The People’s Bank
2015
Annual Report
The People’s Bank
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.
DESIGN PS Graphic Design
PHOTOGRAPHY Frank Borkowski
ELMIRA SAVINGS BANK BOARD OF DIRECTORS
(Back row l-r) Robert K. Lambert, President/Chief Executive Officer, Arnot Health; Marianne W. Young, President/Chief Executive Officer, Market Street Trust Company;
Arie J. van den Blink, Chairman/Chief Executive Officer, The Hilliard Corporation; Katherine H. Roehlke, President/Chief Executive Officer, F.M. Howell & Company;
Donald G. Quick, Jr., Retired Partner, Mengel, Metzger, Barr & Co. LLP; Kristin A. Swain, Executive Director, The Rockwell Museum
(Front row l-r) A. Scott Welliver, Chairman/Chief Executive Officer, Welliver McGuire, Inc.; John R. Alexander, Vice Chairman and Corporate Secretary of the Board/Managing Partner, Sayles & Evans;
Thomas M. Carr, President/Chief Executive Officer; Michael P. Hosey, Chairman of the Board
DEAR SHAREHOLDERS,
It is with great optimism for the
future of our regional economy that
I report to you our accomplishments
of 2015. The Upstate Revitalization
Initiative has provided $1.5 billion over
the next five years to our region, which
includes all markets in which we do
business. This generational opportunity
which lies before us can systemically
alter for the better the long term
prospects of our business environment.
As a community bank operating
across these regions, we are poised to
participate in this transformation.
Thomas M. Carr
President & Chief Executive Officer
During 2015 the Bank achieved solid
financial performance, expanded its
branch network into Watkins Glen,
reorganized its credit and retail
operations, conducted a process
improvement analysis, implemented a
mobile deposit product and began a
study of our corporate brand.
The Bank had total assets of $561.3
million at December 31, 2015 as
compared to $546.0 million the previous
year. Our loan portfolio increased by
$34.0 million to total $451.4 at year
end, an increase of 8.1%. Our deposit
base increased by $17.9 million to total
$440.5 million on December 31, 2015,
an increase of 4.2%. This increase in our
core business, of attracting deposits and
providing credit, was partially offset by a
$21.3 million decrease in our investment
portfolio and $2.5 million decrease in
our borrowed funds.
The Bank had net income of $4.1 million
in 2015, an increase of $457,000 or
12.5% above the previous year. This
increase is due primarily to a 45.9% or
$749,000 increase in gain on sale of
mortgages and a $222,000 increase in
net interest income.
The increase in the revenue from gain
on sale of mortgages is attributable
to a 20.3% or $19.9 million increase
in mortgage originations and the
expansion of our margin on the sale of
mortgages to the secondary market.
The increase in net interest income of
$222,000 is due primarily to an increase
in the loan portfolio of $34.0 million. This
loan growth was funded by $17.9 million
of deposit growth and a $21.3 million
decrease in our investment portfolio.
The Bank’s noninterest expense
increased by $90,000 or less than
one percent. During the year the
Bank invested in a process review,
reorganized its credit and retail
divisions, and conducted a brand
evaluation, all resulting in one-time
increased expense in 2015. These
increases were substantially offset by
the absence of the retirement expense
recognized in 2014.
The Bank’s asset quality remains
strong. Our nonperforming loans as a
percentage of total loans declined from
1.13% in 2014 to 1.05% in 2015. Our
delinquent loans more than 30 days
delinquent, excluding nonperforming
loans, totaled .38% of total loans.
Both aforementioned ratios compare
favorably to peers.
The Bank’s provision for loan losses was
increased by $223,000 during 2015,
which resulted in a $174,000 increase
in the allowance for loan losses which
totaled $4.2 million at December 31,
2015. The increase in the provision was
primarily due to the growth in the loan
portfolio of 8.1%.
The Bank paid 92 cents per common
share in cash dividends in 2015.
This represents a dividend yield of
approximately 5% based on current
market price for stocks. This dividend
yield is one of the highest in the nation
for publicly traded banks. The Bank
paid $2.5 million of common stock
cash dividends in 2015 the majority of
which is returned to shareholders in
the markets we serve. In addition, the
Bank purchased all outstanding stock
warrants for $1.5 million.
