ELMIRA, N.Y., Jan. 22, 2021 (GLOBE NEWSWIRE) -- Chemung Financial Corporation (Nasdaq: CHMG), the parent company of Chemung Canal Trust Company, today reported net income of $19.3 million, or $4.01 per share, for the year ended December 31, 2020, compared to $15.6 million, or $3.21 per share, for the year ended December 31, 2019. Net income was $5.2 million, or $1.11 per share, for the fourth quarter of 2020, compared to $4.2 million, or $0.87 per share, for the fourth quarter of 2019.

"The year 2020 was certainly an extraordinary and challenging year for our employees, our communities and our country. COVID-19 fundamentally altered both business and social practices across the globe, and we reacted and adapted quickly. Although the coronavirus altered how our Company conducted business, we were confident that our strong financial position, our community focus and our strong culture would help us through the difficult times. Due to the hard work of so many, I am proud to report earnings of $1.11 per share for the fourth quarter of 2020, and $4.01 per share for the fiscal year 2020," said Anders M. Tomson, President and CEO of Chemung Canal Trust Company. “As we look to 2021, our business, along with so many others, will remain disrupted by the pandemic. We are once again supporting local businesses through our continued participation in the Paycheck Protection Program, and we look ahead with optimism as we enter the Western New York market and continue to focus on expense management and non-interest income opportunities,” Tomson added.

Fourth Quarter Highlights¹:

• Fourth quarter earnings per share grew to $1.11 per share as of December 31, 2020 versus $0.87 per share as of December 31, 2019
• Total shareholders’ equity increased $17.1 million, or 9.35% from December 31, 2019
• Tangible book value per share increased from $32.74 to $37.83, or 15.5% from December 31, 2019 ²
• Loans, net of deferred fees, increased $227.2 million, including $150.9 million of Payroll Protection Program (PPP) loans, or 17.36% from December 31, 2019
• Non-performing loans decreased from $18.0 million as of December 31, 2019 to $10.0 million as of December 31, 2020, 0.65% of total loans.

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

2020 vs 2019

Net Interest Income:
Net interest income for the year ended December 31, 2020 totaled $62.9 million compared with $60.6 million for the prior year, an increase of $2.3 million, or 3.8%. The increase was primarily due to increases of $0.8 million in interest income on loans, including fees, and $0.7 million in interest and dividend income on taxable securities, and a decrease of $2.3 million in total interest expense, offset by a decrease of $1.5 million in interest income on interest-earning deposits.

The increase in interest income on loans was due primarily to an increase of $1.7 million in interest income on commercial loans primarily attributable to a $157.8 million increase in average balances on commercial loans and the recognition of $3.8 million of PPP loan fees, partially offset by a decrease in average commercial portfolio yield due to a decrease in interest rates. Interest income on mortgage loans increased $0.9 million primarily due to an increase of $28.2 million in average balances on mortgage loans, partially offset by a decrease in average portfolio yield due to a decrease in interest rates. These increases were offset by a decrease of $1.8 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 increase in interest and dividend income on taxable securities was due primarily to an increase in average invested balances of $77.7 million, partially offset by a decrease in average interest rates. The decrease in interest 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 2.26% in 2019 to 0.54% in 2020, offset by a $38.9 million increase in average balances on interest-earning deposits. The decrease in interest expense on deposits was due primarily to the decreases in average rates paid on interest-bearing checking, savings and money market products in response to the Federal Reserve's 50 and 100 basis points drop on overnight rates in March, 2020.

Fully taxable equivalent net interest margin was 3.25% for the year ended December 31, 2020, compared with 3.64% for the prior year. Average interest-earning assets increased $270.4 million in 2020 compared to the prior year. The average yield on interest- earning assets decreased 56 basis points while the average cost of interest-bearing liabilities decreased 25 basis points in 2020 when compared to the prior year.

Provisions for loan losses for the year ended December 31, 2020 totaled $4.2 million compared with $5.9 million for the prior year, a decrease of $1.7 million, or 28.8%. The decrease in provision for loan losses in 2020 was primarily due to a specific impairment of $4.2 million related to a participation interest in a commercial credit in the prior year. The Corporation is closely monitoring the loan portfolio for effects related to COVID-19. In 2020, the Company increased the allowance by $4.5 million for future estimated credit losses related to the COVID-19 pandemic, of which $4.0 million remains part of the allowance at year end.

