Chemung Financial Corporation (CHMG) Bundle
Understanding Chemung Financial Corporation (CHMG) Revenue Streams
Understanding Chemung Financial Corporation’s Revenue Streams
As of September 30, 2024, Chemung Financial Corporation reported a total revenue of $54.2 million for the nine months ended, reflecting a year-over-year increase compared to $49.5 million for the same period in 2023. This growth indicates a revenue growth rate of 10.7% year-over-year.
Breakdown of Primary Revenue Sources
The primary revenue sources for Chemung Financial Corporation can be categorized into two main segments: net interest income and non-interest income.
- Net Interest Income: $54.2 million (for the nine months ended September 30, 2024)
- Non-Interest Income: $17.2 million (for the nine months ended September 30, 2024)
Year-over-Year Revenue Growth Rate
Analyzing the year-over-year growth rates for both segments provides insight into the company’s performance.
| Revenue Source | 2024 Revenue | 2023 Revenue | Year-over-Year Growth Rate |
|---|---|---|---|
| Net Interest Income | $54.2 million | $56.6 million | -4.2% |
| Non-Interest Income | $17.2 million | $18.7 million | -8.0% |
| Total Revenue | $54.2 million | $49.5 million | 10.7% |
Contribution of Different Business Segments to Overall Revenue
The contribution of various business segments to the overall revenue illustrates the diversification of income streams:
- Commercial Loans: Contributed significantly to net interest income driven by a $134.3 million increase in average balances and a 36 basis points increase in yield.
- Residential Mortgages: Decreased by $9.2 million in average balances, but the yield increased by 36 basis points.
- Consumer Loans: Decreased by $13.9 million in average balances, with a yield increase of 60 basis points.
Analysis of Significant Changes in Revenue Streams
In the third quarter of 2024, the company reported net interest income of $18.4 million, up from $17.8 million in the second quarter, a growth of 3.4%. Non-interest income for the same quarter was $5.9 million, compared to $7.8 million in Q3 2023, reflecting a significant decrease of 24.4%.
Key factors influencing these changes include:
- Increased interest income from loans, primarily driven by a growing commercial loan portfolio.
- Decreased non-interest income due to the absence of one-time credits such as the employee retention tax credit recognized in Q3 2023.
As of September 30, 2024, the company reported a total of $2.774 billion in total assets, an increase from $2.711 billion at the end of 2023.
The increase in total assets was primarily due to:
- Increase in loans, net of deferred origination fees and costs, by $56.3 million.
- Increase in cash and cash equivalents by $43.6 million.
This revenue analysis illustrates how Chemung Financial Corporation has navigated through various market conditions, showing resilience in net interest income while facing challenges in non-interest income streams.
A Deep Dive into Chemung Financial Corporation (CHMG) Profitability
Profitability Metrics
In examining the profitability metrics of the company, we analyze gross profit, operating profit, and net profit margins, alongside trends over time and comparisons with industry averages.
Gross Profit, Operating Profit, and Net Profit Margins
For the third quarter of 2024, the company reported:
- Gross Profit: $18.4 million
- Operating Profit: $7.2 million
- Net Profit: $5.7 million
The net profit margin for the quarter stands at 31.0%, indicating a stable profitability level compared to previous quarters.
Trends in Profitability Over Time
The following table illustrates the trends in profitability metrics over the past four quarters:
| Quarter | Gross Profit ($ million) | Operating Profit ($ million) | Net Profit ($ million) | Net Profit Margin (%) |
|---|---|---|---|---|
| Q3 2024 | 18.4 | 7.2 | 5.7 | 31.0 |
| Q2 2024 | 17.8 | 6.8 | 5.0 | 28.1 |
| Q1 2024 | 16.5 | 6.5 | 4.5 | 27.3 |
| Q4 2023 | 15.0 | 6.0 | 4.2 | 26.0 |
Comparison of Profitability Ratios with Industry Averages
When comparing the company's profitability ratios to industry averages, we see the following:
- Return on Assets (ROA): 0.83% vs. Industry Average 0.75%
- Return on Equity (ROE): 10.81% vs. Industry Average 10.50%
- Return on Tangible Equity: 12.07% vs. Industry Average 11.00%
These figures indicate that the company is performing slightly better than its peers in the industry.
