<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, 1999
[ ] 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 July 31, 1999
<PAGE> 2
INDEX
EVANS BANCORP, INC. AND SUBSIDIARY
PAGE
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets--June 30, 1999 and
December 31, 1998 1
Consolidated statements of income--Three months
ended June 30, 1999 and 1998 2
Consolidated statements of income--Six months 3
ended June 30, 1999 and 1998
Consolidated statements of cash flows--Six months 4
ended June 30, 1999 and 1998
Notes to consolidated financial statements--
June 30, 1999 and 1998 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Item 3. Quantative and Qualitative Disclosures About Market Risks 9
PART II. OTHER INFORMATION 10
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 11
<PAGE> 3
PART I - FINANCIAL INFORMATION PAGE 1
ITEM I - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
June 30, 1999 and December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1999 1998
------------- -------------
<S> <C> <C>
Cash and due from banks $ 6,887,579 $ 7,300,780
Federal Funds sold 3,075,000 0
Securities:
Classified as available-for-sale, at fair value 53,035,121 45,969,587
Classified as held-to-maturity, at amortized cost 4,668,303 4,090,385
Loans, net 109,042,649 110,526,449
Properties and equipment, net 3,709,777 3,696,658
Other assets 3,328,710 2,536,371
------------- -------------
TOTAL ASSETS $ 183,747,139 $ 174,120,230
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand $ 29,113,344 $ 25,857,037
NOW and money market accounts 7,735,656 7,554,104
Regular savings 56,888,707 47,676,615
Time Deposits, $100,000 and over 21,560,332 24,208,290
Other time accounts 40,937,929 38,787,590
------------- -------------
156,235,968 144,083,636
Federal Funds Purchased 0 2,225,000
Other Borrowed Funds 5,000,000 7,000,000
Other liabilities 4,180,937 2,188,181
------------- -------------
TOTAL LIABILITIES 165,416,905 155,496,817
============= =============
STOCKHOLDERS' EQUITY
Common Stock, $.50 par value; 10,000,000 shares authorized;
1,698,950 shares issued 849,475 849,475
Capital surplus 10,990,720 10,990,720
Retained earnings 6,962,950 6,400,764
Unrealized gains on available for sale securities (472,911) 443,308
------------- -------------
18,330,234 18,684,267
Less: Treasury Stock, at cost (2,419 shares) 0 (60,854)
------------- -------------
Total Stockholders' equity 18,330,234 18,623,413
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 183,747,139 $ 174,120,230
============= =============
</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 June 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1999 1998
----------- ----------
<S> <C> <C>
INTEREST INCOME
Loans $ 2,332,930 $ 2,387,228
Federal funds sold 54,107 9,293
Securities:
Taxable 423,054 321,998
Non-taxable 311,934 264,618
----------- -----------
Total Interest Income 3,122,025 2,983,137
INTEREST EXPENSE
Interest on Deposits 1,151,710 1,176,624
Short Term Borrowing 74,361 37,345
----------- -----------
NET INTEREST INCOME 1,895,954 1,769,168
PROVISION FOR LOAN LOSSES 45,000 29,999
----------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,850,954 1,739,169
----------- -----------
NON-INTEREST INCOME:
Service charges 169,710 176,832
Other 102,667 64,790
Securities Gain(Loss) 0 (1,284)
----------- -----------
Total Non-interest Income 272,377 240,338
----------- -----------
NON-INTEREST EXPENSE:
Salaries and employee benefits 773,501 663,217
Occupancy 219,120 188,995
Supplies 34,797 28,399
Repairs and maintenance 59,062 47,307
Advertising and public relations 49,171 34,802
Professional services 62,969 63,897
FDIC assessments 4,087 4,169
Other 291,195 228,215
----------- -----------
Total Non-interest Expense 1,493,902 1,259,001
----------- -----------
Income before income taxes 629,429 720,506
----------- -----------
INCOME TAXES 171,250 209,000
----------- -----------
NET INCOME $ 458,179 $ 511,506
=========== ===========
NET INCOME PER COMMON SHARE-BASIC $ 0.27 $ 0.30
=========== ===========
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 Six Months ended June 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1999 1998
----------- ----------
<S> <C> <C>
INTEREST INCOME
Loans $4,661,556 $4,697,627
Federal Funds Sold 93,318 40,257
Securities
Taxable 777,535 646,627
Non-taxable 607,338 525,542
---------- ----------
Total Interest Income 6,139,747 5,910,053
INTEREST EXPENSE
Interest on Deposits 2,271,794 2,388,026
