What changed in this filing

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Item 1. Business

2025-03-14 compared with 2024-03-13 · 62 added, 63 removed, 365 unchanged (26% of the section changed)

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 incorporated on January 2, 1985 under the laws of the State of New York and is headquartered in Elmira, New York.

The Corporation was organized for the purpose of acquiring the Bank.

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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.

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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.

The Corporation’s Board of Directors has concluded that 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 past two decades, the Corporation has completed two whole bank acquisitions, including of Canton, Pennsylvania based Canton Bancorp, Inc.

in 2009 and Albany, New York based Fort Orange Financial Corp., in 2011, as well as branch acquisitions involving offices in Broome, Cayuga, Cortland, Seneca, Tioga, and Tompkins counties of New York.

Additionally, in 2021 the Corporation expanded its geographic footprint into Western New York with the opening of a de novo branch office in Erie County, and established the “Canal Bank, a division of Chemung Canal Trust Company” brand in 2024, concurrent with the opening of a new regional banking center in Erie County, located in Williamsville, New York.

As a result of these transactions and organic growth, the Corporation had $2.776 billion in consolidated assets, $2.071 billion in loans, $2.397 billion in deposits, and $215.3 million in shareholders’ equity as of December 31, 2024.

Growth Strate g y

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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.

The Bank operates with a traditional community bank model where the relationship manager possesses credit skills and is significantly involved in the credit decisions.

This creates value since clients and prospects know they are dealing with a decision maker.

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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.

These officers exercise substantial authority over credit and pricing decisions, subject to Corporate 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.

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(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.

Commercial and industrial loans primarily consist of loans to small and mid-sized businesses in the Bank's market areas 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.

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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.

Economic events or conditions in real estate markets 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 Bank enters into mirroring swaps with a Domestic Systemically Important Bank (D-SIBs) to manage it's interest rate risk.

The swap agreements are free-standing derivatives and are recorded at fair value in the Bank's Consolidated Balance Sheets.

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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.

In the current environment, the Corporation supplemented this strategy with certificate of deposit campaigns.

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.

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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.

The Bank relies primarily on customer service, digital product offerings, 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.

The Bank utilizes a combination of digital and traditional media, including print, television, and radio, when advertising its deposit and lending 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 securities portfolio also provides a medium for certain interest rate 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.

The Bank utilizes its investment portfolio as the main source of collateral for its municipal depositors, allowing for excess liquidity to fund loans.

Derivative Financial Instruments

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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.

Additionally, the Bank participates in risk participation agreements with lead 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.

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Wealth Mana g ement Strate g y

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.

With $2.212 billion of assets under management or administration as of December 31, 2024, including $301.9 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.

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The Bank operates 30 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.

Bank branch offices operating under the “Chemung Canal Trust Company” brand are located in the following New York counties:

Chemung, Broome, Cayuga, Cortland, Schuyler, Seneca, Steuben, Tioga and Tompkins, as well as in Bradford County, Pennsylvania.

The Bank also operates under the names “Capital Bank, a division of Chemung Canal Trust Company,” with branch offices in Albany, Saratoga, and Schenectady counties in New York, and “Canal Bank, a division of Chemung Canal Trust Company,” with a branch office in Erie County, New York.

According to the FDIC's annual Summary of Deposits – Market Share Report as of June 30, 2024, the Bank held a majority of market deposits in Chemung County, where it is headquartered, with 61.22% of total market deposits, which included the Bank’s $69.5 million in brokered deposits.

Overall, the Bank's legacy market, consisting of the counties operating under the Chemung Canal Trust Company brand as described in the preceding paragraph, comprised 13.0% of the market's $14.7 billion in total deposits.

The Bank's Capital Bank division and newly-established Canal Bank divisions comprised 1.97% and 0.01% of their respective markets total deposits of $26.3 billion and $58.0 billion.

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.

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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.

Regeneron announced the purchase of a 1.1 million square foot site in Saratoga Springs, New York for its warehouse and production support activities with the potential for other operations.

