ELMIRA, N.Y., Jan. 23, 2019 (GLOBE NEWSWIRE) — Chemung Financial Corporation (the “Corporation”) (Nasdaq: CHMG), the parent company of Chemung Canal Trust Company (the “Bank”), today reported net income of $19.6 million, or $4.06 per share, for the full year of 2018, compared to $7.4 million, or $1.55 per share, for the full year of 2017. Net income for the fourth quarter of 2018 was $5.7 million, or $1.18 per share, compared to a net loss of $2.2 million, or ($0.45) per share, for the fourth quarter of 2017.
Anders M. Tomson, Chemung Financial Corporation CEO, stated:
“We are very pleased to report record earnings for 2018, which included a strong fourth quarter. Our results for the year are a direct reflection of our focused approach to managing interest rate sensitivity, liquidity, and efficiency while positioning the balance sheet for 2019. We are looking forward to the benefits of a stronger balance sheet and capital ratios that will provide us with the opportunity to support continued growth. We enter 2019 sharing the optimism of our clients, and business and municipal leaders of the communities we serve, and are encouraged by the economic development opportunities provided by the upstate New York revitalization initiatives that are in process in many of our markets.”
Fourth Quarter Highlights1
- Net interest income increased $0.7 million, or 4.8%
- Provision for loan losses decreased $6.5 million, or 103.5%
- Total assets increased $47.7 million, or 2.8%
- Commercial loans increased $20.7 million, or 2.5%
- Deposits increased $101.8 million, or 6.9%
- Dividends declared during the fourth quarter of 2018 were $0.26 per share
A more detailed summary of financial performance follows.
1 Balance sheet comparisons are calculated for December 31, 2018 versus December 31, 2017. Income statement comparisons are calculated for the fourth quarter of 2018 versus the fourth quarter of 2017.
2018 vs 2017
Net Interest Income:
Net interest income for the year ended December 31, 2018 totaled $60.5 million compared with $57.0 million for the prior year, an increase of $3.5 million, or 6.1%, due primarily to a $4.5 million increase in total interest and dividend income, offset by a $1.0 million increase in total interest expense. The increase in total interest and dividend income was due primarily to increases in interest and fees of $5.0 million from loans and interest income of $0.2 million from interest-earning deposits, while interest and dividend income from securities decreased $0.7 million, compared to the prior year. The increase in total interest expense was due primarily to increases in interest expense of $1.2 million on deposits and $0.2 million on borrowed funds, while interest expense on securities sold under agreements to repurchase decreased $0.3 million, compared to the prior year. Fully taxable equivalent net interest margin was 3.72% in 2018, compared with 3.56% for the prior year. Average interest-earning assets increased $14.9 million in 2018 compared to the prior year. The average yield on interest-earning assets increased 21 basis points, while the average cost of interest-bearing liabilities increased nine basis points, as compared to the prior year. The increase in interest and dividend income in 2018 was due primarily to a $61.6 million increase in the average balance of commercial loans, primarily commercial mortgages, along with a 22 basis points increase in the average yield on commercial loans, and a $14.3 million increase in the average balance of consumer loans, compared to the prior year. The increase in interest expense in 2018 was due primarily to an increase in interest rates on interest-bearing deposit accounts, including promotional interest rates on time deposits, offset by a 41 basis points decrease in the average cost on borrowed funds, as compared to the prior year.
Non-Interest Income:
Non-interest income for the year ended December 31, 2018 was $23.1 million compared with $20.5 million for the prior year, an increase of $2.6 million, or 12.6%. The increase was due primarily to increases of $1.9 million in the fair value of equity investments, $0.5 million in Wealth Management Group fee (“WMG”) income, and $0.3 million in interchange revenue from debit card transactions, offset by a $0.2 million decrease in service charges on deposits accounts. The increase in the fair value of equity investments was due primarily to the $2.1 million increase in the fair value of Visa Class B shares. Subsequent to the change in fair value, the Visa Class B shares were sold during the third quarter of 2018. The increase in WMG fee income can be attributed to an increase in average assets under management or administration throughout the year. The increase in interchange revenue from debit card transactions was related to an increase in the volume of transactions. The decrease in service charges on deposits can be attributed to a decline in overdraft fee income.
Non-Interest Expense:
Non-interest expense for the year ended December 31, 2018 was $56.8 million compared with $53.8 million for the prior year, an increase of $3.0 million, or 5.6%. The increase was due primarily to increases of $0.8 million in salaries and wages, $0.3 million in net occupancy expenses, $0.5 million in data processing expenses, $0.4 million in professional services, $0.4 million in marketing and advertising expenses and $0.3 million in other real estate owned expenses, and a $0.6 million decrease in other components of net periodic pension and postretirement benefits, due primarily to a $0.8 million charge related to a lump sum settlement to terminated, vested employees. These items were offset by a decrease of $0.3 million in furniture and equipment expenses. The increase in salaries and wages can be attributed to annual merit increases and an increase in headcount with two denovo branches which opened in 2018. The increase in net occupancy and data processing expenses can also be attributed to the two new branches, along with the timing of various projects. The increase in other real estate owned expenses can be attributed to additional OREO properties acquired during 2017 and 2018.
Income Tax Expense:
Income tax expense for 2018 was $4.0 million compared with $7.3 million for the prior year, a decrease of $3.3 million, or 44.8%. The effective tax rate for 2018 decreased to 17.0% compared with 49.4% for the prior year. The decreases in income tax expense and effective tax rate can be attributed to a tax benefit of $0.4 million recorded in December 2018 and to the estimated $2.9 million one-time net deferred tax revaluation recorded in December 2017, both due to the enactment of the Tax Cuts and Jobs Act of 2017 (the “TCJ Act”). The effective tax rates for the years ended December 31, 2018 and 2017, excluding the tax benefit and one-time net deferred tax revaluation, were 18.8%1 and 29.5%2, respectively. Additionally, the Corporation increased income generated from CCTC Funding Corp., a real estate investment trust subsidiary of the Bank, reducing the Corporation’s state income tax expense.
1 ($4,009 income tax expense + $445 revaluation of net deferred tax expense) / $23,635income before income tax expense.
2 ($7,262 income tax expense – $2,927 revaluation of net deferred tax expense) / $14,692 income before income tax expense.
4th Quarter 2018 vs 4th Quarter 2017
Net Interest Income:
Net interest income for the current quarter totaled $15.5 million compared with $14.8 million for the same period in the prior year, an increase of $0.7 million, or 4.8%, due primarily to a $1.3 million increase in total interest and dividend income, offset by a $0.6 million increase in total interest expense. Interest and fees from loans increased $1.1 million and interest from interest-earning deposits increased $0.5 million, while interest and dividends from investments decreased $0.3 million in the fourth quarter of 2018 as compared to the same period in the prior year. Interest expense on deposits increased $0.8 million, while interest expense on securities sold under agreements to repurchase decreased $0.1 million and interest expense on borrowed funds decreased $0.1 million in the fourth quarter of 2018 when compared to the same period in the prior year. Fully taxable equivalent net interest margin was 3.68% in the fourth quarter of 2018, compared with 3.63% for the same period in the prior year. Average interest-earning assets increased $41.0 million in the fourth quarter of 2018, compared to the same period in the prior year. The average yield on interest-earning assets increased 19 basis points, while the average cost of interest-bearing liabilities increased 22 basis points in the fourth quarter of 2018, compared to the same period in the prior year. The increase in interest and dividend income for the current quarter can be mostly attributed to a 34 basis points increase in average yield on commercial loans, along with a $25.7 million increase in the average balance of commercial loans, primarily commercial real estate, and a $78.3 million increase in the average balance of interest-earning deposits, compared to the same period in the prior year. The increase in interest expense for the current quarter can be mostly attributed to an increase in interest rates on interest-bearing deposit accounts, including promotional interest rates on time deposits.
