ANNUAL REPORT
2019
ELMIRA SAVINGS BANK
Board of Directors
(Front row l-r) John R. Alexander, Vice Chairman and Corporate Secretary of the Board & Managing Partner, Sayles & Evans;
Thomas J. Gough, President, Gough Holding 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, Retired Executive Director, The Rockwell Museum.
(Back row l-r) Arie J. van den Blink, Chairman & Chief Executive Officer, The Hilliard Corporation; Michael P. Hosey, Chairman of the Board;
Marianne W. Young, Retired President & Chief Executive Officer, Market Street Trust Company ; Jodi J. Edger, President, Edger Enterprises, Incorporated;
Thomas M. Carr, President & Chief Executive Officer; A. Scott Welliver, Chairman & Chief Executive Officer, Welliver.
Page 2 : Elmira Savings Bank : 2019 ANNUAL REPORT
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.
ELMIRA SAVINGS BANK
Senior Officers
(Left to right):
Jason T. Sanford, Senior Vice President & Chief Financial Officer
Thomas M. Carr, President & Chief Executive Officer
Donna J. Tangorre, Senior Vice President & Retail Banking Manager
Kevin J. Berkley, Executive Vice President & Senior Loan Officer
Elmira Savings Bank : 2019 ANNUAL REPORT : Page 3
raise of $9.5 million, the repurchase of
the preferred stock which totaled $9.4
million and the difference between net
income and dividends. Our common
shares outstanding had a book value
per share of $17.07 at December 31,
2017, an increase of $0.33 per share
from December 31, 2016.
We invested in our branch network
in 2017 by completing our new full-
service branch located at 602 West
State Street in Ithaca in May. This
historic rehabilitation was a major
management focus for the last half of
2016 and the first five months of 2017.
The completed facility, showcased in
this report, is the centerpiece of our
franchise in Tompkins County. The
branch consists of a full-service Bank
Branch of 2,100 square feet with two
Thomas M. Carr
drive-through lanes, one of which
President & Chief Executive Officer
includes a state of the art ATM.
In addition to the Bank Branch, we have
leasable space on the second floor.
TO OUR
We also maintain control of several
SHAREHOLDERS
vacant parcels surrounding the State
Street Branch that we look forward to
developing in the future.
I am pleased to report that the Bank
had many accomplishments in
During 2017 we restructured our capital,
2019. Several of these achievements
first in April with the successful private
represent the first time we have
placement of 548,430 shares of common
reached certain milestones. Total assets
stock. These shares were placed with
were $607 million, total deposits were
select investors with no single investor
$512 million, and total loans were $519
acquiring more than 5% of total
million as of December 31, 2019. This
outstanding shares. The proceeds from
was the first time the Bank exceeded
this issuance totaled $9.5 million.
$600 million in total assets and $500
In December, the Bank repurchased all
million in total deposits and total loans.
of its shares of preferred stock that were
Assets increased by $17 million, or
outstanding. The liquidation value of
3%, year to year, while total deposits
these shares was $10.0 million. They
increased by 4%, or $21 million. Total
also had a dividend rate of 9.00%. The
loans increased by $37 million, or 8%.
shares were repurchased at a discount
Commercial loan originations totaled
of $600,000 with the total purchase
$40.5 million for 2019, a record level
price being $9.4 million.
of commercial originations. This was
We were able to repurchase these
shares with the capital raised in
the private placement of common
stock. After this transaction, the Bank
an increase of $5.6 million, or 16%.
maintained a core capital ratio of 8.5%
This origination level increased our
as of December 31, 2017, significantly
commercial loan portfolio by $10.1
above the well-capitalized level
million to total $143 million as of
established by Bank regulators.
December 31, 2019.
The anticipated effect of retiring
Our mortgage loan originations totaled
preferred shares will be to reduce the
$112 million for 2019, an increase of $31
overall dividends paid out of earnings,
million, or 38%, over the previous year.
increase the net income available to
This increase in originations was due, in
common shareholders, and improve
part, to a Bank-wide effort to increase
the Bank’s tangible common equity
production. The residential mortgage
ratio. We were pleased to execute this
portfolio increased by $21.9 million
repurchase and complete the second
year over year due to the success of our
step of our capital strategy during 2017.
