EVANS BANCORP 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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|
þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For quarterly period ended March 31, 2007
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o |
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 0-18539
EVANS BANCORP, INC.
(Exact name of registrant as specified in its charter)
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|
New York
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16-1332767 |
|
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|
(State of other jurisdiction of
|
|
(I.R.S. Employer |
incorporation or organization)
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Identification No.) |
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|
14 -16 North Main Street, Angola, New York
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14006 |
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|
(Address of principal executive offices)
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(Zip Code) |
(716) 926-2000
(Registrants telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer in Rule 12b-2 of the Exchange Act: (Check one):
Large accelerated filer o Accelerated filer o Non-accelerated filer þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act.)
Yes o No þ
Indicate the number of shares outstanding of each of the issuers classes of common stock, as
of the latest practicable date:
Common Stock, $.50 Par Value2,748,013 shares as of May 1, 2007
INDEX
EVANS BANCORP, INC. AND SUBSIDIARIES
1
PART I FINANCIAL INFORMATION
ITEM I FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2007 AND DECEMBER 31, 2006
(in thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
14,340 |
|
|
$ |
12,592 |
|
|
|
|
|
|
|
|
|
|
Securities: |
|
|
|
|
|
|
|
|
Available for sale, at fair value |
|
|
149,957 |
|
|
|
133,519 |
|
Held to maturity, at amortized cost |
|
|
4,142 |
|
|
|
4,211 |
|
|
|
|
|
|
|
|
|
|
Loans and leases, net of allowance for loan and lease losses of $3,885
in 2007 and $3,739 in 2006 |
|
|
290,467 |
|
|
|
285,367 |
|
|
|
|
|
|
|
|
|
|
Properties and equipment, net |
|
|
8,695 |
|
|
|
8,743 |
|
Goodwill |
|
|
10,003 |
|
|
|
10,003 |
|
Intangible assets |
|
|
2,154 |
|
|
|
2,298 |
|
Bank-owned life insurance |
|
|
10,280 |
|
|
|
10,140 |
|
Other assets |
|
|
7,354 |
|
|
|
7,021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
497,392 |
|
|
$ |
473,894 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
Demand |
|
$ |
70,830 |
|
|
$ |
72,125 |
|
NOW |
|
|
12,929 |
|
|
|
11,253 |
|
Regular savings |
|
|
86,637 |
|
|
|
85,084 |
|
Muni-vest |
|
|
46,745 |
|
|
|
31,240 |
|
Time |
|
|
162,797 |
|
|
|
156,047 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits |
|
|
379,938 |
|
|
|
355,749 |
|
|
|
|
|
|
|
|
|
|
Securities sold under agreement to repurchase |
|
|
6,281 |
|
|
|
8,954 |
|
Other short-term borrowings |
|
|
26,350 |
|
|
|
24,753 |
|
Other liabilities |
|
|
11,067 |
|
|
|
9,089 |
|
Junior subordinated debentures |
|
|
11,330 |
|
|
|
11,330 |
|
Long-term borrowings |
|
|
22,285 |
|
|
|
24,476 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
457,251 |
|
|
|
434,351 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTINGENT LIABILITIES AND COMMITMENTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY: |
|
|
|
|
|
|
|
|
Common stock, $.50 par value; 10,000,000 shares authorized;
2,745,338 and 2,745,338 shares issued, respectively, and
2,729,556 and 2,733,056 shares outstanding, respectively |
|
|
1,373 |
|
|
|
1,373 |
|
Capital surplus |
|
|
26,184 |
|
|
|
26,160 |
|
Retained earnings |
|
|
14,555 |
|
|
|
14,196 |
|
Accumulated other comprehensive loss, net of tax |
|
|
(1,629 |
) |
|
|
(1,917 |
) |
Less: Treasury stock, at cost (15,782 and 12,282 shares, respectively) |
|
|
(342 |
) |
|
|
(269 |
) |
|
|
|
|
|
|
|
Total stockholders equity |
|
|
40,141 |
|
|
|
39,543 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
|
$ |
497,392 |
|
|
$ |
473,894 |
|
|
|
|
|
|
|
|
See Notes to Unaudited Consolidated Financial Statements
2
PART I FINANCIAL INFORMATION
ITEM I FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2007 AND 2006
(in thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2007 |
|
|
2006 |
|
INTEREST INCOME |
|
|
|
|
|
|
|
|
Loans |
|
$ |
5,600 |
|
|
$ |
4,615 |
|
Federal funds sold/Interest bearing deposits at other banks |
|
|
87 |
|
|
|
11 |
|
Securities: |
|
|
|
|
|
|
|
|
Taxable |
|
|
1,012 |
|
|
|
1,104 |
|
Non-taxable |
|
|
443 |
|
|
|
474 |
|
|
|
|
|
|
|
|
Total interest income |
|
|
7,142 |
|
|
|
6,204 |
|
INTEREST EXPENSE |
|
|
|
|
|
|
|
|
Deposits |
|
|
2,704 |
|
|
|
1,895 |
|
Other borrowings |
|
|
350 |
|
|
|
483 |
|
Junior subordinated debentures |
|
|
218 |
|
|
|
192 |
|
|
|
|
|
|
|
|
Total interest expense |
|
|
3,272 |
|
|
|
2,570 |
|
NET INTEREST INCOME |
|
|
3,870 |
|
|
|
3,634 |
|
PROVISION FOR LOAN AND LEASE LOSSES |
|
|
315 |
|
|
|
282 |
|
|
|
|
|
|
|
|
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES |
|
|
3,555 |
|
|
|
3,352 |
|
|
|
|
|
|
|
|
|
|
NON-INTEREST INCOME: |
|
|
|
|
|
|
|
|
Bank charges |
|
|
471 |
|
|
|
498 |
|
Insurance service and fees |
|
|
2,129 |
|
|
|
2,177 |
|
Net loss on sales of securities |
|
|
(1 |
) |
|
|
|
|
Premium on loans sold |
|
|
1 |
|
|
|
3 |
|
Bank-owned life insurance |
|
|
140 |
|
|
|
105 |
|
Other |
|
|
405 |
|
|
|
373 |
|
|
|
|
|
|
|
|
Total non-interest income |
|
|
3,145 |
|
|
|
3,156 |
|
NON-INTEREST EXPENSE: |
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
2,668 |
|
|
|
2,501 |
|
Occupancy |
|
|
603 |
|
|
|
532 |
|
Supplies |
|
|
78 |
|
|
|
85 |
|
Repairs and maintenance |
|
|
139 |
|
|
|
137 |
|
Advertising and public relations |
|
|
88 |
|
|
|
71 |
|
Professional services |
|
|
252 |
|
|
|
144 |
|
Amortization of intangibles |
|
|
144 |
|
|
|
130 |
|
Other Insurance |
|
|
90 |
|
|
|
87 |
|
Other |
|
|
870 |
|
|
|
799 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-interest expense |
|
|
4,932 |
|
|
|
4,486 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES |
|
|
1,768 |
|
|
|
2,022 |
|
|
|
|
|
|
|
|
|
|
INCOME TAXES |
|
|
481 |
|
|
|
616 |
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
1,287 |
|
|
$ |
1,406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share-basic |
|
$ |
0.47 |
|
|
$ |
0.52 |
|
|
|
|
|
|
|
|
Net income per common share-diluted |
|
$ |
0.47 |
|
|
$ |
0.52 |
|
|
|
|
|
|
|
|
Cash dividends per common share |
|
$ |
0.34 |
|
|
$ |
0.34 |
|
|
|
|
|
|
|
|
Weighted average number of common shares |
|
|
2,730,499 |
|
|
|
2,722,950 |
|
|
|
|
|
|
|
|
Weighted average number of diluted shares |
|
|
2,731,925 |
|
|
|
2,724,583 |
|
|
|
|
|
|
|
|
See Notes to Unaudited Consolidated Financial Statements
3
PART 1 FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
THREE MONTHS ENDED MARCH 31, 2007 AND 2006
(in thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
Common |
|
|
Capital |
|
|
Retained |
|
|
Comprehensive |
|
|
Treasury |
|
|
|
|
|
|
Stock |
|
|
Surplus |
|
|
Earnings |
|
|
Income |
|
|
Stock |
|
|
Total |
|
Balance, January 1, 2006 |
|
$ |
1,373 |
|
|
$ |
26,155 |
|
|
$ |
11,087 |
|
|
$ |
(1,387 |
) |
|
$ |
(352 |
