Chemung Financial Corporation
Annual Report 2021

Plain-text annual report

Chemung Financial Corporation Annual Report CB122_Annual Report.indd 1 CB122_Annual Report.indd 1 4/1/22 2:31 PM 4/1/22 2:31 PM Bank Anywhere, Anytime. ALBANY 132 State St., Albany 65 Wolf Rd., Albany 581 Loudon Rd., Latham 1365 New Scotland Rd., Slingerlands BRADFORD 5 W. Main St., Canton 159 Canton St., Troy BROOME 127 Court St., Binghamton 100 Rano Blvd., Vestal CAYUGA 110 Genesee St., Auburn 185 Grant Ave., Auburn CHEMUNG One Chemung Canal Plaza, Elmira 628 W. Church St., Elmira 100 W. McCann’s Blvd., Elmira Heights 29 Arnot Rd., Horseheads 602 S. Main St., Horseheads 951 Pennsylvania Ave., Southport CORTLAND 1094 Highway 222, Cortland ERIE 9159 Main Street, Suite 1B, Clarence SARATOGA 25 Park Ave., Clifton Park 3057 Route 50, Saratoga Springs SCHENECTADY 2 Rush St., Schenectady SCHUYLER 303 W. Main St., Montour Falls 318 N. Franklin St., Watkins Glen SENECA 54 Fall St., Seneca Falls STEUBEN 201 Bath Plaza, Bath 149 W. Market St., Corning TIOGA 203 Main St., Owego 405 Chemung St., Waverly TOMPKINS 909 Hanshaw Rd., Ithaca 304 Elmira Rd., Ithaca 806 W. Buffalo St., Ithaca CB122_Annual Report.indd 2 CB122_Annual Report.indd 2 4/1/22 2:31 PM 4/1/22 2:31 PM Operating Results - Year Ended December 31: 2021 2020 % of Change Financial Highlights (in thousands, except per share data and employee count) Net interest income Provision for loan losses Other operating income: Wealth Management Group fee income Other income Other operating expenses Income tax expense Net income At Year End: Assets Loans, net of deferred loan fees 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 for loan losses to total loans Return on average assets Return on average equity Return on average tangible equity Efficiency ratio (adjusted) Trust Assets Under Administration (market value): as Fiduciary as Custodian Common Stock Market Prices and Dividends Paid During Past Two Years: 4.2% (99.6)% 16.6% 10.0% (0.5)% 59.2% 37.2% 6.1% (1.2)% 0.5% 5.8% 5.9% (1.2)% 40.6% 6.0% 6.9% 14.4% (2.5)% $65,589 17 11,072 12,798 55,682 $62,919 4,239 9,492 11,632 55,935 7,335 4,607 $26,425 $19,262 $2,418,475 1,518,249 21,025 2,155,433 211,455 337 $2,279,451 1,536,463 20,924 2,037,774 199,699 341 5.64 45.09 40.44 1.19 4,683 1.38% 1.09% 12.94% 14.49% 61.71% 4.01 42.53 37.83 1.04 4,802 1.36% 0.94% 9.94% 11.24% 65.71% $1,941,412 383,413 $2,324,825 $1,743,891 346,933 $2,090,824 11.3% 10.5% 11.2% December 31, 2021 High Low Dividends 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter December 31, 2020 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter $48.33 48.30 46.60 44.73 $44.29 42.81 42.09 33.46 $0.31 0.31 0.31 0.26 High $39.41 31.83 30.99 42.38 Low $28.57 24.68 23.85 23.27 Dividends $0.26 0.26 0.26 0.26 CB122_Annual Report.indd 3 CB122_Annual Report.indd 3 4/1/22 2:31 PM 4/1/22 2:31 PM 2 Annual Letter to Shareholders We are pleased to report that Chemung Buoyed by strong financial results, we increased Financial Corporation delivered strong financial results in 2021 for our shareholders. A solid foundation and focused commitment on our core community banking pillars helped us navigate a dynamic year. Organic loan growth, prudent expense management, and higher fee income from our Wealth Management Group all contributed to our success. In 2021, the Corporation’s net income totaled $26.4 million, or $5.64 per share. These totals represent year-over-year increases of 37.2 percent and 40.7 percent, respectively. In addition to producing record financial results, we grew and strengthened our Balance Sheet during the year. Overall, our Balance Sheet increased 6.1 percent to $2.4 billion year-over-year. Furthermore, we remain recognized as a well- capitalized institution by our banking regulators. our quarterly cash dividend in May by $0.05 per share, an increase of 19.2 percent. This continued our long history of uninterrupted dividend payments. Additionally, the Corporation’s share price rose