Elmira Savings Bank (NASDAQ: ESBK)

Highlights

  • Net income was $1,168,000 for the three months ended March 31, 2022, compared to $1,204,000 for the same period in 2021.
  • Diluted earnings per share were $.33 per share for the three months ended March 31, 2022, compared to $.34 per share for the same period in 2021.
  • Return on average assets was .76% for the three months ended March 31, 2022, and .75% for the same period in 2021.
  • Return on average equity was 7.32% for the three months ended March 31, 2022, compared to 7.93% for the same period in 2021.

"Earnings per share and return on assets are consistent with last year’s first quarter, as we work diligently towards the merger and integration with Community Bank, N.A, which is expected to take place in the second quarter," said Thomas M Carr, President and CEO.

Net Income

Net income totaled $1,168,000 for the three months ended March 31, 2022, a decrease of $36,000 or 3.0% from the $1,204,000 recorded for the same period in 2021. This decrease was the net result of a decrease in net interest income of $399,000 and a decrease in noninterest income of $1,038,000, offset by a decrease in the provision for loan losses of $150,000, a decrease in noninterest expense of $1,177,000, and a decrease in tax expense of $74,000.

Basic and diluted earnings per share for the three months ended March 31, 2022 were both $.33 per share compared to $.34 per share for both for the same period in 2021.

The decrease in noninterest income for the three months ended March 31, 2022 is primarily due to a decrease in the gain on sale of loans, reflecting lower levels of residential mortgages originated for sale to the secondary markets compared to the same period in 2021. The decrease in noninterest expense for the three months ended March 31, 2022 reflects lower levels of salaries and benefits, occupancy expense, and all other expense categories. The lower levels of salaries and benefits and all other expense categories relate to staffing reductions and controlled spending reductions leading up to the upcoming merger.

Net Interest Margin

The net interest margin for the three months ended March 31, 2022 was 3.46% compared to 3.57% for the first quarter of 2021. The yield on average earning assets was 3.79% for the three months ended March 31, 2022, compared to 4.29% for the same period in 2021. The average cost of interest-bearing liabilities was 0.36% for the three months ended March 31, 2022, compared to 0.79% for the three months ended March 31, 2021.

Assets

Total assets decreased $18.9 million or 3.0% to $613.4 million at March 31, 2022, compared to $632.2 million at December 31, 2021. Loans receivable decreased 1.4% to $457.9 million at March 31, 2022, compared to December 31, 2021. The available-for-sale investment portfolio decreased $470,000 from December 31, 2021 to March 31, 2022, and cash and cash equivalents decreased by $10.7 million from December 31, 2021 to March 31, 2022. The decrease in cash resulted primarily from a $17.6 million decrease in deposits.

Nonperforming Loans

Our nonperforming loans to total loans ratio was 0.83% at March 31, 2022, and 0.70% at December 31, 2021. Net loan charge-offs to average loans for the three months ended March 31, 2022 was .05% and .03% for the three months ended March 31, 2021. The allowance for loan losses was 1.22% of total loans at March 31, 2022 and 1.21% at December 31, 2021.

Liabilities

Deposits totaled $523.4 million at March 31, 2022, a decrease of $17.6 million or 3.3% from the December 31, 2021 total of $541.0 million. Borrowed funds decreased by $2.0 million from December 31, 2021 to $20.0 million at March 31, 2022.

Shareholders’ Equity

Shareholders’ equity increased $677,000 to $64.7 million at March 31, 2022 compared to December 31, 2021. The current level of shareholders’ equity equates to a book value per share of $18.16 at March 31, 2022, compared to $18.02 at December 31, 2021. Dividends paid to common shareholders were $0.15 for the three months ended March 31, 2022 and March 31, 2021.

Elmira Savings Bank, with $613.4 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. On April 22, 2022, Community Bank, N.A. announced that it had received regulatory approvals to complete its merger with Elmira Savings Bank. The acquisition is expected to be complete effective close of business May 13, 2022, subject to customary closing conditions and approval from the New York State Department of Financial Services.

