CHMG 10-Q Quarter ended Sept. 30, 2014

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 incorporation or organization)	I.R.S. Employer Identification No.
One Chemung Canal Plaza, P.O. Box 1522, Elmira, NY	14902
(Address of principal executive offices)	(Zip Code)
(607) 737-3711 or (800) 836-3711
(Registrant's telephone number, including area code)

		PAGES
	Glossary of Terms and Abbreviations	3
PART I.	FINANCIAL INFORMATION
Item 1:	Financial Statements – Unaudited
	Consolidated Balance Sheets	4
	Consolidated Statements of Income (Loss)	5
	Consolidated Statements of Comprehensive Income	6
	Consolidated Statements of Shareholders' Equity	7
	Consolidated Statements of Cash Flows	8
	Notes to Unaudited Consolidated Financial Statements	9
Item 2:	Management's Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4:	Controls and Procedures	52
PART II.	OTHER INFORMATION	53
Item 1:	Legal Proceedings	53
Item 1A:	Risk Factors	53
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3:	Defaults Upon Senior Securities	53
Item 4:	Mine Safety Disclosures	53
Item 5:	Other Information	53
Item 6:	Exhibits	54
SIGNATURES		55
EXHIBIT INDEX

GLOSSARY OF TERMS AND ABBREVIATIONS
To assist the reader the Corporation has provided the following list of commonly used acronyms and abbreviations included in the Notes to Unaudited Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations.
ASU	Accounting Standards Update
BANK	Chemung Canal Trust Company
CDO	Collateralized Debt Obligation
CORPORATION	Chemung Financial Corporation
FASB	Financial Accounting Standards Board
FDIC	Federal Deposit Insurance Corporation
FHLBNY	Federal Home Loan Bank New York
FRB	Board of Governors of the Federal Reserve System
FRBNY	Federal Reserve Bank of New York
FREDDIE MAC	Federal Home Loan Mortgage Corporation
GAAP	United States Generally Accepted Accounting Principles
OTTI	Other-Than-Temporary Impairment
PCI	Purchased Credit Impaired
SEC	Securities and Exchange Commission
TDR	Troubled Debt Restructuring

PART I. FINANCIAL INFORMATION Item 1: Financial Statements-Unaudited
CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
(dollars in thousands, except per share data)		September 30, 2014				December 31, 2013
ASSETS
Cash and due from financial institutions		$	31,957			$	31,600
Interest-bearing deposits in other financial institutions			3,069				20,009
Total cash and cash equivalents			35,026				51,609
Trading assets, at fair value			483				366
Securities available for sale, at estimated fair value			288,097				346,016
Securities held to maturity, estimated fair value of $5,821 at September 30, 2014 and $6,930 at December 31, 2013			5,430				6,495
Federal Home Loan Bank and Federal Reserve Bank Stock, at cost			4,362				4,482
Loans, net of deferred origination fees and costs, and unearned income			1,114,182				995,866
Allowance for loan losses			(13,151	)			(12,776	)
Loans, net			1,101,031				983,090
Loans held for sale			1,167				695
Premises and equipment, net			32,431				30,039
Goodwill			21,824				21,824
Other intangible assets, net			5,384				6,377
Bank owned life insurance			2,744				2,796
Accrued interest and other assets			25,578				22,354
Total assets		$	1,523,557			$	1,476,143
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest-bearing		$	372,916			$	351,222
Interest-bearing			938,083				915,034
Total deposits			1,310,999				1,266,256
Securities sold under agreements to repurchase			30,981				32,701
Federal Home Loan Bank term advances			24,086				25,243
Long term capital lease obligations			3,039				-
Dividends payable			1,201				1,195
Accrued interest payable and other liabilities			13,690				12,170
Total liabilities			1,383,996				1,337,565
Shareholders' equity:
Common stock, $.01 par value per share, 10,000,000 shares authorized; 5,310,076 issued at September 30, 2014 and December 31, 2013			53				53
Additional-paid-in-capital			45,555				45,399
Retained earnings			111,105				111,031
Treasury stock, at cost (691,237 shares at September 30, 2014; 707,674 shares at December 31, 2013)			(17,640	)			(18,060	)
Accumulated other comprehensive income			488				155
Total shareholders' equity			139,561				138,578
Total liabilities and shareholders' equity		$	1,523,557			$	1,476,143
See accompanying notes to unaudited consolidated financial statements.

CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
		Nine months ended								Three months ended
(dollars in thousands, except per share data)		September 30,								September 30,
		2014				2013				2014				2013
Interest and dividend income:
Loans, including fees		$	34,590			$	33,605			$	11,973			$	11,245
Taxable securities			3,889				3,120				1,122				1,003
Tax exempt securities			752				845				230				258
Interest-bearing deposits			59				21				16				3
Total interest and dividend income			39,290				37,591				13,341				12,509
Interest Expense:
Deposits			1,550				1,791				511				571
Securities sold under agreements to repurchase			634				645				214				214
Borrowed funds			572				594				190				207
Total interest expense			2,756				3,030				915				992
Net interest income			36,534				34,561				12,426				11,517
Provision for loan losses			2,330				1,755				589				874
Net interest income after provision for loan losses			34,204				32,806				11,837				10,643
Other operating income:
Wealth management group fee income			5,816				5,448				1,943				1,813
Service charges on deposit accounts			3,962				3,377				1,381				1,222
Net gain on security transactions			522				1				-				-
Net gain on sales of loans held for sale			209				425				84				134
Net (losses) gains on sales of other real estate owned			(40	)			33				4				17
Income from bank owned life insurance			59				63				20				21
Other			4,828				3,500				1,554				1,144
Total other operating income			15,356				12,847				4,986				4,351
Other operating expense:
Salaries and wages			15,653				14,138				5,344				4,721
Pension and other employee benefits			4,132				4,161				1,294				1,372
Net occupancy expenses			5,174				4,016				1,721				1,315
Furniture and equipment expenses			2,052				1,600				707				514
Data processing expense			4,383				3,433				1,488				1,192
Professional services			911				713				268				188
Legal settlement			4,250				-				4,250				-
Amortization of intangible assets			993				663				324				214
Marketing and advertising expenses			879				782				255				297
Other real estate owned expenses			154				138				22				75
FDIC insurance			814				625				271				206
Loan expense			564				538				269				217
Merger and acquisition related expenses			115				217				-				202
Other			4,611				3,904				1,550				1,300
Total operating expenses			44,685				34,928				17,763				11,813
Income (loss) before income tax expense			4,875				10,725				(940	)			3,181
Income tax expense (benefit)			1,199				3,479				(621	)			1,002
Net income (loss)		$	3,676			$	7,246			$	(319	)		$	2,179
Weighted average shares outstanding			4,681				4,658				4,684				4,660
Basic and diluted earnings (loss) per share		$	0.79			$	1.56			$	(0.07	)		$	0.47
See accompanying notes to unaudited consolidated financial statements.

		Nine Months Ended September 30,								Three Months Ended September 30,
(dollars in thousands)		2014				2013				2014				2013
Net income (loss)		$	3,676			$	7,246			$	(319	)		$	2,179
Other comprehensive income:
Unrealized holding gains (losses) on securities available for sale			635				(1,901	)			(1,380	)			1,404
Reclassification adjustment gains realized in net income			(522	)			(1	)			-				-
Net unrealized gains (losses)			113				(1,902	)			(1,380	)			1,404
Tax effect			43				(731	)			(531	)			540
Net of tax amount			70				(1,171	)			(849	)			864
Change in funded status of defined benefit pension plan and other benefit plans:
Net gain (loss) arising during the period			-				-				-				-
Reclassification adjustment for amortization of prior service costs			(66	)			(63	)			(22	)			(21	)
Reclassification adjustment for amortization of net actuarial loss			499				1,202				169				401
Total before tax effect			433				1,139				147				380
Tax effect			170				438				60				146
Net of tax amount			263				701				87				234
Total other comprehensive income (loss)			333				(470	)			(762	)			1,098
Comprehensive income (loss)		$	4,009			$	6,776			$	(1,081	)		$	3,277
See accompanying notes to unaudited consolidated financial statements.