) |
|
$ |
36,876 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of adopting SAB 108, net of tax $12 |
|
|
|
|
|
|
|
|
|
|
43 |
|
|
|
|
|
|
|
|
|
|
|
43 |
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
|
|
|
|
|
|
|
|
1,406 |
|
|
|
|
|
|
|
|
|
|
|
1,406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on available-for-sale
securities, net of tax effect of $453 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(711 |
) |
|
|
|
|
|
|
(711 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
738 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends ($0.34 per common share) |
|
|
|
|
|
|
|
|
|
|
(928 |
) |
|
|
|
|
|
|
|
|
|
|
(928 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options expense |
|
|
|
|
|
|
30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased 10,100 shares for treasury |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(211 |
) |
|
|
(211 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2006 |
|
$ |
1,373 |
|
|
$ |
26,185 |
|
|
$ |
11,608 |
|
|
$ |
(2,098 |
) |
|
$ |
(563 |
) |
|
$ |
36,505 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2007 |
|
$ |
1,373 |
|
|
$ |
26,160 |
|
|
$ |
14,196 |
|
|
$ |
(1,917 |
) |
|
$ |
(269 |
) |
|
$ |
39,543 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
|
|
|
|
|
|
|
|
1,287 |
|
|
|
|
|
|
|
|
|
|
|
1,287 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on available-for-sale
securities, net of reclassification
adjustment of ($1) and tax effect of $(176) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
275 |
|
|
|
|
|
|
|
275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of prior service cost and net
loss,
net of tax effect $(8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 |
|
|
|
|
|
|
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,575 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends ($0.34 per common share) |
|
|
|
|
|
|
|
|
|
|
(928 |
) |
|
|
|
|
|
|
|
|
|
|
(928 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options expense |
|
|
|
|
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased 3,500 shares for treasury |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(73 |
) |
|
|
(73 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2007 |
|
$ |
1,373 |
|
|
$ |
26,184 |
|
|
$ |
14,555 |
|
|
$ |
(1,629 |
) |
|
$ |
(342 |
) |
|
$ |
40,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Unaudited Consolidated Financial Statements
4
PART I-FINANCIAL INFORMATION
ITEM I-FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2007 AND 2006
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2007 |
|
|
2006 |
|
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Interest received |
|
$ |
7,120 |
|
|
$ |
6,125 |
|
Fees received |
|
|
2,854 |
|
|
|
3,098 |
|
Proceeds from sales of loans |
|
|
527 |
|
|
|
492 |
|
Origination of loans held for resale |
|
|
(1,014 |
) |
|
|
(584 |
) |
Interest paid |
|
|
(3,327 |
) |
|
|
(2,607 |
) |
Cash paid to employees and suppliers |
|
|
(3,674 |
) |
|
|
(3,909 |
) |
Income taxes paid |
|
|
(20 |
) |
|
|
(108 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
2,466 |
|
|
|
2,507 |
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Available for sales securities: |
|
|
|
|
|
|
|
|
Purchases |
|
|
(63,938 |
) |
|
|
(82 |
) |
Proceeds from sales |
|
|
575 |
|
|
|
|
|
Proceeds from maturities |
|
|
47,258 |
|
|
|
5,419 |
|
Held to maturity securities: |
|
|
|
|
|
|
|
|
Purchases |
|
|
(24 |
) |
|
|
(240 |
) |
Proceeds from maturities |
|
|
93 |
|
|
|
92 |
|
Additions to properties and equipment |
|
|
(195 |
) |
|
|
(201 |
) |
Increase in loans, net of repayments |
|
|
(5,133 |
) |
|
|
(1,569 |
) |
Cash paid on earn-out agreements |
|
|
(202 |
) |
|
|
(56 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by investing activities |
|
|
(21,566 |
) |
|
|
3,363 |
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from borrowings |
|
|
7,848 |
|
|
|
|
|
Repayments of short-term borrowings |
|
|
(8,926 |
) |
|
|
(38,205 |
) |
Repayments of long-term borrowings |
|
|
(2,190 |
) |
|
|
(2,033 |
) |
Increase in deposits |
|
|
24,189 |
|
|
|
31,431 |
|
Dividends paid |
|
|
|
|
|
|
(928 |
) |
Purchase of treasury stock |
|
|
(73 |
) |
|
|
(211 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities |
|
|
20,848 |
|
|
|
(9,946 |
) |
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and equivalents |
|
|
1,748 |
|
|
|
(4,076 |
) |
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS: |
|
|
|
|
|
|
|
|
Beginning of period |
|
|
12,592 |
|
|
|
15,635 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period |
|
$ |
14,340 |
|
|
$ |
11,559 |
|
|
|
|
|
|
|
|
5
PART I-FINANCIAL INFORMATION
ITEM I-FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2007 AND 2006
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2007 |
|
|
2006 |
|
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,287 |
|
|
$ |
1,406 |
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash
provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
519 |
|
|
|
411 |
|
Deferred tax benefit |
|
|
(122 |
) |
|
|
(215 |
) |
Provision for loan and lease losses |
|
|
315 |
|
|
|
282 |
|
Net gain on sales of securities |
|
|
1 |
|
|
|
|
|
Proceeds from sale of loans held for resale |
|
|
527 |
|
|
|
492 |
|
Originations of loans held for resale |
|
|
(1,014 |
) |
|
|
(584 |
) |
Premiums on loans sold |
|
|
(1 |
) |
|
|
(3 |
) |
Stock options expense |
|
|
24 |
|
|
|
30 |
|
Changes in assets and liabilities affecting cash flow: |
|
|
|
|
|
|
|
|
Other assets |
|
|
561 |
|
|
|
(155 |
) |
Other liabilities |
|
|
369 |
|
|
|
843 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
|
$ |
2,466 |
|
|
$ |
2,507 |
|
|
|
|
|
|
|
|
See Notes to Unaudited Consolidated Financial Statements
6
PART 1 FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2007 AND 2006
1. |
|
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The accounting and reporting policies followed by Evans Bancorp, Inc. (the Company), a
financial holding company organized as a New York business corporation and incorporated under
the laws of the State of New York on October 28, 1988, for the purpose of becoming a bank
holding company, and its two direct, wholly-owned subsidiaries: (i) Evans National Bank (the
Bank), and its subsidiaries, Evans National Leasing, Inc. (ENL) and Evans National
Holding Corp. (ENHC); and (ii) Evans National Financial Services, Inc. (ENFS), and its
subsidiary ENB Insurance Agency, Inc. (ENBI) and its subsidiaries, Frontier Claim Services,
Inc. (FCS) and ENB Associates Inc. (ENB), in the preparation of the accompanying interim
unaudited consolidated financial statements conform with generally accepted accounting
principles and with general practice within the banking industry. Except as the context
otherwise requires, the Company and its direct and indirect subsidiaries are collectively
referred to in this report as the Company.
The accompanying consolidated financial statements are unaudited. In the opinion of
management, all adjustments necessary for a fair presentation of financial position and
results of operations for the interim periods have been made. Such adjustments are of a
normal recurring nature.