Short Term Borrowing 158,236 48,497
---------- ----------
NET INTEREST INCOME 3,709,717 3,473,530
PROVISION FOR LOAN LOSSES 80,000 60,000
---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,629,717 3,413,530
---------- ----------
NON-INTEREST INCOME:
Service charges 347,031 348,030
Other 239,688 137,349
Securities Gains 1,064 3,308
---------- ----------
Total Non-interest Income 587,783 488,687
---------- ----------
NON-INTEREST EXPENSE:
Salaries and employee benefits 1,513,121 1,326,052
Occupancy 434,902 380,493
Supplies 67,905 59,513
Repairs and maintenance 113,031 92,635
Advertising and public relations 95,838 61,802
Professional services 126,111 132,386
FDIC Assessment 8,299 8,294
Other 553,209 444,499
---------- ----------
Total Non-interest Expense 2,912,416 2,505,674
---------- ----------
Income before income taxes 1,305,084 1,396,543
---------- ----------
INCOME TAXES 352,450 394,700
---------- ----------
NET INCOME $ 952,634 $1,001,843
========== ==========
NET INCOME PER COMMON SHARE-BASIC $ 0.56 $ 0.59
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 1,698,950 1,698,950
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 6
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, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1999 1998
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Interest received $ 6,101,106 $ 5,547,030
Fees and commissions received 559,856 536,503
Interest paid (2,449,218) (2,367,240)
Cash paid to suppliers and employees (2,791,423) (2,163,468)
Income taxes paid (347,000) (417,973)
Net cash provided by operating
activities 1,073,321 1,134,852
------------ ------------
INVESTING ACTIVITIES
Available for sale securities
Purchases (18,272,730) (13,347,284)
Proceeds from sales 2,842,567 6,219,849
Proceeds from maturities 6,904,242 4,895,965
Held to maturity securities
Purchases (1,592,571) (1,052,390)
Proceeds from maturities 1,014,678 1,181,519
Additions to properties and equipment (97,593) (157,988)
Decrease in loans, net of repayments (2,379,120) (5,453,499)
Proceeds from sales of loans 3,204,950 1,829,235
------------ ------------
Net cash used in investing activities (8,375,577) (5,884,593)
------------ ------------
FINANCING ACTIVITIES
Increase in deposits 12,152,332 1,086,075
(Repayment)Purchase of Short Term Borrowing (1,858,669) 2,345,244
Treasury Stock 60,840
Cash Dividends Paid (390,448) (288,822)
------------ ------------
Net cash provided by financing
activities 9,964,055 3,142,497
------------ ------------
Net increase(decrease) in cash and cash
equivalents 2,661,799 (1,607,244)
Cash and cash equivalents, January 1 7,300,780 10,336,532
------------ ------------
Cash and cash equivalents, June 30 $ 9,962,579 $ 8,729,288
============ ============
</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 Six Months Ended June 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1999 1998
<S> <C> <C>
----------- -------------
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net income $ 952,634 $ 1,001,843
----------- -----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 309,199 (21,149)
Provision for credit losses 80,000 60,001
Gain on sale of assets (11,137) (10,890)
(Decrease)Increase in accrued interest payable (19,188) 53,157
Increase in accrued interest receivable (84,938) (208,137)
(Decrease)Increase in other liabilities (2,775) 228,884
(Increase)Decrease in other assets (150,474) 31,143
----------- -----------
Total adjustments 120,687 133,009
----------- -----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES $ 1,073,321 $ 1,134,852
=========== ===========
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION:
Net unrealized (loss)gain on available for sale securities ($ 695,457) $ 258,772
=========== ===========
</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
June 30, 1999 AND 1998
(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 six month period ended June 30, 1999
are not necessarily indicative of the results to be expected for the
full year.
2. SECURITIES
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, allowance for loan losses 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 and stock splits. The Company adopted
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings
per Share," during the fourth quarter of 1997. Only basic earnings per
share is disclosed because the Company does not have any dilutive
securities or other contracts to issue common stock or convert to common
stock.
