Elmira Savings Bank Reports Second Quarter Earnings

ELMIRA, NY--(Marketwired - Jul 17, 2013) -  Elmira Savings Bank (NASDAQ: ESBK)

Highlights

• Net income increased to $1,374,000 and $2,566,000 for the three and six months ended June 30, 2013 compared to $1,358,000 and $2,516,000 for the same periods in 2012.
  
  
• Diluted earnings per share were $.44 per share and $.76 per share for the three and six months ended June 30, 2013 compared to $.40 per share and $.73 per share for the same periods in 2012. These represent increases of 10.0% and 4.1% for the three and six months ended June 30, 2013 compared to the same periods in 2012.
  
  
• Return on average assets was 1.07% and .99% for the three and six months ended June 30, 2013 compared to 1.04% and .97% for the same periods in 2012.
  
  
• Return on average equity was 9.67% and 8.38% for the three and six months ended June 30, 2013 compared to 8.33% and 7.73% for the same periods in 2012.

"We are pleased to report strong operating results for the first half 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 10% for the second quarter of 2013 compared to the same period in 2012," said Thomas M. Carr, President and COO. 

Net Income

Net income totaled $2,566,000 for the six months ended June 30, 2013, an increase of $50,000 or 2% from the $2,516,000 of net income recorded for the same period in 2012. This increase of $50,000 was the net result of an increase in noninterest income of $106,000 and a reduction in tax expense of $460,000, offset by a decline in net interest income of $29,000, and an increase in noninterest expense of $489,000.

Net income totaled $1,374,000 for the three months ended June 30, 2013, an increase of $16,000 or 1% from the $1,358,000 recorded for the same period in 2012. This increase was the net result of a reduction in tax expense of $476,000, offset by a decline in noninterest income and net interest income of $129,000 and $60,000, a reduction in the provision for loan losses of $57,000, and an increase of $328,000 in noninterest expense.

Basic and diluted earnings per share for the six months ended June 30, 2013 were $.80 per share and $.76 per share compared to $.76 per share and $.73 per share for the same period in 2012. Basic and diluted earnings per share for the three months ended June 30, 2013 were $.46 per share and $.44 per share compared to $.42 per share and $.40 per share for the same period in 2012.

Net Interest Margin

The net interest margin for the six months ended June 30, 2013 was 3.28% compared to 3.39% for the same period in 2012. The yield on average earning assets was 4.41% for the six months ended June 30, 2013 compared to 4.77% for the same period in 2012. The average cost of interest-bearing liabilities was 1.32% for the six months ended June 30, 2013 compared to 1.54% for the same period in 2012.

The net interest margin for the three months ended June 30, 2013 was 3.24% compared to 3.37% for the same period in 2012. The average yield on earning assets was 4.36% for the three months ended June 30, 2013 compared to 4.71% for the same period in 2012. The average cost of interest-bearing liabilities was 1.32% for the three months ended June 30, 2013 compared to 1.50% for the same period in 2012.

Assets

Total assets decreased $20.8 million or 4% to $516.1 million at June 30, 2013 compared to $536.9 million at December 31, 2012. Loans receivable increased 2% to $384.1 million at June 30, 2013 compared to December 31, 2012. The available-for-sale investment portfolio decreased $7.2 million from December 31, 2012 to June 30, 2013.

"During the first half of 2013, our loan production remained strong and has allowed us to grow our loan portfolio and avoid participating in the historically low yield investment market," said Thomas M. Carr, President and COO. 

Nonperforming Loans

Our nonperforming loans to total loans ratio has decreased to .93% at June 30, 2013 from 1.02% at December 31, 2012. Net loan charge-offs to average loans for the six months ended June 30, 2013 of 0.10% increased from 0.01% for the six months ended June 30, 2012. The allowance for loan losses was 0.99% of total loans at June 30, 2013 and December 31, 2012.

Liabilities

Deposits total $397.0 million at June 30, 2013, a decrease of $12.6 million or 3%. The $12.6 million decrease primarily consists of an $11.5 million decrease in time deposits and a $4.2 million decrease in NOW accounts, partially offset by a $2.8 million increase in savings accounts. Borrowed funds increased by $2.0 million or 4%.

