Elmira Savings Bank Reports First Quarter Earnings

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

Highlights

• Net income was $1,060,000 for the three months ended March 31, 2014 compared to $1,192,000 for the same period in 2013. Income available to common shareholders after dividends on preferred stock increased 5.6% to $835,000 for the three months ended March 31, 2014 compared to $791,000 for the same period in 2013.
  
  
• Diluted earnings per share was $.30 per share for the three months ended March 31, 2014 compared to $.29 per share for the same period in 2013. This represents an increase of 3.4% for the three months ended March 31, 2014 compared to the same period in 2013.
  
  
• Return on average assets was .84% for the three months ended March 31, 2014 compared to .91% for the same period in 2013.
  
  
• Return on average equity was 7.82% for the three months ended March 31, 2014 compared to 7.26% for the same period in 2013.
  
  

"We are pleased to report a 5.6% increase in income available to common shareholders for the first quarter of 2014, compared to the same period in 2013, despite slightly lower net income," said Thomas M. Carr, President and Chief Operating Officer. Carr continued, "Our decision to retire preferred shares in 2013 has greatly reduced our level of preferred dividend payments, benefiting our common shareholders who were also rewarded with a $.23, or 4% annualized, common dividend in the first quarter."

Net Income

Net income totaled $1,060,000 for the three months ended March 31, 2014, a decrease of $132,000 or 11.1% from the $1,192,000 recorded for the same period in 2013. This decrease was the net result of a decline in noninterest income of $196,000 and an increase in noninterest expense of $187,000, partially offset by an increase of $74,000 in net interest income, a reduction in the provision for loan losses of $126,000, and a reduction in tax expense of $51,000.

Basic and diluted earnings per share for the three months ended March 31, 2014 were $.31 per share and $.30 per share compared to $.31 per share and $.29 per share for the same period in 2013.

Net Interest Margin

The net interest margin for the three months ended March 31, 2014 was 3.31% compared to 3.32% for the first quarter of 2013. The yield on average earning assets was 4.34% for the three months ended March 31, 2014 compared to 4.46% for the same period in 2013. The average cost of interest-bearing liabilities was 1.22% for the three months ended March 31, 2014 compared to 1.32% for the three months ended March 31, 2013.

Assets

Total assets decreased $387,000 or 0.1% to $513.9 million at March 31, 2014 compared to $514.3 million at December 31, 2013. Loans receivable increased 0.8% to $392.1 million at March 31, 2014 compared to December 31, 2013. The available-for-sale investment portfolio decreased $5.8 million from December 31, 2013 to March 31, 2014.

Nonperforming Loans

Our nonperforming loans to total loans ratio has decreased to .82% at March 31, 2014 from .90% at December 31, 2013. Net loan charge-offs to average loans for the three months ended March 31, 2014 of .04% decreased from .06% for the twelve months ended December 31, 2013. The allowance for loan losses was .98% of total loans at March 31, 2014 and .99% at December 31, 2013.

Liabilities

Deposits totaled $395.0 million at March 31, 2014, reflecting a decrease of $2.8 million or .7%. Borrowed funds increased by $3.3 million or 5.8%.

Shareholders' Equity

Shareholders' equity increased $738,000 to $54.8 million at March 31, 2014 compared to December 31, 2013. The current level of shareholders' equity equates to a book value per share of $16.78 at March 31, 2014, compared to $16.64 at December 31, 2013. Dividends paid to common shareholders were $0.23 for the three months ended March 31, 2014 compared to $0.21 for the same period in 2013, representing an increase of 9.5%.