Non-Interest Income:
Non-interest income for the current quarter was $4.9 million compared with $5.5 million for the same period in the prior year, a decrease of $0.6 million, or 10.3%. The decrease was due primarily to a decrease in the fair market value of equity investments of $0.2 million, as well as a decrease in other non-interest income of $0.3 million. The decrease in other non-interest income was due primarily to decreases is CFS fee income, swap fees, off balance sheet sweep account fees and rental income from other real estate owned.
Non-Interest Expense:
Non-interest expense for the current quarter was $14.2 million compared with $13.1 million for the same period in the prior year, an increase of $1.1 million, or 8.3%. The increase was due primarily to an expense of $0.5 million, compared with a credit of $0.3 million for the same period in the prior year in other components of net periodic pension and postretirement benefits due to recording a $0.8 million charge related to a lump sum settlement to terminated, vested employees. Additionally, there were increases of $0.2 million in marketing and advertising and $0.1 million in net occupancy. The increase in marketing and advertising can be attributed to the timing of external advertising campaigns. The increases in net occupancy can be attributed to two denovo branches which opened in 2018, along with the timing of various projects.
Income Tax Expense:
The Corporation recognized a $5.5 million increase in income before income tax expense for the quarter, when compared to the same period in the prior year, however, income tax expense for the current quarter was $0.7 million compared with $3.0 million for the same period in the prior year, a decrease of $2.4 million, or 78.1%. The decrease in income tax expense can be attributed to a tax benefit of $0.4 million recorded in December 2018 and to the estimated $2.9 million one-time net deferred tax revaluation recorded in December 2017, both due to the enactment of the TCJ Act. These items were offset by the additional income tax expense related to the increase in income before income tax expense.
4th Quarter 2018 vs 3rd Quarter 2018
Net Interest Income:
Net interest income for the current quarter totaled $15.5 million compared with $15.1 million for the prior quarter, an increase of $0.4 million, or 2.7%, due primarily to a $0.7 million increase in total interest and dividend income, offset by a $0.3 million increase in total interest expense. Total interest and dividend income increased due primarily to increases of $0.3 million in interest and fees from loans and $0.6 million in interest from interest-earning deposits, offset by a decrease of $0.1 million in interest and dividends from taxable securities. Interest expense on deposits increased $0.5 million, while interest expense on borrowed funds decreased $0.2 million. Fully taxable equivalent net interest margin was 3.68% in the fourth quarter of 2018, compared with 3.71% for the prior quarter. Average interest-earning assets increased $55.1 million in the fourth quarter of 2018, compared to the prior quarter. The average yield on interest-earning assets increased five basis points, while the average cost of interest-bearing liabilities increased eleven basis points in the fourth quarter of 2018, compared to the prior quarter. The increase in total interest and dividend income for the current quarter can be mostly attributed to an 18 basis points increase in the average yield on total loans and a $93.5 million increase in the average balance of interest-earning deposits, along with an 18 basis points increase in the average yield on interest-earning deposits, compared to the prior quarter. These items were partially offset by decreases of $23.5 million in the average balance of total loans and $15.5 million in the average balance of taxable securities, compared to the prior quarter. The decrease in the average balance of total loans was due to decreases of $10.0 million in the average balance of commercial loans, $5.4 million in the average balance of residential mortgage loans and $8.1 million in the average balance of consumer loans. The increase in interest expense for the current quarter can be mostly attributed to an increase in interest rates on interest-bearing deposit accounts, including promotional interest rates on time deposits, partially offset by a decrease of $28.9 million in the average balance of borrowed funds.
Non-Interest Income:
Non-interest income for the current quarter was $4.9 million compared with $7.4 million for the prior quarter, a decrease of $2.5 million, or 33.7%. The decrease in non-interest income was due primarily to a $2.1 million increase in the fair value of Visa Class B shares during the third quarter of 2018, and a decrease of $0.2 million in WMG fee income. The decline in WMG fee income is due primarily to a decrease in the market value of total assets under management or administration.
Non-Interest Expense:
Non-interest expense for the current quarter was $14.2 million compared with $13.4 million for the prior quarter, an increase of $0.8 million, or 5.8%. The increase can be mostly attributed to a reduction in other components of net periodic pension and postretirement benefits, due to a $0.8 million charge related to the lump sum settlement to terminated, vested employees, and increases of $0.2 million in professional services and $0.2 million in marketing and advertising expenses, offset by decreases of $0.3 million in salaries and wages and $0.2 million in pension and other employee benefits. The decrease in salaries and wages can be attributed to reductions in year-end bonus accruals and deferred compensation, along with an increase in open positions. The decrease in pension and other employee benefits can be attributed to lower payroll taxes and health care claims. The increase in professional services, and marketing and advertising expenses was related to the timing of various projects.
Income Tax Expense:
Income tax expense for the current quarter was $0.7 million compared with $1.8 million for the prior quarter, a decrease of $1.1 million, or 63.4%. The decrease in income tax expense can be attributed to a tax benefit of $0.4 million recorded in December 2018, due to the enactment of the TCJ Act, and a $2.3 million decrease in income before income tax expense for the fourth quarter of 2018, when compared to the prior quarter.
Asset Quality
Non-performing loans totaled $12.3 million at December 31, 2018, or 0.93% of total loans, compared with $17.3 million at December 31, 2017, or 1.32% of total loans. Non-performing assets, which are comprised of non-performing loans and other real estate owned, were $12.8 million, or 0.73% of total assets, at December 31, 2018, compared with $19.3 million, or 1.13% of total assets, at December 31, 2017. The decline in non-performing loans can be mostly attributed to the charge-off of multiple large commercial loans to one borrower for $3.6 million during the second quarter of 2018, along with decreases in non-performing loans in the commercial mortgage, residential mortgage and consumer loan portfolios. The decline in non-performing assets can be mostly attributed to the charge-off of multiple large commercial loans to one borrower for $3.6 million and the sale of multiple other real estate owned properties during 2018.
Management performs an ongoing assessment of the adequacy of the allowance for loan losses based upon a number of factors including an analysis of historical loss factors, collateral evaluations, recent charge-off experience, credit quality of the loan portfolio, current economic conditions and loan growth. Based on this analysis, the provision for loan losses for the fourth quarter of 2018 was a credit of $0.2 million, a decrease of $6.5 million compared with the same period in the prior year. The decrease in the provision for loan losses was due primarily to recording a provision for two commercial loans, one for $3.6 million and one for $1.4 million, in 2017. Net charge-offs for the fourth quarter of 2018 were $0.5 million, compared with $0.8 million for the fourth quarter of 2017.
The allowance for loan losses was $18.9 million at December 31, 2018 compared with $21.2 million at December 31, 2017. The allowance for loan losses was 154.59% of non-performing loans at December 31, 2018 compared with 122.14% at December 31, 2017. The ratio of the allowance for loan losses to total loans was 1.44% at December 31, 2018 compared with 1.61% at December 31, 2017.
Balance Sheet Activity
Total assets were $1.755 billion at December 31, 2018 compared with $1.708 billion at December 31, 2017, an increase of $47.7 million, or 2.8%. The increase can be mostly attributed to an increase of $99.2 million in cash and cash equivalents and a $2.2 million decrease in the allowance for loan losses. These items were offset by a decrease of $52.4 million in total investment securities.