The results of operations for the three month period ended March 31, 2007 are not necessarily
indicative of the results to be expected for the full year. The accompanying unaudited
consolidated financial statements should be read in conjunction with the Audited Consolidated
Financial Statements and the Notes thereto included in our Annual Report on Form 10-K for the
year ended December 31, 2006.
Securities which the Company has the positive ability and intent to hold to maturity are
stated at amortized cost. Securities which the Company has identified as available-for-sale
are stated at fair value with changes in fair value included as a component of stockholders
equity. Available-for-sale securities are net of unrealized losses of $1.5 million and $1.9
million as of March 31, 2007 and
December 31, 2006, respectively. As of March 31, 2007, the securities portfolio did not
contain any other than temporary declines in fair value.
3. |
|
ALLOWANCE FOR LOAN AND LEASE LOSSES |
The allowance for loan and lease losses represents the amount charged against the Banks
earnings to establish an allowance for probable loan and lease losses based on Bank
managements evaluation of the loan and lease portfolio. Factors considered by the Banks
management in establishing the allowance include: the collectibility of individual loans and
leases, current loan and lease concentrations, charge-off history, delinquent loan and lease
percentages, input from regulatory agencies and general economic conditions.
On a quarterly basis, management of the Bank meets to review and determine the adequacy of
the allowance for loan and lease losses. In making this determination, the Banks management
analyzes the ultimate collectibility of the loans and leases in its portfolio by
incorporating feedback provided by the Banks internal loan staff, an independent internal
loan review function and information provided by examinations performed by regulatory
agencies.
The analysis of the allowance for loan and lease losses is composed of three components:
specific credit allocation, general portfolio allocation and subjectively by determined
allocation. The specific credit allocation includes a detailed review of the credit in
accordance with the Statement of Financial Accounting Standards (SFAS) No. 114, Accounting
by Creditors for Impairment of a Loan and No. 118, Accounting by Creditors for Impairment
of a Loan Income Recognition and Disclosures, and allocation is made based on this
analysis. The general portfolio allocation consists of an assigned reserve percentage based
on the actual credit rating of the loan or lease.
7
The subjective portion of the allowance reflects managements evaluation of various
conditions, and involves a higher degree of uncertainty because this component of the
allowance is not identified with specific problem credits of portfolio segments. The
conditions evaluated in connection with this component include the following: industry and
regional conditions; seasoning of the loan and lease portfolio and changes in the composition
of and growth in the loan and lease portfolio; the strength and duration of the business
cycle; existing general economic and business conditions in the lending areas; credit quality
trends in nonaccruing loans and leases; historical loan and lease charge-off experience; and
the results of bank regulatory examinations.
The following table sets forth information regarding the allowance for loan and lease losses
for the three month periods ended March 31, 2007 and 2006.
Allowance for loan and lease losses
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, |
|
|
|
2007 |
|
|
2006 |
|
|
|
(in thousands) |
|
Beginning balance, January 1 |
|
$ |
3,739 |
|
|
$ |
3,211 |
|
Charge-offs: |
|
|
|
|
|
|
|
|
Commercial |
|
|
(23 |
) |
|
|
(100 |
) |
Installment loans |
|
|
(1 |
) |
|
|
(5 |
) |
Overdrafts |
|
|
(7 |
) |
|
|
(6 |
) |
Direct financing leases |
|
|
(170 |
) |
|
|
(47 |
) |
|
|
|
|
|
|
|
Total charge-offs |
|
|
(201 |
) |
|
|
(158 |
) |
|
|
|
|
|
|
|
|
|
Recoveries: |
|
|
|
|
|
|
|
|
Commercial |
|
|
4 |
|
|
|
|
|
Installment loans |
|
|
1 |
|
|
|
9 |
|
Overdrafts |
|
|
5 |
|
|
|
6 |
|
Direct financing leases |
|
|
22 |
|
|
|
14 |
|
|
|
|
|
|
|
|
Total recoveries |
|
|
32 |
|
|
|
29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs |
|
|
(169 |
) |
|
|
(129 |
) |
|
|
|
|
|
|
|
|
|
Provision for loan and lease losses |
|
|
315 |
|
|
|
282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance, March 31 |
|
$ |
3,885 |
|
|
$ |
3,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of net charge-offs to average
net loans and leases outstanding (annualized) |
|
|
0.23 |
% |
|
|
0.20 |
% |
|
|
|
|
|
|
|
The common stock per share information is based upon the weighted average number of shares
outstanding during each period, retroactively adjusted for stock dividends and stock splits.
The Companys potential dilutive securities included 1,426 dilutive shares for the three
month period ended March 31, 2007. There were 1,633 dilutive shares for the three month
period ended March 31, 2006. On February 23, 2007, the Company declared a cash dividend of
$0.34 per share payable on April 2, 2007 to shareholders of record as of March 12, 2007.
Potential common shares that would have the effect of increasing diluted earnings per share
are considered to be anti-dilutive. In accordance with SFAS No. 128, Earnings Per Share,
these shares were not included in calculating diluted earnings per share. As of March 31,
2007 and 2006, there were 55 thousand and 59 thousand shares, respectively, that are not
included in calculating diluted earnings per share because their effect was anti-dilutive.
8
During the quarter ended March 31, 2007 the Company repurchased 3,500 shares of common
stock at an average cost of $20.77 per share, pursuant to the Companys publicly announced
common stock repurchase program.
The Company is comprised of two primary business segments, banking and insurance agency
activities. The following tables set forth information regarding these segments for the three
month periods ended March 31, 2007 and 2006.
Three Months Ended
March 31, 2007
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance |
|
|
|
|
|
|
Banking Activities |
|
|
Agency Activities |
|
|
Total |
|
Net interest income (expense) |
|
$ |
3,990 |
|
( |
$ |
120 |
) |
|
$ |
3,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan and lease losses |
|
|
315 |
|
|
|
|
|
|
|
315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (expense) after
provision for loan and lease losses |
|
|
3,675 |
|
|
|
(120 |
) |
|
|
3,555 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income |
|
|
1,016 |
|
|
|
|
|
|
|
1,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance commissions and fees |
|
|
|
|
|
|
2,129 |
|
|
|
2,129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expense |
|
|
3,783 |
|
|
|
1,149 |
|
|
|
4,932 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
908 |
|
|
|
860 |
|
|
|
1,768 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes |
|
|
137 |
|
|
|
344 |
|
|
|
481 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
771 |
|
|
$ |
516 |
|
|
$ |
1,287 |
|
|
|
|
|
|
|
|
|
|
|
9
Three Months Ended
March 31, 2006
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance |
|
|
|
|
|
|
Banking Activities |
|
|
Agency Activities |
|
|
Total |
|
Net interest income (expense) |
|
$ |
3,752 |
|
( |
$ |
118 |
) |
|
$ |
3,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan and lease losses |
|
|
282 |
|
|
|
|
|
|
|
282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (expense) after
provision for loan and lease losses |
|
|
3,470 |
|
|
|
(118 |
) |
|
|
3,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income |
|
|
979 |
|
|
|
|
|
|
|
979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance commissions and fees |
|
|
|
|
|
|
2,177 |
|
|
|
2,177 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expense |
|
|
3,282 |
|
|
|
1,204 |
|
|
|
4,486 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
1,167 |
|
|
|
855 |
|
|
|
2,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes |
|
|
274 |
|
|
|
342 |
|
|
|
616 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
893 |
|
|
$ |
513 |
|
|
$ |
1,406 |
|
|
|
|
|
|
|
|
|
|
|
7. |
|
CONTINGENT LIABILITIES AND COMMITMENTS |
|
|
|
The unaudited consolidated financial statements do not reflect various commitments and
contingent liabilities, which arise in the normal course of business, and which involve
elements of credit risk, interest rate risk and liquidity risk. These commitments and
contingent liabilities consist of commitments to extend credit and standby letters of credit.
