<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(mark one)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For quarterly period ended JUNE 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_________ to____________
Commission file number 0-18539
----------------------
EVANS BANCORP, INC.
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(Exact name of registrant as specified in its charter)
NEW YORK 16-1332767
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14 -16 North Main Street, Angola, New York 14006
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(Address of principal executive offices)
(Zip Code)
(716) 549-1000
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(Issuer's telephone number)
NOT APPLICABLE
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(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check (x) whether the issuer (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
Common Stock, $.50 Par Value--1,698,950 shares as of July 31, 1997
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INDEX
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EVANS BANCORP, INC. AND SUBSIDIARY
PAGE
PART 1. FINANCIAL INFORMATION
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Item 1. Financial Statements (Unaudited)
Consolidated balance sheets--June 30, 1997 and
December 31, 1996 1
Consolidated statements of income--Three months
ended June 30, 1997 and 1996 2
Consolidated statements of income--Six months 3
ended June 30, 1997 and 1996
Consolidated statements of cash flows--Six months 4
ended June 30, 1997 and 1996
Notes to consolidated financial statements--
June 30, 1997 and 1996 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION 8
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Item 1. Legal Proceedings
Item 2. Changes In Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES 9
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PART I - FINANCIAL INFORMATION PAGE 1
ITEM I - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
June 30, 1997 and December 31, 1996
(Unaudited)
June 30, December 31,
ASSETS 1997 1996
<S> <C> <C>
Cash and due from banks $6,084,221 $5,662,231
Interest bearing deposits in other banks 0 0
Federal Funds sold 2,815,000 1,450,000
Securities:
Classified as available-for-sale, at fair value 36,270,518 30,201,120
Classified as held-to-maturity, at amortized cost 6,490,485 5,853,204
Loans, net 95,820,813 92,087,902
Premises and equipment, net 3,803,401 3,748,663
Other assets 2,155,031 1,894,937
$153,439,469 $140,898,057
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand $22,695,483 $20,149,152
NOW and money market accounts 6,857,469 6,437,613
Regular savings 44,223,439 42,136,290
Time Deposits, $100,000 and over 19,648,747 14,096,821
Other time accounts 41,693,366 40,641,503
135,118,504 123,461,379
Dividend Payable 0 169,895
Other liabilities 2,038,968 1,756,700
137,157,472 125,387,974
STOCKHOLDERS' EQUITY
Common Stock, $.50 par value; 10,000,000
shares authorized; 1,698,950 and 339,790
shares issued and outstanding 849,475 849,475
Surplus 10,990,720 10,990,720
Retained earnings 4,561,421 3,692,659
Unrealized losses on available for sale securities (119,619) (22,771)
16,281,997 15,510,083
$153,439,469 $140,898,057
See Notes to Consolidated Financial Statements.
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PART I - FINANCIAL INFORMATION PAGE 2
ITEM I - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months ended June 30, 1997 and 1996
(Unaudited)
Three Months Ended
June 30,
1997 1996
<S> <C> <C>
INTEREST INCOME
Loans $2,177,414 $1,813,850
Federal funds sold 29,659 61,761
Securities:
Taxable 391,651 381,343
Non-taxable 220,637 198,718
Deposits in other banks 0 8,993
2,819,361 2,464,665
INTEREST EXPENSE
Deposits 1,156,604 975,922
Short Term Borrowing 2,160 83
NET INTEREST INCOME 1,660,597 1,488,660
PROVISION FOR CREDIT LOSSES 15,000 15,000
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES 1,645,597 1,473,660
NON-INTEREST INCOME:
Service charges 166,139 163,941
Other 31,414 44,963
Securities Gains and Losses (10,113) 6,347
187,440 215,251
NON-INTEREST EXPENSE:
Salaries and employee benefits 624,072 628,274
Occupancy 195,842 151,383
Supplies 21,193 30,501
Repairs and maintenance 35,808 35,077
Advertising and public relations 28,808 31,709
Professional services 59,510 52,900
FDIC assessments 4,533 500
Other 228,070 216,941
1,197,836 1,147,285
Income before income taxes 635,201 541,626
PROVISION FOR INCOME TAXES 203,984 153,855
NET INCOME $431,217 $387,771
NET INCOME PER COMMON SHARE $0.25 $0.23
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 1,698,950 1,698,950
See Notes to Consolidated Financial Statements.
