-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L3/UMpHxucSr91jCydhPz/tiI8yE1zyV6nVANdcNwGPDuyUC5AfYqh4b8OZ3SEp+ BLhy7AjX83oL5vPM0MI+zA== 0000763563-99-000018.txt : 19990811 0000763563-99-000018.hdr.sgml : 19990811 ACCESSION NUMBER: 0000763563-99-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHEMUNG FINANCIAL CORP CENTRAL INDEX KEY: 0000763563 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 161237038 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-13888 FILM NUMBER: 99682503 BUSINESS ADDRESS: STREET 1: ONE CHEMUNG CANAL PLZ STREET 2: P O BOX 1522 CITY: ELMIRA STATE: NY ZIP: 14902 BUSINESS PHONE: 6077373711 MAIL ADDRESS: STREET 1: ONE CHEMUNG CANAL PLZ STREET 2: P O BOX 1522 CITY: ELMIRA STATE: NY ZIP: 14902 10-Q 1 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, 1999 [ ] 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 I.R.S. Employer incorporation or organization) Identification No. One Chemung Canal Plaza, Elmira, NY 14902 (Address of principal executive offices) (Zip Code) (607) 737-3711 (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 XX NO Indicate the number of shares outstanding of each of the issuer's classes of common stock as of June 30, 1999: Common Stock, $.01 par value -- outstanding 4,090,954 shares CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARY INDEX PAGE PART I. FINANCIAL INFORMATION Item 1: Financial Statements - Unaudited Condensed Consolidated Balance Sheets 1 Condensed Consolidated Statements of Income 2 Condensed Consolidated Statements of Cash Flows 3 Notes to Condensed Consolidated Financial Statements 4 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 5 Item 3: Quantitative and Qualitative Disclosures about Market Risk Information required by this Item is set forth herein in Management's Discussion and Analysis of Financial Condition and Results of Operations under the heading Interest Rate Risk. 10 Item 4: Submission of matters to a vote of Chemung Financial Corporation Shareholders 11 PART II. OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K 12 All other items required by Part II are either inapplicable or would require an answer which is negative. SIGNATURES 13 PART I. FINANCIAL INFORMATION Item 1: Financial Statements
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS Unaudited June 30 Dec. 31 1999 1998 ASSETS Cash and due from banks $22,013,727 $27,515,582 Int.-bearing deposits with other financial institutions 1,649,445 1,304,207 Securities held to maturity, fair value of $6,789,155 at June 30, 1999 and $6,660,923 at Dec. 31, 1998 6,789,155 6,660,923 Securities available for sale, at fair value 226,403,315 235,293,736 Loans, net of unearned income and deferred fees 346,426,520 329,255,342 Allowance for loan losses (4,612,355) (4,509,185) Loans, net 341,814,165 324,746,157 Bank premises and equipment, net 10,379,752 10,084,608 Intangible assets, net of accumulated amortization 5,934,677 6,228,328 Other assets 12,163,756 11,826,068 Total assets $627,147,992 $623,659,609 LIABILITIES Deposits: Non-interest bearing $ 94,103,147 $ 101,908,083 Interest bearing 385,512,443 364,231,279 Total deposits 479,615,590 466,139,362 Securities sold under agreement to repurchase 50,122,652 50,587,369 Federal Home Loan Bank Advances 22,200,000 26,900,000 Other liabilities 9,207,420 13,943,251 Total liabilities 561,145,662 557,569,982 SHAREHOLDERS' EQUITY Common Stock, $.01 par value per share; authorized 10,000,000, issued: 4,300,134 43,001 43,001 Surplus 21,864,001 20,851,800 Retained earnings 45,199,320 42,770,991 Treasury stock, at cost (209,180 shares at June 30, 1999 and 197,380 at Dec. 31, 1998) (3,276,454) (2,970,954) Accumulated Other Comprehensive Income 2,172,462 5,394,789 Total shareholders' equity 66,002,330 66,089,627 Total liabilities & shareholders' equity $627,147,992 $623,659,609 See Accompanying Notes to Condensed Consolidated Financial Statements
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF INCOME Unaudited 6 Months Ended 3 Months Ended June 30, June 30, INTEREST AND DIVIDEND INCOME 1999 1998 1999 1998 Loans $14,120,637 $13,503,936 $ 7,223,280 $ 6,902,141 Securities 6,876,553 6,245,131 3,449,098 3,159,975 Federal funds sold 269,845 263,513 123,955 117,534 Interest bearing deposits 143,023 160,439 58,808 63,125 Total interest and dividend income 21,410,058 20,173,019 10,855,141 10,242,775 INTEREST EXPENSE Deposits 7,327,100 7,598,242 3,719,549 3,864,983 Securities sold under agreement to repurchase and funds borrowed 1,772,075 952,400 887,380 516,166 Total interest expense 9,099,175 8,550,642 4,606,929 4,381,149 Net interest income 12,310,883 11,622,377 6,248,212 5,861,626 Provision for loan losses 400,000 400,000 200,000 200,000 Net interest income after provision for loan losses 11,910,883 11,222,377 6,048,212 5,661,626 Realized gains-security trans., net 150,435 147,395 150,435 10 Other operating income 4,303,688 3,688,786 2,198,002 1,844,188 Total other operating income 4,454,123 3,836,181 2,348,437 1,844,198 Other operating expenses 10,623,095 10,114,083 5,311,619 5,182,464 Income before income taxes 5,741,911 4,944,475 3,085,030 2,323,360 Income tax expense 1,839,615 1,563,800 1,022,371 690,894 Net Income $ 3,902,296 $ 3,380,675 $ 2,062,659 $ 1,632,466 Basic and Diluted Earnings per Share $0.94 $0.82 $0.50 $0.40 See Accompanying Notes to Condensed Consolidated Financial Statements
