Chemung Financial Corporation Reports Third Quarter 2020 Net Income of $5.7 million, or $1.19 per Share

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ELMIRA, N.Y., Oct. 19, 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 $5.7 million, or $1.19 per share, for the third quarter of 2020, compared to $2.0 million, or $0.40 per share, for the third quarter of 2019.

"We are pleased to report another strong quarter with third quarter earnings of $1.19 per share," according to Anders M. Tomson, President and CEO of Chemung Financial Corporation. "Third quarter results included a 4.8% increase in net interest income and a 1.2% reduction in non-interest expenses, when compared to the third quarter of last year. Our efficiency ratio continued to improve throughout the year as did our non-interest expense to average assets ratio reinforcing our continued focus on expense management. We have remained committed to supporting our clients as they navigate these uncertain times, pivoting to assist as they begin the SBA's loan forgiveness application process. As we look toward the end of this unique and unprecedented year for our country and our communities, we are secure in the knowledge that our company is well-positioned from a capital and liquidity perspective to provide the necessary stability to our customers and communities as they work toward renewal and recovery," Tomson added.

Third Quarter Highlights 1 :

  • Third quarter earnings per share grew to $1.19 per share as of September 30, 2020 versus $0.40 as of September 30, 2019

  • Total shareholders equity increased $14.4 million, or 7.87% from December 31, 2019

  • Tangible book value per share increased from $32.74 to $36.83, or 12.49% from December 31, 2019 2

  • Loans, net of deferred fees, increased $229.3 million, including $189.8 million of Payroll Protection Program (PPP) loans, or 17.51% from December 31, 2019

  • As of September 30, 2020, a total of 184,360 shares of common stock have been repurchased at a weighted average cost of $27.57 per share since the inception of the Corporation's share repurchase program

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

3rd Quarter 2020 vs 3rd Quarter 2019

Net Interest Income:

Net interest income for the current quarter totaled $15.9 million compared to $15.1 million for the same period in the prior year, an increase of $0.8 million, or 4.8%, due primarily to increases of $0.2 million in interest income on loans, including fees, $0.1 million in interest and dividend income on taxable securities, and a decrease of $0.8 million in total interest expense, offset by a decrease of $0.4 million in interest income on interest-earning deposits.

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 $210.1 million increase in average balances on commercial loans and the recognition of $1.2 million of PPP loan fees, offset by a decrease in portfolio average yield due to a decrease in interest rates. Interest income on mortgage loans increased $0.3 million primarily due to an increase of $36.3 million in average balances on mortgage loans. These increases were also offset by a decrease of $0.5 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 increase in interest and dividend income on taxable securities was due primarily to an increase in average invested balances of $67.2 million. 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 2.22% in the third quarter of 2019 to 0.31% in the third quarter of 2020. The decrease in interest expense on deposits was due primarily to the decreases in average rates paid on interest-bearing checking, savings and money market products in response to the Federal Reserve's 50 and 100 basis points drop on overnight rates in March, 2020.

Fully taxable equivalent net interest margin was 3.20% for the third quarter 2020, compared to 3.63% for the same period in the prior year. Average interest-earning assets increased $320.3 million in the third quarter 2020 compared to the same period in the prior year. The average yield on interest-earning assets decreased 66 basis points in the third quarter of 2020, while the average cost of interest-bearing liabilities decreased 34 basis points, as compared to the same period in the prior year.

Provision for loan losses for the current quarter totaled $0.7 million compared to $4.4 million for the same period in the prior year, a decrease of $3.7 million. The decrease in provision for loan losses was primarily due to a specific impairment of $4.2 million related to a participation interest in a commercial credit in the third quarter of the prior year.

Non-Interest Income:

Non-interest income for the current quarter was $5.3 million compared to $5.0 million for the same period in the prior year, an increase of $0.3 million, or 7.7%. The increase can be mostly attributed to increases of $0.5 million in net gains on sales of residential mortgage loans sold into the secondary market, $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 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 $13.4 million compared to $13.5 million for the same period in the prior year, a decrease of $0.1 million, or 1.2%. The decrease can be mostly attributed to decreases of $0.2 million in pension and other employee benefits, and $0.2 million in other non-interest expense, offset by an increase of $0.3 million in FDIC insurance. 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 non-interest expense can be primarily attributed to an overall decrease in spending during the third quarter of 2020, compared to the same period in 2019. The increase in FDIC insurance was primarily due to the receipt of a $0.2 million credit in the third quarter of the prior year related to the Deposit Insurance Fund's (DIF) minimum reserve ratio assessment.

