Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Evans Bancorp Reports Net Income of $24.5 Million in 2023 By: Evans Bancorp, Inc. via Business Wire February 01, 2024 at 16:15 PM EST 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 fourth quarter and full year ended December 31, 2023. HIGHLIGHTS Completed the sale of The Evans Agency (“TEA”) to Arthur J. Gallagher & Co, netting a pretax gain of $20.2 million in the fourth quarter Repositioned balance sheet with sale of $78 million of investment securities – proceeds used to reduce short-term borrowings; resulted in recognized pretax loss of $5.0 million in the quarter but improves forward net interest income Total loan balances of $1.7 billion up 1% in the quarter and 3% year-over-year Fourth quarter net interest margin of 2.75% declined 4 basis points sequentially Tangible book value per share increased 25% to $32.07 at December 31, 2023 compared with prior year’s fourth quarter Paid dividends of $1.32 per share in 2023, up 5% Net income was $10.2 million, or $1.85 per diluted share, in the fourth quarter of 2023, compared with $3.6 million, or $0.66 per diluted share, in the third quarter of 2023 and $6.0 million, or $1.10 per diluted share, in last year’s fourth quarter. On November 30, 2023, the Company sold The Evans Agency to Arthur J. Gallagher & Co., and recognized a pretax gain of $20.2 million. In addition, the Company strategically repositioned its balance sheet by selling $78 million of investment securities, primarily available-for-sale U.S. Treasuries and government-sponsored agency securities, and used the proceeds to pay down short-term borrowings. This action resulted in $5.0 million of pretax losses on investment securities during the fourth quarter of 2023 with expected positive forward impact on net interest income. Return on average equity was 25.73% for the fourth quarter of 2023, compared with 9.06% in the third quarter of 2023 and 16.07% in the fourth quarter of 2022. For the full year of 2023, net income increased 10% to $24.5 million, or $4.48 per diluted share, compared with $22.4 million, or $4.04 per diluted share, in 2022. The increase mainly reflected the gain on sale of the insurance agency partially offset by lower net interest income and loss on investment securities. Allowance for credit losses was reduced by $2.7 million from the prior year as a result of improving economic factors, including peer metrics, and a $1.5 million charge-off of a single commercial loan during 2022. The return on average equity was 15.47% for 2023 compared with 13.49% in 2022. “Evans’ performance in 2023 was characterized by resiliency,” commented David J. Nasca, President and CEO of Evans Bancorp, Inc. “With a backdrop of interest rate pressure and macro-economic factors such as inflation, potential recession and liquidity demands, the dedicated work of the entire Evans team successfully protected and served client relationships, and maintained funding and liquidity. Actions were also taken to control costs, deliver efficiencies, and improve customer experience with investments in technology and process improvements. “During the fourth quarter, we executed two strategic initiatives. The sale of The Evans Agency resulted in significant value creation including measurable growth in our tangible book value with an after-tax gain of approximately $13 million and elimination of almost $12 million of goodwill and other intangibles. The proceeds from the transaction strengthened capital which allows flexibility to strategically redeploy back into our core banking franchise, including the restructure in our balance sheet which was completed in the fourth quarter to reduce lower yielding investment assets and reduce borrowings which we expect to improve returns in 2024.” Net Interest Income ($ in thousands) 4Q 2023 3Q 2023 4Q 2022 Interest income $ 25,205 $ 24,292 $ 22,381 Interest expense 11,259 10,036 3,167 Net interest income 13,946 14,256 19,214 Provision for credit losses 282 506 923 Net interest income after provision $ 13,664 $ 13,750 $ 18,291 Net interest income of $13.9 million was down $0.3 million, or 2%, from the third quarter and $5.3 million, or 27%, from last year’s fourth quarter as a result of higher interest expense related to the increased cost of interest-bearing liabilities produced by competitive pricing on deposits. Fourth quarter net interest margin of 2.75% declined 4 basis points from the trailing third quarter and 102 basis points from the prior-year period. The yield on loans increased 18 basis points compared with the third quarter and 55 basis points year-over-year. The cost of interest-bearing liabilities was 2.87% compared with 2.59% in the third quarter of 2023 and 0.86% in the fourth quarter of 2022. The $0.3 million provision for credit losses in the current quarter was due to loan growth and higher reserves on individually analyzed loans, partially offset by improving economic factors, including peer group metrics. Asset Quality ($ in thousands) 4Q 2023 3Q 2023 4Q 2022 Total non-performing loans $ 27,325 $ 27,311 $ 24,728 Total net loan charge-offs 11 35 115 Non-performing loans / Total loans 1.59 % 1.60 % 1.48 % Net loan charge-offs / Average loans - % 0.01 % 0.03 % Allowance for loan losses / Total loans 1.28 % 1.28 % 1.16 % “The transaction to restructure the balance sheet reduces a portion of the Bank’s liability sensitivity, increases future net interest income, and has just over a two-year payback after paying down higher rate borrowings,” commented John Connerton, Chief Financial Officer of Evans Bank. “We remain focused on growing consumer and commercial core deposits, and while our deposit levels saw some contraction during the quarter, a large component was attributable to normal commercial and municipal deposit seasonality. We believe we are managing the current rate environment well by retaining key relationships, which along with capital growth puts us in a favorable position.” Non-Interest Income ($ in thousands) 4Q 2023 3Q 2023 4Q 2022 Deposit service charges $ 670 $ 665 $ 684 Insurance service and fee revenue 1,613 3,498 2,204 Bank-owned life insurance 230 239 221 Interchange fee income 510 516 507 Gain on sale of insurance agency 20,160 - - Loss on sale of investment securities (5,044) - - Other income 412 638 845 Total non-interest income $ 18,551 $ 5,556 $ 4,461 Excluding the fourth quarter’s one-time transactions relating to the gain on the sale of TEA and loss on sale of securities, non-interest income would have been $3.4 million. Insurance service and fee revenue of $1.6 million reflects two months of revenue earned by TEA. Insurance service and fee revenue was also higher in the third quarter of 2023 due to premium seasonality. Other income decreased $0.2 million from the third quarter of 2023 due to a decrease in value of mortgage servicing rights. The decrease from last year’s fourth quarter was primarily due to a $0.2 million gain on sale of an asset that was acquired in foreclosure and sold in the fourth quarter of 2022, and also included $0.2 million of revenue recognized relating to rents received from the acquired asset prior to the sale. Non-Interest Expense ($ in thousands) 4Q 2023 3Q 2023 4Q 2022 Salaries and employee benefits $ 10,251 $ 8,735 $ 9,498 Occupancy 1,078 1,109 1,190 Advertising and public relations 296 348 125 Professional services 1,003 869 871 Technology and communications 1,545 1,517 1,437 Amortization of intangibles 67 100 100 FDIC insurance 350 350 250 Other expenses 1,710 1,379 1,429 Total non-interest expenses $ 16,300 $ 14,407 $ 14,900 Total non-interest expense increased $1.9 million, or 13%, from the third quarter of 2023, and $1.4 million, or 9%, from last year’s fourth quarter. Salaries and employee benefits increased $1.5 million, or 17%, from the sequential quarter, largely due to higher incentive accruals of $2.2 million, partially offset by reduced staff expenses including former insurance employees. The increase from the prior year’s fourth quarter was due to higher incentive accruals of $1.6 million, partially offset by a reduction of staff expenses through consolidation of branches, back-office operations, and sale of TEA. The increase in other expenses compared with both comparative periods was due to $0.3 million of charitable contributions made during the current quarter. The Company’s GAAP efficiency ratio, or noninterest expenses divided by the sum of net interest income and noninterest income, was 50.2% in the fourth quarter of 2023, 72.7% in the third quarter of 2023, and 62.9% in the fourth quarter of 2022. Income tax expense was $5.7 million, for an effective tax rate of 36.1%, in the fourth quarter of 2023 compared with 26.2% in the third quarter of 2023 and 