Evans Bancorp, Inc. 14-16 North Main Street Angola, New York 14006
Contact: Mark DeBacker, Treasurer Phone: (716) 926-2000 Fax: (716) 926-2005
EVANS BANCORP REPORTS 2005 ANNUAL NET INCOME OF $4.8 MILLION, UP 6.9 PERCENT OVER 2004 SOLID LOAN GROWTH OVER PRIOR YEAR
Angola, N.Y.-February 1, 2006-Evans Bancorp, Inc. (Nasdaq: EVBN) today reported net income of $1.1 million or $0.41 per share driven by strong loan growth for the quarter ended December 31, 2005. Evans Bancorp, Inc. is the holding company for Evans National Bank, a commercial bank with 10 Western New York branches, and approximately $468.5 million in assets. It is also the holding company for Evans National Financial Services, Inc., whose subsidiary, ENB Insurance Agency, Inc., has 12 office locations in Erie, Niagara, Cattaraugus and Chautauqua counties.
Fourth Quarter Performance Highlights:
•
Average earning assets grew by 7.0 percent, or $27.0 million, in comparison to the fourth quarter 2004
•
Net loans grew by $8.1 million, or an annualized 13.0 percent, in the fourth quarter 2005 as compared to the third quarter 2005
•
Net interest income grew by 12.8 percent, or $0.4 million, in comparison to the fourth quarter 2004
“We are pleased with the results of our 2005 fiscal year, which resulted in a 6.9 percent increase in our earnings,” said James Tilley, President and Chief Executive Officer of Evans Bancorp. “We continued to execute our strategic initiative of growing and rebalancing our balance sheet through redeploying assets into higher-yielding loans during the fourth quarter. We experienced a decline in net income for the fourth quarter ended December 31, 2005, as compared to the fourth quarter of 2004 primarily as a result of an exceptionally strong 2004 fourth quarter which included some investment portfolio gains as well as a much stronger insurance market. 2005 was a challenging environment for all banks as a result of the flat yield curve, yet we are encouraged by the prospects of 2006 as a result of our strategic positioning with the banking division’s earning-asset redeployment and the insurance division’s investment in growth.”
Net Income
Net income was $1.1 million or $0.41 per basic and diluted share for the quarter ended December 31, 2005 as compared to $1.2 million or $0.44 per basic and diluted share for the quarter ended December 31, 2004. The decrease is primarily attributable to a decrease of $0.1 million in insurance revenue in the fourth quarter of 2005 as compared to the fourth quarter of 2004 and $77 thousand in investment gains realized in the fourth quarter of 2004. The insurance revenues were impacted by a softening market, causing lower premium rates in 2005 as compared to 2004, especially in consumer product lines.
On a year-to-date basis, net income was $4.8 million or $1.77 per basic and diluted share for the 12 months ended December 31, 2005, as compared to $4.5 million or $1.65 per basic and diluted share for the 12 months ended December 31, 2004.
All share and per share data included in this press release have been adjusted for the five percent stock dividend paid in December 2005.
Financial Position
Total assets at December 31, 2005 were $468.5 million, an increase of $9.0 million or 2.0 percent in comparison to September 30, 2005.
Total deposits for the quarter decreased 5.1 percent to $336.8 million at December 31, 2005 from $354.9 million at September 30, 2005, due primarily to the seasonally anticipated outflow of municipal deposits. Muni-Vest deposits decreased 41.7 percent or $19.7 million during the quarter, while regular savings decreased 6.6% or $6.1 million. These decreases were partially offset by a strong increase in demand deposits of 7.8% or $5.1 million and an increase in time deposits of 2.1% or $2.8 million, from the quarter ended September 30, 2005.
Non-performing loans as a percentage of total loans outstanding were 0.72 percent at December 31, 2005 as compared to 0.84 percent at September 30, 2005. Net charge-offs totaled $329 thousand in the fourth quarter 2005, as compared to net charge-offs of $55 thousand in the third quarter 2005. The increase in charge-offs are primarily attributable to one large commercial loan and one personal loan for which the Bank is aggressively pursuing collection. The allowance for loan losses totaled $3.2 million, or 1.23 percent of gross loans outstanding, at December 31, 2005, as compared to $3.3 million or 1.32 percent of gross loans outstanding at September 30, 2005.
