Company Quick10K Filing
Quick10K
Chemung Financial
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$47.92 5 $232
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-05-15 Other Events, Exhibits
8-K 2019-05-15 Amend Bylaw, Exhibits
8-K 2019-05-09 Shareholder Vote, Regulation FD, Exhibits
8-K 2019-04-17 Earnings, Exhibits
8-K 2019-02-20 Other Events, Exhibits
8-K 2019-01-30 Regulation FD, Exhibits
8-K 2019-01-23 Earnings, Exhibits
8-K 2019-01-23 Earnings, Exhibits
8-K 2018-12-19 Officers, Exhibits
8-K 2018-11-14 Other Events, Exhibits
8-K 2018-11-07 Regulation FD, Exhibits
8-K 2018-10-18 Earnings, Exhibits
8-K 2018-08-15 Other Events, Exhibits
8-K 2018-07-18 Earnings, Exhibits
8-K 2018-06-15 Other Events
8-K 2018-05-16 Amend Bylaw, Other Events, Exhibits
8-K 2018-05-10 Officers, Shareholder Vote, Exhibits
8-K 2018-04-18 Earnings, Exhibits
8-K 2018-02-21 Officers, Exhibits
8-K 2018-02-15 Earnings, Exhibits
8-K 2018-01-08 Officers, Exhibits
8-K 2017-12-20 Amend Bylaw, Exhibits
XHR Xenia Hotels & Resorts 2,550
SNH Senior Housing Properties Trust 1,970
MTRN Materion 1,400
VRAY Viewray 820
PCB Pacific City Financial 277
EMCF Emclaire Financial 83
IMAGE Image International Group 0
NWBO Northwest Biotherapeutics 0
ESES Eco-Stim 0
PTCO Petrogas 0
CHMG 2019-03-31
Note 1 Summary of Significant Accounting Policies
Note 2 Earning per Common Share (Shares in Thousands)
Note 3 Securities
Note 4 Loans and Allowance for Loan Losses
Note 5 Fair Value
Note 6 Leases
Note 7 Goodwill and Intangible Assets
Note 8 Commitments and Contingencies
Note 9 Accumulated Other Comprehensive Loss
Note 10 Revenue From Contracts with Customers
Note 11 Components of Quarterly and Year To Date Net Periodic Benefit Costs
Note 12 Segment Reporting
Note 13 Stock Compensation
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3: Quantitative and Qualitative Disclosures About Market Risk
Item 4: Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 chmg10q03312019exh31-1.htm
EX-31.2 chmg10q03312019exh31-2.htm
EX-32.1 chmg10q03312019exh32-1.htm
EX-32.2 chmg10q03312019exh32-2.htm

Chemung Financial Earnings 2019-03-31

CHMG 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 chmg0331201910q.htm 10-Q Document


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
 
FORM 10-Q
 
 
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly period ended March 31, 2019
Or
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission File No. 000-13888
chemungfinanciallogo.jpg
CHEMUNG FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
 
New York
 
16-1237038
(State or other jurisdiction of incorporation or organization)
 
I.R.S. Employer Identification No.
 
One Chemung Canal Plaza, Elmira, NY
 
14901
(Address of principal executive offices)
 
(Zip Code)
 
(607) 737-3711 or (800) 836-3711
(Registrant's telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES:    X         NO:____
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
YES:    X        NO:____
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
[   ]
Non-accelerated filer
 
[   ]
Accelerated filer
[X]
Smaller reporting company
 
[X]
 
 
 
Emerging growth company
 
[   ]
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):
YES:____       NO:    X
 
 
 
 
 
 

The number of shares of the registrant's common stock, $.01 par value, outstanding on May 3, 2019 was 4,837,455.

Securities registered pursuant to Section 12(b) of the Exchange Act:
Common stock, par value $.01 per share
 
CHMG
 
Nasdaq Global Select Market
(Title of each class)
 
(Trading Symbol)
 
(Name of exchange on which registered)




CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES

INDEX


 
 
PAGES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2



GLOSSARY OF ABBREVIATIONS AND TERMS

To assist the reader the Corporation has provided the following list of commonly used abbreviations and terms included in the Notes to the Unaudited Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Abbreviations
AFS
Available for sale securities
ALCO
Asset-Liability Committee
AOCI
Accumulated Other Comprehensive Income
ASC
Accounting Standards Codification
ASU
Accounting Standards Update
Bank
Chemung Canal Trust Company
Basel III
The Third Basel Accord of the Basel Committee on Banking Supervision
Board of Directors
Board of Directors of Chemung Financial Corporation
BOLI
Bank Owned Life Insurance
CAM
Common area maintenance charges
CDARS
Certificate of Deposit Account Registry Service
CDO
Collateralized Debt Obligation
CECL
Current expected credit loss
CFS
CFS Group, Inc.
Corporation
Chemung Financial Corporation
CRM
Chemung Risk Management, Inc.
Dodd-Frank Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act
EPS
Earnings per share
Exchange Act
Securities Exchange Act of 1934
FASB
Financial Accounting Standards Board
FDIC
Federal Deposit Insurance Corporation
FHLBNY
Federal Home Loan Bank of New York
FRB
Board of Governors of the Federal Reserve System
FRBNY
Federal Reserve Bank of New York
Freddie Mac
Federal Home Loan Mortgage Corporation
GAAP
U.S. Generally Accepted Accounting Principles
HTM
Held to maturity securities
ICS
Insured Cash Sweep Service
IFRS
International Financial Reporting Standards
MD&A
Management’s Discussion and Analysis of Financial Condition and Results of Operations
NAICS
North American Industry Classification System
N/M
Not meaningful
OPEB
Other postemployment benefits
OREO
Other real estate owned
OTTI
Other-than-temporary impairment

3



PCI
Purchased credit impaired
Regulatory Relief Act
Economic Growth, Regulatory Relief, and Consumer Protection Act
ROA
Return on average assets
ROE
Return on average equity
RWA
Risk-weighted assets
SBA
Small Business Administration
SEC
Securities and Exchange Commission
Securities Act
Securities Act of 1933
Tax Act
Tax Cuts and Jobs Act of 2017
TDRs
Troubled debt restructurings
WMG
Wealth Management Group

