Evans Bancorp Reports Net Income of $2.9 Million In Second Quarter 2024

WILLIAMSVILLE, N.Y.--(BUSINESS WIRE)-- 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 second quarter ended June 30, 2024. The prior-year period includes business activity relating to The Evans Agency (TEA) prior to the sale to Arthur J. Gallagher & Co. on November 30, 2023.

HIGHLIGHTS

• Net income per share was $0.53 in the second quarter, which was up 26% sequentially on higher revenue and lower expenses
• Second quarter net interest margin of 2.71% was above expectations due to balance sheet adjustments in the first quarter and ongoing deposit pricing strategy
• Total loan balances of $1.77 billion increased $43 million, or 5% annualized, year-to-date and were up $94 million, or 6%, over last year’s second quarter
• Strong loan pipeline of $137 million
• Total deposits of $1.89 billion increased $173 million, or 10%, year-to-date, and were up $105 million, or 6%, from the end of last year’s second quarter

Net income increased 26% to $2.9 million, or $0.53 per diluted share, in the second quarter of 2024, from $2.3 million, or $0.42 per diluted share, in the first quarter of 2024. The sequential increase was due to higher net interest income of $0.4 million, an increase in non-interest income of $0.1 million, and lower non-interest expense of $0.4 million. Last year’s second quarter had net income of $4.9 million, or $0.90 per diluted share. The change from the prior-year period was due to lower net interest income of $1.4 million, an increase in loan provision of $0.4 million, and the impact of the sale of TEA. Return on average equity was 6.76% for the second quarter of 2024, compared with 5.28% in the first quarter of 2024 and 12.25% in the second quarter of 2023.

David J. Nasca, President and CEO of Evans Bancorp, Inc., commented, “Strong performance was delivered in the second quarter, marked by growth in core banking operations and notable increases in commercial lending portfolio. This growth, alongside a stable deposit base and other balance sheet optimization efforts during the first quarter, resulted in a net interest margin that exceeded expectations. Additionally, disciplined expense management contributed to the 26% increase in net income on a sequential basis.

“We remain focused on strategic priorities, including enhancing our digital capabilities to provide innovative banking solutions, expanding our commercial loan portfolio in the Rochester market, and delivering exceptional customer service. While we remain cautious about the economic outlook and potential impacts of interest rate fluctuations and regulatory changes, we are confident in our ability to perform through these challenges.”

Net Interest Income
($ in thousands)
		2Q 2024				1Q 2024				2Q 2023
Interest income		$	27,815			$	25,374			$	23,988
Interest expense			13,495				11,467				8,307
Net interest income			14,320				13,907				15,681
Provision for credit losses			297				266				(116	)
Net interest income after provision		$	14,023			$	13,641			$	15,797

Net interest income of $14.3 million increased $0.4 million, or 3%, over the first quarter of 2024 due to higher average loans and the Company’s investment strategy to strengthen the balance sheet at the end of the first quarter. Compared with last year’s second quarter, net interest income was lower by $1.4 million, or 9%, as a result of higher interest expense related to the increased cost of interest-bearing liabilities produced by competitive pricing on deposits.

Second quarter net interest margin of 2.71% decreased 8 basis points from the trailing first quarter and 39 basis points from the prior-year period. The yield on loans increased 7 basis points compared with the first quarter and was up 37 basis points year-over-year. The cost of interest-bearing liabilities was 3.27% compared with 3.04% in the first quarter of 2024 and 2.18% in the second quarter of 2023.

The $0.3 million provision for credit losses in the second quarter was due to loan growth as well as slower prepayment rates, partially offset by improving economic factors.

Asset Quality
($ in thousands)
		2Q 2024				1Q 2024				2Q 2023
Total non-performing loans		$	25,128			$	27,977			$	27,789
Total net loan charge-offs			22				93				35
Non-performing loans / Total loans			1.42	%			1.62	%			1.66	%
Net loan charge-offs / Average loans			0.01	%			0.02	%			0.01	%
Allowance for loan losses / Total loans			1.28	%			1.29	%			1.28	%

Non-Interest Income
($ in thousands)
		2Q 2024				1Q 2024				2Q 2023
Deposit service charges		$	667			$	681			$	645
Insurance service and fee revenue			176				149				2,720
Bank-owned life insurance			252				246				238
Interchange fee income			504				466				528
Other income			801				725				570
Total non-interest income		$	2,400			$	2,267			$	4,701

Total non-interest income increased $0.1 million from the sequential quarter primarily due to higher loan fees and wealth management revenue.

The $2.3 million reduction from the prior-year period was due to lower insurance service and fee revenue of $2.5 million mostly driven by the sale of TEA, partially offset by an increase in other income of $0.2 million.