Elmira Savings Bank, with $513.9 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; and 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)			March 31,				December 31,
			2014				2013				% Change
ASSETS
Cash and due from banks			$	9,379			$	7,077			32.5	%
Federal funds sold and other short-term investments				530				564			-6.0	%
	Total cash and cash equivalents			9,909				7,641			29.7	%
Securities available for sale, at fair value				57,688				63,464			-9.1	%
Securities held to maturity - fair value $8,235 at March 31, 2014, and $8,302 at December 31, 2013				7,742				7,805			-0.8	%
Federal Reserve and Federal Home Loan Bank (FHLB) stock, at cost				10,433				10,417			0.2	%
Loans held for sale				1,291				1,847			-30.1	%
Loans receivable				392,146				389,129			0.8	%
Less: Allowance for loan losses				3,851				3,834			0.4	%
	Net loans			388,295				385,295			0.8	%
Premises and equipment, net				9,202				8,620			6.8	%
Bank-owned life insurance				12,477				12,387			0.7	%
Accrued interest receivable				1,520				1,454			4.5	%
Intangible assets, net				188				210			-10.5	%
Goodwill				12,320				12,320			0.0	%
Other assets				2,873				2,865			0.3	%
	Total assets		$	513,938			$	514,325			-0.1	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits			$	394,951			$	397,733			-0.7	%
Borrowings				59,800				56,500			5.8	%
Other liabilities				4,424				6,067			-27.1	%
	Total liabilities			459,175				460,300			-0.2	%
Shareholders' equity:
Preferred stock, $1,000 liquidation value per issued share; 5,000,000 shares authorized; 10,000 shares issued at March 31, 2014 and at December 31, 2013				9,700				9,700			0.0	%
Common stock, $1 par value; authorized 5,000,000 shares; 2,786,504 shares issued at March 31, 2014 and 2,776,240 shares issued at December 31, 2013				2,787				2,776			0.4	%
Additional paid-in capital				41,896				41,693			0.5	%
Retained earnings				2,703				2,485			8.8	%
Treasury stock, at cost - 104,418 shares at March 31, 2014 and 116,268 shares at December 31, 2013				(3,053	)			(3,327	)		-8.2	%
Accumulated other comprehensive income				676				644			5.0	%
	Total Elmira Savings Bank shareholders' equity			54,709				53,971			1.4	%
Noncontrolling interest				54				54			0.0	%
	Total shareholders' equity			54,763				54,025			1.4	%
	Total liabilities and shareholders' equity		$	513,938			$	514,325			-0.1	%

ELMIRA SAVINGS BANK
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
				Three Months Ended
				March 31,
(in thousands, except for per share data)				2014			2013			% Change
Interest and dividend income:
	Interest and fees on loans			$	4,397		$	4,473		-1.7	%
	Interest and dividends on securities
		Taxable			464			447		3.8	%
		Non-taxable			204			185		10.3	%
		Total interest and dividend income			5,065			5,105		-0.8	%
Interest expense:
	Interest on deposits				742			829		-10.5	%
	Interest on borrowings				450			477		-5.7	%
		Total interest expense			1,192			1,306		-8.7	%
Net interest income					3,873			3,799		1.9	%
Provision for loan losses					54			180		-70.0	%
Net interest income after provision for loan losses					3,819			3,619		5.5	%
Noninterest income:
	Service fees				329			316		4.1	%
	Gain on sale of loans held for sale				448			848		-47.2	%
	Gain on sale of securities				216			61		254.1	%
	Other service fees				164			154		6.5	%
	Earnings on bank-owned life insurance				91			90		1.1	%
	Other				41			16		156.3	%
		Total noninterest income			1,289			1,485		-13.2	%
Noninterest expense:
	Salaries and benefits				1,839			1,821		1.0	%
	Net occupancy				416			325		28.0	%
	Equipment				250			259		-3.5	%
	Marketing and public relations				200			147		36.1	%
	Professional fees				161			169		-4.7	%
	Other				697			655		6.4	%
		Total noninterest expense			3,563			3,376		5.5	%
Income before income taxes					1,545			1,728		-10.6	%
Income taxes					485			536		-9.5	%
Net income					1,060			1,192		-11.1	%
Less: Net income attributable to noncontrolling interest					-			-		-
Net income attibutable to Elmira Savings Bank					1,060			1,192		-11.1	%
Dividend on preferred stock					225			401		-43.9	%
Income available to common shareholders				$	835		$	791		5.6	%
Basic earnings per share				$	0.31		$	0.31		0.0	%
Diluted earnings per share				$	0.30		$	0.29		3.4	%
Weighted average shares outstanding - basic					2,657,141			2,568,005		3.5	%
Weighted average shares outstanding - diluted					2,789,840			2,718,478		2.6	%
Dividends per share				$	0.23		$	0.21		9.5	%
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
		March 31, 2014									March 31, 2013
ASSETS:		Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans		$	388,765		$	4,397		4.54	%		$	376,910		$	4,473		4.77	%
Short-term investments			510			1		0.04				2,595			-		0.04
Securities			79,547			667		3.37				80,592			632		3.15
Total interest-earning assets			468,822			5,065		4.34				460,097			5,105		4.46
Noninterest-earning assets			42,488									70,022
TOTAL ASSETS		$	511,310								$	530,119
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits		$	335,489		$	742		0.90			$	343,753		$	829		0.98
Borrowings			58,413			450		3.08				54,000			477		3.53
Total interest-bearing liabilities			393,902			1,192		1.22				397,753			1,306		1.32
Noninterest-bearing liabilities			62,456									65,747
Shareholders' equity			54,952									66,619
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	511,310								$	530,119
Interest rate spread								3.12	%								3.14	%
Net interest income/margin					$	3,873		3.31	%					$	3,799		3.32	%

