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Evans Bancorp Reports Net Income of $1.8 Million for the 2013 First Quarter

HAMBURG, N.Y., April 24, 2013 (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, 2013.

SUMMARY OF THE 2013 FIRST QUARTER

  • First quarter net interest income of $6.8 million was comparable with the prior year period.
  • Provision for loan losses of $450 thousand is a return to a more normalized level after a $249 thousand release of provision in 2012.
  • First quarter net income was $1.8 million, or $0.43 per diluted share, compared with $2.4 million, or $0.58 per diluted share, in the first quarter of 2012.
  • The ratio of non-performing loans and leases to total loans and leases decreased from 2.09% to 1.37% year-over-year.
  • Total deposits increased $48.6 million, or 7.5%, over 2012 first quarter, driven by continued growth in savings and transactional deposits.
  • Strong capital position with Total Risk-Based Capital ratio of 15.28% at March 31, 2013.

Net income was $1.8 million in the first quarter of 2013, down 23.7% from net income of $2.4 million in the first quarter of 2012, primarily reflecting an increase in the provision for loan and lease losses. The prior-year period included a release of loan and lease loss reserves due to the continued improvement in the leasing portfolio's credit quality. Overall, the provision for loan and lease losses increased $0.7 million from a release of $249 thousand in the first quarter of 2012 to a provision of $450 thousand in the first quarter of 2013. Return on average equity was 9.55% for the first quarter of 2013, compared with 13.59% in the first quarter of 2012.

"During the first quarter the bank grew at a slower pace than recent quarters, due mainly to loan payoffs and slower loan closings," said David J. Nasca, Evans Bank President & CEO. "We did, however, attain higher loan and deposit balances while continuing to improve asset quality. Income comparisons to last year's first quarter appear less favorable as provision for loan and lease losses returned to more normal levels. We continue to diversify and rebalance our loan portfolio with increased commercial and industrial and consumer loans and anticipate a healthier pace of growth in the second quarter as we have a strong loan pipeline and as business activity picks up."

Net Interest Income

Net interest income was $6.8 million for the 2013 first quarter, flat when compared with the first quarter of 2012 and down 3.9% from the trailing fourth quarter of 2012.

The Company's net interest margin decreased in the first quarter to 3.63%, compared with the 2012 fourth quarter net interest margin rate of 3.78%, and 2012 first quarter rate of 3.93%. When compared with last year's first quarter, the Company has been able to partially offset the 57 basis point decrease in the yield on interest-earning assets through reduced pricing of its interest bearing liabilities by 34 basis points.

The provision for loan and lease losses in the first quarter of 2013 was $450 thousand. The prior-year period had a release of $249 thousand in provision, and the trailing fourth quarter of 2012 had a release of $129 thousand in provision.

Non-Interest Income

Non-interest income remained steady at $3.3 million, or 32.7% of total revenue, in the first quarter of 2013, compared with the first quarter of 2012. Insurance agency revenue of $2.0 million was up $54 thousand, or 2.8%, from the 2012 first quarter, due mostly to increases in profit sharing and commercial lines revenue. Service charges on deposits increased 10.6% to $482 thousand from the prior-year period. Compared with the fourth quarter of 2012, total non-interest income remained flat, with an increase in insurance agency revenue offset by a decrease in other income. The increase in insurance agency revenue in the linked quarter is due to seasonal profit-sharing income, while the decrease in other income is driven by a decrease in income related to selling loans to Fannie Mae as the Company decided to retain more residential mortgage originations in portfolio.

Non-Interest Expense

Total non-interest expense was $7.1 million in the first quarter of 2013, an increase of 2.4% from $6.9 million in the first quarter of 2012. The main driver of the increase was occupancy costs, which were up $131 thousand, or 19.1%, compared with the first quarter of 2012. This was due mainly to a write-off of software which is no longer going to be utilized.

As a result, the Company's first quarter efficiency ratio increased to 69.20% compared with 67.10% during the prior-year period.

Income tax expense for the quarter ended March 31, 2013, was $0.8 million, representing an effective tax rate of 30.4% compared with an effective tax rate of 31.7% in the first quarter of 2012.

Balance Sheet Highlights

Total assets grew to $823.7 million at March 31, 2013, up 6.2% from $775.8 million on March 31, 2012, and up 1.7% from $809.7 million at the end of the 2012 fourth quarter. Loans were $587.2 million at March 31, 2013, an increase of 2.1% from $575.2 million at March 31, 2012, and up 1.0% from $581.3 million at December 31, 2012.

Investment securities were $98.2 million at March 31, 2013, up 2.5% from $95.8 million at the end of the fourth quarter of 2012 and down 12.7% from $112.5 million as of the end of first quarter of 2012. Other assets increased $53.5 million over last year's first quarter, the majority of which was in Fed Funds sold balances due to deposit growth outpacing loan growth.

Total deposits increased $48.6 million, or 7.5%, to $698.3 million at March 31, 2013, from $649.7 million at March 31, 2012, and grew $19.3 million, or 2.8%, from the 2012 year-end balance. The sequential quarter and year-over-year growth was attributable to deposit increases in both seasonal municipal and consumer products. The Company's Better Checking product (included in the NOW category), along with its complementary Better Savings product, continues to be successful in acquiring new customers, deepening existing relationships and increasing fee income.

