Chemung Financial Corp · NASDAQ:CHMG
Chemung Financial — Investor Presentation (September 2019)
38 slides from Chemung Financial's investor presentation, Sep 20, 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 Presenters September 19, 2019 Atlanta, GA 2
Slide 3: 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, Wealth Management Group Dale Co
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 c hartered b ank and Member of the Federal Reserve • Listed on Nasdaq Stock Market, LLC • Assets of $1.75 billion and 355 employees • Operates through a single subsidiary bank, Chemung Canal Trust Company, with 33 branc
Slide 10: Corporate Hierarchy
Corporate Hierarchy Chemung Risk Management, Inc. Bank Divisions Wealth Management Group
Slide 11: Markets
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 2019 Deposits 2019 Share Schuyler $134,351,000 57.63% Chemung $535,067,000 49.39% Tioga $126,141,000 27.08% Steuben $108,659,000 9.85% Cayuga $118,770,000 10.80% Bradford (PA) $62,841,000 5.37% Tompkins $99,177,000 4.71% Seneca $19,456,000 3.86% Broome $63,266,000 2.
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: 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 17: Stock price performance vs peers
6/30/2019 Stock Price $48.34 Price to Earnings 12.36x Price to Book 1.32x Price to Tangible Book 1.51x Opportunities • Loan / Deposit Ratio • Retail Transformation CHMG Return 17 Indexes • Russell 2000/3000 Period: 01/01/16 – 06/30/2019: Price Change (%) Frequency: Daily *June 30, 2019 figures unaud
Slide 18: Financial Highlights
Financial Highlights (Millions) 18 *June 30, 2019 figures unaudited 6/30/2019 2018 2017 Return on Assets 1.09% 1.14% 0.43% Return on Equity 11.18% 12.76% 4.91% Net Interest Margin 3.69% 3.72% 3.56% Charge - off Ratio 0.08% 0.41% 0.17% June 30, 2019 December 31, 2018 December 31, 2017 Total Assets $1
Slide 19: Wealth Management Group
Wealth Management Group 19 *June 30, 2019 figures unaudited 399.8 509.0 609.9 133.5 185.3 Assets Under Management 6/30/2019 (Millions) Assets Under Management Trusts Management Accounts Employee Benefit Custody Accounts Safekeeping
Slide 20: Asset Growth
Asset Growth Organic • Loans in Capital Region • Municipal Deposits Acquisitions • Bank of America Branches (2013) • Capital Bank (2011) Asset Growth ($ Millions) 20 *CAGR: 12/31/13 to 06/30/19 *June 30, 2019 figures unaudited $1,476 $1,525 $1,620 $1,657 $1,708 $1,755 $1,753 $1,300 $1,350 $1,400 $1,
Slide 21: Summary of Loan Growth
687.2 724.1 683.1 636.8 630.7 603.1 588.6 308.6 397.5 485.5 563.5 681.1 708.8 699.7 $0.0 $200.0 $400.0 $600.0 $800.0 $1,000.0 $1,200.0 $1,400.0 12/31/13 12/31/14 12/31/15 12/31/16 12/31/17 12/31/18 6/30/19 Loans by Division (Millions) Chemung Canal Trust Company Capital Bank • Total loans: $1.3B at
Slide 22: Loan Concentrations
16% 50% 14% 20% Portfolio Concentrations to Total Loans June 30, 2019 Commercial & Ag. Commercial RE Residential Mort. Consumer Effectively managing portfolio concentration by establishing specific criteria, such as: • % of portfolio for each category • % of capital deployed in each category • Incre
Slide 23: Commercial Loan Portfolio
Commercial Loan Portfolio (06/30/2019) 23 *June 30, 2019 figures unaudited NAICS Code / Descriptions Balances ($ thousands) Percentage Real Estate and Rental & Leasing 571,483 66.8% Manufacturing 32,673 3.8% Health Care & Social Assistance 41,510 4.9% Wholesale Trade 31,861 3.7% Construction 24,816
Slide 24: Asset Quality
Asset Quality 24 *June 30, 2019 figures unaudited 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 Provision (Thousands) Provision Non-performing assets to total assets Non-performing loans to total loans $- $2,000 $4,000
