SOURCE: Elmira Savings Bank

January 22, 2014 12:47 ET

# Elmira Savings Bank Reports 2013 Earnings

ELMIRA, NY--(Marketwired - Jan 22, 2014) - Elmira Savings Bank (NASDAQ: ESBK)

Highlights

• Net income was $5,054,000 for the twelve months ended December 31, 2013 compared to$5,213,000 for the same period in 2012. Income available to common shareholders after dividends on preferred stock increased 6.5% to $3,839,000 for the twelve months ended December 31, 2013 compared to$3,604,000 for the same period in 2012.

• Diluted earnings per share was $1.40 per share for the twelve months ended December 31, 2013 compared to$1.37 per share for the same period in 2012. This represents an increase of 2.2% for the twelve months ended December 31, 2013 compared to the same period in 2012.

• Return on average assets was .97% for the twelve months ended December 31, 2013 compared to .99% for the same period in 2012.

• Return on average equity was 8.51% for the twelve months ended December 31, 2013 compared to 7.92% for the same period in 2012.

"We are pleased to report a third consecutive year of net income in excess of $5 million. In addition to strong earnings of$5.1 million, the retirement of the SBLF preferred shares allowed us to increase our earnings per common share by 2%, despite slightly lower net income," said Thomas M. Carr, President and COO. Carr continued, "In January 2013, we expanded our branch network in Steuben County by opening a full branch in Erwin, NY. We also expanded our mortgage operations into Broome County in September with the opening of a loan production office in Vestal, NY. Finally, our shareholders were rewarded during the year with $.84 of cash dividends, a 10% stock dividend, and a year ending share price of$25.20 per share."

Net Income

Net income totaled $5,054,000 for the twelve months ended December 31, 2013, a decrease of$159,000 or 3% from the $5,213,000 of net income recorded for the same period in 2012. This decrease was the net result of a decline in net interest income of$36,000, a decrease in noninterest income of $493,000, and an increase in noninterest expense of$918,000, offset by a reduction in tax expense of $1,140,000 and a reduction in the provision for loan losses of$148,000.

Net income totaled $1,119,000 for the three months ended December 31, 2013, a decrease of$180,000 or 14% from the $1,299,000 recorded for the same period in 2012. This decrease was the net result of a decline in noninterest income of$350,000 and an increase of $272,000 in noninterest expense, offset by an increase in net interest income of$33,000, a reduction in tax expense of $367,000, and a reduction in the provision for loan losses of$42,000.

Basic and diluted earnings per share for the twelve months ended December 31, 2013 were $1.47 per share and$1.40 per share compared to $1.44 per share and$1.37 per share for the same period in 2012. Basic and diluted earnings per share for the three months ended December 31, 2013 were $.32 per share and$.30 per share compared to $.35 per share and$.33 per share for the same period in 2012.

Net Interest Margin

The net interest margin for the twelve months ended December 31, 2013 was 3.25% compared to 3.34% for the same period in 2012. The yield on average earning assets was 4.37% for the twelve months ended December 31, 2013 compared to 4.64% for the same period in 2012. The average cost of interest-bearing liabilities was 1.31% for the twelve months ended December 31, 2013 compared to 1.47% for the same period in 2012.

The net interest margin for the three months ended December 31, 2013 was 3.22% compared to 3.25% for the same period in 2012. The average yield on earning assets was 4.31% for the three months ended December 31, 2013 compared to 4.45% for the same period in 2012. The average cost of interest-bearing liabilities was 1.28% for the three months ended December 31, 2013 compared to 1.37% for the same period in 2012.

Assets

Total assets decreased $22.6 million or 4% to$514.3 million at December 31, 2013 compared to $536.9 million at December 31, 2012. Loans receivable increased 3% to$389.1 million at December 31, 2013 compared to December 31, 2012. The available-for-sale investment portfolio decreased $3.4 million from December 31, 2012 to December 31, 2013. Nonperforming Loans Our nonperforming loans to total loans ratio has decreased to .90% at December 31, 2013 from 1.02% at December 31, 2012. Net loan charge-offs to average loans for the twelve months ended December 31, 2013 were 0.06% compared to 0.01% for the twelve month period ended December 31, 2012. The allowance for loan losses was 0.99% of total loans at December 31, 2013 and December 31, 2012. Liabilities Deposits totaled$397.7 million at December 31, 2013, a decrease of $11.8 million or 3%. The$11.8 million decrease consists of a $14.8 million decrease in time deposits and a$1.5 million decrease in transaction accounts, partially offset by a $1.9 million increase in savings accounts, a$1.6 million increase in NOW accounts, and a $1.0 million increase in money market accounts. Borrowed funds increased by$2.5 million or 5%.

