Executive Summary

Q2 2025 headline GAAP results were driven by a one-time balance sheet repositioning: net loss of $6.5M and GAAP EPS of -$1.35 due to a $17.5M pre-tax loss on sale of AFS securities; core non-GAAP EPS was $1.31 and non-GAAP net income was $6.3M .
Net interest margin expanded 9 bps to 3.05% vs Q1 2025, and 39 bps YoY, aided by higher loan yields and mix shift after securities sales; management expects lower funding costs to benefit results beginning Q3 2025 .
Strategy catalysts: issued $45.0M 7.75% fixed-to-floating subordinated notes (Tier 2/holding company, Tier 1/bank) and sold $245.5M book value AFS securities with $227.3M proceeds to retire wholesale funding and fund loan growth; tangible equity/assets improved to 7.53% (from 7.02%) .
Consensus context: normalized EPS of $1.31 was slightly below S&P Global consensus of $1.33 (1 estimate); revenue consensus not available for comparison*.
Dividend maintained at $0.32/share; brokered deposits of $100M matured in early July and were not replaced, supporting the funding cost tailwind .

What Went Well and What Went Wrong

What Went Well

Net interest margin expanded to 3.05% (+9 bps QoQ; +39 bps YoY) on higher loan yields and asset mix after the repositioning; total cost of funds held near 1.94% (vs 1.92% in Q1) .
Commercial loan growth remained strong: period-end commercial balances +$75.5M YTD, with pipelines in Capital (Albany) and Canal (Buffalo) divisions underscoring expansion strategy .
Asset quality stayed solid: NPLs fell to $8.2M (0.39% of loans) vs year-end; ACL coverage of NPLs rose to 275% .
Management quotes: “These strategic actions strengthen our regulatory capital position… and position the Corporation to benefit from lower funding costs beginning in the third quarter.” — Anders M. Tomson, President & CEO .

What Went Wrong

One-time $17.5M pre-tax loss on AFS securities drove negative non-interest income (-$10.7M) and GAAP net loss in the quarter; adjusted recurring non-interest income grew modestly .
Non-interest expense rose to $17.8M (+5.3% QoQ) on higher salaries/benefits and professional services, reflecting growth investments and market-driven benefit costs .
Annualized net charge-offs increased to 0.19% of average loans (vs 0.05% in Q1), including a $0.7M C&I charge-off already reserved; consumer losses concentrated in indirect auto .

Financial Results

P&L and Margin Comparisons (oldest → newest)

Metric	Q3 2024	Q4 2024	Q1 2025	Q2 2025
Net Interest Income ($USD Millions)	$18.39	$19.82	$19.82	$20.81
Non-Interest Income ($USD Millions)	$5.92	$6.06	$5.89	-$10.71
Provision for Credit Losses ($USD Millions)	$0.56	$0.55	$1.09	$1.15
Net Income ($USD Millions)	$5.72	$5.91	$6.02	-$6.45
GAAP EPS ($)	$1.19	$1.24	$1.26	-$1.35
Non-GAAP EPS ($)	$1.19	$1.24	$1.26	$1.31
NIM (FTE, %)	2.72%	2.92%	2.96%	3.05%
ROA (%)	0.83%	0.85%	0.88%	-0.92%
ROE (%)	10.81%	10.73%	10.96%	-11.29%

Segment/Portfolio Mix (Period-End Loans, $USD Millions)

Loans	Q3 2024	Q4 2024	Q1 2025	Q2 2025
Commercial	$1,464.21	$1,516.53	$1,555.99	$1,592.00
Residential Mortgage	$274.10	$274.98	$275.45	$278.22
Consumer	$290.65	$279.92	$266.20	$262.19
Loans, net	$2,007.51	$2,050.03	$2,075.11	$2,109.75

KPIs and Risk Metrics (oldest → newest)

KPI	Q3 2024	Q4 2024	Q1 2025	Q2 2025
Loans/Deposits (%)	82.78%	86.42%	86.20%	86.37%
Cost of Funds (%)	2.24%	2.04%	1.92%	1.94%
Yield on Loans (%)	5.65%	5.61%	5.49%	5.61%
Cost of Interest-Bearing Deposits (%)	2.88%	2.67%	2.48%	2.45%
NPLs / Total Loans (%)	0.52%	0.43%	0.47%	0.39%
NPAs / Total Assets (%)	0.40%	0.35%	0.37%	0.30%
ACL / Loans (%)	1.06%	1.03%	1.07%	1.06%
Annualized Net Charge-offs (%)	0.02%	0.12%	0.05%	0.19%
Uninsured Deposits ($, %)	$708.9M, 28.9%	$652.3M, 27.2%	$690.3M, 28.4%	$694.3M, 28.1%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Funding Costs / NIM	Q3 2025	Not provided	Management “positioned to benefit from lower funding costs beginning in the third quarter”	Qualitative improvement
Brokered Deposits	Early Q3 2025	$100.0M brokered deposits outstanding (Q2-end)	All matured early July; not replaced	Lowered reliance on wholesale
Dividend per Share	Q2 2025	$0.32 (Q1 2025)	$0.32 (payable July 1, 2025)	Maintained

