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, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-13888
CHEMUNG FINANCIAL CORPORATION
-----------------------------
(Exact name of registrant as specified in its charter)
New York 16-1237038
------------------ ---------------
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.
One Chemung Canal Plaza, Elmira, NY 14902
----------------------------------- ---------
(Address of principal executive offices) (Zip Code)
(607) 737-3711
---------------
(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 XX NO
---- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of March 31, 1999:
Common Stock, $.01 par value -- outstanding 4,098,154 shares
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARY
--------------------------------------------
INDEX
-----
PAGE
PART I. FINANCIAL INFORMATION
Item 1: Financial Statements - Unaudited
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of Income 2
Condensed Consolidated Statements of Cash Flows 3
Notes to Condensed Consolidated Financial
Statements 4
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations 5
Item 3: Quantitative and Qualitative Disclosures
about Market Risk
Information required by this Item is set forth
herein in Management's Discussion and Analysis
of Financial Condition and Results of Operations
under the heading Interest Rate Risk. 12
PART II. OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K 13
All other items required by Part II are either
inapplicable or would require an answer which
is negative.
SIGNATURES 15
PART I. FINANCIAL INFORMATION
Item 1: Financial Statements
<TABLE>
<CAPTION>
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
--------------------------------------------
March 31 Dec. 31
1999 1998
---------- ----------
ASSETS
<S> <C> <C>
Cash and due from banks $24,472,105 $27,515,582
Int.-bearing deposits with other financial
Institutions 1,163,264 1,304,207
Securities held to maturity, fair value of
$6,713,967 in 1999 and $6,660,923 in 1998 6,713,967 6,660,923
Securities available for sale, at fair value 231,912,865 235,293,736
Loans, net of unearned income and deferred fees 341,906,040 329,255,342
Allowance for loan losses (4,552,493) (4,509,185)
------------ ------------
Loans, net 337,353,547 324,746,157
Bank premises and equipment, net 10,112,069 10,084,608
Intangible assets,
net of accumulated amortization 6,081,502 6,228,328
Other assets 12,350,571 11,826,068
------------ ------------
Total assets $630,159,890 $623,659,609
============ ============
LIABILITIES
Deposits: Non-interest bearing $ 91,190,059 $101,908,083
Interest bearing 391,566,251 364,231,279
----------- -----------
Total deposits 482,756,310 466,139,362
Securities sold under agreement to repurchase 51,018,415 50,587,369
Federal Home Loan Bank Advances 20,000,000 26,900,000
Other liabilities 10,316,569 13,943,251
---------- -----------
Total liabilities 564,091,294 557,569,982
----------- -----------
SHAREHOLDERS' EQUITY
Common Stock, $.01 par value per share;
authorized 10,000,000 shares,
issued: 4,300,134 43,001 43,001
Surplus 20,851,800 20,851,800
Retained earnings 43,913,941 42,770,991
Treasury stock, at cost (201,980 shares in 1999
and 197,380 in 1998) (3,094,241) (2,970,954)
Accumulated Other Comprehensive Income 4,354,095 5,394,789
----------- -----------
Total shareholders' equity 66,068,596 66,089,627
----------- -----------
Total liabilities & shareholders' equity $630,159,890 $623,659,609
============ ============
See Accompanying Notes to Condensed Consolidated Financial Statements
</TABLE>
<TABLE>
<CAPTION>
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited
--------------------------------------------
Three Months Ended
March 31
INTEREST INCOME 1999 1998
- --------------- ---- ----
<S> <C> <C>
Loans $ 6,897,357 $ 6,601,795
Securities 3,427,455 3,085,156
Federal funds sold 145,890 145,979
Interest bearing deposits 84,215 97,314
----------- -----------
Total interest income 10,554,917 9,930,244
----------- -----------
INTEREST EXPENSE
- ----------------
Deposits 3,607,551 3,733,259
Securities sold under agreement
to repurchase and funds borrowed 884,695 436,234
----------- -----------
Total interest expense 4,492,246 4,169,493
----------- -----------
Net interest income 6,062,671 5,760,751
Provision for loan losses 200,000 200,000
----------- -----------
Net interest income after
provision for loan losses 5,862,671 5,560,751
----------- -----------
Net Gain on Sales of Securities 0 147,385
Other operating income 2,105,686 1,844,598
----------- -----------
Total other operating income 2,105,686 1,991,983
Other operating expenses 5,311,476 4,931,619
----------- -----------
Income before income taxes 2,656,881 2,621,115
Income taxes 817,244 872,906
----------- -----------
Net Income $ 1,839,637 $ 1,748,209
=========== ===========
Net Income per Share $0.45 $0.42
See Accompanying Notes to Condensed Consolidated Financial Statements
</TABLE>
<TABLE>
<CAPTION>
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
----------------------------------------------
Three Months Ended
March 31
1999 1998
---- ----
OPERATING ACTIVITIES
- --------------------
<S> <C> <C>
Net income $ 1,839,637 $ 1,748,209
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of intangible assets 146,826 146,826
Provision for loan losses 200,000 200,000
Depreciation and amortization 392,130 375,910
Amortization and discount on
securities, net 176,269 21,393
Net Gain on Sales of Securities 0 (147,385)
(Increase) decrease in other assets (524,503) (693,941)
Increase (decrease) other liabilities (4,317,861) (2,729,281)
------------- -------------
Net cash provided (used) by
operating activities (2,087,502) 4,380,293
------------- -------------
INVESTING ACTIVITIES
- --------------------
Proceeds from maturities of securities - AFS 26,375,406 13,639,209
Proceeds from maturities of securities -HTM 620,747 822,130
Proceeds from sales of securities - AFS 248 6,080,716
Purchases of securities - AFS (23,519,683) (35,423,066)
Purchases of securities - HTM (673,791) (320,920)
Purchases of premises and equipment, net (419,591) (311,783)
Loans, net of repayments and
other reductions (13,431,139) 3,973,136
Proceeds from sales of student loans 623,749 285,957
------------- -------------
Net cash (used) by investing activities (10,424,054) (11,254,621)
------------- -------------
FINANCING ACTIVITIES
- --------------------
Net increase (decrease) in demand deposits,
NOW, savings and insured money
market accounts (2,367,298) (3,523,166)
Net increase (decrease) in certificates of
deposit and individual retirement account 18,984,245 13,767,481
Net increase (decrease) in securities sold
under agreements to repurchase 431,046 12,339,209
Net Increase (decrease) in Federal Home
Loan Bank advances (6,900,000) (6,300,000)
Sale of treasury shares 0 0
Purchase of treasury shares (123,287) (335,033)
Cash dividends paid (697,570) (641,611)
------------- ------------
Net cash provided (used) by
financing activities 9,327,136 15,306,880
------------ ------------
Net increase (decrease) in cash and
cash equivalents (3,184,420) 8,432,552
Cash and cash equivalents at beginning
of year 28,819,789 34,418,455
------------ ------------
Cash and cash equivalents at end of period $25,635,369 $42,851,007
============= ============
See Accompanying Notes to Condensed Consolidated Financial Statements
</TABLE>
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Summary of Significant Accounting Policies
------------------------------------------
Basis of Presentation
Chemung Financial Corporation (the Company) operates as a bank holding company.
Its only subsidiary is Chemung Canal Trust Company (the Bank).The consolidated
financial statements include the accounts of the Company and its wholly owned
subsidiary, the Bank. All material intercompany accounts and transactions have
been eliminated in the consolidation.
The data in the condensed consolidated balance sheet as of December 31, 1998
was derived from the Company's 1998 Annual Report to Shareholders. That data,
along with the other interim financial information presented in the condensed
consolidated balance sheets, statements of income and cash flows should be read
in conjunction with the consolidated financial statements, including the notes
thereto, contained in the 1998 Annual Report to Shareholders.