The increase in cash and cash equivalents was due to changes in securities, loans, deposits, and borrowings. Total loans remained level with the prior year, however, changes included increases of $16.1 million in commercial mortgages and $4.6 million in commercial and agricultural loans, offset by decreases of $11.7 million in residential mortgages, $3.7 million in indirect consumer loans and $5.2 million in other consumer loans. The decrease in securities available for sale can be mostly attributed to pay-downs, maturities, and a decrease in fair value related to an increase in interest rates.
Total liabilities were $1.590 billion at December 31, 2018 compared with $1.558 billion at December 31, 2017, an increase of $32.5 million or 2.1%. Deposits totaled $1.569 billion at December 31, 2018 compared with $1.467 billion at December 31, 2017, an increase of $101.8 million, or 6.9%. The growth was attributable to increases of $16.8 million in non-interest bearing demand deposits accounts, $30.6 million in interest-bearing demand deposit accounts, $24.2 million in money market accounts, and $31.9 million in time deposits, due to a rate promotion, offset by a decrease of $1.6 million in savings accounts. The increase in interest-bearing demand deposit accounts was mainly attributable to the Bank converting its off balance sheet sweep agreement accounts into interest-bearing demand deposit accounts during 2018 which resulted in the onboarding of approximately $30.0 million in deposits. FHLB advances and other debt totaled $4.3 million at December 31, 2018 compared with $64.2 million at December 31, 2017, a decrease of $59.9 million, or 93.3%. The decline in FHLB advances can be attributed to an increase in deposits and decline in securities.
Total shareholders’ equity was $165.0 million at December 31, 2018 compared with $149.8 million at December 31, 2017, an increase of $15.2 million, or 10.1%. The increase in retained earnings of $14.7 million was due primarily to earnings of $19.6 million, offset by $5.0 million in dividends declared. The increase in accumulated other comprehensive loss of $1.1 million can be mostly attributed to the decline in the fair market value of the securities portfolio. Also, treasury stock decreased $1.8 million, due to the issuance of shares to the Corporation’s employee benefit stock plans and directors’ stock plans.
The total equity to total assets ratio was 9.40% at December 31, 2018 compared with 8.77% at December 31, 2017. The tangible equity to tangible assets ratio was 8.19% at December 31, 2018 compared with 7.48% at December 31, 2017. Book value per share increased to $33.99 at December 31, 2018 from $31.10 at December 31, 2017. As of December 31, 2018, 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 $1.768 billion at December 31, 2018, including $283.0 million of assets under management or administration for the Corporation, compared to $1.952 billion at December 31, 2017, including $346.8 million of assets under management or administration for the Corporation, a decrease of $183.4 million, or 9.4%. The decline in total assets under management or administration can be mostly attributed to decreases in the market value of total assets, and the Corporation’s pledged securities portfolio for municipal deposits, which were held by its Wealth Management Group.
About Chemung Financial Corporation
Chemung Financial Corporation is a $1.8 billion financial services holding company headquartered in Elmira, New York and operates 34 retail offices through its principal subsidiary, Chemung Canal Trust Company, a full service community bank with trust powers. Established in 1833, Chemung Canal Trust Company is the oldest locally-owned and managed community bank in New York State. Chemung Financial Corporation is also the parent of CFS Group, Inc., a financial services subsidiary offering non-traditional services including mutual funds, annuities, brokerage services, tax preparation services and insurance, and Chemung Risk Management, Inc., a captive insurance company based in the State of Nevada.
This press release may be found at: www.chemungcanal.com under Investor Relations.
Forward-Looking Statements:
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act, and the Private Securities Litigation Reform Act of 1995. The Corporation intends its forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in this press release. All statements regarding the Corporation’s expected financial position and operating results, the Corporation’s business strategy, the Corporation’s financial plans, forecasted demographic and economic trends relating to the Corporation’s industry and similar matters are forward-looking statements. These statements can sometimes be identified by the Corporation’s use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect,” or “intend.” The Corporation cannot promise that its expectations in such forward-looking statements will turn out to be correct. The Corporation’s actual results could be materially different from expectations because of various factors, including changes in economic conditions or interest rates, credit risk, difficulties in managing the Corporation’s growth, competition, changes in law or the regulatory environment, including the Dodd-Frank Act, and changes in general business and economic trends. Information concerning these and other factors can be found in the Corporation’s periodic filings with the Securities and Exchange Commission (“SEC”), including the 2017 Annual Report on Form 10-K. These filings are available publicly on the SEC’s website at http://www.sec.gov, on the Corporation’s website at http://www.chemungcanal.com or upon request from the Corporate Secretary at (607) 737-3746. Except as otherwise required by law, the Corporation undertakes no obligation to publicly update or revise its forward-looking statements, whether as a result of new information, future events, or otherwise.
