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Chemung Financial Corporation Reports Second Quarter 2020 Net Income of $5.8 million, or $1.20 per Share

ELMIRA, N.Y., July 20, 2020 (GLOBE NEWSWIRE) -- Chemung Financial Corporation (the Corporation) (Nasdaq: CHMG), the parent company of Chemung Canal Trust Company (the Bank), today reported net income of $5.8 million, or $1.20 per share, for the second quarter of 2020, compared to $5.0 million, or $1.02 per share, for the second quarter of 2019. 

Our results in the second quarter reflected increased net interest income and a continued focus on expense management, according to Anders M. Tomson, President and CEO of Chemung Financial Corporation. Throughout the quarter, we processed a significant number of loans through the Small Business Administrations Paycheck Protection Program to help support businesses and their employees in our communities. We were also able to assist our retail customers by waiving certain deposit fees and modifying or deferring loans. The positive results we achieved are due in large part to the dedication and flexibility of our employees as we navigated the COVID-19 pandemic throughout the second quarter, Tomson added.

Second Quarter Highlights 1 :

  • Total Assets increased to $2.1 billion, the first time over $2.0 billion in the Company's history
     
  • Net interest income included $985 thousand in Paycheck Protection Program ("PPP") fees and increased $528 thousand from the prior quarter, to $15.6 million for the second quarter of 2020, the highest in the Company's history
     
  • Total shareholders equity increased $12.0 million, or 6.55%
     
  • Tangible book value per share increased from $32.74 to  $35.86, or 9.53% 2
     
  • Book value per share increased from $37.35 to $40.51, or 8.46%
     
  • Return on Average Assets in the second quarter increased to 1.15% from 0.55% in the previous quarter
     
  • Average interest earning assets increased $215.5 million to $1.931 billion for the second quarter of 2020 when compared to average interest earning assets for the first quarter of 2020
     
  • Loans, net of deferred fees, increased $188.8 million, or 14.42%

1 Balance sheet comparisons are calculated for June 30, 2020 versus December 31, 2019.
2 See GAAP to Non-GAAP Reconciliations, included within.

2nd Quarter 2020 vs 2nd Quarter 2019

Net Interest Income:

Net interest income for the current quarter totaled $15.6 million compared with $15.1 million for the same period in the prior year, an increase of $0.5 million, or 3.2%, due primarily to increases of $0.1 million in interest and dividend income on taxable securities and $0.1 million in interest income on loans, including fees, and a decrease of $0.7 million in total interest expense, offset by a decrease of $0.4 million in interest income on interest-earning deposits.

The increase in interest and dividend income on taxable securities was due primarily to an increase in average invested balances of $27.6 million. The increase in loan income was due primarily to an increase of $0.4 million in interest income on commercial loans primarily attributable to a $172.6 million increase in average balances on commercial loans and the receipt of $0.9 million of PPP fees, and an increase in interest income on mortgage loans, which can be attributed to an increase of $16.6 million in average balances on mortgage loans. These increases were offset by a decrease of $0.4 million in interest income on consumer loans which can be attributed to both decreases in average balances and average portfolio yield on consumer loans. The decrease in interest expense on deposits was due primarily to a $0.7 million decrease in interest-bearing checking, savings, and money market expenses which was due to the decreases in average rates paid on these products in response to the Federal Reserve's 50 and 100 basis point drops on overnight rates in March, 2020. The decrease in interest income on interest-earning deposits was due primarily to the sharp drop in interest rates on overnight deposits with the average yield on interest-earning deposits declining from 2.58% in the second quarter of 2019 to 0.33% in the second quarter of 2020. Fully taxable equivalent net interest margin was 3.26% for the current quarter 2020, compared with 3.69% for the same period in the prior year. Average interest-earning assets increased $277.0 million in the current quarter 2020 compared to the same period in the prior year. The average yield on interest-earning assets decreased 62 basis points, while the average cost of interest-bearing liabilities decreased 28 basis points, as compared to the same period in the prior year.

Provision for loan losses for the current quarter totaled $0.3 million compared with $0.2 million for the same period in the prior year, an increase of $0.1 million. The increase in provision for loan losses was primarily due to revised projected loss estimates based on the current economic environment and response to the COVID-19 pandemic, offset by paydowns, recoveries and decreases in specific reserve allowances.