Income Tax Expense:

Income tax expense for the current quarter was $1.5 million compared to $0.2 million for the same period in the prior year, an increase of $1.3 million. The effective tax rate for the current quarter increased to 20.3% compared to 8.3% for the same period in the prior year. The increase in income tax expense was primarily due to an increase in pretax income.

3rd Quarter 2020 vs 2nd Quarter 2020

Net Interest Income:

Net interest income for the current quarter totaled $15.9 million compared to $15.6 million for the prior quarter, an increase of $0.3 million, or 1.8%, due primarily to increases of $0.2 million in interest income and fees from loans, and $0.1 million in interest and dividend income on taxable securities.

The increase in interest income and fees from loans was primarily attributed to a $44.7 million increase in average loan balances in the third quarter and the recognition of $0.3 million of fees related to the PPP, offset by decreased average loan yield due to the decline in interest rates. The average yield on loans fell from 4.06% in the second quarter of 2020 to 3.91% in the third quarter of 2020. The increase in interest and dividend income on taxable securities can be primarily attributed to an increase in average invested balances of $43.6 million in the third quarter of 2020.

Fully taxable equivalent net interest margin was 3.20% in the current quarter compared to 3.26% in the prior quarter. Average interest-earning assets increased $54.9 million in the current quarter, while the average yield on interest-earning assets decreased eight basis points from 3.45% in the prior quarter to 3.37% in the current quarter. The average cost of interest-bearing liabilities decreased two basis points in the third quarter of 2020, compared to the prior quarter.

Provision for loan losses for the current quarter totaled $0.7 million compared to $0.3 million for the prior quarter, an increase of $0.4 million primarily due to an overall increase in loan volume. Although the Corporation continues to closely monitor the loan portfolio for effects related to COVID-19, an adjustment to the allowance specific to the COVID-19 pandemic was not necessary in the third quarter. 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 $5.3 million compared to $5.1 million for the prior quarter, an increase of
$0.2 million, or 5.1%. The increase in non-interest income can be attributed to increases of $0.3 million in net gains on sales of residential mortgage loans sold into the secondary market and $0.2 million in service charges on deposit accounts, offset by a decrease of $0.3 million in other non-interest income. The increase in net gains on sales of loans held for sale was primarily due to an increase in residential mortgage loans originated and sold into the secondary market. The increase in service charges on deposit accounts was primarily attributed to an increase in NSF and overdraft fees. The decrease in other non-interest income was due primarily to a decrease in interest rate swap fees earned.

Non-Interest Expense:

Non-interest expense for the current quarter was $13.4 million compared to $13.2 million for the prior quarter, an increase of $0.2 million, or 1.0%. The increase can be mostly attributed to an increase in salaries and wage expense offset by a decrease in data processing expenses.

Income Tax Expense:

Income tax expense for the current quarter was $1.5 million compared to $1.4 million for the prior quarter, an increase of
$0.1 million in income tax expense. The effective tax rate for the current quarter increased to 20.3% compared to 18.9% in the prior period.

Asset Quality

Non-performing loans totaled $15.7 million at September 30, 2020, or 1.02% of total loans, compared to $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 $16.3 million, or 0.75% of total assets, at September 30, 2020, compared to $18.5 million, or 1.04% of total assets, at December 31, 2019. The decrease in non-performing loans can mostly be attributed to the charge off of one large commercial mortgage in the second quarter of 2020. The decrease in non-performing assets can be attributed to the decrease in non-performing loans.

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. Management continues to evaluate 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 during the first half of 2020. Based on this approach, the Corporation determined that additional provision specifically related to the COVID-19 pandemic was not necessary in the third quarter of 2020. The total provision for loan losses for the current quarter was $0.7 million, due to an increase in loan volume during the quarter. Net charge-offs for the current quarter were $0.2 million, consistent with the same period in the prior year.

The allowance for loan losses was $24.6 million at September 30, 2020 compared to $23.5 million at December 31, 2019. The allowance for loan losses was 156.36% of non-performing loans at September 30, 2020 compared to 130.38% at December 31, 2019. The ratio of the allowance for loan losses to total loans was 1.60% at September 30, 2020 compared to 1.79% at December 31, 2019. The ratio of the allowance for loan losses to total loans excluding PPP loans was 1.82% at September 30, 2020. The increase in the allowance for loan losses can be mostly attributed to increased loan volume during the third quarter of 2020.

