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Chemung Financial Reports Record Earnings

Chemung Financial Reports Record Earnings

ELMIRA, N.Y., Jan. 30, 2013 (GLOBE NEWSWIRE) -- Chemung Financial Corporation
(Nasdaq:CHMG), the parent company of Chemung Canal Trust Company, reported
year-to-date and quarter ended December 31, 2012, net income and earnings per
share. Highlights for the current year and quarter include:

  *Net income for the twelve months ended December 31, 2012, was $11.0
    million, or $2.38 per share, compared with $10.5 million, or $2.40 per
    share, for the prior year, an increase of $0.5 million, or 4.6%. Net
    income for the fourth quarter of 2012 was $2.1 million, or $0.46 per
    share, compared with $3.0 million, or $0.64 per share, for the same
    quarter in the prior year.
    
  *Net interest margin for the twelve months ended December 31, 2012, was
    4.07%,level with the prior year. Net interest margin for the fourth
    quarter of 2012 was 3.98% compared with 4.04% for the preceding quarter
    and 4.19% for the fourth quarter in the prior year.
    
  *Non-performing assets to total assets ratio declined to 0.89% at December
    31, 2012, from 1.79% at December 31, 2011. Excluding $4.5 million in
    accruing loans that are 90 days or more past their stated maturity dates,
    the non-performing assets to total assets ratio was 0.53%.
    
  *Capital remains strong as the tangible equity to tangible assets ratio was
    8.53% at December 31, 2012, compared with 8.23% at December 31, 2011.

Ronald M. Bentley, President and CEO stated, "We set new financial performance
records for Chemung Financial Corporation in 2012 while devoting much of our
time and attention preparing for the future. We are pleased to report that the
Capital Bank merger is delivering as promised and our other business units
also performed well."

Mr. Bentley continued, "Credit quality remained strong as the level of both
classified and nonperforming loans declined from year-earlier levels.
Excluding some performing but past due construction loans acquired in
connection with the Capital Bank merger, the ratio of total nonperforming
assets to total assets at year end was 0.53%, a level attesting to our solid
and stable credit quality and a ratio better than most of our peers."

Summary:

Chemung Financial Corporation reported net income of $11.0 million for the
twelve months ended December 31, 2012, an increase of $0.5 million, or 4.6%,
compared with $10.5 million for the twelve months ended December 31,
2011.Earnings per share for the twelve months ended December 31, 2012, was
$2.38 compared with $2.40 for the twelve months ended December 31,
2011.Return on average assets and return on average equity for the twelve
months ended December 31, 2012, were 0.88% and 8.41%, respectively, compared
with 0.90% and 8.77%, respectively, for the prior year.

The improvement in 2012 earnings was due primarily to a $2.9 million increase
in net interest income and a $2.2 million decrease in pre-tax one-time merger
transaction costs, both related to the Capital Bank acquisition in April
2011.In addition, we recognized $0.8 million in pre-tax casualty gains from
insurance reimbursements related to the September 2011 flooding of our Owego
and Tioga offices.These items were partially offset by increases of $1.8
million in salaries and wages, $0.8 million in pension and other employee
benefits, $0.5 million in data processing expenses, $0.5 million in
professional services, $0.4 million in income taxes and a $0.8 million
reduction in net gains on securities transactions.

Net income for the fourth quarter 2012 was $2.1 million compared with fourth
quarter 2011 results of $3.0 million, a decrease of $0.9 million, or
28.1%.The decline was attributable toa decreaseof $0.4 million in net
interest income and an increase of $1.1 million in non-interest expense,
partially offset by a reduction of $0.5 million in income taxes.Earnings per
share for the current quarter totaled $0.46 compared with $0.64 for the same
period in the prior year.Return on average assets and return on average
equity for the current quarter were 0.67% and 6.33%, respectively, compared
with 0.95% and 9.06%, respectively, for the fourth quarter of 2011.