Shareholders' Equity

Shareholders' equity decreased $10.2 million to $56.7 million at June 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 $18.10 at June 30, 2013, compared to $18.50 at December 31, 2012. Dividends paid to common shareholders were $0.23 and $0.46 for the three and six months ended June 30, 2013 compared to $0.21 and $0.42 for the same periods in 2012, representing increases of 9.5% for both the three and six month periods. 

Elmira Savings Bank, with $516.1 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 Cortland 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,
			2013				2012				% Change
ASSETS
Cash and due from banks			$	17,658			$	39,641			-55.5	%
Federal funds sold and other short-term investments				742				684			8.5	%
	Total cash and cash equivalents			18,400				40,325			-54.4	%
Securities available for sale, at fair value				59,653				66,875			-10.8	%
Securities held to maturity - fair value $6,802 at June 30, 2013, and $5,853 at December 31, 2012				6,633				5,521			20.1	%
Federal Reserve and Federal Home Loan Bank (FHLB) stock, at cost				9,942				9,178			8.3	%
Loans held for sale				4,484				3,167			41.6	%
Loans receivable				384,061				378,108			1.6	%
Less: Allowance for loan losses				3,809				3,740			1.8	%
	Net loans			380,252				374,368			1.6	%
Premises and equipment, net				7,982				7,947			0.4	%
Bank-owned life insurance				12,169				11,988			1.5	%
Accrued interest receivable				1,498				1,529			-2.0	%
Intangible assets, net				262				316			-17.1	%
Goodwill				12,320				12,320			0.0	%
Other real estate owned				-				125			-100.0	%
Other assets				2,542				3,277			-22.4	%
	Total assets		$	516,137			$	536,936			-3.9	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits			$	396,993			$	409,565			-3.1	%
Borrowings				56,000				54,000			3.7	%
Other liabilities				6,399				6,462			-1.0	%
	Total liabilities			459,392				470,027			-2.3	%
Shareholders' equity:
Preferred stock, $1,000 liquidation value per issued share; 5,000,000 shares authorized; 13,515 shares issued at June 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; 2,518,813 shares issued at June 30, 2013 and 2,454,840 shares issued at December 31, 2012				2,519				2,455			2.6	%
Additional paid-in capital				41,586				41,448			0.3	%
Retained earnings				1,661				868			91.4	%
Treasury stock, at cost - 116,268 shares at June 30, 2013 and 125,865 shares at December 31, 2012				(3,327	)			(3,548	)		-6.2	%
Accumulated other comprehensive income				1,035				1,872			-44.7	%
	Total Elmira Savings Bank shareholders' equity			56,689				66,858			-15.2	%
Noncontrolling interest				56				51			9.8	%
	Total shareholders' equity			56,745				66,909			-15.2	%
	Total liabilities and shareholders' equity		$	516,137			$	536,936			-3.9	%

