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	%