Elmira Savings Bank Reports Second Quarter Earnings

ELMIRA, NY--(Marketwired - Jul 22, 2015) - Elmira Savings Bank (NASDAQ: ESBK)

Highlights

• Net income was $1,019,000 and $2,029,000 for the three and six months ended June 30, 2015 compared to $1,099,000 and $2,159,000 for the same periods in 2014.
  
  
• Diluted earnings per share were $.29 per share and $.57 per share for the three and six months ended June 30, 2015 compared to $.31 per share and $.61 per share for the same periods in 2014.
  
  
• Return on average assets was .72% and .73% for the three and six months ended June 30, 2015 compared to .86% and .85% for the same periods in 2014.
  
  
• Return on average equity was 7.39% and 7.34% for the three and six months ended June 30, 2015 compared to 7.95% and 7.89% for the same periods in 2014.
  
  

"During the first six months of 2015, despite lower earnings, the Bank experienced an increase in loan originations of 34% over the same period one year ago, resulting in 5% growth in the loan portfolio. Additionally, we have experienced deposit growth of 4% since the beginning of the year," said Thomas M. Carr, President and CEO. Carr continued, "We also have been very pleased with our activity in our Watkins Glen branch, which opened in March."

Net Income

Net income totaled $2,029,000 for the six months ended June 30, 2015, a decrease of $130,000 or 6% from the $2,159,000 of net income recorded for the same period in 2014. This decrease was the net result of a decrease in noninterest income of $93,000, an increase in the provision for loan losses of $61,000, and an increase in noninterest expense of $184,000, offset by an increase in net interest income of $62,000 and a decrease in tax expense of $146,000.

Net income totaled $1,019,000 for the three months ended June 30, 2015, a decrease of $80,000 or 7% from the $1,099,000 recorded for the same period in 2014. This decrease was the net result of a decrease in noninterest income of $39,000, an increase in the provision for loan losses of $65,000, and an increase in noninterest expense of $178,000, offset by an increase in net interest income of $110,000 and a decrease in tax expense of $92,000.

Net income of $1,019,000 for the current quarter ended June 30, 2015 increased $9,000 from net income for the preceding quarter ended March 31, 2015.

Basic and diluted earnings per share for the six months ended June 30, 2015 were $.58 per share and $.57 per share compared to $.64 per share and $.61 per share for the same period in 2014. Basic and diluted earnings per share for the three months ended June 30, 2015 were both $.29 per share compared to $.33 per share and $.31 per share for the same period in 2014.

Net Interest Margin

The net interest margin for the six months ended June 30, 2015 was 3.05% compared to 3.25% for the same period in 2014. The yield on average earning assets was 4.08% for the six months ended June 30, 2015 compared to 4.28% for the same period in 2014. The average cost of interest-bearing liabilities was 1.19% for the six months ended June 30, 2015 compared to 1.22% for the same period in 2014.

The net interest margin for the three months ended June 30, 2015 was 3.04% compared to 3.19% for the same period in 2014. The average yield on earning assets was 4.07% for the three months ended June 30, 2015 compared to 4.22% for the same period in 2014. The average cost of interest-bearing liabilities was 1.19% for the three months ended June 30, 2015 compared to 1.22% for the same period in 2014.

Assets

Total assets increased $26.9 million or 4.9% to $572.9 million at June 30, 2015 compared to $546.0 million at December 31, 2014. Loans, including loans held for sale, increased 5.2% to $440.1 million at June 30, 2015 compared to December 31, 2014. The available-for-sale investment portfolio decreased $7.2 million from December 31, 2014 to June 30, 2015.

Nonperforming Loans

Our nonperforming loans to total loans ratio has decreased to 1.01% at June 30, 2015 from 1.13% at December 31, 2014. Net loan charge-offs to average loans for the six months ended June 30, 2015 of 0.06% decreased from 0.09% for the six months ended June 30, 2014. The allowance for loan losses was 0.92% of total loans at June 30, 2015 and 0.95% of total loans at December 31, 2014.

