Elmira Savings Bank Reports 2018 Earnings

ELMIRA, N.Y., Jan. 23, 2019 (GLOBE NEWSWIRE) — Elmira Savings Bank (NASDAQ:ESBK)

Highlights

• Net income was $935,000 and $4,239,000 for the three and twelve months ended December 31, 2018 compared to $1,449,000 and $4,851,000 for the same periods in 2017.

• Diluted earnings per share were $.27 per share and $1.22 per share for the three and twelve months ended December 31, 2018 compared to $.37 per share and $1.22 per share for the same periods in 2017. 

• Return on average assets was .65% and .75% for the three and twelve months ended December 31, 2018 compared to 1.03% and .86% for the same periods in 2017.

• Return on average equity was 6.39% and 7.36% for the three and twelve months ended December 31, 2018 compared to 9.04% and 7.78% for the same periods in 2017.

“We are pleased with the solid growth in loans and deposits in 2018,” said Thomas M. Carr, President and CEO. He continued, “Growing the balance sheet while maintaining our net interest margin has been a key focus of the bank in 2018.  Our earnings per share has remained at $1.22 per share in 2018 despite lower earnings due to our capital restructuring in 2017.”
  
Net Income

Net income totaled $4,239,000 for the twelve months ended December 31, 2018, a decrease of $612,000 or 13% from the $4,851,000 of net income recorded for the same period in 2017.  This decrease was the net result of an increase in income tax expense of $638,000 and a decrease in noninterest income of $919,000, offset by an increase in net interest income of $22,000, a decrease in the provision for loan losses of $528,000, and a decrease in noninterest expense of $395,000.

Net income totaled $935,000 for the three months ended December 31, 2018, a decrease of $514,000 or 36% from the $1,449,000 recorded for the same period in 2017.  This decrease was the net result of an increase in income tax expense of $1.4 million and a decrease in noninterest income of $74,000, offset by a decrease in noninterest expense of $477,000, an increase in net interest income of $83,000, and a decrease in the provision for loan losses of $430,000.

The enactment of the Tax Cuts and Jobs Act (“the Act”) on December 22, 2017 reduced the federal corporate tax rate starting in 2018 from 34% to 21%.  As a result of the enactment of the Act, the Bank was required under Generally Accepted Accounting Principles (“GAAP”) to adjust its net deferred tax liability in 2017 for the tax rate change.  This adjustment resulted in a $1.2 million reduction in income tax expense for both the three and twelve months ended December 31, 2017.

Basic and diluted earnings per share for the twelve months ended both December 31, 2018 and December 31, 2017 were $1.22 and $1.21 per share.  Basic and diluted earnings per share for the three months ended December 31, 2018 were both $.27 per share compared to $.37 per share for both for the same period in 2017.

Net Interest Margin

The net interest margin for the twelve months ended December 31, 2018 was 3.31% compared to 3.32% for the same period in 2017.  The yield on average earning assets was 4.20% for the twelve months ended December 31, 2018 compared to 4.12% for the same period in 2017.  The average cost of interest-bearing liabilities was 1.06% for the twelve months ended December 31, 2018 compared to .94% for the same period in 2017.

The net interest margin for the three months ended December 31, 2018 was 3.26% compared to 3.31% for the same period in 2017.  The average yield on earning assets was 4.25% for the three months ended December 31, 2018 compared to 4.10% for the same period in 2017.  The average cost of interest-bearing liabilities was 1.17% for the three months ended December 31, 2018 and 0.95% for the same period in 2017.

Assets

Total assets increased $35.5 million or 6.4% to $590.0 million at December 31, 2018 compared to $554.6 million at December 31, 2017.  Cash and cash equivalents increased by $11.6 million or 147% to $19.5 million at December 31, 2018 compared to $7.9 million at December 31, 2017.  Loans, including loans held for sale, increased 5.0% to $483.7 million at December 31, 2018 compared to December 31, 2017.  The available-for-sale investment portfolio increased $995,000 from December 31, 2017 to December 31, 2018.

Nonperforming Loans

Our nonperforming loans to total loans ratio was 0.94% at December 31, 2018 from 0.64% at December 31, 2017.  Net loan charge-offs to average loans for the twelve months ended December 31, 2018 of 0.10% decreased from 0.16% for the twelve months ended December 31, 2017.  The allowance for loan losses was 0.91% of total loans at December 31, 2018 and 0.97% of total loans at December 31, 2017.

