Chemung Financial Corp · NASDAQ:CHMG
Chemung Financial — Investor Presentation (November 2017)
35 slides from Chemung Financial's investor presentation, Nov 16, 2017
Slide 1: Chemung Financial Corporation 2017 Investor Presentation
CHEMUNG FINANCIAL CORPORATION 2017 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 Karl F. Krebs EVP, Chief Financial Officer & Treasurer Louis C. DiFabio EVP, Business Client Services Karen R. Makowski EVP, Chief Risk Officer Kimberly A. Hazelton EVP, Retail Client Services Thomas W. Wirth, CFA EVP, Wealth Management Group Exec
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: 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 $1.7 billion and 372 employees • Operates through a single subsidiary bank, Chemung Canal Trust Company, with 33 branch
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 Markets Corning, NY Watkins Glen, NY Albany, NY Albany, NY 11
Slide 12: Market Share by County
CCTC/Capital Market Share County 2017 Deposits 2016 Share Schuyler $110,412,000 54.33% Chemung $509,442,000 48.97% Tioga $120,148,000 26.69% Steuben $135,383,000 12.32% Cayuga $107,890,000 9.77% Bradford (PA) $59,160,000 5.28% Tompkins $101,340,000 5.04% Seneca $20,378,000 4.21% Broome $90,207,000 3
Slide 13: Franchise and growth strategy
• 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: CanalCare / CapitalCare
CanalCare 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. CanalCare also me
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 Return
10/31/17 Stock Price $47.24 Price to Earnings 16.96x Price to Book 1.47x Price to Tangible Book 1.74x Opportunities • Loan / Deposit Ratio • Retail Transformation CHMG Return 16 Indexes • Russell 2000/3000
Slide 17: Financial Highlights
YTD Q3 2017 2016 Return on Assets 0.75% 0.60% Return on Equity 8.54% 7.02% Net Interest Margin 3.53% 3.37% Charge - off Ratio 0.14% 0.20% September 30 , 2017 December 31, 2016 Total Assets $1,732 $1,657 Assets Under Management or Admin. $1,890 $1,721 Nonperforming Loans/Total Loans 1.09% 1.00% Nonpe
Slide 18: Asset Growth
$1,248 $1,476 $1,525 $1,620 $1,657 $1,732 $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 9/30/2017 Asset Growth Organic • Loans in Capital Region • Municipal Deposits Acquisitions • Bank of America Branches (2013) • Capital Ban
Slide 19: Loan growth by bank division
• Total loans: $1.3B at September 30, 2017 • Increase: $292.9M since December 31, 2013 • Growing market share in the Capital Region • Greater opportunity due to ongoing economic development in the region • Low unemployment due to state government and growth of technology industries • Represents larg
Slide 20: Loan Concentrations
15% 49% 15% 21% Portfolio Concentrations to Total Loans September 30, 2017 Commercial & Ag. Commercial RE Residential Mort. Consumer C&A CRE RRE CONS 12/31/2016 122% 392% 137% 177% 9/30/2017 128% 434% 134% 180% 0% 50% 100% 150% 200% 250% 300% 350% 400% 450% 500% Portfolio Concentrations to Total Cap
Slide 21: Commercial Loan Portfolio
Commercial Loan Portfolio (9/30/2017) 21 NAICS Code / Descriptions Balances ($ thousands) Percentage Real Estate and Rental & Leasing 574,012 69.4% Manufacturing 35,040 4.2% Health Care & Social Assistance 44,179 5.3% Wholesale Trade 26,817 3.2% Construction 21,479 2.6% Accomodation & Food Service 3
Slide 22: Asset Quality
Asset Quality • Stable, high quality loan portfolio • Non - performing loans mainly driven by remaining loans acquired from Capital Bank in 2011 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 12/31/2013 12/31/2014 12/31/2015 12/31/2016 YTD 9
Slide 23: Deposits