throughout the year, closing at $46.45, an increase of nearly 37 percent from December 31, 2020. As previously announced, The Corporation approved a Share Repurchase Plan in early 2021. Under the Plan, the Corporation may repurchase up to 250,000 shares of common stock, or approximately 5 percent of our outstanding shares. At the end of 2021, 34,921 shares had been repurchased, further enhancing value for our Shareholders. While the COVID-19 pandemic continued to alter many business and social practices, the Corporation proceeded confidently, supported by our strong financial condition and seasoned 3 CB122_Annual Report.indd 4 CB122_Annual Report.indd 4 4/1/22 2:32 PM 4/1/22 2:32 PM Annual Letter to Shareholders more manageable, our bankers successfully provided our complete menu of Community Banking products and services to the clients and communities we serve. Our employees’ dedication was inspirational, and their efforts provided meaningful support to our stakeholders. While we remained focused on supporting our employees and our communities, we also continued to evaluate and enhance our customer experience. In 2021, we improved our business-lending experience by adding skilled lenders to our team and revamping the former Small Business Lending program throughout our footprint. The refreshed Business Banking program features specialized professionals located throughout our markets providing comprehensive financial solutions and assisting small to mid-sized businesses. During the year, we invested in our technology platforms, providing a superior digital-banking experience for our clients. Industry-wide, adoption and usage rates of digital-banking services accelerated. Our team implemented several upgrades to our digital experience, including online appointment scheduling, DocuSign integration, web and mobile based real-time alerts, contactless debit cards, account-to-account transfers, and personal budgeting and savings tools. Additionally, we established a Customer Experience Office with a particular focus on improving the digital customer experience, mitigating risk, and promoting efficiencies across all lines of business. Business Continuity Plan. We modified business practices and work plans in response to the ever- changing pandemic environment, while adhering to our two primary objectives of providing essential financial services and maintaining safe and healthy banking environments. We focused on delivering critical capital to eligible local businesses throughout our footprint during the second phase of the Paycheck Protection Program (PPP), and closely assisted PPP clients with the Small Business Administration’s loan-forgiveness phase. At the end of the year, $185.5 million in PPP loans were forgiven, and $77.7 million in new PPP loans were made during the program’s second phase, which ended on May 31, 2021. We are pleased to report that non-performing loans decreased throughout the year, and no pandemic-related forbearances remained at the end of the year. As safety protocols were refined and the In its first full year of operation, our office in development of treatments made the virus Western New York made a meaningful impact. CB122_Annual Report.indd 5 CB122_Annual Report.indd 5 4 4/1/22 2:32 PM 4/1/22 2:32 PM 2021 Annual Letter to Shareholders – continued The office, which serves the Buffalo-Niagara percent of our employees volunteered over Falls and Rochester MSAs, originated over $47 16,300 total hours, representing nearly 90 hours million in loans, meeting our first-year goal. The per volunteer. The Corporation also distributed Corporation has secured regulatory approval over $460,000 throughout our communities for future expansion of our services, and we in the form of sponsorships and contributions. look forward to bringing our full complement of Over 65 percent of these contributions were community banking products and services to this important market. The Corporation has also continued to refine our physical