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PART I - FINANCIAL INFORMATION PAGE 3
ITEM I - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
For the Six Months ended June 30, 1997 and 1996
(Unaudited)
Six Months Ended
June 30,
1997 1996
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INTEREST INCOME
Loans $4,275,818 $3,574,961
Federal Funds Sold 71,223 130,289
Securities:
Taxable 753,696 730,291
Non-taxable 419,786 394,342
Deposits in other Banks 0 16,821
5,520,523 4,846,704
INTEREST EXPENSE
Deposits 2,264,033 1,919,903
Short Term Borrowing 2,359 83
NET INTEREST INCOME 3,254,131 2,926,718
PROVISION FOR CREDIT LOSSES 30,000 30,000
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES 3,224,131 2,896,718
NON-INTEREST INCOME:
Service charges 328,758 326,126
Other 102,095 114,420
Securities gains and losses (9,740) 9,042
421,113 449,588
NON-INTEREST EXPENSE:
Salaries and employee benefits 1,253,133 1,260,375
Occupancy 382,022 286,901
Supplies 42,571 56,347
Repairs and maintenance 73,338 73,142
Advertising and public relations 56,937 70,175
Professional services 114,329 107,293
FDIC Assessment 7,126 1,000
Other 442,226 431,515
2,371,682 2,286,748
Income before income taxes 1,273,562 1,059,558
PROVISION FOR INCOME TAXES 404,800 305,040
NET INCOME $868,762 $754,518
NET INCOME PER COMMON SHARE $0.51 $0.44
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 1,698,950 1,698,950
See Notes to Consolidated Financial Statements.
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PART I - FINANCIAL INFORMATION PAGE 4
ITEM I - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1997 and 1996
(Unaudited)
Six Months Ended
June 30,
1997 1996
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OPERATING ACTIVITIES
Interest received $5,337,980 $4,769,053
Fees and commissions received 448,205 516,779
Interest paid (2,190,470) (1,888,765)
Cash paid to suppliers and employees (1,956,194) (2,377,602)
Income taxes paid (429,250) (303,295)
Net cash provided by operating
activities 1,210,271 716,170
INVESTING ACTIVITIES
Available for sale securities
Purchases (16,093,746) (10,458,874)
Proceeds from sales 9,479,604 4,625,320
Proceeds from maturities 342,311 3,911,873
Held to maturity securities
Purchases (1,186,054) (272,703)
Proceeds from sales 0 0
Proceeds from maturities 569,308 563,790
Additions to bank premises and equipment (259,865) (979,594)
Increase in loans, net of repayments (4,414,756) (7,294,705)
Proceeds from sales of loans 652,687 1,631,138
Net cash used in investing activities (10,910,511) (8,273,755)
FINANCING ACTIVITIES
Increase in deposits 11,657,125 10,866,902
Cash Dividends Paid (169,895) (40,503)
Net cash provided by financing
activities 11,487,230 10,826,399
Net increase in cash and cash
equivalents 1,786,990 3,268,814
Cash and cash equivalents, January 1 7,112,231 6,443,256
Cash and cash equivalents, June 30 $8,899,221 $9,712,070
</TABLE>
See Notes to Consolidated Financial Statements.
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PART I - FINANCIAL INFORMATION PAGE 5
ITEM I - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1997 and 1996
(Unaudited)
Six Months Ended
June 30,
1997 1996
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RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net income $868,762 $754,518
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 237,004 121,222
Provision for credit losses 30,000 30,000
(Gain)/Loss on sale of assets 4,398 (23,039)
Increase in accrued interest payable 75,922 31,221
Increase in accrued interest receivable (212,269) (34,595)
Increase in other liabilities 251,930 60,286
Increase in other assets (45,476) (223,443)
Total adjustments 341,509 (38,348)
NET CASH PROVIDED BY
OPERATING ACTIVITIES $1,210,271 $716,170
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION:
Transfers of available for sale securities to held $0 $0
to maturity securities
Net unrealized gain/(loss) on available for sale securities ($119,619) ($294,339)
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See Notes to Consolidated Financial Statements.
