Financial News

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

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

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

Second Quarter Highlights1:

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

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

2nd Quarter 2020 vs 2nd Quarter 2019

Net Interest Income:

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

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

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

Non-Interest Income:

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

Non-Interest Expense:

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

Income Tax Expense:

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

2nd Quarter 2020 vs 1st Quarter 2020

Net Interest Income:

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

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

Non-Interest Income:

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

Non-Interest Expense:

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

Income Tax Expense:

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

Asset Quality

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

Management performs an ongoing assessment of the adequacy of the allowance for loan losses based upon a number of factors including an analysis of historical loss factors, collateral evaluations, recent charge-off experience, credit quality of the loan portfolio, current economic conditions and loan growth. In the second quarter of 2020, management again evaluated the potential impact of the COVID-19 pandemic as it relates to the loan portfolio. As part of this analysis, management identified what it believes to be higher risk loans through a detailed analysis of industry codes. Management increased certain allowance qualitative factors based on its assessment of the impact of the current pandemic on local, national, and global economic conditions as well as the perceived risks inherent in specific industries and credit characteristics.

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

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

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

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

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

Balance Sheet Activity

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

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

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

The total equity to total assets ratio was 9.49% at June 30, 2020 compared with 10.22% at December 31, 2019.  The tangible equity to tangible assets ratio was 8.49% at June 30, 2020 compared with 9.07% at December 31, 2019.  Book value per share increased to $40.51 at June 30, 2020 from $37.35 at December 31, 2019.  As of June 30, 2020, the Bank’s capital ratios were in excess of those required to be considered well-capitalized under the regulatory framework for prompt corrective action.

Other Items

The market value of total assets under management or administration in our Wealth Management Group was $1.861 billion at June 30, 2020, including $289.0 million of assets under management or administration for the Corporation, compared to $1.915 billion at December 31, 2019, including $289.7 million of assets under management or administration for the Corporation, a decrease of $54.3 million, or 2.8%. The decrease in total assets under management or administration can be mostly attributed to a decrease in the market value of total assets.

As previously announced on March 18, 2020, the Corporation's Board of Directors approved a stock repurchase program which replaces the previously authorized repurchase program. Under the new repurchase program, the Corporation may repurchase up to 250,000 shares of its common stock, or approximately 5% of its then outstanding shares. The repurchase program permits shares to be repurchased in open market or privately negotiated transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission. As of June 30, 2020, the Corporation repurchased 120,490 shares of common stock at a total cost of $3.3 million under its share repurchase program. The weighted average cost was $27.12 per share repurchased. Remaining buyback authority under the share repurchase program was 129,510 shares at June 30, 2020.

CHEMUNG FINANCIAL'S COVID-19 PANDEMIC UPDATE

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

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

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

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

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

About Chemung Financial Corporation

Chemung Financial Corporation is a $2.1 billion financial services holding company headquartered in Elmira, New York and operates 32 retail offices through its principal subsidiary, Chemung Canal Trust Company, a full service community bank with trust powers.  Established in 1833, Chemung Canal Trust Company is the oldest locally-owned and managed community bank in New York State.  Chemung Financial Corporation is also the parent of CFS Group, Inc., a financial services subsidiary offering non-traditional services including mutual funds, annuities, brokerage services, tax preparation services and insurance, and Chemung Risk Management, Inc., a captive insurance company based in the State of Nevada.

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

Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act, and the Private Securities Litigation Reform Act of 1995.  The Corporation intends its forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in this press release.  All statements regarding the Corporation's expected financial position and operating results, the Corporation's business strategy, the Corporation's financial plans, forecasted demographic and economic trends relating to the Corporation's industry and similar matters are forward-looking statements.  These statements can sometimes be identified by the Corporation's use of forward-looking words such as "may," "will," "anticipate," "estimate," "expect," or "intend."  The Corporation cannot promise that its expectations in such forward-looking statements will turn out to be correct.  The Corporation's actual results could be materially different from expectations because of various factors, including changes in economic conditions or interest rates, credit risk, difficulties in managing the Corporation’s 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 Board’s 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 Corporation’s periodic filings with the Securities and Exchange Commission (“SEC”), including the 2019 Annual Report on Form 10-K.  These filings are available publicly on the SEC's website at http://www.sec.gov, on the Corporation's website at http://www.chemungcanal.com or upon request from the Corporate Secretary at (607) 737-3746.  Except as otherwise required by law, the Corporation undertakes no obligation to publicly update or revise its forward-looking statements, whether as a result of new information, future events, or otherwise.