Loan growth of $8.1 million in the fourth quarter was funded primarily with maturities of securities of $5.6 million. At December 31, 2005, total net loans outstanding were $256.8 million, or 54.8 percent of total assets, as compared to $248.7 million or 54.1 percent of total assets at September 30, 2005. Commercial loan growth was bolstered by solid core lending to the Bank’s target market, as well as continued success in equipment leasing by the Bank’s wholly-owned subsidiary, Evans National Leasing (ENL), which was acquired in December 2004 and now accounts for 6.6% of total loans outstanding.
Operational Results
Net interest income for the three month period ended December 31, 2005 was $3.6 million, an increase of $0.4 million over the same period in 2004, and is primarily a result of growth in interest-earning assets and the Company’s entry into the small ticket leasing business through ENL.
The net interest margin for the three month period ended December 31, 2005 was 3.47%, as compared to 3.29% for the same period in 2004. This increase is primarily due to higher yields on loans resulting from prime rate increases and a higher earned yield on increasing balances of lease receivables, which offset the Bank’s increase in the cost of interest-bearing liabilities in the three month period ended December 31, 2005. Muni-Vest deposits, time deposits, borrowings, and interest on the Company’s junior subordinated debentures were the primary drivers of this increase in the cost of funds.
Non-interest income was $2.4 million for the three month period ended December 31, 2005, an increase of $0.1 million, or 5.6% over the same period in 2004.
Non-interest expense was $4.3 million for the three month period ended December 31, 2005, an increase of $0.4 million, or 11.3% over the same period in 2004. Salary and employee benefit expense for the three month period ended December 31, 2005 increased $0.2 million from the same period in 2004 due to Company growth and merit pay increases awarded in early 2005. Additionally, in the three month period ended December 31, 2005, other expenses increased $0.1 million primarily due to company growth and expenses related to ENL.
“We are pleased with the results of fiscal 2005, which represented another year of record earnings for the Company. Our current de-novo banking strategy certainly adds a cost burden that the remainder of the Company must absorb during this phase of our growth. We expect 2006 to remain a challenging year for us as a result of the flat yield curve and softening insurance market, as well. However, we believe that we have executed a number of strategic initiatives which will position us for positive earnings growth in 2006 with insurance division performance expected to be bolstered by previous insurance agency acquisitions and the further maturation of our newer branches. We are excited about our prospects in 2006,” Tilley said.
* * * * *
Attached are Unaudited Financial Highlights and Consolidated Balance Sheets, Consolidated Statements of Income, and Condensed Consolidated Average Balance Sheets and Annualized Rates for Evans Bancorp, Inc. for the three and 12 month periods ended December 31, 2005.
A conference call will be held with Company management at 11:00 a.m. (ET) on Thursday February 2, 2006 to discuss our results for the fourth quarter 2005 at 1-888-396-2384 (request Q4 Evans Bancorp Inc., Earnings Conference Call – passcode 27519828). An audio recording will be available beginning one hour after the call through February 9, 2006 at 12:00 p.m., and may be accessed at 1-888-286-8010, passcode 29298186. The call will also be simultaneously broadcast live over the Internet through a link located at the following location:http://www.evansbancorp.com and will be archived at the same location, accessible for one year following the call. There is no charge to access either event.
Evans Bancorp, Inc. is a financial holding company and is the parent company of Evans National Bank, a commercial bank with 10 branches located in Western New York, which had approximately $468.5 million in assets and approximately $336.8 million in deposits at December 31, 2005. Evans National Bank’s wholly-owned subsidiaries include Evans National Leasing, Inc., a general business equipment leasing company. ENB Insurance Agency, Inc., a retail property and casualty insurance agency with 12 offices in Erie, Niagara, Cattaraugus and Chautauqua counties of Western New York, is an indirect, wholly-owned subsidiary of Evans Bancorp Inc. ENB Insurance Agency’s wholly owned subsidiaries include ENB Associates Inc., which provides non-deposit investment products. Evans Bancorp, Inc. common stock is listed on the Nasdaq National Market under the symbol EVBN.
