Chemung
Financial
C o r p o r a t i o n
CELEbRATiNg OUR 180Th YEAR
Excerpt of legislation passed by the NYS Legislature in April 1833.
2013 ANNUAL REPORT
financial highlights
(in thousands, except share and per share data)
OPERating REsUlts - Year Ended December 31
2013
2012 % of Change
Net interest income
Provision for loan losses
Other operating income:
Securities gains, net
Wealth Management group fee income
Other income
Other operating expense:
Merger and acquisition related expenses
Other expense
income tax expense
Net income
at Year End:
Assets
Loans, net
Allowance for loan losses
Deposits
Shareholders' equity
Employees (full time equivalent)
share and Per share Data:
Net income
book value, at year end
Tangible book value, at year end
Dividends declared
Shares outstanding (average)
Ratios:
Allowance to total loans
Return on average assets
Return on average equity
Return on average tangible equity
trust assets Under administration (market value)
as Fiduciary
as Custodian
common stock Market Prices and Dividends Paid
During Past two Years (dollars)
December 31, 2013
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
December 31, 2012
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
$ 46,361
2,755
$ 46,842
828
-1.03%
232.73%
(13)
7,344
10,745
1,387
48,012
3,822
8,731
$ 1,476,143
995,866
12,776
1,263,370
138,578
390
1.87
29.67
23.63
1.04
4,659,685
301
6,827
10,060
30
46,765
5,385
11,022
$ 1,248,160
893,517
10,433
1,044,734
131,115
356
2.38
28.20
22.40
1.00
4,640,912
7.57%
6.81%
2.67%
-29.03%
-20.79%
18.27%
11.45%
22.46%
20.93%
5.69%
9.55%
-21.43%
5.21%
5.49%
4.00%
0.40%
1.28%
0.67%
6.50%
8.12%
1.17%
0.88%
8.41%
10.63%
$1,424,491
463,923
$1,888,414
$1,230,111
504,733
$1,734,844
15.80%
-8.09%
8.85%
high
$ 36.00
35.85
34.53
33.99
$ 32.50
25.70
25.99
26.00
Low
$ 30.23
30.31
30.18
28.41
Dividends
$ 0.26
0.26
0.26
-
$ 23.51
23.55
24.76
22.65
$ 0.50
0.25
0.25
0.25
As of February 28, 2014 there were 1,226 registered holders of record of the Corporation’s stock, which includes 608
Non-Objecting beneficial Owners ("NObO") shares held in street name.
On the cover: An excerpt of the April 1833 legislation authorizing the establishment of Chemung Canal bank. A complete copy of
this legislation can be found in “About Us” section of our website www.chemungcanal.com
APRiL 1, 2014
T o o u r s h a r e h o l d e r s
Dear fellow shareholders:
2013 was an eventful and challenging year for Chemung
Canal Trust Company. As expected, earnings came under
pressure from net interest margin compression. In this
historic low rate environment, this has become an industry-
wide challenge. Simply put, we cannot lower deposit rates
enough to offset the decline in loan and investment yields.
The single best strategy to combat margin pressure is to
grow our balance sheet so we were very pleased to announce
the acquisition of six (6) Bank of America branches in
November. This branch purchase expands our distribution
network in Tompkins County which we have long targeted
for expansion and in other contiguous markets where
we enjoy brand recognition. This transaction becomes
increasingly accretive to earnings as we channel the acquired
deposits into loans over the next few years.
David J. Dalrymple
Ronald M. bentley
financial Results
Net income for the year was $8.7 million and earnings per share (EPS) were $1.87. Excluding one-time acquisition
related expenses, net income was $9.1 million and EPS were $1.96, both in line with our expectations for the year.
Our return on average assets was 0.67% and our return on average equity was 6.50%. In 2013, $4.8 million in
dividends were declared continuing our long history of uninterrupted dividend payments. Driven almost entirely
by organic growth, we experienced solid growth in both loans and deposits. Commercial loans increased $64.5
million or 14.2% and consumer and mortgage loans increased $37.9 million or 8.6% from year earlier levels.