Shareholders' Equity

Shareholders' equity decreased $12.9 million to$54.0 million at December 31, 2013 compared to December 31, 2012. The decrease in shareholders' equity is attributable to the Bank redeeming $14.1 million of preferred stock issued to the United States Treasury Department through the Small Business Lending Fund. The current level of shareholders' equity equates to a book value per share of$16.64 at December 31, 2013, compared to $16.76 at December 31, 2012. Dividends paid to common shareholders were$0.21 and $0.84 for the three and twelve months ended December 31, 2013 compared to$0.20 and $0.77 for the same periods in 2012, representing increases of 5% for the three month period and 9% for the twelve month period. Elmira Savings Bank, with$514.3 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) December 31, December 31, 2013 2012 % Change ASSETS Cash and due from banks $7,077$ 39,641 -82.1 % Federal funds sold and other short-term investments 564 684 -17.5 % Total cash and cash equivalents 7,641 40,325 -81.1 % Securities available for sale, at fair value 63,464 66,875 -5.1 % Securities held to maturity - fair value $8,302 at December 31, 2013, and$5,853 at December 31, 2012 7,805 5,521 41.4 % Federal Reserve and Federal Home Loan Bank (FHLB) stock, at cost 10,417 9,178 13.5 % Loans held for sale 1,847 3,167 -41.7 % Loans receivable 389,129 378,108 2.9 % Less: Allowance for loan losses 3,834 3,740 2.5 % Net loans 385,295 374,368 2.9 % Premises and equipment, net 8,620 7,947 8.5 % Bank-owned life insurance 12,387 11,988 3.3 % Accrued interest receivable 1,454 1,529 -4.9 % Intangible assets, net 210 316 -33.5 % Goodwill 12,320 12,320 0.0 % Other assets 2,865 3,402 -15.8 % Total assets $514,325$ 536,936 -4.2 % LIABILITIES AND SHAREHOLDERS' EQUITY Deposits $397,733$ 409,565 -2.9 % Borrowings 56,500 54,000 4.6 % Other liabilities 6,067 6,462 -6.1 % Total liabilities 460,300 470,027 -2.1 % Shareholders' equity: Preferred stock, $1,000 liquidation value per issued share; 5,000,000 shares authorized; 10,000 shares issued at December 31, 2013 and at 24,063 shares issued at December 31, 2012 9,700 23,763 -59.2 % Common stock,$1 par value; authorized 5,000,000 shares; 2,776,240 shares issued at December 31, 2013 and 2,454,840 shares issued at December 31, 2012 2,776 2,455 13.1 % Additional paid-in capital 41,693 41,448 0.6 % Retained earnings 2,485 868 186.3 % Treasury stock, at cost - 116,268 shares at December 31, 2013 and 125,865 shares at December 31, 2012 (3,327 ) (3,548 ) -6.2 % Accumulated other comprehensive income 644 1,872 -65.6 % Total Elmira Savings Bank shareholders' equity 53,971 66,858 -19.3 % Noncontrolling interest 54 51 5.9 % Total shareholders' equity 54,025 66,909 -19.3 % Total liabilities and shareholders' equity $514,325$ 536,936 -4.2 %
