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 third
quarter ended September 30, 2021.
THIRD QUARTER 2021 HIGHLIGHTS (compared with prior-year
period unless otherwise noted)
- Net interest income increased 16% to $18.2 million reflecting
accelerated amortization of Paycheck Protection Program (“PPP”)
fees, higher commercial loan prepayment fees and lower interest
expense
- Results include $1.5 million release of allowance for loan
losses due to improved credit quality in the hotel portfolio and
lower specific reserves
- Total deposits of $1.88 billion, increased 5%
Net income increased 54% to a record $7.0 million, or $1.27 per
diluted share, in the third quarter of 2021, from $4.5 million, or
$0.84 per diluted share, in last year’s third quarter. The increase
included higher net interest income of $2.5 million and a $3.3
million decrease in provision for loan loss. Partially offsetting
these increases to net income was $1.9 million of higher salary
expenses primarily related to incentives and strategic hires.
The 11% increase in net income from the sequential second
quarter of $6.3 million, or $1.15 per diluted share, reflected a
$0.7 million decrease in provision for loan losses due to a
reduction in criticized assets and $0.7 million increase in
non-interest income primarily due to seasonally higher insurance
service and fee revenue. These increases were partially offset by a
$0.6 million increase in salary incentive expenses.
Return on average equity was 15.58% for the third quarter of
2021, compared with 14.72% in the second quarter of 2021 and 11.09%
in the third quarter of 2020.
“The Bank’s record results this quarter were supported by strong
loan production throughout the year, PPP fees and credit quality
improvements, reflecting underwriting strength and proactive
measures with our hotel portfolio resulting in upgrades to the
credit risk ratings of a number of relationships into normal
performing categories. While PPP forgiveness and higher than
typical payoffs in this historically low-rate environment continue
to provide headwinds to our overall loan growth, we are generating
strong loan production this year and are encouraged by the return
of more commercial and industrial loan opportunities,” said David
J. Nasca, President and CEO of Evans Bancorp, Inc.
“Our priority continues to be utilization of excess liquidity.
We are strategically adding talent to supplement our loan efforts
both within our legacy market and new market area in Rochester, as
well as bolstering our fee based businesses. We are in the process
of building out customer solutions in an effort to deliver an
enhanced experience that is centered on speed, flexibility and
efficiency. The actions we are taking are designed to continue to
enhance returns over the long-term.”
Net Interest Income
($ in thousands)
3Q 2021
2Q 2021
3Q 2020
Interest income
$
19,302
$
19,576
$
17,766
Interest expense
1,139
1,226
2,124
Net interest income
18,163
18,350
15,642
Provision (credit) for loan losses
(1,459)
(760)
1,881
Net interest income after provision
$
19,622
$
19,110
$
13,761
Net interest income decreased $0.2 million, or 1%, from the
sequential second quarter, but increased $2.5 million or 16% from
prior-year third quarter. The increase from the prior-year period
reflected higher PPP fees of $1.2 million, a $0.3 million increase
in commercial loan prepayment fees, and lower interest expense of
$1.0 million. The decrease in net interest income from the second
quarter of 2021 reflects lower fees earned in connection with PPP
and commercial prepayment fees. As PPP loans are forgiven, the
Company is accelerating the recognition of fees that were being
amortized over the original life of the loan. PPP fees recognized
in interest income were $2.1 million in the third quarter of 2021,
$2.5 million in the second quarter of 2021 and $0.9 million in the
third quarter of 2020.
Third quarter net interest margin of 3.48% decreased 14 basis
points from the second quarter of 2021, reflecting higher amounts
of low-yielding interest-bearing deposits at banks. Net interest
margin increased 29 basis points from the third quarter of 2020 due
to higher balances in interest-earning assets, PPP fee
amortization, commercial prepayment income and reduced interest
expense as the Company continued to align rates on deposits. The
yield on loans increased 4 basis points when compared with the
second quarter of 2021 and increased 35 basis points when compared
with the third quarter of 2020. The cost of interest-bearing
liabilities decreased to 0.31% compared with 0.34% in the second
quarter of 2021 and 0.59% in the third quarter of 2020.