Asset Quality

Net charge-offs to average total loans and leases ratio were 0.02% for the first quarter of 2013, down from 0.32% in the first quarter of 2012 and down from 0.24% in the fourth quarter of 2012. The improved charge-off percentage remains below industry standards and reflects the Bank's focus on maintaining strong credit fundamentals.

The ratio of non-performing loans and leases to total loans and leases improved to 1.37% at March 31, 2013, from 1.38% and 2.09% at December 31, 2012, and March 31, 2012, respectively. During the first quarter of 2013, there was a $0.2 million decrease in non-performing loans and leases due mainly to commercial loan charge-offs.

The ratio of the allowance for loan and lease losses to total loans and leases was 1.73% at March 31, 2013, compared with 1.67% at December 31, 2012, and 1.86% at the end of 2012 first quarter. The level of non-performing loans and leases decreased, resulting in an improved coverage ratio of 126.4% at March 31, 2013, compared with 118.3% at December 31, 2012 and 82.7% at March 31, 2012.

Gary A. Kajtoch, Executive Vice President and CFO commented, "Our nonperforming loans have continued to decline as a result of a concerted effort to manage credits that require attention. We will maintain rigorous credit standards as we strive for profitable growth in this intensely competitive marketplace."

Capital Management

The Company consistently maintains regulatory capital ratios measurably above the federal "well capitalized" standard, including a Tier 1 leverage ratio of 9.87% at March 31, 2013. Book value per share was $18.26 at March 31, 2013, compared with $17.94 at December 31, 2012, and $17.06 at March 31, 2012. Tangible book value per share at March 31, 2013 was $16.26, up 2.1% from the end of the fourth quarter of 2012 and up 8.7% from the first quarter 2012.

Outlook

Mr. Nasca concluded, "While the outlook for financial institutions continues to be challenging, we believe we can grow profitably by executing our newly updated strategic plan which focuses on structured relationship development and customer acquisition, enhanced fee-based income and refined risk management approaches. Evans seeks to deliver solutions based upon our intimate knowledge of customer needs, which differentiates us from regional and national banks. We expect this relationship-based approach will provide for market growth and increased shareholder value."

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 $824 million in assets and $698 million in deposits at March 31, 2013. 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 7 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 Web sites, 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.

EVANS BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED)
(in thousands except shares and per share data)

3/31/2013 12/31/2012 9/30/2012 6/30/2012 3/31/2012
ASSETS
Investment Securities $98,220 $95,807 $95,912 $96,802 $112,492
Loans 587,157 581,283 596,176 594,569 575,188
Leases 929 1,612 2,440 3,355 4,512
Allowance for loan and lease losses (10,154) (9,732) (10,208) (10,658) (10,790)
Goodwill and intangible assets 8,367 8,429 8,492 8,569 8,675
All other assets 139,195 132,277 106,496 85,486 85,716
Total assets $823,714 $809,676 $799,308 $778,122 $775,793

LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits $123,084 $123,405 $126,251 $116,231 $114,423
NOW deposits 73,016 65,753 62,946 63,535 62,077
Regular savings deposits 391,739 380,924 375,859 365,875 363,552
Time deposits 110,461 108,910 107,674 108,279 109,629
Total deposits 698,300 678,992 672,730 653,920 649,681
Borrowings 37,113 42,441 39,411 40,185 42,010
Other liabilities 11,806 13,416 13,185 11,736 13,647
Total stockholders' equity $76,495 $74,827 $73,982 $72,281 $70,455

SHARES AND CAPITAL RATIOS
Common shares outstanding 4,190,257 4,171,473 4,151,985 4,153,332 4,128,905
Book value per share $18.26 $17.94 $17.82 $17.40 $17.06
Tangible book value per share $16.26 $15.92 $15.77 $15.34 $14.96
Tier 1 leverage ratio 9.87% 9.69% 9.71% 9.77% 9.74%
Tier 1 risk-based capital ratio 14.02% 13.41% 12.96% 12.92% 12.96%
Total risk-based capital ratio 15.28% 14.67% 14.22% 14.18% 14.22%

ASSET QUALITY DATA
Total non-performing loans and leases $8,036 $8,229 $9,415 $11,008 $13,041
Total net loan and lease charge-offs 28 346 459 433 456

Non-performing loans and leases/Total loans and leases 1.37% 1.38% 1.53% 1.77% 2.09%
Net loan and lease charge-offs/Average loans and leases 0.02% 0.24% 0.31% 0.30% 0.32%
Allowance for loans and leases to total loans and leases 1.73% 1.67% 1.71% 1.78% 1.86%
EVANS BANCORP, INC AND SUBSIDIARIES
SELECTED OPERATIONS DATA (UNAUDITED)
(in thousands except share and per share data)