6. NEW ACCOUNTING STANDARDS PRONOUNCEMENTS
SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information was issued in 1997 by the Financial Accounting Standards
Board. This Statement establishes standards for the way that public
business enterprises report information about operating segments in
annual financial statements. Management has determined that the Bank is
the Company's only operating segment. As such additional disclosures are
not considered necessary.
SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, was issued in June 1998. The Company adopted the provisions
of SFAS No. 133 effective October 1, 1998. Because the Company does not
use derivatives, the adoption of SFAS No. 133 did not impact the
Company's earnings or financial position. As allowed by SFAS No. 133 the
Company transferred approximately $2,900,000 of certain securities from
held to maturity to the available for sale classification. The realized
and unrealized gains on the securities transferred were not material to
the Company.
<PAGE> 9
PART I - FINANCIAL INFORMATION PAGE 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
MATERIAL CHANGES IN FINANCIAL CONDITION
Total deposits increased 8.4% over the first six months of 1999 versus
an increase of .8% over the first six months of 1998. Demand deposits increased
12.6%, Regular savings increased 19.3% and Other time accounts increased 5.5%
over the first six months of 1999. Deposit increases primarily are attributable
to the expansion of the Bank's trade area to include West Seneca, NY since
opening a new branch in February 1999. Time Deposits over $100,000 decreased
10.9% in the first six months of 1999 versus a decrease of 3.8% in the first six
months 1998.
Total net loans outstanding of $109 million have decreased 1.3% since
December 31, 1998, which compares to an increase of 3.5% from December 1997 to
June 1998. Total consumer loans decreased $1.4 million, which reflects the
current trend towards residential mortgage and home equity mortgage refinancing.
The decrease also reflects the sale of $2.8 million in residential mortgages to
the Federal National Mortgage Association ("FNMA") and $400 thousand in student
loans sold to Sallie Mae ("SLMA") in the first half of 1999.
The securities portfolio increased 15.3% between December 31, 1998 and
June 30, 1999 versus an increase of 5.4% over the same time period last year.
Available funds continue to be invested in US government and agency securities
and tax-advantaged bonds issued by New York State municipalities and school
districts.
The annualized return on average assets ("ROAA") at June 30, 1999 was
1.08%. The ROAA at December 31, 1998 was 1.24%. The return on average equity at
June 30, 1999 was 10.35% versus 11.63% at December 31, 1998. The capital to
assets ratio of 10.63% at June 30,1999 compares to 10.81% at December 31, 1998.
Total assets have increased approximately $9.6 million or 5.5% since December
31, 1998.
MATERIAL CHANGES IN THE RESULTS OF OPERATIONS
Net interest income for the semi-annual period ending June 30, 1999
increased 6.8% over the same six month period in 1998. Interest paid on deposits
decreased 4.9%. The decrease reflects the impact of Federal Reserve dropping
short term interest rates three times, twenty five basis points each, in the
last months of 1998. The cost of short term borrowing was substantially higher
due to the increased use of the Bank's funding options as a member of the
Federal Home Loan Bank. The Bank's year-to-date net interest margin at June 30,
1999 was 4.54% as compared to 4.69% at June 30, 1998. The year-to-date yield on
average earning assets has declined from 8.26% at June 30, 1998 to 7.73% at June
30, 1999. The yield on loans has declined to 8.50% from 9.01% over that time
period and the tax-equivalent yield on federal funds and investments has
decreased from 6.52% to 6.24%. Comparatively, the year-to-date cost of funds on
interest bearing balances decreased from 4.15% at June 30, 1998 to 3.75% at June
30, 1999.
The year-to-date provision for credit losses was $80,000 through June
30, 1999 versus $60,000 through the second quarter of 1998. Management has
increased the amount set aside for potential loan losses due to the substantial
increase in the volume of the portfolio experienced over the past two years.
Management believes that the credit quality of the portfolio remains high as
supported by the fact that the charge-offs for the six month period ending June
1999 were $5,000 versus $20,000 for the same period in June 1998.
Non-interest expenses increased 16.2% in the first six months of 1999.
This compares to an increase of only 5.6% in the first six months of 1998. All
expense categories were impacted by the branch expansion into West Seneca.
