ELMIRA, N.Y., April 18, 2024 (GLOBE NEWSWIRE) -- Chemung Financial Corporation (the "Corporation") (NASDAQ:CHMG), the parent company of Chemung Canal Trust Company (the "Bank"), today reported net income of $7.1 million, or $1.48 per share, for the first quarter of 2024, compared to $3.8 million, or $0.80 per share, for the fourth quarter of 2023, and $7.3 million, or $1.54 per share, for the first quarter of 2023. "We have started out 2024 with another strong quarter of results from our core businesses," said Anders M. Tomson, President and CEO of the Corporation. "Improving credit metrics and 6% annualized loan growth in a challenging environment is an endorsement of our client focused business model and franchise," Tomson added. First Quarter Highlights: Total loans exceeded $2.0 billion for the first time in the Corporation's 190-year history, growing $30.9 million during the first quarter.1 Fully taxable equivalent net interest margin expanded by four basis points during the first quarter of 2024 to 2.73%, from 2.69% during the fourth quarter of 2023.2 Non-performing loans to total loans decreased by 14 basis points to 0.39% as of March 31, 2024, from 0.53% as of December 31, 2023.1 Dividends declared during the first quarter 2024 were $0.31 per share. 1 Balance sheet comparisons are calculated as of March 31, 2024 versus December 31, 2023. 2 See the GAAP to Non-GAAP reconciliations. 1st Quarter 2024 vs 4th Quarter 2023 Net Interest Income: Net interest income for the first quarter of 2024 totaled $18.1 million compared to $17.9 million for the prior quarter, an increase of $0.2 million, or 1.1%, driven primarily by an increase of $1.1 million in interest income on loans, including fees, offset by increases of $0.8 million in interest expense on deposits and $0.2 million in interest expense on borrowed funds. Interest income on loans, including fees, increased primarily due to a $37.8 million increase in average commercial loan balances, and a 21 basis points increase in the average yield on commercial loans, compared to the prior quarter. Interest income on commercial loans for the first quarter of 2024 included $0.3 million in deferred interest recognized on the payoff of a nonaccrual commercial real estate loan. Average balances of consumer and residential mortgage loans decreased by $2.9 million and $1.7 million respectively, while the average yield on these loan categories each increased 15 basis points, compared to the prior quarter. The Corporation continued to see demand for new commercial originations, while demand for new consumer and residential mortgage loans remained subdued due to current market conditions. Interest expense on deposits increased primarily due to an increase of 16 basis points in the average interest rate paid on interest-bearing deposits, and growth in average balances of customer and brokered deposits. Average balances of total customer interest-bearing deposits increased $21.6 million and average balances of brokered deposits increased $17.4 million compared to the prior quarter. The cost of customer time deposits increased 21 basis points compared to the prior quarter, and comprised 20.1% of average total deposits as of March 31, 2024, compared to 18.7% as of December 31, 2023. A continuation of CD campaigns was primarily responsible for the increase in average balances and the cost of customer time deposits during the current quarter. Pressures on pricing continued during the current quarter due to both competition and market expectations, while the shift in deposit mix towards higher cost accounts softened in the current quarter, compared to the shift experienced throughout 2022 and 2023. The increase in interest expense on borrowed funds was due primarily to an increase in average balances of borrowed funds of $19.9 million in the current quarter, compared to the prior quarter, due to a $50.0 million advance from the FRB Bank Term Funding Program (BTFP) at an interest rate of 4.91%. The advance is due in January 2025 and is prepayable at any time prior to maturity, without prepayment penalty. Average balances of FHLBNY overnight advances decreased $18.5 million compared to the prior quarter, primarily due to the utilization of the lower cost BTFP advance. The average cost of total borrowings for the current quarter was 5.15%, compared to 5.52% in the prior quarter, a decrease of 37 basis points. Fully taxable equivalent net interest margin was 2.73% in the current quarter, compared to 2.69% in the prior quarter. Net interest margin expansion in the current quarter was primarily attributable to $0.3 million in interest income recognized on the payoff of a nonaccrual commercial loan. Average balances of interest-earning assets increased $26.4 million in the current quarter, compared to the prior quarter, and the average yield on interest-earning assets increased 20 