Evans Bancorp, Inc. (NASDAQ: EVBN), today reported its results of operations for the quarter ended March 31, 2007.
Diluted earnings per share for the first quarter of 2007 were $0.47 compared with $0.52 in the corresponding period for 2006. First quarter 2007 net income was $1.29 million, down 8.5% from $1.41 million in the year earlier period.
David J. Nasca, President and CEO of Evans Bancorp, noted, “Like other financial institutions, we are experiencing strong headwinds in this current interest rate environment. We continue to work to improve our earnings power and maintain a tight cost discipline. We are assertively creating change within the organization as we rationalize each line of business, increase the sophistication of our accountability system and enhance our incentive programs. Although we recognize that change will not occur overnight, we are building momentum to ensure we are well positioned to capitalize on opportunities as markets improve or maintain a strong position if conditions remain difficult.”
Revenue and Expenses
Net interest income of $3.87 million for the first quarter of 2007 was up $0.24 million, or 6.5%, from the first quarter 2006. Total interest income for the first quarter of 2007 was $7.14 million, up $0.94 million, or 15.1%, from the same period last year, primarily due to higher interest income from loans and leases which increased $0.99 million, or 21.3%, to $5.60 million on a larger loan and lease base. Higher interest income was somewhat offset by a $0.70 million, or 27.3%, increase in interest expense to $3.27 million from $2.57 million in the first quarter of last year. Higher interest expense reflects elevated rates paid on deposits.
The Company’s net interest margin for the quarter was 3.60%, up 11 basis points from last year’s first quarter net interest margin of 3.49%. A primary contributing factor to the improved margin was the growth of interest free funds, as Evans National Bank continues to have success in penetrating its market area with core transactional accounts.
Net interest income after the provision for loan and lease losses was $3.56 million in the first quarter 2007, up $0.2 million from $3.35 million in the same period of 2006. A higher provision for loan and lease losses reflects loan growth.
Total non-interest income for the first quarter of 2007 was $3.15 million, or approximately 44.8% of total revenue, and relatively unchanged from the first quarter of 2006. Higher other income, which was primarily volume driven fee revenue related to lending, offset lower service charges and insurance fees.
Non-interest expense for the first quarter of 2007 increased to $4.93 million from $4.49 million in the first quarter of 2006. Salaries and employee benefits increased $0.17 million during the quarter. Approximately $0.09 million of that increase are non-recurring expenses as executive management succession is completed and the roles of President and CEO are once again reunited. Higher professional services expenses were the result of additional non-recurring items including market analysis for the Company’s distribution network, executive search, and investor relations consulting. Occupancy expenses increased in the first quarter of 2007 compared with the same period for the prior year due to the addition of our eleventh bank branch, which opened in December 2006. Additionally, the Company experienced a $0.15 million loss related to a branch operational error in processing checks.
Balance Sheet Trends and Asset Quality
At March 31, 2007, total assets were $497.4 million compared with $460.3 million at March 31, 2006 and $473.9 million at December 31, 2006. Net loans increased 12.5% to $290.5 million from $258.1 million at March 31, 2006, and increased from $285.4 million at December 31, 2006.
Asset growth was primarily related to commercial loan and lease originations mitigated somewhat by softness in consumer loan growth.
Deposits increased 3.2% and 6.8% to $379.9 million when compared with the first quarter last year and December 31, 2006, respectively. The growth in deposits during the recent quarter was attributed to increases in operating and municipal accounts. The Company continues to focus on core deposit growth to manage its funding costs.
The allowance for loan and lease losses to total loans and leases was 1.32% compared with 1.29% at March 31, 2006. Additionally, nonperforming loans and leases to total loans and leases decreased to 0.22%, a 16 basis point improvement over March 31, 2006.
Stockholders’ equity was $40.1 million as of March 31, 2007, up from $39.5 million at the end of the first quarter last year.
Outlook
Mr. Nasca concluded, “Our strategy is to build a profitable, dynamic, growth-oriented, community-based financial services company to fully meet the need for relationship-based financial services by small and middle market customers. The differentiator in banking is people and relationships. As we move forward, we are evaluating our staffing, processes, and customer experience and will aggressively execute our plans to deepen relationships with our customers.
We believe we can profitably grow our market share over the next 3-5 years to provide competitive scale and meet the continuing demands of leveraging technology and addressing regulatory requirements.”
About Evans Bancorp, Inc.
