Elmira Savings Bank Reports Increase in Quarterly Earnings

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

Highlights

• Net income was $1,057,000 and $3,086,000 for the three and nine months ended September 30, 2015 compared to $475,000 and $2,634,000 for the same periods in 2014.
  
  
• Diluted earnings per share were $.30 per share and $.87 per share for the three and nine months ended September 30, 2015 compared to $.09 per share and $.70 per share for the same periods in 2014. 
  
  
• Return on average assets was .73% for both the three and nine months ended September 30, 2015 compared to .36% and .68% for the same periods in 2014.
  
  
• Return on average equity was 7.60% and 7.43% for the three and nine months ended September 30, 2015 compared to 3.36% and 6.35% for the same periods in 2014.
  
  

"We are pleased with the increase in core earnings supported by loan and deposit growth," said Thomas M. Carr, President and CEO. "During the quarter we experienced strong mortgage originations and are pleased with our reception in the Watkins Glen market," continued Mr. Carr.

Net Income

Net income totaled $3,086,000 for the nine months ended September 30, 2015, an increase of $452,000 or 17% from the $2,634,000 of net income recorded for the same period in 2014. This increase was the net result of an increase in noninterest income of $291,000, an increase in net interest income of $112,000, and a decrease in noninterest expense of $281,000, offset by an increase in the provision for loan losses of $93,000 and an increase in tax expense of $139,000.

Net income totaled $1,057,000 for the three months ended September 30, 2015, an increase of $582,000 or 123% from the $475,000 recorded for the same period in 2014. This increase was the net result of a decrease in noninterest expense of $465,000, an increase in noninterest income of $384,000, and an increase in net interest income of $50,000, offset by an increase in tax expense of $285,000 and an increase in the provision for loan losses of $32,000.

The decrease in noninterest expense for both the three and nine months ended September 30, 2015 versus the same periods in 2014 includes the impact of $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.

Net income of $1,057,000 for the current quarter ended September 30, 2015 increased $38,000 or 4% from net income for the preceding quarter ended June 30, 2015.

Basic and diluted earnings per share for the nine months ended September 30, 2015 were $.89 per share and $.87 per share compared to $.73 per share and $.70 per share for the same period in 2014. Basic and diluted earnings per share for the three months ended September 30, 2015 were $.31 per share and $.30 per share compared to $.09 per share for both basic and diluted earnings per share for the same period in 2014.

Net Interest Margin

The net interest margin for the nine months ended September 30, 2015 was 3.03% compared to 3.23% for the same period in 2014. The yield on average earning assets was 4.05% for the nine months ended September 30, 2015 compared to 4.25% for the same period in 2014. The average cost of interest-bearing liabilities was 1.19% for the nine months ended September 30, 2015 compared to 1.22% for the same period in 2014.

The net interest margin for the three months ended September 30, 2015 was 2.97% compared to 3.18% for the same period in 2014. The average yield on earning assets was 4.00% for the three months ended September 30, 2015 compared to 4.19% for the same period in 2014. The average cost of interest-bearing liabilities was 1.20% for the three months ended September 30, 2015 compared to 1.21% for the same period in 2014.

Assets

Total assets increased $20.3 million or 3.7% to $566.2 million at September 30, 2015 compared to $546.0 million at December 31, 2014. Loans, including loans held for sale, increased 6.7% to $446.2 million at September 30, 2015 compared to December 31, 2014. The available-for-sale investment portfolio decreased $15.1 million from December 31, 2014 to September 30, 2015.

Nonperforming Loans

Our nonperforming loans to total loans ratio has decreased to 1.01% at September 30, 2015 from 1.13% at December 31, 2014. Net loan charge-offs to average loans for the nine months ended September 30, 2015 of 0.08% increased from 0.06% for the nine months ended September 30, 2014. The allowance for loan losses was 0.92% of total loans at September 30, 2015 and 0.95% of total loans at December 31, 2014.

Liabilities

Deposits total $442.0 million at September 30, 2015, an increase of $19.5 million or 4.6%. The $19.5 million increase consists of a $6.2 million increase in interest-bearing transaction accounts, a $10.3 million increase in noninterest-bearing accounts, and a $4.5 million increase in time deposits, partially offset by a $0.9 million decrease in savings accounts and a $0.6 million decrease in money market accounts. Borrowed funds increased by $1.0 million or 1.6%.