Excluding the deposits acquired in connection with the Bank of America branch purchase, demand deposits grew
$12.4 million or 4.1% while total core deposits (demand, NOW, savings and money market) grew $72.9 million
or 9.0% from year earlier levels. With some changes to our service charges and fees to bring us more in line with
competition along with a solid year in our Wealth Management Group, non-interest income was $18.1 million,
up 5.2% from the previous year.
At December 31, 2013, our balance sheet reflects total assets of $1.5 billion, total loans of $1.0 billion, total
deposits of $1.3 billion and total shareholders’ equity of $138.6 million. Our capital ratios remain well above
those considered to be “well capitalized” by regulators. The market value of total assets under management or
administration in our Wealth Management Group was $1.9 billion at year-end.
the Bank of america Branch acquisition
In November, we completed the acquisition of six (6) Bank of America branches. Two of these offices are located in
Ithaca (The Commons and Route 13), two are located in Auburn (Genesee St. and Grant Ave.) and the remaining
two are situated in Cortland and Seneca Falls. In total, we acquired $178 million in deposits and $1 million
in commercial loans. We are prudently deploying these low-cost deposits into commercial and consumer loans.
This will take some time as we will not deviate from our disciplined and conservative underwriting practices.
Consequently, we expect the transaction to be slightly dilutive to EPS in 2014 but accretive in years thereafter. This
transaction becomes very financially attractive as more and more of these deposits are channeled into loans. Once
again, our team did an outstanding job with the systems conversion and integration. We extend a warm welcome
to former Bank of America clients and staff.
1
asset Quality and Reserves
Credit quality remains stable and strong. The ratio of total nonperforming assets to total assets at year end was
0.61%, a level considered very strong. The significant increase in the provision for loan losses for the year was
driven primarily by the growth in the bank’s loan portfolio. The allowance for loan and lease losses (ALLL) at
year-end was $12.8 million, representing an ALLL to total loans ratio of 1.28%.
growth strategy
Our strategy is to grow our company organically, through de novo branch expansion and by acquiring branches,
banks and businesses that complement existing strengths and market niches. We have been successful on all fronts.
The Bank of America purchase represents our sixth transaction in the last seven (7) years. Mergers and acquisitions
have become a core competency of our organization and we remain alert to new opportunities.
We are enjoying continued success in the Capital Region which we entered into with the acquisition of Capital
Bank in April of 2011. The Albany market has proven to be fertile ground for new high-quality loans and we
have been well received in this market. We continue to channel our resources into markets that offer the greatest
opportunity and potential and Albany is one of the best markets in the state. Last year, we relocated our Latham
office to a full service, free-standing building with a 2-bay drive-up and ATM across the street from our old
storefront location. We also added a drive-up at our Slingerlands office. With a limited branch network in the
region, we have crystallized our plans to expand our distribution channels in the region. We recognize, however,
that technology is dramatically changing the way banking services are delivered and we believe that future banking
offices will be further apart and cover a larger footprint. In other words, there are no plans to put a branch on
every corner.
As previously mentioned, we also continued to grow organically. We have built a better engine for natural growth
by sharpening our sales and marketing effectiveness, building long-term client relationships, bringing new products
to market and delivering on our CanalCare service promise.
Other accomplishments
Our Wealth Management Group had a very good year contributing almost $1.9 million in pre-tax income. With
so much pressure on the margin, it is important we find new sources of fee income and the preservation, creation
and protection of wealth for high net worth individuals has long been a hallmark of Chemung Canal.
