Elmira Savings Bank Reports 2014 Earnings

ELMIRA, NY--(Marketwired - Jan 21, 2015) -  Elmira Savings Bank (NASDAQ: ESBK)

Highlights

• Net income was $1,031,000 and $3,665,000 for the three and twelve months ended December 31, 2014 compared to $1,119,000 and $5,054,000 for the same periods in 2013. Net income for the twelve months ended December 31, 2014 includes the effects of a one-time expense of $820,000 related to retirement benefits.
  
  
• Diluted earnings per share were $.29 per share and $.99 per share for the three and twelve months ended December 31, 2014 compared to $.30 per share and $1.40 per share for the same periods in 2013.
  
  
• Return on average assets (annualized) was .76% and .70% for the three and twelve months ended December 31, 2014 compared to .85% and .97% for the same periods in 2013.
  
  
• Return on average equity (annualized) was 7.34% and 6.60% for the three and twelve months ended December 31, 2014 compared to 7.75% and 8.51% for the same periods in 2013.

Net Income

Net income totaled $1,031,000 for the three months ended December 31, 2014, a decrease of $88,000 or 8% from the $1,119,000 recorded for the same period in 2013. This decrease was the net result of a decrease in noninterest income of $140,000 and an increase in the provision for loan losses of $140,000, offset by an increase in net interest income of $246,000 and a decrease in noninterest expense of $167,000.

Net income totaled $3,665,000 for the twelve months ended December 31, 2014, a decrease of $1,389,000 or 28% from the $5,054,000 of net income recorded for the same period in 2013. This decrease was the net result of a decrease in noninterest income of $799,000, an increase in noninterest expense of $641,000, and an increase in income tax expense of $216,000, offset by an increase in net interest income of $359,000.

The increase in noninterest expense for the twelve months ended December 31, 2014 includes $820,000 of one-time expense recognized in the third quarter of 2014. This one-time expense was for the estimated value of an executive retirement compensation agreement.

"The year 2014 was a transitional period for the leadership of the company," said Thomas M. Carr, President and CEO. Mr. Carr continued, "As we look forward into 2015, we are focused on growing our company and to our expansion into Watkins Glen, NY, with a full-service branch."

Basic and diluted earnings per share for the twelve months ended December 31, 2014 were $1.03 per share and $.99 per share compared to $1.47 per share and $1.40 per share for the same periods in 2013. Basic and diluted earnings per share for the three months ended December 31, 2014 were $.30 per share and $.29 per share compared to $.32 per share and $.30 per share for the same periods in 2013.

Net Interest Margin

The net interest margin for the twelve months ended December 31, 2014 was 3.23% compared to 3.25% for the same period in 2013. The yield on average earning assets was 4.24% for the twelve months ended December 31, 2014 compared to 4.37% for the same period in 2013. The average cost of interest-bearing liabilities was 1.22% for the twelve months ended December 31, 2014 compared to 1.31% for the same period in 2013.

The net interest margin for the three months ended December 31, 2014 was 3.24% compared to 3.22% for the same period in 2013. The average yield on earning assets was 4.23% for the three months ended December 31, 2014 compared to 4.31% for the same period in 2013. The average cost of interest-bearing liabilities was 1.18% for the three months ended December 31, 2014 compared to 1.28% for the same period in 2013.

Assets

Total assets increased $31.6 million or 6.2% to $546.0 million at December 31, 2014 compared to $514.3 million at December 31, 2013. Loans receivable increased 7.3% to $417.4 million at December 31, 2014 compared to December 31, 2013. The available-for-sale investment portfolio increased $2.2 million from December 31, 2013 to December 31, 2014.

Nonperforming Loans

Our nonperforming loans to total loans ratio has increased to 1.13% at December 31, 2014 from .90% at December 31, 2013. Net loan charge-offs to average loans for the twelve months ended December 31, 2014 of 0.07% increased from 0.06% for the twelve months ended December 31, 2013. The allowance for loan losses was 0.95% of total loans at December 31, 2014 and 0.99% of total loans at December 31, 2013.