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited Six Months Ended June 30 1999 1998 OPERATING ACTIVITIES Net income $ 3,902,296 $ 3,380,675 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of intangible assets 293,651 293,651 Provision for loan losses 400,000 400,000 Depreciation and amortization 784,260 751,820 Premium amortization and discount accretion on securities, net 302,707 92,316 Net Gain on Sales of Securities (150,435) (147,395) Increase in other assets (337,688) (1,217,594) Increase (decrease) other liabilities (1,660,489) 192,282 Net cash provided by operating activities 3,534,302 3,745,755 INVESTING ACTIVITIES Proceeds from maturities of securities - AFS 40,065,272 26,865,482 Proceeds from maturities of securities -HTM 1,503,139 1,708,364 Proceeds from sales of securities - AFS 12,238,695 6,080,902 Purchases of securities - AFS (48,930,999 (57,292,964) Purchases of securities - HTM (1,631,370 (840,920) Purchases of premises and equipment, net (1,079,404 (684,923) Increase in loans, net of repayments and other reductions (18,206,803) (23,327,584) Proceeds from sales of student loans 738,795 1,101,984 Net cash used by investing activities (15,302,675) (46,389,659) FINANCING ACTIVITIES Net increase in demand deposits, NOW, savings and insured money market accounts 2,115,956 486,500 Net increase in certificates of deposit and individual retirement accounts 11,360,272 20,231,564 Net increase (decrease) in securities sold under agreements to repurchase (464,716) 26,858,030 Net decrease in Federal Home Loan Bank advances (4,700,000) (6,300,000) Purchase of treasury shares (305,500) (335,033) Cash dividends paid (1,394,256) (1,280,750) Net cash provided by financing activities 6,611,756 39,660,311 Net decrease in cash and cash equivalents (5,156,617) (2,983,593) Cash and cash equivalents at beginning of year 28,819,789 34,418,455 Cash and cash equivalents at end of period $23,663,172 $31,434,862 See Accompanying Notes to Condensed Consolidated Financial Statements
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. Summary of Significant Accounting Policies Basis of Presentation Chemung Financial Corporation (the Company) operates as a bank holding company. Its only subsidiary is Chemung Canal Trust Company (the Bank). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, the Bank. All material intercompany accounts and transactions have been eliminated in the consolidation. The data in the condensed consolidated balance sheet as of December 31, 1998 was derived from the Company's 1998 Annual Report to Shareholders. That data, along with the other interim financial information presented in the condensed consolidated balance sheets, statements of income and cash flows should be read in conjunction with the consolidated financial statements, including the notes thereto, contained in the 1998 Annual Report to Shareholders. The condensed 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 Company's financial position as of June 30, 1999 and December 31, 1998, and results of operations for the three and six month periods ended June 30, 1999 and 1998 and cash flows for the six months ended June 30, 1999 and 1998. Net Income Per Share Net income per share was computed by dividing net income by 4,145,996 and 4,123,479 weighted average shares outstanding for the six month periods ended June 30, 1999 and 1998 and 4,142,243 and 4,123,476 weighted average shares outstanding for the three month periods ended June 30, 1999 and 1998, respectively. Issuable shares (such as those related to directors restricted stock units)are considered outstanding and are included in the computation of Basic EPS. In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. During the second quarter of 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133." SFAS No. 137 defers the effective date of SFAS No. 133 by one year from fiscal years beginning after June 15, 1999 to fiscal quarters of fiscal years beginning after June 15, 2000. Comprehensive Income Comprehensive income for the six-month periods ended June 30, 1999 and 1998 was $679,969 and $3,928,040, respectively. The following summarizes the components of other comprehensive income:
Unrealized Gains or Losses on Securities: Unrealized holding gains during the six months ended June 30, 1998, net of tax (pre-tax amount of $1,058,758) $ 635,890 Reclassification adjustment for gains realized in net income during the six months ended June 30, 1998, net of tax (pre-tax amount of $147,395) (88,525) Other comprehensive income-six months ended June 30, 1998 $ 547,365 Unrealized holding losses during the six months ended June 30, 1999, net of tax (pre-tax amount of $(5,214,745)) $ (3,131,976) Reclassification adjustment for gains or losses realized in net income during the six months ended June 30, 1999, net of tax (pre-tax amount of $150,435) (90,351) Other comprehensive loss -six months ended June 30, 1999 $(3,222,327)
Item 2: Management's Discussion and Analysis of Financial Condition And Results of Operation The review that follows focuses on the factors affecting the financial condition and results of operations of Chemung Financial Corporation during the three month and six month periods ended June 30, 1999, with comparisons to 1998 as applicable. The consolidated interim financial statements and related notes, as well as the 1998 Annual Report to Shareholders should read in conjunction with this review. Amounts in prior period consolidated interim financial statements are reclassified whenever necessary to conform to the current periods presentation. Forward-looking Statements Statements included in this review and in future filings by Chemung Financial Corporation with the Securities and Exchange Commission, in Chemung Financial Corporation press releases, and in oral statements made with the approval of an authorized executive officer, which are not historical or current facts, are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. Chemung Financial Corporation wishes to caution readers not to place undue reliance on any such forward- looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect Chemung Financial Corporation's actual results, and could cause Chemung Financial Corporation's actual financial performance to differ materially from that expressed in any forward-looking statement: (1) credit risk, (2) interest rate risk, (3) competition, (4) certain vendors of critical systems or services failing to comply with Year 2000 programming issues, (5) changes in the regulatory environment, and (6) changes in general business and economic trends. The foregoing list should not be construed as exhaustive, and the Company disclaims any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements, or to reflect the occurrence of anticipated or unanticipated events. Total assets at June 30, 1999 were $627.1 million, an increase of $3.5 million or 0.56% since the beginning of the year. While our total loan portfolio has grown by $17.1 million, this has been somewhat offset by decreases in our securities portfolio and cash and due from banks of $8.8 million and $5.5 million respectively. Financial Condition The Available for Sale segment of the securities portfolio at June 30, 1999 totaled $226.4 million as compared to $235.3 million at the beginning of the year, a decrease of 3.78%. At amortized cost, an increase in Federal Agency Bonds ($7.8 million) was offset primarily by decreases in Mortgage Backed Securities ($6.9 million), U.S. Treasury Notes ($2.5 million), and Municipal Bonds ($1.9 million). The unrealized gain for available for sale securities has declined by $5.4 million since year end 1998 reflecting the impact of the higher market interest rates we have seen in 1999. The Held to Maturity segment of the portfolio consisting primarily of Municipal Obligations totaled $6.8 million at June 30, 1999 versus $6.7 million at the beginning of the year. Realized net gains on sales of securities Available for sale for the six-month period ended June 30, 1999 were $150,435 as compared to $147,395 through June 30, 1998. Total loans have increased $17.1 million or 5.26% since the beginning of the year. $13.7 million of this growth has occurred in our commercial loan portfolio where we have seen strong demand throughout the year. The total mortgage portfolio has grown by $3.8 million or 4.22%, and we continue to see steady growth in this area. While total consumer loan balances are down $250 thousand, we are encouraged by the fact that we have recently seen an increase in indirect auto financing. Total deposits at June 30, 1999 were $479.6 million as compared to $466.1 million at the beginning of the year, an increase of $13.5 million or 2.89%. Public fund balances were up $11.9 million with personal and non- personal balances increasing $1.6 million. Results of Operations Net income for the second quarter totaled $2.063 million or $0.50 per share as compared to $1.632 million or $0.40 per share for the second quarter of 1998. Included