Net income of $2.1 million for the quarter ended December 31, 2012, represents
a decrease of $0.7 million, or 24.8%, from net income of $2.8 million for the
preceding quarter ended September 30, 2012.The decline was primarily due to
an increase of $1.2 million in non-interest expense,partially offset by a
reduction of $0.4 million in income taxes.Earnings per share for the current
quarter totaled $0.46 compared with $0.61 for the preceding quarter.Return on
average assets and return on average equity for the current quarter were 0.67%
and 6.33%, respectively, compared with 0.89% and 8.53%, respectively, for the
preceding quarter.

Net Interest Income:

Net interest income for the twelve months ended December 31, 2012, totaled
$46.8 million compared with $43.8 million for the prior year, an increase of
$3.0 million, or 6.7%.Net interest margin was 4.07% for the twelve months
ended December 31, 2012, level with the prior year.The increase in net
interest income was primarily due to an increase in average earning
assets.The increase in average earning assets was the result of the Capital
Bank acquisition in April 2011, and organic growth during 2012 in the Albany
region.

Net interest income for the fourth quarter of 2012 was $11.6 million compared
with $12.0 million for the same quarter in the prior year, a decrease of $0.4
million, or 3.2%.Net interest margin declined to 3.98% for the current
quarter from 4.19% for the same quarter in the prior year.The decline in net
interest margin was primarily due 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.

Compared with the preceding quarter ended September 30, 2012, net interest
incomedecreased by $0.1 million, primarily due to a six basis pointdecline
in the net interest margin.Thedecrease in the net interest margin was
primarily due to a19 basis point decrease in the yield on loans.

Non-Interest Income:

Non-interest income for the twelve months ended December 31, 2012, was $17.3
million compared with $17.5 million for the prior year, a decrease of $0.2
million, or 1.0%.The decline was primarily due to decreases of $0.8 million
in net gain on securities transactions and $0.6 million in revenue from our
equity investment in Cephas Capital Partners, L.P.These items were partially
offset by $0.8 million in casualty gains from insurance reimbursements related
to the September 2011 flooding of our Owego and Tioga offices and an increase
of $0.3 million in net gain on sale of loans held for sale.

Non-interest income for the fourth quarter of 2012 was $4.2 million, a slight
increase compared with both the preceding quarter and same quarter in the
prior year, primarily due to an increase in net gain on sales of loans held
for sale.

Non-Interest Expense:

Non-interest expense for the twelve months ended December 31, 2012, was $46.8
million compared with $44.8 million for the prior year, an increase of $2.0
million, or 4.6%.Excluding $2.2 million in merger related expenses from the
prior year, non-interest expense increased $4.3 million, or 10.1%, for the
twelve months ended December 31, 2012.This increase was primarily due to
increases of $1.8 million in salaries and wages, $0.8 million in pension and
other employee benefits, $0.5 million in data processing expenses and $0.5
million in professional services.The increase in salaries and wages was
primarily due to the operation of the Capital Bank division for twelve months
during 2012 compared with nine months during 2011, and additional compensation
related to merit increases and incentive compensation.The increase in pension
and other employee benefits was primarily due to higher pension costs, health
benefits and payroll taxes.The increase in data processing expenses was
primarily due to higher hardware and software maintenance fees and check card
processing costs that included conversion costs for a new processor.The
increase in professional services was due primarily to consultant fees.

Non-interest expense for the fourth quarter of 2012 was $12.6 million compared
with $11.5 million for the same quarter in the prior year, an increase of $1.1
million, or 9.7%.The increase was primarily due to increases of $0.6 million
in salaries and wages and $0.5 million in professional services.The increase
in salaries and wages was primarily due to an increase in employees and
additional compensation related to merit increases and incentive
compensation.The increase in professional services was due to the reason
discussed above.Compared with the preceding quarter ended September 30, 2012,
non-interest expense increased $1.2 million, or 10.9%.The increase was
primarily due to increases of $0.5 million in salaries and wages and $0.6
million in professional services.