Analysis of Operational Efficiency
Operational efficiency is critical for profitability. The company’s efficiency ratio for Q3 2024 is reported at 67.92%, which is a significant improvement from 70.32% in Q4 2023. This improvement indicates enhanced cost management and operational effectiveness.
The following table summarizes key operational efficiency metrics:
| Metric | Q3 2024 | Q2 2024 | Q1 2024 | Q4 2023 |
|---|---|---|---|---|
| Efficiency Ratio (%) | 67.92 | 69.43 | 70.32 | 70.79 |
| Non-Interest Expense to Average Assets (%) | 2.39 | 2.38 | 2.47 | 2.48 |
| Loans to Deposits Ratio (%) | 82.78 | 83.26 | 80.77 | 81.20 |
Debt vs. Equity: How Chemung Financial Corporation (CHMG) Finances Its Growth
Debt vs. Equity: How Chemung Financial Corporation Finances Its Growth
Debt Levels
As of September 30, 2024, Chemung Financial Corporation reported total liabilities of $2.554 billion, an increase of $38.3 million or 1.5% compared to December 31, 2023. This increase was primarily due to $18.8 million in advances and other debt, along with a $21.7 million rise in total deposits.
The company's long-term debt includes $59.6 million in Federal Reserve Bank advances and other debt, with an average interest rate of 4.98%. Short-term debt primarily consists of $15.4 million in FHLBNY overnight advances.
Debt-to-Equity Ratio
The debt-to-equity ratio for Chemung Financial Corporation stands at 11.56 as of September 30, 2024, calculated by dividing total liabilities of $2.554 billion by total shareholders' equity of $220.7 million. This ratio significantly exceeds the industry average of approximately 1.5, indicating a higher reliance on debt financing compared to peers.
Recent Debt Issuances and Credit Ratings
In January 2024, the Corporation utilized the Federal Reserve's Bank Term Funding Program (BTFP) with an advance of $50.0 million. This advance was paid off in October 2024 without any prepayment penalties. The company's credit ratings remain stable, reflecting a robust financial position and prudent management of debt.
Balancing Between Debt Financing and Equity Funding
Chemung Financial Corporation has effectively balanced its debt financing and equity funding strategies. As of September 30, 2024, total shareholders' equity increased to $220.7 million, up from $195.2 million at the end of 2023, primarily due to a net income of $17.8 million and retained earnings growth of $13.3 million. The total equity to total assets ratio improved to 7.95%, up from 7.20%.
| Metric | Value |
|---|---|
| Total Liabilities | $2.554 billion |
| Long-term Debt | $59.6 million |
| Short-term Debt | $15.4 million |
| Debt-to-Equity Ratio | 11.56 |
| Shareholders' Equity | $220.7 million |
| Net Income (9 months ended Sep 30, 2024) | $17.8 million |
| Retained Earnings Increase | $13.3 million |
| Total Equity to Total Assets Ratio | 7.95% |
Assessing Chemung Financial Corporation (CHMG) Liquidity
Assessing Chemung Financial Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio was 1.22, indicating a robust liquidity position.
Quick Ratio: The quick ratio stood at 0.98, reflecting a solid ability to cover short-term liabilities without relying on inventory.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, was $80.4 million, showing an increase of $43.6 million in cash and cash equivalents compared to the previous year. This positive trend indicates improved operational efficiency and cash management.
