Chemung Financial Reports Third Quarter 2013 Earnings

Chemung Financial Reports Third Quarter 2013 Earnings

ELMIRA, N.Y., Oct. 28, 2013 (GLOBE NEWSWIRE) -- Chemung Financial Corporation
(Nasdaq:CHMG), the parent company of Chemung Canal Trust Company, reported
third quarter ended September 30, 2013 and year-to-date net income and
earnings per share. Highlights for the third quarter and year-to-date include:

  *Net income for the third quarter of 2013 was $2.2 million, or $0.47 per
    share, compared with $2.8 million, or $0.61 per share, for the same
    quarter in the prior year. Excluding pre-tax acquisition expenses of $0.2
    million, core net income for the third quarter of 2013 was $2.3 million,
    or $0.50 per share.
  *Net income for the nine months ended September 30, 2013 was $7.2 million,
    or $1.56 per share, compared with $8.9 million, or $1.92 per share, for
    the same period in the prior year, a decrease of $1.7 million, or 18.5%.
    Excluding pre-tax acquisition expenses of $0.2 million, core net income
    for the nine months ended September 30, 2013 was $7.4 million, or $1.58
    per share. Excluding pre-tax items of $0.3 million in net gain on
    securities transactions and $0.8 million in casualty gains, core net
    income for the nine months ended September 30, 2012 was $8.2 million, or
    $1.78 per share.
  *Net interest margin for the third quarter of 2013 was 3.84%, compared with
    3.87% for the preceding quarter and 4.04% for the third quarter in the
    prior year. Net interest margin for the nine months ended September 30,
    2013 was 3.93%, down from 4.10% for the same period in the prior year,
    while interest-earning assets increased $30.6 million.
  *Non-performing assets to total assets ratio was 0.61% at September 30,
    2013 compared with 0.53% at December 31, 2012 and 0.75% at September 30,
    2012.
  *Capital remains strong as the tangible equity to tangible assets ratio was
    8.25% at September 30, 2013, compared with 8.53% at December 31, 2012 and
    8.39% at September 30, 2012.
  *Book value per share increased to $28.93 at September 30, 2013 from $28.20
    at December 31, 2012.
  *Dividends declared during the quarter ended September 30, 2013 were $0.26
    per share compared with $0.25 per share for the prior year, an increase of
    4.0%.
  *In the third quarter, in anticipation of the increase in liquidity
    resulting from the purchase of six branches with approximately $260
    million in deposits, the Corporation initiated a pre-funding strategy. The
    strategy involved the purchase of investment securities of varying
    maturities, funded with short-term FHLB advances. The maturities and cash
    flows of the securities were structured to provide funding for the
    anticipated deployment into new commercial and consumer loans originated
    in the near future. The acquisition of the branches will close in the
    fourth quarter of 2013.

Ronald M. Bentley, President and CEO stated, "We are pleased to report solid
quarterly earnings combined with strong asset quality and capital
levels.Despite a sluggish economy in many of our markets, we continue to
experience growth in our commercial and consumer loan portfolios."Mr. Bentley
also stated, "Our branch acquisition pre-funding strategy, which included
growth in securities and loans, drove an increase in net interest income for
the third quarter of 2013 compared with the preceding quarter."

Summary:

Chemung Financial Corporation reported net income of $2.2 million for the
third quarter of 2013, a decrease of $0.6 million, or 23.1%, compared with
$2.8 million for the same period in the prior year. Earnings per share for the
third quarter of 2013 totaled $0.47, compared with $0.61 for the same period
in the prior year. Return on average assets and return on average equity for
the third quarter of 2013 were 0.67% and 6.45%, respectively, compared with
0.89% and 8.53%, respectively, for the same period in the prior year.

Core net income for the third quarter of 2013 was $2.3 million, or $0.50 per
share, compared with $2.8 million, or $0.61 per share, for the same period in
the prior year.Core net income for the current quarter excluded $0.2 million
in acquisition expenses.The decrease in core net income was due primarily to
a decline of $0.3 million in net interest income and increases of $0.6 million
in the provision for loan losses and $0.3 million in non-interest
expense.These items were partially offset by an increase of $0.4 million in
non-interest income and a reduction of $0.3 million in income taxes.Core
return on average assets and core return on average equity for the third
quarter of 2013 were 0.71% and 6.85%, respectively, compared with 0.90% and
8.55%, respectively, for the same period in the prior year.