We continued to invest in new products and services to meet the changing needs of our clients. Mobile banking
was launched in February 2013 and is very popular — nearly 10,000 clients have signed up already. Our iPad
mobile banking app is also catching on quickly. Global 1.0 and 2.0, our banking program for younger clients, is
meeting with similar success. We now offer a MyDesign Debit Card which is a personalized check card program
that allows our cardholders to design their own card for a minimal fee. We are also upgrading our ATMs to accept
cash and check deposits. All great examples of Chemung Canal meeting the needs of our clients.
Regulatory climate
As we have written in these pages in the past, there is an avalanche of new regulations coming our way. This
is the environment in which we operate so we will adapt and make sure we are in compliance. But our chief
concern is not the increase in “hard” costs — it is the time our management team must devote to this activity,
distracting us from our main mission of profitably growing our business. And there is no relief in sight. A one-
size-fits-all regulatory regime is inappropriate, costly and unnecessary. We strongly endorse a two-tier system that
distinguishes between Main Street community banks and Wall Street systemically important banks.
2
in Memoriam: Boyd McDowell ii, 1926 -2013
We mourn the passing of long-time leader of Chemung Canal, Boyd McDowell II. Boyd served in executive
leadership positions for 20 years. He was elected President in 1976 and acquired the title of Chairman the
following year. He served as Chairman, President and CEO from 1977 to 1988 at which time Jack Bennett was
appointed President. Boyd continued to serve in his other capacities until 1991 and then served on the Board of
Directors until 1997. Boyd was the great, great grandson of NYS Senator John G. McDowell who took the lead
in the NYS Legislature to establish the bank in 1833 then served as its first president. Boyd was greatly admired
and respected by so many at the bank and in our community. He was 87.
Our Board of Directors
This past February, our board elected two (2) new members: Tom Tranter, President of Corning Enterprises and
Tom Tyrrell, Area Chairman at Arthur J. Gallagher & Co. in Albany, NY. Both bring a wealth of experience,
knowledge and skills to our boardroom and will stand for election at our upcoming shareholders’ meeting.
Management changes
In October, we welcomed Karl Krebs to Chemung Canal as our Chief Financial Officer. Karl has held executive
leadership positions at both regional and community banks and we look forward to his contributions to our success.
Some long-serving managers have retired. The following retired after serving for more than 25 years: Daniel
Donovan, Consumer Loan Manager (42 years); Tina McGurgan, Computer Operations Manager (40 years);
James Ripley, Logistical Support Manager (38 years); Pamela Kelley, Senior Relationship Manager (30 years);
Jackie Stevens, Branch Manager (30 years); and Donna Coles, Branch Manager (25 years). We thank them all
for their dedication and contributions, and we wish them good health and happiness in retirement. Through a
combination of internal professional development and promotion and external recruitment, we have provided for
seamless management succession.
the future
Our purpose is to create value for our shareholders, clients, employees and the communities where we do business.
The way to create value is to grow our earnings. With higher earnings, shareholders should see stock appreciation
and continued dividends. With higher earnings, we can pay our employees competitive compensation and benefits
and invest in their professional development. With higher earnings, we can invest in technology and new products
and services to meet the needs of our clients. With higher earnings, we can continue to be a good and generous
corporate citizen helping to improve the quality of life for many. The single best way for a banking company to
increase earnings is to grow our company and balance sheet. We are proud to report that we have more than
doubled the size of the bank over the past seven years and, in the process, increased value for all our stakeholders.
The task ahead is to continue this momentum.
It was 180 years ago this past October that Chemung Canal opened for business just a few steps away from our
current headquarters in Elmira, NY. Established by an Act of the New York State Legislature in 1833 (Andrew
Jackson was President), we are the oldest locally owned and managed banking institution in the state. Our long,
rich and successful history continues to inspire us today.
As always, we are grateful for the continued support of our shareholders, clients, employees and the
communities we serve.