Liabilities

Deposits total $437.7 million at June 30, 2015, an increase of $15.1 million or 3.6%. The $15.1 million increase consists of a $7.9 million increase in NOW accounts, a $6.7 million increase in noninterest-bearing accounts, a $0.2 million increase in money market accounts, and a $0.8 million increase in time deposits, partially offset by a $0.5 million decrease in savings accounts. Borrowed funds increased by $12.0 million or 19.4%.

Shareholders' Equity

Shareholders' equity decreased $1.3 million to $54.2 million at June 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 $16.34 at June 30, 2015, compared to $16.91 at December 31, 2014. Dividends paid to common shareholders were $0.23 and $0.46 for the three and six months ended for both June 30, 2015 and 2014.

Elmira Savings Bank, with $572.9 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)			June 30,				December 31,
			2015				2014				% Change
ASSETS
Cash and due from banks			$	17,407			$	7,959			118.7	%
Federal funds sold and other short-term investments				153				606			-74.8	%
	Total cash and cash equivalents			17,560				8,565			105.0	%
Securities available for sale, at fair value				58,422				65,624			-11.0	%
Securities held to maturity - fair value $9,393 at June 30, 2015 and $7,641 at December 31, 2014				9,213				7,389			24.7	%
Federal Reserve and Federal Home Loan Bank (FHLB) stock, at cost				11,647				11,182			4.2	%
Loans held for sale				4,064				787			416.4	%
Loans receivable				436,021				417,359			4.5	%
Less: Allowance for loan losses				4,028				3,974			1.4	%
	Net loans			431,993				413,385			4.5	%
Premises and equipment, net				10,383				9,475			9.6	%
Bank-owned life insurance				12,990				12,790			1.6	%
Accrued interest receivable				1,505				1,566			-3.9	%
Intangible assets, net				92				125			-26.4	%
Goodwill				12,320				12,320			0.0	%
Other assets				2,701				2,761			-2.2	%
	Total assets		$	572,890			$	545,969			4.9	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits			$	437,663			$	422,561			3.6	%
Borrowings				74,000				62,000			19.4	%
Other liabilities				6,994				5,915			18.2	%
	Total liabilities			518,657				490,476			5.7	%
Shareholders' equity:
Preferred stock, $1,000 liquidation value per issued share; 5,000,000 shares authorized; 10,000 shares issued at June 30, 2015 and at December 31, 2014				9,700				9,700			0.0	%
Common stock, $1 par value; authorized 5,000,000 shares; 2,820,745 shares issued at June 30, 2015 and 2,809,364 shares issued at December 31, 2014				2,821				2,809			0.4	%
Additional paid-in capital				41,128				42,365			-2.9	%
Retained earnings				3,097				2,769			11.8	%
Treasury stock, at cost - 98,118 shares at June 30, 2015 and 104,418 shares at December 31, 2014				(2,907	)			(3,053	)		-4.8	%
Accumulated other comprehensive income				340				849			-60.0	%
	Total Elmira Savings Bank shareholders' equity			54,179				55,439			-2.3	%
Noncontrolling interest				54				54			0.0	%
	Total shareholders' equity			54,233				55,493			-2.3	%
	Total liabilities and shareholders' equity		$	572,890			$	545,969			4.9	%

