Chemung Financial Corp · NASDAQ:CHMG
Chemung Financial — 2023 Janney Community Bank Forum
41 slides from Chemung Financial's conference presentation, Sep 18, 2023
Slide 1: Chemung Financial Corporation 2023 Janney Community Bank Forum
Chemung Financial Corporation 2023 Janney Community Bank Forum 1
Slide 2: With You Today
With Y ou Today Anders Tomson President and Chief Executive Officer Dale McKim Executive Vice President and Chief Financial Officer 2
Slide 3: Safe Harbor Statement
Safe Harbor Statement 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
Slide 4: Key Takeaways
Key Takeaways 4 Continued strength and momentum in underlying business High customer engagement across all business lines and geographies. Stable deposit base and ample liquidity Majority of deposits sourced from stable, legacy markets. Commercial loan growth throughout footprint Demand remained str
Slide 5: About Us
About Us History • Oldest locally owned and managed community bank in New York State, dating to 1833 . Operations • Subsidiary bank - Chemung Canal Trust Company - operates with 31 branches over 14 counties in New York and Pennsylvania. Operating as Capital Bank division in Albany, New York market.
Slide 6: Core Strategies
Core Strategies Build through organic growth and acquisitions x 3 whole bank acquisitions since 1994 plus 12 branches acquired. x Drive growth in Albany and Buffalo with legacy market deposits. Be a disciplined acquirer x Well positioned to opportunistically acquire when operational model and pricin
Slide 7: Second Quarter 2023 Highlights
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
Slide 8: Company and Financial Highlights
Company and Financial Highlights 2 Loans Page 15 x Loan Growth x Portfolio Composition x Commercial Portfolio x CECL Adoption x Non - Performers Investments Page 23 x Portfolio Composition x Yield and Duration x Fair Value and AOCI 3 4 Deposits Page 27 x Deposit Costs x Deposits Composition x Liquid
Slide 9: Background
5 Background ©
Slide 10: Corporate Organization
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. Wealth Management Group Banking ope
Slide 11: Markets
Markets Legacy 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. Growth Opportunity New York’s Capital and Western New Yor
Slide 12: Market Share
Market Share Legacy Markets Dominant market share of deposits Growth Markets Small share of much larger markets; a lot of room to grow. Competitive Advantage Deployment of lower cost deposits to higher growth markets . Share 2022 Deposits County 54.80% $792,545,000 Chemung 1.51% $331,755,000 Albany
Slide 13: Experienced Management Team
Experienced Management Team Anders Tomson President and CEO Industry Experience: 30 years Years with CHMG: 12 years Previously with Citizens Dale McKim EVP & CFO Industry Experience: 27 years Previously with KPMG LLP and Evans Bancorp Jeffrey Kenefick Regional President Industry Experience: 34 years
Slide 14: Supporting our Communities
Supporting our Communities Volunteering over 8,000 Hours Distributing nearly $550,000 in donations and sponsorships 14
Slide 15: Loans
Loans 15
Slide 16: Summary of Loan Growth
• Total loans: $1.894 billion at June 30, 2023 • Originated $178.4MM in Commercial Loans through June 2023 • Originated $48.1MM in Indirect Loans through June 2023 • Originated $15.3MM in Home Equity Loans through June 2023 • Opened Loan Production Office in Buffalo, NY in 2021. $83.3MM in loans as
Slide 17: Loan Composition
• Effectively managing portfolio composition by establishing limits such as exposure and percentage of capital deployed for each category. • Tactical use of participations to manage risk and Loan Composition capital. Portfolio Concentrations to Total Loans June 30, 2023 13.62% 55.15% 15.05% 16.18% C
Slide 18: Commercial Loan Portfolio – June 30, 2023
Commercial Loan Portfolio – June 30, 2023 70.08% 2.94% 5.90% 2.85% 1.48% 4.01% 2.46% 10.28% NAICS Descriptions Real Estate, Rental & Leasing Manufacturing Health Care & Social Assistance Wholesale Trade Construction Accommodation & Food Services Arts, Entertainment & Recreation Other 33.97% 18.27% 2
Slide 19: Commercial Real Estate
Commercial Real Estate 37.22% 17.16% 12.36% 10.61% 5.71% 11.56% 5.38% Multifamily Retail Construction & Land Development Office Warehouse & Storage Hotel Other $1.05 Billion in Total CRE *June 30, 2023 figures unaudited 19
