Evans Bancorp Reports Net Income of $24.5 Million in 2023

Rhea-AI Summary

Evans Bancorp, Inc. reported a pretax gain of $20.2 million in the fourth quarter of 2023, with a net income of $10.2 million. The company repositioned its balance sheet, resulting in a 25% increase in tangible book value per share. Total loan balances increased by 1% in the quarter and 3% year-over-year. However, the net interest margin declined 4 basis points sequentially. The Company's GAAP efficiency ratio was 50.2% in the fourth quarter of 2023. The Company's provision for credit loss was less than $0.1 million, reflecting improving economic conditions, and the ratio of non-performing loans to total loans was 1.59% compared with 1.48% in 2022.

Insights

Financial Analyst

The recent financial results from Evans Bancorp, Inc. reveal a mixed performance with several strategic actions taken by the company. A significant transaction was the sale of The Evans Agency, which netted a substantial pretax gain. This gain, however, is a one-time event and should be analyzed accordingly. From a financial perspective, the sale's impact on the tangible book value and the elimination of goodwill and intangibles are positive signs of balance sheet strengthening. This could potentially lead to a more favorable view from investors and analysts, as it indicates a cleaner, more focused asset base.

The decision to reposition the balance sheet by selling investment securities and reducing short-term borrowings, despite resulting in a recognized loss, is expected to improve net interest income moving forward. This kind of proactive management can be seen as an attempt to optimize the company's financial structure in a rising interest rate environment. The reduction in allowance for credit losses also suggests confidence in asset quality and economic conditions.

Looking at the net interest income, the decline compared to the previous year is concerning, as it reflects the increased cost of interest-bearing liabilities. The net interest margin contraction indicates that the profitability of the company's lending activities is under pressure, a trend that investors should monitor closely. The reported increase in net income for the full year, however, is a positive indicator of the company's overall profitability.

Market Research Analyst

Evans Bancorp's strategic initiatives, including the sale of The Evans Agency and the restructuring of the balance sheet, are reflective of a broader industry trend where financial institutions are streamlining operations and focusing on core banking activities. The reported increase in loan balances, particularly in commercial real estate and residential mortgages, aligns with a market that has seen a steady demand in these sectors despite broader economic uncertainties.

The company's focus on technology and process improvements is a critical investment area that can enhance customer experience and operational efficiency. This is a trend across the financial services sector, where digital transformation is increasingly becoming a competitive differentiator. The rise in non-interest expenses, particularly salaries and employee benefits, reflects the industry's investment in human capital to support growth and innovation.

The reported efficiency ratio improvements year-over-year suggest that the company is becoming more efficient in its operations, which is a positive signal to investors who often use this metric to gauge management effectiveness. The increased effective tax rate due to the sale of TEA and non-deductible goodwill expense is a one-off impact that should be considered when evaluating the company's tax position.

Economist

Evans Bancorp's performance must be contextualized within the current macroeconomic landscape, characterized by rising interest rates and inflationary pressures. The company's actions, such as reducing liability sensitivity and increasing net interest income, are indicative of an adaptive response to the Federal Reserve's aggressive monetary policy aimed at curbing inflation. The strategic sale of lower-yielding investment assets and the reduction of borrowings are prudent steps in an environment where the cost of capital is increasing.

The reported reduction in the provision for credit losses, due to improving economic factors and peer metrics, suggests a cautiously optimistic outlook on the economy. However, the increase in the cost of interest-bearing liabilities and the decrease in net interest income highlight the challenges faced by the banking sector in maintaining margins amidst a volatile interest rate environment.

Evans Bancorp's capital management strategies, maintaining regulatory capital ratios well above the Federal 'well capitalized' standard, demonstrate a strong capital position that provides resilience against potential economic downturns. The impact of unrealized losses on investment securities due to interest rate hikes is a common theme across the banking industry, reflecting the sensitivity of financial institutions' balance sheets to changes in the interest rate environment.

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 fourth quarter and full year ended December 31, 2023.

