Evans Bancorp, Inc.14-16 N Main St. Angola, NY 14006
Evans Bancorp Reports 3.2% Increase in Fourth Quarter Net Income over Fourth Quarter 2005
•
Diluted earnings per share increased 4.9% to $0.43 over fourth quarter 2005
•
Net Interest Income increased 6.6% over fourth quarter 2005
•
Net loans and leases increased 11.1% from December 2005
•
Total deposits grew 5.6% from December 2005
ANGOLA, NY, February 1, 2007 – Evans Bancorp, Inc. (NASDAQ: EVBN), a financial services company serving Western New York, today reported a 3.2% increase in net income to $1.162 million for the fourth quarter which ended December 31, 2006. On a per share basis, earnings grew 4.9% to $0.43 per diluted share. The results for the quarter are compared with fourth quarter 2005 results of $1.126 million in net income or $0.41 per diluted share. On a year-to-date basis, net income grew 2.1% to $4.921 million in fiscal 2006 from $4.819 million in fiscal 2005. On a per diluted share basis, earnings grew 1.7% to $1.80 in fiscal 2006 from $1.77 in fiscal 2005.
James Tilley, CEO of Evans Bancorp, Inc., commented, “During the fourth quarter, we successfully met the challenge of the difficult interest rate environment presented by the flat yield curve present for the majority of 2006. We have grown our core transactional accounts, continued to expand our commercial lease business and focused on containing our costs.”
Revenue and Expenses Total interest income for the fourth quarter of 2006 was $7.0 million, up $0.9 million, or 15.5%, from the same period last year. Interest income from loans and leases increased $1.1 million, or 23.7%, to $5.5 million on a larger loan and lease base. Approximately $0.5 million of the increase in loan and lease interest income was related to the Company’s national leasing subsidiary’s growth in revenue. Higher interest income was offset by a $0.7 million, or 28.7%, increase in interest expense to $3.1 million from $2.4 million in the fourth quarter last year. Higher interest expense reflects elevated interest rates paid on deposits. Net interest income of $3.8 million was up $0.2 million, or 6.6%, from the fourth quarter 2005 mainly due to the growth in higher yielding loans and leases outpacing the increased expense paid on interest-bearing deposits.
The Company’s net interest margin for the quarter was 3.66%, up 18 basis points from last year’s fourth quarter net interest margin of 3.48%. The largest contributing factor to the improvement was the growth of interest free funds, as the bank continues to have success in penetrating its market area with core transactional accounts. Net interest income after the provision for loan losses was $3.5 million in the fourth quarter 2006, up $0.1 million from $3.4 million in the same period of 2005. A higher provision for loan and lease losses reflects the growth in the allowance for loan and lease losses primarily due to a larger loan and lease base over last year.
Total non-interest income for the fourth quarter of 2006 was $2.5 million, or approximately 26.3% of total revenue, an increase of 4.2%, or $0.1 million, over the fourth quarter of 2005. Higher other income was primarily from loan and lease-volume driven revenue which includes significant increases in lease fee income. Insurance service and fees, although impacted by the soft insurance market, increased slightly in the quarter.
Non-interest expense for the fourth quarter of 2006 increased slightly to $4.4 million from $4.3 million in the fourth quarter of 2005. Slight increases in occupancy, supplies, repair and maintenance, and advertising are related to the opening of the Tonawanda, New York Bank branch in December 2006. A $0.1 million decrease in salaries during the quarter was mainly attributable to a decline in profit sharing expenses from the same period in 2005.
Balance Sheet Trends and Asset Quality At December 31, 2006, total assets were $473.9 million compared with $468.5 million at December 31, 2005. Net loans increased $28.6 million or 11.1% to $285.4 million from $256.8 million at December 31, 2005. The higher loan balances were attributed to strong residential mortgage growth, and continued success with expanding the Company’s small-ticket equipment leasing business.
Deposits increased $18.9 million, or 5.6%, to $355.7 million, compared with the fourth quarter last year. The growth in deposits during 2006 was mainly due to successful bidding on large municipal accounts which were used to fund loan growth. The Company redesigned its retail deposit product suite in the first half of 2006 to focus on growing its core deposit base.
The allowance for loan and lease losses to total loans and leases at December 31, 2006 was 1.29% compared with 1.23% at December 31, 2005. Additionally, nonperforming loans and leases to total loans and leases decreased to 0.23%, a 49 basis point improvement over December 31, 2005.
