Chemung Financial Corp · NASDAQ:CHMG
Chemung Financial — 2023 KBW Community Bank Investor Conference
40 slides from Chemung Financial's conference presentation, Aug 8, 2023
Slide 1: 2023 KBW Community Bank Investor Conference
2023 KBW Community Bank Investor Conference 1
Slide 2: Presenters: President and CEO, EVP and CFO
President and Chief Executive Officer Executive Vice President and Chief Financial Officer 2
Slide 3: 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 21 E of the Exchange Act, and the Private Securities Litigation Reform Act of 1995 , which are subject to numerous risks and uncertainti
Slide 4: Investment highlights
High customer engagement across all business lines and geographies. Majority of deposits sourced from stable, legacy markets. Demand remained strong through first half of 2023; 8.7% annualized growth rate. Expansion of the franchise in higher growth markets of Albany and Buffalo Consistently low non
Slide 5: Company overview
Oldest locally - owned and managed community bank in New York State, dating to 1833 • Subsidiary bank - Chemung Canal Trust Company - operates with 31 branches over 15 counties in New York and Pennsylvania. Operating as Capital Bank division in Albany, New York market. • Trust and Wealth Management
Slide 6: Core strategies
x 3 whole bank acquisitions since 1994 plus 12 branches acquired x Drive growth in Albany and Buffalo with legacy market deposits. x Believe and behave like a community bank. x Recognized community partner within our markets. x Relationship focus. x Well positioned to opportunistically acquire when
Slide 7: Second quarter 2023 highlights
EPS: Net Income: Returns: Asset Quality: ACL - to - total loans 1.07% ROA 0.95% ROE 13.97% ROTE 15.89% $6.3 million $1.33 Non - performing loans - to - total loans 0.39% • Net interest income $1.0 million, or 5.4%, over Q2 2022. • Net interest margin 2.87% • Efficiency ratio 66.19% • Tangible common
Slide 8: Agenda
2 x Loan Growth x Portfolio Composition x Commercial Portfolio x CECL Adoption x Non - Performers 3 x Portfolio Composition x Yield and Duration x Fair Value and AOCI 4 x Deposit Costs x Deposits Composition x Liquidity 5 1 x Corporate Organization x Markets and Share x Management Team x Core Strate
Slide 9: Company
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Slide 10: Corporate organization
Nevada based captive insurer Trust and Wealth Management services Provides mutual funds, securities and insurance brokerage services through LPL Financial Banking operations in Southern Tier and Western New York Chemung Risk Management, Inc. 10 Wealth Management Group Banking operations in the Capit
Slide 11: Our markets
Long, deep relationships since 1833 provide stable funding and earnings engine. Steady and even economy, powered by large corporations (Corning, Inc.), higher education (Cornell University, SUNY Binghamton) and tourism. New York’s Capital and Western New York regions offer larger population centers
Slide 12: Deposit market share by county
Dominant market share of deposits Small share of much larger markets; a lot of room to grow. Deployment of lower cost deposits to higher growth markets. 54.80% $792,545,000 Chemung 1.51% $331,755,000 Albany 27.94% $156,083,000 Tioga 68.61% $190,265,000 Schuyler 9.92% $133,306,000 Steuben 7.72% $122,
Slide 13: Management team
President and CEO Industry Experience: 30 years Years with CHMG: 12 years Previously with Citizens EVP & CFO Industry Experience: 27 years Previously with KPMG LLP and Evans Bancorp Regional President Industry Experience: 34 years Years with CHMG: 4 Previously with Five Star Bank President, Capital
Slide 14: Supporting our Communities