HIGHLIGHTS

• Completed the sale of The Evans Agency (“TEA”) to Arthur J. Gallagher & Co, netting a pretax gain of $20.2 million in the fourth quarter
• Repositioned balance sheet with sale of $78 million of investment securities – proceeds used to reduce short-term borrowings; resulted in recognized pretax loss of $5.0 million in the quarter but improves forward net interest income
• Total loan balances of $1.7 billion up 1% in the quarter and 3% year-over-year
• Fourth quarter net interest margin of 2.75% declined 4 basis points sequentially
• Tangible book value per share increased 25% to $32.07 at December 31, 2023 compared with prior year’s fourth quarter
• Paid dividends of $1.32 per share in 2023, up 5%

Net income was $10.2 million, or $1.85 per diluted share, in the fourth quarter of 2023, compared with $3.6 million, or $0.66 per diluted share, in the third quarter of 2023 and $6.0 million, or $1.10 per diluted share, in last year’s fourth quarter. On November 30, 2023, the Company sold The Evans Agency to Arthur J. Gallagher & Co., and recognized a pretax gain of $20.2 million. In addition, the Company strategically repositioned its balance sheet by selling $78 million of investment securities, primarily available-for-sale U.S. Treasuries and government-sponsored agency securities, and used the proceeds to pay down short-term borrowings. This action resulted in $5.0 million of pretax losses on investment securities during the fourth quarter of 2023 with expected positive forward impact on net interest income. Return on average equity was 25.73% for the fourth quarter of 2023, compared with 9.06% in the third quarter of 2023 and 16.07% in the fourth quarter of 2022.

For the full year of 2023, net income increased 10% to $24.5 million, or $4.48 per diluted share, compared with $22.4 million, or $4.04 per diluted share, in 2022. The increase mainly reflected the gain on sale of the insurance agency partially offset by lower net interest income and loss on investment securities. Allowance for credit losses was reduced by $2.7 million from the prior year as a result of improving economic factors, including peer metrics, and a $1.5 million charge-off of a single commercial loan during 2022. The return on average equity was 15.47% for 2023 compared with 13.49% in 2022.

“Evans’ performance in 2023 was characterized by resiliency,” commented David J. Nasca, President and CEO of Evans Bancorp, Inc. “With a backdrop of interest rate pressure and macro-economic factors such as inflation, potential recession and liquidity demands, the dedicated work of the entire Evans team successfully protected and served client relationships, and maintained funding and liquidity. Actions were also taken to control costs, deliver efficiencies, and improve customer experience with investments in technology and process improvements.

“During the fourth quarter, we executed two strategic initiatives. The sale of The Evans Agency resulted in significant value creation including measurable growth in our tangible book value with an after-tax gain of approximately $13 million and elimination of almost $12 million of goodwill and other intangibles. The proceeds from the transaction strengthened capital which allows flexibility to strategically redeploy back into our core banking franchise, including the restructure in our balance sheet which was completed in the fourth quarter to reduce lower yielding investment assets and reduce borrowings which we expect to improve returns in 2024.”

Net Interest Income ($ in thousands)
		4Q 2023				3Q 2023				4Q 2022
Interest income		$	25,205			$	24,292			$	22,381
Interest expense			11,259				10,036				3,167
Net interest income			13,946				14,256				19,214
Provision for credit losses			282				506				923
Net interest income after provision		$	13,664			$	13,750			$	18,291

Net interest income of $13.9 million was down $0.3 million, or 2%, from the third quarter and $5.3 million, or 27%, from last year’s fourth quarter as a result of higher interest expense related to the increased cost of interest-bearing liabilities produced by competitive pricing on deposits.

Fourth quarter net interest margin of 2.75% declined 4 basis points from the trailing third quarter and 102 basis points from the prior-year period. The yield on loans increased 18 basis points compared with the third quarter and 55 basis points year-over-year. The cost of interest-bearing liabilities was 2.87% compared with 2.59% in the third quarter of 2023 and 0.86% in the fourth quarter of 2022.

The $0.3 million provision for credit losses in the current quarter was due to loan growth and higher reserves on individually analyzed loans, partially offset by improving economic factors, including peer group metrics.

