Elmira Savings Bank Reports Third Quarter Earnings

ELMIRA, NY--(Marketwired - Oct 23, 2013) - Elmira Savings Bank (NASDAQ: ESBK)

Highlights

• Net income was $1,369,000 and $3,935,000 for the three and nine months ended September 30, 2013 compared to $1,398,000 and $3,914,000 for the same periods in 2012.
  
  
• Diluted earnings per share were $.44 per share and $1.20 per share for the three and nine months ended September 30, 2013 compared to $.41 per share and $1.14 per share for the same periods in 2012. These represent increases of 7.3% and 5.3% for the three and nine months ended September 30, 2013 compared to the same periods in 2012.
  
  
• Return on average assets was 1.05% and 1.01% for the three and nine months ended September 30, 2013 compared to 1.04% and .99% for the same periods in 2012.
  
  
• Return on average equity was 9.55% and 8.75% for the three and nine months ended September 30, 2013 compared to 8.39% and 7.95% for the same periods in 2012.
  
  

"We are pleased to report strong operating results for the first nine months of 2013. Our redemption of $10.5 million of preferred stock at the end of first quarter of 2013, combined with increased earnings has resulted in an increase of earnings per share by 5% for the first nine months of 2013 compared to the same period in 2012," said Thomas M. Carr, President and COO. 

Net Income

Net income totaled $3,935,000 for the nine months ended September 30, 2013, an increase of $21,000 or 1% from the $3,914,000 of net income recorded for the same period in 2012. This increase of $21,000 was the net result of a reduction in tax expense of $773,000 and a reduction in the provision for loan losses of $106,000, offset by a decline in net interest income of $69,000, a decrease in noninterest income of $143,000, and an increase in noninterest expense of $646,000.

Net income totaled $1,369,000 for the three months ended September 30, 2013, a decrease of $29,000 or 2% from the $1,398,000 recorded for the same period in 2012. This decrease was the net result of a reduction in tax expense of $313,000 and a reduction in the provision for loan losses of $104,000, offset by a decline in noninterest income and net interest income of $249,000 and $40,000, respectively, and an increase of $157,000 in noninterest expense.

Basic and diluted earnings per share for the nine months ended September 30, 2013 were $1.26 per share and $1.20 per share compared to $1.19 per share and $1.14 per share for the same period in 2012. Basic and diluted earnings per share for the three months ended September 30, 2013 were $.46 per share and $.44 per share compared to $.44 per share and $.41 per share for the same period in 2012.

Net Interest Margin

The net interest margin for the nine months ended September 30, 2013 was 3.26% compared to 3.37% for the same period in 2012. The yield on average earning assets was 4.39% for the nine months ended September 30, 2013 compared to 4.70% for the same period in 2012. The average cost of interest-bearing liabilities was 1.32% for the nine months ended September 30, 2013 compared to 1.50% for the same period in 2012.

The net interest margin for the three months ended September 30, 2013 was 3.23% compared to 3.32% for the same period in 2012. The average yield on earning assets was 4.34% for the three months ended September 30, 2013 compared to 4.56% for the same period in 2012. The average cost of interest-bearing liabilities was 1.31% for the three months ended September 30, 2013 compared to 1.41% for the same period in 2012.

Assets

Total assets decreased $17.2 million or 3% to $519.7 million at September 30, 2013 compared to $536.9 million at December 31, 2012. Loans receivable increased 2% to $385.1 million at September 30, 2013 compared to December 31, 2012. The available-for-sale investment portfolio decreased $7.6 million from December 31, 2012 to September 30, 2013.

"During the first nine months of 2013, our loan originations have remained strong. We are excited about expanding our mortgage origination operation into Broome County, New York, with the opening of our loan production office on the Vestal Parkway," said Thomas M. Carr, President and COO. 

Nonperforming Loans

Our nonperforming loans to total loans ratio has decreased to .86% at September 30, 2013 from 1.02% at December 31, 2012. Net loan charge-offs to average loans for the nine months ended September 30, 2013 remained low at 0.08%, consistent with the nine month period ended September 30, 2012 when net recoveries totaled $9,000. The allowance for loan losses was 0.99% of total loans at September 30, 2013 and December 31, 2012.