Chemung Financial Corporation         
Consolidated Balance Sheets (Unaudited)         
 June 30, March 31, Dec. 31, Sept. 30, June 30,
(in thousands)2020 2020 2019 2019 2019
ASSETS         
Cash and due from financial institutions$28,689   $27,522   $25,203   $36,497   $32,622  
Interest-earning deposits in other financial institutions126,473   116,936   96,701   109,801   83,838  
  Total cash and cash equivalents155,162   144,458   121,904   146,298   116,460  
          
Equity investments2,169   1,999   2,174   2,065   2,079  
          
Securities available for sale317,061   299,075   284,090   267,529   269,286  
Securities held to maturity3,597   3,001   3,115   3,420   4,090  
FHLB and FRB stocks, at cost3,150   3,099   3,099   3,091   3,091  
  Total investment securities323,808   305,175   290,304   274,040   276,467  
          
Commercial1,065,901   895,741   879,085   878,703   855,298  
Mortgage207,999   192,722   188,338   184,013   183,835  
Consumer224,098   231,998   241,796   243,922   249,238  
  Loans, net of deferred loan fees1,497,998   1,320,461   1,309,219   1,306,638   1,288,371  
Allowance for loan losses(24,130)  (26,233)  (23,478)  (23,923)  (19,656) 
  Loans, net1,473,868   1,294,228   1,285,741   1,282,715   1,268,715  
          
Loans held for sale1,491   801   1,185   1,313   624  
Premises and equipment, net21,395   21,781   22,417   22,962   23,605  
Operating lease right-of-use assets7,650   7,826   8,001   8,051   8,220  
Goodwill21,824   21,824   21,824   21,824   21,824  
Other intangible assets, net491   610   742   886   1,037  
Accrued interest receivable and other assets43,063   42,627   33,535   33,489   33,966  
  Total assets$2,050,921   $1,841,329   $1,787,827   $1,793,643   $1,752,997  
          
LIABILITIES AND SHAREHOLDERS' EQUITY         
Deposits:         
Non-interest-bearing demand deposits$616,736   $469,535   $468,238   $472,600   $451,985  
Interest-bearing demand deposits246,470   210,493   200,089   208,222   188,843  
Money market accounts538,006   544,024   530,241   510,194   505,084  
Savings deposits239,334   217,789   212,393   215,665   217,434  
Time deposits170,710   166,262   161,177   169,825   177,792  
  Total deposits1,811,256   1,608,103   1,572,138   1,576,506   1,541,138  
          
Long-term advances and other debt3,969   4,028   4,085   4,140   4,195  
Operating lease liabilities7,752   7,919   8,084   8,125   8,250  
Accrued interest payable and other liabilities33,355   30,832   20,893   22,828   21,027  
  Total liabilities1,856,332   1,650,882   1,605,200   1,611,599   1,574,610  
          
Shareholders' equity         
Common stock53   53   53   53   53  
Additional-paid-in capital46,758   46,754   46,382   46,464   46,284  
Retained earnings159,505   154,926   153,701   150,759   150,063  
Treasury stock, at cost(13,869)  (11,204)  (11,710)  (11,956)  (12,062) 
Accumulated other comprehensive loss2,142   (82)  (5,799)  (3,276)  (5,951) 
  Total shareholders' equity194,589   190,447   182,627   182,044   178,387  
  Total liabilities and shareholders' equity$2,050,921   $1,841,329   $1,787,827   $1,793,643   $1,752,997  
          
Period-end shares outstanding4,804   4,905   4,889   4,874   4,868  

 