Asset Quality ($ in thousands)
		4Q 2023					3Q 2023					4Q 2022
Total non-performing loans		$	27,325				$	27,311				$	24,728
Total net loan charge-offs			11					35					115
Non-performing loans / Total loans			1.59		%			1.60		%			1.48		%
Net loan charge-offs / Average loans			-		%			0.01		%			0.03		%
Allowance for loan losses / Total loans			1.28		%			1.28		%			1.16		%

“The transaction to restructure the balance sheet reduces a portion of the Bank’s liability sensitivity, increases future net interest income, and has just over a two-year payback after paying down higher rate borrowings,” commented John Connerton, Chief Financial Officer of Evans Bank. “We remain focused on growing consumer and commercial core deposits, and while our deposit levels saw some contraction during the quarter, a large component was attributable to normal commercial and municipal deposit seasonality. We believe we are managing the current rate environment well by retaining key relationships, which along with capital growth puts us in a favorable position.”

Non-Interest Income ($ in thousands)
		4Q 2023				3Q 2023				4Q 2022
Deposit service charges		$	670			$	665			$	684
Insurance service and fee revenue			1,613				3,498				2,204
Bank-owned life insurance			230				239				221
Interchange fee income			510				516				507
Gain on sale of insurance agency			20,160				-				-
Loss on sale of investment securities			(5,044)				-				-
Other income			412				638				845
Total non-interest income		$	18,551			$	5,556			$	4,461

Excluding the fourth quarter’s one-time transactions relating to the gain on the sale of TEA and loss on sale of securities, non-interest income would have been $3.4 million.

Insurance service and fee revenue of $1.6 million reflects two months of revenue earned by TEA. Insurance service and fee revenue was also higher in the third quarter of 2023 due to premium seasonality.

Other income decreased $0.2 million from the third quarter of 2023 due to a decrease in value of mortgage servicing rights. The decrease from last year’s fourth quarter was primarily due to a $0.2 million gain on sale of an asset that was acquired in foreclosure and sold in the fourth quarter of 2022, and also included $0.2 million of revenue recognized relating to rents received from the acquired asset prior to the sale.

Non-Interest Expense ($ in thousands)
		4Q 2023				3Q 2023				4Q 2022
Salaries and employee benefits		$	10,251			$	8,735			$	9,498
Occupancy			1,078				1,109				1,190
Advertising and public relations			296				348				125
Professional services			1,003				869				871
Technology and communications			1,545				1,517				1,437
Amortization of intangibles			67				100				100
FDIC insurance			350				350				250
Other expenses			1,710				1,379				1,429
Total non-interest expenses		$	16,300			$	14,407			$	14,900

Total non-interest expense increased $1.9 million, or 13%, from the third quarter of 2023, and $1.4 million, or 9%, from last year’s fourth quarter.

Salaries and employee benefits increased $1.5 million, or 17%, from the sequential quarter, largely due to higher incentive accruals of $2.2 million, partially offset by reduced staff expenses including former insurance employees. The increase from the prior year’s fourth quarter was due to higher incentive accruals of $1.6 million, partially offset by a reduction of staff expenses through consolidation of branches, back-office operations, and sale of TEA.

The increase in other expenses compared with both comparative periods was due to $0.3 million of charitable contributions made during the current quarter.

The Company’s GAAP efficiency ratio, or noninterest expenses divided by the sum of net interest income and noninterest income, was 50.2% in the fourth quarter of 2023, 72.7% in the third quarter of 2023, and 62.9% in the fourth quarter of 2022.

Income tax expense was $5.7 million, for an effective tax rate of 36.1%, in the fourth quarter of 2023 compared with 26.2% in the third quarter of 2023 and 23.0% in last year’s fourth quarter. The elevated tax rate in the 2023 fourth quarter reflected the sale of TEA which included significant non-deductible goodwill expense.

Balance Sheet Highlights

Total assets were $2.11 billion as of December 31, 2023, a decrease of $66 million, or 3% since September 30, 2023, and $69 million, or 3% since December 31, 2022. The change from comparative periods was due to the sale of investment securities, partially offset by an increase in loan balances. Loan balances increased $17 million, or 1%, during the fourth quarter and reflected higher commercial real estate loans of $13 million and residential mortgages of $3 million. Since December 31, 2022, loan balances increased $49 million, or 3%, due to higher commercial real estate loans of $73 million and residential mortgages of $3 million, partially offset by a decrease in commercial and industrial loans of $27 million.

