Evans Bank(US:EVBN)2024-05-02 20:10Credit Losses and Loan Performance - As of March 31, 2024, the allowance for credit losses (ACL) on loans totaled $22.3 million, an increase from $21.5 million at March 31, 2023[98]. - Non-performing loans amounted to $28 million, or 1.62% of total loans, as of March 31, 2024, compared to $24 million, or 1.45%, a year prior[111]. - The criticized loan portfolio decreased to $70 million at March 31, 2024, down from $90 million a year earlier[112]. - The company recorded a provision for credit losses of $0.3 million during the first quarter of 2024, primarily due to slower prepayment rates and higher net loan charge-offs[113]. Loan and Deposit Trends - Total gross loans remained stable at $1.7 billion as of March 31, 2024, with real estate-secured loans increasing to $1.5 billion from $1.4 billion a year earlier[108]. - Total deposits increased by $173 million, or 10%, from December 31, 2023, reaching $1.9 billion as of March 31, 2024[119]. Investment Securities - Investment securities totaled $272 million at March 31, 2024, down from $370 million a year earlier, reflecting strategic repositioning of the balance sheet[115]. - The company’s highest concentration in its securities portfolio was in U.S. government-sponsored mortgage-backed securities, comprising 62% of total investment securities as of March 31, 2024[116]. - The total net unrealized loss position of the available-for-sale investment portfolio was $58 million at March 31, 2024, reflecting an increase in market interest rates[117]. Income and Expenses - Net income was $2.3 million, or $0.42 per diluted share, in the first quarter of 2024, compared to $10.2 million, or $1.85 per diluted share in the fourth quarter of 2023[124]. - Net interest income of $13.9 million was flat compared to the fourth quarter of 2023 but decreased by $3.4 million, or 20%, year-over-year[126]. - First quarter net interest margin was 2.79%, an increase of 4 basis points from the fourth quarter of 2023 but a decrease of 67 basis points from the first quarter of 2023[127]. - Non-interest income was $2.3 million in the first quarter of 2024, down from $18.6 million in the fourth quarter of 2023[129]. - Non-interest expense was $12.9 million in the first quarter of 2024, compared to $16.3 million in the fourth quarter of 2023[131]. - The Company's GAAP efficiency ratio was 79.9% in the first quarter of 2024, compared to 50.16% in the fourth quarter of 2023[133]. Capital and Liquidity - The Tier 1 leverage ratio was 10.52% at March 31, 2024, compared to 10.37% at December 31, 2023[136]. - Book value per share was $31.62 at March 31, 2024, down from $32.40 at December 31, 2023[137]. - As of March 31, 2024, the Company reported net short-term liquidity of $336 million, a slight increase from $333 million at December 31, 2023[143]. - The Company does not foresee any funding issues that would significantly pressure liquidity, although an economic recession could negatively impact it[144]. - The Bank had $88 million in short-term borrowings with the Federal Reserve at March 31, 2024, compared to $86 million at December 31, 2023[120]. Interest Rate Risk Management - The primary market risk faced by the Company is interest rate risk, which affects net interest income due to the timing and amounts of asset and liability repricing[148]. - The sensitivity analysis indicates that a 200 basis point increase in interest rates could decrease projected annual net interest income by $2,173,000 as of March 31, 2024[151]. - Conversely, a 100 basis point increase could increase projected annual net interest income by $1,513,000, while a 100 basis point decrease could reduce it by $1,492,000[151]. - Management employs a model to monitor interest rate sensitivity, considering ongoing lending and deposit activities[149]. - The Company plans to mitigate interest rate risk through adjustments in loan and deposit pricing and the composition of interest-earning assets[149]. - Assumptions regarding prepayment rates, loan and deposit volumes, and pricing are critical in calculating the impact of interest rate changes on net interest income[151]. - The Company acknowledges that actual results may differ significantly from projections due to uncertainties in market conditions and interest rate changes[151].