ITEM 1. BUSINESS
(a) General development of business
Chemung Financial Corporation (Corporation) was incorporated on January 2, 1985, under the laws of the State of New York. The Corporation was organized for the purpose of acquiring a majority holding of Chemung Canal Trust Company (Bank). The Bank was established in 1833 under the name Chemung Canal Bank, and was subsequently granted a New York State bank charter in 1895. In 1902, the Bank was reorganized as a New York State trust company under the name Elmira Trust Company, which name was changed to Chemung Canal Trust Company in 1903.
On June 1, 1985, after the approval by the New York State Superintendent of Banks and the Board of Governors of the Federal Reserve System of the Plan of Acquisition and holding company application, the Bank became a wholly-owned subsidiary of the Corporation. There have been no material changes in the mode of conducting business of either the Corporation or the Bank since the acquisition of the Bank by the Corporation.
The Corporation is subject to applicable federal laws relating to bank holding companies as well as federal securities laws, State Corporation Law and State Banking Law.
(b) Financial information about industry segments
The Corporation and the Bank are engaged only in banking and bank-related businesses. The Selected Financial Data Exhibit included in "Management's Discussion and Analysis of Financial Condition and Results of Operation" ("MD&A") for the Corporation's Annual Report to Shareholders for the year ended December 31, 1995, sets forth financial information with respect to bank-related industry segments. The MD&A including the Selected Financial Data Exhibit is incorporated herein by reference.
(c) Narrative description of business
Business
The Bank is a New York State chartered, independent commercial bank which engages in full-service commercial and consumer banking and trust business. The Bank's services include accepting time, demand and savings deposits including NOW accounts, Super NOW accounts, regular savings accounts, insured money market accounts, investment certificates, fixed-rate certificates of deposit and club accounts. Its services also include making secured and unsecured commercial and consumer loans, financing commercial transactions either directly or participating with regional industrial development and community lending corporations, making commercial, residential and home equity mortgage loans, revolving credit loans with overdraft checking protection, small business loans and student loans. Additional services include renting of safe deposit facilities, selling uninsured annuity and mutual fund investment products, and the use of networked automated teller facilities.
Trust services provided by the Bank include services as executor, trustee under wills and agreements, guardian and custodian and trustee and agent for pension, profit-sharing and other employee benefit trusts as well as various investment, pension, estate planning and employee benefit administrative services.
For additional information which focuses on the results of operation of the Corporation and the Bank, see Management's Discussion and Analysis of Financial Condition and Results of Operations, incorporated herein by reference.
There have been no material changes in the manner of doing business by the Corporation or the Bank during the fiscal year ended December 31, 1995.
Competition
Six (6) of the Bank's thirteen (13) full-service branches, in addition to the main office, are located in Chemung County. The other seven (7) full-service branches are located in the adjacent counties of Schuyler, Steuben, and Tioga. All facilities are located in New York State.
Within these market areas, the Bank encounters intense competition in its banking business from several other financial institutions offering comparable products. These competitors include other commercial banks (both locally-based independent banks and local offices of regional and major metropolitan-based banks), as well as stock savings banks and credit unions. In addition, the Bank experiences competition in marketing some of its services from local operations of insurance companies, brokerage firms and retail financial service businesses.
Dependence Upon a Single Customer
Neither the Corporation nor the Bank is dependent upon a single or limited number of customers.
Research and Development
Expenditures for research and development were immaterial for the years 1995, 1994, and 1993.
Employees
As of December 31, 1995, the Bank employed 281 persons on a full-time equivalent basis.
(d) Financial information about foreign and domestic operations and export sales
Neither the Corporation nor the Bank relies on foreign sources of funds or income.
(e) Statistical disclosure by bank holding companies
The following disclosures present summarized statistical data covering the Corporation and the Bank.
The following table sets forth for the periods indicated, a summary of the changes in interest earned and interest paid resulting from changes in volume and changes in rates:
Investment Portfolio
The following table sets forth the carrying amount of investment securities at the dates indicated:
Investment Portfolio (continued)
The following tables set forth the maturities of investment securities at December 31, 1995 and the weighted average yields of such securities (calculated on the basis of the cost and effective yields weighted for the scheduled maturity of each security). Federal tax equivalent adjustments have been made in calculating yields on municipal obligations.
Loan Portfolio
The following table shows the Corporation's loan distribution at the end of each of the last five years:
The following table shows the maturity of loans (excluding residential real estate mortgages and installment loans) outstanding as of December 31, 1995. Also provided are the amounts due after one year classified according to the sensitivity to changes in interest rates:
Nonaccrual and Past Due Loans
The following table summarizes the Corporation's nonaccrual and past due loans:
Information with respect to nonaccrual loans at December 31, 1995, 1994 and 1993 is as follows:
Potential Problem Loans
At December 31, 1995, the Corporation has no commercial loans for which payments are presently current but the borrowers are currently experiencing severe financial difficulties. Those loans are subject to constant management attention and their classification is reviewed by the Board of Directors at least semi-annually.