Investment securities were $278 million at December 31, 2023, $59 million lower than the end of the third quarter of 2023 and $94 million lower than the end of last year’s fourth quarter. The decrease reflects the strategic decision to sell $78 million of investment securities as well as changes in unrealized gains and losses on investment securities and maturities within the available-for-sale investment portfolio. 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 $1.72 billion decreased $87 million, or 5%, from September 30, 2023, and were down $53 million, or 3%, from the end of last year’s fourth quarter. The change from the sequential quarter largely reflected typical seasonal outflows from commercial and municipal relationships. From a product perspective, deposit decreases were in demand deposits of $57 million, municipal savings of $29 million, commercial savings of $14 million, consumer savings of $7 million, and consumer time deposits of $1 million. Offsetting those decreases were higher NOW deposits of $21 million.

While the Company has not experienced a significant outflow of deposits, in the event of such occurrences, it has access to alternate sources of funding to meet withdrawal demands. As of December 31, 2023, Evans had $53 million in overnight borrowings at the FHLB. Given the current collateral available at FHLB, advances up to $364 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 and participates in the Bank Term Funding Program. At December 31, 2023, Evans had $86 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 10.37% at December 31, 2023 compared with 9.40% at September 30, 2023 and 9.13% at December 31, 2022.

Book value per share was $32.40 at December 31, 2023 compared with $27.52 at September 30, 2023 and $28.32 at December 31, 2022. 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 December 31, 2023 this amounted to $7.41 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.

Tangible book value per share was $32.07 at December 31, 2023 compared with $25.04 at September 30, 2023 and $25.76 at December 31, 2022.

For the full year of 2023, cash dividends totaled $1.32 per share, up 5% over 2022.

2023 Year in Review (compared with prior-year)

Net interest income was $61.2 million, down 16%. The yield on loans increased 86 basis points while competition on deposits and changes in customer behaviors contributed to the 189 basis points increase in cost of funds during 2023. Net interest margin was 3.02%, a decrease of 51 basis points.

The Company’s provision for credit loss was less than $0.1 million, which reflected improving economic conditions, including peer group metrics, partially offset by loan growth and specific reserve related individually analyzed loans. Provision for loan loss in 2022 included a $1.5 million charge-off of a single commercial loan and loan growth, partially offset by a decrease of criticized loans. The ratio of non-performing loans to total loans was 1.59% compared with 1.48% in 2022.

Non-interest income was up $13.7 million to $32.9 million. The increase was due to the gain on sale of the insurance agency of $20.2 million, partially offset by loss on sale of investment securities of $5 million, reduced bank services charges of $0.3 million, and lower insurance service and fee revenue of $0.2 million. Included in non-interest income during 2022 was a gain on sale of an asset that was acquired in foreclosure of $0.2 million, as well as $0.2 million of revenue recognized relating to rents received from the acquired asset and a $0.2 million final payment in connection with a historic tax credit investment.

Non-interest expense decreased $0.6 million, or 1%, to $59.4 million. Current year decreases included salaries and employee benefits of $1.8 million and loan expenses of $0.3 million, partially offset by higher technology and communication expenses of $0.8 million, charitable contributions of $0.3 million, and FDIC insurance expense of $0.4 million.

The Company’s GAAP efficiency ratio was 63.1% in 2023 compared with 65.0% in 2022.

Income tax expense for the year was $10.2 million, representing an effective tax rate of 29.4% compared with an effective tax rate of 24.2% in 2022.

Webcast and Conference Call

The Company will host a conference call and webcast on Thursday, February 1, 2024 at 4:45 p.m. ET. Management will review the financial and operating results for the fourth quarter and full year of 2023, as well as the Company’s strategy and outlook. A question and answer session will follow.

The conference call can be accessed by calling (201) 689-8471. Alternatively, the webcast can be monitored at www.evansbancorp.com.

A telephonic replay will be available from 8:00 p.m. ET on the day of the teleconference until Thursday, February 15, 2024. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13743382, or access the webcast replay at www.evansbancorp.com, where a transcript will be posted once available.