The condensed consolidated financial statements included herein reflect all
adjustments which are, in the opinion of management, of a normal recurring
nature and necessary to present fairly the Company's financial position as of
March 31, 1999 and December 31, 1998, and results of operations and cash flows
for the three month periods ended March 31, 1999 and 1998.
Net Income Per Share
Net income per share was computed by dividing net income by 4,100,321 weighted
average shares outstanding for the three month period ended March 31, 1999 and
4,123,483 weighted average shares outstanding for the three month period ended
March 31, 1998.
Comprehensive Income
Comprehensive income for the three-month periods ended March 31, 1999 and 1998
was $798,943 and $1,842,275, respectively. The following summarizes the
components of other comprehensive income:
<TABLE>
<CAPTION>
Unrealized Gains or Losses on Securities:
-----------------------------------------
<S> <C>
Unrealized holding gains during the
three months ended March 31, 1998,
net of tax (pre-tax amount of $304,005) $ 182,585
Reclassification adjustment for gains
realized in net income during the
three months ended March 31, 1998, net of
tax (pre-tax amount of $147,385) (88,519)
-------------
Other comprehensive income-three months ended
March 31, 1998 $ 94,066
==============
Unrealized holding losses during the
three months ended March 31, 1999,
net of tax (pre-tax amount of $(1,732,757)) $ (1,040,694)
Reclassification adjustment for gains or
losses realized in net income during the
three months ended March 31, 1999, net of
tax (pre-tax amount of $0) 0
-------------
Other comprehensive income-three months ended
March 31, 1999 $ (1,040,694)
=============
</TABLE>
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations
Total assets at March 31, 1999 were $630.2 million, an increase of $6.5 million
or 1.04% from the beginning of the year. This first quarter growth is reflected
in total loans which have increased by $12.7 million or 3.84%, primarily offset
by decreases in our securities portfolio and cash and due from banks of $3.3
million and $3.0 million respectively.
The available for sale segment of the securities portfolio totaled $231.9
million as compared to $235.3 million at the beginning of the year. At amortized
cost, increases in Federal Agency Bonds ($3.0 million) and Municipal Bonds
($1.3 million) were offset by paydowns in Mortgage Backed Securities of $5.9
million. The valuation allowance for available for sale securities has declined
by $1.7 million since year end 1998 as the result of the impact of higher market
interest rates. The held to maturity segment of the portfolio consisiting
primarily of Municipal Obligations totaled $6.7 million on both March 31, 1999
and December 31, 1998.
Amortized cost and fair value, maturity duration, and unrealized gains and
losses for the components in each of the Available for Sale and Held to Maturity
categories of the securities portfolio at March 31, 1999 are set forth in the
following tables:
<TABLE>
<CAPTION>
AVAILABLE FOR SALE HELD TO MATURITY
Amortized Fair Amortized Fair
Cost Value Cost Value
--------- -------- --------- -----
<S> <C> <C> <C> <C>
U.S. Treasury and other
U.S. Govt. Agencies $103,783,506 $103,763,542 $ - $ -
Mtg. Backed Securities 83,316,699 83,157,453 - -
Obligations of states and
Political subdivisions 22,269,473 22,549,466 6,656,642 6,656,642
Other bonds and notes 9,677,030 9,603,575 57,325 57,325
Corporate Stocks 5,616,582 12,838,829 - -
------------ ------------ ----------- --------
$224,663,290 $231,912,865 $6,713,967 $6,713,967
</TABLE>
The carrying value and weighted average yields based on amortized cost by years
to maturity for securities available for sale as of March 31, 1999 are as
follows (excluding corporate stocks):
<TABLE>
<CAPTION>
Maturing
Within One Year After One, Within Five
Amount Yield Amount Yield
------ ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Treasury and other
U.S. Government Agencies $ 28,575,820 5.89% $ 51,197,722 6.03%
Mortgage Backed Securities - - 1,724,649 6.69%
Obligations of states and
political subdivisions 4,803,323 4.74% 5,785,768 4.56%
Other bonds and notes - - 2,491,400 6.25%
------------ ------------
Total $ 33,379,143 5.73% $ 61,199,539 5.93%
</TABLE>
<TABLE>
<CAPTION>
Maturing
After Five, Within Ten After Ten Years
Amount Yield Amount Yield
------ ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Treasury and other
U.S. Government Agencies $ 23,990,000 6.28% $ - -
Mortgage Backed Securities - - 81,432,804 6.92%
Obligations of states and
political subdivisions 6,914,098 4.65% 5,046,277 4.88%
Other bonds and notes 2,610,150 6.31% 4,502,025 6.88%
------------ ------------
Total $ 33,514,248 5.95% $90,981,106 6.80%
</TABLE>
Mortgage-backed securities are expected to have shorter average lives than their
contractual maturities as shown above, because borrowers may repay obligations
with or without call or prepayment penalties.
The amortized cost and weighted average yields by years to maturity for
securities held to maturity as of March 31, 1999 are as follows:
<TABLE>
<CAPTION>
Maturing
Within One Year After One, Within Five
Amount Yield Amount Yield
------ ----- ------ -----
<S> <C> <C> <C> <C>
Obligations of states and
political subdivisions $ 3,646,173 3.86% $ 1,736,039 4.63%
Other bonds and notes - - - -
----------- -----------
Total $ 3,646,173 3.86% $ 1,736,039 4.63%
</TABLE>
<TABLE>
<CAPTION>
Maturing
After Five, Within Ten After Ten Years
Amount Yield Amount Yield
------ ----- ------ -----
<S> <C> <C> <C> <C>
Obligations of states and
political subdivisions $ 1,274,430 4.02% $ - -
Other bonds and notes 57,325 8.25% - -
----------- ---------
Total $ 1,331,755 4.20% $ - -
</TABLE>
There are no securities of a single issuer (other than securities of the U.S.
Government and its agencies) that exceed 10% of shareholders equity at March 31,
1999 in either the Available for Sale or Held to Maturity categories.
Gross unrealized gains and gross unrealized losses on securities Available for
Sale were as follows:
<TABLE>
<CAPTION>
AVAILABLE FOR SALE
Unrealized Unrealized
Gains Losses
---------- ----------
<S> <C> <C>
U.S. Treasury and other
U.S. Govt. Agencies $ 272,894 $ 292,858
Mtg. Backed Securities 444,387 603,633
Obligations of states and
Political subdivisions 315,925 35,932
Other bonds and notes 0 73,455
Corporate Stocks 7,222,247 -
---------- -----------
$8,255,453 $1,005,878
</TABLE>
There were no realized net gains or losses on sales of securities available for
sale during the three month period ended March 31, 1999.
Included in the Corporate Stocks component in the above tables are 46,898 shares
of SLM Holding Corp., formerly known as Student Loan Marketing Association
("Sallie Mae") at a cost basis of $4,290 and fair value of $1,957,992. These
shares were acquired as preferred shares (a permitted exception to the U.S.
Government regulation banning bank ownership of equity securities) in the
original capitalization of the U.S. Government Agency. Later, the shares were
converted to common stock as Sallie Mae recapitalized. Additionally, at March
31, 1999, the bank's equity portfolio held listed securities totaling $89,538
at cost with a total fair value of $5,327,907. These shares were acquired
prior to the enactment of the Banking Act of 1933. Other equities included in
the bank portfolio are 9,964 shares of Federal Reserve Bank and 39,556 shares of
the Federal Home Loan Bank of New York valued at $498,200 and $3,955,600
respectively. Management has no current plans for selling these securities.
Total loan balances have increased $12.7 million or 3.84% since the beginning of
the year. We have experienced strong first quarter demand in commercial lending
where total business portfolio balances have increased by $12.0 million or
10.50%. Mortgage activity has remained strong with outstanding balances growing
$2.3 million or 2.53%. Total consumer loans were down $1.5 million centered
primarily in consumer installment loans and home equity loans which declined
$1.3 million and $479 thousand respectively. We would attribute some of the
above decrease in consumer installment loans to seasonal slowness in indirect
auto lending activity.