basis points, compared to the prior quarter, to 4.70%. For the current quarter, the average cost of interest- bearing liabilities increased 17 basis points, compared to the prior quarter, to 2.85%. Provision for Credit Losses: Provision for credit losses decreased $4.3 million during the current quarter, compared to the prior quarter. The decrease in the current quarter was primarily due to the annual review and update of the loss drivers used in the Bank's CECL model, $0.3 million in paydowns on loans analyzed on an individual basis which have specific reserve allocations, and continued favorable FOMC forecasts for unemployment and GDP growth. The Bank's updated loss drivers resulted in lower loss experience over the historical look back period, however the economic factors used did not change as a result of these updates. Provision for credit losses in the fourth quarter of 2023 was primarily attributable to a $0.9 million specific allocation on a commercial real estate relationship, a decline in prepayment assumptions, and loan growth. Non-Interest Income: Non-interest income for the first quarter of 2024 was $5.7 million, compared to $5.9 million for the prior quarter, a decrease of $0.2 million, or 3.4%. The decrease was driven primarily by decreases of $0.1 million each in service charges on deposit accounts, interchange revenue from debit card transactions, and the change in fair value of equity investments, partially offset by a $0.1 million increase in other non-interest income. The decrease in service charges on deposit accounts was primarily attributable to a decrease in NSF activity in the current quarter, compared to the prior quarter. The decrease in interchange revenue on debit card transactions was primarily attributable to greater transactional volume in the prior quarter, compared to the current quarter. The decrease in the change in fair value of equity investments was primarily attributable to disbursements related to the Corporation's deferred compensation plan. The increase in other non-interest income was primarily attributable to the receipt of Mastercard incentives in the current quarter. Non-Interest Expense: Non-interest expense for the first quarter of 2024 was $16.7 million, compared to $16.8 million for the prior quarter, a decrease of $0.1 million, or 0.8%. The decrease was driven primarily by a decrease of $0.7 million in other non-interest expense, partially offset by increases of $0.2 million in salaries and wages, $0.2 million in pension and other employee benefits, $0.1 million in marketing and advertising expenses, and $0.1 million in other real estate owned expenses. The decrease in other non-interest expense in the current quarter, compared to the prior quarter, was primarily due to decreases in expenses across a majority of included expense categories, including non-loan charge offs and charitable contributions. Salaries and wages increased in the current quarter compared to the prior quarter primarily due to increases in expenses related to the Corporation's reward program and base wages. The increase in pension and other employee benefits was primarily due to an increase in payroll tax expense in the current quarter, compared to the prior quarter. The increase in marketing and advertising expense was primarily related to promotion of the Corporation's 190th anniversary checking account campaign, a new CD campaign, as well as resumed marketing and advertising efforts overall, compared to the prior quarter. The increase in other real estate owned expenses was primarily due to gains on the transfer of two properties to OREO in the prior period. Income Tax Expense: Income tax expense for the first quarter of 2024 was $2.0 million, compared to $0.8 million for the prior quarter, an increase of $1.2 million. The effective tax rate for the current quarter increased to 22.4% from 18.1% in the prior quarter. The increase in income tax expense was primarily attributable to an increase in pretax income. 1st Quarter 2024 vs 1st Quarter 2023 Net Interest Income: Net interest income for the first quarter of 2024 totaled $18.1 million compared to $19.9 million for the same period in the prior year, a decrease of $1.8 million, or 8.8%, driven primarily by increases of $6.8 million in interest expense on deposits and $0.1 million in interest expense on borrowed funds, offset by increases of $4.9 million in interest income on loans, including fees, and $0.1 million in interest-earning deposits. Interest income on taxable securities was comparable between the first quarters of 2023 and 2024. The increase in interest expense on deposits was due primarily to a 141 basis points increase in the average interest rate paid on interest-bearing deposits, which included brokered deposits, and an increase of $134.2 million in the average balance of customer interest-bearing deposits. The average