<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 September 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.
------------------------------------------------------
(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
-----------------------------------------------
(Address of principal executive offices)
(Zip Code)
(716) 549-1000
-----------------------------------------------
(Issuer's telephone number)
Not applicable
-----------------------------------------------
(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 October 31, 1997
<PAGE> 2
INDEX
EVANS BANCORP, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
PAGE
PART 1. FINANCIAL INFORMATION
- -------------------------------
<S> <C> <C>
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets--September 30, 1997 and
December 31, 1996 1
Consolidated statements of income--Three months
ended September 30, 1997 and 1996 2
Consolidated statements of income--Nine months
ended September 30, 1997 and 1996 3
Consolidated statements of cash flows--Nine months 4
ended September 30, 1997 and 1996
Notes to consolidated financial statements--
September 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
- ---------------------------
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
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION PAGE 1
ITEM I - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
September 30, 1997 and December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1997 1996
-------------- ---------------
<S> <C> <C>
Cash and due from banks $ 6,012,688 $ 5,662,231
Interest bearing deposits in other banks 0 0
Federal Funds sold 2,800,000 1,450,000
Securities:
Classified as available-for-sale, at fair value 35,703,190 30,201,120
Classified as held-to-maturity, at amortized cost 6,547,881 5,853,204
Loans, net 97,777,001 92,087,902
Premises and equipment, net 3,976,845 3,748,663
Other assets 2,477,820 1,894,937
------------ -------------
$155,295,425 $ 140,898,057
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand $ 23,978,354 $ 20,149,152
NOW and money market accounts 6,791,755 6,437,613
Regular savings 45,513,002 42,136,290
Time Deposits, $100,000 and over 17,768,059 14,096,821
Other time accounts 41,981,762 40,641,503
------------ -------------
136,032,932 123,461,379
Dividend Payable 509,685 169,895
Other liabilities 2,259,212 1,756,700
------------ -------------
138,801,829 125,387,974
------------ -------------
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 4,531,589 3,692,659
Unrealized gains/(losses) on available for sale securities 121,812 (22,771)
------------ -------------
16,493,596 15,510,083
------------ -------------
$155,295,425 $ 140,898,057
============ =============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 4
PART I - FINANCIAL INFORMATION PAGE 2
ITEM I - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1997 1996
---------- -----------
<S> <C> <C>
INTEREST INCOME
Loans $2,216,758 $ 1,955,251
Federal funds sold 26,428 31,219
Securities:
Taxable 343,602 361,765
Non-taxable 249,015 182,968
Deposits in other banks 0 4,068
---------- -----------
2,835,803 2,535,271
INTEREST EXPENSE
Deposits 1,142,744 965,096
Short Term Borrowing 4,309 426
---------- -----------
NET INTEREST INCOME 1,688,750 1,569,749
PROVISION FOR CREDIT LOSSES 15,000 15,000
---------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES 1,673,750 1,554,749
---------- -----------
NON-INTEREST INCOME:
Service charges 169,866 170,108
Other 70,577 93,047
Gains/(Losses) on Securities Transactions 1,990 (54,516)
---------- -----------
242,433 208,639
---------- -----------
NON-INTEREST EXPENSE:
Salaries and employee benefits 637,514 722,775
Occupancy 188,002 163,876
Supplies 25,332 28,048
Repairs and maintenance 43,634 35,312
Advertising and public relations 35,452 29,735
Professional services 88,232 52,657
FDIC assessments 4,074 500
Other 227,165 272,643
---------- -----------
1,249,405 1,305,546
---------- -----------
Income before income taxes 666,778 457,842
---------- -----------
PROVISION FOR INCOME TAXES 186,925 54,155
---------- -----------
NET INCOME $ 479,853 $ 403,687
========== ===========
NET INCOME PER COMMON SHARE $ 0.28 $ 0.24
========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 1,698,950 1,698,950
========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 5
PART I - FINANCIAL INFORMATION PAGE 3
ITEM I - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
For the Nine Months ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1997 1996
----------- -----------
<S> <C> <C>
INTEREST INCOME
Loans $ 6,492,576 $ 5,530,212
Federal funds sold 97,651 161,508
Securities:
Taxable 1,097,298 1,092,056
Non-taxable 668,801 577,311
Deposits in other banks 0 20,889
----------- -----------
8,356,326 7,381,976
INTEREST EXPENSE
Deposits 3,406,777 2,884,999
Short Term Borrowing 6,668 509
----------- -----------
NET INTEREST INCOME 4,942,881 4,496,468
PROVISION FOR CREDIT LOSSES 45,000 45,000
----------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES 4,897,881 4,451,468
----------- -----------
NON-INTEREST INCOME:
Service charges 498,623 496,234
Other 172,672 207,468
Losses on Securities Transactions (7,750) (45,475)
----------- -----------
663,545 658,227
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NON-INTEREST EXPENSE:
Salaries and employee benefits 1,890,647 1,983,151