Chemung Financial Corporation           
Consolidated Statements of Income (Unaudited)           
 Three Months Ended June 30, 2020 Percent Six Months Ended June 30, 2020 Percent
(in thousands, except per share data)2020 2019 Change 2020 2019 Change
Interest and dividend income:           
Loans, including fees$14,666   $14,570   0.7   $28,894   $29,059   (0.6) 
Taxable securities1,397   1,281   9.1   2,884   2,476   16.5  
Tax exempt securities265   306   (13.4)  536   579   (7.4) 
Interest-earning deposits144   525   (72.6)  542   1,233   (56.0) 
  Total interest and dividend income16,472   16,682   (1.3)  32,856   33,347   (1.5) 
            
Interest expense:           
Deposits827   1,544   (46.4)  2,113   3,005   (29.7) 
Borrowed funds55   37   48.6   90   74   21.6  
  Total interest expense882   1,581   (44.2)  2,203   3,079   (28.5) 
            
  Net interest income15,590   15,101   3.2   30,653   30,268   1.3  
Provision for loan losses260   150   73.3   3,310   1,243   166.3  
Net interest income after provision for loan losses15,330   14,951   2.5   27,343   29,025   (5.8) 
            
Non-interest income:           
Wealth management group fee income2,323   2,524   (8.0)  4,552   4,800   (5.2) 
Service charges on deposit accounts564   1,085   (48.0)  1,554   2,189   (29.0) 
Interchange revenue from debit card transactions982   1,024   (4.1)  1,907   2,055   (7.2) 
Net gains on securities transactions   19   N/M      19   N/M  
Change in fair value of equity investments156   27   477.8   (90)  116   (177.6) 
Net gains on sales of loans held for sale288   29   893.1   363   77   371.4  
Net gains (losses) on sales of other real estate owned(48)  (3)  N/M   (77)  (86)  (10.5) 
Income from bank owned life insurance14   16   (12.5)  133   31   329.0  
Other801   365   119.5   1,468   810   81.2  
Total non-interest income5,080   5,086   (0.1)  9,810   10,011   (2.0) 
            
Non-interest expense:           
Salaries and wages5,821   5,780   0.7   11,590   11,501   0.8  
Pension and other employee benefits1,334   1,473   (9.4)  2,850   3,018   (5.6) 
Other components of net periodic pension and postretirement benefits(243)  (141)  N/M   (508)  (282)  80.1  
Net occupancy1,430   1,478   (3.2)  2,952   3,045   (3.1) 
Furniture and equipment560   595   (5.9)  1,035   1,123   (7.8) 
Data processing1,939   1,873   3.5   3,853   3,600   7.0  
Professional services530   418   26.8   860   823   4.5  
Amortization of intangible assets119   151   (21.2)  251   314   (20.1) 
Marketing and advertising82   145   (43.4)  406   413   (1.7) 
Other real estate owned expense5   40   (87.5)  34   71   (52.1) 
FDIC insurance229   221   3.6   479   486   (1.4) 
Loan expense187   190   (1.6)  497   386   28.8  
Other1,231   1,600   (23.1)  2,677   2,822   (5.1) 
  Total non-interest expense13,224   13,823   (4.3)  26,976   27,320   (1.3) 
            
  Income before income tax expense7,186   6,214   15.6   10,177   11,716   (13.1) 
Income tax expense1,357   1,233   10.1   1,859   2,267   (18.0) 
  Net income$5,829   $4,981   17.0   $8,318   $9,449   (12.0) 
            
Basic and diluted earnings per share$1.20   $1.02     $1.71   $1.94    
Cash dividends declared per share0.26   0.26     0.52   0.52    
Average basic and diluted shares outstanding4,850   4,866     $4,868   $4,863    
            
            
N/M - Not Meaningful           

 

Chemung Financial CorporationAs of or for the Three Months Ended As of or for the
Six Months Ended
Consolidated Financial Highlights (Unaudited)June 30, March 30, Dec. 31, Sept. 30, June 30, June 30, June 30,
(in thousands, except per share data)2020 2020 2019 2019 2019 2020 2019
RESULTS OF OPERATIONS             
Interest income$16,472  $16,384  $16,777  $16,808  $16,682  $32,856  $33,347 
Interest expense882  1,322  1,576  1,666  1,581  2,203  3,079 
Net interest income15,590  15,062  15,201  15,142  15,101  30,653  30,268 
Provision (credit) for loan losses260  3,050  261  4,441  150  3,310  1,243 
Net interest income after provision for loan losses15,330  12,012  14,940  10,701  14,951  27,343  29,025 
Non-interest income5,080  4,730  5,106  4,956  5,086  9,810  10,011 
Non-interest expense13,224  13,749  14,851  13,525  13,823  26,976  27,320 
Income before income tax expense7,186  2,993  5,195  2,132  6,214  10,177  11,716 
Income tax expense1,357  502  991  176  1,233  1,859  2,267 
Net income$5,829  $2,491  $4,204  $1,956  $4,981  $8,318  $9,449 
              
