EVBN - Earnings call transcript Q1 2021

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Operator

Greetings. Welcome to the Evans Bancorp First Quarter Fiscal Year 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. the to turn Pawlowski. host now will conference your over Deborah I go Please ahead.

Deborah Pawlowski

questions. good certainly time everyone. in you Nasca, I afternoon Thank and me with We us our and David XXXX John you the President have hear join review the for Evans our for appreciate and Chief and we Officer. open Connerton, of taking will then to Chief the today for and our Officer; on David Financial call. call results first our Bancorp interest your Executive and will quarter John

You results closed. www.evansbank.com. should today on have If a were markets at copy website of them the after access our that financial not can you released

differ risks as the may some as on with statements materially the the aware These earnings stated could release documents statements as from well that is and are apply actual Exchange and Securities provided to we you future with the are that by factors As filed well uncertainties subject results cause uncertainties make factors other and to in what as the and These company during to events as other risks call. Q&A. as forward-looking Commission. today's other well are during formal discussion

on With website it www.sec.gov. begin. can turn find You those documents let that, to our me or at over David to

David Nasca

you appreciate the Thank We Good joining us for you everyone. afternoon Debbie. call today.

been this take environment, certainly in the at are onset thank clients to this but been end begin, our see tunnel. support the and year to It a needs now US our to the of again we than for operating to the since communities. outstanding opportunity COVID of a the once the and starting light we difficult pandemic their efforts has and full commitment As has ongoing I'd like associates all continued more of

move. and year, and considering of operations, Overall, quarter not woods more out long-term in diverse the yet, the focused typical a execution first business our quarter quarter communities, past a activities year, place and solid headquarters that of we're very strength of took other our two business like especially this felt our acquisitions the actions While significant of our to model, the the first strategy. clients our the marked support the start of reflecting with

across We are that and Program Protection engagement provide FSB of positive portfolio quality a reflecting or up release a of trends. will both provision and Fairport diluted addition Bank, income $XXX,XXX and one year and $X.X primarily to reporting last of continued solid and absent macroeconomic were would earnings Savings this. Loan with the but due $X.XX per credit, a significantly detail, million experienced including net active our relationship. provision to commercial given have credit deposit we share John year-over-year more levels the Paycheck

and X. to and the In in X funded to continued clients be Many has fact businesses loans assist new round for loan million latest a jobs clients of newer for our size XX other important of and It of for with healthy as the navigate and the away many we level approximately however that note given loans heightened and that had estimate quarter employees. the those funding offset helped is these originations of average services. PPP quarter been in or other of market. the we secure payoffs ultimately serve. originations $XX of first PPP, went round. for the we PPP million We deepen smaller, less of during did us build platform in products by approximately tended the part XX% has our offer first exists work gained communities the liquidity We've low businesses protect banks to serviced Those in of an PPP The round relationships were experience This commercial while turned Phase important loans the existing not opportunity XX,XXX the continued by receive million. to the Phase be were to very funding this while to a and environment to growth excess originated of and quarter. loan that $XX refinancing XXX than of $XX reflected and rate

in resurgence person impact, the activities We as in Given we pursue ability still unable many at record real growth, our demand our both events remain loan to of of interaction. confident a at and our and are would that community we pandemic experiencing on in such Despite full restrictions projects. approximately to attendance the in is the normally, we future customer greater ongoing a as pipeline million. drive commercial estate commercial level are $XXX loan C&I interactions,

of came amount XX% pipeline a originations the the similar the our In during Rochester from addition, and of quarter approximately market. first

current further economic that Given traction operating pleased are anticipate recovery unfolds. with as the the in we greater and progress environment, market

renewal per on was in management early increase share XXX,XXX years. again, dividend $X.XX semiannual cash last authorizing support we of returns the also performance to in a common deliver to value the once outstanding common our paid up stock focus stock. announced repurchase shareholder our commitment company's shares strong the shareholders, X.X% marking A of and capital the annualized increase In nine XXth approximating of the Our to company's repurchase April dividend of a February per share enabled over us return. -- to program

reconstitution other upon based be will perhaps dropped with the we is Finally, XX upon along regarding due the may of financial market rates that it Russell stock in out to increased index XX market for institutions the expectation public inclusion. analysis, to bank's investment capitalization

anticipate, from continue to performance. While impact we'll move values value to stock will book through but vigilant growing remain and do seek disappointing, not operating we our the any to our

get returning, back developments we take anticipate we lingering relationship to of continue results, are I'll be associates deliver return the believe of as recovery drive with it our that, early then to is will normalcy we'll to to are strategy John our to there happy There and July. a we performance. recovers with headwinds, the we and to Currently, forward With over signs John? encouraging reopens We of run while and market our and hand banking. position strong and see ahead, headquarters to our in a vaccinations. Looking having basics through to questions. pleased positive sense be any economic in

