Elmira Savings Bank Reports 2012 Earnings

ELMIRA, NY--(Marketwire - Jan 23, 2013) - Elmira Savings Bank (NASDAQ: ESBK)

Highlights

• Net income increased to $1,299,000 and $5,213,000 for the three and twelve months ended December 31, 2012 compared to $1,291,000 and $5,029,000 for the same periods in 2011.
  
  
• Diluted earnings per share were $.37 per share and $1.51 per share for the three and twelve months ended December 31, 2012 compared to $.38 per share and $1.41 per share for the same period in 2011.
  
  
• Return on average assets was .97% and .99% for the three and twelve months ended December 31, 2012 compared to .99% and 1.00% for the same period in 2011.
  
  
• Return on average equity was 7.72% and 7.89% for the three and twelve months ended December 31, 2012 compared to 7.94% and 8.40% for the same periods in 2011.
  
  
• Noninterest income increased to $1,529,000 and $6,050,000 for the three and twelve months ended December 31, 2012 compared to $1,382,000 and $4,727,000 for the same periods in 2011. These represent increases of 10.6% and 28.0% for the three and twelve months ended December 31, 2012 compared to the same periods in 2011.
  
  
• Loans receivable were $378,108,000 at December 31, 2012, an increase of $32,126,000 or 9.3% from December 31, 2011. Deposits were $409,565,000 at December 31, 2012, an increase of $27,836,000 or 7.3% from December 31, 2011.
  
  

"We are pleased to be able to provide this report of strong 2012 operating results. We achieved record earnings, had solid loan growth, and maintained our strong asset quality," said Michael P. Hosey, President and Chief Executive Officer. Hosey continued, "In addition, we increased our cash dividend, issued a stock dividend, and witnessed our share price increase during the year. We appreciate our loyal shareholders and are proud to provide them with these results." 

Net Income

Net income totaled $5,213,000 for the twelve months ended December 31, 2012, an increase of $184,000 or 3.7% from the $5,029,000 of net income recorded for the same period in 2011. This increase of $184,000 was primarily the net result of an increase in noninterest income of $1,323,000, offset by a decline in net interest income of $461,000, and an increase in noninterest expense of $742,000.

Net income totaled $1,299,000 for the three months ended December 31, 2012, an increase of $8,000 or 0.6% from the $1,291,000 recorded for the same period in 2011. This modest increase was the result of an increase in noninterest income of $147,000, a reduction in the provision for loan losses of $99,000, partially offset by a decline in net interest income of $106,000, and an increase of $135,000 in noninterest expense.

Basic and diluted earnings per share for the twelve months ended December 31, 2012 were $1.58 per share and $1.51 per share compared to $1.45 per share and $1.41 per share for the same period in 2011. Basic and diluted earnings per share for the three months ended December 31, 2012 were $.39 per share and $.37 per share compared to $.39 per share and $.38 per share for the same period in 2011.

Net Interest Margin

The net interest margin for the twelve months ended December 31, 2012 was 3.34% compared to 3.51% for the same period in 2011. The yield on average earning assets was 4.64% for the twelve months ended December 31, 2012 compared to 4.98% for the same period in 2011. The average cost of interest-bearing liabilities was 1.47% for the twelve months ended December 31, 2012 compared to 1.67% for the same period in 2011.

The net interest margin for the three months ended December 31, 2012 was 3.25% compared to 3.45% for the same period in 2011. The average yield on earning assets was 4.45% for the three months ended December 31, 2012 compared to 4.87% for the same period in 2011. The average cost of interest-bearing liabilities was 1.37% for the three months ended December 31, 2012 compared to 1.60% for the same period in 2011.

"Our mortgage originations exceeded $160 million for the year. This provided the Bank with historic levels of noninterest income and loan growth that allowed us to avoid unattractive investment alternatives. In addition, we replaced borrowed funds with deposit growth in an attempt to protect our net interest margin," said Michael P. Hosey, President and Chief Executive Officer.

Assets

Total assets increased $13.5 million or 2.6% to $536.9 million at December 31, 2012 compared to $523.4 million at December 31, 2011. Loans receivable increased 9.3% to $378.1 million at December 31, 2012 compared to December 31, 2011. The available-for-sale investment portfolio decreased $19.7 million from December 31, 2011 to December 31, 2012.