Tompkins County is dominated by the presence of Cornell University and Ithaca College.

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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.

The region also has reliance on higher education with the University at Buffalo, Buffalo State University, as well as several private colleges.

The region's largest employers are affiliated with the healthcare industry, primarily located in the medical corridor, as well as financial institutions.

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.

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As of December 31, 2024 our workforce was 71% female and 29% male, and our average tenure was 8.0 years.

Our Executive Management Team has an average tenure of 12.5 years.

We continue to focus on diversity and inclusion among our workforce.

Our Executive Management Team had an average tenure of 12.5 years with the Corporation.

We believe having a workforce that reflects the unique communities in which we operate is crucial for our ongoing success.

Total Rewards

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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.

We encourage all employees to join career circles, find a mentor, apply for our leadership program, job shadow, participate in moderated employee discussions, and attend other trainings offered.

The success of our company depends on the success of our employees.

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McKillip, Corporate Secretary, Chemung Financial Corporation, One Chemung Canal Plaza, Elmira, NY 14901.

Supervision and Re g ulation

Supervision , Re g ulation, and Evaluation

The Corporation and the Bank are subject to comprehensive regulation, supervision, and examination by regulatory authorities.

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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 Corporation is a bank holding company registered with, and subject to regulation and evaluation 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.

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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.

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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 Bank also is a member bank of the FRB and, therefore, the FRBNY 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.

This structure gives the regulatory authorities extensive discretion in the enforcement of laws and regulations and the supervision of the Bank.

Loans to One Borrower

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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.

As of December 31, 2024, the Bank’s legal lending limit on loans to one borrower was $41.2 million for loans not fully secured by readily marketable collateral and $45.3 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.

As of December 31, 2024, 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.

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.

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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.

As of December 31, 2024, 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.

These guidelines establish general standards relating to capital adequacy, asset quality, management, earnings performance, liquidity levels and funds management practices, sensitivity to market risk, and overall risk management practices.

In general, the guidelines require appropriate systems and practices to identify, measure, manage, and monitor 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.

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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 has authority to increase insurance assessments.

As of December 31, 2024, 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.

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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.

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 ratio of 6% of risk-weighted assets, and a total capital ratio of 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%.

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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.

In assessing an institution’s capital adequacy, the federal regulators, including the FRB with respect to a state member bank such as the Bank, 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 institutions where necessary.

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.

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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.

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.

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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.

The Bank is 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 for the Bank to acquire and hold shares of capital stock in the FHLBNY.

The Bank was in compliance with the rules and requirements of the FHLBNY as of December 31, 2024.

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.

The FRBNY 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 March 31, 2023, and the FRB as of September 25, 2023.

On October 24, 2023, the FRB issued a final rule to strengthen and modernize the federal CRA regulations.

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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.

As of March, 2024, a preliminary injunction was granted by a federal court, effectively staying the implementation of the CRA Final Rule due to a lawsuit filed by several banking and trade associations.

Fair Lending and Consumer Protection Laws

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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.

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 Fair Credit Reporting Act, 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.

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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.

Insurance activities are supervised by the NYSDFS and Pennsylvania Insurance Department, and brokerage activities are subject to supervision by the SEC and FINRA.

Additional Important Le g islation and Re g ulation

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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.

Cybersecurity

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;

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(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.

Banking organizations are required to notify their primary federal regulator as soon as possible and no later than 36 hours of determining that a “computer-security incident” that arises to the level of a “notification incident” has occurred.

A notification incident is a “computer-security incident” that has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the banking organization’s ability to deliver services to a material portion of its customer base, jeopardize the viability of key operations of the banking organization, or impact the stability of the financial sector.

Bank service providers are also required to notify any affected bank to or on behalf of which the service provider provides services “as soon as possible” after determining that it has experienced an incident that materially disrupts or degrades, or is reasonably likely to materially disrupt or degrade, covered services provided to such bank for four or more hours.

Gramm-Leach-Bliley Act

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business