Chemung Canal Trust Company
STATEMENTS OF INCOME [Abstract]
Income (loss) from equity method investments	18,267	21,638
Parent Company | CFS Group Inc.
STATEMENTS OF INCOME [Abstract]
Income (loss) from equity method investments	124	220
Parent Company | Chemung Risk Management
STATEMENTS OF INCOME [Abstract]
Distributed earnings of Chemung Risk Management, Inc.	$ (301)	$ 250

XML

PARENT COMPANY FINANCIAL INFORMATION - STATEMENTS OF CASH FLOWS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Cash flows from operating activities:
Net income	$ 25,000	$ 28,783
Adjustments to reconcile net income to net cash provided by operating activities:
Change in other assets	(1,298)	(28,071)
Change in other liabilities	(1,271)	25,529
Net cash provided by operating activities	30,881	35,047
Cash flow from investing activities:
Net cash (used by) provided by investing activities	(82,381)	(252,620)
Cash flow from financing activities:
Cash dividends paid	(5,840)	(5,797)
Purchase of treasury stock	(316)	(933)
Sale of treasury stock	601	424
Net cash (used in) provided by financing activities	32,478	246,461
Increase (decrease) in cash and cash equivalents	(19,022)	28,888
Cash and cash equivalents, beginning of period	55,869
Cash and cash equivalents, end of period	36,847	55,869
Parent Company
Cash flows from operating activities:
Net income	25,000	28,783
Adjustments to reconcile net income to net cash provided by operating activities:
Change in dividend receivable	(14)	(5)
Change in other assets	(122)	(211)
Change in other liabilities	(1,085)	(733)
Expense related to restricted stock units directors' deferred compensation plan	20	20
Expense to employee restricted stock awards	1,139	795
Net cash provided by operating activities	6,848	6,541
Cash flow from investing activities:
Proceeds from dissolution of Chemung Risk Management, Inc.	2,634	0
Net cash (used by) provided by investing activities	2,634	0
Cash flow from financing activities:
Cash dividends paid	(5,840)	(5,797)
Purchase of treasury stock	(316)	(933)
Sale of treasury stock	601	424
Net cash (used in) provided by financing activities	(5,555)	(6,306)
Increase (decrease) in cash and cash equivalents	3,927	235
Cash and cash equivalents, beginning of period	2,708	2,473
Cash and cash equivalents, end of period	6,635	2,708
Parent Company | Chemung Canal Trust Company
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed earnings	(18,267)	(21,638)
Parent Company | CFS Group Inc.
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed earnings	(124)	(220)
Parent Company | Chemung Risk Management
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed earnings	$ 301	$ (250)

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FAIR VALUES (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Financial Assets:
Total	$ 583,993	$ 632,589
Derivative assets	23,942	26,706
Financial Liabilities:
Derivative liabilities	23,981	26,761
Recurring
Financial Assets:
U.S. treasury notes and bonds	55,332	55,574
Mortgage-backed securities, residential	403,824	435,131
Obligations of states and political subdivisions	38,686	38,892
Corporate bonds and notes	20,669	21,970
SBA loan pools	65,482	81,022
Total	583,993	632,589
Equity Investments	2,552	2,246
Derivative assets	23,942	26,706
Financial Liabilities:
Derivative liabilities	23,981	26,761
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial Assets:
U.S. treasury notes and bonds	55,332	55,574
Mortgage-backed securities, residential	0	0
Obligations of states and political subdivisions	0	0
Corporate bonds and notes	0	0
SBA loan pools	0	0
Total	55,332	55,574
Equity Investments	2,552	2,246
Derivative assets	0	0
Financial Liabilities:
Derivative liabilities	0	0
Recurring | Significant Other Observable Inputs (Level 2)
Financial Assets:
U.S. treasury notes and bonds	0	0
Mortgage-backed securities, residential	403,824	435,131
Obligations of states and political subdivisions	38,686	38,892
Corporate bonds and notes	13,139	21,970
SBA loan pools	65,482	81,022
Total	521,131	577,015
Equity Investments	0	0
Recurring | Significant Unobservable Inputs (Level 3)
Financial Assets:
U.S. treasury notes and bonds	0	0
Mortgage-backed securities, residential	0	0
Obligations of states and political subdivisions	0	0
Corporate bonds and notes	7,530	0
SBA loan pools	0	0
Total	7,530	0
Equity Investments	0	0
Derivative assets	$ 0	0
Financial Liabilities:
Derivative liabilities		$ 0