A summary of the Banks commitments and contingent liabilities at March 31, 2007 and 2006 is
as follows: |
|
|
|
|
|
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
|
(in thousands) |
|
Commitments to extend credit |
|
$ |
72,687 |
|
|
$ |
69,600 |
|
|
Standby letters of credit |
|
|
1,992 |
|
|
|
1,996 |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
74,679 |
|
|
$ |
71,596 |
|
|
|
|
|
|
|
|
|
|
Commitments to extend credit and standby letters of credit include some exposure to credit
loss in the event of nonperformance of the customer. The Banks credit policies and
procedures for credit commitments and financial guarantees are the same as those for
extensions of credit that are recorded on the Companys unaudited consolidated balance
sheets. Because these instruments have fixed maturity dates, and because they may expire
without being drawn upon, they do not necessarily represent cash requirements of the Bank.
The Bank has not incurred any losses on its commitments during the past two years. |
|
|
|
Certain lending commitments for construction residential mortgage loans are considered
derivative instruments under the guidelines of SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. The changes in the fair value of these commitments due
to interest rate risk are not recorded on the consolidated balance sheets as these
derivatives are considered inconsequential. |
10
|
|
The Company is subject to possible litigation proceedings in the normal course of business.
As of
March 31, 2007, there were no claims pending against the Company that management considered
to be significant. |
|
8. |
|
RECLASSIFICATIONS |
|
|
|
Certain reclassifications have been made to the 2006 consolidated financial statements to
conform with the presentation used in 2007. |
|
9. |
|
NET PERIODIC BENEFIT COSTS |
|
|
|
The Bank has a defined benefit pension plan covering substantially all Bank employees. The
plan provides benefits that are based on the employees compensation and years of service.
The Bank uses an actuarial method of amortizing prior service cost and unrecognized net gains
or losses which result from actual experience and assumptions being different than those that
are projected. The amortized method used by the Bank recognizes the prior service cost and
net gains or losses over the average remaining service period of active employees. |
|
|
|
The Bank also maintains a nonqualified supplemental executive retirement plan covering
certain members of the Companys senior management. The Bank uses an actuarial method of
amortizing unrecognized net gains or losses which result from actual expense and assumptions
being different than those that are projected. The amortization method used by the Bank uses
recognizes the net gains or losses over the average remaining service period of active
employees. |
|
|
|
The following table represents net periodic benefit costs recognized: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, |
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Executive |
|
|
|
Pension Benefits |
|
|
Retirement Plan |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Service cost |
|
$ |
91 |
|
|
$ |
79 |
|
|
$ |
15 |
|
|
$ |
29 |
|
|
Interest cost |
|
|
61 |
|
|
|
49 |
|
|
|
40 |
|
|
|
38 |
|
|
Expected return on plan assets |
|
|
(62 |
) |
|
|
(58 |
) |
|
|
|
|
|
|
|
|
|
Amortization of prior service cost |
|
|
(4 |
) |
|
|
(4 |
) |
|
|
14 |
|
|
|
14 |
|
|
Amortization of the net loss |
|
|
7 |
|
|
|
6 |
|
|
|
4 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost |
|
$ |
93 |
|
|
$ |
72 |
|
|
$ |
73 |
|
|
$ |
85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10. |
|
RECENT ACCOUNTING PRONOUNCEMENTS |
Accounting for Servicing of Financial Assets (SFAS 156) - In March 2006, the FASB issued SFAS No.
156, Accounting for Servicing of Financial Assets an amendment of FASB Statement No. 140 (SFAS
156). This statement amends SFAS 140, Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities, with respect to the accounting for separately recognized
servicing assets and servicing liabilities. This statement requires all separately recognized
servicing assets and servicing liabilities to be initially measured at fair value, if practicable.
It permits an entity to choose either the amortization method or the fair value measurement method
for subsequent measurement for each class of separately recognized servicing assets and servicing
liabilities. The adoption of the fair value measurement method under this statement on January 1,
2007, did not have a material impact on the Companys financial statements.
Accounting for Uncertainty in Income Taxes In July 2006, the FASB issued FIN 48, Accounting for
Uncertainty in Income Taxes, to set out a consistent framework for tax preparers to use to
determine the appropriate level of tax reserves to maintain for uncertain tax positions. This
interpretation of FASB Statement No. 109 uses a two-step approach wherein a tax benefit is
recognized if a position is more likely than not to be sustained.
11
The amount of the benefit is
then measured to be the highest tax benefit that is greater than 50 percent likely to be realized.
FIN 48 also sets out disclosure requirements to enhance transparency of an entitys tax reserves.
The Company adopted FIN 48 as of January 1, 2007. There were no unrecognized tax benefits or
penalties at the date of adoption.
The Internal Revenue Service (IRS) commenced examinations of the Companys U.S. Federal income tax
returns for 2003, 2004, and 2005 in the first quarter of 2007. It is anticipated that the
examination related to these returns will be completed within the next twelve months. To date,
there are no proposed adjustments that will have a material impact on the Companys financial
position or results of operations. All penalties or interest on adjustments, if any, will be
expensed as income tax expense.
ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q may contain certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and
Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), that involve
substantial risks and uncertainties. When used in this report, or in the documents incorporated by
reference herein, the words anticipate, believe, estimate, expect, intend, may, plan,
seek, and similar expressions identify such forward-looking statements. These forward-looking
statements include statements regarding the Companys business plans, prospects, growth and
operating strategies, statements regarding the asset quality of the Companys loan and investment
portfolios, and estimates of the Companys risks and future costs and benefits.
These forward-looking statements are based largely on the expectations of the Companys management
and are
subject to a number of risks and uncertainties, including but not limited to general economic
conditions, either nationally or in the Companys market areas, that are worse than expected;
increased competition among depository or other financial institutions; inflation and changes in
the interest rate environment that reduce the Companys margins or reduce the fair value of
financial instruments; changes in laws or government regulations affecting financial institutions,
including changes in regulatory fees and capital requirements; the Companys ability to enter new
markets successfully and capitalize on growth opportunities; the Companys ability to successfully
integrate acquired entities; changes in accounting pronouncements and practices, as adopted by
financial institution regulatory agencies, the Financial Accounting Standards Board and the Public
Company Accounting Oversight Board; changes in consumer spending, borrowing and saving habits;
changes in the Companys organization, compensation and benefit plans; and other factors discussed
elsewhere in this Report on Form 10-Q, as well as in the Companys periodic reports filed with the
Securities and Exchange Commission (the SEC). Many of these factors are beyond the Companys
control and are difficult to predict.
Because of these and other uncertainties, the Companys actual results, performance or achievements
could differ materially from those contemplated, expressed or implied by the forward-looking
statements contained herein. Forward-looking statements speak only as of the date they are made.
The Company undertakes no obligation, to publicly update or revise forward-looking information,
whether as a result of new, updated information, future events or otherwise.
APPLICATION OF CRITICAL ACCOUNTING ESTIMATES
The Companys Unaudited Consolidated Financial Statements are prepared in accordance with generally
accepted accounting principles and follow general practices within the industries in which it
operates. Application of these principles requires management to make estimates, assumptions and
judgments that affect the amounts reported in the Companys Unaudited Consolidated Financial
Statements and Notes. These estimates, assumptions and judgments are based on information
available as of the date of the Unaudited Consolidated Financial Statements. Accordingly, as this
information changes, the Unaudited Consolidated Financial Statements could reflect different
estimates, assumptions and judgments. Certain policies inherently have a greater reliance on the
use of estimates, assumptions and judgments, and as such, have a greater possibility of producing
results that could be materially different than originally reported. Estimates, assumptions and
judgments are necessary when assets and liabilities are required to be recorded at fair value, when
a decline in the value of an asset not carried on the financial statements at fair value warrants
an impairment write-down or valuation reserve to be established, or when an asset or liability
needs to be recorded contingent upon a future event. Carrying assets and liabilities at fair value
inherently results in more financial statement volatility. The fair values and the information
used to record valuation adjustments for certain assets and liabilities are based either on quoted
market prices or are provided by other third-party sources, when available. When third-party
information is not available, valuation adjustments are estimated in good faith by management
primarily through the use of internal cash flow modeling techniques.