(dollars in thousands except share data)		Common Stock				Additional Paid-in Capital				Retained Earnings				Treasury Stock				Accumulated Other Comprehensive Income (Loss)				Total
Balances at December 31, 2012		$	53			$	45,357			$	107,078			$	(18,566	)		$	(2,807	)		$	131,115
Net income			-				-				7,246				-				-				7,246
Other comprehensive loss			-				-				-				-				(470	)			(470	)
Restricted stock awards			-				106				-				-				-				106
Restricted stock units for directors' deferred compensation plan			-				74				-				-				-				74
Cash dividends declared ($.78 per share)			-				-				(3,584	)			-				-				(3,584	)
Distribution of 7,969 shares of treasury stock for directors' compensation			-				14				-				203				-				217
Distribution of 4,116 shares of treasury stock for employee compensation			-				7				-				105				-				112
Distribution of 3,356 shares of treasury stock for deferred directors' compensation			-				(75	)			-				86				-				11
Purchase of 3,094 shares of treasury stock			-				-				-				(93	)			-				(93	)
Sale of 2,369 shares of treasury stock			-				11				-				60				-				71
Forfeit 1,797 shares of restricted stock awards			-				61				-				(61	)			-				-
Balances at September 30, 2013		$	53			$	45,555			$	110,740			$	(18,266	)		$	(3,277	)		$	134,805
Balances at December 31, 2013		$	53			$	45,399			$	111,031			$	(18,060	)		$	155			$	138,578
Net income			-				-				3,676				-				-				3,676
Other comprehensive income			-				-				-				-				333				333
Restricted stock awards			-				112				-				-				-				112
Restricted stock units for directors' deferred compensation plan			-				71				-				-				-				71
Distribution of 990 shares of treasury stock granted for employee restricted stock awards, net			-				(26	)			-				26				-				-
Cash dividends declared ($.78 per share)			-				-				(3,602	)			-				-				(3,602	)
Distribution of 8,385 shares of treasury stock for directors' compensation			-				59				-				214				-				273
Distribution of 3,467 shares of treasury stock for deferred directors' compensation			-				(85	)			-				88				-				3
Distribution of 3,595 shares of treasury stock for employee compensation			-				25				-				92				-				117
Balances at September 30, 2014		$	53			$	45,555			$	111,105			$	(17,640	)		$	488			$	139,561
See accompanying notes to unaudited consolidated financial statements.

(dollars in thousands)		Nine Months Ended September 30,
CASH FLOWS FROM OPERATING ACTIVITIES:		2014				2013
Net income		$	3,676			$	7,246
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets			993				663
Provision for loan losses			2,330				1,755
Depreciation and amortization of fixed assets			2,765				2,233
Amortization of premiums on securities, net			1,808				1,693
Gains on sales of loans held for sale, net			(209	)			(425	)
Proceeds from sales of loans held for sale			9,447				15,383
Loans originated and held for sale			(9,710	)			(14,767	)
Net gains on trading assets			(32	)			(27	)
Net gains on securities transactions			(522	)			(1	)
Proceeds from sales of trading assets			7				112
Purchase of trading assets			(92	)			(50	)
Net loss (gain) on sales of other real estate owned			40				(33	)
Increase in other assets			(475	)			(1,344	)
Decrease in prepaid FDIC assessment			-				1,970
Decrease in accrued interest payable			(61	)			(114	)
Expense related to restricted stock units for directors' deferred compensation plan			71				74
Expense related to employee stock compensation			117				112
Expense related to employee stock awards			112				106
Increase in other liabilities			2,077				398
Proceeds from bank owned life insurance			111				-
Income from bank owned life insurance			(59	)			(63	)
Net cash provided by operating activities			12,394				14,921
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and calls of securities available for sale			55,610				10,534
Proceeds from maturities and principal collected on securities available for sale			19,437				36,204
Proceeds from maturities and principal collected on securities held to maturity			3,022				5,379
Purchases of securities available for sale			(18,301	)			(69,921	)
Purchases of securities held to maturity			(1,957	)			(6,174	)
Purchase of FHLB and FRBNY stock			(1,103	)			(8,915	)
Redemption of FHLB and FRBNY stock			1,223				6,901
Purchases of premises and equipment			(2,118	)			(1,835	)
Proceeds from sales of other real estate owned			284				137
Net increase in loans			(123,345	)			(74,553	)
Net cash used by investing activities			(67,248	)			(102,243	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits, interest-bearing demand accounts, savings accounts, and insured money market accounts			77,980				58,463
Net decrease in time deposits			(33,237	)			(14,752	)
Net decrease in securities sold under agreements to repurchase			(1,720	)			(2,211	)
Increase of FHLB overnight advances			-				49,100
Repayments of FHLB long term advances			(1,157	)			(1,179	)
Purchase of treasury stock			-				(93	)
Sale of treasury stock			-				71
Cash dividends paid			(3,595	)			(2,389	)
Net cash provided by financing activities			38,271				87,010
Net decrease in cash and cash equivalents			(16,583	)			(312	)
Cash and cash equivalents, beginning of period			51,609				40,241
Cash and cash equivalents, end of period		$	35,026			$	39,929

Supplemental disclosure of cash flow information:
Cash paid for:
Interest		$	2,817			$	3,143
Income taxes		$	1,846			$	4,310
Supplemental disclosure of non-cash activity:
Transfer of loans to other real estate owned		$	3,074			$	103
Dividends declared, not yet paid		$	1,201			$	1,195
Assets acquired through long term capital lease obligations		$	3,039			$	-
See accompanying notes to unaudited consolidated financial statements.

		September 30, 2014
		Amortized Cost				Unrealized Gains				Unrealized Losses				Estimated Fair Value
Obligations of U.S. Government and U.S. Government sponsored enterprises		$	175,960			$	1,499			$	244			$	177,215
Mortgage-backed securities, residential			63,858				793				80				64,571
Collateralized mortgage obligations			457				7				-				464
Obligations of states and political subdivisions			32,710				982				12				33,680
Corporate bonds and notes			1,505				38				4				1,539
SBA loan pools			1,340				12				3				1,349
Trust preferred securities			1,904				121				-				2,025
Corporate stocks			433				6,823				2				7,254
Total		$	278,167			$	10,275			$	345			$	288,097

		December 31, 2013
		Amortized Cost				Unrealized Gains				Unrealized Losses				Estimated Fair Value
Obligations of U.S. Government and U.S. Government sponsored enterprises		$	187,098			$	1,915			$	907			$	188,106
Mortgage-backed securities, residential			104,069				1,036				749				104,356
Collateralized mortgage obligations			1,001				14				-				1,015
Obligations of states and political subdivisions			37,339				1,059				22				38,376
Corporate bonds and notes			2,879				76				9				2,946
SBA loan pools			1,471				17				-				1,488
Trust preferred securities			1,898				136				-				2,034
Corporate stocks			444				7,253				2				7,695
Total		$	336,199			$	11,506			$	1,689			$	346,016

	September 30, 2014
	Amortized Cost				Unrealized Gains				Unrealized Losses				Estimated Fair Value
Obligations of states and political subdivisions		$	4,774			$	382			$	-			$	5,156
Time deposits with other financial institutions			656				9				-				665
Total		$	5,430			$	391			$	-			$	5,821

	December 31, 2013
	Amortized Cost				Unrealized Gains				Unrealized Losses				Estimated Fair Value
Obligations of states and political subdivisions		$	5,472			$	419			$	-			$	5,891
Time deposits with other financial institutions			1,023				16				-				1,039
Total		$	6,495			$	435			$	-			$	6,930

