• Chemung Financial Corporation Reports Third Quarter 2017 Net Income of $3.7 Million, or $0.76 per Share

    Source: Nasdaq GlobeNewswire / 19 Oct 2017 17:15:45   Eastern Standard Time

    ELMIRA, N.Y., Oct. 19, 2017 (GLOBE NEWSWIRE) -- Chemung Financial Corporation (the “Corporation”) (Nasdaq:CHMG), the parent company of Chemung Canal Trust Company (the “Bank”), today reported net income of $3.7 million, or $0.76 per share, for the third quarter of 2017, compared to $2.7 million, or $0.58 per share, for the third quarter of 2016.

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

    “Our continued focus on our customers and clients produced another quarter of strong results, recognizing solid growth in net interest income, earnings, loans, and deposits.  To continue our growth in loans and deposits, we are excited to be opening a new branch in Schenectady, NY during the fourth quarter of 2017.”

    Third Quarter Highlights1

    • Loans, net of deferred fees, increased $88.5 million, or 7.4%
    • Commercial loans increased $81.3 million, or 10.9%
    • Deposits increased $80.7 million, or 5.5%
    • Net interest income increased $1.8 million, or 13.2%
    • Non-interest expense decreased $0.2 million, or 1.4%
    • Dividends declared during the quarter were $0.26

    Karl F. Krebs, Chemung Financial Corporation CFO, stated:

    “Strong growth in high quality loans continues to drive interest income. Year-to-date 2017 interest income increased $2.6 million or 6.2%, over year-to-date 2016. Over the same period, we have reduced our non-interest expense by $2.4 million or 5.6%. Our continued focus on growth in high quality assets and strengthening financial performance has allowed us to improve our return on average assets 32%, from 0.57% to 0.75%, our efficiency ratio from 75.03% to 67.72%, and our return on average equity from 6.62% to 8.54%.”

    A more detailed summary of financial performance follows.

    1 Balance sheet comparisons are calculated for September 30, 2017 versus December 31, 2016.   Income statement comparisons are calculated for the third quarter of 2017 versus third quarter of 2016.

    3rd Quarter 2017 vs 3rd Quarter 2016

    Net Interest Income:

    Net interest income for the current quarter totaled $14.8 million compared with $13.0 million for the same period in the prior year, an increase of $1.8 million, or 13.2%.  Interest and fees from loans increased $1.2 million and interest from investments, including interest-bearing deposits, increased $0.3 million while interest expense on borrowed funds and securities sold under agreements to repurchase decreased $0.2 million when compared to the same period in the prior year.  Fully taxable equivalent net interest margin was 3.68%, compared with 3.33% for the same period in the prior year.  Average interest-earning assets increased $38.5 million compared to the same period in the prior year.  The yield on interest-earning assets increased 28 basis points, while the cost of interest-bearing liabilities decreased nine basis points compared to the same period in the prior year.  The increase in the yield on interest-earning assets can be mostly attributed to a 43 basis point increase in the yield on investments due to the reinvestment of maturing securities into higher yielding mortgage-backed and municipal securities, along with an 18 basis point increase in the yield on loans due to payoffs of nonaccrual loans and an increase in PRIME and LIBOR.  The decline in the cost of interest-bearing liabilities can be attributed to a 20 basis point decline in the cost of borrowings due to the maturity of one $10.0 million FHLB term advance (4.60% rate) in December 2016 and one $10.0 million repurchase agreement (4.54% rate) in March 2017.

    Non-Interest Income:

    Non-interest income for the current quarter was $5.2 million compared with $5.4 million for the same period in the prior year, a decrease of $0.2 million, or 4.9%.  The decrease was due primarily to a $0.3 million decline in interchange revenue from debit card transactions.

    Non-Interest Expense:

    Non-interest expense for the current quarter was $13.3 million compared with $13.5 million for the same period in the prior year, a decrease of $0.2 million, or 1.4%.  The decrease was due primarily to decreases of $0.6 million in pension and other employee benefits, offset by increases in salaries and wages, marketing and advertising, and other non-interest expense.  The decrease in pension and other employee benefits can be mostly attributed to a $0.7 million decrease related to the freezing of accruals for the pension and post-retirement healthcare plans during the fourth quarter of 2016.  The increase in salaries and wages can be attributed to annual merit increases, while the increase in marketing and advertising expenses can be mostly attributed to timing.  The increase in other non-interest expense can be mostly attributed to an increase in non-loan charge-offs and other non-interest expenses.

    3rd Quarter 2017 vs 2nd Quarter 2017

    Net Interest Income:

    Net interest income for the current quarter totaled $14.8 million compared with $14.0 million for the prior quarter, an increase of $0.8 million, or 5.8%.  Interest and fees from loans increased $0.9 million while interest from interest-bearing deposits decreased $0.1 million when compared to the prior quarter.  Fully taxable equivalent net interest margin was 3.68%, compared with 3.47% for the prior quarter.  Average interest-earning assets decreased $19.1 million compared to the prior quarter.  The yield on interest-earning assets increased 21 basis points, while the cost of interest-bearing liabilities increased one basis point compared to the prior quarter.  The increase in the yield on interest-earning assets can be mostly attributed to a 15 basis point increase in the yield on investments due to the reinvestment of maturing securities into higher yielding municipal securities and interest-bearing deposits, along with a 16 basis point increase in the yield on loans due to payoffs of nonaccrual loans and an increase in PRIME and LIBOR.