Bank-wide effort.
As mentioned, we continue to
We are pleased with our deposit growth
work on improving operations and
of $21 million, or 4%, which is the
processes and are pleased to have
second consecutive year we achieved
implemented a mortgage loan process
deposit growth at a higher pace than
management system to improve the
many of our peers.
time it takes us to process a mortgage
This past year was a challenging year
loan from application to closing. This
for the Bank as earnings and share
effort began with an analysis of our
price trended lower. Net income was
2016 mortgage originations which
$3.5 million for 2019, 18% lower than
provided us with key information to
the previous year. This reduction is
standardize our process and establish
attributable to higher provision expense
benchmarks. The implementation of
and an increase in operating expense
this system has produced early results
from the previous year.
that are encouraging. In the first half
of 2017, our mortgage turn time was
Provision expense was $744,000 for
approximately 60 days. By the 4th
2019 as compared to the prior year
quarter of 2017, the average turn time
level of $367,000. This increase in
was 44 days, an improvement of 16 days
provision expense is attributable
from application to closing.
primarily to the increase in the loan
portfolio, combined with an increase in
Finally, we continued to invest in
net charge offs for the year.
technology. We recently continued
expansion of our Electronic Banking
Operating expense totaled $16.3 million
Services through an upgrade to our Bill
in 2019, an increase of $788,000 from
Pay Services, as well as expansion of the
the prior year. This increase is due to
Touch ID and Passcode access within
a $449,000 increase in salaries and
Mobile Banking. Bill Pay allows users
benefits and a $324,000 increase in
to pay all of their bills through Online
marketing and public relations expense.
or Mobile Banking rather than setting
The increases in salary and benefit
up payments on multiple websites or
paying by check. The latest version of
Bill Pay features an updated look and
streamlined efficiencies within Online
expense are due, in part, to high loan
Banking, as well as expanded abilities
volumes, which resulted in higher
offered through Mobile Banking.
compensation expense. In addition,
Additionally, the Elmira Savings Bank
the Bank experienced an increase in
Mobile Banking App was recently
healthcare expense.
updated to allow users to access all
During the second half of 2019,
functionalities of the App using a
Management implemented several
fingerprint or six-digit Passcode of
strategies to enhance profitability in
their choice.
2019 and into the future. We continue to
As we look forward to 2018, we are
be focused on improving our profitability
dedicated to organically growing our
in 2020 and are continuing to make
business. We are fortunate to have
changes to increase our earnings.
strong and expanding economies in our
In 2019, we commemorated the 150th
geographic footprint and will continue
anniversary of the Bank’s charter by
to focus on increasing our market share
hosting events in each market with the
in these regions.
150th anniversary as the theme. Our
We will continue to invest in our staff
marketing message accentuated the
and in technology to keep improving
150th anniversary and we published
the quality and convenience of every
a historical account of the Bank’s first
customer interaction with our institution.
150 years.
We have, and going forward will, benefit
We welcomed two new members
financially from changes in the federal
to our Board of Directors during
tax code. These changes have reduced
the year. Joining the Board were
our tax burden and will benefit our
Thomas J. Gough, President of Gough
shareholders, customers and employees.
Holding Corporation and Jodi J. Edger,
President, Edger Enterprises Inc. We are
We remain optimistic that regulatory
proud to have Mr. Gough and Mr. Edger
relief will occur in a meaningful way
as part of our team and look forward to
and provide us with reductions in
their contributions.
compliance-related burden.
As we continue to look forward,
We are determined to provide excellent
we are committed to fulfilling our
service for our customers and strong
mission as a regional community bank.
financial results for shareholders.
We appreciate our many loyal and
dedicated shareholders. We are focused
We appreciate your loyal support as
on improving profitability and creating
shareholders and look forward to
shareholder value.
continuing to build our business.