John Connerton

or Also, trends provision with The the X% reflected The as connection to sale linked with quarter $X.XX year XX% recognize the the an benefits last conditions fees assets FSB the during prior from to of Net PPP. $X.X for ....or and our acquisition fourth average increase $X.X per higher lending. from a of share higher was The had economic of elevated interest on of fourth year's pandemic. million former the interest we million $X.X COVID-XX loss PPP XXXX recognized increase $X.XX loan decrease administrative million in interest-earning diluted reserve to share year-over-year net due headquarters in related a the deterioration and in income income due first the increased and quarter. first reflected provision the gain diluted loan for in first quarter and the net loss quarter year's and income from quarter. quarter compared period. earned FSB per the increase in last to

fees remaining million During deferred the in the of booked quarter in realized to round original PPP, in Of $X.X we $X.X be quarter, million to million compared with million $X.X income. of there first from $X.X XXXX. fees PPP fourth is the the

originations The for that second one over forgiven. will of $X.X round realized five year their date of produced million additional to PPP fees terms be

loan referenced, overruns for specific quarter environmental cleanup. that customer with was $X.X million a loan This first a David commercial single the provision experienced unanticipated cost As reflected relationship. reserves for associated commercial losses in construction

Excluding, the improving including we stabilizing in and released bank have realized for quarter improvements economic adjust this employment numbers. during GDP one conditions reserve as relationship the would

on have their our to performance the weekly with continue hotel of summer better We the the a for and that to coming a properties, many associated and Due months. long-term speak basis. seasonality we expect over to report monitor these with spring can I feel we relationships portfolio,

making by however occupancy following as are statistics. the We progress evidenced

in occupancy Currently, properties average to XX%. portfolio that note, well we Of construction, building. in in was December continues collateralized. the XX% are Excluding running be at

the investment loans PPP net bank rates margin year's fee the residential interest-earning continued quarter, quarter of basis basis from First five as federal in and greater fed align sequential points reduced accelerated changes points points the early the XXXX has of in $X.X increased decrease the rate from XXX the including interest reserves of income about basis to speed reflecting forgiveness the mortgages $X.X margin related to assets, fee. funds X.XX% cash the from of The fourth stabilized expense first interest-earning the decline balances interest on $X.X in net to Non-interest there recognition XX million amortization will FSB. of period, interest from the tax year's believe last non-interest though the some the reduction loans, an or as for credit. a historic slow of dependent PPP which be can income variability quarter related net of million of be million margin a accelerate rehabilitation which deposits. on mix and increased PPP last We by continues reflects included quarter, and

other benefited largely the When about that and of from XXXX income loan including fourth down XXXX XX.X% sale rate disciplined quarter from during last the and in XX% expense tax headquarters first former quarters quarter quarter. to in the higher the non-interest the mortgage – value income effective tax with prior-year comparing quarter first expense our which FSB non-interest of was fair from Absent XX.X% and also in in servicing credit the Total fourth can several XX.X% the fourth for X% line We of $XXX,XXX the addition management. the XX.X% impacted driven found benefits. items, expense by the the increase was from effective an higher compared of rates. and be lines due The line. XXXX and on gain in fees year, historic was Non-interest rate of period, period declined linked-quarter of salaries last tax year's respectively. the

last $XX Compared ending with or compared loan portfolio $XXX million million FSB. of loans XXXX or total year's of forgiveness $XXX all million The of the linked to Turning million experienced X%. loans XX reflects balance during first sheet, which quarter PPP of portfolio a the in first which funded XXXX. quarter, was the $XX of of million. $XXX grew of balance loans March as XXXX $XX with to date, million forgiven was PPP fourth The quarter, previous $XXX has million increased during XX% from the