Total deposits at March 31, 1999 were $482.8 million as compared to $466.1
million at the beginning of the year, an increase of $16.7 million or 3.56%.
While public fund balances were up $26.0 million, this was somewhat offset by a
$9.3 million decrease in personal and non-personal balances reflected primarily
in non-interest bearing demand deposits. Much of this relates to the fact that
direct deposits normally received on the first and third of the month were
received on December 31, 1998 thereby somewhat inflating year end deposit
balances.
Results of Operations
Net earnings for the first quarter of 1999 were $1.840 million, an increase of
$91 thousand or 5.23% when compared to first quarter 1998 results. Net earnings
per share for the period were $0.45 on 4,100,321 average shares outstanding
versus $0.42 on 4,123,483 average shares outstanding the prior year. During the
first quarter of 1998, realized after tax gains of $89 thousand were taken on
the sale of $5.9 million of municipal obligations. No gains were taken during
the first quarter of this year. Excluding the 1998 gains, all other net
earnings increased by $180 thousand or 10.84% when compared to first quarter
1998 results. These positive results were impacted by a $302 thousand increase
in net interest income as well as a $261 thousand (14.15%) increase in other
operating income, the above being somewhat offset by a $380 thousand (7.70%)
increase in other operating expenses. The reduction in income tax expense when
compared to last year has resulted from tax minimization strategies implemented
primarily in the second quarter of 1998.
Liquidity and Capital Resources
As indicated on the Condensed Consolidated Statement of Cash Flows, cash and
cash equivalents have decreased by $3.2 million since the beginning of the year.
The primary sources of cash flow during the three month period ended March 31,
1999 included proceeds from the maturity of investment securities ($27.0
million) and an increase in deposits ($16.6 million) due primarily to higher
public fund deposit balances. Cash generated from the above sources were used
primarily to fund loan growth ($12.7 million), purchase securities ($24.2
million), repay overnight advances from the Federal Home Loan Bank ($6.9
million) and reduce other liabilities ($4.3 million).
During the three months ended March 31, 1999, the company acquired 4,600
treasury shares at an average price of $26.80 per share. No treasury shares
have been sold thusfar in 1999. During the quarter, the Company declared a cash
dividend of $0.17 per share.
Non Performing Loans and Allowance For Loan Losses
Based upon loans outstanding, past experience, as well as an ongoing review of
the risk inherent in our loan portfolio, management has maintained the loan loss
provision for the first three months at $200 thousand which is equal to the
amount expensed during the first three months of 1998. At 98% of non-performing
loans and 1.33% of total loans, the Allowance for Loan Losses is viewed by
management as adequate relative to risk. Non-performing loans at March 31, 1999
constituted 1.36% of total loans.
Changes in the allowance for loan losses for the three months ended March 31,
1999 is as follows:
<TABLE>
<CAPTION>
March 31, 1999
Amount (000's)
--------------
<S> <C> <C>
Balance at beginning of period $ $ 4,509
Charge-offs:
Domestic:
Commercial, financial and agricultural 16
Commercial mortgages 0
Residential mortgages 7
Consumer loans 183 $ 206
Recoveries:
Domestic:
Commercial, financial and agricultural $ 15
Commercial mortgages 0
Residential mortgages 0
Consumer loans 34
-------
$ 49
-------
Net charge-offs $ 157
Provision charged to operations 200
Balance at end of period $ 4,552
-------
Ratio of net charge-offs during the period
to average loans outstanding during the period .05%
</TABLE>
A loan would be considered impaired when it is probable that after having
considered current information and events regarding the borrower's ability to
repay their obligations, the corporation will be unable to collect all amounts
due according to the contractual terms of the loan agreement.
Included in the allowance for loan losses at March 31, 1999 is an allowance for
impaired loans of $946 thousand versus $993 thousand at the beginning of the
year. The total recorded investment in these loans at March 31, 1999 and
December 31, 1998 was $4.349 million and $4.569 million respectively.
A loan is placed on non-accrual when it becomes past due and is referred to
legal counsel, or in the case of a commercial loan which becomes 90 days
delinquent, or in the case of a consumer loan (not guaranteed by a government
agency) or a real estate loan which becomes 120 days delinquent unless, because
of collateral or other circumstances, it is deemed to be collectible. When
placed on non-accrual, previously accrued interest is reversed. Loans may also
be placed in non-accrual if management believes such classification is
warranted for other reasons.
At March 31, 1999, the allocation of the allowance for loan losses is as
follows:
<TABLE>
<CAPTION>
Reported Period
March 31, 1999
---------------
Balance at end of period
applicable to:
Percent of Loans in each
Amount Category to Total Loans
------ ------------------------
<S> <C> <C>
Domestic:
Commercial, financial
and agricultural 2,088,439 36.77%
Commercial mortgages 22,969 1.40%
Residential mortgages 91,752 25.43%
Consumer loans 934,715 36.40%
Unallocated: 1,414,618 N/A
--------- --------
Total $4,552,493 100.00%
</TABLE>
For the periods ended March 31, 1999 and December 31, 1998, the following table
summarized the Company's non-accrual and past due loans:
<TABLE>
<CAPTION>
Amounts (000's)
---------------
March 31, 1999 December 31, 1998
-------------- -----------------
<S> <C> <C>
Non-accrual loans $ 4,525 $ 4,457
------- ---------
Accruing loans past due $ 117 $ 357
90 days or more ------- ---------
</TABLE>
At March 31, 1999, the Company has no commercial loans for which payments are
presently current but the borrowers are currently experiencing severe financial
difficulties. At March 31, 1999, no loan concentrations to borrowers engaged in
the same or similar industries exceeded 10% of total loans and the Corporation
has no interest-bearing assets other than loans that meet the non-accrual, past
due, restructured or potential problem loan criteria.
On March 31, 1999, the Company's consolidated leverage ratio was 8.96%. The Tier
I and Total Risk Adjusted Capital ratios were 15.23% and 16.48%, respectively.
Significant Issue - Year 2000
In 1997, management advised its Board of Directors of the many issues
surrounding the approach of January 1, 2000. Nearly all computer hardware and
software developed during the current century have been programmed with two
digit reference to each year. Such hardware and software, if not upgraded by
January 1, 2000, may become useless. Management is undergoing a five-phase
project to respond to this issue, with major emphasis on identifying all
applications and databases supporting the Bank's mission-critical applications.
The five phase are awareness, assessment, renovation, validation and
implementation, and will seek to neutralize not only the Bank's vulnerability,
but to determine the financial capacity of its vendors, determine alternate
vendors, and evaluate the capacity of its customers to respond to this
challenge. A committee continues to direct the Bank's Year 2000 activities
under the framework of the FFIEC's Five-Step Program. The first phase of
testing of critical applications was substantially completed by year-end 1998,
with testing of other non-critical applications completed by March of 1999. The
Bank will continue to test applications throughout 1999 to insure all systems
are Year 2000 compliant. The Company has begun evaluating Year 2000 readiness
of its commercial loan applicants as part of the loan underwriting process and
is calling upon major existing borrowers to assess their readiness and identify
potential problems.
In addition, the Bank has formulated a contingency plan for business
continuation in the event of Year 2000 systems failures. This contingency plan
is based upon the Bank's existing disaster recovery plan with modifications for
the Year 2000 risks. The Bank expects to complete its systems contingency plan
with testing and implementation by June 1999.
Significant Year 2000 failures in the Bank's systems or in the system's of third
parties (or third parties upon whom they depend) could have a material adverse
effect on the Bank's financial condition and results of operations. The Bank
believes that its reasonably likely worst-case Year 2000 scenario is (i) a
material increase in the Bank's credit losses due to Year 2000 problems for
the Bank's borrowers and obligors, and (ii) disruption in financial markets
causing liquidity stress to the Bank. The magnitude of these potential credit
losses and disruption cannot be determined at this time.
