Elmira Savings Bank (NASDAQ:ESBK)

Highlights

  • Net income was $1,102,000 and $5,219,000 for the three and twelve months ended December 31, 2021 compared to $1,284,000 and $4,159,000 for the same periods in 2020.
  • Diluted earnings per share were $.31 per share and $1.48 per share for the three and twelve months ended December 31, 2021 compared to $.37 per share and $1.19 per share for the same periods in 2020.  
  • Return on average assets was .69% and .81% for the three and twelve months ended December 31, 2021 compared to .78% and .64% for the three and twelve months ended December 31, 2020.
  • Return on average equity was 6.82% and 8.31% for the three and twelve months ended December 31, 2021 compared to 8.40% and 6.94% for the same periods in 2020.

"We are pleased to report an increase in earnings year-to-year, highlighted by residential mortgage originations exceeding $145 million." said Thomas M Carr, President and CEO.  Carr continued, “The merger and integration with Community Bank, N.A, overwhelmingly approved by our shareholders in December, is expected to occur in the second quarter of 2022, instead of the first quarter as had been originally announced.”

Net Income

Net income totaled $5,219,000 for the twelve months ended December 31, 2021, an increase of $1,060,000 or 26% from the $4,159,000 of net income recorded for the same period in 2020. This increase was the net result of an increase in net interest income of $1,426,000 and a decrease in the provision for loan losses of $1,300,000, offset by a decrease in noninterest income of $1,225,000, an increase in noninterest expense of $6,000, and an increase in tax expense of $435,000.

Net income totaled $1,102,000 for the three months ended December 31, 2021, a decrease of $182,000 or 14% from the $1,284,000 recorded for the same period in 2020. This decrease was the net result of a decrease in noninterest income of $1,346,000, offset by an increase in net interest income of $127,000, a decrease in noninterest expense of $584,000, a decrease in the provision for loan losses of $375,000, and a decrease in tax expense of $78,000.

The decrease in noninterest income for both the three and twelve months ended December 31, 2021 is primarily due to decreases in the gain on sale of loans, reflecting lower levels of residential mortgages originated for sale to the secondary markets compared to the same periods in 2020.

For both the three and twelve months ended December 31, 2021, the decreases in the provision for loan losses reflect the higher provisions in 2020 that resulted from management’s consideration of the uncertainty of ongoing economic conditions resulting from the COVID-19 pandemic and associated economic slowdown during that time. Management did not determine it necessary to continue a similar level of provisions for loan losses in 2021, as the allowance for loan losses was determined to already be at adequate levels during 2021.

Basic and diluted earnings per share for the twelve months ended December 31, 2021 were both $1.48 per share compared to $1.19 per share for both for the same period in 2020. Basic and diluted earnings per share for the three months ended December 31, 2021 were both $.31 per share compared to $.37 per share for both for the same period in 2020.

Net Interest Margin

The net interest margin for the twelve months ended December 31, 2021 was 3.64% compared to 3.06% for the same period in 2020. The yield on average earning assets was 4.15% for the twelve months ended December 31, 2021 compared to 4.13% for the same period in 2020. The average cost of interest-bearing liabilities was 0.56% for the twelve months ended December 31, 2021 compared to 1.23% for the same period in 2020.

The net interest margin for the three months ended December 31, 2021 was 3.65% compared to 3.24% for the same period in 2020. The average yield on earning assets was 4.00% for the three months ended December 31, 2021 compared to 4.13% for the same period in 2020. The average cost of interest-bearing liabilities was 0.38% for the three months ended December 31, 2021 compared to 0.97% for the same period in 2020.

Assets

Total assets decreased $12.4 million or 1.9% to $632.2 million at December 31, 2021 compared to $644.6 million at December 31, 2020. Loans, including loans held for sale, decreased 5% to $466.6 million at December 31, 2021 compared to December 31, 2020. The available-for-sale investment portfolio decreased $2.0 million from December 31, 2020 to December 31, 2021. Total cash and cash equivalents were $101.8 million at December 31, 2021, an increase of $12.6 million from December 31, 2020 when cash totaled $89.2 million.  

Nonperforming Loans

The nonperforming loans to total loans ratio was 0.70% at December 31, 2021 and 1.07% at December 31, 2020. Net loan charge-offs to average loans for the twelve months ended December 31, 2021 was 0.06% and was 0.05% for the twelve months ended December 31, 2020. The allowance for loan losses was 1.21% of total loans at December 31, 2021 and 1.19% of total loans at December 31, 2020.

Liabilities

Deposits totaled $541.0 million at December 31, 2021, a decrease of $6.0 million or 1.1% from the December 31, 2020 total of $547.0 million. The $6.0 million decrease in deposits consists of a $12.9 million increase in noninterest bearing accounts, a $14.9 million increase in savings accounts, and a $12.2 million increase in interest bearing transaction accounts, offset by a $1.3 million decrease in money market accounts and an $18.9 million decrease in time deposits. Borrowed funds totaled $22.0 million as of December 31, 2021 and $29.0 million at December 31, 2020.

