EVBN - Earnings call transcript Q1 2024

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Operator

Greetings, and welcome to the Evans Bancorp First Quarter Fiscal Year 2024 Financial Results. [Operator Instructions]

As a reminder, this conference is being recorded. It is now my pleasure to introduce Deborah Pawlowski, Investor Relations for Evans Bancorp. Thank you.

begin. may You

Deborah Pawlowski

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

our the progress with provide on President open our Here we an for Financial and results update review David and the that, going Officer. have will first of I David the Chief and and XXXX outlook. John questions. me, After CEO; call Connerton, to the strategic John company's Nasca, quarter and

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

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

Please at documents our sec.gov. find those website or on

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

David Nasca

off of it Good highlights hand from We you, today. quarter, in John appreciate review we'll detail. everyone. with our afternoon, results then a the Thank I'll the Debbie. you to joining start us and discuss recent to

some margin solid environment, continued demonstrated reflect and key a saw challenging expansion. First segments. net performance business across sequential quarter interest Against resilience our results

the margin continues increase to the a which of While rate outlook. stabilizing decelerating, net of rise, we provides funding see interest cost

later. as John will in detail more discuss

certificates longer modest During the a market X manage higher borrowings prefunding against in used of in deposit possible opportunistically This $XX movements growth. Federal of rates a overnight of maturities rate $XX on of for and expected the million as some quarter, for deposit period and well funding lock extension years. included Bank seasonality the wholesale amount to brokered as million to we loan Loan Home

organic quarter expansion. sets for recent loan foundation future Our during gathering a deposit the strong

quarter particularly to in rate loan Across we diverse loans our continue during optimistic approximating muted, areas, business commercial was high-quality relative $XX a are pipeline to difficult our banking a the teams While first in loans market build significant our consumer, pipeline of and growth environment. million.

tools. seeing of commercial in are early team benefits investments strategic our to enhancements banking We prospecting also and

growth Relationship in bolstered in activity with to to additional And team a has Regional addition our Manager. February, acquired Rochester pipeline. provided we Commercial in recently new the the Director,

opportunities efficiencies only By areas, operations to also refine but and and seize invest challenges, not in ultimately importance have we people in While organization, efforts scale pivotal strategic and investments the recognize to These both our weather right enhanced we investments customer-facing of deliver technology. are the vigilant are continuing poised managing effectively expenses, to solutions future we for drive been and in growth. are the and in experience.

note adjustments our Shareholders, of some Board, on As make the to we approach wanted May Annual occur to will Meeting I X. which our meeting following of

his process the our particularly throughout Savings the in Rochester. played governance bolstering Fairport in departure be who and statement, pivotal presence will proxy members. our our acquisition. in joined Kevin after to a counsel his in has through Robert X will who XX we Their to for the Kevin expansion and Board XXXX contributions Kevin bid Bank seeking farewell gratitude and directors We will Marone. in efforts, our extend integration the Jr. acquisition Maroney, result in in outlined to for not Miller, reduction role size As reelection: us a wise

for part integral bank's leadership commitment for unwavering building years. to an owe been the business in that an of crucial insurance in acquisitions, tenure Evans. organically impressive the and also his of the but our year. the impact of not gratitude on through of the and quarter has profound of Jr. left his of culminating the dedication speaks until played a insurance only visionary fourth Evans sale agency We successful His long-serving its Bob His expertise. and business Agency, a debt Miller in XX last our President XXXX retirement driving in volumes role Board, XX to his a growth as Board Robert his

Evans and entire the their Board both very them of best behalf in On family, we wish endeavors. the future

through loan Central our and progress diligently relationship and experience foster optimizing our are we strength. focus expand on to well remains our operational we and base on all enables the and growth. for deposit as returns. to fostering effectively primary efficiency management customer year, expenses to environments. capitalize to and core acquisition sustainable we in relationships, customer-centric to prioritizing This needs As model, confident Concurrently, our support, we as strategy are to opportunities committed community-based managing challenges navigate is is the economic deliver growth. and customer our which us faced our client clients' By strong ability across believe serve being

questions will over results take then we to turn in be With to have. may run John our it to greater detail, John? through any you happy and that, I'll

