Evans Bancorp, Inc.14-16 North Main Street, Angola, NY 14006
IMMEDIATE RELEASE
Evans Bancorp Reports Record Net Income for First Quarter 2006•Earnings per share increased of 13.0% over first quarter 2005
•
Net income increased 11.4% to $1.406 million over first quarter 2005
•
Net loans increased 15.9% first quarter 2006 over first quarter 2005
•
Net interest income grew 8.1%, or $0.3 million, over the first quarter 2005
ANGOLA, NY, April 26, 2006 – Evans Bancorp, Inc. (NASDAQ: EVBN), today reported net income grew 11.4% to a record quarter of $1.406 million and earnings per diluted share increased 13.0% to $0.52 for the first quarter which ended March 31, 2006. This compares with net income of $1.262 million and earnings per diluted share of $0.46 for the first quarter of 2005. The higher earnings were primarily a result of insurance agency activities and, secondarily, higher yields on a larger loan base, which more than offset a 76 basis point increase in the cost of funds.
James Tilley, President and CEO commented, “Our first quarter results reflect our steadfast approach to gaining market share in the Western New York region that we serve. We believe there is significant opportunity for growth in this market that can be gained through quality customer service carefully balanced with consistent, conservative lending practices. Our diversification strategy has contributed to our solid track record of growth. Our insurance business, which has successfully integrated ten acquisitions in the last six years, has gained market share by focusing on serving the small- to medium-sized businesses in our market. In the last year, our national leasing business has more than doubled its revenue since our acquisition of the business at the end of 2004. Nonetheless, we recognize that there is still untapped earnings power within our organization as well. In addition to growing revenue, we are focused on managing our cost structure and improving our efficiencies.”
Revenue and Expenses Total interest income for the first quarter was $6.2 million, up $1.0 million, or 19.3%, from the same period last year. Interest income from loans increased 41.7% to $4.6 million on net loans of $258.1 million, up from $222.7 million a year ago. Approximately $0.4 million of the increase in loan interest income was related to the national leasing subsidiary’s growth in revenue. Higher interest income was partially offset by a 39.9% increase in interest expense to $2.6 million compared with $1.8 million in the first quarter last year. Higher expenses reflect elevated interest paid on deposits. Rising interest rates increase the cost of funds, but also provide interest earnings potential on adjustable rate loans and new loans processed at the higher rates.
The Company’s net interest margin for the quarter was 3.49%, relatively flat compared with last year’s first quarter net interest margin of 3.42%. Net interest income after the provision for loan losses was $3.4 million compared with $3.2 million in the same period last year, a 4.4% increase. A slightly higher provision for loan loss reflects the larger loan base.
Total non-interest income, approximately one-third of total revenue, was $3.2 million, an increase of 4.2% over the first quarter of 2005. The increase was primarily from higher income from insurance services and fees. Non-interest expense remained flat at $4.5 million. Decreases in advertising and public relations expense and professional services reflect the timing of promotional campaigns and payments made to a revenue enhancement consulting group in the first quarter 2005 for fee income initiatives. Income tax expense for the quarter was 30.5% compared with a rate of 28.1% from the same period last year, primarily due to the higher composition of non-tax advantaged insurance agency income in the first quarter of 2006.
Balance Sheet Trends and Asset Quality At March 31, 2006, total assets were $460.3 million compared with $457.5 million at March 31, 2005 and $468.5 million at December 31, 2005. Net loans increased 15.9% to $258.1 million from $222.7 million at March 31, 2005, and increased slightly from $256.8 at December 31, 2005. The higher loan balances can be attributed to a more focused approach in lending on commercial and residential mortgages, commercial loans, home equity loans and equipment financing leases. Deposits increased 3.1% and 9.3% to $368.2 million when compared with the first quarter last year and December 31, 2005, respectively. Higher time deposits can be attributed to continued favorable short-term interest rates.
The allowance for loan losses to total loans was 1.29% compared with 1.23% at December 31, 2005, while nonperforming loans to total loans decreased to 0.38%, a 61 basis point improvement over March 31, 2005.
Shareholders’ equity was $36.5 million as of March 31, 2006, up from $34.4 million at the end of the first quarter last year. Annualized return on average total assets was 1.21%, up from 1.14% at the same time last year reflecting stronger earnings. The annualized return on average shareholders’ equity improved 87 basis points to 15.04% compared with 14.17% at March 31, 2005.
Outlook Mr. Tilley adds, “We intend to outpace the competition by introducing innovative new products and services to meet our customers’ needs while capitalizing on our strong commercial lending relationships. By managing our balance sheet to optimize earnings potential and provide flexibility, we are positioning ourselves to pursue additional acquisition opportunities that complement the banking, insurance and financial services we already offer.”