Slide 20: CECL Adoption
CECL Adoption • 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. $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
Slide 21: Trends in Non-Performing Assets
Trends in Non - Performing Assets 0.39% 0.28% 0.20% 0.00% 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% Non - Performing Loans and Assets (% of Total) Non Performing Assets to Total Assets Non Performing Loans to Total Loans *June 30, 2023 figures unaudited 21
Slide 22: Trends in Non-Performing Assets
Trends in Non - Performing Assets $7,304 $7,471 $5,000 $7,500 $20,000 $17,500 $15,000 $12,500 $10,000 Non - Performing Loans and Assets ($ Thousands) Non Performing Loans ($) Non Performing Assets ($) *June 30, 2023 figures unaudited 22
Slide 23: Investments
pC) Investments Cc
Slide 24: Investment Portfolio Composition
Investment Portfolio Composition 15.2% 16.5% 14.1% 7.8% 5.6% 15.1% 7.8% 6.4% 6.1% 5.3% 84.4% 73.0% 79.3% 69.1% 68.6% 9.3% 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 Q2 2023 Securities Available for Sale by Type (%) U.S. Government & Enterprises MB
Slide 25: Investment Portfolio – Yield & Duration
Investment Portfolio – Yield & Duration * June 30, 2023 figures unaudited • Utilizing cashflows from principal and interest payments to fund loans and pay down borrowings. • Approximately $5 million a month in cash flows. • Principal cash flows representing over 40% of the portfolio to be received i
Slide 26: Investment Portfolio – Fair Value and AOCI
Investment Portfolio – Fair Value and AOCI 26 * June 30, 2023 figures unaudited $ - $ - $60,431 $55,574 $56,197 $225,029 $467,866 $577,361 $435,131 $417,365 $43,405 $42,303 $38,892 $38,584 $15,962 $41,265 $43,340 $111,931 $102,992 $92,167 $1,834 $12,249 $3,383 $(96,609) $(95,940) $(120,000) $(100,00
Slide 27: Deposits
Deposits 27
Slide 28: Deposits Costs
Deposits Costs *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
Slide 29: Deposit Composition
Deposit Composition *June 30, 2023 figures unaudited *CAGR 12/31/2018 to 06/30/2023 29 $1,331.5 $1,815.5 $1,817.9 $240.6 $351.4 $415.6 $435.2 $383.7 $73.5 $185.5 $1.8 $3.0 $3.1 29.6% 32.0% $1,686.4 33.6% $1,738.0 30.1% 25.7% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% $ - $500
Slide 30: Liquidity
Liquidity As of June 30, 2023, unaudited Proposed Williamsville, New York Branch 30
Slide 31: Performance
pC) Performance Cc
Slide 32: Net Income – Quarterly Trend
Net Income – Quarterly Trend ($ Thousands) *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 $
Slide 33: Net Interest Margin
Net Interest Margin 2023 2022 2021 2020 2019 3.14% 2.87% 2.86% 3.55% 3.71% Q1 2.87% 2.97% 2.76% 3.26% 3.69% Q2 3.08% 2.88% 3.20% 3.63% Q3 3.26% 2.85% 3.06% 3.56% Q4 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.
Slide 34: Non-Interest Income Components
Non - Interest Income Components 21.41% 47.68% 13.67% 4.66% 3.81% 0.21% - 0.29% 8.85% $10.9 Million 6/30/2023 Overdraft Fees Wealth Management Revenue Change in FV of Equity Securities Service Charges on Deposits CFS Group, Inc. Revenue Other Interchange Income Net Gains on Sales of Loans 34 *June 3
Slide 35: Non-Interest Income Components
Non - Interest Income Components YTD Q2 2023 2022 2021 2020 2019 $5,183 $10,280 $11,072 $9,492 $9,503 Wealth Management Revenue $2,327 $4,603 $4,844 $4,068 $4,104 Interchange Income $1,486 $2,501 $2,266 $2,304 $3,653 Overdraft Fees $414 $1,287 $948 $830 $807 Service Charges on Deposits $506 $1,079 $
Slide 36: Non-Interest Expense Components
Non - Interest Expense Components 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 36 *June 30, 2023 figures unaudited
Slide 37: Non-Interest Expense Components
Non - Interest Expense Components *June 30, 2023 figures unaudited $ - $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 Non - Interest Expense ($ Thousands) YTD Q2 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
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 • Growth without adding cost • Cost savings recognized: • Reduction i
Slide 39: Capital Management
• 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 Capital Management Q2 2023 2022 2021 202
Slide 40: CHMG Stock at a Glance
4.7 million Shares Outstanding* $181.1M 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 41: Get In Touch
Get In Touch 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, Chemun