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Chemung Financial Corporation Reports Fourth Quarter 2019 Net Income of $4.2 Million, or $0.87 per Share

ELMIRA, N.Y., Jan. 22, 2020 (GLOBE NEWSWIRE) -- Chemung Financial Corporation (the “Corporation”) (CHMG), the parent company of Chemung Canal Trust Company (the “Bank”), today reported net income of $4.2 million, or $0.87 per share, for the fourth quarter of 2019, compared to $5.7 million, or $1.18 per share, for the fourth quarter of 2018. 

Anders M. Tomson, Chemung Financial Corporation CEO, stated:

“2019 was a year of mixed results for the corporation, largely dominated by the deterioration of two large commercial credits, both of which required a significant reserve allowance earlier in the calendar year.  These previously reported, isolated incidents overshadowed our continuing focus on balance sheet quality, expense reduction through operating efficiencies and the increase of fee income generated by the portfolio expansion of our Wealth Management Group,” said Anders M. Tomson, President & CEO.  “We are optimistic that our community banking model will yield positive results in the coming year, and when coupled with strategic technology opportunities, continued enhancements to our delivery channels and an even greater emphasis on client attraction and retention, we expect to continue to deliver strong results to our constituent stakeholders,” Tomson added.

2019 Highlights1:            

  • Total shareholders’ equity increased $17.6 million, or 10.7%
     
  • Tangible book value per share increased from $29.22 to $32.74, or 12.05%
     
  • Average interest earning assets increased $35.9 million to $1.675 billion
     
  • Net charge-offs to average loans decreased from .41% to .11%
     
  • Total equity to total assets at the end of the period increased from 9.40% to 10.22%

1 Balance sheet comparisons are calculated for December 31, 2019 versus December 31, 2018. 

2019 vs  2018

Net Interest Income:

Net interest income for the year ended December 31, 2019 totaled $60.6 million compared with $60.5 million for the prior year, an increase of $0.1 million, or 0.2%, due primarily to a $2.4 million increase in total interest and dividend income, offset by a $2.2 million increase in total interest expense.  The increase in total interest and dividend income was due primarily to increases in interest income on interest-earning deposits of $1.5 million, interest and fees of $0.4 million from loans, and interest income from taxable securities of $0.5 million, compared to the prior year.  The increase in total interest expense was due primarily to an increase in interest expense of $2.9 million on deposits, offset by decreases in interest expense on securities sold under agreements to repurchase of $0.1 million, and interest expense on borrowed funds of $0.5 million, compared to the prior year.  Fully taxable equivalent net interest margin was 3.64% in 2019, compared with 3.72% for the prior year.  Average interest-earning assets increased $35.9 million in 2019 compared to the prior year.  The average yield on interest-earning assets increased six basis points, while the average cost of interest-bearing liabilities increased twenty basis points, as compared to the prior year.  The increase in interest and dividend income in 2019 was due primarily to a $67.2 million increase in the average balance of interest-earning deposits, and a $9.2 million increase in the average balance of commercial loans, compared to the prior year.  The increase in interest expense in 2019 was due primarily to an increase in interest rates on interest-bearing deposit accounts, including promotional interest rates on time deposits.

Non-Interest Income:

Non-interest income for the year ended December 31, 2019 was $20.1 million compared with $23.1 million for the prior year, a decrease of $3.0 million, or 13.0%.  The decrease was due primarily to decreases of $1.9 million in the fair value of equity investments, $0.8 million in other non-interest income, $0.2 million in net gains (losses) on sales of other real estate owned, and $0.3 million in service charges on deposit accounts, offset by an increase of $0.2 million in Wealth Management Group (“WMG”) fee income.  The decrease in the fair value of equity investments was due primarily to the $2.1 million increase in the fair value of Visa Class B shares in the prior year, and a $0.1 million loss related to an investment in a limited partnership in the current year.  Subsequent to the change in fair value, the Visa Class B shares were sold during the third quarter of 2018.  The decrease in other non-interest income was due to a $0.4 million state sales tax refund in the prior year, a reduction of $0.1 million in rental income from other property owned in the prior year, and a decrease of $0.1 million in interest rate swap income primarily due to changes in market value in the current year.  The increase in WMG fee income can be mostly attributed to an increase in the market value of assets under management and additional fee income from terminating trusts.