Non-Interest Income:

Total non-interest income for the current quarter remained substantially unchanged as compared to the same quarter in the prior year. Increases of $0.3 million in swap fee income, $0.3 million in net gains on sales of loans held for sale and $0.1 million in change in fair value of equity investments were offset by a decrease of $0.5 million in service charges on deposit accounts primarily attributable to a decrease in NSF and overdraft fees as compared to the same period in the prior year.

Non-Interest Expense:

Non-interest expense for the current quarter was $13.2 million compared with $13.8 million for the same period in the prior year, a decrease of $0.6 million, or 4.3%. The decrease can be mostly attributed to decreases of $0.4 million in other non-interest expense, $0.1 million in pension and other employee benefits, and $0.1 million in other components of net periodic pension cost (benefits). The decrease in other non-interest expense can be primarily attributed to decreases in bank and client relations expenditures, as well as an overall decrease in spending during the second quarter of 2020, compared to the same period in 2019. The decrease in pension and other employee benefits was primarily attributed to a decrease in healthcare expenses in the current quarter as compared to the same quarter in the prior year. The decrease in other components of net periodic pension benefits was primarily attributed to a change in actuarial adjustments to the employee pension account.

Income Tax Expense:

Income tax expense for the current quarter was $1.4 million compared with $1.2 million for the same period in the prior year, an increase of $0.1 million, or 10.1%  The effective tax rate for the current quarter decreased to 18.9% compared with 19.8% for the same period in the prior year. The increase in income tax expense was primarily due to an increase in pretax income.

2nd Quarter 2020 vs 1st Quarter 2020

Net Interest Income:

Net interest income for the current quarter totaled $15.6 million compared with $15.1 million for the prior quarter, an increase of $0.5 million, or 3.5%, due primarily to a $0.5 million decrease in interest expense on deposits and a $0.4 million increase in interest income and fees from loans which was offset by decreases of $0.3 million in interest income on interest-earning deposits, and $0.1 million in interest and dividend income on taxable securities, compared to the prior quarter. The decrease in interest expense on deposits and interest income on interest-earning deposits and taxable securities were primarily due to the sharp decline in interest rates in the second quarter of 2020 as a result of the Federal Reserve's 50 and 100 basis point drops on overnight rates in March, 2020. The increase in interest income and fees from loans was primarily attributed to a $146.0 million increase in average loan balances in the second quarter and the receipt of $0.9 million of fees related to the Paycheck Protection Program (PPP), offset by decreased average yield due to the decline in interest rates. The average yield on loans fell from 4.37% in the first quarter of 2020 to 4.06% in the second quarter of 2020, the average yield on interest-earning deposits fell from 1.44% in the first quarter of 2020 to 0.33% in the second quarter of 2020, and the average cost of interest-bearing deposits fell from 0.46% in the first quarter of 2020 to 0.28% in the second quarter of 2020. Fully taxable equivalent net interest margin was 3.26% in the current quarter compared to 3.55% in the prior quarter. Average interest-earning assets increased $215.5 million in the current quarter, while the average yield on interest-earning assets decreased 41 basis points from 3.86% in the prior quarter to 3.45% in  the current quarter.

Provision for loan losses for the current quarter totaled $0.3 million compared with $3.1 million for the prior quarter, a decrease of $2.8 million. The Corporation is closely monitoring the loan portfolio for effects related to COVID-19 and as a result, increased qualitative factors resulting in an additional $1.8 million added to the allowance in the second quarter. This was offset by recoveries, decreases in specific allocations and a net decrease in the historical loss factors due to a large 2018 loan charge-off which no longer impacts the calculation. Year to date 2020, the Company has increased the allowance by $4.5 million for future estimated credit losses related to the COVID-19 pandemic. 

Non-Interest Income:

Non-interest income for the current quarter was $5.1 million compared with $4.7 million for the prior quarter, an increase of $0.4 million, or 7.4%. The increase in non-interest income can be attributed to increases of $0.4 million in the change in fair value of equity investments, $0.2 million in net gains on sales of loans held for sale, $0.1 million in wealth management group fee income, and $0.1 million in other non-interest income, offset by a decrease of $0.4 million in service charges on deposit accounts. The increase in the change in fair value of equity investments was primarily due to a general increase in the equity markets during the second quarter of 2020, which also impacted the market value of assets under management by the wealth management group on which fee income is based. The increase in net gains on sales of loans held for sale was primarily due to an increase in loans originated and sold in the secondary market. The increase other non-interest income was due primarily to an increase in interest rate swap fees earned and a decrease in the swap valuation reserve. The decrease in service charges on deposit accounts was primarily attributed to a decrease in NSF and overdraft fees.