Liabilities

Deposits total $491.5 million at December 31, 2018, an increase of $34.8 million or 7.6%.  The $34.8 million increase consists of a $24.4 million increase in time deposits, a $7.6 million increase in noninterest bearing accounts, a $5.1 million increase in savings accounts, and a $2.9 million increase in interest bearing transaction accounts, partially offset by a $5.3 million decrease in money market accounts.  Borrowed funds decreased by $4.0 million or 11.4%.

Shareholders’ Equity

Shareholders’ equity increased $1.3 million to $57.9 million at December 31, 2018 compared to December 31, 2017.  The current level of shareholders’ equity equates to a book value per share of $16.52 at December 31, 2018, compared to $16.26 at December 31, 2017.  Dividends paid for common shareholders were $0.23 and $0.91 for the three and twelve months ended December 31, 2018 and $0.22 and $0.88 for the same periods 2017, after adjusting for the 5% stock dividend paid on June 15, 2018.  As a result of the repurchase of all outstanding preferred shares in December 2017, there were no dividends paid for preferred shares for the three or twelve months ended December 31, 2018 versus $170,000 and $845,000 paid in preferred dividends for the same periods in 2018.

Elmira Savings Bank, with $590.0 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 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)				December 31,				December 31,
					2018				2017			% Change
ASSETS
Cash and due from banks				$	19,429			$	7,800			149.1	%
Federal funds sold and other short-term investments					94				97			-3.1	%
Total cash and cash equivalents					19,523				7,897			147.2	%
Securities available for sale, at fair value					25,051				24,056			4.1	%
Securities held to maturity – fair value $7,638
at December 31, 2018 and $8,186 at December 31, 2017					7,518				8,039			-6.5	%
Federal Reserve and Federal Home Loan Bank (FHLB) stock, at cost					9,462				10,221			-7.4	%
Loans held for sale					1,392				1,999			-30.4	%
Loans receivable					482,272				458,629			5.2	%
Less: Allowance for loan losses					4,372				4,442			-1.6	%
Net loans					477,900				454,187			5.2	%
Premises and equipment, net					16,846				16,772			0.4	%
Bank-owned life insurance					14,444				13,982			3.3	%
Accrued interest receivable					1,566				1,497			4.6	%
Goodwill					12,320				12,320			0.0	%
Other assets					4,018				3,590			11.9	%
Total assets				$	590,040			$	554,560			6.4	%
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits				$	491,517			$	456,762			7.6	%
Borrowings					31,000				35,000			-11.4	%
Other liabilities					9,574				6,117			56.5	%
Total liabilities					532,091				497,879			6.9	%
Shareholders’ equity:
Preferred stock, $1 par value; $1,000 liquidation value per issued share; 5,000,000 shares
authorized; 10,000 shares issued at December 31, 2018 and at December 31, 2017					9,700				9,700			0.0	%
Common stock, $1 par value; authorized 5,000,000 shares; 3,597,605 shares
issued at December 31, 2018 and 3,410,622 shares issued at December 31, 2017					3,598				3,411			5.5	%
Additional paid-in capital					53,784				50,258			7.0	%
Retained earnings					3,176				5,493			-42.2	%
Treasury stock, at cost – 93,883 common shares and 10,000 preferred shares
at December 31, 2018 and December 31, 2017					(12,202	)			(12,202	)		0.0	%
Accumulated other comprehensive loss					(158	)			(31	)		409.7	%
Total Elmira Savings Bank shareholders’ equity					57,898				56,629			2.2	%
Noncontrolling interest					51				52			-1.9	%
Total shareholders’ equity					57,949				56,681			2.2	%
Total liabilities and shareholders’ equity				$	590,040			$	554,560			6.4	%