23.0% in last year’s fourth quarter. The elevated tax rate in the 2023 fourth quarter reflected the sale of TEA which included significant non-deductible goodwill expense. Balance Sheet Highlights Total assets were $2.11 billion as of December 31, 2023, a decrease of $66 million, or 3% since September 30, 2023, and $69 million, or 3% since December 31, 2022. The change from comparative periods was due to the sale of investment securities, partially offset by an increase in loan balances. Loan balances increased $17 million, or 1%, during the fourth quarter and reflected higher commercial real estate loans of $13 million and residential mortgages of $3 million. Since December 31, 2022, loan balances increased $49 million, or 3%, due to higher commercial real estate loans of $73 million and residential mortgages of $3 million, partially offset by a decrease in commercial and industrial loans of $27 million. Investment securities were $278 million at December 31, 2023, $59 million lower than the end of the third quarter of 2023 and $94 million lower than the end of last year’s fourth quarter. The decrease reflects the strategic decision to sell $78 million of investment securities as well as changes in unrealized gains and losses on investment securities and maturities within the 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. The Company has the positive intent and ability to hold the remaining portfolio through recovery of value. Total deposits of $1.72 billion decreased $87 million, or 5%, from September 30, 2023, and were down $53 million, or 3%, from the end of last year’s fourth quarter. The change from the sequential quarter largely reflected typical seasonal outflows from commercial and municipal relationships. From a product perspective, deposit decreases were in demand deposits of $57 million, municipal savings of $29 million, commercial savings of $14 million, consumer savings of $7 million, and consumer time deposits of $1 million. Offsetting those decreases were higher NOW deposits of $21 million. While the Company has not experienced a significant outflow of deposits, in the event of such occurrences, it has access to alternate sources of funding to meet withdrawal demands. As of December 31, 2023, Evans had $53 million in overnight borrowings at the FHLB. Given the current collateral available at FHLB, advances up to $364 million can be drawn on the FHLB via the Company’s overnight line of credit. Additionally, Evans has the ability to borrow from the Federal Reserve and participates in the Bank Term Funding Program. At December 31, 2023, Evans had $86 million in short-term borrowings with the Federal Reserve and $8 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 10.37% at December 31, 2023 compared with 9.40% at September 30, 2023 and 9.13% at December 31, 2022. Book value per share was $32.40 at December 31, 2023 compared with $27.52 at September 30, 2023 and $28.32 at December 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. As of December 31, 2023 this amounted to $7.41 per share impact to book value. 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 $32.07 at December 31, 2023 compared with $25.04 at September 30, 2023 and $25.76 at December 31, 2022. For the full year of 2023, cash dividends totaled $1.32 per share, up 5% over 2022. 2023 Year in Review (compared with prior-year) Net interest income was $61.2 million, down 16%. The yield on loans increased 86 basis points while competition on deposits and changes in customer behaviors contributed to the 189 basis points increase in cost of funds during 2023. Net interest margin was 3.02%, a decrease of 51 basis points. The Company’s provision for credit loss was less than $0.1 million, which reflected improving economic conditions, including peer group metrics, partially offset by loan growth and specific reserve related individually analyzed loans. Provision for loan loss in 2022 included a $1.5 million charge-off of a single commercial loan and loan growth, partially offset by a decrease of criticized loans. The ratio of non-performing loans to total loans was 1.59% compared with 1.48% in 2022. Non-interest income was up $13.7 million to $32.9 million. The increase was due to the gain on sale of the insurance agency of $20.2 million, partially offset by loss on sale of investment securities of $5 million, reduced bank services charges of $0.3 million, and lower insurance service and fee revenue of $0.2 million. Included in non-interest income during 2022 was a gain on sale of an asset that was acquired in foreclosure of $0.2 million, as well as $0.2 million of revenue recognized relating to rents received from the acquired asset and a $0.2 million final payment in connection with a historic tax credit investment. Non-interest expense decreased $0.6 million, or 1%, to $59.4 million. Current year decreases included salaries and employee benefits of $1.8 million and loan expenses of $0.3 million, partially offset by higher technology and communication expenses of $0.8 million, charitable contributions of $0.3 million, and FDIC insurance expense of $0.4 million. The Company’s GAAP efficiency ratio was 63.1% in 2023 compared with 65.0% in 2022. Income tax expense for the year was $10.2 million, representing an effective tax rate of 29.4% compared with an effective tax rate of 24.2% in 2022. Webcast and Conference Call The Company will host a conference call and webcast on Thursday, February 1, 2024 at 4:45 p.m. ET. Management will review the financial and operating results for the fourth quarter and full year 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, February 15, 2024. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13743382, 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 $1.7 billion in deposits at December 31, 2023. Evans Bank is a full-service community bank with 18 branches providing comprehensive financial services to consumer, business and municipal customers throughout Western New York. 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) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 ASSETS Interest-bearing deposits at banks $ 3,798 $ 7,468 $ 10,334 $ 3,832 $ 6,258 Securities AFS 275,680 334,460 351,595 365,929 364,326 Securities HTM 2,059 2,170 2,241 3,707 6,949 Loans 1,720,946 1,704,400 1,670,753 1,658,576 1,672,369 Allowance for credit losses (22,114) (21,846) (21,368) (21,523) (19,438) Goodwill and intangible assets 1,862 13,629 13,729 13,829 13,929 All other assets 126,432 134,462 127,679 123,920 134,117 Total assets $ 2,108,663 $ 2,174,743 $ 2,154,963 $ 2,148,270 $ 2,178,510 LIABILITIES AND STOCKHOLDERS' EQUITY Demand deposits $ 390,238 $ 447,306 $ 442,195 $ 483,958 $ 493,710 NOW deposits 345,279 324,219 303,159 268,283 273,359 Savings deposits 649,621 698,653 726,687 807,532 801,943 Time deposits 333,623 335,228 314,574 290,141 202,667 Total deposits 1,718,761 1,805,406 1,786,615 1,849,914 1,771,679 Securities sold under agreement to repurchase 9,475 13,447 19,185 9,264 7,147 Subordinated debt 31,177 31,152 31,126 31,101 31,075 Other borrowings 145,123 151,252 140,386 79,637 193,001 Other liabilities 25,908 22,551 18,167 20,103 21,615 Total stockholders' equity $ 178,219 $ 150,935 $ 159,484 $ 158,251 $ 153,993 SHARES AND CAPITAL RATIOS Common shares outstanding 5,499,772 5,483,591 5,477,505 5,462,763 5,437,048 Book value per share $ 32.40 $ 27.52 $ 29.12 $ 28.97 $ 28.32 Tangible book value per share $ 32.07 $ 25.04 $ 26.61 $ 26.44 $ 25.76 Tier 1 leverage ratio 10.37 % 9.40 % 9.43 % 9.13 % 9.13 % Tier 1 risk-based capital ratio 13.80 % 12.04 % 12.73 % 12.55 % 12.29 % Total risk-based capital ratio 15.05 % 13.29 % 13.98 % 13.80 % 13.48 % ASSET QUALITY DATA Total non-performing loans $ 27,325 $ 27,311 $ 27,789 $ 24,084 $ 24,728 Total net loan charge-offs (recoveries) 11 35 35 (4) 115 Other real estate owned (OREO) $ - $ - $ - $ - $ - Non-performing loans/Total loans 1.59 % 1.60 % 1.66 % 1.45 % 1.48 % Net loan charge-offs (recoveries)/Average loans - % 0.01 % 0.01 % - % 0.03 % Allowance for credit losses/Total loans 1.28 % 1.28 % 1.28 % 1.30 % 1.16 % EVANS BANCORP, INC AND SUBSIDIARIES SELECTED OPERATIONS DATA (UNAUDITED) (in thousands, except share and per share data) 2023 2023 2023 2023 2022 Fourth Quarter Third Quarter Second Quarter First Quarter Fourth Quarter Interest income $ 25,205 $ 24,292 $ 23,988 $ 23,365 $ 22,381 Interest expense 11,259 10,036 8,307 6,040 3,167 Net interest income 13,946 14,256 15,681 17,325 19,214 Provision for credit losses 282 506 (116) (654) 923 Net interest income after provision for credit losses 13,664 13,750 15,797 17,979 18,291 Deposit service charges 670 665 645 613 684 Insurance service and fee revenue 1,613 3,498 2,720 2,429 2,204 Bank-owned life insurance 230 