EVBN - Earnings call transcript Q2 2021

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Operator

Greetings and welcome to the Evans Bancorp’s Second Quarter Fiscal Year 2021 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. Deborah Pawlowski, Investor Relations for Evans Bancorp. Thank you. ahead. go Please

Deborah Pawlowski

and taking Donna your everyone. certainly We in Thank time good today you the Bancorp. and to appreciate Evans you, afternoon join interest us

Chief David Here will we David open then questions. second and our for our Nasca, quarter Executive review Officer. Officer will the for our Chief with call Financial and have we President results me, John of Connerton, John and and the XXXX

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

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

You at sec.gov. website can our or the find documents on

to So me let turn it to with begin. David? over that, David

David Nasca

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

and of As and opportunity this emergence continued with net the by clients and outstanding economy once and throughout in period. $X.X to to quarter, second reflected pandemic as the clients started, team the up record and a $X.X the quarter, we this we its get this prospective driven drive strong last from earnings from communities compared million we in diligent results efforts with delivered were responsiveness first with commitment business of quarter These $XXX,XXX engagement million I the again flexibility, recovers thank our Evans year. year’s XX% take support would income serve. like for both for the Overall, entire to

we our Rochester. expanded and base customer market into grew Our presence

addressing we payoffs drive both still Loan our at was once given disciplined again hospitality Paycheck remains regained interest of balance levels rate standpoint, and due approach loan historically the results Protection and the played originations our a refinancing as in to low provision the the recorded higher credit and portfolio, release We income. growth from net credit cumulative environment pre-COVID, captured commercial our total had liquidity the muted building lending a conditions. record improved forgiveness. While notable economic consumer feel loan heightened with were and out level combined in helped though and been demand excess momentum which we in ongoing Program pent-up that market in that to

engenders solid, quarters. over Importantly, which that PPP we our loan confidence pipeline excluding coming forgiveness growth generate can remains

our last call, to on with continuing to administrative new began engaged noted and As on spent our many and regarding we tremendous flexibility their concerns demonstrate X working headquarters associates back onsite address the work our splitting workplace associates administrative between XX% at we our based safety. of office. more for our on associates an eligible average return we surrounding to were time Approximately hybrid The our of XX% to time while offices office. staff and day to July with schedule a majority home work bringing Evans’ are seeking

senior this they pleased in known hybrid how us have market at to exclusively nearing responsibilities. their footprint, forward, been to housing as will A on-site project least and and work office are completion. week, work the and have days desire to model new a we associates these asked by bank as but top our retaining positions Overall, office all to with pandemic to stakeholders branch development relative bank, underserved if we they low-income is an which talent. continue in is beneficial welcome our located move financed will the within in X teams been be productive and allow Westminster the a recruiting Commons, have throughout We believe

forward. grand staffed We Buffalo an are we Evans’ in will of branch to during the and and region, renaissance this fully Buffalo be East and in the effort part opening project the are play anticipate third the This will the role that a to believe the move branch and quarter. XXst We overall. be Niagara XXth integral of proud Side this community support of

ahead, about our while lingering optimistic Looking there will headwinds, we future are be prospects.

competitive and expansion and to rebound. diversified to we’ll and John economy to John? and turn strong, as continues the positioned support well a any will questions. With our run built I clients have to that, results, plans then our franchise that through it is happy take growth, be We over their to

John Connerton

everyone. good Thank afternoon you, David and

the conditions second a trends higher incurred million The noted, $X.XX or COVID-XX year reflecting net also the improved was related and commercial interest lower we quarter, period. decrease $X.X year’s and change periods second net for and last growth increase XX% share record compared million losses income As first was net to pandemic. loans higher quarter $X.X $X.X bank from reflected the both from share expenses. prior achieved diluted income the due or $X.X The higher over diluted in by and interest-earning of to million connection Also, $X.X merger-related period David loan assets. per largely in from driven the in higher income interest for quarter. non-interest fees increased year $X.XX interest XX% loan earned and in of million or increase PPP $X.X net in with to prior The the expenses prepayments. FSB income with or economic per higher provision due quarter last provision million a loss. income XX% reflected million The first for Net year’s

fees loan. of accelerating As that recognition forgiven, the were amortized life the original are the the being PPP loans over is of company

