Elmira Savings Bank Reports Second Quarter Earnings

ELMIRA, NY--(Marketwired - Jul 20, 2016) -  Elmira Savings Bank (NASDAQ: ESBK)

Highlights

• Net income was $1,057,000 and $2,093,000 for the three and six months ended June 30, 2016 compared to $1,019,000 and $2,029,000 for the same periods in 2015.
  
  
• Diluted earnings per share were $.30 per share and $.60 per share for the three and six months ended June 30, 2016 compared to $.29 per share and $.57 per share for the same periods in 2015. 
  
  
• Return on average assets was .75% for both the three and six months ended June 30, 2016 compared to .72% and .73% for the same periods in 2015.
  
  
• Return on average equity was 7.65% and 7.58% for the three and six months ended June 30, 2016 compared to 7.39% and 7.34% for the same periods in 2015.

"During the first six months of 2016, the Bank experienced 4% growth in the loan portfolio and deposit growth of 7%," said Thomas M. Carr, President and CEO. Carr continued, "In addition, we have increased our noninterest income by 13% and expanded our net interest income by 6%."

Net Income

Net income totaled $2,093,000 for the six months ended June 30, 2016, an increase of $64,000 or 3% from the $2,029,000 of net income recorded for the same period in 2015. This increase was the net result of an increase in noninterest income of $319,000 and an increase in net interest income of $500,000, offset by an increase in noninterest expense of $647,000, an increase in the provision for loan losses of $35,000, and an increase in tax expense of $73,000.

Net income totaled $1,057,000 for the three months ended June 30, 2016, an increase of $38,000 or 4% from the $1,019,000 recorded for the same period in 2015. This increase was the net result of an increase in noninterest income of $203,000, a decrease in the provision for loan losses of $55,000, and an increase in net interest income of $225,000, offset by an increase in noninterest expense of $369,000 and an increase in tax expense of $76,000.

Basic and diluted earnings per share for the six months ended June 30, 2016 were both $.60 per share compared to $.58 per share and $.57 per share for the same period in 2015. Basic and diluted earnings per share for the three months ended June 30, 2016 were $.31 per share and $.30 per share compared to $.29 per share for both for the same period in 2015.

Net Interest Margin

The net interest margin for the six months ended June 30, 2016 was 3.18% compared to 3.05% for the same period in 2015. The yield on average earning assets was 4.07% for the six months ended June 30, 2016 compared to 4.08% for the same period in 2015. The average cost of interest-bearing liabilities was 1.04% for the six months ended June 30, 2016 compared to 1.19% for the same period in 2015.

The net interest margin for the three months ended June 30, 2016 was 3.17% compared to 3.04% for the same period in 2015. The average yield on earning assets was 4.06% for the three months ended June 30, 2016 compared to 4.07% for the same period in 2015. The average cost of interest-bearing liabilities was 1.04% for the three months ended June 30, 2016 compared to 1.19% for the same period in 2015.

Assets

Total assets increased $13.4 million or 2.4% to $574.7 million at June 30, 2016 compared to $561.3 million at December 31, 2015. Loans, including loans held for sale, increased 3.8% to $472.3 million at June 30, 2016 compared to December 31, 2015. The available-for-sale investment portfolio decreased $8.4 million from December 31, 2015 to June 30, 2016.

Nonperforming Loans

Our nonperforming loans to total loans ratio has increased to 1.15% at June 30, 2016 from 1.05% at December 31, 2015. Net loan charge-offs to average loans for the six months ended June 30, 2016 of 0.04% decreased from 0.06% for the six months ended June 30, 2015. The allowance for loan losses was 0.92% of total loans at both June 30, 2016 and December 31, 2015.

Liabilities

Deposits total $470.5 million at June 30, 2016, an increase of $30.0 million or 6.8%. The $30.0 million increase consists of a $34.8 million increase in interest bearing transaction accounts, a $3.8 million increase in noninterest-bearing accounts, a $2.2 million increase in savings accounts, and a $1.8 million increase in money market accounts, partially offset by a $12.7 million decrease in time deposits. Borrowed funds decreased by $17.5 million or 29.4%.

