Chemung Financial Corp · NASDAQ:CHMG
Chemung Financial — Investor Presentation (January 2019)
36 slides from Chemung Financial's investor presentation, Jan 30, 2019
Slide 1: Chemung Financial Corporation 2019 Investor Presentation
CHEMUNG FINANCIAL CORPORATION 2019 Investor Presentation
Slide 2: Presenters
Anders Tomson, President and CEO Karl Krebs, CFO P r ese n t e r s January 30, 2019 Scottsdale, AZ 2
Slide 3: Executive Management Team
Executive Management Team Anders M. Tomson President & Chief Executive Officer Louis C. DiFabio EVP, Business Client Services Karen R. Makowski EVP, Chief Risk Officer Daniel D. Fariello President, Capital Bank Division Kimberly A. Hazelton EVP, Retail Client Services Thomas W. Wirth, CFA EVP, Wealt
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
6 This presentation contains certain statements that may be considered forward - looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act, and the Private Securities Litigation Reform Act of 1995, which are subject to numerous risks and uncertaintie
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
8 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 retu
Slide 9: Company overview
9 • 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 $1.76 billion and 367 employees • Operates through a single subsidiary bank, Chemung Canal Trust Company, with 34 branc
Slide 10: Corporate Hierarchy
10 Corporate Hierarchy Chemung Risk Management, Inc. Bank Divisions
Slide 11: Markets: Growth and Stability
GROWTH Capital Region STABILITY Finger Lakes Region Mar k e ts Corning, NY Watkins Glen, NY Albany, NY Albany, NY 11
Slide 12: CCTC/Capital Market Share
CCTC/Capital Market Share County 2018 Deposits 2018 Share Schuyler $118,762,000 55.76% Chemung $498,011,000 47.47% Tioga $110,919,000 24.65% Steuben $116,871,000 10.61% Cayuga $108,255,000 9.57% Bradford (PA) $60,012,000 5.17% Tompkins $97,629,000 4.72% Seneca $19,109,000 3.75% Broome $85,405,000 3.
Slide 13: Growth strategy and acquisitions
13 • Franchise built through acquisitions and organic growth and Wilton, NY • Disciplined acquirer and well positioned to opportunistically acquire when strategic fit and pricing are right • NYS and contiguous states remain focus • Seeking appropriate wealth management, whole bank, and branch acquis
Slide 14: Platinum Promise
14 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. Platinu
Slide 15: 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 16: Stock performance and valuation
12 / 31 / 18 Stock Price $41.31 Price to Earnings 10.17x Price to Book 1.22x Price to Tangible Book 1.41x Indexes • Russell 2000/3000 Opportunities • Loan / Deposit Ratio • Retail Transformation CHMG Return Period: 01/01/16 - 12/31/18: Price Change (%) Frequency: Daily *2018 figures unaudited 16
Slide 17: Financial Highlights
*2018 figures unaudited 17 2018 2017 Return on Assets 1.14% 0.43% Return on Equity 12.76% 4.91% Net Interest Margin 3.72% 3.56% Charge - off Ratio 0.37% 0.17% December 31, 2018 December 31, 2017 Total Assets $1,755 $1,708 Assets Under Management or Admin. $1,768 $1,895 Nonperforming Loans/Total Loan
Slide 18: Wealth Management Group
Wealth Management Group 384 . 9 443 . 2 583 . 5 125 . 5 203 . 0 Assets Under Management 12/31/18 (Millions ) Assets Under Management T r u s t s Management Accounts Employee Benefit Custody Accounts Safekeeping *12/31/18 figures unaudited 18
Slide 19: Asset Growth
$1,525 $1,476 $1 , 7 5 5 $1,708 $1,657 $1,620 $1 , 3 0 0 $1 , 3 5 0 $ 1 , 4 0 0 $ 1 , 4 5 0 $ 1 , 5 0 0 $ 1 , 5 5 0 $ 1 , 6 0 0 $ 1 , 6 5 0 $ 1 , 7 0 0 $ 1 , 7 5 0 $ 1 , 8 0 0 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 Asset Growth *12/31/18 figures unaudited 19 *CAGR: 12/31/1
Slide 20: Loan growth and portfolio concentration
• Total loans: $1.3B at December 31, 2018 • Increase: $316.1M since December 31, 2013 • Growing market share in the Capital Region • Greater opportunity due to ongoing economic development in the region • Low unemployment due to state government and growth of technology industries • Represents large
Slide 21: Loan Concentrations
16% 50% 14% 20% Portfolio Concentrations to Total Loans December 31, 2018 Commercial & Ag. Commercial RE Residential Mort. Consumer C&A CRE RRE CONS 12/31/2017 130% 421% 127% 179% 12/31/2018 121% 389% 108% 157% 4 0 0 % 3 5 0 % 3 0 0 % 2 5 0 % 2 0 0 % 1 5 0 % 1 0 0 % 5 0 % 0% 4 5 0 % Portfolio Concen
Slide 22: Commercial Loan Portfolio
Commercial Loan Portfolio (12/31/2018) 22 Balances To t a l 864 , 02 4 100 . 0 % Loan Types Non - Owner Occupied Commercial & Industrial 311,220 184,783 36 . 0 % 21 . 4 % Construction Agricultural & Farmland 56 , 68 5 2 , 23 2 6 . 6 % 0 . 3 % Other 36,213 4.2% To t a l 864 , 02 4 100 . 0 % NAICS Cod
Slide 23: Asset Quality
Asset Quality • Stable, high quality loan portfolio • Non - performing loans as of 12/31/2017 were mainly driven by commercial loans related to two relationships. 0 . 0 0 % 0 . 4 0 % 0 . 2 0 % 0 . 6 0 % 0 . 8 0 % 1 . 4 0 % 1 . 2 0 % 1 . 0 0 % $ 1 0 ,000 $ 9 , 0 0 0 $ 8 , 0 0 0 $ 7 , 0 0 0 $ 6 , 0 0
Slide 24: Deposits and Cost of Deposits
0.8 0 % 0.7 0 % 0.6 0 % 0.5 0 % 0.4 0 % 0.3 0 % 0.2 0 % 0.1 0 % 0.0 0 % 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 Deposits Cost of Deposits N O W Savings and Money Market Time Deposits 57.4% 53 . 1 % 52.8% 51 . 3 % 50 . 2 % 25 . 7 % 24 . 7 % 24.1% 10.7% 10 . 4 % 9 . 1 % 11 .
