Elmira Savings Bank Reports Second Quarter Earnings

ELMIRA, NY--(Marketwired - Jul 16, 2014) - Elmira Savings Bank ( NASDAQ : ESBK )

Highlights

• Net income was $1,099,000 and $2,159,000 for the three and six months ended June 30, 2014 compared to $1,374,000 and $2,566,000 for the same periods in 2013.
• Diluted earnings per share were $.31 per share and $.61 per share for the three and six months ended June 30, 2014 compared to $.40 per share and $.69 per share for the same periods in 2013. 
• Return on average assets was .86% and .85% for the three and six months ended June 30, 2014 compared to 1.07% and .99% for the same periods in 2013.
• Return on average equity was 7.95% and 7.89% for the three and six months ended June 30, 2014 compared to 9.67% and 8.38% for the same periods in 2013.

"During the first six months of 2014, the Bank experienced a decline in its mortgage originations, despite maintaining its market share, due to lower levels of refinancing, as well as purchasing activity across our market area. This decline in originations has unfavorably affected our level of noninterest income," said Thomas M. Carr, President and COO.

Mr. Carr continued, "We have maintained our net interest margin, limited our operating expenses, increased deposit fee income, and continue to have strong asset quality."

Net Income

Net income totaled $2,159,000 for the six months ended June 30, 2014, a decrease of $407,000 or 16% from the $2,566,000 of net income recorded for the same period in 2013. This decrease was the net result of a decrease in noninterest income of $341,000, an increase in tax expense of $237,000, and an increase in noninterest expense of $46,000, offset by an increase in net interest income of $81,000 and a decrease in the provision for loan losses of $136,000.

Net income totaled $1,099,000 for the three months ended June 30, 2014, a decrease of $275,000 or 20% from the $1,374,000 recorded for the same period in 2013. This decrease was the net result of a decrease in noninterest income of $145,000 and an increase in tax expense of $288,000, offset by a decrease in noninterest expense of $141,000, an increase in net interest income of $7,000 and a decrease in the provision for loan losses of $10,000.

Net income of $1.1 million for the current quarter ended June 30, 2014 represents an increase of $39,000, or 4%, from net income for the preceding quarter ended March 31, 2014.

Basic and diluted earnings per share for the six months ended June 30, 2014 were $.64 per share and $.61 per share compared to $.73 per share and $.69 per share for the same period in 2013. Basic and diluted earnings per share for the three months ended June 30, 2014 were $.33 per share and $.31 per share compared to $.42 per share and $.40 per share for the same period in 2013.

Net Interest Margin

The net interest margin for the six months ended June 30, 2014 was 3.25% compared to 3.28% for the same period in 2013. The yield on average earning assets was 4.28% for the six months ended June 30, 2014 compared to 4.41% for the same period in 2013. The average cost of interest-bearing liabilities was 1.22% for the six months ended June 30, 2014 compared to 1.32% for the same period in 2013.

The net interest margin for the three months ended June 30, 2014 was 3.19% compared to 3.24% for the same period in 2013. The average yield on earning assets was 4.22% for the three months ended June 30, 2014 compared to 4.36% for the same period in 2013. The average cost of interest-bearing liabilities was 1.22% for the three months ended June 30, 2014 compared to 1.32% for the same period in 2013.

Assets

Total assets increased $2.7 million or 0.5% to $517.1 million at June 30, 2014 compared to $514.3 million at December 31, 2013. Loans receivable increased 1.6% to $395.4 million at June 30, 2014 compared to December 31, 2013. The available-for-sale investment portfolio decreased $8.7 million from December 31, 2013 to June 30, 2014.

Nonperforming Loans

Our nonperforming loans to total loans ratio has increased to 1.06% at June 30, 2014 from .90% at December 31, 2013. Net loan charge-offs to average loans for the six months ended June 30, 2014 of 0.09% decreased from 0.10% for the six months ended June 30, 2013. The allowance for loan losses was 0.96% of total loans at June 30, 2014 and 0.99% of total loans at December 31, 2013.

Liabilities

Deposits total $399.2 million at June 30, 2014, an increase of $1.5 million or 0.4%. The $1.5 million increase consists of a $2.5 million increase in savings accounts, a $1.6 million increase in money market accounts, a $1.3 million increase in noninterest-bearing accounts, and a $0.7 million increase in time deposits, partially offset by a $4.6 million decrease in NOW accounts. Borrowed funds decreased by $1.5 million or 3%.