| Chemung Financial Corporation | ||||||||||||||||||||
| Consolidated Balance Sheets (Unaudited) | ||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | ||||||||||||||||
| (in thousands) | 2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and due from financial institutions | $ | 33,040 | $ | 31,831 | $ | 30,837 | $ | 25,473 | $ | 27,966 | ||||||||||
| Interest-earning deposits in other financial institutions | 96,932 | 82,081 | 3,978 | 5,531 | 2,763 | |||||||||||||||
| Total cash and cash equivalents | 129,972 | 113,912 | 34,815 | 31,004 | 30,729 | |||||||||||||||
| Equity investments | 1,909 | 1,987 | 2,112 | 2,154 | 2,337 | |||||||||||||||
| Securities available for sale | 242,258 | 246,473 | 265,157 | 278,984 | 293,091 | |||||||||||||||
| Securities held to maturity | 4,875 | 4,203 | 3,806 | 3,640 | 3,781 | |||||||||||||||
| FHLB and FRB stocks, at cost | 3,138 | 3,138 | 5,816 | 3,097 | 5,784 | |||||||||||||||
| Total investment securities | 250,271 | 253,814 | 274,779 | 285,721 | 302,656 | |||||||||||||||
| Commercial | 864,024 | 857,954 | 860,209 | 848,075 | 843,337 | |||||||||||||||
| Mortgage | 182,724 | 188,636 | 193,423 | 194,600 | 194,440 | |||||||||||||||
| Consumer | 265,158 | 274,048 | 280,812 | 277,236 | 274,047 | |||||||||||||||
| Loans, net of deferred loan fees | 1,311,906 | 1,320,638 | 1,334,444 | 1,319,911 | 1,311,824 | |||||||||||||||
| Allowance for loan losses | (18,944 | ) | (19,635 | ) | (19,645 | ) | (21,390 | ) | (21,161 | ) | ||||||||||
| Loans, net | 1,292,962 | 1,301,003 | 1,314,799 | 1,298,521 | 1,290,663 | |||||||||||||||
| Loans held for sale | 502 | 1,715 | 684 | 190 | 542 | |||||||||||||||
| Premises and equipment, net | 24,980 | 25,514 | 26,049 | 26,136 | 26,657 | |||||||||||||||
| Goodwill | 21,824 | 21,824 | 21,824 | 21,824 | 21,824 | |||||||||||||||
| Other intangible assets, net | 1,351 | 1,527 | 1,709 | 1,891 | 2,085 | |||||||||||||||
| Accrued interest receivable and other assets | 31,572 | 32,568 | 33,395 | 32,513 | 30,127 | |||||||||||||||
| Total assets | $ | 1,755,343 | $ | 1,753,864 | $ | 1,710,166 | $ | 1,699,954 | $ | 1,707,620 | ||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Non-interest-bearing demand deposits | $ | 484,433 | $ | 469,887 | $ | 462,233 | $ | 460,271 | $ | 467,610 | ||||||||||
| Interest-bearing demand deposits | 179,603 | 211,099 | 125,867 | 144,707 | 149,026 | |||||||||||||||
| Money market accounts | 537,948 | 532,489 | 522,328 | 574,075 | 513,782 | |||||||||||||||
| Savings deposits | 217,027 | 217,621 | 222,387 | 222,700 | 218,666 | |||||||||||||||
| Time deposits | 150,226 | 144,901 | 146,094 | 116,447 | 118,362 | |||||||||||||||
| Total deposits | 1,569,237 | 1,575,997 | 1,478,909 | 1,518,200 | 1,467,446 | |||||||||||||||
| Securities sold under agreements to repurchase | – | – | – | 10,000 | 10,000 | |||||||||||||||
| FHLB advances and other debt | 4,304 | 4,358 | 63,361 | 4,464 | 64,217 | |||||||||||||||
| Accrued interest payable and other liabilities | 16,773 | 17,010 | 16,116 | 17,028 | 16,144 | |||||||||||||||
| Total liabilities | 1,590,314 | 1,597,365 | 1,558,386 | 1,549,692 | 1,557,807 | |||||||||||||||
| Shareholders’ equity | ||||||||||||||||||||
| Common stock | 53 | 53 | 53 | 53 | 53 | |||||||||||||||
| Additional-paid-in capital | 45,820 | 46,006 | 45,873 | 46,404 | 45,967 | |||||||||||||||
| Retained earnings | 143,129 | 138,654 | 132,973 | 131,694 | 128,453 | |||||||||||||||
| Treasury stock, at cost | (12,562 | ) | (12,927 | ) | (12,998 | ) | (14,053 | ) | (14,320 | ) | ||||||||||
| Accumulated other comprehensive loss | (11,411 | ) | (15,287 | ) | (14,121 | ) | (13,836 | ) | (10,340 | ) | ||||||||||
| Total shareholders’ equity | 165,029 | 156,499 | 151,780 | 150,262 | 149,813 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 1,755,343 | $ | 1,753,864 | $ | 1,710,166 | $ | 1,699,954 | $ | 1,707,620 | ||||||||||
| Period-end shares outstanding | 4,855 | 4,837 | 4,831 | 4,824 | 4,817 | |||||||||||||||
| Chemung Financial Corporation | ||||||||||||||||||||||
| Consolidated Statements of Income (Unaudited) | ||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
| December 31, | Percent | December 31, | Percent | |||||||||||||||||||
| (in thousands, except per share data) | 2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||
| Interest and dividend income: | ||||||||||||||||||||||
| Loans, including fees | $ | 14,910 | $ | 13,815 | 7.9 | $ | 57,840 | $ | 52,840 | 9.5 | ||||||||||||
| Taxable securities | 1,051 | 1,314 | (20.0 | ) | 4,804 | 5,503 | (12.7 | ) | ||||||||||||||
| Tax exempt securities | 278 | 313 | (11.2 | ) | 1,153 | 1,149 | 0.3 | |||||||||||||||
| Interest-earning deposits | 640 | 118 | 442.4 | 756 | 563 | 34.3 | ||||||||||||||||
| Total interest and dividend income | 16,879 | 15,560 | 8.5 | 64,553 | 60,055 | 7.5 | ||||||||||||||||
| Interest expense: | ||||||||||||||||||||||
| Deposits | 1,356 | 536 | 153.0 | 3,323 | 2,168 | 53.3 | ||||||||||||||||
| Securities sold under agreements to repurchase | – | 95 | (100.0 | ) | 137 | 478 | (71.3 | ) | ||||||||||||||
| Borrowed funds | 39 | 149 | (73.8 | ) | 613 | 422 | 45.3 | |||||||||||||||
| Total interest expense | 1,395 | 780 | 78.8 | 4,073 | 3,068 | 32.8 | ||||||||||||||||
| Net interest income | 15,484 | 14,780 | 4.8 | 60,480 | 56,987 | 6.1 | ||||||||||||||||
| Provision (credit) for loan losses | (218 | ) | 6,272 | (103.5 | ) | 3,153 | 9,022 | (65.1 | ) | |||||||||||||
| Net interest income after provision (credit) for loan losses | 15,702 | 8,508 | 84.6 | 57,327 | 47,965 | 19.5 | ||||||||||||||||
| Non-interest income: | ||||||||||||||||||||||
| Wealth management group fee income | 2,222 | 2,279 | (2.5 | ) | 9,317 | 8,804 | 5.8 | |||||||||||||||
| Service charges on deposit accounts | 1,188 | 1,283 | (7.4 | ) | 4,727 | 4,961 | (4.7 | ) | ||||||||||||||