Net income of $2.2 million for the current quarter ended September 30, 2013
represents a decrease of $0.5 million, or 17.9%, from net income of $2.7
million for the preceding quarter ended June 30, 2013.The decline in earnings
was due primarily to increases of $0.4 million in the provision for loan
losses and $0.4 million in non-interest expense, which included $0.2 million
in acquisition expenses.Earnings per share for the current quarter totaled
$0.47 compared with $0.57 for the preceding quarter.Return on average assets
and return on average equity for the current quarter were 0.67% and 6.45%,
respectively, compared with 0.84% and 7.92%, respectively, for the preceding
quarter.

Net income for the nine months ended September 30, 2013 was $7.2 million, a
decrease of $1.7 million, or 18.5%, compared with $8.9 million for the nine
months ended September 30, 2012. Earnings per share for the nine months ended
September 30, 2013 was $1.56, compared with $1.92 for the nine months ended
September 30, 2012. Return on average assets and return on average equity for
the nine months ended September 30, 2013 were 0.76% and 7.25%, respectively,
compared with 0.95% and 9.12%, respectively, for the same period in the prior
year.

Core net income for the nine months ended September 30, 2013 was $7.4 million
compared with $8.2 million for the nine months ended September 30, 2012.The
current year core net income excluded $0.2 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 a decline of $0.6
million in net interest income and increases of $1.0 million in the provision
for loan losses and $0.6 million in non-interest expense.These items were
partially offset by an increase of $0.9 million in non-interest income and a
reduction of $0.4 million in income taxes.Core earnings per share for
September 30, 2013 was $1.58, compared with $1.78 for the nine months ended
September 30, 2012.Core return on average assets and core return on average
equity for the nine months ended September 30, 2013 were 0.77% and 7.38%,
respectively, compared with 0.88% and 8.45%, respectively, for the same period
in the prior year.

Net Interest Income:

Net interest income for the third quarter of 2013 totaled $11.5 million
compared with $11.8 million for the same period in the prior year, a decrease
of $0.3 million, or 2.3%.Net interest margin was 3.84% for the third quarter
of 2013 compared with 4.04% for the same period in the prior year.The decline
in net interest income was due primarily to a 29 basis point decrease in the
yield on interest-earning assets, partially offset by a 12 basis point decline
in the cost of funds and an increase of $29.5 million in average earning
assets.

Net interest income for the current quarter totaled $11.5 million compared
with $11.3 million for the preceding quarter ended June 30, 2013, an increase
of $0.2 million, or 1.7%.Net interest margin was 3.84% for the current
quarter compared with 3.87% for the preceding quarter.The increase in net
interest income was due primarily to an increase of $16.1 million in average
earning assets, partially offset by a four basis point decrease in the yield
on interest-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.

Net interest income for the nine months ended September 30, 2013 totaled $34.6
million compared with $35.2 million for the prior year, a decrease of $0.6
million, or 1.8%.Net interest margin was 3.93% for the nine months ended
September 30, 2013 compared with 4.10% for the same period in the prior
year.The decline in net interest income was due primarily to margin
compression evidenced by a 31 basis point decrease in the yield on
interest-earning assets, partially offset by a 17 basis point decline in the
cost of funds and an increase of $30.6 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.

Non-Interest Income:

Non-interest income for the third quarter of 2013 was $4.4 million compared
with $4.5 million for the preceding quarter ended June 30, 2013 and $4.0
million for the same second quarter in the prior year.The increase from the
year-ago quarter was due primarily to increases in Wealth Management fee
income, service charges on deposit accounts and net gain on sales of other
real estate owned.The decline from the preceding quarter was due primarily to
decreases in Wealth Management fee income and net gain on sales of loans held
for sale.

Non-interest income for the nine months ended September 30, 2013 was $12.8
million compared with $13.0 million for the prior year, a decrease of $0.2
million, or 1.1%.The decline was due primarily to reductions of $0.8 million
in casualty gains from insurance reimbursements and $0.3 million in net gain
on securities transactions.These items were partially offset by increases of
$0.3 million in Wealth Management Group fee income, $0.2 million in service
charges on deposit accounts and $0.2 million in net gain on sales of loans
held for sale.

