Evans Bancorp, Inc. (the “Company” or “Evans”) (NYSE American:
EVBN), a community financial services company serving Western New
York since 1920, today reported results of operations for the
second quarter ended June 30, 2023.
SECOND QUARTER 2023 REVIEW (compared with prior-year
period unless otherwise noted)
- Net income of $4.9 million reflected continued net interest
margin pressure, partially offset by non-interest income growth and
prudent expense management
- Total non-interest income of $4.7 million increased 2%
year-over-year and up 14% sequentially
- Total non-interest expense declined 4% to $14.2 million, down
2% sequentially
- Total loan balances of $1.67 billion up 3.5%
year-over-year
- The average rate paid on interest-bearing deposits was 2.18%,
up from 0.28% a year ago
Net income was $4.9 million, or $0.90 per diluted share, in the
second quarter of 2023, compared with $5.8 million, or $1.06 per
diluted share, in the first quarter of 2023 and $5.7 million, or
$1.03 per diluted share, in last year’s second quarter. The change
from the first quarter of 2023 reflected a decrease in net interest
income and reduced release of allowance for credit losses,
partially offset by higher non-interest income and lower
non-interest expense. The change from the prior year’s second
quarter was largely due to a reduction in net interest income,
partially offset by lower non-interest expense and a release of
allowance. Return on average equity was 12.25% for the second
quarter of 2023, compared with 14.97% in the first quarter of 2023
and 13.77% in the second quarter of 2022.
David J. Nasca, President and CEO of Evans Bancorp, Inc., said,
“We believe we are executing well given the challenging market
forces and backdrop of margin pressure. Staying close to clients
and cultivating prospective relationships remains paramount as we
maintain stable liquidity and pursue opportunities to continue
driving growth and loan production. Equally important is our focus
on controlling costs and efforts to improve efficiencies, which is
evidenced by our non-interest expense decline both
quarter-over-quarter and year-over-year.”
He added, “The net interest margin reduction during the quarter
reflects ongoing market forces that have driven deposits costs
higher. Overall, we believe we are maintaining our posture against
stiff competition as our team has continued to retain key deposits.
Looking ahead, we expect market dynamics and pricing pressures will
continue to have an impact on our margin in the third quarter and
then begin to moderate heading into the end of the year.”
Net Interest Income
($ in thousands)
2Q 2023
1Q 2023
2Q 2022
Interest income
$
23,988
$
23,365
$
19,097
Interest expense
8,307
6,040
1,045
Net interest income
15,681
17,325
18,052
Provision for credit losses
(116)
(654)
267
Net interest income after provision
$
15,797
$
17,979
$
17,785
Net interest income of $15.7 million was down $1.6 million, or
9%, from the sequential first quarter and $2.4 million, or 13%,
from last year’s second quarter due to higher interest expense
given the cost increase of interest-bearing liabilities as a result
of competitive pricing on deposits.
Second quarter net interest margin of 3.10% declined 36 basis
points over the trailing first quarter and 35 basis points from the
prior-year period. The yield on loans improved both sequentially
and year-over-year, up 10 basis points and 102 basis points,
respectively. The cost of interest-bearing liabilities was 2.18%
compared with 1.65% in the first quarter of 2023 and 0.28% in the
second quarter of 2022.
The $0.1 million release of allowance in the current quarter was
largely due to lower criticized loan balances, and lower specific
reserves on impaired loans, partially offset by loan growth.
“Given external market forces and current headwinds, we believe
our liquidity position is solid and backed by a diversified deposit
base as well as other alternative sources of funding. Total
deposits on an end of period basis did decline during the recent
quarter, though the vast majority – approximately $48 million –
consisted of typical seasonal municipal outflows,” commented John
Connerton, Chief Financial Officer of Evans Bank. “Credit quality
remains strong despite the rise in non-performing loans, which
reflects a single commercial credit of $6.5 million that is well
collateralized and still accruing.”
Asset Quality
($ in thousands)
2Q 2023
1Q 2023
2Q 2022
Total non-performing loans
$
27,789
$
24,084
$
22,010
Total net loan charge-offs
(recoveries)
35
(4)
66
Non-performing loans / Total loans
1.66
%
1.45
%
1.36
%
Net loan charge-offs / Average loans
0.01
%
-
%
0.02
%
Allowance for loan losses / Total
loans
1.28
%
1.30
%
1.17
%
Non-Interest Income
($ in thousands)
2Q 2023
1Q 2023
2Q 2022
Deposit service charges
$
645
$
613
$
703
Insurance service and fee revenue
2,720
2,429
2,567
Bank-owned life insurance
238
224
171
Other income
1,098
847
1,171
Total non-interest income
$
4,701
$
4,113
$
4,612
Total non-interest income increased $0.6 million, or 14%, from
the first quarter of 2023, and was up $0.1 million, or 2%, from
last year’s second quarter.
