Elmira Savings Bank (NASDAQ:ESBK)

Highlights

  • Net income was $948,000 and $2,875,000 for the three and nine months ended September 30, 2020 compared to $901,000 and $2,546,000 for the same periods in 2019.
  • Diluted earnings per share were $.27 per share and $.82 per share for the three and nine months ended September 30, 2020 compared to $.26 per share and $.73 per share for the same periods in 2019.
  • Return on average assets was .55% and .60% for the three and nine months ended September 30, 2020 compared to .58% and .56% for the three and nine months ended September 30, 2019.
  • Return on average equity was 6.27% and 6.44% for the three and nine months ended September 30, 2020 compared to 6.08% and 5.80% for the same periods in 2019.

"We continue to be concerned about the economic impact the pandemic is having in our region," said Thomas M Carr, President and CEO.  Carr continued, "We are focused on continuing to provide the financial services needed in the communities we serve, balancing those efforts with prudent safety measures to minimize potential COVID health risks to our customers and staff.”

Net Income

Net income totaled $2,875,000 for the nine months ended September 30, 2020, an increase of $329,000 or 13% from the $2,546,000 of net income recorded for the same period in 2019. This increase was the net result of an increase in noninterest income of $1,603,000 and an increase in net interest income of $1,000, offset by an increase in the provision for loan losses of $531,000, an increase in noninterest expense of $521,000, and an increase in tax expense of $223,000.

Net income totaled $948,000 for the three months ended September 30, 2020, an increase of $47,000 or 5% from the $901,000 recorded for the same period in 2019. This increase was the net result of an increase in noninterest income of $817,000, offset by a decrease in net interest income of $220,000, an increase in noninterest expense of $305,000, an increase in the provision for loan losses of $200,000, and an increase in tax expense of $45,000.

The increase in noninterest income for both the three and nine months ended September 30, 2020 is primarily due to increases in the gain on sale of loans, reflecting higher levels of residential mortgages originated for sale to the secondary markets compared to the same periods in 2019. The increase in noninterest expense for both the three and nine months ended September 30, 2020 reflects higher levels of other expense. The higher levels of other expense for both the three and nine months ended September 30, 2020 are in part related to higher levels of residential mortgage originations in 2020 and also includes the impact of a one-time FDIC small bank assessment credit of $143,000 recognized during the third quarter of 2019.

For both the three and nine months ended September 30, 2020, the increases in the provision for loan losses reflect management’s consideration of the uncertainty of ongoing economic conditions resulting from the COVID-19 pandemic and associated economic slowdown.

Basic and diluted earnings per share for the nine months ended September 30, 2020 were both $.82 per share compared to $.73 per share for both for the same period in 2019. Basic and diluted earnings per share for the three months ended September 30, 2020 were both $.27 per share compared to $.26 per share for both for the same period in 2019.

Net Interest Margin

The net interest margin for the nine months ended September 30, 2020 was 2.98% compared to 3.05% for the same period in 2019. The yield on average earning assets was 4.13% for the nine months ended September 30, 2020 compared to 4.31% for the same period in 2019. The average cost of interest-bearing liabilities was 1.32% for the nine months ended September 30, 2020 compared to 1.46% for the same period in 2019.

The net interest margin for the three months ended September 30, 2020 was 2.81% compared to 2.97% for the same period in 2019. The average yield on earning assets was 3.91% for the three months ended September 30, 2020 compared to 4.31% for the same period in 2019. The average cost of interest-bearing liabilities was 1.20% for the three months ended September 30, 2020 compared to 1.55% for the same period in 2019.

Assets

Total assets increased $67.2 million or 11.1% to $674.0 million at September 30, 2020 compared to $606.8 million at December 31, 2019. Loans, including loans held for sale, increased 0.1% to $520.9 million at September 30, 2020 compared to December 31, 2019. The available-for-sale investment portfolio decreased $5.3 million from December 31, 2019 to September 30, 2020. Total cash and cash equivalents were $85.4 million at September 30, 2020, an increase of $73.4 million from December 31, 2019 when cash totaled $12.0 million.

Nonperforming Loans

The nonperforming loans to total loans ratio was 1.03% at September 30, 2020 and 0.82% at December 31, 2019. Net loan charge-offs to average loans for the nine months ended September 30, 2020 was 0.06% and was 0.10% for the nine months ended September 30, 2019. The allowance for loan losses was 1.06% of total loans at September 30, 2020 and 0.88% of total loans at December 31, 2019.

