UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): January 31, 2014 (January 30, 2014)
Chemung Financial Corporation
(Exact Name of Registrant as Specified in Charter)
| New York | 0-13888 | 16-1237038 | ||
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
| One Chemung Canal Plaza, P.O. Box 1522, Elmira, NY 14901 |
| (Address of Principal Executive Offices) (Zip Code) |
(607) 737-3711
(Registrant's telephone number including area code)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |
||
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Item 2.02. Results of Operations and Financial Condition.
On January 30, 2014, Chemung Financial Corporation (NASDAQ: CHMG) issued a press release describing its results of operations for the three and twelve-month periods ended December 31, 2013.
The press release is furnished as Exhibit 99.1 to this report.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No.
99.1 Press Release of Chemung Financial Corporation dated January 30, 2014.
SIGNATURE
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 hereunto duly authorized.
| January 30, 2014 | Chemung Financial Corporation |
|
| By: | /s/ KARL F. KREBS Karl F. Krebs Executive Vice President, Chief Financial Officer and Treasurer |
|
EXHIBIT 99.1
ELMIRA, N.Y., Jan. 30, 2014 (GLOBE NEWSWIRE) -- Chemung Financial Corporation (Nasdaq:CHMG), the parent company of Chemung Canal Trust Company, reported fourth quarter ended December 31, 2013 and full-year net income and earnings per share. Highlights for the fourth quarter and full year include:
Ronald M. Bentley, President and CEO stated, "As expected, 2013 was an eventful and challenging year as earnings came under pressure from net interest margin compression. The single best strategy to combat margin compression is to grow our balance sheet, so we were pleased with the acquisition of six branch offices in contiguous markets during the fourth quarter of 2013. This transaction becomes increasingly accretive to earnings as we channel the acquired deposits into loans over the next few years."
Mr. Bentley stated, "In addition to the acquisition, we experienced solid organic growth in both loans and deposits during 2013. Commercial loans increased $64.5 million, or 14.2% and consumer loans increased $42.4 million, or 17.7%. Excluding the deposits acquired in the branch acquisition, organic growth in deposits was $40.9 million, or 3.9%."
"Our inclusion in the Russell 3000 Index is another opportunity to increase the liquidity in our shares for current and future shareholders," said Mr. Bentley. "This listing certainly aids in our effort to increase the visibility of the Corporation within the investment community," Bentley added.
Summary:
Chemung Financial Corporation reported net income of $1.5 million for the fourth quarter of 2013, a decrease of $0.6 million, or 30.2%, compared with $2.1 million for the same period in the prior year. Earnings per share for the fourth quarter of 2013 totaled $0.32, compared with $0.46 for the same period in the prior year. Return on average assets and return on average equity for the fourth quarter of 2013 were 0.42% and 4.34%, respectively, compared with 0.67% and 6.33%, respectively, for the same period in the prior year.
Core net income for the fourth quarter of 2013 was $1.7 million, or $0.37 per share, compared with $2.1 million, or $0.46 per share, for the same period in the prior year. Core net income for the current quarter excluded $0.5 million in gain from bargain purchase and $1.2 million in acquisition expenses. The decrease in core net income was due primarily to increases of $0.9 million in the provision for loan losses and $0.7 million in non-interest expense. These items were partially offset by increases of $0.5 million in net interest income and $0.6 million in non-interest income. Core return on average assets and core return on average equity for the fourth quarter of 2013 were 0.49% and 5.09%, respectively, compared with 0.67% and 6.33%, respectively, for the same period in the prior year.
Net income of $1.5 million for the current quarter ended December 31, 2013 represents a decrease of $0.7 million, or 31.8%, from net income of $2.2 million for the preceding quarter ended September 30, 2013. The decline in earnings was due primarily to an increase of $2.7 million in non-interest expense, which included $1.2 million in acquisition expenses. These items were partially offset by increases of $0.6 million in net interest income and $0.9 million in non-interest income, which included $0.5 million in gain from bargain purchase. Earnings per share for the current quarter totaled $0.32 compared with $0.47 for the preceding quarter. Return on average assets and return on average equity for the current quarter were 0.42% and 4.34%, respectively, compared with 0.67% and 6.45%, respectively, for the preceding quarter.
Net income for the twelve months ended December 31, 2013 was $8.7 million, a decrease of $2.3 million, or 20.8%, compared with $11.0 million for the twelve months ended December 31, 2012. Earnings per share for the twelve months ended December 31, 2013 was $1.87, compared with $2.38 for the twelve months ended December 31, 2012. Return on average assets and return on average equity for the twelve months ended December 31, 2013 were 0.67% and 6.50%, respectively, compared with 0.88% and 8.41%, respectively, for the same period in the prior year.