Insurance service and fee revenue increased 12% over the
sequential first quarter and was up 6% over last year’s second
quarter. The increase from the first quarter of 2023 reflects
seasonally higher policy renewals for institutional clients, while
the year-over-year increase was due to commissions from higher
premiums and new commercial lines insurance sales.
Other income increased $0.3 million from the sequential first
quarter primarily due to movements in mortgage servicing rights and
higher loan fees.
Non-Interest Expense
($ in thousands)
2Q 2023
1Q 2023
2Q 2022
Salaries and employee benefits
$
8,649
$
9,413
$
9,436
Occupancy
1,145
1,173
1,131
Advertising and public relations
407
156
438
Professional services
808
883
843
Technology and communications
1,542
1,356
1,237
Amortization of intangibles
100
100
100
FDIC insurance
350
350
250
Other expenses
1,171
1,071
1,349
Total non-interest expenses
$
14,172
$
14,502
$
14,784
Total non-interest expense decreased $0.3 million, or 2%, from
the first quarter of 2023, and was down $0.6 million, or 4%, from
last year’s second quarter.
Salaries and employee benefits were down $0.8 million, or 8%,
from both comparative periods. Included in salaries and employee
benefits during the first quarter of 2023 was the funding of
employee’s health savings accounts and payroll taxes that are
typically higher in the first quarter. Compared with last year’s
second quarter, the decrease was primarily due to lower incentive
accruals of $1.2 million partially offset by merit increases and
strategic hires.
Technology and communications increased $0.2 million from the
sequential first quarter and $0.3 million from last year’s second
quarter primarily due to higher ATM card fees and software
costs.
FDIC insurance increased $0.1 million from the second quarter of
2022 reflecting changes to the FDIC’s assessment rate schedules
intended to raise the reserve ratio of the Deposit Insurance
Fund.
Other expenses increased from the sequential first quarter
primarily due to charitable contributions. The decrease from last
year’s second quarter was due to lower loan fees.
The Company’s GAAP efficiency ratio, or noninterest expenses
divided by the sum of net interest income and noninterest income,
was 69.5% in the second quarter of 2023, 67.6% in the first quarter
of 2023, and 65.2% in the second quarter of 2022.
Income tax expense was $1.4 million, for an effective tax rate
of 22.0%, in the second quarter of 2023 compared with 23.6% in the
first quarter of 2023 and 24.7% in last year’s first quarter. The
decrease is due to stable non-taxable income on a decreasing
overall pre-tax income base.
Balance Sheet Highlights
Total assets were $2.15 billion as of June 30, 2023, an increase
of less than 1% since March 31, 2023, though down 2% from $2.21
billion at June 30, 2022. The change from last year’s second
quarter was due to a reduction in interest-bearing deposits at
banks of $78 million and investment securities of $49 million,
partially offset by an increase in loan balances of 3.5% or $57
million. The loan balance increase reflects higher commercial real
estate loans of $55 million and residential mortgages of $12
million, partially offset by commercial and industrial loans which
decreased $8 million.
Investment securities were $354 million at June 30, 2023, $16
million lower than the end of the first quarter of 2023 and $49
million lower than the end of last year’s second quarter. The
decrease reflects changes in unrealized gains and losses on
investment securities and maturities within our available-for-sale
investment portfolio. The primary objectives of the Company’s
investment portfolio are to provide liquidity, secure municipal
deposits, and maximize income while preserving the safety of
principal.
Total deposits of $1.79 billion decreased $63 million, or 3%,
from March 31, 2023, and $182 million, or 9%, from the end of last
year’s second quarter. The change from the sequential first quarter
reflects a decrease in demand deposits of $42 million, municipal
savings deposits of $32 million, consumer savings of $30 million,
commercial savings of $19 million and brokered deposits of $6
million, partially offset by an increase in NOW deposits of $35
million and time deposits of $24 million.
When compared with the end of last year’s second quarter, there
were deposit decreases in consumer savings of $196 million, demand
deposits of $108 million, commercial savings of $64 million,
municipal savings of $29 million, and brokered deposits of $6
million. Offsetting those decreases were higher consumer time
deposits of $183 million and NOW deposits of $38 million.