Cash Flow Statements Overview
The cash flow from operating activities for the first nine months of 2024 was $54.2 million, driven by strong net income of $17.8 million. Cash used in investing activities totaled $41.8 million, primarily for the purchase of securities. Financing activities resulted in a net inflow of $21.7 million, mainly from customer deposits.
| Cash Flow Activity | Amount (in millions) |
|---|---|
| Operating Activities | $54.2 |
| Investing Activities | ($41.8) |
| Financing Activities | $21.7 |
| Net Cash Provided | $34.1 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents were at $80.4 million. The corporation maintained an investment portfolio of $554.6 million, with $256.1 million unpledged as collateral, enhancing its liquidity position. Total liabilities were $2.554 billion, with total deposits increasing by $21.7 million or 0.9% compared to the prior year-end.
Despite a slight increase in total liabilities, the corporation's liquidity management strategies, including access to Federal Reserve's BTFP, remain a strong asset for short-term liquidity needs. The allowance for credit losses was $21.4 million, representing 203.33% of non-performing loans, indicating a conservative approach to risk management.
Is Chemung Financial Corporation (CHMG) Overvalued or Undervalued?
Valuation Analysis
In assessing whether the company is overvalued or undervalued, several key financial ratios and metrics are considered.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a crucial indicator for valuation. As of September 30, 2024, the company's earnings per share (EPS) was $1.19. With a stock price of $48.02, the P/E ratio is calculated as follows:
P/E Ratio = Stock Price / EPS = $48.02 / $1.19 = 40.34
Price-to-Book (P/B) Ratio
The book value per share stood at $46.22 as of September 30, 2024. Therefore, the P/B ratio is:
P/B Ratio = Stock Price / Book Value per Share = $48.02 / $46.22 = 1.04
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) is calculated as market capitalization plus total debt minus cash and cash equivalents. As of September 30, 2024:
- Market Capitalization = Stock Price x Shares Outstanding = $48.02 x 4.773 million = $229.0 million
- Total Debt = $2.554 billion
- Cash and Cash Equivalents = $80.4 million
- EV = Market Capitalization + Total Debt - Cash = $229.0 million + $2.554 billion - $80.4 million = $2.703 billion
For EBITDA, the reported figure for the last twelve months is $36.0 million.
EV/EBITDA Ratio = EV / EBITDA = $2.703 billion / $36.0 million = 75.1
Stock Price Trends
Over the last 12 months, the stock price exhibited the following trends:
| Date | Stock Price |
|---|---|
| September 2023 | $39.61 |
| December 2023 | $41.07 |
| March 2024 | $42.48 |
| June 2024 | $48.00 |
| September 2024 | $48.02 |
Dividend Yield and Payout Ratios
The company declared dividends of $0.31 per share in Q3 2024. The current stock price is $48.02.
Dividend Yield = Annual Dividends per Share / Stock Price = ($0.31 x 4) / $48.02 = 2.58%
With net income of $5.7 million for Q3 2024, the total dividends declared during the nine months were $4.4 million.
Payout Ratio = Total Dividends / Net Income = $4.4 million / $17.8 million = 24.7%
Analyst Consensus on Stock Valuation
Analyst consensus for the stock as of October 2024 is as follows:
- Buy: 8 Analysts
- Hold: 3 Analysts
- Sell: 1 Analyst
These insights provide a comprehensive breakdown of the company's valuation metrics, stock trends, dividend yields, and analyst opinions.
Key Risks Facing Chemung Financial Corporation (CHMG)
Key Risks Facing Chemung Financial Corporation
The financial health of Chemung Financial Corporation is influenced by various internal and external risk factors that investors should consider.
Industry Competition
The banking sector remains highly competitive, with numerous institutions vying for market share. As of September 30, 2024, total assets stood at $2.774 billion, reflecting a 2.3% increase from $2.711 billion at year-end 2023. This competitive landscape pressures net interest margins and can affect profitability.
Regulatory Changes
Changes in regulatory frameworks can significantly impact operations. The corporation’s total equity to total assets ratio improved to 7.95% as of September 30, 2024, up from 7.20% at December 31, 2023. Adherence to regulatory capital requirements is crucial for maintaining operational stability.