Non-Interest Income:
Non-interest income for the year ended December 31, 2020 was $21.1 million compared with $20.1 million for the prior year, an increase of $1.1 million, or 5.2%. The increase was due primarily to increases of $1.5 million in net gains on sales of residential mortgage loans sold into the secondary market, $0.2 million in net gains on the sale of four commercial loans, three of which were non-performing, $0.4 million in interest rate swap fees earned, and a $0.6 million credit adjustment to Chemung Risk Management loss reserves, offset by a decrease of $1.3 million in service charges on deposit accounts primarily attributable to a decrease in NSF and overdraft fees as compared to the prior year.

Non-Interest Expense:
Non-interest expense for the year ended December 31, 2020 was $55.9 million compared with $55.7 million in the prior year, an increase of $0.2 million, or 0.4%. The increase was due primarily to increases of $0.8 million in salaries and wage expense, $0.5 million in FDIC insurance expense, and $0.4 million in loan expenses, offset by decreased spending across most other categories, including $0.4 million in furniture and equipment expenses, $0.3 million in marketing and advertising expenses, and $0.3 million in pension and other employee benefits, and a $0.5 million increase in the credit related to the net periodic pension and post- retirement benefits.

The increase in salaries and wage expense was primarily attributed to annual merit increases and an increase in commission and reward expenses. The increase in FDIC insurance expense was primarily attributed to the receipt of a $0.4 million credit in 2019 related to the Deposit Insurance Fund's (DIF) minimum reserve ratio assessment. The increase in loan expenses was primarily attributed to legal fees associated with a legal action taken by the Corporation related to the $4.2 million impairment of a commercial credit disclosed in the Corporations' Current Report on Form 8-K, dated September 12, 2019, and an increase in loan volume during 2020 when compared to the prior year. The decrease in furniture and equipment expenses was primarily attributed to normal depreciation and a reduction in one-time service contract expenditures. The decrease in marketing and advertising expenses was primarily attributed to the cancellation of directed marketing initiatives due to the COVID-19 pandemic. The decrease in pension and other employee benefits in 2020 was primarily attributed to a decrease in healthcare expenses when compared to the prior year. The increase in the credit related to the net periodic pension and post-retirement benefits was primarily due to a change in factors used to prepare annual actuarial estimates.

Income Tax Expense:
Income tax expense for the year ended December 31, 2020 was $4.6 million compared with $3.4 million for the prior year, an increase of $1.2 million in income tax expense. The effective tax rate for the year ended December 31, 2020 increased to 19.3% compared to 18.0% for the prior year. The increase in income tax expense was primarily due to an increase in pretax income.

4th Quarter 2020 vs 4th Quarter 2019

Net Interest Income:

Net interest income for the current quarter totaled $16.4 million compared to $15.2 million for the same period in the prior year, an increase of $1.2 million, or 7.9%, due primarily to increases of $0.8 million in interest income on loans, including fees, and $0.2 million in interest and dividend income on taxable securities, and a decrease of $0.6 million in total interest expense, offset by a decrease of $0.4 million in interest income on interest-earning deposits.

The increase in interest income on loans was due primarily to an increase of $0.9 million in interest income on commercial loans primarily attributable to a $219.2 million increase in average balances on commercial loans and the recognition of $1.6 million of PPP loan fees, partially offset by a decrease in commercial portfolio average yield due to a decrease in interest rates. Interest income on mortgage loans increased $0.3 million primarily due to an increase of $49.7 million in average balances on mortgage loans, partially offset by a decrease in average portfolio yield due to a decrease in interest rates. These increases were also offset by a decrease of $0.5 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 increase in interest and dividend income on taxable securities was due primarily to an increase in average invested balances of $177.0 million. 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 1.84% in the fourth quarter of 2019 to 0.31% in the fourth quarter of 2020. The decrease in interest expense on deposits was due primarily to the decreases in average rates paid on interest-bearing checking, savings and money market products in response to the Federal Reserve's 50 and 100 basis points drop on overnight rates in March, 2020.

Fully taxable equivalent net interest margin was 3.06% for the fourth quarter 2020, compared to 3.56% for the same period in the prior year. Average interest-earning assets increased $439.1 million in the fourth quarter 2020 compared to the same period in the prior year. The average yield on interest-earning assets decreased 69 basis points in the fourth quarter of 2020, while the average cost of interest-bearing liabilities decreased 29 basis points, as compared to the same period in the prior year.

