Chemung Financial (CHMG) 10-Q 1999 Q3 Quarterly report

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 September 30, 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 (State or other jurisdiction of	16-1237038 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 September 30, 1999:

Common Stock, $.01 par value -- outstanding 4,068,614 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	6
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.	11
PART II.	OTHER INFORMATION
Item 6:	Exhibits and Reports on Form 8-K	13
	SIGNATURES	34

PART I. FINANCIAL INFORMATION

Item 1: Financial Statements

CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
	Sept. 30	Dec. 31
	1999	1998
ASSETS
Cash and due from banks	$ 28,618,398	$ 27,515,582
Interest bearing deposits with other financial Institutions	1,520,138	1,304,207
Securities held to maturity, fair value of
$8,497,698 at Sept. 30, 1999 and $6,660,923 at Dec. 31, 1998	8,497,698	6,660,923
Securities available for sale, at fair value	234,323,631	235,293,736
Loans, net of unearned income and deferred fees	353,724,084	329,255,342
Allowance for loan losses	(4,684,459)	(4,509,185)
Loans, net	349,039,625	324,746,157
Bank premises and equipment, net	11,323,554	10,084,608
Intangible assets, net of accumulated amortization	5,787,851	6,228,328
Other assets	11,693,055	11,826,068
Total assets	$650,803,950	$623,659,609
LIABILITIES
Deposits: Non-interest bearing	$ 99,736,243	$101,908,083
Interest bearing	402,736,744	364,231,279
Total deposits	502,472,987	466,139,362
Securities sold under agreements to repurchase	49,188,399	50,587,369
Federal Home Loan Bank Advances	22,900,000	26,900,000
Other liabilities	10,505,348	13,943,251
Total liabilities	585,066,734	557,569,982
SHAREHOLDERS' EQUITY
Common Stock, $.01 par value per share;
authorized 10,000,000 shares, issued: 4,300,134 shares	43,001	43,001
Surplus	21,901,920	20,851,800
Retained earnings	46,563,843	42,770,991
Treasury stock, at cost (231,520 shares at Sept. 30, 1999 and 197,380 shares at Dec. 31, 1998)	(3,832,702)	(2,970,954)
Accumulated other comprehensive income	1,061,154	5,394,789
Total shareholders' equity	65,737,216	66,089,627
Total liabilities & shareholders' equity	$650,803,950	$623,659,609

See accompanying notes to condensed consolidated financial statements

CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF INCOME Unaudited
	Nine Months	Ended	Three Months	Ended
	Sept. 30,		Sept. 30,
INTEREST AND DIVIDEND INCOME	1999	1998	1999	1998
Loans	$21,526,878	$20,747,883	$ 7,406,241	$ 7,243,947
Securities	10,399,274	9,442,108	3,522,721	3,196,977
Federal funds sold	422,329	423,266	152,484	159,753
Interest bearing deposits	203,624	202,945	60,601	42,506
Total interest and dividend income	32,552,105	30,816,202	11,142,047	10,643,183
INTEREST EXPENSE
Deposits	11,185,164	11,553,221	3,858,064	3,954,979
Securities sold under agreement
To repurchase and funds borrowed	2,661,829	1,613,694	889,754	661,294
Total interest expense	13,846,993	13,166,915	4,747,818	4,616,273
Net interest income	18,705,112	17,649,287	6,394,229	6,026,910
Provision for loan losses	533,333	600,000	133,333	200,000
Net interest income after
provision for loan losses	18,171,779	17,049,287	6,260,896	5,826,910
OTHER INCOME
Net gains on sales of securities	150,453	215,993	18	68,598
Other non-interest income	6,686,550	5,755,952	2,382,862	2,067,166
Total other operating income	6,837,003	5,971,945	2,382,880	2,135,764
OTHER EXPENSE
Other non-interest expenses	15,909,184	15,283,937	5,286,089	5,169,854
Income before income taxes	9,099,598	7,737,295	3,357,687	2,792,820
Income tax expense	3,059,125	2,440,967	1,219,510	877,167
Net Income	$ 6,040,473	$ 5,296,328	$ 2,138,177	$ 1,915,653
Basic Earnings per Share	$1.46	$1.29	$0.52	$0.47