in second quarter 1999 earnings is a gain on the sale of securities totaling $150 thousand, with no securities gains taken during the second quarter of 1998. This added approximately $90 thousand to net after tax earnings, or about $0.02 per share. As compared to last year, the remainder of the earnings improvement is attributed primarily to a $387 thousand or 6.8% increase in net interest income as well as a $354 thousand or 19.2% increase in non interest income, exclusive of the above noted securities gains. Net income for the six month period ended June 30, 1999 was $3.902 million, a $522 thousand or 15.4% increase over last years six month results. Earnings per share for the 1999 six month period were $0.94 versus $0.82 the prior year. Despite a 29 basis point decline in our net interest margin, net interest income has increased by $689 thousand or 6.1% due to an approximate $69 million increase in average earning assets. Additionally, non interest income is $618 thousand or 16.1% higher than last year, while operating expenses have increased by $509 thousand or 5.0%. Liquidity and Capital Resources As indicated on the Condensed Consolidated Statements of Cash Flows, cash and cash equivalents have decreased $5.2 million since the beginning of the year. In addition to cash provided by operating activities ($3.5 million), other primary sources of cash flow during the six month period ended June 30, 1999 included proceeds from the sale and maturity of investment securities ($53.8 million), and an increase in deposit balances ($13.5 million). Cash proceeds generated from the above sources have been used primarily to fund the purchase of investment securities ($50.6 million), an increase in loans, net of repayments ($18.2 million), the repayment of overnight advances from the Federal Home Loan Bank ($4.7 million), the payment of cash dividends ($1.4 million), and purchases of premises and equipment, net ($1.1 million). During the six months ended June 30, 1999, the Company acquired 11,800 treasury shares at an average price of $25.89 per share. No treasury shares have been sold thus far in 1999. During the quarter, the Company declared a cash dividend of $0.19 per share, an increase of 11.8% over the first quarter dividend of $0.17 per share. Non Performing Loans and Allowance For Loan Losses Based upon loans outstanding, past experience, as well as an ongoing review of the risk inherent in our loan portfolio, management has maintained the loan loss provision for the first six months at $400 thousand which is equal to the amount expensed during the first six months of 1998. At 108% of non-performing loans and 1.33% of total loans, the Allowance for Loan Losses is viewed by management as adequate relative to risk. Non-performing loans at June 30, 1999 constituted 1.23% of total loans. Changes in the allowance for loan losses for the six months ended June 30, 1999 is as follows:
June 30, 1999 Amount (000's) Balance at beginning of period $ $ 4,509 Charge-offs: Domestic: Commercial, financial and agricultural 16 Commercial mortgages 0 Residential mortgages 20 Consumer loans 354 $ 390 Recoveries: Domestic: Commercial, financial and agricultural $ 23 Commercial mortgages 0 Residential mortgages 0 Consumer loans 70 $ 93 Net charge-offs $ 297 Provisions charged to operations 400 Balance at end of period $ 4,612 Ratio of net charge-offs during the period to average loans outstanding during the period .09%
A loan would be considered impaired when it is probable that after having considered current information and events regarding the borrower's ability to repay their obligations, the corporation will be unable to collect all amounts due according to the contractual terms of the loan agreement. Included in the allowance for loan losses at June 30, 1999 is an allowance for impaired loans of $850 thousand versus $993 thousand at the beginning of the year. The total recorded investment in these loans at June 30, 1999 and December 31, 1998 was $3.788 million and $4.569 million respectively. A loan is placed on non-accrual when it becomes past due and is referred to legal counsel, or in the case of a commercial loan which becomes 90 days delinquent, or in the case of a consumer loan (not guaranteed by a government agency) or a real estate loan which becomes 120 days delinquent unless, because of collateral or other circumstances, it is deemed to be collectible. When placed on non-accrual, previously accrued interest is reversed. Loans may also be placed in non-accrual if management believes such classification is warranted for other reasons. At June 30, 1999 and December 31, 1998, the following table summarized the Company's non-accrual and past due loans:
Amounts (000's) June 30, 1999 December 31, 1998 Non-accrual loans $ 4,079 $ 4,457 Accruing loans past due $ 183 $ 357 90 days or more