239 238 224 221 Interchange fee income 510 516 528 493 507 Gain on sale of insurance agency 20,160 - - - - Loss on sale of investment securities (5,044) - - - - Other income 412 638 570 354 845 Total non-interest income 18,551 5,556 4,701 4,113 4,461 Salaries and employee benefits 10,251 8,735 8,649 9,413 9,498 Occupancy 1,078 1,109 1,145 1,173 1,190 Advertising and public relations 296 348 407 156 125 Professional services 1,003 869 808 883 871 Technology and communications 1,545 1,517 1,542 1,356 1,437 Amortization of intangibles 67 100 100 100 100 FDIC insurance 350 350 350 350 250 Other expenses 1,710 1,379 1,171 1,071 1,429 Total non-interest expenses 16,300 14,407 14,172 14,502 14,900 Income before income taxes 15,915 4,899 6,326 7,590 7,852 Income tax provision 5,741 1,281 1,394 1,790 1,809 Net income 10,174 3,618 4,932 5,800 6,043 PER SHARE DATA Net income per common share-diluted $ 1.85 $ 0.66 $ 0.90 $ 1.06 $ 1.10 Cash dividends per common share $ - $ 0.66 $ - $ 0.66 $ - Weighted average number of diluted shares 5,497,029 5,490,600 5,474,462 5,475,790 5,500,810 PERFORMANCE RATIOS Return on average total assets 1.90 % 0.67 % 0.91 % 1.07 % 1.12 % Return on average stockholders' equity 25.73 % 9.06 % 12.25 % 14.97 % 16.07 % Return on average tangible common stockholders' equity* 27.37 % 9.90 % 13.39 % 16.44 % 17.72 % Efficiency ratio 50.16 % 72.72 % 69.53 % 67.65 % 62.94 % Efficiency ratio (Non-GAAP)** 93.40 % 72.21 % 69.04 % 67.18 % 62.51 % * 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, gains from sale of subsidiaries, 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 2023 2023 2022 Fourth Quarter Third Quarter Second Quarter First Quarter Fourth Quarter AVERAGE BALANCES Loans, net $ 1,682,177 $ 1,658,132 $ 1,646,502 $ 1,641,162 $ 1,627,028 Investment securities 327,303 355,870 373,922 382,329 382,125 Interest-bearing deposits at banks 5,916 9,883 7,235 9,824 10,416 Total interest-earning assets 2,015,396 2,023,885 2,027,659 2,033,315 2,019,569 Non interest-earning assets 128,915 135,896 129,793 133,936 135,035 Total Assets $ 2,144,311 $ 2,159,781 $ 2,157,452 $ 2,167,251 $ 2,154,604 NOW 333,893 311,624 281,910 260,242 265,313 Savings 687,223 708,724 776,020 796,793 874,816 Time deposits 335,646 325,667 304,575 257,733 174,362 Total interest-bearing deposits 1,356,762 1,346,015 1,362,505 1,314,768 1,314,491 Borrowings 197,363 192,277 163,338 173,053 151,259 Total interest-bearing liabilities 1,554,125 1,538,292 1,525,843 1,487,821 1,465,750 Demand deposits 409,115 441,149 451,990 503,945 518,666 Other non-interest bearing liabilities 22,880 20,529 18,532 20,487 19,798 Stockholders' equity 158,191 159,811 161,087 154,998 150,390 Total Liabilities and Equity $ 2,144,311 $ 2,159,781 $ 2,157,452 $ 2,167,251 $ 2,154,604 Average tangible common stockholders' equity* 148,673 146,122 147,299 141,111 136,406 YIELD/RATE Loans, net 5.43 % 5.25 % 5.26 % 5.16 % 4.88 % Investment securities 2.53 % 2.48 % 2.47 % 2.53 % 2.36 % Interest-bearing deposits at banks 6.38 % 5.29 % 4.45 % 3.97 % 3.16 % Total interest-earning assets 4.96 % 4.76 % 4.75 % 4.66 % 4.40 % NOW 2.12 % 1.79 % 1.24 % 0.75 % 0.36 % Savings 2.09 % 1.85 % 1.58 % 0.95 % 0.33 % Time deposits 3.83 % 3.45 % 3.10 % 2.63 % 1.61 % Total interest-bearing deposits 2.53 % 2.22 % 1.85 % 1.24 % 0.51 % Borrowings 5.27 % 5.14 % 4.98 % 4.74 % 3.88 % Total interest-bearing liabilities 2.87 % 2.59 % 2.18 % 1.65 % 0.86 % Interest rate spread 2.09 % 2.17 % 2.57 % 3.01 % 3.54 % Contribution of interest-free funds 0.66 % 0.62 % 0.53 % 0.45 % 0.23 % Net interest margin 2.75 % 2.79 % 3.10 % 3.46 % 3.77 % * Average tangible common stockholders' equity excludes goodwill and intangible assets from average stockholders equity. EVANS BANCORP, INC AND SUBSIDIARIES SELECTED OPERATIONS DATA (UNAUDITED) (in thousands, except share and per share data) 2023 2022 Year to Date Year to Date % Change Interest income $ 96,850 $ 79,482 22 % Interest expense 35,642 6,527 446 % Net interest income 61,208 72,955 (16) % Provision for credit losses 18 2,739 (99) % Net interest income after provision for credit losses 61,190 70,216 (13) % Deposit service charges 2,593 2,861 (9) % Insurance service and fee revenue 10,261 10,453 (2) % Bank-owned life insurance 932 707 32 % Interchange fee income 2,047 2,071 (1) % Gain on sale of insurance agency 20,160 - - Loss on sale of investment securities (5,044) - - Other income 1,973 3,179 (38) % Total non-interest income 32,922 19,271 71 % Salaries and employee benefits 37,047 38,854 (5) % Occupancy 4,506 4,619 (2) % Advertising and public relations 1,207 1,159 4 % Professional services 3,563 3,425 4 % Technology and communications 5,959 5,187 15 % FDIC insurance 1,400 1,025 37 % Amortization of intangibles 367 400 (8) % Other expenses 5,333 5,266 1 % Total non-interest expenses 59,382 59,935 (1) % Income before income taxes 34,730 29,552 18 % Income tax provision 10,206 7,163 42 % Net income 24,524 22,389 10 % PER SHARE DATA Net income per common share-diluted $ 4.48 $ 4.04 11 % Cash dividends per common share $ 1.32 $ 1.26 5 % Weighted average number of diluted shares 5,471,033 5,536,375 PERFORMANCE RATIOS Return on average total assets 1.14 % 1.02 % Return on average stockholders' equity 15.47 % 13.49 % Return on average tangible common stockholders' equity* 16.82 % 14.74 % Efficiency ratio 63.09 % 64.99 % Efficiency ratio (Non-GAAP)** 74.69 % 64.55 % Net interest margin 3.02 % 3.53 % Net loan charge-offs (recoveries)/Average loans - % 0.11 % * 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, gains from sale of subsidiaries, merger-related expenses and the impact of historic tax credit transactions. View source version on businesswire.com: https://www.businesswire.com/news/home/20240201099964/en/Contacts 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: Kathleen Rizzo Young Group VP/Public & Community Relations Director 716-343-5562 krizzoyoung@evansbank.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Evans Bancorp Reports Net Income of $24.5 Million in 2023 By: Evans Bancorp, Inc. via Business Wire February 01, 2024 at 16:15 PM EST 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 fourth quarter and full year ended December 31, 2023. HIGHLIGHTS Completed the sale of The Evans Agency (“TEA”) to Arthur J. Gallagher & Co, netting a pretax gain of $20.2 million in the fourth quarter Repositioned balance sheet with sale of $78 million of investment securities – proceeds used to reduce short-term borrowings; resulted in recognized pretax loss of $5.0 million in the quarter but improves forward net interest income Total loan balances of $1.7 billion up 1% in the quarter and 3% year-over-year Fourth quarter net interest margin of 2.75% declined 4 basis points sequentially Tangible book value per share increased 25% to $32.07 at December 31, 2023 compared with prior year’s fourth quarter Paid dividends of $1.32 per share in 2023, up 5% Net income was $10.2 million, or $1.85 per diluted share, in the fourth quarter of 2023, compared with $3.6 million, or $0.66 per diluted share, in the third quarter of 2023 and $6.0 million, or $1.10 per diluted share, in last year’s fourth quarter. On November 30, 2023, the Company sold The Evans Agency to Arthur J. Gallagher & Co., and recognized a pretax gain of $20.2 million. In addition, the Company strategically repositioned its balance sheet by selling $78 million of investment securities, primarily available-for-sale U.S. Treasuries and government-sponsored agency securities, and used the proceeds to pay down short-term borrowings. This action resulted in $5.0 million of pretax losses on investment securities during the fourth quarter of 2023 with expected positive forward impact on net interest income. Return on average equity was 25.73% for the fourth quarter of 2023, compared with 9.06% in the third quarter of 2023 and 16.07% in the fourth quarter of 2022. For the full year of 2023, net income increased 10% to $24.5 million, or $4.48 per diluted share, compared with $22.4 million, or $4.04 per diluted share, in 2022. The increase mainly reflected the gain on sale of the insurance agency partially offset by lower net interest income and loss on investment securities. Allowance for credit losses was reduced by $2.7 million from the prior year as a result of improving economic factors, including peer metrics, and a $1.5 million charge-off of a single commercial loan during 2022. The return on average equity was 15.47% for 2023 compared with 13.49% in 2022. “Evans’ performance in 2023 was characterized by resiliency,” commented David J. Nasca, President and CEO of Evans Bancorp, Inc. “With a backdrop of interest rate pressure and macro-economic factors such as inflation, potential recession and liquidity demands, the