Non-Interest Expense:

Non-interest expense for the third quarter of 2013 was $11.8 million compared
with $11.3 million for the prior year, an increase of $0.5 million, or
4.2%.The increase was due primarily to increases of $0.2 million in data
processing costs and $0.2 million in acquisition expenses.

Non-interest expense for the current quarter was $11.8 million compared with
$11.4 million for the preceding quarter ended June 30, 2013, an increase of
$0.4 million, or 3.7%.The increase was due primarily to increases of $0.2
million in acquisition expenses, $0.1 million in salaries and wages, and $0.1
million in marketing and advertising expense.

Non-interest expense for the nine months ended September 30, 2013 was $34.9
million compared with $34.2 million for the prior year, an increase of $0.7
million, or 2.3%.The increase was due primarily to increases of $0.4 million
in salaries and wages, $0.2 million in acquisition expenses and $0.2 million
in data processing costs.These items were partially offset by decreases of
$0.1 million in other real estate owned expenses and $0.1 million in
amortization of intangible assets.The increase in salaries and wages was due
primarily to compensation related to merit increases and incentive plans.

Asset Quality:

Non-performing loans totaled $7.6 million at September 30, 2013, or 0.79% of
total loans, up from $6.0 million, or 0.68%, at December 31, 2012 and down
from $8.7 million, or 0.99%, at September 30, 2012.The increase in
non-performing loans at September 30, 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 $8.2 million at
September 30, 2013, or 0.61% of total assets, up from $6.6 million, or 0.53%,
at December 31, 2012 and down from $9.6 million, or 0.75%, at September 30,
2012.

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 third
quarter of 2013 was $0.9 million compared with $0.5 million for the preceding
quarter ended June 30, 2013, and $0.2 million for the same period in the prior
year.The increase in the provision for loan losses was due primarily to one
commercial loan, loan portfolio growth and higher net charge-offs.Net
charge-offs for the current quarter were $0.3 million compared with net
recoveries of less than $0.1 million for the preceding quarter and net
recoveries of $0.2 million for the same period in the prior year.

The provision for loan losses for the nine months ended September 30, 2013 was
$1.8 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 one
commercial loan, loan portfolio growth and higher net charge-offs.Net
charge-offs for the nine months ended September 30, 2013 were $0.3 million
compared with net recoveries of $0.3 million for the prior year.

At September 30, 2013 the allowance for loan losses was $11.9 million,
compared with $10.4 million at December 31, 2012 and $10.8 million at
September 30, 2012.The allowance for loan losses was 155.12% of
non-performing loans at September 30, 2013, compared with 172.96% at December
31, 2012 and 124.96% at September 30, 2012.The ratio of the allowance for
loan losses to total loans was 1.23% at September 30, 2013, compared with
1.17% at December 31, 2012 and 1.24% at September 30, 2012.

Balance Sheet Activity:

Assets totaled $1.341 billion at September 30, 2013 compared with $1.248
billion at December 31, 2012, an increase of $92.9 million, or 7.4%.The
growth was due primarily to increases of $74.1 million, or 8.3%, in total
portfolio loans and $22.4 million, or 9.0%, in investment securities.The
increase in portfolio loans was due to strong growth of $46.9 million in
commercial loans and $33.6 million in consumer loans.The increase in
investment securities was related to a pre-funding strategy associated with
the acquisition of six branches scheduled to close in the fourth quarter of
2013.

Deposits totaled $1.088 billion at September 30, 2013 compared with $1.045
million at December 31, 2012, an increase of $43.7 million, or 4.2%.The
growth was primarily due to increases of $46.3 million in money market
accounts and $10.2 million in savings deposits.These items were partially
offset by a decrease of $14.8 million in higher cost time deposits.At
September 30, 2013, demand deposit and money market accounts comprised 62.7%
of total deposits compared with 60.7% at December 31, 2012 and 60.9% at
September 30, 2012.

The increase in FHLB advances was due to primarily to an increase of $49.1
million in low-cost overnight FHLB advances.The increase was related to a
pre-funding strategy associated with the acquisition of six branches scheduled
to close in the fourth quarter of 2013.The overnight FHLB advances will be
paid off after the acquisition is closed.