Shareholders' Equity

Shareholders' equity increased $0.6 million to $55.4 million at June 30, 2016 compared to December 31, 2015. The current level of shareholders' equity equates to a book value per share of $16.69 at June 30, 2016, compared to $16.53 at December 31, 2015. Dividends paid to common shareholders were $0.23 and $0.46 for the three and six months ended for both June 30, 2016 and 2015.

Elmira Savings Bank, with $574.7 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; 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,
			2016				2015				% Change
ASSETS
Cash and due from banks			$	10,723			$	5,352			100.4	%
Federal funds sold and other short-term investments				101				102			-1.0	%
	Total cash and cash equivalents			10,824				5,454			98.5	%
Securities available for sale, at fair value				34,263				42,709			-19.8	%
Securities held to maturity - fair value $9,145 at June 30, 2016 and $9,010 at December 31, 2015				8,725				9,003			-3.1	%
Federal Reserve and Federal Home Loan Bank (FHLB) stock, at cost				10,700				11,108			-3.7	%
Loans held for sale				4,873				3,630			34.2	%
Loans receivable				467,389				451,368			3.5	%
Less: Allowance for loan losses				4,285				4,148			3.3	%
	Net loans			463,104				447,220			3.6	%
Premises and equipment, net				12,143				12,130			0.1	%
Bank-owned life insurance				13,393				13,188			1.6	%
Accrued interest receivable				1,467				1,541			-4.8	%
Intangible assets, net				40				61			-34.4	%
Goodwill				12,320				12,320			0.0	%
Other assets				2,869				2,980			-3.7	%
	Total assets		$	574,721			$	561,344			2.4	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits			$	470,462			$	440,472			6.8	%
Borrowings				42,000				59,525			-29.4	%
Other liabilities				6,877				6,576			4.6	%
	Total liabilities			519,339				506,573			2.5	%
Shareholders' equity:
Preferred stock, $1,000 liquidation value per issued share; 5,000,000 shares authorized; 10,000 shares issued at June 30, 2016 and at December 31, 2015				9,700				9,700			0.0	%
Common stock, $1 par value; authorized 5,000,000 shares; 2,832,304 shares issued at June 30, 2016 and 2,820,745 shares issued at December 31, 2015				2,832				2,821			0.4	%
Additional paid-in capital				41,396				41,243			0.4	%
Retained earnings				3,875				3,488			11.1	%
Treasury stock, at cost - 98,118 shares at June 30, 2016 and December 31, 2015				(2,907	)			(2,907	)		0.0	%
Accumulated other comprehensive income				433				373			16.1	%
	Total Elmira Savings Bank shareholders' equity			55,329				54,718			1.1	%
Noncontrolling interest				53				53			0.0	%
	Total shareholders' equity			55,382				54,771			1.1	%
	Total liabilities and shareholders' equity		$	574,721			$	561,344			2.4	%

