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 first
quarter ended March 31, 2022.
FIRST QUARTER 2022 HIGHLIGHTS (compared with prior-year
period unless otherwise noted)
- Achieved first quarter net income of $4.7 million, or $0.86 per
diluted share
- Net interest income was $16.5 million and reflected
significantly lower PPP fees as the program approaches its
conclusion
- Total loan balances increased 6%, excluding PPP loans
- Commercial and industrial loans increased $19 million, ex
PPP
- Commercial real estate loans were up $19 million
- Residential mortgages increased $42 million
- Total deposits of $1.99 billion increased 6%
- Expense management focus as total non-interest expenses
increased less than one percent
Net income was $4.7 million, or $0.86 per diluted share, in the
first quarter of 2022, compared with $5.9 million, or $1.06 per
diluted share, in the fourth quarter of 2021 and $4.9 million, or
$0.89 per diluted share, in last year’s first quarter. The change
from the sequential fourth quarter was largely due to lower net
interest income impacted by reduced PPP fees earned during the
first quarter of 2022. In addition, the fourth quarter of 2021
included higher interest income recognized on non-accrual loan
payoffs and higher amortization of fair value marks on loans
acquired in a bank acquisition. Return on average equity was 10.46%
for the first quarter of 2022, compared with 12.98% in the fourth
quarter of 2021 and 11.48% in the first quarter of 2021.
“The Company continues to perform toward its focused strategy of
driving commercial loan growth, amplifying revenue streams such as
residential mortgage and insurance while emphasizing talent,
customer experience and operational efficiency to further scale the
Company,” said David J. Nasca, President and CEO of Evans Bancorp,
Inc. “First quarter revenue performance was solid with loan growth
of 6% and margins positioned to expand in a rising rate
environment. Our teams continue to attract new customers in our WNY
markets and have had good success in gaining traction in our
expanded Rochester footprint. Our continued investment in our
franchise to differentiate with talent and customer experience and
control over non-interest expense levels demonstrates our
commitment to enhancing returns over both the near term and into
the future.”
Net Interest Income
($ in thousands)
1Q 2022
4Q 2021
1Q 2021
Interest income
$
17,517
$
20,732
$
17,970
Interest expense
1,016
1,057
1,373
Net interest income
16,501
19,675
16,597
Provision for loan losses
221
393
313
Net interest income after provision
$
16,280
$
19,282
$
16,284
Net interest income decreased $3.2 million, or 16%, from the
sequential fourth quarter, but was relatively flat when compared
with prior-year first quarter. The decrease reflected lower PPP
fees of $1.9 million, amortization of fair value marks on acquired
loans of $0.8 million, and interest recognized on the payoff of
non-accrual loans of $0.7 million. The decrease in PPP fees
reflects the deceleration in the rate of remaining loan forgiveness
as the program approaches its conclusion. PPP fees recognized in
interest income were $0.5 million in the first quarter of 2022,
$2.4 million in the fourth quarter of 2021 and $1.7 million in the
first quarter of 2021. Interest expense remained relatively flat
from the prior quarter as the Company continued to effectively
manage rates on deposits.
First quarter net interest margin of 3.18% decreased 56 basis
points from the fourth quarter of 2021 and 25 basis points from the
first quarter of 2021. The sequential fourth quarter net interest
margin was elevated as a result of higher PPP fee amortization,
non-accrued interest recognized and acceleration of loan mark
impacts. The yield on loans decreased 79 basis points compared with
the fourth quarter of 2021 but remained relatively flat compared
with the first quarter of 2021. The cost of interest-bearing
liabilities decreased to 0.27% compared with 0.28% in the fourth
quarter of 2021 and 0.39% in the first quarter of 2021.
The Company continues to evaluate the credit quality of its loan
portfolio in response to the economic impact of the COVID-19
pandemic on clients. During 2020, the Company identified a
well-defined weakness in the hotel industry and classified $81
million of loans to clients within that industry as criticized.