    Non-Interest Income:

    Non-interest income for the current quarter was $5.2 million compared with $5.0 million for the prior quarter, an increase of $0.2 million, or 2.9%.  The increase can be mostly attributed to an increase of $0.1 million in swap fee income. 

    Non-Interest Expense:

    Non-interest expense for the current quarter was $13.3 million compared with $14.3 million for the prior quarter, a decrease of $1.0 million, or 7.4%.  The decrease was due primarily to an increase in the legal reserve of $0.9 million during the second quarter, and decreases of $0.2 million in pension and other employee benefits, and $0.3 million in net occupancy and furniture and equipment expenses, offset by an increase of $0.1 million in marketing and advertising expense.  The decrease in pension and other employee benefits can be mostly attributed to lower healthcare costs during the third quarter.  The decrease in net occupancy and furniture and equipment expenses was due primarily to exit costs for the branch at 120 Genesee Street in Auburn, NY recognized in the second quarter of 2017.  The increase in marketing and advertising expenses can be mostly attributed to timing.

    Asset Quality

    Non-performing loans totaled $14.0 million at September 30, 2017, or 1.09% of total loans, compared with $12.0 million at December 31, 2016, or 1.00% of total loans.  The increase in non-performing loans at September 30, 2017 was primarily in the commercial mortgage segment and related to one large commercial loan, offset by decreases in the residential mortgage and consumer segments.  Non-performing assets, which are comprised of non-performing loans and other real estate owned, were $14.2 million, or 0.82% of total assets, at September 30, 2017, compared with $12.4 million, or 0.75% of total assets, at December 31, 2016.  As noted above, the increase in non-performing assets was primarily due to the commercial mortgage segment of the loan portfolio.

    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 third quarter of 2017 was $1.3 million, an increase of $0.2 million compared with the same period in the prior year.  Net charge-offs for the third quarter of 2017 were $0.7 million, compared with $0.4 million for the third quarter of 2016. 

    The allowance for loan losses was $15.7 million as of September 30, 2017 and $14.3 million as of December 31, 2016.  The allowance for loan losses was 111.88% of non-performing loans at September 30, 2017 compared with 118.35% at December 31, 2016.  The ratio of the allowance for loan losses to total loans was 1.22% at September 30, 2017 compared with 1.19% at December 31, 2016.

    Balance Sheet Activity

    Assets totaled $1.732 billion at September 30, 2017 compared with $1.657 billion at December 31, 2016, an increase of $74.5 million, or 4.5%.  The growth was due primarily to increases of $8.8 million in securities available for sale and $88.5 million in the loan portfolio, offset by a decrease of $17.8 million in cash and cash equivalents.  

    The increase in total loans can be mostly attributed to increases of $81.3 million in commercial loans and $8.5 million in consumer loans, offset by a $1.3 million decrease in residential mortgages.  The increase in securities available for sale can be mostly attributed to additional purchases of municipal securities and SBA loan pools.  The decrease in cash and cash equivalents can be attributed to an increase in securities available for sale and total loans, offset by an increase in deposits. 

    Deposits totaled $1.537 billion at September 30, 2017 compared with $1.456 billion at December 31, 2016, an increase of $80.7 million, or 5.5%.  The growth was attributable to increases of $32.0 million in non-interest bearing demand deposits, $19.3 million in interest-bearing demand deposits, $37.8 million in money market accounts and $9.5 million in savings deposits.  Partially offsetting the increases noted above was a decrease of $17.9 million in time deposits.  The changes in money market accounts and demand deposits can be mostly attributed to new municipal clients, along with the seasonal inflow of deposits from existing municipal clients, and deposits of commercial clients. 

    Total equity was $154.3 million at September 30, 2017 compared with $143.7 million at December 31, 2016, an increase of $10.5 million, or 7.3%.  The increase was primarily due to earnings of $9.6 million, a $0.5 million increase in additional paid in capital, a reduction of $0.7 million in treasury stock, and a decrease of $3.5 million in accumulated other comprehensive loss, mostly attributable to the increase in the fair market value of the securities portfolio, offset by $3.7 million in dividends declared during the year.

    The total equity to total assets ratio was 8.91% at September 30, 2017 compared with 8.67% at December 31, 2016.  The tangible equity to tangible assets ratio was 7.62% at September 30, 2017 compared with 7.29% at December 31, 2016.  Book value per share increased to $32.11 at September 30, 2017 from $30.07 at December 31, 2016.  As of September 30, 2017, the Bank’s capital ratios were in excess of those required to be considered well-capitalized under regulatory capital guidelines and the Corporation met capital requirements under regulatory guidelines.