dedicated work of the entire Evans team successfully protected and served client relationships, and maintained funding and liquidity. Actions were also taken to control costs, deliver efficiencies, and improve customer experience with investments in technology and process improvements. “During the fourth quarter, we executed two strategic initiatives. The sale of The Evans Agency resulted in significant value creation including measurable growth in our tangible book value with an after-tax gain of approximately $13 million and elimination of almost $12 million of goodwill and other intangibles. The proceeds from the transaction strengthened capital which allows flexibility to strategically redeploy back into our core banking franchise, including the restructure in our balance sheet which was completed in the fourth quarter to reduce lower yielding investment assets and reduce borrowings which we expect to improve returns in 2024.” Net Interest Income ($ in thousands) 4Q 2023 3Q 2023 4Q 2022 Interest income $ 25,205 $ 24,292 $ 22,381 Interest expense 11,259 10,036 3,167 Net interest income 13,946 14,256 19,214 Provision for credit losses 282 506 923 Net interest income after provision $ 13,664 $ 13,750 $ 18,291 Net interest income of $13.9 million was down $0.3 million, or 2%, from the third quarter and $5.3 million, or 27%, from last year’s fourth quarter as a result of higher interest expense related to the increased cost of interest-bearing liabilities produced by competitive pricing on deposits. Fourth quarter net interest margin of 2.75% declined 4 basis points from the trailing third quarter and 102 basis points from the prior-year period. The yield on loans increased 18 basis points compared with the third quarter and 55 basis points year-over-year. The cost of interest-bearing liabilities was 2.87% compared with 2.59% in the third quarter of 2023 and 0.86% in the fourth quarter of 2022. The $0.3 million provision for credit losses in the current quarter was due to loan growth and higher reserves on individually analyzed loans, partially offset by improving economic factors, including peer group metrics. Asset Quality ($ in thousands) 4Q 2023 3Q 2023 4Q 2022 Total non-performing loans $ 27,325 $ 27,311 $ 24,728 Total net loan charge-offs 11 35 115 Non-performing loans / Total loans 1.59 % 1.60 % 1.48 % Net loan charge-offs / Average loans - % 0.01 % 0.03 % Allowance for loan losses / Total loans 1.28 % 1.28 % 1.16 % “The transaction to restructure the balance sheet reduces a portion of the Bank’s liability sensitivity, increases future net interest income, and has just over a two-year payback after paying down higher rate borrowings,” commented John Connerton, Chief Financial Officer of Evans Bank. “We remain focused on growing consumer and commercial core deposits, and while our deposit levels saw some contraction during the quarter, a large component was attributable to normal commercial and municipal deposit seasonality. We believe we are managing the current rate environment well by retaining key relationships, which along with capital growth puts us in a favorable position.” Non-Interest Income ($ in thousands) 4Q 2023 3Q 2023 4Q 2022 Deposit service charges $ 670 $ 665 $ 684 Insurance service and fee revenue 1,613 3,498 2,204 Bank-owned life insurance 230 239 221 Interchange fee income 510 516 507 Gain on sale of insurance agency 20,160 - - Loss on sale of investment securities (5,044) - - Other income 412 638 845 Total non-interest income $ 18,551 $ 5,556 $ 4,461 Excluding the fourth quarter’s one-time transactions relating to the gain on the sale of TEA and loss on sale of securities, non-interest income would have been $3.4 million. Insurance service and fee revenue of $1.6 million reflects two months of revenue earned by TEA. Insurance service and fee revenue was also higher in the third quarter of 2023 due to premium seasonality. Other income decreased $0.2 million from the third quarter of 2023 due to a decrease in value of mortgage servicing rights. The decrease from last year’s fourth quarter was primarily due to a $0.2 million gain on sale of an asset that was acquired in foreclosure and sold in the fourth quarter of 2022, and also included $0.2 million of revenue recognized relating to rents received from the acquired asset prior to the sale. Non-Interest Expense ($ in thousands) 4Q 2023 3Q 2023 4Q 2022 Salaries and employee benefits $ 10,251 $ 8,735 $ 9,498 Occupancy 1,078 1,109 1,190 Advertising and public relations 296 348 125 Professional services 1,003 869 871 Technology and communications 1,545 1,517 1,437 Amortization of intangibles 67 100 100 FDIC insurance 350 350 250 Other expenses 1,710 1,379 1,429 Total non-interest expenses $ 16,300 $ 14,407 $ 14,900 Total non-interest expense increased $1.9 million, or 13%, from the third quarter of 2023, and $1.4 million, or 9%, from last year’s fourth quarter. Salaries and employee benefits increased $1.5 million, or 17%, from the sequential quarter, largely due to higher incentive accruals of $2.2 million, partially offset by reduced staff expenses including former insurance employees. The increase from the prior year’s fourth quarter was due to higher incentive accruals of $1.6 million, partially offset by a reduction of staff expenses through consolidation of branches, back-office operations, and sale of TEA. The increase in other expenses compared with both comparative periods was due to $0.3 million of charitable contributions made during the current quarter. The Company’s GAAP efficiency ratio, or noninterest expenses divided by the sum of net interest income and noninterest income, was 50.2% in the fourth quarter of 2023, 72.7% in the third quarter of 2023, and 62.9% in the fourth quarter of 2022. Income tax expense was $5.7 million, for an effective tax rate of 36.1%, in the fourth quarter of 2023 compared with 26.2% in the third quarter of 2023 and 23.0% in last year’s fourth quarter. The elevated tax rate in the 2023 fourth quarter reflected the sale of TEA which included significant non-deductible goodwill expense. Balance Sheet Highlights Total assets were $2.11 billion as of December 31, 2023, a decrease of $66 million, or 3% since September 30, 2023, and $69 million, or 3% since December 31, 2022. The change from comparative periods was due to the sale of investment securities, partially offset by an increase in loan balances. Loan balances increased $17 million, or 1%, during the fourth quarter and reflected higher commercial real estate loans of $13 million and residential mortgages of $3 million. Since December 31, 2022, loan balances increased $49 million, or 3%, due to higher commercial real estate loans of $73 million and residential mortgages of $3 million, partially offset by a decrease in commercial and industrial loans of $27 million. Investment securities were $278 million at December 31, 2023, $59 million lower than the end of the third quarter of 2023 and $94 million lower than the end of last year’s fourth quarter. The decrease reflects the strategic decision to sell $78 million of investment securities as well as changes in unrealized gains and losses on investment securities and maturities within the 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. The Company has the positive intent and ability to hold the remaining portfolio through recovery of value. Total deposits of $1.72 billion decreased $87 million, or 5%, from September 30, 2023, and were down $53 million, or 3%, from the end of last year’s fourth quarter. The change from the sequential quarter largely reflected typical seasonal outflows from commercial and municipal relationships. From a product perspective, deposit decreases were in demand deposits of $57 million, municipal savings of $29 million, commercial savings of $14 million, consumer savings of $7 million, and consumer time deposits of $1 million. Offsetting those decreases were higher NOW deposits of $21 million. While the Company has not experienced a significant outflow of deposits, in the event of such occurrences, it has access to alternate sources of funding to meet withdrawal demands. As of December 31, 2023, Evans had $53 million in overnight borrowings at the FHLB. Given the current collateral available at FHLB, advances up to $364 million can be drawn on the FHLB via the Company’s overnight line of credit. Additionally, Evans has the ability to borrow from the Federal Reserve and participates in the Bank Term Funding Program. At December 31, 2023, Evans had $86 million in short-term borrowings with the Federal Reserve and $8 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 10.37% at December 31, 2023 compared with 9.40% at September 30, 2023 and 9.13% at December 31, 2022. Book value per share was $32.40 at December 31, 2023 compared with $27.52 at September 30, 2023 and $28.32 at December 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. As of December 31, 2023 this amounted to $7.41 per share impact to book value. 