Non-Interest Expense:

Non-interest expense for the year ended December 31, 2019 was $55.7 million compared with $56.8 million for the prior year, a decrease of $1.1 million, or 1.9%.  The decrease was due primarily to decreases of $1.0 million in legal accruals and settlements, $0.6 million in net occupancy expenses, $0.6 million in FDIC insurance expense, $0.2 million in marketing and advertising expenses, $0.3 million in professional services, $0.3 million in other real estate owned expenses, and $0.1 in furniture and equipment expenses.  These items were partially offset by increases of $1.1 million in salaries and wages, $0.4 million in pension and other employee benefits, $0.4 million in data processing expenses, and $0.1 million in other non-interest expenses.  The decrease in legal accruals and settlements was due to the resolution of a legal matter in 2018.  The decrease in net occupancy and furniture and equipment expenses was mostly attributable to runoff in depreciation expense related to mechanical equipment, the closing of two branches in 2019, and the reduction in non-capitalizable fixed asset purchases as compared to the prior year due to the opening of two new branches in 2018.  The decrease in FDIC insurance expense was primarily due to the receipt of a $0.4 million credit related to the Deposit Insurance Fund’s (DIF) minimum reserve ratio assessment.  The decrease in marketing and advertising expenses was due to opening two denovo branches during 2018.  The decrease in professional services was due to consulting fees incurred in the prior year associated with a sales tax refund in the prior year.  The decrease in other real estate owned expenses can be attributed to fewer OREO properties acquired during 2019 as compared to 2018.  The increase in salaries and wages can be attributed to annual merit increases and a lower vacancy rate in 2019.  The increase in pension and other employee benefits can be attributed to full vesting of stock awards related to an executive retirement.  The increase in other non-interest expense can be attributed to the impairment of a fixed asset.

Income Tax Expense:

Income tax expense for 2019 was $3.4 million compared with $4.0 million for the prior year, a decrease of $0.6 million, or 14.3%.  The effective tax rate for 2019 increased to 18.0% compared with 17.0% for the prior year.  The decrease in income tax expense was primarily due to a decrease in pretax income.

4th Quarter 2019 vs 4th Quarter 2018

Net Interest Income:

Net interest income decreased $0.3 million, or 1.8%, to $15.2 million for the current quarter compared to the same period in the prior year, due primarily to a decrease of $0.1 million in interest and dividend income, and a $0.2 million increase in total interest expense.  Interest and fees from loans decreased $0.4 million, interest from taxable securities increased $0.4 million, and interest from interest-earning deposits decreased $0.1 million in the fourth quarter of 2019 as compared to the same period in the prior year.  Interest expense on deposits increased $0.2 million in the fourth quarter of 2019 when compared to the same period in the prior year.  Fully taxable equivalent net interest margin was 3.56% in the fourth quarter of 2019, compared with 3.68% for the same period in the prior year.  Average interest-earning assets increased $25.5 million, compared to the same period in the prior year.  The average yield on interest-earning assets decreased 9 basis points, while the average cost of interest-bearing liabilities increased 6 basis points in the fourth quarter of 2019, compared to the same period in the prior year. 

The decrease in interest and dividend income for the current quarter can be mostly attributed to decreases in interest income on consumer loans, commercial loans, and interest-earning deposits, offset by an increase in interest and dividend income on taxable securities. The decrease on consumer loans was primarily due to a decrease of $25.4 million in the average balance.  The decrease on commercial loans was primarily due to an 18 basis points decrease in the average yield on commercial loans, offset by a $21.5 million increase in the average balance of commercial loans.  The decrease in interest income on interest-earning deposits was primarily due to a 49 basis points decrease in the average yield of interest-earning deposits.  The increase in interest and dividend income on taxable securities was due to a 42 basis points increase on the average yield and a $26.9 million increase in the average balance of taxable securities.  The increase in interest expense for the current quarter can be mostly attributed to a 47 basis points increase in the average cost of time deposits, and a $15.8 million increase on the average balance of time deposits. 

Non-Interest Income:

Non-interest income for the current quarter was $5.1 million compared with $4.9 million for the same period in the prior year, an increase of $0.2 million, or 4.4%.  The increase can be mostly attributed to increases of $0.2 million in Wealth Management Group (“WMG”) fee income, and $0.1 million in the change in fair value of equity investments.  The increase in WMG fee income can be mostly attributed to an increase in fees from estates and agency accounts, and an increase in the market value of assets under management.

