Shareholders Get News of Stock Increase -- Bid for Board Seat Fails.

ELMIRA, N.Y.--(BUSINESS WIRE)--April 24, 1998--Elmira Savings Bank, FSB (NASDAQ:ESBK) shareholders got details of a 73 percent increase in the value of their stock during 1997 at the Bank's annual shareholders' meeting held Tuesday, April 21. At the meeting shareholders re-elected three directors and appointed independent auditors for 1998.

In his address to shareholders, Elmira Savings Bank president and chief executive officer, John C. Brugler noted a 12 3/8 increase in the stock price from 17 3/8 at the end of 1996 to a closing price of 30 at the end of 1997. This combined with 1997 year end profits of $875,000, a 40 percent increase over the previous year, led the Bank to issue a 5 percent stock dividend on Jan. 15, 1998.

"The dividend is a desire to reward shareholders who have perservered through several years of uncertainty and tenuous results. Although profits have increased the Bank will continue to seek improvement, however we are pleased to have reached a substantial step on the path of progress in meeting and surpassing levels of performance similar to those of peer banks," Brugler said.

Highlights of 1997 which contributed to increased operating efficiencies included reductions in staffing and operating expense as well as the addition of a new upgraded computer system. During the year the Bank completed the purchase of its main office building which will allow for consolidation of operations now housed in two buildings in downtown Elmira. The year also saw the sale of the Bank's two operating subsidiaries.

"While these sales were unconnected they served to allow Bank management and the board of directors to focus totally on the future operation of a community bank," Brugler said.

Elmira Savings Bank will maintain its focus on profitability in 1998 while investing for long term growth. Included in the plans for the coming year are advances in technology on the branch operations level, new products designed to maximize relationships with customers and innovations in customer service.

"The Bank will continue to implement its thoroughly defined strategic plan which emphasizes a goal of improved profitability. To accomplish this, we will institute a series of upgrades, enhancements, objectives, and controls to support our mission as a community bank," Brugler said.

Hanaper Partners, an out-of-town family run investment firm, had announced plans to nominate Rodney M. Propp, a principal in that firm, to a seat on the board. Although the nomination was announced at the meeting, shareholders failed to support the proposal. Further, the nomination was inconsistent with the Bank's by-laws.

Director Anthony J. Cooper, who was targeted by Hanaper was easily re-elected to a three year term receiving over 88 percent of the votes cast. Also re-elected at the meeting were John R. Alexander, the company's corporate secretary and Cornelius J. Milliken, chairman of the board. Both Alexander and Milliken will serve three year terms.

Hanaper representative Morris Propp, during remarks made following the meeting, accused the directors of conflicts of interest in the sale of its Elmco subsidiary, the purchase of its main office building and its legal representation.

"These charges are completely without merit," said Paul B. Stull, vice president and Bank spokesman. "Hanaper is an out-of-town firm that lacks the knowledge or information to make such dramatic and unfounded charges. Hanaper failed to verify the facts in their allegations and appear to have relied upon one or more disgruntled former employees," Stull said.

"To suggest that these transactions were in any way inappropriate or not in the best interests of our shareholders is totally off base. Directors of Elmira Savings Bank have consistently been very judicious and have used, for example, independent committees and independent legal counsel to avoid any impropriety in their business dealings with the Bank. The Bank remains committed to its mission of service to our customers and increasing value for our shareholders," Stull said.

The Elmira Savings Bank is insured by the Federal Deposit Insurance Corp. (FDIC) and operates six offices in Chemung County, N.Y. and Tioga County, Penn.

CONTACT: Elmira Savings Bank

Paul B. Stull

607/737-8805

E-Mail: [e-mail]