distribution network. In November, our Bath Office was relocated within the village to a more visible and accessible location, improving the customer experience. The new facility also provides our team with the additional space needed to continue building and expanding relationships in the community. As community bankers, we embrace our corporate responsibility throughout our made to organizations with a direct social or environmental impact. Ensuring we are a good corporate citizen is a key pillar of our success. We commend our team for the dedication they have shown. Industry-wide, 2022 will be a challenging year. We begin 2022 with the continued uncertainty that defined the two previous years. Our nation grapples with inflation and uncertainty and devastation in Eastern Europe, while the pandemic continues to limit economic growth in certain key sectors. However, we start the year footprint. This responsibility requires inclusion, on much steadier ground than at the beginning volunteerism, financial support, thoughtful of 2021. The Corporation benefits from a strong partnerships and the responsible oversight balance sheet, diversity of revenue and sound of our environmental impact. In 2021, over 52 financial condition. The prospect of rising interest rates is now a reality. The Corporation has positioned its balance sheet favorably for a rising interest rate environment, and our earnings will benefit from the ensuing expansion of the interest margin. However, rising rates alone will not be a panacea, and we will focus on the importance of expense management and non-interest income growth. 5 BUFFALO, NY CB122_Annual Report.indd 6 CB122_Annual Report.indd 6 4/1/22 2:32 PM 4/1/22 2:32 PM In order to grow earnings, the Bank will again look to channel excess liquidity appropriately into higher-earning assets. We will maintain our credit standards and provide particular focus on those industries acutely impacted by the pandemic and other emerging trends. As is our practice, the Bank has developed initiatives to counteract adverse conditions and take advantage of opportunities in the market. At this year’s annual meeting, Larry H. Becker will be retiring from Chemung Financial Corporation’s Board of Directors. A former Director of Fort Orange Financial Corporation, Larry joined our Board in May of 2011 in connection with the Capital Bank merger. Larry has been a strong advocate of our company and had a direct and meaningful impact on our success as we expanded into the Capital Region. We extend our sincere thanks and appreciation to Larry for his efforts, advocacy, dedication, and support. This has been a year of strong teamwork and activity yielding record financial results. Our success is a direct result of the dedication and hard work of our talented staff and the guidance of our Board of Directors. We are committed to continuing to support the well- being and prosperity of the clients, shareholders, and communities we serve. Thank you for your continued confidence and support of our company. Anders M. Tomson President & CEO David J. Dalrymple Chairman of the Board 2021 Results At A Glance Net Income $26.4 million, up 37.2% Total Assets $2.4 billion, up 6.1% Return on Average Equity 12.94%, up 30.2% Return on Average Assets 1.09%, up 16.0% Efficiency Ratio 61.71%, improvement of 6.1% Dividends Declared Per Share $1.19, up 14.4% Current Quarterly Cash Dividend $0.31 Tangible Book Value Per Share $40.44, up 6.9% CB122_Annual Report.indd 7 CB122_Annual Report.indd 7 6 4/1/22 2:32 PM 4/1/22 2:32 PM Board of Directors The Annual Meeting of Shareholders will be held on Tuesday, June 7, 2022, at 2:00 p.m. Anders M. Tomson President & CEO Chemung Financial Corporation, Chemung Canal Trust Company, & CFS Group, Inc. Raimundo C. Archibold, Jr. Managing Director, Schwartz Heslin Group, Inc. Larry H. Becker Chief Operating Officer The Windsor Companies Ronald M. Bentley Retired President & CEO Chemung Financial Corporation, Chemung Canal Trust