balance of brokered deposits increased $8.3 million, and the average interest rate paid on brokered deposits increased 50 basis points, compared to the same period in the prior year. The increase in interest expense on borrowed funds was primarily due to a 24 basis points increase in the average interest rate paid and a $2.4 million increase in the average balances of borrowed funds. Changes in the composition of borrowed funds reflects the Corporation's shift to the lower cost funding source of the BTFP, partially replacing relatively higher cost FHLBNY overnight advances. The average balances of FHLBNY overnight advances decreased $35.8 million compared to the same period in the prior year, and the average interest rate paid on FHLBNY overnight advances increased 55 basis points. Interest income on loans, including fees, increased primarily due to a $145.9 million increase in average commercial loan balances, compared to the same period in the prior year, and an increase of 57 basis points in the average yield on commercial loans between these periods, due to the rising interest rate environment. Average consumer loan balances, supported by growth in the indirect auto portfolio, increased $1.9 million, and the average yield on consumer loans increased 90 basis points, primarily due to originations of higher rate indirect auto loans, and interest rate increases on variable rate home equity loans. Average balances of residential mortgage loans decreased $7.9 million compared to the same period in the prior year, due to adverse conditions for borrowers in the residential real estate market, while the average yield on residential mortgage loans increased 23 basis points compared to the same period in the prior year. Interest and dividend income on taxable securities was comparable between the first quarters of 2023 and 2024. During this period, the average yield on taxable securities increased 17 basis points, due to an increase in interest rates on variable rate securities. This increase was offset by $54.4 million in paydowns and maturities on securities held in the portfolio between the first quarters of 2023 and 2024. Fully taxable equivalent net interest margin was 2.73% for the first quarter 2024, compared to 3.14% for the same period in the prior year. The Corporation exhibited a greater level of liability sensitivity throughout 2023 and early 2024, after reaching an inflection point in the fourth quarter of 2022. Average interest-earning assets increased $88.4 million for the first quarter of 2024, compared to the same period in the prior year. The average yield on interest-earning assets increased 58 basis points to 4.70%, while the average cost of interest-bearing liabilities increased 136 basis points to 2.85%, for the first quarter of 2024, compared to the same period in the prior year, due to the rising interest rate environment, as well as a shift in the overall deposit mix to higher-cost account types, compared to the same period in the prior year. Provision for Credit Losses: Provision for credit losses decreased $2.3 million for the first quarter of 2024, compared to the same period in the prior year. The decrease in provision was primarily attributable to the annual review and update of the loss drivers used in the Bank's CECL model, favorable changes in economic forecasts, and a comparatively smaller increase in loan volume during the current period. The Bank's updated loss drivers resulted in lower loss experience over the historical look back period, however the economic factors used did not change as a result of these updates. FOMC forecasts improved substantially between the first quarters of 2023 and 2024. Forecasted year-end 2023 U.S. unemployment was projected at 4.5% as of March 2023, and year-end 2024 unemployment was projected at 4.0% as of March 2024. U.S annual GDP growth was projected at 0.4% for year-end 2023 as of March 2023, and year-end 2024 U.S. annual GDP growth was projected at 2.1% as of March 2024. 2023 FOMC projections reflected uncertainty concerning the impact of interest rate increases in the wake of multiple regional banks being placed into receivership prior to the FOMC's March 2023 meeting. Loan growth in the first quarter of 2024 totaled $30.9 million, compared to $44.3 million in the first quarter of 2023, resulting in lower volume-related provisioning in the current period. Non-Interest Income: Non-interest income for the first quarter of 2024 was $5.7 million compared to $5.4 million for the same period in the prior year, an increase of $0.3 million, or 5.6%. The increase was primarily driven by increases of $0.1 million in both wealth management group fee income other non-interest income. The increase in wealth management group fee income was primarily attributable to an increase in assets under management in the first quarter of the current year, compared