Total equity was $134.8 million at September 30, 2013 compared with $131.1
million at December 31, 2012.The total equity to total assets ratio was
10.05% at September 30, 2013 compared with 10.50% at December 31, 2012.The
tangible equity to tangible assets ratio was 8.25% at September 30, 2013
compared with 8.53% at December 31, 2012.Book value per share increased to
$28.93 at September 30, 2013 from $28.20 at December 31, 2012.As of September
30, 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 $1.829 billion at September 30, 2013 compared with
$1.735 billion at December 31, 2012 and $1.722 billion at September 30, 2012.

On July 12, 2013, Chemung Financial Corporation announced that its banking
subsidiary, Chemung Canal Trust Company entered into an agreement with Bank of
America to purchase six branch offices located in Auburn, Cortland, Ithaca and
Seneca Falls, New York.As part of the transaction, Chemung Canal Trust
Company will acquire approximately $260.9 million in deposits and $1.8 million
in loans.The transaction will close in the fourth quarter of 2013 and is
expected to be accretive to Chemung Financial Corporation earnings in 2015.

About Chemung Financial Corporation:

Chemung Financial Corporation is a $1.3 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.

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)
                       Sept. 30,  June 30,   March 31,  Dec. 31,   Sept. 30,
(Dollars in thousands,  2013       2013       2013       2012       2012
except share data)
ASSETS                                                          
Cash and due from       $37,491  $23,812  $27,757  $29,239  $35,324
financial institutions
Interest-bearing
deposits in other       2,438     945       18,380    11,002    45,908
financial institutions
Total cash and cash    39,929    24,757    46,137    40,241    81,232
equivalents
                                                               
Trading assets, at fair 313       389       384       348       275
value
                                                               
Securities available    259,275   225,362   235,307   239,686   253,669
for sale
Securities held to      6,544     6,570     9,898     5,749     6,163
maturity
FHLB and FRB stocks, at 6,725     4,579     4,607     4,710     4,760
cost
Total investment       272,544   236,511   249,812   250,145   264,592
securities
                                                               
Commercial              500,957   478,018   481,063   454,048   444,491
Mortgage                194,042   198,072   202,114   200,476   193,049
Consumer                272,635   257,950   238,256   238,993   238,818
Total loans            967,634   934,040   921,433   893,517   876,358
Allowance for loan      (11,856)  (11,320)  (10,825)  (10,433)  (10,828)
losses
Loans, net             955,778   922,720   910,608   883,084   865,530
                                                               
Loans held for sale     866       947       786       1,057     1,165
Premises and equipment, 25,087    24,969    24,800    25,484    24,863
net
Goodwill                21,824    21,824    21,824    21,824    21,824
Other intangible        4,481     4,695     4,909     5,144     5,382
assets, net
Other assets            20,269    20,348    20,712    20,833    22,117
Total assets           $         $         $         $         $
                        1,341,091  1,257,160  1,279,972  1,248,160  1,286,980
                                                               
                                                               
Deposits:                                                       
Non-interest-bearing    $297,053 $297,523 $296,361 $300,610 $302,509
demand deposits
Interest-bearing demand 96,191    89,027    102,201   90,730    108,923
deposits
Insured money market    289,459   261,060   265,025   243,115   248,722
accounts
Savings deposits        183,804   182,393   181,421   173,589   174,074
Time deposits           221,938   224,965   232,091   236,690   248,948
Total deposits         1,088,445 1,054,968 1,077,099 1,044,734 1,083,176
                                                               
Securities sold under
agreements to           30,499    30,568    31,427    32,711    32,918
repurchase
FHLB advances           75,146    26,101    27,158    27,225    28,046
Other liabilities       12,195    12,844    11,380    12,375    9,960
Total liabilities      1,206,285 1,124,481 1,147,064 1,117,045 1,154,100
                                                               
Shareholders' equity                                            
Common stock            53        53        53        53        53
Additional-paid-in      45,556    45,451    45,473    45,357    45,538
capital
Retained earnings       110,740   109,755   108,296   107,078   106,092
Treasury stock, at cost (18,266)  (18,205)  (18,291)  (18,566)  (18,731)
Accumulated other
comprehensive income    (3,277)   (4,375)   (2,623)   (2,807)   (72)
(loss)
Total shareholders'    134,806   132,679   132,908   131,115   132,880
equity
Total liabilities and  $         $         $         $         $
shareholders' equity    1,341,091  1,257,160  1,279,972  1,248,160  1,286,980
                                                               