Annual salary adjustments and an increase in the number of full-time equivalent
employees from 82 at June 30, 1998 to 90 at June 30, 1999 contributed to the
14.1% increase in salary and benefit expense. Occupancy expense is up 14.3% over
the same time period in 1998, along with Advertising and Public Relations, up
55.1% relating to the branch expansion cost. Repairs and Maintenance are also up
22%.
Net income through June 30, 1999 of $952,634 reflects a decrease of 4.9%
over the first six months of 1998. The effective combined tax rate for the first
six months of 1999 was 27% compared to 28% for the first six months of 1998. The
relatively low tax rates experienced in 1999 and 1998 demonstrate the impact of
increasing the Bank's investment in tax-advantaged municipal bonds and the
benefit realized from a favorable deferred tax position.
<PAGE> 10
PAGE 8
YEAR 2000
Company has long been aware of the complexity and significance of the issues
associated with the arrival of the Millennium (Year 2000). The "Year 2000"
problem centers around the world's computer systems and a common programming
practice that condenses a century date to just two digits, i.e. "98" to
represent 1998, to conserve storage space. As a result, these systems may
interpret "00" as 1900 rather than 2000, causing potential data corruption,
misinterpretation, or system failure. The Company, with the support and
direction of its Board of Directors and Senior Management, has dedicated
financial and human resources to formally adapt strategies and work towards
resolving all potential Year 2000 issues.
In the third quarter of 1997, the Company began formalizing its strategy
to address the data processing and business impacts we anticipated to be
associated with Year 2000 issues. Our ultimate approach was to adopt the
five-phase format recommended by the Federal Financial Institutions Examination
Council, and follow guidance provided to us by our regulatory authorities who
periodically monitor and evaluate our progress. These phases, and our
activities, are described as follows:
Awareness Phase
While this can be considered an ongoing phase relating to education of
employees, customers, and vendors, our primary activities defined the Year 2000
problem; obtained Board of Director and Executive level support; established a
project team to include the Senior Vice President of Administration, the Bank
Auditor; Manager of Data Processing, Manager of Systems Development,
representatives form each functional area of the Bank, legal counsel, and the
principal of our main-frame software vendor. This committee was responsible for
development and implementation of an overall strategy to identify and resolve
issues associated with year 2000.
Assessment Phase
Implementing this phase provided an assessment of the size and
complexity, identifying affected areas of our business, identified the required
resources, and enabled us to develop a comprehensive plan. An inventory of all
hardware and software was completed to establish a specific Year 2000 status,
i.e. "already deemed compliant", "requiring replacement or renovation", or
"becoming obsolete". Priorities were then determined. Certain systems were
identified as mission critical. Non-information technology systems were also
addressed. Key vendors, such as providers of power, heating, and telephone
services, among others, were contacted regarding their Year 2000 readiness. The
Bank has received letters certifying Year 2000 compliance from those suppliers
whose services are deemed critical to bank operations. However, in the event of
an infra-structure failure, i.e. lack of power, etc., a Bank committee has
developed a contingency plan so that business can continue with minimal
interruption. The Bank also performed a customer risk assessment in the last
quarter of 1998.
Renovation Phase
The Company does not write or create computer code or perform
programming activities. We are reliant on vendors and software suppliers to
furnish enhancements in a timely manner. Renovation of our core processing
system was completed in early 1998 in conjunction with a plan developed by the
vendor, other user financial institutions, and our Company. These renovations
were successfully tested in collaboration with all user institutions at our
back-up site. The renovated system was successfully installed in June 1998.
Additional in-house testing was conducted throughout the remainder of the year.
Validation Phase
This is probably the most critical and intensive phase of the entire
project. It is this phase that we validate, through a variety of testing
methods, that each system can process after the turn of the century, with
particular emphasis on those identified as "mission critical". As stated above,
renovation to our core processing systems was successfully tested, and all
testing of mission critical systems was successfully completed by year end 1998.
In each case, we followed a comprehensive written test plan involving user
representation to validate test results. All systems, including those designated
mission critical, have been renovated and successfully tested as of December 31,
1998.
During the second quarter of 1999 the Company performed another integrated test
of our processing system to validate "Year 2000 readiness". The test was
completed successfully and controls are in place to ensure a "clean" system that
remains Year 2000 ready.