Non-Interest Expense:

Non-interest expense for the current quarter was $14.9 million compared with $14.2 million for the same period in the prior year, an increase of $0.6 million, or 4.5%.  The increase can be mostly attributed to increases of $0.7 million in salaries and wages, $0.3 million in pension and other employee benefits, $0.3 million in data processing expenses, and $0.4 million in other non-interest expense, offset by decreases of $0.1 million in net occupancy expense, $0.2 million in FDIC insurance expense, $0.1 in marketing and advertising expenses, and a $0.6 million decrease in other components of net periodic pension and post-retirement benefits.  The increase in salaries and wages can be mostly attributed to annual merit increases and a lower vacancy rate. The increase in pension and other employee benefits was due to full vesting of stock awards related to an executive retirement. The increase in other non-interest expense can be partially attributed to the impairment of a fixed asset.  The increase in data processing expenses was primarily attributed to timing of various projects.  The decrease in marketing and advertising expenses was due to the timing of various projects. The decrease in net occupancy expense was due primarily to the closure of two branches in 2019.  The decrease in FDIC insurance expense was primarily due to the receipt of a $0.2 million credit related to the Deposit Insurance Fund’s (DIF) minimum reserve ratio assessment.  The decrease in other components of net periodic pension cost (benefits) was primarily due to a lump sum settlement in the fourth quarter of 2018 to terminated, vested employees.

Income Tax Expense:

Income tax expense for the current quarter was $1.0 million compared with $0.7 million for the same period in the prior year.  The increase in income tax expense was due primarily to a tax benefit of $0.4 million recorded in December 2018 due to the enactment of the Tax Cuts and Jobs Act of 2017.  The effective income tax rate increased from 10.3% for the fourth quarter of 2018 to 19.1% for the fourth quarter of 2019.

4th Quarter 2019 vs 3rd Quarter 2019

Net Interest Income:

Net interest income for the current quarter totaled $15.2 million compared with $15.1 million for the prior quarter, an increase of $0.1 million, or 0.4%. Interest and fees from loans decreased $0.1 million and interest and dividend income from investment securities increased $0.1 million.  Interest expense on deposits decreased $0.1 million due primarily to a six basis points decrease in the average cost on savings and money market accounts.    

Fully taxable equivalent net interest margin was 3.56% in the fourth quarter of 2019, a decrease of seven basis points compared with 3.63% for the prior quarter.  Average interest-earning assets increased $40.0 million in the fourth quarter of 2019, while the average yield on interest-earning assets decreased eleven basis points compared to the prior quarter.   The average cost of interest-bearing liabilities decreased five basis points in the fourth quarter of 2019, compared to the prior quarter.

Non-Interest Income:

Non-interest income for the current quarter was $5.1 million compared with $5.0 million for the prior quarter, an increase of $0.1 million, or 3.0%.  The increase in non-interest income can be attributed to a $0.1 million increase in interest rate swap fee income primarily due to changes in market value.

Non-Interest Expense:

Non-interest expense for the current quarter was $14.9 million compared with $13.5 million for the prior quarter, an increase of $1.4 million, or 9.8%.  The increase can be mostly attributed to increases of $0.3 million in professional services, $0.2 in salaries and wage expense, $0.5 million in other non-interest expense, $0.2 million in data processing expenses, $0.1 million in net occupancy expenses, and $0.1 million in FDIC insurance expense.  The increases in professional services and data processing expenses were related to the timing of various projects.  The increase in salaries and wage expenses was primarily due to merit increases and a lower vacancy rate. The increase in other non-interest expense was primarily due to increases in charitable contributions, bank service fees and the impairment of a fixed asset.  The increase in FDIC insurance expense was primarily due to the receipt of a credit related to the Deposit Insurance Fund’s (DIF) minimum reserve ratio assessment which fully offset the expense in the third quarter of 2019, and partially offset the expense in the fourth quarter of 2019. 

Income Tax Expense:

Income tax expense for the current quarter was $1.0 million compared with $0.2 million for the prior quarter, an increase of $0.8 million.  The increase in income tax expense can be attributed to a $3.1 million increase in income before income tax expense for the fourth quarter of 2019, when compared to the prior quarter.  The effective income tax rate increased from 8.3% for the third quarter of 2019 to 19.1% for the fourth quarter of 2019.