While the Company has not experienced a significant outflow of
deposits, in the event of such occurrences, the Bank has access to
alternate sources of funding to meet withdrawal demands. As of June
30, 2023, the Bank had $34 million in overnight borrowings at the
FHLB. Given the current collateral available at FHLB, advances up
to $337 million can be drawn on the FHLB via the banks overnight
line of credit. Additionally, the Bank has the ability to borrow
from the Federal Reserve and participates in the Bank Term Funding
Program. At June 30, 2023 the Bank had $100 million in short-term
borrowings with the Federal Reserve and had $54.5 million in
additional availability to borrow against collateral.
Capital Management
The Company has consistently maintained regulatory capital
ratios measurably above the Federal “well capitalized” standard,
including a Tier 1 leverage ratio of 9.43% at June 30, 2023
compared with 9.13% at March 31, 2023 and 8.73% at June 30,
2022.
Book value per share was $29.13 at June 30, 2023 compared with
$28.97 at March 31, 2023 and $29.53 at June 30, 2022. Reflected in
the book value changes are the Federal Reserve’s aggressive
interest rate hikes that have resulted in significant unrealized
losses on investment securities, which reduced book value per share
at June 30, 2023 by $2.94 when compared with the last year’s second
quarter. Such unrealized gains and losses are due to changes in
interest rates and represent the difference, net of applicable
income tax effect, between the estimated fair value and amortized
cost of investment securities classified as available-for-sale.
Tangible book value per share was $26.62 at June 30, 2023
compared with $26.44 at March 31, 2023 and $26.97 at June 30,
2022.
Webcast and Conference Call
The Company will host a conference call and webcast on Thursday,
July 27, 2023 at 4:45 p.m. ET. Management will review the financial
and operating results for the second quarter of 2023, as well as
the Company’s strategy and outlook. A question and answer session
will follow.
The conference call can be accessed by calling (201) 689-8471.
Alternatively, the webcast can be monitored at
www.evansbancorp.com .
A telephonic replay will be available from 8:00 p.m. ET on the
day of the teleconference until Thursday, August 10, 2023. To
listen to the archived call, dial (412) 317-6671 and enter
conference ID number 13739491, or access the webcast replay at
www.evansbancorp.com , where a transcript will be posted once
available.
About Evans Bancorp, Inc.
Evans Bancorp, Inc. is a financial holding company and the
parent company of Evans Bank, N.A., a commercial bank with $2.2
billion in assets and $1.8 billion in deposits at June 30, 2023.
Evans is a full-service community bank with 18 branches providing
comprehensive financial services to consumer, business and
municipal customers throughout Western New York. Evans Insurance
Agency, a wholly owned subsidiary, provides life insurance,
employee benefits, and property and casualty insurance through
eight offices in the Western New York region. Evans Investment
Services provides non-deposit investment products, such as
annuities and mutual funds.
Evans Bancorp, Inc. and Evans Bank routinely post news and other
important information on their websites, at www.evansbancorp.com
and www.evansbank.com.
Safe Harbor Statement: This news release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements include, but are not limited to, statements concerning
future business, revenue and earnings. These statements are not
historical facts or guarantees of future performance, events or
results. There are risks, uncertainties and other factors that
could cause the actual results of Evans Bancorp to differ
materially from the results expressed or implied by such
statements. Factors that may cause actual results to differ
materially from those contemplated by such forward-looking
statements include the impacts from COVID-19, competitive pressures
among financial services companies, interest rate trends, general
economic conditions, changes in legislation or regulatory
requirements, effectiveness at achieving stated goals and
strategies, and difficulties in achieving operating efficiencies.
These risks and uncertainties are more fully described in Evans
Bancorp’s Annual and Quarterly Reports filed with the Securities
and Exchange Commission. Forward-looking statements speak only as
of the date they are made. Evans Bancorp undertakes no obligation
to publicly update or revise forward-looking information, whether
as a result of new, updated information, future events or
otherwise.