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)					2013			2012			% Change			2013			2012			% Change
Interest and Dividend Income:
	Interest and fees on loans				$	4,390		$	4,520		-2.9	%		$	8,863		$	9,094		-2.5	%
	Interest and dividends on securities
			Taxable			424			553		-23.3	%			871			1,128		-22.8	%
			Non-taxable			191			197		-3.0	%			376			397		-5.3	%
		Total interest and dividend income				5,005			5,270		-5.0	%			10,110			10,619		-4.8	%
Interest Expense:
	Interest on deposits					809			924		-12.4	%			1,638			1,871		-12.5	%
	Interest expense on borrowings					484			574		-15.7	%			961			1,208		-20.4	%
		Total interest expense				1,293			1,498		-13.7	%			2,599			3,079		-15.6	%
Net interest income						3,712			3,772		-1.6	%			7,511			7,540		-0.4	%
Provision for loan losses						85			142		-40.1	%			265			267		-0.7	%
Net interest income after provision for loan losses						3,627			3,630		-0.1	%			7,246			7,273		-0.4	%
Noninterest Income:
	Service fees					329			316		4.1	%			645			638		1.1	%
	Net gain on sale of loans					806			880		-8.4	%			1,654			1,536		7.7	%
	Net gain on sale of securities					-			75		-100.0	%			61			75		-18.7	%
	Other service fees					172			153		12.4	%			326			317		2.8	%
	Earnings on bank-owned life insurance					91			86		5.8	%			181			168		7.7	%
	Other					21			38		-44.7	%			37			64		-42.2	%
		Total noninterest income				1,419			1,548		-8.3	%			2,904			2,798		3.8	%
Noninterest Expense:
	Salaries and benefits					1,786			1,672		6.8	%			3,607			3,324		8.5	%
	Net occupancy					318			284		12.0	%			643			586		9.7	%
	Equipment					253			229		10.5	%			512			446		14.8	%
	Regulatory assessments					116			100		16.0	%			221			200		10.5	%
	Marketing and public relations					204			150		36.0	%			351			296		18.6	%
	Professional fees					207			168		23.2	%			376			352		6.8	%
	Other					601			554		8.5	%			1,151			1,168		-1.5	%
		Total noninterest expense				3,485			3,157		10.4	%			6,861			6,372		7.7	%
Income before income taxes						1,561			2,021		-22.8	%			3,289			3,699		-11.1	%
Income taxes						187			663		-71.8	%			723			1,183		-38.9	%
Net income						1,374			1,358		1.2	%			2,566			2,516		2.0	%
Less: Net income attributable to noncontrolling interest						-			-		-				-			-
Net income attibutable to Elmira Savings Bank						1,374			1,358		1.2	%			2,566			2,516		2.0	%
Dividend on preferred stock						269			403		-33.3	%			670			798		-16.0	%
Income available to common shareholders					$	1,105		$	955		15.7	%		$	1,896		$	1,718		10.4	%
Basic earnings per share					$	0.46		$	0.42		9.5	%		$	0.80		$	0.76		5.3	%
Diluted earnings per share					$	0.44		$	0.40		10.0	%		$	0.76		$	0.73		4.1	%
Weighted average shares outstanding - basic						2,381,791			2,268,804		5.0	%			2,361,225			2,264,365		4.3	%
Weighted average shares outstanding - diluted						2,492,137			2,382,599		4.6	%			2,484,795			2,366,520		5.0	%
Dividends per share					$	0.23		$	0.21		9.5	%		$	0.46		$	0.42		9.5	%
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
		June 30, 2013									June 30, 2012
ASSETS:		Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans		$	378,654		$	4,390		4.64	%		$	356,304		$	4,520		5.08	%
Short-term investments			1,879			-		0.03				1,299			-		0.04
Securities			78,488			615		3.13				90,588			750		3.31
Total interest-earning assets			459,021			5,005		4.36				448,191			5,270		4.71
Noninterest-earning assets			53,762									74,338
TOTAL ASSETS		$	512,783								$	522,529
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits		$	336,175		$	809		0.97			$	337,902		$	924		1.10
Borrowings			54,595			484		3.51				61,813			574		3.67
Total interest-bearing liabilities			390,770			1,293		1.32				399,715			1,498		1.50
Noninterest-bearing liabilities			65,013									57,442
Shareholders' equity			57,000									65,372
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	512,783								$	522,529
Interest rate spread								3.04	%								3.21	%
Net interest income/margin					$	3,712		3.24	%					$	3,772		3.37	%

ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES
(Dollars in Thousands)		For the Six Months Ended
		June 30, 2013									June 30, 2012
ASSETS:		Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans		$	377,787		$	8,863		4.70	%		$	352,100		$	9,094		5.17	%
Short-term investments			2,235			-		0.03				1,098			-		0.03
Securities			79,534			1,247		3.14				92,491			1,525		3.29
Total interest-earning assets			459,556			10,110		4.41				445,689			10,619		4.77
Noninterest-earning assets			61,847									75,042
TOTAL ASSETS		$	521,403								$	520,731
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits		$	339,943		$	1,638		0.98			$	333,394		$	1,871		1.12
Borrowings			54,299			961		3.52				65,199			1,208		3.67
Total interest-bearing liabilities			394,242			2,599		1.32				398,593			3,079		1.54
Noninterest-bearing liabilities			65,378									56,852
Shareholders' equity			61,783									65,286
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	521,403								$	520,731
Interest rate spread								3.09	%								3.23	%
Net interest income/margin					$	7,511		3.28	%					$	7,540		3.39	%