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)			2018			2017			% Change				2018			2017		% Change
Interest and dividend income:
Interest and fees on loans		$	5,091		$	4,752			7.1	%		$	19,569		$	18,971		3.2	%
Interest and dividends on securities
Taxable			295			253			16.6	%			1,037			965		7.5	%
Non-taxable			116			129			-10.1	%			472			610		-22.6	%
Total interest and dividend income			5,502			5,134			7.2	%			21,078			20,546		2.6	%
Interest expense:
Interest on deposits			1,056			744			41.9	%			3,565			2,951		20.8	%
Interest on borrowings			221			248			-10.9	%			943			1,047		-9.9	%
Total interest expense			1,277			992			28.7	%			4,508			3,998		12.8	%
Net interest income			4,225			4,142			2.0	%			16,570			16,548		0.1	%
Provision for loan losses			150			580			-74.1	%			367			895		-59.0	%
Net interest income after provision for loan losses			4,075			3,562			14.4	%			16,203			15,653		3.5	%
Noninterest income:
Service fees			371			352			5.4	%			1,456			1,485		-2.0	%
Gain on sale of loans held for sale			410			526			-22.1	%			1,588			2,701		-41.2	%
Other service fees			198			184			7.6	%			813			739		10.0	%
Earnings on bank-owned life insurance			95			94			1.1	%			384			390		-1.5	%
Other			50			42			19.0	%			277			122		127.0	%
Total noninterest income			1,124			1,198			-6.2	%			4,518			5,437		-16.9	%
Noninterest expense:
Salaries and benefits			2,168			2,242			-3.3	%			8,088			8,183		-1.2	%
Net occupancy			400			376			6.4	%			1,596			1,499		6.5	%
Equipment			360			343			5.0	%			1,392			1,278		8.9	%
Marketing and public relations			90			291			-69.1	%			736			884		-16.7	%
Professional fees			141			212			-33.5	%			541			720		-24.9	%
Other			879			1,051			-16.4	%			3,136			3,320		-5.5	%
Total noninterest expense			4,038			4,515			-10.6	%			15,489			15,884		-2.5	%
Income before income taxes			1,161			245			373.9	%			5,232			5,206		0.5	%
Income taxes			221			(1,209	)		-118.3	%			988			350		182.3	%
Net income			940			1,454			-35.4	%			4,244			4,856		-12.6	%
Less: Net income attributable to noncontrolling interest			5			5			–				5			5		–
Net income attibutable to Elmira Savings Bank			935			1,449			-35.5	%			4,239			4,851		-12.6	%
Dividend on preferred stock			–			170			-100.0	%			–			845		-100.0	%
Income available to common shareholders		$	935		$	1,279			-26.9	%		$	4,239		$	4,006		5.8	%
Basic earnings per share		$	0.27		$	0.37			-27.0	%		$	1.22		$	1.22		0.0	%
Diluted earnings per share		$	0.27		$	0.37			-27.0	%		$	1.21		$	1.21		0.0	%
Weighted average shares outstanding – basic			3,486,535			3,467,468			0.5	%			3,479,916			3,281,706		6.0	%
Weighted average shares outstanding – diluted			3,499,475			3,481,925			0.5	%			3,494,218			3,297,938		6.0	%
Dividends per share		$	0.23		$	0.22			4.5	%		$	0.91		$	0.88		3.4	%
Share and per share data has been restated to reflect the 5% stock dividend paid on June 15, 2018.

ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES
(Dollars in Thousands)	For the Three Months Ended
	December 31, 2018									December 31, 2017
ASSETS:	Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans	$	472,389		$	5,091		4.28	%		$	452,863		$	4,752		4.17	%
Short-term investments		520			3		2.20				1,248			4		1.10
Securities		41,536			408		3.91				43,565			378		3.46
Total interest-earning assets		514,445			5,502		4.25				497,676			5,134		4.10
Noninterest-earning assets		57,902									60,203
TOTAL ASSETS	$	572,347								$	557,879
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits	$	400,138		$	1,056		1.05			$	377,628		$	744		0.78
Borrowings		31,095			221		2.79				35,615			248		2.72
Total interest-bearing liabilities		431,233			1,277		1.17				413,243			992		0.95
Noninterest-bearing liabilities		83,083									81,024
Shareholders’ equity		58,031									63,612
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	572,347								$	557,879
Interest rate spread							3.08	%								3.15	%
Net interest income/margin				$	4,225		3.26	%					$	4,142		3.31	%

ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES
(Dollars in Thousands)	For the Twelve Months Ended
	December 31, 2018									December 31, 2017
ASSETS:	Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Loans	$	458,691		$	19,569		4.25	%		$	450,896		$	18,971		4.20	%
Short-term investments		478			8		1.65				496			8		1.63
Securities		40,693			1,501		3.68				46,347			1,567		3.38
Total interest-earning assets		499,862			21,078		4.20				497,739			20,546		4.12
Noninterest-earning assets		62,926									66,709
TOTAL ASSETS	$	562,788								$	564,448
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits	$	390,407		$	3,565		0.91			$	381,353		$	2,951		0.77
Borrowings		33,491			943		2.78				40,222			1,047		2.57
Total interest-bearing liabilities		423,898			4,508		1.06				421,575			3,998		0.94
Noninterest-bearing liabilities		81,287									80,494
Shareholders’ equity		57,603									62,379
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	562,788								$	564,448
Interest rate spread							3.14	%								3.18	%
Net interest income/margin				$	16,570		3.31	%					$	16,548		3.32	%

						Quarter Ended
(Dollars in Thousands, Except Per Share Data)				12/31/2018			9/30/2018			6/30/2018			3/31/2018			12/31/2017
Operating Data
	Net income		$	935		$	1,010		$	1,163		$	1,131		$	1,449
	Net interest income			4,225			4,090			4,080			4,175			4,142
	Provision for loan losses			150			150			25			42			580
	Non-interest income, ex. Net security gains			1,124			1,154			1,130			1,110			1,198
	Non-interest expense			4,038			3,891			3,732			3,828			4,515
Performance Statistics
	Net interest margin			3.26%			3.26%			3.32%			3.38%			3.31%
	Annualized return on average assets			0.65%			0.71%			0.83%			0.83%			1.03%
	Annualized return on average equity			6.39%			6.94%			8.11%			8.03%			9.04%
	Annualized net loan charge-offs to avg loans			0.17%			0.08%			0.09%			0.05%			0.46%
	Net charge-offs			199			91			96			51			528
	Efficiency ratio			75.5%			74.2%			71.6%			72.4%			84.6%
Per Share Data
	Basic earnings per share		$	0.27		$	0.29		$	0.33		$	0.32		$	0.37
	Diluted earnings per share			0.27			0.29			0.33			0.32			0.37
	Dividend declared per share			0.23			0.23			0.23			0.22			0.22
	Book value			16.52			16.42			16.36			16.27			16.26
	Common stock price:
		High		20.47			21.00			20.60			19.95			19.90
		Low		15.77			20.10			19.29			19.19			18.00
		Close		17.45			20.40			20.43			19.52			19.48
	Weighted average common shares:
		Basic		3,487			3,481			3,477			3,474			3,467
		Fully diluted		3,499			3,497			3,491			3,489			3,482
	End-of-period common shares:
		Issued		3,598			3,593			3,593			3,591			3,582
		Treasury		94			94			94			94			94
		Share and per share data has been restated to reflect the 5% stock dividend paid on June 15, 2018.
Financial Condition Data:
General
	Total assets		$	590,040		$	570,785		$	562,924		$	553,259		$	554,560
	Loans, net			477,900			462,713			448,690			447,131			454,187
	Intangibles			12,320			12,320			12,320			12,320			12,320
	Total deposits			491,517			474,449			468,293			456,322			456,762
		Noninterest-bearing		81,690			78,324			76,880			73,540			74,072
		Savings		75,483			71,748			73,200			70,574			70,339
		NOW		89,666			89,835			87,402			86,205			86,799
		Money Market		20,087			18,910			21,934			22,928			25,363
		Time deposits		224,591			215,632			208,877			203,075			200,189
		Total interest-bearing deposits		409,827			396,125			391,413			382,782			382,690
	Shareholders’ equity			57,949			57,512			57,299			56,887			56,681
Asset Quality
	Non-performing assets		$	4,649		$	4,520		$	4,560		$	3,181		$	2,933
	Non-performing assets to total assets			0.79%			0.79%			0.81%			0.57%			0.53%
	Allowance for loan losses			4,372			4,421			4,362			4,433			4,442
	Allowance for loan losses to total loans			0.91%			0.95%			0.96%			0.98%			0.97%
	Allowance for loan losses to
		non-performing loans		97.16%			100.00%			99.18%			142.59%			153.97%
	Non-performing loans to total loans			0.94%			0.96%			0.98%			0.70%			0.64%
Capitalization
	Shareholders’ equity to total assets			9.82%			10.08%			10.18%			10.28%			10.22%

For further information contact:
Thomas M. Carr, President & CEO
Elmira Savings Bank
333 East Water Street
Elmira, New York  14901
(607) 735-8660
[email protected]