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 first
quarter ended March 31, 2023.
FIRST QUARTER 2023 HIGHLIGHTS (compared with prior-year
period unless otherwise noted)
- Net income increased 22% to $5.8 million, or $1.06 per diluted
share
- Results included $0.7 million provision release due to changes
in loan balances and qualitative factors
- Total non-interest expense of $14.5 million was flat with last
year and down 3% sequentially
- Average loan balances of $1.64 billion up 5% year-over-year and
up 1% sequentially
- Average total deposits of $1.82 billion down 1% in the quarter;
The average rate paid on interest-bearing deposits was 1.24%, up
from 0.16% a year ago
Net income was $5.8 million, or $1.06 per diluted share, in the
first quarter of 2023, up 22%, or $1.1 million, from $4.7 million,
or $0.86 per diluted share, in last year’s first quarter. The
increase reflected higher net interest income and a reduction in
provision for credit losses, partially offset by lower non-interest
income. Net income for the fourth quarter of 2022 was $6.0 million,
or $1.10 per diluted share. The change from the sequential fourth
quarter was largely due to a reduction in net interest income,
partially offset by a release of allowance for credit losses.
Return on average equity was 14.97% for the first quarter of 2023,
compared with 16.07% in the fourth quarter of 2022 and 10.46% in
the first quarter of 2022.
”Evans delivered solid results during a period of heightened
volatility and the headwinds of margin pressure caused by rising
interest rates and competitive pricing. Year-over-year, we have
continued to execute our strategy to grow responsibly by
cultivating core relationships and attracting new customers while
maintaining credit quality, optimizing operational efficiency, and
controlling costs to deliver optimal returns, said David J. Nasca,
President and CEO of Evans Bancorp, Inc. “Looking ahead, we remain
highly focused on supporting our customers and community through
this challenging economic environment.”
Net Interest Income
($ in thousands)
1Q 2023
4Q 2022
1Q 2022
Interest income
$
23,365
$
22,381
$
17,517
Interest expense
6,040
3,167
1,016
Net interest income
17,325
19,214
16,501
Provision for credit losses
(654)
923
221
Net interest income after provision
$
17,979
$
18,291
$
16,280
Net interest income of $17.3 million was down $1.9 million, or
10%, from the sequential fourth quarter due to higher interest
expense given the cost increase of interest-bearing liabilities as
a result of competitive pricing on deposits. When compared with
last year’s first quarter, net interest income was up $0.8 million,
or 5%, as a result of the 450 basis point increase in federal funds
rates and higher average loan and investment balances.
First quarter net interest margin of 3.46% declined 31 basis
points over the trailing fourth quarter but improved 28 basis
points from the prior-year period. The yield on loans improved both
sequentially and year-over-year, up 28 basis points and 109 basis
points, respectively. The cost of interest-bearing liabilities was
1.65% compared with 0.86% in the fourth quarter of 2022 and 0.27%
in the first quarter of 2022.
The $0.7 million release of allowance in the current quarter was
largely due to lower loan balances, a reduction in rate of
increases in home prices in the Company’s market and lower specific
reserves on impaired loans.
Upon adoption of ASU 2016-13, Measurement of Credit Losses on
Financial Instruments, the Company recognized a $2.7 million
increase in the allowance for credit losses as of January 1, 2023
with a cumulative adjustment to retained earnings net of tax of
$2.0 million.
John Connerton, Chief Financial Officer of Evans Bank,
commented, “Deposit betas accelerated during the quarter with
elevated rates for deposits and customers looking for options with
greater returns. Funding balances have been maintained with the use
of competitive pricing within our products, as reflected in the
shift in deposit mix and subsequent increase in the rates paid on
our interest-bearing deposits. We expect that these market
conditions and pricing pressures will have an impact on our margin
for the second quarter.”
Asset Quality
($ in thousands)
1Q 2023
4Q 2022
1Q 2022
Total non-performing loans
$
24,084
$
24,728
$
20,659
Total net loan charge-offs
(recoveries)
(4)
115
41
Non-performing loans / Total loans
1.45
%
1.48
%
1.29
%
Net loan charge-offs / Average loans
-
%
0.03
%
0.01
%
Allowance for loan losses / Total
loans
1.30
%
1.16
%
1.16
%
Non-Interest Income
($ in thousands)
1Q 2023
4Q 2022
1Q 2022
Deposit service charges
$
613
$
684
$
692
Insurance service and fee revenue
2,429
2,204
2,299
Bank-owned life insurance
224
221
154
Other income
847
1,352
1,286
Total non-interest income
$
4,113
$
4,461
$
4,431
Insurance service and fee revenue increased 10% over the
sequential fourth quarter and was up 6% from last year’s first
quarter. The increase over both comparative periods was due to
increased profit sharing revenue and commissions from higher
premiums and new commercial lines insurance sales.