\ Supporting our Communities —e Volunteering over 8,000 Hours Distributing nearly $550,000 in donations and sponsorships alli,
Slide 15: Loans
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Slide 16: Loan growth
• Total loans: $1.874 billion at March 31, 2023 • Originated $69.3MM in Commercial Loans through March 2023 • Originated $28.5MM in Indirect Loans through March 2023 • Originated $9.7MM in Home Equity Loans through March 2023 • Opened Loan Production Office in Buffalo, NY in 2021. $80.6MM in loans a
Slide 17: Portfolio composition
x Effectively managing portfolio composition by establishing limits such as exposure and percentage of capital deployed for each category. x Tactical use of participations to manage risk and capital. *The CRE Ratio above does not agree to the regulatory guidelines due to the inclusion of owner occup
Slide 18: Commercial portfolio
69.61% 3.55% 1.10% 4.10% 3.06% 6.07% 2.45% 10.06% Real Estate, Rental & Leasing Manufacturing Health Care & Social Assistance Wholesale Trade Construction Accommodation & Food Services Arts, Entertainment & Recreation Other 35.27% 17.95% 23.92% 9.09% 9.79% 0.11% 3.87% Non - Owner Occupied Commercial
Slide 19: CECL adoption and allowance
• Recorded a net decrease to retained earnings of $1.1 million, net of taxes. • The allowance for unfunded commitments increased by $1.1 million, reflected in other liabilities on the balance sheet. 19 $17,485 $18,631 $19,659 $374 $20,033 $20,075 $20,172 1.08% 1.07% 1.07% 1.10% 1.07% 1.07% 1.10% 1.0
Slide 20: Non-performing loans and assets (% of total)
0.28% 0.39% 0.20% 0.00% 0.40% 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% Non - Performing Loans and Assets (% of Total) Non Performing Assets to Total Assets Non Performing Loans to Total Loans *June 30, 2023 figures unaudited 20
Slide 21: Non-performing loans and assets ($)
$7,304 $7,471 $5,000 $7,500 $20,000 $17,500 $15,000 $12,500 $10,000 Non - Performing Loans and Assets ($000 Currently Outstanding) Non Performing Loans ($) Non Performing Assets ($) *June 30, 2023 figures unaudited 21
Slide 22: Investments
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Slide 23: Securities available for sale by type
* March 31, 2023 figures unaudited 15.6% 16.3% 14.1% 7.8% 5.6% 15.1% 7.8% 5.3% 6.3% 6.1% 84.4% 73.0% 79.3% 69.1% 68.8% 9.0% 8.8% 7.6% 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 2019 2020 2021 2022 Q1 2023 Securities Available for Sale by Type (%) U.S. Government & Enterprises
Slide 24: Investment portfolio yield and duration
* March 31, 2023 figures unaudited 2.22% 4.60 3.8 4.0 4.2 4.4 4.6 4.8 5.0 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 2019 2020 2021 2022 Q1 2023 Investment Portfolio Yield Duration - Years x Utilizing cashflows from principal and interest payments to fund loans and pay down borrowings. 24 x Approximately $
Slide 25: Fair values and unrealized gain/loss
$ - $ - $60,431 $55,574 $56,328 $225,029 $467,866 $577,361 $435,131 $432,654 $43,405 $42,303 $38,892 $39,414 $15,962 $41,265 $43,340 $111,931 $102,992 $97,659 $1,834 $12,249 $3,383 $(96,609) $(88,784) $(120,000) $(100,000) $(80,000) $(60,000) $(40,000) $(20,000) $ - $20,000 $ - $100,000 $200,000 $30
Slide 26: Deposits
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Slide 27: Deposit costs and composition
*June 30, 2023 figures unaudited • 2023 Total Deposits $2.390B; an increase of $63.0 million in 2023 • 2023 Brokered Deposits $185.4 million; an increase of $111.9 million in 2023 Q2 2023 2022 2021 2020 2019 Rate 0.70% 0.15% 0.08% 0.14% 0.40% NOW 1.05% 0.24% 0.10% 0.16% 0.42% Savings and Money Marke
Slide 28: Deposits by customer and division