		September 30, 2014
		Available for Sale								Held to Maturity
		Amortized				Fair				Amortized				Fair
		Cost				Value				Cost				Value
Within One Year		$	26,690			$	27,044			$	1,931			$	1,960
After One, But Within Five Years			178,884				180,813				2,347				2,547
After Five, But Within Ten Years			6,505				6,602				1,152				1,314
			212,079				214,459				5,430				5,821
Mortgage-backed securities, residential			63,858				64,571				-				-
Collateralized mortgage obligations			457				464				-				-
SBA loan pools			1,340				1,349				-				-
Total		$	277,734			$	280,843			$	5,430			$	5,821

		2014				2013
Proceeds		$	55,610			$	10,534
Gross gains		$	522			$	1
Gross losses		$	-			$	-
Tax expense		$	201			$	-

		Less than 12 months								12 months or longer								Total
September 30, 2014		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
Obligations of U.S. Government and U.S. Government sponsored enterprises		$	45,511			$	159			$	15,698			$	85			$	61,209			$	244
Mortgage-backed securities, residential			22,875				80				-				-				22,875				80
Obligations of states and political subdivisions			3,608				11				326				-				3,934				11
Corporate bonds and notes			-				-				242				5				242				5
SBA loan pools			605				3				-				-				605				3
Corporate stocks			-				-				2				2				2				2
Total temporarily impaired securities		$	72,599			$	253			$	16,268			$	92			$	88,867			$	345

		Less than 12 months								12 months or longer								Total
December 31, 2013		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
Obligations of U.S. Government and U.S. Government sponsored enterprises		$	83,840			$	867			$	1,978			$	39			$	85,818			$	906
Mortgage-backed securities, residential			63,115				750				-				-				63,115				750
Obligations of states and political subdivisions			4,589				22				-				-				4,589				22
Corporate bonds and notes			238				9				-				-				238				9
Corporate stocks			-				-				2				2				2				2
Total temporarily impaired securities		$	151,782			$	1,648			$	1,980			$	41			$	153,762			$	1,689

		2014				2013
Beginning balance, January 1,		$	1,939			$	3,506
Amounts related to credit loss for which an other-than-temporary impairment was not previously recognized			-				-
Additions/Subtractions:
Amounts realized for securities sold during the period			-				-
Amounts related to securities for which the company intends to sell or that it will be more likely than not that the company will be required to sell prior to recovery of amortized cost basis			-				-
Reductions for increase in cash flows expected to be collected that are recognized over the remaining life of the security			-				-
Reductions for previous credit losses realized in securities liquidated during the period			(1,939	)			-
Increases to the amount related to the credit loss for which other-than-temporary impairment was previously recognized			-				-
Ending balance, September 30,		$	-			$	3,506

		2014				2013
Beginning balance, July 1,		$	-			$	3,506
Amounts related to credit loss for which an other-than-temporary impairment was not previously recognized			-				-
Additions/Subtractions:
Amounts realized for securities sold during the period			-				-
Amounts related to securities for which the company intends to sell or that it will be more likely than not that the company will be required to sell prior to recovery of amortized cost basis			-				-
Reductions for increase in cash flows expected to be collected that are recognized over the remaining life of the security			-				-
Reductions for previous credit losses realized in securities liquidated during the period			-				-
Increases to the amount related to the credit loss for which other-than-temporary impairment was previously recognized			-				-
Ending balance, September 30,		$	-			$	3,506

		September 30, 2014				December 31, 2013
Commercial and agricultural:
Commercial and industrial		$	164,984			$	144,787
Agricultural			868				576
Commercial mortgages:
Construction			46,981				27,440
Commercial mortgages			388,185				345,707
Residential mortgages			192,870				195,997
Consumer loans:
Credit cards			1,621				1,756
Home equity lines and loans			100,991				95,905
Indirect consumer loans			196,603				164,846
Direct consumer loans			21,079				18,852
Total loans, net of deferred origination fees and costs, and unearned income		$	1,114,182			$	995,866
Interest receivable on loans			2,512				2,597
Total recorded investment in loans		$	1,116,694			$	998,463

		Nine Months Ended
		September 30, 2014
Allowance for loan losses		Commercial and Agricultural				Commercial Mortgages				Residential Mortgages				Consumer Loans				Unallocated				Total
Beginning balance:		$	1,979			$	6,243			$	1,517			$	3,037			$	-			$	12,776
Charge Offs:			(415	)			(1,236	)			(97	)			(1,191	)			-				(2,939	)
Recoveries:			331				118				28				507				-				984
Net recoveries (charge offs)			(84	)			(1,118	)			(69	)			(684	)			-				(1,955	)
Provision			(183	)			1,200				(16	)			1,329				-				2,330
Ending balance		$	1,712			$	6,325			$	1,432			$	3,682			$	-			$	13,151

		Nine Months Ended
		September 30, 2013
Allowance for loan losses		Commercial and Agricultural				Commercial Mortgages				Residential Mortgages				Consumer Loans				Unallocated				Total
Beginning balance:		$	1,708			$	4,428			$	1,565			$	2,706			$	26			$	10,433
Charge Offs:			(186	)			(44	)			(53	)			(910	)			-				(1,193	)
Recoveries:			454				53				65				289				-				861
Net recoveries (charge offs)			268				9				12				(621	)			-				(332	)
Provision			82				976				(25	)			748				(26	)			1,755
Ending balance		$	2,058			$	5,413			$	1,552			$	2,833			$	-			$	11,856

		Three Months Ended
		September 30, 2014
Allowance for loan losses		Commercial and Agricultural				Commercial Mortgages				Residential Mortgages				Consumer Loans				Unallocated				Total
Beginning balance:		$	1,749			$	6,912			$	1,498			$	3,473			$	-			$	13,632
Charge Offs:			(60	)			(878	)			(90	)			(415	)			-				(1,443	)
Recoveries:			138				35				-				200				-				373
Net recoveries (charge offs)			78				(843	)			(90	)			(215	)			-				(1,070	)
Provision			(115	)			256				24				424				-				589
Ending balance		$	1,712			$	6,325			$	1,432			$	3,682			$	-			$	13,151

		Three Months Ended
		September 30, 2013
Allowance for loan losses		Commercial and Agricultural				Commercial Mortgages				Residential Mortgages				Consumer Loans				Unallocated				Total
Beginning balance:		$	1,879			$	5,134			$	1,515			$	2,792			$	-			$	11,320
Charge Offs:			(167	)			(44	)			-				(512	)			-				(723	)
Recoveries:			158				34				27				166				-				385
Net recoveries (charge-offs)			(9	)			(10	)			27				(346	)			-				(338	)
Provision			188				289				10				387				-				874
Ending balance		$	2,058			$	5,413			$	1,552			$	2,833			$	-			$	11,856

	September 30, 2014
Allowance for loan losses	Commercial and Agricultural				Commercial Mortgages				Residential Mortgages				Consumer Loans				Unallocated				Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment		$	68			$	188			$	-			$	1			$	-			$	257
Collectively evaluated for impairment			1,644				5,199				1,419				3,681				-				11,943
Loans acquired with deteriorated credit quality			-				938				13				-				-				951
Total ending allowance balance		$	1,712			$	6,325			$	1,432			$	3,682			$	-			$	13,151

	December 31, 2013
Allowance for loan losses	Commercial and Agricultural				Commercial Mortgages				Residential Mortgages				Consumer Loans				Unallocated				Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment		$	576			$	466			$	-			$	4			$	-			$	1,046
Collectively evaluated for impairment			1,403				4,407				1,497				3,033				-				10,340
Loans acquired with deteriorated credit quality			-				1,370				20				-				-				1,390
Total ending allowance balance		$	1,979			$	6,243			$	1,517			$	3,037			$	-			$	12,776