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

The growth numbers. originations release of million associated their allowance second $XXX,XXX single by be of in PPP customer the when $XXX,XXX a $X.X reserves commercial or conditions, economic and that was offset fees with forgiven. will produced The year in over loan losses a X realized and of for specific round of including additional partially improving This employment loan terms decrease improvement quarter. stabilized during relationship GDP represents

made XX credits the totals of across which closely monitor portfolio, and relationships. approximately XX continue to We hotel is $XX million up

of XX% beginning rely economy note, the and border the has XXXX. early and well on are modest continues average the portfolio gives further are as the We U.S.-Canada currently we traffic. see that opening collateralized, summer to in improvements XX% reserved. locations rates Ultimately, expected hotel are The the to travel as many of compared with occupancy believe August improves around end increased. at running us cross-border of optimism be appropriately we Of

basis quarter interest margin align point higher PPP the with Second along interest accelerated quarter reflecting growth as rates on income. and reduced XX reflects XX net prepayment assets recognition interest-earning X.XX% continued year’s from quarter basis to from the first second fee last and deposits. points same expense The commercial those the of factors increased company

near levels. decrease COVID-XX. affected certain temporary the fair in $XXX,XXX to suspension of was period by margin income million servicing $X.X last other customers in due reflecting to fees and the the X.XX%, Non-interest believe given largely these we assist lower has impact, mortgage quarter PPP about this net Non-interest Excluding the year’s to in from of primarily value from deposit year’s service $XXX,XXX period of interest second charges attributable income the was down stabilized increased last income rights. changes linked

total software expenses annual quarter, related quarter area prior of The the non-interest in the with non-interest the resident The reflecting expense While being and first merit capitalization including increased within prudently an the was quarter which focus costs last year’s and managed. tax a was origination in effective for line the increases, in benefits. ATM PPP we from loans comparing online and year the When first of of addition the quarter. the of first period, XX.X% increase the and are costs XX.X% related of expense salaries – for are the to salary believe prior compared XX.X% change salaries largely and rate of benefits items, several second impacted XXXX higher to in XXXX, increased activity. FSB XXXX quarter quarter

historic the quarter second the XXXX. tax XX.X% was of effective in the impact credit rate tax the Excluding of transaction,

levels The real commercial than mortgages Donna? so Since open of are although of grew increases two-thirds including June far to Offsetting like Total approximately loans million mentioned, That balance of million we of down $XX of since to payments commercial or billion was some million. is of XXXX originated. slower balances loans, was forgiven year’s in the million balances half where last this $XXX loans, and to driven and for specifically XX Turning PPP a spending. the the $X.X about second little sheet consumer quarter date would The consumer estate residential last portfolio, loan the loans my liquidity change bringing forgiven have $XX deposits originations of remaining of items the loans and customers David we as year. from in questions. this generated million less period second forgiveness. all balance by million. there $XX to heightened of to deposits comments. government just reflecting And year’s have stimulus decline total as increased PPP line X% $XXX.X masking quarter, was a the $XXX balance deposits strong of period PPP the $XX now the C&I related over concludes result loans PPP FDA in were million the that

Operator

for Instructions] question The of Twerdahl ahead. questions. you. first Our Sandler. floor Alex is go open from Piper Please is [Operator coming Thank now

Alex Twerdahl

good afternoon Hey, guys.

David Nasca

afternoon, Good Alex.

John Connerton

Alex. Hi,

Alex Twerdahl

PPP, the million the left, of the balance the the quarter terms left John? quarter that end have end of do at at handy, second In $XXX.X you first number of the was the had you

David Nasca

We off paid million. $XX

John Connerton

Yes. off in just back it million, $XX Alex, to way. We paid that

Alex Twerdahl

Okay.

