GlobeNewswire Inc | Jul 20, 2020 05:25PM EDT

July 20, 2020

ELMIRA, N.Y., July 20, 2020 (GLOBE NEWSWIRE) -- Chemung Financial Corporation (the Corporation) (Nasdaq: CHMG), the parent company of Chemung Canal Trust Company (the Bank), today reported net income of $5.8 million, or $1.20 per share, for the second quarter of 2020, compared to $5.0 million, or $1.02 per share, for the second quarter of 2019.

Our results in the second quarter reflected increased net interest income and a continued focus on expense management, according to Anders M. Tomson, President and CEO of Chemung Financial Corporation. Throughout the quarter, we processed a significant number of loans through the Small Business Administrations Paycheck Protection Program to help support businesses and their employees in our communities. We were also able to assist our retail customers by waiving certain deposit fees and modifying or deferring loans. The positive results we achieved are due in large part to the dedication and flexibility of our employees as we navigated the COVID-19 pandemic throughout the second quarter, Tomson added.

Second Quarter Highlights1:

-- Total Assets increased to $2.1 billion, the first time over $2.0 billion in the Company's history -- Net interest income included $985 thousand in Paycheck Protection Program ("PPP") fees and increased $528 thousand from the prior quarter, to $15.6 million for the second quarter of 2020, the highest in the Company's history -- Total shareholders equity increased $12.0 million, or 6.55% -- Tangible book value per share increased from $32.74 to $35.86, or 9.53% 2 -- Book value per share increased from $37.35 to $40.51, or 8.46% -- Return on Average Assets in the second quarter increased to 1.15% from 0.55% in the previous quarter -- Average interest earning assets increased $215.5 million to $1.931 billion for the second quarter of 2020 when compared to average interest earning assets for the first quarter of 2020 -- Loans, net of deferred fees, increased $188.8 million, or 14.42%

1 Balance sheet comparisons are calculated for June 30, 2020 versus December 31, 2019. 2 See GAAP to Non-GAAP Reconciliations, included within.

2nd Quarter 2020 vs 2nd Quarter 2019

Net Interest Income:

Net interest income for the current quarter totaled $15.6 million compared with $15.1 million for the same period in the prior year, an increase of $0.5 million, or 3.2%, due primarily to increases of $0.1 million in interest and dividend income on taxable securities and $0.1 million in interest income on loans, including fees, and a decrease of $0.7 million in total interest expense, offset by a decrease of $0.4 million in interest income on interest-earning deposits.

The increase in interest and dividend income on taxable securities was due primarily to an increase in average invested balances of $27.6 million. The increase in loan income was due primarily to an increase of $0.4 million in interest income on commercial loans primarily attributable to a $172.6 million increase in average balances on commercial loans and the receipt of $0.9 million of PPP fees, and an increase in interest income on mortgage loans, which can be attributed to an increase of $16.6 million in average balances on mortgage loans. These increases were offset by a decrease of $0.4 million in interest income on consumer loans which can be attributed to both decreases in average balances and average portfolio yield on consumer loans. The decrease in interest expense on deposits was due primarily to a $0.7 million decrease in interest-bearing checking, savings, and money market expenses which was due to the decreases in average rates paid on these products in response to the Federal Reserve's 50 and 100 basis point drops on overnight rates in March, 2020. The decrease in interest income on interest-earning deposits was due primarily to the sharp drop in interest rates on overnight deposits with the average yield on interest-earning deposits declining from 2.58% in the second quarter of 2019 to 0.33% in the second quarter of 2020. Fully taxable equivalent net interest margin was 3.26% for the current quarter 2020, compared with 3.69% for the same period in the prior year. Average interest-earning assets increased $277.0 million in the current quarter 2020 compared to the same period in the prior year. The average yield on interest-earning assets decreased 62 basis points, while the average cost of interest-bearing liabilities decreased 28 basis points, as compared to the same period in the prior year.

Provision for loan losses for the current quarter totaled $0.3 million compared with $0.2 million for the same period in the prior year, an increase of $0.1 million. The increase in provision for loan losses was primarily due to revised projected loss estimates based on the current economic environment and response to the COVID-19 pandemic, offset by paydowns, recoveries and decreases in specific reserve allowances.

Non-Interest Income:

Total non-interest income for the current quarter remained substantially unchanged as compared to the same quarter in the prior year. Increases of $0.3 million in swap fee income, $0.3 million in net gains on sales of loans held for sale and $0.1 million in change in fair value of equity investments were offset by a decrease of $0.5 million in service charges on deposit accounts primarily attributable to a decrease in NSF and overdraft fees as compared to the same period in the prior year.

Non-Interest Expense:

Non-interest expense for the current quarter was $13.2 million compared with $13.8 million for the same period in the prior year, a decrease of $0.6 million, or 4.3%. The decrease can be mostly attributed to decreases of $0.4 million in other non-interest expense, $0.1 million in pension and other employee benefits, and $0.1 million in other components of net periodic pension cost (benefits). The decrease in other non-interest expense can be primarily attributed to decreases in bank and client relations expenditures, as well as an overall decrease in spending during the second quarter of 2020, compared to the same period in 2019. The decrease in pension and other employee benefits was primarily attributed to a decrease in healthcare expenses in the current quarter as compared to the same quarter in the prior year. The decrease in other components of net periodic pension benefits was primarily attributed to a change in actuarial adjustments to the employee pension account.

Income Tax Expense:

Income tax expense for the current quarter was $1.4 million compared with $1.2 million for the same period in the prior year, an increase of $0.1 million, or 10.1% The effective tax rate for the current quarter decreased to 18.9% compared with 19.8% for the same period in the prior year. The increase in income tax expense was primarily due to an increase in pretax income.

2nd Quarter 2020 vs 1st Quarter 2020

Net Interest Income:

Net interest income for the current quarter totaled $15.6 million compared with $15.1 million for the prior quarter, an increase of $0.5 million, or 3.5%, due primarily to a $0.5 million decrease in interest expense on deposits and a $0.4 million increase in interest income and fees from loans which was offset by decreases of $0.3 million in interest income on interest-earning deposits, and $0.1 million in interest and dividend income on taxable securities, compared to the prior quarter. The decrease in interest expense on deposits and interest income on interest-earning deposits and taxable securities were primarily due to the sharp decline in interest rates in the second quarter of 2020 as a result of the Federal Reserve's 50 and 100 basis point drops on overnight rates in March, 2020. The increase in interest income and fees from loans was primarily attributed to a $146.0 million increase in average loan balances in the second quarter and the receipt of $0.9 million of fees related to the Paycheck Protection Program (PPP), offset by decreased average yield due to the decline in interest rates. The average yield on loans fell from 4.37% in the first quarter of 2020 to 4.06% in the second quarter of 2020, the average yield on interest-earning deposits fell from 1.44% in the first quarter of 2020 to 0.33% in the second quarter of 2020, and the average cost of interest-bearing deposits fell from 0.46% in the first quarter of 2020 to 0.28% in the second quarter of 2020. Fully taxable equivalent net interest margin was 3.26% in the current quarter compared to 3.55% in the prior quarter. Average interest-earning assets increased $215.5 million in the current quarter, while the average yield on interest-earning assets decreased 41 basis points from 3.86% in the prior quarter to 3.45% in the current quarter.