12
The most significant accounting policies followed by the Company are presented in Note 1 to the
Audited Consolidated Financial Statements included in Item 8 in its Annual Report on Form 10-K.
These policies, along with the disclosures presented in the other Notes to the Companys Audited
Consolidated Financial Statements contained in its Annual Report on Form 10-K and in this financial
review, provide information on how significant assets and liabilities are valued in the Companys
Unaudited Consolidated Financial Statements and how those values are determined.
Based on the valuation techniques used and the sensitivity of financial statement amounts to the
methods, assumptions and estimates underlying those amounts, management has identified the
determination of the allowance for loan and lease losses and valuation of goodwill to be the
accounting areas that require the most subjective or complex judgments, and as such, could be most
subject to revision as new information becomes available.
Allowance for Loan and Lease Losses
The allowance for loan and lease losses represents managements estimate of probable losses in the
Banks loan and lease portfolio. Determining the amount of the allowance for loan and lease losses
is considered a critical accounting estimate because it requires significant judgment on the part
of management and the use of estimates related to the amount and timing of expected future cash
flows on impaired loans and leases, estimated losses on pools of homogeneous loans and leases based
on historical loss experience and consideration of current economic trends and conditions, all of
which may be susceptible to significant change. The loan and lease portfolio also represents the
largest asset type on the Unaudited Consolidated Balance Sheets. Note 1 to the Audited
Consolidated Financial Statements included in Item 8 in its Annual Report on Form 10-K describes
the methodology used to determine the allowance for loan and lease losses.
Goodwill
The amount of goodwill reflected in the Companys Unaudited Consolidated Financial Statements is
required to be tested by management for impairment on at least an annual basis. The test for
impairment of goodwill on the identified reporting unit is considered a critical accounting
estimate because it requires judgment on the part of management and the use of estimates related to
the growth assumptions and market multiples used in the valuation model.
ANALYSIS OF FINANCIAL CONDITION
Average Balance Sheet
The following table presents the significant categories of the assets and liabilities of the
Company, interest income and interest expense, and the corresponding yields earned and rates paid
for the periods indicated. The assets and liabilities are presented as daily averages. The
average loan and lease balances include both performing and non-performing loans and leases.
Investments are included at amortized cost. Yields are presented on a non-tax-equivalent basis.
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
|
March 31, 2007 |
|
|
March 31, 2006 |
|
|
|
Average |
|
|
Interest |
|
|
|
|
|
|
Average |
|
|
Interest |
|
|
|
|
|
|
Outstanding |
|
|
Earned/ |
|
|
Yield/ |
|
|
Outstanding |
|
|
Earned/ |
|
|
Yield/ |
|
|
|
Balance |
|
|
Paid |
|
|
Rate |
|
|
Balance |
|
|
Paid |
|
|
Rate |
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases, net |
|
$ |
286,986 |
|
|
$ |
5,600 |
|
|
|
7.81 |
% |
|
$ |
257,874 |
|
|
$ |
4,615 |
|
|
|
7.16 |
% |
Taxable securities |
|
|
94,387 |
|
|
|
1,011 |
|
|
|
4.28 |
% |
|
|
112,352 |
|
|
|
1,104 |
|
|
|
3.93 |
% |
Tax-exempt securities |
|
|
41,241 |
|
|
|
443 |
|
|
|
4.30 |
% |
|
|
45,479 |
|
|
|
474 |
|
|
|
4.17 |
% |
Federal funds sold |
|
|
7,062 |
|
|
|
87 |
|
|
|
4.93 |
% |
|
|
1,162 |
|
|
|
11 |
|
|
|
3.79 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning assets |
|
|
429,676 |
|
|
|
7,141 |
|
|
|
6.65 |
% |
|
|
416,867 |
|
|
|
6,204 |
|
|
|
5.95 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
|
10,987 |
|
|
|
|
|
|
|
|
|
|
|
12,642 |
|
|
|
|
|
|
|
|
|
Premises and equipment, net |
|
|
8,708 |
|
|
|
|
|
|
|
|
|
|
|
8,156 |
|
|
|
|
|
|
|
|
|
Other assets |
|
|
29,558 |
|
|
|
|
|
|
|
|
|
|
|
28,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
478,929 |
|
|
|
|
|
|
|
|
|
|
$ |
465,811 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES & STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOW |
|
$ |
12,057 |
|
|
$ |
6 |
|
|
|
0.20 |
% |
|
$ |
11,562 |
|
|
$ |
5 |
|
|
|
0.17 |
% |
Regular savings |
|
|
88,254 |
|
|
|
252 |
|
|
|
1.14 |
% |
|
|
89,628 |
|
|
|
188 |
|
|
|
0.84 |
% |
Muni-Vest savings |
|
|
47,927 |
|
|
|
518 |
|
|
|
4.32 |
% |
|
|
34,125 |
|
|
|
330 |
|
|
|
3.87 |
% |
Time deposits |
|
|
157,473 |
|
|
|
1,927 |
|
|
|
4.89 |
% |
|
|
149,397 |
|
|
|
1,372 |
|
|
|
3.67 |
% |
Other borrowed funds |
|
|
34,000 |
|
|
|
336 |
|
|
|
3.95 |
% |
|
|
51,495 |
|
|
|
466 |
|
|
|
3.62 |
% |
Junior subordinated debentures |
|
|
11,330 |
|
|
|
218 |
|
|
|
7.70 |
% |
|
|
11,330 |
|
|
|
192 |
|
|
|
6.78 |
% |
Securities sold U/A to repurchase |
|
|
7,445 |
|
|
|
14 |
|
|
|
0.75 |
% |
|
|
8,068 |
|
|
|
17 |
|
|
|
0.84 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities |
|
|
358,486 |
|
|
$ |
3,271 |
|
|
|
3.65 |
% |
|
|
355,605 |
|
|
$ |
2,570 |
|
|
|
2.89 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
|
70,935 |
|
|
|
|
|
|
|
|
|
|
|
65,806 |
|
|
|
|
|
|
|
|
|
Other |
|
|
9,451 |
|
|
|
|
|
|
|
|
|
|
|
7,006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
$ |
438,872 |
|
|
|
|
|
|
|
|
|
|
$ |
428,417 |
|
|
|
|
|
|
|
|
|
Stockholders equity |
|
|
40,057 |
|
|
|
|
|
|
|
|
|
|
|
37,394 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity |
|
$ |
478,929 |
|
|
|
|
|
|
|
|
|
|
$ |
465,811 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest earnings |
|
|
|
|
|
$ |
3,870 |
|
|
|
|
|
|
|
|
|
|
$ |
3,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net yield on interest earning assets |
|
|
|
|
|
|
|
|
|
|
3.60 |
% |
|
|
|
|
|
|
|
|
|
|
3.49 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate spread |
|
|
|
|
|
|
|
|
|
|
3.00 |
% |
|
|
|
|
|
|
|
|
|
|
3.06 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan and Lease Activity
Total gross loans and leases grew to $294.4 million at March 31, 2007, reflecting a 1.8% or
$5.2 million increase from December 31, 2006. Gross loans and leases are net of $8.2 million and
$7.8 million unearned income on direct financing leases as of March 31, 2007 and December 31, 2006,
respectively. Commercial loans and leases totaled $207.0 million at March 31, 2007, reflecting a
2.6% or $5.3 million increase from December 31, 2006. Increases in direct financing leases and
installment loans of $2.5 million and $1.2 million, respectively, were largely responsible for this
increase. Consumer loans totaled $86.7 million at March 31, 2007, which was unchanged from the
balance at December 31, 2006. Increases in consumer real estate and home equity loans were offset
by decreases in installment, credit card, and other balances. The Bank continues to sell certain
fixed rate residential mortgages originated below a designated interest level to the Federal
National Mortgage Association (FNMA), while maintaining the servicing rights for those mortgages.