David J. Dalrymple
Chairman of the Board
Ronald M. Bentley
President and Chief Executive Officer
3
Sitting (l to r) E. Sneeringer, Jr., J. Updegraff, R. Dalrymple, R. bentley, R. Storch
Standing (l to r) D. Dalrymple, W. Eggers, R. Swan, S. Lounsberry iii, C. Drinkwater, L. becker, J. Potter, and b. boyea
BOaRD Of DiREctORs
Ronald M. Bentley
President and Chief Executive Officer
Chemung Financial Corporation,
Chemung Canal Trust Company and
CFS group, inc.
larry h. Becker
Chief Operating Officer
Windsor Development group, inc.
Bruce W. Boyea
Chairman, President and
Chief Executive Officer
Security Mutual Life insurance
Company of New York
David J. Dalrymple
Chairman of the board
Chemung Financial Corporation,
Chemung Canal Trust Company
and
President
Dalrymple holding Corporation
Robert h. Dalrymple
Vice President and Secretary
Dalrymple holding Corporation
clover M. Drinkwater
Partner
Sayles & Evans
William D. Eggers
Senior Counsel
Nixon Peabody LLP
stephen M. lounsberry, iii
President
Applied Technology
Manufacturing
John f. Potter
President
Seneca beverage Corp.
Eugene M. sneeringer, Jr.
Principal
Sneeringer Monahan Provost
Redgrave Title Agency, inc.
Robert l. storch
Retired Owner
Storchmont Dairy Farms
Richard W. swan
Chairman of the board
Swan and Sons-Morss Co., inc.
Jan P. Updegraff
Retired President and
Chief Executive Officer
Chemung Financial Corporation
and Chemung Canal Trust
Company
caPital BanK DivisiOn aDvisORY BOaRD
Elizabeth t. coco
Entrepreneur in Residence
University of Albany
gerald D. Jennings
Former Mayor
City of Albany
Paul g. Kasselman
President
Kasselman Electric inc.
Raymond J. Kinley, Jr.
Retired President and
Chief Executive Officer
Clough harbour & Assoc.
Jim Menzies
Founder
Leontine Consulting LLC
Retired Chief Executive Officer
Keybank, New York
Daniel P. nolan
President and
Chief Executive Officer
hugh Johnson Advisors
gregory f. Oberting
President
interstate Commodities, inc.
Joseph a. Reilly
President
Empire broadcasting
Corporation
Dean a. Rueckert
President
Rueckert Advertising and
Public Relations
Edward J. trombly
Partner, hiscock & barclay
thomas R. tyrrell
Area Chairman
Arthur J. gallagher & Company
OthER infORMatiOn
Dividend Reinvestment and stock Purchase Plan: Registered shareholders
of Chemung Financial Corporation, through The Dividend Reinvestment and
Stock Purchase Plan, may reinvest their dividends or make quarterly cash
payments to purchase additional stock of the Corporation. Shareholders not
enrolled in the plan may view and print a descriptive brochure and enrollment
form at www.amstock.com or receive the plan documents upon written request
to the Corporation’s secretary at the following address:
Chemung Financial Corporation
Attn: Corporate Secretary
P.O. box 1522
Elmira, New York 14902-1522
www.chemungcanal.com
4
form 10-K annual Report: A copy of the Corporation’s Form 10-K Annual
Report is available without charge to shareholders after March 31, 2014 upon
written request to the Corporation’s secretary. A copy is also available on our
Transfer Agent, American Stock Transfer & Trust Company’s website at www.
amstock.com/proxyservices/viewmaterials.asp.
annual Meeting
The Annual Meeting of Shareholders will be held on Thursday, May 8, 2014
at 2:00 p.m. at the downtown holiday inn, Elmira — Riverview.
chEMUng canal tRUst cOMP anY, caPital BanK & cfs gROUP , inc. OfficERs
E xEcUt i vE M a n a gE M En t t EaM
Ronald M. Bentley President & Chief Executive Officer, Richard g. carr Executive Vice President, business Client Services, louis c.