Since that time, approximately a third of the portfolio was
upgraded or paid off, leaving $55 million in criticized status at
the end of the 2022 first quarter. The improvement of the remaining
criticized hotel credits is dependent on continued positive payment
performance.
The $0.2 million provision for loan losses in the current
quarter was due to loan growth, partially offset by a reduction in
specific reserves. Evans has deferred the adoption of the Current
Expected Credit Loss Impairment Model (CECL) until January 2023, as
permitted by its classification as a Smaller Reporting Company by
the Securities and Exchange Commission.
Asset Quality
($ in thousands)
1Q 2022
4Q 2021
1Q 2021
Total non-performing loans
$
20,659
$
18,415
$
29,079
Total net loan charge-offs
41
6
27
Non-performing loans / Total loans
1.29
%
1.17
%
1.66
%
Net loan charge-offs / Average loans
0.01
%
-
%
0.01
%
Allowance for loan losses / Total
loans
1.16
%
1.17
%
1.18
%
“We continued to deploy our excess liquidity into investments
and to fund loan growth. Our balance sheet is well-positioned for
rising interest rates, and given recent and expected Fed actions we
anticipate seeing a notable lift to net interest income as we
progress through the year,” stated John Connerton, Chief Financial
Officer of Evans Bank. “Asset quality remains strong, despite a
modest increase in non-performing loans, which reflected just one
commercial real estate relationship that continues to accrue and is
well collateralized.”
Non-Interest Income
($ in thousands)
1Q 2022
4Q 2021
1Q 2021
Deposit service charges
$
692
$
688
$
572
Insurance service and fee revenue
2,299
2,107
2,502
Bank-owned life insurance
154
360
163
Other income
1,286
1,551
1,329
Total non-interest income
$
4,431
$
4,706
$
4,566
Deposit service charges were up 21% over last year’s first
quarter, largely due to higher debit card usage.
Insurance service and fee revenue increased $0.2 million from
the fourth quarter of 2021 due to higher profit sharing revenue.
The change from the first quarter of 2021 was primarily the result
of the discontinued operations of our insurance claims services
business and decreased profit sharing revenue.
The Company recognized a $0.2 million gain on a bank-owned life
insurance claim in the fourth quarter of 2021. There were no policy
claims in the first quarter of 2022 or 2021.
The decrease in other income from the sequential quarter was
largely due to the reversal of an earnout relating to a small 2020
insurance agency acquisition equating to a $0.3 million benefit
recognized during the fourth quarter of 2021.
Non-Interest Expense
($ in thousands)
1Q 2022
4Q 2021
1Q 2021
Salaries and employee benefits
$
9,470
$
10,273
$
9,044
Occupancy
1,180
1,208
1,187
Advertising and public relations
179
325
263
Professional services
872
799
959
Technology and communications
1,174
1,353
1,264
Amortization of intangibles
100
132
135
FDIC insurance
270
269
300
Other expenses
1,215
1,926
1,213
Total non-interest expenses
$
14,460
$
16,285
$
14,365
Total non-interest expense decreased $1.8 million, or 11%, from
the fourth quarter of 2021, and was relatively flat from last
year’s first quarter.
Salaries and employee benefits expense decreased $0.8 million,
or 8%, from the fourth quarter of 2021, largely due to an increase
in incentive expense that was incurred during the fourth quarter as
a result of the record performance achieved in 2021. The increase
in salaries and employee benefits from the prior year period was
primarily due to increased deferment of PPP loan origination costs
during the first quarter of 2021 and merit increases.
Advertising expense decreased from the sequential quarter due to
increased media campaigns during the fourth quarter of 2021.
Other expenses decreased $0.7 million from the prior period,
which had included $0.4 million in philanthropic contributions,
$0.1 million loss on disposal of assets and $0.1 million of
impairment charges.