Period-end shares       4,660,217 4,659,931 4,657,151 4,649,741 4,642,317
outstanding


Chemung Financial Corporation
Consolidated Statements of Income (Unaudited)
                  Nine Months Ended            Three Months Ended    
                  September 30,         Percent September 30,         Percent
(Dollars in
thousands, except  2013       2012       Change  2013       2012       Change
share and per
share data)
Interest and                                                      
dividend income:
Loans, including   $33,605  $34,078  (1.4)   $11,245  $11,374  (1.1)
fees
Taxable securities 3,120     4,142     (24.7)  1,003     1,306     (23.2)
Tax exempt         845       977       (13.5)  258       300       (14.0)
securities
Interest-bearing   21        123       (82.9)  3         35        (91.4)
deposits
Total interest
and dividend       37,591    39,320    (4.4)   12,509    13,015    (3.9)
income
                                                                 
Interest expense:                                                 
Deposits           1,791     2,487     (28.0)  572       760       (24.7)
Securities sold
under agreements   645       763       (15.5)  214       231       (7.4)
to repurchase
Borrowed funds     594       868       (31.6)  206       234       (12.0)
Total interest    3,030     4,118     (26.4)  992       1,225     (19.0)
expense
                                                                 
Net interest      34,561    35,202    (1.8)   11,517    11,790    (2.3)
income
Provision for loan 1,755     754       132.8   874       225       288.4
losses
Net interest
income after       32,806    34,448    (4.8)   10,643    11,565    (8.0)
provision for loan
losses
                                                                 
Non-interest                                                      
income:
Wealth management  5,448     5,170     5.4     1,813     1,668     8.7
group fee income
Service charges on 3,378     3,143     7.5     1,222     1,111     10.0
deposit accounts
Net gain on
securities         1         301       (99.7)  --       1         (100.0)
transactions
Net gain on sales
of loans held for  425       270       57.4    134       126       6.3
sale
Net gain (loss) on
sales of other     33        (72)      N/M    18        (68)      N/M
real estate owned
Casualty gains     --       790       (100.0) --       10        (100.0)
Other              3,563     3,393     5.0     1,164     1,145     1.7
Total
non-interest       12,848    12,995    (1.1)   4,351     3,993     9.0
income
                                                                 
Non-interest                                                      
expense:
Salaries and wages 14,138    13,711    3.1     4,721     4,662     1.3
Pension and other  4,162     4,138     0.6     1,372     1,381     (0.7)
employee benefits
Net occupancy      4,016     3,849     4.3     1,315     1,269     3.6
Furniture and      1,600     1,600     0.0     514       504       2.0
equipment
Data processing    3,433     3,279     4.7     1,192     972       22.6
Professional fees  713       695       2.6     188       186       1.1
Amortization of    663       808       (17.9)  214       260       (17.7)
intangible assets
Marketing and      782       916       (14.6)  297       271       9.6
advertising
Other real estate  138       286       (51.7)  76        154       (50.6)
owned expense
FDIC insurance     625       615       1.6     206       205       0.5
Merger and
acquisition        217       30        N/M    217       22        N/M
expenses
Loan expenses      537       548       (2.0)   202       223       (9.4)
Other              3,905     3,678     6.2     1,299     1,232     5.4
Total
non-interest       34,929    34,153    2.3     11,813    11,341    4.2
expense
                                                                 
Income before     10,725    13,290    (19.3)  3,181     4,217     (24.6)
income tax expense
Income tax expense 3,479     4,397     (20.9)  1,002     1,383     (27.5)
Net income        $7,246   $8,893   (18.5)  $2,179   $2,834   (23.1)
                                                                 
Basic and diluted  $1.56    $1.92           $0.47    $0.61    
earnings per share
Cash dividends     0.78      0.75             0.26      0.25      
declared per share
Average basic and
diluted shares     4,658,199 4,639,985        4,660,336 4,641,547 
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                    Nine Months Ended
                Sept. 30,  June 30,   March 31,  Dec. 31,   Sept. 30,  Sept. 30,  Sept. 30,
(Dollars in
thousands,       2013       2013       2013       2012       2012       2013       2012
except share and
per share data)
                                                                            
