Elmira West Elmira Southport Horseheads Bi
Big Flats Elmira Heights Corning Erwin Ithac
Ithaca Commons South Meadow Triphamm
Moravia Montour Falls Cortland Elmira West
West Elmira Southport Horseheads Big Flats
Elmira Heights Corning Erwin Ithaca Comm
South Meadow Triphammer Moravia Monto
Cortland Elmira West Elmira Southport Hors
Big Flats Elmira Heights Corning Erwin Ithac
Commons South Meadow Triphammer Mor
Moravia Montour Falls Cortland Elmira West
Elmira Heights Corning Erwin Ithaca Comm
South Meadow Triphammer Moravia Monto
Cortland Elmira West Elmira Southport Hors
Big Flats Elmira Heights Corning Erwin Ithac
2012
Moravia Montour Falls Cortland Elmira West
Annual Report
Elmira Heights Corning Erwin Ithaca Comm
Growing, Growing Strong!
South Meadow Triphammer Moravia Monto
Cortland Elmira West Elmira Southport Hors
Our MissiOn
The MissiOn Of elMira savings Bank is to provide above
average returns to our shareholders while providing a broad range of
financial services that meet the needs of the individuals, businesses, and
organizations of our community.
We will achieve this through our commitment to:
• Consistent and superior quality service for our customers.
• A culture that incents employees to excel personally and professionally.
• Leadership in and support for our community.
• Independence as a local community bank.
The People’s Bank
Growing, Growing Strong!
Design PS Graphic Design, Elmira, NY
Portrait PhotograPhy Tom Mike Photography
selecTed financial daTa
(in thousands, except for per share amounts)
financial sTaTeMenT highlighTs
2012
2011
Assets
$ 536,936
523,358
Loans (including loans held for sale)
381,275
348,824
$3,018
net income ($000)
$5,029
$5,213
$4,833
$4,526
Allowance for loan losses
Deposits
Shareholders’ equity
Net interest income
Provision for loan losses
Non-interest income
Non-interest expense
3,740
3,299
409,565
381,729
66,909
15,089
463
6,050
12,944
Net income attributable to Elmira Savings Bank
5,213
Per share infOrM aTiOn
Basic earnings per share
$
Diluted earnings per share
Book value per share
Cash dividend per share
selecTed raTiOs
Return on average assets
Return on average equity
Shareholders’ equity to assets
Dividend payout ratio
Efficiency ratio
1.58
1.51
18.50
0.84
0.99%
7.92%
12.46%
53.16%
61.23%
64,615
15,550
668
4,727
12,202
5,029
1.45
1.41
17.92
0.71
1.00%
8.40%
12.35%
49.34%
60.18%
2008
2009
2010
2011
2012
Total assets ($000)
$536,936
$523,358
$498,983
$499,839
$480,600
2008
2009
2010
2011
2012
Total net loans (including loans held for sale) ($000)
$332,092
$307,616
$310,477
$381,275
$348,824
OTher selecTed daTa
Number of offices
Number of automated teller machines
15
13
13
10
Weighted average shares outstanding
2,277,545
2,253,452
Weighted average diluted shares outstanding
2,389,217
2,315,109
2008
2009
2010
2011
2012
Share and per share data have been adjusted to reflect the 5% stock dividend
distributed December 28, 2012 and a 10% stock dividend paid on December 28, 2011.
Elmira Savings Bank : 2012 AnnuAl RepoRt : Page 3
deposit growth ($000)
dear sharehOlders,
Non Interest Bearing Deposits
Interest Bearing Deposits (other than CDs)
Certificates of Deposit (CDs)
$167,412
$170,332
$185,457
$192,823
$147,299
$148,163
$143,631
$155,298
$146,603
$136,469
$36,804
$37,880
$38,126
$52,641
$61,444
2008
2009
2010
2011
2012
efficiency ratio
73.26%
64.25%
60.78%
60.18%
61.23%
2008
2009
2010
2011
2012
nonperforming loans ($000)
noncurrent loans & Ore1 to Total loans &
Ore Peer comparison at december 31, 2012
$3,672
$3,861
3.19%
1.04%
2011
2012
Elmira Savings Bank
Peers*
1 Noncurrent loans & ORE includes loans past due 90
days or more, nonaccrual loans, and other real estate
owned
* Peer group is FDIC-insured banks with assets of $300
million to $1 billion
We are pleased to report another
successful year for Elmira Savings
Bank. For the year ended December
31, 2012, we reported $5.2 million of net income
or $1.51 per diluted share. This represents the
fifth consecutive year of record earnings.