    Other Items

    The market value of total assets under management or administration in our Wealth Management Group was $1.890 billion at September 30, 2017, including $345.0 million of assets under management or administration for the Corporation, compared to $1.721 billion at December 31, 2016, including $294.9 million of assets under management or administration for the Corporation, an increase of $169.3 million, or 9.8%.

    About Chemung Financial Corporation

    Chemung Financial Corporation is a $1.7 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.

    Chemung Financial Corporation          
    Consolidated Balance Sheets (Unaudited) 
      Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
    (in thousands) 2017
     2017
     2017
     2016
     2016
    ASSETS          
    Cash and due from financial institutions $34,572  $26,684  $26,275  $28,205  $35,345 
    Interest-bearing deposits in other financial institutions  21,806   37,862   99,410   45,957   100,159 
    Total cash and cash equivalents  56,378   64,546   125,685   74,162   135,504 
               
    Trading assets, at fair value  909   877   826   774   720 
               
    Securities available for sale  312,226   324,293   302,581   303,402   303,259 
    Securities held to maturity  3,865   4,928   3,721   4,705   4,504 
    FHLB and FRB stocks, at cost  3,497   3,764   3,597   4,041   4,491 
    Total investment securities  319,588   332,985   309,899   312,148   312,254 
               
    Commercial  826,554   794,175   780,687   745,217   759,675 
    Mortgage  197,210   200,629   198,020   198,493   197,665 
    Consumer  265,049   257,843   255,544   256,580   259,226 
    Loans, net of deferred loan fees  1,288,813   1,252,647   1,234,251   1,200,290   1,216,566 
    Allowance for loan losses  (15,694)  (15,104)  (14,960)  (14,253)  (15,325)
    Loans, net  1,273,119   1,237,543   1,219,291   1,186,037   1,201,241 
               
    Loans held for sale  1,246   386   20   412   119 
    Premises and equipment, net  27,366   27,836   28,206   28,923   29,084 
    Goodwill  21,824   21,824   21,824   21,824   21,824 
    Other intangible assets, net  2,292   2,506   2,719   2,945   3,183 
    Accrued interest receivable and other assets  28,960   30,069   27,630   29,954   24,936 
    Total assets $1,731,682  $1,718,572  $1,736,100  $1,657,179  $1,728,865 
               
    LIABILITIES AND SHAREHOLDERS' EQUITY          
    Deposits:          
    Non-interest-bearing demand deposits $449,841  $436,017  $432,062  $417,812  $424,243 
    Interest-bearing demand deposits  156,094   144,239   154,848   136,826   149,527 
    Money market accounts  586,795   591,751   597,547   548,963   579,211 
    Savings deposits  218,106   220,227   219,180   208,636   207,544 
    Time deposits  126,182   132,803   140,614   144,106   148,419 
    Total deposits  1,537,018   1,525,037   1,544,251   1,456,343   1,508,944 
               
    Securities sold under agreements to repurchase  10,000   11,937   15,215   27,606   30,002 
    FHLB advances and other debt  13,577   13,658   13,736   13,815   23,893 
    Accrued interest payable and other liabilities  16,810   15,978   14,641   15,667   21,214 
    Total liabilities  1,577,405   1,566,610   1,587,843   1,513,431   1,584,053 
               
    Shareholders' equity          
    Common stock  53   53   53   53   53 
    Additional-paid-in capital  46,089   45,966   45,901   45,603   45,724 
    Retained earnings  130,006   127,585   125,860   124,111   122,382 
    Treasury stock, at cost  (14,596)  (14,670)  (14,801)  (15,265)  (15,542)
    Accumulated other comprehensive (loss)  (7,275)  (6,972)  (8,756)  (10,754)  (7,805)
    Total shareholders' equity  154,277   151,962   148,257   143,748   144,812 
    Total liabilities and shareholders' equity $1,731,682  $1,718,572  $1,736,100  $1,657,179  $1,728,865 
               
    Period-end shares outstanding  4,804   4,799   4,794   4,781   4,768 
               

     

    Chemung Financial Corporation           
    Consolidated Statements of Income (Unaudited) 
      Three Months Ended   Nine Months Ended  
      September 30, Percent September 30, Percent
    (in thousands, except per share data) 2017 2016 Change 2017 2016 Change
    Interest and dividend income:            
    Loans, including fees $13,709  $12,487  9.8  $39,025  $37,054  5.3 
    Taxable securities  1,369   1,225  11.8   4,189   3,943  6.2 
    Tax exempt securities  322   228  41.2   836   722  15.8 
    Interest-bearing deposits  97   85  14.1   445   180  147.2 
    Total interest and dividend income  15,497   14,025  10.5   44,495   41,899  6.2 
                
    Interest expense:            
    Deposits  545   561  (2.9)  1,632   1,607  1.6 
    Securities sold under agreements to repurchase  95   214  (55.6)  383   636  (39.8)
    Borrowed funds  94   210  (55.2)  273   623  (56.2)
    Total interest expense  734   985  (25.5)  2,288   2,866  (20.2)
                