Core net income for the twelve months ended December 31, 2013 was $9.1 million, or $1.96 per share, compared with $10.4 million, or $2.23 per share, for the twelve months ended December 31, 2012. The current year core net income excluded $0.5 million in gain from bargain purchase and $1.4 million in acquisition expenses. The prior year core net income excluded pre-tax items of $0.3 million in net gain on securities transactions and $0.8 million in casualty gains. The decrease in core net income was due primarily to increases of $1.9 million in the provision for loan losses and $1.2 million in non-interest expense, and a decline of $0.2 million in net interest income. These items were partially offset by an increase of $1.5 million in non-interest income and a reduction of $0.6 million in income taxes. Core return on average assets and core return on average equity for the twelve months ended December 31, 2013 were 0.70% and 6.79%, respectively, compared with 0.83% and 7.91%, respectively, for the same period in the prior year.
Net Interest Income:
Net interest income for the fourth quarter of 2013 totaled $12.1 million compared with $11.6 million for the same period in the prior year, an increase of $0.5 million, or 3.7%. Net interest margin was 3.66% for the fourth quarter of 2013 compared with 3.98% for the same period in the prior year. The decline in net interest margin was due in part to a 39 basis point decrease in the yield on interest-earning assets, partially offset by a 13 basis point decline in the cost of funds and an increase of $144.1 million in average earning assets. In addition, the net interest margin declined as a result of the investment of cash from the branch acquisition into investment securities.
Net interest income for the current quarter totaled $12.1 million compared with $11.5 million for the preceding quarter ended September 30, 2013, an increase of $0.6 million, or 4.8%. Net interest margin was 3.66% for the current quarter compared with 3.84% for the preceding quarter. The increase in net interest income was due primarily to an increase of $117.0 million in average earning assets, partially offset by a 20 basis point decrease in the yield on interest-earning assets. The decline in net interest margin was due in part to yields on interest-earning assets decreasing at a faster rate than the cost of interest-bearing liabilities and as stated above, the branch acquisition.
Net interest income for the twelve months ended December 31, 2013 totaled $46.6 million compared with $46.8 million for the prior year, a decrease of $0.2 million, or 0.5%. Net interest margin was 3.85% for the twelve months ended December 31, 2013 compared with 4.07% for the same period in the prior year. The decline in net interest income was due primarily to margin compression evidenced by a 34 basis point decrease in the yield on interest-earning assets, partially offset by a 16 basis point decline in the cost of funds and an increase of $59.3 million in average earning assets. The decline in net interest margin was due primarily to yields on interest-earning assets decreasing at a faster rate than the cost of interest-bearing liabilities. The decrease in yield on interest-earning assets was attributable to lower loan yields as loans continue to reprice at current market rates. In addition, the Corporation anticipated a decline in the yield on interest-earning assets due in part to its investment of cash from the branch acquisition into investment securities.
Non-Interest Income:
Non-interest income for the fourth quarter of 2013 was $5.2 million compared with $4.4 million for the preceding quarter ended September 30, 2013 and $4.2 million for the same fourth quarter in the prior year. The increase from the preceding quarter and year-ago quarter was due primarily to a gain from bargain purchase and increases in Wealth Management fee income and service charges on deposit accounts.
Net loss on securities transactions for the fourth quarter of 2013 was less than $0.1 million, due primarily to the sale of a CDO consisting of a pool of trust preferred securities that was rated as Caa3 by Moody's. In light of uncertainty around the treatment of covered securities under Volker Rule provisions, the Corporation thought it was prudent to sell the CDO at a slight loss.
Non-interest income for the twelve months ended December 31, 2013 was $18.1 million compared with $17.2 million for the prior year, an increase of $0.9 million, or 5.2%. The increase was due primarily to a $0.5 million gain from bargain purchase and increases of $0.5 million in Wealth Management Group fee income and $0.5 million in service charges on deposit accounts. These items were partially offset by reductions of $0.8 million in casualty gains from insurance reimbursements and $0.3 million in net gain on securities transactions.
Non-Interest Expense:
Non-interest expense for the fourth quarter of 2013 was $14.5 million compared with $12.6 million for the prior year, an increase of $1.9 million, or 14.5%. The increase was due primarily to increases of $1.2 million in acquisition expenses and $0.3 million in pension and other employee benefits.
