Chemung Financial (CMHG) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $5.0 million ($1.05 per share), down 21% year-over-year and from $7.1 million in Q1 2024, with a return on average equity of 10.27% and return on average assets of 0.73%.

• Six-month net income was $12.0 million ($2.53 per share), down 11% from the prior year, mainly due to lower net interest income and higher non-interest expense.

• Commercial credit pipelines remain robust, especially in the Capital District and Western NY.

• Funding costs continue to challenge net interest income expansion despite loan growth.

• Focus remains on expense management and branch rationalization.

Financial highlights

• Net interest income for Q2 2024 was $17.8 million, down 4.5% year-over-year and 1.7% sequentially, driven by higher deposit and borrowing costs.

• Non-interest income was $5.6 million, up 2.8% year-over-year and 3.7% year-over-year, but down 1.8% sequentially, led by higher wealth management fees and equity investment gains.

• Non-interest expense was $16.2 million, up 1.9% year-over-year but down 3.0% sequentially, with compensation and benefits up 4%.

• Efficiency ratio (adjusted) was 69.19% for Q2 2024, up from 65.94% a year ago but improved from 70.07% in Q1 2024.

• Allowance for credit losses was $21.0 million (1.05% of loans), with net charge-offs of $0.3 million in Q2.

Outlook and guidance

• Management expects continued pressure on net interest margin due to competition for deposits and higher funding costs.

• Loan growth is anticipated to remain concentrated in commercial real estate, especially in the Albany and Western NY regions.

• Asset quality remains stable, but management is monitoring economic conditions and credit trends closely.

• Management continues to monitor the impact of elevated interest rates on borrowers.

• The company anticipates continued use of brokered deposits as a secondary funding source.