Elmira Savings Bank Reports Third Quarter Earnings

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

Highlights

• Net income was $475,000 and $2,634,000 for the three and nine months ended September 30, 2014 compared to $1,369,000 and $3,935,000 for the same periods in 2013. Net income for the three and nine months ended September 30, 2014 includes the effects of a one-time expense of $820,000 related to retirement benefits.
  
  

• Diluted earnings per share were $.09 per share and $.70 per share for the three and nine months ended September 30, 2014 compared to $.40 per share and $1.09 per share for the same periods in 2013.
  
  

• Return on average assets (annualized) was .36% and .68% for the three and nine months ended September 30, 2014 compared to 1.05% and 1.01% for the same periods in 2013.
  
  

• Return on average equity (annualized) was 3.36% and 6.35% for the three and nine months ended September 30, 2014 compared to 9.55% and 8.75% for the same periods in 2013.
  
  

Net Income

Net income totaled $2,634,000 for the nine months ended September 30, 2014, a decrease of $1,301,000 or 33% from the $3,935,000 of net income recorded for the same period in 2013. This decrease was the net result of a decrease in noninterest income of $660,000 and an increase in noninterest expense of $808,000, offset by an increase in net interest income of $113,000.

Net income totaled $475,000 for the three months ended September 30, 2014, a decrease of $894,000 or 65% from the $1,369,000 recorded for the same period in 2013. This decrease was the net result of a decrease in noninterest income of $319,000, an increase in the provision for loan losses of $88,000, and an increase in noninterest expense of $762,000, offset by an increase in net interest income of $32,000 and a decrease in income tax expense of $243,000.

The increase in noninterest expense for both the three and nine months ended September 30, 2014 includes $820,000 of one-time expense recognized in the third quarter of 2014. This one-time expense is for the estimated value of an executive retirement compensation agreement.

"The first nine months of 2014 have been a transitional period for the company. Michael P. Hosey retired as Chief Executive Officer of the company after 30 years of service and was appointed Chairman of the Board of Directors," said Thomas M. Carr, President and CEO.

Mr. Carr continued, "As we look towards the future, the Bank is fortunate to have strong neighboring markets that continue to expand our balance sheet and grow our company."

Basic and diluted earnings per share for the nine months ended September 30, 2014 were $.73 per share and $.70 per share compared to $1.15 per share and $1.09 per share for the same period in 2013. Basic and diluted earnings per share for the three months ended September 30, 2014 were both $.09 per share compared to $.42 per share and $.40 per share for the same period in 2013.

Net Interest Margin

The net interest margin for the nine months ended September 30, 2014 was 3.23% compared to 3.26% for the same period in 2013. The yield on average earning assets was 4.25% for the nine months ended September 30, 2014 compared to 4.39% for the same period in 2013. The average cost of interest-bearing liabilities was 1.22% for the nine months ended September 30, 2014 compared to 1.32% for the same period in 2013.

The net interest margin for the three months ended September 30, 2014 was 3.18% compared to 3.23% for the same period in 2013. The average yield on earning assets was 4.19% for the three months ended September 30, 2014 compared to 4.34% for the same period in 2013. The average cost of interest-bearing liabilities was 1.21% for the three months ended September 30, 2014 compared to 1.31% for the same period in 2013.

Assets

Total assets increased $19.4 million or 3.8% to $533.7 million at September 30, 2014 compared to $514.3 million at December 31, 2013. Loans receivable increased 5.4% to $410.1 million at September 30, 2014 compared to December 31, 2013. The available-for-sale investment portfolio decreased $1.2 million from December 31, 2013 to September 30, 2014.

Nonperforming Loans

Our nonperforming loans to total loans ratio has increased to 1.08% at September 30, 2014 from .90% at December 31, 2013. Net loan charge-offs to average loans for the nine months ended September 30, 2014 of 0.06% decreased from 0.08% for the nine months ended September 30, 2013. The allowance for loan losses was 0.96% of total loans at September 30, 2014 and 0.99% of total loans at December 31, 2013.

Liabilities

Deposits total $405.7 million at September 30, 2014, an increase of $7.9 million or 2.0%. The $7.9 million increase consists of an $8.9 million increase in noninterest-bearing accounts, a $2.0 million increase in savings accounts, and a $0.4 million increase in money market accounts, partially offset by a $2.5 million decrease in NOW accounts and a $0.9 million decrease in time deposits. Borrowed funds increased by $9.7 million or 17%.

Shareholders' Equity

Shareholders' equity increased $1.1 million to $55.1 million at September 30, 2014 compared to December 31, 2013. The current level of shareholders' equity equates to a book value per share of $16.76 at September 30, 2014, compared to $16.64 at December 31, 2013. Dividends paid to common shareholders were $0.23 and $0.69 for the three and nine months ended September 30, 2014 compared to $0.21 and $0.63 for the same periods in 2013, representing increases of 9.5% for both the three and nine month periods.

Elmira Savings Bank, with $533.7 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.