Our achievements are a direct reflection of
the dedication of our Elmira Savings Bank
team of employees and their desire to
provide outstanding service to our entire
customer base. Many of these individuals
devote personal time and resources to
many deserving organizations and causes
throughout our region. We are proud of them
and grateful for their earnest effort.
An improvement in capital levels was
accomplished primarily through earnings
after cash dividends of $1.6 million. We
achieved balance sheet growth by replacing
$15 million of investment securities with $32
million of loan growth, and we replaced $16
million of borrowed funds with $28 million of
deposits including $9 million of noninterest-
bearing deposits. This strategic shift continues
to improve the composition and strength of
our balance sheet.
Our disciplined approach to managing
the overhead of the bank has enabled us
to maintain an efficiency ratio in the 60%
range from 2010 through 2012. We have
accomplished this efficiency while continuing
to invest in expanding convenient locations
for our customers, training for employees,
upgraded technology, and in new staff who
will focus solely on risk management and
consumer compliance.
The stellar performance of our branch
personnel is highlighted on the deposit
growth chart. This chart demonstrates their
competency to generate deposit growth
against the headwinds of a prolonged low
rate environment. Branch loan originations
increased 77% from 2011 to 2012. Our
branches are revenue generators, as well as
deposit gatherers.
In addition, two new locations were
established during 2012. In the first quarter
Page 4 : Elmira Savings Bank : 2012 AnnuAl RepoRt
we opened a new location at 971
County Route 64, Big Flats, NY. This
location is on one of the most highly
trafficked roads in our market area.
During 2012, 180 loans were originated
out of this location. We closed our
branch located in the nearby Arnot Mall
and successfully transferred $24 million
of deposits to this new location.
In the third quarter of 2012 we
opened a new branch on Lake Road
in Elmira Heights, NY. This is the only
key location in our home market of
Chemung County where we did not
have a branch. The existing bank
branch building and renovation was
acquired for an almost unbelievably
low cost of less than $125,000. The
added convenience including a drive-
up window and ATM will be meaningful
to existing customers who live or work
in the Heights, and should help us draw
new customers as well.
In addition to these two new locations
opened in 2012, we have leased
an office in Erwin, NY, in Steuben
County that will open in the first
quarter of 2013. This township is
home to Corning Inc.’s Sullivan Park
Research and Development Center
and is the planned location for
future commercial and residential
development by Steuben County
economic development agencies. Our
first Steuben County branch on Market
Street in Corning reached critical mass
of $35 million of deposits during 2012.
The new Erwin branch will be a great
extension of our existing presence in
this market.
Residential mortgage volume during
2012 totaled $162 million, an increase
of 44% over record 2011 originations of
$113 million. We continued to improve
the infrastructure and product mix of
this key line of business during the
year. The results of this effort speak for
themselves.
We continue to anticipate that New
York State will allow the permitting
NEW Elmira Heights office
NEW Erwin office
of natural gas wells located in the
Marcellus Shale. This action will create
increased business potential across
most of our footprint, which is ideally
aligned with future drilling sites.
Shareholders received a 5% stock
dividend as well as dividends of $0.84
per share. With share price reaching
$22.74 per common share at year’s
end, total return for the year including
price appreciation and dividends
amounted to 51%.
We are very enthusiastic about the
prospects for Elmira Savings Bank in the
years ahead and we remain committed
to driving shareholder return through
our focus on service to our customers,
community, and employees.
I would like to take this opportunity
to extend my sincerest thanks to you,
the shareholders, for your continued
support of this wonderful organization.
We are pleased to provide you with this
report of progress and look forward to
a successful 2013.
Michael P. Hosey
Vice Chairman of the Board
President
Chief Executive Officer
george L. howell
Chairman Emeritus
F.M. Howell & Company
We would like to recognize
George L. Howell for his 20 years
as a Director, of which he served
eleven years as Chairman of the
Board before his 2012 retirement.
During his tenure the bank
experienced significant balance
sheet and market growth. Mr.
Howell played a key role in the
expansion of insider ownership
to over 30%. We are pleased that
Mr. Howell remains involved in his
capacity as Chairman Emeritus.
