HAMBURG, N.Y., April 23, 2014 (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, 2014.
HIGHLIGHTS OF THE 2014 FIRST QUARTER
- First quarter net income increased 10.8% to $2.0 million, or $0.47 per diluted share, from $1.8 million, or $0.43 per diluted share, in the first quarter of 2013.
- Loans increased 12.5% over the prior-year period and 2.1% from the trailing fourth quarter to $660.7 million; Annualized loan growth rate was 8.5%.
- Total deposits were up 3.4%, or $23.6 million, over the first quarter of 2013, driven by 13.7% growth in demand deposits.
- First quarter net interest income of $7.3 million increased 6.9% over the prior-year period on strong loan and non-interest bearing demand deposit growth.
- The ratio of non-performing loans and leases to total loans and leases decreased from 1.37% to 0.79% year-over-year.
Net income was $2.0 million in the first quarter of 2014, up from $1.8 million in the first quarter of 2013, primarily due to a $0.5 million increase in net interest income driven by growth in loans and non-interest bearing demand deposits. As a result, return on average equity was 10.01% for the first quarter of 2014 compared with 9.55% in the first quarter of 2013.
"We delivered a strong start to the year with solid earnings growth, continued expansion of our loan portfolio and gains in core deposits, while improving asset quality performance," commented David J. Nasca, Evans Bancorp President and CEO. "Of note this quarter was the performance of our wealth management group. The Company is successfully executing against our strategy to develop and deliver a sustainable model for customer acquisition and market share expansion."
Net Interest Income
Net interest income was $7.3 million for the first quarter, an increase of 6.9% from the prior-year period, and down 0.6% from the trailing fourth quarter of 2013. Growth in loans and non-interest bearing demand deposits drove the increase over the prior-year period.
Net interest margin decreased 6 basis points to 3.79% from 3.85% in the trailing fourth quarter, primarily driven by a decrease in the yield on interest-earning assets. Net interest margin improved over the 2013 first quarter rate of 3.63%. The increase in net interest margin from the prior-year period was due to a 14 basis point decrease in pricing on Evans' interest bearing liabilities, combined with a 3 basis point increase in the yield on interest-earning assets.
The provision for loan and lease losses was $0.2 million in the 2014 first quarter, down from $0.5 million in the prior-year period. The decrease is due mostly to a lower level of criticized assets added in the current quarter in comparison to prior year first quarter. When compared with the trailing fourth quarter of 2013, the provision decreased by $0.1 million.
Non-Interest Income
Non-interest income was $3.4 million, or 31.7% of total revenue, in the quarter, up $0.1 million, or 2.6%, from the prior-year period. Insurance agency revenue of $2.1 million was up $0.1 million, or 6.6%, from the 2013 first quarter, due mostly to increases in property and casualty and wealth management revenue. Compared with the trailing fourth quarter of 2013, total non-interest income increased by 12.5%, mostly due to an increase of $0.6 million, or 35.0%, in insurance agency revenue as a result of seasonal profit sharing.
Non-Interest Expense
Total non-interest expense was $7.6 million, an increase of 7.7% from the prior-year period. Personnel expenses, the largest expense item for the Company, were up $0.4 million, or 9.5%, from the prior-year period, and reflect annual merit increases and personnel hires to support the Company's growth strategy.
Income tax expense for the quarter was $0.9 million, representing an effective tax rate of 31.1% compared with an effective tax rate of 30.4% in the first quarter of 2013.
Balance Sheet Highlights
Total assets grew 2.8% to $846.9 million at March 31, 2014 from $823.7 million on March 31, 2013, and were up 1.7% from $833.5 million at the end of the 2013 fourth quarter. Loans of $660.7 million grew 12.5% from $587.2 million at March 31, 2013, and were up 2.1% from $647.0 million at December 31, 2013. The increase was mostly due to growth in both commercial real estate and commercial and industrial loan portfolios for both periods.
Investment securities were $99.8 million at March 31, 2014, up 1.6% from the end of first quarter of 2013, though down 4.8% from the trailing 2013 fourth quarter.