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. At its highest point as of May 31, 2020, total loan forbearances represented 15.77% of the Corporation's total loan portfolio. As of September 30, 2020, total loan forbearances decreased to 2.98% of the total loan portfolio.

 

 

 

 

 

 

 

 

 

COVID-19 Loan Modifications Outstandin g As Of

 

 

June 30, 2020

 

September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

# Clients

 

Total Loan
Balance

 

# Clients

 

Total Loan
Balance

 

 

 

 

 

 

 

 

 

Commercial

 

172

 

$167.7 million

 

31

 

$43.3 million

 

 

 

 

 

 

 

 

 

Retail and Residential 

 

457

 

$18.0 million

 

43

 

$2.5 million

 

 

 

 

 

 

 

 

 

The above reflects the uncertain economic situation 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 $2.165 billion at September 30, 2020 compared to $1.788 billion at December 31, 2019, an increase of $377.2 million, or 21.1%. The increase can be mostly attributed to increases of $229.3 million in loans, net of deferred fees, $112.2 million in securities available for sale, at estimated fair value, $17.9 million in interest-earning deposits in other financial institutions, $10.3 million in accrued interest receivable and other assets, offset by an increase of $1.1 million in allowance for loan losses. The increase in loans was due primarily to the growth of $216.1 million in commercial loans and $39.1 million in residential mortgages, offset by a decrease of $25.9 million in consumer loans. $189.8 million of the increase in loans related to the PPP. The increase in securities available for sale can be mostly attributed to purchases of $138.4 million and an increase in the value of the portfolio of $11.8 million due to decreases in interest rates, offset by $38.9 million in maturities and paydowns. The increase in interest earning deposits was due primarily to strong deposit growth in the first three quarters of 2020. The increase in other assets was due primarily to an increase of $10.4 million in interest rate swap assets.

Total liabilities were $1.968 billion at September 30, 2020 compared to $1.605 billion at December 31, 2019, an increase of $362.8 million, or 22.6%. The increase in total liabilities can primarily be attributed to increases of $352.1 million, or 22.4% in deposits, and $11.2 million in accrued interest payable and other liabilities. The increase in deposits was due primarily to increases of $61.6 million in consumer deposits, $220.7 million in commercial deposits, and $69.7 million in public deposits. The increase in deposits was partially attributed to the collection of stimulus checks and PPP loan disbursements. The increase in accrued interest payable and other liabilities was due primarily to an increase of $10.3 million in interest rate swap liabilities.

Total shareholders equity was $197.0 million at September 30, 2020 compared to $182.6 million at December 31, 2019, an increase of $14.4 million, or 7.9%. The increase in retained earnings of $10.3 million was due primarily to net income of $14.0 million offset by $3.7 million in dividends declared. The increase in accumulated other comprehensive income of $7.4 million can mostly be attributed to an increase in the fair market value of the securities portfolio. Treasury stock increased $3.9 million primarily due to the Corporation's common stock repurchase program. As of September 30, 2020, 184,360 shares have been repurchased at an average cost of $27.57 per share.

The total equity to total assets ratio was 9.10% at September 30, 2020 compared to 10.22% at December 31, 2019. The tangible equity to tangible assets ratio was 8.16% at September 30, 2020 compared to 9.07% at December 31, 2019. Book value per share increased to $41.51 at September 30, 2020 from $37.35 at December 31, 2019. As of September 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 $1.935 billion at September 30, 2020, including $299.0 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, an increase of $20.0 million, or 1.1%. The increase in total assets under management or administration can be mostly attributed to an increase 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 September 30, 2020, the Corporation repurchased 184,360 shares of common stock at a total cost of $5.1 million under its share repurchase program. The weighted average cost was $27.57 per share repurchased. Remaining buyback authority under the share repurchase program was 65,640 shares at September 30, 2020.

As disclosed in the Corporation's August 20, 2020 Current Report on Form 8-K, the Corporation will consolidate two branches on or about November 20, 2020. The Big Flats, New York branch at 437 Maple Street, Big Flats, NY, will be consolidated into the nearby Arnot Road Office at 29 Arnot Road, Horseheads, NY. The Owego, New York branch located at 1054 State Route 17C, Owego, New York, will be consolidated into the nearby Owego branch office at 203 Main Street, Owego, New York.