Shareholders’ Equity

Shareholders’ equity increased $3,216,000 to $64.0 million at December 31, 2021 compared to December 31, 2020. The current level of shareholders’ equity equates to a book value per share of $18.02 at December 31, 2021, compared to $17.23 at December 31, 2020. Dividends paid for common shareholders were $0.15 and $0.60 for the three and twelve months ended December 31, 2021 and $0.15 and $0.68 for the three and twelve months ended December 31, 2020.

Elmira Savings Bank, with $632.2 million in total assets, is insured by the Federal Deposit Insurance Corporation (FDIC) and is a state-chartered bank with five 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.

On October 4, 2021, Elmira Savings Bank, in a joint press release with Community Bank System, Inc. (NYSE:CBU), announced that it had entered into a definitive agreement to be acquired by Community Bank System’s bank subsidiary, Community Bank, N.A. for approximately $82.8 million in cash. Community Bank System, with reported assets of over $15.3 billion, is headquartered in DeWitt, New York and is among the country’s 125 largest banking institutions.   On December 14, 2021, at a Special Shareholders Meeting the shareholders of Elmira Savings Bank approved the merger with more than 98% of the votes cast in favor of the merger.

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.

For further information contact:Thomas M. Carr, President & CEOElmira Savings Bank333 East Water StreetElmira, New York 14901(607) 735-8660tcarr@elmirasavingsbank.com

           
           
ELMIRA SAVINGS BANK
CONSOLIDATED BALANCE SHEET
(unaudited)
           
(in thousands, except for share and per share data) December 31,   December 31,    
  2021   2020   % Change
ASSETS          
           
Cash and due from banks $ 99,785     $ 88,536     12.7 %
Federal funds sold and other short-term investments   2,058       651     216.1 %
Total cash and cash equivalents   101,843       89,187     14.2 %
           
Securities available for sale, at fair value   4,109       6,125     -32.9 %
Securities held to maturity - fair value $6,315          
at December 31, 2021 and $7,211 at December 31, 2020   6,080       6,597     -7.8 %
Federal Reserve and Federal Home Loan Bank (FHLB) stock, at cost   8,087       9,054     -10.7 %
           
Loans held for sale   2,374       5,408     -56.1 %
           
Loans receivable   464,246       483,768     -4.0 %
Less: Allowance for loan losses   5,620       5,755     -2.3 %
Net loans   458,626       478,013     -4.1 %
           
Premises and equipment, net   15,558       15,876     -2.0 %
Bank-owned life insurance   15,914       15,410     3.3 %
Accrued interest receivable   1,380       1,564     -11.8 %
Goodwill   12,320       12,320     0.0 %
Other assets   5,941       5,033     18.0 %
Total assets $ 632,232     $ 644,587     -1.9 %
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
Deposits $ 540,999     $ 547,021     -1.1 %
Borrowings   22,000       29,000     -24.1 %
Other liabilities   5,256       7,805     -32.7 %
Total liabilities   568,255       583,826     -2.7 %
           
Shareholders' equity:          
Preferred stock, $1 par value; $1,000 liquidation value per issued share; 5,000,000 shares authorized;          
10,000 shares issued and none outstanding at December 31, 2021 and at December 31, 2020   9,700       9,700     0.0 %
Common stock, $1 par value; authorized 5,000,000 shares; 3,641,487 shares issued and 3,547,604 outstanding        
at December 31, 2021 and 3,616,770 shares issued and 3,522,887 outstanding at December 31, 2020   3,641       3,617     0.7 %
Additional paid-in capital   54,421       54,255     0.3 %
Retained earnings   8,288       5,197     59.5 %
Treasury stock, at cost - 93,883 common shares and 10,000 preferred shares          
at December 31, 2021 and December 31, 2020   (12,202 )     (12,202 )   0.0 %
Accumulated other comprehensive income   79       144     -45.1 %
Total Elmira Savings Bank shareholders' equity   63,927       60,711     5.3 %
Noncontrolling interest   50       50     0.0 %
Total shareholders' equity   63,977       60,761     5.3 %
Total liabilities and shareholders' equity $ 632,232     $ 644,587     -1.9 %

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) 2021   2020   % Change   2021   2020   % Change
                       
Interest and dividend income:                      
Interest and fees on loans $ 4,683   $ 5,262   -11.0 %   $ 19,810   $ 21,475   -7.8 %
Interest and dividends on securities                      
Taxable   117     155   -24.5 %     515     708   -27.3 %
Non-taxable   64     71   -9.9 %     266     297   -10.4 %
Total interest and dividend income   4,864     5,488   -11.4 %     20,591     22,480   -8.4 %
                       