Elmira Savings Bank : 2012 AnnuAl RepoRt : Page 5
consolidated Balance sheets
Elmira Savings Bank and Subsidiaries
(in thousands, except for share and per share data)
asseTs
Cash and due from banks
Federal funds sold and other short-term investments
Total cash and equivalents
Securities available for sale, at fair value
Securities held to maturity - fair value of $5,853
at December 31, 2012 and $4,923 at December 31, 2011
Federal Reserve and Federal Home Loan Bank (FHLB) stock, at cost
Loans held for sale
Loans receivable
Less: allowance for loan losses
Net loans
Premises and equipment, net
Bank-owned life insurance
Accrued interest receivable
Intangible assets, net
Goodwill
Other real estate owned
Other assets
total assets
liaBiliTies and sharehOlders’ eQuiTY
Deposits
Borrowings
Other liabilities
total liabilities
sharehOlders’ eQuiTY
Preferred stock, $1,000 liquidation value per issued share; 5,000,000 shares authorized;
24,063 shares issued at December 31, 2012 and at December 31, 2011
Common stock, $1 par value; authorized 5,000,000 shares; 2,454,840 shares
issued at December 31, 2012 and 2,292,656 at December 31, 2011
Additional paid-in capital
Retained earnings
Treasury stock, at cost - 125,865 shares at December 31, 2012
and December 31, 2011
Accumulated other comprehensive income
Total Elmira Savings Bank shareholders’ equity
Noncontrolling interest
total shareholders’ equity
December 31,
2012
December 31,
2011
$
39,641
684
40,325
66,875
5,521
9,178
3,167
378,108
3,740
374,368
7,947
11,988
1,529
316
12,320
125
3,277
$
47,456
740
48,196
86,536
4,621
5,295
2,842
345,982
3,299
342,683
5,392
10,100
1,615
444
12,320
202
3,112
$ 536,936
$
523,358
$
409,565
54,000
6,462
470,027
$
381,729
70,019
6,995
458,743
23,763
2,455
41,448
868
(3,548)
1,872
66,858
51
66,909
23,763
2,293
38,402
1,735
(3,548)
1,918
64,563
52
64,615
total liabilities and shareholders’ equity
$ 536,936
$
523,358
Page 6 : Elmira Savings Bank : 2012 AnnuAl RepoRt
consolidated statements of income
Elmira Savings Bank and Subsidiaries
(in thousands, except for per share amounts)
inTeresT and dividend incOMe
Interest and fees on loans
Interest and dividends on securities
Taxable
Non-taxable
total interest and dividend income
inTeresT eXPense
Interest on deposits
Interest on borrowings
total interest expense
Net interest income
Provision for loan losses
Years Ended December 31
2011
2010
2012
$ 18,114
$ 18,140
$ 18,185
2,111
760
3,140
820
3,681
822
20,985
22,100
22,688
3,712
2,184
5,896
15,089
463
3,850
2,700
6,550
15,550
668
4,564
3,205
7,769
14,919
515
net interest income after provision for loan losses
14,626
14,882
14,404
nOninTeresT incOMe
Service fees
Gain on sale of loans held for sale
Net gain on sale of securities
Other service fees
Earnings on bank-owned life insurance
Other
total noninterest income
nOninTeresT eXPense
Salaries and benefits
Net occupancy
Equipment
Marketing and public relations
Professional fees
Regulatory assessments
Other
total noninterest expense
Income before income taxes
Income taxes
Net income
Less: Net income attributable to noncontrolling interest
1,242
3,561
75
677
388
107
1,236
1,836
448
634
369
204
6,050
4,727
6,770
1,130
946
722
643
360
2,373
6,491
1,154
854
636
513
462
2,092
1,409
1,450
474
620
353
287
4,593
6,007
1,102
924
483
654
574
2,115
12,944
12,202
11,859
7,732
2,514
5,218
5
7,407
2,373
5,034
5
7,138
2,300
4,838
5
net income attributable to elmira savings Bank
$ 5,213
$ 5,029
$ 4,833
Dividend on preferred stock
Accretion of preferred stock discount
1,609
-
1,512
252
1,367
84
income available to common shareholders
$ 3,604
$ 3,265
$ 3,382
Basic earnings per common share
Diluted earnings per common share
$
$
1.58
1.51
$
$
1.45
1.41
$
$
1.51
1.49
Per share data has been restated to reflect a 5% stock dividend paid on December 28, 2012 and a 10% stock dividend paid on December 28, 2011.