Liabilities

Deposits totaled $551.3 million at September 30, 2020, an increase of $39.1 million or 7.6% from the December 31, 2019 total of $512.2 million. Borrowed funds totaled $54.9 million as of September 30, 2020, an increase of $25.9 million from December 31, 2019 when borrowed funds totaled $29.0 million.

Shareholders’ Equity

Shareholders’ equity increased $1,349,000 to $60.0 million at September 30, 2020 compared to December 31, 2019. The current level of shareholders’ equity equates to a book value per share of $17.01 at September 30, 2020, compared to $16.67 at December 31, 2019. Dividends paid for common shareholders were $0.15 and $0.53 for the three and nine months ended September 30, 2020 and $0.23 and $0.69 for the three and nine months ended September 30, 2019.

Elmira Savings Bank, with $674.0 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.

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) September 30,   December 31,    
    2020       2019     % Change
ASSETS          
           
Cash and due from banks $ 85,381     $ 11,954     614.2 %
Federal funds sold and other short-term investments   88       92     -4.3 %
  Total cash and cash equivalents   85,469       12,046     609.5 %
           
Securities available for sale, at fair value   6,456       11,802     -45.3 %
Securities held to maturity - fair value $7,348          
  at September 30, 2020 and $7,233 at December 31, 2019   6,716       7,018     -4.3 %
Federal Reserve and Federal Home Loan Bank (FHLB) stock, at cost   9,417       9,944     -5.3 %
           
Loans held for sale   10,489       1,354     674.7 %
           
Loans receivable   510,364       518,871     -1.6 %
Less: Allowance for loan losses   5,418       4,576     18.4 %
  Net loans   504,946       514,295     -1.8 %
           
Premises and equipment, net   16,030       16,210     -1.1 %
Bank-owned life insurance   15,307       14,919     2.6 %
Accrued interest receivable   1,675       1,625     3.1 %
Goodwill   12,320       12,320     0.0 %
Other assets   5,207       5,296     -1.7 %
  Total assets $ 674,032     $ 606,829     11.1 %
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
Deposits $ 551,350     $ 512,215     7.6 %
Borrowings   54,896       29,000     89.3 %
Other liabilities   7,826       7,003     11.8 %
  Total liabilities   614,072       548,218     12.0 %
           
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 September 30, 2020 and at December 31, 2019   9,700       9,700     0.0 %
Common stock, $1 par value; authorized 5,000,000 shares; 3,616,770 shares issued and 3,522,887 oustanding        
  at September 30, 2020 and 3,606,089 shares issued and 3,512,206 outstanding at December 31, 2019   3,617       3,606     0.3 %
Additional paid-in capital   54,197       53,993     0.4 %
Retained earnings   4,441       3,432     29.4 %
Treasury stock, at cost - 93,883 common shares and 10,000 preferred shares          
  at September 30, 2020 and December 31, 2019   (12,202 )     (12,202 )   0.0 %
Accumulated other comprehensive income   157       32     390.6 %
  Total Elmira Savings Bank shareholders' equity   59,910       58,561     2.3 %
Noncontrolling interest   50       50     0.0 %
  Total shareholders' equity   59,960       58,611     2.3 %
  Total liabilities and shareholders' equity $ 674,032     $ 606,829     11.1 %
           
ELMIRA SAVINGS BANK
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
                         
    Three Months Ended   Nine Months Ended
    September 30,   September 30,
(in thousands, except for per share data)    2020    2019   % Change    2020    2019   % Change
                         
Interest and dividend income:                        
  Interest and fees on loans   $ 5,140   $ 5,568   -7.7 %   $ 16,213   $ 16,215   -0.0 %
  Interest and dividends on securities                        
     Taxable     163     234   -30.3 %     553     759   -27.1 %
     Non-taxable     72     107   -32.7 %     226     331   -31.7 %
    Total interest and dividend income     5,375     5,909   -9.0 %     16,992     17,305   -1.8 %
                         
Interest expense:                        
  Interest on deposits     1,291     1,627   -20.7 %     4,050     4,407   -8.1 %
  Interest on borrowings     232     210   10.5 %     672     629   6.8 %
    Total interest expense     1,523     1,837   -17.1 %     4,722     5,036   -6.2 %
Net interest income     3,852     4,072   -5.4 %     12,270     12,269   0.0 %
Provision for loan losses     450     250   80.0 %     1,075     544   97.6 %
Net interest income after provision for loan losses     3,402     3,822   -11.0 %     11,195     11,725   -4.5 %
                         