Provision for loan losses for the current quarter totaled $0.3 million compared with $3.1 million for the prior quarter, a decrease of $2.8 million. The Corporation is closely monitoring the loan portfolio for effects related to COVID-19 and as a result, increased qualitative factors resulting in an additional $1.8 million added to the allowance in the second quarter. This was offset by recoveries, decreases in specific allocations and a net decrease in the historical loss factors due to a large 2018 loan charge-off which no longer impacts the calculation. Year to date 2020, the Company has increased the allowance by $4.5 million for future estimated credit losses related to the COVID-19 pandemic.

Non-Interest Income:

Non-interest income for the current quarter was $5.1 million compared with $4.7 million for the prior quarter, an increase of $0.4 million, or 7.4%. The increase in non-interest income can be attributed to increases of $0.4 million in the change in fair value of equity investments, $0.2 million in net gains on sales of loans held for sale, $0.1 million in wealth management group fee income, and $0.1 million in other non-interest income, offset by a decrease of $0.4 million in service charges on deposit accounts. The increase in the change in fair value of equity investments was primarily due to a general increase in the equity markets during the second quarter of 2020, which also impacted the market value of assets under management by the wealth management group on which fee income is based. The increase in net gains on sales of loans held for sale was primarily due to an increase in loans originated and sold in the secondary market. The increase other non-interest income was due primarily to an increase in interest rate swap fees earned and a decrease in the swap valuation reserve. The decrease in service charges on deposit accounts was primarily attributed to a decrease in NSF and overdraft fees.

Non-Interest Expense:

Non-interest expense for the current quarter was $13.2 million compared with $13.7 million for the prior quarter, a decrease of $0.5 million, or 3.8%. The decrease can be mostly attributed to decreases of $0.2 million in marketing and advertising expense, $0.2 million in other non-interest expense, and $0.2 million in pension and other employee benefits. The decreases in marketing and advertising expense and other non-interest expense were primarily attributed to reduced promotional efforts and a decrease in bank and client relations expenditures in the second quarter primarily due to the COVID-19 pandemic. The decrease in pension and other employee benefits was primarily attributed to a decrease in healthcare and payroll tax expenses.

Income Tax Expense:

Income tax expense for the current quarter was $1.4 million compared with $0.5 million for the prior quarter, an increase of $0.9 million in income tax expense. The effective tax rate for the current quarter increased to 18.9% compared with 16.8% in the prior period. The increase in income tax expense was primarily due to an increase in pretax income.

Asset Quality

Non-performing loans totaled $17.3 million at June 30, 2020, or 1.15% of total loans, compared with $18.0 million at December 31, 2019, or 1.38% of total loans. Non-performing assets, which are comprised of non-performing loans and other real estate owned, were $17.6 million, or 0.86% of total assets, at June 30, 2020, compared with $18.5 million, or 1.04% of total assets, at December 31, 2019. The decrease in non-performing loans can mostly be attributed to payments received on non-performing commercial loans and charge-offs, partially offset by additional commercial, mortgage and indirect non-performing consumer loans. The decrease in non-performing assets can be attributed to the decrease in non-performing loans and sales of other real estate owned.

Management performs an ongoing assessment of the adequacy of the allowance for loan losses based upon a number of factors including an analysis of historical loss factors, collateral evaluations, recent charge-off experience, credit quality of the loan portfolio, current economic conditions and loan growth. In the second quarter of 2020, management again evaluated the potential impact of the COVID-19 pandemic as it relates to the loan portfolio. As part of this analysis, management identified what it believes to be higher risk loans through a detailed analysis of industry codes. Management increased certain allowance qualitative factors based on its assessment of the impact of the current pandemic on local, national, and global economic conditions as well as the perceived risks inherent in specific industries and credit characteristics.

Based on this analysis, the Corporation increased the allowance for loan losses in the second quarter by $1.8 million specifically related to the COVID-19 pandemic. The total provision for loan losses for the current quarter was $0.3 million due to offsets related to recoveries, decreases in specific allocations, a decrease in the historical loss factors due to a large 2018 loan charge-off which no longer impacts the calculation, and a decrease in substandard loans. Net charge-offs for the current quarter were $2.4 million, primarily related to the partial charge-off of a commercial loan, compared with $0.2 million for the same period in the prior year.

The allowance for loan losses was $24.1 million at June 30, 2020 compared with $23.5 million at December 31, 2019. The allowance for loan losses was 139.64% of non-performing loans at June 30, 2020 compared with 130.38% at December 31, 2019. The ratio of the allowance for loan losses to total loans was 1.61% at June 30, 2020 compared with 1.79% at December 31, 2019. The ratio of the allowance for loan losses to total loans excluding PPP loans was 1.84% at June 30, 2020. The increase in the allowance for loan losses can be mostly attributed to a $4.5 million increase in potential projected loss estimates in response to the COVID-19 pandemic, offset by a partial charge-off of a commercial loan, decreases in the specific reserve, the improvement of historical loss factors, and a decrease in substandard loans.

Under Section 4013 of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), "Temporary Relief from Troubled Debt Restructurings" loans less than 30 days past due as of December 31, 2019 will be considered current for COVID-19 related modifications and therefore will not be treated as TDRs.

On June 17, 2020 the New York legislature passed, and Governor Cuomo signed, new legislation which allows certain borrowers to extend the period of forbearance on a primary residence if financial hardship is demonstrated as a result of COVID-19. The Corporation anticipates that this new law could increase the amount of forbearance in the upcoming periods. As of June 30, 2020, the Corporation has deferred a total of $5.7 million in interest and principal payments for commercial borrowers, and a total of $2.0 million in interest and principal payments for consumer borrowers.

COVID-19 Loan Modifications As Of April 30, 2020 June 30, 2020 Principal Total Principal Total & # Loan & # Loan Interest Clients Balance Interest Clients Balance Deferred Deferred Commercial $5.5 170 $281.3 $5.7 175 $286.5 million million million millionRetail and $1.7 806 $36.3 $2.0 921 $34.1Residential million million million million The above reflects the uncertain economic situation as of April 30, 2020whereby the initial response by customers prompted a quick reaction to theunknown potential impact of COVID-19 on their business. Subsequently, customersmay have reassessed their financial position prior to finalization of amodification, either modifying deferral requests or withdrawing the requestaltogether. In some cases, customers continued to make payments on modifiedloans. Of these modifications, 100% were considered current prior to theforbearance and primarily reflect deferrals for 90 days.