This press release includes “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, revenues 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 the Company 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, among others, the following: (1) competitive pressures among financial services companies; (2) general economic conditions; (3) changes in legislation or regulatory requirements; (4) difficulties in achieving operating efficiencies; and (5) difficulties in integrating acquired companies’ businesses. Additional information on factors that could affect the Company’s business and results is discussed in the Company’s periodic reports filed with the Securities and Exchange Commission.Forward-looking statements speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise forward-looking information, whether as a result of new, updated information, future events or otherwise.
1
EVANS BANCORP, INC. AND SUBSIDIARIES UNAUDITED FINANCIAL HIGHLIGHTS
Three Months Ended
December 31,
2005
2004
Change
(In thousands except share and per share amounts)
Performance
Net Income
$
1,126
$
1,188
(5.2
)%
Per Common Share:
Basic Earnings*
$
0.41
$
0.44
(6.8
)%
Diluted Earnings*
$
0.41
$
0.44
(6.8
)%
Common shares outstanding
Average-diluted*
2,725,294
2,727,066
(0.1
)%
Period end basic*
2,729,779
2,722,044
0.3
%
Return on (annualized)
Average total assets
0.98
%
1.10
%
Average stockholders’ equity
12.42
%
13.54
%
Net interest income
$
3,599
$
3,190
12.8
%
Yield on average earning assets
5.82
%
5.00
%
Cost of interest-bearing liabilities
2.77
%
1.98
%
Net interest rate spread
3.05
%
3.02
%
Contribution of interest-free funds
0.42
%
0.27
%
Net interest margin
3.47
%
3.29
%
Net charge-offs to average total
loans (annualized)
0.5
%
0.1
%
Loan quality
Non-accrual loans
$
1,775
$
1,655
Accruing loans past due 90 days or more
$
95
$
151
Total non-performing loans
$
1,870
$
1,806
Non-performing loans to total loans
0.72
%
0.82
%
Allowance for loan losses to total loans
1.23
%
1.36
%
*All December 31, 2004 and 2005 share and per share data have been adjusted to reflect the five percent stock dividend paid on December 30, 2004 and December 7, 2005, respectively.
EVANS BANCORP, INC. AND SUBSIDIARIESY CONSOLIDATED BALANCE SHEETS December 31December June 3031, 20054 and December 31, 20042003 (Unaudited)
December 31,
December 31,
2005
2004
(In thousands except share and
per share amounts)
ASSETS
Cash and due from banks
$
15,635
$
8,124
Interest bearing accounts in other banks
—
984
Securities:
Available-for-sale, at fair value
155,610
166,817
Held-to-maturity, at amortized cost
4,342
3,062
Loans, net
256,810
217,599
Properties and equipment, net
8,151
7,747
Goodwill
9,639
9,219
Intangible assets
2,728
3,170
Bank-owned life insurance
9,586
7,943
Other assets
6,045
4,377
TOTAL ASSETS
$
468,546
$
429,042
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposits:
Demand
$
71,183
$
54,013
NOW accounts
12,401
11,650
Regular savings
86,558
101,540
Muni-Vest savings
27,521
40,235
Time deposits
139,145
94,490
Total deposits
336,808
301,928
Other borrowed funds
70,468
68,034
Junior subordinated debentures
11,330
11,330
Securities sold under agreements to repurchase
6,435
7,306
Other liabilities
6,629
4,970
Total liabilities
431,670
393,568
STOCKHOLDERS’ EQUITY*
Common stock, $.50 par value; 10,000,000 shares authorized;
2,745,338 and 2,745,338 shares issued, respectively, and
2,729,779 and 2,722,044 shares outstanding, respectively
1,373
1,307
Capital surplus
26,155
23,361
Retained earnings
11,087
10,808
Accumulated other comprehensive (loss) income, net of tax
(1,387
)
563
Less: Treasury stock, at cost (15,559 and 23,294 shares, respectively)
(352
)
(565
)
Total stockholders' equity
36,876
35,474
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
468,546
$
429,042
*All December 31, 2004 and 2005 share and per share data have been adjusted to reflect the five percent stock dividend paid on December 30, 2004 and December 7, 2005, respectively.