See accompanying notes to condensed consolidated financial statements

CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited
	Nine Months Ended Sept. 30,
	1999	1998
OPERATING ACTIVITIES
Net income	$ 6,040,473	$ 5,296,328
Adjustments to reconcile net income to net cash
Provided by operating activities:
Amortization of intangible assets	440,477	440,477
Provision for loan losses	533,333	600,000
Depreciation and amortization	1,176,390	1,127,729
Premium amort. and discount accretion on securities, net	383,884	150,237
Net gain on sales of securities	(150,453)	(215,993)
Decrease (increase) in other assets	133,013	(1,606,264)
Increase other liabilities	418,009	1,319,641
Net cash provided by operating activities	8,975,126	7,112,155
INVESTING ACTIVITIES
Proceeds from maturities of securities - avail. for sale	42,992,581	49,673,891
Proceeds from maturities of securities -held to maturity	3,688,990	6,194,839
Proceeds from sales of securities - avail. for sale	12,238,761	19,174,370
Purchases of securities - available for sale	(61,710,179)	(83,217,743)
Purchases of securities - held to maturity	(5,525,765)	(3,159,640)
Purchases of premises and equipment	(2,415,336)	(1,013,172)
Increase in loans, net of repayments and other reductions	(27,149,476)	(30,478,543)
Proceeds from sales of student loans	2,322,675	2,759,052
Net cash used by investing activities	(35,557,749)	(40,066,946)
FINANCING ACTIVITIES
Net increase in demand deposits,
NOW, savings and insured money market accounts	7,489,041	5,437,507
Net increase in certificates of
Deposit and individual retirement accounts	28,844,584	12,557,529
Net increase (decrease) in securities sold under
Agreements to repurchase	(1,398,970)	26,492,516
Decrease in Federal Home Loan Bank advances	(4,000,000)	(6,300,000)
Purchase of treasury shares	(861,748)	(582,251)
Cash dividends paid	(2,171,537)	(1,981,741)
Net cash provided by financing activities	27,901,370	35,623,560
Net increase in cash and cash equivalents	1,318,747	2,668,769
Cash and cash equivalents at beginning of period	28,819,789	34,418,455
Cash and cash equivalents at end of period	$30,138,536	$37,087,224

See accompanying notes to condensed consolidated financial statements

CHEMUNG FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. 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 statements of 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 September 30, 1999 and December 31, 1998, and results of operations for the three and nine month periods ended September 30, 1999 and 1998 and cash flows for the nine months ended September 30, 1999 and 1998.

2. Basic Earnings Per Share

Net income per share was computed by dividing net income by 4,140,441 and 4,120,832 weighted average shares outstanding for the nine month periods ended September 30, 1999 and 1998 and 4,129,332 and 4,115,538 weighted average shares outstanding for the three month periods ended September 30, 1999 and 1998, respectively. Issuable shares (such as those related to directors restricted stock units) are considered outstanding and are included in the computation of Basic EPS.

3. Accounting Standards

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities.

During the second quarter of 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133." SFAS No. 137 defers the effective date of SFAS No. 133 by one year from fiscal years beginning after June 15, 1999 to fiscal years beginning after June 15, 2000.

4. Comprehensive Income

Comprehensive income for the three and nine month periods ended September 30, 1999 was $1,026,869 and $1,706,838, respectively. Comprehensive income for the three and nine month periods ended September 30, 1998 was $1,997,786 and $5,925,825, respectively. The following summarizes the components of other comprehensive income:

Unrealized Gains or Losses on Securities:
Unrealized holding losses during the
Three months ended September 30, 1999,
net of tax (pre-tax amount of $(1,850,313))	$ (1,111,298)
Reclassification adjustment for gains
Realized in net income during the
Three months ended September 30, 1999, net
of tax (pre-tax amount of $18)	(10)
Other comprehensive loss-three months ended
September 30, 1999	$ (1,111,308)
Unrealized holding gains during the
Three months ended September 30, 1998,
net of tax (pre-tax amount of $205,350)	$ 123,333
Reclassification adjustment for gains
Realized in net income during the
Three months ended September 30, 1998, net
Of tax (pre-tax amount of $68,598)	(41,200)
Other comprehensive income-three months
ended September 30, 1998	$ 82,133
Comprehensive Income (continued)
Unrealized holding losses during the
nine months ended September 30, 1999,
net of tax (pre-tax amount of $(7,065,058)	$ (4,243,274)
Reclassification adjustment for gains
Realized in net income during the
nine months ended September 30, 1999, net of
tax (pre-tax amount of $150,453)	(90,361)
Other comprehensive loss-nine months ended
September 30, 1999	$ (4,333,635)
Unrealized holding gains during the
nine months ended September 30, 1998,
net of tax (pre-tax amount of $(1,264,106)	$ 759,222
Reclassification adjustment for gains
Realized in net income during the
nine months ended September 30, 1998, net of
tax (pre-tax amount of $215,993)	(129,725)
Other comprehensive income-nine months ended
September 30, 1998	$ 629,497

Item 2: Management's Discussion and Analysis of Financial Condition And Results of Operations

The review that follows focuses on the factors affecting the financial condition and results of operations of Chemung Financial Corporation during the three month and nine month periods September 30, 1999, with comparisons to the comparable periods in 1998 as applicable. The consolidated interim financial statements and related notes, as well as the 1998 Annual Report to Shareholders, should be read in conjunction with this review. Amounts in prior period consolidated interim financial statements are reclassified whenever necessary to conform to the current period presentation.

Forward-looking Statements

Statements included in this review and in future filings by Chemung Financial Corporation with the Securities and Exchange Commission, in Chemung Financial Corporation press releases, and in oral statements made with the approval of an authorized executive officer, which are not historical or current facts, are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. Chemung Financial Corporation wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect Chemung Financial Corporation's actual results, and could cause Chemung Financial Corporation's actual financial performance to differ materially from that expressed in any forward-looking statement: (1) credit risk, (2) interest rate risk, (3) competition, (4) certain vendors of critical systems or services failing to comply with Year 2000 programming issues, (5) changes in the regulatory environment, and (6) changes in general business and economic trends. The foregoing list should not be construed as exhaustive, and the Company disclaims any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements, or to reflect the occurrence of anticipated or unanticipated events.

Financial Condition

Total assets at September 30, 1999 were $650.8 million, an increase of $27.1 million or 4.35% since the beginning of the year. The majority of this growth has occurred in our earning assets which have increased by $25.6 million or 4.46% thusfar in 1999. $24.5 million of this increase is related to growth in our loan portfolio, with the balance comprised of increases in our securities portfolio and interest bearing deposits of $867 thousand and $216 thousand, respectively.

The Available for Sale segment of the securities portfolio totaled $234.3 million as compared to $235.3 million at the beginning of the year, a decrease of 0.41%. At amortized cost, increases in Federal Agency Bonds ($17.8 million) and Municipal Bonds ($646 thousand) were offset primarily by decreases in Mortgage Backed Securities ($9.7 million) and U.S. Treasury Notes ($2.5 million). The valuation adjustment for available for sale securities (net unrealized gains) has declined by $7.2 million since year-end 1998 reflecting the impact of the higher market interest rates we have seen in 1999. The Held to Maturity segment of the portfolio, consisting primarily of Municipal Obligations totaled $8.5 million versus $6.7 million at the end of 1998.

Realized net gains on sales of securities Available for sale for the nine-month period ended September 30, 1999 were $150,453 as compared to $215,993 for the nine months ended September 30, 1998.

