UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
|
|||||
[X]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
||||
For Quarterly period ended June 30, 2011
|
|||||
Or
|
|||||
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
||||
Commission File No. 0-13888
|
|||||
CHEMUNG FINANCIAL CORPORATION
|
|||||
(Exact name of registrant as specified in its charter)
|
|||||
New York
|
16-1237038
|
||||
(State or other jurisdiction of incorporation or organization)
|
I.R.S. Employer Identification No.
|
||||
One Chemung Canal Plaza, P.O. Box 1522, Elmira, NY
|
14902
|
||||
(Address of principal executive offices)
|
(Zip Code)
|
||||
(607) 737-3711 or (800) 836-3711
|
|||||
(Registrant's telephone number, including area code)
|
|||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
|
|||||
YES: X NO:____
|
|||||
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
|
|||||
YES: X NO:____
|
|||||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
|
|||||
Large accelerated filer
|
[ ]
|
Non-accelerated filer
|
[ ]
|
||
Accelerated filer
|
[ ]
|
Smaller reporting company
|
[X]
|
||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):
|
|||||
YES: NO: X
|
|||||
The number of shares of the registrant's common stock, $.01 par value, outstanding on July 29, 2011 was 4,573,695.
|
PART I.
|
FINANCIAL INFORMATION
|
PAGE
|
Item 1:
|
Financial Statements - Unaudited
|
|
3
|
||
4
|
||
5
|
||
6
|
||
8
|
||
Item 2:
|
37
|
|
Item 3:
|
52
|
|
Item 4:
|
52
|
|
PART II.
|
OTHER INFORMATION
|
53
|
Item 1A:
|
Risk Factors
|
53
|
Item 2:
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
53
|
Item 6:
|
Exhibits
|
53
|
SIGNATURES
|
54
|
|
INDEX TO EXHIBITS
|
JUNE 30,
2011
|
DECEMBER, 31, 2010
|
|||||||
ASSETS
|
||||||||
Cash and due from financial institutions
|
$
|
27,787,395
|
$
|
16,540,095
|
||||
Interest-bearing deposits in other financial institutions
|
56,156,424
|
44,079,682
|
||||||
Total cash and cash equivalents
|
83,943,819
|
60,619,777
|
||||||
Securities available for sale, at estimated fair value
|
284,133,730
|
223,544,961
|
||||||
Securities held to maturity, estimated fair value of $8,792,461
at June 30, 2011 and $8,297,392 at December 31, 2010
|
8,040,872
|
7,715,123
|
||||||
Federal Home Loan Bank and Federal Reserve Bank Stock, at cost
|
4,723,750
|
3,328,900
|
||||||
Loans, net of deferred origination fees and costs, and unearned income
|
788,720,027
|
613,684,369
|
||||||
Allowance for loan losses
|
(9,755,672
|
)
|
(9,498,131
|
)
|
||||
Loans, net
|
778,964,355
|
604,186,238
|
||||||
Loans held for sale
|
351,055
|
486,997
|
||||||
Premises and equipment, net
|
24,344,587
|
24,192,593
|
||||||
Goodwill
|
22,551,090
|
9,872,375
|
||||||
Other intangible assets, net
|
6,766,541
|
4,655,900
|
||||||
Bank owned life insurance
|
2,580,326
|
2,536,715
|
||||||
Other assets
|
20,635,998
|
17,187,706
|
||||||
Total assets
|
$
|
1,237,036,123
|
$
|
958,327,285
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Deposits:
|
||||||||
Non-interest-bearing
|
$
|
245,273,828
|
$
|
197,322,036
|
||||
Interest-bearing
|
768,688,273
|
589,036,816
|
||||||
Total deposits
|
1,013,962,101
|
786,358,852
|
||||||
Securities sold under agreements to repurchase
|
42,218,485
|
44,774,615
|
||||||
Federal Home Loan Bank term advances
|
44,096,181
|
20,000,000
|
||||||
Accrued interest payable
|
927,459
|
784,351
|
||||||
Dividends payable
|
1,141,977
|
881,203
|
||||||
Other liabilities
|
8,130,029
|
8,119,701
|
||||||
Total liabilities
|
1,110,476,232
|
860,918,722
|
||||||
Shareholders' equity:
|
||||||||
Common stock, $.01 par value per share, 10,000,000 shares authorized;
5,310,076 issued at June 30, 2011 and 4,300,134 issued at December 31, 2010
|
53,101
|
43,001
|
||||||
Additional-paid-in capital
|
45,718,649
|
22,022,122
|
||||||
Retained earnings
|
96,659,359
|
94,407,620
|
||||||
Treasury stock, at cost (741,281 shares at June 30, 2011;
749,880 shares at December 31, 2010)
|
(18,929,935
|
)
|
(19,166,655
|
)
|
||||
Accumulated other comprehensive income (loss)
|
3,058,717
|
102,475
|
||||||
Total shareholders' equity
|
126,559,891
|
97,408,563
|
||||||
Total liabilities and shareholders' equity
|
$
|
1,237,036,123
|
$
|
958,327,285
|
||||
See accompanying notes to unaudited consolidated financial statements.
|
Six Months Ended
|
Three Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
June 30,
|
June 30,
|
|||||||||||||
INTEREST AND DIVIDEND INCOME
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Loans, including fees
|
$
|
19,783,190
|
$
|
17,670,421
|
$
|
11,207,847
|
$
|
8,845,646
|
||||||||
Taxable securities
|
2,843,016
|
3,412,987
|
1,594,432
|
1,709,419
|
||||||||||||
Tax exempt securities
|
684,511
|
588,021
|
369,088
|
295,701
|
||||||||||||
Interest-bearing deposits
|
101,816
|
82,275
|
62,088
|
34,527
|
||||||||||||
Total interest and dividend income
|
23,412,533
|
21,753,704
|
13,233,455
|
10,885,293
|
||||||||||||
INTEREST EXPENSE
|
||||||||||||||||
Deposits
|
2,187,770
|
3,116,766
|
1,160,405
|
1,452,046
|
||||||||||||
Borrowed funds
|
497,938
|
471,597
|
263,513
|
237,172
|
||||||||||||
Securities sold under agreements to repurchase
|
729,553
|
874,333
|
358,454
|
417,553
|
||||||||||||
Total interest expense
|
3,415,261
|
4,462,696
|
1,782,372
|
2,106,771
|
||||||||||||
Net interest income
|
19,997,272
|
17,291,008
|
11,451,083
|
8,778,522
|
||||||||||||
Provision for loan losses
|
250,000
|
750,000
|
125,000
|
375,000
|
||||||||||||
Net interest income after provision for loan losses
|
19,747,272
|
16,541,008
|
11,326,083
|
8,403,522
|
||||||||||||
Other operating income:
|
||||||||||||||||
Trust & investment services income
|
3,384,160
|
4,073,209
|
1,768,469
|
1,984,942
|
||||||||||||
Service charges on deposit accounts
|
2,049,909
|
2,321,862
|
1,066,831
|
1,128,384
|
||||||||||||
Net gain on securities transactions
|
679,209
|
451,094
|
485,811
|
451,094
|
||||||||||||
Other-than-temporary loss on investment securities:
|
||||||||||||||||
Total impairment losses
|
-
|
(336,625
|
)
|
-
|
(76,100
|
)
|
||||||||||
Loss recognized in other comprehensive income
|
-
|
-
|
-
|
-
|
||||||||||||
Net impairment loss recognized in earnings
|
-
|
(336,625
|
)
|
-
|
(76,100
|
)
|
||||||||||
Net gain on sales of loans held for sale
|
79,332
|
133,565
|
32,400
|
82,077
|
||||||||||||
Credit card merchant earnings
|
105,063
|
99,170
|
54,619
|
51,294
|
||||||||||||
Gains on sales of other real estate owned
|
88,961
|
33,550
|
88,961
|
33,550
|
||||||||||||
Income from bank owned life insurance
|
43,611
|
43,138
|
22,024
|
21,801
|
||||||||||||
Other
|
2,661,305
|
1,840,795
|
1,224,942
|
988,107
|
||||||||||||
Total other operating income
|
9,091,550
|
8,659,758
|
4,744,057
|
4,665,149
|
||||||||||||
Other operating expenses:
|
||||||||||||||||
Salaries and wages
|
8,261,602
|
7,593,955
|
4,338,097
|
3,759,735
|
||||||||||||
Pension and other employee benefits
|
2,124,770
|
2,018,554
|
1,081,663
|
984,287
|
||||||||||||
Net occupancy expenses
|
2,432,515
|
2,206,501
|
1,258,473
|
1,084,739
|
||||||||||||
Furniture and equipment expenses
|
1,062,530
|
975,768
|
565,083
|
513,169
|
||||||||||||
Data processing expense
|
1,905,099
|
1,635,006
|
1,043,286
|
832,131
|
||||||||||||
Amortization of intangible assets
|
465,192
|
370,168
|
288,689
|
181,051
|
||||||||||||
Losses on sales of other real estate owned
|
1,671
|
25,557
|
-
|
25,557
|
||||||||||||
Other real estate owned expenses
|
48,491
|
192,840
|
21,268
|
109,934
|
||||||||||||
FDIC insurance
|
442,385
|
625,353
|
189,989
|
320,045
|
||||||||||||
Merger related expenses
|
2,223,419
|
-
|
1,187,347
|
-
|
||||||||||||
Other
|
3,676,924
|
3,016,827
|
2,227,065
|
1,604,083
|
||||||||||||
Total other operating expenses
|
22,644,598
|
18,660,529
|
12,200,960
|
9,414,731
|
||||||||||||
Income before income tax expense
|
6,194,224
|
6,540,237
|
3,869,180
|
3,653,940
|
||||||||||||
Income tax expense
|
1,909,105
|
2,037,041
|
1,249,076
|
1,150,931
|
||||||||||||
Net income
|
$
|
4,285,119
|
$
|
4,503,196
|
$
|
2,620,104
|
$
|
2,503,009
|
||||||||
Weighted average shares outstanding
|
4,127,969
|
3,605,614
|
4,631,504
|
3,604,780
|
||||||||||||
Basic and diluted earnings per share
|
$
|
1.04
|
$
|
1.25
|
$
|
0.57
|
$
|
0.69
|
||||||||
See accompanying notes to unaudited consolidated financial statements.
|
Common Stock
|
Additional Paid-in Capital
|
Retained Earnings
|
Treasury Stock
|
Accumulated Other Comprehensive Income (Loss)
|
Total
|
|||||||||||||||||||
Balances at January 1, 2010
|
$
|
43,001
|
$
|
22,806,829
|
$
|
87,826,331
|
$
|
(20,024,661
|
)
|
$
|
(565,835
|
)
|
$
|
90,085,665
|
||||||||||
Comprehensive Income:
|
||||||||||||||||||||||||
Net income
|
-
|
-
|
4,503,196
|
-
|
-
|
4,503,196
|
||||||||||||||||||
Change in unrealized gains(losses) on securities AFS, net
|
-
|
-
|
-
|
-
|
1,806,092
|
1,806,092
|
||||||||||||||||||
Change in funded status of Employers' Accounting for Defined Benefit Pension and Other Benefit Plans, net
|
-
|
-
|
-
|
-
|
216,496
|
216,496
|
||||||||||||||||||
Total comprehensive income
|
-
|
-
|
-
|
-
|
-
|
6,525,784
|
||||||||||||||||||
Restricted stock units for directors' deferred compensation plan
|
-
|
55,782
|
-
|
-
|
-
|
55,782
|
||||||||||||||||||
Cash dividends declared ($.50 per share)
|
-
|
-
|
(1,761,150
|
)
|
-
|
-
|
(1,761,150
|
)
|
||||||||||||||||
Distribution of 10,082 shares of treasury stock for director's compensation
|
-
|
(44,677
|
)
|
-
|
258,906
|
-
|
214,229
|
|||||||||||||||||
Distribution of 2,750 shares of treasury stock for employee compensation
|
-
|
(15,537
|
)
|
-
|
70,537
|
-
|
55,000
|
|||||||||||||||||
Purchase of 15,480 shares of treasury stock
|
-
|
-
|
-
|
(323,885
|
)
|
-
|
(323,885
|
)
|
||||||||||||||||
Balances at June 30, 2010
|
$
|
43,001
|
$
|
22,802,397
|
$
|
90,568,377
|
$
|
(20,019,103
|
)
|
$
|
1,456,756
|
$
|
94,851,425
|
|||||||||||
Balances at January 1, 2011
|
$
|
43,001
|
$
|
22,022,122
|
$
|
94,407,620
|
$
|
(19,166,655
|
)
|
$
|
102,475
|
$
|
97,408,563
|
|||||||||||
Comprehensive Income:
|
||||||||||||||||||||||||
Net income
|
-
|
-
|
4,285,119
|
-
|
-
|
4,285,119
|
||||||||||||||||||
Change in unrealized gains (losses) on securities AFS, net
|
-
|
-
|
-
|
-
|
2,766,538
|
2,766,538
|
||||||||||||||||||
Change in funded status of Employers' Accounting for Defined Benefit Pension and Other Benefit Plans, net
|
-
|
-
|
-
|
-
|
189,704
|
189,704
|
||||||||||||||||||
Total comprehensive income (loss)
|
-
|
-
|
-
|
-
|
-
|
7,241,361
|
||||||||||||||||||
Restricted stock awards
|
-
|
12,660
|
-
|
-
|
-
|
12,660
|
||||||||||||||||||
Restricted stock units for directors' deferred compensation plan
|
-
|
42,924
|
-
|
-
|
-
|
42,924
|
||||||||||||||||||
Cash dividends declared ($.50 per share)
|
-
|
-
|
(2,033,380
|
)
|
-
|
-
|
(2,033,380
|
)
|
||||||||||||||||
Distribution of 10,378 shares of treasury stock for directors' compensation
|
-
|
(33,831
|
)
|
-
|
265,262
|
-
|
231,431
|
|||||||||||||||||
Distribution of 2,392 shares of treasury stock for employee compensation
|
-
|
(6,140
|
)
|
-
|
61,140
|
-
|
55,000
|
|||||||||||||||||
Distribution of 286 shares of treasury stock for director’s deferred Compensation
|
-
|
(7,364
|
)
|
-
|
7,310
|
-
|
(54
|
)
|
||||||||||||||||
Distribution of 3,387 shares of treasury stock for employee
restricted stock warrants
|
-
|
(35,260
|
)
|
-
|
86,550
|
-
|
51,290
|
|||||||||||||||||
Purchase of 7,844 shares of treasury stock
|
-
|
-
|
-
|
(183,542
|
)
|
-
|
(183,542
|
)
|
||||||||||||||||
Issuance of 1,009,942 shares related to FOFC Merger
|
10,100
|
23,723,538
|
-
|
-
|
-
|
23,733,638
|
||||||||||||||||||
Balances at June 30, 2011
|
$
|
53,101
|
$
|
45,718,649
|
$
|
96,659,359
|
$
|
(18,929,935
|
)
|
$
|
3,058,717
|
$
|
126,559,891
|
|||||||||||
See accompanying notes to unaudited consolidated financial statements.