The Company’s GAAP efficiency ratio, or noninterest expenses
divided by the sum of net interest income and noninterest income,
was 69.1% in the first quarter of 2022, 66.8% in the fourth quarter
of 2021, and 67.9% in the first quarter of 2021. The Company’s
non-GAAP efficiency ratio, excluding amortization expense, gains
and losses from investment securities, and merger-related expenses,
was 68.6% compared with 66.2% in the fourth quarter of 2021 and
67.2% in last year’s first quarter.
Income tax expense was $1.5 million, for an effective tax rate
of 24.0%, in the first quarter of 2022 compared with 23.4% in the
fourth quarter of 2021 and 25.2% in last year’s first quarter.
Balance Sheet Highlights
Total assets were $2.24 billion as of March 31, 2022, an
increase of 1% from $2.21 billion at December 31, 2021, and 4% from
$2.14 billion at March 31, 2021. The growth from the prior year
resulted from an increase in interest-bearing deposits at banks of
$42 million and investment securities of $194 million, partially
offset by a decrease in total loans of $143 million. Since last
year’s first quarter, PPP loan balances, which are included in
commercial and industrial loans decreased $227 million. Excluding
the decrease of PPP loans, commercial and industrial loans
increased $19 million from the first quarter of 2021. PPP loans
totaled $10 million at March 31, 2022, compared with $25 million at
December 31, 2021 and $237 million at March 31, 2021. Residential
mortgages increased $42 million and commercial real estate loans
were up $19 million since the first quarter of 2021.
Investment securities were $389 million at March 31, 2022, $80
million higher than the end of the fourth quarter of 2021, and $194
million higher than at the end of last year’s first 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 $1.99 billion increased $50 million, or 3%,
from December 31, 2021, and $115 million, or 6%, from the end of
last year’s first quarter. The change from prior quarter is
primarily due to the seasonal increase in municipal deposits. The
change from the prior year primarily reflects increases in
commercial savings of $54 million and municipal deposits of $40
million.
Capital Management
The Company has consistently maintained regulatory capital
ratios measurably above the Federal “well capitalized” standard,
including a Tier 1 leverage ratio of 8.57% at March 31, 2022 and
December 31, 2021 and 8.19% at March 31, 2021. Book value per share
was $30.65 at March 31, 2022 compared with $33.54 at December 31,
2021 and $30.76 at March 31, 2021. Tangible book value per share
was $28.08 at March 31, 2022 compared with $30.93 at December 31,
2021 and $28.03 at March 31, 2021.
On February 15, 2022, the Company declared a cash dividend of
$0.62 per common share, which was paid on April 5, 2022. The
semi-annual dividend represented a $0.02, or 3%, increase from the
previous semi-annual dividend paid in October 2021.
Webcast and Conference Call
The Company will host a conference call and webcast on
Wednesday, April 27, 2022 at 4:45 p.m. ET. Management will review
the financial and operating results for the first quarter of 2022,
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 Wednesday, May 4, 2022. To listen
to the archived call, dial (412) 317-6671 and enter conference ID
number 13728595, 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 $2.0 billion in deposits at March 31, 2022.