ELMIRA SAVINGS BANK
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
				Three Months Ended									Six Months Ended
				June 30,									June 30,
(in thousands, except for per share data)				2015			2014			% Change			2015			2014			% Change
Interest and dividend income:
	Interest and fees on loans			$	4,570		$	4,302		6.2	%		$	9,032		$	8,699		3.8	%
	Interest and dividends on securities
		Taxable			330			412		-19.9	%			732			876		-16.4	%
		Non-taxable			233			204		14.2	%			464			408		13.7	%
		Total interest and dividend income			5,133			4,918		4.4	%			10,228			9,983		2.5	%
Interest expense:
	Interest on deposits				741			745		-0.5	%			1,468			1,487		-1.3	%
	Interest on borrowings				563			454		24.0	%			1,106			904		22.3	%
		Total interest expense			1,304			1,199		8.8	%			2,574			2,391		7.7	%
Net interest income					3,829			3,719		3.0	%			7,654			7,592		0.8	%
Provision for loan losses					140			75		86.7	%			190			129		47.3	%
Net interest income after provision for loan losses					3,689			3,644		1.2	%			7,464			7,463		0.0	%
Noninterest income:
	Service fees				368			365		0.8	%			723			694		4.2	%
	Gain on sale of loans held for sale				457			345		32.5	%			811			793		2.3	%
	Gain on sale of securities				80			205		-61.0	%			284			421		-32.5	%
	Other service fees				189			176		7.4	%			358			340		5.3	%
	Earnings on bank-owned life insurance				106			131		-19.1	%			200			222		-9.9	%
	Other				35			52		-32.7	%			94			93		1.1	%
		Total noninterest income			1,235			1,274		-3.1	%			2,470			2,563		-3.6	%
Noninterest expense:
	Salaries and benefits				1,751			1,732		1.1	%			3,545			3,571		-0.7	%
	Net occupancy				335			331		1.2	%			727			747		-2.7	%
	Equipment				254			250		1.6	%			508			500		1.6	%
	Marketing and public relations				215			204		5.4	%			426			404		5.4	%
	Professional fees				223			195		14.4	%			403			356		13.2	%
	Other				744			632		17.7	%			1,482			1,329		11.5	%
		Total noninterest expense			3,522			3,344		5.3	%			7,091			6,907		2.7	%
Income before income taxes					1,402			1,574		-10.9	%			2,843			3,119		-8.8	%
Income taxes					383			475		-19.4	%			814			960		-15.2	%
Net income					1,019			1,099		-7.3	%			2,029			2,159		-6.0	%
Less: Net income attributable to noncontrolling interest					-			-		-				-			-		-
Net income attibutable to Elmira Savings Bank					1,019			1,099		-7.3	%			2,029			2,159		-6.0	%
Dividend on preferred stock					225			225		0.0	%			450			450		0.0	%
Income available to common shareholders				$	794		$	874		-9.2	%		$	1,579		$	1,709		-7.6	%
Basic earnings per share				$	0.29		$	0.33		-12.1	%		$	0.58		$	0.64		-9.4	%
Diluted earnings per share				$	0.29		$	0.31		-6.5	%		$	0.57		$	0.61		-6.6	%
Weighted average shares outstanding - basic					2,706,983			2,674,098		1.2	%			2,703,787			2,665,640		1.4	%
Weighted average shares outstanding - diluted					2,776,116			2,798,180		-0.8	%			2,793,883			2,794,030		0.0	%
Dividends per share				$	0.23		$	0.23		0.0	%		$	0.46		$	0.46		0.0	%

ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES
(Dollars in Thousands)		For the Six Months Ended
		June 30, 2015									June 30, 2014
ASSETS:		Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans		$	422,517		$	9,032		4.28	%		$	389,447		$	8,699		4.48	%
Short-term investments			1,273			1		0.02				1,028			-		0.02
Securities			78,350			1,195		3.06				76,875			1,284		3.34
Total interest-earning assets			502,140			10,228		4.08				467,350			9,983		4.28
Noninterest-earning assets			57,624									43,688
TOTAL ASSETS		$	559,764								$	511,038
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits		$	359,861		$	1,468		0.82			$	335,755		$	1,487		0.89
Borrowings			72,917			1,106		3.01				57,141			904		3.14
Total interest-bearing liabilities			432,778			2,574		1.19				392,896			2,391		1.22
Noninterest-bearing liabilities			71,241									62,957
Shareholders' equity			55,745									55,185
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	559,764								$	511,038
Interest rate spread								2.89	%								3.06	%
Net interest income/margin					$	7,654		3.05	%					$	7,592		3.25	%

ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES
(Dollars in Thousands)		For the Three Months Ended
		June 30, 2015									June 30, 2014
ASSETS:		Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans		$	427,499		$	4,570		4.27	%		$	390,122		$	4,302		4.41	%
Short-term investments			1,040			-		0.03				1,000			-		0.02
Securities			74,952			563		3.01				74,772			616		3.30
Total interest-earning assets			503,491			5,133		4.07				465,894			4,918		4.22
Noninterest-earning assets			61,047									44,874
TOTAL ASSETS		$	564,538								$	510,768
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits		$	361,447		$	741		0.82			$	336,018		$	745		0.89
Borrowings			74,000			563		3.01				55,882			454		3.22
Total interest-bearing liabilities			435,447			1,304		1.19				391,900			1,199		1.22
Noninterest-bearing liabilities			73,728									63,452
Shareholders' equity			55,363									55,416
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	564,538								$	510,768
Interest rate spread								2.88	%								3.00	%
Net interest income/margin					$	3,829		3.04	%					$	3,719		3.19	%

