Evans Bank(US:EVBN)2024-08-08 18:42Credit Losses and Provisions - The allowance for credit losses (ACL) on loans totaled $22.6 million at June 30, 2024, compared to $21.4 million at June 30, 2023, reflecting an increase of $1.2 million [110]. - The company recorded a provision for credit losses of $0.3 million during Q2 2024, mainly due to loan growth and slower prepayment rates [122]. - The company recorded a provision for credit losses of $0.6 million in the first half of 2024, compared to a release of $0.8 million in the same period of 2023 [142]. Loan and Deposit Growth - Total gross loans were $1.8 billion at June 30, 2024, up from $1.7 billion at both December 31, 2023, and June 30, 2023 [118]. - Total deposits increased by $173 million, or 10%, from December 31, 2023, to $1.9 billion at June 30, 2024 [128]. - The commercial and industrial (C&I) portfolio grew to $257 million at June 30, 2024, representing a $34 million, or 15%, increase from December 31, 2023 [120]. - Residential mortgage originations were $15 million in Q2 2024, compared to $10 million in both Q1 2024 and Q2 2023 [119]. Non-Performing Loans - Non-performing loans amounted to $25 million, or 1.42% of total loans outstanding, at June 30, 2024, down from $28 million, or 1.66%, at June 30, 2023 [121]. Investment Securities - Total investment securities decreased to $267 million at June 30, 2024, from $354 million at June 30, 2023, primarily due to strategic repositioning [125]. - The total net unrealized loss position of the available for sale investment portfolio was $59 million at June 30, 2024, compared to $65 million at June 30, 2023 [127]. Interest Income and Expenses - Net interest income for the six months ended June 30, 2024 was $28.2 million, with a net interest margin of 2.75% [134]. - Net interest income for Q2 2024 was $14.3 million, a 3% increase from Q1 2024, but a 9% decrease from Q2 2023, attributed to higher average loans and increased interest expenses [137]. - For the first six months of 2024, net interest income was $28.2 million, a 14% decrease from the same period in 2023, driven by higher costs of interest-bearing liabilities [140]. Assets and Liabilities - Total assets increased to $2,252.0 million as of June 30, 2024, compared to $2,157.5 million at December 31, 2023 [132]. - Total liabilities increased to $2,077.6 million as of June 30, 2024, compared to $1,996.4 million at December 31, 2023 [134]. - Total borrowings decreased from $145 million at December 31, 2023 to $129 million at June 30, 2024 [129]. - Long-term Federal Home Loan Bank advances increased to $41 million at June 30, 2024 from $6 million at December 31, 2023 [129]. - Short-term borrowings with the Federal Reserve were $88 million at June 30, 2024, compared to $100 million at June 30, 2023 [129]. Stockholders' Equity - Stockholders' equity increased to $174.4 million as of June 30, 2024, compared to $161.1 million at December 31, 2023 [134]. Interest Rate Sensitivity - The Bank's net interest income is projected to decrease by $3,440,000 under a +200 basis points interest rate scenario by June 30, 2024 [156]. - A +100 basis points change is expected to increase net interest income by $1,047,000 by June 30, 2024 [156]. - A -100 basis points change is projected to decrease net interest income by $1,082,000 by June 30, 2024 [156]. - Under a -200 basis points scenario, net interest income is expected to decrease by $2,218,000 by June 30, 2024 [156]. - The Bank's assumptions regarding interest rate changes include immediate adjustments of up to 200 basis points [156]. - The impact of interest rate changes on net interest income is inherently uncertain and may differ significantly from projections [156]. - Management's assumptions include factors such as prepayment rates of mortgage-related assets and loan and deposit volumes [156]. - The Bank cannot precisely predict the impact of interest rate changes due to market conditions and interest rate differentials [156]. - The amounts presented in the sensitivity table are not considered significant to the Bank's projected net interest income [156]. - Management may take actions to counter changes in interest rates, which could affect net interest income [156]. Non-Interest Income and Expenses - Non-interest income in Q2 2024 was $2.4 million, slightly up from $2.3 million in Q1 2024, but down from $4.7 million in Q2 2023, primarily due to lower insurance service revenue [138]. - Non-interest expense decreased to $12.6 million in Q2 2024, down from $12.9 million in Q1 2024 and $14.2 million in Q2 2023, mainly due to reduced salaries and employee benefits [139]. - Total non-interest expense for the first six months of 2024 was $25.5 million, an 11% decrease from the prior year, reflecting lower salaries related to TEA [142]. Efficiency Ratio - The GAAP efficiency ratio improved to 75.11% in Q2 2024 from 79.92% in Q1 2024, but was higher than 69.53% in Q2 2023 [140]. - The net interest margin for the first six months of 2024 was 2.75%, down 53 basis points from 3.28% in the same period of 2023 [141]. Net Income - Net income for Q2 2024 was $2.9 million, or $0.53 per diluted share, up from $2.3 million, or $0.42 per diluted share in Q1 2024, but down from $4.9 million, or $0.90 per diluted share in Q2 2023 [136].