Difabio Executive Vice President, Retail Client Services, Karl f. Krebs Executive Vice President, Chief Financial Officer and Treasurer,
Karen R. Makowski Executive Vice President, Chief Administrative & Risk Officer, Melinda a. sartori Executive Vice President,
Wealth Management group, anders M. tomson Division President, Capital bank, Pamela D. Burns Senior Vice President, human
Resources, Michael J. crimmins Senior Vice President, Support Services, Michael J. Wayne Senior Vice President, Marketing,
Brendan P. Mccormick Vice President & Auditor, Kathleen s. McKillip Assistant Treasurer & Corporate Secretary
catherine B. crandall WMg Estate Administration, Daniel D. fariello Commercial Lending, Marianne t. Kalec Retail Lending,
Robert M. Pichette Commercial Lending, timothy P. Rubery Commercial Lending, thomas J. Whitaker Finance, thomas W.
Wirth, cfa investment Services
s En iO R vi cE PR Es iD En t s
vi cE PR Es iD En t s
Yvonne l. albee Regulatory Risk, Dawn l. aubin Auburn genesee St branch, Judy l. Barton bank Operations, Michael J.
Battersby branch Administration, sean Beliles WMg Estate Administration, Michael D. Blatt, cfa investment Services, John
h. Brand, cfa investment Services, Marci l. cartwright Wealth Management group, andrew c. Day Commercial Lending,
lucimar foo-siam Escudero Commercial Credit, Yvette M. francisco Loan Review, thomas E. funk Finance, victoria a. harkins
Private banking, James s. hartle branch Administration, craig B. heffner Commercial Lending, William M. hodel Commercial
Lending, christopher K. Kelly Retirement Services group, Mark P. Kenjerska ithaca Commons branch, christopher Kennedy
Commercial Lending, John t. Kite Commercial Lending, celeste D. Knickerbocker Finance, Michael s. lares WMg Estate
Administration, Ronald W. lesch Commercial Lending, christopher B. loughridge WMg Estate Administration, Robert P. luther
Commercial Lending, audrey Manchester branch Administration, Eileen M. Mccarthy WMg Support Services, D. tavis McKeon
branch Administration, J. Edmond Morton iv WMg Regional Manager, Ronald W. Poole Commercial Lending, chester l. Reed
Commercial Lending, Robert a. Roemmelt Jr. Arnot Road branch, John J. sentigar information Technology, Kenneth J. Wilson
business Development
as s i s ta n t vi cE PR Es iD En t s
Kimberly a. Bailey Canton branch, christopher c. Brown Commercial Lending, David E. carlson Troy branch, Richard W. carroll
Watkins glen branch, alison J. conklin-Devita Waverly branch, Joel a. crimmins Commercial Lending, gary K. Earley WMg
Estate Administration, constance l. English Corning branch, sandra l. grooms The Station (ithaca) branch, scott t. heffner
Marketing, Mary l. Keefe business Services, Matthew t. Keefe information Technology, lorri a. Miller Tioga branch, Mary anne
narosky business Client Services, Debra a. newcomer Main Office branch, Randi Richer Loan Operations, sheryl J. scott big
Flats branch, Jennifer sczepanski horseheads branch, andrea l. seymour Logistical Support, Zoran M. smiljanic ithaca South
branch, susan l. smith Auburn grant Ave. branch, Debra l. stanton Security, theresa a. Wagner Deposit Operations, David a.
Wakeman Resource Recovery, sheila a. Washburn bank Operations, Joan M. Wittig-smith Audit
as s i s ta n t t R Ea sU R E Rs
sherry l. armstrong Community Corners (ithaca) branch, larissa a. Benderskaya Latham branch, laura l. Bennett Real Estate
Lending, gregory J. Bruno Slingerlands branch, Elizabeth M. courtright Compliance, cheryl a. DeBlock binghamton branch, Karen
a. Dimmick Westside (Elmira) branch, stephanie l. gibbons Real Estate Lending, Barbara l. Keller indirect Lending, lashonda R.
love Washington Ave. branch, sharon M. Martin Elmira heights branch, Julianne E. Meeker information Technology, christine
Perlee Wolf Rd. branch, veronica s. Porter Seneca Falls branch, tina M. sabina Real Estate Lending, Kenneth h. seeber Clifton
Park branch, allison a. strife human Resources, Meredith l. tigue Regulatory Risk, scott a. townsend Cortland branch, todd
n. trencancky Vestal branch, charolette R. truxal Oakdale Mall branch, Devin E. Wandell WMg Estate Administration, linda l.