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) March 31,   December 31,    
   2022    2021   % Change
ASSETS          
           
Cash and due from banks $ 90,905     $ 99,785     -8.9 %
Federal funds sold and other short-term investments   195       2,058     -90.5 %
Total cash and cash equivalents   91,100       101,843     -10.5 %
           
Securities available for sale, at fair value   3,639       4,109     -11.4 %
Securities held to maturity - fair value $5,982          
at March 31, 2022, and $6,315 at December 31, 2021   5,992       6,080     -1.4 %
Federal Reserve and Federal Home Loan Bank (FHLB) stock, at cost   7,975       8,087     -1.4 %
           
Loans held for sale   435       2,374     -81.7 %
           
Loans receivable   457,900       464,246     -1.4 %
Less: Allowance for loan losses   5,569       5,620     -0.9 %
Net loans   452,331       458,626     -1.4 %
           
Premises and equipment, net   16,397       15,558     5.4 %
Bank-owned life insurance   16,019       15,914     0.7 %
Accrued interest receivable   1,376       1,380     -0.3 %
Goodwill   12,320       12,320     0.0 %
Other assets   5,787       5,941     -2.6 %
Total assets $ 613,371     $ 632,232     -3.0 %
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
Deposits $ 523,402     $ 540,999     -3.3 %
Borrowings   20,000       22,000     -9.1 %
Other liabilities   5,315       5,256     1.1 %
Total liabilities   548,717       568,255     -3.4 %
           
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 March 31, 2022 and at December 31, 2021   9,700       9,700     0.0 %
Common stock, $1 par value; authorized 5,000,000 shares; 3,651,426 shares issued and 3,557,543 outstanding                    
at March 31, 2022 and 3,641,487 shares issued and 3,547,604 outstanding at December 31, 2021   3,651       3,641     0.3 %
Additional paid-in capital   54,551       54,421     0.2 %
Retained earnings   8,922       8,288     7.6 %
Treasury stock, at cost - 93,883 common shares and 10,000 preferred shares          
at March 31, 2022 and December 31, 2021   (12,202 )     (12,202 )   0.0 %
Accumulated other comprehensive (loss) income   (18 )     79     -122.8 %
Total Elmira Savings Bank shareholders' equity   64,604       63,927     1.1 %
Noncontrolling interest   50       50     0.0 %
Total shareholders' equity   64,654       63,977     1.1 %
Total liabilities and shareholders' equity $ 613,371     $ 632,232     -3.0 %
           
ELMIRA SAVINGS BANK
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
           
  Three Months Ended
  March 31,
(in thousands, except for per share data)  2022    2021   % Change
           
Interest and dividend income:          
Interest and fees on loans $ 4,338     $ 5,212     -16.8 %
Interest and dividends on securities          
Taxable   112       143     -21.7 %
Non-taxable   62       69     -10.1 %
Total interest and dividend income   4,512       5,424     -16.8 %
           
Interest expense:          
Interest on deposits   250       725     -65.5 %
Interest on borrowings   140       178     -21.3 %
Total interest expense   390       903     -56.8 %
Net interest income   4,122       4,521     -8.8 %
Provision for loan losses   -       150     -100.0 %
Net interest income after provision for loan losses   4,122       4,371     -5.7 %
           
Noninterest income:          
Service fees   302       308     -1.9 %
Gain on sale of loans held for sale   255       1,211     -78.9 %
Other service fees   201       210     -4.3 %
Earnings on bank-owned life insurance   105       101     4.0 %
Other   24       95     -74.7 %
Total noninterest income   887       1,925     -53.9 %
           
Noninterest expense:          
Salaries and benefits   1,761       2,307     -23.7 %
Net occupancy   412       626     -34.2 %
Equipment   390       442     -11.8 %
Marketing and public relations   92       241     -61.8 %
Professional fees   87       147     -40.8 %
Other   781       937     -16.6 %
Total noninterest expense   3,523       4,700     -25.0 %
Income before income taxes   1,486       1,596     -6.9 %
Income taxes   318       392     -18.9 %
Net income   1,168       1,204     -3.0 %
Less: Net income attributable to noncontrolling interest   -       -     -  
           
Net income attributable to Elmira Savings Bank $ 1,168     $ 1,204     -3.0 %
           
           
Basic earnings per share $ 0.33     $ 0.34     -2.9 %
           
Diluted earnings per share $ 0.33     $ 0.34     -2.9 %
           
Weighted average shares outstanding - basic   3,533,077       3,514,650     0.5 %
           
Weighted average shares outstanding - diluted   3,560,126       3,515,256     1.3 %
           
Dividends per share $ 0.15     $ 0.15     0.0 %
           
ELMIRA SAVINGS BANK
AVERAGE BALANCES AND INTEREST RATES
                                   
(Dollars in Thousands) For the Three Months Ended
  March 31, 2022   March 31, 2021
ASSETS: Average Balance   Interest   Average Rate   Average Balance   Interest   Average Rate
Loans $ 458,353     $ 4,338     3.80 %   $ 485,646     $ 5,212     4.31 %
Short-term investments   1,781       -     0.06       617       -     0.02  
Securities   18,025       174     3.89       21,267       212     4.01  
Total interest-earning assets   478,159       4,512     3.79       507,530       5,424     4.29  
                                   