to the same period in the prior year. The increase in other non-interest income was primarily related to gains on the transfer of two properties to OREO in the current period. Non-Interest Expense: Non-interest expense for the first quarter of 2024 was $16.7 million compared to $15.8 million for the same period in the prior year, an increase of $0.9 million, or 5.7%. The increase was primarily driven by increases of $0.4 million in pension and other employee benefits, $0.2 million in salaries and wages, $0.2 million in data processing, and $0.1 million in professional services, offset by a decrease of $0.2 million in other non-interest expense. The increase in pension and other employee benefits for the current quarter was primarily attributable to an increase in employee healthcare expense, compared to the same period in the prior year. Salaries and wages increased in the current quarter, compared to the same period in the prior year, primarily due to increases in base wages, severance expense, and an increase in the market value of the Corporation's deferred compensation plan. The increase in data processing expense in the current quarter was primarily attributable to increases in software related expenses, compared to the same period in the prior year. Professional services increased in the current quarter, compared to the same period in the prior year, primarily due to outsourced services related to the realignment of certain back office functions, new strategic consulting arrangements, and fee increases. The decrease in other non-interest expense was primarily attributable to decreases across a majority of included expense categories in the current quarter, compared to the same period in the prior year. Income Tax Expense:Income tax expense of $2.0 million for the first quarter of 2024 was comparable with the first quarter of 2023. The effective tax rate for the current quarter was 22.4%, compared to 21.5% for the same period in the prior year. Asset Quality Non-performing loans totaled $7.8 million as of March 31, 2024, or 0.39% of total loans, compared to $10.4 million, or 0.53% of total loans as of December 31, 2023. The decrease in non-performing loans was primarily attributable to the payoff of a nonaccrual commercial real estate loan totaling $1.9 million, as well as $0.5 million in paydown activity on other nonaccrual commercial loans, inclusive of $0.2 million in paydowns relating to the commercial real estate relationship for which a $0.9 million specific reserve allocation was made in the prior quarter. Non-performing assets, which are comprised of non-performing loans and other real estate owned, were $8.4 million, or 0.30% of total assets, as of March 31, 2024, compared to $10.7 million, or 0.40% of total assets, as of December 31, 2023. The decrease in non-performing assets can be attributed to the decrease in non-performing loans. Total loan delinquencies as of March 31, 2024 declined compared to December 31, 2023, primarily attributable to a decline in consumer loan delinquency rates during the period, consistent with the Corporation's past experience of seasonal fluctuations, particularly for auto loans. Commercial loan and residential mortgage delinquencies remained stable as of March 31, 2024, compared to December 31, 2023, and management continues to monitor the impacts that elevated interest rates may have on its borrower base. Annualized net charge-offs to total average loans for the first quarter of 2024 were 0.04%, compared to 0.05% for the year ended December 31, 2023. Annualized consumer net charge-offs for the period ended March 31, 2024 were 0.30% of average consumer loans, primarily concentrated in auto loans, while commercial loans and residential mortgage loans each had net recoveries during the period ended March 31, 2024. The allowance for credit losses was $20.5 million as of March 31, 2024, and $22.5 million as of December 31, 2023. The allowance for credit losses on unfunded commitments, a component of other liabilities, was $0.7 million as of March 31, 2024 and $0.9 million as of December 31, 2023. The decrease in the allowance for credit losses was primarily attributable to the aforementioned annual review and update to the loss drivers which the Bank's CECL model is based upon. Loss drivers are the economic variables used to make forward looking credit loss projections by determining correlations between changes in the underlying economic variables and changes in historical loss experience over a predefined historical period. Peer loss experience is utilized to supplement the Bank's own historical loss experience. Recalibration of the loss drivers resulted in a decline in the baseline loss rates which the model utilizes. Additionally, FOMC projections for the economic variables used in the model improved between December 31, 2023 and March 31, 2024. Projected