Non-Interest Expense
($ in thousands)
		2Q 2024				1Q 2024				2Q 2023
Salaries and employee benefits		$	7,330			$	7,837			$	8,649
Occupancy			1,089				1,157				1,145
Advertising and public relations			254				171				407
Professional services			870				895				808
Technology and communications			1,596				1,409				1,542
Amortization of intangibles			4				4				100
FDIC insurance			300				325				350
Other expenses			1,115				1,129				1,171
Total non-interest expenses		$	12,558			$	12,927			$	14,172

Non-interest expenses decreased $0.4 million from the sequential quarter and $1.6 million from the prior-year period.

Salaries and employee benefits, the largest component of non-interest expenses, were down $0.5 million, or 6%, from the first quarter of 2024 and $1.3 million, or 15%, from the prior-year period. Included in salaries and employee benefits during the first quarter of 2024 was the funding of employee’s health savings accounts and payroll taxes that are typically higher in the first quarter. Compared with last year’s second quarter, the decrease was primarily due to salaries and employee benefits expenses related to TEA of $1.5 million, offset by higher incentive accruals of $0.2 million.

The change in advertising and public relations when compared with both periods reflected the timing of promotional campaigns.

Technology and communications expenses increased $0.2 million from the sequential first quarter but remained relatively flat from last year’s second quarter. The sequential increase was due to higher ATM card fees as well as software costs as the Company continues to invest in technological solutions.

The Company’s GAAP efficiency ratio, or noninterest expenses divided by the sum of net interest income and noninterest income, was 75.11% in the second quarter of 2024, 79.92% in the first quarter of 2024, and 69.53% in the second quarter of 2023.

Income tax expense was $0.9 million, for an effective tax rate of 23.8%, in the second quarter of 2024 compared with 21.7% in the first quarter of 2024 and 22.0% in last year’s second quarter.

Balance Sheet Highlights

“Our capital position remains solid, providing us with the capacity to support clients, invest in strategic initiatives, and return capital to shareholders. Investments in our team continue to drive strong loan production, which is on plan through the first half of the year. With a healthy pipeline in place, we expect mid-single digit commercial loan growth in 2024,” commented John Connerton, Chief Financial Officer of Evans Bank.

Total assets were $2.26 billion as of June 30, 2024, an increase of $149 million, or 7%, since December 31, 2023, and were up $102 million, or 5%, since June 30, 2023. Interest-bearing deposits at banks increased $106 million and $100 million, respectively, from the comparative periods. In addition, loan growth was $44 million, or 5% on an annualized basis, since year end 2023 and $94 million, or 6%, when compared with the prior-year period. Partially offsetting those increases was a reduction in investment securities of $10 million and $86 million since December 31, 2023, and June 30, 2023, respectively. Since June 30, 2023, commercial real estate loans increased $60 million and commercial and industrial loans increased $28 million.

Investment securities were $267 million at June 30, 2024, $5 million lower than the end of the first quarter of 2024 and $86 million lower than the end of last year’s second quarter. The Company sold $78 million of investment securities during the fourth quarter of 2023 and used the proceeds to reduce short-term borrowings. 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 $1.89 billion increased $173 million, or 10%, from December 31, 2023, and were up $105 million, or 6%, from the end of last year’s second quarter. From a product perspective, the change from year-end reflected increases in brokered time deposits of $55 million, municipal saving deposits of $40 million, NOW deposits of $37 million, consumer time deposits of $13 million, commercial savings of $11 million, consumer savings of $10 million, and demand deposits of $7 million.

At June 30, 2024, Evans had $41 million borrowed at FHLB. Given the current collateral available at FHLB, advances up to $303 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. At June 30, 2024, Evans had $88 million in short-term borrowings with the Federal Reserve and $10 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 10.04% at June 30, 2024 compared with 10.52% at March 31, 2024 and 9.43% at June 30, 2023.

Book value per share was $32.15 at June 30, 2024 compared with $31.62 at March 31, 2023 and $29.12 at June 30, 2023. 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 June 30, 2024, this amounted to $7.89 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.

Non-GAAP tangible book value per share was $31.81 at June 30, 2024 compared with $31.29 at March 31, 2024 and $26.61 at June 30, 2023. The increase over the prior-year period reflected the sale of TEA, which resulted in significant value creation including growth in tangible book value.