    Net interest income  14,763   13,040  13.2   42,207   39,033  8.1 
    Provision for loan losses  1,289   1,050  22.8   2,750   2,033  35.3 
    Net interest income after provision for loan losses  13,474   11,990  12.4   39,457   37,000  6.6 
                
    Non-interest income:            
    Wealth management group fee income  2,147   2,027  5.9   6,525   6,240  4.6 
    Service charges on deposit accounts  1,269   1,361  (6.8)  3,678   3,781  (2.7)
    Interchange revenue from debit card transactions  925   1,203  (23.1)  2,809   3,035  (7.4)
    Net gains on securities transactions  -   75  (100.0)  12   983  (98.8)
    Net gains on sales of loans held for sale  71   115  (38.3)  193   273  (29.3)
    Net gains (losses) on sales of other real estate owned  30   10  200.0   38   (6) N/M 
    Income from bank owned life insurance  17   19  (10.5)  52   55  (5.5)
    Other  707   625  13.1   1,728   1,891  (8.6)
    Total non-interest income  5,166   5,435  (4.9)  15,035   16,252  (7.5)
                 
    Non-interest expense:            
    Salaries and wages  5,480   5,355  2.3   16,177   15,720  2.9 
    Pension and other employee benefits  992   1,573  (36.9)  3,417   4,894  (30.2)
    Net occupancy  1,476   1,503  (1.8)  4,784   5,287  (9.5)
    Furniture and equipment  657   685  (4.1)  2,119   2,286  (7.3)
    Data processing  1,667   1,624  2.6   4,858   5,058  (4.0)
    Professional services  452   502  (10.0)  1,169   1,418  (17.6)
    Legal accruals and settlements  -   -  N/M   850   1,200  (29.2)
    Amortization of intangible assets  214   245  (12.7)  653   748  (12.7)
    Marketing and advertising  213   101  110.9   580   648  (10.5)
    Other real estate owned expense  4   41  (90.2)  35   150  (76.7)
    FDIC insurance  312   324  (3.7)  946   895  5.7 
    Loan expense  165   162  1.9   447   462  (3.2)
    Other  1,644   1,356  21.2   4,618   4,283  7.8 
    Total non-interest expense  13,276   13,471  (1.4)  40,653   43,049  (5.6)
                 
    Income before income tax expense  5,364   3,954  35.7   13,839   10,203  35.6 
    Income tax expense  1,710   1,209  41.4   4,250   3,130  35.8 
      Net income $3,654  $2,745  33.1  $9,589  $7,073  35.6 
                 
    Basic and diluted earnings per share $0.76  $0.58    $2.00  $1.49   
    Cash dividends declared per share  0.26   0.26     0.78   0.78   
    Average basic and diluted shares outstanding  4,802   4,765     4,796   4,758   
                 
    N/M - Not meaningful            
                 

     

    Chemung Financial Corporation              
    Consolidated Financial Highlights (Unaudited)    
                As of or for the
      As of or for the Three Months Ended Nine Months Ended
      Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Sept. 30, Sept. 30,
    (in thousands, per share data) 2017 2017 2017 2016 2016 2017 2016
    RESULTS OF OPERATIONS                  
    Interest income $15,497  $14,684  $14,314  $14,269  $14,025  $44,495  $41,899 
    Interest expense  734   734   820   973   985   2,288   2,866 
    Net interest income  14,763   13,950   13,494   13,296   13,040   42,207   39,033 
    Provision for loan losses  1,289   421   1,040   404   1,050   2,750   2,033 
    Net interest income after provision for loan losses  13,474   13,529   12,454   12,892   11,990   39,457   37,000 
    Non-interest income  5,166   5,022   4,847   4,897   5,435   15,035   16,252 
    Non-interest expense  13,276   14,332   13,045   13,561   13,471   40,653   43,049 
    Income before income tax expense  5,364   4,219   4,256   4,228   3,954   13,839   10,203 
    Income tax expense  1,710   1,263   1,277   1,274   1,209   4,250   3,130 
    Net income $3,654  $2,956  $2,979  $2,954  $2,745  $9,589  $7,073 
                   
    Basic and diluted earnings per share $0.76  $0.62  $0.62  $0.62  $0.58  $2.00  $1.49 
    Average basic and diluted shares outstanding  4,802   4,797   4,790   4,773   4,765   4,796   4,758 
                   
    PERFORMANCE RATIOS              
    Return on average assets  0.85%  0.69%  0.71%  0.69%  0.65%  0.75%  0.57%
    Return on average equity  9.46%  7.90%  8.24%  8.20%  7.55%  8.54%  6.62%
    Return on average tangible equity (a)  11.24%  9.43%  9.90%  9.92%  9.14%  10.21%  8.05%
    Efficiency ratio (a) (b)  64.83%  69.28%  69.25%  72.63%  71.28%  67.72%  75.03%
    Non-interest expense to average assets  3.09%  3.34%  3.12%  3.18%  3.20%  3.18%  3.47%
    Loans to deposits  83.85%  82.14%  79.93%  82.42%  80.62%  83.85%  80.62%
                   