RESULTS OF                                                                   
OPERATIONS
Interest income  $12,509  $12,333  $12,748  $12,757  $13,015  $37,591  $39,320
Interest expense 992        1,005      1,031      1,116      1,225      3,030      4,118
Net interest     11,517     11,328     11,717     11,641     11,790     34,561     35,202
income
Provision for    874        450        431        74         225        1,755      754
loan losses
Net interest
income after     10,643     10,878     11,286     11,567     11,565     32,806     34,448
provision for
loan losses
Non-interest     4,351      4,475      4,022      4,192      3,993      12,848     12,995
income
Non-interest     11,813     11,392     11,725     12,642     11,341     34,929     34,153
expense
Income before
income tax       3,181      3,961      3,583      3,117      4,217      10,725     13,290
expense
Income tax       1,002      1,306      1,171      987        1,383      3,479      4,397
expense
Net income       $2,179   $2,655   $2,412   $2,130   $2,834   $7,246   $8,893
                                                                            
Basic and
diluted earnings $0.47    $0.57    $0.52    $0.46    $0.61    $1.56    $1.92
per share
Average basic
and diluted      4,660,336  4,658,400  4,655,862  4,643,695  4,641,547  4,658,199  4,639,985
shares
outstanding
                                                                            
PERFORMANCE                                                                  
RATIOS
Return on        0.67%      0.84%      0.77%      0.67%      0.89%      0.76%      0.95%
average assets
Return on        6.45%      7.92%      7.37%      6.33%      8.53%      7.25%      9.12%
average equity
Return on
average tangible 8.04%      9.88%      9.24%      7.94%      10.76%     9.05%      11.57%
equity (a)
Efficiency ratio 73.08%     72.09%     74.50%     79.85%     71.91%     73.22%     72.50%
(b)
Non-interest
expense to       3.65%      3.60%      3.75%      3.98%      3.57%      3.67%      3.65%
average assets
Loans to         88.90%     88.54%     85.55%     85.53%     80.91%     88.90%     80.91%
deposits
                                                                            
YIELDS / RATES                                                               
Yield on loans   4.69%      4.77%      5.04%      5.02%      5.21%      4.83%      5.49%
Yield on         2.10%      2.10%      2.28%      2.23%      2.23%      2.16%      2.21%
investments
Yield on
interest-earning 4.17%      4.21%      4.43%      4.36%      4.46%      4.27%      4.58%
assets
Cost of
interest-bearing 0.30%      0.31%      0.33%      0.36%      0.40%      0.31%      0.44%
deposits
Cost of          2.49%      2.80%      2.79%      2.74%      2.84%      2.68%      2.95%
borrowings
Cost of
interest-bearing 0.47%      0.49%      0.50%      0.54%      0.59%      0.49%      0.66%
liabilities
Interest rate    3.70%      3.72%      3.93%      3.82%      3.87%      3.78%      3.92%
spread
Net interest     3.84%      3.87%      4.07%      3.98%      4.04%      3.93%      4.10%
margin
                                                                            
CAPITAL                                                                      
Total equity to
total assets at  10.05%     10.55%     10.38%     10.50%     10.32%     10.05%     10.32%
end of period
Tangible equity
to tangible      8.25%      8.63%      8.47%      8.53%      8.39%      8.25%      8.39%
assets at end of
period (a)
                                                                            
Book value per   $28.93   $28.47   $28.54   $28.20   $28.62   $28.93   $28.62
share
Tangible book    23.28      22.78      22.80      22.40      22.76      23.28      22.76
value per share
Period-end
market value per 34.63      33.49      33.90      29.89      23.77      34.63      23.77
share
Dividends
declared per     0.26       0.26       0.26       0.25       0.25       0.78       0.75
share
                                                                            
AVERAGE BALANCES                                                             
Loans (c)        $950,657 $929,439 $909,166 $888,515 $867,971 $929,906 $829,396
Earning assets   1,189,978  1,173,862  1,166,590  1,162,788  1,160,479  1,176,896  1,146,252
Total assets     1,283,577  1,269,472  1,266,379  1,264,125  1,262,648  1,273,206  1,250,232
Deposits         1,070,553  1,065,649  1,064,016  1,059,463  1,055,510  1,066,763  1,037,108
Total equity     133,955    134,392    132,783    133,799    132,186    133,714    130,218
Tangible equity  107,528    107,746    105,913    106,703    104,827    107,068    102,650
(a)
                                                                            