The Company continues to evaluate its loan portfolio in response
to the economic impact of the COVID-19 pandemic on its clients.
During the third quarter of 2020, the Company identified a
well-defined weakness in the hotel industry and classified the
loans to clients within that industry as criticized. As of
September 30, 2021, the Company’s hotel loan portfolio totaled
approximately $80 million, of which the Company upgraded $20
million out of the criticized loan category and $2.2 million was
classified as nonaccrual during the recent third quarter.
The $1.5 million release of allowance for loan losses in the
current quarter included $0.7 million related to a decrease in
criticized hotel portfolio loans and a $0.5 million reduction in
specific reserves resulting from payments received from one
commercial customer relationship. Evans has deferred the adoption
of the Current Expected Credit Loss Impairment Model (CECL), as
permitted by its classification as a Smaller Reporting Company by
the Securities and Exchange Commission.
Asset Quality
($ in thousands)
3Q 2021
2Q 2021
3Q 2020
Total non-performing loans
$
25,463
$
24,317
$
21,466
Total net loan charge-offs
431
-
34
Non-performing loans / Total loans
1.58
%
1.43
%
1.26
%
Net loan charge-offs / Average loans
0.10
%
-
%
0.01
%
Allowance for loan losses / Total
loans
1.12
%
1.17
%
1.21
%
“Our hotel portfolio continues to show improvement as we moved
about a quarter of the total portfolio back to normal paying
status, and received all deferred interest. Only one hotel loan was
moved to nonaccrual status, which was reflected in the increase in
non-performing assets. We will continue to closely monitor the
portfolio and although the remaining hotel relationships have shown
improvement in their occupancy rates and have paid all amounts due,
the Bank is looking to establish sustained performance on these
credits before upgrading,” stated John Connerton, Chief Financial
Officer of Evans Bank.
Non-Interest Income
($ in thousands)
3Q 2021
2Q 2021
3Q 2020
Deposit service charges
$
664
$
607
$
598
Insurance service and fee revenue
3,191
2,657
3,217
Bank-owned life insurance
158
172
170
Gain on sale of securities
-
-
667
Other income
1,144
982
1,205
Total non-interest income
$
5,157
$
4,418
$
5,857
The increase in insurance service and fee revenue from the
sequential second quarter reflects seasonally higher commercial
lines insurance commissions and profit-sharing revenue.
During the third quarter of 2020, the Company recognized
approximately $0.7 million of gain on sale of investment
securities. There were no comparable gains during 2021.
The increase in other income from the sequential second quarter
was largely due to changes in the fair value of mortgage servicing
rights and other loan fee income.
Non-Interest Expense
($ in thousands)
3Q 2021
2Q 2021
3Q 2020
Salaries and employee benefits
$
9,930
$
9,365
$
8,101
Occupancy
1,126
1,177
1,204
Advertising and public relations
434
405
503
Professional services
840
989
865
Technology and communications
1,327
1,432
1,365
Amortization of intangibles
135
135
136
FDIC insurance
285
279
290
Merger-related expenses
-
-
524
Other expenses
1,316
1,394
1,480
Total non-interest expenses
$
15,393
$
15,176
$
14,468
Total non-interest expense increased $0.2 million, or 1%, from
the second quarter of 2021, and $0.9 million, or 6% from last
year’s third quarter.
Salaries and employee benefits increased $0.6 million, or 6%,
from the sequential second quarter and $1.8 million, or 23%, from
last year’s third quarter. The sequential change reflected a $0.6
million increase in incentive accruals, while the prior-year period
included a $0.7 million reduction of incentive accruals. The
year-over-year change also reflects the addition of strategic hires
to support the Company’s continued growth along with inflation in
the cost of labor.
Third quarter of 2020 merger-related expenses included costs
relating to the acquisition of Fairport Savings Bank. There were no
comparable expenses during the second or third quarters of
2021.
The Company’s GAAP efficiency ratio, or noninterest expenses
divided by the sum of net interest income and noninterest income,
was 66.0% in the third quarter of 2021, 66.7% in the second quarter
of 2021, and 67.3% in the third quarter of 2020. The Company’s
non-GAAP efficiency ratio, excluding amortization expense, gains
and losses from investment securities, and merger-related expenses,
was 65.4% compared with 66.1% in the second quarter of 2021 and
66.3% in last year’s third quarter.