Balance Sheet Activity

Total assets were $2.051 billion at June 30, 2020 compared with $1.788 billion at December 31, 2019, an increase of $263.1 million, or 14.7%. The increase can be mostly attributed to increases of $29.8 million in interest-earning deposits in other financial institutions, $33.0 million in securities available for sale, at estimated fair value, $188.8 million in loans, net of deferred fees, and $9.6 million in accrued interest receivable and other assets, offset by an increase of $0.7 million in allowance for loan losses. The increase in interest earning deposits was due primarily to strong deposit growth in the first and second quarters. The increase in securities available for sale was due primarily to purchases of fixed income investments and an increase in the overall market value of investments. The increase in the market value of investments was directly related to the decline in interest rates. The increase in securities available for sale can be mostly attributed to purchases of $39.7 million and an increase in the value of the portfolio of $10.4 million due to decreases in interest rates, offset by $21.1 million in maturities and paydowns. The increase in loans was due primarily to the growth of $186.8 million in commercial loans and $19.7 million in residential mortgages offset by a decrease of $17.7 million in consumer loans. $186.9 million of the increase in loans related to loans extended as part of the Paycheck Protection Program (PPP). The increase in other assets was due primarily to an increase of $11.4 million in interest rate swap assets.

Total liabilities were $1.856 billion at June 30, 2020 compared with $1.605 billion at December 31, 2019, an increase of $251.1 million, or 15.6%. The increase in total liabilities can primarily be attributed to increases of $239.1 million, or 15.2% in deposits, and $12.5 million in accrued interest payable and other liabilities. The increase in deposits was due primarily to increases of $62.6 million in consumer deposits, and $191.8 million in commercial deposits, offset by a decrease of $18.8 million in public deposits. The increase in deposits was partially due to the collection of $33.6 million in stimulus checks and $186.9 million in PPP loan disbursements. The increase in accrued interest payable and other liabilities was due primarily to an increase of $11.3 million in interest rate swap liabilities.

Total shareholders equity was $194.6 million at June 30, 2020 compared with $182.6 million at December 31, 2019, an increase of $12.0 million, or 6.5%. The increase in retained earnings of $5.8 million was due primarily to net income of $8.3 million offset by $2.5 million in dividends declared. The increase in accumulated other comprehensive income of $7.9 million can mostly be attributed to an increase in the fair market value of the securities portfolio. Treasury stock increased $2.2 million primarily due to the Corporation's common stock repurchase program. As of June 30, 2020, 120,490 shares have been repurchased at an average cost of $27.12 per share.

The total equity to total assets ratio was 9.49% at June 30, 2020 compared with 10.22% at December31, 2019. The tangible equity to tangible assets ratio was 8.49% at June 30, 2020 compared with 9.07% at December 31, 2019. Book value per share increased to $40.51 at June 30, 2020 from $37.35 at December31, 2019. As of June 30, 2020, the Banks capital ratios were in excess of those required to be considered well-capitalized under the regulatory framework for prompt corrective action.

Other Items

The market value of total assets under management or administration in our Wealth Management Group was $1.861 billion at June 30, 2020, including $289.0 million of assets under management or administration for the Corporation, compared to $1.915 billion at December 31, 2019, including $289.7 million of assets under management or administration for the Corporation, a decrease of $54.3 million, or 2.8%. The decrease in total assets under management or administration can be mostly attributed to a decrease in the market value of total assets.

As previously announced on March 18, 2020, the Corporation's Board of Directors approved a stock repurchase program which replaces the previously authorized repurchase program. Under the new repurchase program, the Corporation may repurchase up to 250,000 shares of its common stock, or approximately 5% of its then outstanding shares. The repurchase program permits shares to be repurchased in open market or privately negotiated transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission. As of June 30, 2020, the Corporation repurchased 120,490 shares of common stock at a total cost of $3.3 million under its share repurchase program. The weighted average cost was $27.12 per share repurchased. Remaining buyback authority under the share repurchase program was 129,510 shares at June 30, 2020.

CHEMUNG FINANCIAL'S COVID-19 PANDEMIC UPDATE

The second quarter of 2020 was truly one of the most extraordinary in the history of the Corporation. During this uncertain time, the Corporation remained true to the two main goals management set at the start of the COVID-19 pandemic: ensure a healthy and safe work environment for our colleagues, clients and the communities we assist, and provide top-tier financial services that our communities depend on in a manner that is accessible, reliable and efficient. We continued to provide these essential banking services to our clients and the communities, pivoting to offer banking transactions through newly created walk-up windows, as well as our drive-up windows. More complex transactions were handled inside our lobbies, by appointment only. At all times, social distancing, sanitizing and facial coverings were required. As of the date of this press release, 29 of our 32 offices have fully re-opened to normal business hours.

The Corporation successfully navigated the processes set forth by the Small Business Administration and assisted customers and non-customers alike through the Paycheck Protection Program (PPP). As of June 30, 2020, the Bank received 1,370 applications, of which 1,195 were processed, and 1,167 or $186.9 million were funded under the PPP, impacting approximately 19,000 employees of the approved businesses in our communities. As of the date of this press release, the Corporation is preparing to assist the businesses who received PPP loans with the forgiveness-application phase of the program.

Management believes that the Corporation's liquidity position is strong. The Corporation uses a variety of resources to meet its liquidity needs. These include short term investments, cash flow from lending and investing activities, core-deposit growth and non-core funding sources, such as time deposits of $100,000 or more, FHLB advances, securities sold under agreements to repurchase, and other borrowings. As of June 30, 2020, the Corporation's cash and cash equivalents balance was $155.2 million. The Corporation also maintains an investment portfolio of securities available for sale, comprised primarily of mortgage-backed securities and municipal bonds. Although this portfolio generates interest income for the Corporation, it also serves as an available source of liquidity and capital if the need should arise. As of June 30, 2020, the Corporation's investment in securities available for sale was $317.1 million, $126.0 million of which was not pledged as collateral. Additionally, the Bank's unused borrowing capacity at the Federal Home Loan Bank of New York was $124.9 million, as of June 30, 2020. The Corporation did not experience excessive draws on available working capital lines of credit and home equity lines of credit during the first half of 2020 due to the COVID-19 crisis. Nor has the Corporation experienced any significant or unusual activity related to customer reaction to the COVID-19 crisis that would create stress on the Corporation's liquidity position.

With respect to the Corporation's credit risk and lending activities, management has taken actions to identify and assess additional possible credit exposure due to the changing environment caused by the COVID-19 crisis based upon the industry types within our current loan portfolio. Lending risks, as mentioned, are being monitored by industry, based upon NAICS code, with specific attention being paid to those industries that may experience greater stress during this time.

The COVID-19 crisis is expected to continue to impact the Corporation's financial results, as well as demand for its services and products during the second half of 2020 and potentially beyond. The short and long-term implications of the COVID-19 crisis, and related monetary and fiscal stimulus measures on the Corporation's future revenues, earnings results, allowance for loan losses, capital reserves, and liquidity are uncertain at this time.