At June 30, 1999, the Company has no commercial loans for which payments are presently current but the borrowers are currently experiencing severe financial difficulties. At June 30, 1999, no loan concentrations to borrowers engaged in the same or similar industries exceeded 10% of total loans and the Corporation has no interest-bearing assets other than loans that meet the non-accrual, past due, restructured or potential problem loan criteria. On June 30, 1999, the Company's consolidated leverage ratio was 9.18%. The Tier I and Total Risk Adjusted Capital ratios were 15.58% and 16.82%, respectively. Significant Issue - Year 2000 In 1997, management advised its Board of Directors of the many issues surrounding the approach of January 1, 2000. Nearly all computer hardware and software developed during the current century have been programmed with two digit reference to each year. Such hardware and software, if not upgraded by January 1, 2000, may become useless. Management is undergoing a five-phase project to respond to this issue, with major emphasis on identifying all applications and databases supporting the Bank's mission- critical applications. The five phase are awareness, assessment, renovation, validation and implementation, and will seek to neutralize not only the Bank's vulnerability, but to determine the financial capacity of its vendors and evaluate the capacity of its customers to respond to this challenge. A committee continues to direct the Bank's Year 2000 activities under the framework of the FFIEC's Five-Step Program. The first phase of testing of critical applications was substantially completed by year-end 1998, with testing of other non-critical applications completed by March of 1999. The Bank will continue to test applications throughout 1999 to insure all systems are Year 2000 compliant. The Company has begun evaluating Year 2000 readiness of its commercial loan applicants as part of the loan underwriting process and is calling upon major existing borrowers to assess their readiness and identify potential problems. In addition, the Bank has formulated a contingency plan for business continuation in the event of Year 2000 systems failures. This contingency plan is based upon the Bank's existing disaster recovery plan with modifications for the Year 2000 risks. The Bank has substantially completed its systems contingency plan as of June 30, 1999, with further testing and modifications to occur throughout 1999. Significant Year 2000 failures in the Bank's systems or in the system's of third parties (or third parties upon whom they depend) could have a material adverse effect on the Bank's financial condition and results of operations. The Bank believes that its reasonably likely worst- case Year 2000 scenario is (i) a material increase in the Bank's credit losses due to Year 2000 problems for the Bank's borrowers and obligors, and (ii) disruption in financial markets causing liquidity stress to the Bank. The magnitude of these potential credit losses and disruption cannot be determined at this time. It is expected that costs associated with Year 2000 readiness including hardware and software upgrades, as well as costs of testing, will be approximately $200,000. Interest Rate Risk The Company realizes a major source of income by acting as intermediary between borrowers and savers. The differential or spread between interest earned on earning assets, primarily loans and investments, and the interest paid to depositors and on other interest bearing liabilities is affected with changes to market interest rates. Additionally, because of assumptions made to the Company's loan and investment portfolios and to its deposit base, changes in interest rates can materially affect the projected maturities of these balance sheet classes and thus alter the Company's sensitivity to future changes in interest rates. The Bank's Asset/Liability Committee (ALCO) has the strategic responsibility for setting the policy guidelines on acceptable interest rate risk exposure. The ALCO is made up of the chief executive officer, executive vice presidents, senior lending officer, senior marketing officer, financial officer and others representing key functions. All guidelines set by this committee are board approved. The ALCO's primary focus is on maintaining consistent growth in net interest income with an acceptable level of volatility as a result of changes to interest rates. As of June 30, 1999 the exposure to changing interest rates is within the guidelines established by the ALCO. The Company uses an industry standard earnings simulation model as its primary method to identify and manage its interest rate risk profile. The model is based on projected cash flows using