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FAIR VALUES - Unobservable Input Reconciliation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	$ 0	$ 0
Included in other comprehensive income	(1,096)	0
Transfers into Level 3	9,955	0
Transfers out of Level 3	(1,329)	0
Ending balance	$ 7,530	$ 0
Fair Value, Asset, Recurring Basis, Unobservable Input Reconciliation, Asset, Gain (Loss), Statement of Other Comprehensive Income or Comprehensive Income [Extensible Enumeration]	Unrealized holding gain (loss) on securities available for sale	Unrealized holding gain (loss) on securities available for sale

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FAIR VALUES - Quantitative Information (Details) - Corporate bonds and notes $ in Thousands	Dec. 31, 2023 USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Assets, fair value, recurring	$ 7,530
Discounted cash flow | Market discount rate | Minimum
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Financial asset, measurement input	0.1250
Discounted cash flow | Market discount rate | Maximum
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Financial asset, measurement input	0.1250
Discounted cash flow | Market discount rate | Weighted Average
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Financial asset, measurement input	0.1250

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FAIR VALUE - Narrative (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2023 USD ($) bond	Dec. 31, 2022 USD ($)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Number of corporate bonds transferred out of Level 3 into Level 2 | bond	2
Transfers out of Level 3	$ 1,329	$ 0
Significant Unobservable Inputs (Level 3)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets, fair value, recurring	$ 0