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 $2.1 billion in assets and $1.7 billion in deposits at December 31, 2023. 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 COVID-19, 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)
			12/31/2023					9/30/2023					6/30/2023					3/31/2023					12/31/2022
ASSETS
Interest-bearing deposits at banks		$	3,798				$	7,468				$	10,334				$	3,832				$	6,258
Securities AFS			275,680					334,460					351,595					365,929					364,326
Securities HTM			2,059					2,170					2,241					3,707					6,949
Loans			1,720,946					1,704,400					1,670,753					1,658,576					1,672,369
Allowance for credit losses			(22,114)					(21,846)					(21,368)					(21,523)					(19,438)
Goodwill and intangible assets			1,862					13,629					13,729					13,829					13,929
All other assets			126,432					134,462					127,679					123,920					134,117
Total assets		$	2,108,663				$	2,174,743				$	2,154,963				$	2,148,270				$	2,178,510
LIABILITIES AND STOCKHOLDERS'
EQUITY
Demand deposits		$	390,238				$	447,306				$	442,195				$	483,958				$	493,710
NOW deposits			345,279					324,219					303,159					268,283					273,359
Savings deposits			649,621					698,653					726,687					807,532					801,943
Time deposits			333,623					335,228					314,574					290,141					202,667
Total deposits			1,718,761					1,805,406					1,786,615					1,849,914					1,771,679
Securities sold under agreement to repurchase			9,475					13,447					19,185					9,264					7,147
Subordinated debt			31,177					31,152					31,126					31,101					31,075
Other borrowings			145,123					151,252					140,386					79,637					193,001
Other liabilities			25,908					22,551					18,167					20,103					21,615
Total stockholders' equity		$	178,219				$	150,935				$	159,484				$	158,251				$	153,993
SHARES AND CAPITAL RATIOS
Common shares outstanding			5,499,772					5,483,591					5,477,505					5,462,763					5,437,048
Book value per share		$	32.40				$	27.52				$	29.12				$	28.97				$	28.32
Tangible book value per share		$	32.07				$	25.04				$	26.61				$	26.44				$	25.76
Tier 1 leverage ratio			10.37		%			9.40		%			9.43		%			9.13		%			9.13		%
Tier 1 risk-based capital ratio			13.80		%			12.04		%			12.73		%			12.55		%			12.29		%
Total risk-based capital ratio			15.05		%			13.29		%			13.98		%			13.80		%			13.48		%
ASSET QUALITY DATA
Total non-performing loans		$	27,325				$	27,311				$	27,789				$	24,084				$	24,728
Total net loan charge-offs (recoveries)			11					35					35					(4)					115
Other real estate owned (OREO)		$	-				$	-				$	-				$	-				$	-
Non-performing loans/Total loans			1.59		%			1.60		%			1.66		%			1.45		%			1.48		%
Net loan charge-offs (recoveries)/Average loans			-		%			0.01		%			0.01		%			-		%			0.03		%
Allowance for credit losses/Total loans			1.28		%			1.28		%			1.28		%			1.30		%			1.16		%