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PART I - FINANCIAL INFORMATION PAGE 6
ITEM 1 - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997 AND 1996
(UNAUDITED)
1. GENERAL
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The accounting and reporting policies followed by Evans Bancorp, Inc., a
bank holding company, and its subsidiary, Evans National Bank, in the
preparation of the accompanying interim financial statements conform
with generally accepted accounting principles and with general practice
within the banking industry.
The accompanying financial statements are unaudited. In the opinion of
management, all adjustments necessary for a fair presentation of
financial position and results of operations for the interim periods
have been made. Such adjustments are of a normal recurring nature.
The results of operations for the six month period ending June 30, 1997
are not necessarily inductive of the results to be expected for the full
year.
2. SECURITIES
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In 1994 the Bank implemented accounting procedures for securities as
outlined in Statement of Financial Accounting Standard No. 115.
Securities which the Bank has the ability and intent to hold to maturity
are stated at cost, plus discounts accrued and less premiums amortized.
Securities which the Bank has identified as available for sale are
stated at fair value.
3. ALLOWANCE FOR CREDIT LOSSES
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The provision for credit losses is based on management's evaluation of
the relative risks inherent in the loan portfolio and, on an annual
basis, generally exceeds the amount of net loan losses charged against
the allowance.
4. INCOME TAXES
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Provision for deferred income taxes are made as a result of timing
differences between financial and taxable income. These differences
relate principally to directors deferred compensation, pension premiums
payable, allowance for loan losses and deferred loan origination
expenses.
5. PER SHARE DATA
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The per share of common stock information is based upon the weighted
average number of shares outstanding during each period, retroactively
adjusted for stock dividends and stock splits.
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PART I - FINANCIAL INFORMATION PAGE 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
MATERIAL CHANGES IN FINANCIAL CONDITION
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Total deposits increased 9.4% over the first six months of 1997. This
compares to an increase of 10% over the same time period last year. Time
deposits over $100,000 have increased 39.4%, largely due to additional municipal
deposits obtained through the competitive bidding process, presently funding
strong loan demand. Other time accounts are up 2.6%, regular savings balances
grew 4.9%, demand deposits increased 12.6% and NOW account balances increased
6.5%.
Total net loans of $95.8 million reflect an increase of 4.1% since
December 31, 1996. Loan demand has been strong since the last quarter of 1996
and is expected to remain strong throughout 1997. The successful promotion of
variable rate home equity loans has contributed to the increase in net loans in
1997. In addition, there has been a significant increase in commercial loan
activity. Growth has not only outpaced runoff, but offset sales of $293 thousand
in NYSHE loans to SLMA and $354 thousand in residential mortgages to FNMA.
The securities portfolio increased 18.6% between December 31, 1996 and
June 30, 1997, compared to an increase of 2.5% over the first six months of
1996. Since loan activity picked up in late 1995, fewer dollars were directed
into securities. However, deposit growth is traditionally highest in the first
two quarters and in 1997 excess funds have been available for investment. The
Bank's portfolio remains concentrated in US government and agency securities and
New York State Municipal Bonds. This concentration provides a source of
liquidity and cash flows, reduces risk factors and improves tax status.
The annualized return on average assets at June 30, 1997 was 1.17%. The
return on average assets at December 31, 1996 was 1.20%. The Bank's annualized
return on average equity at June 30, 1997 was 10.93% compared to 10.72% at
December 31, 1996. The capital to assets ratio at June 30, 1997 of 11.03%
compares to 11.37% at December 31, 1996. Total assets have increased $12.5
million or 8.9% since December 31, 1996.
MATERIAL CHANGES IN THE RESULTS OF OPERATIONS
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Net interest income for the quarter ending June 30, 1997 increased 11.2%
over the same six month period in 1996. Interest income on loans and securities
increased 13.9%. Interest expense on deposits increased 18%. The Bank's
year-to-date net interest margin was 4.68% declining slightly from 4.71% as of
June 1996. The year-to-date yield on total earning assets was 8.30% at June 30,
1997, increasing from 8.21% as of June 30, 1996. Yields on US treasury
securities and municipal bonds have been computed on a tax-equivalent basis.