Chemung Financial' s COVID-19 Pandemic Update

The Corporation continued to exercise COVID-19 precautions throughout its footprint, striving to ensure a healthy and safe work environment for our colleagues, clients and the communities we assist, and continued to provide the high level of customer service that our communities depend on in a manner that is accessible, reliable and efficient. At all times, social distancing, sanitizing and facial coverings were required. As of the date of this press release, 30 of our 32 offices have fully re-opened to normal business hours. The remaining two branches, currently being consolidated, are available by appointment. The Corporation is looking forward to assisting clients in the case that a next-phase stimulus package is passed by Congress, and with the SBA loan-forgiveness application process.

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 September 30, 2020, the Corporation's cash and cash equivalents balance was $149.9 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 September 30, 2020, the Corporation's investment in securities available for sale was $396.3 million, $216.3 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 $97.1 million, as of September 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 nine months 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 remainder 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 $2.2 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)

 

 

 

Sept. 30,

 

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

(in thousands)

 

 

2020

 

 

 

2020

 

 

 

2020

 

 

 

2019

 

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from financial institutions

 

 

35,327

 

 

$

28,689

 

 

$

27,522

 

 

$

25,203

 

 

$

36,497

 

Interest-earning deposits in other financial institutions

 

 

114,575

 

 

 

126,473

 

 

 

116,936

 

 

 

96,701

 

 

 

109,801

 

Total cash and cash equivalents

 

 

149,902

 

 

 

155,162

 

 

 

144,458

 

 

 

121,904

 

 

 

146,298

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity investments

 

 

2,291

 

 

 

2,169

 

 

 

1,999

 

 

 

2,174

 

 

 

2,065

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities available for sale

 

 

396,300

 

 

 

317,061

 

 

 

299,075

 

 

 

284,090

 

 

 

267,529

 

Securities held to maturity

 

 

3,047

 

 

 

3,597

 

 

 

3,001

 

 

 

3,115

 

 

 

3,420

 

FHLB and FRB stocks, at cost

 

 

3,150

 

 

 

3,150

 

 

 

3,099

 

 

 

3,099

 

 

 

3,091

 

Total investment securities

 

 

402,497

 

 

 

323,808

 

 

 

305,175

 

 

 

290,304

 

 

 

274,040

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

1,095,170

 

 

 

1,065,901

 

 

 

895,741

 

 

 

879,085

 

 

 

878,703

 

Mortgage

 

 

227,372

 

 

 

207,999

 

 

 

192,722

 

 

 

188,338

 

 

 

184,013

 

Consumer

 

 

215,951

 

 

 

224,098

 

 

 

231,998

 

 

 

241,796

 

 

 

243,922

 

Loans, net of deferred loan fees

 

 

1,538,493

 

 

 

1,497,998

 

 

 

1,320,461

 

 

 

1,309,219

 

 

 

1,306,638

 

Allowance for loan losses

 

 

(24,590

)

 

 

(24,130

)

 

 

(26,233

)

 

 

(23,478

)

 

 

(23,923

)

Loans, net

 

 

1,513,903

 

 

 

1,473,868

 

 

 

1,294,228

 

 

 

1,285,741

 

 

 

1,282,715

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

 

2,059

 

 

 

1,491

 

 

 

801

 

 

 

1,185

 

 

 

1,313

 

Premises and equipment, net

 

 

20,891

 

 

 

21,395

 

 

 

21,781

 

 

 

22,417

 

 

 

22,962

 

Operating lease right-of-use assets

 

 

7,474

 

 

 

7,650

 

 

 

7,826

 

 

 

8,001

 

 

 

8,051

 

Goodwill

 

 

21,824

 

 

 

21,824

 

 

 

21,824

 

 

 

21,824

 

 

 

21,824

 

Other intangible assets, net

 

 

371

 

 

 

491

 

 

 

610

 

 

 

742

 

 

 

886

 

Accrued interest receivable and other assets

 

 

43,802

 

 

 

43,063

 

 

 

42,627

 

 

 

33,535

 

 

 

33,489

 

Total assets

 

$

2,165,014

 

 

$

2,050,921

 

 

$

1,841,329

 

 

$

1,787,827

 

 

$

1,793,643

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing demand deposits

 

 

619,412

 

 

$

616,736

 

 

$

469,535

 

 

$

468,238

 

 

$

472,600

 

Interest-bearing demand deposits

 

 

270,949

 

 

 

246,470

 

 

 

210,493

 

 

 

200,089

 

 

 

208,222

 

Money market accounts

 

 

579,574

 

 

 

538,006

 

 

 

544,024

 

 

 

530,241

 

 

 

510,194

 

Savings deposits

 

 

248,751

 

 