historical data for all financial instruments. Also incorporated into the model are assumptions of deposit rates and balances in relation to changes in interest rates. These assumptions are based on internal historical data. In recent years core deposits (NOW accounts, Insured Money Market Accounts and Savings accounts) have not been re-priced with movements of interest rates in the negotiable securities markets. The ALCO recognizes that the assumptions made are inherently uncertain. The ALCO uses static gap analysis as a secondary method of identifying and managing the Company's interest rate risk profile. Gap analysis measures the difference between the assets and liabilities re-pricing and maturing within specific time periods, called buckets. A positive gap indicates more rate sensitive assets are due to either re-price or mature than rate sensitive liabilities in a specific bucket. This would indicate that the Company should have rising earnings in periods of rising interest rates and falling earnings in periods of falling rates. The ALCO recognizes the limitations of static gap analysis. Primarily it does not take into account the effect of interest rate movements and the competitive market forces on the re-pricing and maturity characteristics of interest-earning assets and interest-bearing liabilities. For these reasons, and for the recent practicality of using earnings simulation models gap analysis has fallen out of favor with the risk management community. Lastly, the ALCO monitors the expected fluctuation of the Company's market value of equity with changes to interest rates. Appropriate risk limits have been established to protect shareholders in the advent of adverse changes to interest rates, and as of June 30, 1999 exposure to changing interest rates is within the risk limits established. There have been no material changes in the Company's interest rate risk position since December 31, 1998. Other types of market risk, such as foreign exchange rate risk and commodity price risk do not arise in the normal courses of the Company's business activities. Item 4: Submission of Matters To A Vote of Shareholders The following matters were submitted to a vote of shareholders at the Annual Meeting of Shareholders of Chemung Financial Corporation on May 12, 1999. 1. To elect six directors to serve until the 2002 Annual Meeting of Shareholders listed below: Robert E. Agan Thomas K. Meier Donald L. Brooks, Jr. Charles M. Streeter Stephen M. Lounsberry Nelson Mooers van den Blink Directors continuing in office with terms expiring in 2000: David J. Dalrymple William C. Ughetta Edward B. Hoffman Jan P. Updegraff John F. Potter Directors continuing in office with terms expiring in 2001: John W. Bennett Ralph H. Meyer Robert H. Dalrymple Richard W. Swan Frederick Q. Falck William A. Tryon PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Applicable Exhibits (3.1) Certificate of Incorporation is filed as Exhibit 3.1 to Registrant's Registration Statement on Form S-14, Registration No. 2-95743, and is incorporated herein by reference. Certificate of Amendment to the Certificate of Incorporation, filed with the Secretary of State of New York on April 1, 1988, is incorporated herein by reference to Exhibit A of the registrant's Form 10-K for the year ended December 31, 1988, File No. 0-13888. Certificate of Amendment to the Certificate of Incorporation, filed with the Secretary of State of New York on May 13, 1998, is incorporated herein by reference to Exhibit A of the registrant's Form 10-Q for quarter ended March 31, 1999, File No. 0-13888. (3.2) Bylaws of the Registrant, as amended to December 9, 1998 are incorporated herein by reference to Exhibit B of the registrant's Form 10-Q for the quarter ended March 31,1999, File No. 0-13888. (27) Financial Data Schedule (EDGAR version only) (b) Reports on Form 8-K During the quarter ended June 30, 1999, no reports on Form 8-K or amendments to any previously-filed Form 8-K were filed by the registrant. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned there to duly authorized. CHEMUNG FINANCIAL CORPORATION DATE: August 10, 1999 Jan P. Updegraff President & CEO DATE: August 10, 1999 John R. Battersby Jr. Treasurer EX-27 2
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S UNAUDITED QUARTERLY FINANCIAL STATEMENTS AND DISCLOSURES FOR THE PERIOD ENDED JUNE 30, 1999 AS PRESENTED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND DISCLOSURES. 1,000 6-MOS DEC-31-1999 JUN-30-1999 22,014 1,649 0 0 226,403 6,789 6,789 346,427 4,612 627,148 479,616 52,323 9,207 20,000 0 0 43 65,959 627,148 14,121 6,877 413 21,410 7,327 9,099 12,311 400 150 10,623 5,742 5,742 0 0 3,902 .94 .94 4.06 4,079 183 0 0 4,509 390 93 4,612 2,891 0 1,721
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