<PAGE> 11
PAGE 9
Implementation Phase
The Company's Year 2000 ready systems are in place and presently
functioning. As a part of implementation, we plan continued testing in 1999,
along with fully integrated tests. Quality reviews will be conducted throughout
1999 and the year 2000 to ensure proper functioning of our systems. The
implementation phase involves contingency planning. The Company maintains a
formal Business Resumption plan and has developed a supplemental Year 2000
specific contingency plan. In accordance with regulatory guidance we have tested
and validated our Business Resumption Contingency Plan. This process was
completed in June 1999.
The Company believes, however, that due to the widespread nature of
potential Year 2000 issues, the contingency planning process is an ongoing one
which will require further modifications as the Company obtains additional
information, specifically regarding third party Year 2000 readiness.
The Company has identified significant (large) commercial depositors and
performed an assessment of their efforts towards Year 2000 readiness. Should
these depositors be unable to function financially as a result of their own Year
2000 issues, or significantly reduce their deposit levels, there could be an
impact on the Bank's own cash flow. Our initial assessment evaluates this risk
as minimal, and all customers identified in this risk assessment are aware of
the Year 2000 issues and are planning Year 2000 readiness efforts. The Company
will periodically monitor these depositors throughout 1999.
A risk assessment of large commercial borrowers was also completed
representing approximately 70 commercial customers, or 74% of commercial loan
outstandings. Based on survey results, all are rated as moderate to low risk. We
plan to selectively monitor the progress of certain moderate risk borrowers
throughout 1999. New commercial loans exceeding our borrowing threshold for risk
ratings will be measured to assure information technology utilized by the
borrower will be Year 2000 ready.
The Company has a comprehensive Customer Awareness program that includes
training and education of employees regarding Year 2000 issues and financial
industry efforts toward readiness. Our awareness program provides periodic
communication to customers and the community describing our preparation efforts.
Management continues to quantify expenses related to Year 2000
readiness. The Company has not been required to provide additional staff for the
express purpose of Year 2000 readiness, but rather has utilized existing
internal staff. Our budgeted expenses approximate $45,000, of which $15,000 will
be allocated for renovation of core processing software. Expenses associated
with Year 2000 preparedness are not expected to have a material impact on the
financial condition of the Company.
The Company's objective is to migrate to the Year 2000 with minimal
impact on customers, and be prepared for January 1, 2000. We believe that the
manner in which we have addressed this issue underscores our strengths. The
Company has the resources and the technological expertise to address such new
issues, but is small enough to enable us to make adjustments to internal
programs and systems without affecting the ability to service our customers. The
Company cannot provide assurance that failure of third parties to adequately
address the Year 2000 issue will not have an adverse impact. The Company intends
to continue to assess critical suppliers and customers to determine their
readiness. The Company is confident that with the implementation of the Year
2000 initiatives as scheduled, the possibility of significant interruptions to
normal operations should be reduced.
The preceding "Year 2000" discussion contains various statements which
represent the Company's beliefs or expectations regarding future events. All
forward-looking statements involve a number of risks and uncertainties that
could cause the actual results to differ materially from the projected results.
Factors that cause the differences include, but are not limited to, the actions
of governmental agencies or other third parties with respect to Year 2000
problems.
ITEM 3 - QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Company does not hold investments in instruments (i.e. such as
derivative financial or commodity instruments) that are considered to be subject
of any significant market risk.
<PAGE> 12
PAGE 10
PART II - OTHER INFORMATION
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
except for the annual shareholders meeting held on April 27, 1999
reported in the Form 10-Q filed for the quarter ended March 31, 1999.
ITEM 5. Other Information - None to Report.
ITEM 6. Exhibits and Reports on Form 8-K - None to Report.
The following Exhibits are filed as part of this Report:
Exhibit No. Description Page
27 Financial Data Schedule 12
<PAGE> 13
PAGE 11
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
August 11, 1999 /s/Richard M. Craig
-----------------------------------
Richard M. Craig
President and Chief Executive Officer
DATE
August 11, 1999 /s/James Tilley
-----------------------------------
James Tilley
Senior Vice President
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
EVANS BANCORP INC. BALANCE SHEET AND STATEMENT OF INCOME (UNAUDITED)
AS OF JUNE 30, 1999 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-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 6,887,580
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0
0
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</TABLE>