John Connerton

everyone. good Thank you, David, and afternoon,

As a TEA. Evans relating that We Gallagher of XXXX business XXXX. & periods sale Company comparative to to Agency Arthur November activity reminder, the business or J. on include the the . completed of XX,

as on the recognized $X secured. per quarter $X.X XXXX $XX.X million, income million of $X.X net of delivered we quarter, well had of though gain The the as of insurance diluted sale a $XX by million of included TEA investments share. sale, was pretax that sale from recent fourth the linked to the of $X.XX revenue partially of loss the or million For offset million prior earnings

saw earnings of primary our quarter in first The last and million. change provision. were of When compared year-over-year interest income the atypical change and $X.X the net sequential business a with TEA improvement drivers excluding year's core lower when banking items, earnings

$XX.X Net quarter, for fourth by when million income, interest deposit was by in was which period compared XXXX. of interest pressure rate year growth offset accelerated variable interest of with with pricing, the impacted expense, flat more portfolios. on linked though in higher increases given the it prior most income competitive This than driven our

from I pricing talk at came will interest NIM quarter my end and restructure from the of balance net in up a basis fourth slightly First quarter. the we flat quarter our to linked X our benefited expectations points favorable as sheet to X.XX%, was This NIM at margin strategy. of continued prudent expectations remarks.

rates $XX.X of the increase of the income and loss, offset recognized in million million increase the the in revenue, The credit million was from TEA the of to value and was from sequential provision due insurance $XXX,XXX mortgage reduction losses on offset $X.X The $X sequential to investment by factors. in from an higher for noninterest XXXX TEA recent primarily fourth net due which quarter. partially improving to charge-offs, quarter remaining loan the The of Total noninterest rates. million down economic slower quarter. quarter all prepayment fourth by due in servicing sale in was income $XX.X the gain was the quarter the were

servicing with related mortgage majority $X.X increase Total the first of noninterest revenue of down the million was value insurance rights reduction XXXX. XXXX. the first $X.X TEA the million in compared quarter when income of recognized mostly of first The This an was to in quarter offset quarter was in by XXXX. during

fourth from benefits accruals of that and XXXX of due million quarter TEA, prior fourth were expense of million noninterest lower to The primarily decrease the noninterest was quarter recognized and during employee in to XXXX the to of sale. related $X.X $X salaries expense the incentive

included In settlement $XXX,XXX addition, other quarter. during contributions pension sequential of the were and of expenses in $XXX,XXX charitable expenses

of equity unemployment retirement-eligible benefited quarters The be and recent annual incentive accruals, not accounts to resets annual our are FICA into first The employees in from accelerated compensation quarter and for but that include costs subsequent quarter and in did in expected status. some about repeated the include those insurance. $XXX,XXX Those for HSA XXXX. the of other seasonal payment lower

of of first The noninterest and was decrease expenses from salaries TEA, the $X.X in million due which of relating $X.X to XXXX to quarter noninterest employee million. expense benefits were

is and first XXXX, first due benefits, during remaining of noninterest the technology total in by million to salaries related quarter expense bank TEA, of quarter were employee the $XXX,XXX the of of the higher the expenses XXXX. and quarter recognized to excluding first The with During $X.X million, flat increase XXXX. communication $X.X

quarter close of for in merit additional the run for within costs Adjusting first forward. the and approximation full of going this the expense end is first first at salaries a expense quarter the noninterest awarded of the use quarter increases impact for adding and XXXX, the rate to benefits

for the XXXX expectation TEA's and decrease expenses XXXX expense is Our bank-only between including X% X%. a year

our We borrowings extending David interest overnight favorable of manage at million in as rates continue and $XX suggested. sheet deposits the to brokered during strengthen million quarter, strategically to recent $XX adding rate of balance approximately order risk,

up broker of was which the considered $X only tax quarter last saw deposits. seasonal or Those to Reflected we make be down of and can distributions million on and perspective, a municipal first XX% deposit was time year. that the and quarter year's sequential and of savings, due product million. increase the in the Total the increased commercial deposits commercial clients seasonal $XX at or category deposits were in X% beginning typical were outflows during the first which decrease the $XXX end from payments quarter. inflows million From

million flat in compared as quarter. of originations originations with the quarter with $XX commercial were $XX.X Total loans net million fourth net linked the were

to commercial warehouse that including ]. -- meet seeing warehousing brands selective decisions underwriting credit facilities opportunities be continue in multi-family in but real [ are and our We estate,