		September 30, 2014
Loans:		Commercial and Agricultural				Commercial Mortgages				Residential Mortgages				Consumer Loans				Total
Loans individually evaluated for impairment		$	1,318			$	12,477			$	108			$	124			$	14,027
Loans collectively evaluated for  impairment			164,288				418,721				193,020				320,868				1,096,897
Loans acquired with deteriorated credit quality			607				4,917				246				-				5,770
Total ending loans balance		$	166,213			$	436,115			$	193,374			$	320,992			$	1,116,694

		December 31, 2013
Loans:		Commercial and Agricultural				Commercial Mortgages				Residential Mortgages				Consumer Loans				Total
Loans individually evaluated for impairment		$	2,946			$	10,703			$	117			$	131			$	13,897
Loans collectively evaluated for  impairment			142,108				354,636				196,147				281,979				974,870
Loans acquired with deteriorated credit quality			678				8,757				261				-				9,696
Total ending loans balance		$	145,732			$	374,096			$	196,525			$	282,110			$	998,463

		September 30, 2014												December 31, 2013
With no related allowance recorded:		Unpaid Principal Balance				Recorded Investment				Allowance for Loan Losses Allocated				Unpaid Principal Balance				Recorded Investment				Allowance for Loan Losses Allocated
Commercial and agricultural:
Commercial and industrial		$	1,247			$	1,250			$	-			$	1,906			$	1,909			$	-
Commercial mortgages:
Construction			1,936				1,919				-				2,329				2,319				-
Commercial mortgages			9,437				9,331				-				7,406				7,439				-
Residential mortgages			108				108				-				117				117				-
Consumer loans:
Home equity lines and loans			67				69				-				71				73				-
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial			68				68				68				1,037				1,037				576
Commercial mortgages:
Commercial mortgages			1,237				1,227				188				951				945				466
Consumer loans:
Home equity lines and loans			55				55				1				58				58				4
Total		$	14,155			$	14,027			$	257			$	13,875			$	13,897			$	1,046

		Nine Months Ended September 30, 2014								Nine Months Ended September 30, 2013								Three Months Ended September 30, 2014								Three Months Ended September 30, 2013
		Average Recorded Investment				Interest Income Recognized				Average Recorded Investment				Interest Income Recognized				Average Recorded Investment				Interest Income Recognized				Average Recorded Investment				Interest Income Recognized
With no related allowance recorded:
Commercial and agricultural:
Commercial and industrial		$	1,566			$	26			$	1,529			$	52			$	1,309			$	11			$	1,599			$	17
Commercial mortgages:
Construction			2,231				76				3,626				64				1,924				26				2,576				22
Commercial mortgages			6,806				211				5,629				184				7,909				82				5,564				66
Residential mortgages			114				-				127				-				110				-				124				-
Consumer loans:
Home equity lines and loans			72				2				41				2				69				1				60				1
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial			784				-				640				-				144				-				819				-
Commercial mortgages:
Commercial mortgages			912				-				847				-				1,233				-				1,333				-
Consumer loans:
Home equity lines and loans			58				3				43				2				56				1				58				1
Direct consumer loans			-				-				4				-				-				-				-				-
Total		$	12,543			$	318			$	12,486			$	304			$	12,754			$	121			$	12,133			$	107

September 30, 2014		Current				30-89 Days Past Due				90 Days or more Past Due and accruing				Loans acquired with deteriorated credit quality				Non-Accrual (1)				Total
Commercial and agricultural:
Commercial and industrial		$	164,207			$	206			$	-			$	607			$	324			$	165,344
Agricultural			869				-				-				-				-				869
Commercial mortgages:
Construction			44,710				-				1,447				774				152				47,083
Commercial mortgages			378,459				2,542				1,077				4,143				2,811				389,032
Residential mortgages			187,777				2,219				-				246				3,132				193,374
Consumer loans:
Credit cards			1,601				17				3				-				-				1,621
Home equity lines and loans			100,153				608				-				-				465				101,226
Indirect consumer loans			195,291				1,426				-				-				286				197,003
Direct consumer loans			21,042				61				-				-				39				21,142
Total		$	1,094,109			$	7,079			$	2,527			$	5,770			$	7,209			$	1,116,694

December 31, 2013		Current				30-89 Days Past Due				90 Days or more Past Due and accruing				Loans acquired with deteriorated credit quality				Non-Accrual (1)				Total
Commercial and agricultural:
Commercial and industrial		$	143,100			$	29			$	-			$	678			$	1,348			$	145,155
Agricultural			577				-				-				-				-				577
Commercial mortgages:
Construction			24,742				-				1,454				774				540				27,510
Commercial mortgages			335,123				1,138				-				7,983				2,342				346,586
Residential mortgages			187,448				5,458				-				261				3,358				196,525
Consumer loans:
Credit cards			1,729				9				19				-				-				1,757
Home equity lines and loans			95,349				150				-				-				635				96,134
Indirect consumer loans			163,810				1,235				-				-				249				165,294
Direct consumer loans			18,830				50				-				-				45				18,925
Total		$	970,708			$	8,069			$	1,473			$	9,696			$	8,517			$	998,463

Nine months ended September 30, 2014		Number of Loans				Pre-Modification Outstanding Recorded Investment				Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:
Commercial and agricultural:
Commercial and industrial			3			$	908			$	908
Commercial mortgages:
Commercial mortgages			3				2,236				2,192
Total			6			$	3,144			$	3,100

Nine months ended September 30, 2013
Troubled debt restructurings:
Commercial and agricultural:
Commercial and industrial			4			$	841			$	841
Commercial mortgages:
Commercial mortgages			1				133				133
Consumer loans:
Home equity lines and loans			3				134				134
Total			8			$	1,108			$	1,108

Three months ended September 30, 2014		Number of Loans				Pre-Modification Outstanding Recorded Investment				Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:
Commercial and agricultural:
Commercial and industrial			2			$	405			$	405
Commercial mortgages:
Commercial mortgages			1				1,869				1,869
Total			3			$	2,274			$	2,274

Three months ended September 30, 2013
Troubled debt restructurings:
Consumer loans:
Home equity lines and loans			1			$	31			$	31
Total			1			$	31			$	31

		September 30, 2014
		Not Rated				Pass				Loans acquired with deteriorated credit quality				Special Mention				Substandard				Doubtful				Total
Commercial and agricultural:
Commercial and industrial		$	-			$	154,618			$	607			$	6,671			$	3,380			$	68			$	165,344
Agricultural			-				869				-				-				-				-				869
Commercial mortgages:
Construction			-				42,829				774				3,328				152				-				47,083
Commercial mortgages			-				362,160				4,143				12,088				10,491				150				389,032
Residential mortgages			189,739				-				246				-				3,389				-				193,374
Consumer loans:
Credit cards			1,621				-				-				-				-				-				1,621
Home equity lines and loans			100,761				-				-				-				465				-				101,226
Indirect consumer loans			196,717				-				-				-				286				-				197,003
Direct consumer loans			21,103				-				-				-				39								21,142
Total		$	509,941			$	560,476			$	5,770			$	22,087			$	18,202			$	218			$	1,116,694

		December 31, 2013
		Not Rated				Pass				Loans acquired with deteriorated credit quality				Special Mention				Substandard				Doubtful				Total
Commercial and agricultural:
Commercial and industrial		$	-			$	133,615			$	678			$	5,117			$	4,724			$	1,021			$	145,155
Agricultural			-				577				-				-				-				-				577
Commercial mortgages:
Construction			-				23,087				774				2,783				866				-				27,510
Commercial mortgages			-				313,956				7,983				13,611				11,036				-				346,586
Residential mortgages			192,995				-				261				-				3,269				-				196,525
Consumer loans
Credit cards			1,757				-				-				-				-				-				1,757
Home equity lines and loans			95,422				-				-				-				712				-				96,134
Indirect consumer loans			165,045				-				-				-				249				-				165,294
Direct consumer loans			18,880				-				-				-				45				-				18,925
Total		$	474,099			$	471,235			$	9,696			$	21,511			$	20,901			$	1,021			$	998,463