David this funding, the As customers rapid needs the for to quarter. million $XX of PPP during reflected latest our mentioned, the originated of increase round response loans in we PPP as

level commercial of real We $XX C&I. commercial estate also construction a $XX About loans loans These million unfunded to largely real projects. were growth balances, commercial in originations, not and healthy which million season included but funded community up. did half are were estate as in originations of add and to construction development mostly the in for fund multifamily and ramps expected the

to XXXX, originations year's that quarter of million million, loan were million commercial of Additionally, FSB, lower The XX% $X.X which from quarter. fourth of from resulted and but $XXX compared the for by have mostly the Commercial comprised as by line saw Residential when of excluding and the a loans. totaled a those decline PPP plans. of million, benefited early excluding sold provided driven balance refinance growth of payoffs number grew all in the Total two combination smaller customers the due $XXX this PPP usage customers first last $XX substantial impact have we was during the or growth period continuing for loan government quarter, activity seen which resulted deposits. payoffs, slight in in customers $XX payoffs, have quarter added which of deposits stimulus billion $X commercial companies. since million to portfolio their paydowns liquidity

as liquidity benefited deposits That increase concludes account increases commercial slower of from in factors comments. consumer quarter. million, heightened levels fourth Those including We deposits the from in to from or spending. well the deposits government consumer $XXX my sequential largely PPP also for X% related as stimulus loans customers, payments,

now we line to would So questions. the open for like

Operator

question ahead. and from Instructions] At this time, we Alex comes a will conducting with [Operator be Our question session. Sandler. Twerdahl Piper Please answer first go

Alex Twerdahl

Hey. Good afternoon.

David Nasca

Good afternoon, Alex.

John Connerton

Good Hey. afternoon, Alex.

that talk it stability off, not appreciate cetera? First in what things size you of the and contemplates in on John, assumption? terms whether bit et liquidity, here. quarter? or it just second underlying average PPP forgiveness Can about comment like And balance the expecting what Is the includes it I a sheet and your NIM of little from --

John Connerton

Sure.

the I think what's going NIM. to drive

We continue to the on loans on yield the some commercial down have pressure side.

been has uptick some on to the our from quarter curve. our the on quarter increase yield there first originations, originations However, from due fourth to

of So in at we're have there there benefiting still as not forward. going opportunity some we to some It's but reprice our that. But still much is from this some also ability point, deposits.

then, quarter. So the two the about quarter, we're the with PPP those second two the end in and deferral third here fees end through -- the there fourth fourth is exhausted beginning lead stability. expectation until anticipating outcome round not to is be PPP the quarter, included the that next start of round from PPP And those year. of of to the most fees any one going our will similar forgiveness some of the statement the fees And quarter, beginning through of of income third to through

So the assumptions driving. of those kind major are

the which around, such million As and have of in that, our pipeline, it should should David payoffs turning the about far that in as the we seen that indicated past. growth overcome growth, refinances start feel we we've $XXX some major

Alex Twerdahl

-- appreciate all of all those commentary. I Okay. that

progresses? together, So trends the growing it the if little NII sounds balance I the NIM put bit means stability, bit, higher plus as a year a sheet it like

John Connerton

That's a safe conclusion, yes.

Alex Twerdahl

tax a using XX% rate from remainder then, impact the XX.X% right tax But the carrying in a can last the little about credit talk through. for just And be -- didn't higher? you have bit came bit you Obviously, the tax Perfect. year of rate year? the to there

John Connerton

that to There some to rate. is utilize limit from our the tax tax seasonality some we of things

XX% an expectation our basis. on further annual will to closer so, down the And it come is, to

Alex Twerdahl

for Great. taking Thank you questions. my

John Connerton

Okay.

Operator

Instructions] Please go next Hovde. ahead. [Operator question Rowe with Our comes from Bryce

Bryce Rowe

you taking Hi. Good Appreciate here. afternoon. the call

David Nasca

Hi, Bryce.

