Evans Bancorp Reports Net Income of $2.9 Million In Third Quarter 2024

Rhea-AI Summary

Evans Bancorp (EVBN) reported third quarter 2024 net income of $2.9 million, or $0.53 per diluted share. The company announced a definitive agreement to merge with NBT Bancorp during the quarter. Key highlights include: net interest margin of 2.80% (up 9 basis points), total loans growth of $67 million (4%) since year-end 2023, and total deposits increase of $182 million (11%). The quarter included $0.6 million in merger-related expenses offset by a gain from property sale. The NBT merger, valued at approximately $236 million, is expected to close in Q2 2025 with an exchange ratio of 0.91 NBT shares for each Evans share.

Positive

• Net interest income increased $0.7 million (5%) quarter-over-quarter
• Total loans grew by $67 million (4%) since year-end 2023
• Total deposits rose by $182 million (11%) from December 31, 2023
• Net interest margin improved to 2.80%, up 9 basis points sequentially
• Strong loan pipeline of $83 million maintained

Negative

• Net income decreased from $3.6 million in Q3 2023 to $2.9 million in Q3 2024
• Return on average equity declined to 6.44% from 9.06% year-over-year
• Non-performing loans increased by $7.5 million during the quarter
• Non-performing loans to total loans ratio increased to 1.82% from 1.42% in Q2 2024

Insights

Financial Analyst

The Q3 2024 results reveal mixed performance with some positive developments. $2.9 million in net income ($0.53 per share) remained flat sequentially but declined from $3.6 million ($0.66 per share) year-over-year. Key positives include 4% loan growth YTD, 11% deposit growth and net interest margin expansion to 2.80% (up 9 basis points). However, non-performing loans increased to 1.82% of total loans, up from 1.42% in Q2.

The pending merger with NBT Bancorp, valued at approximately $236 million, represents a strategic move that could enhance scale and market presence. The fixed exchange ratio of 0.91 NBT shares for each Evans share provides clarity on deal terms. The 75.32% efficiency ratio indicates room for operational improvements, while the strong Tier 1 leverage ratio of 10.01% demonstrates solid capital position.

WILLIAMSVILLE, N.Y.--(BUSINESS WIRE)-- Evans Bancorp, Inc. (the “Company” or “Evans”) (NYSE American: EVBN), a community financial services company serving Western New York since 1920, today reported results of operations for the third quarter ended September 30, 2024. The prior-year period includes business activity relating to The Evans Agency (“TEA”) prior to the sale to Arthur J. Gallagher & Co. on November 30, 2023.

HIGHLIGHTS

• Evans announced Definitive Agreement to merge with NBT Bancorp Inc. during the third quarter
• Net income per share was $0.53 in the third quarter, which included $0.6 million in merger-related expenses and an offsetting gain from the sale of other real estate owned (OREO) property
• Third quarter net interest margin was 2.80%, up 9 basis points sequentially driven by balance sheet adjustments in the first quarter of 2024 and strategic deposit pricing
• Total loans grew by $67 million, or 4%, since year-end 2023, and by $84 million, or 5%, compared with the prior-year period
• Maintained a strong loan pipeline of $83 million
• Total deposits rose by $182 million, or 11%, from December 31, 2023, and increased $95 million, or 5%, from the end of last year’s third quarter

Net income of $2.9 million, or $0.53 per diluted share, in the third quarter of 2024 was flat sequentially and reflected higher net interest income of $0.7 million and an increase in non-interest income of $0.6 million offset by higher provision for credit losses of $0.3 million and an increase in non-interest expense of $1.0 million, which included $0.6 million of merger related costs. Last year’s third quarter had net income of $3.6 million, or $0.66 per diluted share. The change from the prior-year period reflected higher net interest income of $0.8 million, which was more than offset by the impact of the sale of TEA in 2023. Return on average equity was 6.44% for the third quarter of 2024, compared with 6.76% in the second quarter of 2024 and 9.06% in the third quarter of 2023.

David J. Nasca, President and CEO of Evans Bancorp, Inc., commented, “Evans delivered solid third quarter performance as the rate environment began to improve, driven by growth in our lending portfolio, and deposits, an expanded net interest margin, and continued expense management discipline. We additionally benefited from the sale of an OREO property during the quarter, which boosted non-interest income and helped offset the initial $0.6 million in merger-related costs incurred.

“As we look ahead, we are excited about the future for Evans as we join with NBT Bancorp. This partnership provides a tremendous opportunity to scale our service to customers and communities by leveraging NBT's strong regional presence and shared community banking values. Together, we are well positioned to deliver long-term value to our shareholders and continue our tradition of supporting the local markets we serve.”

