Chemung Financial Corp · NASDAQ:CHMG
Chemung Financial — Investor Presentation (November 2020)
47 slides from Chemung Financial's investor presentation, Nov 20, 2020
Slide 1: Chemung Financial Corporation 2020 Investor Presentation
CHEMUNG FINANCIAL CORPORATION 2020 Investor Presentation
Slide 2: Presenters
Anders Tomson, President and CEO Karl Krebs, CFO Presenters November 19, 2020 2
Slide 3: Executive Management Team
Anders M. Tomson President & Chief Executive Officer Louis C. DiFabio EVP, Senior Lending Officer Thomas W. Wirth, CFA EVP, Wealth Management Group Daniel D. Fariello President, Capital Bank Division Kimberly A. Hazelton EVP, Senior Banking Officer Peter Cosgrove EVP, Chief Credit Officer, Chief Ris
Slide 4: Our namesake…the Chemung Canal
Our namesake…the Chemung Canal 4
Slide 5: The past decade…a period of significant growth
The past decade…a period of significant growth 5
Slide 6: Forward-looking statements
This presentation contains certain statements that may be considered forward - looking statements within the meaning of Section 27 A of the Securities Act, Section 21E of the Exchange Act, and the Private Securities Litigation Reform Act of 1995, which are subject to numerous risk s a nd uncertainti
Slide 7: Company history timeline
1833 – Chemung Canal Bank founded in Elmira, NY by act of NYS Legislature 1834 – First permanent headquarters opens at 413 - 415 E. Water Street in Elmira, NY 1895 – Granted a New York State bank charter 1902 – Merged with Elmira Trust Company 1903 – Name changed to Chemung Canal Trust Company 1920
Slide 8: Our mission
Our mission is to remain a strong and independent financial services organization creating value for shareholders, customers, employees and the communities where we do business, while maintaining the highest standards of business ethics. • Value for shareholders means delivering a competitive return
Slide 9: Company overview
• Oldest locally - owned and managed community bank in NYS, dating to 1833 • NYS chartered bank and Member of the Federal Reserve • Listed on Nasdaq Stock Market, LLC • Assets of $ 2.17 billion and 338 employees • Operates through a single subsidiary bank, Chemung Canal Trust Company, with 32 branch
Slide 10: Corporate Hierarchy
Corporate Hierarchy Chemung Risk Management, Inc. Bank Divisions Wealth Management Group 10
Slide 11: Markets: Growth and Stability
GROWTH Capital Region STABILITY Finger Lakes Region Markets Corning, NY Watkins Glen, NY Albany, NY Albany, NY 11
Slide 12: CCTC/Capital Market Share
CCTC/Capital Market Share Source: SNL Financial, as of June 30, 2020 12 County 2020 Deposits 2020 Share Chemung $726,001,000 54.47% Albany $266,402,000 1.38% Tioga $142,433,000 27.76% Schuyler $136,053,000 56.06% Steuben $118,897,000 9.96% Cayuga $110,046,000 8.17% Tompkins $89,299,000 3.49% Bradfor
Slide 13: Franchise and growth strategy
• Franchise built through acquisitions and organic growth • Three bank acquisitions since 1994 ($38 million to $255 million) • Three branch acquisitions involving twelve branch offices, ranging in deposits of $45 million to $178 million • Steady, stable organic growth in Finger Lakes Region • Higher
Slide 14: Digital Engagement
Digital Engagement We believe digital self - service is the key to engaging and retaining our clients for the future . We strive to deliver a meaningful, secure and frictionless digital platform across all customer delivery channels . Our digital strategy provides our customers the services they hav
Slide 15: Platinum Promise
Platinum Promise is a pledge from every one of us at Chemung Canal Trust Company to do everything within our power to make your business with us as helpful, friendly, prompt and courteous as possible. If it means meeting with you outside normal business hours or on a weekend, we’ll do it. Platinum P
Slide 16: Platinum Promise
Platinum Promise ey Ee > MUTUAL RESPECT OPEN & HONEST ACCEPTING COMMUNICATION RESPONSIBILITY We are committed to treating We pride ourselves on providing ce your banking ot ots seh the with Godenanomerieveniooe eqatnces paar Instead of the utmost courtesy and lent f that means meeting ‘an errand. On