|
Six Months Ended
|
||||||||
June 30,
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
2011
|
2010
|
||||||
Net income
|
$
|
4,285,119
|
$
|
4,503,196
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Amortization of intangible assets
|
465,192
|
370,168
|
||||||
Provision for loan losses
|
250,000
|
750,000
|
||||||
Depreciation and amortization of fixed assets
|
1,450,227
|
1,395,291
|
||||||
Amortization of premiums on securities, net
|
557,177
|
329,895
|
||||||
Gains on sales of loans held for sale, net
|
(79,332
|
)
|
(133,565
|
)
|
||||
Proceeds from sales of loans held for sale
|
3,480,239
|
4,503,070
|
||||||
Loans originated and held for sale
|
(3,264,965
|
)
|
(4,267,369
|
)
|
||||
Net gain on sale of other real estate owned
|
(87,290
|
)
|
(7,993
|
)
|
||||
Net gains on securities transactions
|
(679,209
|
)
|
(451,094
|
)
|
||||
Net impairment loss recognized on investment securities
|
-
|
336,625
|
||||||
Decrease (increase) in other assets
|
3,654,987
|
(500,904
|
)
|
|||||
(Increase) decrease in prepaid FDIC assessment
|
(323,836
|
)
|
561,758
|
|||||
Decrease in accrued interest payable
|
(160,511
|
)
|
(167,114
|
)
|
||||
Expense related to restricted stock units for directors' deferred compensation plan
|
42,924
|
55,782
|
||||||
Expense related to employee stock compensation
|
55,000
|
55,000
|
||||||
Expense related to employee stock awards
|
12,660
|
-
|
||||||
Decrease in other liabilities
|
(2,255,146
|
)
|
(2,276,730
|
)
|
||||
Income from bank owned life insurance
|
(43,611
|
)
|
(43,138
|
)
|
||||
Proceeds from sales of student loans
|
-
|
137,509
|
||||||
Net cash provided by operating activities
|
7,359,625
|
5,150,387
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Proceeds from sales and calls of securities available for sale
|
56,656,054
|
30,440,459
|
||||||
Proceeds from maturities and principal collected on securities available for sale
|
14,554,015
|
40,300,934
|
||||||
Proceeds from maturities and principal collected on securities held to maturity
|
2,579,275
|
7,712,800
|
||||||
Purchases of securities available for sale
|
(80,994,140
|
)
|
(99,052,056
|
)
|
||||
Purchases of securities held to maturity
|
(2,905,024
|
)
|
(4,865,041
|
)
|
||||
Purchase of Federal Home Loan Bank and Federal Reserve Bank stock
|
(45,000
|
)
|
(58,200
|
)
|
||||
Redemption of Federal Home Loan Bank and Federal Reserve Bank stock
|
228,450
|
-
|
||||||
Purchases of premises and equipment
|
(722,734
|
)
|
(704,672
|
)
|
||||
Cash paid Fort Orange Financial Corp. acquisition
|
(8,137,816
|
)
|
-
|
|||||
Cash received Fort Orange Financial Corp. acquisition
|
33,284,995
|
-
|
||||||
Proceeds from sale of other real estate owned
|
323,143
|
228,528
|
||||||
Net (increase) decrease in loans
|
(10,752,681
|
)
|
6,206,890
|
|||||
Net cash provided (used) by investing activities
|
4,068,537
|
(19,790,358
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Net increase in demand deposits, NOW accounts, savings accounts,
and insured money market accounts
|
29,819,077
|
39,673,352
|
||||||
Net decrease in time deposits and individual retirement accounts
|
(2,684,163
|
)
|
(8,299,471
|
)
|
||||
Net decrease in securities sold under agreements to repurchase
|
(13,124,903
|
)
|
(8,975,159
|
)
|
||||
Net decrease in Federal Home Loan Bank long term advances
|
(157,983
|
)
|
-
|
|||||
Purchase of treasury stock
|
(183,542
|
)
|
(323,885
|
)
|
||||
Cash dividends paid
|
(1,772,606
|
)
|
(1,761,812
|
)
|
||||
Net cash provided by financing activities
|
11,895,880
|
20,313,025
|
||||||
Net increase in cash and cash equivalents
|
23,324,042
|
5,673,054
|
||||||
Cash and cash equivalents, beginning of period
|
60,619,777
|
79,738,396
|
||||||
Cash and cash equivalents, end of period
|
$
|
83,943,819
|
$
|
85,411,450
|
||||
See accompanying notes to unaudited consolidated financial statements.
|
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid during the year for:
|
||||||||
Interest
|
$
|
3,272,153
|
$
|
4,629,810
|
||||
Income Taxes
|
$
|
2,204,866
|
$
|
3,225,675
|
||||
Supplemental disclosure of non-cash activity:
|
||||||||
Transfer of loans to other real estate owned
|
$
|
32,621
|
$
|
517,646
|
||||
See accompanying notes to unaudited consolidated financial statements.
|
Fair Value Measurement at June 30, 2011
Using
|
||||||||||||||||
Financial Assets:
|
Fair Value
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
||||||||||||
Obligations of U.S. Government and U.S. Government sponsored enterprises
|
$
|
138,564,924
|
$
|
40,993,000
|
$
|
97,571,924
|
$
|
-
|
||||||||
Mortgage-backed securities, residential
|
61,853,786
|
-
|
61,853,786
|
-
|
||||||||||||
Obligations of states and political subdivisions
|
48,602,858
|
-
|
48,602,858
|
-
|
||||||||||||
Trust Preferred securities
|
2,395,329
|
-
|
2,023,594
|
371,735
|
||||||||||||
Corporate bonds and notes
|
14,625,858
|
-
|
14,625,858
|
-
|
||||||||||||
CMO’s
|
9,205,469
|
-
|
9,205,469
|
-
|
||||||||||||
SBA Pool’s
|
2,370,423
|
-
|
2,370,423
|
-
|
||||||||||||
Corporate stocks
|
6,515,083
|
5,830,663
|
684,420
|
-
|
||||||||||||
Total available for sale securities
|
$
|
284,133,730
|
$
|
46,823,663
|
$
|
236,938,332
|
$
|
371,735
|
Fair Value Measurement at December 31, 2010 Using
|
||||||||||||||||
Financial Assets:
|
Fair Value
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
||||||||||||
Obligations of U.S. Government and U.S. Government sponsored enterprises
|
$
|
102,131,517
|
$
|
40,581,250
|
$
|
61,550,267
|
$
|
-
|
||||||||
Mortgage-backed securities, residential
|
62,761,633
|
-
|
62,761,633
|
-
|
||||||||||||
Obligations of states and political subdivisions
|
38,765,092
|
-
|
38,765,092
|
-
|
||||||||||||
Trust Preferred securities
|
2,344,094
|
-
|
2,009,509
|
334,585
|
||||||||||||
Corporate bonds and notes
|
11,694,190
|
-
|
11,694,190
|
-
|
||||||||||||
Corporate stocks
|
5,848,435
|
5,209,069
|
639,366
|
-
|
||||||||||||
Total available for sale securities
|
$
|
223,544,961
|
$
|
45,790,319
|
$
|
177,420,057
|
$
|
334,585
|
Fair Value Measurement six-months ended June 30, 2011 Using Significant Unobservable Inputs (Level 3)
|
Fair Value Measurement six-months ended June 30, 2010 Using Significant Unobservable Inputs (Level 3)
|
|||||||
Investment Securities Available for Sale
|
||||||||
Beginning balance
|
$
|
334,585
|
$
|
511,480
|
||||
Total gains/losses (realized/unrealized):
|
||||||||
Included in earnings:
|
||||||||
Income on securities
|
-
|
-
|
||||||
Impairment charge on investment securities
|
-
|
(336,625
|
)
|
|||||
Included in other comprehensive income
|
37,150
|
223,100
|
||||||
Transfers in and/or out of Level 3
|
-
|
-
|
||||||
Ending balance June 30
|
$
|
371,735
|
$
|
397,955
|
Fair Value Measurement at June 30, 2011
Using
|
||||||||||||||||
Financial Assets:
|
Fair Value
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
||||||||||||
Impaired Loans
|
||||||||||||||||
Commercial, financial and agricultural:
|
||||||||||||||||
Commercial and industrial
|
$
|
3,130,000
|
$
|
-
|
$
|
-
|
$
|
3,130,000
|
||||||||
Commercial mortgages:
|
||||||||||||||||
Construction
|
-
|
-
|
-
|
-
|
||||||||||||
Other
|
400,736
|
-
|
-
|
400,736
|
||||||||||||
Total Impaired Loans
|
$
|
3,530,736
|
$
|
-
|
$
|
-
|
$
|
3,530,736
|
||||||||
Other real estate owned, net
|
$
|
429,861
|
$
|
-
|
$
|
-
|
$
|
429,861
|
Fair Value Measurement at December 31, 2010
Using
|
||||||||||||||||
Financial Assets:
|
Fair Value
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
||||||||||||
Impaired Loans:
|
||||||||||||||||
Commercial mortgages:
|
||||||||||||||||
Construction
|
$
|
72,211
|
$
|
-
|
$
|
-
|
$
|
72,211
|
||||||||
Other
|
580,329
|
-
|
-
|
580,329
|
||||||||||||
Total Impaired Loans
|
$
|
652,540
|
$
|
-
|
$
|
-
|
$
|
652,540
|
||||||||
Other real estate owned, net
|
$
|
740,620
|
$
|
-
|
$
|
-
|
$
|
740,620
|
(dollars in thousands)
|
June 30, 2011
|
December 31, 2010
|
||||||||||||||
Financial assets:
|
Carrying
Amount
|
Estimated
Fair Value
(1)
|
Carrying
Amount
|
Estimated
Fair Value
(1)
|
||||||||||||
Cash and due from financial institutions
|
$
|
27,787
|
$
|
27,787
|
$
|
16,540
|
$
|
16,540
|
||||||||
Interest-bearing deposits in other financial institutions
|
56,156
|
56,156
|
44,080
|
44,080
|
||||||||||||
Securities available for sale
|
284,134
|
284,134
|
223,545
|
223,545
|
||||||||||||
Securities held to maturity
|
8,041
|
8,792
|
7,715
|
8,297
|
||||||||||||
Federal Home Loan and Federal Reserve Bank stock
|
4,724
|
N/A
|
3,329
|
N/A
|
||||||||||||
Net loans
|
778,964
|
796,374
|
604,186
|
618,859
|
||||||||||||
Loans held for sale
|
351
|
351
|
487
|
487
|
||||||||||||
Accrued interest receivable
|
3,775
|
3,775
|
2,713
|
2,713
|
||||||||||||
Financial liabilities:
|
||||||||||||||||
Deposits:
|
||||||||||||||||
Demand, savings, and insured money market accounts
|
696,077
|
696,077
|
532,555
|
532,555
|
||||||||||||
Time deposits
|
317,885
|
320,824
|
253,804
|
256,281
|
||||||||||||
Securities sold under agreements to repurchase
|
42,218
|
44,216
|
44,775
|
46,667
|
||||||||||||
Federal Home Loan Bank advances
|
44,096
|
46,891
|
20,000
|
21,609
|
||||||||||||
Accrued interest payable
|
927
|
927
|
784
|
784
|
||||||||||||
Dividends payable
|
1,142
|
1,142
|
881
|
881
|
||||||||||||
(1) Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
|
2011
|
2010
|
|||||||
Beginning of year
|
$
|
9,872,375
|
$
|
9,872,375
|
||||
Acquired goodwill
|
12,678,715
|
-
|
||||||
June 30,
|
$
|
22,551,090
|
$
|
9,872,375
|
At June 30, 2011
|
At December 31, 2010
|
|||||||||||||||
Balance Acquired
|
Accumulated Amortization
|
Balance Acquired
|
Accumulated Amortization
|
|||||||||||||
Core deposit intangibles
|
$
|
3,819,798
|
$
|
887,305
|
$
|
1,174,272
|
$
|
674,141
|
||||||||
Other customer relationship intangibles
|
6,063,423
|
2,229,375
|
6,133,116
|
1,977,347
|
||||||||||||
Total
|
$
|
9,883,221
|
$
|
3,116,680
|
$
|
7,307,388
|
$
|
2,651,488
|
Year
|
Estimated Expense
|
|||
2011
|
$
|
576,001
|
||
2012
|
1,046,720
|
|||
2013
|
876,524
|
|||
2014
|
777,801
|
|||
2015
|
681,176
|
|||
2016 and thereafter
|
2,808,319
|
|||
Total
|
$
|
6,766,541
|
Reconciliation of Shares Outstanding
|
||||
FOFC shares outstanding at April 8, 2011
|
3,771,425
|
|||
Percentage of stock consideration
|
75
|
%
|
||
FOFC shares exchanged for stock
|
2,828,569
|
|||
Exchange Ratio
|
0.3571
|
|||
Chemung Financial shares issued to FOFC shareholders (excludes fractional shares)
|
1,009,942
|
|||
Chemung Financial shares outstanding April 8, 2011
|
3,565,610
|
|||
Total Chemung Financial Shares at April 8, 2011 following the consummation of the transaction
|
4,575,552
|
|||
Ownership % held by FOFC shareholders
|
22
|
%
|
||
Ownership % held by legacy Chemung Financial shareholders
|
78
|
%
|
Purchase Price Consideration (dollar amounts in thousands, except per share data)
|
||||
FOFC shares outstanding at April 8, 2011
|
3,771,425
|
|||
Percentage of stock consideration
|
75
|
%
|
||
FOFC shares exchanged for stock
|
2,828,569
|
|||
Exchange Ratio
|
0.3571
|
|||
Chemung Financial shares issued to FOFC shareholders (excludes fractional shares)
|
1,009,942