Page 4 : Elmira Savings Bank : 2015 ANNUAL REPORT
In March 2015 the Bank opened its 13th
full-service branch office in Watkins
Glen, NY. This is the Bank’s first full-
service office in Schuyler County. We
have many customers and business
partners in that community and
are pleased with our acceptance by
the market. We are happy to report
that total deposits at this branch
exceeded $20 million at December
31, 2015. In addition we have actively
been providing both consumer and
commercial credit to the market as
highlighted later in this report on pages
12 and 13. Watkins Glen is important
geographically to the Bank. It provides
us with greater access to the economic
development in the Finger Lakes region
and helps connect our Corning and
Elmira markets to our Ithaca market.
In April 2015 the Bank implemented
a mobile deposit product providing
the highest level of convenience by
allowing customers to deposit checks
through their mobile devices. This
product is a great addition to our
mobile and online banking suite of
products and has been adopted by
thousands of customers during the year.
The Bank engaged a marketing research
firm during 2015 to conduct a corporate
brand evaluation in the markets
we serve. We believe that results
provided by this study will enable us
to strategically better position the
organization and our message in each
market. The study will be completed in
early 2016.
During the year the Bank, with outside
expertise, conducted an evaluation
of its retail and lending operations.
The results of this review were
the implementation of significant
improvements to the Bank’s processes
and systems.
The Bank also implemented significant
changes to its organizational structure,
with the formation of a credit
department and the addition of key
new positions which will help drive our
business development efforts.
increased visibility and help to create a
higher level of awareness of our brand
in that market.
During the fourth quarter of 2015 the
Bank established a credit department
which consolidated the underwriting,
processing and administration of our
three lending divisions, mortgage,
consumer and commercial, into one
department. This change will allow
greater efficiency and utilization of
resources for our loan administration. In
addition, this change will relieve our loan
officers of administrative burden which
will allow them to focus more intently
on new loan origination. We anticipate
increased efficiency and scalability from
the credit department and increased
production from our loan officers.
On the retail side of the organization
we established three new positions to
support business development. These
new resources will drive our business
development activities across our
branch network, allow greater focus on
acquiring commercial deposit market
share, and assist us in elevating our
employees’ overall skill level.
On December 4, 2015, the Bank acquired
approximately one acre in the City of
Ithaca located between State Street and
Seneca Street along North Meadow
Street. On the corner of North Meadow
and State Street stands a two story brick
commercial building which the Bank
intends to renovate into a full-service
branch office.
During January 2016, the Bank received
regulatory approval to move its existing
branch located at 301 East State Street
to 602 West State Street when the
renovation is completed.
The high level of economic activity in
Tompkins County has made that market
attractive to the Bank. We believe that
the new branch location at 602 West
State Street will provide the Bank with
Along with the aforementioned parcel
at 602 West State Street, the Bank also
obtained five other parcels extending
from State Street along North Meadow
to Seneca Street. The Bank has no
immediate plans for those parcels and
in the future will look to work with the
City of Ithaca and local developers to
determine their best economic use.
As we look forward to 2016 and beyond,
we are committed to obtaining the
necessary resources to grow our
company. We are looking forward to
having a higher profile in the Tompkins
County market and capitalizing on the
economic development opportunities.
We believe the organizational changes
we have made will allow us to better
execute on future opportunities. We
are excited about the prospects which
may develop over the next five years
in conjunction with the $1.5 billion
awarded to the regions we serve through
the Upstate Revitalization Initiative.
The Board of Directors and
management of the Bank are dedicated
to improving performance primarily
through balance sheet growth and
enhancement of noninterest income.
We believe there is substantial
opportunity in the markets we serve
and we are determined to capitalize on
them. We appreciate the support of our
shareholders and customers and look
forward to building new relationships.