Non-Interest Expense:

Non-interest expense for the current quarter was $13.2 million compared with $13.7 million for the prior quarter, a decrease of $0.5 million, or 3.8%. The decrease can be mostly attributed to decreases of $0.2 million in marketing and advertising expense, $0.2 million in other non-interest expense, and $0.2 million in pension and other employee benefits. The decreases in marketing and advertising expense and other non-interest expense were primarily attributed to reduced promotional efforts and a decrease in bank and client relations expenditures in the second quarter primarily due to the COVID-19 pandemic. The decrease in pension and other employee benefits was primarily attributed to a decrease in healthcare and payroll tax expenses.

Income Tax Expense:

Income tax expense for the current quarter was $1.4 million compared with $0.5 million for the prior quarter, an increase of $0.9 million in income tax expense.  The effective tax rate for the current quarter increased to 18.9% compared with 16.8% in the prior period.  The increase in income tax expense was primarily due to an increase in pretax income.

Asset Quality

Non-performing loans totaled $17.3 million at June 30, 2020, or 1.15% of total loans, compared with $18.0 million at December 31, 2019, or 1.38% of total loans. Non-performing assets, which are comprised of non-performing loans and other real estate owned, were $17.6 million, or 0.86% of total assets, at June 30, 2020, compared with $18.5 million, or 1.04% of total assets, at December 31, 2019. The decrease in non-performing loans can mostly be attributed to payments received on non-performing commercial loans and charge-offs, partially offset by additional commercial, mortgage  and indirect non-performing consumer loans. The decrease in non-performing assets can be attributed to the decrease in non-performing loans and sales of other real estate owned.

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. In the second quarter of 2020, management again evaluated the potential impact of the COVID-19 pandemic as it relates to the loan portfolio. As part of this analysis, management identified what it believes to be higher risk loans through a detailed analysis of industry codes. Management increased certain allowance qualitative factors based on its assessment of the impact of the current pandemic on local, national, and global economic conditions as well as the perceived risks inherent in specific industries and credit characteristics.

Based on this analysis, the Corporation increased the allowance for loan losses in the second quarter by $1.8 million specifically related to the COVID-19 pandemic. The total provision for loan losses for the current quarter was $0.3 million due to offsets related to recoveries, decreases in specific allocations, a decrease in the historical loss factors due to a large 2018 loan charge-off which no longer impacts the calculation, and a decrease in substandard loans. Net charge-offs for the current quarter were $2.4 million, primarily related to the partial charge-off of a commercial loan, compared with $0.2 million for the same period in the prior year.

The allowance for loan losses was $24.1 million at June 30, 2020 compared with $23.5 million at December 31, 2019. The allowance for loan losses was 139.64% of non-performing loans at June 30, 2020 compared with 130.38% at December 31, 2019. The ratio of the allowance for loan losses to total loans was 1.61% at June 30, 2020 compared with 1.79% at December 31, 2019. The ratio of the allowance for loan losses to total loans excluding PPP loans was 1.84% at June 30, 2020. The increase in the allowance for loan losses can be mostly attributed to a $4.5 million increase in potential projected loss estimates in response to the COVID-19 pandemic, offset by a partial charge-off of a commercial loan, decreases in the specific reserve, the improvement of historical loss factors, and a decrease in substandard loans.

Under Section 4013 of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), "Temporary Relief from Troubled Debt Restructurings" loans less than 30 days past due as of December 31, 2019 will be considered current for COVID-19 related modifications and therefore will not be treated as TDRs. 

On June 17, 2020 the New York legislature passed, and Governor Cuomo signed, new legislation which allows certain borrowers to extend the period of forbearance on a primary residence if financial hardship is demonstrated as a result of COVID-19. The Corporation anticipates that this new law could increase the amount of forbearance in the upcoming periods. As of June 30, 2020, the Corporation has deferred a total of $5.7 million in interest and principal payments for commercial borrowers, and a total of $2.0 million in interest and principal payments for consumer borrowers. 