			Quarter Ended
(Dollars in Thousands, Except Per Share Data)			3/31/2014				12/31/2013				9/30/2013				6/30/2013				3/31/2013
Operating Data
	Net income		$	1,060			$	1,119			$	1,369			$	1,374			$	1,192
	Net interest income			3,873				3,772				3,770				3,712				3,799
	Provision for loan losses			54				-				50				85				180
	Net security gains			216				-				-				-				61
	Non-interest income, ex. Net security gains			1,073				1,179				1,474				1,419				1,424
	Non-interest expense			3,563				3,573				3,428				3,485				3,376
Performance Statistics
	Net interest margin			3.31	%			3.22	%			3.23	%			3.24	%			3.32	%
	Annualized return on average assets			0.84	%			0.85	%			1.05	%			1.07	%			0.91	%
	Annualized return on average equity			7.82	%			7.75	%			9.55	%			9.67	%			7.26	%
	Annualized net loan charge-offs to avg loans			0.04	%			-0.02	%			0.04	%			0.00	%			0.21	%
	Net charge-offs (recoveries)			38				(15	)			40				-				196
	Efficiency ratio			69.0	%			72.2	%			65.4	%			67.9	%			63.9	%
Per Share Data
	Basic earnings per share		$	0.31			$	0.32			$	0.42			$	0.42			$	0.31
	Diluted earnings per share			0.30				0.30				0.40				0.40				0.29
	Dividend declared per share			0.23				0.21				0.21				0.21				0.21
	Book value			16.78				16.64				16.62				16.44				16.47
	Common stock price:
		High		26.97				28.45				22.73				23.93				23.05
		Low		22.25				20.15				19.30				18.18				20.67
		Close		24.49				25.20				22.07				19.59				23.05
	Weighted average common shares:
		Basic		2,657				2,639				2,626				2,620				2,569
		Fully diluted		2,790				2,764				2,745				2,741				2,718
	End-of-period common shares:
		Issued		2,787				2,776				2,775				2,771				2,761
		Treasury		104				116				116				116				116
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		$	513,938			$	514,325			$	519,747			$	516,137			$	510,915
	Loans, net			388,295				385,295				381,298				380,252				370,753
	Intangibles			12,508				12,530				12,555				12,582				12,609
	Total deposits			394,951				397,733				396,600				396,993				395,091
		Noninterest-bearing		57,059				59,886				62,616				61,018				58,118
		Savings		61,655				60,924				60,710				61,918				60,177
		NOW		75,789				77,736				72,076				71,894				71,472
		Money Market		21,540				21,130				22,465				20,826				19,222
		Time deposits		178,908				178,057				178,733				181,337				186,102
		Total interest-bearing deposits		337,892				337,847				333,984				335,975				336,973
	Shareholders' equity			54,763				54,025				57,290				56,745				56,677
Asset Quality
	Non-performing assets		$	3,368			$	3,592			$	3,302			$	3,575			$	3,826
	Non-performing assets to total assets			0.66	%			0.70	%			0.64	%			0.69	%			0.75	%
	Allowance for loan losses			3,851				3,834				3,819				3,809				3,724
	Allowance for loan losses to total loans			0.98	%			0.99	%			0.99	%			0.99	%			0.99	%
	Allowance for loan losses to non-performing loans			119.23	%			109.73	%			115.66	%			106.55	%			100.95	%
	Non-performing loans to total loans			0.82	%			0.90	%			0.86	%			0.93	%			0.99	%
Capitalization
	Shareholders' equity to total assets			10.66	%			10.50	%			11.02	%			10.99	%			11.09	%