year-end 2024 U.S. unemployment improved from 4.1% in December 2023 to 4.0% in March 2024. Actual unemployment rates between January 2022 and March 2024 have remained at or below 4.0% for the longest continuous duration since the 49-month period ended February 1970, keeping projection levels below historical norms. Projected year-end 2024 U.S annual GDP growth improved from 1.4% in December 2023 to 2.1% in March 2024. The allowance for credit losses was 261.28% of non-performing loans as of March 31, 2024 and 216.28% as of December 31, 2023. The allowance for credit losses to total loans was 1.02% as of March 31, 2024 and 1.14% as of December 31,2023. Balance Sheet Activity Total assets were $2.785 billion as of March 31, 2024 compared to $2.711 billion as of December 31, 2023, an increase of $74.4 million, or 2.7%. The increase can mostly be attributed to increases of $58.0 million in cash and cash equivalents, $30.9 million in loans, net of deferred origination fees and costs, $2.6 million in accrued interest receivable and other assets, and a decrease of $2.0 million in the allowance for credit losses, offset by a decrease of $19.4 million in total investment securities. The increase in cash and cash equivalents was primarily due to increases of $51.3 million in total deposits, $50.0 million in advances from the Federal Reserve BTFP, and $11.9 million related to paydowns and maturities of securities in the available for sale portfolio, offset by an increase of $30.9 million in loans, net of deferred origination fees and costs, and a decrease of $31.9 million in FHLBNY overnight advances. The increase in loans, net of deferred origination fees and costs, was concentrated in the commercial loan portfolio, which increased $38.1 million, or 2.7%. Consumer loans decreased $6.4 million, or 2.1%, primarily driven by weaker demand for originations in the indirect auto segment, and the relatively fast turnover rate of the portfolio. The residential mortgage portfolio decreased $0.7 million, or 0.3%, as the Corporation continued to elect to sell a greater proportion of originations into the secondary market, and constrained residential real estate market conditions impacted demand. Total investment securities decreased primarily due to a decrease of $18.0 million in securities available for sale. Net paydowns and maturities on securities available for sale for the first quarter totaled $11.9 million, primarily attributable to paydowns on mortgage-backed securities and SBA pooled-loan securities. The market value of securities available for sale declined $5.5 million, due to unfavorable changes in interest rates during the quarter. FHLB stock decreased $1.4 million due to lower FHLBNY overnight advance borrowing activity as of the end of the current quarter, compared to prior year-end. The increase in accrued interest receivable and other assets was primarily due to increases in interest rate swap assets of $1.3 million, due to an increase in the market value of swaps, and accrued interest receivable of $1.2 million, primarily on loans. Total liabilities were $2.588 billion as of March 31, 2024 compared to $2.515 billion as of December 31, 2023, an increase of $72.5 million, or 2.9%. The increase in total liabilities can primarily be attributed to increases of $51.3 million in deposits, $18.0 million in advances and other debt, and $2.8 million in accrued interest payable and other liabilities. Total deposits increased $51.3 million or 2.1%, compared to prior year-end, primarily due to increases of $24.0 million in interest-bearing demand deposits, or 8.2%, and $17.1 million in total time deposits, or 2.8%, which include customer time deposits and brokered deposits. Customer time deposits increased $33.9 million, while brokered deposits decreased $16.8 million. Additionally, money market deposits and non-interest bearing demand deposits increased $7.6 million and $3.2 million respectively, compared to prior year-end. Savings deposits decreased by $0.6 million compared to prior year-end. Non-interest bearing deposits comprised 26.5% and 26.9% of total deposits as of March 31, 2024 and December 31, 2023 respectively. The increase in advances and other debt can primarily be attributed to a $50.0 million advance from the Federal Reserve, as the Corporation took advantage of lower interest rates offered by the BTFP, offset by a decrease of $31.9 million in FHLBNY overnight advances. The increase in accrued interest payable and other liabilities was primarily due to increases in the interest rate swap liability of $1.2 million, primarily due to an increase in the market value of swaps, and accrued interest payable of $1.9 million, primarily on deposits. Total shareholders' equity was $197.1 million as of March 31, 2024, compared to $195.2 million as of December 31, 2023, an increase of $1.9 million, or 1.0%, primarily driven