| Interchange revenue from debit card transactions | 1,027 | 952 | 7.9 | 4,040 | 3,761 | 7.4 | ||||||||||||||||
| Net gains on securities transactions | – | 97 | (100.0 | ) | – | 109 | (100.0 | ) | ||||||||||||||
| Change in fair value of equity investments | (161 | ) | 41 | (492.7 | ) | 2,004 | 137 | 1362.8 | ||||||||||||||
| Net gains on sales of loans held for sale | 167 | 67 | 149.3 | 351 | 260 | 35.0 | ||||||||||||||||
| Net gains (losses) on sales of other real estate owned | (29 | ) | – | N/M | 90 | 38 | 136.8 | |||||||||||||||
| Income from bank owned life insurance | 16 | 18 | (11.1 | ) | 66 | 70 | (5.7 | ) | ||||||||||||||
| Other | 463 | 719 | (35.6 | ) | 2,479 | 2,351 | 5.4 | |||||||||||||||
| Total non-interest income | 4,893 | 5,456 | (10.3 | ) | 23,074 | 20,491 | 12.6 | |||||||||||||||
| Non-interest expense: | ||||||||||||||||||||||
| Salaries and wages | 5,353 | 5,299 | 1.0 | 22,322 | 21,476 | 3.9 | ||||||||||||||||
| Pension and other employee benefits | 1,086 | 1,192 | (8.9 | ) | 5,524 | 5,608 | (1.5 | ) | ||||||||||||||
| Other components of net periodic pension and postretirement benefits | 454 | (333 | ) | N/M | (770 | ) | (1,332 | ) | (42.2 | ) | ||||||||||||
| Net occupancy | 1,628 | 1,479 | 10.1 | 6,550 | 6,263 | 4.6 | ||||||||||||||||
| Furniture and equipment | 609 | 709 | (14.1 | ) | 2,550 | 2,828 | (9.8 | ) | ||||||||||||||
| Data processing | 1,709 | 1,681 | 1.7 | 6,997 | 6,539 | 7.0 | ||||||||||||||||
| Professional services | 642 | 605 | 6.1 | 2,169 | 1,774 | 22.3 | ||||||||||||||||
| Legal accruals and settlements | – | – | N/M | 989 | 850 | 16.4 | ||||||||||||||||
| Amortization of intangible assets | 176 | 207 | (15.0 | ) | 734 | 860 | (14.7 | ) | ||||||||||||||
| Marketing and advertising | 365 | 214 | 70.6 | 1,181 | 794 | 48.7 | ||||||||||||||||
| Other real estate owned expense | 101 | 75 | 34.7 | 422 | 110 | 283.6 | ||||||||||||||||
| FDIC insurance | 261 | 290 | (10.0 | ) | 1,142 | 1,236 | (7.6 | ) | ||||||||||||||
| Loan expense | 248 | 247 | 0.4 | 863 | 694 | 24.4 | ||||||||||||||||
| Other | 1,573 | 1,446 | 8.8 | 6,093 | 6,064 | 0.5 | ||||||||||||||||
| Total non-interest expense | 14,205 | 13,111 | 8.3 | 56,766 | 53,764 | 5.6 | ||||||||||||||||
| Income before income tax expense | 6,390 | 853 | 649.1 | 23,635 | 14,692 | 60.9 | ||||||||||||||||
| Income tax expense | 660 | 3,012 | (78.1 | ) | 4,009 | 7,262 | (44.8 | ) | ||||||||||||||
| Net income (loss) | $ | 5,730 | $ | (2,159 | ) | N/M | $ | 19,626 | $ | 7,430 | 164.1 | |||||||||||
| Basic and diluted earnings per share | $ | 1.18 | $ | (0.45 | ) | $ | 4.06 | $ | 1.55 | |||||||||||||
| Cash dividends declared per share | 0.26 | 0.26 | 1.04 | 1.04 | ||||||||||||||||||
| Average basic and diluted shares outstanding | 4,843 | 4,809 | 4,832 | 4,800 | ||||||||||||||||||
| Chemung Financial Corporation | ||||||||||||||||||||||||||||
| Consolidated Financial Highlights (Unaudited) | ||||||||||||||||||||||||||||
| As of or for the | ||||||||||||||||||||||||||||
| As of or for the Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||||||
| (in thousands, except per share data) | 2018 | 2018 | 2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||
| RESULTS OF OPERATIONS | ||||||||||||||||||||||||||||
| Interest income | $ | 16,879 | $ | 16,136 | $ | 15,869 | $ | 15,669 | $ | 15,560 | $ | 64,553 | $ | 60,055 | ||||||||||||||
| Interest expense | 1,395 | 1,057 | 852 | 769 | 780 | 4,073 | 3,068 | |||||||||||||||||||||
| Net interest income | 15,484 | 15,079 | 15,017 | 14,900 | 14,780 | 60,480 | 56,987 | |||||||||||||||||||||
| Provision (credit) for loan losses | (218 | ) | 300 | 2,362 | 709 | 6,272 | 3,153 | 9,022 | ||||||||||||||||||||
| Net interest income after provision (credit) for loan losses | 15,702 | 14,779 | 12,655 | 14,191 | 8,508 | 57,327 | 47,965 | |||||||||||||||||||||
| Non-interest income | 4,893 | 7,381 | 5,325 | 5,475 | 5,456 | 23,074 | 20,491 | |||||||||||||||||||||
| Non-interest expense | 14,205 | 13,428 | 14,967 | 14,166 | 13,111 | 56,766 | 53,764 | |||||||||||||||||||||
| Income before income tax expense | 6,390 | 8,732 | 3,013 | 5,500 | 853 | 23,635 | 14,692 | |||||||||||||||||||||
| Income tax expense | 660 | 1,802 | 486 | 1,061 | 3,012 | 4,009 | 7,262 | |||||||||||||||||||||
| Net income (loss) | $ | 5,730 | $ | 6,930 | $ | 2,527 | $ | 4,439 | $ | (2,159 | ) | $ | 19,626 | $ | 7,430 | |||||||||||||
| Basic and diluted earnings per share | $ | 1.18 | $ | 1.43 | $ | 0.52 | $ | 0.92 | $ | (0.45 | ) | $ | 4.06 | $ | 1.55 | |||||||||||||
| Average basic and diluted shares outstanding | 4,843 | 4,834 | 4,828 | 4,822 | 4,809 | 4,832 | 4,800 | |||||||||||||||||||||
| PERFORMANCE RATIOS | ||||||||||||||||||||||||||||
| Return on average assets | 1.29 | % | 1.61 | % | 0.59 | % | 1.06 | % | (0.50 | )% | 1.14 | % | 0.43 | % | ||||||||||||||
| Return on average equity | 14.29 | % | 17.81 | % | 6.70 | % | 11.96 | % | (5.53 | )% | 12.76 | % | 4.91 | % | ||||||||||||||
| Return on average tangible equity (a) | 16.74 | % | 21.01 | % | 7.94 | % | 14.21 | % | (6.55 | )% | 15.07 | % | 5.85 | % | ||||||||||||||
| Efficiency ratio (unadjusted) (f) | 69.71 | % | 59.79 | % | 73.58 | % | 69.53 | % | 64.79 | % | 67.94 | % | 69.39 | % | ||||||||||||||
| Efficiency ratio (adjusted) (a) (b) | 68.49 | % | 64.72 | % | 67.47 | % | 68.21 | % | 63.43 | % | 67.22 | % | 66.60 | % | ||||||||||||||
| Non-interest expense to average assets | 3.21 | % | 3.13 | % | 3.52 | % | 3.37 | % | 3.01 | % | 3.31 | % | 3.14 | % | ||||||||||||||
| Loans to deposits | 83.60 | % | 83.80 | % | 90.23 | % | 86.94 | % | 89.40 | % | 83.60 | % | 89.40 | % | ||||||||||||||
| YIELDS / RATES – Fully Taxable Equivalent | ||||||||||||||||||||||||||||
| Yield on loans | 4.54 | % | 4.36 | % | 4.33 | % | 4.34 | % | 4.26 | % | 4.39 | % | 4.24 | % | ||||||||||||||
| Yield on investments | 2.16 | % | 2.18 | % | 2.21 | % | 2.22 | % | 2.15 | % | 2.19 | % | 2.08 | % | ||||||||||||||