Terms
Allowance for loan losses to total loans
Represents period-end allowance for loan losses divided by retained loans.
Assets under administration
Represents assets that are beneficially owned by clients and all investment decisions pertaining to these assets are also made by clients.
Assets under management
Represents assets that are managed on behalf of clients.
Basel III
A comprehensive set of reform measures designed to improve the regulation, supervision, and risk management within the banking sector. The reforms require banks to maintain proper leverage ratios and meet certain capital requirements.
Benefit obligation
Refers to the projected benefit obligation for pension plans and the accumulated postretirement benefit obligation for OPEB plans.
Capital Bank
Division of Chemung Canal Trust Company located in the “Capital Region” of New York State and includes the counties of Albany and Saratoga.
CDARS
Product involving a network of financial institutions that exchange certificates of deposits among members in order to ensure FDIC insurance coverage on customer deposits above the single institution limit.  Using a sophisticated matching system, funds are exchanged on a dollar-for-dollar basis, so that the equivalent of an original deposit comes back to the originating institution.
Captive insurance company
A company that provides risk-mitigation services for its parent company.
Collateralized debt obligation
A structured financial product that pools together cash flow-generating assets, such as mortgages, bonds, and loans.
Collateralized mortgage obligations
A type of mortgage-backed security with principal repayments organized according to their maturities and into different classes based on risk.  The mortgages serve as collateral and are organized into classes based on their risk profile.
Dodd-Frank Act
The Dodd-Frank Act was enacted on July 21, 2010 and significantly changed the bank regulatory landscape and has impacted and will continue to impact the lending, deposit, investment, trading and operating activities of financial institutions and their holding companies.  The Dodd-Frank Act requires various federal agencies to adopt a broad range of new rules and regulations, and to prepare various studies and reports for Congress.
Fully taxable equivalent basis
Income from tax-exempt loans and investment securities that have been increased by an amount equivalent to the taxes that would have been paid if this income were taxable at statutory rates; the corresponding income tax impact related to tax-exempt items is recorded within income tax expense.
GAAP
Accounting principles generally accepted in the United States of America.
Holding company
Consists of the operations for Chemung Financial Corporation (parent only).
ICS
Product involving a network of financial institutions that exchange interest-bearing money market deposits among members in order to ensure FDIC insurance coverage on customer deposits above the single institution limit.  Using a sophisticated matching system, funds are exchanged on a dollar-for-dollar basis, so that the equivalent of an original deposit comes back to the originating institution.
Loans held for sale
Residential real estate loans originated for sale on the secondary market with maturities from 15-30 years.

4



Long term lease obligation
An obligation extending beyond the current year, which is related to a long term finance lease that is considered to have the economic characteristics of asset ownership.
Mortgage-backed securities
A type of asset-backed security that is secured by a collection of mortgages.
Municipal clients
A political unit, such as a city, town, or village, incorporated for local self-government.
N/A
Data is not applicable or available for the period presented.
N/M
Not meaningful.
Non-GAAP
A calculation not made according to GAAP.
Obligations of state and political subdivisions
An obligation that is guaranteed by the full faith and credit of a state or political subdivision that has the power to tax.
Obligations of U.S. Government
A federally guaranteed obligation backed by the full power of the U.S. government, including Treasury bills, Treasury notes and Treasury bonds.
Obligations of U.S. Government sponsored enterprise obligations
Obligations of agencies originally established or chartered by the U.S. government to serve public purposes as specified by the U.S. Congress; these obligations are not explicitly guaranteed as to the timely payment of principal and interest by the full faith and credit of the U.S. government.
OREO
Represents real property owned by the Corporation, which is not directly related to its business and is most frequently the result of a foreclosure on real property.
OTTI
Impairment charge taken on a security whose fair value has fallen below the carrying value on the balance sheet and whose value is not expected to recover through the holding period of the security.
PCI loans
Represents loans that were acquired in the Fort Orange Financial Corp. transaction and deemed to be credit-impaired on the acquisition date in accordance with the guidance of FASB.
Political subdivision
A county, city, town, or other municipal corporation, a public authority, or a publicly-owned entity that is an instrumentality of a state or a municipal corporation.
Pre-provision profit/(loss)
Represents total net revenue less noninterest expense, before income tax expense (benefit).  The Corporation believes that this financial measure is useful in assessing the ability of a bank to generate income in excess of its provision for credit losses.
Regulatory Relief Act
The Economic Growth, Regulatory Relief and Consumer Protection Act was enacted on May 24, 2018 provides certain limited amendments to the Dodd-Frank Act, as well as certain targeted modifications to other post-financial crisis regulatory requirements.  In addition, the legislation establishes new consumer protections and amends various securities- and investment company-related requirements.
RWA
Risk-weighted assets consist of on- and off-balance sheet assets that are assigned to one of several broad risk categories and weighted by factors representing their risk and potential for default.  On-balance sheet assets are risk-weighted based on the perceived credit risk associated with the obligor or counterparty, the nature of any collateral, and the guarantor, if any.  Off-balance sheet assets such as lending-related commitments, guarantees, derivatives and other applicable off-balance sheet positions are risk-weighted by multiplying the contractual amount by the appropriate credit conversion factor to determine the on-balance sheet credit equivalent amount, which is then risk-weighted based on the same factors used for on-balance sheet assets.  Risk-weighted assets also incorporate a measure for market risk related to applicable trading assets-debt and equity instruments.  The resulting risk-weighted values for each of the risk categories are then aggregated to determine total risk-weighted assets.
SBA loan pools
Business loans partially guaranteed by the SBA.
Securities sold under agreements to repurchase
Sale of securities together with an agreement for the seller to buy back the securities at a later date.
Tax Act
The Tax Act was enacted on December 22, 2017 and amended the Internal Revenue Code of 1986. The legislation reduced the U.S. federal corporate income tax rate from 35 percent to 21 percent, with some related business deductions and credits being either reduced or eliminated.
TDR
A TDR is deemed to occur when the Corporation modifies the original terms of a loan agreement by granting a concession to a borrower that is experiencing financial difficulty.