Included in the sequential 2022 fourth quarter other income was
a $0.2 million gain on sale of an asset that was acquired in
foreclosure as well as $0.2 million of revenue recognized relating
to rents received from the acquired asset. The decrease in other
income from last year’s first quarter was primarily due to
movements in mortgage servicing rights and lower loan fees.
Non-Interest Expense
($ in thousands)
1Q 2023
4Q 2022
1Q 2022
Salaries and employee benefits
$
9,413
$
9,498
$
9,470
Occupancy
1,173
1,190
1,180
Advertising and public relations
156
125
179
Professional services
883
871
872
Technology and communications
1,356
1,437
1,174
Amortization of intangibles
100
100
100
FDIC insurance
350
250
270
Other expenses
1,071
1,429
1,215
Total non-interest expenses
$
14,502
$
14,900
$
14,460
Total non-interest expense decreased $0.4 million, or 3%, from
the fourth quarter of 2022, and was relatively flat with last
year’s first quarter.
Salaries and employee benefits were down slightly from both
comparative periods as merit increases and strategic hires were
offset by lower incentive accruals of $0.6 million when compared
with both the sequential fourth quarter and last year’s first
quarter.
Technology and communications increased $0.2 million from last
year’s first quarter primarily due to higher software costs.
FDIC insurance increased $0.1 million from both comparative
periods reflecting changes to the FDIC’s assessment rate schedules
intended to raise the reserve ratio of the Deposit Insurance
Fund.
Other expenses decreased from the sequential fourth quarter
primarily due to lower loan fees of $0.3 million and expenses
relating to a foreclosed property of $0.1 million in the fourth
quarter.
The Company’s GAAP efficiency ratio, or noninterest expenses
divided by the sum of net interest income and noninterest income,
was 67.6% in the first quarter of 2023, 62.9% in the fourth quarter
of 2022, and 69.1% in the first quarter of 2022.
Income tax expense was $1.8 million, for an effective tax rate
of 23.6%, in the first quarter of 2023 compared with 23.0% in the
fourth quarter of 2022 and 24.0% in last year’s first quarter.
Balance Sheet Highlights
Total assets were $2.15 billion as of March 31, 2023, down 1%
from December 31, 2022 and down 4% from March 31, 2022. The change
from last year’s first quarter was due to a reduction in
interest-bearing deposits at banks of $143 million, partially
offset by an increase in loan balances of $54 million. When
compared with last year’s first quarter, commercial real estate
loans increased $36 million, commercial and industrial loans
increased $8 million, excluding PPP loan balances, and residential
mortgages increased $18 million. PPP loan balances were less than
$1 million at quarter-end, down $9 million from the prior-year
period.
Investment securities were $370 million at March 31, 2023, $1.6
million lower than the end of the fourth quarter of 2022 and $19
million lower than the end of last year’s first quarter. The
decrease from prior year reflects changes in unrealized gains and
losses on investment securities. 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 $1.85 billion increased $78 million, or 4%,
from December 31, 2022, but decreased $137 million, or 7%, from the
end of last year’s first quarter. The increase from the sequential
fourth quarter reflects an increase in time deposits of $87
million, municipal savings deposits of $52 million, and commercial
savings of $15 million, partially offset by a decrease in consumer
savings of $62 million, demand deposits of $10 million, and NOW
deposits of $5 million.
When compared with the end of last year’s first quarter, there
were deposit decreases in consumer savings of $163 million,
commercial savings of $51 million, demand deposits of $45 million,
municipal savings of $30 million, and brokered deposits of $2
million. Offsetting those decreases were higher consumer time
deposits of $143 million and NOW deposits of $11 million.
While the Company has not experienced a significant outflow of
deposits, in the event of such occurrences, the Bank may need to
rely on other sources of funding to meet withdrawal demands. As of
March, 31, 2023, given the current collateral available, advances
up to $335 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.
Capital Management
The Company has consistently maintained regulatory capital
ratios measurably above the Federal “well capitalized” standard,
including a Tier 1 leverage ratio of 9.13% at March 31, 2023 and
December 31, 2022, compared with 8.57% at March 31, 2022.
Book value per share was $28.97 at March 31, 2023 compared with
$28.32 at December 31, 2022 and $30.65 at March 31, 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 March 31, 2023 by $4.37 when compared with the last year’s first
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 $26.44 at March 31, 2023
compared with $25.76 at December 31, 2022 and $28.08 at March 31,
2022.