 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) 2013 2012 % Change 2013 2012 % Change Interest and Dividend Income: Interest and fees on loans $4,409$ 4,469 -1.3 % $17,733$ 18,114 -2.1 % Interest and dividends on securities Taxable 454 476 -4.6 % 1,744 2,111 -17.4 % Non-taxable 204 184 10.9 % 776 760 2.1 % Total interest and dividend income 5,067 5,129 -1.2 % 20,253 20,985 -3.5 % Interest Expense: Interest on deposits 781 903 -13.5 % 3,224 3,712 -13.1 % Interest expense on borrowings 514 487 5.5 % 1,976 2,184 -9.5 % Total interest expense 1,295 1,390 -6.8 % 5,200 5,896 -11.8 % Net interest income 3,772 3,739 0.9 % 15,053 15,089 -0.2 % Provision for loan losses - 42 -100.0 % 315 463 -32.0 % Net interest income after provision for loan losses 3,772 3,697 2.0 % 14,738 14,626 0.8 % Noninterest Income: Service fees 359 297 20.9 % 1,357 1,242 9.3 % Net gain on sale of loans 536 953 -43.8 % 3,007 3,561 -15.6 % Gain on sale of securities - - - 61 75 -18.7 % Other service fees 174 165 5.5 % 660 677 -2.5 % Earnings on bank-owned life insurance 92 95 -3.2 % 399 388 2.8 % Other 18 19 -5.3 % 73 107 -31.8 % Total noninterest income 1,179 1,529 -22.9 % 5,557 6,050 -8.1 % Noninterest Expense: Salaries and benefits 1,938 1,803 7.5 % 7,382 6,770 9.0 % Net occupancy 320 274 16.8 % 1,259 1,130 11.4 % Equipment 255 257 -0.8 % 1,022 946 8.0 % Marketing and public relations 143 177 -19.2 % 676 722 -6.4 % Professional fees 130 147 -11.6 % 674 643 4.8 % Other 787 643 22.4 % 2,849 2,733 4.2 % Total noninterest expense 3,573 3,301 8.2 % 13,862 12,944 7.1 % Income before income taxes 1,378 1,925 -28.4 % 6,433 7,732 -16.8 % Income taxes 254 621 -59.1 % 1,374 2,514 -45.3 % Net income 1,124 1,304 -13.8 % 5,059 5,218 -3.0 % Less: Net income attributable to noncontrolling interest 5 5 - 5 5 - Net income attibutable to Elmira Savings Bank 1,119 1,299 -13.9 % 5,054 5,213 -3.1 % Dividend on preferred stock 277 406 -31.8 % 1,215 1,609 -24.5 % Income available to common shareholders $842$ 893 -5.7 % $3,839$ 3,604 6.5 % Basic earnings per share $0.32$ 0.35 -8.6 % $1.47$ 1.44 2.1 % Diluted earnings per share $0.30$ 0.33 -9.1 % $1.40$ 1.37 2.2 % Weighted average shares outstanding - basic 2,638,844 2,527,056 4.4 % 2,617,073 2,505,300 4.5 % Weighted average shares outstanding - diluted 2,763,867 2,666,307 3.7 % 2,745,934 2,628,139 4.5 % Dividends per share $0.21$ 0.20 5.0 % $0.84$ 0.77 9.1 % 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 Three Months Ended December 31, 2013 December 31, 2012 ASSETS: Average Balance Interest Average Rate Average Balance Interest Average Rate Loans $387,571$ 4,409 4.53 % $376,032$ 4,469 4.73 % Short-term investments 1,988 - 0.03 1,669 - 0.04 Securities 78,281 658 3.35 80,965 660 3.26 Total interest-earning assets 467,840 5,067 4.31 458,666 5,129 4.45 Noninterest-earning assets 52,676 73,992 TOTAL ASSETS $520,516$ 532,658 LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing deposits $336,584$ 781 0.92 $346,611$ 903 1.04 Borrowings 61,266 514 3.28 54,000 487 3.53 Total interest-bearing liabilities 397,850 1,295 1.28 400,611 1,390 1.37 Noninterest-bearing liabilities 65,349 65,302 Shareholders' equity 57,317 66,745 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $520,516$ 532,658 Interest rate spread 3.03 % 3.08 % Net interest income/margin $3,772 3.22 %$ 3,739 3.25 %