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)
3/31/2022
12/31/2021
9/30/2021
6/30/2021
3/31/2021
ASSETS
Interest-bearing deposits at banks
$
147,277
$
234,929
$
179,231
$
126,810
$
105,658
Investment Securities
388,953
309,124
258,221
234,350
195,012
Loans
1,604,079
1,571,905
1,614,162
1,697,321
1,747,229
Allowance for loan losses
(18,618
)
(18,438
)
(18,051
)
(19,942
)
(20,701
)
Goodwill and intangible assets
14,229
14,329
14,546
14,682
14,817
All other assets
104,814
98,791
103,949
106,982
102,250
Total assets
$
2,240,734
$
2,210,640
$
2,152,058
$
2,160,203
$
2,144,265
LIABILITIES AND STOCKHOLDERS'
EQUITY
Demand deposits
528,962
492,864
502,689
486,737
486,385
NOW deposits
257,475
259,908
253,124
261,173
238,769
Savings deposits
1,051,136
1,019,925
942,147
940,352
924,781
Time deposits
149,243
164,340
178,083
195,533
222,002
Total deposits
1,986,816
1,937,037
1,876,043
1,883,795
1,871,937
Borrowings
64,322
67,965
71,564
76,895
78,278
Other liabilities
20,393
21,746
25,617
23,824
27,076
Total stockholders' equity
169,203
183,892
178,834
175,689
166,974
SHARES AND CAPITAL RATIOS
Common shares outstanding
5,519,831
5,482,756
5,463,141
5,443,491
5,428,993
Book value per share
$
30.65
$
33.54
$
32.73
$
32.28
$
30.76
Tangible book value per share
$
28.08
$
30.93
$
30.07
$
29.58
$
28.03
Tier 1 leverage ratio
8.57
%
8.57
%
8.34
%
8.23
%
8.19
%
Tier 1 risk-based capital ratio
12.55
%
12.76
%
12.34
%
11.96
%
11.90
%
Total risk-based capital ratio
13.78
%
14.02
%
13.57
%
13.21
%
13.15
%
ASSET QUALITY DATA
Total non-performing loans
$
20,659
$
18,415
$
25,463
$
24,317
$
29,079
Total net loan charge-offs
41
6
431
-
27
Non-performing loans/Total loans
1.29
%
1.17
%
1.58
%
1.43
%
1.66
%
Net loan charge-offs /Average loans
0.01
%
-
%
0.10
%
-
%
0.01
%
Allowance for loans losses/Total loans
1.16
%
1.17
%
1.12
%
1.17
%
1.18
%
EVANS BANCORP, INC AND
SUBSIDIARIES
SELECTED OPERATIONS DATA
(UNAUDITED)
(in thousands, except share and per
share data)
2022
2021
2021
2021
2021
First Quarter
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Interest income
$
17,517
$
20,732
$
19,302
$
19,576
$
17,970
Interest expense
1,016
1,057
1,139
1,226
1,373
Net interest income
16,501
19,675
18,163
18,350
16,597
Provision (credit) for loan losses
221
393
(1,459
)
(760
)
313
Net interest income after provision
(credit) for loan losses
16,280
19,282
19,622
19,110
16,284
Deposit service charges
692
688
664
607
572
Insurance service and fee revenue
2,299
2,107
3,191
2,657
2,502
Bank-owned life insurance
154
360
158
172
163
Loss on tax credit investment
-
(30
)
-
-
-
Refundable NY state historic tax
credit
-
21
-
-
-
Other income
1,286
1,560
1,144
982
1,329
Total non-interest income
4,431
4,706
5,157
4,418
4,566
Salaries and employee benefits
9,470
10,273
9,930
9,365
9,044
Occupancy
1,180
1,208
1,126
1,177
1,187
Advertising and public relations
179
325
434
405
263
Professional services
872
799
840
989
959
Technology and communications
1,174
1,353
1,327
1,432
1,264
Amortization of intangibles
100
132
135
135
135
FDIC insurance
270
269
285
279
300
Other expenses
1,215
1,926
1,316
1,394
1,213
Total non-interest expenses
14,460
16,285
15,393
15,176
14,365
Income before income taxes
6,251
7,703
9,386