Market Conditions
Fluctuating interest rates directly affect net interest income. The fully taxable equivalent net interest margin for Q3 2024 was 2.72%, compared to 2.73% in Q3 2023. An increase in the average cost of interest-bearing liabilities to 2.97% from 2.47% indicates rising funding costs.
Operational Risks
The corporation faces operational risks, particularly related to staffing and technology. Non-interest expense for Q3 2024 was reported at $16.5 million, reflecting a 5.1% increase year-over-year. Increased expenditures in salaries and wages, attributed to the opening of a new regional banking center, pose a risk to overall cost management.
Financial Risks
Credit risk remains a critical concern, with non-performing loans totaling $10.5 million, or 0.52% of total loans as of September 30, 2024. The allowance for credit losses was 203.33% of non-performing loans. Investors should monitor the trends in loan quality and the adequacy of the reserve for potential losses.
Strategic Risks
Strategic decisions, such as the expansion into new markets, carry inherent risks. The corporation opened a new branch in Williamsville, New York, which could enhance market presence but also requires careful management to ensure profitability.
Mitigation Strategies
To address these risks, the corporation has implemented several strategies:
- Maintaining strong capital ratios to absorb potential losses, with a tangible equity to tangible assets ratio of 7.22%.
- Enhancing operational efficiencies to manage costs effectively, as reflected in an efficiency ratio of 67.92%.
- Continual assessment of loan portfolios and proactive management of credit risks, with annualized net charge-offs to total average loans at 0.02%.
| Risk Factor | Current Metric | Comparison |
|---|---|---|
| Total Assets | $2.774 billion | +2.3% from $2.711 billion |
| Net Interest Margin | 2.72% | Down from 2.73% |
| Non-Performing Loans | $10.5 million (0.52%) | Stable year-over-year |
| Allowance for Credit Losses | 203.33% of non-performing loans | Down from 216.28% |
| Tangible Equity to Tangible Assets | 7.22% | +66 basis points from prior quarter |
Future Growth Prospects for Chemung Financial Corporation (CHMG)
Future Growth Prospects for Chemung Financial Corporation
Analysis of Key Growth Drivers
The company is positioned for growth through strategic initiatives, including the expansion of customer time deposits, which increased by $102.8 million or 21.9% year-over-year. Interest-bearing demand deposits also rose by $58.2 million, reflecting a 20.0% increase.
Future Revenue Growth Projections and Earnings Estimates
For the third quarter of 2024, net interest income totaled $18.4 million, a growth of 2.2% compared to the same quarter in the previous year. This increase was driven by a $134.3 million rise in average balances of commercial loans. Furthermore, the earnings per share (EPS) for the third quarter of 2024 was reported at $1.19, compared to $1.05 in the prior quarter.
Strategic Initiatives or Partnerships That May Drive Future Growth
The establishment of a new regional banking center in Western New York is expected to enhance market presence and drive growth. Additionally, the bank's capital ratios exceed the well-capitalized requirements, indicating strong financial health to support expansion initiatives.
Competitive Advantages That Position the Company for Growth
The company's total equity to total assets ratio improved to 7.95% as of September 30, 2024, up from 7.20% at the end of 2023. This reflects a robust capital position that can support further growth.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Interest Income | $18.4 million | $18.0 million | +2.2% |
| EPS | $1.19 | $1.05 | +13.3% |
| Total Deposits | $2.554 billion | $2.515 billion | +1.5% |
| Total Equity | $220.7 million | $195.2 million | +13.0% |
Overall, these growth opportunities, combined with strategic initiatives and a solid capital base, position the company well for future financial performance.
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Article updated on 8 Nov 2024
Resources:
- Chemung Financial Corporation (CHMG) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Chemung Financial Corporation (CHMG)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Chemung Financial Corporation (CHMG)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.