The Bank sold mortgages to FNMA totaling $0.5 million during the first quarters of 2007 and 2006.
At March 31, 2007, the Bank had a loan servicing portfolio
14
principal balance of $28.9 million upon
which it earns servicing fees, compared to $28.7 million at December 31, 2006.
Loan and Lease Portfolio Composition
The following table presents selected information on the composition of the Companys loan and
lease portfolio in dollar amounts and in percentages as of the dates indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2007 |
|
|
Percentage |
|
|
December 31, 2006 |
|
|
Percentage |
|
|
|
(in thousands) |
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
Commercial Loans and Leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate |
|
$ |
141,041 |
|
|
|
47.9 |
% |
|
$ |
140,376 |
|
|
|
48.6 |
% |
Installment |
|
|
18,463 |
|
|
|
6.3 |
% |
|
|
17,263 |
|
|
|
6.0 |
% |
Direct Financing Leases |
|
|
34,210 |
|
|
|
11.6 |
% |
|
|
31,742 |
|
|
|
11.0 |
% |
Lines of Credit |
|
|
13,206 |
|
|
|
4.5 |
% |
|
|
12,279 |
|
|
|
4.2 |
% |
Cash Reserve |
|
|
54 |
|
|
|
0.0 |
% |
|
|
39 |
|
|
|
0.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Commercial Loans
and leases |
|
|
206,974 |
|
|
|
70.3 |
% |
|
|
201,699 |
|
|
|
69.8 |
% |
Consumer Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate |
|
|
49,547 |
|
|
|
16.8 |
% |
|
|
48,877 |
|
|
|
16.9 |
% |
Home Equity |
|
|
34,484 |
|
|
|
11.7 |
% |
|
|
34,453 |
|
|
|
11.9 |
% |
Installment |
|
|
2,443 |
|
|
|
0.8 |
% |
|
|
2,621 |
|
|
|
0.9 |
% |
Overdrafts |
|
|
159 |
|
|
|
0.1 |
% |
|
|
163 |
|
|
|
0.1 |
% |
Credit Card |
|
|
2 |
|
|
|
0.0 |
% |
|
|
298 |
|
|
|
0.1 |
% |
Other |
|
|
111 |
|
|
|
0.1 |
% |
|
|
341 |
|
|
|
0.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Loans |
|
|
86,746 |
|
|
|
29.5 |
% |
|
|
86,753 |
|
|
|
30.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Deferred Costs &
Unearned Discounts |
|
|
632 |
|
|
|
0.2 |
% |
|
|
654 |
|
|
|
0.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Loans and Leases |
|
|
294,352 |
|
|
|
100.0 |
% |
|
|
289,106 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan and
Lease Losses |
|
|
(3,885 |
) |
|
|
|
|
|
|
(3,739 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and Leases, net |
|
$ |
290,467 |
|
|
|
|
|
|
$ |
285,367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs were $169 thousand in the first quarter of 2007 as compared to $129 thousand
in the first quarter of 2006. Non-performing loans and leases, defined as accruing loans and
leases greater than 90 days past due and non-accrual loans and leases, totaled 0.22% of total loans
and leases outstanding at March 31, 2007 as compared to 0.23 % at December 31, 2006. The allowance
for loan and lease losses totaled $3.9 million or 1.32% of total loans and leases outstanding at
March 31, 2007 as compared to $3.7 million or 1.29% of total loans and leases outstanding at
December 31, 2006.
The adequacy of the Companys allowance for loan and lease losses is reviewed quarterly by the
Companys management with consideration given to loan and lease concentrations, charge-off history,
delinquent loan and lease percentages, and general economic conditions. Management believes the
allowance for loan and lease losses is adequate for losses from existing loans and leases.
The following table sets forth information regarding non-performing loans and leases as of the
dates specified.
15
|
|
|
|
|
|
|
|
|
|
|
March 31, 2007 |
|
|
December 31, 2006 |
|
|
|
(in thousands) |
|
Non-accruing loans and leases: |
|
|
|
|
|
|
|
|
Mortgage loans on real estate |
|
|
|
|
|
|
|
|
Residential 1-4 family |
|
$ |
|
|
|
$ |
|
|
Commercial and multi-family |
|
|
136 |
|
|
|
145 |
|
Construction |
|
|
|
|
|
|
|
|
Second mortgages |
|
|
|
|
|
|
|
|
Home equity lines of credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mortgage loans on real estate |
|
|
136 |
|
|
|
145 |
|
|
|
|
|
|
|
|
|
|
Direct financing leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans |
|
|
455 |
|
|
|
443 |
|
|
|
|
|
|
|
|
|
|
Consumer installment loans |
|
|
|
|
|
|
|
|
Personal |
|
|
|
|
|
|
|
|
Credit cards |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consumer installment loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-accruing loans and leases |
|
$ |
591 |
|
|
$ |
588 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accruing loans and leases 90+ days past due |
|
|
68 |
|
|
|
74 |
|
|
|
|
|
|
|
|
Total non-performing loans and leases |
|
|
659 |
|
|
|
662 |
|
|
|
|
|
|
|
|
Total non-performing loans and leases as a
percentage of total assets |
|
|
0.14 |
% |
|
|
0.15 |
% |
Total non-performing loans and leases as a
of total loans and leases |
|
|
0.22 |
% |
|
|
0.23 |
% |
For the quarter ended March 31, 2007, gross interest income that would have been reported on
non-accruing loans and leases, had they been current, was $18 thousand. There was $6 thousand in
interest income included in net income for the quarter ended March 31, 2007 on non-accruing loans
and leases.
Investing Activities
The Companys securities portfolio increased by 11.9%, or $16.4 million, to approximately
$154.1 million at March 31, 2007, as compared to approximately $137.7 million at December 31, 2006.
The increase in the securities portfolio was mainly due to securities purchased to collateralize
seasonal municipal tax deposits, which are expected to decrease by the end of the next quarter end.
The Company monitors extension and prepayment risk in the portfolio to limit potential exposures.
Management believes the average expected life of the portfolio is 2.7 years as of March 31, 2007.
Available-for-sale securities with a total fair value of $121.6 million at March 31, 2007 were
pledged as collateral to secure public deposits and for other purposes required or permitted by
law.
Funding Activities
Total deposits during the quarter ended March 31, 2007, increased 6.8% to $379.9 million at
March 31, 2007 from $355.7 million at December 31, 2006. Time deposits $100,000 and over increased
4.7%, or $3.8 million, in the quarter, mainly composed of municipal money. Due to higher short-term
interest rates, many municipalities have preferred short-term time deposit funding as an investment
option. Muni-vest deposits increased 49.6%, or $15.5 million, due to the normal inflow of
municipal tax receipts, which occurs during the first quarter of the calendar year. Core deposits
(all deposits excluding time deposits greater than $100,000) increased 7.8% or $21.5 million during
the quarter ended March 31, 2007. Demand deposits decreased 1.8%, or $1.3 million, while NOW
accounts increased 14.9%, or $1.7 million, from December 31, 2006. Securities sold under agreement
to repurchase decreased 30.0%, or $2.7 million, from December 31, 2006. Balances in demand
deposits, NOW accounts and securities sold under agreement to repurchase vary from day to day based
on customer transaction volume and represent normal deposit activity.
16
The Company also uses borrowings from other correspondent banks and the Federal Home Loan Bank
of New York as sources of funding. There was $26.4 million in short-term borrowing at March 31,
2007 as compared to $24.8 million at December 31, 2006.