|
|||
Purchase price per Chemung Financial common share
|
$
|
23.50
|
||
Total stock consideration paid
|
$
|
23,734
|
||
Total cash consideration paid
|
6,939
|
|||
Cash paid for fractional shares
|
3
|
|||
Cash paid for the settlement of FOFC stock options
|
545
|
|||
Cash paid for severance payments
|
650
|
|||
Total consideration paid
|
$
|
31,871
|
Total Purchase Price
|
$
|
31,871
|
||||||
Net assets acquired:
|
||||||||
Cash and due from banks
|
$
|
33,285
|
||||||
Securities available for sale
|
46,525
|
|||||||
Federal Home Loan Bank Stock
|
1,578
|
|||||||
Loans
|
164,243
|
|||||||
Accrued Interest Receivable
|
864
|
|||||||
Premises and equipment
|
879
|
|||||||
Core deposit intangible
|
2,646
|
|||||||
Deferred tax asset
|
2,466
|
|||||||
Other assets
|
3,046
|
|||||||
Deposits
|
(200,468
|
)
|
||||||
Borrowings
|
(34,823
|
)
|
||||||
Accrued Interest Payable
|
(304
|
)
|
||||||
Other liabilities
|
(745
|
)
|
||||||
Net assets acquired
|
$
|
19,192
|
||||||
Goodwill resulting from the FOFC merger
|
$
|
12,679
|
Gross loans-unpaid principal balance at April 8, 2011
|
$
|
170,682
|
||
Fair value adjustment on pools of homogeneous loans
|
(1,619
|
)
|
||
Credit fair value adjustment on loans with deteriorating credit quality
|
(4,820
|
)
|
||
Fair value of purchased loans at April 8, 2011
|
$
|
164,243
|
Contractually required principal and interest at acquisition
|
$
|
25,718
|
||
Contractual cash flows not expected to be collected (nonaccretable discount)
|
(5,849
|
)
|
||
Expected cash flows at acquisition
|
19,869
|
|||
Interest component of expected cash flows (accretable yield)
|
(1,861
|
)
|
||
Fair value of loans acquired with deteriorating credit quality
|
$
|
18,008
|
Six Months Ended
June 30,
|
Three Months Ended
June 30,
|
||||||||||||||||
Financial assets:
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Interest and dividend income
|
$
|
26,821
|
$
|
28,515
|
$
|
13,509
|
$
|
14,265
|
|||||||||
Interest expense
|
4,275
|
6,681
|
1,850
|
3,199
|
|||||||||||||
Net interest income
|
22,546
|
21,834
|
11,659
|
11,066
|
|||||||||||||
Provision for loan losses
|
1,225
|
1,675
|
125
|
695
|
|||||||||||||
Net interest income after provision for loan losses
|
21,321
|
20,159
|
11,534
|
10,371
|
|||||||||||||
Non-interest income
|
$
|
9,144
|
$
|
9,055
|
$
|
4,747
|
$
|
4,729
|
|||||||||
Non-interest expense
|
22,180
|
21,673
|
11,490
|
10,943
|
|||||||||||||
Income before income taxes
|
8,285
|
7,541
|
4,791
|
4,157
|
|||||||||||||
Income tax expense
|
2,718
|
2,427
|
1,606
|
1,345
|
|||||||||||||
Net income
|
$
|
5,567
|
$
|
5,114
|
$
|
3,185
|
$
|
2,812
|
|||||||||
Weighted average shares outstanding
|
4,629
|
4,616
|
4,629
|
4,614
|
|||||||||||||
Basic and diluted earnings per share
|
$
|
1.20
|
$
|
1.11
|
$
|
0.69
|
$
|
0.61
|
Six Months Ended
June 30,
|
Three Months Ended
June 30,
|
|||||||||||||||
Other Comprehensive Income
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Unrealized holding gains on securities available for sale
|
$
|
5,191,291
|
$
|
3,173,635
|
$
|
4,443,919
|
$
|
2,068,572
|
||||||||
Change in unrealized gains (losses) on securities available for sale for which a portion of an other-than-temporary impairment has been recognized in earnings, net of reclassification
|
-
|
223,100
|
-
|
105,435
|
||||||||||||
Reclassification adjustment net gains realized in net income
|
(679,209
|
)
|
(451,094
|
)
|
(485,811
|
)
|
(451,094
|
)
|
||||||||
Net unrealized gains
|
4,512,082
|
2,945,641
|
3,958,108
|
1,722,913
|
||||||||||||
Tax effect
|
1,745,544
|
1,139,549
|
1,531,234
|
666,526
|
||||||||||||
Net of tax amount
|
$
|
2,766,538
|
$
|
1,806,092
|
$
|
2,426,874
|
$
|
1,056,387
|
||||||||
Change in funded status of defined benefit pension plan and other benefit plans
|
309,398
|
353,094
|
154,699
|
176,547
|
||||||||||||
Tax effect
|
119,694
|
136,598
|
59,847
|
68,299
|
||||||||||||
Net of tax amount
|
189,704
|
216,496
|
94,852
|
108,248
|
||||||||||||
Total other comprehensive income
|
$
|
2,956,242
|
$
|
2,022,588
|
$
|
2,521,726
|
$
|
1,164,635
|
Balance at
December 31, 2010
|
Current Period Change
|
Balance at
June 30, 2011
|
||||||||||
Unrealized gains on securities available for sale
|
$
|
5,661,013
|
$
|
2,766,538
|
$
|
8,427,551
|
||||||
Unrealized loss on pension plans and other benefit plans
|
(5,558,538
|
)
|
189,704
|
(5,368,834
|
)
|
|||||||
Total
|
$
|
102,475
|
$
|
2,956,242
|
$
|
3,058,717
|
June 30, 2011
|
||||||||||||||||
Amortized Cost
|
Unrealized Gains
|
Unrealized Losses
|
Estimated Fair Value
|
|||||||||||||
Obligations of U.S. Government and U.S. Government sponsored enterprises
|
$
|
135,742,036
|
$
|
2,822,888
|
$
|
-
|
$
|
138,564,924
|
||||||||
Mortgage-backed securities, residential
|
58,827,886
|
3,027,069
|
1,169
|
61,853,786
|
||||||||||||
Collateralized Mortgage obligations
|
8,998,635
|
212,238
|
5,404
|
9,205,469
|
||||||||||||
Obligations of states and political subdivisions
|
47,110,056
|
1,497,448
|
4,647
|
48,602,857
|
||||||||||||
Corporate bonds and notes
|
13,988,649
|
667,300
|
30,091
|
14,625,858
|
||||||||||||
SBA loan pools
|
2,331,536
|
38,887
|
-
|
2,370,423
|
||||||||||||
Trust Preferred securities
|
2,601,808
|
144,831
|
351,310
|
2,395,329
|
||||||||||||
Corporate stocks
|
788,219
|
5,734,023
|
7,158
|
6,515,084
|
||||||||||||
Total
|
$
|
270,388,825
|
$
|
14,144,684
|
$
|
399,779
|
$
|
284,133,730
|
December 31, 2010
|
||||||||||||||||
Amortized Cost
|
Unrealized Gains
|
Unrealized Losses
|
Estimated Fair Value
|
|||||||||||||
Obligations of U.S. Government and U.S. Government sponsored enterprises
|
$
|
101,426,799
|
$
|
916,547
|
$
|
211,829
|
$
|
102,131,517
|
||||||||
Mortgage-backed securities, residential
|
60,379,269
|
2,385,036
|
2,672
|
62,761,633
|
||||||||||||
Obligations of states and political subdivisions
|
38,143,972
|
672,067
|
50,947
|
38,765,092
|
||||||||||||
Corporate bonds and notes
|
11,019,343
|
674,847
|
-
|
11,694,190
|
||||||||||||
Trust Preferred securities
|
2,597,993
|
134,561
|
388,460
|
2,344,094
|
||||||||||||
Corporate stocks
|
744,763
|
5,112,755
|
9,082
|
5,848,435
|
||||||||||||
Total
|
$
|
214,312,139
|
$
|
9,895,813
|
$
|
662,990
|
$
|
223,544,961
|
June 30, 2011
|
||||||||||||||||
Amortized Cost
|
Unrealized Gains
|
Unrealized Losses
|
Estimated Fair Value
|
|||||||||||||
Obligations of states and political subdivisions
|
$
|
8,040,872
|
$
|
751,589
|
$
|
-
|
$
|
8,792,461
|
||||||||
Total
|
$
|
8,040,872
|
$
|
751,589
|
$
|
-
|
$
|
8,792,461
|
December 31, 2010
|
||||||||||||||||
Amortized Cost
|
Unrealized Gains
|
Unrealized Losses
|
Estimated Fair Value
|
|||||||||||||
Obligations of states and political subdivisions
|
$
|
7,715,123
|
$
|
582,269
|
$
|
-
|
$
|
8,297,392
|
||||||||
Total
|
$
|
7,715,123
|
$
|
582,269
|
$
|
-
|
$
|
8,297,392
|
June 30, 2011
|
||||||||||||||||
Available for Sale
|
Held to Maturity
|
|||||||||||||||
Amortized
|
Fair
|
Amortized
|
Fair
|
|||||||||||||
Cost
|
Value
|
Cost
|
Value
|
|||||||||||||
Within One Year
|
$
|
53,786,224
|
$
|
54,219,365
|
$
|
2,163,515
|
$
|
2,191,516
|
||||||||
After One, But Within Five Years
|
180,767,175
|
187,110,336
|
3,472,107
|
3,827,144
|
||||||||||||
After Five, But Within Ten Years
|
31,383,828
|
32,861,862
|
2,405,250
|
2,773,801
|
||||||||||||
After Ten Years
|
3,663,379
|
3,427,083
|
-
|
-
|
||||||||||||
Total
|
$
|
269,600,606
|
$
|
277,618,646
|
$
|
8,040,872
|
$
|
8,792,461
|
Less than 12 months
|
12 months or longer
|
Total
|
||||||||||||||||||||||
June 30, 2011
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
||||||||||||||||||
Mortgage-backed securities, residential
|
$
|
215,776
|
$
|
1,169
|
$
|
-
|
$
|
-
|
$
|
215,776
|
$
|
1,169
|
||||||||||||
Collateralized mortgage obligations
|
943,092
|
5,404
|
-
|
-
|
943,092
|
5,404
|
||||||||||||||||||
Obligations of states and political subdivisions
|
937,225
|
4,647
|
-
|
-
|
937,225
|
4,647
|
||||||||||||||||||
Corporate bonds and notes
|
748,858
|
30,091
|
-
|
-
|
748,858
|
30,091
|
||||||||||||||||||
Trust preferred securities
|
-
|
-
|
371,735
|
351,310
|
371,735
|
351,310
|
||||||||||||||||||
Corporate stocks
|
3,353
|
284
|
43,118
|
6,874
|
46,471
|
7,158
|
||||||||||||||||||
Total temporarily impaired securities
|
$
|
2,848,304
|
$
|
41,595
|
$
|
414,853
|
$
|
358,184
|
$
|
3,263,157
|
$
|
399,779
|
Less than 12 months
|
12 months or longer
|
Total
|
||||||||||||||||||||||
December 31, 2010
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
||||||||||||||||||
Obligations of U.S. Government and US Government sponsored enterprises
|
$
|
25,543,154
|
$
|
211,829
|
$
|
-
|
$
|
-
|
$
|
25,543,154
|
$
|
211,829
|
||||||||||||
Mortgage-backed securities, residential
|
844,587
|
2,672
|
-
|
-
|
844,587
|
2,672
|
||||||||||||||||||
Obligations of states and political subdivisions
|
7,746,912
|
50,947
|
-
|
-
|
7,746,912
|
50,947
|
||||||||||||||||||
Trust preferred securities
|
-
|
-
|
334,585
|
388,460
|
334,585
|
388,460
|
||||||||||||||||||
Corporate stocks
|
-
|
-
|
40,910
|
9,082
|
40,910
|
9,082
|
||||||||||||||||||
$
|
34,134,653
|
$
|
265,448
|
$
|
375,495
|
$
|
397,542
|
$
|
34,510,148
|
$
|
662,990
|
Description
|
Actual Deferrals as % of Outstanding Collateral
|
Actual Defaults as % of Original Collateral
|
Excess Subordination as % of Performing Collateral
|
Expected Additional Defaults as % of Performing Collateral
|
MM Community Funding IX, Ltd. (Class B-2)
|
23.04%
|
17.05%
|
-60.80%
|
25.43%
|
TPREF Funding II, Ltd. (Class B)
|
20.97%
|
14.24%
|
-44.32%
|
14.28%
|
2011
|
2010
|
|||||||
Beginning balance, January 1,
|
$
|
3,438,673
|
$
|
3,045,668
|
||||
Amounts related to credit loss for which an other-than-temporary
impairment was not previously recognized
|
-
|
-
|
||||||
Additions/Subtractions:
|
||||||||
Amounts realized for securities sold during the period
|
-
|
-
|
||||||
Amounts related to securities for which the company intends to sell
or that it will be more likely than not that the company will be required to
sell prior to recovery of amortized cost basis
|
-
|
-
|
||||||
Reductions for increase in cash flows expected to be collected that are
recognized over the remaining life of the security
|
-
|
-
|
||||||
Increases to the amount related to the credit loss for which other-than-temporary
impairment was previously recognized
|
-
|
336,625
|
||||||
Ending balance, June 30,
|
$
|
3,438,673
|
$
|
3,382,293
|
Beginning balance, April 1,
|
$
|
3,438,673
|
$
|
3,306,193
|
||||
Amounts related to credit loss for which an other-than-temporary
impairment was not previously recognized
|
-
|
-
|
||||||
Additions/Subtractions:
|
||||||||
Amounts realized for securities sold during the period
|
-
|
-
|
||||||
Amounts related to securities for which the company intends to sell
or that it will be more likely than not that the company will be required to
sell prior to recovery of amortized cost basis
|
-
|
-
|
||||||
Reductions for increase in cash flows expected to be collected that are
recognized over the remaining life of the security
|
-
|
-
|
||||||
Increases to the amount related to the credit loss for which other-than-temporary
impairment was previously recognized