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FAIR VALUES - Carrying Amounts and Estimated Fair Values of Other Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Financial assets:
Cash and due from financial institutions	$ 22,247	$ 29,309
Interest-bearing deposits in other financial institutions	14,600	26,560
Estimated Fair Value	583,993	632,589
Securities held to maturity	785	2,424
Derivative assets	23,942	26,706
Deposits:
Time deposits	612,265
FHLBNY overnight advances	31,920	95,810
Derivative liabilities	23,981	26,761
Recurring
Financial assets:
Estimated Fair Value	583,993	632,589
Derivative assets	23,942	26,706
Deposits:
Derivative liabilities	23,981	26,761
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial assets:
Estimated Fair Value	55,332	55,574
Derivative assets	0	0
Deposits:
Derivative liabilities	0	0
Recurring | Significant Other Observable Inputs (Level 2)
Financial assets:
Estimated Fair Value	521,131	577,015
Recurring | Significant Unobservable Inputs (Level 3)
Financial assets:
Estimated Fair Value	7,530	0
Derivative assets	0	0
Deposits:
Derivative liabilities		0
Recurring | Carrying Value
Financial assets:
Cash and due from financial institutions	22,247	29,309
Interest-bearing deposits in other financial institutions	14,600	26,560
Equity investments	3,046	2,830
Estimated Fair Value	583,993	632,589
Securities held to maturity	785	2,424
FHLBNY and FRBNY stock	5,498	8,197
Loans, net and loans held for sale	1,972,664	1,829,448
Derivative assets	23,942	26,706
Deposits:
Demand, savings, and insured money market deposits	1,817,162	1,924,843
Time deposits	612,265	402,384
FHLBNY overnight advances	31,920	95,810
Derivative liabilities	23,981	26,761
Recurring | Estimated Fair Value
Financial assets:
Cash and due from financial institutions	22,247	29,309
Interest-bearing deposits in other financial institutions	14,600	26,560
Equity investments	3,046	2,830
Estimated Fair Value	583,993	632,589
Securities held to maturity	785	2,402
Loans, net and loans held for sale	1,875,390	1,757,171
Derivative assets	23,942	26,706
Deposits:
Demand, savings, and insured money market deposits	1,817,162	1,924,843
Time deposits	609,863	403,572
FHLBNY overnight advances	31,925	0
Derivative liabilities	23,981	26,761
Recurring | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial assets:
Cash and due from financial institutions	22,247	29,309
Interest-bearing deposits in other financial institutions	14,600	26,560
Equity investments	3,046	2,830
Estimated Fair Value	55,332	55,574
Securities held to maturity	0	0
FHLBNY and FRBNY stock	0	0
Loans, net and loans held for sale	0	0
Derivative assets	0	0
Deposits:
Demand, savings, and insured money market deposits	1,817,162	1,924,843
Time deposits	0	0
FHLBNY overnight advances	0	0
Derivative liabilities	0	0
Recurring | Estimated Fair Value | Significant Other Observable Inputs (Level 2)
Financial assets:
Cash and due from financial institutions	0	0
Interest-bearing deposits in other financial institutions	0	0
Equity investments	0	0
Estimated Fair Value	521,131	577,015
Securities held to maturity	0	1,450
FHLBNY and FRBNY stock	0	0
Loans, net and loans held for sale	0	0
Derivative assets	23,942	26,706
Deposits:
Demand, savings, and insured money market deposits	0	0
Time deposits	609,863	403,572
FHLBNY overnight advances	31,925	0
Derivative liabilities	23,981	26,761
Recurring | Estimated Fair Value | Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and due from financial institutions	0	0
Interest-bearing deposits in other financial institutions	0	0
Equity investments	0	0
Estimated Fair Value	7,530	0
Securities held to maturity	785	952
FHLBNY and FRBNY stock	0	0
Loans, net and loans held for sale	1,875,390	1,757,171
Derivative assets	0	0
Deposits:
Demand, savings, and insured money market deposits	0	0
Time deposits	0	0
FHLBNY overnight advances	0	0
Derivative liabilities	$ 0	$ 0