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 $32.07 at December 31, 2023 compared with $25.04 at September 30, 2023 and $25.76 at December 31, 2022. For the full year of 2023, cash dividends totaled $1.32 per share, up 5% over 2022. 2023 Year in Review (compared with prior-year) Net interest income was $61.2 million, down 16%. The yield on loans increased 86 basis points while competition on deposits and changes in customer behaviors contributed to the 189 basis points increase in cost of funds during 2023. Net interest margin was 3.02%, a decrease of 51 basis points. The Company’s provision for credit loss was less than $0.1 million, which reflected improving economic conditions, including peer group metrics, partially offset by loan growth and specific reserve related individually analyzed loans. Provision for loan loss in 2022 included a $1.5 million charge-off of a single commercial loan and loan growth, partially offset by a decrease of criticized loans. The ratio of non-performing loans to total loans was 1.59% compared with 1.48% in 2022. Non-interest income was up $13.7 million to $32.9 million. The increase was due to the gain on sale of the insurance agency of $20.2 million, partially offset by loss on sale of investment securities of $5 million, reduced bank services charges of $0.3 million, and lower insurance service and fee revenue of $0.2 million. Included in non-interest income during 2022 was a gain on sale of an asset that was acquired in foreclosure of $0.2 million, as well as $0.2 million of revenue recognized relating to rents received from the acquired asset and a $0.2 million final payment in connection with a historic tax credit investment. Non-interest expense decreased $0.6 million, or 1%, to $59.4 million. Current year decreases included salaries and employee benefits of $1.8 million and loan expenses of $0.3 million, partially offset by higher technology and communication expenses of $0.8 million, charitable contributions of $0.3 million, and FDIC insurance expense of $0.4 million. The Company’s GAAP efficiency ratio was 63.1% in 2023 compared with 65.0% in 2022. Income tax expense for the year was $10.2 million, representing an effective tax rate of 29.4% compared with an effective tax rate of 24.2% in 2022. Webcast and Conference Call The Company will host a conference call and webcast on Thursday, February 1, 2024 at 4:45 p.m. ET. Management will review the financial and operating results for the fourth quarter and full year 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, February 15, 2024. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13743382, 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 $1.7 billion in deposits at December 31, 2023. Evans Bank is a full-service community bank with 18 branches providing comprehensive financial services to consumer, business and municipal customers throughout Western New York. 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) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 ASSETS Interest-bearing deposits at banks $ 3,798 $ 7,468 $ 10,334 $ 3,832 $ 6,258 Securities AFS 275,680 334,460 351,595 365,929 364,326 Securities HTM 2,059 2,170 2,241 3,707 6,949 Loans 1,720,946 1,704,400 1,670,753 1,658,576 1,672,369 Allowance for credit losses (22,114) (21,846) (21,368) (21,523) (19,438) Goodwill and intangible assets 1,862 13,629 13,729 13,829 13,929 All other assets 126,432 134,462 127,679 123,920 134,117 Total assets $ 2,108,663 $ 2,174,743 $ 2,154,963 $ 2,148,270 $ 2,178,510 LIABILITIES AND STOCKHOLDERS' EQUITY Demand deposits $ 390,238 $ 447,306 $ 442,195 $ 483,958 $ 493,710 NOW deposits 345,279 324,219 303,159 268,283 273,359 Savings deposits 649,621 698,653 726,687 807,532 801,943 Time deposits 333,623 335,228 314,574 290,141 202,667 Total deposits 1,718,761 1,805,406 1,786,615 1,849,914 1,771,679 Securities sold under agreement to repurchase 9,475 13,447 19,185 9,264 7,147 Subordinated debt 31,177 31,152 31,126 31,101 31,075 Other borrowings 145,123 151,252 140,386 79,637 193,001 Other liabilities 25,908 22,551 18,167 20,103 21,615 Total stockholders' equity $ 178,219 $ 150,935 $ 159,484 $ 158,251 $ 153,993 SHARES AND CAPITAL RATIOS Common shares outstanding 5,499,772 5,483,591 5,477,505 5,462,763 5,437,048 Book value per share $ 32.40 $ 27.52 $ 29.12 $ 28.97 $ 28.32 Tangible book value per share $ 32.07 $ 25.04 $ 26.61 $ 26.44 $ 25.76 Tier 1 leverage ratio 10.37 % 9.40 % 9.43 % 9.13 % 9.13 % Tier 1 risk-based capital ratio 13.80 % 12.04 % 12.73 % 12.55 % 12.29 % Total risk-based capital ratio 15.05 % 13.29 % 13.98 % 13.80 % 13.48 % ASSET QUALITY DATA Total non-performing loans $ 27,325 $ 27,311 $ 27,789 $ 24,084 $ 24,728 Total net loan charge-offs (recoveries) 11 35 35 (4) 115 Other real estate owned (OREO) $ - $ - $ - $ - $ - Non-performing loans/Total loans 1.59 % 1.60 % 1.66 % 1.45 % 1.48 % Net loan charge-offs (recoveries)/Average loans - % 0.01 % 0.01 % - % 0.03 % Allowance for credit losses/Total loans 1.28 % 1.28 % 1.28 % 1.30 % 1.16 % EVANS BANCORP, INC AND SUBSIDIARIES SELECTED OPERATIONS DATA (UNAUDITED) (in thousands, except share and per share data) 2023 2023 2023 2023 2022 Fourth Quarter Third Quarter Second Quarter First Quarter Fourth Quarter Interest income $ 25,205 $ 24,292 $ 23,988 $ 23,365 $ 22,381 Interest expense 11,259 10,036 8,307 6,040 3,167 Net interest income 13,946 14,256 15,681 17,325 19,214 Provision for credit losses 282 506 (116) (654) 923 Net interest income after provision for credit losses 13,664 13,750 15,797 17,979 18,291 Deposit service charges 670 665 645 613 684 Insurance service and fee revenue 1,613 3,498 2,720 2,429 2,204 Bank-owned life insurance 230 239 238 224 221 Interchange fee income 510 516 528 493 507 Gain on sale of insurance agency 20,160 - - - - Loss on sale of investment securities (5,044) - - - - Other income 412 638 570 354 845 Total non-interest income 18,551 5,556 4,701 4,113 4,461 Salaries and employee benefits 10,251 8,735 8,649 9,413 9,498 Occupancy 1,078 1,109 1,145 1,173 1,190 Advertising and public relations 296 348 407 156 125 Professional services 1,003 869 808 883 871 Technology and communications 1,545 1,517 1,542 1,356 1,437 Amortization of intangibles 67 100 100 100 100 FDIC insurance 350 350 350 350 250 Other expenses 1,710 1,379 1,171 1,071 1,429 Total non-interest expenses 16,300 14,407 14,172 14,502 14,900 Income before income taxes 15,915 4,899 6,326 7,590 7,852 Income tax provision 5,741 1,281 1,394 1,790 1,809 Net income 10,174 3,618 4,932 5,800 6,043 PER SHARE DATA Net income per common share-diluted $ 1.85 $ 0.66 $ 0.90 $ 1.06 $ 1.10 Cash dividends per common share $ - $ 0.66 $ - $ 0.66 $ - Weighted average number of diluted shares 5,497,029 5,490,600 5,474,462 5,475,790 5,500,810 PERFORMANCE RATIOS Return on average total assets 1.90 % 0.67 % 0.91 % 1.07 % 1.12 % Return on average stockholders' equity 25.73 % 9.06 % 12.25 % 14.97 % 16.07 % Return on average tangible common stockholders' equity* 27.37 % 9.90 % 13.39 % 16.44 % 17.72 % Efficiency ratio 50.16 % 72.72 % 69.53 % 67.65 % 62.94 % Efficiency ratio (Non-GAAP)** 93.40 % 72.21 % 69.04 % 67.18 % 62.51 % * 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, gains from sale of subsidiaries, 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 2023 2023 2022 Fourth Quarter Third Quarter Second Quarter First Quarter Fourth Quarter AVERAGE BALANCES Loans, net $ 1,682,177 $ 1,658,132 $ 1,646,502 $ 1,641,162 $ 1,627,028 Investment securities 327,303 355,870 373,922 382,329 382,125 Interest-bearing deposits at banks 5,916 9,883 7,235 9,824 10,416 Total interest-earning assets 2,015,396 2,023,885 2,027,659 2,033,315 2,019,569 Non interest-earning assets 128,915 135,896 129,793 133,936 135,035 Total Assets $ 2,144,311 $ 2,159,781 $ 2,157,452 $ 2,167,251 $ 2,154,604 NOW 333,893 311,624 281,910 260,242 265,313 Savings 687,223 708,724 776,020 796,793 874,816 Time deposits 335,646 325,667 304,575 257,733 174,362 Total interest-bearing deposits 1,356,762 1,346,015 1,362,505 1,314,768 1,314,491 Borrowings 197,363 192,277 163,338 173,053 151,259 Total interest-bearing liabilities 1,554,125 1,538,292 1,525,843 1,487,821 1,465,750 Demand deposits 409,115 441,149 451,990 503,945 518,666 Other non-interest bearing liabilities 22,880 20,529 18,532 20,487 19,798 Stockholders' equity 158,191 159,811 161,087 154,998 150,390 Total Liabilities and Equity $ 2,144,311 $ 2,159,781 $ 2,157,452 $ 2,167,251 $ 2,154,604 Average tangible common stockholders' equity* 148,673 146,122 147,299 