	September 30, 2014
					Consumer Loans
	Residential Mortgages				Credit Card				Home Equity Lines and Loans				Indirect Consumer Loans				Other Direct Consumer Loans
Performing		$	190,242			$	1,621			$	100,761			$	196,717			$	21,103
Non-Performing			3,132				-				465				286				39
Total		$	193,374			$	1,621			$	101,226			$	197,003			$	21,142

	December 31, 2013
					Consumer Loans
	Residential Mortgages				Credit Card				Home Equity Lines and Loans				Indirect Consumer Loans				Other Direct Consumer Loans
Performing		$	193,167			$	1,757			$	95,499			$	165,045			$	18,880
Non-Performing			3,358				-				635				249				45
Total		$	196,525			$	1,757			$	96,134			$	165,294			$	18,925

Nine months ended September 30, 2014		Balance at December 31, 2013				Income Accretion				All Other Adjustments				Balance at September 30, 2014
Contractually required principal and interest		$	11,230			$	-			$	(4,359	)		$	6,871
Contractual cash flows not expected to be collected (non accretable discount)			(543	)			-				(43	)			(586	)
Cash flows expected to be collected			10,687				-				(4,402	)			6,285
Interest component of expected cash flows (accretable yield)			(991	)			464				12				(515	)
Fair value of loans acquired with deteriorating credit quality		$	9,696			$	464			$	(4,390	)		$	5,770

Three months ended September 30, 2014		Balance at June 30, 2014				Income Accretion				All Other Adjustments				Balance at September 30, 2014
Contractually required principal and interest		$	10,057			$	-			$	(3,186	)		$	6,871
Contractual cash flows not expected to be collected (non accretable discount)			(486	)			-				(100	)			(586	)
Cash flows expected to be collected			9,571				-				(3,286	)			6,285
Interest component of expected cash flows (accretable yield)			(673	)			120				38				(515	)
Fair value of loans acquired with deteriorating credit quality		$	8,898			$	120			$	(3,248	)		$	5,770

						Fair Value Measurement at September 30, 2014 Using
Financial Assets:		Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Obligations of U.S. Government and U.S. Government sponsored enterprises		$	177,215			$	31,174			$	146,041			$	-
Mortgage-backed securities, residential			64,571				-				64,571				-
Collateralized mortgage obligations			464				-				464				-
Obligations of states and political subdivisions			33,680				-				33,680				-
Corporate bonds and notes			1,539				-				1,539				-
SBA loan pools			1,349				-				1,349				-
Trust Preferred securities			2,025				-				2,025				-
Corporate stocks			7,254				6,838				416				-
Total available for sale securities		$	288,097			$	38,012			$	250,085			$	-
Trading assets		$	483			$	483			$	-			$	-

						Fair Value Measurement at December 31, 2013 Using
Financial Assets:		Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Obligations of U.S. Government and U.S. Government sponsored enterprises		$	188,106			$	31,262			$	156,844			$	-
Mortgage-backed securities, residential			104,356				-				104,356				-
Collateralized mortgage obligations			1,015				-				1,015				-
Obligations of states and political subdivisions			38,376				-				38,376				-
Corporate bonds and notes			2,946				-				2,946				-
SBA loan pools			1,488				-				1,488				-
Trust Preferred securities			2,034				-				2,034				-
Corporate stocks			7,695				7,279				416				-
Total available for sale securities		$	346,016			$	38,541			$	307,475			$	-
Trading assets		$	366			$	366			$	-			$	-

						Fair Value Measurement at September 30, 2014 Using
Financial Assets:		Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Impaired Loans:
Commercial mortgages:
Commercial mortgages		$	1,049			$	-			$	-			$	1,049
Consumer loans:
Home equity lines and loans			54				-				-				54
Total Impaired Loans		$	1,103			$	-			$	-			$	1,103
Other real estate owned:
Commercial mortgages:
Commercial mortgages		$	3,117			$	-			$	-			$	3,117
Consumer loans:
Home equity lines and loans			2				-				-				2
Total Other Real Estate Owned, net		$	3,119			$	-			$	-			$	3,119

						Fair Value Measurement at December 31, 2013 Using
Financial Assets:		Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Impaired Loans:
Commercial and agricultural:
Commercial and industrial		$	460			$	-			$	-			$	460
Commercial mortgages:
Commercial mortgages			485				-				-				485
Consumer loans:
Home equity lines and loans			54				-				-				54
Total Impaired Loans		$	999			$	-			$	-			$	999
Other real estate owned:
Commercial and agricultural:
Commercial and industrial		$	101			$	-			$	-			$	101
Commercial mortgages:
Commercial mortgages			266				-				-				266
Residential mortgages			106				-				-				106
Consumer loans:
Home equity lines and loans			65				-				-				65
Total Other Real Estate Owned, net		$	538			$	-			$	-			$	538

Description		Fair Value at September 30, 2014			Technique		Unobservable Inputs
Impaired loans		$	1,103		Third party appraisals			1		Management discount based on underlying collateral characteristics and market conditions
Other real estate owned		$	3,119		Third party appraisals			1		Estimated holding  period
								2		Estimated closing costs

Description		Fair Value at December 31, 2013			Technique		Unobservable Inputs
Impaired loans		$	999		Third party appraisals			1		Management discount based on underlying collateral characteristics and market conditions
Other real estate owned		$	538		Third party appraisals			1		Estimated holding  period
								2		Estimated closing costs

		Fair Value Measurements at September 30, 2014 Using
Financial assets:		Carrying Amount				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Estimated Fair Value (1)
Cash and due from financial Institutions		$	31,957			$	31,957			$	-			$	-			$	31,957
Interest-bearing deposits in other financial institutions			3,069				3,069				-				-				3,069
Trading assets			483				483				-				-				483
Securities available for sale			288,097				38,012				250,085				-				288,097
Securities held to maturity			5,430				-				5,821				-				5,821
FHLBNY and FRBNY stock			4,362				-				-				-				N/	A
Loans, net			1,101,031				-				-				1,127,642				1,127,642
Loans held for sale			1,167				-				1,167				-				1,167
Accrued interest receivable			4,340				360				1,468				2,512				4,340
Financial liabilities:
Deposits:
Demand, savings, and insured money market accounts		$	1,099,744			$	1,099,744			$	-			$	-			$	1,099,744
Time deposits			211,255				-				211,876				-				211,876
Securities sold under agreements to repurchase			30,981				-				32,144				-				32,144
FHLBNY term advances			24,086				-				24,994				-				24,994
Accrued interest payable			275				12				263				-				275
(1) Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

		Fair Value Measurements at December 31, 2013 Using
Financial Assets:		Carrying Amount				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Estimated Fair Value (1)
Cash and due from financial institutions		$	31,600			$	31,600			$	-			$	-			$	31,600
Interest-bearing deposits in other financial institutions			20,009				20,009				-				-				20,009
Trading assets			366				366				-				-				366
Securities available for sale			346,016				38,541				307,475				-				346,016
Securities held to maturity			6,495				-				6,930				-				6,930
FHLBNY and FRBNY stock			4,482				-				-				-				N/	A
Loans, net			983,090				-				-				1,008,826				1,008,826
Loans held for sale			695				-				695				-				695
Accrued interest receivable			4,166				145				1,468				2,553				4,166
Financial liabilities:
Deposits:
Demand, savings, and insured money market accounts		$	1,021,764			$	1,021,764			$	-			$	-			$	1,021,764
Time deposits			244,492				-				245,482				-				245,482
Securities sold under agreements to repurchase			32,701				-				33,636				-				33,636
FHLBNY Advances			25,243				-				26,064				-				26,064
Accrued interest payable			336				15				321				-				336
(1) Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