5



Trust preferred securities
A hybrid security with characteristics of both subordinated debt and preferred stock which allows for early redemption by the issuer, makes fixed or variable payments, and matures at face value.
Unaudited
Financial statements and information that have not been subjected to auditing procedures sufficient to permit an independent certified public accountant to express an opinion.
WMG
Provides services as executor and trustee under wills and agreements, and guardian, custodian, trustee and agent for pension, profit-sharing and other employee benefit trusts, as well as various investment, financial planning, pension, estate planning and employee benefit administration services.


6



 
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share data)
 
March 31,
2019
 
December 31,
2018
ASSETS
 
 
 
 
Cash and due from financial institutions
 
$
28,153

 
$
33,040

Interest-earning deposits in other financial institutions
 
97,657

 
96,932

Total cash and cash equivalents
 
125,810

 
129,972

 
 
 
 
 
Equity investments, at estimated fair value
 
2,032

 
1,909

Securities available for sale, at estimated fair value
 
266,721

 
242,258

Securities held to maturity, estimated fair value of $3,857 at March 31, 2019
  and $4,858 at December 31, 2018
 
3,861

 
4,875

FHLBNY and FRBNY Stock, at cost
 
3,143

 
3,138

 
 
 
 
 
Loans, net of deferred loan fees
 
1,299,037

 
1,311,906

Allowance for loan losses
 
(19,745
)
 
(18,944
)
Loans, net
 
1,279,292

 
1,292,962

 
 
 
 
 
Loans held for sale
 
658

 
502

Premises and equipment, net
 
24,279

 
24,980

Operating lease right-of-use assets
 
8,391

 

Goodwill
 
21,824

 
21,824

Other intangible assets, net
 
1,188

 
1,351

Bank-owned life insurance
 
3,063

 
3,048

Accrued interest receivable and other assets
 
29,310

 
28,524

 
 
 
 
 
Total assets
 
$
1,769,572

 
$
1,755,343

 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 

Deposits:
 
 
 
 

Non-interest-bearing
 
$
462,000

 
$
484,433

Interest-bearing
 
1,104,502

 
1,084,804

Total deposits
 
1,566,502

 
1,569,237

 
 
 
 
 
Long term finance lease obligation
 
4,250

 
4,304

Operating lease liabilities
 
8,399

 

Dividends payable
 
1,257

 
1,254

Accrued interest payable and other liabilities
 
17,630

 
15,519

Total liabilities
 
1,598,038

 
1,590,314

 
 
 
 
 
Shareholders' equity:
 
 
 
 

Common stock, $0.01 par value per share, 10,000,000 shares authorized;
  5,310,076 issued at March 31, 2019 and December 31, 2018
 
53

 
53

Additional paid-in capital
 
46,174

 
45,820

Retained earnings
 
146,340

 
143,129

Treasury stock, at cost; 474,174 shares at March 31, 2019 and 488,844
  shares at December 31, 2018
 
(12,191
)
 
(12,562
)
Accumulated other comprehensive loss
 
(8,842
)
 
(11,411
)
Total shareholders' equity
 
171,534

 
165,029

 
 
 
 
 
Total liabilities and shareholders' equity
 
$
1,769,572

 
$
1,755,343


See accompanying notes to unaudited consolidated financial statements.
7



CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
 
 
Three Months Ended 
 March 31,
(in thousands, except per share data)
 
2019
 
2018
Interest and dividend income:
 
 
 
 
Loans, including fees
 
$
14,489

 
$
14,050

Taxable securities
 
1,195

 
1,289

Tax exempt securities
 
273

 
308

Interest-earning deposits
 
708

 
22

Total interest and dividend income
 
16,665

 
15,669

Interest expense:
 
 

 
 

Deposits
 
1,461

 
501

Securities sold under agreements to repurchase
 

 
93

Borrowed funds
 
37

 
175

Total interest expense
 
1,498

 
769

Net interest income
 
15,167

 
14,900

Provision for loan losses
 
1,093

 
709

Net interest income after provision for loan losses
 
14,074

 
14,191

 
 
 
 
 
Non-interest income:
 
 

 
 

WMG fee income
 
2,276

 
2,316

Service charges on deposit accounts
 
1,104

 
1,164

Interchange revenue from debit card transactions
 
1,031

 
1,035

Changes in fair value of equity investments
 
89

 
(2
)
Net gains on sales of loans held for sale
 
48

 
46

Net gains (losses) on sales of other real estate owned
 
(83
)
 
44

Income from bank-owned life insurance
 
15

 
16

Other
 
445

 
856

Total non-interest income
 
4,925

 
5,475

 
 
 
 
 
Non-interest expenses:
 
 

 
 

Salaries and wages
 
5,721

 
5,714

Pension and other employee benefits
 
1,545

 
1,658

Other components of net periodic pension and postretirement benefits
 
(141
)
 
(408
)
Net occupancy
 
1,567

 
1,608

Furniture and equipment
 
528

 
658

Data processing
 
1,727

 
1,742

Professional services
 
405

 
540

Amortization of intangible assets
 
163

 
194

Marketing and advertising
 
268

 
349

Other real estate owned
 
31

 
138

FDIC insurance
 
265

 
317

Loan expense
 
196

 
169

Other
 
1,222

 
1,487

Total non-interest expenses
 
13,497

 
14,166

Income before income tax expense
 
5,502

 
5,500

Income tax expense
 
1,034

 
1,061

Net income
 
$
4,468

 
$
4,439

 
 
 
 
 
Weighted average shares outstanding
 
4,860

 
4,822

Basic and diluted earnings per share
 
$
0.92

 
$
0.92


See accompanying notes to unaudited consolidated financial statements.
8



CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
 
 
Three Months Ended 
 March 31,
(in thousands)
 