On September 9, 2024, NBT Bancorp Inc. (“NBT”) (Nasdaq: NBTB) and Evans announced that they entered into a definitive agreement pursuant to which Evans will merge with and into NBT. In accord with the merger agreement, NBT will acquire 100% of the outstanding shares of Evans in exchange for common shares of NBT. The exchange ratio will be fixed at 0.91 NBT shares for each share of Evans, resulting in an aggregate transaction value of approximately $236 million based on NBT’s closing stock price of $46.28 on September 6, 2024. The merger was unanimously approved by the Boards of Directors of both companies. The merger is expected to close in the second quarter of 2025, subject to the satisfaction of customary closing conditions, including approval by the shareholders of Evans and the receipt of required regulatory approvals.

Net Interest Income
($ in thousands)
		3Q 2024				2Q 2024				3Q 2023
Interest income		$	28,698			$	27,815			$	24,292
Interest expense			13,654				13,495				10,036
Net interest income			15,044				14,320				14,256
Provision for credit losses			570				297				506
Net interest income after provision		$	14,474			$	14,023			$	13,750

Net interest income of $15.0 million increased $0.7 million, or 5%, over the second quarter of 2024 due to higher average loans originated and the Company’s investment strategy to strengthen the balance sheet at the end of the first quarter of 2024. Compared with last year’s third quarter, net interest income was higher by $0.8 million, or 6%, due to higher average loan balances and the stabilization of the net interest margin.

Third quarter net interest margin of 2.80% increased 9 basis points from the trailing second quarter and was up 1 basis point over the prior-year period. The yield on loans increased 17 basis points compared with the second quarter and was up 55 basis points year-over-year. The cost of interest-bearing liabilities was 3.28% compared with 3.27% in the second quarter of 2024 and 2.59% in the third quarter of 2023.

The $0.6 million provision for credit losses in the third quarter was due to loan growth as well as slower prepayment rates. The increase in non-performing loans of $7.5 million during the quarter was due largely to one loan that is 90 days past due and still accruing that is expected to be renewed early in the fourth quarter.

Asset Quality
($ in thousands)
		3Q 2024				2Q 2024				3Q 2023
Total non-performing loans		$	32,598			$	25,128			$	27,311
Total net loan charge-offs			40				22				35
Non-performing loans / Total loans			1.82	%			1.42	%			1.60	%
Net loan charge-offs / Average loans			0.01	%			0.01	%			0.01	%
Allowance for credit losses / Total loans			1.29	%			1.28	%			1.28	%

Non-Interest Income
($ in thousands)
		3Q 2024				2Q 2024				3Q 2023
Deposit service charges		$	699			$	667			$	665
Insurance service and fee revenue			186				176				3,498
Bank-owned life insurance			253				252				239
Interchange fee income			529				504				516
Other income			1,327				801				638
Total non-interest income		$	2,994			$	2,400			$	5,556

Total non-interest income increased $0.6 million from the sequential quarter due to a gain on the sale of the one property that the Company had in other real estate owned at the end of the second quarter of 2024. That gain was recognized in the other income category.

The $2.6 million reduction in non-interest income from the prior-year period was due to lower insurance service and fee revenue of $3.3 million driven by the sale of TEA, partially offset by the sale of the other real estate owned.

Non-Interest Expense
($ in thousands)
		3Q 2024				2Q 2024				3Q 2023
Salaries and employee benefits		$	7,539			$	7,330			$	8,735
Occupancy			1,088				1,089				1,109
Advertising and public relations			327				254				348
Professional services			992				870				869
Technology and communications			1,423				1,596				1,517
Amortization of intangibles			4				4				100
FDIC insurance			340				300				350
Merger related			600				-				-
Other expenses			1,274				1,115				1,379
Total non-interest expenses		$	13,587			$	12,558			$	14,407

Non-interest expenses increased $1.0 million from the sequential quarter, which included $0.6 million of merger related expenses in support of the planned merger with NBT.

Salaries and employee benefits, the largest component of non-interest expenses, were up $0.2 million, or 3%, from the second quarter of 2024 and down $1.2 million, or 14%, from the prior-year period. Included in salaries and employee benefits during the third quarter of 2024 was the funding of employee’s health savings accounts. Compared with last year’s third quarter, the decrease was primarily due to salaries and employee benefit expenses related to TEA of $1.5 million, offset by merit increases given in the beginning of the current year.

The Company’s GAAP efficiency ratio, or noninterest expenses divided by the sum of net interest income and noninterest income, was 75.32% in the third quarter of 2024, 75.11% in the second quarter of 2024, and 72.72% in the third quarter of 2023.