141,111 136,406 YIELD/RATE Loans, net 5.43 % 5.25 % 5.26 % 5.16 % 4.88 % Investment securities 2.53 % 2.48 % 2.47 % 2.53 % 2.36 % Interest-bearing deposits at banks 6.38 % 5.29 % 4.45 % 3.97 % 3.16 % Total interest-earning assets 4.96 % 4.76 % 4.75 % 4.66 % 4.40 % NOW 2.12 % 1.79 % 1.24 % 0.75 % 0.36 % Savings 2.09 % 1.85 % 1.58 % 0.95 % 0.33 % Time deposits 3.83 % 3.45 % 3.10 % 2.63 % 1.61 % Total interest-bearing deposits 2.53 % 2.22 % 1.85 % 1.24 % 0.51 % Borrowings 5.27 % 5.14 % 4.98 % 4.74 % 3.88 % Total interest-bearing liabilities 2.87 % 2.59 % 2.18 % 1.65 % 0.86 % Interest rate spread 2.09 % 2.17 % 2.57 % 3.01 % 3.54 % Contribution of interest-free funds 0.66 % 0.62 % 0.53 % 0.45 % 0.23 % Net interest margin 2.75 % 2.79 % 3.10 % 3.46 % 3.77 % * Average tangible common stockholders' equity excludes goodwill and intangible assets from average stockholders equity. EVANS BANCORP, INC AND SUBSIDIARIES SELECTED OPERATIONS DATA (UNAUDITED) (in thousands, except share and per share data) 2023 2022 Year to Date Year to Date % Change Interest income $ 96,850 $ 79,482 22 % Interest expense 35,642 6,527 446 % Net interest income 61,208 72,955 (16) % Provision for credit losses 18 2,739 (99) % Net interest income after provision for credit losses 61,190 70,216 (13) % Deposit service charges 2,593 2,861 (9) % Insurance service and fee revenue 10,261 10,453 (2) % Bank-owned life insurance 932 707 32 % Interchange fee income 2,047 2,071 (1) % Gain on sale of insurance agency 20,160 - - Loss on sale of investment securities (5,044) - - Other income 1,973 3,179 (38) % Total non-interest income 32,922 19,271 71 % Salaries and employee benefits 37,047 38,854 (5) % Occupancy 4,506 4,619 (2) % Advertising and public relations 1,207 1,159 4 % Professional services 3,563 3,425 4 % Technology and communications 5,959 5,187 15 % FDIC insurance 1,400 1,025 37 % Amortization of intangibles 367 400 (8) % Other expenses 5,333 5,266 1 % Total non-interest expenses 59,382 59,935 (1) % Income before income taxes 34,730 29,552 18 % Income tax provision 10,206 7,163 42 % Net income 24,524 22,389 10 % PER SHARE DATA Net income per common share-diluted $ 4.48 $ 4.04 11 % Cash dividends per common share $ 1.32 $ 1.26 5 % Weighted average number of diluted shares 5,471,033 5,536,375 PERFORMANCE RATIOS Return on average total assets 1.14 % 1.02 % Return on average stockholders' equity 15.47 % 13.49 % Return on average tangible common stockholders' equity* 16.82 % 14.74 % Efficiency ratio 63.09 % 64.99 % Efficiency ratio (Non-GAAP)** 74.69 % 64.55 % Net interest margin 3.02 % 3.53 % Net loan charge-offs (recoveries)/Average loans - % 0.11 % * 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, gains from sale of subsidiaries, merger-related expenses and the impact of historic tax credit transactions. View source version on businesswire.com: https://www.businesswire.com/news/home/20240201099964/en/Contacts 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: Kathleen Rizzo Young Group VP/Public & Community Relations Director 716-343-5562 krizzoyoung@evansbank.com
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 fourth quarter and full year ended December 31, 2023. HIGHLIGHTS Completed the sale of The Evans Agency (“TEA”) to Arthur J. Gallagher & Co, netting a pretax gain of $20.2 million in the fourth quarter Repositioned balance sheet with sale of $78 million of investment securities – proceeds used to reduce short-term borrowings; resulted in recognized pretax loss of $5.0 million in the quarter but improves forward net interest income Total loan balances of $1.7 billion up 1% in the quarter and 3% year-over-year Fourth quarter net interest margin of 2.75% declined 4 basis points sequentially Tangible book value per share increased 25% to $32.07 at December 31, 2023 compared with prior year’s fourth quarter Paid dividends of $1.32 per share in 2023, up 5% Net income was $10.2 million, or $1.85 per diluted share, in the fourth quarter of 2023, compared with $3.6 million, or $0.66 per diluted share, in the third quarter of 2023 and $6.0 million, or $1.10 per diluted share, in last year’s fourth quarter. On November 30, 2023, the Company sold The Evans Agency to Arthur J. Gallagher & Co., and recognized a pretax gain of $20.2 million. In addition, the Company strategically repositioned its balance sheet by selling $78 million of investment securities, primarily available-for-sale U.S. Treasuries and government-sponsored agency securities, and used the proceeds to pay down short-term borrowings. This action resulted in $5.0 million of pretax losses on investment securities during the fourth quarter of 2023 with expected positive forward impact on net interest income. Return on average equity was 25.73% for the fourth quarter of 2023, compared with 9.06% in the third quarter of 2023 and 16.07% in the fourth quarter of 2022. For the full year of 2023, net income increased 10% to $24.5 million, or $4.48 per diluted share, compared with $22.4 million, or $4.04 per diluted share, in 2022. The increase mainly reflected the gain on sale of the insurance agency partially offset by lower net interest income and loss on investment securities. Allowance for credit losses was reduced by $2.7 million from the prior year as a result of improving economic factors, including peer metrics, and a $1.5 million charge-off of a single commercial loan during 2022. The return on average equity was 15.47% for 2023 compared with 13.49% in 2022. “Evans’ performance in 2023 was characterized by resiliency,” commented David J. Nasca, President and CEO of Evans Bancorp, Inc. “With a backdrop of interest rate pressure and macro-economic factors such as inflation, potential recession and liquidity demands, the dedicated work of the entire Evans team successfully protected and served client relationships, and maintained funding and liquidity. Actions were also taken to control costs, deliver efficiencies, and improve customer experience with investments in technology and process improvements. “During the fourth quarter, we executed two strategic initiatives. The sale of The Evans Agency resulted in significant value creation including measurable growth in our tangible book value with an after-tax gain of approximately $13 million and elimination of almost $12 million of goodwill and other intangibles. The proceeds from the transaction strengthened capital which allows flexibility to strategically redeploy back into our core banking franchise, including the restructure in our balance sheet which was completed in the fourth quarter to reduce lower yielding investment assets and reduce borrowings which we expect to improve returns in 2024.” Net Interest Income ($ in thousands) 4Q 2023 3Q 2023 4Q 2022 Interest income $ 25,205 $ 24,292 $ 22,381 Interest expense 11,259 10,036 3,167 Net interest income 13,946 14,256 19,214 Provision for credit losses 282 506 923 Net interest income after provision $ 13,664 $ 13,750 $ 18,291 Net interest income of $13.9 million was down $0.3 million, or 2%, from the third quarter and $5.3 million, or 27%, from last year’s fourth quarter as a result of higher interest expense related to the increased cost of interest-bearing liabilities produced by competitive pricing on deposits. Fourth quarter net interest margin of 2.75% declined 4 basis points from the trailing third quarter and 102 basis points from the prior-year period. The yield on loans increased 18 basis points compared with the third quarter and 55 basis points year-over-year. The cost of interest-bearing liabilities was 2.87% compared with 2.59% in the third quarter of 2023 and 0.86% in the fourth quarter of 2022. The $0.3 million provision for credit losses in the current quarter was due to loan growth and higher reserves on individually analyzed loans, partially offset by improving economic factors, including peer group metrics. Asset Quality ($ in thousands) 4Q 2023 3Q 2023 4Q 2022 Total non-performing loans $ 27,325 $ 27,311 $ 24,728 Total net loan charge-offs 11 35 115 Non-performing loans / Total loans 1.59 % 1.60 % 1.48 % Net loan charge-offs / Average loans - % 0.01 % 0.03 % Allowance for loan losses / Total loans 1.28 % 1.28 % 1.16 % “The transaction to restructure the balance sheet reduces a portion of the Bank’s liability sensitivity, increases future net interest income, and has just over a two-year payback after paying down higher rate borrowings,” commented John Connerton, Chief Financial Officer of Evans Bank. “We remain focused on growing consumer and commercial core deposits, and while our deposit levels saw some contraction during the quarter, a large component was attributable to normal commercial and municipal deposit seasonality. We believe we are managing the current rate