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Chemung Financial discloses possible effect of potentially fraudulent activity

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Chemung Financial discloses possible effect of potentially fraudulent activity

The lead lender in an approximately $36.0 million commercial credit secured by business assets recently advised Chemung Canal Trust Co. of a default on the credit due to potentially fraudulent activity.

Chemung Canal Trust, a Chemung Financial Corp. subsidiary, owns a participating interest totaling $4.2 million in the commercial credit.

In a filing, Chemung Financial stated it is currently evaluating the situation but expects that its third quarter net income and net income per share will be adversely affected. Chemung Canal Trust expects to remain well-capitalized subsequent to recording any potential loss associated with the credit.

Chemung Canal Trust plans to pursue all available sources of collection and other means of mitigating the potential loss, but no assurance can be given that it will be successful in this regard, according to the filing. Based on its review of the circumstances of the alleged fraudulent activities, the bank believes the incident is isolated to the subject credit.