About Chemung Financial Corporation

Chemung Financial Corporation is a $2.1 billion financial services holding company headquartered in Elmira, New York and operates 32 retail offices through its principal subsidiary, Chemung Canal Trust Company, a full service community bank with trust powers. Established in 1833, Chemung Canal Trust Company is the oldest locally-owned and managed community bank in New York State. Chemung Financial Corporation is also the parent of CFS Group, Inc., a financial services subsidiary offering non-traditional services including mutual funds, annuities, brokerage services, tax preparation services and insurance, and Chemung Risk Management, Inc., a captive insurance company based in the State of Nevada.

This press release may be found at:www.chemungcanal.comunder Investor Relations.

Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities 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 this press release. 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 promise 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 Corporations growth, competition, changes in law or the regulatory environment, including the Dodd-Frank Act, and changes in general business and economic trends.

As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, the Company could be subject to any of the following additional risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations:

-- demand for our products and services may decline, making it difficult to grow assets and income; -- if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; -- collateral for loans,especially real estate, may decline in value, which could cause loan losses to increase; -- our allowance for loan losses may have to be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income; -- the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; -- as the result of the decline in the Federal Reserve Boards target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income; -- a material decrease in net income over several quarters could result in a decrease in the rate of our quarterly cash dividend; -- our cyber security risks are increased as the result of an increase in the number of employees working remotely; -- we rely on third party vendors for certain services and the unavailability of a critical service due to the COVID-19 outbreak could have an adverse effect on us; and -- FDIC premiums may increase if the agency experiences additional resolution costs.

Information concerning these and other factors can be found in the Corporations periodic filings with the Securities and Exchange Commission (SEC), including the 2019 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.comor upon request from the Corporate Secretary at (607) 737-3746. 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.

Chemung Financial CorporationConsolidated Balance Sheets (Unaudited) June 30, March 31, Dec. 31, Sept. 30, June 30,(in thousands) 2020 2020 2019 2019 2019ASSETS Cash and due fromfinancial $ 28,689 $ 27,522 $ 25,203 $ 36,497 $ 32,622 institutionsInterest-earningdeposits in other 126,473 116,936 96,701 109,801 83,838 financialinstitutions Total cash and 155,162 144,458 121,904 146,298 116,460 cash equivalents Equity investments 2,169 1,999 2,174 2,065 2,079 Securities available 317,061 299,075 284,090 267,529 269,286 for saleSecurities held to 3,597 3,001 3,115 3,420 4,090 maturityFHLB and FRB stocks, 3,150 3,099 3,099 3,091 3,091 at cost Total investment 323,808 305,175 290,304 274,040 276,467 securities Commercial 1,065,901 895,741 879,085 878,703 855,298 Mortgage 207,999 192,722 188,338 184,013 183,835 Consumer 224,098 231,998 241,796 243,922 249,238 Loans, net of 1,497,998 1,320,461 1,309,219 1,306,638 1,288,371 deferred loan feesAllowance for loan (24,130 ) (26,233 ) (23,478 ) (23,923 ) (19,656 ) losses Loans, net 1,473,868 1,294,228 1,285,741 1,282,715 1,268,715 Loans held for sale 1,491 801 1,185 1,313 624 Premises and 21,395 21,781 22,417 22,962 23,605 equipment, netOperating lease 7,650 7,826 8,001 8,051 8,220 right-of-use assetsGoodwill 21,824 21,824 21,824 21,824 21,824 Other intangible 491 610 742 886 1,037 assets, netAccrued interestreceivable and other 43,063 42,627 33,535 33,489 33,966 assets Total assets $ 2,050,921 $ 1,841,329 $ 1,787,827 $ 1,793,643 $ 1,752,997 LIABILITIES AND SHAREHOLDERS' EQUITYDeposits: Non-interest-bearing $ 616,736 $ 469,535 $ 468,238 $ 472,600 $ 451,985 demand depositsInterest-bearing 246,470 210,493 200,089 208,222 188,843 demand depositsMoney market 538,006 544,024 530,241 510,194 505,084 accountsSavings deposits 239,334 217,789 212,393 215,665 217,434 Time deposits 170,710 166,262 161,177 169,825 177,792 Total deposits 1,811,256 1,608,103 1,572,138 1,576,506 1,541,138 Long-term advances 3,969 4,028 4,085 4,140 4,195 and other debtOperating lease 7,752 7,919 8,084 8,125 8,250 liabilitiesAccrued interestpayable and other 33,355 30,832 20,893 22,828 21,027 liabilities Total liabilities 1,856,332 1,650,882 1,605,200 1,611,599 1,574,610 Shareholders' equity Common stock 53 53 53 53 53 Additional-paid-in 46,758 46,754 46,382 46,464 46,284 capitalRetained earnings 159,505 154,926 153,701 150,759 150,063 Treasury stock, at (13,869 ) (11,204 ) (11,710 ) (11,956 ) (12,062 ) costAccumulated other 2,142 (82 ) (5,799 ) (3,276 ) (5,951 ) comprehensive loss Total 194,589 190,447 182,627 182,044 178,387 shareholders' equity Total liabilitiesand shareholders' $ 2,050,921 $ 1,841,329 $ 1,787,827 $ 1,793,643 $ 1,752,997 equity Period-end shares 4,804 4,905 4,889 4,874 4,868 outstanding