Thomas M. Carr
Thomas M. Carr
President and
President and
Chief Executive Officer
Chief Executive Officer
Elmira Savings Bank : 2017 ANNUAL REPORT : Page 5
Page 4 : Elmira Savings Bank : 2019 ANNUAL REPORT
ELMIRA SAVINGS BANK EMPLOYEES
Christina Allen
Nicholas Antczak
Shannon Bailey
Dwayne Balcom
Kathleen Bange
Nicole Battin
Blair Beavers
Mary Becker
Joyelle Briggs
Marilynne Burchard
Kadison Byrnes-Shaver
Kimberly Card
Rebecca Cartwright
Janet Caswell
Jennifer Catron
Jacqueline Cecce
Craig Charron
Brenda Cimakasky
Mandie Close
Jessica Coates
Brianna Cochran
Eugenia Cole
Phillip Collins
Linda Confer
Ashley Congdon
Susan Cook
Michele Corby
Kristie Cummings
Eric Dejesus
Keri Disidoro
Tina Dittler
Stacy Doane
Pamela Donovan
Nicholas Dutcher
Cory Eddy
April Eggleston-Branston
JoAnn Eldred
Kimberly Elliott
Kelly Ewanyk
Shanna Flint
Deborah French
Valerie Friedrich
Amy Frisbie
Patricia Frisbie
Shawna Fullmer
Christopher Giammichele
Ilene Girardi
Lorenda Gneo
Mario Gonzalez-Ayon
Meggie Hall
Kristin Haner
Robert Hazelton
Brittany Hernandez
Brooke Hockeborn
Malissa Hootman
Rachel Houseknecht
Margaret Hurd
Danielle Kehoe
William Klinko
Joshua Knoll
Debra Knowles
Theresa Laney
Anne Lavancher
Ellaminda Leader
Shaina Leister
Christina Losey
Trisha Luchaco
Colleen Manuel
Aimee Marshall
Julie May
Jill McConnell
Lindsey McCutcheon
Cherry Merrill
Kala Mitchell
Kassandra Moore
Katie Mosher
Haley Mullins
Katie Murphy
Jennifer Murphy
Jessica Ober
Kimberly O’Dell
Leah O’Neil
Sarah Parker
Eileen Payne
Margaret Phillips
James Pollen
Michael Price
Jacob Queener
Laura Reynolds
April Roberts
Deborah Rockwell
Sharla Root
Denise Sarro
Youngmi Schickel
Bethany Schroeder
Ashley Schultz
Meredith Schutt
Taryn Schwartz
BriAnn Schweitzer
Brad Serva
Gary Short
Dawn Siglin
Mark Simon
Karen Slusser
Christine Snyder
Frank Spena
Carrie Spencer
John Stempin
John Strong
Desirea Sullivan
Ashley Tallarida
Erin Thomas-Allen
Jenara Towner
Joseph Walker
Suzanne Walsh
Stacy Ward
Olivia West
Renee Wheeler
Tracy Wiles
Jennifer Wood
Judy Woodruff
Stacy Woodworth
Elmira Savings Bank : 2019 ANNUAL REPORT : Page 5
Assets, Deposits, and Loans ($000)
Total Assets Total Deposits Total Loans
$561,344
$573,450
$554,560
$440,472
$454,998
$469,547
$459,528
$456,762
$460,628
$590,040
$606,829
$491,517
$483,664
$512,215
$520,225
SELECTED FINANCIAL DATA
(in thousands, except share and per share amounts)
FINANCIAL STATEMENT HIGHLIGHTS
2019
2018
Assets
$ 606,829
590,040
$2,765
Loans (including loans held for sale)
520,225
483,664
2015
2016
2017
2018
2019
Per Share Data
Diluted Earnings Per Common Share
Cash Dividends Per Common Share
1.11
1.19
1.21
1.21
0.88
0.88
0.88
1.00
0.92
0.92
2015
2016
2017
2018
2019
Net Income ($000)
Net Income ($000) Available to Common Shareholders
$4,851
$4,122
$4,337
$4,006
$4,239
$4,239
$3,222
$3,437
$3,486
$3,486
Allowance for loan losses
Deposits
Shareholders’ equity
Net interest income
Provision for loan losses
Non-interest income
Non-interest expense
Net income
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
Shareholders’ equity to assets
Dividend payout ratio
Efficiency ratio
OTHER SELECTED DATA
Number of offices
Number of automated teller machines
4,576
4,372
512,215
491,517
58,611
16,428
744
4,773
16,277
3,486
$
1.00
1.00
16.67
0.92
0.57%
5.93%
9.66%
57,949
16,570
367
4,518
15,489
4,239
1.22
1.21
16.52
0.92
0.75%
7.36%
9.82%
92.00%
75.41%
76.77%
73.45%
12
13
14
14
Weighted average shares outstanding
3,495,089
3,479,916
Weighted average diluted shares outstanding
3,500,123
3,494,218
Share and per share data have been adjusted to reflect the 5% stock
dividend paid on June 15, 2018.