Non-interest expense for the current quarter was $14.5 million compared with $11.8 million for the preceding quarter ended September 30, 2013, an increase of $2.7 million, or 22.5%. The increase was due primarily to increases of $1.0 million in acquisition expenses, $0.5 million in salaries and wages, and $0.4 million in pension and other employee benefits.
Non-interest expense for the twelve months ended December 31, 2013 was $49.4 million compared with $46.8 million for the prior year, an increase of $2.6 million, or 5.6%. The increase was due primarily to increases of $1.4 million in acquisition expenses, $0.4 million in salaries and wages, $0.3 million in pension and other employee benefits, $0.3 million in net occupancy expense and $0.3 million in data processing costs. These items were partially offset by a decrease of $0.5 million in professional services.
Asset Quality:
Non-performing loans totaled $8.5 million at December 31, 2013, or 0.85% of total loans, up from $6.0 million, or 0.68%, at December 31, 2012. The increase in non-performing loans at December 31, 2013 was primarily in the commercial loan segment of the loan portfolio. Non-performing assets, which are comprised of non-performing loans and other real estate owned, totaled $9.0 million at December 31, 2013, or 0.61% of total assets, up from $6.6 million, or 0.53%, at December 31, 2012. The Corporation's peer group average for the ratio of non-performing assets to total assets was 1.46% at September 30, 2013 (the most recent period available).
Management performs an ongoing assessment of the adequacy of the allowance for loan losses based upon a number of factors including an analysis of historical loss factors, collateral evaluations, recent charge-off experience, credit quality of the loan portfolio, current economic conditions and loan growth. Based on this analysis, the provision for loan losses for the fourth quarter of 2013 was $1.0 million compared with $0.9 million for the preceding quarter ended September 30, 2013, and $0.1 million for the same period in the prior year. The increase in the provision for loan losses was due primarily to the establishment of $0.5 million in additional specific reserves on two commercial loans and loan portfolio growth. Net charge-offs for the current quarter were $0.1 million compared with $0.3 million for the preceding quarter and $0.5 million for the same period in the prior year.
The provision for loan losses for the twelve months ended December 31, 2013 was $2.8 million compared with $0.8 million for the same period in the prior year. The increase in the provision for loan losses was due primarily to the establishment of $0.9 million in additional specific reserves on three commercial loans, loan portfolio growth and higher net charge-offs. Net charge-offs for the twelve months ended December 31, 2013 were $0.4 million compared with $0.2 million for the prior year.
At December 31, 2013 the allowance for loan losses was $12.8 million, compared with $10.4 million at December 31, 2012. The allowance for loan losses was 150.11% of non-performing loans at December 31, 2013, compared with 172.96% at December 31, 2012. The ratio of the allowance for loan losses to total loans was 1.28% at December 31, 2013, compared with 1.17% at December 31, 2012.
Balance Sheet Activity:
Assets totaled $1.476 billion at December 31, 2013 compared with $1.248 billion at December 31, 2012, an increase of $227.9 million, or 18.3%. The growth was due primarily to increases of $106.8 million in investment securities and $102.3 million, or 11.5%, in total portfolio loans. The increase in portfolio loans was due to strong growth of $64.5 million in commercial loans and $42.4 million in consumer loans.
Deposits totaled $1.263 billion at December 31, 2013 compared with $1.045 million at December 31, 2012, an increase of $218.6 million, or 20.9%. The increase was primarily due to $177.7 million from the branch acquisition and $40.9 million in organic deposit growth. At December 31, 2013, demand deposit and money market accounts comprised 65.5% of total deposits compared with 60.7% at December 31, 2012.
Total equity was $138.6 million at December 31, 2013 compared with $131.1 million at December 31, 2012, an increase of $7.5 million, or 5.7%. The total equity to total assets ratio was 9.39% at December 31, 2013 compared with 10.50% at December 31, 2012. The tangible equity to tangible assets ratio was 7.62% at December 31, 2013 compared with 8.53% at December 31, 2012. Book value per share increased to $29.67 at December 31, 2013 from $28.20 at December 31, 2012. As of December 31, 2013, both the Corporation's and the Bank's capital ratios were in excess of those required to be considered well-capitalized under regulatory capital standards.
Other Items:
The market value of total assets under management or administration in our Wealth Management Group was $1.888 billion at December 31, 2013 compared with $1.735 billion at December 31, 2012, an increase of $153.0 million, or 8.8%.
Subsequent Event:
In addition to the CDO that was sold during the fourth quarter of 2013, the Corporation owned one other CDO consisting of a pool of trust preferred securities. The remaining CDO was liquidated and the Corporation will record a gain of approximately $0.5 million during the first quarter of 2014. The Corporation does not own any other CDO's in its investment securities portfolio.