Nonperforming Loans

Our nonperforming loans to total loans ratio has decreased to 1.02% at December 31, 2012 from 1.06% at December 31, 2011. Net loan charge-offs to average loans for the twelve months ended December 31, 2012 of 0.01% decreased from 0.09% for the twelve months ended December 31, 2011. The allowance for loan losses increased to 0.99% of total loans at December 31, 2012 from 0.95% of total loans at December 31, 2011.

Liabilities

Deposits total $409.6 million at December 31, 2012, an increase of $27.8 million or 7.3%. The $27.8 million increases primarily consists of an $8.8 million increase in noninterest-bearing deposits, a $7.8 million increase in NOW accounts, and a $7.4 million increase in time deposits. Borrowed funds declined by $16.0 million or 22.9%.

Shareholders' Equity

Shareholders' equity increased $2.0 million to $66.6 million at December 31, 2012 compared to December 31, 2011. The current level of shareholders' equity equates to a book value per share of $18.50 at December 31, 2012, compared to $17.92 at December 31, 2011. Dividends paid to common shareholders were $0.22 and $0.84 for the three and twelve months ended December 31, 2012 compared to $0.19 and $0.71 for the same periods in 2011, representing increases of 15.8% and 18.3%, respectively. Additionally, a 5% stock dividend was paid to common shareholders on December 28, 2012.

Elmira Savings Bank, with $536.9 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; and a loan center in Cortland 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)			December 31,
			2012				2011				% Change
ASSETS
Cash and due from banks			$	39,641			$	47,456			-16.5	%
Federal funds sold and other short-term investments				684				740			-7.6	%
	Total cash and cash equivalents			40,325				48,196			-16.3	%
Securities available for sale, at fair value				66,875				86,536			-22.7	%
Securities held to maturity - fair value $5,853 at December 31, 2012, and $4,923 at December 31, 2011				5,521				4,621			19.5	%
Federal Reserve and Federal Home Loan Bank (FHLB) stock, at cost				9,178				5,295			73.3	%
Loans held for sale				3,167				2,842			11.4	%
Loans receivable				378,108				345,982			9.3	%
Less: Allowance for loan losses				3,740				3,299			13.4	%
	Net loans			374,368				342,683			9.2	%
Premises and equipment, net				7,947				5,392			47.4	%
Bank-owned life insurance				11,988				10,100			18.7	%
Accrued interest receivable				1,529				1,615			-5.3	%
Intangible assets, net				316				444			-28.8	%
Goodwill				12,320				12,320			0.0	%
Other real estate owned				125				202			-38.1	%
Other assets				3,277				3,112			5.3	%
	Total assets		$	536,936			$	523,358			2.6	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits			$	409,565			$	381,729			7.3	%
Borrowings				54,000				70,019			-22.9	%
Other liabilities				6,462				6,995			-7.6	%
	Total liabilities			470,027				458,743			2.5	%
Shareholders' equity:
Preferred stock, $1,000 liquidation value per issued share; 5,000,000 shares authorized; 24,063 shares issued at December 31, 2012 and at December 31, 2011				23,763				23,763			0.0	%
Common stock, $1 par value; authorized 5,000,000 shares; 2,454,840 shares issued at December 31, 2012 and 2,292,656 shares issued at December 31, 2011				2,455				2,293			7.1	%
Additional paid-in capital				41,448				38,402			7.9	%
Retained earnings				868				1,735			-50.0	%
Treasury stock, at cost - 125,865 shares at December 31, 2012 and December 31, 2011				(3,548	)			(3,548	)		0.0	%
Accumulated other comprehensive income				1,872				1,918			-2.4	%
	Total Elmira Savings Bank shareholders' equity			66,858				64,563			3.6	%
Noncontrolling interest				51				52			-1.9	%
	Total shareholders' equity			66,909				64,615			3.6	%
	Total liabilities and shareholders' equity		$	536,936			$	523,358			2.6	%