As noted above, total loans have increased $24.5 million or 7.43% since the beginning of the year. $17.1 million of this growth has occurred in our commercial loan portfolio where we have seen strong demand throughout the year. The total mortgage portfolio has grown by $4.7 million or 4.25%, and we continue to see steady growth in this area. Total consumer loans have increased by $2.7 million or 2.17%. The growth in this area has occurred primarily in our indirect auto lending activity.

Total deposits at September 30, 1999 were $502.5 million as compared to $466.1 million at the beginning of the year, an increase of $36.4 million or 7.79%. Public fund balances were up $24.9 million with personal and non-personal balances increasing $11.5 million.

Results of Operations

Net earnings for the third quarter totaled $2.138 million or $0.52 per share as compared to $1.916 million or $0.47 per share for the third quarter of 1998. Included in third quarter 1998 earnings is a gain on the sale of securities totaling $69 thousand, with nominal securities gains taken during the third quarter of 1999. This added approximately $41 thousand to net after tax earnings for the third quarter of 1998, or about $0.01 per share. Factors which have contributed to the earnings improvement include the following: Net interest income after provision for loan losses has increased $434 thousand or 7.45%, a function of a higher level of average earning assets. Additionally, non interest income, exclusive of the above noted securities gains, has increased $316 thousand or 15.27% due to higher revenues generated by our Trust department as well as increases in service charges and other fee income.

Net earnings for the nine month period ended September 30, 1999 were $6.040 million, a $744 thousand or 14.05% increase over last year's nine month results. Earnings per share for the nine month period were $1.46 versus $1.29 the prior year. Despite a 26 basis point decline in our net interest margin, net interest income after the provision for loan losses, has increased by $1.122 million or 6.58% due to an approximate $65 million increase in average earning assets. Additionally, non interest income is $865 thousand or 14.49% higher than last year, while operating expenses have increased by $625 thousand or 4.09%. Again, the increase in non interest income is primarily attributed to increased revenue generated within our Trust department, as well as increases in service charges and other fee income. Factors influencing the increase in operating expenses include higher salaries and benefits, data processing costs and advertising.

Liquidity and Capital Resources

As indicated on the Condensed Consolidated Statements of Cash Flows, cash and cash equivalents have increased $1.3 million since the beginning of the year. In addition to cash provided by operating activities ($9.0 million), other primary sources of cash flow during the nine month period ended September 30, 1999 included proceeds from the sale and maturity of investment securities ($58.9 million), and an increase in deposit balances ($36.3 million). Cash proceeds generated from the above sources have been used primarily to fund the purchase of additional investment securities ($67.2 million), an increase in loans, net of repayments ($27.1 million), the repayment of overnight advances from the Federal Home Loan Bank ($4.0 million), the payment of cash dividends ($2.2 million), and purchases of premises and equipment ($2.4 million).

On September 30, 1999, the Company's consolidated leverage ratio was 9.20%. The Tier I and Total Risk Adjusted Capital ratios were 15.38% and 16.60%, respectively. All of the above ratios are in excess of the requirements for being considered "well capitalized" by the FDIC, the Federal Reserve and the New York State Banking Department.

During the nine months ended September 30, 1999, the Company acquired 34,140 treasury shares at an average price of $25.24 per share. No treasury shares have been sold thus far in 1999. During the quarter, the Company declared a cash dividend of $0.19 per share. Year to date, dividends totaling $0.55 per share have been declared, an 11.11% increase as compared to dividends declared during the first nine months of 1998 totaling $0.495 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, the amount expensed to the loan loss provision for the first nine months totaled $533 thousand as compared to $600 thousand expensed during the first nine months of 1998. At 98% of non-performing loans and 1.32% of total loans, the Allowance for Loan Losses is viewed by management as reasonable and adequate relative to the inherent risk. Of loss in the loan portfolio. Non-performing loans at September 30, 1999 constituted 1.35% of total loans.