    YIELDS / RATES - Fully Taxable Equivalent              
    Yield on loans  4.34%  4.18%  4.19%  4.16%  4.16%  4.24%  4.18%
    Yield on investments  2.16%  2.01%  2.00%  1.75%  1.73%  2.05%  1.86%
    Yield on interest-earning assets  3.86%  3.65%  3.66%  3.57%  3.58%  3.72%  3.63%
    Cost of interest-bearing deposits  0.20%  0.20%  0.20%  0.21%  0.21%  0.20%  0.21%
    Cost of borrowings  2.95%  2.82%  3.04%  3.13%  3.15%  2.95%  2.97%
    Cost of interest-bearing liabilities  0.27%  0.26%  0.30%  0.35%  0.36%  0.27%  0.35%
    Interest rate spread  3.59%  3.39%  3.36%  3.22%  3.22%  3.45%  3.28%
    Net interest margin, fully taxable equivalent  3.68%  3.47%  3.45%  3.33%  3.33%  3.53%  3.38%
                   
    CAPITAL              
    Total equity to total assets at end of period  8.91%  8.84%  8.54%  8.67%  8.38%  8.91%  8.38%
    Tangible equity to tangible assets at end of period (a)  7.62%  7.53%  7.23%  7.29%  7.03%  7.62%  7.03%
                   
    Book value per share $32.11  $31.67  $30.93  $30.07  $30.37  $32.11  $30.37 
    Tangible book value per share  27.09   26.60   25.81   24.89   25.13   27.09   25.13 
    Period-end market value per share  47.10   40.88   39.50   36.35   28.99   47.10   28.99 
    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) $1,259,919  $1,237,189  $1,215,445  $1,210,922  $1,199,367  $1,237,681  $1,189,105 
    Earning assets  1,615,833   1,634,955   1,605,460   1,607,287   1,577,348   1,618,788   1,559,500 
    Total assets  1,707,111   1,723,664   1,694,199   1,699,059   1,674,492   1,708,360   1,656,313 
    Deposits  1,512,685   1,532,819   1,495,724   1,483,348   1,456,622   1,513,804   1,439,497 
    Total equity  153,244   150,155   146,642   143,388   144,631   150,038   142,745 
    Tangible equity (a)  129,024   125,720   121,988   118,502   119,504   125,603   117,372 
                   
    ASSET QUALITY              
    Net charge-offs $699  $277  $333  $1,476  $393  $1,309  $968 
    Non-performing loans (d)  14,028   15,208   12,914   12,043   12,903   14,028   12,903 
    Non-performing assets (e)  14,216   15,545   13,251   12,431   13,270   14,216   13,270 
    Allowance for loan losses  15,694   15,104   14,960   14,253   15,325   15,694   15,325 
                   
    Annualized net charge-offs to average loans  0.22%  0.09%  0.11%  0.48%  0.13%  0.14%  0.11%
    Non-performing loans to total loans  1.09%  1.21%  1.05%  1.00%  1.06%  1.09%  1.06%
    Non-performing assets to total assets  0.82%  0.90%  0.76%  0.75%  0.77%  0.82%  0.77%
    Allowance for loan losses to total loans  1.22%  1.21%  1.21%  1.19%  1.26%  1.22%  1.26%
    Allowance for loan losses to non-performing loans  111.88%  99.32%  115.84%  118.35%  118.77%  111.88%  118.77%
                   
    (a)  See the GAAP to Non-GAAP reconciliations.
    (b)  Efficiency ratio 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 on securities transactions less gain from bargain purchase less gain on liquidation of trust preferred securities.
    (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.
                   

     

    Chemung Financial Corporation                  
    Average Consolidated Balance Sheets & Net Interest Income Analysis and Rate/Volume Analysis of Net Interest Income (Unaudited)    
           
    YTD - September 30, 2017YTD - September 30, 2016 YTD - Sept. 30, 2017 vs. Sept. 30, 2016
    (in thousands) Average
    Balance
     Interest Yield /
    Rate
     Average
    Balance
     Interest Yield /
    Rate
     Total
    Change
     Due to
    Volume
     Due to
    Rate
       
    Earning assets:                  
    Commercial loans $780,120  $25,425  4.36% $727,824  $23,617  4.33% $1,808  $1,649  $159 
    Mortgage loans  199,625   5,716  3.83%  196,799   5,806  3.94%  (90)  79   (169)
    Consumer loans  257,936   8,082  4.19%  264,482   7,784  3.93%  298   (199)  497 
    Taxable securities  273,124   4,194  2.05%  277,346   3,947  1.90%  247   (61)  308 
    Tax-exempt securities  51,016   1,214  3.18%  45,824   1,042  3.04%  172   95   77 
    Interest-bearing deposits  56,967   445  1.04%  47,225   180  0.51%  265   44   221 
    Total earning assets  1,618,788   45,076  3.72%  1,559,500   42,376  3.63%  2,700   1,607   1,093 
                       
    Non-earnings assets:                  
    Cash and due from banks  25,456       26,867           
    Premises and equipment, net  28,208       29,696           
    Other assets  53,965       51,564           
    Allowance for loan losses  (14,866)      (14,592)          
    AFS valuation allowance  (3,191)      3,278           
    Total assets $1,708,360      $1,656,313           
                       