Loan Concentrations
At December 31, 1995, the Corporation has no loan concentrations to borrowers engaged in the same or similar industries that exceed 10% of total loans.
Other Interest-Bearing Assets
At December 31, 1995, the Corporation has no interest-bearing assets other than loans that meet the nonaccrual, past due, restructured or potential problem loan criteria.
Summary of Loan Experience
This table summarizes the Corporation's loan loss experience for each year in the five-year period ended December 31, 1995:
This table summarizes the Corporation's allocation of the loan loss reserve for each year in the five-year period ended December 31, 1995.
Deposits
The average daily amounts of deposits and rates paid on such deposits are summarized for the periods indicated in the following table:
Maturities of certificates of deposit $100,000 or more outstanding at December 31 are summarized as follows:
There were no other time deposits of $100,000 or more.
Return on Equity and Assets
The following table shows consolidated operating and capital ratios of the Corporation for each of the last three years:
Short-Term Borrowings
For each of the three years in the period ended December 31, 1995, the average outstanding balance of short-term borrowings did not exceed 30% of shareholders' equity.
ITEM 2.
ITEM 2. PROPERTIES
The Corporation and the Bank currently conduct all their business activities from the Bank's main office, thirteen (13) branch locations situated in a four-county area, owned office space adjacent to the Bank's main office, and five (5) off-site automated teller facilities (ATMs), three (3) of which are located on leased property. The main office is a six-story structure located at One Chemung Canal Plaza, Elmira, New York, in the downtown business district. The main office consists of approximately 62,000 square feet of space entirely occupied by the Bank. The combined square footage of the thirteen (13) branch banking facilities totals approximately 46,350 square feet. The office building adjacent to the main office was acquired during 1995 and consists of approximately 18,213 square feet of which 8,202 square feet are occupied by operating departments of the Bank and 10,011 square feet are leased. The leased automated teller facility spaces total approximately 150 square feet.
The Bank holds two (2) of its branch facilities (Arnot Mall Office and Bath Office) and three (3) automated teller facilities (Elmira/Corning Regional Airport, Elmira College and WalMart Store) under lease arrangements; and owns the rest of its offices including the main office and the adjacent office building.
The Corporation holds no real estate in its own name.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
Neither the Corporation nor its subsidiary are a party to any material pending legal proceeding required to be disclosed under this item.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
There were no matters submitted to a vote of shareholders during the fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANTS SECURITIES AND RELATED SHAREHOLDER MATTERS
The Corporation's stock is traded in the over-the-counter market. Incorporated herein by reference to portions of the Corporation's Annual Report to Shareholders for the year ended December 31, 1995, are the quarterly market price ranges for the Corporation's stock for the past three (3) years, based upon actual transactions as reported by securities brokerage firms which maintain a market or conduct trades in the Corporation's stock and other transactions known by the Corporation's management. Also incorporated herein by reference to a part of the Corporation's 1995 Annual Report are the dividends paid by the Corporation for each quarter of the last three (3) years. The number of shareholders of record on February 29, 1996 was 834.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The Selected Financial Data Exhibit included in Management's Discussion and Analysis of Financial Condition and Results of Operations and presented in the Corporation's Annual Report to Shareholders for the year ended December 31, 1995 is incorporated herein by reference.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of Operations presented in the Corporation's Annual Report to Shareholders for the year ended December 31, 1995 is incorporated herein by reference.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Independent Auditors' Report and consolidated financial statements as presented in the Corporation's Annual Report to Shareholders for the year ended December 31, 1995 are incorporated herein by reference.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF THE REGISTRANT
The information set forth under the captions "Election of Directors" and "Executive Officers" and the Section 16(a) disclosure set forth under the caption "Security Ownership of Management", as presented in the registrant's Proxy Statement, dated March 5, 1996, relating to the Annual Meeting of Shareholders to be held on April 2, 1996, is incorporated herein by reference.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the captions "Directors Compensation"; "Directors' Personnel Committee Report on Executive Compensation"; " Comparative Return Performance Graph"; "Executive Compensation"; "Retirement Plan"; "Profit- Sharing, Savings and Investment Plan"; "Management Incentive Plan"; "Employment Contracts"; and "Other Compensation Agreements", presented in the registrant's Proxy Statement, dated March 5, 1996, relating to the Annual Meeting of Shareholders to be held on April 2, 1996, is incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the captions "Security Ownership of Certain Beneficial Owners" and "Security Ownership of Management", presented in the registrant's Proxy Statement, dated March 5, 1996, relating to the Annual Meeting of Shareholders to be held on April 2, 1996, is incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the caption "Certain Transactions", presented in the registrant's Proxy Statement, dated March 5, 1996, relating to the Annual Meeting of Shareholders to be held on April 2, 1996, is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) List of Financial Statements and Independent Auditors' Report
The following consolidated financial statements and Independent Auditors' Report of Chemung Financial Corporation and subsidiary, included in the Annual Report of the registrant to its shareholders as of December 31, 1995 and 1994, and for each of the years in the three-year period ended December 31, 1995 are incorporated by reference in Item 8:
- Independent Auditors' Report - Consolidated Balance Sheets - December 31, 1995 and 1994 - Consolidated Statements of Income - Years ended December 31, 1995, 1994 and 1993 - Consolidated Statements of Shareholders' Equity - Years ended December 31, 1995, 1994 and 1993 - Consolidated Statements of Cash Flows - Years ended December 31, 1995, 1994 and 1993 - Notes to Consolidated Financial Statements - December 31, 1995 and
(2) List of Financial Schedules
Schedules to the consolidated financial statements required by Article 9 of Regulation S-X are not required under the related instructions or are inapplicable, and therefore have been omitted.