2015
2016
2017
2018
2019
Page 6 : Elmira Savings Bank : 2019 ANNUAL REPORT
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 $7,233
at December 31, 2019 and $7,638 at December 31, 2018
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
Goodwill
Other assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Borrowings
Other liabilities
Total liabilities
SHAREHOLDERS’ EQUITY:
Preferred stock, $1 par value; $1,000 liquidation value per issued share; 5,000,000 shares
authorized; 10,000 shares issued at December 31, 2019 and December 31, 2018
Common stock, $1 par value; authorized 5,000,000 shares; 3,606,089 shares
issued at December 31, 2019 and 3,597,605 at December 31, 2018
Additional paid-in capital
Retained earnings
Treasury stock, at cost - 93,883 common shares and 10,000 preferred shares
at December 31, 2019 and December 31, 2018
Accumulated other comprehensive income (loss)
Total Elmira Savings Bank shareholders’ equity
Noncontrolling interest
December 31,
2019
December 31,
2018
$
11,954
92
$
19,429
94
12,046
11,802
7,018
9,944
1,354
518,871
4,576
19,523
25,051
7,518
9,462
1,392
482,272
4,372
514,295
477,900
16,210
14,919
1,625
12,320
5,296
16,846
14,444
1,566
12,320
4,018
$ 606,829
$
590,040
$
512,215
29,000
7,003
$
491,517
31,000
9,574
548,218
532,091
9,700
3,606
53,993
3,432
(12,202)
32
58,561
50
9,700
3,598
53,784
3,176
(12,202)
(158)
57,898
51
Total shareholders’ equity
58,611
57,949
Total liabilities and shareholders’ equity
$ 606,829
$
590,040
Elmira Savings Bank : 2019 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
2018
2017
2019
$ 21,857
$ 19,569
$ 18,971
977
427
1,037
472
965
610
Total interest and dividend income
23,261
21,078
20,546
INTEREST EXPENSE
Interest on deposits
Interest on borrowings
Total interest expense
Net interest income
Provision for loan losses
5,992
841
3,565
943
6,833
4,508
2,951
1,047
3,998
16,428
744
16,570
367
16,548
895
Net interest income after provision for loan losses
15,684
16,203
15,653
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
1,399
1,830
90
865
385
204
1,456
1,588
-
813
384
277
1,485
2,701
-
739
390
122
4,773
4,518
5,437
8,537
1,562
1,517
1,060
574
3,027
8,088
1,596
1,392
736
541
3,136
8,183
1,499
1,278
884
720
3,320
Total noninterest expense
16,277
15,489
15,884
Income before income taxes
Income taxes
Net income
Less: Net income attributable to noncontrolling interest
4,180
689
3,491
5
5,232
988
4,244
5
5,206
350
4,856
5
Net income attributable to Elmira Savings Bank
$ 3,486
$ 4,239
$ 4,851
Dividend on preferred stock
-
-
845
Income available to common shareholders
$ 3,486
$ 4,239
$ 4,006
Basic earnings per common share
Diluted earnings per common share
$
$
1.00
1.00
$
$
1.22
1.21
$
$
1.22
1.21
Per share data has been restated to reflect a 5% stock dividend paid on June 15, 2018.