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REGULATORY CAPITAL REQUIREMENTS (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]
Net profits period for accessing dividends declarable (years)	2 years
Declarable dividends without prior approval for next fiscal year	$ 59,400
Total Capital (to Risk Weighted Assets):
Actual	262,864	$ 239,478
Tier 1 Capital (to Risk Weighted Assets):
Actual	239,429	219,820
Common Equity Tier 1 Capital (to Risk Weighted Assets):
Actual	239,429	219,820
Tier 1 Capital (to Average Assets):
Actual	$ 239,429	$ 219,820
Risk Based Ratios [Abstract]
Capital to Risk Weighted Assets	0.1326	0.1257
Tier One Risk Based Capital to Risk Weighted Assets	0.1208	0.1154
Common Equity Tier 1 Capital to Risk Weighted Assets	12.08%	11.54%
Leverage Ratios [Abstract]
Tier One Leverage Capital to Average Assets (in hundredths)	0.0862	0.0823
Bank
Total Capital (to Risk Weighted Assets):
Actual	$ 252,783	$ 230,560
Minimal Capital Adequacy	158,438	152,414
Minimal Capital Adequacy with Capital Buffer	207,950	200,044
To Be Well Capitalized Under Prompt Corrective Action Provisions	198,048	190,518
Tier 1 Capital (to Risk Weighted Assets):
Actual	229,348	210,901
Minimal Capital Adequacy	118,829	114,311
Minimal Capital Adequacy with Capital Buffer	168,341	161,940
To Be Well Capitalized Under Prompt Corrective Action Provisions	158,438	152,414
Common Equity Tier 1 Capital (to Risk Weighted Assets):
Actual	229,348	210,901
Minimal Capital Adequacy	89,122	85,733
Minimal Capital Adequacy with Capital Buffer	138,634	133,363
To Be Well Capitalized Under Prompt Corrective Action Provisions	128,731	123,837
Tier 1 Capital (to Average Assets):
Actual	229,348	210,901
Minimal Capital Adequacy	111,034	106,616
To Be Well Capitalized Under Prompt Corrective Action Provisions	$ 138,792	$ 133,270
Risk Based Ratios [Abstract]
Capital to Risk Weighted Assets	0.1276	0.1210
Capital Required To Be Adequately Capitalized to Risk Weighted Assets	0.0800	0.0800
Capital Required for Capital Adequacy with Capital Buffer to Risk Weighted Assets	10.50%	10.50%
Capital Required To Be Well Capitalized to Risk Weighted Assets	0.1000	0.1000
Tier One Risk Based Capital to Risk Weighted Assets	0.1158	0.1107
Tier One Risk Based Capital Required To Be Adequately Capitalized to Risk Weighted Assets	0.0600	0.0600
Tier One Risk Based Capital Required for Capital Adequacy With Capital Buffer to Risk Weighted Assets	8.50%	8.50%
Tier One Risk Based Capital Required To Be Well Capitalized to Risk Weighted Assets	0.0800	0.0800
Common Equity Tier 1 Capital to Risk Weighted Assets	11.58%	11.07%
Common Equity Tier 1 Capital Required to be Adequately Capitalized to Risk Weighted Assets	4.50%	4.50%
Common Equity Tier One Risk Based Capital Requirement for Capital Adequacy with Capital Buffer to Risk Weighted Assets	7.00%	7.00%
Common Equity Tier 1 Capital Required to be Well Capitalized to Risk Weighted Assets	6.50%	6.50%
Leverage Ratios [Abstract]
Tier One Leverage Capital to Average Assets (in hundredths)	0.0826	0.0791
Tier One Leverage Capital Required To Be Adequately Capitalized to Average Assets (in hundredths)	0.0400	0.0400
Tier One Leverage Capital Required To Be Well Capitalized to Average Assets (in hundredths)	0.0500	0.0500

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ACCUMULATED OTHER COMPREHENSIVE INCOME OR LOSS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Summary of changes in accumulated other comprehensive income or loss by component, net of tax [Roll Forward]
Beginning balance	$ 166,388	$ 211,455
Other comprehensive income (loss) before reclassification	9,208	(68,754)
Amounts reclassified from accumulated other comprehensive income (loss)	36	27
Total other comprehensive income (loss)	9,244	(68,727)
Ending balance	195,241	166,388
Realized gains (losses) on securities available for sale	(39)	0
Tax effect	(6,501)	(8,106)
Total reclassification for the period, net of tax	25,000	28,783
Reclassification out of Accumulated Other Comprehensive Income (loss)
Summary of changes in accumulated other comprehensive income or loss by component, net of tax [Roll Forward]
Total reclassification for the period, net of tax	37	27
Total
Summary of changes in accumulated other comprehensive income or loss by component, net of tax [Roll Forward]
Beginning balance	(75,257)	(6,530)
Total other comprehensive income (loss)	9,244	(68,727)
Ending balance	(66,013)	(75,257)
Total | Reclassification out of Accumulated Other Comprehensive Income (loss)
Summary of changes in accumulated other comprehensive income or loss by component, net of tax [Roll Forward]
Total reclassification for the period, net of tax	(10)	0
Unrealized Gains and Losses on Securities Available for Sale
Summary of changes in accumulated other comprehensive income or loss by component, net of tax [Roll Forward]
Beginning balance	(71,296)	(2,495)
Other comprehensive income (loss) before reclassification	8,506	(68,801)
Amounts reclassified from accumulated other comprehensive income (loss)	(10)	0
Total other comprehensive income (loss)	8,496	(68,801)
Ending balance	(62,800)	(71,296)
Unrealized Gains and Losses on Securities Available for Sale | Reclassification out of Accumulated Other Comprehensive Income (loss)
Summary of changes in accumulated other comprehensive income or loss by component, net of tax [Roll Forward]
Realized gains (losses) on securities available for sale	(14)	0
Tax effect	4	0
Defined Benefit and Other Benefit Plans
Summary of changes in accumulated other comprehensive income or loss by component, net of tax [Roll Forward]
Beginning balance	(3,961)	(4,035)
Other comprehensive income (loss) before reclassification	702	47
Amounts reclassified from accumulated other comprehensive income (loss)	46	27
Total other comprehensive income (loss)	748	74
Ending balance	(3,213)	(3,961)
Defined Benefit and Other Benefit Plans | Reclassification out of Accumulated Other Comprehensive Income (loss)
Summary of changes in accumulated other comprehensive income or loss by component, net of tax [Roll Forward]
Tax effect	(16)	(11)
Total reclassification for the period, net of tax	47	27
Actuarial losses | Reclassification out of Accumulated Other Comprehensive Income (loss)
Summary of changes in accumulated other comprehensive income or loss by component, net of tax [Roll Forward]
Pension and other employee benefits	$ 63	$ 38

