Chemung Financial Corp · NASDAQ:CHMG
Chemung Financial — Investor Presentation (November 2018)
36 slides from Chemung Financial's investor presentation, Nov 7, 2018
Slide 1: Chemung Financial Corporation 2018 Investor Presentation
CHEMUNG FINANCIAL CORPORATION 2018 Investor Presentation
Slide 2: Presenters
Anders Tomson, President and CEO Karl Krebs, CFO Presenters November 16, 2017 Naples, FL 2
Slide 3: Executive Management Team
Anders M. Tomson President & Chief Executive Officer Kimberly A. Hazelton EVP, Retail Client Services Thomas W. Wirth, CFA EVP, Wealth Management Group Daniel D. Fariello President, Capital Bank Division Karl F. Krebs EVP, Chief Financial Officer & Treasurer Louis C. DiFabio EVP, Business Client Ser
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 21 E of the Exchange Act, and the Private Securities Litigation Reform Act of 1995 , which are subject to numerous risks and 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 and key facts
• Oldest locally - owned and managed community bank in NYS, dating to 1833 • NYS c hartered b ank and Member of the Federal Reserve • Listed on Nasdaq Stock Market, LLC • Assets of $1.75 billion and 363 employees • Operates through a single subsidiary bank, Chemung Canal Trust Company, with 35 branc
Slide 10: Corporate Hierarchy
10 Corporate Hierarchy Chemung Risk Management, Inc. Bank Divisions
Slide 11: Markets: Capital Region and Finger Lakes Region
GROWTH Capital Region STABILITY Finger Lakes Region Markets Corning, NY Watkins Glen, NY Albany, NY Albany, NY 11
Slide 12: Market share by county
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 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: 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 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: CHMG stock return and valuation
09/30/18 Stock Price $42.43 Price to Earnings 11.02x Price to Book 1.31x Price to Tangible Book 1.54x Opportunities • Loan / Deposit Ratio • Retail Transformation CHMG Return 16 Indexes • Russell 2000/3000
Slide 17: Financial Highlights
YTD Q3 2018 2017 Return on Assets 1.09% 0.43% Return on Equity 12.22% 4.91% Net Interest Margin 3.73% 3.56% Charge - off Ratio 0.49% 0.17% September 30 , 2018 December 31, 2017 Total Assets $1,754 $1,708 Assets Under Management or Admin. $1,923 $1,952 Nonperforming Loans/Total Loans 0.96% 1.32% Nonp
Slide 18: Wealth Management Group assets under management
Wealth Management Group 18 424.7 468.6 717.9 138.8 172.6 Assets Under Management 09/30/2018 (millions) Trusts Management Accounts Employee Benefit Custody Accounts Safekeeping
Slide 19: Asset Growth
$1,476 $1,525 $1,620 $1,657 $1,708 $1,754 $1,300 $1,350 $1,400 $1,450 $1,500 $1,550 $1,600 $1,650 $1,700 $1,750 $1,800 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 9/30/2018 Asset Growth Organic • Loans in Capital Region • Municipal Deposits Acquisitions • Bank of America Branches (2013) •
Slide 20: Loan growth and portfolio concentration
• Total loans: $1.3B at September 30, 2018 • Increase: $324.8M since December 31, 2013 • Growing market share in the Capital Region • Greater opportunity due to ongoing economic development in the region • Low unemployment due to state government and growth of technology industries • Represents larg
Slide 21: Loan Concentrations
15% 50% 14% 21% Portfolio Concentrations to Total Loans September 30, 2018 Commercial & Ag. Commercial RE Residential Mort. Consumer C&A CRE RRE CONS 12/31/2017 130% 421% 127% 179% 9/30/2018 118% 403% 115% 166% 0% 50% 100% 150% 200% 250% 300% 350% 400% 450% Portfolio Concentrations to Tier 1 Capital
Slide 22: Commercial Loan Portfolio
