Evans Bancorp Reports First Quarter Net Income Up 27%
HAMBURG, NY, April 25, 2012 – Evans Bancorp, Inc. (the “Company” or “Evans”) (NYSE Amex: 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, 2012.
HIGHLIGHTS OF THE 2012 FIRST QUARTER
•
Net income increased to $2.4 million in the 2012 first quarter, or $0.58 per diluted share, from
$1.9 million, or $0.46 per diluted share, in the first quarter of 2011.
•
Total deposits grew 5.4% to $649.7 million in the first quarter, driven by continued growth in savings deposits (which increased $20.2 million, or 25.8% on an annualized basis) and seasonal municipal deposits.
•
The provision for loan and lease losses declined $0.7 million year-over-year, reflecting the positive impact of the release in provision from the direct financing lease portfolio and improving credit quality trends.
•
Return on average equity improved to 13.59% in the first quarter of 2012 compared with 11.71% in the prior year period.
•
Strong capital position with Total Risk-Based Capital ratio of 14.22% at March 31, 2012.
Net income grew to $2.4 million in the first quarter of 2012, up 26.9% from net income of $1.9 million in the first quarter of 2011. The improvement in net income reflected a combination of higher net interest income, which resulted from growing interest earning assets, and a $0.7 million year-over-year reduction in the provision for loan and lease losses due to the declining balance and improving credit quality trends in the leasing portfolio. The Company released $0.4 million in leasing provision in the 2012 first quarter compared with no leasing provision for the prior-year period. Return on average equity was 13.59% for the first quarter of 2012 compared with 11.71% in the first quarter of 2011.
David J. Nasca, President and CEO of Evans Bancorp, stated, “The strong earnings momentum the Bank has experienced continued in the first quarter of 2012 as we maintained core customer growth. The solid results are evidence of a growing awareness of what Evans has to offer as a community financial institution in the Western New York marketplace. We remain confident in this market and believe our investments in organic growth initiatives and overall risk management will contribute to our ability to drive performance.”
Net Interest Income Net interest income was $6.9 million for the 2012 first quarter, up 8.8% compared with the first quarter of 2011 and flat compared with the fourth quarter of 2011. Growth in net interest-earning assets drove the increase from the first quarter of 2011 and offset the net interest margin contraction relative to the same period. The linked fourth quarter contained a $0.2 million adjustment in interest income due to the recovery of a previously marked down commercial loan acquired in the 2009 Waterford transaction. Excluding this adjustment, net interest income increased $0.1 million, or 2.2%, from the prior year’s fourth quarter. Core loans, which are defined as total loans and leases less national direct financing leases, were $575.2 million at March 31, 2012, an increase of 10.8% from $519.2 million at March 31, 2011, and down slightly from $577.4 million at December 31, 2011. Relatively flat performance in the first quarter of this year, compared with annualized growth of 11.8% in the fourth quarter of 2011, was primarily due to timing, as a significant number of loans were closed late in the fourth quarter of 2011. The majority of the loan growth since the first quarter of 2011 was in the commercial/industrial and commercial mortgage loan portfolios.
Investment securities were $112.5 million at March 31, 2012, up 8.4% from $103.8 million at the end of the fourth quarter of 2011 and up 15.1% from $97.7 million at the end of first quarter of 2011. The growth in the investment securities portfolio reflects the success of the Company in attracting core deposits in excess of the growth rate of loans.
Total deposits were $649.7 million at March 31, 2012, up 11.0%, or $64.5 million, from $585.1 million at March 31, 2011, and up 5.4%, or $33.5 million, from $616.2 million at December 31, 2011. Approximately $23.6 million of the growth in deposits since the end of the linked fourth quarter occurred in municipal deposits. There is typically seasonal growth in municipal deposits in the first quarter of the year due to municipal tax receipts. Municipal deposits are included in various categories, but are primarily concentrated in NOW and muni-vest savings. The remaining sequential and year-over-year growth was attributable to strong core deposit increases across a variety of products, including the Company’s Better Checking product (included in the NOW category) along with its complementary Better Savings product. These products have been successful in garnering new customers, rewarding existing customers for doing more business with the Bank and, ultimately, developing deeper customer relationships. Partially offsetting those gains was a decrease in time deposits due to the roll-off of higher rate promotional CD’s and decreased brokered time deposits.