Non-Interest Income:

Non-interest income for the current quarter was $6.0 million compared to $5.1 million for the same period in the prior year, an increase of $0.9 million, or 17.0%. The increase was due primarily to increases of $0.5 million in net gains on sales of residential mortgage loans sold into the secondary market, $0.2 million in net gains on the sale of four commercial loans, three of which were non-performing, $0.1 million in change in fair value of equity investments, and $0.1 million in wealth management group fee income, offset by a decrease of $0.3 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 $15.6 million compared to $14.9 million for the same period in the prior year, an increase of $0.7 million, or 5.0%. The increase can be mostly attributed to the establishment of a $0.7 million reserve for unresolved compliance matters, increases of $0.5 million in salaries and wage expense, and $0.2 million in FDIC insurance expense. These increases were offset by decreases of $0.3 million in professional services, $0.2 million in marketing and advertising expenses, and $0.2 million in furniture and equipment expenses. The increase in salaries and wage expense was primarily attributed to annual merit awards and commission and reward expenses. The increase in FDIC insurance was primarily due to the receipt of a $0.2 million credit in the fourth quarter of the prior year related to the Deposit Insurance Fund's (DIF) minimum reserve ratio assessment. The decrease in professional services was primarily due to the timing of various projects. The decrease in marketing and advertising expenses was primarily attributed to the cancellation of directed marketing initiatives due to the COVID-19 pandemic.

Income Tax Expense:

Income tax expense for the current quarter was $1.3 million compared to $1.0 million for the same period in the prior year, an increase of $0.3 million. The effective tax rate for the current quarter increased to 19.8% compared to 19.1% for the same period in the prior year. The increase in income tax expense was primarily due to an increase in pretax income.

4th Quarter 2020 vs 3rd Quarter 2020

Net Interest Income:

Net interest income for the current quarter totaled $16.4 million compared to $15.9 million for the prior quarter, an increase of $0.5 million, or 3.3%, due primarily to increases of $0.4 million in interest income and fees from loans, and $0.2 million in interest and dividend income on taxable securities, offset by a $0.1 million increase in interest expense on deposits.

The increase in interest income and fees from loans was primarily attributed to a $24.9 million increase in average loan balances in the fourth quarter. Also in the fourth quarter, the Corporation recorded $1.6 million in PPP fees, $0.7 million of which represented accelerated recognition of fees related to SBA loan forgiveness of $39.0 million in loan balances. This $1.6 million in fees represents a $0.4 million increase over the third quarter 2020. The increase in interest and dividend income on taxable securities can be primarily attributed to an increase in average invested balances of $118.6 million in the fourth quarter of 2020.

Fully taxable equivalent net interest margin was 3.06% in the current quarter compared to 3.20% in the prior quarter. Average interest-earning assets increased $158.8 million in the current quarter as compared to the prior quarter, while the average yield on interest-earning assets decreased 14 basis points from 3.37% in the prior quarter to 3.23% in the current quarter. The average cost of interest-bearing liabilities remained the same in the fourth quarter of 2020, compared to the prior quarter.

The Corporation continues to closely monitor the loan portfolio for effects related to the COVID-19 pandemic. Changes in governmental policies during the pandemic placed stress on certain industries while other industries initially anticipated to be highly impacted by the pandemic demonstrated resilience. As a result, the Corporation re-evaluated various qualitative factors used to calculate the provision. In addition the Corporation charged off one large commercial mortgage and one participating interest in a commercial credit. In 2020, the Company increased the allowance by $4.5 million for future estimated credit losses related to the COVID-19 pandemic, of which $4.0 million remains part of the allowance at year end. In the fourth quarter of 2020, the Corporation sold and released reserves for three non-performing commercial loans. Provision for loan losses for the current quarter totaled $0.3 million compared to $0.7 million for the prior quarter, a decrease of $0.4 million.

Non-Interest Income:

Non-interest income for the current quarter was $6.0 million compared to $5.3 million for the prior quarter, an increase of $0.7 million, or 11.9%. The increase can mostly be attributed to increases of $0.1 million in net gains on sales of residential mortgage loans sold into the secondary market, $0.2 million in net gains on the sale of four commercial loans, three of which were non-performing, $0.1 million in Wealth Management Group fee income, and $0.1 million in service charges on deposit accounts.

The increase in net gains on sales of loans held for sale was primarily due to an increase in residential mortgage loans originated and sold into the secondary market. The increase in Wealth Management Group fee income was primarily attributed to an increase in market value of assets under management and additional fee income from terminating trusts. The increase in service charges on deposit accounts was primarily attributed to an increase in NSF and overdraft fees.

