Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. CHEMUNG FINANCIAL CORP (763563) 10-Q published on May 08, 2020 at 5:21 pm
Reporting Period: Mar 30, 2020
The COVID-19 pandemic has caused significant economic dislocation in the United States as many state and local governments have ordered non-essential businesses to close and residents to shelter in place at home. This has resulted in an unprecedented slow-down in economic activity and a related increase in unemployment. Since the COVID-19 pandemic, more than 30 million people have filed claims for unemployment, and stock markets have declined in value and in particular bank stocks have significantly declined in value. Certain industries have been particularly hard-hit, including the travel and hospitality industry, the restaurant industry and the retail industry. Finally, the spread of the coronavirus has caused us to modify our business practices, including employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences. We have many employees working remotely and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers and business partners.
On March 2, 2020 the Corporation held the first meeting of our Incident Response Team (IRT) to execute on the Bank’s pandemic recovery plan and evaluated the impact of the virus on our organization and the communities we serve within our 13 county footprint. Since that time, the Corporation's IRT, which is comprised of members of the Bank’s Executive Management Team and key department managers, has focused on the impact on our major lines of business (retail banking, commercial business services and wealth management), our infrastructure (technology & equipment, system access, IT security, facility operations - including enhanced cleaning protocols and physical security), communications with our staff, clients and the communities we serve, and the health and well-being of our over 360 employees. During this time our IRT has identified two main goals: providing essential
As part of the Coronavirus Aid, Relief and Economic Security Act ("CARES" Act), Congress established the Paycheck Protection Program (“PPP”) under the direction of the United States Small Business Administration (the “SBA”). Included in the legislation was $349 billion to assist small businesses by providing SBA guaranteed loans to help pay for up to 8 weeks of their payroll, in addition to interest expense on mortgages, rent or utility payments. PPP loans have an interest rate of 1.0%, a two-year loan term to maturity and principal and interest payments deferred for six months from the date of disbursement. The funds are an effort to encourage retention of employees and up to the entire loan balance and interest may be forgiven, if the borrower meets certain predetermined SBA criteria. Businesses with less than 500 employees are eligible, although certain corporate organizational structures were not included in the legislation. As a qualified SBA lender, the Corporation was automatically authorized to originate PPP loans. In less than two weeks the $349 billion funding was fully depleted. During that time, the Bank submitted 405 applications, which were approved by the SBA, for $145.4 million of loans under the PPP, impacting over 18,000 employees of the approved businesses. The second phase of the PPP was approved by Congress on April 23, 2020, and extended an additional $310.0 billion to small businesses. The Bank is participating in this second phase and as of April 30, 2020, the Corporation has submitted an additional 590 loan applications for a total of $36.0 million for approval by the SBA.
Management believes that the Corporation's liquidity position is strong. The Corporation uses a variety of resources to meet its liquidity needs. These include short term investments, cash flow from lending and investing activities, core-deposit growth and non-core funding sources, such as time deposits of $100,000 or more, FHLB borrowings, securities sold under agreements to repurchase and other borrowings. At March 31, 2020, the Corporation's cash and cash equivalents balances was $144.5 million. The Corporation also maintains an investment portfolio of securities available for sale, comprised primarily of mortgage-backed securities and municipal bonds. Although this portfolio generates interest income for the Corporation, it also serves as an available source of liquidity and capital if the need should arise. As of March 31, 2020, the Corporation's investment in securities available for sale was $299.1 million, $102.0 million of which was unpledged collateral. Additionally, the Bank's unused borrowing capacity at the Federal Home Loan Bank of New York was $137.0 million as of March 31, 2020. The Corporation did not experience excessive draws on available working capital lines of credit and home equity lines of credit during the first quarter of 2020 due to the COVID-19 pandemic.
In December 2019, a coronavirus (COVID-19) was reported in China, and, in March 2020, the World Health Organization declared it a pandemic. On March 12, 2020 the President of the United States declared the COVID-19 pandemic in the United States a national emergency. The COVID-19 pandemic has caused significant economic dislocation in the United States as many state and local governments have ordered non-essential businesses to close and residents to shelter in place at home. This has resulted in an unprecedented slow-down in economic activity and a related increase in unemployment. Since the COVID-19 pandemic, more than 30 million people have filed claims for unemployment, and stock markets have declined in value and in particular bank stocks have significantly declined in value. In response to the COVID-19 pandemic, the Federal Reserve has reduced the benchmark fed funds rate to a target range of 0% to 0.25%, and the yields on 10 and 30-year treasury notes have declined to historic lows. The State of New York and certain federal agencies are requiring lenders to provide forbearance and other relief to borrowers (e.g., waiving late payment and other fees). The federal banking agencies have encouraged financial institutions to prudently work with affected borrowers and recently passed legislation has provided relief from reporting loan classifications due to modifications related to the COVID-19 pandemic. Certain industries have been particularly hard-hit, including the travel and hospitality industry, the restaurant industry and the retail industry. Finally, the spread of the coronavirus has caused us to modify our business practices, including employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences. We have many employees working remotely and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers and business partners.