| Yield on interest-earning assets | 4.01 | % | 3.96 | % | 3.94 | % | 3.94 | % | 3.82 | % | 3.96 | % | 3.75 | % | ||||||||||||||
| Cost of interest-bearing deposits | 0.48 | % | 0.33 | % | 0.24 | % | 0.20 | % | 0.20 | % | 0.31 | % | 0.20 | % | ||||||||||||||
| Cost of borrowings | 3.58 | % | 2.38 | % | 2.41 | % | 2.23 | % | 2.42 | % | 2.37 | % | 2.78 | % | ||||||||||||||
| Cost of interest-bearing liabilities | 0.50 | % | 0.39 | % | 0.32 | % | 0.29 | % | 0.28 | % | 0.37 | % | 0.28 | % | ||||||||||||||
| Interest rate spread | 3.51 | % | 3.57 | % | 3.62 | % | 3.65 | % | 3.54 | % | 3.59 | % | 3.47 | % | ||||||||||||||
| Net interest margin, fully taxable equivalent | 3.68 | % | 3.71 | % | 3.73 | % | 3.75 | % | 3.63 | % | 3.72 | % | 3.56 | % | ||||||||||||||
| CAPITAL | ||||||||||||||||||||||||||||
| Total equity to total assets at end of period | 9.40 | % | 8.92 | % | 8.88 | % | 8.84 | % | 8.77 | % | 9.40 | % | 8.77 | % | ||||||||||||||
| Tangible equity to tangible assets at end of period (a) | 8.19 | % | 7.69 | % | 7.60 | % | 7.55 | % | 7.48 | % | 8.19 | % | 7.48 | % | ||||||||||||||
| Book value per share | $ | 33.99 | $ | 32.35 | $ | 31.42 | $ | 31.16 | $ | 31.10 | $ | 33.99 | $ | 31.10 | ||||||||||||||
| Tangible book value per share (a) | 29.22 | 27.53 | 26.55 | 26.24 | 26.14 | 29.22 | 26.14 | |||||||||||||||||||||
| Period-end market value per share | 41.31 | 42.43 | 50.11 | 46.47 | 48.10 | 41.31 | 48.10 | |||||||||||||||||||||
| Dividends declared per share | 0.26 | 0.26 | 0.26 | 0.26 | 0.26 | 1.04 | 1.04 | |||||||||||||||||||||
| AVERAGE BALANCES | ||||||||||||||||||||||||||||
| Loans and loans held for sale (c) | $ | 1,306,556 | $ | 1,330,071 | $ | 1,328,386 | $ | 1,315,207 | $ | 1,291,414 | $ | 1,320,059 | $ | 1,251,225 | ||||||||||||||
| Interest earning assets | 1,680,269 | 1,625,132 | 1,625,591 | 1,623,748 | 1,639,257 | 1,638,803 | 1,623,948 | |||||||||||||||||||||
| Total assets | 1,756,765 | 1,704,721 | 1,703,722 | 1,703,047 | 1,727,616 | 1,716,992 | 1,713,233 | |||||||||||||||||||||
| Deposits | 1,576,629 | 1,501,082 | 1,495,410 | 1,488,708 | 1,516,390 | 1,515,658 | 1,514,457 | |||||||||||||||||||||
| Total equity | 159,032 | 154,331 | 151,216 | 150,495 | 154,767 | 153,793 | 151,229 | |||||||||||||||||||||
| Tangible equity (a) | 135,766 | 130,891 | 127,591 | 126,665 | 130,759 | 130,256 | 126,902 | |||||||||||||||||||||
| ASSET QUALITY | ||||||||||||||||||||||||||||
| Net charge-offs | $ | 472 | $ | 310 | $ | 4,107 | $ | 480 | $ | 805 | $ | 5,369 | $ | 2,114 | ||||||||||||||
| Non-performing loans (d) | 12,254 | 12,629 | 12,790 | 17,280 | 17,324 | 12,254 | 17,324 | |||||||||||||||||||||
| Non-performing assets (e) | 12,828 | 13,356 | 13,676 | 19,113 | 19,264 | 12,828 | 19,264 | |||||||||||||||||||||
| Allowance for loan losses | 18,944 | 19,635 | 19,645 | 21,390 | 21,161 | 18,944 | 21,161 | |||||||||||||||||||||
| Annualized net charge-offs to average loans | 0.14 | % | 0.09 | % | 1.24 | % | 0.15 | % | 0.25 | % | 0.41 | % | 0.17 | % | ||||||||||||||
| Non-performing loans to total loans | 0.93 | % | 0.96 | % | 0.96 | % | 1.31 | % | 1.32 | % | 0.93 | % | 1.32 | % | ||||||||||||||
| Non-performing assets to total assets | 0.73 | % | 0.76 | % | 0.80 | % | 1.12 | % | 1.13 | % | 0.73 | % | 1.13 | % | ||||||||||||||
| Allowance for loan losses to total loans | 1.44 | % | 1.49 | % | 1.47 | % | 1.62 | % | 1.61 | % | 1.44 | % | 1.61 | % | ||||||||||||||
| Allowance for loan losses to non-performing loans | 154.59 | % | 155.48 | % | 153.60 | % | 123.78 | % | 122.14 | % | 154.59 | % | 122.14 | % | ||||||||||||||
| (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 December 31, 2018 |
Three Months Ended December 31, 2017 |
Three Months Ended December 31, 2018 vs. 2017 |
||||||||||||||||||||||||||||||||
| (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 | $ | 851,484 | $ | 10,203 | 4.75 | % | $ | 825,773 | $ | 9,170 | 4.41 | % | $ | 1,033 | $ | 297 | $ | 736 | ||||||||||||||||
| Mortgage loans | 186,116 | 1,762 | 3.76 | % | 196,283 | 1,825 | 3.69 | % | (63 | ) | (97 | ) | 34 | |||||||||||||||||||||
| Consumer loans | 268,956 | 2,982 | 4.40 | % | 269,358 | 2,882 | 4.24 | % | 100 | (4 | ) | 104 | ||||||||||||||||||||||
| Taxable securities | 215,883 | 1,057 | 1.94 | % | 261,395 | 1,316 | 2.00 | % | (259 | ) | (220 | ) | (39 | ) | ||||||||||||||||||||
| Tax-exempt securities | 48,860 | 340 | 2.76 | % | 55,822 | 455 | 3.23 | % | (115 | ) | (53 | ) | (62 | ) | ||||||||||||||||||||
| Interest-earning deposits | 108,970 | 640 | 2.33 | % | 30,626 | 118 | 1.53 | % | 522 | 433 | 89 | |||||||||||||||||||||||
| Total interest earning assets | 1,680,269 | 16,984 | 4.01 | % | 1,639,257 | 15,766 | 3.82 | % | 1,218 | 356 | 862 | |||||||||||||||||||||||
| Non- interest earnings assets: | ||||||||||||||||||||||||||||||||||
| Cash and due from banks | 26,424 | 26,275 | ||||||||||||||||||||||||||||||||
| Premises and equipment, net | 25,382 | 27,130 | ||||||||||||||||||||||||||||||||
| Other assets | 54,968 | 53,568 | ||||||||||||||||||||||||||||||||
| Allowance for loan losses | (19,806 | ) | (15,660 | ) | ||||||||||||||||||||||||||||||
| AFS valuation allowance | (10,472 | ) | (2,954 | ) | ||||||||||||||||||||||||||||||
| Total assets | $ | 1,756,765 | $ | 1,727,616 | ||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||
| Interest-bearing checking | $ | 194,639 | $ | 224 | 0.46 | % | $ | 153,869 | $ | 37 | 0.10 | % | 187 | 12 | 175 | |||||||||||||||||||
| Savings and money market | 768,656 | 738 | 0.38 | % | 792,266 | 398 | 0.20 | % | 340 | (12 | ) | 352 | ||||||||||||||||||||||
| Time deposits | 147,327 | 394 | 1.06 | % | 121,472 | 101 | 0.33 | % | 293 | 26 | 267 | |||||||||||||||||||||||
| FHLB advances and repos | 4,327 | 39 | 3.58 | % | 40,034 | 244 | 2.42 | % | (205 | ) | (286 | ) | 81 | |||||||||||||||||||||
| Total int.-bearing liabilities | 1,114,949 | 1,395 | 0.50 | % | 1,107,641 | 780 | 0.28 | % | 615 | (260 | ) | 875 | ||||||||||||||||||||||