Slide 17: Supporting Our Community
Supporting Our Community Achieve | Albany Medical Center | American Cancer Society | American Heart Association | ARCs | Arnot Art Mus di Joel Ua Es Th oats tect coven ieee | ee ae Capital City Rescue Mission | Capital Region Sponsor-A-Scholar | CareFirst | Career Development Council | Catholic Char
Slide 18: History of Acquisitions
• Whole Bank Acquisitions • 1974 – Montour National Bank, one branch office • 1995 – Owego National Financial Corporation, one branch office • 2009 – Canton Bancorp, Inc., three branch offices • 2011 – Fort Orange Financial Corporation (Capital Bank), five branch offices • Branch Acquisitions • 1994
Slide 19: CHMG Return 1 Year
Opportunities • Loan / Deposit Ratio • Retail Transformation CHMG Return 1 Year 19 Indexes • Russell 2000/3000 *2020 figures unaudited Period: 10/01/19 – 11/13/2020: Frequency: Daily 9/30/2020 Stock Price $28.87 Price to Earnings 7.45x Price to Book 0.70x Price to Tangible Book 0.78x '20 0 0 50,000
Slide 20: CHMG Return 3 Year
Opportunities • Loan / Deposit Ratio • Retail Transformation CHMG Return 3 Year 20 Indexes • Russell 2000/3000 *2020 figures unaudited Period: 10/01/17 – 11/13/2020: Frequency: Daily 9/30/2020 Stock Price $28.87 Price to Earnings 7.45x Price to Book 0.70x Price to Tangible Book 0.78x Performance: CH
Slide 21: CHMG Return 5 Year
Opportunities • Loan / Deposit Ratio • Retail Transformation CHMG Return 5 Year 21 Indexes • Russell 2000/3000 *2020 figures unaudited Period: 10/01/15 – 11/13/2020: Frequency: Daily 9/30/2020 Stock Price $28.87 Price to Earnings 7.45x Price to Book 0.70x Price to Tangible Book 0.78x Performance: CH
Slide 22: Financial Highlights
Financial Highlights ($ Millions) 22 *September 30, 2020 figures unaudited 9/30/2020 2019 2018 2017 Return on Assets 0.95% 0.88% 1.14% 0.43% Return on Equity 9.74% 8.86% 12.76% 4.91% Net Interest Margin 3.33% 3.64% 3.72% 3.56% Charge-off Ratio 0.27% 0.11% 0.41% 0.17% Total Assets $2,165 $1,788 $1,75
Slide 23: COVID-19 response and PPP lending
• Financial • Received 1,370 PPP loan applications and funded 1,260 totaling $ 189.8 million • Impacting 19,000 employees of approved businesses in our communities • 35.7% of PPP loans were for less than $350,000 and qualified for 5% origination fee from the SBA • We are assisting customers with the
Slide 24: COVID - Loan Deferrals
24 COVID - 19 Loan Deferrals • Outstanding COVID - 19 deferrals: • 6 /30/20 – 629 Loans totaling $185.7MM had active COVID - 19 deferrals. • 9/30/20 – 74 Loans totaling $45.9MM had active COVID - 19 deferrals. As of June 30, 2020 Category Loan Balance Balance as % Count Count as % Commercial $ 167,0
Slide 25: COVID - Highly Impacted Industries
25 COVID - 19 Highly Impacted Industries • Identified industries highly impacted by COVID - 19, excluding PPP loans • Highly impacted industries totaled $248.4M, or 27.4% of commercial loan portfolio excluding PPP loans • Real Estate, Rental & Leasing includes $111.4M of loans related to hospitality
Slide 26: COVID - PPP Loans
26 COVID - 19 PPP Loans PPP Loan Balances by NAICS Code (in Thousands) NAICS Code 9/30/20 Balance Percent of Total Construction 34,366$ 18.1% Health Care and Social Assistance 26,575 14.0% Professional, Scientific, and Technical Services 20,785 11.0% Accommodation and Food Services 19,240 10.1% Fabr
Slide 27: Asset Growth
Asset Growth Organic • Loans in Capital Region • PPP Loans Asset Growth ($ Millions) 27 *CAGR: 12/31/14 to 9/30/2020 *September 30, figures unaudited
Slide 28: Summary of Loan Growth
• Total loans: $ 1.540B at September 30, 2020 • Increase: $417.0M since December 31, 2014 • Funded $189.8 million in PPP Loans through 09/30/20 • Growing market share in the Capital Region • Greater opportunity due to ongoing economic development in the region • Low unemployment due to state governm
Slide 29: Loan Concentrations
Effectively managing portfolio concentration by establishing specific criteria, such as: • % of portfolio for each category • % of capital deployed i n each category • Increased use of participations to manage risk and capital Loan Concentrations 29 *CRE ratio was 331% and 334% as of December 31, 20