On February 22, 2023, the Company declared a cash dividend of
$0.66 per common share, which was paid on April 4, 2023. The
semi-annual dividend represented a $0.02, or 3%, increase from the
previous semi-annual dividend paid in October 2022.
Webcast and Conference Call
The Company will host a conference call and webcast on Thursday,
April 27, 2023 at 4:45 p.m. ET. Management will review the
financial and operating results for the first 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, May 4, 2023. To listen to
the archived call, dial (412) 317-6671 and enter conference ID
number 13737659, 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 $2.1
billion in assets and $1.8 billion in deposits at March 31, 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)
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
ASSETS
Interest-bearing deposits at banks
$
3,832
$
6,258
$
6,813
$
88,190
$
147,277
Investment Securities
369,636
371,275
376,713
403,322
388,953
Loans
1,658,576
1,672,369
1,626,457
1,613,834
1,604,079
Allowance for credit losses
(21,523)
(19,438)
(18,630)
(18,819)
(18,618)
Goodwill and intangible assets
13,829
13,929
14,029
14,129
14,229
All other assets
123,920
134,117
124,323
107,698
104,814
Total assets
$
2,148,270
$
2,178,510
$
2,129,705
$
2,208,354
$
2,240,734
LIABILITIES AND STOCKHOLDERS'
EQUITY
Demand deposits
483,958
493,710
558,805
550,079
528,962
NOW deposits
268,283
273,359
263,648
265,181
257,475
Savings deposits
807,532
801,943
913,383
1,015,511
1,051,136
Time deposits
290,141
202,667
137,910
137,561
149,243
Total deposits
1,849,914
1,771,679
1,873,746
1,968,332
1,986,816
Borrowings
120,002
231,223
83,456
59,028
64,322
Other liabilities
20,103
21,615
22,652
18,319
20,393
Total stockholders' equity
158,251
153,993
149,850
162,675
169,203
SHARES AND CAPITAL RATIOS
Common shares outstanding
5,462,763
5,437,048
5,509,917
5,508,663
5,519,831
Book value per share
$
28.97
$
28.32
$
27.20
$
29.53
$
30.65
Tangible book value per share
$
26.44
$
25.76
$
24.65
$
26.97
$
28.08
Tier 1 leverage ratio
9.13
%
9.13
%
9.00
%
8.73
%
8.57
%
Tier 1 risk-based capital ratio
12.55
%
12.29
%
12.40
%
12.47
%
12.55
%
Total risk-based capital ratio
13.80
%
13.48
%
13.57
%
13.68
%
13.78
%
ASSET QUALITY DATA
Total non-performing loans
$
24,084
$
24,728
$
25,961
$
22,010
$
20,659
Total net loan charge-offs
(recoveries)
(4)
115
1,518
66
41
Non-performing loans/Total loans
1.45
%
1.48
%
1.60
%
1.36
%
1.29
%
Net loan charge-offs (recoveries)/Average
loans
-
%
0.03
%
0.38
%
0.02
%
0.01
%
Allowance for credit losses/Total
loans
1.30
%
1.16
%
1.15
%
1.17
%
1.16
%
EVANS BANCORP, INC AND
SUBSIDIARIES
SELECTED OPERATIONS DATA
(UNAUDITED)
(in thousands, except share and per
share data)
2023
2022
2022
2022
2022
First Quarter
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Interest income
$
23,365
$
22,381
$
20,487
$
19,097
$
17,517
Interest expense
6,040
3,167
1,299
1,045
1,016
Net interest income
17,325
19,214
19,188
18,052
16,501
Provision for credit losses
(654)
923
1,328
267
221
Net interest income after provision for
credit losses
17,979
18,291
17,860
17,785
16,280
Deposit service charges
613
684
782
703
692
Insurance service and fee revenue
2,429
2,204
3,383
2,567
2,299
Bank-owned life insurance
224
221
161
171
154
Other income
847
1,352
1,441
1,171
1,286
Total non-interest income
4,113
4,461
5,767
4,612
4,431
Salaries and employee benefits
9,413
9,498
10,450
9,436
9,470
Occupancy
1,173
1,190
1,118
1,131
1,180
Advertising and public relations
156
125
417
438
179
Professional services
883
871
839
843
872
