Elmira Savings Bank Reports 2021 Earnings

 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) [e-mail]

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	%