Page 8 : Elmira Savings Bank : 2019 ANNUAL REPORT
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 (expense) benefit
Realized securities gains included in net income
Tax expense
Other comprehensive income (loss), net of tax
Comprehensive income
Years Ended December 31,
2019
2018
2017
$ 3,486
$ 4,239
$ 4,851
347
(90)
257
(90)
23
(67)
190
(163)
42
(121)
-
-
-
(121)
(20)
8
(12)
-
-
-
(12)
$ 3,676
$ 4,118
$ 4,839
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
(Loss) Income
Noncontrolling
Interest
Total
Balance at December 31, 2018
$9,700
3,598
53,784
3,176
(12,202)
(158)
51
57,949
Net income
Other comprehensive income
Stock based compensation expense
Restricted stock grants (7,680 shares)
Exercise of stock options, net (804 shares)
Preferred stock repurchased -
noncontrolling interest
Cash dividend on preferred stock
Cash dividend on common stock
($.92 per share)
-
-
-
-
-
-
-
-
-
-
-
7
1
-
-
-
-
-
216
(7)
-
-
-
-
3,486
-
-
-
-
-
-
(3,230)
-
-
-
-
-
-
-
-
-
190
-
-
-
-
-
-
5
3,491
-
-
-
-
(1)
(5)
190
216
-
1
(1)
(5)
-
(3,230)
Balance at December 31, 2019
$ 9,700
3,606
53,993
3,432
(12,202)
32
50
58,611
Per share data has been restated to reflect the 5% stock dividend paid on June 15, 2018.
Elmira Savings Bank : 2019 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, 2019 and 2018, and the
related 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, 2019, and in our report dated March 16, 2020, we expressed
an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying
condensed financial statements is fairly stated, in all material respects, in relation to the consolidated financial
statements from which it has been derived.
Cranberry Township, Pennsylvania
March 16, 2020
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 2019 and 2018.
Quarters
2019
2018
High
Low
High
Low
First
19.09
16.32
19.95
19.19
Second
17.40
15.69
20.60
19.29
Third
16.40
13.97
21.00
20.10
Fourth
15.99
13.97
20.47
15.77
ANNUAL SHAREHOLDERS’ MEETING
The Annual Shareholders’ Meeting will be held at 10:00 a.m. on April 28, 2020 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 : 2019 ANNUAL REPORT
ELMIRA SAVINGS BANK LOCATIONS
MAIN OFFICE
333 East Water Street
Elmira, NY 14902-9967
607-734-3374
STATE STREET
602 West State Street
Ithaca, NY 14850
607-272-1111
HORSEHEADS
2149 Grand Central Avenue
Horseheads, NY 14845
607-734-3374
SOUTH MEADOW
702 South Meadow Street
Ithaca, NY 14850
607-272-2211
SOUTHPORT
1136 Pennsylvania Avenue
Elmira, NY 14904
607-734-3374
TRIPHAMMER
2300 North Triphammer Road
Suite 5
Ithaca, NY 14850
607-257-8808
BINGHAMTON
LOAN CENTER
84 Court Street
Binghamton, NY 13901
607-729-0386
WATKINS GLEN
712 North Franklin Street
Watkins Glen, NY 14891
607-535-4108
ARNOT MALL ATM
Entrance 4 - Center Court
Horseheads, NY 14845
607-734-3374
MORAVIA
142 Main Street
Moravia, NY 13118
315-497-1300
Finger Lakes
Region
WEST ELMIRA
930 West Church Street
Elmira, NY 14905
607-734-3374
BIG FLATS
971 County Route 64
Elmira, NY 14903
607-734-3374
CORNING
19 East Market Street, Suite 101
Corning, NY 14830
607-962-0812
ERWIN
404 South Hamilton Street
Painted Post, NY 14870
607-936-1806
Elmira Savings Bank : 2019 ANNUAL REPORT : Page 11
www.elmirasavingsbank.com
Member FDIC | Equal Housing Lender
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