Technology and communications
1,356
1,437
1,339
1,237
1,174
Amortization of intangibles
100
100
100
100
100
FDIC insurance
350
250
255
250
270
Other expenses
1,071
1,429
1,273
1,349
1,215
Total non-interest expenses
14,502
14,900
15,791
14,784
14,460
Income before income taxes
7,590
7,852
7,836
7,613
6,251
Income tax provision
1,790
1,809
1,972
1,879
1,503
Net income
5,800
6,043
5,864
5,734
4,748
PER SHARE DATA
Net income per common share-diluted
$
1.06
$
1.10
$
1.06
$
1.03
$
0.86
Cash dividends per common share
$
0.66
$
-
$
0.64
$
-
$
0.62
Weighted average number of diluted
shares
5,475,790
5,500,810
5,546,764
5,550,436
5,547,548
PERFORMANCE RATIOS
Return on average total assets
1.07
%
1.12
%
1.08
%
1.04
%
0.86
%
Return on average stockholders' equity
14.97
%
16.07
%
14.15
%
13.77
%
10.46
%
Return on average tangible common
stockholders' equity*
16.44
%
17.72
%
15.46
%
15.06
%
11.35
%
Efficiency ratio
67.65
%
62.94
%
63.28
%
65.23
%
69.08
%
Efficiency ratio (Non-GAAP)**
67.18
%
62.51
%
62.88
%
64.79
%
68.60
%
* 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
2022
2022
2022
2022
First Quarter
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
AVERAGE BALANCES
Loans, net
$
1,641,162
$
1,627,028
$
1,597,382
$
1,591,971
$
1,566,716
Investment securities
382,329
382,125
406,703
392,371
357,930
Interest-bearing deposits at banks
9,824
10,416
42,788
111,457
178,729
Total interest-earning assets
2,033,315
2,019,569
2,046,873
2,095,799
2,103,375
Non interest-earning assets
133,936
135,035
122,321
116,202
110,316
Total Assets
$
2,167,251
$
2,154,604
$
2,169,194
$
2,212,001
$
2,213,691
NOW
260,242
265,313
269,359
258,197
252,965
Savings
796,793
874,816
964,051
1,020,004
1,024,447
Time deposits
257,733
174,362
132,319
143,677
156,534
Total interest-bearing deposits
1,314,768
1,314,491
1,365,729
1,421,878
1,433,946
Borrowings
173,053
151,259
65,990
63,203
65,154
Total interest-bearing liabilities
1,487,821
1,465,750
1,431,719
1,485,081
1,499,100
Demand deposits
503,945
518,666
549,625
542,827
512,118
Other non-interest bearing liabilities
20,487
19,798
22,073
17,562
20,897
Stockholders' equity
154,998
150,390
165,777
166,531
181,576
Total Liabilities and Equity
$
2,167,251
$
2,154,604
$
2,169,194
$
2,212,001
$
2,213,691
Average tangible common stockholders'
equity*
141,111
136,406
151,690
152,345
167,287
YIELD/RATE
Loans, net
5.16
%
4.88
%
4.47
%
4.24
%
4.07
%
Investment securities
2.53
%
2.36
%
2.23
%
2.09
%
1.95
%
Interest-bearing deposits at banks
3.97
%
3.16
%
2.01
%
0.81
%
0.16
%
Total interest-earning assets
4.66
%
4.40
%
3.97
%
3.65
%
3.38
%
NOW
0.75
%
0.36
%
0.10
%
0.09
%
0.09
%
Savings
0.95
%
0.33
%
0.19
%
0.14
%
0.14
%
Time deposits
2.63
%
1.61
%
0.64
%
0.49
%
0.44
%
Total interest-bearing deposits
1.24
%
0.51
%
0.22
%
0.16
%
0.16
%
Borrowings
4.74
%
3.88
%
3.27
%
2.95
%
2.79
%
Total interest-bearing liabilities
1.65
%
0.86
%
0.36
%
0.28
%
0.27
%
Interest rate spread
3.01
%
3.54
%
3.61
%
3.37
%
3.11
%
Contribution of interest-free funds
0.45
%
0.23
%
0.11
%
0.08
%
0.07
%
Net interest margin
3.46
%
3.77
%
3.72
%
3.45
%
3.18
%
* 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/20230427005834/en/
For more information contact: John B.
Connerton Executive Vice President and Chief Financial Officer
(716) 926-2000 jconnerton@evansbank.com -OR- Deborah K.
Pawlowski/Craig Mychajluk Kei Advisors LLC (716) 843-3908
dpawlowski@keiadvisors.com cmychajluk@keiadvisors.com Media
Contact: Kathleen Rizzo Young Public & Community Relations
Manager 716-343-5562 krizzoyoung@evansbank.com
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