It is expected that costs associated with Year 2000 readiness including hardware
and software upgrades, as well as costs of testing, will be approximately
$200,000.
Interest Rate Risk
The Company realizes a major source of income by acting as intermediary between
borrowers and savers. The differential or spread between interest earned on
earning assets, primarily loans and investments, and the interest paid to
depositors is affected with changes to market interest rates. Additionally,
because of assumptions made to the Company's loan and investment portfolios
and to its deposit base, changes in interest rates can materially affect the
projected maturities of these balance sheet classes and thus alter the Company's
sensitivity to future changes in interest rates.
The Bank's Asset/Liability Committee (ALCO) has the strategic responsibility
for setting the policy guidelines on acceptable interest rate risk exposure.
The ALCO is made up of the chief executive officer, executive vice presidents,
senior lending officer, senior marketing officer, financial officer and others
representing key functions. All guidelines set by this committee are board
approved. The ALCO's primary focus is on maintaining consistent growth in net
interest income with an acceptable level of volatility as a result of changes
to interest rates. As of March 31, 1999 the exposure to changing interest rates
is within the guidelines established by the ALCO.
The Company uses an industry standard earnings simulation model as its primary
method to identify and manage its interest rate risk profile. The model is
based on projected cash flows using historical data for all financial
instruments. Also incorporated into the model are assumptions of deposit rates
and balances in relation to changes in interest rates. These assumptions are
based on internal historical data. In recent years core deposits (NOW accounts,
Insured Money Market Accounts and Savings accounts) have not been re-priced
with movements of interest rates in the negotiable securities markets. The ALCO
recognizes that the assumptions made are inherently uncertain.
The ALCO uses static gap analysis as a secondary method of identifying and
managing the Company's interest rate risk profile. Gap analysis measures the
difference between the assets and liabilities re-pricing and maturing within
specific time periods, called buckets. A positive gap indicates more rate
sensitive assets are due to either re-price or mature than rate sensitive
liabilities in a specific bucket. This would indicate that the Company should
have rising earnings in periods of rising interest rates and falling earnings
in periods of falling rates.
The ALCO recognizes the limitations of static gap analysis. Primarily it does
not take into account the effect of interest rate movements and the competitive
market forces on the re-pricing and maturity characteristics of interest-earning
assets and interest-bearing liabilities. For these reasons, and for the recent
practicality of using earnings simulation models gap analysis has fallen out
of favor with the risk management community.
Lastly, the ALCO monitors the expected fluctuation of the Company's market value
of equity with changes to interest rates. Appropriate risk limits have been
established to protect shareholders in the advent of adverse changes to interest
rates, and as of March 31, 1999 exposure to changing interest rates is within
the risk limits established.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Applicable Exhibits
(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.
Certificate of Amendment to the Certificate of Incorporation,
Filed with the Secretary of State of New York on May 13,
1998.
EXHIBIT A
(3.2) Bylaws of the Registrant, as amended to December 9, 1998.
EXHIBIT B
(27) Financial Data Schedule (EDGAR version only)
(b) Reports on Form 8-K
During the quarter ended March 31, 1999, no reports on Form
8-K or amendments to any previously-filed Form 8-K were
filed by the registrant.
FORM 10 - Q
QUARTERLY REPORT
EXHIBIT INDEX
FOR THE PERIOD ENDING MARCH 31, 1999
CHEMUNG FINANCIAL CORPORATION
ELMIRA, NEW YORK
_____________________________
EXHIBIT A Certificate of Amendment to the Certificate of
Incorporation, filed with the Secretary of the
State of New York on May 13, 1998.
EXHIBIT B Amended Bylaws Effective December 9, 1998
(A copy of the Bylaws exhibit filed with the
Securities and Exchange Commission may be obtained
upon request by writing to the registrant's
Corporate Secretary.)
EXHIBIT A
Certificate of Amendment
-of the-
Certificate of Incorporation
-of-
CHEMUNG FINANCIAL CORPORATION
-----------------------------
Under Section 805 of the Business Corporation Law
-------------------------------------------------
We, the undersigned, Jan P. Updegraff, President and Robert J. Hodgson,
Secretary of Chemung Financial Corporation, do hereby certify:
1. The name of the Corporation is Chemung Financial Corporation.
2. The corporation's Certificate of Incorporation was filed by the Department
of State of the State of New York on January 2, 1985.
3. The corporation's Certificate of Incorporation is hereby amended:
(a) to change the number of shares which the corporation is
authorized to issue from 3,000,000 shares of common stock of the par
value of $5.00 each to 10,000,000 shares of common stock of the
par value of $.01 each and for this purpose, Article 4 of the
Certificate of Incorporation is hereby amended to read as follows:
4. Number of Shares. The aggregate number of shares which the Corporation
shall have the authority to issue is: Ten Million (10,000,000), all of
which shall be common shares of the par value of one cent ($.01) each.
(b) to change the 2,150,067 issued shares of common stock of the
corporation of the par value of $5.00 each into 4,300,134 shares
of common stock of the par value of $.01 each by changing each
share of issued common stock of the par value of $5.00 each into
two (2) shares of common stock of the par value of $.01 each.
(c) to change the 849,933 shares of authorized but unissued
common stock of the corporation of the par value of $5.00 each into
1,699,866 shares of authorized but unissued common stock of the
par value of $.01 each by changing each share of authorized but
unissued common stock of the par value of $5.00 each into two (2)
shares of authorized but unissued common stock of the par value of
$.01 each.
(d) to authorize 4,000,000 new shares of common stock with a par
value of $.01 per share.
IN WITNESS WHEREOF, we have signed this Certificate and affirmed the same as
true under the penalties of perjury this 13th date of May, 1998.
_____________________________ ________________________________
/s/Jan P. Updegraff /s/Robert J. Hodgson
President Secretary
EXHIBIT B
CHEMUNG FINANCIAL CORPORATION
BY-LAWS
Amended to December 9, 1998
ARTICLE I
Offices
SECTION 1. Principal Office
The principal office of the corporation shall be located in the City of Elmira,
County of Chemung and State of New York.
SECTION 2. Other Offices
The corporation may also have such other offices, either within or without the
State of New York, as the Board of Directors may from time to time determine
or the business of the corporation may require.
ARTICLE II
Shareholders
SECTION 1. Place of Meetings of Shareholders
Meetings of shareholders may be held at such place, within or without the
State of New York, as may be fixed by the Board of Directors.
SECTION 2. Annual Meeting of Shareholders
A meeting of shareholders shall be held annually on such date and at such place
and time as may be fixed by the Board of Directors for the election of directors
and the transaction of other business.
SECTION 3. Special Meetings of Shareholders
Special meetings of the shareholders may be called by the Board of Directors
or by the chairman of the board or by the president. Such call shall state
the purpose or purposes of the proposed meeting. Business transacted at any
special meeting shall be confined to the purpose or purposes for which the
meeting is called.
SECTION 4. Fixing Record Date
The Board of Directors may fix, in advance, a date as the record date for
purpose of determining the shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or to express consent to
or dissent from any proposal without a meeting, or for the purpose of
determining shareholders entitled to receive payment of any dividend or the
allotment of any rights, or for the purpose of any other action. Such date
shall be not more than sixty (60) nor less than ten (10) days before the date
of such meeting nor more than 60 days before any other action. If no record
date is fixed, the record date for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders shall be at the
close of business on the day next preceding the day on which notice is given
and for all other purposes shall be at the close of business on the day on
which the resolution of the Board of Directors relating thereto is adopted.