Income tax expense was $0.9 million, for an effective tax rate of 24.2%, in the third quarter of 2024 compared with 23.8% in the second quarter of 2024 and 26.2% in last year’s third quarter.

Balance Sheet Highlights

Total assets were $2.28 billion as of September 30, 2024, an increase of $171 million, or 8%, since December 31, 2023, and were up $105 million, or 5%, since September 30, 2023. Interest-bearing deposits at banks increased $103 million and $100 million, respectively, from the comparative periods. In addition, loan growth was $67 million, or 4%, since year end 2023 and $84 million, or 5%, when compared with the prior-year period.

Investment securities were $276 million at September 30, 2024, $8 million higher than the end of the second quarter of 2024 and $61 million lower than the end of last year’s third quarter. The Company sold $78 million of investment securities during the fourth quarter of 2023 and used the proceeds to reduce short-term borrowings. The primary objectives of the Company’s investment portfolio are to provide liquidity, secure municipal deposits, and maximize income while preserving the safety of principal. The Company has the positive intent and ability to hold the remaining portfolio through recovery of value.

Total deposits of $1.90 billion increased $182 million, or 11%, from December 31, 2023, and were up $95 million, or 5%, from the end of last year’s third quarter.

At September 30, 2024, Evans had $40 million borrowed at FHLB. Given the current collateral available at FHLB, advances up to $373 million can be drawn on the FHLB via the Company’s overnight line of credit. Additionally, Evans has the ability to borrow from the Federal Reserve. At September 30, 2024, Evans had $88 million in short-term borrowings with the Federal Reserve and $8 million in additional availability to borrow against collateral.

Capital Management

The Company has consistently maintained regulatory capital ratios measurably above the Federal “well capitalized” standard, including a Tier 1 leverage ratio of 10.01% at September 30, 2024 compared with 10.04% at June 30, 2024 and 9.40% at September 30, 2023.

Book value per share was $33.58 at September 30, 2024 compared with $32.15 at June 30, 2024 and $27.52 at September 30, 2023. Reflected in the book value changes are the Federal Reserve’s aggressive interest rate hikes that have resulted in significant unrealized losses on investment securities. As of September 30, 2024, this amounted to $6.36 per share impact to book value. Such unrealized gains and losses are due to changes in interest rates and represent the difference, net of applicable income tax effect, between the estimated fair value and amortized cost of investment securities classified as available-for-sale.

Non-GAAP tangible book value per share was $33.25 at September 30, 2024 compared with $31.81 at June 30, 2024 and $25.04 at September 30, 2023. The increase over the prior-year period reflected the sale of TEA, which resulted in significant value creation including growth in tangible book value.

On August 21, 2024, the Company declared a cash dividend of $0.66 per common share, which was paid on October 10, 2024.

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 $2.3 billion in assets and $1.9 billion in deposits at September 30, 2024. Evans Bank is a full-service community bank with 18 branches providing comprehensive financial services to consumer, business and municipal customers throughout Western New York. Evans Investment Services 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 websites, at www.evansbancorp.com and www.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 the impacts from 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.