environment well by retaining key relationships, which along with capital growth puts us in a favorable position.” Non-Interest Income ($ in thousands) 4Q 2023 3Q 2023 4Q 2022 Deposit service charges $ 670 $ 665 $ 684 Insurance service and fee revenue 1,613 3,498 2,204 Bank-owned life insurance 230 239 221 Interchange fee income 510 516 507 Gain on sale of insurance agency 20,160 - - Loss on sale of investment securities (5,044) - - Other income 412 638 845 Total non-interest income $ 18,551 $ 5,556 $ 4,461 Excluding the fourth quarter’s one-time transactions relating to the gain on the sale of TEA and loss on sale of securities, non-interest income would have been $3.4 million. Insurance service and fee revenue of $1.6 million reflects two months of revenue earned by TEA. Insurance service and fee revenue was also higher in the third quarter of 2023 due to premium seasonality. Other income decreased $0.2 million from the third quarter of 2023 due to a decrease in value of mortgage servicing rights. The decrease from last year’s fourth quarter was primarily due to a $0.2 million gain on sale of an asset that was acquired in foreclosure and sold in the fourth quarter of 2022, and also included $0.2 million of revenue recognized relating to rents received from the acquired asset prior to the sale. Non-Interest Expense ($ in thousands) 4Q 2023 3Q 2023 4Q 2022 Salaries and employee benefits $ 10,251 $ 8,735 $ 9,498 Occupancy 1,078 1,109 1,190 Advertising and public relations 296 348 125 Professional services 1,003 869 871 Technology and communications 1,545 1,517 1,437 Amortization of intangibles 67 100 100 FDIC insurance 350 350 250 Other expenses 1,710 1,379 1,429 Total non-interest expenses $ 16,300 $ 14,407 $ 14,900 Total non-interest expense increased $1.9 million, or 13%, from the third quarter of 2023, and $1.4 million, or 9%, from last year’s fourth quarter. Salaries and employee benefits increased $1.5 million, or 17%, from the sequential quarter, largely due to higher incentive accruals of $2.2 million, partially offset by reduced staff expenses including former insurance employees. The increase from the prior year’s fourth quarter was due to higher incentive accruals of $1.6 million, partially offset by a reduction of staff expenses through consolidation of branches, back-office operations, and sale of TEA. The increase in other expenses compared with both comparative periods was due to $0.3 million of charitable contributions made during the current quarter. The Company’s GAAP efficiency ratio, or noninterest expenses divided by the sum of net interest income and noninterest income, was 50.2% in the fourth quarter of 2023, 72.7% in the third quarter of 2023, and 62.9% in the fourth quarter of 2022. Income tax expense was $5.7 million, for an effective tax rate of 36.1%, in the fourth quarter of 2023 compared with 26.2% in the third quarter of 2023 and 23.0% in last year’s fourth quarter. The elevated tax rate in the 2023 fourth quarter reflected the sale of TEA which included significant non-deductible goodwill expense. Balance Sheet Highlights Total assets were $2.11 billion as of December 31, 2023, a decrease of $66 million, or 3% since September 30, 2023, and $69 million, or 3% since December 31, 2022. The change from comparative periods was due to the sale of investment securities, partially offset by an increase in loan balances. Loan balances increased $17 million, or 1%, during the fourth quarter and reflected higher commercial real estate loans of $13 million and residential mortgages of $3 million. Since December 31, 2022, loan balances increased $49 million, or 3%, due to higher commercial real estate loans of $73 million and residential mortgages of $3 million, partially offset by a decrease in commercial and industrial loans of $27 million. Investment securities were $278 million at December 31, 2023, $59 million lower than the end of the third quarter of 2023 and $94 million lower than the end of last year’s fourth quarter. The decrease reflects the strategic decision to sell $78 million of investment securities as well as changes in unrealized gains and losses on investment securities and maturities within the 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. The Company has the positive intent and ability to hold the remaining portfolio through recovery of value. Total deposits of $1.72 billion decreased $87 million, or 5%, from September 30, 2023, and were down $53 million, or 3%, from the end of last year’s fourth quarter. The change from the sequential quarter largely reflected typical seasonal outflows from commercial and municipal relationships. From a product perspective, deposit decreases were in demand deposits of $57 million, municipal savings of $29 million, commercial savings of $14 million, consumer savings of $7 million, and consumer time deposits of $1 million. Offsetting those decreases were higher NOW deposits of $21 million. While the Company has not experienced a significant outflow of deposits, in the event of such occurrences, it has access to alternate sources of funding to meet withdrawal demands. As of December 31, 2023, Evans had $53 million in overnight borrowings at the FHLB. Given the current collateral available at FHLB, advances up to $364 million can be drawn on the FHLB via the Company’s overnight line of credit. Additionally, Evans has the ability to borrow from the Federal Reserve and participates in the Bank Term Funding Program. At December 31, 2023, Evans had $86 million in short-term borrowings with the Federal Reserve and $8 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 10.37% at December 31, 2023 compared with 9.40% at September 30, 2023 and 9.13% at December 31, 2022. Book value per share was $32.40 at December 31, 2023 compared with $27.52 at September 30, 2023 and $28.32 at December 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. As of December 31, 2023 this amounted to $7.41 per share impact to book value. 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 $32.07 at December 31, 2023 compared with $25.04 at September 30, 2023 and $25.76 at December 31, 2022. For the full year of 2023, cash dividends totaled $1.32 per share, up 5% over 2022. 2023 Year in Review (compared with prior-year) Net interest income was $61.2 million, down 16%. The yield on loans increased 86 basis points while competition on deposits and changes in customer behaviors contributed to the 189 basis points increase in cost of funds during 2023. Net interest margin was 3.02%, a decrease of 51 basis points. The Company’s provision for credit loss was less than $0.1 million, which reflected improving economic conditions, including peer group metrics, partially offset by loan growth and specific reserve related individually analyzed loans. Provision for loan loss in 2022 included a $1.5 million charge-off of a single commercial loan and loan growth, partially offset by a decrease of criticized loans. The ratio of non-performing loans to total loans was 1.59% compared with 1.48% in 2022. Non-interest income was up $13.7 million to $32.9 million. The increase was due to the gain on sale of the insurance agency of $20.2 million, partially offset by loss on sale of investment securities of $5 million, reduced bank services charges of $0.3 million, and lower insurance service and fee revenue of $0.2 million. Included in non-interest income during 2022 was a gain on sale of an asset that was acquired in foreclosure of $0.2 million, as well as $0.2 million of revenue recognized relating to rents received from the acquired asset and a $0.2 million final payment in connection with a historic tax credit investment. Non-interest expense decreased $0.6 million, or 1%, to $59.4 million. Current year decreases included salaries and employee benefits of $1.8 million and loan expenses of $0.3 million, partially offset by higher technology and communication expenses of $0.8 million, charitable contributions of $0.3 million, and FDIC insurance expense of $0.4 million. The Company’s GAAP efficiency ratio was 63.1% in 2023 compared with 65.0% in 2022. Income tax expense for the year was $10.2 million, representing an effective tax rate of 29.4% compared with an effective tax rate of 24.2% in 2022. Webcast and Conference Call The Company will host a conference call and webcast on Thursday, February 1, 2024 at 4:45 p.m. ET. Management will review the financial and operating results for the fourth quarter and full year 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, February 15, 2024. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13743382, 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 $1.7 billion in deposits at December 31, 2023. Evans Bank is a full-service community bank with 18 branches providing comprehensive financial services to consumer, business and municipal customers throughout Western New York. 