2013 2012 2012 2012 2012
First Quarter Fourth Quarter Third Quarter Second Quarter First Quarter
Interest income $7,956 $8,409 $8,309 $8,289 $8,369
Interest expense 1,130 1,309 1,364 1,408 1,516
Net interest income 6,826 7,100 6,945 6,881 6,853
Provision for loan and lease losses 450 (129) 9 301 (249)
Net interest income after provision 6,376 7,229 6,936 6,580 7,102

Deposit service charges 482 498 487 437 436
Insurance service and fee revenue 1,999 1,604 1774 1,643 1,945
Bank-owned life insurance 113 120 118 134 117
Other income 716 1,060 837 824 790
Total non-interest income 3,310 3,282 3,216 3,038 3,288

Salaries and employee benefits 4,289 4,083 4,778 4,229 4,214
Occupancy 816 776 679 645 685
Repairs and maintenance 178 213 210 177 169
Advertising and public relations 124 214 119 336 145
Professional services 454 463 356 567 539
Technology and communications 291 337 320 276 263
Amortization of intangibles 62 63 77 105 104
FDIC insurance 138 130 118 139 134
Other expenses 724 926 699 848 656
Total non-interest expenses 7,076 7,204 7,356 7,323 6,909

Income before income taxes 2,610 3,307 2,796 2,295 3,481
Income tax provision 794 1,185 660 800 1,102
Net income $1,816 $2,122 $2,136 $1,495 $2,379

PER SHARE DATA
Net income per common share-diluted $0.43 $0.51 $0.51 $0.36 $0.58
Cash dividends per common share $0.00 $0.24 $0.22 $0.00 $0.22
Weighted average number of diluted shares 4,210,595 4,180,578 4,177,567 4,156,868 4,131,330

PERFORMANCE RATIOS
Return on average total assets 0.89% 1.05% 1.07% 0.77% 1.26%
Return on average stockholders' equity 9.55% 11.33% 11.60% 8.33% 13.59%
Efficiency ratio 69.20% 68.78% 71.64% 72.75% 67.10%
EVANS BANCORP, INC AND SUBSIDIARIES
SELECTED AVERAGE BALANCES AND YIELDS/RATES (UNAUDITED)
(in thousands)

2013 2012 2012 2012 2012
First Quarter Fourth Quarter Third Quarter Second Quarter First Quarter
AVERAGE BALANCES
(dollars in thousands)

Loans and leases, net $575,953 $585,453 $590,200 $574,639 $568,863
Investment securities 98,120 101,135 99,347 101,053 105,339
Interest bearing deposits at banks 78,426 63,797 48,619 39,198 23,271
Total interest-earning assets 752,499 750,385 738,166 714,890 697,473
Non interest-earning assets 61,314 58,617 57,776 58,261 58,607
Total Assets $813,813 $809,002 $795,942 $773,151 $756,080

NOW $67,836 $62,245 $62,283 $60,472 $55,116
Regular savings 359,434 355,327 352,378 336,798 326,090
Muni-Vest savings 21,348 28,991 21,792 26,821 22,076
Time deposits 110,209 108,447 108,179 109,170 112,079
Total interest-bearing deposits 558,827 555,010 544,632 533,261 515,361
Other borrowings 43,693 41,948 39,883 40,619 42,512
Total interest-bearing liabilities 602,520 596,958 584,515 573,880 557,873

Demand deposits 122,359 124,741 124,590 115,033 114,783
Other non-interest bearing liabilities 12,857 12,408 13,186 12,471 13,418
Stockholders' equity 76,077 74,895 73,651 71,766 70,006

Total Liabilities and Equity $813,813 $809,002 $795,942 $773,151 $756,080

YIELD/RATE

Loans and leases, net 5.04% 5.26% 5.13% 5.23% 5.28%
Investment securities 2.80% 2.74% 2.93% 2.98% 3.23%
Interest bearing deposits at banks 0.09% 0.09% 0.12% 0.15% 0.15%
Total interest-earning assets 4.23% 4.48% 4.50% 4.64% 4.80%

NOW 0.67% 1.05% 1.03% 0.99% 1.01%
Regular savings 0.35% 0.46% 0.54% 0.57% 0.69%
Muni-Vest savings 0.28% 0.30% 0.29% 0.30% 0.38%
Time deposits 1.63% 1.70% 1.67% 1.80% 1.85%
Total interest-bearing deposits 0.64% 0.76% 0.81% 0.86% 0.96%
Other borrowings 2.20% 2.45% 2.59% 2.58% 2.58%
Total interest-bearing liabilities 0.75% 0.88% 0.93% 0.98% 1.09%

Interest rate spread 3.48% 3.60% 3.57% 3.66% 3.71%
Contribution of interest-free funds 0.15% 0.18% 0.19% 0.19% 0.22%
Net interest margin 3.63% 3.78% 3.76% 3.85% 3.93%

CONTACT: Gary A. Kajtoch Executive Vice President and Chief Financial Officer Phone: (716) 926-2000 Email: gkajtoch@evansbank.com Deborah K. Pawlowski Kei Advisors LLC Phone: (716) 843-3908 Email: dpawlowski@keiadvisors.com

Source:Evans Bancorp, Inc.