EVANS BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED)
(in thousands, except shares and per share data)
			9/30/2024				6/30/2024				3/31/2024				12/31/2023				9/30/2023
ASSETS
Interest-bearing deposits at banks		$	107,296			$	110,042			$	164,400			$	3,798			$	7,468
Securities AFS			271,232				263,740				268,476				275,680				334,460
Securities HTM			4,376				3,626				3,611				2,059				2,170
Loans			1,787,957				1,765,116				1,721,876				1,720,946				1,704,400
Allowance for credit losses			(23,091)				(22,562)				(22,287)				(22,114)				(21,846)
Goodwill and intangible assets			1,850				1,854				1,858				1,862				13,629
All other assets			130,386				135,551				122,010				126,432				134,462
Total assets		$	2,280,006			$	2,257,367			$	2,259,944			$	2,108,663			$	2,174,743
LIABILITIES AND STOCKHOLDERS'
EQUITY
Demand deposits		$	435,358			$	397,535			$	399,558			$	390,238			$	447,306
NOW deposits			372,462				382,513				381,798				345,279				324,219
Savings deposits			706,849				710,596				715,495				649,621				698,653
Time deposits			386,049				400,897				394,515				333,623				335,228
Total deposits			1,900,718				1,891,541				1,891,366				1,718,761				1,805,406
Securities sold under agreement to repurchase			8,282				7,684				6,873				9,475				13,447
Subordinated debt			31,254				31,228				31,203				31,177				31,152
Other borrowings			128,000				129,006				131,023				145,123				151,252
Other liabilities			25,905				20,259				24,884				25,908				22,551
Total stockholders' equity		$	185,847			$	177,649			$	174,595			$	178,219			$	150,935
SHARES AND CAPITAL RATIOS
Common shares outstanding			5,534,239				5,525,838				5,521,009				5,499,772				5,483,591
Book value per share		$	33.58			$	32.15			$	31.62			$	32.40			$	27.52
Tangible book value per share (Non-GAAP)		$	33.25			$	31.81			$	31.29			$	32.07			$	25.04
Tier 1 leverage ratio			10.01	%			10.04	%			10.52	%			10.37	%			9.40	%
Tier 1 risk-based capital ratio			13.38	%			13.55	%			13.63	%			13.80	%			12.04	%
Total risk-based capital ratio			14.63	%			14.80	%			14.89	%			15.05	%			13.29	%
ASSET QUALITY DATA
Total non-performing loans		$	32,598			$	25,128			$	27,977			$	27,325			$	27,311
Total net loan charge-offs (recoveries)			41				22				93				11				35
Other real estate owned (OREO)		$	-			$	6,902			$	-			$	-			$	-
Non-performing loans/Total loans			1.82	%			1.42	%			1.62	%			1.59	%			1.60	%
Net loan charge-offs (recoveries)/Average loans			0.01	%			0.01	%			0.02	%			-	%			0.01	%
Allowance for credit losses/Total loans			1.29	%			1.28	%			1.29	%			1.28	%			1.28	%

EVANS BANCORP, INC AND SUBSIDIARIES
SELECTED OPERATIONS DATA (UNAUDITED)
(in thousands, except share and per share data)
			2024				2024				2024				2023				2023
			Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter
Interest income		$	28,698			$	27,815			$	25,374			$	25,205			$	24,292
Interest expense			13,654				13,495				11,467				11,259				10,036
Net interest income			15,044				14,320				13,907				13,946				14,256
Provision for credit losses			570				297				266				282				506
Net interest income after provision for credit losses			14,474				14,023				13,641				13,664				13,750
Deposit service charges			699				667				681				670				665
Insurance service and fee revenue			186				176				149				1,613				3,498
Bank-owned life insurance			253				252				246				230				239
Interchange fee income			529				504				466				510				516
Gain on sale of other real estate owned			598				-				-				-				-
Gain on sale of insurance agency			-				-				-				20,160				-
Loss on sale of investment securities			-				-				-				(5,044)				-
Other income			729				801				725				412				638
Total non-interest income			2,994				2,400				2,267				18,551				5,556
Salaries and employee benefits			7,539				7,330				7,837				10,251				8,735
Occupancy			1,088				1,089				1,157				1,078				1,109
Advertising and public relations			327				254				171				296				348
Professional services			992				870				895				1,003				869
Technology and communications			1,423				1,596				1,409				1,545				1,517
Amortization of intangibles			4				4				4				67				100
FDIC insurance			340				300				325				350				350
Merger related			600				-				-				-				-
Other expenses			1,274				1,115				1,129				1,710				1,379
Total non-interest expenses			13,587				12,558				12,927				16,300				14,407
Income before income taxes			3,881				3,865				2,981				15,915				4,899
Income tax provision			938				919				647				5,741				1,281
Net income			2,943				2,946				2,334				10,174				3,618
PER SHARE DATA
Net income per common share-diluted		$	0.53			$	0.53			$	0.42			$	1.85			$	0.66
Cash dividends per common share		$	0.66			$	-			$	0.66			$	-			$	0.66
Weighted average number of diluted shares			5,542,694				5,530,120				5,519,244				5,497,029				5,490,600
PERFORMANCE RATIOS
Return on average total assets			0.52	%			0.52	%			0.44	%			1.90	%			0.67	%
Return on average stockholders' equity			6.44	%			6.76	%			5.28	%			25.73	%			9.06	%
Return on average tangible common stockholders' equity (Non-GAAP)*			6.51	%			6.83	%			5.33	%			27.37	%			9.90	%
Efficiency ratio			75.32	%			75.11	%			79.92	%			50.16	%			72.72	%
Efficiency ratio (Non-GAAP)**			71.98	%			75.08	%			79.90	%			93.40	%			72.21	%
* The calculation of the average tangible common stockholders' equity ratio excludes goodwill and intangible assets from average stockholders equity.
** The calculation of the non-GAAP efficiency ratio excludes amortization of intangibles, gains and losses from investment securities, gains from sale of subsidiaries, merger-related expenses and the impact of historic tax credit transactions.