Noninterest-earning assets   143,931                   140,728              
                                   
TOTAL ASSETS $ 622,090                 $ 648,258              
                                   
LIABILITIES AND SHAREHOLDERS' EQUITY                                  
Interest-bearing deposits $ 414,018     $ 250     0.24     $ 436,731     $ 725     0.67  
Borrowings   21,978       140     2.55       26,933       178     2.65  
Total interest-bearing liabilities   435,996       390     0.36       463,664       903     0.79  
                                   
Noninterest-bearing liabilities   121,433                   123,014              
Shareholders' equity   64,661                   61,580              
                                   
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 622,090                 $ 648,258              
Interest rate spread             3.43 %               3.50 %
Net interest income/margin       $ 4,122     3.46 %         $ 4,521     3.57 %
                                   
          Quarter Ended
(Dollars in Thousands, Except Per Share Data)   3/31/2022     12/31/2021     9/30/2021     6/30/2021     3/31/2021  
                               
Operating Data                              
                               
Net income $ 1,168   $ 1,102   $ 1,511   $ 1,402   $ 1,204  
Net interest income   4,122     4,437     4,708     4,340     4,521  
Provision for loan losses   -     -     -     -     150  
Non-interest income, ex. Net security gains   887     1,158     1,564     1,347     1,925  
Non-interest expense   3,523     4,187     4,307     3,904     4,700  
                     
Performance Statistics                    
                     
Net interest margin   3.46 %   3.65 %   3.81 %   3.48 %   3.57 %
Annualized return on average assets   0.76 %   0.69 %   0.92 %   0.86 %   0.75 %
Annualized return on average equity   7.32 %   6.82 %   9.49 %   9.03 %   7.93 %
Annualized net loan charge-offs to avg loans   0.05 %   0.01 %   0.14 %   0.06 %   0.03 %
Net charge-offs   52     7     164     74     40  
Efficiency ratio   70.3 %   74.8 %   68.7 %   68.6 %   72.9 %
                               
Per Share Data                    
                     
Basic earnings per share $ 0.33   $ 0.31   $ 0.43   $ 0.40   $ 0.34  
Diluted earnings per share   0.33     0.31     0.43     0.40     0.34  
Dividend declared per share   0.15     0.15     0.15     0.15     0.15  
Book value   18.16     18.02     17.86     17.57     17.34  
Common stock price:                    
High   23.00     23.22     14.75     15.05     15.96  
Low   22.69     13.50     12.80     13.23     11.48  
Close   22.93     22.84     13.34     14.31     13.50  
Weighted average common shares:                    
Basic   3,533     3,526     3,522     3,519     3,515  
Fully diluted   3,560     3,553     3,524     3,520     3,515  
End-of-period common shares:                    
Issued   3,651     3,641     3,641     3,641     3,636  
Treasury   94     94     94     94     94  
                     
                     
Financial Condition Data:                    
General                    
Total assets $ 613,371   $ 632,232   $ 643,596   $ 648,686   $ 659,333  
Loans, net   452,331     458,626     458,631     465,271     476,383  
Intangibles   12,320     12,320     12,320     12,320     12,320  
Total deposits   523,402     540,999     544,763     551,245     562,893  
                               
Noninterest-bearing   115,680     122,268     118,511     121,534     121,101  
                               
Savings   99,642     97,479     95,299     93,351     87,228  
NOW   109,999     112,519     114,514     111,343     111,414  
Money Market   30,233     34,626     36,577     32,624     35,011  
Time deposits   167,848     174,107     179,862     192,393     208,139  
Total interest-bearing deposits   407,722     418,731     426,252     429,711     441,792  
                               
Shareholders' equity   64,654     63,977     63,396     62,375     61,462  
                               
Asset Quality                    
                     
Non-performing assets $ 4,173   $ 3,675   $ 3,645   $ 5,023   $ 5,602  
Non-performing assets to total assets   0.68 %   0.58 %   0.57 %   0.77 %   0.85 %
Allowance for loan losses   5,569     5,620     5,627     5,791     5,865  
Allowance for loan losses to total loans   1.22 %   1.21 %   1.21 %   1.23 %   1.22 %
Allowance for loan losses to                    
non-performing loans   148.98 %   174.37 %   175.95 %   116.12 %   108.63 %
Non-performing loans to total loans   0.83 %   0.70 %   0.70 %   1.07 %   1.13 %
                     
Capitalization                    
                     
Shareholders' equity to total assets   10.54 %   10.12 %   9.85 %   9.62 %   9.32 %
                     
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