Liabilities

Deposits totaled $396.6 million at September 30, 2013, a decrease of $13.0 million or 3%. The $13.0 million decrease primarily consists of a $14.1 million decrease in time deposits and a $4.1 million decrease in NOW accounts, partially offset by a $2.3 million increase in money market accounts. Borrowed funds increased by $6.0 million or 11%.

Shareholders' Equity

Shareholders' equity decreased $9.6 million to $57.3 million at September 30, 2013 compared to December 31, 2012. The decrease in shareholders' equity is attributable to the Bank redeeming $10.5 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 $18.29 at September 30, 2013, compared to $18.50 at December 31, 2012. Dividends paid to common shareholders were $0.23 and $0.69 for the three and nine months ended September 30, 2013 compared to $0.22 and $0.64 for the same periods in 2012, representing increases of 4.5% for the three month period and 7.8% for the nine month period. 

Elmira Savings Bank, with $519.7 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,
			2013				2012				% Change
ASSETS
Cash and due from banks			$	20,333			$	39,641			-48.7	%
Federal funds sold and other short-term investments				590				684			-13.7	%
	Total cash and cash equivalents			20,923				40,325			-48.1	%
Securities available for sale, at fair value				59,309				66,875			-11.3	%
Securities held to maturity - fair value $7,775 at September 30, 2013, and $5,853 at December 31, 2012				7,601				5,521			37.7	%
Federal Reserve and Federal Home Loan Bank (FHLB) stock, at cost				10,280				9,178			12.0	%
Loans held for sale				2,682				3,167			-15.3	%
Loans receivable				385,117				378,108			1.9	%
Less: Allowance for loan losses				3,819				3,740			2.1	%
	Net loans			381,298				374,368			1.9	%
Premises and equipment, net				8,311				7,947			4.6	%
Bank-owned life insurance				12,295				11,988			2.6	%
Accrued interest receivable				1,552				1,529			1.5	%
Intangible assets, net				235				316			-25.6	%
Goodwill				12,320				12,320			0.0	%
Other assets				2,941				3,402			-13.6	%
	Total assets		$	519,747			$	536,936			-3.2	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits			$	396,600			$	409,565			-3.2	%
Borrowings				60,000				54,000			11.1	%
Other liabilities				5,857				6,462			-9.4	%
	Total liabilities			462,457				470,027			-1.6	%
Shareholders' equity:
Preferred stock, $1,000 liquidation value per issued share; 5,000,000 shares authorized; 13,515 shares issued at September 30, 2013 and at 24,063 shares issued at December 31, 2012				13,215				23,763			-44.4	%
Common stock, $1 par value; authorized 5,000,000 shares; 2,522,872 shares issued at September 30, 2013 and 2,454,840 shares issued at December 31, 2012				2,523				2,455			2.8	%
Additional paid-in capital				41,709				41,448			0.6	%
Retained earnings				2,208				868			154.4	%
Treasury stock, at cost - 116,268 shares at September 30, 2013 and 125,865 shares at December 31, 2012				(3,327	)			(3,548	)		-6.2	%
Accumulated other comprehensive income				906				1,872			-51.6	%
	Total Elmira Savings Bank shareholders' equity			57,234				66,858			-14.4	%
Noncontrolling interest				56				51			9.8	%
	Total shareholders' equity			57,290				66,909			-14.4	%
	Total liabilities and shareholders' equity		$	519,747			$	536,936			-3.2	%

