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 June 30, 2019 Or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 000-13888 CHEMUNG FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) New York 16-1237038 | --- | --- | --- | --- | |---------------------------------------- ...

PART I. FINANCIAL INFORMATION [Financial Statements – Unaudited](index=7&type=section&id=Item%201%3A%20Financial%20Statements%20%E2%80%93%20Unaudited) The unaudited consolidated financial statements for Chemung Financial Corporation as of March 31, 2019, show total assets of $1.77 billion, a slight increase from $1.76 billion at year-end 2018, with net income for the first quarter of 2019 at $4.468 million, or $0.92 per share, nearly flat compared to the prior year period Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total Assets | $1,769,572 | $1,755,343 | | Loans, net | $1,279,292 | $1,292,962 | | Total Deposits | $1,566,502 | $1,569,237 | | Total Liabilities | $1,598,038 | $1,590,314 | | Total Shareholders' Equity | $171,534 | $165,029 | Consolidated Income Statement Highlights (in thousands, except per share data) | Account | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net Interest Income | $15,167 | $14,900 | | Provision for Loan Losses | $1,093 | $709 | | Net Income | $4,468 | $4,439 | | Basic and Diluted EPS | $0.92 | $0.92 | - Adopted ASU 2016-02 (Leases) on January 1, 2019, resulting in the recording of operating lease right-of-use assets and liabilities of approximately **$8.6 million**, with no material impact on net earnings or cash flows[45](index=45&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=18&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes detail the Corporation's accounting policies, including the adoption of several new standards, a loan portfolio composition of **$1.30 billion** with commercial mortgages as the largest segment, an allowance for loan losses of **$19.7 million**, and non-performing loans at **$15.1 million** - The Corporation is preparing for the adoption of the Current Expected Credit Loss (CECL) model, effective January 1, 2020, and anticipates it will result in an increase to the allowance for loan losses[37](index=37&type=chunk) Loan Portfolio Composition (in thousands) | Loan Type | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Commercial and agricultural | $204,497 | $202,854 | | Commercial mortgages | $658,100 | $661,170 | | Residential mortgages | $181,428 | $182,724 | | Consumer loans | $255,012 | $265,709 | | **Total loans** | **$1,299,037** | **$1,311,906** | Allowance for Loan Losses Activity (in thousands) | Description | Three Months Ended March 31, 2019 | | :--- | :--- | | Beginning Balance | $18,944 | | Charge-offs | ($448) | | Recoveries | $156 | | Provision | $1,093 | | **Ending Balance** | **$19,745** | - As of March 31, 2019, non-accrual loans totaled **$15.1 million**, up from **$12.3 million** at year-end 2018, with the majority of the increase in the commercial mortgages category[62](index=62&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reports that net income for Q1 2019 was **$4.5 million**, or **$0.92 per share**, a slight increase from Q1 2018, driven by increased net interest income and decreased non-interest expense, partially offset by lower non-interest income and a higher provision for loan losses Q1 2019 vs Q1 2018 Performance Summary (in thousands) | Metric | Q1 2019 | Q1 2018 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $15,167 | $14,900 | $267 | 1.8% | | Non-interest Income | $4,925 | $5,475 | ($550) | (10.0)% | | Non-interest Expense | $13,497 | $14,166 | ($669) | (4.7)% | | Provision for Loan Losses | $1,093 | $709 | $384 | 54.2% | | **Net Income** | **$4,468** | **$4,439** | **$29** | **0.7%** | - The increase in the provision for loan losses was primarily due to recording a **$1.9 million** provision for a single **$3.4 million** commercial relationship[181](index=181&type=chunk) - Non-interest income decreased mainly because of a **$0.4 million** New York State sales tax refund received in March 2018 which did not recur, and a net loss on sales of other real estate owned in Q1 2019[165](index=165&type=chunk)[185](index=185&type=chunk) [Financial Condition](index=57&type=section&id=Financial%20Condition) As of March 31, 2019, total assets stood at **$1.77 billion**, an increase of **$14.2 million** (0.8%) from December 31, 2018, driven by increased investment securities partially offset by a decrease in total loans, while deposits remained stable and shareholders' equity increased due to net income and improved securities portfolio fair value Balance Sheet Changes (in thousands) | Account | March 31, 2019 | Dec 31, 2018 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $1,769,572 | $1,755,343 | $14,229 | | Total Loans, net | $1,279,292 | $1,292,962 | ($13,670) | | Total Deposits | $1,566,502 | $1,569,237 | ($2,735) | | Shareholders' Equity | $171,534 | $165,029 | $6,505 | - The loan portfolio decreased by **1.0%** to **$1.299 billion**, with declines in commercial mortgages (**$3.1M**), indirect consumer loans (**$7.0M**), and residential mortgages (**$1.3M**), attributed to portfolio runoff exceeding new production[208](index=208&type=chunk) - Assets under management or administration in the Wealth Management Group (WMG) increased by **$36.7 million** (**2.1%**) to **$1.805 billion**, primarily due to market