Thomas M. Carr
President and
Chief Executive Officer
Elmira Savings Bank : 2015 ANNUAL REPORT : Page 5
Assets, Deposits, and Net Loans
Assets Deposits Net Loans
$523,358
$536,936
$514,325
$545,969
$561,344
SELECTED FINANCIAL DATA
(in thousands, except share and per share amounts)
$381,729
$348,824
$409,565
$397,733
$422,561
$3,665
$440,472
$381,275
$390,976
$418,146
$454,998
Assets
$ 561,344
545,969
$2,765
Loans (including loans held for sale)
454,998
418,146
FINANCIAL STATEMENT HIGHLIGHTS
2015
2014
2011
2012
2013
2014
2015
Allowance for loan losses
Deposits
Shareholders’ equity
Net interest income
Provision for loan losses
Non-interest income
Non-interest expense
4,148
3,974
440,472
422,561
54,771
55,493
15,634
15,412
630
5,391
407
4,758
14,593
14,503
Total Return Performance
Net income attributable to Elmira Savings Bank
4,122
3,665
Elmira Savings Bank
NASDAQ Composite
SNL Mid-Atlantic Thrift
SNL Bank NASDAQ
SNL Thrift NASDAQ
SNL Bank $500M-$1B
SNL Mid-Atlantic Bank
225
200
175
150
125
100
75
50
25
0
2010
PER SHARE INFORMATION
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
2011
2012
2013
2014
2015
Shareholders’ equity to assets
Net Income ($000)
Net Income ($000) Available to Common Shareholders
$5,213
$5,054
$5,029
Dividend payout ratio
Efficiency ratio
OTHER SELECTED DATA
Number of offices
Number of automated teller machines
$
1.19
1.17
16.53
0.92
1.03
0.99
16.91
0.92
0.73%
7.43%
9.76%
0.70%
6.60%
10.16%
77.31%
89.32%
69.41%
71.90%
16
14
16
13
$4,122
Weighted average shares outstanding
2,707,491
2,677,252
$3,665
Weighted average diluted shares outstanding
2,762,332
2,799,670
$3,265
$3,604
$3,839
$2,765
$3,222
2011
2012
2013
2014
2015
Page 6 : Elmira Savings Bank : 2015 ANNUAL REPORT
SELECTED FINANCIAL DATA
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 $9,010
at December 31, 2015, and $7,641 at December 31, 2014
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 assets
December 31,
2015
December 31,
2014
$
5,352
102
5,454
42,709
9,003
11,108
3,630
451,368
4,148
447,220
12,130
13,188
1,541
61
12,320
2,980
$
7,959
606
8,565
65,624
7,389
11,182
787
417,359
3,974
413,385
9,475
12,790
1,566
125
12,320
2,761
Total assets
$ 561,344
$ 545,969
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;
10,000 shares issued at December 31, 2015 and at December 31, 2014
Common stock, $1 par value; authorized 5,000,000 shares; 2,820,745 shares
issued at December 31, 2015 and 2,809,364 at December 31, 2014
Additional paid-in capital
Retained earnings
Treasury stock, at cost - 98,118 shares at December 31, 2015 and
104,418 shares at December 31, 2014
Accumulated other comprehensive income
Total Elmira Savings Bank shareholders’ equity
Noncontrolling interest
Total shareholders’ equity
Total liabilities and shareholders’ equity
$
440,472
59,525
6,576
$
422,561
62,000
5,915
506,573
490,476
9,700
2,821
41,243
3,488
(2,907)
373
54,718
53
9,700
2,809
42,365
2,769
(3,053)
849
55,439
54
54,771
55,493
$ 561,344
$
545,969
Elmira Savings Bank : 2015 ANNUAL REPORT : Page 7
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
Years Ended December 31
2014
2013
2015
$ 18,418
$ 17,709
$ 17,733
1,367
949
1,659
899
1,744
776
Total interest and dividend income
20,734
20,267
20,253
INTEREST EXPENSE
Interest on deposits
Interest on borrowings
Total interest expense
Net interest income
Provision for loan losses
3,016
2,084
5,100
2,986
1,869
4,855
3,224
1,976
5,200
15,634
630
15,412
407
15,053
315
Net interest income after provision for loan losses
15,004
15,005
14,738
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
Other
1,471
2,382
284
716
398
140
1,437
1,633
422
687
404
175
1,357
3,007
61
660
399
73
5,391
4,758
5,557
7,324
1,383
1,061
832
773
3,220
7,692
1,416
1,012
884
690
2,809
7,382
1,259
1,022
676
674
2,849
Total noninterest expense
14,593
14,503
13,862
Income before income taxes
Income taxes
Net income
Less: Net income attributable to noncontrolling interest
5,802
1,675
4,127
5
5,260
1,590
3,670
5
6,433
1,374
5,059
5
Net income attributable to Elmira Savings Bank
$ 4,122
$ 3,665
$ 5,054
Dividend on preferred stock
900
900
1,215
Income available to common shareholders
$ 3,222
$ 2,765
$ 3,839
Basic earnings per common share
Diluted earnings per common share
$
$
1.19
1.17