Stockholders’ equity was $39.5 million as of December 31, 2006, up from $36.9 million at December 31, 2005.
Outlook Mr. Tilley concluded, “We had another record year of earnings for the Company in a tough banking and insurance environment. Our strategy is to create a dynamic, growth-oriented community-based financial services organization that can capitalize on the small business market place that is better served by relationship-based, flexible community banking. As our newer branches continue to mature in 2007, we believe our continued focus on providing excellent customer service and cross-selling among our broad business lines will continue to serve us well in this difficult interest rate environment.”
About Evans Bancorp, Inc. Evans Bancorp, Inc., a financial holding company, is the parent company of Evans National Bank, a commercial bank with approximately $474 million in assets and $356 million in deposits at December 31, 2006. The Bank has 11 branches located in Western New York. Evans National Leasing, Inc., an indirect wholly-owned subsidiary of Evans National Bank is a general business equipment leasing company with customers throughout the U.S. 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.evansnationalonline.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 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, 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. 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 FINANCIAL HIGHLIGHTS (In thousands except share and per share data)
Three Months Ended
December 31,
2006
2005
Performance ratios, annualized
Return on average total assets
0.99
%
0.98
%
Return on average stockholders’ equity
11.81
%
12.42
%
Common dividend payout ratio (TTM)
36.61
%
37.70
%
Efficiency ratio
67.62
%
69.92
%
Yield on average earning assets
6.65
%
5.83
%
Cost of interest-bearing liabilities
3.57
%
2.77
%
Net interest rate spread
3.08
%
3.06
%
Contribution of interest-free funds
0.58
%
0.42
%
Net interest margin
3.66
%
3.48
%
Asset quality data
Past due over 90 days and accruing loans and leases
$
74
$
95
Non-accrual loans and leases
$
588
$
1,775
Total non-performing loans and leases
$
662
$
1,870
Other real estate owned (ORE)
$
40
$
40
Total non-performing assets
$
702
$
1,910
Net loan and lease charge-offs (recoveries)
$
255
$
329
Net charge-offs to average total loans and leases
0.36
%
0.52
%
Asset quality ratios
Non-performing loans and leases to total loans and leases
0.23
%
0.72
%
Non-performing assets to total assets
0.15
%
0.41
%
Allowance for loan and lease losses to total loans and leases
1.29
%
1.23
%
Allowance for loan and lease losses to non- performing loans and leases
564.80
%
171.71
%
Capital ratios
Average common equity to average total assets
8.39
%
7.87
%
Leverage ratio
8.86
%
8.29
%
Tier 1 risk-based capital ratio
12.77
%
12.59
%
Risk-based capital ratio
13.95
%
13.67
%
Book value per share
$
14.46
$
13.51
Common shares outstanding
Average-diluted
2,730,983
2,725,294
Period-end basic
2,733,056
2,729,779
EVANS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands except share and per share data)
December 31,
December 31,
2006
2005
ASSETS
Cash and cash equivalents:
Cash and due from banks
$
12,592
$
15,635
Securities:
Available for sale, at fair value
133,519
155,610
Held to maturity, at amortized cost
4,211
4,342
Loans and leases, net of allowance for loan and lease losses of $3,739
in 2006 and $3,211 in 2005
285,367
256,810
Properties and equipment, net
8,743
8,151
Goodwill
10,003
9,639
Intangible assets
2,298
2,728
Bank-owned life insurance
10,140
9,586
Other assets
7,021
6,045
TOTAL ASSETS
$
473,894
$
468,546
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposits:
Demand
$
72,125
$
71,183
NOW
11,253
12,401
Regular savings
85,084
86,558
Muni-vest
31,240
27,521