John Connerton

ahead. Go

Alex Twerdahl

no, say something. going No, you Yes. sorry, were to

John Connerton

that’s No, good.

Alex Twerdahl

something round round. in you $X.X of $XXX,XXX remember quarter, $X.X are fees think that rounds correctly, in – there then there the at first been that that between yet haven’t left that the recognized fees of left was remain the the NII? I two terms And like second left so I first I are said Okay. total there from million mean, the end the of million If around was through

John Connerton

correct. That’s

Alex Twerdahl

in in that’s in the ago second out And second can mentioned impact in that prepayment perfect. break of the a income the then the you Okay, press that quarter? cited commercial the and NIM, you terms release dollar you

John Connerton

Alex. Say The you again, that say? prepayments, did

Alex Twerdahl

I commercial income. think prepayment Yes,

John Connerton

Yes, million. it’s $X.X about

we have prepayments do in normal a just every they little Now, normal is clunky. – in and come This environment.

year, amount occur through quarter but the but XX on quarter, of typical we unique, for the it high not all over particular does $XXX,XXX is a basis So, a because is NIM, it’s points that have about every typically. again,

Alex Twerdahl

it. are of your assumptions And stability the which Got prepayments about cash? excluding of NIM, the and sort the in for the talk levels you liquidity when what and also excess excluding then is PPP,

John Connerton

we we So, we growth middle liquidity excess mentioned, coming back us, of our but XXXX. the David have from especially pipeline, still the of as probably the will perspective forgiveness have – through good with will at

expect of to middle XXXX. would we we so start be the – would the through where we third hopefully, we are And quarter that now, hopefully or from borrowed are

Alex Twerdahl

roughly what you Okay. well do PPP, And as for translating at getting the stable expect several excluding the to stable I a penalties, prepayment I quarters? NII guess NII be is to excluding am next NIM

John Connerton

would growth would with that expect NII that have We grow. is the we

Alex Twerdahl

quarter? of when in happening expenses going is that’s just bit Okay. and getting – your guys up that and the little cause expenses And some talked the about people back your third in for then think to last I me, go office, a you the reopening about to

John Connerton

Where back, some coming of expenses relieved actually. some will expenses we some expenses, be are

the for it third overall quarter impactful expect to So, quarter. be we don’t – to for

Alex Twerdahl

for questions. Got my taking Thanks Great. it.

John Connerton

Alex. Thanks, Alright.

Operator

you. Thank

question Our next from Hovde of Bryce go ahead. is Group. coming Rowe Please

Bryce Rowe

Thanks. afternoon. Good evening. Good

David Nasca

Good afternoon.

John Connerton

Hi, Bryce.

Bryce Rowe

refinance end against the and and you it about just Dave, second half you so talked this if growth you seeing against of the just prepayment could and could next the you we that are activity, prospects in. – that environment maybe again into speak to how are environment, for loan year pipeline of that competitive of lending kind frame then and frame

David Nasca

Okay, I to will that. try do

the for way. strong growth let So, quarters. We say me had it first very two this

at closings about out real the mentioned, estate, XX% XX% point I As I about C&I. as John it if that parsed were mentioned, about commercial – it’s

liquidity is tremendous that a market. amount – in a there was Some of the result of of

cash, So, businesses line, example. weren’t sitting a they were expanding of on because for lot their

our seeing pipeline are We is flipped.

have opportunities We between are growth a pipeline. evenly we Competitively, the C&I we pipeline seeing so good CRE, in little and where is the feel seeing of to a experienced more read balanced in more that now the seems the production because about and C&I, some. I right little that’s now saying we bit in be terms everything is industry are banking growth muted

So, feel about positively we that.