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) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 ASSETS Interest-bearing deposits at banks $ 3,798 $ 7,468 $ 10,334 $ 3,832 $ 6,258 Securities AFS 275,680 334,460 351,595 365,929 364,326 Securities HTM 2,059 2,170 2,241 3,707 6,949 Loans 1,720,946 1,704,400 1,670,753 1,658,576 1,672,369 Allowance for credit losses (22,114) (21,846) (21,368) (21,523) (19,438) Goodwill and intangible assets 1,862 13,629 13,729 13,829 13,929 All other assets 126,432 134,462 127,679 123,920 134,117 Total assets $ 2,108,663 $ 2,174,743 $ 2,154,963 $ 2,148,270 $ 2,178,510 LIABILITIES AND STOCKHOLDERS' EQUITY Demand deposits $ 390,238 $ 447,306 $ 442,195 $ 483,958 $ 493,710 NOW deposits 345,279 324,219 303,159 268,283 273,359 Savings deposits 649,621 698,653 726,687 807,532 801,943 Time deposits 333,623 335,228 314,574 290,141 202,667 Total deposits 1,718,761 1,805,406 1,786,615 1,849,914 1,771,679 Securities sold under agreement to repurchase 9,475 13,447 19,185 9,264 7,147 Subordinated debt 31,177 31,152 31,126 31,101 31,075 Other borrowings 145,123 151,252 140,386 79,637 193,001 Other liabilities 25,908 22,551 18,167 20,103 21,615 Total stockholders' equity $ 178,219 $ 150,935 $ 159,484 $ 158,251 $ 153,993 SHARES AND CAPITAL RATIOS Common shares outstanding 5,499,772 5,483,591 5,477,505 5,462,763 5,437,048 Book value per share $ 32.40 $ 27.52 $ 29.12 $ 28.97 $ 28.32 Tangible book value per share $ 32.07 $ 25.04 $ 26.61 $ 26.44 $ 25.76 Tier 1 leverage ratio 10.37 % 9.40 % 9.43 % 9.13 % 9.13 % Tier 1 risk-based capital ratio 13.80 % 12.04 % 12.73 % 12.55 % 12.29 % Total risk-based capital ratio 15.05 % 13.29 % 13.98 % 13.80 % 13.48 % ASSET QUALITY DATA Total non-performing loans $ 27,325 $ 27,311 $ 27,789 $ 24,084 $ 24,728 Total net loan charge-offs (recoveries) 11 35 35 (4) 115 Other real estate owned (OREO) $ - $ - $ - $ - $ - Non-performing loans/Total loans 1.59 % 1.60 % 1.66 % 1.45 % 1.48 % Net loan charge-offs (recoveries)/Average loans - % 0.01 % 0.01 % - % 0.03 % Allowance for credit losses/Total loans 1.28 % 1.28 % 1.28 % 1.30 % 1.16 % EVANS BANCORP, INC AND SUBSIDIARIES SELECTED OPERATIONS DATA (UNAUDITED) (in thousands, except share and per share data) 2023 2023 2023 2023 2022 Fourth Quarter Third Quarter Second Quarter First Quarter Fourth Quarter Interest income $ 25,205 $ 24,292 $ 23,988 $ 23,365 $ 22,381 Interest expense 11,259 10,036 8,307 6,040 3,167 Net interest income 13,946 14,256 15,681 17,325 19,214 Provision for credit losses 282 506 (116) (654) 923 Net interest income after provision for credit losses 13,664 13,750 15,797 17,979 18,291 Deposit service charges 670 665 645 613 684 Insurance service and fee revenue 1,613 3,498 2,720 2,429 2,204 Bank-owned life insurance 230 239 238 224 221 Interchange fee income 510 516 528 493 507 Gain on sale of insurance agency 20,160 - - - - Loss on sale of investment securities (5,044) - - - - Other income 412 638 570 354 845 Total non-interest income 18,551 5,556 4,701 4,113 4,461 Salaries and employee benefits 10,251 8,735 8,649 9,413 9,498 Occupancy 1,078 1,109 1,145 1,173 1,190 Advertising and public relations 296 348 407 156 125 Professional services 1,003 869 808 883 871 Technology and communications 1,545 1,517 1,542 1,356 1,437 Amortization of intangibles 67 100 100 100 100 FDIC insurance 350 350 350 350 250 Other expenses 1,710 1,379 1,171 1,071 1,429 Total non-interest expenses 16,300 14,407 14,172 14,502 14,900 Income before income taxes 15,915 4,899 6,326 7,590 7,852 Income tax provision 5,741 1,281 1,394 1,790 1,809 Net income 10,174 3,618 4,932 5,800 6,043 PER SHARE DATA Net income per common share-diluted $ 1.85 $ 0.66 $ 0.90 $ 1.06 $ 1.10 Cash dividends per common share $ - $ 0.66 $ - $ 0.66 $ - Weighted average number of diluted shares 5,497,029 5,490,600 5,474,462 5,475,790 5,500,810 PERFORMANCE RATIOS Return on average total assets 1.90 % 0.67 % 0.91 % 1.07 % 1.12 % Return on average stockholders' equity 25.73 % 9.06 % 12.25 % 14.97 % 16.07 % Return on average tangible common stockholders' equity* 27.37 % 9.90 % 13.39 % 16.44 % 17.72 % Efficiency ratio 50.16 % 72.72 % 69.53 % 67.65 % 62.94 % Efficiency ratio (Non-GAAP)** 93.40 % 72.21 % 69.04 % 67.18 % 62.51 % * 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, gains from sale of subsidiaries, 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 2023 2023 2022 Fourth Quarter Third Quarter Second Quarter First Quarter Fourth Quarter AVERAGE BALANCES Loans, net $ 1,682,177 $ 1,658,132 $ 1,646,502 $ 1,641,162 $ 1,627,028 Investment securities 327,303 355,870 373,922 382,329 382,125 Interest-bearing deposits at banks 5,916 9,883 7,235 9,824 10,416 Total interest-earning assets 2,015,396 2,023,885 2,027,659 2,033,315 2,019,569 Non interest-earning assets 128,915 135,896 129,793 133,936 135,035 Total Assets $ 2,144,311 $ 2,159,781 $ 2,157,452 $ 2,167,251 $ 2,154,604 NOW 333,893 311,624 281,910 260,242 265,313 Savings 687,223 708,724 776,020 796,793 874,816 Time deposits 335,646 325,667 304,575 257,733 174,362 Total interest-bearing deposits 1,356,762 1,346,015 1,362,505 1,314,768 1,314,491 Borrowings 197,363 192,277 163,338 173,053 151,259 Total interest-bearing liabilities 1,554,125 1,538,292 1,525,843 1,487,821 1,465,750 Demand deposits 409,115 441,149 451,990 503,945 518,666 Other non-interest bearing liabilities 22,880 20,529 18,532 20,487 19,798 Stockholders' equity 158,191 159,811 161,087 154,998 150,390 Total Liabilities and Equity $ 2,144,311 $ 2,159,781 $ 2,157,452 $ 2,167,251 $ 2,154,604 Average tangible common stockholders' equity* 148,673 146,122 147,299 141,111 136,406 YIELD/RATE Loans, net 5.43 % 5.25 % 5.26 % 5.16 % 4.88 % Investment securities 2.53 % 2.48 % 2.47 % 2.53 % 2.36 % Interest-bearing deposits at banks 6.38 % 5.29 % 4.45 % 3.97 % 3.16 % Total interest-earning assets 4.96 % 4.76 % 4.75 % 4.66 % 4.40 % NOW 2.12 % 1.79 % 1.24 % 0.75 % 0.36 % Savings 2.09 % 1.85 % 1.58 % 0.95 % 0.33 % Time deposits 3.83 % 3.45 % 3.10 % 2.63 % 1.61 % Total interest-bearing deposits 2.53 % 2.22 % 1.85 % 1.24 % 0.51 % Borrowings 5.27 % 5.14 % 4.98 % 4.74 % 3.88 % Total interest-bearing liabilities 2.87 % 2.59 % 2.18 % 1.65 % 0.86 % Interest rate spread 2.09 % 2.17 % 2.57 % 3.01 % 3.54 % Contribution of interest-free funds 0.66 % 0.62 % 0.53 % 0.45 % 0.23 % Net interest margin 2.75 % 2.79 % 3.10 % 3.46 % 3.77 % * Average tangible common stockholders' equity excludes goodwill and intangible assets from average stockholders equity. EVANS BANCORP, INC AND SUBSIDIARIES SELECTED OPERATIONS DATA (UNAUDITED) (in thousands, except share and per share data) 2023 2022 Year to Date Year to Date % Change Interest income $ 96,850 $ 79,482 22 % Interest expense 35,642 6,527 446 % Net interest income 61,208 72,955 (16) % Provision for credit losses 18 2,739 (99) % Net interest income after provision for credit losses 61,190 70,216 (13) % Deposit service charges 2,593 2,861 (9) % Insurance service and fee revenue 10,261 10,453 (2) % Bank-owned life insurance 932 707 32 % Interchange fee income 2,047 2,071 (1) % Gain on sale of insurance agency 20,160 - - Loss on sale of investment securities (5,044) - - Other income 1,973 3,179 (38) % Total non-interest income 32,922 19,271 71 % Salaries and employee benefits 37,047 38,854 (5) % Occupancy 4,506 4,619 (2) % Advertising and public relations 1,207 1,159 4 % Professional services 3,563 3,425 4 % Technology and communications 5,959 5,187 15 % FDIC insurance 1,400 1,025 37 % Amortization of intangibles 367 400 (8) % Other expenses 5,333 5,266 1 % Total non-interest expenses 59,382 59,935 (1) % Income before income taxes 34,730 29,552 18 % Income tax provision 10,206 7,163 42 % Net income 24,524 22,389 10 % PER SHARE DATA Net income per common share-diluted $ 4.48 $ 4.04 11 % Cash dividends per common share $ 1.32 $ 1.26 5 % Weighted average number of diluted shares 5,471,033 5,536,375 PERFORMANCE RATIOS Return on average total assets 1.14 % 1.02 % Return on average stockholders' equity 15.47 % 13.49 % Return on average tangible common stockholders' equity* 16.82 % 14.74 % Efficiency ratio 63.09 % 64.99 % Efficiency ratio (Non-GAAP)** 74.69 % 64.55 % Net interest margin 3.02 % 3.53 % Net loan charge-offs (recoveries)/Average loans - % 0.11 % * 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, gains from sale of subsidiaries, merger-related expenses and the impact of historic tax credit transactions. 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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: Kathleen Rizzo Young Group VP/Public & Community Relations Director 716-343-5562 krizzoyoung@evansbank.com