8,352
6,485
Income tax provision
1,503
1,804
2,407
2,039
1,633
Net income
4,748
5,899
6,979
6,313
4,852
PER SHARE DATA
Net income per common share-diluted
$
0.86
$
1.06
$
1.27
$
1.15
$
0.89
Cash dividends per common share
$
0.62
$
-
$
0.60
$
-
$
0.60
Weighted average number of diluted
shares
5,547,548
5,540,924
5,516,781
5,489,420
5,463,674
PERFORMANCE RATIOS
Return on average total assets
0.86
%
1.07
%
1.28
%
1.17
%
0.93
%
Return on average stockholders' equity
10.46
%
12.98
%
15.58
%
14.72
%
11.48
%
Return on average tangible common
stockholders' equity*
11.35
%
14.11
%
16.96
%
16.11
%
12.59
%
Efficiency ratio
69.08
%
66.79
%
66.01
%
66.65
%
67.88
%
Efficiency ratio (Non-GAAP)**
68.60
%
66.23
%
65.43
%
66.06
%
67.24
%
* 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)
2022
2021
2021
2021
2021
First Quarter
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
AVERAGE BALANCES
Loans, net
$
1,566,716
$
1,573,608
$
1,647,395
$
1,718,507
$
1,706,325
Investment securities
357,930
283,216
248,690
216,134
180,473
Interest-bearing deposits at banks
178,729
229,658
174,296
97,168
76,651
Total interest-earning assets
2,103,375
2,086,482
2,070,381
2,031,809
1,963,449
Non interest-earning assets
110,316
110,315
109,601
119,392
115,200
Total Assets
$
2,213,691
$
2,196,797
$
2,179,982
$
2,151,201
$
2,078,649
NOW
252,965
254,059
262,105
246,565
230,627
Savings
1,024,447
983,403
949,956
928,375
866,991
Time deposits
156,534
170,318
186,126
210,287
246,120
Total interest-bearing deposits
1,433,946
1,407,780
1,398,187
1,385,227
1,343,738
Borrowings
65,154
69,847
74,326
77,050
78,284
Total interest-bearing liabilities
1,499,100
1,477,627
1,472,513
1,462,277
1,422,022
Demand deposits
512,118
515,204
503,006
493,734
464,579
Other non-interest bearing liabilities
20,897
22,223
25,250
23,682
23,031
Stockholders' equity
181,576
181,743
179,213
171,508
169,017
Total Liabilities and Equity
$
2,213,691
$
2,196,797
$
2,179,982
$
2,151,201
$
2,078,649
Average tangible common stockholders'
equity*
167,287
167,285
164,588
156,748
154,122
YIELD/RATE
Loans, net
4.07
%
4.86
%
4.36
%
4.32
%
4.06
%
Investment securities
1.95
%
1.91
%
1.82
%
1.94
%
2.00
%
Interest-bearing deposits at banks
0.16
%
0.15
%
0.14
%
0.08
%
0.08
%
Total interest-earning assets
3.38
%
3.94
%
3.70
%
3.86
%
3.71
%
NOW
0.09
%
0.09
%
0.10
%
0.11
%
0.13
%
Savings
0.14
%
0.14
%
0.15
%
0.17
%
0.20
%
Time deposits
0.44
%
0.44
%
0.49
%
0.52
%
0.64
%
Total interest-bearing deposits
0.16
%
0.17
%
0.18
%
0.21
%
0.27
%
Borrowings
2.79
%
2.64
%
2.62
%
2.55
%
2.52
%
Total interest-bearing liabilities
0.27
%
0.28
%
0.31
%
0.34
%
0.39
%
Interest rate spread
3.11
%
3.66
%
3.39
%
3.52
%
3.32
%
Contribution of interest-free funds
0.07
%
0.08
%
0.09
%
0.10
%
0.11
%
Net interest margin
3.18
%
3.74
%
3.48
%
3.62
%
3.43
%
* 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/20220427005996/en/
John B. Connerton Executive Vice President and Chief Financial
Officer (716) 926-2000 jconnerton@evansbank.com -OR- Deborah
K. Pawlowski Kei Advisors LLC (716) 843-3908
dpawlowski@keiadvisors.com
Media: Kathleen Rizzo Young Public & Community
Relations Manager 716-343-5562 krizzoyoung@evansbank.com
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