Elmira Savings Bank : 2012 AnnuAl RepoRt : Page 7
consolidated statements of comprehensive income
Elmira Savings Bank and Subsidiaries
(in thousands)
net income
OTher cOMPrehensive incOMe (lOss)
Net unrealized holding gains (losses) on securities available for sale
Tax benefit (expense)
Realized securities gains included in net income
Tax expense
Years Ended December 31,
2012
2011
2010
$ 5,218
$ 5,034
$ 4,838
-
-
-
(75 )
29
(46 )
2,014
(779 )
1,235
(448 )
173
(275 )
(184 )
72
(112 )
(474 )
183
(291 )
(403 )
other comprehensive income (loss), net of tax
(46 )
960
Comprehensive income
$ 5,172
$ 5,994
$ 4,435
consolidated statements of shareholders’ equity
Elmira Savings Bank and Subsidiaries
(in thousands, except for share
and per share amounts)
Preferred
Stock
Common
Stock
Additional
Paid-in
Capital
Retained
earnings
Treasury
Stock
Accumulated
other
comprehensive
income (loss)
Noncontrolling
Interest
Total
Balance at December 31, 2011
$ 23,763
2,293
38,402
1,735
(3,548)
1,918
52
64,615
Net income
Other comprehensive loss
5% stock dividend (110,417 shares)
Cash in lieu of fractional shares
resulting from a 5% stock dividend
Stock based compensation expense
Issuance of common shares
(12,321 shares)
Exercise of stock options, net
(39,446 shares)
Preferred stock repurchased -
noncontrolling interest
Cash dividend on preferred stock
Cash dividend on common stock
($.84 per share)
-
-
-
-
-
-
-
-
-
-
-
-
110
-
-
12
40
-
-
-
-
-
2,387
-
340
(12)
331
5,213
-
(2,497)
(7)
-
-
-
-
-
-
-
(1,609)
(1,967)
-
-
-
-
-
-
-
-
-
-
-
(46)
-
-
-
-
-
-
-
-
5
-
-
-
-
-
-
5,218
(46)
-
(7)
340
-
371
(1)
(5)
(1)
(1,614)
-
(1,967)
Balance at December 31, 2012
$ 23,763
2,455
41,448
868
(3,548)
1,872
51
66,909
Per share data has been restated to reflect the 5% stock dividend paid on December 28, 2012 and a 10% stock dividend paid on December 28, 2011.
To the Board of directors and shareholders of elmira savings Bank and subsidiaries
We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated
balance sheets of Elmira Savings Bank and subsidiaries (the “Bank”) as of December 31, 2012 and 2011, and the related consolidated
statements of income, comprehensive income, shareholders’ equity, and cash flows (not presented herein), for each of the three years in
the period ended December 31, 2012, and in our report dated March 13, 2013, we expressed an unqualified opinion on those consolidated
financial statements.
In our opinion, the information set forth in the accompanying condensed consolidated financial statements is fairly stated, in all material
respects, in relation to the consolidated financial statements from which it has been derived.
Wexford, Pennsylvania
March 13, 2013
Page 8 : Elmira Savings Bank : 2012 AnnuAl RepoRt
elMira savings Bank BO ard Of direc TOrs
John r. alexander
Corporate Secretary of the Board
Sayles & Evans
John Brand, iii
Chairman of the Board
Arnot Realty Corporation
anthony J. Cooper
President
Arnot Health
george L. howell
Chairman Emeritus
F.M. Howell & Company
a. scott Welliver
Chairman
Chief Executive Officer
Welliver McGuire, Inc.
Kristin a. swain
Executive Director
Rockwell Museum of Western Art
Michael P. hosey
Vice Chairman of the Board
President
Chief Executive Officer
Elmira Savings Bank
Donald g. Quick, Jr.
Retired Partner
Mengel, Metzger, Barr & Co. LLP
thomas M. Carr
Executive Vice President
Chief Operating Officer
Elmira Savings Bank
Katherine h. roehlke
President
Chief Executive Officer
F.M. Howell & Company
arie J. van den Blink
Chairman
Chief Executive Officer
The Hilliard Corporation
Marianne W. young
President
Market Street Trust Company
The People’s Bank
Elmira Savings Bank : 2012 AnnuAl RepoRt : Page 9
elMira savings Bank Officers
MarkeT Price infOrM aTiOn
eXecuTive
Michael P. hosey
President
Chief Executive Officer
thomas M. Carr
Executive Vice President
Chief Operating Officer
shirley a. Weigand
Assistant Secretary
audiT and cOnTrOl
edith B. Keebler
Assistant Treasurer
Joseph P. Klaiber
Compliance Officer
Jill M. McConnell
Assistant Secretary
cOllecTiOns
tricia rennells
Assistant Vice President
finance
Jason t. sanford
Senior Vice President
Chief Financial Officer
John J. stempin
Assistant Secretary
Judy a. Woodruff
Assistant Secretary
huMan resOurces
Bradley V. serva
Vice President
lending
Kevin J. Berkley
Senior Vice President
gary o. short
Senior Vice President
tamara s. Pabis
Vice President
susan M. Cook
Assistant Vice President
Christopher Mekos
Vice President
Jennifer M. Murphy
Assistant Secretary
Carrie L. spencer
Assistant Secretary
amy Ward
Assistant Vice President
ManageMenT
infOrMaTiOn sYsTeMs
Joseph L. Walker
Vice President
Phillip J. Collins
Assistant Vice President
OPeraTiOns
Margaret a. Phillips
Vice President
Frank P. spena, Jr.