and line that impact portfolio. to in growth remain continue C&I muted balances

the $XX partially growth $XX C&I. Total strong estate We commercial and which low million stands year-over-year, current quarter the are million, offset $XX originations million. to majority were loans were pipeline million real up end. at which line quarter $XX were loans, first making at The of the and offset industrial reflected some usage as in is progress the loan of down commercial

liquidity our of that be in current supports expected XXXX. X% the expect We loan commercial growth to approximately foundation position

sequential the a million in quarter. slight with fourth million. on last a end compared increase first with quarter $XX $XX loans $XX of $XX remain million Credit of at from quarter a nonperforming Criticized end, sound This loans decrease was basis. metrics the million were year's at

successful our dynamics. balancing deposit liquidity our continue pricing with been in managing and to evolving profitability in have to ability market are the to We strategy confident include navigate

rates deposits and fight to core for continue markets maintaining warranted, for will offer by We pricing when competitive in preferred clients. our

seasonal anticipated a funds to fluctuation deposits brokered and temporary adding in expected for increase deposit impact sheet longer-term with growth was funding borrowings balance The loan Fed [indiscernible].

basis While in the decrease adding of will NIM income, quarter is XX net the the second leverage to by short-term points. impact interest it the

rate currently Deposit in offerings market. are our stable

in as well move accounts However, transactional increases we expect customers ]. as continue [ continue the costs continue to accounts to balances reprice from modest interest-bearing portfolio to to as CD

Given second those in quarter to of XXXX. expect the X.XX% we impacts, our NIM be

for With line the that, operator, we would now like open to questions.

Operator

from Our Instructions] comes question Piper Twerdahl the line with [Operator of Sandler. Alex first

Alexander Roberts Twerdahl

and typically progresses. balance at John, the quarter year? and flat from more you're could does kind talk of little And the also, where that you a borrowings of stay more the year on course shrink the bit sitting see how evolving on sheet liquidity -- Or we you little alluded. year does as of overall first it the know now? I to management do the But was due the bit sort is strategy maybe than a the the the progresses? end sheet maybe balance you hoping over sheet roughly about of the bit a little extension as see brokered of that it the I balance

John Connerton

then think we significantly. seasonally the then of million the guess, through end mostly borrowings just a fluctuations municipal winter. deposits CDs, are I from So We're this in -- brokered end the of the quarter at that a me, CDs about that -- municipal are -- talk yes, fall portfolio up -- this alone, to X-year, will bit we have you -- and think $XX run back is FHLB in and and million as up $XX the of those I excuse the can down the the out and down the little little on and broker

we and mitigate So in didn't went we're going have funding out quarter, CDs market. that some utilizing we got to in kind opportunity deposits. an we And to that there some of brokered those of utilize where interest of price dips. took help wholesale the that to some so those municipal our was where we're And kind cyclicality

itself, by through the through the end kind flat the would consider that sheet So of of the and balance again, year. period to

is portion of suggested, and dropped other the advantage some our were expectations, longer obviously kind on again, prefund growth expectation in to The of of it's take of rates, as increased an of the $XX loans. our drop million we since prefunding to before we in rates end currently X% wanted the the

be And would the the so movement again, that out again our would kind balance of a cash of just offset that loans. mean into sheet

stay would flat. transactions, So purposes, yes, what particular mainly balance say, in X, those total, for I sheet that pre-funding should the

slightly, types, such couple up the after said do of percentage. expect still we sheet a done, that trend growth have all X However, some and those should that balance deposit excluding we'll

Alexander Roberts Twerdahl

And loan overall do talk will X% growth about the target we Okay. the year, That's you that over goes the helpful Great. of sort X% into the spread that evenly color. of about the think remaining be think that, pretty then what year? maybe Or X and quarters for target? when

John Connerton

quarter assumption, estimate, think of year the the fourth but -- is of of is I rest is bit expectation a be evenly little spread. our should more that's more an Yes, bit that... fairly a a good little that Obviously,

Alexander Roberts Twerdahl

with lot wanted quarters, more little about a capital over Okay. And flexibility to you're about the couple on next talk question, then of how more I created management final a thinking obviously just bit considerations in the more front restructuring, quarter. buybacks sale like things the that? fourth you or thoughts just if of TEA have or curious I'm capital any things like And the additional