SECTION 5. Notice of Meetings of Shareholders
Written notice of every meeting of shareholders shall state the place, date
and hour of the meeting and unless it is the annual meeting, indicate that it
is being issued by or at the direction of the person or persons calling the
meeting. Notice of a special meeting shall also state the purpose or purposes
for which the meeting is called. If, at any meeting, action is proposed to
be taken which would, if taken, entitle shareholders fulfilling the statutory
requirements to receive payment for their shares, the notice of such meeting
shall include a statement of that purpose and to that effect. A copy of
the notice of any meeting shall be given, personally or by mail, not less
than ten (10) nor more than sixty (60) days before the date of the meeting,
to each shareholder entitled to vote at such meeting. If mailed, such notice
shall be deemed given when deposited in the United States mail, with postage
thereon prepaid, directed to the shareholder at his address as it appears on
the record of shareholders or, if he shall have filed with the secretary of the
corporation a written request that notices to him be mailed to some other
address, then directed to him at such other address.
SECTION 6. Adjourned Meetings
When a determination of shareholders entitled to notice of or to vote at any
meeting of shareholders has been made, such determination shall apply to any
adjournment thereof, unless the Board of Directors fixes a new record date
for the adjourned meeting. When a meeting is adjourned to another time or
place, it shall not be necessary to give any notice of the adjourned meeting
if the time and place to which the meeting is adjourned are announced at the
meeting at which the adjournment is taken, and at the adjourned meeting the
corporation may transact any business that might have been transacted on the
original date of the meeting. However, if after the adjournment the Board of
Directors fixes a new record date for the adjourned meeting, a notice of the
adjourned meeting shall be given to each shareholder of record on the new
record date entitled to notice.
SECTION 7. List of Shareholders at Meeting
A list of shareholders as of the record date, certified by the secretary or by
the transfer agent, shall be produced at any meeting of shareholders upon the
request thereat or prior thereto of any shareholder. If the right to vote at
any meeting is challenged, the inspectors of election, or person presiding
thereat, shall require such list of shareholders to be produced as evidence of
the right of the persons challenged to vote at such meetings, and all persons
who appear from such list to be shareholders entitled to vote at such meeting.
SECTION 8. Quorum of Shareholders
The holders of a majority of the shares entitled to vote thereat shall
constitute a quorum at a meeting of shareholders for the transaction of any
business. When a quorum is once present to organize a meeting, it is not
broken by the subsequent withdrawal of any shareholders. Despite the absence
of a quorum, the shareholders present may adjourn the meeting.
SECTION 9. Proxies
Every shareholder entitled to vote at a meeting of shareholders or to express
consent or dissent without a meeting may authorize another person or persons
to act for him by proxy. Every proxy must be signed by the shareholder or his
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the shareholder executing it,
except in those cases where an irrevocable proxy is provided by law.
SECTION 10. Inspectors at Shareholders Meetings
The Board of Directors, in advance of any shareholders meeting, may appoint one
or more inspectors to act at the meeting or any adjournment thereof. If
inspectors are not so appointed, the person presiding at a shareholders meeting
may, and on the request of any shareholder entitled to vote thereat shall,
appoint inspectors. If appointed on the request of one or more shareholders,
the holders of a majority of shares present and entitled to vote thereat shall
determine the number of inspectors to be appointed. In case any person
appointed fails to appear or act, the vacancy may be filled by appointment
made by the Board of Directors in advance of the meeting or at the meeting by
the person presiding thereat. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector at such meeting with strict impartiality and according to
the best of his ability. The inspectors shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine all challenges and questions
arising in connection with the right to the result, and do such acts as are
proper to conduct the election or vote with fairness to all shareholders. On
request of the person presiding at the meeting or any shareholder entitled to
vote thereat, the inspectors shall make a report in writing of any challenge,
question or matter determined by them and execute a certificate of any fact
found by them. A report or certificate made by them shall be prima facie
evidence of the facts stated and of the vote as certified by them.
SECTION 11. Qualifications of Voters
Every shareholder of record shall be entitled at every meeting of shareholders
to one vote for every share standing in his name on the record of shareholders.
Neither treasury shares nor shares held by another domestic or foreign
corporation of any type or kind, if a majority of the shares entitled to vote
in the election of directors of such other corporation is held by the
corporation, shall be voted at any meeting or counted in determining the total
number of outstanding shares.
Shares held by an administrator, executor, guardian, conservator, committee,
or other fiduciary, except a trustee, may be voted by him, either in person or
by proxy, without transfer of such shares into his name. Shares held by a
trustee may be voted by him, either in person or by proxy, only after the shares
have been transferred into his name as trustee or into the name of his nominee.
Shares held by or under the control of a receiver may be voted by him without
the transfer thereof into his name if authority so to do is contained in an
order of the court by which such received was appointed.
A shareholder whose shares are pledged shall be entitled to vote such shares
until the shares have been transferred into the name of the pledgee, or a
nominee of the pledgee.
Shares standing in the name of another domestic or foreign corporation of any
type or kind may be voted by such officer, agent or proxy as the By-Laws of
such corporation may provide or, in the absence of such provision, as the Board
of Directors of such corporation may determine.
SECTION 12. Vote of Shareholders
Directors shall, except as otherwise required by law, be elected by a plurality
of the votes cast at a meeting of shareholders by the holders of shares entitled
to vote in the election. Any other corporate action by vote of the shareholders
shall, except as otherwise required by law, these By-Laws or the certificate
of incorporation, be authorized by a majority of the votes cast at a meeting
of shareholders by the holders of shares entitled to vote thereon.
SECTION 13. Conduct of Shareholders' Meetings
The Officer presiding over the shareholders' meeting may establish such rules
and regulations for the conduct of the meeting as the presiding Officer may
deem to be reasonably necessary or desirable for the orderly and expeditious
conduct of the meeting.
SECTION 14. Shareholder Proposals
No shareholder shall be entitled to submit a proposal to a meeting of
shareholders unless at the time of submitting the proposal, the shareholder
shall be a record or beneficial owner of at least 1% or $1,000 in market value
of shares entitled to be voted at the meeting, and shall have held such shares
for at least one year and shall continue to own such shares through the date
on which the meeting is held. A shareholder meeting the above requirements
shall deliver to the secretary of the corporation not later than 120 days prior
to the date on which the corporation's proxy statement was mailed to
stockholders in connection with the previous year's annual meeting, the text of
any proposal which he intends to propose at an annual meeting of shareholders
and a notice of the intention of the shareholder to present such proposal at
the meeting. A proposal to be presented at any meeting of shareholders other
than an annual meeting shall be delivered to the secretary a reasonable time
before the mailing of the corporation's proxy material.
ARTICLE III
Directors
SECTION 1. Board of Directors
The business of the corporation shall be managed under the direction of its
Board of Directors.
SECTION 2. Qualifications of Directors
Each director shall be at least 18 years of age and shall automatically cease
to be a director on the last day of the month during which he or she attains
the age of seventy-two (72) years. At the time of taking an office, each
director shall be a stockholder of the corporation owning in his or her
own right, free from pledge, lien or charge, the number of shares of capital
stock of the corporation while each director of a New York bank or trust company
is required to own in such bank or trust company or a holding company of such
bank or trust company by the New York State Banking law. If a director shall
cease to own the required number of shares, he or she automatically ceases to
be a director of the corporation and his or her office shall be vacant, and he
or she shall not be eligible for re-election as a director for a period of one
year from the date of the next succeeding annual meeting of stockholders of
the corporation.
SECTION 3. Number of Directors
The number of directors constituting the entire Board shall be nineteen(19).
This number may be incresed or decreased from time to time by amendment of
these By-Laws, provided, however, that the number may not be decreased to less
than three (3). No decrease in the number of directors shall shorten the
term of any incumbant director.