Webcast and Conference Call

The Company will host a conference call and webcast on Tuesday, July 30, 2024 at 4:45 p.m. ET. Management will review the financial and operating results for the second quarter of 2024, 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 Tuesday, August 13, 2024. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13746898, 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 $2.3 billion in assets and $1.9 billion in deposits at June 30, 2024. 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 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)
			6/30/2024				3/31/2024				12/31/2023				9/30/2023				6/30/2023
ASSETS
Interest-bearing deposits at banks		$	110,042			$	164,400			$	3,798			$	7,468			$	10,334
Securities AFS			263,740				268,476				275,680				334,460				351,595
Securities HTM			3,626				3,611				2,059				2,170				2,241
Loans			1,765,116				1,721,876				1,720,946				1,704,400				1,670,753
Allowance for credit losses			(22,562)				(22,287)				(22,114)				(21,846)				(21,368)
Goodwill and intangible assets			1,854				1,858				1,862				13,629				13,729
All other assets			135,551				122,010				126,432				134,462				127,679
Total assets		$	2,257,367			$	2,259,944			$	2,108,663			$	2,174,743			$	2,154,963
LIABILITIES AND STOCKHOLDERS'
EQUITY
Demand deposits		$	397,535			$	399,558			$	390,238			$	447,306			$	442,195
NOW deposits			382,513				381,798				345,279				324,219				303,159
Savings deposits			710,596				715,495				649,621				698,653				726,687
Time deposits			400,897				394,515				333,623				335,228				314,574
Total deposits			1,891,541				1,891,366				1,718,761				1,805,406				1,786,615
Securities sold under agreement to repurchase			7,684				6,873				9,475				13,447				19,185
Subordinated debt			31,228				31,203				31,177				31,152				31,126
Other borrowings			129,006				131,023				145,123				151,252				140,386
Other liabilities			20,259				24,884				25,908				22,551				18,167
Total stockholders' equity		$	177,649			$	174,595			$	178,219			$	150,935			$	159,484
SHARES AND CAPITAL RATIOS
Common shares outstanding			5,525,838				5,521,009				5,499,772				5,483,591				5,477,505
Book value per share		$	32.15			$	31.62			$	32.40			$	27.52			$	29.12
Tangible book value per share (Non-GAAP)		$	31.81			$	31.29			$	32.07			$	25.04			$	26.61
Tier 1 leverage ratio			10.04	%			10.52	%			10.37	%			9.40	%			9.43	%
Tier 1 risk-based capital ratio			13.55	%			13.63	%			13.80	%			12.04	%			12.73	%
Total risk-based capital ratio			14.80	%			14.89	%			15.05	%			13.29	%			13.98	%
ASSET QUALITY DATA
Total non-performing loans		$	25,128			$	27,977			$	27,325			$	27,311			$	27,789
Total net loan charge-offs (recoveries)			22				93				11				35				35
Other real estate owned (OREO)		$	6,902			$	-			$	-			$	-			$	-
Non-performing loans/Total loans			1.42	%			1.62	%			1.59	%			1.60	%			1.66	%
Net loan charge-offs (recoveries)/Average loans			0.01	%			0.02	%			-	%			0.01	%			0.01	%
Allowance for credit losses/Total loans			1.28	%			1.29	%			1.28	%			1.28	%			1.28	%