2019
 
2018
Net income
 
$
4,468

 
$
4,439

Other comprehensive income (loss):
 
 

 
 

Unrealized holding gains (losses) on securities available for sale
 
3,430

 
(4,439
)
Tax effect
 
874

 
(1,132
)
Net of tax amount
 
2,556

 
(3,307
)
 
 
 
 
 
Change in funded status of defined benefit pension plan and other benefit plans:
 
 

 
 

Reclassification adjustment for amortization of prior service costs
 
(55
)
 
(55
)
Reclassification adjustment for amortization of net actuarial loss
 
73

 
73

Total before tax effect
 
18

 
18

Tax effect
 
5

 
5

Net of tax amount
 
13

 
13

 
 
 
 
 
Total other comprehensive income (loss)
 
2,569

 
(3,294
)
 
 
 
 
 
Comprehensive income
 
$
7,037

 
$
1,145


See accompanying notes to unaudited consolidated financial statements.
9



CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
(in thousands, except share and per share data)
Common Stock
 
Additional Paid-in Capital
 
Retained Earnings
 
Treasury Stock
 
Accumulated Other Comprehensive Loss
 
Total
Balances at December 31, 2017, as reported
$
53

 
$
45,967

 
$
128,453

 
$
(14,320
)
 
$
(10,340
)
 
$
149,813

Cumulative effect of accounting change (a)

 

 
40

 

 
(202
)
 
(162
)
Balances at January 1, 2018, as adjusted
53

 
45,967

 
128,493

 
(14,320
)
 
(10,542
)
 
149,651

Net income

 

 
4,439

 

 

 
4,439

Other comprehensive loss

 

 

 

 
(3,294
)
 
(3,294
)
Restricted stock awards

 
163

 

 

 

 
163

Restricted stock units for directors' deferred compensation plan

 
25

 

 

 

 
25

Cash dividends declared ($0.26 per share)

 

 
(1,238
)
 

 

 
(1,238
)
Distribution of 6,015 shares of treasury stock for directors' compensation

 
147

 

 
154

 

 
301

Distribution of 1,784 shares of treasury stock for employee compensation

 
44

 

 
45

 

 
89

Sale of 2,648 shares of treasury stock (b)

 
58

 

 
68

 

 
126

Balances at March 31, 2018
$
53

 
$
46,404

 
$
131,694

 
$
(14,053
)
 
$
(13,836
)
 
$
150,262

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at January 1, 2019
$
53

 
$
45,820

 
$
143,129

 
$
(12,562
)
 
$
(11,411
)
 
$
165,029

Net income

 

 
4,468

 

 

 
4,468

Other comprehensive income

 

 

 

 
2,569

 
2,569

Restricted stock awards

 
101

 

 

 

 
101

Restricted stock units for directors' deferred compensation plan

 
11

 

 

 

 
11

Distribution of 439 shares of treasury stock grants for employee restricted stock awards

 

 

 
11

 

 
11

Cash dividends declared ($0.26 per share)

 

 
(1,257
)
 

 

 
(1,257
)
Distribution of 8,465 shares of treasury stock for directors' compensation

 
139

 

 
218

 

 
357

Distribution of 2,373 shares of treasury stock for employee compensation

 
39

 

 
61

 

 
100

Repurchase of 272 shares of common stock

 

 

 
(13
)
 

 
(13
)
Sale of 3,665 shares of treasury stock (b)

 
64

 

 
94

 

 
158

Balances at March 31, 2019
$
53

 
$
46,174

 
$
146,340

 
$
(12,191
)
 
$
(8,842
)
 
$
171,534

(a) Due to implementation of ASC 2016-01. See "Adoption of New Accounting Standards" discussion in Note 1.
(b) All treasury stock sales were completed at the prevailing market price with the Chemung Canal Trust Company Profit Sharing, Savings, and Investment Plan which is a defined contribution plan sponsored by the Bank.


See accompanying notes to unaudited consolidated financial statements.
10



CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Three Months Ended 
 March 31,
CASH FLOWS FROM OPERATING ACTIVITIES:
2019
 
2018
Net income
$
4,468

 
$
4,439

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Amortization of intangible assets
163

 
194

Provision for loan losses
1,093

 
709

Net losses on disposal of fixed assets
9

 
7

Depreciation and amortization of fixed assets
816

 
889

Amortization of right-of-use asset
159

 

Amortization of premiums on securities, net
236

 
305

Gains on sales of loans held for sale, net
(48
)
 
(46
)
Proceeds from sales of loans held for sale
2,416

 
3,611

Loans originated and held for sale
(2,524
)
 
(3,213
)
Changes in fair value on equity investments
(89
)
 
2

Net (gains) losses on sales of other real estate owned
83

 
(44
)
Purchase of equity investments
(34
)
 
(28
)
Expense related to restricted stock units for directors' deferred compensation plan
11

 
25

Expense related to employee stock compensation
100

 
89

Expense related to employee restricted stock awards
101

 
163

Income from bank-owned life insurance
(15
)
 
(16
)
Increase in other assets and accrued interest receivable
(1,147
)
 
(2,486
)
Payments made on operating leases
(151
)
 

(Increase) decrease in accrued interest payable
47

 
(29
)
Increase (decrease) in other liabilities
1,550

 
2,409

Net cash provided by operating activities
7,244

 
6,980

 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 

 
 

Proceeds from sales of securities available for sale

 
285

Proceeds from maturities, calls, and principal paydowns on securities available for sale
8,198

 
9,078

Proceeds from maturities and principal collected on securities held to maturity
1,074

 
261

Purchases of securities available for sale
(29,467
)
 

Purchases of securities held to maturity
(60
)
 
(120
)
Purchase of FHLBNY and FRBNY stock
(5
)
 
(6,437
)
Redemption of FHLBNY and FRBNY stock

 
9,124

Purchases of premises and equipment
(124
)
 