Slide 30: Commercial Loan Portfolio
Commercial Loan Portfolio (9/30/2020 ) 30 September 30, 2020 figures unaudited Loan Types Non-Owner Occupied 324,660$ 29.58% Commercial & Industrial 374,850 34.16% Multi-Family 200,874 18.30% Owner Occupied 83,576 7.62% Construction 56,315 5.13% Agricultural & Farmland 1,503 0.14% Other 55,622 5.07%
Slide 31: Non-Performing Assets
Non - Performing Assets 31 *September 30, 2020 figures unaudited
Slide 32: Deposits
Deposits 32 *September 30 , 2020 figures unaudited
Slide 33: Deposit Breakdown
Deposit Breakdown 33 *September 30, 2020 figures unaudited
Slide 34: Net Income – Quarterly Trend
Net Income – Quarterly Trend ($ Thousands) 34 *September 30, 2020 figures unaudited 2017 2018 2019 $7.4MM $19.6MM $15.6MM $14.0MM 2020 Impacted by $2.9 million reduction of net deferred tax asset as a result of a decrease in the Federal income tax rate due to the Tax Act and a provision of $4.9 in s
Slide 35: Net Interest Margin
• 17% of loan portfolio reprices within the next 90 days (As of September 30, 2020) • 60% of commercial loan portfolio is variable and 29% is subject to reprice over the next 90 days (As of September 30, 2020) Net Interest Margin 35 September 30, 2020 figures unaudited
Slide 36: Investment Portfolio
Investment Portfolio 36 *September 30, 2020 figures unaudited
Slide 37: Wealth Management Group
Wealth Management Group 37 *September 30, 2020 figures unaudited
Slide 38: Non-Interest Income Components
Non - Interest Income Components 38 *September 30, 2020 figures unaudited
Slide 39: Non-Interest Expense Components
Non - Interest Expense Components 39 *September 30, 2020 figures unaudited
Slide 40: Expense Management and Control
• Goal is both cost containment and cost savings • Increase efficiency in banking operations (e.g., hub and spoke) • Identify internal best practices • Develop clear action plans to implement best practices across the organization • Cost savings recognized: • Reduction in headcount • Froze pension p
Slide 41: Capital Management
• Grow capital organically through earnings • Continue to remain profitable and pay dividend • Completed buyback of 250,000 shares, October 2020 • Performed well under rigorous stress test at 03/31/2020 Capital Management 41 *September 30, 2020 figures unaudited ^ As of September 30, 2020
Slide 42: Enterprise Risk Management
• ERM is Board / Executive Management responsibility guided by our Risk Appetite Statement and Supported by our Risk Management Policy • Board approved Risk Governance framework • Continuous monitoring of eight major risk categories (i.e., credit, interest rate, operational, liquidity, compliance, s
Slide 43: Investment Considerations
• Listed on Nasdaq Stock Market, LLC • $2.17B in assets • $137.8 market capitalization • Diversified Revenue Stream – 23.41% Non - Interest Income • Low risk profile – Nonperforming Assets 0.75% of Total Assets • Dividend yield – 3 .60% • Price to earnings – 7.45x • Price to tangible book – 0.78x In
Slide 44: Book Value Per Share
Book Value Per Share Book Value Per Share sant $3399, sanse $3007 $2430 $683 car $28.44 gor s2asa $2489 $7648 2014 2017-2018 2019 9/30/2020 —Book value Per Share —Tangible Book Value Per Share
Slide 45: CHMG Stock at a Glance
Shares Outstanding* 4.8 million Market Capitalization* $137.8M YTD Dividend Per Share* $0.78 Dividend Yield* 3.60% Average Daily Volume^ 4,677 Book Value Per Share* $41.51 Tangible Book Value Per Share* $36.83 Stock Price* $28.87 Price to Earnings (TTM)* 7.45x Price to Tangible Book* 0.78x Return on
Slide 46: Key Takeaways
• Strategic growth, through acquisitions and organic performance • Actively looking for acquisition opportunities • Stable low cost deposits • Growth engine in Capital Region • Engaged corporate board and advisory board • Strong capital base • Competitive dividend • Opportunities to improve efficien
Slide 47: Contact details
47 Anders M. Tomson Karl F. Krebs President & CEO EVP - Chief Financial Officer 518.433.5803 607.737.3714 atomson@chemungcanal.com kkrebs@chemungcanal.com Kathy McKillip - Investor Relations - 607.737.3746 - kmckillip@chemungcanal.com
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