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SEGMENT REPORTING (Details) $ in Thousands		12 Months Ended
		Dec. 31, 2023 USD ($) segment	Dec. 31, 2022 USD ($)
Segment Reporting Information [Line Items]
Number of primary business segments | segment		2
Reportable segments and reconciliation to consolidated results [Abstract]
Interest and dividend income		$ 113,074	$ 81,475
Interest expense		38,617	7,296
Net interest income		74,457	74,179
Provision for credit losses	[1]	3,262	(554)
Net interest income after provision for credit losses		71,195	74,733
Non-interest income		24,549	21,436
Legal settlements		0	0
Non-interest expenses		64,243	59,280
Income before income tax expense		31,501	36,889
Income tax expense (benefit)		6,501	8,106
Net income		25,000	28,783
Segment assets		2,710,529	2,645,553
Operating Segments | Core Banking
Reportable segments and reconciliation to consolidated results [Abstract]
Interest and dividend income		112,947	81,425
Interest expense		38,617	7,296
Net interest income		74,330	74,129
Provision for credit losses		3,262	(554)
Net interest income after provision for credit losses		71,068	74,683
Non-interest income		13,150	10,225
Legal settlements		0	0
Non-interest expenses		55,982	51,301
Income before income tax expense		28,236	33,607
Income tax expense (benefit)		5,869	7,361
Net income		22,367	26,246
Segment assets		2,706,373	2,635,043
Operating Segments | WMG
Reportable segments and reconciliation to consolidated results [Abstract]
Interest and dividend income		0	0
Interest expense		0	0
Net interest income		0	0
Provision for credit losses		0	0
Net interest income after provision for credit losses		0	0
Non-interest income		10,460	10,280
Legal settlements		0	0
Non-interest expenses		7,061	6,582
Income before income tax expense		3,399	3,698
Income tax expense (benefit)		730	851
Net income		2,669	2,847
Segment assets		2,627	2,559
Intersegment Eliminations
Reportable segments and reconciliation to consolidated results [Abstract]
Interest and dividend income		127	50
Interest expense		0	0
Net interest income		127	50
Provision for credit losses		0	0
Net interest income after provision for credit losses		127	50
Non-interest income		939	931
Legal settlements		0	0
Non-interest expenses		1,200	1,397
Income before income tax expense		(134)	(416)
Income tax expense (benefit)		(98)	(106)
Net income		(36)	(310)
Segment assets		$ 1,529	$ 7,951

[1] Effective January 1, 2023, the allowance calculation is based upon Current Expected Credit loss methodology. Prior to January 1, 2023, the allowance calculation was based upon incurred loss methodology. Refer to Note 1 for further discussion.