Although the Bank experienced net interest margin compression due to declining interest rates throughout 2011, the margin remained relatively strong at 3.93% for the first quarter of 2012, flat compared with the fourth quarter rate of 3.92% (after adjusting for the one-time interest income adjustment) and down from 4.05% at March 31, 2011. As the low interest rate cycle matures, the Company’s loan and investment portfolios continue to re-price into lower yields, as evidenced by a decrease in yield on interest-earning assets of 35 basis points from the first quarter of 2011. The Company benefited from re-pricing its interest-bearing liabilities much earlier in the interest rate cycle and these rates have fallen less than its interest-earning assets in the past year. Accordingly, the cost of interest-bearing liabilities for the Company declined 26 basis points in the first quarter of 2012 from the first quarter of 2011. Additionally, the Company has been successful in attracting new customers, with most of that success coming in the premium-rate Better Checking and Better Savings products.
Allowance for Loan and Lease Losses and Asset Quality
Provision:The provision for loan and lease losses decreased to a release of $(0.2) million in the first quarter of 2012 from a provision of $0.5 million in the first quarter of 2011 and a provision of $0.8 million in the linked fourth quarter. The majority of the provision in the quarter was related to deterioration and charge-off of a $0.2 million commercial loan not previously identified as impaired. The first quarter benefitted from the release of $(0.4) million related to the continued improvement in the shrinking leasing portfolio’s credit quality.
Net charge-offs:There were net charge-offs to average total loans and leases of 0.32% in the first quarter of 2012 compared with 0.03% in the fourth quarter of 2011 and 0.33% in the first quarter of 2011. The charge-off percentage remains below industry standards and is indicative of the Bank’s historical credit quality.
Gary A. Kajtoch, Executive Vice President and CFO, noted, “We are closely monitoring the strength and breadth of the economic recovery. Our non-performing loans and leases have decreased during the quarter and, at 2.25%, our ratio of non-performing loans and leases to total loans and leases is at the lowest level in over a year. We will continue to apply our prudent underwriting standards in order to grow our portfolio while at the same time minimizing our exposure.”
As a result of the release of provision and the charge-offs during the first quarter of 2012, the ratio for the allowance for loan and lease losses to total loans and leases decreased to 1.86% at March 31, 2012, compared with 1.97% at December 31, 2011, and 1.97% at March 31, 2011. While the ratio decreased, the level of non-performing loans and leases decreased even further, resulting in an improved coverage ratio of 82.7% at March 31, 2012, compared with 75.7% at December 31, 2011.
Non-performing loans and leases:The ratio of non-performing loans and leases to total loans and leases decreased to 2.25% at March 31, 2012, from 2.60% and 2.53% at December 31, 2011, and March 31, 2011, respectively. In the first quarter of 2012, two commercial constructions loans for $1.2 million were converted to permanent loans that were current and accruing as of March 31, 2012, but were 90 days past their maturity date as of December 31, 2011. There was an additional $1.0 million decrease in non-performing loans and leases due to pay-offs ($0.5 million), improved performance in the leasing portfolio ($0.2 million), charge-offs ($0.2 million), and pay-downs ($0.1 million). The total coverage ratio for non-performing loans and leases was 82.74% at March 31, 2012, compared with 75.74% at December 31, 2011.
The FDIC-assisted acquisition of Waterford Village Bank in July of 2009 accounted for $2.5 million, or approximately 20%, of the Company’s $12.1 million in non-performing loans at March 31, 2012. These loans are included in a loss-sharing agreement with the FDIC, in which the FDIC bears at least 80% of the losses on these loans. On an adjusted basis, Evans’ coverage ratio for non-performing loans and leases was 104.8% at March 31, 2012, which includes the leasing portfolio mark of $0.4 million while excluding all of the FDIC-guaranteed Waterford loans.