About Chemung Financial Corporation:
Chemung Financial Corporation is a $1.5 billion financial services holding company headquartered in Elmira, New York and operates 34 retail offices through its principal subsidiary, Chemung Canal Trust Company, a full-service community bank with trust powers. Established in 1833, Chemung Canal Trust Company is the oldest locally-owned and managed community bank in New York State. Chemung Financial Corporation is also the parent of CFS Group, Inc., a financial services subsidiary offering non-traditional services including mutual funds, annuities, brokerage services, tax preparation services and insurance.
This press release may be found at: www.chemungcanal.com under Shareholder Info.
Forward-Looking Statements:
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Corporation intends its forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in these sections. All statements regarding, among other things, the Corporation's expected financial condition and results of operations, the Corporation's business strategy, the Corporation's financial plans, forecasted demographic and economic trends relating to the Corporation's industry and similar matters are forward-looking statements. These statements can sometimes be identified by the Corporation's use of forward-looking words such as "may," "will," "anticipate," "estimate," "expect," or "intend." The Corporation cannot promise that its expectations in such forward-looking statements will turn out to be correct. The Corporation's actual results could be materially different from expectations because of various factors, including changes in economic conditions or interest rates, credit risk, difficulties in managing the Corporation's growth, competition, changes in law or the regulatory environment, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, and changes in general business and economic trends. Information concerning these and other factors can be found in the Corporation's periodic filings with the Securities and Exchange Commission, including in our 2012 Annual Report on Form 10-K. These filings are available publicly on the SEC's website at http://www.sec.gov, on the Corporation's website at http://www.chemungcanal.com or upon request from the Corporate Secretary at (607) 737-3746. Except as otherwise required by law, the Corporation undertakes no obligation to publicly update or revise its forward-looking statements, whether as a result of new information, future events, or otherwise.
| Chemung Financial Corporation | |||||
| Consolidated Balance Sheets (Unaudited) | |||||
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | |
| (Dollars in thousands, except share data) | 2013 | 2013 | 2013 | 2013 | 2012 |
| ASSETS | |||||
| Cash and due from financial institutions | $ 31,600 | $ 37,491 | $ 23,812 | $ 27,757 | $ 29,239 |
| Interest-bearing deposits in other financial institutions | 20,009 | 2,438 | 945 | 18,380 | 11,002 |
| Total cash and cash equivalents | 51,609 | 39,929 | 24,757 | 46,137 | 40,241 |
| Trading assets, at fair value | 366 | 313 | 389 | 384 | 348 |
| Securities available for sale | 346,016 | 259,275 | 225,362 | 235,307 | 239,686 |
| Securities held to maturity | 6,495 | 6,544 | 6,570 | 9,898 | 5,749 |
| FHLB and FRB stocks, at cost | 4,482 | 6,725 | 4,579 | 4,607 | 4,710 |
| Total investment securities | 356,993 | 272,544 | 236,511 | 249,812 | 250,145 |
| Commercial | 518,504 | 500,957 | 478,018 | 481,063 | 454,048 |
| Mortgage | 195,997 | 194,042 | 198,072 | 202,114 | 200,476 |