Total deposits increased $23.6 million, or 3.4%, to $721.9 million at March 31, 2014 from $698.3 million at March 31, 2013, and increased $15.3 million, or 2.2%, from the 2013 fourth quarter-end. The year-over-year growth was mainly attributable to deposit increases in commercial demand deposits. The increase from the 2013 fourth quarter was the result of inflows of municipal savings deposits.
Asset Quality
There were net recoveries from prior-year charged off loans in the first quarter, resulting in a (0.05%) ratio of net charge offs to average total loans and leases. This was an improvement from net charge offs of 0.02% in the first quarter of 2013, though down slightly from (0.15%) in the fourth quarter of 2013.
The ratio of non-performing loans and leases to total loans and leases decreased to 0.79% at March 31, 2014 from 1.37% at March 31, 2013 and from 2.12% at December 31, 2013. During the first quarter of 2014, there was an $8.5 million decrease in non-performing loans and leases due mainly to a well collateralized $8.0 million commercial real estate loan which was successfully restructured in third quarter of 2013 with a new borrower and has since demonstrated a period of performance.
The ratio of the allowance for loan and lease losses to total loans and leases was 1.78% at March 31, 2014 compared with 1.78% at December 31, 2013 and 1.73% at March 31, 2013. The coverage ratio was 224.7% at March 31, 2014 compared with 83.8% at the end of the trailing fourth quarter and 126.4% at March 31, 2013.
Gary A. Kajtoch, Executive Vice President and CFO, commented, "Our strong growth combined with our continually improving credit quality reflects our consistent credit discipline, strong relationships with our customers and a continuous critical eye on our loan portfolio. We are generating capital and have regulatory capital ratios well in excess of federal requirements. Our favorable position allows us to both invest in our growth and return capital to our shareholders."
Capital Management
The Company consistently maintains regulatory capital ratios measurably above the federal "well capitalized" standard, including a Tier 1 leverage ratio of 10.20% at March 31, 2014. Book value per share was $19.41 at March 31, 2014 compared with $19.21 at December 31, 2013 and $18.26 at March 31, 2013. Tangible book value per share at March 31, 2014 was $17.44, up 7.3% from the end of the first quarter of 2013 and up 1.0% from the trailing fourth quarter of 2014.
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 $847 million in assets and $722 million in deposits at March 31, 2014. 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 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.
TABLES FOLLOW
| EVANS BANCORP, INC. AND SUBSIDIARIES | |||||
| SELECTED FINANCIAL DATA (UNAUDITED) | |||||
| (in thousands except shares and per share data) | |||||
| 3/31/2014 | 12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | |
| ASSETS | |||||
| Investment Securities | $99,812 | $104,880 | $99,175 | $99,329 | $98,220 |
| Loans | 660,695 | 646,996 | 625,555 | 607,442 | 587,157 |
| Leases | -- | -- | -- | 337 | 929 |
| Allowance for loan and lease losses | (11,734) | (11,503) | (10,890) | (10,259) | (10,154) |
| Goodwill and intangible assets | 8,168 | 8,209 | 8,249 | 8,305 | 8,367 |