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)			2016			2015			% Change			2016			2015			% Change
Interest and dividend income:
	Interest and fees on loans		$	4,744		$	4,570		3.8	%		$	9,473		$	9,032		4.9	%
	Interest and dividends on securities
		Taxable		242			330		-26.7	%			527			732		-28.0	%
		Non-taxable		205			233		-12.0	%			424			464		-8.6	%
		Total interest and dividend income		5,191			5,133		1.1	%			10,424			10,228		1.9	%
Interest expense:
	Interest on deposits			763			741		3.0	%			1,497			1,468		2.0	%
	Interest on borrowings			374			563		-33.6	%			773			1,106		-30.1	%
		Total interest expense		1,137			1,304		-12.8	%			2,270			2,574		-11.8	%
Net interest income				4,054			3,829		5.9	%			8,154			7,654		6.5	%
Provision for loan losses				85			140		-39.3	%			225			190		18.4	%
Net interest income after provision for loan losses				3,969			3,689		7.6	%			7,929			7,464		6.2	%
Noninterest income:
	Service fees			354			368		-3.8	%			702			723		-2.9	%
	Gain on sale of loans held for sale			749			457		63.9	%			1,271			811		56.7	%
	Gain on sale of securities			-			80		-100.0	%			180			284		-36.6	%
	Other service fees			186			189		-1.6	%			366			358		2.2	%
	Earnings on bank-owned life insurance			108			106		1.9	%			205			200		2.5	%
	Other			41			35		17.1	%			65			94		-30.9	%
		Total noninterest income		1,438			1,235		16.4	%			2,789			2,470		12.9	%
Noninterest expense:
	Salaries and benefits			1,969			1,751		12.5	%			3,896			3,545		9.9	%
	Net occupancy			353			335		5.4	%			722			727		-0.7	%
	Equipment			301			254		18.5	%			576			508		13.4	%
	Marketing and public relations			192			215		-10.7	%			393			426		-7.7	%
	Professional fees			194			223		-13.0	%			374			403		-7.2	%
	Other			882			744		18.5	%			1,777			1,482		19.9	%
		Total noninterest expense		3,891			3,522		10.5	%			7,738			7,091		9.1	%
Income before income taxes				1,516			1,402		8.1	%			2,980			2,843		4.8	%
Income taxes				459			383		19.8	%			887			814		9.0	%
Net income				1,057			1,019		3.7	%			2,093			2,029		3.2	%
Less: Net income attributable to noncontrolling interest				-			-		-				-			-		-
Net income attibutable to Elmira Savings Bank				1,057			1,019		3.7	%			2,093			2,029		3.2	%
Dividend on preferred stock				225			225		0.0	%			450			450		0.0	%
Income available to common shareholders			$	832		$	794		4.8	%		$	1,643		$	1,579		4.1	%
Basic earnings per share			$	0.31		$	0.29		6.9	%		$	0.60		$	0.58		3.4	%
Diluted earnings per share			$	0.30		$	0.29		3.4	%		$	0.60		$	0.57		5.3	%
Weighted average shares outstanding - basic				2,717,506			2,706,983		0.4	%			2,716,710			2,703,787		0.5	%
Weighted average shares outstanding - diluted				2,734,970			2,776,116		-1.5	%			2,733,992			2,793,883		-2.1	%
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 Three Months Ended
		June 30, 2016									June 30, 2015
ASSETS:		Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans		$	457,695		$	4,744		4.15	%		$	427,499		$	4,570		4.27	%
Short-term investments			691			-		0.20				1,040			-		0.03
Securities			53,202			447		3.36				74,952			563		3.01
Total interest-earning assets			511,588			5,191		4.06				503,491			5,133		4.07
Noninterest-earning assets			53,756									61,047
TOTAL ASSETS		$	565,344								$	564,538
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits		$	384,003		$	763		0.80			$	361,447		$	741		0.82
Borrowings			52,055			374		2.84				74,000			563		3.01
Total interest-bearing liabilities			436,058			1,137		1.04				435,447			1,304		1.19
Noninterest-bearing liabilities			73,662									73,728
Shareholders' equity			55,624									55,363
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	565,344								$	564,538
Interest rate spread								3.02	%								2.88	%
Net interest income/margin					$	4,054		3.17	%					$	3,829		3.04	%

ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES
(Dollars in Thousands)		For the Six Months Ended
		June 30, 2016									June 30, 2015
ASSETS:		Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans		$	455,762		$	9,473		4.16	%		$	422,517		$	9,032		4.28	%
Short-term investments			536			-		0.19				1,273			1		0.02
Securities			56,416			951		3.37				78,350			1,195		3.06
Total interest-earning assets			512,714			10,424		4.07				502,140			10,228		4.08
Noninterest-earning assets			50,882									57,624
TOTAL ASSETS		$	563,596								$	559,764
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits		$	379,304		$	1,497		0.79			$	359,861		$	1,468		0.82
Borrowings			55,526			773		2.76				72,917			1,106		3.01
Total interest-bearing liabilities			434,830			2,270		1.04				432,778			2,574		1.19
Noninterest-bearing liabilities			73,255									71,241
Shareholders' equity			55,511									55,745
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	563,596								$	559,764
Interest rate spread								3.03	%								2.89	%
Net interest income/margin					$	8,154		3.18	%					$	7,654		3.05	%

