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Evans Bancorp Reports 14% Loan Growth and Net Income of $1.7 Million for the First Quarter of 2016

HAMBURG, N.Y., April 27, 2016 (GLOBE NEWSWIRE) -- Evans Bancorp, Inc. (the “Company” or “Evans”) (NYSE MKT:EVBN), a community financial services company serving Western New York since 1920, today reported its results of operations for the first quarter ended March 31, 2016.

HIGHLIGHTS OF THE 2016 FIRST QUARTER

  • Net income for the first quarter was $1.7 million, or $0.40 per diluted share
  • Loans increased $95.0 million, or 13.5%, to $796.8 million from the prior-year period
  • Strong low-cost deposit growth drove total deposit balances to $849.0 million, up $68.7 million, or 8.8%, from the prior-year period
  • Net interest income for the quarter increased 9.0% to $8.3 million
  • Total assets were $989.9 million, up 9% from the prior year

Net income was $1.7 million, or $0.40 per diluted share, in the first quarter of 2016 compared with $1.9 million, or $0.44 per diluted share, in the first quarter of 2015. The decline reflects increases in personnel expenses related to strategic hires made to support the Company’s continued growth, as well as technology expenses for the Company’s recent core banking system conversion. Return on average equity was 7.43% for the first quarter of 2016 compared with 8.74% in the first quarter of 2015.

“We continue to be successful at organically growing Evans’ franchise as both business loans and core deposits were up significantly over last year, producing robust expansion of net interest income,” said David J. Nasca, President and CEO of Evans Bancorp. “Expenditures incurred to drive positive top line net interest income growth of 9% muted bottom line performance in the near term, but are expected to drive significant results and increase earnings power into the future. We are building a strong platform to support continued growth and capitalize on opportunities from market disruption resulting when KeyCorp and First Niagara, with almost 35% deposit market share, combine. Given our current success at growing the business, we believe this transformative change in our marketplace creates the opportunity for us to win a larger share of the market with our broadened network, outstanding customer satisfaction ratings, increased brand awareness, as well as personalized, tailored solutions which provide a community banking alternative to big banking.”

Net Interest Income

Net interest income was $8.3 million in the first quarter, an increase of $0.7 million, or 9.0%, from the prior-year period, reflecting strong loan and demand deposit growth. The interest earned on the prepayment of a large investment security in the trailing quarter caused net interest income to be down $0.2 million, or 2.1%, from the fourth quarter of 2015, despite strong loan growth.

Net interest margin of 3.69% declined 15 basis points from the 2015 first quarter and 22 basis points from the trailing 2015 fourth quarter, reflecting a decrease in the yield on interest-earning assets and an increase in the cost of interest-bearing deposits. The additional decrease from the trailing quarter was mostly due to interest earned on the payoff of a large investment referenced above.

The provision for loan losses was $0.2 million in the 2016 first quarter, essentially flat with both the prior-year period and the trailing fourth quarter of 2015, as the overall credit quality of the Company’s loan portfolio remained strong.

Asset Quality

The ratio of the allowance for loan losses to total loans was 1.65% at March 31, 2016 compared with 1.66% at December 31, 2015 and 1.82% at March 31, 2015. The ratio declined from the previous year primarily due to the charge-off of one loan in the fourth quarter of 2015.

The ratio of non-performing loans to total loans increased to 2.25% at March 31, 2016 from 2.07% at December 31, 2015 and from 1.68% at March 31, 2015. Non-performing loans increased with the movement of a large commercial loan relationship to 90 days past due and accruing. The loan is considered well secured and in the process of collection.

Non-interest Income

Non-interest income was $3.0 million, or 26.6% of total revenue, in the quarter, down $0.1 million from the prior-year period. Insurance agency revenue of $1.7 million was down $0.1 million from the 2015 first quarter due to financial services and profit sharing revenue decreases. Core insurance revenue lines such as property and casualty insurance and employee benefits have increased over the prior-year period however. Compared with the trailing fourth quarter of 2015, total non-interest income increased by $0.1 million, primarily due to seasonal increases in insurance revenue.

Non-interest Expense

Total non-interest expense was $8.5 million in the first quarter, an increase of 13.5%, or $1.0 million, from the prior-year period. Personnel expenses, the largest expense category for the Company, were up $0.7 million, or 15.0%, from last year’s first quarter, and reflect annual merit increases and strategic hires to support the Company’s continued growth, including new commercial loan officers, business development officers and related support staff. The 2016 first quarter included $0.3 million in technology expenses related to the Company’s recent core conversion.

Compared with the trailing fourth quarter of 2015, total non-interest expense was down $0.1 million, or 1.6%, and primarily reflects lower loan expenses for the 2016 first quarter.

Income tax expense for the quarter was $0.8 million, representing an effective tax rate of 31.9% compared with an effective tax rate of 35.1% in the first quarter of 2015. The decrease was due to one-time adjustments to deferred tax assets in the previous year’s first quarter as a result of statutory changes made by New York State legislation in 2014 that went into effect on January 1, 2015.