| All other assets | 89,935 | 84,916 | 104,871 | 111,120 | 139,195 |
| Total assets | $846,876 | $833,498 | $826,960 | $816,274 | $823,714 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| Demand deposits | 139,975 | 139,973 | 140,423 | 132,820 | 123,084 |
| NOW deposits | 79,531 | 65,927 | 66,095 | 67,736 | 73,016 |
| Regular savings deposits | 393,735 | 390,575 | 383,766 | 379,782 | 391,739 |
| Time deposits | 108,702 | 110,137 | 112,341 | 112,076 | 110,461 |
| Total deposits | 721,943 | 706,612 | 702,625 | 692,414 | 698,300 |
| Borrowings | 31,704 | 33,680 | 34,509 | 34,872 | 37,113 |
| Other liabilities | 12,712 | 12,495 | 11,191 | 11,703 | 11,806 |
| Total stockholders' equity | $80,517 | $80,711 | $78,635 | $77,285 | $76,495 |
| SHARES AND CAPITAL RATIOS | |||||
| Common shares outstanding | 4,147,666 | 4,201,362 | 4,200,207 | 4,198,596 | 4,190,257 |
| Book value per share | $19.41 | $19.21 | $18.72 | $18.41 | $18.26 |
| Tangible book value per share | $17.44 | $17.26 | $16.76 | $16.43 | $16.26 |
| Tier 1 leverage ratio | 10.20% | 10.36% | 10.27% | 10.06% | 9.87% |
| Tier 1 risk-based capital ratio | 13.44% | 13.64% | 13.84% | 14.17% | 14.02% |
| Total risk-based capital ratio | 14.70% | 14.90% | 15.10% | 15.42% | 15.28% |
| ASSET QUALITY DATA | |||||
| Total non-performing loans and leases | $5,221 | $13,733 | $14,311 | $13,456 | $8,036 |
| Total net loan and lease charge-offs (recoveries) | (79) | (231) | 143 | (25) | 28 |
| Non-performing loans and leases/Total loans and leases | 0.79% | 2.12% | 2.29% | 2.21% | 1.37% |
| Net loan and lease charge-offs/Average loans and leases | -0.05% | -0.15% | 0.09% | -0.02% | 0.02% |
| Allowance for loans and leases to total loans and leases | 1.78% | 1.78% | 1.74% | 1.69% | 1.73% |
| EVANS BANCORP, INC AND SUBSIDIARIES | |||||
| SELECTED OPERATIONS DATA (UNAUDITED) | |||||
| (in thousands except share and per share data) | |||||
| 2014 | 2013 | 2013 | 2013 | 2013 | |
| First | Fourth | Third | Second | First | |
| Quarter | Quarter | Quarter | Quarter | Quarter | |
| Interest income | 8,219 | 8,305 | 8,149 | 7,993 | 7,956 |
| Interest expense | 921 | 961 | 975 | 991 | 1,130 |
| Net interest income | 7,298 | 7,344 | 7,174 | 7,002 | 6,826 |
| Provision for loan and lease losses | 153 | 236 | 774 | 80 | 450 |
| Net interest income after provision | 7,145 | 7,108 | 6,400 | 6,922 | 6,376 |
| Deposit service charges | 461 | 510 | 540 | 506 | 482 |
| Insurance service and fee revenue | 2,131 | 1,579 | 1,906 | 1,726 | 1,999 |
| Bank-owned life insurance | 145 | 158 | 108 | 129 | 113 |
| Other income | 658 | 771 | 64 | 853 | 716 |
| Total non-interest income | 3,395 | 3,018 | 2,618 | 3,214 | 3,310 |
| Salaries and employee benefits | 4,695 | 4,604 | 4,637 | 4,225 | 4,289 |
| Occupancy | 743 | 761 | 695 | 738 | 816 |
| Repairs and maintenance | 176 | 189 | 169 | 187 | 178 |
| Advertising and public relations | 222 | 268 | 158 | 236 | 124 |
| Professional services | 518 | 478 | 480 | 480 | 454 |
| Technology and communications | 300 | 353 | 299 | 340 | 291 |
| Amortization of intangibles | 41 | 41 | 55 | 62 | 62 |
| FDIC insurance | 162 | 126 | 147 | 165 | 138 |
| Other expenses | 761 | 879 | 708 | 824 | 724 |
| Total non-interest expenses | 7,618 | 7,699 | 7,348 | 7,257 | 7,076 |