John Connerton

the a do challenges -- So just yes, to Alex, in and that in lot look we which based market own take liquidity we quarter, have. and we the level low have there's out did. our continue the our can. restrictions and opportunity when stock, do first I'm did at on going go buybacks and of quarter, some we'll we to in to first get buybacks back We the that get

And sure first it, that asset make is think, we're to and capital especially we've at it's a to now a thirdly, we're been supporting an lower I to that our perspective. that But then a definitely from we buybacks. foremost, at with. really our sure secondly, growth, make look that our we And then there when of for performance those consistent buybacks. support want yes, level, hard somewhat get that But -- dividend years, to little

if would in of to So it, kind I suggest that from a were perspective, I X, X that priority look X, it's order. at

Alexander Roberts Twerdahl

the Got have if the did handy? them. that in What first you was quarter, amount that you

John Connerton

I Alex. don't have small a handy, amount. It's it

along million something like worth we think $X.X did those maybe shares lines. I like or XX,XXX

Operator

Christopher [Operator from next of O'Connell Instructions] Our comes with the KBW. question line

Christopher O'Connell

the all Yes. I appreciate NIM impact. from guidance the

at that As far what that borrowing occur? where extensions, were -- the as did the point brokered CDs on were the put first quarter in those in

John Connerton

so won't in an quarter. impact March, first the later the see you in of was of It much

Christopher O'Connell

about guys kind 'XX in NIM in trajectory are of half of of the after That's back it. XQ? you helpful. the And the reset thinking Got how the

David Nasca

impact of the our NIM. seen is deposits NIM expect little the see right Well, hope and we're out NIM to we the decreases now little bit, help that the a but impact, lot have should should moderated here we've think the flattened on We with a starting the which here, certainly to betas bit. a don't decelerate that expansion, be

Christopher O'Connell

what's to of has it. CD market yet rates? remaining Got reprice it kind the for up portion of the And portfolio, toward that

John Connerton

XX%. We come but around in quarter, XX%. Probably piece big through had another a this

Christopher O'Connell

or Great. have been recent what yields do are pipeline? on they coming at the loan origination have in the you And

John Connerton

Yes.

the at rates rates loans, C&I to are prime. -- between offering is somewhere our on -- then current and our Our term offering are least X.XX% X.X%, than better

Christopher O'Connell

quarter? out the on of kind unrelated insurance in then that Does amount like that is is that there's after And still $XXX,XXX falling there a this -- side, the fee business? line. lingering Or

John Connerton

question, Good Chris.

year, very program, been which It's our around there, in For has was last been $XXX,XXX line. consistent. it always part in of a comparative wealth that purposes, year, is

we're should ] but to in for of So purposes, didn't out that it -- -- comparative so be from consistent there, there, we want reflash that quarter-to-quarter. [ just leaving is it

Christopher O'Connell

Okay. Got it.

David Nasca

benefit for that, of did like we things we the dovetailed and corporations plans sort Yes, insurance. and with

in that it bucket. was So

Christopher O'Connell

then the are guys or the credit sustaining. NPLs Great, to are net seeing signs side, quarter any charge-offs this And on the in any credit and commentary of size in not recently? what kind your movement well. stress of markets you're that But know stress you seeing? pretty any much good as and I

David Nasca

not credit say we, done now. out that see we've companies to for in the making higher by won't in right we've credit And rates, loans real believe the all but continue conservative. we've environments. have I any watched We all sure conservative, reasons, the we're We been been cracks impacted armor appropriately but for that

we So said. seeing as of cracks, a not are lot I

think. that credit are longer, at we're point. may we're cycle to that And have but seeing We think credits we You not a are that point, going higher we're see we that some rates this through there working seeing be nonperforming. for the at

moving and make progress to those. to we repairing continue We expect continue forward there, on some

of second. So this whole challenge impending we're seeing not a right lot

Operator

closing I'd further it no queue. to to Nasca back the questions There remarks. like for hand in David

David Nasca

support. All out forward at you. hope we report have to Thank We quarter all a second you our great any of when talking XXXX right. time. here again always We in you're Please you results. look continued us for free day. We to all reach Doug. feel Thank your that you, and us and you participating appreciate Thank with to teleconference. today the interest with

Operator

you teleconference. conclude and this does Ladies for Thank participation. gentlemen, your today's

this wonderful at lines have your day. time, and disconnect may a You

Evans Bancorp (EVBN) 30 Apr 242024 Q1 Earnings call transcript