Time
156,047
139,145
Total deposits
355,749
336,808
Federal funds purchased and agreements to repurchase securities
8,954
8,985
Other short-term borrowings
24,753
34,585
Other liabilities
9,089
6,629
Junior subordinated debentures
11,330
11,330
Long-term borrowings
24,476
33,333
Total liabilities
434,351
431,670
CONTINGENT LIABILITIES AND COMMMITMENTS
STOCKHOLDERS’ EQUITY:
Common stock, $.50 par value; 10,000,000 shares authorized;
2,745,338 and 2,745,338 shares issued, respectively, and
2,733,056 and 2,729,779 shares outstanding, respectively
1,373
1,373
Capital surplus
26,160
26,155
Retained earnings
14,196
11,087
Accumulated other comprehensive loss, net of tax
(1,917
)
(1,387
)
Less: Treasury stock, at cost (12,282 and 15,559 shares, respectively)
(269
)
(352
)
Total stockholders’ equity
39,543
36,876
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
473,894
$
468,546
EVANS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands except share and per share data)
Three Months Ended
��
December 31,
2006
2005
INTEREST INCOME
Loans and leases
$
5,515
$
4,458
Federal funds sold/Interest bearing deposits at other banks
14
4
Securities:
Taxable
1,000
1,107
Non-taxable
454
477
Total interest income
6,983
6,046
INTEREST EXPENSE
Deposits
2,550
1,739
Other borrowings
359
512
Junior subordinated debentures
229
188
Total interest expense
3,138
2,439
NET INTEREST INCOME
3,845
3,607
PROVISION FOR LOAN AND LEASE LOSSES
313
215
NET INTEREST INCOME AFTER
PROVISION FOR LOAN AND LEASE LOSSES
3,532
3,392
NON-INTEREST INCOME:
Bank charges
482
531
Insurance service and fees
1,319
1,293
Net gain on sales of securities
26
-
Premium on loans sold
4
2
Bank-owned life insurance
189
211
Other
472
354
Total non-interest income
2,492
2,391
NON-INTEREST EXPENSE:
Salaries and employee benefits
2,333
2,395
Occupancy
526
493
Supplies
86
67
Repairs and maintenance
134
123
Advertising and public relations
99
86
Professional services
236
201
Amortization of intangibles
157
129
Other Insurance
91
86
Other
780
743
Total non-interest expense
4,442
4,323
INCOME BEFORE INCOME TAXES
1,582
1,460
INCOME TAXES
420
334
NET INCOME
$
1,162
$
1,126
Net income per common share-basic
$
0.43
$
0.41
Net income per common share-diluted
$
0.43
$
0.41
Cash dividends per common share
-
-
Weighted average number of common shares
2,729,736
2,724,687
Weighted average number of diluted shares
2,730,983
2,725,294
EVANS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands except share and per share data)
Twelve Months Ended
December 31,
2006
2005
INTEREST INCOME
Loans and leases
$
20,405
$
16,234
Federal funds sold/Interest bearing deposits at other banks
49
116
Securities:
Taxable
4,209
4,663
Non-taxable
1,881
1,933
Total interest income
26,544
22,946
INTEREST EXPENSE
Deposits
8,979
6,241
Other borrowings
1,868
1,666
Junior subordinated debentures
850
662
Total interest expense
11,697
8,569
NET INTEREST INCOME
14,847
14,377
PROVISION FOR LOAN AND LEASE LOSSES
1,128
769
NET INTEREST INCOME AFTER
PROVISION FOR LOAN AND LEASE LOSSES
13,719
13,608
NON-INTEREST INCOME:
Bank charges
1,990
2,077
Insurance service and fees
6,466
6,377
Net gain on sales of securities
140
107
Premium on loans sold
10
18
Bank-owned life insurance
554
513
Life insurance proceeds
-
95
Other
1,613
1,189
Total non-interest income
10,773
10,376
NON-INTEREST EXPENSE:
Salaries and employee benefits
9,677
9,338
Occupancy
2,055
1,978
Supplies
302
337
Repairs and maintenance
545
553
Advertising and public relations
442
464
Professional services
838
986
Amortization of intangibles
563
515
Other Insurance
347
368
Other
2,959
2,865
Total non-interest expense
17,728
17,404
INCOME BEFORE INCOME TAXES
6,764
6,580
INCOME TAXES
1,843
1,761
NET INCOME
$
4,921
$
4,819
Net income per common share-basic
$
1.81
$
1.77
Net income per common share-diluted