(375
)
Proceeds from sales of other real estate owned
313

 
157

Net (increase) decrease in loans
12,550

 
(8,572
)
Net cash (used in) provided by investing activities
(7,521
)
 
3,401

 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 

 
 

Net increase (decrease) in demand deposits, interest-bearing demand accounts,
  savings accounts, and insured money market accounts
(9,502
)
 
52,670

Net increase (decrease) in time deposits
6,767

 
(1,916
)
Net decrease in FHLBNY overnight advances

 
(57,700
)
Repayments of FHLBNY long term advances

 
(2,000
)
Payments made on finance leases
(54
)
 
(53
)
Sale of treasury stock
158

 
126

Cash dividends paid
(1,254
)
 
(1,233
)
Net cash used in financing activities
(3,885
)
 
(10,106
)
Net increase (decrease) in cash and cash equivalents
(4,162
)
 
275

Cash and cash equivalents, beginning of period
129,972

 
30,729

Cash and cash equivalents, end of period
$
125,810

 
$
31,004

(continued)
 
 
 

See accompanying notes to unaudited consolidated financial statements.
11



CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(UNAUDITED)
(in thousands)
Three Months Ended 
 March 31,
Supplemental disclosure of cash flow information:
2019
 
2018
Cash paid (received) for:
 
 
 
Interest
$
1,451

 
$
798

Income taxes
$

 
$
(175
)
Supplemental disclosure of non-cash activity:
 

 
 

  Transfer of loans to other real estate owned
$
27

 
$
5

Dividends declared, not yet paid
$
1,257

 
$
1,238

Distribution of treasury stock for directors' compensation
$
357

 
$
301


See accompanying notes to unaudited consolidated financial statements.
12



CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

The Corporation, through its wholly-owned subsidiaries, the Bank and CFS, provides a wide range of banking, financing, fiduciary and other financial services to its clients.  The Corporation and the Bank are subject to the regulations of certain federal and state agencies and undergo periodic examinations by those regulatory authorities.

CRM, a wholly-owned subsidiary of the Corporation, which was formed and began operations on May 31, 2016, is a Nevada-based captive insurance company which insures against certain risks unique to the operations of the Corporation and its subsidiaries and for which insurance may not be currently available or economically feasible in today's insurance marketplace. CRM pools resources with several other similar insurance company subsidiaries of financial institutions to spread a limited amount of risk among themselves. CRM is subject to regulations of the State of Nevada and undergoes periodic examinations by the Nevada Division of Insurance.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in conformity with GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X of the Exchange Act.  These financial statements include the accounts of the Corporation and its subsidiaries, and all significant intercompany balances and transactions are eliminated in consolidation.  Amounts in the prior periods' consolidated financial statements are reclassified whenever necessary to conform to the current period's presentation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions based on available information.  These estimates and assumptions affect the amounts reported in the financial statements and disclosures provided, and actual results could differ.  In the opinion of management, all adjustments (consisting of normal recurring adjustments) and disclosures necessary for the fair presentation of the accompanying consolidated financial statements have been included. The unaudited consolidated financial statements should be read in conjunction with the Corporation's 2018 Annual Report on Form 10-K for the year ended December 31, 2018. The results of operations for any interim periods are not necessarily indicative of the results which may be expected for the entire year or any other period.

Reclassifications

Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior year net income or shareholders' equity.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The objective of the ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date by replacing the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to form credit loss estimates. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2019, though entities may adopt the amendments earlier for fiscal years beginning after December 15, 2018. The Corporation is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements. The Corporation anticipates that the adoption of the CECL model will result in an increase to the Corporation's allowance for loan losses. The Corporation has established a committee to oversee the implementation of CECL and has selected a vendor to assist in the implementation process. In 2018, the committee began establishing parameters which will be used in the CECL model with the selected vendor. The Corporation further plans to run its current incurred loss model and a CECL model concurrently for twelve months prior to the adoption of this guidance on January 1, 2020.


13



In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The objective of the ASU is to simplify the manner in which an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Additionally, the ASU removes the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails such qualitative test, to perform Step 2 of the goodwill impairment test. The amendments in this ASU are effective for annual, or any interim, goodwill impairment tests in fiscal years beginning after December 15, 2019. The adoption of the ASU is not expected to have a significant impact on the Corporation's consolidated financial statements.

Adoption of New Accounting Standards

On January 1, 2018, the Corporation adopted ASU 2014-09 Revenue from Contracts with Customers (Topic 606) and all subsequent amendments to the ASU (collectively, "ASU 606"), which creates a single framework for recognizing revenue from contracts with customers that fall within its scope and revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets, such as OREO. The majority of the Corporation's revenues come from interest income and other sources, including loans, securities, and derivatives that are outside the scope of ASC 606. The Corporation's services that fall within the scope of ASC 606 are presented within non-interest income and are recognized as revenue as the Corporation satisfies its obligation to the customer. Services within the scope of ASC 606 include service charges on deposits, interchange income, wealth management fees, and the sale of OREO. The amendments allow for one of two transition methods: full retrospective or modified retrospective. The full retrospective approach requires application to all periods presented. The modified retrospective transition requires application to uncompleted contracts at the date of adoption. Periods prior to the date of adoption are not retrospectively revised, but a cumulative effect is recognized at the date of initial application on uncompleted contracts. The Corporation adopted the new revenue guidance using the modified retrospective approach. There was no significant change upon adoption of the standard, as the new standard did not materially change the way the Corporation currently records revenue for its WMG and deposit related fees at the Bank; as such, no cumulative effect adjustment was recorded. Refer to Note 10 - Revenue from Contracts with Customers for further discussion on the Corporation's accounting policies for revenue sources within the scope of ASC 606.