SECTION 4. Election and Term of Directors
The directors shall be classified by the Board of Directors with respect to the
time for which they severally hold office, into three classes, as nearly equal
in number for a term of (1) year, the second class shall be orginally elected
for a term of two (2) years, and the third class shall be originally
elected for a term of three (3) years, with the directors of each class to hold
office until their successors are elected and qualified. Newly created
directorships resulting from an increase in the number of directors shall be
classified by the Board of Directors when the directorship is created. At each
annual meeting of the stockholders of the corporation, the successors of the
class of directors whose terms expire at that meeting shall be elected to hold
office for a term expiring at the annual meeting of stockholders held in the
third year following the year of their election or until their successors are
elected and have qualified.
SECTION 5. Nominations for Directors
Nominations of candidates for election as directors of the corporation at any
meeting of stockholders called for the election of directors may be made by
the Board of Directors or by any stockholder entitled to vote at such meeting.
Nominations made by the Board of Directors shall be made at a meeting of the
Board of Directors, or by written consent of directors in lieu of a meeting,
not later than 60 days prior to the date of any meeting of stockholders called
for the election of directors. The secretary of the corporation shall request
that each such proposed nominee provide the corporation with such information
concerning himself as is required, under the rules of the Securities and
Exchange Commission, to be included in the corporation's proxy statement
soliciting proxies for his election as a director. Any stockholder who intends
to make a nomination at any annual meeting of stockholders shall deliver to the
secretary of the corporation not later than 120 days prior to the date on which
the corporation's proxy statement was mailed to stockholders in connection with
the previous year's annual meeting, or if such nomination is to be made at a
meeting of shareholders other than an annual meeting, a reasonable time before
the mailing of the corporation's proxy material, a notice setting forth (i) the
name, age, business address and residence address of each nominee proposed in
such notice, (ii) the principal occupation or employment of each nominee, (iii)
the number of shares of capital stock of the corporation which are owned of
record and beneficially by each such nominee and (iv) such other information
concerning each such nominee as would be required, under the rules of the
Securities and Exchange Commission, in a proxy statement soliciting proxies
for the election of such nominees. Such notice shall include a signed consent
of such nominee to serve as a director of the corporation, if elected. In the
event that a person is validly designated as a nominee in accordance with the
provisions of this section and shall thereafter become unable or unwilling to
stand for election to the Board of Directors, the Board of Directors or the
stockholder who proposed such nominee, as the case may be, may designate a
substitute nominee. If the secretary of the meeting of stockholders called for
the election of directors determines that a nomination was not made in
accordance with the foregoing procedures, such nomination shall be void.
SECTION 6 Newly Created Directorships and Vacancies
Newly created directorships resluting from an increase in the numer of directors
and vacancies occurring in the Board of Directors for any reson may be filled
by vote of a majority of the directors then in office, although less than a
quorum exists. A director elected to fill a newly created directorship or a
vacancy, shall be elected to hold office until the next meeting of shareholders
at which the election of directors is in the regular order of business, and
until his successor has been elected and qualified.
SECTION 7. Removal of Directors
Any director, an entire class of directors or the entire Board of Directors may
be removed from office, with or without cause, only by the affirmative vote of
the holders of at least 75% of the outstanding shares of stock of the
corporation entitled to vote generally in the election of directors, voting
together as a single class.
SECTION 8. Quorum of Directors
One-third (1/3) of the entire Board of Directors or seven directors, whichever
number is greater, shall constitute a quorum for the transaction of business or
of any specified item of business.
SECTION 9. Action by the Board of Directors
The vote of the majority of the directors present at a meeting of the Board of
Directors at the time of the vote, if a quorum is present at such time, shall,
except as otherwise provided by law, these By-Laws or the certificate of
incorporation, be the act of the Board of Directors.
SECTION 10. Written Consent of Directors Without A Meeting
Any action required or permitted to be taken by the Board of Directors or a
committee thereof may be taken without a meeting if all members of the Board
or the committee consent in writing to the adoption of a resolution authorizing
the action. The resolution and the written consents thereto by the members of
the board or committee shall be filed with the minutes of the proceedings of
the Board or committee.
SECTION 11. Place and Time of Meetings of Board of Directors
Meetings of the Board of Directors, regular or special, may be held at any
place, within or without the State of New York and at any time, fixed by the
Board of Directors or by the person or persons calling the meeting. Such
meetings may be held by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time.
SECTION 12. Notice of Meetings of the Board of Directors
Regular meetings of the Board of Directors may be held without notice if the
time and place of such meetings are fixed by the Board of Directors. Special
meetings of the Board of Directors shall be held upon notice to the directors
and may be called by the chairman of the board, the president, the executive
vice president, or any two directors. The notice shall be given personally
including by telephone or mail, telegram, cable or other public instrumentality.
If given personally or by telephone, such notice shall be given not less than
48 hours before the meeting to each director. If given by mail, cable, telegram
or other public instrumentality, such notice shall be given not less than five
(5) days before the date of the meeting, to each director. Such notice shall
be deemed given, if mailed, when deposited in the United States mail, with
postage thereon prepaid or, if telegraphed, cabled or sent by other public
instrumentality, when given to the telegraph company, cable company, or other
public instrumentality, directed to the director at his business address or,
if he shall have filed with the secretary of the corporation, a written request
that notices to him be mailed or telegraphed, cabled or sent to some other
address, then directed to him at such other address. The notice need not
specify the purpose of any regular or special meeting of the Board of Directors.
SECTION 13. Interested Directors
No contract or other transaction between a corporation and one or more of its
directors, or between a corporation and any other corporation, firm,
association or other entity in which one or more of its directors, or officers,
are directors or have a substantial financial interest, shall be either void
or voidable for this reason alone or by reason alone that such director or
directors are present at the meeting of the Board, or of a committee thereof,
which approves such contract or transaction or that his or their votes are
counted for such purpose:
1. If the material facts as to such director's interest in such contract or
transaction and as to any such common directorship, officership or
financial interest are disclosed in good faith or known to the Board
or committee, and the Board or committee approves such contract or
transaction by a vote sufficient for such purpose without counting the
vote of such interested director or, if the votes of the disinterested
directors are insufficient to constitute an act of the Board as defined
in Section 9 of this Article, by unanimous vote of the disinterested
directors; or
2. If the material facts as to such director's interest in such contract or
transaction and as to any such common directorship, officership or
financial interest are disclosed in good faith or known to the
shareholders entitled to vote thereon, and such contract or transaction
is approved by vote of such shareholders; or
3. If the contract or transaction is affirmatively established by the party
or parties thereto to be fair and reasonable as to the corporation at
the time it was approved by the Board, a committee thereof, or the
shareholders.
Common or interested directors may be counted in determining the presence of
a quorum at a meeting of the Board or a committee thereof which approves
such contract or transaction.
The Board of Directors shall have authority to fix the compensation of
directors for services in any capacity.
A loan shall not be made by the corporation to any director unless it is
authorized by vote of the shareholders. For this purpose, the shares of
the director who would be the borrower shall not be shares entitled to vote.
SECTION 14. Reimbursement and Compensation of Directors
The directors may be paid their expenses of attendance at each meeting of
the Board of Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director. No
such payment shall preclude any director from serving the corporation
in any other capacity and receiving compensation therefor. Members of
the executive committee or other committees may be allowed similar
reimbursement and compensation for their services as such.
SECTION 15. Executive Committee and Other Committees
The Board of Directors by resolution adopted by a majority of the entire
Board, may designate from among its members an executive committee and other
committees, each consisting of three or more directors, and each of which
shall have and may exercise such powers as shall be conferred or authorized
by the resolution appointing it, except that no such committee shall have
authority as to the following matters:
1. The submission to shareholders of any action that needs shareholders'
approval;
2. The filling of vacancies in the Board of Directors or in any committee;
3. The fixing of compensation of the directors for serving on the Board of
Directors or on any committee;
4. The amendment or repeal of the By-Laws or the adoption of new By-Laws;
5. The amendment or repeal or any resolution of the Board of Directors.
Each such committee shall serve at the pleasure of the Board. The Board of
Directors shall have the power at any time to fill vacancies in, to change
the size or membership of, and to discharge any such committee.