Income tax expense was $2.4 million, or an effective tax rate of
25.6%, for the third quarter of 2021 compared with 24.4% in the
second quarter of 2021 and 11.8% in last year’s third quarter.
Excluding the impact of a 2020 historic tax credit transaction, the
effective tax rate was 25.6% in the third quarter of 2020.
Balance Sheet Highlights
Total assets were $2.15 billion as of September 30, 2021, a
decrease of less than 1% from $2.16 billion at June 30, 2021, but
up 5% from $2.06 billion at September 30, 2020. The increase from
the prior year was due to an increase in investment securities and
interest-bearing deposits at banks, partially offset by lower loan
balances. Since last year’s third quarter, residential mortgages
increased $38 million and commercial real estate loans were up $37
million. More than offsetting was a decrease in commercial and
industrial loans of $163 million, of which $127 million was a
result of the change in PPP loan balances. PPP loans totaled $76.3
million at September 30, 2021, compared with $145.7 million at June
30, 2021 and $203.1 million at September 30, 2020. The Company has
also experienced a significant increase in the level of commercial
payoffs, with a quarterly average of $43 million in 2021 compared
with a more normalized level around $21 million a quarter.
Investment securities were $258 million at September 30, 2021,
$24 million higher than the end of the second quarter of 2021, and
$97 million higher than at the end of last year’s third quarter.
The increases reflect the use of excess cash balances. 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.
Total deposits of $1.88 billion decreased $8 million, or less
than 1%, from June 30, 2021, but were up $95 million, or 5%, from
the end of last year’s third quarter. The increase from the prior
year reflects an accumulation of liquidity by commercial customers
in response to the pandemic, including deposits related to PPP
loans, and increases in consumer deposits from government stimulus
payments and lower consumer spending.
Capital Management
The Company has consistently maintained regulatory capital
ratios measurably above the Federal “well capitalized” standard,
including a Tier 1 leverage ratio of 8.34% at September 30, 2021
compared with 8.23% at June 30, 2021 and 7.82% at September 30,
2020. Book value per share was $32.73 at September 30, 2021
compared with $32.28 at June 30, 2021 and $30.29 at September 30,
2020. Tangible book value per share was $30.07 at September 30,
2021 compared with $29.58 at June 30, 2021 and $27.49 at September
30, 2020.
In October 2021, the Company paid a semi-annual cash dividend of
$0.60 per common share. Cash dividends totaled $1.20 per common
share during 2021, up 3% over 2020.
Webcast and Conference Call
The Company will host a conference call and webcast on Thursday,
October 28, 2021 at 4:45 p.m. ET. Management will review the
financial and operating results for the third quarter of 2021, as
well as the Company’s strategy and outlook. A question and answer
session will follow the formal presentation.