 

239,334

 

 

 

217,789

 

 

 

212,393

 

 

 

215,665

 

Time deposits

 

 

205,503

 

 

 

170,710

 

 

 

166,262

 

 

 

161,177

 

 

 

169,825

 

Total deposits

 

 

1,924,189

 

 

 

1,811,256

 

 

 

1,608,103

 

 

 

1,572,138

 

 

 

1,576,506

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advances and other debt

 

 

4,155

 

 

 

3,969

 

 

 

4,028

 

 

 

4,085

 

 

 

4,140

 

Operating lease liabilities

 

 

7,584

 

 

 

7,752

 

 

 

7,919

 

 

 

8,084

 

 

 

8,125

 

Accrued interest payable and other liabilities

 

 

32,081

 

 

 

33,355

 

 

 

30,832

 

 

 

20,893

 

 

 

22,828

 

Total liabilities

 

 

1,968,009

 

 

 

1,856,332

 

 

 

1,650,882

 

 

 

1,605,200

 

 

 

1,611,599

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

53

 

 

 

53

 

 

 

53

 

 

 

53

 

 

 

53

 

Additional-paid-in capital

 

 

46,892

 

 

 

46,758

 

 

 

46,754

 

 

 

46,382

 

 

 

46,464

 

Retained earnings

 

 

163,987

 

 

 

159,505

 

 

 

154,926

 

 

 

153,701

 

 

 

150,759

 

Treasury stock, at cost

 

 

(15,569

)

 

 

(13,869

)

 

 

(11,204

)

 

 

(11,710

)

 

 

(11,956

)

Accumulated other comprehensive income (loss)

 

 

1,642

 

 

 

2,142

 

 

 

(82

)

 

 

(5,799

)

 

 

(3,276

)

Total shareholders' equity

 

 

197,005

 

 

 

194,589

 

 

 

190,447

 

 

 

182,627

 

 

 

182,044

 

Total liabilities and shareholders' equity

 

$

2,165,014

 

 

$

2,050,921

 

 

$

1,841,329

 

 

$

1,787,827

 

 

$

1,793,643

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-end shares outstanding

 

 

4,746

 

 

 

4,804

 

 

 

4,905

 

 

 

4,889

 

 

 

4,874

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chemung Financial Corporation
Consolidated Statements of Income (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

Percent

 

Nine Months Ended
September 30,

 

Percent

(in thousands, except per share data)

 

 

2020

 

 

 

2019

 

 

Change

 

 

2020

 

 

 

2019

 

 

Change

Interest and dividend income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

14,876

 

 

$

14,664

 

 

1.4

 

 

$

43,770

 

 

$

43,723

 

 

0.1

 

Taxable securities

 

 

1,474

 

 

 

1,349

 

 

9.3

 

 

 

4,358

 

 

 

3,825

 

 

13.9

 

Tax exempt securities

 

 

263

 

 

 

293

 

 

(10.2

)

 

 

799

 

 

 

872

 

 

(8.4

)

Interest-earning deposits

 

 

101

 

 

 

502

 

 

(79.9

)

 

 

643

 

 

 

1,735

 

 

(62.9

)

Total interest and dividend income

 

 

16,714

 

 

 

16,808

 

 

(0.6

)

 

 

49,570

 

 

 

50,155

 

 

(1.2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

809

 

 

 

1,629

 

 

(50.3

)

 

 

2,922

 

 

 

4,634

 

 

(36.9

)

Borrowed funds

 

 

36

 

 

 

37

 

 

(2.7

)

 

 

126

 

 

 

111

 

 

13.5

 

Total interest expense

 

 

845

 

 

 

1,666

 

 

(49.3

)

 

 

3,048

 

 

 

4,745

 

 

(35.8

)



Net interest income

 

 



15,869

 

 

 



15,142

 

 



4.8

 

 

 



46,522

 

 

 



45,410

 

 



2.4

 

Provision for loan losses

 

 

679

 

 

 

4,441

 

 

(84.7

)

 

 

3,989

 

 

 

5,684

 

 

(29.8

)

Net interest income after provision for loan losses

 

 

15,190

 

 

 

10,701

 

 

41.9

 

 

 

42,533

 

 

 

39,726

 

 

7.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wealth management group fee income

 

 

2,416

 

 

 

2,315

 

 

4.4

 

 

 

6,968

 

 

 

7,115

 

 

(2.1

)

Service charges on deposit accounts

 

 

740

 

 

 

1,141

 

 

(35.1

)