COVID-19 Loan Modifications As Of
  April 30, 2020   June 30, 2020
  Principal &
Interest
Deferred
  # Clients   Total Loan
Balance
  Principal &
Interest
Deferred
  # Clients   Total Loan
Balance
                       
Commercial $5.5 million   170   $281.3 million   $5.7 million   175   $286.5 million
Retail and Residential $1.7 million   806   $36.3 million   $2.0 million   921   $34.1 million
                       
The above reflects the uncertain economic situation as of April 30, 2020 whereby the initial response by customers prompted a quick reaction to the unknown potential impact of COVID-19 on their business. Subsequently, customers may have reassessed their financial position prior to finalization of a modification, either modifying deferral requests or withdrawing the request altogether. In some cases, customers continued to make payments on modified loans. Of these modifications, 100% were considered current prior to the forbearance and primarily reflect deferrals for 90 days.

Balance Sheet Activity

Total assets were $2.051 billion at June 30, 2020 compared with $1.788 billion at December 31, 2019, an increase of $263.1 million, or 14.7%. The increase can be mostly attributed to increases of $29.8 million in interest-earning deposits in other financial institutions, $33.0 million in securities available for sale, at estimated fair value, $188.8 million in loans, net of deferred fees, and $9.6 million in accrued interest receivable and other assets, offset by an increase of $0.7 million in allowance for loan losses. The increase in interest earning deposits was due primarily to strong deposit growth in the first and second quarters. The increase in securities available for sale was due primarily to purchases of fixed income investments and an increase in the overall market value of investments. The increase in the market value of investments was directly related to the decline in interest rates. The increase in securities available for sale can be mostly attributed to purchases of $39.7 million and an increase in the value of the portfolio of $10.4 million due to decreases in interest rates, offset by $21.1 million in maturities and paydowns. The increase in loans was due primarily to the growth of $186.8 million in commercial loans and $19.7 million in residential mortgages offset by a decrease of $17.7 million in consumer loans. $186.9 million of the increase in loans related to loans extended as part of the Paycheck Protection Program (PPP). The increase in other assets was due primarily to an increase of $11.4 million in interest rate swap assets.

Total liabilities were $1.856 billion at June 30, 2020 compared with $1.605 billion at December 31, 2019, an increase of $251.1 million, or 15.6%. The increase in total liabilities can primarily be attributed to increases of $239.1 million, or 15.2% in deposits, and $12.5 million in accrued interest payable and other liabilities. The increase in deposits was due primarily to increases of $62.6 million in consumer deposits, and $191.8 million in commercial deposits, offset by a decrease of $18.8 million in public deposits. The increase in deposits was partially due to the collection of $33.6 million in stimulus checks and $186.9 million in PPP loan disbursements. The increase in accrued interest payable and other liabilities was due primarily to an increase of $11.3 million in interest rate swap liabilities.

Total shareholders equity was $194.6 million at June 30, 2020 compared with $182.6 million at December 31, 2019, an increase of $12.0 million, or 6.5%. The increase in retained earnings of $5.8 million was due primarily to net income of $8.3 million offset by $2.5 million in dividends declared. The increase in accumulated other comprehensive income of $7.9 million can mostly be attributed to an increase in the fair market value of the securities portfolio.  Treasury stock increased $2.2 million primarily due to the Corporation's common stock repurchase program. As of June 30, 2020, 120,490 shares have been repurchased at an average cost of $27.12 per share.

The total equity to total assets ratio was 9.49% at June 30, 2020 compared with 10.22% at December 31, 2019.  The tangible equity to tangible assets ratio was 8.49% at June 30, 2020 compared with 9.07% at December 31, 2019.  Book value per share increased to $40.51 at June 30, 2020 from $37.35 at December 31, 2019.  As of June 30, 2020, the Banks 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 $1.861 billion at June 30, 2020, including $289.0 million of assets under management or administration for the Corporation, compared to $1.915 billion at December 31, 2019, including $289.7 million of assets under management or administration for the Corporation, a decrease of $54.3 million, or 2.8%. The decrease in total assets under management or administration can be mostly attributed to a decrease in the market value of total assets.

As previously announced on March 18, 2020, the Corporation's Board of Directors approved a stock repurchase program which replaces the previously authorized repurchase program. Under the new 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 Commission. As of June 30, 2020, the Corporation repurchased 120,490 shares of common stock at a total cost of $3.3 million under its share repurchase program. The weighted average cost was $27.12 per share repurchased. Remaining buyback authority under the share repurchase program was 129,510 shares at June 30, 2020.