John Connerton

Bryce. Hi,

David Nasca

you? How are

Bryce Rowe

that especially Hey. talk kind the I’m any Can we quarters, space. we a activity pipeline common second a -- seeing I theme of little the and and you into into you're I’m across about third see, considering what the guess right good, work good. -- commercial the But payoff might it's you bit think pretty as record now? the visibility have I the

John Connerton

that. take So I'll

it kind suggested just, it's in is of seen, commentary, to payoffs sometimes note we're on mostly that a away. those the they're think, that the paying current some I from customers guess, we've so liquidity lot I excess and down I that of, the credits. some seeing competition that taking in not early as our but There are of market, there's that,

in the been some has activity there is -- there as, well -- As lot M&A industries. around has market of a customers' our --

seen have we So those.

but they're the on that we played we typically expect degree, those some but customers, quarter, second still out are some -- if expect we But we're that So them have there lot losing, we moderate our When it going but to will that do be should level, to winning forward. that our get to looking payoffs are of payoffs, some in and good is, we think the front those. start competition. seeing news to the in we of we not do things continue expectation third of a kind those an opportunity to losing have of we're refinance,

David Nasca

in And the that's obviously talking. commercial books

but too. seen to in of little We we a we of bit consumer expect activity and We're and did that refinance that stabilize an seeing acquisition. have bit the some book payoff a that,

Bryce Rowe

can the opportunity Okay, maybe all then, Rochester. to in okay. speak And you

tied originations and pipeline in think out you market. terms called the Rochester of percentage I to of it

to I'd some -- frame market. opportunity I mean, what maybe around that opportunity the in hear us might So be, just commentary love the for

David Nasca

bit It Bryce. try right. is All market. say opportunity. – you, be I'm going there's smaller I'll a a of to to specific, for I real do to that think it's not hard we but that would

right We fair we tire talk as the them. fairly now, house. financing going of especially There or in amount a activity, are CRE the side robust seeing of kicking on to a is strong

C&I We coming well. trying built as make that in we of is we've we that entered sure said hard the – has right market. that market last awareness are stuff get credits with The The like out about XX% the Rochester. now quarter seen up relationships produced, of to had issue we've are was the we getting we've

We been there. have

the mortgage lending us had did bigger ground And people of was but a to We we're closed a thaw can stand there, we five in on They on for And little of team lot there get Lobbies branches. them deposit was operation put We get branches see – operation a This out bit. of the where bit, period team market. out the still front a commercial helped base let ourselves. know that front there time. into in years a XX there it's there out of tough a for people starting going with on boots a a mortgage big side. have been been is coming we're little COVID a in the play for that the again, were up to lending. a weren't people, that

should M&T will look help are There opportunity at with is to So XX% us our market. probably all a – this has traction. But you is out think market, market the being our awareness that there. – that reasonable start get happen in less market fairly of there about we when greater

banks community this KeyCorp out got is you've XX%. market. like M&T When got in more XX% then out of there. Rochester, other look you You've some And

market well well So set up we in pretty and think see. that do we'll to we

Bryce Rowe

that business, there. bit whether a side detail first insurance good a with maybe question maybe little on around quarter growth bit if there to of the income seen Just insurance a reopening. drive a you curious then you've And opportunity we first that potential quarter? That's to growth? economy some little year-over-year fee get there the give Does the just some Okay. of

David Nasca

answer commercial a is The short little which it's and is, of We that answer longer stool is think P&C, the is, The the yes. legs Casualty Property are complicated. the side. more

capacity of of and a base. talking have bigger that really client It's slower digital We've We over Nationwide, or benefits. company the lines XXXX. The years, And GEICO opens much expect that whether is advertising. challenging our personal Allstate up it's end as of businesses growth a of last the then some to grow. taken has opened. on stool lot to economy to a story as side. a players growth a direct maintained us. has which We've been We couple service model Certainly moved to or leg been the acquired little big the the third of more at helped employee this on greater

in So of January and aware and translating good but see activity really making getting there. to did making lot existing salesperson activity we yet out new we our a sales starting are in area awareness that seeing are Rochester, We then necessarily in customers. both people a customers we not just well starting to that that and getting hire that's the space a and and difference new cuts Buffalo in known between think

to in So to little going as where are we be opportunities there's the but think come do from. nuanced opens a it's market opportunity the going

Bryce Rowe

you All all. right. stuff. good talk to you so Good Thank to That’s much.

David Nasca

you. Thank

Operator

over the for now closing remarks. floor David will to turn I

David Nasca

you with your participating and right. us, free feel We talking reach certainly second a all again, myself, everyone appreciate teleconference hope at time. to XXXX like day. today. interest We you to All out have and John Please our we or for the all say thank you forward I'd as to we support. to continued great to any quarter results report look in

Operator

This concludes today's teleconference.

lines disconnect You your for thank you time at and may this participation. your

Evans Bancorp (EVBN) 1 May 212021 Q1 Earnings call transcript