                       
    Interest-bearing liabilities:                  
    Interest-bearing checking $144,683  $98  0.09% $132,988  $106  0.11% $(8) $11  $(19)
    Savings and money market  802,700   1,168  0.19%  743,808   1,060  0.19%  108   108   - 
    Time deposits  136,359   366  0.36%  160,352   441  0.37%  (75)  (63)  (12)
    FHLB advances and repos  29,760   656  2.95%  56,605   1,259  2.97%  (603)  (595)  (8)
    Total int.-bearing liabilities  1,113,502   2,288  0.27%  1,093,753   2,866  0.35%  (578)  (539)  (39)
                       
    Non-interest-bearing liabilities:                  
    Demand deposits  430,062       402,349           
    Other liabilities  14,758       17,466           
    Total liabilities  1,558,322       1,513,568           
    Shareholders' equity  150,038       142,745           
    Total liabilities and shareholders' equity $1,708,360      $1,656,313           
                       
    Fully taxable equivalent net interest income    42,788       39,510    $3,278  $2,146  $1,132 
    Net interest rate spread (1)     3.45%     3.28%      
    Net interest margin, fully taxable equivalent (2)     3.53%     3.38%      
    Taxable equivalent adjustment    (581)      (477)        
    Net interest income   $42,207      $39,033         
                       
    (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) 
                       
      QTD - September 30, 2017 QTD - September 30, 2016 QTD - Sept. 30, 2017 vs. Sept. 30, 2016
      Average
    Balance
     Interest Yield /
    Rate
     Average
    Balance
     Interest Yield /
    Rate
     Total
    Change
     Due to
    Volume
     Due to
    Rate
       
    Earning assets:                  
    Commercial loans $799,505  $9,037  4.48% $741,515  $7,967  4.27% $1,070  $657  $413 
    Mortgage loans  199,396   1,963  3.91%  197,292   1,950  3.93%  13   22   (9)
    Consumer loans  261,018   2,782  4.23%  260,559   2,623  4.00%  159   5   154 
    Taxable securities  271,529   1,371  2.00%  268,388   1,225  1.82%  146   15   131 
    Tax-exempt securities  57,127   467  3.24%  43,692   329  3.00%  138   110   28 
    Interest-bearing deposits  27,258   97  1.41%  65,902   85  0.51%  12   (72)  84 
    Total earning assets  1,615,833   15,717  3.86%  1,577,348   14,179  3.58%  1,538   737   801 
                       
    Non-earnings assets:                  
    Cash and due from banks  26,036       27,420           
    Premises and equipment, net  27,774       29,575           
    Other assets  53,944       50,397           
    Allowance for loan losses  (15,179)      (14,783)          
    AFS valuation allowance  (1,297)      4,535           
    Total assets $1,707,111      $1,674,492           
                       
    Interest-bearing liabilities:                  
    Interest-bearing checking $138,364  $32  0.09% $122,030  $27  0.09%  5   5   - 
    Savings and money market  801,580   398  0.20%  769,855   392  0.20%  6   6   - 
    Time deposits  130,445   115  0.35%  154,618   142  0.37%  (27)  (20)  (7)
    FHLB advances and repos  25,405   189  2.95%  53,619   424  3.15%  (235)  (210)  (25)
    Total int.-bearing liabilities  1,095,794   734  0.27%  1,100,122   985  0.36%  (251)  (219)  (32)
                       
    Non-interest-bearing liabilities:                  
    Demand deposits  442,296       410,119           
    Other liabilities  15,777       19,620           
    Total liabilities  1,553,867       1,529,861           
    Shareholders' equity  153,244       144,631           
    Total liabilities and shareholders' equity $1,707,111      $1,674,492           
                       
    Fully taxable equivalent net interest income    14,983       13,194    $1,789  $956  $833 
    Net interest rate spread (1)     3.59%     3.22%      
    Net interest margin, fully taxable equivalent (2)     3.68%     3.33%      
    Taxable equivalent adjustment    (220)      (154)        
    Net interest income   $14,763      $13,040         
                       
    (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

    GAAP to Non-GAAP Reconciliations (Unaudited)

    The Corporation prepares its Consolidated Financial Statements in accordance with GAAP.  See the Corporation’s unaudited consolidated balance sheets and statements of income contained within this press release. That presentation provides the reader with an understanding of the Corporation’s results that can be tracked consistently from period-to-period and enables a comparison of the Corporation’s performance with other companies’ GAAP financial statements.

    In addition to analyzing the Corporation’s results on a reported basis, management uses certain non-GAAP financial measures, because it believes these non-GAAP financial measures provide information to investors about the underlying operational performance and trends of the Corporation and, therefore, facilitate a comparison of the Corporation with the performance of its competitors. Non-GAAP financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used by other companies.