Basic and diluted earnings per share$1.20  $0.51  $0.87  $0.40  $1.02  $1.71  $1.94 
Average basic and diluted shares outstanding4,850  4,895  4,879  4,871  4,866  4,868  4,863 
PERFORMANCE RATIOS 
Return on average assets 1.15%  0.55%  0.93%  0.44% 1.15
% 0.87% 1.09%
Return on average equity 12.22  5.32%  9.14%  4.29% 11.51
% 8.80% 11.18%
Return on average tangible equity (a) 13.83  6.04%  10.43%  4.91% 13.27
% 9.98% 12.92%
Efficiency ratio (unadjusted) (f) 63.99  69.47%  73.13%  67.30% 68.47
% 66.67% 67.83%
Efficiency ratio (adjusted) (a) (b) 63.15  68.50%  72.08%  66.21% 67.44
% 65.77% 66.74%
Non-interest expense to average assets 2.62  3.06%  3.28%  3.05% 3.18
% 2.83% 3.15%
Loans to deposits 82.70  82.11%  83.28%  82.88% 83.60
% 82.70% 83.60%
YIELDS / RATES - Fully Taxable Equivalent 

 

Yield on loans 4.06
%  4.37
%  4.43%  4.50%  4.54% 4.21% 4.54%
Yield on investments 1.58
%  2.20
%  2.29%  2.36%  2.41% 1.87% 2.41%
Yield on interest-earning assets 3.45
%  3.86
%  3.92%  4.03%  4.07% 3.64% 4.07%
Cost of interest-bearing deposits 0.28
%  0.46
%  0.55%  0.60%  0.57% 0.37% 0.55%
Cost of borrowings 0.82
%  3.58
%  3.58%  3.53%  3.52% 1.18% 3.52%
Cost of interest-bearing liabilities 0.29
%  0.47
%  0.56%  0.61%  0.58% 0.38% 0.57%
Interest rate spread 3.16
%  3.39
%  3.36%  3.42%  3.49% 3.26% 3.50%
Net interest margin, fully taxable equivalent 3.26
%  3.55
%  3.56%  3.63%  3.69% 3.40% 3.69%
CAPITAL 
Total equity to total assets at end of period9.49% 10.34% 10.22% 10.15% 10.18% 9.49%  10.18% 
Tangible equity to tangible assets at end of period (a)8.49% 9.24% 9.07% 9.00% 8.99% 8.49%  8.99% 
Book value per share$40.50  $38.83  $37.35  $37.35  $36.64  $40.51  $36.64  
Tangible book value per share (a)35.86  34.25  32.74  32.69  31.95  35.86   31.95  
Period-end market value per share27.30  32.98  42.50  42.00  48.34  27.30   48.34  
Dividends declared per share0.26  0.26  0.26  0.26  0.26  0.52   0.52  
AVERAGE BALANCES  
Loans and loans held for sale (c)$1,456,080  $1,310,342  $1,303,349  $1,295,167  $1,290,923  $1,383,211  $1,293,547  
Interest earning assets1,931,107  1,715,562  1,705,766  1,665,793  1,654,156   1,823,335   1,663,372  
Total assets2,032,729  1,807,753  1,798,385  1,760,385  1,744,599   1,920,163   1,749,168  
Deposits1,776,275  1,588,147  1,581,645  1,545,858  1,539,739   1,682,210   1,552,485  
Total equity191,853  188,427  182,522  180,896  173,534   190,140   170,476  
Tangible equity (a)169,464  165,911  159,889  158,111  150,598   167,688   147,463  
               
ASSET QUALITY              
Net charge-offs$2,363  $294  $706  $174  $239  $2,657  $531
  