ASSET QUALITY                                                                
Net charge-offs  $338     $(45)    $39      $469     $(210)   $332     $(291)
(recoveries)
Non-performing   7,643      7,468      7,282      6,032      8,665      7,643      8,665
loans (d)
Non-performing   8,207      8,056      7,847      6,597      9,599      8,207      9,599
assets (e)
Allowance for    11,856     11,320     10,825     10,433     10,828     11,856     10,828
loan losses
                                                                            
Annualized net
charge-offs to   0.14%      (0.02)%    0.02%      0.21%      (0.10)%    0.05%      (0.05)%
average loans
Non-performing
loans to total   0.79%      0.80%      0.79%      0.68%      0.99%      0.79%      0.99%
loans
Non-performing
assets to total  0.61%      0.64%      0.61%      0.53%      0.75%      0.61%      0.75%
assets
Allowance for
loan losses to   1.23%      1.21%      1.17%      1.17%      1.24%      1.23%      1.24%
total loans
Allowance for
loan losses to   155.12%    151.58%    148.65%    172.96%    124.96%    155.12%    124.96%
non-performing
loans
                                                                            
(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.
(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                    Nine Months Ended
                Sept. 30,  June 30,   March 31,  Dec. 31,   Sept. 30,  Sept. 30,  Sept. 30,
(Dollars in
thousands,       2013       2013       2013       2012       2012       2013       2012
except per share
data)
                                                                            
TANGIBLE EQUITY
AND TANGIBLE                                                                 
ASSETS
(PERIOD END)                                                                 
Total
shareholders'    $134,806 $132,679 $132,908 $131,115 $132,880 $134,806 $132,880
equity (GAAP)
Less:intangible (26,305)   (26,519)   (26,733)   (26,968)   (27,206)   (26,305)   (27,206)
assets
Tangible equity  $108,501 $106,160 $106,175 $104,147 $105,674 $108,501 $105,674
(non-GAAP)
                                                                            
Total assets     $         $         $         $         $         $         $
(GAAP)           1,341,091  1,257,160  1,279,972  1,248,160  1,286,980  1,341,091  1,286,980
Less:intangible (26,305)   (26,519)   (26,733)   (26,968)   (27,206)   (26,305)   (27,206)
assets
Tangible assets  $         $         $         $         $         $         $
(non-GAAP)       1,314,786  1,230,641  1,253,239  1,221,192  1,259,774  1,314,786  1,259,774
                                                                            
Total equity to
total assets at  10.05%     10.55%     10.38%     10.50%     10.32%     10.05%     10.32%
end of period
(GAAP)
Book value per   $28.93   $28.47   $28.54   $28.20   $28.62   $28.93   $28.62
share (GAAP)
                                                                            
Tangible equity
to tangible
assets atend of 8.25%      8.63%      8.47%      8.53%      8.39%      8.25%      8.39%
period
(non-GAAP)
Tangible book
value per share  $23.28   $22.78   $22.80   $22.40   $22.76   $23.28   $22.76
(non-GAAP)
                                                                            
TANGIBLE EQUITY
AND TANGIBLE                                                                 
ASSETS
(AVERAGE)                                                                    
Total
shareholders'    $133,955 $134,392 $132,783 $133,799 $132,186 $133,714 $130,218
equity (GAAP)
Less:intangible (26,427)   (26,646)   (26,870)   (27,096)   (27,359)   (26,646)   (27,568)
assets
Tangible equity  $107,528 $107,746 $105,913 $106,703 $104,827 $107,068 $102,650
(non-GAAP)
                                                                            
Return on
average equity   6.45%      7.92%      7.37%      6.33%      8.53%      7.25%      9.12%
(GAAP)
                                                                            
Return on
average tangible 8.04%      9.88%      9.24%      7.94%      10.76%     9.05%      11.57%
equity
(non-GAAP)

CONTACT: For further information contact:
         Karl F. Krebs, EVP and CFO
         kkrebs@chemungcanal.com
         Phone: 607-737-3714

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