Asset Quality

Non-performing loans totaled $18.0 million at December 31, 2019, or 1.38% of total loans, compared with $12.3 million at December 31, 2018, or 0.93% of total loans.  Non-performing assets, which are comprised of non-performing loans and other real estate owned, were $18.5 million, or 1.04% of total assets, at December 31, 2019, compared with $12.8 million, or 0.73% of total assets, at December 31, 2018. The increase in non-performing loans can be mostly attributed to one commercial mortgage relationship and one participating interest in a commercial credit, offset by decreases in the non-performing residential mortgage, consumer loan, and the remaining commercial loan portfolios.

Management performs an ongoing assessment of the adequacy of the allowance for loan losses based upon a number of factors including an analysis of historical loss factors, collateral evaluations, recent charge-off experience, credit quality of the loan portfolio, current economic conditions and loan growth.  Based on this analysis, the provision for loan losses for the fourth quarter of 2019 was $0.3 million, an increase of $0.5 million compared with the same period in the prior year.  The increase in the provision for loan losses can be mostly attributed to a $0.2 million credit adjustment in the fourth quarter of 2018.  Net charge-offs for the fourth quarter of 2019 were $0.7 million, compared with $0.5 million for the fourth quarter of 2018. 

The allowance for loan losses was $23.5 million at December 31, 2019 compared with $18.9 million at December 31, 2018.  The allowance for loan losses was 130.38% of non-performing loans at December 31, 2019 compared with 154.59% at December 31, 2018.  The ratio of the allowance for loan losses to total loans was 1.79% at December 31, 2019 compared with 1.44% at December 31, 2018.  The increase in the allowance for loan losses can be mostly attributed to the aforementioned non-performing commercial mortgage relationship and participating interest in a commercial credit.   

Balance Sheet Activity

Total assets were $1.788 billion at December 31, 2019 compared with $1.755 billion at December 31, 2018, an increase of $32.5 million, or 1.9%.  The increase can be mostly attributed to increases of $41.8 million in securities available for sale, and $8.0 million in operating lease right-to-use assets related to the adoption of ASU No. 2016-02 Leases (“Topic 842”) as of January 1, 2019, offset by decreases of $7.2 million in total loans, net, $8.1 million in cash and cash equivalents, and $2.6 million in premises and equipment, net.

The decrease in cash and cash equivalents was due to changes in securities, loans, deposits, and borrowings, offset by year to date net income.  The decrease in total loans, net, can be mostly attributed to decreases of $14.4 million in indirect consumer loans, $12.9 million in commercial mortgages, and $9.0 million in other consumer loans, offset by increases of $28.0 million in commercial and agriculture loans and $5.6 million in residential mortgages.  The increase in securities available for sale can be mostly attributed to purchases in the amount of $118.1 million, offset by $33.7 million in sales of mortgage-backed and municipal securities, and $42.6 million of maturities and paydowns.

Total liabilities were $1.605 billion at December 31, 2019 compared with $1.590 billion at December 31, 2018, an increase of $14.9 million or 0.9%.  The increase in total liabilities can be mostly attributed to increases of $2.9 million in total deposits, $8.1 million in operating lease liabilities related to the January 1, 2019 adoption of Topic 842, and $4.1 million in accrued interest payable and other liabilities.  The increase in deposits from $1.569 billion at December 31, 2018 to $1.572 billion at December 31, 2019 can be mostly attributed to an increase of $20.5 million in interest-bearing demand deposits and $11.0 million of time deposits, offset by decreases of $7.7 million in money market accounts and $16.2 million in non-interest bearing demand deposits.  The decrease in non-interest-bearing demand deposits was mostly attributed to a decrease in personal customer deposits.  The decrease in money market accounts can mostly be attributed to a decrease in ICS deposits, offset by an increase in personal customer deposits.

Total shareholders’ equity was $182.6 million at December 31, 2019 compared with $165.0 million at December 31, 2018, an increase of $17.6 million, or 10.7%.  The increase in retained earnings of $10.6 million can be mostly attributed to earnings of $15.6 million, offset by $5.0 million in dividends paid.  The decrease in accumulated other comprehensive loss of $5.6 million can be mostly attributed to the increase in the fair market value of the securities portfolio.  Also, treasury stock decreased $0.9 million, due to the issuance of shares to the Corporation’s employee benefit stock plans and directors’ stock plans.