Shareholders' Equity

Shareholders' equity increased $1.2 million to $55.2 million at June 30, 2014 compared to December 31, 2013. The current level of shareholders' equity equates to a book value per share of $16.87 at June 30, 2014, compared to $16.64 at December 31, 2013. Dividends paid to common shareholders were $0.23 and $0.46 for the three and six months ended June 30, 2014 compared to $0.21 and $0.42 for the same periods in 2013, representing increases of 9.5% for both the three and six month periods. 

Elmira Savings Bank, with $517.1 million in total assets, is insured by the Federal Deposit Insurance Corporation (FDIC) and is a state-chartered bank with six offices in Chemung County, NY; three offices and a loan center in Tompkins County, NY; two offices in Steuben County, NY; one office in Cayuga County, NY; one office in Schuyler County; a loan center in Cortland County, NY; and a loan center in Broome County, NY.

Except for the historical information contained herein, the matters discussed in this news release are forward looking statements that involve the risks and uncertainties, including the timely availability and acceptance of Bank products, the impact of competitive products and pricing, the management of growth, and other risks detailed from time to time in the Bank's regulatory reports.

ELMIRA SAVINGS BANK
CONSOLIDATED BALANCE SHEET
(unaudited)
(in thousands, except for share and per share data)			June 30,				December 31,
			2014				2013				% Change
ASSETS
Cash and due from banks			$	12,048			$	7,077			70.2	%
Federal funds sold and other short-term investments				477				564			-15.4	%
	Total cash and cash equivalents			12,525				7,641			63.9	%
Securities available for sale, at fair value				54,813				63,464			-13.6	%
Securities held to maturity - fair value $8,023 at June 30, 2014, and $8,302 at December 31, 2013				7,588				7,805			-2.8	%
Federal Reserve and Federal Home Loan Bank (FHLB) stock, at cost				10,450				10,417			0.3	%
Loans held for sale				1,579				1,847			-14.5	%
Loans receivable				395,394				389,129			1.6	%
Less: Allowance for loan losses				3,783				3,834			-1.3	%
	Net loans			391,611				385,295			1.6	%
Premises and equipment, net				9,128				8,620			5.9	%
Bank-owned life insurance				12,609				12,387			1.8	%
Accrued interest receivable				1,454				1,454			0.0	%
Intangible assets, net				166				210			-21.0	%
Goodwill				12,320				12,320			0.0	%
Other assets				2,810				2,865			-1.9	%
	Total assets		$	517,053			$	514,325			0.5	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits			$	399,219			$	397,733			0.4	%
Borrowings				55,000				56,500			-2.7	%
Other liabilities				7,632				6,067			25.8	%
	Total liabilities			461,851				460,300			0.3	%
Shareholders' equity:
Preferred stock, $1,000 liquidation value per issued share; 5,000,000 shares authorized; 10,000 shares issued at June 30, 2014 and at December 31, 2013				9,700				9,700			0.0	%
Common stock, $1 par value; authorized 5,000,000 shares; 2,798,757 shares issued at June 30, 2014 and 2,776,240 shares issued at December 31, 2013				2,799				2,776			0.8	%
Additional paid-in capital				41,999				41,693			0.7	%
Retained earnings				2,958				2,485			19.0	%
Treasury stock, at cost - 104,418 shares at June 30, 2014 and 116,268 shares at December 31, 2013				(3,053	)			(3,327	)		-8.2	%
Accumulated other comprehensive income				745				644			15.7	%
	Total Elmira Savings Bank shareholders' equity			55,148				53,971			2.2	%
Noncontrolling interest				54				54			0.0	%
	Total shareholders' equity			55,202				54,025			2.2	%
	Total liabilities and shareholders' equity		$	517,053			$	514,325			0.5	%