|
-
|
76,100
|
||||||
Ending balance, June 30,
|
$
|
3,438,673
|
$
|
3,382,293
|
June 30, 2011
|
December 31, 2010
|
|||||||
Commercial, financial and agricultural
|
$
|
159,906,838
|
$
|
114,697,440
|
||||
Commercial mortgages
|
238,003,579
|
133,070,484
|
||||||
Residential mortgages
|
195,150,301
|
173,467,806
|
||||||
Indirect consumer loans
|
96,699,376
|
98,940,854
|
||||||
Consumer loans
|
98,959,933
|
93,507,785
|
||||||
$
|
788,720,027
|
$
|
613,684,369
|
Six Months Ended June 30, 2011
|
||||||||||||||||||||||||
Allowance for loan losses
|
Commercial, Financial and Agricultural
|
Commercial Mortgages
|
Residential Mortgages
|
Consumer Loans
|
Unallocated
|
Total
|
||||||||||||||||||
Beginning balance:
|
$
|
2,118,299
|
$
|
2,575,058
|
$
|
1,301,780
|
$
|
2,727,022
|
$
|
775,972
|
$
|
9,498,131
|
||||||||||||
Charge Offs:
|
(3003
|
)
|
(3,764
|
)
|
-
|
(340,655
|
)
|
-
|
(347,422
|
)
|
||||||||||||||
Recoveries:
|
205,406
|
26,103
|
30,324
|
93,130
|
-
|
354,963
|
||||||||||||||||||
Net charge offs
|
202,403
|
22,339
|
30,324
|
(247,525
|
)
|
-
|
7,541
|
|||||||||||||||||
Provision
|
760,731
|
15,258
|
(85,224
|
)
|
(182,038
|
)
|
(258,727
|
)
|
250,000
|
|||||||||||||||
Ending balance
|
$
|
3,081,433
|
$
|
2,612,655
|
$
|
1,246,880
|
$
|
2,297,459
|
$
|
517,245
|
$
|
9,755,672
|
Three Months Ended June 30, 2011
|
||||||||||||||||||||||||
Allowance for loan losses
|
Commercial, Financial and Agricultural
|
Commercial Mortgages
|
Residential Mortgages
|
Consumer Loans
|
Unallocated
|
Total
|
||||||||||||||||||
Beginning balance:
|
$
|
2,509,076
|
$
|
2,650,309
|
$
|
1,366,214
|
$
|
2,424,312
|
$
|
641,040
|
$
|
9,590,951
|
||||||||||||
Charge Offs:
|
(3,003
|
)
|
-
|
-
|
(133,744
|
)
|
-
|
(136,747
|
)
|
|||||||||||||||
Recoveries:
|
87,941
|
23,350
|
15,845
|
49,332
|
-
|
176,468
|
||||||||||||||||||
Net charge offs
|
84,938
|
23,350
|
15,845
|
(84,412
|
)
|
-
|
39,721
|
|||||||||||||||||
Provision
|
487,419
|
(61,004
|
)
|
(135,179
|
)
|
(42,441
|
)
|
(123,795
|
)
|
125,000
|
||||||||||||||
Ending balance
|
$
|
3,081,433
|
$
|
2,612,655
|
$
|
1,246,880
|
$
|
2,297,459
|
$
|
517,245
|
$
|
9,755,672
|
Three Months Ended June 30, 2010
|
Six Months Ended June 30, 2010
|
|||||||
Beginning balance:
|
$
|
10,163,840
|
$
|
9,967,223
|
||||
Charge offs:
|
(233,841
|
)
|
(585,241
|
)
|
||||
Recoveries:
|
142,292
|
315,309
|
||||||
Net charge offs
|
(91,549
|
)
|
(269,932
|
)
|
||||
Provision
|
375,000
|
750,000
|
||||||
Ending balance
|
$
|
10,447,291
|
$
|
10,447,291
|
June 30, 2011
|
||||||||||||||||||||||||
Allowance for loan losses
|
Commercial, Financial and Agricultural
|
Commercial Mortgages
|
Residential Mortgages
|
Consumer Loans
|
Unallocated
|
Total
|
||||||||||||||||||
Ending allowance balance attributable to loans:
|
||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
681,617
|
$
|
202,301
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
883,918
|
||||||||||||
Collectively evaluated for impairment
|
2,399,816
|
2,410,354
|
1,246,880
|
2,297,459
|
517,245
|
8,871,754
|
||||||||||||||||||
Acquired with deteriorated credit quality
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Total ending allowance balance
|
$
|
3,081,433
|
$
|
2,612,655
|
$
|
1,246,880
|
$
|
2,297,459
|
$
|
517,245
|
$
|
9,755,672
|
December 31, 2010
|
||||||||||||||||||||||||
Allowance for loan losses
|
Commercial, Financial and Agricultural
|
Commercial Mortgages
|
Residential Mortgages
|
Consumer Loans
|
Unallocated
|
Total
|
||||||||||||||||||
Ending allowance balance attributable to loans:
|
||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
23,524
|
$
|
216,234
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
239,758
|
||||||||||||
Collectively evaluated for impairment
|
2,094,775
|
2,358,824
|
1,301,780
|
2,727,022
|
775,972
|
9,258,373
|
||||||||||||||||||
Acquired with deteriorated credit quality
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Total ending allowance balance
|
$
|
2,118,299
|
$
|
2,575,058
|
$
|
1,301,780
|
$
|
2,727,022
|
$
|
775,972
|
$
|
9,498,131
|
June 30, 2011
|
||||||||||||||||||||
Loans:
|
Commercial, Financial and Agricultural
|
Commercial Mortgages
|
Residential Mortgages
|
Consumer Loans
|
Total
|
|||||||||||||||
Loans individually evaluated for impairment
|
$
|
6,926,216
|
$
|
4,115,043
|
$
|
333,482
|
$
|
-
|
$
|
11,374,741
|
||||||||||
Loans collectively evaluated for impairment
|
120,954,264
|
137,382,860
|
173,384,978
|
189,585,779
|
$
|
621,307,881
|
||||||||||||||
Loans acquired with deteriorated credit quality
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total ending loans balance
|
$
|
128,880,480
|
$
|
141,497,903
|
$
|
173,718,460
|
$
|
189,585,779
|
$
|
632,682,622
|
December 31, 2010
|
||||||||||||||||||||
Loans:
|
Commercial, Financial and Agricultural
|
Commercial Mortgages
|
Residential Mortgages
|
Consumer Loans
|
Total
|
|||||||||||||||
Loans individually evaluated for impairment
|
$
|
3,215,761
|
$
|
4,450,882
|
$
|
408,392
|
$
|
-
|
$
|
8,075,035
|
||||||||||
Loans collectively evaluated for impairment
|
111,778,238
|
128,963,664
|
173,465,831
|
193,098,341
|
607,306,074
|
|||||||||||||||
Loans acquired with deteriorated credit quality
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total ending loans balance
|
$
|
114,993,999
|
$
|
133,414,546
|
$
|
173,874,223
|
$
|
193,098,341
|
$
|
615,381,109
|
June 30, 2011
|
Six Months Ended
June 30, 2011
|
Three Months Ended
June 30, 2011
|
|||||||||||||||||||||||||||
Unpaid Principal Balance
|
Allowance for Loan Losses Allocated
|
Recorded Investment
|
Average Recorded Investment
|
Interest Income Recognized
|
Average Recorded Investment
|
Interest Income Recognized
|
|||||||||||||||||||||||
With no related allowance recorded:
|
|||||||||||||||||||||||||||||
Commercial, financial and agricultural:
|
|||||||||||||||||||||||||||||
Commercial & industrial
|
$
|
3,090,943
|
$
|
-
|
$
|
3,093,931
|
$
|
3,141,620
|
$
|
18,759
|
$
|
3,116,317
|
$
|
10,933
|
|||||||||||||||
Commercial mortgages:
|
|||||||||||||||||||||||||||||
Construction
|
|
30,464
|
-
|
30,464
|
31,128
|
-
|
30,559
|
-
|
|||||||||||||||||||||
Other
|
3,488,055
|
-
|
3,486,675
|
3,451,644
|
-
|
3,402,624
|
-
|
||||||||||||||||||||||
Residential mortgages
|
332,966
|
-
|
333,482
|
349,501
|
5,640
|
320,055
|
3,266
|
||||||||||||||||||||||
With an allowance recorded:
|
|||||||||||||||||||||||||||||
Commercial, financial and agricultural:
|
|||||||||||||||||||||||||||||
Commercial & industrial
|
|
3,811,617
|
681,617
|
3,832,285
|
1,306,572
|
144,242
|
1,948,091
|
144,242
|
|||||||||||||||||||||
Commercial mortgages:
|
|||||||||||||||||||||||||||||
Construction
|
19,853
|
19,853
|
19,853
|
30,318
|
-
|
20,008
|
-
|
||||||||||||||||||||||
Other
|
583,184
|
182,448
|
578,051
|
703,733
|
-
|
646,603
|
-
|
||||||||||||||||||||||
Total
|
$
|
11,357,082
|
$
|
883,918
|
$
|
11,374,741
|
$
|
9,014,516
|
$
|
168,641
|
$
|
9,484,257
|
$
|
157,841
|
December 31, 2010
|
||||||||||||||||||||
Unpaid Principal Balance
|
Allowance for Loan Losses Allocated
|
Recorded Investment
|
Average Recorded Investment
|
Interest Income Recognized
|
||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Commercial, financial and agricultural:
|
||||||||||||||||||||
Commercial & industrial
|
$
|
4,334,095
|
$
|
-
|
$
|
3,192,227
|
$
|
1,876,603
|
$
|
73,657
|
||||||||||
Commercial mortgages:
|
||||||||||||||||||||
Construction
|
32,266
|
-
|
32,266
|
8,067
|
-
|
|||||||||||||||
Other
|
4,148,423
|
-
|
3,549,686
|
3,374,678
|
63,061
|
|||||||||||||||
Residential mortgages
|
407,105
|
-
|
408,392
|
309,537
|
21,324
|
|||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||
Commercial, financial and agricultural:
|
||||||||||||||||||||
Commercial & industrial
|
23,524
|
23,524
|
23,534
|
1,393,995
|
386
|
|||||||||||||||
Agricultural
|
-
|
-
|
-
|
6,211
|
453
|
|||||||||||||||
Commercial mortgages:
|
||||||||||||||||||||
Construction
|
50,939
|
43,514
|
50,939
|
215,901
|
-
|
|||||||||||||||
Other
|
838,277
|
172,720
|
817,991
|
1,378,687
|
969
|
|||||||||||||||
Residential mortgages
|
-
|
-
|
-
|
215,299
|
6,470
|
|||||||||||||||
Total
|
$
|
9,834,629
|
$
|
239,758
|
$
|
8,075,035
|
$
|
8,778,978
|
$
|
166,320
|
June 30, 2011
|
December 31, 2010
|
||||||||||||||||
Non-Accrual
|
Loans Past Due Over 90 Days Still Accruing
|
Non-Accrual
|
Loans Past Due Over 90 Days Still Accruing
|
||||||||||||||
Commercial, financial and agricultural:
|
|||||||||||||||||
Commercial & industrial
|
$
|
7,104,320
|
$
|
-
|
$
|
2,938,174
|
$
|
-
|
|||||||||
Commercial mortgages
|
-
|
-
|
-
|
||||||||||||||
Construction
|
50,317
|
3,324,639
|
83,204
|
-
|
|||||||||||||
Other
|
4,266,152
|
-
|
4,230,701
|
-
|
|||||||||||||
Residential mortgages
|
2,309,648
|
-
|
2,558,534
|
-
|
|||||||||||||
Consumer loans
|
|||||||||||||||||
Credit cards
|
-
|
8,608
|
-
|
11,174
|
|||||||||||||
Home equity lines & loans
|
473,953
|
-
|
545,039
|
-
|
|||||||||||||
Indirect consumer loans
|
166,028
|
-
|
180,632
|
-
|
|||||||||||||
Other direct consumer loans
|
19,712
|
-
|
61,601
|
-
|
|||||||||||||
Total
|
$
|
14,390,130
|
$
|
3,333,247
|
$
|
10,597,886
|
$
|
11,174
|
June 30, 2011
|
||||||||||||||||||||||||||||
Legacy Loans:
|
30-59 Days Past Due
|
60-89 Days Past Due
|
Greater than 90 Days Past Due
|
Total Past Due
|
Loans Acquired with deteriorated credit quality
|
Loans Not Past Due
|
Total
|
|||||||||||||||||||||
Commercial, financial and agricultural:
|
|
|||||||||||||||||||||||||||
Commercial & industrial
|
$
|
10,583
|
$
|
-
|
$
|
2,953,201
|
$
|
2,963,784
|
$
|
-
|
$
|
124,398,708
|
$
|
127,362,492
|
||||||||||||||
Agricultural
|
-
|
-
|
-
|
-
|
-
|
517,988
|
517,988
|
|||||||||||||||||||||
Commercial mortgages:
|
||||||||||||||||||||||||||||
Construction
|
19,853
|
-
|
-
|
19,853
|
-
|
7,687,809
|
7,707,662
|
|||||||||||||||||||||
Other
|
214,514
|
-
|
2,552,134
|
2,766,648
|
-
|
131,023,593
|
133,790,241
|
|||||||||||||||||||||
Residential mortgages
|
1,609,372
|
433,019
|
853,400
|
2,895,791
|
-
|
170,822,669
|
173,718,460
|
|||||||||||||||||||||
Consumer loans:
|
||||||||||||||||||||||||||||
Credit cards
|
6,970
|
7,210
|
8,608
|
22,788
|
-
|
1,859,763
|
1,882,551
|
|||||||||||||||||||||
Home equity lines & loans
|
295,845
|
117,655
|
184,820
|
598,320
|
-
|
75,789,623
|
76,387,943
|
|||||||||||||||||||||
Indirect consumer loans
|
357,344
|
54,638
|
144,613
|
556,595
|
-
|
96,455,625
|
97,012,220
|
|||||||||||||||||||||
Other direct consumer loans
|
35,125
|
6,234
|
3,897
|
45,256
|
-
|
14,257,808
|
14,303,064
|
|||||||||||||||||||||
Total
|
$
|
2,549,606
|
$
|
618,756
|
$
|
6,700,673
|
$
|
9,869,035
|
$
|
-
|
$
|
622,813,587
|
$
|
632,682,622
|
June 30, 2011
|
||||||||||||||||||||||||||||
Acquired Loans:
|
30-59 Days Past Due
|
60-89 Days Past Due
|
Greater than 90 Days Past Due
|
Total Past Due
|
Loans Acquired with deteriorated credit quality
|
Loans Not Past Due
|
Total
|
|||||||||||||||||||||
Commercial, financial and agricultural:
|
|
|||||||||||||||||||||||||||
Commercial & industrial
|
$
|
37,160
|
$
|
119,356
|
$
|
352,073
|
$
|
508,589
|
$
|
3,313,774
|
$
|
30,592,681
|
$
|
34,415,044
|