Liabilities

Deposits total $422.6 million at December 31, 2014, an increase of $24.8 million or 6.2%. The $24.8 million increase consists of a $17.8 million increase in time deposits, a $4.4 million increase in savings accounts, a $2.1 million increase in noninterest-bearing accounts, and a $1.2 million increase in NOW accounts, partially offset by a $.6 million decrease in money market accounts. Borrowed funds increased by $5.5 million or 6.2%.

Shareholders' Equity

Shareholders' equity increased $1.5 million to $55.5 million at December 31, 2014 compared to December 31, 2013. The current level of shareholders' equity equates to a book value per share of $16.91 at December 31, 2014, compared to $16.64 at December 31, 2013. Dividends paid to common shareholders were $0.23 and $0.92 for the three and twelve months ended December 31, 2014 compared to $0.21 and $0.84 for the same periods in 2013, representing increases of 9.5% for both the three and twelve month periods. 

Elmira Savings Bank, with $546.0 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,
			2014				2013				% Change
ASSETS
Cash and due from banks			$	7,959			$	7,077			12.5	%
Federal funds sold and other short-term investments				606				564			7.4	%
	Total cash and cash equivalents			8,565				7,641			12.1	%
Securities available for sale, at fair value				65,624				63,464			3.4	%
Securities held to maturity - fair value $7,641 at December 31, 2014, and $8,302 at December 31, 2013				7,389				7,805			-5.3	%
Federal Reserve and Federal Home Loan Bank (FHLB) stock, at cost				11,182				10,417			7.3	%
Loans held for sale				787				1,847			-57.4	%
Loans receivable				417,359				389,129			7.3	%
Less: Allowance for loan losses				3,974				3,834			3.7	%
	Net loans			413,385				385,295			7.3	%
Premises and equipment, net				9,475				8,620			9.9	%
Bank-owned life insurance				12,790				12,387			3.3	%
Accrued interest receivable				1,566				1,454			7.7	%
Intangible assets, net				125				210			-40.5	%
Goodwill				12,320				12,320			0.0	%
Other assets				2,761				2,865			-3.6	%
	Total assets		$	545,969			$	514,325			6.2	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits			$	422,561			$	397,733			6.2	%
Borrowings				62,000				56,500			9.7	%
Other liabilities				5,915				6,067			-2.5	%
	Total liabilities			490,476				460,300			6.6	%
Shareholders' equity:
Preferred stock, $1,000 liquidation value per issued share; 5,000,000 shares authorized; 10,000 shares issued at December 31, 2014 and at December 31, 2013				9,700				9,700			0.0	%
Common stock, $1 par value; authorized 5,000,000 shares; 2,809,364 shares issued at December 31, 2014 and 2,776,240 shares issued at December 31, 2013				2,809				2,776			1.2	%
Additional paid-in capital				42,365				41,693			1.6	%
Retained earnings				2,769				2,485			11.4	%
Treasury stock, at cost - 104,418 shares at December 31, 2014 and 116,268 shares at December 31, 2013				(3,053	)			(3,327	)		-8.2	%
Accumulated other comprehensive income				849				644			31.8	%
	Total Elmira Savings Bank shareholders' equity			55,439				53,971			2.7	%
Noncontrolling interest				54				54			0.0	%
	Total shareholders' equity			55,493				54,025			2.7	%
	Total liabilities and shareholders' equity		$	545,969			$	514,325			6.2	%