The total equity to total assets ratio was 10.22% at December 31, 2019 compared with 9.40% at December 31, 2018.  The tangible equity to tangible assets ratio was 9.07% at December 31, 2019 compared with 8.19% at December 31, 2018.  Book value per share increased to $37.35 at December 31, 2019 from $33.99 at December 31, 2018.  As of December 31, 2019, the Bank’s capital ratios were in excess of those required to be considered well-capitalized under the regulatory framework for prompt corrective action.

Other Items

The market value of total assets under management or administration in our Wealth Management Group was $1.915 billion at December 31, 2019, including $289.7 million of assets under management or administration for the Corporation, compared to $1.768 billion at December 31, 2018, including $283.0 million of assets under management or administration for the Corporation, an increase of $147.1 million, or 8.3%.  The increase in total assets under management or administration can be mostly attributed to increases in the market value of total assets.

About Chemung Financial Corporation

Chemung Financial Corporation is a $1.8 billion financial services holding company headquartered in Elmira, New York and operates 33 retail offices through its principal subsidiary, Chemung Canal Trust Company, a full service community bank with trust powers.  Established in 1833, Chemung Canal Trust Company is the oldest locally-owned and managed community bank in New York State.  Chemung Financial Corporation is also the parent of CFS Group, Inc., a financial services subsidiary offering non-traditional services including mutual funds, annuities, brokerage services, tax preparation services and insurance, and Chemung Risk Management, Inc., a captive insurance company based in the State of Nevada.

This press release may be found at: www.chemungcanal.com under Investor Relations.

Forward-Looking Statements:

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities 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 this press release.  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 promise 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, difficulties in managing the Corporation’s growth, competition, changes in law or the regulatory environment, including the Dodd-Frank Act, 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 Securities and Exchange Commission (“SEC”), including the 2018 Annual Report on Form 10-K.  These 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 upon request from the Corporate Secretary at (607) 737-3746.  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.


                     
Chemung Financial Corporation 
Consolidated Balance Sheets (Unaudited) 
    Dec. 31,   Sept. 30,   June 30,   March 31,   Dec. 31,
(in thousands)     2019       2019       2019       2019       2018  
ASSETS                    
Cash and due from financial institutions   $ 25,203     $ 36,497     $ 32,622     $ 28,153     $ 33,040  
Interest-earning deposits in other financial institutions     96,701       109,801       83,838       97,657       96,932  
Total cash and cash equivalents     121,904       146,298       116,460       125,810       129,972  
                     
Equity investments     2,174       2,065       2,079       2,032       1,909  
                     
Securities available for sale     284,090       267,529       269,286       266,721       242,258  
Securities held to maturity     3,115       3,420       4,090       3,861       4,875  
FHLB and FRB stocks, at cost     3,099       3,091       3,091       3,143       3,138  
Total investment securities     290,304       274,040       276,467       273,725       250,271  
                     
Commercial     879,085       878,703       855,298       862,597       864,024  
Mortgage     188,338       184,013       183,835       181,428       182,724  
Consumer     241,796       243,922       249,238       255,012       265,158  
Loans, net of deferred loan fees     1,309,219       1,306,638       1,288,371       1,299,037       1,311,906  
Allowance for loan losses     (23,478 )     (23,923 )     (19,656 )     (19,745 )     (18,944 )
Loans, net     1,285,741       1,282,715       1,268,715       1,279,292       1,292,962  
                     
Loans held for sale     1,185       1,313       624       658       502  
Premises and equipment, net     22,417       22,962       23,605       24,279       24,980  
Operating lease right-of-use assets     8,001       8,051       8,220       8,391       -  
Goodwill     21,824       21,824       21,824       21,824       21,824  
Other intangible assets, net     742       886       1,037       1,188       1,351  
Accrued interest receivable and other assets     33,535       33,489       33,966       32,373       31,572  
Total assets   $ 1,787,827     $ 1,793,643     $ 1,752,997     $ 1,769,572     $ 1,755,343  
                     
LIABILITIES AND SHAREHOLDERS' EQUITY                    
Deposits:                    
Non-interest-bearing demand deposits   $ 468,238     $ 472,600     $ 451,985     $ 462,000     $ 484,433  
Interest-bearing demand deposits     200,089       208,222       188,843       187,834       179,603  
Money market accounts     530,241       510,194       505,084       540,476       537,948  
Savings deposits     212,393       215,665       217,434       219,199       217,027  
Time deposits     161,177       169,825       177,792       156,993       150,226  
Total deposits     1,572,138       1,576,506       1,541,138       1,566,502       1,569,237  
                     