				Quarter Ended
(Dollars in Thousands, Except Per Share Data)				6/30/2016				3/31/2016				12/31/2015				9/30/2015				6/30/2015
Operating Data
	Net income			$	1,057			$	1,036			$	1,036			$	1,057			$	1,019
	Net interest income				4,054				4,100				4,128				3,852				3,829
	Provision for loan losses				85				140				270				170				140
	Net security gains				-				180				-				-				80
	Non-interest income, ex. Net security gains				1,438				1,171				1,382				1,539				1,155
	Non-interest expense				3,891				3,847				3,777				3,725				3,522
Performance Statistics
	Net interest margin				3.17	%			3.19	%			3.19	%			2.97	%			3.04	%
	Annualized return on average assets				0.75	%			0.74	%			0.73	%			0.73	%			0.72	%
	Annualized return on average equity				7.65	%			7.52	%			7.46	%			7.60	%			7.39	%
	Annualized net loan charge-offs to avg loans				0.01	%			0.07	%			0.18	%			0.10	%			0.11	%
	Net charge-offs (recoveries)				14				74				204				117				114
	Efficiency ratio				70.8	%			70.6	%			68.5	%			69.1	%			69.5	%
Per Share Data
	Basic earnings per share			$	0.31			$	0.30			$	0.30			$	0.31			$	0.29
	Diluted earnings per share				0.30				0.30				0.30				0.30				0.29
	Dividend declared per share				0.23				0.23				0.23				0.23				0.23
	Book value				16.69				16.59				16.53				16.49				16.34
	Common stock price:
		High			20.10				20.55				21.13				20.81				20.82
		Low			18.06				16.83				18.41				19.05				19.43
		Close			19.66				18.01				19.88				19.20				20.09
	Weighted average common shares:
		Basic			2,718				2,716				2,712				2,710				2,707
		Fully diluted			2,735				2,733				2,731				2,730				2,776
	End-of-period common shares:
		Issued			2,832				2,828				2,821				2,821				2,821
		Treasury			98				98				98				98				98
Financial Condition Data:
General
	Total assets			$	574,721			$	560,020			$	561,344			$	566,228			$	572,890
	Loans, net				463,104				452,718				447,220				438,777				431,993
	Intangibles				12,360				12,371				12,381				12,396				12,412
	Total deposits				470,462				443,552				440,472				442,046				437,663
		Noninterest-bearing			70,803				65,165				66,964				72,293				68,707
		Savings			69,159				67,295				66,914				64,421				64,758
		NOW			121,875				105,094				87,083				85,136				86,835
		Money Market			25,172				25,281				23,382				19,912				20,678
		Time deposits			183,453				180,717				196,129				200,284				196,685
		Total interest-bearing deposits			399,659				378,387				373,508				369,753				368,956
	Shareholders' equity				55,382				55,039				54,771				54,657				54,233
Asset Quality
	Non-performing assets			$	5,622			$	5,328			$	4,943			$	4,545			$	4,430
	Non-performing assets to total assets				0.98	%			0.95	%			0.88	%			0.80	%			0.77	%
	Allowance for loan losses				4,285				4,214				4,148				4,082				4,028
	Allowance for loan losses to total loans				0.92	%			0.92	%			0.92	%			0.92	%			0.92	%
	Allowance for loan losses to non-performing loans				80.41	%			83.69	%			87.66	%			91.20	%			91.75	%
	Non-performing loans to total loans				1.15	%			1.10	%			1.05	%			1.01	%			1.01	%
Capitalization
	Shareholders' equity to total assets				9.64	%			9.83	%			9.76	%			9.65	%			9.47	%