		2014				2013
Beginning of year		$	21,824			$	21,824
Acquired goodwill			-				-
Ending balance September 30,		$	21,824			$	21,824

	At September 30, 2014								At December 31, 2013
	Balance Acquired				Accumulated Amortization				Balance Acquired				Accumulated Amortization
Core deposit intangibles		$	5,975			$	3,054			$	5,975			$	2,338
Other customer relationship intangibles			5,633				3,170				6,063				3,323
Total		$	11,608			$	6,224			$	12,038			$	5,661

Year		Estimated Expense
2014		$	318
2015			1,136
2016			986
2017			859
2018			734
2019 and thereafter			1,351
Total		$	5,384

		Unrealized Gains and Losses on Securities Available for Sale				Defined Benefit and Other Benefit Plans				Total
Balance at December 31, 2013		$	6,043			$	(5,888	)		$	155
Other comprehensive income before reclassification			391				-				391
Amounts reclassified from accumulated other comprehensive income			(321	)			263				(58	)
Net current period other comprehensive income			70				263				333
Balance at September 30, 2014		$	6,113			$	(5,625	)		$	488

		Unrealized Gains and Losses on Securities Available for Sale				Defined Benefit and Other Benefit Plans				Total
Balance at June 30, 2014		$	6,962			$	(5,712	)		$	1,250
Other comprehensive (loss) before reclassification			(849	)			-				(849	)
Amounts reclassified from accumulated other comprehensive income			-				87				87
Net current period other comprehensive (loss) income			(849	)			87				(762	)
Balance at September 30, 2014		$	6,113			$	(5,625	)		$	488

		Unrealized Gains and Losses on Securities Available for Sale				Defined Benefit and Other Benefit Plans				Total
Balance at December 31, 2012		$	8,023			$	(10,830	)		$	(2,807	)
Other comprehensive loss before reclassification			(1,170	)			-				(1,170	)
Amounts reclassified from accumulated other comprehensive income			(1	)			701				700
Net current period other comprehensive (loss) inocme			(1,171	)			701				(470	)
Balance at September 30, 2013		$	6,852			$	(10,129	)		$	(3,277	)

		Unrealized Gains and Losses on Securities Available for Sale				Defined Benefit and Other Benefit Plans				Total
Balance at June 30, 2013		$	5,988			$	(10,363	)		$	(4,375	)
Other comprehensive income before reclassification			864				-				864
Amounts reclassified from accumulated other comprehensive income			-				234				234
Net current period other comprehensive income			864				234				1,098
Balance at September 30, 2013		$	6,852			$	(10,129	)		$	(3,277	)

Details about Accumulated Other Comprehensive Income Components		Nine Months Ended September 30,							Affected Line Item in the Statement Where Net Income is Presented
		2014				2013
Unrealized gains and losses on securities available for sale:
Reclassification adjustment for other-than- temporary gains (losses) realized in income		$	-			$	-
Realized gains on securities available for sale			522				1		Net gains on securities transactions
Tax effect			201				-		Income tax expense
Net of tax			321				1
Amortization of defined pension plan and other benefit plan items:
Prior service costs (a)			66				63		Pension and other employee benefits
Actuarial losses (a)			(499	)			(1,202	)	Pension and other employee benefits
Tax effect			170				438		Income tax expense
Net of tax			(263	)			(701	)
Total reclassification for the period, net of tax		$	58			$	(700	)

Details about Accumulated Other Comprehensive Income Components		Three Months Ended September 30,							Affected Line Item in the Statement Where Net Income is Presented
		2014				2013
Unrealized gains and losses on securities available for sale:
Reclassification adjustment for other-than- temporary gains (losses) realized in income		$	-			$	-
Realized gains on securities available for sale			-				-		Net gains on securities transactions
Tax effect			-				-		Income tax expense
Net of tax			-				-
Amortization of defined pension plan and other benefit plan items:
Prior service costs (a)			22				21		Pension and other employee benefits
Actuarial losses (a)			(169	)			(401	)	Pension and other employee benefits
Tax effect			60				146		Income tax expense
Net of tax			(87	)			(234	)
Total reclassification for the period, net of tax		$	(87	)		$	(234	)

	September 30, 2014								December 31, 2013
	Fixed Rate				Variable Rate				Fixed Rate				Variable Rate
Commitments to make loans		$	29,126			$	14,973			$	21,049			$	7,893
Unused lines of credit		$	1,738			$	173,196			$	2,190			$	187,061
Standby letters of credit		$	-			$	16,687			$	-			$	17,290

		Nine Months Ended								Three Months Ended
		September 30, 2014				September 30, 2013				September 30, 2014				September 30, 2013
Qualified Pension
Service cost, benefits earned during the period		$	813			$	1,048			$	271			$	349
Interest cost on projected benefit obligation			1,305				1,226				435				409
Expected return on plan assets			(2,379	)			(2,181	)			(793	)			(727	)
Amortization of unrecognized prior service cost			6				10				2				3
Amortization of unrecognized net loss			480				1,172				160				391
Net periodic pension expense		$	225			$	1,275			$	75			$	425
Supplemental Pension
Service cost, benefits earned during the period		$	30			$	30			$	10			$	10
Interest cost on projected benefit obligation			40				36				14				12
Amortization of unrecognized net loss			19				26				9				9
Net periodic supplemental pension expense		$	89			$	92			$	33			$	31
Postretirement, Medical and Life
Service cost, benefits earned during the period		$	33			$	36			$	11			$	12
Interest cost on projected benefit obligation			54				48				18				16
Amortization of unrecognized prior service cost			(72	)			(73	)			(24	)			(24	)
Amortization of unrecognized net loss			-				4				-				1
Net periodic postretirement, medical and life expense		$	15			$	15			$	5			$	5

		Nine Months Ended September 30, 2014
		Core Banking				Wealth Management Group Services				Holding Company And Other				Consolidated Totals
Net interest income		$	36,525			$	-			$	9			$	36,534
Provision for loan losses			2,330				-				-				2,330
Net interest income after provision for loan losses			34,195				-				9				34,204
Other operating income			8,930				5,816				610				15,356
Other operating expenses			35,836				8,199				650				44,685
Income (loss) before income tax expense			7,289				(2,383	)			(31	)			4,875
Income tax expense (benefit)			2,179				(916	)			(64	)			1,199
Segment net income (loss)		$	5,110			$	(1,467	)		$	33			$	3,676
Segment assets		$	1,515,658			$	6,332			$	1,567			$	1,523,557

		Nine Months Ended September 30, 2013
		Core Banking				Wealth Management Group Services				Holding Company And Other				Consolidated Totals
Net interest income		$	34,553			$	-			$	8			$	34,561
Provision for loan losses			1,755				-				-				1,755
Net interest income after provision for loan losses			32,798				-				8				32,806
Other operating income			6,715				5,448				684				12,847
Other operating expenses			30,137				4,174				617				34,928
Income before income tax expense			9,376				1,274				75				10,725
Income tax expense (benefit)			2,995				490				(6	)			3,479
Segment net income		$	6,381			$	784			$	81			$	7,246
Segment assets		$	1,334,376			$	5,023			$	1,692			$	1,341,091

		Three Months Ended September 30, 2014
		Core Banking				Wealth Management Group Services				Holding Company And Other				Consolidated Totals
Net interest income		$	12,424			$	-			$	2			$	12,426
Provision for loan losses			589				-				-				589
Net interest income after provision for loan losses			11,835				-				2				11,837
Other operating income			2,852				1,943				191				4,986
Other operating expenses			12,055				5,510				198				17,763
Income (loss) before income tax expense			2,632				(3,567	)			(5	)			(940	)
Income tax expense (benefit)			769				(1,371	)			(19	)			(621	)
Segment net income (loss)		$	1,863			$	(2,196	)		$	14			$	(319	)