FHLB advances and other debt     4,085       4,140       4,195       4,250       4,304  
Operating lease liabilities     8,084       8,125       8,250       8,399       -  
Accrued interest payable and other liabilities     20,893       22,828       21,027       18,887       16,773  
Total liabilities     1,605,200       1,611,599       1,574,610       1,598,038       1,590,314  
                     
Shareholders' equity                    
Common stock     53       53       53       53       53  
Additional-paid-in capital     46,382       46,464       46,284       46,174       45,820  
Retained earnings     153,701       150,759       150,063       146,340       143,129  
Treasury stock, at cost     (11,710 )     (11,956 )     (12,062 )     (12,191 )     (12,562 )
Accumulated other comprehensive loss     (5,799 )     (3,276 )     (5,951 )     (8,842 )     (11,411 )
Total shareholders' equity     182,627       182,044       178,387       171,534       165,029  
Total liabilities and shareholders' equity   $ 1,787,827     $ 1,793,643     $ 1,752,997     $ 1,769,572     $ 1,755,343  
                     
Period-end shares outstanding     4,889       4,874       4,868       4,863       4,855  
                                         


...
                         
Chemung Financial Corporation 
Consolidated Statements of Income (Unaudited) 
    Three Months Ended       Twelve Months Ended    
(in thousands, except    December 31,   Percent   December 31,   Percent
 per share data)     2019       2018     Change     2019       2018     Change
Interest and dividend income:                        
Loans, including fees   $ 14,522     $ 14,910     (2.6 )   $ 58,245     $ 57,840     0.7  
Taxable securities     1,440       1,051     37.0       5,265       4,804     9.6  
Tax exempt securities     280       278     0.7       1,152       1,153     (0.1 )
Interest-earning deposits     535       640     (16.4 )     2,270       756     200.3  
Total interest and dividend income     16,777       16,879     (0.6 )     66,932       64,553     3.7  
                         
Interest expense:                        
Deposits     1,539       1,356     13.5       6,173       3,323     85.8  
Securities sold under agreements to repurchase     -       -     N/M       -       137     (100.0 )
Borrowed funds     37       39     (5.1 )     148       613     (75.9 )
Total interest expense     1,576       1,395     13.0       6,321       4,073     55.2  
                           
Net interest income     15,201       15,484     (1.8 )     60,611       60,480     0.2  
Provision for loan losses     261       (218 )   (219.7 )     5,945       3,153     88.6  
Net interest income after provision for loan losses     14,940       15,702     (4.9 )     54,666       57,327     (4.6 )
                           
Non-interest income:                          
Wealth management group fee income     2,388       2,222     7.5       9,503       9,317     2.0  
Service charges on deposit accounts     1,130       1,188     (4.9 )     4,460       4,727     (5.6 )
Interchange revenue from debit card transactions     991       1,027     (3.5 )     4,104       4,040     1.6  
Net gains on securities transactions     -       -     N/M       19       -     N/M  
Change in fair value of equity investments     (25 )     (161 )   (84.5 )     81       2,004     (96.0 )
Net gains on sales of loans held for sale     102       167     (38.9 )     248       351     (29.3 )
Net gains (losses) on sales of other real estate owned     (12 )     (29 )   (58.6 )     (99 )     90     (210.0 )
Income from bank owned life insurance     15       16     (6.3 )     63       66     (4.5 )
Other     517       463     11.7       1,694       2,479     (31.7 )
Total non-interest income     5,106       4,893     4.4       20,073       23,074     (13.0 )
                         
Non-interest expense:                        
Salaries and wages     6,045       5,353     12.9       23,420       22,322     4.9  
Pension and other employee benefits     1,414       1,086     30.2       5,902       5,524     6.8  
Other components of net periodic pension and postretirement benefits     (118 )     454     (126.0 )     (541 )     (770 )   (29.7 )
Net occupancy     1,500       1,628     (7.9 )     5,969       6,550     (8.9 )
Furniture and equipment     657       609     7.9       2,497       2,550     (2.1 )
Data processing     1,968       1,709     15.2       7,386