Evans Bancorp, Inc., a registered financial holding company under the Bank Holding Company Act of 1956, is the parent company of Evans National Bank, a commercial bank with $497 million in assets and $380 million in deposits at March 31, 2007. 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 Inc., 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: www.evansbancorp.com and www.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, interest rate trends, 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 | |||||
March 31, | |||||
2007 | 2006 | ||||
Performance ratios, annualized | |||||
Return on average total assets | 1.07% | 1.21% | |||
Return on average stockholders’ equity | 12.85% | 15.04% | |||
Common dividend payout ratio (TTM) | 38.9% | 37.0% | |||
Efficiency ratio | 68.26% | 64.15% | |||
Yield on average earning assets | 6.65% | 5.95% | |||
Cost of interest-bearing liabilities | 3.65% | 2.89% | |||
Net interest rate spread | 3.00% | 3.06% | |||
Contribution of interest-free funds | 0.60% | 0.43% | |||
Net interest margin | 3.60% | 3.49% | |||
Asset quality data | |||||
Past due over 90 days and accruing loans and leases | $68 | $111 | |||
Non-accrual loans and leases | $591 | $893 | |||
Total non-performing loans and leases | $659 | $1,004 | |||
Other real estate owned (ORE) | $40 | $40 | |||
Total non-performing assets | $699 | $1,044 | |||
Net loan and lease charge-offs | $169 | $129 | |||
Net charge-offs to average total loans and leases | 0.23% | 0.20% | |||
Asset quality ratios | |||||
Non-performing loans and leases to total loans and leases | 0.22% | 0.38% | |||
Non-performing assets to total assets | 0.14% | 0.23% | |||
Allowance for loan and lease losses to total loans and leases | 1.32% | 1.29% | |||
Allowance for loan and lease losses to non- performing loans and leases | 589.41% | 335.1% | |||
Capital ratios | |||||
Average common equity to average total assets | 8.36% | 8.03% | |||
Leverage ratio | 8.68% | 8.10% | |||
Tier 1 risk-based capital ratio | 12.34% | 12.86% | |||
Risk-based capital ratio | 13.48% | 14.11% | |||
Book value per share | $14.71 | $13.41 | |||
Common shares outstanding | |||||
Average-diluted | 2,731,925 | 2,724,583 | |||
Period-end basic | 2,729,556 | 2,719,636 |
EVANS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands except share and per share data) | ||||||
March 31, | December 31, | |||||
2007 | 2006 | |||||
ASSETS | ||||||
Cash and cash equivalents: | ||||||
Cash and due from banks | $14,340 | $12,592 | ||||
Securities: | ||||||
Available for sale, at fair value | 149,957 | 133,519 | ||||
Held to maturity, at amortized cost | 4,142 | 4,211 | ||||
Loans and leases, net of allowance for loan and lease losses of $3,885 | ||||||
in 2007 and $3,739 in 2006 | 290,467 | 285,367 | ||||
Properties and equipment, net | 8,695 | 8,743 | ||||
Goodwill | 10,003 | 10,003 | ||||
Intangible assets | 2,154 | 2,298 | ||||
Bank-owned life insurance | 10,280 | 10,140 | ||||
Other assets | 7,354 | 7,021 | ||||
TOTAL ASSETS | $497,392 | $473,894 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
LIABILITIES | ||||||
Deposits: | ||||||
Demand | $70,830 | $72,125 | ||||
NOW | 12,929 | 11,253 | ||||
Regular savings | 86,637 | 85,084 | ||||
Muni-vest | 46,745 | 31,240 | ||||
Time | 162,797 | 156,047 | ||||
Total deposits | 379,938 | 355,749 | ||||
Securities Sold Under Agreement to Repurchase | 6,281 | 8,954 | ||||
Other short-term borrowings | 26,350 | 24,753 | ||||
Other liabilities | 11,063 | 9,089 | ||||
Junior subordinated debentures | 11,330 | 11,330 | ||||
Long-term borrowings | 22,285 | 24,476 | ||||
Total liabilities | 457,247 | 434,351 | ||||
CONTINGENT LIABILITIES AND COMMITMENTS | ||||||
STOCKHOLDERS' EQUITY: | ||||||
Common stock, $.50 par value; 10,000,000 shares authorized; | ||||||
2,745,338 and 2,745,338 shares issued, respectively, and | ||||||
2,729,556 and 2,733,056 shares outstanding, respectively | 1,373 | 1,373 | ||||
Capital surplus | 26,184 | 26,160 | ||||
Retained earnings | 14,555 | 14,196 | ||||
Accumulated other comprehensive loss, net of tax | (1,625) | (1,917) | ||||