About Evans Bancorp, Inc. Evans Bancorp, Inc., a financial holding company, is the parent company of Evans National Bank, a commercial bank with 10 branches located in Western New York with approximately $460 million in assets and $368 million in deposits. Evans National Leasing, Inc., a wholly-owned subsidiary of Evans National Bank is a general business equipment leasing company. ENB Insurance Agency, Inc. is an indirect, wholly-owned subsidiary of Evans Bancorp and provides retail and commercial property and casualty insurance through 12 agencies in the Western New York region. ENB Associates, a wholly-owned subsidiary of ENB Insurance Agency, provides non-deposit investment products such as annuities and mutual funds
More information on Evans Bancorp, Inc and Evans National Bank can be found at its websites:www.evansbancorp.com andwww.evansnationalbank.com.
Safe Harbor Statement This press 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, 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 competitive pressures among financial services companies, general economic conditions, changes in legislation or regulatory requirements, effectiveness at achieving stated goals and strategies, difficulties in achieving operating efficiencies and difficulties in integrating acquired companies’ businesses. 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. 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.
EVANS BANCORP, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (Unaudited) (In thousands except share and per share data)
Three Months Ended
March 31,
2006
2005
Performance ratios, annualized
Return on average total assets
1.21
%
1.14
%
Return on average stockholders’ equity
15.04
%
14.17
%
Common dividend payout ratio (TTM)
37.0
%
36.9
%
Efficiency ratio
64.15
%
68.20
%
Yield on average earning assets
5.95
%
5.30
%
Cost of interest-bearing liabilities
2.89
%
2.13
%
Net interest rate spread
3.06
%
3.17
%
Contribution of interest-free funds
0.43
%
0.25
%
Net interest margin
3.49
%
3.42
%
Asset quality data
Past due over 90 days and accruing
$
111
$
605
Nonaccrual loans
$
893
$
1,628
Total non-performing loans
$
1,004
$
2,233
Other real estate owned (ORE)
$
40
$
0
Total non-performing assets
$
1,044
$
2,233
Net loan charge-offs (recoveries)
$
129
$
(29
)
Net charge-offs to average total loans
0.2
%
(0.0
)%
Asset quality ratios
Non-performing loans to total loans
0.38
%
0.99
%
Non-performing assets to total assets
0.23
%
0.49
%
Allowance for loan losses to total loans
1.29
%
1.41
%
Allowance for loan losses to non-performing loans
335.1
%
142.4
%
Capital ratios
Average common equity to average total assets
8.03
%
8.04
%
Leverage ratio
8.10
%
7.80
%
Tier 1 risk-based capital ratio
12.86
%
13.00
%
Risk-based capital ratio
14.11
%
14.19
%
Book value per share*
$
13.41
$
12.65
Common shares outstanding
Average-diluted*
2,724,583
2,723,634
Period end basic*
2,719,636
2,719,398
*All March 31, 2005 share and per share data have been adjusted to reflect the five percent stock dividend paid on
December 7, 2005.
EVANS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands except share and per share data)
March 31,
December 31,
2006
2005
ASSETS
Cash and due from banks
$
11,559
$
15,635
Securities:
Available-for-sale, at fair value (cost $152,366 at March
31, 2006; $157,700 at December 31, 2005)
149,112
155,610
Held-to-maturity, at cost
4,388
4,342
Loans and leases
266,442
264,060
Unearned income
(4,937
)
(4,039
)
Allowance for loan loss
(3,364
)
(3,211
)
Loan and leases, net
258,141
256,810
Properties and equipment, net
8,170
8,151
Goodwill
9,639
9,639
Intangible assets
2,654
2,728
Bank-owned life insurance
9,692
9,586
Other assets
6,959
6,045
TOTAL ASSETS
$
460,314
$
468,546
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposits:
Demand
$
63,150
$
71,183
NOW
11,532
12,401
Regular savings
85,589
86,558
Muni-Vest savings
38,285
27,521
Time
169,683
139,145
Total deposits
368,239
336,808
Federal funds purchased and agreements to repurchase
securities
5,365
8,985
Other short-term borrowings
—
34,585
Other liabilities
7,618
6,629
Junior subordinated debentures
11,330
11,330