    The SEC has adopted Regulation G, which applies to all public disclosures, including earnings releases, made by registered companies that contain “non-GAAP financial measures.”  Under Regulation G, companies making public disclosures containing non-GAAP financial measures must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure and a statement of the Corporation’s reasons for utilizing the non-GAAP financial measure as part of its financial disclosures.  The SEC has exempted from the definition of “non-GAAP financial measures” certain commonly used financial measures that are not based on GAAP.  When these exempted measures are included in public disclosures, supplemental information is not required.  The following measures used in this Report, which are commonly utilized by financial institutions, have not been specifically exempted by the SEC and may constitute "non-GAAP financial measures" within the meaning of the SEC's new rules, although we are unable to state with certainty that the SEC would so regard them.

    Fully Taxable Equivalent Net Interest Income, Net Interest Margin, and Efficiency Ratio

    Net interest income is commonly presented on a tax-equivalent basis.  That is, to the extent that some component of the institution's net interest income, which is presented on a before-tax basis, is exempt from taxation (e.g., is received by the institution as a result of its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is added to the actual before-tax net interest income total.  This adjustment is considered helpful in comparing one financial institution's net interest income to that of other institutions or in analyzing any institution’s net interest income trend line over time, to correct any analytical distortion that might otherwise arise from the fact that financial institutions vary widely in the proportions of their portfolios that are invested in tax-exempt securities, and that even a single institution may significantly alter over time the proportion of its own portfolio that is invested in tax-exempt obligations.  Moreover, net interest income is itself a component of a second financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average interest-earning assets.  For purposes of this measure as well, fully taxable equivalent net interest income is generally used by financial institutions, as opposed to actual net interest income, again to provide a better basis of comparison from institution to institution and to better demonstrate a single institution’s performance over time.  The Corporation follows these practices.

    The efficiency ratio is a non-GAAP financial measure which represents the Corporation’s ability to turn resources into revenue and is calculated as non-interest expense divided by total revenue (fully taxable equivalent net interest income and non-interest income), adjusted for one-time occurrences and amortization.  This measure is meaningful to the Corporation, as well as investors and analysts, in assessing the Corporation’s productivity measured by the amount of revenue generated for each dollar spent.

                As of or for the
      As of or for the Three Months Ended Nine Months Ended
      Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Sept. 30, Sept. 30,
    (in thousands, except per share data) 2017
     2017
     2017
     2016
     2016
     2017
     2016
    NET INTEREST MARGIN - FULLY TAXABLE EQUIVALENT              
    AND EFFICIENCY RATIO              
    Net interest income (GAAP) $14,763  $13,950  $13,494  $13,296  $13,040  $42,207  $39,033 
    Fully taxable equivalent adjustment  220   192   169   154   154   581   477 
    Fully taxable equivalent net interest income (non-GAAP) $14,983  $14,142  $13,663  $13,450  $13,194  $42,788  $39,510 
                   
    Non-interest income (GAAP) $5,166  $5,022  $4,847  $4,897  $5,435  $15,035  $16,252 
    Less:  net (gains) losses on security transactions  -   (12)  -   (4)  (75)  (12)  (983)
    Adjusted non-interest income (non-GAAP) $5,166  $5,010  $4,847  $4,893  $5,360  $15,023  $15,269 
                   
    Non-interest expense (GAAP) $13,276  $14,332  $13,045  $13,561  $13,471  $40,653  $43,049 
    Less:  amortization of intangible assets  (214)  (213)  (226)  (238)  (245)  (653)  (748)
    Less:  legal reserve  -   (850)  -   -   -   (850)  (1,200)
    Adjusted non-interest expense (non-GAAP) $13,062  $13,269  $12,819  $13,323  $13,226  $39,150  $41,101 
                   
    Average interest-earning assets (GAAP) $1,615,833  $1,634,955  $1,605,460  $1,607,287  $1,577,348  $1,618,788  $1,559,500 
                   
    Net interest margin - fully taxable equivalent (non-GAAP)  3.68%  3.47%  3.45%  3.33%  3.33%  3.53%  3.38%
    Efficiency ratio (non-GAAP)  64.83%  69.28%  69.25%  72.63%  71.28%  67.72%  75.03%
                   

    Tangible Equity and Tangible Assets (Period-End)

    Tangible equity, tangible assets, and tangible book value per share are each non-GAAP financial measures. Tangible equity represents the Corporation’s stockholders’ equity, less goodwill and intangible assets.  Tangible assets represents the Corporation’s total assets, less goodwill and other intangible assets.  Tangible book value per share represents the Corporation’s equity divided by common shares at period-end.  These measures are meaningful to the Corporation, as well as investors and analysts, in assessing the Corporation’s use of equity.