Non-Interest Expense:

Non-interest expense for the current quarter was $15.6 million compared to $13.4 million for the prior quarter, an increase of $2.2 million, or 16.7%. The increase can be mostly attributed to increases of $1.4 million in other non-interest expense, $0.5 million in salaries and wage expense, $0.2 million in pension and other employee benefits, and $0.2 million in data processing expenses. The increase in other non-interest expense was primarily attributed to the establishment of a $0.7 million reserve for unresolved compliance matters, and increases of $0.4 million related to the termination of the lease of the now closed Owego, New York branch, and $0.2 million in charitable contributions. The increase in salaries and wage expense was primarily attributed to annual merit increases and an increase in commission and reward expenses. The increase in pension and other employee benefits was primarily attributed to the recapture of $0.2 million in health insurance expense in the third quarter. The increase in data processing expenses was primarily attributed to timing of various projects.

Income Tax Expense:

Income tax expense for the current quarter was $1.3 million compared to $1.5 million for the prior quarter, a decrease of $0.2 million in income tax expense. The effective tax rate for the current quarter decreased to 19.8% compared to 20.3% in the prior period.

Asset Quality

Non-performing loans totaled $10.0 million at December 31, 2020, or 0.65% of total loans, compared to $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 $10.2 million, or 0.45% of total assets, at December 31, 2020, compared to $18.5 million, or 1.04% of total assets, at December 31, 2019. The decrease in non-performing loans can mostly be attributed to the charge off of one large commercial mortgage in the second quarter of 2020, and one participating interest in a commercial credit in the fourth quarter of 2020. In the fourth quarter of 2020, the Corporation sold four commercial loans with total balances of $4.9 million, three of which were non-performing with total balances of $3.8 million. The decrease in non- performing assets can be attributed to the decrease in non-performing loans.

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. Management continues to evaluate 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 during the first half of 2020. Based on this approach, the Corporation determined that a $0.5 million release of provision specifically related to the COVID-19 pandemic was appropriate in the fourth quarter of 2020. The total provision for loan losses for the fourth quarter of 2020 was $0.3 million, due to an increase in loan volume during the quarter. Net charge-offs for the fourth quarter of 2020 were $3.9 million, compared to $0.7 million for the fourth quarter of 2019.

The allowance for loan losses was $20.9 million at December 31, 2020 compared to $23.5 million at December 31, 2019. The allowance for loan losses was 210.25% of non-performing loans at December 31, 2020 compared to 130.38% at December 31, 2019. The ratio of the allowance for loan losses to total loans was 1.36% at December 31, 2020 compared to 1.79% at December 31, 2019. The ratio of the allowance for loan losses to total loans excluding PPP loans was 1.51% at December 31, 2020. The Corporation continues to closely monitor the loan portfolio for effects related to the COVID-19 pandemic. Changes in governmental policies during the pandemic placed stress on certain industries while other industries initially anticipated to be highly impacted by the pandemic demonstrated resilience. As a result, the Corporation re-evaluated various qualitative factors used to calculate the provision. The 2020 pandemic related provision was $4.5 million, of which $4.0 million remains part of the allowance at year end. In addition the Corporation charged off one large commercial mortgage and one participating interest in a commercial credit. In the fourth quarter of 2020, the Corporation sold and released reserves for three non-performing commercial 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. At its highest point as of May 31, 2020, total loan forbearances represented 15.77% of the Corporation's total loan portfolio. As of December 31, 2020, total loan forbearances decreased to 1.35% of the total loan portfolio.

The above reflects the uncertain economic situation whereby the initial response by customers prompted a quick reaction to the unknown potential impact of COVID-19 on their business. Subsequently, customers may have reassessed their financial position prior to finalization of a modification, either modifying deferral requests or withdrawing the request altogether. In some cases, customers continued to make payments on modified loans. Of these modifications, 100% were considered current prior to the forbearance and primarily reflect deferrals for 90 days.

Balance Sheet Activity

Total assets were $2.279 billion at December 31, 2020 compared to $1.788 billion at December 31, 2019, an increase of $491.6 million, or 27.5%. The increase can be mostly attributed to increases of $227.2 million in loans, net of deferred fees, $270.5 million in securities available for sale, at estimated fair value, $9.6 million in accrued interest receivable and other assets, and a decrease of $2.6 million in allowance for loan losses, offset by decreases of $17.6 million in interest- earning deposits in other financial institutions, $2.3 million in premises and equipment, and $1.0 million in loans held for sale.