ANALYSIS OF RESULTS OF OPERATIONS
Net Income
Net income was $1.3 million or $0.47 per basic and diluted share for the three months ended
March 31, 2007, as compared to $1.4 million or $0.52 per basic and diluted share for the same
period in 2006. Net income represented a return on average assets of 1.07% and 1.21% for the three
month periods ended March 31, 2007 and 2006, respectively. The return on average equity was 12.85%
and 15.04% for the three months periods ended March 31, 2007 and 2006, respectively.
Other Operating Results
Net interest income for the three month period ended March 31, 2007 was $3.9 million, an
increase of $0.2 million over the same period in 2006, and is primarily a result of interest income
growth related to the loan and lease portfolio, offset by increased interest expense on deposits.
The net interest margin for the three month period ended March 31, 2007 was 3.60% as compared
to 3.49% for the same period in 2006. The increase in interest income was mainly attributable to
an increase in the interest earned on loans and leases, due to both higher average balances and
elevated yields. Interest free funds contributed 60 basis points to the net interest margin in the
three month period ended March 31, 2007 compared to a 43 basis point contribution in the same
period of 2006 as average demand deposit balances, other non-interest-bearing liabilities, and
stockholders equity all increased. These were partially offset by an increase in the Banks cost
of interest-bearing liabilities, which increased to 3.65% from 2.89% in 2006. Higher interest
expense reflects elevated rates paid on deposits.
The provision for loan and lease losses for the three month period ended March 31, 2007
increased to $315
thousand from $282 thousand for the same period in 2006. The increase was a result of the
Companys expanding direct financing lease portfolio through Evans National Leasing, along with
continued commercial loan growth. Commercial loans and direct financing leases tend to have a
higher credit risk than consumer loans.
Non-interest income was $3.1 million for the three month period ended March 31, 2007, which
was flat to the same period in 2006. Higher other income, which was primarily volume driven fee
revenue related to lending, offset lower service charges and insurance fees.
Non interest expense was $4.9 million for the three month period ended March 31, 2007, an
increase of $0.4 million, or 9.9%, over the same period in 2006. Salaries and employee benefits
increased $0.2 million during the quarter ended March 31, 2007. Approximately $0.1 million of that
increase are non-recurring expenses as executive management succession is completed. Higher
professional services expenses were the result of additional non-recurring items including market
analysis for the Companys distribution network, executive search, and investor relations
consulting. Occupancy expenses increased in the first quarter of 2007 compared with the same
period for the prior year due to the addition of the Companys eleventh bank branch, which opened
in December 2006. Additionally, the Company experienced a $0.2 million loss related to a branch
operational error in processing checks.
Income tax expense totaled $481 thousand for the three month period ended March 31, 2007,
compared to $616 thousand for the same period in 2006. The effective tax rate for the three month
period ended March 31, 2007 was 27.2%, compared to 30.5% for the same period in 2006. The Company
records an effective tax rate for the period that will be reflective of the projected annual tax
rate based on expected supportable tax positions.
In July 2006, the FASB issued FIN 48, Accounting for Uncertainty in Income Taxes, to set out
a consistent framework for tax preparers to use to determine the appropriate level of tax reserves
to maintain for uncertain tax positions. This interpretation of FASB Statement No. 109 uses a
two-step approach wherein a tax benefit is recognized if a position is more likely than not to be
sustained. The amount of the benefit is then measured to be the highest tax benefit that is
greater than 50 percent likely to be realized. FIN 48 also sets out disclosure requirements to
enhance transparency of an entitys tax reserves. The Company adopted FIN 48 as of January 1,
2007. There were no unrecognized tax benefits or penalties at the date of adoption.
17
CAPITAL
The Bank has consistently maintained regulatory capital ratios at, or above, federal well
capitalized standards. Equity as a percentage of assets was 8.1% at March 31, 2007 down slightly
from 8.3% at December 31, 2006. Book value per common share was $14.71 at March 31, 2007, compared
to $13.41 at December 31, 2006. Total stockholders equity was $40.1 million at March 31, 2007, up
from $39.5 million at December 31, 2006. The increase is primarily attributable to net income of
$1.3 million and unrealized gains in the investment portfolio in first quarter 2007, somewhat
offset by the declaration of dividends.
LIQUIDITY
The Bank utilizes cash flows from the investment portfolio and federal funds sold balances to
manage the liquidity requirements related to loan demand and deposit fluctuations. The Bank also
has many borrowing options. As a member of the Federal Home Loan Bank (FHLB) the Bank is able to
borrow funds at competitive rates. Advances of up to $45.0 million can be drawn on the FHLB via an
Overnight Line of Credit Agreement between the Bank and the FHLB. An amount equal to 25% of the
Banks total assets could be borrowed through the advance programs under certain qualifying
circumstances. The Bank also has the ability to purchase up to $14.0 million in federal funds from
its correspondent banks. By placing sufficient collateral in safekeeping at the Federal Reserve
Bank, the Bank could also borrow at the discount window. Additionally, the Company has access to
capital markets as a funding source.
Cash flows from the Banks investment portfolio are laddered, so that securities mature at
regular intervals, to provide funds from principal and interest payments at various times as
liquidity needs may arise. Contractual maturities are also laddered, with consideration as to the
volatility of market prices, so that securities are available-for-sale from time-to-time without
the need to incur significant losses. At March 31, 2007, approximately 24.1% of the Banks
securities had contractual maturity dates of one year or less and approximately 43.0% had maturity
dates of five years or less. Available assets of $154.6 million, less public and purchased funds of
$207.3 million, resulted
in a long-term liquidity ratio of 75% at March 31, 2007, versus 80% at December 31, 2006. The
liquidity ratio decreased due to large municipal collections in the first quarter which increased
the percentage of public funds.
The Companys liquidity needs can also be met by more aggressively pursuing municipal
deposits, which are normally awarded on the basis of competitive bidding. The Company believes that
the Bank maintains a sufficient level of U.S. government and government agency securities and New
York State municipal bonds that can be pledged as collateral for these deposits.
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Additional information responsive to this Item is contained in the Liquidity section of
Managements Discussion and Analysis of Financial Condition and Results of Operations, which
information is incorporated herein by reference.
Market risk is the risk of loss from adverse changes in market prices and/or interest rates of
the Banks financial instruments. The primary market risk the Company is exposed to is interest
rate risk. The core banking activities of lending and deposit-taking expose the Bank to interest
rate risk, which occurs when assets and liabilities reprice at different times and by different
amounts as interest rates change. As a result, net interest income earned by the Bank is subject to
the effects of changing interest rates. The Bank measures interest rate risk by calculating the
variability of net interest income in the future periods under various interest rate scenarios
using projected balances for interest-earning assets and interest-bearing liabilities. Managements
philosophy toward interest rate risk management is to limit the variability of net interest income
to changes in net interest rates. The balances of financial instruments used in the projections are
based on expected growth from forecasted business opportunities, anticipated prepayments of loans,
and investment securities and expected maturities of investment securities, loans and deposits.
Management supplements the modeling technique described above with analysis of market values of the
Banks financial instruments and changes to such market values given changes in the interest rates.
The Banks Asset Liability Committee, which includes members of senior management, monitors
the Banks interest rate sensitivity with the aid of a computer model that considers the impact of
ongoing lending and deposit taking activities, as well as interrelationships in the magnitude and
timing of the repricing of financial instruments, including the effect of changing interest rates
on expected prepayments and maturities. When deemed prudent, management has taken actions, and
intends to do so in the future, to mitigate exposure to interest rate risk through the use of on-
or off-balance sheet financial instruments. Possible actions include, but are not limited to,
18
changing the pricing of loan and deposit products, and modifying the composition of
interest-earning assets and interest-bearing liabilities, and other financial instruments used for
interest rate risk management purposes.