 

 

2,294

 

 

 

3,330

 

 

(31.1

)

Interchange revenue from debit card transactions

 

 

1,082

 

 

 

1,058

 

 

2.3

 

 

 

2,989

 

 

 

3,113

 

 

(4.0

)

Net gains on securities transactions

 

 

 

 

 

 

 

N/M

 

 

 

 

 

 

19

 

 

N/M

 

Change in fair value of equity investments

 

 

57

 

 

 

(10

)

 

(670.0

)

 

 

(33

)

 

 

106

 

 

(131.1)Net gains on sales of loans held for sale 553 69 701.4 916 146 527.4 Net gains (losses) on sales of other real estate owned 6 (1) N/M (71) (87) (18.4)Income from bank owned life insurance 14 17 (17.6) 147 48 206.3 Other 471 367 28.3 1,940 1,177 64.8 Total non-interest income 5,339 4,956 7.7 15,150 14,967 1.2 Non-interest expense: Salaries and wages 6,088 5,874 3.6 17,678 17,375 1.7 Pension and other employee benefits 1,245 1,470 (15.3) 4,095 4,488 (8.8)Other components of net periodic pension and postretirement benefits (254) (141) 80.1 (762) (423) 80.1 Net occupancy 1,454 1,424 2.1 4,406 4,469 (1.4)Furniture and equipment 538 717 (25.0) 1,573 1,840 (14.5)Data processing 1,777 1,818 (2.3) 5,630 5,418 3.9 Professional services 453 395 14.7 1,313 1,218 7.8 Amortization of intangible assets 120 151 (20.5) 371 465 (20.2)Marketing and advertising 140 231 (39.4) 546 644 (15.2)Other real estate owned expense 53 9 N/M 87 80 8.8 FDIC insurance 247 (10) N/M 726 476 52.5 Loan expense 301 171 76.0 798 557 43.3 Other 1,200 1,416 (15.3) 3,878 4,238 (8.5)Total non-interest expense 13,362 13,525 (1.2) 40,339 40,845 (1.2) Income before income tax expense 7,167 2,132 236.2 17,344 13,848 25.2 Income tax expense 1,456 176 727.3 3,315 2,443 35.7 Net income $5,711 $1,956 192.0 $14,029 $11,405 23.0 Basic and diluted earnings per share $1.19 $0.40 $2.90 $2.34 Cash dividends declared per share 0.26 0.26 0.78 0.78 Average basic and diluted shares outstanding 4,773 4,871 $4,836 $4,866
N/M - Not Meaningful


Chemung Financial Corporation

As of or for the Three Months Ended

As of or for the
Nine Months Ended

Consolidated Financial Highlights (Unaudited)
(in thousands, except per share data)

Sept. 30,
2020

June 30,
2020

March 31,
2020

Dec. 31,
2019

Sept. 30,
2019

Sept. 30,
2020

Sept. 30,
2019

RESULTS OF OPERATIONS

Interest income

$

16,714

$

16,472

$

16,384

$

16,777

$

16,808

$

49,570

$

50,155

Interest expense

845

881

1,322

1,576

1,666

3,048

4,745

Net interest income

15,869

15,591

15,062

15,201

15,142

46,522

45,410

Provision (credit) for loan losses

679

260

3,050

261

4,441

3,989

5,684

Net interest income after provision for loan losses

15,190

15,331

12,012

14,940

10,701

42,533

39,726

Non-interest income

5,339

5,080

4,730

5,106

4,956

15,150

14,967

Non-interest expense

13,362

13,227

13,749

14,851

13,525

40,339

40,845

Income before income tax expense

7,167

7,184

2,993

5,195

2,132

17,344

13,848

Income tax expense

1,456

1,357

502

991

176

3,315

2,443

Net income

$

5,711

$

5,827

$

2,491

$

4,204

$

1,956

$

14,029

$

11,405

Basic and diluted earnings per share

$

1.19

$

1.20

$

0.51

$

0.87

$

0.40

$

2.90

$

2.34

Average basic and diluted shares outstanding

4,773

4,850

4,895

4,879

4,871

4,836

4,866

PERFORMANCE RATIOS

Return on average assets

1.08

%

1.15

%

0.55

%

0.93

%

0.44

%

0.95

%

0.87

%

Return on average equity

11.56

%

12.22

%

5.32

%

9.14

%

4.29

%

9.74

%

8.76

%

Return on average tangible equity (a)