Non-Interest Income
Non-interest income, which represented 32.4% of total revenue in the first quarter of 2012, declined 5.0%, or $0.2 million, to $3.3 million when compared with the first quarter of 2011, reflecting lower insurance agency revenue and a reduction in other income. Data center income, which is included in other income and declined $115 thousand from the prior year’s first quarter, is from Suchak Data Systems, LLC (“SDS”), a data processing company which was acquired by the Bank on December 31, 2008. The original contracted revenue generated by service agreements with other banks is expiring as expected. The Company is focusing on its original purpose for the purchase of SDS, which was to provide resources for its own internal bank processing needs. Insurance agency revenue of $1.9 million was down $144 thousand, or 6.9%, when compared with the 2011 first quarter due mostly to a decrease in profit sharing revenue from the insurance carriers. The lower profit sharing is driven by higher loss ratios related to lower premium levels. Compared with the fourth quarter of 2011, TEA’s revenue was up $0.6 million, reflecting the typical revenue cycle seasonality.
Non-Interest Expense
Total non-interest expense was $6.9 million in the first quarter of 2012, an increase of $0.3 million, or 4.6%, from $6.6 million in the first quarter of 2011. The largest component of the increase was salaries and employee benefits, which was up $0.3 million, or 7.9%, to $4.2 million compared with the first quarter of 2011. This rise reflected merit increases awarded for 2011 performance, higher health care costs and increased staff, including commercial loan officers. These increases were partially offset by lower occupancy costs, mostly related to fully depreciated assets lowering depreciation expense and a reduction in FDIC insurance expense due to changes in the premium calculation adopted in the second quarter of 2011 by the FDIC.
As a result of the increase in non-interest expense and the decrease in non-interest income, the efficiency ratio slightly increased to 67.10% for the first quarter of 2012 from 66.36% for the first quarter of 2011.
Income tax expense for the quarter ended March 31, 2012, was $1.1 million, representing an effective tax rate of 31.7% compared with an effective tax rate of 29.6% in the first quarter of 2011. The effective tax rate increased because taxable income increased significantly while tax-exempt income was relatively flat.
Capital Management
The Company consistently maintains regulatory capital ratios measurably above the federal “well capitalized” standard, including a Tier 1 leverage ratio of 9.7% at March 31, 2012. Book value per share was $17.06 at March 31, 2012, compared with $16.72 at December 31, 2011, and $15.71 at March 31, 2011. Tangible book value per share at March 31, 2012, was $14.96, up 2.5% from the end of the fourth quarter of 2011 and up 11.0% from the same period in 2011.
Outlook
Mr. Nasca concluded, “We continue to make steady progress while facing the persistent challenge of increasing regulatory burden, capital requirements and margin compression due to low rates. We are well positioned to capitalize on the pending sale of HSBC and First Niagara branches, which has created an unprecedented opportunity to deliver our customer-centric community banking relationship model to the significant number of clients disrupted by this change. We believe we can be very effective in winning business related to the transition and improve our market share in Western New York.”
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 $776 million in assets, 13 branches and $650 million in deposits at March 31, 2012. Evans is a full-service community bank 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 12 insurance offices in the Western New York region. Evans Investment Services, Inc., a wholly-owned subsidiary of Evans Bank, 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, atwww.evansbancorp.com andwww.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.