EVANS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Three and Six NineTwelve Months Ended June 3December 301, 2005 and 2004 (Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2005
2004
2005
2004
(In thousands except share
(In thousands except share
INTEREST INCOME
and per share amounts)
and per share amounts)
Loans
$
4,450
$
3,154
$
16,171
$
11,815
Federal funds sold/Interest on deposits at other banks
4
35
116
109
Securities:
Taxable
1,107
1,146
4,663
3,654
Non-taxable
477
513
1,933
2,130
Total interest income
6,038
4,848
22,883
17,708
INTEREST EXPENSE
Deposits
1,739
1,140
6,241
4,047
Borrowings
512
386
1,666
932
Junior subordinated debentures
188
132
662
132
Total interest expense
2,439
1,658
8,569
5,111
NET INTEREST INCOME
3,599
3,190
14,314
12,597
PROVISION FOR LOAN LOSSES
215
91
769
485
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES
3,384
3,099
13,545
12, 112
NON-INTEREST INCOME:
Bank service charges
531
496
2,077
1,890
Insurance service and fees
1,293
1,410
6,377
5,053
Net gain on sales of securities
—
77
107
245
Premium on loans sold
2
6
18
17
Bank-owned life insurance
211
53
513
356
Life insurance proceeds
—
—
95
—
Other
362
229
1,252
1,011
Total non-interest income
2,399
2,271
10,439
8,572
NON-INTEREST EXPENSE:
Salaries and employee benefits
2,395
2,152
9,338
7,927
Occupancy
493
470
1,978
1,805
Supplies
67
68
337
290
Repairs and maintenance
123
105
553
439
Advertising and public relations
86
74
464
337
Professional services
201
201
986
734
Amortization of intangibles
129
127
515
385
Other Insurance
86
92
368
349
Other
743
595
2,865
2,513
Total non-interest expense
4,323
3,884
17,404
14,779
INCOME BEFORE INCOME TAXES
1,460
1,486
6,580
5,905
INCOME TAXES
334
298
1,761
1,396
NET INCOME
$
1,126
$
1,188
$
4,819
$
4,509
Net income per common share-basic*
$
0.41
$
0.44
$
1.77
$
1.65
Net income per common share-diluted*
$
0.41
$
0.44
$
1.77
$
1.65
Weighted average number of common shares*
2,724,687
2,722,335
2,722,644
2,725,469
Weighted average number of diluted shares*
2,725,294
2,727,066
2,723,960
2,727,363
*All December 31, 2004 and 2005 share and per share data have been adjusted to reflect the five percent stock dividend paid on December 30, 2004 and December 7, 2005, respectively.