Interest expense:                      
Interest on deposits   281     968   -71.0 %     1,913     5,018   -61.9 %
Interest on borrowings   146     210   -30.5 %     672     882   -23.8 %
Total interest expense   427     1,178   -63.8 %     2,585     5,900   -56.2 %
Net interest income   4,437     4,310   2.9 %     18,006     16,580   8.6 %
Provision for loan losses   -     375   -100.0 %     150     1,450   -89.7 %
Net interest income after provision for loan losses   4,437     3,935   12.8 %     17,856     15,130   18.0 %
                       
Noninterest income:                      
Service fees   317     292   8.6 %     1,237     1,163   6.4 %
Gain on sale of loans held for sale   491     1,820   -73.0 %     3,199     4,577   -30.1 %
Other service fees   215     203   5.9 %     892     793   12.5 %
Earnings on bank-owned life insurance   108     104   3.8 %     415     402   3.2 %
Other   27     85   -68.2 %     251     284   -11.6 %
Total noninterest income   1,158     2,504   -53.8 %     5,994     7,219   -17.0 %
                       
Noninterest expense:                      
Salaries and benefits   2,422     2,515   -3.7 %     9,109     8,965   1.6 %
Net occupancy   387     396   -2.3 %     1,562     1,613   -3.2 %
Equipment   436     476   -8.4 %     1,646     1,669   -1.4 %
Other   942     1,384   -31.9 %     4,781     4,845   -1.3 %
Total noninterest expense   4,187     4,771   -12.2 %     17,098     17,092   0.0 %
Income before income taxes   1,408     1,668   -15.6 %     6,752     5,257   28.4 %
Income taxes   301     379   -20.6 %     1,528     1,093   39.8 %
Net income   1,107     1,289   -14.1 %     5,224     4,164   25.5 %
Less: Net income attributable to noncontrolling interest   5     5   -       5     5   -  
                       
Net income attributable to Elmira Savings Bank   1,102     1,284   -14.2 %     5,219     4,159   25.5 %
                       
Dividend on preferred stock   -     -   -       -     -   -  
Income available to common shareholders $ 1,102   $ 1,284   -14.2 %   $ 5,219   $ 4,159   25.5 %
                       
                       
Basic earnings per share $ 0.31   $ 0.37   -16.2 %   $ 1.48   $ 1.19   24.4 %
                       
Diluted earnings per share $ 0.31   $ 0.37   -16.2 %   $ 1.48   $ 1.19   24.4 %
                       
Weighted average shares outstanding - basic   3,525,536     3,511,688   0.4 %     3,520,476     3,507,910   0.4 %
                       
Weighted average shares outstanding - diluted   3,553,083     3,511,688   1.2 %     3,528,029     3,508,722   0.6 %
                       
Dividends per share $ 0.15   $ 0.15   0.0 %   $ 0.60   $ 0.68   -11.8 %

ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES
                           
(Dollars in Thousands) For the Three Months Ended  
  December 31, 2021     December 31, 2020  
ASSETS: Average Balance Interest   Average Rate   Average Balance Interest   Average Rate  
Loans $ 463,287   $ 4,683   4.01 %   $ 503,332   $ 5,262   4.15 %
Short-term investments   1,247     -   0.03       2,348     -   0.04  
Securities   18,611     181   3.86       22,177     226   4.04  
Total interest-earning assets   483,145     4,864   4.00       527,857     5,488   4.13  
                           
Noninterest-earning assets   151,017               130,513          
                           
TOTAL ASSETS $ 634,162             $ 658,370          
                           
LIABILITIES AND SHAREHOLDERS' EQUITY                          
Interest-bearing deposits $ 422,200   $ 281   0.26     $ 437,689   $ 968   0.88  
Borrowings   22,391     146   2.55       43,831     210   1.87  
Total interest-bearing liabilities   444,591     427   0.38       481,520     1,178   0.97  
                           
Noninterest-bearing liabilities   125,459               116,069          
Shareholders' equity   64,112               60,781          
                           
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 634,162             $ 658,370          
Interest rate spread         3.62 %           3.16 %
Net interest income/margin     $ 4,437   3.65 %       $ 4,310   3.24 %
                           

ELMIRA SAVINGS BANK  
AVERAGE BALANCES AND INTEREST RATES  
                           
(Dollars in Thousands) For the Twelve Months Ended  
  December 31, 2021     December 31, 2020  
ASSETS: Average Balance Interest   Average Rate   Average Balance Interest   Average Rate  
Loans $ 474,212   $ 19,810   4.16 %   $ 516,170   $ 21,475   4.14 %
Short-term investments   743     -   0.03       1,422     2   0.12  
Securities   19,871     781   3.93       24,490     1,003   4.09  
Total interest-earning assets   494,826     20,591   4.15       542,082     22,480   4.13  
                           