| Non-interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||
| Demand deposits | 466,007 | 448,783 | ||||||||||||||||||||||||||||||||
| Other liabilities | 16,777 | 16,425 | ||||||||||||||||||||||||||||||||
| Total liabilities | 1,597,733 | 1,572,849 | ||||||||||||||||||||||||||||||||
| Shareholders’ equity | 159,032 | 154,767 | ||||||||||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 1,756,765 | $ | 1,727,616 | ||||||||||||||||||||||||||||||
| Fully taxable equivalent net interest income | 15,589 | 14,986 | $ | 603 | $ | 616 | $ | (13 | ) | |||||||||||||||||||||||||
| Net interest rate spread (1) | 3.51 | % | 3.54 | % | ||||||||||||||||||||||||||||||
| Net interest margin, fully taxable equivalent (2) | 3.68 | % | 3.63 | % | ||||||||||||||||||||||||||||||
| Taxable equivalent adjustment | (105 | ) | (206 | ) | ||||||||||||||||||||||||||||||
| Net interest income | $ | 15,484 | $ | 14,780 | ||||||||||||||||||||||||||||||
| (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. | ||||||||||||||||||||||||||||||||||
| AVERAGE CONSOLIDATED BALANCE SHEETS & NET INTEREST INCOME ANALYSIS AND RATE/VOLUME ANALYSIS OF NET INTEREST INCOME | ||||||||||||||||||||||||||||||||||
| Chemung Financial Corporation | ||||||||||||||||||||||||||||||||||
| Average Consolidated Balance Sheets & Net Interest Income Analysis and Rate/Volume Analysis of Net Interest Income (Unaudited) | ||||||||||||||||||||||||||||||||||
| Twelve Months Ended December 31, 2018 |
Twelve Months Ended December 31, 2017 |
Twelve Months Ended December 31, 2018 vs. 2017 |
||||||||||||||||||||||||||||||||
| (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 | $ | 853,240 | $ | 39,166 | 4.59 | % | $ | 791,627 | $ | 34,596 | 4.37 | % | $ | 4,570 | $ | 2,775 | $ | 1,795 | ||||||||||||||||
| Mortgage loans | 191,668 | 7,197 | 3.75 | % | 198,783 | 7,541 | 3.79 | % | (344 | ) | (265 | ) | (79 | ) | ||||||||||||||||||||
| Consumer loans | 275,151 | 11,625 | 4.22 | % | 260,815 | 10,964 | 4.20 | % | 661 | 608 | 53 | |||||||||||||||||||||||
| Taxable securities | 234,407 | 4,815 | 2.05 | % | 270,168 | 5,510 | 2.04 | % | (695 | ) | (722 | ) | 27 | |||||||||||||||||||||
| Tax-exempt securities | 51,036 | 1,414 | 2.77 | % | 52,227 | 1,669 | 3.20 | % | (255 | ) | (37 | ) | (218 | ) | ||||||||||||||||||||
| Interest-earning deposits | 33,301 | 756 | 2.27 | % | 50,328 | 563 | 1.12 | % | 193 | (239 | ) | 432 | ||||||||||||||||||||||
| Total interest earning assets | 1,638,803 | 64,973 | 3.96 | % | 1,623,948 | 60,843 | 3.75 | % | 4,130 | 2,120 | 2,010 | |||||||||||||||||||||||
| Non-interest earnings assets: | ||||||||||||||||||||||||||||||||||
| Cash and due from banks | 27,122 | 25,663 | ||||||||||||||||||||||||||||||||
| Premises and equipment, net | 26,024 | 27,936 | ||||||||||||||||||||||||||||||||
| Other assets | 54,831 | 53,883 | ||||||||||||||||||||||||||||||||
| Allowance for loan losses | (20,534 | ) | (15,066 | ) | ||||||||||||||||||||||||||||||
| AFS valuation allowance | (9,254 | ) | (3,131 | ) | ||||||||||||||||||||||||||||||
| Total assets | $ | 1,716,992 | $ | 1,713,233 | ||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||
| Interest-bearing checking | $ | 156,432 | $ | 365 | 0.23 | % | $ | 146,999 | $ | 135 | 0.09 | % | $ | 230 | $ | 9 | $ | 221 | ||||||||||||||||
| Savings and money market | 764,420 | 2,044 | 0.27 | % | 800,070 | 1,566 | 0.20 | % | 478 | (72 | ) | 550 | ||||||||||||||||||||||
| Time deposits | 134,837 | 914 | 0.68 | % | 132,607 | 467 | 0.35 | % | 447 | 8 | 439 | |||||||||||||||||||||||
| FHLB advances and repos | 31,590 | 750 | 2.37 | % | 32,350 | 900 | 2.78 | % | (150 | ) | (20 | ) | (130 | ) | ||||||||||||||||||||
| Total int.-bearing liabilities | 1,087,279 | 4,073 | 0.37 | % | 1,112,026 | 3,068 | 0.28 | % | 1,005 | (75 | ) | 1,080 | ||||||||||||||||||||||
| Non-interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||
| Demand deposits | 459,969 | 434,781 | ||||||||||||||||||||||||||||||||
| Other liabilities | 15,951 | 15,197 | ||||||||||||||||||||||||||||||||
| Total liabilities | 1,563,199 | 1,562,004 | ||||||||||||||||||||||||||||||||
| Shareholders’ equity | 153,793 | 151,229 | ||||||||||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 1,716,992 | $ | 1,713,233 | ||||||||||||||||||||||||||||||
| Fully taxable equivalent net interest income | 60,900 | 57,775 | $ | 3,125 | $ | 2,195 | $ | 930 | ||||||||||||||||||||||||||
| Net interest rate spread (1) | 3.59 | % | 3.47 | % | ||||||||||||||||||||||||||||||
| Net interest margin, fully taxable equivalent (2) | 3.72 | % | 3.56 | % | ||||||||||||||||||||||||||||||
| Taxable equivalent adjustment | (420 | ) | (788 | ) | ||||||||||||||||||||||||||||||
| Net interest income | $ | 60,480 | $ | 56,987 | ||||||||||||||||||||||||||||||
| (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 | Twelve Months Ended | |||||||||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||||||
| (in thousands, except per share data) | 2018 | 2018 | 2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||
| NET INTEREST MARGIN – FULLY TAXABLE EQUIVALENT | ||||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 15,484 | $ | 15,079 | $ | 15,017 | $ | 14,900 | $ | 14,780 | $ | 60,480 | $ | 56,987 | ||||||||||||||
| Fully taxable equivalent adjustment | 105 | 99 | 106 | 110 | 206 | 420 | 788 | |||||||||||||||||||||
| Fully taxable equivalent net interest income (non-GAAP) | $ | 15,589 | $ | 15,178 | $ | 15,123 | $ | 15,010 | $ | 14,986 | $ | 60,900 | $ | 57,775 | ||||||||||||||
| Average interest-earning assets (GAAP) | $ | 1,680,269 | $ | 1,625,132 | $ | 1,625,591 | $ | 1,623,748 | $ | 1,639,257 | $ | 1,638,803 | $ | 1,623,948 | ||||||||||||||
| Net interest margin – fully taxable equivalent (non-GAAP) | 3.68 | % | 3.71 | % | 3.73 | % | 3.75 | % | 3.63 | % | 3.72 | % | 3.56 | % | ||||||||||||||
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.