13.03

%

13.83

%

6.04

%

10.43

%

4.91

%

11.03

%

10.09

%

Efficiency ratio (unadjusted) (f)

63.00

%

63.99

%

69.47

%

73.13

%

67.30

%

65.41

%

67.65

%

Efficiency ratio (adjusted) (a) (b)

62.19

%

63.16

%

68.50

%

72.08

%

66.21

%

64.54

%

66.56

%

Non-interest expense to average assets

2.54

%

2.62

%

3.06

%

3.28

%

3.05

%

2.72

%

3.12

%

Loans to deposits

79.96

%

82.70

%

82.11

%

83.28

%

82.88

%

79.96

%

82.88

%

YIELDS / RATES - Fully Taxable Equivalent

Yield on loans

3.91

%

4.06

%

4.37

%

4.43

%

4.50

%

4.10

%

4.53

%

Yield on investments

1.61

%

1.58

%

2.20

%

2.29

%

2.36

%

1.78

%

2.39

%

Yield on interest-earning assets

3.37

%

3.45

%

3.86

%

3.92

%

4.03

%

3.54

%

4.05

%

Cost of interest-bearing deposits

0.26

%

0.28

%

0.46

%

0.55

%

0.60

%

0.33

%

0.57

%

Cost of borrowings

3.54

%

0.82

%

3.58

%

3.58

%

3.53

%

1.44

%

3.52

%

Cost of interest-bearing liabilities

0.27

%

0.29

%

0.47

%

0.56

%

0.61

%

0.34

%

0.58

%

Interest rate spread

3.10

%

3.16

%

3.39

%

3.36

%

3.42

%

3.20

%

3.47

%

Net interest margin, fully taxable equivalent

3.20

%

3.26

%

3.55

%

3.56

%

3.63

%

3.33

%

3.67

%

CAPITAL

Total equity to total assets at end of period

9.10

%

9.49

%

10.34

%

10.22

%

10.15

%

9.10

%

10.15

%

Tangible equity to tangible assets at end of period (a)

8.16

%

8.49

%

9.24

%

9.07

%

9.00

%

8.16

%

9.00

%

Book value per share

$

41.51

$

40.51

$

38.83

$

37.35

$

37.35

$

41.51

$

37.35

Tangible book value per share (a)

36.83

35.86

34.25

32.74

32.69

36.83

32.69

Period-end market value per share

28.87

27.30

32.98

42.50

42.00

28.87

42.00

Dividends declared per share

0.26

0.26

0.26

0.26

0.26

0.78

0.78

AVERAGE BALANCES

Loans and loans held for sale (c)

$

1,515,762

$

1,456,080

$

1,310,342

$

1,303,349

$

1,295,167

$

1,427,716

$

1,294,093

Interest earning assets

1,986,043

1,931,107

1,715,562

1,705,766

1,665,793

1,877,966

1,664,188

Total assets

2,094,114

2,032,729

1,807,753

1,798,385

1,760,385

1,978,570

1,752,948

Deposits

1,853,557

1,776,275

1,588,147

1,581,645

1,545,858

1,739,744

1,550,251

Total equity

196,569

191,853

188,427

182,522

180,896

192,299

173,998

Tangible equity (a)

174,302

169,464

165,911

159,889

158,111

169,909

151,052

ASSET QUALITY

Net charge-offs

$

220

$

2,363

$

294

$

706

$

174

$

2,877

$

705

Non-performing loans (d)

15,726

17,280

17,948

18,008

23,468

15,726

23,468

Non-performing assets (e)

16,311

17,573

18,328

18,525

23,679

16,311

23,679

Allowance for loan losses

24,590

24,130

26,233

23,478

23,923

24,590

23,923

Annualized net charge-offs to average loans

0.06

%

0.65

%

0.09

%

0.21

%

0.05

%

0.27

%

0.07

%

Non-performing loans to total loans

1.02

%

1.15

%

1.36

%

1.38

%

1.80

%

1.02

%

1.80

%

Non-performing assets to total assets

0.75

%

0.86

%

1.00

%

1.04

%

1.32

%

0.75

%

1.32

%

Allowance for loan losses to total loans

1.60

%

1.61

%

1.99

%

1.79

%

1.83

%

1.60

%

1.83

%

Allowance for loan losses to non-performing loans

156.36

%

139.64

%

146.16

%

130.38

%

101.94

%

156.36

%

101.94

%

(a) See the GAAP to Non-GAAP reconciliations.

