Evans Bank(US:EVBN)2023-05-01 16:00Loan Portfolio - As of March 31, 2023, the Allowance for Credit Losses (ACL) on loans totaled $21.5 million, a decrease from $22.2 million at January 1, 2023, with a significant portion allocated to the commercial portfolio [108]. - Total gross loans were $1.7 billion at March 31, 2023, unchanged from December 31, 2022, and up from $1.6 billion at March 31, 2022 [116]. - Residential real estate loans were $441 million at March 31, 2023, reflecting a decrease of $3 million or less than 1% from the previous quarter, but an increase of $18 million or 4% from the same quarter last year [116]. - Non-performing loans totaled $24 million, or 1.45% of total loans outstanding, at March 31, 2023, compared to $25 million or 1.48% at December 31, 2022 [119]. - The criticized loan portfolio, graded as "special mention" and "substandard," decreased to $90 million at March 31, 2023, down from $93 million at December 31, 2022 [120]. - The Company recorded a $0.7 million release of allowance during the three months ended March 31, 2023, primarily due to lower loan balances and reduced specific reserves [122]. Investment Securities - Total investment securities were $370 million at March 31, 2023, compared to $371 million at December 31, 2022, and $389 million at March 31, 2022 [124]. - The total net unrealized loss position of the available-for-sale investment portfolio was $59 million at March 31, 2023, down from $64 million at December 31, 2022 [127]. Deposits and Liquidity - Total deposits increased by $78 million or 4% from December 31, 2022, to $1.8 billion as of March 31, 2023, but decreased by $137 million or 7% from March 31, 2022 [129]. - The Company had $11 million in long-term Federal Home Loan Bank advances as of March 31, 2023, down from $20 million at December 31, 2022 [130]. - The Company had net short-term liquidity of $433 million as of March 31, 2023, compared to $209 million at December 31, 2022 [150]. - The long-term liquidity ratio was 74% at March 31, 2023, slightly down from 75% at December 31, 2022 [150]. - Management believes available sources of liquidity are adequate to meet funding needs in the normal course of business [150]. - The Company maintains a sufficient level of U.S. government and agency securities that can be pledged as collateral for municipal deposits [151]. Financial Performance - Net income for Q1 2023 was $5.8 million, or $1.06 per diluted share, compared to $6.0 million, or $1.10 per diluted share, in Q4 2022, and $4.7 million, or $0.86 per diluted share, in Q1 2022 [134]. - Net interest income decreased by $1.9 million or 10% from Q4 2022 due to higher interest expenses, but increased by $0.8 million or 5% compared to Q1 2022 [136]. - The net interest margin for Q1 2023 was 3.46%, a decrease of 31 basis points from Q4 2022, but an increase of 28 basis points from Q1 2022 [137]. - Non-interest income was $4.1 million in Q1 2023, down from $4.5 million in Q4 2022 and $4.4 million in Q1 2022 [139]. - Non-interest expenses were $14.5 million in Q1 2023, a decrease of $0.4 million or 3% from Q4 2022, and relatively flat compared to Q1 2022 [140]. - The Company's GAAP efficiency ratio was 67.6% in Q1 2023, compared to 62.9% in Q4 2022 and 69.1% in Q1 2022 [141]. Capital and Ratios - The Tier 1 leverage ratio was 9.13% as of March 31, 2023, consistent with December 31, 2022, and up from 8.57% as of March 31, 2022 [142]. - Book value per share was $28.97 at March 31, 2023, down from $30.65 at March 31, 2022, reflecting unrealized losses on investment securities [143]. Interest Rate Sensitivity - The Bank's projected annual net interest income could decrease by $2,734,000 with a +200 basis points change in interest rates as of March 31, 2023 [156]. - A +100 basis points change in interest rates could increase projected annual net interest income by $528,000 [156]. - The Bank's Asset-Liability Committee monitors interest rate sensitivity and takes actions to mitigate exposure to interest rate risk [155]. - Management's philosophy is to limit the variability of net interest income to changes in net interest rates [154]. Accounting and Internal Controls - The Company adopted ASU 2016-13 on January 1, 2023, which resulted in a $2.7 million increase to the allowance for credit losses recognized as a cumulative effect adjustment to retained earnings [121]. - The Company adopted the CECL accounting standard effective January 1, 2023, implementing new and modified controls over financial reporting [159]. - There were no significant changes in the Company's internal control over financial reporting during the fiscal quarter ended March 31, 2023, except for the CECL adoption [160].