Non-performing loans (d)17,280  17,948  18,008  23,468  19,505  17,280   19,505
  
Non-performing assets (e)17,573  18,328  18,525  23,679  19,719  17,573   19,719
  
Allowance for loan losses24,130  26,233  23,478  23,923  19,656  24,130   19,656
  
Annualized net charge-offs to average loans0.65% 0.09% 0.21% 0.05% 0.07% 0.39%  0.08% 
Non-performing loans to total loans1.15% 1.36% 1.38% 1.80% 1.51% 1.15%  1.51%
Non-performing assets to total assets0.86% 1.00% 1.04% 1.32% 1.12%  0.86% 1.12%
Allowance for loan losses to total loans1.61% 1.99% 1.79% 1.83% 1.53%  1.61% 1.53%
Allowance for loan losses to non-performing loans139.64% 146.16% 130.38% 101.94% 100.77%  139.64% 100.77%

 

(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 Three Months Ended Three Months Ended
 June 30, 2020 June 30, 2019 June 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$1,030,364   $10,479   4.09% $857,748   $10,098   4.72% $381   $1,848   $(1,467) 
Mortgage loans198,692   1,859   3.76% 182,134   1,713   3.77% 146   151   (5) 
Consumer loans227,024   2,350   4.16% 251,041   2,795   4.47% (445)  (258)  (187) 
Taxable securities257,720   1,397   2.18% 230,085   1,282   2.23% 115   145   (30) 
Tax-exempt securities41,669   327   3.16% 51,413   373   2.91% (46)  (76)  30  
Interest-earning deposits175,638   144   0.33% 81,735   525   2.58% (381)  305   (686) 
Total interest earning assets1,931,107   16,556   3.45% 1,654,156   16,786   4.07% (230)  2,115   (2,345) 
                  
Non- interest earnings assets:                 
Cash and due from banks24,100       25,450            
Other assets103,786       85,051            
Allowance for loan losses(26,264)      (20,058)           
  Total assets$2,032,729       $1,744,599            
                  
Interest-bearing liabilities:                 
Interest-bearing checking$229,706   $47   0.08% $182,480   $179   0.39% $(132)  $37   $(169) 
Savings and money market782,121   228   0.12% 738,188   790   0.43% (562)  44   (606) 
Time deposits170,659   551   1.30% 163,619   575   1.41% (24)  23   (47) 
Long-term advances and repos27,090   55   0.82% 4,214   37   3.52% 18   65   (47) 
Total int.-bearing liabilities1,209,576   881   0.29% 1,088,501   1,581   0.58% (700)  170   (870) 
                  
Non-interest-bearing liabilities:                 
Demand deposits593,789       455,452            
Other liabilities37,511       27,112            
Total liabilities1,840,876       1,571,065            
Shareholders' equity191,853       173,534            
  Total liabilities and shareholders' equity$2,032,729       $1,744,599            
                  
Fully taxable equivalent net interest income  15,675       15,205     $470   $1,946   $(1,476) 
Net interest rate spread (1)    3.16%     3.49%      
Net interest margin, fully taxable equivalent (2)    3.26%     3.69 %      
Taxable equivalent adjustment  (84)      (104)         
Net interest income  $15,591       $15,101           
                  
(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)
 Six Months Ended
June 30, 2020
 Six Months Ended
June 30, 2019
 Six Months Ended
June 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$956,257   $20,352   4.28% $855,985   $20,025   4.72% $327   $2,274   $(1,947) 
Mortgage loans195,274   3,695   3.81% 181,928 3,434 3.81% 261   261     
Consumer loans231,680   4,894   4.25% 255,634 5,673 4.48% (779)  (503)  (276) 
Taxable securities254,694   2,885   2.28% 221,939 2,480 2.25% 405   371   34  
Tax-exempt securities41,945   659   3.16% 49,366 706 2.88% (47)  (112)  65  
Interest-earning deposits143,485   542   0.76% 98,520 1,233 2.52% (691)  410   (1,101) 
Total interest earning assets1,823,335   33,027   3.64% 1,663,372   33,551   4.07% (524)  2,701   (3,225) 
                  