Slide 25: Net Income – Quarterly Trend
$ 2 ,707 $ 1 ,621 $ 2 ,745 $ 2 ,954 $2,979 $ 2 ,956 $(2,1 5 9) $4,439 $3,654 $ 2 ,527 $ 6 ,930 $ 5 ,730 $ (3 , 000 ) $(1,000) $1,000 $3,000 $5,000 $7,000 $9,000 Q 1 Q 2 Q 3 Q 4 Q 1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 $10.0 million $7.4 million $19.6 million Net Income – Quarterly Trend (thousands) Impacted by $2.9
Slide 26: Net Interest Income and Net Interest Margin
• Higher yield on loans due to increase in rate hikes • 17% of loan portfolio reprices within the next 90 days* • 67% of commercial loan portfolio is variable and 25% is subject to reprice over the next 90 days* • Balance sheet growth and the improvement in our yield will allow us to continue growin
Slide 27: Investment Portfolio
54.4% 64.8% 29 . 0 % 5.8 % 5.3% 2.4% 30 . 5 % 22.1% 57.6% 81.0% 75.1% 75.6% 11.1% 11 . 2 % 12.9 % 12.8% 18.1% 18.2% 1 0 0.0% 9 0 . 0 % 8 0 . 0 % 7 0 . 0 % 6 0 . 0 % 5 0 . 0 % 4 0 . 0 % 3 0 . 0 % 2 0 . 0 % 1 0 . 0 % 0.0% 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 Securities Ava
Slide 28: Noninterest Income Components
$23.1 million 12/31/2018 Noninterest Income Components 28 2013 2014 2015 2016 2017 2018 Other 2,771 9,538 2,826 3,173 2,318 4,481 CFS Group, Inc. Revenue 694 830 906 544 646 510 Interchange Income 2,562 3,360 3,307 4,027 3,761 4,040 Overdraft Fees 3,437 3,810 3,536 3,835 3,794 3,624 Service Charges
Slide 29: Noninterest Expense Components
39% 12% 8% 12% 5% 2% 4% 18% Salaries Net Occupancy Employee Benefits Data Processing Equipment Professional Services FDIC Insurance O t her $56.8 million 12/31/2018 Noninterest Expense Components 2013 2014 2015 2016 2017 2 0 18 Other 1 2 , 4 58 15,573 14,704 14,894 14,360 1 5 , 1 54 Legal Settlement
Slide 30: 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 31: Capital management
• Grow capital organically through capital • Continue to remain profitable and pay dividend • Board authorized share buyback, up to 121,000 • Performed well under rigorous stress test at 03/31/18 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 EPS 1.87 1.74 2.00 2.11 1.55 4.06 Divi
Slide 32: 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 33: Investment Considerations
• Listed on Nasdaq Stock Market, LLC • $1.76B in assets • $199.2M market capitalization (12/31/18) • Diversified Revenue Stream – 26% Non - Interest Income • Low risk profile – Nonperforming Assets 0.73% of Total Assets • Dividend yield – 2.52% • Price to earnings – 10.17x • Price to tangible book –
Slide 34: CHMG Stock at a Glance
34 Shares Outstanding* 4.8 million Market Capitalization* $199.2 million YTD Dividend Per Share* $1.04 Dividend Yield* 2.52% Average Daily Volume^ 5,686 Book Value Per Share* $33.99 Tangible Book Value Per Share* $29.22 Stock Price* $41.31 Price to Earnings* 10.17x Price to Tangible Book* 1.41x Retu
Slide 35: 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 36: Contact details
Anders M. Tomson President & CEO 518.433.5803 36 Daniel D. Fariello President - Capital Bank 518.433.5826 Dale Cole EVP - Chief Information Officer 607.735.2024 Kimberly A. Hazelton EVP - Retail 607.735.2021 Karl F. Krebs EVP - Chief Financial Officer 607.737.3714 Karen R. Makowski EVP - Chief Risk
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