| Consumer | 281,365 | 272,635 | 257,950 | 238,256 | 238,993 |
| Total loans | 995,866 | 967,634 | 934,040 | 921,433 | 893,517 |
| Allowance for loan losses | (12,776) | (11,856) | (11,320) | (10,825) | (10,433) |
| Loans, net | 983,090 | 955,778 | 922,720 | 910,608 | 883,084 |
| Loans held for sale | 695 | 866 | 947 | 786 | 1,057 |
| Premises and equipment, net | 30,039 | 25,087 | 24,969 | 24,800 | 25,484 |
| Goodwill | 21,824 | 21,824 | 21,824 | 21,824 | 21,824 |
| Other intangible assets, net | 6,377 | 4,481 | 4,695 | 4,909 | 5,144 |
| Other assets | 25,150 | 20,269 | 20,348 | 20,712 | 20,833 |
| Total assets | $ 1,476,143 | $ 1,341,091 | $ 1,257,160 | $ 1,279,972 | $ 1,248,160 |
| Deposits: | |||||
| Non-interest-bearing demand deposits | $ 351,222 | $ 297,053 | $ 297,523 | $ 296,361 | $ 300,610 |
| Interest-bearing demand deposits | 114,679 | 96,191 | 89,027 | 102,201 | 90,730 |
| Insured money market accounts | 361,095 | 289,459 | 261,060 | 265,025 | 243,115 |
| Savings deposits | 191,882 | 183,804 | 182,393 | 181,421 | 173,589 |
| Time deposits | 244,492 | 221,938 | 224,965 | 232,091 | 236,690 |
| Total deposits | 1,263,370 | 1,088,445 | 1,054,968 | 1,077,099 | 1,044,734 |
| Securities sold under agreements to repurchase | 32,701 | 30,499 | 30,568 | 31,427 | 32,711 |
| FHLB advances | 25,243 | 75,146 | 26,101 | 27,158 | 27,225 |
| Other liabilities | 16,251 | 12,195 | 12,844 | 11,380 | 12,375 |
| Total liabilities | 1,337,565 | 1,206,285 | 1,124,481 | 1,147,064 | 1,117,045 |
| Shareholders' equity | |||||
| Common stock | 53 | 53 | 53 | 53 | 53 |
| Additional-paid-in capital | 45,398 | 45,556 | 45,451 | 45,473 | 45,357 |
| Retained earnings | 111,031 | 110,740 | 109,755 | 108,296 | 107,078 |
| Treasury stock, at cost | (18,059) | (18,266) | (18,205) | (18,291) | (18,566) |
| Accumulated other comprehensive income (loss) | 155 | (3,277) | (4,375) | (2,623) | (2,807) |
| Total shareholders' equity | 138,578 | 134,806 | 132,679 | 132,908 | 131,115 |
| Total liabilities and shareholders' equity | $ 1,476,143 | $ 1,341,091 | $ 1,257,160 | $ 1,279,972 | $ 1,248,160 |
| Period-end shares outstanding | 4,671,066 | 4,660,217 | 4,659,931 | 4,657,151 | 4,649,741 |
| Chemung Financial Corporation | ||||||
| Consolidated Statements of Income (Unaudited) | ||||||
| Twelve Months Ended | Three Months Ended | |||||
| December 31, | Percent | December 31, | Percent | |||
| (Dollars in thousands, except share and per share data) | 2013 | 2012 | Change | 2013 | 2012 | Change |
| Interest and dividend income: | ||||||
| Loans, including fees | $ 45,135 | $ 45,298 | (0.4) | $ 11,530 | $ 11,220 | 2.8 |
| Taxable securities | 4,391 | 5,357 | (18.0) | 1,271 | 1,215 | 4.6 |
| Tax exempt securities | 1,101 | 1,268 | (13.2) | 256 | 292 | (12.3) |
| Interest-bearing deposits | 36 | 153 | (76.5) | 15 | 30 | (50.0) |
| Total interest and dividend income | 50,663 | 52,076 | (2.7) | 13,072 | 12,757 | 2.5 |
| Interest expense: | ||||||
| Deposits | 2,350 | 3,182 | (26.1) | 559 | 695 | (19.6) |
| Securities sold under agreements to repurchase | 858 | 994 | (13.7) | 213 | 231 | (7.8) |
| Borrowed funds | 824 | 1,058 | (22.1) | 230 | 190 | 21.1 |
| Total interest expense | 4,032 | 5,234 | (23.0) | 1,002 | 1,116 | (10.2) |
| Net interest income | 46,631 | 46,842 | (0.5) | 12,070 | 11,641 | 3.7 |
| Provision for loan losses | 2,755 | 828 | 232.7 | 1,000 | 74 | 1251.4 |
| Net interest income after provision for loan losses | 43,876 | 46,014 | (4.6) | 11,070 | 11,567 | (4.3) |