CHEMUNG FINANCIAL'S COVID-19 PANDEMIC UPDATE

The second quarter of 2020 was truly one of the most extraordinary in the history of the Corporation. During this uncertain time, the Corporation remained true to the two main goals management set at the start of the COVID-19 pandemic: ensure a healthy and safe work environment for our colleagues, clients and the communities we assist, and provide top-tier financial services that our communities depend on in a manner that is accessible, reliable and efficient. We continued to provide these essential banking services to our clients and the communities, pivoting to offer banking transactions through newly created walk-up windows, as well as our drive-up windows. More complex transactions were handled inside our lobbies, by appointment only. At all times, social distancing, sanitizing and facial coverings were required. As of the date of this press release, 29 of our 32 offices have fully re-opened to normal business hours.

The Corporation successfully navigated the processes set forth by the Small Business Administration and assisted customers and non-customers alike through the Paycheck Protection Program (PPP). As of June 30, 2020, the Bank received 1,370 applications, of which 1,195 were processed, and 1,167 or $186.9 million were funded under the PPP, impacting approximately 19,000 employees of the approved businesses in our communities. As of the date of this press release, the Corporation is preparing to assist the businesses who received PPP loans with the forgiveness-application phase of the program.

Management believes that the Corporation's liquidity position is strong. 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 $100,000 or more, FHLB advances, securities sold under agreements to repurchase, and other borrowings. As of June 30, 2020, the Corporation's cash and cash equivalents balance was $155.2 million. The Corporation also maintains an investment portfolio of securities available for sale, comprised primarily of mortgage-backed securities and municipal bonds. Although this portfolio generates interest income for the Corporation, it also serves as an available source of liquidity and capital if the need should arise. As of June 30, 2020, the Corporation's investment in securities available for sale was $317.1 million, $126.0 million of which was not pledged as collateral. Additionally, the Bank's unused borrowing capacity at the Federal Home Loan Bank of New York was $124.9 million, as of June 30, 2020. The Corporation did not experience excessive draws on available working capital lines of credit and home equity lines of credit during the first half of 2020 due to the COVID-19 crisis. Nor has the Corporation experienced any significant or unusual activity related to customer reaction to the COVID-19 crisis that would create stress on the Corporation's liquidity position.

With respect to the Corporation's credit risk and lending activities, management has taken actions to identify and assess additional possible credit exposure due to the changing environment caused by the COVID-19 crisis based upon the industry types within our current loan portfolio. Lending risks, as mentioned, are being monitored by industry, based upon NAICS code, with specific attention being paid to those industries that may experience greater stress during this time.

The COVID-19 crisis is expected to continue to impact the Corporation's financial results, as well as demand for its services and products during the second half of 2020 and potentially beyond. The short and long-term implications of the COVID-19 crisis, and related monetary and fiscal stimulus measures on the Corporation's future revenues, earnings results, allowance for loan losses, capital reserves, and liquidity are uncertain at this time.

About Chemung Financial Corporation

Chemung Financial Corporation is a $2.1 billion financial services holding company headquartered in Elmira, New York and operates 32 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 Corporations growth, competition, changes in law or the regulatory environment, including the Dodd-Frank Act, and changes in general business and economic trends. 

As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, the Company could be subject to any of the following additional risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations:

  • demand for our products and services may decline, making it difficult to grow assets and income;
     
  • if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;
     
  • collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase;
     
  • our allowance for loan losses may have to be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income;
     
  • the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;
     
  • as the result of the decline in the Federal Reserve Boards target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income;
     
  • a material decrease in net income over several quarters could result in a decrease in the rate of our quarterly cash dividend;
     
  • our cyber security risks are increased as the result of an increase in the number of employees working remotely;
     
  • we rely on third party vendors for certain services and the unavailability of a critical service due to the COVID-19 outbreak could have an adverse effect on us; and
     
  • FDIC premiums may increase if the agency experiences additional resolution costs.