Asset Quality:

Non-performing loans totaled $10.5 million at December 31, 2012, or 1.18% of
total loans, down $10.4 million from $20.9 million, or 2.62%, at December 31,
2011.Non-performing assets which are comprised of non-performing loans and
other real estate owned, totaled $11.1 million at December 31, 2012, or 0.89%
of total assets, down $10.7 million from $21.8 million, or 1.79%, at December
31, 2011.Excluding $4.5 million in accruing loans that are 90 days or more
past their stated maturity dates, the non-performing assets to total assets
ratio was 0.53%.

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 twelve
months ended December 31, 2012, was $0.8 million,a decreaseof $0.1 million
compared with the prior year.Net charge-offs for the twelve months ended
December 31, 2012, were $0.2 million compared with $0.8 million for the prior
year.

For the fourth quarter of 2012, the provision for loan losses was $0.1 million
compared with $0.2 million for the preceding quarter and $0.1 million for the
same quarter in the prior year.Net charge-offs for the current quarter were
$0.5 million compared with net recoveries of $0.2 million for the preceding
quarter and net charge-offs of $0.1 million for the same quarter in the prior
year.

At December 31, 2012, the allowance for loan losses was $10.4
million,compared with $10.8 million at September 30, 2012, and $9.7 million
at December 31, 2011.The allowance for loan losses was 99.21% of
non-performing loans at December 31, 2012, compared with 81.66% at September
30, 2012, and 46.18% at December 31, 2011.The ratio of the allowance for loan
losses to total loans was 1.17% at December 31, 2012, compared with 1.24% at
September 30, 2012, and 1.21% at December 31, 2011.Excluding acquired loans,
the ratio of the allowance for loan losses on originated loans to originated
loans was 1.18% at December 31, 2012, compared with 1.38% at September 30,
2012, and 1.47% at December 31, 2011.

Balance Sheet Activity:

Assets totaled $1.248 billion at December 31, 2012, compared with $1.216
billion at December 31, 2011, an increase of $31.9 million, or 2.6%.The
growth was primarily due to anincrease of $96.6 million, or 12.1%, in total
portfolio loans, partially offset by decreases of $44.5 million in investment
securities and $13.7 million in interest-bearing deposits in other financial
institutions.The increase in portfolio loans was due to strong growth of
$47.3 million in commercial loans and $42.5 million in consumer loans.

Deposits totaled $1.045 billion at December 31, 2012, compared with $998.5
million at December 31, 2011, an increase of $46.2 million, or 4.6%.The
growth was primarily due to increases of $65.1 million in money market
accounts, $41.8 million in non-interest-bearing demand deposits and $16.4
million in NOW accounts.These items were partially offset by decreases of
$36.7 million in savings accounts and $40.3 million in certificates of
deposit.

Total equity was $131.1 million at December 31, 2012, compared with $125.9
million at December 31, 2011.The total equity to total assets ratio was
10.50% at December 31, 2012, up from 10.35% at December 31, 2011.The tangible
equity to tangible assets ratio was 8.53% at December 31, 2012, up from 8.23%
at December 31, 2011.As of December 31, 2012, 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 Item:

The market value of total assets under management or administration in our
Wealth Management Group was $1.735 billion at December 31, 2012, compared with
$1.596 billion at December 31, 2011.

About Chemung Financial Corporation:

Chemung Financial Corporation is a $1.2 billion financial services holding
company headquartered in Elmira, New York and operates 28 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.CFS Group, Inc. was founded in 2001.

This press release may be found at: www.chemungcanal.com under Shareholder
Info.

Forward-Looking Statements:

This press release may include forward-looking statements with respect to
revenue sources, growth, market risk, corporate objectives and possible losses
due to asset quality.These statements constitute "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.Chemung Financial Corporation
assumes no duty, and specifically disclaims any obligation to update
forward-looking statements, whether as a result of new information, future
events or otherwise, and cautions that these statements are subject to risks
and uncertainties that could cause the Corporation's actual operating results
to differ materially.