ChemungFinancial CorporationConsolidatedStatements of Income(Unaudited) Three Months Ended June 30, Percent Six Months Ended June 30, Percent 2020 2020(in thousands,except per share 2020 2019 Change 2020 2019 Changedata)Interest and dividend income:Loans, including $ 14,666 $ 14,570 0.7 $ 28,894 $ 29,059 (0.6 ) feesTaxable 1,397 1,281 9.1 2,884 2,476 16.5 securitiesTax exempt 265 306 (13.4 ) 536 579 (7.4 ) securitiesInterest-earning 144 525 (72.6 ) 542 1,233 (56.0 ) deposits Total interestand dividend 16,472 16,682 (1.3 ) 32,856 33,347 (1.5 ) income Interest expense:Deposits 827 1,544 (46.4 ) 2,113 3,005 (29.7 ) Borrowed funds 55 37 48.6 90 74 21.6 Total interest 882 1,581 (44.2 ) 2,203 3,079 (28.5 ) expense Net interest 15,590 15,101 3.2 30,653 30,268 1.3 incomeProvision for 260 150 73.3 3,310 1,243 166.3 loan lossesNet interestincome after 15,330 14,951 2.5 27,343 29,025 (5.8 ) provision forloan losses Non-interest income:Wealthmanagement group 2,323 2,524 (8.0 ) 4,552 4,800 (5.2 ) fee incomeService chargeson deposit 564 1,085 (48.0 ) 1,554 2,189 (29.0 ) accountsInterchangerevenue from 982 1,024 (4.1 ) 1,907 2,055 (7.2 ) debit cardtransactionsNet gains onsecurities ? 19 N/M ? 19 N/M transactionsChange in fairvalue of equity 156 27 477.8 (90 ) 116 (177.6 ) investmentsNet gains onsales of loans 288 29 893.1 363 77 371.4 held for saleNet gains(losses) onsales of other (48 ) (3 ) N/M (77 ) (86 ) (10.5 ) real estateownedIncome from bankowned life 14 16 (12.5 ) 133 31 329.0 insuranceOther 801 365 119.5 1,468 810 81.2 Totalnon-interest 5,080 5,086 (0.1 ) 9,810 10,011 (2.0 ) income Non-interest expense:Salaries and 5,821 5,780 0.7 11,590 11,501 0.8 wagesPension andother employee 1,334 1,473 (9.4 ) 2,850 3,018 (5.6 ) benefitsOther componentsof net periodicpension and (243 ) (141 ) N/M (508 ) (282 ) 80.1 postretirementbenefitsNet occupancy 1,430 1,478 (3.2 ) 2,952 3,045 (3.1 ) Furniture and 560 595 (5.9 ) 1,035 1,123 (7.8 ) equipmentData processing 1,939 1,873 3.5 3,853 3,600 7.0 Professional 530 418 26.8 860 823 4.5 servicesAmortization ofintangible 119 151 (21.2 ) 251 314 (20.1 ) assetsMarketing and 82 145 (43.4 ) 406 413 (1.7 ) advertisingOther realestate owned 5 40 (87.5 ) 34 71 (52.1 ) expenseFDIC insurance 229 221 3.6 479 486 (1.4 ) Loan expense 187 190 (1.6 ) 497 386 28.8 Other 1,231 1,600 (23.1 ) 2,677 2,822 (5.1 ) Totalnon-interest 13,224 13,823 (4.3 ) 26,976 27,320 (1.3 ) expense Income beforeincome tax 7,186 6,214 15.6 10,177 11,716 (13.1 ) expenseIncome tax 1,357 1,233 10.1 1,859 2,267 (18.0 ) expense Net income $ 5,829 $ 4,981 17.0 $ 8,318 $ 9,449 (12.0 ) Basic anddiluted earnings $ 1.20 $ 1.02 $ 1.71 $ 1.94 per shareCash dividendsdeclared per 0.26 0.26 0.52 0.52 shareAverage basicand diluted 4,850 4,866 $ 4,868 $ 4,863 sharesoutstanding N/M - Not Meaningful



Chemung Financial As of or for the Three Months EndedAs of or for theCorporation Six Months EndedConsolidatedFinancial June 30, March 30, Dec. 31, Sept. 30, June 30,June 30,Highlights June 30,(Unaudited)(in thousands,except per share 2020 2020 2019 2019 201920202019data)RESULTS OF OPERATIONSInterest income $ 16,472 $ 16,384 $ 16,777 $ 16,808 $ 16,682 $32,856$33,347 Interest expense 882 1,322 1,576 1,666 1,581 2,2033,079Net interest 15,590 15,062 15,201 15,142 15,101 30,65330,268income Provision(credit) for loan 260 3,050 261 4,441 150 3,3101,243lossesNet interestincome after 15,330 12,012 14,940 10,701 14,951 27,34329,025provision for loan lossesNon-interest 5,080 4,730 5,106 4,956 5,086 9,81010,011income Non-interest 13,224 13,749 14,851 13,525 13,823 26,97627,320expense Income before 10,17711,716income tax 7,186 2,993 5,195 2,132 6,214 expenseIncome tax 1,357 502 991 176 1,233 1,8592,267expenseNet income $ 5,829 $ 2,491 $ 4,204 $ 1,956 $ 4,981 $8,318$9,449 Basic and dilutedearnings per $ 1.20 $ 0.51 $ 0.87 $ 0.40 $ 1.02 $1.71$1.94shareAverage basic anddiluted shares 4,850 4,895 4,879 4,871 4,866 4,8684,863outstandingPERFORMANCE RATIOSReturn on average 1.15 % 0.55 % 0.93 % 0.44 % 1.15 % 0.87%1.09%assetsReturn on average 12.22 % 5.32 % 9.14 % 4.29 % 11.51 % 8.80%11.18%equityReturn on average 13.27tangible equity 13.83 % 6.04 % 10.43 % 4.91 % % 9.98%12.92%(a)Efficiency ratio 63.99 % 69.47 % 73.13 % 67.30 % 68.47 % 66.67%67.83%(unadjusted) (f)Efficiency ratio 67.44(adjusted) (a) 63.15 % 68.50 % 72.08 % 66.21 % % 65.77%66.74%(b)Non-interest 3.18expense to 2.62 % 3.06 % 3.28 % 3.05 % % 2.83%3.15%average assetsLoans to deposits 82.70 % 82.11 % 83.28 % 82.88 % 83.60 % 82.70%83.60%

YIELDS / RATES - Fully Taxable Equivalent



Yield on loans 4.06 % 4.37 % 4.43 % 4.50 % 4.54 % 4.21 % 4.54%Yield on 1.58 % 2.20 % 2.29 % 2.36 % 2.41 % 1.87 % 2.41%investmentsYield oninterest-earning 3.45 % 3.86 % 3.92 % 4.03 % 4.07 % 3.64 % 4.07%assetsCost ofinterest-bearing 0.28 % 0.46 % 0.55 % 0.60 % 0.57 % 0.37 % 0.55%depositsCost of 0.82 % 3.58 % 3.58 % 3.53 % 3.52 % 1.18 % 3.52%borrowingsCost ofinterest-bearing 0.29 % 0.47 % 0.56 % 0.61 % 0.58 % 0.38 % 0.57%liabilitiesInterest rate 3.16 % 3.39 % 3.36 % 3.42 % 3.49 % 3.26 % 3.50%spreadNet interestmargin, fully 3.26 % 3.55 % 3.56 % 3.63 % 3.69 % 3.40 % 3.69%taxableequivalentCAPITALTotal equity tototal assets at 9.49 % 10.34 % 10.22 % 10.15 % 10.18 % 9.49 % 10.18%end of periodTangible equityto tangible 8.49 % 9.24 % 9.07 % 9.00 % 8.99 % 8.49 % 8.99%assets at end ofperiod (a)Book value per $ 40.50 $ 38.83 $ 37.35 $ 37.35 $ 36.64 $ 40.51 $36.64shareTangible bookvalue per share 35.86 34.25 32.74 32.69 31.95 35.86 31.95(a)Period-end market 27.30 32.98 42.50 42.00 48.34 27.30 48.34value per shareDividendsdeclared per 0.26 0.26 0.26 0.26 0.26 0.52 0.52shareAVERAGE BALANCESLoans and loans $ 1,456,080 $ 1,310,342 $ 1,303,349 $ 1,295,167 $ 1,290,923 $ 1,383,211 $1,293,547held for sale (c) Interest earning 1,931,107 1,715,562 1,705,766 1,665,793 1,654,156 1,823,335 1,663,372assets Total assets 2,032,729 1,807,753 1,798,385 1,760,385 1,744,599 1,920,163 1,749,168 Deposits 1,776,275 1,588,147 1,581,645 1,545,858 1,539,739 1,682,210 1,552,485 Total equity 191,853 188,427 182,522 180,896 173,534 190,140 170,476 Tangible equity 169,464 165,911 159,889 158,111 150,598 167,688 147,463(a) ASSET QUALITY Net charge-offs $ 2,363 $ 294 $ 706 $ 174 $ 239 $ 2,657 $531 Non-performing 17,280 17,948 18,008 23,468 19,505 17,280 19,505loans (d) Non-performing 17,573 18,328 18,525 23,679 19,719 17,573 19,719assets (e) Allowance for 24,130 26,233 23,478 23,923 19,656 24,130 19,656loan losses Annualized netcharge-offs to 0.65 % 0.09 % 0.21 % 0.05 % 0.07 % 0.39 % 0.08%average loansNon-performingloans to total 1.15 % 1.36 % 1.38 % 1.80 % 1.51 % 1.15 % 1.51%loansNon-performingassets to total 0.86 % 1.00 % 1.04 % 1.32 % 1.12 % 0.86 % 1.12%assetsAllowance forloan losses to 1.61 % 1.99 % 1.79 % 1.83 % 1.53 % 1.61 % 1.53%total loansAllowance forloan losses to 139.64 % 146.16 % 130.38 % 101.94 % 100.77 % 139.64 % 100.77%non-performingloans