Noninterest-earning assets   151,993               104,926          
                           
TOTAL ASSETS $ 646,819             $ 647,008          
                           
LIABILITIES AND SHAREHOLDERS' EQUITY                          
Interest-bearing deposits $ 431,255   $ 1,913   0.44     $ 434,495   $ 5,018   1.15  
Borrowings   25,282     672   2.62       43,964     882   1.97  
Total interest-bearing liabilities   456,537     2,585   0.56       478,459     5,900   1.23  
                           
Noninterest-bearing liabilities   127,479               108,595          
Shareholders' equity   62,803               59,954          
                           
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 646,819             $ 647,008          
Interest rate spread         3.58 %           2.90 %
Net interest income/margin     $ 18,006   3.64 %       $ 16,580   3.06 %

              Quarter Ended
(Dollars in Thousands, Except Per Share Data)   12/31/2021   9/30/2021   6/30/2021   3/31/2021   12/31/2020
Operating Data                    
                                 
  Net income $ 1,102   $ 1,511   $ 1,402   $ 1,204   $ 1,284  
  Net interest income   4,437     4,708     4,340     4,521     4,310  
  Provision for loan losses   -     -     -     150     375  
  Non-interest income, ex. Net security gains   1,158     1,564     1,347     1,925     2,504  
  Non-interest expense   4,187     4,307     3,904     4,700     4,771  
                     
Performance Statistics                    
                                 
  Net interest margin   3.65 %   3.81 %   3.48 %   3.57 %   3.24 %
  Annualized return on average assets   0.69 %   0.92 %   0.86 %   0.75 %   0.78 %
  Annualized return on average equity   6.82 %   9.49 %   9.03 %   7.93 %   8.40 %
  Annualized net loan charge-offs to avg loans   0.01 %   0.14 %   0.06 %   0.03 %   0.03 %
  Net charge-offs   7     164     74     40     38  
  Efficiency ratio   74.8 %   68.7 %   68.6 %   72.9 %   70.0 %
                     
Per Share Data                    
                     
  Basic earnings per share $ 0.31   $ 0.43   $ 0.40   $ 0.34   $ 0.37  
  Diluted earnings per share   0.31     0.43     0.40     0.34     0.37  
  Dividend declared per share   0.15     0.15     0.15     0.15     0.15  
  Book value   18.02     17.86     17.57     17.34     17.23  
  Common stock price:                    
    High   23.22     14.75     15.05     15.96     13.25  
    Low   13.50     12.80     13.23     11.48     10.44  
    Close   22.84     13.34     14.31     13.50     11.50  
  Weighted average common shares:                    
    Basic   3,526     3,522     3,519     3,515     3,512  
    Fully diluted   3,553     3,524     3,520     3,515     3,512  
  End-of-period common shares:                    
    Issued   3,641     3,641     3,641     3,636     3,617  
    Treasury   94     94     94     94     94  
                         
                         
Financial Condition Data:                    
General                    
  Total assets $ 632,232   $ 643,596   $ 648,686   $ 659,333   $ 644,587  
  Loans, net   458,626     458,631     465,271     476,383     478,013  
  Intangibles   12,320     12,320     12,320     12,320     12,320  
  Total deposits   540,999     544,763     551,245     562,893     547,021  
                                   
    Noninterest-bearing   122,268     118,511     121,534     121,101     109,346  
                                   
    Savings   97,479     95,299     93,351     87,228     82,573  
    NOW   112,519     114,514     111,343     111,414     100,293  
    Money Market   34,626     36,577     32,624     35,011     35,920  
    Time deposits   174,107     179,862     192,393     208,139     218,889  
    Total interest-bearing deposits   418,731     426,252     429,711     441,792     437,675  
                                 
  Shareholders' equity   63,977     63,396     62,375     61,462     60,761  
                     
Asset Quality                    
                     
  Non-performing assets $ 3,675   $ 3,645   $ 5,023   $ 5,602   $ 5,304  
  Non-performing assets to total assets   0.58 %   0.57 %   0.77 %   0.85 %   0.82 %
  Allowance for loan losses   5,620     5,627     5,791     5,865     5,755  
  Allowance for loan losses to total loans   1.21 %   1.21 %   1.23 %   1.22 %   1.19 %
  Allowance for loan losses to                    
    non-performing loans   174.37 %   175.95 %   116.12 %   108.63 %   112.67 %
  Non-performing loans to total loans   0.70 %   0.70 %   1.07 %   1.13 %   1.07 %
                     
Capitalization                    
                     
  Shareholders' equity to total assets   10.12 %   9.85 %   9.62 %   9.32 %   9.43 %
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