| Non-interest income: | ||||||
| Wealth management group fee income | 7,344 | 6,827 | 7.6 | 1,896 | 1,657 | 14.4 |
| Service charges on deposit accounts | 4,706 | 4,241 | 11.0 | 1,328 | 1,098 | 20.9 |
| Net gain (loss) on securities transactions | (13) | 301 | (104.3) | (14) | -- | N/M |
| Net gain on sales of loans held for sale | 503 | 484 | 3.9 | 78 | 214 | (63.6) |
| Net gain (loss) on sales of other real estate owned | 28 | (45) | N/M | (5) | 27 | N/M |
| Casualty gains | -- | 790 | (100.0) | -- | -- | N/M |
| Gain from bargain purchase | 470 | -- | N/M | 470 | -- | N/M |
| Other | 5,038 | 4,590 | 9.8 | 1,476 | 1,196 | 23.4 |
| Total non-interest income | 18,076 | 17,188 | 5.2 | 5,229 | 4,192 | 24.7 |
| Non-interest expense: | ||||||
| Salaries and wages | 19,365 | 18,918 | 2.4 | 5,227 | 5,207 | 0.4 |
| Pension and other employee benefits | 5,939 | 5,624 | 5.6 | 1,777 | 1,486 | 19.6 |
| Net occupancy | 5,502 | 5,164 | 6.5 | 1,486 | 1,315 | 13.0 |
| Furniture and equipment | 2,326 | 2,205 | 5.5 | 726 | 605 | 20.0 |
| Data processing | 4,750 | 4,421 | 7.4 | 1,317 | 1,142 | 15.3 |
| Professional fees | 928 | 1,443 | (35.7) | 215 | 749 | (71.3) |
| Amortization of intangible assets | 921 | 1,047 | (12.0) | 258 | 238 | 8.4 |
| Marketing and advertising | 1,033 | 1,068 | (3.3) | 251 | 153 | 64.1 |
| Other real estate owned expense | 194 | 328 | (40.9) | 56 | 42 | 33.3 |
| FDIC insurance | 866 | 807 | 7.3 | 241 | 192 | 25.5 |
| Merger and acquisition expenses | 1,387 | 30 | N/M | 1,170 | -- | N/M |
| Loan expenses | 780 | 788 | (1.0) | 243 | 250 | (2.8) |
| Other | 5,408 | 4,952 | 9.2 | 1,503 | 1,263 | 19.0 |
| Total non-interest expense | 49,399 | 46,795 | 5.6 | 14,470 | 12,642 | 14.5 |
| Income before income tax expense | 12,553 | 16,407 | (23.5) | 1,829 | 3,117 | (41.3) |
| Income tax expense | 3,822 | 5,385 | (29.0) | 343 | 987 | (65.2) |
| Net income | $ 8,731 | $ 11,022 | (20.8) | $ 1,486 | $ 2,130 | (30.2) |
| Basic and diluted earnings per share | $ 1.87 | $ 2.38 | $ 0.32 | $ 0.46 | ||
| Cash dividends declared per share | 1.04 | 1.00 | 0.26 | 0.25 | ||
| Average basic and diluted shares outstanding | 4,659,685 | 4,640,912 | 4,664,140 | 4,643,696 | ||
| N/M - not meaningful. | ||||||
| Chemung Financial Corporation | |||||||
| Consolidated Financial Highlights (Unaudited) | |||||||
| As of or for the | |||||||
| As of or for the Three Months Ended | Twelve Months Ended | ||||||
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | |
| (Dollars in thousands, except share and per share data) | 2013 | 2013 | 2013 | 2013 | 2012 | 2013 | 2012 |
| RESULTS OF OPERATIONS | |||||||
| Interest income | $ 13,072 | $ 12,509 | $ 12,333 | $ 12,748 | $ 12,757 | $ 50,663 | $ 52,076 |
| Interest expense | 1,002 | 992 | 1,005 | 1,031 | 1,116 | 4,032 | 5,234 |
| Net interest income | 12,070 | 11,517 | 11,328 | 11,717 | 11,641 | 46,631 | 46,842 |
| Provision for loan losses | 1,000 | 874 | 450 | 431 | 74 | 2,755 | 828 |
| Net interest income after provision for loan losses | 11,070 | 10,643 | 10,878 | 11,286 | 11,567 | 43,876 | 46,014 |
| Non-interest income | 5,229 | 4,351 | 4,475 | 4,022 | 4,192 | 18,076 | 17,188 |
| Non-interest expense | 14,470 | 11,813 | 11,392 | 11,725 | 12,642 | 49,399 | 46,795 |
| Income before income tax expense | 1,829 | 3,181 | 3,961 | 3,583 | 3,117 | 12,553 | 16,407 |
| Income tax expense | 343 | 1,002 | 1,306 | 1,171 | 987 | 3,822 | 5,385 |
| Net income | $ 1,486 | $ 2,179 | $ 2,655 | $ 2,412 | $ 2,130 | $ 8,731 | $ 11,022 |