Commercial Loan Portfolio (9/30/2018) 22 NAICS Code / Descriptions Balances ($ thousands) Percentage Real Estate and Rental & Leasing 608,547 70.9% Manufacturing 33,659 3.9% Health Care & Social Assistance 41,907 4.9% Wholesale Trade 25,743 3.0% Construction 19,120 2.2% Accomodation & Food Service 3
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. 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 Provision (Thou
Slide 24: Deposits
Deposits 24 60.0% 57.4% 53.1% 52.8% 51.3% 48.4% 25.6% 25.7% 24.7% 24.1% 26.9% 28.0% 11.2% 10.7% 10.4% 9.1% 9.1% 10.5% 3.2% 6.2% 11.8% 14.0% 12.8% 13.1% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 9/30/2018 Customer (%) Consumer Commerical Public Brokere
Slide 25: Net Income – Quarterly Trend
$2,707 $1,621 $2,745 $2,954 $2,979 $2,956 $3,654 $(2,159) $4,439 $2,527 $6,930 $(3,000) $(1,000) $1,000 $3,000 $5,000 $7,000 $9,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 $7.4 million $10.0 million $13.9 million Net Income – Quarterly Trend (thousands) 25 Impacted by $2.9 million reduction of net deferred
Slide 26: Net Interest Margin
• Lower yield on loans due to slope of yield curve and competition for best credits • 19% of loan portfolio reprices less than every 90 days • 68% of commercial loan portfolio is variable and 35% is subject to repricing at least every 90 days • Balance sheet growth and the improvement in our yield w
Slide 27: Investment Portfolio
54.4% 64.8% 29.0% 5.8% 5.3% 4.2% 30.5% 22.1% 57.6% 81.0% 75.1% 75.8% 11.1% 11.2% 12.9% 12.8% 18.1% 18.5% 4.0% 1.9% 0.5% 0.4% 1.5% 1.5% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2018 9/30/2018 Securities Available for Sale by T
Slide 28: Noninterest Income Components
$18.2 million YTD 9/30/2018 Noninterest Income Components 28 2013 2014 2015 2016 2017 YTD 9/30/2018 Other 2,771 9,538 2,826 3,173 2,318 4,169 CFS Group, Inc. Revenue 694 830 906 544 646 365 Interchange Income 2,562 3,360 3,307 4,027 3,761 3,013 Overdraft Fees 3,437 3,810 3,536 3,835 3,794 2,709 Serv
Slide 29: Noninterest Expense Components
39% 12% 7% 12% 5% 4% 2% 19% Salaries Net Occupancy Employee Benefits Data Processing Equipment Professional Services FDIC Insurance Other $42.6 million YTD 9/30/2018 Noninterest Expense Components 29 2013 2014 2015 2016 2017 YTD 9/30/2018 Other 12,458 15,573 14,704 14,894 14,360 11,452 Legal Settlem
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, earnings and dividends per share
• 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 3/31/18 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 YTD 9/30/2018 EPS 1.87 1.74 2.00 2.11 1.55 2.88 Di
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 • $1.75B in assets • $203.9M market capitalization (9/30/18) • Diversified Revenue Stream – 28% Non - Interest Income • Low risk profile – Nonperforming Assets 0.76% of Total Assets • Dividend yield – 2.45% • Price to earnings – 11.02x • Price to tangible book –
Slide 34: CHMG Stock at a Glance
Shares Outstanding* 4.8 million Market Capitalization* $203.9 million Annual Dividend Per Share** $1.04 YTD Dividend Per Share* $0.78 Dividend Yield* 2.45% Average Daily Volume^ 10,816 Book Value Per Share* $32.35 Tangible Book Value Per Share* $27.53 Stock Price* $42.43 Price to Earnings* 11.02x Pr
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 Daniel D. Fariello Louis C. DiFabio Kimberly A. Hazelton Karl F. Krebs Karen R. Makowski Thomas W. Wirth President & CEO President - Capital Bank EVP - Lending EVP - Retail EVP - Chief Financial Officer EVP - Chief Risk Officer EVP - Wealth Management 518.433.5803 518.433.5826 607.7
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