Chemung Financial Corporation's Capital Utilization Analysis

• Chemung Financial Corporation (NASDAQ:CHMG) struggles with capital utilization, having a negative ROIC to WACC ratio.
• Investar Holding Corporation showcases exceptional efficiency with a high ROIC to WACC ratio, indicating superior capital utilization.
• Comparative analysis with peers reveals varying efficiencies in capital utilization across the banking sector.

Chemung Financial Corporation (NASDAQ:CHMG) is a regional bank holding company based in New York. It provides a range of financial services, including commercial and consumer banking, wealth management, and insurance services. In the competitive landscape, Chemung Financial faces peers like C&F Financial Corporation, Enterprise Bancorp, and others, each with varying efficiencies in capital utilization.

Chemung Financial's Return on Invested Capital (ROIC) is -0.52%, while its Weighted Average Cost of Capital (WACC) is 15.17%. This results in a ROIC to WACC ratio of -0.034, indicating that the company is not generating enough returns to cover its cost of capital. This inefficiency suggests that Chemung Financial is struggling to use its capital effectively.

In comparison, Central Valley Community Bancorp (CVCY) and American National Bankshares Inc. (AMNB) also show inefficiencies, with negative ROIC to WACC ratios of -0.761 and -0.009, respectively. However, Investar Holding Corporation (ISTR) stands out with a remarkable ROIC of 203.48% against a WACC of 23.00%, resulting in a ROIC to WACC ratio of 8.846. This indicates that ISTR is highly efficient in generating returns on its invested capital.

The analysis reveals that while Chemung Financial Corporation is underperforming in capital utilization, Investar Holding Corporation demonstrates exceptional efficiency. This comparison highlights the importance of evaluating ROIC and WACC to understand a company's ability to generate returns relative to its cost of capital.