For more information contact:
-OR-
Gary A. Kajtoch Executive Vice President and Chief Financial Officer
EVANS BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (Unaudited)
(in thousands except shares and per share data)
2012
2011
2011
2011
2011
First Quarter
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
ASSETS
Investment Securities
$
112,492
$
103,783
$
94,182
$
94,494
$
97,703
Loans
575,188
577,383
560,792
532,537
519,180
Leases
4,512
6,022
7,783
9,957
12,449
Allowance for loan and lease losses
(10,790
)
(11,495
)
(10,708
)
(10,667
)
(10,482
)
Goodwill and intangible assets
8,675
8,779
8,893
9,013
9,139
All other assets
85,716
56,430
72,073
67,498
71,722
Total assets
775,793
740,902
733,015
702,832
699,711
LIABILITIES AND STOCKHOLDERS’ EQUITY
Demand deposits
114,423
118,037
116,036
104,814
99,444
NOW deposits
62,077
50,761
48,924
44,193
43,457
Regular savings deposits
334,010
313,777
301,610
277,564
263,854
Muni-vest deposits
29,542
20,161
26,241
26,333
34,804
Time deposits
109,629
113,467
120,427
133,863
143,588
Total deposits
649,681
616,203
613,238
586,767
585,147
Borrowings
42,010
42,340
39,161
38,921
38,176
Other liabilities
13,647
13,371
12,417
10,831
12,055
Total stockholders’ equity
$
70,455
$
68,988
$
68,199
$
66,313
$
64,333
SHARES AND CAPITAL RATIOS
Common shares outstanding
4,128,905
4,124,892
4,106,933
4,108,103
4,094,147
Book value per share
$
17.06
$
16.72
$
16.61
$
16.14
$
15.71
Tangible book value per share
$
14.96
$
14.60
$
14.44
$
13.95
$
13.48
Tier 1 leverage ratio
9.74
%
9.71
%
9.81
%
9.80
%
9.89
%
Tier 1 risk-based capital ratio
12.96
%
12.77
%
12.65
%
13.00
%
12.95
%
Total risk-based capital ratio
14.22
%
14.03
%
13.90
%
14.26
%
14.21
%
ASSET QUALITY DATA
Non-performing loans
$
12,091
$
14,016
$
13,782
$
11,031
$
11,322
Non-performing leases
950
1,160
1,549
1,747
2,127
Total non-performing loans and leases
13,041
15,176
15,331
12,778
13,449
Net loan charge-offs
456
41
118
824
430
Net lease charge-offs
-
-
-
-
-
Total net loan and lease (recoveries) charge-offs
456
41
118
824
430
Non-performing loans/Total loans and leases
2.09
%
2.40
%
2.42
%
2.03
%
2.13
%
Non-performing leases/Total loans and leases
0.16
%
0.20
%
0.27
%
0.32
%
0.40
%
Non-performing loans and leases/Total loans and leases
2.25
%
2.60
%
2.70
%
2.36
%
2.53
%
Net loan charge-offs/Average loans and leases
0.32
%
0.03
%
0.09
%
0.63
%
0.33
%
Net lease charge-offs/Average loans and leases
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
Net loan and lease charge-offs/Average loans and leases
0.32
%
0.03
%
0.09
%
0.63
%
0.33
%
Allowance to loans and leases
1.86
%
1.97
%
1.88
%
1.97
%
1.97
%
2
EVANS BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (Unaudited)
(in thousands, except share and per share data)
2012
2011
2011
2011
2011
First Quarter
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Interest income
$
8,369
$
8,518
$
8,169
$
8,015
$
8,013
Interest expense
1,516
1,627
1,655
1,728
1,716
Net interest income
6,853
6,891
6,514
6,287
6,297
Provision for loan and lease losses
(249
)
828
159
1,009
488
Net interest income after provision
7,102
6,063
6,355
5,278
5,809
Deposit service charges
436
482
498
416
386
Insurance service and fee revenue
1,945
1,363
1,849
1,601
2,089
Bank-owned life insurance
117
123
117
110
103
Other income