Company, & CFS Group, Inc. David M. Buicko President & CEO Galesi Group David J. Dalrymple Chairman of the Board Chemung Financial Corporation, Chemung Canal Trust Company, & CFS Group, Inc.; President Dalrymple Gravel & Contracting Robert H. Dalrymple Vice President & Secretary Dalrymple Holding Corporation President, Seneca Stone Corporation; Vice President, Chemung Contracting Corporation Richard E. Forrestel, Jr. Treasurer Cold Spring Construction Co. Denise V. Gonick Owner & Strategic Advisor Crossa Sound Concepts Stephen M. Lounsberry III President Applied Technology Manufacturing Corporation Jeffrey B. Streeter President Streeter Associates G. Thomas Tranter, Jr. Retired President Corning Enterprises Thomas R. Tyrrell Vice President NFP Corporation Forward-looking Statements: This report contains 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. The Corporation intends its forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in these sections. All statements regarding the Corporation’s expected financial position and operating results, the Corporation’s business strategy, the Corporation’s financial plans, forecasted demographic and economic trends relating to the Corporation’s industry and similar matters are forward-looking statements. These statements can sometimes be identified by the Corporation’s use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect,” or “intend.” The Corporation cannot guarantee that its expectations in such forward-looking statements will turn out to be correct. The Corporation’s actual results could be materially different from expectations because of various factors, including changes in economic conditions or interest rates, credit risk, difficulties in managing the Corporation’s growth, competition, the impact of the COVID-19 7 CB122_Annual Report.indd 8 CB122_Annual Report.indd 8 4/1/22 2:32 PM 4/1/22 2:32 PM Executive Management Team Anders M. Tomson President & CEO Chemung Financial Corporation, Chemung Canal Trust Company, & CFS Group, Inc. Pamela D. Burns Senior Vice President Director of Human Resources & Chief Diversity Officer L. Dale Cole Executive Vice President & Chief Information Officer Peter K. Cosgrove Executive Vice President & Chief Credit Officer Daniel D. Fariello President Capital Bank Division Kimberly A. Hazelton Executive Vice President Retail Client Services Scott T. Heffner Senior Vice President Director of Marketing Jeffrey P. Kenefick Regional President Chemung Canal Division Karl F. Krebs Executive Vice President Chief Financial Officer & Treasurer Kathleen S. McKillip Vice President Corporate Secretary Mary E. Meisner Senior Vice President Senior Risk Officer Duane W. Mittan Vice President & Chief Auditor 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.astfinancial. 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, NY 14902-1522. Thomas W. Wirth Executive Vice President Wealth Management Group pandemic, changes in law or the regulatory environment, and changes in general business and economic trends. Information concerning these and other factors can be found in the Corporation’s 2021 Annual Report on Form 10-K. These filings are available publicly on the SEC’s website at http://www.sec.gov, on the Corporation’s website at http://www.chemungcanal.com or by written request to: Kathleen S. McKillip, Corporate Secretary, Chemung Financial Corporation, One Chemung Canal Plaza, Elmira, NY 14901. Except as otherwise required by law, the Corporation undertakes no obligation to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise. Form 10-K Annual Report: A copy of the Corporation’s Form 10-K Annual Report is available without charge to shareholders after April 29, 2022, 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.astproxyportal.com/ast/01079. CB122_Annual Report.indd 9 CB122_Annual Report.indd 9 8 4/1/22 2:32 PM 4/1/22 2:32 PM Capital Bank Advisory Board Carl Becker Vice President & Counsel The Windsor Companies Kenneth Brownell