                As of or for the
      As of or for the Three Months Ended Nine Months Ended
      Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Sept. 30, Sept. 30,
    (in thousands, except per share and ratio data) 2017 2017 2017 2016 2016 2017 2016
    TANGIBLE EQUITY AND TANGIBLE ASSETS              
    (PERIOD END)              
    Total shareholders' equity (GAAP) $154,277  $151,962  $148,257  $143,748  $144,812  $154,277  $144,812 
    Less:  intangible assets  (24,116)  (24,330)  (24,543)  (24,769)  (25,007)  (24,116)  (25,007)
    Tangible equity (non-GAAP) $130,161  $127,632  $123,714  $118,979  $119,805  $130,161  $119,805 
                   
    Total assets (GAAP) $1,731,682  $1,718,572  $1,736,100  $1,657,179  $1,728,865  $1,731,682  $1,728,865 
    Less:  intangible assets  (24,116)  (24,330)  (24,543)  (24,769)  (25,007)  (24,116)  (25,007)
    Tangible assets (non-GAAP) $1,707,566  $1,694,242  $1,711,557  $1,632,410  $1,703,858  $1,707,566  $1,703,858 
                   
    Total equity to total assets at end of period (GAAP)  8.91%  8.84%  8.54%  8.67%  8.38%  8.91%  8.38%
    Book value per share (GAAP) $32.11  $31.67  $30.93  $30.07  $30.37  $32.11  $30.37 
                   
    Tangible equity to tangible assets at              
    end of period (non-GAAP)  7.62%  7.53%  7.23%  7.29%  7.03%  7.62%  7.03%
    Tangible book value per share (non-GAAP) $27.09  $26.60  $25.81  $24.89  $25.13  $27.09  $25.13 
                   

    Tangible Equity (Average)

    Average tangible equity and return on average tangible equity are each non-GAAP financial measures. Average tangible equity represents the Corporation’s average stockholders’ equity, less average goodwill and intangible assets for the period.  Return on average tangible equity measures the Corporation’s earnings as a percentage of average tangible equity.  These measures are meaningful to the Corporation, as well as investors and analysts, in assessing the Corporation’s use of equity.

                As of or for the
      As of or for the Three Months Ended Nine Months Ended
      Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Sept. 30, Sept. 30,
    (in thousands, except ratio data) 2017 2017 2017 2016 2016 2017 2016
    TANGIBLE EQUITY (AVERAGE)              
    Total average shareholders' equity (GAAP) $153,244  $150,155  $146,642  $143,388  $144,631  $150,038  $142,745 
    Less:  average intangible assets  (24,220)  (24,435)  (24,654)  (24,886)  (25,127)  (24,435)  (25,373)
    Average tangible equity (non-GAAP) $129,024  $125,720  $121,988  $118,502  $119,504  $125,603  $117,372 
                   
    Return on average equity (GAAP)  9.46%  7.90%  8.24%  8.20%  7.55%  8.54%  6.62%
    Return on average tangible equity (non-GAAP)  11.24%  9.43%  9.90%  9.92%  9.14%  10.21%  8.05%
                   

    Adjustments for Certain Items of Income or Expense

    In addition to disclosures of certain GAAP financial measures, including net income, EPS, ROA, and ROE, we may also provide comparative disclosures that adjust these GAAP financial measures for a particular period by removing from the calculation thereof the impact of certain transactions or other material items of income or expense occurring during the period, including certain nonrecurring items.  The Corporation believes that the resulting non-GAAP financial measures may improve an understanding of its results of operations by separating out any such transactions or items that may have had a disproportionate positive or negative impact on the Corporation’s financial results during the particular period in question. In the Corporation’s presentation of any such non-GAAP (adjusted) financial measures not specifically discussed in the preceding paragraphs, the Corporation supplies the supplemental financial information and explanations required under Regulation G.

                As of or for the
      As of or for the Three Months Ended
     Nine Months Ended
      Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Sept. 30, Sept. 30,
    (in thousands, except per share and ratio data) 2017 2017 2017 2016 2016 2017 2016
    NON-GAAP NET INCOME              
    Reported net income (GAAP) $3,654  $2,956  $2,979  $2,954  $2,745  $9,589  $7,073 
    Net (gains) losses on security transactions (net of tax)  -   (8)  -   (2)  (47)  (8)  (612)
    Legal reserve  -   528   -   -   -   528   747 
    Non-GAAP net income $3,654  $3,476  $2,979  $2,952  $2,698  $10,109  $7,208 
                   
    Average basic and diluted shares outstanding  4,802   4,797   4,790   4,773   4,765   4,796   4,758 
                   
    Reported basic and diluted earnings per share (GAAP) $0.76  $0.62  $0.62  $0.62  $0.58  $2.00  $1.49 
    Reported return on average assets (GAAP)  0.85%  0.69%  0.71%  0.69%  0.65%  0.75%  0.57%
    Reported return on average equity (GAAP)  9.46%  7.90%  8.24%  8.20%  7.55%  8.54%  6.62%
                   
    Core basic and diluted earnings per share (non-GAAP) $0.76  $0.72  $0.62  $0.62  $0.57  $2.10  $1.51 
    Core return on average assets (non-GAAP)  0.85%  0.81%  0.71%  0.69%  0.64%  0.79%  0.58%
    Core return on average equity (non-GAAP)  9.46%  9.29%  8.24%  8.19%  7.42%  9.01%  6.75%
                   

    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 2016 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.

    For further information contact:
    Karl F. Krebs, EVP and CFO
    kkrebs@chemungcanal.com
    Phone:  607-737-3714

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