A majority of any such committee may determine its action and may fix the
time and place of its meetings, unless provided otherwise by the Board of
Directors. Each such committee shall keep a written record of its acts and
proceedings and shall submit such record to the Board of Directors at each
regular meeting thereof and at such other times as requested by the Board
of Directors. Failure to submit such record, or failure of the Board to
approve any action indicated therein will not, however, invalidate such
action to the extent it has been carried out by the corporation prior to
the time the record of such action was, or should have been, submitted to the
Board of Directors as herein provided.
ARTICLE IV
Officers
SECTION 1. Number
The Board of Directors may elect a chairman of the board who shall be a member
of the Board of Directors and shall elect a president, one or more vice
presidents, a secretary and a treasurer, who need not be members of the
Board of Directors and such other officers and assistant officers who need
not be members of the Board of Directors as the Board of Directors may from
time to time deem proper. Any two or more offices may be held by the same
person, except the offices of president and secretary.
SECTION 2. Election and Term of Office
The officers of the corporation to be elected or appointed by the Board of
Directors shall be elected or appointed annually by the Board of Directors
at the first meeting of the Board of Directors held after each annual
meeting of the shareholders. Subject to the provisions of Section 3 of this
Article, each officer shall hold office until the first meeting of the Board
of Directors following the next annual meeting of shareholders and until his
successor has been elected or appointed and qualified.
SECTION 3. Removal
Any officer or agent elected or appointed by the Board of Directors may be
removed by the Board of Directors with or without cause, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed. The election or appointment of an officer shall not of itself
create contract rights.
SECTION 4. New Offices and Vacancies
Newly created offices and vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled from time to time by
the Board of Directors for the unexpired portion of the term.
SECTION 5. Chief Executive Officer
The Board of Directors shall appoint either the chairman of the board, if any,
or the president the chief executive officer of the corporation ("the CEO")
who, subject to the control of the Board of Directors, shall direct and
control all the business and affairs of the corporation.
SECTION 6. Chairman of the Board
The chairman of the board, if any, and if so designated by the Board of
Directors, shall be the chief executive officer of the corporation and,
subject to the control of the Board of Directors, shall in general perform
all duties incident to the office of chief executive officer. He shall, when
present, preside at all meetings of the shareholders and of the Board of
Directors. He may sign, with the secretary or any other proper officer of
the corporation thereunto authorized by the Board of Directors, certificates
representing shares of the corporation, any deeds, mortgages, bonds, contracts
or other instruments which the Board of Directors has authorized to be executed,
except in cases where the signing and execution thereof shall be expressly
delegated by the Board of Directors or by these By-Laws to some other officer
or agent of the corporation, or shall be required by law to be otherwise signed
or executed; and shall perform such other duties as may be prescribed by the
Board of Directors from time to time.
SECTION 7. President
The president shall be the chief operating officer of the corporation and,
subject to the control of the Board of Directors and the chairman of the
board (if he is the CEO), shall direct the conduct and operation of the
business and properties of the corporation. If so designated by the Board
of Directors, he shall also be the chief executive officer of the corporation
and shall perform all duties incident to that office. He shall, in the absence
of the chairman of the board, preside at all meetings of the shareholders and
the Board of Directors. He may sign, with the secretary or any other proper
officer of the corporation thereunto authorized by the Board of Directors,
certificates representing shares of the corporation, any deeds, mortgages,
bonds, contracts or other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
By-Laws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed; and shall perform such other duties
as may be prescribed by the Board of Directors from time to time.
SECTION 8. Vice President
In the absence of the chairman of the board and the president or in the event
of their death or inability to act, the executive vice president (or in the
event of the death or inability to act of the executive vice president, the
vice president designated by the Board of Directors, if any, or if none, the
vice president having the greatest seniority) shall perform the duties of the
chairman of the board and the president, and when so acting shall have the
authority of and be subject to all the restrictions upon the chairman of the
board and the president. Any vice president may sign, with the secretary or
any other proper officer of the corporation thereunto authorized by the Board
of Directors, certficates representing shares of the corporation; and shall
perform such other duties as from time to time may be assigned to him by the
chairman of the board (if he is the CEO) or by the president or by the Board
of Directors.
SECTION 9. Secretary
The secretary shall: 1) keep the minutes of the proceedings of its shareholders,
Board of Directors and executive committee and other committees, if any; in one
or more books provided for that purpose; 2) see that all notices are duly given
in accordance with the provisions of these By-Laws or as required by law;
3) be custodian of the corporate records and of the seal of the corporation and
see that the seal of the corporation is affixed to all documents and execution
of which on behalf of the corporation under its seal is duly authorized;
4) file each written request by a shareholder that notices to him be mailed to
some address other than this address as it appears on the record of
shareholders; 5) sign with the chairman of the board or the president or a
vice president certificates representing shares of the corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors; 6) have general charge of the record of shareholders of the
corporation; and 7) in general perform all duties incident to the office of
secretary and such other duties as from time to time may be assigned to him by
the chairman of the board (if he is the CEO) or by the president or by the Board
of Directors.
SECTION 10. Treasurer
If required by the Board of Directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties
as the Board of Directors shall determine. He shall: 1) have charge and
custody of and be responsible for all funds and securities of the corporation,
receive and give receipts for moneys due and payable to the corporation from
any source whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositaries as shall be
selected in accordance with the provisions of these By-Laws; 2) have charge
and custody of and be responsible for the keeping of correct and complete
books and records of account of the corporation; sign with the chairman of
the board, or the president or a vice president, certificates representing
shares of the corporation, the issuance of which shall have been authorized
by resolution of the Board of Directors; and 3) in general perform all of the
duties incident to the office of treasurer and such other duties as from time
to time may be assigned to him by the chairman of the board (if he is the CEO)
or by the president or by the Board of Directors.
SECTION 11. Assistant Secretaries and Assistant Treasurers
The assistant secretaries, when authorized by the Board of Directors, may sign
with the chairman of the board or the president or a vice president,
certificates representing shares of the corporation, the issuance of which shall
have been authorized by a resolution of the Board of Directors. The assistant
treasurers shall, if required by the Board of Directors, give bonds for the
faithful discharge of their duties in such sums and with such sureties as the
Board of Directors shall determine. Assistant secretaries and assistant
treasurers, in general, shall perform such duties as shall be assigned to them
by the secretary or the treasurer, respectively, or by the chairman of the
board (if he is the CEO) or the president or the Board of Directors. In the
absence of the secretary or in the event of his death, inability or refusal
to act, the assistant secretary (or in the event there be more than one
assistant secretary, the assistant secretaries in the order of their
appointment or as determined by the chairman of the board (if he is the CEO)
or the president or the Board of Directors), shall perform the duties and
exercise the authority of the secretary. In the absence of the treasurer or
in the event of his death, inability or refusal to act, the assistant treasurer,
(or in the event there be more than one assistant treasurer, the assistant
treasurers in the order of their appointment or as determined by the chairman
of the board (if he is the CEO) or the president or the Board of Directors)
shall perform the duties and exercise the authority of the treasurer.
SECTION 12. Compensation of Officers
The compensation of the officers shall be fixed from time to time by the Board
of Directors and no officer shall be prevented from receiving such compensation
by reason of the fact that he is also a director of the corporation.
ARTICLE V
Contracts, Checks and Deposits
SECTION 1. Contracts
The Board of Directors may authorize any officer or officers, agent or agents,
to enter into any contract or execute and deliver any instrument in the name
of and on behalf of the corporation and such authority may be general or
confined to specific instances.
SECTION 2. Checks, Drafts, etc.