Managing Director Vanguard-Fine, LLC Paola Horvath Owner Orange Theory Fitness Gerald Jennings Former Mayor City of Albany Dave Jersen CEO Jersen Construction Group Spencer Jones Executive Dawn Homes Management Raymond Kinley Jr. Retired President & CEO Clough Harbour & Associates John Maloy Managing Partner James H. Maloy, Inc. Dr. Lee McElroy Director of Athletics & Associate Vice President Rensselaer Polytechnic Institute Mark Rosen President Dawn Homes Management Jacqueline Rosetti-Falvey President Rosetti Properties Dean Rueckert Past President Rueckert Advertising Edward Trombly Partner Barclay Damon Senior Vice Presidents Laura Bennett Retail Lending Catherine Crandall WMG Estate Administration Christopher Kelly WMG Retirement Services Manager Mark Lasch WMG Regional Manager Michelle Maloney Commercial Lending Joseph Tascone WMG Investment Services James Morton IV WMG Regional Manager Thomas Whitaker Finance Vice Presidents Dawn Aubin Auburn Roberta Bastow Commercial Lending Michael Battersby Support Services Kellea Bauda Business Banking Bryce Cutler Business Banking Mark Fife Business Banking Yvette Francisco Loan Review James Kresge Commercial Credit Danielle Krisko Business Banking Koen Long Finance Victoria Harkins WMG Prestige Banking Sarah Manasse Commercial Lending Michael Blatt WMG Investment Services Kevin Harrigan Commercial Lending D. Tavis McKeon E-Retail Peter Capozzola WMG Investment Services Michael Hart WMG Estate Administration Mary Anne Narosky Business Client Services Marci Cartwright CFS Group, Inc. Christopher Coletta Commercial Lending Joshua Cukerstein Commercial Lending James Hartle Branch Administration Michael Novotny Branch Administration Mary Keefe Business Services John Kite Special Assets Nino Pellegrino Business Banking Monica Ridosh Human Resources Jennifer Sczepanski Branch Administration John Shea WMG Relationship Manager Gregory Stewart WMG Sr. Relationship Manager Billie Taft-Sitler Commercial Lending Frank Vassallo Finance Sheila Washburn Card & ATM Services Cortni Wickham Commercial Credit 9 CB122_Annual Report.indd 10 CB122_Annual Report.indd 10 4/1/22 2:32 PM 4/1/22 2:32 PM Assistant Vice Presidents Kimberly Bailey Canton & Troy Sarah Darling Real Estate Lending Mohammad Khan State Street & Slingerlands Heidi Wahl WMG Estate Administration Bruce Boughton Montour Falls & Watkins Glen Shelby Fay WMG Investment Services Zachary Knapp BCSG Relationship Manager Patrick Ward WMG Prestige Banking Kevin Brimmer WMG Investment Services Judith Frisk Arnot Road & Westside Sandra Grooms Ithaca Melissa Letts Contact Center Andrea McClure WMG Tax Services Tracey Wardwell Clifton Park & Wilton Sue Williams Owego & Waverly Gregory Bruno Business Banking Pamela Colomaio Bath & Corning Alison Conklin-Devita Regulatory Risk Joel Crimmins Commercial Lending Jennifer Cruise WMG Support Services Darick Harriger Information Technology Patrick McFarland WMG Estate Administration Tyler Wilson Regulatory Risk Tara Humphrey Loan Operations Tonya Johnson Regulatory Risk Barbara Keller Indirect Lending Julianne Meeker Information Technology Kristen Woodward Digital Client Experience Kathryn Rayne Finance Charolette Truxal Binghamton & Vestal Lauren Zell WMG Retirement Services Assistant Treasurers Wendy Bixler Logistical Support Ann Burns Special Assets Dena Carrigan Elmira Heights Tonya DeLige Account Services Austin Farrell Horseheads Erica Gaylord Branch Administration Daniel Hoover Information Technology Alice Kiser Regulatory Risk Lyanna Liu Audit Megan Thomson Main Office Heather Machmer Commercial Lending Sarah Williamson Business Services Manager Ashley Skiff Southport Andrew Stockwell Cortland Heidi Wood Resource Recovery ELMIRA, NY CB122_Annual Report.indd 11 CB122_Annual Report.indd 11 10 4/1/22 2:32 PM 4/1/22 2:32 PM chemungcanal.com capitalbank.com cfsgroupny.com CB122_Annual Report.indd 12 CB122_Annual Report.indd 12 4/1/22 2:32 PM 4/1/22 2:32 PM 

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