| Basic and diluted earnings per share | $ 0.32 | $ 0.47 | $ 0.57 | $ 0.52 | $ 0.46 | $ 1.87 | $ 2.38 |
| Average basic and diluted shares outstanding | 4,664,140 | 4,660,336 | 4,658,400 | 4,655,862 | 4,643,696 | 4,659,685 | 4,640,912 |
| PERFORMANCE RATIOS | |||||||
| Return on average assets | 0.42% | 0.67% | 0.84% | 0.77% | 0.67% | 0.67% | 0.88% |
| Return on average equity | 4.34% | 6.45% | 7.92% | 7.37% | 6.33% | 6.50% | 8.41% |
| Return on average tangible equity (a) | 5.40% | 8.04% | 9.88% | 9.24% | 7.94% | 8.12% | 10.63% |
| Efficiency ratio (b) | 78.96% | 73.08% | 72.09% | 74.50% | 79.85% | 74.73% | 74.30% |
| Non-interest expense to average assets | 4.09% | 3.65% | 3.60% | 3.75% | 3.98% | 3.78% | 3.73% |
| Loans to deposits | 78.83% | 88.90% | 88.54% | 85.55% | 85.53% | 78.83% | 85.53% |
| YIELDS / RATES | |||||||
| Yield on loans | 4.66% | 4.69% | 4.77% | 5.04% | 5.02% | 4.79% | 5.37% |
| Yield on investments | 1.88% | 2.10% | 2.10% | 2.28% | 2.23% | 2.07% | 2.22% |
| Yield on interest-earning assets | 3.97% | 4.17% | 4.21% | 4.43% | 4.36% | 4.19% | 4.53% |
| Cost of interest-bearing deposits | 0.26% | 0.30% | 0.31% | 0.33% | 0.36% | 0.30% | 0.43% |
| Cost of borrowings | 1.43% | 2.49% | 2.80% | 2.79% | 2.74% | 2.42% | 2.90% |
| Cost of interest-bearing liabilities | 0.41% | 0.47% | 0.49% | 0.50% | 0.54% | 0.47% | 0.63% |
| Interest rate spread | 3.56% | 3.70% | 3.72% | 3.93% | 3.82% | 3.72% | 3.90% |
| Net interest margin | 3.66% | 3.84% | 3.87% | 4.07% | 3.98% | 3.85% | 4.07% |
| CAPITAL | |||||||
| Total equity to total assets at end of period | 9.39% | 10.05% | 10.55% | 10.38% | 10.50% | 9.39% | 10.50% |
| Tangible equity to tangible assets at end of period (a) | 7.62% | 8.25% | 8.63% | 8.47% | 8.53% | 7.62% | 8.53% |
| Book value per share | $ 29.67 | $ 28.93 | $ 28.47 | $ 28.54 | $ 28.20 | $ 29.67 | $ 28.20 |
| Tangible book value per share | 23.63 | 23.28 | 22.78 | 22.80 | 22.40 | 23.63 | 22.40 |
| Period-end market value per share | 34.17 | 34.63 | 33.49 | 33.90 | 29.89 | 34.17 | 29.89 |
| Dividends declared per share | 0.26 | 0.26 | 0.26 | 0.26 | 0.25 | 1.04 | 1.00 |
| AVERAGE BALANCES | |||||||
| Loans (c) | $ 981,491 | $ 950,657 | $ 929,439 | $ 909,166 | $ 888,515 | $ 942,908 | $ 844,255 |
| Earning assets | 1,306,934 | 1,189,978 | 1,173,862 | 1,166,590 | 1,162,788 | 1,209,673 | 1,150,408 |
| Total assets | 1,404,770 | 1,283,577 | 1,269,472 | 1,266,379 | 1,264,125 | 1,306,367 | 1,253,725 |
| Deposits | 1,160,761 | 1,070,553 | 1,065,649 | 1,064,016 | 1,059,463 | 1,090,456 | 1,042,727 |
| Total equity | 135,979 | 133,955 | 134,392 | 132,783 | 133,799 | 134,285 | 131,119 |
| Tangible equity (a) | 109,082 | 107,528 | 107,746 | 105,913 | 106,703 | 107,576 | 103,670 |
| ASSET QUALITY | |||||||
| Net charge-offs (recoveries) | $ 80 | $ 338 | $ (45) | $ 39 | $ 469 | $ 412 | $ 178 |
| Non-performing loans (d) | 8,511 | 7,643 | 7,468 | 7,282 | 6,032 | 8,511 | 6,032 |
| Non-performing assets (e) | 9,049 | 8,207 | 8,056 | 7,847 | 6,597 | 9,049 | 6,597 |
| Allowance for loan losses | 12,776 | 11,856 | 11,320 | 10,825 | 10,433 | 12,776 | 10,433 |
| Annualized net charge-offs to average loans | 0.03% | 0.14% | (0.02)% | 0.02% | 0.21% | 0.04% | 0.02% |
| Non-performing loans to total loans | 0.85% | 0.79% | 0.80% | 0.79% | 0.68% | 0.85% | 0.68% |
| Non-performing assets to total assets | 0.61% | 0.61% | 0.64% | 0.61% | 0.53% | 0.61% | 0.53% |
| Allowance for loan losses to total loans | 1.28% | 1.23% | 1.21% | 1.17% | 1.17% | 1.28% | 1.17% |
| Allowance for loan losses to non-performing loans | 150.11% | 155.12% | 151.58% | 148.65% | 172.96% | 150.11% | 172.96% |