Information concerning these and other factors can be found in the Corporations periodic filings with the Securities and Exchange Commission (SEC), including the 2019 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)                  
  June 30,   March 31,   Dec. 31,   Sept. 30,   June 30,
(in thousands) 2020   2020   2019   2019   2019
ASSETS                  
Cash and due from financial institutions $ 28,689       $ 27,522       $ 25,203       $ 36,497       $ 32,622    
Interest-earning deposits in other financial institutions 126,473       116,936       96,701       109,801       83,838    
  Total cash and cash equivalents 155,162       144,458       121,904       146,298       116,460    
                   
Equity investments 2,169       1,999       2,174       2,065       2,079    
                   
Securities available for sale 317,061       299,075       284,090       267,529       269,286    
Securities held to maturity 3,597       3,001       3,115       3,420       4,090    
FHLB and FRB stocks, at cost 3,150       3,099       3,099       3,091       3,091    
  Total investment securities 323,808       305,175       290,304       274,040       276,467    
                   
Commercial 1,065,901       895,741       879,085       878,703       855,298    
Mortgage 207,999       192,722       188,338       184,013       183,835    
Consumer 224,098       231,998       241,796       243,922       249,238    
  Loans, net of deferred loan fees 1,497,998       1,320,461       1,309,219       1,306,638       1,288,371    
Allowance for loan losses (24,130 )     (26,233 )     (23,478 )     (23,923 )     (19,656 )  
  Loans, net 1,473,868       1,294,228       1,285,741       1,282,715       1,268,715    
                   
Loans held for sale 1,491       801       1,185       1,313       624    
Premises and equipment, net 21,395       21,781       22,417       22,962       23,605    
Operating lease right-of-use assets 7,650       7,826       8,001       8,051       8,220    
Goodwill 21,824       21,824       21,824       21,824       21,824    
Other intangible assets, net 491       610       742       886       1,037    
Accrued interest receivable and other assets 43,063       42,627       33,535       33,489       33,966    
  Total assets $ 2,050,921       $ 1,841,329       $ 1,787,827       $ 1,793,643       $ 1,752,997    
                   
LIABILITIES AND SHAREHOLDERS' EQUITY                  
Deposits:                  
Non-interest-bearing demand deposits $ 616,736       $ 469,535       $ 468,238       $ 472,600       $ 451,985    
Interest-bearing demand deposits 246,470       210,493       200,089       208,222       188,843    
Money market accounts 538,006       544,024       530,241       510,194       505,084    
Savings deposits 239,334       217,789       212,393       215,665       217,434    
Time deposits 170,710       166,262       161,177       169,825       177,792    
  Total deposits 1,811,256       1,608,103       1,572,138       1,576,506       1,541,138    
                   
Long-term advances and other debt 3,969       4,028       4,085       4,140       4,195    
Operating lease liabilities 7,752       7,919       8,084       8,125       8,250    
Accrued interest payable and other liabilities 33,355       30,832       20,893       22,828       21,027    
  Total liabilities 1,856,332       1,650,882       1,605,200       1,611,599       1,574,610    
                   
Shareholders' equity                  
Common stock 53       53       53       53       53    
Additional-paid-in capital 46,758       46,754       46,382       46,464       46,284    
Retained earnings 159,505       154,926       153,701       150,759       150,063    
Treasury stock, at cost (13,869 )     (11,204 )     (11,710 )     (11,956 )     (12,062 )  
Accumulated other comprehensive loss 2,142       (82 )     (5,799 )     (3,276 )     (5,951 )  
  Total shareholders' equity 194,589       190,447       182,627       182,044       178,387    
  Total liabilities and shareholders' equity $ 2,050,921       $ 1,841,329       $ 1,787,827       $ 1,793,643       $ 1,752,997    
                   
Period-end shares outstanding 4,804       4,905       4,889       4,874       4,868    

 

Chemung Financial Corporation                      
Consolidated Statements of Income (Unaudited)                      
  Three Months Ended June 30, 2020   Percent   Six Months Ended June 30, 2020   Percent
(in thousands, except per share data) 2020   2019   Change   2020   2019   Change
Interest and dividend income:                      
Loans, including fees $ 14,666       $ 14,570       0.7       $ 28,894       $ 29,059       (0.6 )  
Taxable securities 1,397       1,281       9.1       2,884       2,476       16.5    
Tax exempt securities 265       306       (13.4 )     536       579       (7.4 )  
Interest-earning deposits 144       525       (72.6 )     542       1,233       (56.0 )  
  Total interest and dividend income 16,472       16,682       (1.3 )     32,856       33,347       (1.5 )  
                       
Interest expense:                      
Deposits 827       1,544       (46.4 )     2,113       3,005       (29.7 )  
Borrowed funds 55       37       48.6       90       74       21.6    
  Total interest expense 882       1,581       (44.2 )     2,203       3,079       (28.5 )  
                       