Less: Treasury stock, at cost (15,782 and 12,282 shares, respectively) | (342) | (269) | ||||
Total stockholders' equity | 40,145 | 39,543 | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $497,392 | $473,894 |
EVANS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands except share and per share data) | ||||||
Three Months Ended | ||||||
March 31, | ||||||
2007 | 2006 | |||||
INTEREST INCOME | ||||||
Loans and leases | $5,600 | $4,615 | ||||
Federal funds sold/Interest bearing deposits at other banks | 87 | 11 | ||||
Securities: | ||||||
Taxable | 1,012 | 1,104 | ||||
Non-taxable | 443 | 474 | ||||
Total interest income | 7,142 | 6,204 | ||||
INTEREST EXPENSE | ||||||
Deposits | 2,704 | 1,895 | ||||
Other borrowings | 350 | 483 | ||||
Junior subordinated debentures | 218 | 192 | ||||
Total interest expense | 3,272 | 2,570 | ||||
NET INTEREST INCOME | 3,870 | 3,634 | ||||
PROVISION FOR LOAN AND LEASE LOSSES | 315 | 282 | ||||
NET INTEREST INCOME AFTER | ||||||
PROVISION FOR LOAN AND LEASE LOSSES | 3,555 | 3,352 | ||||
NON-INTEREST INCOME: | ||||||
Bank charges | 471 | 498 | ||||
Insurance service and fees | 2,129 | 2,177 | ||||
Net loss on sales of securities | (1) | - | ||||
Premium on loans sold | 1 | 3 | ||||
Bank-owned life insurance | 140 | 105 | ||||
Other | 405 | 373 | ||||
Total non-interest income | 3,145 | 3,156 | ||||
NON-INTEREST EXPENSE: | ||||||
Salaries and employee benefits | 2,668 | 2,501 | ||||
Occupancy | 603 | 532 | ||||
Supplies | 78 | 85 | ||||
Repairs and maintenance | 139 | 137 | ||||
Advertising and public relations | 88 | 71 | ||||
Professional services | 252 | 144 | ||||
Amortization of intangibles | 144 | 130 | ||||
Other Insurance | 90 | 87 | ||||
Other | 870 | 799 | ||||
Total non-interest expense | 4,932 | 4,486 | ||||
INCOME BEFORE INCOME TAXES | 1,768 | 2,022 | ||||
INCOME TAXES | 481 | 616 | ||||
NET INCOME | $1,287 | $1,406 | ||||
Net income per common share-basic | $0.47 | $0.52 | ||||
Net income per common share-diluted | $0.47 | $0.52 | ||||
Cash dividends per common share | $0.34 | $0.34 | ||||
Weighted average number of common shares | 2,730,499 | 2,722,950 | ||||
Weighted average number of diluted shares | 2,731,925 | 2,724,583 |
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 | |||||||||||
March 31, 2007 | March 31, 2006 | |||||||||||
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 | $286,986 | $5,600 | 7.81% | $257,874 | $4,615 | 7.16% | ||||||
Taxable securities | 94,387 | 1,011 | 4.28% | 112,352 | 1,104 | 3.93% | ||||||
Tax-exempt securities | 41,241 | 443 | 4.30% | 45,479 | 474 | 4.17% | ||||||
Federal funds sold | 7,062 | 87 | 4.93% | 1,162 | 11 | 3.79% | ||||||
Total interest-earning assets | 429,676 | 7,141 | 6.65% | 416,867 | 6,204 | 5.95% | ||||||
Non interest-earning assets: | ||||||||||||
Cash and due from banks | 10,987 | 12,642 | ||||||||||
Premises and equipment, net | 8,708 | 8,156 | ||||||||||
Other assets | 29,558 | 28,146 | ||||||||||
Total Assets | $478,929 | $465,811 | ||||||||||
LIABILITIES & STOCKHOLDERS' EQUITY | ||||||||||||
Interest-bearing liabilities: | ||||||||||||
NOW | $12,057 | $6 | 0.20% | $11,562 | $5 | 0.17% | ||||||
Regular savings | 88,254 | 252 | 1.14% | 89,628 | 188 | 0.84% | ||||||
Muni-Vest savings | 47,927 | 518 | 4.32% | 34,125 | 330 | 3.87% | ||||||
Time deposits | 157,473 | 1,927 | 4.89% | 149,397 | 1,372 | 3.67% | ||||||
Other borrowed funds | 34,000 | 336 | 3.95% | 51,495 | 466 | 3.62% | ||||||
Junior subordinated debentures | 11,330 | 218 | 7.70% | 11,330 | 192 | 6.78% | ||||||
Securities sold U/A to repurchase | 7,445 | 14 | 0.75% | 8,068 | 17 | 0.84% | ||||||
Total interest-bearing liabilities | 358,486 | $3,271 | 3.65% | 355,605 | $2,570 | 2.89% | ||||||
Noninterest-bearing liabilities: | ||||||||||||
Demand deposits | 70,935 | 65,806 | ||||||||||
Other | 9,451 | 7,006 | ||||||||||
Total liabilities | $438,872 | $428,417 | ||||||||||
Stockholders' equity | 40,057 | 37,394 | ||||||||||
Total Liabilities and Equity | $478,929 | $465,811 | ||||||||||
Net interest earnings | $3,870 | $3,634 | ||||||||||
Net yield on interest earning assets | 3.60% | 3.49% | ||||||||||
Interest rate spread | 3.00% | 3.06% |