Chemung Financial Corporation was incorporated on January 2, 1985 under the laws of the State of New York. The Corporation was organized for the purpose of acquiring Chemung Canal Trust Company or the Bank. The Corporation, through the Bank and CFS Group, Inc., provides financial services, including demand, savings and time deposits, commercial, residential and consumer loans, letters of credit, wealth management services, employee benefit plans, securities and insurance brokerage services. The Bank derives its income from interest and fees on loans, interest on investment securities, Wealth Management Group fee income and fees received in connection with deposit and other services. The Corporation segments its loan portfolio into the following categories: commercial and agricultural, commercial mortgages, residential mortgages and consumer loans. The commercial and agricultural loans segment consists of loans to small to mid-sized businesses in the market area. Commercial mortgage loans generally have larger balances and involve a greater degree of risk than residential mortgage loans, and therefore pose higher potential losses on an individual customer basis. Residential mortgage loans are generally made on the basis of the borrower's ability to make repayment from his or her employment and other income, but are secured by real property whose value tends to be more easily ascertainable. The consumer loan segment includes home equity lines of credit and home equity loans, which exhibit many of the same risk characteristics as residential mortgages. The Bank operates 34 branch offices located in 11 counties in New York and Bradford County in Pennsylvania. Bank branch offices are located in the following New York counties: Chemung, Broome, Cayuga, Cortland, Schuyler, Seneca, Steuben, Tioga and Tompkins. The Bank also operates under the name Capital Bank, a division of Chemung Canal Trust Company, with branch offices located in Albany and Saratoga counties in New York. The Bank encounters competition in the lending and deposit gathering aspects of its business from local, regional and national commercial banks and thrift institutions, credit unions and other providers of financial services, such as brokerage firms, investment companies, insurance companies and internet banking institutions. The Bank also competes with non-financial institutions, including retail stores and certain utilities that maintain their own credit programs, as well as governmental agencies that make loans to certain borrowers. The Bank is subject to the USA PATRIOT Act.