 ELMIRA SAVINGS BANK AVERAGE BALANCES AND INTEREST RATES (Dollars in Thousands) For the Twelve Months Ended December 31, 2013 December 31, 2012 ASSETS: Average Balance Interest Average Rate Average Balance Interest Average Rate Loans $382,403$ 17,733 4.63 % $362,986$ 18,114 4.99 % Short-term investments 2,158 1 0.03 1,371 - 0.04 Securities 78,532 2,519 3.21 87,539 2,871 3.28 Total interest-earning assets 463,093 20,253 4.37 451,896 20,985 4.64 Noninterest-earning assets 57,315 74,451 TOTAL ASSETS $520,408$ 526,347 LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing deposits $338,347$ 3,224 0.95 $340,236$ 3,712 1.09 Borrowings 56,626 1,976 3.44 59,623 2,184 3.66 Total interest-bearing liabilities 394,973 5,200 1.31 399,859 5,896 1.47 Noninterest-bearing liabilities 66,014 60,633 Shareholders' equity 59,421 65,855 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $520,408$ 526,347 Interest rate spread 3.06 % 3.17 % Net interest income/margin $15,053 3.25 %$ 15,089 3.34 %
 Quarter Ended (Dollars in Thousands, Except Per Share Data) 12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012 Operating Data Net income $1,119$ 1,369 $1,374$ 1,192 $1,299 Net interest income 3,772 3,770 3,712 3,799 3,739 Provision for loan losses - 50 85 180 42 Net security gains - - - 61 - Non-interest income, ex. Net security gains 1,179 1,474 1,419 1,424 1,529 Non-interest expense 3,573 3,428 3,485 3,376 3,301 Performance Statistics Net interest margin 3.22 % 3.23 % 3.24 % 3.32 % 3.25 % Annualized return on average assets 0.85 % 1.05 % 1.07 % 0.91 % 0.97 % Annualized return on average equity 7.75 % 9.55 % 9.67 % 7.26 % 7.72 % Annualized net loan charge-offs to avg loans -0.02 % 0.04 % 0.00 % 0.21 % 0.03 % Net charge-offs (recoveries) (15 ) 40 - 196 31 Efficiency ratio 72.2 % 65.4 % 67.9 % 63.9 % 62.7 % Per Share Data Basic earnings per share$ 0.32 $0.42$ 0.42 $0.31$ 0.35 Diluted earnings per share 0.30 0.40 0.40 0.29 0.33 Dividend declared per share 0.21 0.21 0.21 0.21 0.20 Book value 16.64 16.62 16.44 16.47 16.76 Common stock price: High 28.45 22.73 23.93 23.05 21.50 Low 20.15 19.30 18.18 20.67 16.80 Close 25.20 22.07 19.59 23.05 20.67 Weighted average common shares: Basic 2,639 2,626 2,620 2,569 2,527 Fully diluted 2,764 2,745 2,741 2,718 2,666 End-of-period common shares: Issued 2,776 2,775 2,771 2,761 2,700 Treasury 116 116 116 116 126 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 $514,325$ 519,747 $516,137$ 510,915 $536,936 Loans, net 385,295 381,298 380,252 370,753 374,368 Intangibles 12,530 12,555 12,582 12,609 12,636 Total deposits 397,733 396,600 396,993 395,091 409,565 Noninterest-bearing 59,886 62,616 61,018 58,118 61,444 Savings 60,924 60,710 61,918 60,177 59,034 NOW 77,736 72,076 71,894 71,472 76,133 Money Market 21,130 22,465 20,826 19,222 20,131 Time deposits 178,057 178,733 181,337 186,102 192,823 Total interest-bearing deposits 337,847 333,984 335,975 336,973 348,121 Shareholders' equity 54,025 57,290 56,745 56,677 66,909 Asset Quality Non-performing assets$ 3,592 $3,302$ 3,575 $3,826$ 3,986 Non-performing assets to total assets 0.70 % 0.64 % 0.69 % 0.75 % 0.74 % Allowance for loan losses 3,834 3,819 3,809 3,724 3,740 Allowance for loan losses to total loans 0.99 % 0.99 % 0.99 % 0.99 % 0.99 % Allowance for loan losses to non-performing loans 109.73 % 115.66 % 106.55 % 100.95 % 96.87 % Non-performing loans to total loans 0.90 % 0.86 % 0.93 % 0.99 % 1.02 % Capitalization Shareholders' equity to total assets 10.50 % 11.02 % 10.99 % 11.09 % 12.41 %

## Contact Information

• For further information contact:
Thomas M. Carr
President & COO
Elmira Savings Bank
333 East Water Street
Elmira, New York 14901
(607) 735-8660
Email Contact