*March 31, 2023 figures unaudited *CAGR 12/31/2018 to 03/31/2023 15.3% 15.8% 13.4% 15.6% 11.5% 8.7% 7.5% 5.4% 3.2% 6.6% 6.9% 6.8% 34.1% 29.4% 34.0% 30.1% 28.3% 50.4% 44.1% 44.1% 45.0% 43.8% DEPOSITS BY CUSTOMER (%) Consumer Commerical Public Brokered ICS / CDARS 28 $1,815.5 $1,797.5 $240.6 $351.4 $4
Slide 29: Proposed Williamsville, New York Branch
As of June 30, 3023, unaudited Proposed Williamsville, New York Branch 29
Slide 30: Performance
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Slide 31: Net income trend
*March 31, 2023 and June 30, 2023 figures unaudited $15.6MM $19.2MM $26.4MM 2020 $28.8MM 2022 $13.5 MM YTD 2023 2019 2021 $4,468 $4,981 $1,956 $4,204 $2,491 $5,827 $5,711 $5,233 $6,795 $6,646 $6,454 $6,530 $6,867 $8,024 $6,453 $7,439 $7,270 $6,280 $1,000 $ - $2,000 $3,000 $4,000 $5,000 $6,000 $7,000
Slide 32: Net interest margin
2019 2020 2021 2022 2023 Q1 3.71% 3.55% 2.86% 2.87% 3.14% Q2 3.69% 3.26% 2.76% 2.97% 2.87% Q3 3.63% 3.20% 2.88% 3.08% Q4 3.56% 3.06% 2.85% 3.26% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 4.00% 3.50% Fully Taxable Equivalent Net Interest Margin (%) Q1 Q2 Q3 Q4 3.64% 3.25% 2.84% 3.05% 3.00% 1.00% 1.40
Slide 33: Non-interest income composition
13.07% 4.28% 20.89% 47.58% 4.44% 1.33% 0.09% 8.32% $5.4 Million 3/31/2023 Overdraft Fees Service Charges on Deposits Interchange Income Wealth Management Revenue CFS Group, Inc. Revenue Net Gains on Sales of Loans Change in FV of Equity Securities Other *March 31, 2023 figures unaudited 33
Slide 34: Non-interest income ($000)
Q1 2023 2022 2021 2020 2019 $ - $2,580 $10,280 $11,072 $9,492 $9,503 Wealth Management Revenue $1,133 $4,603 $4,844 $4,068 $4,104 Interchange Income $709 $2,501 $2,266 $2,304 $3,653 Overdraft Fees $232 $1,287 $948 $830 $807 Service Charges on Deposits $241 $1,079 $1,043 $657 $673 CFS Group, Inc. Rev
Slide 35: Non-interest expense composition
35 *June 30, 2023 figures unaudited 12.15% 3.41% 1.58% 2.77% 3.28% 15.29% 9.15% 9.89% 42.48% $31.7 Million 6/30/2023 Other FDIC Insurance Marketing Furniture/Equipment Professional Services Data Processing Net Occupancy Employee Benefits Salaries
Slide 36: Non-interest expense ($000)
*June 30, 2023 figures unaudited $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 Non - Interest Expense ($000) YTD 2023 2022 2021 2020 2019 $ - 2018 $13,487 $25,054 $24,413 $24,250 $23,420 $22,322 Salaries $3,140 $6,020 $4,503 $4,536 $5,361 $4,754 Employee Benefits $2,905 $5,539 $5,873 $5,885 $5,969
Slide 37: Expense management and efficiency ratio
• 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 • Growth without adding cost • Cost savings recognized: • Reduction i
Slide 38: Capital, dividends and per-share data
• Grow capital organically through earnings • Continue to remain profitable and pay dividends • Announced share repurchase program of 250,000 shares in January 2021. • As of June 30, 2023 - 49,184 shares had been repurchased. • Positive stress testing results *March 31, 2023 figures unaudited 38 7.9
Slide 39: Stock and market data
4.7 million Shares Outstanding* $181.8M Market Capitalization* $0.62 YTD Dividend Per Share^ 3.23% Dividend Yield (TTM)* 13,077 Average Daily Volume^ $37.49 Book Value Per Share* $32.88 Tangible Book Value Per Share* $38.41 Stock Price* 6.64x Price to Earnings (TTM)* 1.17x Price to Tangible Book* 1.
Slide 40: About Chemung Financial Corporation and contacts
Chemung Financial Corporation is a $2.7 billion financial services holding company headquartered in Elmira, New York and operates 31 retail offices through its principal subsidiary, Chemung Canal Trust Company, a full service community bank with trust powers. Established in 1833, Chemung Canal Trust
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