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 7:45 p.m. ET on the
day of the teleconference until Thursday, November 4, 2021. To
listen to the archived call, dial (412) 317-6671 and enter
conference ID number 13723727, 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 $2.2
billion in assets and $1.9 billion in deposits at September 30,
2021. Evans is a full-service community bank with 21 financial
centers providing comprehensive financial services to consumer,
business and municipal customers throughout Western New York. Evans
Insurance Agency, a wholly owned subsidiary, provides life
insurance, employee benefits, and property and casualty insurance
through ten 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 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)
9/30/2021
6/30/2021
3/31/2021
12/31/2020
9/30/2020
ASSETS
Interest-bearing deposits at banks
$
179,231
$
126,810
$
105,658
$
83,902
$
88,249
Investment Securities
258,221
234,350
195,012
166,600
160,757
Loans
1,614,162
1,697,321
1,747,229
1,693,794
1,703,076
Allowance for loan losses
(18,051)
(19,942)
(20,701)
(20,415)
(20,601)
Goodwill and intangible assets
14,546
14,682
14,817
14,951
15,085
All other assets
103,949
106,982
102,250
105,283
110,427
Total assets
$
2,152,058
$
2,160,203
$
2,144,265
$
2,044,115
$
2,056,993
LIABILITIES AND STOCKHOLDERS'
EQUITY
Demand deposits
502,689
486,737
486,385
436,157
442,536
NOW deposits
253,124
261,173
238,769
230,751
215,492
Savings deposits
942,147
940,352
924,781
825,947
799,739
Time deposits
178,083
195,533
222,002
278,554
323,211
Total deposits
1,876,043
1,883,795
1,871,937
1,771,409
1,780,978
Borrowings
71,564
76,895
78,278
79,663
82,909
Other liabilities
25,617
23,824
27,076
24,138
30,218
Total stockholders' equity
178,834
175,689
166,974
168,905
162,888
SHARES AND CAPITAL RATIOS
Common shares outstanding
5,463,141
5,443,491
5,428,993
5,411,384
5,376,742
Book value per share
$
32.73
$
32.28
$
30.76
$
31.21
$
30.29
Tangible book value per share
$
30.07
$
29.58
$
28.03
$
28.45
$
27.49
Tier 1 leverage ratio
8.34
%
8.23
%
8.19
%
8.21
%
7.82
%
Tier 1 risk-based capital ratio
12.34
%
11.96
%
11.90
%
11.62
%
11.28
%
Total risk-based capital ratio
13.57
%
13.21
%
13.15
%
12.88
%
12.53
%
ASSET QUALITY DATA
Total non-performing loans
$
25,463
$
24,317
$
29,079
$
28,118
$
21,466
Total net loan charge-offs
431
-
27
60
34
Non-performing loans/Total loans
1.58
%
1.43
%
1.66
%
1.66
%
1.26
%
Net loan charge-offs /Average loans
0.10
%
-
%
0.01
%
0.01
%
0.01
%
Allowance for loans losses/Total loans
1.12
%
1.17
%
1.18
%
1.21
%
1.21
%
EVANS BANCORP, INC AND
SUBSIDIARIES
SELECTED OPERATIONS DATA
(UNAUDITED)
(in thousands, except share and per
share data)
2021
2021
2021
2020
2020
Third Quarter
Second Quarter
First Quarter
Fourth Quarter
Third Quarter
Interest income
$
19,302
$
19,576
$
17,970
$
18,175
$
17,766
Interest expense
1,139
1,226
1,373
1,744
2,124
Net interest income
18,163
18,350
16,597
16,431
15,642
Provision (credit) for loan losses
(1,459)
(760)
313
(126)
1,881
Net interest income after provision
(credit) for loan losses
19,622
19,110
16,284
16,557
13,761
Deposit service charges
664
607
572
619
598
Insurance service and fee revenue
3,191
2,657
2,502
2,301
3,217
Bank-owned life insurance
158
172
163
172
170
Gain on sale of securities
-
-
-
-
667
Other income
1,144
982
1,329
1,711
1,205
Total non-interest income
5,157
4,418
4,566
4,803
5,857
Salaries and employee benefits
9,930
9,365
9,044
9,087
8,101
Occupancy
1,126
1,177
1,187
1,169
1,204
Advertising and public relations
434
405
263
233
503
Professional services
840
989
959
893
865
Technology and communications
1,327
1,432
1,264