$
$
1.03
0.99
$
$
1.47
1.40
Page 8 : Elmira Savings Bank : 2015 ANNUAL REPORT
Consolidated Statements of Comprehensive Income
Elmira Savings Bank and Subsidiaries
(in thousands)
Net income
OTHER COMPREHENSIVE INCOME (LOSS):
Net unrealized holding (losses) gains on securities available for sale
Tax benefit (expense)
Realized securities gains included in net income
Tax expense
Other comprehensive (loss) income, net of tax
Comprehensive income
Years Ended December 31,
2015
2014
2013
$ 4,122
$ 3,665
$ 5,054
(493)
191
(302)
(284)
110
(174)
757
(293)
464
(422)
163
(259)
(1,943)
753
(1,190)
(61)
23
(38)
(476)
205
(1,228)
$ 3,646
$ 3,870
$ 3,826
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
Noncontrolling
Interest
Total
Balance at December 31, 2014
$ 9,700
2,809
42,365
2,769
(3,053)
849
54
55,493
Net income
Other comprehensive loss
Stock based compensation expense
Issuance of common shares
(6,925 shares)
Exercise of stock options, net
(4,456 shares)
Repurchase of stock warrant
Issuance of treasury stock
(6,300 shares)
Preferred stock repurchased -
noncontrolling interest
Cash dividend on preferred stock
Cash dividend on common stock
($.92 per share)
-
-
-
-
-
-
-
-
-
-
-
-
-
7
5
-
-
-
-
-
-
-
333
(7)
39
(1,486)
(1)
-
-
-
4,122
-
-
-
-
-
-
-
(900)
(2,503)
-
-
-
-
-
-
146
-
-
-
-
(476)
-
-
-
-
-
-
-
-
5
-
-
-
-
-
-
(1)
(5)
4,127
(476)
333
-
44
(1,486)
145
(1)
(905)
-
(2,503)
Balance at December 31, 2015
$ 9,700
2,821
41,243
3,488
(2,907)
373
53
54,771
Elmira Savings Bank : 2015 ANNUAL REPORT : Page 9
To the Board of Directors and Shareholders of Elmira Savings Bank
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 as of December 31, 2015 and 2014, and the
related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows (not
presented herein) for each of the three years in the year ended December 31, 2015, and in our report dated March 21,
2016, we expressed an unqualified opinion on those financial statements.
In our opinion, the information set forth in the accompanying consolidated financial statements is fairly stated, in all
material respects, in relation to the financial statements from which it has been derived.
Wexford, Pennsylvania
March 21, 2016
MARKET PRICE INFORMATION
The Bank’s common stock was first offered in March
1985, and is now listed on the NASDAQ exchange under
the symbol ESBK. This table summarizes the high and low
market price for the Bank’s stock during 2015 and 2014.
Quarters
2015
2014
High
Low
High
Low
First
23.00
19.99
26.97
22.25
Second
20.82
19.43
24.78
21.92
Third
20.81
19.05
24.54
20.16
Fourth
21.13
18.41
23.00
20.50
ANNUAL SHAREHOLDERS’ MEETING
The Annual Shareholders’ Meeting will be held at 10:00 a.m. on April 26, 2016 at the
Clemens Center, 207 Clemens Center Parkway, Elmira, NY 14901
SHAREHOLDER INQUIRIES
The Bank’s transfer agent is:
Computershare, Inc.
Computershare Investor Services
PO Box 30170, College Station, TX 77842
(800) 368-5948
•
The Bank’s Annual Report on Form 10-K will be furnished
without charge upon written request to:
Thomas M. Carr
President/Chief Executive Officer
Elmira Savings Bank
333 E. Water Street, Elmira, NY 14901
Page 10 : Elmira Savings Bank : 2015 ANNUAL REPORT
Elmira Savings Bank
Watkins Glen Office
On March 16, 2015 we officially
opened our Watkins Glen
branch office at 712 North Franklin
Street. We have been warmly
received by the community and are
very pleased with our first year of
operations.
The People’s Bank
Tops Plaza
The Bank provided permanent
financing to the investor group,
Ten Patels Realty, LLC, who purchased
the Tops Plaza located at 504 South
Franklin Street, Watkins Glen. We were
delighted to provide this funding in
support of the local economy.
Watkins Brewery Apartments
We were pleased to provide financing
to Watkins Brewery Holdings, LLC for
their project located at 106-118 Lake Shore
Drive, Watkins Glen. This project was started
in 2015 and is expected to be completed in
2017 providing seasonal townhouse rental
property to the market.
ELMIRA SAVINGS BANK OFFICERS
In Memoriam
George L. Howell
George L. Howell was elected to the Bank’s Board
of Directors in 1992. Mr. Howell served in a
number of key board positions highlighted by his
tenure as Chairman from 2002 to 2012. During Mr.