(3) Listing of Exhibits
Exhibit (3.1) -- Certificate of Incorporation is filed as Exhibit 3.1 to Registrant's Registration Statement on Form S-14, Registration No. 2-95743, and is incorporated herein by reference.
-- Certificate of Amendment to the Certificate of Incorporation, filed with the Secretary of State of New York on April 1, 1988, is incorporated herein by reference to Exhibit A of the Registrant's Form 10-K for the year ended December 31, 1988, File No. 0-13888.
(3.2) -- Bylaws of the Registrant, as amended September 13, 1995, are incorporated herein by reference to Exhibit A of the Registrant's Form 10-Q for the period ended September 30, 1995, File No. 0-13888.
Exhibit (13) -- Annual Report to Shareholders for the year ended December 31, 1995.
-- Table of Quarterly Market Price Ranges. EXHIBIT A
-- Table of Dividends Paid. EXHIBIT B
-- Management's Discussion and Analysis of EXHIBIT C Financial Condition and Results of Operations including the Selected Financial Data Exhibit.
-- Consolidated Financial Statements and EXHIBIT D Independent Auditors' Report.
Exhibit (21) -- Subsidiaries of the registrant. EXHIBIT E
Exhibit (22) -- Registrant's Notice of Annual Meeting, EXHIBIT F Proxy Statement dated March 5, 1996, and Proxy Form
Exhibit (27) -- Financial Disclosure Schedule (EDGAR version only)
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the three months ended December 31, 1995.
(c) Exhibits
The response to this portion of Item 14 is submitted as a separate section of this report.
(d) Financial Statement Schedules
None
ANNUAL REPORT ON FORM 10-K
ITEM 14(c)
CERTAIN EXHIBITS
YEAR ENDED DECEMBER 31, 1995
CHEMUNG FINANCIAL CORPORATION
ELMIRA, NEW YORK ____________________________________
EXHIBIT LISTING EXHIBIT
EXHIBIT 13 Annual Report To Shareholders For The Year Ended December 31, 1995
A - Table of Quarterly Market Price Ranges
B - Table of Dividends Paid
C - Management's Discussion and Analysis of Financial Condition and Results of Operations Including the Selected Financial Data Exhibit
D - Consolidated Financial Statements and Independent Auditors' Report
EXHIBIT 21 E - Subsidiaries of the Registrant EXHIBIT 22 F - Notice of Annual Meeting, Proxy Statement dated March 5, 1996, and Proxy Form
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CHEMUNG FINANCIAL CORPORATION DATED: MARCH 13, 1996
By "signature" John W. Bennett Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been executed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date
"signature" Director 3/13/96 Robert E. Agan
"signature" Director, Chairman & 3/13/96 John W. Bennett Chief Executive Officer
Director Donald L. Brooks, Jr.
"signature" Director 3/13/96 David J. Dalrymple
"signature" Director 3/13/96 Robert H. Dalrymple
"signature" Director 3/13/96 Richard H. Evans
"signature" Director 3/13/96 Natalie B. Kuenkler
"signature" Director 3/13/96 Edward B. Hoffman
"signature" Director 3/13/96 Stephen M. Lounsberry III
 Signature Title Date
Director Boyd McDowell II
"signature" Director 3/13/96 Thomas K. Meier
"signature" Director 3/13/96 Ralph H. Meyer
Director John F. Potter
"signature" Director 3/13/96 Samuel J. Semel
"signature" Director 3/13/96 Charles M. Streeter, Jr.
"signature" Director 3/13/96 Richard W. Swan
"signature" Director 3/13/96 William A. Tryon
Director William C. Ughetta
"signature" Director, President & 3/13/96 Jan P. Updegraff Chief Operating Officer
"signature" Director 3/13/96 Nelson Mooers van den Blink
"signature" Treasurer and Principal 3/13/96 Accounting Officer
Attest
"signature" Secretary 3/13/96 Jerome F. Denton