The increase in loans was due primarily to the growth of $206.5 million in commercial loans and $51.1 million in residential mortgages, offset by a decrease of $30.3 million in consumer loans. $150.9 million of the increase in loans related to the PPP. The increase in securities available for sale can be mostly attributed to purchases of $329.9 million and an increase in the value of the portfolio of $10.4 million due to the decreases in interest rates, offset by $67.4 million in maturities and paydowns. The decrease in interest earning deposits was due primarily to the increase in investment securities and loans during 2020. The increase in other assets was due primarily to an increase of $8.2 million in interest rate swap assets.

Total liabilities were $2.080 billion at December 31, 2020 compared to $1.605 billion at December 31, 2019, an increase of $474.6 million, or 29.6%. The increase in total liabilities can primarily be attributed to increases of $465.6 million, or 29.6% in deposits, and $10.0 million in accrued interest payable and other liabilities, offset by a decrease of $0.8 million in operating lease liabilities.

The increase in deposits was due primarily to increases of $100.4 million in consumer deposits, $230.4 million in commercial deposits, and $134.9 million in public deposits. The increase in deposits was partially attributed to the collection of stimulus checks and PPP loan disbursements. The increase in accrued interest payable and other liabilities was due primarily to an increase of $8.2 million in interest rate swap liabilities. The decrease in operating lease liabilities includes a $0.2 million decrease due to the termination of the lease of the now closed Owego, New York branch.

Total shareholders’ equity was $199.7 million at December 31, 2020 compared to $182.6 million at December 31, 2019, an increase of $17.1 million, or 9.3%. The increase in retained earnings of $14.3 million was due primarily to net income of $19.3 million offset by $5.0 million in dividends declared. The increase in accumulated other comprehensive income of $8.2 million can mostly be attributed to an increase in the fair market value of the securities portfolio. Treasury stock increased $5.8 million primarily due to the Corporation's common stock repurchase program. As of December 31, 2020, all 250,000 shares have been repurchased at an average cost of $29.40 per share.

The total equity to total assets ratio was 8.76% at December 31, 2020 compared to 10.22% at December 31, 2019. The tangible equity to tangible assets ratio was 7.87% at December 31, 2020 compared to 9.07% at December 31, 2019. Book value per share increased to $42.53 at December 31, 2020 from $37.35 at December 31, 2019. As of December 31, 2020, the Bank’s 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 $2.091 billion at December 31, 2020, including $305.5 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, an increase of $175.5 million, or 9.2%. The increase in total assets under management or administration can be mostly attributed to an increase in the market value of total assets.

As previously announced on January 8, 2021, the Corporation announced that the Board of Directors approved a new stock 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 this press release, the Corporation has not initiated any repurchases under the new program.

As disclosed in the Corporation's August 20, 2020 Current Report on Form 8-K, the Corporation consolidated two branches November 20, 2020. The Big Flats, New York branch at 437 Maple Street, Big Flats, NY, was consolidated into the nearby Arnot Road Office at 29 Arnot Road, Horseheads, NY. The Owego, New York branch located at 1054 State Route 17C, Owego, New York, was consolidated into the nearby Owego branch office at 203 Main Street, Owego, New York.

Chemung Financial's COVID-19 Pandemic Update

The Corporation remained flexible with its COVID-19 response, adapting weekly to new micro-cluster zone restrictions and spiking positivity rates throughout our footprint. This flexibility allowed us to ensure a healthy and safe work environment for our colleagues, clients and the communities we assist. At all times, social distancing, sanitizing and facial coverings were required and at certain times, access to branches was limited or restricted. When the need arose to temporarily close a branch, impacted customers were directed to adjacent branches when possible, and offices were immediately deep-cleaned to ensure a safe work environment when employees and customers returned to work. At the date of this press release 29 of our 30 offices are open with normal business hours. The Corporation further assisted its customer base as the Paycheck Protection Program (PPP) moved forward with its Forgiveness phase, with the Small Business Administration (SBA) beginning to approve forgiveness applications on October 2, 2020. The Corporation is participating in the latest round of PPP, and began accepting applications on January 19, 2021, receiving a total of 250 applications for a total of $37.0 million, as of the date of this press release.

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 December 31, 2020, the Corporation's cash and cash equivalents balance was $108.5 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 December 31, 2020, the Corporation's investment in securities available for sale was $554.6 million, $373.8 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 $89.6 million, as of December 31, 2020. The Corporation did not experience excessive draws on available working capital lines of credit and home equity lines of credit during 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 2021. 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 $2.3 billion financial services holding company headquartered in Elmira, New York and operates 30 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.com under Investor Relations.