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CF

CHEMUNG FINANCIAL CORP (CHMG)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 EPS was $1.24, up from $1.19 in Q3 and $0.80 YoY; net interest margin expanded 20 bps QoQ to 2.92% on lower funding costs and a one-time $0.3M interest income from payoff of a nonaccrual construction loan .
  • Total revenue (net interest income + non-interest income) rose QoQ to $25.88M (from $24.31M), driven by higher loan interest and lower deposit and borrowing costs; YoY revenue also improved vs Q4 2023 $23.77M .
  • Management highlighted disciplined deposit pricing and brokered deposit replacement as catalysts for margin improvement; Western NY Canal Bank expansion supported commercial loan growth (C&I +13.3% YoY; CRE +8.4% YoY) .
  • Operating expenses increased QoQ (+7.9%) on healthcare, incentive comp, consulting, and cybersecurity; credit remained stable with NPLs at 0.43% of loans and allowance coverage at 238.9% .
  • The Board raised the quarterly dividend to $0.32 (from $0.31) post-quarter; a modest capital return signal tied to strong performance and confidence heading into 2025 .

What Went Well and What Went Wrong

What Went Well

  • Strong net interest margin expansion: NIM rose to 2.92% (+20 bps QoQ) on reduced deposit and borrowing costs, and $0.3M interest income from payoff of a nonaccrual construction loan; “Strong net interest margin expansion speaks to the execution of Bank-wide strategic initiatives…” .
  • Funding cost management: average rates on brokered deposits fell 61 bps and customer time deposit rates were reduced via CD campaign adjustments, contributing to lower interest expense on deposits QoQ .
  • Commercial loan growth and asset quality: commercial balances increased QoQ and YoY; NPL ratio fell QoQ to 0.43%, with allowance coverage rising to ~239% .

What Went Wrong

  • Elevated non-interest expense: Q4 non-interest expense rose 7.9% QoQ (+$1.3M), driven by healthcare, incentive comp, consulting fees, and cybersecurity/data processing initiatives .
  • Deposit mix still costlier YoY: customer interest-bearing deposits higher YoY (+$105.9M) and time deposit rates up 25 bps YoY due to CD campaigns, keeping deposit expense above prior year levels .
  • Consumer loan runoff and auto net charge-offs: consumer balances declined QoQ and YoY; annualized consumer net charge-offs rose to 0.45% in Q4, concentrated in indirect auto .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Net Interest Income ($USD Millions)$17.90 $18.39 $19.82
Non-Interest Income ($USD Millions)$5.87 $5.92 $6.06
Total Revenue ($USD Millions)$23.77 $24.31 $25.88
Diluted EPS ($)$0.80 $1.19 $1.24
Net Interest Margin (FTE) (%)2.69% 2.72% 2.92%
Efficiency Ratio (Adjusted) (%)70.42% 67.69% 68.64%
ROAA (%)0.56% 0.83% 0.85%

Segment/Portfolio Mix (Period-End Loans)

Loans ($USD Millions)Q4 2023Q3 2024Q4 2024
Commercial$1,387.32 $1,464.21 $1,516.53
Mortgage$277.99 $274.10 $274.98
Consumer$307.35 $290.65 $279.92
Total Loans, Net ($USD Millions)$1,950.15 $2,007.51 $2,050.03

Key KPIs

KPIQ4 2023Q3 2024Q4 2024
Loans/Deposits (%)81.20% 82.78% 86.42%
Cost of Interest-Bearing Deposits (%)2.59% 2.88% 2.67%
Cost of Interest-Bearing Liabilities (%)2.68% 2.97% 2.73%
Yield on Interest-Earning Assets (FTE, %)4.50% 4.78% 4.79%
Cost of Borrowings (%)5.52% 5.08% 4.74%
NPLs ($USD Millions)$10.41 $10.55 $8.95
NPLs / Total Loans (%)0.53% 0.52% 0.43%
NPA / Total Assets (%)0.40% 0.40% 0.35%
ACL / Total Loans (%)1.14% 1.06% 1.03%
ACL / NPLs (%)216.28% 203.33% 238.87%
Annualized Net Charge-Offs / Avg Loans (%)0.03% 0.02% 0.12%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ4 2024$0.31 per share declared$0.32 per share declared for Q1 2025 (payable Apr 1, 2025)Raised
Revenue/EPS/Margins2025Not providedNot providedMaintained (no quantitative guidance)

Earnings Call Themes & Trends

Note: No Q4 2024 earnings call transcript was available in our document catalog.