All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation, shall be
signed by such officer or officers, agent or agents of the corporation and
in such manner as shall from time to time be determined by resolution of the
Board of Directors.
SECTION 3. Deposits
All funds of the corporation not otherwise employed shall be deposited from time
to time to the credit of the corporation in such banks, trust companies or other
depositaries as the Board of Directors may select.
ARTICLE VI
Certificates Representing Shares, Record
of Shareholders, Transfer of Shares
SECTION 1. Issuance of Shares
No shares of any class of the corporation or any obligations or other
securities convertible into or carrying options to purchase any such shares of
the corporation, or any options or rights to purchase any such shares or
securities of the corporation, shall be issued or sold unless such issuance
or sale is approved by the affirmative vote of at least 80% of the entire
Board of Directors.
SECTION 2. Certificates Representing Shares
The shares of the corporation shall be represented by certificates which
shall be in such form as shall be determined by the Board of Directors.
All such certificates shall be consecutively numbered or otherwise identified.
Such certificates shall be signed by the chairman of the board or the president
or a vice president and the secretary or an assistant secretary or the
treasurer or an assistant treasurer, and may, but need not, be sealed with the
seal of the corporation or a facsimile thereof. The signature of the officers
upon the certificate may be facsimile if the certificate is countersigned by
a transfer agent or an assistant transfer agent, or registered by a registrar
other than the corporation itself or its employee. In case any officer who
has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer before such certificate is issued, it
may be issued by the corporation with the same effect as if he were such
officer at the date of issue. Each certificate shall state upon the face
thereof; 1) that the corporation is formed under the laws of New York;
2) the name of the person or persons to whom issued; 3) the number and class
of shares and the par value of each share represented by such certificate.
SECTION 3. Lost, Destroyed or Wrongfully Taken Certificates
The Board of Directors may direct a new certificate or certificates to be
issued in place of any certificate or certificates theretofore issued by the
corporation, alleged to have been lost, apparently destroyed or wrongfully
taken upon the making of an affidavit of that fact by the person claiming the
certificate to be lost, apparently destroyed or wrongfully taken. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, apparently destroyed or wrongfully
taken certificate or certificates, or his legal representative to advertise
the same in such manner as it shall require and/or give the corporation a bond
in such sum and with such surety or sureties as it may direct as indemnity
against any claim that may be made against the corporation with respect to
the certificates alleged to have been lost, apparently destroyed or wrongfully
taken.
SECTION 4. Record of Shareholders
The corporation shall keep at its principal office, or at the office of its
transfer agent in the State of New York, a record containing the names and
addresses of all shareholders, the number and class of shares held by each
and the dates when they respectively became the owners of record thereof.
The corporation shall be protected in treating the persons in whose names
shares stand on the record of shareholders as the owners thereof for all
purposes.
SECTION 5. Transfer of Shares
Upon surrender to the corporation or the transfer agent of the corporation
of a certificate representing shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate. Every such transfer of shares shall
be entered on the record of shareholders of the corporation.
ARTICLE VII
Fiscal Year
The fiscal year of the corporation shall be determined by resolution of the
Board of Directors.
ARTICLE VIII
Dividends
The Board of Directors may from time to time declare, and the corporation
may pay, dividends on its outstanding shares in the manner and upon the
terms and conditions provided by law and its certificate of incorporation.
ARTICLE IX
Seal
The seal of the corporation shall be circular in form and contain the name
of the corporation, the year when it was formed, and the words "New York."
The corporation may use the seal causing it or a facsimile to be affixed or
impressed or reproduced in any other manner.
ARTICLE X
Waiver of Notice
SECTION 1. Waiver of Notice to Shareholders
Notice of meeting need not be given to any shareholder who signed a waiver
of notice, in person or by proxy, whether before or after the meeting.
The attendance of any shareholder at a meeting, in person or by proxy,
without protesting prior to the conclusion of the meeting the lack of
notice of such meeting, shall constitute a waiver of notice by him.
SECTION 2. Waiver of Notice to Director
Notice of meeting need not be given to any director who signs a waiver of
notice whether before or after the meeting, or who attends the meeting without
protesting, prior thereto or at the commencement, the lack of notice to him. A
waiver of notice need not specify the purpose of any regular or special
meeting of the Board of Directors.
SECTION 3. Notice Dispensed with When Delivery Prohibited
Whenever communication to any shareholder or any director is unlawful under
any statute of the State of New York or of the United States or any regulation,
proclamation or order issued under said statutes, the giving of any notice to
such shareholder or such director shall not be required and there shall be
no duty to apply for license or other permission to do so.
ARTICLE XI
Indemnification
To the fullest extent permitted by law, either directly or by the purchase of
insurance or in part directly and in part by the purchase of insurance, the
corporation shall indemnify each natural person, or if deceased, his personal
representative made or threatened to be made a party to any action or
proceeding civil or criminal, including an appeal therein against the
reasonable expenses, attorneys' fees, judgments, fines and amounts paid in
settlement if such person is made or threatened to be made a party by reason of
the fact that he or his testator or intestate is or was: 1) an officer,
director or employee of the corporation or 2) an officer, director or employee
of or served in any capacity in any other corporation, partnership, joint
venture, trust or other enterprise, at the request of this corporation,
provided that in the case of a person serving as an employee or in any
capacity in any other corporation, that such person was at the time he was
so designated to serve by this corporation, an employee of this corporation, or
3) the occupant of a position or a member of a committee or Board or a person
having responsibilities under federal or state law, including but not limited
to responsibilities under the Employee Retirement Income Security Act of 1974,
who was appointed to such position or to such committee or Board by the Board
of this corporation or by an officer of this corporation or who served in such
position or on such committee or Board at the request or direction of the Board
of this corporation or of an officer of this corporation or who assumed such
responsibilities at the request or direction of the Board of this corporation
or of any officer of this corporation, provided only that such person acted in
good faith for a purpose which he reasonably believed would be in the best
interest of the corporation or in the case of service for any other
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise, not opposed to the best interests of the corporation, and in
criminal proceedings had no reasonable cause to believe that his conduct was
unlawful.
The corporation's obligations under this Article shall be reduced by the amount
of any insurance which is available to any such person whether such insurance is
purchased by the corporation or otherwise. The right of indemnity created
herein shall be personal to the officer, director, employee or other person
and their respective legal representatives and in no case shall any insurance
carrier be entitled to be subrogated to any rights created herein.
Nothing contained herein shall obligate the corporation to indemnify any
person against any claim arising out of personal injuries, bodily injuries
or property damage.
ARTICLE XII
Amendment and Repeal
SECTION 1. Amendment and Repeal by the Shareholders
These By-Laws may be amended or repealed by vote of the shareholders entitled
to vote generally in the election of directors, provided that notice of
meeting states such purpose, and provided further that the provisions of
Article III may be amended or repealed only by the affirmative vote of
holders of at least 75% of the outstanding shares of stock of the corporation
entitled to vote generally in the election of directors.
SECTION 2. Amendment and Repeal by the Board of Directors
These By-Laws may also be amended or repealed by a majority of the entire
Board of Directors provided that the provisions of Article III may be amended
only by the affirmative vote of at least 75% of the entire Board of Directors
and further provided that Section 1 of Article VI may be amended only by the
affirmative vote of at least 80% of the entire Board of Directors.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned there to duly authorized.
CHEMUNG FINANCIAL CORPORATION
DATE: May 14, 1999 /s/ Jan P. Updegraff
------------ --------------------
Jan P. Updegraff
President & CEO
DATE: May 14, 1999 /s/ John R. Battersby Jr.
------------ -------------------------
John R. Battersby Jr.
Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED QUARTERLY FINANCIAL STATEMENTS AND DISCLOSURES FOR THE
PERIOD ENDED MARCH 31, 1999 AS PRESENTED IN ITS FIRST QUARTER 1999 FORM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND
DISCLOSURES.
</LEGEND>
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