(a) See the GAAP to Non-GAAP reconciliations.(b) Efficiency ratio (adjusted) is non-interest expense less amortization ofintangible assets less legal reserve divided by the total of fully taxableequivalent net interest income plus non-interest income less net gains orlosses on securities transactions.(c) Loans and loans held for sale do not reflect the allowance for loanlosses.(d) Non-performing loans include non-accrual loans only.(e) Non-performing assets include non-performing loans plus other real estateowned.(f) Efficiency ratio (unadjusted) is non-interest expense divided by thetotal of net interest income plus non-interest income.

Chemung Financial CorporationAverage Consolidated Balance Sheets & Net Interest Income Analysis and Rate/Volume Analysis of Net Interest Income (Unaudited) Three Months Ended Three Months Ended Three Months Ended June 30, 2020 June 30, 2019 June 30, 2020 vs. 2019 Average Yield Average Yield / Total Due to Due to Balance Interest / Balance Interest Rate Change Volume Rate Rate(in thousands) Interest earning assets: Commercial loans $ 1,030,364 $ 10,479 4.09 % $ 857,748 $ 10,098 4.72 % $ 381 $ 1,848 $ (1,467 ) Mortgage loans 198,692 1,859 3.76 % 182,134 1,713 3.77 % 146 151 (5 ) Consumer loans 227,024 2,350 4.16 % 251,041 2,795 4.47 % (445 ) (258 ) (187 ) Taxable securities 257,720 1,397 2.18 % 230,085 1,282 2.23 % 115 145 (30 ) Tax-exempt securities 41,669 327 3.16 % 51,413 373 2.91 % (46 ) (76 ) 30 Interest-earning deposits 175,638 144 0.33 % 81,735 525 2.58 % (381 ) 305 (686 ) Total interest earning 1,931,107 16,556 3.45 % 1,654,156 16,786 4.07 % (230 ) 2,115 (2,345 ) assets Non- interest earnings assets:Cash and due from banks 24,100 25,450 Other assets 103,786 85,051 Allowance for loan losses (26,264 ) (20,058 ) Total assets $ 2,032,729 $ 1,744,599 Interest-bearing liabilities:Interest-bearing checking $ 229,706 $ 47 0.08 % $ 182,480 $ 179 0.39 % $ (132 ) $ 37 $ (169 ) Savings and money market 782,121 228 0.12 % 738,188 790 0.43 % (562 ) 44 (606 ) Time deposits 170,659 551 1.30 % 163,619 575 1.41 % (24 ) 23 (47 ) Long-term advances and 27,090 55 0.82 % 4,214 37 3.52 % 18 65 (47 ) reposTotal int.-bearing 1,209,576 881 0.29 % 1,088,501 1,581 0.58 % (700 ) 170 (870 ) liabilities Non-interest-bearing liabilities:Demand deposits 593,789 455,452 Other liabilities 37,511 27,112 Total liabilities 1,840,876 1,571,065 Shareholders' equity 191,853 173,534 Total liabilities and $ 2,032,729 $ 1,744,599 shareholders' equity Fully taxable equivalent 15,675 15,205 $ 470 $ 1,946 $ (1,476 ) net interest incomeNet interest rate spread 3.16 % 3.49 % (1)Net interest margin,fully taxable equivalent 3.26 % 3.69 % (2)Taxable equivalent (84 ) (104 ) adjustmentNet interest income $ 15,591 $ 15,101 (1) Net interest rate spread is the difference in the average yield oninterest-earning assets less the average rate on interest-bearing liabilities.(2) Net interest margin is the ratio of fully taxable equivalent net interestincome divided by average interest-earning assets.



Chemung Financial Corporation Average Consolidated Balance Sheets & Net Interest Income Analysis and Rate/Volume Analysis of Net Interest Income (Unaudited) Six Months Ended Six Months Ended Six Months Ended June 30, 2020 June 30, 2019 June 30, 2020 vs. 2019 Average Yield Average Yield Total Due to Due to(in thousands) Balance Interest / Balance Interest / Change Volume Rate Rate Rate Interest earning assets:Commercial loans $ 956,257 $ 20,352 4.28 % $ 855,985 $ 20,025 4.72 % $ 327 $ 2,274 $ (1,947 ) Mortgage loans 195,274 3,695 3.81 % 181,928 3,434 3.81 % 261 261 ? Consumer loans 231,680 4,894 4.25 % 255,634 5,673 4.48 % (779 ) (503 ) (276 ) Taxable securities 254,694 2,885 2.28 % 221,939 2,480 2.25 % 405 371 34 Tax-exempt securities 41,945 659 3.16 % 49,366 706 2.88 % (47 ) (112 ) 65 Interest-earning 143,485 542 0.76 % 98,520 1,233 2.52 % (691 ) 410 (1,101 ) depositsTotal interest 1,823,335 33,027 3.64 % 1,663,372 33,551 4.07 % (524 ) 2,701 (3,225 ) earning assets Non-interest earnings assets: Cash and due from 24,897 25,898 banksOther assets 96,923 79,556 Allowance for loan (24,992 ) (19,658 ) losses Total assets $ 1,920,163 $ 1,749,168 Interest-bearing liabilities:Interest-bearing $ 219,866 $ 207 0.19 % $ 189,111 $ 384 0.41 % $ (177 ) $ 55 $ (232 ) checkingSavings and money 766,467 770 0.20 % 746,197 1,584 0.43 % (814 ) 43 (857 ) marketTime deposits 165,805 1,136 1.38 % 158,470 1,037 1.32 % 99 50 49 Long-term advances 15,569 91 1.18 % 4,241 74 3.52 % 17 93 (76 ) and reposTotal int.-bearing 1,167,707 2,204 0.38 % 1,098,019 3,079 0.57 % (875 ) 242 (1,117 ) liabilities Non-interest-bearing liabilities: Demand deposits 530,072 458,707 Other liabilities 32,244 21,966 Total liabilities 1,730,023 1,578,692 Shareholders' equity 190,140 170,476 Total liabilities and $ 1,920,163 $ 1,749,168 shareholders' equity Fully taxableequivalent net 30,823 30,472 $ 351 $ 2,459 $ (2,108 ) interest incomeNet interest rate 3.26 % 3.50 % spread (1)Net interest margin,fully taxable 3.40 % 3.69 % equivalent (2)Taxable equivalent (170 ) (204 ) adjustmentNet interest income $ 30,653 $ 30,268 (1) Net interest rate spread is the difference in the average yield oninterest-earning assets less the average rate on interest-bearing liabilities.(2) Net interest margin is the ratio of fully taxable equivalent net interestincome divided by average interest-earning assets.