EVANS BANCORP, INC. AND
SUBSIDIARIES
SELECTED FINANCIAL DATA
(UNAUDITED)
(in thousands, except shares and per
share data)
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
ASSETS
Interest-bearing deposits at banks
$
10,334
$
3,832
$
6,258
$
6,813
$
88,190
Investment Securities
353,836
369,636
371,275
376,713
403,322
Loans
1,670,753
1,658,576
1,672,369
1,626,457
1,613,834
Allowance for credit losses
(21,368
)
(21,523
)
(19,438
)
(18,630
)
(18,819
)
Goodwill and intangible assets
13,729
13,829
13,929
14,029
14,129
All other assets
127,679
123,920
134,117
124,323
107,698
Total assets
$
2,154,963
$
2,148,270
$
2,178,510
$
2,129,705
$
2,208,354
LIABILITIES AND STOCKHOLDERS'
EQUITY
Demand deposits
442,195
483,958
493,710
558,805
550,079
NOW deposits
303,159
268,283
273,359
263,648
265,181
Savings deposits
726,687
807,532
801,943
913,383
1,015,511
Time deposits
314,574
290,141
202,667
137,910
137,561
Total deposits
1,786,615
1,849,914
1,771,679
1,873,746
1,968,332
Borrowings
190,697
120,002
231,223
83,456
59,028
Other liabilities
18,167
20,103
21,615
22,652
18,319
Total stockholders' equity
159,484
158,251
153,993
149,850
162,675
SHARES AND CAPITAL RATIOS
Common shares outstanding
5,477,505
5,462,763
5,437,048
5,509,917
5,508,663
Book value per share
$
29.12
$
28.97
$
28.32
$
27.20
$
29.53
Tangible book value per share
$
26.61
$
26.44
$
25.76
$
24.65
$
26.97
Tier 1 leverage ratio
9.43
%
9.13
%
9.13
%
9.00
%
8.73
%
Tier 1 risk-based capital ratio
12.73
%
12.55
%
12.29
%
12.40
%
12.47
%
Total risk-based capital ratio
13.98
%
13.80
%
13.48
%
13.57
%
13.68
%
ASSET QUALITY DATA
Total non-performing loans
$
27,789
$
24,084
$
24,728
$
25,961
$
22,010
Total net loan charge-offs
(recoveries)
35
(4
)
115
1,518
66
Non-performing loans/Total loans
1.66
%
1.45
%
1.48
%
1.60
%
1.36
%
Net loan charge-offs (recoveries)/Average
loans
0.01
%
-
%
0.03
%
0.38
%
0.02
%
Allowance for credit losses/Total
loans
1.28
%
1.30
%
1.16
%
1.15
%
1.17
%
EVANS BANCORP, INC AND
SUBSIDIARIES
SELECTED OPERATIONS DATA
(UNAUDITED)
(in thousands, except share and per
share data)
2023
2023
2022
2022
2022
Second Quarter
First Quarter
Fourth Quarter
Third Quarter
Second Quarter
Interest income
$
23,988
$
23,365
$
22,381
$
20,487
$
19,097
Interest expense
8,307
6,040
3,167
1,299
1,045
Net interest income
15,681
17,325
19,214
19,188
18,052
Provision for credit losses
(116
)
(654
)
923
1,328
267
Net interest income after provision for
credit losses
15,797
17,979
18,291
17,860
17,785
Deposit service charges
645
613
684
782
703
Insurance service and fee revenue
2,720
2,429
2,204
3,383
2,567
Bank-owned life insurance
238
224
221
161
171
Other income
1,098
847
1,352
1,441
1,171
Total non-interest income
4,701
4,113
4,461
5,767
4,612
Salaries and employee benefits
8,649
9,413
9,498
10,450
9,436
Occupancy
1,145
1,173
1,190
1,118
1,131
Advertising and public relations
407
156
125
417
438
Professional services
808
883
871
839
843
Technology and communications
1,542
1,356
1,437
1,339
1,237
Amortization of intangibles
100
100
100
100
100
FDIC insurance
350
350
250
255
250
Other expenses
1,171
1,071
1,429
1,273
1,349
Total non-interest expenses
14,172
14,502
14,900
15,791
14,784
Income before income taxes
6,326
7,590
7,852
7,836
7,613
Income tax provision
1,394
1,790
1,809
1,972
1,879
Net income
4,932
5,800
6,043
5,864
5,734
PER SHARE DATA
Net income per common share-diluted
$
0.90
$
1.06
$
1.10
$
1.06
$
1.03
Cash dividends per common share
$
-
$
0.66
$
-
$
0.64
$
-
Weighted average number of diluted
shares
5,474,462
5,475,790
5,500,810
5,546,764
5,550,436
PERFORMANCE RATIOS
Return on average total assets
0.91
%
1.07
%
1.12
%
1.08
%
1.04
%
Return on average stockholders' equity
12.25
%
14.97
%
16.07
%
14.15
%
13.77
%
Return on average tangible common
stockholders' equity*
13.39
%
16.44
%
17.72
%
15.46
%
15.06
%
Efficiency ratio
69.53
%
67.65
%
62.94
%
63.28
%
65.23
%
Efficiency ratio (Non-GAAP)**
69.04
%
67.18
%
62.51
%
62.88
%
64.79
%
* The calculation of the average tangible
common stockholders' equity ratio excludes goodwill and intangible
assets from average stockholders equity.