No formal revenue, margin, OpEx, tax rate, or segment guidance ranges were issued in Q2 2025 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Balance sheet repositioning	Funding-cost moderation, NIM expansion; BTFP paid off; deposit mix management	Executed $45M sub notes and sold $245.5M AFS securities to retire wholesale funding and fund loans	Acceleration (transformational actions)
Funding costs & brokered deposits	Cut rates on CDs; reduced brokered costs; seasonal municipal inflows	Brokered deposits ($100M) matured; not replaced; FRBNY balances elevated ahead of wholesale maturities	Improving cost outlook
Loan growth in expansion markets	Growth in Canal Bank (Buffalo) and Capital (Albany); strong CRE	Continued CRE-led growth; pipelines solid; deposit-focused hires in growth markets	Continuing execution
Credit/CECL	Provision in Q1 up on model update and macro forecast deterioration	Provision $1.1M; ACL/NPL coverage 275%; NCOs up on reserved C&I charge-off	Stable reserves; isolated losses
Wealth management & fees	Fee increases mid-2024; WM AUM/AUA supported revenues	WM AUM/AUA $2.313B; fee income up YoY; market tailwinds	Slightly positive

Note: No Q2 2025 earnings call transcript was available in our document set; themes inferred from management’s press releases and 8-K filings .

Management Commentary

“These strategic actions strengthen our regulatory capital position, improved commercial real estate concentration ratios, and enhanced our flexibility in funding loan growth… positioning the Corporation to benefit from lower funding costs beginning in the third quarter.” — Anders M. Tomson, President & CEO .
“Core operating results for the quarter were solid… The recent addition of deposit focused team members in our growth markets will complement the strong loan pipelines we are seeing across our footprint.” — Anders M. Tomson .

Q&A Highlights

No public Q2 2025 earnings call transcript was found; management emphasized:

Funding cost tailwind starting Q3 from brokered deposit runoff and wholesale maturities, supported by FRBNY liquidity .
Loan growth focus in Albany/Buffalo divisions with continued CRE momentum and deposit team build-out .
Credit commentary: provision driven by macro forecasts and loan growth; NCOs largely on loans with specific allocations, limiting provision impact .

Estimates Context

EPS (Normalized) vs Consensus: Actual $1.31 vs S&P Global consensus $1.33 (1 estimate) — slight miss*.
Primary EPS Consensus Mean: $1.33; actual $1.31*.
Revenue Consensus Mean: not available for comparison (no consensus provided); actual reported “non-interest income” and net interest income detailed above; S&P revenue series for banks may be non-comparable*.

Metric	Q2 2025
Primary EPS Consensus Mean ($)	1.33*
EPS Normalized Consensus Mean ($)	1.33*
EPS Actual (Normalized, $)	1.31*
Primary EPS – # of Estimates	1*
Revenue Consensus Mean ($)	N/A*

Values retrieved from S&P Global.

Key Takeaways for Investors

The quarter’s GAAP loss is a deliberate, one-time reset: $245.5M AFS sale and $45M sub debt optimize the balance sheet for lower funding costs and higher NIM in Q3+; focus on the forward earnings power rather than the reported loss .
Core earnings quality remained intact (non-GAAP EPS $1.31; NIM 3.05%); expect positive NIM trajectory as brokered deposits roll off and FRBNY liquidity is redeployed .
Loan growth is tracking to plan in expansion markets, especially CRE, with deposit-focused hires supporting funding; watch for continued volume in Canal/Capital divisions .
Asset quality is sound and well-reserved (ACL/NPL 275%), with Q2 charge-offs tied to previously specifically-allocated C&I exposures; credit remains manageable amid macro uncertainty .
Capital position strengthened (tangible equity/assets 7.53%); dividend maintained at $0.32, signaling confidence in recurring cash flows .
Near-term trading: potential relief rally as investors reframe the one-time loss as a catalyst for improved NIM and funding costs; monitor Q3 NIM, wholesale funding paydown, and loan growth pacing .
Medium-term thesis: community-bank funding mix, stable AUM-driven fee base, and disciplined underwriting support consistent ROA/ROE; keep an eye on CRE concentration trends and municipal deposit seasonality .

Bolded events of note:

One-time $17.5M pre-tax securities loss driving GAAP loss .
NIM expansion to 3.05% QoQ and expected further improvement in Q3 .
Brokered deposits not replaced at maturity (early July), reducing wholesale reliance .

CHEMUNG FINANCIAL CORP (CHMG)·Q2 2025 Earnings Summary