Non-interest earnings assets:                
Cash and due from banks24,897        25,898             
Other assets96,923        79,556             
Allowance for loan losses(24,992)      (19,658)           
  Total assets$1,920,163        $1,749,168             
                  
Interest-bearing liabilities:                 
Interest-bearing checking$219,866   $207   0.19% $189,111   $384   0.41% $(177)  $55   $(232) 
Savings and money market766,467   770   0.20% 746,197   1,584   0.43% (814)  43   (857) 
Time deposits165,805   1,136   1.38% 158,470   1,037   1.32% 99   50   49  
Long-term advances and repos15,569   91   1.18% 4,241   74   3.52% 17   93   (76) 
Total int.-bearing liabilities1,167,707   2,204   0.38% 1,098,019   3,079   0.57% (875)  242   (1,117) 
                  
Non-interest-bearing liabilities:                
Demand deposits530,072       458,707            
Other liabilities32,244       21,966            
Total liabilities1,730,023       1,578,692            
Shareholders' equity190,140       170,476            
Total liabilities and shareholders' equity$1,920,163       $1,749,168            
                  
Fully taxable equivalent net interest income  30,823       30,472     $351   $2,459   $(2,108) 
Net interest rate spread (1)    3.26%     3.50%      
Net interest margin, fully taxable equivalent (2)    3.40%     3.69%      
Taxable equivalent adjustment  (170)      (204)         
Net interest income  $30,653       $30,268          
                  
(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 rules, although we are unable to state with certainty that the SEC would so regard them.

Fully Taxable Equivalent Net Interest Income and Net Interest Margin

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.

 

            As of or for the
  As of or for the Three Months Ended Six Months Ended
  June 30, March 31, Dec. 31, Sept. 30, June 30, June 30, June 30,
(in thousands, except ratio data) 2020 2020 2019 2019 2019 2020 2019
NET INTEREST MARGIN - FULLY TAXABLE EQUIVALENT 
Net interest income (GAAP) $15,590  $15,062  $15,201  $15,142  $15,101  $30,653  $30,268 
Fully taxable equivalent adjustment 84  86  98  101  104  170  204 
Fully taxable equivalent net interest income (non-GAAP) $15,675  $15,148  $15,299  $15,243  $15,205  $30,823  $30,472 
               
Average interest-earning assets (GAAP) $1,931,107  $1,715,562
 $ 1,705,766  $1,665,793  $1,654,156  $1,823,335  $1,663,372 
Net interest margin - fully taxable equivalent (non-GAAP)  3.26%   3.55%  3.56%  3.63%  3.69%  3.40%  3.69%


Efficiency Ratio

The unadjusted efficiency ratio is calculated as non-interest expense divided by total revenue (net interest income and non-interest income).  The adjusted 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 Six Months Ended
 June 30, March 31, Dec. 31, Sept. 30, June 30, June 30, June 30,
(in thousands, except ratio data)2020 2020 2019 2019 2019 2020 2019
EFFICIENCY RATIO             
Net interest income (GAAP)$15,590   $15,062   $15,201   $15,142   $15,101   $30,653   $30,268  
Fully taxable equivalent adjustment84   86   98   101   104   170   204  
Fully taxable equivalent net interest income (non-GAAP)$15,675   $15,148   $15,299   $15,243   $15,205   $30,823   $30,472  
              
Non-interest income (GAAP)$5,080   $4,730   $5,106   $4,956   $5,086   $9,810   $10,011  
Less:  changes in fair value of equity investments                    
Less:  net (gains) losses on security transactions            (19)     (19) 
Adjusted non-interest income (non-GAAP)$5,080   $4,730   $5,106   $4,956   $5,067   $9,810   $9,992  
              
Non-interest expense (GAAP)$13,224   $13,749   $14,851   $13,525   $13,823   $26,976   $27,320  
Less:  amortization of intangible assets(119)  (132)  (144)  (151)  (151)  (251)  (314) 
Less:  legal reserve                    
Adjusted non-interest expense (non-GAAP)$13,107   $13,617   $14,707   $13,374   $13,672   $26,725   $27,006  
              
Efficiency ratio (unadjusted)63.98%  69.47%  73.13%  67.30%  68.47%  66.67%  67.83% 
Efficiency ratio (adjusted)63.15%  68.50%  72.08%  66.21%  67.44%  65.77%  66.74% 