||||||||||||||
Agricultural
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Commercial mortgages:
|
||||||||||||||||||||||||||||
Construction
|
-
|
3,517,682
|
3,324,639
|
6,842,321
|
2,517,582
|
16,525,618
|
25,885,521
|
|||||||||||||||||||||
Other
|
126,111
|
198,355
|
162,781
|
487,247
|
11,237,159
|
57,577,664
|
69,302,070
|
|||||||||||||||||||||
Residential mortgages
|
1,053,574
|
-
|
141,058
|
1,194,632
|
361,910
|
20,682,094
|
22,238,636
|
|||||||||||||||||||||
Consumer loans:
|
||||||||||||||||||||||||||||
Credit cards
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Home equity lines & loans
|
-
|
-
|
-
|
-
|
-
|
6,380,752
|
6,380,752
|
|||||||||||||||||||||
Indirect consumer loans
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Other direct consumer loans
|
4,650
|
-
|
-
|
4,650
|
-
|
171,312
|
175,962
|
|||||||||||||||||||||
Total
|
$
|
1,221,495
|
$
|
3,835,393
|
$
|
3,980,551
|
$
|
9,037,439
|
$
|
17,430,425
|
$
|
131,930,121
|
$
|
158,397,985
|
December 31, 2010
|
||||||||||||||||||||||||
Legacy Loans:
|
30-59 Days Past Due
|
60-89 Days Past Due
|
Greater than 90 Days Past Due
|
Total Past Due
|
Loans Not Past Due
|
Total
|
||||||||||||||||||
Commercial, financial and agricultural
|
||||||||||||||||||||||||
Commercial & industrial
|
$
|
33,434
|
$
|
17,351
|
$
|
2,914,640
|
$
|
2,965,425
|
$
|
111,202,073
|
$
|
114,167,498
|
||||||||||||
Agricultural
|
-
|
-
|
-
|
-
|
826,501
|
826,501
|
||||||||||||||||||
Commercial mortgages
|
||||||||||||||||||||||||
Construction
|
-
|
-
|
63,102
|
63,102
|
9,029,450
|
9,092,552
|
||||||||||||||||||
Other
|
116,432
|
-
|
2,913,525
|
3,029,957
|
121,292,041
|
124,321,998
|
||||||||||||||||||
Residential mortgages
|
1,851,412
|
277,276
|
1,404,067
|
3,532,755
|
170,341,467
|
173,874,222
|
||||||||||||||||||
Consumer loans
|
||||||||||||||||||||||||
Credit cards
|
4,889
|
16,635
|
11,174
|
32,698
|
1,989,199
|
2,021,897
|
||||||||||||||||||
Home equity lines & loans
|
550,134
|
79,910
|
321,116
|
951,160
|
76,052,290
|
77,003,450
|
||||||||||||||||||
Indirect consumer loans
|
465,818
|
154,969
|
146,221
|
767,008
|
98,571,142
|
99,338,150
|
||||||||||||||||||
Other direct consumer loans
|
51,125
|
12,502
|
41,964
|
105,591
|
14,629,253
|
14,734,844
|
||||||||||||||||||
Total
|
$
|
3,073,244
|
$
|
558,643
|
$
|
7,815,809
|
$
|
11,447,696
|
$
|
603,933,416
|
$
|
615,381,112
|
June 30, 2011
|
||||||||||||||||||||
Legacy Loans:
|
Not Rated
|
Pass
|
Special Mention
|
Substandard
|
Doubtful
|
|||||||||||||||
Commercial, financial and agricultural:
|
||||||||||||||||||||
Commercial & industrial
|
$
|
-
|
$
|
104,337,788
|
$
|
10,799,719
|
$
|
10,662,192
|
$
|
1,562,794
|
||||||||||
Agricultural
|
-
|
517,863
|
125
|
-
|
-
|
|||||||||||||||
Commercial mortgages:
|
||||||||||||||||||||
Construction
|
-
|
6,214,757
|
638,046
|
515,450
|
339,408
|
|||||||||||||||
Other
|
-
|
118,281,674
|
7,128,938
|
8,379,629
|
-
|
|||||||||||||||
Residential mortgages
|
171,340,299
|
-
|
-
|
2,378,161
|
-
|
|||||||||||||||
Consumer loans:
|
||||||||||||||||||||
Credit cards
|
1,882,551
|
-
|
-
|
-
|
-
|
|||||||||||||||
Home equity lines & loans
|
75,913,990
|
-
|
-
|
473,953
|
-
|
|||||||||||||||
Indirect consumer loans
|
96,839,047
|
-
|
-
|
173,173
|
-
|
|||||||||||||||
Other direct consumer loans
|
14,283,353
|
-
|
-
|
19,712
|
-
|
|||||||||||||||
Total
|
$
|
360,259,240
|
$
|
229,352,082
|
$
|
18,566,828
|
$
|
22,602,270
|
$
|
1,902,202
|
Acquired Loans:
|
||||||||||||||||||||
Commercial, financial and agricultural:
|
||||||||||||||||||||
Commercial & industrial
|
$
|
-
|
$
|
30,776,530
|
$
|
-
|
$
|
324,741
|
$
|
-
|
||||||||||
Agricultural
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Commercial mortgages:
|
||||||||||||||||||||
Construction
|
-
|
22,090,680
|
-
|
1,277,258
|
-
|
|||||||||||||||
Other
|
-
|
55,779,527
|
640,783
|
1,644,601
|
-
|
|||||||||||||||
Residential mortgages
|
21,735,667
|
-
|
-
|
141,059
|
-
|
|||||||||||||||
Consumer loans:
|
||||||||||||||||||||
Credit cards
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Home equity lines & loans
|
6,380,752
|
-
|
-
|
-
|
-
|
|||||||||||||||
Indirect consumer loans
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Other direct consumer loans
|
175,962
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total
|
$
|
28,292,381
|
$
|
108,646,737
|
$
|
640,783
|
$
|
3,387,659
|
$
|
-
|
December 31, 2010
|
||||||||||||||||||||
Legacy Loans:
|
Not Rated
|
Pass
|
Special Mention
|
Substandard
|
Doubtful
|
|||||||||||||||
Commercial, financial and agricultural:
|
||||||||||||||||||||
Commercial & industrial
|
$
|
-
|
$
|
90,887,538
|
$
|
16,946,891
|
$
|
4,770,276
|
$
|
1,562,794
|
||||||||||
Agricultural
|
-
|
824,882
|
1,619
|
-
|
-
|
|||||||||||||||
Commercial mortgages:
|
||||||||||||||||||||
Construction
|
-
|
7,497,488
|
672,136
|
922,928
|
-
|
|||||||||||||||
Other
|
-
|
108,732,393
|
7,245,641
|
8,343,964
|
-
|
|||||||||||||||
Residential mortgages
|
171,024,544
|
-
|
-
|
2,849,678
|
-
|
|||||||||||||||
Consumer loans:
|
||||||||||||||||||||
Credit cards
|
2,021,896
|
-
|
-
|
-
|
-
|
|||||||||||||||
Home equity lines & loans
|
76,458,414
|
-
|
-
|
545,037
|
-
|
|||||||||||||||
Indirect consumer loans
|
99,155,306
|
-
|
-
|
77,883
|
-
|
|||||||||||||||
Other direct consumer loans
|
14,656,690
|
-
|
-
|
182,844
|
-
|
|||||||||||||||
Total
|
$
|
363,317,120
|
$
|
207,942,301
|
$
|
24,866,287
|
$
|
17,692,610
|
$
|
1,562,794
|
June 30, 2011
|
||||||||||||||||||||
Consumer Loans
|
||||||||||||||||||||
Legacy Loans:
|
Residential Mortgages
|
Credit Card
|
Home Equity Lines & Loans
|
Indirect Consumer Loans
|
Other Direct Consumer Loans
|
|||||||||||||||
Performing
|
$
|
171,261,066
|
$
|
1,873,942
|
$
|
75,913,990
|
$
|
96,846,193
|
$
|
14,283,353
|
||||||||||
Non-Performing
|
2,457,394
|
8,608
|
473,953
|
166,028
|
19,712
|
|||||||||||||||
Total
|
$
|
173,718,460
|
$
|
1,882,550
|
$
|
76,387,943
|
$
|
97,012,221
|
$
|
14,303,065
|
Acquired Loans:
|
||||||||||||||||||||
Performing
|
$
|
22,097,577
|
$
|
-
|
$
|
6,380,752
|
$
|
-
|
$
|
175,962
|
||||||||||
Non-Performing
|
141,059
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total
|
$
|
22,238,636
|
$
|
-
|
$
|
6,380,752
|
$
|
-
|
$
|
175,962
|
December 31, 2010
|
||||||||||||||||||||
Consumer Loans
|
||||||||||||||||||||
Legacy Loans:
|
Residential Mortgages
|
Credit Card
|
Home Equity Lines & Loans
|
Indirect Consumer Loans
|
Other Direct Consumer Loans
|
|||||||||||||||
Performing
|
$
|
171,070,881
|
$
|
2,010,723
|
$
|
76,458,413
|
$
|
99,157,518
|
$
|
14,673,243
|
||||||||||
Non-Performing
|
2,803,342
|
11,174
|
545,037
|
186,632
|
61,601
|
|||||||||||||||
Total
|
$
|
173,874,223
|
$
|
2,021,897
|
$
|
77,003,450
|
$
|
99,338,150
|
$
|
14,734,844
|
Six Months Ended June 30,
|
Three Months Ended June 30,
|
||||||||||||||||
2011
|
2010
|
2011
|
2010
|
||||||||||||||
Qualified Pension
|
|||||||||||||||||
Service cost, benefits earned during the period
|
$
|
518,268
|
$
|
532,716
|
$
|
259,134
|
$
|
266,358
|
|||||||||
Interest cost on projected benefit obligation
|
785,912
|
958,024
|
392,956
|
479,012
|
|||||||||||||
Expected return on plan assets
|
(1,171,346
|
)
|
(1,388,272
|
)
|
(585,673
|
)
|
(694,136
|
)
|
|||||||||
Amortization of unrecognized transition obligation
|
-
|
-
|
-
|
-
|
|||||||||||||
Amortization of unrecognized prior service cost
|
14,940
|
28,396
|
7,470
|
14,198
|
|||||||||||||
Amortization of unrecognized net loss
|
338,226
|
369,136
|
169,113
|
184,568
|
|||||||||||||
Net periodic pension expense
|
$
|
486,000
|
$
|
500,000
|
$
|
243,000
|
$
|
250,000
|
|||||||||
Supplemental Pension
|
|||||||||||||||||
Service cost, benefits earned during the period
|
$
|
15,312
|
$
|
16,514
|
7,656
|
$
|
8,257
|
||||||||||
Interest cost on projected benefit obligation
|
26,887
|
30,424
|
13,443
|
15,212
|
|||||||||||||
Expected return on plan assets
|
-
|
-
|
-
|
-
|
|||||||||||||
Amortization of unrecognized prior service cost
|
-
|
-
|
-
|
-
|
|||||||||||||
Amortization of unrecognized net loss
|
4,732
|
3,062
|
2,366
|
1,531
|
|||||||||||||
Net periodic supplemental pension expense
|
$
|
46,931
|
$
|
50,000
|
$
|
23,465
|
$
|
25,000
|
|||||||||
Postretirement, Medical and Life
|
|||||||||||||||||
Service cost, benefits earned during the period
|
$
|
16,500
|
$
|
15,000
|
8,250
|
$
|
7,500
|
||||||||||
Interest cost on projected benefit obligation
|
37,500
|
37,500
|
18,750
|
18,750
|
|||||||||||||
Expected return on plan assets
|
-
|
-
|
-
|
-
|
|||||||||||||
Amortization of unrecognized prior service cost
|
(48,500
|
)
|
(47,500
|
)
|
(24,250
|
)
|
(23,750
|
)
|
|||||||||
Amortization of unrecognized net gain
|
-
|
-
|
-
|
-
|
|||||||||||||
Net periodic postretirement, medical and life expense
|
$
|
5,500
|
$
|
5,000
|
$
|
2,750
|
$
|
2,500
|
Three Months Ended June 30, 2011
|
Six Months Ended June 30, 2011
|
|||||||||||||||||||||||||||||||
Core Banking
|
Trust & Investment Advisory Services
|
Holding Company And Other
|
Consolidated Totals
|
Core Banking
|
Trust & Investment Advisory Services
|
Holding Company And Other
|
Consolidated Totals
|
|||||||||||||||||||||||||
Net interest income
|
$
|
11,448
|
$
|
-
|
$
|
3
|
$
|
11,451
|
$
|
19,992
|
$
|
-
|
$
|
5
|
$
|
19,997
|
||||||||||||||||
Provision for loan losses
|
125
|
-
|
-
|
125
|
250
|
-
|
-
|
250
|
||||||||||||||||||||||||
Net interest income after provision for loan losses
|
11,323
|
-
|
3
|
11,326
|
19,742
|
-
|
5
|
19,747
|
||||||||||||||||||||||||
Other operating income
|
2,732
|
1,768
|
244
|
4,744
|
4,819
|
3,384
|
888
|
9,091
|
||||||||||||||||||||||||
Other operating expenses
|
10,215
|
1,791
|
195
|
12,201
|
18,620
|
3,607
|
417
|
22,644
|
||||||||||||||||||||||||
Income before income tax expense
|
3,840
|
(23
|
)
|
52
|
3,869
|
5,941
|
(223
|
)
|
476
|
6,194
|
||||||||||||||||||||||
Income tax expense
|
1,255
|
(9
|
)
|
3
|
1,249
|
1,846
|
(86
|
)
|
149
|
1,909
|
||||||||||||||||||||||
Segment net income
|
$
|
2,585
|
$
|
(14
|
)
|
$
|
49
|
$
|
2,620
|
$
|
4,095
|
$
|
(137
|
)
|
$
|
327
|
$
|
4,285
|
||||||||||||||
Segment assets
|
$
|
1,228,705
|
$
|
6,020
|
$
|
2,311
|
$
|
1,237,036
|
Three Months Ended June 30, 2010
|
Six Months Ended June 30, 2010
|
|||||||||||||||||||||||||||||||
Core Banking
|
Trust & Investment Advisory Services
|
Holding Company And Other
|
Consolidated Totals
|
Core Banking
|
Trust & Investment Advisory Services
|
Holding Company And Other
|
Consolidated Totals
|
|||||||||||||||||||||||||
Net interest income
|
$
|
8,778
|
$
|
-
|
$
|
1
|
$
|
8,779
|
$
|
17,289
|
$
|
-
|
$
|
2
|
$
|
17,291
|
||||||||||||||||
Provision for loan losses
|
375
|
-
|
-
|
375
|
750
|
-
|
-
|
750
|
||||||||||||||||||||||||
Net interest income after provision for loan losses
|
8,403
|
-
|
1
|
8,404
|
16,539
|
-
|
2
|
16,541
|
||||||||||||||||||||||||
Other operating income
|
2,519
|
1,985
|
161
|
4,665
|
4,290
|
4,073
|
297
|
8,660
|
||||||||||||||||||||||||
Other operating expenses
|
7,488
|
1,751
|
176
|
9,415
|
14,681
|
3,599
|
381
|
18,661
|
||||||||||||||||||||||||
Income before income tax expense
|
3,434
|
234
|
(14
|
)
|
3,654
|
6,148
|
474
|
(82
|
)
|
6,540
|