(b) Efficiency ratio (adjusted) is non-interest expense less amortization of intangible assets less legal reserve divided by the total of fully taxable equivalent net interest income plus non-interest income less net gains or losses on securities transactions.

(c) Loans and loans held for sale do not reflect the allowance for loan losses.

(d) Non-performing loans include non-accrual loans only.

(e) Non-performing assets include non-performing loans plus other real estate owned.

(f) Efficiency ratio (unadjusted) is non-interest expense divided by the total of net interest income plus non-interest income.

Chemung Financial Corporation
Average Consolidated Balance Sheets & Net Interest Income Analysis and Rate/Volume Analysis of Net Interest Income (Unaudited)

Three Months Ended
September 30, 2020

Three Months Ended
September 30, 2019

Three Months Ended
September 30, 2020 vs. 2019

Average
Balance

Interest

Yield /
Rate

Average
Balance

Interest

Yield /
Rate

Total
Change

Due to
Volume

Due to
Rate

(in thousands)

Interest earning assets:

Commercial loans

$

1,075,029

$

10,575

3.91

%

$

864,923

$

10,160

4.66

%

$

415

$

2,212

$

(1,797

)

Mortgage loans

220,345

2,067

3.73

%

184,090

1,788

3.85

%

279

337

(58

)

Consumer loans

220,388

2,256

4.07

%

246,154

2,752

4.44

%

(496

)

(276

)

(220

)

Taxable securities

301,315

1,476

1.95

%

234,075

1,350

2.29

%

126

348

(222

)

Tax-exempt securities

41,372

325

3.13

%

46,945

357

3.02

%

(32

)

(44

)

12

Interest-earning deposits

127,594

100

0.31

%

89,606

502

2.22

%

(402

)

152

(554

)

Total interest earning assets

1,986,043

16,799

3.37

%

1,665,793

16,909

4.03

%

(110

)

2,729

(2,839

)

Non- interest earnings assets:

Cash and due from banks

25,534

25,784

Other assets

106,907

88,841

Allowance for loan losses

(24,370

)

(20,033

)

Total assets

$

2,094,114

$

1,760,385

Interest-bearing liabilities:

Interest-bearing checking

$

253,278

$

55

0.09

%

$

180,852

$

170

0.37

%

$

(115

)

$

49

$

(164

)

Savings and money market

791,004

231

0.12

%

724,451

794

0.43

%

(563

)

64

(627

)

Time deposits

188,889

524

1.10

%

178,107

665

1.48

%

(141

)

38

(179

)

Long-term advances and other debt

3,930

35

3.54

%

4,161

37

3.53

%

(2

)

(2

)

Total int.-bearing liabilities

1,237,101

845

0.27

%

1,087,571

1,666

0.61

%

(821

)

149

(970

)

Non-interest-bearing liabilities:

Demand deposits

620,386

462,448

Other liabilities

40,058

29,470

Total liabilities

1,897,545

1,579,489

Shareholders' equity

196,569

180,896

Total liabilities and shareholders' equity

$

2,094,114

$

1,760,385

Fully taxable equivalent net interest income

15,954

15,243

$

711

$

2,580

$

(1,869

)

Net interest rate spread (1)

3.10

%

3.42

%

Net interest margin, fully taxable equivalent (2)

3.20

%

3.63

%

Taxable equivalent adjustment

(85

)

(101

)

Net interest income

$

15,869

$

15,142

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

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

Chemung Financial Corporation
Average Consolidated Balance Sheets & Net Interest Income Analysis and Rate/Volume Analysis of Net Interest Income (Unaudited)


Nine Months Ended
September 30, 2020


Nine Months Ended
September 30, 2019


Nine Months Ended
September 30, 2020 vs. 2019



(in thousands)

Average
Balance



Interest

Yield /
Rate

Average
Balance



Interest

Yield /
Rate

Total
Change

Due to
Volume

Due to
Rate

Interest earning assets:

Commercial loans

$

996,136

$

30,926

4.15

%

$

858,997

$

30,184

4.70

%

$

742

$

4,521

$

(3,779

)

Mortgage loans

203,692

5,762

3.78

%

182,657

5,223

3.82

%

539

595

(56

)

Consumer loans

227,888

7,150

4.19

%

252,439

8,425

4.46

%

(1,275

)

(786

)

(489

)

Taxable securities

270,348

4,361

2.15

%

226,029

3,830

2.27

%

531

739

(208

)

Tax-exempt securities

41,753

983

3.14

%

48,550

1,063

2.93

%

(80

)

(154

)

74

Interest-earning deposits

138,149

643