                                                               
Chemung Financial                                               
Corporation
Consolidated Balance                                            
Sheets (Unaudited)
                       Dec. 31,   Sept. 30,  June 30,   March 31,  Dec. 31,
(Dollars in thousands,  2012       2012       2012       2012       2011
except share data)
ASSETS                                                          
Cash and due from       $29,239  $35,324  $33,673  $27,311  $28,205
financial institutions
Interest-bearing
deposits in other       11,002    45,908    40,502    83,203    24,697
financial institutions
Total cash and cash     40,241    81,232    74,175    110,514   52,902
equivalents
                                                               
Trading assets, at fair 348       275       252       254       294
value
                                                               
Securities available    239,686   253,669   260,942   259,450   280,870
for sale
Securities held to      5,749     6,163     6,334     7,447     8,312
maturity
FHLB and Federal
Reserve Bank stocks, at 4,710     4,760     5,359     5,436     5,509
cost
Total investment        250,145   264,592   272,635   272,333   294,691
securities
                                                               
Commercial              454,048   444,491   436,205   414,536   406,798
Mortgage                200,476   193,049   194,512   192,548   193,600
Consumer                238,993   238,818   225,230   195,949   196,517
Total loans             893,517   876,358   855,947   803,033   796,915
Allowance for loan      (10,433)  (10,828)  (10,392)  (10,283)  (9,659)
losses
Loans, net              883,084   865,530   845,555   792,750   787,256
                                                               
Loans held for sale     1,057     1,165     482       826       395
Premises and equipment, 25,484    24,863    24,718    24,977    24,762
net
Goodwill                21,824    21,824    21,824    21,824    21,984
Other intangible        5,144     5,382     5,642     5,906     6,191
assets, net
Other assets            20,833    22,117    22,176    25,111    27,785
Total assets            $         $         $         $         $
                        1,248,160  1,286,980  1,267,459  1,254,495  1,216,260
                                                               
LIABILITIES AND                                                 
SHAREHOLDERS' EQUITY
Deposits:                                                       
Demand deposits         $300,610 $302,509 $297,413 $272,055 $258,836
(non-interest bearing)
NOW accounts            90,730    108,923   88,343    88,105    74,349
Savings                 173,589   174,074   174,974   203,204   210,288
Money market accounts   243,115   248,722   232,870   212,376   178,030
Certificates of deposit 236,690   248,948   260,079   262,965   276,990
Total deposits          1,044,734 1,083,176 1,053,679 1,038,705 998,493
                                                               
Securities sold under
agreements to           32,711    32,918    31,750    34,998    37,107
repurchase
FHLB term advances      27,225    28,046    41,128    43,227    43,344
Other liabilities       12,375    9,960     10,693    8,736     11,386
Total liabilities       1,117,045 1,154,100 1,137,250 1,125,666 1,090,330
                                                               
Shareholders' equity                                            
Common stock            53        53        53        53        53
Additional-paid-in      45,357    45,538    45,525    45,556    45,583
capital
Retained earnings       107,078   106,092   104,402   103,100   100,629
Treasury stock          (18,566)  (18,731)  (18,915)  (18,734)  (18,894)
Accumulated other
comprehensive income    (2,807)   (72)      (856)     (1,146)   (1,441)
(loss)
Total shareholders'     131,115   132,880   130,209   128,829   125,930
equity
Total liabilities and   $         $         $         $         $
shareholders' equity    1,248,160  1,286,980  1,267,459  1,254,495  1,216,260
                                                               
Period-end shares       4,649,741 4,642,317 4,632,014 4,639,565 4,640,646
outstanding

                                                                 
Chemung Financial                                                 
Corporation
Consolidated
Statements of                                                     
Income (Unaudited)
                  Twelve Months Ended          Three Months Ended    
                  December 31,          Percent December 31,          Percent
(Dollars in
thousands, except  2012       2011       Change  2012       2011       Change
share and per
share data)
Interest and                                                      
dividend income:
Loans, including   $45,298  $43,181  4.9     $11,220  $11,725  (4.3)
fees
Taxable securities 5,358     5,874     (8.8)   1,215     1,526     (20.4)
Tax exempt         1,268     1,379     (8.0)   292       344       (15.1)
securities
Interest-bearing   153       214       (28.5)  30        47        (36.2)
deposits
Total interest and 52,077    50,648    2.8     12,757    13,642    (6.5)
dividend income
                                                                 