On January 1, 2018, the Corporation adopted ASU 2016-01, an amendment to Recognition and Measurement of Financial Assets and Financial Liabilities ("ASC 825"). The objectives of the ASC 825 were (1) require equity investments to be measured at fair value, with changes in fair value recognized in net income, (2) simplify the impairment assessment of equity investments without readily determinable fair values, (3) eliminate the requirement to disclose methods and significant assumptions used to estimate fair value for financial instruments measured at amortized cost on the balance sheet, (4) require the use of the exit price notion when measuring the fair value of financial instruments, and (5) clarify the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The Corporation adopted all provisions of this ASU using the modified retrospective method. The adjustments to opening retained earnings and accumulated other comprehensive loss related to the adoption of ASC 825 are immaterial to the financial statements.

On January 1, 2018, the Corporation adopted ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The objective of the ASU is to reduce the existing diversity in practice relating to eight specific cash flow issues: (1) debt prepayment or debt extinguishment costs, (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, (3) contingent consideration payments made after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, (6) distributions received from equity method investees, (7) beneficial interests in securitization transactions, and (8) separately identifiable cash flows and application of the predominance principal. The adoption of ASU 2016-15 did not result in a change to how the Corporation accounts for its cash flows.

On January 1, 2018, the Corporation adopted ASU 2017-07, Compensation - Retirement Benefits - Improving the Presentation of Net Periodic Cost and Net Periodic Postretirement Benefit Cost ("ASC 715"). The objective of ASC 715 was to improve guidance related to the presentation of defined benefit costs in the income statement. Specifically, ASC 715 required that an employer report the service cost component in the same line item(s) as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. Additionally, ASC 715 allows only the service cost component to be eligible for capitalization, when applicable. Results for reporting periods beginning after January 1, 2018 are presented under ASC 715, while prior period amounts continue to be reported in accordance with legacy GAAP, with comparable periods presented retrospectively for the presentation of the service cost and net periodic postretirement benefit cost in the income statement. The Corporation elected the practical expedient, which permits employers to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation for applying retrospective presentation requirements.


14



On January 1, 2019, the Corporation adopted ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires companies that lease valuable assets to recognize on their balance sheets the assets and liabilities generated by contracts longer than a year. The Corporation adopted the new lease guidance using the modified retrospective approach and elected the transition option issued under ASU 2018-11, Leases (Topic 842) Targeted Improvements, allowing entities to continue to apply the legacy guidance in ASC 840, Leases, to prior periods, including disclosure requirements. Accordingly, prior period financial results and disclosures have not been adjusted. In addition, the Corporation elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Corporation to carry forward the historical lease classification. Adoption of the new standard resulted in the recording of operating lease right-of-use assets and operating lease liabilities of approximately $8.6 million as of January 1, 2019. The standard did not materially impact our consolidated net earnings and had no impact on cash flows.

On January 1, 2019, the Corporation adopted ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The objective of the ASU is to align the amortization period of premiums and discounts to expectations incorporated in market pricing on the underlying securities. The amendment requires that the premium be amortized to the earliest call date, but does not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The adoption of the ASU did not have a significant impact on the Corporation's consolidated financial statements.


NOTE 2        EARNING PER COMMON SHARE (shares in thousands)

Basic earnings per share is net income divided by the weighted average number of common shares outstanding during the period.  Issuable shares, including those related to directors’ restricted stock units and directors’ stock compensation, are considered outstanding and are included in the computation of basic earnings per share.  All outstanding unvested share based payment awards that contain rights to non-forfeitable dividends are considered participating securities for this calculation.  Restricted stock awards are grants of participating securities and are considered outstanding at grant date.  Earnings per share information is adjusted to present comparative results for stock splits and stock dividends that occur.  Earnings per share were computed by dividing net income by 4,860 and 4,822 weighted average shares outstanding for the three-month periods ended March 31, 2019 and 2018, respectively. There were no common stock equivalents during the three-month periods ended March 31, 2019 or 2018.


NOTE 3        SECURITIES

Amortized cost and estimated fair value of securities available for sale are as follows (in thousands):
 
 
March 31, 2019
 
 
Amortized Cost
 
Unrealized Gains
 
Unrealized Losses
 
Estimated Fair Value
Obligations of U.S. Government and U.S. Government sponsored enterprises
 
$
5,492

 
$
9

 
$
13

 
$
5,488

Mortgage-backed securities, residential
 
207,277

 
283

 
3,622

 
203,938

Obligations of states and political subdivisions
 
47,733

 
619

 
20

 
48,332

Corporate bonds and notes
 
250

 

 
1

 
249

SBA loan pools
 
8,777

 

 
63

 
8,714

Total
 
$
269,529

 
$
911

 
$
3,719

 
$
266,721


 
 
December 31, 2018
 
 
Amortized Cost
 
Unrealized Gains
 
Unrealized Losses
 
Estimated Fair Value
Obligations of U.S. Government and U.S. Government sponsored enterprises
 
$
5,489

 
$
10

 
$
27

 
$
5,472

Mortgage-backed securities, residential
 
189,111

 
146

 
6,065

 
183,192

Obligations of states and political subdivisions
 
44,390

 
70

 
308

 
44,152

Corporate bonds and notes
 
249

 

 
2

 
247

SBA loan pools
 
9,257

 

 
62

 
9,195

Total
 
$
248,496

 
$
226

 
$
6,464

 
$
242,258


15




Amortized cost and estimated fair value of securities held to maturity are as follows (in thousands):
 
 
March 31, 2019
 
 
Amortized Cost
 
Unrealized Gains
 
Unrealized Losses
 
Estimated Fair Value
Obligations of states and political subdivisions
 
$
2,006

 
$

 
$

 
$
2,006

Time deposits with other financial institutions
 
1,855

 

 
4

 
1,851

Total
 
$
3,861

 
$

 
$
4

 
$
3,857


 
 
December 31, 2018
 
 
Amortized Cost
 
Unrealized Gains
 
Unrealized Losses
 
Estimated Fair Value
Obligations of states and political subdivisions
 
$
3,020

 
$

 
$

 
$
3,020

Time deposits with other financial institutions
 
1,855

 

 
17

 
1,838

Total
 
$
4,875

 
$

 
$
17

 
$
4,858


The amortized cost and estimated fair value of debt securities are shown below by expected maturity.  Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.  Securities not due at a single maturity date are shown separately (in thousands):
 
 
March 31, 2019
 
 
Available for Sale
 
Held to Maturity
 
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
Within one year
 
$
11,600

 
$
11,592

 
$
1,866

 
$
1,863

After one, but within five years
 
13,500

 
13,590

 
1,995

 
1,994

After five, but within ten years
 
26,902

 
27,402

 

 

After ten years
 
1,473

 
1,485

 

 

 
 
53,475

 
54,069

 
3,861

 
3,857

Mortgage-backed securities, residential
 
207,277

 
203,938

 

 

SBA loan pools
 
8,777

 
8,714

 

 

Total
 
$
269,529

 
$
266,721

 
$
3,861

 
$
3,857


There were no proceeds from sales and calls of securities resulting in gains or losses for the three months ended March 31, 2019 and 2018.