Evans Bancorp, Inc. Condensed Consolidated Average Balance Sheet and Annualized Rates (Unaudited)
Three Months Ended
Three Months Ended
December 31, 2005
December 31, 2004
Average
Interest
Average
Interest
Outstanding
Earned/
Yield/
Outstanding
Earned/
Yield/
Balance
Paid
Rate
Balance
Paid
Rate
(in thousands)
(in thousands)
ASSETS
Interest-earning assets:
Loans, net
$
251,959
$
4,450
7.06
%
$
207,330
$
3,154
6.08
%
Taxable investments
116,868
1,107
3.79
%
127,711
1,146
3.59
%
Tax-exempt investments
45,458
477
4.20
%
47,264
513
4.34
%
Time deposits-other bank
—
—
0.00
%
984
4
1.63
%
Federal funds sold
383
4
4.08
%
4,424
31
2.80
%
Total interest-earning assets
414,668
$
6,038
5.82
%
387,713
$
4,848
5.00
%
Non-interest earning assets
Cash and due from banks
11,257
13,671
Premises and equipment, net
8,217
7,638
Other assets
27,407
23,780
Total Assets
$
461,549
$
432,802
LIABILITIES & STOCKHOLDERS’
EQUITY
Interest-bearing liabilities
Now accounts
$
11,733
$
5
0.18
%
$
10,625
$
5
0.20
%
Savings deposits
90,746
191
0.84
%
101,916
244
0.96
%
Muni-Vest savings
40,428
351
3.48
%
52,269
253
1.93
%
Time deposits
136,997
1,192
3.48
%
103,466
638
2.47
%
Fed funds purchased
20,217
225
4.44
%
1,376
6
1.74
%
Securities sold u/a to
repurchase
7,158
15
0.82
%
7,588
15
0.79
%
FHLB advances
33,241
269
3.24
%
46,873
361
3.08
%
Junior subordinated
debentures
11,330
188
6.64
%
11,000
132
4.84
%
Notes payable
398
3
2.69
%
613
4
2.61
%
Total interest-bearing liabilities
352,248
$
2,439
2.77
%
335,726
$
1,658
1.98
%
Non-interest bearing liabilities
Demand deposits
66,154
56,098
Other
6,875
5,876
Total liabilities
$
425,277
$
397,700
Stockholders’ equity
36,272
35,102
Total Liabilities and Stockholders’
Equity
$
461,549
$
432,802
Net interest earnings
$
3,599
$
3,190
Net yield on interest earning assets
3.47
%
3.29
%
Net Interest rate spread
3.05
%
3.02
%
Evans Bancorp, Inc. Condensed Consolidated Average Balance Sheet and Annualized Rates (Unaudited)
Twelve Months Ended
Twelve Months Ended
December 31, 2005
December 31, 2004
Average
Interest
Average
Interest
Outstanding
Earned/
Yield/
Outstanding
Earned/
Yield/
Balance
Paid
Rate
Balance
Paid
Rate
(in thousands)
(in thousands)
ASSETS
Interest-earning assets:
Loans, net
$
236,754
$
16,171
6.83
%
$
196,711
$
11,815
6.01
%
Taxable investments
124,774
4,663
3.74
%
103,173
3,654
3.54
%
Tax-exempt investments
45,751
1,933
4.23
%
49,514
2,130
4.30
%
Time deposits-other bank
215
3
1.40
%
832
14
1.68
%
Federal funds sold
4,462
113
2.53
%
7,051
95
1.35
%
Total interest-earning assets
411,956
$
22,883
5.55
%
357,281
$
17,708
4.96
%
Non-interest earning assets
Cash and due from banks
11,183
11,163
Premises and equipment, net
8,215
6,905
Other assets
26,160
18,140
Total Assets
$
457,514
$
393,489
LIABILITIES & STOCKHOLDERS’
EQUITY
Interest-bearing liabilities
Now accounts
$
11,976
$
22
0.18
%
$
11,272
$
22
0.20
%
Savings deposits
94,841
804
0.85
%
86,018
550
0.64
%
Muni-Vest Savings
51,300
1,454
2.83
%
62,060
949
1.53
%
Time deposits
126,945
3,961
3.12
%
102,164
2,526
2.47
%
Fed funds purchased
8,287
323
3.89
%
2,243
29
1.29
%
Securities sold u/a to ___repurchase
6,467
50
0.78
%
7,160
60
0.84
%
FHLB advances
41,173
1,280
3.11
%
25,489
825
3.24
%
Junior subordinated ___debentures
11,330
662
5.85
%
2,765
132
4.77
%
Notes payable
479
13
2.71
%
697
18
2.58
%
Total interest-bearing liabilities
352,798
$
8,569
2.43
%
299,868
$
5,111
1.70
%
Non-interest bearing liabilities
Demand deposits
62,186
54,318
Other
6,419
4,953
Total liabilities
$
421,403
$
359,139
Stockholders’ equity
36,111
34,350
Total Liabilities and Stockholders’
Equity
$
457,514
$
393,489
Net interest earnings
$
14,314
$
12,597
Net yield on interest earning assets
3.47
%
3.53
%
Net Interest rate spread
3.12
%
3.26
%
2
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