Evans Bank(US:EVBN)2023-07-31 16:00Credit Losses and Loan Performance - As of June 30, 2023, the Allowance for Credit Losses (ACL) on loans totaled $21.4 million, a decrease from $22.2 million at January 1, 2023[107]. - Non-performing loans amounted to $28 million, or 1.66% of total loans outstanding, as of June 30, 2023, up from $25 million, or 1.48%, at December 31, 2022[119]. - The criticized loan portfolio decreased to $74 million at June 30, 2023, down from $93 million at December 31, 2022[120]. - The Company recorded a $0.1 million release of allowance during the three months ended June 30, 2023, primarily due to lower criticized loan balances[122]. - The Company adopted ASU 2016-13 on January 1, 2023, resulting in a $2.7 million increase in the allowance for credit losses[121]. - The Company released $0.8 million in allowance for credit losses in the first half of 2023, compared to a provision of $0.5 million in the same period of 2022[148]. Loan and Deposit Trends - Total gross loans were $1.7 billion at June 30, 2023, compared to $1.6 billion at June 30, 2022, with real estate-secured loans remaining stable at $1.4 billion[116]. - Total deposits as of June 30, 2023, were $1.8 billion, reflecting a $15 million (1%) increase from December 31, 2022, but a decrease of $182 million (9%) from June 30, 2022[129]. - The C&I portfolio was $228 million at June 30, 2023, representing a $22 million or 9% decrease from December 31, 2022[118]. - Residential mortgage originations were $10 million in Q2 2023, compared to $8 million in Q1 2023 and $18 million in Q2 2022[117]. - Consumer clients are migrating from savings accounts to higher-yielding accounts, such as time deposits, with an increase of $183 million in consumer time deposits[129]. Financial Performance - Net income for Q2 2023 was $4.9 million, or $0.90 per diluted share, down from $5.8 million (1.06 per diluted share) in Q1 2023 and $5.7 million (1.03 per diluted share) in Q2 2022[135]. - Net income for the first six months of 2023 was $10.7 million, or $1.96 per diluted share, compared to $10.5 million (1.89 per diluted share) in the same period of 2022[136]. - Non-interest income increased to $4.7 million in Q2 2023, up from $4.1 million in Q1 2023 and $4.6 million in Q2 2022, driven by higher insurance service and fee revenue[141]. - Net interest income decreased by $1.6 million (9%) from Q1 2023 and $2.4 million (13%) from Q2 2022, primarily due to higher interest expenses on interest-bearing liabilities[138]. - Net interest income for the first six months of 2023 was $33.0 million, a decrease of $1.5 million or 4% from the same period in 2022, attributed to higher costs of interest-bearing liabilities[146]. Efficiency and Expenses - Non-interest expenses decreased to $14.2 million in Q2 2023, down 2% from Q1 2023 and 4% from Q2 2022, with salaries and employee benefits down 8% compared to both periods[142]. - Total non-interest expense for the first six months of 2023 was $28.7 million, a 2% decrease from the prior year, primarily due to lower salaries and employee benefits[151]. - The GAAP efficiency ratio was 69.5% in Q2 2023, compared to 67.6% in Q1 2023 and 65.2% in Q2 2022, indicating increased operational costs relative to income[144]. Capital and Liquidity - The Tier 1 leverage ratio was 9.43% as of June 30, 2023, compared to 9.13% at March 31, 2023, indicating strong capital position[154]. - The Company had net short-term liquidity of $352 million as of June 30, 2023, compared to $209 million at December 31, 2022, showing improved liquidity management[162]. - The effective tax rate for the first half of 2023 was 22.9%, down from 24.4% in the same period of 2022, reflecting stable non-taxable income[153]. Interest Margin and Borrowings - The net interest margin for Q2 2023 was 3.10%, a decline of 36 basis points from Q1 2023 and 35 basis points from Q2 2022[139]. - The net interest margin was 3.28% in the first half of 2023, down 4 basis points from 3.32% in the same period of 2022, with loan yields increasing by 105 basis points[147]. - Total borrowings decreased from $193 million at December 31, 2022, to $140 million at June 30, 2023, due to growth in deposits and securities under agreement to repurchase[130]. - The yield on loans increased by 10 basis points from Q1 2023 and 102 basis points from Q2 2022, while the cost of interest-bearing liabilities was 2.18% in Q2 2023, up from 1.65% in Q1 2023[139].