Howell’s tenure as Chairman of the Board, the Bank
expanded into Steuben and Tompkins Counties, NY.
He continued to serve as Chairman Emeritus until his
death in November 2015.
Mr. Howell gave tirelessly of his time and talents
as a leader of the Bank and will be missed by every-
one at Elmira Savings Bank and in our community.
Gary O. Short
Senior Vice President
Robert W. Hazelton
Vice President
Jason Sorochinsky
Vice President
MANAGEMENT
INFORMATION SYSTEMS
Joseph L. Walker
Vice President
Phillip J. Collins
Assistant Vice President
OPERATIONS
Margaret A. Phillips
Vice President
RETAIL SERVICES
Donna J. Tangorre
Senior Vice President
Renee A. Wheeler
Vice President
Deborah L. Adams
Assistant Vice President
Kimberly A. Elliott
Assistant Vice President
Theresa A. Emo
Assistant Vice President
John Strong
Assistant Vice President
Janette Allen
Assistant Treasurer
Linda Confer
Assistant Treasurer
Joan Ferreira
Assistant Treasurer
Lorenda D. Gneo
Assistant Treasurer
Margaret Hurd
Assistant Treasurer
Phylis A. Jensen
Assistant Treasurer
Debra S. Knowles
Assistant Treasurer
EXECUTIVE
Thomas M. Carr
President
Chief Executive Officer
Shirley A. Weigand
Assistant Secretary
AUDIT AND CONTROL
Joseph P. Klaiber
Vice President
Edith B. Harkness
Assistant Vice President
Jill M. McConnell
Assistant Secretary
COLLECTIONS
Tricia Rennells
Assistant Vice President
CREDIT
Carrie L. Spencer
Vice President
Susan M. Cook
Assistant Vice President
Amy Frisbie
Assistant Vice President
Frank P. Spena, Jr.
Assistant Vice President
Jennifer M. Murphy
Assistant Secretary
FINANCE
Jason T. Sanford
Senior Vice President
Chief Financial Officer
John J. Stempin
Vice President
Controller
Judy A. Woodruff
Assistant Secretary
HUMAN RESOURCES
Bradley V. Serva
Vice President
Stacy Ward
Assistant Secretary
LENDING
Kevin J. Berkley
Executive Vice President
Senior Loan Officer
Tamara S. Pabis
Senior Vice President
Page 14 : Elmira Savings Bank : 2015 ANNUAL REPORT
ELMIRA SAVINGS BANK LOCATIONS
MAIN OFFICE
333 East Water Street
Elmira, NY 14902-9967
607-734-3374
CORNING
19 East Market Street, Suite 101
Corning, NY 14830
607-962-0812
HORSEHEADS
2149 Grand Central Avenue
Horseheads, NY 14845
607-734-3374
SOUTHPORT
1136 Pennsylvania Avenue
Elmira, NY 14904
607-734-3374
WEST ELMIRA
930 West Church Street
Elmira, NY 14905
607-734-3374
BIG FLATS
971 County Route 64
Big Flats, NY 14841
607-734-3374
ERWIN
404 S. Hamilton Street
Painted Post, NY 14870
607-936-1806
ITHACA LOAN CENTER
301 East State Street
Ithaca, NY 14850
607-257-3584
COMMONS
301 East State Street
Ithaca, NY 14850
607-272-1111
The People’s Bank
Finger Lakes
Region
MORAVIA
142 Main Street
Moravia, NY 13118
315-497-1300
WATKINS GLEN
712 N. Franklin Street
Watkins Glen, NY 14891
607-535-4026
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
ARNOT MALL ATM
Entrance 4 - Center Court
Horseheads, NY 14845
607-734-3374
ELMIRA HEIGHTS
2075 Lake Road
Elmira Heights, NY 14903
607-734-3374
TRIPHAMMER
2300 North Triphammer Road
Ithaca, NY 14850
607-257-8808
VESTAL LOAN CENTER*
3439 Vestal Parkway E.
Vestal, NY 13850
607-729-0386
*ATM available at all locations
except for the
Cortland Loan Center and
Vestal Loan Center.
Mobile Deposit
In April 2015 Elmira Savings Bank implemented
mobile deposit complementing its online
banking suite of products enabling the
customer to make a check deposit from their
personal device.
Elmira Savings Bank : 2015 ANNUAL REPORT : Page 15
The People’s Bank
www.elmirasavingsbank.com
Member FDIC | Equal Housing Lender
002CSN63EE