Chemung Financial Corporation

GAAP to Non-GAAP Reconciliations (Unaudited)

The Corporation prepares its Consolidated Financial Statements in accordance with GAAP. See the Corporations unaudited consolidated balance sheets and statements of income contained within this press release. That presentation provides the reader with an understanding of the Corporations results that can be tracked consistently from period-to-period and enables a comparison of the Corporations performance with other companies GAAP financial statements.

In addition to analyzing the Corporations results on a reported basis, management uses certain non-GAAP financial measures, because it believes these non-GAAP financial measures provide information to investors about the underlying operational performance and trends of the Corporation and, therefore, facilitate a comparison of the Corporation with the performance of its competitors. Non-GAAP financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used by other companies.

The SEC has adopted Regulation G, which applies to all public disclosures, including earnings releases, made by registered companies that contain non-GAAP financial measures. Under Regulation G, companies making public disclosures containing non-GAAP financial measures must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure and a statement of the Corporations reasons for utilizing the non-GAAP financial measure as part of its financial disclosures. The SEC has exempted from the definition of non-GAAP financial measures certain commonly used financial measures that are not based on GAAP. When these exempted measures are included in public disclosures, supplemental information is not required. The following measures used in this Report, which are commonly utilized by financial institutions, have not been specifically exempted by the SEC and may constitute "non-GAAP financial measures" within the meaning of the SEC's rules, although we are unable to state with certainty that the SEC would so regard them.

Fully Taxable Equivalent Net Interest Income and Net Interest Margin

Net interest income is commonly presented on a tax-equivalent basis. That is, to the extent that some component of the institution's net interest income, which is presented on a before-tax basis, is exempt from taxation (e.g., is received by the institution as a result of its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is added to the actual before-tax net interest income total. This adjustment is considered helpful in comparing one financial institution's net interest income to that of other institutions or in analyzing any institutions net interest income trend line over time, to correct any analytical distortion that might otherwise arise from the fact that financial institutions vary widely in the proportions of their portfolios that are invested in tax-exempt securities, and that even a single institution may significantly alter over time the proportion of its own portfolio that is invested in tax-exempt obligations. Moreover, net interest income is itself a component of a second financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average interest-earning assets. For purposes of this measure as well, fully taxable equivalent net interest income is generally used by financial institutions, as opposed to actual net interest income, again to provide a better basis of comparison from institution to institution and to better demonstrate a single institutions performance over time. The Corporation follows these practices.



As of or for the As of or for the Three Months Ended Six Months Ended June 30, March 31, Dec. Sept. June 30, June June 31, 30, 30, 30,(in thousands,except ratio 2020 2020 2019 2019 2019 2020 2019data)NET INTEREST MARGIN - FULLY TAXABLE EQUIVALENTNet interest $ 15,590 $ 15,062 $ 15,201 $ 15,142 $ 15,101 $ 30,653 $ 30,268 income (GAAP)Fully taxableequivalent 84 86 98 101 104 170 204 adjustmentFully taxableequivalent net $ 15,675 $ 15,148 $ 15,299 $ 15,243 $ 15,205 $ 30,823 $ 30,472 interest income(non-GAAP) Average 1,663,372interest-earning $ 1,931,107 $ 1,715,562 $ 1,705,766 $ 1,665,793 $ 1,654,156 $ 1,823,335 $ assets (GAAP)Net interestmargin - fullytaxable 3.26 % 3.55 % 3.56 % 3.63 % 3.69 % 3.40 % 3.69%equivalent(non-GAAP)

Efficiency Ratio

The unadjusted efficiency ratio is calculated as non-interest expense divided by total revenue (net interest income and non-interest income). The adjusted efficiency ratio is a non-GAAP financial measure which represents the Corporations ability to turn resources into revenue and is calculated as non-interest expense divided by total revenue (fully taxable equivalent net interest income and non-interest income), adjusted for one-time occurrences and amortization. This measure is meaningful to the Corporation, as well as investors and analysts, in assessing the Corporations productivity measured by the amount of revenue generated for each dollar spent.

As of or for the As of or for the Three Months Ended Six Months Ended June 30, March 31, Dec. 31, Sept. 30, June 30, June 30, June 30,(in thousands,except ratio 2020 2020 2019 2019 2019 2020 2019data)EFFICIENCY RATIONet interest $ 15,590 $ 15,062 $ 15,201 $ 15,142 $ 15,101 $ 30,653 $ 30,268 income (GAAP)Fully taxableequivalent 84 86 98 101 104 170 204 adjustmentFully taxableequivalent netinterest $ 15,675 $ 15,148 $ 15,299 $ 15,243 $ 15,205 $ 30,823 $ 30,472 income(non-GAAP) Non-interest $ 5,080 $ 4,730 $ 5,106 $ 4,956 $ 5,086 $ 9,810 $ 10,011 income (GAAP)Less: changesin fair value ? ? ? ? ? ? ? of equityinvestmentsLess: net(gains) losses ? ? ? ? (19 ) ? (19 ) on securitytransactionsAdjustednon-interest $ 5,080 $ 4,730 $ 5,106 $ 4,956 $ 5,067 $ 9,810 $ 9,992 income(non-GAAP) Non-interest $ 13,224 $ 13,749 $ 14,851 $ 13,525 $ 13,823 $ 26,976 $ 27,320 expense (GAAP)Less:amortization (119 ) (132 ) (144 ) (151 ) (151 ) (251 ) (314 ) of intangibleassetsLess: legal ? ? ? ? ? ? ? reserveAdjustednon-interest $ 13,107 $ 13,617 $ 14,707 $ 13,374 $ 13,672 $ 26,725 $ 27,006 expense(non-GAAP) Efficiencyratio 63.98 % 69.47 % 73.13 % 67.30 % 68.47 % 66.67 % 67.83 % (unadjusted)Efficiencyratio 63.15 % 68.50 % 72.08 % 66.21 % 67.44 % 65.77 % 66.74 % (adjusted)

Tangible Equity and Tangible Assets (Period-End)

Tangible equity, tangible assets, and tangible book value per share are each non-GAAP financial measures. Tangible equity represents the Corporations stockholders equity, less goodwill and intangible assets. Tangible assets represents the Corporations total assets, less goodwill and other intangible assets. Tangible book value per share represents the Corporations tangible equity divided by common shares at period-end. These measures are meaningful to the Corporation, as well as investors and analysts, in assessing the Corporations use of equity.