Deposits 23 60.0% 57.4% 53.1% 52.8% 49.6% 25.6% 25.7% 24.7% 24.1% 25.0% 11.2% 10.7% 10.4% 9.1% 9.6% 3.2% 6.2% 11.8% 14.0% 15.8% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 12/31/2013 12/31/2014 12/31/2015 12/31/2016 9/30/2017 Customer (%) Consumer Commerical Public Brokered / ICS / CDARS 27.7% 28.6% 28.7% 2
Slide 24: Net Income – Quarterly Trend
$2,276 $2,577 $2,451 $2,129 $2,707 $1,621 $2,745 $2,954 $2,979 $2,956 $3,654 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 $10.0 million $9.4 million $9.6 million Net Income – Quarterly Trend (thousands) 24 2015 2016 2017
Slide 25: Net Interest Margin
• Lower yield on loans due to slope of yield curve and competition for best credits • 20% of loan portfolio reprices less than every 90 days • 67% of commercial loan portfolio is variable and 26% is subject to repricing at least every 90 days • Increase in Prime/LIBOR has stabilized our yield and we
Slide 26: Investment Portfolio
54.4% 64.8% 29.0% 5.8% 5.0% 30.5% 22.1% 57.6% 81.0% 75.8% 11.1% 11.2% 12.9% 12.8% 17.5% 4.0% 1.9% 0.5% 0.4% 1.7% 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 9/30/2017 Securities Available for Sale by Type (%) U.S. Government & Enterpr
Slide 27: Noninterest Income Components
$15.0 million YTD 9/30/2017 Noninterest Income Components 27 2013 2014 2015 2016 YTD 9/30/2017 Other 2,771 9,538 2,826 3,173 1,571 CFS Group, Inc. Revenue 694 830 906 544 452 Interchange Income 2,562 3,360 3,307 4,027 2,809 Overdraft Fees 3,437 3,810 3,536 3,835 2,802 Service Charges on Deposits 1,2
Slide 28: Noninterest Expense Components
40% 12% 8% 12% 5% 3% 2% 18% Salaries Net Occupancy Employee Benefits Data Processing Equipment Professional Services FDIC Insurance Other $40.7 million YTD 9/30/2017 Noninterest Expense Components 28 2013 2014 2015 2016 YTD 9/30/2017 Other 12,458 15,573 14,704 14,894 10,567 Legal Settlement - 4,250
Slide 29: 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 30: Capital Management
• Continue to remain profitable and pay dividend • Board authorized share buyback, up to 121,000 • Performed well under rigorous stress test at 9/30/16 12/31/2013 12/31/2014 12/31/2015 12/31/2016 YTD 9/30/2017 EPS 1.87 1.74 2.00 2.11 2.00 Dividends / Share 1.04 1.04 1.04 1.04 0.78 Book Value / Share
Slide 31: 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 32: Investment Considerations
• Listed on Nasdaq Stock Market, LLC • $1.7B in assets • $223.2M market capitalization (9/30/17) • Diversified Revenue Stream – 26% Non - Interest Income • Low risk profile – Nonperforming Assets 0.82% of Total Assets • Dividend yield – 2.21% • Price to earnings – 17.61x • Price to tangible book – 1
Slide 33: CHMG Stock at a Glance
Shares Outstanding* 4.8 million Market Capitalization* $223.2 million Annual Dividend Per Share** $1.04 YTD Dividend Per Share* $0.78 Dividend Yield* 2.21% Average Daily Volume^ 7,516 Book Value Per Share* $32.11 Tangible Book Value Per Share* $27.09 Stock Price* $47.10 Price to Earnings* 17.61x Pri
Slide 34: Key Takeaways
• Growth, through acquisitions and organic means • Actively looking for acquisition opportunities • Well positioned for margin improvement and higher earnings during an increasing interest rate environment • Stable low cost deposits • Growth engine in Capital Region • Engaged corporate board and adv
Slide 35: Contact
Anders M. Tomson Louis C. DiFabio Kimberly A. Hazelton Karl F. Krebs Karen R. Makowski Thomas W. Wirth President & CEO EVP - Lending EVP - Retail EVP - Chief Financial Officer EVP - Chief Risk Officer EVP - Wealth Management 518.433.5803 607.735.2055 607.735.2021 607.737.3714 607.737.3891 607.737.38
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