||||||||||||||||||||||
Income tax expense
|
1,082
|
90
|
(21
|
)
|
1,151
|
1,920
|
183
|
(66
|
)
|
2,037
|
||||||||||||||||||||||
Segment net income
|
$
|
2,352
|
$
|
144
|
$
|
7
|
$
|
2,503
|
$
|
4,228
|
$
|
291
|
$
|
(16
|
)
|
$
|
4,503
|
|||||||||||||||
Segment assets
|
$
|
991,219
|
$
|
6,690
|
$
|
3,071
|
$
|
1,000,980
|
Shares
|
Weighted–Average Grant Date Fair Value
|
|||||||
Nonvested at December 31, 2010
|
5,886 | $ | 21.25 | |||||
Granted
|
1,087 | 23.00 | ||||||
Vested
|
- | - | ||||||
Forfeited or Cancelled
|
- | - | ||||||
Nonvested at June 30, 2011
|
6,973 | $ | 21.52 |
June 30, 2011
|
December 31, 2010
|
|||||||
Commercial, financial and agricultural
|
$
|
159,906,838
|
$
|
114,697,440
|
||||
Commercial mortgages
|
238,003,579
|
133,070,484
|
||||||
Residential mortgages
|
195,150,301
|
173,467,806
|
||||||
Indirect Consumer loans
|
96,699,376
|
98,940,854
|
||||||
Consumer loans
|
98,959,933
|
93,507,785
|
||||||
Total loans, net of deferred origination fees and cost,
and unearned income
|
$
|
788,720,027
|
$
|
613,684,369
|
(dollars in thousands)
|
June 30, 2011
|
December 31, 2010
|
||||||
Non-accrual loans
|
$
|
14,329
|
$
|
10,586
|
||||
Troubled debt restructurings
|
286
|
657
|
||||||
Accruing loans past due 90 days or more
|
3,319
|
11
|
||||||
Total non-performing loans
|
$
|
17,934
|
$
|
11,254
|
||||
Other real estate owned
|
430
|
741
|
||||||
Total non-performing assets
|
$
|
18,364
|
$
|
11,995
|
(dollars in thousands)
|
Six Months Ended June 30,
|
|||||||
2011
|
2010
|
|||||||
Balance at beginning of period
|
$
|
9,498
|
$
|
9,967
|
||||
Charge-offs:
|
||||||||
Commercial, financial and agricultural
|
(3
|
)
|
(44
|
)
|
||||
Commercial mortgages
|
(4
|
)
|
-
|
|||||
Residential mortgages
|
-
|
(36
|
)
|
|||||
Consumer loans
|
(340
|
)
|
(505
|
)
|
||||
Total
|
(347
|
)
|
(585
|
)
|
||||
Recoveries:
|
||||||||
Commercial, financial and agricultural
|
205
|
222
|
||||||
Commercial mortgages
|
26
|
-
|
||||||
Residential mortgages
|
30
|
-
|
||||||
Consumer loans
|
94
|
93
|
||||||
Total
|
355
|
315
|
||||||
Net recoveries (charge-offs)
|
8
|
(270
|
)
|
|||||
Provision charged to operations
|
250
|
750
|
||||||
Balance at end of period
|
$
|
9,756
|
$
|
10,447
|
Six Months Ended
June 30, 2011
|
Six Months Ended
June 30, 2010
|
Three Months Ended
June 30, 2011
|
Three Months Ended
June 30, 2010
|
|||||||||||||||||||||||||||||||||||||||||||||
Assets
|
Average Balance
|
Interest
|
Yield/
Rate
|
Average Balance
|
Interest
|
Yield/
Rate
|
Average Balance
|
Interest
|
Yield/
Rate
|
Average Balance
|
Interest
|
Yield/
Rate
|
||||||||||||||||||||||||||||||||||||
Earning assets:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Loans
|
$
|
690,759
|
$
|
19,783
|
5.78
|
%
|
$
|
588,073
|
$
|
17,670
|
6.06
|
%
|
$
|
765,918
|
$
|
11,208
|
5.87
|
%
|
$
|
587,487
|
$
|
8,846
|
6.04
|
%
|
||||||||||||||||||||||||
Taxable securities
|
201,575
|
2,842
|
2.84
|
%
|
212,307
|
3,414
|
3.24
|
%
|
226,177
|
1,594
|
2.83
|
%
|
230,136
|
1,709
|
2.98
|
%
|
||||||||||||||||||||||||||||||||
Tax-exempt securities
|
51,203
|
685
|
2.70
|
%
|
42,050
|
588
|
2.82
|
%
|
55,034
|
369
|
2.69
|
%
|
42,379
|
295
|
2.79
|
%
|
||||||||||||||||||||||||||||||||
Federal funds sold
|
-
|
-
|
N/A
|
-
|
-
|
N/A
|
-
|
-
|
N/A
|
-
|
-
|
N/A
|
%
|
|||||||||||||||||||||||||||||||||||
Interest-bearing deposits
|
71,810
|
102
|
0.29
|
%
|
66,564
|
82
|
0.25
|
%
|
79,085
|
62
|
0.31
|
%
|
56,022
|
35
|
0.25
|
%
|
||||||||||||||||||||||||||||||||
Total earning assets
|
1,015,347
|
23,412
|
4.65
|
%
|
908,994
|
21,754
|
4.83
|
%
|
1,126,214
|
13,233
|
4.71
|
%
|
916,024
|
10,885
|
4.77
|
%
|
||||||||||||||||||||||||||||||||
Non-earning assets:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Cash and due from banks
|
21,667
|
22,310
|
22,564
|
21,255
|
||||||||||||||||||||||||||||||||||||||||||||
Premises and equipment, net
|
24,240
|
24,568
|
24,447
|
24,389
|
||||||||||||||||||||||||||||||||||||||||||||
Other assets
|
42,812
|
38,151
|
51,959
|
38,199
|
||||||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses
|
(9,648
|
)
|
(10,210
|
)
|
(9,702
|
)
|
(10,318
|
)
|
||||||||||||||||||||||||||||||||||||||||
AFS valuation allowance
|
10,655
|
8,949
|
11,675
|
9,552
|
||||||||||||||||||||||||||||||||||||||||||||
Total
|
$
|
1,105,073
|
$
|
992,762
|
$
|
1,227,157
|
$
|
999,101
|
||||||||||||||||||||||||||||||||||||||||
Liabilities and Shareholders' Equity
|
||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing demand deposits
|
67,454
|
37
|
0.11
|
%
|
51,889
|
26
|
0.10
|
%
|
81,437
|
26
|
0.13
|
%
|
54,634
|
13
|
0.09
|
%
|
||||||||||||||||||||||||||||||||
Savings and insured money market deposits
|
331,690
|
416
|
0.25
|
%
|
298,684
|
553
|
0.37
|
%
|
368,448
|
240
|
0.26
|
%
|
304,041
|
228
|
0.30
|
%
|
||||||||||||||||||||||||||||||||
Time deposits
|
285,286
|
1,735
|
1.23
|
%
|
278,233
|
2,538
|
1.84
|
%
|
316,417
|
894
|
1.13
|
%
|
276,358
|
1,210
|
1.76
|
%
|
||||||||||||||||||||||||||||||||
Federal Home Loan Bank advances and securities sold under agreements to Repurchase
|
76,661
|
1,227
|
3.23
|
%
|
72,572
|
1,346
|
3.74
|
%
|
88,485
|
622
|
2.82
|
%
|
69,967
|
655
|
3.75
|
%
|
||||||||||||||||||||||||||||||||
Total interest-bearing liabilities
|
761,091
|
3,415
|
0.90
|
%
|
701,378
|
4,463
|
1.28
|
%
|
854,787
|
1,782
|
0.84
|
%
|
705,000
|
2,106
|
1.20
|
%
|
||||||||||||||||||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Demand deposits
|
225,338
|
191,416
|
241,266
|
193,184
|
||||||||||||||||||||||||||||||||||||||||||||
Other liabilities
|
7,376
|
7,324
|
7,794
|
7,161
|
||||||||||||||||||||||||||||||||||||||||||||
Total liabilities
|
993,805
|
900,118
|
1,103,847
|
905,345
|
||||||||||||||||||||||||||||||||||||||||||||
Shareholders' equity
|
111,268
|
92,644
|
123,310
|
93,756
|
||||||||||||||||||||||||||||||||||||||||||||
Total
|
$
|
1,105,073
|
$
|
992,762
|
$
|
1,227, 157
|
$
|
999,101
|
||||||||||||||||||||||||||||||||||||||||
Net interest income
|
$
|
19,997
|
$
|
17,291
|
$
|
11,451
|
$
|
8,779
|
||||||||||||||||||||||||||||||||||||||||
Net interest rate spread
|
3.75
|
%
|
3.55
|
%
|
3.87
|
%
|
3.57
|
%
|
||||||||||||||||||||||||||||||||||||||||
Net interest margin
|
3.97
|
%
|
3.84
|
%
|
4.08
|
%
|
3.84
|
%
|
Six Months Ended June 30, 2011 Compared to Six Months Ended
June 30, 2010
|
Three Months Ended June 30, 2011 Compared to Three Months Ended
June 30, 2010
|
|||||||||||||||||||||||
Increase (Decrease) Due to (1)
|
Increase (Decrease) Due to (1)
|
|||||||||||||||||||||||
Volume
|
Rate
|
Net
|
Volume
|
Rate
|
Net
|
|||||||||||||||||||
Interest and dividends earned on:
|
||||||||||||||||||||||||
Loans
|
$
|
2,972
|
$
|
(859
|
)
|
$
|
2,113
|
$
|
2,617
|
$
|
(255
|
)
|
$
|
2,362
|
||||||||||
Taxable securities
|
(166
|
)
|
(406
|
)
|
(572
|
)
|
(29
|
)
|
(86
|
)
|
(115
|
)
|
||||||||||||
Tax-exempt securities
|
125
|
(28
|
)
|
97
|
85
|
(11
|
)
|
74
|
||||||||||||||||
Interest-bearing deposits
|
7
|
13
|
20
|
16
|
11
|
27
|
||||||||||||||||||
Total earning assets
|
$
|
2,476
|
$
|
(818
|
)
|
$
|
1,658
|
$
|
2,471
|
(123
|
)
|
2,348
|
||||||||||||
Interest paid on:
|
||||||||||||||||||||||||
Demand deposits
|
$
|
8
|
$
|
3
|
$
|
11
|
$
|
7
|
$
|
6
|
$
|
13
|
||||||||||||
Savings and insured money market deposits
|
56
|
(193
|
)
|
(137
|
)
|
44
|
(32
|
)
|
12
|
|||||||||||||||
Time deposits
|
63
|
(866
|
)
|
(803
|
)
|
158
|
(474
|
)
|
(316
|
)
|
||||||||||||||
Federal Home Loan Bank advances and securities sold under agreements to repurchase
|
73
|
(192
|
)
|
(119
|
)
|
151
|
(184
|
)
|
(33
|
)
|
||||||||||||||
Total interest-bearing liabilities
|
$
|
355
|
$
|
(1,403
|
)
|
$
|
(1,048
|
)
|
$
|
392
|
$
|
(716
|
)
|
$
|
(324
|
)
|
||||||||
Net interest income
|
$
|
2,121
|
$
|
585
|
$
|
2,706
|
$
|
2,079
|
$
|
593
|
$
|
2,672
|
||||||||||||
(1) The change in interest due to both rate and volume has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.
|
PART II.
|
OTHER INFORMATION
|
||||
Item 1A.
|
Risk Factors
|
||||
There have been no material changes in the risk factors set forth in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission on March 16, 2011.
|
|||||
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
||||
(c)
|
Issuer Purchases of Equity Securities (1)
|
||||
Period
|
Total number of shares purchased
|
Average price paid per share
|
Total number of shares purchased as part of publicly announced plans or programs
|
Maximum number of shares that may yet be purchased under the plans or programs
|
|
4/1/11-4/30/11
|
5,674
|
$ 23.55
|
5,674
|
63,625
|
|
5/1/11-5/31/11
|
2,000
|
23.00
|
2,000
|
61,625
|
|
6/1/11-6/30/11
|
200
|
23.25
|
200
|
61,425
|
|
Quarter ended 6/30/11
|
7,844
|
$ 23.40
|
7,844
|
61,425
|
|
(1) On November 17, 2010, the Corporation’s Board of Directors approved a one year extension of the stock repurchase program that had been initially approved on November 18, 2009. The extension authorizes the purchase of up to 90,000 shares of the Corporation's outstanding common stock, including those shares purchased during the first year of the plan Purchases will be made from time to time on the open-market or in privately negotiated transactions, and will be at the discretion of management.
|
Item 6.
|
EXHIBITS
|
The following exhibits are either filed with this Form 10-Q or are incorporated herein by reference:
|
|
3.1 Certificate of Incorporation of Chemung Financial Corporation dated December 20, 1984. Filed as Exhibit 3.1 to Registrant’s Form 10-K filed with the SEC on March 13, 2008 and incorporated herein by reference.
|
|
3.2 Certificate of Amendment to the Certificate of Incorporation of Chemung Financial Corporation, dated March 28, 1988. Filed as Exhibit 3.2 to Registrant's Form 10-K filed with the SEC on March 13, 2008 and incorporated herein by reference.
|
|
3.3 Certificate of Amendment to the Certificate of Incorporation of Chemung Financial Corporation, dated May 13, 1998. Filed as Exhibit 3.4 of the Registrant's Form 10-K for the year ended December 31, 2005 and incorporated herein by reference.
|
|
3.4 Amended and Restated Bylaws of the Registrant, as amended to December 15, 2010. Filed as Exhibit 3.4 to Registrant's Form 10-K filed with the SEC on March 16, 2011 and incorporated herein by reference.
|
|
10.14 Change of Control Agreement dated April 8, 2011 between Chemung Canal Trust Company and Anders M. Tomson, President Capital Bank Division. Filed as Exhibit 10.14 to Registrant’s Form 10-Q filed with the SEC on May 13, 2011 and incorporated herein by reference.*
|
|
31.1 Certification of President and Chief Executive Officer of the Registrant pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
|
|
31.2 Certification of Treasurer and Chief Financial Officer of the Registrant pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
|
|
32.1 Certification of President and Chief Executive Officer of the Registrant pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. §1350.
|
|
32.2 Certification of Treasurer and Chief Financial Officer of the Registrant pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. §1350.
|
|
* Denotes management contract or compensatory plan.