		Three Months Ended September 30, 2013
		Core Banking				Wealth Management Group Services				Holding Company And Other				Consolidated Totals
Net interest income		$	11,515			$	-			$	2			$	11,517
Provision for loan losses			874				-				-				874
Net interest income after provision for loan losses			10,641				-				2				10,643
Other operating income			2,402				1,813				136				4,351
Other operating expenses			10,276				1,371				166				11,813
Income (loss) before income tax expense			2,767				442				(28	)			3,181
Income tax expense (benefit)			860				170				(28	)			1,002
Segment net income		$	1,907			$	272			$	-			$	2,179

		Shares				Weighted–Average Grant Date Fair Value
Nonvested at December 31, 2013			20,639			$	27.17
Granted			990				30.33
Vested			(415	)			23.07
Forfeited or Cancelled			-				-
Nonvested at September 30, 2014			21,214			$	27.40

		TABLE 1. SECURITIES AVAILABLE FOR SALE
		September 30, 2014												December 31, 2013
Securities Available for Sale		Amortized Cost				Estimated Fair Value				Unrealized Gains (Losses)				Amortized Cost				Estimated Fair Value				Unrealized Gains (Losses)
Obligations of U.S. Government and U.S. Government sponsored enterprises		$	175,960			$	177,215			$	1,255			$	187,098			$	188,106			$	1,008
Mortgage-backed securities, residential			63,858				64,571				713				104,069				104,356				287
Collateralized mortgage obligations			457				464				7				1,001				1,015				14
Obligations of states and political subdivisions			32,710				33,680				970				37,339				38,376				1,037
Corporate bonds and notes			1,505				1,539				34				2,879				2,946				67
SBA loan pools			1,340				1,349				9				1,471				1,488				17
Trust preferred securities			1,904				2,025				121				1,898				2,034				136
Corporate stocks			433				7,254				6,821				444				7,695				7,251
Totals		$	278,167			$	288,097			$	9,930			$	336,199			$	346,016			$	9,817

		TABLE 2. LOANS
		September 30, 2014				December 31, 2013				Dollar Change				Percent Change
Commercial and agricultural		$	165,852			$	145,363			$	20,489				14.1	%
Commercial mortgages			435,166				373,147				62,019				16.6	%
Residential mortgages			192,870				195,997				(3,127	)			-1.6	%
Indirect consumer loans			196,603				164,846				31,757				19.3	%
Consumer loans			123,691				116,513				7,178				6.2	%
Loans, net		$	1,114,182			$	995,866			$	118,316				11.9	%

		TABLE 3. NON-PERFORMING ASSETS
		September 30, 2014				December 31, 2013
Non-accrual loans		$	6,599			$	7,456
Non-accrual troubled debt restructurings			610				1,061
Total non-performing loans		$	7,209			$	8,517
Other real estate owned			3,119				538
Total non-performing assets		$	10,328			$	9,055

Ratio of non-performing loans to total loans			0.65	%			0.86	%
Ratio of non-performing assets to total assets			0.68	%			0.61	%
Ratio of allowance for loan losses to non-performing loans			182.42	%			150.01	%
Accruing loans past due 90 days or more (1)		$	2,527			$	1,473
Accruing troubled debt restructurings (1)		$	8,108			$	6,831
(1) These loans are not included in non-performing assets above.

TABLE 4. SUMMARY OF LOAN LOSS EXPERIENCE
		Nine Months Ended
		September 30, 2014				September 30, 2013
Balance at beginning of period		$	12,776			$	10,433
Charge-offs:
Commercial and agricultural			415				186
Commercial mortgages			1,236				44
Residential mortgages			97				53
Consumer loans			1,191				910
Total charge-offs			2,939				1,193
Recoveries:
Commercial and agricultural			331				454
Commercial mortgages			118				53
Residential mortgages			28				65
Consumer loans			507				289
Total  recoveries			984				861
Net charge-offs (recoveries)			1,955				332
Provision charged to operations			2,330				1,755
Balance at end of period		$	13,151			$	11,856
Ratio of net charge-offs to average loans outstanding			0.25	%			0.05	%
Ratio of allowance for loan losses to total loans outstanding			1.18	%			1.23	%

		TABLE 5. DEPOSITS
		September 30, 2014				December 31, 2013				Dollar Change				Percent Change
Non-interest-bearing demand deposits		$	372,916			$	351,222			$	21,694				6.2	%
Interest-bearing demand deposits			138,751				114,679				24,072				21.0	%
Insured money market accounts			391,671				361,095				30,576				8.5	%
Savings deposits			196,406				194,768				1,638				0.8	%
Time deposits			211,255				244,492				(33,237	)			-13.6	%
Total		$	1,310,999			$	1,266,256			$	44,743				3.5	%

TABLE 6. AVERAGE BALANCES AND YIELDS
Distribution of Assets, Liabilities and Shareholders' Equity, Interest Rates and Interest Differential
(in thousands of dollars)		Nine Months Ended September 30, 2014												Nine Months Ended September 30, 2013
Assets		Average Balance				Interest				Yield/ Rate				Average Balance				Interest				Yield/ Rate
Earning assets:
Loans		$	1,050,905			$	34,682				4.41	%		$	929,906			$	33,704				4.85	%
Taxable securities			271,670				3,951				1.94	%			193,016				3,178				2.20	%
Tax-exempt securities			40,975				1,100				3.59	%			43,101				1,232				3.82	%
Interest-bearing deposits			31,847				59				0.25	%			10,873				21				0.25	%
Total earning assets			1,395,397				39,792				3.81	%			1,176,896				38,135				4.33	%
Non-earning assets:
Cash and due from banks			26,522												23,291
Premises and equipment, net			29,838												25,144
Other assets			51,125												46,918
Allowance for loan losses			(13,231	)											(10,924	)
AFS valuation allowance			11,109												11,881
Total		$	1,500,760											$	1,273,206
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits		$	124,739				73				0.08	%		$	95,218				70				0.10	%
Savings and insured money market deposits			582,883				730				0.17	%			448,506				613				0.18	%
Time deposits			229,519				747				0.43	%			229,362				1,108				0.65	%
FHLB advances, securities sold under agreements to repurchase and other debt			55,737				1,206				2.89	%			61,690				1,239				2.69	%
Total interest-bearing liabilities			992,878				2,756				0.37	%			834,775				3,030				0.49	%
Non-interest-bearing liabilities:
Demand deposits			356,978												296,089
Other liabilities			8,790												8,628
Total liabilities			1,358,646												1,139,492
Shareholders' equity			142,114												133,714
Total		$	1,500,760											$	1,273,206
Fully taxable equivalent net interest income							37,036												35,105
Net interest rate spread(1)											3.44	%											3.84	%
Net interest margin, fully taxable equivalent (2)											3.55	%											3.99	%
Taxable equivalent adjustment							502												544
Net interest income						$	36,534											$	34,561

	Nine Months Ended
	September 30, 2014 vs. 2013
	Increase/(Decrease)
(in thousands of dollars)	Total Change				Due to Volume				Due to Rate
Interest and dividends earned on:
Loans		$	978			$	4,153			$	(3,175	)
Taxable investment securities			773				1,178				(405	)
Tax-exempt investment securities			(132	)			(59	)			(73	)
Interest-bearing deposits			38				38				-
Total earning assets		$	1,657			$	5,310			$	(3,653	)

Interest paid on:
Interest-bearing demand deposits		$	3			$	19			$	(16	)
Savings and insured money market deposits			117				171				(54	)
Time deposits			(361	)			1				(362	)
FHLB advances, securities sold under agreements to repurchase and other debt			(33	)			(124	)			91
Total interest-bearing liabilities		$	(274	)		$	67			$	(341	)
Net interest income		$	1,931			$	5,243			$	(3,312	)