  Net interest income 15,590       15,101       3.2       30,653       30,268       1.3    
Provision for loan losses 260       150       73.3       3,310       1,243       166.3    
Net interest income after provision for loan losses 15,330       14,951       2.5       27,343       29,025       (5.8 )  
                       
Non-interest income:                      
Wealth management group fee income 2,323       2,524       (8.0 )     4,552       4,800       (5.2 )  
Service charges on deposit accounts 564       1,085       (48.0 )     1,554       2,189       (29.0 )  
Interchange revenue from debit card transactions 982       1,024       (4.1 )     1,907       2,055       (7.2 )  
Net gains on securities transactions       19       N/M             19       N/M    
Change in fair value of equity investments 156       27       477.8       (90 )     116       (177.6 )  
Net gains on sales of loans held for sale 288       29       893.1       363       77       371.4    
Net gains (losses) on sales of other real estate owned (48 )     (3 )     N/M       (77 )     (86 )     (10.5 )  
Income from bank owned life insurance 14       16       (12.5 )     133       31       329.0    
Other 801       365       119.5       1,468       810       81.2    
Total non-interest income 5,080       5,086       (0.1 )     9,810       10,011       (2.0 )  
                       
Non-interest expense:                      
Salaries and wages 5,821       5,780       0.7       11,590       11,501       0.8    
Pension and other employee benefits 1,334       1,473       (9.4 )     2,850       3,018       (5.6 )  
Other components of net periodic pension and postretirement benefits (243 )     (141 )     N/M       (508 )     (282 )     80.1    
Net occupancy 1,430       1,478       (3.2 )     2,952       3,045       (3.1 )  
Furniture and equipment 560       595       (5.9 )     1,035       1,123       (7.8 )  
Data processing 1,939       1,873       3.5       3,853       3,600       7.0    
Professional services 530       418       26.8       860       823       4.5    
Amortization of intangible assets 119       151       (21.2 )     251       314       (20.1 )  
Marketing and advertising 82       145       (43.4 )     406       413       (1.7 )  
Other real estate owned expense 5       40       (87.5 )     34       71       (52.1 )  
FDIC insurance 229       221       3.6       479       486       (1.4 )  
Loan expense 187       190       (1.6 )     497       386       28.8    
Other 1,231       1,600       (23.1 )     2,677       2,822       (5.1 )  
  Total non-interest expense 13,224       13,823       (4.3 )     26,976       27,320       (1.3 )  
                       
  Income before income tax expense 7,186       6,214       15.6       10,177       11,716       (13.1 )  
Income tax expense 1,357       1,233       10.1       1,859       2,267       (18.0 )  
  Net income $ 5,829       $ 4,981       17.0       $ 8,318       $ 9,449       (12.0 )  
                       
Basic and diluted earnings per share $ 1.20       $ 1.02           $ 1.71       $ 1.94        
Cash dividends declared per share 0.26       0.26           0.52       0.52        
Average basic and diluted shares outstanding 4,850       4,866           $ 4,868       $ 4,863        
                       
                       
N/M - Not Meaningful                      

 

Chemung Financial Corporation As of or for the Three Months Ended   As of or for the
Six Months Ended
Consolidated Financial Highlights (Unaudited) June 30,   March 30,   Dec. 31,   Sept. 30,   June 30,   June 30,   June 30,
(in thousands, except per share data) 2020   2020   2019   2019   2019   2020   2019
RESULTS OF OPERATIONS                          
Interest income $ 16,472     $ 16,384     $ 16,777     $ 16,808     $ 16,682     $ 32,856     $ 33,347  
Interest expense 882     1,322     1,576     1,666     1,581     2,203     3,079  
Net interest income 15,590     15,062     15,201     15,142     15,101     30,653     30,268  
Provision (credit) for loan losses 260     3,050     261     4,441     150     3,310     1,243  
Net interest income after provision for loan losses 15,330     12,012     14,940     10,701     14,951     27,343     29,025  
Non-interest income 5,080     4,730     5,106     4,956     5,086     9,810     10,011  
Non-interest expense 13,224     13,749     14,851     13,525     13,823     26,976     27,320  
Income before income tax expense 7,186     2,993     5,195     2,132     6,214     10,177     11,716  
Income tax expense 1,357     502     991     176     1,233     1,859     2,267  
Net income $ 5,829     $ 2,491     $ 4,204     $ 1,956     $ 4,981     $ 8,318     $ 9,449  
                           