790
894
720
798
883
Total non-interest income
3,288
2,862
3,184
2,925
3,461
Salaries and employee benefits
4,214
3,931
4,073
3,912
3,904
Occupancy
685
750
777
816
777
Repairs and maintenance
169
191
184
155
159
Advertising and public relations
145
247
188
247
130
Professional services
539
456
510
407
402
Technology and communications
248
248
177
220
235
Amortization of intangibles
104
114
120
126
130
FDIC insurance
134
153
135
135
229
Other expenses
671
983
639
744
639
Total non-interest expenses
6,909
7,073
6,803
6,762
6,605
Income before income taxes
3,481
1,852
2,736
1,441
2,665
Income tax provision
1,102
514
810
469
790
Net income
$
2,379
$
1,338
$
1,926
$
972
$
1,875
PER SHARE DATA
Net income per common share-diluted
$
0.58
$
0.33
$
0.47
$
0.24
$
0.46
Cash dividends per common share
$
0.22
$
0.00
$
0.20
-
$
0.20
Weighted average number of diluted shares
4,131,330
4,115,061
4,109,181
4,106,371
4,096,170
PERFORMANCE RATIOS
Return on average total assets
1.26
%
0.72
%
1.08
%
0.55
%
1.10
%
Return on average stockholders’ equity
13.59
%
7.77
%
11.37
%
5.90
%
11.71
%
Efficiency ratio
67.10
%
71.35
%
69.10
%
72.04
%
66.36
%
EVANS BANCORP, INC. AND SUBSIDIARIES SELECTED AVERAGE BALANCES AND YIELDS/RATES (Unaudited)
2012
2011
2011
2011
2011
First Quarter
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
AVERAGE BALANCES
(dollars in thousands)
Loans and leases, net
$
568,863
$
557,875
$
541,357
$
524,178
$
518,246
Investment securities
105,339
102,676
98,526
100,639
95,978
Interest bearing deposits at banks
23,271
22,928
17,200
16,952
8,456
Total interest-earning assets
697,473
683,479
657,083
641,769
622,680
Non interest-earning assets
58,607
58,078
59,647
62,517
62,148
Total Assets
756,080
741,557
716,730
704,286
684,828
NOW
55,116
49,665
45,604
44,707
38,469
Regular savings
326,090
307,164
290,310
268,220
256,158
Muni-Vest savings
22,076
29,808
25,177
29,483
24,616
Time deposits
112,079
117,074
125,037
139,727
143,177
Total interest-bearing deposits
515,361
503,711
486,128
482,137
462,420
Other borrowings
42,512
41,425
39,544
39,381
44,846
Total interest-bearing liabilities
557,873
545,136
525,672
521,518
507,266
Demand deposits
114,783
115,342
111,044
105,725
101,798
Other non-interest bearing liabilities
13,418
12,219
12,273
11,144
11,737
Stockholders’ equity
70,006
68,860
67,741
65,899
64,027
Total Liabilities and Equity
$
756,080
$
741,557
$
716,730
$
704,286
$
684,828
YIELD/RATE
Loans and leases, net
5.28
%
5.49
%
5.36
%
5.40
%
5.52
%
Investment securities
3.23
%
3.33
%
3.69
%
3.68
%
3.57
%
Interest bearing deposits at banks
0.15
%
0.14
%
0.16
%
0.17
%
0.19
%
Total interest-earning assets
4.80
%
4.99
%
4.97
%
5.00
%
5.15
%
NOW
1.01
%
1.29
%
1.32
%
1.17
%
1.10
%
Regular savings
0.69
%
0.77
%
0.77
%
0.69
%
0.64
%
Muni-Vest savings
0.38
%
0.46
%
0.51
%
0.47
%
0.47
%
Time deposits
1.85
%
1.94
%
2.07
%
2.38
%
2.44
%
Total interest-bearing deposits
0.96
%
1.07
%
1.14
%
1.21
%
1.23
%
Other borrowings
2.58
%
2.65
%
2.72
%
2.71
%
2.64
%
Total interest-bearing liabilities
1.09
%
1.19
%
1.26
%
1.33
%
1.35
%
Interest rate spread
3.71
%
3.80
%
3.71
%
3.67
%
3.80
%
Contribution of interest-free funds
0.22
%
0.23
%
0.26
%
0.25
%
0.25
%
Net interest margin
3.93
%
4.03
%
3.97
%
3.92
%
4.05
%
3
We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.