Occupancy 570,024 450,776
Supplies 67,903 84,396
Repairs and maintenance 116,972 108,454
Advertising and public relations 92,389 99,910
Professional services 202,561 159,950
FDIC assessments 11,200 1,500
Other 669,391 704,158
----------- -----------
3,621,087 3,592,295
----------- -----------
Income before income taxes 1,940,339 1,517,400
----------- -----------
PROVISION FOR INCOME TAXES 591,725 359,195
----------- -----------
NET INCOME $ 1,348,614 $ 1,158,205
=========== ===========
NET INCOME PER COMMON SHARE $ 0.79 $ 0.68
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 1,698,950 1,698,950
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 6
PAGE 4
ITEM I - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1997 1996
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Interest received $ 7,953,798 $ 7,272,615
Fees and commissions received 725,455 797,043
Interest paid (3,341,151) (2,855,095)
Cash paid to suppliers and employees (3,482,480) (3,382,858)
Income taxes paid (608,750) (559,443)
------------ ------------
Net cash provided by operating
activities 1,246,872 1,272,262
------------ ------------
INVESTING ACTIVITIES
Available for sale securities
Purchases (20,390,722) (13,607,497)
Proceeds from sales 14,641,489 10,732,162
Proceeds from maturities 407,731 4,279,114
Held to maturity securities
Purchases (2,261,519) (1,062,002)
Proceeds from sales 0 0
Proceeds from maturities 1,607,944 1,250,154
Additions to bank premises and equipment (509,822) (1,373,081)
Increase in loans, net of repayments (7,444,229) (11,919,346)
Proceeds from sales of loans 1,726,206 2,111,011
------------ ------------
Net cash used in investing activities (12,222,922) (9,589,485)
------------ ------------
FINANCING ACTIVITIES
Increase in deposits 12,571,553 10,700,983
Cash Dividends Paid (169,895) (40,503)
------------ ------------
Net cash provided by financing
activities 12,401,658 10,660,480
------------ ------------
Net increase in cash and cash
equivalents 1,425,608 2,343,257
Cash and cash equivalents, January 1 7,112,231 6,443,256
------------ ------------
Cash and cash equivalents, September 30 $ 8,537,839 $ 8,786,513
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 7
PART I - FINANCIAL INFORMATION PAGE 5
ITEM I - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1997 1996
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<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net income $ 1,348,614 $ 1,158,205
----------- -----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 259,441 218,979
Provision for credit losses 45,000 45,000
(Gain)/Loss on sale of assets (15,076) 20,015
Changes in:
Accrued interest payable 72,294 30,413
Accrued interest receivable (357,620) (60,423)
Other liabilities 40,954 (40,648)
Other assets (146,735) (99,279)
----------- -----------
Total adjustments (101,742) 114,057
----------- -----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES $ 1,246,872 $ 1,272,262
=========== ===========
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 $ 179,137 ($ 186,687)
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 8
PART I - FINANCIAL INFORMATION PAGE 6
ITEM 1 - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997 AND 1996
(UNAUDITED)
1. GENERAL
-------
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 nine month period ending September 30,
1997 are not necessarily indicative of the results to be expected for
the full year.
2. SECURITIES
----------
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
---------------------------
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
------------
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 and deferred loan origination expenses.
5. PER SHARE DATA
--------------
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.
<PAGE> 9
PART I - FINANCIAL INFORMATION PAGE 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
MATERIAL CHANGES IN FINANCIAL CONDITION
- ---------------------------------------
Total deposits increased 10.18% over the first nine months of 1997. This
compares to an increase of 9.82% over the first nine months of 1996. Demand
deposits have increased 19%, regular savings have increased 8.01%, NOW account
balances increased 5.50% and other time accounts are up 3.30%. The Bank
introduced a new tiered savings product in May which has attracted new deposits,
and the impact of the expansion of the Bank's trade area is also reflected in
increased balances. Time deposits over $100,000 have increased 26.04%, largely
due to additional municipal deposits obtained through the competitive bidding
process.
Much of the cash provided by deposit growth has been used to fund loans.
Total net loans have increased 6.18% since December 31, 1996, reaching a total
of $97.8 million. Loan demand has been strong since the last quarter of 1995,
and is expected to continue throughout the remainder of 1997. The fixed and
variable home equity products remain popular contributing to an increase in
consumer loans over 1996 and the commercial sector of the portfolio has also
grown significantly. Growth has not only outpaced runoff, but has offset sales
of $1.1 million in New York State Higher Education Loans to the Student Loan
Marketing Association ("SLMA") and $691 thousand in residential mortgages to the
Federal National Mortgage Association ("FNMA").