1,306
1,365
Amortization of intangibles
135
135
135
133
136
FDIC insurance
285
279
300
339
290
Merger-related expenses
-
-
-
-
524
Other expenses
1,316
1,394
1,213
1,350
1,480
Total non-interest expenses
15,393
15,176
14,365
14,510
14,468
Income before income taxes
9,386
8,352
6,485
6,850
5,150
Income tax provision
2,407
2,039
1,633
821
606
Net income
6,979
6,313
4,852
6,029
4,544
PER SHARE DATA
Net income per common share-diluted
$
1.27
$
1.15
$
0.89
$
1.11
$
0.84
Cash dividends per common share
$
0.60
$
-
$
0.60
$
-
$
0.58
Weighted average number of diluted
shares
5,516,781
5,489,420
5,463,674
5,416,198
5,395,806
PERFORMANCE RATIOS
Return on average total assets
1.28
%
1.17
%
0.93
%
1.18
%
0.88
%
Return on average stockholders' equity
15.58
%
14.72
%
11.48
%
14.51
%
11.09
%
Return on average tangible common
stockholders' equity*
16.96
%
16.11
%
12.59
%
15.96
%
12.23
%
Efficiency ratio
66.01
%
66.65
%
67.88
%
68.33
%
67.30
%
Efficiency ratio (Non-GAAP)**
65.43
%
66.06
%
67.24
%
67.71
%
66.28
%
* 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, 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)
2021
2021
2021
2020
2020
Third Quarter
Second Quarter
First Quarter
Fourth Quarter
Third Quarter
AVERAGE BALANCES
Loans, net
$
1,647,395
$
1,718,507
$
1,706,325
$
1,677,502
$
1,671,338
Investment securities
248,690
216,134
180,473
162,941
172,712
Interest-bearing deposits at banks
174,296
97,168
76,651
92,974
106,154
Total interest-earning assets
2,070,381
2,031,809
1,963,449
1,933,417
1,950,204
Non interest-earning assets
109,601
119,392
115,200
117,458
117,244
Total Assets
$
2,179,982
$
2,151,201
$
2,078,649
$
2,050,875
$
2,067,448
NOW
262,105
246,565
230,627
218,587
221,343
Savings
949,956
928,375
866,991
818,878
799,082
Time deposits
186,126
210,287
246,120
300,605
337,967
Total interest-bearing deposits
1,398,187
1,385,227
1,343,738
1,338,070
1,358,392
Borrowings
74,326
77,050
78,284
80,814
84,926
Total interest-bearing liabilities
1,472,513
1,462,277
1,422,022
1,418,884
1,443,318
Demand deposits
503,006
493,734
464,579
439,953
430,658
Other non-interest bearing liabilities
25,250
23,682
23,031
25,882
29,644
Stockholders' equity
179,213
171,508
169,017
166,156
163,828
Total Liabilities and Equity
$
2,179,982
$
2,151,201
$
2,078,649
$
2,050,875
$
2,067,448
Average tangible common stockholders'
equity*
164,588
156,748
154,122
151,131
148,658
YIELD/RATE
Loans, net
4.36
%
4.32
%
4.06
%
4.09
%
4.01
%
Investment securities
1.82
%
1.94
%
2.00
%
2.18
%
2.06
%
Interest-bearing deposits at banks
0.14
%
0.08
%
0.08
%
0.10
%
0.10
%
Total interest-earning assets
3.70
%
3.86
%
3.71
%
3.74
%
3.62
%
NOW
0.10
%
0.11
%
0.13
%
0.15
%
0.19
%
Savings
0.15
%
0.17
%
0.20
%
0.24
%
0.33
%
Time deposits
0.49
%
0.52
%
0.64
%
0.90
%
1.04
%
Total interest-bearing deposits
0.18
%
0.21
%
0.27
%
0.37
%
0.48
%
Borrowings
2.62
%
2.55
%
2.52
%
2.43
%
2.26
%
Total interest-bearing liabilities
0.31
%
0.34
%
0.39
%
0.49
%
0.59
%
Interest rate spread
3.39
%
3.52
%
3.32
%
3.25
%
3.03
%
Contribution of interest-free funds
0.09
%
0.10
%
0.11
%
0.13
%
0.16
%
Net interest margin
3.48
%
3.62
%
3.43
%
3.38
%
3.19
%
* 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/20211028006118/en/
John B. Connerton Executive Vice President and Chief Financial
Officer (716) 926-2000 jconnerton@evansbank.com Media:
Kathleen Rizzo Young Public & Community Relations Manager
716-343-5562 krizzoyoung@evansbank.com -OR- Deborah K.
Pawlowski Kei Advisors LLC (716) 843-3908
dpawlowski@keiadvisors.com
Evans Bancorp (AMEX:EVBN)
Historical Stock Chart
From Mar 2024 to Apr 2024
Evans Bancorp (AMEX:EVBN)
Historical Stock Chart
From Apr 2023 to Apr 2024