ELMIRA SAVINGS BANK
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
			Three Months Ended									Six Months Ended
			June 30,									June 30,
(in thousands, except for per share data)			2014			2013			% Change			2014			2013			% Change
Interest and dividend income:
	Interest and fees on loans		$	4,302		$	4,390		-2.0	%		$	8,699		$	8,863		-1.9	%
	Interest and dividends on securities
		Taxable		412			424		-2.8	%			876			871		0.6	%
		Non-taxable		204			191		6.8	%			408			376		8.5	%
		Total interest and dividend income		4,918			5,005		-1.7	%			9,983			10,110		-1.3	%
Interest expense:
	Interest on deposits			745			809		-7.9	%			1,487			1,638		-9.2	%
	Interest on borrowings			454			484		-6.2	%			904			961		-5.9	%
		Total interest expense		1,199			1,293		-7.3	%			2,391			2,599		-8.0	%
Net interest income				3,719			3,712		0.2	%			7,592			7,511		1.1	%
Provision for loan losses				75			85		-11.8	%			129			265		-51.3	%
Net interest income after provision for loan losses				3,644			3,627		0.5	%			7,463			7,246		3.0	%
Noninterest income:
	Service fees			365			329		10.9	%			694			645		7.6	%
	Gain on sale of loans held for sale			345			806		-57.2	%			793			1,654		-52.1	%
	Gain on sale of securities			205			-		-				421			61		590.2	%
	Other service fees			176			172		2.3	%			340			326		4.3	%
	Earnings on bank-owned life insurance			131			91		44.0	%			222			181		22.7	%
	Other			52			21		147.6	%			93			37		151.4	%
		Total noninterest income		1,274			1,419		-10.2	%			2,563			2,904		-11.7	%
Noninterest expense:
	Salaries and benefits			1,732			1,786		-3.0	%			3,571			3,607		-1.0	%
	Net occupancy			331			318		4.1	%			747			643		16.2	%
	Equipment			250			253		-1.2	%			500			512		-2.3	%
	Marketing and public relations			204			204		0.0	%			404			351		15.1	%
	Professional fees			195			207		-5.8	%			356			376		-5.3	%
	Other			632			717		-11.9	%			1,329			1,372		-3.1	%
		Total noninterest expense		3,344			3,485		-4.0	%			6,907			6,861		0.7	%
Income before income taxes				1,574			1,561		0.8	%			3,119			3,289		-5.2	%
Income taxes				475			187		154.0	%			960			723		32.8	%
Net income				1,099			1,374		-20.0	%			2,159			2,566		-15.9	%
Less: Net income attributable to noncontrolling interest				-			-		-				-			-		-
Net income attibutable to Elmira Savings Bank				1,099			1,374		-20.0	%			2,159			2,566		-15.9	%
Dividend on preferred stock				225			269		-16.4	%			450			670		-32.8	%
Income available to common shareholders			$	874		$	1,105		-20.9	%		$	1,709		$	1,896		-9.9	%
Basic earnings per share			$	0.33		$	0.42		-21.4	%		$	0.64		$	0.73		-12.3	%
Diluted earnings per share			$	0.31		$	0.40		-22.5	%		$	0.61		$	0.69		-11.6	%
Weighted average shares outstanding - basic				2,674,032			2,619,970		2.1	%			2,665,640			2,597,348		2.6	%
Weighted average shares outstanding - diluted				2,798,114			2,741,351		2.1	%			2,794,030			2,733,275		2.2	%
Dividends per share			$	0.23		$	0.21		9.5	%		$	0.46		$	0.42		9.5	%
Per share data has been restated to reflect the 10% stock dividend paid on December 27, 2013.

ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES
(Dollars in Thousands)		For the Six Months Ended
		June 30, 2014									June 30, 2013
ASSETS:		Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans		$	389,447		$	8,699		4.48	%		$	377,787		$	8,863		4.70	%
Short-term investments			1,028			-		0.02				2,235			-		0.03
Securities			76,875			1,284		3.34				79,534			1,247		3.14
Total interest-earning assets			467,350			9,983		4.28				459,556			10,110		4.41
Noninterest-earning assets			43,688									61,847
TOTAL ASSETS		$	511,038								$	521,403
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits		$	335,755		$	1,487		0.89			$	339,943		$	1,638		0.98
Borrowings			57,141			904		3.14				54,299			961		3.52
Total interest-bearing liabilities			392,896			2,391		1.22				394,242			2,599		1.32
Noninterest-bearing liabilities			62,957									65,378
Shareholders' equity			55,185									61,783
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	511,038								$	521,403
Interest rate spread								3.06	%								3.09	%
Net interest income/margin					$	7,592		3.25	%					$	7,511		3.28	%

ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES
(Dollars in Thousands)	For the Three Months Ended
	June 30, 2014									June 30, 2013
ASSETS:	Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans	$	390,122		$	4,302		4.41	%		$	378,654		$	4,390		4.64	%
Short-term investments		1,000			-		0.02				1,879			-		0.03
Securities		74,772			616		3.30				78,488			615		3.13
Total interest-earning assets		465,894			4,918		4.22				459,021			5,005		4.36
Noninterest-earning assets		44,874									53,762
TOTAL ASSETS	$	510,768								$	512,783
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits	$	336,018		$	745		0.89			$	336,175		$	809		0.97
Borrowings		55,882			454		3.22				54,595			484		3.51
Total interest-bearing liabilities		391,900			1,199		1.22				390,770			1,293		1.32
Noninterest-bearing liabilities		63,452									65,013
Shareholders' equity		55,416									57,000
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	510,768								$	512,783
Interest rate spread							3.00	%								3.04	%
Net interest income/margin				$	3,719		3.19	%					$	3,712		3.24	%

			Quarter Ended
(Dollars in Thousands, Except Per Share Data)			6/30/2014				3/31/2014				12/31/2013				9/30/2013				6/30/2013
Operating Data
	Net income		$	1,099			$	1,060			$	1,119			$	1,369			$	1,374
	Net interest income			3,719				3,873				3,772				3,770				3,712
	Provision for loan losses			75				54				-				50				85
	Net security gains			205				216				-				-				-
	Non-interest income, ex. Net security gains			1,069				1,073				1,179				1,474				1,419
	Non-interest expense			3,344				3,563				3,573				3,428				3,485
Performance Statistics
	Net interest margin			3.19	%			3.31	%			3.22	%			3.23	%			3.24	%
	Annualized return on average assets			0.86	%			0.84	%			0.85	%			1.05	%			1.07	%
	Annualized return on average equity			7.95	%			7.82	%			7.75	%			9.55	%			9.67	%
	Annualized net loan charge-offs to avg loans			0.15	%			0.04	%			-0.02	%			0.04	%			0.00	%
	Net charge-offs (recoveries)			143				38				(15	)			40				-
	Efficiency ratio			67.0	%			69.0	%			72.2	%			65.4	%			67.9	%
Per Share Data
	Basic earnings per share		$	0.33			$	0.31			$	0.32			$	0.42			$	0.42
	Diluted earnings per share			0.31				0.30				0.30				0.40				0.40
	Dividend declared per share			0.23				0.23				0.21				0.21				0.21
	Book value			16.87				16.78				16.64				16.62				16.44
	Common stock price:
		High		24.78				26.97				28.45				22.73				23.93
		Low		21.92				22.25				20.15				19.30				18.18
		Close		24.50				24.49				25.20				22.07				19.59
	Weighted average common shares:
		Basic		2,674				2,657				2,639				2,626				2,620
		Fully diluted		2,798				2,790				2,764				2,745				2,741
	End-of-period common shares:
		Issued		2,799				2,787				2,776				2,775				2,771
		Treasury		104				104				116				116				116
Share and per share data has been restated to reflect the 10% stock dividend paid on December 27, 2013.
Financial Condition Data:
General
	Total assets		$	515,053			$	513,938			$	514,325			$	519,747			$	516,137
	Loans, net			391,611				388,295				385,295				381,298				380,252
	Intangibles			12,486				12,508				12,530				12,555				12,582
	Total deposits			399,219				394,951				397,733				396,600				396,993
		Noninterest-bearing		61,221				57,059				59,886				62,616				61,018
		Savings		63,433				61,655				60,924				60,710				61,918
		NOW		73,116				75,789				77,736				72,076				71,894
		Money Market		22,702				21,540				21,130				22,465				20,826
		Time deposits		178,747				178,908				178,057				178,733				181,337
		Total interest-bearing deposits		337,998				337,892				337,847				333,984				335,975
	Shareholders' equity			55,202				54,763				54,025				57,290				56,745
Asset Quality
	Non-performing assets		$	4,281			$	3,368			$	3,592			$	3,302			$	3,575
	Non-performing assets to total assets			0.83	%			0.66	%			0.70	%			0.64	%			0.69	%
	Allowance for loan losses			3,783				3,851				3,834				3,819				3,809
	Allowance for loan losses to total loans			0.96	%			0.98	%			0.99	%			0.99	%			0.99	%
	Allowance for loan losses to non-performing loans			89.90	%			119.23	%			109.73	%			115.66	%			106.55	%
	Non-performing loans to total loans			1.06	%			0.82	%			0.90	%			0.86	%			0.93	%
Capitalization
	Shareholders' equity to total assets			10.72	%			10.66	%			10.50	%			11.02	%			10.99	%