Noninterest income:                        
  Service fees     285     353   -19.3 %     871     1,054   -17.4 %
  Gain on sale of loans held for sale     1,431     452   216.6 %     3,060     1,166   162.4 %
  Gain on sale of securities     -     90   -       -     90   -  
  Other service fees     254     250   1.6 %     648     664   -2.4 %
  Earnings on bank-owned life insurance     103     98   5.1 %     298     284   4.9 %
  Other     48     61   -21.3 %     141     157   -10.2 %
    Total noninterest income     2,121     1,304   62.7 %     5,018     3,415   46.9 %
                         
Noninterest expense:                        
  Salaries and benefits     2,236     2,258   -1.0 %     6,450     6,383   1.0 %
  Net occupancy     388     379   2.4 %     1,217     1,199   1.5 %
  Equipment     408     381   7.1 %     1,193     1,145   4.2 %
  Marketing and public relations     202     289   -30.1 %     525     788   -33.4 %
  Professional fees     143     90   58.9 %     458     361   26.9 %
  Other     971     646   50.3 %     2,781     2,227   24.9 %
    Total noninterest expense     4,348     4,043   7.5 %     12,624     12,103   4.3 %
Income before income taxes     1,175     1,083   8.5 %     3,589     3,037   18.2 %
Income taxes     227     182   24.7 %     714     491   45.4 %
Net income     948     901   5.2 %     2,875     2,546   12.9 %
Less: Net income attributable to noncontrolling interest     -     -   -       -     -   -  
                         
Net income attibutable to Elmira Savings Bank     948     901   5.2 %     2,875     2,546   12.9 %
                         
Dividend on preferred stock     -     -   -       -     -   -  
Income available to common shareholders   $ 948   $ 901   5.2 %   $ 2,875   $ 2,546   12.9 %
                         
                         
Basic earnings per share   $ 0.27   $ 0.26   3.8 %   $ 0.82   $ 0.73   12.3 %
                         
Diluted earnings per share   $ 0.27   $ 0.26   3.8 %   $ 0.82   $ 0.73   12.3 %
                         
Weighted average shares outstanding - basic     3,509,421     3,496,195   0.4 %     3,506,646     3,493,945   0.4 %
                         
Weighted average shares outstanding - diluted     3,509,421     3,498,545   0.3 %     3,507,728     3,499,813   0.2 %
                         
Dividends per share   $ 0.15   $ 0.23   -34.8 %   $ 0.53   $ 0.69   -23.2 %
                         
ELMIRA SAVINGS BANK  
AVERAGE BALANCES AND INTEREST RATES  
                           
(Dollars in Thousands) For the Three Months Ended  
  September 30, 2020     September 30, 2019  
ASSETS: Average Balance Interest   Average Rate   Average Balance Interest   Average Rate  
Loans $ 521,294   $ 5,140   3.92 %   $ 506,556   $ 5,568   4.36 %
Short-term investments   1,257     -   0.05       689     4   2.15  
Securities   23,170     235   4.08       36,861     337   3.63  
Total interest-earning assets   545,721     5,375   3.91       544,106     5,909   4.31  
                           
Noninterest-earning assets   136,645               75,625          
                           
TOTAL ASSETS $ 682,366             $ 619,731          
                           
LIABILITIES AND SHAREHOLDERS' EQUITY                          
Interest-bearing deposits $ 447,441   $ 1,291   1.15     $ 441,020   $ 1,627   1.46  
Borrowings   56,548     232   1.61       29,000     210   2.85  
Total interest-bearing liabilities   503,989     1,523   1.20       470,020     1,837   1.55  
                           
Noninterest-bearing liabilities   118,276               90,876          
Shareholders' equity   60,101               58,835          
                           
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 682,366             $ 619,731          
Interest rate spread         2.71 %           2.76 %
Net interest income/margin     $ 3,852   2.81 %       $ 4,072   2.97 %
                           
ELMIRA SAVINGS BANK  
AVERAGE BALANCES AND INTEREST RATES  
                           
(Dollars in Thousands) For the Nine Months Ended  
  September 30, 2020     September 30, 2019  
ASSETS: Average Balance Interest   Average Rate   Average Balance Interest   Average Rate  
Loans $ 520,481   $ 16,213   4.14 %   $ 493,922   $ 16,215   4.37 %
Short-term investments   1,111     2   0.18       562     9   2.06  
Securities   25,291     777   4.10       39,506     1,081   3.65  
Total interest-earning assets   546,883     16,992   4.13       533,990     17,305   4.31  
                           