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 tangible 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 Six Months Ended
 June 30, March 31, Dec. 31, Sept. 30, June 30, June 30, June 30,
(in thousands, except per share and ratio data) 2020  2020  2019  2019  2019  2020  2019
TANGIBLE EQUITY AND TANGIBLE ASSETS            
(PERIOD END)             
Total shareholders' equity (GAAP)$194,589   $190,447   $182,627   $182,044   $178,387   $194,589   $178,387  
Less:  intangible assets (22,315)   (22,434)   (22,566)   (22,710)   (22,861)   (22,315)   (22,861) 
Tangible equity (non-GAAP)$172,274   $168,013   $160,061   $159,334   $155,526   $172,274   $155,526  
              
Total assets (GAAP)$2,050,921   $1,841,329   $1,787,827   $1,793,643   $1,752,997   $2,050,921   $1,752,997  
Less:  intangible assets (22,315)   (22,434)   (22,566)   (22,710)   (22,861)   (22,315)   (22,861) 
Tangible assets (non-GAAP)$ 2,028,606   $1,818,895   $1,765,261   $1,770,933   $1,730,136   $2,028,606   $1,730,136  
              
Total equity to total assets at end of period (GAAP) 9.49%   10.34%   10.22%   10.15%   10.18%   9.49%   10.18% 
Book value per share (GAAP)$40.50   $38.83   $37.35   $37.35   $36.64   $40.51   $36.64  
              
Tangible equity to tangible assets at             
end of period (non-GAAP) 8.49%   9.24%   9.07%   9.00%   8.99%   8.49%   8.99% 
Tangible book value per share (non-GAAP)$35.86   $34.25   $32.74   $32.69   $31.95   $35.86   $31.95  

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 Six Months Ended
 June 30, March 31, Dec. 31, Sept. 30, June 30, June 30, June 30,
(in thousands, except ratio data)2020 2020 2019 2019 2019 2020 2019
TANGIBLE EQUITY (AVERAGE)             
Total average shareholders' equity (GAAP)$191,853   $188,427   $182,522   $180,896   $173,534   $190,140   $170,476  
Less:  average intangible assets(22,389)  (22,516)  (22,633)  (22,785)  (22,936)  (22,452)  (23,013) 
Average tangible equity (non-GAAP)$169,464   $165,911   $159,889   $158,111   $150,598   $167,688   $147,463  
              
Return on average equity (GAAP)12.22%  5.32%  9.14%  4.29%  11.51%  8.80%  11.18% 
Return on average tangible equity (non-GAAP)13.83%  6.04%  10.43%  4.91%  13.27%  9.98%  12.92% 


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 Six Months Ended
 June 30, March 31, Dec. 31, Sept. 30, June 30, June 30, June 30,
(in thousands, except per share and ratio data)2020 2020 2019 2019 2019 2020 2019
NON-GAAP NET INCOME             
Reported net income (GAAP)$5,829  $2,491  $4,204  $1,956  $4,981   $8,318  $9,449  
Net (gains) losses on security transactions (net of tax)        (14)    (14) 
Net income (non-GAAP)$5,829  $2,491  $4,204  $1,956  $4,967   $8,318  $9,435  
              
Average basic and diluted shares outstanding4,850  4,895  4,879  4,871  4,866   4,868  4,863  
              
Reported basic and diluted earnings per share (GAAP)$1.20  $0.51  $0.87  $0.40  $1.02   $1.71  $1.94  
Reported return on average assets (GAAP)1.15% 0.55% 0.93% 0.44% 1.15%  0.87% 1.09% 
Reported return on average equity (GAAP)12.22% 5.32% 9.14% 4.29% 11.51%  8.80% 11.18% 
              
Basic and diluted earnings per share (non-GAAP)$1.20  $0.51  $0.87  $0.40  $1.02%  $1.71  $1.94  
Return on average assets (non-GAAP)1.15% 0.55% 0.93% 0.44% 1.14%  0.87% 1.09% 
Return on average equity (non-GAAP)12.22% 5.32% 9.14% 4.29% 11.48%  8.80% 11.16% 

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

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