Comparatively, the year-to-date cost of funds on interest-bearing deposit
balances at June 30, 1997 was 4.11% increasing from 3.97% in June 1996. This is
largely due to the change in the deposit mix as customers migrated out of
regular savings products into higher yielding certificates.
The year-to-date provision for credit losses was $30 thousand through
June 30, 1997. The provision was also $30 thousand for the same period last
year. Management remains confident in the loan portfolio and in the overall
adequacy of the reserve for credit losses in relation to the quality and size of
the loan portfolio.
Net operating expenses increased 3.7% for the quarter ending June 30,
1997 compared to the same six month period in 1996. This compares with a 10%
increase in the second quarter of 1996 over the second quarter of 1995. The
increase in 1996 over 1995 was the result of the initial phase of the $2.5
million expansion plan. In 1997, occupancy expense increased 33.2% over the
second quarter of 1996 due to the second phase of that plan, which included the
opening of a newly-constructed facility in Evans, NY in May of 1996 and the
renovation of the Main Street, Angola building. These costs have also increased
due to the Bank's investment in technologically up-to-date check processing
equipment and a new mainframe computer system. Salaries and benefits, supplies
and advertising decreased from levels recorded at June 30, 1996.
Net income for the second quarter of $869 thousand reflects an increase
of 15.1% over the second quarter of 1996. The effective combined income tax rate
for the first six months of 1997 was 31.8% compared to 28.8% for the same period
in 1996.
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PART II - OTHER INFORMATION PAGE 8
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ITEM 1. Legal Proceedings - None to report.
ITEM 2. Changes in Securities - None to report except for the five-for-one
stock split which was effective May 1, 1997 and reported in the
Registrant's Form 10-Q for the quarter ended March 31, 1997.
ITEM 3. Defaults upon Senior Securities - None to report.
ITEM 4. Submission of Matters To a Vote of Security Holders--none to report:
Except for the annual shareholders meeting held on April 29, 1997
reported in the Form 10-Q filed for the quarter ended March 31, 1997.
ITEM 5. Other Information - None to Report.
ITEM 6. Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule
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PAGE 9
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
Evans Bancorp, Inc.
DATE
August 13, 1997 /s/Richard M. Craig
-------------------------------------
Richard M. Craig
President and Chief Executive Officer
DATE
August 13, 1997 /s/James Tilley
-------------------------------------
James Tilley
Senior Vice President
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<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EVANS
BANCORP INC BALANCE SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000842518
<NAME> EVANS BANCORP INC
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 6,084,221
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,815,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 36,270,518
<INVESTMENTS-CARRYING> 6,490,485
<INVESTMENTS-MARKET> 0
<LOANS> 95,820,813
<ALLOWANCE> (582,972)
<TOTAL-ASSETS> 153,439,469
<DEPOSITS> 135,118,504
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,038,968
<LONG-TERM> 0
<COMMON> 849,475
0
0
<OTHER-SE> 15,432,522
<TOTAL-LIABILITIES-AND-EQUITY> 153,439,469
<INTEREST-LOAN> 4,275,818
<INTEREST-INVEST> 1,173,482
<INTEREST-OTHER> 71,223
<INTEREST-TOTAL> 5,520,523
<INTEREST-DEPOSIT> 2,264,033
<INTEREST-EXPENSE> 2,266,392
<INTEREST-INCOME-NET> 3,254,131
<LOAN-LOSSES> 30,000
<SECURITIES-GAINS> (9,740)
<EXPENSE-OTHER> 2,371,682
<INCOME-PRETAX> 1,273,562
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 868,762
<EPS-PRIMARY> .51
<EPS-DILUTED> 0
<YIELD-ACTUAL> 8.30
<LOANS-NON> 215,931
<LOANS-PAST> 462,761
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 546,954
<CHARGE-OFFS> 6,671
<RECOVERIES> 12,689
<ALLOWANCE-CLOSE> 582,972
<ALLOWANCE-DOMESTIC> 30,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