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| As of or for the Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||||||
| (in thousands, except per share data) | 2018 | 2018 | 2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||
| EFFICIENCY RATIO | ||||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 15,484 | $ | 15,079 | $ | 15,017 | $ | 14,900 | $ | 14,780 | $ | 60,480 | $ | 56,987 | ||||||||||||||
| Fully taxable equivalent adjustment | 105 | 99 | 106 | 110 | 206 | 420 | 788 | |||||||||||||||||||||
| Fully taxable equivalent net interest income (non-GAAP) | $ | 15,589 | $ | 15,178 | $ | 15,123 | $ | 15,010 | $ | 14,986 | $ | 60,900 | $ | 57,775 | ||||||||||||||
| Non-interest income (GAAP) | $ | 4,893 | $ | 7,381 | $ | 5,325 | $ | 5,475 | $ | 5,456 | $ | 23,074 | $ | 20,491 | ||||||||||||||
| Less: changes in fair value of equity investments | – | (2,093 | ) | – | – | – | (2,093 | ) | – | |||||||||||||||||||
| Less: net (gains) losses on security transactions | – | – | – | – | (97 | ) | – | (109 | ) | |||||||||||||||||||
| Adjusted non-interest income (non-GAAP) | $ | 4,893 | $ | 5,288 | $ | 5,325 | $ | 5,475 | $ | 5,359 | $ | 20,981 | $ | 20,382 | ||||||||||||||
| Non-interest expense (GAAP) | $ | 14,205 | $ | 13,428 | $ | 14,967 | $ | 14,166 | $ | 13,111 | $ | 56,766 | $ | 53,764 | ||||||||||||||
| Less: amortization of intangible assets | (176 | ) | (182 | ) | (182 | ) | (194 | ) | (207 | ) | (734 | ) | (860 | ) | ||||||||||||||
| Less: legal reserve | – | – | (989 | ) | – | – | (989 | ) | (850 | ) | ||||||||||||||||||
| Adjusted non-interest expense (non-GAAP) | $ | 14,029 | $ | 13,246 | $ | 13,796 | $ | 13,972 | $ | 12,904 | $ | 55,043 | $ | 52,054 | ||||||||||||||
| Efficiency ratio (unadjusted) | 69.71 | % | 59.79 | % | 73.58 | % | 69.53 | % | 64.79 | % | 67.94 | % | 69.39 | % | ||||||||||||||
| Efficiency ratio (adjusted) | 68.49 | % | 64.72 | % | 67.47 | % | 68.21 | % | 63.43 | % | 67.22 | % | 66.60 | % | ||||||||||||||
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 | Twelve Months Ended | |||||||||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||||||
| (in thousands, except per share and ratio data) | 2018 | 2018 | 2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||
| TANGIBLE EQUITY AND TANGIBLE ASSETS | ||||||||||||||||||||||||||||
| (PERIOD END) | ||||||||||||||||||||||||||||
| Total shareholders’ equity (GAAP) | $ | 165,029 | $ | 156,499 | $ | 151,780 | $ | 150,262 | $ | 149,813 | $ | 165,029 | $ | 149,813 | ||||||||||||||
| Less: intangible assets | (23,175 | ) | (23,351 | ) | (23,533 | ) | (23,715 | ) | (23,909 | ) | (23,175 | ) | (23,909 | ) | ||||||||||||||
| Tangible equity (non-GAAP) | $ | 141,854 | $ | 133,148 | $ | 128,247 | $ | 126,547 | $ | 125,904 | $ | 141,854 | $ | 125,904 | ||||||||||||||
| Total assets (GAAP) | $ | 1,755,343 | $ | 1,753,864 | $ | 1,710,166 | $ | 1,699,954 | $ | 1,707,620 | $ | 1,755,343 | $ | 1,707,620 | ||||||||||||||
| Less: intangible assets | (23,175 | ) | (23,351 | ) | (23,533 | ) | (23,715 | ) | (23,909 | ) | (23,175 | ) | (23,909 | ) | ||||||||||||||
| Tangible assets (non-GAAP) | $ | 1,732,168 | $ | 1,730,513 | $ | 1,686,633 | $ | 1,676,239 | $ | 1,683,711 | $ | 1,732,168 | $ | 1,683,711 | ||||||||||||||
| Total equity to total assets at end of period (GAAP) | 9.40 | % | 8.92 | % | 8.88 | % | 8.84 | % | 8.77 | % | 9.40 | % | 8.77 | % | ||||||||||||||
| Book value per share (GAAP) | $ | 33.99 | $ | 32.35 | $ | 31.42 | $ | 31.16 | $ | 31.10 | $ | 33.99 | $ | 31.10 | ||||||||||||||
| Tangible equity to tangible assets at end of period (non-GAAP) | 8.19 | % | 7.69 | % | 7.60 | % | 7.55 | % | 7.48 | % | 8.19 | % | 7.48 | % | ||||||||||||||
| Tangible book value per share (non-GAAP) | $ | 29.22 | $ | 27.53 | $ | 26.55 | $ | 26.24 | $ | 26.14 | $ | 29.22 | $ | 26.14 | ||||||||||||||
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.
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| As of or for the Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||||||
| (in thousands, except ratio data) | 2018 | 2018 | 2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||
| TANGIBLE EQUITY (AVERAGE) | ||||||||||||||||||||||||||||
| Total average shareholders’ equity (GAAP) | $ | 159,032 | $ | 154,331 | $ | 151,216 | $ | 150,495 | $ | 154,767 | $ | 153,793 | $ | 151,229 | ||||||||||||||
| Less: average intangible assets | (23,266 | ) | (23,440 | ) | (23,625 | ) | (23,830 | ) | (24,008 | ) | (23,537 | ) | (24,327 | ) | ||||||||||||||
| Average tangible equity (non-GAAP) | $ | 135,766 | $ | 130,891 | $ | 127,591 | $ | 126,665 | $ | 130,759 | $ | 130,256 | $ | 126,902 | ||||||||||||||
| Return on average equity (GAAP) | 14.29 | % | 17.81 | % | 6.70 | % | 11.96 | % | (5.53 | )% | 12.76 | % | 4.91 | % | ||||||||||||||
| Return on average tangible equity (non-GAAP) | 16.74 | % | 21.01 | % | 7.94 | % | 14.21 | % | (6.55 | )% | 15.07 | % | 5.85 | % | ||||||||||||||
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.
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| As of or for the Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||||||
| (in thousands, except per share and ratio data) | 2018 | 2018 | 2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||
| NON-GAAP NET INCOME | ||||||||||||||||||||||||||||
| Reported net income (GAAP) | $ | 5,730 | $ | 6,930 | $ | 2,527 | $ | 4,439 | $ | (2,159 | ) | $ | 19,626 | $ | 7,430 | |||||||||||||
| Net changes in fair value of investments (net of tax) | – | (1,559 | ) | – | – | – | (1,559 | ) | – | |||||||||||||||||||
| Net (gains) losses on security transactions (net of tax) | – | – | – | – | (60 | ) | – | (68 | ) | |||||||||||||||||||
| Legal reserve (net of tax) | – | – | 737 | – | – | 737 | 528 | |||||||||||||||||||||
| Revaluation of net deferred tax asset | (445 | ) | – | – | – | 2,927 | (445 | ) | 2,927 | |||||||||||||||||||
| Net income (non-GAAP) | $ | 5,285 | $ | 5,371 | $ | 3,264 | $ | 4,439 | $ | 708 | $ | 18,359 | $ | 10,817 | ||||||||||||||
| Average basic and diluted shares outstanding | 4,843 | 4,834 | 4,828 | 4,822 | 4,809 | 4,832 | 4,800 | |||||||||||||||||||||
| Reported basic and diluted earnings per share (GAAP) | $ | 1.18 | $ | 1.43 | $ | 0.52 | $ | 0.92 | $ | (0.45 | ) | $ | 4.06 | $ | 1.55 | |||||||||||||
| Reported return on average assets (GAAP) | 1.29 | % | 1.61 | % | 0.59 | % | 1.06 | % | (0.50 | )% | 1.14 | % | 0.43 | % | ||||||||||||||
| Reported return on average equity (GAAP) | 14.29 | % | 17.81 | % | 6.70 | % | 11.96 | % | (5.53 | )% | 12.76 | % | 4.91 | % | ||||||||||||||
| Basic and diluted earnings per share (non-GAAP) | $ | 1.09 | $ | 1.11 | $ | 0.68 | $ | 0.92 | $ | 0.15 | $ | 3.80 | $ | 2.25 | ||||||||||||||
| Return on average assets (non-GAAP) | 1.19 | % | 1.25 | % | 0.77 | % | 1.06 | % | 0.16 | % | 1.07 | % | 0.63 | % | ||||||||||||||
| Return on average equity (non-GAAP) | 13.18 | % | 13.81 | % | 8.66 | % | 11.96 | % | 1.81 | % | 11.94 | % | 7.15 | % | ||||||||||||||
For further information contact:
Karl F. Krebs, EVP and CFO
[email protected]
Phone: 607-737-3714