The following tables summarize the investment securities available for sale with unrealized losses at March 31, 2019 and December 31, 2018 by aggregated major security type and length of time in a continuous unrealized loss position (in thousands):

 
Less than 12 months
 
12 months or longer
 
Total
March 31, 2019
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
Obligations of U.S. Government and U.S. Government sponsored enterprises
$

 
$

 
$
4,984

 
$
13

 
$
4,984

 
$
13

Mortgage-backed securities, residential
10,651

 

 
158,684

 
3,622

 
169,335

 
3,622

Obligations of states and political subdivisions
1,387

 

 
4,285

 
20

 
5,672

 
20

Corporate bonds and notes
249

 
1

 

 

 
249

 
1

SBA loan pools
5,668

 
18

 
3,046

 
45

 
8,714

 
63

Total temporarily impaired securities
$
17,955

 
$
19

 
$
170,999

 
$
3,700

 
$
188,954

 
$
3,719



16



 
Less than 12 months
 
12 months or longer
 
Total
December 31, 2018
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
Obligations of U.S. Government and U.S. Government sponsored enterprises
$

 
$

 
$
4,969

 
$
27

 
$
4,969

 
$
27

Mortgage-backed securities, residential

 

 
171,481

 
6,065

 
171,481

 
6,065

Obligations of states and political subdivisions
10,868

 
38

 
21,345

 
270

 
32,213

 
308

Corporate bonds and notes
247

 
2

 

 

 
247

 
2

SBA loan pools
5,985

 
17

 
3,210

 
45

 
9,195

 
62

Total temporarily impaired securities
$
17,100

 
$
57

 
$
201,005

 
$
6,407

 
$
218,105

 
$
6,464


Other-Than-Temporary Impairment

As of March 31, 2019, the majority of the Corporation’s unrealized losses in the investment securities portfolio related to mortgage-backed securities.  At March 31, 2019, all of the unrealized losses related to mortgage-backed securities were issued by U.S. government sponsored entities, Fannie Mae and Freddie Mac. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because it is not likely that the Corporation will be required to sell these securities before their anticipated recovery, the Corporation does not consider these securities to be other-than-temporarily impaired at March 31, 2019.

Equity Investments

Beginning January 1, 2018, upon adoption of ASU 2016-01, equity securities with readily determinable fair values are stated at fair value with realized and unrealized gains and losses reported in the consolidated statement of income.


NOTE 4        LOANS AND ALLOWANCE FOR LOAN LOSSES

The composition of the loan portfolio, net of deferred origination fees and costs, is summarized as follows (in thousands):
 
 
March 31, 
 2019
 
December 31, 
 2018
Commercial and agricultural:
 
 
 
 
Commercial and industrial
 
$
204,171

 
$
202,526

Agricultural
 
326

 
328

Commercial mortgages:
 
 

 
 

Construction
 
46,590

 
54,476

Commercial mortgages, other
 
611,510

 
606,694

Residential mortgages
 
181,428

 
182,724

Consumer loans:
 
 

 
 

Credit cards
 

 
1,449

Home equity lines and loans
 
97,042

 
98,145

Indirect consumer loans
 
142,383

 
149,380

Direct consumer loans
 
15,587

 
16,184

Total loans, net of deferred origination fees and costs
 
1,299,037

 
1,311,906

Interest receivable on loans
 
3,995

 
3,703

Total recorded investment in loans
 
$
1,303,032

 
$
1,315,609


The Corporation's concentrations of credit risk by loan type are reflected in the preceding table.  The concentrations of credit risk with standby letters of credit, committed lines of credit and commitments to originate new loans generally follow the loan classifications in the table above.


17



The following tables present the activity in the allowance for loan losses by portfolio segment for the three-month periods ended March 31, 2019 and 2018 (in thousands):
 
Three Months Ended March 31, 2019
Allowance for loan losses
Commercial and Agricultural
 
Commercial Mortgages
 
Residential Mortgages
 
Consumer Loans
 
Total
Beginning balance
$
5,383

 
$
8,184

 
$
1,226

 
$
4,151

 
$
18,944

Charge-offs
(7
)
 

 
(2
)
 
(439
)
 
(448
)
Recoveries
11

 
1

 

 
144

 
156

Net recoveries (charge-offs)
4

 
1

 
(2
)
 
(295
)
 
(292
)
Provision
42

 
1,289

 
(9
)
 
(229
)
 
1,093

Ending balance
$
5,429

 
$
9,474

 
$
1,215

 
$
3,627

 
$
19,745

 
Three Months Ended March 31, 2018
Allowance for loan losses
Commercial and Agricultural
 
Commercial Mortgages
 
Residential Mortgages
 
Consumer Loans
 
Total
Beginning balance
$
6,976

 
$
8,514

 
$
1,316

 
$
4,355

 
$
21,161

Charge-offs
(19
)
 

 
(94
)
 
(458
)
 
(571
)
Recoveries
9

 
1

 
5

 
76

 
91

Net recoveries (charge-offs)
(10
)
 
1

 
(89
)
 
(382
)
 
(480
)
Provision
37

 
125

 
180

 
367

 
709

Ending balance
$
7,003

 
$
8,640

 
$
1,407

 
$
4,340

 
$
21,390


The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2019 and December 31, 2018 (in thousands):
 