TABLE 8. AVERAGE BALANCES AND YIELDS
Distribution of Assets, Liabilities and Shareholders' Equity, Interest Rates and Interest Differential
(in thousands of dollars)		Three Months Ended September 30, 2014												Three Months Ended September 30, 2013
Assets		Average Balance				Interest				Yield/ Rate				Average Balance				Interest				Yield/ Rate
Earning assets:
Loans		$	1,097,133			$	12,004				4.34	%		$	950,657			$	11,278				4.71	%
Taxable securities			244,269				1,142				1.86	%			195,337				1,021				2.07	%
Tax-exempt securities			37,734				350				3.68	%			39,470				377				3.79	%
Interest-bearing deposits			25,029				16				0.25	%			4,514				3				0.25	%
Total earning assets			1,404,165				13,512				3.82	%			1,189,978				12,679				4.23	%
Non-earning assets:
Cash and due from banks			26,766												23,512
Premises and equipment, net			30,160												25,006
Other assets			51,063												46,465
Allowance for loan losses			(13,694	)											(11,300	)
AFS valuation allowance			10,855												9,916
Total		$	1,509,315											$	1,283,577
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits		$	124,490				24				0.08	%		$	88,854				22				0.10	%
Savings and insured money market deposits			589,022				256				0.17	%			458,836				205				0.18	%
Time deposits			218,748				231				0.42	%			226,278				345				0.61	%
FHLB advances, securities sold under agreements to repurchase and other debt			56,278				404				2.85	%			66,889				420				2.50	%
Total interest-bearing liabilities			988,538				915				0.37	%			840,857				992				0.47	%
Non-interest-bearing liabilities:
Demand deposits			368,823												299,603
Other liabilities			9,010												9,162
Total liabilities			1,366,371												1,149,622
Shareholders' equity			142,944												133,955
Total		$	1,509,315											$	1,283,577
Fully taxable equivalent net interest income							12,597												11,687
Net interest rate spread(1)											3.45	%											3.76	%
Net interest margin, fully taxable equivalent (2)											3.56	%											3.90	%
Taxable equivalent adjustment							171												170
Net interest income						$	12,426											$	11,517

	Three Months Ended
	September 30, 2014 vs. 2013
	Increase/(Decrease)
(in thousands of dollars)	Total Change				Due to Volume				Due to Rate
Interest and dividends earned on:
Loans		$	726			$	1,649			$	(923	)
Taxable investment securities			121				237				(116	)
Tax-exempt investment securities			(27	)			(17	)			(10	)
Interest-bearing deposits			13				13				-
Total earning assets		$	833			$	1,882			$	(1,049	)

Interest paid on:
Interest-bearing demand deposits		$	2			$	7			$	(5	)
Savings and insured money market deposits			51				57				(6	)
Time deposits			(114	)			(11	)			(103	)
FHLB advances, securities sold under agreements to repurchase and other debt			(16	)			(72	)			56
Total interest-bearing liabilities		$	(77	)		$	(19	)		$	(58	)
Net interest income		$	910			$	1,901			$	(991	)

PART II.	OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS
	For information related to this item, please see Note 8 to the Corporation's financial statements included herein.
ITEM 1A.	RISK FACTORS
	There have been no material changes in the risk factors set forth in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2013, filed with the Securities and Exchange Commission on March 14, 2014.
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds
(c)	Issuer Purchases of Equity Securities (1)
Period	Total number of shares purchased				Average price paid per share				Total number of shares purchased as part of publicly announced plans or programs				Maximum number of shares that may yet be purchased under the plans or programs
7/1/14-7/30/14			-			$	-				-				121,906
8/1/14-8/31/14			-			$	-				-				121,906
9/1/14-9/30/14			-			$	-				-				121,906
Quarter ended 9/30/14			-			$	-				-				121,906
(1) On December 19, 2012, the Corporation's Board of Directors approved a stock repurchase plan authorizing the purchase of up to 125,000 shares of the Corporation's outstanding common stock. Purchases may be made from time to time on the open market or in private negotiated transactions and will be at the discretion of management. As of June 30, 2014, a total of 3,094 shares had been purchased under this plan.
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES
	Not applicable

ITEM 4.	MINE SAFETY DISCLOSURES
	Not applicable

ITEM 5.	OTHER INFORMATION
	Not applicable

ITEM 6.	EXHIBITS
	The following exhibits are either filed with this Form 10-Q or are incorporated herein by reference. The Corporation's Securities Exchange Act File number is 000-13888.
	3.1  Certificate of Incorporation of Chemung Financial Corporation dated December 20, 1984.  (Filed as Exhibit 3.1 to Registrant's Form 10-K filed with the SEC on March 13, 2008 and incorporated herein by reference).
	3.2  Certificate of Amendment to the Certificate of Incorporation of Chemung Financial Corporation, dated March 28, 1988.  (Filed as Exhibit 3.2 to Registrant's Form 10-K filed with the SEC on March 13, 2008 and incorporated herein by reference).
	3.3  Certificate of Amendment to the Certificate of Incorporation of Chemung Financial Corporation, dated May 13, 1998.  (Filed as Exhibit 3.4 of the Registrant's Form 10-K for the year ended December 31, 2005 and incorporated herein by reference).
	3.4  Amended and Restated Bylaws of the Registrant, as amended to February 26, 2014. (Filed as Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the SEC on March 4, 2014 and incorporated herein by reference).
	31.1  Certification of President and Chief Executive Officer of the Registrant pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.*
	31.2  Certification of Chief Financial Officer and Treasurer of the Registrant pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.*
	32.1  Certification of President and Chief Executive Officer of the Registrant pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. §1350.*
	32.2  Certification of Chief Financial Officer and Treasurer of the Registrant pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. §1350.*
	101.INS  Instance Document*
	101.SCH  XBRL Taxonomy Schema*
	101.CAL  XBRL Taxonomy Calculation Linkbase*
	101.DEF  XBRL Taxonomy Definition Linkbase*
	101.LAB  XBRL Taxonomy Label Linkbase*
	101.PRE  XBRL Taxonomy Presentation Linkbase*
*	Filed herewith.

DATED:  November 17, 2014	By:  /s/ Ronald M. Bentley
	Ronald M. Bentley, President and Chief Executive Officer (Principal Executive Officer)

DATED:  November 17, 2014	By:  /s/ Karl F. Krebs
	Karl F. Krebs, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

3.1  Certificate of Incorporation of Chemung Financial Corporation dated December 20, 1984.  (Filed as Exhibit 3.1 to Registrant's Form 10-K filed with the SEC on March 13, 2008 and incorporated herein by reference).

3.2  Certificate of Amendment to the Certificate of Incorporation of Chemung Financial Corporation, dated March 28, 1988.  (Filed as Exhibit 3.2 to Registrant's Form 10-K filed with the SEC on March 13, 2008 and incorporated herein by reference).

3.3  Certificate of Amendment to the Certificate of Incorporation of Chemung Financial Corporation, dated May 13, 1998.  (Filed as Exhibit 3.4 of the Registrant's Form 10-K for the year ended December 31, 2005 and incorporated herein by reference).

3.4  Amended and Restated Bylaws of the Registrant, as amended to February 26, 2014. (Filed as Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the SEC on March 4, 2014 and incorporated herein by reference).

31.1  Certification of President and Chief Executive Officer of the Registrant pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.*

31.2  Certification of Chief Financial Officer and Treasurer of the Registrant pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.*

32.1  Certification of President and Chief Executive Officer of the Registrant pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. §1350.*

32.2  Certification of Chief Financial Officer and Treasurer of the Registrant pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. §1350.*

101.INS  Instance Document*

101.SCH  XBRL Taxonomy Schema*

101.CAL  XBRL Taxonomy Calculation Linkbase*

101.DEF  XBRL Taxonomy Definition Linkbase*

101.LAB  XBRL Taxonomy Label Linkbase*

101.PRE  XBRL Taxonomy Presentation Linkbase*