As of or for the As of or for the Three Months Ended Six Months Ended June 30, March 31, Dec. 31, Sept. 30, June 30, June 30, June 30,(in thousands,except per share 2020 2020 2019 2019 2019 2020 2019and ratio data)TANGIBLE EQUITY AND TANGIBLE ASSETS (PERIOD END) Totalshareholders' $ 194,589 $ 190,447 $ 182,627 $ 182,044 $ 178,387 $ 194,589 $ 178,387 equity (GAAP)Less: (22,315 ) (22,434 ) (22,566 ) (22,710 ) (22,861 ) (22,315 ) (22,861 ) intangible assetsTangible equity $ 172,274 $ 168,013 $ 160,061 $ 159,334 $ 155,526 $ 172,274 $ 155,526 (non-GAAP) Total assets $ 2,050,921 $ 1,841,329 $ 1,787,827 $ 1,793,643 $ 1,752,997 $ 2,050,921 $ 1,752,997 (GAAP)Less: (22,315 ) (22,434 ) (22,566 ) (22,710 ) (22,861 ) (22,315 ) (22,861 ) intangible assetsTangible assets $ 2,028,606 $ 1,818,895 $ 1,765,261 $ 1,770,933 $ 1,730,136 $ 2,028,606 $ 1,730,136 (non-GAAP) Total equity tototal assets at 9.49 % 10.34 % 10.22 % 10.15 % 10.18 % 9.49 % 10.18 % end of period(GAAP)Book value per $ 40.50 $ 38.83 $ 37.35 $ 37.35 $ 36.64 $ 40.51 $ 36.64 share (GAAP) Tangible equityto tangible assets atend of period 8.49 % 9.24 % 9.07 % 9.00 % 8.99 % 8.49 % 8.99 % (non-GAAP)Tangible bookvalue per share $ 35.86 $ 34.25 $ 32.74 $ 32.69 $ 31.95 $ 35.86 $ 31.95 (non-GAAP)

Tangible Equity (Average)

Average tangible equity and return on average tangible equity are each non-GAAP financial measures. Average tangible equity represents the Corporations average stockholders equity, less average goodwill and intangible assets for the period. Return on average tangible equity measures the Corporations earnings as a percentage of average tangible equity. These measures are meaningful to the Corporation, as well as investors and analysts, in assessing the Corporations use of equity.

As of or for the As of or for the Three Months Ended Six Months Ended June 30, March 31, Dec. 31, Sept. 30, June 30, June 30, June 30,(in thousands,except ratio 2020 2020 2019 2019 2019 2020 2019data)TANGIBLE EQUITY (AVERAGE)Total averageshareholders' $ 191,853 $ 188,427 $ 182,522 $ 180,896 $ 173,534 $ 190,140 $ 170,476 equity (GAAP)Less: averageintangible (22,389 ) (22,516 ) (22,633 ) (22,785 ) (22,936 ) (22,452 ) (23,013 ) assetsAveragetangible equity $ 169,464 $ 165,911 $ 159,889 $ 158,111 $ 150,598 $ 167,688 $ 147,463 (non-GAAP) Return onaverage equity 12.22 % 5.32 % 9.14 % 4.29 % 11.51 % 8.80 % 11.18 % (GAAP)Return onaverage 13.83 % 6.04 % 10.43 % 4.91 % 13.27 % 9.98 % 12.92 % tangible equity(non-GAAP)

Adjustments for Certain Items of Income or Expense

In addition to disclosures of certain GAAP financial measures, including net income, EPS, ROA, and ROE, we may also provide comparative disclosures that adjust these GAAP financial measures for a particular period by removing from the calculation thereof the impact of certain transactions or other material items of income or expense occurring during the period, including certain nonrecurring items. The Corporation believes that the resulting non-GAAP financial measures may improve an understanding of its results of operations by separating out any such transactions or items that may have had a disproportionate positive or negative impact on the Corporations financial results during the particular period in question. In the Corporations presentation of any such non-GAAP (adjusted) financial measures not specifically discussed in the preceding paragraphs, the Corporation supplies the supplemental financial information and explanations required under Regulation G.

As of or for the As of or for the Three Months Ended Six Months Ended June 30, March 31, Dec. 31, Sept. 30, June 30, June 30, June 30,(inthousands,except per 2020 2020 2019 2019 2019 2020 2019share andratio data)NON-GAAP NET INCOMEReported netincome $ 5,829 $ 2,491 $ 4,204 $ 1,956 $ 4,981 $ 8,318 $ 9,449 (GAAP)Net (gains)losses onsecurity ? ? ? ? (14 ) ? (14 ) transactions(net of tax)Net income $ 5,829 $ 2,491 $ 4,204 $ 1,956 $ 4,967 $ 8,318 $ 9,435 (non-GAAP) Averagebasic anddiluted 4,850 4,895 4,879 4,871 4,866 4,868 4,863 sharesoutstanding Reportedbasic anddiluted $ 1.20 $ 0.51 $ 0.87 $ 0.40 $ 1.02 $ 1.71 $ 1.94 earnings pershare (GAAP)Reportedreturn onaverage 1.15 % 0.55 % 0.93 % 0.44 % 1.15 % 0.87 % 1.09 % assets(GAAP)Reportedreturn onaverage 12.22 % 5.32 % 9.14 % 4.29 % 11.51 % 8.80 % 11.18 % equity(GAAP) Basic anddilutedearnings per $ 1.20 $ 0.51 $ 0.87 $ 0.40 $ 1.02 % $ 1.71 $ 1.94 share(non-GAAP)Return onaverage 1.15 % 0.55 % 0.93 % 0.44 % 1.14 % 0.87 % 1.09 % assets(non-GAAP)Return onaverage 12.22 % 5.32 % 9.14 % 4.29 % 11.48 % 8.80 % 11.16 % equity(non-GAAP)

For further information contact:Karl F. Krebs, EVP and CFO kkrebs@chemungcanal.comPhone: 607-737-3714