Despite the growth in loans, excess funds have been available for
investment. The securities portfolio has increased 17.19% between December 31,
1996 and September 30, 1997 compared to a decrease of 5.53% between December 31,
1995 and September 30, 1996. The Bank's portfolio remains concentrated in US
government 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 ("ROAA") at September 30, 1997
was 1.20%. The ROAA was also 1.20% at December 31, 1996. The Bank's annualized
return on average equity at September 30, 1997 was 11.14%. At December 31, 1996
the return on average equity was 10.72%. The capital to assets ratio at
September 30, 1997 of 10.89% compares to 11.37% at December 31, 1996. Total
assets have increased 10.22% since December 31, 1996.
MATERIAL CHANGES IN THE RESULTS OF OPERATIONS
- ---------------------------------------------
Net interest income for the quarter ending September 30, 1997 increased
7.58% over the same three month period in 1996. Interest income on loans and
securities increased 13.20%, interest expense on deposits increased 18.09%. The
year-to-date interest margin was 4.69% as of September 30, 1997 versus 4.79% as
of September 30, 1996. The year-to-date tax-equivalent yield on total earning
assets was 8.29%, increasing from 8.27% at September 30, 1996. Comparatively,
the year-to-date cost of funds on interest-bearing deposit balances at September
30, 1997 was 4.10% increasing from 3.97% at September 30, 1996, largely due to
customer movement towards higher yielding products, particularly certificates of
deposit.
The year-to-date provision for credit losses was $45,000 through
September 30, 1997. The provision was also $45,000 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 .80% over September 30, 1996. This
compares to an increase of 15.22% in September 1996 over September 1995.
Categories such as salaries and benefits, occupancy, supplies, repair and
maintenance and advertising were all impacted by the Bank's expansion in 1996.
In 1997, net operating expenses have remained stable. Reductions in salary
expense have been possible in part, as a result of purchasing technologically-
advanced check processing and statement imaging equipment. There has been an
increase in occupancy expense, however, due to the depreciation of that
equipment, as well as a full nine months of depreciation related to the Evans
facility which opened in May 1996. Professional service costs have also been
higher over the first nine months of 1997 due to additional legal and accounting
expenses related to the stock split and dividend reinvestment plan as well as
the cost of an analyst hired to identify areas where efficiency can be improved
and costs can be reduced.
Net income for the third quarter of $1.3 million reflects an increase of
16.44% over the third quarter of 1996. The effective combined tax rate for the
first nine months of 1997 was 30.5% compared to 23.67% for the same period in
1996. A change in the components used in the calculation of deferred taxes
resulted in a lower effective tax rate in 1996.
<PAGE> 10
PART II - OTHER INFORMATION PAGE 8
- ---------------------------
ITEM 1. Legal Proceedings - None to report
ITEM 2. Changes in Securities - None to report
ITEM 3. Defaults upon Senior Securities - None to report
ITEM 4. Submission of Matters To a Vote of Security Holders--None to
report
ITEM 5. Other Information:
On August 19, 1997, the Board of Directors declared a cash
dividend of $.30 per share payable on October 21, 1997 to
shareholders of record on October 1, 1997.
ITEM 6. Exhibits:
Filed Here With:
Exhibit Description Page
- ------- ----------- ----
27.1 Financial Data Schedule as of September 30, 1997
<PAGE> 11
PAGE 9
SIGNATURES
----------
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
November 07, 1997 /Richard M. Craig
-------------------------------------
Richard M. Craig
President and Chief Executive Officer
DATE
November 07, 1997 /James Tilley
-------------------------------------
James Tilley
Senior Vice President
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 6,012,688
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,800,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 35,703,190
<INVESTMENTS-CARRYING> 6,547,881
<INVESTMENTS-MARKET> 0
<LOANS> 97,777,001
<ALLOWANCE> (599,207)
<TOTAL-ASSETS> 155,295,425
<DEPOSITS> 136,032,932
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,768,897
<LONG-TERM> 0
0
0
<COMMON> 849,475
<OTHER-SE> 15,644,121
<TOTAL-LIABILITIES-AND-EQUITY> 155,295,425
<INTEREST-LOAN> 6,492,576
<INTEREST-INVEST> 1,766,099
<INTEREST-OTHER> 97,651
<INTEREST-TOTAL> 8,356,326
<INTEREST-DEPOSIT> 3,406,777
<INTEREST-EXPENSE> 6,668
<INTEREST-INCOME-NET> 4,942,881
<LOAN-LOSSES> 45,000
<SECURITIES-GAINS> (7,750)
<EXPENSE-OTHER> 3,621,087
<INCOME-PRETAX> 1,940,339
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,348,614
<EPS-PRIMARY> .79
<EPS-DILUTED> 0
<YIELD-ACTUAL> 8.29
<LOANS-NON> 462,063
<LOANS-PAST> 253,397
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 546,954
<CHARGE-OFFS> 39,328
<RECOVERIES> 46,581
<ALLOWANCE-CLOSE> 599,207
<ALLOWANCE-DOMESTIC> 45,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