Shareholders' Equity

Shareholders' equity decreased $0.8 million to $54.7 million at September 30, 2015 compared to December 31, 2014. The decrease is primarily the result of the repurchase of a warrant in May 2015 that had been issued to the United States Treasury Department at a purchase price of $1.5 million. The current level of shareholders' equity equates to a book value per share of $16.49 at September 30, 2015, compared to $16.91 at December 31, 2014. Dividends paid to common shareholders were $0.23 and $0.69 for the three and nine months ended for both September 30, 2015 and 2014.

Elmira Savings Bank, with $566.2 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)			September 30,				December 31,
			2015				2014				% Change
ASSETS
Cash and due from banks			$	12,916			$	7,959			62.3	%
Federal funds sold and other short-term investments				102				606			-83.2	%
	Total cash and cash equivalents			13,018				8,565			52.0	%
Securities available for sale, at fair value				50,509				65,624			-23.0	%
Securities held to maturity - fair value $9,315 at September 30, 2015, and $7,641 at December 31, 2014				9,132				7,389			23.6	%
Federal Reserve and Federal Home Loan Bank (FHLB) stock, at cost				11,073				11,182			-1.0	%
Loans held for sale				3,344				787			324.9	%
Loans receivable				442,859				417,359			6.1	%
Less: Allowance for loan losses				4,082				3,974			2.7	%
	Net loans			438,777				413,385			6.1	%
Premises and equipment, net				10,487				9,475			10.7	%
Bank-owned life insurance				13,089				12,790			2.3	%
Accrued interest receivable				1,640				1,566			4.7	%
Intangible assets, net				76				125			-39.2	%
Goodwill				12,320				12,320			-
Other assets				2,763				2,761			0.1	%
	Total assets		$	566,228			$	545,969			3.7	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits			$	442,046			$	422,561			4.6	%
Borrowings				63,000				62,000			1.6	%
Other liabilities				6,525				5,915			10.3	%
	Total liabilities			511,571				490,476			4.3	%
Shareholders' equity:
Preferred stock, $1,000 liquidation value per issued share; 5,000,000 shares authorized; 10,000 shares issued at September 30, 2015 and at December 31, 2014				9,700				9,700			-
Common stock, $1 par value; authorized 5,000,000 shares; 2,820,745 shares issued at September 30, 2015 and 2,809,364 shares issued at December 31, 2014				2,821				2,809			0.4	%
Additional paid-in capital				41,191				42,365			-2.8	%
Retained earnings				3,303				2,769			19.3	%
Treasury stock, at cost - 98,118 shares at September 30, 2015 and 104,418 shares at December 31, 2014				(2,907	)			(3,053	)		-4.8	%
Accumulated other comprehensive income				496				849			-41.6	%
	Total Elmira Savings Bank shareholders' equity			54,604				55,439			-1.5	%
Noncontrolling interest				53				54			-1.9	%
	Total shareholders' equity			54,657				55,493			-1.5	%
	Total liabilities and shareholders' equity		$	566,228			$	545,969			3.7	%