Changes in the allowance for loan losses for the three and nine months ended September 30, 1999 are as follows:

	Three Months Ended		Nine Months Ended
	Sept. 30, 1999		Sept. 30, 1999
	Amount (000's)		Amount(000's)
Balance at beginning of period	$	$ 4,612	$	$ 4,509
Charge-offs:
Commercial, financial and agricultural	7		23
Commercial mortgages	0		0
Residential mortgages	0		20
Consumer loans	90	$ 97	444	$ 487
Recoveries:
Commercial, financial and agricultural	$ 12		$ 35
Commercial mortgages	0		0
Residential mortgages	0		0
Consumer loans	24		94
		$ 36		$ 129
Net charge-offs		$ 61		$ 358
Provisions charged to operations		133		533
Balance at end of period		$ 4,684		$ 4,684

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 September 30, 1999 is an allowance for impaired loans of $850 thousand versus $993 thousand at the beginning of the year. The total recorded investment in the related impaired loans at September 30, 1999 and December 31, 1998 was $3.774 million and $4.569 million respectively. The recorded investment in both periods includes a large real estate secured loan. Based upon existing negotiations, it now appears that this loan will be satisfied during the fourth quarter.

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 September 30, 1999 and December 31, 1998, the following table summarizes the Company's non-accrual and past due loans:

	September 30, 1999	December 31,1998
Non-accrual loans	$ 4,074	$ 4,457
Accruing loans past due 90 days or more	$ 690	$ 357

At September 30, 1999, the Company has no commercial loans for which payments are presently current but the borrowers are currently experiencing severe financial difficulties. At September 30, 1999, no loan concentrations to borrowers engaged in the same or similar industries exceeded 10% of total loans and the Company has no interest-bearing assets other than loans that meet the non-accrual, past due, restructured or potential problem loan criteria.

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 phases 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 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. 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 has continued to test applications in 1999 to insure all systems are Year 2000 compliant. The Company evaluates Year 2000 readiness of its commercial loan applicants as part of the loan underwriting process and has called 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 has substantially completed its systems contingency plan as of September 30, 1999, with further testing and modifications to occur in the fourth quarter.

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 and on other interest bearing liabilities is affected by changes to market interest rates. Additionally, because of assumptions made relative 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 September 30, 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 event of adverse changes to interest rates, and as of September 30, 1999 exposure to changing interest rates is within the risk limits established.

There have been no material changes in the Company's interest rate risk position since December 31, 1998. Other types of market risk, such as foreign exchange rate risk and commodity price risk do not arise in the normal courses of the Company's business activities.

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, 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 Form10-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, is incorporated herein by reference to Exhibit A of the registrant's Form 10-Q for quarter ended March 31, 1999, File No. 0-13888.
	EXHIBIT A
(3.2)	Bylaws of the Registrant, as amended to August 11, 1999.
(27)	Financial Data Schedule (EDGAR version only)
(b)	Reports on Form 8-K
	During the quarter ended September 30, 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 SEPTEMBER 30, 1999

CHEMUNG FINANCIAL CORPORATION

ELMIRA, NEW YORK

EXHIBIT A
	Amended Bylaws Effective August 11,1999
	(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.)

CHEMUNG FINANCIAL CORPORATION

BY-LAWS

Amended to August 11, 1999

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 thereat may 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 sixteen (16). This number may be increased 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 incumbent 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 one (1) year, the second class shall be originally 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 such 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 resulting from an increase in the number of directors and vacancies occurring in the Board of Directors for any reason 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 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 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, certificates 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.

CHEMUNG FINANCIAL CORPORATION

LEGEND FOR BY-LAWS

DATE	ARTICLE	SECTION	DESCRIPTION
4/9/97	Article III	Section 3	Number of Directors changed from twenty to nineteen.
4/8/98	Article II	Sections 4 & 5	Change fifty (50) days to sixty (60) days.
12/8/98	Article III	Section 3	Number of Directors changed from nineteen to seventeen.
8/11/99	Article III	Section 3	Number of Directors changed from seventeen to sixteen.

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:	November 9, 1999	/s/ Jan P. Updegraff
		Jan P. Updegraff President & CEO
DATE:	November 9, 1999	/s/ John R. Battersby Jr.
		John R. Battersby Jr. Treasurer