ELMIRA SAVINGS BANK
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
				Three Months Ended									Twelve Months Ended
				December 31,									December 31,
(in thousands, except for per share data)				2012			2011			% Change			2012			2011			% Change
Interest and Dividend Income:
	Interest and fees on loans			$	4,469		$	4,670		-4.3	%		$	18,114		$	18,140		-0.1	%
	Interest and dividends on securities
		Taxable			476			578		-17.6	%			2,111			3,140		-32.8	%
		Non-taxable			184			202		-8.9	%			760			820		-7.3	%
		Total interest and dividend income			5,129			5,450		-5.9	%			20,985			22,100		-5.0	%
Interest Expense:
	Interest on deposits				903			952		-5.1	%			3,712			3,850		-3.6	%
	Interest expense on borrowings				487			653		-25.4	%			2,184			2,700		-19.1	%
		Total interest expense			1,390			1,605		-13.4	%			5,896			6,550		-10.0	%
Net interest income					3,739			3,845		-2.8	%			15,089			15,550		-3.0	%
Provision for loan losses					42			141		-70.2	%			463			668		-30.7	%
Net interest income after provision for loan losses					3,697			3,704		-0.2	%			14,626			14,882		-1.7	%
Noninterest Income:
	Service fees				297			231		28.6	%			1,242			1,236		0.5	%
	Net gain on sale of loans				953			733		30.0	%			3,561			1,836		94.0	%
	Net gain on sale of securities				-			152		-100.0	%			75			448		-83.3	%
	Other service fees				165			159		3.8	%			677			634		6.8	%
	Earnings on bank-owned life insurance				95			84		13.1	%			388			369		5.1	%
	Other				19			23		-17.4	%			107			204		-47.5	%
		Total noninterest income			1,529			1,382		10.6	%			6,050			4,727		28.0	%
Noninterest Expense:
	Salaries and benefits				1,803			1,698		6.2	%			6,770			6,491		4.3	%
	Net occupancy				274			269		1.9	%			1,130			1,154		-2.1	%
	Equipment				257			215		19.5	%			946			854		10.8	%
	Regulatory assessments				61			106		-42.5	%			360			462		-22.1	%
	Marketing and public relations				177			236		-25.0	%			722			636		13.5	%
	Professional fees				147			114		28.9	%			643			513		25.3	%
	Other				582			528		10.2	%			2,373			2,092		13.4	%
		Total noninterest expense			3,301			3,166		4.3	%			12,944			12,202		6.1	%
Income before income taxes					1,925			1,920		0.3	%			7,732			7,407		4.4	%
Income taxes					621			624		-0.5	%			2,514			2,373		5.9	%
Net income					1,304			1,296		0.6	%			5,218			5,034		3.7	%
Less: Net income attributable to noncontrolling interest					5			5		0.0	%			5			5		0.0	%
Net income attibutable to Elmira Savings Bank					1,299			1,291		0.6	%			5,213			5,029		3.7	%
Dividend on preferred stock					406			406		0.0	%			1,609			1,512		6.4	%
Accretion of preferred stock discount					-			-		-				-			252		-100.0	%
Income available to common shareholders				$	893		$	885		0.9	%		$	3,604		$	3,265		10.4	%
Basic earnings per share				$	0.39		$	0.39		0.0	%		$	1.58		$	1.45		9.0	%
Diluted earnings per share				$	0.37		$	0.38		-2.6	%		$	1.51		$	1.41		7.1	%
Weighted average shares outstanding - basic					2,297,324			2,260,193		1.6	%			2,277,545			2,253,452		1.1	%
Weighted average shares outstanding - diluted					2,423,915			2,331,189		4.0	%			2,389,217			2,315,109		3.2	%
Dividends per share				$	0.22		$	0.19		15.8	%		$	0.84		$	0.71		18.3	%
Per share data has been restated to reflect the 5% stock dividend paid on December 28, 2012.

ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES
(Dollars in Thousands)		For the Three Months Ended
		December 31, 2012									December 31, 2011
ASSETS:		Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans		$	376,032		$	4,469		4.73	%		$	343,570		$	4,670		5.41	%
Short-term investments			1,669			-		-				1,035			-		-
Securities			80,965			660		3.26				100,922			780		3.09
Total interest-earning assets			458,666			5,129		4.45				445,527			5,450		4.87
Noninterest-earning assets			73,992									71,353
TOTAL ASSETS		$	532,658								$	516,880
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits		$	346,611		$	903		1.04			$	325,389		$	952		1.16
Borrowings			54,000			487		3.53				70,031			653		3.64
Total interest-bearing liabilities			400,611			1,390		1.37				395,420			1,605		1.60
Noninterest-bearing liabilities			65,302									56,966
Shareholders' equity			66,745									64,494
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	532,658								$	516,880
Interest rate spread								3.08	%								3.27	%
Net interest income/margin					$	3,739		3.25	%					$	3,845		3.45	%

ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES
(Dollars in Thousands)		For the Twelve Months Ended
		December 31, 2012									December 31, 2011
ASSETS:		Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans		$	362,986		$	18,114		4.99	%		$	325,172		$	18,140		5.58	%
Short-term investments			1,371			-		-				1,084			-		-
Securities			87,539			2,871		3.28				117,305			3,960		3.38
Total interest-earning assets			451,896			20,985		4.64				443,561			22,100		4.98
Noninterest-earning assets			74,451									59,638
TOTAL ASSETS		$	526,347								$	503,199
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits		$	340,236		$	3,712		1.09			$	320,227		$	3,850		1.20
Borrowings			59,623			2,184		3.66				72,563			2,700		3.72
Total interest-bearing liabilities			399,859			5,896		1.47				392,790			6,550		1.67
Noninterest-bearing liabilities			60,633									50,535
Shareholders' equity			65,855									59,874
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	526,347								$	503,199
Interest rate spread								3.17	%								3.31	%
Net interest income/margin					$	15,089		3.34	%					$	15,550		3.51	%

			Quarter Ended
(Dollars in Thousands, Except Per Share Data)			12/31/2012			9/30/2012			6/30/2012			3/31/2012			12/31/2011
Operating Data
	Net income		$	1,299		$	1,398		$	1,358		$	1,158		$	1,291
	Net interest income			3,739			3,810			3,772			3,768			3,835
	Provision for loan losses			42			154			142			125			141
	Net security gains			-			-			75			-			152
	Non-interest income, ex. Net security gains			1,529			1,723			1,473			1,250			1,230
	Non-interest expense			3,301			3,271			3,157			3,215			3,166
Performance Statistics
	Net interest margin			3.25	%		3.32	%		3.37	%		3.40	%		3.45	%
	Annualized return on average assets			0.97	%		1.04	%		1.04	%		0.90	%		0.99	%
	Annualized return on average equity			7.72	%		8.39	%		8.33	%		7.12	%		7.94	%
	Annualized net loan charge-offs to avg loans			0.03	%		-0.02	%		0.02	%		-0.01	%		0.07	%
	Net charge-offs (recoveries)			31			(19	)		20			(10	)		59
	Efficiency ratio			62.7	%		59.1	%		59.3	%		64.1	%		60.7	%
Per Share Data
	Basic earnings per share		$	0.39		$	0.44		$	0.42		$	0.33		$	0.39
	Diluted earnings per share			0.37			0.42			0.40			0.32			0.38
	Dividend declared per share			0.22			0.22			0.21			0.21			0.19
	Book value			18.50			18.52			18.22			18.06			17.92
	Common stock price:
		High		23.65			19.04			20.46			20.82			16.19
		Low		18.48			17.50			16.83			15.45			13.05
		Close		22.74			18.86			18.36			18.81			15.60
	Weighted average common shares:
		Basic		2,297			2,280			2,269			2,263			2,260
		Fully diluted		2,424			2,396			2,383			2,353			2,331
	End-of-period common shares:
		Issued		2,455			2,438			2,425			2,407			2,407
		Treasury		126			126			126			126			126
Share and per share data has been restated to reflect the 5% stock dividend paid on December 28, 2012.
Financial Condition Data:
General
	Total assets		$	536,936		$	534,159		$	530,646		$	519,618		$	523,358
	Loans, net			374,368			369,851			358,756			346,144			342,683
	Intangibles			12,636			12,667			12,699			12,732			12,764
	Total deposits			409,565			406,216			397,972			383,314			381,729
		Noninterest-bearing		61,444			58,760			55,269			50,113			52,641
		Savings		59,034			56,115			56,332			54,936			54,558
		NOW		76,133			73,079			73,431			70,068			68,307
		Money Market		20,131			23,082			19,272			18,890			20,766
		Time deposits		192,823			195,180			193,668			189,307			185,457
		Total interest-bearing deposits		348,121			347,456			342,703			333,201			329,088
	Shareholders' equity			66,609			66,543			65,621			64,944			64,615
Asset Quality
	Non-performing assets		$	3,986		$	3,980		$	3,829		$	3,764		$	3,896
	Non-performing assets to total assets			0.74	%		0.75	%		0.72	%		0.72	%		0.74	%
	Allowance for loan losses			3,740			3,729			3,556			3,434			3,299
	Allowance for loan losses to total loans			0.99	%		1.00	%		0.98	%		0.98	%		0.95	%
	Allowance for loan losses to total loans non-performing loans			96.87	%		97.29	%		96.57	%		94.26	%		89.83	%
	Non-performing loans to total loans			1.02	%		1.03	%		1.02	%		1.05	%		1.06	%
Capitalization
	Shareholders' equity to total assets			12.41	%		12.46	%		12.37	%		12.50	%		12.35	%