FINANCIAL STATEMENTS

Consolidated Statements of Financial Condition
Dollar Amounts in Thousands

                                                                                                                  As of December 31,          

President's Message

       

We are pleased to report that our 156th year of operation was very successful with strong net income against a backdrop of challenging issues throughout the financial services industry.

The investments we made a decade ago, in accordance with our current business model, have positioned us very well.  Holding true to our expertise and beliefs will allow us to partake of opportunities as they become available and insure that we are well positioned over the next ten years.

We are excited to announce that the bank has an option on property in another community for a financial services branch, our first addition to our operating footprint in twenty years.  During the last ten years we focused primarily on building business in personal, commercial, trust, retirement and investment services.

Our customers constantly tell us that they appreciate the personal attention they receive and the consultative approach we take in examining their needs and goals. We take the time to listen to clients’ concerns and respond like they are members of our family.  Our talented professionals consistently strive to add value, build relationships with all participants in the process and serve as trusted resources. Strategically, we have chosen a vision that strives to simplify an unprecedented array of options.

Results for the year ended December 31, 2007, included bank assets rising to $259 million from $251 million. Core capital increased to $30 million, far in excess of regulatory requirements. At the end of the year, once again, we have zero real estate owned and no non-performing loans, confirming the strength of the bank’s loan portfolio. During the year, operating net income remained solid at $2.2 million compared to $2.4 million in the same period last year. Last year’s net income included an extraordinary gain of $175,000, which reflected the collection of a deficiency judgment left over from the past downturn in the nineties. Operating contributions from banking, both retail and commercial, and trust were balanced. Outstanding results were achieved from our independent broker dealer, Essex Financial Services, Inc., as its revenue rose 24 percent in 2007, to $11.2 million, accounting for 54 percent of the institution’s $20.7 million of total revenue. Gross interest income rose by $1.2 million, for a total $15.1 million, while interest expense rose faster at $1.4 million. Our loan portfolio expanded by $10 million through the efforts of our experienced loan officers. Deposits increased to $188 million, as advances from the Federal Home Loan Bank declined by $4.5 million. Our Trust Department continued to make excellent progress by expanding relationships, resulting in another 32% increase in total assets to $158 million from $120 million reported last year.

Essex Financial Services, Inc., our subsidiary, continued to excel, demonstrating their ability to build their practice with significant referrals from attorneys, accountants and satisfied clients. John W. Rafal, President, was selected by Barron’s, in their "The Best of the Best" article, as the number one independent financial advisor in the country. Connecticut Magazine also rated him number two in Connecticut for two years in a row. Managed assets at Essex Financial Services rose to $2.1 billion, an increase of $300 million.

Essex Savings Bank operates as an independent mutual savings bank for the benefit of our customers, communities and employees. For more than a dozen years, we have shared 10% of our after tax net income through our Community Investment Program. This year we will distribute a record $302,000 to our community to over 200 different nonprofits. Total distributions will reach $2.4 million since the inception of the program in 1996. Voting by our customers determines 30% of the yearly allocations through balloting for participating non-profits. 

Nothing would be possible without our clients’ faith in us to effectively assist them with their financial needs. We also thank our Directors, Officers and Staff who make this business a successful endeavor, year after year.

Sincerely,


Gregory R. Shook
President & Chief Executive Officer

 

Member FDIC           Equal Housing Lender
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