|
DATE:
|
August 19, 2011
|
/s/ Ronald M. Bentley
|
||
Ronald M. Bentley
|
||||
President & Chief Executive Officer
|
||||
DATE:
|
August 19, 2011
|
/s/ John R. Battersby Jr.
|
||
John R. Battersby Jr.
|
||||
Treasurer & Chief Financial Officer
|
||||
(Principal Financial and Accounting Officer)
|
3.1 Certificate of Incorporation of Chemung Financial Corporation dated December 20, 1984. Filed as Exhibit 3.1 to Registrant’s Form 10-K filed with the SEC on March 13, 2008 and incorporated herein by reference.
|
3.2 Certificate of Amendment to the Certificate of Incorporation of Chemung Financial Corporation, dated March 28, 1988. Filed as Exhibit 3.2 to Registrant's Form 10-K filed with the SEC on March 13, 2008 and incorporated herein by reference.
|
3.3 Certificate of Amendment to the Certificate of Incorporation of Chemung Financial Corporation, dated May 13, 1998. Filed as Exhibit 3.4 of the Registrant's Form 10-K for the year ended December 31, 2005 and incorporated herein by reference.
|
3.4 Amended and Restated Bylaws of the Registrant, as amended to December 15, 2010. Filed as Exhibit 3.4 to Registrant's Form 10-K filed with the SEC on March 16, 2011 and incorporated herein by reference.
|
10.14 Change of Control Agreement dated April 8, 2011 between Chemung Canal Trust Company and Anders M. Tomson, President Capital Bank Division. Filed as Exhibit 10.14 to Registrant’s Form 10-Q filed with the SEC on May 13, 2011 and incorporated herein by reference.*
|
31.1 Certification of President and Chief Executive Officer of the Registrant pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
|
31.2 Certification of Treasurer and Chief Financial Officer of the Registrant pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
|
32.1 Certification of President and Chief Executive Officer of the Registrant pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. §1350.
|
32.2 Certification of Treasurer and Chief Financial Officer of the Registrant pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. §1350.
|
* Denotes management contract or compensatory plan
|
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $)
|
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
CONSOLIDATED BALANCE SHEETS (Unaudited) | Â | Â |
Securities held to maturity, fair value | $ 8,792,461 | $ 8,297,392 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Common stock, shares issued (in shares) | 5,310,076 | 4,300,134 |
Treasury stock, at cost (in shares) | 741,281 | 749,880 |
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
INTEREST AND DIVIDEND INCOME | Â | Â | Â | Â |
Loans, including fees | $ 11,207,847 | $ 8,845,646 | $ 19,783,190 | $ 17,670,421 |
Taxable securities | 1,594,432 | 1,709,419 | 2,843,016 | 3,412,987 |
Tax exempt securities | 369,088 | 295,701 | 684,511 | 588,021 |
Interest-bearing deposits | 62,088 | 34,527 | 101,816 | 82,275 |
Total interest and dividend income | 13,233,455 | 10,885,293 | 23,412,533 | 21,753,704 |
INTEREST EXPENSE | Â | Â | Â | Â |
Deposits | 1,160,405 | 1,452,046 | 2,187,770 | 3,116,766 |
Borrowed funds | 263,513 | 237,172 | 497,938 | 471,597 |
Securities sold under agreements to repurchase | 358,454 | 417,553 | 729,553 | 874,333 |
Total interest expense | 1,782,372 | 2,106,771 | 3,415,261 | 4,462,696 |
Net interest income | 11,451,083 | 8,778,522 | 19,997,272 | 17,291,008 |
Provision for loan losses | 125,000 | 375,000 | 250,000 | 750,000 |
Net interest income after provision for loan losses | 11,326,083 | 8,403,522 | 19,747,272 | 16,541,008 |
Other operating income: | Â | Â | Â | Â |
Trust & investment services income | 1,768,469 | 1,984,942 | 3,384,160 | 4,073,209 |
Service charges on deposit accounts | 1,066,831 | 1,128,384 | 2,049,909 | 2,321,862 |
Net gain on securities transactions | 485,811 | 451,094 | 679,209 | 451,094 |
Other-than-temporary loss on investment securities: | Â | Â | Â | Â |
Total impairment losses | 0 | (76,100) | 0 | (336,625) |
Loss recognized in other comprehensive income | 0 | 0 | 0 | 0 |
Net impairment loss recognized in earnings | 0 | (76,100) | 0 | (336,625) |
Net gain on sales of loans held for sale | 32,400 | 82,077 | 79,332 | 133,565 |
Credit card merchant earnings | 54,619 | 51,294 | 105,063 | 99,170 |
Gains on sales of other real estate owned | 88,961 | 33,550 | 88,961 | 33,550 |
Income from bank owned life insurance | 22,024 | 21,801 | 43,611 | 43,138 |
Other | 1,224,942 | 988,107 | 2,661,305 | 1,840,795 |
Total other operating income | 4,744,057 | 4,665,149 | 9,091,550 | 8,659,758 |
Other operating expenses: | Â | Â | Â | Â |
Salaries and wages | 4,338,097 | 3,759,735 | 8,261,602 | 7,593,955 |
Pension and other employee benefits | 1,081,663 | 984,287 | 2,124,770 | 2,018,554 |
Net occupancy expenses | 1,258,473 | 1,084,739 | 2,432,515 | 2,206,501 |
Furniture and equipment expenses | 565,083 | 513,169 | 1,062,530 | 975,768 |
Data processing expense | 1,043,286 | 832,131 | 1,905,099 | 1,635,006 |
Amortization of intangible assets | 288,689 | 181,051 | 465,192 | 370,168 |
Losses on sales of other real estate owned | 0 | 25,557 | 1,671 | 25,557 |
Other real estate owned expenses | 21,268 | 109,934 | 48,491 | 192,840 |
FDIC insurance | 189,989 | 320,045 | 442,385 | 625,353 |
Merger related expenses | 1,187,347 | 0 | 2,223,419 | 0 |
Other | 2,227,065 | 1,604,083 | 3,676,924 | 3,016,827 |
Total other operating expenses | 12,200,960 | 9,414,731 | 22,644,598 | 18,660,529 |
Income before income tax expense | 3,869,180 | 3,653,940 | 6,194,224 | 6,540,237 |
Income tax expense | 1,249,076 | 1,150,931 | 1,909,105 | 2,037,041 |
Net income | $ 2,620,104 | $ 2,503,009 | $ 4,285,119 | $ 4,503,196 |
Weighted average shares outstanding | 4,631,504 | 3,604,780 | 4,127,969 | 3,605,614 |
Basic and diluted earnings per share | $ 0.57 | $ 0.69 | $ 1.04 | $ 1.25 |
Document And Entity Information (USD $)
|
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
Jul. 29, 2011
|
Jun. 30, 2010
|
|
Entity Registrant Name | CHEMUNG FINANCIAL CORP | Â | Â |
Entity Central Index Key | 0000763563 | Â | Â |
Current Fiscal Year End Date | --12-31 | Â | Â |
Entity Well-known Seasoned Issuer | No | Â | Â |
Entity Voluntary Filers | No | Â | Â |
Entity Current Reporting Status | Yes | Â | Â |
Entity Filer Category | Smaller Reporting Company | Â | Â |
Entity Public Float | Â | Â | $ 41,351,063 |
Entity Common Stock, Shares Outstanding | Â | 4,573,695 | Â |
Document Fiscal Year Focus | 2011 | Â | Â |
Document Fiscal Period Focus | Q2 | Â | Â |
Document Type | 10-Q | Â | Â |
Amendment Flag | false | Â | Â |
Document Period End Date | Jun. 30, 2011 |
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Business Combinations
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations | 5. Business Combinations Acquisition of Fort Orange Financial Corp. On April 8, 2011, the Corporation completed its merger with Fort Orange Financial Corp. (“FOFC”), the holding company of Capital Bank & Trust Company (“Capital Bank”) based in Albany, New York, with FOFC being merged with and into the Corporation, and the Corporation being the surviving entity. Immediately following the merger, Capital Bank was merged with and into the Bank. As of the date of the merger, Capital Bank's unaudited balance sheet included approximately $254 million in assets, a loan portfolio approximating $171 million and deposits of $199 million. With the completion of the acquisition, the Corporation became a $1.2 billion financial institution with 28 offices located in eight New York counties, as well as Bradford County in Pennsylvania. The Capital Bank branch locations are in Albany, Clifton Park, Latham and Slingerlands. Under the terms of an Agreement and Plan of Merger (the “Agreement”) entered into on October 14, 2010, the Corporation purchased all of the outstanding shares of FOFC common stock in a stock and cash transaction valued at $31.9 million, based upon the Corporation's closing stock price on April 8, 2011 of $23.50. For each share of FOFC common stock outstanding immediately prior to the merger, each FOFC shareholder had the right to elect to receive: (i) all cash in the amount of $7.50 per share (“Cash Consideration”), (ii) all stock at an exchange ratio of 0.3571 of a share of the Corporation's common stock for each share of FOFC common stock (“Stock Consideration”) or (iii) a mix of Cash Consideration for 25% of their shares and Stock Consideration for 75% of their shares. The total consideration to be paid by the Corporation was subject to the requirement that 25% of the FOFC common stock be acquired for the Cash Consideration and 75% be acquired for the Stock Consideration. As a result of the merger, the Corporation issued approximately 1.01 million additional shares of its common stock. The table below illustrates the reconciliation of shares outstanding and the calculation of the consideration effectively transferred.
As a result of the FOFC merger, we recognized assets acquired and liabilities assumed at their acquisition date fair value as presented below: (in thousands).
The goodwill generated by the FOFC merger consists of, among other things, synergies and increased economies of scale, including the ability to offer more diverse and profitable products, greater diversity in the branch system which may lead to lower cost deposits, and an increased legal lending limit. We expect that no goodwill recognized as a result of the FOFC merger will be deductible for income tax purposes. Purchase accounting adjustments are subject to refinement as management finalizes their fair value measurements, including their analysis of identifiable intangible assets. Since the branches acquired were merged into the bank, there is no segment impact of the FOFC merger. The fair value of the financial assets acquired included loans receivable with an unpaid principal balance of $170.7 million. Accounting principles generally accepted in the United States of America (“U.S. GAAP”) prohibits carrying over an allowance for loan losses for impaired loans purchased in the merger. The table below illustrates the fair value adjustments made to the unpaid principal balance in order to present a fair value of the loans acquired (in thousands).
The market rate adjustment represents the movement in market interest rates, irrespective of credit adjustments, compared to the stated rates of the acquired loans. The credit adjustment made on pools of homogeneous loans represents the changes in credit quality of the underlying borrowers from the loan inception to the merger date. The credit adjustment on loans with deteriorating credit quality is derived in accordance with Accounting Standard Codification 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality” and represents the portion of the loan balance that has been deemed uncollectible based on our expectations of future cash flows for each respective loan. The information below presents the recorded fair value on April 8, 2011 of the Corporation's purchased impaired loans with the accretable and non-accretable related adjustments from the perspective of total contractual cash flows (in thousands).