The following table demonstrates the possible impact of changes in interest rates on the
Banks net interest income over a 12 month period of time:
SENSITIVITY OF NET INTEREST INCOME
TO CHANGES IN INTEREST RATES
|
|
|
|
|
|
|
|
|
|
|
Calculated (decrease) increase |
|
|
in projected annual net interest income |
|
|
(in thousands) |
|
|
March 31, 2007 |
|
December 31, 2006 |
Changes in interest rates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
+200 basis points |
|
|
(872 |
) |
|
|
(853 |
) |
+100 basis points |
|
|
(432 |
) |
|
|
(424 |
) |
|
|
|
|
|
|
|
|
|
-100 basis points |
|
|
387 |
|
|
|
379 |
|
-200 basis points |
|
|
566 |
|
|
|
551 |
|
Many assumptions were utilized by management to calculate the impact that changes in the
interest rates may have on the Banks net interest income. The more significant assumptions related
to the rate of prepayments of mortgage-related assets, loan and deposit volumes and pricing, and
deposit maturities. The Bank assumed immediate
changes in rates including 200 basis point rate changes. In the event that the 200 basis point rate
changes cannot be achieved, the applicable rate changes are limited to lesser amounts such that
interest rates cannot be less than zero. These assumptions are inherently uncertain and, as a
result, the Bank cannot precisely predict the impact of changes in interest rates on net interest
income. Actual results may differ significantly due to the timing, magnitude, and frequency of
interest rate changes in market conditions and interest rate differentials (spreads) between
maturity/repricing categories, as well as any actions such as those previously described, which
management may take to counter such changes. In light of the uncertainties and assumptions
associated with the process, the amounts presented in the table and changes in such amounts are not
considered significant to the Banks projected net interest income.
ITEM 4 CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
The Companys management, with the participation of the Companys principal executive officer
and principal financial officer, evaluated the effectiveness of the design and operation of the
Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act). Based on that evaluation, the Companys principal executive and principal financial
officers concluded that the Companys disclosure controls and procedures as of March 31, 2007 (the
end of the period covered by this Report) have been designed and are functioning effectively to
provide reasonable assurance that the information required to be disclosed by the Company in its
reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SECs rules and forms.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
No changes in the Companys internal control over financial reporting were identified in the
fiscal quarter ended March 31, 2007 that have materially affected, or are reasonably likely to
materially affect, the Companys internal control over financial reporting.
19
PART II OTHER INFORMATION
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table includes all Company repurchases of its common stock, $0.50 par value, made on
a monthly basis during the period covered by this Report, including those made pursuant to publicly
announced plans or programs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares purchased as |
|
|
Maximum number of |
|
|
|
Total number |
|
|
Average price |
|
|
part of publicly |
|
|
shares that may yet be |
|
|
|
of shares |
|
|
paid |
|
|
announced plans or |
|
|
purchased under the |
|
Period |
|
purchased |
|
|
per share |
|
|
programs |
|
|
plans or programs |
|
January 2007
(January 1, 2007 through January 31, 2007) |
|
|
2,500 |
|
|
$ |
20.69 |
|
|
|
2,500 |
|
|
|
42,615 |
|
February 2007
(February 1, 2007 through February 28,
2007) |
|
|
600 |
|
|
$ |
21.16 |
|
|
|
600 |
|
|
|
42,015 |
|
March 2007 (March 1, 2007 through March 31, 2007) |
|
|
400 |
|
|
$ |
20.64 |
|
|
|
400 |
|
|
|
41,615 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
3,500 |
|
|
$ |
20.77 |
|
|
|
3,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All of the foregoing shares were purchased in open market transactions. On August 18, 2005, the
Company announced that its Board of Directors authorized a common stock repurchase program,
pursuant to which the Company may repurchase of up to 75,000 shares of the Companys common stock
over a period of two years, unless the program is terminated earlier. The Company did not make any
repurchases during the quarter ended March 31, 2007 other than pursuant to this publicly announced
program, and there were no other publicly announced plans or programs outstanding during the
quarter ended March 31, 2007.
20
ITEM 6 EXHIBITS
|
|
|
|
|
|
|
Exhibit No. |
|
Name |
|
Page No. |
10.1
|
|
Summary of Compensation Arrangements of Certain
Officers and Directors
|
|
|
23 |
|
|
|
|
|
|
|
|
10.2
|
|
Employment Agreement between ENB Insurance Agency, Inc. and Robert G. Miller Jr.
(incorporated by reference to Exhibit 10.1 of the Companys Current Report on
Form 8-K filed on February 26, 2007) |
|
|
|
|
|
|
|
|
|
|
|
10.3
|
|
Employment Agreement among Evans Bancorp, Inc., Evans National Bank
and Gary A. Kajtoch as of April 1, 2007 (incorporated by reference to
Exhibit 10.1 of the Companys Current Report on Form 8-K filed March 26, 2007 |
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Certification of Principal Executive Officer pursuant to
section 302 of The Sarbanes-Oxley Act of 2002.
|
|
|
24 |
|
|
|
|
|
|
|
|
31.2
|
|
Certification of the Principal Financial Officer pursuant to
section 302 of The Sarbanes-Oxley Act of 2002.
|
|
|
25 |
|
|
|
|
|
|
|
|
32.1
|
|
Certification of Principal Executive Officer pursuant to 18
USC Section 1350 Chapter 63 of Title 18, United States Code,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
|
|
|
26 |
|
|
|
|
|
|
|
|
32.2
|
|
Certification of Principal Financial Officer pursuant to 18
USC Section 1350 Chapter 63 of Title 18, United States Code,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
|
|
|
27 |
|
21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Evans Bancorp, Inc.
|
|
|
|
|
DATE |
|
/s/ David J. Nasca |
|
|
May 15, 2007
|
|
David J. Nasca
President and CEO
|
|
|
|
|
(On Behalf of the Registrant and |
|
|
|
|
as Principal Executive Officer) |
|
|
|
|
|
|
|
DATE |
|
/s/ Gary A. Kajtoch |
|
|
May 15, 2007
|
|
Gary A. Kajtoch
|
|
|
|
|
Treasurer |
|
|
|
|
(Principal Financial Officer) |
|
|
22
Exhibit Index
|
|
|
|
|
|
|
Exhibit No. |
|
Name |
|
Page No. |
10.1
|
|
Summary of Compensation Arrangements of Certain
Officers and Directors
|
|
|
23 |
|
|
|
|
|
|
|
|
10.2
|
|
Employment Agreement between ENB Insurance Agency, Inc. and Robert G. Miller Jr.
(incorporated by reference to Exhibit 10.1 of the Companys Current Report on
Form 8-K filed on February 26, 2007) |
|
|
|
|
|
|
|
|
|
|
|
10.3
|
|
Employment Agreement among Evans Bancorp, Inc., Evans National Bank
and Gary A. Kajtoch as of April 1, 2007 (incorporated by reference to
Exhibit 10.1 of the Companys Current Report on Form 8-K filed March 26, 2007 |
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Certification of Principal Executive Officer pursuant to
section 302 of The Sarbanes-Oxley Act of 2002.
|
|
|
24 |
|
|
|
|
|
|
|
|
31.2
|
|
Certification of the Principal Financial Officer pursuant to
section 302 of The Sarbanes-Oxley Act of 2002.
|
|
|
25 |
|
|
|
|
|
|
|
|
32.1
|
|
Certification of Principal Executive Officer pursuant to 18
USC Section 1350 Chapter 63 of Title 18, United States Code,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
|
|
|
26 |
|
|
|
|
|
|
|
|
32.2
|
|
Certification of Principal Financial Officer pursuant to 18
USC Section 1350 Chapter 63 of Title 18, United States Code,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
|
|
|
27 |
|