Interest expense:                                                 
Deposits           3,243     4,351     (25.5)  710       1,025     (30.7)
Securities sold
under agreements   994       1,375     (27.7)  231       319       (27.6)
to repurchase
Borrowed funds     1,059     1,073     (1.3)   190       290       (34.5)
Total interest     5,296     6,799     (22.1)  1,131     1,634     (30.8)
expense
                                                                 
Net interest       46,781    43,849    6.7     11,626    12,008    (3.2)
income
Provision for loan 828       958       (13.6)  74         125       (40.8)
losses
Net interest
income after       45,953    42,891    7.1     11,552    11,883    (2.8)
provision for loan
losses
                                                                 
Non-interest                                                      
income:
Wealth management  6,827     6,710     1.7     1,657     1,579     4.9
group fee income
Service charges on 4,241     4,282     (1.0)   1,098     1,101     (0.3)
deposit accounts
Net gain on
securities         301       1,108     (72.8)  --        --        N/M
transactions
Net impairment
loss recognized in --        (67)      N/M    --        --        N/M
earnings
Net gain on sales
of loans held for  484       179       170.4   214       46        365.2
sale
Casualty gains     790       --        N/M    --        --        N/M
Other              4,647     5,252     (11.5)  1,233     1,318     (6.4)
Total non-interest 17,290    17,464    (1.0)   4,202     4,044     3.9
income
                                                                 
Non-interest                                                      
expense:
Salaries and wages 18,918    17,136    10.4    5,207     4,602     13.1
Pension and other  5,624     4,797     17.2    1,486     1,500     (0.9)
employee benefits
Net occupancy      5,164     5,016     3.0     1,315     1,353     (2.8)
Furniture and      2,205     2,119     4.1     605       570       6.1
equipment
Data processing    4,421     3,916     12.9    1,142     1,035     10.3
Professional       1,443     950       51.9    749       205       265.4
services
Amortization of    1,047     1,041     0.6     238       288       (17.4)
intangible assets
Marketing and      1,068     1,037     3.0     153       246       (37.8)
advertising
FDIC insurance     807       967       (16.5)  192       230       (16.5)
Loan expenses      788       608       29.6    240       160       50.0
Other real estate  328       105       212.4   42        19        121.1
owned expenses
Merger related     30        2,255     (98.7)  --        11        (100.0)
expenses
Other              4,994     4,837     3.2     1,268     1,303     (2.7)
Total non-interest 46,837    44,784    4.6     12,637    11,522    9.7
expense
                                                                 
Income before      16,406    15,571    5.4     3,117     4,405     (29.2)
income tax expense
Income tax expense 5,384     5,033     7.0     987       1,443     (31.6)
Net income         $11,022  $10,538  4.6     $2,130   $2,962   (28.1)
                                                                 
Basic and diluted  $2.38    $2.40           $0.46    $0.64    
earnings per share
Cash dividends     1.25      1.00             0.50      0.25      
declared per share
Average basic and
diluted shares     4,640,912 4,382,843        4,643,695 4,638,042 
outstanding
                                                                 
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,       2012       2012       2012       2012       2011       2012       2011
except share and
per share data)
                                                                            