| (a) See the GAAP to Non-GAAP reconciliations. |
| (b) Efficiency ratio is non-interest expense less merger and acquisition expenses divided by the total of net interest income plus non-interest income less net gain on securities transactions less casualty gains less gain from bargain purchase. |
| (c) Loans include loans held for sale. Loans do not reflect the allowance for loan losses. |
| (d) Non-performing loans include non-accrual loans only. |
| (e) Non-performing assets include non-performing loans plus other real estate owned. |
| N/M – not meaningful. |
Chemung Financial Corporation
GAAP to Non-GAAP Reconciliations (Unaudited)
The table below shows computations of tangible equity and tangible assets and certain related ratios, all of which are considered to be non-GAAP financial measures. The tangible equity to tangible assets ratio has become a focus of some investors and management believes this ratio may assist in analyzing the Corporation's capital position, absent the effects of intangible assets. These non-GAAP financial measures have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of results reported under GAAP. Because not all companies use identical calculations, the non-GAAP measures presented in the following table may not be comparable to those reported by other companies.
| As of or for the | |||||||
| As of or for the Three Months Ended | Twelve Months Ended | ||||||
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | |
| (Dollars in thousands, except per share data) | 2013 | 2013 | 2013 | 2013 | 2012 | 2013 | 2012 |
| TANGIBLE EQUITY AND TANGIBLE ASSETS | |||||||
| (PERIOD END) | |||||||
| Total shareholders' equity (GAAP) | $ 138,578 | $ 134,806 | $ 132,679 | $ 132,908 | $ 131,115 | $ 138,578 | $ 131,115 |
| Less: intangible assets | (28,201) | (26,305) | (26,519) | (26,733) | (26,968) | (28,201) | (26,968) |
| Tangible equity (non-GAAP) | $ 110,377 | $ 108,501 | $ 106,160 | $ 106,175 | $ 104,147 | $ 110,377 | $ 104,147 |
| Total assets (GAAP) | $ 1,476,143 | $ 1,341,091 | $ 1,257,160 | $ 1,279,972 | $ 1,248,160 | $ 1,476,143 | $ 1,248,160 |
| Less: intangible assets | (28,201) | (26,305) | (26,519) | (26,733) | (26,968) | (28,201) | (26,968) |
| Tangible assets (non-GAAP) | $ 1,447,942 | $ 1,314,786 | $ 1,230,641 | $ 1,253,239 | $ 1,221,192 | $ 1,447,942 | $ 1,221,192 |
| Total equity to total assets at end of period (GAAP) | 9.39% | 10.05% | 10.55% | 10.38% | 10.50% | 9.39% | 10.50% |
| Book value per share (GAAP) | $ 29.67 | $ 28.93 | $ 28.47 | $ 28.54 | $ 28.20 | $ 29.67 | $ 28.20 |
| Tangible equity to tangible assets at end of period (non-GAAP) | 7.62% | 8.25% | 8.63% | 8.47% | 8.53% | 7.62% | 8.53% |
| Tangible book value per share (non-GAAP) | $ 23.63 | $ 23.28 | $ 22.78 | $ 22.80 | $ 22.40 | $ 23.63 | $ 22.40 |
| TANGIBLE EQUITY AND TANGIBLE ASSETS | |||||||
| (AVERAGE) | |||||||
| Total shareholders' equity (GAAP) | $ 135,979 | $ 133,955 | $ 134,392 | $ 132,783 | $ 133,799 | $ 134,285 | $ 131,119 |
| Less: intangible assets | (26,897) | (26,427) | (26,646) | (26,870) | (27,096) | (26,709) | (27,449) |
| Tangible equity (non-GAAP) | $ 109,082 | $ 107,528 | $ 107,746 | $ 105,913 | $ 106,703 | $ 107,576 | $ 103,670 |
| Return on average equity (GAAP) | 4.34% | 6.45% | 7.92% | 7.37% | 6.33% | 6.50% | 8.41% |
| Return on average tangible equity (non-GAAP) | 5.40% | 8.04% | 9.88% | 9.24% | 7.94% | 8.12% | 10.63% |
CONTACT: Karl F. Krebs, EVP and CFO
kkrebs@chemungcanal.com
Phone: 607-737-3714