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

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.