Wead Montour Falls branch, Jennifer l. White bath branch, sue a. Williams Towanda branch, Jean a. Wise-Wicks Painted Post branch
cfs gROUP, inc.
Joseph M. cascio, Sr. Vice President
Officer listing as of March 31, 2014
CFS
g R O U P, i N C .
Chemung Canal Trust Company and Capital bank office locations
19
Seneca Falls •
8 9
Auburn •
• Clifton Park
3
Latham •
4
• Albany
1
2
• Slingerlands
5
16
Cortland •
26
28
• Ithaca
29
27
20
• Bath
Watkins Glen •
18
17
•Montour Falls
22
Painted Post •
21
Corning •
13 14
• Horseheads
12
• Elmira Heights
10
• Big Flats 1
11
Southport •
15
• Elmira
25
• Waverly
23 24
• Owego
• Johnson City
56
• Binghamton
7
• Vestal
nY
Pa
4
• Troy
3
• Towanda
2
• Canton
Main OfficE
One Chemung Canal Plaza, Elmira
cORtlanD cOUntY
cortland: 1094 highway 222
16.
1.
2.
3.
4.
5.
6.
7.
8.
9.
BRaDfORD cOUntY
canton: 5 West Main St.
towanda: 304 Main St.
troy: 159 Canton St.
BROOME cOUntY
Binghamton: 127 Court St.
Johnson city: Oakdale Mall,
601-635 harry L. Dr.
vestal: 100 Rano blvd.
caYUga cOUntY
auburn: 120 genesee St.
auburn: 185 grant Ave.
schUYlER cOUntY
Montour falls: 303 W. Main St.
Watkins glen: 318 N. Franklin St.
17.
18.
sEnEca cOUntY
seneca falls: 54 Fall St.
19.
stEUBEn cOUntY
Bath: 410 W. Morris St.
corning: 149 W. Market St.
Painted Post: 243 N. hamilton St.
tiOga cOUntY
Owego: 203 Main St.
Owego: 1054 State Route 17C
Waverly: 405 Chemung St.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
chEMUng cOUntY
Big flats: 437 Maple St.
Elmira: 628 W. Church St.
Elmira heights: 100 W. McCanns blvd.
horseheads: 29 Arnot Rd.
horseheads: 602 S. Main St.
southport: 951 Pennsylvania Ave.
10.
11.
12.
13.
14.
15.
tOMPKins cOUntY
ithaca: Community Corners, 909 hanshaw Rd.
ithaca: 304 Elmira Rd.
ithaca: 202 The Commons
Current logo usage
ithaca: The Station, 806 W. buffalo St.
caPital REgiOn
albany: 1375 Washington Ave.
albany: 65 Wolf Rd., Suite 107
clifton Park: 7 Southside Dr.
latham: 581 Loudon Rd.
slingerlands: 1365 New Scotland Rd.
1.
2.
3.
4.
5.
All locations offer 24-hour ATM ser-
vices. For office hours and a list of all
Chemung Canal Trust Company and
Capital bank ATMs, please visit our
websites at chemungcanal.com and
capitalbank.com.
chemungcanal.com capitalbank.com
Larger CCTC logo but Capital bank cap “C” is larger than CCTC cap “C”
Cap “C” height is identical for both logos
CCTC text and graphic are reversed
Capital bank cap “C” is larger than CCTC cap “C”