recapturing to of going coming Looking demand are both situation also and momentum believe into the out get we into able from future, traction coming right kind ourselves of pretty the and pandemic we out. we now are momentum good COVID we pent-up that seeing being a had

be think to as a lumpy, it going yes, So, so. little John we mentioned, is

that to capture speaking said our that terms growth into comment. arrow and we future think north pointed ability going quarters However, of in is some the the in we my

does in terms about? question, So, your thinking answer of that we Bryce, what are

Bryce Rowe

think curious sounded have was of refinance or it have to like if elevated normalize any the quarter and anticipate it somewhat here you every you prepayment and being mean, second are do elevated like we I just said in I’m kind kind mean, activity into prepayment you I John expect obviously – do move going it continued you so activity quarter, of forward? as I visibility to

David Nasca

liquidity little the the John road am is there but a of system. because on historically elevated, of here the just prepayment more let high this, I take and a environment I we to some will going activity is slushing rate say are give you in color low around a and lot

not that as That think a little soon are a that is. slow sure said that starts we prepayments when As to bit. bit normalize more, we

of terms that. but ball we well, a were slow if big is there is the will probably rear Inflation, that crystal mine in Your liquidity better it here. to some its believe of we than head, on overhang as piece

want you add do to John, So anything?

John Connerton

thing The refis. are I a we is only would that deceleration add, seeing of Bryce,

are it it our we slowing. portfolio, seeing in is just own so So,

that drove had our some that what we record pipeline growth like three is that So, that excluding originations had we over again, In slowing quarter. we commercial pipeline a so good a the us – something quarters. growth been has a quarter, or growth and of we to PPP. the with healthy refis, would at record first easier the that’s pipeline, it had the – kind gives indication say in loan the in not first is But healthy we that than think be going we quarter with good pipeline some four we have that that second still last with least

David Nasca

off was the not are And boom little activity everybody refinance also see on more are experienced are activity, we and the if but heavy what seeing are you a consumer slowdown normal a about we talking back to in marketplace. starting we that loans, seeing refinance in monstrously, a

Bryce Rowe

or for early to second some the opening Got it, bit Maybe gears here that your quarter to border showing to one up in summer about try fall. just Canada me, later percentage in U.S., hotel allowance. the want more came Allowance down okay. juxtapose and shifting here against the improvement, the comments the portfolio little

that is diminish So, any help within bring even in allowance us perhaps and near if that what specific down maybe the q-factor future methodology understand the – more? allowance you could here or there reserve could could

John Connerton

piece in that’s uncertainty in of and risk for left – reserved our that for what’s portfolio that biggest the right. XXXX So, the reserved we –

the and uncertainty the risk around We economy. have

bit through, the one We risk as What’s that results start summer and that we provision But quite that we and move that have the as portfolio of could that – way the a – that. will the or in a on and little performance we hotel have be bit we to the other. back left is get back that moved amount really that. would haven’t worked of see come we in the start to still reserve kind that is remains had that portfolio

Bryce Rowe

would Okay. part would right as mind that quantifying – you I what of now? And mean, is you reserve the $XX John of million kind

John Connerton

we million we on It’s portfolio. portfolio that probably $XX reserved an and an – X% had additional

Bryce Rowe

Alright. Great.

it think for me. I that’s time. Appreciate your

John Connerton

Thanks, Bryce.

Operator

[Operator team remarks. closing Instructions] for We this floor the to no queue showing management would are additional like time. to the at over questions in back I any turn

David Nasca

We at talking to us we free feel Thank again report you out like participating for continued day. I results third to when thank your today. Thanks, everyone you we reach and XXXX much. and a our in our all interest certainly time. any to have Donna. to would look of We appreciate Please great very support. hope with you teleconference forward quarter

Operator

your and gentlemen, for you Ladies thank participation.

You and time or this at may logoff disconnect lines wonderful your phone the have a day. webcast

Evans Bancorp (EVBN) 31 Jul 212021 Q2 Earnings call transcript