March 31, 2019
Allowance for loan losses:
Commercial and Agricultural
 
Commercial Mortgages
 
Residential Mortgages
 
Consumer Loans
 
Total
Ending allowance balance attributable to loans:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
1,748

 
$
2,228

 
$

 
$

 
$
3,976

Collectively evaluated for impairment
3,681

 
7,246

 
1,215

 
3,627

 
15,769

   Total ending allowance balance
$
5,429

 
$
9,474

 
$
1,215

 
$
3,627

 
$
19,745

 
December 31, 2018
Allowance for loan losses:
Commercial and Agricultural
 
Commercial Mortgages
 
Residential Mortgages
 
Consumer Loans
 
Total
Ending allowance balance attributable to loans:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
1,743

 
$
446

 
$

 
$

 
$
2,189

Collectively evaluated for impairment
3,640

 
7,738

 
1,226

 
4,151

 
16,755

   Total ending allowance balance
$
5,383

 
$
8,184

 
$
1,226

 
$
4,151

 
$
18,944

 
March 31, 2019
Loans:
Commercial and Agricultural
 
Commercial Mortgages
 
Residential Mortgages
 
Consumer Loans
 
Total
Loans individually evaluated for impairment
$
2,136

 
$
9,278

 
$
392

 
$
167

 
$
11,973

Loans collectively evaluated for  impairment
203,001

 
650,880

 
181,548

 
255,630

 
1,291,059

   Total ending loans balance
$
205,137

 
$
660,158

 
$
181,940

 
$
255,797

 
$
1,303,032


18



 
December 31, 2018
Loans:
Commercial and Agricultural
 
Commercial Mortgages
 
Residential Mortgages
 
Consumer Loans
 
Total
Loans individually evaluated for impairment
$
2,128

 
$
6,146

 
$
402

 
$
55

 
$
8,731

Loans collectively evaluated for  impairment
201,284

 
656,842

 
182,823

 
265,929

 
1,306,878

   Total ending loans balance
$
203,412

 
$
662,988

 
$
183,225

 
$
265,984

 
$
1,315,609


The following table presents loans individually evaluated for impairment recognized by class of loans as of March 31, 2019 and December 31, 2018 (in thousands):
 
March 31, 2019
 
December 31, 2018
With no related allowance recorded:
Unpaid Principal Balance
 
Recorded Investment
 
Allowance for Loan Losses Allocated
 
Unpaid Principal Balance
 
Recorded Investment
 
Allowance for Loan Losses Allocated
Commercial and agricultural:
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
304

 
$
304

 
$

 
$
345

 
$
346

 
$

Commercial mortgages:
 

 
 

 
 

 
 

 
 

 
 

Construction
292

 
293

 

 
307

 
308

 

Commercial mortgages, other
3,915

 
3,843

 

 
4,007

 
3,935

 

Residential mortgages
420

 
392

 

 
424

 
402

 

Consumer loans:
 

 
 

 
 

 
 

 
 

 
 

Home equity lines and loans
164

 
167

 

 
54

 
55

 

With an allowance recorded:
 

 
 

 
 

 
 

 
 

 
 

Commercial and agricultural:
 
 
 

 
 

 
 

 
 

 
 

Commercial and industrial
1,832

 
1,832

 
1,748

 
1,780

 
1,782

 
1,743

Commercial mortgages:
 

 
 

 
 

 
 

 
 

 
 

Commercial mortgages, other
5,141

 
5,142

 
2,228

 
1,902

 
1,903

 
446

Total
$
12,068

 
$
11,973

 
$
3,976

 
$
8,819

 
$
8,731

 
$
2,189



19



The following table presents the average recorded investment and interest income of loans individually evaluated for impairment recognized by class of loans for the three-month periods ended March 31, 2019 and 2018 (in thousands):
 
 
Three Months Ended 
 March 31, 2019
 
Three Months Ended 
 March 31, 2018
With no related allowance recorded:
 
Average Recorded Investment
 
Interest Income Recognized
(1)
 
Average Recorded Investment
 
Interest Income Recognized
(1)
Commercial and agricultural:
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
325

 
$
1

 
$
820

 
$
9

Commercial mortgages:
 
 

 
 

 
 

 
 

Construction
 
301

 
2

 
359

 
3

Commercial mortgages, other
 
3,889

 
5

 
4,175

 
5

Residential mortgages
 
397

 
2

 
426

 
2

Consumer loans:
 
 

 
 

 
 

 
 

Home equity lines & loans
 
111

 
1

 
63

 
1

With an allowance recorded:
 
 

 
 

 
 

 
 

Commercial and agricultural:
 
 

 
 

 
 

 
 

Commercial and industrial
 
1,807

 

 
5,144

 

Commercial mortgages:
 
 

 
 

 
 

 
 

Commercial mortgages, other
 
3,523

 

 
2,797

 
1

Total
 
$
10,353

 
$
11

 
$
13,784

 
$
21

(1)Cash basis interest income approximates interest income recognized.

The following table presents the recorded investment in non-accrual and loans past due 90 days or more and still accruing by class of loans as of March 31, 2019 and December 31, 2018 (in thousands):

 
 
Non-accrual
 
Loans Past Due 90 Days or More and Still Accruing
 
 
March 31, 2019
 
December 31, 2018
 
March 31, 2019
 
December 31, 2018
Commercial and agricultural:
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
2,081

 
$
2,048

 
$
11

 
$
10

Commercial mortgages:
 
 
 
 
 
 
 
 
Construction
 
101

 
109

 

 

Commercial mortgages, other
 
8,680

 
5,529

 

 

Residential mortgages
 
2,550

 
2,655

 

 

Consumer loans:
 
 
 
 
 
 
 
 
Credit cards
 

 

 

 
9

Home equity lines and loans
 
1,022

 
1,183

 

 

Indirect consumer loans
 
632

 
693

 

 

Direct consumer loans