ELMIRA SAVINGS BANK
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
				Three Months Ended									Nine Months
				September 30,									Ended September 30,
(in thousands, except for per share data)				2015			2014			% Change			2015			2014			% Change
Interest and dividend income:
	Interest and fees on loans			$	4,624		$	4,412		4.8	%		$	13,656		$	13,111		4.2	%
	Interest and dividends on securities
		Taxable			331			393		-15.8	%			1,063			1,269		-16.2	%
		Non-taxable			245			221		10.9	%			709			629		12.7	%
		Total interest and dividend income			5,200			5,026		3.5	%			15,428			15,009		2.8	%
Interest expense:
	Interest on deposits				786			753		4.4	%			2,254			2,240		0.6	%
	Interest on borrowings				562			471		19.3	%			1,668			1,375		21.3	%
		Total interest expense			1,348			1,224		10.1	%			3,922			3,615		8.5	%
Net interest income					3,852			3,802		1.3	%			11,506			11,394		1.0	%
Provision for loan losses					170			138		23.2	%			360			267		34.8	%
Net interest income after provision for loan losses					3,682			3,664		0.5	%			11,146			11,127		0.2	%
Noninterest income:
	Service fees				376			380		-1.1	%			1,099			1,074		2.3	%
	Gain on sale of loans held for sale				870			483		80.1	%			1,681			1,276		31.7	%
	Gain on sale of securities				-			-		-				284			421		-32.5	%
	Other service fees				174			170		2.4	%			532			510		4.3	%
	Earnings on bank-owned life insurance				98			86		14.0	%			298			308		-3.2	%
	Other				21			36		-41.7	%			115			129		-10.7	%
		Total noninterest income			1,539			1,155		33.2	%			4,009			3,718		7.8	%
Noninterest expense:
	Salaries and benefits				1,862			2,512		-25.9	%			5,407			6,083		-11.1	%
	Net occupancy				319			317		0.6	%			1,046			1,064		-1.7	%
	Equipment				272			263		3.4	%			780			763		2.2	%
	Marketing and public relations				209			210		-0.5	%			635			614		3.4	%
	Professional fees				225			167		34.7	%			628			523		20.1	%
	Other				838			721		16.2	%			2,320			2,050		13.2	%
		Total noninterest expense			3,725			4,190		-11.1	%			10,816			11,097		-2.5	%
Income before income taxes					1,496			629		137.8	%			4,339			3,748		15.8	%
Income taxes					439			154		185.1	%			1,253			1,114		12.5	%
Net income					1,057			475		122.5	%			3,086			2,634		17.2	%
Less: Net income attributable to noncontrolling interest					-			-		-				-			-		-
Net income attibutable to Elmira Savings Bank					1,057			475		122.5	%			3,086			2,634		17.2	%
Dividend on preferred stock					225			225		-				675			675		-
Income available to common shareholders				$	832		$	250		232.8	%		$	2,411		$	1,959		23.1	%
Basic earnings per share				$	0.31		$	0.09		244.4	%		$	0.89		$	0.73		21.9	%
Diluted earnings per share				$	0.30		$	0.09		233.3	%		$	0.87		$	0.70		24.3	%
Weighted average shares outstanding - basic					2,710,219			2,684,475		1.0	%			2,705,958			2,672,010		1.3	%
Weighted average shares outstanding - diluted					2,730,365			2,802,609		-2.6	%			2,772,737			2,796,982		-0.9	%
Dividends per share				$	0.23		$	0.23		-			$	0.69		$	0.69		-

ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES
(Dollars in Thousands)		For the Nine Months Ended
		September 30, 2015									September 30, 2014
ASSETS:		Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans		$	428,567		$	13,656		4.25	%		$	393,254		$	13,111		4.44	%
Short-term investments			1,072			-		0.03				985			1		0.02
Securities			77,665			1,772		3.04				76,520			1,897		3.31
Total interest-earning assets			507,304			15,428		4.05				470,759			15,009		4.25
Noninterest-earning assets			57,643									43,903
TOTAL ASSETS		$	564,947								$	514,662
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits		$	363,781		$	2,254		0.83			$	336,891		$	2,240		0.89
Borrowings			73,011			1,668		3.01				57,620			1,375		3.14
Total interest-bearing liabilities			436,792			3,922		1.19				394,511			3,615		1.22
Noninterest-bearing liabilities			72,604									64,677
Shareholders' equity			55,551									55,474
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	564,947								$	514,662
Interest rate spread								2.86	%								3.03	%
Net interest income/margin					$	11,506		3.03	%					$	11,394		3.23	%

ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES
(Dollars in Thousands)		For the Three Months Ended
		September 30, 2015									September 30, 2014
ASSETS:		Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans		$	440,467		$	4,624		4.17	%		$	400,745		$	4,412		4.38	%
Short-term investments			675			-		0.03				901			-		0.02
Securities			76,319			576		3.01				75,821			614		3.24
Total interest-earning assets			517,461			5,200		4.00				477,467			5,026		4.19
Noninterest-earning assets			57,683									44,325
TOTAL ASSETS		$	575,144								$	521,792
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits		$	371,492		$	786		0.84			$	339,126		$	753		0.88
Borrowings			73,196			562		3.00				58,563			471		3.15
Total interest-bearing liabilities			444,688			1,348		1.20				397,689			1,224		1.21
Noninterest-bearing liabilities			75,287									68,062
Shareholders' equity			55,169									56,041
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	575,144								$	521,792
Interest rate spread								2.80	%								2.98	%
Net interest income/margin					$	3,852		2.97	%					$	3,802		3.18	%

				Quarter Ended
(Dollars in Thousands, Except Per Share Data)				9/30/2015				6/30/2015				3/31/2015				12/31/2014				9/30/2014
Operating Data
	Net income			$	1,057			$	1,019			$	1,010			$	1,031			$	475
	Net interest income				3,852				3,829				3,825				4,018				3,802
	Provision for loan losses				170				140				50				140				138
	Net security gains				-				80				204				-				-
	Non-interest income, ex. Net security gains				1,539				1,155				1,031				1,039				1,155
	Non-interest expense				3,725				3,522				3,569				3,406				4,190
Performance Statistics
	Net interest margin				2.97	%			3.04	%			3.07	%			3.24	%			3.18	%
	Annualized return on average assets				0.73	%			0.72	%			0.74	%			0.76	%			0.36	%
	Annualized return on average equity				7.60	%			7.39	%			7.29	%			7.37	%			3.36	%
	Annualized net loan charge-offs to avg loans				0.10	%			0.11	%			0.02	%			0.09	%			-0.01	%
	Net charge-offs (recoveries)				117				114				21				94				(7	)
	Efficiency ratio				69.1	%			69.5	%			70.5	%			67.4	%			84.5	%
Per Share Data
	Basic earnings per share			$	0.31			$	0.29			$	0.29			$	0.30			$	0.09
	Diluted earnings per share				0.30				0.29				0.28				0.29				0.09
	Dividend declared per share				0.23				0.23				0.23				0.23				0.23
	Book value				16.49				16.34				16.96				16.91				16.76
	Common stock price:
		High			20.81				20.82				23.00				23.00				24.54
		Low			19.05				19.43				19.99				20.50				20.16
		Close			19.20				20.09				20.40				23.00				22.25
	Weighted average common shares:
		Basic			2,710				2,707				2,701				2,693				2,684
		Fully diluted			2,730				2,776				2,812				2,808				2,803
	End-of-period common shares:
		Issued			2,821				2,821				2,813				2,809				2,809
		Treasury			98				98				98				104				104
Financial Condition Data:
General
	Total assets			$	566,228			$	572,890			$	562,185			$	545,969			$	533,726
	Loans, net				438,777				431,993				416,235				413,385				406,168
	Intangibles				12,396				12,412				12,428				12,445				12,464
	Total deposits				442,046				437,663				426,075				422,561				405,681
		Noninterest-bearing			72,293				68,707				64,442				62,019				68,871
		Savings			64,421				64,758				63,776				65,287				62,898
		NOW			85,136				86,835				78,169				78,920				75,246
		Money Market			19,912				20,678				22,112				20,512				21,498
		Time deposits			200,284				196,685				197,576				195,823				177,168
		Total interest-bearing deposits			369,753				368,956				361,633				360,542				336,810
	Shareholders' equity				54,657				54,233				55,818				55,493				55,088
Asset Quality
	Non-performing assets			$	4,545			$	4,430			$	4,790			$	4,699			$	4,575
	Non-performing assets to total assets				0.80	%			0.77	%			0.85	%			0.86	%			0.86	%
	Allowance for loan losses				4,082				4,028				4,002				3,974				3,928
	Allowance for loan losses to total loans				0.92	%			0.92	%			0.95	%			0.95	%			0.96	%
	Allowance for loan losses to non-performing loans				91.20	%			91.75	%			83.55	%			84.57	%			88.61	%
	Non-performing loans to total loans				1.01	%			1.01	%			1.14	%			1.13	%			1.08	%
Capitalization
	Shareholders' equity to total assets				9.65	%			9.47	%			9.93	%			10.16	%			10.32	%