Noninterest-earning assets   96,310               69,978          
                           
TOTAL ASSETS $ 643,193             $ 603,968          
                           
LIABILITIES AND SHAREHOLDERS' EQUITY                          
Interest-bearing deposits $ 433,423   $ 4,050   1.25     $ 429,598   $ 4,407   1.37  
Borrowings   44,008     672   2.01       29,249     629   2.84  
Total interest-bearing liabilities   477,431     4,722   1.32       458,847     5,036   1.46  
                           
Noninterest-bearing liabilities   106,086               86,449          
Shareholders' equity   59,676               58,672          
                           
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 643,193             $ 603,968          
Interest rate spread         2.81 %           2.85 %
Net interest income/margin     $ 12,270   2.98 %       $ 12,269   3.05 %
                           
          Quarter Ended
(Dollars in Thousands, Except Per Share Data) 9/30/2020   6/30/2020   3/31/2020   12/31/2019   9/30/2019
Operating Data                    
  Net income $ 948   $ 909   $ 1,018   $ 940   $ 901  
  Net interest income   3,852     4,137     4,281     4,159     4,072  
  Provision for loan losses   450     575     50     200     250  
  Net security gains   -     -     -     -     90  
  Non-interest income, ex. Net security gains   2,121     1,756     1,141     1,358     1,214  
  Non-interest expense   4,348     4,193     4,083     4,174     4,043  
Performance Statistics                    
  Net interest margin   2.81 %   2.98 %   3.16 %   3.01 %   2.97 %
  Annualized return on average assets   0.55 %   0.57 %   0.68 %   0.61 %   0.58 %
  Annualized return on average equity   6.27 %   6.12 %   6.93 %   6.33 %   6.07 %
  Annualized net loan charge-offs to avg loans 0.04 %   0.09 %   0.05 %   0.14 %   0.11 %
  Net charge-offs   57     116     60     183     135  
  Efficiency ratio   72.8 %   71.1 %   75.3 %   75.7 %   75.2 %
Per Share Data                    
  Basic earnings per share $ 0.27   $ 0.26   $ 0.29   $ 0.27   $ 0.26  
  Diluted earnings per share   0.27     0.26     0.29     0.27     0.26  
  Dividend declared per share   0.15     0.15     0.23     0.23     0.23  
  Book value   17.01     16.87     16.77     16.67     16.62  
  Common stock price:                    
    High   11.18     13.39     17.40     15.99     16.40  
    Low   10.30     10.49     11.50     13.97     13.97  
    Close   11.02     11.00     11.50     15.10     14.07  
  Weighted average common shares:                    
    Basic   3,509     3,507     3,503     3,499     3,496  
    Fully diluted   3,509     3,507     3,507     3,501     3,499  
  End-of-period common shares:                    
    Issued   3,617     3,617     3,611     3,606     3,606  
    Treasury   94     94     94     94     94  
                         
Financial Condition Data:                    
General                    
  Total assets $ 674,032   $ 675,862   $ 598,017   $ 606,829   $ 615,601  
  Loans, net   504,946     518,698     506,076     514,295     511,750  
  Intangibles   12,320     12,320     12,320     12,320     12,320  
  Total deposits   551,350     551,225     501,760     512,215     520,030  
    Noninterest-bearing   107,423     109,985     83,431     81,934     82,613  
    Savings   79,492     79,150     72,174     70,358     69,186  
    NOW   98,464     91,166     83,323     88,126     84,207  
    Money Market   34,375     28,467     20,306     24,724     21,555  
    Time deposits   231,596     242,457     242,526     247,073     262,469  
    Total interest-bearing deposits   443,927     441,240     418,329     430,281     437,417  
  Shareholders' equity   59,960     59,496     59,044     58,611     58,422  
Asset Quality                    
  Non-performing assets $ 5,507   $ 5,578   $ 4,686   $ 4,723   $ 4,923  
  Non-performing assets to total assets   0.82 %   0.83 %   0.78 %   0.78 %   0.80 %
  Allowance for loan losses   5,418     5,025     4,566     4,576     4,559  
  Allowance for loan losses to total loans   1.06 %   0.96 %   0.89 %   0.88 %   0.88 %
  Allowance for loan losses to                    
    non-performing loans   104.11 %   95.28 %   105.43 %   108.51 %   96.43 %
  Non-performing loans to total loans   1.03 %   1.02 %   0.86 %   0.82 %   0.92 %
Capitalization                    
  Shareholders' equity to total assets   8.90 %   8.80 %   9.87 %   9.66 %   9.49 %
                         
Elmira Savings Bank (NASDAQ:ESBK)
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