EVANS BANCORP, INC AND SUBSIDIARIES
SELECTED OPERATIONS DATA (UNAUDITED)
(in thousands, except share and per share data)
			2024				2024				2023				2023				2023
			Second Quarter				First Quarter				Fourth Quarter				Third Quarter				Second Quarter
Interest income		$	27,815			$	25,374			$	25,205			$	24,292			$	23,988
Interest expense			13,495				11,467				11,259				10,036				8,307
Net interest income			14,320				13,907				13,946				14,256				15,681
Provision for credit losses			297				266				282				506				(116	)
Net interest income after provision for credit losses			14,023				13,641				13,664				13,750				15,797
Deposit service charges			667				681				670				665				645
Insurance service and fee revenue			176				149				1,613				3,498				2,720
Bank-owned life insurance			252				246				230				239				238
Interchange fee income			504				466				510				516				528
Gain on sale of insurance agency			-				-				20,160				-				-
Loss on sale of investment securities			-				-				(5,044	)			-				-
Other income			801				725				412				638				570
Total non-interest income			2,400				2,267				18,551				5,556				4,701
Salaries and employee benefits			7,330				7,837				10,251				8,735				8,649
Occupancy			1,089				1,157				1,078				1,109				1,145
Advertising and public relations			254				171				296				348				407
Professional services			870				895				1,003				869				808
Technology and communications			1,596				1,409				1,545				1,517				1,542
Amortization of intangibles			4				4				67				100				100
FDIC insurance			300				325				350				350				350
Other expenses			1,115				1,129				1,710				1,379				1,171
Total non-interest expenses			12,558				12,927				16,300				14,407				14,172
Income before income taxes			3,865				2,981				15,915				4,899				6,326
Income tax provision			919				647				5,741				1,281				1,394
Net income			2,946				2,334				10,174				3,618				4,932
PER SHARE DATA
Net income per common share-diluted		$	0.53			$	0.42			$	1.85			$	0.66			$	0.90
Cash dividends per common share		$	-			$	0.66			$	-			$	0.66			$	-
Weighted average number of diluted shares			5,530,120				5,519,244				5,497,029				5,490,600				5,474,462
PERFORMANCE RATIOS
Return on average total assets			0.52	%			0.44	%			1.90	%			0.67	%			0.91	%
Return on average stockholders' equity			6.76	%			5.28	%			25.73	%			9.06	%			12.25	%
Return on average tangible common stockholders' equity (Non-GAAP)*			6.83	%			5.33	%			27.37	%			9.90	%			13.39	%
Efficiency ratio			75.11	%			79.92	%			50.16	%			72.72	%			69.53	%
Efficiency ratio (Non-GAAP)**			75.08	%			79.90	%			93.40	%			72.21	%			69.04	%
* 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)
			2024				2024				2023				2023				2023
			Second Quarter				First Quarter				Fourth Quarter				Third Quarter				Second Quarter
AVERAGE BALANCES
Loans, net		$	1,715,280			$	1,703,320			$	1,682,177			$	1,658,132			$	1,646,502
Investment securities			275,854				280,975				327,303				355,870				373,922
Interest-bearing deposits at banks			137,442				18,889				5,916				9,883				7,235
Total interest-earning assets			2,128,576				2,003,184				2,015,396				2,023,885				2,027,659
Non interest-earning assets			123,457				117,646				128,915				135,896				129,793
Total Assets		$	2,252,033			$	2,120,830			$	2,144,311			$	2,159,781			$	2,157,452
NOW			374,910				347,908				333,893				311,624				281,910
Savings			718,627				658,656				687,223				708,724				776,020
Time deposits			399,476				342,358				335,646				325,667				304,575
Total interest-bearing deposits			1,493,013				1,348,922				1,356,762				1,346,015				1,362,505
Borrowings			168,856				166,948				197,363				192,277				163,338
Total interest-bearing liabilities			1,661,869				1,515,870				1,554,125				1,538,292				1,525,843
Demand deposits			395,876				404,053				409,115				441,149				451,990
Other non-interest bearing liabilities			19,885				23,943				22,880				20,529				18,532
Stockholders' equity			174,403				176,964				158,191				159,811				161,087
Total Liabilities and Equity		$	2,252,033			$	2,120,830			$	2,144,311			$	2,159,781			$	2,157,452
Average tangible common stockholders' equity (Non-GAAP)*			172,546				175,103				148,673				146,122				147,299
YIELD/RATE
Loans, net			5.63	%			5.56	%			5.43	%			5.25	%			5.26	%
Investment securities			2.63	%			2.53	%			2.53	%			2.48	%			2.47	%
Interest-bearing deposits at banks			5.86	%			1.68	%			6.38	%			5.29	%			4.45	%
Total interest-earning assets			5.26	%			5.09	%			4.96	%			4.76	%			4.75	%
NOW			2.50	%			2.30	%			2.12	%			1.79	%			1.24	%
Savings			2.53	%			2.25	%			2.09	%			1.85	%			1.58	%
Time deposits			4.52	%			4.24	%			3.83	%			3.45	%			3.10	%
Total interest-bearing deposits			3.05	%			2.77	%			2.53	%			2.22	%			1.85	%
Borrowings			5.16	%			5.25	%			5.27	%			5.14	%			4.98	%
Total interest-bearing liabilities			3.27	%			3.04	%			2.87	%			2.59	%			2.18	%
Interest rate spread			1.99	%			2.05	%			2.09	%			2.17	%			2.57	%
Contribution of interest-free funds			0.72	%			0.74	%			0.66	%			0.62	%			0.53	%
Net interest margin			2.71	%			2.79	%			2.75	%			2.79	%			3.10	%
* Average tangible common stockholders' equity excludes goodwill and intangible assets from average stockholders equity.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240730696735/en/

For more information contact:

John B. Connerton

Executive Vice President and Chief Financial Officer

(716) 926-2000

jconnerton@evansbank.com

-OR-

Deborah K. Pawlowski/Craig Mychajluk

Kei Advisors LLC

(716) 843-3908

dpawlowski@keiadvisors.com

cmychajluk@keiadvisors.com

Media Contact:

Kathleen Rizzo Young

Group VP/Public & Community Relations Director

(716) 343-5562

krizzoyoung@evansbank.com

 

Source: Evans Bancorp, Inc.