Balance Sheet Highlights

Total assets were $989.9 million at March 31, 2016, up 9%, or $85.6 million, from March 31, 2015 and 5.4%, or $50.8 million, higher than the end of the trailing 2015 fourth quarter. Loans of $796.8 million increased 13.5% from $701.7 million at March 31, 2015 and were up 2.9% from $774.0 million at December 31, 2015. The improvement over both periods was primarily due to growth in the commercial real estate and commercial and industrial loan portfolios.

Investment securities were $116.3 million at March 31, 2016, up 16.3% from March 31, 2015 and 17.8% from the trailing 2015 fourth quarter.

Total deposits increased $68.7 million, or 8.8%, to $849.0 million at March 31, 2016 from $780.4 million at the same time last year, and were up $46.1 million, or 5.7%, from the trailing 2015 fourth quarter-end. The year-over-year growth was mainly attributable to increases in NOW accounts and savings deposits, which increased $12.7 million, or 15.3%, and $47.4 million, or 11.4%, respectively. In the first quarter of 2015, the Bank introduced a new money market account that has been successful in acquiring new customer deposit relationships and providing cross-sell opportunities.

Capital Management
The Company consistently maintains regulatory capital ratios measurably above the Federal “well capitalized” standard, including a Tier 1 leverage ratio of 10.18% at March 31, 2016. Book value per share increased to $21.54 at March 31, 2016 compared with $21.44 at December 31, 2015 and $20.49 at March 31, 2015. Tangible book value per share at March 31, 2016 was $19.64, up 5.7% from the end of the first quarter of 2015 and 1.0% higher than the trailing fourth quarter of 2015.

2016 Outlook

Mr. Nasca commented, “We expect to leverage a stronger platform to accelerate franchise expansion and earnings into the future. We also expect to make additional investments in business development in 2016 and, along with our successfully completed core banking system conversion, we plan enhancements in digital distribution and service capabilities. We recently relocated our Lockport insurance office to a larger, better location with plans for a new interactive, full service financial center to broaden our presence in Niagara County. These investments enhance our ability to maintain loan and deposit development at a vigorous pace, while associated costs are expected to result in comparable earnings to last year, but drive higher earnings in future years.”

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 $990 million in assets and $849 million in deposits at March 31, 2016. Evans is a full-service community bank, with 13 branches, providing comprehensive financial services to consumer, business and municipal customers throughout Western New York. Evans Bancorp's wholly-owned insurance subsidiary, The Evans Agency, LLC, provides property and casualty insurance through seven insurance offices in the Western New York region. Evans Investment Services provides non-deposit investment products, such as annuities and mutual funds.

Evans Bancorp, Inc. and Evans Bank routinely post news and other important information on their websites, at www.evansbancorp.com and www.evansbank.com.

Safe Harbor Statement
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements concerning future business, revenue and earnings. These statements are not historical facts or guarantees of future performance, events or results. There are risks, uncertainties and other factors that could cause the actual results of Evans Bancorp to differ materially from the results expressed or implied by such statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include 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.

TABLES FOLLOW


EVANS BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED)
(in thousands, except shares and per share data)
3/31/2016 12/31/2015 9/30/2015 6/30/2015 3/31/2015
ASSETS
Investment Securities $116,294 $98,758 $106,651 $106,734 $99,981
Loans 796,773 773,984 731,239 710,832 701,738
Allowance for loan losses (13,119) (12,883) (13,456) (13,110) (12,777)
Goodwill and intangible assets 8,101 8,101 8,101 8,101 8,101
All other assets 81,866 71,147 88,356 95,990 107,309
Total assets $989,915 $939,107 $920,891 $908,547 $904,352
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits 174,276 183,098 170,022 163,862 169,965
NOW deposits 95,622 83,674 79,983 79,266 82,956
Regular savings deposits 463,672 439,993 436,331 431,555 416,317
Time deposits 115,479 96,217 95,967 99,482 111,120
Total deposits 849,049 802,982 782,303 774,165 780,358
Borrowings 34,224 32,151 32,640 32,339 22,003
Other liabilities 14,482 12,718 16,275 13,848 15,290
Total stockholders' equity $ 92,160 $91,256 $89,673 $88,195 $86,701
SHARES AND CAPITAL RATIOS
Common shares outstanding 4,279,296 4,257,179 4,238,448 4,239,929 4,230,895
Book value per share $21.54 $21.44 $21.16 $20.80 $20.49
Tangible book value per share $19.64 $19.53 $19.25 $18.89 $18.58
Tier 1 leverage ratio 10.18 % 10.45% 10.32% 10.23% 10.81%
Tier 1 risk-based capital ratio 11.94 % 11.82% 12.03% 12.63% 13.34%
Total risk-based capital ratio 13.20 % 13.07% 13.29% 13.89% 14.54%
ASSET QUALITY DATA
Total non-performing loans $17,941 $16,042 $8,170 $10,994 $11,803
Total net loan charge-offs (recoveries) (29) 776 50 83 (43)
Non-performing loans/Total loans 2.25% 2.07% 1.12% 1.55% 1.68%
Net loan charge-offs/Average loans (0.02)% 0.42% 0.03% 0.05% (0.03)%
Allowance for loans losses/Total loans 1.65% 1.66% 1.84% 1.84% 1.82%