EVANS BANCORP, INC AND SUBSIDIARIES SELECTED OPERATIONS DATA (UNAUDITED) (in thousands, except share and per share data)
			2023					2023					2023					2023					2022
			Fourth Quarter					Third Quarter					Second Quarter					First Quarter					Fourth Quarter
Interest income		$	25,205				$	24,292				$	23,988				$	23,365				$	22,381
Interest expense			11,259					10,036					8,307					6,040					3,167
Net interest income			13,946					14,256					15,681					17,325					19,214
Provision for credit losses			282					506					(116)					(654)					923
Net interest income after provision for credit losses			13,664					13,750					15,797					17,979					18,291
Deposit service charges			670					665					645					613					684
Insurance service and fee revenue			1,613					3,498					2,720					2,429					2,204
Bank-owned life insurance			230					239					238					224					221
Interchange fee income			510					516					528					493					507
Gain on sale of insurance agency			20,160					-					-					-					-
Loss on sale of investment securities			(5,044)					-					-					-					-
Other income			412					638					570					354					845
Total non-interest income			18,551					5,556					4,701					4,113					4,461
Salaries and employee benefits			10,251					8,735					8,649					9,413					9,498
Occupancy			1,078					1,109					1,145					1,173					1,190
Advertising and public relations			296					348					407					156					125
Professional services			1,003					869					808					883					871
Technology and communications			1,545					1,517					1,542					1,356					1,437
Amortization of intangibles			67					100					100					100					100
FDIC insurance			350					350					350					350					250
Other expenses			1,710					1,379					1,171					1,071					1,429
Total non-interest expenses			16,300					14,407					14,172					14,502					14,900
Income before income taxes			15,915					4,899					6,326					7,590					7,852
Income tax provision			5,741					1,281					1,394					1,790					1,809
Net income			10,174					3,618					4,932					5,800					6,043
PER SHARE DATA
Net income per common share-diluted		$	1.85				$	0.66				$	0.90				$	1.06				$	1.10
Cash dividends per common share		$	-				$	0.66				$	-				$	0.66				$	-
Weighted average number of diluted shares			5,497,029					5,490,600					5,474,462					5,475,790					5,500,810
PERFORMANCE RATIOS
Return on average total assets			1.90		%			0.67		%			0.91		%			1.07		%			1.12		%
Return on average stockholders' equity			25.73		%			9.06		%			12.25		%			14.97		%			16.07		%
Return on average tangible common stockholders' equity*			27.37		%			9.90		%			13.39		%			16.44		%			17.72		%
Efficiency ratio			50.16		%			72.72		%			69.53		%			67.65		%			62.94		%
Efficiency ratio (Non-GAAP)**			93.40		%			72.21		%			69.04		%			67.18		%			62.51		%
* 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)
			2023				2023				2023				2023				2022
			Fourth Quarter				Third Quarter				Second Quarter				First Quarter				Fourth Quarter
AVERAGE BALANCES
Loans, net		$	1,682,177			$	1,658,132			$	1,646,502			$	1,641,162			$	1,627,028
Investment securities			327,303				355,870				373,922				382,329				382,125
Interest-bearing deposits at banks			5,916				9,883				7,235				9,824				10,416
Total interest-earning assets			2,015,396				2,023,885				2,027,659				2,033,315				2,019,569
Non interest-earning assets			128,915				135,896				129,793				133,936				135,035
Total Assets		$	2,144,311			$	2,159,781			$	2,157,452			$	2,167,251			$	2,154,604
NOW			333,893				311,624				281,910				260,242				265,313
Savings			687,223				708,724				776,020				796,793				874,816
Time deposits			335,646				325,667				304,575				257,733				174,362
Total interest-bearing deposits			1,356,762				1,346,015				1,362,505				1,314,768				1,314,491
Borrowings			197,363				192,277				163,338				173,053				151,259
Total interest-bearing liabilities			1,554,125				1,538,292				1,525,843				1,487,821				1,465,750
Demand deposits			409,115				441,149				451,990				503,945				518,666
Other non-interest bearing liabilities			22,880				20,529				18,532				20,487				19,798
Stockholders' equity			158,191				159,811				161,087				154,998				150,390
Total Liabilities and Equity		$	2,144,311			$	2,159,781			$	2,157,452			$	2,167,251			$	2,154,604
Average tangible common stockholders' equity*			148,673				146,122				147,299				141,111				136,406
YIELD/RATE
Loans, net			5.43	%			5.25	%			5.26	%			5.16	%			4.88	%
Investment securities			2.53	%			2.48	%			2.47	%			2.53	%			2.36	%
Interest-bearing deposits at banks			6.38	%			5.29	%			4.45	%			3.97	%			3.16	%
Total interest-earning assets			4.96	%			4.76	%			4.75	%			4.66	%			4.40	%
NOW			2.12	%			1.79	%			1.24	%			0.75	%			0.36	%
Savings			2.09	%			1.85	%			1.58	%			0.95	%			0.33	%
Time deposits			3.83	%			3.45	%			3.10	%			2.63	%			1.61	%
Total interest-bearing deposits			2.53	%			2.22	%			1.85	%			1.24	%			0.51	%
Borrowings			5.27	%			5.14	%			4.98	%			4.74	%			3.88	%
Total interest-bearing liabilities			2.87	%			2.59	%			2.18	%			1.65	%			0.86	%
Interest rate spread			2.09	%			2.17	%			2.57	%			3.01	%			3.54	%
Contribution of interest-free funds			0.66	%			0.62	%			0.53	%			0.45	%			0.23	%
Net interest margin			2.75	%			2.79	%			3.10	%			3.46	%			3.77	%
* Average tangible common stockholders' equity excludes goodwill and intangible assets from average stockholders equity.

