Evans Bank(US:EVBN)2024-07-31 00:59Financial Data and Key Metrics Changes - Net interest income increased to $14.3 million, up $0.4 million from the previous quarter, driven by higher average loans and balance sheet strengthening efforts [7] - Year-over-year, net interest income reflected higher interest expense due to competitive pressure on deposit pricing [7] - Non-interest expenses decreased by $1.6 million year-over-year, primarily due to the sale of TEA [8] Business Line Data and Key Metrics Changes - Total loans increased by 2.5% in the quarter, with net commercial originations at $85.3 million compared to $36.3 million in the first quarter [9] - Criticized loans decreased to $68 million from $70 million at the end of the first quarter [39] - Commercial loan production for the first half of the year was $44 million, with a $137 million pipeline anticipated for mid-single-digit growth for the full year [44] Market Data and Key Metrics Changes - The variable rate portfolio is approximately $300 million, with expectations for funding costs to stabilize [14] - Total deposits increased by $173 million or 10% year-to-date, although flat compared to the previous quarter [75] - The net interest margin (NIM) for the second quarter was 2.71%, down eight basis points from the linked quarter, but better than expectations [74] Company Strategy and Development Direction - The company focuses on customer acquisition, relationship management, and improving client experience while optimizing operational efficiency [38] - A commitment to community banking and local economic development through initiatives like the Regional Revitalization Partnership (RRP) [56][72] - The company aims to maintain a disciplined approach to credit risk management while navigating evolving market dynamics [39][61] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about growth prospects despite challenges posed by the current economic environment [5] - The expectation is that the third quarter will be the low point for margins, with gradual improvement anticipated in the fourth quarter and next year [11][62] - Management has not observed any significant credit issues in the portfolio and is confident in the ability to deliver performance against economic headwinds [5][31] Other Important Information - The company has made significant investments in technology and personnel to enhance operational efficiencies [55][88] - The provision for credit losses was $297,000, attributed to growth and slower prepayment rates, partially offset by improving economic factors [59] Q&A Session Summary Question: Can you go through the origination yields that you're seeing nowadays in the commercial book? - The current origination yields for commercial loans are around prime plus, with longer-term commercial loans at 7.5% and above [81] Question: How are you thinking about the seasonality in the final two quarters of the year? - The company expects traditional seasonality, with the lowest point typically in December [26] Question: Is there any additional color on the OREO that is set to sell at no loss? - The property involved was a hotel that has now turned around with new operators, and the company expects no losses upon sale [49] Question: What is a good go-forward tax rate? - The anticipated go-forward tax rate is around 22.5% [23]