** The calculation of the non-GAAP
efficiency ratio excludes amortization of intangibles, gains and
losses from investment securities, merger-related expenses and the
impact of historic tax credit transactions.
EVANS BANCORP, INC AND
SUBSIDIARIES
SELECTED AVERAGE BALANCES AND
YIELDS/RATES (UNAUDITED)
(in thousands)
2023
2023
2022
2022
2022
Second Quarter
First Quarter
Fourth Quarter
Third Quarter
Second Quarter
AVERAGE BALANCES
Loans, net
$
1,646,502
$
1,641,162
$
1,627,028
$
1,597,382
$
1,591,971
Investment securities
373,922
382,329
382,125
406,703
392,371
Interest-bearing deposits at banks
7,235
9,824
10,416
42,788
111,457
Total interest-earning assets
2,027,659
2,033,315
2,019,569
2,046,873
2,095,799
Non interest-earning assets
129,793
133,936
135,035
122,321
116,202
Total Assets
$
2,157,452
$
2,167,251
$
2,154,604
$
2,169,194
$
2,212,001
NOW
281,910
260,242
265,313
269,359
258,197
Savings
776,020
796,793
874,816
964,051
1,020,004
Time deposits
304,575
257,733
174,362
132,319
143,677
Total interest-bearing deposits
1,362,505
1,314,768
1,314,491
1,365,729
1,421,878
Borrowings
163,338
173,053
151,259
65,990
63,203
Total interest-bearing liabilities
1,525,843
1,487,821
1,465,750
1,431,719
1,485,081
Demand deposits
451,990
503,945
518,666
549,625
542,827
Other non-interest bearing liabilities
18,532
20,487
19,798
22,073
17,562
Stockholders' equity
161,087
154,998
150,390
165,777
166,531
Total Liabilities and Equity
$
2,157,452
$
2,167,251
$
2,154,604
$
2,169,194
$
2,212,001
Average tangible common stockholders'
equity*
147,299
141,111
136,406
151,690
152,345
YIELD/RATE
Loans, net
5.26
%
5.16
%
4.88
%
4.47
%
4.24
%
Investment securities
2.47
%
2.53
%
2.36
%
2.23
%
2.09
%
Interest-bearing deposits at banks
4.45
%
3.97
%
3.16
%
2.01
%
0.81
%
Total interest-earning assets
4.75
%
4.66
%
4.40
%
3.97
%
3.65
%
NOW
1.24
%
0.75
%
0.36
%
0.10
%
0.09
%
Savings
1.58
%
0.95
%
0.33
%
0.19
%
0.14
%
Time deposits
3.10
%
2.63
%
1.61
%
0.64
%
0.49
%
Total interest-bearing deposits
1.85
%
1.24
%
0.51
%
0.22
%
0.16
%
Borrowings
4.98
%
4.74
%
3.88
%
3.27
%
2.95
%
Total interest-bearing liabilities
2.18
%
1.65
%
0.86
%
0.36
%
0.28
%
Interest rate spread
2.57
%
3.01
%
3.54
%
3.61
%
3.37
%
Contribution of interest-free funds
0.53
%
0.45
%
0.23
%
0.11
%
0.08
%
Net interest margin
3.10
%
3.46
%
3.77
%
3.72
%
3.45
%
* Average tangible common stockholders'
equity excludes goodwill and intangible assets from average
stockholders equity.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230727906774/en/
For more information contact: John B. Connerton Executive
Vice President and Chief Financial Officer (716) 926-2000
jconnerton@evansbank.com Media Contact: Kathleen Rizzo Young
Group VP/Public & Community Relations Director 716-343-5562
krizzoyoung@evansbank.com
-OR- Deborah K. Pawlowski/Craig Mychajluk Kei Advisors
LLC (716) 843-3908 dpawlowski@keiadvisors.com
cmychajluk@keiadvisors.com
Grafico Azioni Evans Bancorp (AMEX:EVBN)
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