ELMIRA SAVINGS BANK
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
(in thousands, except for per share data)				Three Months Ended									Nine Months Ended
				September 30,									September 30,
				2013			2012			% Change			2013			2012			% Change
Interest and Dividend Income:
	Interest and fees on loans			$	4,461		$	4,551		-2.0	%		$	13,324		$	13,645		-2.4	%
	Interest and dividends on securities
		Taxable			419			507		-17.4	%			1,290			1,635		-21.1	%
		Non-taxable			196			179		9.5	%			572			576		-0.7	%
		Total interest and dividend income			5,076			5,237		-3.1	%			15,186			15,856		-4.2	%
Interest Expense:
	Interest on deposits				805			938		-14.2	%			2,443			2,809		-13.0	%
	Interest expense on borrowings				501			489		2.5	%			1,462			1,697		-13.8	%
		Total interest expense			1,306			1,427		-8.5	%			3,905			4,506		-13.3	%
Net interest income					3,770			3,810		-1.0	%			11,281			11,350		-0.6	%
Provision for loan losses					50			154		-67.5	%			315			421		-25.2	%
Net interest income after provision for loan losses					3,720			3,656		1.8	%			10,966			10,929		0.3	%
Noninterest Income:
	Service fees				353			307		15.0	%			998			945		5.6	%
	Net gain on sale of loans				817			1,072		-23.8	%			2,471			2,608		-5.3	%
	Gain on sale of securities				-			-		-				61			75		-18.7	%
	Other service fees				160			195		-17.9	%			486			512		-5.1	%
	Earnings on bank-owned life insurance				126			125		0.8	%			307			293		4.8	%
	Other				18			24		-25.0	%			55			88		-37.5	%
		Total noninterest income			1,474			1,723		-14.5	%			4,378			4,521		-3.2	%
Noninterest Expense:
	Salaries and benefits				1,837			1,643		11.8	%			5,444			4,967		9.6	%
	Net occupancy				296			270		9.6	%			939			856		9.7	%
	Equipment				255			243		4.9	%			767			689		11.3	%
	Marketing and public relations				182			249		-26.9	%			533			545		-2.2	%
	Professional fees				168			144		16.7	%			544			496		9.7	%
	Other				690			722		-4.4	%			2,062			2,090		-1.3	%
		Total noninterest expense			3,428			3,271		4.8	%			10,289			9,643		6.7	%
Income before income taxes					1,766			2,108		-16.2	%			5,055			5,807		-12.9	%
Income taxes					397			710		-44.1	%			1,120			1,893		-40.8	%
Net income					1,369			1,398		-2.1	%			3,935			3,914		0.5	%
Less: Net income attributable to noncontrolling interest					-			-		-				-			-		-
Net income attibutable to Elmira Savings Bank					1,369			1,398		-2.1	%			3,935			3,914		0.5	%
Dividend on preferred stock					268			405		-33.8	%			938			1,203		-22.0	%
Income available to common shareholders				$	1,101		$	993		10.9	%		$	2,997		$	2,711		10.5	%
Basic earnings per share				$	0.46		$	0.44		4.5	%		$	1.26		$	1.19		5.9	%
Diluted earnings per share				$	0.44		$	0.41		7.3	%		$	1.20		$	1.14		5.3	%
Weighted average shares outstanding - basic					2,387,156			2,279,794		4.7	%			2,369,962			2,269,547		4.4	%
Weighted average shares outstanding - diluted					2,494,943			2,395,579		4.1	%			2,488,271			2,371,702		4.9	%
Dividends per share				$	0.23		$	0.22		4.5	%		$	0.69		$	0.64		7.8	%

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
		September 30, 2013									September 30, 2012
ASSETS:		Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans		$	386,316		$	4,461		4.59	%		$	371,475		$	4,551		4.88	%
Short-term investments			2,179			-		0.04				1,610			-		0.07
Securities			76,809			615		3.20				84,322			686		3.25
Total interest-earning assets			465,304			5,076		4.34				457,407			5,237		4.56
Noninterest-earning assets			53,038									73,740
TOTAL ASSETS		$	518,342								$	531,147
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits		$	336,967		$	805		0.95			$	347,397		$	938		1.07
Borrowings			56,565			501		3.47				54,217			489		3.53
Total interest-bearing liabilities			393,532			1,306		1.31				401,614			1,427		1.41
Noninterest-bearing liabilities			67,929									63,444
Shareholders' equity			56,881									66,089
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	518,342								$	531,147
Interest rate spread								3.03	%								3.15	%
Net interest income/margin					$	3,770		3.23	%					$	3,810		3.32	%

ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES
(Dollars in Thousands)		For the Nine Months Ended
		September 30, 2013									September 30, 2012
ASSETS:		Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans		$	380,661		$	13,324		4.67	%		$	358,605		$	13,645		5.07	%
Short-term investments			2,216			1		0.04				1,270			-		0.08
Securities			78,616			1,861		3.16				89,748			2,211		3.29
Total interest-earning assets			461,493			15,186		4.39				449,623			15,856		4.70
Noninterest-earning assets			58,878									74,606
TOTAL ASSETS		$	520,371								$	524,229
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits		$	338,940		$	2,443		0.96			$	338,096		$	2,809		1.11
Borrowings			55,063			1,462		3.50				61,511			1,697		3.62
Total interest-bearing liabilities			394,003			3,905		1.32				399,607			4,506		1.50
Noninterest-bearing liabilities			66,238									59,066
Shareholders' equity			60,130									65,556
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	520,371								$	524,229
Interest rate spread								3.07	%								3.20	%
Net interest income/margin					$	11,281		3.26	%					$	11,350		3.37	%

				Quarter Ended
(Dollars in Thousands, Except Per Share Data)				9/30/2013				6/30/2013			3/31/2013				12/31/2012				9/30/2012
Operating Data
	Net income			$	1,369			1,374			$	1,192			$	1,299			$	1,398
	Net interest income				3,770			3,712				3,799				3,739				3,810
	Provision for loan losses				50			85				180				42				154
	Net security gains				-			-				61				-				-
	Non-interest income, ex. Net security gains				1,474			1,419				1,424				1,529				1,723
	Non-interest expense				3,428			3,485				3,376				3,301				3,271
Performance Statistics
	Net interest margin				3.23	%		3.24	%			3.32	%			3.25	%			3.32	%
	Annualized return on average assets				1.05	%		1.07	%			0.91	%			0.97	%			1.04	%
	Annualized return on average equity				9.55	%		9.67	%			7.26	%			7.72	%			8.39	%
	Annualized net loan charge-offs to avg loans				0.04	%		0.00	%			0.21	%			0.03	%			-0.02	%
	Net charge-offs (recoveries)				40			-				196				31				(19	)
	Efficiency ratio				65.4	%		67.9	%			63.9	%			62.7	%			59.1	%
Per Share Data
	Basic earnings per share			$	0.46			0.46			$	0.34			$	0.39			$	0.44
	Diluted earnings per share				0.44			0.44				0.32				0.37				0.42
	Dividend declared per share				0.23			0.23				0.23				0.22				0.22
	Book value				18.29			18.10				18.13				18.50				18.52
	Common stock price:
		High			25.00			26.32				25.35				23.65				19.04
		Low			21.23			20.00				22.74				18.48				17.50
		Close			24.28			21.55				25.35				22.74				18.86
	Weighted average common shares:
		Basic			2,387			2,382				2,335				2,297				2,280
		Fully diluted			2,495			2,492				2,471				2,424				2,396
	End-of-period common shares:
		Issued			2,523			2,519				2,510				2,455				2,438
		Treasury			116			116				116				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			$	519,747			516,137			$	510,915			$	536,936			$	534,159
	Loans, net				381,298			380,252				370,753				374,368				369,851
	Intangibles				12,555			12,582				12,609				12,636				12,667
	Total deposits				396,600			396,993				395,091				409,565				406,216
		Noninterest-bearing			62,616			61,018				58,118				61,444				58,760
		Savings			60,710			61,918				60,177				59,034				56,115
		NOW			72,076			71,894				71,472				76,133				73,079
		Money Market			22,465			20,826				19,222				20,131				23,082
		Time deposits			178,733			181,337				186,102				192,823				195,180
		Total interest-bearing deposits			333,984			335,975				336,973				348,121				347,456
	Shareholders' equity				57,290			56,745				56,677				66,609				66,543
Asset Quality
	Non-performing assets			$	3,302			3,575			$	3,826			$	3,986			$	3,980
	Non-performing assets to total assets				0.64	%		0.69	%			0.75	%			0.74	%			0.75	%
	Allowance for loan losses				3,819			3,809				3,724				3,740				3,729
	Allowance for loan losses to total loans				0.99	%		0.99	%			0.99	%			0.99	%			1.00	%
	Allowance for loan losses to non-performing loans				115.66	%		106.55	%			100.95	%			96.87	%			97.29	%
	Non-performing loans to total loans				0.86	%		0.93	%			0.99	%			1.02	%			1.03	%
Capitalization
	Shareholders' equity to total assets				11.02	%		10.99	%			11.09	%			12.41	%			12.46	%