Assistant Secretary
reTail services
Donna J. tangorre
Vice President
Deborah L. adams
Assistant Vice President
Kimberly a. elliott
Assistant Vice President
Janette allen
Assistant Treasurer
ashley a. Case
Assistant Treasurer
Patricia L. Cobb
Assistant Treasurer
theresa a. emo
Assistant Treasurer
Lorenda D. gneo
Assistant Treasurer
Phylis a. Jensen
Assistant Treasurer
Debra s. Knowles
Assistant Treasurer
sara J. Meisner
Assistant Treasurer
advisOrY services, inc.
Vincent Mazzarella
Vice President
The bank’s common stock was first offered in March 1985,
and is now listed on the NASDAQ exchange under the
symbol ESBK. The table below summarizes the high and low
market price for the bank’s stock during 2012 and 2011.
Quarters
2012
2011
High
Low
First
20.82
15.45
Second
20.46
16.83
Third
19.04
17.50
Fourth
23.65
18.48
High
16.02
14.93
15.29
16.19
Low
14.36
12.25
11.38
13.05
annuaL sharehoLDers’ Meeting
The Annual Shareholders’ Meeting will be held
at 10 a.m. on April 23, 2013
at the
Clemens Center
207 Clemens Center Parkway
Elmira, NY
sharehoLDer inQuiries
The bank’s transfer agent is:
Registrar and Transfer Company
10 Commerce Drive
Cranford, NJ 07016
(800) 525-7686
The bank’s Annual Report on
Form 10-K will be furnished without charge
upon written request to:
Thomas M. Carr
Executive Vice President
Chief Operating Officer
Elmira Savings Bank
333 E. Water Street
Elmira, NY 14901
Page 10 : Elmira Savings Bank : 2012 AnnuAl RepoRt
Elmira Savings Bank
Offices in the
Finger Lakes Region
Finger Lakes
region
Moravia
Cortland Loan Center
Commons
Ithaca Loan Center
Triphammer
South Meadow
Montour Falls
Erwin
Big Flats
Corning
Horseheads
Elmira Heights
West Elmira
Elmira
Southport
New York
Pennsylvania
The People’s Bank
Main Office
333 East Water Street
Elmira, NY 14902-9967
607-734-3374
hOrseheads
2149 Grand Central Avenue
Horseheads, NY 14845
607-734-3374
Big flaTs
971 County Route 64
Big Flats, NY 14841
607-734-3374
elMira heighTs
2075 Lake Road
Elmira, NY 14903
607-734-3374
iThaca lOan cenTer
301 East State Street
Ithaca, NY 14850
607-257-3584
MOravia
142 Main Street
Moravia, NY 13118
315-497-1300
cOMMOns
301 East State Street
Ithaca, NY 14850
607-272-1111
MOnTOur falls*
401 West Main Street, Suite 110
Montour Falls, NY 14865
607-535-4026
sOuThPOrT
1136 Pennsylvania Avenue
Elmira, NY 14904
607-734-3374
cOrning
19 East Market Street, Suite 101
Corning, NY 14830
607-962-0812
sOuTh MeadOW
702 South Meadow Street
Ithaca, NY 14850
607-272-2211
cOrTland lOan cenTer*
77 South West Street
Homer, NY 13077
607-749-7251
WesT elMira
930 West Church Street
Elmira, NY 14905
607-734-3374
erWin
404 S. Hamilton Street
Painted Post, NY 14870
607-936-1806
TriPhaMMer
2300 North Triphammer Road
Ithaca, NY 14850
607-257-8808
arnOT Mall aTM
Entrance 4 - Center Court
Horseheads, NY 14845
607-734-3374
*ATM available at all locations except for the Montour Falls Office and Cortland Loan Center.
Elmira Savings Bank : 2012 AnnuAl RepoRt : Page 11
The People’s Bank
www.elmirasavingsbank.com
Member FDIC | Equal Housing Lender