by an increase of $5.6 million in retained earnings, offset by an increase of $4.1 million in accumulated other comprehensive loss, as a result of increases in interest rates. The increase in retained earnings was due primarily to net income of $7.1 million, offset by dividends declared of $1.5 million. The total equity to total assets ratio was 7.08% as of March 31, 2024, compared to 7.20% as of December 31, 2023. The tangible equity to tangible assets ratio was 6.34% as of March 31, 2024 compared to 6.45% as of December 31, 20231. Book value per share increased to $41.35 as of March 31, 2024 from $41.07 as of December 31, 2023. As of March 31, 2024, the Bank's capital ratios were in excess of those required to be considered well-capitalized under the regulatory framework for prompt corrective action. 1 See the GAAP to Non-GAAP reconciliations Liquidity The Corporation uses a variety of resources to manage its liquidity, and management believes it has the necessary liquidity to allow for flexibility in meeting its various business 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 $250,000 or greater, brokered deposits, FHLBNY advances, and FRB Bank Term Funding Program (BTFP) advances. No new borrowings may be made under the BTFP after March 11, 2024. As of March 31, 2024, the Corporation's cash and cash equivalents balance was $94.9 million. The Corporation also maintains an investment portfolio of securities available for sale, comprised primarily of US Government treasury securities, SBA loan pools, 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 March 31, 2024, the Corporation's investment in securities available for sale was $566.0 million, $240.3 million of which was not pledged as collateral. Additionally, as of March 31, 2024, the Bank's overnight advance line capacity at the Federal Home Loan Bank of New York was $231.0 million, of which $54.1 million in US Government treasury securities was considered unpledged. None of the available capacity at the FHLB was utilized as of March 31, 2024. Borrowings may be used on a short-term basis for liquidity purposes or on a long-term basis to fund asset growth. In January 2024, the Corporation utilized the BTFP with an advance of $50.0 million, maturing in January 2025, however BTFP advances may be prepaid at any time without prepayment penalty. As of March 31, 2024, uninsured deposits totaled $689.4 million, or 27.8% of total deposits, including $190.7 million of municipal deposits that were collateralized by pledged assets. As of December 31, 2023, uninsured deposits totaled $655.7 million, or 27.0% of total deposits, including $152.9 million of municipal deposits that were collateralized by pledged assets. Due to their fluidity, the Corporation closely monitors uninsured deposit levels when considering liquidity management strategies. The Corporation considers brokered deposits to be an element of its deposit strategy, and anticipates it will continue utilizing brokered deposits as a secondary source of funding in support of growth. As of March 31, 2024, the Corporation has entered into brokered deposit arrangements with multiple brokers. As of March 31, 2024, brokered deposits carried terms between 2 and 48 months, with staggered maturities, totaling $126.0 million. Excluding brokered deposits, total deposits increased $68.1 million compared to December 31, 2023. Other Items The market value of total assets under management or administration in our Wealth Management Group was $2.350 billion as of March 31, 2024, including $390.2 million of assets under management or administration for the Corporation, compared to $2.242 billion as of December 31, 2023, including $381.3 million of assets under management or administration for the Corporation, an increase of $108.0 million, or 4.8%, due primarily to improvements in equity markets during the first quarter of 2024. As previously announced on January 8, 2021, the Corporation announced that the Board of Directors approved a stock repurchase program. Under the 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 Exchange Act of 1934. As of March 31, 2024, a total of 49,184 shares of common stock at a total cost of $2.0 million were repurchased by the Corporation under its share repurchase program. No shares were repurchased in the first quarter of 2024. The weighted average cost was $40.42 per share repurchased. Remaining buyback authority under the share repurchase program was 200,816 shares as of March 31, 2024. About Chemung Financial Corporation Chemung Financial Corporation is a $2.8 billion financial services holding company headquartered in Elmira, New York and operates 31 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. This press release may be found at: www.chemungcanal.com under 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, inflation, cyber security risks, difficulties