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Funding costs & deposit strategy“Funding costs continue to remain challenging” with CD campaigns raising deposit costs Balance sheet “well positioned as we enter into this rate cutting cycle” Average rates on brokered and time deposits reduced; deposit expense down QoQ Improving
Net interest marginNIM contracted to 2.66% on higher liability costs NIM expanded to 2.72% on higher asset yields NIM expanded to 2.92% (+20 bps QoQ), aided by lower funding costs and one-time income Improving
Loan growth (Commercial)Growth concentrated in Albany; strong pipelines Higher yields; growth continued Annual commercial growth: C&I +13.3%, CRE +8.4%; Canal Bank expansion Positive
Liquidity & brokered depositsUsed BTFP; brokered deposits ~$69.5M; FHLB capacity $221.4M BTFP prepaid in Oct; brokered deposits $39.5M; strong liquidity Brokered deposits $92.2M; FHLB capacity $221.1M with $112.0M available Stable
Asset quality/CECLACL/loans 1.05%; NPLs 0.41%; CECL drivers updated NPLs 0.52%; ACL coverage 203%; charge-offs low NPLs 0.43%; ACL coverage 239%; consumer auto NCOs elevated Mixed (stable overall; higher consumer NCOs)
Capital & book valueTBVPS $37.59; equity/assets 7.30% Book value $46.22; TE/TA 7.22% Book value $45.13; TE/TA 7.02%; capital well-capitalized Stable

Management Commentary

  • “A prudent and relationship-based effort to manage funding costs provided a tailwind for fourth quarter earnings… Strong net interest margin expansion speaks to the execution of Bank-wide strategic initiatives…” — Anders M. Tomson, President & CEO .
  • “Our balance sheet is well positioned as we enter into this rate cutting cycle. We are seeing the benefit of higher yielding loans driving interest income, while funding costs continue to moderate.” — Anders M. Tomson (Q3) .
  • “Commercial credit pipelines remain robust… Funding costs continue to remain challenging, impacting net interest income expansion commensurate with our loan growth.” — Anders M. Tomson (Q2) .

Q&A Highlights

  • No Q4 2024 earnings call transcript was available; therefore no Q&A content to report from the quarter in our document set.

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable due to access limits at the time of retrieval; as a result, beats/misses versus consensus cannot be determined for this quarter. If consensus is obtained, investors should compare EPS $1.24, NIM 2.92%, and total revenue $25.88M to the published estimates to assess surprise magnitude .

Key Takeaways for Investors

  • Margin momentum is real: NIM expanded 20 bps QoQ to 2.92% on lower deposit/borrowing costs and one-time loan payoff income—if deposit pricing discipline persists, NIM should remain supported .
  • Deposit cost tailwinds emerged: brokered deposit rates fell 61 bps and customer time deposit rates declined; this reduced deposit interest expense QoQ and aided net interest income .
  • Commercial engines driving growth: year-end commercial balances rose 9.3% YoY; Canal Bank expansion supports pipelines and lending yield resilience .
  • Watch non-interest expense: Q4 OpEx grew 7.9% QoQ on healthcare, incentive comp, consulting, and cybersecurity—monitor trajectory into 2025 as margin gains could be offset .
  • Credit risk stable but consumer auto pressure: NPL ratio improved to 0.43%; consumer annualized NCOs at 0.45% in Q4 warrant attention as indirect auto runoff continues .
  • Liquidity and capital remain strong: ample unpledged AFS securities, FHLB capacity, and well-capitalized status support flexibility for growth and deposit mix management .
  • Dividend signal positive: the Board raised the quarterly dividend to $0.32, indicating confidence in earnings durability and capital position; modest yield enhancement could support shares near term .

Appendix: Additional Operational Detail

  • QoQ revenue drivers: Net interest income +$1.43M QoQ to $19.82M on lower deposit (-$0.8M) and borrowing (-$0.4M) expense, and slightly higher loan income (+$0.2M); non-interest income +$0.14M QoQ to $6.06M (swap fees, service charges) .
  • YoY revenue drivers: Net interest income +$1.92M YoY to $19.82M on higher loan balances/yields and lower borrowing expense; deposit expense rose YoY due to CD campaigns; NIM improved to 2.92% from 2.69% YoY .
  • One-time effects: $0.3M interest income on payoff of a nonaccrual construction loan; note non-GAAP FTE NIM used for comparability .