Slide 25: Deposits
Deposits 25 *June 30, 2019 figures unaudited 28.6% 28.7% 28.7% 31.9% 30.9% 29.3% 8.7% 9.3% 9.4% 10.2% 11.4% 12.3% 30.7% 35.5% 37.7% 35.0% 34.3% 32.8% 15.5% 14.6% 14.3% 14.9% 13.8% 14.1% 16.5% 11.9% 9.9% 8.1% 9.6% 11.5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 12/31/2014 12/31/2015 12/31/2016 12/3
Slide 26: Deposit Breakdown
Deposit Breakdown 26 969.2 1,054.5 1,108.1 1,117.9 1,177.9 1,167.4 141.8 147.0 150.7 158.8 160.6 181.0 206.5 202.6 240.6 214.9 $0.0 $200.0 $400.0 $600.0 $800.0 $1,000.0 $1,200.0 $1,400.0 $1,600.0 $1,800.0 Deposits by Division (Millions) CCTC (excl. BofA) CCTC (BofA) Capital Bank 150.2 164.7 57.4% 53
Slide 27: 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 $5,730 $4,468 $4,981 $(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 Q4 Q1 Q2 $7.4 million $10.0 million $19.6 million $9.5 million Net Income – Quarterly Trend ($ Thousands) 27 Impac
Slide 28: Net Interest Margin
• Higher yield on loans due to increase in rate hikes • 24% of loan portfolio reprices within the next 90 days* • 70% of commercial loan portfolio is variable and 32% is subject to reprice over the next 90 days* Net Interest Margin 28 *June 30, 2019 figures unaudited 3.91 3.59 3.46 3.37 3.56 3.72 3.
Slide 29: Investment Portfolio
2.02% 2.46% 3.08 5.55 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 5.50 6.00 1.60% 1.70% 1.80% 1.90% 2.00% 2.10% 2.20% 2.30% 2.40% 2.50% 2.60% Duration Yield Investment Portfolio Yield Duration Investment Portfolio 29 * Fair Value as of 06/30/2019 was $269.3 million *June 30, 2019 figures unaudite
Slide 30: Non-Interest Income Components
Non - Interest Income Components 30 *June 30, 2019 figures unaudited 2013 2014 2015 2016 2017 2018 Jun-19 Wealth Management Revenue 7,344 7,747 8,522 8,316 8,804 9,317 4,800 Service Charges on Deposits 1,269 1,471 1,350 1,254 1,168 1,102 541 Overdraft Fees 3,437 3,810 3,536 3,835 3,794 3,624 1,647 I
Slide 31: Non-Interest Expense Components
$27.3 Million 06/30/2019 Non - Interest Expense Components 31 *June 30, 2019 figures unaudited 23.57% 0.00% 0.00% 13.18% 11.15% 10.01% 42.10% Other Legal Settlement M&A Data Processing Net Occupancy Employee Benefits Salaries 2013 2014 2015 2016 2017 2018 30-Jun Salaries 19,365 21,315 21,223 20,954
Slide 32: 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 33: Capital Management
• Grow capital organically through earnings • Continue to remain profitable and pay dividend • Board authorized share buyback, up to 121,000 • Performed well under rigorous stress test at 06/30/19 8.08% 7.78% 7.83% 7.81% 8.02% 8.79% 9.37% 10.57% 10.59% 11.01% 10.93% 10.56% 11.89% 12.55% 12.10% 11.85
Slide 34: 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 35: Investment Considerations
• Listed on Nasdaq Stock Market, LLC • $1.75B in assets • $233.8M market capitalization (06/30/19) • Diversified Revenue Stream – 23% Non - Interest Income • Low risk profile – Nonperforming Assets 1.12% of Total Assets • Dividend yield – 2.15% • Price to earnings – 12.36x • Price to tangible book –
Slide 36: CHMG Stock at a Glance
Shares Outstanding* 4.8 million Market Capitalization* $233.8 million YTD Dividend Per Share* $0.52 Dividend Yield* 2.15% Average Daily Volume^ 8,556 Book Value Per Share* $36.64 Tangible Book Value Per Share* $31.95 Stock Price* $48.34 Price to Earnings* 12.36x Price to Tangible Book* 1.51x Return
Slide 37: 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 38: Contact details
38 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
Chemung Financial — Investor Presentation (September 2019) on 6ix