value appreciation[200](index=200&type=chunk) [Asset Quality](index=60&type=section&id=Asset%20Quality) Asset quality metrics showed some deterioration in the first quarter of 2019, with non-performing loans increasing to **$15.1 million** (**1.16%** of total loans) from **$12.3 million** (**0.93%** of total loans) at year-end 2018, primarily due to one commercial relationship Non-Performing Assets (in thousands) | Metric | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total non-performing loans | $15,099 | $12,254 | | Other real estate owned | $205 | $574 | | **Total non-performing assets** | **$15,304** | **$12,828** | Key Asset Quality Ratios | Ratio | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Non-performing loans to total loans | 1.16% | 0.93% | | Allowance for loan losses to non-performing loans | 130.77% | 154.59% | - Impaired loans increased to **$12.1 million** from **$8.8 million** at year-end 2018, mainly due to the impairment of a commercial mortgage to one borrower for **$3.4 million**[220](index=220&type=chunk) [Liquidity and Capital Resources](index=65&type=section&id=Liquidity%20and%20Capital%20Resources) The Corporation maintains adequate liquidity through various sources, including cash flows, deposit growth, and access to borrowings, and the Bank remains 'well-capitalized' under regulatory standards, with a Tier 1 leverage ratio of **8.64%** and a Total risk-based capital ratio of **12.81%** - As of March 31, 2019, the Bank was categorized as 'well capitalized' under regulatory guidelines, exceeding all minimum requirements[254](index=254&type=chunk) Bank Regulatory Capital Ratios (March 31, 2019) | Ratio | Actual | Minimum to be Well Capitalized | | :--- | :--- | :--- | | Common Equity Tier 1 Capital Ratio | 11.56% | 6.50% | | Tier 1 Capital Ratio | 11.56% | 8.00% | | Total Capital Ratio | 12.81% | 10.00% | | Tier 1 Leverage Ratio | 8.64% | 5.00% | - The holding company is no longer subject to regulatory capital requirements as of August 30, 2018, due to the Regulatory Relief Act for institutions with under **$3 billion** in assets[242](index=242&type=chunk)[251](index=251&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=73&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Corporation's primary market risk is interest rate risk, managed by the Asset-Liability Committee (ALCO) to maintain a stable net interest margin, with projected impacts of interest rate changes remaining within policy guidelines Net Interest Income (NII) Sensitivity Analysis (Next 12 Months) | Interest Rate Change | Estimated NII Impact | | :--- | :--- | | +300 basis points | +11.95% | | +200 basis points | +8.02% | | -100 basis points | -4.82% | | -200 basis points | -13.01% | - The Corporation's primary objectives in asset and liability management are to maintain a strong, stable net interest margin, use capital effectively, maintain adequate liquidity, and reduce vulnerability to interest rate changes[284](index=284&type=chunk) [Controls and Procedures](index=74&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the Corporation's disclosure controls and procedures as of March 31, 2019, concluding they were effective with no material changes to internal control over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the Corporation's disclosure controls and procedures are effective as of March 31, 2019[291](index=291&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=75&type=section&id=Item%201%3A%20Legal%20Proceedings) In the normal course of business, the Corporation is involved in various claims and legal proceedings, but as of March 31, 2019, management believes there are no pending proceedings that would have a material adverse impact on the company's financial results or liquidity - As of March 31, 2019, the Corporation is not a party to any pending legal, arbitration, or regulatory proceedings that are expected to have a material adverse impact on its financial results or liquidity[294](index=294&type=chunk) [Risk Factors](index=75&type=section&id=Item%201A%3A%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2018 - No material changes in risk factors were reported since the filing of the 2018 Form 10-K[295](index=295&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Corporation has a stock repurchase plan, approved in December 2012, authorizing the purchase of up to **125,000 shares**, but no shares were repurchased during the three months ended March 31, 2019 - No shares were purchased under the company's stock repurchase plan during the first quarter of 2019[296](index=296&type=chunk)[298](index=298&type=chunk) - The maximum number of shares that may yet be purchased under the plan is **121,906**[296](index=296&type=chunk)[298](index=298&type=chunk) [Defaults Upon Senior Securities](index=75&type=section&id=Item%203%3A%20Defaults%20Upon%20Senior%20Securities) Not applicable [Mine Safety Disclosures](index=75&type=section&id=Item%204%3A%20Mine%20Safety%20Disclosures) Not applicable [Other Information](index=75&type=section&id=Item%205%3A%20Other%20Information) Not applicable [Exhibits](index=76&type=section&id=Item%206%3A%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer, and XBRL data files

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _____________ Commission File Number 0-13888 CHEMUNG FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) NEW YORK 16-123703-8 (Sta ...