								Quarter Ended
(Dollars in Thousands, Except Per Share Data)				6/30/2013				3/31/2013				12/31/2012				9/30/2012				6/30/2012
Operating Data
	Net income			$	1,374			$	1,192			$	1,299			$	1,398			$	1,358
	Net interest income				3,712				3,799				3,739				3,810				3,772
	Provision for loan losses				85				180				42				154				142
	Net security gains				-				61				-				-				75
	Non-interest income, ex. Net security gains				1,419				1,424				1,529				1,723				1,473
	Non-interest expense				3,485				3,376				3,301				3,271				3,157
Performance Statistics
	Net interest margin				3.24	%			3.32	%			3.25	%			3.32	%			3.37	%
	Annualized return on average assets				1.07	%			0.91	%			0.97	%			1.04	%			1.04	%
	Annualized return on average equity				9.67	%			7.26	%			7.72	%			8.39	%			8.33	%
	Annualized net loan charge-offs to avg loans				0.00	%			0.21	%			0.03	%			-0.02	%			0.02	%
	Net charge-offs (recoveries)				-				196				31				(19	)			20
	Efficiency ratio				67.9	%			63.9	%			62.7	%			59.1	%			59.3	%
Per Share Data
	Basic earnings per share			$	0.46			$	0.34			$	0.39			$	0.44			$	0.42
	Diluted earnings per share				0.44				0.32				0.37				0.42				0.40
	Dividend declared per share				0.23				0.23				0.22				0.22				0.21
	Book value				18.10				18.13				18.50				18.52				18.22
	Common stock price:
		High			26.32				25.35				23.65				19.04				20.46
		Low			20.00				22.74				18.48				17.50				16.83
		Close			21.55				25.35				22.74				18.86				18.36
	Weighted average common shares:
		Basic			2,382				2,335				2,297				2,280				2,269
		Fully diluted			2,492				2,471				2,424				2,396				2,383
	End-of-period common shares:
		Issued			2,519				2,510				2,455				2,438				2,425
		Treasury			116				116				126				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			$	516,137			$	510,915			$	536,936			$	534,159			$	530,646
	Loans, net				380,252				370,753				374,368				369,851				358,756
	Intangibles				12,582				12,609				12,636				12,667				12,699
	Total deposits				396,993				395,091				409,565				406,216				397,972
		Noninterest-bearing			61,018				58,118				61,444				58,760				55,269
		Savings			61,918				60,177				59,034				56,115				56,332
		NOW			71,894				71,472				76,133				73,079				73,431
		Money Market			20,826				19,222				20,131				23,082				19,272
		Time deposits			181,337				186,102				192,823				195,180				193,668
		Total interest-bearing deposits			335,975				336,973				348,121				347,456				342,703
	Shareholders' equity				56,745				56,677				66,609				66,543				65,621
Asset Quality
	Non-performing assets			$	3,575			$	3,826			$	3,986			$	3,980			$	3,829
	Non-performing assets to total assets				0.69	%			0.75	%			0.74	%			0.75	%			0.72	%
	Allowance for loan losses				3,809				3,724				3,740				3,729				3,556
	Allowance for loan losses to total loans				0.99	%			0.99	%			0.99	%			1.00	%			0.98	%
	Allowance for loan losses to non-performing loans				106.55	%			100.95	%			96.87	%			97.29	%			96.57	%
	Non-performing loans to total loans				0.93	%			0.99	%			1.02	%			1.03	%			1.02	%
Capitalization
	Shareholders' equity to total assets				10.99	%			11.09	%			12.41	%			12.46	%			12.37	%