EVANS BANCORP, INC AND SUBSIDIARIES SELECTED OPERATIONS DATA (UNAUDITED) (in thousands, except share and per share data)
		2023				2022
		Year to Date				Year to Date				% Change
Interest income		$	96,850			$	79,482			22		%
Interest expense			35,642				6,527			446		%
Net interest income			61,208				72,955			(16)		%
Provision for credit losses			18				2,739			(99)		%
Net interest income after provision for credit losses			61,190				70,216			(13)		%
Deposit service charges			2,593				2,861			(9)		%
Insurance service and fee revenue			10,261				10,453			(2)		%
Bank-owned life insurance			932				707			32		%
Interchange fee income			2,047				2,071			(1)		%
Gain on sale of insurance agency			20,160				-			-
Loss on sale of investment securities			(5,044)				-			-
Other income			1,973				3,179			(38)		%
Total non-interest income			32,922				19,271			71		%
Salaries and employee benefits			37,047				38,854			(5)		%
Occupancy			4,506				4,619			(2)		%
Advertising and public relations			1,207				1,159			4		%
Professional services			3,563				3,425			4		%
Technology and communications			5,959				5,187			15		%
FDIC insurance			1,400				1,025			37		%
Amortization of intangibles			367				400			(8)		%
Other expenses			5,333				5,266			1		%
Total non-interest expenses			59,382				59,935			(1)		%
Income before income taxes			34,730				29,552			18		%
Income tax provision			10,206				7,163			42		%
Net income			24,524				22,389			10		%
PER SHARE DATA
Net income per common share-diluted		$	4.48			$	4.04			11		%
Cash dividends per common share		$	1.32			$	1.26			5		%
Weighted average number of diluted shares			5,471,033				5,536,375
PERFORMANCE RATIOS
Return on average total assets			1.14		%		1.02		%
Return on average stockholders' equity			15.47		%		13.49		%
Return on average tangible common stockholders' equity*			16.82		%		14.74		%
Efficiency ratio			63.09		%		64.99		%
Efficiency ratio (Non-GAAP)**			74.69		%		64.55		%
Net interest margin			3.02		%		3.53		%
Net loan charge-offs (recoveries)/Average loans			-		%		0.11		%
* 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.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240201099964/en/

John B. Connerton

Executive Vice President and Chief Financial Officer

(716) 926-2000

jconnerton@evansbank.com



-OR-



Deborah K. Pawlowski/Craig Mychajluk

Kei Advisors LLC

(716) 843-3908

dpawlowski@keiadvisors.com

cmychajluk@keiadvisors.com



Media:

Kathleen Rizzo Young

Group VP/Public & Community Relations Director

716-343-5562

krizzoyoung@evansbank.com

Source: Evans Bancorp, Inc.

FAQ

What was Evans Bancorp, Inc.'s net income in the fourth quarter of 2023?

The net income was $10.2 million.

What was the pretax gain in the fourth quarter of 2023?

The company reported a pretax gain of $20.2 million.

What was the change in tangible book value per share compared to the prior year's fourth quarter?

Tangible book value per share increased 25% to $32.07 at December 31, 2023 compared with the prior year’s fourth quarter.

What was the change in total loan balances in the fourth quarter of 2023 compared to the prior year?

Total loan balances of $1.7 billion increased 1% in the quarter and 3% year-over-year.

What was the Company's GAAP efficiency ratio in the fourth quarter of 2023?

The Company’s GAAP efficiency ratio was 50.2% in the fourth quarter of 2023.

What was the ratio of non-performing loans to total loans in 2023 compared with 2022?

The ratio of non-performing loans to total loans was 1.59% compared with 1.48% in 2022.