Long-term liabilities
31,300
33,333
Total Liabilities
423,852
431,670
STOCKHOLDERS’ EQUITY
Common stock, $.50 par value; 10,000,000 shares authorized;
2,745,338 and 2,745,338 shares issued, respectively, and
2,719,636 and 2,729,779 shares outstanding, respectively
1,373
1,373
Capital surplus
26,185
26,155
Retained earnings
11,565
11,087
Accumulated other comprehensive loss, net of tax
(2,098
)
(1,387
)
Less: Treasury stock, at cost (25,702 and 15,559 shares,
respectively)
(563
)
(352
)
Total stockholders' equity
36,462
36,876
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
460,314
$
468,546
EVANS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands except share and per share data)
Three Months Ended
March 31,
2006
2005
INTEREST INCOME
Loans
$
4,615
$
3,258
Federal funds sold & interest on deposits in other banks
11
36
Securities:
Taxable
1,104
1,145
Non-taxable
474
490
Total interest income
6,204
5,199
INTEREST EXPENSE
Interest on deposits
1,895
1,250
Interest on borrowings
483
444
Junior subordinated debentures
192
143
Total interest expense
2,570
1,837
NET INTEREST INCOME
3,634
3,362
PROVISION FOR LOAN LOSSES
282
151
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES
3,352
3,211
NON-INTEREST INCOME:
Service charges
498
488
Insurance service and fees
2,177
2,027
Net gain on sales of securities
—
93
Premium on loans sold
3
9
Bank owned life insurance
105
103
Other
373
308
Total non-interest income
3,156
3,028
NON-INTEREST EXPENSE:
Salaries and employee benefits
2,501
2,367
Occupancy
532
508
Supplies
85
105
Repairs and maintenance
137
148
Advertising and public relations
71
161
Professional services
144
289
Amortization of intangibles
130
127
Other insurance
87
94
Other
799
686
Total non-interest expense
4,486
4,485
Income before income taxes
2,022
1,754
INCOME TAXES
616
492
NET INCOME
$
1,406
$
1,262
Net income per common share-basic*
$
0.52
$
0.46
Net income per common share-diluted*
$
0.52
$
0.46
Cash dividends per common share*
$
0.34
$
0.32
Weighted average number of common shares*
2,722,950
2,720,580
Weighted average number of diluted shares*
2,724,583
2,723,634
*All March 31, 2005 share and per share data have been adjusted to reflect the five percent stock dividend paid on December 7, 2005.
2
EVANS BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED RATES (Unaudited)\ (In thousands except share and per share data)
Three Months Ended
Three Months Ended
March 31, 2006
March 31, 2005
Average
Interest
Average
Interest
Outstanding
Earned/
Yield/
Outstanding
Earned/
Yield/
Balance
Paid
Rate
Balance
Paid
Rate
ASSETS
Interest-earning assets:
Loans, net
$
257,874
$
4,615
7.16
%
$
217,162
$
3,528
6.50
%
Taxable securities
112,352
1,104
3.93
%
122,731
1,145
3.73
%
Tax-exempt securities
45,479
474
4.17
%
45,252
490
4.33
%
Time deposits at other banks
—
—
—
872
3
1.54
%
Federal funds sold
1,162
11
3.79
%
6,726
33
1.92
%
Total interest-earning assets
416,867
$
6,204
5.95
%
392,743
$
5,199
5.30
%
Non-interest earning assets:
Cash and due from banks
12,642
17,289
Premises and equipment, net
8,156
8,030
Other assets
28,146
24,958
Total Assets
$
465,811
$
443,020
LIABILITIES & STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Now accounts
$
11,562
$
5
0.17
%
$
11,556
$
6
0.19
%
Savings deposits
89,628
188
0.84
%
100,287
219
0.87
%
Muni-Vest savings
34,125
330
3.87
%
50,201
286
2.28
%
Time deposits
149,397
1,372
3.67
%
106,170
739
2.78
%
Fed funds purchased
19,384
211
4.35
%
6,089
41
2.67
%
Securities sold u/a to
repurchase
8,068
17
0.84
%
7,335
14
0.78
%
FHLB advances
31,756
253
3.19
%
51,817
385
2.98
%
Junior subordinated debentures
11,330
192
6.78
%
11,330
143
5.04
%
Notes payable
355
2
2.25
%
560
4
2.96
%
Total interest-bearing liabilities
355,605
$
2,570
2.89
%
345,345
$
1,837
2.13
%
Non-interest bearing liabilities:
Demand deposits
65,806
56,589
Other
7,006
5,452
Total liabilities
$
428,417
$
407,386
Stockholders’ equity
37,394
35,634
Total Liabilities and Stockholders’ Equity
$
465,811
$
443,020
Net interest earnings
$
3,634
$
3,362
Net yield on interest-earning assets
3.49
%
3.42
%
Interest rate spread
3.06
%
3.17
%
3
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