$
1.80
$
1.77
Cash dividends per common share
$
0.68
$
0.65
Weighted average number of common shares
2,725,601
2,722,644
Weighted average number of diluted shares
2,727,331
2,723,960
EVANS BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED RATES (In thousands except share and per share data)
Three Months Ended
Three Months Ended
December 31, 2006
December 31, 2005
Average
Interest
Average
Interest
Outstanding
Earned/
Yield/
Outstanding
Earned/
Yield/
Balance
Paid
Rate
Balance
Paid
Rate
(dollars in thousands)
(dollars in thousands)
ASSETS
Interest-earning assets:
Loans and leases, net
$
279,441
$
5,515
7.89
%
$
251,959
$
4,458
7.08
%
Taxable securities
97,360
1,000
4.11
%
116,868
1,107
3.79
%
Tax-exempt securities
42,016
454
4.32
%
45,458
477
4.20
%
Federal funds sold
1,507
14
3.72
%
383
4
4.08
%
Total interest-earning assets
420,324
6,983
6.65
%
414,668
6,046
5.83
%
Non interest-earning assets:
Cash and due from banks
10,992
11,257
Premises and equipment, net
8,254
8,217
Other assets
29,415
27,407
Total Assets
$
468,985
$
461,549
LIABILITIES & STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
NOW
$
11,891
$
6
0.20
%
$
11,733
$
5
0.18
%
Regular savings
87,254
248
1.14
%
90,746
191
0.84
%
Muni-Vest savings
33,692
377
4.48
%
40,428
351
3.48
%
Time deposits
161,528
1,919
4.75
%
136,997
1,192
3.48
%
Other borrowed funds
34,519
336
3.89
%
53,856
497
3.69
%
Junior subordinated debentures
11,330
229
8.08
%
11,330
188
6.64
%
Securities sold U/A to repurchase
10,934
23
0.84
%
7,158
15
0.82
%
Total interest-bearing liabilities
351,148
$
3,138
3.57
%
352,248
$
2,439
2.77
%
Noninterest-bearing liabilities:
Demand deposits
69,762
66,154
Other
8,720
6,875
Total liabilities
$
429,630
$
425,277
Stockholders’ equity
39,355
36,272
Total Liabilities and Equity
$
468,985
$
461,549
Net interest earnings
$
3,845
$
3,607
Net yield on interest earning assets
3.66
%
3.48
%
Interest rate spread
3.08
%
3.06
%
2
EVANS BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED RATES (In thousands except share and per share data)
Twelve Months Ended
Twelve Months Ended
December 31, 2006
December 31, 2005
Average
Interest
Average
Interest
Outstanding
Earned/
Yield/
Outstanding
Earned/
Yield/
Balance
Paid
Rate
Balance
Paid
Rate
(dollars in thousands)
(dollars in thousands)
ASSETS
Interest-earning assets:
Loans and leases, net
$
268,538
$
20,405
7.60
%
$
236,754
$
16,234
6.86
%
Taxable securities
104,368
4,209
4.03
%
124,774
4,663
3.74
%
Tax-exempt securities
44,044
1,881
4.27
%
45,751
1,933
4.23
%
Time Deposits-Other Banks
—
—
—
215
3
1.40
%
Federal funds sold
1,097
49
4.47
%
4,462
113
2.53
%
Total interest-earning assets
418,047
26,544
6.35
%
411,956
22,946
5.57
%
Non interest-earning assets:
Cash and due from banks
12,066
11,183
Premises and equipment, net
8,194
8,215
Other assets
29,022
26,160
Total Assets
$
467,329
$
457,514
LIABILITIES & STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
NOW
$
11,767
$
22
0.19
%
$
11,976
$
22
0.18
%
Regular savings
88,522
926
1.05
%
94,841
804
0.85
%
Muni-Vest savings
36,301
1,550
4.27
%
51,300
1,454
2.83
%
Time deposits
151,530
6,481
4.28
%
126,945
3,961
3.12
%
Other borrowed funds
46,304
1,800
3.89
%
49,939
1,616
3.23
%
Junior subordinated debentures
11,330
850
7.50
%
11,330
662
5.84
%
Securities sold U/A to repurchase
8,493
68
0.80
%
6,467
50
0.77
%
Total interest-bearing liabilities
354,247
$
11,697
3.30
%
352,798
$
8,569
2.43
%
��
Noninterest-bearing liabilities:
Demand deposits
67,046
62,186
Other
8,153
6,419
Total liabilities
$
429,446
$
421,403
Stockholders’ equity
37,883
36,111
Total Liabilities and Equity
$
467,329
$
457,514
Net interest earnings
$
14,847
$
14,377
Net yield on interest earning assets
3.55
%
3.49
%
Interest rate spread
3.05
%
3.14
%
3
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