				Quarter Ended
(Dollars in Thousands, Except Per Share Data)				6/30/2015				3/31/2015				12/31/2014				9/30/2014				6/30/2014
Operating Data
	Net income			$	1,019			$	1,010			$	1,031			$	475			$	1,099
	Net interest income				3,829				3,825				4,018				3,802				3,719
	Provision for loan losses				140				50				140				138				75
	Net security gains				80				204				-				-				205
	Non-interest income, ex. Net security gains				1,155				1,031				1,039				1,155				1,069
	Non-interest expense				3,522				3,569				3,406				4,190				3,344
Performance Statistics
	Net interest margin				3.04	%			3.07	%			3.24	%			3.18	%			3.19	%
	Annualized return on average assets				0.72	%			0.74	%			0.76	%			0.36	%			0.86	%
	Annualized return on average equity				7.39	%			7.29	%			7.37	%			3.36	%			7.95	%
	Annualized net loan charge-offs to avg loans				0.11	%			0.02	%			0.09	%			-0.01	%			0.15	%
	Net charge-offs (recoveries)				114				21				94				(7	)			143
	Efficiency ratio				69.5	%			70.5	%			67.4	%			84.5	%			67.0	%
Per Share Data
	Basic earnings per share			$	0.29			$	0.29			$	0.30			$	0.09			$	0.33
	Diluted earnings per share				0.29				0.28				0.29				0.09				0.31
	Dividend declared per share				0.23				0.23				0.23				0.23				0.23
	Book value				16.34				16.96				16.91				16.76				16.87
	Common stock price:
		High			20.82				23.00				23.00				24.54				24.78
		Low			19.43				19.99				20.50				20.16				21.92
		Close			20.09				20.40				23.00				22.25				24.50
	Weighted average common shares:
		Basic			2,707				2,701				2,693				2,684				2,674
		Fully diluted			2,776				2,812				2,808				2,803				2,798
	End-of-period common shares:
		Issued			2,821				2,813				2,809				2,809				2,799
		Treasury			98				98				104				104				104
Financial Condition Data:
General
	Total assets			$	572,890			$	562,185			$	545,969			$	533,726			$	515,053
	Loans, net				431,993				416,235				413,385				406,168				391,611
	Intangibles				12,412				12,428				12,445				12,464				12,486
	Total deposits				437,663				426,075				422,561				405,681				399,219
		Noninterest-bearing			68,707				64,442				62,019				68,871				61,221
		Savings			64,758				63,776				65,287				62,898				63,433
		NOW			86,835				78,169				78,920				75,246				73,116
		Money Market			20,678				22,112				20,512				21,498				22,702
		Time deposits			196,685				197,576				195,823				177,168				178,747
		Total interest-bearing deposits			368,956				361,633				360,542				336,810				337,998
	Shareholders' equity				54,233				55,818				55,493				55,088				55,202
Asset Quality
	Non-performing assets			$	4,430			$	4,790			$	4,699			$	4,575			$	4,281
	Non-performing assets to total assets				0.77	%			0.85	%			0.86	%			0.86	%			0.83	%
	Allowance for loan losses				4,028				4,002				3,974				3,928				3,783
	Allowance for loan losses to total loans				0.92	%			0.95	%			0.95	%			0.96	%			0.96	%
	Allowance for loan losses to non-performing loans				91.75	%			83.55	%			84.57	%			88.61	%			89.90	%
	Non-performing loans to total loans				1.01	%			1.14	%			1.13	%			1.08	%			1.06	%
Capitalization
	Shareholders' equity to total assets				9.47	%			9.93	%			10.16	%			10.32	%			10.72	%