in managing the Corporation's growth, competition, changes in law or the regulatory environment, and changes in general business and economic trends. Information concerning these and other factors, including Risk Factors, can be found in the Corporation's periodic filings with the Securities and Exchange Commission ("SEC"), including the 2023 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 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 Corporation   Consolidated Balance Sheets (Unaudited)     March 31, Dec. 31, Sept. 30, June 30, March 31, (in thousands)     2024     2023     2023     2023     2023   ASSETS                                 Cash and due from financial institutions   $         22,984   $         22,247   $         52,563   $         25,499   $         25,109   Interest-earning deposits in other financial institutions     71,878     14,600     23,017     28,727     9,532   Total cash and cash equivalents     94,862     36,847     75,580     54,226     34,641   Equity investments     3,093     3,046     2,811     2,841     2,949   Securities available for sale     566,028     583,993     569,004     604,313     626,055   Securities held to maturity     785     785     1,804     1,804     1,932   FHLB and FRB stock, at cost     4,071     5,498     4,053     6,328     7,913   Total investment securities     570,884     590,276     574,861     612,445     635,900   Commercial     1,425,437     1,387,321     1,341,017     1,302,333     1,280,804   Mortgage     277,246     277,992     281,361     285,084     285,944   Consumer     300,927     307,351     308,310     306,489     306,953   Loans, net of deferred loan fees     2,003,610     1,972,664     1,930,688     1,893,906     1,873,701   Allowance for credit losses     (20,471 )   (22,517 )   (20,252 )   (20,172 )   (20,075 ) Loans, net     1,983,139     1,950,147     1,910,436     1,873,734     1,853,626   Loans held for sale     96     —     —     785     —   Premises and equipment, net     14,183     14,571     15,036     15,496     15,867   Operating lease right-of-use assets     6,018     5,648     5,850     6,050     6,250   Goodwill     21,824     21,824     21,824     21,824     21,824   Accrued interest receivable and other assets     90,791     88,170     101,436     87,272     83,126   Total assets   $ 2,784,890   $ 2,710,529   $ 2,707,834   $ 2,674,673   $ 2,654,183   LIABILITIES AND SHAREHOLDERS' EQUITY                                 Deposits:             Non-interest-bearing demand deposits   $ 656,330   $ 653,166   $ 683,348   $ 671,643   $ 690,596   Interest-bearing demand deposits     315,154     291,138     310,885     273,380     287,242   Money market accounts     631,350     623,714     626,256     629,985     631,052   Savings deposits     248,578     249,144     261,822     269,700     271,445   Time deposits     629,360     612,265     591,188     545,486     452,094   Total deposits     2,480,772     2,429,427     2,473,499     2,390,194     2,332,429   Advances and other debt     52,979     34,970     3,120     53,949     93,328   Operating lease liabilities     6,197     5,827     6,028     6,228     6,427   Accrued interest payable and other liabilities     47,814     45,064     55,123     46,876     44,658   Total liabilities     2,587,762     2,515,288     2,537,770     2,497,247     2,476,842   Shareholders' equity             Common stock     53     53     53     53     53   Additional paid-in capital     47,794     47,773     47,974     47,740     47,387   Retained earnings     235,506     229,930     227,596     221,412     216,593   Treasury stock, at cost     (16,147 )   (16,502 )   (16,880 )   (17,033 )   (17,219 ) Accumulated other comprehensive loss     (70,078 )   (66,013 )   (88,679 )   (74,746 )   (69,473 ) Total shareholders' equity     197,128     195,241     170,064     177,426     177,341   Total liabilities and shareholders' equity   $ 2,784,890   $ 2,710,529   $ 2,707,834   $ 2,674,673   $ 2,654,183   Period-end shares outstanding     4,768     4,754     4,738     4,732     4,726            Chemung Financial CorporationConsolidated Statements of Income (Unaudited)                       Three Months EndedMarch 31,       Percent (in thousands, except per share data)   2024     2023   Change Interest and dividend income:Loans, including fees $    27,198   $    22,289   22.0   Taxable securities   3,557     3,583   (0.7 ) Tax exempt securities   258     261   (1.1 ) Interest-earning deposits   206     97   112.4   Total interest and dividend income   31,219     26,230   19.0   Interest expense:Deposits   12,145     5,387   125.5   Borrowed funds   985     896   9.9   Total interest expense   13,130     6,283   109.0   Net interest income   18,089     19,947   (9.3 ) Provision (credit) for credit losses   (2,040 )   277   (836.5 ) Net interest income after provision for credit losses   20,129