Elmer Bancorp, Inc. Announces Third Quarter 2020 Financial Results

ELMER BANCORP, INC. (“Elmer Bancorp” or the “Company”) (OTC Pink: ELMA), the parent company of The First National Bank of Elmer (the “Bank”), announces its operating results for the three and nine months ended September 30, 2020.

For the three months ended September 30, 2020, Elmer Bancorp reported net income of $183,000, or $0.16 per common share compared to $556,000, or $0.49 per common share for the quarter ended September 30, 2019. For the nine months ended September 30, 2020 net income totaled $1.147 million, or $1.00 per common share compared to $1.486 million, or $1.30 per common share for the nine months ended September 30, 2019.

Net income for both the three and nine-month periods ended September 30, 2020 was significantly impacted by increases in the provision for loan losses. For the three months ended September 30, 2020, provisions for loan losses totaled $335,000 compared to $23,000 for the three months ended September 30, 2019, an increase of $312,000. For the nine-month period ended September 30, 2020, provisions for loan losses totaled $571,000 compared to $198,000 for the nine months ended September 30, 2019, an increase of $373,000. These increases in the loan loss provision were necessary due to the uncertainties in the economy and the ability of businesses to recover from the effects of the coronavirus pandemic. Management continues to remain cautious in the current operating environment by increasing the loan loss provisions and adding to the allowance for losses. As a result, at September 30, 2020, the allowance for loan losses was 1.52% of total core loans (excluding Paycheck Protection Program loans (PPP)) compared to 1.39% of total loans at December 31, 2019.

Net interest income for the three months ended September 30, 2020 totaled $2.716 million, compared to $2.776 million for the three months ended September 30, 2019. For the nine months ended September 30, 2020, net interest income totaled $8.311 million compared to $8.365 million for the nine-month period of 2019. An increase in interest income on loans resulting from core loan growth year-over-year and interest income related to the addition of $32.0 million in SBA PPP loans was more than offset by a reduction in interest income on investments, primarily interest on overnight investments resulting from the significant drop in interest rates in 2020.

Non-interest income for the three months ended September 30, 2020 was $50,000 lower than the same three-month period last year and $62,000 lower than the nine-month period last year. Significant declines in service charges on deposit accounts, primarily overdraft fees and losses on the sale of other real estate were partially offset by an increase in the cash surrender value of Bank Owned Life Insurance (“BOLI”) as the Company increased it’s investment in BOLI year-over-year. In addition, fee income on the placement of mortgages increased year-over-year. Non-interest expenses were higher for both the three and nine months ended September 30, 2020 versus the prior year periods by $112,000 and $19,000, respectively. Higher employment costs, legal and professional services and data processing expenses were partially offset by lower occupancy costs (building maintenance and repairs and snow removal costs) and lower write-downs on other real estate.

Elmer Bancorp’s total assets at September 30, 2020 totaled $326.6 million compared to $285.4 million at September 30, 2019. Total core assets (excluding PPP related assets) totaled $294.9 million, an increase of $9.5 million over September 30, 2019 and $9.1 million higher than December 31, 2019. Loans totaled $289.1 million at September 30, 2020. Total core loans (excluding PPP loans) at September 30, 2020 were $257.4 million, $21.0 million higher than September 30, 2019 and $14.1 million higher than December 31, 2019. The growth in loans was attributable to increases in commercial real estate loans, construction loans and residential mortgage loans.

Deposits saw a significant increase primarily resulting from the PPP loan program and other government stimulus programs. At September 30, 2020, total deposits were $296.8 million, an increase of $39.6 million over the December 31, 2019 total of $257.2 million. Increases in non-interest-bearing demand deposits, money market accounts and savings deposits contributed to the increase in deposit levels.

Stockholders’ equity at September 30, 2020 totaled $28.1 million compared to $26.8 million at December 31, 2019. Book value per share at September 30, 2020 was $24.46 per common share compared to $23.32 at December 31, 2019 and $23.24 at September 30, 2019. The Company and the Bank met all capital requirements at September 30, 2020.

Brian W. Jones, President and Chief Executive Officer, stated, “As we come to the close of another quarter in 2020, we continue to navigate through these economically troubled times by providing continued support for our loyal customer base whether it be through forbearance agreements, assisting in the process of applying for, or the forgiveness of, SBA PPP loans, or by providing new extensions of credit. While our earnings performance for the third quarter and the year-to-date 2020 was significantly impacted by increased loan loss provisions and the lower interest rate environment, we remain a strong institution. We are pleased that we have been able to maintain positive growth trends in both our core loan portfolio and deposit base. In addition, the Board of Directors declared a $0.16 per common share dividend on October 1, 2020, payable on November 2, 2020 to stockholders of record as of the close of business on October 16, 2020. Yet, as the coronavirus pandemic continues, there remains much uncertainty in the months ahead regarding future economic conditions and the overall effect the pandemic will have on the capital of many financial institutions. As we continue to remain cautious, we anticipate future increases in the provision for loan losses to bolster our allowance for possible loan losses related to the COVID-19 pandemic. The continued support of our loyal customer base, stockholders and employees is very much appreciated and we wish you all good health.”

The First National Bank of Elmer, a nationally chartered bank headquartered in Elmer, New Jersey, has a long history of serving the community since its beginnings in 1903. We are a community bank focused on providing deposit and loan products to retail customers and to small and mid-sized businesses from our six full-service branch offices located in Cumberland, Gloucester and Salem Counties, New Jersey, including our main office located at 10 South Main Street in Elmer, New Jersey. Deposits at The First National Bank of Elmer are insured up to the legally maximum amount by the Federal Deposit Insurance Corporation (FDIC).

For more information about Elmer Bank and its products and services, please visit our website at www.elmerbank.com or call toll free 1-877-358-8141.

Forward-Looking Statements

This press release and other statements made from time to time by the Company’s management contain express and implied statements relating to our future financial condition, results of operations, credit quality, corporate objectives, and other financial and business matters, which are considered forward-looking statements. These forward-looking statements are necessarily speculative and speak only as of the date made, and are subject to numerous assumptions, risks and uncertainties, all of which may change over time. Actual results could differ materially from those expected or implied by such forward-looking statements. Risks and uncertainties which could cause our actual results to differ materially and adversely from such forward-looking statements include economic conditions affecting the financial industry: changes in interest rates and shape of the yield curve, credit risk associated with our lending activities, risks relating to our market area, significant real estate collateral and the real estate market, operating, legal and regulatory risk, fiscal and monetary policy, economic, political and competitive forces affecting our business, our ability to identify and address cyber-security risks, and management’s analysis of these risks and factors being incorrect, and/or the strategies developed to address them being unsuccessful. Any statements made that are not historical facts should be considered forward-looking statements. You should not place undue reliance on any forward-looking statements. We undertake no obligation to update forward-looking statements or to make any public announcement when we consider forward-looking statements to no longer be accurate because of new information of future events, except as may be required by applicable law or regulation.

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