Chemung Financial Corp · NASDAQ:CHMG
Chemung Financial — Investor Presentation (September 2020)
45 slides from Chemung Financial's investor presentation, Sep 22, 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 September 21, 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 $2.05 billion and 344 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 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: Growth strategy and community banking model
• 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 eS MUTUAL RESPECT $s, “25 OPEN & HONEST COMMUNICATION We are committed to treating fe ourselves on providing our clients and each other with Sede aint anientooe the utmost courtesy and respect. We will clients. if that means meeting outside of normal business hours, ower to make you
Slide 17: Supporting Our Community
Supporting Our Community Achieve | Albany Medical Center | American Cancer Society | American Heart Association | ARCs | Arnot Art Museum ‘Arnot Health | Auburn Public Theater | Boy Scouts | Broome County Council of Churches | Buddy Walk Capital City Rescue Mission | Capital Region Sponsor-A-Scholar
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: Opportunities and stock performance
Opportunities • Loan / Deposit Ratio • Retail Transformation CHMG Return 19 Indexes • Russell 2000/3000 *June 30, 2020 figures unaudited 6/30/2020 Stock Price $27.30 Price to Earnings 7.94x Price to Book 0.67x Price to Tangible Book 0.76x Period: 07/01/17 – 06/30/2020: Performance: - 33.22%, Frequen
Slide 20: Financial Highlights
Financial Highlights ($ Millions) June 30, 2020 December 31, 2019 December 31, 2018 December 31, 2017 Return on Assets 0.87% 0.88% 1.14% 0.43% Return on Equity 8.80% 8.86% 12.76% 4.91% Net Interest Margin 3.40% 3.64% 3.72% 3.56% Charge - off Ratio 0.39% 0.11% 0.41% 0.17% Total Assets $2,051 $1,788 $
Slide 21: COVID-19 Response
• Financial • Received 1,370 PPP loan applications and funded 1,167 totaling $186.9 million • Impacting 19,000 employees of approved businesses in our communities • 34.8% of PPP loans were for less than $350,000 and qualified for 5% origination fee from the SBA • Will assist customers with forgivene
Slide 22: COVID - Loan Deferrals
22 COVID - 19 Loan Deferrals • Outstanding COVID - 19 deferrals: • 6/30/20 - 629 loans totaling $185.7M had active COVID - 19 deferrals • 7/31/20 - 181 loans totaling $59.1M had active COVID - 19 deferrals Loan Balances with Active COVID - 19 Deferrals Outstanding As of June 30, 2020 Category Loan B
Slide 23: COVID - Highly Impacted Industries
23 COVID - 19 Highly Impacted Industries • Identified industries highly impacted by COVID - 19, excluding PPP loans • Highly impacted industries totaled $245.1M, or 27.9% of commercial loan portfolio excluding PPP loans • Real Estate, Rental & Leasing includes $109.7M of loans related to hospitality
Slide 24: COVID - PPP Loans
24 COVID - 19 PPP Loans Construction Health Care and Social Assistance Professional, Scientific, and Technical Services Accommodation and Food Services Fabricated Metal Product Manufacturing Wholesale Trade Machinery Manufacturing Real Estate and Rental and Leasing Educational Services Other Service
Slide 25: Asset Growth
Asset Growth Organic • Loans in Capital Region • PPP Loans Asset Growth ($ Millions) 25 *CAGR: 12/31/14 to 6/30/2020 *June 30, 2020 figures unaudited
Slide 26: Summary of Loan Growth
• Total loans: $1.50B at June 30, 2020 • Increase: $376.4M since December 31, 2014 • Funded $186.9 million in PPP Loans through 06/30/20 • Growing market share in the Capital Region • Greater opportunity due to ongoing economic development in the region • Low unemployment due to state government and
Slide 27: Loan Concentrations
Effectively managing portfolio concentration by establishing specific criteria, such as: • % of portfolio for each category • % of capital deployed i n each category • Increased use of participations to manage risk and capital Loan Concentrations 27 *CRE ratio was 331% and 330% as of December 31, 20
Slide 28: Commercial Loan Portfolio
Commercial Loan Portfolio (6/30/2020) 28 June 30, 2020 figures unaudited Real Estate and Rental & Leasing 611,936 57.1% Manufacturing 61,211 5.7% Health Care & Social Assistance 56,353 5.3% Wholesale Trade 36,482 3.4% Construction 60,792 5.7% Accomodation & Food Service 62,983 5.9% Arts, Entertainme
Slide 29: Non-Performing Assets
Non - Performing Assets 29 *June 30, 2020 figures unaudited
Slide 30: Deposits
Deposits 30 *June 30, 2020 figures unaudited
Slide 31: Deposit Breakdown
Deposit Breakdown 31 *June 30, 2020 figures unaudited
Slide 32: Net Income – Quarterly Trend
Net Income – Quarterly Trend ($ Thousands) 32 *June 30, 2020 figures unaudited 2017 2018 2019 $7.4MM $19.6MM $15.6MM $8.3MM 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 specifi
Slide 33: Net Interest Margin
• 16% of loan portfolio reprices within the next 90 days* (As of June 30, 2020) • 61% of commercial loan portfolio is variable and 26% is subject to reprice over the next 90 days* (As of June 30, 2020) Net Interest Margin 33 *June 30, 2020 figures unaudited
Slide 34: Investment Portfolio
Investment Portfolio 34 *June 30, 2020 figures unaudited
Slide 35: Wealth Management Group
Wealth Management Group 35 *June 30, 2020 figures unaudited
Slide 36: Non-Interest Income Components
Non - Interest Income Components 36 *June 30, 2020 figures unaudited
Slide 37: Non-Interest Expense Components
Non - Interest Expense Components 37 *June 30, 2020 figures unaudited
Slide 38: 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 39: Capital Management
• Grow capital organically through earnings • Continue to remain profitable and pay dividend • Board authorized share buyback, up to 250,000 • Performed well under rigorous stress test at 03/31/2020 Capital Management 39 *June 30, 2020 figures unaudited
Slide 40: 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 41: Investment Considerations
• Listed on Nasdaq Stock Market, LLC • $2.05B in assets • $131.2 market capitalization (6/30/2020) • Diversified Revenue Stream – 22.99% Non - Interest Income • Low risk profile – Nonperforming Assets 0.86% of Total Assets • Dividend yield – 3.81% • Price to earnings – 7.94x • Price to tangible book
Slide 42: Book Value Per Share
Book Value Per Share Book Value Per Share $40.51 $37.35, $33.99 $2896 $30.07 932-10 $28.44 $35.86 $32.74 $29.22 ne SaaS 2014 2015 2016 = -2017,—S 2018 2019 6/30/2020 Book Value Per Share ~~ ——Tangible Book Value Per Share
Slide 43: CHMG Stock at a Glance
Shares Outstanding* 4.8 million Market Capitalization* $131.2M YTD Dividend Per Share* $0.52 Dividend Yield* 3.81% Average Daily Volume^ 9,591 Book Value Per Share* $40.51 Tangible Book Value Per Share* $35.86 Stock Price* $27.30 Price to Earnings (TTM)* 7.94x Price to Tangible Book* 0.76x Return on
Slide 44: 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 45: Contact details
45 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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