The results of operations of the merged entity have been reflected in Chemung Financial Corporation's consolidated statements of income beginning as of the acquisition date. Pro forma condensed consolidated income statements for the three and six months ended June 30, 2011 and 2010 as if the merger occurred at the beginning of each period presented are as follows (in thousands):
The consolidated income statement for the Corporation includes $2.718 million of net interest income, $28 thousand of non-interest income and net income of $1.115 million of the acquiree since the acquisition date. |
Components of Quarterly and Year
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Components of Quarterly and Year [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Quarterly and Year | 10. Components of Quarterly and Year-to-Date Net Periodic Benefit Costs
On April 21, 2010 the Corporation's Board of Directors approved an amendment to the Corporation's Defined Benefit Pension Plan. Under the amendment, which became effective on July 1, 2010, new employees hired on or after the effective date will not be eligible to participate in the plan, however, existing participants at that time will continue to accrue benefits. The Corporation anticipates that the amendment will result in a decrease in the future benefit obligations of the plan and the corresponding net periodic benefit cost associated with the plan. |
Basis of Presentation
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
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Basis of Presentation [Abstract] | Â |
Basis of Presentation | 1. Basis of Presentation Chemung Financial Corporation (the "Corporation"), through its wholly owned subsidiaries, Chemung Canal Trust Company (the "Bank") and CFS Group, Inc., a financial services company, provides a wide range of banking, financing, fiduciary and other financial services to its local market area. The consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiaries. All material intercompany accounts and transactions are eliminated in consolidation. The data in the consolidated balance sheet as of December 31, 2010 was derived from the audited consolidated financial statements in the Corporation's 2010 Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 16, 2011. That data, along with the other interim financial information presented in the consolidated balance sheets, statements of income, shareholders' equity and comprehensive income, and cash flows should be read in conjunction with the audited consolidated financial statements, including the notes thereto, contained in the 2010 Annual Report on Form 10-K. Amounts in prior periods' consolidated interim financial statements are reclassified whenever necessary to conform to the current period's presentation. The consolidated financial statements included herein reflect all adjustments which are, in the opinion of management, of a normal recurring nature and necessary to present fairly the Corporation's financial position as of June 30, 2011 and December 31, 2010, and results of operations for the three and six-month periods ended June 30, 2011 and 2010, and changes in shareholders' equity and cash flows for the six-month periods ended June 30, 2011 and 2010. Subsequent events were evaluated for any required recognition or disclosure. The results for the periods presented are not necessarily indicative of results to be expected for the entire fiscal year or any other interim period. |
Commitments and Contingencies
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Jun. 30, 2011
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Commitments and Contingencies [Abstract] | Â |
Commitments and Contingencies | 7. Commitments and Contingencies The Corporation is a party to certain financial instruments with off-balance sheet risk such as commitments under standby letters of credit, unused portions of lines of credit, overdraft protection and commitments to fund new loans. In accordance with U.S. GAAP, these financial instruments are not recorded in the financial statements. The Corporation's policy is to record such instruments when funded. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are generally used by the Corporation to manage clients' requests for funding and other client needs. Also in the normal course of business, there are various outstanding claims and legal proceedings involving the Corporation or its subsidiaries. On February 14 and April 14, 2011, the Bank received separate settlement demands from representatives of beneficiaries of certain trusts for which the Bank has acted as trustee. The settlement demands relate to alleged claims of, among other things, breach of the Bank's fiduciary duties as trustee, including the Bank's alleged failure to adequately diversify the relevant trust portfolios. The beneficiaries seek aggregate damages of up to approximately $27.0 million. While none of the potential claims have been asserted in court, management believes it is probable that some or all of the claims will be asserted in the future. Although these matters are inherently unpredictable, management will defend any claims vigorously and has concluded that it is reasonably possible, but not probable, that the financial position, results of operations or cash flows of the Corporation could be materially adversely affected in any particular period by the unfavorable resolution of these as yet unasserted claims. Accordingly, no liabilities have been accrued in the Corporation's financial statements with respect to the unasserted claims. |
Stock Based Compensation
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Jun. 30, 2011
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Stock Based Compensation [Abstract] | Â | ||||||||||||||||||||||||
Stock Based Compensation | 12. Stock Based Compensation Board of Director's Stock Compensation Members of the Board of Directors receive common shares of the Corporation equal in value to the amount of fees individually earned during the previous year for service as a director. The common shares are distributed to the Corporation's individual board members from treasury shares of the Corporation on or about January 15 following the calendar year of service. Additionally, the President and CEO of the Corporation, who does not receive cash compensation as a member of the Board of Directors, is awarded common shares equal in value to the average of those awarded to board members not employed by the Corporation who have served for twelve (12) months during the prior year. An expense of $231 thousand related to this compensation was recognized during the year of 2010. During January 2011, 10,378 shares were re-issued from treasury to fund the stock component of directors' compensation. Restricted Stock Plan On June 16, 2010, the Corporation's Board of Directors approved the Corporation's Restricted Stock Plan (the "Plan"), which became effective immediately. Pursuant to the Plan, the Corporation may make discretionary grants of restricted stock to officers other than the Corporation's Chief Executive Officer. Compensation expense is recognized over the vesting period of the awards based on the fair value of the stock at issue date. The maximum number of shares as to which stock awards may be granted under the Plan is 10,000 per year, with these shares vesting over a 5 year period. A summary of restricted stock activity from December 31, 2010 to June 30, 2011 is presented below:
As of June 30, 2011, there was $136,275 of total unrecognized compensation cost related to nonvested shares granted under the Plan. The cost is expected to be recognized over a weighted-average period of 4.67 years. |
Securities
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Jun. 30, 2011
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Securities [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities | 8. Securities Amortized cost and estimated fair value of securities available for sale are as follows:
Amortized cost and estimated fair value of securities held to maturity are as follows:
The amortized cost and estimated fair value of debt securities are shown by expected maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties:
Proceeds from sales and calls of securities available for sale for the three and six months ended June 30, 2011, were $6,485,156 and $56,656,054, respectively. Realized gross gains on these sales and calls were $485,811 and $679,209 during the three and six month periods ended June 30, 2011, respectively. There were no sales or calls of securities available for sale that resulted in losses for the three or six-months ended June 30, 2011. Proceeds from sales and calls of securities available for sale for the three and six months ended June 30, 2010, were $12,545,459 and $30,440,459, respectively. Realized gross gains on these sales and calls were $451,094 during the three and six month periods ended June 30, 2010. There were no sales or calls of securities available for sale that resulted in losses for the three or six-months ended June 30, 2010. The following table summarizes the investment securities available for sale and held to maturity with unrealized losses at June 30, 2011 and December 31, 2010 by aggregated major security type and length of time in a continuous unrealized loss position:
Other-Than-Temporary-Impairment In determining OTTI for debt securities, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Corporation has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time. In order to determine OTTI for purchased beneficial interests, the Corporation compares the present value of the remaining cash flows as estimated at the preceding evaluation date to the current expected remaining cash flows. OTTI is deemed to have occurred if there has been an adverse change in the remaining expected future cash flows. When OTTI occurs, for either debt securities or purchased beneficial interests, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis, less any current-period credit loss. If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis, less any current-period credit loss, the OTTI shall be recognized in earnings equal to the entire difference between the investment's amortized cost basis and its fair value at the balance sheet date. If an entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current-period loss, the OTTI shall be separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment. As of June 30, 2011, the majority of the Corporation's unrealized losses in the investment securities portfolio related to two pooled trust preferred securities. The decline in fair value on these securities is primarily attributable to the financial crisis and resulting credit deterioration and financial condition of the underlying issuers, all of which are financial institutions. This deterioration may affect the future receipt of both principal and interest payments on these securities. This fact combined with the current illiquidity in the market makes it unlikely that the Corporation would be able to recover its investment in these securities if the securities were sold at this time. Our analysis of these investments includes $723 thousand book value of collateralized debt obligations ("CDO's") consisting of pooled trust preferred securities. These securities were rated high quality at inception, but at June 30, 2011 Moody's rated these securities as Caa3, which is defined as substantial risk of default. The Corporation uses the OTTI evaluation model to compare the present value of expected cash flows to the previous estimate to determine if there are adverse changes in cash flows during the quarter. The OTTI model considers the structure and term of the CDO and the financial condition of the underlying issuers. Specifically, the model details interest rates, principal balances of note classes and underlying issuers, the timing and amount of interest and principal payments of the underlying issuers, and the allocation of the payments to the note classes. The current estimate of expected cash flows is based on the most recent trustee reports and any other relevant market information including announcements of interest payment deferrals or defaults of underlying trust preferred securities. Assumptions used in the model include expected future default rates and prepayments. We assume no recoveries on defaults and treat all interest payment deferrals as defaults. In determining the amount of "currently performing" collateral for the purposes of modeling the expected future cash flows, management analyzed the default and deferral history over the past 3 years in both of the securities held. This review indicated significant increases in the number and amount of defaults and deferrals by the issuers. Additionally, management has noted the correlation between the rising levels of non-performing loans as a percent of tangible equity plus loan loss reserves by those issuers that have defaulted and/or deferred interest payments. Therefore management has used this ratio as a primary indicator to project the levels of future defaults for modeling purposes. Management recognizes the potential of defaults and deferrals to continue over the next 12 to 24 months. The operating environment remains difficult for community and regional banks in many parts of the country, which could lead to higher default and deferral levels. Forty-Eight depository institutions were closed by regulators during the first six months of 2011. The following table provides detailed information related to the pooled trust preferred securities held as of June 30, 2011:
In the table above, "Excess Subordination as % of Performing Collateral" was calculated by dividing the difference between the total face value of performing collateral less the face value of all outstanding note balances not subordinate to our investment, by the total face value of performing collateral. This ratio measures the extent to which there may be tranches within each pooled trust preferred structure available to absorb credit losses before the Corporation's securities would be impacted. As mentioned earlier, the levels of defaults and deferrals in these pools have increased significantly in recent months, which have resulted in a significant reduction in the amount of performing collateral. As a result, the negative Excess Subordination as a % of Performing Collateral percentages shown above indicate there is no support from subordinate tranches available to absorb losses before the Corporation's securities would be impacted. A negative ratio is not the only factor to consider when determining if OTTI should be recorded. Other factors affect the timing and amount of cash flows available for payments to investors such as the excess interest paid by the issuers, as issuers typically pay higher rates of interest than are paid out to investors. Upon completion of the June 30, 2011 analysis, our model indicated no additional other-than-temporary impairment on these securities. Both of these securities remained classified as available for sale and represented $351 thousand of the unrealized losses reported at June 30, 2011. Payments continue to be made as agreed on the TPREF Funding II security, however the Corporation learned early in August 2011 that the MM Community Funding IX security was officially in default and the quarterly interest payment would not be made as scheduled. This action had no material impact to the financial statements as of June 30, 2011 and no future interest will be accrued on this security. When the analysis of these securities was conducted at June 30, 2011, the present value of expected future cash flows using a discount rate equal to the yield in effect at the time of purchase was compared to the previous quarters' analysis. This analysis indicated no further decline in value attributed to credit related factors stemming from any further deterioration in the underlying collateral payment streams in either security held. Additionally, the present value of the expected future cash flows was calculated using a current estimated discount rate that a willing market participant might use to value the securities based on current market conditions and interest rates. This comparison indicated a slight increase in value during the quarter, based on factors other than credit which resulted in a gain reported in other comprehensive income. This result is consistent with the fact that some improvement has been noted recently in the credit markets related to overall corporate and financial institution credit spreads. Therefore, while the credit quality related to these securities remained stable during the quarter, the change in value related to other factors actually improved and resulted in this increase in the overall fair value of the impaired securities. Changes in credit quality may or may not correlate to changes in the overall fair value of the impaired securities as the change in credit quality is only one component in assessing the overall fair value of the impaired securities. Therefore the recognition of additional credit related OTTI could result in a gain reported in other comprehensive income. Total other-than-temporary impairment recognized in accumulated other comprehensive income was $214,680 and $233,895 for securities available for sale at June 30, 2011 and June 30, 2010, respectively. The table below presents a roll forward of the cumulative credit losses recognized in earnings for the three and six-month periods ending June 30, 2011 and 2010:
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Comprehensive Income
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Jun. 30, 2011
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Comprehensive Income | 6. Comprehensive Income Comprehensive income or loss of the Corporation represents net income plus other comprehensive income or loss, which consists of the net change in unrealized holding gains or losses on securities available for sale and the change in the funded status of the Corporation's defined benefit pension plan and other benefit plans, net of the related tax effect. Accumulated other comprehensive income or loss represents the net unrealized holding gains or losses on securities available for sale and the funded status of the Corporation's defined benefit pension plan and other benefit plans, as of the consolidated balance sheet dates, net of the related tax effect. Comprehensive income for the three and six-month periods ended June 30, 2011 was $5,141,830 and $7,241,361, respectively. Comprehensive income for the three and six-month periods ended June 30, 2010 was $3,667,644 and $6,525,784, respectively. The following summarizes the components of other comprehensive income:
The following is a summary of the accumulated other comprehensive income balance, net of tax:
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Earnings Per Common Share
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Jun. 30, 2011
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Earnings Per Share [Abstract] | Â |
Earnings Per Share | 2. Earnings Per Common Share Basic earnings per share is net income divided by the weighted average number of common shares outstanding during the period. Issuable shares including those related to directors' restricted stock units and directors' stock compensation are considered outstanding and are included in the computation of basic earnings per share as they are earned. All outstanding unvested share based payment awards that contain rights to nonforfeitable dividends are considered participating securities for this calculation. The restricted stock awards granted in December 2010 are grants of participating securities. The impact of the participating securities on earnings per share is not material. Earnings per share information is adjusted to present comparative results for stock splits and stock dividends that occur. Earnings per share were computed by dividing net income by 4,127,969 and 3,605,614 weighted average shares outstanding for the six-month periods ended June 30, 2011 and 2010, and 4,631,504 and 3,604,780 weighted average shares outstanding for the three-month periods ended June 30, 2011 and 2010, respectively. There were no dilutive common stock equivalents during the three and six-month periods ended June 30, 2011 or 2010. |
Fair Value
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Fair Value [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | 3. Fair Value Fair value is the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a reporting entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability. The fair values of securities available for sale are usually determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs), or matrix pricing, which is a mathematical technique widely used to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 inputs). The Corporation's investment in collateralized debt obligations consisting of pooled trust preferred securities which are issued by financial institutions were historically priced using Level 2 inputs. The lack of observable inputs and market activity in this class of investments has been significant and resulted in unreliable external pricing. Broker pricing and bid/ask spreads, when available, have varied widely. The once active market has become comparatively inactive. As a result, these investments are now priced using Level 3 inputs. The Corporation has developed an internal model for pricing these securities. This is the same model used in determining other-than-temporary impairment (“OTTI”) as further described in Note 8. Information such as historical and current performance of the underlying collateral, deferral/default rates, collateral coverage ratios, break in yield calculations, cash flow projections, liquidity and credit premiums required by a market participant, and financial trend analysis with respect to the individual issuing financial institutions, are utilized in determining individual security valuations. Discount rates were utilized along with the cash flow projections in order to calculate an appropriate fair value. These discount rates were calculated based on industry index rates and adjusted for various credit and liquidity factors. Due to current market conditions as well as the limited trading activity of these securities, the market value of the securities is highly sensitive to assumption changes and market volatility. The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals and collateral evaluations. The appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by third party appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. Non-recurring adjustments to certain commercial and residential real estate properties classified as other real estate owned ("OREO") are measured at the lower of carrying amount or fair value, less costs to sell. Fair values are generally based on third party appraisals of the property, resulting in a Level 3 classification. In cases where the carrying amount exceeds the fair value less costs to sell, an impairment loss is recognized. Assets and liabilities measured at fair value on a recurring basis are summarized below:
The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six-month periods ending June 30, 2011 and 2010:
Assets and liabilities measured at fair value on a non-recurring basis are summarized below:
Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a carrying amount of $4,414,654 with a valuation allowance of $883,918 as of June 30, 2011, resulting in a $250,000 provision for loan losses for the six-month period ending June 30, 2011. OREO, which is measured by the lower of carrying or fair value less costs to sell, had a net carrying amount of $429,861 at June 30, 2011. The net carrying amount reflects the outstanding balance of $540,428 net of a valuation allowance of $110,567 at June 30, 2011 and no write downs resulted for the six-month period ending June 30, 2011. Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a carrying amount of $892,298, with a valuation allowance of $239,758 as of December 31, 2010, resulting in no additional provision for loan losses for the year ending December 31, 2010. OREO, which is measured at the lower of carrying or fair value less costs to sell, had a net carrying amount of $740,620 at December 31, 2010. The net carrying amount reflected an outstanding balance of $909,947, net of a valuation allowance of $169,327 at December 31, 2010 which resulted in write downs of $169,327 for the year ending December 31, 2010. The carrying amounts and estimated fair values of other financial instruments, at June 30, 2011 and December 31, 2010, are as follows:
The methods and assumptions used to estimate fair value are described as follows: Carrying amount is the estimated fair value for cash and due from financial institutions, interest bearing deposits, accrued interest receivable and payable, demand deposits, short-term debt, and variable rate loans or deposits that reprice frequently and fully. The methods for determining the fair values for securities were described previously. For fixed rate loans or deposits and for variable rate loans or deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. Fair value of debt is based on current rates for similar financing. It was not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability. The fair value of off-balance-sheet items is not considered material. |
Segment Reporting
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Segment Reporting [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | 11. Segment Reporting The Corporation manages its operations through two primary business segments: core banking and trust and investment advisory services. The core banking segment provides revenues by attracting deposits from the general public and using such funds to originate consumer, commercial, commercial real estate, and residential mortgage loans, primarily in the Corporation's local markets and to invest in securities. The trust and investment advisory services segment provides revenues by providing trust and investment advisory services to clients. Summarized financial information concerning the Corporation's reportable segments and the reconciliation to the Corporation's consolidated results is shown in the following table. Income taxes are allocated based on the separate taxable income of each entity and indirect overhead expenses are allocated based on reasonable and equitable allocations applicable to the reportable segment. Holding company amounts are the primary differences between segment amounts and consolidated totals, and are reflected in the Holding Company and Other column below, along with amounts to eliminate transactions between segments. (dollars in thousands)
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