RESULTS OF                                                                   
OPERATIONS
Interest income  $12,757  $13,015  $12,765  $13,540  $13,642  $52,077  $50,648
Interest expense 1,131      1,240      1,400      1,524      1,634      5,296      6,799
Net interest     11,626     11,775     11,365     12,016     12,008     46,781     43,849
income
Provision for    74         225        52         477        125        828        958
loan losses
Net interest
income after     11,552     11,550     11,313     11,539     11,883     45,953     42,891
provision for
loan losses
Non-interest     4,202      4,060      4,131      4,897      4,044      17,290     17,464
income
Non-interest     12,637     11,393     11,885     10,922     11,522     46,837     44,784
expense
Income before
income tax       3,117      4,217      3,559      5,514      4,405      16,406     15,571
expense
Income tax       987        1,383      1,115      1,899      1,443      5,384      5,033
expense
Net income       $2,130   $2,834   $2,444   $3,615   $2,962   $11,022  $10,538
Basic and
diluted earnings $0.46    $0.61    $0.53    $0.78    $0.64    $2.38    $2.40
per share
Average basic
and diluted      4,643,695  4,641,547  4,636,395  4,642,012  4,638,042  4,640,912  4,382,843
shares
outstanding
                                                                            
PERFORMANCE                                                                  
RATIOS
Return on        0.67%      0.89%      0.78%      1.18%      0.95%      0.88%      0.90%
average assets
Return on        6.33%      8.53%      7.55%      11.34%     9.06%      8.41%      8.77%
average equity
Return on
average tangible 7.94%      10.76%     9.58%      14.47%     11.60%     10.63%     11.05%
equity (a)
Efficiency ratio 78.21%     70.16%     74.75%     62.85%     69.88%     71.32%     71.18%
Non-interest
expense to       3.98%      3.59%      3.82%      3.56%      3.68%      3.74%      3.81%
average assets
Loans to         85.53%     80.91%     81.23%     77.31%     79.81%     85.53%     79.81%
deposits
                                                                            
YIELDS / RATES                                                               
Yield on loans   5.02%      5.21%      5.39%      5.90%      5.85%      5.37%      5.83%
Yield on         2.23%      2.23%      2.13%      2.27%      2.22%      2.22%      2.22%
investments
Yield on
interest-earning 4.36%      4.46%      4.46%      4.83%      4.76%      4.53%      4.70%
assets
Cost of
interest-bearing 0.37%      0.40%      0.44%      0.50%      0.54%      0.43%      0.60%
deposits
Cost of          2.74%      2.85%      3.02%      2.96%      2.84%      2.90%      3.01%
borrowings
Cost of
interest-bearing 0.55%      0.60%      0.67%      0.74%      0.77%      0.64%      0.85%
liabilities
Interest rate    3.81%      3.86%      3.79%      4.09%      3.99%      3.89%      3.85%
spread
Net interest     3.98%      4.04%      3.97%      4.28%      4.19%      4.07%      4.07%
margin
                                                                            
CAPITAL                                                                      
Total equity to
total assets at  10.50%     10.32%     10.27%     10.27%     10.35%     10.50%     10.35%
end of period
Tangible equity
to tangible      8.53%      8.39%      8.29%      8.24%      8.23%      8.53%      8.23%
assets at end of
period (a)
                                                                            
Book value per   $28.20   $28.62   $28.11   $27.77   $27.14   $28.20   $27.14
share
Tangible book    22.40      22.76      22.18      21.79      21.07      22.40      21.07
value per share
Period-end
market value per 29.89      23.77      25.50      25.40      22.70      29.89      22.70
share
Dividends
declared per     0.50       0.25       0.25       0.25       0.25       1.25       1.00
share
                                                                            
AVERAGE BALANCES                                                             
Loans (b)        $888,515 $867,971 $823,754 $796,035 $795,450 $844,256 $740,950
Earning assets   1,162,788  1,160,479  1,150,073  1,128,047  1,138,120  1,150,409  1,078,418
Total assets     1,264,125  1,262,648  1,252,461  1,235,453  1,241,144  1,253,725  1,175,046
Deposits         1,059,463  1,055,510  1,037,576  1,018,035  1,017,116  1,042,727  965,183
Total equity     133,799    132,186    130,254    128,194    129,767    131,119    120,225
Tangible equity  106,703    104,827    102,635    100,465    101,279    103,670    95,375
(a)
                                                                            