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)			2014			2013			% Change			2014			2013			% Change
Interest and dividend income:
	Interest and fees on loans		$	4,598		$	4,409		4.3	%		$	17,709		$	17,733		-0.1	%
	Interest and dividends on securities
		Taxable		390			454		-14.1	%			1,659			1,744		-4.9	%
		Non-taxable		270			204		32.4	%			899			776		15.9	%
		Total interest and dividend income		5,258			5,067		3.8	%			20,267			20,253		0.1	%
Interest expense:
	Interest on deposits			746			781		-4.5	%			2,986			3,224		-7.4	%
	Interest on borrowings			494			514		-3.9	%			1,869			1,976		-5.4	%
		Total interest expense		1,240			1,295		-4.2	%			4,855			5,200		-6.6	%
Net interest income				4,018			3,772		6.5	%			15,412			15,053		2.4	%
Provision for loan losses				140			-		-				407			315		29.2	%
Net interest income after provision for loan losses				3,878			3,772		2.8	%			15,005			14,738		1.8	%
Noninterest income:
	Service fees			363			359		1.1	%			1,437			1,357		5.9	%
	Gain on sale of loans held for sale			357			536		-33.4	%			1,633			3,007		-45.7	%
	Gain on sale of securities			-			-		-				422			61		591.8	%
	Other service fees			177			174		1.7	%			687			660		4.1	%
	Earnings on bank-owned life insurance			96			92		4.3	%			404			399		1.3	%
	Other			46			18		155.6	%			175			73		139.7	%
		Total noninterest income		1,039			1,179		-11.9	%			4,758			5,557		-14.4	%
Noninterest expense:
	Salaries and benefits			1,609			1,938		-17.0	%			7,692			7,382		4.2	%
	Net occupancy			352			320		10.0	%			1,416			1,259		12.5	%
	Equipment			249			255		-2.4	%			1,012			1,022		-1.0	%
	Marketing and public relations			270			143		88.8	%			884			676		30.8	%
	Professional fees			167			130		28.5	%			690			674		2.4	%
	Other			759			787		-3.6	%			2,809			2,849		-1.4	%
		Total noninterest expense		3,406			3,573		-4.7	%			14,503			13,862		4.6	%
Income before income taxes				1,511			1,378		9.7	%			5,260			6,433		-18.2	%
Income taxes				476			254		87.4	%			1,590			1,374		15.7	%
Net income				1,035			1,124		-7.9	%			3,670			5,059		-27.5	%
Less: Net income attributable to noncontrolling interest				5			5		-				5			5		-
Net income attibutable to Elmira Savings Bank				1,031			1,119		-7.9	%			3,665			5,054		-27.5	%
Dividend on preferred stock				225			277		-18.8	%			900			1,215		-25.9	%
Income available to common shareholders			$	805		$	842		-4.4	%		$	2,765		$	3,839		-28.0	%
Basic earnings per share			$	0.30		$	0.32		-6.3	%		$	1.03		$	1.47		-29.9	%
Diluted earnings per share			$	0.29		$	0.30		-3.3	%		$	0.99		$	1.40		-29.3	%
Weighted average shares outstanding - basic				2,692,833			2,638,844		2.0	%			2,677,252			2,617,073		2.3	%
Weighted average shares outstanding - diluted				2,807,591			2,763,867		1.6	%			2,799,670			2,745,934		2.0	%
Dividends per share			$	0.23		$	0.21		9.5	%		$	0.92		$	0.84		9.5	%

ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES
(Dollars in Thousands)		For the Twelve Months Ended
		December 31, 2014									December 31, 2013
ASSETS:		Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans		$	398,416		$	17,709		4.44	%		$	382,403		$	17,733		4.63	%
Short-term investments			1,069			1		0.02				2,158			1		0.03
Securities			77,349			2,557		3.31				78,532			2,519		3.21
Total interest-earning assets			476,834			20,267		4.24				463,093			20,253		4.37
Noninterest-earning assets			44,418									57,315
TOTAL ASSETS		$	521,252								$	520,408
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits		$	339,720		$	2,986		0.88			$	338,347		$	3,224		0.95
Borrowings			60,263			1,869		3.06				56,626			1,976		3.44
Total interest-bearing liabilities			399,983			4,855		1.21				394,973			5,200		1.31
Noninterest-bearing liabilities			65,727									66,014
Shareholders' equity			55,542									59,421
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	521,252								$	520,408
Interest rate spread								3.03	%								3.06	%
Net interest income/margin					$	15,412		3.23	%					$	15,053		3.25	%

ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES
(Dollars in Thousands)		For the Three Months Ended
		December 31, 2014									December 31, 2013
ASSETS:		Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans		$	413,733		$	4,598		4.42	%		$	387,571		$	4,409		4.53	%
Short-term investments			1,318			-		0.02				1,988			-		0.03
Securities			79,810			660		3.30				78,281			658		3.35
Total interest-earning assets			494,861			5,258		4.23				467,840			5,067		4.31
Noninterest-earning assets			45,947									52,676
TOTAL ASSETS		$	540,808								$	520,516
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits		$	348,115		$	746		0.85			$	336,584		$	781		0.92
Borrowings			68,105			494		2.85				61,266			514		3.28
Total interest-bearing liabilities			416,220			1,240		1.18				397,850			1,295		1.28
Noninterest-bearing liabilities			68,841									65,349
Shareholders' equity			55,747									57,317
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	540,808								$	520,516
Interest rate spread								3.05	%								3.03	%
Net interest income/margin					$	4,018		3.24	%					$	3,772		3.22	%

			Quarter Ended
(Dollars in Thousands, Except Per Share Data)			12/31/2014				9/30/2014				6/30/2014				3/31/2014				12/31/2013
Operating Data
	Net income		$	1,031			$	475			$	1,099			$	1,060			$	1,119
	Net interest income			4,018				3,802				3,719				3,873				3,772
	Provision for loan losses			140				138				75				54				-
	Net security gains			-				-				205				216				-
	Non-interest income, ex. Net security gains			1,039				1,155				1,069				1,073				1,179
	Non-interest expense			3,406				4,190				3,344				3,563				3,573
Performance Statistics
	Net interest margin			3.24	%			3.18	%			3.19	%			3.31	%			3.22	%
	Annualized return on average assets			0.76	%			0.36	%			0.86	%			0.84	%			0.85	%
	Annualized return on average equity			7.34	%			3.36	%			7.95	%			7.82	%			7.75	%
	Annualized net loan charge-offs to avg loans			0.09	%			-0.01	%			0.15	%			0.04	%			-0.02	%
	Net charge-offs (recoveries)			94				(7	)			143				38				(15	)
	Efficiency ratio			67.4	%			84.5	%			67.0	%			69.0	%			72.2	%
Per Share Data
	Basic earnings per share		$	0.30			$	0.09			$	0.33			$	0.31			$	0.32
	Diluted earnings per share			0.29				0.09				0.31				0.30				0.30
	Dividend declared per share			0.23				0.23				0.23				0.23				0.21
	Book value			16.91				16.76				16.87				16.78				16.64
	Common stock price:
		High		23.00				24.54				24.78				26.97				28.45
		Low		20.50				20.16				21.92				22.25				20.15
		Close		23.00				22.25				24.50				24.49				25.20
	Weighted average common shares:
		Basic		2,693				2,684				2,674				2,657				2,639
		Fully diluted		2,808				2,803				2,798				2,790				2,764
	End-of-period common shares:
		Issued		2,809				2,809				2,799				2,787				2,776
		Treasury		104				104				104				104				116
Financial Condition Data:
General
	Total assets		$	545,969			$	533,726			$	515,053			$	513,938			$	514,325
	Loans, net			413,385				406,168				391,611				388,295				385,295
	Intangibles			12,445				12,464				12,486				12,508				12,530
	Total deposits			422,561				405,681				399,219				394,951				397,733
		Noninterest-bearing		62,019				68,871				61,221				57,059				59,886
		Savings		65,287				62,898				63,433				61,655				60,924
		NOW		78,920				75,246				73,116				75,789				77,736
		Money Market		20,512				21,498				22,702				21,540				21,130
		Time deposits		195,823				177,168				178,747				178,908				178,057
		Total interest-bearing deposits		360,542				336,810				337,998				337,892				337,847
	Shareholders' equity			55,493				55,088				55,202				54,763				54,025
Asset Quality
	Non-performing assets		$	4,699			$	4,575			$	4,281			$	3,368			$	3,592
	Non-performing assets to total assets			0.86	%			0.86	%			0.83	%			0.66	%			0.70	%
	Allowance for loan losses			3,974				3,928				3,783				3,851				3,834
	Allowance for loan losses to total loans			0.95	%			0.96	%			0.96	%			0.98	%			0.99	%
	Allowance for loan losses to non-performing loans			84.57	%			88.61	%			89.90	%			119.23	%			109.73	%
	Non-performing loans to total loans			1.13	%			1.08	%			1.06	%			0.82	%			0.90	%
Capitalization
	Shareholders' equity to total assets			10.16	%			10.32	%			10.72	%			10.66	%			10.50	%