Basic and diluted earnings per share $ 1.20     $ 0.51     $ 0.87     $ 0.40     $ 1.02     $ 1.71     $ 1.94  
Average basic and diluted shares outstanding 4,850     4,895     4,879     4,871     4,866     4,868     4,863  
PERFORMANCE RATIOS  
Return on average assets   1.15 %     0.55 %     0.93 %     0.44 %   1.15
%   0.87 %   1.09 %
Return on average equity   12.22     5.32 %     9.14 %     4.29 %   11.51
%   8.80 %   11.18 %
Return on average tangible equity (a)   13.83     6.04 %     10.43 %     4.91 %   13.27
%   9.98 %   12.92 %
Efficiency ratio (unadjusted) (f)   63.99     69.47 %     73.13 %     67.30 %   68.47
%   66.67 %   67.83 %
Efficiency ratio (adjusted) (a) (b)   63.15     68.50 %     72.08 %     66.21 %   67.44
%   65.77 %   66.74 %
Non-interest expense to average assets   2.62     3.06 %     3.28 %     3.05 %   3.18
%   2.83 %   3.15 %
Loans to deposits   82.70     82.11 %     83.28 %     82.88 %   83.60
%   82.70 %   83.60 %
YIELDS / RATES - Fully Taxable Equivalent  

 

...
Yield on loans   4.06
%     4.37
%     4.43 %     4.50 %     4.54 %   4.21 %   4.54 %
Yield on investments   1.58
%     2.20
%     2.29 %     2.36 %     2.41 %   1.87 %   2.41 %
Yield on interest-earning assets   3.45
%     3.86
%     3.92 %     4.03 %     4.07 %   3.64 %   4.07 %
Cost of interest-bearing deposits   0.28
%     0.46
%     0.55 %     0.60 %     0.57 %   0.37 %   0.55 %
Cost of borrowings   0.82
%     3.58
%     3.58 %     3.53 %     3.52 %   1.18 %   3.52 %
Cost of interest-bearing liabilities   0.29
%     0.47
%     0.56 %     0.61 %     0.58 %   0.38 %   0.57 %
Interest rate spread   3.16
%     3.39
%     3.36 %     3.42 %     3.49 %   3.26 %   3.50 %
Net interest margin, fully taxable equivalent   3.26
%     3.55
%     3.56 %     3.63 %     3.69 %   3.40 %   3.69 %
CAPITAL  
Total equity to total assets at end of period 9.49 %   10.34 %   10.22 %   10.15 %   10.18 %   9.49 %     10.18 %  
Tangible equity to tangible assets at end of period (a) 8.49 %   9.24 %   9.07 %   9.00 %   8.99 %   8.49 %     8.99 %  
Book value per share $ 40.50     $ 38.83     $ 37.35     $ 37.35     $ 36.64     $ 40.51     $ 36.64    
Tangible book value per share (a) 35.86     34.25     32.74     32.69     31.95     35.86       31.95    
Period-end market value per share 27.30     32.98     42.50     42.00     48.34     27.30       48.34    
Dividends declared per share 0.26     0.26     0.26     0.26     0.26     0.52       0.52    
AVERAGE BALANCES    
Loans and loans held for sale (c) $ 1,456,080     $ 1,310,342     $ 1,303,349     $ 1,295,167     $ 1,290,923     $ 1,383,211     $ 1,293,547    
Interest earning assets 1,931,107     1,715,562     1,705,766     1,665,793     1,654,156       1,823,335       1,663,372    
Total assets 2,032,729     1,807,753     1,798,385     1,760,385     1,744,599       1,920,163       1,749,168    
Deposits 1,776,275     1,588,147     1,581,645     1,545,858     1,539,739       1,682,210       1,552,485    
Total equity 191,853     188,427     182,522     180,896     173,534       190,140       170,476    
Tangible equity (a) 169,464     165,911     159,889     158,111     150,598       167,688       147,463    
                             
ASSET QUALITY                            
Net charge-offs $ 2,363     $ 294     $ 706     $ 174     $ 239     $ 2,657     $ 531
   
Non-performing loans (d) 17,280     17,948     18,008     23,468     19,505     17,280       19,505
   
Non-performing assets (e) 17,573     18,328     18,525     23,679     19,719     17,573       19,719
   
Allowance for loan losses 24,130     26,233     23,478     23,923     19,656     24,130       19,656