EVANS BANCORP, INC AND SUBSIDIARIES
SELECTED OPERATIONS DATA (UNAUDITED)
(in thousands, except share and per share data)
2016 2015 2015 2015 2015
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Interest income 9,356 9,437 9,099 8,636 8,456
Interest expense 1,096 1,001 960 988 875
Net interest income 8,260 8,436 8,139 7,648 7,581
Provision for loan losses 208 204 396 415 201
Net interest income after provision 8,052 8,232 7,743 7,233 7,380
Deposit service charges 443 461 455 411 409
Insurance service and fee revenue 1,748 1,572 1,972 1,821 1,829
Bank-owned life insurance 136 140 134 152 137
Gain on insurance proceeds - - 734 - -
Other income 667 748 962 1,092 691
Total non-interest income 2,994 2,921 4,257 3,476 3,066
Salaries and employee benefits 5,514 5,365 5,253 5,066 4,794
Occupancy 699 722 675 697 695
Repairs and maintenance 176 204 230 215 173
Advertising and public relations 285 227 188 231 211
Professional services 580 499 674 670 511
Technology and communications 422 308 354 262 259
FDIC insurance 159 161 151 148 147
Litigation expense (100) - (175) - -
Other expenses 793 1,179 930 952 722
Total non-interest expenses 8,528 8,665 8,280 8,241 7,512
Income before income taxes 2,518 2,488 3,720 2,468 2,934
Income tax provision 804 734 1,211 793 1,029
Net income 1,714 1,754 2,509 1,675 1,905
PER SHARE DATA
Net income per common share-diluted $0.40 $0.41 $0.58 $0.39 $0.44
Cash dividends per common share $0.38 $0.00 $0.36 $0.00 $0.36
Weighted average number of diluted shares 4,328,034 4,315,489 4,312,275 4,309,688 4,291,676
PERFORMANCE RATIOS
Return on average total assets 0.71% 0.75% 1.10% 0.74% 0.89%
Return on average stockholders' equity 7.43% 7.72% 11.20% 7.62% 8.74%
Efficiency ratio 75.78% 76.30% 66.79% 74.08% 70.56%


EVANS BANCORP, INC AND SUBSIDIARIES
SELECTED AVERAGE BALANCES AND YIELDS/RATES (UNAUDITED)
(in thousands)
2016 2015 2015 2015 2015
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
AVERAGE BALANCES
Loans, net $772,672 $740,337 $706,568 $691,608 $682,653
Investment securities 103,094 103,940 112,339 103,641 100,886
Interest bearing deposits at banks 18,862 19,185 27,501 51,094 6,624
Total interest-earning assets 894,628 863,462 846,408 846,343 790,163
Non interest-earning assets 66,375 66,115 66,102 64,396 64,372
Total Assets $961,003 $929,577 $912,510 $910,739 $854,535
NOW 88,220 80,810 78,335 78,979 77,072
Regular savings 447,318 439,108 431,127 430,930 370,017
Time deposits 108,954 96,478 97,321 105,051 112,224
Total interest-bearing deposits 644,492 616,396 606,783 614,960 559,313
Other borrowings 34,250 32,443 32,113 31,533 33,852
Total interest-bearing liabilities 678,742 648,839 638,896 646,493 593,165
Demand deposits 176,074 175,362 168,883 162,632 159,388
Other non-interest bearing liabilities 13,879 14,549 15,122 13,665 14,785
Stockholders' equity 92,308 90,827 89,609 87,949 87,197
Total Liabilities and Equity $961,003 $929,577 $912,510 $910,739 $854,535
YIELD/RATE
Loans, net 4.52% 4.59% 4.76% 4.59% 4.58%
Investment securities 2.39% 3.59% 2.42% 2.58% 2.55%
Interest bearing deposits at banks 0.23% 0.29% 0.23% 0.26% 0.06%
Total interest-earning assets 4.18% 4.37% 4.30% 4.08% 4.28%
NOW 0.39% 0.40% 0.40% 0.43% 0.41%
Regular savings 0.47% 0.43% 0.41% 0.38% 0.29%
Time deposits 1.26% 1.29% 1.27% 1.42% 1.55%
Total interest-bearing deposits 0.60% 0.56% 0.55% 0.56% 0.56%
Other borrowings 1.60% 1.64% 1.64% 1.62% 1.09%
Total interest-bearing liabilities 0.65% 0.62% 0.60% 0.61% 0.59%
Interest rate spread 3.53% 3.75% 3.70% 3.47% 3.69%
Contribution of interest-free funds 0.16% 0.16% 0.15% 0.14% 0.15%
Net interest margin 3.69% 3.91% 3.85% 3.61% 3.84%



For more information contact: John B. Connerton Senior Vice President and Chief Financial Officer Phone: (716) 926-2000 Email: jconner@evansbank.com -OR- Deborah K. Pawlowski Kei Advisors LLC Phone: (716) 843-3908 Email: dpawlowski@keiadvisors.com

Source:Evans Bancorp, Inc.