ASSET QUALITY                                                                
Net charge-offs  $469     $(210)   $(58)    $(23)    $143     $178     $797
(recoveries)
Non-performing   10,516     13,260     15,009     15,077     20,915     10,516     20,915
loans
Non-performing   11,081     14,194     15,979     16,057     21,813     11,081     21,813
assets
Allowance for    10,433     10,828     10,392     10,283     9,659      10,433     9,659
loan losses
                                                                            
Annualized net
charge-offs to   0.21%      (0.10)%    (0.03)%    (0.01)%    0.07%      0.02%      0.11%
average loans
Non-performing
loans to total   1.18%      1.51%      1.75%      1.88%      2.62%      1.18%      2.62%
loans
Non-performing
assets to total  0.89%      1.10%      1.26%      1.28%      1.79%      0.89%      1.79%
assets
Allowance for
loan losses to   1.17%      1.24%      1.21%      1.28%      1.21%      1.17%      1.21%
total loans
Allowance for
originated loans 1.18%      1.38%      1.38%      1.48%      1.47%      1.18%      1.47%
to originated
loans (c)
Allowance for
loan losses to   99.21%     81.66%     69.24%     68.20%     46.18%     99.21%     46.18%
non-performing
loans
                                                                            
(a) See the GAAP to Non-GAAP reconciliations.
(b) Loans include loans held for sale.Loans do not reflect the allowance for loan losses.
(c) Originated loans represent total loans excluding acquired loans.

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,       2012       2012       2012       2012       2011       2012       2011
except per share
data)
                                                                            
TANGIBLE EQUITY
AND TANGIBLE                                                                 
ASSETS
(PERIOD END)                                                                 
Total
shareholders'    $131,115 $132,880 $130,209 $128,829 $125,930 $131,115 $125,930
equity (GAAP)
Less:intangible (26,968)   (27,206)   (27,466)   (27,730)   (28,175)   (26,968)   (28,175)
assets
Tangible equity  $104,147 $105,674 $102,743 $101,099 $97,755  $104,147 $97,755
(non-GAAP)
                                                                            
Total assets     $         $         $         $         $         $         $
(GAAP)           1,248,160  1,286,980  1,267,459  1,254,495  1,216,260  1,248,160  1,216,260
Less:intangible (26,968)   (27,206)   (27,466)   (27,730)   (28,175)   (26,968)   (28,175)
assets
Tangible assets  $         $         $         $         $         $         $
(non-GAAP)       1,221,192  1,259,774  1,239,993  1,226,765  1,188,085  1,221,192  1,188,085
                                                                            
Total equity to
total assets at  10.50%     10.32%     10.27%     10.27%     10.35%     10.50%     10.35%
end of period
(GAAP)
Book value per   $28.20   $28.62   $28.11   $27.77   $27.14   $28.20   $27.14
share (GAAP)
                                                                            
Tangible equity
to tangible
assets at end of 8.53%      8.39%      8.29%      8.24%      8.23%      8.53%      8.23%
period
(non-GAAP)
Tangible book
value per share  $22.40   $22.76   $22.18   $21.79   $21.07   $22.40   $21.07
(non-GAAP)
                                                                            
TANGIBLE EQUITY
AND TANGIBLE                                                                 
ASSETS
(AVERAGE)                                                                    
Total
shareholders'    $133,799 $132,186 $130,254 $128,194 $129,767 $131,119 $120,225
equity (GAAP)
Less:intangible (27,096)   (27,359)   (27,619)   (27,729)   (28,488)   (27,449)   (24,850)
assets
Tangible equity  $106,703 $104,827 $102,635 $100,465 $101,279 $103,670 $95,375
(non-GAAP)
                                                                            
Return on
average equity   6.33%      8.53%      7.55%      11.34%     9.06%      8.41%      8.77%
(GAAP)
                                                                            
Return on
average tangible 7.94%      10.76%     9.58%      14.47%     11.60%     10.63%     11.05%
equity
(non-GAAP)

CONTACT: Mark A. Severson, EVP and CFO
         Phone:  607-737-3714
 
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