EVANS BANCORP, INC AND SUBSIDIARIES
SELECTED AVERAGE BALANCES AND YIELDS/RATES (UNAUDITED)
(in thousands)
			2024				2024				2024				2023				2023
			Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter
AVERAGE BALANCES
Loans, net		$	1,743,042			$	1,715,280			$	1,703,320			$	1,682,177			$	1,658,132
Investment securities			278,956				275,854				280,975				327,303				355,870
Interest-bearing deposits at banks			117,326				137,442				18,889				5,916				9,883
Total interest-earning assets			2,139,324				2,128,576				2,003,184				2,015,396				2,023,885
Non interest-earning assets			126,056				123,457				117,646				128,915				135,896
Total Assets		$	2,265,380			$	2,252,033			$	2,120,830			$	2,144,311			$	2,159,781
NOW			381,054				374,910				347,908				333,893				311,624
Savings			707,742				718,627				658,656				687,223				708,724
Time deposits			399,180				399,476				342,358				335,646				325,667
Total interest-bearing deposits			1,487,976				1,493,013				1,348,922				1,356,762				1,346,015
Borrowings			168,630				168,856				166,948				197,363				192,277
Total interest-bearing liabilities			1,656,606				1,661,869				1,515,870				1,554,125				1,538,292
Demand deposits			403,182				395,876				404,053				409,115				441,149
Other non-interest bearing liabilities			22,792				19,885				23,943				22,880				20,529
Stockholders' equity			182,800				174,403				176,964				158,191				159,811
Total Liabilities and Equity		$	2,265,380			$	2,252,033			$	2,120,830			$	2,144,311			$	2,159,781
Average tangible common stockholders' equity (Non-GAAP)*			180,947				172,546				175,103				148,673				146,122
YIELD/RATE
Loans, net			5.80	%			5.63	%			5.56	%			5.43	%			5.25	%
Investment securities			2.48	%			2.63	%			2.53	%			2.53	%			2.48	%
Interest-bearing deposits at banks			5.31	%			5.86	%			1.68	%			6.38	%			5.29	%
Total interest-earning assets			5.34	%			5.26	%			5.09	%			4.96	%			4.76	%
NOW			2.62	%			2.50	%			2.30	%			2.12	%			1.79	%
Savings			2.56	%			2.53	%			2.25	%			2.09	%			1.85	%
Time deposits			4.41	%			4.52	%			4.24	%			3.83	%			3.45	%
Total interest-bearing deposits			3.07	%			3.05	%			2.77	%			2.53	%			2.22	%
Borrowings			5.09	%			5.16	%			5.25	%			5.27	%			5.14	%
Total interest-bearing liabilities			3.28	%			3.27	%			3.04	%			2.87	%			2.59	%
Interest rate spread			2.06	%			1.99	%			2.05	%			2.09	%			2.17	%
Contribution of interest-free funds			0.74	%			0.72	%			0.74	%			0.66	%			0.62	%
Net interest margin			2.80	%			2.71	%			2.79	%			2.75	%			2.79	%
* Average tangible common stockholders' equity excludes goodwill and intangible assets from average stockholders equity.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241031920276/en/

For more information contact:

John B. Connerton

Executive Vice President and Chief Financial Officer

(716) 926-2000

jconnerton@evansbank.com

-OR-

Deborah K. Pawlowski/Craig Mychajluk

Alliance Advisors IR

(716) 843-3908

dpawlowski@allianceadvisors.com

cmychajluk@allianceadvisors.com

Media Contact:

Kathleen Rizzo Young

Group VP/Public & Community Relations Director

(716) 343-5562

krizzoyoung@evansbank.com

Source: Evans Bancorp, Inc.

FAQ

What was Evans Bancorp's (EVBN) net income for Q3 2024?

Evans Bancorp reported net income of $2.9 million, or $0.53 per diluted share, for the third quarter of 2024.

What are the terms of Evans Bancorp's merger with NBT Bancorp?

NBT will acquire Evans (EVBN) with an exchange ratio of 0.91 NBT shares for each Evans share, valuing the deal at approximately $236 million. The merger is expected to close in Q2 2025.

How did Evans Bancorp's (EVBN) deposits perform in Q3 2024?

Total deposits increased by $182 million (11%) from December 31, 2023, and were up $95 million (5%) from the end of Q3 2023.

What was Evans Bancorp's (EVBN) net interest margin in Q3 2024?

Evans Bancorp's net interest margin was 2.80% in Q3 2024, increasing 9 basis points from the previous quarter.