| Income before income taxes | 2,922 | 2,427 | 1,670 | 2,879 | 2,610 |
| Income tax provision | 909 | 760 | (779) | 956 | 794 |
| Net income | 2,013 | 1,667 | 2,449 | 1,923 | 1,816 |
| PER SHARE DATA | |||||
| Net income per common share-diluted | $0.47 | $0.39 | $0.58 | $0.46 | $0.43 |
| Cash dividends per common share | $0.31 | $0.00 | $0.26 | $0.00 | $0.00 |
| Weighted average number of diluted shares | 4,284,016 | 4,265,655 | 4,232,961 | 4,219,428 | 4,210,595 |
| PERFORMANCE RATIOS | |||||
| Return on average total assets | 0.96% | 0.80% | 1.20% | 0.94% | 0.89% |
| Return on average stockholders' equity | 10.01% | 8.35% | 12.50% | 9.86% | 9.55% |
| Efficiency ratio | 70.86% | 73.90% | 68.59% | 70.43% | 69.20% |
| EVANS BANCORP, INC AND SUBSIDIARIES | |||||
| SELECTED AVERAGE BALANCES AND YIELDS/RATES (UNAUDITED) | |||||
| (in thousands) | |||||
| 2014 | 2013 | 2013 | 2013 | 2013 | |
| First | Fourth | Third | Second | First | |
| Quarter | Quarter | Quarter | Quarter | Quarter | |
| AVERAGE BALANCES | |||||
| (dollars in thousands) | |||||
| Loans and leases, net | $641,265 | $620,936 | $604,283 | $585,431 | $575,953 |
| Investment securities | 103,491 | 101,343 | 97,049 | 100,027 | 98,120 |
| Interest bearing deposits at banks | 26,238 | 41,414 | 55,102 | 74,617 | 78,426 |
| Total interest-earning assets | 770,994 | 763,693 | 756,434 | 760,075 | 752,499 |
| Non interest-earning assets | 65,919 | 65,143 | 62,461 | 60,814 | 61,314 |
| Total Assets | $836,913 | $828,836 | $818,895 | $820,889 | $813,813 |
| NOW | 71,190 | 65,764 | 66,926 | 69,698 | 67,836 |
| Regular savings | 357,471 | 355,426 | 356,939 | 356,616 | 359,434 |
| Muni-Vest savings | 31,419 | 31,508 | 22,367 | 28,916 | 21,348 |
| Time deposits | 109,549 | 111,042 | 111,774 | 111,615 | 110,209 |
| Total interest-bearing deposits | 569,629 | 563,740 | 558,006 | 566,845 | 558,827 |
| Other borrowings | 35,213 | 35,806 | 34,690 | 36,704 | 43,693 |
| Total interest-bearing liabilities | 604,842 | 599,546 | 592,696 | 603,549 | 602,520 |
| Demand deposits | 139,503 | 137,731 | 135,491 | 128,369 | 122,359 |
| Other non-interest bearing liabilities | 12,090 | 11,740 | 12,323 | 10,991 | 12,857 |
| Stockholders' equity | 80,478 | 79,819 | 78,385 | 77,980 | 76,077 |
| Total Liabilities and Equity | $836,913 | $828,836 | $818,895 | $820,889 | $813,813 |
| YIELD/RATE | |||||
| Loans and leases, net | 4.68% | 4.88% | 4.93% | 4.97% | 5.04% |
| Investment securities | 2.68% | 2.77% | 2.75% | 2.68% | 2.80% |
| Interest bearing deposits at banks | 0.23% | 0.29% | 0.28% | 0.24% | 0.09% |
| Total interest-earning assets | 4.26% | 4.35% | 4.31% | 4.21% | 4.23% |
| NOW | 0.42% | 0.48% | 0.48% | 0.49% | 0.67% |
| Regular savings | 0.28% | 0.29% | 0.30% | 0.29% | 0.35% |
| Muni-Vest savings | 0.22% | 0.22% | 0.21% | 0.22% | 0.28% |
| Time deposits | 1.52% | 1.58% | 1.59% | 1.62% | 1.63% |
| Total interest-bearing deposits | 0.53% | 0.56% | 0.58% | 0.57% | 0.64% |
| Other borrowings | 1.87% | 1.90% | 1.95% | 1.97% | 2.20% |
| Total interest-bearing liabilities | 0.61% | 0.64% | 0.66% | 0.66% | 0.75% |
| Interest rate spread | 3.65% | 3.71% | 3.65% | 3.55% | 3.48% |
| Contribution of interest-free funds | 0.14% | 0.14% | 0.14% | 0.13% | 0.15% |
| Net interest margin | 3.79% | 3.85% | 3.79% | 3.68% | 3.63% |